Document:

ex10_1.htm

 

 

OMEGA HEALTHCARE INVESTORS, INC.

 

$350,000,000

 

6.75% Senior Notes due 2022

 

PURCHASE AGREEMENT

 

November 9, 2010

 

	
  

	
MERRILL LYNCH, PIERCE, FENNER & SMITH

	
  

	
                              INCORPORATED,

	
  

	
As Representative of the Initial Purchasers

	
  

	
Merrill Lynch, Pierce, Fenner & Smith

	
  

	
                     Incorporated

	
  

	
One Bryant Park

	
  

	
New York, New York  10036

 

Ladies and Gentlemen:

 

Omega Healthcare Investors, Inc., a Maryland corporation (the “Company”), and the Company’s subsidiaries listed on the signature pages hereto (the “Subsidiary Guarantors”), hereby confirm their agreement with you, as set forth below.

 

Section 1. The Securities.  Subject to the terms and conditions herein contained, the Company proposes to issue and sell to Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and the several Initial Purchasers named in Schedule 1 ( together with Merrill Lynch, the “Initial Purchasers”) $350,000,000 aggregate principal amount of its 6.75% Senior Notes due 2022 (the “Notes”).  The Notes will be unconditionally guaranteed (the “Guarantees”) on a senior basis by the Subsidiary Guarantors.  The Notes and the Guarantees are collectively referred to herein as the “Securities.”  The Securities are to be issued under an indenture (as supplemented to date, the “Indenture”) dated as of  October 4, 2010 by and among the Company, the Subsidiary Guarantors and U.S. Bank National Association, as Trustee (the “Trustee”).  Merrill Lynch has agreed to act as the representative of the several Initial Purchasers (the “Representative”) in connection with the offering and sale of the Notes.

 

The Company has previously issued $225,000,000 aggregate principal amount of 6.75% Senior Notes due 2022 (the “Existing Notes”) under the Indenture.  The Securities constitute “Additional Notes” (as such term is defined in the Indenture) under the Indenture.  Except as otherwise disclosed in the Pricing Disclosure Package (as defined below) and the Final Offering Memorandum (as defined below), the Securities will have terms identical to the Existing Notes and will be treated as a single series of debt securities for all purposes under the Indenture.

 

The Company has, pursuant to an Offer to Purchase and Consent Solicitation Statement and related letter of transmittal, each dated as of November 8, 2010 (together, the “Offer to Purchase”), commenced a cash tender offer (the “Tender Offer”) for any and all of its outstanding 7.00% notes due 2014 (the “2014 Notes”) and consent solicitation (the “Consent Solicitation”) of registered holders of the 2014 Notes to certain proposed amendments and waivers to the indenture, dated as of March 22, 2004 (as amended and supplemented, the “2014 Indenture”) among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee under the 2014 Indenture.  As described in the Pricing Disclosure Package and the Final Memorandum, it is expected that proceeds from the issuance and sale of the Securities shall be used to (i) pay consideration to holders who tender their 2014 Notes in the Tender Offer to the extent the Company obtains the requisite consents under the Consent Solicitation and (ii) pay fees and expenses in connection with the Tender Offer and Consent Solicitation.

 

The Securities will be offered and sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the “Act”), in reliance on exemptions therefrom.

 

In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum dated November 9, 2010 (the “Preliminary Memorandum”) setting forth or including a description of the terms of the Securities, the terms of the offering of the Securities, a description of the Company and any material developments relating to the Company occurring after the date of the most recent historical financial statements included therein.  As used herein, “Pricing Disclosure Package” shall mean the Preliminary Memorandum, as supplemented or amended by the written communications listed on Annex A hereto in the most recent form that has been prepared and delivered by the Company to the Initial Purchasers in connection with their solicitation of offers to purchase Securities prior to the time when sales of the Securities were first made (the “Time of Execution”).  Promptly after the Time of Execution and in any event no later than the second Business Day following the Time of Execution, the Company will prepare and deliver to each Initial Purchaser a final offering memorandum (the “Final Memorandum”), which will consist of the Preliminary Memorandum with such changes therein as are required to reflect the information contained in the amendments or supplements listed on Annex A hereto.  The Company hereby confirms that it has authorized the use of the Pricing Disclosure Package, the Final Memorandum and the Recorded Road Show (defined below), if any, in connection with the offer and sale of the Securities by the Initial Purchasers.  Any references herein to the Pricing Disclosure Package and the Final Memorandum shall be deemed to refer to and include any documents incorporated by reference therein.

 

The Initial Purchasers, the Subsidiary Guarantors and their direct and indirect transferees of the Securities will be entitled to the benefits of a Registration Rights Agreement, to be dated as of the Closing Date (the “Registration Rights Agreement”), pursuant to which each of the Company and the Subsidiary Guarantors has agreed, among other things, to use commercially reasonable efforts to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) registering the Securities or the Exchange Notes (as defined in the Registration Rights Agreement) under the Act.

 

Section 2. Representations and Warranties. As of the Time of Execution and at the Closing Date, each of the Company and the Subsidiary Guarantors, jointly and severally, represents and warrants to and agrees with each of the Initial Purchasers as follows (references in this Section 2 to the “Offering Memorandum” are to (i) the Pricing Disclosure Package in the case of representations and warranties made as of the Time of Execution and (ii) both the Pricing Disclosure Package and the Final Memorandum in the case of representations and warranties made at the Closing Date):

 

(a) The Preliminary Memorandum, on the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  At the Time of Execution, the Pricing Disclosure Package does not, and on the Closing Date (as defined in Section 3 below), will not, and the Final Memorandum as of its date and on the Closing Date will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that each of the Company and the Subsidiary Guarantors makes no representation or warranty as to the information contained in or omitted from the Pricing Disclosure Package and Final Memorandum, in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of the Initial Purchasers through the Representative specifically for inclusion therein.  The Company has not distributed or referred to and will not distribute or refer to any written communications (as defined in Rule 405 of the Act) that constitutes an offer to sell or solicitation of an offer to buy the Securities (each such communication by the Company or its agents and representatives (other than the Pricing Disclosure Package and Final Memorandum) an “Issuer Written Communication”) other than the Pricing Disclosure Package, the Final Memorandum and the recorded electronic road show, made available to investors (the “Recorded Road Show”).  Any information in an Issuer Written Communication that is not otherwise included in the Pricing Disclosure Package and the Final Memorandum does not conflict with the Pricing Disclosure Package or the Final Memorandum and, each Issuer Written Communication, when taken together with the Pricing Disclosure Package does not at the Time of Execution and when taken together with the Final Memorandum at the Closing Date will not, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(b) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Offering Memorandum complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations thereunder.

 

(c) All of the issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable, have been issued in compliance with all federal and state securities laws and were not issued in violation of any preemptive right, resale right, right of first refusal or similar right.

 

(d) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Maryland, with full corporate power and authority to acquire, own, lease and operate its properties, and to lease the same to others, and to conduct its business as described in the Offering Memorandum, to execute and deliver this Agreement and to issue, sell and deliver the Notes as contemplated herein.  The Company is in compliance in all respects with the laws, orders, rules, regulations and directives issued or administered by such jurisdictions, except where the failure to be in compliance would not, individually or in the aggregate, either (i) have a material adverse effect on the business, properties, financial condition, results of operation or prospects of the Company and the Subsidiaries (as hereinafter defined) taken as a whole or (ii) prevent consummation of the transactions contemplated hereby (the occurrence of such effect or such prevention described in the foregoing clauses (i) and (ii) being herein referred to as a “Material Adverse Effect”).

 

(e) The Company is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect.

 

(f) The Company has no subsidiaries (as defined under the Act) other than those listed in Schedule 2 annexed hereto (collectively, the “Subsidiaries”).  On the Closing Date, each Subsidiary Guarantor will issue its Guarantee of the Notes; the Company owns, directly or indirectly, all of the issued and outstanding equity interests of each of the Subsidiaries; the Company does not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities of any corporation or have any equity interest in any firm, partnership, joint venture, association or other entity other than the equity interests of the Subsidiaries, or as would not be material to the Company and the Subsidiaries on a consolidated basis.  Complete and correct copies of the articles of incorporation and the bylaws of the Company and all amendments thereto have been delivered to you, and no changes therein or to the articles of incorporation and the bylaws (or other organizational documents) of the Subsidiaries will be made from and including the date hereof through and including the Closing Date.  Each Subsidiary has been duly formed and is validly existing as a corporation, limited liability company, limited partnership or trust in good standing under the laws of the jurisdiction of its formation, with full organizational power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum, except where the failure to be so formed and existing or to have such organizational power and authority would not, individually or in the aggregate, have a Material Adverse Effect.  Each Subsidiary is duly qualified to do business as a foreign corporation, limited liability company, limited partnership or trust and is in good standing in each jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect.  Each Subsidiary is in compliance in all respects with the laws, orders, rules, regulations and directives issued or administered by such jurisdictions, except where the failure to be in compliance would not, individually or in the aggregate, have a Material Adverse Effect.  All of the outstanding shares of equity interests of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and are owned, directly or indirectly, by the Company subject to no security interest, other material encumbrance or adverse claims other than security interests, as disclosed in the Offering Memorandum, granted under the Company’s credit agreement dated April 13, 2010, as amended.  No options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligation into shares of capital stock or ownership interests in the Subsidiaries are outstanding.  The Company has no “significant subsidiary,” as that term is defined in Rule 1-02(w) of Regulation S-X under the Act, other than those listed in Exhibit 21 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

 

(g) The Company has all requisite corporate power and authority to execute, deliver and perform each of its obligations under the Notes, the Exchange Notes (as defined in the Registration Rights Agreement) and the Private Exchange Notes (as defined in the Registration Rights Agreement).  The Notes, when issued, will be in the form contemplated by the Indenture.  The Notes, the Exchange Notes and the Private Exchange Notes have each been duly and validly authorized by the Company and, when executed by the Company and authenticated by the Trustee in accordance with the provisions of the Indenture and, in the case of the Notes, when delivered to and paid for by the Initial Purchasers in accordance with the terms of this Agreement, will constitute valid and legally binding obligations of the Company, in each case entitled to the benefits of the Indenture, and enforceable against the Company in accordance with their terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity and the discretion of the court before which any proceeding therefor may be brought.

 

(h) Each of the Subsidiary Guarantors has all requisite organizational power and authority to execute, deliver and perform each of its obligations under the Guarantees and the guarantees of the Exchange Notes and the Private Exchange Notes.  The Guarantees, and the guarantees of the Exchange Notes, when issued, will be in the form contemplated by the Indenture.  The Guarantees have been duly and validly authorized by each of the Subsidiary Guarantors and, when the Guarantees are executed by each of the Subsidiary Guarantors and the Notes are authenticated by the Trustee in accordance with the provisions of the Indenture, will have been duly executed, issued and delivered and will constitute valid and legally binding obligations of the Subsidiary Guarantors, and the guarantees of the Exchange Notes and the Private Exchange Notes, if any, have been duly and validly authorized by each of the Subsidiary Guarantors and, when the guarantees of the Exchange Notes and the Private Exchange Notes, if any, are executed by each of the Subsidiary Guarantors and the Exchange Notes and the Private Exchange Notes, if any, are authenticated by the Trustee in accordance with the provisions of the Indenture and issued in exchange for the guarantees of the Notes in accordance with the Indenture, will constitute valid and binding obligations of such Subsidiary Guarantor, in each case entitled to the benefits of the Indenture and enforceable against such Subsidiary Guarantor in accordance with their terms, subject to (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity and the discretion of the court before which any proceeding therefor may be brought.

 

(i) The Company and each of the Subsidiary Guarantors has all requisite corporate or organizational power and authority to execute, deliver and perform its obligations under the Indenture.  The Indenture meets the requirements for qualification under the Trust Indenture Act of 1939, as amended (the “TIA”).  The Indenture has been duly and validly authorized by the Company and each of the Subsidiary Guarantors. The Indenture has been duly executed and delivered by the Company and each of the Subsidiary Guarantors and (assuming the due authorization, execution and delivery by the Trustee), constitutes a valid and legally binding agreement of the Company and each of the Subsidiary Guarantors, enforceable against the Company and each of the Subsidiary Guarantors in accordance with its terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity and the discretion of the court before which any proceeding therefor may be brought.

 

(j) The Company and each of the Subsidiary Guarantors has all requisite corporate or organizational power and authority to execute, deliver and perform its obligations under the Registration Rights Agreement.  The Registration Rights Agreement has been duly and validly authorized by the Company and each of the Subsidiary Guarantors and, when executed and delivered by the Company and each of the Subsidiary Guarantors (assuming the due authorization, execution and delivery by the Initial Purchasers), will constitute a valid and legally binding agreement of the Company enforceable against the Company and each of the Subsidiary Guarantors in accordance with its terms, except that (A) the enforcement thereof may be subject to (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity and the discretion of the court before which any proceeding therefor may be brought and (B) any rights to indemnity or contribution thereunder may be limited by federal and state securities laws and public policy considerations.

 

(k) The Company and each of the Subsidiary Guarantors has all requisite corporate or organizational power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Tender Offer, the Consent Solicitation and the other transactions contemplated hereby.  This Agreement and the consummation by the Company and each of the Subsidiary Guarantors of the transactions contemplated hereby have been duly authorized by the Company and each of the Subsidiary Guarantors.  This Agreement has been duly and validly executed and delivered by the Company and each of the Subsidiary Guarantors.

 

(l) Neither the Company nor any of the Subsidiaries is in breach or violation of or in default under (nor has any event occurred which with notice, lapse of time or both would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) its (i) respective charter or bylaws (or other formation documents), (ii) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected (including, without limitation, the Indenture) or (iii) any federal, state, local or foreign law, regulation or rule, including, without limitation, the rules and regulations of the New York Stock Exchange (the “NYSE”), or any decree, judgment or order applicable to the Company or any of the Subsidiaries or any of their respective properties, except in the case of clauses (ii) and (iii) above, for such breaches, violations or defaults as would not, individually or in the aggregate, have a Material Adverse Effect.  The execution, delivery and performance of this Agreement, the issuance and sale of the Securities and the consummation of the Tender Offer, the Consent Solicitation and the other transactions contemplated hereby (A) will neither conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which with notice, lapse of time or both would result in any breach or violation of or constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (1) the charter or bylaws (or other formation documents) of the Company or any of the Subsidiaries, (2) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected (including, without limitation, the Indenture), or (3) any federal, state or local law, regulation or rule, including the rules and regulations of the NYSE or any decree, judgment or order applicable to the Company or any of the Subsidiaries, except in the case of clause (2) above, for such breaches, violations or defaults as would not, individually or in the aggregate, have a Material Adverse Effect, nor (B) result in the creation or imposition of any lien, charge, claim or encumbrance upon any of the properties (real and personal (including, without limitation, mortgage loans and unsecured loans)) described in the Offering Memorandum as being owned or leased by the Company or any of the Subsidiaries (the “Properties”).

 

(m) No approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency, or of or with the NYSE, or approval of the stockholders of the Company, is required in connection with the issuance and sale of the Securities or the consummation by the Company or any of the Subsidiary Guarantors of the transactions contemplated hereby other than which has been effected and any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the Securities are being offered by the Initial Purchasers.

 

(n) Except as expressly set forth in the Offering Memorandum, (i) no person has the right, contractual or otherwise, to cause the Company to issue or sell to it any shares of common stock of the Company or shares of any other capital stock or other equity interests of the Company and (ii) no person has any preemptive rights, resale rights, rights of first refusal or other rights to purchase any shares of common stock of the Company or shares of any other capital stock of or other equity interests in the Company and (iii) no person has the right to act as an initial purchaser or as a financial advisor to the Company in connection with the offer and sale of the Securities, whether as a result of the sale of the Securities as contemplated thereby or otherwise.

 

(o) Each of the Company and the Subsidiaries (and, to the Company’s knowledge, each operator, lessee or sublessee of any Property or portion thereof) (i) has all necessary licenses, authorizations, consents and approvals, (ii) has made all necessary filings required under any federal, state, local or foreign law, regulation or rule, and (iii) has obtained all necessary licenses, authorizations, consents and approvals from other persons, in order to acquire and own, lease or sublease, lease to others and conduct its respective business as described in the Offering Memorandum, except in the case of clauses (i), (ii) and (iii) above, where the failure to have such items, make such filings or obtain such items would not, individually or in the aggregate, have a Material Adverse Effect.  Neither the Company nor any of the Subsidiaries (nor, to the knowledge of the Company or any of the Subsidiary Guarantors, any such operator, lessee or sublessee) is in violation of, or in default under, or has received notice of any proceedings relating to revocation or modification of, any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, order or judgment applicable to the Company or any of the Subsidiaries, except where such violation, default, revocation or modification would not, individually or in the aggregate, have a Material Adverse Effect.

 

(p) All legal or governmental proceedings, affiliate transactions, off-balance sheet transactions (including, without limitation, transactions related to, and the existence of, “variable interest entities” within the meaning of Statement of Financial Accounting Standards No. 167), contracts, licenses, agreements, leases or documents of a character required to be described in a Registration Statement on Form S-3 filed by the Company or to be filed as an exhibit to such a Registration Statement or any incorporated document have been so described or filed as required.

 

(q) There are no actions, suits, claims, investigations or proceedings pending or, to the knowledge of the Company or any of the Subsidiary Guarantors, threatened or contemplated to which the Company or any of the Subsidiaries or any of their respective directors or officers (or, to the Company’s knowledge, any person from whom the Company or any Subsidiary acquired any of the Properties (each, a “seller”), or any lessee, sublessee or operator of any Property or any portion thereof) is or would be a party, or of which any of the respective properties or assets of the Company and the Subsidiaries, or any Property, is or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency, except any such action, suit, claim, investigation or proceeding which would not result in a judgment, decree or order having, individually or in the aggregate, a Material Adverse Effect.

 

(r) Ernst & Young LLP, whose report on the consolidated financial statements of the Company and the Subsidiaries is incorporated by reference in the Offering Memorandum, are independent public accountants as required by the Act and by Rule 3600T of the Public Company Accounting Oversight Board.

 

(s) The audited and unaudited consolidated financial statements of the Company and the Subsidiaries included or incorporated by reference in the Offering Memorandum, together with the related notes, present fairly the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated results of operations and cash flows of the Company and the Subsidiaries for the periods specified and have been prepared in compliance with the applicable requirements of the Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in conformity with generally accepted accounting principles applied on a consistent basis during the periods involved (except, in the case of unaudited financial statements, for normal year-end adjustments and the absence of notes).   The pro forma financial statements and data included or incorporated by reference in the Offering Memorandum comply with the applicable requirements of Regulation S-X of the Act and the pro forma adjustments have been properly applied to the historical amounts in the compilation of those statements and data.  The other financial and statistical data set forth or incorporated by reference in the Offering Memorandum are fairly presented in all material respects and prepared on a basis consistent with the financial statements and books and records of the Company.  There are no financial statements (historical or pro forma) that are required to be included or incorporated by reference in the Offering Memorandum (including, without limitation, as required by Rules 3-12 or 3-05 or Article 11 of Regulation S-X under the Act to the extent applicable) that are not included as required.  The Company and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations or any “variable interest entities” within the meaning of Statement of Financial Accounting Standards No. 167), not disclosed in the Offering Memorandum.

 

(t) Subsequent to the respective dates as of which information is given in the Offering Memorandum, there has not been (i) any material adverse change, or any development which could have a reasonable possibility of giving rise to a prospective material adverse change, in the business, properties, management, financial condition or results of operations of the Company and the Subsidiaries taken as a whole, (ii) any transaction which is material to the Company and the Subsidiaries taken as a whole, (iii) any obligation, direct or contingent (including any off-balance sheet obligations), incurred by the Company or any Subsidiary, which is material to the Company and the Subsidiaries taken as a whole, (iv) any change in the capital stock (except as the result of the exercise or vesting of rights or awards held by directors and employees under the Company’s stock incentive plans described in the Offering Memorandum or issuances under the Company’s dividend reinvestment and common stock purchase plan) or outstanding indebtedness of the Company or any Subsidiary or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any Subsidiary except as disclosed in the Offering Memorandum.

 

(u) Neither the Company nor any Subsidiary is and, after giving effect to the offering and sale of the Securities and the consummation of the transactions contemplated hereby, neither of them will be an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(v) None of the Company, the Subsidiaries or any agent acting on their behalf, other than the Initial Purchasers, has taken or will take any action that would cause this Agreement or the sale of the Notes to violate Regulation T, U or X of the Board of Governors of the Federal Reserve System, in each case as in effect, or as the same may hereafter be in effect, on the Closing Date.

 

(w) Except for Property Encumbrances (as defined below) arising under our credit agreement dated as of April 13, 2010, as amended, which is described in the Offering Memorandum, the Company, and each of the Subsidiaries, has insurable title, and, in the case of real property, in fee simple, to the Properties, free and clear of all liens, claims, mortgages, deeds of trust, restrictions, security interests and other encumbrances or defects (“Property Encumbrances”), except for (x) the leasehold interests of lessees in the Properties of the Company and the Subsidiaries held under lease (the “Leases”) and (y) any other Property Encumbrances that would not, individually or in the aggregate, have a Material Adverse Effect.  All Property Encumbrances on or affecting the Properties which are required to be disclosed in the Offering Memorandum are disclosed therein as required.

 

(x) Each of the Leases pertaining to the Properties has been duly authorized by the Company or a Subsidiary, as applicable, and is a valid, subsisting and enforceable agreement of the Company or such Subsidiary, as applicable, and, to the knowledge of the Company, each other party thereto, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally or general equitable principles.

 

(y) No person other than the Company or a Subsidiary has an option or right of first refusal to purchase all or part of any Property owned by the Company or any interest therein, and to the Company’s knowledge no such right exists with respect to any Property that the Company leases (as lessee), except for such options or rights of first refusal which, if refused, will not individually or in the aggregate have a Material Adverse Effect.

 

(z) To the knowledge of the Company or any of the Subsidiary Guarantors, except as disclosed in the Offering Memorandum, no lessee of any portion of any of the Properties is in default under its respective lease, and there is no event which, with notice, lapse of time or both, would constitute a default under any such lease, except such defaults that would not, individually or in the aggregate, have a Material Adverse Effect.

 

(aa) To the knowledge of the Company or any of the Subsidiary Guarantors, except as disclosed in the Offering Memorandum, no borrower of a mortgage loan from the Company is in default under its respective mortgage loan, and there is no event which, with notice, lapse of time or both, would constitute a default under any such mortgage loan, except such defaults that would not, individually or in the aggregate, have a Material Adverse Effect.

 

(bb) The Company and the Subsidiaries own, or have obtained valid and enforceable licenses for, or other rights to use, the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, service names, copyrights, trade secrets and other proprietary information described in the Offering Memorandum as being owned or licensed by them or which are necessary for the conduct of their respective businesses, except where the failure to own, license or have such rights would not, individually or in the aggregate, have a Material Adverse Effect.

 

(cc) Neither the Company nor any of the Subsidiaries is engaged in any unfair labor practice, except as would not, individually or in the aggregate, have a Material Adverse Effect.  There has been no violation of any federal, state or local law relating to discrimination in the hiring, promotion or pay of employees, any applicable wage or hour laws or any provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) or the rules and regulations promulgated thereunder concerning the employees of the Company or any of the Subsidiaries, except as would not, individually or in the aggregate, have a Material Adverse Effect.

 

(dd) The Company and the Subsidiaries and their properties, assets and operations (and, to the knowledge of the Company or any of the Subsidiary Guarantors, each operator or lessee of any Property or portion thereof) are in compliance with, and hold all permits, authorizations and approvals required under, Environmental Laws (as defined below), except to the extent that failure to so comply or to hold such permits, authorizations or approvals would not, individually or in the aggregate, have a Material Adverse Effect.  There are no past, present or, to the knowledge of the Company or any of the Subsidiary Guarantors, reasonably anticipated future events, conditions, circumstances, activities, practices, actions, omissions or plans that could reasonably be expected to give rise to any material costs or liabilities to the Company or any Subsidiary under, or to interfere with or prevent compliance by the Company or any Subsidiary with, Environmental Laws, except as would not, individually or in the aggregate, have a Material Adverse Effect.  Except as would not, individually or in the aggregate, have a Material Adverse Effect, neither the Company nor any of the Subsidiaries, nor, to the knowledge of the Company or any of the Subsidiary Guarantors, any seller, lessee, sublessee or operator of any Property or portion thereof or any previous owner thereof, (i) is the subject of any investigation, (ii) has received any notice or claim, (iii) is a party to or affected by any pending or threatened action, suit or proceeding, (iv) is bound by any judgment, decree or order or (v) has entered into any agreement, in each case relating to any alleged violation of any Environmental Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Materials (as defined below).  Neither the Company nor any of the Subsidiaries, nor, to the knowledge of the Company or any of the Subsidiary Guarantors, any seller, lessee, sublessee or operator of any Property or portion thereof or any previous owner thereof, has received from any governmental authority notice of any violation, concerning the Properties, of any municipal, state or federal law, rule or regulation or of any Environmental Law, except for such violations as have heretofore been cured and except for such violations as would not, individually or in the aggregate, have a Material Adverse Effect.  As used herein, “Environmental Law” means any federal, state or local law, statute, ordinance, rule, regulation, order, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials, and “Hazardous Materials” means any material (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise to liability under any Environmental Law.

 

(ee) The Company and the Subsidiaries have (A) all licenses, certificates, permits, authorizations, approvals, franchises and other rights from, and have made all declarations and filings with, all applicable authorities, all self-regulatory authorities and all courts and other tribunals (each, an “Authorization”) necessary to engage in the business conducted by them in the manner described in the Offering Memorandum, except as would not, individually or in the aggregate, have a Material Adverse Effect, and (B) no reason to believe that any governmental body or agency, domestic or foreign, is considering limiting, suspending or revoking any such Authorization, except where any such limitations, suspensions or revocations would not, individually or in the aggregate, have a Material Adverse Effect.  All such Authorizations are valid and in full force and effect and the Company and the Subsidiaries are in compliance with the terms and conditions of all such Authorizations and with the rules and regulations of the regulatory authorities having jurisdiction with respect to such Authorizations, except for any invalidity, failure to be in full force and effect or noncompliance with any Authorization that would not, individually or in the aggregate, have a Material Adverse Effect.

 

(ff) Neither the Company nor any of the Subsidiaries, nor, to the knowledge of the Company or any of the Subsidiary Guarantors, any seller, lessee, sublessee or operator of any Property or portion thereof, has received from any governmental authority any written notice of any condemnation of, or zoning change affecting, the Properties or any portion thereof, and the Company does not know of any such condemnation or zoning change which is threatened, except for such condemnations or zoning changes that, if consummated, would not, individually or in the aggregate, have a Material Adverse Effect.  Each of the Properties, and the current and intended use and occupancy thereof, complies with all applicable zoning laws, ordinances and regulations, except where such failure does and will not, individually or in the aggregate, have a Material Adverse Effect.

 

(gg) All tax returns required to be filed by the Company or any of the Subsidiaries have been timely filed, and all taxes and other assessments of a similar nature (whether imposed directly or through withholding and whether or not shown on a tax return) including any interest, additions to tax or penalties applicable thereto due or claimed to be due from such entities have been timely paid, other than those taxes being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP or the filing of tax returns or the payment of any taxes which would not, individually or in the aggregate, have a Material Adverse Effect.  There is no tax deficiency which has been or could reasonably be expected to be asserted against the Company or any Subsidiary, except any tax deficiency which would not, individually or in the aggregate, have a Material Adverse Effect.  The Company has made adequate charges, accruals and reserves in accordance with GAAP in the applicable financial statements referred to in Section 2(s) hereof in respect of all taxes for all periods as to which the tax liability of the Company or its Subsidiaries has not been finally determined.

 

(hh) There is no strike, labor dispute, slowdown or work stoppage with the employees of the Company or any of the Subsidiaries that is pending or, to the knowledge of the Company or any of the Subsidiary Guarantors, threatened.

 

(ii) Each of the Company and the Subsidiaries is insured by insurers of recognized financial responsibility against such losses and risks and in such amount as the Company reasonably deems to be adequate and as are customary in the business in which they are engaged, except as described in the Offering Memorandum.  Except as would not, individually or in the aggregate, have a Material Adverse Effect, all policies of insurance insuring the Company and the Subsidiaries or any of their businesses, assets, employees, officers, directors and trustees are in full force and effect, and the Company and the Subsidiaries are in compliance with the terms of such policies in all material respects.  Except as would not, individually or in the aggregate, have a Material Adverse Effect, there are no claims by the Company or any of the Subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause.

 

(jj) Neither the Company nor any of the Subsidiaries has sustained, since the date of the last audited financial statements included or incorporated by reference in the Offering Memorandum, any loss or interference with its respective business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, except for such loss or interference as would not, individually or in the aggregate, have a Material Adverse Effect.

 

(kk) Neither the Company nor any Subsidiary has sent or received any communication regarding termination of, or intent not to renew, any of the leases, contracts or agreements referred to or described in, or filed as an exhibit to, any Incorporated Document, and no such termination or non-renewal has been threatened by the Company or any Subsidiary or, to the knowledge of the Company or any Subsidiary Guarantor after due inquiry, any other party to any such contract or agreement, except for such termination or non-renewal as would not, individually or in the aggregate, have a Material Adverse Effect.

 

(ll) The Company and its Subsidiaries on a consolidated basis maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(mm) The Company has established and maintains and evaluates “disclosure controls and procedures” (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act) and “internal control over financial reporting” (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the Company’s Chief Executive Officer and its Chief Financial Officer by others within those entities, and such disclosure controls and procedures are effective to perform the functions for which they were established; the Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of:  (i) any significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls.  Any material weaknesses in internal controls have been identified for the Company’s auditors.  Since the date of the most recent evaluation of such disclosure controls and procedures, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses; the principal executive officers (or their equivalents) and principal financial officers (or their equivalents) of the Company have made all certifications required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and any related rules and regulations promulgated by the Commission, and the statements contained in any such certification are complete and correct.  The Company and the Subsidiaries are in compliance in all material respects with all applicable effective provisions of the Sarbanes-Oxley Act and the rules and regulations of the Commission and the NYSE promulgated thereunder.

 

(nn) This Agreement, the Securities, the Indenture and the Registration Rights Agreement will conform in all material respects to the descriptions thereof in the Offering Memorandum.

 

(oo) No holder of securities of the Company or any Subsidiary will be entitled to have such securities registered under the registration statements required to be filed by the Company pursuant to the Registration Rights Agreement other than as expressly permitted thereby.

 

(pp) Immediately after the consummation of the transactions contemplated by this Agreement, the fair value and present fair saleable value of the assets of each of the Company and the Subsidiaries (each on a consolidated basis) will exceed the sum of its stated liabilities and identified contingent liabilities; none of the Company or the Subsidiaries (each on a consolidated basis) is, nor will any of the Company or the Subsidiaries (each on a consolidated basis) be, after giving effect to the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, (a) left with unreasonably small capital with which to carry on its business as it is proposed to be conducted, (b) unable to pay its debts (contingent or otherwise) as they mature or (c) otherwise insolvent.

 

(qq) None of the Company, the Subsidiaries or any of their respective Affiliates (as defined in Rule 501(b) of Regulation D under the Act) has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of any “security” (as defined in the Act) that is or could be integrated with the sale of the Notes in a manner that would require the registration under the Act of the Notes or (ii) engaged in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Act) in connection with the offering of the Securities or in any manner involving a public offering within the meaning of Section 4(2) of the Act.  Assuming the accuracy of the representations and warranties of the Initial Purchasers in Section 8 hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers in the manner contemplated by this Agreement to register any of the Notes under the Act or to qualify the Indenture under the TIA.

 

(rr) No securities of the Company or any Subsidiary that are of the same class (within the meaning of Rule 144A under the Act) as the Securities are listed on a national securities exchange registered under Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.

 

(ss) None of the Company, the Subsidiaries, any of their respective Affiliates or any person acting on its or their behalf (other than the Initial Purchasers) has engaged in any directed selling efforts (as that term is defined in Regulation S under the Act (“Regulation S”)) with respect to the Securities.  The Company, the Subsidiaries and their respective Affiliates and any person acting on its or their behalf (other than the Initial Purchasers) have complied with the offering restrictions requirement of Regulation S.

 

(tt) The Company has provided you true, correct and complete copies of all documentation pertaining to any extension of credit in the form of a personal loan made, directly or indirectly, by the Company or any Subsidiary to any director or executive officer of the Company, or to any family member or affiliate of any director or executive officer of the Company.  On or after September 30, 2010, the Company has not, directly or indirectly, including through any Subsidiary:  (i) extended credit, arranged to extend credit, or renewed any extension of credit, in the form of a personal loan, to or for any director or executive officer of the Company, or to or for any family member or affiliate of any director or executive officer of the Company; or (ii) made any material modification, including any renewal thereof, to any term of any personal loan to any director or executive officer of the Company, or any family member or affiliate of any director or executive officer, which loan was outstanding on September 30, 2010.

 

(uu) All statistical or market-related data included or incorporated by reference in the Offering Memorandum are based on or derived from sources that the Company believes to be reliable and accurate in all material respects, and the Company has obtained the written consent to the use of such data from such sources to the extent required.

 

(vv) Neither the Company nor any of the Subsidiaries nor, to the knowledge of the Company and each of the Subsidiary Guarantors, any employee or agent of the Company or any Subsidiary has made any payment of funds of the Company or any Subsidiary or received or retained any funds in violation of any law, rule or regulation, which payment, receipt or retention of funds is of a character required to be disclosed in the Offering Memorandum or any document incorporated by reference therein.

 

(ww) Except pursuant to this Agreement, neither the Company nor any of the Subsidiaries has incurred any liability for any finder’s or broker’s fee or agent’s commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby or by the Offering Memorandum.

 

(xx) From and including the Company’s taxable year ended December 31, 1992, the Company was and is organized in conformity with the requirements for, its actual methods of operation through the date hereof has permitted, and its proposed methods of operations as described in the Officer’s Certificate will permit the Company to meet the requirements for, qualification and taxation as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), and the Company has qualified and will so qualify, and, the Company will continue to meet such requirements and qualify as a REIT after consummation of the contemplated transactions and the application of the proceeds, if any, from the offering of the Notes by the Company as described in the Offering Memorandum.  All statements in the Offering Memorandum regarding the Company’s qualification as a REIT are true, complete and correct in all material respects.

 

(yy) Neither the Company nor any of the Subsidiaries nor any of their respective directors, officers, affiliates or controlling persons has taken, directly or indirectly, any action designed, or which has constituted or might reasonably be expected to cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.

