Document:

Asset Purchase Agreement - Focus Healthcare, LLC

 Execution Copy 
  
 Exhibit 10.2 
  
 ASSET PURCHASE AGREEMENT (FOCUS) 
  
 by and among 
  
 FOCUS HEALTHCARE, LLC 
 and the other Sellers named herein, 
  
 as Sellers, 
  
 and 
  
 HORIZON HEALTH CORPORATION, 
  

as Purchaser 
  
 Dated as of December 9, 2005 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page No.

	ARTICLE 1 DEFINITIONS; SALE AND TRANSFER OF ASSETS; CONSIDERATION; CLOSING; OTHER MATTERS	  	2
	 1.1
	  	Definitions	  	2
	 1.2
	  	Transfer of Seller Assets	  	5
	 1.3
	  	Excluded Assets	  	7
	 1.4
	  	Assumed Liabilities	  	8
	 1.5
	  	Excluded Liabilities	  	9
	 1.6
	  	Actions Taken on Execution Date	  	10
	 1.7
	  	Purchase Price	  	11
	 1.8
	  	Closing Date	  	12
	 1.9
	  	Items to be Delivered by Sellers at Closing	  	12
	 1.10
	  	Items to be Delivered by Purchaser at Closing	  	14
	 1.11
	  	Prorations and Utilities	  	15
	 1.12
	  	Net Assets Adjustment	  	15
	 1.13
	  	Risk of Loss	  	17
	 1.14
	  	Seller Representative	  	19
		
	 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLERS
	  	20
	 2.1
	  	Authority	  	20
	 2.2
	  	Authorization/Execution	  	20
	 2.3
	  	Organization and Good Standing; No Subsidiaries; No Conflicts	  	21
	 2.4
	  	Financial Statements; Changes; Related Matters	  	21
	 2.5
	  	Taxes	  	23
	 2.6
	  	Material Contracts	  	24
	 2.7
	  	Real and Personal Property; Title to Property; Leases	  	25
	 2.8
	  	Intangible Property	  	27
	 2.9
	  	Legal Proceedings	  	27
	 2.10
	  	[Reserved]	  	27
	 2.11
	  	Insurance	  	27
	 2.12
	  	Employees	  	27
	 2.13
	  	Employee Benefits	  	28
	 2.14
	  	Certain Interests	  	29
	 2.15
	  	Inventory	  	29
	 2.16
	  	Receivables	  	29
	 2.17
	  	Third-Party Payors and Suppliers	  	29
	 2.18
	  	Worker Adjustment and Retraining Notification (WARN)	  	29
	 2.19
	  	Environmental Compliance	  	30
	 2.20
	  	Powers of Attorney	  	31
	 2.21
	  	Accreditation; Medicare and Medicaid; Third-Party Payors; Compliance with Health Care Laws	  	31
	 2.22
	  	Compliance Program	  	33
	 2.23
	  	HIPAA	  	33
	 2.24
	  	Restricted Grant and Loan Programs	  	34

  

 - i - 

					
	 2.25
	  	Experimental Procedures	  	34
	 2.26
	  	Medical Staff; Physician Relations	  	34
	 2.27
	  	Solvency	  	34
	 2.28
	  	No Brokers or Finders	  	34
	 2.29
	  	Improper Payments	  	34
	 2.30
	  	No Misrepresentations	  	34
		
	 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER
	  	35
	 3.1
	  	Authority	  	35
	 3.2
	  	Authorization/Execution	  	35
	 3.3
	  	Organization and Good Standing; No Violation.	  	35
	 3.4
	  	Brokers and Finders	  	35
	 3.5
	  	Due Diligence	  	36
	 3.6
	  	Financial Ability	  	36
	 3.7
	  	No Misrepresentations	  	36
		
	 ARTICLE 4 COVENANTS OF SELLERS
	  	36
	 4.1
	  	Access and Information; Inspection Period	  	36
	 4.2
	  	Conduct of Business	  	37
	 4.3
	  	Negative Covenants	  	37
	 4.4
	  	Consents	  	38
	 4.5
	  	Additional Financial Information	  	38
	 4.6
	  	No-Shop	  	38
	 4.7
	  	Sellers’ Efforts to Close	  	39
	 4.8
	  	Notification; Updating of Disclosure Schedules	  	39
	 4.9
	  	Facility Repairs	  	39
	 4.10
	  	Delaware Facility Remediation	  	39
	 4.11
	  	Payment of Taxes	  	39
	 4.12
	  	Cooper City Prime Lease	  	39
	 4.13
	  	Required Approvals; Other Actions	  	40
		
	 ARTICLE 5 COVENANTS OF PURCHASER
	  	40
	 5.1
	  	Purchaser’s Efforts to Close	  	40
	 5.2
	  	Confidentiality	  	40
	 5.3
	  	Waiver of Bulk Sales Law Compliance	  	41
	 5.4
	  	Required Approvals; Other Actions	  	41
	 5.5
	  	Financing	  	41
		
	 ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
	  	42
	 6.1
	  	Accuracy of Representations and Warranties	  	42
	 6.2
	  	Purchaser’s Performance	  	42
	 6.3
	  	Governmental Authorizations	  	42
	 6.4
	  	Other Consents	  	42
	 6.5
	  	Unfavorable Action or Proceeding	  	42
	 6.6
	  	Signing and Delivery of Instruments	  	42
	 6.7
	  	Simultaneous Closing Under Lighthouse Purchase Agreement	  	42

  

 - ii - 

					
	 ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
	  	43
	 7.1
	  	Accuracy of Representations and Warranties	  	43
	 7.2
	  	Seller’s Performance	  	43
	 7.3
	  	Governmental Authorizations	  	43
	 7.4
	  	Unfavorable Action or Proceeding	  	43
	 7.5
	  	Required Consents	  	43
	 7.6
	  	No Material Adverse Change	  	43
	 7.7
	  	Disclosure Schedules	  	43
	 7.8
	  	Real Property Title Matters	  	44
	 7.9
	  	Milestones Program Agreement	  	44
	 7.10
	  	Facility Repairs	  	44
	 7.11
	  	Delaware Remediation	  	44
	 7.12
	  	APE Contracts	  	44
	 7.13
	  	Signing and Delivery of Instruments	  	44
	 7.14
	  	Simultaneous Closing Under Lighthouse Purchase Agreement	  	44
		
	 ARTICLE 8 TERMINATION
	  	45
	 8.1
	  	Termination	  	45
	 8.2
	  	Effect of Termination; Other Matters	  	45
		
	 ARTICLE 9 POST-CLOSING MATTERS
	  	47
	 9.1
	  	Excluded Assets and Excluded Liabilities	  	47
	 9.2
	  	Preservation and Access to Records After the Closing	  	47
	 9.3
	  	Provision of Benefits of Contracts and Leases	  	48
	 9.4
	  	Misdirected Payments, Etc	  	48
	 9.5
	  	Government Receivables	  	48
	 9.6
	  	Termination Cost Reports	  	49
	 9.7
	  	Change of Sellers’ Name	  	49
	 9.8
	  	Other Actions	  	49
		
	 ARTICLE 10 SURVIVAL AND INDEMNIFICATION
	  	50
	 10.1
	  	Survival	  	50
	 10.2
	  	Indemnification and Reimbursement by Sellers	  	51
	 10.3
	  	Indemnification and Reimbursement by Purchaser	  	51
	 10.4
	  	Limitations On Amount	  	52
	 10.5
	  	Limitations	  	52
	 10.6
	  	Escrow	  	53
	 10.7
	  	Third-Party Claims	  	53
	 10.8
	  	Other Claims	  	55
		
	 ARTICLE 11 TAX AND COST REPORT MATTERS
	  	55
	 11.1
	  	Tax Matters; Allocation of Purchase Price	  	55
	 11.2
	  	Cost Report Matters	  	56
		
	 ARTICLE 12 MISCELLANEOUS PROVISIONS
	  	57
	 12.1
	  	Entire Agreement	  	57
	 12.2
	  	Further Assurances	  	57

  

 - iii - 

					
	 12.3
	  	Assignments, Successors and No Third Party Rights	  	57
	 12.4
	  	Governing Law	  	58
	 12.5
	  	Amendments	  	58
	 12.6
	  	Notices	  	58
	 12.7
	  	Headings	  	59
	 12.8
	  	Confidentiality and Publicity	  	59
	 12.9
	  	Expenses and Attorneys’ Fees	  	59
	 12.10
	  	Severability	  	60
	 12.11
	  	Execution of Agreement	  	60
	 12.12
	  	Seller Obligations	  	60
	 12.13
	  	Enforcement	  	60
	 12.14
	  	Waiver; Remedies Cumulative	  	60
	 12.15
	  	Waiver of Jury Trial	  	61

  

 - iv - 

 LIST OF EXHIBITS 
  

			
	 EXHIBIT

	  	 DESCRIPTION

		
	 A
	  	 Closing Date Escrow Agreement

		
	 B-1 and B-2
	  	 Forms of Bills of Sale

		
	 C
	  	 Opinion of Counsel for Sellers

		
	 D
	  	 Form of Limited Powers of Attorney

		
	 E
	  	 Opinion of Counsel for Purchaser

		
	 F-1, F-2, F-3 and F-4
	  	 Title Commitments

  

 - i - 

 LIST OF SCHEDULES 
  

			
	 SCHEDULE

	  	 DESCRIPTION

		
	 1.2(a)
	  	 Real Property

		
	 1.2(b)
	  	 Personal Property

		
	 1.2(d)
	  	 Leases

		
	 1.2(e)
	  	 Contracts

		
	 1.2(m)
	  	 Trade Names

		
	 1.3(b)
	  	 Excluded Contracts

		
	 1.3(m)
	  	 Excluded Assets

		
	 1.4(f)
	  	 Other Assumed Liabilities

		
	 1.12
	  	 Net Assets

		
	 2.3(a)
	  	 Organization and Good Standing

		
	 2.3(b)
	  	 Subsidiaries

		
	 2.3(c)
	  	 Seller Consents/Conflicts

		
	 2.4(a)
	  	 Financial Statements

		
	 2.4(e)
	  	 Financial Statement Matters; Changes Affecting Business

		
	 2.4(f)
	  	 Financial Statement Matters; Current Liabilities

		
	 2.5(b)
	  	 Tax Matters

		
	 2.6
	  	 Material Contracts

		
	 2.7(a)
	  	 Title Matters; Condition of Property

		
	 2.7(c)
	  	 Real Property Leases

		
	 2.7(d)
	  	 Title Matters; Leases

		
	 2.8
	  	 Intangible Property

		
	 2.9
	  	 Legal Proceedings

		
	 2.11
	  	 Insurance/Claims

		
	 2.12(a)
	  	 Employees

		
	 2.13(a)
	  	 Employee Plans

		
	 2.14
	  	 Affiliate Transactions

		
	 2.17
	  	 Payor Contracts

		
	 2.19
	  	 Environmental Matters

		
	 2.21(a)
	  	 Accreditation

		
	 2.21(b)
	  	 Uncorrected Deficiencies

		
	 2.21(c)
	  	 Facility Provider and Supplier Numbers

		
	 2.21(d)
	  	 Cost/Other Report Matters

		
	 2.21(e)
	  	 Facility Reviews

		
	 2.21(g)
	  	 Certain Compliance Matters

		
	 2.26
	  	 Medical Staff Matters

		
	 4.9
	  	 Facility Repairs

		
	 6.4
	  	 Other Consents

		
	 7.5
	  	 Required Consents

		
	 7.8(b)
	  	 Real Property Title Matters

  

 - i - 

 TABLE OF DEFINED TERMS 
  

			
	 Term

	  	Page

	 Accounting Firm
	  	16
	 Accounts Receivable
	  	6
	 Affiliate
	  	2
	 Agency Settlements
	  	57
	 Aggregate Damage
	  	17
	 Agreement
	  	1
	 Allocation Schedule
	  	56
	 Anti-Kickback Law
	  	2
	 Antitrust Laws
	  	2
	 APE
	  	28
	 Assets
	  	5
	 Assignment of Lease
	  	14
	 Assumed Liabilities
	  	8
	 Base Net Assets
	  	15
	 Bills of Sale
	  	12
	 Closing
	  	12
	 Closing Date
	  	12
	 Closing Date Escrow Agreement
	  	12
	 Closing Date Escrow Deposit
	  	12
	 Closing Date Net Assets
	  	16
	 Closing Date Net Assets Calculation
	  	17
	 Closing Purchase Price Payment
	  	12
	 Code
	  	23
	 Commonly Controlled Entity
	  	29
	 Confidential Information
	  	41
	 Contract and Lease Consents
	  	13
	 Contracts
	  	6
	 Control
	  	2
	 Controlled By
	  	2
	 Controlling
	  	2
	 Cooper City Prime Lease
	  	40
	 Cooper City Sublease
	  	14
	 Current Assets
	  	15
	 Current Liabilities
	  	15
	 Damages
	  	51
	 Delaware Facility
	  	13
	 Delaware Remediation
	  	40
	 Designee
	  	58
	 Disclosure Schedules
	  	3
	 Document Retention Period
	  	47
	 DOJ
	  	40
	 Effective Time
	  	12

  

 - 1 - 

			
	 Environmental Laws
	  	30
	 ERISA
	  	29
	 Escrow Agent
	  	11
	 Escrow Agreement
	  	3
	 Estimated Net Assets
	  	15
	 Excluded Assets
	  	7
	 Excluded Contracts
	  	6
	 Excluded Liabilities
	  	9
	 Execution Date
	  	1
	 Execution Date Escrow Agreement
	  	11
	 Execution Date Escrow Deposit
	  	11
	 Extension Escrow Deposit
	  	46
	 Facilities
	  	1
	 Facility Repairs
	  	40
	 Facility Worker
	  	3
	 False Claims Act
	  	3
	 Final Net Assets Settlement Amount
	  	17
	 Final Net Assets Settlement Date
	  	17
	 Focus FL
	  	5
	 Focus FL Apartment Leases
	  	26
	 FTC
	  	40
	 GAAP
	  	3
	 Government Programs
	  	6
	 Government Receivables
	  	6
	 Governmental Approvals
	  	3
	 Highpoint LLC
	  	5
	 HSR Act
	  	2
	 HUD
	  	3
	 HUD Loan
	  	3
	 immediate family member
	  	3
	 Indemnified Person
	  	54
	 Indemnifying Person
	  	54
	 Independent Consultant
	  	18
	 Intangible Property
	  	27
	 Interim Balance Sheet Date
	  	22
	 Interim Balance Sheets
	  	22
	 Inventory
	  	6
	 JCAHO
	  	32
	 Knowledge of Sellers
	  	3
	 Leases
	  	6
	 Legal Requirement
	  	3
	 Letter of Intent
	  	3
	 Licenses
	  	6
	 Liens
	  	13
	 Lighthouse Entities
	  	1
	 Lighthouse Purchase Agreement
	  	1
	 LOI Deposit
	  	12

  

 - 2 - 

			
	 Material Adverse Change
	  	4
	 Material Adverse Effect
	  	4
	 Material Contract
	  	25
	 Material Interest
	  	4
	 Net Assets
	  	15
	 Net Assets Adjustment Amount
	  	16
	 Noncompetition Agreements
	  	11
	 Owner
	  	4
	 Parties
	  	1
	 Party
	  	1
	 Permitted Encumbrances
	  	26
	 Person
	  	4
	 Personal Property
	  	6
	 Plan
	  	29
	 Powers of Attorney
	  	13
	 Prepaids
	  	6
	 Proceeding
	  	4
	 Purchase Price
	  	11
	 Purchaser
	  	1
	 Purchaser Indemnified Persons
	  	51
	 Real Property
	  	6
	 Real Property Leases
	  	26
	 Related Person
	  	4
	 Right of First Refusal Agreements
	  	11
	 Seller APE Leases
	  	28
	 Seller Cost Reports
	  	50
	 Seller Representative
	  	20
	 Sellers
	  	5
	 Specified Representations
	  	5
	 Stark Law
	  	5
	 Submittal Date
	  	19
	 Successor Representative
	  	20
	 Tax
	  	23
	 Tax Return
	  	23
	 Taxes
	  	23
	 Third-Party Claim
	  	5
	 Title Commitments
	  	26
	 Title Policies
	  	44
	 under common control with
	  	2
	 WARN Act
	  	30

  

 - 3 - 

 ASSET PURCHASE AGREEMENT (FOCUS) 
  
 This ASSET PURCHASE AGREEMENT (FOCUS) (this “Agreement”) is made and entered into as of the 9th day of December,
2005 (the “Execution Date”), by and among FOCUS HEALTHCARE, LLC, a California limited liability company, the other SELLERS (as defined herein) and HORIZON HEALTH CORPORATION, a Delaware corporation whose chief
executive office is located in Lewisville, Texas (“Purchaser”). Sellers and Purchaser are sometimes collectively referred to herein as the “Parties” and individually referred to herein as a “Party.” 
  
 R E C I T A L S: 
  
 A. Sellers own and operate the following behavioral health facilities (the
“Facilities”): 
  

	 	(i)	Focus Healthcare of Delaware d/b/a Meadowood Behavioral Health System, a fifty-three (53) licensed bed freestanding behavioral health facility located in New Castle, Delaware;

  

	 	(ii)	Focus Healthcare of Florida, a licensed freestanding behavioral health facility consisting of sixty-two (62) licensed beds located at a location owned and operated by Sellers
in Cooper City, Florida and twenty-two (22) licensed beds that are leased and operated by Sellers at a separate location in Cooper City, Florida; 

  

	 	(iii)	Focus Healthcare of Georgia d/b/a Focus-by-the-Sea, a one hundred one (101) licensed bed freestanding behavioral health facility located on St. Simons Island, Georgia; and

  

	 	(iv)	Focus Healthcare of Ohio, a forty-two (42) licensed bed behavioral health facility located in Maumee, Ohio. 

  
 B. Purchaser desires to purchase from Sellers, and Sellers desire to sell and
transfer to Purchaser, all of the real property and other assets owned by any Seller, other than certain excluded assets specified herein, for the consideration and upon the terms and conditions contained in this Agreement. 
  
 C. Simultaneous with the execution and delivery of this Agreement by the
Parties, Lighthouse Care Centers, LLC and certain entities related to it, as sellers (Lighthouse Care Centers, LLC and such other entities, collectively, the “Lighthouse Entities”), and Purchaser, as purchaser, have executed and delivered
an Asset Purchase Agreement (Lighthouse) (the “Lighthouse Purchase Agreement”) providing for the sale to Purchaser by the Lighthouse Entities of certain assets of the Lighthouse Entities simultaneously with the consummation of the Closing
under this Agreement. 
  

 Page 1 

 A G R E E M E N T: 
  
 NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants contained in this
Agreement, the Parties, intending to be legally bound, agree as follows: 
  
 ARTICLE 1 
 DEFINITIONS; SALE AND TRANSFER OF ASSETS; 
 CONSIDERATION; CLOSING; OTHER MATTERS 
  
 1.1 Definitions. For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context hereof otherwise requires,

  
 (a) the terms used in this Agreement include
the plural as well as the singular; 
  
 (b) all
accounting terms used but not otherwise defined herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP; 
  

(c) all references in this Agreement to designated “Articles,” “Sections” and other subdivisions are to the
designated Articles, Sections and other subdivisions of the main body of this Agreement; 
  
 (d) pronouns of either gender or neuter include, as appropriate, the other pronoun forms; 
  
 (e) the words “including” and “include”
are deemed to be followed by the words “without limitation”; 
  
 (f) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole, including the Exhibits and Schedules attached hereto, and not to any
particular Article, Section or other subdivision; 
  
 (g) “or” is used in the inclusive sense of “and/or”; 
  
 (h) “Affiliate” of a specified Person means any other Person directly or indirectly controlling, controlled by or under common
control with the specified Person. The term “control” (including the terms “controlling,” “controlled by“ and “under common control with“) means the possession, direct or indirect, 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; 
  
 (i) “Anti-Kickback Law“ means 42 U.S.C. § 1320a-7b(b) and any rules or regulations promulgated thereunder; 

 
 (j) “Antitrust Laws“ means the Sherman Act, as
amended, the Clayton Act, as amended, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act“), the Federal Trade Commission Act, as amended, and all other laws, rules, regulations and other legal requirements
that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade; 
  

 Page 2 

 (k) “Disclosure Schedules” means the Schedules that are identified on the cover
page thereof as “Sellers Disclosure Schedule” and attached to this Agreement; 
  
 (l) “Escrow Agreement” means the Execution Date Escrow Agreement or the Closing Date Escrow Agreement; 
  
 (m) “Facility Worker” means any individual who
provides services to any Seller at or in connection with the operation of any Facility pursuant to an employee leasing agreement between the employer of such individual and any Seller; 
  
 (n) “False Claims Act” means 31 U.S.C. § 3729 et. seq. and any rules or regulations
promulgated thereunder; 
  
 (o) “GAAP”
means United States generally accepted accounting principles, as applied on a basis consistent with past practice; 
  
 (p) “Governmental Approvals” means all consents, approvals, authorizations, clearances, certificates of need, licenses and
permits required to be obtained from governmental or regulatory agencies, authorities or bodies that are required for the consummation of the transactions contemplated by this Agreement; 
  
 (q) “HUD Loan” means that certain Mortgage Note dated September 6, 2001, in the original
principal amount of $7,284,500 from Delaware Investment Associates, LLC, a Delaware limited liability company, as maker, payable to the order of AMI Capital, Inc., a Delaware corporation, as payee, which is insured by the U.S. Department of Housing
and Urban Development (“HUD“) and secured by the Mortgage between Delaware Investment Associates, LLC and AMI Capital, Inc., dated September 6, 2001, and recorded on September 6, 2001 in the Office of the Recorder of Deeds in and
for New Castle County, State of Delaware, in Instrument No. 20010906-0073583; 
  
 (r) “immediate family member” has the meaning given to such term in 42 C.F.R. §411.351; 
  
 (s) “Knowledge of Sellers”, and similar variations
thereof (including any reference to the “Knowledge” of any Seller), means the actual knowledge, as of the relevant date, of Byron DeFoor, Chuck Jabaley, Nelson Bowers, Neil Campbell or Mark Schneider after reasonable inquiry by them of Joe
Hartl, Chief Financial Officer of Focus Healthcare, LLC, and the administrator of each Facility; 
  
 (t) “Legal Requirement” means any federal, state, local or other constitution, treaty, statute, code, ordinance, law, principle
of common law, or written rule or regulation; 
  
 (u) “Letter of Intent” means the amended and restated letter of intent dated October 25, 2005, as amended by letter dated November 30, 2005 and by letter dated December 7, 2005, among Purchaser, Focus Healthcare,
LLC and Lighthouse Care Centers, LLC, relating to the transactions contemplated by this Agreement and the Lighthouse Purchase Agreement; 
  

 Page 3 

 (v) “Material Adverse Change” or “Material Adverse Effect”, when used
with respect to any Seller or Facility, or Sellers, means any material adverse change in or effect on such Seller or Facility, or Sellers as a whole, as applicable, other than changes or effects that are or result from occurrences relating to the
United States economy generally, the United States health care industry generally or any usual and customary seasonal variations or fluctuations in the occupancy rate of any Facility or the receivables of Sellers; 
  
 (w) “Material Interest” means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity
securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person; 
  
 (x) “Owner” means (i) each Seller, (ii) each Lighthouse Entity, (iii) each party to a Right of First Refusal
Agreement, other than Purchaser, and (iv) each Person that directly, or indirectly through one or more intermediaries, owns an equity security or other equity interest in any Person listed in any of the preceding clauses (i), (ii) or
(iii); 
  
 (y) “Person” means any
natural person, partnership, corporation, limited liability company, association, government, governmental agency, governmental authority, governmental body, governmental or political subdivision, trust or other legal entity; 
  
 (z) “Proceeding” means any action, arbitration,
audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise
involving, any government, governmental agency, governmental authority or body, court or arbitrator; 
  
 (aa) “Related Person” means: 
  
 With respect to a particular individual: 
  
 (i) each immediate family member of such individual; 
  
 (ii) any Person that is directly or indirectly controlled by such individual or any one or more immediate
family members of such individual; 
  
 (iii) any
Person in which such individual or any one or more immediate family members of such individual holds (individually or in the aggregate) a Material Interest; and 
  
 (iv) any Person with respect to which such individual or any one or more immediate family members of such
individual serves as a manager, director, executive officer, partner, executor or trustee (or in a similar capacity). 
  
