Document:

exh_101.htm

Exhibit 10.1

 

 

 

 

STOCK PURCHASE AGREEMENT

 

BY AND AMONG

 

ELK VALLEY PROFESSIONAL AFFILIATES, INC.,

a Tennessee corporation,

 

SOUTH MISSISSIPPI HOME HEALTH, INC.,

a Mississippi corporation,

 

DEACONESS HOMECARE, LLC,

a Delaware limited liability company,

 

BIOSCRIP, INC.

a Delaware corporation,

 

THE BUYERS IDENTIFIED ON THE SIGNATURE PAGE HERETO,

 

and

 

LHC GROUP, INC.

a Delaware corporation

 

 

February 1, 2014

 

  

  

  

Table of Contents

 

Page

 

	
ARTICLE 1 DEFINITIONS

	
2

	
1.1

	
Certain Definitions

	
2

	
1.2

	
Other Defined Terms

	
9

	 	 
	
ARTICLE 2 SALE AND PURCHASE OF SHARES

	
10

	 	 
	
ARTICLE 3 CLOSING

	
10

	 	 
	
ARTICLE 4 PURCHASE PRICE

	
10

	
4.1

	
Purchase Price

	
10

	
4.2

	
Payment and Adjustment of Purchase Price

	
11

	 	 
	
ARTICLE 5 REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANIES

	
12

	 	 
	
5.1

	
Organization and Corporate Power

	
12

	
5.2

	
Authorization; Valid and Binding Agreement

	
12

	
5.3

	
No Breach

	
12

	
5.4

	
Capitalization.

	
13

	
5.5

	
Financial Statements

	
14

	
5.6

	
Absence of Certain Developments

	
15

	
5.7

	
Title to Properties

	
15

	
5.8

	
Real Property.

	
15

	
5.9

	
Tax Matters

	
16

	
5.10

	
Contracts and Commitments.

	
18

	
5.11

	
Intellectual Property

	
19

	
5.12

	
Litigation

	
20

	
5.13

	
Employee Benefit Plans.

	
20

	
5.14

	
Insurance

	
21

	
5.15

	
Compliance with Laws

	
21

	
5.16

	
Environmental Matters

	
21

	
5.17

	
Related Party Transactions

	
22

	
5.18

	
Employees.

	
22

	
5.19

	
Brokerage

	
23

	
5.20

	
Licenses, Authorizations and Provider Programs

	
24

	
5.21

	
Officers and Directors

	
25

	
5.22

	
Bank Accounts

	
25

	
5.23

	
Healthcare Laws.

	
25

	
5.24

	
Inspections and Investigations

	
26

	
5.25

	
Suppliers

	
27

	
5.26

	
No Undisclosed Liabilities

	
27

	
5.27

	
No Other Representations or Warranties

	
27

	 	 

 

  

i

  

	
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER

	
27

	 	 
	
6.1

	
Organization and Authority

	
27

	
6.2

	
Authorization; Valid and Binding Agreement

	
27

	
6.3

	
No Breach

	
28

	
6.4

	
Litigation

	
28

	
6.5

	
Title to Shares, Etc.

	
28

	
6.6

	
Brokerage

	
28

	
6.7

	
No Other Representations or Warranties

	
28

	 	 
	
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF BUYER

	
29

	 	 
	
7.1

	
Organization and Authority

	
29

	
7.2

	
Authorization; Valid and Binding Agreement

	
29

	
7.3

	
Brokerage

	
29

	
7.4

	
Litigation

	
29

	
7.5

	
Financing

	
29

	
7.6

	
No Knowledge of Misrepresentations or Omissions

	
29

	
7.7

	
No Other Representations or Warranties

	
29

	 	 
	
ARTICLE 8 BUYER’S CONDITIONS PRECEDENT TO CLOSING

	
30

	 	 
	
8.1

	
Covenants to be Performed

	
30

	
8.2

	
No Judgment, Decree or Order

	
30

	
8.3

	
Supporting Documents

	
30

	
8.4

	
Satisfaction of Indebtedness; Release of Liens

	
31

	
8.5

	
Third Party Consents

	
31

	
8.6

	
No Material Adverse Effect

	
31

	
8.7

	
Necessary Consents and Approvals

	
31

	
8.8

	
Transfer of Assets to Operating Newcos

	
31

	 	 
	
ARTICLE 9 SHAREHOLDER’S CONDITIONS PRECEDENT TO CLOSING

	
31

	 	 
	
9.1

	
Covenants to be Performed

	
31

	
9.2

	
No Judgment, Decree or Order

	
31

	
9.3

	
Supporting Documents

	
31

	
9.4

	
Purchase Price

	
32

	 	 
	
ARTICLE 10 PRE-CLOSING COVENANTS

	
32

	 	 
	
10.1

	
Conduct of the Business.

	
32

	
10.2

	
Access to Books and Records

	
35

	
10.3

	
Conditions

	
36

	
10.4

	
Transition Services

	
36

	
10.5

	
No-Shop

	
36

	
10.6

	
Insurance

	
36

	
10.7

	
Resignation of Directors and Officers

	
37

	
10.8

	
Formation of Holding Newcos and Operating Newcos

	
37

	 	 

 

  

ii

  

	
ARTICLE 11 COVENANTS OF BUYER

	
37

	 	 
	
11.1

	
Access to Books and Records

	
37

	
11.2

	
Conditions

	
37

	
11.3

	
Contact with Customers, Suppliers, Etc

	
37

	
11.4

	
Confidentiality

	
38

	
11.5

	
Employment; Employee Benefits

	
38

	
11.6

	
WARN Act Notice

	
39

	
11.7

	
Notification

	
39

	 	 
	
ARTICLE 12 ADDITIONAL COVENANTS AND AGREEMENTS

	
39

	 	 
	
12.1

	
Acknowledgment by Buyer.

	
39

	
12.2

	
Tax Matters.

	
40

	
12.3

	
Further Assurances

	
45

	
12.4

	
Restrictive Covenants

	
45

	
12.5

	
Public Announcements

	
48

	
12.6

	
Access to Books and Records

	
49

	 	 
	
ARTICLE 13 INDEMNIFICATION

	
49

	 	 
	
13.1

	
Survival Period

	
49

	
13.2

	
Indemnification by the Shareholder for the Benefit of Buyer.

	
49

	
13.3

	
Mitigation; Related Matters.

	
51

	
13.4

	
Indemnification by Buyer for the Benefit of the Shareholder

	
52

	
13.5

	
Manner of Payment

	
53

	
13.6

	
Defense of Third Party Claims

	
53

	
13.7

	
Determination of Loss Amount

	
53

	
13.8

	
Expiration of Indemnification

	
54

	
13.9

	
Effect of Failure to Close

	
54

	 	 
	
ARTICLE 14 TERMINATION

	
54

	 	 
	
ARTICLE 15 MISCELLANEOUS

	
55

	 	 
	
15.1

	
Specific Performance

	
55

	
15.2

	
Notices

	
55

	
15.3

	
Waiver

	
56

	
15.4

	
Third Parties

	
56

	
15.5

	
Severability

	
56

	
15.6

	
Amendment

	
56

	
15.7

	
Counterparts

	
56

	
15.8

	
Headings

	
56

	
15.9

	
Entire Agreement

	
56

	
15.10

	
Successors and Assigns

	
56

	
15.11

	
Governing Law; Jurisdiction

	
56

	
15.12

	
BioScrip Guarantee.

	
57

	
15.13

	
LHC Guarantee.

	
58

 

 

  

iii

  

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of this 1st day of February, 2014 (the “Effective Date”), by and among ELK VALLEY PROFESSIONAL AFFILIATES, INC., a Tennessee corporation (“EVPA”), SOUTH MISSISSIPPI HOME HEALTH, INC., a Mississippi corporation (“SMHH”) , DEACONESS HOMECARE, LLC, a Delaware limited liability company (“Shareholder”), and the Buyers identified on the signature pages hereto (collectively, the “Buyer”), BioScrip, Inc., a Delaware corporation (“BioScrip”) (solely with respect to Sections 10.4, 10.5, 10.6, 12.2, 12.4 and 15.12), and LHC Group, a Delaware corporation (“LHC”) (solely with respect to Sections 10.4, 10.6, 12.3 and 15.13).

 

RECITALS

 

WHEREAS, SMHH owns all of the issued and outstanding shares of the capital stock of the following: South Mississippi Home Health, Inc. – Region I, a Mississippi corporation, South Mississippi Home Health, Inc. – Region II, a Mississippi corporation, South Mississippi Home Health, Inc. – Region III, a Mississippi corporation, which collectively conduct home health and hospice operations in the State of Mississippi at the locations set forth on Exhibit A hereto;

 

WHEREAS, EVPA holds all of the membership interests of the following: Cedar Creek Home Health Care Agency, LLC, a Tennessee limited liability company, Elk Valley Health Services, LLC, a Tennessee limited liability company, Gericare, LLC, a Tennessee limited liability company, Elk Valley Home Health Care Agency, LLC, a Tennessee limited liability company, which collectively conduct home health and private duty operations in the State of Tennessee at the locations set forth on Exhibit A hereto;

 

WHEREAS, Infusion Therapy Specialists, Inc., a Nebraska corporation, Scott-Wilson, Inc., a Kentucky corporation, and Option Health, Ltd., an Illinois corporation (the “Excluded Companies”), collectively conduct home health operations in the States of Nebraska, Kentucky and Illinois, respectively, at the locations set forth on Exhibit A hereto;

 

WHEREAS, prior to the Closing the Shareholder is expected to form three (3) new wholly owned limited liability company subsidiaries in connection with the transactions contemplated hereunder  (“Holding Newcos”);

 

WHEREAS, prior to the Closing the Holding Newcos are expected to each form a wholly owned limited liability company subsidiary in connection with the transactions contemplated hereunder  (“Operating Newcos”);

 

WHEREAS, prior to the Closing the assets which are currently solely used in, and the operating liabilities which arose solely from, the operation of the home health businesses currently operated through the Excluded Companies are expected to be transferred to the Operating Newcos;

 

WHEREAS, Shareholder owns all of the issued and outstanding shares of the capital stock of EVPA and SMHH, and prior to the Closing will own all of the issued and outstanding membership interests of the Holding Newcos (collectively, the “Shares”); and

 

  

1

  

WHEREAS, Buyer desires to purchase from Shareholder, and Shareholder desires to sell to Buyer, the Shares on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the above and the mutual representations, warranties, covenants and agreements set forth herein, the parties hereby agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1 Certain Definitions.  In this Agreement, the following terms have the meanings specified or referred to in this Section 1.1, which shall be equally applicable to both the singular and plural forms.

 

“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to elect at least 50% of the governing board of such Person or to direct or cause the direction of the management and policies of the Person, whether through ownership of voting securities, partnership or limited liability interests, nonprofit membership, contract or otherwise.

 

“Buyer Closing Date Transaction” means any transaction outside of the ordinary course of business engaged in by any Company or any Company Subsidiary on the Closing Date, which occurs after the Closing at the direction of the Buyer, including any transaction engaged in by any Company or any Company Subsidiary in connection with the financing any obligations of the Buyer to make a payment under this Agreement, but not including transactions deemed to occur as a result of a Section 338(h)(10) Election.

 

“Closing Date Net Working Capital” means the Net Working Capital as of the Closing Date as determined in accordance with Section 4.2. For the avoidance of doubt, the Net Working Capital for each Company and each Company Subsidiary will be aggregated, however, any asset or Liability on the balance sheet of either Company related to Company Subsidiaries or any Affiliates shall be disregarded.

 

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

 

“Companies’ knowledge”, “knowledge of Companies” and like phrases mean the actual knowledge of the Companies’ and Companies’ Subsidiaries’ Vice President of Home Care and Vice President Finance and Treasurer, and BioScrip’s Senior Vice President Human Resources, Chief Information Officer, Chief Financial Officer, Director of Corporate Development, and those person(s) identified on Schedule 1.1 attached hereto, after such due inquiry as a prudent businessperson would have made or exercised in the management of his or her business affairs.

 

“Companies” means EVPA, SMHH, and Holding Newcos, with each referred to as a “Company”.

 

“Companies’ Subsidiaries” means Cedar Creek Home Health Care Agency, LLC, a Tennessee limited liability company, Elk Valley Health Services, LLC, a Tennessee limited liability company, Gericare, LLC, a Tennessee limited liability company, Elk Valley Home Health Care Agency, LLC, a Tennessee limited liability company, South Mississippi Home Health, Inc. – Region I, a Mississippi corporation, South Mississippi Home Health, Inc. – Region II, a Mississippi corporation, South Mississippi Home Health, Inc. – Region III, a Mississippi corporation, and the Operating Newcos (once formed).

 

  

2

  

“Confidential Information” means any confidential or proprietary business information, other than Trade Secrets, solely applicable to the Companies or the Companies’ Subsidiaries that is the subject of reasonable efforts to maintain its confidentiality and that is not generally disclosed by practice or authority to persons not employed by the Companies or the Companies’ Subsidiaries.  Confidential Information shall include, but not be limited to, the following to the extent solely applicable to the Companies and the Companies’ Subsidiaries: (i) business or operating plans, strategies, know-how, portfolios, prospects or objectives; (ii) structure, products, product development in progress as of the date hereof, technology, distribution, sales, advertising services, support and marketing plans, practices, and operations; (iii) methods of pricing, costs and details of services; (iv) financial condition and results of operations; (v) the performance of any accounts; (vi) research and development, operations or plans; (vii) lists of patients, and payors (including, without limitation, the identity of patients, addresses, and any other characteristics of such Persons); (viii) information received from third parties under confidential conditions; (ix) management organization and related information (including, without limitation, data and other information concerning the compensation and benefits paid to officers, directors, employees and management); (x) personnel and compensation policies; (xi) operating policies and manuals; (xii) financial records and related information; (xiii) computer aided systems, software, strategies and programs; (xiv) financial data, formulas, patterns, compilations, studies, strategies, methods, techniques, processes and system analyses; or (xv) other valuable financial, commercial, business technical and marketing information  related to any of the products or services made solely with respect to, the Companies or any of the Companies’ Subsidiaries.  This definition shall not limit any definition of “confidential information” or any equivalent term under applicable state or federal law as applied to information which is solely applicable to the Companies or the Companies’ Subsidiaries. “Confidential Information” shall not include information which may also pertain to the Shareholder or its Affiliates (other than the Companies and the Companies’ Subsidiaries).

 

“Current Assets” means all accounts, notes, interest and other receivables of Companies and the Companies’ Subsidiaries, and all claims, rights, interests and proceeds related thereto, including all accounts and other receivables, in any case arising from the rendering of services to patients of the Companies and the Companies’ Subsidiaries, billed and unbilled, recorded and unrecorded, for services provided by Companies and the Companies’ Subsidiaries whether payable by private pay patients, private insurance, third party payors, Medicare, Medicaid, or by any other source (net of reserves for contractual allowances and allowance for doubtful accounts), inventory and prepaid expenses, calculated consistent with past practices.

 

“Current Liabilities” means all accounts payable, accrued Taxes and accrued wages and related liabilities of the Companies and the Companies’ Subsidiaries, calculated consistent with past practices.

 

  

3

  

“Dispute” means any dispute or controversy arising between or among any parties out of or relating to or with respect to any of the provisions contained in this Agreement.

 

“EBITDA” means earnings before interest, income Taxes, depreciation and amortization, all of which shall be determined in accordance with GAAP, calculated consistent with past practices.

 

“Employee Benefit Plans” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and each other material employee benefit plan, program or arrangement that is maintained or contributed to by the Companies or the Companies’ Subsidiaries on behalf of their employees; provided, however, that the definition of “Employee Benefit Plan” shall not be deemed to include employment agreements.

 

“Environmental Laws” means all applicable federal, state, local and foreign Laws concerning emissions, discharges, releases or threatened releases, or the manufacture, transportation, storage or use, of any substance that is or becomes defined as a “hazardous substance,” “hazardous waste,” “hazardous material,” “pollutant,” or “contaminant” under the Comprehensive Environmental Response Compensation and Liability Act; the Emergency Planning and Community Right-To-Know Act; the Toxic Substances Control Act; the Resource Conservation and Recovery Act; the Clean Water Act; the Safe Drinking Water Act; the Clean Air Act; and the Hazardous Materials Transportation Act, each as amended and supplemented as of the Closing Date, any final regulations promulgated pursuant to such Laws, and any analogous and applicable Law, as the foregoing are enacted and in effect on or prior to the Closing Date.

 

“GAAP” means generally accepted accounting principles.

 

“Governmental Entity” means any government or any agency, bureau, board, commission, court, arbitral body, department, division, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

 

“Health Care Laws” means: (i) Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395hhh (the Medicare statute), including specifically, the Ethics in Patient Referrals Act, as amended (the “Stark Law”), 42 U.S.C. § 1395nn; (ii) Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396v (the Medicaid statute); (iii) the Federal Health Care Program Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b); (iv) the False Claims Act, 31 U.S.C. §§ 3729-3733 (as amended); the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Anti-Kickback Act of 1986, 41 U.S.C. §§ 51-58; (v) the Civil Monetary Penalties Law, 42 U.S.C. §§ 1320a-7a and 1320a-7b; the Exclusion Laws, 42 U.S.C. § 1320a-7; (vi) the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§ 1320d-1329d-8 (“HIPAA”) and all applicable implementing regulations, rules, ordinances, judgments, and orders, and any similar state and local statutes, regulations, rules, ordinances, judgments, and orders; (vii) all licensing, certificate of need, regulatory and reimbursement Laws applicable to healthcare service providers providing the items and services that the Companies or the Companies’ Subsidiaries provide, including, without limitation 42 CFR §424.550(b) referenced in Section 5.23.6 below; and (viii) any applicable policies, manuals, transmittals, guidelines of Governmental Entities related to reimbursement, claims submission or claims adjudication (including, without limiting the generality of the foregoing, any of the same, noncompliance with which would reasonably be expected to terminate or disqualify a person’s (including any party hereto) reimbursement or right to payment from, or participation with, any governmental payor).

 

  

4

  

“Indebtedness” means, without duplication, the sum of (i) all obligations of the Companies and the Companies’ Subsidiaries for indebtedness for borrowed money (excluding, for the avoidance of doubt, any trade payables, accounts payable and other similar liabilities) and (ii) all obligations of the Companies and the Companies’ Subsidiaries for any accrued but unpaid interest relating to any of the foregoing; provided that, notwithstanding anything in the foregoing to the contrary, Indebtedness shall not include any (a) liabilities or obligations of the Companies and the Companies’ Subsidiaries in respect of any guarantees, letters of credit, performance bonds, surety bonds, sureties or similar obligations issued by or on behalf of the Companies or the Companies’ Subsidiaries, whether issued in connection with any customer or supplier contracts, proposals or otherwise, but in all cases limited to those solely related to the business operations of the Companies and the Companies’ Subsidiaries, (b) intercompany accounts, payables or loans of any kind or nature between or among any of the Companies and the Companies’ Subsidiaries, (c) liabilities or obligations under any lease (including under any capital lease), and (d) liabilities or obligations of the Companies and/or the Companies’ Subsidiaries relating to Buyer’s and/or any of Buyer’s Affiliates’ financing for the transactions contemplated hereby and/or any indebtedness arranged by Buyer and/or any of Buyer’s Affiliates.

 

“Independent Auditor” means BKD, LLP or another independent national or regional accounting firm which is acceptable to the parties and is not the auditor for Buyer, Shareholder or their respective Affiliates.

 

“Intellectual Property” means all (i) patents, patent applications, patent disclosures and inventions, together with all improvements, revisions, extensions and continuations thereof (ii) trademarks, service marks, trade dress, trade names, logos and corporate names (in each case, whether registered or unregistered) and registrations and applications for registration thereof together, to the extent applicable, with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and registrations and applications for registration thereof, (iv) computer software, data, data bases and documentation thereof, (v) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and information), (vi) World Wide Web addresses and domain name registrations, (vii) works of authorship including, without limitation, computer programs, source code and executable code, whether embodied in software, firmware or otherwise, documentation, designs, files, records, data and mask works and any rights in semiconductor masks, layouts, architectures or topography, (viii) all advertising and promotional materials, and (ix) all copies and tangible embodiments of any of the above.

 

“Law” means, with respect to any particular Person, any statute, law, ordinance, rule or regulation of a Governmental Entity applicable to such Person, as the case may be.

 

  

5

  

“Liability” means any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills, checks, and drafts presented for collection or deposit in the ordinary course of business) of any type, whether accrued, absolute or contingent, known or unknown, liquidated or unliquidated, matured or unmatured, or otherwise.

 

“Liens” means any liens, claims, options, pledges, security interests, encumbrances or restrictions on transfer.

 

“Losses” means losses and out-of-pocket costs, damages, and expenses, including, without limitation, reasonable legal fees, accounting costs, fines, penalties, compliance costs, amounts paid in settlement, court costs, investigation and remediation costs, and consultant, expert, and other professional fees, including any of the above incurred in enforcing a right to indemnification hereunder. Losses shall exclude any such items that are punitive, special, consequential, incidental, exemplary, in the nature of lost profits or the like, or any dimunition in value of property or equity, except as to actual awards to a third party in an action brought against a Buyer Indemnified Party or with respect to a claim based on fraud.

 

“Material Adverse Effect” means any fact, circumstance, effect, change, event or development that materially adversely affects the business, properties, condition (financial or otherwise) or results of operations of the Companies and the Companies’ Subsidiaries, taken as a whole; provided, that, for purposes of this Agreement, a Material Adverse Effect shall not include the effect of (and none of the following shall be deemed in themselves, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect) (i) facts or circumstances existing as of the Effective Date within, or changes to, the industry or markets in which the business of the Companies and the Companies’ Subsidiaries operate, (ii) the announcement or disclosure of the transactions contemplated herein, (iii) general economic, regulatory or political conditions and other economic, regulatory or political conditions applicable to the home health care industry, or changes to any of the foregoing, (iv) changes in or the condition of financial, banking or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (v) military action or any act of terrorism, (vi) changes in Law or GAAP after the date hereof, (vii) compliance with the terms of this Agreement or with any request of Buyer, (viii) any “Act of God”, including, but not limited to, any hurricane, fire, earthquake or other natural disaster, (ix) the failure of the Companies and the Companies’ Subsidiaries to meet or achieve the results set forth in any projection, estimate, forecast or plan, and/or (x) any matter set forth in the Schedules hereto (provided that the underlying causes of such failures in subsections (ix) and (x) (subject to the other provisions of this definition) shall not be excluded), except in each of subsections (i), (iii), (iv), (v), (vi), and (viii), above, to the extent that such changes, conditions or acts, taken as a whole, have a disproportionate impact on the Companies or the Companies’ Subsidiaries relative to other comparable businesses.

 

“Net Working Capital” means consolidated Current Assets of the Companies and the Companies’ Subsidiaries, minus consolidated Current Liabilities of the Companies and the Companies’ Subsidiaries, determined according to the accounting methods, policies, practices and procedures, including classification and estimation methodology, used by the Companies, the Companies’ Subsidiaries, and their Affiliates in the preparation of the Financial Statements.

 

  

6

  

“Objections Statement” means a statement setting forth in reasonable detail the basis for the items on the Closing Statement being disputed in good faith.

 

“Permitted Liens” means (i) any restriction on transfer arising under any applicable securities Laws, (ii) Liens in respect of Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings by either Company and/or any Company Subsidiary; (iii) Liens of landlords and mechanics’, carriers’, workers’, repairers’, and similar Liens arising or incurred in the ordinary course of business; (iv) zoning, entitlement, building, environmental and other land use regulations imposed by Governmental Entities having jurisdiction over any of the Leased Real Property which are not violated by the current use and operation of the Leased Real Property; (v) covenants, conditions, restrictions, easements and other similar matters of record or otherwise disclosed on title surveys affecting any of the real property subject to the Real Property Leases which do not materially impair the occupancy or use thereof for the purposes for which it is currently used or proposed to be used by either Company and/or any Company Subsidiary in connection with the Companies’ or the Companies’ Subsidiaries’ businesses; (vi) Liens arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation; (vii) purchase money Liens and Liens of lessors and licensors arising under lease agreements or license arrangements; (viii) Liens granted to any lender at or about the Closing in connection with any financing by Buyer or any of its Affiliates for the transactions contemplated hereby.

 

“Person” means an association, a corporation, an individual, a partnership, a limited liability company, a trust or any other entity or organization, including a Governmental Entity.

 

“Pre-Closing Tax Periods” means all Tax periods ending on or before the Closing Date and the portion through the end of the Closing Date for any Tax period that includes but does not end on the Closing Date.

 

“Recoupment Indemnity Matter”  has the meaning set forth in Section 13.2.1(iv).

 

“Shareholder Approved Tax Matter” means (a) amending or otherwise changing any Tax Return or Tax election of the Companies or the Companies’ Subsidiaries for a Pre-Closing Tax Period or Straddle Period; (b) extending or waiving the applicable statute of limitations with respect to a Tax of the Companies or the Companies’ Subsidiaries for a Pre-Closing Tax Period or Straddle Period; (c) filing any ruling request with any Governmental Entity that relates to Taxes or Tax Returns of the Companies or the Companies’ Subsidiaries for a Pre-Closing Tax Period or Straddle Period; or (d) any disclosure to, or discussions with, any Governmental Entity regarding any Tax or Tax Returns of the Companies or the Companies’ Subsidiaries for a Pre-Closing Tax Period or Straddle Period, including disclosure to, or discussions with, a Governmental Entity with respect to filing Tax Returns or paying Taxes for a Pre-Closing Tax Period (or Straddle Period) in jurisdictions that the Companies or the Companies’ Subsidiaries did not file a Tax Return (or pay Taxes) for such periods.

 

“Special Indemnity Matter” has the meaning set forth in Section 13.2.1(iv).

 

“Straddle Period” means any taxable period that includes, but does not end on, the Closing Date.

 

  

7

  

“Target Net Working Capital” means Eight Million Dollars ($8,000,000.00).

 

“Tax Benefit” shall mean any reduction in Taxes payable or any increase in any Tax refund receivable (including any related interest).