 

(zz) Any certificate signed by any officer of the Company or any Subsidiary Guarantor and delivered to any Initial Purchaser or to counsel for the Initial Purchasers shall be deemed a joint and several representation and warranty by the Company and each of the Subsidiary Guarantors to each Initial Purchaser as to the matters covered thereby.

 

Section 3. Purchase, Sale and Delivery of the Notes.  On the basis of the representations, warranties, agreements and covenants herein contained and subject to the terms and conditions herein set forth, the Company and the Subsidiary Guarantors agree  to issue and sell to the Initial Purchasers, and the Initial Purchasers, acting severally and not jointly, agree to purchase the Securities in the respective amounts set forth on Schedule 1 hereto from the Company and the Subsidiary Guarantors at 101.25% of their principal amount, plus accrued interest from October 4, 2010 to the Closing Date.  One or more certificates in definitive form for the Securities that the Initial Purchasers have agreed to purchase hereunder, and in such denomination or denominations and registered in such name or names as the Initial Purchasers request upon notice to the Company of at least 48 hours (but not less than one business day) prior to the Closing Date, shall be delivered by or on behalf of the Company and the Subsidiary Guarantors to the Initial Purchasers, against payment by or on behalf of the Initial Purchasers of the purchase price therefor by wire transfer (same day funds), to such account or accounts as the Company shall specify in writing prior to the Closing Date, or by such means as the parties hereto shall agree prior to the Closing Date.  Such delivery of and payment for the Securities shall be made at the offices of Cahill Gordon & Reindel llp, 80 Pine Street, New York, New York at 10:00 A.M., New York time, on November 23, 2010, or at such other place, time or date as the Initial Purchasers, on the one hand, and the Company, on the other hand, may agree upon, such time and date of delivery against payment being herein referred to as the “Closing Date.”  The Company and the Subsidiary Guarantors will make such certificate or certificates for the Securities available for checking and packaging by the Initial Purchasers at the offices of Merrill Lynch in New York, New York, or at such other place as Merrill Lynch may designate, at least 24 hours prior to the Closing Date.

 

Section 4. Offering by the Initial Purchasers.  The Initial Purchasers propose to make an offering of the Securities at the price and upon the terms set forth in the Offering Memorandum as soon as practicable after this Agreement is entered into and as in the judgment of the Initial Purchasers is advisable.

 

Section 5. Covenants of the Company.  Each of the Company and the Subsidiary Guarantors, as the case may be, jointly and severally, covenants and agrees with the Initial Purchasers as follows:

 

(a) Until the later of (i) the completion of the distribution of the Securities by the Initial Purchasers and (ii) the Closing Date, the Company will not amend or supplement the Offering Memorandum or file any report with the Commission under the Exchange Act unless the Initial Purchasers shall previously have been advised and furnished a copy for a reasonable period of time prior to the proposed amendment, supplement or report and as to which the Initial Purchasers shall have given their consent (which consent shall not be unreasonably withheld).  The Company will promptly, upon the reasonable request of the Initial Purchasers or counsel for the Initial Purchasers, make any amendments or supplements to the Offering Memorandum that may be necessary or advisable in connection with the resale of the Securities by the Initial Purchasers.

 

(b) The Company and each of the Subsidiary Guarantors will cooperate with the Initial Purchasers, to arrange for the qualification of the Securities for offering and sale under the securities or “Blue Sky” laws of such U.S. jurisdictions as the Initial Purchasers may reasonably designate and will continue such qualifications in effect for as long as may be necessary to complete the resale of the Securities; provided, however, that in connection therewith, neither the Company nor any Subsidiary Guarantor shall be required to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction or subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction where it is not then so subject.

 

(c) (1) If, at any time prior to the completion of the distribution by the Initial Purchasers of the Securities or the Private Exchange Notes, any event occurs or information becomes known as a result of which the Offering Memorandum as then amended or supplemented would include any untrue statement of a material fact, or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if for any other reason it is necessary at any time to amend or supplement the Offering Memorandum to comply with applicable law, the Company will promptly notify the Initial Purchasers thereof and will prepare, at the expense of the Company, an amendment or supplement to the Offering Memorandum that corrects such statement or omission or effects such compliance and (2) if at any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which any of the Pricing Disclosure Package as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or any Issuer Written Communication would conflict with the Pricing Disclosure Package as then amended or supplemented, or (ii) it is necessary to amend or supplement any of the Pricing Disclosure Package so that any of the Pricing Disclosure Package or any Issuer Written Communication will comply with applicable law, the Company will immediately notify the Initial Purchasers thereof and forthwith prepare and, subject to paragraph (a) above, furnish to the Initial Purchasers such amendments or supplements to any of the Pricing Disclosure Package or any Issuer Written Communication (it being understood that any such amendments or supplements may take the form of an amended or supplemented Final Memorandum)  as may be necessary so that the statements in any of the Pricing Disclosure Package as so amended or supplemented will not, in light of the circumstances under which they were made, be misleading or so that any Issuer Written Communication will not conflict with the Pricing Disclosure Package or so that the Pricing Disclosure Package or any Issuer Written Communication as so amended or supplemented will comply with law.

 

(d) The Company will, without charge, provide to the Initial Purchasers and to counsel for the Initial Purchasers as many copies of the Offering Memorandum or any amendment or supplement thereto as the Initial Purchasers may reasonably request.

 

(e) The Company will apply the net proceeds from the sale of the Notes as set forth under “Use of Proceeds” in the Offering Memorandum.

 

(f) For so long as any of the Securities remain outstanding, the Company will furnish to the Initial Purchasers copies of all reports and other communications (financial or otherwise) furnished by the Company to the Trustee or to the holders of the Securities and, as soon as available, copies of any reports or financial statements furnished to or filed by the Company with the Commission or any national securities exchange on which any class of securities of the Company may be listed; provided that the foregoing obligation will not apply to any reports or other communication made available on the Commission’s EDGAR database.

 

(g) Prior to the Closing Date, the Company will furnish to the Initial Purchasers, as soon as they have been prepared, a copy of any unaudited interim consolidated financial statements of the Company and the Subsidiaries for any period subsequent to the period covered by the most recent financial statements appearing in the Offering Memorandum.

 

(h) None of the Company, the Subsidiary Guarantors or any of their Affiliates will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any “security” (as defined in the Act) that could be integrated with the sale of the Securities in a manner which would require the registration under the Act of the Securities.

 

(i) The Company and the Subsidiary Guarantors will not, and will not permit any of the other Subsidiaries or their respective Affiliates to, engage in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Act) in connection with the offering of the Securities or in any manner involving a public offering within the meaning of Section 4(2) of the Act.

 

(j) For so long as any of the Securities remain outstanding, the Company will make available at its expense, upon request, to any holder of such Securities and any prospective purchasers thereof the information specified in Rule 144A(d)(4) under the Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.

 

(k) The Company will use commercially reasonable efforts to permit the Securities to be eligible for clearance and settlement through The Depository Trust Company.

 

(l) In connection with Securities offered and sold in an off shore transaction (as defined in Regulation S) the Company will not register any transfer of such Notes not made in accordance with the provisions of Regulation S and will not, except in accordance with the provisions of Regulation S, if applicable, issue any such Notes in the form of definitive securities.

 

(m) None of the Company, the Subsidiary Guarantors or any of their Affiliates will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Securities.

 

(n) For a period of one year (calculated in accordance with paragraph (d) of Rule 144 under the Act) following the date any Securities are acquired by the Company or any of its Affiliates, none of the Company, the Subsidiary Guarantors or any of their respective Affiliates will re-sell any such Securities.

 

Section 6. Expenses.  The Company and the Subsidiary Guarantors, jointly and severally, agree to pay all costs and expenses incident to the performance of their obligations under this Agreement, whether or not the transactions contemplated herein are consummated or this Agreement is terminated pursuant to Section 11 hereof, including all costs and expenses incident to (i) the printing, word processing or other production of documents with respect to the transactions contemplated hereby, including any costs of printing the Preliminary Memorandum and any Offering Memorandum and any amendment or supplement thereto, and any “Blue Sky” memoranda, (ii) all arrangements relating to the delivery to the Initial Purchasers of copies of the foregoing documents, (iii) the fees and disbursements of the counsel, the accountants and any other experts or advisors retained by the Company, (iv) preparation (including printing), issuance and delivery to the Initial Purchasers of the Securities, (v) the qualification of the Securities under state securities and “Blue Sky” laws, including filing fees and fees and disbursements of counsel for the Initial Purchasers relating thereto, (vi) expenses in connection with the “roadshow,” if any, and any other meetings with prospective investors in the Securities, (vii) fees and expenses of the Trustee, including fees and expenses of counsel, and (viii) any fees charged by investment rating agencies for the rating of the Securities.  If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Initial Purchasers set forth in Section 7 hereof is not satisfied, because this Agreement is terminated or because of any failure, refusal or inability on the part of the Company or the Subsidiary Guarantors to perform all obligations and satisfy all conditions on their part to be performed or satisfied hereunder (other than solely by reason of a default by the Initial Purchasers of their obligations hereunder after all conditions hereunder have been satisfied in accordance herewith), the Company and the Subsidiary Guarantors agree to promptly reimburse the Initial Purchasers upon demand for all reasonable and documented out-of-pocket expenses (including the fees, disbursements and charges of Cahill Gordon & Reindel llp, counsel for the Initial Purchasers), that shall have been incurred by the Initial Purchasers in connection with the proposed purchase and sale of the Securities.

 

Section 7. Conditions of the Initial Purchasers’ Obligations.  The obligation of the Initial Purchasers to purchase and pay for the Securities shall, in their sole discretion, be subject to the satisfaction or waiver of the following conditions on or prior to the Closing Date:

 

(a) On the Closing Date, the Initial Purchasers shall have received the opinions, dated as of the Closing Date and addressed to the Initial Purchasers, of Bryan Cave LLP, counsel for the Company and certain of the Subsidiary Guarantors, in form and substance satisfactory to counsel for the Initial Purchasers, as set forth in Exhibit A-1 and Exhibit A-2 hereto.  Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and the Subsidiary Guarantors and certificates of public officials, copies of which shall have been provided to the Initial Purchasers.  Additionally, on the Closing Date, the Initial Purchasers shall have received a reliance letter, dated as of the Closing Date and addressed to the Initial Purchasers, of Bryan Cave LLP, counsel for the Company and certain of the Subsidiary Guarantors, allowing the Initial Purchasers to rely on such legal opinions as Bryan Cave LLP may deliver to the Trustee in connection with the offering of the Securities.

 

(b) On the Closing Date, the Initial Purchasers shall have received the opinion, in form and substance satisfactory to the Initial Purchasers, dated as of the Closing Date and addressed to the Initial Purchasers, of Cahill Gordon & Reindel llp, counsel for the Initial Purchasers, with respect to certain legal matters relating to this Agreement and such other related matters as the Initial Purchasers may reasonably require.  Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and the Subsidiary Guarantors and certificates of public officials, copies of which shall have been provided to the Initial Purchasers.

 

(c) On the date hereof, the Initial Purchasers shall have received from Ernst & Young LLP a comfort letter dated the date hereof, in form and substance satisfactory to counsel for the Initial Purchasers with respect to the audited, unaudited and pro forma financial information in the Pricing Disclosure Package.  On the Closing Date, the Initial Purchasers shall have received from Ernst & Young LLP a comfort letter dated the Closing Date, in form and substance satisfactory to counsel for the Initial Purchasers, which shall refer to the comfort letter dated the date hereof and reaffirm or update as of a more recent date the information stated in the comfort letter dated the date hereof and similarly address the audited, unaudited and pro forma financial information contained in the Final Memorandum.

 

(d) The representations and warranties of the Company and the Subsidiary Guarantors contained in this Agreement shall be true and correct on and as of the Time of Execution and on and as of the Closing Date as if made on and as of the Closing Date; the statements of the Company’s and the Subsidiary Guarantors’ officers made pursuant to any certificate delivered in accordance with the provisions hereof shall be true and correct on and as of the date made and on and as of the Closing Date; the Company and the Subsidiary Guarantors shall have performed all covenants and agreements and satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the Closing Date; and, except as described in the Pricing Disclosure Package (exclusive of any amendment or supplement thereto after the date hereof), subsequent to the date of the most recent financial statements in such Pricing Disclosure Package, there shall have been no event or development, and no information shall have become known, that, individually or in the aggregate, has or would be reasonably likely to have a Material Adverse Effect.

 

(e) The sale of the Securities hereunder shall not be enjoined (temporarily or permanently) on the Closing Date.

 

(f) Subsequent to the date of the most recent financial statements in the Pricing Disclosure Package (exclusive of any amendment or supplement thereto after the date hereof), none of the Company or any of the Subsidiaries shall have sustained any loss or interference with respect to its business or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any strike, labor dispute, slow down or work stoppage or from any legal or governmental proceeding, order or decree, which loss or interference, individually or in the aggregate, has or would be reasonably likely to have a Material Adverse Effect.

 

(g) The Initial Purchasers shall have received certificates of the Company and each of the Subsidiary Guarantors, dated the Closing Date, signed on behalf of the Company or the applicable Subsidiary Guarantor by its Chairman of the Board, President or any Vice President and the Chief Financial Officer, to the effect that

 

(i) the representations and warranties of the Company or the applicable Subsidiary Guarantor contained in this Agreement are true and correct on and as of the Time of Execution and on and as of the Closing Date, and the Company or the applicable Subsidiary Guarantor has performed all covenants and agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date;

 

(ii) at the Closing Date, since the date hereof or since the date of the most recent financial statements in the Pricing Disclosure Package (exclusive of any amendment or supplement thereto after the date hereof), no event or development has occurred, and no information has become known to the Company or such Subsidiary Guarantor, that, individually or in the aggregate, has or would be reasonably likely to have a Material Adverse Effect; and

 

(iii) the sale of the Securities hereunder has not been enjoined (temporarily or permanently).

 

(h) On the Closing Date, the Initial Purchasers shall have received the Registration Rights Agreement executed by the Company and the Subsidiary Guarantors and such agreement shall be in full force and effect.

 

(i) The Securities shall be eligible for clearance and settlement through The Depository Trust Company.

 

On or before the Closing Date, the Initial Purchasers and counsel for the Initial Purchasers shall have received such further documents, opinions, certificates, letters and schedules or instruments relating to the business, corporate, legal and financial affairs of the Company and the Subsidiaries as they shall have heretofore reasonably requested from the Company.

 

All such documents, opinions, certificates, letters, schedules or instruments delivered pursuant to this Agreement will comply with the provisions hereof only if they are reasonably satisfactory in all material respects to the Initial Purchasers and counsel for the Initial Purchasers.  The Company and the Subsidiary Guarantors shall furnish to the Initial Purchasers such conformed copies of such documents, opinions, certificates, letters, schedules and instruments in such quantities as the Initial Purchasers shall reasonably request.

 

Section 8. Offering of Securities; Restrictions on Transfer.  (a)  Each of the Initial Purchasers agrees with the Company (as to itself only) and the Subsidiary Guarantors that (i) it has not and will not solicit offers for, or offer or sell, the Securities by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Act; and (ii) it has and will solicit offers for the Securities only from, and will offer the Securities only to, (A) in the case of offers inside the United States, persons whom the Initial Purchasers reasonably believe to be QIBs or, if any such person is buying for one or more institutional accounts for which such person is acting as fiduciary or agent, only when such person has represented to the Initial Purchasers that each such account is a QIB, to whom notice has been given that such sale or delivery is being made in reliance on Rule 144A, and, in each case, in transactions under Rule 144A and (B) in the case of offers outside the United States, to persons other than U.S. persons (“non-U.S. purchasers,” which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for non-U.S. beneficial owners (other than an estate or trust)); provided, however, that, in the case of this clause (B), in purchasing such Securities such persons are deemed to have represented and agreed as provided under the caption “Notice to Investors” contained in the Pricing Disclosure Package.

 

(b) Each of the Initial Purchasers represents and warrants (as to itself only) with respect to offers and sales outside the United States that (i) it has and will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Notes or has in its possession or distributes any Pricing Disclosure Package or any such other material, in all cases at its own expense, (ii) the Notes have not been and will not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Act or pursuant to an exemption from the registration requirements of the Act and (iii) it has offered the Notes and will offer and sell the Notes (A) as part of its distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 of Regulation S and, accordingly, neither it nor any persons acting on its behalf have engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Notes, and any such persons have complied and will comply with the offering restrictions requirement of Regulation S.

 

Terms used in this Section 8 and not defined in this Agreement have the meanings given to them in Regulation S.

 

Section 9. Indemnification and Contribution.  (a)  The Company and the Subsidiary Guarantors, jointly and severally, agree to indemnify and hold harmless each Initial Purchaser and each person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of the Exchange Act against any losses, claims, damages or liabilities to which any Initial Purchaser or such controlling person may become subject under the Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon the following:

 

(i) any untrue statement or alleged untrue statement made by the Company or any Subsidiary Guarantor in Section 2 hereof;

 

(ii) any untrue statement or alleged untrue statement of any material fact contained in the Pricing Disclosure Package, any Issuer Written Communication, or Final Memorandum, or any amendment or supplement thereto; or

 

(iii) the omission or alleged omission to state, in the Pricing Disclosure Package, any Issuer Written Communication, or Final Memorandum or any amendment or supplement thereto, a material fact required to be stated therein or necessary to make the statements therein not misleading;

 

and will reimburse, as incurred, the Initial Purchasers and each such controlling person for any reasonable legal or other documented expenses incurred by the Initial Purchasers or such controlling person in connection with investigating, defending against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action; provided, however, the Company and the Subsidiary Guarantors will not be liable in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in the Pricing Disclosure Package or Final Memorandum or any amendment or supplement thereto in reliance upon and in conformity with written information concerning the Initial Purchasers furnished to the Company by the Initial Purchasers through the Representative specifically for use therein, which is described in Section 12 hereof.  The indemnity provided for in this Section 9 will be in addition to any liability that the Company and the Subsidiary Guarantors may otherwise have to the indemnified parties.  The Company and the Subsidiary Guarantors shall not be liable under this Section 9 for any settlement of any claim or action effected without their prior written consent, which shall not be unreasonably withheld.

 

(b) Each Initial Purchaser, severally and not jointly, agrees to indemnify and hold harmless the Company and the Subsidiary Guarantors, their respective directors, their respective officers and each person, if any, who controls the Company and the Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20 of the Exchange Act against any losses, claims, damages or liabilities to which the Company and the Subsidiary Guarantors or any such director, officer or controlling person may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Pricing Disclosure Package or Final Memorandum or any amendment or supplement thereto, or (ii) the omission or the alleged omission to state therein a material fact required to be stated in the Pricing Disclosure Package or Final Memorandum or any amendment or supplement thereto, or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Initial Purchaser, furnished to the Company by such Initial Purchasers through the Representative specifically for use therein, which is described in Section 12 hereof; and subject to the limitation set forth immediately preceding this clause, will reimburse, as incurred, any reasonable legal or other documented expenses incurred by the Company and the Subsidiary Guarantors or any such director, officer or controlling person in connection with investigating or defending against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action in respect thereof.  The indemnity provided for in this Section 9 will be in addition to any liability that the Initial Purchasers may otherwise have to the indemnified parties.  The Initial Purchasers shall not be liable under this Section 9 for any settlement of any claim or action effected without their consent, which shall not be unreasonably withheld.

 

(c) Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action for which such indemnified party is entitled to indemnification under this Section 9, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, notify the indemnifying party of the commencement thereof in writing; but the omission to so notify the indemnifying party (i) will not relieve it from any liability under paragraph (a) or (b) above unless and to the extent such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraphs (a) and (b) above.  In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party or (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after receipt by the indemnifying party of notice of the institution of such action, then, in each such case, the indemnifying party shall not have the right to direct the defense of such action on behalf of such indemnified party or parties and such indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties.  After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by such indemnified party of counsel appointed to defend such action, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the immediately preceding sentence (it being understood, however, that in connection with such action the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to local counsel) in any one action or separate but substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances, designated by the Initial Purchasers in the case of paragraph (a) of this Section 9 or the Company and the Subsidiary Guarantors in the case of paragraph (b) of this Section 9, representing the indemnified parties under such paragraph (a) or paragraph (b), as the case may be, who are parties to such action or actions) or (ii) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party.  All fees and expenses reimbursed pursuant to this paragraph (c) shall be reimbursed as they are incurred.  After such notice from the indemnifying party to such indemnified party, the indemnifying party will not be liable for the costs and expenses of any settlement of such action effected by such indemnified party without the prior written consent of the indemnifying party (which consent shall not be unreasonably withheld), unless such indemnified party waived in writing its rights under this Section 9, in which case the indemnified party may effect such a settlement without such consent.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party, or indemnity could have been sought hereunder by any indemnified party, unless such settlement (A) includes an unconditional written release of the indemnified party, in form and substance reasonably satisfactory to the indemnified party, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of any indemnified party.

 

(d) In circumstances in which the indemnity agreement provided for in the preceding paragraphs of this Section 9 is unavailable to, or insufficient to hold harmless, an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to herein, each indemnifying party, in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect (i) the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the offering of the Securities or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, not only such relative benefits but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof).  The relative benefits received by the Company and the Subsidiary Guarantors on the one hand and any Initial Purchaser on the other shall be deemed to be in the same proportion as the total proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by such Initial Purchaser.  The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Subsidiary Guarantors on the one hand, or such Initial Purchaser on the other, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or alleged statement or omission, and any other equitable considerations appropriate in the circumstances.  The Company, the Subsidiary Guarantors and the Initial Purchasers agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the first sentence of this paragraph (d).  Notwithstanding any other provision of this paragraph (d), no Initial Purchaser shall be obligated to make contributions hereunder that in the aggregate exceed the total discounts, commissions and other compensation received by such Initial Purchaser under this Agreement, less the aggregate amount of any damages that such Initial Purchaser has otherwise been required to pay by reason of the untrue or alleged untrue statements or the omissions or alleged omissions to state a material fact, and no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  For purposes of this paragraph (d), each person, if any, who controls an Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Initial Purchasers, and each director of the Company and the Subsidiary Guarantors, each officer of the Company and the Subsidiary Guarantors and each person, if any, who controls the Company and the Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company.

 

Section 10. Survival Clause.  The respective representations, warranties, agreements, covenants, indemnities and other statements of the Company and the Subsidiary Guarantors, their officers and the Initial Purchasers set forth in this Agreement or made by or on behalf of them pursuant to this Agreement shall remain in full force and effect, regardless of (i) any investigation made by or on behalf of the Company and the Subsidiary Guarantors, any of their officers or directors, the Initial Purchasers or any controlling person referred to in Section 9 hereof and (ii) delivery of and payment for the Securities.  The respective agreements, covenants, indemnities and other statements set forth in Sections 6, 9, 10 and 15 hereof shall remain in full force and effect, regardless of any termination or cancellation of this Agreement.

 

Section 11. Termination.  (a)  This Agreement may be terminated in the sole discretion of the Initial Purchasers by notice to the Company and the Subsidiary Guarantors given prior to the Closing Date in the event that the Company and the Subsidiary Guarantors shall have failed, refused or been unable to perform all obligations and satisfy all conditions on their part to be performed or satisfied hereunder at or prior thereto or, if at or prior to the Closing Date:

 

(i) any of the Company or the Subsidiaries shall have sustained any loss or interference with respect to its businesses or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any strike, labor dispute, slow down or work stoppage or any legal or governmental proceeding, which loss or interference, in the sole judgment of the Initial Purchasers, has had or has a Material Adverse Effect, or there shall have been, in the sole judgment of the Initial Purchasers, any event or development that, individually or in the aggregate, has or could be reasonably likely to have a Material Adverse Effect (including without limitation a change in control of the Company or the Subsidiaries), except in each case as described in the Pricing Disclosure Package and the Final Memorandum (exclusive of any amendment or supplement thereto);

 

(ii) trading in securities of the Company or in securities generally on the NYSE, American Stock Exchange or the NASDAQ National Market shall have been suspended or materially limited or minimum or maximum prices shall have been established on any such exchange or market;

 

(iii) a banking moratorium shall have been declared by New York or United States authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States;

 

(iv) there shall have been (A) an outbreak or escalation of hostilities between the United States and any foreign power, (B) an outbreak or escalation of any other insurrection or armed conflict involving the United States or any other national or international calamity or emergency or (C) any material change in the financial markets of the United States which, in the case of (A), (B) or (C) above and in the sole judgment of the Initial Purchasers, makes it impracticable or inadvisable to proceed with the offering or the delivery of the Securities as contemplated by the Pricing Disclosure Package and the Final Memorandum; or

 

(v) any securities of the Company shall have been downgraded by any nationally recognized statistical rating organization or any such organization shall have publicly announced that it has under surveillance or review, or has changed its outlook with respect to, its ratings of any securities of the Company (other than an announcement with positive implications of a possible upgrading).

 

(b) Termination of this Agreement pursuant to this Section 11 shall be without liability of any party to any other party except as provided in Section 10 hereof.

 

Section 12. Information Supplied by the Initial Purchasers.  The statements set forth in the last paragraph on the front cover page and in the fourth sentence of the seventh paragraph and in the ninth paragraph under the heading “Plan of Distribution” in the Preliminary Memorandum and the Final Memorandum (to the extent such statements relate to the Initial Purchasers) constitute the only information furnished by the Initial Purchasers to the Company for the purposes of Sections 2(a) and 9 hereof.

 

Section 13. Notices.  All communications hereunder shall be in writing and, if sent to the Initial Purchasers, shall be mailed or delivered to (i) Merrill Lynch, Pierce, Fenner & Smith Incorporated, One Bryant Park, New York, New York  10036, Attention: Sarang Gadkari, and (ii) if sent to the Company, shall be mailed or delivered to 200 International Circle, Suite 3500, Hunt Valley, Maryland,  21030, Attention:  Robert O. Stephenson; with a copy to Bryan Cave LLP, One Atlantic Center, Fourteenth Floor, 1201 W. Peachtree Street, NW, Atlanta, Georgia  30309-3488, Attention:  Eliot Robinson.

 

All such notices and communications shall be deemed to have been duly given:  when delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; and one business day after being timely delivered to a next-day air courier.

 

Section 14. Successors.  This Agreement shall inure to the benefit of and be binding upon the Initial Purchasers, the Company, the Subsidiary Guarantors and their respective successors and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained; this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person except that (i) the indemnities of the Company and the Subsidiary Guarantors contained in Section 9 of this Agreement shall also be for the benefit of any person or persons who control the Initial Purchasers within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the indemnities of the Initial Purchasers contained in Section 9 of this Agreement shall also be for the benefit of the directors of the Company and the Subsidiary Guarantors, their officers and any person or persons who control the Company and the Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.  No purchaser of Securities from the Initial Purchasers will be deemed a successor because of such purchase.

 

Section 15. APPLICABLE LAW.  THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.

 

Section 16. Default by an Initial Purchaser.  If any one or more Initial Purchasers shall fail to purchase and pay for any of the Notes agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Initial Purchasers shall be obligated severally to take up and pay for (in the respective proportions which the principal amount of Notes set forth opposite their names in Schedule 1 hereto bears to the aggregate principal amount of Notes set forth opposite the names of all the remaining Initial Purchasers) the Notes which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase; provided, however, that in the event that the aggregate principal amount of Notes which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10% of the aggregate principal amount of Notes set forth in Schedule 1 hereto, the Issuer shall be entitled to a further period of 36 hours within which to procure another party or parties reasonably satisfactory to the nondefaulting Initial Purchaser or Initial Purchasers to purchase no less than the amount of such unpurchased Notes that exceeds 10% of the principal amount thereof upon such terms herein set forth.  If, however, the Issuer shall not have completed such arrangements within 72 hours after such default and the principal amount of such unpurchased Notes exceeds 10% of the principal amount of such Notes to be purchased on such date, then this Agreement will terminate without liability to any nondefaulting Initial Purchaser or any Issuer.  In the event of a default by any Initial Purchaser as set forth in this Section 16, the Closing Date shall be postponed for such period, not exceeding five business days, as the Representative, the Issuer and their counsel shall determine in order that the required changes in the Pricing Disclosure Package and the Final Memorandum or in any other documents or arrangements may be effected.  Nothing contained in this Agreement shall relieve any defaulting Initial Purchaser of its liability, if any, to the Issuer or any nondefaulting Initial Purchaser for damages occasioned by its default hereunder.

 

Section 17. No Advisory or Fiduciary Responsibility.  The Company acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the Initial Purchasers, on the other, (ii) in connection therewith and with the process leading to such transaction each Initial Purchaser is acting solely as a principal and not the agent or fiduciary of the Company, (iii) no Initial Purchaser has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Initial Purchaser has advised or is currently advising the Company on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate.  The Company agrees that it will not claim that any Initial Purchaser has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.

 

Section 18. Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

  

  

  

If the foregoing correctly sets forth our understanding, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company, the Subsidiary Guarantors and the Initial Purchasers.

 

	
  

	
Very truly yours,

 

	
  

	
OMEGA HEALTHCARE INVESTORS, INC.,

 

	
  

	
as Issuer

 

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

ARIZONA LESSOR - INFINIA, INC.

BALDWIN HEALTH CENTER, INC.

BAYSIDE ALABAMA HEALTHCARE SECOND, INC.

BAYSIDE ARIZONA HEALTHCARE ASSOCIATES, INC.

BAYSIDE ARIZONA HEALTHCARE SECOND, INC.

BAYSIDE COLORADO HEALTHCARE ASSOCIATES, INC.

BAYSIDE COLORADO HEALTHCARE SECOND, INC.

BAYSIDE INDIANA HEALTHCARE ASSOCIATES, INC.,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

BAYSIDE STREET II, INC.

BAYSIDE STREET, INC.

CANTON HEALTH CARE LAND, INC.

CARNEGIE GARDENS LLC

CENTER HEALTHCARE ASSOCIATES, INC.

CHERRY STREET – SKILLED NURSING, INC.

COLONIAL GARDENS, LLC

COLORADO LESSOR - CONIFER, INC.

COPLEY HEALTH CENTER, INC.

CSE ALBANY LLC

CSE AMARILLO LLC

CSE ANCHORAGE LLC

CSE ARDEN L.P.

CSE AUGUSTA LLC

CSE BEDFORD LLC

CSE BLOUNTVILLE LLC

CSE BOLIVAR LLC

CSE CAMBRIDGE LLC

CSE CAMBRIDGE REALTY LLC

CSE CAMDEN LLC

CSE CANTON LLC

CSE CASABLANCA HOLDINGS II LLC

CSE CASABLANCA HOLDINGS LLC

CSE CEDAR RAPIDS LLC

CSE CENTENNIAL VILLAGE

CSE CHELMSFORD LLC

CSE CHESTERTON LLC

CSE CLAREMONT LLC

CSE CORPUS NORTH LLC

CSE CRANE LLC

CSE DENVER ILIFF LLC

CSE DENVER LLC

CSE DOUGLAS LLC

CSE DUMAS LLC,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

CSE ELKTON LLC

CSE ELKTON REALTY LLC

CSE FAIRHAVEN LLC

CSE FORT WAYNE LLC

CSE FRANKSTON LLC

CSE GEORGETOWN LLC

CSE GREEN BAY LLC

CSE HILLIARD LLC

CSE HUNTINGDON LLC

CSE HUNTSVILLE LLC

CSE INDIANAPOLIS-CONTINENTAL LLC

CSE INDIANAPOLIS-GREENBRIAR LLC

CSE JACINTO CITY LLC

CSE JEFFERSON CITY LLC

CSE JEFFERSONVILLE-HILLCREST CENTER LLC

CSE JEFFERSONVILLE-JENNINGS HOUSE LLC

CSE KERRVILLE LLC

CSE KING L.P.

CSE KINGSPORT LLC

CSE KNIGHTDALE L.P.

CSE LAKE CITY LLC

CSE LAKE WORTH LLC

CSE LAKEWOOD LLC

CSE LAS VEGAS LLC

CSE LAWRENCEBURG LLC

CSE LENOIR L.P.,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

CSE LEXINGTON PARK LLC

CSE LEXINGTON PARK REALTY LLC

CSE LIGONIER LLC

CSE LIVE OAK LLC

CSE LOGANSPORT LLC

CSE LOWELL LLC

CSE MARIANNA HOLDINGS LLC

CSE MEMPHIS LLC

CSE MOBILE LLC

CSE MOORE LLC

CSE NORTH CAROLINA HOLDINGS I LLC

CSE NORTH CAROLINA HOLDINGS II LLC

CSE OMRO LLC

CSE ORANGE PARK LLC

CSE ORLANDO-PINAR TERRACE MANOR LLC

CSE ORLANDO-TERRA VISTA REHAB LLC

CSE PENNSYLVANIA HOLDINGS

CSE PIGGOTT LLC

CSE PILOT POINT LLC

CSE PONCA CITY LLC

CSE PORT ST. LUCIE LLC

CSE RICHMOND LLC

CSE RIPLEY LLC

CSE RIPON LLC

CSE SAFFORD LLC

CSE SALINA LLC

CSE SEMINOLE LLC

CSE SHAWNEE LLC,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

CSE SPRING BRANCH LLC

CSE STILLWATER LLC

CSE TAYLORSVILLE LLC

CSE TEXARKANA LLC

CSE TEXAS CITY LLC

CSE THE VILLAGE LLC

CSE UPLAND LLC

CSE WALNUT COVE L.P.

CSE WEST POINT LLC

CSE WHITEHOUSE LLC

CSE WILLIAMSPORT LLC

CSE WINTER HAVEN LLC

CSE WOODFIN L.P.

CSE YORKTOWN LLC

DALLAS – SKILLED NURSING, INC.

DELTA INVESTORS I, LLC

DELTA INVESTORS II, LLC

DESERT LANE LLC

DIXON HEALTH CARE CENTER, INC.

FLORIDA LESSOR – CRYSTAL SPRINGS, INC.

FLORIDA LESSOR – EMERALD, INC.

FLORIDA LESSOR – LAKELAND, INC.

FLORIDA LESSOR – MEADOWVIEW, INC.

FLORIDA REAL ESTATE COMPANY, LLC

GEORGIA LESSOR - BONTERRA/PARKVIEW, INC.,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

GREENBOUGH, LLC

HANOVER HOUSE, INC.

HERITAGE TEXARKANA HEALTHCARE ASSOCIATES, INC.

HOUSE OF HANOVER, LTD

HUTTON I LAND, INC.

HUTTON II LAND, INC.

HUTTON III LAND, INC.

INDIANA LESSOR – JEFFERSONVILLE, INC.

INDIANA LESSOR – WELLINGTON MANOR, INC.

JEFFERSON CLARK, INC.