 With respect to a specified Person other than an individual: 
  
 (v) any Person that is an Affiliate of such specified Person; 
  
 (vi) any Person that holds a Material Interest in such
specified Person; 
  

 Page 4 

 (vii) each Person that serves as a manager, director, executive officer, partner,
executor or trustee of such specified Person (or in a similar capacity); 
  
 (viii) any Person in which such specified Person holds a Material Interest; and 
  
 (ix) any Person with respect to which such specified Person serves as a manager, general partner or trustee (or in a similar capacity).

  
 (bb) “Sellers” means, collectively,
(i) Focus Healthcare, LLC, a California limited liability company, (ii) Focus Healthcare of Delaware, LLC, a Delaware limited liability company, (iii) Focus Healthcare of Florida, LLC, a Delaware limited liability company (“Focus
FL”), (iv) Focus Healthcare of Georgia, LLC, a Georgia limited liability company, (v) Focus Healthcare of Ohio, LLC, a Delaware limited liability company, (vi) Delaware Investment Associates, LLC, a Delaware limited liability
company and (vii) Highpoint Investment Associates, LLC, a Delaware limited liability company (“Highpoint LLC“); “Seller” means any of the Sellers individually; 
  
 (cc) “Specified Representations” means any representation or warranty in either of Sections 2.5 or
2.21; 
  
 (dd) “Stark Law” means 42
U.S.C. § 1395nn and the rules or regulations promulgated thereunder; and 
  
 (ee) “Third-Party Claim” means any claim against any Indemnified Person by a Person that is not a Party, whether or not
involving a Proceeding. 
  
 Other capitalized terms used in this
Agreement have the respective meanings assigned to such terms elsewhere in this Agreement. For ease of reference, the page containing the definition of each such capitalized term is listed in the table of defined terms included elsewhere as a part
of this Agreement. 
  
 1.2 Transfer of Seller Assets.
Subject to Section 12.3(b), at the Closing, but effective as of the Effective Time, Sellers shall sell, assign, transfer, convey and deliver to Purchaser, free and clear of any Liens other than Permitted Encumbrances, and Purchaser shall
acquire, all right, title and interest in and to all assets and properties of Sellers, real, personal or mixed, tangible and intangible, of every kind and description, wherever located, whether owned collectively by one or more Sellers or
individually by any Seller (collectively, the “Assets”), including the following: 
  
 (a) all of the real property owned by any Seller, including the real property described in Schedule 1.2(a), together with all
buildings, improvements and fixtures located thereon and all construction in progress thereon (collectively, the “Real Property”); 
  
 (b) all equipment, furniture, fixtures, machinery, vehicles, office furnishings, leasehold improvements, and other tangible personal
property owned by any Seller, including the items listed in Schedule 1.2(b) (the “Personal Property”); 
  

 Page 5 

 (c) all rights of any Seller, to the extent assignable or transferable, to all licenses,
permits, approvals, certificates of need, certificates of exemption, franchises, accreditations and registrations and other governmental licenses, permits or approvals issued to any Seller (the “Licenses”); 
  
 (d) subject to Section 9.3, the entire interest of each
Seller in all leases listed in Schedule 1.2(d) pursuant to which any Seller, as lessee, leases any personal property, and all leases of personal property executed by any Seller on or after the Execution Date which Purchaser hereafter agrees
in writing to accept (collectively, the “Leases”); 
  
 (e) subject to Section 9.3, the entire interest of each Seller in and to all contracts and agreements listed in Schedule 1.2(e) and all contracts and agreements executed by any Seller on or after the
Execution Date which Purchaser hereafter agrees in writing to accept (the “Contracts”); provided, however, the term “Contracts” as used in this Agreement shall exclude all other contracts and agreements of any Seller (the
“Excluded Contracts”), including contracts listed in Schedule 1.3(b); 
  
 (f) all accounts, notes, interest and other receivables of any Seller, and all claims, rights, interests and proceeds related thereto,
including all accounts and other receivables arising from the rendering of services or the provision of medicine, drugs or supplies to patients at any Facility, billed and unbilled, recorded and unrecorded, for services provided by or on behalf of
any Seller (the “Accounts Receivable”); provided, however, that the Accounts Receivable shall not include (i) any accounts or receivables arising from the rendering of services or provision of medicine, drugs or supplies to
patients at any Facility, billed or unbilled, recorded or unrecorded, for services provided by any Seller prior to the Effective Time and relating to any Federal health care program as such term is defined in 42 U.S.C. § 1320a-7b(f) (the
“Government Programs”) or any other third-party payor, which by law are not assignable, (ii) any rights of any Seller to settlements and retroactive adjustments, if any, for cost reporting periods ending on or prior to the Closing
Date (whether open or closed) arising from or against any Government Programs or other third-party payor programs that settle on a cost-report basis, and (iii) any right to receive disproportionate share payments or enhanced payments from any
Government Program (subsections (i), (ii) and (iii) above, collectively the “Government Receivables”); 
  
 (g) all advance payments, prepayments, prepaid expenses, deposits and the like of any Seller which exist as of the Closing Date (the
“Prepaids”); 
  
 (h) all inventories of
supplies, drugs, food, janitorial and office supplies, and other disposables and consumables of any Seller (the “Inventory”); 
  
 (i) all documents, records, policy and procedure manuals, compliance programs, staff bylaws, operating manuals, files and computer
software owned or used by any Seller, including all patient records, medical records, employee records, financial records, equipment records, construction plans and specifications, and medical and administrative libraries; 
  
 (j) to the extent assignable, all rights in all warranties
of any builder, manufacturer or other Person in favor of any Seller; 
  

 Page 6 

 (k) all goodwill and other intangible assets used or useful in connection with the
business of any Seller or Facility; 
  
 (l)
subject to the provisions of Section 1.13, all insurance proceeds arising in connection with property damage to or destruction of any assets of any Seller occurring after the Execution Date and prior to the Effective Time, to the extent not
expended on the repair, restoration or replacement of such assets that are transferred to Purchaser at the Closing hereunder; 
  
 (m) all of Sellers’ rights in (i) all names, symbols, telephone numbers (and related listings and advertisements), facsimile
numbers, domain names, trademarks, trade names, service marks and copyrights used with respect to the operation of any Facility, (ii) the items listed in Schedule 1.2(m), (iii) all variants of any items referred to in the
preceding clauses (i) or (ii), (iv) the internet websites www.focushealthcare.com and www.focushighpoint.com maintained by any Seller and all content and information included thereon, and (v) all rights to the use of, and all common
law trademark and other rights and all goodwill associated with, any item referred to in the preceding clauses (i), (ii), (iii) or (iv); 
  
 (n) to the extent transferable, all rights of any Seller with respect to any Medicare, Medicaid and other third-party provider or supplier
numbers; and 
  
 (o) all other assets of any
Seller; 
  
 provided, however, that the Assets shall not include the
Excluded Assets. 
  
 1.3 Excluded Assets. Notwithstanding
anything to the contrary in Section 1.2, the following assets (collectively, the “Excluded Assets”) are not part of the sale and purchase contemplated hereunder, are excluded from the Assets and shall remain the property of Sellers
after the Closing: 
  
 (a) all cash and cash
equivalents of any Seller; 
  
 (b) the Excluded
Contracts other than the Leases, including those Excluded Contracts listed in Schedule 1.3(b); 
  
 (c) the Government Receivables; 
  
 (d) all documents, records, correspondence, work papers and other documents relating to the Seller Cost Reports or Agency Settlements;

  
 (e) all records of any Seller relating to the
Excluded Assets or the Excluded Liabilities to the extent that Purchaser does not need the same in connection with the ongoing activities of the Facilities, the Assets, or the Assumed Liabilities, as well as all records which by law any Seller is
required to maintain in its possession; 
  
 (f)
any reserves or prepaid expenses to the extent related to the Excluded Assets or the Excluded Liabilities; 
  
 (g) all limited liability company minute books of any Seller; 
  

 Page 7 

 (h) all limited liability company membership interests or other equity interests in any
Seller; 
  
 (i) all claims, rights, causes of
action and chooses in action relating to the Excluded Assets or the Excluded Liabilities; 
  
 (j) all rights of any Seller under or pursuant to this Agreement; 
  
 (k) all assets located at or used exclusively in connection with the behavioral health facilities subject to
the Right of First Refusal Agreements or located at the Sellers’ corporate headquarters in Chattanooga, Tennessee, except for any computer servers or software servicing any of the Facilities; 
  
 (l) all retrospective adjustment payments received from
third-party payors, including Medicare and Medicaid, for services rendered to patients of the Facilities at or prior to the Effective Time, except to the extent included as a Current Asset in the Closing Date Net Assets Calculation; and 

 
 (m) all other assets specifically listed in
Schedule 1.3(m). 
  
 1.4 Assumed Liabilities.
Subject to the terms and conditions of this Agreement, including Section 9.3, at the Closing, but effective as of the Effective Time, Purchaser shall assume and agree to discharge, pay or perform only the following liabilities and obligations
of Sellers (collectively, the “Assumed Liabilities”): 
  
 (a) liabilities and obligations of any Seller under the Contracts, but only to the extent such liabilities and obligations either (i) arise after the Effective Time, or (ii) are specifically included as
Current Liabilities in the Closing Date Net Assets Calculation; provided, however, that the Assumed Liabilities do not include any liability or obligation arising out of or relating to any breach or default by any Seller that occurred at or
prior to the Effective Time; 
  
 (b) liabilities
and obligations of any Seller under the Leases, but only to the extent such liabilities and obligations either (i) arise after the Effective Time, or (ii) are specifically included as Current Liabilities in the Closing Date Net Assets
Calculation; provided, however, that the Assumed Liabilities do not include any liability or obligation arising out of or relating to any breach or default by any Seller that occurred at or prior to the Effective Time; 
  
 (c) Sellers’ accounts payable and other current
liabilities, but only to the extent specifically included as Current Liabilities in the Closing Date Net Assets Calculation; 
  
 (d) Sellers’ obligations and liabilities as of the Closing Date in respect of accrued, unpaid vacation and sick pay of all Facility
Workers who are leased to Purchaser by APE as of the Closing Date, and related taxes, but only to the extent specifically included as Current Liabilities in the Closing Date Net Assets Calculation; 
  
 (e) all liabilities of the maker of the HUD Loan under the
terms of the HUD Loan to the extent such liabilities arise after the Effective Time (the “Assumed Indebtedness”); and 
  

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 (f) any other obligations and liabilities of Sellers identified in
Schedule 1.4(f), but only to the extent specifically included as Current Liabilities in the Closing Date Net Assets Calculation. 
  
 1.5 Excluded Liabilities. Notwithstanding anything to the contrary in Section 1.4, Purchaser shall not assume or become responsible for any
liabilities or obligations of any Seller other than the Assumed Liabilities (the “Excluded Liabilities”), and the Excluded Liabilities shall be retained, paid, performed and discharged solely by Sellers. The Excluded Liabilities shall
include: 
  
 (a) all liabilities and obligations
of any Seller which are not specifically included in the Assumed Liabilities; 
  
 (b) all liabilities and obligations of any Seller arising out of or relating to any act, omission, event or occurrence connected with the use, ownership or operation of the Facilities or any of the Assets prior to the
Effective Time, which are not specifically included in the Assumed Liabilities; 
  
 (c) all liabilities and obligations of any Seller to any employee of any Seller or any Facility Worker, including salary, wages, benefits,
accrued unpaid vacation and sick pay and related Taxes, which are not specifically included in the Assumed Liabilities; 
  
 (d) all liabilities and obligations of any Seller arising under or in connection with or relating to payroll, vacation, sick leave,
workers’ compensation, unemployment benefits, pension benefits, employee stock option or profit-sharing plans, health care plans or benefits, or any other employee plans or benefits or Plans of any kind for any Seller’s employees or former
employees, or any Facility Workers or former Facility Workers, including all liabilities and obligations of any Seller for matching contributions for eligible beneficiaries’ 401(k) plans, Section 125 plans and other Plans, and all
administrative costs associated with any such Plans; in each case which are not specifically included in the Assumed Liabilities; 
  
 (e) all liabilities and obligations of any Seller under any employment, severance, retention or termination agreement with any present or
former employee of any Owner or any Related Person of any Owner or with any present or former Facility Worker; 
  
 (f) all liabilities and obligations of any Seller arising out of or relating to any employee or Facility Worker grievance to the extent
arising out of any facts or circumstances occurring at or prior to the Effective Time, whether or not the affected employees or Facility Workers are hired by or leased to Purchaser; 
  
 (g) all liabilities and obligations of any Seller to any Owner or to any Related Person of any Owner, except
for those arising after the Effective Time under the Cooper City Sublease, and accrued insurance premiums owed to Sunland to the extent specifically included as Current Liabilities in the Closing Date Net Assets Calculation; 
  
 (h) all liabilities and obligations of any Seller relating
to Seller Cost Reports with respect to periods ending at or prior to the Effective Time; 
  

 Page 9 

 (i) all liabilities and obligations of any Seller with respect to refund, recoupment,
set-off and other liabilities arising out of billings to third-party payors, including Medicare and Medicaid, for services rendered to patients of the Facilities at or prior to the Effective Time; 
  
 (j) all liabilities and obligations of any Seller for
violations of any Legal Requirement, including the Anti-Kickback Law, the False Claims Act, the Stark Law and other Legal Requirements pertaining to Medicare, Medicaid or health care fraud or abuse; 
  
 (k) all liabilities and obligations of any Seller under any
Contract or Lease assumed by Purchaser pursuant to Section 1.4, which liability or obligation arises after the Effective Time but arises out of or relates to any breach or default by any Seller that occurred at or prior to the Effective Time;

  
 (l) all liabilities and obligations of any
Seller under any of the Excluded Contracts; 
  
 (m) except as provided in Section 1.4(d) (relating to taxes on accrued, unpaid vacation and sick pay) or Section 1.11 (relating to proration of property taxes), all liabilities and obligations of any Seller for Taxes, including
(i) any Taxes arising as a result of the operation of any Facility or other operations of any Seller, or the ownership of any Assets, prior to the Effective Time, (ii) any Taxes with respect to Sellers that arise or will arise as a result
of the sale or transfer of any of the Assets pursuant to this Agreement, and (iii) any liability or obligation of any Seller to pay the Taxes of any other Person under any tax sharing, tax allocation or tax indemnity agreement or otherwise;

  
 (n) all liabilities and obligations of any
Seller arising out of or resulting from any Seller’s compliance or noncompliance with any Legal Requirement or order, injunction, judgment, decree, ruling assessment or arbitration award of any government, governmental agency, governmental
authority, governmental body, court or arbitrator; 
  
 (o) all liabilities and obligations of any Seller in connection with claims of professional malpractice; 
  
 (p) all liabilities and obligations of any Seller arising out of any Proceeding pending as of the Effective Time; 
  
 (q) all liabilities and obligations of any Seller arising
out of any Proceeding commenced after the Effective Time to the extent arising out of or relating to any occurrence or event happening at or prior to the Effective Time; 
  
 (r) all liabilities and obligations of any Seller for commissions or fees owed to any finder or broker in
connection with the transactions contemplated hereby; and 
  
 (s) all liabilities and obligations of any Seller under this Agreement or any other document executed in connection with the transactions contemplated hereby. 
  

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 1.6 Actions Taken on Execution Date. Concurrently with the execution and delivery of this
Agreement: 
  
 (a) The Seller Representative (as
the agent of Sellers), Purchaser and The Bank/First Citizens Bank, as Escrow Agent (the “Escrow Agent” ), shall execute and deliver an Execution Date Escrow Agreement (Focus) (the “Execution Date Escrow Agreement”), pursuant to
which the Execution Date Escrow Deposit deposited with the Escrow Agent pursuant hereto and all earnings thereon shall be held, invested and disbursed by the Escrow Agent; 
  
 (b) Purchaser shall deposit One Million Six Hundred Seventy-Three Thousand Five Hundred Eighty-Six Dollars
($1,673,586) in escrow with the Escrow Agent pursuant to the Execution Date Escrow Agreement (the “Execution Date Escrow Deposit”); 
  
 (c) Byron DeFoor, Chuck Jabaley and Nelson Bowers shall each execute and deliver to Purchaser a Non-Competition Agreement which shall
restrict certain actions of each such individual (collectively, the “Noncompetition Agreements”); and 
  
 (d) Purchaser shall enter into a Right of First Refusal Agreement with each of (i) Focus Healthcare of Tennessee, LLC and Veranda
Property Investment, LLC, with respect to the behavioral health facility known as Focus Healthcare of Tennessee located in Chattanooga, Tennessee, and (ii) Knollwood Psychiatric and Chemical Dependency Center, Inc. and Knollwood Investment
Associates, LLC, with respect to the behavioral health facility known as Knollwood Hospital located in Riverside, California, which agreements grant a right of first refusal to Purchaser to acquire such facilities and their related assets as further
described therein for a period of eighteen (18) months, commencing as of the Effective Time (collectively, the “Right of First Refusal Agreements”). 
  
 1.7 Purchase Price. The total consideration payable for the Assets (the “Purchase Price”) shall be
(a) Sixty-Three Million Eight Hundred Thirty Thousand Five Hundred Sixty-Six Dollars ($63,830,566) less the aggregate amount of the outstanding principal and unpaid accrued interest as of the Effective Time on the HUD Loan, but
(i) subject to increase or decrease pursuant to Section 1.12, and (ii) subject to possible decrease pursuant to Section 4.10, and (b) the assumption of the Assumed Liabilities pursuant to Section 1.4. In accordance with
Section 1.10, on the terms and subject to the conditions of this Agreement, at the Closing, subject to the adjustments contemplated by the preceding sentence, the Purchase Price shall be delivered by Purchaser to Sellers as follows: 

 
 (i) Sixty Million Four Hundred Eighty-Three Thousand
Three Hundred Ninety-Four Dollars ($60,483,394) less the aggregate amount of the outstanding principal and unpaid accrued interest as of the Effective Time on the HUD Loan (the “Closing Purchase Price Payment”) by wire transfer to
an account designated by the Seller Representative; provided, however, that One Hundred Thousand Four Hundred Fifteen Dollars ($100,415) of the aggregate deposit of One Hundred Fifty Thousand Dollars ($150,000) made by Purchaser pursuant to
the Letter of Intent prior to the Execution Date (the “LOI Deposit”) shall be credited against and constitute payment of a like amount of the Closing Purchase Price Payment; 
  
 (ii) Three Million Three Hundred Forty-Seven Thousand One Hundred Seventy-Two Dollars ($3,347,172) (the
“Closing Date Escrow Deposit”) by wire transfer to the Escrow Agent for deposit in escrow pursuant to a Closing Date Escrow Agreement (Focus) in the form attached hereto as Exhibit A to be executed and delivered at the Closing by
Purchaser, the Seller Representative (as the agent of Sellers) and the Escrow Agent (the “Closing Date Escrow Agreement”); provided, however, that an amount equal to the sum of the Execution Date 

  

 Page 11 

 
Escrow Deposit made pursuant to Section 1.6(b), any Extension Escrow Deposit made pursuant to Section 8.1(f), and all earnings thereon to the
Closing Date shall be credited against and constitute payment of a like amount of the Closing Date Escrow Deposit; and 
  
 (iii) the Assumed Liabilities shall be assumed by the execution and delivery of the Bills of Sale. 
  
 1.8 Closing Date. The consummation of the transactions contemplated by
this Agreement (the “Closing”) shall take place (a) at 10:00 a.m. Central time at the offices of Strasburger & Price, L.L.P., on or before five (5) business days after the day on which the last of the conditions set
forth in Articles 6 and 7 is fulfilled or waived (other than any conditions that are not capable of being satisfied until the Closing, but subject to the satisfaction or waiver of those conditions), or (b) at such other date, time and place as
Purchaser and the Seller Representative shall mutually agree upon in writing (the date on which the Closing actually occurs, the “Closing Date”). The Closing, the transfer of the Assets and the assumption of the Assumed Liabilities shall
be deemed to have occurred and to be effective as of 12:01 a.m. Eastern time, on the Closing Date (the “Effective Time”). 
  