 

“Tax Loss” means any (i) Tax of either Company and/or any Company Subsidiary for a Pre-Closing Tax Period (or the portion of a Straddle Period ending on the Closing Date determined as provided in Section 12.2.2) and (ii) any reasonable fees and expenses of legal counsel or other tax advisors incurred by Buyer, either Company and/or any Company Subsidiary in controlling a proceeding by any Governmental Entity with respect to the Taxes set forth in clause (i).  Notwithstanding the foregoing, Tax Losses shall exclude the following Taxes (and related costs):  (a) Taxes to the extent reserved for as a Current Liability on the Closing Statement, as finally determined; (b) Taxes directly resulting from a breach by the Buyer of any covenant or other agreement in Section 12.2; (c) the Buyer’s allocable share of any Transfer Taxes under Section 12.2.4; and (d) Taxes resulting from a Buyer Closing Date Transaction.

 

“Tax Returns” means any return, report, statement, information return or other document (including any related or supporting information) filed or required to be filed with any Governmental Entity in connection with the determination, assessment, collection or administration of any Taxes or the administration of any Laws, regulations or administrative requirements relating to any Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

“Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, unclaimed property, environmental (including taxes under Code § 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other taxes, charges, fees imposts, levies of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not.

 

“Trade Secret” means, in addition to any information solely applicable to the Companies and the Companies’ Subsidiaries which is covered by any definition of “trade secret” or any equivalent term under state, local or federal law, all information solely applicable to the Companies and the Companies’ Subsidiaries, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, distribution lists, a list of actual or potential customers, or a list of actual or potential contractors, consultants and suppliers, which is not commonly known by or available to the public and which information: (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.  “Trade Secret” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of Buyer, and shall not include information which may also pertain to the Shareholder or its Affiliates (other than the Companies and the Companies’ Subsidiaries).  Nothing in this Agreement is intended, or shall be construed, to limit the protections of the Uniform Trade Secrets Act of any state or any other applicable law protecting trade secrets or other confidential information.

 

  

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1.2 Other Defined Terms. The following terms have the meanings defined for such terms in the locations set forth below:

 

	
Term

	
Location

	
Additional Cap

	
Section 13.2.2

	
Agreement

	
Introductory Paragraph

	
Allocation Schedule

	
Section 12.2.1(iii)(E)

	
BioScrip Obligation(s)

	
Section 15.12

	
Buyer

	
Introductory Paragraph

	
Buyer Indemnified Parties

	
Section 13.2.1

	
Closing

	
Article 3

	
Closing Date

	
Article 3

	
Closing Statement

	
Section 4.2

	
Companies

	
Introductory Paragraph

	
Comparable Benefits

	
Section 11.5

	
Confidentiality Agreement

	
Section 11.4

	
Deductible

	
Section 13.2.2

	
Effective Date

	
Introductory Paragraph

	
Effective Time

	
Article 3

	
Employees

	
Section 12.4.3(ii)

	
Estimated Closing Date Net Working Capital

	
Section 4.2

	
EVPA

	
Introductory Paragraph

	
EVPA Shares

	
Section 5.4.1

	
Excess Losses

	
Section 13.2.2(iii)

	
Final Closing Date Net Working Capital

	
Section 4.2

	
Financial Statements

	
Section 5.5

	
Fundamental Representations

	
Section 13.1

	
General Cap

	
Section 13.2.2

	
Government Programs

	
Section 5.20.1

	
Health Care Laws

	
Section 5.23.1

	
HIPAA

	
Section 5.23.1

	
Holding Newco

	
Recitals

	
Indemnification Notice

	
Section 13.6

	
Indemnitee

	
Section 13.6

	
Indemnitor

	
Section 13.6

	
Labor Laws

	
Section 5.18.2

	
Latest Balance Sheets

	
Section 5.5

	
Leased Real Property

	
Section 5.8.1

	
LHC

	
Introductory Paragraph

	
Material Contracts

	
Section 5.10.2

	
LHC Obligation

	
Section 15.13

	
Necessary Consents and Approvals

	
Section 8.7

	
New Plans

	
Section 11.5

	
Old Plans

	
Section 11.5

	
Operating Newcos

	
Recitals

	
Private Programs

	
Section 5.20.1

 

  

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Term

	
Location

	
Providers

	
Section 12.4.3(ii)

	
Purchase Price

	
Section 4.1

	
Real Property Leases

	
Section 5.8.1

	
Restricted Territory

	
Section 12.4.2

	
Section 338(h)(10) Election

	
Section 12.2.1(iii)(E)

	
Seller Party

	
Section 10.5

	
Shareholder

	
Introductory Paragraph

	
Shareholder Indemnified Parties

	
Section 13.4.1

	
Shareholder Prepared Returns

	
Section 12.2.1

	
Shares

	
Recitals

	
SMHH

	
Introductory Paragraph

	
SMHH Shares

	
Section 5.4.1

	
Stark Law

	
Section 5.23.1

	
Survival Period

	
Section 13.1

	
Tax Contest

	
Section 12.2.5(i)

	
Third Party Claim

	
Section 13.6

	
Top Suppliers

	
Section 5.25

	
Transfer Taxes

	
Section 12.2.4

	
WARN Act

	
Section 5.18.4

	  	  

 

ARTICLE 2

SALE AND PURCHASE OF SHARES

 

Subject to the terms and the conditions set forth in this Agreement and on the basis of the representations and warranties herein, Shareholder agrees to sell, convey, transfer, assign and deliver to Buyer and Buyer agrees to purchase, receive and accept from Shareholder all of the Shares, free and clear of all Liens.

 

ARTICLE 3

CLOSING

 

Unless the parties hereto otherwise agree in writing, the actions contemplated to consummate the transactions under this Agreement (the “Closing”) shall take place on the later of March 31, 2014 or the second business day following the satisfaction or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective parties will take at the Closing itself) (the “Closing Date”). The Closing shall occur at a time and place mutually determined by the parties, and shall be deemed effective at 12:01 a.m. Eastern Time on the date immediately following the Closing Date (the “Effective Time”).

 

ARTICLE 4

PURCHASE PRICE

 

4.1 Purchase Price. The amount payable in consideration for the sale by the Shareholder of the Shares (the “Purchase Price”) shall be equal to (a) SIXTY MILLION Dollars ($60,000,000.00), less (b) One Dollar ($1.00) for each dollar that the Closing Date Net Working Capital is less than the Target Net Working Capital, plus (c) One Dollar ($1.00) for each dollar that the Closing Date Net Working Capital is more than the Target Net Working Capital. The Purchase Price shall be paid as set forth in this Article 4.

 

  

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4.2 Payment and Adjustment of Purchase Price. At least five (5) days prior to the Closing Date, the Shareholder shall deliver to Buyer a certificate signed by the chief financial officer of Shareholder (or person with similar responsibilities) setting forth the Shareholder’s estimate of the Closing Date Net Working Capital (the “Estimated Closing Date Net Working Capital”). At the Closing, Buyer shall pay to Shareholder an amount equal to the Purchase Price (based on the Estimated Closing Date Net Working Capital) in readily available funds via wire transfer to an account designated by Shareholder.  Within forty-five (45) days after the Closing Date, Buyer will deliver to Shareholder a reasonably detailed proposed statement of the final calculation of Closing Date Net Working Capital (collectively, the “Closing Statement”). After delivery of the Closing Statement, Buyer and the Companies shall promptly make available to Shareholder the working papers, books, records and personnel of the Companies and their accountants that the Shareholder reasonably requires in order to review and understand the Closing Statement and the basis therefor. Shareholder may make inquiries of Buyer or the Companies and their accountants and appropriate employees regarding questions concerning or disagreements with the proposed Closing Statement arising in the course of Shareholder’s review thereof, and Buyer and the Companies shall cause any such employees and accountants to reasonably cooperate with and respond to such inquiries in a prompt manner. If Shareholder has any objections to the Closing Statement, Shareholder shall deliver to Buyer an Objections Statement within thirty (30) days after delivery of the Closing Statement. If an Objections Statement is not delivered to Buyer within thirty (30) days after delivery of the Closing Statement, the Closing Statement shall be final, binding and non-appealable by the parties hereto. Shareholder hereby waives the right to assert any objection, other than allegations of fraud, with respect to the Closing Statement that is not asserted in an Objections Statement delivered to Buyer within thirty (30) days after delivery of the Closing Statement. If Shareholder timely delivers an Objection Statement, Shareholder and Buyer shall negotiate in good faith to resolve any identified objections. If they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, Shareholder or Buyer may, with written notice to the other party, submit such Dispute to the Independent Auditor. Shareholder and Buyer shall use their commercially reasonable efforts to cause the Independent Auditor to resolve all disagreements as soon as practicable. The Closing Statement reflecting the resolution of the Dispute by the Independent Auditor shall be final, binding and non-appealable on the parties hereto. “Final Closing Date Net Working Capital” means the final, binding and non-appealable determination of the Closing Date Net Working Capital pursuant to this Section 4.2.  The Shareholder shall pay a portion of the fees and expenses of the Independent Auditor, if any, equal to 100% of such fees and expenses multiplied by a fraction, the numerator of which is equal to the difference between Buyer’s proposed Closing Date Net Working Capital as adjusted after taking into account the items Shareholder disputes in good faith and the Independent Auditor’s determination, and the denominator of which is equal to the difference between Buyer’s proposed Closing Date Net Working Capital as adjusted after taking into account the items Shareholder disputes in good faith and Buyer’s proposed Closing Date Net Working Capital. Buyer shall pay that portion of the fees and expenses of the Independent Auditor that Shareholder is not required to pay hereunder. If the amount required to be paid as the Purchase Price based on the Final Closing Date Net Working Capital is greater than the amount paid to Shareholder on the Closing Date, Buyer shall pay to Shareholder the amount of such excess in readily available funds via wire transfer to an account designated by Shareholder. If the amount required to be paid as the Purchase Price based on the Final Closing Date Net Working Capital is less than the amount paid to Shareholder on the Closing Date, Shareholder shall pay the amount of such shortfall to Buyer in readily available funds via wire transfer to an account designated by Buyer. Any payment required under this Section shall be (A) due within five (5) business days of determination of the Final Closing Date Net Working Capital; and (B) paid by wire transfer of immediately available funds to such account as is directed by Buyer or Shareholder, as the case may be.

 

  

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANIES

 

The Shareholder and the Companies, jointly and severally, represent and warrant to Buyer that, as of the date hereof and at the Closing Date:

 

5.1 Organization and Corporate Power. Each of the Companies and the Companies’ Subsidiaries (a) is a corporation or other legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, (b) has all requisite power to own and operate its properties and to carry on its businesses as now conducted and (c) is, where applicable, duly qualified to do business and is, where applicable, in good standing in every jurisdiction in which its ownership of property or the conduct of its business as now conducted requires it to qualify, except, in each case, where the failure to be so qualified or in good standing would not have a Material Adverse Effect. The Companies have made available to Buyer copies of the applicable certificate of incorporation, bylaws or other charter or organizational documents of each of the Companies and Companies’ Subsidiaries as currently in effect. Except for the Companies’ equity ownership interests of the Companies’ Subsidiaries, none of the Companies or any of the Companies’ Subsidiaries own any capital stock, partnership interest or other equity ownership interest in any other Person.

 

5.2 Authorization; Valid and Binding Agreement. The Companies have full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Companies and the consummation by the Companies of the transactions contemplated hereby have been duly authorized by all necessary corporate (including shareholder/member authorization to the extent necessary) action and no other corporate (including shareholder/member) proceedings on the part of the Companies are necessary to authorize this Agreement and the transactions contemplated hereby. This Agreement constitutes the valid and legally binding obligations of the Companies, enforceable in accordance with its terms and conditions, subject to Laws of general application relating to public policy, bankruptcy, insolvency and the relief of debtors and rules of Law governing specific performance, injunctive relief and other equitable remedies.

 

5.3 No Breach. Except as set forth on Schedule 5.3, the execution, delivery and performance of this Agreement by the Companies and the consummation of the transactions contemplated hereby by the Companies does and will not (i) result in any breach of, constitute a default under or result in a violation of the provisions of the Companies’ or any Companies’ Subsidiaries’ certificate of incorporation, bylaws or other charter or organizational documents, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any Material Contract or Real Property Lease, (iii) result in the imposition or creation of a Lien upon or with respect to any of the Shares, (iv) violate any applicable Law, order, judgment or decree to which the Companies or any Companies’ Subsidiaries is subject or (v) require the Companies or any Companies’ Subsidiaries to obtain any authorization, consent or approval of or require the Companies or any Companies’ Subsidiaries to provide any notice to or make any filing with any Governmental Entity under the provisions of any applicable material Law, order, judgment or decree to which the Companies or any Companies’ Subsidiaries is subject.

 

  

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5.4 Capitalization.

 

5.4.1 The entire authorized equity securities of EVPA consist of 200,000 shares of common stock, no par value per share, of which 118,541.96 shares are issued and outstanding (the “EVPA Shares”).  The entire authorized equity securities of SMHH consist of 5,000 shares of common stock, par value $1.00 per share, of which 1,000 shares are issued and outstanding (the “SMHH Shares”). The EVPA Shares, the SMHH Shares, and upon Closing, the membership interests of the Holding Newcos, constitute all of the Shares.  Shareholder is the sole owner (of record and beneficially) of all of the Shares, free and clear of all Liens, except for (i) Liens described in subsections (i) and (viii) of the definition of Permitted Liens, and/or (ii) Liens that will be terminated or released at the Closing, which Liens are set forth on Schedule 5.7. Upon termination or release at the Closing of those Liens set forth on Schedule 5.7, there will be no restrictions on the right of the Shareholder to transfer the Shares to Buyer pursuant to this Agreement.  The assignments, endorsements, stock powers, or other instruments of transfer to be delivered by Shareholder to Buyer at the Closing will be sufficient to transfer Shareholder’s entire interest in the Shares (of record and beneficially) owned by Shareholder.  Upon transfer to Buyer of the certificates representing the Shares, Buyer will receive good title to the Shares, free and clear of all Liens. To the Company’s knowledge, no third party has asserted a claim of ownership to any of the Shares since March 25, 2010.

 

5.4.2 All of the Shares have been duly authorized, are validly issued, fully paid and non-assessable. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Companies to issue, sell or otherwise cause to become outstanding any of their capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Companies.

 

5.4.3 All of the issued and outstanding shares of capital stock or other equity ownership interests of the Companies’ Subsidiaries are duly authorized and validly issued, fully paid and, to the extent applicable, non-assessable. All of the issued and outstanding shares of capital stock or other equity ownership interests of the Companies’ Subsidiaries are owned by the Companies, free and clear of all Liens, except for (i) Liens described in subsections (i) and (viii) of the definition of Permitted Liens, and/or (ii) Liens that will be terminated or released at the Closing, which Liens are set forth on Schedule 5.7. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require any Companies’ Subsidiaries to issue, sell or otherwise cause to become outstanding any of its capital stock or other equity ownership interests.  Schedule 5.4.3 lists for each of the Companies’ Subsidiaries, its authorized equity securities, the number and type of equity securities issued and outstanding, and the Company holder of such securities and the number of securities of each entity held by the applicable Company.  There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Companies’ Subsidiaries. As of the Effective Time, the Companies will hold, beneficially and of record, good title to all capital stock or other equity ownership interests of the Companies’ Subsidiaries, free and clear of all Liens. To the Company’s knowledge, no third party has asserted a claim of ownership to any of the issued and outstanding shares of capital stock or other equity ownership interests of the Companies’ Subsidiaries since March 25, 2010.

 

  

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5.4.4 None of the Companies nor the Companies’ Subsidiaries owns, or is a party to or is bound by any contract or commitment to acquire, any equity security or other security of any Person or any direct or indirect equity or ownership interest in any other business.  None of the Companies nor the Companies’ Subsidiaries is obligated to provide funds to or make any investment (whether in the form of a loan, capital contribution, or otherwise) in any other Person.

 

5.5 Financial Statements. The Companies have furnished Buyer with copies of the following (collectively, the “Financial Statements”):

 

5.5.1 the unaudited consolidated balance sheet of the Companies and the Companies’ Subsidiaries as of December 31, 2011, 2012 and 2013 (which does not include the home health businesses operated through Infusion Therapy Specialists, Inc., Scott-Wilson, Inc., and Option Health, Ltd.);

 

5.5.2 the unaudited pro forma selected balance sheet accounts reflecting the assets and liabilities of the home health businesses operated through Infusion Therapy Specialists, Inc., Scott-Wilson, Inc., and Option Health, Ltd. as of December 31, 2013 (collectively with the balance sheet provided under subsection 5.5.1 above, the “Latest Balance Sheets”); and

 

5.5.3 the unaudited consolidated statement of income of the Companies and the Companies’ Subsidiaries, and for the home health businesses operated through Infusion Therapy Specialists, Inc., Scott-Wilson, Inc., and Option Health, Ltd. for the years ended December 31, 2011, 2012 and 2013.

 

The balance sheets provided under subsections 5.5.1 above have been prepared consistent with past practices, except as set forth therein or on Schedule 5.5. The balance sheet provided under subsection 5.5.2 above and the statements of income provided under subsections 5.5.3 above have been prepared consistent with accounting methods used in the past with respect to the Companies and the Companies’ Subsidiaries, except as set forth therein or on Schedule 5.5. The Financial Statements are true, correct and complete in all material respects, and, except as set forth therein or on Schedule 5.5 , have been prepared using consistent accounting practices for the periods and dates presented.  The Financial Statements present fairly in all material respects the financial position of the Company and the Companies’ Subsidiaries, as applicable, as of the dates indicated and present fairly in all material respects the results of the operations, changes in equity and cash flows for the periods then ended.  The Financial Statements have been prepared in accordance with the books and records of the Company and the Companies’ Subsidiaries, as applicable, which have been properly maintained and are true, complete and correct in all material respects.  Neither the Company nor the Companies’ Subsidiaries has received any advice or notification that it has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the Financial Statements or the books and records, any properties, assets, liabilities, revenues or expenses.

 

  

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5.6 Absence of Certain Developments. Since the date of the Latest Balance Sheets, there has not been any Material Adverse Effect. Since the date of the Latest Balance Sheets, except (i) as set forth on Schedule 5.6, and (ii) as contemplated by this Agreement, the business of the Companies and the Companies’ Subsidiaries have been operated in all material respects in the ordinary course of business consistent with past practice, and the Companies and each Companies’ Subsidiary has complied in all material respects with the covenants and restrictions set forth in Section 10.1.1 (other than Section 10.1.1(v), (vi) and (ix)) and Section 10.1.2 (other than Section 10.1.2(v)) hereof.

 

5.7 Title to Properties. Except as set forth on Schedule 5.7, the Companies and the Companies’ Subsidiaries have good title to all of the tangible personal property shown to be owned by them on the Latest Balance Sheets (except for such personal property sold or disposed of subsequent to the date thereof in the ordinary course of business), free and clear of all Liens, except for Permitted Liens and those Liens set forth on Schedule 5.7.  All items of tangible personal property (including inventory) shown to be owned by the Companies and each Companies’ Subsidiaries on the Latest Balance Sheets (except for such personal property sold or disposed of subsequent to the date thereof in the ordinary course of business) are in the aggregate in adequate operating condition and repair, normal wear and tear excepted, other than machinery and equipment under repair or out of service in the ordinary course of business, and are of a quality and quantity usable and, with respect to inventory, saleable in the ordinary course of business.

 

5.8 Real Property.

 

5.8.1 Leased Real Property. The real property demised by the leases described on Schedule 5.8.1 (the “Real Property Leases”) constitutes all of the real property leased by the Companies and each Companies’ Subsidiaries (the “Leased Real Property”). With respect to each Real Property Lease, except as set forth on Schedule 5.8.1, neither the Companies, any Companies’ Subsidiaries nor, to the Companies’ knowledge, any of the other counterparties thereto is in material breach or material default under any such Real Property Lease.  Each of the Companies and each of the Companies’ Subsidiaries has a valid leasehold interest in its Leased Real Property free and clear of any Liens other than Permitted Liens.  Each of the Real Property Leases is in full force and effect in all material respects.  None of the Companies nor any of the Companies’ Subsidiaries has received any written notice within the past twenty-four (24) months of any pending or threatened condemnations, planned public improvements, annexation, special assessments, zoning or subdivision changes, or other adverse claims affecting the Leased Real Property.  All licenses, permits and approvals required for the occupancy and operation of the Leased Real Property as presently being used have been obtained and are in full force and effect and none of the Companies or any of the Companies’ Subsidiaries has received any written notice of violations in connection with such items.  Except as set forth on Schedule 5.8.1, none of the Companies nor any of the Companies’ Subsidiaries has subleased, licensed or otherwise granted anyone the right to use or occupy the Leased Real Property or any portion thereof or collaterally assigned or granted any other security interest in any such lease or interest therein.

 

  

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5.8.2 Owned Real Property. Neither the Companies nor any Companies’ Subsidiaries owns any real property.

 

5.9 Tax Matters. Except as set forth on Schedule 5.9:

 

5.9.1 Each of the Companies and the Companies’ Subsidiaries has timely filed all material Tax Returns in all jurisdictions in which Tax Returns are required to be filed, and such Tax Returns are correct and complete in all material respects.  None of the Companies nor any of the Companies’ Subsidiaries is the beneficiary of any extension of time within which to file any Tax Return.  All Taxes of, or for which there exists liability of, the Companies and the Companies’ Subsidiaries (whether or not shown on any Tax Return) have been fully and timely paid.  There are no Liens for any Taxes (other than a Lien for current real property or ad valorem Taxes not yet due and payable) on any of the assets of the Companies or the Companies’ Subsidiaries.  No claim has ever been made by any Governmental Entity in a jurisdiction where the  Companies or any of the Companies’ Subsidiaries does not file a Tax Return that such entity may be subject to Taxes in that jurisdiction.

 

5.9.2 None of the Companies nor any of the Companies’ Subsidiaries has received any written notice of assessment or proposed assessment in connection with any Taxes, and to the knowledge of the Company and the Companies’ Subsidiaries there are no threatened or pending disputes, claims, audits or examinations regarding any Taxes or the assets of the Companies or any of the Companies’ Subsidiaries.  Neither the Companies nor any of the Companies’ Subsidiaries has waived any statute of limitations in respect of any Taxes or agreed to a Tax assessment or deficiency.

 

5.9.3 Each of the Companies and the Companies’ Subsidiaries has materially complied with all applicable laws, rules and regulations relating to the withholding of Taxes and the payment thereof to appropriate Governmental Entities, including Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or independent contractor, and Taxes required to be withheld and paid pursuant to Code Sections 1441 and 1442 or similar provisions under foreign law.

 

5.9.4 The unpaid Taxes of each of the Companies and the Companies’ Subsidiaries (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Latest Balance Sheets, (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of the Companies and the Companies’ Subsidiaries in filing their Tax Returns and (iii) do not exceed the amount reflected as a Current Liability in the computation of Net Working Capital.

 

5.9.5 Except as set forth on Schedule 5.9.5, none of the Companies nor any of the Companies’ Subsidiaries is a party to any Tax allocation or Tax sharing agreement and none of the Companies nor any of the Companies’ Subsidiaries has been a member of an affiliated group within the meaning of Section 1504(a) of the Code filing a consolidated federal income Tax Return (other than a group the common parent of which is BioScrip, Inc.) or has any Tax Liability of any Person under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign law, or as a transferee or successor, by contract or otherwise.

 

  

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5.9.6 Each of the Companies and the Companies’ Subsidiaries has disclosed on its federal income Tax Returns all positions taken thereon that could reasonably give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662.

 

5.9.7 None of the Companies nor any of the Companies’ Subsidiaries has participated in any reportable transaction, as defined in Code Section 6707A(c)(1) and Regulation Section 1.6011-4(b)(1), or a transaction substantially similar to a reportable transaction.

 

5.9.8 None of the Companies nor any of the Companies’ Subsidiaries has distributed stock of another entity, or had its stock distributed by another entity in a transaction governed or intended to be governed by Section 355 or Section 361 of the Code.

 

5.9.9 Neither of the Companies nor any Company Subsidiary is a party to any agreement, contract, arrangement or a plan that has resulted or could reasonably result, separately or in the aggregate, in a payment of (i) any “excess parachute payment within the meaning of Section 280G of the Code (or any corresponding provision of state, local or foreign law) or (ii) any amount that will not be fully deductible as a result of Section 162(m) of the Code (or any corresponding provision of state, local, or foreign law).

 

5.9.10 Neither of the Companies nor any Company Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:

 

(i) change in method of accounting for a taxable period ending on or prior to the Closing Date;

 

(ii) use of an improper method of accounting for a taxable period ending on or prior to the Closing Date;

 

(iii) "closing agreement" as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax law) executed on or prior to the Closing Date;

 

(iv) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local, or non-U.S. income Tax law);

 

(v) installment sale or open transaction disposition made on or prior to the Closing Date;

 

(vi) prepaid amount received on or prior to the Closing Date; or

 

(vii) election under Section 108(i) of the Code.

 

  

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5.9.11 The Companies and each Company Subsidiary that is a corporation are members of the federal consolidated group of which BioScrip is the common parent and each Company Subsidiary that is a limited liability company is a disregarded entity for federal tax purposes.

 

5.10 Contracts and Commitments.

 

5.10.1 Schedule 5.10.1 lists all of the following contracts, agreements, arrangements, commitments, obligations and plans (whether written or oral, unless otherwise specified below) to which any of the Companies or any of Companies’ Subsidiaries is a party:

 

(i) Any pension, retirement or deferred compensation plan or contract or other bonus plan, other than as described in Schedule 5.13;

 

(ii) Any collective bargaining agreement or contract with any labor union;

 

(iii) Any employment agreement for the employment of any Person;

 

(iv) Any engagement of any medical director or any physician as a consultant, independent contractor or agent;

 

(v) Any loan agreement or indenture with any third party relating to Indebtedness under which the Companies or any Companies’ Subsidiaries has borrowed money or made any loan;

 

(vi) Any lease agreement with any third party under which the Companies or any Companies’ Subsidiaries is lessee of any personal property owned by any third party for which the annual rental payments paid by the Companies or any Companies’ Subsidiaries (as applicable) exceeds $25,000 and which is not terminable on thirty (30) or fewer days’ notice by the Companies or any Companies’ Subsidiaries without Liability for any material penalty;

 

(vii) Any lease agreement under which the Companies or any Companies’ Subsidiaries is lessor of any personal property owned by the Companies or any Companies’ Subsidiaries for which the annual rental payments paid to the Companies or any Companies’ Subsidiaries (as applicable) exceeds $25,000 and which is not terminable by on thirty (30) or fewer days’ notice by the Companies or any Companies’ Subsidiaries without Liability for any material penalty;

 

(viii) Any contract or agreement (other than those covered by clauses (i) through (vi) above and other than the Real Property Leases) with any third party involving annual payments to or by the Companies or any Companies’ Subsidiaries of more than $50,000 with respect to any such contract or agreement;

 

(ix) Any partnership or joint venture contract;

 

(x) Any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other material plan or arrangement for the benefit of the Companies’ or the Companies’ Subsidiaries’ current or former directors, officers, and employees not otherwise listed on Schedule 5.13;

 

  

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(xi) Any written agreement between any of the Companies or the Companies’ Subsidiaries and any of their Affiliates pursuant to which amounts are payable by or to the Companies or the Companies’ Subsidiaries;

 

(xii) Any contract with any third party containing covenants prohibiting the Companies or any Companies’ Subsidiaries in any material respect following the Closing from: (a) competing in any line of business, (b) soliciting employees or businesses, or (c) disclosing information (other than contracts entered into in the ordinary course of business); and

 

(xiii)           Any contract subject to Executive Order 11246.