LAD I REAL ESTATE COMPANY, LLC

LAKE PARK – SKILLED NURSING, INC.

LEATHERMAN 90-1, INC.

LEATHERMAN PARTNERSHIP 89-1, INC.

LEATHERMAN PARTNERSHIP 89-2, INC.

LONG TERM CARE – MICHIGAN, INC.

LONG TERM CARE – NORTH CAROLINA, INC.

LONG TERM CARE ASSOCIATES – ILLINOIS, INC.

LONG TERM CARE ASSOCIATES – INDIANA, INC.

LONG TERM CARE ASSOCIATES – TEXAS, INC.,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

MERIDIAN ARMS LAND, INC.

NORTH LAS VEGAS LLC

NRS VENTURES, L.L.C.

OHI (CONNECTICUT), INC.

OHI (FLORIDA), INC.

OHI (ILLINOIS), INC.

OHI (INDIANA), INC.

OHI (IOWA), INC.

OHI (KANSAS), INC.

OHI ASSET (CA), LLC

OHI ASSET (CO), LLC

OHI ASSET (CT) LENDER, LLC

OHI ASSET (FL), LLC

OHI ASSET (ID), LLC

OHI ASSET (IL), LLC

OHI ASSET (IN), LLC

OHI ASSET (LA), LLC

OHI ASSET (MI), LLC

OHI ASSET (MI/NC), LLC

OHI ASSET (MO), LLC

OHI ASSET (OH) LENDER, LLC

OHI ASSET (OH) NEW PHILADELPHIA, LLC

OHI ASSET (OH), LLC

OHI ASSET (PA) TRUST

OHI ASSET (PA), LLC

OHI ASSET (SMS) LENDER, INC.

OHI ASSET (TX), LLC

OHI ASSET CSB LLC

OHI ASSET CSE – E, LLC

OHI ASSET CSE – U, LLC,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

OHI ASSET ESSEX (OH), LLC

OHI ASSET II (CA), LLC

OHI ASSET II (FL), LLC

OHI ASSET II (PA) TRUST

OHI ASSET III (PA) TRUST

OHI ASSET IV (PA) SILVER LAKE TRUST

OHI ASSET, LLC

OHI OF TEXAS, INC.

OHI SUNSHINE, INC.

OHI TENNESSEE, INC.

OHIMA, INC.

OMEGA (KANSAS), INC.

OMEGA TRS I, INC.

ORANGE VILLAGE CARE CENTER, INC.

OS LEASING COMPANY

PANAMA CITY NURSING CENTER LLC

PARKVIEW – SKILLED NURSING, INC.

PAVILLION NORTH PARTNERS, INC.

PAVILLION NORTH, LLP

PAVILLION NURSING CENTER NORTH, INC.

PINE TEXARKANA HEALTHCARE ASSOCIATES, INC.

REUNION TEXARKANA HEALTHCARE ASSOCIATES, INC.

SAN AUGUSTINE HEALTHCARE ASSOCIATES, INC.

SKILLED NURSING – GASTON, INC.

SKILLED NURSING – HERRIN, INC.

SKILLED NURSING – HICKSVILLE, INC.,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

SKILLED NURSING – PARIS, INC.

SKYLER MAITLAND LLC

SOUTH ATHENS HEALTHCARE ASSOCIATES, INC.

ST. MARY’S PROPERTIES, INC.

STERLING ACQUISITION CORP.

STERLING ACQUISITION CORP. II

SUWANEE, LLC

TEXAS LESSOR – STONEGATE GP, INC.

TEXAS LESSOR – STONEGATE, LIMITED, INC.

TEXAS LESSOR – STONEGATE, LP

TEXAS LESSOR – TREEMONT, INC.

THE SUBURBAN PAVILION, INC.

WASHINGTON LESSOR – SILVERDALE, INC.

WAXAHACHIE HEALTHCARE ASSOCIATES, INC.

WEST ATHENS HEALTHCARE ASSOCIATES, INC.

WILCARE, LLC,

as Subsidiary Guarantors

By:         /s/ Robert O. Stephenson                                                              

Name:           Robert O. Stephenson

Title:           Chief Financial Officer

  

  

  

The foregoing Agreement is hereby confirmed

 

and accepted as of the date first above written.

 

MERRILL LYNCH, PIERCE, FENNER & SMITH

                              INCORPORATED

Acting on behalf of itself

and as the Representative of

the several Initial Purchasers

By:           MERRILL LYNCH, PIERCE, FENNER & SMITH

                                          INCORPORATED

	
By:

	
/s/ Sarang R. Gadkari __________________

 

	
  

	
Name:  Sarang R. Gadkari

 

	
  

	
Title: Managing Director

 

  

  

  

 

SCHEDULE 1

 

	
Initial Purchasers

	 	
Principal Amount of Notes

	 
	
Merrill Lynch, Pierce, Fenner & Smith

    Incorporated

	 	$	62,125,000	 
	
Deutsche Bank Securities Inc. .

	 	$	62,125,000	 
	
Jefferies & Company, Inc. .

	 	$	49,875,000	 
	
UBS Securities LLC

	 	$	49,875,000	 
	
Credit Agricole Securities (USA) Inc. .

	 	$	49,875,000	 
	
RBS Securities Inc. .

	 	$	49,875,000	 
	
Stifel, Nicolaus & Company, Incorporated

	 	$	26,250,000 	 
	
Total

	 	$	350,000,000 	 

  

  

  

SCHEDULE 2

 

Subsidiaries of the Company

 

	
Arizona Lessor - Infinia, Inc.

	
Baldwin Health Center, Inc.

	
Bayside Alabama Healthcare Second, Inc.

	
Bayside Arizona Healthcare Associates, Inc.

	
Bayside Arizona Healthcare Second, Inc.

	
Bayside Colorado Healthcare Associates, Inc.

	
Bayside Colorado Healthcare Second, Inc.

	
Bayside Indiana Healthcare Associates, Inc.

	
Bayside Street II, Inc.

	
Bayside Street, Inc.

	
Canton Health Care Land, Inc.

	
Carnegie Gardens LLC

	
Center Healthcare Associates, Inc.

	
Cherry Street – Skilled Nursing, Inc.

	
CHR Bartow LLC

	
CHR Boca Raton LLC

	
CHR Bradenton LLC

	
CHR Cape Coral LLC

	
CHR Clearwater Highland LLC

	
CHR Clearwater LLC

	
CHR Deland East LLC

	
CHR Deland West LLC

	
CHR Fort Myers LLC

	
CHR Fort Walton Beach LLC

	
CHR Gulfport LLC

	
CHR Hudson LLC

	
CHR Lake Wales LLC

	
CHR Lakeland LLC

	
CHR Panama City LLC

	
CHR Pompano Beach Broward LLC

	
CHR Pompano Beach LLC

	
CHR Sanford LLC

	
CHR Sarasota LLC

	
CHR Spring Hill LLC

	
CHR St. Pete Abbey LLC

	
CHR St. Pete Bay LLC

	
CHR St. Pete Egret LLC

	
CHR Tampa Carrollwood LLC

	
CHR Tampa LLC

	
CHR Tarpon Springs LLC

	
CHR Titusville LLC

	
CHR West Palm Beach LLC

	
Colonial Gardens, LLC

	
Colorado Lessor - Conifer, Inc.

	
Copley Health Center, Inc.

	
CSE Albany LLC

	
CSE Amarillo LLC

	
CSE Anchorage LLC

	
CSE Arden L.P.

	
CSE Augusta LLC

	
CSE Bedford LLC

	
CSE Blountville LLC

	
CSE Bolivar LLC

	
CSE Cambridge LLC

	
CSE Cambridge Realty LLC

	
CSE Camden LLC

	
CSE Canton LLC

	
CSE Casablanca Holdings II LLC

	
CSE Casablanca Holdings LLC

	
CSE Cedar Rapids LLC

	
CSE Centennial Village

	
CSE Chelmsford LLC

	
CSE Chesterton LLC

	
CSE Claremont LLC

	
CSE Corpus North LLC

	
CSE Crane LLC

	
CSE Denver Iliff LLC

	
CSE Denver LLC

	
CSE Douglas LLC

	
CSE Dumas LLC

	
CSE Elkton LLC

	
CSE Elkton Realty LLC

	
CSE Fairhaven LLC

	
CSE Fort Wayne LLC

	
CSE Frankston LLC

	
CSE Georgetown LLC

	
CSE Green Bay LLC

	
CSE Hilliard LLC

	
CSE Huntingdon LLC

	
CSE Huntsville LLC

	
CSE Indianapolis-Continental LLC

	
CSE Indianapolis-Greenbriar LLC

	
CSE Jacinto City LLC

	
CSE Jefferson City LLC

	
CSE Jeffersonville-Hillcrest Center LLC

	
CSE Jeffersonville-Jennings House LLC

	
CSE Kerrville LLC

	
CSE King L.P.

	
CSE Kingsport LLC

	
CSE Knightdale L.P.

	
CSE Lake City LLC

	
CSE Lake Worth LLC

	
CSE Lakewood LLC

	
CSE Las Vegas LLC

	
CSE Lawrenceburg LLC

	
CSE Lenoir L.P.

	
CSE Lexington Park LLC

	
CSE Lexington Park Realty LLC

	
CSE Ligonier LLC

	
CSE Live Oak LLC

	
CSE Logansport LLC

	
CSE Lowell LLC

	
CSE Marianna Holdings LLC

	
CSE Memphis LLC

	
CSE Mobile LLC

	
CSE Moore LLC

	
CSE North Carolina Holdings I LLC

	
CSE North Carolina Holdings II LLC

	
CSE Omro LLC

	
CSE Orange Park LLC

	
CSE Orlando-Pinar Terrace Manor LLC

	
CSE Orlando-Terra Vista Rehab LLC

	
CSE Pennsylvania Holdings

	
CSE Piggott LLC

	
CSE Pilot Point LLC

	
CSE Pine View LLC

	
CSE Ponca City LLC

	
CSE Port St. Lucie LLC

	
CSE Richmond LLC

	
CSE Ripley LLC

	
CSE Ripon LLC

	
CSE Safford LLC

	
CSE Salina LLC

	
CSE Seminole LLC

	
CSE Shawnee LLC

	
CSE Spring Branch LLC

	
CSE Stillwater LLC

	
CSE Taylorsville LLC

	
CSE Texarkana LLC

	
CSE Texas City LLC

	
CSE The Village LLC

	
CSE Upland LLC

	
CSE Walnut Cove L.P.

	
CSE West Point LLC

	
CSE Whitehouse LLC

	
CSE Williamsport LLC

	
CSE Winter Haven LLC

	
CSE Woodfin L.P.

	
CSE Yorktown LLC

	
Dallas – Skilled Nursing, Inc.

	
Delta Investors I, LLC

	
Delta Investors II, LLC

	
Desert Lane LLC

	
Dixie White Nursing Home, Inc.

	
Dixon Health Care Center, Inc.

	
Florida Lessor – Crystal Springs, Inc.

	
Florida Lessor – Emerald, Inc.

	
Florida Lessor – Lakeland, Inc.

	
Florida Lessor – Meadowview, Inc.

	
Florida Real Estate Company, LLC

	
Georgia Lessor - Bonterra/Parkview, Inc.

	
Greenbough, LLC

	
Hanover House, Inc.

	
Heritage Texarkana Healthcare Associates, Inc.

	
House of Hanover, Ltd

	
Hutton I Land, Inc.

	
Hutton II Land, Inc.

	
Hutton III Land, Inc.

	
Indiana Lessor – Jeffersonville, Inc.

	
Indiana Lessor – Wellington Manor, Inc.

	
Jefferson Clark, Inc.

	
LAD I Real Estate Company, LLC

	
Lake Park – Skilled Nursing, Inc.

	
Leatherman 90-1, Inc.

	
Leatherman Partnership 89-1, Inc.

	
Leatherman Partnership 89-2, Inc.

	
Long Term Care – Michigan, Inc.

	
Long Term Care – North Carolina, Inc.

	
Long Term Care Associates – Illinois, Inc.

	
Long Term Care Associates – Indiana, Inc.

	
Long Term Care Associates – Texas, Inc.

	
Meridian Arms Land, Inc.

	
North Las Vegas LLC

	
NRS Ventures, L.L.C.

	
Ocean Springs Nursing Home, Inc.

	
OHI (Connecticut), Inc.

	
OHI (Florida), Inc.

	
OHI (Illinois), Inc.

	
OHI (Indiana), Inc.

	
OHI (Iowa), Inc.

	
OHI (Kansas), Inc.

	
OHI Acquisition Co I, LLC

	
OHI Asset (CA), LLC

	
OHI Asset (CO), LLC

	
OHI Asset (CT) DIP, LLC

	
OHI Asset (CT) Lender, LLC

	
OHI Asset (FL), LLC

	
OHI Asset (ID), LLC

	
OHI Asset (IL), LLC

	
OHI Asset (IN), LLC

	
OHI Asset (LA), LLC

	
OHI Asset (MI), LLC

	
OHI Asset (MI/NC), LLC

	
OHI Asset (MO), LLC

	
OHI Asset (OH) Lender, LLC

	
OHI Asset (OH) New Philadelphia, LLC

	
OHI Asset (OH), LLC

	
OHI Asset (PA) Trust

	
OHI Asset (PA), LLC

	
OHI Asset (SMS) Lender, Inc.

	
OHI Asset (TX) Paris, LLC

	
OHI Asset (TX), LLC

	
OHI Asset CSB LLC

	
OHI Asset CSE – E, LLC

	
OHI Asset CSE – U, LLC

	
OHI Asset Essex (OH), LLC

	
OHI Asset HUD Delta, LLC

	
OHI Asset HUD H-F, LLC

	
OHI Asset II (CA), LLC

	
OHI Asset II (FL), LLC

	
OHI Asset II (PA) Trust

	
OHI Asset III (PA) Trust

	
OHI Asset IV (PA) Silver Lake Trust

	
OHI Asset, LLC

	
OHI of Texas, Inc.

	
OHI Sunshine, Inc.

	
OHI Tennessee, Inc.

	
OHIMA, Inc.

	
Omega (Kansas), Inc.

	
Omega TRS I, Inc.

	
Orange Village Care Center, Inc.

	
OS Leasing Company

	
Panama City Nursing Center LLC

	
Parkview – Skilled Nursing, Inc.

	
Pavillion North Partners, Inc.

	
Pavillion North, LLP

	
Pavillion Nursing Center North, Inc.

	
Pensacola Real-Estate Holdings I, Inc.

	
Pensacola Real-Estate Holdings II, Inc.

	
Pensacola Real-Estate Holdings III, Inc.

	
Pensacola Real-Estate Holdings IV, Inc.

	
Pensacola Real-Estate Holdings V, Inc.

	
Pine Texarkana Healthcare Associates, Inc.

	
Reunion Texarkana Healthcare Associates, Inc.

	
San Augustine Healthcare Associates, Inc.

	
Skilled Nursing – Gaston, Inc.

	
Skilled Nursing – Herrin, Inc.

	
Skilled Nursing – Hicksville, Inc.

	
Skilled Nursing – Paris, Inc.

	
Skyler Boyington, Inc.

	
Skyler Florida, Inc.

	
Skyler Maitland LLC

	
Skyler Pensacola, Inc.

	
South Athens Healthcare Associates, Inc.

	
St. Mary’s Properties, Inc.

	
Sterling Acquisition Corp.

	
Sterling Acquisition Corp. II

	
Suwanee, LLC

	
Texas Lessor – Stonegate GP, Inc.

	
Texas Lessor – Stonegate, Limited, Inc.

	
Texas Lessor – Stonegate, LP

	
Texas Lessor – Treemont, Inc.

	
The Suburban Pavilion, Inc.

	
Washington Lessor – Silverdale, Inc.

	
Waxahachie Healthcare Associates, Inc.

	
West Athens Healthcare Associates, Inc.

	
Wilcare, LLC

  

  

  

ANNEX A

 

 

  

  

  

EXHIBIT A-1

 

Form of Opinion of Bryan Cave LLP

 

 November [ ], 2010

	
To the Initial Purchasers listed on Schedule A hereto

c/oMerrill Lynch, Pierce, Fenner & Smith

                                Incorporated

One Bryant Park

New York, New York 10036

 

Re:           Omega Healthcare Investors, Inc.

Ladies and Gentlemen:

We have acted as counsel to Omega Healthcare Investors, Inc., a Maryland corporation (the “Company”), and the subsidiaries of the Company listed on Schedule B annexed hereto (collectively, the “Subsidiary Guarantors” and each, a “Subsidiary Guarantor”; together with the Company, the “Omega Parties”) in connection with that certain Purchase Agreement, dated as of November 9, 2010 (the “Purchase Agreement”), among the initial purchasers listed on Schedule A  (collectively, the “Initial Purchasers”), the Company and the Subsidiary Guarantors, providing for, among other things, the sale to you of $350,000,000 aggregate principal amount of 6.75% Senior Notes of the Company due 2022 (the “Notes”).  All capitalized terms which are defined in the Purchase Agreement shall have the same meanings when used herein, unless otherwise specified.

In connection herewith, we have examined:

 

	
(1)  

	
the Purchase Agreement;

 

	
(2)  

	
the Notes (including the Guarantees);

 

	
(3)  

	
the Indenture;

 

	
(4)  

	
the Registration Rights Agreement;

 

	
(5)  

	
the Preliminary Memorandum, dated November 9, 2010, relating to the Notes (the “Preliminary Memorandum);

 

	
(6)  

	
the pricing term sheet, dated November 9, 2010, relating to the Notes (together with the Preliminary Memorandum, the “Pricing Disclosure Package”); and

 

	
(7)  

	
The Final Memorandum, dated November 9, 2010, relating to the Notes (the “Final Memorandum”).

 

The documents referenced as items (1) through (4) above are collectively referred to herein as the “Transaction Documents.”

 

We have also examined originals or copies, certified or otherwise identified to our satisfaction, of the Articles of Incorporation, as amended, and the Amended and Restated Bylaws, as amended, of the Company, the certificate or articles of incorporation, formation or trust and bylaws, limited liability company agreement, limited partnership agreement or other organizational documents of the Subsidiary Guarantors identified as “Identified Guarantors” on Schedule B (collectively the “Identified Guarantors,” and each individually an “Identified Guarantor”)) and such other corporate, limited liability company, limited partnership and business trust records, agreements and instruments of each of the Company and the Identified Guarantors (together, the “Identified Parties,” and each an “Identified Party”), certificates of public officials and officers or other appropriate persons of each of the Identified Parties, and such other documents, records and instruments, and we have made such legal and factual inquiries, as we have deemed necessary or appropriate as a basis for us to render the opinions hereinafter expressed.  In our examination of the Transaction Documents and the foregoing, we have assumed the genuineness of all signatures other than those of officers and other representatives of the Identified Parties on the Transaction Documents, the legal competence and capacity of natural persons, the authenticity of documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies.  When relevant facts were not independently established, we have relied without independent investigation as to matters of fact upon statements of governmental officials and upon representations made in or pursuant to the Transaction Documents and certificates and statements of appropriate representatives of the Identified Parties.

 

In connection herewith, we have assumed that, other than with respect to each of the Identified Parties, all of the documents referred to in this opinion letter have been duly authorized by, have been duly executed and delivered by, and  constitute the valid, binding and enforceable obligations of, all of the parties to such documents, all of the signatories to such documents have been duly authorized and all such parties are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform such documents.

 

We have assumed that (a) each of the Subsidiary Guarantors other than the Identified Guarantors (such other entities, collectively, the “Outside Guarantors,” and each an “Outside Guarantor”), is validly existing as a corporation, limited liability company, limited partnership or business trust in good standing under the laws of its jurisdiction of incorporation, formation or organization, (b) the execution and delivery by any such Outside Guarantor of the Transaction Documents to which such Outside Guarantor is a party and the consummation by each of the Outside Guarantors of the transactions contemplated thereby are within each Outside Guarantor’s corporate, limited liability company, limited partnership or business trust, as applicable, power and authority and have been duly authorized by all necessary corporate, limited liability company, limited partnership or business trust, as applicable, action on the part of each Outside Guarantor, (c) each Outside Guarantor has duly executed and delivered each of the Transaction Documents to which it is a party, (d) the execution and delivery by each of the Outside Guarantors of the Transaction Documents to which it is a party and the consummation by each such Outside Guarantor of its obligations thereunder do not result in any violation by any such Outside Guarantor of its certificate or articles of incorporation or formation, certificate of trust, its bylaws, limited liability company agreement, limited partnership agreement or other organizational documents, as the case may be, and (e) no consent, approval, authorization or other action by, and no notice to or filing with, any state governmental authority or regulatory body pursuant to any state statute is required for the making of the Guarantee by any Outside Guarantor.

 

Based upon the foregoing and in reliance thereon, and subject to the assumptions, comments, qualifications, limitations and exceptions set forth herein, we are of the opinion that:

 

1.           Based solely on a recently dated good standing certificate from the State Department of Assessments and Taxation of the State of Maryland, the Company is validly existing as a corporation, in good standing under the laws of the State of Maryland. The Company has all requisite corporate power to own, lease and operate its properties and conduct its business as now being conducted and as set forth in the Pricing Disclosure Package.

 

2.           Based solely on a recently dated good standing certificate from the applicable governmental authority of the state of its incorporation or formation, each of the Identified Guarantors is validly existing as a corporation, limited liability company, limited partnership or business trust, as the case may be, in good standing under the laws of the State of Delaware or Maryland, as the case may be and as identified opposite each such entity’s name on Schedule B.

 

3.           Based solely on recently dated good standing certificates from the Secretaries of State of the applicable jurisdictions, the Company is duly qualified or admitted to transact business and is in good standing as a foreign corporation in the jurisdictions identified on Schedule C.

 

4.           The execution and delivery by the Company of the Transaction Documents to which it is a party and the consummation by the Company of its obligations thereunder are within the Company’s corporate power and authority and have been duly authorized by all necessary corporate action on the part of the Company.

 

5           The execution and delivery by each of the Identified Guarantors of the Transaction Documents to which it is a party, and the consummation by each of the Identified Guarantors of its obligations thereunder, are within each such Identified Guarantor’s corporate, limited liability company, limited partnership or business trust, as applicable, power and authority and have been duly authorized by all necessary corporate, limited liability company, limited partnership or business trust, as applicable, action on the part of each such Identified Guarantor.

 

6.           Each of the Transaction Documents, other than the Notes (including the Guarantees), has been duly executed and delivered by each of the Identified Parties party thereto and constitutes the valid and binding obligation of each of the Company and Subsidiary Guarantors, enforceable against each such party thereto in accordance with its terms.

 

7.           No consent, approval, authorization or other action by, and no notice to or filing with, (i) any Federal or New York State governmental authority or regulatory body pursuant to any Federal or New York State statute, or (ii) any Maryland State or Delaware State governmental authority or regulatory body pursuant to the Maryland or Delaware statutes, as applicable, expressly identified in paragraph (b) below (“Covered State Statutes”), in each case that we, based on our experience, recognize as applicable to the Identified Parties in a transaction of this type, is required for the issuance of the Notes (including the Guarantees) or the consummation by each Identified Party of its obligations under the Transaction Documents, except for (i) the filings and other actions required pursuant to Federal and state securities or blue sky laws, or (ii) the rules of the Financial Industry Regulatory Authority (“FINRA”), in each such case, as to which we express no opinion.

 

8.           The execution and delivery by each of the Identified Parties of the Transaction Documents to which it is a party and the consummation by each such Identified Party of its obligations thereunder do not result in (a) any violation by any such Identified Party of its certificate or articles of incorporation or formation, certificate of trust, its bylaws, limited liability company agreement, limited partnership agreement or other organizational documents, as the case may be; (b) any violation by any Identified Party of (i) any provision of applicable Federal or New York State statute or regulation or any of the Covered State Statutes, in each case that we, based on our experience, recognize as applicable to any Identified Party in a transaction of this type, other than state securities and blue sky laws, or the Rules of FINRA, as to which we express no opinion, or (ii) to our knowledge, any order, writ, judgment or decree of any Federal or New York State court or governmental authority or regulatory body having jurisdiction over any Identified Party or any of their material properties that names or is specifically directed to any Identified Party, or (c) a breach or default or require the creation or imposition of any security interest or lien upon any of the Identified Party’s properties pursuant to any of the agreements, contracts or instruments identified on Schedule D to which any Identified Party is a party or by which it is bound, except (x) in the case of clauses (b) and (c), such matters as would not individually or in the aggregate have a Material Adverse Effect, and (y) we do not express any opinion as to any covenant, restriction or provision with respect to financial ratios or tests or any aspect of the financial condition or results of operations of any of the Identified Parties.

 

9.           The Notes are in the form contemplated by the Indenture, have been duly authorized  and executed by the Company and, when duly authenticated, issued and delivered to the Initial Purchasers in exchange for payment therefor in accordance with the terms of the Indenture and the Purchase Agreement, will be validly issued and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits provided by the Indenture.

 

10.           The Guarantees are in the form contemplated by the Indenture, have been duly authorized and executed by each of the Identified Guarantors and, when duly issued and delivered by each of the Subsidiary Guarantors to the Initial Purchasers in accordance with the terms of the Indenture and the Purchase Agreement for value received, will be validly issued and constitute valid and binding obligations of each of the Subsidiary Guarantors, enforceable against the Subsidiary Guarantors in accordance with their terms and entitled to the benefits provided by the Indenture.

 

11.           The Exchange Notes and the Private Exchange Notes have been duly authorized by the Company and, when duly executed, authenticated, issued and delivered by the Company as contemplated by the Indenture and the Registration Rights Agreement, will be validly issued and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits provided by the Indenture.

 

12.           The guarantees of the Exchange Notes and the Private Exchange Notes have been duly authorized by each of the Identified Guarantors and, when duly executed, issued and delivered by each of the Subsidiary Guarantors as contemplated by the Indenture and the Registration Rights Agreement, will be validly issued and constitute valid and binding obligations of each of the Subsidiary Guarantors, enforceable against the Subsidiary Guarantors in accordance with their terms and entitled to the benefits provided by the Indenture.

 

13.           The statements in the Pricing Disclosure Package under the captions “Description of the Notes” and “Exchange Offer; Registration Right,” insofar as such statements constitute summaries of the terms and provisions of the Notes, the Indenture and the Registration Rights Agreement, fairly summarize such terms and provisions in all material respects (except for the financial statements and related notes and schedules and other financial and accounting data included or incorporated by reference therein or omitted therefrom, as to which we express no opinion).

 

14.            The statements under the captions “Business – Recent Developments Regarding Government Regulation and Reimbursement” in Part I, Item 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (as updated by subsequent periodic reports filed with the Securities and Exchange Commission (the “SEC”)) and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments Regarding Government Regulation and Reimbursement” in Part I, Item 2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010, insofar as such statements constitute summaries of matters of law relating to Medicare and Medicaid referred to therein, fairly present the matters so summarized to the extent material to the business or condition (financial or otherwise) of the Company in all material respects.

 

15.           Assuming (i) the accuracy of the representations and warranties of the Company, the Subsidiary Guarantors and the Initial Purchasers set forth in the Purchase Agreement, (ii) the due performance by the Company, the Subsidiary Guarantors and the Initial Purchasers of the covenants and agreements set forth in the Purchase Agreement, and (iii) compliance with the offering and transfer procedures described in the Pricing Disclosure Package, the Final Memorandum and the Purchase Agreement, based on current interpretations by the Staff of the SEC, the offer, sale and delivery of the Notes (including the Guarantees) by the Company and the Subsidiary Guarantors to the Initial Purchasers pursuant to the Purchase Agreement and the initial resale of the Notes (including the Guarantees) by the Initial Purchasers in accordance with Section 8 of the Purchase Agreement do not under existing law require the registration under the Securities Act of 1933, as amended, or the qualification of an indenture in respect thereof under the Trust Indenture Act of 1939, as amended, it being understood that no opinion is being expressed as to any subsequent resale of the Notes (including the Guarantees).

 

16.            No Identified Party is, nor will it be upon the issuance of the Notes and the application of the proceeds therefrom as set forth under the caption  “Use of Proceeds” in the Pricing Disclosure Package, an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 

17.            The reports filed by the Company with the SEC and incorporated by reference in the Pricing Disclosure Package and the Final Memorandum (other than the financial statements and related notes and schedules and other financial and accounting data included therein or omitted therefrom, as to which we express no opinion) when they were filed with the SEC appear on their face to have complied as to form in all material respects with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

During the preparation of each of the Pricing Disclosure Package and Final Memorandum, we have participated in conferences with officers and other representatives of the Company, representatives of the independent accountants for the Company and you and your representatives and counsel, at which conferences the contents of the Pricing Disclosure Package and Final Memorandum and related matters were discussed, reviewed and revised.  We are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of such contents (except to the extent specified in the foregoing opinions 13 and 14 above), and have not made any independent investigation or verification thereof.  Moreover, many of the determinations required to be made in the preparation of the Pricing Disclosure Package  and Final Memorandum involve matters of a non-legal nature or relate to legal matters outside the scope of our legal opinions above.  On the basis of the information which was developed based upon the participation and discussions described above, and considered in light of our understanding of applicable law and the experience we have gained through our practice thereunder, this is to advise you that nothing has come to our attention which causes us to believe that, (i) as of the Time of Execution, the Pricing Disclosure Package (except as to financial statements and related notes and other financial and accounting data and supporting schedules included or incorporated by reference therein or omitted therefrom, as to which we express no belief) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) as of the date of the Final Memorandum or at the Closing Date, the Final Memorandum (except as to financial statements and related notes and other financial and accounting data and supporting schedules included or incorporated by reference therein or omitted therefrom, as to which we express no belief) contained  or contains any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

In addition to the assumptions, comments, qualifications, limitations and exceptions set forth above, the opinions set forth herein are further limited by, subject to and based upon the following assumptions, comments, qualifications, limitations and exceptions:

 

(a)           Wherever this opinion letter refers to matters “known to us,” or “to our knowledge,” or words of similar import, such reference means that, during the course of our representation of the Omega Parties in connection with the contemplated transaction, we have requested information of the Omega Parties concerning the matter referred to and no information has come to the attention of (either as a result of such request for information or otherwise) the attorneys of our Firm currently devoting substantive attention or a material amount of time thereto, which has given us actual knowledge of the existence (or absence) of facts to the contrary.  Except as otherwise stated herein, we have undertaken no independent investigation or verification of such matters, and no inference should be drawn to the contrary from the fact of our representation of the Omega Parties.

 

(b)           Our opinions herein reflect only the application of applicable New York State law (excluding the securities and blue sky laws of such state, as to which we express no opinion), the Federal laws of the United States of America and, to the extent required by the foregoing opinions, the General Corporation Law of the State of Delaware (8 Delaware Code Chapter 1), the Delaware Limited Liability Company Act (6 Delaware Code Chapter 18), the Delaware Revised Uniform Limited Partnership Act (6 Delaware Code Chapter 17), the Maryland General Corporation Law (Titles 1-3, Corporations and Associations, Maryland Code), the Maryland Limited Liability Company Act (Title 4A, Corporations and Associations, Maryland Code) and the Maryland Business Trust Act (Title 12, Corporations and Associations, Maryland Code).  While our firm does not maintain an office or an active practice in the State of Maryland, an attorney of our firm who is admitted to the bar of the State of Maryland has reviewed this opinion letter.

 

(c)           Our opinions contained herein may be limited by (i) applicable bankruptcy, insolvency, reorganization, receivership, moratorium or similar laws affecting or relating to the rights and remedies of creditors generally including, without limitation, laws relating to fraudulent transfers or conveyances, preferences and equitable subordination, (ii) general principles of equity (regardless of whether considered in a proceeding in equity or at law), and (iii) an implied covenant of good faith and fair dealing.

 

(d)           Our opinions are further subject to the effect of generally applicable rules of law arising from statutes, judicial and administrative decisions, and the rules and regulations of governmental authorities that: (i) limit or affect the enforcement of provisions of a contract that purport to require waiver of the obligations of good faith, fair dealing, diligence and reasonableness; (ii) limit the availability of a remedy under certain circumstances where another remedy has been elected; (iii) limit the enforceability of provisions releasing, exculpating, or exempting a party from, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves negligence, recklessness, willful misconduct or unlawful conduct; (iv) may, where less than all of the contract may be unenforceable, limit the enforceability of the balance of the contract to circumstances in which the unenforceable portion is not an essential part of the agreed exchange; and (v) govern and afford judicial discretion regarding the determination of damages and entitlement to attorneys’ fees.

 

(e)           We express no opinion as to:

 

(i)           the enforceability of any provision in any of the Transaction Documents purporting or attempting to (A) confer exclusive jurisdiction and/or venue upon certain courts or otherwise waive the defenses of forum non conveniens or improper venue, (B) confer subject matter jurisdiction on a court not having independent grounds therefor, (C) modify or waive the requirements for effective service of process for any action that may be brought, (D) waive the right of any of the Omega Parties or any other person to a trial by jury, (E) provide that remedies are cumulative or that decisions by a party are conclusive, (F) modify or waive the rights to notice, legal defenses, statutes of limitations and statutes of repose (including the tolling of the same) or other benefits that cannot be waived under applicable law, (G) govern choice of law or conflicts of laws, or (H) provide for or grant a power of attorney;

 

(ii)           the enforceability of (A) any rights to indemnification or contribution provided for in the Transaction Documents which are violative of public policy underlying any law, rule or regulation (including any Federal or state securities law, rule or regulation) or the legality of such rights, or (B) provisions in the Transaction Documents whose terms are left open for later resolution by the parties;

 

(iii)           the effect of any third-party preemptive rights, or any rights of first refusal or of set-offs,

 

(iv)           the effect on the enforceability of any of the Transaction Documents of any decision of an arbitration tribunal or an arbitrator to the extent such decision does not give effect to the terms of such Transaction Documents or to applicable law;

 

 (v)           whether any of the Subsidiary Guarantors may guarantee or otherwise be liable for, or pledge its assets to secure, indebtedness incurred by the Company except to the extent that a Subsidiary Guarantor may be determined to have benefited from the incurrence of the indebtedness by the Company or whether such benefit may be measured other than by the extent to which the proceeds of the indebtedness incurred by the Company are, directly or indirectly, made available to the  Subsidiary Guarantor for its corporate, limited liability company, limited partnership or business trust purposes;

 

(vi)           the validity, binding effect or enforceability of any provision that purports to create joint and several liability for affiliated borrowers; and

 

(vii)            except to the extent heretofore expressly stated as being addressed herein, and without limiting the generality of any of the other paragraphs in this opinion letter, the opinions contained herein do not express any opinion as to the following matters, including their effects or the effects of noncompliance, and are not covered by implication or otherwise in our opinions: (A) laws, rules, regulations or ordinances of political subdivisions (such as counties, cities, towns and other municipalities); (B) labor law; (C) antitrust and unfair competition law; (D) securities and blue sky law; (E) fiduciary obligations; (F) pension and employee benefit law; (G) Regulations T, U and X of the Board of Governors of the Federal Reserve System; (H) antifraud, insolvency, fraudulent transfers, obligations or conveyance law, and similar state laws; (I) environmental law; (J) land use and subdivision law; (K) bulk transfer law; (L) laws related to filing requirements, other than charter-related filing requirements, such as requirements of filing articles of merger; (M) law concerning creation, attachment, perfection or priority of a security interest in any assets; (N) tax law; (O) patent, copyright, trademark and other intellectual property law; (P) racketeering laws; (Q) criminal statutes of general application; (R) safety, health and healthcare law; (S) law concerning national or local emergency; or (T) any laws relating to foreign corrupt practices, trading with the enemy, terrorism or money laundering, including but not limited the Trading with the Enemy Act, as amended, the United States Foreign Corrupt Practices Act of 1977, as amended, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001), commonly referred to as the USA Patriot Act (as any of the foregoing may have been renewed, extended, amended or replaced) and any regulations, enabling legislation or executive order, relating to any of the foregoing.