 1.9 Items to be Delivered by Sellers at Closing. Subject to Section 12.3(b), at the Closing, Sellers shall deliver to Purchaser the following
items, duly executed by Sellers or the Seller Representative where appropriate and in the form provided for below or otherwise reasonably satisfactory to Purchaser and counsel for Purchaser: 
  
 (a) the Closing Date Escrow Agreement executed by the Seller
Representative and the Escrow Agent; 
  
 (b)
multiple forms of General Assignment, Bill of Sale and Assumption of Liabilities (Focus) as contemplated by the forms attached hereto as Exhibits B-1 and B-2 (the “Bills of Sale”); 
  
 (c) Limited Warranty Deeds with respect to the Real Property
in forms reasonably satisfactory to Purchaser, which Limited Warranty Deed with respect to the Facility operated by Focus Healthcare of Delaware, LLC shall reflect that such Real Property (the “Delaware Facility“) is thereby conveyed
subject to the HUD Loan and the Permitted Encumbrances securing the HUD Loan; 
  
 (d) original certificates of existence and good standing, or comparable status, of each Seller, issued by the state of each such Seller’s organization and each state in which such Seller operates a Facility or
owns any of the Real Property, as applicable, dated no earlier than a date which is fourteen (14) calendar days prior to the Closing Date; 
  
 (e) an opinion of counsel for Sellers substantially as described in Exhibit C attached hereto; 
  
 (f) a certificate of Sellers, executed by a duly authorized
officer of each Seller, certifying to Purchaser that (i) all the representations and warranties of Sellers contained herein are true as of the Closing Date with the same effect as though made at such time, except to the extent such
representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true on and as of such earlier date, and (ii) Sellers have 

  

 Page 12 

 
performed or complied with the covenants and agreements required of Sellers set forth in this Agreement to be performed or complied with by the Closing Date;

  
 (g) a certificate of Sellers, executed by a
duly authorized officer of each Seller, certifying to Purchaser (i) the incumbency of the officers of the respective Sellers on the Execution Date and on the Closing Date and bearing the authentic signatures of all such officers who shall
execute this Agreement or any additional documents contemplated by this Agreement and (ii) the due adoption and text of the resolutions of the members or managers, as applicable, of the respective Sellers authorizing (A) the transfer of
the Assets and Assumed Liabilities to Purchaser and (B) the execution, delivery and performance of this Agreement and all ancillary documents and instruments by Sellers, and that such resolutions have not been amended or rescinded and remain in
full force and effect on the Closing Date; 
  
 (h) complete releases (or bank release letters in a form reasonably acceptable to Purchaser) of any and all pledges, liens, mortgages, security interests, restrictions, easements, conditions, covenants, charges, licenses, leases and other
encumbrances of any nature whatsoever (collectively, “Liens”) with respect to the Assets, including the real property matters described in Section 7.8, other than Permitted Encumbrances; 
  
 (i) payment of the premiums, costs and charges relating to
the Title Policies in the amount required to be paid by Sellers hereunder and payment of all other Taxes, fees and expenses required to be paid by Sellers pursuant to Sections 4.11 and 12.9, to the extent determinable at Closing; 
  
 (j) multiple forms of Limited Power of Attorney for use of
Pharmacy Licenses, DEA and Other Registration Numbers, and DEA Order Forms (Focus) for each Facility, substantially in the form of Exhibit D attached hereto (the “Powers of Attorney”); 
  
 (k) all consents to the assignment of the Contracts and the
Leases from third parties required to assign the Contracts and Leases to Purchaser without violation or breach of the Contract or Lease in question (the “Contract and Lease Consents”), except for those Contracts and Leases as to which the
provisions of clauses (a) or (b) of the first sentence of Section 7.5, and the provisions of the second sentence of Section 7.5, if applicable to the Contract or Lease in question, have been satisfied; 
  
 (l) evidence of the assignment of the Cooper City Prime
Lease as described in Section 4.12; 
  
 (m)
an Assignment and Assumption of Real Estate Lease in form reasonably satisfactory to Purchaser and the Seller Representative, pursuant to which Highpoint LLC (as successor in interest to Focus FL pursuant to the assignment of the Cooper City Prime
Lease described in Section 4.12) will assign its interest, as landlord, in that certain Sub-Lease dated as of December 6, 2002, by and between Focus FL and Lighthouse Care Centers (the “Cooper City Sublease”), to Purchaser or its
Designee (the “Assignment of Lease”); 
  
 (n) evidence of termination, together with mutual releases by the parties thereto, of all leases of the Real Property, other than the Cooper City Sublease; 
  
 (o) possession of the tangible Assets at the respective Facilities; and 
  

 Page 13 

 (p) such other instruments, certificates, consents, affidavits, no-change survey
affidavits, or other documents which are reasonably necessary to carry out the transactions contemplated by this Agreement and to comply with the terms hereof or which Purchaser or a title company issuing one of the Title Policies may otherwise
reasonably request. 
  
 1.10 Items to be Delivered by Purchaser
at Closing. Subject to Section 12.3(b), at the Closing, Purchaser shall execute and deliver or cause to be delivered to Sellers the following, duly executed by Purchaser where appropriate: 
  
 (a) the Closing Date Escrow Agreement executed by Purchaser;

  
 (b) the Closing Purchase Price Payment in
accordance with Section 1.7(i) by wire transfer to the account specified by the Seller Representative, which account the Seller Representative shall specify to Purchaser not less than three (3) business days prior to the Closing Date in
writing; 
  
 (c) the Closing Date Escrow Deposit
in accordance with Section 1.7(ii) by wire transfer to the Escrow Agent for deposit in escrow pursuant to the Closing Date Escrow Agreement; 
  
 (d) the Bills of Sale; 
  
 (e) original certificate of existence and good standing, or comparable status, of Purchaser, issued by the Delaware Secretary of State
dated no earlier than a date which is fourteen (14) calendar days prior to the Closing Date; 
  
 (f) an opinion of counsel for Purchaser substantially as described in Exhibit E attached hereto; 
  
 (g) a certificate of Purchaser, executed by the President or
any Vice President of Purchaser, certifying to Sellers that (i) all the representations and warranties of Purchaser contained herein are true as of the Closing Date with the same effect as though made at such time, except to the extent such
representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true on and as of such earlier date, and (ii) Purchaser has performed or complied with the covenants and agreements
required of Purchaser set forth in this Agreement required to be performed or complied with by the Closing Date; 
  
 (h) a certificate of Purchaser, executed by the corporate Secretary of Purchaser, certifying to Sellers (i) the incumbency of the
officers of Purchaser on the Execution Date and on the Closing Date and bearing the authentic signatures of all such officers, who shall execute this Agreement or any additional documents contemplated by this Agreement and (ii) the due adoption
and text of the resolutions of the Board of Directors of Purchaser authorizing the execution, delivery and performance of this Agreement and all ancillary documents and instruments by Purchaser, and that such resolutions have not been amended or
rescinded and remain in full force and effect on the Closing Date; 
  
 (i) the Powers of Attorney; 
  

 Page 14 

 (j) the Assignment of Lease; and 
  
 (k) such other instruments, certificates, consents or other
documents which are reasonably necessary to carry out the transactions contemplated by this Agreement and to comply with the terms hereof or which may be reasonably requested by the Seller Representative. 
  
 1.11 Prorations and Utilities. To the extent not included in the
calculation of the Net Assets Adjustment Amount or otherwise prorated pursuant to this Agreement, at Closing, Purchaser and Sellers shall prorate (as of the Effective Time), to the extent applicable to the Assets, real estate and personal property
lease payments, real estate and personal property Taxes, assessments and other similar charges against real estate, and utility charges. If accurate allocations as to such matters cannot be made at Closing because current bills are not obtainable,
the Parties shall allocate such income or expense at Closing on the best available information, subject to adjustment after Closing upon receipt of the final bill or other evidence of the applicable item of income or expense. There shall be no
proration of rents or other items between Purchaser and Sellers under any of the Real Property Leases, and Purchaser shall not be responsible for the security deposit, if any, deposited pursuant to any such leases nor shall any such security deposit
be transferred to Purchaser. 
  
 1.12 Net Assets
Adjustment. 
  
 (a) As used herein,
(i) the term “Net Assets” means the amount determined by subtracting the “Current Liabilities” from the “Current Assets,” and (ii) the term “Base Net Assets” means Two Million Three Hundred Forty-Six
Thousand Four Hundred Thirty Dollars ($2,346,430). 
  
 (b) At least ten (10) days prior to the Closing, the Seller Representative shall deliver to Purchaser a written determination of the Net Assets as of 11:59 p.m. Eastern Time on November 30, 2005 (“Estimated Net Assets”),
which written determination shall contain reasonable detail and supporting documents showing the computation of such determination and the components of Current Assets and Current Liabilities included therein. The principles, specifications and
methodologies for determining Estimated Net Assets, including the components of the Current Assets and the components of the Current Liabilities to be included therein, shall be as specified in Schedule 1.12. The “Net Assets Adjustment
Amount” shall equal the difference between Estimated Net Assets and Base Net Assets. If Estimated Net Assets exceeds Base Net Assets, the Net Assets Adjustment Amount shall be added to the Closing Purchase Price Payment. If Estimated Net Assets
is less than Base Net Assets, the Closing Purchase Price Payment shall be reduced by the amount of the Net Assets Adjustment Amount. 
  
 (c) Within one hundred eighty (180) days after the Effective Time, Purchaser shall deliver to the Seller Representative a written
determination of the Net Assets as of 11:59 p.m. Eastern Time on the day before the Closing Date (“Closing Date Net Assets”), which written determination shall contain reasonable detail and supporting documents showing the computation of
such determination and the components of Current Assets and Current Liabilities included therein. The principles, specifications and methodologies for determining Closing Date Net Assets, including the components of the Current Assets and the
components of the Current Liabilities to be included therein, shall be as specified in Schedule 1.12. Each Party shall have full access to the financial books and records of the Sellers or pertaining to the Facilities to 

  

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confirm or audit Closing Date Net Assets computations. If the Seller Representative disagrees with Purchaser’s determination of Closing Date Net Assets,
the Seller Representative shall notify Purchaser in writing within twenty (20) days after Purchaser’s delivery of its determination of Closing Date Net Assets and state in reasonable detail the basis for such disagreement. Failure of the
Seller Representative to deliver such a notice of disagreement within such twenty (20) day period shall constitute Sellers’ acceptance of Purchaser’s determination of Closing Date Net Assets as delivered to the Seller Representative
under this Section 1.12(c). If the Seller Representative and Purchaser fail to agree within thirty (30) days after the Seller Representative’s delivery of notice of disagreement on the amount of Closing Date Net Assets, such
disagreement shall be resolved in accordance with the procedures set forth in Section 1.12(d), which shall be the sole and exclusive remedy for resolving disputes relative to the determination of the amount of Closing Date Net Assets under this
Section 1.12. 
  
 (d) In the event that the
Seller Representative and Purchaser are not able to agree on the Closing Date Net Assets within thirty (30) days after the Seller Representative’s delivery of notice of disagreement pursuant to Section 1.12(c), the Seller
Representative and Purchaser shall each have the right to require that such disputed determination be submitted to Grant Thornton LLP, or if Grant Thornton LLP is not available for any reason or does not maintain its independent status, such other
independent certified public accounting firm as the Seller Representative and Purchaser may then promptly mutually agree upon in writing (the “Accounting Firm”) for computation or verification in accordance with the provisions of this
Agreement. The Accounting Firm shall review the matters in dispute and, acting as arbitrator, shall promptly decide the proper amounts of such disputed entries (which decision shall also include a final calculation of Closing Date Net Assets). The
submission of the disputed matter to the Accounting Firm shall be the exclusive remedy for resolving disputes relative to the determination of Closing Date Net Assets under this Section 1.12. If issues are submitted to the Accounting Firm for
resolution, (i) each Seller and Purchaser shall furnish or cause to be furnished to the Accounting Firm such work papers and other documents and information relating to the disputed issues as the Accounting Firm may request and are available to
that Party or its agents, and the Seller Representative and Purchaser shall be afforded the opportunity to present to the Accounting Firm any material relating to the disputed issues and to discuss the issues with the Accounting Firm; (ii) the
determination by the Accounting Firm, as set forth in a notice to be delivered to both the Seller Representative and Purchaser within sixty (60) days of the submission to the Accounting Firm, of the issues remaining in dispute, shall be final,
binding and conclusive on the Parties and shall be used in the calculation of Closing Date Net Assets; and (iii) one-half of the Accounting Firm’s fees and expenses shall be paid by Sellers, and one-half of such fees and expenses shall be
paid by Purchaser. The final calculation of Closing Date Net Assets pursuant to this Section 1.12, as determined pursuant to this Section 1.12, is referred to herein as the “Closing Date Net Assets Calculation.” 
  
 (e) The Purchase Price shall be increased or decreased based
on the difference between Closing Date Net Assets and Estimated Net Assets (the “Final Net Assets Settlement Amount”) up to, but not exceeding, a total adjustment amount of Three Hundred Thirty-Four Thousand Seven Hundred Fifteen Dollars
($334,715). Within ten (10) days after the date the final determination of Closing Date Net Assets is agreed to or settled upon by the Parties pursuant to this Section 1.12 (the “Final Net Assets Settlement Date”), (i) if
Closing Date Net Assets exceed Estimated Net Assets, the Final Net Assets Settlement Amount shall be paid in cash by Purchaser to an account specified by the Seller Representative by wire transfer of 

  

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immediately-available funds and as an increase to the Purchase Price, or (ii) if Estimated Net Assets exceed Closing Date Net Assets, the Final Net
Assets Settlement Amount shall be paid in cash to Purchaser pursuant to the Closing Date Escrow Agreement as a decrease in the Purchase Price; provided, however, that the increase or decrease pursuant to this sentence shall not exceed Three Hundred
Thirty-Four Thousand Seven Hundred Fifteen Dollars ($334,715). 
  
 1.13 Risk of Loss. The risk of loss or damage to any of the Personal Property, the Real Property, the Facilities and all other assets and property of Sellers, the transfer of which is contemplated by this Agreement, shall remain with
Sellers until the Effective Time. Sellers shall maintain in effect through the Effective Time, without material change, all insurance policies covering the Personal Property, the Real Property, the Facilities and all other assets and property of
Sellers. 
  
 (a) With respect to the Real
Property, if prior to the Closing, all or any part of the Real Property is damaged or destroyed by fire or the elements or by any other cause where such damage or destruction is in the aggregate (the “Aggregate Damage”) less than ten
percent (10%) of the Purchase Price and Sellers have duly maintained the insurance policies described above, the Parties’ duties and obligations under this Agreement shall not be affected and the Closing shall proceed as scheduled;
provided, however, at the Closing, Sellers shall assign, transfer and set over to Purchaser all of Sellers’ right, title and interest in and to any insurance proceeds on account of such damage or destruction and shall pay to Purchaser an
amount of cash equal to the amount of any applicable deductibles under such insurance policies, and, if the sum of such insurance proceeds and deductible amounts are insufficient to repair, restore and/or replace the damaged or destroyed Real
Property, the Purchase Price and the Closing Purchase Price Payment shall be reduced by an amount equal to difference between the cost to repair, restore and/or replace and the sum of such insurance proceeds and deductible amounts. If prior to the
Closing, all or any part of the Real Property is damaged or destroyed by fire or the elements or by any other cause where the Aggregate Damage equals or exceeds ten percent (10%) of the Purchase Price, Purchaser may elect to (i) purchase
such Real Property, in which case the Closing shall proceed as scheduled; provided, however, at the Closing, Sellers shall assign, transfer and set over to Purchaser all of Sellers’ right, title and interest in and to any insurance
proceeds on account of such damage or destruction and shall pay to Purchaser an amount of cash equal to the amount of any applicable deductibles under such insurance policies, and, if the sum of such insurance proceeds and deductible amounts are
insufficient to repair, restore and/or replace the damaged or destroyed Real Property, the Purchase Price and the Closing Purchase Price Payment shall be reduced by an amount equal to the difference between the cost to repair, restore and/or replace
and the sum of such insurance proceeds and deductible amounts, (ii) not purchase such Real Property, and, in such event, an appropriate reduction of the Purchase Price, utilizing a methodology to be agreed upon, shall be made by Purchaser and
the Seller Representative, or (iii) elect to terminate this Agreement by written notice to the Seller Representative. If Purchaser and the Seller Representative are unable to agree upon the amount of the Aggregate Damage and any applicable
Purchase Price reduction within ten (10) days after Purchaser notifies the Seller Representative of an election made by Purchaser pursuant to subsection (ii) of the preceding sentence, the amount of the Aggregate Damage and any applicable
Purchase Price reduction shall be determined by a consulting firm mutually selected by the Seller Representative and Purchaser (the “Independent Consultant”) pursuant to Section 1.13(d). 
  

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 (b) With respect to any Assets other than Real Property which are damaged or destroyed by
fire or the elements or by any other cause prior to the Closing, Sellers shall assign, transfer and set over to Purchaser all of Sellers’ right, title and interest to any insurance proceeds on account of such damage or destruction and shall pay
to Purchaser an amount of cash equal to the amount of any applicable deductibles under such insurance policies, and, if such insurance proceeds and deductible amounts are insufficient to repair, restore and/or replace the damaged or destroyed
Assets, the Purchase Price and the Closing Purchase Price Payment shall be reduced by an amount equal to the difference between the cost to repair, restore and/or replace and the sum of such insurance proceeds and deductible amounts. 
  
 (c) If prior to the Closing, all or any part of a parcel of
the Real Property is made subject to an eminent domain or condemnation proceeding which would in Purchaser’s reasonable judgment materially adversely impair access to such Real Property or be materially adverse to the operations of the Facility
located on such Real Property, Purchaser may elect to (i) purchase such affected Real Property, and the Closing shall proceed as scheduled; provided, however, at the Closing, Sellers shall assign, transfer and set over to Purchaser all
of Sellers’ right, title and interest in and to any award in such eminent domain or condemnation proceeding, (ii) not purchase the affected Real Property and the Facility and related Assets located thereon, and, in such event, an
appropriate reduction of the Purchase Price, utilizing a methodology to be agreed upon, shall be made by Purchaser and the Seller Representative, or (iii) terminate this Agreement by written notice to the Seller Representative. If Purchaser and
the Seller Representative are unable to agree upon the amount of the Purchase Price reduction within ten (10) days after Purchaser notifies the Seller Representative of an election made by Purchaser pursuant to subsection (ii) of the
preceding sentence, the amount of the Purchase Price reduction shall be resolved by the Independent Consultant pursuant to Section 1.13(d). 
  
 (d) If pursuant to either Section 1.13(a) or 1.13(c), the amount of the Aggregate Damage (and any applicable Purchase Price
reduction) is to be determined by the Independent Consultant, within the ten (10) day period referred to in Section 1.13(a) or 1.13(c), as applicable (the “Submittal Date”), Purchaser and the Seller Representative shall each
submit to the other and to the Independent Consultant its proposed Aggregate Damage if applicable (and any applicable Purchase Price reduction) as a result of the event(s) contemplated by either Section 1.13(a) or 1.13(c), along with a detailed
description of the basis for such amount and any applicable reduction. Within ten (10) calendar days after the Submittal Date, the Independent Consultant, acting as an expert and not as an arbitrator, shall determine the Aggregate Damage if
applicable (and any applicable Purchase Price reduction), taking into account any submissions by the Seller Representative or Purchaser made by the Submittal Date. The decision of the Independent Consultant shall be conclusive and binding as between
Purchaser and Sellers. One-half of the costs of such review shall be paid by Sellers, and one-half of the costs of such review shall be paid by Purchaser. Upon any such determination of the adjustment to the Purchase Price in accordance with this
Section 1.13(d), the Parties shall, subject to the terms and conditions of this Agreement, consummate the transactions contemplated by this Agreement at a mutually agreeable time and place, in accordance with the provisions of this Agreement,
which shall be no later than the fifteenth (15th) calendar day following the Submittal Date unless Purchaser and the Seller Representative mutually agree upon a later date. 
  

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 1.14 Seller Representative. 
  
 (a) Each Seller hereby constitutes and appoints Byron DeFoor as its representative and true and lawful
attorney in fact (the “Seller Representative”), with full power and authority in each of their names and on behalf of each of them: 
  
 (i) to act on behalf of each of them in the absolute discretion of the Seller Representative, but only with respect to the following
provisions of this Agreement, with the power to: (A) designate the account for payment of the Purchase Price pursuant to Section 1.7 or 1.10 or other payments to be made to any Seller pursuant to this Agreement or either Escrow Agreement,
(B) act pursuant to Sections 1.11, 1.12 and 1.13 with respect to prorations and Purchase Price adjustments (including the Net Assets Adjustment Amount and the Final Net Assets Settlement Amount) and related matters, including executing any
amendment hereto to reflect any Purchase Price adjustment or reduction agreed to pursuant to Section 1.12 or 1.13, (C) execute, deliver and act under each Escrow Agreement, (D) grant any waiver or consent under Article 6,
Section 8.1 or Section 12.14, make any determination under Article 6 or Section 8.1 (including a determination that the conditions in Article 6 have been satisfied), or terminate this Agreement pursuant to Section 8.1,
(E) act in connection with any matter as to which Sellers, jointly and severally, have or are alleged to have obligations, or as to which any Seller is or claims to be an Indemnified Person, under Article 10, (F) consent to the assignment
of rights under this Agreement in accordance with Section 12.3(a), (G) give and receive notices pursuant to Section 12.6, and (H) receive and accept such notices or correspondence, execute such other documents, and take such
other actions as are provided herein to be received, accepted, executed or taken by the Seller Representative; and 
  
 (ii) in general, to do all things and to perform all acts, including executing and delivering all agreements, certificates, receipts,
instructions and other instruments contemplated by or deemed advisable to effectuate the provisions of this Section 1.14. 
  
 (b) The foregoing appointment and grant of power and authority is coupled with an interest and is in consideration of the mutual covenants
made herein and is irrevocable and shall not be terminated by any act of any Seller or by operation of law or by the occurrence of any other event. 
  
 (c) Each Seller consents to the taking by the Seller Representative of any and all actions and the making by the Seller Representative of
any decisions required or permitted to be taken or made by the Seller Representative pursuant to this Section 1.14, and agrees that each such action or decision shall bind such Seller. Each Seller hereby authorizes, approves and ratifies the
execution of the Execution Date Escrow Agreement by the Seller Representative on such Seller’s behalf and further acknowledges and agrees that such Seller is bound thereby as if such Seller had executed the Execution Date Escrow Agreement
directly. 
  
 (d) Each Seller agrees that the
Seller Representative shall have no obligation or liability to any Person for any action or omission taken or omitted by the Seller Representative in good faith hereunder. Sellers, jointly and severally, shall indemnify and hold the Seller
Representative harmless from and against any and all loss, damage, expense or liability (including reasonable counsel fees and expenses) which the Seller Representative may sustain as a result of any such action or omission by the Seller
Representative hereunder. 
  

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 (e) Purchaser and the Escrow Agent shall be entitled to conclusively rely, without any
independent verification or inquiry, upon any document or other paper delivered by or other action taken by the Seller Representative as (i) genuine and correct and (ii) having been duly signed or sent or taken by the Seller
Representative, and neither Purchaser nor the Escrow Agent shall be liable to any Seller for any action taken or omitted to be taken by Purchaser or such Escrow Agent in such reliance. 
  
 (f) Payments made to or as directed by the Seller Representative under Section 1.10 or any other
provision of this Agreement, or under either Escrow Agreement, are binding to the same extent as though such payments were made directly to Sellers. Neither Purchaser nor the Escrow Agent shall have any responsibility or liability for any further
delivery or application of any such payment, it being agreed by Sellers that, on the terms set forth herein, (i) any payment Purchaser is required to make hereunder, and any payment the Escrow Agent is required to make under either Escrow
Agreement, may be made to or as directed by the Seller Representative on behalf of Sellers, (ii) Sellers shall determine among themselves the amount due to each Seller from each payment made to or as directed by the Seller Representative
hereunder or under either Escrow Agreement, and (iii) each Seller shall look solely to the Seller Representative for each Seller’s respective share of any payment made to or as directed by the Seller Representative hereunder or under
either Escrow Agreement. 
  