 

5.10.2 With respect to each of the contracts, agreements and plans set forth on Schedule 5.10.1 (each a “Material Contract”), except as set forth on Schedule 5.10.2, (i) the Companies have made available to Buyer a copy of such Material Contract, (ii) neither the Companies, any Companies’ Subsidiaries nor, to the Companies’ knowledge, any other party thereto, is in material breach of such Material Contract or default under any such Material Contract, and (iii) each such Material Contract is valid and in full force in effect in all material respects and constitutes a legal, valid and binding obligation of the Companies or the applicable Companies’ Subsidiaries and, to the Companies’ knowledge, the other parties thereto, and is enforceable against the Companies or the applicable Companies’ Subsidiaries in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at Law or in equity).

 

5.11 Intellectual Property.

 

5.11.1 Schedule 5.11 contains a list of all of the Intellectual Property, and all applications for the registration of any Intellectual Property, that are material to (and used in the conduct of) the businesses of the Companies and each Companies’ Subsidiaries and that are owned, licensed or filed by the Companies and any Companies’ Subsidiaries. Except as set forth on Schedule 5.11: (i) since January 1, 2012, neither the Companies nor any Companies’ Subsidiaries has received any written notices of infringement or misappropriation from any third party with respect to the use by the Companies and any Companies’ Subsidiaries of any material Intellectual Property owned or used by the Companies or any Companies’ Subsidiaries during such period; (ii) to the Companies’ knowledge, no third party is materially infringing or misappropriating any Intellectual Property owned by the Companies or any Companies’ Subsidiaries, and (iii) the trademarks, service marks, and trade names identified on Schedule 5.11 are owned by the Companies or the Companies’ Subsidiaries, were first used in commerce by the Companies or any Companies’ Subsidiaries as of the date set forth on Schedule 5.11, and have been continuously and properly used since the identified first use date. All Intellectual Property owned by the Companies or the Companies’ Subsidiaries is owned free and clear of all Liens.  The Companies and the Companies’ Subsidiaries own or have the right to use all of the Intellectual Property used in the conduct of their businesses.

 

  

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5.11.2 The Companies and Companies’ Subsidiaries have obtained and possesses valid licenses, sublicenses or other rights to legally use all of the software programs present on the computers and other software-enabled electronic devices that it owns or leases or that it has otherwise provided to its employees for their use in connection with each Company’s business.

 

5.12 Litigation. Except as set forth on Schedule 5.12, there are no actions, suits, hearings,  or proceedings currently pending or, to the Companies’ knowledge, threatened against the Companies or any Companies’ Subsidiaries, at Law or in equity, before or by any Governmental Entity, and neither the Companies nor any Companies’ Subsidiaries is subject to any outstanding judgment, injunction, order, ruling or decree of any Governmental Entity with respect to which the Companies or any Companies’ Subsidiaries has any future material obligations.

 

5.13 Employee Benefit Plans.

 

5.13.1 Schedule 5.13 sets forth a list of each Employee Benefit Plan maintained by the Companies and the Companies’ Subsidiaries or to which the Companies and any Companies’ Subsidiaries are obligated to contribute.

 

5.13.2 Except as set forth on Schedule 5.13:

 

(i) All such Employee Benefit Plans have been made available to Buyer and/or its agents;

 

(ii) Each such Employee Benefit Plan has been maintained, funded and administered in material compliance with its terms and all applicable Laws (including, to the extent applicable, the applicable requirements of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Code), except as would not result in a material Loss to the Companies and the Companies’ Subsidiaries;

 

(iii) Other than routine claims for benefits, there is no claim or lawsuit pending or, to the knowledge of the Companies, overtly threatened against the Companies or the Companies’ Subsidiaries arising out of any such Employee Benefit Plan, except for any such claim or lawsuit as would not result in a material Loss to the Companies or the Companies’ Subsidiaries;

 

(iv) Each such Employee Benefit Plan that is intended to meet the requirements of a “qualified plan” under Section 401(a) of the Code has received a favorable determination letter or prototype opinion letter from the Internal Revenue Service, and, to the Companies’ knowledge, nothing has occurred that would be reasonably likely to cause the loss of such qualified status of such plan(s);

 

(v) No such Employee Benefit Plan is a defined benefit pension plan or “multiple employer welfare arrangement” under Section 3(40) of ERISA or has, since December 31, 2008, been subject to the minimum funding requirements of Section 412 of the Code or Title IV of ERISA; and

 

  

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(vi) Neither the Companies nor any Companies’ Subsidiaries have ever contributed to, or had any obligation to contribute to, any “multiemployer plan” under Section 3(37) of ERISA.

 

5.13.3 This Section 5.13 constitutes the sole and exclusive representations and warranties of the Companies and the Companies’ Subsidiaries with respect to any matters relating to any Employee Benefit Plan.

 

5.14 Insurance. Since January 1, 2009, there have been maintained by or on behalf of the Companies and the Companies’ Subsidiaries (i) general and professional liability insurance coverage , and (ii) various policies and forms of insurance insuring the business of the Companies and the Companies’ Subsidiaries, which are, in each case, of the type and in amounts customary and adequate for the businesses then conducted by the Companies and the Companies’ Subsidiaries.  Schedule 5.14 lists all insurance policies to which any of the Companies or any of the Companies’ Subsidiaries is a party, an insured, or a beneficiary, or under which any director, officer, or manager of any of the Companies or any of the Companies’ Subsidiaries, in his or her capacity as such, is covered. All such policies are maintained on an occurrence basis, except as disclosed on Schedule 5.14. Except as provided on Schedule 5.14, none of such insurance policies provide for any retrospective premium adjustments on the part of the Companies or Companies’ Subsidiaries. All such insurance policies are in full force and effect. Neither the Companies nor any Companies’ Subsidiaries is in default regarding the policies of any such insurance, including, without limitation, failure to make timely payments of all premiums due thereon, and they have not failed to file any notice or present any claim thereunder in due and timely fashion.  No insured under any such insurance policy has, and to Company’s knowledge, no insurer has, repudiated any material provision thereof.  Copies of all insurance policies set forth on Schedule 5.14 have been delivered to Buyer.

 

5.15 Compliance with Laws. Except as set forth on Schedule 5.15, the Companies and the Companies’ Subsidiaries are in material compliance with all Laws, orders, judgments, decrees or any other requirement of any Governmental Entity applicable to the Companies or the Companies’ Subsidiaries.

 

5.16 Environmental Matters. Except as set forth on Schedule 5.16:

 

5.16.1 The Companies and the Companies’ Subsidiaries are in compliance with all applicable Environmental Laws, except where the failure to obtain or comply would not have a Material Adverse Effect. The Companies and the Companies’ Subsidiaries possess all material permits, registrations, licenses and other authorizations required under applicable Environmental Laws to be possessed by them with respect to the conduct of their respective businesses as presently conducted, and are in compliance with such permits, registrations, licenses and authorizations, except where the failure to obtain or comply would not have a Material Adverse Effect.

 

5.16.2 Neither the Companies nor the Companies’ Subsidiaries has, since January 1, 2012, received any written notice from any Governmental Entity that alleges that the Companies or any Companies’ Subsidiaries is in material violation of any Environmental Law or has any Liability arising under applicable Environmental Laws relating to either the Companies, the Companies’ Subsidiaries or their facilities.

 

  

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5.16.3 This Section 5.16 constitutes the sole and exclusive representations and warranties of the Companies and the Companies’ Subsidiaries with respect to any environmental matters, including, without limitation, any arising under Environmental Laws.

 

5.17 Related Party Transactions. Except as (i) set forth on Schedule 5.17 or (ii) reflected in the Financial Statements, none of the Shareholder, nor any of the officers, directors, employees, or managers of the Shareholder, the Companies or the Companies’ Subsidiaries has entered into any outstanding agreement or contract with the Companies or any Companies’ Subsidiaries.

 

5.18 Employees.

 

5.18.1 Schedule 5.18.1(i) sets forth a list, on a de-identified basis, of all employees of the Companies and the Companies’ Subsidiaries, including all full-time, part-time, temporary and “as needed” employees, including each such employee’s position, salary and specifying the benefits in which such employee is enrolled as of the business day prior to the date of this Agreement.  The first business day following the execution of this Agreement, the Shareholder shall provide to the Buyer a supplemented Schedule 5.18.1(i), providing the corresponding names of each employee. There are no individuals who are independent contractors or consultants with whom the Companies and Companies’ Subsidiaries contract for nursing or therapy services. Schedule 5.18.1(ii) sets forth a list of all nurse staffing and therapy companies with which the Companies and the Companies’ Subsidiaries has entered into a written agreement. Within ten (10) business days following the execution of this Agreement, the Shareholder shall use diligent efforts to provide to the Buyer a list of those individuals (by name and position) who have provided services to the Companies and/or the Companies’ Subsidiaries during the prior three (3) month period pursuant to contracts with the nursing and/or therapy services companies listed on Schedule 5.18.1(ii).

 

5.18.2 Each of the Companies and the Companies’ Subsidiaries is in material compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages and hours, occupational safety and health, including without limitation, ERISA, the Immigration Reform and Control Act of 1986, the National Labor Relations Act, the Civil Rights Acts of 1966 and 1964, the Equal Pay Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the Worker Adjustment and Retraining Notification Act, the Occupational Safety and Health Act, the Davis-Bacon Act, the Walsh-Healy Act, the Service Contract Act, Executive Order 11246, the Fair Labor Standards Act and the Rehabilitation Act of 1973 and all regulations under such acts (collectively, the “Labor Laws”), and none of the Companies nor any of the Companies’ Subsidiaries is liable for any Liabilities, judgments, decrees, orders, arrearage of wages or Taxes, fines or penalties for failure to comply with any of the Labor Laws.

 

  

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5.18.3 Except as disclosed on Schedule 5.18.3:

 

(i) There are no charges, governmental audits, investigations, administrative proceedings or complaints concerning the Companies or any of the Companies’ Subsidiaries employment practices pending or, to the Companies’ knowledge, threatened before any Governmental Authority or court, and, to the Companies’ knowledge, no basis for any such matter exists;

 

(ii) All current employees, consultants and independent contracts performing services for or on behalf of the Companies and the Companies’ Subsidiaries possess and at all times under the employ of the Companies and the Companies’ Subsidiaries have maintained all valid licenses, registrations and certifications required by any federal or state board or agency charged with regulating the activities of health care practitioners;

 

(iii) To the Companies’ knowledge, there are no inquiries, investigations or monitoring of activities of any licensed, registered, or certified personnel employed by, credentialed or privileged by, or otherwise providing health care services on behalf of the Companies or any of the Companies’ Subsidiaries pending or threatened by any federal or state board or agency charged with regulating the professional activities of health care practitioners;

 

(iv) None of the Companies nor any of the Companies’ Subsidiaries is a party to any union or collective bargaining agreement or any other agreement regarding the rates of pay or working conditions of any employees of the Companies or any of the Companies’ Subsidiaries, and, to the Companies’ knowledge, no union attempts to organize the employees of the Companies or any of the Companies’ Subsidiaries have been made, and, to the Companies’ knowledge, there are no such attempts now threatened; and

 

(v) None of the Companies nor any of the Companies’ Subsidiaries has experienced any organized slowdown, work interruption, strike, or work stoppage by its employees.

 

5.18.4 None of the Companies nor any of the Companies’ Subsidiaries has  effectuated (i) a “plant closing” (as defined in the Worker Adjustment and Retraining Notification Act (the “WARN Act”)) affecting any site of employment or one or more facilities or operating units within any site of employment or facility; or (ii) a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility; and none of the Companies nor any of the Companies’ Subsidiaries has been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar Law.  None of the Companies’ nor any of the Companies’ Subsidiaries’ employees has suffered an “employment loss” (as defined in the WARN Act) more recently than six (6) months prior to the Closing Date.

 

5.19 Brokerage. Except as set forth on Schedule 5.19 to the Companies’ knowledge, neither the Companies nor the Companies’ Subsidiaries has any liability or obligation to pay any brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by the Companies or the Companies’ Subsidiaries prior to the Closing Date.

 

  

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5.20 Licenses, Authorizations and Provider Programs.

 

5.20.1 The Companies and the Companies’ Subsidiaries, as applicable are: (i) the holders of all valid licenses and other rights, permits and authorizations required by Law or any Governmental Authority to be owned or possessed by the Companies and the Companies’ Subsidiaries for the conduct of their respective businesses as presently conducted; (ii) certified for participation and reimbursement under Titles XVIII and XIX of the Social Security Act to participate in Medicare and such other similar federal reimbursement or governmental programs, and those Medicaid programs listed on Schedule 5.20.1  for which the Companies and/or the Companies’ Subsidiaries are eligible to receive payments on account of services provided by them (the “Government Programs”); (iii) the holders of current provider agreements for such Government Programs; and (iv) the holders of current provider agreements with certain private non-governmental programs listed on Schedule 5.20.1 (“Private Programs”).  Set forth on Schedule 5.20.1 is a correct and complete list of such licenses, permits and other authorizations under all Government Programs and Private Programs. Except as noted on Schedule 5.20.1, true, complete and correct copies of all items listed on Schedule 5.20.1 have been provided to Buyer.  True, complete and correct copies of all surveys of the Companies and/or the Companies’ Subsidiaries conducted in connection with any Government Program, Private Program or licensing or accrediting body during the past five (5) years have been provided to Buyer.

 

5.20.2 No material violation, default, or deficiency by Companies or Companies’ Subsidiaries exists with respect to any of the items listed on Schedule 5.20.1.  None of the Companies nor any of the Companies’ Subsidiaries has received within the past three (3) years, and to the Companies’ knowledge none of the Companies nor any of the Companies’ Subsidiaries has received prior to such three (3) year period,  any written notice of any action pending or recommended by any Governmental Authority having jurisdiction over the items listed on Schedule 5.20.1, either to revoke, limit, withdraw or suspend any license, right or authorization, or to terminate the participation of the Companies or any of the Companies’ Subsidiaries in any Government Program or Private Program.  To the Companies’ knowledge, no event has occurred which, with the giving of notice, the passage of time, or both, would constitute grounds for a violation, order or deficiency with respect to any of the items listed on Schedule 5.20.1 or to revoke, limit, withdraw or suspend any such item, or to terminate or modify the participation of the Companies or any of the Companies’ Subsidiaries in any Government Program or Private Program.  To the Companies’ knowledge, there has been no decision not to renew any provider or third-party payor agreement between any of the Companies or any of the Companies’ Subsidiaries and a Government Program or Private Program.  No current employee, agent or contractor of any of the Companies or any of the Companies’ Subsidiaries has been excluded from or prohibited from providing services under any federal or state health care program, including but not limited to the Medicare and Medicaid programs.

 

  

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5.20.3 The Companies and each of the Companies’ Subsidiaries have timely filed all cost reports and other reports required to be filed by them prior to the date hereof with respect to the Government Programs and Private Programs.  All such reports are complete and accurate in all material respects and have been prepared in compliance with all applicable Laws governing reimbursement and payment of claims.  All cost reports have been accepted (as provided in the CMS Provider Reimbursement Manual Publication 15-1) by the applicable Regional Home Health Care Intermediaries or Medicare Administrative Contractors with which such cost reports were filed.  True and complete data pertaining to the Companies and the Companies’ Subsidiaries provided on cost reports filed for 2012 have been delivered to Buyer.  To the Companies’ knowledge, the Companies and the Companies’ Subsidiaries, as applicable, (i) have paid or caused to be paid or have properly reflected in the Financial Statements all known and undisputed refunds, overpayments, discounts or adjustments, including but not limited to any Hospice Medicare cap liability, which have become due pursuant to such reports and related to the Companies or the Companies’ Subsidiaries and (ii) have no Liability under any Government Program or Private Program for any refund, overpayment, discount or adjustment for services provided in the operation of the Companies or the Companies’ Subsidiaries other than in the ordinary course or except as has been specifically reserved for in the Financial Statements or disclosed herein or in the Schedules hereto, including Liabilities discovered as a result of audits conducted by recovery audit contractors, zone program integrity contractors, or similar investigative agencies on behalf of any Government Program and interest or penalties accruing with respect thereto.  To the Companies’ knowledge, there is no basis for any claim or request for recoupment or reimbursement by any Governmental Authority or other provider reimbursement entity relating to the Government Programs in connection with the Companies or the Companies’ Subsidiaries.  Except as set forth on Schedule 5.20.3, during the past three (3) years, there have been no claims for refunds, overpayments, discounts or adjustments with respect to the Companies or the Companies’ Subsidiaries as a result of audits conducted by recovery audit contractors, zone program integrity contractors, or similar investigative agencies on behalf of any Government Program.  To the Companies’ knowledge, there are no pending appeals, adjustments, challenges, audits, litigation or notices of intent to reopen any closed cost reports filed with respect to the Companies or the Companies’ Subsidiaries.  There are no other reports required to be filed by the Companies or the Companies’ Subsidiaries in order to be paid under any Government Program or Private Program for services rendered, except for cost reports not yet due.

 

5.21 Officers and Directors. Schedule 5.21 lists all officers and directors of the Companies and the Companies’ Subsidiaries as of the date hereof.

 

5.22 Bank Accounts. Schedule 5.22 lists all of the bank accounts of the Companies and the Companies’ Subsidiaries as of the date hereof.

 

5.23 Healthcare Laws.

 

5.23.1  The Companies and the Companies’ Subsidiaries have been and are currently operating their respective businesses in material compliance with all applicable Health Care Laws. To the Companies’ knowledge, no owner, officer, or director the Companies or the Companies’ Subsidiaries, or any other Person, has engaged in any act on behalf of the Companies or the Companies’ Subsidiaries, that violates the Health Care Laws.

 

5.23.2 None of the Companies nor any of the Companies’ Subsidiaries has received any written communication from a Governmental Authority that alleges that it is not in compliance with any Health Care Law, other than statements of deficiencies from a governmental authority received in the ordinary course of business.

 

  

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5.23.3 None of the Companies nor any of the Companies’ Subsidiaries has been subpoenaed or charged or, to the Companies’ knowledge, investigated in connection with any possible violation of any Health Care Law, but excluding therefrom any surveys or investigations in the ordinary course of business regarding compliance with Medicare conditions of participation or state licensure requirements.

 

5.23.4 To the Companies’ knowledge, each of the Companies and the Companies’ Subsidiaries, as applicable, has properly and legally billed for all items and services furnished and have maintained records supporting the provision of services billed in accordance with Health Care Laws.  No funds are now, or to the Companies knowledge will be, withheld from the Companies or the Companies’ Subsidiaries pursuant to any Health Care Law.

 

5.23.5 To the Companies’ knowledge, none of the Companies, nor any of the Companies’ Subsidiaries, nor any current employee thereof has been excluded or is threatened with exclusion from participation in any Federal health care program, as such term is defined in section 1128B(f) the Social Security Act, 42 U.S.C. § 1320a-7b(f).

 

5.23.6 In accordance with 42 CFR §424.550(b), each of the Companies and the Companies’ Subsidiaries warrants, with respect to its respective provider number, that it has not experienced a change of majority ownership, as that term is interpreted under 42 CFR §424.550(b), during the thirty-six (36) months preceding the Closing Date.  Further, each of the Companies and the Companies’ Subsidiaries warrants that it has the power to transfer the Governmental Program provider numbers listed in Schedule 5.20.1 to Buyer provided that any required consent or approval of, prior filing with or notice to, or any action by, any Governmental Authority is fulfilled, and that no transaction or event has occurred that would prevent the Companies and the Companies’ Subsidiaries from transferring those Governmental Program provider numbers set forth on Schedule 5.20.1 to Buyer.

 

5.23.7 In accordance with 42 CFR §424.535, 42 CFR §424.502, and 42 CFR §489.52, with respect to the Governmental Program provider numbers to be transferred to Buyer under this Agreement, each of the Companies and the Companies’ Subsidiaries warrants that it has not undergone a cessation of business and has remained operational as defined in 42 CFR §424.502.  There is no violation, default, or deficiency that exists with respect to the Governmental Program provider numbers owned by the Companies or the Companies’ Subsidiaries that would give cause for termination of the provider agreement or revocation of enrollment or billing privileges by any Government Program.

 

5.24 Inspections and Investigations.  Except as set forth and described in Schedule 5.24: (i) each of the Companies’ and the Companies’ Subsidiaries’, as applicable, right to receive reimbursements pursuant to any Government Program or Private Program has not been terminated or otherwise adversely affected as a result of any investigation or action whether by any Governmental Authority or other third party; (ii) none of the Companies nor the Companies’ Subsidiaries has during the past three (3) years, been the subject of any non-ordinary course inspection, investigation, survey, audit, monitoring or other form of review by any Governmental Authority, professional review organization, accrediting organization or certifying agency based upon any alleged improper activity on the part of such entity, and  none of the Companies nor the Companies’ Subsidiaries has received any written notice of material deficiency during the past three (3) years in connection with its operations; (iii) there are not presently, and at the Closing Date, there will not be, any outstanding deficiencies or work orders of any Governmental Authority having jurisdiction over any of the Companies or the Companies’ Subsidiaries, requiring conformity to any applicable agreement, Law or bylaw or rule, including but not limited to, the Government Programs and Private Programs; and (iv) to the Companies’ knowledge, there is not any notice of any claim, requirement or demand of any Governmental Authority or other third party supervising or having authority over any of the Companies or the Companies’ Subsidiaries or their operations to rework or redesign any part thereof or to provide additional furniture, fixtures, equipment, appliances or inventory so as to conform to or comply with any existing Law or standard.  The Companies have provided to Buyer true and complete copies of all reports, correspondence, notices and other documents relating to any matter described or referenced on Schedule 5.24, other than any such items that are protected by the attorney-client privilege or other applicable privilege (a list of such privileged items has been provided to Buyer).

 

  

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5.25 Suppliers.   Schedule 5.25 sets forth a true, complete and correct list of the six (6) largest suppliers of the Companies and the Companies’ Subsidiaries (the “Top Suppliers”) by dollar volume of purchases for each of 2012 and 2013. Except as set forth on Schedule 5.25, since the Latest Balance Sheets, neither the Companies nor the Companies’ Subsidiaries has received any written indication from any Top Supplier to the effect that such Top Supplier will stop supplying materials, products or services to the Companies or any Companies’ Subsidiaries, which could reasonably be expected to have a Material Adverse Effect.

 

5.26 No Undisclosed Liabilities.   Except as set forth in Schedule 5.26 or as would not have a Material Adverse Effect, none of the Companies, nor any of the Companies’ Subsidiaries has any Liability or obligation of any nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, or otherwise) other than liabilities or obligations to the extent shown on the Latest Balance Sheets and Current Liabilities incurred in the ordinary course of business since the date of the Interim Balance Sheet.

 

5.27 No Other Representations or Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS Article 5 (AS QUALIFIED BY THE SCHEDULES HERETO), THE SHAREHOLDER AND THE COMPANIES MAKE NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY.

 

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER

 

Shareholder hereby represents and warrants to Buyer that, as of the Closing Date:

 

6.1 Organization and Authority. Shareholder is a limited liability company duly organized, validly existing, and in good standing under the Laws of the jurisdiction of its organization.

 

6.2 Authorization; Valid and Binding Agreement. Shareholder has full power and authority (including full limited liability company power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Shareholder and the consummation by Shareholder of the transactions contemplated hereby have been duly authorized by all necessary limited liability company action, and no other company proceedings on the part of Shareholder and no member vote is necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement constitutes the valid and legally binding obligation of Shareholder, enforceable in accordance with its terms and conditions, subject to Laws of general application relating to public policy, bankruptcy, insolvency and the relief of debtors and rules of Law governing specific performance, injunctive relief and other equitable remedies.

 

  

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6.3 No Breach. The execution, delivery and performance of this Agreement by the Shareholder and the consummation of the transactions contemplated hereby will not (i) result in any breach of, constitute a default under or result in a violation of the provisions of the Shareholder’s certificate of formation, operating agreement or other organizational documents, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which the Shareholder is a party or by which it is bound or to which any of the Shares are subject, (iii) result in the imposition or creation of a Lien upon or with respect to Shares, (iv) violate any applicable Law, order, judgment or decree to which the Shareholder is subject, or (v) require the Shareholder to obtain any authorization, consent or approval of or require the Shareholder to provide any notice to or make any filing with any Governmental Entity under the provisions of any applicable Law, order, judgment or decree to which the Shareholder is subject.

 

6.4 Litigation. There are no actions, suits or proceedings currently pending or, to Shareholder’s knowledge, threatened against Shareholder or any of its Affiliates, at Law or in equity, before or by any Governmental Entity, which could interfere with Shareholder’s ability to close this transaction.

 

6.5 Title to Shares, Etc. Shareholder is the record and beneficial owner of, and has good and marketable title to, the Shares free and clear of all Liens, agreements, voting trusts, proxies and other arrangements or restrictions of any kind whatsoever. Neither Shareholder nor any other Person owns any other securities of the Companies other than the Shares, and, except for this Agreement, there are no agreements or other rights or arrangements existing which provide for the sale, purchase, exchange or other transfer by Shareholder of any of the Shares or any other security of the Companies.

 

6.6 Brokerage. Except as set forth on Schedule 6.6, there are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of the Shareholder, the Companies, or the Companies’ Subsidiaries.

 

6.7 No Other Representations or Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN Article 5 AND Article 6 (AS QUALIFIED BY THE SCHEDULES HERETO), THE SHAREHOLDER MAKES NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY.

 

  

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ARTICLE 7

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby jointly and severally represents and warrants to the Shareholder, the Companies, and the Companies’ Subsidiaries that:

 

7.1 Organization and Authority. Each Buyer is a limited liability company duly organized, validly existing, and in good standing under the Laws of the jurisdiction of its formation as reflected on the signature page hereto. Each Buyer is a wholly owned subsidiary of LHC.