 

(f)           We express no opinion as to whether the interest, fees or other charges to be paid or reimbursed as provided in the Transaction Documents (and any other documents or instruments executed in connection therewith or any prior documents and instruments related thereto), taken as a whole or considering any part thereof, would be usurious.  In rendering our opinions expressed herein, however, we assume that the interest, fees and other charges to be paid or reimbursed as provided in the Transaction Documents (and any other documents or instruments executed in connection therewith), taken as a whole and considering any part thereof, would not be usurious.

 

The opinions set forth herein are made as of the date hereof and are subject to, and may be limited by, future changes in factual matters, and we undertake no duty to advise you of the same.  The opinions expressed herein are based upon the law in effect (and published or otherwise generally available) on the date hereof, and we assume no obligation to revise or supplement these opinions should such law be changed by legislative action, judicial decision or otherwise.  In rendering our opinions, we have not considered, and hereby disclaim any opinion as to, the application or impact of any laws, cases, decisions, rules or regulations of any other jurisdiction, court or administrative agency.

 

 

 

 

We do not render any opinions except as set forth above.  This opinion letter is being delivered by us solely for your benefit pursuant to the provisions of Section 7(a) of the Purchase Agreement in your capacities as the Initial Purchasers and may be relied upon by you in connection therewith.  By your acceptance of this opinion letter, you agree that it may not be relied upon, circulated, quoted or otherwise referred to by you for any other purpose or by any other person for any purpose without our prior written consent in each instance.

 

 

Very truly yours,

 

  

  

  

SCHEDULE A

 

Initial Purchasers

 

	
  

	
Merrill Lynch, Pierce, Fenner & Smith Incorporated

Deutsche Bank Securities Inc.

Jefferies & Company, Inc.

UBS Securities LLC

Credit Agricole Securities (USA) Inc.

RBS Securities Inc.

	
  

	
Stifel, Nicolaus & Company, Incorporated

 

 

 

  

  

  

SCHEDULE B

 

Subsidiary Guarantors and Identified Guarantors

 

Each entity listed below is a Subsidiary Guarantor, but only those entities with an asterisk next to its name is an Identified Guarantor.

 

	
Arizona Lessor - Infinia, Inc.*

	
Baldwin Health Center, Inc.

	
Bayside Alabama Healthcare Second, Inc.

	
Bayside Arizona Healthcare Associates, Inc.

	
Bayside Arizona Healthcare Second, Inc.

	
Bayside Colorado Healthcare Associates, Inc.

	
Bayside Colorado Healthcare Second, Inc.

	
Bayside Indiana Healthcare Associates, Inc.

	
Bayside Street II, Inc.*

	
Bayside Street, Inc.*

	
Canton Health Care Land, Inc.

	
Carnegie Gardens LLC*

	
Center Healthcare Associates, Inc.

	
Cherry Street – Skilled Nursing, Inc.

	
Colonial Gardens, LLC

	
Colorado Lessor - Conifer, Inc.*

	
Copley Health Center, Inc.

	
CSE Albany LLC*

	
CSE Amarillo LLC*

	
CSE Anchorage LLC*

	
CSE Arden L.P.*

	
CSE Augusta LLC*

	
CSE Bedford LLC*

	
CSE Blountville LLC*

	
CSE Bolivar LLC*

	
CSE Cambridge LLC*

	
CSE Cambridge Realty LLC*

	
CSE Camden LLC*

	
CSE Canton LLC*

	
CSE Casablanca Holdings II LLC*

	
CSE Casablanca Holdings LLC*

	
CSE Cedar Rapids LLC*

	
CSE Centennial Village

	
CSE Chelmsford LLC*

	
CSE Chesterton LLC*

	
CSE Claremont LLC*

	
CSE Corpus North LLC*

	
CSE Crane LLC*

	
CSE Denver Iliff LLC*

	
CSE Denver LLC*

	
CSE Douglas LLC*

	
CSE Dumas LLC*

	
CSE Elkton LLC*

	
CSE Elkton Realty LLC*

	
CSE Fairhaven LLC*

	
CSE Fort Wayne LLC*

	
CSE Frankston LLC*

	
CSE Georgetown LLC*

	
CSE Green Bay LLC*

	
CSE Hilliard LLC*

	
CSE Huntingdon LLC*

	
CSE Huntsville LLC*

	
CSE Indianapolis-Continental LLC*

	
CSE Indianapolis-Greenbriar LLC*

	
CSE Jacinto City LLC*

	
CSE Jefferson City LLC*

	
CSE Jeffersonville-Hillcrest Center LLC*

	
CSE Jeffersonville-Jennings House LLC*

	
CSE Kerrville LLC*

	
CSE King L.P.*

	
CSE Kingsport LLC*

	
CSE Knightdale L.P.*

	
CSE Lake City LLC*

	
CSE Lake Worth LLC*

	
CSE Lakewood LLC*

	
CSE Las Vegas LLC*

	
CSE Lawrenceburg LLC*

	
CSE Lenoir L.P.*

	
CSE Lexington Park LLC*

	
CSE Lexington Park Realty LLC*

	
CSE Ligonier LLC*

	
CSE Live Oak LLC*

	
CSE Logansport LLC*

	
CSE Lowell LLC*

	
CSE Marianna Holdings LLC*

	
CSE Memphis LLC*

	
CSE Mobile LLC*

	
CSE Moore LLC*

	
CSE North Carolina Holdings I LLC*

	
CSE North Carolina Holdings II LLC*

	
CSE Omro LLC*

	
CSE Orange Park LLC*

	
CSE Orlando-Pinar Terrace Manor LLC*

	
CSE Orlando-Terra Vista Rehab LLC*

	
CSE Pennsylvania Holdings

	
CSE Piggott LLC*

	
CSE Pilot Point LLC*

	
CSE Ponca City LLC*

	
CSE Port St. Lucie LLC*

	
CSE Richmond LLC*

	
CSE Ripley LLC*

	
CSE Ripon LLC*

	
CSE Safford LLC*

	
CSE Salina LLC*

	
CSE Seminole LLC*

	
CSE Shawnee LLC*

	
CSE Spring Branch LLC*

	
CSE Stillwater LLC*

	
CSE Taylorsville LLC*

	
CSE Texarkana LLC*

	
CSE Texas City LLC*

	
CSE The Village LLC*

	
CSE Upland LLC*

	
CSE Walnut Cove L.P.*

	
CSE West Point LLC*

	
CSE Whitehouse LLC*

	
CSE Williamsport LLC*

	
CSE Winter Haven LLC*

	
CSE Woodfin L.P.*

	
CSE Yorktown LLC*

	
Dallas – Skilled Nursing, Inc.

	
Delta Investors I, LLC*

	
Delta Investors II, LLC*

	
Desert Lane LLC*

	
Dixon Health Care Center, Inc.

	
Florida Lessor – Crystal Springs, Inc.*

	
Florida Lessor – Emerald, Inc.*

	
Florida Lessor – Lakeland, Inc.*

	
Florida Lessor – Meadowview, Inc.*

	
Florida Real Estate Company, LLC

	
Georgia Lessor - Bonterra/Parkview, Inc.*

	
Greenbough, LLC*

	
Hanover House, Inc.

	
Heritage Texarkana Healthcare Associates, Inc.

	
House of Hanover, Ltd

	
Hutton I Land, Inc.

	
Hutton II Land, Inc.

	
Hutton III Land, Inc.

	
Indiana Lessor – Jeffersonville, Inc.*

	
Indiana Lessor – Wellington Manor, Inc.*

	
Jefferson Clark, Inc.*

	
LAD I Real Estate Company, LLC*

	
Lake Park – Skilled Nursing, Inc.

	
Leatherman 90-1, Inc.

	
Leatherman Partnership 89-1, Inc.

	
Leatherman Partnership 89-2, Inc.

	
Long Term Care – Michigan, Inc.

	
Long Term Care – North Carolina, Inc.

	
Long Term Care Associates – Illinois, Inc.

	
Long Term Care Associates – Indiana, Inc.

	
Long Term Care Associates – Texas, Inc.

	
Meridian Arms Land, Inc.

	
North Las Vegas LLC*

	
NRS Ventures, L.L.C.*

	
OHI (Connecticut), Inc.

	
OHI (Florida), Inc.

	
OHI (Illinois), Inc.

	
OHI (Indiana), Inc.

	
OHI (Iowa), Inc.

	
OHI (Kansas), Inc.

	
OHI Asset (CA), LLC*

	
OHI Asset (CO), LLC*

	
OHI Asset (CT) Lender, LLC*

	
OHI Asset (FL), LLC*

	
OHI Asset (ID), LLC*

	
OHI Asset (IL), LLC*

	
OHI Asset (IN), LLC*

	
OHI Asset (LA), LLC*

	
OHI Asset (MI), LLC*

	
OHI Asset (MI/NC), LLC*

	
OHI Asset (MO), LLC*

	
OHI Asset (OH) Lender, LLC*

	
OHI Asset (OH) New Philadelphia, LLC*

	
OHI Asset (OH), LLC*

	
OHI Asset (PA) Trust*

	
OHI Asset (PA), LLC*

	
OHI Asset (SMS) Lender, Inc.*

	
OHI Asset (TX), LLC*

	
OHI Asset CSB LLC*

	
OHI Asset CSE – E, LLC*

	
OHI Asset CSE – U, LLC*

	
OHI Asset Essex (OH), LLC*

	
OHI Asset II (CA), LLC*

	
OHI Asset II (FL), LLC*

	
OHI Asset II (PA) Trust*

	
OHI Asset III (PA) Trust*

	
OHI Asset IV (PA) Silver Lake Trust*

	
OHI Asset, LLC*

	
OHI of Texas, Inc.*

	
OHI Sunshine, Inc.

	
OHI Tennessee, Inc.*

	
OHIMA, Inc.

	
Omega (Kansas), Inc.

	
Omega TRS I, Inc.*

	
Orange Village Care Center, Inc.

	
OS Leasing Company

	
Panama City Nursing Center LLC*

	
Parkview – Skilled Nursing, Inc.

	
Pavillion North Partners, Inc.

	
Pavillion North, LLP

	
Pavillion Nursing Center North, Inc.

	
Pine Texarkana Healthcare Associates, Inc.

	
Reunion Texarkana Healthcare Associates, Inc.

	
San Augustine Healthcare Associates, Inc.

	
Skilled Nursing – Gaston, Inc.

	
Skilled Nursing – Herrin, Inc.

	
Skilled Nursing – Hicksville, Inc.

	
Skilled Nursing – Paris, Inc.

	
Skyler Maitland LLC*

	
South Athens Healthcare Associates, Inc.

	
St. Mary’s Properties, Inc.

	
Sterling Acquisition Corp.

	
Sterling Acquisition Corp. II

	
Suwanee, LLC*

	
Texas Lessor – Stonegate GP, Inc.*

	
Texas Lessor – Stonegate, Limited, Inc.*

	
Texas Lessor – Stonegate, LP*

	
Texas Lessor – Treemont, Inc.*

	
The Suburban Pavilion, Inc.

	
Washington Lessor – Silverdale, Inc.*

	
Waxahachie Healthcare Associates, Inc.

	
West Athens Healthcare Associates, Inc.

	
Wilcare, LLC

 

  

  

  

SCHEDULE C

 

Company Foreign Qualification

 

Alabama

 

Arkansas

 

Colorado

 

Florida

 

Idaho

 

Indiana

 

Kentucky

 

Louisiana

 

Massachusetts

 

Michigan

 

Missouri

 

North Carolina

 

Ohio

 

Pennsylvania

 

Rhode Island

 

Tennessee

 

Texas

 

Washington

 

 

  

  

  

SCHEDULE D

 

Identified Agreements

 

	
1.  

	
Indenture dated as of October 4, 2010, among the Company and each of the Subsidiary Guarantors named therein, as Subsidiary Guarantors, and U.S. Bank National Association, as Trustee, pursuant to which the Company issued its 6.75% Senior Notes due 2022.

	
2.  

	
Indenture dated as of March 22, 2004, among the Company and each of the Subsidiary Guarantors named therein, as Subsidiary Guarantors, and U.S. Bank National Association, as Trustee, pursuant to which the Company issued its 7% Senior Notes due 2014, and Supplemental Indentures thereto dated as of July 20, 2004, November 5, 2004, December 1, 2005, January 7, 2010, January 29, 2010, February 2, 2010, June 23, 2010 and September 2, 2010.

	
2.  

	
Indenture dated as of December 30, 2005, among the Company and each of the Subsidiary Guarantors named therein, as Subsidiary Guarantors, and U.S. Bank National Association, as Trustee, pursuant to which the Company issued its 7% Senior Notes due 2016, and Supplemental Indentures thereto dated as of January 7, 2010, January 29, 2010, February 2, 2010, June 23, 2010 and September 2, 2010.

	
3.  

	
Indenture dated as of February 9, 2010, among the Company and each of the Subsidiary Guarantors named therein, as Subsidiary Guarantors, and U.S. Bank National Association, as Trustee, pursuant to which the Company issued its 7-1/2% Senior Notes due 2020, and Supplemental Indentures thereto dated as of June 23, 2010 and September 2, 2010.

	
4.  

	
Credit Agreement, dated as of April 13, 2010, by and among OHI ASSET, LLC, OHI ASSET (ID), LLC, OHI ASSET (LA), LLC,  OHI ASSET (CA), LLC, DELTA INVESTORS I, LLC, DELTA INVESTORS II, LLC, OHI ASSET (CO), LLC, COLONIAL GARDENS, LLC, WILCARE, LLC, TEXAS LESSOR – STONEGATE, LP, OHIMA, INC., CANTON HEALTH CARE LAND, INC., DIXON HEALTH CARE CENTER, INC., HUTTON I LAND, INC., HUTTON II LAND, INC., HUTTON III LAND, INC., LEATHERMAN PARTNERSHIP 89-1, INC.,  LEATHERMAN PARTNERSHIP 89-2, INC., LEATHERMAN 90-1, INC., MERIDIAN ARMS LAND, INC., ORANGE VILLAGE CARE CENTER, INC., and ST. MARY’S PROPERTIES, INC., as Borrowers,  the Lenders party thereto, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and the related Guaranty of even date therewith made by the Company and the subsidiary guarantors party thereto in favor of the Administrative Agent.

  

  

  

EXHIBIT A-2

 

Form of Tax Opinion of Bryan Cave LLP

 

We have acted as counsel to Omega Healthcare Investors, Inc., a Maryland corporation (the “Company”), in connection with the offering of an aggregate principal amount of $___000,000 of the Company’s ___% Senior Notes due 20__ (the “Notes”) pursuant to the Company’s Offering Memorandum (the “Offering Memorandum”).

 

In rendering our opinion, we have examined and relied on originals or copies certified or otherwise identified to our satisfaction of (i) the Articles of Incorporation, the Articles of Amendment, Articles of Amendment and Restatement, and Articles Supplementary thereto, of the Company and its Subsidiaries, (ii) the Offering Memorandum, and (iii) such other documents, certificates, and records as we have deemed necessary or appropriate.  We also have relied upon factual statements and representations made to us by representatives of the Company and others that are set forth in a certificate executed and provided to us by the Company (the “Officer’s Certificate”).  With respect to the ownership of stock of the Company for certain periods prior to March 8, 2004, we also have relied on a letter from Explorer Holdings, L.P., regarding the ownership of stock of the Company by Explorer Holdings, L.P., Explorer Holdings Level II, L.P., and Hampstead Investment Partners III, L.P. (the “Representation Letter”).  For purposes of this opinion, we have assumed the validity and accuracy of the documents, certificates and records set forth above, and that the statements and representations made therein are and will remain true and complete.  We also have assumed that the Offering Memorandum and such other documents, certificates and records and that the statements as to factual matters contained in the Offering Memorandum are true, correct and complete and will continue to be true, correct and complete through the completion of the transactions contemplated therein.  For purposes of this Opinion, we have not, however,  assumed the correctness of any statement to the effect that the Company qualifies as a REIT.

 

In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photo copies, and the authenticity of the originals of such copies.  In making our examination of documents executed, or to be executed, by the parties indicated therein, we have assumed that each party (other than the Company) has, or will have, the power, corporate or other, to enter into and perform all obligations thereunder and we have also assumed the due authorization by all requisite action, corporate or other, and the execution and delivery by such parties and the validity and binding effect thereof on such parties.  All of the documents we have reviewed will be complied with without waiver.  Finally, in connection with the opinions rendered below, we have assumed that during its taxable year ended December 31, 1992 and in each subsequent taxable year to present, the Company has operated and will continue to operate in such a manner that makes and will continue to make the representations contained in the Officer’s Certificate true for each of such years, as of the date hereof, and any representation made as a belief, made “to the knowledge of,” or made in a similarly qualified manner is true, correct, and complete, as of the date hereof, without such qualification.

 

In rendering our opinion, we have considered the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Department regulations promulgated thereunder, pertinent judicial authorities, interpretive rulings of the Internal Revenue Service and such other authorities as we have considered relevant, all in effect as of the date hereof.  It should be noted that statutes, regulations, judicial decisions and administrative interpretations are subject to change at any time (possibly with retroactive effect).  A change in the authorities or the accuracy or completeness of any of the information, documents, certificates, records, statements, representations, covenants, or assumptions on which our opinion is based could affect our conclusions.

 

Based on the foregoing, in reliance thereon and subject thereto and to the limitations stated below, it is our opinion that:

 

(a)           From and including the Company’s taxable year ended December 31, 1992, the Company was and is organized in conformity with the requirements for, its actual methods of operation through the date hereof have permitted, and its proposed methods of operations as described in the Officer’s Certificate will permit the Company to meet the requirements for, qualification and taxation as a real estate investment trust (“REIT”) under the Code and the Company has qualified and will so qualify, and the Company will continue to meet such requirements and qualify as a REIT after consummation of the contemplated transactions and the application of the proceeds, if any, from the offering of the Notes by the Company as described in the Offering Memorandum.

 

(b)           The discussion in the Offering Memorandum under the heading “CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS,” in so far as such statements constitute a summary of U.S. federal tax matters, fairly and accurately summarizes such matters in all material respects.

 

Except as set forth above, we express no opinion to any party as to the tax consequences, whether federal, state, local or foreign, of the offerings discussed in the Offering Memorandum or of any transaction related thereto or contemplated thereby.  This opinion is expressed as of the date hereof, and we are under no obligation to advise you of, supplement, or revise our opinion to reflect, any changes (including changes that have retroactive effect) in applicable law or any information, document, certificate, record, statement, representation, covenant or assumption relied upon herein that becomes incorrect or untrue.Exhibit 10.1 

Execution Copy 

MERGER AGREEMENT 

by and among 

CARDIONET, INC. 

GARDEN MERGER SUB, INC. 

and 

BIOTEL INC. 

Dated as of November 5, 2010

TABLE OF CONTENTS

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE I 

 	
 THE MERGER

 	
  

 	
 2

 
	
  

 	
 Section 1.1

 	
  

 	
 The Merger

 	
  

 	
 2

 
	
  

 	
 Section 1.2

 	
  

 	
 Closing

 	
  

 	
 2

 
	
  

 	
 Section 1.3

 	
  

 	
 Effective
 Date

 	
  

 	
 2

 
	
  

 	
 Section 1.4

 	
  

 	
 Effects of
 the Merger

 	
  

 	
 2

 
	
 ARTICLE II 

 	
 CONVERSION
 OF SHARES; EXCHANGE OF CERTIFICATES

 	
  

 	
 2

 
	
  

 	
 Section 2.1

 	
  

 	
 Effect on
 Capital Stock

 	
  

 	
 2

 
	
  

 	
 Section 2.2

 	
  

 	
 Exchange of
 Certificates

 	
  

 	
 4

 
	
  

 	
 Section 2.3

 	
  

 	
 Cancellation
 of Certain Shares

 	
  

 	
 6

 
	
 ARTICLE III 

 	
 REPRESENTATIONS
 AND WARRANTIES OF THE COMPANY

 	
  

 	
 6

 
	
  

 	
 Section 3.1

 	
  

 	
 Qualification,
 Organization, Subsidiaries, etc.

 	
  

 	
 6

 
	
  

 	
 Section 3.2

 	
  

 	
 Capital
 Stock

 	
  

 	
 7

 
	
  

 	
 Section 3.3

 	
  

 	
 Corporate
 Authority Relative to This Agreement; No Violation

 	
  

 	
 8

 
	
  

 	
 Section 3.4

 	
  

 	
 Reports and
 Financial Statements

 	
  

 	
 10

 
	
  

 	
 Section 3.5

 	
  

 	
 Assets

 	
  

 	
 12

 
	
  

 	
 Section 3.6

 	
  

 	
 No
 Undisclosed Liabilities

 	
  

 	
 13

 
	
  

 	
 Section 3.7

 	
  

 	
 Compliance
 with Law; Permits

 	
  

 	
 13

 
	
  

 	
 Section 3.8

 	
  

 	
 Environmental
 Laws and Regulations

 	
  

 	
 13

 
	
  

 	
 Section 3.9

 	
  

 	
 Employee Benefit
 Plans

 	
  

 	
 14

 
	
  

 	
 Section 3.10

 	
  

 	
 Absence of
 Certain Changes or Events

 	
  

 	
 16

 
	
  

 	
 Section 3.11

 	
  

 	
 Investigations;
 Litigation

 	
  

 	
 17

 
	
  

 	
 Section 3.12

 	
  

 	
 Proxy
 Statement; Other Information

 	
  

 	
 17

 
	
  

 	
 Section 3.13

 	
  

 	
 Regulatory
 Compliance

 	
  

 	
 17

 
	
  

 	
 Section 3.14

 	
  

 	
 Tax Matters

 	
  

 	
 19

 
	
  

 	
 Section 3.15

 	
  

 	
 Labor
 Matters

 	
  

 	
 20

 
	
  

 	
 Section 3.16

 	
  

 	
 Intellectual
 Property

 	
  

 	
 21

 
	
  

 	
 Section 3.17

 	
  

 	
 Opinion of
 Financial Advisor

 	
  

 	
 22

 
	
  

 	
 Section 3.18

 	
  

 	
 Required
 Vote of the Company Shareholders

 	
  

 	
 22

 
	
  

 	
 Section 3.19

 	
  

 	
 Material
 Contracts

 	
  

 	
 23

 
	
  

 	
 Section 3.20

 	
  

 	
 Insurance

 	
  

 	
 24

 

-i-

TABLE OF CONTENTS
(continued)

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Section 3.21

 	
  

 	
 Title To and
 Sufficiency of Property; Liens; Leases

 	
  

 	
 24

 
	
  

 	
 Section 3.22

 	
  

 	
 Finders or
 Brokers

 	
  

 	
 25

 
	
  

 	
 Section 3.23

 	
  

 	
 Voting
 Agreements

 	
  

 	
 26

 
	
  

 	
 Section 3.24

 	
  

 	
 Off-Balance
 Sheet Arrangements

 	
  

 	
 26

 
	
  

 	
 Section 3.25

 	
  

 	
 Compliance
 with Insider Trading Laws

 	
  

 	
 26

 
	
  

 	
 Section 3.26

 	
  

 	
 Illegal
 Payments

 	
  

 	
 26

 
	
 ARTICLE IV

 	
 REPRESENTATIONS
 AND WARRANTIES OF PARENT AND MERGER SUB

 	
  

 	
 26

 
	
  

 	
 Section 4.1

 	
  

 	
 Qualification;
 Organization, Subsidiaries, etc.

 	
  

 	
 26

 
	
  

 	
 Section 4.2

 	
  

 	
 Corporate Authority
 Relative to This Agreement; No Violation

 	
  

 	
 27

 
	
  

 	
 Section 4.3

 	
  

 	
 Investigations;
 Litigation

 	
  

 	
 28

 
	
  

 	
 Section 4.4

 	
  

 	
 Capitalization
 of Merger Sub

 	
  

 	
 28

 
	
  

 	
 Section 4.5

 	
  

 	
 No Vote of
 Parent Stockholders

 	
  

 	
 28

 
	
  

 	
 Section 4.6

 	
  

 	
 Finders or
 Brokers

 	
  

 	
 28

 
	
  

 	
 Section 4.7

 	
  

 	
 Lack of
 Ownership of Company Common Stock

 	
  

 	
 28

 
	
  

 	
 Section 4.8

 	
  

 	
 Absence of
 Arrangements with Management

 	
  

 	
 29

 
	
 ARTICLE V 

 	
 COVENANTS
 AND AGREEMENTS

 	
  

 	
 29

 
	
  

 	
 Section 5.1

 	
  

 	
 Conduct of
 Business by the Company and Parent

 	
  

 	
 29

 
	
  

 	
 Section 5.2

 	
  

 	
 Investigation

 	
  

 	
 32

 
	
  

 	
 Section 5.3

 	
  

 	
 No Solicitation

 	
  

 	
 33

 
	
  

 	
 Section 5.4

 	
  

 	
 Proxy
 Statement; Company Meeting

 	
  

 	
 35

 
	
  

 	
 Section 5.5

 	
  

 	
 Reasonable
 Best Efforts

 	
  

 	
 36

 
	
  

 	
 Section 5.6

 	
  

 	
 Takeover
 Statute

 	
  

 	
 38

 
	
  

 	
 Section 5.7

 	
  

 	
 Public
 Announcements

 	
  

 	
 38

 
	
  

 	
 Section 5.8

 	
  

 	
 Control of
 Operations

 	
  

 	
 38

 
	
  

 	
 Section 5.9

 	
  

 	
 Notification
 of Certain Matters

 	
  

 	
 38

 
	
  

 	
 Section 5.10

 	
  

 	
 Security
 Holder Litigation

 	
  

 	
 39

 
	
  

 	
 Section 5.11

 	
  

 	
 Company
 Stock Options

 	
  

 	
 39

 
	
  

 	
 Section 5.12

 	
  

 	
 Termination
 of 401(a) Plans

 	
  

 	
 40

 
	
 ARTICLE VI 

 	
 CONDITIONS
 TO THE MERGER

 	
  

 	
 40

 

-ii-

TABLE OF CONTENTS

(continued)

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Section 6.1

 	
  

 	
 Conditions
 to Each Party’s Obligation to Effect the Merger

 	
  

 	
 40

 
	
  

 	
 Section 6.2

 	
  

 	
 Conditions
 to Obligation of the Company to Effect the Merger

 	
  

 	
 40

 
	
  

 	
 Section 6.3

 	
  

 	
 Conditions
 to Obligation of Parent and Merger Sub to Effect the Merger

 	
  

 	
 41

 
	
  

 	
 Section 6.4

 	
  

 	
 Frustration
 of Closing Conditions

 	
  

 	
 41

 
	
 ARTICLE VII 

 	
 TERMINATION

 	
  

 	
 42

 
	
  

 	
 Section 7.1

 	
  

 	
 Termination
 and Abandonment

 	
  

 	
 42

 
	
  

 	
 Section 7.2

 	
  

 	
 Effect of
 Termination

 	
  

 	
 43

 
	
 ARTICLE 

 	
 VIII
 MISCELLANEOUS

 	
  

 	
 44

 
	
  

 	
 Section 8.1

 	
  

 	
 No Survival
 of Representations and Warranties

 	
  

 	
 44

 
	
  

 	
 Section 8.2

 	
  

 	
 Expenses

 	
  

 	
 44

 
	
  

 	
 Section 8.3

 	
  

 	
 Counterparts;
 Effectiveness

 	
  

 	
 44

 
	
  

 	
 Section 8.4

 	
  

 	
 Governing
 Law

 	
  

 	
 44

 
	
  

 	
 Section 8.5

 	
  

 	
 Jurisdiction;
 Enforcement

 	
  

 	
 44

 
	
  

 	
 Section 8.6

 	
  

 	
 WAIVER OF
 JURY TRIAL

 	
  

 	
 45

 
	
  

 	
 Section 8.7

 	
  

 	
 Notices

 	
  

 	
 45

 
	
  

 	
 Section 8.8

 	
  

 	
 Assignment;
 Binding Effect

 	
  

 	
 46

 
	
  

 	
 Section 8.9

 	
  

 	
 Severability

 	
  

 	
 46

 
	
  

 	
 Section 8.10

 	
  

 	
 Entire
 Agreement; No Third-Party Beneficiaries

 	
  

 	
 46

 
	
  

 	
 Section 8.11

 	
  

 	
 Amendments;
 Waivers

 	
  

 	
 47

 
	
  

 	
 Section 8.12

 	
  

 	
 Headings

 	
  

 	
 47

 
	
  

 	
 Section 8.13

 	
  

 	
 Interpretation

 	
  

 	
 47

 
	
  

 	
 Section 8.14

 	
  

 	
 Definitions

 	
  

 	
 47

 

	
  

 
	
 EXHIBITS 

 
	
  

 
	
 Exhibit A –
 Plan of Merger 

 
	
 Exhibit B -
 Voting Agreement 

 
	
 Exhibit C -
 Gray, Plant & Mooty Opinion 

 

-iii-

          MERGER
AGREEMENT, dated as of November 5, 2010 (the “Agreement”), among
CARDIONET, INC., a Delaware corporation (“Parent”), GARDEN MERGER SUB,
INC., a Minnesota corporation and a direct wholly owned subsidiary of Parent (“Merger
Sub”), and BIOTEL INC., a Minnesota corporation (the “Company”). 

W I T N E S S E T H :

          WHEREAS,
the parties previously entered into a Merger Agreement, dated as of April 1,
2009 (the “Prior Agreement”). 

          WHEREAS,
the merger transaction contemplated by the Prior Agreement has not been
consummated, and the parties have been engaged in litigation with respect
thereto. 

          WHEREAS,
the parties have entered into a Settlement Agreement, of even date herewith
(the “Settlement Agreement”), pursuant to which the parties have agreed,
among other things, (i) to terminate the Prior Agreement, (ii) to settle the
litigation with respect thereto and (iii) to enter into this Agreement, in each
case in accordance with the terms and conditions set forth in the Settlement
Agreement. 

          WHEREAS the
parties intend that Merger Sub be merged with and into the Company (the “Merger”),
with the Company surviving the Merger as a wholly owned subsidiary of Parent. 

          WHEREAS,
the Board of Directors of the Company has unanimously (i) determined that it is
in the best interests of the Company and its shareholders, and declared it
advisable to enter into this Agreement, (ii) approved the execution, delivery
and performance of this Agreement, the Plan of Merger attached hereto as Exhibit
A (the “Plan”) and the consummation of the transactions contemplated
hereby and thereby, including the Merger, and (iii) resolved to recommend to
the shareholders of the Company approval of this Agreement and the Plan. 

          WHEREAS,
the Board of Directors of Parent has approved the transactions contemplated by
this Agreement and the Plan and authorized the execution and delivery of this
Agreement by Parent. 

          WHEREAS,
the Board of Directors of Merger Sub has approved this Agreement and the Plan
and declared it advisable for Merger Sub to enter into this Agreement. 

          WHEREAS,
Merger Sub and the Company are sometimes herein referred to together as the “Constituent
Corporations”; and the Company, as the surviving corporation in the Merger,
is sometimes hereinafter referred to as the “Surviving Corporation”. 

          WHEREAS,
Parent, Merger Sub and the Company desire to make certain representations,
warranties, covenants and agreements specified herein in connection with this
Agreement. 

          NOW,
THEREFORE, in consideration of the foregoing, which is incorporated in this
Agreement as if fully set forth below, and the representations, warranties,
covenants and 

- 1 -

agreements contained herein, and intending to be legally bound hereby,
Parent, Merger Sub and the Company agree as follows: 

ARTICLE I

THE MERGER

          Section 1.1     The
Merger. On the Closing Date (as hereinafter defined), Merger Sub shall be
merged with and into the Company on the terms and subject to the conditions set
forth in this Agreement and the Plan and in accordance with the Minnesota
Business Corporation Act (the “MBCA”). 

          Section
1.2     Closing. The closing of the Merger (the
“Closing”) shall take place at the Philadelphia office of Morgan, Lewis
& Bockius LLP at 10:00 a.m., local time, on a date to be specified by the
parties (the “Closing Date”) which shall be no later than the second
business day after the satisfaction or waiver (to the extent permitted by
applicable Law (as hereinafter defined)) of the conditions set forth in Article
VI (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of such conditions), or at
such other place, date and time as the Company and Parent may agree in writing.

          Section
1.3     Effective Date. The effective date of
the Merger (the “Effective Date”) shall be the Closing Date or such
later date as may be agreed by the Company and Merger Sub in writing and
specified in the Articles of Merger in accordance with the MBCA. 

          Section
1.4     Effects of the Merger. The Merger shall
have the effects set forth in this Agreement, the Plan and the applicable
provisions of the MBCA. Without limiting the generality of the foregoing, and
subject thereto, from and after the Effective Date, all property, rights,
privileges, immunities, powers, franchises, licenses and authority of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions and duties of each of the Company and
Merger Sub shall become the debts, liabilities, obligations, restrictions and
duties of the Surviving Corporation. 