 (g) Byron DeFoor may
appoint Seller Representative, LLC, a Tennessee limited liability company (the “Successor Representative”), as the successor Seller Representative to replace Byron DeFoor. To be effective, such appointment must be written, signed by Byron
DeFoor as the Seller Representative to indicate such appointment, signed by the Successor Representative to indicate its acceptance of such appointment and its agreement to be bound by the terms hereof pertaining to the “Seller
Representative,” delivered to Purchaser and be reasonably satisfactory to Purchaser in form and substance. Upon such an appointment of a successor Seller Representative under this Agreement, such successor Seller Representative will succeed to
and become vested with all of the rights, powers, privileges and duties of the predecessor Seller Representative, and the predecessor Seller Representative shall be discharged from such predecessor Seller Representative’s duties and obligations
under this Agreement. 
  
 ARTICLE 2 
 REPRESENTATIONS AND WARRANTIES OF SELLERS 
  
 Sellers, jointly and severally, represent and warrant to Purchaser as follows: 
  
 2.1 Authority. Each Seller has full limited liability company power and authority (a) to enter into this
Agreement and all documents delivered or to be delivered by such Seller in connection herewith, and (b) to carry out and perform the transactions contemplated hereby or thereby. 
  
 2.2 Authorization/Execution. All limited liability company action and other actions required to be taken by any
Seller to authorize the execution, delivery and performance of this Agreement, all documents executed or to be executed by any Seller in connection herewith, and all transactions contemplated hereby or thereby, have been duly and properly taken or
obtained. No other limited liability company action or other action on the part of any Seller is necessary to authorize the execution, delivery and performance of this Agreement, any document executed or to be executed by any Seller in connection
herewith, or any transaction contemplated hereby. 

  

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This Agreement and all documents executed or to be executed by any Seller in connection herewith have been (or will be, as applicable) duly and validly
executed and delivered by each Seller party thereto and (assuming due and valid execution by, and enforceability against, Purchaser if Purchaser is a party thereto) this Agreement and all documents executed or to be executed by any Seller in
connection herewith constitute (or will constitute, when executed and delivered) valid and binding obligations of each Seller party thereto enforceable in accordance with their respective terms. 
  
 2.3 Organization and Good Standing; No Subsidiaries; No Conflicts.

  
 (a) Each Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of the state of its organization. Each Seller is duly qualified and in good standing in each state in which such Seller owns any real property, if different from the state
of its organization, and all such states are listed for each Seller on Schedule 2.3(a). Each Seller has full power and authority to own, operate and lease its properties and to carry on its business as now conducted. 
  
 (b) Except as set forth on Schedule 2.3(b), no Seller
has any subsidiary, whether direct or indirect, that is not also a Seller hereunder. No Seller has any equity interest or investment in, or any other right or obligation to purchase any equity interest or other investment in, any other Person that
is not also a Seller hereunder. No Seller is a partner of or joint venturer with any other Person. 
  
 (c) Except as set forth in Schedule 2.3(c), the execution and delivery of this Agreement and the performance of the
transactions contemplated by this Agreement and all other instruments, agreements, and certificates referenced herein to which any Seller is or will be a party do not and will not (i) violate any decree or judgment of any court or governmental
authority which is applicable to or binding upon any Seller, (ii) violate in any material respect any Legal Requirement applicable to any Seller, (iii) violate or conflict with, or result in a breach of, or constitute a default (or an
event which, with or without notice or lapse of time or both, would constitute a default) under, or permit cancellation of, or result in the creation of any encumbrance upon any of the Assets under, any contract, lease, sales order, purchase order,
indenture, mortgage, note, bond, instrument, license or other agreement to which any Seller is a party, or by which any Seller is bound, which violation, conflict, breach or default would have a Material Adverse Effect on any Seller or Facility,
(iv) require the consent, waiver or approval of or notice to any Person, which, if not obtained, would have a Material Adverse Effect on any Seller or Facility, (v) permit the acceleration of the maturity of any indebtedness of any Seller,
or (vi) violate or conflict with any provision of the certificate of formation or organization, limited liability company agreement or regulations, or similar organizational documents of any Seller. 
  
 2.4 Financial Statements; Changes; Related Matters. 
  
 (a) Sellers have delivered to Purchaser the financial
statements of Sellers listed in Schedule 2.4(a). To the Knowledge of Sellers, except as set forth in Schedule 2.4(a), such financial statements fairly present in all material respects the financial condition and the results of
operations of Sellers as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP. 
  

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 (b) Sellers have delivered to Purchaser unaudited, unconsolidated balance sheets (the
“Interim Balance Sheets”) of Sellers at October 31, 2005 (the “Interim Balance Sheet Date”) and the related unaudited, unconsolidated statements of operations of Sellers for the ten (10) month period then ended. To the
Knowledge of Sellers, except as set forth in Schedule 2.4(b), such financial statements fairly present in all material respects (and the financial statements delivered pursuant to Section 4.5 will fairly present in all material respects)
the financial condition and the results of operations of Sellers as at the respective dates of and for the periods referred to in such financial statements. To the Knowledge of Sellers, except as set forth in Schedule 2.4(b), such interim
financial statements reflect (and in the case of financial statements delivered pursuant to Section 4.5 will reflect when delivered) all adjustments necessary for a fair presentation of the financial information contained therein other than
normal year-end adjustments which are consistent with past practices. 
  
 (c) To the Knowledge of Sellers, the financial statements referred to in this Section 2.4 and delivered pursuant to Section 4.5 reflect and will reflect the consistent application in all material respects of
accounting principles throughout the periods involved, except as disclosed in the notes to such financial statements. To the Knowledge of Sellers, all such financial statements have been and will be prepared from and are and will be in accordance
with the accounting records of Sellers. To the Knowledge of Sellers, the accounting records of Sellers, all of which have been made available to Purchaser, are complete and correct in all material respects and represent actual, bona fide
transactions and have been maintained in accordance with sound business practices. 
  
 (d) Sellers have delivered to Purchaser copies of all letters from Sellers’ auditors to any Seller during the twenty-four
(24) months preceding the execution of this Agreement, together with copies of all responses thereto. 
  
 (e) Except as set forth in Schedule 2.4(e), since the Interim Balance Sheet Date, whether or not in the ordinary course of
business, there has not been: 
  
 (i) any change
in or event affecting any Seller or the business of any Facility that has had or would reasonably be expected to have a Material Adverse Effect on any Seller or Facility; 
  
 (ii) any strike or other material labor dispute involving any Seller or employees or personnel at any
Facility; or 
  
 (iii) any casualty, loss, damage
or destruction (whether or not covered by insurance) of any property of any Seller that is material or that has involved or may involve a material loss to such Seller in excess of applicable insurance coverage. 
  
 (f) Except as set forth in Schedule 2.4(f), no Seller
has any material liabilities except for liabilities reflected or reserved against in the Interim Balance Sheets and current liabilities incurred in the ordinary course of business of Sellers since the Interim Balance Sheet Date. 
  

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 2.5 Taxes. 
  
 (a) For purposes of this Agreement, 
  
 (i) “Tax” or “Taxes” means any income, gross income, gross receipts, premiums, profits,
capital, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, excise, registration, occupation, service, sales, use, license, lease, transfer, import, export, value added,
severance, environmental, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any governmental entity or political subdivision thereof, and any
interest, penalties, additions to tax, or additional amounts in respect of the foregoing. 
  
 (ii) “Tax Return” means any report of Taxes due, any claims for refund of Taxes paid, any information return with respect to
Taxes, or any other similar report, statement, declaration, or document required to be filed under the Internal Revenue Code of 1986, as amended (the “Code”), or other Legal Requirement relating to Taxes, including any attachments,
exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing. 
  
 (b) Except as set forth in Schedule 2.5(b): 
  
 (i) Each Seller has timely filed (taking into account valid extensions of the time for filing) all Tax
Returns required to have been filed and all such Tax Returns were true, correct and complete in all material respects. All Taxes owed by any Seller (whether or not shown on any Tax Return) that have become due and payable have been paid, except
where the failure to pay such Taxes would not have a Material Adverse Effect on any Seller or Facility. 
  
 (ii) No Seller is currently the beneficiary of any extension of time within which to file any Tax Return. 
  
 (iii) Each Seller has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, member or other third party. 
  
 (iv) There are no liens or security interests on any of the Assets that arose in connection with any failure (or alleged failure) to pay
any Tax. 
  
 (v) No deficiencies for any Taxes
have been asserted or assessed in writing against any Seller or any of the Assets, which are unpaid. To the Knowledge of Sellers, there are no claims, audits, or investigations pending or threatened against any Seller or any of the Assets for any
Tax. 
  
 (vi) To the Knowledge of Sellers, there
is no reasonable basis for any assertion by any tax authority of any deficiency in Taxes against any Seller or the Assets, including any assertion by any tax authority for any jurisdiction where a Seller does not file Tax Returns with respect to a
given Tax that the Seller is or may be subject to such Tax in such jurisdiction. 
  
 (vii) No Seller has consented to extend to a date later than the Closing Date the time in which any Tax may be assessed or collected by
any tax authority 
  

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 (viii) No Seller is a party to any tax allocation or sharing agreement with any Person,
or a party to any agreement to indemnify any Person with respect to Taxes. 
  
 (ix) None of the Assets shown on any Interim Balance Sheet is owned by a Person other than a Seller such that Purchaser will not acquire ownership of the Asset for tax purposes as a result of the transactions
contemplated by this Agreement. 
  
 (x) None of
the Assets is (A) required to be or is being depreciated under the alternative depreciation system under Code Section 168(g)(2), or (B) subject to Code Section 168(f). 
  
 (xi) No “industrial development bonds” within the
meaning of Section 103 of the Internal Revenue Code of 1954, as amended and in effect prior to the enactment of the Tax Reform Act of 1986, “private activity bonds” within the meaning of Code Section 141, or other tax exempt
financings are outstanding which have been used to finance Assets of any Seller, whether leased or owned. 
  
 (xii) The consummation of the transactions contemplated by this Agreement will not adversely affect the continued validity and
effectiveness of any Tax exemptions, Tax holidays or other Tax reduction agreements or orders that relate to the Assets. 
  
 (xiii) None of the Assumed Liabilities is an obligation to make a payment that is not deductible under Code Sections 280G or 162(m) or any
corresponding provision of any other applicable Tax law. 
  
 (xiv) No Seller is a partner in any entity classified as a partnership for federal income Tax purposes that is not also a Seller hereunder. 
  
 (xv) No election under Treasury Regulations Section 301.7701-3 or corresponding provisions of any other
applicable Tax law has been made to classify any Seller entity other than in accordance with the default classification for such entity. 
  
 (xvi) No Seller is a “foreign person” within the meaning of Treasury Regulation Section 1.1445-2(b). 
  
 2.6 Material Contracts. Schedule 2.6 lists each Material
Contract to which any Seller is a party or to which any of its properties are subject or by which any thereof is bound, other than the Excluded Contracts listed in Schedule 1.3(b). Except as set forth in Schedule 2.6, each
such Material Contract was entered into in the ordinary course of business. As used herein, “Material Contract” means any contract or agreement that (a) after the Interim Balance Sheet Date, obligates any Seller or Sellers to pay an
amount of Twenty-Five Thousand Dollars ($25,000) or more in any one twelve-month period or obligates any Seller or Sellers to pay an aggregate amount of Fifty Thousand Dollars ($50,000) or more, (b) has an unexpired term as of the Interim
Balance Sheet Date in excess of twelve (12) months that is not terminable upon sixty (60) days or less notice by the Seller party thereto at any time during the term, without penalty, (c) contains a covenant not to compete or
otherwise restricts the ability of any Seller to conduct its business, including as to manner or place, (d) grants a power of attorney, agency or similar authority to another Person or entity, (e) contains a right of first refusal,
(f) constitutes a collective bargaining agreement including any collective bargaining agreement with physicians 

  

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or any other referral source, (g) constitutes an employment or severance agreement with any Facility Worker or any member, manager, director, officer or
employee of any Seller or any Affiliate of any Seller, (h) represents a contract upon which the business of any Facility is substantially dependent or a contract which is otherwise material to the business of any Facility, (i) represents a
contract with a physician, or to the Knowledge of Sellers, an immediate family member of a physician or any other referral source, including any contract with a pharmacy or any other supplier of medical products to patients of any Facility,
(j) to the Knowledge of Sellers, represents a contract with an entity in which a referring physician (as that term is defined in 42 U.S.C. § 1395m(h)(5)) or a referring physician’s immediate family member has an ownership or
investment interest, (k) represents a third-party payor, managed care or preferred provider organization contract, (l) represents an agreement providing for the lease to any Seller of any Facility Workers, or (m) was not made in the
ordinary course of business. Except as set forth on Schedule 2.6, (i) true, correct and complete copies of the Material Contracts and the Excluded Contracts, including all amendments and supplements thereto, have been delivered to
Purchaser, (ii) each Material Contract is valid and subsisting, (iii) each Seller party thereto has duly performed in all material respects all its obligations thereunder to the extent that such obligations to perform have accrued, and
(iv) no breach or default, alleged breach or default, or event which would (with the passage of time, notice or both) constitute a breach or default thereunder by the Seller party thereto (or, to the Knowledge of Sellers, any other party or
obligor with respect thereto), has occurred or as a result of the execution of this Agreement or its performance will occur. 
  
 2.7 Real and Personal Property; Title to Property; Leases. 
  
 (a) Each Seller has good and valid title in and to the Real Property shown as owned by such Seller on any
Schedule hereto, and to all Personal Property and other Assets, free and clear of Liens, subject only to (i) any Liens for taxes not yet due and payable, (ii) any lease obligations included in the Assumed Liabilities, (iii) any Liens
for Assumed Indebtedness, if any, (iv) those exceptions and other matters set forth in Schedule B-Sections 1 and 2 of the title commitment for the respective parcels of Real Property as set forth in Exhibits F-1, F-2, F-3 and F-4
attached hereto (the “Title Commitments“), other than those exceptions and other matters identified therein to be satisfied or complied with by Sellers, and (v) any easements and other restrictions that are visible and apparent on any
of the Real Property on the Execution Date and do not materially interfere with the operations of any Facility on any of the Real Property in any manner consistent with the current operation thereof by Sellers (items (i), (ii), (iii), (iv) and
(v), collectively, the “Permitted Encumbrances”). Except as shown in Schedule 2.7(a) and to Seller’s Knowledge, no material defects exist with respect to the condition or state of maintenance or repair of any Assets that
would restrict or prevent the operations of any Facility on any of the Real Property in a manner consistent with the current operation thereof by Sellers. Except for Permitted Encumbrances, on or after the Execution Date, no Seller shall take, or
consent to, any steps or actions which will in any manner adversely alter the status of the title to any of the Real Property without Purchaser’s prior written consent. Except for Permitted Encumbrances, no Seller shall execute, grant or record
any Liens or other agreements or matters with respect to any of the Real Property without Purchaser’s prior written consent. 
  
 (b) The Real Property listed in Schedule 1.2(a) consists of all real property owned by any Seller and, together with the real
property leased pursuant to those certain Apartment Lease Agreements between Taplin Falls LTD. and Focus FL identified on Schedule  

  

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1.2(e) (the “Focus FL Apartment Leases”), constitutes all real property used in the conduct of the business of the Facilities. 
  
 (c) Other than leases of the Real Property from one Seller
to another Seller or to an Owner, all of which leases are identified on Schedule 2.7(c) (the “Real Property Leases”) and which, except for the Cooper City Sublease and the Cooper City Prime Lease, shall be terminated at or prior to
Closing at no cost to Purchaser, there are no leases of any of the Real Property. 
  
 (d) Sellers have heretofore made available to Purchaser a true, correct and complete copy of all of the Leases. Except as set forth in
Schedule 2.7(d), no consents are required to be obtained from any third party for the assignment of any of the Leases to Purchaser hereunder. 
  
 (e) At Closing, Sellers will convey to Purchaser good and valid title to the Real Property and all other Assets and a valid leasehold
interest in all of Sellers’ leased property, free and clear of all Liens, conditional sales agreements, rights of first refusal or options, except for Permitted Encumbrances and the rights of any lessor or licensor of leased or licensed
Personal Property expressly set forth in the applicable written Lease or license Contract. 
  
 (f) The Leases, the Real Property Leases and the Focus FL Apartment Leases constitute all of the agreements to which any Seller is a party
with respect to the leasehold interests in properties which are demised pursuant thereto and pertain to all real and personal property leased by any Seller and used in the conduct of the business of any Facility. 
  
 (g) Except as set forth in Schedule 2.7(g), all
conditions precedent to the enforceability of each Lease have been satisfied and there exists no breach or default, nor state of facts which, with the passage of time, notice, or both, would result in a breach or default on the part of the Seller
party thereto or, to the Knowledge of Sellers, any other party thereunder. 
  
 (h) Sellers have no Knowledge of, and, during the past three (3) years, no Seller has received any written notice of, non-compliance in any material respect with any Legal Requirement or other restriction with
respect to any of the Real Property. 
  
 (i)
There is no pending or, to the Knowledge of Sellers, threatened action that would materially interfere with the ownership, use or quiet enjoyment of any of the Real Property by any Seller. 
  
 (j) Sellers have no Knowledge of, and, during the past three
(3) years, no Seller has received any notice of, any proposed special assessments, threatened condemnation or any proposed material changes in property tax or land use Legal Requirements affecting any of the Real Property. 
  
 (k) The Assets include in all material respects all of the
property used by Sellers to operate the Facilities as of the Execution Date. 
  
 (l) Sellers have not conveyed or otherwise granted access or parking rights for the benefit of “Parcel 2” (as identified on the Plat recorded in Plat Book 27, Page 193, Records of Glynn County,
Georgia) on or across the Real Property (identified as “Parcel 1” on 

  

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such Plat). The Permitted Encumbrance for the parking shown on such Plat shall identify the same as an encroachment from Parcel 1 upon Parcel 2. 

 
 2.8 Intangible Property. Schedule 1.2(m) lists any and
all marks and other material items of intangible property described in Section 1.2(m) (the “Intangible Property“) in which any Seller has an interest and the nature of such interest. Except as set forth in Schedule 1.2(m),
Sellers have valid rights to use or ownership of all of the Intangible Property and any other material intangible property required for use in connection with the business of the Facilities. Except as set forth in Schedule 2.8, no Seller
uses any Intangible Property by consent of any other Person and no Seller is required to or does make any payments to others with respect thereto. Except as set forth in Schedule 2.8, the Intangible Property is held by Sellers and fully
assignable free and clear of any Liens. To the Knowledge of Sellers, each Seller has performed in all material respects all obligations required to be performed by such Seller, and no Seller is in default in any material respect, under any contract
relating to any of the foregoing. No Seller has received any notice to the effect (or otherwise has Knowledge) that any Intangible Property or any use thereof by any Seller conflicts with or infringes (or allegedly conflicts with or infringes upon)
the rights of any Person. 
  
 2.9 Legal Proceedings. Except
as set forth in Schedule 2.9, there is no Proceeding or order pending, or, to the Knowledge of Sellers threatened, against or affecting any Seller, or any of its respective properties or assets. Schedule 2.9 lists each Proceeding
and each order that involves a claim of aggregate liability in excess of Twenty Five Thousand Dollars ($25,000) against, or that enjoins or seeks to enjoin or excludes or seeks to exclude the conduct of any activity by, any Seller. 
  
 2.10 [Reserved]. 
  
 2.11 Insurance. Schedule 2.11 lists all insurance
policies and bonds that are currently maintained by any Seller and indicates the type of insurance, policy number, term, identity of insurer, premiums and coverage amounts and coverages (including applicable deductibles) for each such insurance
policy and bond. No Seller is in default in any material respect under any insurance policy or bond. Each Seller has timely filed claims with its respective insurers with respect to all matters and occurrences for which it believes it has coverage.
Schedule 2.11 lists all claims in excess of $20,000 which have been made by any Seller in the last two (2) years under any insurance policy and bond. Except as set forth in Schedule 2.11, all insurance policies and bonds
maintained by any Seller are in full force and effect. Except as shown in Schedule 2.11, no Seller has received notice from any insurer or agent of any intent to cancel or not to renew any of such insurance policies or bonds. There are
no outstanding requirements or recommendations by any insurance company that issued a policy with respect to any of the properties and assets of any Seller requiring or recommending any action which has not been taken. 
  
 2.12 Employees. 
  
 (a) By letter dated December 6, 2005, Sellers have
provided Purchaser with a complete list (as of the date set forth therein) of names, departments and current annual salaries or wage rates, bonus and other compensation and/or benefit arrangements, accrued vacation and sick leave, the paid time off
pay and period of service credited for vesting as of the date thereof of all full-time and part-time employees of any Seller and all Facility Workers and indicating 

  

 Page 27 

 
whether such employee or Facility Worker works part time or full time at any Facility. Except as set forth in Schedule 2.12(a), there are no
employment agreements or severance agreements with any employee of any Seller or any Facility Worker or arrangements requiring the payment of a bonus or other compensation as a result of the consummation of the transactions contemplated by this
Agreement. 
  
 (b) There are no labor union or
collective bargaining agreements in effect with respect to any employees of any Seller or any Facility Worker. There is no unfair labor practice complaint against any Seller pending, or to the Knowledge of Sellers threatened, before the National
Labor Relations Board. There is no labor strike, arbitration, dispute, slowdown or stoppage, and no union organizing campaign, pending, or to the Knowledge of Sellers threatened by or involving any employees of any Seller or any Facility Worker.

  
 (c) The agreements between Sellers and
Atlantic Professional Employers, Inc. (“APE”) listed on Schedule 2.6 (the “Seller APE Leases”) constitute the only agreements pursuant to which any Facility Workers are leased by any Seller. 
  
 2.13 Employee Benefits. 
  
 (a) Except to the extent that any Seller may be an adopting
employer of a 401(k) Plan maintained by APE as a multiple employer plan under Section 413(c) of the Code, Seller does not maintain any pension, retirement, savings, deferred compensation, profit-sharing plan, bonus or other incentive plan,
severance plan, health, group insurance or other welfare plan, or other similar plan and any “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), under which any Facility Worker or other Person has or may have any current or future right to benefits (the term “plan” includes any contract, agreement, policy or understanding, and each such plan is referred to in
this Agreement individually as a “Plan”). 
  
 (b) There are no actions pending, or, to the Knowledge of Sellers, threatened, with respect to any Plan of APE with respect to any Facility Worker, other than claims for benefits in the ordinary course. To the Knowledge of Sellers, each
Plan of APE with respect to any Facility Worker has been administered in accordance with its terms and with all applicable laws (including ERISA). 
  