 

7.2 Authorization; Valid and Binding Agreement. Buyer has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and no other corporate proceedings on the part of Buyer and no stockholder votes are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions, subject to Laws of general application relating to public policy, bankruptcy, insolvency and the relief of debtors and rules of Law governing specific performance, injunctive relief and other equitable remedies.

 

7.3 Brokerage. Except as set forth on Schedule 7.3, there are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Buyer.

 

7.4 Litigation. There are no actions, suits or proceedings currently pending or, to Buyer’s knowledge, threatened against Buyer or any of its Affiliates, at Law or in equity, before or by any Governmental Entity, which could interfere with Buyer’s ability to close this transaction.

 

7.5 Financing. Buyer has (and at Closing shall have) sufficient unrestricted cash or other sources of immediately available unrestricted funds to enable Buyer to consummate the transactions contemplated by this Agreement, to satisfy its obligations hereunder on and after the Closing Date and to make payment of all amounts to be paid by it under this Agreement on and after the Closing Date.

 

7.6 No Knowledge of Misrepresentations or Omissions. Buyer, including its agents and advisors, has no knowledge that any of the representations and warranties of Companies and/or the Shareholder in this Agreement are untrue or incorrect in any material respect.

 

7.7 No Other Representations or Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS Article 7 (AS QUALIFIED BY THE SCHEDULES HERETO), THE BUYER MAKES NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY.

 

  

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ARTICLE 8

BUYER’S CONDITIONS PRECEDENT TO CLOSING

 

The obligations of Buyer to consummate the transactions described in this Agreement are subject to the satisfaction, before the Effective Time, of the following conditions precedent, any of which may be waived in writing by Buyer.

 

8.1 Covenants to be Performed. The Shareholder, the Companies and the Companies’ Subsidiaries shall have performed in all material respects all of the covenants and agreements required to be performed by them under this Agreement at or prior to the Closing.

 

8.2 No Judgment, Decree or Order. There must not have been any judgment, decree or order entered after the date hereof by any Governmental Entity which would prevent the consummation of the Closing on the Closing Date.

 

8.3 Supporting Documents. Buyer shall have received the documents set forth below:

 

8.3.1 Certificate(s) representing all of the Shares, free and clear of all Liens, with any necessary federal, state and local transfer stamps affixed thereto, duly endorsed or accompanied by duly executed stock powers, in the form attached hereto as Exhibit 8.3.1;

 

8.3.2 Certificate(s) representing all of the ownership interests of the Companies’ Subsidiaries;

 

8.3.3 A certificate signed by an authorized officer of the Shareholder dated the Closing Date and certifying that (i) the representations and warranties of the Companies and the Shareholder set forth in Article 5 and Article 6 hereof are true and correct at and as of the Closing Date, as though then made (other than those representations and warranties that address matters as of particular dates, in which case such representations and warranties shall be true and correct as of such particular dates), except to the extent that failure of such representations and warranties to be true and correct as of such date do not result in a Material Adverse Effect, and (ii) as of the Closing Date, that condition set forth in Section 8.1 is satisfied.

 

8.3.4 Certificates of the Secretary or an Assistant Secretary of the Companies and the Companies’ Subsidiaries dated the Closing Date and certifying: (i) that attached thereto is a true and complete copy of the organizational documents (e.g., Articles of Incorporation/Organization and Bylaws/Operating Agreement) of such entity as in effect on the date of such certification; and (ii) that the organizational documents have not been amended since the date of the last amendment referred to in the organizational documents attached pursuant to subsection (i) above;

 

8.3.5 A certificate of the Secretary or an Assistant Secretary of the Shareholder dated the Closing Date and certifying that attached thereto is a true and complete copy of all resolutions adopted by the Managers of the Shareholder authorizing the execution, delivery and performance of this Agreement and the ancillary agreements and all transactions contemplated by this Agreement and that all such resolutions are in full force and effect as of the Closing Date; and

 

  

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8.3.6 Certificates of good standing for the Companies and the Companies’ Subsidiaries from the Secretary of State of the jurisdiction in which such entity was formed dated no more than five (5) days prior to Closing.

 

8.4 Satisfaction of Indebtedness; Release of Liens. Buyer shall have received correspondence or documentation reasonably acceptable to the Buyer evidencing the release and satisfaction of (i) all Indebtedness of the Companies and the Companies’ Subsidiaries (other than accounts payable) and (ii) all Liens (other than Permitted Liens) on all of the assets of the Companies and the Companies’ Subsidiaries.

 

8.5 Third Party Consents. All required third party consents/approvals to the consummation of the transactions contemplated hereby which are listed on Schedule 8.5 shall have been obtained.

 

8.6 No Material Adverse Effect.  There shall not have occurred any Material Adverse Effect between the date hereof and the Closing Date and a certificate of a duly authorized officer of the Shareholder shall have been delivered to Buyer to such effect.

 

8.7 Necessary Consents and Approvals.  Buyer and the Companies shall have obtained those new certificates of need, certificates of exemption, regulatory approvals, licenses, consents and permits to which the Companies and the Companies Subsidiaries are subject which are listed on Schedule 8.7 (“Necessary Consents and Approvals”) which are required by Law to be issued prior to or on Closing in order for the Buyer to be legally entitled to continue to provide services in the manner provided by the Company and the Company Subsidiaries prior to the Closing Date.

 

8.8 Transfer of Assets to Operating Newcos. The assets which are currently solely used in, and the operating liabilities which arose solely from, the operation of the home health businesses of the Excluded Companies, which collectively conduct home health operations in the States of Nebraska, Illinois and Kentucky at the locations set forth on Exhibit A hereto, shall have been transferred to the Operating Newcos.

 

ARTICLE 9

SHAREHOLDER’S CONDITIONS PRECEDENT TO CLOSING

 

The obligation of Shareholder to consummate the transactions described in this Agreement is subject to the satisfaction, before the Effective Time, of the following conditions precedent, any of which may be waived in writing by Shareholder:

 

9.1 Covenants to be Performed. The Buyer shall have performed in all material respects all of the covenants and agreements required to be performed by it under this Agreement at or prior to the Closing.

 

9.2 No Judgment, Decree or Order. There must not have been any judgment, decree or order entered after the date hereof by any Governmental Entity which would prevent the consummation of the Closing on the Closing Date.

 

9.3 Supporting Documents. Shareholder shall have received the documents set forth below:

 

  

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9.3.1 A certificate signed by an authorized officer of each Buyer dated the Closing Date and certifying that (i) the representations and warranties of the Buyer set forth in Article 7 hereof are true and correct at and as of the Closing Date, as though then made (other than those representations and warranties that address matters as of particular dates, in which case such representations and warranties shall be true and correct as of such particular dates), except to the extent that failure of such representations and warranties to be true and correct as of such date do not result in a Material Adverse Effect, and (ii) as of the Closing Date, that condition set forth in Section 9.1 is satisfied.

 

9.3.2 A certificate of the Secretary or an Assistant Secretary of each Buyer dated the Closing Date and certifying that attached thereto is a true and complete copy of all resolutions adopted by the Board of Directors of the Buyer authorizing the execution, delivery and performance of this Agreement and the ancillary agreements and all transactions contemplated by this Agreement and that all such resolutions are in full force and effect as of the Closing Date; and

 

9.3.3 Certificates of good standing for each Buyer from the Secretary of State of the jurisdiction in which such entity was formed dated no more than five (5) days prior to Closing.

 

9.4 Purchase Price. Buyer shall pay the Purchase Price as required in Article 4.

 

ARTICLE 10

PRE-CLOSING COVENANTS

 

10.1 Conduct of the Business.

 

10.1.1 Affirmative Covenants of the Companies. From the date hereof until the earlier of the Closing Date or the termination of this Agreement, unless the prior written consent of Buyer shall have been obtained (which consent shall not be unreasonably withheld, conditioned or delayed), and except as otherwise expressly contemplated herein, the Companies shall (and shall cause each of the Companies’ Subsidiaries to):

 

(i) Operate the Companies and each of the Companies’ Subsidiaries in accordance with all applicable Laws and only in the usual, regular, and ordinary course of business, consistent with past general practices and custom;

 

(ii) Use reasonable commercial efforts to preserve intact the rights, assets, properties, business organization, licenses, permits, Government Programs, Private Programs, customers and employee, supplier, patient, referral source and other relationships of the Companies and each of the Companies’ Subsidiaries;

 

(iii) Use reasonable commercial efforts to retain the services of the employees, agents and consultants of the Companies and each of the Companies’ Subsidiaries on terms and conditions not less favorable to the Companies and each of the Companies’ Subsidiaries than those existing prior to the date hereof and to ensure that there are no material adverse changes to employee relations of the Companies and each of the Companies’ Subsidiaries;

 

  

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(iv) Keep and maintain the properties and assets of the Companies and each of the Companies’ Subsidiaries in their present condition, repair and working order, except for normal depreciation and wear and tear, and maintain the Companies and each of the Companies’ Subsidiaries rights and licenses;

 

(v) Make available to the Buyer and its affiliates  true and correct copies of applicable internal management and control reports (including aging of accounts receivable, and listings of accounts payable) and financial statements directly related to the Companies and each of the Companies’ Subsidiaries;

 

(vi) As soon as reasonably practicable after they become available, but in no event more than thirty (30) days following the end of each calendar month, deliver to Buyer or its designated Affiliate true and complete copies of its monthly financial statements with respect to the Companies and each of the Companies’ Subsidiaries for each calendar month ending after the date of this Agreement and prior to Closing in the format historically utilized by the Companies and each of the Companies’ Subsidiaries;

 

(vii) Perform in all material respects all obligations under agreements relating to or affecting the assets, properties or rights of the Companies and each of the Companies’ Subsidiaries;

 

(viii) Keep in full force and effect present insurance policies or other comparable insurance coverage insuring the assets and properties used by the Companies and each of the Companies’ Subsidiaries; and

 

(ix) Notify the Buyer of (i) any event or circumstance which is reasonably likely to have a Material Adverse Effect or constitute a breach of any of the Shareholders or the Companies representations, warranties or covenants contained herein; (ii) any material unexpected change in the normal course of business or in the operation of the properties and assets of the Companies or any of the Companies’ Subsidiaries; and (iii) any governmental complaints, investigations, hearings, or adjudicatory proceedings (or communications indicating that the same may be contemplated) involving the Companies or any of the Companies’ Subsidiaries. The Companies shall keep the Buyer fully informed of such events and shall consult with the Buyer and its affiliates in connection with any proposed outcome.

 

Notwithstanding the foregoing or anything in Section 10.1.2, the Companies and the Companies’ Subsidiaries may take all actions reasonably required to do any of the following without violation or breach of any of the terms or provisions hereof: (a) use all available cash to repay any Indebtedness prior to the Closing; (b) transfer to the Companies and the Companies’ Subsidiaries those assets or rights which are solely used in, and the operating liabilities which arose solely from, the home health business, hospice, and private duty businesses operated through the Companies, the Companies’ Subsidiaries, and the Excluded Companies; and/or (c) transfer from the Companies and the Companies’ Subsidiaries those assets or rights which are not solely used in, and the operating liabilities which arose solely from, the home health business, hospice, and private duty businesses operated through the Companies, the Companies’ Subsidiaries, and the Excluded Companies.

 

  

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10.1.2 Negative Covenants of the Companies.  From the date hereof until the earlier of the Closing Date or the termination of this Agreement, the Companies shall not (and shall cause the Companies’ Subsidiaries not to) do any of the following without the prior written consent of the Buyer (which consent shall not be unreasonably withheld, conditioned or delayed):

 

(i) Issue, sell or redeem any of the Companies’ or any of the Companies’ Subsidiaries’ capital stock;

 

(ii) Issue, sell or redeem any securities convertible into, or options with respect to, warrants to purchase, or rights to subscribe for, any capital stock (as applicable) of the Companies or any Companies’ Subsidiaries;

 

(iii) Effect any stock dividend or stock split or pay any dividend with respect to the Shares (except for dividends in cash and dividends by the Companies’ Subsidiaries to the Companies);

 

(iv) Amend the Companies  or any of the Companies’ Subsidiaries’ certificate of incorporation, bylaws or charter or other organizational document, except for amendments required to comply with its obligations under this Agreement;

 

(v) Take any action outside the ordinary course that would (a) adversely affect the ability of any party to the transaction to obtain any consents required for the transactions contemplated thereby, or (b) adversely affect the ability of any party hereto to perform its covenants and agreements under this Agreement; or (c) adversely affect the ability of any party to consummate the transactions contemplated by this Agreement;

 

(vi) Impose, or suffer the imposition, on any of the rights, properties or assets of the Companies or any of the Companies’ Subsidiaries of any Lien or permit any such Lien to exist other than any statutory liens relating to obligations not yet due and payable;

 

(vii) Incur any Liability or obligation, except in the ordinary course of business and consistent with past practices;

 

(viii) Except for sales of products or services in the ordinary course of business and other than pursuant to this Agreement, sell, contribute or enter into any contract to sell or contribute, any interest in any of the rights, properties or assets of the Companies or any of the Companies’ Subsidiaries;

 

(ix) Purchase or acquire any assets or properties related to the Companies or any of the Companies’ Subsidiaries, whether real or personal, tangible or intangible, or sell or dispose of any assets or properties of the Companies or Companies’ Subsidiaries, whether real or personal, tangible or intangible, except in the ordinary course of business and consistent with past practices;

 

  

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(x) Grant any increase in compensation or benefits to the employees of the Companies or any of the Companies’ Subsidiaries, except in the ordinary course and in accordance with past practice; pay any severance or termination pay or any bonus to any of such employees other than pursuant to written policies or written contracts in effect as of the date hereof and disclosed to the Buyer; or enter into or amend any severance or employment agreements with employees of the Companies or any of the Companies’ Subsidiaries;

 

(xi) Enter into or amend any medical director agreements or agreements with physicians, or with anyone engaged as a medical director or physician, as the case may be, by the Companies or any of the Companies’ Subsidiaries;

 

(xii) Except for new hires in the ordinary course of business and current employees in the ordinary course of business, enter into any written employment agreement with any employees of the Companies or the Companies’ Subsidiaries;

 

(xiii) Commence any litigation involving any right, property, asset or Liability of the Companies or any of the Companies’ Subsidiaries other than in the ordinary course of business consistent with past practice, or settle any litigation involving any right, property, asset or Liability of the Companies or any of the Companies’ Subsidiaries for restrictions upon the operations of the Companies or any of the Companies’ Subsidiaries or material money damages;

 

(xiv) Except as required by Law or a determination of a Governmental Entity that is final, revoke or otherwise change any material election with respect to Taxes or Tax Returns of the Companies or any of the Companies’ Subsidiaries;

 

(xv) Except in the ordinary course of business and in a manner that is not material, modify, amend or terminate any contract related to or benefiting the Companies or any of the Companies’ Subsidiaries or waive, release, compromise or assign any rights or claims related to or benefiting the Companies or any of the Companies’ Subsidiaries; or

 

(xvi) Make or commit to make any capital expenditure, or enter into any lease of capital equipment as lessee or lessor, related to the Companies or the Companies’ Subsidiaries outside of budget in an amount in excess of $25,000 for all such items.

 

10.2 Access to Books and Records. During the period from the date hereof to the earlier of immediately prior to the Closing and the date that this Agreement is terminated in accordance with its terms, the Companies shall give, and shall cause their Affiliates to give, Buyer and its authorized representatives reasonable access to designated personnel, books and records of the Companies and the Companies’ Subsidiaries that are in the possession or under the control of the Companies and their Affiliates to the extent relating to the transition of the Company and the Companies’ Subsidiaries to Buyer; provided that any such access (i) shall be during normal business hours on reasonable notice, (ii) shall not, except as otherwise agreed in writing by the Companies, include sampling or testing of soil, sediment, surface or ground water and/or building material, (iii) shall not be required where such access would be prohibited or otherwise limited by, or would be in violation of, any applicable Law (including HIPAA) or agreement and (iv) shall not otherwise unreasonably interfere with the conduct of the business of the Companies and the Companies’ Subsidiaries.

 

  

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10.3 Conditions. During the period from the date hereof to the earlier of immediately prior to the Closing and the date that this Agreement is terminated in accordance with its terms, on and subject to the terms and conditions hereof, the Companies shall use their commercially reasonable efforts to cause the conditions set forth in Article 8 and Article 9 to be satisfied and to consummate the transactions contemplated herein, in each case as promptly as practicable after the date hereof.

 

10.4 Transition Services. On the Closing Date, BioScrip and LHC shall execute a transition services agreement in substantially the form attached hereto as Exhibit 10.4 (“Transition Services Agreement”). From the date of this Agreement until the Closing Date, BioScrip and LHC shall use good faith efforts to supplement and finalize the schedules to the Transition Services Agreement describing services, duration and price. In the event that BioScrip determines that it reasonably needs for the Companies and/or the Companies’ Subsidiaries to provide services on behalf of BioScrip or its Affiliates following the Closing, the parties agree in good faith to negotiate an agreement prior to Closing to provide for any such services, including reasonable compensation based on costs incurred by the Companies and/or the Companies’ Subsidiaries in connection with the provision of such services.

 

10.5 No-Shop. Unless and until this Agreement is terminated pursuant to Article 14 or upon the occurrence of the Closing, none of BioScrip, the Shareholder, the Companies, the Companies’ Subsidiaries, nor any of their respective Affiliates, officers, directors, partners, members, employees, agents, or representatives (each, a “Seller Party” and collectively, the “Seller Parties”)  shall: (i) solicit, initiate or encourage submission of proposals or offers from any Person relating to (a) any merger, stock purchase, asset purchase, joint venture, equity investment, or any other business combination relating to the Companies, any of the Companies’ Subsidiaries or any of their respective assets or (b) any transaction that would adversely affect the transactions contemplated by this Agreement; (ii) participate in any discussions or negotiations regarding, or furnish to any other Person, any information with respect to, or otherwise respond to, cooperate or encourage, any effort or attempt by any other Person to enter into any merger, stock purchase, asset purchase, joint venture, equity investment or any other business combination relating to the Companies, any of the Companies’ Subsidiaries or any of their respective assets which would adversely affect the transactions contemplated by this Agreement; (iii) without the prior written consent of Buyer, participate in any discussions or negotiations regarding the establishment of any management, medical director or similar agreement related to the Companies’ or any of the Companies’ Subsidiaries except as otherwise necessary or appropriate to satisfy any applicable regulatory requests, or (iv) approve or undertake any of the foregoing transactions.  If the any of the Seller Parties receives an offer or proposal relating to any merger, stock purchase, asset purchase, joint venture, equity investment or any other business combination relating to the Companies, any of the Companies’ Subsidiaries or any of their respective assets, such Seller Party shall notify Buyer of the receipt of such offer.

 

10.6 Insurance. The Shareholder shall maintain (or cause to be maintained) at its sole cost and expense continuing insurance coverage for the Companies and Companies’ Subsidiaries related to occurrences prior to Closing in amounts consistent with other coverages maintained by the Shareholder prior to the Closing.

 

  

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10.7 Resignation of Directors and Officers. The Shareholder shall secure the resignations of each director and officer of the Companies and the Companies’ Subsidiaries to be effective as of the Closing Date.

 

10.8 Formation of Holding Newcos and Operating Newcos. As soon as practicable following the execution of this Agreement and prior to Closing, the Shareholder shall form or cause to be formed Holding Newcos and Operating Newcos. In connection with the formation of Holding Newcos and Operating Newcos, the Shareholder shall provide Buyer with copies of the formation documents prior to filing and allow Buyer a sufficient opportunity to review and provide reasonable comments to such formation documents.

 

ARTICLE 11

COVENANTS OF BUYER

 

11.1 Access to Books and Records. From and after the Closing, Buyer shall, and shall cause the Companies and the Companies’ Subsidiaries to, provide the Shareholder and its Affiliates and their respective authorized representatives with reasonable access, during normal business hours, to the books, records (including accountants’ work papers), properties, facilities and employees of the Companies and the Companies’ Subsidiaries with respect to periods prior to the Closing Date and/or in connection with any matter relating to or arising out of this Agreement and/or any of the transactions contemplated hereby (whether or not relating to periods prior to the Closing Date). Unless otherwise consented to in writing by the Shareholder, Buyer shall not permit the Companies or the Companies’ Subsidiaries, for a period of ten (10) years following the Closing Date, to destroy, alter or otherwise dispose of any of its books and records, or any portions thereof, relating to periods prior to the Closing Date and/or matters relating to this Agreement and the transactions contemplated hereby without first giving at least thirty (30) days’ prior written notice to the Shareholder and offering to surrender to the Shareholder such books and records or such portions thereof.

 

11.2 Conditions. From the date hereof until the earlier to occur of the Closing Date and the date that this Agreement is terminated in accordance with its terms, on and subject to the terms and conditions hereof, Buyer shall use its commercially reasonable efforts to cause the conditions set forth in Article 8 and Article 9 to be satisfied and to consummate the transactions contemplated herein, in each case as promptly as practicable after the date hereof.

 

11.3 Contact with Customers, Suppliers, Etc. Prior to the Closing, Buyer shall not contact and/or communicate with, and shall cause its Affiliates, representatives, agents and other advisors not to, contact and/or communicate with any customer, supplier, vendor, payor, patient, referral source or other material business relations, of the Companies and/or the Companies’ Subsidiaries, except with the prior written consent of the Shareholder. The Shareholder and Buyer shall cooperate and coordinate with respect to jointly contacting and communicating with employees, officers, directors, patients, payors, referral sources, or other material business relations of the Companies and/or the Companies’ Subsidiaries in connection with the transactions contemplated hereby or otherwise with respect to matters pertaining to the Companies, the Companies’ Subsidiaries and/or any of their respective businesses. Notwithstanding the foregoing, Buyer and its Affiliates may communicate with key members of senior management of the Companies and the Companies Subsidiaries (including, but not limited to, the Vice President of Operations, Regional Managers and similarly situated members of management) in connection with the transactions contemplated hereby or otherwise with respect to matters pertaining to the Companies, the Companies’ Subsidiaries and/or any of their respective businesses, without obtaining the prior written consent of the Shareholder.

 

  

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11.4 Confidentiality. Except as specifically provided in Section 12.5 hereof, Buyer acknowledges that it and its representatives and advisors remain bound by the letter agreement regarding confidentiality dated as of December 6, 2013 (the “Confidentiality Agreement”), from BioScrip, Inc. to LHC Group, Inc. Without limiting the foregoing, and except as required by applicable Law or the rules of any applicable stock exchange, prior to the Closing Date and after any termination of this Agreement, Buyer shall hold and shall cause its Affiliates, officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, all documents and information concerning the Companies or the Companies’ Subsidiaries or any of their Affiliates furnished to Buyer or any of its Affiliates, officers, directors, employees, accountants, counsel, consultants, advisors and/or agents in connection with the transactions contemplated by this Agreement in the manner specified in the Confidentiality Agreement.

 

11.5 Employment; Employee Benefits. Subject to the other provisions of this Section 11.5, immediately following the execution of this Agreement, Buyer and its Affiliates shall assess the staffing needs for the business of the Companies and the Companies’ Subsidiaries following the Closing. Any terminations as a result of such assessment shall be made by the Companies and/or the Companies’ Subsidiaries to be effective as of or after the Closing. Buyer covenants and agrees to be responsible for all obligations and liabilities with respect to or arising out of such terminations and any severance payments owed to persons who are not selected by Buyer to continue employment with the Companies and/or the Companies’ Subsidiaries following the Closing. Notwithstanding anything herein to the contrary, notices of terminations as a result of Buyer’s assessment shall be provided on or after the Closing, except to the extent otherwise agreed by the Buyer and the Shareholder. Each employee of the Companies or the Companies’ Subsidiaries that continues with the business of the Companies or the Companies’ Subsidiaries following the Closing will be provided with a wage, salary and benefit program that is similar to the wage, salary and benefit programs in place with respect to similarly situated employees of Buyer and its Affiliates immediately prior to the Closing Date (“Comparable Benefits”), to the extent such Comparable Benefits are available to such employees of the Companies or the Companies’ Subsidiaries under Buyer’s benefit programs. Comparable Benefits shall include, but not be limited to, extended illness benefit banks in existence as of the Closing; paid time off banks in existence as of the Closing; welfare benefit plans in existence as of the Closing; and retirement benefit plans in existence as of the Closing. Except where it would violate applicable laws or require Buyer to increase benefits to other employees, each employee will be credited with service with the Companies, any Companies’ Subsidiaries, Infusion Therapy Specialists, Inc., Scott-Wilson, Inc., or Option Health, Ltd., as applicable, for purposes of eligibility, vesting and determination of level of benefit purposes (but as to accrual of benefits, only with respect to paid time off and 401(k) matters), except to the extent such credit would result in a duplication of benefits. In addition, and without limiting the generality of the foregoing: (a) each employee shall be immediately eligible to participate, without any waiting time, in any and all employee benefit plans sponsored by Buyer and its Affiliates for the benefit of employees (except with respect to Buyer’s 401(k) Plan and Employee Stock Purchase Plan which provide for waiting periods (which do not exceed ninety (90) days) that cannot be waived) (such plans, collectively, the “New Plans”); and (b) for purposes of each New Plan providing medical, dental, pharmaceutical or vision benefits to any employee, Buyer shall cause all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such employee and his or her covered dependents (as the term “dependents” is defined under the New Plans) (unless such exclusions or requirements are lawful and applied under a comparable employee benefit plan in which such employee participated immediately before the Closing Date (the “Old Plans”), and such employee and his or her covered dependents (as the term “dependents” is defined under the New Plans) shall be credited under the New Plans for any eligible expenses incurred during that portion of the plan year of the Old Plan ending on the date such employee’s participation in the corresponding New Plan begins for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents (as the term “dependents” is defined under the New Plans) for the applicable plan year as if such amounts had been paid in accordance with such New Plan. For avoidance of doubt, the parties agree and acknowledge that Buyer shall not assume the Old Plans or any other Employee Benefit Plan maintained by or on behalf of the Companies and/or the Companies’ Subsidiaries as part of the transactions contemplated by this Agreement, nor any liabilities or obligations under such Old Plans and Employee Benefit Plans. The Buyer’s retirement plan(s) shall accept rollovers of retirement plan accounts, including any participant loans, of the employees of the Companies and the Companies’ Subsidiaries held in any of the Old Plans. The employees of the Companies and the Companies’ Subsidiaries shall not be deemed direct or third party beneficiaries of the covenants contained in this Section 11.5.

