Document:

EXHIBIT 4.28

 

CONFIDENTIAL TREATMENT REQUESTED

[*] indicates confidential portions omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission

 

EXECUTION VERSION

	
 
    

 

STOCK PURCHASE AND CONTRIBUTION AGREEMENT

 

BY AND AMONG

 

SOUND INPATIENT HOLDINGS, LLC

 

SOUND INPATIENT PHYSICIANS, INC.

 

 SOUND INPATIENT PHYSICIANS HOLDINGS, LLC

 

AND

 

FRESENIUS MEDICAL CARE AG & CO. KGAA

 

DATED AS OF JUNE 13, 2014

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
PAGE
    
	
 
    	
 
    
	
ARTICLE I CERTAIN DEFINITIONS
    	
2
    
	
Section 1.1
    	
Certain   Definitions
    	
2
    
	
Section 1.2
    	
Interpretation
    	
13
    
	
 
    	
 
    
	
ARTICLE II PURCHASE AND SALE
    	
13
    
	
Section 2.1
    	
Purchase   and Sale of the Purchased Shares; Contribution of Contributed Shares
    	
13
    
	
Section 2.2
    	
Closing   of the Transactions Contemplated by this Agreement
    	
13
    
	
Section 2.3
    	
Deliveries   at the Closing
    	
14
    
	
Section 2.4
    	
Purchase   Price
    	
14
    
	
 
    	
 
    
	
ARTICLE III REPRESENTATIONS AND WARRANTIES OF   THE COMPANY
    	
18
    
	
Section 3.1
    	
Organization   and Qualification; Subsidiaries
    	
18
    
	
Section 3.2
    	
Capitalization   of the Group Companies
    	
18
    
	
Section 3.3
    	
Authority
    	
19
    
	
Section 3.4
    	
Financial   Statements
    	
19
    
	
Section 3.5
    	
Consents   and Approvals; No Violations
    	
20
    
	
Section 3.6
    	
Material   Contracts
    	
21
    
	
Section 3.7
    	
Absence   of Changes
    	
23
    
	
Section 3.8
    	
Litigation
    	
25
    
	
Section 3.9
    	
Compliance   with Applicable Law
    	
25
    
	
Section 3.10
    	
Employee   Plans
    	
26
    
	
Section 3.11
    	
Environmental   Matters
    	
27
    
	
Section 3.12
    	
Intellectual   Property
    	
28
    
	
Section 3.13
    	
Labor   Matters
    	
28
    
	
Section 3.14
    	
Insurance
    	
28
    
	
Section 3.15
    	
Tax   Matters
    	
29
    
	
Section 3.16
    	
Brokers
    	
30
    
	
Section 3.17
    	
Property
    	
30
    
	
Section 3.18
    	
Transactions   with Affiliates
    	
31
    
	
Section 3.19
    	
No   Undisclosed Liabilities
    	
31
    
	
Section 3.20
    	
Hospital   Clients
    	
32
    
	
Section 3.21
    	
Healthcare   Representations and Warranties
    	
32
    
	
Section 3.22
    	
EXCLUSIVITY   OF REPRESENTATIONS AND WARRANTIES
    	
36
    
	
 
    	
 
    
	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF   SELLER
    	
36
    
	
Section 4.1
    	
Authority
    	
36
    
	
Section 4.2
    	
Consents   and Approvals; No Violations
    	
37
    
	
Section 4.3
    	
Title   to the Shares; Ownership of Seller
    	
37
    
	
Section 4.4
    	
Litigation
    	
37
    
	
Section 4.5
    	
Brokers
    	
37
    
	
Section 4.6
    	
EXCLUSIVITY   OF REPRESENTATIONS AND WARRANTIES
    	
38
    

 

i

 

	
ARTICLE V REPRESENTATIONS AND WARRANTIES OF   BUYER
    	
38
    
	
Section 5.1
    	
Organization
    	
38
    
	
Section 5.2
    	
Authority
    	
39
    
	
Section 5.3
    	
Consents   and Approvals; No Violations
    	
39
    
	
Section 5.4
    	
Brokers
    	
39
    
	
Section 5.5
    	
Financing
    	
40
    
	
Section 5.6
    	
Acquisition   of Equity For Investment
    	
40
    
	
Section 5.7
    	
Solvency
    	
40
    
	
Section 5.8
    	
Interests   in Competitors
    	
40
    
	
Section 5.9
    	
Acknowledgment   and Representations by Buyer
    	
41
    
	
 
    	
 
    
	
ARTICLE VI COVENANTS
    	
41
    
	
Section 6.1
    	
Conduct   of Business of the Company
    	
41
    
	
Section 6.2
    	
Access   to Information
    	
43
    
	
Section 6.3
    	
Efforts   to Consummate
    	
44
    
	
Section 6.4
    	
Public   Announcements
    	
45
    
	
Section 6.5
    	
Indemnification;   Directors’ and Officers’ Insurance
    	
46
    
	
Section 6.6
    	
Exclusive   Dealing
    	
47
    
	
Section 6.7
    	
Documents   and Information
    	
48
    
	
Section 6.8
    	
Contact   with Customers, Suppliers and Other Business Relations
    	
48
    
	
Section 6.9
    	
Employee   Benefit Matters
    	
48
    
	
Section 6.10
    	
Transfer   Taxes Paid By Buyer
    	
49
    
	
Section 6.11
    	
Disclosure   Schedule Updates
    	
49
    
	
Section 6.12
    	
Debt   Payoff Letters
    	
50
    
	
Section 6.13
    	
Change   of Name
    	
50
    
	
Section 6.14
    	
Rollover
    	
50
    
	
Section 6.15
    	
280G   Shareholder Vote
    	
50
    
	
 
    	
 
    
	
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE   TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
    	
51
    
	
Section 7.1
    	
Conditions   to the Obligations of the Company, Buyer and Seller
    	
51
    
	
Section 7.2
    	
Other   Conditions to the Obligations of Buyer
    	
51
    
	
Section 7.3
    	
Other   Conditions to the Obligations of the Company and Seller
    	
52
    
	
Section 7.4
    	
Frustration   of Closing Conditions
    	
53
    
	
 
    	
 
    
	
ARTICLE VIII TERMINATION
    	
53
    
	
Section 8.1
    	
Termination
    	
53
    
	
Section 8.2
    	
Effect   of Termination
    	
54
    
	
 
    	
 
    
	
ARTICLE IX INTENTIONALLY RESERVED
    	
54
    
	
 
    	
 
    
	
ARTICLE X MISCELLANEOUS
    	
54
    
	
Section 10.1
    	
Entire   Agreement; Assignment; Amendment
    	
54
    
	
Section 10.2
    	
Notices
    	
55
    
	
Section 10.3
    	
Governing   Law
    	
57
    
	
Section 10.4
    	
Fees   and Expenses
    	
57
    
	
Section 10.5
    	
Construction
    	
57
    
	
Section 10.6
    	
Exhibits   and Schedules
    	
57
    

 

ii

 

	
Section 10.7
    	
Parties   in Interest
    	
58
    
	
Section 10.8
    	
Extension;   Waiver
    	
58
    
	
Section 10.9
    	
Severability
    	
58
    
	
Section 10.10
    	
Counterparts;   Facsimile Signatures
    	
58
    
	
Section 10.11
    	
Limitation   on Damages; Survival
    	
58
    
	
Section 10.12
    	
WAIVER   OF JURY TRIAL
    	
59
    
	
Section 10.13
    	
Jurisdiction   and Venue
    	
59
    
	
Section 10.14
    	
Remedies
    	
59
    
	
Section 10.15
    	
Waiver   of Conflicts
    	
60
    
	
Section 10.16
    	
Parent   Guarantee
    	
60
    

 

EXHIBITS

 

	
A
    	
 
    	
—   Example Statement of Net Working Capital
    
	
B
    	
 
    	
—   Form of Escrow Agreement
    
	
C
    	
 
    	
—   Form of TowerBrook Restrictive Agreement
    
	
D
    	
 
    	
—   Employee Restrictive Agreements
    
	
E
    	
 
    	
—   Employment Agreement Amendments
    
	
F
    	
 
    	
—   Forms of Rollover Equity Agreements
    

 

iii

 

STOCK PURCHASE AND CONTRIBUTION AGREEMENT

 

This STOCK PURCHASE AND CONTRIBUTION AGREEMENT (this “Agreement”), dated as of June 13, 2014, is made by and among Sound Inpatient Physicians, Inc., a Delaware corporation (the “Company”), Sound Inpatient Holdings, LLC, a Delaware limited liability company (“Seller”), Sound Inpatient Physicians Holdings, LLC, a Delaware limited liability company (“Buyer”), and Fresenius Medical Care AG & Co. KGaA, a German partnership limited by shares (“Parent Guarantor”). The Company, Seller and Buyer shall be referred to herein from time to time collectively as the “Parties”.

 

RECITALS:

 

WHEREAS, as of the date hereof, Seller owns 100% of the issued and outstanding capital stock of the Company, consisting of 100 shares of common stock, par value $0.01 per share, of the Company (the “Shares”);

 

WHEREAS, on the day prior to the Closing Date, Seller shall consummate the Distribution (as defined below) pursuant to and in accordance with Section 6.14;

 

WHEREAS, immediately prior to the Closing, each Rollover Equityholder (as defined below) shall contribute the Rollover Shares (as defined below) held by such Rollover Equityholder to Buyer in exchange for certain Buyer Units (as defined below), in each case, pursuant to and in accordance with the applicable Rollover Agreement (as defined below) (collectively, such contributions, the “Rollover”);

 

WHEREAS, contemporaneously with the Rollover, Seller shall contribute to Buyer, and Buyer shall accept from Seller, the Contributed Shares (as defined below) in exchange for the Contributed Share Consideration (as defined below) (the “Contribution”);

 

WHEREAS, contemporaneously with the Rollover and the Contribution, the Parties desire that, upon the terms and subject to the conditions hereof, Buyer will purchase from Seller, and Seller will sell to Buyer, all of the Purchased Shares (as defined below); and

 

WHEREAS, in connection with the transactions contemplated by this Agreement and concurrently with the execution and delivery of this Agreement, certain employees of the Company have entered into Employee Restrictive Agreements and Employment Agreement Amendments with the Company, which agreements will become effective automatically upon the consummation of the Closing.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby intending to be legally bound agree as follows:

 

 

ARTICLE I
 CERTAIN DEFINITIONS

 

Section 1.1            Certain Definitions.  As used in this Agreement, the following terms have the respective meanings set forth below.

 

“280G Shareholder Vote” has the meaning set forth in Section 6.15.

 

“Accounting Firm” has the meaning set forth in Section 2.4(b)(ii).

 

“Accounting Principles” means the principles, practices, methodologies and procedures used by the Company in the preparation of the Financial Statements.

 

“Acquisition Transaction” has the meaning set forth in Section 6.6.

 

“Actual Adjustment” means an amount, which may be a negative number, equal to (x) the Purchase Price as finally determined pursuant to Section 2.4(b), minus (y) the Estimated Purchase Price.

 

“Affiliate” means, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person.  The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto.

 

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

 

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks in New York City are open for the general transaction of business.

 

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

 

“Buyer Units” means Class A Units of Buyer.

 

“Caregiver Personnel” has the meaning set forth in Section 3.21(m).

 

“Cash and Cash Equivalents” means the sum of the fair market value (expressed in United States dollars) of all cash and cash equivalents (including marketable securities, checks payable to any Group Company, bank deposits and short term investments) of the Group Companies as of the close of business on the Business Day immediately preceding the Closing Date, in each case, calculated in accordance with GAAP using the Accounting Principles.

 

“Closing” has the meaning set forth in Section 2.2.

 

“Closing Date” has the meaning set forth in Section 2.2.

 

“Closing Date Indebtedness” means the Indebtedness as of the close of business on the Business Day immediately preceding the Closing Date.

 

2

 

“Closing Date Tax-Adjusted Settlement Agreement Obligations” means an amount equal to (i) all amounts payable under the Settlement Agreement as of the Closing Date, less (ii) [*].

 

“COBRA” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state law.

 

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

 

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

 

“Company Intellectual Property Rights” has he meaning set forth in Section 3.12.

 

“Company Material Adverse Effect” means a material adverse effect upon the financial condition, business, or results of operations of the Group Companies, taken as a whole; provided, however, that none of the following (or the results thereof) shall be taken into account, either alone or in combination in determining whether a Company Material Adverse Effect has occurred: (i) conditions generally affecting the United States economy or credit, securities, currency, financial, banking or capital markets (including any disruption thereof and any decline in the price of any security or any market index) in the United States or elsewhere in the world, (ii) any national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (iii) changes in GAAP, (iv) changes in any laws, rules, regulations, orders, or other binding directives issued by any Governmental Entity or any action required to be taken under any law, rule, regulation, order or existing contract by which any Group Company (or any of their respective assets or properties) is bound, (v) any change that is generally applicable to the industries or markets in which the Group Companies operate, (vi) the public announcement of the transactions contemplated by this Agreement (including by reason of the identity of Buyer or any communication by Buyer or any of its Affiliates regarding its plans or intentions with respect to the business of any Group Company, and including the impact thereof on relationships with customers, suppliers, distributors, partners or employees or others having relationships with any Group Company) or litigation arising from or relating to this Agreement or the transactions contemplated hereby, (vii) any failure by any Group Company to meet any internal or published projections, forecasts or revenue or earnings predictions for any period ending on or after the date of this Agreement (provided that any effect, event, development, occurrence or change underlying such failure may be considered in determining if a Company Material Adverse Effect otherwise occurred), (viii) the taking of any action contemplated by this Agreement and the other agreements contemplated hereby, including the completion of the transactions contemplated hereby and thereby (except to the extent that such action relates to a breach by the Company or Seller of the terms of this Agreement, including, without limitation, any failure by any Group Company or Seller to obtain any necessary consents or to provide notices required under this Agreement) or (ix) any adverse change in or effect on the business of the Group Companies that is cured prior to the Closing; provided, however, that any facts, changes, developments, events, occurrences, actions, omissions or effects referred to in clauses (i) through (v) above shall be taken into account in determining whether a Company

 

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Material Adverse Effect has or is reasonably likely to have occurred to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Group Companies taken as a whole as compared to other participants in the industries in which the Group Companies conduct their businesses.

 

“Company’s Knowledge” means, as it relates to Seller, the Company or any other Group Company, as of the applicable date, the actual knowledge without independent investigation (and shall in no event encompass constructive, imputed or similar concepts of knowledge) of [*], none of whom, for the sake of clarity and avoidance of doubt, shall have any personal liability or obligations regarding such knowledge.

 

“Confidentiality Agreement” means the confidentiality agreement, dated as of [*], by and between the Company and Fresenius Medical Care AG & Co. KGaA.

 

“Contributed Share Consideration” means that number of Buyer Units having a value (based on the amount for which Parent Guarantor purchased such Buyer Units) equal to the Contributed Share Value.

 

“Contributed Share Value” means [*].

 

“Contributed Shares” means that number of Shares equal to the Contributed Share Value divided by the Per Share Price.

 

“Contribution” has the meaning set forth in the recitals to this agreement.

 

“Corporate Integrity Agreement” means that certain Corporate Integrity Agreement, effective as of June 27, 2013, by and between the Company and the Office of the Inspector General of the Department of Health and Human Services.

 

“Credit Facilities” means that certain Credit Agreement, dated as of December 20, 2013, by and among the Company, as the borrower, Bank of America, N.A., as the lender, Seller and the other Persons set forth on the signature pages thereto.

 

“Cut-Off Time” has the meaning set forth in Section 8.1(g).

 

“Debt Payoff Letters” has the meaning set forth in Section 6.12.

 

“Distribution” has the meaning set forth in Section 6.14.

 

“Employee Benefit Plan” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and each other material employee benefit plan, program or arrangement maintained, sponsored or contributed to by any Group Company.

 

4

 

“Employee Restrictive Agreement” means each employee restrictive agreement, entered into as of the date hereof, by and between the Company and each other party thereto, in each case, as attached hereto as Exhibit D.

 

“Employment Agreement Amendment” means each employee agreement amendment, entered into as of the date hereof, by and between the Company and each other party thereto, in each case, as attached hereto as Exhibit E.

 

“Enterprise Value” means [*].

 

“Environmental Laws” means all applicable federal, state, local and foreign statutes, regulations, and ordinances concerning pollution or protection of human health and safety (regarding exposure to Hazardous Materials) or protection of the environment, including all those relating to the presence of, exposure to, management, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, discharge, release, control, or cleanup of any Hazardous Materials, substances or wastes, as such of the foregoing are enacted and in effect on or prior to the Closing Date.

 

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

 

“Escrow Account” has the meaning set forth in Section 2.4(a)(i).

 

“Escrow Agent” has the meaning set forth in 0.

 

“Escrow Agreement” has the meaning set forth in Section 2.4(a)(i)0.

 

“Escrow Amount” has the meaning set forth in 0.

 

“Escrow Funds” means, at any time, the portion of the Escrow Amount then remaining in the Escrow Account.

 

“Estimated Purchase Price” means a good faith estimate of the Purchase Price, as determined by the Company. For the avoidance of doubt, Estimated Purchase Price shall be calculated as (i) the Enterprise Value, plus (ii) a good faith estimate of the Net Working Capital Adjustment (which may be a negative number), plus (iii) a good faith estimate of the amount of Cash and Cash Equivalents, minus (iv) a good faith estimate of the amount of Closing Date Indebtedness, minus (v) a good faith estimate of the amount of Unpaid Seller Expenses.

 

“Estimated Purchase Price Calculation” has the meaning set forth in Section 2.4(a).

 

“Example Statement of Net Working Capital” means the statement of Net Working Capital as of the close of business on March 31, 2014 and attached hereto as Exhibit A.

 

“Family Member” means, with respect to any Person that is an individual, any parent, brother or sister of a parent, spouse, child, grandchild, spouse of a child, brother or sister of such Person, and each trust created for the benefit of one or more of such Persons and/or the estates of any such Person.

 

5

 

“Federal Anti-kickback Statute” means the federal Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)) and any rules and regulations promulgated thereunder.

 

“Federal Rules of Evidence” means the Federal Rules of Evidence of the United States as in effect on the date of this Agreement.

 

“Federal Stark Law” means the Stark Anti-Self-Referral Law (42 U.S.C. §§ 1395nn) and any rules and regulations promulgated thereunder.

 

“Financial Statements” has the meaning set forth in Section 3.4.

 

“FMCH” has the meaning set forth in Section 5.2.

 

“Funded Indebtedness” means, as of any time, without duplication, the outstanding principal amount of, accrued and unpaid interest on, and other payment obligations (including any prepayment premiums payable as a result of the consummation of the transactions contemplated by this Agreement) arising under, any obligations of any Group Company consisting of (i) indebtedness for borrowed money or indebtedness issued in substitution or exchange for borrowed money, or (ii) indebtedness evidenced by any note, bond, debenture or other debt security, in each case, as of such time.  Notwithstanding the foregoing, “Funded Indebtedness” shall not include any (w) obligations under operating leases or capitalized leases, (x) undrawn letters of credit (including any that are outstanding under the Credit Facilities), (y) obligations under any interest rate, currency or other hedging agreements (other than breakage costs payable upon termination thereof on the Closing Date) or (z) amounts included as Seller Expenses.

 

“GAAP” means United States generally accepted accounting principles.

 

“Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs.  For example, the “Governing Documents” of a corporation are its certificate of incorporation and by-laws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership and the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation.

 

“Governmental Entity” means any (i) nation, state, county, city, district or other similar jurisdiction of any nature, (ii) federal, state, local or foreign government, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, commission, bureau, instrumentality, department, official, entity, court, tribunal or judicial or arbitral body), or (iv) body or other Person (including, without limitation, accreditation agencies or licensure boards) entitled by applicable law to exercise any arbitrative, administrative, executive, judicial, legislative, police, regulatory or taxing authority or power.

 

“Group Companies” means, collectively, the Company and each of its Subsidiaries.

 

“Hazardous Materials” shall mean (i) those substances, materials or wastes defined as toxic, hazardous, acutely hazardous, pollutants or contaminants, in, or regulated (due to their dangerous or deleterious characteristics) under the following federal statutes and any analogous

 

6

 

state statutes, and all regulations thereunder:  the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide Act and the Clean Air Act, (ii) petroleum or any derivative or by-product thereof, (iii) natural gas, synthetic gas, and any mixtures thereof, (iv) asbestos and asbestos-containing materials, radioactive materials, urea formaldehyde foam insulation, and polychlorinated biphenyls and (v) any other substance, material or waste regulated as “toxic”, “hazardous”, “acutely hazardous”, a “pollutant”, or a “contaminant” pursuant to Environmental Law, including, for the avoidance of doubt, medical waste, as such a term is defined in the Medical Waste Tracking Act of 1988, which includes any solid waste that is generated in the diagnosis, treatment, or immunization of human beings or animals, in research pertaining thereto, or in the production or testing of biologicals.

 

“Healthcare Law(s)” means (i) all laws and regulations applicable to Medicare and applicable State Medicaid Programs, (ii) the Federal Anti-kickback Statute, (iii) the Federal Stark Law, (iv) the Civil False Claims Act (31 U.S.C. §§ 3729 et seq.), (v) the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), (vi) the Anti-Inducement Law (42 U.S.C. § 1320a-7a(a)(5)), (vii) the Medicare and Medicaid Patient and Program Protection Act of 1987 (42 U.S.C. Section 1320a 7b), (viii) HIPAA, (ix) the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. § 3801 et seq.), (x) TRICARE Laws (10 U.S.C. § 1071 et seq.), (xi) any comparable self-referral, false claims or fraud and abuse laws, directives and regulations promulgated by any state agency, (xii) any regulations thereunder promulgated by the U.S. Department of Health and Human Services or any applicable state agency relating to the foregoing, (xiii) any other federal or state law or regulation of general applicability to health care fraud and kickback/fee-splitting prohibitions governing or regulating the delivery of health care services and management of health care providers, or regulating medical billing or reimbursement, including but not limited to all applicable Medicare and Medicaid statutes and regulations and (xiv) the regulations promulgated pursuant to such laws, all to the extent applicable to any Group Company.

 

“HIPAA” means the Administrative Simplification provisions of the U.S. Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.), as amended by the Health Information Technology for Economic and Clinical Health Act (42 U.S.C. Section 17921 et seq.), and the regulations promulgated thereunder and any state or local counterpart thereof or other law or regulation the purpose of which is to protect the privacy of individually-identifiable or prescriber-identifiable information.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

“Indebtedness” means, as of any time, without duplication, (i) Funded Indebtedness, (ii) all obligations of the type referred to in the definition of “Funded Indebtedness” of any Person other than any Group Company the payment of which any Group Company is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including any guarantee of such obligations (other than obligations of the Company in respect of any of its Subsidiaries and obligations of any Subsidiary in respect of any other Subsidiary), (iii) any capitalized lease obligations of any Group Company as determined in accordance with GAAP using the Accounting Principles, (iv) breakage costs payable upon termination on the Closing Date of any

 

7

 

obligations of any Group Company under interest rate swap, currency swap, forward currency or interest rate contracts or other interest rate or currency hedging arrangements, (v) the deferred purchase price of property or services (including any earn-out obligations whether or not contingent and regardless of when due, but excluding any trade payables and accrued expenses arising in the ordinary course of business) of any Group Company, (vi) all outstanding reimbursement obligations in respect of drawn letters of credit issued for the account of any Group Company (but for the avoidance of doubt excluding any obligations in respect of undrawn letters of credit), (vii) any unfunded liability under any Employee Benefit Plan (or related trust) and (viii) the Closing Date Tax-Adjusted Settlement Agreement Obligations, in each case, outstanding as of such time.  For the avoidance of doubt “Indebtedness” shall not include any item that would otherwise constitute “Indebtedness” that is an obligation between the Company and any Subsidiary of the Company or between any two Subsidiaries of the Company.

 

“Intellectual Property Rights” means all (i) patents and patent applications, together with all reissuances, continuations, continuations-in-part, revisions, extensions, reexaminations and improvements thereof, (ii) trademarks, service marks, trade dress, trade names, logos, slogans and corporate names, Internet domain names, and all registrations and applications for registration of the foregoing, together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software (including, but not limited to, source code, object code, data, databases and documentation) and (vi) technology, inventions, know-how, proprietary methods and processes and trade secrets.

 

“Latest Balance Sheet” has the meaning set forth in Section 3.4(b).

 

“Latest Balance Sheet Date” means March 31, 2014.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge.  For the avoidance of doubt, the term “Lien” shall not be deemed to include any license of Intellectual Property Rights.

 

“Loss” means any damages, losses, liabilities, obligations, claims of any kind, interest or expenses (including reasonable attorneys’ fees and expenses).

 

“Made Available” means posted to the Project Sigma data room on Intralinks.com and made accessible to Buyer and its representatives at least two Business Days prior to the Closing Date or otherwise delivered to Buyer in person, by facsimile or E-mail in accordance with Section 10.2.

 

“Material Contracts” has the meaning set forth in Section 3.6(a).

 

“Material Hospital Client” has the meaning set forth in Section 3.19.

 

“Material Lease” has the meaning set forth in Section 3.17(a).

 

“Material Permit” has the meaning set forth in Section 3.9.

 

8

 

“Multiemployer Plan” has the meaning set forth in Section 3(37) of ERISA.

 

“Net Working Capital” means, with respect to the Group Companies, the aggregate value of the current assets of the Group Companies less the aggregate value of the current liabilities of the Group Companies, in each case, determined on a consolidated basis without duplication, as of the close of business on the Business Day immediately preceding the Closing Date and calculated in accordance with GAAP using the Accounting Principles and (i) including only current assets and current liabilities of the type and kind included in the Example Statement of Net Working Capital, and (ii) establishing levels of reserves and materiality using the same principles, practices, methodologies and procedures and in the same manner as such levels were established in preparing the Example Statement of Net Working Capital). Notwithstanding anything to the contrary contained herein, “Net Working Capital” shall (A) include Tax assets and liabilities (other than any deferred Tax assets or liabilities) and (B) exclude any amounts with respect to (x) Cash and Cash Equivalents, Seller Expenses or Indebtedness and (y) the “tail” policy pursuant to and in accordance with Section 6.5(c).

 

“Net Working Capital Adjustment” means (i) the amount by which Net Working Capital exceeds the Target Net Working Capital or (ii) the amount by which Net Working Capital is less than the Target Net Working Capital, in each case, if applicable; provided that any amount which is calculated pursuant to clause (ii) above shall be deemed to be and expressed as a negative number.

 

“New Plans” has the meaning set forth in Section 6.9.

 

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

 

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

 

“Permitted Liens” means (a) mechanic’s, materialmen’s, carriers’, repairers’ and other Liens arising or incurred in the ordinary course of business for amounts that are not yet delinquent or are being contested in good faith, (b) Liens for Taxes, assessments or other governmental charges not yet due and payable as of the Closing Date or which are being contested in good faith, (c) encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record) that do not materially interfere with the Group Companies’ present uses or occupancy of such real property, (d) Liens securing the obligations of the Group Companies under the Credit Facilities, (e) Liens which would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole, (f) Liens granted to any lender at the Closing in connection with any financing by Buyer of the transactions contemplated hereby, (g) zoning, building codes and other land use laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Entity having jurisdiction over such real property and which are not violated by the current use or occupancy of such real property or the operation of the businesses of the Group Companies or any violation of which would not, individually or in the aggregate, have a Company Material Adverse Effect, (h) matters that would be disclosed by an accurate survey or inspection of the real property and (i) Liens described on Schedule 1.1(i).

 

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“Permitted Share Liens” means the Permitted Liens described in clauses (b), (d) and (f) of the definition thereof and any Liens arising under applicable securities laws; provided, however, the Permitted Liens described in clause (d) of the definition thereof shall only constitute Permitted Share Liens prior to Closing.

 

“Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other similar entity, whether or not a legal entity.

 

“Per Share Price” means (i) the difference of the Estimated Purchase Price less the Escrow Amount divided by (ii) the number of issued and outstanding Shares as of immediately prior to the Distribution.

 

“Proceeding” has the meaning set forth in Section 3.8.

 

“Programs” has the meaning set forth in Section 3.21(c).

 

“Proposed Closing Date Calculations” has the meaning set forth in Section 2.4(b)(i).

 

“Purchase Price” means (i) the Enterprise Value, plus (ii) the Net Working Capital Adjustment (which may be a negative number), plus (iii) the amount of Cash and Cash Equivalents, minus (iv) the amount of Closing Date Indebtedness, minus (v) the amount of Unpaid Seller Expenses.

 

“Purchase Price Dispute Notice” has the meaning set forth in Section 2.4(b)(ii).

 

“Purchased Shares” means (i) 100 Shares less (ii) the aggregate number of Rollover Shares less (iii) the aggregate number of Contributed Shares.

 

“Review Period” has the meaning set forth in Section 2.4(b)(ii).

 

“Rolled Value” has the meaning, with respect to each Rollover Equityholder, set forth in such Rollover Equityholder’s Rollover Agreement.

 

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

 

“Rollover Agreement” means, for each Rollover Equityholder, that certain Rollover Agreement, by and between such Rollover Equityholder and Buyer, pursuant to which such Rollover Equityholder and Buyer shall consummate the Rollover.

 

“Rollover Certificate” has the meaning set forth in Section 2.4(a).

 

“Rollover Equity Agreements” means, collectively, a securityholders agreement and amended and restated limited liability company agreement of Buyer in substantially the forms attached hereto as Exhibit F.

 

“Rollover Equityholders” collectively, means all of the equityholders of Seller that have executed a Rollover Agreement with Buyer prior to the Closing (and as shall be set forth in the

 

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Rollover Certificate), including those set forth on Schedule 1.1(ii), each of whom has entered into a Rollover Agreement as of the date hereof.

 

“Rollover Shares” means, with respect to each Rollover Equityholder, the Shares such Rollover Equityholder is contributing to Buyer pursuant to such Rollover Equityholder’s Rollover Agreement.

 

“Schedules” has the meaning set forth in Section 6.11.

 

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

 

“Seller Expenses” means, without duplication, the aggregate amount due and payable by the Group Companies as of immediately prior to the Closing (or which becomes due and payable as a result of the Closing other than as a result of any action taken by Buyer or any Group Company from and after the Closing) for all out-of-pocket costs and expenses incurred by any of the Group Companies or by or on behalf of Seller (to the extent such amounts are a liability of any Group Company) in the preparation, negotiation and/or consummation of the transactions contemplated by this Agreement; provided, however, that “Seller Expenses” shall exclude any amounts payable by any of the Group Companies in connection with the “tail” policy pursuant to and in accordance with Section 6.5(c).

 

“Seller Operating Agreement” means that certain limited liability company agreement of Sound Inpatient Holdings, LLC (f/k/a Excelsis Holdings, LLC and f/k/a Hospitalist Holdings, LLC), dated as of July 12, 2005, as amended by that certain First Amendment, dated as of February 15, 2006, as amended by that certain Second Amendment, dated as of February 15, 2007, as amended by that certain Third Amendment, dated as of November 16, 2011, as amended by that certain Fourth Amendment, dated as of May 9, 2012, as amended by that certain Fifth Amendment, dated as of October 17, 2013, as amended by that certain Sixth Amendment, dated as of June 12, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time in a manner that would not have an adverse effect on any Person’s ability to consummate the transactions contemplated hereby).

 

“Settlement Agreement” means that certain Settlement Agreement, dated [*], by and among the Company, [*].

 

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

 

“Solvent” when used with respect to any Person or group of Persons on a combined basis, means that, as of any date of determination, (A) the amount of the “fair saleable value” of the assets of such Person (or group of Persons on a combined basis) will, as of such date, exceed (1) the value of all “liabilities of such Person, including contingent and other liabilities,” as of such date, as such quoted terms are generally determined in accordance with applicable laws governing determinations of the insolvency of debtors, and (2) the amount that will be required to pay the probable liabilities of such Person (or group of Persons on a combined basis) on its existing debts (including contingent liabilities) as such debts become absolute and matured, (B) such Person (or group of Persons on a combined basis) will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date and (C) such Person (or group of Persons on a

 

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combined basis) will be able to pay its liabilities, including contingent and other liabilities, as they mature.

 

“Subsidiary” means, with respect to any Person, any corporation, company, limited liability company, partnership, association, or other business entity of which (i) if a corporation or a company, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation or a company), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation or a company) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be a, or control any, managing director, member or general partner of such business entity (other than a corporation or a company).  The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.  Notwithstanding anything in this definition or this Agreement to the contrary, (i) each of the entities listed on Schedule 3.2(b) is a Subsidiary of the Company for all purposes of this Agreement, and (ii) no Group Company has any direct or indirect Subsidiaries other than the entities listed on Schedule 3.2(b).

 

“Target Net Working Capital” means [*].

 

“Tax” means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, windfall profits, environmental (under Section 59A of the Code), customs, duties, real property, personal property, capital stock, social security (or similar), employment, unemployment, disability, payroll, license, employee or other withholding, abandoned property or escheat payment, or other tax, of any kind whatsoever and any interest, penalties or additions to tax in respect of the foregoing (whether disputed or not).

 

“Tax Return” has the meaning set forth in Section 3.15(a).

 

“Termination Date” has the meaning set forth in Section 8.1(d).

 

“TowerBrook Restrictive Agreement” means an agreement to be entered into by and between Buyer and certain Affiliates of Seller, substantially in the form attached hereto as Exhibit C.

 

“Transaction Documents” means, collectively, this Agreement, the Escrow Agreement, the TowerBrook Restrictive Agreement, each Employee Restrictive Agreement and each Employment Agreement Amendment.

 

“Unaudited Financial Statements” has the meaning set forth in Section 3.4(b).

 

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“Unpaid Seller Expenses” means the aggregate amount of Seller Expenses incurred and unpaid as of immediately prior to the Closing.

 

“Update” has the meaning set forth in Section 6.11.

 

Section 1.2            Interpretation.  Unless otherwise indicated to the contrary herein by the context or use thereof: (i) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedules and Exhibits, and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement; (ii) masculine gender shall also include the feminine and neutral genders, and vice versa; (iii) words importing the singular shall also include the plural, and vice versa; (iv) the words “include”, “includes” or “including” shall be deemed to be followed by the words “without limitation”; (v) the words “party” or “parties” shall refer to parties to this Agreement; (vi) all references to Articles, Sections, Exhibits or Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement; (vii) the word “or” is disjunctive but not necessarily exclusive; (viii) terms used herein that are not defined herein but are defined in GAAP have the meanings ascribed to them therein; (ix) the words “writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (x) references to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; (xi) references to any Person include the successors and permitted assigns of that Person; (xii) references from or through any date mean, unless otherwise specified, from and including or through and including, respectively; (xiii) the words “dollar” or “$” shall mean U.S. dollars; and (ix) the word “day” means calendar day unless Business Day is expressly specified.  If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on the first succeeding Business Day thereafter.

 

ARTICLE II
 PURCHASE AND SALE

 

Section 2.1            Purchase and Sale of the Purchased Shares; Contribution of Contributed Shares.  Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer will purchase, acquire and accept from Seller, and Seller will sell, assign, transfer, convey and deliver to Buyer, the Purchased Shares free and clear of all Liens (other than Permitted Share Liens).  Upon the terms and subject to the conditions set forth in this Agreement, at the Closing and contemporaneously with the acquisition of the Purchased Shares, Seller will assign, transfer, convey and deliver to Buyer, and Buyer will accept from Seller, the Contributed Shares free and clear of all Liens (other than Permitted Share Liens).

 

Section 2.2            Closing of the Transactions Contemplated by this Agreement.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at 10:00 a.m., New York time, on a date to be specified by the Parties, which shall be no later than the second Business Day after the later to occur of (x) satisfaction (or waiver) of the conditions set forth in ARTICLE VII (other than those conditions which are to be satisfied by the delivery of documents or taking of any other action at the Closing by any Party) and (y) the Cut-

 

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Off Time (such date, as applicable, the “Closing Date”), at the offices of Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022, unless another time, date or place is agreed to in writing by Buyer and Seller.

 

Section 2.3            Deliveries at the Closing.

 

(a)           Deliveries by Seller.  At the Closing, Seller shall deliver to Buyer all certificate(s) representing the Contributed Shares and the Purchased Shares, duly endorsed in blank or accompanied by any other proper instrument of assignment endorsed in blank in proper form for transfer.

 

(b)           Deliveries by Buyer.  At the Closing, Buyer shall (a) pay (i) the Estimated Purchase Price, (ii) the portion of the Closing Date Indebtedness that is Funded Indebtedness and (iii) the Unpaid Seller Expenses that were deducted in the calculation of the Estimated Purchase Price, in each case, in accordance with the provisions set forth in Section 2.4 and (b) transfer, convey and deliver to Seller certificates representing the Contributed Share Consideration, duly endorsed in blank or accompanied by any other proper instrument of assignment endorsed in blank in proper form for transfer, which Contributed Share Consideration shall be delivered free and clear of all Liens (other than Liens arising under the Rollover Equity Agreements).

 

(c)           Other Deliveries.  The closing certificates and other documents required to be delivered pursuant to this Agreement with respect to the Closing pursuant to ARTICLE VII will be exchanged.