 (c) No Seller or any Commonly Controlled Entity contributes to or has an obligation to contribute to, nor has any Seller or any Commonly
Controlled Entity at any time within six (6) years prior to the Closing contributed to or had an obligation to contribute to, either (i) a multiemployer plan within the meaning of Section 3(37) of ERISA, or (ii) any plan subject
to Title IV of ERISA. Each Seller has performed timely and shall timely perform all obligations of such Seller and each Commonly Controlled Entity, whether arising by operation of law or by contract, required to be performed under Section 4980B
of the Code (or similar state law), including, but not limited to, such obligations that may arise by virtue of the transactions contemplated by this Agreement. For the purposes of this Section 2.13, “Commonly Controlled Entity” means
any corporation, trade, business, or entity under common control with any Seller within the meaning of Section 414(b), (c), (m), or (o) of the Code or Section 4001 of ERISA. 
  

 Page 28 

 (d) To the Knowledge of Sellers, each employee, nonemployee worker, former employee and
independent contractor of each Seller has been properly classified as such for all purposes under the Code and ERISA. 
  
 2.14 Certain Interests. Except as set forth in Schedule 2.14, (a) no Related Person of any Owner has any material interest in any
property used in or pertaining to the business of any Facility, (b) no Related Person of any Owner is indebted or otherwise obligated to any Seller, (c) no Seller is indebted or otherwise obligated to any Related Person of any Owner,
except for amounts due under normal arrangements applicable to all employees generally as to salary, or reimbursement of ordinary business expenses not unusual in amount or significance, and (d) the consummation of the transactions contemplated
by this Agreement will not (either alone, or upon the occurrence of any act or event, or with the lapse of time, or both) result in any benefit or payment (severance or other) arising or becoming due from any Seller or the successor or assign of any
thereof to any Person, which in the case of clauses (a) through (d) above will adversely affect the business conducted by the Purchaser at the Facilities after the Closing or impose any obligations or liabilities on Purchaser. Schedule
2.14 contains a complete and accurate listing of all business functions and activities of each Facility which are performed, in whole or in part, by any Related Person of any Owner. Except as set forth in Schedule 2.14, no Seller has
engaged in any transaction with any Related Person of any Owner. 
  
 2.15 Inventory. All Inventory of each Seller is of a quality and quantity and that is sufficient for the operation of the Facilities in the ordinary course of business, consistent with past practices. The value at which any Inventory
is carried on the books of Sellers reflects the customary Inventory valuation policy of the applicable Seller for stating inventory in accordance with GAAP consistently applied. 
  
 2.16 Receivables. To Seller’s Knowledge, the accounts receivable (including the Government Receivables)
reflected on the books and records of each Seller and each Facility arose from bona fide commercial transactions, and the financial statements referred to in Section 2.4 include all refunds, discounts or setoffs payable or assessable with
respect to such accounts receivable (including the Government Receivables), taken as a whole. Each Seller adequately records in all material respects on its financial statements all estimates for future Seller Cost Report settlements for all years
open to settlement. Each Seller records Government Program recoupments on its financial statements in the period in which the recoupment is assessed. 
  
 2.17 Third-Party Payors and Suppliers. Schedule 2.17 lists all Material Contracts for the year ended December 31, 2004,
attributable to the five (5) largest third-party payors (or such fewer payors if such Facility has less than five (5) material payors), and any sole-source suppliers of material goods or services (other than electricity, gas, telephone or
water) to the business of each such Facility with respect to which alternative sources of supply are not readily available on comparable terms and conditions. 
  

2.18 Worker Adjustment and Retraining Notification (WARN). Each Seller has complied with the Worker Adjustment and Retraining Notification Act,
29 U.S.C.A. §2102, et seq., as amended (the “WARN Act”), insofar as applicable to any acts or transactions with respect to the operation of any Facility prior to and, assuming compliance by Purchaser with the applicable
requirements of the WARN Act as relates to the Facility Workers leased by Purchaser 

  

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from APE as of the Effective Time upon consummation of the Closing, including the transactions contemplated by this Agreement. 
  
 2.19 Environmental Compliance. Except as set forth in
Schedule 2.19 or as disclosed in the Phase I environmental surveys listed in Schedule 2.19: 
  
 (a) To the Knowledge of Sellers, the Assets are in material compliance with all applicable Environmental Laws. As used herein,
“Environmental Laws” means all applicable Legal Requirements relating to pollution or protection of the environment (including ambient air, surface water, ground water, land or surface or subsurface strata), including all applicable
federal, state or local laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment and all applicable Legal Requirements
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any of the foregoing, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901, et. seq.), and the rules and regulations promulgated thereunder. 
  
 (b) To the Knowledge of Sellers, Sellers have obtained all permits required under applicable Environmental
Laws for the use, operation or ownership of the Real Property and the business of the Facilities, and the Real Property and the Facilities are in material compliance with each such applicable permit. No federal, state or local governmental entity
has notified any Seller that any such permits may or will be suspended, cancelled, revoked or modified, or cannot be renewed in the ordinary course of business. 
  
 (c) No Seller has received from any federal, state or local governmental entity or other Person any order,
directive, information request, notice of violation, notice of alleged violation, notice of noncompliance, notice of liability or potential liability, regarding compliance with, or liability or potential liability under, applicable Environmental
Laws concerning any of the Real Property or the business of any Facility or any off-site disposal of a hazardous substance (including any letter or request for information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law). 
  
 (d) No Proceeding or claim is pending or, to the Knowledge of Sellers, threatened, under any applicable Environmental Law pursuant to
which any Seller is or to the Knowledge of Sellers could be reasonably expected to be named as a party with respect to the Real Property or the business operations of the Facilities. 
  
 (e) No Seller has entered into any agreement with any federal, state or local governmental entity or any
other Person pursuant to which a Seller assumed responsibility for the investigation or remediation of any condition resulting from the release, treatment, storage or disposal of hazardous substances, which matter has not been completed or resolved.

  

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 (f) Sellers have disclosed and made available to Purchaser all relevant information,
including all studies, site assessments, compliance audits and similar environmental reports, analyses, and test results that are in the possession, custody or control of any Seller, relating to any past and present (i) environmental conditions
concerning the business of the Facilities or on, under or about the Real Property, (ii) use or operation of the Real Property used in or held for use in connection with the business of the Facilities, and (iii) activities relating to
hazardous substances on, or any off-site disposal of a hazardous substance from, the Real Property or used in connection with the business of the Facilities. Sellers have disclosed and made available to Purchaser any and all documents that are in
the possession, custody or control of any Seller relating to projected necessary environmental expenditures for the business of the Facilities and the Real Property, including capital and operating budgets and reports prepared by independent
auditors or accountants and prepared by personnel, and including reports, studies or documents relating to the costs (including, anticipated capital costs and annual expenses) of compliance with Environmental Laws. 
  
 (g) To the Knowledge of Seller, there is no soil or
groundwater contamination on, under, or about any Real Property. 
  
 (h) No Seller holds or is required to hold a permit for the generation, treatment, storage, or disposal of hazardous waste in accordance with the Resource Conservation and Recovery Act (42 U.S.C.
§ 6901, et seq.). 
  
 2.20 Powers of Attorney.
Except as contemplated by this Agreement, no Seller has given any currently outstanding power of attorney (irrevocable or otherwise) to any Person for any purpose relating to the business of any Facility, other than powers of attorney given to
regulatory authorities in connection with routine qualifications to do business. 
  
 2.21 Accreditation; Medicare and Medicaid; Third-Party Payors; Compliance with Health Care Laws. 
  
 (a) Each Facility is duly accredited by the Joint Commission on Accreditation of Healthcare Organizations (“JCAHO”) as evidenced
by such Facility’s most recent JCAHO accreditation survey reports and is duly licensed by the state in which such Facility is located as shown on Schedule 2.21(a). Sellers have the lawful authority and all federal, state or local
governmental authorizations, certificates of authority, certificates of need, licenses or permits necessary for or required to conduct the business operations of the Facilities as such are presently being conducted. In order to conduct the business
operations of the Facilities as presently conducted, no Seller is required to hold any licenses, permits or other governmental approvals or authorizations except for those items currently held by such Seller as listed in
Schedule 2.21(a). The items listed in Schedule 2.21(a) are in full force and effect and each Seller is in compliance in all material respects with all requirements of each license, permit or other governmental approval or
authorization that it holds. Each Seller has made all filings with governmental agencies required for the conduct of its business operations. There are no judgments, consent decrees or injunctions of any court or any governmental department,
commission, agency or instrumentality by which any Seller is bound or to which any Seller is subject which relate in any manner to the business of any Facility. No Seller has received nor, to the Knowledge of Sellers is any Seller subject to, any
notice, subpoena, demand letter, administrative inquiry or formal or informal complaint or claim from any governmental department, commission, agency or instrumentality which relate in any manner to the business operations of any Facility.

  

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 (b) The applicable facilities, equipment, staffing and operations of the business of the
Facilities satisfy the accreditation standards of JCAHO. Sellers have previously delivered or made available to Purchaser true, correct and complete copies of (i) each Facility’s most recent JCAHO accreditation survey report, a list of
deficiencies, if any, and, if applicable, a plan of correction, (ii) each Facility’s most recent state health or licensing agency surveys, lists of deficiencies, if any, and, if applicable, plans of correction, (iii) each
Facility’s fire marshal’s surveys for the past two (2) years and lists of deficiencies, if any, and (iv) each Facility’s boiler inspection reports for the past two (2) years and lists of deficiencies, if any. Sellers
have taken all reasonable steps to correct all such deficiencies and a description of any uncorrected deficiency is set forth in Schedule 2.21(b). 
  

(c) Except for the Facility operated by Focus FL which does not receive any Medicare payments and except that only the Delaware
Facility is a Medicaid provider, each Facility receives payment without restriction under Medicare and Medicaid and has a valid and current provider agreement and one or more properly issued provider numbers with each Government Program. All such
provider numbers of the Facilities, as well as any supplier numbers of the Facilities, are listed in Schedule 2.21(c) by Facility to the extent applicable. Except as set forth in Schedule 2.21(c), each Seller is in material
compliance with the conditions of participation for the Government Programs. 
  
 (d) Sellers have timely filed in accordance with instructions from the Centers for Medicare & Medicaid Services or the applicable fiscal intermediary, carrier or payor and applicable Legal Requirements, and
shall cause to be timely filed in accordance with instructions from the Centers for Medicare & Medicaid Services or the applicable fiscal intermediary, carrier or payor and applicable Legal Requirements, all cost reports and other reports
that are required to have been filed or made on or before the Closing Date with respect to the purchase of services of the business of the Facilities, including Government Programs and other insurance carriers, and, except as disclosed in
Schedule 2.21(d), all such reports are or when filed shall be complete and accurate. Except as disclosed in Schedule 2.21(d), each Seller is and has been in compliance with all filing requirements with respect to cost reports
of such Seller, and such reports do not claim, and such Seller has not received, payment or reimbursement materially in excess of the amount provided or allowed by applicable Legal Requirements or any applicable agreement, except where excess
reimbursement was noted on the cost report. True and correct copies of all such reports for the 2004 fiscal year, and any other cost report for which a final settlement has not been issued, have been made available to Purchaser. Except as disclosed
in Schedule 2.21(d) and except for claims, actions and appeals in the ordinary course of business that are not material to any Seller or Facility, no Seller has either initiated or received written notice of any material claims, actions
or appeals pending before any commission, board or agency, including any fiscal intermediary or carrier, governmental entity, or the Administrator of the Centers for Medicare & Medicaid Services, with respect to any Government Program cost
reports or claims filed on behalf of any Seller with respect to the business of any of the Facilities. Schedule 2.21(d) indicates which of such cost reports have been audited by the fiscal intermediary and finally settled. 
  
 (e) Except as disclosed in Schedule 2.21(e), no
validation review or program integrity review related to any Facility, the operation of any Facility, or the consummation of the transactions contemplated by this Agreement, has been conducted by any commission, board, agency or government entity in
connection with the Government Programs, and to the 

  

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Knowledge of Sellers, no such reviews are scheduled, pending or threatened against or affecting any Seller with respect to any Facility or the consummation
of the transactions contemplated by this Agreement. 
  
 (f) All billing practices of Sellers with respect to the Facilities to all third-party payors, including the Government Programs and private insurance companies, are and have been in compliance with all applicable Legal Requirements and all
policies of such third-party payors and Government Programs, and no Seller or Facility has billed or received any payment or reimbursement in excess of amounts allowed by law which would materially adversely affect Purchaser. 
  
 (g) To the knowledge of Sellers, (i) no Facility
Worker, employee or independent contractor of any Seller, and no physician currently on the medical staff at any Facility, is, or is listed on the website of the Office of Inspector General of the United States Department of Health and Human
Services as having been, excluded from participating in Medicare or any other Government Program, and (ii) none of the business of any Facility, or any Seller or any Seller’s officers, managers, agents or management employees (as that term
is defined in 42 U.S.C. § 1320a-5(b)), has been excluded from participating in Medicare or any other Government Program or has been subject to sanction pursuant to 42 U.S.C. § 1320a-7a or 1320a-8 or has been convicted
of a criminal offense under the Anti-Kickback Law or any similar Legal Requirement. 
  
 (h) In the five (5) year period immediately preceding the Execution Date and since the Execution Date, to the Knowledge of Sellers,
no employee of any Seller and no Facility Worker has committed a violation in any material respect of any Legal Requirement regulating health care fraud, including the Anti-Kickback Law, the Stark Law, and the False Claims Act. 
  
 2.22 Compliance Program. Sellers have made available to Purchaser
(i) a copy of each Facility’s 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 and (ii) copies of any written complaints received in the previous five (5) years from employees, independent contractors, vendors, physicians or any other Person
asserting that any Facility or any Seller has violated any health care Legal Requirement, including the Anti-Kickback Law, the Stark Law, and any similar Legal Requirement. No Seller (a) is a party to a Corporate Integrity Agreement with the
Office of Inspector General of the United States Department of Health and Human Services, (b) has reporting obligations pursuant to any settlement agreement entered into with any Governmental Program, (c) to the Knowledge of Sellers, has
been the subject of any Government Program investigation conducted by any federal or state enforcement agency during the past five (5) years, (d) to the best Knowledge of Sellers, has been a defendant in any qui tam/False Claims Act
litigation during the past five (5) years, or (e) has been served with or received any written search warrant, subpoena, civil investigative demand or contact letter from any federal or state enforcement agency (except in connection with
medical services provided to, or medical supplies purchased from, third parties who may be defendants or the subject of investigation into conduct unrelated to the operation of the health care businesses conducted by such Seller). 
  
 2.23 HIPAA. Each Seller has complied in all material respects with all
applicable provisions of the Health Insurance Portability and Accountability Act of 1996, and the rules and 

  

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regulations promulgated thereunder, from and after the applicable effective dates for such requirements. 
  
 2.24 Restricted Grant and Loan Programs. The transactions contemplated
by this Agreement will not result in any obligation on any Seller to repay any loans, grants or loan guarantees or provide uncompensated care in consideration thereof pursuant to the Hill Burton Program or any similar statute or program with respect
to the ownership or operation of the business of any Facility. 
  
 2.25 Experimental Procedures. No Seller has performed or authorized the performance of any experimental or research procedures or studies involving patients of any Facility that require the prior approval of any governmental entity
that has not been obtained. 
  
 2.26 Medical Staff; Physician
Relations. Sellers have made available to Purchaser complete and genuine copies of the bylaws and rules and regulations of the medical staff and medical executive committees of each Facility. Schedule 2.26 sets forth (a) the
name and status on the medical staff of each member of the medical staff of each Facility and (b) the degree (e.g., M.D., D.O.), title specialty and board certification, if any, of each such medical staff member. Except as set forth in
Schedule 2.26, there are no pending or, to the Knowledge of Sellers, threatened disputes with any Facility’s medical staff members or applicants or allied health professionals, and all appeal periods in respect of any medical staff
member or applicant against whom an adverse action has been taken have expired. 
  
 2.27 Solvency. No Seller is insolvent or will be rendered insolvent as a result of any of the transactions contemplated by this Agreement. For purposes hereof, the term “solvency” means that:
(a) the fair salable value of a Seller’s tangible assets is in excess of the total amount of its liabilities (including for purposes of this definition all liabilities, whether or not reflected on a balance sheet prepared in accordance
with GAAP, and whether direct or indirect, fixed or contingent, secured or unsecured, and disputed or undisputed), (b) each Seller is able to pay its debts or obligations in the ordinary course as they mature, and (c) each Seller has
capital sufficient to carry on its businesses and all businesses which it is about to engage. 
  
 2.28 No Brokers or Finders. No agent, broker, finder, or investment or commercial banker, or other Person or firm engaged by or acting on behalf of any Seller, or any Affiliate of any Seller, in connection with
the negotiation, execution or performance of this Agreement or the transactions contemplated by this Agreement, is or will be entitled to any brokerage or finder’s or similar fee or other commission as a result of this Agreement or such
transactions. 
  
 2.29 Improper Payments. To the Knowledge
of Sellers, no Related Person or employee of any Owner, and no Facility Worker, has made any illegal bribes, kickbacks or other illegal payments to, or received any such illegal payments from, customers, vendors, suppliers or other Persons
contracting with any Seller and has not proposed or offered to make or receive any such illegal payments. 
  
 2.30 No Misrepresentations. All representations, warranties and statements made by any Seller in this Agreement are true, complete and correct in
all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make any such representation, warranty or statement, in light of the circumstances under which they were made,
not materially misleading. 
  

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 ARTICLE 3 
 REPRESENTATIONS AND WARRANTIES OF PURCHASER 
  
 Purchaser represents and warrants to Sellers as follows: 
  
 3.1 Authority. Purchaser has full corporate power and authority (a) to enter into this Agreement and all documents executed or to be executed by Purchaser in connection herewith, and (b) to carry out
and perform the transactions contemplated hereby and thereby. 
  
 3.2 Authorization/Execution. All corporate action and other actions required to be taken by Purchaser to authorize its execution, delivery and performance of this Agreement, all documents executed or to be executed by Purchaser in
connection herewith, and all transactions contemplated hereby or thereby, have been duly and properly taken or obtained by Purchaser. No other corporate action or other action on the part of Purchaser is necessary to authorize Purchaser’s
execution, delivery and performance of this Agreement, any document executed or to be executed by Purchaser in connection herewith, or any transaction contemplated hereby. This Agreement and all documents executed or to be executed by Purchaser in
connection herewith have been (or will be, as applicable) duly and validly executed and delivered by Purchaser and (assuming due and valid execution by, and enforceability against, any other Person that is a party thereto) this Agreement and all
documents executed or to be executed by Purchaser in connection herewith constitute (or will constitute when executed and delivered) the valid and binding obligations of Purchaser enforceable in accordance with their respective terms. 
  
 3.3 Organization and Good Standing; No Violation. 
  
 (a) Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. 
  
 (b) The execution and delivery by Purchaser of this Agreement and the performance by Purchaser of the transactions contemplated by this Agreement and all other instruments, agreements, certificates and documents
contemplated hereby to which Purchaser is or will be a party do not and will not (i) violate any decree or judgment of any court or governmental authority which is applicable to or binds Purchaser, (ii) violate any Legal Requirement
applicable to Purchaser which would have a material adverse effect on Purchaser, (iii) violate or conflict with, or result in a breach of, or constitute a default (or an event which, with or without notice or lapse of time or both, would
constitute a default) under, or permit cancellation of, any material contract, lease, mortgage, note, bond, instrument, license or other agreement to which Purchaser is a party, or by which Purchaser is bound, (iv) permit the acceleration of
the maturity of any indebtedness of Purchaser, (v) following the receipt of the Governmental Approvals and the Contract and Lease Consents and the expiration of the applicable waiting period, and any extensions thereof, under the HSR Act,
require the consent of any third party, or (vi) violate or conflict with any provision of the Certificate of Incorporation or Bylaws of Purchaser. 
  
 3.4 Brokers and Finders. No agent, broker, finder, or investment or commercial banker, or other Person or firm engaged by or acting on behalf of
Purchaser, or any Affiliate of Purchaser, in connection with the negotiation, execution or performance of this Agreement or the transactions contemplated by this Agreement, is or will be entitled to any brokerage or finder’s or similar fee or
other commission as a result of this Agreement or such transactions. 
  

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 3.5 Due Diligence. Purchaser has commissioned the Phase I environmental surveys of the Real
Property listed in Schedule 2.19 as ordered by Purchaser and the Title Commitments and has reviewed and is familiar with the results of such surveys and reports. 
  
 3.6 Financial Ability. Purchaser has the financial ability to consummate the transactions contemplated by this
Agreement, the Right of First Refusal Agreements, and the Lighthouse Purchase Agreement. 
  
 3.7 No Misrepresentations. All representations, warranties and statements made by Purchaser in this Agreement are true, complete and correct in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make any such representations, warranty or statement, in light of the circumstances under which they were made, not materially misleading. 
  
 ARTICLE 4 
 COVENANTS OF SELLERS 
  
 4.1 Access and Information; Inspection Period. From the Execution Date through the consummation of the Closing, Sellers shall afford to the officers, employees, contractors and agents of Purchaser, at
Purchaser’s sole cost and expense, (which shall include accountants, attorneys, bankers and other consultants and agents of Purchaser) full and complete access during normal business hours to and the right to inspect the plants, properties,
books, accounts, records and all other relevant documents and information with respect to the assets, liabilities and business of Sellers, the Facilities, the Real Property and all of the other Assets to be purchased or acquired by Purchaser
hereunder. From the Execution Date through the consummation of the Closing, Sellers shall furnish Purchaser with such additional financial and operating data and other information in any Seller’s possession as to businesses and properties of
Sellers, the Facilities, the Real Property and all of the Assets as Purchaser or its representatives may from time to time reasonably request, without regard to where such information may be located. Such access shall include consultations with the
personnel of any Seller if requested by Purchaser. Purchaser agrees that Purchaser’s right of access and inspection shall be exercised in such a manner as not to interfere unreasonably with the operations of the Facilities. Further, Purchaser
may, at its sole cost and expense undertake environmental, mechanical, engineering, and structural inspections, tests and surveys of the Facilities and the Real Property. Purchaser agrees that, after performing any inspections, tests or surveys,
Purchaser shall restore the Facilities and the Real Property as nearly as possible to its condition immediately prior to such inspections, tests or surveys and repair any damage to same caused by the performance of such inspections, tests, or
surveys. Purchaser agrees that, prior to the entry of Purchaser or its officers, employees, contractors or agents onto the Facilities or the Real Property to perform any such inspections, tests, or surveys, Purchaser shall, or shall cause its
officers, employees, contractors or agents to, maintain levels of liability and other insurance as are considered generally acceptable in the industry for such activities to be undertaken on the Facilities or the Real Property. Purchaser agrees to
defend, indemnify and save Sellers harmless from and against any claim, damage, liability, cost or expense (including reasonable attorneys’ fees and expenses) arising from acts or omissions of Purchaser (and from the acts or omissions of
Purchaser’s officers, employees, contractors or agents) in any way pertaining to any entry upon, or inspection, test or survey of, the Facilities or the Real Property (or any parts thereof) prior to consummation of the Closing. Purchaser’s
obligations under this Section with respect to acts or 

  

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omissions occurring prior to Closing, but not thereafter, shall survive Closing or termination hereunder. 
  