 

  

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11.6 WARN Act Notice. At and for a period of ninety (90) days after the Closing Date, Buyer shall not, and shall cause the Companies and the Companies’ Subsidiaries not to, take any action as would trigger any Liability under the WARN Act or any similar Laws. Buyer shall be solely responsible for providing any notice or other filing required under the WARN Act or any similar Laws in respect of the termination in connection with or after the Closing of the employment of any employee of the Companies and the Companies’ Subsidiaries, and shall indemnify and hold the Shareholder and its Affiliates harmless from any Liability arising from any failure of Buyer to comply fully with this Section 11.6.

 

11.7 Notification. Prior to the Closing, upon discovery of any material inaccuracy of the representations and warranties contained in this Agreement, Buyer shall promptly notify the Companies and the Shareholder of such inaccuracies.

 

ARTICLE 12

ADDITIONAL COVENANTS AND AGREEMENTS

 

12.1 Acknowledgment by Buyer.

 

12.1.1 Buyer acknowledges and agrees that it has conducted to its satisfaction, an independent investigation and verification of the financial condition, results of operations, assets, liabilities, properties and projected operations of the Companies and the Companies’ Subsidiaries and, in making its determination to proceed with the transactions contemplated by this Agreement, Buyer has relied on the results of its own independent investigation and verification and the representations and warranties of the Companies and the Companies’ Subsidiaries expressly and specifically set forth in this Agreement (as qualified by the Schedules hereto). BUYER ACKNOWLEDGES AND AGREES THAT SUCH REPRESENTATIONS AND WARRANTIES BY THE COMPANIES AND THE COMPANIES’ SUBSIDIARIES CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SHAREHOLDER TO BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND BUYER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ANY OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE EXPRESS OR IMPLIED (INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION OR PROJECTIONS, RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OF THE COMPANIES) ARE SPECIFICALLY DISCLAIMED BY THE COMPANIES AND THE SHAREHOLDER.

 

  

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12.2 Tax Matters.

 

12.2.1 Responsibility for Filing Tax Returns.

 

(i) Except as otherwise provided herein, Buyer, at its sole cost and expense, shall cause the Companies and each of the Companies’ Subsidiaries to prepare and timely file all Tax Returns of the Companies and each of the Companies’ Subsidiaries due after the Closing Date. To the extent that a Tax Return of any Company or any of the Companies’ Subsidiaries due after the Closing Date relates to a Pre-Closing Tax Period or a Straddle Period, such Tax Return shall be prepared by Shareholder or one of its Affiliates consistent with past practices (“Shareholder Prepared Return”) and any Taxes on such returns attributable to a Pre-Closing Tax Period or the portion of the Straddle Period ending on the Closing Date shall be paid by the Shareholder or included as a Current Liability. At least ninety (90) days prior to the due date of any Shareholder Prepared Return, Shareholder shall provide a draft of such Tax Return to the Buyer for the Buyer’s review and comment. The Buyer shall cause the Companies or applicable Companies’ Subsidiaries to file such Shareholder Prepared Returns with only those changes as may be agreed to in writing in advance by Shareholder.  Except for Buyer Closing Date Transactions, Shareholder or BioScrip shall include the income of each Company and the Companies’ Subsidiaries (including any deferred items triggered into income under Regulation 1.1502-13, any excess loss account taken into income under Regulation 1.1502-19 and the effects of a Section 338(h)(10) Election) on Shareholder’s or BioScrip’s consolidated federal income Tax Returns for all periods through the Closing Date and Shareholder or BioScrip shall pay any Tax attributable to such income.

 

(ii) Buyer shall not, and shall not allow Companies or any Companies’ Subsidiaries, to amend any Tax Return of the Companies and the Companies’ Subsidiaries for a Pre-Closing Tax Period or Straddle Period or otherwise initiate (or otherwise participate in) any other Shareholder Approved Tax Matter without the prior written permission of the Shareholder, which permission shall not be unreasonably withheld in instances where such action results in a Tax Loss for which no indemnity is owed by Shareholder.

 

  

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(iii) Buyer, the Companies and the Shareholder, agree with respect to certain Tax matters as follows:

 

(A) Buyer, the Companies and the Companies’ Subsidiaries shall cooperate to make and/or implement all elections and decisions with respect to whether to carry back or carry forward a net operating loss or other Tax attribute or a Tax credit incurred  or realized in a Pre-Closing Tax Period by the Companies or any Companies’ Subsidiaries consistent with the elections and decisions  taken by the Companies, the Companies’ Subsidiaries, the Shareholder, or its Affiliates prior to Closing and to minimize the amount of Taxes payable by the Shareholder or its Affiliates for Pre-Closing Tax Periods.

 

(B) Buyer, the Companies and the Companies’ Subsidiaries shall treat any gains, income, deductions, losses, or other items realized by the Companies or the Companies’ Subsidiaries resulting from any Buyer Closing Date Transaction as occurring on the day after the Closing Date and each party hereto shall (and cause the Companies or the Companies’ Subsidiaries to) utilize the “next day rule” in Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) (or any similar provision of state, local, or non-U.S. applicable Law) for purposes of reporting such items on applicable Tax Returns.

 

(C) Neither Buyer, the Companies nor the Companies’ Subsidiaries shall make an election under Treasury Regulation Section 1.1502-76(b)(2) (or any similar provision of state, local or non-U.S. applicable Law) (or allow the Companies or the Companies’ Subsidiaries) to ratably allocate items incurred by the Companies or the Companies’ Subsidiaries.

 

(D) To treat any indemnification payments as adjustments to the Purchase Price.

 

(E) To the extent available and at Buyer’s option, BioScrip, the Shareholder and the Companies, as applicable, shall join with Buyer in making a timely election under Section 338(h)(10) of the Code (and any corresponding election under state, local, and foreign Law) with respect to the purchase and sale of the Shares hereunder and with respect to each Company Subsidiary that is a corporation (collectively, a “Section 338(h)(10) Election”). Notwithstanding Section 12.2.1(iii)(B), Shareholder shall pay any Tax attributable to the making of the Section 338(h)(10) Election and Shareholder shall indemnify Buyer and the Company against any adverse consequences arising out of any failure to pay any such Taxes.  If a Section 338(h)(10) Election is made, the Shareholder, the Companies, and Buyer agree that the Purchase Price and the liabilities of the Companies and the Companies’ Subsidiaries (plus other relevant items) shall be allocated among the assets of the Companies and the Companies’ Subsidiaries for all purposes (including Tax and financial accounting) as shown on the allocation schedule (the “Allocation Schedule”). A draft of the Allocation Schedule shall be prepared by Buyer and delivered to Shareholder within thirty (30) days following the Closing Date for its approval. If Shareholder notifies Buyer in writing that Shareholder objects to one or more items reflected in the Allocation Schedule, Shareholder and Buyer shall negotiate in good faith to resolve such dispute; provided, however, that if Shareholder and Buyer are unable to resolve any dispute with respect to the Allocation Schedule within fifteen (15) days following the Closing Date, such dispute shall be resolved by the Independent Auditor. The fees and expenses of such Independent Auditor shall be borne equally by Shareholder and Buyer. Buyer, the Companies and Shareholder shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with the Allocation Schedule. Any adjustments to the Purchase Price pursuant to Section 4.2 herein shall be allocated in a manner consistent with the Allocation Schedule.

 

  

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Unless otherwise required by a determination of a Governmental Entity that is final, neither Buyer nor the Companies shall file a Tax Return (and Buyer and the Companies shall not allow the Companies’ Subsidiaries to file a Tax Return) that is inconsistent with any agreement pursuant to this Section 12.2.1(iii), and neither Buyer nor the Companies shall take any position (and Buyer and the Companies shall not allow the Companies’ Subsidiaries to take any position) during the course of any Tax Contest or other audit or proceedings that is inconsistent with any agreement pursuant to this Section 12.2.1(iii).

 

12.2.2 Straddle Period Tax Returns. To the extent permissible under applicable Laws, the parties agree to elect to have each Tax year of the Companies and the Companies’ Subsidiaries end on the Closing Date and, if such election is not permitted or required in a jurisdiction such that the Companies and/or any Companies’ Subsidiaries is required to file a Tax Return for a Straddle Period, the parties agree to use the following conventions for determining the amount of Taxes attributable to the portion of the Straddle Period ending on the Closing Date: (A) in the case of property Taxes and other similar Taxes imposed on a periodic basis, the amount attributable to the portion of the Straddle Period ending on the Closing Date shall be determined by multiplying the Taxes for the entire Straddle Period by a fraction, the numerator of which is the number of calendar days in the portion of the period ending on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period; and (B) in the case of all other Taxes (including income Taxes, sales Taxes, employment Taxes, withholding Taxes), the amount attributable to the portion of the Straddle Period ending on the Closing Date shall be determined as if the Companies and/or such Companies’ Subsidiaries filed a separate Tax Return with respect to such Taxes for the portion of the Straddle Period ending as of the end of the day on the Closing Date using a “closing of the books methodology.” For purposes of clause (B), any item determined on an annual or periodic basis (including amortization and depreciation deductions) shall be allocated to the portion of the Straddle Period ending on the Closing Date based on the relative number of days in such portion of the Straddle Period as compared to the number of days in the entire Straddle Period.

 

12.2.3 Cooperation on Tax Matters. BioScrip, the Shareholder and Buyer shall (and Buyer shall cause the Companies and the Companies’ Subsidiaries) cooperate to carry out the provisions of this Article 12, including but not limited to, (i) assisting in the preparation and timely filing of any Tax Return of the Companies and the Companies’ Subsidiaries; (ii) assisting in any audit or other proceeding with respect to the Tax Returns or Taxes of the Companies and the Companies’ Subsidiaries; (iii) making available any information, records or other documents relating to any Taxes or Tax Returns of the Companies and the Companies’ Subsidiaries; (iv) providing any information required to allow the Shareholder, Buyer, the Companies or any Companies’ Subsidiaries to comply with any information reporting contained in the Code or other applicable Laws; (v) timely making any elections required for a Section 338(h)(10) Election; and (vi) providing certificates or forms, and timely execute any Tax Return, that are necessary or appropriate to establish an exemption for (or reduction in) any Transfer Tax.

 

  

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12.2.4 Transfer Taxes. Buyer will pay, and will indemnify and hold the Shareholder harmless against, any documentary, stamp, stock transfer, or similar Tax imposed on the Companies, the Companies’ Subsidiaries or one or more Shareholder as a result of the transactions contemplated by this Agreement and any related penalties or interest (collectively, “Transfer Taxes”).

 

12.2.5 Tax Contests.

 

(i) If any Governmental Entity issues to the Companies or any Companies’ Subsidiaries (1) a notice of its intent to audit or conduct another proceeding with respect to a Tax Return or Taxes of the Companies or any Companies’ Subsidiaries for any Pre-Closing Tax Period or Straddle Period or (2) a notice of deficiency for Taxes for any such period, Buyer shall notify the Shareholder of its receipt of such communication from the Governmental Entity within ten (10) days of receipt and provide the Shareholder with copies of all correspondence and other documents received from the Governmental Entity. The Companies and such Companies’ Subsidiaries, as applicable, shall control any audit or other proceeding in respect of any Taxes or Tax Returns of the Companies and such Companies’ Subsidiaries (a “Tax Contest”); provided, however, (1) the Shareholder, at the Shareholder’ sole cost and expense, shall have the right to control (including the settlement or resolution thereof and the selection of counsel) or  participate in any Tax Contest to the extent it relates to a Pre-Closing Tax Period and participate in any Tax Contest to the extent it relates to a Straddle Period; and (2) Buyer shall not, and shall not allow the Companies and any Companies’ Subsidiaries, to settle, resolve or abandon a Tax Contest (whether or not the Shareholder participates in or controls such Tax Contest) for a Pre-Closing Tax Period or Straddle Period without the prior written permission of the Shareholder (which shall not be unreasonably withheld, delayed or conditioned).

 

(ii) If the Shareholder elects to control a Tax Contest for a Pre-Closing Tax Period, (1) the Shareholder shall notify Buyer of such intent; (2) Buyer shall promptly complete and execute, and promptly cause the Companies, the Companies’ Subsidiaries or other Buyer Indemnified Party, as applicable, to complete and execute, any powers of attorney or other documents and take other reasonable actions that the Shareholder requests to allow the Shareholder to control such Tax Contest; (3) prior to the Shareholder taking control, Buyer shall, and shall cause the Companies or the Companies’ Subsidiaries, as applicable, to control such Tax Contest diligently and in good faith and after the Shareholder takes control, the Shareholder shall control such Tax Contest in good faith; and (4) while it controls a Tax Contest, the Shareholder shall (A) keep the Buyer reasonably informed regarding the status of such Tax Contest; (B) allow the Buyer, the Companies or any Companies’ Subsidiaries, at Buyer’s sole cost and expense, to participate in such Tax Contest; and (C) not settle, resolve, or abandon any such Tax Contest if such settlement, resolution, or abandonment would result in any Buyer Indemnified Party incurring any material Tax that the Shareholder are not obligated to pay or indemnify under this Agreement without the prior written consent of the Buyer (which shall not be unreasonably withheld, delayed, or conditioned).

 

  

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(iii) If the Shareholder elects to participate in a Tax Contest, (1) the Shareholder shall notify Buyer of such intent; (2) Buyer shall control, or cause the Companies or the Companies’ Subsidiaries, as applicable, to control, such Tax Contest diligently and in good faith; and (3) Buyer shall (and shall cause the Companies and the Companies’ Subsidiaries to) promptly take all actions necessary to allow the Shareholder (and its counsel) to fully participate in such Tax Contest; and (4) if requested by the Shareholder, Buyer shall settle (or cause the Companies or the applicable Companies’ Subsidiaries, as applicable, to settle) the Tax Contest on terms acceptable to the Governmental Entity and the Shareholder (provided that such settlement will not result in a Buyer Indemnified Party incurring any material Tax that the Shareholder are not required to pay under this Agreement).

 

(iv) If the Shareholder does not control or participate in a Tax Contest (whether by election or otherwise) that relates to a Pre-Closing Tax Period or Straddle Period, (1) Buyer shall control, or cause the Companies or the applicable Companies’ Subsidiaries, as applicable, to control such Tax Contest diligently and in good faith; and (2) Buyer shall keep the Shareholder reasonably informed regarding the status of such Tax Contest; and (3) if requested by the Shareholder, Buyer shall settle (or cause the Companies and/or the applicable Companies’ Subsidiaries, as applicable, to settle) the Tax Contest on terms acceptable to the applicable Governmental Entity and the Shareholder (provided that such settlement will not result in any Buyer Indemnified Party incurring any Taxes that the Shareholder is not required to pay under this Agreement).

 

12.2.6 Tax Refunds. All refunds of Taxes (other than refunds of Transfer Taxes or refunds generated by the carryback of losses or credits attributable to periods after the Closing Date) of the Companies or any Companies’ Subsidiaries for any Pre-Closing Tax Period (or portion of a Straddle Period ending on the Closing Date as determined in accordance with the same principles provided for in Section 12.2.2) (whether in the form of cash received or a credit or offset against Taxes otherwise payable) shall be the property of the Shareholder to the extent such refund was not included as an asset in the computation of the Final Closing Date Net Working Capital. To the extent that Buyer, the Companies or any Companies’ Subsidiaries receives a refund that is the property of the Shareholder, Buyer shall pay the amount of such refund (and interest received from the Governmental Entity) to the Shareholder for distribution to the Shareholder in accordance with the terms of this Agreement. The amount due to the Shareholder shall be payable to the Shareholder ten (10) days after receipt of the refund from the applicable Governmental Entity (or, if the refund is in the form of credit or offset, ten (10) days after the due date of the Tax Return claiming such credit or offset). Buyer shall use commercially reasonable efforts to claim (and shall cause the Companies and each Companies’ Subsidiaries to use commercially reasonable efforts to claim) any refunds that will give rise to a payment to, or on behalf of, the Shareholder under Section 12.2.6.  If any such refund or credit is subsequently reversed by such Governmental Entity, Shareholder shall repay such amount within ten (10) days of notice from Buyer.

 

  

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12.2.7 Termination of Tax Sharing Agreements.  Any tax sharing agreement between the Companies, the Company Subsidiaries and any other member of BioScrip Inc.’s consolidated group is terminated as of the Closing Date and shall have no further effect for any taxable year (whether the current year, future year or a past year).  Shareholder agrees to indemnify Buyer from and against any liability under such tax-sharing agreements.

 

12.2.8 Indemnity for Consolidated Tax Liability. Shareholder agrees to indemnify Buyer from and against any liability the Companies or the Company Subsidiaries may have resulting from, arising out of, relating to, in the nature of, or caused by any liability of the Companies or any Company Subsidiary for Taxes of any person under Regulation 1.1502-6 (or any similar provision under state, local or foreign law).

 

12.3 Further Assurances. From time to time, as and when requested by any party hereto and at such requesting party’s expense, any other party hereto shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as the requesting party may reasonably deem necessary or desirable to evidence and effectuate the transactions contemplated by this Agreement on and subject to the terms and conditions hereof. Without limiting the generality of the foregoing, LHC and Buyer shall take such actions (and following Closing shall cause the Companies and Companies’ Subsidiaries to take such actions), and BioScrip and the Shareholder shall assist LHC and Buyer with taking such actions, as are necessary in order to obtain full releases of all guarantees by BioScrip or its Affiliates with respect to the liabilities, operations, or business of the Companies and Companies’ Subsidiaries following the Closing.

 

12.4 Restrictive Covenants

 

12.4.1 Non-Disclosure of Trade Secrets and Confidential Information.

 

(i) None of BioScrip, the Shareholder, its Affiliates, or any of their respective officers, directors, partners, members, or employees (each, a “Shareholder Party” and collectively, the “Shareholder Parties”) shall, at any time after the Effective Date, directly or indirectly transmit or disclose any Trade Secret to any Person and shall not make use of any such Trade Secret, directly or indirectly, for its, his or her own benefit, without the prior written consent of Buyer.

 

(ii) No Shareholder Party shall, at any time after the Effective Date, directly or indirectly transmit or disclose any Confidential Information to any Person or make use of any such Confidential Information, directly or indirectly, for its, his or her own benefit without the prior written consent of Buyer.

 

  

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(iii) Notwithstanding Sections 12.4.1(i) and 12.4.1(ii) above, any Person may disclose or use any Trade Secret or Confidential Information to the extent, and only to the extent, that such Trade Secret or Confidential Information (a) is, or becomes part of, the public domain other than as a result of any violation by a Shareholder Party under this Agreement; (b) is required to be disclosed by law, provided that, to the extent practicable, the disclosing or using party must give Buyer reasonable advance written notice of the proceeding resulting in such order, so that Buyer may seek a protective order if Buyer chooses to do so; or (c) is provided to the Shareholder Party by a third party who, to the Shareholder Party’s knowledge, has not done so in breach of a confidentiality obligation of that third party.

 

(iv) Shareholder shall, and shall cause each other Shareholder Party to, convey to Buyer all Trade Secrets and Confidential Information and shall not retain (or cause any Shareholder Party to retain) any copies of any such materials after the Effective Date, provided, however, that no Shareholder Party shall be required to destroy electronic copies of any Trade Secrets or Confidential Information that is created and/or maintained pursuant to such Shareholder Party’s standard electronic backup and archival procedures.

 

(v) The restrictions of this Section 12.4.1 shall apply regardless of whether the Trade Secret or Confidential Information is in written, graphic, computer, recorded, photographic or any machine-readable form, is orally conveyed to the Shareholder Party.

 

(vi) Notwithstanding anything herein to the contrary, the Shareholder Parties may retain a copy of all Confidential Information related to the transactions contemplated under this Agreement (including, but not limited to, all documentation provided to Buyer through the Intralinks dataroom) and all Trade Secrets shared with Buyer in connection with the transactions contemplated under this Agreement solely for purposes of defending or asserting any claim related to this Agreement.

 

12.4.2 Non-Competition.  Shareholder acknowledges that the Confidential Information in the possession of any Shareholder Party would enable such Shareholder Party to establish goodwill with the patients, customers and potential customers, suppliers, and sources or potential sources of referrals who provide products and services on behalf of the Companies and each of the Companies’ Subsidiaries or who receive services from the Companies or the Companies’ Subsidiaries and that the Confidential Information constitutes a valuable asset of the Companies and the Companies’ Subsidiaries.  Shareholder further acknowledges that it has developed relationships with certain of the Companies’ and the Companies’ Subsidiaries’ patients and potential patients, suppliers, contractors or potential contractors, consultants or potential consultants, and sources or potential sources of referrals.  Accordingly, BioScrip and Shareholder will (and shall cause each Shareholder Party to) comply with the provisions of this Section 12.4.2 for the period beginning on the Effective Date and ending on the third (3rd) anniversary thereof.  During such three-year period, BioScrip and Shareholder agree that no Shareholder Party shall directly or indirectly engage in, render services to or become interested in any manner, as manager, employee, officer, consultant, or partner, or through ownership (other than holding less than two percent (2%) of the outstanding equity securities of a Person having securities that are listed for trading on a national securities exchange), or otherwise, either alone or in association with others, in any Person that solely provides services that are similar to or competitive with the services provided by the Companies or the Companies’ Subsidiaries, which restrictions shall be applicable within: (i) the Mississippi counties set forth on Exhibit 12.4.2; (ii) the Tennessee counties set forth on Exhibit 12.4.2; (iii) the Kentucky counties set forth on Exhibit 12.4.2; (iv) the Nebraska counties set forth on Exhibit 12.4.2; and (v) the Illinois counties set forth on Exhibit 12.4.2 (collectively, the “Restricted Territory”). For the avoidance of doubt and notwithstanding anything herein to the contrary, nothing herein shall prohibit a Shareholder Party from (i) acquiring and thereafter operating a business (including, but not limited to, a predominantly home infusion business) which includes as a component a home health, hospice, and/or private duty business which operates within the Restricted Territory, provided that such home health, hospice, and/or private duty business either (a) accounts for less than 10% of the revenue of the acquired business, or (b) is divested as soon as commercially practicable, but in no event later than  twelve (12) months following the acquisition; (ii) providing non-Medicare certified nursing services within the Restricted Territory in connection with the Shareholder Parties’ businesses that are not being sold under this Agreement (including, but not limited to, the Shareholder Parties’ home infusion, medical supplies, and transitional care businesses), or (iii) jointly marketing the Shareholder Parties’ businesses that are not being sold under this Agreement (including, but not limited to, the Shareholder Parties’ home infusion, medical supplies, and transitional care businesses) or otherwise collaborating or joint venturing with an unrelated provider or supplier that operates, or has an Affiliate which operates, a home health, hospice, and/or private duty business (including, but not limited to, health systems); provided that in conjunction with any such collaboration or joint venture the Shareholder Parties’ may not provide home health, hospice, and/or private duty services within the Restricted Territory during the Restricted Period, but the collaboration or joint venture may provide such services.

 

  

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12.4.3 Non-Solicitation, Non-Interference and No-Hire.

 

(i) Shareholder acknowledges and agrees that valuable relationships have been established between the Companies and the Companies’ Subsidiaries and certain Persons, including, without limitation, customers, patients, and physicians.  Shareholder further acknowledges and agrees that the aforementioned relationships constitute a valuable asset of the Companies and the Companies’ Subsidiaries and constitute a significant portion of the goodwill of such entities that is being purchased by Buyer pursuant to this Agreement.  Accordingly, Shareholder agrees that for a period of three (3) years after the Effective Date, no Shareholder Party shall, without the prior written consent of Buyer, directly or indirectly, solicit, divert, take away or attempt to solicit, divert or take away any customer, patient, physician or other Person having business or patient relations with the Companies or the Companies’ Subsidiaries for the purpose of providing services that are similar to or competitive with the services provided by the Companies or the Companies’ Subsidiaries.  Shareholder further agrees that, for a period of three (3) years after the Effective Date, no Shareholder Party shall, induce or attempt to induce any customer, patient, physician, supplier or other Person having business or patient relations with the Companies or the Companies’ Subsidiaries to breach an existing contract with the Companies or the Companies’ Subsidiaries or take any other action intended to damage the relationship between any customer, patient, physician, supplier or other Person having business relations with the Companies or the Companies’ Subsidiaries. For the avoidance of doubt, nothing herein shall prohibit a Shareholder Party from calling upon or providing services (including, but not limited to, nursing services) to any customer, patient, physician or other Person, which  had business or patient relations with the Shareholder Parties’ businesses that are not being sold under this Agreement (including, but not limited to, the Shareholder Parties’ home infusion businesses).

 

  

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(ii) Shareholder acknowledges and agrees that the Companies and the Companies’ Subsidiaries have provided healthcare services through a network of persons that includes both persons actually employed by the Companies and the Companies’ Subsidiaries (“Employees”) as well as other non-employee healthcare providers, including but not limited to physicians, physician groups, nurses, hospitals, contractors and consultants (the “Providers”), that have contracted with the Companies and the Companies’ Subsidiaries to provide healthcare services.  Shareholder further acknowledges and agrees that the arrangements, agreements and relationships with the Providers and the services provided by such Providers are integral to the operations of the Companies and the Companies’ Subsidiaries and that the loss of such arrangements, agreements and relations would result in irreparable damages to Buyer.  Accordingly, Shareholder agrees that, for a period of three (3) years after the Effective Date, no Shareholder Party shall, without the prior written consent of Buyer, hire, engage or solicit any Employee who is employed by the Companies and the Companies’ Subsidiaries as of the Effective Date for a period of 12 months following their termination of employment with the Companies or the Companies’ Subsidiaries; provided, however, that the foregoing shall not prohibit any Shareholder Party from (a) posting a general public advertisement for employment not specifically directed at such Employees and hiring any such Employee who responds to such general public advertisement; or (b) soliciting and/or hiring any Employee following Buyer’s determination to terminate such Employee.  Shareholder further agrees that, for a period of three (3) years after the Effective Date, no Shareholder Party shall, without the prior written consent of Buyer, hire, engage or solicit any Provider who is engaged  by the Companies and the Companies’ Subsidiaries as of the Effective Date, for the purpose of assisting or creating a relationship with any business entity that is similar to or competitive with the Companies or the Companies’ Subsidiaries within the Restricted Territory for a period of 12 months following their termination of engagement with the Companies or the Companies’ Subsidiaries; provided, however, that the foregoing shall not prohibit any Shareholder Party from (a) hiring, engaging or soliciting any Provider that may provide health care services on behalf of Buyer to patients of Buyer, in connection with the Shareholder Parties’ businesses within the Restricted Territory that are not being sold under this Agreement (including, but not limited to, the Shareholder Parties’ home infusion businesses); or (b) soliciting and/or hiring any Provider following Buyer’s determination to terminate such Provider.