 

Section 2.4            Purchase Price.

 

(a)           Estimated Purchase Price and Closing Date Payments.  No later than two Business Days prior to the Closing, Seller shall deliver to Buyer a calculation with reasonable detail of the Estimated Purchase Price (the “Estimated Purchase Price Calculation”), which Estimated Purchase Price Calculation shall include (x) the Per Share Price and (y), with respect to each equityholder of Seller, the portion of the Estimated Purchase Price (less the Escrow Amount) that each such equityholder of Seller would be entitled to receive at the Closing pursuant to the Seller Operating Agreement absent the consummation of the Distribution and the Rollover and assuming for such purposes that Seller were to distribute the full amount of such Estimated Purchase Price.  Within one Business Day after Buyer’s receipt of the Estimated Purchase Price Calculation, Buyer shall deliver to Seller a certificate, setting forth (i) the name of each Rollover Equityholder, (ii) the number of Rollover Shares with respect to each Rollover Equityholder (and the aggregate number of Rollover Shares with respect to all Rollover Equityholders) and (iii) the Rolled Value with respect to each Rollover Equityholder (and the aggregate Rolled Value with respect to all Rollover Equityholders), in the case of clauses (ii) and (iii), based on the Estimated Purchase Price Calculations (the “Rollover Certificate”).

 

(i)                At the Closing, Buyer shall pay, or shall cause the Company to pay, in cash by wire transfer of immediately available funds, the Estimated Purchase Price as follows:

 

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(A)  [*] of cash (such amount, the “Escrow Amount”) shall be deposited into an escrow account (the “Escrow Account”), which shall be established pursuant to an escrow agreement (the “Escrow Agreement”), which Escrow Agreement shall be (x) entered into on the Closing Date by and among Seller, the Company, Buyer and Continental Stock Transfer & Trust Company (the “Escrow Agent”) as security for the Seller’s obligations pursuant to Section 2.4(c) and (y) substantially in the form of Exhibit B attached hereto;

 

(B)  to Seller, an amount equal to (w) the Estimated Purchase Price, minus (x) the Escrow Amount, minus (y) the aggregate Rolled Value of all of the Rollover Equityholders, minus (z) the Contributed Share Value.

 

(ii)               At the Closing, Buyer shall pay, or cause the Company to pay, in cash by wire transfer of immediately available funds, on behalf of Seller and the Group Companies, (x) the portion of the Closing Date Indebtedness that is Funded Indebtedness and (y) the Unpaid Seller Expenses that were deducted in the calculation of the Estimated Purchase Price, each in accordance with the Debt Payoff Letters, invoices or other documents evidencing such amounts delivered to Buyer at least two Business Days prior to the Closing Date.

 

(b)         Determination of the Final Purchase Price.

 

(i)                As soon as practicable, but no later than 60 days after the Closing Date, Buyer shall prepare and deliver to Seller, Buyer’s good faith (A) calculation of the Net Working Capital (and the related Net Working Capital Adjustment, if any), (B) calculation of the amount of Cash and Cash Equivalents, (C) calculation of the amount of Closing Date Indebtedness, (D) calculation of the amount of Unpaid Seller Expenses, and (E) calculation of the Purchase Price, and, in each case, the components thereof and in a manner consistent with the definitions thereof.  The calculations described in the previous sentence shall collectively be referred to herein from time to time as the “Proposed Closing Date Calculations”.  Buyer agrees to prepare the Proposed Closing Date Calculations in accordance with GAAP using the Accounting Principles, and, except with respect to any changes required by an underlying material change in facts or circumstances, Buyer shall not make any changes to the assumptions underlying the Accounting Principles (including levels of reserves used by the Group Companies with respect thereto).

 

(ii)               Seller shall have 30 days following receipt of the Proposed Closing Date Calculations to review such calculations (the “Review Period”).  Seller may, on or prior to the last day of the Review Period, give to Buyer written notice of dispute, which sets forth in reasonable detail its objections to Buyer’s calculation of the Proposed Closing Date Calculations (a “Purchase Price Dispute Notice”).  Unless Seller delivers a Purchase Price Dispute Notice to Buyer on or before the last day of the Review Period, Seller and the other Parties agree that the Proposed Closing Date Calculations shall be deemed to set forth the final Net Working Capital (and the related Net Working Capital Adjustment, if any), Cash and Cash Equivalents, Closing Date Indebtedness, Unpaid Seller

 

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Expenses and the Purchase Price, in each case, for all purposes hereunder (including the determination of the Actual Adjustment).  Prior to the end of the Review Period, Seller may accept the Proposed Closing Date Calculations by delivering written notice to that effect to Buyer, in which case the Purchase Price will be finally determined when such notice is given.  If Seller gives a Purchase Price Dispute Notice to Buyer on or prior to the last day of the Review Period, Buyer and Seller shall use commercially reasonable efforts to resolve any disputes set forth in the Purchase Price Dispute Notice in good faith during the 30-day period commencing on the date Buyer receives the applicable Purchase Price Dispute Notice from Seller.  The parties hereto acknowledge and agree that the Federal Rules of Evidence Rule 408 shall apply to Buyer and Seller during such 30-day period of negotiations and any subsequent dispute arising therefrom.  If Seller and Buyer do not agree upon a final resolution with respect to any disputed items set forth in the Purchase Price Dispute Notice within such 30-day period, then the remaining items in dispute shall be submitted promptly by Buyer and Seller to an independent accounting firm of national reputation mutually acceptable to Buyer and Seller (the “Accounting Firm”).  The Accounting Firm shall be requested to render a written determination of the applicable dispute (acting as an expert and not as an arbitrator) within 45 days after referral of the matter to such Accounting Firm, which determination must be in writing and must set forth, in reasonable detail, the basis therefor and must be based solely on (i) the definitions and other applicable provisions of this Agreement, (ii) a single presentation (which presentations shall be limited to the remaining items in dispute set forth in the Proposed Closing Date Calculations and Purchase Price Dispute Notice) submitted by each of Buyer and Seller to the Accounting Firm within 15 days after the engagement thereof (which the Accounting Firm shall forward to the other Party) and (iii) one written response submitted to the Accounting Firm within 5 Business Days after receipt of each such presentation (which the Accounting Firm shall forward to the other Party), and not on independent review, which such determination shall be conclusive and binding on Buyer and Seller. The terms of appointment and engagement of the Accounting Firm shall be as reasonably agreed upon between Seller and Buyer, and any associated engagement fees shall initially be borne 50% by Seller and 50% by Buyer; provided that such fees shall ultimately be borne by Seller and Buyer in the same proportion as the aggregate amount of the disputed items that is unsuccessfully disputed by each such party (as determined by the Accounting Firm) bears to the total amount of the disputed items submitted to the Accounting Firm.  Except as provided in the preceding sentence, all other costs and expenses incurred by the Parties in connection with resolving any dispute hereunder before the Accounting Firm shall be borne by the Party incurring such cost and expense.  The Accounting Firm shall resolve each disputed item by choosing a value not in excess of, nor less than, the greatest or lowest value, respectively, set forth in the presentations (and, if applicable, the responses) delivered to the Accounting Firm pursuant to this Section 2.4(b)(ii).  Such determination of the Accounting Firm shall be conclusive and binding upon the Parties absent fraud or manifest error. The Proposed Closing Date Calculations shall be revised as appropriate to reflect the resolution of any objections thereto pursuant to this Section 2.4(b)(ii), and, as so revised, such Proposed Closing Date Calculations shall be deemed to set forth the final Net Working Capital, Cash and Cash Equivalents, Closing Date Indebtedness, Unpaid Seller Expenses and Purchase Price, in each case, for all purposes hereunder (including the determination of the Actual Adjustment).

 

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(iii)              Buyer shall, and shall cause each Group Company to, promptly make such Group Company’s financial records, supporting documents and work papers and personnel available to Seller and its accountants and other representatives (including the Accounting Firm) at reasonable times during the review by Seller of, and the resolution of any objections with respect to, the Proposed Closing Date Calculations.

 

(iv)              Buyer and Seller agree that the procedures set forth in this Section 2.4 for resolving disputes with respect to the Proposed Closing Date Calculations shall be the sole and exclusive method for resolving any such disputes; provided, that this provision shall not prohibit either Party from instituting litigation to enforce any final determination of the Purchase Price by the Accounting Firm pursuant to Section 2.4(b)(ii) in any court of competent jurisdiction in accordance with Section 10.13.  The substance of the Accounting Firm’s determination shall not be subject to review or appeal, absent a showing of fraud or manifest error.  It is the intent of the Parties to have any final determination of the Purchase Price by the Accounting Firm proceed in an expeditious manner; however, any deadline or time period contained herein may be extended or modified by the written agreement of the Parties and the Parties agree that the failure of the Accounting Firm to strictly conform to any deadline or time period contained herein shall not be a basis for seeking to overturn any determination rendered by the Accounting Firm which otherwise conforms to the terms of this Section 2.4.

 

(c)           Adjustment to Estimated Purchase Price.

 

(i)                If the Actual Adjustment is a positive amount, Buyer shall pay, or shall cause the Company to pay, to Seller an amount equal to such positive amount by wire transfer of immediately available funds, in each case, within three (3) Business Days after the date on which the Purchase Price is finally determined pursuant to Section 2.4(b) above, and the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver to Seller the Escrow Funds.

 

(ii)               If the Actual Adjustment is a negative amount, then within three (3) Business Days after the date on which the Purchase Price is finally determined pursuant to Section 2.4(b), the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver to the Company an amount equal to the absolute value of such negative amount from the Escrow Funds; provided that (A) if the Actual Adjustment is a negative amount the absolute value of which is less than the amount of the Escrow Funds, then simultaneously with the delivery of such joint written instructions, the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release any of the remaining Escrow Funds to Seller, and (B) if the Actual Adjustment is a negative amount the absolute value of which is greater than the amount of Escrow Funds, in addition to the release of Escrowed Funds described in clause (A) of this Section 2.4(c)(ii), Seller shall pay to Buyer an amount equal to such excess.

 

(iii)              Any amounts which become payable pursuant to this Section 2.4(c) will constitute an adjustment to the Purchase Price for all purposes hereunder.

 

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ARTICLE III
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to Buyer as follows:

 

Section 3.1            Organization and Qualification; Subsidiaries.

 

(a)           The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.  Each Subsidiary of the Company is a corporation, partnership, limited liability company or other business entity, as the case may be, duly organized, validly existing and in good standing (or the equivalent thereof) under the laws of its respective jurisdiction of formation, except where the failure to be so organized, validly existing and in good standing (or the equivalent thereof) would not have a Company Material Adverse Effect.  Each Group Company has the requisite corporate, partnership, limited liability company or other applicable power and authority to own, lease and operate its material assets and properties and to carry on its businesses as presently conducted, except where the failure to have such power or authority would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.

 

(b)           Schedule 3.1(i) sets forth the jurisdictions in which each Group Company is qualified or licensed to transact business.  Except as set forth on Schedule 3.1(ii), each Group Company is duly qualified or licensed to transact business and is in good standing (or the equivalent thereof) in each jurisdiction in which the property owned, leased or operated by it, or the nature of the business conducted by it, makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not have a Company Material Adverse Effect.

 

Section 3.2            Capitalization of the Group Companies.

 

(a)           The Shares comprise all of the Company’s authorized equity interests that are issued and outstanding.  As of the date hereof and as of immediately prior to the Distribution, the Shares are held beneficially and of record by Seller free and clear of any Liens (other than Permitted Share Liens).  Immediately following the consummation of the Distribution through and until immediately prior to the Closing, Seller will hold beneficially and of record all of the issued and outstanding Purchased Shares and the Contributed Shares free and clear of any Liens (other than Permitted Share Liens). As a result of the Distribution, Seller will deliver to each Rollover Equityholder good and valid title to all of the issued and outstanding Rollover Shares distributed to such Rollover Equityholder in the Distribution free and clear of any Liens (other than Permitted Share Liens).  The Shares have been duly authorized and validly issued and are fully paid and non-assessable.  Except for the Shares, there are no outstanding (i) equity securities of the Company, (ii) securities of the Company convertible into or exchangeable for, at any time, equity securities of the Company and (iii) rights to acquire from the Company and no obligations of the Company to issue, any equity securities or securities convertible into or exchangeable for equity securities of the Company.

 

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(b)           Except as set forth on Schedule 3.2(b), no Group Company directly or indirectly owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, at any time, any equity or similar interest in, any corporation, partnership, limited liability company, joint venture or other business association or entity.  Except as set forth on Schedule 3.2(b), all outstanding equity securities of each Subsidiary of the Company (i) (except to the extent such concepts are not applicable under the applicable law of such Subsidiary’s jurisdiction of formation or other applicable law) have been duly authorized and validly issued, are, to the extent applicable, fully paid and non-assessable, are free and clear of any Liens (other than Permitted Liens) and (ii) are owned, beneficially and of record, by the Group Companies listed on Schedule 3.2(b).  Except as set forth on Schedule 3.2(b), there are no outstanding (i) equity securities of any Subsidiary of the Company, (ii) securities of any Subsidiary of the Company convertible into or exchangeable for, at any time, equity securities of any Subsidiary of the Company, and (iii) rights to acquire from any Subsidiary of the Company, and no obligation of any Subsidiary of the Company to issue, any equity securities or securities convertible into or exchangeable for, at any time, equity securities of any Subsidiary of the Company.

 

Section 3.3            Authority.  The Company has the requisite corporate power and authority to execute and deliver each Transaction Document to which it is a party and to consummate the transactions contemplated thereby.  The execution and delivery of each Transaction Document to which it is a party and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of the Company.  Each Transaction Document to which it is a party has been duly executed and delivered by the Company and constitutes a valid, legal and binding agreement of the Company (assuming that each such Transaction Document has been duly and validly authorized, executed and delivered by the other parties thereto), enforceable against the Company in accordance with its terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.  Each Transaction Document to be executed and delivered at Closing by each other Group Company will, at Closing, constitute a valid, legal and binding agreement of such Group Company (assuming that each such Transaction Document has been duly and validly authorized, executed and delivered by the other parties thereto), enforceable against such Group Company in accordance with its terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

 

Section 3.4            Financial Statements.  Attached hereto as Schedule 3.4 are true and complete copies of the following financial statements (such financial statements, collectively, the “Financial Statements”):

 

(a)           the audited consolidated balance sheet of Seller as of December 31, 2012 and December 31, 2013 and the related audited consolidated statements of income and cash flows for the respective periods then ended; and

 

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(b)           the unaudited consolidated balance sheet of Seller as of the Latest Balance Sheet Date (the “Latest Balance Sheet”) and the related unaudited consolidated statements of income and cash flows for the 3-month period then ended (collectively, the “Unaudited Financial Statements”).

 

(c)           Except as set forth on Schedule 3.4, the Financial Statements (x) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, except as may be indicated in the notes thereto and except, in the case of Unaudited Financial Statements, for the absence of footnotes and subject to year-end adjustments, and (y) fairly present, in all material respects, the consolidated financial position of the Group Companies as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in the case of the Unaudited Financial Statements, to the absence of customary footnotes and to normal year-end adjustments).

 

(d)           The minutes and stock records of the Group Companies from the past two years have been Made Available to Buyer, are true and correct in all material respects and have been maintained in accordance with customary business practices.  Such minutes contain accurate and complete records of all meetings, and actions taken by written consent of, the equityholders, the board of directors and any committees of the board of directors (or analogous governing body) of the Group Companies for the periods covered thereby.  At the Closing, all of those books and records will be in the possession of the Group Companies.

 

Section 3.5            Consents and Approvals; No Violations.  Except as set forth on Schedule 3.5, assuming the truth and accuracy of the representations and warranties of Buyer set forth in Section 5.4, no notice to, filing with, or authorization, consent or approval of any Governmental Entity is necessary for the execution, delivery or performance of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, except for (i) compliance with and filings under the HSR Act, (ii) those the failure of which to obtain or make would not, individually or in the aggregate, have a Company Material Adverse Effect, and (iii) those that may be required solely by reason of Buyer’s (as opposed to any other third party’s) participation in the transactions contemplated hereby.  Neither the execution, delivery and performance by the Company of any Transaction Document to which it is a party nor the consummation by the Company of the transactions contemplated thereby will (a) conflict with or result in any breach of any provision of the Governing Documents of any Group Company (true and correct copies of which have been Made Available to Buyer), (b) except as set forth on Schedule 3.5, result in a violation or breach of, or cause acceleration, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any Material Contract, Material Permit, Material Lease or Employee Benefits Plans (and related trust documents) to which any Group Company is a party, (c) violate any order, writ, injunction, decree, law, statute, rule or regulation of any Governmental Entity having jurisdiction over any Group Company or any of their respective material properties or assets, (d) except as contemplated by this Agreement or with respect to Permitted Liens, result in the creation of any Lien upon any of the material assets of any Group Company, or (e) give rise to any payment or compensation to any employee or other service provider to the Group Companies, which in the case of any of clauses (b) and (d) above, would, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise

 

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materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.

 

Section 3.6            Material Contracts.

 

(a)           Except as set forth on Schedule 3.6(a) (collectively, the “Material Contracts”) and except for this Agreement and any Material Lease, as of the date of this Agreement, no Group Company is a party to or bound by any:

 

(i)                contract for the employment or engagement of any individual on a full-time, part-time, consulting or other basis providing annual base salary in excess of [*] (other than any “at will” contract that may be terminated by any Group Company upon 30 days or less advance notice or any contract with a physician serving primarily in the role of a clinician or any regional medical officer, regional medical director or chief hospitalist);

 

(ii)               contract for the employment or engagement of any of regional CMO;

 

(iii)              agreement or indenture relating to Indebtedness for an amount in excess of [*];

 

(iv)              lease or agreement under which any Group Company is lessee of or holds or operates, in each case, any tangible property (other than real property), owned by any other Person, except for any lease or agreement under which the aggregate annual rental payments do not exceed [*];

 

(v)               lease or agreement under which any Group Company is lessor of or permits any third party to hold or operate, in each case, any tangible property (other than real property), owned or controlled by any Group Company, except for any lease or agreement under which the aggregate annual rental payments do not exceed [*];

 

(vi)              partnership agreements, management services agreements, joint venture agreements or other similar agreements relating to any of the Group Companies or to which any of the Group Companies is a party;

 

(vii)             agreement, contract or commitment prohibiting any Group Company from freely engaging in any material line of business (including, without limitation, the hospitalist, locum tenens, accountable care organization services and post-acute care businesses) or competing anywhere in the world to the extent such restriction would materially and adversely affect the operations of the business of such Group Company;

 

(viii)            contract that relates to the future disposition or acquisition of material assets or properties by any Group Company, or any merger or business combination with respect to any Group Company;

 

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(ix)              contract with any Material Hospital Client;

 

(x)               contract with any of the [*] largest third-party payors (based on consolidated net sales) of the Group Companies on a consolidated basis for the 12-month period ended December 31, 2013;

 

(xi)              agreements providing for registration rights with respect to the equity or debt securities of any Group Company;

 

(xii)             material inbound or outbound software license agreements (other than agreements for commercially available software);

 

(xiii)            any other agreements (other than those of the types of agreements generally specified in clauses (i) through (xii) above (without regard to the materiality or other qualifications contained therein)) involving payments by or to any Group Company in excess of [*] during the 2014 calendar year or any subsequent calendar year;

 

(xiv)            contracts that are Governing Documents of any Group Company and any material agreements between the Company and any other Group Company;

 

(xv)             agreements between or among owners of any Group Company, on the one hand, and such Group Company, on the other hand; or

 

(xvi)            agreements other than those disclosed pursuant to clauses (i) through (xv) above, the breach or termination of which would cause a Company Material Adverse Effect.

 

(b)           Each Material Contract is valid and binding on the applicable Group Company and enforceable in accordance with its terms against such Group Company (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity) and, to the Company’s Knowledge, the other parties thereto.  During the period beginning on January 1, 2014 and ending on the date of this Agreement, no Group Company has received written notice of any default under any Material Contract, except for defaults that would not, individually or in the aggregate, have a Company Material Adverse Effect.  To the Company’s Knowledge, as of the date hereof, none of the other parties to any Material Contract are in material breach thereof, except for defaults that would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

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Section 3.7            Absence of Changes.  Except as set forth on Schedule 3.7, during the period beginning on the date of the Latest Balance Sheet and ending on the date of this Agreement, there has not been any Company Material Adverse Effect and each Group Company has conducted its business in the ordinary course and in substantially the same manner heretofore conducted (including any conduct that is reasonably related, complementary or incidental thereto) and no Group Company has:

 

(a)           issued any notes, bonds or other debt securities or any capital stock or other equity securities or any securities convertible, exchangeable or exercisable into any capital stock or other equity securities;

 

(b)           borrowed any amount or incurred or become subject to any material liabilities except current liabilities which have a maturity of less than one year and which have been incurred in the ordinary course of business and liabilities under contracts entered into in the ordinary course of business;

 

(c)           discharged or satisfied any Lien or paid any material obligation or current liability, other than liabilities paid in the ordinary course of business consistent with past practice;

 

(d)           declared, set aside or made any payment or distribution of cash or other property to its stockholders or equityholders (other than to any Group Company) with respect to its capital stock or other equity securities or purchased or redeemed any shares of its capital stock or other equity securities (including, without limitation, any warrants, options or other rights to acquire its capital stock or other equity securities);

 

(e)           mortgaged or pledged any of its properties or assets (tangible or intangible) or subjected them to any Lien, except to the extent such mortgage or pledge results in a Permitted Lien;

 

(f)            sold, assigned, transferred, leased, licensed or otherwise encumbered any of its tangible or intangible assets, except in the ordinary course of business, or canceled any material debts or claims other than write-offs of accounts receivable in the ordinary course of business;

 

(g)           other than in the ordinary course of business consistent with past practices, sold, assigned, transferred, leased or licensed any material Company Intellectual Property Rights owned by any Group Company;

 

(h)           made any unbudgeted expenditure or commitment (other than capital expenditures or commitments therefor) in excess of [*] or made any capital expenditures or commitments therefor that aggregate in excess of [*];

 

(i)            made any loans or advances to, guarantees for the benefit of, or any investments in, any Persons in excess of [*] in the aggregate;

 

(j)            suffered any damage, destruction or casualty loss exceeding in the aggregate [*], whether or not covered by insurance;

 

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(k)           except as made in the ordinary course of business consistent with past practices or in order to comply with applicable law or an Employee Benefit Plan, Material Contract or other written employment arrangement in existence as of the date hereof (i) made or granted any bonus or any material wage, salary or compensation increase to any director, officer or employee, (ii) made or granted any increase in any Employee Benefit Plan or arrangement, (iii) amended or terminated any existing Employee Benefit Plan or arrangement or (iv) adopted any new Employee Benefit Plan or arrangement;

 

(l)            amended or authorized any amendment to the Governing Documents of any Group Company;

 

(m)          materially changed or authorized any material change in its accounting practices or method of accounting for any items in the preparation of the financial statements of any Group Company;

 

(n)           entered into any settlement, conciliation or similar agreement involving claims not fully covered by insurance in excess of [*] or waived any rights having a value in excess of [*];

 

(o)           entered into, amended or terminated any lease, contract, agreement, commitment or any other transaction with any Person, in each case providing for payments by or to any Group Company in excess of [*] in the aggregate;

 

(p)           materially increased its long term liabilities from those reflected in the Latest Balance Sheet;

 

(q)           suffered any extraordinary losses or waived any rights of material value (whether or not in the ordinary course of business) in excess of [*] in the aggregate or [*] in any one instance;

 

(r)            wrote- off or otherwise reduced the amount of any receivables, except in the ordinary course of business and at levels which are consistent with reserves for uncollectible amounts included in the Latest Balance Sheet;

 

(s)            received any written notice from a Governmental Entity, or otherwise became aware of any information which any Group Company believes may require a recoupment or repayment of amounts collected by a Group Company in excess of [*] in the aggregate or [*] in any one instance, whether or not such recoupment or repayment amount is accrued; or

 

(t)            entered into or approved any contract, arrangement or understanding to do, engage in or cause or having the effects of, any of the foregoing.

 

Buyer acknowledges that the announcement by the Seller of its intention to sell the Company (as well as the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby) might affect one or more of the Group Companies’ customer relationships, and that such effects do not and will not constitute a breach of this Section 3.7.

 

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Section 3.8            Litigation.  Except as set forth on Schedule 3.8(i), as of the date hereof, there are no suits, litigations, arbitrations, actions or proceedings (each a “Proceeding”) pending before any Governmental Entity or, to the Company’s Knowledge, threatened in writing against any Group Company (or, to the Company’s Knowledge, any officer, director, manager, shareholder or member of any Group Company in their respective capacities as such).  Since January 1, 2012 through the date of this Agreement, there is and has not been any Proceeding pending before any Governmental Entity or, to the Company’s Knowledge, threatened in writing against any Group Company (or, to the Company’s Knowledge, any officer, director, manager, shareholder or member of any Group Company in their respective capacities as such) which, individually or in the aggregate, has or would reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.  Except as set forth on Schedule 3.8(ii), as of the date hereof, no Group Company (or, to the Company’s Knowledge, any officer, director, manager, shareholder or member of any Group Company in their respective capacities as such) is subject to any outstanding order, writ, injunction or decree.  Since January 1, 2012 through the date of this Agreement, no Group Company (or, to the Company’s Knowledge, any officer, director, manager, shareholder or member of any Group Company in their respective capacities as such) is or has been subject to any outstanding order, writ, injunction or decree which, individually or in the aggregate, has or would reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.

 

Section 3.9            Compliance with Applicable Law.

 

(a)           Except as set forth on Schedule 3.9(i), the Group Companies hold all permits, licenses, approvals, certificates and other authorizations of and from all, and have made all declarations and filings with, Governmental Entities necessary for the lawful conduct of their respective businesses as presently conducted, except for failures to hold such permits, licenses, approvals, certificates and authorizations which would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole (each, a “Material Permit”).   A list of the Material Permits is set forth on Schedule 3.9(ii). As of the date of this Agreement, the business of the Group Companies is operated in compliance with all applicable laws, rules, regulations, codes, ordinances, and applicable orders of all Governmental Entities, except for instances of noncompliance which would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole. This Section 3.9 does not relate to Tax matters (which is the subject of Section 3.15), environmental matters (which is the subject of Section 3.11), employee benefit matters (which is the subject of Section 3.10), intellectual property matters (which is the subject of Section 3.12) or healthcare matters (which is the subject of Section 3.21).

 

(b)           Neither any Group Company nor, to the Company’s Knowledge, any employees or agents of any other Person acting for or on the behalf of any Group Company, has

 

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directly or indirectly, (i) offered, made or received any contribution of any kind, gift or gratuity, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, regardless of form, whether in money, property, or services, in material violation of any applicable laws, rules, regulations, codes, ordinances, and applicable orders of any Governmental Entity (including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended) including (1) to obtain favorable treatment in securing business, (2) to pay for favorable treatment for business secured, or (3) to obtain special concessions or for special concessions already obtained, for or in respect of any Group Company or any Affiliate thereof, or (ii) established or maintained any fund or asset that has not been recorded in the consolidated books and records of the Group Companies.  The Group Companies maintain a system of internal accounting controls designed to reasonably ensure that, in all material respects, no Group Company maintains any off-the-books accounts and that the Group Companies’ assets are used only in accordance with directives from the Company’s management.

 

(c)           The Group Companies are, and have at all times been, in compliance with, and are not in violation of, HIPAA and such compliance includes, but is not limited to having disclosed any material breach or security incident (as those terms are defined by HIPAA) with respect to any protected health information or electronic protected health information or personal information that any such entity is obligated to protect under HIPAA or for which a business associate has an obligation to any such entity to protect, whether resulting from such other entity’s actions, inactions, errors, omissions, misconduct or breach of HIPAA, except such incidents which, individually or in the aggregate, could not reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.

 

Section 3.10         Employee Plans.

 

(a)           Schedule 3.10(a) lists all material Employee Benefit Plans.

 

(b)           No Employee Benefit Plan is a Multiemployer Plan or a plan that is subject to Title IV of ERISA, and no Employee Benefit Plan provides health or other welfare benefits to former employees of any Group Company other than health continuation coverage pursuant to COBRA.

 

(c)           Each material Employee Benefit Plan has been maintained and administered in compliance with the applicable requirements of ERISA, the Code and any other applicable laws, except for instances of noncompliance that would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.  Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service or is the subject of a favorable opinion letter from the Internal Revenue Service on the form of such Employee Benefit Plan and, to the Company’s Knowledge, there are no facts or circumstances that would be reasonably likely to adversely affect the qualified status of any such Employee Benefit Plan.

 

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(d)           No material liability under Title IV of ERISA for contributions or for termination liability has been or, to the Company’s Knowledge, is reasonably expected to be incurred by any Group Company.

 

(e)           To the Company’s Knowledge, no Group Company has engaged in any transaction with respect to any Employee Benefit Plan that would be reasonably likely to subject any Group Company to any material Tax or penalty (civil or otherwise) imposed by ERISA, the Code or other applicable law.

 

(f)            No Proceeding, hearing, audit, investigation or other claim with respect to any Employee Benefit Plan (other than routine claims for benefits) is ongoing, pending or, to the Company’s Knowledge, threatened.

 

(g)           Except as set forth on Schedule 3.10(g), the transactions contemplated by the Agreement will not cause acceleration of vesting in, or payment of, any material benefits under any Employee Benefit Plan and will not otherwise materially accelerate or increase any obligation under any Employee Benefit Plan.

 

(h)           To the Company’s Knowledge, each Employee Benefit Plan that constitutes in any part a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the Code) has been operated and maintained in all respects in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder.

 

(i)            No employer securities, employer real property or other employer property is included in the assets of any Employee Benefit Plan.

 

(j)            This Section 3.10 contains the sole and exclusive representations and warranties of the Company with respect to the Group Companies’ Employee Benefit Plans.

 

Section 3.11         Environmental Matters.

 

(a)           To the Company’s Knowledge:

 

(i)                The Group Companies are in compliance with all applicable Environmental Laws, except for noncompliance which would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

(ii)               The Group Companies hold all permits, licenses and other authorizations that are required pursuant to Environmental Laws for the lawful conduct of their respective businesses as presently conducted, except for failures to hold such permits, licenses and authorizations which would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

(iii)              No Group Company has received in the past three years any currently unresolved written notice of any violation of, or liability or investigatory, corrective or remedial obligation under, any Environmental Laws, except for such notice the subject matter of which, if determined adversely to any Group Company, would not, individually or in the aggregate, have a Company Material Adverse Effect

 

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(b)           This Section 3.11 contains the sole and exclusive representations and warranties of the Company with respect to environmental matters, including any matters arising under Environmental Laws.

 

Section 3.12         Intellectual Property.  To the Company’s Knowledge, the Group Companies own, license or otherwise have a right to all Intellectual Property Rights that are material to the conduct of the business of the Group Companies as currently conducted (the “Company Intellectual Property Rights”).  Schedule 3.12 sets forth a list of (a) patents, trademark registrations and copyright registrations owned by any Group Company, (b) patent applications, trademark applications and copyright applications owned by any Group Company, (c) all technology and software material to the Group Companies’ businesses taken as a whole, and (d) all other Company Intellectual Property Rights material to the Group Companies’ businesses taken as a whole.  Except as set forth on Schedule 3.12, (i) there is not pending before any Governmental Entity or, to the Company’s Knowledge, threatened in writing against any Group Company any claim by any Person contesting the use or ownership of any Company Intellectual Property Rights owned by such Group Company, or alleging that any Group Company is infringing any Intellectual Property Rights of any Person in any material respect, and (ii) there are no claims pending before any Governmental Entity that have been brought, or, to the Company’s Knowledge, threatened in writing to be brought, by any Group Company against any Person alleging infringement of any Company Intellectual Property Rights owned by or confidential information of such Group Company.  The Group Companies’ rights in the Intellectual Property Rights set forth on Schedule 3.12 are subsisting and, to the Company’s Knowledge, valid and enforceable.  Notwithstanding any other provisions of this Agreement, other than under this Section 3.12, the Group Companies make no representations or warranties with respect to Intellectual Property Rights.  No Person other than the Group Companies has, or to the Company’s Knowledge has claimed in writing to have, any ownership in or rights to use or exploit the [*] or any component or module thereof.

 

Section 3.13         Labor Matters.  No Group Company is bound by any collective bargaining agreement or collective bargaining relationship with respect to its employees.  There is no labor strike or work stoppage or walkout pending or, to the Company’s Knowledge, threatened in writing against or affecting any Group Company.  To the Company’s Knowledge, no union organization campaign is in progress with respect to any employees of any Group Company.  No Group Company has engaged in any plant closing or employee mass layoff activities since the date of the Latest Balance Sheet without complying in all material respects with the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar state or local plant closing or mass layoff statute, rule or regulation.  To the Company’s Knowledge, no executive or key employee of the Group Companies has notified, as of the date hereof, any Group Company in writing of his or her intention to terminate employment with any Group Company.  The Group Companies are in compliance, and have complied, in all material respects with all laws relating to the employment of labor (including, without limitation, provisions thereof relating to wages, hours, equal opportunity, classification and the payment of social security and other taxes).

 

Section 3.14         Insurance.  Schedule 3.14 contains a list of all material policies of fire, liability, workers’ compensation, property, casualty and other forms of insurance owned or held by the Group Companies as of the date of this Agreement.  All such policies are, as of the

 

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date of this Agreement, in full force and effect, all premiums with respect thereto covering all periods up to and including the Closing Date will have been paid, and no notice of cancellation or termination has been received by any Group Company with respect to any such policy.  Such policies are in amounts and have coverages as required by any Material Contract to which any Group Company is a party.

 

Section 3.15         Tax Matters.  Except as set forth on Schedule 3.15:

 

(a)           each Group Company has prepared and duly filed with the appropriate domestic, federal, state, local and foreign taxing authorities all material tax returns, information returns, statements, forms, filings and reports (each a “Tax Return” and, collectively, the “Tax Returns”) required to be filed with respect to each Group Company and has timely paid all material Taxes owed or payable by it, whether or not shown on any Tax Return, including Taxes which any Group Company is obligated to withhold;

 

(b)           all Tax Returns filed with respect to each of the Group Companies are true and correct in all material respects;

 

(c)           no Group Company is currently the subject of a Tax audit or examination;

 

(d)           no Group Company has consented to extend the time, or is the beneficiary of any extension of time, in which any Tax may be assessed or collected by any taxing authority;

 

(e)           no Group Company has received from any taxing authority any written notice of proposed adjustment, deficiency, underpayment of Taxes or any other such written notice which has not been satisfied by payment or been withdrawn;

 

(f)            within the last two years, no written claim has been made by any taxing authority in a jurisdiction where any Group Company does not file Tax Returns that any such Group Company is or may be subject to taxation by that jurisdiction;

 

(g)           no amount that could be received as a result of the consummation of the transactions contemplated by this Agreement by any employee or other service provider to the Group Companies would not be deductible by reason of Section 280G of the Code or result in a requirement to pay any gross-up or similar make-whole payments to any employee, director or consultant of any Group Company;

 

(h)           there are no Liens for Taxes other than Taxes not yet due and payable upon the assets of any Group Company;

 

(i)            no Group Company (i) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than the group the common parent of which is the Company) or (ii) has any liability for the Taxes of any Person (other than any Group Company, under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or non-U.S. law)), as a transferee or successor, by contract or otherwise;

 

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(j)            no Group Company will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:

 

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

 

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

 

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

 

(iv)          intercompany 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 non-U.S. income Tax law);

 

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

 

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

 

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

 

(k)           within the past three (3) years, no Group Company has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code; and

 

(l)            no Group Company is or has been a party to any “listed transaction,” as defined in Section 6707A(c)(2) of the Code and Treasury Regulation Section 1.6011-4(b)(2).

 

Section 3.16         Brokers.  No broker, finder, financial advisor or investment banker, other than J.P. Morgan Securities LLC (whose fees shall be included as Seller Expenses), is entitled to any broker’s, finder’s, financial advisor’s or investment banker’s fee or commission in connection with the transactions contemplated by this Agreement that will not be included as Seller Expenses based upon arrangements made by or on behalf of any of the Group Companies.

 

Section 3.17         Property.

 

(a)           No Group Company owns any real property.  Schedule 3.17 sets forth (whether as lessee or lessor) a list of all leases (each a “Material Lease”) of real property to which any Group Company is a party or by which any of them is bound, in each case, as of the date of this Agreement involving annual rent in excess of [*].  Except as set forth on Schedule 3.17, each Material Lease is valid and binding on the Group Company party thereto, enforceable in accordance with its terms (subject to proper authorization and execution of such Material Lease by the other party thereto and subject to applicable bankruptcy, insolvency,

 

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reorganization, moratorium or other laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity) and, to the Company’s Knowledge, the other parties thereto.  Except as set forth on Schedule 3.17, during the period beginning on January 1, 2014 and ending on the date of this Agreement, no Group Company has received written notice of any default under any Material Lease, except for defaults that would not, individually or in the aggregate, have a Company Material Adverse Effect.  To the Company’s Knowledge none of the other parties to any Material Lease are in material breach thereof, except for defaults that would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

(b)           Except as would not, individually or in the aggregate, have a Company Material Adverse Effect (i) the Group Companies have good, valid and marketable title to, or a valid leasehold interest, license in or right to use pursuant to a valid lease or license, all assets used in the operation of the Group Companies businesses, free and clear of all Liens, except for properties and assets disposed of in the ordinary course of business since the date of the Latest Balance Sheet and except for Permitted Liens, (ii) all material, tangible personal property owed, leased, licensed or otherwise used in the businesses of the Group Companies are in good operating condition and repair (other than ordinary wear and tear), and are adequate for the uses to which they are being put and (iii) all material, tangible personal property owed, leased, licensed or otherwise used in the businesses of the Group Companies are sufficient for the continued conduct of the Group Companies’ businesses after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Group Companies in substantially the same manner as currently conducted.