 4.2 Conduct of Business. On and after the Execution Date and prior to
consummation of the Closing, and except as otherwise consented to or approved in writing by an authorized officer of Purchaser or required by this Agreement, each Seller shall: 
  
 (a) carry on its businesses in substantially the same manner as presently conducted and not make any
material change in personnel, operations, finance, accounting policies (unless the applicable Seller is required to adopt such changes under GAAP), Tax elections or Tax Returns or real or personal property; 
  
 (b) maintain the Facilities and the Real Property and all
parts thereof and all other Assets in operating condition in a manner consistent with past practices, ordinary wear and tear excepted; 
  
 (c) perform all of its material obligations under agreements relating to or affecting any of the Facilities, the Real Property, their
operations or the Assets; 
  
 (d) keep in full
force and effect present insurance policies or other comparable self-insurance; 
  
 (e) use commercially reasonable efforts to maintain and preserve its business organization intact, retain its present employees and
Facility Workers at the Facilities and maintain its relationships with physicians, suppliers, customers and others having business relationships with any Facility; 
  
 (f) pay all of its liabilities as they become due; and 
  
 (g) collect all Accounts Receivable in the ordinary course
of business consistent with Sellers’ past practices. 
  
 4.3
Negative Covenants. From the Execution Date until consummation of the Closing, no Seller shall, without the prior written consent of Purchaser or except as may be required by law: 
  
 (a) amend or terminate any of the Contracts or Leases, enter into any new contract or commitment, or incur
or agree to incur any liability, except in the ordinary course of business, and in no event with respect to any such contract, commitment or liability as to which the total to be paid in the future under the contract, commitment or liability exceeds
Twenty Five Thousand Dollars ($25,000); 
  
 (b)
increase compensation payable or to become payable or make any bonus payment to or otherwise enter into one or more bonus, severance or other agreements with or for the benefit of any employee or Facility Worker, except in the ordinary course of
business in accordance with Sellers’ customary personnel policies; 
  
 (c) create, assume or permit to exist any new debt, mortgage, deed of trust, pledge or other lien or encumbrance (other than Permitted Encumbrances) upon any of the Assets; 
  

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 (d) acquire (whether by purchase or lease) or sell, assign, lease, or otherwise transfer
or dispose of any property, plant or equipment, except in the ordinary course of business with comparable replacement thereof; 
  
 (e) except with respect to expenditures budgeted by Sellers and disclosed to Purchaser prior to the Execution Date, purchase capital
assets or incur costs in respect of construction in progress; 
  
 (f) take any action outside the ordinary course of business; 
  
 (g) reduce Inventory except in the ordinary course of business; or 
  
 (h) make any efforts to collect or reduce Accounts Receivable between the Execution Date and the Effective
Time except in the ordinary course of business. 
  
 4.4
Consents. Sellers shall use commercially reasonable efforts to obtain all Contract and Lease Consents and shall cooperate with Purchaser and its representatives and attorneys: (a) in Purchaser’s efforts to obtain all other consents,
approvals, authorizations, clearances, certificates of need and licenses required to carry out the transactions contemplated by this Agreement (including those of governmental and regulatory authorities) or which Purchaser reasonably deems necessary
or appropriate, and (b) in the preparation of any document or other material which may be required by any governmental agency as a predicate to or result of the transactions contemplated in this Agreement. Notwithstanding anything to the
contrary in this Agreement, to the extent Sellers are unable to obtain any of the Contract and Lease Consents, if the Closing is consummated without such Consents Sellers shall cooperate with Purchaser to ensure that Purchaser obtains the benefits
of each such Contract or Lease and shall indemnify and hold harmless Purchaser and its Affiliates from and against any and all Damages as a result, directly or indirectly, of the failure to obtain any such Contract or Lease Consent. 
  
 4.5 Additional Financial Information. Within thirty (30) calendar
days following the end of each calendar month ending after October 2005 and prior to Closing, Sellers shall deliver to Purchaser a complete copy of the unaudited, unconsolidated balance sheets and related unaudited, unconsolidated statements of
operations of Sellers for such month then ended, together with corresponding year-to-date amounts. All such financial statements shall be prepared consistent with the representations of Sellers in Sections 2.4(b) and 2.4(c). 
  
 4.6 No-Shop. From and after the Execution Date until the earlier of
the consummation of the Closing or the termination of this Agreement, Sellers agree that none of them nor any of their respective Affiliates shall, without the prior written consent of Purchaser, directly or indirectly: (a) offer for sale or
lease any assets of any Facility or any of the Assets other than in the ordinary course of business consistent with past practices, (b) solicit offers to buy all or any material portion of the assets of any Facility or any of the Assets,
(c) hold discussions with any Person (other than Purchaser) looking toward such an offer or solicitation, or (d) enter into any negotiations or agreement with any Person (other than Purchaser) with respect to the sale or other disposition
of any Facility or any of the Assets or any business combination transaction involving any Seller (including the sale of equity interests in any Seller or the merger or consolidation of any Seller). 
  

 Page 38 

 4.7 Sellers’ Efforts to Close. Sellers shall use commercially reasonable efforts to satisfy
all of the conditions precedent set forth in Articles 6 and 7 to its or Purchaser’s obligations under this Agreement to the extent that any Seller’s action or inaction materially can control or influence the satisfaction of such
conditions. 
  
 4.8 Notification; Updating of Disclosure
Schedules. Between the Execution Date and the Closing, Sellers shall notify Purchaser in writing (i) if any Seller becomes aware of (A) any fact or condition that causes or constitutes a breach of any Seller’s representations and
warranties made herein, or (B) the occurrence after the Execution Date of any fact or condition that would or be reasonably likely to (except as expressly contemplated by this Agreement) cause or constitute a breach of any such representation
or warranty had that representation or warranty been made as of the time of the occurrence of, or any Seller’s discovery of, such fact or condition, and (ii) of any changes, additions, or events which may cause any change in or addition to
the Disclosure Schedules delivered by Sellers under this Agreement; in each case promptly after the discovery or occurrence of the same and again at the Closing by delivery of appropriate updates or supplements to all such Schedules. No notification
of a change or addition to a Disclosure Schedule made pursuant to this Section 4.8 shall be deemed to cure any breach of any representation or warranty unless in any such case Purchaser specifically agrees thereto in writing, nor shall any such
notification be considered to constitute or give rise to a waiver by Purchaser of any condition set forth in this Agreement, unless in any such case Purchaser specifically agrees thereto in writing or if following such notification Purchaser
proceeds to close the transactions contemplated by this Agreement. Nothing contained herein shall be deemed to create or impose on Purchaser any duty to examine or investigate any matter or thing for the purposes of verifying the representations and
warranties made by Sellers herein. 
  
 4.9 Facility
Repairs. At or prior to Closing, Sellers, at their sole expense, shall perform the repairs described in Schedule 4.9 (the “Facility Repairs”) to the reasonable satisfaction of Purchaser. 
  
 4.10 Delaware Facility Remediation. Prior to Closing, Sellers, at
their sole expense, shall remove the fully grown trees and vegetation around the drainage pit in the rear of the Facility operated by Focus Healthcare of Delaware, LLC and located in New Castle, Delaware as required by the State of Delaware
Department of Special Services (the “Delaware Remediation”) to the reasonable satisfaction of Purchaser. To the extent any of the Delaware Remediation has not been completed prior to the Closing Date, the Purchase Price shall be reduced
(as a reduction to the Closing Purchase Price Payment) by an amount equal to the amount of the reasonable estimated cost of such portion of the Delaware Remediation as is not completed by the Closing Date. 
  
 4.11 Payment of Taxes. At or prior to Closing, Sellers shall pay
(a) all past-due property Taxes, together with all penalties and interest thereon, owing with respect to any of the Real Property, and (b) all Taxes referred to on Schedule 2.5(b), together with all penalties and interest thereon.

  
 4.12 Cooper City Prime Lease. At or prior to Closing,
Focus FL shall assign its interest, as tenant, in that certain Lease Agreement dated as of April 16, 1999, by and between Highpoint LLC and Focus FL (the “Cooper City Prime Lease”), to Highpoint LLC. 
  

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 4.13 Required Approvals; Other Actions. In addition to Sellers’ obligations under
Section 4.4, between the Execution Date and the consummation of the Closing, each Seller shall (a) make as promptly as practicable all filings required by applicable law to be made by it or any of its Affiliates in order to consummate the
transactions contemplated hereby (including making all filings and submissions under any applicable Antitrust Laws), (b) comply at the earliest practicable date with any request for additional information or documentary material (or any similar
request for information and/or documents) respectively received by Purchaser or any Seller, or any of their respective Affiliates, from the Federal Trade Commission (“FTC”), the Antitrust Division of the Department of Justice
(“DOJ”) or any other governmental authority pursuant to any applicable Antitrust Law in connection with the transactions contemplated hereby, (c) promptly inform Purchaser of any material communication made by such Seller to, or
received by such Seller from, the FTC, the DOJ or any other governmental authority regarding any of the transactions contemplated hereby, (d) cooperate in connection with any filing under applicable Antitrust Law and in connection with
resolving any investigation or other inquiry concerning the transactions contemplated hereby, commenced by the FTC, the DOJ, any state attorney general or any other governmental authority pursuant to any applicable Antitrust Law, and
(e) cooperate with each Seller and Purchaser and use commercially reasonable efforts to obtain all consents required to be obtained under applicable Antitrust Laws to permit the consummation of the transactions contemplated hereby, and with
respect to all other filings any Seller or Purchaser elects to make or is required to make in connection with the transactions contemplated hereby. Notwithstanding the foregoing or anything else in this Agreement, nothing in this Agreement shall
require any Seller or any of its Affiliates to dispose of or make any change in any portion of its business or to incur any other similar burden to obtain any Governmental Approval. 
  
 ARTICLE 5 
 COVENANTS OF PURCHASER 
  
 5.1 Purchaser’s
Efforts to Close. Purchaser shall use commercially reasonable efforts to satisfy all of the conditions precedent set forth in Articles 6 and 7 to its or Sellers’ obligations under this Agreement to the extent that Purchaser’s
action or inaction can control or influence the satisfaction of such conditions. 
  
 5.2 Confidentiality. Until Closing, Purchaser shall, and shall cause its employees, representatives and agents (including all parties to whom access is granted pursuant to Section 4.1) to, hold in strict
confidence, unless compelled to disclose by judicial or administrative process or, in the reasonable opinion of Purchaser’s counsel, by other requirements of law, all Confidential Information, Purchaser shall not disclose the Confidential
Information to any Person, except as otherwise may be reasonably necessary to carry out the transactions contemplated by this Agreement, including any business or diligence review by or on behalf of Purchaser, and Purchaser shall not use the
Confidential Information other than as is reasonably necessary or appropriate in connection with the transactions contemplated by this Agreement or to the detriment of any Seller or any Related Person; provided, however, that the foregoing
shall not limit in any way any rights of Purchaser under any other provision hereof or the enforcement by Purchaser of any of its legal rights or claims. For the purposes hereof, “Confidential Information” shall mean (i) all
information of any kind concerning Sellers or the business of the Facilities and existing or relating to any period prior to the Effective Time, except information (A) ascertainable or obtained from public or published information,
(B) received 

  

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from a third party that is not known by Purchaser to be under an obligation to any Seller or any Affiliate of any Seller to keep such information
confidential, (C) which is or becomes known to the public (other than through a breach of this Agreement), or (D) which was in Purchaser’s possession prior to disclosure thereof to Purchaser in connection herewith, and (ii) all
“Individually Identifiable Health Information,” as such term is defined in 45 C.F.R. §160.102, of patients and others receiving services from the Facilities to the extent relating to any time prior to the Effective Time. In the event
of any termination of this Agreement, Purchaser shall, in addition to complying with this Section 5.2, return to the Seller Representative any and all such Confidential Information (including all notes, memoranda, written or electronic records
relating to the same (without maintaining copies thereof) and Individually Identifiable Health Information in Purchaser’s possession without retaining copies thereof. Notwithstanding the foregoing or Section 12.8, Purchaser shall have the
right to issue a press release announcing the execution of this Agreement and the Lighthouse Purchase Agreement, which press release shall be in form and substance reasonably satisfactory to the Seller Representative. 
  
 5.3 Waiver of Bulk Sales Law Compliance. Subject to
Section 10.2(f), Purchaser hereby waives compliance by Sellers with the requirements, if any, of Article 6 of the Uniform Commercial Code as in force in any state in which any of the Assets are located and all other similar laws applicable to
bulk sales and transfers. 
  
 5.4 Required Approvals; Other
Actions. Between the Execution Date and the consummation of the Closing, Purchaser shall (a) make as promptly as practicable all filings required by applicable law to be made by it or any of its Affiliates in order to consummate the
transactions contemplated hereby (including making all filings and submissions under any applicable Antitrust Laws), (b) comply at the earliest practicable date with any request for additional information or documentary material (or any similar
request for information and/or documents) respectively received by Purchaser or any Seller, or any of their respective Affiliates, from the FTC, the Antitrust Division of the DOJ, or any other governmental authority pursuant to any applicable
Antitrust Law in connection with the transactions contemplated hereby, (c) promptly inform the Seller Representative of any material communication made by Purchaser to, or received by Purchaser from, the FTC, the DOJ or any other governmental
authority regarding any of the transactions contemplated hereby, (d) cooperate in connection with any filing under applicable Antitrust Law and in connection with resolving any investigation or other inquiry concerning the transactions
contemplated hereby, commenced by the FTC, the DOJ, any state attorney general or any other governmental authority pursuant to any applicable Antitrust Law, and (e) cooperate with Sellers and use commercially reasonable efforts to obtain all
consents required to be obtained under applicable Antitrust Laws to permit the consummation of the transactions contemplated hereby, and with respect to all other filings any Seller or Purchaser elects to make or is required to make in connection
with the transactions contemplated hereby. Notwithstanding the foregoing or anything else in this Agreement, nothing in this Agreement shall require Purchaser or any of its Affiliates to dispose of or make any change in any portion of its business
or to incur any other similar burden to obtain any Governmental Approval. 
  
 5.5 Financing. Immediately upon the execution of this Agreement, Purchaser shall diligently pursue and use its commercially reasonable efforts to obtain financing from one or more third parties in an aggregate
amount sufficient to enable Purchaser to meet its obligation to pay the Purchase Price pursuant to this Agreement and the Lighthouse Purchase Agreement on or before December 21, 2005. 
  

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 ARTICLE 6 
 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS 
  
 Sellers’ obligation to sell the Assets and to close the transactions contemplated by this Agreement shall be subject to the satisfaction of each of the following conditions at or prior to the Closing except to
the extent specifically waived in writing by the Seller Representative in whole or in part at or prior to the Closing: 
  
 6.1 Accuracy of Representations and Warranties. Each representation and warranty of Purchaser in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all material respects as of the time of the Closing as if then made. 
  
 6.2 Purchaser’s Performance. Each covenant and obligation that Purchaser is required to perform or to comply with pursuant to this Agreement
at or prior to the Closing shall have been performed and complied with in all material respects. 
  
 6.3 Governmental Authorizations. Purchaser and Sellers shall have obtained for the benefit of Purchaser all material licenses, permits, approvals,
certificates of need and authorizations from governmental agencies or governmental bodies that are necessary or required for completion of the transactions contemplated by this Agreement. All waiting periods, and any extensions thereof, applicable
to the transactions contemplated hereby under the HSR Act shall have expired or been terminated. 
  
 6.4 Other Consents. All consents, waivers, and approvals listed on Schedule 6.4 shall have been obtained and be in full force and effect.

  
 6.5 Unfavorable Action or Proceeding. On the Closing
Date, no orders, decrees, judgments or injunctions of any court or governmental body shall be in effect, and no claim or Proceeding shall be pending or threatened, which challenge or seek to challenge, or which could reasonably be expected to
prevent or cause the rescission of, the consummation of the transactions contemplated in this Agreement. 
  
 6.6 Signing and Delivery of Instruments. Subject to Section 12.3(b), Purchaser shall have executed and delivered all documents, instruments
and certificates required to be executed and delivered by it pursuant to Section 1.10. 
  
 6.7 Simultaneous Closing Under Lighthouse Purchase Agreement. The closing of the transactions contemplated by the Lighthouse Purchase Agreement shall be consummated simultaneously with the Closing hereunder.

  

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 ARTICLE 7 
 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER 
  
 Purchaser’s obligation to purchase the Assets and to close the transactions contemplated by this Agreement shall be subject to the satisfaction of each of the following conditions at or prior to the Closing
except to the extent specifically waived in writing by Purchaser in whole or in part at or prior to the Closing: 
  
 7.1 Accuracy of Representations and Warranties. Each representation and warranty of any Seller in this Agreement shall have been accurate in all
material respects as of the date of this Agreement, and shall be accurate in all material respects as of the time of the Closing as if then made giving effect to any supplement to the Disclosure Schedules delivered to Purchaser at or prior to
Closing. In addition, for purposes of this Section 7.1, each of the representations and warranties in Sections 2.2 and 2.4, and each of the representations and warranties of any Seller in this Agreement that contains an express materiality
qualification, shall have been accurate in all respects as of the time of the Closing as if then made giving effect to any supplement to the Disclosure Schedules delivered to Purchaser at or prior to Closing. 
  
 7.2 Seller’s Performance. Each covenant and obligation that any
Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been performed and complied with in all material respects. 
  
 7.3 Governmental Authorizations. Purchaser and Sellers shall have obtained all material licenses, permits, approvals,
certificates of need and authorizations from governmental agencies or governmental bodies that are necessary or required for completion of the transactions contemplated by this Agreement and the operation of the Facilities by Purchaser after the
Closing. All waiting periods, and any extensions thereof, applicable to the transactions contemplated hereby under the HSR Act shall have expired or been terminated. 
  
 7.4 Unfavorable Action or Proceeding. On the Closing Date, no orders, decrees, judgments or injunctions of any court
or governmental body shall be in effect, and no claim or Proceeding shall be pending or threatened, which challenge or seek to challenge, or which could reasonably be expected to prevent or cause the rescission of, the consummation of the
transactions contemplated in this Agreement. 
  
 7.5 Required
Consents. All Contract and Lease Consents shall have been received or obtained in form and substance reasonably satisfactory to Purchaser without the imposition of any unreasonable burdens or conditions materially adverse to Purchaser and shall
be in full force and effect, unless (a) Sellers shall have provided to Purchaser the benefit of such arrangements without the consent of such third party and in a manner reasonably satisfactory to Purchaser or (b) the absence of such
consent would not have a Material Adverse Effect upon any Seller or Facility, or adversely affect in any material respect Purchaser or the operation of any Facility by Purchaser after the Closing in light of Section 9.3. Notwithstanding the
immediately preceding sentence, those certain Contract and Lease Consents, consents, waivers and approvals listed on Schedule 7.5 shall have been obtained in form and substance reasonably satisfactory to Purchaser without the imposition of
any unreasonable burdens or conditions materially adverse to Purchaser and shall be in full force and effect. 
  
 7.6 No Material Adverse Change. There shall not have been any Material Adverse Change with respect to any Seller or Facility subsequent to the
Execution Date. 
  
 7.7 Disclosure Schedules. Sellers shall
have updated the Disclosure Schedules in accordance with the requirements of Section 4.8 hereof. 
  

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 7.8 Real Property Title Matters. 
  
 (a) Purchaser shall have received a pro forma A.L.T.A. extended Owner’s Title Policy with respect to
each parcel of the Real Property (collectively, the “Title Policies”) issued to Purchaser covering the Real Property in the amount of the full insurable value of such parcel of the Real Property, and which contains such endorsements as are
customary and reasonable in the counties where such parcel of the Real Property is located and no exceptions other than the Permitted Encumbrances, and which is reasonably satisfactory to Purchaser in all respects. 
  
 (b) Sellers shall have delivered full and complete releases
in recordable form of the Liens listed in Schedule 7.8(b) (or a commitment from such lenders to deliver releases upon receipt of payment in full of the debt secured), and Sellers shall have satisfied or complied with all of the
requirements and other matters set forth in Schedule B-Sections 1 and 2 of the Title Commitments which are identified to be satisfied or complied with by any Seller. 
  
 7.9 Milestones Program Agreement. Sellers shall have obtained an amendment, in form and substance reasonably
satisfactory to Purchaser, to that certain Management Services Agreement dated as of March 10, 2005, by and between Focus FL and Milestones In Recovery, Inc., which amendment shall (a) permit the assignment of such agreement to Purchaser
or its Designee, and (b) amend such agreement so that nothing therein shall restrict Purchaser, its Designee or any of their respective Affiliates (as the assignee of Focus F1 under such agreement after Closing) from owning or operating any
eating disorder program at any facility owned or operated by any of them so long as such eating disorder program is not similar to the Milestones Residential Treatment Program provided by Milestones In Recovery, Inc. pursuant to the Management
Services Agreement referred to above in this Section 7.9. 
  
 7.10 Facility Repairs. The Facility Repairs shall have been completed by Sellers to the reasonable satisfaction of Purchaser. 
  
 7.11 Delaware Remediation. The Delaware Remediation shall have been completed by Sellers to the reasonable satisfaction of Purchaser or Purchaser
shall have received the credit against the Closing Purchase Price Payment as described in Section 4.10. 
  
 7.12 APE Contracts. Sellers shall have amended the Seller APE Leases to the reasonable satisfaction of Purchaser, such that effective as of the
Effective Time, none of the Facility Workers will be leased to any Seller pursuant to such leases. Purchaser and APE shall have entered into an agreement, in form and substance reasonably satisfactory to Purchaser, for the lease of the Facility
Workers by APE to Purchaser or its Designees commencing as of the Effective Time. 
  
 7.13 Signing and Delivery of Instruments. Each Seller shall have executed and delivered all documents, instruments and certificates required to be executed and delivered by it pursuant to Section 1.9.

  
 7.14 Simultaneous Closing Under Lighthouse Purchase
Agreement. The closing of the transactions contemplated by the Lighthouse Purchase Agreement shall be consummated simultaneously with the Closing hereunder. 
  