 

12.5 Public Announcements. Except with respect to issuances required by applicable Law or the rules of any applicable stock exchange, the parties hereto shall not issue any non-required report, statement or press release or otherwise make any other public statement with respect to this Agreement and the transactions contemplated hereby without prior consultation with and approval (which shall not be unreasonably withheld) of the other parties. The parties acknowledge and agree that each party intends to make a public announcement upon the execution and the closing of this Agreement. Each party agrees to provide the other party with a prior draft of such public announcement, which shall be subject to approval of the other parties to the extent required under, and in accordance with, the terms of this Section 12.5.

 

  

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12.6 Access to Books and Records. From and after the Closing, Shareholder shall, and shall cause its Affiliates to, provide Buyer, the Companies and the Companies’ Subsidiaries and their respective authorized representatives with reasonable access, during normal business hours, to all Shareholder and Shareholder’s Affiliates’ books and records to the extent pertaining to the Companies and the Companies’ Subsidiaries, including, but not limited to those records, reporting systems and platforms identified on Schedule 12.6, with respect to periods prior to the Closing Date to the extent such access does not violate any Laws and to the extent reasonably necessary for Buyer, the Companies and/or the Companies’ Subsidiaries to have access to such information . Unless otherwise consented to in writing by Buyer, Shareholder shall not, and shall cause its Affiliates not to, for a period of ten (10) years following the Closing Date, destroy, alter or otherwise dispose of any of its books and records, including, but not limited to those records, reporting systems and platforms identified on Schedule 12.6, pertaining to the Companies and/or the Companies’ Subsidiaries, or any portions thereof, relating to periods prior to the Closing Date without first giving at least thirty (30) days’ prior written notice to Buyer and offering to surrender to Buyer, at Buyer’s sole cost and expense, such books and records or such portions thereof.

 

ARTICLE 13

INDEMNIFICATION

 

13.1 Survival Period. The representations, warranties, covenants and agreements of the Companies, the Shareholder and Buyer set forth in this Agreement shall survive the Closing for a period beginning on the Closing Date and ending on the date that is eighteen (18) months following the Closing Date and shall thereafter be of no further force or effect; provided, however, that: (i) the representations and warranties provided for in Sections 5.1, 6.1 and 7.1 (Organization and Corporate Power), Sections 5.2, 6.2 and 7.2 (Authorization), and Section 5.4 (Capitalization) (collectively, the “Fundamental Representations”) shall survive the Closing indefinitely; (ii) the representations and warranties provided for in Section 5.9 (Tax Matters), Section 5.20 (Licenses, Authorizations and Provider Programs), 5.23 (Healthcare Laws.), 5.24 (Inspections and Investigations) shall survive the Closing until thirty (30) days following the expiration of the applicable statute of limitations to which claims relating to such representations and warranties may apply;  (iii) the covenants and agreements of the parties in this Agreement that specify a different time period (e.g., x years, x days, x months) shall survive in accordance with their respective terms; and (iv) the covenants in Section 12.2 shall survive the Closing until thirty (30) days following the expiration of the applicable statute of limitations (including extensions)(any such period with respect to the survival of representations, warranties, covenants and agreements shall be referred to herein as a “Survival Period”).

 

13.2 Indemnification by the Shareholder for the Benefit of Buyer.

 

13.2.1 Subject to the applicable provisions and limitations of this Article 13, after the Closing, the Shareholder shall indemnify Buyer and the Companies, and each of their respective Affiliates, officers, directors, partners, members, employees, agents, representatives, successors and permitted assigns (the “Buyer Indemnified Parties”) from and against any Loss, which each Buyer Indemnified Party actually suffers as a result of:

 

  

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(i) any breach of any representation and warranty contained in Article 5 or in Article 6 of this Agreement;

 

(ii) any breach of any covenant or agreement of the Shareholder contained in this Agreement;

 

(iii) any breach prior to the Closing of any covenant or agreement of the Companies or the Companies’ Subsidiaries contained in this Agreement to be performed or complied with prior to the Closing (excluding, for the avoidance of doubt, any breaches by the Companies or the Companies’ Subsidiaries of covenants or agreements herein from and after the Closing);

 

(iv) for a period beginning on the Closing Date and ending thirty (30) days following the expiration of the applicable statute of limitations, Losses arising from (a) the result of any post-payment review of claims, actions, audits, investigations, or proceedings conducted by or on behalf of any Government Programs, including, but not limited to, Medicare administrative contractors or intermediaries, recovery audit contractors, zone program integrity contractors, specialty medical review contractors,  or similar investigative agencies, but only to the extent such Losses arise from dates of service prior to the Effective Time (“Recoupment Indemnity Matter”); provided, however, that Recoupment Indemnity Matter shall exclude Losses to the extent arising from new or different billing policies, procedures and/or practices implemented by the Buyer with respect to bills submitted by the Companies and/or the Companies’ Subsidiaries following Closing; and (b) any audits, investigations, claims, actions, proceedings or lawsuits by the U.S. Department of Health and Human Services Office of Inspector General, U.S. Department of Justice, a State Attorney General, State Medicaid agency or other agencies or persons with respect to healthcare fraud, False Claims Act matters, qui tam or whistle blower actions, or other intent-based, reckless disregard-based, or other scienter-based Laws related to the provision of healthcare services or the submission of healthcare claims by the Companies or the Companies’ Subsidiaries relating to dates of service prior to the Effective Time (“Special Indemnity Matter”); and

 

(v)           Tax Losses.

 

13.2.2 Notwithstanding any other provision in this Agreement to the contrary other than Section 12.2.8 (but subject to the other applicable limitations on indemnification recovery set forth in this Article 13):

 

(i) the Shareholder shall have no liability under Section 13.2.1(i), unless the aggregate of all Losses relating thereto for which the Shareholder would be liable, but for this Section 13.2.2, exceeds on a cumulative basis one percent (1%) of the Purchase Price (the “Deductible”), and then only to the extent such Losses exceed the Deductible; provided, however, that the Deductible shall not apply to any Loss incurred by the Buyer Indemnified Parties as a result of a breach of the Fundamental Representations;

 

  

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(ii) except to the extent provided in Sections 13.2.2(iii), the Shareholder’s aggregate liability under Section 13.2 (other than with respect to the Fundamental Representations made by the Shareholder and the obligations in Section 12.2.8) shall not exceed an amount equal to ten percent (10%) of the Purchase Price received by Shareholder (the “General Cap”); and

 

(iii) to the extent that Losses arising under Section 13.2.1(iv)  exceed the amount of the General Cap, the Shareholder shall be liable for Losses arising under Sections 13.2.1(iv) as set forth on Schedule 13.2.2(iii).

 

All Losses (including but not limited to, Losses as a result of a breach by Shareholder of the Fundamental Representations and as a result of Tax Losses), but not including Losses under  Section 13.2.1(iv)(b) and Section 12.2.8, shall be counted for purposes of determining whether the General Cap and any additional caps, as applicable, have been reached.

 

13.2.3 Notwithstanding any other provision in this Agreement to the contrary, the Shareholder shall not be liable to, or have any obligation to indemnify, any Buyer Indemnified Party for any Losses (i) resulting from any breach of any covenant, agreement, representation or warranty to which Buyer had knowledge on or prior to the Closing Date, (ii) to the extent that such Losses result from or arise out of a breach of this Agreement by Buyer or actions taken by Buyer, the Companies, the Companies’ Subsidiaries or any of their respective Affiliates from and after the Closing Date, (iii) to the extent that such Losses result from or are increased by the passing of or any change in, after the Effective Date, any Law of any Governmental Entity in effect on the Effective Date or by any change in, after the Effective Date, any interpretation or enforcement of any Law by any Governmental Entity, or (iv) to the extent that an accrual for or reserve against any such Losses was or is included in the Financial Statements and/or the Closing Date Net Working Capital (as finally determined pursuant to Section 4.2). The parties acknowledge and agree that the indemnification provided by this Article 13 constitutes the sole and exclusive remedies of the parties to this Agreement for any and all Losses or other claims relating to or arising from this Agreement or in connection with the transactions contemplated hereby or any exhibit, schedule or certificate delivered hereunder or otherwise with respect to the transactions contemplated hereby including, without limitation, with respect to any misrepresentation or inaccuracy in, or breach of, any representations or warranties or any breach or failure in performance of any covenants or agreements made by any party to this Agreement or in any exhibits or schedules hereto or any certificate delivered hereunder or otherwise with respect to the transactions contemplated hereby; provided that this sentence shall not limit any rights Buyer or Shareholder may have (a) under Section 15.1 with respect to seeking specific performance, injunctive or other equitable relief, (b) under Article 14 in connection with any termination of this Agreement prior to the Closing, or (c) under Section 13.9.

 

13.3 Mitigation; Related Matters.

 

13.3.1 The Buyer Indemnified Parties shall use, and shall cause the Companies and the Companies’ Subsidiaries to use, all commercially reasonable efforts to mitigate all losses, costs, damages and expenses upon and after becoming aware of any event which could reasonably be expected to give rise to losses, costs, damages and expenses that are or may be indemnifiable under this Article 13.

 

  

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13.3.2 The Buyer Indemnified Parties shall not be entitled to recover any Losses relating to any matter (i) arising under one provision of this Agreement to the extent that the Buyer Indemnified Parties had already recovered Losses with respect to such matter pursuant to any other provision of this Agreement or (ii) to the extent such matter has been included in the calculation of (or otherwise taken into account in determining) the Purchase Price (including, without limitation, by virtue of being included in the calculation of the Closing Date Net Working Capital).

 

13.4 Indemnification by Buyer for the Benefit of the Shareholder.

 

13.4.1 Subject to the applicable provisions of this Article 13, after the Closing, Buyer shall jointly and severally indemnify the Shareholder and each of its Affiliates, officers, directors, partners, members, employees, agents, representatives, successors and permitted assigns (collectively, the “Shareholder Indemnified Parties”) against any Losses which any of the Shareholder Indemnified Parties actually suffer as a result of:

 

(i) any breach of any representation or warranty of Buyer contained in this Agreement,

 

(ii) any breach of any covenant or agreement set forth in this Agreement to be performed by Buyer and/or, from and after the Closing, the Companies or the Companies’ Subsidiaries, or

 

(iii) the ownership and/or the operation of the Companies, the Companies’ Subsidiaries and their respective businesses from and after the Closing.

 

13.4.2 Notwithstanding any other provision in this Agreement to the contrary (but subject to the other applicable limitations on indemnification recovery set forth in this Article 13):

 

(i) the Buyer shall have no liability under Section 13.4.1(i), unless the aggregate of all Losses relating thereto for which the Shareholder would be liable, but for this Section 13.4.2, exceeds on a cumulative basis the Deductible, and then only to the extent such Losses exceed the Deductible; and

 

(ii) the Buyer’s aggregate liability under Section 13.2 (other than with respect to the Fundamental Representations made by the Shareholder and other than with respect to Losses arising under Section 13.4.1(iii)) shall not exceed the General Cap.

 

All Losses (including but not limited to, Losses as a result of a breach by Buyer of the Fundamental Representations) shall be counted for purposes of determining whether the General Cap has been reached.

 

  

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13.5 Manner of Payment. Any indemnification payment pursuant to this Article 13 shall be effected by wire transfer of immediately available funds from (or on behalf of) the applicable indemnifying party to an account designated by each applicable indemnified party within twenty-one (21) days after the determination thereof.

 

13.6 Defense of Third Party Claims. Promptly after the assertion by any third party of any claim (a “Third Party Claim”) against any Person entitled to seek indemnification under Section 13.2 or Section 13.4 (an “Indemnitee”) that results or may result in the incurrence by such Indemnitee of any Loss for which such Indemnitee desires to seek indemnification under this Article 13, such Indemnitee shall notify each of the parties from whom such indemnification could be sought hereunder with respect to such claim (collectively, the “Indemnitor”) of such claim in writing promptly after receiving notice of such claim, describing the claim, the amount thereof (if known and quantifiable) and the basis thereof in reasonable detail (such written notice, an “Indemnification Notice”); provided that the failure to so notify an Indemnitor shall not relieve the Indemnitor of its obligations hereunder except to the extent that the Indemnitor is materially prejudiced thereby. Any Indemnitor shall be entitled to participate in the defense of such action, lawsuit, proceeding, investigation or other claim giving rise to an Indemnitee’s claim for indemnification at such Indemnitor’s expense, and at its option shall be entitled to assume the defense thereof by appointing a reputable counsel reasonably acceptable to the Indemnitee to be the lead counsel in connection with such defense; provided that the Indemnitee shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose; provided, however, that the fees and expenses of such counsel shall be borne by the Indemnitee and shall not be recoverable from such Indemnitor(s) under this Article 13. If the Indemnitor shall control the defense of any such claim, the Indemnitor shall be entitled to settle such claims; provided that the Indemnitor shall obtain the prior written consent of the Indemnitee (which consent shall not be unreasonably withheld, conditioned and/or delayed) before entering into any settlement of a claim or ceasing to defend such claim; provided, however, that no such consent will be required if, pursuant to or as a result of such settlement, there is no injunctive or other equitable relief that will be imposed against the Indemnitee, such settlement expressly and unconditionally releases the Indemnitee from all liabilities and obligations with respect to such claim, and such settlement does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnified Parties. In all cases, the Indemnitee shall provide, and the Indemnitee shall cause its Affiliates to provide, their reasonable cooperation with the Indemnitor in defense of claims or litigation, including by making employees, information and documentation reasonably available. In no event shall an Indemnitee consent to the entry of any judgment or enter into any settlement with respect to any Third Party Claim without the written consent of the Indemnitor (which consent shall not be unreasonably withheld, conditioned and/or delayed) if any Indemnitee is seeking or shall seek indemnification hereunder with respect to such matter; it being understood and agreed, for the avoidance of doubt, that any such consent of the Indemnitor to any such consent to the entry of judgment or settlement shall not be deemed to be an admission or acknowledgement that any Indemnitee is entitled to indemnification hereunder with respect to any such Third Party Claim.

 

13.7 Determination of Loss Amount. The amount of any Loss subject to indemnification under Section 13.2.1 or 13.4.1 shall be calculated net of (a) any Tax Benefit inuring to Buyer or Shareholder, as applicable, and/or any of their respective Affiliates on account of such Loss, and (b) any insurance proceeds or other third party indemnification or reimbursement proceeds actually recovered on account of such Loss. If Buyer or Shareholder and/or any of their respective Affiliates realizes a Tax Benefit on account of such Loss and such Tax Benefit was not included in the computation of the Loss, Buyer or Shareholder, as applicable, shall within ten (10) days of filing the Tax Return claiming the Tax Benefit (or, to the extent the Tax Benefit is in the form of a refund, within ten (10) days of receiving the refund from the Governmental Entity) pay to the other party the amount of such Tax Benefit. Each party shall take all commercially reasonable actions (and shall cause its Affiliates to take all commercially reasonable actions) to timely claim any Tax Benefit that shall reduce the amount of a Loss, or give rise to a payment to or for the benefit of the other party, under this Section 13.7. Buyer and Shareholder shall, and shall cause their respective Affiliates to, seek full recovery under all insurance policies and other third-party agreements covering any Loss to the same extent as they would if such Loss were not subject to indemnification hereunder. In the event that an insurance recovery or a recovery under any other third-party agreement is made by Buyer or the Shareholder and/or any of their respective Affiliates with respect to any Loss for which any Buyer Indemnified Party or any Shareholder Indemnified Party, as applicable, has been indemnified hereunder, then a payment equal to the aggregate amount of the recovery shall be made promptly by Buyer or the Shareholder, as applicable to the other party for the benefit of the other party. The Shareholder shall be subrogated to all rights of Buyer, the Companies and the Companies’ Subsidiaries in respect of any Losses indemnified by the Shareholder. The Buyer shall be subrogated to all rights of the Shareholder in respect of any Losses indemnified by the Buyer.

 

  

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13.8 Expiration of Indemnification. No Person shall be liable for any claim for indemnification under Section 13.2.1 or Section 13.4.1 unless written notice (stating in reasonable detail the nature of, and factual and legal basis for, any such claim for indemnification, and the provisions of this Agreement upon which such claim for indemnification is made) is delivered by the Person seeking indemnification to the Person from whom indemnification is sought prior to the expiration of the applicable Survival Period, in which case the representation, warranty, covenant or agreement which is the subject of such claim shall survive, to the extent of such claim only, until such claim is resolved, whether or not the amount of the Losses resulting from such breach has been finally determined at the time the notice is given.

 

13.9 Effect of Failure to Close. For the avoidance of doubt, notwithstanding anything to the contrary in this Article 13, nothing herein shall prohibit any Party from suing another or limit the amount of recovery for breach of contract as a result of the other failing to consummate the transactions described in this Agreement upon the satisfaction or waiver of its conditions precedent to Closing.

 

ARTICLE 14

TERMINATION

 

This Agreement and the transactions contemplated herein may be terminated at any time prior to the Effective Time by the mutual written agreement of Shareholder and Buyer. In addition, either Shareholder or Buyer may terminate this Agreement prior to the Effective Time if the other party fails to satisfy the conditions applicable to such party (under Article 8 or Article 9, as the case may be) by July 1, 2014.

 

In the event of such a termination, this Agreement shall be rendered void and of no further force or effect, without any liability on the part of any of the parties hereto or their respective owners, directors, officers or employees, except the obligations of each party to preserve the confidentiality of documents, certificates, and information furnished to such party pursuant hereto and for any obligation or liability of any party based on or arising from any breach or default by such party with respect to its representations, warranties, covenants or agreements contained in related agreements.

 

  

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ARTICLE 15

MISCELLANEOUS

 

15.1 Specific Performance. The Shareholder and the Companies agree that the Buyer shall have the right, in addition to any other rights and remedies existing in its favor, to enforce its rights and the obligations of the Shareholder and the Companies hereunder not only by an action or actions for damages but also by an action or actions for specific performance, injunctive and/or other equitable relief. Furthermore, the Buyer agrees that the Shareholder and the Companies shall have the right, in addition to any other rights and remedies existing in their favor, to enforce their rights and the obligations of the Buyer hereunder not only by an action or actions for damages but also by an action or actions for specific performance, injunctive and/or other equitable relief.

 

15.2 Notices. All notices, requests, demands and other communications required or permitted to be given or made under this Agreement shall be in writing and shall be deemed delivered (a) on the date of personal delivery or transmission by confirmed telegram or confirmed facsimile transmission, (b) on the third (3rd) business day following the date of deposit in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, (c) on the first (1st) business day following the date of delivery to a nationally-recognized overnight courier service, or (d) by e-mail, in each case addressed as follows, or to such other address, Person or entity as either party shall designate by notice to the other in accordance herewith:

 

If to Buyer, the Companies or LHC, addressed to:                          LHC Group, Inc.

420 West Pinhook Road, Suite A

Layfayette, LA 70503

Attention:  Joshua L. Proffitt General Counsel

Facsimile: (337) 235-8037

E-mail: Josh.Proffitt@lhcgroup.com

 

With a copy to:                                                                     Jones Walker LLP

201 St. Charles Avenue, 51st Floor

New Orleans, LA 70170

Attention: Allison C. Bell

Facsimile: (504) 589-8596

E-mail: abell@joneswalker.com

 

If to Shareholder or BioScrip, addressed to:                                    BioScrip, Inc.

100 Clearbrook Road

Elmsford, NY 10523

Attention: Kimberlee Seah General Counsel

Facsimile: (914) 345-8122

E-mail: Kimberlee.Seah@bioscrip.com

 

  

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With a copy to:                                                                     Polsinelli PC

100 South Fourth Street, Suite 1000

St. Louis, MO 63102

Attention: Mark H. Goran

Facsimile: (314) 754-9465

E-mail: mgoran@polsinelli.com

 

15.3 Waiver. The failure of any party to insist, in any one or more instances, on performance of any of the terms and conditions of this Agreement shall not be construed as a waiver or relinquishment of any rights granted hereunder or of the future performance of any such term, covenant or condition, but the obligations of the parties with respect thereto shall continue in full force and effect.

 

15.4 Third Parties. None of the provisions of this Agreement shall confer rights or benefits as third party beneficiaries or otherwise upon any party that is not expressly a party to this Agreement, and the provisions of this Agreement shall not be enforceable by any such third party.

 

15.5 Severability. If any part of this Agreement should be determined to be invalid, unenforceable, or contrary to Law, that part shall be amended, if possible, to conform to Law, and if amendment is not possible, that part shall be deleted and other parts of this Agreement shall remain fully effective, but only if, and to the extent, such modification or deletion would not materially and adversely frustrate the parties’ essential objectives as expressed in this Agreement.

 

15.6 Amendment. This Agreement may be amended, supplemented, altered or modified at any time only by a written instrument duly executed by Shareholder and Buyer.

 

15.7 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The parties to this Agreement may deliver their executed counterparts by facsimile or other electronic means, provided that original signatures are delivered by U.S. Mail promptly thereafter.

 

15.8 Headings. The headings contained in this Agreement have been inserted for the convenience of reference only and shall in no way restrict or modify any of the terms or provisions hereof.

 

15.9 Entire Agreement. This Agreement (including the schedules and exhibits hereto, and all other agreements and documents executed in connection herewith) constitutes the entire agreement among the parties hereto with respect to the subject hereof.

 

15.10 Successors and Assigns. All terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties hereto, whether so expressed or not.

 

15.11 Governing Law; Jurisdiction. The parties specifically agree that this Agreement shall in all respects be interpreted, read construed and governed by the internal Laws of the State of Delaware, exclusive of its conflicts of law rules. Any party hereto shall be entitled to bring an action to enforce any provision of, or based on any right arising out of, relating to or in connection with, this Agreement, in law or at equity for specific performance, or for any other remedy or damages, in the United States District Court for the District of Delaware, situated in Wilmington, Delaware or any Delaware court sitting in New Castle County, Delaware. Each party hereto expressly agrees to waive any challenge to either jurisdiction or venue in any of the aforementioned courts. The prevailing party in any such action shall be entitled to recover all attorneys’ fees of pursuing or defending an action under this Agreement.

 

  

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15.12 BioScrip Guarantee.

 

15.12.1 BioScrip hereby guarantees to the Buyer the payment in full of all amounts when due and owing (i) by Shareholder under this Agreement and any amendments hereto, including Shareholder’s obligations to indemnify the Buyer Indemnified Parties in accordance with Article 13; (ii) incurred in connection with any actions, suits or proceedings initiated to enforce the provisions of this Section 15.12; and (iii) with respect to damages for breach of contract as a result of the Shareholder failing to consummate the transactions described in this Agreement upon the satisfaction or waiver of its conditions precedent to Closing (collectively, the “BioScrip Obligations” and each, individually, a “BioScrip Obligation”).

 

15.12.2 BioScrip covenants and agrees that if at any time the Shareholder defaults in the payment of any BioScrip Obligation, BioScrip shall promptly, upon notice from a Buyer Indemnified Party, pay, or cause the payment of, such BioScrip Obligation.

 

15.12.3 The obligations of BioScrip under this Section 15.12 are absolute and unconditional, present and continuing, and shall not be affected, modified or impaired or prejudiced upon the happening from time to time of any one or more of the following events:

 

(i) the extension of time for payment of any amounts due or of the time for performance of any of the BioScrip Obligations;

 

(ii) the modification or amendment (whether material or otherwise) of any of the BioScrip Obligations;

 

(iii) the failure, omission, delay or lack on the part of the Buyers to enforce, ascertain or exercise any right, power or remedy under or pursuant to the terms of this Agreement;

 

(iv) the fact that BioScrip may at any time in the future dispose of all or any part of its interest in Shareholder; or

 

(v) the bankruptcy, insolvency, winding up, dissolution, liquidation, administration, reorganization or other similar or dissimilar failure or financial disability of Shareholder.

 

  

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15.13 LHC Guarantee.

 

15.13.1 LHC hereby guarantees to the Shareholder the payment in full of all amounts when due and owing (i) by Buyer under this Agreement and any amendments hereto, including Buyer’s obligations to indemnify the Shareholder Indemnified Parties in accordance with Article 13; (ii) incurred in connection with any actions, suits or proceedings initiated to enforce the provisions of this Section 15.12; and (iii) with respect to damages for breach of contract as a result of the Buyer failing to consummate the transactions described in this Agreement upon the satisfaction or waiver of its conditions precedent to Closing (collectively, the “LHC Obligations” and each, individually, a “LHC Obligation”).

 

15.13.2 LHC covenants and agrees that if at any time Buyer defaults in the payment of any LHC Obligation, LHC shall promptly, upon notice from a Shareholder Indemnified Party, pay, or cause the payment of, such LHC Obligation.

 

15.13.3 The obligations of LHC under this Section 15.13 are absolute and unconditional, present and continuing, and shall not be affected, modified or impaired or prejudiced upon the happening from time to time of any one or more of the following events:

 

(i) the extension of time for payment of any amounts due or of the time for performance of any of the LHC Obligations;

 

(ii) the modification or amendment (whether material or otherwise) of any of the LHC Obligations;

 

(iii) the failure, omission, delay or lack on the part of the Shareholder to enforce, ascertain or exercise any right, power or remedy under or pursuant to the terms of this Agreement;

 

(iv) the fact that LHC may at any time in the future dispose of all or any part of its interest in the Buyers; or

 

(v) the bankruptcy, insolvency, winding up, dissolution, liquidation, administration, reorganization or other similar or dissimilar failure or financial disability of the Buyers.

 

[Remainder of page reserved intentionally]

 

*                      *                      *                      *                      *

 

  

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IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above.