 

Section 3.18         Transactions with Affiliates.  Schedule 3.18 sets forth all contracts or arrangements (other than employment agreements and Governing Documents) between any Group Company, on the one hand, and Affiliates of the Group Companies (other than any Group Company or any employee of any Group Company who is not an officer of any Group Company) or, as applicable, to the Company’s Knowledge, the Family Members of any such Affiliates, on the other hand, that will not be terminated effective as of the Closing Date.  To the Company’s Knowledge, except as disclosed on Schedule 3.18, none of the Group Companies and their respective Affiliates, directors, officers or employees, or, as applicable, to the Company’s Knowledge, the Family Members of any such Affiliates, possesses, directly or indirectly, any financial interest in, or is a director, officer or employee of, any Person (other than any Group Company) which is a client, payor, hospital or other healthcare provider, supplier, customer, lessor, lessee, or competitor of any Group Company; provided, that ownership of five percent (5%) or less of any class of securities of a company whose securities are registered under the Securities and Exchange Act of 1934, as amended, shall not be deemed to be a financial interest for purposes of this Section 3.18.

 

Section 3.19         No Undisclosed Liabilities.  No Group Company has any liabilities of any kind, whether accrued, contingent, absolute, determined, determinable or otherwise, other than (a) liabilities disclosed or provided for in the Financial Statements (including the notes thereto), (b) liabilities existing as of the Latest Balance Sheet Date but that are not required under GAAP to be reserved against or reflected in the Latest Balance Sheet, (c) liabilities disclosed in the Disclosure Schedules, (d) liabilities incurred in the ordinary course of business since the Latest Balance Sheet Date, (e) liabilities that would not, individually or in the

 

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aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole or (f) liabilities incurred in connection with the transactions contemplated by this Agreement or any other Transaction Document.

 

Section 3.20         Hospital Clients.  Schedule 3.20 lists the [*] largest hospital clients (based on consolidated net sales) of the Group Companies on a consolidated basis (collectively, the “Material Hospital Clients”) for the 12-month period ended December 31, 2013.  Except as set forth on Schedule 3.20, the Company has not received written notice of any termination or cancellation or threatened termination or cancellation by any Material Hospital Client of its business relationship with the Company, except where such termination or cancellation would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.

 

Section 3.21         Healthcare Representations and Warranties.

 

(a)           Except as set forth on Schedule 3.21(a), each Group Company is in compliance in all material respects with all Healthcare Laws except where non-compliance would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.

 

(b)           Each Group Company holds or possesses each of the permits, licenses, approvals, certificates and authorizations issued by any Governmental Entity necessary under any Healthcare Law to conduct business substantially as currently conducted, except for such permits, licenses, approvals, certificates and authorizations the absence of which would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole.  There are no Proceedings pending or to the Company’s Knowledge, threatened in writing that seek the revocation, cancellation, or termination of any such permits, licenses, approvals, certificates and authorizations.

 

(c)           Each Group Company meets all of the applicable requirements of any Federal Health Care Programs (as defined in 42 U.S.C. § 1320a-7(b)) (“Programs”) in which it participates except where the failure to meet any such requirement would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in any material respect with the conduct of the business of, the Group Companies taken as a whole, and each is a party to participation agreements for payment by such Programs to the extent that it bills a particular Program for services or procedures.  There is no Proceeding pending or to the Company’s Knowledge, threatened in writing against any Group Company which relates to failure to comply with the applicable requirements of any Program.

 

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(d)           The Company has Made Available to Buyer true and complete copies of all material surveys, reviews, or audits of any Group Company conducted by or in connection with any of the Programs or any licensing or accrediting bodies during the past three (3) years, including any written statements of deficiencies and plans of correction. Except as set forth on Schedule 3.21(d), no Group Company has, during the past three (3) years, been the subject of any inspection, investigation, survey, audit, monitoring, or other form of review by any Governmental Entity, trade association, professional review organization, accrediting organization or certifying agency based upon any alleged improper activity on the part of such Group Company, nor has any Group Company received any notice or other communication of deficiency from any Governmental Entity in connection with the business of such Group Company.  Except as set forth on Schedule 3.21(d), there are not presently any outstanding deficiencies or plans of correction claimed or imposed by any Governmental Entity having jurisdiction over the business of any Group Company or requiring conformity to any applicable agreement, governing document, or applicable laws, rules, regulations, codes, ordinances, and applicable orders of any Governmental Entity. Schedule 3.21(d) sets forth a true and complete list of all deficiencies or plans of correction related to any Governmental Entity having jurisdiction over the business of any Group Company that have been imposed during the past three (3) years.

 

(e)           To the Company’s Knowledge, no Group Company nor any of their respective directors, officers, employees or independent contractors at the time of becoming a director, officer,  employee or independent contractors  or while they were serving as a director, officer, employee or independent contractors was listed on HHS/OIG List of Excluded Individuals/Entities (LEIE) database (http://exclusions.oig.hhs.gov) or the General Services Administration’s Excluded Parties List System (http://www.epls.gov) as being excluded or debarred from participation in any Program.

 

(f)            Except as set forth on Schedule 3.21(f), no Group Company has received any written notice of overpayments from any Program or any other third-party payor amounting to more than [*], individually or in the aggregate, or that is otherwise outside of the ordinary course of business, within the past six (6) years.  No Group Company has any outstanding overpayment or refund due to any Program or third-party payor in excess, individually or in the aggregate, of [*].

 

(g)           No Group Company has entered into any impermissible “financial relationship” in violation of the Federal Stark Law and, to the Company’s Knowledge, no Group Company has accepted referrals from physicians that do not otherwise comply with the the Federal Anti-kickback Statute. For purposes of this Section 3.21(g), the term “financial relationship” has the meaning given in 42 U.S.C. §1395nn(a)(2) of the Federal Stark Law.

 

(h)           To the Knowledge of the Company, each Group Company is in compliance, in all material respects, with the rules and policies required to be complied with in regards to each third-party payor contracts including all material certification, billing, reimbursement and documentation requirements except for such non-compliance which would not, individually or in the aggregate, reasonably be expected to result in material liability to the Group Companies, taken as a whole, or otherwise materially impair the value of, or interfere in

 

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any material respect with the conduct of the business of, the Group Companies taken as a whole.

 

(i)            Except as would not individually or in the aggregate be material to Group Companies taken as a whole, the Group Companies have (i) verified the required credentials of employees and independent contractors providing clinical services as required by any applicable laws, rules, regulations, codes, ordinances, and applicable orders of any Governmental Entity and (ii) conducted criminal background checks on all such employees and independent contractors.

 

(j)            No referral source of any Group Company maintains an ownership interest in, or compensation arrangement with, any Group Company in violation of the Federal Stark Law.

 

(k)           To the Company’s Knowledge, the Group Companies have Made Available to Buyer a true and complete copy of the Group Companies’ current compliance program materials, including all program descriptions, compliance officer and committee descriptions, ethics and risk area policy materials, training and education materials, auditing and monitoring protocols, reporting mechanisms and disciplinary policies.  To the Company’s Knowledge, each Group Company has conducted its operations in accordance in all material respects with its respective compliance programs during the applicable period for which such compliance program was in effect.  Except as set forth on Schedule 3.21(k), none of the Group Companies (i) is a party to a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, (ii) has reporting obligations pursuant to any settlement agreement entered into with any Governmental Entity, (iii) to the Company’s Knowledge, has been the subject of any Government Program investigation conducted by any federal or state enforcement agency, (iv) has been a defendant in any qui tam/False Claims Act litigation (other than by reason of a sealed complaint of which the Company may have no Knowledge), (v) has been served with or received any search warrant, subpoena, civil investigation demand, contact letter, or, to the Company’s Knowledge, telephone or personal contact by or from any federal or state enforcement agency (except in connection with medical services provided to third parties who may be defendants or the subject of investigation into conduct unrelated to the Group Companies’ business) and (vi) to the Company’s Knowledge has received any complaints through any Group Company compliance “hotline” from employees, independent contractors, vendors, physicians, patients, or any other Persons that could reasonably be considered to indicate that Company has violated, or is currently in violation of, any applicable laws, rules, regulations, codes, ordinances, and applicable orders of any Governmental Entity.  For purposes of this Agreement, the term “compliance program” refers to provider programs of the type described in the compliance guidance published by the Office of Inspector General of the Department of Health and Human Services.

 

(l)            Each Group Company has complied in all material respects with its respective obligations and reporting requirements under the Corporate Integrity Agreement.

 

(m)          For the three (3) years immediately preceding the Closing Date, through and including the Closing Date, to the Company’s Knowledge, each physician, physician assistant, registered nurse or similar person who is or was employed (with respect to the time of

 

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such employment) by, or who renders or has rendered services as an independent contractor (with respect to the time of the rendering of services) on behalf of, any Group Company (collectively, “Caregiver Personnel”) has been and continues to be in compliance with the following:

 

(i)            each such Caregiver Personnel has been duly licensed or certified pursuant to the applicable laws, rules, regulations, codes, ordinances, and applicable orders of any Governmental Entity of the applicable state, and said license or certification has not been suspended, revoked or restricted in any manner;

 

(ii)           no Caregiver Personnel (1) is currently, or has ever been, found to have, either civilly or criminally, violated any laws and regulations governing the Medicare or Medicaid programs, or any other federal or state healthcare program, (2) has been excluded or suspended from participation in the Medicare and Medicaid programs, or any other federal or state healthcare program, or (3) has been found to have, either civilly or criminally, violated any laws and regulations governing the Medicare or Medicaid programs, or any other federal or state healthcare program; and

 

(iii)          except as set forth in Schedule 3.21(m)(iii), to the Company’s Knowledge, no Caregiver Personnel, while he or she has been an employee of any Group Company, has:

 

(1)           been a party to any disciplinary investigation or Proceeding instituted by any licensure board, hospital, medical school, health care facility or entity, professional society or association, payor, peer review or professional review committee or body, or Governmental Entity;

 

(2)           been a party to any criminal complaint, indictment or criminal Proceeding;

 

(3)           been a party to any investigation or Proceeding, whether administrative, civil or criminal, relating to any allegations of filing false health care claims, violating state or federal anti-kickback or self-referral laws, or engaging in any other billing or health care services related improprieties;

 

(4)           had any dependency on, habitual use or episodic abuse of, controlled substances or any dependency on alcohol, or any participation in any alcohol or controlled substance detoxification, treatment, recovery, rehabilitation, counseling, screening or monitoring program; or

 

(5)           been a party to any allegation, or any investigation or Proceeding based on any allegation, of violating professional ethics or standards, or engaging in illegal, immoral or other misconduct (of any nature or degree), relating to the provision of medical care; or

 

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(6)           failed to comply in any material respects with the requirements, if any, set forth in all applicable third-party payor contracts.

 

Section 3.22         EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE III, THE GROUP COMPANIES EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THEIR BUSINESSES OR THEIR ASSETS, AND THE GROUP COMPANIES SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THEIR ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT SUCH SUBJECT ASSETS ARE BEING ACQUIRED “AS IS, WHERE IS” ON THE CLOSING DATE, AND IN THEIR PRESENT CONDITION, AND BUYER HAS RELIED SOLELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF.  FURTHER, THE GROUP COMPANIES HEREBY EXPRESSLY DISCLAIM ANY OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, LEGAL OR CONTRACTUAL, EXPRESS OR IMPLIED, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA).

 

ARTICLE IV
 REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby represents and warrants to Buyer as follows:

 

Section 4.1            Authority.  Seller has the requisite limited liability company power and authority to execute and deliver each Transaction Document to which it is a party and to consummate the transactions contemplated thereby.  The execution and delivery of each Transaction Document to which Seller is a party and the consummation of the transactions contemplated thereby have been duly authorized by all necessary limited liability company action on the part of Seller.  Each Transaction Document to which Seller is a party has been duly executed and delivered by Seller and constitutes a valid, legal and binding agreement of Seller (assuming that each such Transaction Document to which Seller is a party has been duly and validly authorized, executed and delivered by the other parties thereto), enforceable against Seller in accordance with its terms, except (a) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and (b) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.  Seller was formed for the sole purpose of holding the Shares and, other than serving as a holding company for the Company (including the taking of actions related and ancillary thereto), does not and has not ever carried on any other trade or

 

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business or had any other assets or any other liabilities or obligations of any kind (whether accrued, absolute, contingent or otherwise).

 

Section 4.2            Consents and Approvals; No Violations.  Except as set forth on Schedule 4.2, assuming the truth and accuracy of the representations and warranties of Buyer set forth in Section 5.4, no notice to, filing with, or authorization, consent or approval of any Governmental Entity is necessary for the execution, delivery or performance of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby, except for (i) compliance with and filings under the HSR Act, (ii) those the failure of which to obtain or make would not, individually or in the aggregate, interfere in any material respect with Seller’s ownership of the Shares, or otherwise prevent or materially delay the Closing and (iii) those that may be required solely by reason of Buyer’s (as opposed to any other third party’s) participation in the transactions contemplated hereby.  Neither the execution, delivery and performance of each Transaction Document to which Seller is a party nor the consummation by Seller of the transactions contemplated hereby will (a) conflict with or result in any breach of any provision of Seller’s Governing Documents, (b) result in a violation or breach of, or cause acceleration, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any material agreement to which Seller is a party or (c) violate any order, writ, injunction, decree, law, statute, rule or regulation of any Governmental Entity having jurisdiction over Seller, which in the case of any of clauses (b) and (c) above, would not, individually or in the aggregate, have a material adverse effect on Seller’s ownership of the Shares, or otherwise prevent or materially delay the Closing.

 

Section 4.3            Title to the Shares; Ownership of Seller.  As of the date hereof and as of immediately prior to the Distribution, the Shares are held beneficially and of record by Seller free and clear of any Liens (other than the Permitted Share Liens) and Seller has good and marketable title to the Shares.  Immediately following the consummation of the Distribution through and until immediately prior to the Closing, Seller will hold beneficially and of record all of the issued and outstanding Purchased Shares and the Contributed Shares free and clear of any Liens (other than the Permitted Share Liens).  As a result of the Distribution, Seller will deliver to each Rollover Equityholder good and valid title to all of the issued and outstanding Rollover Shares distributed to such Rollover Equityholder in the Distribution free and clear of any Liens (other than Permitted Share Liens).

 

Section 4.4            Litigation.  As of the date of this Agreement, there is no Proceeding pending before any Governmental Entity or, to Seller’s actual knowledge, threatened in writing against Seller which would have a material adverse effect on Seller’s ownership of the Shares, or otherwise prevent or materially delay the Closing.  Seller is not subject to any outstanding order, writ, injunction or decree that would have a material adverse effect on Seller’s ownership of the Shares, or otherwise prevent or materially delay the Closing.

 

Section 4.5            Brokers.  No broker, finder, financial advisor or investment banker, other than J.P. Morgan Securities LLC (whose fees shall be included as Seller Expenses), is entitled to any broker’s, finder’s, financial advisor’s or investment banker’s fee or commission in connection with the transactions contemplated by this Agreement that will not be included as

 

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Seller Expenses based upon arrangements made by or on behalf of Seller or the member of Seller.

 

Section 4.6            EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES.  THE REPRESENTATIONS AND WARRANTIES MADE BY SELLER IN THIS ARTICLE IV ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES.  SELLER HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, LEGAL OR CONTRACTUAL, EXPRESS OR IMPLIED, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER OR ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA).

 

ARTICLE V
  REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Seller as follows:

 

Section 5.1            Organization; Formation.  Buyer is a Delaware limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to carry on its business as now being conducted, except where the failure to have such power or authority would not prevent or materially delay the consummation of the transactions contemplated hereby.  Buyer is a newly formed entity, formed for the sole purpose of acquiring and holding the Shares from and after the Closing (including the taking of actions related and ancillary thereto) and does not and has not ever carried on any other trade or business or had any other assets or any other liabilities or obligations of any kind (whether accrued, absolute, contingent or otherwise).

 

Section 5.2            Capitalization. As of the date of this Agreement, Fresenius Medical Care Holdings, Inc., a New York corporation (“FMCH”), is the sole member of Buyer and all of the limited liability company interests of Buyer are held beneficially and of record by FMCH free and clear of any Liens (other than Permitted Share Liens).  As of immediately prior to the Rollover, the limited liability company interests of Buyer shall be as set forth in Article III of the amended and restated limited liability company agreement of Buyer substantially in the form attached hereto as Exhibit F.  After giving effect to the Contribution, the Rollover and the other transactions contemplated by this Agreement and the Rollover Equity Agreements and Rollover Agreements (assuming the truth and accuracy of the representations and warranties of the Rollover Equityholders in the Rollover Agreements), all of the Buyer Units will be held beneficially and of record free and clear of any Liens (other than Liens arising under the Rollover Equity Agreements) by the Persons contemplated by this Agreement, the Rollover Equity Agreements and Rollover Agreements.  The Buyer Units have been duly authorized and validly issued and are fully paid and non-assessable and free of preemptive rights except as set forth in the Rollover Equity Agreements.  Except for the Buyer Units, there are no outstanding (i) equity securities of Buyer, (ii) securities of Buyer convertible into or exchangeable for, at any time, equity securities of Buyer and (iii) rights to acquire from Buyer and no obligations of

 

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Buyer to issue, any equity securities or securities convertible into or exchangeable for equity securities of Buyer.  Buyer does not own, and has never owned, directly or indirectly, any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, at any time, any equity or similar interest in, any corporation, partnership, limited liability company, joint venture or other business association or entity.

 

Section 5.3            Authority.  Buyer has all necessary power and authority to execute and deliver each Transaction Document to which it is a party and to consummate the transactions contemplated thereby.  The execution and delivery of each Transaction Document to which Buyer is a party and the consummation of the transactions contemplated thereby have been duly authorized by all necessary action on the part of Buyer and no other proceeding (including by its equityholders) on the part of Buyer is necessary to authorize each Transaction Document to which Buyer is a party or to consummate the transactions contemplated thereby.  No vote of Buyer’s equityholders is required to approve this Agreement or for Buyer to consummate the transactions contemplated hereby.  Each Transaction Document to which Buyer is a party has been duly and validly executed and delivered by Buyer and constitutes a valid, legal and binding agreement of Buyer (assuming that each such Transaction Document has been duly and validly authorized, executed and delivered by the other parties thereto), enforceable against Buyer in accordance with its terms, except (a) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and (b) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

 

Section 5.4            Consents and Approvals; No Violations.  No notices to, filings with, or authorizations, consents or approvals of any Governmental Entity is necessary for the execution, delivery or performance of any of the Transaction Documents to which Buyer is a party or the consummation by Buyer of the transactions contemplated thereby, except for (i) compliance with and filings under the HSR Act and (ii) those set forth on Schedule 5.4.  Neither the execution, delivery and performance of any of the Transaction Documents to which Buyer is a party nor the consummation by Buyer of the transactions contemplated thereby will (a) conflict with or result in any breach of any provision of Buyer’s Governing Documents, (b) except as set forth on Schedule 5.4, result in a violation or breach of, or cause acceleration, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Buyer is or will be a party or by which any of them or any of their respective properties or assets may be bound, or (c) violate any order, writ, injunction, decree, law, statute, rule or regulation of any Governmental Entity applicable to Buyer or any of Buyer’s Subsidiaries or any of their respective material properties or assets, except in the case of clauses (b) and (c) above, for violations which would not prevent or materially delay the consummation of the transactions contemplated thereby.

 

Section 5.5            Brokers.  No broker, finder, financial advisor or investment banker is entitled to any brokerage, finder’s, financial advisor’s or investment banker’s fee or commission in connection with the transactions contemplated by this Agreement based upon

 

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arrangements made by and on behalf of Buyer or any of its respective Affiliates for which Seller or any Group Company may become liable.

 

Section 5.6            Financing.  (a) Parent Guarantor directly or through immediately available capacity under credit facilities has and at all times during the period beginning on the date hereof and ending on the Closing Date will have, (b) Parent Guarantor will directly have on the Closing Date and (c) Buyer will directly have on the Closing Date, in each case, sufficient cash in hand that is available to consummate the transactions contemplated hereby, including to pay (without duplication) the Purchase Price, any Funded Indebtedness, the Unpaid Seller Expenses and the fees and expenses of Buyer related to the transactions contemplated hereby.  There is no circumstance or condition that, individually or in the aggregate with all other circumstances or conditions, could reasonably be expected to prevent or substantially delay the availability of such funds at the Closing.

 

Section 5.7            Acquisition of Equity For Investment.  Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its purchase of the Shares.  Buyer confirms that it can bear the economic risk of its investment in the Shares and can afford to lose its entire investment in the Shares, has been furnished the materials relating to the purchase of the Shares which Buyer has requested, and the Company has provided Buyer and its representatives the opportunity to ask questions of the officers and management employees of the business and to acquire additional information about the business and financial condition of the Group Companies.  Buyer is acquiring the Shares for investment and not with a view toward or for sale in connection with any distribution thereof, or with any present intention of distributing or selling such Shares.  Buyer agrees that the Shares may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without compliance with applicable United States prospectus and registration requirements, except pursuant to an exemption therefrom under applicable United States securities laws.

 

Section 5.8            Solvency.  Buyer is not entering into the transactions contemplated by this Agreement with the actual intent to hinder, delay or defraud either present or future creditors of the Group Companies.  Buyer is Solvent as of the date of this Agreement and, assuming the satisfaction of the condition to Seller’s and the Company’s obligation to consummate the transactions contemplated hereby and the accuracy of the representations and warranties of the Company in ARTICLE III and the representations and warranties of Seller in ARTICLE IV, Buyer and each of the Group Companies (on both a stand-alone and on a combined basis) will, after giving effect to all of the transactions contemplated by this Agreement, including the payment of the Purchase Price, Funded Indebtedness, Unpaid Seller Expenses, all other amounts required to be paid, borrowed or refinanced in connection with the consummation of the transactions contemplated by this Agreement and all related fees and expenses, be Solvent at and after the Closing Date.

 

Section 5.9            Interests in Competitors.  Buyer does not own any interest(s), nor do its Affiliates insofar as such Affiliate-owned interest would be attributed to Buyer under the HSR Act, in any Person that derives a substantial portion of its revenues from any line of business similar to those of the Group Companies.

 

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Section 5.10         Acknowledgment and Representations by Buyer.  Buyer acknowledges and agrees that it (i) has conducted its own independent review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of the Group Companies and (ii) has been furnished with or given sufficient access to information about the Group Companies and their respective businesses and operations.  In entering into this Agreement, Buyer has relied solely upon its own investigation and analysis and the representations and warranties of the Company and Seller set forth in this Agreement, and Buyer acknowledges that, other than as set forth in this Agreement and in the certificates or other instruments delivered pursuant hereto, none of the Group Companies or any of their respective directors, officers, employees, Affiliates, equityholders, agents or representatives makes or has made any representation or warranty, either express or implied, (a) as to the accuracy or completeness of any of the information provided or Made Available to Buyer or any of its respective agents, representatives, lenders or Affiliates prior to the execution of this Agreement and (b) with respect to any projections, forecasts, estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of any Group Company heretofore or hereafter delivered to or Made Available to Buyer or any of its respective agents, representatives, lenders or Affiliates.

 

ARTICLE VI
  COVENANTS

 

Section 6.1            Conduct of Business of the Company.  Except as contemplated by this Agreement or in Schedule 6.1, from and after the date hereof until the earlier of the Closing Date and the termination of this Agreement in accordance with its terms, the Company shall and shall cause each other Group Company to, except as consented to in writing by Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), (i) conduct its business in the ordinary course in substantially the same manner heretofore conducted (including any conduct that is reasonably related, complementary or incidental thereto), (ii) not take or omit to take any action which would have a Company Material Adverse Effect and (iii) use commercially reasonable efforts to preserve substantially intact its business organization and to preserve in all material respects the present commercial relationships with key Persons with whom it does business.  Without limiting the generality of the immediately preceding sentence and except as set forth on Schedule 6.1, from and after the date hereof until the earlier of the Closing Date and the termination of this Agreement in accordance with its terms, the Company shall not and shall cause each other Group Company not to, except as consented to in writing by Buyer (which consent shall not be unreasonably withheld, conditioned or delayed):

 

(a)           enter into, amend, extend or voluntarily terminate any agreement that is or would be a Material Contract or Material Lease (other than entering into, extending or amending any Material Contract or Material Lease in the ordinary course of business consistent with past practice);

 

(b)           amend the Group Companies’ Governing Documents, or adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of any Group Companies;

 

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(c)           acquire (other than as a result of a capital expenditure), dispose of or transfer any asset with a value in excess of [*] individually or [*] in the aggregate;

 

(d)           declare, set aside, make or pay any contribution or other payment (in each case, other than in cash) in respect of any interests of any Group Company or purchase or redeem, directly or indirectly, any interests of any Group Company;

 

(e)           (i) incur any Indebtedness for borrowed money or guarantee such Indebtedness of another Person, (ii) make any loans or advances of borrowed money or capital contributions to, or equity investments in, any other Person or group of related loans, advances or contributions other than in the ordinary course of business, or (iii) issue or sell any debt securities;

 

(f)            pay, discharge or satisfy any claims or liabilities in excess of [*] or forgive, cancel, compromise, waive or release any debts, claims or rights in excess of [*], other than in the ordinary course of business consistent with past practices;

 

(g)           issue, sell, grant, confer, award, pledge or otherwise encumber, any equity interests of any Group Company;

 

(h)           acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any Person or enterprise or make any material investment, either by purchase of any interests, or contribution to capital, in or of any other Person;

 

(i)             except in the ordinary course of business and consistent with past practice or as required by applicable law (i) enter into, amend, extend or terminate any individual employment, termination, retention, change of control, severance or other compensation agreement; or (ii) provide (except in accordance with the terms of employee agreements, as they exist immediately prior to the execution of this Agreement) or promise or agree to provide, any severance pay or benefits, change in control benefits, or advance notice of termination of employment to any employee;

 

(j)            except as required by applicable law, adopt any new Employee Benefit Plan, program or arrangement, including, without limitation, any bonus, profit sharing, compensation, equity option, profits interest, pension, retirement, deferred compensation, for the benefit or welfare of any director or employee or (ii) amend any existing Employee Benefit Plan to provide additional benefits or vesting, except as required by applicable law;

 

(k)           promise, grant or agree to grant any bonus or increase the compensation or benefits of any employee, other than bonuses and increases in the ordinary course of business consistent with past practice not to exceed [*] individually or [*] in the aggregate;

 

(l)            make any material changes in any accounting or financial reporting principles, practices, methods or policies or method of calculating any bad debt contingency or other reserve for accounting or financial reporting purposes, except, in each case, as may be required by changes in applicable law or GAAP;

 

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(m)          except in the ordinary course of business consistent with past practice, dispose of or permit to lapse any rights to any Company Intellectual Property Rights owned by any Group Company;

 

(n)           make or authorize any capital expenditures in excess of [*] individually or [*] in the aggregate;

 

(o)           permit or suffer any new Liens other than Permitted Liens;

 

(p)           terminate or fail to use commercially reasonable efforts not to let to expire any insurance coverage, except to the extent that such insurance policies are replaced with policies that offer substantially similar coverage;

 

(q)           make or change any Tax election, settle or compromise any Tax liability, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, or agree to an extension or a waiver of a statutory period of limitations for the assessment of Tax, in each case if such action would have the effect of increasing the Tax liability of any Group Company for any period (or portion thereof) ending after the Closing Date; or

 

(r)            agree in writing or otherwise to take any of the actions described above in clauses (a) through (q) of this Section 6.1.

 

Section 6.2            Access to Information.  From and after the date hereof until the earlier of the Closing Date and the termination of this Agreement in accordance with its terms, upon reasonable notice, and subject to restrictions contained in any confidentiality agreement to which any Group Company is subject, each Group Company shall provide to Buyer and its authorized representatives during normal business hours reasonable access to all books and records of the Group Companies (in a manner so as to not interfere with the normal business operations of any Group Company); provided, that the Group Companies and their respective representatives shall have no obligation to provide Buyer and its representatives access to any books or records to the extent such books and records pertain solely to the Seller and/or its equityholders and, to such extent, any Group Company and its representatives are entitled to withhold access to or redact any portion of such books and records.  All of such information shall be treated as confidential information pursuant to the terms of the Confidentiality Agreement, the provisions of which are by this reference hereby incorporated herein and Buyer agrees that it shall be bound by the Confidentiality Agreement to the same extent as Fresenius Medical Care AG & Co. KGaA.  Notwithstanding anything to the contrary set forth in this Agreement, during the period from the date hereof until the Closing, neither Seller nor any of its Affiliates (including the Group Companies) shall be required to disclose to Buyer or any of its representatives any (a) information (i) to the extent related to the sale or divestiture process conducted by Seller or its Affiliates for the Group Companies vis-à-vis any Person other than Buyer and its Affiliates, or Seller’s or its Affiliates’ (or their representatives’) evaluation of the business of the Group Companies in connection therewith, including projections, financial and other information relating thereto, (ii) if doing so would violate any contract or law to which Seller or any of its Affiliates (including the Group Companies) is a party or is subject or which it reasonably determined upon the advice of counsel could result in the loss of the ability to

 

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successfully assert attorney-client and work product privileges, (iii) if Seller or any of its Affiliates, on the one hand, and Buyer or any of its Affiliates, on the other hand, are adverse parties in a litigation and such information is reasonably pertinent thereto, or (iv) if Seller reasonably determines upon the advice of counsel that such information should not be so disclosed due to its competitively sensitive nature, or (b) any information relating to Taxes or Tax Returns other than information relating to the Group Companies.

 

Section 6.3            Efforts to Consummate.

 

(a)           Subject to the terms and conditions herein provided, each of Seller, Buyer, Parent Guarantor and each of their respective Affiliates shall use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make effective as promptly as practicable the transactions contemplated hereby (including the satisfaction, but not waiver, of the closing conditions set forth in ARTICLE VII and obtaining consents of all Governmental Entities necessary to consummate the transactions contemplated hereby).  The HSR Act filing fee will be split equally between Buyer and Seller.  Each Party shall make an appropriate filing pursuant to the HSR Act (which filing shall specifically request early termination of the waiting period prescribed by the HSR Act) with respect to the transactions contemplated by this Agreement promptly (and in any event, within two (2) Business Days) after the date of this Agreement and shall supply as promptly as practicable to the appropriate Governmental Entities any additional information and documentary material that may be requested pursuant to the HSR Act.  Without limiting the foregoing, (i) Buyer, Seller, Parent Guarantor and each of their respective Affiliates shall not take any action that has or may have the effect of extending any waiting period or comparable period under the HSR Act or enter into any agreement with any Governmental Entity not to consummate the transactions contemplated hereby, except with the prior written consent of Seller, and (ii) Buyer and Parent Guarantor agree to take (and Buyer’s and Parent Guarantor’s “reasonable best efforts” shall expressly including the taking of) all actions that are necessary or advisable or as may be required by any Governmental Entity to expeditiously (and in no event later than the Termination Date) consummate the transactions contemplated by this Agreement, including, (A) selling, licensing or otherwise disposing of, or holding separate and agreeing to sell, license or otherwise dispose of (i) any entities, assets or facilities of any Group Company after the Closing or (ii) any entity, facility or asset of Buyer, Parent Guarantor or any of their respective Affiliates before or after the Closing, (B) terminating, amending or assigning existing relationships and contractual rights and obligations (other than terminations that would result in a breach of a contractual obligation to a third party) and (C) amending, assigning or terminating existing licenses or other agreements (other than terminations that would result in a breach of a license or such other agreement with a third party) and entering into such new licenses or other agreements.

 

(b)           In the event any Proceeding by a Governmental Entity or other Person is commenced which questions the validity or legality of the transactions contemplated hereby or seeks damages in connection therewith, Buyer, Seller and Parent Guarantor agree to cooperate and use all reasonable efforts to defend against such Proceeding and, if an injunction or other order is issued in any such action, suit or other proceeding, to use all reasonable efforts to have such injunction or other order lifted, and to cooperate reasonably regarding any other impediment to the consummation of the transactions contemplated hereby.

 

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(c)           Seller and Buyer 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 relating to the transactions contemplated by this Agreement.  Each of Seller and Buyer agrees not to participate in any substantive meeting or discussion, either in person or by telephone with any Governmental Entity in connection with the transactions contemplated by this Agreement 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 in such meeting or discussion.

 

(d)           During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, except as required by this Agreement, Buyer, Parent Guarantor and each of their respective Affiliates shall not engage in any action or enter into any transaction or permit any action to be taken or transaction to be entered into, that would materially impair or delay Buyer’s ability to consummate the transactions contemplated by this Agreement or perform its obligations hereunder.  Without limiting the generality of the foregoing, none of Buyer, Parent Guarantor, the Subsidiaries of Buyer or Parent Guarantor or any of their respective Affiliates shall acquire (whether by merger, consolidation, stock or asset purchase or otherwise), or agree to so acquire, any amounts of assets of or any equity in any other Person or any business or division thereof, unless that acquisition or agreement would not reasonably be expected to (i) increase the risk of not obtaining any authorizations, consents, orders, declarations or approvals of any Governmental Entity necessary to consummate the transactions contemplated by this Agreement or the expiration or termination of any waiting period under the HSR Act, or (ii) increase the risk of any Governmental Entity entering an order prohibiting the consummation of the transactions contemplated by this Agreement, or increase the risk of not being able to remove any such order on appeal or otherwise.

 

(e)           From the Cut-Off Time through the Closing Date, Seller and the Company shall use commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties to the agreements set forth on Schedule 3.5.  Within two (2) Business Days following the date on which the Cut-Off Time occurs, the Company shall deliver written notice (including by e-mail) of the transactions contemplated by this Agreement to the Office of the Inspector General of the Department of Health and Human Services.  Notwithstanding the foregoing, neither Seller nor the Company shall be required to incur any liabilities or provide any financial accommodation in order to obtain any such third party consents. For the avoidance of doubt, it shall not be a condition to the closing of the transactions contemplated by this Agreement that any such notices (other than the notice contemplated by the second sentence of this Section 6.3(e) and the expiration or termination of any waiting period under the HSR Act) be sent to, or any such consents be received from, such third parties.

 

Section 6.4            Public Announcements.  Prior to the Closing Date, Buyer, on the one hand, and the Company and Seller, on the other hand, shall consult with one another and seek one another’s approval (not to be unreasonably withheld, conditioned or delayed) before issuing any press release, or otherwise making any public statements, with respect to the transactions contemplated by this Agreement and shall not issue any such press release or make any such public statement prior to such consultation and approval; provided that each Party may

 

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make any such announcement which it in good faith believes, based on advice of counsel, is necessary or advisable in connection with any requirement of law or regulation (or the rules and regulations promulgated by any stock exchange that are applicable to Buyer or its Affiliates), it being understood and agreed that each Party shall provide the other Parties with copies of and a reasonable opportunity to comment on any such announcement in advance of such issuance.

 

Section 6.5            Indemnification; Directors’ and Officers’ Insurance.

 

(a)           Buyer agrees that all rights to indemnification, exculpation and advancement of expenses now existing in favor of the directors, officers, employees, fiduciaries, trustees and agents of each Group Company, as provided in the Group Companies’ Governing Documents or otherwise in effect as of the date hereof with respect to any matters occurring prior to the Closing Date, shall survive the transactions contemplated by this Agreement and shall continue in full force and effect and that Buyer shall cause the Group Companies (on their own or on Seller’s behalf) to perform and discharge the Group Companies’ obligations to provide indemnification, exculpation and advancement of expenses as set forth in the Group Companies Governing Documents.  Buyer shall cause the Group Companies to advance expenses in connection with such indemnification as provided in the applicable Group Company’s Governing Documents or other applicable agreements.  For a period of [*], the indemnification, liability limitation, exculpation or advancement of expenses provisions of the Group Companies’ Governing Documents shall not be amended, repealed or otherwise modified after the Closing Date in any manner that would adversely affect the rights thereunder of individuals who, as of the Closing Date or at any time prior to the Closing Date, were directors, officers, employees, fiduciaries, trustees or agents of Seller or any Group Company, unless such modification is required by applicable law.