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 ARTICLE 8 
 TERMINATION 
  
 8.1
Termination. This Agreement may be terminated at any time prior to Closing: 
  
 (a) by the mutual written consent of Purchaser and the Seller Representative; 
  
 (b) by Purchaser if a material breach of this Agreement has
been committed by any Seller and such breach has not been (i) waived by Purchaser or (ii) cured by Sellers to the reasonable satisfaction of Purchaser within fifteen (15) business days after notice from Purchaser to the Seller
Representative of a written notice which describes the nature of such breach; 
  
 (c) by the Seller Representative if a material breach of this Agreement has been committed by Purchaser and such breach has not been (i) waived by the Seller Representative or (ii) cured by Purchaser to the
reasonable satisfaction of the Seller Representative within fifteen (15) business days after notice from the Seller Representative to Purchaser which describes the nature of such breach; 
  
 (d) by either Purchaser or the Seller Representative if the
Lighthouse Purchase Agreement is terminated prior to the closing of the transactions contemplated thereby; 
  
 (e) by Purchaser if the Closing has not occurred on or before January 31, 2006, unless Purchaser is in material breach of this
Agreement; or 
  
 (f) by the Seller
Representative if the Closing has not occurred on or before December 21, 2005, unless any Seller is in material breach of this Agreement; provided, however, Purchaser may extend the December 21, 2005 date stated in this Section 8.1(f)
to January 31, 2006 by delivering Three Hundred Thirty-Four Thousand Seven Hundred Fifteen Dollars ($334,715) (the “Extension Escrow Deposit”) by wire transfer to the Escrow Agent for deposit in escrow pursuant to the Execution Date
Escrow Agreement prior to 5:00 p.m., Central time, on December 21, 2005. 
  
 8.2 Effect of Termination; Other Matters. 
  
 (a) Except as expressly provided below in this Section 8.2, if this Agreement is terminated pursuant to Section 8.1, this
Agreement shall be void and all obligations of the Parties under this Agreement shall terminate; provided, however, that the obligations in Section 5.2, this Section 8.2 and Article 12 (except for those in Section 12.13)
shall survive any termination of this Agreement. 
  
 (b) Notwithstanding Section 8.2(a): 
  
 (i) If this Agreement is terminated pursuant to any provision of Section 8.1, Sellers shall be entitled to retain the LOI Deposit. 
  
 (ii) If (A) this Agreement is terminated (i) pursuant to Section 8.1(c), or (ii) pursuant to Section 8.1(d) as a
result of termination of the Lighthouse Purchase Agreement pursuant to Section 8.1(c) of the Lighthouse Purchase Agreement, and (B) at the time of any such termination of this Agreement referred to in the preceding clause (A),
(i) no Seller is in material breach of this Agreement and (ii) no Lighthouse Entity is in material breach of the 

  

 Page 45 

 
Lighthouse Purchase Agreement, then Sellers shall be entitled (x) to retain the LOI Deposit and (y) to receive a payment under the Execution Date
Escrow Agreement of all escrow funds then held in escrow pursuant to the Execution Date Escrow Agreement. 
  
 (iii) If (A) this Agreement is terminated (i) pursuant to Section 8.1(e) solely because the condition set forth in
Section 7.3 is not satisfied through no fault of any Seller and other than as a result of the failure to obtain any consent or approval relating to the HUD Loan and required in connection with the contemplated transfer of the Delaware Facility
to Purchaser hereunder subject to the HUD Loan, or (ii) pursuant to Section 8.1(d) as a result of the termination of the Lighthouse Purchase Agreement pursuant to Section 8.1(e) of the Lighthouse Purchase Agreement solely because the
condition set forth in Section 7.3 of the Lighthouse Purchase Agreement is not satisfied through no fault of any Lighthouse Entity, and (B) at the time of any such termination of this Agreement or the Lighthouse Purchase Agreement
referred to in the preceding clause (A), (i) Purchaser has deposited the Extension Escrow Deposit in escrow pursuant to the Execution Date Escrow Agreement, (ii) no Seller is in material breach of this Agreement, and (iii) no
Lighthouse Entity is in material breach of the Lighthouse Purchase Agreement, then Sellers shall be entitled (x) to retain the LOI Deposit and (y) to receive a payment under the Execution Date Escrow Agreement in an amount equal to the
amount of the Extension Escrow Deposit. 
  
 (iv)
If (A) this Agreement is terminated (i) pursuant to Section 8.1(f) solely because the condition set forth in Section 6.3 is not satisfied through no fault of any Seller and other than as a result of the failure to obtain any
consent or approval relating to the HUD Loan and required in connection with the contemplated transfer of the Delaware Facility to Purchaser hereunder subject to the HUD Loan, or (ii) pursuant to Section 8.1(d) as a result of the
termination of the Lighthouse Purchase Agreement pursuant to Section 8.1(f) of the Lighthouse Purchase Agreement solely because the condition set forth in Section 6.3 of the Lighthouse Purchase Agreement is not satisfied through no fault
of any Lighthouse Entity, and (B) at the time of any such termination of this Agreement or the Lighthouse Purchase Agreement referred to in the preceding clause (A), (i) Purchaser has deposited the Extension Escrow Deposit in escrow
pursuant to the Execution Date Escrow Agreement, (ii) no Seller is in material breach of this Agreement, and (iii) no Lighthouse Entity is in material breach of the Lighthouse Purchase Agreement, then Sellers shall be entitled (x) to
retain the LOI Deposit and (y) to receive a payment under the Execution Date Escrow Agreement in an amount equal to the amount of the Extension Escrow Deposit. 
  
 (v) Except as otherwise required by clause (b)(ii), (b)(iii) or (b)(iv) of this Section 8.2, upon any
termination of this Agreement pursuant to Section 8.1, all remaining escrow funds held in escrow pursuant to the Execution Date Escrow Agreement shall be paid to Purchaser. 
  
 (vi) If this Agreement is terminated pursuant to Section 8.1(b) or Section 8.1(c), Sellers or
Purchaser, as the case may be, shall be liable for damages caused by such breach of this Agreement notwithstanding the return of escrow funds to Purchaser pursuant to clause (b)(v) of this Section 8.2. Notwithstanding the preceding provisions
of this clause (b)(vi) or anything herein to the contrary, Sellers shall not be entitled to recover damages upon any termination of this Agreement covered by the preceding provisions of this clause (b)(vi) except to the extent that such aggregate
damages suffered by all Sellers that would otherwise be recoverable by them pursuant to the terms of this clause (b)(vi) exceeds the sum of (A) the LOI Deposit and (B) the amount of escrow funds, if any, paid to Sellers pursuant to the
Execution Date Escrow Agreement. 
  

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 ARTICLE 9 
 POST-CLOSING MATTERS 
  
 9.1 Excluded Assets and Excluded Liabilities. Subject to Sections 9.4, 9.5 and 11.2, any asset, liability, remittance, mail or other communication that constitutes an Excluded Asset or an Excluded Liability (a) pursuant to the
terms of this Agreement, (b) as otherwise determined by mutual written agreement of Purchaser and the Seller Representative, or (c) absent such agreement, as determined by adjudication by a court or similar tribunal, and which comes into
the possession, custody or control of Purchaser, shall within five (5) business days following receipt by Purchaser be delivered by it to the Seller Representative. Except for such delivery obligation, Purchaser shall not have any right, title
or interest in or obligation or responsibility with respect to such asset, liability, remittance, mail or communication except that pending delivery thereof to the Seller Representative Purchaser shall hold such asset in trust for the benefit of
Sellers. 
  
 9.2 Preservation and Access to Records After the
Closing. 
  
 (a) From the Closing Date until
seven (7) years after the Closing Date or such longer period as required by law (the “Document Retention Period”), Purchaser shall keep and preserve all medical records, patient records, medical staff records and other books and
records which are among the Assets delivered to it as of the Effective Time, but excluding any books and records which are among the Excluded Assets. Purchaser will afford to the Seller Representative and its representatives, including its counsel
and accountants, full and complete access to, and copies of, such records with respect to time periods prior to the Effective Time (including access to records of patients treated at the Facilities prior to the Effective Time) during normal business
hours after the Effective Time, to the extent reasonably requested by Sellers for business purposes and all in such manner as not to unreasonably interfere with the operations of the Facilities. After the expiration of the Document Retention Period,
if Purchaser intends to destroy or otherwise dispose of any of the documents covered by this Section 9.2(a), Purchaser shall provide written notice to the Seller Representative of Purchaser’s intention no later than forty-five
(45) days prior to the date of such intended destruction or disposal. During such forty-five (45) day period, the Seller Representative shall have the right, at Sellers’ sole cost, to take possession of such documents to be destroyed
or disposed of by Purchaser. To the extent the Seller Representative does not take possession of such documents during such forty-five (45) day period, Purchaser shall be free to destroy or otherwise dispose of such documents upon the
expiration of such forty-five (45) day period. The confidentiality obligations of Section 5.2 applicable to Purchaser shall apply to the Seller Representative (and its representatives) and Sellers with respect to access to and use of
Purchaser’s books and records pursuant to this Section, except that such obligations do not expire at Closing. 
  
 (b) Purchaser and its representatives shall be given access by Sellers during normal business hours to the extent reasonably needed by
Purchaser for business purposes to all documents, records, correspondence, work papers and other documents retained by Sellers pertaining to any of the Assets or with respect to the operation of the Facilities prior to the Effective Time, all in
such manner as to not interfere unreasonably with Sellers’ business. 
  

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 9.3 Provision of Benefits of Contracts and Leases. If, as of the Effective Time, Sellers have not
obtained a required Contract and Lease Consent or Purchaser is unable to enter into a new third-party contract with respect to such Contract or Lease, and the Closing is nevertheless consummated, then (i) such Contract or Lease shall not be
assigned to Purchaser as part of the Assets, and the Assumed Liabilities shall not include such Contract or Lease or any liability or obligation arising thereunder, (ii) until such Contract and Lease Consent is obtained or a new third-party
contract is obtained, Sellers shall use reasonable commercial efforts to provide Purchaser the benefits of such Contract or Lease only with respect to the applicable Facility and cooperate in any reasonable and lawful arrangement designed to provide
such benefits to Purchaser, and (iii) from and after Closing, Purchaser shall use reasonable commercial efforts to perform, on behalf of Sellers, the obligations of the applicable Seller thereunder or in connection therewith for so long as
Purchaser is receiving the benefits thereof as contemplated by the preceding clause (ii), limited to those obligations of the applicable Facility thereunder that arise after the Effective Time, but only to the extent that such action would not
result in a material default under the applicable Contract or Lease and such obligation would have been an obligation of Purchaser had it received the required Contract and Lease Consent with respect to such Contract or Lease or had it entered into
a new third-party contract on substantially similar terms as the applicable Contract or Lease. 
  
 9.4 Misdirected Payments, Etc. Subject to Section 9.5, after Closing, Sellers and Purchaser covenant and agree to remit, with reasonable promptness, to the other any payments received, which payments are
on or in respect of accounts or notes receivable owned by (or are otherwise payable to) the other. In addition, and without limitation, in the event of a determination by any governmental or third-party payor that payments to any Seller or any
Facility resulted in an overpayment or other determination that funds previously paid by any program or plan to any Seller or any Facility must be repaid, Sellers shall be solely responsible for repayment of said monies (or defense of such actions)
if such overpayment or other repayment determination was for services rendered at or prior to the Effective Time and Purchaser shall be responsible for repayment of said monies (or defense of such actions) if such overpayment or other repayment
determination was for services rendered at the Facilities after the Effective Time. In the event that, following the Effective Time, Purchaser suffers any offsets against reimbursement under any third-party payor or reimbursement programs due to
Purchaser, relating to amounts owing under any such programs by any Seller or any of its Affiliates and not included as Current Liabilities in the Closing Date Net Assets Calculation, Sellers shall promptly upon demand from Purchaser pay to
Purchaser the amounts so billed or offset. In the event that, following the Effective Time, any Seller suffers any offsets against reimbursement under any third-party payor or reimbursement programs due to such Seller, relating to amounts owing
under any such programs by Purchaser or any of its Affiliates and not relating to any act or occurrence at or prior to the Effective Time, Purchaser shall promptly upon demand from the Seller Representative pay to Sellers the amounts so billed or
offset. Any remittances or payments to be made by Purchaser to any Seller pursuant to this Section 9.4 shall be made to the Seller Representative for further delivery by the Seller Representative to the Seller or Sellers entitled thereto.

  
 9.5 Government Receivables. Subject to the provisions
of this Section 9.5, after the Closing, Purchaser hereby agrees to attempt to collect on Sellers’ behalf, and at no cost to Sellers, Sellers’ Government Receivables attributable to the Facilities that are payable with respect to the
period prior to the Effective Time other than Government Receivables described in 

  

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Section 1.3(l). Sellers hereby appoint Purchaser, and Purchaser agrees to act, as Sellers’ collection agent with respect to such Government
Receivables of Sellers. On or before the Closing Date, Sellers shall establish, at their expense, a bank account at a financial institution selected by Sellers and after the date hereof Purchaser, as agent for Sellers, shall deposit in such account
cash, checks, drafts or other similar items of payment received by Purchaser on such Government Receivables. As and when requested by Purchaser, Sellers shall pay to Purchaser in immediately available funds all collected funds received as payment on
such Government Receivables collected by Purchaser pursuant to this Section 9.5. Further, Sellers shall promptly remit to Purchaser all payments on any such Government Receivables received by any Seller. Purchaser shall apply to the collection
of Sellers’ Government Receivables pursuant to this Section 9.5 the level of diligence, effort and resources that Purchaser ordinarily and customarily applies in the collection of its own accounts receivable; provided, however, that
(a) Purchaser does not guarantee the extent to which any Government Receivables will be collected, (b) Purchaser shall not be required to institute any legal or other proceedings to collect any such Government Receivables,
(c) Purchaser shall not be obligated to incur any costs and expenses payable to third parties in any such collection efforts, and (d) the methods of collecting such Government Receivables shall at all times be within the reasonable
discretion of Purchaser and in accordance in all material respects with applicable law. 
  
 9.6 Termination Cost Reports. Sellers shall file with Government Programs and third-party payors any cost reports relating to periods ending on or before the Effective Time or required to be filed as a result
of the consummation of (a) the transfer of the Assets to Purchaser and (b) the transactions contemplated by this Agreement (the “Seller Cost Reports”). All such Seller Cost Reports shall be filed by Sellers in a manner that is
consistent with applicable Legal Requirements. Sellers shall provide Purchaser with a reasonable opportunity to review such reports before filing. 
  
 9.7 Change of Sellers’ Name. Not later than thirty (30) days after the Closing Date, each Seller shall change its corporate name to a
name which does not include any of the words “Focus,” “Lighthouse,” “Meadowood” or “Jedburg;” provided, however, that Sellers shall not be required to change the name of Focus Healthcare of
Tennessee, LLC (but such name may only be used following the Closing in connection with the operation of the behavioral health facility operated by Focus Healthcare of Tennessee, LLC at the Execution Date and located in Chattanooga, Tennessee).

  
 9.8 Other Actions. 
  
 (a) Sellers shall pay and perform, or make adequate
provision for the payment and performance of, as and when due, all Excluded Liabilities and other liabilities and obligations of Sellers under this Agreement. Purchaser shall pay and perform and make adequate provision for the payment and
performance of, as and when due, all Assumed Liabilities and other liabilities and obligations of Purchaser under this Agreement. 
  
 (b) On or before the Closing Date, Sellers shall remove all Excluded Assets from all Facilities and other Real Property or leased real
property to be acquired or occupied by Purchaser hereunder. Such removal shall be done in such manner as to avoid any damage to the Facilities and other properties to be occupied by Purchaser and any disruption of the business operations to be
conducted by Purchaser after the Closing. The cost to repair any damage to the Assets or to the Facilities or other properties resulting from such removal shall be paid by Sellers 

  

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to Purchaser at the Closing. If Sellers fail to remove the Excluded Assets as required by this Section, Purchaser, subsequent to providing the Seller
Representative with notice and the reasonable opportunity to remove such Excluded Assets, shall have the right, but not the obligation, (a) to remove the Excluded Assets at Sellers’ sole cost and expense, (b) to store the Excluded
Assets and to charge Sellers all storage costs associated therewith, (c) to treat the Excluded Assets as unclaimed and to proceed to dispose of the same under the laws governing unclaimed property, or (d) to exercise any other right or
remedy conferred by this Agreement or otherwise available at law or in equity. Sellers shall promptly reimburse Purchaser for all costs and expenses incurred by Purchaser in connection with any Excluded Assets not removed from the Facilities by
Sellers on or before the Closing Date. 
  
 (c)
Each Party shall cooperate with the other and its counsel in the contest or defense of, and make available to the other Party each Party’s personnel and provide any testimony and reasonable access to each Party’s books and records in
connection with, any Proceeding involving or relating to (a) any transaction contemplated hereby or (b) any action, activity, circumstance, condition, conduct, event, fact, failure to act, incident, occurrence, plan, practice, situation,
status or transaction on or before the Closing Date involving any Party or any business, asset or activity of any Party. 
  
 (d) Purchaser and the appropriate Seller (and/or its Affiliates) shall use commercially reasonable efforts to negotiate, execute and
deliver a Transition Services Agreement, in form and substance reasonably satisfactory to Purchaser and the Seller Representative, pursuant to which Purchaser will provide Sellers with VPN access to the servers listed in Schedule 1.2(b) and
associated software, and to the data associated therewith to the extent relating exclusively to the operations of the behavioral health facilities subject to the Right of First Refusal Agreements, for a period of one hundred eighty (180) days
following the Effective Time. 
  
 (e) Sellers, at
their sole expense, shall pay, as and when due, all costs payable to or required by HUD or the lender of the HUD Loan in connection with the granting of approval or consent by HUD or such lender to the transfer of the Delaware Facility to Purchaser
hereunder subject to the HUD Loan. 
  
 ARTICLE 10

 SURVIVAL AND INDEMNIFICATION 
  
 10.1 Survival. All representations, warranties, covenants and obligations in this Agreement, the Disclosure Schedules, the supplements to the
Disclosure Schedules, or the certificates, writings and instruments delivered pursuant to Section 1.9 or Section 1.10 (including the Bills of Sale and the Limited Warranty Deeds) shall survive the Closing and the consummation of the
transactions contemplated hereby, subject to Section 10.5. 
  

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 10.2 Indemnification and Reimbursement by Sellers. Each Seller, jointly and severally, shall
indemnify and hold harmless Purchaser and each Designee, if any (collectively, the “Purchaser Indemnified Persons”), against, and shall reimburse the Purchaser Indemnified Persons for, any loss, liability, claim, demand, obligation,
judgment, damage, cost, fee, expense (including reasonable attorneys’ fees and expenses), penalties or fines, whether or not involving a Third-Party Claim (collectively, “Damages”), arising from or in connection with: 
  
 (a) any breach of any representation or warranty made by any
Seller in (i) this Agreement, (ii) the Disclosure Schedules, as supplemented at or prior to Closing pursuant to Section 4.8, (iii) the certificates delivered pursuant to Section 1.9(f) (for this purpose, each such
certificate will be deemed to have stated that each Seller’s representations and warranties in this Agreement fulfill the requirements of Section 7.1 as of the Closing Date as if made on the Closing Date after giving effect to any
supplement to the Disclosure Schedules delivered to Purchaser pursuant to Section 4.8 at or prior to Closing), (v) any transfer instrument, or (vi) any other certificate, writing or instrument delivered by any Seller pursuant to
Section 1.9; 
  
 (b) any breach of any
covenant or obligation of any Seller in this Agreement or in any certificate, writing or instrument delivered by any Seller pursuant to Section 1.9; 
  
 (c) the ownership or operation of any of the Assets, or any act or omission of any Seller, prior to the Effective Time, other than the
Assumed Liabilities; 
  
 (d) any claim of any
Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding made, or alleged to have been made, by such Person with any Seller (or any Person acting on behalf of any Seller) in connection
with any of the transactions contemplated by this Agreement; 
  
 (e) subject to the provisions of Section 12.9 regarding sales or transfer taxes, all Taxes resulting from or payable in connection with the sale of the Assets pursuant to this Agreement, regardless of the Person
on whom such Taxes are imposed by any Legal Requirement; 
  
 (f) any noncompliance with any bulk sales laws or fraudulent transfer law in respect of the transactions contemplated hereby; 
  

(g) any liability under the WARN Act or any similar Legal Requirement that may result from an “Employment Loss,” as defined
by 29 U.S.C. § 2101(a)(6), caused by any action of any Seller at or prior to the Closing; 
  
 (h) any Plan adopted, established or maintained by any Seller; 
  
 (i) any Excluded Assets; or 
  
 (j) any Excluded Liabilities. 
  
 10.3 Indemnification and Reimbursement by Purchaser. Purchaser shall indemnify and hold harmless Sellers against, and
shall reimburse Sellers for, any Damages arising from or in connection with: 
  
 (a) any breach of any representation or warranty made by Purchaser in this Agreement or in any certificate, writing or instrument delivered by Purchaser pursuant to Section 1.10; 
  
 (b) any breach of any covenant or obligation of Purchaser in
this Agreement or in any certificate, writing or instrument delivered by Purchaser pursuant to Section 1.10; 
  

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 (c) any claim of any Person for brokerage or finder’s fees or commissions or similar
payments based upon any agreement or understanding made, or alleged to have been made, by such Person with Purchaser (or any Person acting on Purchaser’s behalf) in connection with any of the transactions contemplated by this Agreement;

  
 (d) any Assumed Liabilities; 
  
 (e) the ownership and operation of the Assets or the
Facilities subsequent to the Effective Time, other than Excluded Liabilities; or 
  
 (f) any liability under the WARN Act or any similar Legal Requirement that may result from an “Employment Loss,” as defined by
29 U.S.C. § 2101(a)(6), caused by any action of Purchaser. 
  
 10.4 Limitations On Amount. 
  
 (a) Sellers shall have no liability with respect to claims under Section 10.2(a) until the total of all Damages with respect to all such matters exceeds Two Hundred Thousand Dollars ($200,000) and then only for the amount by which such
Damages exceed Two Hundred Thousand Dollars ($200,000). The maximum aggregate liability of Sellers to Purchaser with respect to claims under Section 10.2(a) shall not exceed the sum of (i) Twelve Million Nine Hundred Thousand Dollars
($12,900,000) plus (ii) twenty percent (20%) of the aggregate amount of the Current Liabilities included in the Closing Date Net Assets Calculation. Notwithstanding the foregoing, this Section 10.4(a) will not apply to any claims
based on fraud. 
  
 (b) Purchaser will have no
liability with respect to claims under Section 10.3(a) until the total of all Damages with respect to all such matters exceeds Two Hundred Thousand Dollars ($200,000) and then only for the amount by which such Damages exceed Two Hundred
Thousand Dollars ($200,000). Notwithstanding the foregoing, this Section 10.4(b) will not apply to any claims based on fraud. 
  