 

 

 

  

  

  

LHC (solely with respect to Sections 10.4, 10.6, 12.3 and 15.13 of this Agreement):

  

 

 

 

 

 

[Remainder of page reserved intentionally; Signatures continue on following page.]EX-10.8

 Exhibit 10.8 

MANDIANT CORPORATION 

2011 EQUITY INCENTIVE PLAN 

ADOPTED BY THE BOARD OF DIRECTORS:
APRIL 6, 2011 
 APPROVED BY THE STOCKHOLDERS:
APRIL 6, 2011 
 TERMINATION DATE: APRIL 5, 2021 

1. GENERAL. 

(a) Successor to and Continuation of Prior Plan. The Plan is intended as the successor to and continuation of the Mandiant Corporation
2006 Equity Incentive Plan (the “Prior Plan”). Following the Effective Date, no additional stock awards shall be granted under the Prior Plan. Any shares remaining available for issuance pursuant to the exercise of options or
issuance or settlement of stock awards under the Prior Plan as of the Effective Date (the “Prior Plan Available Reserve”) shall become available for issuance pursuant to Stock Awards granted hereunder. From and after the
Effective Date, all outstanding stock awards granted under the Prior Plan shall remain subject to the terms of the Prior Plan; provided, however, that any shares underlying outstanding stock awards granted under the Prior Plan that
expire or terminate for any reason prior to exercise or settlement or are forfeited because of the failure to meet a contingency or condition required to vest such shares (the “Returning Shares”) shall become available for
issuance pursuant to Awards granted hereunder. All Awards granted on or after the Effective Date of this Plan shall be subject to the terms of this Plan. 

(b) Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are Employees, Directors and Consultants. 

(c) Available Stock Awards. The Plan provides for the grant of the following Stock Awards: (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, and (v) Restricted Stock Unit Awards. 

(d) Purpose. The Company, by means of the Plan, seeks to secure and retain the services of the group of persons eligible to receive
Stock Awards as set forth in Section 1(b), to provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate, and to provide a means by which such eligible recipients may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of Stock Awards. 

2. ADMINISTRATION. 

(a) Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration of the Plan to a
Committee or Committees, as provided in Section 2(c). 

 (b) Powers of Board. The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan: 
 (i) To determine from time to time (A) which of the persons eligible under
the Plan shall be granted Stock Awards; (B) when and how each Stock Award shall be granted; (C) what type or combination of types of Stock Award shall be granted; (D) the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to receive cash or Common Stock pursuant to a Stock Award; (E) the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such
person; and (F) the Fair Market Value applicable to a Stock Award. 
 (ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan or Stock Award fully effective. 
 (iii) To settle all
controversies regarding the Plan and Stock Awards granted under it. 
 (iv) To accelerate the time at which a Stock Award may first
be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will
vest. 
 (v) To suspend or terminate the Plan at any time. Suspension or termination of the Plan shall not impair rights and
obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant. 

(vi) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, amendments relating to
Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to bring the Plan or Stock Awards granted under the Plan into compliance therewith, subject to the limitations, if any, of applicable
law. However, except as provided in Section 9(a) relating to Capitalization Adjustments, to the extent required by applicable law, stockholder approval shall be required for any amendment of the Plan that either (A) materially increases
the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Stock Awards under the Plan, (C) materially increases the benefits accruing to Participants
under the Plan or materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (D) materially extends the term of the Plan, or (E) expands the types of Stock Awards available for issuance under
the Plan. Except as provided above, rights under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (1) the Company requests the consent of the affected Participant, and (2) such
Participant consents in writing. 

  
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 (vii) To submit any amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of Section 422 of the Code regarding Incentive Stock Options. 

(viii) To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock Awards,
including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion;
provided, however, that except with respect to amendments that disqualify or impair the status of an Incentive Stock Option, a Participant’s rights under any Stock Award shall not be impaired by any such amendment unless
(A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, subject to the limitations of applicable law, if any, the Board may amend the terms of any one
or more Stock Awards without the affected Participant’s consent if necessary to maintain the qualified status of the Stock Award as an Incentive Stock Option or to bring the Stock Award into compliance with Section 409A of the Code. 

(ix) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best
interests of the Company and that are not in conflict with the provisions of the Plan or Stock Awards. 
 (x) To adopt such
procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States. 

(xi) To effect, at any time and from time to time, with the consent of any adversely affected Participant, (A) the reduction of
the exercise price (or strike price) of any outstanding Option or SAR under the Plan, (B) the cancellation of any outstanding Option or SAR under the Plan and the grant in substitution therefore of (1) a new Option or SAR under the Plan or
another equity plan of the Company covering the same or a different number of shares of Common Stock, (2) a Restricted Stock Award, (3) a Restricted Stock Unit Award, (4) cash and/or (5) other valuable consideration (as
determined by the Board, in its sole discretion), or (C) any other action that is treated as a repricing under generally accepted accounting principles; provided, however, that no such reduction or cancellation may be effected if
it is determined, in the Company’s sole discretion, that such reduction or cancellation would result in any such outstanding Option becoming subject to the requirements of Section 409A of the Code. 

(c) Delegation to Committee. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If
administration of the Plan is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to
delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Committee may, at any time, abolish the subcommittee and/or revest in the Committee any powers delegated to the subcommitee. The
Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated. 

  
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 (d) Delegation to an Officer. The Board may delegate to one or more Officers of the
Company the authority to do one or both of the following: (i) designate Officers and Employees of the Company or any of its Subsidiaries to be recipients of Options and Stock Appreciation Rights (and, to the extent permitted by applicable law,
other Stock Awards) and the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Officers and Employees; provided, however, that the Board resolutions regarding
such delegation shall specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself. Notwithstanding the foregoing, the
Board may not delegate authority to an Officer to determine the Fair Market Value pursuant to Section 13(t) below. 
 (e) Effect of
Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons. 

3. SHARES SUBJECT TO THE PLAN. 

(a) Share Reserve. Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock
that may be issued pursuant to Stock Awards from and after the Effective Date shall not exceed 2,745,663 shares (the “Share Reserve”), which number is the sum of (i) the number of shares (802,348) subject to the
Prior Plan Available Reserve, (ii) an additional 306,584 new shares, plus (iii) an additional number of shares in an amount not to exceed 1,636,731 shares (which number consists of the Returning Shares, if any, as such shares become
available from time to time). Further, if a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the
Participant receives cash rather than stock), such expiration, termination or settlement shall not reduce (or otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan. For clarity, the limitation in
this Section 3(a) is a limitation in the number of shares of Common Stock that may be issued pursuant to the Plan. Accordingly, this Section 3(a) does not limit the granting of Stock Awards except as provided in Section 7(a). 

(b) Reversion of Shares to the Share Reserve. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to or
repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased shall revert to and again become available for issuance under the
Plan. Also, any shares reacquired by the Company pursuant to Section 8(g) or as consideration for the exercise of an Option shall again become available for issuance under the Plan. Notwithstanding the provisions of this Section 3(b), any
such shares shall not be subsequently issued pursuant to the exercise of Incentive Stock Options. 

  
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 (c) Incentive Stock Option Limit. Notwithstanding anything to the contrary in this
Section 3 and subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options shall be
2,745,663 shares of Common Stock. 
 (d) Source of Shares. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise. 

4. ELIGIBILITY. 

(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent
corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants;
provided, however, that Nonstatutory Stock Options and SARs may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in
Rule 405, unless the stock underlying such Stock Awards is treated as “service recipient stock” under Section 409A of the Code because the Stock Awards are granted pursuant to a corporate transaction (such as a spin off
transaction) or unless such Stock Awards comply with the distribution requirements of Section 409A of the Code. 
 (b) Ten Percent
Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration
of five years from the date of grant. 
 (c) Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at
the time of grant, either the offer or sale of the Company’s securities to such Consultant is not exempt under Rule 701 because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a
natural person, or because of any other provision of Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply
with the securities laws of all other relevant jurisdictions. 
 5. PROVISIONS RELATING TO
OPTIONS AND STOCK APPRECIATION RIGHTS. 
 Each Option or SAR
shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are
issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased on exercise of each type of 

  
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Option. If an Option is not specifically designated as an Incentive Stock Option, then the Option shall be a Nonstatutory Stock Option. The provisions of separate Options or SARs need not be
identical; provided, however, that each Option Agreement or Stock Appreciation Right Agreement shall conform to (through incorporation of provisions hereof by reference in the applicable Stock Award Agreement or otherwise) the substance of
each of the following provisions: 
 (a) Term. Subject to the provisions Section 4(b) regarding Ten Percent Stockholders, no
Option or SAR shall be exercisable after the expiration of ten years from the date of its grant or such shorter period specified in the Stock Award Agreement. 

(b) Exercise Price. Subject to the provisions of Section 4(b) regarding Incentive Stock Options granted to Ten Percent
Stockholders, the exercise price (or strike price) of each Option or SAR shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Option or SAR is granted. Notwithstanding the foregoing,
an Option or SAR may be granted with an exercise price (or strike price) lower than 100% of the Fair Market Value of the Common Stock subject to the Option or SAR if such Option or SAR is granted pursuant to an assumption of or substitution for
another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Sections 409A and 424(a) of the Code (whether or not such stock awards are Incentive Stock Options). Each SAR will be
denominated in shares of Common Stock equivalents. 
 (c) Purchase Price for Options. The purchase price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board shall have the authority to
grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The permitted
methods of payment are as follows: 
 (i) by cash, check, bank draft or money order payable to the Company; 

(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the
stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds; 

(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock; 

(iv) if the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issued upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company shall accept a cash or
other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued; provided further, that shares

  
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of Common Stock will no longer be outstanding under an Option and will not be exercisable thereafter to the extent that (A) shares are used to pay the exercise price pursuant to the
“net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; 

(v) according to a deferred payment or similar arrangement with the Optionholder; provided, however, that interest shall
compound at least annually and shall be charged at the minimum rate of interest necessary to avoid (A) the imputation of interest income to the Company and compensation income to the Optionholder under any applicable provisions of the Code, and
(B) the classification of the Option as a liability for financial accounting purposes; or 
 (vi) in any other form of legal
consideration that may be acceptable to the Board. 
 (d) Exercise and Payment of a SAR. To exercise any outstanding Stock
Appreciation Right, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. The appreciation distribution payable on
the exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares of Common Stock equal
to the number of Common Stock equivalents in which the Participant is vested under such Stock Appreciation Right, and with respect to which the Participant is exercising the Stock Appreciation Right on such date, over (B) the strike price that
will be determined by the Board at the time of grant of the Stock Appreciation Right. The appreciation distribution in respect to a Stock Appreciation Right may be paid in Common Stock, in cash, in any combination of the two or in any other form of
consideration, as determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. 

(e) Transferability of Options and SARs. Except as set forth in this Section 5(e) or as otherwise determined by the Board under
terms that are not prohibited by applicable tax and securities laws, Options and SARs shall not be transferable. The Board may, in its sole discretion, impose additional limitations on the transferability of Options and SARs in the applicable Stock
Award Agreement. 
 (i) Restrictions on Transfer. An Option or SAR shall not be transferable except by will or by the laws of descent
and distribution and shall be exercisable during the lifetime of the Participant only by the Participant; provided, however, that the Board may, in its sole discretion, permit transfer of the Option or SAR and in a manner that is not
prohibited by applicable tax and securities laws (including but not limited to Rule 701) upon the Participant’s request. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration. 

(ii) Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorized designee, an Option or SAR may
be transferred pursuant to a domestic relations order; provided, however, that if an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer. 

  
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 (iii) Beneficiary Designation. Upon receiving written permission from the Board or its
duly authorized designee, the Participant may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a third party who, in the event of the death of the Participant, shall thereafter
be the beneficiary of the Option or SAR with the right to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, the executor or administrator of the
Participant’s estate shall be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. 

(f) Vesting Generally. The total number of shares of Common Stock subject to an Option or SAR may vest and therefore become exercisable
in periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of performance goals or other
criteria) as the Board may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of shares of Common Stock
as to which an Option or SAR may be exercised. 
 (g) Termination of Continuous Service. Except as otherwise provided in the
applicable Stock Award Agreement or other agreement between the Participant and the Company, in the event that a Participant’s Continuous Service terminates (other than for Cause or upon the Participant’s death or Disability), the
Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Stock Award as of the date of termination of Continuous Service) but only within such period of time ending on the earlier of
(i) the date three months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Stock Award Agreement, which period shall not be less than 30 days if necessary
to comply with applicable laws unless such termination is for Cause) or (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not
exercise his or her Option or SAR within the time specified herein or in the Stock Award Agreement (as applicable), the Option or SAR shall terminate. 

(h) Extension of Termination Date. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the
Participant and the Company, if the exercise of the Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause or upon the Participant’s death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR shall terminate on the earlier of the expiration of a total period of three months (that need not be
consecutive) after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option or SAR
as set forth in the applicable Stock Award Agreement. In addition, unless otherwise provided in a Participant’s Stock Award Agreement, if the immediate sale of any Common Stock received upon exercise of an Option or SAR following the
termination of the Participant’s Continuous Service (other than for 

  
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Cause) would violate the Company’s insider trading policy, then the Option or SAR shall terminate on the earlier of (i) the expiration of a period equal to the applicable
post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading
policy, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement. 
 (i)
Disability of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, in the event that a Participant’s Continuous Service terminates as a result of the
Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of
time ending on the earlier of (i) the date 12 months following such termination of Continuous Service (or such longer or shorter period specified in the Stock Award Agreement, which period shall not be less than six months if necessary to
comply with applicable laws), or (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the
time specified herein or in the Stock Award Agreement (as applicable), the Option or SAR shall terminate. 
 (j) Death of
Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, in the event that (i) a Participant’s Continuous Service terminates as a result of the
Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Stock Award Agreement after the termination of the Participant’s Continuous Service for a reason other than death, then the Option or SAR
may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a
person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date 18 months following the date of death (or such longer or shorter period specified in the
Stock Award Agreement, which period shall not be less than six months if necessary to comply with applicable laws), or (ii) the expiration of the term of such Option or SAR as set forth in the Stock Award Agreement. If, after the
Participant’s death, the Option or SAR is not exercised within the time specified herein or in the Stock Award Agreement (as applicable), the Option or SAR shall terminate. 

(k) Termination for Cause. Except as explicitly provided otherwise in a Participant’s Stock Award Agreement, if a
Participant’s Continuous Service is terminated for Cause, the Option or SAR shall terminate upon the termination date of such Participant’s Continuous Service, and the Participant shall be prohibited from exercising his or her Option or
SAR from and after the time of such termination of Continuous Service. 

  
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 (l) Non-Exempt Employees. No Option or SAR granted to an Employee who is a non-exempt
employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable for any shares of Common Stock until at least six months following the date of grant of the Option or SAR. Notwithstanding the foregoing,
consistent with the provisions of the Worker Economic Opportunity Act, (i) in the event of the Participant’s death or Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued or substituted,
(iii) upon a Change in Control in which the vesting of such Options or SARs accelerates, or (iv) upon the Participant’s retirement (as such term is defined for purposes of the Fair Labor Standards Act of 1938) any such vested Options
and SARs may be exercised earlier than six months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be
exempt from his or her regular rate of pay. 
 (m) Early Exercise of Options. An Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option.
Subject to the “Repurchase Limitation” in Section 8(l), any unvested shares of Common Stock so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate.
Provided that the “Repurchase Limitation” in Section 8(l) is not violated, the Company shall not be required to exercise its repurchase right until at least six months (or such longer or shorter period of time required to avoid
classification of the Option as a liability for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option Agreement. 

(n) Right of Repurchase. Subject to the “Repurchase Limitation” in Section 8(l), an Option or SAR may include a
provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Participant pursuant to the exercise of the Option or SAR. 

(o) Right of First Refusal. An Option or SAR may include a provision whereby the Company may elect to exercise a right of first refusal
following receipt of notice from the Participant of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option or SAR. Such right of first refusal shall be subject to the “Repurchase
Limitation” in Section 8(l). Except as expressly provided in this Section 5(o) or in the Stock Award Agreement, such right of first refusal shall otherwise comply with any applicable provisions of the bylaws of the Company. 

6. PROVISIONS OF RESTRICTED STOCK AWARDS AND
RESTRICTED STOCK UNITS. 
 (a) Restricted Stock Awards.
Each Restricted Stock Award Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common
Stock may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate shall be held in

  
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such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted
Stock Award Agreements need not be identical; provided, however, that each Restricted Stock Award Agreement shall conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions: 
 (i) Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash or
cash equivalents, (B) past or future services actually or to be rendered to the Company or an Affiliate, or (C) any other form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under
applicable law. 
 (ii) Vesting. Subject to the “Repurchase Limitation” in Section 8(l), shares of Common Stock
awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board. 

(iii) Termination of Participant’s Continuous Service. If a Participant’s Continuous Service terminates, the Company may
receive through a forfeiture condition or a repurchase right, any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination of Continuous Service under the terms of the Restricted Stock Award
Agreement. 
 (iv) Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement shall be
transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board shall determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award
Agreement remains subject to the terms of the Restricted Stock Award Agreement. 
 (v) Dividends. A Restricted Stock Award Agreement
may provide that any dividends paid on Restricted Stock will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate. 

(b) Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical,
provided, however, that each Restricted Stock Unit Award Agreement shall conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions: 

(i) Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid
by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid
in any form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under applicable law. 

  
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 (ii) Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may
impose such restrictions or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate. 

(iii) Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any
combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. 

(iv) Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose
such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award. 

(v) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit
Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit
Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all the terms and conditions of the underlying Restricted Stock Unit
Award Agreement to which they relate. 
 (vi) Termination of Participant’s Continuous Service. Except as otherwise provided in
the applicable Restricted Stock Unit Award Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service. 

(vii) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set forth herein, any Restricted Stock
Unit Award granted under the Plan that is not exempt from the requirements of Section 409A of the Code shall contain such provisions so that such Restricted Stock Unit Award will comply with the requirements of Section 409A of the Code.
Such restrictions, if any, shall be determined by the Board and contained in the Restricted Stock Unit Award Agreement evidencing such Restricted Stock Unit Award. For example, such restrictions may include, without limitation, a requirement that
any Common Stock that is to be issued in a year following the year in which the Restricted Stock Unit Award vests must be issued in accordance with a fixed pre-determined schedule. 

7. COVENANTS OF THE COMPANY. 

(a) Availability of Shares. During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of
Common Stock reasonably required to satisfy such Stock Awards. 

  
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 (b) Securities Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon
exercise of such Stock Awards unless and until such authority is obtained. A Participant shall not be eligible for the grant of a Stock Award or the subsequent issuance of Common Stock pursuant to the Stock Award if such grant or issuance would be
in violation of any applicable securities law. 
 (c) No Obligation to Notify or Minimize Taxes. The Company shall have no duty or
obligation to any Participant to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company shall have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of
a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder of such Stock Award. 

8. MISCELLANEOUS. 
 (a)
Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Stock Awards shall constitute general funds of the Company. 

(b) Corporate Action Constituting Grant of Stock Awards. Corporate action constituting a grant by the Company of a Stock Award to any
Participant shall be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or
accepted by, the Participant. 
 (c) Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until (i) such Participant has satisfied all requirements for the exercise of the Stock Award, or the issuance of shares thereunder, pursuant
to its terms, and (ii) the issuance of the Common Stock pursuant to the Stock Award has been entered into the books and records of the Company. 

(d) No Employment or Other Service Rights. Nothing in the Plan, any Stock Award Agreement or any other instrument executed thereunder
or in connection with any Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right
of the Company or an Affiliate to terminate (i) the employment of an Employee with 

  
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or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the
service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be. 

(e) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000, the Options or portions thereof that
exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s). 

(f) Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any
Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give
written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the
Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (x) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered
under a then currently effective registration statement under the Securities Act, or (y) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common Stock. 
 (g) Withholding
Obligations. Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means (in
addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock
from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be
withheld by law (or such lesser amount as may be necessary to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding payment from any amounts otherwise payable to the Participant;
(iv) withholding cash from a Stock Award settled in cash; or (v) by such other method as may be set forth in the Stock Award Agreement. 

  
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 (h) Electronic Delivery. Any reference herein to a “written” agreement or
document shall include any agreement or document delivered electronically or posted on the Company’s intranet. 
 (i)
Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may
be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the
Board may provide for distributions while a Participant is still an employee. The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum
payments, following the Participant’s termination of employment or retirement, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law. 

(j) Compliance with Section 409A. To the extent that the Board determines that any Stock Award granted hereunder is subject to
Section 409A of the Code, the Stock Award Agreement evidencing such Stock Award shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan
and Stock Award Agreements shall be interpreted in accordance with Section 409A of the Code. 
 (k) Compliance with
Exemption Provided by Rule 12h-1(f). If at the end of the Company’s most recently completed fiscal year: (i) the aggregate of the number of persons who hold outstanding compensatory employee stock options to purchase shares
of Common Stock granted pursuant to the Plan or otherwise (such persons, “Holders of Options”) equals or exceeds 500, and (ii) the Company’s assets exceed $10,000,000, then the following restrictions
shall apply during any period during which the Company does not have a class of its securities registered under Section 12 of the Exchange Act and is not required to file reports under Section 15(d) of the Exchange Act: (A) the
Options and, prior to exercise, the shares of Common Stock acquired upon exercise of the Options may not be transferred until the Company is no longer relying on the exemption provided by Rule 12h-1(f) promulgated under the Exchange Act
(“Rule 12h-1(f)”), except: (1) as permitted by Rule 701(c) promulgated under the Securities Act, (2) to a guardian upon the disability of the Holder of Options, or (3) to an executor
upon the death of the Holder of Options (collectively, the “Permitted Transferees”); provided, however, that the following transfers are permitted: (i) transfers by the Holder of Options to the
Company, and (ii) transfers in connection with a change of control or other acquisition involving the Company, if following such transaction, the Options no longer remain outstanding and the Company is no longer relying on the exemption
provided by Rule 12h-1(f); provided further, that any Permitted Transferees may not further transfer the Options; (B) except as otherwise provided in (A) above, the Options and shares of
Common Stock acquired upon exercise of the Options are restricted as to any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” as defined by Rule 16a-1(h) promulgated under the
Exchange Act, or any “call equivalent position” as defined by Rule 16a-1(b) promulgated under the Exchange Act by the Holder of Options prior to exercise of an Option until the Company 

  
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is no longer relying on the exemption provided by Rule 12h-1(f); and (C) at any time that the Company is relying on the exemption provided by Rule 12h-1(f), the Company shall
deliver to Holders of Options (whether by physical or electronic delivery or written notice of the availability of the information on an internet site) the information required by Rule 701(e)(3), (4) and (5) promulgated under the
Securities Act every six months, including financial statements that are not more than 180 days old; provided, however, that the Company may condition the delivery of such information upon the Holder of Options’ agreement to
maintain its confidentiality. 
 (l) Repurchase Limitation. The terms of any repurchase right shall be specified in the Stock
Award Agreement. The repurchase price for vested shares of Common Stock shall be the Fair Market Value of the shares of Common Stock on the date of repurchase. The repurchase price for unvested shares of Common Stock shall be the lower of
(i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price. However, the Company shall not exercise its repurchase right until at least six months (or such longer or shorter
period of time necessary to avoid classification of the Stock Award as a liability for financial accounting purposes) have elapsed following delivery of shares of Common Stock subject to the Stock Award, unless otherwise specifically provided by the
Board. 
 9. ADJUSTMENTS UPON CHANGES IN COMMON STOCK;
OTHER CORPORATE EVENTS. 
 (a) Capitalization Adjustments. In the event of a
Capitalization Adjustment, the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities
that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), and (iii) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive. 
 (b) Dissolution or Liquidation. Except as
otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a
forfeiture condition or the Company’s right of repurchase) shall terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a
forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service. 

(c) Corporate Transaction. The following provisions shall apply to Stock Awards in the event of a Corporate Transaction unless
otherwise provided in the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the holder of the Stock Award or unless otherwise expressly provided by the Board at the time of grant of a Stock
Award. Except as otherwise stated in the Stock Award Agreement, in the event of a Corporate Transaction, then, notwithstanding any other provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards,
contingent upon the closing or completion of the Corporate Transaction: 
 (i) arrange for the surviving corporation or
acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume or continue all or any portion of the Stock Award or to substitute a similar stock award for all or any portion of the Stock Award (including, but not
limited to, an award to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction); 

  
 -16- 

 (ii) arrange for the assignment of any reacquisition or repurchase rights held by the
Company in respect of Common Stock issued pursuant to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company); 

(iii) accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be
exercised), with such Stock Award terminating if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction; provided, however, that the Board may require Participants to complete and deliver to the Company a notice
of exercise before the effective date of a Corporate Transaction, which is contingent upon the effectiveness of such Corporate Transaction; 

(iv) arrange for the lapse of any reacquisition or repurchase rights held by the Company with respect to the Stock Award; 

(v) cancel or arrange for the cancellation of all or any portion of the Stock Award, to the extent not vested or not exercised prior to
the effective time of the Corporate Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and 

(vi) make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property
the holder of the Stock Award would have received upon the exercise of the Stock Award, over (B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero ($0) if the value of the property
is equal to or less than the exercise price. Payments under this provision may be delayed to the same extent that payment of consideration to the holders of the Company’s Common Stock in connection with the Corporate Transaction is delayed as a
result of escrows, earn outs, holdbacks or any other contingencies (such consideration, the “Contingent Consideration”). In the event the exercise price (or strike price) of a Stock Award is greater than the consideration
payable to the holder of the Stock Award in connection with the Corporate Transaction at the closing of such transaction (the “Closing Consideration”), the Board may, in its discretion, elect to (x) cancel the Stock
Award, or (y) allow the holder of the Stock Award to make a payment to retain the right to receive payments pursuant to this Section 9(c)(vi) if the sum of the Closing Consideration and the Contingent Consideration payable to the
holder of the Stock Award in connection with the Corporate Transaction is greater than the exercise price (or strike price) of the Stock Award. 

  
 -17- 

 The Board need not take the same action with respect to all Stock Awards or with respect to all
Participants. The Board may take different actions with respect to the vested and unvested portions of a Stock Award. In addition, the Board may provide that a Participant may not exercise an Option or a SAR in any event on or after the date that is
five days prior to the effective date of the Corporate Transaction (or such other date that the Board shall determine, which may not exceed ten days prior to the effective date of the Corporate Transaction). 

(d) Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in
Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration
shall occur. 
 10. TERMINATION OR SUSPENSION OF THE
PLAN. 
 (a) Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner terminated by the
Board pursuant to Section 2, the Plan shall automatically terminate on the day before the tenth anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of
the Company. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated. 
 (b) No
Impairment of Rights. Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant. 

11. EFFECTIVE DATE OF PLAN. 

This Plan shall become effective on the Effective Date. 

12. CHOICE OF LAW. 

The law of state of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard
to that state’s conflict of laws rules. 
 13. DEFINITIONS. 

As used in the Plan, the following definitions shall apply to the capitalized terms indicated below: 

(a) “Affiliate” means, at the time of determination, any “parent” or
“majority-owned subsidiary” of the Company, as such terms are defined in Rule 405. The Board shall have the authority to determine the time or times at which “parent” or “majority-owned subsidiary” status is
determined within the foregoing definition. 