 

(b)           Without limiting any additional rights that any director, officer, employee, fiduciary, trustee or agent may have under any agreement, arrangement, Employee Benefit Plan or under any Group Company’s Governing Documents, from and after the Closing Date, Buyer shall, and shall cause the applicable Group Company, to the fullest extent permitted under applicable Law as in effect from time to time, to indemnify and hold harmless each present and former director, officer, employee, fiduciary, trustee or agent of any Group Company against any and all Losses in connection with any Proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to the fact that such Person is or was a director, officer, employee, fiduciary, trustee or agent of any Group Company or arising out of actions taken (or failed to be taken) by such Person at the request of any Group Company, including any and all such Losses arising out of or relating to this Agreement or the transactions contemplated hereby, for a period of [*] after the Closing Date.  The Buyer or the Group Companies shall promptly advance expenses to any such director, officer, employee, fiduciary, trustee or agent of any Group Company, as incurred, to the fullest extent permitted under applicable Law as in effect from time to time.  Neither the Buyer nor any Group Company shall settle, compromise or consent to the entry of any judgment in any actual or threatened Proceeding or investigation in respect of which indemnification has been or could be sought by a Person hereunder unless such settlement, compromise or judgment includes an unconditional release of such Person from all liability arising out of such Proceeding or investigation.  Neither Buyer nor any Group Company shall have any obligation hereunder to any Person when and if a court of competent jurisdiction shall ultimately determine (and such

 

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determination shall have become final and non-appealable) that the indemnification of such Person in the manner contemplated hereby is prohibited by applicable Law.

 

(c)           The Group Companies may purchase, prior to the Closing, at Buyer’s cost and expense if there is a Closing, a “tail” policy providing employees’, fiduciaries’, trustees’, directors’ and officers’ liability insurance coverage for a period of [*] after the Closing Date for the benefit of those Persons who are covered by any Group Company’s employees’, fiduciaries’, trustees’, directors’ and officers’ liability insurance policies as of the date hereof or at the Closing, with respect to matters occurring prior to the Closing; provided, that if the Group Companies do not purchase any such policy on or prior to the Closing Date, the Buyer shall cause the Group Companies to purchase and maintain in effect, beginning on the Closing and for a period of [*] thereafter, without any lapses in coverage, a policy providing employees’, fiduciaries’, trustees’, directors’ and officers’ liability insurance coverage for the benefit of those Persons who are covered by any Group Company’s employees’, fiduciaries’, trustees’, directors’ and officers’ liability insurance policies as of the date hereof or at the Closing.  Such a policy shall provide coverage that is at least equal to the coverage provided under Seller’s or the Group Companies’ current employees’, fiduciaries’, trustees’, directors’ and officers’ liability insurance policies; provided that the Group Companies may substitute therefor policies of at least the same coverage containing terms and conditions which are no less advantageous to the beneficiaries thereof so long as such substitution does not result in gaps or lapses in coverage with respect to matters occurring prior to the Closing Date.

 

(d)           Buyer agrees, and will cause the Group Companies, not to take any action that would have the effect of limiting the aggregate amount of insurance coverage required to be maintained for the individuals referred to in this Section 6.5. If Buyer, any Group Company or any of their respective successors or assigns (i) shall merge or consolidate with or merge into any other corporation or entity and shall not be the surviving or continuing corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of their respective properties and assets as an entity in one or a series of related transactions to any individual, corporation or other entity, then in each such case, proper provisions shall be made so that the successors or assigns of Buyer or such Group Company shall assume all of the obligations set forth in this Section 6.5; provided that neither Buyer nor such Group Company shall be relieved from such obligation.  In addition, neither Buyer nor any Group Company shall distribute, sell, transfer or otherwise dispose of any of its assets in a manner that would reasonably be expected to render Buyer or such Group Company unable to satisfy its obligations under this Section 6.5.

 

(e)           The directors, officers, employees, fiduciaries, trustees and agents of Seller and each Group Company entitled to the indemnification, liability limitation, exculpation and insurance set forth in this Section 6.5 are intended to be third party beneficiaries of this Section 6.5.  This Section 6.5 shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns of Buyer.

 

Section 6.6            Exclusive Dealing.  Neither the Company nor Seller shall take, nor shall they permit any of their respective Affiliates, officers, directors, employees, representatives, consultants, financial advisors, attorneys, accountants or other agents to: (a) during the period from the Cut-Off Time until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms: (i) solicit, initiate discussions or engage in negotiations with any

 

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Person (whether such negotiations are initiated by the Company, an Affiliate, a third party or otherwise), other than Buyer or its Affiliates, relating to the possible acquisition of any material portion of the equity or assets of Seller or the Company (whether by way of merger, purchase of equity, purchase of assets, loan or otherwise) or a refinancing or recapitalization of the Company (an “Acquisition Transaction”); or (ii) provide non-public information or documentation with respect to the Company to any Person, other than Buyer or its Affiliates or its or their representatives, relating to an Acquisition Transaction; provided, however, that Buyer hereby acknowledges that prior to the date of this Agreement, the Company has provided information relating to the Group Companies and has afforded access to, and engaged in discussions with, other Persons in connection with a proposed Acquisition Transaction and (b) during the period from the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, enter into any definitive agreement with any Person, other than Buyer or its Affiliates effecting an Acquisition Transaction.

 

Section 6.7            Documents and Information.  After the Closing Date, Buyer and the Company shall, and shall cause the Company’s Subsidiaries to, until the seventh anniversary of the Closing Date, retain all books, records and other documents pertaining to the business of the Group Companies in existence on the Closing Date and to make the same available for inspection and copying by Seller (at Seller’s expense) during normal business hours of the Company or any of its Subsidiaries, as applicable, upon reasonable request and upon reasonable notice.  All of such information shall be treated as confidential information pursuant to the terms of the Confidentiality Agreement, the provisions of which are by this reference hereby incorporated herein.  No such books, records or documents shall be destroyed after the seventh anniversary of the Closing Date by Buyer, the Company or any of its Subsidiaries, without first advising Seller in writing and giving Seller a reasonable opportunity to obtain possession thereof.

 

Section 6.8            Contact with Customers, Suppliers and Other Business Relations.  During the period from the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, Buyer hereby agrees that it is not authorized to and shall not (and shall not permit any of its employees, agents, representatives or Affiliates to) contact any employee, client or other material business relation of any Group Company regarding any Group Company, its business or the transactions contemplated by this Agreement without the prior consent of the Company (which consent shall not be unreasonably withheld).

 

Section 6.9            Employee Benefit Matters.  During the period beginning on the Closing Date and ending on the [*] of the Closing Date, Buyer shall provide employees of the Group Companies who are employed by any Group Company from and after the Closing with compensation that is, in the aggregate, no less favorable in any material respect than the compensation provided to such employees immediately prior to the Closing Date (including with respect to opportunities for cash-based bonus compensation and post-termination severance pay) and with employee benefits that are at least substantially similar in the aggregate to the Employee Benefit Plans and other benefit plans, programs or arrangements maintained by Seller and the Group Companies as of the date of this Agreement (other than with respect to equity compensation).  Buyer further agrees that, from and after the Closing Date, Buyer shall and shall cause each Group Company to grant all of its employees credit for any service with any Group Company earned prior to the Closing Date (i) for eligibility and vesting purposes and (ii) for

 

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purposes of vacation accrual and severance benefit determinations under any benefit or compensation plan, program, agreement or arrangement that may be established or maintained by Buyer or a Group Company or any of its or their Subsidiaries on or after the Closing Date (the “New Plans”).  In addition, Buyer hereby agrees that Buyer shall (A) cause to be waived all pre-existing condition exclusion and actively-at-work requirements and similar limitations, eligibility waiting periods and evidence of insurability requirements under any New Plans to the extent waived or satisfied by an employee under any Employee Benefit Plan as of the Closing Date and (B) cause any deductible, co-insurance and out-of-pocket covered expenses paid on or before the Closing Date by any employee (or covered dependent thereof) of any Group Company to be taken into account for purposes of satisfying applicable deductible, coinsurance and maximum out-of-pocket provisions after the Closing Date under any applicable New Plan in the year of initial participation.  Nothing contained herein, express or implied, is intended to confer upon any employee of any Group Company any right to continued employment for any period or continued receipt of any specific employee benefit, or shall constitute an amendment to or any other modification of any New Plan or Employee Benefit Plan.  Nothing in this Section 6.9 is intended to create any third-party beneficiary rights in any current or former employee or director of any Group Company with respect to any Employee Benefit Plan, New Plan or any plans or agreements which provide for executive compensation.  Buyer agrees that Buyer and the Group Companies shall be solely responsible for satisfying the continuation coverage requirements of Section 4980B of the Code for all individuals who are “M&A qualified beneficiaries” as such term is defined in Treasury Regulation Section 54.4980B-9.  Nothing in this Section 6.9 shall be deemed to limit the right of Buyer, the Company or any of their respective Affiliates to terminate the employment of any employee at any time.

 

Section 6.10         Transfer Taxes Paid By Buyer. All transfer Taxes, recording fees and other similar Taxes that are imposed on any of the parties hereto by any Governmental Entity in connection with the transactions contemplated by this Agreement shall be borne by Buyer.

 

Section 6.11         Disclosure Schedule Updates. Concurrently with the execution and delivery of this Agreement, the Company and Seller have delivered to Buyer the disclosure schedules to this Agreement (the “Schedules”).  From and after the date of this Agreement until the Closing Date, the Company and/or Seller shall promptly prepare and deliver to Buyer supplements and/or amendments to the Schedules (which may contain additional Schedules that are not in existence as of the date hereof relating to any of the provisions contained in ARTICLE III and/or ARTICLE IV (other than the representations and warranties set forth in Section 3.1(a) (Organization and Qualification; Subsidiaries), Section 3.2 (Capitalization of the Group Companies), Section 3.3 (Authority), Section 3.16 (Brokers), Section 4.1 (Authority), Section 4.3 (Title to the Shares; Ownership of Seller) and Section 4.5 (Brokers)), in each case, such supplement, amendment or new Schedule being referred to as an “Update”) with respect to matters first arising after the date hereof, which, if existing at the date of this Agreement would have been required to be set forth or described in the Schedules, in each case, to the extent such matters, individually or in the aggregate, would give rise to a failure of the condition set forth in Section 7.2(a).  Each such Update shall be deemed to be an amendment to this Agreement for all purposes hereof other than for purposes of the conditions set forth in Section 7.2(a); provided that, in the event that the disclosure of the facts, circumstances and events included in such Update would give Buyer the right to elect to terminate this Agreement pursuant to Section 8.1(b) 

 

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if the 30-day cure period described therein had lapsed and Buyer does not make such election within five Business Days of its receipt of such Update, such Update shall be deemed to be an amendment to this Agreement for all purposes hereof, including with respect to the conditions set forth in Section 7.2(a).

 

Section 6.12         Debt Payoff Letters. The Company shall, and shall cause each other Group Company to, use commercially reasonable efforts to (a) obtain from each holder of Closing Date Indebtedness that is Funded Indebtedness a payoff letter in a customary form and which provides for the release of all Liens securing such Funded Indebtedness upon the payoff thereof, all in customary form (collectively, the “Debt Payoff Letters”) and (b) provide Buyer with a copy of such Debt Payoff Letters at least two Business Days prior to the Closing Date.

 

Section 6.13         Change of Name. No later than five (5) Business Days following the Closing Date, Seller shall cause its name to be changed to a name that does not include the words “Sound Inpatient Physicians,” “SIP” or any derivation thereof, and Seller agrees to take any and all actions and make such filings with the Secretary of State of the State of Delaware and any other Governmental Entities as may be necessary to comply with its obligations under this Section 6.13.

 

Section 6.14         Rollover. On the day prior to the Closing Date, Seller shall distribute to each Rollover Equityholder a number of Shares in an amount equal to such Rollover Equityholder’s Rollover Shares in accordance with the amounts set forth in the Rollover Certificate (the “Distribution”). The Distribution made by Seller to each Rollover Equityholder shall be deemed a distribution of assets to such Rollover Equityholder pursuant to Section 7.2 of the Seller Operating Agreement, and shall appropriately reduce the cash distributions otherwise payable to such Rollover Equityholder in respect of the Estimated Purchase Price under Section 7.2 of the Seller Operating Agreement, when and as paid by Seller. For purposes of determining the value of the Distribution made by Seller to each Rollover Equityholder, each Rollover Share shall be deemed to have a Fair Market Value (as such term is defined in the Seller Operating Agreement) as of the time of such Distribution equal to the Per Share Price.

 

Section 6.15         280G Shareholder Vote.  The Company shall use reasonable best efforts to submit to Seller promptly after the date hereof, for approval (in a manner and with a disclosure document reasonably satisfactory to Buyer) by a vote of Seller as is required pursuant to Section 280G(b)(5)(B) of the Code and the Treasury Regulations thereunder (the “280G Shareholder Vote”), any such payments or other benefits that may, separately or in the aggregate, constitute “excess parachute payments” (within the meaning of Section 280G of the Code and the Treasury Regulations thereunder), such that, if the 280G Shareholder Vote is received approving such payments and benefits, such payments and benefits shall not be deemed to be “excess parachute payments” under Section 280G of the Code and the Treasury Regulations thereunder. Prior to such 280G Shareholder Vote, the Company shall use reasonable best efforts to obtain, from each person whom the Company reasonably believes to be with respect to the Company a “Disqualified Individual” and who might otherwise have, receive or have the right or entitlement to receive a parachute payment under Section 280G of the Code, a written waiver (in form and substance reasonably satisfactory to Buyer) pursuant to which such person agrees to waive any and all right or entitlement to such parachute payment, to the extent such payment would not be deductible pursuant to Section 280G of the Code. Such waivers shall cease to have

 

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any force or effect with respect to any item covered thereby to the extent the 280G Shareholder Vote for such item is obtained.

 

ARTICLE VII
  CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT

 

Section 7.1            Conditions to the Obligations of the Company, Buyer and Seller.  The obligations of the Company, Buyer and Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or, if permitted by applicable law, waiver by the Party for whose benefit such condition exists) of the following conditions:

 

(a)           any applicable waiting period under the HSR Act relating to the transactions contemplated by this Agreement shall have expired or been terminated; and

 

(b)           no order, decree or ruling (including by temporary restraining order or preliminary or permanent injunction) issued by any court of competent jurisdiction or other Governmental Entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect.

 

Section 7.2            Other Conditions to the Obligations of Buyer.  The obligations of Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver by Buyer of the following further conditions:

 

(a)           (i) the representations and warranties set forth in Section 3.1(a) (Organization and Qualification; Subsidiaries), Section 3.2 (Capitalization of the Group Companies), Section 3.3 (Authority), Section 3.16 (Brokers), Section 4.1 (Authority), Section 4.3 (Title to the Shares; Ownership of Seller) and Section 4.5 (Brokers) shall be true and correct as of the date of this Agreement and as of the Closing in all respects as if made at and as of such time (in each case, other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need to be true and correct only as of such date or with respect to such period); and (ii) all other representations and warranties of the Company set forth in ARTICLE III hereof and Seller set forth in ARTICLE IV hereof (A) shall be true and correct in all material respects (provided that any of such representations and warranties that are qualified as to “materiality” or “Company Material Adverse Effect” shall be true and correct in all respects) as of the date of this Agreement (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need to be true and correct only as of such date or with respect to such period) except, in the case of this clause (A), where such failure of such representations and warranties to be so true and correct (y) was not within the Company’s Knowledge as of the date of this Agreement, and (z) has not had and could not be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect; and (B) shall be true and correct as of the Closing in all respects (without giving effect to any qualifications as to “materiality” and “Company Material Adverse Effect” set forth in such representations and warranties) as if made at and as of such time (in each case, other than those

 

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representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need to be true and correct only as of such date or with respect to such period), except, in the case of this clause (B), where the failure of such representations and warranties to be so true and correct has not had and could not be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect;

 

(b)           Seller and the Company shall have performed and complied in all material respects with all covenants required to be performed or complied with by Seller and the Company under this Agreement on or prior to the Closing Date;

 

(c)           prior to or at the Closing, the Company shall have delivered the following closing documents:

 

(i)        a certificate of an authorized officer of the Company, dated as of the Closing Date, to the effect that the conditions specified in Section 7.2(a) and Section 7.2(b) have been satisfied;

 

(ii)       written resignations of (A) each of the directors of the Company and (B) those officers of the Company designated in writing by Buyer at least ten (10) Business Days prior to the Closing Date;

 

(iii)      a duly executed non-foreign affidavit from Seller dated as of the Closing Date and in form and substance required under Section 1445 of the Code stating that Seller is not a “foreign person” as defined in Section 1445 of the Code; and

 

(iv)      a duly executed TowerBrook Restrictive Agreement substantially in the form of Exhibit C attached hereto; and

 

(d)           the Escrow Agreement shall have been executed by Seller and the Escrow Agent.

 

Section 7.3            Other Conditions to the Obligations of the Company and Seller.  The obligations of the Company and Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver by the Company and Seller of the following further conditions:

 

(a)           the representations and warranties of Buyer set forth in ARTICLE V hereof shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, except to the extent such representations and warranties are made on and as of a specified date, in which case the same shall continue on the Closing Date to be true and correct as of the specified date;

 

(b)           Buyer shall have performed and complied in all material respects with all covenants required to be performed or complied with by it under this Agreement on or prior to the Closing Date;

 

52

 

(c)           prior to or at the Closing, Buyer shall have delivered a certificate of an authorized officer of Buyer, dated as of the Closing Date, to the effect that the conditions specified in Section 7.3(a) and Section 7.3(b) have been satisfied; and

 

(d)           the Escrow Agreement shall have been executed by Buyer and the Escrow Agent.

 

Section 7.4            Frustration of Closing Conditions.  No Party may rely on the failure of any condition set forth in this ARTICLE VII to be satisfied if such failure was caused by such Party’s failure to use commercially reasonable efforts to cause the Closing to occur, as required by Section 6.3.

 

ARTICLE VIII
 TERMINATION

 

Section 8.1            Termination.  This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the Closing:

 

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

 

(b)           by Buyer, if any of the representations and warranties of the Company set forth in ARTICLE III or Seller set forth in ARTICLE IV shall not be true and correct such that the condition to Closing set forth in Section 7.2(a) would not be satisfied and the breach or breaches causing such representations or warranties not to be so true and correct is not cured within 30 days after written notice thereof is delivered to Seller by Buyer;

 

(c)           by Seller, if any of the representations and warranties of Buyer set forth in ARTICLE V shall not be true and correct such that the condition to Closing set forth in Section 7.3(a) would not be satisfied and the breach or breaches causing such representations or warranties not to be so true and correct is not cured within 30 days after written notice thereof is delivered to Buyer by Seller;

 

(d)           by Buyer, if the transactions contemplated by this Agreement shall not have been consummated by September 12, 2014 (the “Termination Date”), unless the failure to consummate the transactions contemplated by this Agreement is solely the result of a breach by Buyer of its representations, warranties, obligations or covenants under this Agreement;

 

(e)           by Seller, if the transactions contemplated by this Agreement shall not have been consummated by the Termination Date, unless the failure to consummate the transactions contemplated by this Agreement is solely the result of a breach by either Seller or the Company of their respective representations, warranties, obligations or covenants under this Agreement;

 

(f)            by either Buyer or Seller, if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree or ruling or other action shall have become final and nonappealable; provided that the Party seeking to

 

53

 

terminate this Agreement pursuant to this Section 8.1(f) shall have used commercially reasonable efforts to remove such order, decree, ruling, judgment or injunction and shall have complied in all respects and taken all actions required by Section 6.3 hereof; or

 

(g)           automatically (and without any further action on the part of any Party) at 5:00 pm (New York time) on June 20, 2014 (the “Cut-Off Time”), if Buyer has not provided Seller with written notice that the supervisory board of Fresenius Medical Care AG & Co. KGaA, the ultimate parent entity of Parent Guarantor, has approved this Agreement, the transactions contemplated hereby and the performance by Parent Guarantor and Buyer of their obligations hereunder by the Cut-Off Time.

 

Section 8.2            Effect of Termination.  In the event of the termination of this Agreement pursuant to Section 8.1, this entire Agreement shall forthwith become void (and there shall be no liability or obligation on the part of Buyer, Seller or the Company or their respective officers, directors or equityholders) with the exception of (a) the provisions of this Section 8.2, Section 6.4 and ARTICLE X, and (b) any liability of any Party for any willful breach of this Agreement (which, for the avoidance of doubt, shall be deemed to include any failure by Buyer to consummate the transactions contemplated by this Agreement if it is obligated to do so hereunder) prior to such termination.  For the avoidance of doubt, there shall be no liability or obligation on the part of Buyer, Seller or the Company or their respective officers, directors or equityholders as a result of the failure of the transactions contemplated hereby to close as a result of the termination of this Agreement pursuant to Section 8.1(g).

 

ARTICLE IX
 INTENTIONALLY RESERVED

 

ARTICLE X
 MISCELLANEOUS

 

Section 10.1         Entire Agreement; Assignment; Amendment.  This Agreement, together with all Exhibits and Schedules hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof, and together with the Confidentiality Agreement, the other Transaction Documents and the Rollover Agreements, (a) constitute the entire agreement among the Parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof and (b) shall not be assigned by any Party other than by Buyer to an Affiliate and/or to its lenders for collateral security purposes (whether by operation of law or otherwise) without the prior written consent of Buyer and Seller. Any attempted assignment of this Agreement not in accordance with the terms of this Section 10.1 shall be void.  This Agreement may be amended or modified only by a written agreement executed and delivered by duly authorized officers of Buyer and Seller (on behalf of itself and the Company).  This Agreement may not be modified or amended except as provided in the immediately preceding sentence and any amendment by any Party or Parties effected in a manner which does not comply with this Section 10.1 shall be void.

 

54

 

Section 10.2         Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile or E-mail (having obtained electronic delivery confirmation thereof), or by registered or certified mail (postage prepaid, return receipt requested) to the other Parties as follows:

 

	
 
    	
To Buyer or Parent   Guarantor:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fresenius Medical Care   North America
    
	
 
    	
 
    	
920 Winter Street
    
	
 
    	
 
    	
Waltham, MA  02451
    
	
 
    	
 
    	
Attention: 
    	
Law Department
    
	
 
    	
 
    	
Facsimile: 
    	
(781) 699-9698
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
with a copy (which shall   not constitute notice to Buyer) to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Dentons US LLP
    
	
 
    	
 
    	
233 South Wacker Drive
    
	
 
    	
 
    	
Suite 7800
    
	
 
    	
 
    	
Chicago, IL  60606
    
	
 
    	
 
    	
Attention: 
    	
Michael M. Froy
    
	
 
    	
 
    	
Facsimile:  
    	
(312) 876-7934
    
	
 
    	
 
    	
E-mail:  
    	
michael.froy@dentons.com
    
	
 
    	
 
    	
 
    
	
 
    	
To Seller:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Sound   Inpatient Holdings, LLC
    
	
 
    	
 
    	
c/o   TowerBrook Capital Partners L.P.
    
	
 
    	
 
    	
Park   Avenue Tower
    
	
 
    	
 
    	
65   East 55th Street, 27th Floor
    
	
 
    	
 
    	
New   York, NY 10022
    
	
 
    	
 
    	
Attention: 
    	
Evan Goldman
    
	
 
    	
 
    	
 
    	
Glenn   F. Miller, Esq.
    
	
 
    	
 
    	
Facsimile: 
    	
(917) 591-4789
    
	
 
    	
 
    	
E-mail: 
    	
Evan.Goldman@towerbrook.com
    
	
 
    	
 
    	
 
    	
Glenn.Miller@towerbrook.com
    

 

55

 

	
 
    	
 
    	
with a copy (which shall   not constitute notice to Seller) to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Kirkland & Ellis   LLP
    
	
 
    	
 
    	
601 Lexington Avenue
    
	
 
    	
 
    	
New York, NY  10022
    
	
 
    	
 
    	
Attention: 
    	
Brian Raftery
    
	
 
    	
 
    	
 
    	
Leo Greenberg
    
	
 
    	
 
    	
 
    	
Dvir Oren
    
	
 
    	
 
    	
Facsimile: 
    	
(212) 446-6460
    
	
 
    	
 
    	
E-mail: 
    	
brian.raftery@kirkland.com
    
	
 
    	
 
    	
 
    	
leo.greenberg@kirkland.com
    
	
 
    	
 
    	
 
    	
dvir.oren@kirkland.com
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
To the Company (prior to   the Closing):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Sound Inpatient   Physicians, Inc.
    
	
 
    	
 
    	
1123 Pacific Avenue
    
	
 
    	
 
    	
Tacoma, WA 98402
    
	
 
    	
 
    	
Attention: 
    	
Robert A Bessler, MD
    
	
 
    	
 
    	
 
    	
Steven M McCarty, Esq.
    
	
 
    	
 
    	
Facsimile: 
    	
(253)   682-6128
    
	
 
    	
 
    	
E-mail: 
    	
rbessler@soundphysicians.com
    
	
 
    	
 
    	
 
    	
smccarty@soundphysicians.com
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with a copy (which shall   not constitute notice to the Company) to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Kirkland & Ellis   LLP
    
	
 
    	
 
    	
601 Lexington Avenue
    
	
 
    	
 
    	
New York, NY  10022
    
	
 
    	
 
    	
Attention: 
    	
Brian Raftery
    
	
 
    	
 
    	
 
    	
Leo Greenberg
    
	
 
    	
 
    	
 
    	
Dvir Oren
    
	
 
    	
 
    	
Facsimile: 
    	
(212) 446-6460
    
	
 
    	
 
    	
E-mail: 
    	
brian.raftery@kirkland.com
    
	
 
    	
 
    	
 
    	
leo.greenberg@kirkland.com
    
	
 
    	
 
    	
 
    	
dvir.oren@kirkland.com
    
	
 
    	
 
    
	
 
    	
To the Company (after the   Closing):
    
	
 
    	
 
    
	
 
    	
 
    	
Fresenius Medical Care   North America
    
	
 
    	
 
    	
920 Winter Street
    
	
 
    	
 
    	
Waltham, MA  02451
    
	
 
    	
 
    	
Attention: 
    	
Law Department
    
	
 
    	
 
    	
Facsimile: 
    	
(781) 699-9698
    

 

56

 

	
 
    	
 
    	
with a copy (which shall   not constitute notice to the Company) to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Dentons US LLP
    
	
 
    	
 
    	
233 South Wacker Drive
    
	
 
    	
 
    	
Suite 7800
    
	
 
    	
 
    	
Chicago, IL  60606
    
	
 
    	
 
    	
Attention: 
    	
Michael M. Froy
    
	
 
    	
 
    	
Facsimile: 
    	
(312) 876-7934
    
	
 
    	
 
    	
E-mail: 
    	
michael.froy@dentons.com
    

 

or to such other address as the Party to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

 

Section 10.3         Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware.

 

Section 10.4         Fees and Expenses.  Except as otherwise set forth in this Agreement (including, for the avoidance of doubt, the fees and expenses to be borne by Buyer in accordance with Section 6.3 and Section 6.5), all fees and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement, including the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the Party incurring such fees or expenses; provided, that in the event that the transactions contemplated by this Agreement are consummated, Buyer shall, or shall cause the Company to, pay all Unpaid Seller Expenses in accordance with Section 2.4(a)(ii).

 

Section 10.5         Construction.  The headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.  No Party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any Party and no presumption or burden of proof will arise favoring or disfavoring any Person by virtue of its authorship of any provision of this Agreement.

 

Section 10.6         Exhibits and Schedules.  All Exhibits and Schedules, or documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement.  Any item disclosed in any Schedule referenced by a particular Section in this Agreement shall be deemed to have been disclosed with respect to every other Section in this Agreement if the relevance of such disclosure to such other sections is reasonably apparent.  The specification of any dollar amount in the representations or warranties contained in this Agreement or the inclusion of any specific item in any Schedule is not intended to imply that such amounts, or higher or lower amounts or the items so included or other items, are or are not material, and no Party shall use the fact of the setting of such amounts or the inclusion of any such item in any dispute or controversy as to whether any obligation, items or matter not described herein or included in a Schedule is or is not material for purposes of this Agreement. Any capitalized term used in any

 

57

 

Exhibit or Schedule but not otherwise defined therein shall have the meaning given to such term in this Agreement.

 

Section 10.7         Parties in Interest.  This Agreement shall be binding upon and inure solely to the benefit of each Party and its successors and permitted assigns and, except as provided in Section 6.5, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

 

Section 10.8         Extension; Waiver.  At any time prior to the Closing, Seller may, on behalf of itself and the Company, (a) extend the time for the performance of any of the obligations or other acts of Buyer contained herein, (b) waive any inaccuracies in the representations and warranties of Buyer contained herein or in any document, certificate or writing delivered by Buyer pursuant hereto, or (c) waive compliance by Buyer with any of the agreements or conditions contained herein. At any time prior to the Closing, Buyer may (i) extend the time for the performance of any of the obligations or other acts of the Company or Seller contained herein, (ii) waive any inaccuracies in the representations and warranties of the Company and the Seller contained herein or in any document, certificate or writing delivered by the Company or Seller pursuant hereto, or (iii) waive compliance by the Company and Seller with any of the agreements or conditions contained herein.  Any agreement on the part of any Party to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such Party.  The failure of any Party to assert any of its rights hereunder shall not constitute a waiver of such rights.

 

Section 10.9         Severability.  Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party hereto.  Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable law, 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 in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

Section 10.10       Counterparts; Facsimile Signatures.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.

 

Section 10.11       Limitation on Damages; Survival.  Notwithstanding anything to the contrary set forth herein, no Party shall be liable for any consequential damages, including loss of revenue, income or profits, loss in value of assets or securities, punitive, special or indirect damages relating to any breach of this Agreement.  None of the representations and warranties contained in this Agreement or in any certificate delivered pursuant to this Agreement

 

58

 

shall survive the Closing.  This Section 10.11 shall not limit any covenant or agreement of the Parties set forth in this Agreement, which by its express terms requires performance after the Closing.  This ARTICLE X and the agreements of the Parties contained in Section 8.2 (Effect of Termination) and the Confidentiality Agreement shall survive the termination of this Agreement.

 

Section 10.12       WAIVER OF JURY TRIAL.  EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE.  EACH PARTY HEREBY FURTHER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

Section 10.13       Jurisdiction and Venue.  Each of the Parties (i) submits to the exclusive jurisdiction of the Chancery Court of the State of Delaware (or, if the Chancery Court of the  State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) in any action or proceeding arising out of or relating to this Agreement, (ii) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court and (iii) agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court.  Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other Party with respect thereto.  Each Party agrees that service of summons and complaint or any other process that might be served in any action or proceeding may be made on such Party by sending or delivering a copy of the process to the Party to be served at the address of the Party and in the manner provided for the giving of notices in Section 10.2.  Nothing in this Section 10.13, however, shall affect the right of any Party to serve legal process in any other manner permitted by law.  Each Party agrees that a final, non-appealable judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law.

 

Section 10.14       Remedies.  The Parties acknowledge and agree that irreparable harm for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that it does not fully and timely perform its obligations under or in connection with this Agreement (including failing to take such actions as are required of it hereunder to consummate this Agreement and the Closing) in accordance with its terms.   The Parties acknowledge and agree that (i) the other Parties shall be entitled to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without proof of damages and without posting a bond, prior to the valid termination of this Agreement in accordance with Section 8.1, this being in addition to any other remedy to which such other parties are entitled under this Agreement, (ii) the provisions set forth in Section 8.2 (A) are not intended to and do not adequately compensate

 

59

 

for the harm that would result from a breach of this Agreement prior to its valid termination and (B) shall not be construed to diminish or otherwise impair in any respect any party’s right to an injunction, specific performance, or other equitable relief and (iii) the right to obtain an injunction, specific performance, or other equitable relief is an integral part of the transactions contemplated by this Agreement and without that right, none of the parties would have entered into this Agreement. Each Party agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that the other Parties have an adequate remedy at Law.

 

Section 10.15       Waiver of Conflicts.  Recognizing that Kirkland & Ellis LLP has acted as legal counsel to Seller and its Affiliates and the Group Companies prior to the Closing, and that Kirkland & Ellis LLP intends to act as legal counsel to Seller and its Affiliates (which will no longer include the Group Companies) after the Closing, each of Buyer, Parent Guarantor and the Company hereby waives, on its own behalf and agrees to cause its Affiliates to waive, any conflicts that may arise in connection with Kirkland & Ellis LLP representing Seller and/or its Affiliates after the Closing as such representation may relate to Buyer, any Group Company or the transactions contemplated herein.  In addition, all communications involving attorney-client confidences between the Seller, its Affiliates or any Group Company and Kirkland & Ellis LLP in the course of the negotiation, documentation and consummation of the transactions contemplated hereby shall be deemed to be attorney-client confidences that belong solely to Seller and its Affiliates (and not the Group Companies).  Accordingly, the Group Companies shall not, without Seller’s consent, have access to any such communications, or to the files of Kirkland & Ellis LLP relating to its engagement, whether or not the Closing shall have occurred.  Without limiting the generality of the foregoing, upon and after the Closing, (a) Seller and its Affiliates (and not the Group Companies) shall be the sole holders of the attorney-client privilege with respect to such engagement, and none of the Group Companies shall be a holder thereof, (b) to the extent that files of Kirkland & Ellis LLP in respect of such engagement constitute property of the client, only Seller and its Affiliates (and not the Group Companies) shall hold such property rights and (c) Kirkland  & Ellis LLP shall have no duty whatsoever to reveal or disclose any such attorney-client communications or files to any of the Group Companies by reason of any attorney-client relationship between Kirkland & Ellis LLP and any of the Group Companies or otherwise.

 

Section 10.16     Parent Guarantee.

 

(a)         Parent Guarantor absolutely, unconditionally and irrevocably guarantees the full and prompt payment and performance of all covenants, obligations, liabilities and agreements of Buyer set forth in this Agreement.  The foregoing obligation of Parent Guarantor constitutes a continuing guarantee of payment and performance, and is and shall be absolute and unconditional under any and all circumstances, including circumstances which might otherwise constitute a legal or equitable discharge of a guarantor.  The guarantee set forth in this Section 10.16 is a primary guarantee of performance and not just of collection. Neither Seller nor the Company shall be required to attempt to collect any obligation guaranteed hereunder from Buyer prior to enforcing its rights against Parent Guarantor.  Parent Guarantor hereby waives (to the fullest extent permitted by applicable law) notice of acceptance of this guaranty and notice of any liability to which it may apply, and waives promptness, diligence, presentment, demand or payment, protest, notice of dishonor or nonpayment, suit or taking of other action by

 

60

 

Seller or the Company against, any other notice to, any party liable thereon. The Parties entered into this Agreement in reliance upon this Section 10.16.  Parent Guarantor acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated hereby and that the waivers and agreements by Parent Guarantor set forth in this Section 10.16 are knowingly made in contemplation of such benefits.

 

(b)           Parent Guarantor represents and warrants to Buyer and the Company that:

 

(i)                the execution, delivery and performance of this Agreement by Parent Guarantor have been duly authorized by all necessary action and do not contravene any provision of Parent Guarantor’s charter or similar organizational documents;

 

(ii)               all consents, approvals, authorizations, permits of, filings with and notifications to, any Governmental Entity necessary for the due execution, delivery and performance of this Agreement by Parent Guarantor have been obtained or made and all conditions thereof have been duly complied with and no other action by, and no notice to or filing with, any Governmental Entity is required in connection with the execution, delivery or performance of this Agreement;

 

(iii)              this Agreement constitutes a legal, valid and binding obligation of Parent Guarantor enforceable against Parent Guarantor in accordance with its terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought; and

 

(iv)              Parent Guarantor has, and will cause Buyer to have at the Closing, sufficient funds to consummate the transactions contemplated by this Agreement, including to pay all amounts required to be paid hereunder and the fees and expenses of Buyer related to the transactions contemplated hereby.

 

(c)         Parent Guarantor consents to the renewal, compromise, extension, acceleration or other changes in the time of payment of, or other changes in the obligations subject to, the guarantee set forth in Section 10.16 or any part thereof, in each case, to the extent Buyer has agreed to such change in writing in accordance with this Agreement.

 

(d)         Notwithstanding any other provision to the contrary contained herein, Parent Guarantor agrees to be bound by the terms and conditions of this ARTICLE X as if Parent Guarantor was a “Party.”

 

*     *     *     *     *

 

61

 

 

IN WITNESS WHEREOF, each of the Parties has caused this Stock Purchase and Contribution Agreement to be duly executed on its behalf as of the day and year first above written.

 

	
 
    	
SOUND INPATIENT HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert A. Bessler, M.D.
    
	
 
    	
Name:
    	
Robert   A. Bessler, M.D.
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SOUND INPATIENT PHYSICIANS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert A. Bessler, M.D.
    
	
 
    	
Name:
    	
Robert   A. Bessler, M.D.
    