ARTICLE II

CONVERSION OF SHARES; EXCHANGE OF
CERTIFICATES

          Section
2.1     Effect on Capital Stock. As set forth
in the Plan, at the Effective Date, by virtue of the Merger and without any
action on the part of the Company, Merger Sub or the holders of any securities
of the Company or Merger Sub: 

                    (a)         Conversion
of Company Common Stock. At the Effective Date, each share of common stock,
par value $.01 per share, of the Company (such shares, collectively, “Company
Common Stock,” and each, a “Share”) outstanding immediately prior to
the Effective Date other than Dissenting Shares (as hereinafter defined), shall
be converted automatically into, and shall thereafter represent the right to
receive a per Share amount equal to: 

	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 $11,000,000,
 plus or minus (as the case may be)

 

- 2 -

	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 the amount by which the Company’s consolidated working capital
 (current assets (excluding deferred tax assets) minus current liabilities
 (excluding deferred tax liabilities), determined in accordance with GAAP)
 immediately prior to the Closing is greater than, or less than, $3,600,000
 (only as agreed by the parties at the Closing), minus

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 the aggregate Option Consideration, divided
 by

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 the number of shares of Company Common Stock outstanding immediately
 prior to the Closing 

 

(the “Merger Consideration”). All outstanding Shares that have
been converted into the right to receive the Merger Consideration as provided
in this Section 2.1(a) shall be automatically cancelled and shall cease to
exist, and the holders of certificates which immediately prior to the Effective
Date represented such Shares shall cease to have any rights with respect to
such Shares other than the right to receive the Merger Consideration. 

                    (b)         Conversion
of Merger Sub Common Stock. Each share of common stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Date shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation. From and after the Effective Date, all certificates
representing the common stock of Merger Sub shall be deemed for all purposes to
represent the number of shares of common stock of the Surviving Corporation
into which they were converted in accordance with the immediately preceding
sentence. 

                    (c)         Dissenters’
Rights. As set forth in the Plan, and notwithstanding any provision of this
Agreement to the contrary, if required by the MBCA (but only to the extent
required thereby), Shares that are issued and outstanding immediately prior to
the Effective Date and that are held by holders of such Shares who have not
voted in favor of the approval of the Plan or consented thereto in writing and
who have properly exercised appraisal rights with respect thereto in accordance
with, and who have complied with, Section 302A.473 of the MBCA (the “Dissenting
Shares”) will not be converted into the right to receive the Merger
Consideration, and holders of such Dissenting Shares will be entitled to
receive payment of the fair value of such Dissenting Shares in accordance with
the provisions of such Section 302A.473 unless and until any such holder fails
to perfect or effectively waives, withdraws or loses his, her or its rights to
appraisal and payment under the MBCA. If, after the Effective Date, any such
holder fails to perfect or effectively waives, withdraws or loses such right,
such Dissenting Shares will thereupon be treated as if they had been converted
into and have become exchangeable for, at the Effective Date, the right to
receive the Merger Consideration, without any interest thereon, and the
Surviving Corporation shall remain liable for payment of the Merger
Consideration for such Shares. At the Effective Date, any holder of Dissenting
Shares shall cease to have any rights with respect to the Company, except the
rights provided in Section 302A.473 of the MBCA and as provided in the previous
sentence. The Company will give Parent (i) notice of any demands received by
the Company for appraisals of Shares and (ii) the 

- 3 -

opportunity to participate in and direct all negotiations and
proceedings with respect to such notices and demands. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any demands for appraisal or settle any such demands. 

                    (d)         Adjustments.
If at any time during the period between the date of this Agreement and the
Effective Date, any change in the outstanding shares of capital stock of the
Company shall occur as a result of any reclassification, recapitalization,
stock split (including a reverse stock split) or combination, exchange or
readjustment of shares, or any stock dividend or stock distribution is declared
with a record date during such period, the Merger Consideration shall be
equitably adjusted to reflect such change. 

          Section
2.2     Exchange of Certificates. 

                    (a)         Paying
Agent. At or prior to the Effective Date, Parent shall deposit, or shall
cause to be deposited (including by requesting the Company to deposit
unrestricted cash at Closing substantially as contemplated by Parent’s
financing plan previously provided to the Company, which the Company hereby
agrees to do to the extent legally permitted), with a U.S. bank or trust
company that shall be appointed by Parent to act as a paying agent hereunder
(the “Paying Agent”), in trust for the benefit of holders of the Shares
cash in U.S. dollars sufficient to pay the aggregate Merger Consideration in
exchange for all of the outstanding Shares immediately prior to the Effective
Date, payable upon due surrender of the certificates that immediately prior to
the Effective Date represented Shares (“Certificates”) (or effective
affidavits of loss in lieu thereof), pursuant to the provisions of this Article
II (such cash referred to herein being hereinafter referred to as the “Exchange
Fund”). 

                    (b)         Payment
Procedures. 

	
  

 	
  

 
	
  

 	
                          (i)         As
 soon as reasonably practicable after the Effective Date, Parent shall
 instruct the Paying Agent to mail to each holder of record of Shares whose
 Shares were converted into the Merger Consideration pursuant to Section 2.1,
 (A) a letter of transmittal (which shall specify that delivery shall be
 effected, and risk of loss and title to Certificates shall pass, only upon
 delivery of Certificates (or effective affidavits of loss in lieu thereof) to
 the Paying Agent and shall be in such form and have such other customary
 provisions as Parent and the Company may mutually agree), and (B)
 instructions for effecting the surrender of Certificates (or effective
 affidavits of loss in lieu thereof) in exchange for the Merger Consideration.
 

 
	
  

 	
  

 
	
  

 	
                          (ii)         Upon
 surrender of Certificates (or effective affidavits of loss in lieu thereof)
 to the Paying Agent together with such letter of transmittal, duly completed
 and validly executed in accordance with the instructions thereto, and such
 other documents as may reasonably be required by the Paying Agent, the holder
 of such Certificates shall be entitled to receive in exchange therefor a
 check in an amount equal to the product of (x) the number of Shares
 represented by such holder’s properly surrendered Certificates (or effective
 affidavits of loss in lieu thereof) multiplied by (y) the Merger
 Consideration. No interest will be paid or accrued on any amount payable upon
 due surrender of Certificates. In the event of a transfer of ownership of
 Shares that 

 

- 4 -

	
  

 	
  

 
	
  

 	
 is not registered in the transfer records of the Company, a check for
 any cash to be paid upon due surrender of the Certificate may be paid to such
 a transferee if the Certificate formerly representing such Shares is
 presented to the Paying Agent, accompanied by all documents required to
 evidence and effect such transfer and to evidence that any applicable stock
 transfer Taxes (as hereinafter defined) have been paid or are not applicable.
 

 

                    (c)         Closing
of Transfer Books. At the Effective Date, the stock transfer books of the
Company shall be closed, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
Shares that were outstanding immediately prior to the Effective Date. If, after
the Effective Date, Certificates are presented or delivered to the Surviving
Corporation or Parent for transfer, they shall be cancelled and exchanged for a
check in the proper amount pursuant to this Article II. 

                    (d)         Termination
of Exchange Fund. Any portion of the Exchange Fund (including the proceeds
of any investments thereof) that remains undistributed to the former holders of
Shares one year after the Effective Date shall be delivered to the Parent upon
demand, and any former holders of Shares who have not surrendered their Shares
in accordance with this Section 2.2 shall thereafter look only to the Parent
for payment of their claim for the Merger Consideration, without any interest
thereon, upon due surrender of their Shares. 

                    (e)         No
Liability. Notwithstanding anything herein to the contrary, none of the
Company, Parent, Merger Sub, the Surviving Corporation, the Paying Agent or any
other person shall be liable to any former holder of Shares for any amount
properly delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law. 

                    (f)         Investment
of Exchange Fund. The Paying Agent shall invest all cash included in the
Exchange Fund as reasonably directed by Parent. Any interest and other income
resulting from such investments shall be paid to the Parent upon demand. 

                    (g)         Withholding
Rights. Parent, the Surviving Corporation or the Paying Agent, as
appropriate, shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement (including any payments made in
respect of the Dissenting Shares) to any holder of Certificates such amounts as
may be required to be deducted and withheld with respect to the making of such
payment under the Internal Revenue Service Code, as amended (the “Code”)
or under any provision of state, local or foreign Tax Law. To the extent that
amounts are so withheld, (i) such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the
Certificates in respect of which such deduction and withholding was made and
(ii) Parent, the Surviving Corporation or the Paying Agent, as appropriate,
shall provide to the holders of such Certificates written notice of the amounts
so deducted or withheld. 

                    (h)         Lost
Certificates. In the case of any Certificate that has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the Paying
Agent or Parent, the posting by such person of a bond in customary amount as
indemnity against any claim that may be made against 

- 5 -

it with respect to such Certificate, as the case may be, the Paying
Agent will issue in exchange for such lost, stolen or destroyed Certificate, as
the case may be, a check in the amount of the number of Shares represented by
such lost, stolen or destroyed Certificate pursuant to this Article II. 

          Section
2.3     Cancellation of Certain Shares. Each
Share of Company Common Stock and all other shares of capital stock of the
Company that are owned, directly or indirectly, by the Company or any
Subsidiary of the Company shall automatically be canceled and retired and shall
cease to exist and no cash or other consideration shall be delivered or
deliverable in exchange therefor. 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          Except as
disclosed in the Company SEC Documents (as hereinafter defined) filed at least
ten (10) business days prior to the date hereof, to the extent the relevance of
the disclosure is readily apparent and excluding any disclosures included in any
such Company SEC Document that are predictive or cautionary in nature, or in
the disclosure schedule delivered by the Company to Parent immediately prior to
the execution of this Agreement (the “Company Disclosure Schedule”), the
Company represents and warrants, on behalf of itself and each of its
Subsidiaries, to Parent and Merger Sub as follows: 

          Section
3.1     Qualification, Organization, Subsidiaries,
etc. 

                    (a)         Each
of the Company and its Subsidiaries is a legal entity duly organized, validly
existing and in good standing under the Laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the ownership, leasing or
operation of its assets or properties or conduct of its business requires such
qualification, all of which are listed in Section 3.1(a) of the Company
Disclosure Schedule, except where the failure to be so organized, validly
existing, qualified or in good standing, or to have such power or authority,
would not have, individually or in the aggregate, a Company Material Adverse
Effect. As used in this Agreement, any reference to any facts, circumstances,
events or changes having a “Company Material Adverse Effect” means such
facts, circumstances, events or changes that are or are reasonably likely to be
materially adverse to (A) the business, financial condition, assets,
liabilities or continuing operations of the Company and its Subsidiaries, taken
as a whole or (B) the Company’s ability to perform its obligations under this
Agreement or consummate the Merger prior to the End Date (regardless of whether
or not such adverse effect or change can be or has been cured at any time or
whether the Parent has knowledge of such effect or change on the date hereof),
but that are not a result of the announcement or consummation of the
transactions contemplated by the Agreement. For the avoidance of doubt, neither
the loss of business, business prospects or suppliers of the Company as a
result of the announcement or consummation of the transactions contemplated by
the Agreement, nor the Company’s failure to meet internal or published
projections, forecasts or 

- 6 -

revenue or earnings predictions for any period shall in and of itself
constitute a Company Material Adverse Effect, but the underlying causes of such
failure shall, to the extent applicable, be considered in determining whether
there is a Company Material Adverse Effect. The Company has provided to Parent
prior to the date of this Agreement a true and complete copy of (i) the
Company’s amended and restated articles of incorporation and by-laws, each as
amended through the date hereof and (ii) the minutes (or, in the case of draft
minutes, the most recent drafts thereof) of all meetings of the Company’s
stockholders, the Company Board and each committee of the Company Board of
Directors held since January 1, 2004 through the date hereof (except, in each
case, minutes related to the transactions contemplated by this Agreement or
other alternative strategic transactions considered). 

                    (b)         Section
3.1(b) of the Company Disclosure Schedule sets forth a true and complete list
of all the Subsidiaries of the Company (identifying its jurisdiction of
incorporation, each jurisdiction in which it is qualified or licensed to do
business, and the number of shares owned and percentage ownership represented
by such share ownership). The Company owns, directly or indirectly, all of the
outstanding shares of the capital stock or other equity interest of each of the
Company’s Subsidiaries free and clear of any Lien. Neither the Company nor any
of its Subsidiaries owns, directly or indirectly, any capital stock, equity or
other ownership interest in any other person. 

                    (c)         The
copies of the organizational documents of each Subsidiary, in each case as
amended to date and provided to Parent’s and Merger Sub’s counsel, are true and
complete copies thereof, and no amendments thereto are pending. None of the
Company’s Subsidiaries is in default in the performance, observation or
fulfillment of its obligations under its respective organizational documents.
The Company has provided to Parent prior to the date hereof (i) complete and
correct copies of by-laws or similar governing documents of each of its
Subsidiaries and (ii) the minutes (or, in the case of draft minutes, the most
recent drafts thereof) of all meetings of its Subsidiaries’ stockholders,
boards of directors and each committee of such Boards of Directors held since
inception through the date hereof (except, in each case, minutes related to the
transactions contemplated by this Agreement or other alternative strategic
transactions considered). 

          Section
3.2     Capital Stock. 

                    (a)         The
authorized capital stock of the Company consists of 10,000,000 shares of
Company Common Stock and 2,000,000 shares of preferred stock, par value $0.01
per share (“Company Preferred Stock”). As of September 30, 2010, (i)
2,783,827 shares of Company Common Stock were issued and outstanding, (ii)
7,236,123 shares of Company Common Stock were held in treasury, (iii) 650,000
shares of Company Common Stock were reserved for issuance under the employee
and director stock plans of the Company’s 1999 Incentive Compensation Plan (the
“Company Stock Plan”), (iv) 141,000 shares of Company Common Stock were
issuable upon exercise of duly and validly issued Company Stock Options, (v) no
shares of Company Preferred Stock were issued and outstanding, and (vi) each
outstanding Company Stock Option was granted with an exercise price at least equal
to the fair market value of a share of Company Common Stock on the date of
grant. All outstanding shares of Company Common Stock, and all shares of
Company Common Stock reserved for issuance as noted in 

- 7 -

clause (iii), when issued in accordance with the respective terms
thereof, are or will be duly authorized, validly issued, fully paid and
non-assessable and free of pre-emptive rights and have not been issued in
violation of any federal or state securities Laws. As of the date of this
Agreement, the authorized capital stock of Agility Centralized Research
Services, Inc., a Minnesota corporation, consists of 10,000,000 shares of
common stock, par value $0.01 per share, 1,000,000 of which are validly issued
and outstanding and the authorized capital stock of Braemar, Inc., a North
Carolina corporation, consists of 1,000,000 shares of common stock, no par
value per share. All of the issued and outstanding capital stock of each of the
Company’s Subsidiaries is, and at the Effective Date will be, owned by the
Company. None of the Company’s Subsidiaries has outstanding any option,
warrant, right, or any other agreement pursuant to which any person other than
the Company may acquire any equity security of the Company’s Subsidiaries. 

                    (b)         Except
as set forth in subsection (a) above, the Company does not have any shares of
its capital stock issued or outstanding other than shares of Company Common
Stock. Included in Section 3.2(b) of the Company Disclosure Schedule is a
correct and complete list, as of November 5, 2010, of all outstanding Company
Stock Options (all of which have been duly and validly issued) and, for each
such option, the number of shares of Company Common Stock subject thereto, the
exercise price thereof, the expiration date and the name of the holder thereof.
Except for the foregoing, there are no outstanding subscriptions, options,
warrants, calls, convertible securities or other similar rights, agreements or
commitments relating to the issuance of capital stock to which the Company or
any of the Company’s Subsidiaries is a party obligating the Company or any of
the Company’s Subsidiaries to (i) issue, transfer or sell any shares of capital
stock or other equity interests of the Company or any Subsidiary of the Company
or securities convertible into or exchangeable for such shares or equity
interests, (ii) grant, extend or enter into any such subscription, option,
warrant, call, convertible securities or other similar right, agreement or
arrangement, (iii) redeem or otherwise acquire any such shares of capital stock
or other equity interests, or (iv) provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any Subsidiary.
Except for the issuance of shares of Company Common Stock that were reserved
for issuance pursuant to Company Stock Options or otherwise set forth in this
Section 3.2(b), the Company has not issued, sold, repurchased, redeemed or
otherwise acquired any Company Common Stock, and its Board of Directors have not
authorized any of the foregoing. Pursuant to the terms of the Company Stock
Plan, all Company Stock Options shall immediately vest on the Closing Date and
shall be fully exercisable on such date. The Company has not declared or paid
any dividend or distribution in respect of the Company Common Stock. 

                    (c)         Except
for the Company Stock Options listed in Section 3.2(b) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has
outstanding bonds, debentures, notes or other obligations, the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the shareholders of the Company on
any matter. 

                    (d)         There
are no voting trusts or other agreements or understandings to which the Company
or any of its Subsidiaries is a party with respect to the voting of the capital
stock or other equity interest of the Company or any of its Subsidiaries. 

- 8 -

          Section 3.3     Corporate
Authority Relative to This Agreement; No Violation. 

                    (a)        
The Company has requisite corporate power and authority to enter into this
Agreement and, subject to receipt of the Company Shareholder Approval (as
hereinafter defined), to consummate the transactions contemplated hereby. The
Board of Directors of the Company at a duly held meeting has unanimously (i)
determined that it is in the best interests of the Company and its
shareholders, and declared it advisable, to enter into this Agreement including
the Merger, the Plan, the Voting Agreements and the transactions contemplated
hereby and thereby, (ii) approved the execution, delivery and performance of
this Agreement and the Plan and the consummation of the transactions
contemplated hereby and thereby, including the Merger, and (iii) resolved,
subject to Section 5.3, to recommend that the shareholders of the Company
approve this Agreement and the Plan (the “Recommendation”) and directed
that such matter be submitted for consideration of the shareholders of the
Company at the Company Meeting (as hereinafter defined). Except for the Company
Shareholder Approval and the filing of the Articles of Merger with the
Secretary of State of the State of Minnesota, no other corporate proceedings on
the part of the Company are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes
the valid and binding agreement of Parent and Merger Sub, constitutes the valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability (i) may be limited
by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws of general application affecting or relating to the
enforcement of creditors’ rights generally and (ii) is subject to general
principles of equity, whether considered in a proceeding at law or in equity
(the “Bankruptcy and Equity Exception”). 

                    (b)        The
execution, delivery and performance by the Company of this Agreement and the
consummation of the Merger by the Company do not and will not require any
consent, approval, authorization or permit of, action by, filing with or
notification to any state, federal or foreign governmental or regulatory
agency, commission, court, body, entity or authority (each, a “Governmental
Entity”) other than (i) the filing of the Articles of Merger, (ii)
compliance with applicable federal or state antitrust, competition or similar
Laws of any foreign jurisdiction, (iii) compliance with the applicable
requirements of the Securities Exchange Act of 1934 (the “Exchange Act”),
including the filing of the Proxy Statement (as hereinafter defined), (iv)
compliance with any applicable foreign or state securities or blue sky laws,
and (v) the other consents and/or notices set forth on Section 3.3(b) of the
Company Disclosure Schedule (collectively, clauses (i) through (v), the “Company
Approvals”), and other than any other consent, approval, authorization,
permit, action, filing or notification the failure of which to make or obtain
would not (A) individually or in the aggregate, have a Company Material Adverse
Effect (the definition of which, for the purposes of this Section
3.3(b) and for purposes of Section 6.3(a) as it relates to this Section 3.3(b),
shall be interpreted so that facts or changes resulting from the announcement
or consummation of the transactions contemplated by this Agreement shall not be
excluded from the definition of Company Material Adverse Effect) or (B) prevent
or materially delay the consummation of the Merger. 

                    (c)        The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the Merger and the other transactions 

- 9 -

contemplated hereby do not and will not (i) contravene or conflict with
the organizational or governing documents of the Company or any of its
Subsidiaries, (ii) assuming compliance with the matters referenced in Section
3.3(b) and the receipt of the Company Shareholder Approval, contravene or
conflict with or constitute a violation of any provision of any Law binding
upon or applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, or (iii) result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any material
obligation or to the loss of a material benefit under, any loan, guarantee of
indebtedness or credit agreement, note, bond, mortgage, indenture, lease,
agreement, contract, instrument, permit, concession, franchise, right or
license binding upon the Company or any of the Company’s Subsidiaries or result
in the creation of any liens, claims, mortgages, encumbrances, pledges,
security interests, equities or charges of any kind (each, a “Lien”),
other than any such Lien (A) for Taxes or governmental assessments, charges or
claims of payment not yet due or being contested in good faith, provided
adequate accruals or reserves have been established in accordance with GAAP, or
(B) which is disclosed on the most recent consolidated balance sheet of the
Company included in the Company SEC Documents (each of the foregoing, a “Company
Permitted Lien”), upon any of the properties or assets of the Company or
any of the Company’s Subsidiaries, other than, in the case of clauses (ii) and
(iii), any such violation, conflict, default, termination, cancellation,
acceleration, right, loss or Lien that would not have, individually or in the
aggregate, a Company Material Adverse Effect (the definition of which, for the
purposes of this Section 3.3(c) and for purposes of Section 6.3(a) as it
relates to this Section 3.3(c), shall be interpreted so that facts or changes
resulting from the announcement or consummation of the transactions
contemplated by this Agreement shall not be excluded from the definition of Company
Material Adverse Effect). 

          Section
3.4     Reports and Financial Statements. 

                    (a)        The
Company has timely filed or furnished (or filed or furnished within any
applicable extension periods, themselves timely invoked) all forms, documents
and reports required to be filed or furnished prior to the date hereof by it
with the Securities and Exchange Commission (the “SEC”) since July 1,
2005 (such documents and reports, together with any reports filed by the
Company with the SEC on a voluntary basis on Form 8-K, the “Company SEC
Documents”). As of their respective dates, or, if amended, as of the date
of the last such amendment, the Company SEC Documents complied, and all
documents and reports required to be filed or furnished after the date hereof
and prior to the Effective Date by the Company (together with any reports filed
by the Company with the SEC on a voluntary basis on Form 8-K, the “New
Company SEC Documents”) with the SEC (which will be filed on a timely
basis) will comply, in all material respects with the requirements of the
Securities Act of 1933 and the Exchange Act, as the case may be, and the
applicable rules and regulations promulgated thereunder. None of the Company
SEC Documents contained, and none of the New Company SEC Documents will
contain, any untrue statement of a material fact or omitted or will omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the date of this Agreement, there are no outstanding or
unresolved comments received by the Company from the SEC staff with respect to
any Company SEC Documents. To the knowledge of the Company, none of the Company
SEC Documents is the subject of ongoing SEC review or investigation. 

- 10 -

                    (b)          Each offering or sale of securities by the Company since January 1,
1998 (i) was either registered under the Securities Act or made pursuant to a
valid exemption from registration, (ii) complied in all material respects with
the applicable requirements of the Law, and (iii) was made pursuant to offering
documents which did not, at the time of the offering (or, in the case of
registration statements, at the effective date thereof) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in the offering documents or necessary in order to make the statements
in such documents not misleading. The Company has delivered to Parent all
comment letters received since January 1, 1998, by the Company from the staff
of the SEC and all responses to such letters by or on behalf of with all
respect to all SEC Documents. The Company’s principal executive officer and
principal financial officer (and the Company’s former principal executive
officers and principal financial officers, as applicable) have made the
certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”) and the rules and regulations of the
Exchange Act thereunder with respect to the Company’s SEC Documents to the
extent such rules or regulations applied at the time of the filing. For
purposes of the preceding sentence, “principal executive officer” and
“principal financial officer” shall have the meanings given to such terms in
the Sarbanes-Oxley Act. Such certifications contain no qualifications or
exceptions to the matters certified therein and have not been modified or
withdrawn; and neither the Company nor any of its officers has received notice from
any Governmental Entity questioning or challenging the accuracy, completeness,
content, form or manner of filing or submission of such certifications. No
Company Subsidiary is required to file any Company SEC Documents. 

                    (c)          The
consolidated financial statements of the Company included in the Company SEC
Documents and the New Company SEC Documents comply and will comply in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, fairly present in all
material respects the consolidated financial position of the Company and its
consolidated Subsidiaries, as at the respective dates thereof, and the
consolidated results of their operations and their consolidated cash flows for
the respective periods then ended is in conformity with United States generally
accepted accounting principles (“GAAP”) applied on a consistent basis
during the periods involved. 

                    (d)          The
Company’s independent public accountants, which have expressed their opinion
with respect to the financial statements of the Company and its Subsidiaries
whether or not included in the Company SEC Documents, is and has been
throughout the periods covered by such financial statements (x) a registered
public accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley
Act), (y) “independent” with respect to the Company within the meaning of
Regulation S-X, and (z) with respect to the Company, in compliance with
subsections (g) through (l) of Section 10A of the Exchange Act and related
securities Laws. Section 3.4(d) of the Company Disclosure Schedule lists all
non-audit services performed by the Company’s independent public accountants
for the past three fiscal years and year to date. 

                    (e)          The
Company maintains disclosure controls and procedures required by Rule 13a-15 or
15d-15 under the Exchange Act; such controls and procedures are effective to
ensure that all material information concerning the Company and its
Subsidiaries is made known on a timely basis to the principal executive officer
and the principal financial officer. 

- 11 -

Section 3.4(e) of the Company Disclosure Schedule lists, and the
Company has delivered to Parent copies of, all written descriptions of, and all
policies, manuals and other documents promulgating, such disclosure controls
and procedures. The Company’s management has completed assessments of the
effectiveness of the Company’s internal control over financial reporting in
compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for
the years ended June 30, 2008, 2009 and 2010, and such assessments concluded
that as of June 30, 2008, 2009 and 2010, such controls were effective. The
Company has disclosed, in the Company’s SEC Reports, any changes in the
Company’s internal control over financial reporting that materially affected,
or were reasonably likely to materially affect, the Company’s internal control
over financial reporting, and the Company has further disclosed, based on its
most recent evaluation of such internal control over financial reporting that
occurred prior to the date of this Agreement, to the Company’s auditors and the
audit committee of the Company Board of Directors (i) any significant
deficiencies or material weaknesses in the design or operation of internal
control over financial reporting that are reasonably likely to adversely affect
in the Company’s ability to record, process, summarize and report financial
information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting. 

          Section
3.5     Assets.

                    (a)         The
Company and each of its Subsidiaries have good and marketable title, free and
clear of all Liens, to all of their respective assets. All such assets used in
the businesses of the Company or any of its Subsidiaries are in good operating
condition and repair for assets of like type and age, subject to ordinary wear
and tear, are adequate for the conduct of such businesses as currently
conducted. Section 3.5(a) of the Company Disclosure Schedule separately lists
all assets used in the businesses of the Company and any of its Subsidiaries,
including molds, tools, dies and schematics, that are in the possession of
third parties, including suppliers, identifying with respect to each asset the
third party in possession thereof. 

                    (b)         The
Company and each of its Subsidiaries currently maintain insurance with
reputable insurers. None of the Company or any of its Subsidiaries has received
written notice from any insurance carrier, or have any reason to believe that
(i) any policy of insurance will be canceled or that coverage thereunder will
be reduced or eliminated, (ii) premium costs with respect to such policies of
insurance will be substantially increased, or (iii) similar coverage will be
denied or limited or not extended or renewed with respect to the Company or any
of its Subsidiaries, any act or occurrence, or that any asset, officer,
director, employee or agent of the Company or any Subsidiary will not be
covered by such insurance or bond. There are presently no claims for amounts
exceeding $1,000 individually or in the aggregate pending under such policies
of insurance or bonds, and no notices of claims in excess of such amounts have
been given by the Company or any Subsidiary under such policies. The Company
has made no claims, and no claims are contemplated to be made, under any errors
and omissions or other insurance or blanket bond. 

                    (c)         The
assets of the Company and its Subsidiaries include all assets required by the
Company and its Subsidiaries to operate the business of the Company and its
Subsidiaries 

- 12 -

as presently conducted. The current assets of the Company and its
Subsidiaries are appropriately valued in their books and records and on their
financial statements at the lower of cost or market. 

          Section
3.6     No Undisclosed Liabilities. Except (a)
as reflected or reserved against in the Company’s consolidated balance sheets
included in the Company SEC Documents, and (b) as expressly permitted or
contemplated by this Agreement, as of the date hereof, neither the Company nor
any Subsidiary of the Company has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by GAAP
to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries. 

          Section
3.7     Compliance with Law; Permits. 

                    (a)         The
Company and each of the Company’s Subsidiaries are in compliance with, and are
not in any respect in default under or in violation of, any applicable federal,
state, local or foreign law, statute, ordinance, rule, regulation, judgment,
order, injunction, decree or agency requirement or any other legal requirement
of any Governmental Entity (collectively, “Laws” and each, a “Law”)
which is material to their business or where the failure to comply would not
have, individually or in the aggregate, a Company Material Adverse Effect.  

                    (b)         The
Company and the Company’s Subsidiaries are in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for the Company and the Company’s Subsidiaries to own, lease and
operate their properties and assets or to carry on their businesses as they are
now being conducted (the “Company Permits”). All Company Permits are in
full force and effect. 

          Section
3.8     Environmental Laws and Regulations. 

                    (a)         The
Company and its Subsidiaries and their respective businesses are in and have
been in compliance with all applicable Environmental Laws (as hereinafter
defined), which compliance included obtaining, maintaining and complying with
all Permits required under Environmental Laws for the operation of the Company
and any of its Subsidiaries and their respective businesses. There are no
Hazardous Substances (as hereinafter defined) present in amounts exceeding the
levels permitted by applicable Environmental Laws on, in, at, under or from any
of the properties currently or previously owned or currently leased by the
Company or any of its Subsidiaries. There are no underground storage tanks
owned by the Company or any of its Subsidiaries, or located at any facility
currently owned or operated by the Company or any of its Subsidiaries. There
are no unsatisfied financial assurance or closure requirements under
Environmental Laws pertaining to any property now or at any time owned,
operated, leased or otherwise used by the Company or any of its Subsidiaries or
former subsidiaries. From January 1, 1998 to the date hereof, neither the
Company nor any of its Subsidiaries has received any notices, claims, demand letters
or requests for information or other written communication from any
Governmental Entity or any other person indicating that the Company or any of
its Subsidiaries may be in violation of, or liable under, any Environmental Law
in connection with the ownership or operation of its businesses or any real
property currently or formerly owned or currently leased by the Company or any
of its Subsidiaries (collectively, “Environmental

- 13 -

Claims”) and, to the knowledge of the Company,
no Environmental Claims have been threatened. No Hazardous Substance has been
disposed of, released or transported in violation of any applicable
Environmental Law, or in a manner giving rise to any liability under
Environmental Law, from any properties currently or previously owned or
currently leased by the Company or any of its Subsidiaries. Neither the
Company, its Subsidiaries nor any of their respective current, or to the
knowledge of the Company, former owned or leased properties are subject to any
liabilities relating to any suit, settlement, court order, administrative
order, regulatory requirement, judgment or written claim asserted or arising
under any Environmental Law. The Company has provided to Parent copies of all
environmental assessments, audits, investigations or similar reports relating
to the environment or Hazardous Substances as well as any correspondence
related to any pending or threatened Environmental Claim, to the extent in the
possession, custody or control of the Company. 

                    (b)         As
used herein, “Environmental Law” means any Law (including common law) relating
to (x) the protection, preservation or restoration of the environment
(including air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or (y) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of, Hazardous Substances, in each case as in effect at the date
hereof.  

                    (c)         As
used herein, “Hazardous Substance” means any chemicals, materials or substances
which are now defined as or included in the definition of “hazardous
substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous
wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,”
or words of similar import, under any Environmental Law. Hazardous Substance
includes any substance to which exposure is regulated by any Governmental
Entity or any Environmental Law including any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or any petroleum or petroleum products, radioactive
materials, asbestos in any form that is friable, urea formaldehyde foam
insulation, and transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls above regulated levels and radon gas
(except as may be naturally occurring).  

                    (d)         All
references in this Section 3.8 to the Company and its Subsidiaries shall
include all predecessors and predecessors in business of the Company and each
of its Subsidiaries, as applicable. 

          Section
3.9     Employee Benefit Plans. 

                    (a)         Section
3.9(a)(i) of the Company Disclosure Schedule lists all Company Benefit Plans.
“Company Benefit Plans” means all benefit plans, programs, policies, agreements
or other arrangements, including any employee welfare plan within the meaning
of Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), any employee pension benefit plan within the meaning
of Section 3(2) of ERISA (whether or not such plan is subject to ERISA), any
employment, individual consulting or other compensation agreements and any
bonus, incentive, equity or equity-based compensation, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change of
control,  

- 14 -

salary continuation, health or life insurance or fringe benefit plan,
program or agreement, in each case that are sponsored, maintained or
contributed to by the Company, its Subsidiaries or any of its ERISA Affiliates
(as hereinafter defined) for the benefit of current or former employees,
directors or consultants of the Company, its Subsidiaries or any of its ERISA
Affiliates or to which the Company, its Subsidiaries or any of its ERISA
Affiliates has any obligation or liability (contingent or otherwise). 

                    (b)         The
Company has heretofore provided to Parent true and complete copies of each of
the Company Benefit Plans and certain related documents, including, but not
limited to, (i) each writing constituting a part of such Company Benefit Plan,
including all amendments thereto; (ii) the three most recent Annual Reports
(Form 5500 Series) or other annual report, as applicable, and accompanying
schedules, if any; (iii) the most recent determination letter from the U.S.
Internal Revenue Service (“IRS”) (if applicable) for such Company
Benefit Plan; (iv) the most recent actuarial report, if any; (v) the most
recent summary plan descriptions; and (vi) written summaries of all non-written
Company Benefit Plans. 

                    (c)         Each
Company Benefit Plan has been maintained and administered in compliance in all
material respects with its terms and with applicable Law, including ERISA and
the Code, to the extent applicable thereto. Each of the Company Benefit Plans
intended to be “qualified” within the meaning of Section 401(a) of the Code is
so qualified, and there are no existing circumstances or any events that have
occurred that could reasonably be expected to adversely affect the qualified
status of any such plan. With respect to each Company Benefit Plan that is
subject to Title IV of ERISA, the present value of the accrued benefits under
such Company Benefit Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared for such Company
Benefit Plan’s actuary with respect to such Company Benefit Plan, did not, as
of its latest valuation date, materially exceed the then current value of the
assets of such Company Benefit Plan allocable to such accrued benefits. No
Company Benefit Plan provides a material amount of health benefit coverage
(whether or not insured), with respect to current or former employees or
directors of the Company, its Subsidiaries or any of its ERISA Affiliates
beyond their retirement or other termination of service, other than coverage
mandated by applicable Law and at the expense of the employee or the employee’s
beneficiary. No liability under Title IV of ERISA has been incurred by the
Company, its Subsidiaries or any ERISA Affiliate of the Company that has not
been satisfied in full (other than with respect to amounts not yet due), and no
condition exists that presents a risk to the Company, its Subsidiaries or any
ERISA Affiliate of the Company of incurring a liability thereunder. No Company
Benefit Plan is a “multiemployer pension plan” (as such term is defined in
Section 3(37) of ERISA) or a plan that has two or more contributing sponsors,
at least two of whom are not under common control, within the meaning of
Section 4063 of ERISA. All contributions or other amounts payable by the
Company, its Subsidiaries or any of its ERISA Affiliates as of the date hereof
with respect to each Company Benefit Plan in respect of current or prior plan
years have been timely paid or accrued in accordance with GAAP and no material
accumulated funding deficiencies exist with respect to any of the Company
Benefit Plans subject to Title IV of ERISA or Section 412 of the Code. Neither
the Company nor its Subsidiaries or ERISA Affiliates has engaged in a
transaction in connection with which the Company, its Subsidiaries or its ERISA
Affiliates reasonably could be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section
4975 or 4976 

- 15 -

of the Code. There are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of the
Company Benefit Plans, or any trusts related thereto (including claims by any
Governmental Entity), which could reasonably be expected to result in liability
to the Company, its Subsidiaries and its ERISA Affiliates taken as a whole. “ERISA
Affiliate” means, with respect to any entity, trade or business, any other
entity, trade or business (whether or not incorporated) that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same “controlled group” as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA. 