  
 -18- 

 (b) “Board” means the Board of Directors of the Company. 

(c) “Capitalization Adjustment” means any change that is made in, or other events
that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or any similar
equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards No. 123 (revised). Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated as
a Capitalization Adjustment. 
 (d) “Cause” shall have the meaning
ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means with respect to a Participant, the occurrence of any of the following events:
(i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such Participant’s attempted commission of, or
participation in, a fraud or act of dishonesty against the Company; such Participant’s intentional, material violation of any contract or agreement between the Participant and the Company or of any statutory duty owed to the Company;
(iv) such Participant’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination of the Participant’s
Continuous Service is either for Cause or without Cause shall be made by the Company in its sole discretion. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of
outstanding Stock Awards held by such Participant shall have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose. 

(e) “Change in Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events: 
 (i) any Exchange Act Person becomes the
Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an
investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance
of equity securities or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a
repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then
outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur; 

  
 -19- 

 (ii) there is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either
(A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting
power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such
transaction; or 
 (iii) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of
the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than 50% of the
combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease,
license or other disposition. 
 Notwithstanding the foregoing definition or any other provision of this Plan, (A) the term Change in
Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition of Change in Control (or any analogous term) in an individual written
agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous
term is set forth in such an individual written agreement, the foregoing definition shall apply. 
 (f)
“Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder. 

(g) “Committee” means a committee of one or more Directors to whom authority has
been delegated by the Board in accordance with Section 2(c). 
 (h) “Common Stock” means
the common stock of the Company. 
 (i) “Company” means Mandiant Corporation, a Delaware corporation. 

(j) “Consultant” means any person, including an advisor, who is (i) engaged by
the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a
Director, or payment of a fee for such service, shall not cause a Director to be considered a “Consultant” for purposes of the Plan. 

  
 -20- 

 (k) “Continuous Service” means that the Participant’s service
with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director, or
Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, shall not terminate a Participant’s
Continuous Service; provided, however, that if the Entity for which a Participant is rendering service ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service shall be
considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an employee of the Company to a consultant of an Affiliate or to a Director shall not constitute an interruption of
Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of (i) any
leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a
leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy
applicable to the Participant, or as otherwise required by law. 
 (l) “Corporate
Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events: 

(i) the consummation of a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of
the consolidated assets of the Company and its Subsidiaries; 
 (ii) the consummation of a sale or other disposition of at least 50%
of the outstanding securities of the Company; 
 (iii) the consummation of a merger, consolidation or similar transaction following
which the Company is not the surviving corporation; or 
 (iv) the consummation of a merger, consolidation or similar transaction
following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or otherwise. 
 (m) “Director”
means a member of the Board. 

  
 -21- 

 (n) “Disability” means, with respect
to a Participant, the inability of a Participant to engage in any substantially gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months as provided in Sections 22(e)(3) and 409A(a)(2) (c)(i) of the Code and shall be determined by the Board on the basis of such medical evidence as the Board deems warranted under
the circumstances. 
 (o) “Effective Date” means the effective date of this Plan, which is the
earlier of the date that this Plan is first approved by the Company’s stockholders, or (ii) the date this Plan is adopted by the Board. 

(p) “Employee” means any person employed by the Company or an Affiliate. However,
service solely as a Director, or payment of a fee for such services, shall not cause a Director to be considered an “Employee” for purposes of the Plan. 

(q) “Entity” means a corporation, partnership, limited liability company or other entity. 

(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder. 
 (s) “Exchange Act
Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include (i) the Company or any Subsidiary
of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, an underwriter
temporarily holding securities pursuant to an offering of such securities, an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any
natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities. 
 (t)
“Fair Market Value” means, as of any date, the value of the Common Stock determined by the Board in compliance with Section 409A of the Code or, in the case of an Incentive Stock Option, in compliance
with Section 422 of the Code. 
 (u) “Incentive Stock Option”
means an option that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 

(v) “Nonstatutory Stock Option” means an Option that does not qualify as an Incentive Stock Option. 

(w) “Officer” means any person designated by the Company as an officer. 

  
 -22- 

 (x) “Option” means an Incentive Stock
Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan. 
 (y)
“Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement shall be subject to the terms and conditions
of the Plan. 
 (z) “Optionholder” means a person to whom an Option
is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option. 
 (aa)
“Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to “Own,” to have “Owned,” to be the
“Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes
the power to vote or to direct the voting, with respect to such securities. 
 (bb)
“Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award. 

(cc) “Plan” means this Mandiant Corporation 2011 Equity Incentive Plan. 

(dd) “Restricted Stock Award” means an award of shares of Common Stock which is
granted pursuant to the terms and conditions of Section 6(a). 
 (ee)
“Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award. Each Restricted
Stock Award Agreement shall be subject to the terms and conditions of the Plan. 
 (ff)
“Restricted Stock Unit Award” means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(b). 

(gg) “Restricted Stock Unit Award Agreement” means a written agreement between the
Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement shall be subject to the terms and conditions of the Plan. 

(hh) “Rule 405” means Rule 405 promulgated under the Securities Act. 

(ii) “Rule 701” means Rule 701 promulgated under the Securities Act. 

(jj) “Securities Act” means the Securities Act of 1933, as amended. 

(kk) “Stock Appreciation Right” or “SAR” means a right to
receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5. 

  
 -23- 

 (ll) “Stock Appreciation Right
Agreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the
terms and conditions of the Plan. 
 (mm) “Stock Award” means any
right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, or a Stock Appreciation Right. 

(nn) “Stock Award Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. 

(oo) “Subsidiary” means, with respect to the Company, (i) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct
or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%. 

(pp) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate. 

  
 -24- 

 MANDIANT CORPORATION 

AMENDMENT NO. 1 TO 2011 EQUITY INCENTIVE PLAN

 RECITALS 

A. On April 6, 2011, the Board of Directors (the “Board”) of Mandiant Corporation, a Delaware corporation (the
“Company”) adopted the Company’s 2011 Equity Incentive Plan (the “Plan”) and on April 6, 2011, the stockholders of the Company approved the Plan. 

B. On October 27, 2011, the Board adopted this Amendment No. 1 to the Plan (this “Amendment No. 1”) and
on October 16, 2012, the stockholders of the Company approved this Amendment No. 1. 
 AMENDMENT 

1. The first sentence of Section 3(a) of the Plan is hereby amended and restated in its entirety as follows: 

“Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued
pursuant to Stock Awards from and after the Effective Date shall not exceed 3,633,348 shares (the “Share Reserve”), which number is the sum of (i) the number of shares (802,348) subject to the Prior Plan Available
Reserve, (ii) an additional 1,194,269 new shares, plus (iii) an additional number of shares in an amount not to exceed 1,636,731 shares (which number consists of the Returning Shares, if any, as such shares become available from time to
time).” 
 2. Section 3(c) of the Plan is hereby amended and restated in its entirety as follows: 

“(c) Incentive Stock Option Limit. Notwithstanding anything to the contrary in this Section 3 and subject to the provisions of
Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options shall be 3,633,348 shares of Common Stock.” 

3. Except as set forth in this Amendment No. 1, the Plan will be unaffected hereby and will remain in full force and effect. 

I hereby certify that this Amendment No. 1 was duly adopted by the Board of Directors of the Company as of October 27, 2011. 

 

	
	/s/ Shane McGee
	Shane McGee
	Secretary

 MANDIANT CORPORATION 

AMENDMENT NO. 2 TO 2011 EQUITY INCENTIVE PLAN

 RECITALS 

A. On April 6, 2011, the Board of Directors (the “Board”) of Mandiant Corporation, a Delaware corporation (the
“Company”) adopted the Company’s 2011 Equity Incentive Plan (the “Plan”) and on April 6, 2011, the stockholders of the Company approved the Plan. 

B. On October 27, 2011, the Board adopted this Amendment No. 1 to the Plan (“Amendment No. 1”) and on
October 16, 2012, the stockholders of the Company approved the Amendment No. 1. 
 C. On April 27, 2012, the Board adopted
this Amendment No. 2 to the Plan (“Amendment No. 2”) and on October 16, 2012, the stockholders of the Company approved this Amendment No. 2. 

AMENDMENT 

1. Section 1(a) of the Plan is hereby deleted and voided in its entirety. 

2. The first sentence of Section 3(a) of the Plan is hereby amended and restated in its entirety as follows: 

“Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued
pursuant to Stock Awards from and after the Effective Date shall not exceed 3,633,348 shares.” 
 3. Except as set forth in this
Amendment No. 2, the Plan will be unaffected hereby and will remain in full force and effect. 
 I hereby certify that this Amendment
No. 2 was duly adopted by the Board of Directors of the Company as of April 27, 2012. 
  

	
	/s/ Shane McGee
	Shane McGee
	Secretary

 MANDIANT CORPORATION 

STOCK OPTION GRANT NOTICE 

(2011 EQUITY INCENTIVE PLAN) 

Mandiant Corporation (the “Company”), pursuant to its 2011 Equity Incentive Plan (the “Plan”),
hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common Stock set forth below (the “Option”). The Option is subject to all of the terms and conditions as set forth in this Stock Option Grant
Notice and in the Option Agreement, the Plan and the Notice of Exercise, all of which are attached to this Stock Option Grant Notice and incorporated in their entirety. 
  

			
	Optionholder:	  	 
		
	Date of Grant:	  	 
		
	Vesting Commencement Date:	  	 
		
	Number of Shares Subject to Option:	  	 
		
	Exercise Price (Per Share):	  	 
		
	Total Exercise Price:	  	 
		
	Expiration Date:	  	 

  

					
	 Type of Grant:
	  	 ̈ Incentive Stock Option	  	 ̈ Nonstatutory Stock Option
			
	 Exercise Schedule:
	  	x Same as Vesting Schedule	  	 ̈ Early Exercise Permitted
		
	 Vesting Schedule:
	  	The Option vests with respect to 25% of the shares (rounded down to the nearest whole share) one year after the Vesting Commencement Date with the balance vesting with respect to 1148th of the Shares (rounded down to
the nearest whole share, except for the last vesting installment) each month thereafter (with vesting occurring on the first day of each month) over a 36 month period, subject to the optionholder’s continuous service with the Company through
each such vesting date.
		
	 Payment:
	  	By one or a combination of the following items (described in the Option Agreement):
		
		  	 x       By cash, check, bank draft or
money order payable to the Company

		  	  ̈        Pursuant to a
Regulation T Program if the Shares are publicly traded

		  	  ̈        By delivery of
already-owned shares if the Shares are publicly traded

		  	  ̈        By deferred
payment

		  	  ̈        By net
exercise

 Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and
understands and agrees to, this Stock Option Grant Notice, the Option Agreement and the Plan. Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Option Agreement and the Plan set forth the entire
understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously granted and delivered to
Optionholder under the Plan and (ii) the following agreements only: 
  

			
	OTHER AGREEMENTS:	  	  
	 	  	 
	 	  	  

  

									
	MANDIANT CORPORATION	 		 	OPTIONHOLDER:
				
	By:	 	 	 		 	 
		 	Name:	 		 	Signature
		 	Title:	 		 	
	Date: 	 	 	 		 	Date: 	 	 

 ATTACHMENTS: Option Agreement, 2011 Equity Incentive Plan and Notice of Exercise 

  
 -2- 

 ATTACHMENT I 

OPTION AGREEMENT 

 MANDIANT CORPORATION 

2011 EQUITY INCENTIVE PLAN 

OPTION AGREEMENT 

(INCENTIVE STOCK OPTION OR NONSTATUTORY
STOCK OPTION) 
 Pursuant to your Stock Option Grant Notice (“Grant
Notice”) and this Option Agreement, Mandiant Corporation (the “Company”) has granted you an option under its 2011 Equity Incentive Plan (the “Plan”) to purchase the number of shares of the
Company’s Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Capitalized terms not explicitly defined in this Option Agreement but defined in the Plan shall have the same definitions as in the
Plan. 
 The details of your option are as follows: 

1. VESTING. Subject to the limitations contained herein, your option
will vest as provided in your Grant Notice, provided that vesting will cease upon the termination of your Continuous Service in accordance with the terms of the Plan. 

2. NUMBER OF SHARES AND EXERCISE
PRICE. The number of shares of Common Stock subject to your option and your exercise price per share referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments. 

3. EXERCISE RESTRICTION FOR NON-EXEMPT
EMPLOYEES. In the event that you are an Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (i.e., a “Non-Exempt Employee”), and except as
otherwise provided in the Plan, you may not exercise your option until you have completed at least six months of Continuous Service measured from the date of grant specified in your Grant Notice (the “Date of Grant”),
notwithstanding any other provision of your option. Notwithstanding the foregoing, consistent with the provisions of the Worker Economic Opportunity Act, (i) in the event of your death or disability, (ii) upon a Corporate Transaction in
which your option is not assumed, continued or substituted or (iii) upon a Change in Control in which the vesting of your option accelerates, you may exercise any vested options earlier than six months following the Date of Grant. 

4. EXERCISE PRIOR TO VESTING (“EARLY
EXERCISE”). If permitted in your Grant Notice (i.e., the “Exercise Schedule” indicates “Early Exercise Permitted”) and subject to the provisions of your option, you may elect at any time that is both
(i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the unvested portion of your option; provided, however, that: 

(a) a partial exercise of your option shall be deemed to cover first vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock; 

 (b) any shares of Common Stock so purchased from installments that have not vested as of the date
of exercise shall be subject to the purchase option in favor of the Company as described in the Company’s form of Early Exercise Stock Purchase Agreement; 

(c) you shall enter into the Company’s form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the
same vesting as if no early exercise had occurred; and 
 (d) if your option is an Incentive Stock Option, then, to the extent that the
aggregate Fair Market Value (determined at the time of grant) of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under
all plans of the Company and its Affiliates) exceeds $100,000, your option(s) or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options. 

5. METHOD OF
PAYMENT. Payment of the exercise price is due in full upon exercise of all or any part of your option. You may elect to make payment of the exercise price in cash or by check or in any
other manner permitted by your Grant Notice, which may include one or more of the following: 
 (a) Provided that
at the time of exercise the Common Stock is publicly traded, and to the extent permitted by law, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results
in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds. 

(b) Provided that at the time of exercise the Common Stock is publicly traded, by delivery to the Company (either by actual delivery or
attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes,
in the sole discretion of the Company at the time you exercise your option, shall include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you
may not exercise your option by tender to the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. 

(c) Pursuant to the following deferred payment alternative: 

(i) Not less than 100% of the aggregate exercise price, plus accrued interest, shall be due four years from date of exercise or, at the
Company’s election, upon termination of your Continuous Service. 
 (ii) Interest shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to avoid (1) the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement and
(2) the classification of your option as a liability for financial accounting purposes. 

  
 -2- 

 (iii) To elect the deferred payment alternative, you must, as a part of your written notice of
exercise, give notice of the election of this payment alternative and, in order to secure the payment of the deferred exercise price to the Company hereunder, if the Company so requests, you must tender to the Company a promissory note and a pledge
agreement covering the purchased shares of Common Stock, both in form and substance satisfactory to the Company, or such other or additional documentation as the Company may request. 

(d) If the option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the
number of shares of Common Stock issued upon exercise of your option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company shall accept a
cash or other payment from you to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued; provided further, that shares of Common Stock will no longer be
outstanding under your option and will not be exercisable thereafter to the extent that (1) shares are used to pay the exercise price pursuant to the “net exercise,” (2) shares are delivered to you as a result of such exercise,
and (3) shares are withheld to satisfy tax withholding obligations. 
 (e) in any other form of legal consideration that may be
acceptable to the Board. 
 6. WHOLE SHARES. You may exercise your option only for whole
shares of Common Stock. 
 7. SECURITIES LAW COMPLIANCE. Notwithstanding
anything to the contrary contained herein, you may not exercise your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common Stock are not then so registered, the
Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option also must comply with other applicable laws and regulations governing your option, and you
may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations. 

8. TERM. You may not exercise your option before the commencement or after the expiration of its term.
The term of your option commences on the Date of Grant and expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following: 

(a) immediately upon the termination of your Continuous Service for Cause; 

(b) three months after the termination of your Continuous Service for any reason other than Cause or your Disability or death, provided
that if during any part of such three month period you may not exercise your option solely because of the condition set forth in Section 7 above relating to “Securities Law Compliance,” your option shall not expire until the earlier
of the 

  
 -3- 

 
Expiration Date or until it shall have been exercisable for an aggregate period of three months after the termination of your Continuous Service; and if (i) you are a Non-Exempt Employee,
(ii) your Continuous Service terminates within six months after the Date of Grant, and (iii) you have vested in a portion of your option at the time of your termination of Continuous Service, your option shall not expire until the earlier
of (x) the later of (A) the date that is seven months after the Date of Grant or (B) the date that is three months after the termination of your Continuous Service, or (y) the Expiration Date; 

(c) twelve months after the termination of your Continuous Service due to your Disability; 

(d) eighteen months after your death if you die either during your Continuous Service or within three months after your Continuous Service
terminates for any reason other than Cause; 
 (e) the Expiration Date indicated in your Grant Notice; or 

(f) the day before the tenth anniversary of the Date of Grant. 

Notwithstanding the foregoing, if you die during the period provided in Section 8(b) or 8(c) above, the term of your option shall not
expire until the earlier of 18 months after your death, the Expiration Date indicated in your Grant Notice, or the day before the tenth anniversary of the Date of Grant. 

If your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option,
the Code requires that at all times beginning on the date of grant of your option and ending on the day three months before the date of your option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your
death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue to
provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three months after the date your employment with the Company or an Affiliate terminates.

 9. EXERCISE. 

(a) You may exercise the vested portion of your option (and the unvested portion of your option if your Grant Notice so permits) during its
term by delivering a Notice of Exercise (in a form designated by the Company at the time of exercise) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then require. 

  
 -4- 

 (b) By exercising your option you agree that, as a condition to any exercise of your option, the
Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option, (2) the lapse of any substantial
risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock acquired upon such exercise. 

(c) If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within 15
days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two years after the date of your option grant or within one year after such shares of Common Stock are transferred
upon exercise of your option. 
 (d) By exercising your option you agree that you shall not sell, dispose of, transfer, make any short sale
of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by you, for a period of 180 days following the
effective date of a registration statement of the Company filed under the Securities Act or such longer period as necessary to permit compliance with NASD Rule 2711 or NYSE Member Rule 472 and similar rules and regulations (the
“Lock-Up Period”); provided, however, that nothing contained in this Section 9(d) shall prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further
agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 9(d) and
shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. 
 (e) As a condition to your
exercise of your option and to the Company’s issuance and delivery of the shares of Common Stock issuable upon such exercise, the Company may require that you execute certain customary agreements entered into with the holders of capital stock
of the Company, such as a right of first refusal and co-sale agreement, shareholders’ agreement and a voting agreement. 
 10.
TRANSFERABILITY. Except as otherwise provided in this Section 10, your option is not transferable except by will or by the laws of descent and distribution and is exercisable during your lifetime only by
you; provided, however, that the Board may, in its sole discretion, permit you to transfer your option to such extent as permitted by Rule 701, if applicable at the time of the grant of the option and in a manner consistent with
applicable tax and securities laws upon your request. Additionally, if your option is an Incentive Stock Option, the Board may permit you to transfer your option only to the extent permitted by Sections 421, 422 and 424 of the Code and the
regulations and other guidance thereunder. Notwithstanding anything to the contrary in this Section 10 or otherwise in this Option Agreement, if at any period of time the Company is relying on Rule 12h-1(f), your option is transferrable
during such period only to the extent permissible under Rule 12h-1(f). 

  
 -5- 

 (a) Domestic Relations Orders. Upon receiving
written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your option
pursuant to a domestic relations order that contains the information required by the Company to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this option with the Company prior to
finalizing the domestic relations order to help ensure the required information is contained within the domestic relations order. If this option is an Incentive Stock Option, this option may be deemed to be a Nonstatutory Stock Option as a result of
such transfer. 
 (b) Beneficiary Designation. Upon receiving written permission from the Board or its duly
authorized designee, you may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a third party who, in the event of your death, shall thereafter be entitled to exercise your option
and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, the executor or administrator of your estate shall be entitled to exercise this option and receive, on behalf of your estate, the
Common Stock or other consideration resulting from such exercise. 
 11. RIGHT OF
FIRST REFUSAL. Shares of Common Stock that you acquire upon exercise of your option are subject to any right of first refusal that may be described in the Company’s bylaws in effect at such time
the Company elects to exercise its right; provided, however, that if your option is an Incentive Stock Option and the right of first refusal described in the Company’s bylaws in effect at the time the Company elects to exercise
its right is more beneficial to you than the right of first refusal described in the Company’s bylaws on the Date of Grant, then the right of first refusal described in the Company’s bylaws on the Date of Grant shall apply. The
Company’s right of first refusal shall expire on the first date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on a national securities exchange or quotation system. 

12. RIGHT OF REPURCHASE. To the extent provided in the Company’s
bylaws in effect at such time the Company elects to exercise its right, the Company shall have the right to repurchase all or any part of the shares of Common Stock you acquire pursuant to the exercise of your option. 

13. OPTION NOT A SERVICE CONTRACT. Your
option is not an employment or service contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate. 
 14. WITHHOLDING OBLIGATIONS. 

(a) At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a “cashless exercise” pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your
option. 

  
 -6- 

 (b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair
Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your option as a liability for
financial accounting purposes). If the date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant to the preceding sentence shall not be permitted unless
you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares of Common Stock acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the
determination of such tax withholding obligation to the date of exercise of your option. Notwithstanding the filing of such election, shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined as of the date
of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility. 

(c) You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly,
you may not be able to exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied. 
 15. TAX CONSEQUENCES. You
hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You shall not make any claim against the Company, or any of its Officers,
Directors, Employees or Affiliates related to tax liabilities arising from your option or your other compensation. In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise price per share
specified in the Grant Notice is at least equal to the “fair market value” per share of the Common Stock on the Date of Grant and there is no other impermissible deferral of compensation associated with the option. While the Common Stock
is not traded on an established securities market, the Fair Market Value is determined by the Board, perhaps in consultation with an independent valuation firm retained by the Company. You acknowledge that there is no guarantee that the Internal
Revenue Service will agree with the valuation as determined by the Board, and you shall not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that
the valuation determined by the Board is less than the “fair market value” as subsequently determined by the Internal Revenue Service. 

  
 -7- 

 16. NOTICES. Any notices provided for in your option or the
Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five days after deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company. 
 17. GOVERNING PLAN DOCUMENT. Your
option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 

  
 -8- 

 ATTACHMENT II 

2011 EQUITY INCENTIVE PLAN 

 ATTACHMENT III 

NOTICE OF EXERCISE 

 NOTICE OF EXERCISE 

MANDIANT CORPORATION 

2011 EQUITY INCENTIVE PLAN 

Mandiant Corporation 
 2318 Mill Road, Suite 500 

Alexandria, Virginia 22314 
 Attention: Chief Financial Officer

 Date of Exercise:
                     
 Ladies and Gentlemen:

 This constitutes notice under my option that I elect to purchase the number of shares for the price set forth below. 

 

									
	 Type of option (check one):
	  	 	Incentive  ̈	  	    	Nonstatutory  ̈	  	
				
	 Option dated:
	  				    		  	
		  	  
	  
	 	    		  	
				
	 Number of shares as to which option is exercised:
	  				    		  	
		  	  
	  
	 	    		  	
				
	 Shares to be issued in name of:
	  				    		  	
		  	  
	  
	 	    		  	
				
	 Total exercise price:
	  	$	 	  	    		  	
		  	  
	  
	 	    		  	
				
	 Cash payment delivered herewith:
	  	$	 	  	    		  	
		  	  
	  
	 	    		  	
				
	 [Promissory note delivered herewith:]
	  	$	 	  	    		  	
		  	  
	  
	 	    		  	

 By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the
terms of the 2011 Equity Incentive Plan of Mandiant Corporation (the “Company”), (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the
exercise of the option, and (iii) if this exercise relates to an incentive stock option, to notify you in writing within 15 days after the date of any disposition of any of the shares of Common Stock issued upon exercise of the option that
occurs within two years after the date of grant of the option or within one year after such shares of Common Stock are issued upon exercise of the option. 

 If at the time of exercise of the option the Common Stock of the Company is not publicly traded,
I hereby make the following certifications and representations with respect to the number of shares of Common Stock of the Company listed above (the “Shares”), which are being acquired by me for my own account upon exercise
of the option as set forth above: 
 I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), and are deemed to constitute “restricted securities” under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present
intention of distributing or selling said Shares, except as permitted under the Securities Act and any applicable state securities laws. 

I further acknowledge that I will not be able to resell the Shares for at least 90 days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144. 

I further acknowledge that all certificates representing any of the Shares subject to the provisions of the option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Option Agreement, the Company’s Certificate of Incorporation, Bylaws and/or applicable securities laws. 

I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten
registration of the offering of any securities of the Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the
same economic effect as a sale, any shares of Common Stock or other securities of the Company for a period of 180 days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as
necessary to permit compliance with NASD Rule 2711 or NYSE Member Rule 472 and similar rules and regulations (the “Lock-Up Period”). I further agree to execute and deliver such other agreements as may be reasonably
requested by the Company and/or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such period. 
 I further agree to be a “Key Holder” pursuant
to (i) that certain Voting Agreement dated as of April 6, 2011, by and among the Company and the Company’s stockholders, as the same may be amended from time to time (the “Voting Agreement”), if such Voting
Agreement is in effect at the time of such exercise and (ii) that certain Right of First Refusal and Co-Sale Agreement dated as of April 6, 2011, by and among the Company and the Company’s stockholders, as the same may be amended from
time to time (the “ROFR Agreement”), if such ROFR Agreement is in effect at the time of such exercise. I further agree to be a “Manager” pursuant to that certain Third Amended and Restated Stockholders Agreement
dated as of April 6, 2011, by and among the Company and the Company’s stockholders, as the same may be amended from time to time (the “Stockholders Agreement”), if such Stockholders Agreement is in effect at of the
time of such exercise. I further 

  
 -2- 

 
acknowledge that all certificates representing any of the Shares subject to the provisions of the option shall have endorsed thereon the “Legend” as defined in the Voting Agreement, the
ROFR Agreement and the Stockholders Agreement. 
  

	
	Very truly yours,
	   

	
	Print Name:
                                         
                       
	
	Address:
                                         
                           
	
	 
	
	Email Address:
                                         
                   
	
	Phone Number:
                                         
                   

  
 -3-

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