	
 
    	
Title:
    	
Chief   Executive Officer
    

 

SIGNATURE PAGE TO STOCK PURCHASE AND CONTRIBUTION AGREEMENT

 

 

	
 
    	
SOUND INPATIENT PHYSICIANS HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Caputo
    
	
 
    	
Name:
    	
Mark   Caputo
    
	
 
    	
Title:
    	
Executive   Vice President, and
   Managing Partner, Joint Ventures
    

 

SIGNATURE PAGE TO STOCK PURCHASE AND CONTRIBUTION AGREEMENT

 

 

	
 
    	
FRESENIUS   MEDICAL CARE AG & CO. KGAA
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Caputo
    
	
 
    	
Name:
    	
Mark   Caputo
    
	
 
    	
Title:
    	
Executive   Vice President, and Managing Partner, Joint Ventures
    

 

SIGNATURE PAGE TO STOCK PURCHASE AND CONTRIBUTION AGREEMENTExhibit 10.1

EMPLOYEE MATTERS AGREEMENT

Dated as of July 30, 2014

by and among

The E.W. Scripps Company,

Desk Spinco, Inc.,

Desk NP Operating, LLC,

Journal Communications, Inc.,

Boat Spinco, Inc., and

Boat NP Newco, Inc.

	
ARTICLE I

		
DEFINITIONS

		
7

	  						
	
SECTION 1.01

	
 

	
In General

	
 

	
7

	
SECTION 1.02

	
 

	
Definitions

	
 

	
7

	
SECTION 1.03

	
 

	
General Interpretive Principles

	
 

	
16

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE II

		
GENERAL PRINCIPLES

		
17

	  						
	
SECTION 2.01

	
 

	
Scripps Employee Matters

	
 

	
17

	
SECTION 2.02

	
 

	
Journal Employee Matters

	
 

	
19

	
SECTION 2.03

	
 

	
No Third Party Beneficiaries

	
 

	
21

	
SECTION 2.04

	
 

	
Reimbursements

	
 

	
21

	
SECTION 2.05

	
 

	
Transition Period Services

	
 

	
21

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE III

		
QUALIFIED DEFINED BENEFIT PLANS

		
22

	  						
	
SECTION 3.01

	
 

	
Scripps Retirement Plan

	
 

	
22

	
SECTION 3.02

	
 

	
Scripps Property Plans

	
 

	
22

	
SECTION 3.03

	
 

	
Journal Retirement Plan

	
 

	
22

	
SECTION 3.04

	
 

	
Multiemployer Pension Plans

	
 

	
23

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE IV

		
QUALIFIED DEFINED CONTRIBUTION PLANS

		
24

	  						
	
SECTION 4.01

	
 

	
As of the Closing Date and During the Transition Period

	
 

	
24

	
SECTION 4.02

	
 

	
Account Balance Transfer Rules

	
 

	
25

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE V

		
HEALTH AND WELFARE PLANS

		
26

	  						
	
SECTION 5.01

	
 

	
Health and Welfare Plans Maintained by Journal Prior to the Closing Date

	
 

	
26

	
SECTION 5.02

	
 

	
Health and Welfare Plans Maintained by Scripps Prior to the Closing Date

	
 

	
26

	
SECTION 5.03

	
 

	
Establishment of the Newco Welfare Plans as of the Closing Date

	
 

	
26

	
SECTION 5.04

	
 

	
Scripps Welfare Plans After Closing

	
 

	
27

	
SECTION 5.05

	
 

	
Reimbursement Account Plans

	
 

	
29

	
SECTION 5.06

	
 

	
COBRA

	
 

	
29

	
SECTION 5.07

	
 

	
Liabilities

	
 

	
29

	
SECTION 5.08

	
 

	
Health Savings Accounts (“HSAs”) as of the Closing Date

	
 

	
31

	
SECTION 5.09

	
 

	
Paid Time-Off Benefits/Sick Pay/Vacation

	
 

	
31

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE VI

		
NONQUALIFIED PLANS

		
32

	  						
	
SECTION 6.01

	
 

	
Scripps Nonqualified Plans

	
 

	
32

ii

	
SECTION 6.02

	
 

	
Journal Nonqualified Plans

	
 

	
33

	
SECTION 6.03

	
 

	
Scripps Transition Credit Plan

	
 

	
34

	
SECTION 6.04

	
 

	
Impact of Transactions

	
 

	
34

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE VII

		
LONG-TERM INCENTIVE AWARDS

		
34

	  						
	
SECTION 7.01

	
 

	
Long-Term Incentive Awards

	
 

	
34

	
SECTION 7.02

	
 

	
Treatment of Scripps Options

	
 

	
34

	
SECTION 7.03

	
 

	
Treatment of Journal SARs

	
 

	
35

	
SECTION 7.04

	
 

	
Treatment of Scripps Restricted Share Units

	
 

	
36

	
SECTION 7.05

	
 

	
Treatment of Journal Restricted Shares

	
 

	
37

	
SECTION 7.06

	
 

	
Treatment of Journal Performance Units

	
 

	
37

	
SECTION 7.07

	
 

	
Treatment of Scripps Phantom Stock Units

	
 

	
38

	
SECTION 7.08

	
 

	
Journal Share Plans

	
 

	
38

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE VIII

		
ADDITIONAL COMPENSATION ACTIONS

		
39

	  						
	
SECTION 8.01

	
 

	
Incentive Awards

	
 

	
39

	
SECTION 8.02

	
 

	
Employee Stock Purchase Plans

	
 

	
40

	
SECTION 8.03

	
 

	
Scripps Senior Executive Change in Control Plan

	
 

	
41

	
SECTION 8.04

	
 

	
Scripps Executive Severance Plan

	
 

	
41

	
SECTION 8.05

	
 

	
Scripps Retention Plan for General Managers and Publishers

	
 

	
42

	
SECTION 8.06

	
 

	
Journal Severance and Retention Plan

	
 

	
42

	
SECTION 8.07

	
 

	
Retention, Severance Pay Programs, Agreements, Practices, Policies or Procedures

	
 

	
43

	
SECTION 8.08

	
 

	
Individual Arrangements

	
 

	
44

	
SECTION 8.09

	
 

	
Effect of the Transactions on Severance

	
 

	
45

	
SECTION 8.10

	
 

	
Adoption of Equity Incentive Plans by Newco

	
 

	
45

	
SECTION 8.11

	
 

	
Employment Tax Reporting Responsibility

	
 

	
45

	
SECTION 8.12

	
 

	
Section 409A of the Code

	
 

	
45

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE IX

		
WORKERS’ COMPENSATION LIABILITIES

		
46

	  						
	
SECTION 9.01

	
 

	
Pre-Closing Date Claims

	
 

	
46

	
SECTION 9.02

	
 

	
Post-Closing Date Claims

	
 

	
46

	
SECTION 9.03

	
 

	
Independent Contractors

	
 

	
46

	
SECTION 9.04

	
 

	
Cooperation

	
 

	
46

	
SECTION 9.05

	
 

	
Reimbursements for Newspaper Leave Employees

	
 

	
46

	
 

	
 

	
 

	
 

	
 

	
 

	
 

iii

	
ARTICLE X

		
INDEMNIFICATION

		
46

	  						
	
SECTION 10.01

	
 

	
Indemnification by Newco

	
 

	
46

	
SECTION 10.02

	
 

	
Indemnification by Scripps

	
 

	
46

	
SECTION 10.03

	
 

	
Indemnification Procedures

	
 

	
47

	
SECTION 10.04

	
 

	
Calculation of Damages

	
 

	
48

	
SECTION 10.05

	
 

	
Survival of Indemnities

	
 

	
48

	
SECTION 10.06

	
 

	
Remedies Cumulative

	
 

	
48

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE XI

		
GENERAL AND ADMINISTRATIVE

		
48

	  						
	
SECTION 11.01

	
 

	
Sharing Of Information

	
 

	
48

	
SECTION 11.02

	
 

	
Reasonable Efforts/Cooperation

	
 

	
49

	
SECTION 11.03

	
 

	
Employer Rights

	
 

	
49

	
SECTION 11.04

	
 

	
Non-Termination of Employment; No Third-Party Beneficiaries

	
 

	
49

	
SECTION 11.05

	
 

	
Consent of Third Parties

	
 

	
50

	
SECTION 11.06

	
 

	
Union Negotiations

	
 

	
50

	
SECTION 11.07

	
 

	
Access to Employees

	
 

	
50

	
SECTION 11.08

	
 

	
Beneficiary Designation/Release of Information/Right to Reimbursement

	
 

	
50

	
SECTION 11.09

	
 

	
Effect of Broadcast Merger

	
 

	
51

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE XII

		
MISCELLANEOUS

		
51

	  						
	
SECTION 12.01

	
 

	
Relationship of Parties

	
 

	
51

	
SECTION 12.02

	
 

	
Affiliates

	
 

	
51

	
SECTION 12.03

	
 

	
Notices

	
 

	
51

	
SECTION 12.04

	
 

	
Entire Agreement

	
 

	
52

	
SECTION 12.05

	
 

	
Waiver

	
 

	
52

	
SECTION 12.06

	
 

	
Amendment

	
 

	
52

	
SECTION 12.07

	
 

	
Governing Law and Submission to Jurisdiction; Waivers

	
 

	
52

	
SECTION 12.08

	
 

	
Headings

	
 

	
53

	
SECTION 12.09

	
 

	
Counterparts

	
 

	
53

	
SECTION 12.10

	
 

	
No Assignment; Binding Effect

	
 

	
53

	
SECTION 12.11

	
 

	
Severability

	
 

	
53

	

	
 

	
 

	
 

	
 

	
 

	
 

	
ARTICLE XIII

		
DISPUTE RESOLUTION

		
53

	  						
	
SECTION 13.01

	
 

	
General

	
 

	
53

iv

	
SECTION 13.02

	
 

	
Initiation

	
 

	
53

	
SECTION 13.03

	
 

	
Arbitration Request

	
 

	
54

	
SECTION 13.04

	
 

	
Injunctive Relief

	
 

	
54

Exhibits

	
Journal Welfare Plans

	
Exhibit A

	
Scripps Welfare Plans

	
Exhibit B

	
Scripps Retiree Medical Program

	
Exhibit C

	
Journal Retiree Medical Program

	
Exhibit D

v

EMPLOYEE MATTERS AGREEMENT

THIS EMPLOYEE MATTERS AGREEMENT (this “Agreement”), dated July 30, 2014, is by and among The E.W. Scripps Company, an Ohio corporation (“Scripps”), Desk Spinco, Inc., a Wisconsin corporation (“Scripps Spinco”), Desk NP Operating, LLC, a Wisconsin limited liability company and wholly owned subsidiary of Scripps Spinco (“SNOC”), Journal Communications, Inc., a Wisconsin corporation (“Journal”), Boat Spinco, Inc., a Wisconsin corporation (“Journal Spinco”), and Boat NP Newco, Inc., a Wisconsin corporation (“Newco”).

WHEREAS, the Board of Directors of Scripps has determined that it is advisable and in the best interests of Scripps and its shareholders to separate the Scripps Newspaper Business pursuant to the Scripps Newspaper Distribution, and the Board of Directors of Journal has determined that it is advisable and in the best interests of Journal and its shareholders to separate the Journal Newspaper Business pursuant to the Journal Newspaper Distribution, in each case on the terms and for the reasons set forth in the MTA;

WHEREAS, the Board of Directors of Scripps has determined that it is advisable and in the best interests of Scripps and its shareholders to effect the Scripps Newspaper Merger immediately following the Scripps Newspaper Distribution, on the terms set forth in the MTA;

WHEREAS, the Board of Directors of Journal has determined that it is advisable and in the best interests of Journal and its shareholders to effect the Journal Newspaper Merger immediately following the Journal Newspaper Distribution, on the terms set forth in the MTA;

WHEREAS, the Boards of Directors of Scripps and Journal have determined that it is advisable and in the respective best interests of Scripps and Journal and their respective shareholders to effect the Broadcast Merger immediately following the Newspaper Mergers, on the terms set forth in the MTA; and

WHEREAS, pursuant to the MTA, the Parties have agreed to enter into this Agreement for the purpose of allocating Assets, Liabilities and responsibilities with respect to certain employee compensation and benefit plan programs and arrangements, and certain employment matters between and among them.

NOW, THEREFORE, in consideration of the premises and of the respective agreements and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01    In General.  Capitalized terms used herein without definition shall have the meanings assigned to them in the MTA.

SECTION 1.02    Definitions.  As used in this Agreement, the following terms shall have the meanings set forth below:

6

“Active Transferring Journal Employee” means a Transferring Journal Employee who, as of immediately prior to the Journal Newspaper Distribution, is then a current employee of Journal or its Subsidiaries, except any employee on a Leave of Absence.   A Transferring Journal Employee shall become an Active Transferring Journal Employee upon coming off such Leave of Absence.

 “Active Transferring Scripps Employee” means a Transferring Scripps Employee who, as of immediately prior to the Scripps Newspaper Distribution, is then a current employee of Scripps or its Subsidiaries, except any employee on a Leave of Absence.   A Transferring Scripps Employee shall become an Active Transferring Scripps Employee upon coming off such Leave of Absence.

 “Agreement” shall have the meaning ascribed thereto in the preamble to this Agreement, including all the exhibits and schedules hereto, and all amendments made hereto from time to time.

“Asserted Liability” shall have the meaning ascribed thereto in Section 10.03 of this Agreement.

“Claim” shall have the meaning ascribed thereto in Section 10.03 of this Agreement.

“Designated Participant” means a Former Scripps Employee or Transferring Scripps Employee whose employment terminates between the date hereof and the Closing Date in connection with the Transactions, as determined by Scripps in its sole discretion, and who has been designated by Scripps as a Designated Participant on Section 1.01 of the Schedules hereto, as such Schedule may be updated from time to time prior to the Closing Date, under the heading “Designated Participants”.

“DOL” means the United States Department of Labor.

“Former Journal Employee” means, (a) as of the Closing Date, any former employee of Journal or a Subsidiary or Affiliate of Journal, including retired, deferred vested, non-vested and other inactive terminated individuals, and (b) after the Closing Date, any employee of Scripps Broadcast Surviving LLC or a Subsidiary or Affiliate of Scripps Broadcast Surviving LLC, whose employment therewith terminates after the Closing Date for any reason.  Notwithstanding the foregoing, a Transferring Journal Employee shall not be a “Former Journal Employee.”

“Former Journal Nonqualified Plan Participants” shall have the meaning ascribed thereto in Section 6.02 of this Agreement.

“Former Journal Severance and Retention Plan Participants” shall have the meaning ascribed thereto in Section 8.06 of this Agreement.

“Former Scripps Employee” means, (a) as of the Closing Date, any former employee of Scripps or a Subsidiary or Affiliate of Scripps, including retired, deferred vested, non-vested and other inactive terminated individuals, and (b) after the Closing Date, any employee of Scripps or a Subsidiary or Affiliate of Scripps, whose employment therewith terminates after the Closing Date for any reason. Notwithstanding the foregoing, a Transferring Scripps Employee shall not be a “Former Scripps Employee.”

7

“Former Scripps Executive CIC Plan Participants” shall have the meaning ascribed thereto in Section 8.03 of this Agreement.

“Former Scripps Executive Severance Plan Participants” shall have the meaning ascribed thereto in Section 8.04 of this Agreement.

“Former Scripps Nonqualified Plan Participants” shall have the meaning ascribed thereto in Section 6.01 of this Agreement.

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.

“HSA” shall have the meaning ascribed thereto in Section 5.08 of this Agreement.

“Indemnified Parties” shall have the meaning ascribed thereto in Section 10.02 of this Agreement.

“Indemnifying Party” shall have the meaning ascribed thereto in Section 10.03 of this Agreement.

“Information” shall mean all information, whether in written, oral, electronic or other tangible or intangible forms, stored in any medium, including non-public financial information, studies, reports, records, books, accountants’ work papers, contracts, instruments, flow charts, data, communications by or to attorneys, memos and other materials prepared by attorneys and accountants or under their direction (including attorney work product) and other financial, legal, employee or business information or data.

“Journal” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Journal 401(k) Plan” means the Journal Communications, Inc. 401(k) Plan.

“Journal Broadcast Employees” means all current and former employees of Journal and its Subsidiaries, other than Active Transferring Journal Employees and Journal Newspaper Leave Employees.

“Journal Broadcast Employee Reimbursement Account Plan” shall have the meaning ascribed thereto in Section 5.05 of this Agreement.

“Journal Compensation Committee” means the Compensation Committee of the Board of Directors of Journal.

“Journal Employee” means any individual who, immediately following the Broadcast Merger Effective Time, will be an employee of Scripps Broadcast Surviving LLC or a Subsidiary or Affiliate thereof, including active employees and employees on vacation and approved leave of absence (including maternity, paternity, family, paid time off, sick, short-term or long-term disability leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family and Medical Leave Act and other approved leaves).

8

“Journal Employee Stock Purchase Plan” means the Journal Communications, Inc. 2003 Employee Stock Purchase Plan.

“Journal ESPP Suspension Date” shall have the meaning ascribed to it in Section 8.02(b) of this Agreement.

“Journal Newspaper Benefit Plan” means any Benefit Plan sponsored or maintained solely by a Journal Newspaper Entity.

“Journal Newspaper Leave Employees” means Transferring Journal Employees who do not become Active Transferring Journal Employees on the Journal Newspaper Distribution Date by reason of being on a Leave of Absence.

“Journal Newspaper Merger Sub” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Journal Nonqualified Plans” means, collectively, the Journal Communications, Inc. Non-Qualified Deferred Compensation Plan and the Journal Communications, Inc. Supplemental Benefit Plan.

“Journal Participant” means any individual who, immediately following the Broadcast Merger Effective Time is a Journal Employee, a Former Journal Employee or a beneficiary, dependent or alternate payee of any of the foregoing.

“Journal Performance Units” means the outstanding grants of performance-based restricted units, which represent the general unsecured promise by Journal to deliver a certain number of shares of Journal Class B Common Stock in the future, granted pursuant to a Journal Share Plan.

“Journal Restricted Shares” means the outstanding grants of restricted Journal Common Stock granted under the Journal Share Plans.

“Journal Retiree Program” has the meaning ascribed to it in Section 5.04(c)(ii) of this Agreement.

“Journal Retirement Plan” means the Journal Communications, Inc. Employees Pension Plan.

“Journal SARs” means the outstanding grants of stock appreciation rights with respect to Journal Common Stock granted under the Journal Share Plans.

“Journal Share Plans” means the Journal Communications, Inc. 2003 Equity Incentive Plan, as amended, and the Journal Communications, Inc. 2007 Omnibus Incentive Plan and any other stock option or stock incentive compensation plan or arrangement maintained before the Closing Date for employees, officers, non-employee directors or other independent contractors of Journal or its Subsidiaries or Affiliates, as amended (exclusive of the Journal Employee Stock Purchase Plan).

9

“Journal Severance and Retention Plan” shall have the meaning ascribed to it in Section 8.06 of this Agreement.

“Journal Spinco” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Journal Welfare Plans” shall have the meaning ascribed thereto in Section 5.01 and Exhibit A of this Agreement.

“Leave of Absence” means an approved absence from work, paid or unpaid, including without limitation, by reason of an employee’s qualification for short term disability benefits, long term disability benefits, managed disability benefits, sick pay, paid time off (not including vacation), medical, personal or other approved leave of absence, other than “intermittent leave”.  The term “intermittent leave” means that the employee still is working, intermittently, during the period of Leave of Absence.

“Memphis Plans” means (i) Newspaper Guild of Memphis Retirement Income Plan; (ii) Retirement Benefit Plan of Memphis Publishing Company & Graphics Communications Conference/International Brotherhood of Teamsters Local 777-M; and (iii) Retirement Benefit Plan of Memphis Publishing Company & Memphis Mailers Union No. M-119.

“Mirror Journal Retiree Program” shall have the meaning ascribed thereto in Section 5.04(c) of this Agreement.

“Mirror Journal Welfare Plans” shall have the meaning ascribed thereto in Section 5.03(a) of this Agreement.

“Mirror Scripps Retiree Medical Program” shall the meaning ascribed thereto in Section 5.04(c) of this Agreement.

“Mirror Scripps Welfare Plans” shall have the meaning ascribed thereto in Section 5.03(a) of this Agreement.

“MTA” means the Master Transaction Agreement, dated July 31, 2014, among the Parties and the other parties named therein.

“Newco” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Newco Benefit Plan” means any Benefit Plan sponsored, maintained or contributed to, or required to be sponsored, maintained or contributed to, by Newco or any of its Subsidiaries.

“Newco Director” means any individual who is a current director of Newco as of the Closing Date.

“Newco Employee” means any individual who, immediately following the Newspaper Merger Effective Time, will be an employee of Newco or a Subsidiary or Affiliate thereof, including active employees and employees on vacation and approved leave of absence (including maternity, paternity, family, sick, short-term or long-term disability leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family and Medical Leave Act and other approved leaves).

10

“Newco Group” means, immediately following the Newspaper Merger Effective Time, Newco, the Journal Newspaper Entities, the Scripps Newspaper Entities, and any of their respective Subsidiaries or Affiliates.

“Newco Indemnified Parties” shall have the meaning ascribed thereto in Section 10.02 of this Agreement.

“Newco Journal Mirror Nonqualified Plans” shall have the meaning ascribed thereto in Section 6.02 of this Agreement.

 “Newco Journal Mirror Severance and Retention Plan” shall have the meaning ascribed thereto in Section 8.06 of this Agreement.

“Newco Journal Mirror Severance and Retention Plan Period” shall have the meaning ascribed to it in Section 8.06 of this Agreement.

“Newco Journal Welfare Plans” shall have the meaning ascribed thereto in Section 5.03(a) of this Agreement.

“Newco 401(k) Plan” means the tax qualified 401(k) plan established by Newco in accordance with Section 4.01 of this Agreement.

“Newco Participant” means any individual who, immediately following the Newspaper Merger Effective Time, is a Newco Employee or a beneficiary, dependent, or alternate payee thereof.

“Newco Retiree Program” has the meaning ascribed to it in Section 5.04(c).

“Newco Scripps Mirror Executive CIC Plan” shall have the meaning ascribed thereto in Section 8.03 of this Agreement.

“Newco Scripps Mirror Executive CIC Plan Period” shall have the meaning ascribed thereto in Section 8.03 of this Agreement.

 “Newco Scripps Mirror Executive Severance Plan” shall have the meaning ascribed thereto in Section 8.04 of this Agreement.

“Newco Scripps Mirror Executive Severance Plan Period” shall have the meaning ascribed to it in Section 8.04 of this Agreement.

“Newco Scripps Mirror Nonqualified Plans” shall have the meaning ascribed thereto in Section 6.01 of this Agreement.

“Newco Scripps Mirror Retention Plan” shall have the meaning ascribed to it in Section 8.05 of this Agreement.

11

“Newco Scripps Mirror Retention Plan Period” shall have the meaning ascribed to it in Section 8.05 of this Agreement.

“Newspaper Leave Employees” means, collectively, the Scripps Newspaper Leave Employees and the Journal Newspaper Leave Employees.

 “Nonqualified Plans” means, collectively, the Scripps Nonqualified Plans and the Journal Nonqualified Plans.

“Participating Company” means Scripps and any Person (other than an individual) participating in a Scripps Benefit Plan.

“Parties” means all of the parties to this Agreement, as set forth in the Preamble.

“PPACA” shall have the meaning ascribed thereto in Section 5.07(f) of this Agreement.

“Prior Plan” shall have the meaning ascribed thereto in Section 2.01(f) of this Agreement.

“Retiree Medical Programs” means the Scripps Retiree Medical Program, the Journal Retiree Program, and the Newco Retiree Program.

“Scripps” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Scripps Broadcast Employees” means all current and former employees of Scripps and its Subsidiaries, other than Active Transferring Scripps Employees and Scripps Newspaper Leave Employees.

“Scripps Director” means any individual who is a current or former director of Scripps as of the Closing Date.

“Scripps Employee” means any individual who, immediately following the Broadcast Merger Effective Time, will be an employee of Scripps or a Subsidiary or Affiliate thereof, including active employees and employees on vacation and approved leave of absence (including maternity, paternity, family, sick, paid time off, short-term or long-term disability leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family and Medical Leave Act and other approved leaves).

“Scripps Employee Reimbursement Account Plan” has the meaning ascribed to it in Section 5.05 of this Agreement.

“Scripps Employee Stock Purchase Plan” means The E.W. Scripps Company Employee Stock Purchase Plan.

“Scripps ESPP Suspension Date” shall have the meaning ascribed to it in Section 8.02(a) of this Agreement.

“Scripps Executive CIC Plan” shall have the meaning ascribed to it in Section 8.03 of this Agreement.

12

“Scripps Executive Severance Plan” shall have the meaning ascribed to it in Section 8.04 of this Agreement.

 “Scripps Group” means, as of the Broadcast Merger Effective Time, Scripps and each of its Subsidiaries (or any predecessor organization thereof), and any corporation or entity that may become part of such group from time to time thereafter.  The Scripps Group shall not include any member of the Newco Group.

“Scripps Indemnified Parties” shall have the meaning ascribed thereto in Section 10.01 of this Agreement.

“Scripps Newspaper Benefit Plan” means any Benefit Plan sponsored or maintained solely by a Scripps Newspaper Entity or to which contributions are made or benefits accrued, with respect to a Scripps Transferring Employee.

“Scripps Newspaper Leave Employees” means Transferring Scripps Employees who do not become Active Transferring Scripps Employees on the Scripps Newspaper Distribution Date by reason of being on a Leave of Absence

“Scripps Newspaper Merger Sub” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Scripps Nonqualified Plans” means, collectively, the Scripps Executive Deferred Compensation Plan, the Scripps Transition Credit Plan, the Scripps Supplemental Executive Retirement Plan, and The E.W. Scripps Company Selected Employees Retirement Program (i.e., individual arrangements maintained by Scripps and its Affiliates for the benefit of retiring employees to provide deferred compensation payments following retirement, as documented in writing or on the books and records of Scripps).

“Scripps Option” means an option to purchase Scripps Class A Common Shares pursuant to a Scripps Share Plan.

“Scripps Participant” means any individual who, immediately following the Broadcast Merger Effective Time, is a Scripps Employee, a Former Scripps Employee or a beneficiary, dependent or alternate payee of any of the foregoing and who is not a Journal Participant.

“Scripps Phantom Stock Units” means a unit credited under The E.W. Scripps Company 1997 Deferred Compensation and Stock Plan for Directors representing a general unsecured promise by Scripps to deliver a certain number of Scripps Class A Common Shares (or the cash equivalent thereof) in the future.

“Scripps Post-Transaction Share Value” means the average of the volume weighted average of the trading price per share of Scripps Class A Common Shares trading on an “ex-distribution” basis as reported on the NYSE for the ten full NYSE trading days immediately following the Closing Date.

“Scripps Pre-Transaction Share Value” means the average of the volume weighted average of the trading price per share of Scripps Class A Common Shares trading on a “regular way” basis as reported on the NYSE for the ten full NYSE trading days immediately preceding the Closing Date.

13

“Scripps Property Plans” means the following defined benefit pension plans: (a) Knoxville Newspaper Editorial Retirement Income Plan; and (b) the Memphis Plans.

“Scripps Ratio” means the quotient obtained by dividing (a) the Scripps Post-Transaction Share Value, by (b) the Scripps Pre-Transaction Share Value.

“Scripps Reimbursement Account Plan” shall have the meaning ascribed thereto in Section 5.05 of this Agreement.

“Scripps Restricted Share Units” means the general unsecured promise by Scripps to deliver a certain number of Scripps Class A Common Shares in the future pursuant to a Scripps Share Plan.

“Scripps Retention Plan” shall have the meaning ascribed to it in Section 8.05 of this Agreement.

 “Scripps Retiree Medical Program” shall have the meaning ascribed thereto in Section 5.04(c)(i) of this Agreement and described in Exhibit C.

“Scripps Retirement Plan” means the Scripps Pension Plan (including the Scripps Group Pension Plan).

“Scripps RIP” means the Scripps Retirement and Investment Plan, (including the Scripps Group Retirement and Investment Plan With Match, and the Scripps Group Retirement and Investment Plan Without Match).

“Scripps Share Plans” means, collectively, The E.W. Scripps Company 2010 Long-Term Incentive Plan, The E.W. Scripps Company Amended and Restated 1997 Long-Term Incentive Plan, The E.W. Scripps 1997 Deferred Compensation and Stock Plan for Directors, and any other stock option or stock incentive compensation plan or arrangement maintained before the Closing Date for employees, officers, non-employee directors or other independent contractors of Scripps or its Subsidiaries or Affiliates, as amended (exclusive of the Scripps Employee Stock Purchase Plan).

“Scripps Spinco” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Scripps Welfare Plans” shall have the meaning ascribed thereto in Section 5.02 of this Agreement.

“Successor Plan” shall have the meaning ascribed thereto in Section 2.01(f) of this Agreement.

“SNOC” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Third-Party Claim” shall have the meaning ascribed thereto in Section 10.03(a) of this Agreement.

14

“Transferred Employees Reimbursement Account Plan” shall have the meaning ascribed thereto in Section 5.05 of this Agreement.

“Transferring Journal Employee” except as otherwise provided in this Agreement, means any individual who, as of the Journal Newspaper Distribution, either (a)(i) is then a current employee of (including any full-time, part-time, temporary employee or an individual in any other employment relationship with), or then on a leave of absence (including, without limitation, paid or unpaid leave, disability, medical, personal or any other form of leave) from, any Journal Newspaper Entity and (ii) who is primarily employed in connection with the Journal Newspaper Business, or (b) has been designated by Journal as a Transferring Journal Employee on Section 1.01 of the Schedules hereto, subject to the consent of Scripps, which consent shall not unreasonably be withheld, delayed or conditioned, under the heading “Transferring Journal Employees.”  A Transition Period Services Provider shall not be considered a Transferring Journal Employee unless and until employed by Newco after the Transition Period End Date.

“Transferring Scripps Employee” means any individual who, as of the Scripps Newspaper Distribution, either (a)(i) is then a current employee of (including any full-time, part-time, temporary employee or an individual in any other employment relationship with), or then on a leave of absence (including, without limitation, paid or unpaid leave, disability, medical, personal or any other form of leave) from, any Scripps Newspaper Entity and (ii) who is primarily employed in connection with the Scripps Newspaper Business, or (b) has been designated by Scripps as a Transferring Scripps Employee on Section 1.01 of the Schedules hereto, subject to the consent of Journal, which consent shall not unreasonably be withheld, delayed or conditioned, under the heading “Transferring Scripps Employees.”  A Transition Period Services Provider shall not be considered a Transferring Scripps Employee unless and until employed by Newco after the Transition Period End Date.

“Transition Credit” shall have the meaning ascribed to it in Section 6.03 of this Agreement.

“Transition Credit Contribution” shall have the meaning ascribed to it in Section 4.01(d) of this Agreement.

“Transition Period” means, with respect to each Scripps Benefit Plan in which any Newco Group member is a Participating Company, the period of time beginning on the Closing Date and ending on December 31, 2015, or such other ending date as may later be agreed upon by the Parties.

“Transition Period End Date” means the last day of the Transition Period.

“Transition Period Services Providers” shall have the meaning ascribed to it in Section 2.05 of this Agreement.

SECTION 1.03    General Interpretive Principles.  Words in the singular shall include the plural and vice versa, and words of one gender shall include the other gender, in each case, as the context requires.  The words “hereof,” “herein,” “hereunder,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and references to Article, Section, paragraph, exhibit and schedule are references to the Articles, Sections, paragraphs, exhibits and schedules to this Agreement unless otherwise specified.  The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified.  Any reference to any federal, state, local or non-U.S. statute or Applicable Law shall be deemed to also refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.

15

ARTICLE II

GENERAL PRINCIPLES

SECTION 2.01    Scripps Employee Matters.

(a)            Effective not later than immediately before the Distribution Time, Scripps shall cause all Active Transferring Scripps Employees to become, or to continue to be, employees of a Scripps Newspaper Entity subject to the consent of Journal with respect to employee's "to become" employees of a Scripps Newspaper Entity which consent shall not be unreasonably delayed, conditioned or withheld.  Scripps and its Subsidiaries shall not take any action that is not otherwise permitted under this Agreement or the MTA that would interfere with such employees so becoming employed, or so remaining employed, as the case may be, by a Scripps Newspaper Entity.  As of the Scripps Newspaper Distribution, the Scripps Newspaper Entities shall have no employees other than the Active Transferring Scripps Employees.  Transferring Scripps Employees, who at the time of the Scripps Newspaper Distribution are not Active Transferring Scripps Employees by reason of being on leave (as described in the definition of Active Transferring Scripps Employees) shall remain (or become) an employee of Scripps until medically cleared to return to work.  Upon becoming medically cleared to return to work, the employee shall become an Active Transferring Scripps Employee and shall be hired by Newco.

(b)            As of the Distribution Time, except as expressly provided in this Agreement or the MTA, Scripps and its Subsidiaries (other than the Scripps Newspaper Entities) shall assign to the Scripps Newspaper Entities, to the extent applicable, and the Scripps Newspaper Entities shall assume or retain, as applicable, and hereby agree to pay, perform, fulfill and discharge, (i) all Liabilities under all Scripps Newspaper Benefit Plans, (ii) all Liabilities incurred with respect to Active Transferring Scripps Employees under all Scripps Benefit Plans (excluding any such Liability that is a Scripps Broadcast Liability, including as set forth on Section 1.01 of the Scripps Disclosure Schedule to the MTA under the heading “Scripps Broadcast Liabilities” or as expressly retained by Scripps pursuant to this Agreement), (iii) all Liabilities with respect to the employment or termination of employment of all Active Transferring Scripps Employees, including those Liabilities arising out of or resulting from employment by Scripps or its Subsidiaries on or before the Closing Date and (iv) all Liabilities with respect to other service providers (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of Scripps or its Subsidiaries, or who is or was in any other employment, non-employment, retainer, or other relationship with Scripps or its Subsidiaries), to the extent arising in connection with or as a result of employment with or the performance of services for Scripps and its Subsidiaries in connection with the Scripps Newspaper Business. All Assets held in trust to fund and all insurance policies funding, any Liabilities expressly assumed or retained by Scripps Newspaper Entities pursuant to the operation of this Section 2.01(b) shall be Scripps Newspaper Assets, except to the extent specifically provided otherwise in this Agreement or the MTA.

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(c)            As of the Distribution Time, except as expressly provided in this Agreement or the MTA, Scripps and its Subsidiaries (other than the Scripps Newspaper Entities) shall assume or retain, as applicable, and Scripps hereby agrees to pay, perform, fulfill and discharge, (i) all Liabilities under all Scripps Benefit Plans not expressly assumed by the Scripps Newspaper Entities pursuant to Section 2.01(b)(ii) above, (ii) all Liabilities with respect to all Scripps Broadcast Employees under all Scripps Benefit Plans that are not Scripps Newspaper Liabilities, (iii) all Liabilities with respect to the employment or termination of employment of all Scripps Broadcast Employees, (iv) all Liabilities with respect to Scripps Newspaper Leave Employees (but only for the period of time that they remain Scripps Employees); (v) all Liabilities with respect to other service providers (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of Scripps or its Subsidiaries, or who is or was in any other employment, non-employment, retainer or other relationship with Scripps or its Subsidiaries), to the extent arising in connection with or as a result of employment with or the performance of services for Scripps or its Subsidiaries in connection with any business other than the Scripps Newspaper Business and (vi) any other Liabilities expressly assigned to Scripps or its Subsidiaries (other than the Scripps Newspaper Entities) under this Agreement or the MTA, including the Scripps Broadcast Liabilities.  All Assets held in trust to fund, and all insurance policies funding, any Liabilities expressly assumed or retained by Scripps and its Subsidiaries (other than the Scripps Newspaper Entities) pursuant to the operation of this Section 2.01(c) shall be Scripps Broadcast Assets, except to the extent specifically provided otherwise in this Agreement or the MTA.

(d)            Notwithstanding anything in this Agreement or the MTA to the contrary, Scripps and its Subsidiaries (other than the Scripps Newspaper Entities) shall retain all Liabilities and Assets relating to health plan or insurance claims paid to or on behalf of Transferring Scripps Employees or their eligible spouses or dependents prior to the Closing Date under any health insurance plan or policy sponsored or maintained by Scripps or its Subsidiaries (other than the Scripps Newspaper Entities).

(e)            Each Active Transferring Scripps Employee will receive service credit for all periods of employment with Scripps or any of its Subsidiaries or any predecessor thereof prior to the Newspaper Merger Effective Time for purposes of vesting, eligibility and benefit levels under any Newco Benefit Plan in which such employee participates after the Newspaper Merger Effective Time, to the extent that such service was recognized under any analogous plan of Scripps or any of its Subsidiaries in effect immediately prior to the Newspaper Merger Effective Time; provided that no such service credit shall be given for purposes of benefit accruals under any defined benefit pension plan or where such credit would result in a duplication of benefits.

(f)            If on or after the Newspaper Merger Effective Time any Active Transferring Scripps Employee becomes covered under any benefit plan providing medical, dental, health, pharmaceutical or vision benefits (a “Successor Plan”), other than the plan in which he or she participated immediately prior to the Newspaper Merger Effective Time (a “Prior Plan”), any such Successor Plan shall not include any restrictions or limitations with respect to any pre-existing condition exclusions and actively-at-work requirements (except to the extent such exclusions or requirements were applicable under the corresponding Prior Plan), and, except as otherwise required by law, any eligible expenses incurred by such Active Transferring Scripps Employee and his or her covered dependents during the calendar year in which the Active Transferring Scripps Employee becomes covered under any Successor Plan shall be taken into account under any such Successor Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and/or his or her covered dependents for that year, to the extent that such expenses were incurred during a period in which the Active Transferring Scripps Employee or covered dependent was covered under a corresponding Prior Plan.