                    (d)         The
consummation of the transactions contemplated by this Agreement will not,
either alone or in combination with another event, (i) entitle any current or
former employee, consultant or officer of the Company, its Subsidiaries or any
of its ERISA Affiliates to severance pay, unemployment compensation or any
other payment, except as expressly provided in this Agreement or as required by
applicable Law, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee, consultant or officer, except
as expressly provided in this Agreement. No payments or benefits under a
Company Benefit Plan or other agreement of the Company, its Subsidiaries or any
ERISA Affiliate of the Company will be considered an “excess parachute payment”
under Section 280G of the Code. No Company Benefit Plan triggers the imposition
of penalty taxes under Section 409A of the Code. Since January 1, 2009, each
Company Benefit Plan that is subject to Section 409A of the Code has complied
with Section 409A of the Code and the final regulations issued thereunder. No
payments or benefits under a Company Benefit Plan or other agreement of the
Company, any of its Subsidiaries or any of its ERISA Affiliates are, or are
expected to be, subject to the disallowance of a deduction under Section 162(m)
of the Code. Neither the Company, any of its Subsidiaries nor any of its ERISA
Affiliates has declared or paid any bonus compensation in contemplation of the
transactions contemplated by this Agreement. 

                    (e)         Neither
the Company, any of its Subsidiaries, nor any of its ERISA Affiliates has made
a plan or commitment, whether or not legally binding, to create any additional
Company Benefit Plan or to modify or change any existing Company Benefit Plan.
No statement, either written or oral, has been made by the Company, any of its
Subsidiaries or any of its ERISA Affiliates to any person with regard to any
Company Benefit Plan that was not in accordance with the terms of an existing
Company Benefit Plan and that could have an material adverse economic
consequence to the Company, any of its Subsidiaries or any of its ERISA
Affiliates. All Company Benefit Plans may be amended or terminated without
penalty by the Company, any of its Subsidiaries or any of its ERISA Affiliates
at any time on or after the Closing. 

          Section
3.10    Absence of
Certain Changes or Events. 

                    (a)         Since
June 30, 2008, except as otherwise contemplated or required by this Agreement
or the Prior Agreement, the businesses of the Company and its Subsidiaries have
been conducted, in all material respects, in the ordinary course of business
consistent with past practice, and there has not been any event, development or
state of circumstances that has had, individually or in the aggregate, a
Company Material Adverse Effect. 

- 16 -

                    (b)         Since
June 30, 2008, neither the Company nor any of its Subsidiaries has taken any
action described in Section 5.1(b) hereof that if taken after the date hereof
and prior to the Effective Date without the prior written consent of Parent
would violate such provision. 

                    (c)         Since
June 30, 2008, no condemnation or eminent domain proceeding or any damage,
destruction or casualty loss affecting any assets of the Company or its
Subsidiaries, whether or not covered by insurance, has occurred which would
have, individually or in the aggregate, a Company Material Adverse Effect. 

                    (d)         Except
as set forth in Section 3.10(d) of the Company Disclosure Schedule, since June
30, 2008, no termination of employment (whether voluntary or involuntary) of
any officer or key employee of the Company or its Subsidiaries has occurred. 

                    (e)         Since
June 30, 2008, no material Tax election has been made with respect to the
Company, there has been no material change in any of its methods of Tax
accounting and no settlement of any claim for Taxes with respect to the Company
has been made. 

          Section
3.11    Investigations; Litigation. Except as
set forth in Section 3.11 of the Company Disclosure Schedule, as of the date
hereof, there is no action, suit, proceeding, arbitration or, to the knowledge
of the Company, investigation pending or threatened (a) against the Company or
any of its Subsidiaries at Law or in equity or before any Governmental Entity
or (b) that seeks restraint, prohibition, damages or other extraordinary relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby. There are no unsatisfied judgments or outstanding orders,
injunctions, decrees, writs, stipulations or awards by any Governmental Entity
against the Company or any of its Subsidiaries. 

          Section
3.12    Proxy Statement; Other Information.
The proxy statement (including the letter to shareholders, notice of meeting
and form of proxy, the “Proxy Statement”) to be filed by the Company
with the SEC in connection with seeking the approval of this Agreement and the
Plan and related matters by the shareholders of the Company will not, at the
time it is filed with the SEC, or at the time it is first mailed to the
shareholders of the Company or at the time of the Company Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Company will cause the Proxy Statement to comply as to form in all material
respects with the requirements of the Exchange Act applicable thereto as of the
date of such filing. 

          Section
3.13    Regulatory Compliance. 

                    (a)         All
products and services of the Company or any of its Subsidiaries that are
subject to regulation by the United States Food and Drug Administration (the “FDA”)
and other applicable U.S. federal, state or local regulatory agencies, are
manufactured, produced, tested, developed, processed, labeled, stored,
distributed, and marketed in compliance in all material respects with all
applicable regulations, guidelines and orders administered or issued by the FDA
and any other applicable U.S. federal, state and local regulatory agencies,
including without limitation, the following: 

- 17 -

	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 FDA Quality
 System Regulation; 

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 FDA
 Establishment Registration requirements; 

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 FDA Medical
 Device Listing requirements; 

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 FDA
 Premarket Notification (510(k)) regulations; 

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 FDA Labeling
 regulations; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 FDA Medical
 Device Reporting regulations. 

 

                    (b)         All
manufacturing sites and product and service facilities of the Company and its
Subsidiaries are operated in compliance in all material respects with (i) the
FDA’s Establishment Registration requirements and Quality System Regulation
requirements at 21 C.F.R. Part 820, and (ii) any state requirements for
manufacturing and distribution facilities, as applicable. 

                    (c)         Each
product manufactured, produced, tested, developed, processed, labeled, stored,
sold, or distributed by or on behalf of the Company or any of its Subsidiaries
(and any modification thereof, as applicable) has received to the extent required
Section 510(k) clearance(s) from the FDA clearing such product for commercial
distribution. None of the Company’s or its Subsidiaries’ current products
(including any products under development) are the subject of or require FDA
premarket approval, or the subject of any pre-clinical or clinical trial. 

                    (d)         Each
product distributed, sold or leased, or service rendered, by the Company or any
of its Subsidiaries complies in all material respects with all applicable
product safety and electrical safety standards of each applicable product and
electrical safety agency, commission, board or other Governmental Entity. 

                    (e)         Neither
the Company nor any of its Subsidiaries, nor, to the knowledge of the Company,
any officer, employee or agent of the Company or any of its Subsidiaries, has
made an untrue statement of a material fact or fraudulent statement to the FDA
or any other Governmental Entity, failed to disclose a material fact required
to be disclosed to the FDA or any other Governmental Entity, or committed an
act, made a statement, or failed to make a statement that, at the time such
disclosure was made, would reasonably be expected to provide a basis for the
FDA or any other Governmental Entity to invoke its policy respecting fraud,
untrue statements, bribery and illegal gratuities or any similar policy. 

                    (f)         There
are no pending or, to the knowledge of the Company, threatened FDA warning
letters; recalls (either voluntary or mandatory), market withdrawals, field
actions, or seizures; revocations, withdrawals, suspensions or cancellations of
prior FDA or other governmental approval or clearance; internal stop-ships;
banned or administratively detained products; or other enforcement actions or
sanctions by or before the FDA in connection with any 

- 18 -

products currently manufactured, produced, tested, developed,
processed, labeled, stored, sold, or distributed by or on behalf of the Company
or any of its Subsidiaries. 

                    (g)         The
Company and each of its Subsidiaries has obtained all necessary foreign
government agency licenses, approvals, permits and authorizations for sale and
distribution of its products and provision of its services, as applicable, to
each foreign country or jurisdiction in which such products or services is
currently sold, leased, marketed or otherwise commercially distributed and
provided and is in compliance with applicable Laws of such countries and/or
jurisdictions. 

                    (h)         None
of the Company or any of its Subsidiaries has been required to enter into any
business associate agreements pursuant to 45 C.F.R. Sections 164.502(e) or
504(e). 

          Section
3.14    Tax Matters. 

                    (a)         The
Company and each of its Subsidiaries have prepared and timely filed (taking
into account any extension of time within which to file) all Tax Returns
required to be filed by any of them and all such filed Tax Returns are complete
and accurate in all material respects. The Company and each of its Subsidiaries
have paid all Taxes that are required to be paid by any of them (whether or not
show on a Tax Return), except with respect to matters contested in good faith
and for which adequate reserves have been established in accordance with GAAP.
All Tax Returns of the Company and each of its Subsidiaries for all periods
ending on or before December 31, 2005, have been examined by the relevant
taxing authority (or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired). There are no pending
or, to the knowledge of the Company, threatened in writing, audits,
examinations, investigations or other proceedings in respect of Tax matters.
There are no Liens for Taxes on any of the assets of the Company or any of its
Subsidiaries other than the Company Permitted Liens. None of the Company or any
of its Subsidiaries has been a “controlled corporation” or a “distributing
corporation” in any distribution occurring during the two-year period ending on
the date hereof that was purported or intended to be governed by Section 355 of
the Code (or any similar provision of state, local or foreign Law). The Company
and each of its Subsidiaries have withheld and paid all amounts of Taxes
required to have been withheld and paid in connection with any amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party. Neither the Company nor any of its Subsidiaries is a party to or
has any obligation under any Tax sharing, Tax indemnity or Tax allocation
agreement or similar contract or arrangement. Neither the Company nor any of
its Subsidiaries has participated in any “listed transaction” within the
meaning of Treasury Regulation 1.6011-4(b)(2). Neither the Company nor any of
its Subsidiaries 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) beginning after the Closing Date as a result of any (A) change in
method of accounting for a taxable period ending on or prior to the Closing
Date, (B) closing agreement as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Law) executed on
or prior to the Closing Date, (C) intercompany transactions or any excess loss
account described in Treasury Regulations under Section 1502 of the Code (or
any corresponding or similar provision of state, local or foreign Law), (D)
installment sale or open transaction disposition made on or prior to the
Closing Date, or (E) 

- 19 -

prepaid amount received on or prior to the Closing Date. Neither the
Company nor any of its Subsidiaries has operating losses or other tax
attributes presently subject to limitation under Sections 279, 382, 383, or 384
of the Code, or the federal consolidated return regulations. No written claim
has been made within the previous five (5) years by a taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns but where the Company or any of its Subsidiaries is or may be subject
to taxation or must file Tax Returns. Since January 1, 2003, neither the
Company nor any of its Subsidiaries has been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code, other than the
affiliated group of which the Company is the common parent. 

                    (b)         For
purposes of Section 3.14(a), any reference to the Company or a Subsidiary shall
be deemed to include any person which merged or was liquidated into such entity
since January 1, 2003. 

                    (c)         As
used in this Agreement, (i) “Taxes” means any and all domestic or
foreign, federal, state, local or other taxes of any kind (together with any
and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any Governmental Entity, including taxes on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, unemployment, social
security, workers’ compensation, or net worth, and taxes in the nature of
excise, withholding, ad valorem or value added, and any liability for the
foregoing payable by reason of contract, assumption, operation of Law, Treasury
Regulation Section 1.1502-6 (or any predecessor or successor thereof of any
analogous or similar provision under Law) or otherwise, and (ii) “Tax Return”
means any return, report or similar filing (including the attached schedules)
required to be filed with respect to Taxes, including any information return,
claim for refund, amended return or declaration of estimated Taxes. 

          Section
3.15    Labor Matters. 

                    (a)         Neither
the Company nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. Neither the Company nor any of its
Subsidiaries is subject to a strike or work stoppage or to any labor dispute.
To the knowledge of the Company, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made
or threatened involving employees of the Company or any of its Subsidiaries. 

                    (b)         To
the Company’s knowledge, no Company employee has provided or is providing
information to any law enforcement agency regarding the commission or possible
commission of any crime or the violation or possible violation of any
applicable Law. Neither the Company nor any of its Subsidiaries nor, to the
Company’s knowledge, any officer, employee, contractor, subcontractor or agent
of the Company or any such Subsidiaries has discharged, demoted, suspended,
threatened, harassed or in any manner discriminated against a Company employee
or any of its Subsidiaries in the terms and conditions of employment because of
any act of any such employee described in 18 U.S.C. Section 1514A(a). 

- 20 -

                    (c)         All
of the employees of the Company and each of its Subsidiaries are either United
States citizens or are legally entitled to work in the United States under the
Immigration Reform and Control Act of 1986, as amended, other United States
immigration Laws and the Laws related to the employment of non-United States
citizens applicable in the state in which the employees are employed. Each of
the Company and its Subsidiaries are in compliance with all applicable Laws
relating to employment, employment practices, equal employment opportunity,
immigration, collective bargaining, payment of social security and similar
Taxes, and wages and hours, except where the failure to be in compliance would
not have, individually or in the aggregate, a Company Material Adverse Effect. 

                    (d)         Except
as set forth in Section 3.15(d) of the Company Disclosure Schedule, (i) each
current employee of the Company or any of its Subsidiaries has, (ii)
substantially all such former employees whose relationships with the Company or
a Subsidiary ended in the past five years have, and (iii) substantially all
current consultants to the Company or any of its Subsidiaries (and
substantially all such former consultants whose relationships with the Company
or a Subsidiary ended in the past five years) in the electronic and software
development areas have, executed and delivered to the Company a
Confidentiality, Assignment of Inventions and Non-Compete Agreement
substantially in the form included in Section 3.15(d) of the Company Disclosure
Schedule and all such agreements (and all other similar agreements that may be
listed in Section 3.15(d) of the Company Disclosure Schedule) are enforceable
by the Company or Subsidiary party thereto in accordance with their terms,
subject to general principles of equity, whether considered in a proceeding at
law or in equity. 

          Section
3.16    Intellectual Property. 

                    (a)         The
Company through itself or its Subsidiaries owns free and clear of all Liens or
possesses valid and enforceable licenses to use, all material patents,
trademarks, trade names, service marks, copyrights together with any
registrations and applications therefor and any renewals, modifications or
extensions thereof, logos, brand names, trade dress, Internet domain names,
know-how, computer software programs or applications including all object and
source codes and tangible or intangible proprietary information or material and
all goodwill associated therewith that are used to conduct the business of the
Company and any of its Subsidiaries as currently conducted and any similar,
corresponding or equivalent rights to any of the foregoing anywhere in the
world (the “Company Intellectual Property”). 

                    (b)         Section
3.16(b) of the Company Disclosure Schedule includes a complete and accurate
list of all granted and issued material patents, registered and unregistered
trademarks, registered and unregistered service marks and trade names,
registered domain names and registered copyrights, and all applications for the
same, included in the Company Intellectual Property owned by the Company and
its Subsidiaries, indicating as to each item as applicable, (i) the
jurisdictions in which the item is issued or registered or in which any
application for issuance or registration has been filed; (ii) the respective
issuance, registration, or application number of the item; and (iii) the dates
of application, issuance or registration of the item. 

                    (c)         Section
3.16(c) of the Company Disclosure Schedule also includes a complete and
accurate list of all material licenses or other agreements (i) by which the
Company 

- 21 -

or any of its Subsidiaries is authorized to use any third party’s
intellectual property that is currently used in the conduct of the Company’s or
its Subsidiaries’ business (excluding off-the-shelf computer programs), and
(ii) by which the Company or any of its Subsidiaries licenses or otherwise
authorizes a third party to use any Company Intellectual Property owned by
Company or its Subsidiaries. With respect to all intellectual property licensed
from third parties, the right to use such intellectual property is free and
clear of all Liens, and subject only to the restrictions and limitations set
forth in the applicable written license agreements. 

                    (d)         There
are no actions that must be taken within 120 days of the Closing, including
payment of any registration, maintenance or renewal fees or the filing of any
documents, applications or certificates for the purposes of maintaining,
perfecting or preserving or renewing any Company Intellectual Property
described in Section 3.16(b) of the Company Disclosure Schedule. 

                    (e)         Except
as set forth is Section 3.16(e) of the Company Disclosure Schedule, the Company
has not received any notice of any conflict with or violation or infringement
of or any claims of conflict with, any rights of any other person with respect
to the Company Intellectual Property owned by the Company, nor, to the
knowledge of the Company, does any third party have any valid grounds for any
bona fide claims against the use by the Company or any of its Subsidiaries of
any Company Intellectual Property owned by the Company. All granted and issued
patents, all registered trademarks, registered service marks and registered
copyrights described in Section 3.16(b) of the Company Disclosure Schedule are
valid, enforceable and subsisting. To the knowledge of the Company, there has
not been and there is not any unauthorized use, infringement or misappropriation
by any third person of any of the Company Intellectual Property owned by the
Company. 

                    (f)         The
Company and its Subsidiaries have used commercially reasonable efforts to
safeguard and maintain the rights of the Company in the Company Intellectual
Property, and the secrecy and confidentiality of the material trade secrets and
the source code of any proprietary software owned, used or licensed by the
Company in the operation of the Company and its Subsidiaries. To the knowledge
of the Company, there has not been, and there is not, any unauthorized
disclosure or misappropriation of any such trade secrets. Without limiting the
foregoing, the Company and each of its Subsidiaries has and enforces a policy
requiring each employee and contractor to execute a proprietary
information/nondisclosure agreement substantially in the form(s) provided to
Parent and all employees and contractors of the Company and its Subsidiaries
have executed such an agreement. 

                    (g)         The
Company and Subsidiaries have not entered into any contracts with any
Governmental Entity pursuant to which any of the Company, Subsidiaries or any
employees or consultants of the Company or Subsidiaries are required to assign
any rights in the Company Intellectual Property in favor of the United States
or foreign governments (or any of their respective agencies). 

          Section
3.17    Opinion of Financial Advisor. The
Company has received the opinion of Oak Ridge Financial Services Group, Inc.,
dated the date of this Agreement, substantially to the effect that, as of such
date and subject to the limitations and assumptions set forth therein, the 

- 22 -

Merger Consideration to be received by the holders of shares of Company
Common Stock pursuant to this Agreement is fair, from a financial point of
view, to such holders.

          Section
3.18    Required Vote of the Company Shareholders.
The affirmative vote of the holders of outstanding shares of Company Common
Stock representing at least a majority of all the votes entitled to be cast
thereupon by holders of Company Common Stock is the only vote of holders of
securities of the Company which is required to approve this Agreement and the
Plan (the “Company Shareholder Approval”). No “fair price,” “moratorium,”
“control share acquisition” or other similar anti-takeover statute or
regulation enacted under state or federal Laws in the United States applicable
to the Company is applicable to the Merger or the other transactions
contemplated hereby. The action of the Board of Directors of the Company in
approving this Agreement is sufficient to render inapplicable to this Agreement
and the transactions contemplated hereby the restrictions on “control share
acquisitions” and “business combinations” (as each such term is defined in the
MBCA). 

          Section
3.19    Material Contracts. 

                    (a)         Except
as set forth in Section 3.19 of the Company Disclosure Schedule and for this
Agreement and the Company Benefit Plans, as of the date hereof, neither the
Company nor any of its Subsidiaries is a party to or bound by (i) any “material
contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the
Exchange Act) or (ii) any of the following: (A) contract that purports to limit,
curtail or restrict the ability of the Company or any of its existing or future
Subsidiaries or affiliates to compete in any geographic area or line of
business or restrict the persons to whom the Company or any of its existing or
future Subsidiaries or affiliates may sell products or deliver services, (B)
loan or credit agreement, mortgage, indenture, note or other contract or
instrument evidencing indebtedness for borrowed money by the Company or any of
its Subsidiaries or any contract or instrument pursuant to which indebtedness
for borrowed money may be incurred or is guaranteed by the Company or any of
its Subsidiaries, (C) mortgage, pledge, security agreement, deed of trust or
other contract granting a Lien on any property or assets of the Company or any
of its Subsidiaries, (D) (x) customer or client contract, or (y) any supplier
contract that is reasonably likely to involve annual purchases by the Company
and its Subsidiaries in excess of $20,000 (in the aggregate) in any of fiscal
years 2011, 2012 or 2013, (E) contract (other than customer, client or supply
contracts) that involve consideration (whether or not measured in cash) of
greater than $20,000, (F) contract that restricts or otherwise limits the
payment of dividends or other distributions on equity securities, (G) to the
extent material to the business or financial condition of the Company and its
Subsidiaries, taken as a whole, (1) product or intellectual property design or
development contract, (2) license or royalty contract or (3) contract granting
a right of first refusal or first negotiation or “most favored nation” status,
(H) investment banker engagement or similar agreement pursuant to which any
person would be entitled to payment in connection with the Merger, (I) contract
which would prohibit or delay the consummation of any of the transactions
contemplated by this Agreement, and (J) commitment or agreement to enter into
any of the foregoing (all contracts of the type described in this Section
3.19(a) being referred to herein as “Company Material Contracts”). Neither the
Company nor any of its Subsidiaries is a party to, or otherwise bound by or
subject to, any agreement, contract, commitment or understanding, oral or
written, regarding the sale, license or other transfer of rights or interests
in any of the products  

- 23 -

listed in Section 3.19(a)(1) of the Company Disclosure Schedule. The
Company has provided to Parent correct and complete copies of each Company
Material Contract in existence as of the date hereof, together with any and all
amendments and supplements thereto, “side letters” and similar documentation
relating thereto. 

                    (b)         Each
Company Material Contract to which any of the Company or its Subsidiaries is a
party or by which any of them is bound is in full force and effect and
constitutes the valid and binding obligation of the Company or such Subsidiary,
as the case may be, and, to the knowledge of the Company, constitutes the valid
and binding obligation of the other parties thereto. To the knowledge of the
Company, no other party to any Company Material Contract is in breach of or
default under the terms of any Company Material Contract. Section 3.19(b)(i) of
the Company Disclosure Schedule sets forth a correct and complete list, as of
the date hereof, of each current customer of the Company or any of its
Subsidiaries that has provided notice of an intention (A) to terminate its
contract(s) with the Company and/or a Company Subsidiary, (B) not to renew its
contract(s) with the Company and/or a Company Subsidiary at the end of the
current contract term(s), (C) to substantially reduce its business under its
contract or (D) to terminate its contract(s) or business relationship with the
Company and/or a Company Subsidiary as a result of the announcement or
consummation of the transactions contemplated by the Agreement. 

          Section
3.20    Insurance. Section 3.20 of the Company
Disclosure Schedule sets forth a correct and complete list of all insurance
policies (including information on the premiums payable in connection therewith
and the scope and amount of the coverage provided thereunder) maintained by the
Company or any of its Subsidiaries (the “Policies”). The Policies (i) have been
issued by insurers which are reputable and (ii) are in full force and effect.
Neither the Company nor any of its Subsidiaries is in material breach or
default, and neither the Company nor any of its Subsidiaries have taken any
action or failed to take any action which, with notice or the lapse of time,
would constitute such a material breach or default, or permit termination or
material modification, of any of the Policies. No notice of cancellation or
termination has been received by the Company with respect to any of the
Policies. The consummation of the Merger will not, in and of itself, cause the
revocation, cancellation or termination of any Policy.  

          Section
3.21    Title To and Sufficiency of Property;
Liens; Leases. 

                    (a)         Each
of the Company and its Subsidiaries has good, valid and marketable title to,
or, in the case of leased properties and assets, valid leasehold interests in,
all of its real property and its tangible properties and assets, in each case
subject to no Liens, except for: (i) Liens reflected in the consolidated
balance sheet of the Company as of December 31, 2008; (ii) Liens consisting of
zoning or planning restrictions, easements, Permits and other restrictions or
limitations on the use of real property or irregularities in title thereto or
matters that would be disclosed by an accurate survey of the real property, and
(iii) Liens for current Taxes, assessments or governmental charges or levies on
property not yet due or which are being contested in good faith. Each of the
Company and its Subsidiaries is in compliance with the terms of all leases of
tangible properties to which it is a party and under which it is in occupancy,
and all such leases are in full force and effect and each of the Company and
its Subsidiaries enjoys peaceful and undisturbed possession under all such
leases. 

- 24 -

                    (b)         All
tangible assets owned or used by the Company and its Subsidiaries in the
operation of their respective businesses (including all assets held by the
Company and its Subsidiaries under leases and licenses) are in good operating
condition and repair for assets of like type and age, subject to ordinary wear
and tear, and are adequate for the conduct of such businesses as currently
conducted. 

                    (c)         Section
3.21(c) of the Company Disclosure Schedule sets forth the address or other
description of each parcel of real property owned by the Company or any of its
Subsidiaries (“Owned Real Property”). Neither the Company nor any of its
Subsidiaries has collaterally assigned or granted any security interest in such
Owned Real Property. 

                    (d)         Each
lease (a “Real Property Lease”) of real property used by the Company or
its Subsidiaries in the conduct of their business as currently conducted is
listed in Section 3.21(d) of the Company Disclosure Schedule (“Leased Real
Property”). 

	
  

 	
  

 
	
  

 	
                         (i)     Each
 Real Property Lease relating to a Leased Real Property has been duly
 authorized and executed by the Company or such Subsidiary, as applicable. 

 
	
  

 	
  

 
	
  

 	
                         (ii)    Neither
 the Company nor any Subsidiary is in default in any material respect under
 any Real Property Lease relating to a Leased Real Property, nor has any event
 occurred which, with notice or the passage of time, or both, would give rise
 to such a default in any material respect by the Company or such Subsidiary,
 as applicable. 

 
	
  

 	
  

 
	
  

 	
                         (iii)   To
 the knowledge of the Company, no other party to any Real Property Lease
 relating to a Leased Real Property is in default in any material respect
 under any such lease. 

 
	
  

 	
  

 
	
  

 	
                         (iv)   Neither
 the Company nor any of its Subsidiaries has assigned, transferred, conveyed,
 mortgaged, deeded in trust or encumbered any interest in any Real Property
 Lease relating to a Leased Real Property. 

 

                    (e)         No
assessment for public improvement, which is due and remaining unpaid, has been
made against any Owned Real Property or Leased Real Property, and, to the
Company’s knowledge, there are no currently proposed or pending assessments for
public improvements against the Owned Real Property or Leased Real Property to
which the Company or any of its Subsidiaries will be responsible. Since January
1, 2004, there has been no condemnation or eminent domain proceeding filed, or
to the knowledge of the Company, threatened, which has had, or would reasonably
be expected to have, an adverse effect on a portion of, or the Company or any
Subsidiary’s use of a portion of, the Owned Real Property or Leased Real Property.

          Section
3.22     Finders or Brokers. Except for fees
relating to the opinion described in Section 3.17, neither the Company nor any
of its Subsidiaries has employed any investment banker, broker or finder in
connection with the transactions contemplated by this Agreement who might be
entitled to any fee or any commission in connection with or upon consummation
of the Merger. 

- 25 -

          Section
3.23     Voting Agreements. Each of the
directors and executive officers of the Company has executed and delivered to
Parent the voting agreements in the form of Exhibit B attached hereto (the “Voting
Agreements”).  

          Section
3.24     Off-Balance Sheet Arrangements.
Section 3.24 of the Company Disclosure Schedule describes (to the extent not
previously disclosed in the Company SEC Documents), and the Company has
delivered to Parent copies of the documentation creating or governing, all
securitization transactions and other “off-balance sheet arrangements” (as
defined in Item 303(c) of Regulation S-K of the SEC) that existed or were
effected by Company or its Subsidiaries since January 1, 2004 in effect on the
date hereof. 

          Section
3.25     Compliance with Insider Trading Laws.
As of the Closing, neither the Company, nor its Subsidiaries, nor any director
or officer of the Company will have purchased or sold any securities of (a)
Parent from January 1, 2009 through the Closing or (ii) the Company from June
30, 2008 through the Closing. 

          Section
3.26     Illegal Payments. Neither the Company,
its Subsidiaries or, to the knowledge of the Company, any officer, director or
employee of the Company or its Subsidiaries has: (a) used any funds of the
Company or its Subsidiaries for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (b) made any payment in
violation of applicable Law to any Governmental Entity official or employee or
to any foreign or domestic political party or campaign or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (c) made
any other payment in violation of applicable Law. 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB

          Except as
disclosed in forms, documents and reports required to be filed or furnished
prior to the date hereof by Parent with the SEC (such documents and reports,
together with any reports filed by Parent with the SEC on a voluntary basis on
Form 8-K, the “Parent SEC Documents”), to the extent the relevance of
the disclosure is readily apparent and excluding any disclosures included in
any such Parent SEC Document that are predictive or cautionary in nature, or in
the disclosure schedule delivered by Parent to the Company immediately prior to
the execution of this Agreement (the “Parent Disclosure Schedule”),
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows: 

          Section
4.1     Qualification; Organization, Subsidiaries,
etc. Each of Parent and Merger Sub is a legal entity duly organized,
validly existing and in good standing under the Laws of its respective
jurisdiction of organization and has all requisite corporate or similar power
and authority to own, lease and operate its properties and assets and to carry
on its business as presently conducted and is qualified to do business and is
in good standing as a foreign corporation in each jurisdiction where the
ownership, leasing or operation of its assets or properties or conduct of its
business requires such qualification, except where the failure to be so
organized, validly existing, qualified or in good standing, or to have such
power or authority, would not, individually or in the aggregate, prevent or
materially delay or materially impair the 

- 26 -

ability of Parent or Merger Sub to consummate the Merger and the other
transactions contemplated by this Agreement (a “Parent Material Adverse
Effect”). Parent has made available to the Company prior to the date of
this Agreement a true and complete copy of the certificate or articles of
incorporation and by-laws or other equivalent organizational documents of
Parent and Merger Sub, each as amended through the date hereof. 

          Section
4.2     Corporate Authority Relative to This
Agreement; No Violation. 

                    (a)         Each
of Parent and Merger Sub has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby (including the Plan). The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Boards of Directors of Parent and Merger Sub and by
Parent, as the sole shareholder of Merger Sub, and, except for the filing of
the Articles of Merger with the Secretary of State of the State of Minnesota,
no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize the consummation of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by Parent
and Merger Sub and, assuming this Agreement constitutes the valid and binding
agreement of the Company, this Agreement constitutes the valid and binding
agreement of Parent and Merger Sub, enforceable against each of Parent and
Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity
Exception. 

                    (b)         The
execution, delivery and performance by Parent and Merger Sub of this Agreement
and the consummation of the Merger by Parent and Merger Sub do not and will not
require any consent, approval, authorization or permit of, action by, filing
with or notification to any Governmental Entity, other than (i) the filing of
the Articles of Merger, (ii) compliance with applicable federal or state
antitrust, competition or similar Laws of any foreign jurisdiction, (iii)
compliance with the applicable requirements of the Exchange Act, (iv)
compliance with any applicable foreign or state securities or blue sky laws,
and (v) the other consents and/or notices set forth on Section 4.2(b) of the
Parent Disclosure Schedule (collectively, clauses (i) through (v),
collectively, the “Parent Approvals”), and other than any other consent,
approval, authorization, permit, action, filing or notification the failure of
which to make or obtain would not, individually or in the aggregate, have a
Parent Material Adverse Effect. 

                    (c)         The
execution, delivery and performance by Parent and Merger Sub of this Agreement
and the consummation by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby do not and will not (i) contravene or conflict
with the organizational or governing documents of Parent or Merger Sub, (ii)
assuming compliance with the matters referenced in Section 4.2(b), contravene
or conflict with or constitute a violation of any provision of any Law binding
upon or applicable to Parent or Merger Sub or any of their respective
properties or assets, or (iii) result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any material obligation or to the
loss of a material benefit under any loan, guarantee of indebtedness or credit
agreement, note, bond, mortgage, indenture, lease, agreement, contract,
instrument, permit, concession, franchise, right or license binding upon Parent
or Merger Sub or result in the creation of any Lien (other than Parent
Permitted Liens) upon any of the properties 

- 27 -

or assets of Parent or Merger Sub, other than, in the case of clauses
(ii) and (iii), any such violation, conflict, default, termination,
cancellation, acceleration, right, loss or Lien that would not have,
individually or in the aggregate, a Parent Material Adverse Effect. “Parent
Permitted Lien” means any Lien (A) for Taxes or governmental assessments,
charges or claims of payment not yet due or being contested in good faith,
provided adequate accruals or reserves have been established in accordance with
GAAP, (B) which is a carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other similar Lien arising in the ordinary course of business,
(C) which is disclosed on the most recent consolidated balance sheet of Parent
or (D) which was incurred in the ordinary course of business since the date of
the most recent consolidated balance sheet of Parent.  

          Section
4.3     Investigations; Litigation. There is no
action, suit, proceeding or, to the knowledge of Parent, investigation pending
or, to the knowledge of Parent, threatened against or relating to Parent or
Merger Sub at Law or in equity, or before any Governmental Entity, that seeks
restraint, prohibition, material damages or other extraordinary relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby. 

          Section
4.4     Capitalization of Merger Sub. As of the
date of this Agreement, the authorized capital stock of Merger Sub consists of
one thousand (1,000) shares of common stock, par value $.01 per share, one
hundred (100) of which are validly issued and outstanding. All of the issued
and outstanding capital stock of Merger Sub is, and at the Effective Date will
be, owned by Parent or a direct or indirect wholly owned Subsidiary of Parent.
Merger Sub has outstanding no option, warrant, right, or any other agreement
pursuant to which any person other than Parent may acquire any equity security
of Merger Sub. Except in respect of the Prior Agreement and the Settlement
Agreement (to which Merger Sub was and is a party, as the case may be), Merger
Sub (a) has not conducted any business prior to the date hereof and (b) has,
and prior to the Effective Date will have, no assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement. 