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SECTION 2.02    Journal Employee Matters.

(a)            Effective not later than immediately before the Distribution Time, Journal shall cause all Active Transferring Journal Employees to become, or to continue to be, employees of a Journal Newspaper Entity, subject to the consent of Scripps with respect to employees “to become” employees of a Journal Newspaper Entity, which consent shall not be unreasonably delayed, conditioned or withheld.  Journal and its Subsidiaries shall not take any action that is not otherwise permitted under this Agreement or the MTA that would interfere with such employees so becoming employed, or so remaining employed, as the case may be, by a Journal Newspaper Entity.  As of the Journal Newspaper Distribution, the Journal Newspaper Entities shall have no employees other than the Active Transferring Journal Employees.  Transferring Journal Employees, who at the Distribution Time are not Active Transferring Journal Employees by reason of being on leave (as described in the definition of Active Transferring Journal Employees) shall remain (or become) an employee of Journal until medically cleared to return to work.  Upon becoming medically cleared to return to work, the employee shall become an Active Transferring Journal Employee and shall be hired by Newco.

(b)            As of the Distribution Time, except as expressly provided in this Agreement or the MTA, Journal and its Subsidiaries (other than the Journal Newspaper Entities) shall assign to the Journal Newspaper Entities, to the extent applicable, and the Journal Newspaper Entities shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge, (i) all Liabilities under all Journal Newspaper Benefit Plans, (ii) certain Liabilities as specified in this Agreement incurred with respect to Transferring Journal Employees under all Journal Benefit Plans (excluding any such Liability that is a Journal Broadcast Liability, including as set forth on Section 1.01 of the Journal Disclosure Schedule to the MTA under the heading “Journal Broadcast Liabilities”), (iii) all Liabilities with respect to the employment or termination of employment of all Active Transferring Journal Employees, including those Liabilities arising out of or resulting from employment by Journal or its Subsidiaries on or before the Closing Date and (iv) all Liabilities with respect to other service providers (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of Journal or its Subsidiaries, or who is or was in any other employment, non-employment, retainer or other relationship with the Journal or its Subsidiaries), to the extent arising in connection with or as a result of employment with or the performance of services for Journal and its Subsidiaries in connection with the Journal Newspaper Business.  All Assets held in trust to fund, and all insurance policies funding, any Liabilities expressly assumed or retained by Journal Newspaper Entities pursuant to the operation of this Section 2.02(b) shall be Journal Newspaper Assets, except to the extent specifically provided otherwise in this Agreement or the MTA.

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(c)            As of the Distribution Time, except as expressly provided in this Agreement or the MTA, Journal and its Subsidiaries (other than the Journal Newspaper Entities) shall assume or retain, as applicable, and Journal hereby agrees to pay, perform, fulfill and discharge, (i) all Liabilities under all Journal Benefit Plans not expressly assumed by the Journal Newspaper Entities pursuant to Section 2.02(b)(ii) above, (ii) all Liabilities with respect to all Journal Broadcast Employees under all Journal Benefit Plans that are not Journal Newspaper Liabilities, (iii) all Liabilities with respect to the employment or termination of employment of all Journal Broadcast Employees, (iv) all Liabilities with respect to Journal Newspaper Leave Employees (but only for the period of time that they remain Journal Employees); (v) all Liabilities with respect to other service providers (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of Journal or its Subsidiaries, or who is or was in any other employment, non-employment, retainer or other relationship with Journal or its Subsidiaries), to the extent arising in connection with or as a result of employment with or the performance of services to Journal or its Subsidiaries in connection with any business other than the Journal Newspaper Business and (vi) any other Liabilities expressly assigned to Journal or its Subsidiaries (other than the Journal Newspaper Entities) under this Agreement or the MTA, including the Journal Broadcast Liabilities. All Assets held in trust to fund, and all insurance policies funding, any Liabilities expressly assumed or retained by Journal and its Subsidiaries (other than the Journal Newspaper Entities) pursuant to the operation of this Section 2.02(c) shall be Journal Broadcast Assets, except to the extent specifically provided otherwise in this Agreement or the MTA.

(d)            Notwithstanding anything in this Agreement or the MTA to the contrary, Journal and its Subsidiaries (other than the Journal Newspaper Entities) shall retain all Liabilities and Assets relating to health plan or insurance claims paid to or on behalf of Transferring Journal Employees or their eligible spouses or dependents prior to the Closing Date under any health insurance plan or policy sponsored or maintained by Journal or its Subsidiaries (other than the Journal Newspaper Entities).

(e)            Each Active Transferring Journal Employee will receive service credit for all periods of employment with Journal or any of its Subsidiaries or any predecessor thereof prior to the Newspaper Merger Effective Time for purposes of vesting, eligibility and benefit levels under any Newco Benefit Plan in which such employee participates after the Newspaper Merger Effective Time, to the extent that such service was recognized under any analogous plan of Journal or any of its Subsidiaries in effect immediately prior to the Newspaper Merger Effective Time; provided that no such service credit shall be given for purposes of benefit accruals under any defined benefit pension plan or where such credit would result in a duplication of benefits.

(f)            If on or after the Newspaper Merger Effective Time any Active Transferring Journal Employee becomes covered under any Successor Plan, other than a Prior Plan, any such Successor Plan shall not include any restrictions or limitations with respect to any pre-existing condition exclusions and actively-at-work requirements (except to the extent such exclusions or requirements were applicable under the corresponding Prior Plan), and, except as otherwise required by law, any eligible expenses incurred by such Active Transferring Journal Employee and his or her covered dependents during the calendar year in which the Active Transferring Journal Employee becomes covered under any Successor Plan shall be taken into account under any such Successor Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and/or his or her covered dependents for that year, to the extent that such expenses were incurred during a period in which the Active Transferring Journal Employee or covered dependent was covered under a corresponding Prior Plan.

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SECTION 2.03    No Third Party Beneficiaries.  No Active Transferring Scripps Employee or beneficiary or dependent thereof, Active Transferring Journal Employee or beneficiary or dependent thereof, or any other future, present or former employee of Scripps, Journal, Newco or any of their respective Subsidiaries or Affiliates shall have any third party beneficiary rights or rights to any specific levels of compensation or benefits or rights to continued employment as a result of the application of this Article 2 or any other provision of this Agreement or the MTA.

SECTION 2.04    Reimbursements.

(a)            In General.  It is the intent of the Parties that, unless expressly provided otherwise in this Agreement, Liabilities for health and welfare plan benefits and workers’ compensation Liabilities generally be the responsibility of Scripps for claims paid to its employees and their spouses and dependents after the Closing Date and of Newco for claims paid to its employees and their spouses or dependents  after the Closing Date irrespective of when the underlying claim is incurred if claims are paid in the ordinary course in accordance with past practice.

(b)            Newco Reimbursement.  From time to time after the Closing Date, Newco shall promptly reimburse Scripps, upon Scripps’ presentation of such substantiating documentation as Newco shall reasonably request, for the cost of any Liabilities satisfied by Scripps or its Subsidiaries or Affiliates that are, or that have been made pursuant to this Agreement, the responsibility of Newco or any of its Subsidiaries or Affiliates, including Liabilities of Scripps Newspaper Leave Employees and Journal Newspaper Leave Employees.

(c)            Scripps Reimbursement.  From time to time after the Closing Date, Scripps shall promptly reimburse Newco, upon Newco’s presentation of such substantiating documentation as Scripps shall reasonably request, for the cost of any Liabilities satisfied by Newco or its Subsidiaries or Affiliates that are, or that have been made pursuant to this Agreement, the responsibility of Scripps, Journal or any of their Subsidiaries or Affiliates.

SECTION 2.05    Transition Period Services.  Certain employees of Journal and Scripps who will not become Transferring Scripps Employees or Transferring Journal Employees may be necessary to the operation of Newco during the Transition Period.  At least 30 days prior to Closing Date, Newco will identify to Journal and Scripps these Journal or Scripps employees (the “Transition Period Services Providers”) and the approximate period for which their services will be required.  The Transition Period Services Providers shall remain employed by Scripps or Journal but provide services to Newco through the Transition Services Agreement.  For the period services are provided to Newco by a Transition Period Service Provider, Newco will reimburse Scripps (via the Transition Services Agreement) for the payroll, benefits and other costs of the Transition Period Services Provider (other than those related to retention, severance or retiree health benefit programs).  Scripps shall remain responsible for any Liabilities for the payroll, benefits and other costs of these Transition Period Services Providers, including under retention, severance or retiree health benefit programs.  Any Transition Period Services Provider whose services are required after the Transition Period End Date shall become employees of Newco and Newco shall be responsible for any Liabilities to these Transition Period Services Providers, including any retention, severance or retiree health benefits beginning on the date the person becomes employed by Newco.  A Transition Period Services Provider shall never become a Transferring Scripps Employee or Transferring Journal Employee unless they are employed by Newco after the Transition Period End Date.

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ARTICLE III

QUALIFIED DEFINED BENEFIT PLANS

SECTION 3.01    Scripps Retirement Plan.  Scripps shall continue to sponsor, maintain and fund the Scripps Retirement Plan.  Transferring Scripps Employees shall no longer be eligible to participate in the Scripps Retirement Plan upon the Closing Date, and shall not be eligible to continue to accrue future pay credits or benefits, become eligible (if not already) for any forms of subsidized early retirement benefits, or otherwise become eligible for the Scripps Retiree Medical Program after the Closing Date.  Scripps will continue to administer the Scripps Retirement Plan for the benefit of the Transferring Scripps Employees and their beneficiaries or alternate payees.  No Journal Broadcast Employee will be eligible to participate in the Scripps Retirement Plan.  Scripps also will continue to maintain and administer that portion of the Scripps Retirement Plan that is comprised of, and sponsored by, the Albuquerque Publishing Company and Journal Publishing Company provided, however, that nothing in this Agreement shall limit in any way whatsoever, any future decisions by Scripps to amend, freeze, merge, or terminate the Scripps Retirement Plan, in particular, with respect to Transferring Scripps Employees or the participants in and through the Albuquerque Publishing Company and Journal Publishing Company.  Newco shall have no Liabilities with respect to the Scripps Retirement Plan including no liability with respect to participants in the Albuquerque Publishing Company or the Journal Publishing Company portions of the Scripps Retirement Plan.

SECTION 3.02    Scripps Property Plans.  Scripps shall continue to maintain, administer, and fund, all as required by Applicable Law, the Scripps Property Plans.  Scripps shall continue to sponsor the Knoxville Newspaper Editorial Retirement Income Plan.  No new participants shall ever become eligible to participate in any of these plans.  With regard to the Memphis Plans, Scripps and Memphis Publishing Company shall take such actions as are necessary to cause Scripps to become the successor plan sponsor on the Closing Date.  Nothing in this Agreement shall limit in any way whatsoever, any future decisions by Scripps to amend, freeze, merge, or terminate any one or all of the Scripps Property Plans at any time, or from time to time.

SECTION 3.03    Journal Retirement Plan.  At the Broadcast Merger Effective Time, Scripps shall become the successor plan sponsor of the Journal Retirement Plan and shall maintain, administer, and fund the plan in accordance with Applicable Law. Scripps shall also assume Journal’s rights and responsibilities with respect to the trust assets which fund the Journal Retirement Plan.  Journal shall file such forms, attachments, enclosures, and related information, as is necessary under Applicable Law, to notify the IRS, the Pension Benefit Guaranty Corporation, and all affected participants, retirees, beneficiaries, and alternate payees of the transfer of plan sponsorship to Scripps.  Journal shall amend the Journal Retirement Plan, as necessary, to effectuate this transfer, and shall cooperate with Scripps as necessary, and provide all information, data, and records in its possession to enable Scripps to carry out this function.  Journal shall notify all vendors and advisors of the plan of this transfer and assign any and all rights to contracts with these vendors and advisors to Scripps; provided, however, that Scripps shall not be required to utilize or contract with these vendors and advisors and shall be free, in any event, to substitute other vendors and advisors to provide services for the plan.  Scripps agrees to accept the transfer of sponsorship, administer the plan in accordance with its terms, and to operate, fund, and maintain the plan in accordance with its terms and with Applicable Law and shall take such actions as are necessary and proper to effectuate this transfer and assumption of sponsorship; provided, however, that nothing in this Agreement shall limit in any way whatsoever any future decisions by Scripps to amend, freeze, merge, or terminate the Journal Retirement Plan after the Closing Date.

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SECTION 3.04    Multiemployer Pension Plans.

(a)            Scripps.  As of the date of execution of the MTA, Scripps contributes to and participates in the following multiemployer pension plans:  (i) the GCIU Employers Retirement Fund, City of Industry, California (for Bremerton, Washington; Evansville, Indiana; and Knoxville, Tennessee Pressmen) and (ii) the CWA/ITU Negotiated Pension Plan, Colorado Springs, Colorado (for Evansville, Indiana and Knoxville, Tennessee Mailers).  Journal and Newco agree that Evansville Courier Company will continue, after the Newspaper Merger Effective Time, to be a participating employer in the CWA/ITU Negotiated Pension Plan for its Mailers in Evansville, Indiana; provided, however, that nothing in this Agreement shall preclude Evansville Courier Company from withdrawing from this plan, completely or partially, but in such case, Newco agrees that it and Evansville Courier Company will be jointly liable for any withdrawal liability assessment at the time of any such withdrawal.  With regard to the CWA/ITU Negotiated Pension Plan (for Knoxville, Tennessee Mailers), Newco agrees that it will become a successor employer to Scripps’ obligations to contribute to these plans, will comply with the Sale of Assets provisions of ERISA Section 4204 if applicable to the Transactions, and will cooperate with Scripps and each of the plans as reasonably requested to execute such contracts or agreements as necessary to evidence this intent and agreement.  Further, nothing in this Agreement shall prevent Newco from withdrawing from the CWA/ITU Negotiated Pension Plan, completely or partially, but in such case, Newco will be liable for any withdrawal liability assessment at the time of such withdrawal.  Prior to the Closing Date, Scripps will use commercially reasonable efforts to withdraw, on behalf of itself and all of its Subsidiaries, from the GCIU Employers Retirement Fund.  Scripps will also use commercially reasonable efforts to negotiate a lump sum settlement of its withdrawal liability to the GCIU Employers Retirement Fund equal to (or less than) the present value of its monthly payments to the fund and obtain a release of any liability (including liability assessments of additional withdrawal liability in the event of a mass withdrawal, including any subsequent reallocation or redetermination of withdrawal liability) to the fund.  Newco shall be responsible for any future assessments of additional withdrawal liability as a result of a mass withdrawal from the fund, including any subsequent reallocation or redetermination of withdrawal liability.  In the event that withdrawal is not accomplished prior to the Closing, Newco will cooperate with Scripps in completing the withdrawal and Scripps shall remain responsible for payment of the withdrawal liability.

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ARTICLE IV

QUALIFIED DEFINED CONTRIBUTION PLANS

SECTION 4.01    As of the Closing Date and During the Transition Period.

(a)            The Newco 401(k) Plan.  As of the Closing Date, Newco shall establish a so-called “401(k)” plan for the benefit of employees of the Newco Group (the “Newco 401(k) Plan”), or shall cause one of its Subsidiaries or Affiliates to establish such a plan.  Newco shall be responsible for taking all necessary, reasonable and appropriate action to establish, maintain, and administer the Newco 401(k) Plan so that it is qualified under Sections 401(a) and 401(k) of the Code, and so that the related trust is exempt from income tax under Section 501(a) of the Code.  Such actions shall include either:  (i) applying for a favorable determination letter from the IRS; or (ii) the adoption of a preapproved or prototype plan with a favorable notification letter to the plan document sponsor, combined with the appropriate use and application of the plan document in a manner pursuant to which Newco can rely on the plan document sponsor’s notification letter from the IRS.  Newco shall accept a transfer to the Newco 401(k) Plan of the account balances of Active Transferring Journal Employees and Active Transferring Scripps Employees.

(b)            The Journal 401(k) Plan.  Journal will fully vest the account balances of all Journal Participants under the Journal 401(k) Plan effective as of the Closing Date.  Journal shall take such action as is necessary, appropriate and reasonable to spin off to the Scripps RIP the account balances of all participants of the Journal 401(k) Plan except the Account balances of Active Transferring Journal Employees as soon as administratively feasible.  Journal and Newco then will take such action as is necessary, appropriate and reasonable to merge the Journal 401(k) Plan into the Newco 401(k) Plan and transfer all related assets of the trust for the Journal 401(k) Plan into the trust for the Newco 401(k) Plan as soon as administratively feasible.  Journal and Newco shall be responsible for governmental and participant notifications in furtherance of the foregoing actions.

(c)            Scripps RIP.  Effective as of the Closing Date, Scripps shall as soon as practicable cause the Scripps RIP to accept the transferred account balances of all participants under the Journal 401(k) Plan except the Account balances of Active Transferring Journal Employees as soon as administratively feasible.  At such time, Scripps also shall fully vest the account balances of all Active Transferring Scripps Employees and shall, as soon as administratively feasible, transfer to the Newco 401(k) Plan from the Scripps RIP in a trustee to trustee transfer, the account balances of Active Transferring Scripps Employees.  Scripps shall take such actions as are necessary, appropriate and reasonable to effectuate these actions, including all appropriate governmental or participant notifications. Newco will reimburse Scripps for all employer matching contributions made by Scripps to the accounts of Journal Newspaper Leave Employees and Scripps Newspaper Leave Employees while they remain employees of Scripps.

(d)            Transition Credit Contribution.

(i)            With Respect to Scripps Retirement Plan Participants.  Prior to or as soon as administratively practicable following the Closing Date, Scripps shall contribute an amount to the Scripps RIP account of each Active Transferring Scripps Employee equal to the “Transition Credit Contribution” (as defined under the Scripps RIP) that the Active Transferring Scripps Employee would have received under the terms of that plan in effect on the date of this Agreement had his or her employment with Scripps continued from the Closing Date until December 31, 2015, assuming for this purpose that the rate of the Active Transferring Scripps Employee’s eligible quarterly compensation for the period that the Active Transferring Scripps Employee is deemed to be so employed shall equal the rate in effect for the calendar quarter ending immediately prior to the Closing Date (but excluding for this purpose only, any one-time or annual payments, such as annual incentives).  Except as specifically provided in this Section 4.01(d), in no event shall a Transferring Scripps Employee receive a Transition Credit Contribution with respect to any service or compensation commencing on or after the Closing Date.

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(ii)            With Respect to GCIU Employer Retirement Fund Participants.  Scripps has negotiated with the Pressmen Unions at each of its Bremerton, Washington; Knoxville, Tennessee; and Evansville, Indiana operations to withdraw from the GCIU Employers’ Retirement Fund, effective as of June 30, 2014, or as soon as practicable thereafter.  Commencing July 1, 2014, Scripps has agreed to pay to the Scripps RIP, a transition credit contribution of one hundred dollars ($100.00) per covered Pressmen employee, per calendar quarter, in advance for such calendar quarter, for the duration of the respective collective bargaining agreements at and with each of the applicable local unions.  Scripps agrees to pay this transition credit contribution to the Scripps RIP until the Newspaper Merger Effective Time. Thereafter, Newco agrees to pay this transition credit contribution to the Newco 401(k) Plan.

(iii)            Journal 401(k) Plan Match True Up.  As soon as administratively practicable following the final Journal payroll, Journal shall contribute a true-up matching contribution to the Journal 401(k) Plan on behalf of Journal Broadcast Employees and Active Transferring Journal Employees eligible for such a contribution and employed on the Closing Date for the portion of the Plan Year during which such Journal Broadcast Employees and Active Transferring Journal Employees participated in the Journal 401(k) Plan.

(e)            Great Empire ESOP.  Prior to the Closing Journal will use commercially reasonable efforts to resolve all Liabilities with respect to the Great Empire Broadcasting, Inc. Employee Stock Ownership Plan (the “GEB ESOP”).  For this purpose, commercially reasonable efforts will include  taking the following actions:  (i) updating the plan documents to comply with requirements for tax qualification under  the Code; (ii) filing a Voluntary Compliance Program under IRS Revenue Procedure 2013-12 to remediate the non-amender status of the plan document; (iii) filing a determination letter request  to ask the IRS for a determination letter on the termination of the plan; (iv) making  an effort to locate lost participants to distribute the assets  in their accounts;  and (v) establishing rollover  IRAs for lost participants who cannot  be located, to the extent allowable under Applicable Laws.  In the event all Liabilities with respect to the GEB ESOP are not resolved as of the Closing Date, Scripps shall assume all of Journal’s rights and responsibilities and liabilities with respect to the GEB ESOP.

SECTION 4.02    Account Balance Transfer Rules.  All balances (except for loans) shall be transferred in cash and no balances (except for loans) shall be transferred in-kind except to the extent an in-kind transfer is acceptable to the applicable vendor and reduces transfer costs.  Loan balances shall be transferred in kind; provided, however the entire account balance (including the loans) must be transferred and, subject to Applicable Law and any required consent of the participants, any such loans may be reamortized as required to reflect any differences in payroll periods.

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ARTICLE V

HEALTH AND WELFARE PLANS

SECTION 5.01    Health and Welfare Plans Maintained by Journal Prior to the Closing Date.  Journal or one or more of its Subsidiaries or Affiliates maintains each of the health and welfare plans set forth on Exhibit A attached hereto (the “Journal Welfare Plans”) for the benefit of eligible Journal Employees.  Effective as of the Broadcast Merger Effective Time, Scripps (or one of its Subsidiaries or Affiliates) will become the successor plan sponsor to the Journal Welfare Plans. At such time, and thereafter, either Scripps (or one of its Subsidiaries or Affiliates) shall continue to maintain, at their sole discretion, the Journal Welfare Plans.  Except as expressly provided in this Agreement, nothing in this Agreement is intended to limit in any way whatsoever Scripps’ ability to amend, merge, or terminate any Journal Welfare Plan after the Broadcast Merger Effective Time.

SECTION 5.02    Health and Welfare Plans Maintained by Scripps Prior to the Closing Date.  Scripps or one or more of its Subsidiaries or Affiliates maintains each of the health and welfare plans set forth on Exhibit B attached hereto (the “Scripps Welfare Plans”) for the benefit of eligible Scripps Employees.

SECTION 5.03    Establishment of the Newco Welfare Plans as of the Closing Date.

 

(a)            Two Sets of Newco Welfare Plans – Mirror Journal Welfare Plans and Mirror Scripps Welfare Plans.  Effective as of the Closing Date, Newco (acting directly or through its Subsidiaries or Affiliates) shall sponsor two sets of health and welfare plans for the benefit of its employees.  One set of health and welfare benefit plans shall be the Newco Mirror Journal Welfare Plans, which Newco shall sponsor and which shall be for the benefit of Active Transferring Journal Employees and shall be a so-called “mirror image” of the Journal Welfare Plans (“Mirror Journal Welfare Plans”).  The second set of health and welfare benefit plans shall be established for the benefit of Active Transferring Scripps Employees and shall mirror the Scripps Welfare Plans (“Mirror Scripps Welfare Plans”).  Collectively, the two sets of health and welfare plans established and sponsored by Newco shall be referenced as the “Newco Welfare Plans.”  The Newco Welfare Plans shall be administered in the same manner and using the same vendors as the Scripps Welfare Plans and Journal Welfare Plans, respectively, are administered, to the extent reasonably possible, with Newco as the plan sponsor of the Newco Welfare Plans.  During the Transition Period:  (i) Active Transferring Scripps Employees shall be entitled to continue to participate in Mirror Scripps Welfare Plans under substantially the same basis and cost that they were participating in the Scripps Welfare Plans; (ii) Active Transferring Journal Employees shall be entitled to continue to participate in Mirror Journal Welfare Plans under substantially the same basis and cost that they were participating in the Journal Welfare Plans; and (iii) Scripps will provide administrative services for the Newco Welfare Plans, during the Transition Period, pursuant to the Transition Services Agreement among the parties thereto.  Upon the Transition Period End Date, Newco shall provide such employee benefits plans and programs to Active Transferring Scripps Employees and Active Transferring Journal Employees as it provides to all other Newco Employees, upon and subject to the same terms, conditions and costs.

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(b)            Terms of Participation in Newco Welfare Plans.  Newco (acting directly or through its Subsidiaries or Affiliates) shall cause the Newco Welfare Plans to (i) waive all limitations as to pre-existing conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to Active Transferring Scripps Employees and Active Transferring Journal Employees, other than limitations that were in effect with respect to employees as of the Closing Date, (ii) except as otherwise required by law, provide credit for any deductible, out-of-pocket maximum, and co-payment incurred by participants under the Scripps Welfare Plans or Journal Welfare Plans in which they participated immediately prior to the Closing Date, in satisfying any applicable deductible or out-of-pocket requirements under any Newco Welfare Plans during the same plan year in which such deductible, out-of-pocket maximums and co-payments were made, and (iii) waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable to an Active Transferring Scripps Employee or Active Transferring Journal Employee, as the case may be, following the Closing Date to the extent such participant had satisfied any similar limitation under the analogous Scripps Welfare Plan or Journal Welfare Plan.

SECTION 5.04    Scripps Welfare Plans After Closing.

(a)            Continuation of the Journal Welfare Plans.  From the Broadcast Merger Effective Time through the Transition Period End Date, in addition to the Scripps Welfare Plans, Scripps shall continue to sponsor Journal Welfare Plans for the benefit of the Journal Broadcast Employees and Journal Newspaper Leave Employees.  Such Journal Welfare Plans shall be administered in the same manner and using the same vendors as the Journal Welfare Plans were administered prior to the Broadcast Merger Effective Time, to the extent reasonably possible, with Scripps (or a Subsidiary or Affiliate thereof) as the successor plan sponsor of the Journal Welfare Plans.  During the Transition Period, Journal Broadcast Employees and Journal Newspaper Leave Employees shall be entitled to continue to participate in Journal Welfare Plans upon substantially the same basis and cost that they were participating in the Journal Welfare Plans prior the Broadcast Merger Effective Time.  Upon the Transition Period End Date, Scripps shall provide such employee benefit plans and programs to the Journal Broadcast Employees and Journal Newspaper Leave Employees as it provides to other Scripps Employees, upon and subject to the same terms, conditions and costs.

(b)            Terms of Participation in the Journal Welfare Plans.  Scripps (acting directly or through its Subsidiaries or Affiliates), after the Broadcast Merger Effective Time, shall cause the Journal Welfare Plans to (i) waive all limitations as to pre-existing conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to Journal Broadcast Employees and Journal Newspaper Leave Employees as of the Closing Date, (ii) provide credit for any deductible, out-of-pocket maximum, and co-payment incurred by participants under the Journal Welfare Plans in which they participated immediately prior to the Closing Date, in satisfying any applicable deductible or out-of-pocket requirements under any Journal Welfare Plans during the same plan year in which such deductible, out-of-pocket maximums and co-payments were made, and (iii) waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable to a Journal Broadcast Employee or Journal Newspaper Leave Employee to the extent such participant had satisfied any similar limitation under the analogous Journal Welfare Plans prior to the Broadcast Merger Effective Time.

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(c)            Retiree Medical Programs.  The Retiree Medical Programs of Scripps, Journal and Newco (the “Retiree Medical Programs”) will be handled as follows:

(i)            Overall Intent of the Parties.  The overall intent of the Parties is for all eligible employees and eligible retirees of the Newspaper Businesses to become covered by the Newco Retiree Program (defined below) and for all other eligible employees and eligible retirees to become covered by the Scripps Retiree Medical Program (defined below).  The mechanics of how this will work during the Transition Period, after the Transition Period End Date, and the circumstances and limitations with respect to which the Parties have agreed to provide these benefits, are set forth in greater detail below.

(ii)            Post-Closing Retiree Medical Programs of Newco.  Effective as of the Closing Date, Newco (acting directly or through its Subsidiaries or Affiliates) shall:  (A) become the successor plan sponsor of the Journal Retiree Program (as described in Exhibit D hereto) (the “Journal Retiree Program”) and, (B) adopt or establish a so-called “mirror image” of the Scripps Retiree Medical Program described in Exhibit C attached hereto (the “Scripps Retiree Medical Program”), which mirror-image program shall be referred to as the “Mirror Scripps Retiree Medical Program.”  The Journal Retiree Program shall continue to cover eligible Active Transferring Journal Employees and eligible current retirees of Journal who worked in the Journal Newspaper Business prior to their retirement.  The Mirror Scripps Retiree Medical Program shall cover eligible Active Transferring Scripps Employees and eligible current retirees of Scripps who worked in the Scripps Newspaper Business.  The adoption of the Journal Retiree Program and the Mirror Scripps Retiree Medical Program shall comprise the “Newco Retiree Program”.

(iii)            Post-Closing Retiree Medical Programs of Scripps.  Effective as of the Closing Date, Scripps (acting directly or through its Subsidiaries or Affiliates) shall:  (A) continue to sponsor the Scripps Retiree Medical Program, and (B) adopt or establish a so-called “mirror-image” of the Journal Retiree Program, which mirror-image program shall be referred to as the “Mirror Journal Retiree Program.”  The Scripps Retiree Medical Program shall continue to cover Scripps Broadcast Employees, and current retirees of Scripps, other than those who worked in the Scripps Newspaper Business and who will be covered under the Mirror Scripps Retiree Medical Program.  The Mirror Journal Retiree Program will cover eligible Journal Broadcast Employees.

(iv)            During the Transition Period.  The Parties contemplate that a mutual Transition Services Agreement will be necessary for them to administer these Retiree Medical Programs.  The Parties also agree not to amend, terminate, or merge the Retiree Medical Programs during the Transition Period, except as may be required under Applicable Law.

(v)            Retiree Life Insurance Coverage.  Notwithstanding anything in this Section 5.04(c) to the contrary, Scripps will assume the liability to provide the life insurance coverage benefits for any eligible grandfathered Journal Broadcast Employees.

(vi)            Executive Life Insurance Plan.  Notwithstanding anything in this Agreement to the contrary, Scripps will retain all Liabilities under the Scripps Executive Life Insurance Plan.

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SECTION 5.05    Reimbursement Account Plans.  Effective as of the Closing Date, Newco (acting directly or through its Subsidiaries or Affiliates) shall establish a health and dependent care reimbursement account plan (the “Scripps Transferred Employees Reimbursement Account Plan”) with features that are comparable to those contained in the health and dependent care reimbursement account plan maintained by Scripps for the benefit of Transferring Scripps Employees immediately prior to the Closing Date (the “Scripps Employee Reimbursement Account Plan”).  Effective as of the Closing Date, Newco (acting directly or through its Subsidiaries or Affiliates) shall establish a health and dependent care reimbursement account plan (the “Journal Transferred Employees Reimbursement Account Plan”) with features that are  comparable to those contained in the health and dependent care reimbursement account plan maintained by Journal for Transferring Journal Employees immediately prior to the Closing Date) (the “Journal Employee Reimbursement Account Plan”). The Scripps Transferred Employees Reimbursement Account Plan and the Journal Transferred Employees Reimbursement Plan shall continue in effect the elections previously made by participants under, and provide benefits previously provided by, the Scripps Employee Reimbursement Account Plan and the Journal Reimbursement Account Plan.  Effective as of the Closing Date, Scripps (acting directly or through its Subsidiaries or Affiliates) shall assume the health and dependent care reimbursement account plan previously adopted by Journal (the “Journal Broadcast Employee Reimbursement Account Plan”).

SECTION 5.06    COBRA.  Effective as of the Closing Date, Scripps (acting directly or through its Subsidiaries or Affiliates) shall assume, or shall have caused its plans, or the Journal Welfare Plans to assume, responsibility for compliance with the health care continuation coverage requirements of COBRA with respect to all employees who, as of the day prior to the Closing Date either were covered under a Journal Welfare Plan or a Scripps Welfare Plan respectively pursuant to COBRA or were eligible to make a COBRA election (i.e., terminated prior to Closing but still in the COBRA election period).    Effective as of the Closing Date, each of Scripps (acting directly or through its Subsidiaries or Affiliates) and Newco (acting directly or through its Subsidiaries or Affiliates) shall assume responsibility for compliance with the healthcare continuation requirements of COBRA with respect to their respective employees who experience a COBRA qualifying event on and after the Closing Date.  The Parties agree that the Transactions will constitute a qualifying event under COBRA for Active Transferring Journal employees and Active Transferring Scripps Employees.

SECTION 5.07    Liabilities.

(a)            Insured Benefits.  Newco shall cause the Newco Welfare Plans to fully perform, pay and discharge all claims of Active Transferring Journal Employees and Active Transferring Scripps Employees that are paid on or after the Closing Date.  Scripps shall cause the Journal Welfare Plan to fully perform, pay and discharge all claims of Journal Broadcast Employees and Journal Newspaper Leave Employees that are paid on or after the Closing Date.  In the event the proper plan does not so pay such claim, such amount shall be a Liability of the sponsor of such plan, and shall be subject to reimbursement under Section 2.04.  All such claims shall be paid in the ordinary course in accordance with past practice, and Newco and Scripps shall cooperate to obtain appropriate insurance recoveries and coverage.

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(b)            Self-Insured Benefits.  With respect to employee welfare and fringe benefits that are provided on a self-insured basis, except as otherwise provided herein, Newco (acting directly or through its Subsidiaries or Affiliates) shall cause the Newco Welfare Plans to fully perform, pay and discharge all claims of Active Transferring Journal Employees and Active Transferring Scripps Employees and their spouses and their dependents that are paid on or after such Closing Date.  With respect to employee welfare and fringe benefits that are provided on a self-insured basis, except as otherwise provided herein, Scripps (acting directly or through its Subsidiaries or Affiliates) shall cause the Journal Welfare Plans to fully perform, pay and discharge all claims of Journal Broadcast Employees, Scripps Newspaper Leave Employees, and Journal Newspaper Leave Employees and their spouses and dependants that are paid after such Closing Date.  Expenses and claims paid to or on behalf of Active Transferring Journal Employees and Transferring Scripps Employees on and after the Closing Date, shall be Liabilities of Newco, notwithstanding which plan actually pays or covers the expense or claim.  Similarly, expenses and claims paid to or on behalf of Journal Broadcast Employees, Scripps Newspaper Leave Employees, and Journal Newspaper Leave Employees and their spouses and dependents on or after the Closing Date shall be Liabilities of Scripps, notwithstanding which plan actually pays or covers the expense or claim.  In the event the proper plan does not so pay such claim, such amount shall be a Liability of the sponsor of such plan, and shall be subject to reimbursement under Section 2.04.  All such claims shall be paid in the ordinary course in accordance with past practice, and Newco and Scripps shall cooperate to obtain appropriate insurance recoveries and coverage.

(c)            Plan Establishment and Administrative Assistance.  As more specifically described in the Transition Services Agreement, Scripps and Newco shall provide assistance to each other in the establishment and administration of the Newco Benefit Plans and the benefit plans of Scripps after the Closing Date.

(d)            Disability.  The insured Journal long term disability plan shall provide coverage to Journal Broadcast Employees, Journal Newspaper Leave Employees, and Transferring Journal Employees who become eligible for coverage under such plan due to an occurrence prior to the Closing Date.  The insured portion of the Scripps long term disability plan (and the fully insured disability plans at Evansville, Indiana and Knoxville, Tennessee) shall provide coverage to Scripps Broadcast Employees, Scripps Newspaper Leave Employees, and Transferring Scripps Employees who become eligible for coverage under such plan due to an occurrence prior to the Closing Date, provided that such occurrence was at least one year prior to Closing.  Active Transferring Scripps Employees and Active Transferring Journal Employees shall not be entitled to any short term disability benefits from Scripps or Journal after the Closing Date or any long term disability benefits from Scripps to the extent they are related to the self insured portion of the Scripps long term disability plan.  Scripps shall remain responsible for all disability benefits provided to Scripps Broadcast Employees and Scripps Newspaper Leave Employees and Journal shall remain responsible for all disability benefits provided to Journal Broadcast Employees and Journal Newspaper Leave Employees.  With respect to Transferring Scripps Employees who were eligible for long term disability benefits prior to Closing, but who had not yet reached one full year since the date of occurrence of the disability (i.e., such employee was in the self-insured portion of their period of long term disability), Scripps shall either pay or provide the long term disability benefits or, if Scripps pays such benefits directly, Newco will reimburse Scripps for long term disability benefits paid or conferred after the Closing Date.

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(e)            Reimbursements for the Newspaper Leave Employees.  Newco will reimburse Scripps for all self-insured health and welfare benefits paid by Scripps, after Closing, to or on behalf of Journal Newspaper Leave Employees and Scripps Newspaper Leave Employees while they remain employees of Scripps

(f)            Audit Rights.  Newco shall have the right, at its own expense, to audit, or to cause an inspection body selected by Newco and composed of members with appropriate professional qualifications to audit any invoices for the payment of self-insured medical claims, retiree medical claims, under Sections 5.07(b) through (e), respectively, in a commercially reasonable manner during normal Scripps business hours.  Scripps shall have identical rights with respect to any reimbursements requested by Newco for pre-Closing Date payments as described under Sections 5.07(b) and (c) above.

(g)            Patient Protection and Affordable Care Act Compliance.  Journal, Newco and Scripps, before and after the Closing Date, all agree to take any and all necessary actions to comply with the requirements of the Patient Protection and Affordable Care Act (“PPACA”), including (1) providing group health plan coverage that satisfies all of the requirements imposed upon relevant plans under Section 715 of ERISA and Subchapter B of Chapter 100 of  Subtitle K of the Code and that satisfies all of the relevant requirements imposed by the Fair Labor Standards Act (as amended by PPACA) upon Journal, Newco or Scripps or any Subsidiary or Affiliate with respect to such plan; and (2) maintaining employee records (or, causing such third parties to maintain such records) reasonably sufficient to enable Journal, Scripps and Newco and each Subsidiary or Affiliate to comply with all relevant reporting and disclosure requirements imposed upon any of them under Sections 6051, 6055, and 6056 of the Code and related regulations and satisfying all reporting and disclosure requirements imposed under said Sections.  Journal, Newco and Scripps shall all cooperate as necessary to meet the reporting and compliance requirements under PPACA.  In addition, Journal, Newco and Scripps shall all cooperate, as necessary, to determine the status of employees for purposes of Code Section 4980H.

(h)            HIPAA Privacy Compliance.  With regard to compliance under HIPAA, each of the welfare plans that are group health plans or include group health plan components shall have HIPAA compliance programs, including but not limited to, policies and procedures, business associate agreements with vendors, and distribution of a HIPAA Notice of Privacy Practice and health plan identifiers.  As necessary, the parties hereto shall enter into HIPAA business associate agreements, as necessary, to provide services under the Transition Services Agreement.  The parties shall cooperate in taking any actions necessary for the others’ HIPAA compliance, including with respect to health plan identifiers.

SECTION 5.08    Health Savings Accounts (“HSAs”) as of the Closing Date.  The parties agree that each HSA account is an individual account that is controlled by each individual account holder.  The Parties agree that an individual’s HSA account is not subject to ERISA, and neither Scripps nor Newco will administer any HSA account of an individual.

SECTION 5.09    Paid Time-Off Benefits/Sick Pay/Vacation.

(a)            Scripps.  During the Transition Period, Scripps will provide Journal Broadcast Employees the same sick pay and vacation benefits as Journal provided to such employees prior to the Closing Date, and shall carry over and grant credit for all such related seniority, length of service, and unused balances at the Closing Date as are used to measure the unused benefits available for the remainder of the calendar year at the Closing Date.  Scripps or Journal also will provide the same sick pay and vacation benefits to Journal Newspaper Leave Employees as Journal provided to such employees prior to Closing.  Scripps also will provide the same short term disability, paid time off, and vacation benefits to Scripps Newspaper Leave Employees as it provided to such employees prior to Closing.

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(b)            Newco.  During the Transition Period, Newco will provide Active Transferring Scripps Employees and Active Transferring Journal Employees the same Paid Time Off and vacation benefits as Scripps and Journal, respectively, provided to such employees prior to the Closing Date, and shall carry over and grant credit for all such related seniority, length of service, and unused balances at the Closing Date as are used to measure the unused benefits for the remainder of the calendar year at the Closing Date.

(c)            At the Transition Period End Date.  At the Transition Period End Date all unused paid time off and vacation benefits in excess of 5 days shall be cashed out by Newco or Scripps.

(d)            Cash Out.  Prior to the Closing Date Journal shall cash out the 5th week vacation bank, the 1995 grandfathered vacation accrual and the 2008 grandfathered vacation accrual.

(e)            Reimbursement for Newspaper Leave Employees.  Newco will reimburse Scripps for all self-insured sick pay, short term disability, long term disability, paid time off and vacation benefits paid by Scripps, after Closing, to or on behalf of Journal Newspaper Leave Employees and Scripps Newspaper Leave Employees while they remain employees of Scripps.

ARTICLE VI

NONQUALIFIED PLANS

SECTION 6.01    Scripps Nonqualified Plans.  Prior to the Distribution Time, Newco shall establish a non-qualified deferred compensation plan or plans that provide benefits substantially comparable in all material respects to the benefits provided under the Scripps Nonqualified Plans, as in effect on the date of this Agreement (the “Newco Scripps Mirror Nonqualified Plans”).  As of the Distribution Time, all individuals who participated in the Scripps Nonqualified Plans immediately prior to the Distribution Time and who are either (a) Transferring Scripps Employees or (b) Former Scripps Employees who, at the time of termination of employment, were primarily employed in connection with the Scripps Newspaper Business (“Former Scripps Nonqualified Plan Participants”) shall cease to participate in the Scripps Nonqualified Plans and, as of the Newspaper Merger Effective Time, Newco shall cause such Former Scripps Nonqualified Plan Participants to commence participation in the Newco Scripps Mirror Nonqualified Plans on terms and conditions substantially comparable in all material respects to those under the Scripps Nonqualified Plans.  Effective as of the Newspaper Merger Effective Time, Newco hereby agrees to cause the Newco Scripps Mirror Nonqualified Plans to assume and to pay, perform, fulfill and discharge all Liabilities under the Scripps Nonqualified Plans with respect to all Former Scripps Nonqualified Plan Participants therein.  Newco (acting directly or through its Affiliates) shall be responsible for any and all Liabilities and other obligations with respect to the Newco Scripps Mirror Nonqualified Plans. Newco shall cause the Newco Scripps Mirror Nonqualified Plans to recognize and maintain all elections (including deferral, distribution and investment elections) and beneficiary designations with respect to Former Scripps Nonqualified Plan Participants under the Scripps Nonqualified Plans for the remainder of the period or periods for which such elections or designations are by their original terms applicable, to the extent such election or designation is available under the Newco Scripps Mirror Nonqualified Plans.  The Newco Scripps Mirror Nonqualified Plans shall be designed and implemented in such a manner that the assumption of Liabilities and other obligations pursuant to this Section 6.01 shall not, by itself, constitute a change in the time or form of payment or an acceleration of payment with respect to any Former Scripps Nonqualified Plan Participant for purposes of Section 409A of the Code.  The Newco Board of Directors may, in its sole discretion, limit participation in the Newco Scripps Mirror Nonqualified Plans solely to Former Scripps Nonqualified Plan Participants.  Neither Scripps, Journal nor their Affiliates shall have any obligations with respect to the Newco Scripps Mirror Nonqualified Plans, as they may be amended from time to time.  Effective as of the Distribution Time, Scripps shall retain and hereby agrees to pay, perform, fulfill and discharge all Liabilities under the Scripps Nonqualified Plans and The E.W. Scripps Company 1997 Deferred Compensation and Stock Plan for Directors, as they may be amended from time to time, with respect to participants other than Transferring Scripps Employees.  Newco and its Affiliates shall have no liability or responsibility with respect to the Scripps Nonqualified Plans.

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SECTION 6.02    Journal Nonqualified Plans.  Prior to the Distribution Time, Newco shall establish a non-qualified deferred compensation plan or plans that provide benefits substantially comparable in all material respects to the benefits provided under the Journal Nonqualified Plans, as in effect on the date of this Agreement (the “Newco Journal Mirror Nonqualified Plans”).  As of the Distribution Time, all individuals who participated in the Journal Nonqualified Plans immediately prior to the Distribution Time and who are either (a) Transferring Journal Employees or (b) Former Journal Employees who, at the time of termination of employment, were primarily employed in connection with the Journal Newspaper Business (“Former Journal Nonqualified Plan Participants”) shall cease to participate in the Journal Nonqualified Plans and, as of the Newspaper Merger Effective Time, Newco shall cause such Former Journal Nonqualified Plan Participants to commence participation in the Newco Journal Mirror Nonqualified Plans on terms and conditions substantially comparable in all material respects to those under the Journal Nonqualified Plans.  Effective as of the Newspaper Merger Effective Time, Newco hereby agrees to cause the Newco Journal Mirror Nonqualified Plans to assume and to pay, perform, fulfill and discharge all Liabilities under the Journal Nonqualified Plans with respect to all Former Journal Nonqualified Plan Participants therein.  Newco (acting directly or through its Affiliates) shall be responsible for any and all Liabilities and other obligations with respect to the Newco Journal Mirror Nonqualified Plans.  Newco shall cause the Newco Journal Mirror Nonqualified Plans to recognize and maintain all elections (including deferral, distribution and investment elections) and beneficiary designations with respect to Former Journal Nonqualified Plan Participants under the Journal Nonqualified Plans for the remainder of the period or periods for which such elections or designations are by their original terms applicable, to the extent such election or designation is available under the Newco Journal Mirror Nonqualified Plans.  The Newco Journal Mirror Nonqualified Plans shall be designed and implemented in such a manner that the assumption of Liabilities and other obligations pursuant to this Section 6.02 shall not, by itself, constitute a change in the time or form of payment or an acceleration of payment with respect to any Former Journal Nonqualified Plan Participant for purposes of Section 409A of the Code.  The Newco Board of Directors may, in its sole discretion, limit participation in the Newco Journal Mirror Nonqualified Plans solely to Former Journal Nonqualified Plan Participants.  Neither Scripps, Journal nor their Affiliates shall have any obligations with respect to the Newco Journal Mirror Nonqualified Plans, as they may be amended from time to time.  Effective as of the Broadcast Merger Effective Time, Journal shall assign to Scripps, and Scripps shall assume or retain, as applicable, and Scripps hereby agrees to pay, perform, fulfill and discharge all Liabilities under the Journal Nonqualified Plans, as they may be amended from time to time, with respect to participants other than Transferring Journal Employees.  Newco and its Affiliates shall have no liability or responsibility with respect to the Journal Nonqualified Plans.

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SECTION 6.03    Scripps Transition Credit Plan.  Prior to the Closing Date, Scripps shall credit an amount to the account of each Transferring Scripps Employee who participates in the Scripps Transition Credit Plan equal to the “Transition Credit” (as defined under the Scripps Transition Credit Plan) that the Transferring Scripps Employee would have received under the terms of that plan in effect on the date of this Agreement had his or her employment with Scripps continued from the Distribution Time until December 31, 2015, after taking into account the Transition Credit contributed to the Scripps RIP on behalf of such Transferring Scripps Employee in accordance with Section 4.01(d) of this Agreement, assuming for this purpose that the rate of the Transferring Scripps Employee’s eligible quarterly compensation for the period that the Transferring Scripps Employee is deemed to be so employed shall equal the rate in effect for the calendar quarter ending immediately prior to the Closing Date (but excluding, for this purpose only, any one-time or annual payments, such as annual incentives).  Except as specifically provided in this Section 6.03, in no event shall a Transferring Scripps Employee receive a Transition Credit with respect to any service or compensation commencing on or after the Closing Date.

SECTION 6.04    Impact of Transactions.  Scripps, Journal and Newco acknowledge and agree that none of the Transactions alone will trigger a separation from service (within the meaning of Section 409A of the Code) of any participant in the Nonqualified Plans.

ARTICLE VII

LONG-TERM INCENTIVE AWARDS

SECTION 7.01    Long-Term Incentive Awards.  Prior to the Closing Date, Scripps and Journal shall take all actions necessary or appropriate to effect the provisions of this Article VII, including obtaining any required consents.

SECTION 7.02    Treatment of Scripps Options.

(a)            Adjustments.  Each Scripps Option that is outstanding immediately prior to the Distribution Time shall be adjusted, as of the Distribution Time, as follows:  (i) the number of Scripps Class A Common Shares subject to such adjusted Scripps Option shall equal the quotient obtained by dividing (x) the number of Scripps Class A Common Shares subject to the corresponding Scripps Option immediately prior to the Distribution Time, by (y) the Scripps Ratio, with fractional shares rounded down to the nearest whole share; and (ii) the per share exercise price of such adjusted Scripps Option shall be equal to the product obtained by multiplying (x) the per share exercise price of the corresponding Scripps Option immediately prior to the Distribution Time, by (y) the Scripps Ratio, rounded up to the nearest whole cent.

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(b)            Terms and Conditions.  Except as provided in Section 7.02(a), at and after the Distribution Time, each Scripps Option shall continue to be subject to the same terms and conditions as applied immediately prior to the Distribution Time, including the terms and conditions relating to vesting, the post-termination exercise period, and the applicable exercise and tax withholding methods (as set forth in the applicable plan, award agreement or in the holder’s then applicable employment agreement).  Solely for purposes of determining the exercise period of a Scripps Option held by a Transferring Scripps Employee (and for no other purpose), the Transferring Scripps Employee shall be treated as having experienced a termination of employment from Scripps and its Subsidiaries, so that each Scripps Option held by a Transferring Scripps Employee shall terminate on the 90th day after the Closing Date (or, if earlier, the expiration of its full term), unless the Transferring Scripps Employee is eligible for “retirement” on the Closing Date (within the meaning of the applicable Scripps Share Plan), in which case the Scripps Option shall remain exercisable for the full duration of its term.

(c)            Exercise of Scripps Options.  Upon the exercise of a Scripps Option after the Distribution Time, regardless of the holder thereof, the exercise price shall be paid to (or otherwise satisfied to the satisfaction of) Scripps in accordance with the terms of the Scripps Option, and Scripps shall be solely responsible for the issuance of Scripps Class A Common Shares and for the withholding, reporting and remittance of all applicable taxes related to the exercise of the Scripps Option.

(d)            Waiting Period for Exercisability. The Scripps Options shall not be exercisable during a period beginning on a date prior to the Closing Date determined by Scripps in its sole discretion, and continuing until the Scripps Ratio is determined after the Closing Date, or such longer period as Scripps determines is necessary to implement the provisions of this Section 7.02.

(e)            Section 409A of the Code.  Scripps, Journal and Newco intend that the adjustments to the Scripps Options as provided in this Section 7.02 be effected in a manner such that the Scripps Options outstanding after the Distribution Time remain exempt from the application of Section 409A of the Code.  This Section 7.02 shall be construed, administered, and governed in a manner that effects such intent, and the Parties shall not take any action that would be inconsistent with such intent.

SECTION 7.03    Treatment of Journal SARs.

(a)            Cancellation of Journal SARs.  Each Journal SAR outstanding immediately prior to the date hereof shall remain outstanding and exercisable in accordance with its terms through the Record Date and shall cease to be exercisable immediately thereafter.  Each Journal SAR not exercised on or prior to the Record Date and outstanding immediately after the Record Date shall be cancelled immediately prior to the Distribution Time.  In exchange therefor, each former holder of any such cancelled Journal SAR shall be entitled to receive, in settlement therefor and full satisfaction thereof, a cash payment, without interest, in an amount determined by the Journal Compensation Committee and communicated to Scripps in writing prior to the Closing Date; provided that the cash payments for the Journal SARs pursuant to this Section 7.03(a) shall not exceed (i) in the aggregate, $978,041, and (ii) on a per-SAR basis, an amount equal to the estimated fair value of such SAR, as determined by the Journal Compensation Committee, consistent with the illustration provided by Journal to Scripps on July 25, 2014, and reasonably acceptable to Scripps.  Scripps shall make or shall cause a member of the Scripps Group to make to each former holder of any such cancelled Journal SAR payment with respect to the cancelled Journal SARs within ten Business Days after the Closing Date.  Scripps or a member of the Scripps Group or Newco or a member of the Newco Group, as appropriate, may withhold or cause to be withheld from any amounts payable under this Section 7.03(a) all required federal, state, local and other taxes (and shall have the right, in its sole discretion, to require the holder to pay or provide for payment of the required tax withholding).

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(b)            Section 409A of the Code.  Scripps, Journal and Newco intend that the treatment of the Journal SARs as provided in this Section 7.03 be effected in a manner such that the Journal SARs remain exempt from the application of Section 409A of the Code.  This Section 7.03 shall be construed, administered, and governed in a manner that effects such intent, and the Parties shall not take any action that would be inconsistent with such intent.

SECTION 7.04    Treatment of Scripps Restricted Share Units.

(a)            Scripps Restricted Share Units Held by Scripps Participants or Scripps Directors.  Each Scripps Restricted Share Unit outstanding immediately prior to the Distribution Time and held by a Scripps Participant or Scripps Director shall be adjusted, as of the Distribution Time, so that the number of Scripps Class A Common Shares subject to such adjusted Scripps Restricted Share Unit shall equal the quotient obtained by dividing (i) the number of Scripps Class A Common Shares subject to the corresponding Scripps Restricted Share Unit immediately prior to the Distribution Time, by (ii) the Scripps Ratio, with fractional shares rounded down to the nearest whole share.  Except as provided above, at and after the Distribution Time, each adjusted Scripps Restricted Share Unit shall continue to be subject to the same terms and conditions as applied immediately prior to the Distribution Time, including the restrictions and the terms and conditions relating to vesting, payment and methods of tax withholding (as set forth in the applicable plan, award agreement or in the holder’s then applicable employment agreement).

(b)            Scripps Restricted Share Units held by Transferring Scripps Employees and Designated Participants.  Each Scripps Restricted Share Unit outstanding immediately prior to the Distribution Time and held by a Transferring Scripps Employee or Designated Participant shall vest in full (and in the case of any Scripps Restricted Share Units subject to performance-based vesting conditions, the applicable performance criteria shall be deemed to have been satisfied based on target level unless the measurement period for such awards has ended on or prior to the Distribution Time, in which case such awards shall vest based on actual results attained) and shall be cancelled as of the Distribution Time.  In exchange therefor, each former holder of any such cancelled Scripps Restricted Share Unit shall be entitled to receive, in settlement therefor and full satisfaction thereof, (i) a number of fully vested Scripps Class A Common Shares equal to the total number of cancelled Scripps Restricted Share Units, (ii) a cash amount equal to the product of (x) the dollar amount of the Pre-Broadcast Merger Dividend payable per Scripps Class A Common Share and (y) the total number of cancelled Restricted Share Units (which, for the avoidance of doubt, shall be in lieu of, but not in duplication of, any dividend equivalents attached to the cancelled Scripps Restricted Share Units) and (iii) a number of fully vested shares of Newco Common Stock to which the individual would be entitled to receive in the Transactions had the Scripps Restricted Share Units represented actual Scripps Class A Common Shares as of the Record Date.  In each case, payment with respect to the cancelled Scripps Restricted Share Units held by Transferring Scripps Employees or Designated Participants shall be made within ten Business Days after the Closing Date (or, if applicable, within such other time period as required under The E. W. Scripps Company Executive Severance Plan); provided, however, that in the case of a Transferring Scripps Employee or Designated Participant listed on Section 1.01 of the Schedules hereto who holds a Scripps Restricted Share Unit that constitutes deferred compensation within the meaning of Section 409A of the Code, the payment shall occur on the date that it would otherwise occur under the applicable award agreement absent the application of this Section 7.04(b) to the extent necessary to avoid the imposition of any penalty or other taxes under Section 409A of the Code.   Scripps may withhold or cause to be withheld from any amounts payable under this Section 7.04(b) all required federal, state, local and other taxes (and shall have the right, in its sole discretion, to require the holder to pay or provide for payment of the required tax withholding).

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SECTION 7.05    Treatment of Journal Restricted Shares.

(a)            Acceleration of Vesting of Journal Restricted Shares.  Each Journal Restricted Share outstanding immediately prior to the Distribution Time shall vest in full immediately prior to the Distribution Time and shall be treated in the same manner as other Journal Common Stock for purposes of the MTA.  Each such Journal Restricted Share shall be subject to tax withholding as set forth in the applicable plan or award agreement; provided that Scripps or a member of the Scripps Group or Newco or a member of the Newco Group, as appropriate, may withhold or cause to be withheld from any amounts payable under this Section 7.05 all required federal, state, local and other taxes with respect to such Journal Restricted Shares (and shall have the right, in its sole discretion, to require the holder to pay or provide for payment of the required tax withholding).

(b)            Section 409A of the Code.  Scripps, Journal and Newco intend that the treatment of the Journal Restricted Shares as provided in this Section 7.05 be effected in a manner such that the Journal Restricted Shares remain exempt from the application of Section 409A of the Code.  This Section 7.05 shall be construed, administered, and governed in a manner that effects such intent, and the Parties shall not take any action that would be inconsistent with such intent.

SECTION 7.06    Treatment of Journal Performance Units.

(a)            Acceleration of Vesting and Cancellation of Journal Performance Units.  Journal Performance Units outstanding immediately prior to the Closing Date shall vest as provided in this Section 7.06(a) and shall be cancelled as of the Closing Date.  Such Journal Performance Units granted with respect to the three-year performance period consisting of Journal’s 2012, 2013 and 2014 fiscal years, if still outstanding immediately prior to the Distribution Time, shall become vested at 150% of the target number of Journal Performance Units.  Such Journal Performance Units granted with respect to the three-year performance period consisting of Journal’s 2013, 2014 and 2015 fiscal years shall be earned based on the actual level of achievement of all relevant performance goals, as determined by the Journal Compensation Committee, measured as of the end of the calendar quarter immediately preceding the Closing Date, and such earned Journal Performance Units shall be prorated based upon the length of time within the performance period that has elapsed prior to the Closing Date.  Such Journal Performance Units granted with respect to the three-year performance period consisting of Journal’s 2014, 2015 and 2016 fiscal years shall be earned based on a deemed achievement of all relevant performance goals at the target level (or, if the Closing Date occurs on or after July 1, 2015, earned based on the actual level of achievement of all relevant performance goals, as determined by the Journal Compensation Committee, measured as of the end of the calendar quarter immediately preceding the Closing Date), and such earned Journal Performance Units shall be prorated based upon the length of time within the performance period that has elapsed prior to the Closing Date.  Any Journal Performance Units outstanding immediately prior to the Closing Date and not becoming vested in accordance with the foregoing shall be forfeited without payment therefor effective as of the Closing Date.  In exchange for each Journal Performance Unit becoming vested and cancelled in accordance with this Section 7.06(a), each former holder of any such cancelled Journal Performance Unit shall be entitled to receive, in settlement therefor and full satisfaction thereof, (i) a number of fully vested Scripps Class A Common Shares to which the individual would be entitled to receive in the Transactions had the vested and cancelled Journal Performance Units represented actual Journal Common Stock as of the Record Date, and (ii) a number of fully vested shares of Newco Common Stock to which the individual would be entitled to receive in the Transactions had the vested and cancelled Journal Performance Units represented actual Journal Common Stock as of the Record Date.  In each case, payment with respect to the vested and cancelled Journal Performance Units shall be made within ten Business Days after the Closing Date.  Scripps or a member of the Scripps Group or Newco or a member of the Newco Group, as appropriate, may withhold or cause to be withheld from any amounts payable under this Section 7.06(a) all required federal, state, local and other taxes (and shall have the right, in its sole discretion, to require the holder to pay or provide for payment of the required tax withholding).

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(b)            Section 409A of the Code.  Scripps, Journal and Newco intend that the treatment of the Journal Performance Units as provided in this Section 7.06 be effected in a manner such that the Journal Performance Units remain exempt from the application of Section 409A of the Code.  This Section 7.06 shall be construed, administered, and governed in a manner that effects such intent, and the Parties shall not take any action that would be inconsistent with such intent.

SECTION 7.07    Treatment of Scripps Phantom Stock Units.  Each Scripps Phantom Stock Unit outstanding immediately prior to the Distribution Time shall be adjusted, as of the Distribution Time, so that the number of Scripps Class A Common Shares subject to such adjusted Scripps Phantom Stock Unit shall be equal to the quotient obtained by dividing (a) the number of Scripps Class A Common Shares subject to the corresponding Scripps Phantom Stock Unit immediately prior to the Distribution Time, by (b) the Scripps Ratio, with fractional shares rounded down to the nearest whole share.  At and after the Distribution Time, the Scripps Phantom Stock Units shall continue to be governed by and paid in accordance with the terms of the applicable plan.

SECTION 7.08    Journal Share Plans.  Journal shall take all actions necessary or appropriate to ensure that, as of the Closing Date, the Journal Share Plans shall terminate and no holder of Journal SARs, Journal Restricted Shares or Journal Performance Units and no participant in any Journal Share Plan shall have any rights to acquire, or other rights in respect of, the capital stock of Journal except the rights contemplated by Sections 7.03, 7.05 and 7.06 hereof.

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ARTICLE VIII

ADDITIONAL COMPENSATION ACTIONS

SECTION 8.01    Incentive Awards.

(a)            Scripps Incentive Awards.  Except as otherwise provided in Section 6.01 hereof, effective as of the Distribution Time, Scripps shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge all Liabilities for cash-based incentive awards under The E.W. Scripps Company Executive Annual Incentive Plan or The E.W. Scripps Company Short-Term incentive Plan (or the comparable non-executive annual incentive plan maintained by Scripps or its Subsidiaries) that any Scripps Participant or Transferring Scripps Employee is eligible to receive with respect to any performance period that ends at or before the Distribution Time and, effective as of the Distribution Time, the Newco Group shall have no obligations with respect to any such incentive awards.  With respect to Transferring Scripps Employees: (i) Scripps shall determine the amount of such incentive awards earned by the Transferring Scripps Employee, which awards shall be determined without regard to any discretionary adjustments that have the effect of reducing the amount of the incentive award (other than discretionary adjustments applicable to all similarly-situated Scripps Participants); and (ii) such incentive awards shall be paid by Scripps in cash to the Transferring Scripps Employees prior to the Distribution Time, but no later than the payment date provided under the applicable plan document.  Scripps acknowledges and agrees that, to the extent it establishes annual cash-based incentive programs prior to the Distribution Time with respect to 2015 performance, it will cause the applicable performance period to end at or prior to the Distribution Time.  Moreover, except as otherwise provided in Section 6.01 hereof, Scripps shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge all Liabilities for any payments to any Scripps Participant or Transferring Scripps Employee under any cash-based incentive compensation, commission or similar bonus or incentive compensation arrangements that have been earned but remain unpaid at or before the Distribution Time and, effective as of the Distribution Time, the Newco Group shall have no obligations with respect to any such payments.

(b)            Journal Incentive Awards.  Except as otherwise provided in Section 6.02 hereof, effective no later than the Distribution Time, Journal shall assume or retain, as applicable, and shall pay, perform, fulfill and discharge, prior to the Distribution Time, all Liabilities for cash-based incentive awards under the Journal Communications, Inc. Annual Management Incentive Plan (or the comparable non-executive annual incentive plan maintained by Journal or its Subsidiaries) that any Journal Participant or Transferring Journal Employee is eligible to receive with respect to any performance period that ends before the Distribution Time and, effective as of the Distribution Time, neither Scripps nor the Newco Group shall have any obligations with respect to any such incentive awards. With respect to Transferring Journal Employees and Journal Participants: (i) Journal shall determine the amount of such incentive awards earned by the Transferring Journal Employee or Journal Participant, which awards shall be determined without regard to any discretionary adjustments that have the effect of reducing the amount of the incentive award (other than discretionary adjustments applicable to all similarly-situated Journal Participants); and (ii) such incentive awards shall be paid by Journal in cash to the Transferring Journal Employees or Journal Participants prior to the Distribution Time, but no later than the payment date provided under the applicable plan document.  Journal acknowledges and agrees that, to the extent it establishes annual cash-based incentive programs prior to the Distribution Time with respect to 2015 performance, it will cause the applicable performance period to end prior to the Distribution Time. Moreover, except as otherwise provided in Section 6.02 hereof Journal shall assume or retain, as applicable, and shall pay, perform, fulfill and discharge, prior to the Distribution Time, all Liabilities for any payments to any Journal Participant or Transferring Journal Employee under any cash-based incentive compensation, commission or similar bonus or incentive compensation arrangements that have been earned but otherwise would remain unpaid at or before the Distribution Time and, effective as of the Distribution Time, the Newco Group shall have no obligations with respect to any such payments.

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(c)            Newco Incentive Awards.  Except as otherwise provided in Sections 6.01 and 6.02 hereof, Newco Group shall not have any obligations with respect to any cash-based incentive compensation, commission or similar bonus or incentive compensation awards or arrangements that have been earned by any Journal Participant, Transferring Journal Employee, Scripps Participant or Transferring Scripps Employee at or before the Distribution Time.  Prior to the Distribution Time, Newco shall (a) take such actions as are necessary to adopt an annual incentive plan, on terms and conditions to be established by the Newco Board of Directors in its sole discretion, and (b) receive shareholder approval with respect to such plan to the extent Newco deems necessary or appropriate to comply with (or qualify for an exemption from) Applicable Laws.  Newco or a member of the Newco Group, as applicable, shall assume or retain, as applicable, and shall pay, perform, fulfill and discharge, all obligations with respect to any cash-based incentive compensation, commission or similar bonus or incentive compensation arrangements or incentive awards that any Newco Participant is eligible to earn for periods that commence after the Distribution Time.

SECTION 8.02    Employee Stock Purchase Plans.

(a)            Scripps Employee Stock Purchase Plan.  Scripps shall take all actions necessary, subject to Applicable Law, pursuant to the terms of the Scripps Employee Stock Purchase Plan in order to: (i) ensure that no offering periods under the Scripps Employee Stock Purchase Plan commence after the date of this Agreement and on or before the Closing Date; (ii) suspend payroll withholding under the Scripps Employee Stock Purchase Plan immediately after the July 25, 2014 payroll (the “Scripps ESPP Suspension Date”); and (iii) freeze the Scripps Employee Stock Purchase Plan effective upon delivery of Scripps Class A Common Shares purchased (via open market purchases) under the Scripps Employee Stock Purchase Plan for the offering period in effect on the Scripps ESPP Suspension Date.

(b)            Journal Employee Stock Purchase Plan.  Journal shall take all actions necessary, subject to Applicable Law, pursuant to the terms of the Journal Employee Stock Purchase Plan in order to: (i) ensure that no offering periods under the Journal Employee Stock Purchase Plan commence after the date of this Agreement; (ii) suspend the offering period under the Journal Employee Stock Purchase Plan in effect on the date of this Agreement (the “Journal ESPP Suspension Date”); and (iii) refund to participants in the Journal Employee Stock Purchase Plan the funds that remain in the participants’ accounts as of the Journal ESPP Suspension Date.  Journal shall take any and all actions (but subject to compliance with the terms and conditions of awards and Applicable Law) as may be necessary to terminate the Journal Employee Stock Purchase Plan as of the Distribution Time.

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SECTION 8.03    Scripps Senior Executive Change in Control Plan.  Prior to the Distribution Time, Newco shall take such actions as are necessary to adopt an executive change in control plan (the “Newco Scripps Mirror Executive CIC Plan”) that provides benefits substantially comparable in all material respects to the benefits provided under the Scripps Senior Executive Change in Control Plan (the “Scripps Executive CIC Plan”), as in effect on the date of this Agreement, for a period of one year after the Closing Date (the “Newco Scripps Mirror Executive CIC Plan Period”).  As of the Distribution Time, Transferring Scripps Employees who participated in the Scripps Executive CIC Plan immediately prior to the Distribution Time (“Former Scripps Executive CIC Plan Participants”) shall cease to participate in the Scripps Executive CIC Plan and, as of the Newspaper Merger Effective Time, Newco shall cause such Former Scripps Executive CIC Plan Participants to commence participation in the Newco Scripps Mirror Executive CIC Plan for the Newco Scripps Mirror Executive CIC Plan Period on terms and conditions substantially comparable in all material respects to those under the Scripps Executive CIC Plan, provided that the Newco Board of Directors may not amend or terminate the Newco Scripps Mirror Executive CIC Plan in a manner that materially adversely affects the rights of a Former Scripps Executive CIC Plan Participant during the Newco Scripps Mirror Executive CIC Plan Period; provided, however, that following the conclusion of the Newco Scripps Mirror Executive CIC Plan Period, the Newco Board of Directors may, in its sole discretion, amend or terminate the Newco Scripps Mirror Executive CIC Plan in accordance with the terms thereof with respect to Former Scripps Executive CIC Plan Participants or otherwise.  The Newco Board of Directors may, in its sole discretion, limit participation in the Newco Scripps Mirror Executive CIC Plan solely to Former Scripps Executive CIC Plan Participants.  Scripps shall have no obligations with respect to the Newco Scripps Mirror Executive CIC Plan, as it may be amended from time to time.   Effective as of the Distribution Time, Scripps shall retain and hereby agrees to pay, perform, fulfill and discharge all Liabilities under the Scripps Senior Executive CIC Plan, as it may be amended from time to time, with respect to Scripps Participants.

SECTION 8.04    Scripps Executive Severance Plan.  Prior to the Distribution Time, Newco shall take such actions as are necessary to adopt an executive severance plan (the “Newco Scripps Mirror Executive Severance Plan”) that provides benefits substantially comparable in all material respects to the benefits provided under The E.W. Scripps Company Executive Severance Plan (the “Scripps Executive Severance Plan”), as in effect on the date of this Agreement, for a period of one year after the Closing Date (the “Newco Scripps Mirror Executive Severance Plan Period”).  As of the Distribution Time, Transferring Scripps Employees who participated in the Scripps Executive Severance Plan immediately prior to the Distribution Time (“Former Scripps Executive Severance Plan Participants”) shall cease to participate in the Scripps Executive Severance Plan and, as of the Newspaper Merger Effective Time, Newco shall cause such Former Scripps Executive Severance Plan Participants to commence participation in the Newco Scripps Mirror Executive Severance Plan for the Newco Scripps Mirror Executive Severance Plan Period on terms and conditions substantially comparable in all material respects to those under the Scripps Executive Severance Plan, provided that the Newco Board of Directors may not amend or terminate the Newco Scripps Mirror Executive Severance Plan in a manner that materially adversely affects the rights of a Former Scripps Executive Severance Plan Participant during the Newco Scripps Mirror Executive Severance Plan Period; provided, however, that following the conclusion of the Scripps Mirror Executive Severance Plan Period, the Newco Board of Directors may, in its sole discretion, amend or terminate the Newco Scripps Mirror Executive Severance Plan in accordance with the terms thereof with respect to Former Scripps Executive Severance Plan Participants or otherwise.  The Newco Board of Directors may, in its sole discretion, limit participation in the Newco Scripps Mirror Executive Severance Plan solely to Former Scripps Executive Severance Plan Participants.  Scripps shall have no obligations with respect to the Newco Scripps Mirror Executive Severance Plan, as it may be amended from time to time.  Effective as of the Distribution Time, Scripps shall retain and hereby agrees to pay, perform, fulfill and discharge all Liabilities under the Scripps Executive Severance Plan, as it may be amended from time to time, with respect to Scripps Participants.

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SECTION 8.05    Scripps Retention Plan for General Managers and Publishers.  Prior to the Distribution Time, Newco shall take such actions as are necessary to adopt a retention plan (the “Newco Scripps Mirror Retention Plan”) that provides benefits substantially comparable in all material respects to the benefits provided under The E.W. Scripps Company Retention Plan for General Managers and Publishers (the “Scripps Retention Plan”), as in effect on the date of this Agreement, for a period of one year after the Closing Date (the “Newco Scripps Mirror Retention Plan Period”).  As of the Distribution Time, Transferring Scripps Employees who participated in the Scripps Retention Plan immediately prior to the Distribution Time (the “Former Scripps Retention Plan Participants”) shall cease to participate in the Scripps Retention Plan and, as of the Newspaper Merger Effective Time, Newco shall cause such Former Scripps Retention Plan Participants to commence participation in the Newco Scripps Mirror Retention Plan for the Newco Scripps Mirror Retention Plan Period on terms and conditions substantially comparable in all material respects to those under the Scripps Retention Plan, provided that the Newco Board of Directors may not amend or terminate the Newco Scripps Mirror Retention Plan in a manner that materially adversely affects the rights of a Former Scripps Retention Plan Participant during the Newco Scripps Mirror Retention Plan Period; provided, however, the following the conclusion of the Newco Scripps Mirror Retention Plan Period, the Newco Board of Directors may, in its sole discretion, amend or terminate the Newco Scripps Mirror Retention Plan in accordance with the terms thereof with respect to Former Scripps Retention Plan Participants Employees or otherwise.  The Newco Board of Directors may, in its sole discretion, limit participation in the Newco Scripps Mirror Retention Plan solely to Former Scripps Retention Plan Participants.  Effective as of the Distribution Time, Scripps shall retain and hereby agrees to pay, perform, fulfill and discharge all Liabilities under the Scripps Retention Plan with respect to Scripps Participants.

SECTION 8.06    Journal Severance and Retention Plan.