          Section
4.5     No Vote of Parent Stockholders. No vote
of the stockholders of Parent or the holders of any other securities of Parent
(equity or otherwise) is required by any applicable Law, the certificate of
incorporation or by-laws or other equivalent organizational documents of Parent
or the applicable rules of any exchange on which securities of Parent are
traded, in order for Parent to consummate the transactions contemplated hereby.

          Section
4.6     Finders or Brokers. Neither Parent nor
any of its Subsidiaries has employed any investment banker, broker or finder in
connection with the transactions contemplated by this Agreement who might be
entitled to any fee or any commission in connection with or upon consummation
of the Merger. 

          Section
4.7     Lack of Ownership of Company Common Stock.
As of the date of this Agreement, neither Parent nor any of its Subsidiaries
nor, to Parent’s knowledge, any of their affiliates, beneficially owns,
directly or indirectly, any shares of Company Common Stock or other securities
convertible into, exchangeable into or exercisable for shares of Company Common
Stock. There are no voting trusts or other agreements or understandings to
which 

- 28 -

Parent or any of its Subsidiaries is a party with respect to the voting
of the capital stock or other equity interest of the Company or any of its
Subsidiaries. 

          Section
4.8     Absence of Arrangements with Management.
Other than as contemplated by this Agreement, as of the date hereof, there are
no contracts, undertakings, commitments, agreements or obligations or
understandings between Parent or Merger Sub or any of their affiliates, on the
one hand, and any member of the Company’s management or Board of Directors, on
the other hand, relating to the transactions contemplated by this Agreement or
the operations of the Company after the Effective Date. 

ARTICLE V

COVENANTS AND AGREEMENTS

          Section
5.1     Conduct of Business by the Company and
Parent. 

                    (a)         From
and after the date hereof and prior to the Effective Date or the date, if any,
on which this Agreement is earlier terminated pursuant to Section 7.1 (the “Termination
Date”), and except (i) as may be required by applicable Law, (ii) as may be
agreed in writing by Parent, or (iii) as may be contemplated or required by
this Agreement, the Company covenants and agrees with Parent that the business
of the Company and its Subsidiaries shall be conducted in, and such entities
shall not take any action except in, the ordinary course of business consistent
with past practice and, to the extent consistent therewith, the Company and its
Subsidiaries shall use commercially reasonable efforts to (i) preserve intact
their current business organization and (ii) preserve their relationships with
customers, suppliers and others having business dealings with them; 

                    (b)         The
Company agrees with Parent, on behalf of itself and its Subsidiaries, that
between the date hereof and the Effective Date, without the prior written
consent of Parent, the Company will not, and will not permit any of its
Subsidiaries to: 

	
  

 	
  

 
	
  

 	
                
       (i)      amend
 its articles or certificate of incorporation, bylaws, partnership or joint
 venture agreements or other organizational documents (except to the extent
 required to comply with applicable Law or its obligations hereunder); 

 
	
  

 	
  

 
	
  

 	
                
       (ii)     combine
 or reclassify any shares of its capital stock or declare, set aside or pay
 any dividend or other distribution or redemption (whether in cash, stock or
 property or any combination thereof) in respect of its capital stock, or
 redeem or otherwise acquire any of its securities or any securities of its
 respective Subsidiaries; 

 
	
  

 	
  

 
	
  

 	
                
       (iii)    reclassify,
 combine, split, subdivide or redeem, purchase or otherwise acquire, directly
 or indirectly, any of its capital stock, stock options or debt securities; 

 
	
  

 	
  

 
	
  

 	
                
       (iv)     except
 as required by Company Benefit Plans, (A) (1) increase the compensation or
 other benefits payable or provided to directors or executive officers of the
 Company or, (2) except in the ordinary course of business consistent with past
 

 

- 29 -

	
  

 	
  

 
	
  

 	
 practice, increase the compensation or other benefits payable or
 provided to employees who are not directors or executive officers of the
 Company, (B) enter into any employment, change of control, severance or
 retention agreement with any employee of the Company or (C) except as
 permitted pursuant to clause (B) above, establish, adopt, enter into or amend
 any collective bargaining agreement, plan, trust, fund, policy or arrangement
 for the benefit of any current or former directors, officers or employees or
 any of their beneficiaries, except as would not result in a material increase
 in cost to the Company; 

 
	
  

 	
  

 
	
  

 	
                
          (v)     change
 any of its financial accounting policies or procedures or any of its methods
 of reporting income, deductions or other items for financial accounting
 purposes, except as required by GAAP, SEC rule or policy or applicable Law; 

 
	
  

 	
  

 
	
  

 	
                
          (vi)    issue,
 sell, pledge, dispose of or encumber, or authorize the issuance, sale,
 pledge, disposition or encumbrance of, any shares of its capital stock or
 other ownership interest in the Company or any Subsidiaries or any securities
 convertible into or exchangeable for any such shares or ownership interest,
 or any rights, warrants or options to acquire or with respect to any such
 shares of capital stock, ownership interest or convertible or exchangeable
 securities or take any action to cause to be exercisable any otherwise
 unexercisable option under any existing stock option plan (except as
 otherwise provided by the terms of this Agreement) other than (A) issuances
 of shares of Company Common Stock in respect of any exercise of Company Stock
 Options, and (B) the sale of shares of Company Common Stock pursuant to the
 exercise of options to purchase Company Common Stock if necessary to
 effectuate an optionee direction upon exercise or for withholding of Taxes; 

 
	
  

 	
  

 
	
  

 	
                
          (vii)   directly
 or indirectly, purchase, redeem or otherwise acquire any shares of its
 capital stock or any rights, warrants or options to acquire any such shares; 

 
	
  

 	
  

 
	
  

 	
                
          (viii)   incur,
 assume, guarantee, prepay or otherwise become liable for any indebtedness for
 borrowed money (directly, contingently or otherwise), except for indebtedness
 for borrowed money incurred to replace, renew, extend, refinance or refund
 any existing indebtedness for borrowed money on materially no less favorable
 terms. 

 
	
  

 	
  

 
	
  

 	
                
          (ix)    sell,
 lease, license, transfer, exchange or swap, mortgage or otherwise encumber
 (including securitizations), or subject to any Lien (other than the Company
 Permitted Liens) or otherwise dispose of any properties or assets, including
 any capital stock of Subsidiaries, except in the ordinary course of business
 consistent with past practice or as may be required by applicable Law or any
 Governmental Entity in order to permit or facilitate the consummation of the
 transactions contemplated hereby, subject to the limitations of Section
 5.5(b); 

 
	
  

 	
  

 
	
  

 	
                
          (x)     alter,
 modify, amend, terminate, waive any rights or exercise any option under any
 Company Material Contract in any material respect in a manner which is
 adverse to the Company; 

 

- 30 -

	
  

 	
  

 
	
  

 	
                
          (xi)    enter
 into any Company Material Contracts other than in the ordinary course of
 business consistent with past practice or enter into any collective
 bargaining agreement; 

 
	
  

 	
  

 
	
  

 	
                
          (xii)    (A)
 make, change or revoke any Tax election, (B) file any amended Tax Return, (C)
 settle or compromise any liability for Taxes or surrender any claim for a
 refund of Taxes, other than in the case of clauses (B) and (C) hereof in
 respect of any Taxes that have been identified in the reserves for Taxes in
 the Company’s GAAP financial statements included in the Company’s SEC
 Documents, (D) change any accounting method, practice or policy in respect of
 Taxes except as required by applicable Law, (E) prepare any Tax Returns in a
 manner which is not consistent in all material respects with the past
 practice of the Company and its Subsidiaries with respect to the treatment of
 items on such Tax Returns, or (F) incur any liability for Taxes other than in
 the ordinary course of business (including as a result of the operation of
 the business in the ordinary course); 

 
	
  

 	
  

 
	
  

 	
                
          (xiii)   make
 any capital expenditure, financing or expenditures which (i) involves the
 purchase of real property or (ii) is in excess of $5,000 individually or
 $20,000 in the aggregate, other than capital expenditures pursuant to
 contracts entered into prior to the date hereof (all of which contracts are
 listed in Section 3.19 of the Company Disclosure Schedule); 

 
	
  

 	
  

 
	
  

 	
                
          (xiv)   acquire,
 sell, lease or dispose of any assets outside the ordinary course of business;
 

 
	
  

 	
  

 
	
  

 	
                
          (xv)    acquire,
 directly or indirectly (A) by merging or consolidating with, or by purchasing
 all of or a substantial equity interest in, or by any other manner, any
 person or division, business or equity interest of any person or (B) except
 in the ordinary course of business consistent with past practice, any assets;
 

 
	
  

 	
  

 
	
  

 	
                
          (xvi)   make
 any investment (by contribution to capital, property transfers, purchase of
 securities or otherwise) in, or loan or advance (other than travel and
 similar advances to its employees in the ordinary course of business
 consistent with past practice) to, any person; 

 
	
  

 	
  

 
	
  

 	
                
          (xvii)  pay,
 discharge, settle or satisfy any claims, liabilities or obligations
 (absolute, accrued, asserted or unasserted, contingent or otherwise), other
 than the payment, discharge, settlement or satisfaction in accordance with
 the terms of such liabilities, claims or obligations reflected or reserved
 against in the most recent consolidated financial statements (or the notes
 thereto) of the Company included in the Company SEC Documents or incurred
 since the date of such financial statements in the ordinary course of
 business consistent with past practice; 

 
	
  

 	
  

 
	
  

 	
                
          (xviii) settle
 or compromise any litigation, proceeding or investigation material to the
 Company and its Subsidiaries taken as a whole; 

 

- 31 -

	
  

 	
  

 
	
  

 	
                
          (xix)   adopt
 a plan of complete or partial liquidation or resolutions providing for or
 authorizing such liquidation or a dissolution, merger, consolidation, restructuring,
 recapitalization or other reorganization, unless required by Law,
 administrative order or the terms of this transaction; 

 
	
  

 	
  

 
	
  

 	
                
          (xx)    reduce
 the prices of products sold or services performed for customers except in the
 ordinary course of business; 

 
	
  

 	
  

 
	
  

 	
                
          (xxi)   modify
 in any material respects any current investment policies or investment
 practices, except as required by or to accommodate changes in applicable Law;
 

 
	
  

 	
  

 
	
  

 	
                
          (xxii)  enter
 into any transaction or take any action or fail to take any action which
 would result in any of the representations and warranties contained in this
 Agreement not being true and correct; 

 
	
  

 	
  

 
	
  

 	
                
          (xxiii) take
 any action or permit any other action to occur which might have a Company
 Material Adverse Effect; or 

 
	
  

 	
  

 
	
  

 	
                
          (xxiv) agree,
 in writing or otherwise, to take any of the foregoing actions. 

 

                    (c)         Parent
agrees with the Company, on behalf of itself and its Subsidiaries, that, between
the date hereof and the Effective Date, Parent shall not, and shall not permit
any of its Subsidiaries to take or agree to take any action (including entering
into agreements with respect to any acquisitions, mergers, consolidations or
business combinations) which would reasonably be expected to result in,
individually or in the aggregate, a Parent Material Adverse Effect. 

          Section
5.2     Investigation. 

                    (a)         The
Company shall afford to Parent and to its officers, employees, accountants,
consultants, legal counsel, financial advisors and agents and other
representatives (collectively, “Parent Representatives”) reasonable
access, throughout the period prior to the earlier of the Effective Date and
the Termination Date, to its and its Subsidiaries’ management, employees,
properties, contracts, commitments, books and records and any report, schedule
or other document filed or received by it pursuant to the requirements of
applicable Laws. Such reasonable access shall include, without limitation,
access to properties currently owned, operated, leased or otherwise used by the
Company or any of its Subsidiaries to conduct environmental sampling and
analysis. Within five (5) days from the date of this Agreement, the Company shall,
and cause its Subsidiaries and their respective Company Representatives to,
provide Parent Representatives reasonable access to its and its Subsidiaries’
customers for the conduct of due diligence. 

                    (b)         Parent
hereby agrees that all information provided to it or Parent Representatives in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be deemed to be Information, as such term is used in,
and shall be treated in accordance with, the Mutual Nondisclosure Agreement,
dated as of September 24, 

- 32 -

2010, between the Company and Parent (the “Nondisclosure Agreement”),
the terms of which are hereby specifically incorporated into this Agreement.  

          Section
5.3     No Solicitation. 

                    (a)         The
Company shall and shall cause its Subsidiaries to, and shall use their best
efforts to cause its and their respective officers, employees, accountants,
consultants, legal counsel, financial advisor and agents and other representatives
(collectively, “Company Representatives”) to, (x) immediately cease and
cause to be terminated any discussions or negotiations with any person
conducted heretofore with respect to an Alternative Proposal or potential
Alternative Proposal and (y) immediately request the prompt return from all
such persons, or the destruction by such persons, of all copies of confidential
information previously provided to such persons by the Company, its
Subsidiaries or their respective Company Representatives and shall deny access
to any virtual data room containing any such information to any person (other
than Parent and Parent Representatives). The Company agrees that neither it nor
any Subsidiary of the Company shall, and that it shall use its best efforts to
cause its and their respective Company Representatives not to, directly or
indirectly, (i) solicit, initiate, cause or knowingly encourage directly or
indirectly (including by way of furnishing information) any inquiry with
respect to, or the making, submission or announcement of, any Alternative
Proposal (as hereinafter defined), (ii) participate in any negotiations
regarding an Alternative Proposal with, or furnish any information regarding
the Company or any Alternative Proposal to, any person that has made or, to the
Company’s knowledge, is considering making an Alternative Proposal, or (iii)
engage in discussions regarding an Alternative Proposal with any person that
has made or, to the Company’s knowledge, is considering making an Alternative
Proposal, except to notify such person as to the existence of the provisions of
this Section 5.3. Without limiting the foregoing, it is understood that any
action taken by Company Representatives that would be a violation of the
restrictions set forth in Section 5.3 if taken by the Company shall be deemed
to be a breach of Section 5.3 by the Company. 

                    (b)         Notwithstanding
the limitations set forth in this Section 5.3, prior to obtaining the Company
Shareholder Approval (but in no event after obtaining the Company Shareholder
Approval), if (A) the Company receives a bona fide written Alternative Proposal
made after the date hereof which the Board of Directors of the Company
determines in good faith, by resolution duly adopted (i) constitutes a Superior
Proposal or (ii) is reasonably likely to result in a Superior Proposal, and (B)
the Board of Directors of the Company determines in good faith, after
consultation with its outside counsel, that the failure to do so would be
reasonably likely to be inconsistent with the directors’ fiduciary duties under
applicable Law, the Company may take the following actions (only after
providing Parent concurrent notice of its intention to take such actions and
after receiving from the third party an executed agreement containing
confidentiality provisions that are no less favorable to the Company than those
contained in the Confidentiality Agreement): (x) furnish information to the
person (including such person’s representatives) making such Alternative Proposal,
and (y) engage in discussions or negotiations with such person (including such
person’s representatives) with respect to the Alternative Proposal. The Company
shall provide Parent with a correct and complete copy of any confidentiality
agreement entered into pursuant to this paragraph within 24 hours after the
execution thereof and shall provide to Parent a correct and complete copy of
any information 

- 33 -

provided or made available to any person pursuant to this paragraph at
the same time such information is provided or made available to such other
person. 

                    (c)         The
Company will promptly notify Parent (within 24 hours) of the receipt of any
Alternative Proposal and shall, in any such notice to Parent, indicate the
identity of the person making such proposal and the material terms and
conditions of such proposal, shall include with such notice a copy of such
proposal, and thereafter shall promptly keep Parent reasonably informed of all
material developments affecting the status and terms of such proposal (and the
Company shall provide Parent promptly (within 24 hours) with copies of any
additional written materials received that relate to such proposal). 

                    (d)         Except
as expressly permitted by this Section 5.3(d), neither the Board of Directors
of the Company nor any committee thereof shall (i)(A) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval of this Agreement and the Plan or the recommendation by such Board of
Directors or committee that shareholders of the Company approve this Agreement
and the Plan, (B) approve or recommend, or propose publicly to approve or
recommend, any Alternative Proposal or (C) in the event of a tender offer or
exchange offer for any outstanding shares of Company Common Stock, fail to
recommend against acceptance of such tender offer or exchange offer by the
Company’s shareholders within fifteen (15) business days of the commencement
thereof (for the avoidance of doubt, the taking of no position or a neutral
position by the Board of Directors of the Company in respect of the acceptance
of any tender offer or exchange offer by its shareholders shall constitute a
failure to recommend against any such offer) (any action described in this
clause (i) being referred to as a “Change of Recommendation”) or (ii)
approve or recommend, or propose publicly to approve or recommend, or cause or
authorize the Company or any of its Subsidiaries to enter into, any letter of
intent, agreement in principle, memorandum of understanding, merger,
acquisition, purchase or joint venture agreement or other agreement related to
any Alternative Proposal (other than a confidentiality agreement in accordance
with Section 5.3(b)) (each a “Company Acquisition Agreement”).
Notwithstanding the foregoing, at any time prior to obtaining the Company
Shareholder Approval and subject to this Section 5.3(d), the Board of Directors
of the Company may (1) make a Change of Recommendation if the Board of
Directors of the Company determines in good faith, after consultation with its
outside counsel, that the failure to do so would be reasonably like to be
inconsistent with the directors’ fiduciary duties under applicable Law or (2)
in response to a Superior Proposal, cause the Company to terminate this
Agreement and concurrently with such termination enter into a Company
Acquisition Agreement, subject to satisfaction of its obligations under Section
7.2; provided, however, that the Board of Directors of the
Company shall not be entitled to exercise its right to terminate this Agreement
pursuant to Section 7.1(f) until immediately after the third business day
following Parent’s receipt of written notice (a “Superior Proposal
Termination Notice”) from the Company advising Parent that the Board of
Directors of the Company intends to take such action and specifying the reasons
therefor, including a description of the material terms of the Superior
Proposal that is the basis for the proposed action of the Board of Directors of
the Company (it being understood and agreed that, in the event of an amendment
to the financial terms or other material terms of such Superior Proposal, the
Board of Directors of the Company shall not be entitled to exercise such right
based on such Superior Proposal, as so amended, until immediately after the
third business day following Parent’s receipt of a Superior Proposal
Termination Notice with respect to such 

- 34 -

Superior Proposal as so amended). In connection with any Superior
Proposal Termination Notice, the Company agrees that, until immediately after
the third business day following Parent’s receipt of such Superior Proposal
Termination Notice, the Company and its Representatives shall (if Parent so
requests) negotiate in good faith with Parent and its Representatives regarding
any revisions to the terms of the transactions contemplated by this Agreement
proposed by Parent. In determining whether to make a Change of Recommendation
or terminate this Agreement in response to a Superior Proposal, the Board of
Directors of the Company shall take into account any amendment to this
Agreement entered into, or to which Parent irrevocably covenants to enter into
and for which all internal approvals of Parent have been obtained, since
receipt of the applicable Superior Proposal Termination Notice, and shall not
make a Change of Recommendation or terminate this Agreement unless, prior to
the effectiveness of such Change of Recommendation or termination, the Board of
Directors of the Company shall have determined in good faith, after considering
the results of any such negotiations and any revised proposals made by Parent,
that the Superior Proposal giving rise to such notice continues to be a
Superior Proposal. 

                    (e)         Nothing
contained in this Agreement shall prohibit the Company or its Board of
Directors from issuing a “stop, look and listen” statement pending disclosure
of its position, in accordance with the provisions of Section 5.3(d),
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act. 

                    (f)         As
used in this Agreement, “Alternative Proposal” shall mean any bona fide
inquiry, proposal or offer made by any person or “group” (as defined in Section
13(d) of the Exchange Act) prior to the receipt of the Company Shareholder
Approval (other than a proposal or offer by Parent or any of its Subsidiaries)
regarding (i) a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, dissolution, liquidation or similar transaction
involving the Company, (ii) the acquisition by any person or group of fifteen
percent (15%) or more of the fair market value of the assets of the Company and
its Subsidiaries or (iii) the acquisition by any person or group of fifteen
percent (15%) or more of the outstanding shares of Company Common Stock.  

                    (g)         As
used in this Agreement “Superior Proposal” shall mean a bona fide, written
offer made by a third party to acquire, directly or indirectly, more than 66
2/3% of the equity securities of the Company or of the fair market value of the
assets of the Company and its Subsidiaries on a consolidated basis, which the
Board of Directors of the Company determines in good faith, after consultation
with the Company’s financial and legal advisors, and considering such factors
as the Company’s Board of Directors considers to be appropriate (including the
timing and likelihood of consummation of such proposal), are more favorable to
the Company and its shareholders from a financial point of view than the
transactions contemplated by this Agreement.  

          Section
5.4     Proxy Statement; Company Meeting. 

                    (a)         As
soon as practicable following the date of this Agreement, and in no case more
than thirty (30) days following the date of this Agreement, the Company shall
prepare and file with the SEC the Proxy Statement, which shall, include the
Recommendation. The 

- 35 -

Company shall use its best efforts to (i) respond to any comments on
the Proxy Statement or requests for additional information from the SEC as soon
as practicable after receipt of any such comments or requests, (ii) obtain
clearance from the SEC to mail the Proxy Statement as soon as practicable, and
(iii) cause the Proxy Statement to be mailed to the shareholders of the Company
promptly upon such clearance. The Company shall promptly (A) notify Parent upon
the receipt of any such comments or requests and (B) provide Parent with copies
of all correspondence between the Company and Company Representatives, on the
one hand, and the SEC and its staff, on the other hand. Prior to responding to
any such comments or requests or the filing or mailing of the Proxy Statement,
the Company shall provide Parent with a reasonable opportunity to review and
comment on any drafts of the Proxy Statement and related correspondence and
filings. If at any time prior to the Effective Date any event shall occur, or
fact or information shall be discovered, that should be set forth in an
amendment of or a supplement to the Proxy Statement, the Company shall, in
accordance with the procedures set forth in this Section 5.4(a), prepare and
file with the SEC such amendment or supplement as soon thereafter as is
reasonably practicable and to the extent required by applicable Law, cause such
amendment or supplement to be distributed to the shareholders of the Company.
Parent and Merger Sub shall provide to the Company, in a timely manner, with
such information as is required to be included in the Proxy Statement under the
Exchange Act with respect to it or them and the rules promulgated thereunder
and such other information as the Company may reasonably request for inclusion
in the Proxy Statement. 

                    (b)         The
Company shall (i) take all action necessary in accordance with the MBCA and its
articles of incorporation and by-laws to duly call, give notice of, convene and
hold a meeting of its shareholders as promptly as reasonably practicable
following the mailing of the Proxy Statement for the purposes of (A) obtaining
the Company Shareholder Approval and (B) in the event such meeting is also the
Company’s annual meeting of shareholders, the election of directors and such
other purposes as the Company may determine (the “Company Meeting”), and
(ii) use all reasonable efforts to solicit from its shareholders proxies in
favor of the approval of this Agreement and the Plan. Without limiting the
generality of the foregoing, the Company’s obligations pursuant to the first
sentence of this Section 5.4(b) shall not be affected by the commencement,
public proposal, public disclosure or communication to the Company of any
Alternative Proposal. 

          Section
5.5     Reasonable Best Efforts. 

                    (a)         Subject
to the terms and conditions set forth in this Agreement, each of the parties
hereto shall use its reasonable best efforts (subject to, and in accordance
with, applicable Law) to take promptly, or cause to be taken, all actions, and
to do promptly, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable under applicable
Laws to consummate and make effective the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, clearances, consents and approvals, including
the Company Approvals and the Parent Approvals, from Governmental Entities and
the making of all necessary registrations and filings and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, and (iii) the
execution and 

- 36 -

delivery of any additional instruments necessary to consummate the
transactions contemplated by this Agreement; provided, however, that in no
event shall any party hereto be required to pay prior to the Effective Date any
fee, penalty or other consideration to any third party for any consent or
approval required for the consummation of the transactions contemplated by this
Agreement under any contract or agreement.  

                    (b)         Without
limiting the foregoing, the Company and Parent shall (i) use reasonable best
efforts to cooperate with each other in (x) determining whether any filings are
required to be made with, or consents, permits, authorizations, waivers,
clearances or approvals are required to be obtained from, any third parties or
other Governmental Entities in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
(y) timely making all such filings and timely seeking all such consents,
permits, authorizations, clearances or approvals, (ii) use reasonable best
efforts to take, or cause to be taken, all other actions and do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective the transactions contemplated hereby, including taking all such
further action as may be necessary to resolve such objections, if any, as the
United States Federal Trade Commission, the Antitrust Division of the United
States Department of Justice, state antitrust enforcement authorities or
competition authorities of any other nation or other jurisdiction or any other
person may assert under Regulatory Law (as hereinafter defined) with respect to
the Merger and the other transactions contemplated hereby, and (iii) subject to
applicable legal limitations and the instructions of any Governmental Entity,
keep each other apprised of the status of matters relating to the completion of
the transactions contemplated thereby, including promptly furnishing the other
with copies of notices or other communications received by the Company or Parent,
as the case may be, or any of their respective Subsidiaries, from any third
party and/or any Governmental Entity with respect to such transactions. The
Company and Parent shall permit counsel for the other party reasonable
opportunity to review in advance, and consider in good faith the views of the
other party in connection with, any proposed written communication to any
Governmental Entity. Each of the Company and Parent agrees not to participate
in any substantive meeting or discussion, either in person or by telephone,
with any Governmental Entity in connection with the proposed transactions
unless it consults with the other party in advance and, to the extent not
prohibited by such Governmental Entity, gives the other party the opportunity
to attend and participate. Notwithstanding anything in this Section 5.5 to the
contrary, in no event will Parent or Merger Sub be obligated to, and the
Company and its Subsidiaries will not, propose or agree to accept any
undertaking or condition, to enter into any consent decree or hold separate
order, to make any divestiture, to accept any operational restriction or
limitation, or to take any other action that would (i) involve assets or
operations of Parent or any of its affiliates or (ii) reasonably be expected to
result in a Company Material Adverse Effect; provided, that for solely the
purposes of this Section 5.5(b), a Company Material Adverse Effect shall
include, without limitation, the divestiture of businesses, product lines or
assets that accounted for 15% or more of the Company’s and its Subsidiaries’
consolidated fiscal year 2010 EBITDA. Notwithstanding anything to the contrary
in this Agreement, in no event will Parent or Merger Sub be obligated to, and
the Company and its Subsidiaries will not, propose or agree to accept any
undertaking or condition to enter into any consent decree or hold separate
order, to make any divestiture, to accept any operational restriction or
limitation, or to take any other action that would involve assets or operations
of the Company or any of its affiliates in order to satisfy the condition set
forth in Section 6.1. 

- 37 -

                    (c)         In furtherance and not in limitation of the covenants of the parties contained
in this Section 5.5, if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as
violative of any Regulatory Law, each of the Company and Parent shall cooperate
in all respects with each other and shall use their respective reasonable best
efforts to contest and resist any such action or proceeding and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any other
provision of this Agreement, nothing in this Section 5.5 shall limit a party’s
right to terminate this Agreement pursuant to Section 7.1(b) or Section 7.1(c)
so long as such party has, prior to such termination, complied with its
obligations under this Section 5.5. 

                    (d)         For
purposes of this Agreement, “Regulatory Law” means the Sherman Act of
1890, the Clayton Antitrust Act of 1914, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, the Federal Trade Commission Act of 1914 and all
other federal, state or foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other Laws, including without
limitation any antitrust, competition or trade regulation Laws, that are
designed or intended to (i) prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening
competition through merger or acquisition or (ii) protect the national security
or the national economy of any nation. 

          Section
5.6     Takeover Statute. If any “fair price,”
“moratorium,” “control share acquisition” or other form of anti-takeover
statute or regulation shall be or become applicable to the transactions
contemplated hereby, each of the Company and Parent and the members of their
respective Boards of Directors shall grant such approvals and take such actions
as are reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby. 

          Section
5.7     Public Announcements. The Company and
Parent will, to the extent practicable, consult with and provide each other the
opportunity to review any press release or other public statement or comment
prior to the issuance of such press release or other public statement or
comment relating to this Agreement or the transactions contemplated herein and,
to the extent practicable, shall not issue any such press release or other
public statement or comment prior to such consultation except as may be
required by applicable Law or by obligations pursuant to any listing agreement
with any national securities exchange. Parent and the Company agree to issue a
joint press release announcing this Agreement. 

          Section
5.8     Control of Operations. Nothing
contained in this Agreement shall give Parent, directly or indirectly, the
right to control or direct the Company’s operations prior to the Effective
Date. Prior to the Effective Date, the Company shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its operations. 

          Section
5.9     Notification of Certain Matters. The
Company shall give prompt notice to Parent, and Parent shall give prompt notice
to the Company, of (i) any notice or other 

- 38 -

communication received by such party from any Governmental Entity in
connection with this Agreement or from any person alleging that the consent of
such person is or may be required in connection with the Merger or the
transactions contemplated hereby, if the subject matter of such communication
or the failure of such party to obtain such consent could be material to the
Company, the Surviving Corporation or Parent, (ii) any actions, suits, claims,
investigations or proceedings commenced or, to such party’s knowledge,
threatened against, relating to or involving or otherwise affecting such party
or any of its Subsidiaries which relate to the Merger or the transactions
contemplated hereby, and (iii) the discovery of any fact or circumstance that,
or the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which, would cause the failure of any condition to
consummation of the Merger; provided, however, that the delivery of any notice
pursuant to this Section 5.9 shall not (A) cure any breach of, or
non-compliance with, any other provision of this Agreement or (B) limit the
remedies available to the party receiving such notice.  

          Section
5.10     Security Holder Litigation. The
Company shall give Parent the opportunity to participate in the defense or
settlement of any security holder litigation against the Company, its
Subsidiaries and/or their respective directors relating to this Agreement, the
Merger or the transactions contemplated hereby, and no such settlement shall be
agreed to without Parent’s prior consent, which consent will not be
unreasonably withheld or delayed. 

          Section
5.11     Company Stock Options. 

                    (a)         As
soon as practicable following the date of this Agreement, the Board of
Directors of the Company (or, if appropriate, any committee thereof
administering any Company Benefit Plan) shall adopt such resolutions and take
such other actions as may be required to effect the following related to each
option to purchase or acquire shares of Company Common Stock, held by an
employee, director or consultant of the Company or any Subsidiaries
(collectively, the “Company Stock Options”): 

	
  

 	
  

 
	
  

 	
                        (i)     effective
 as of the Effective Date, the vesting of each unvested Company Stock Option
 shall be accelerated so that all Company Stock Options shall be fully vested
 as of the Effective Date; 

 
	
  

 	
  

 
	
  

 	
                        (ii)    effective
as of the Effective Date, each Company Stock Option (whether vested or not)
outstanding immediately prior to the Effective Date with an exercise price
per share that is less than the Merger Consideration shall be cancelled by
the Company in exchange for the right to receive, without interest, a cash
amount equal to the product of (A) the excess, if any, of (x) the Merger
Consideration, over (y) the exercise price per share of such Company Stock
Option, multiplied by (B) the total number of shares of Company Common Stock
subject to such Company Stock Option (such product referred to herein as
“Option Consideration”); and  

 
	
  

 	
  

 
	
  

 	
                        (iii)   effective
 as of the Effective Date, each Company Stock Option outstanding as of the
 Effective Date with an exercise price per share that is equal to or greater
 than the Merger Consideration shall be terminated, without any consideration
 therefor. 

 

- 39 -

                    (b)         The
Company shall ensure that following the Effective Date, no holder of a Company
Stock Option (or former holder of a Company Stock Option) or any participant in
any Company Benefit Plan shall have any right thereunder to acquire any capital
stock of the Company or the Surviving Corporation or any other equity interest
therein. 

          Section
5.12    Termination of 401(a) Plans. Prior to
the Closing, the Company shall take all requisite corporate action to terminate
any and all Company Benefit Plans qualified under Section 401(a) of the Code
that have been provided to the employees of the Company, its Subsidiaries or
any of its ERISA Affiliates. The Company acknowledges and agrees that the
employees’ participation, if any, in any such Company Benefit Plan shall be
terminated effective prior to the Closing. 

ARTICLE VI

CONDITIONS TO THE MERGER

          Section
6.1     Conditions to Each Party’s Obligation to
Effect the Merger. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment (or waiver by all parties) at or
prior to the Effective Date of the following conditions: 

                    (a)         The
Company Shareholder Approval shall have been obtained. 

                    (b)         No
injunction by any court or other tribunal of competent jurisdiction which
prohibits the consummation of the Merger shall have been entered and shall
continue to be in effect. 

                    (c)         All
consents, approvals and actions of, filings with and notices required in
connection with consummation of the Merger on the terms contemplated hereby shall
have been obtained or made. 

          Section
6.2     Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the Merger is
further subject to the fulfillment of the following conditions: 

                    (a)         The
representations and warranties of Parent and Merger Sub set forth herein shall
be true and correct both when made and at and as of the Closing Date, as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to “materiality” or “material adverse effect” qualifiers
set forth therein) would not have, individually or in the aggregate, a Parent
Material Adverse Effect. 

                    (b)         Parent
shall have in all material respects performed all obligations and complied with
all covenants required by this Agreement to be performed or complied with by it
prior to the Effective Date. 

- 40 -

                    (c)         Parent
shall have delivered to the Company a certificate, dated the Effective Date and
signed by its Chief Executive Officer or another senior officer, certifying to
the effect that the conditions set forth in Section 6.2(a) and 6.2(b) have been
satisfied. 

          Section
6.3     Conditions to Obligation of Parent and
Merger Sub to Effect the Merger. The obligations of Parent and Merger Sub
to effect the Merger is further subject to the fulfillment of the following
conditions: 

                    (a)         The
representations and warranties of the Company with respect to itself and its
Subsidiaries set forth herein shall be true and correct both when made and at
and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to “materiality” or
“material adverse effect” qualifiers set forth therein) would not have,
individually or in the aggregate, a Company Material Adverse Effect. 

                    (b)         The
Company shall have in all material respects performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Date. 

                    (c)         During
the period from the date of this Agreement to the Closing Date, there shall not
have occurred any Company Material Adverse Effect that continues to exist on
the Closing Date and as of the Effective Date. 

                    (d)         The
equity capitalization of the Company and its Subsidiaries (including all
subscriptions, options, warrants, calls, convertible securities or other
similar rights, agreements or commitments relating to the issuance of capital
stock by the Company or any Subsidiary) shall, as of the Closing Date and not
as of the earlier dates set forth in Section 3.2, be as set forth in Section
3.2 and in Section 3.2 of the Company Disclosure Schedule. 

                    (e)         The
Company shall have delivered to Parent a certificate, dated the Closing Date
and signed by its Chief Executive Officer or another senior officer, certifying
to the effect that the conditions set forth in Section 6.3(a), 6.3(b), 6.3(c)
and 6.3(d) have been satisfied. 