(a)            Prior to the Distribution Time, Newco shall take such actions as are necessary to adopt a severance and retention plan (the “Newco Journal Mirror Severance and Retention Plan”) that provides benefits substantially comparable in all material respects to the benefits provided under Journal Communications, Inc. Severance and Retention Guidelines (the “Journal Severance and Retention Plan”), as in effect on the date of this Agreement, during the period ending on December 31, 2015 (the “Newco Journal Mirror Severance and Retention Plan Period”).  As of the Distribution Time, Transferring Journal Employees who participated in the Journal Severance and Retention Plan immediately prior to the Distribution Time (“Former Journal Severance and Retention Plan Participants”) shall cease to participate in the Journal Severance and Retention Plan and, as of the Newspaper Merger Effective Time, Newco shall cause such Former Journal Severance and Retention Plan Participants to commence participation in the Newco Journal Mirror Severance and Retention Plan for the Newco Journal Mirror Severance and Retention Plan Period on terms and conditions substantially comparable in all material respects to those under the Journal Severance and Retention Plan, provided that the Newco Board of Directors may not amend or terminate the Newco Journal Mirror Severance and Retention Plan in a manner that materially adversely affects the rights of a Former Journal Severance and Retention Plan Participant during the Newco Journal Mirror Severance and Retention Plan Period; provided, however, that following the conclusion of the Newco Journal Mirror Severance and Retention Plan Period, the Newco Board of Directors may, in its sole discretion, amend or terminate the Newco Journal Mirror Severance and Retention Plan in accordance with the terms thereof with respect to Former Journal Severance and Retention Plan Participants or otherwise.  The Newco Board of Directors may, in its sole discretion, limit participation in the Newco Journal Mirror Severance and Retention Plan solely to Former Journal Severance and Retention Plan Participants.  Journal shall have no obligations with respect to the Newco Journal Mirror Severance and Retention Plan, as it may be amended from time to time.  Effective as of the Distribution Time, Journal shall retain and hereby agrees to pay, perform, fulfill and discharge all Liabilities under the Journal Severance and Retention Plan, as it may be amended from time to time, with respect to Journal Participants.

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(b)            Effective as of the Newspaper Merger Effective Time, Journal shall assign to Scripps, and Scripps shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge all Liabilities under Journal Severance and Retention Plan with respect to Journal Participants who participated in the Journal Severance and Retention Plan immediately prior to the Distribution Time (“Former Journal Severance and Retention Plan Participants”) that first arise or accrue after the Distribution Time and during the period ending on December 31, 2015 (the “Assumed Journal Severance and Retention Plan Period”).  Scripps may not amend or terminate the Journal Severance and Retention Plan in a manner that materially adversely affects the rights of a Former Journal Severance and Retention Plan Participant during the Assumed Journal Retention Plan Period; provided, however, the following the Assumed Journal Severance Retention Plan Period, Scripps may, in its sole discretion, amend or terminate the Journal Severance and Retention Plan with respect to Former Journal Retention Plan Participants or otherwise.

SECTION 8.07    Retention, Severance Pay Programs, Agreements, Practices, Policies or Procedures.

(a)            Scripps.  Scripps acknowledges and agrees that, except as otherwise provided herein, at and after the Distribution Time, it shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge all Liabilities under any retention, severance or termination pay program, practice, policy or procedure maintained by Scripps or Journal or any of their respective Affiliates or Subsidiaries for Scripps Participants and Journal Participants.

(b)            Journal.  Journal acknowledges and agrees that, except as otherwise provided herein, at and after the Distribution Time, it shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge all Liabilities under any retention, severance or termination pay program, practice, policy or procedure maintained by Journal or any of its Affiliates or Subsidiaries for Journal Participants; provided, however, that in the event that any Liability under such retention, severance or termination pay program, practice, policy or procedures arises at, or continues beyond, the Closing Date, Scripps shall make or shall cause a member of the Scripps Group to make payment to satisfy such Liability.

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(c)            Newco.  Newco acknowledges and agrees that, except as otherwise provided herein, at and after the Distribution Time, it shall assume and hereby agrees to pay, perform, fulfill and discharge all Liabilities under any retention, severance or termination pay program, practice, policy or procedure maintained by Scripps or Journal, or any of their respective Affiliates or Subsidiaries, for Transferring Scripps Employees and Transferring Journal Employees, but only to the extent such Liabilities relate to a termination of employment or service that occurs after the Closing Date.

(d)            Protection Period.  For a one year period commencing on the Closing Date, each Scripps Employee and Transferring Scripps Employee shall be eligible to receive retention and/or severance benefits in amounts and on terms and conditions substantially comparable in all material respects to those provided under any retention, severance or termination pay program, practice, policy or procedure maintained by Scripps or any of its Affiliates or Subsidiaries on the date of execution of the MTA.  For a one year period commencing on the Closing Date, each Journal Employee and Transferring Journal Employee (other than those who are participating in the Journal Severance and Retention Plan, which is addressed in Section 8.07 hereof) shall be eligible to receive retention and/or severance benefits in amounts and on terms and conditions substantially comparable in all material respects to those provided under any severance or termination pay program, practice, policy or procedure maintained by Journal or any of its Affiliates or Subsidiaries on the date of execution of the MTA.

(e)            Duplication of Benefits.  For the avoidance of doubt, nothing in this Agreement shall result in a duplication of retention, severance or termination pay benefits to any Transferring Scripps Employee, Transferring Journal Employee, Journal Participant or Scripps Participant.

SECTION 8.08    Individual Arrangements.

(a)            Scripps Individual Arrangements.  Scripps acknowledges and agrees that, except as otherwise provided herein, it shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge all Liabilities under any employment, change-in-control, consulting, non-competition, retention or other compensatory arrangement provided by Scripps or Journal, or any of their respective Affiliates or Subsidiaries, except as otherwise provided in Article 6 of this Agreement, to Scripps Participants and Journal Participants.

(b)            Journal Individual Agreements. Journal acknowledges and agrees that, except as otherwise provided herein, it shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge all Liabilities under any employment, change-in-control,  consulting, non-competition, retention or other compensatory arrangement provided by Journal or any of its Affiliates or Subsidiaries, except as otherwise provided in Article 6 of this Agreement, to Journal Participants; provided, however, that in the event that any Liability under any such employment, change-in-control, consulting, non-competition, retention or other compensatory arrangement arises at, or continues beyond, the Closing Date, Scripps shall make or shall cause a member of the Scripps Group to make payment to satisfy such Liability.

(c)            Newco Individual Arrangements. Newco acknowledges and agrees that, except as otherwise provided herein, it shall assume or retain, as applicable, and hereby agrees to pay, perform, fulfill and discharge all Liabilities under any employment, change-in-control, consulting, non-competition, retention or other compensatory arrangement provided by Scripps or Journal, or any of their respective Affiliates or Subsidiaries, to Transferring Scripps Employees and Transferring Journal Employees, but only to the extent such Liabilities relate to a termination of employment or service that occurs after the Closing Date.

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SECTION 8.09    Effect of the Transactions on Severance.  Scripps, Journal and Newco acknowledge and agree that none of the Transactions will trigger a separation from service (within the meaning of Section 409A of the Code) or other termination of employment of any Scripps Employee, Transferring Scripps Employee, Journal Employee or Transferring Journal Employee for purposes of any policy, plan, program or agreement maintained by Scripps, Journal, Newco or any of their respective Affiliates and Subsidiaries that provides for the payment of severance, separation pay, salary continuation or similar benefits in the event of a termination of employment.  In the event of a claim that the Transactions triggered a separation from service (within the meaning of Section 409A of the Code) or other termination of employment of any Scripps Employee, Former Scripps Employee, Transferring Scripps Employee, Journal Employee, Former Journal Employee or Transferring Journal Employee for purposes of any policy, plan, program or agreement maintained by Scripps, Journal, Newco or any of their respective Affiliates and Subsidiaries that provides for the payment of severance, separation pay, salary continuation or similar benefits in the event of a termination of employment, any liability for such claims shall be borne by Scripps to the extent such claim relates to any Scripps Employee, Former Scripps Employee, or Transferring Scripps Employee, and by Journal to the extent such claim relates to any Journal Employee, Former Journal Employee or any Transferring Journal Employee.

SECTION 8.10    Adoption of Equity Incentive Plans by Newco.  Prior to the Distribution Time, Newco shall (a) take such actions as are necessary to adopt an equity incentive plan, on terms and conditions to be established by the Newco Board of Directors in its sole discretion, and (b) receive shareholder approval with respect to such plan to the extent Newco deems necessary or appropriate to comply with (or qualify for an exemption from) Applicable Laws.

SECTION 8.11    Employment Tax Reporting Responsibility.   Each of Scripps, Journal and Newco agrees to follow (or cause its Subsidiaries to follow) the standard procedure for United States employment tax reporting as provided in Section 4 of Rev. Proc. 2004-53, 2004-34 I.R.B. 320 with respect to Transferring Scripps Employees, Transferring Journal Employees and Journal Participants.  Scripps Spinco and Journal Spinco will act as successor employers to Transferring Scripps Employees and Transferring Journal Employees within the meaning of Section 3121(a)(1) of the Code and will adjust the withhold taxes on compensation paid to those individuals following the Distribution Time in accordance with that provision.  Following the Broadcast Merger Effective Time, Scripps Broadcast Surviving LLC will act as successor employer to Journal Participants within the meaning of Section 3121(a)(1) of the Code and will adjust the withhold taxes on compensation paid to those individuals following the Broadcast Merger Effective Time in accordance with that provision.

SECTION 8.12    Section 409A of the Code.  Notwithstanding anything in this Agreement to the contrary, the Parties agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided herein to ensure compliance with, or to maintain exemption from, Section 409A of the Code.

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ARTICLE IX

WORKERS’ COMPENSATION LIABILITIES

SECTION 9.01    Pre-Closing Date Claims.  Notwithstanding anything in this Agreement or the MTA to the contrary, Scripps and its Subsidiaries (other than the Scripp’s Newspaper Entities) shall retain all Assets and Liabilities relating to workers’ compensation claims paid to or on behalf of Transferring Scripps Employees prior to the Closing Date; and, Journal and its Subsidiaries (other than the Journal Newspaper Entities) shall retain all Assets and Liabilities relating to workers’ compensation claims paid to or on behalf of Transferring Journal Employees or Journal Broadcast Employees prior to the Closing Date.  All such claims shall be paid in the ordinary course in accordance with past practice and Newco and Scripps shall cooperate to obtain appropriate insurance recoveries and coverage.

SECTION 9.02    Post-Closing Date Claims.  Scripps shall retain all Assets and Liabilities relating to workers’ compensation claims paid to or on behalf of Journal Broadcast Employees and Journal Newspaper Leave Employees on or after the Closing Date; and, Newco shall retain all Assets and Liabilities relating to workers’ compensation claims paid to or on behalf of Active Transferring Journal Employees or Active Transferring Scripps Employees on or after the Closing Date.

SECTION 9.03    Independent Contractors.  Any independent contractor who is covered by workers compensation pursuant to Section 102.07 of the Wisconsin Statutes, or pursuant to the comparable law of another state, shall be covered by the provisions of this Article IX.

SECTION 9.04    Cooperation. Scripps and Newco shall cooperate in good faith with respect to the notification to appropriate Governmental Authorities of the Distributions, the Newspaper Mergers, and Broadcast Merger and the issuance of new, or the transfer of existing, workers’ compensation insurance policies and claims handling contracts.

SECTION 9.05    Reimbursements for Newspaper Leave Employees. Newco will reimburse Scripps for all Liabilities relating to workers’ compensation (for which there are no Assets transferred to Scripps to cover such Liabilities) paid or satisfied after Closing, with respect to Journal Newspaper Leave Employees and Scripps Newspaper Leave Employees.

ARTICLE X

INDEMNIFICATION

SECTION 10.01    Indemnification by Newco.  Newco shall indemnify, defend, release and hold harmless Scripps, each member of the Scripps Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Scripps Indemnified Parties”), from and against any and all Damages actually incurred or suffered by the Scripps Indemnified Parties relating to, arising out of or resulting from (a) any breach by Newco or any member of the Newco Group of this Agreement or (b) any Liability assumed by Newco hereunder.

SECTION 10.02    Indemnification by Scripps.  Scripps shall indemnify, defend, release and hold harmless Newco, each member of the Newco Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Newco Indemnified Parties,” and, together with Scripps Indemnified Parties, the “Indemnified Parties”), from and against any and all Damages actually incurred or suffered by the Newco Indemnified Parties relating to, arising out of or resulting from any (a) breach by Scripps or any member of the Scripps Group of this Agreement or (b) any Liabilities assumed by Scripps hereunder.

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SECTION 10.03    Indemnification Procedures.

(a)            The Indemnified Party agrees to give prompt notice to the party hereto against whom indemnity is sought (the “Indemnifying Party”) of the assertion of any claim, or the commencement of any suit, Action or proceeding (each, a “Claim”) in respect of which indemnity may be sought under this Article X and will provide the Indemnifying Party such information with respect thereto that the Indemnifying Party may reasonably request. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have actually materially prejudiced the Indemnifying Party.

(b)            The Indemnifying Party shall have the right, at its option, exercisable within thirty (30) days after receipt of such notice to assume the defense of, at its own expense and by its own counsel (which counsel shall be reasonably satisfactory to the Indemnified Party), any matter involving the asserted liability of the Indemnified Party (“Asserted Liabilities”), subject to the limitations set forth herein. If the Indemnifying Party shall undertake to compromise, settle or defend any such Asserted Liability, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party agrees to cooperate fully with the Indemnifying Party and its counsel in the compromise or settlement of, or defense against, any such Asserted Liability; provided, however, that the Indemnifying Party shall not settle any such Asserted Liability without the written consent of the Indemnified Party unless such settlement releases the Indemnified Party from all liabilities and obligations with respect to the Asserted Liability and the settlement does not impose injunctive or other equitable relief against the Indemnified Party. Notwithstanding an election by the Indemnifying Party to assume the defense of such action or proceeding, the Indemnified Party shall have the right to employ separate counsel and to participate in the defense of such action or proceeding at its own expense. Notwithstanding anything herein to the contrary, the Indemnifying Party shall not be entitled to assume control of such defense but shall pay for the reasonable fees, costs and expenses of the Indemnified Party’s legal counsel, which counsel shall be reasonably satisfactory to the Indemnifying Party, if (i) the claim for indemnification relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation, (ii) the Indemnified Party has been advised by counsel that a reasonable likelihood exists of a conflict of interest between the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand, or (iii) the Indemnifying Party failed or is failing to prosecute or defend such claim. If the Indemnified Party shall undertake to compromise, settle or defend any Asserted Liability in accordance with the immediately preceding sentence or after the Indemnifying Party has declined to exercise its option to assume the defense of an Asserted Liability, the Indemnified Party shall promptly notify the Indemnifying Party of its intention to do so, and the Indemnifying Party agrees to cooperate fully with the Indemnified Party and its counsel in the compromise or settlement of, or defense against, any such Asserted Liability; provided, however, that the Indemnified Party shall not settle any such Asserted Liability without the written consent of the Indemnifying Party, which such consent shall not be unreasonably withheld, conditioned or delayed.

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(c)            Each party hereto shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Claim by a third party and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.

SECTION 10.04    Calculation of Damages.  Any Damages payable by an Indemnifying Party pursuant to Article X shall be (a) reduced by any proceeds recovered by the Indemnified Party under applicable insurance policies, net of any costs incurred by the Indemnified Party in obtaining such proceeds, (b) reduced by any indemnity, contribution or other similar payment paid to the Indemnified Party by any Third Party with respect to such Damages, net of any costs incurred by the Indemnified Party in obtaining such payment and (c) reduced by an amount equal to any net tax benefit actually realized by the Indemnified Party as a consequence of such Damages.  If an Indemnified Party receives a payment required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives insurance proceeds, then the Indemnified Party will pay to the Indemnifying Party an amount equal to the excess of the payment received over the amount of the payment that would have been due if the insurance proceeds had been received, realized or recovered before the payment was made by the Indemnifying Party.  Neither Scripps nor Newco shall be liable to any Indemnified Party for any punitive, incidental, consequential, special or indirect damages, including business interruption, loss of profit or loss of future revenue.

SECTION 10.05    Survival of Indemnities.  The rights and obligations of each of Scripps and Newco and their respective Indemnified Parties under this Article X shall survive the sale or other transfer by any Party of any Assets or the assignment by it of any Liabilities.

SECTION 10.06    Remedies Cumulative.  The remedies provided in this Article X shall be cumulative and shall not preclude assertion by any Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party; provided that the procedures set forth in this Article X shall be the exclusive procedures governing any indemnity action brought under this Agreement.

ARTICLE XI

GENERAL AND ADMINISTRATIVE

SECTION 11.01    Sharing Of Information.  Scripps and Newco (acting directly or through their respective Subsidiaries or Affiliates) shall provide to the other and their respective agents and vendors all Information as the other may reasonably request to enable the requesting Party to administer efficiently and accurately each of its Benefit Plans, to assist Newco in obtaining its own insurance policies to provide benefits under Newco Benefit Plans, to transfer state unemployment and workers’ compensation experience ratings and associated reserves, and to determine the scope of, as well as fulfill, its obligations under this Agreement; provided, however, that in the event that any Party reasonably determines that any such provision of Information could be commercially detrimental to such Party or any of its Affiliates or Subsidiaries, violate any Applicable Law or agreement to which such Party or member of its Affiliates or Subsidiaries is a party, or waive any attorney-client privilege applicable to such Party or member of its Affiliates or Subsidiaries, the Parties shall provide any such Information and the Parties shall take all reasonable measures to comply with the obligations pursuant to this Section 11.01 in a manner that mitigates any such harm or consequence to the extent practicable, and the Parties agree to cooperate with each other and take such commercially reasonable steps as may be practicable to preserve the attorney-client privilege with respect to the disclosure of any such Information.  Such Information shall, to the extent reasonably practicable, be provided in the format and at the times and places requested, but in no event shall the Party providing such Information be obligated to incur any out-of-pocket expenses not reimbursed by the Party making such request or make such Information available outside of its normal business hours and premises.  The Parties also hereby agree to enter into any business associate agreements that may be required for the sharing of any Information pursuant to this Agreement to comply with the requirements of HIPAA.

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SECTION 11.02    Reasonable Efforts/Cooperation.  Each of the Parties will use its commercially reasonable efforts to promptly take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under Applicable Laws and regulations to consummate the transactions contemplated by this Agreement, including adopting plans or plan amendments.  Each of the Parties shall cooperate fully on any issue relating to the transactions contemplated by this Agreement for which any other Party seeks a determination letter or private letter ruling from the IRS, an advisory opinion from the DOL or any other filing, consent or approval with respect to or by a Governmental Authority.

SECTION 11.03    Employer Rights.  Except as expressly set forth in this Agreement, nothing in this Agreement shall prohibit Newco or any of its Subsidiaries or Affiliates from amending, modifying or terminating any Newco Benefit Plan at any time within its sole discretion.  In addition, nothing in this Agreement shall prohibit Scripps or any of its Subsidiaries or Affiliates from amending, modifying or terminating any Scripps Benefit Plan at any time within its sole discretion.

SECTION 11.04    Non-Termination of Employment; No Third-Party Beneficiaries.  No provision of this Agreement or the MTA shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any Scripps Employee, Journal Employee or Newco Employee or other future, present, or former employee of any member of the Scripps Group or Newco Group under any Benefit Plan or otherwise.  Without limiting the generality of the foregoing, except as expressly provided in this Agreement, the occurrence of the Distributions, Newspaper Mergers, and Broadcast Merger, alone shall not cause any employee to be deemed to have incurred a termination of employment that entitles such individual to the commencement of benefits under any of the Benefit Plans.  Furthermore, this Agreement is solely for the benefit of the Parties hereto and their respective successors and permitted assigns.  Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person or persons (including any employee or former employee of Scripps, Journal or Newco or any of their respective Subsidiaries or Affiliates or any beneficiary or dependent thereof) any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.  No provision in this Agreement shall modify or amend any other agreement, plan, program, or document unless this Agreement explicitly states that the provision “amends” that other agreement, plan, program, or document.  This shall not prevent the Parties entitled to enforce this Agreement from enforcing any provision in this Agreement, but no other person shall be entitled to enforce any provision in this Agreement on the grounds that it is an amendment to another agreement, plan, program, or document unless the provision is explicitly designated as such in this Agreement, and the person is otherwise entitled to enforce the other agreement, plan, program, or document.  If a person not entitled to enforce this Agreement brings a lawsuit or other action to enforce any provision in this Agreement as an amendment to another agreement, plan, program, or document, and that provision is construed to be such an amendment despite not being explicitly designated as one in this Agreement, that provision in this Agreement shall be void ad initio, thereby precluding it from having any amendatory effect.  Furthermore, nothing in this Agreement is intended to confer upon any employee or former employee of Scripps, Journal or Newco or any of their respective Subsidiaries or Affiliates any right to continued employment, or any recall or similar rights to an individual on layoff or any type of approved leave.

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SECTION 11.05    Consent of Third Parties.  If any provision of this Agreement is dependent on the consent of any third party (e.g., any labor union) and such consent is withheld, the Parties hereto shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the fullest extent practicable.  If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties hereto shall negotiate in good faith to implement the provision in a mutually satisfactory manner.

SECTION 11.06    Union Negotiations.  Nothing in this Agreement shall be interpreted to require the Parties to violate any collective bargaining agreement or prevent the Parties from fulfilling any bargaining obligations they may have under the National Labor Relations Act.  However, the Parties will use their reasonable best efforts to negotiate changes to collective bargaining agreements or other agreements consistent with this agreement to the fullest extent practicable and will not negotiate changes to any collective bargaining agreement or negotiate any other agreements with any labor union that would materially adversely affect the Transactions or the nature, scope or volume of the Parties rights or obligations under this Agreement.

SECTION 11.07    Access to Employees.  Following the Closing Date, Scripps and Newco shall, or shall cause each of their respective Subsidiaries or Affiliates to, make available to each other those of their employees who may reasonably be needed in order to defend or prosecute any legal or administrative action (other than a legal action between any Scripps Group Member and any Newco Group Member) to which any employee, director or Benefit Plan of the Scripps Group or Newco Group is a party and which relates to their respective Benefit Plans prior to the Closing Date.  The Party to whom an employee is made available in accordance with this Section 11.06 shall pay or reimburse the other Party for all reasonable expenses that may be incurred by such employee in connection therewith, including all reasonable travel, lodging, and meal expenses, but excluding any amount for such employee’s time spent in connection herewith.

SECTION 11.08    Beneficiary Designation/Release of Information/Right to Reimbursement.  To the extent permitted by Applicable Law and except as otherwise provided for in this Agreement, all beneficiary designations, authorizations for the release of information and rights to reimbursement made by or relating to Newco Employees, Active Transferring Journal Employees, or Active Transferring Scripps Employees under Scripps Benefit Plans or Journal Benefit Plans shall be transferred to and be in full force and effect under the corresponding Newco Benefit Plans until such beneficiary designations, authorizations or rights are replaced or revoked by, or no longer apply, to the relevant Newco Participant, Active Transferring Journal Employee or Active Transferring Scripps Employee.

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SECTION 11.09    Effect of Broadcast Merger. Notwithstanding anything contained in this Agreement to the contrary, from and after the Broadcast Merger Effective Time, all Liabilities of Journal and Desk BC Merger, LLC assumed or retained under this Agreement shall become or remain the Liabilities of Scripps Broadcast Surviving LLC in accordance with Section 5.04(c) of the MTA.

ARTICLE XII

MISCELLANEOUS

SECTION 12.01    Relationship of Parties.  Nothing in this Agreement shall be deemed or construed by the Parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship set forth herein.

SECTION 12.02    Affiliates.  Each of Scripps and Newco shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by each of their Subsidiaries or Affiliates, respectively.

SECTION 12.03    Notices.  All notices, requests, claims, demands and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the Parties at the following addresses or facsimile numbers:

If to Scripps, to:

The E.W. Scripps Company

312 Walnut Street, 28th Floor

Cincinnati, Ohio 45202

Facsimile:  (513) 977-3720

Attention:  Lisa A. Knutson, Senior Vice President/Chief Administrative Officer

with a copy to:

The E.W. Scripps Company

312 Walnut Street, 28th Floor

Cincinnati, Ohio 45202

Facsimile:  (513) 977-3042

Attention:  William Appleton, Senior Vice President, General Counsel

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If to Newco, to:

Boat NP Newco, Inc.

333 West State Street

Milwaukee, Wisconsin 53203

Attention:  Steven J. Smith

Chief Executive Officer

Facsimile:  (414) 224-2469

with a copy to:

Foley & Lardner LLP

777 East Wisconsin Avenue

Milwaukee, Wisconsin 53202-5306

Attention:   Benjamin F. Garmer III

 Russell E. Ryba

Facsimile:  (414) 297-4900

All such notices, requests and other communications will (a) if delivered personally to the address as provided in this Section 12.03, be deemed given upon delivery, (b) if delivered by facsimile transmission to the facsimile number as provided in this Section 12.03, be deemed given upon receipt and (c) if delivered by mail in the manner described above to the address as provided in this Section 12.03, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section 12.03).  Any Party from time to time may change its address, facsimile number or other information for the purpose of notices to that Party by giving notice specifying such change to all other Parties.

SECTION 12.04    Entire Agreement.  This Agreement, together with all exhibits and schedules hereto, and the applicable provisions of the MTA, the Scripps Tax Matters Agreement and the Journal Tax Matters Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

SECTION 12.05    Waiver.  Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition.  No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.  All remedies, either under this Agreement or by Applicable Law or otherwise afforded, will be cumulative and not alternative.

SECTION 12.06    Amendment.  This Agreement may be amended, modified, waived, supplemented or superseded, in whole or in part, only by a written instrument signed by duly authorized signatories of the Parties.

SECTION 12.07    Governing Law and Submission to Jurisdiction; Waivers.  Sections 15.07 and 15.13 of the MTA shall apply.

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SECTION 12.08    Headings.  The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

SECTION 12.09    Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

SECTION 12.10    No Assignment; Binding Effect.  No Party shall be permitted to assign, in whole or in part, directly or indirectly, by operation of law nor otherwise, any of its rights or obligations under this Agreement without the prior written consent of the other Party and any unauthorized assignment shall be null and void.  Notwithstanding such prohibition on assignment:

(a)            Nothing herein shall prohibit, modify or limit the ability of the Parties to transfer or allocate Assets and Liabilities, as the case may be, to any entity within the Scripps Group or the Newco Group in connection with, or in furtherance of, the Distribution and, to the extent that any such transfer or allocation results in an assignment of this Agreement or any rights or obligations hereunder, then the Parties shall make such amendments, revisions or modifications to this Agreement as are reasonably necessary to reflect the effect of such assignment.

(b)            Any Party may assign all, but not less than all, of its rights or obligations under this Agreement in connection with a consolidation or merger transaction in which such Party is not the continuing or surviving entity or the sale by such Party of all or substantially all of its properties and assets, provided that except with regard to the Newspaper Merger and the Broadcast Merger: (i) prior to such transaction becoming effective, the continuing, surviving or acquiring entity shall have executed and delivered to the other Parties a written agreement, in form and substance reasonably satisfactory to the other Parties, pursuant to which such entity agrees to be bound by all of the terms, conditions and provisions of this Agreement as if named as a “Party” hereto and (ii) no Party shall be obligated to materially change the nature, scope or volume of its rights or obligations under this Agreement as a result of any such assignment.

SECTION 12.11    Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Applicable Law, the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.

ARTICLE XIII

DISPUTE RESOLUTION

SECTION 13.01    General. Except with respect to injunctive relief described below, any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall attempt to be settled first, by good faith efforts of the Parties to reach mutual agreement, and second, if mutual agreement is not reached to resolve the dispute, by final, binding arbitration as set out below.

SECTION 13.02    Initiation. A Party that wishes to initiate the dispute resolution process shall send written notice to the other Parties, in accordance with Section 12.03, with a summary of the controversy and a request to initiate these dispute resolution procedures.  Each Party shall appoint a knowledgeable, responsible representative who has the authority to settle the dispute, to meet and to negotiate in good faith to resolve the dispute.  The discussions shall be left to the discretion of the representatives who may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations.  Discussions and correspondence among the representatives for purposes of these negotiations (a) shall be treated as confidential information developed for purposes of settlement, (b) shall be exempt from discovery and production and (c) shall not be admissible in the arbitration described above or in any lawsuit pursuant to Rule 408 of the Federal Rules of Evidence.  Documents identified in or provided with such communications that are not prepared for purposes of the negotiations are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration or lawsuit.  The Parties agree to pursue resolution under this subsection for a minimum of 30 calendar days before requesting arbitration.

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SECTION 13.03    Arbitration Request. If the dispute is not resolved under the preceding subsection within 30 calendar days of the initial written notice, any Party may demand arbitration by sending written notice to the other Parties.  The Parties shall promptly submit the dispute to the American Arbitration Association for resolution by a single neutral arbitrator acceptable to both Parties, as selected under the rules of the American Arbitration Association.  The dispute shall then be administered according to the American Arbitration Association’s Commercial Arbitration Rules, with the following modifications: (a) the arbitration shall be held in a location mutually acceptable to the Parties, and, if the Parties do not agree, the location shall be Cincinnati, Ohio; (b) the arbitrator shall be licensed to practice law; (c) the arbitrator shall conduct the arbitration as if it were a bench trial and shall use, apply and enforce the Federal Rules of Evidence and Federal Rules of Civil Procedure; (d) except for breaches related to Information subject to Section 11.01, the arbitrator shall have no power or authority to make any award that provides for consequential, punitive or exemplary damages or extend the term hereof; (e) the arbitrator shall control the scheduling so that the hearing is completed no later than 30 calendar days after the date of the demand for arbitration; and (f) the arbitrator’s decision shall be given within five calendar days thereafter in summary form that states the award, without written decision, which decision shall follow the plain meaning of this Agreement, and in the event of any ambiguity, the intent of the Parties.  Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction over the Parties.  Each Party to the dispute shall bear its own expenses arising out of the arbitration, except that the Parties shall share the expenses of the facilities to conduct the arbitration and the fees of the arbitrator equally.

SECTION 13.04    Injunctive Relief. The foregoing notwithstanding, each Party shall have the right to seek injunctive relief in an applicable court of law or equity to preserve the status quo pending resolution of the dispute and enforce any decision relating to the resolution of the dispute.

[signature page follows]

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

	
THE E.W. SCRIPPS COMPANY

	
 

	
DESK SPINCO, INC.

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ William Appleton

	
 

	
By:

	
/s/ Richard A. Boehne

	
Name:

	
William Appleton

	
 

	
Name:

	
Richard A. Boehne

	
Title:

	
Senior Vice President and General Counsel

	
 

	
Title:

	
Chief Executive Officer

	
 

	
 

	
 

	
 

	
 

	
DESK NP OPERATING, LLC

	
 

	
JOURNAL COMMUNICATIONS, INC.

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Richard A. Boehne

	
 

	
By:

	
/s/ Steven J. Smith

	
Name:  

	
Richard A. Boehne

	
 

	
Name:  

	
Steven J. Smith

	
Title:

	
Chief Executive Officer

	
 

	
Title:

	
Chairman and Chief Executive Officer

	
 

	
 

	
 

	
 

	
 

	
BOAT SPINCO, INC.

	
 

	
BOAT NP NEWCO, INC.

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Steven J. Smith

	
 

	
By:

	
/s/ Steven J. Smith

	
Name:

	
Steven J. Smith

	
 

	
Name:

	
Steven J. Smith

	
Title:

	
Chief Executive Officer

	
 

	
Title:

	
Chief Executive Officer

[Signature Page to Employee Matters Agreement]

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EXHIBIT A

Journal Welfare Plans

	1.	Journal’s Employee Handbook

	2.	Sales Commission Policy

	3.	Sales Commission Policy – Director of Business Development

	4.	Journal Communications, Inc. Delta Dental PPO Plan

	5.	Journal Communications, Inc. Delta Dental EPO Plan

	6.	Journal Communications, Inc. Flexible Spending Account Plans – Health Care and Dependent Care

	7.	Journal Communications, Inc. Employee Assistance Program Administered by Humana

	8.	Direct Deposit

	9.	Journal Communications, Inc. Eye Med Vision Plan

	10.	Journal Communications, Inc. Reliance Standard Long Term Disability Insurance

	11.	Journal Communications, Inc. Unum Long Term Care Insurance

	12.	Journal Communications, Inc. LifeLock Identity Theft Protection

	13.	Journal Communications, Inc. Hyatt Pre-paid Legal Expenses

	14.	Short Term Disability

	15.	Workers’ Compensation Program

	16.	Vacation

	17.	Paid Time Off

	18.	Paid Holidays

	19.	Floating Holidays

	20.	Personal Hours

	21.	Unpaid Personal Leave of Absence

	22.	Family and Medical Leave

	23.	Bereavement

	24.	Jury Duty

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	25.	Military Leave

	26.	Time Off to Vote

	27.	Overtime Pay

	28.	Under applicable state law,  Journal’s at-will employment relationship with each of its salaried and hourly employees could be determined an express or implied understanding of employment.

	29.	Journal Communications, Inc. Employee Welfare Benefit Trust, as amended and restated January 1, 2008

	30.	Journal Communications, Inc. Employees Welfare Benefit Master Plan Trust

	31.	Journal Communications, Inc. Reliance Standard Group Life Insurance Plan (including retiree life)

	32.	Journal Communications, Inc. Humana High Deductible Health Plan 1300 with a Health Savings Account

	33.	Journal Communications, Inc. Humana High Deductible Health Plan 2500 with a Health Savings Account

	34.	Journal Communications, Inc. Humana High Deductible Health Plan 5000 with a Health Savings Account

	35.	Journal Communications, Inc. Reliance Standard Accidental Death & Dismemberment Plan

	36.	Journal Communications, Inc. Flexible Benefits Plans

	37.	Journal Communications, Inc. Anthem Dental Plan

	38.	Journal Communications, Inc. Retiree Medical Plan (Humana Medicare Advantage Plans)

	39.	Journal Communications, Inc. Health Plan of Nevada Medical Plans (POS) (HMO)

	40.	Journal Communications, Inc. Group Travel & Accident Policy

	41.	Journal Retention / Severance Program

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EXHIBIT B

SCRIPPS WELFARE PLANS

Scripps Choice Plan

Medical Plan

Dental Plan

Vision Plan

Life Management Program

Limited Purpose Health Care Spending Account

Dependent Care Spending Account

Life Insurance Plan

Accidental Death & Dismemberment Plan

Scripps Managed Disability Plan

Scripps Retiree Medical Program (Exhibit C)

Scripps Executive Life Insurance Plan

Group Travel Accident Policy of The E.W. Scripps Company

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EXHIBIT C

SCRIPPS RETIREE MEDICAL PROGRAM

Early Retirement Provision (of the Scripps Choice Medical Plan)

Employees who are enrolled in the Scripps Choice medical plan and over the age of 55 with at least 10 years of service at the time of retirement can receive health insurance at the Company-wide group rate until they reach Medicare eligibility.  At that time, if the spouse is not yet Medicare entitled, a spouse may receive health insurance at the Company-wide group rate for up to 10 additional years or until the spouse becomes Medicare eligible, whichever comes first.

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EXHIBIT D

JOURNAL RETIREE PROGRAM

PRE-MEDICARE RETIREE MEDICAL COVERAGE

Eligibility

In order to receive the benefit, an employee must:

		·	Work for an eligible affiliate of Journal Communications (as described below)

		·	Have been hired full-time prior to January 1, 2002

		·	Have at least 10 years of continuous full-time service and

		·	Terminate employment after attaining age 55

In addition, retiree who turn:

		·	Age 50 prior to January 1, 2007 may receive an employer contribution based on years of service

		·	Age 50 on or after January 1, 2007; do not receive an employer contribution (Access Only)

Cost Sharing

		·	Service schedule for employees who retired prior to April 1, 2002 – plan rates same as active employees, with higher employer contribution percentage.

		·	Service schedule for employees who retired on or after April 1, 2002 – plan rates reflect actuarial experience of early retirees with a lower employer contribution percentage.

		·	Employees who turned age 50 on or after January 1, 2007 pay 100% (Access Only)

MEDICARE-ELIGIBLE RETIREE MEDICAL COVERAGE

Eligibility

In order to receive the benefit, an employee must:

		·	Work for an eligible affiliate of Journal Communications (as described below)

		·	Have been hired full-time prior to January 1, 2002

		·	Have at least 10 years of continuous full-time service and

		·	Terminate employment after attaining age 55

Cost Sharing

The amount of premium a retiree pays is based on when they retire from the organization. Employees who retired:

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		·	Prior to April 1, 1993 – Journal Communication pays:

		o	$35 each month up to the annual cap ($420) per participant enrolled in Humana

		·	On or after April 1, 1993 – Journal Communications pays:

		o	A percentage of the monthly premium up to the annual cap ($1,696) per participant enrolled in Humana

		·	From NorthStar Print Group or Temp Communications – Journal Communications pays:

		o	42.5% of the monthly premium up to the annual cap ($1,300) per participant enrolled in Humana

		·	On or after April 1, 2007 – Journal Communications provides Access only and the participant pays 100% of the premium. This is a standard fully-insured Medicare Advantage PPO Plan which is community rated.

RETIREE LIFE BENEFIT

		·	A closed group of grandfathered retirees.

		·	Retired prior to April 1, 1995

		·	Upon retirement, the death benefit is 50% of the active face amount. For certain retirees, the face amount further decreases beginning at age 70 according to one of the two pre-determined schedules:

		·	Schedule A: the death benefit is 40% of the active face amount at age 70, further decreased by 2.5% per year to 15% at age 80 or above. In no event, the death benefit is lower than $2,000.

		·	Schedule B: the death benefit is 30% of the active face amount at age 70, further decreased by 2% per year to 10% at age 80 or above. In no event, the death benefit is lower than $2,500.

		·	No retiree contribution.

60

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00233-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00233-of-00352.parquet"}]]