                    (f)         Parent
and Merger Sub shall have been furnished with the opinion of Gray, Plant &
Mooty, counsel to the Company, as dated of the Closing Date, in the form of
Exhibit C attached hereto.  

          Section
6.4     Frustration of Closing Conditions. Neither the
Company nor Parent may rely, either as a basis for not consummating the Merger
or terminating this Agreement and abandoning the Merger, on the failure of any
condition set forth in Section 6.1, 6.2 or 6.3, as the case may be, to be
satisfied if such failure was caused by such party’s breach of any provision of
this Agreement or failure to use its reasonable best efforts to consummate the
Merger and the other transactions contemplated hereby, as required by and
subject to Section 5.5.  

- 41 -

ARTICLE VII

TERMINATION

          Section
7.1     Termination and Abandonment.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may be terminated and abandoned at any time prior to the Effective
Date, whether before or after any approval of the matters presented in
connection with the Merger by the shareholders of the Company: 

                    (a)         by
the mutual written consent of the Company and Parent; 

                    (b)         by
either the Company or Parent if (i) the Effective Date shall not have occurred
on or before March 31, 2011 (the “End Date”), and (ii) the party seeking to
terminate this Agreement pursuant to this Section 7.1(b) shall not have
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately caused the failure to consummate the Merger
on or before such date;  

                    (c)         by
either the Company or Parent if an injunction shall have been entered
permanently restraining, enjoining or otherwise prohibiting the consummation of
the Merger and such injunction shall have become final and non-appealable,
provided that the party seeking to terminate this Agreement pursuant to this
Section 7.1(c) shall have used its reasonable efforts to remove such
injunction;  

                    (d)         by
either the Company or Parent if the Company Meeting (including any adjournments
or postponements thereof) shall have concluded and the Company Shareholder
Approval contemplated by this Agreement shall not have been obtained or by
Parent if the Company Meeting shall not have concluded prior to the close of
business on the day prior to the End Date; 

                    (e)         by
the Company, if Parent shall have breached or failed to perform in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (i) would
result in a failure of a condition set forth in Section 6.1 or 6.2 and (ii)
cannot be cured by the End Date, provided that the Company shall have given
Parent written notice, delivered at least thirty (30) days prior to such
termination, stating the Company’s intention to terminate this Agreement
pursuant to this Section 7.1(e) and the basis for such termination;  

                    (f)         by
the Company, prior to the Company Shareholder Approval, if the Board of
Directors of the Company determines to accept and/or enter into an agreement
for a Superior Proposal; provided, however, that the Company shall have
complied with the provisions of Section 5.3; 

                    (g)         by
Parent, if the Company shall have breached or failed to perform in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (i) would
result in a failure of a condition set forth in Section 6.1 or 6.3 and (ii)
cannot be cured by the End Date, provided that Parent shall have given the
Company written notice, delivered at least thirty (30) days prior to such 

- 42 -

termination,
stating Parent’s intention to terminate this Agreement pursuant to this Section
7.1(g) and the basis for such termination; 

                    (h)         by
Parent, prior to the Company Shareholder Approval, if the Board of Directors of
the Company has failed to make the Recommendation in the Proxy Statement or has
made a Change of Recommendation; and 

                    (i)         by
Parent if holders of five percent (5%) or more of the Shares have exercised
dissenters’ rights in accordance with Section 302A.471 et seq. of the MBCA. 

          Section
7.2     Effect of Termination. 

                    (a)         In
the event that (i) this Agreement is terminated by Parent pursuant to Section
7.1(h), (ii) this Agreement is terminated after December 31, 2010 by the
Company pursuant to Section 7.1(f) or (iii) (A) an Alternative Proposal shall
have been made to the Company or shall have been made directly to the
shareholders of the Company generally or shall have otherwise become publicly
known or any person shall have publicly announced an intention (whether or not
conditional) to make an Alternative Proposal, (B) thereafter this Agreement is
terminated (I) by Company pursuant to Section 7.1(b) or (II) by either Parent
or the Company pursuant to Section 7.1(d) and (C) within 12 months after such
termination, the Company enters into a definitive agreement to consummate, or
consummates, the transactions contemplated by any Alternative Proposal
(regardless of whether such Alternative Proposal is made before or after
termination of this Agreement), then the Company shall pay Parent a fee equal
to $330,000 (the “Termination Fee”) plus Expenses of up to $100,000, by wire
transfer of same-day funds on the first business day following (x) in the case
of a payment required by clause (i) or (ii) above, the date of termination of
this Agreement and (y) in the case of a payment required by clause (iii) above,
the date of the first to occur of the events referred to in clause (iii)(C)
above. “Expenses” shall mean the cash amount necessary to reimburse Parent,
Merger Sub and each of their respective affiliates for all out-of-pocket fees
and expenses incurred (whether or not billed) at any time (whether before or
after the date of this Agreement) prior to the termination of this Agreement by
any of them or on their behalf in connection with the Merger, this Agreement,
their due diligence investigation of the Company and the transactions
contemplated by this Agreement (including the fees and expenses of counsel,
investment banking firms or financial advisors and their respective counsel and
representatives).  

                    (b)         The
Company and Parent acknowledge and agree that the agreements contained in
Section 7.2(a) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement; accordingly, if the Company fails promptly to pay the amount due
pursuant to Section 7.2(a), and, in order to obtain such payment, Parent
commences a suit that results in a judgment against the Company for the
Termination Fee and/or Expenses, the Company shall pay to Parent its costs and
expenses (including attorneys’ fees and expenses) in connection with such suit,
together with interest on the amount of the Termination Fee and/or Expenses, as
the case may be, from the date such payment was required to be made until the
date of payment at the prime rate of Citibank, N.A., in effect on the date such
payment was required to be made. 

- 43 -

                    (c)         In
the event of the termination of this Agreement pursuant to Section 7.1, this
Agreement shall become void and have no effect, without any liability or
obligation on the part of Parent, Merger Sub or the Company under this
Agreement, other than the provisions of Sections 5.2(b), 7.2, 8.2, 8.4, 8.5,
8.6 and 8.10, which provisions shall survive such termination; provided,
however, that no such termination shall relieve any party hereto from any
liability or damages resulting from the willful and material breach by a party
of any of its representations, warranties, covenants or agreements set forth in
this Agreement. 

ARTICLE VIII

MISCELLANEOUS

          Section
8.1     No Survival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Merger. 

          Section
8.2     Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Merger,
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring or required to incur such expenses. 

          Section
8.3     Counterparts; Effectiveness. This
Agreement may be executed in two or more consecutive counterparts (including by
facsimile), each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered (by facsimile or otherwise) to the other parties. 

          Section
8.4     Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Minnesota, without giving effect to any choice or conflict of law provision or
rule (whether of the State of Minnesota or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Minnesota. 

          Section
8.5     Jurisdiction; Enforcement. The parties
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement non-exclusively in the Minnesota State Courts and any state appellate
court therefrom (or, if the Minnesota State Courts decline to accept
jurisdiction over a particular matter, any state or federal court within the
State of Minnesota). In addition, each of the parties hereto irrevocably agrees
that any legal action or proceeding with respect to this Agreement and the
rights and obligations arising hereunder, or for recognition and enforcement of
any judgment in respect of this Agreement and the rights and obligations
arising hereunder brought by the other party hereto or its successors or assigns,
may be brought and determined non-exclusively in the Minnesota State Courts and
any state appellate court therefrom (or, if the Minnesota State Courts decline
to accept jurisdiction over a particular matter, any state or federal court
within the State of Minnesota). Each of the parties hereto hereby irrevocably
submits with regard to any such action or proceeding for itself and in respect 

- 44 -

of
its property, generally and unconditionally, to the personal jurisdiction of
the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement, (a) any
claim that it is not personally subject to the jurisdiction of the above named
courts for any reason other than the failure to serve in accordance with this
Section 8.5, (b) any claim that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) to the fullest extent permitted by the applicable law, any claim that
(i) the suit, action or proceeding in such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper or (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts. The parties hereto agree that irreparable damage would occur in the
event any of the provisions of this Agreement were not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or
equity. 

          Section
8.6     WAIVER OF JURY TRIAL. EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. 

          Section
8.7     Notices. Any notice required to be
given hereunder shall be sufficient if in writing, and sent by facsimile
transmission (provided that any notice received by facsimile transmission or
otherwise at the addressee’s location on any business day after 5:00 p.m.
(addressee’s local time) shall be deemed to have been received at 9:00 a.m.
(addressee’s local time) on the next business day), by reliable overnight
delivery service (with proof of service), hand delivery or certified or registered
mail (return receipt requested and first-class postage prepaid), addressed as
follows:  

	
  

 	
  

 
	
 To Parent and Merger Sub:

 
	
  

 	
  

 
	
  

 	
 CARDIONET, INC.

 
	
  

 	
 227 Washington Street #300

 
	
  

 	
 Conshohocken, PA 19428

 
	
  

 	
 Attn: Director of Legal
 Services

 
	
  

 	
 Phone: (610) 729-5066

 
	
  

 	
 Facsimile: (866) 924-2464

 
	
  

 	
  

 
	
  

 	
 With copies to:

 
	
  

 	
  

 
	
  

 	
 MORGAN, LEWIS &
 BOCKIUS LLP

 
	
  

 	
 1701 Market Street

 
	
  

 	
 Philadelphia, PA 19103

 
	
  

 	
 Attn: Timothy Maxwell,
 Esq.

 
	
  

 	
 Phone: (215) 963-5438

 
	
  

 	
 Facsimile: (215) 963-5001

 

-
45 -

	
  

 	
  

 
	
 To the Company:

 
	
  

 	
  

 
	
  

 	
 BIOTEL INC.

 
	
  

 	
 1285 Corporate Center
 Drive, Suite 150

 
	
  

 	
 Eagan, Minnesota 55121

 
	
  

 	
 Attn: Steve Springrose,
 Chief Executive Officer

 
	
  

 	
 Phone: (651) 286-8623

 
	
  

 	
 Facsimile: (651) 286-8630

 
	
  

 	
  

 
	
  

 	
 With copies to:

 
	
  

 	
  

 
	
  

 	
 GRAY PLANT & MOOTY

 
	
  

 	
 500 IDS Center

 
	
  

 	
 80 South Eighth Street

 
	
  

 	
 Minneapolis, MN 55402

 
	
  

 	
 Attn: Lindley S. Branson,
 Esq.

 
	
  

 	
 Phone: (612) 632-3024

 
	
  

 	
 Facsimile: (612) 632-4024

 

or
to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so telecommunicated,
personally delivered or mailed. Any party to this Agreement may notify any
other party of any changes to the address or any of the other details specified
in this paragraph. Rejection or other refusal to accept or the inability to
deliver because of changed address of which no notice was given shall be deemed
to be receipt of the notice as of the date of such rejection, refusal or
inability to deliver. 

          Section
8.8     Assignment; Binding Effect. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns. 

          Section
8.9     Severability. Any term or provision of
this Agreement which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable. Upon any determination that
a term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner, to the end that the transactions contemplated hereby are
fulfilled to the extent possible. 

          Section
8.10     Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the exhibits and schedules
hereto), the Settlement Agreement and the Nondisclosure Agreement constitute
the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, between the parties, or any of them,
with respect to the subject matter hereof and thereof and, except for the
provisions of Section 2.1(a), is not intended 

- 46 -

to
and shall not confer upon any person other than the parties hereto any rights
or remedies hereunder. 

          Section
8.11     Amendments; Waivers. At any time prior
to the Effective Date, any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by the Company, Parent and Merger Sub, or in the case of a
waiver, by the party against whom the waiver is to be effective; provided,
however, that after receipt of Company Shareholder Approval, if any such
amendment or waiver shall by applicable Law require further approval of the
shareholders of the Company, the effectiveness of such amendment or waiver
shall be subject to the approval of the shareholders of the Company.
Notwithstanding the foregoing, no failure or delay by the Company or Parent in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise of
any other right hereunder. 

          Section
8.12     Headings. Headings of the Articles and
Sections of this Agreement are for convenience of the parties only and shall be
given no substantive or interpretive effect whatsoever. The table of contents
to this Agreement is for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. 

          Section
8.13     Interpretation. When a reference is
made in this Agreement to an Article or Section, such reference shall be to an
Article or Section of this Agreement unless otherwise indicated. Whenever the words
“include,” “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words “hereof,”
“herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant thereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and
neuter genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. Each of the parties has participated in the drafting and negotiation
of this Agreement. If an ambiguity or question of intent or interpretation
arises, this Agreement must be construed as if it is drafted by all the
parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of authorship of any of the provisions of this
Agreement. 

          Section
8.14     Definitions.  

                    (a)         References
in this Agreement to “Subsidiaries” of any party shall mean any
corporation, partnership, association, trust or other form of legal entity of
which (i) more than 50% of the outstanding voting securities are on the date
hereof directly or indirectly owned by such party, or (ii) such party or any
Subsidiary of such party is a general partner (excluding 

- 47 -

partnerships
in which such party or any Subsidiary of such party does not have a majority of
the voting interests in such partnership). References in this Agreement (except
as specifically otherwise defined) to “affiliates” shall mean, as to any
person, any other person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such person. As used in this
definition, “control” (including, with its correlative meanings,
“controlled by” and “under common control with”) shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a person, whether through the ownership of securities
or partnership or other ownership interests, by contract or otherwise.
References in this Agreement (except as specifically otherwise defined) to “person”
shall mean an individual, a corporation, a partnership, a limited liability
company, an association, a trust or any other entity, group (as such term is
used in Section 13 of the Exchange Act) or organization, including, without
limitation, a Governmental Entity, and any permitted successors and assigns of
such person. As used in this Agreement, “knowledge” means (i) with
respect to Parent, the actual knowledge of the individuals listed on Section
8.14(a) of the Parent Disclosure Schedule after conducting reasonable inquiry
about the accuracy of any representation or warranty of Parent or Merger Sub
contained in this Agreement and (ii) with respect to the Company, the actual
knowledge of the individuals listed on Section 8.14(a) of the Company
Disclosure Schedule after conducting reasonable inquiry about the accuracy of
the Company or its Subsidiaries contained in this Agreement. As used in this
Agreement “fiscal year” shall mean the Company’s fiscal year ending June
30. As used in this Agreement, “business day” shall mean any day other
than a Saturday, Sunday or a day on which the banks in New York are authorized
by law or executive order to be closed. References in this Agreement to
specific laws or to specific provisions of laws shall include all rules and
regulations promulgated thereunder. Any statute defined or referred to herein
or in any agreement or instrument referred to herein shall mean such statute as
from time to time amended, modified or supplemented, including by succession of
comparable successor statutes. 

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

	
  

 	
  

 	
  

 	
  

 
	
 Term

 	
  

 	
 Section

 	
  

 
	
 affiliates

 	
 8.14(a)

 
	
 Agreement

 	
 Preamble

 
	
 Alternative Proposal

 	
 5.3(f)

 
	
 Bankruptcy and Equity
 Exception

 	
 3.3(a)

 
	
 business day

 	
 8.14(a)

 
	
 Articles of Merger

 	
 1.3

 
	
 Certificates

 	
 2.2(a)

 
	
 Change of Recommendation

 	
 5.3(d)

 
	
 Closing

 	
 1.2

 
	
 Closing Date

 	
 1.2

 
	
 Code

 	
 2.2(g)

 

- 48 -

	
  

 	
  

 	
  

 	
  

 
	
 Term

 	
  

 	
 Section

 	
  

 
	
 Company

 	
 Preamble

 
	
 Company Acquisition Agreement

 	
 5.3(d)

 
	
 Company Approvals

 	
 3.3(b)

 
	
 Company Benefit Plans

 	
 3.9(a)

 
	
 Company Common Stock

 	
 2.1(a)

 
	
 Company Disclosure
 Schedule

 	
 ARTICLE III

 
	
 Company Intellectual
 Property

 	
 3.16(a)

 
	
 Company Material Adverse
 Effect

 	
 3.1(a)

 
	
 Company Material Contracts

 	
 3.19(a)

 
	
 Company Meeting

 	
 5.4(b)

 
	
 Company Permits

 	
 3.7(b)

 
	
 Company Permitted Lien

 	
 3.3(c)

 
	
 Company Preferred Stock

 	
 3.2(a)

 
	
 Company Representative

 	
 5.3(a)

 
	
 Company SEC Documents

 	
 3.4(a)

 
	
 Company Shareholder
 Approval

 	
 3.18

 
	
 Company Stock Options

 	
 5.11(a)

 
	
 Company Stock Plan

 	
 3.2(a)(iii)

 
	
 control

 	
 8.14(a)

 
	
 Dissenting Shares

 	
 2.1(c)

 
	
 Effective Date

 	
 1.3

 
	
 End Date

 	
 7.1(b)

 
	
 Environmental Claims

 	
 3.8(a)

 
	
 Environmental Law

 	
 3.8(b)

 
	
 ERISA

 	
 3.9(a)

 
	
 ERISA Affiliate

 	
 3.9(c)

 
	
 Exchange Act

 	
 3.3(b)

 
	
 Exchange Fund

 	
 2.2(a)

 
	
 FDA

 	
 3.13(a)

 
	
 fiscal year

 	
 8.14(a)

 
	
 GAAP

 	
 3.4(c)

 
	
 Governmental Entity

 	
 3.3(b)

 
	
 Hazardous Substance

 	
 3.8(c)

 
	
 IRS

 	
 3.9(b)

 

- 49 -

	
  

 	
  

 	
  

 	
  

 
	
 Term

 	
  

 	
 Section

 	
  

 
	
 knowledge

 	
 8.14(a)

 
	
 Law

 	
 3.7(a)

 
	
 Laws

 	
 3.7(a)

 
	
 Leased Real Property

 	
 3.21(d)

 
	
 Lien

 	
 3.3(c)(iii)

 
	
 MBCA

 	
 1.1

 
	
 Merger

 	
 Recitals

 
	
 Merger Consideration

 	
 2.1(a)

 
	
 Merger Sub

 	
 Preamble

 
	
 New Company SEC Documents

 	
 3.4(a)

 
	
 Nondisclosure Agreement

 	
 5.2(b)

 
	
 Option Consideration

 	
 5.11(a)(ii)

 
	
 Owned Real Property

 	
 3.21(c)

 
	
 Parent

 	
 Preamble

 
	
 Parent Approvals

 	
 4.2(b)

 
	
 Parent Disclosure Schedule

 	
 ARTICLE IV

 
	
 Parent Material Adverse
 Effect

 	
 4.1

 
	
 Parent Permitted Lien

 	
 4.2(c)

 
	
 Parent Representatives

 	
 5.2(a)

 
	
 Parent SEC Documents

 	
 ARTICLE IV

 
	
 Paying Agent

 	
 2.2(a)

 
	
 person

 	
 8.14(a)

 
	
 Policies

 	
 3.20

 
	
 Prior Agreement

 	
 Preamble

 
	
 Proxy Statement

 	
 3.12

 
	
 Real Property Lease

 	
 3.21(d)

 
	
 Recommendation

 	
 3.3(a)(iii)

 
	
 Regulatory Law

 	
 5.5(d)

 
	
 Sarbanes-Oxley Act

 	
 3.4(b)

 
	
 SEC

 	
 3.4(a)

 
	
 Settlement Agreement

 	
 Preamble

 
	
 Share

 	
 2.1(a)

 
	
 Subsidiaries

 	
 8.14(a)

 
	
 Superior Proposal

 	
 5.3(g)

 

- 50 -

	
  

 	
  

 	
  

 	
  

 
	
 Term

 	
  

 	
 Section

 	
  

 
	
 Superior Proposal
 Termination Notice

 	
 5.3(d)

 
	
 Surviving Corporation

 	
 1.1

 
	
 Tax Return

 	
 3.14(c)(ii)

 
	
 Taxes

 	
 3.14(c)(i)

 
	
 Termination Date

 	
 5.1(a)

 
	
 Termination Fee

 	
 7.2(a)

 
	
 Voting Agreements

 	
 3.23

 
	
  

 	
  

 

- 51 -

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

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 CARDIONET, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Heather Getz

 	
  

 
	
  

 	
 Name:  Heather Getz

 
	
  

 	
 Title:  SVP & CFO

 
	
  

 	
  

 	
  

 
	
  

 	
 GARDEN MERGER SUB, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Heather Getz

 	
  

 
	
  

 	
 Name:  Heather Getz

 
	
  

 	
 Title:  SVP & CFO

 
	
  

 	
  

 	
  

 
	
  

 	
 BIOTEL INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ B. Steven Springrose

 	
  

 
	
  

 	
 Name:  B. Steven Springrose

 
	
  

 	
 Title:  President & CEO

 

- 52 -

Exhibit A

PLAN OF MERGER

FOR THE MERGER

OF

GARDEN MERGER SUB, INC.

INTO

BIOTEL INC.

          PLAN
OF MERGER (hereinafter referred to as the “Plan”), dated __________ __,
20__, for the merger of Garden Merger Sub, Inc., a Minnesota corporation (the “Merged
Corporation”), into Biotel Inc., a Minnesota corporation (the “Surviving
Corporation”). (The Merged and Surviving Corporations may be collectively
referred to as “Constituent Corporations”). 

RECITALS

          A.          The
Constituent Corporations are corporations duly organized and existing under the
laws of the State of Minnesota. 

          B.          The
Constituent Corporations are parties to a Merger Agreement, dated as of
November 5, 2010, and the merger effected pursuant to this Plan of Merger is
being consummated pursuant to such Merger Agreement. 

          NOW,
THEREFORE, the Constituent Corporations shall be merged into a single
corporation, Biotel Inc. a Minnesota corporation, and one of the Constituent
Corporations, which shall continue its corporate existence and be the
corporation surviving the merger. The terms and conditions of this merger (the
“Merger”) and the manner of carrying the same into effect, are as follows: 

ARTICLE I

Effective Date of the Merger

          The
Effective Date shall be the close of business on __________ __, 20__. At the
Effective Date of the Merger, the separate corporate existence of Constituent
Corporations will cease and the Constituent Corporations shall be merged in the
Surviving Corporation, Biotel Inc., a Minnesota corporation. 

ARTICLE II

Governing Laws; Articles of

Incorporation; Authorized Shares

- 1 -

          The
Articles of Incorporation of the Merged Corporation shall be the Articles of
Incorporation of the Surviving Corporation as of the Effective Date of the
Merger; provided, however, that ARTICLE 1 of the Merged Corporation’s Articles
of Incorporation shall be amended to read as follows: “The name of this
corporation is Biotel Inc.” 

ARTICLE III

Bylaws; Registered Office

          The
Bylaws of the Merged Corporation shall be the Bylaws of the Surviving
Corporation as of the Effective Date of the Merger. The registered office of
the Surviving Corporation after the Merger shall be at
___________________________. 

ARTICLE IV

Directors and Officers

          The
directors of the Merged Corporation as of the Effective Date shall be the
initial directors of the Surviving Corporation and shall hold office until
their respective successors are duly elected and qualified, or their earlier
death, resignation or removal. The officers of the Merged Corporation as of the
Effective Date shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal. The directors and
officers of the Surviving Corporation holding office on the Effective Date
shall be deemed to have resigned effective as of the Effective Date. 

ARTICLE V

Conversion of Shares in the Merger

          The
manner of carrying the Merger into effect, and the manner and basis of
converting the shares of the Constituent Corporations into shares of the
Surviving Corporation are as follows: 

	
  

 	
  

 
	
 •

 	
 Conversion
 of Surviving Corporation Common Stock. At the Effective Date, each share of
 common stock, par value $.01 per share, of the Surviving Corporation (such
 shares, collectively, “Surviving Corporation Common Stock,” and each,
 a “Share”) outstanding immediately prior to the Effective Date other
 than Dissenting Shares (as hereinafter defined), shall be converted
 automatically into, and shall thereafter represent the right to receive,
 $____ in cash (the “Merger Consideration”). All outstanding Shares
 that have been converted into the right to receive the Merger Consideration
 as provided in this section shall be automatically cancelled and shall cease
 to exist, and the holders of certificates which immediately prior to the
 Effective Date represented such Shares shall cease to have any rights with
 respect to such Shares other than the right to receive the Merger
 Consideration. 

 

- 2 -

	
  

 	
  

 
	
 •

 	
 Conversion of Merged Corporation Common Stock. Each share of common stock, par value
$.01 per share, of the Merged Corporation issued and outstanding immediately
prior to the Effective Date shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $.01
per share, of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation. From and
after the Effective Date, all certificates representing the common stock of
Merger Sub shall be deemed for all purposes to represent the number of shares
of common stock of the Surviving Corporation into which they were converted
in accordance with the immediately preceding sentence.  

 
	
  

 	
  

 
	
 •

 	
 Dissenters’ Rights. If required by the MBCA (but only to the extent required thereby),
Shares that are issued and outstanding immediately prior to the Effective
Date and that are held by holders of such Shares who have not voted in favor
of the approval and adoption of this Plan of Merger or consented thereto in
writing and who have properly exercised appraisal rights with respect thereto
in accordance with, and who have complied with, Section 302A.473 of the MBCA
(the “Dissenting Shares”) will not be converted into the right to receive the
Merger Consideration, and holders of such Dissenting Shares will be entitled
to receive payment of the fair value of such Dissenting Shares in accordance
with the provisions of such Section 302A.473 unless and until any such holder
fails to perfect or effectively waives, withdraws or loses his, her or its
rights to appraisal and payment under the MBCA. If, after the Effective Date,
any such holder fails to perfect or effectively waives, withdraws or loses
such right, such Dissenting Shares will thereupon be treated as if they had
been converted into and have become exchangeable for, at the Effective Date,
the right to receive the Merger Consideration, without any interest thereon,
and the Surviving Corporation shall remain liable for payment of the Merger
Consideration for such Shares. At the Effective Date, any holder of
Dissenting Shares shall cease to have any rights with respect to the Surviving
Corporation, except the rights provided in Section 302A.473 of the MBCA and
as provided in the previous sentence.  

 

ARTICLE VI

Effect of the Merger

          At
the Effective Date of the Merger, the Surviving Corporation shall succeed to
and shall possess and enjoy all the rights, privileges, immunities, powers and
franchises, both of a public and private nature, of the Constituent
Corporations, and all property, real, personal, and mixed, including patents,
trademarks, tradenames, and all debts due to either of the Constituent
Corporations on whatever account, for stock subscriptions as well as for all
other things in action or all other rights belonging to either of said
corporations; and all said property, rights, privileges, immunities, powers and
franchises, and all and every other interest shall be thereafter the property
of the Surviving Corporation as effectively as they were of the respective
Constituent Corporations, and the title of any real estate vested by deed or
otherwise in either of said Constituent Corporations shall not revert or be in
any way impaired by reason of the Merger; provided, however, that all rights of
creditors and all liens upon any property of either of 

- 3 -

said
Constituent Corporations shall be preserved unimpaired, limited in lien to the
property affected by such liens prior to the Effective Date of the Merger, and
all debts, liabilities, and duties of said Constituent Corporations,
respectively, shall thenceforth attach to the Surviving Corporation and may be enforced
against it to the same extent as if said debts, liabilities, and duties had
been incurred or contracted in the first instance by the Surviving Corporation.

ARTICLE VII

Filing of Plan of Merger

          Upon
adoption and approval of the Plan of Merger by the Boards of Directors and
shareholders of the Constituent of Corporations in accordance with Section
302A.613 of the Minnesota Business Corporation Act, Articles of Merger in
accordance with Section 302A.615 of the Minnesota Business Corporation Act
shall be executed and delivered to the Secretary of State of the State of
Minnesota for filing as provided by the Minnesota Business Corporation Act. The
Constituent Corporations shall also cause to be performed all necessary acts
within the State of Minnesota and elsewhere to effectuate the Merger. 

- 4 -

Exhibit B

 

VOTING
AGREEMENT

                VOTING
AGREEMENT, dated as of November 5,
2010 (this “Agreement”), by and among CARDIONET, INC., a Delaware
corporation (“Parent”), and ____________________________
(“Shareholder”), a shareholder of BIOTEL INC., a Minnesota
corporation (the “Company”).  

                WHEREAS,
concurrently herewith, Parent, GARDEN MERGER SUB., INC., a Minnesota
corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and
the Company are entering into an Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which (and subject to the terms and conditions set
forth therein) Merger Sub will merge with and into the Company, with the
Company continuing as the surviving corporation and a wholly-owned subsidiary
of Parent (the “Merger”); and 

                WHEREAS, in
order to induce Parent and Merger Sub to enter into the Merger Agreement and to
proceed with the transactions contemplated thereby, including the Merger,
Parent and Shareholder are entering into this Agreement; and 

                WHEREAS,
Shareholder acknowledges that Parent and Merger Sub are entering into the
Merger Agreement in reliance on the representations, warranties, covenants and
other agreements of Shareholder set forth in this Agreement and would not enter
into the Merger Agreement if Shareholder did not enter into this Agreement.  

                NOW, THEREFORE,
in consideration of the foregoing and the representations, warranties,
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent and Shareholder hereby represent, warrant, covenant and agree as
follows:   

                1.  Shareholder
represents and warrants that:   

                                a. 
Shareholder owns of record and beneficially good and valid title to all of the
shares of the capital stock of the Company, and options to acquire shares of
capital stock of the Company, shown on Exhibit A attached
hereto, free and clear of any and all mortgages, liens, encumbrances, charges,
claims, restrictions, pledges, security interests, voting trusts or agreements,
or impositions, except as otherwise disclosed on Exhibit A, and
such shares represent all of the shares, or rights to acquire shares, of
capital stock of the Company owned by Shareholder.  For purposes hereof, the
capital stock of the Company and the options to acquire capital stock of the
Company set forth on Exhibit A attached hereto shall be
referred to herein as the “Stock”.  

                                b. 
The execution and delivery of this Agreement by Shareholder does not, and the
performance by Shareholder of its obligations hereunder will not, constitute a
violation of, conflict with, result in a default (or an event which, with
notice or lapse of time or both, would result in default) under, or result in
the creation of any lien on any such Stock under, (i) any contract, commitment
or agreement, to which Shareholder is a party or by which Shareholder is bound,
(ii) any judgment, order or ruling applicable to Shareholder, or (iii) the
organizational documents of Shareholder, if applicable.  

                                c. 
Shareholder has full power and authority to execute, deliver and perform this
Agreement, to vote the Stock as required herein and to consummate the
transactions contemplated hereby.  The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized and no other actions on the part of the
Shareholder are required in order to consummate the transaction contemplated
hereby.  This Agreement has been duly and validly executed and delivered by
Shareholder and constitutes a valid and binding agreement of Shareholder,
enforceable against Shareholder in accordance with its terms. 

 

- 1 -

 

                2.  When a
meeting of the shareholders of the Company is held for the purpose of
considering the Merger Agreement and the Merger (such meeting referred to
herein as the “Meeting”), Shareholder shall (a) appear at the Meeting or
otherwise cause the Stock to be counted as present at the Meeting for the
purpose of establishing a quorum; (b) at the Meeting, vote, or cause to be
voted, all of the Stock, in person or by proxy, for approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger; and
(c) at the Meeting (or any other meeting of shareholders of the Company), vote,
or cause to be voted, all of the Stock, in person or by proxy, against any
action that is intended, or could reasonably be expected, to impede, interfere
with, delay, postpone, or adversely affect the transactions contemplated by the
Merger Agreement, including the Merger, unless and until the Company has
terminated the Merger Agreement in accordance with the terms and conditions of
the Merger Agreement.  

                3.  Shareholder
hereby grants an irrevocable proxy appointing Parent, by its duly authorized
officers and representatives, as Shareholder’s sole and exclusive and true and
lawful agent and attorney-in-fact, with full power of substitution, to vote all
Stock that Shareholder is entitled to vote, express consent or dissent or
otherwise to utilize such voting power in such manner and upon any of the
matters referred to in Paragraph 2 above, to the same extent and with the same
effect as Shareholder might or could do under any applicable laws or
regulations governing the rights and powers of shareholders of the Company. 
This proxy shall become effective as of the date hereof and shall expire upon
termination of this Agreement.  Shareholder hereby affirms that this proxy is
coupled with an interest and shall be irrevocable and binding upon any and all
transferees of the Stock so long as it remains in effect pursuant to the terms
hereof.  

                4.  The proxy
granted by Shareholder pursuant to Paragraph 3 above and Shareholder’s entrance
into this Agreement is in consideration of Parent’s entrance into the Merger
Agreement.  The proxy granted by Shareholder pursuant to Paragraph 3 above is
meant to secure Shareholder’s performance of this Agreement.  This proxy/power
of attorney shall not terminate on disability of the Shareholder.  Shareholder
hereby revokes any proxy previously granted by Shareholder with respect to the
Stock.  

                5.  Shareholder
will not, nor will Shareholder permit any entity under Shareholder’s control
to, deposit any of the Stock in a voting trust or subject any of the Stock to
any arrangement with respect to the voting of the Stock in any manner
inconsistent with this Agreement.  

                6.  Shareholder
will not sell, transfer, pledge, give, hypothecate, assign or otherwise
alienate or transfer, by proxy or otherwise (including any transfer by
operation of law), the Stock or any of Shareholder’s voting rights with respect
to the Stock, except to a person who is a party to a voting agreement with
Parent in the form of this Agreement.  

                7.  Shareholder
expressly agrees and acknowledges that irreparable damage would occur in the
event any of the provisions of this Agreement were not performed in accordance
with the terms hereof, and that Parent shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or
equity.  

                8.  This
Agreement constitutes the entire agreement of Shareholder with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, of Shareholder with respect to the
subject matter hereof, and shall be binding upon the successors and assigns (as
applicable) of Shareholder.  This Agreement shall terminate automatically upon
the termination of the Merger Agreement.  

                9.  This
Agreement will be governed by and construed in accordance with the laws of the
State of Minnesota regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.  

                10. 
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Merger Agreement.  

                11.  It is
understood and hereby agreed that this Agreement relates solely to the capacity
of Shareholder as a shareholder or beneficial owner of the Stock and is not in
any way intended to affect the exercise of Shareholder’s responsibilities and
fiduciary duties as a director or officer of the Company or any of its subsidiaries. 

 

- 2 -

                IN
WITNESS WHEREOF, Parent and Shareholder have executed or caused to be
executed this Agreement as of the date first written above.  

	
   

  	
  CARDIONET,
  INC.:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SHAREHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature
Page to Voting Agreement]

- 3 -

Exhibit A

 

	
Name of Shareholder

	
 

	
Number of Shares Owned

	
 

	
Number of Shares Subject

to Stock Options

 

 

 

 

 

 

 

- 4 -

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