 10.5 Limitations. 
  
 (a) Subject to Section 10.5(e), if the Closing occurs, Sellers will have liability under this Agreement (other than with respect to
any claim based on fraud, or any claim arising from or in connection with or relating to any of the Excluded Liabilities or any breach of any of the Specified Representations, it being agreed that any such claim may be brought at any time prior to
the expiration of the applicable statute of limitations), only if on or before the one year anniversary of the Closing Date, a Purchaser Indemnified Person notifies the Seller Representative of a claim specifying the factual basis of the claim in
reasonable detail to the extent then known by such Purchaser Indemnified Person. 
  
 (b) Subject to Section 10.5(e), if the Closing occurs, Purchaser will have liability under this Agreement (other than with respect to
any claim based on fraud, or any claim arising from or in connection with any of the Assumed Liabilities, it being agreed that any such claim may be brought at any time prior to the expiration of the applicable statute of limitations), only if on or
before the one year anniversary of the Closing Date, the Seller Representative notifies Purchaser of a claim specifying the factual basis of the claim in reasonable detail to the extent then known by any Seller. 
  

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 (c) All indemnification payments pursuant to this Article 10 shall be paid by the
indemnifying party net of any net Tax benefits or insurance benefits that are actually received by the Party indemnified hereunder with respect to the claim in question (taking into account any tax or other consequences arising from the payment of
the claim, the receipt of the indemnification payment, or the receipt of any insurance benefits). 
  
 (d) Notwithstanding anything to the contrary contained in this Article 10, Sellers shall have no obligation to make any payments to any
Purchaser Indemnified Person pursuant to Section 10.2 (other than from the escrow account established pursuant to the Closing Date Escrow Agreement) unless and until the escrow account established pursuant to the Closing Date Escrow Agreement
shall be exhausted by (i) distributions or payments made under the Closing Date Escrow Agreement, (ii) the amount of claims made by Purchaser under the Closing Date Escrow Agreement pending resolution thereunder, or (iii) any
combination of the matters referred to in the preceding clause (i) or (ii). 
  
 (e) Except for (i) post-closing covenants contained in Section 4.4, Article 9, Article 11 or Article 12 hereof,
(ii) obligations pursuant to the Closing Date Escrow Agreement, the Noncompetition Agreements, or the Right of First Refusal Agreements, and (iii) claims based on fraud, in each case as to which the limitations in Sections 10.5(a),
10.5(b), and 10.5(d) shall not apply and as to which the Parties shall have all remedies available to them at law or in equity, if the Closing occurs, the sole and exclusive remedy of the parties hereto for any breach or nonperformance of any
provision of this Agreement shall be the indemnification provided by this Article 10. 
  
 (f) Notwithstanding any other provision contained herein to the contrary, no Purchaser Indemnified Person or Seller shall be entitled to
indemnification under Section 10.2(a) or Section 10.3(a) for Damages arising from or in connection with a breach of a representation or warranty if such Indemnified Person had actual knowledge of such breach at any time on or before the
Closing. 
  
 10.6 Escrow. Upon notice to the Seller
Representative specifying in reasonable detail the basis therefor, Purchaser may give notice under the Closing Date Escrow Agreement of a claim in such amount to which any Purchaser Indemnified Person may be entitled under this Article 10. The
failure to give a notice of a claim under the Closing Date Escrow Agreement will not constitute an election of remedies or limit any Purchaser Indemnified Person in any manner in the enforcement of any other remedies that may be available to it.

  
 10.7 Third-Party Claims. 
  
 (a) Promptly after receipt by a Seller or a Purchaser
Indemnified Person entitled to indemnity under Section 10.2 or 10.3 (an “Indemnified Person”) of notice of the assertion of a Third-Party Claim against it, such Indemnified Person shall give notice to the Person obligated to indemnify
under such Section (an “Indemnifying Person”) of the assertion of such Third-Party Claim, provided that the failure to notify the Indemnifying Person will not relieve the Indemnifying Person of any liability that it may have to any
Indemnified Person, except to the extent that the Indemnifying Person proves that the defense of such Third-Party Claim is prejudiced by the Indemnified Person’s failure to give such notice. 
  

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 (b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to
Section 10.7(a) of the assertion of a Third-Party Claim, the Indemnifying Person, at its sole cost and expense, shall be entitled to participate in the defense of such Third-Party Claim and, to the extent that it wishes (unless (i) the
Indemnifying Person is also a Person against whom the Third-Party Claim is made and the Indemnified Person determines in good faith that joint representation would be inappropriate or (ii) the Indemnifying Person fails to provide reasonable
assurance to the Indemnified Person of its financial capacity to defend such Third-Party Claim and provide indemnification with respect to such Third-Party Claim), to assume the defense of such Third-Party Claim with counsel satisfactory to the
Indemnified Person. After notice from the Indemnifying Person to the Indemnified Person of its election to assume the defense of such Third-Party Claim, the Indemnifying Person shall not, so long as it diligently conducts such defense, be liable to
the Indemnified Person under this Article 10 for any fees of other counsel or any other expenses with respect to the defense of such Third-Party Claim, in each case subsequently incurred by the Indemnified Person in connection with the defense of
such Third-Party Claim, other than reasonable costs of investigation. Notwithstanding the assumption of defense by the Indemnifying Person, the Indemnified Person may, at its sole cost and expense, file any motion, answer or other pleadings that the
Indemnified Person may deem necessary or appropriate to protect its interests or those of the Indemnifying Person and which is not prejudicial, in the reasonable judgment of the Indemnifying Person, to the Indemnifying Person. If requested by the
Indemnifying Person, the Indemnified Person agrees, at the sole cost and expense of the Indemnifying Person, to cooperate with the Indemnifying Person and its counsel in contesting any Third-Party Claim that the Indemnifying Person assumes the
defense of and elects to contest, or, if appropriate and related to the Third-Party Claim in question, in making any counterclaim against the Person asserting the Third-Party Claim, or any cross-complaint against any Person (other than the
Indemnified Person or any of its Affiliates). The Indemnified Person may participate in, but not control, any defense or settlement of any Third-Party Claim controlled by the Indemnifying Person pursuant to this Section 10.7(b), and except as
specifically provided in this Section 10.7(b), the Indemnified Person will bear its own costs and expenses with respect to such participation. If the Indemnifying Person assumes the defense of a Third-Party Claim, (i) such assumption will
conclusively establish for purposes of this Agreement that the claims made in that Third-Party Claim are within the scope of and subject to indemnification, and (ii) no compromise or settlement of such Third-Party Claim may be effected by the
Indemnifying Person without the Indemnified Person’s written consent unless (A) there is no finding or admission of any violation of any Legal Requirement or any violation of the rights of any Person, (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Person, and (C) the Indemnified Person shall have no liability with respect to any compromise or settlement of such Third-Party Claim effected without its written consent. 

 
 (c) Notwithstanding the provisions of
Section 10.7(b), if an Indemnified Person determines in good faith that there is a reasonable probability that a Third-Party Claim may adversely affect it or any of its Affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnified Person may, by notice to the Indemnifying Person, assume the exclusive right to defend, compromise or settle such Third-Party Claim, but the Indemnifying Person will not be bound by
any compromise or settlement of any Third-Party Claim so defended for the purposes of this Agreement if such compromise or settlement is effected without its written consent (which may not be unreasonably withheld). 
  

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 (d) If notice is given to an Indemnifying Person of the assertion of any Third-Party
Claim and the Indemnifying Person does not, within ten (10) days after the Indemnified Person’s notice is given, give notice to the Indemnified Person of its election to assume the defense of such Third-Party Claim, or if the Indemnifying
Person gives such a notice but fails to prosecute diligently or settle the Third-Party Claim, then the Indemnified Person will have the right to defend, at the sole cost and expense of the Indemnifying Person, the Third-Party Claim by all
appropriate proceedings. In such event, the Indemnified Person will have full control of such defense and proceedings, including any compromise or settlement thereof, and the Indemnifying Person will be bound by any determination made in such
Third-Party Claim or any compromise or settlement effected by the Indemnified Person; provided, however, that if requested by the Indemnified Person, the Indemnifying Person agrees, at the sole cost and expense of the Indemnifying Person, to
cooperate with the Indemnified Person and its counsel in contesting any Third-Party Claim which the Indemnified Person is contesting, or, if appropriate and related to the Third-Party Claim in question, in making any counterclaim against the Person
asserting the Third-Party Claim, or any cross-complaint against any Person (other than the Indemnifying Person or any of its Affiliates). 
  
 (e) Each Party consents to the nonexclusive jurisdiction of any court in which a Proceeding in respect of a Third-Party Claim is brought
against any Indemnified Person for purposes of any claim that an Indemnified Person may have under this Agreement with respect to such Proceeding or the matters alleged therein and agrees that process may be served on any Party with respect to such
a claim anywhere in the world. 
  
 (f) With
respect to any Third-Party Claim subject to indemnification under this Article 10: (i) both the Indemnified Person and the Indemnifying Person, as the case may be, shall keep the other Person fully informed of the status of such Third-Party
Claim and any related Proceedings at all stages thereof where such other Person is not represented by its own counsel, and (ii) the parties agree (each at its own expense except as specifically provided in this Section 10.7) to render to
each other such assistance as they may reasonably require of each other and to cooperate in good faith with each other in order to ensure the proper and adequate defense of any Third-Party Claim. 
  
 10.8 Other Claims. Subject to Section 10.5(d), a claim for
indemnification for any matter not involving a Third-Party Claim may be asserted by notice to the Party from whom indemnification is sought. 
  
 ARTICLE 11 
 TAX AND COST REPORT
MATTERS 
  
 11.1 Tax Matters; Allocation of Purchase
Price. 
  
 (a) Sellers shall promptly after
the Closing prepare and file all Tax Returns and other reports and returns required by any Legal Requirement relating to any Seller or any business, asset, or activity of any Seller, to and including the Effective Time. 
  
 (b) After the Closing Date, the Parties shall cooperate
fully with each other and shall make available to each other, as reasonably requested, all information, records or documents relating to Tax liabilities or potential Tax liabilities with respect to the operation of the Facilities or ownership of the
Assets for all periods prior to the Effective Time and shall 

  

 Page 55 

 
preserve all such information, records and documents at least until the expiration of any applicable statute of limitations or extensions thereof. The
Parties shall also make available to each other as reasonably required, and at the reasonable cost of the requesting Party (for out-of-pocket costs and expenses only), personnel responsible for preparing or maintaining information, records and
documents in connection with Tax matters. 
  
 (c)
The Seller Representative and Purchaser shall cooperate in the preparation of a joint schedule (the “Allocation Schedule”) allocating the Purchase Price (including, for purposes of this Section, any other consideration paid by Purchaser
for the Assets and any Assumed Liabilities), among the Assets. Sellers and Purchaser each agree to file IRS Form 8594, and all federal, state, local and foreign tax returns, in accordance with the Allocation Schedule. Sellers and Purchaser each
agree to provide the other promptly with any other information required to complete the Allocation Schedule. If, however, the Seller Representative and Purchaser are unable to complete such schedule on or before the Final Net Assets Settlement Date,
or by such later date as may agreed upon by the Seller Representative and Purchaser, each of Sellers and Purchaser may file IRS Form 8594, and any federal, state, local and foreign tax returns, allocating the Purchase Price (as defined for purposes
of this Section) among the Assets in the manner each believes appropriate, provided such allocation is reasonable and in accordance with Section 1060 of the Code and the regulations thereunder. 
  
 (d) Sellers and Purchaser shall cooperate with each other,
and shall cause their respective representatives and attorneys to cooperate with each other, in obtaining any tax clearance certificates or similar documentation necessary for avoiding Tax withholding with respect to the payment of the Purchase
Price or the assumption of the Assumed Liabilities. Purchaser shall be entitled to withhold amounts from the Purchase Price and pay such amounts over to applicable tax authorities as required under applicable Tax laws, and any such withholding tax
payments shall be deemed to be a payment to Sellers in accordance with the requirements of this Agreement. Sellers shall indemnify Purchaser and hold Purchaser harmless for any liability of Purchaser for any amount that was required to be withheld
from the Purchase Price with respect to any Tax of any Seller and that was not so withheld. 
  
 11.2 Cost Report Matters. 
  
 (a) Purchaser shall forward to the Seller Representative any and all correspondence received by Purchaser relating to the Seller Cost Reports or rights to settlements and retroactive adjustments on Seller Cost Reports
(“Agency Settlements”), within ten (10) business days of receipt by Purchaser. Purchaser shall not reply to any such correspondence without the Seller Representative’s written approval. Within ten (10) business days after
receipt by Purchaser, Purchaser shall remit or forward to the Seller Representative any receipts relating to the Seller Cost Reports or the Agency Settlements and any demand for payments. Sellers shall retain all rights to Seller Cost Reports
including any payables resulting therefrom or receivables relating thereto and the right to appeal any Medicare determinations relating to the Agency Settlements and Seller Cost Reports. 
  
 (b) Upon reasonable notice and during normal business office hours, Purchaser will cooperate with Sellers in
regard to (i) the preparation, filing, handling, and appeals of Seller Cost Reports, and (ii) any cost report disputes and/or other claim adjudication matters relative to governmental program reimbursement. Such cooperation shall include
the providing of statistics and obtaining files at the Facilities and the coordination with the Seller Representative pursuant to adequate notice of Medicare and Medicaid exit conferences or meetings. 
  

 Page 56 

 ARTICLE 12 
 MISCELLANEOUS PROVISIONS 
  
 12.1 Entire Agreement. This Agreement (including the first paragraph and the Recitals, and the Disclosure Schedules, Exhibits and other documents referred to in this Agreement, all of which are incorporated herein as integral parts
of this Agreement) contains the entire understanding between Sellers and Purchaser with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements, understandings, representations and statements, oral or written,
between Sellers and Purchaser with respect to such subject matter (including the Letter of Intent, and any confidentiality agreement between Purchaser and any Seller). The Parties agree that the Escrow Agreements, the Noncompetition Agreements and
the Right of First Refusal Agreements shall survive the execution and delivery of this Agreement and the consummation of the Closing. 
  
 12.2 Further Assurances. The Parties shall cooperate reasonably with each other and with their respective representatives in connection with any
steps required to be taken as part of their respective obligations under this Agreement, and shall (a) furnish upon request to each other such further information, (b) execute and deliver to each other such other documents, and (c) do
such other acts and things, all as any other Party may reasonably request for the purpose of carrying out the intent of this Agreement and the transactions contemplated hereby. 
  
 12.3 Assignments, Successors and No Third Party Rights. 
  
 (a) Subject to Section 12.3(b), no Party may assign any
of its rights or delegate any of its obligations under this Agreement without the prior written consent of the other Parties. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon and inure to the benefit
of (i) the successors and permitted assigns of the Parties, and (ii) any Designee. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the Parties any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provision of this Agreement, except such rights as shall inure to a successor, permitted assignee or Designee pursuant to this Section 12.3. 
  
 (b) Notwithstanding anything herein to the contrary:

  
 (A) Purchaser may (i) assign any of its
rights or delegate any of its duties under this Agreement to any one or more subsidiaries that are wholly-owned, directly or indirectly, by Purchaser, or (ii) at or prior to Closing, designate one or more of such subsidiaries as the entity to
acquire some or all of the Assets or assume some or all of the Assumed Liabilities (any such subsidiary to whom such an assignment, delegation or designation is made, a “Designee”); and in the event of any such assignment, delegation or
designation by Purchaser, the term “Purchaser,” as used herein, shall include such Designee or Designees as appropriate in connection with the nature and extent of such assignment, delegation or designation. No such assignment, delegation
or designation by Purchaser shall relieve Purchaser from any of its obligations hereunder in the event of any Designee’s breach or failure to perform any of the matters assigned or delegated to it; and 
  

 Page 57 

 (B) Purchaser may collaterally assign its rights under this Agreement to any financial
institution providing financing to Purchaser. 
  
 12.4
Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Texas as applied to contracts made and to be performed entirely within the State of Texas and without regard to
conflicts-of-laws principles that would require the application of any other law. The Parties hereby waive their right to assert in any proceeding involving this Agreement that the law of any other jurisdiction shall apply to such dispute; and the
Parties hereby covenant that they shall assert no such claim in any dispute arising under or in connection with this Agreement or the transactions contemplated hereby. 
  
 12.5 Amendments. This Agreement may not be amended, supplemented or otherwise modified other than by a written
agreement signed by or on behalf of the Party to be charged with such amendment, supplement or modification. 
  
 12.6 Notices. All notices, consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be
deemed given to a Party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid), (b) sent by facsimile with confirmation of transmission by the transmitting equipment, or
(c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses or facsimile numbers and marked to the attention of the Person (by name or title) designated below (or to
such other address, facsimile number or Person as a Party may designate by notice to the other Parties): 
  

			
	If to any Seller, to the	 	 
	Seller Representative:	 	Byron DeFoor
	 	 	c/o Focus Healthcare, LLC
	 	 	7201 Shallowford Road, Suite 200
	 	 	Chattanooga, TN 37421
	 	 	Facsimile No.: (423) 308-1844
		
	With a copy to:	 	Hugh Sharber
	 	 	Miller & Martin PLLC
	 	 	Suite 1000, Volunteer Building
	 	 	832 Georgia Avenue
	 	 	Chattanooga, TN 37402
	 	 	Facsimile No.: (423) 785-8480
		
	If to Purchaser:	 	Horizon Health Corporation
	 	 	1500 Waters Ridge Drive
	 	 	Lewisville, Texas 75057
	 	 	Attention: President
	 	 	Facsimile No.: (972) 420-4060

  

 Page 58 

			
	With copies to:	 	Horizon Health Corporation
	 	 	 1500 Waters Ridge Drive

	 	 	 Lewisville, Texas 75057

	 	 	 Attention: General Counsel

	 	 	 Facsimile No.: (972) 420-7789

		
	 	 	 Strasburger & Price, L.L.P.

	 	 	 901 Main Street, Suite 4400

	 	 	 Dallas, Texas 75202

	 	 	 Attention: Patrick Owens, Esq.

	 	 	 Facsimile No.: (214) 651-4330

  
 12.7 Headings.
The section and other headings contained in this Agreement, including the Disclosure Schedules and Exhibits, are included for the purpose of convenient reference only and shall not restrict, amplify, modify or otherwise affect in any way the meaning
or interpretation of this Agreement, including the Disclosure Schedules and Exhibits. 
  
 12.8 Confidentiality and Publicity. Without the prior written consent of the Purchaser (in the case of a proposed disclosure by any Seller) or the Seller Representative (in the case of a proposed disclosure by
Purchaser), neither Purchaser nor any Seller shall discuss with, or provide to, any third party (except for such disclosing Party’s attorneys, accountants, directors, officers and employees, the directors, officers and employees of any
Affiliate of any Party hereto, and other consultants and professional advisors) any non-public information contained in or related to this Agreement or concerning this transaction, except: (a) Purchaser and Sellers shall each be permitted to
provide a copy of this Agreement, or provide information herein or a description thereof, to applicable governmental or administrative authorities as reasonably required or necessary, (b) as reasonably necessary to obtain any consents or
approvals required hereunder to be obtained, (c) as required in governmental filings or judicial, administrative or arbitration proceedings, (d) pursuant to public announcements made with the prior written approval of the Seller
Representative and Purchaser, or (e) as otherwise required by applicable law. 
  
 12.9 Expenses and Attorneys’ Fees. Except as otherwise provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each Party shall bear and pay its own fees and
expenses incurred in connection with the preparation, negotiation, execution and performance of this Agreement and the transactions contemplated hereby, including all fees and expenses of their respective attorneys, accountants, advisors, agents and
other representatives. Purchaser shall pay the following: (a) all costs of surveys of the Real Property ordered by Purchaser, (b) all costs of any environmental surveys of any of the Real Property ordered by Purchaser, and (c) all
filing fees under the HSR Act in connection with the transactions contemplated hereby. All sales or transfer Taxes, recording charges and escrow fees in connection with the conveyance of the Assets shall be paid one-half by Sellers and one-half by
Purchaser. All fees or costs due to any lender of any Seller, if any, in order to secure any necessary consents or releases in connection with the consummation of the transactions contemplated herein shall be paid by Sellers. Sellers shall pay
one-half and Purchaser shall pay one-half of all amounts payable to any title company in respect of any of the Title Commitments, copies of exceptions and the Title Policies, including reasonable premiums (including premiums for endorsements) and
search fees; provided, however, that notwithstanding anything in this sentence to the contrary, Sellers’ liability with respect to premiums for the Title Policies shall not 

  

 Page 59 

 
exceed $.50 per $1,000 of the total amount insured pursuant to such Title Policies. Notwithstanding the foregoing, Purchaser shall be solely responsible for
all costs, fees or endorsements with respect to any mortgagee Title Policies required by any creditor or lender of Purchaser, the cost of which shall be based upon the lower simultaneous issue premium. Sellers shall pay one-half and Purchaser shall
pay one-half of the fees and expenses of the Escrow Agent under the Escrow Agreements. If this Agreement is terminated, the obligation of any Party to pay its own fees and expenses will be subject to any rights of such Party arising from a breach of
this Agreement by any other Party. If any action is brought by any Seller or Purchaser to enforce any provision of this Agreement, the prevailing Party shall be entitled to recover its court costs and reasonable attorneys’ fees from the other
such Party (from Purchaser or Sellers, as the case may be). 
  
 12.10 Severability. If any term, provision, condition or covenant of this Agreement or the application thereof to any Party or circumstance shall be held to be invalid or unenforceable to any extent in any jurisdiction, then the
remainder of this Agreement and the application of such term, provision, condition or covenant in any other jurisdiction or to Persons or circumstances other than those as to whom or which it is held to be invalid or unenforceable, shall not be
affected thereby, and each term, provision, condition and covenant of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 
  
 12.11 Execution of Agreement. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and
delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties transmitted by facsimile shall be deemed to be their original signatures for all purposes. 
  
 12.12 Seller Obligations. The liability of each Seller hereunder shall
be joint and several with each other Seller. Where in this Agreement provision is made for any action to be taken or not taken by any Seller, Sellers jointly and severally undertake to cause each Seller to take or not take such action, as the case
may be. Without limiting the generality of the foregoing, each Seller shall be jointly and severally liable with each other Seller for the indemnities set forth in Article 10. 
  
 12.13 Enforcement. Sellers acknowledge and agree that Purchaser would be irreparably damaged if any of the provisions
of this Agreement are not performed in accordance with their specific terms and that any breach of this Agreement by any Seller could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right
or remedy to which Purchaser may be entitled, at law or in equity, it shall be entitled to enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches
or threatened breaches of any of the provisions of this Agreement, without posting any bond or other undertaking. 
  
 12.14 Waiver; Remedies Cumulative. The rights and remedies of the Parties to this Agreement are cumulative and not alternative. Neither any failure
nor any delay by any Party in exercising any right, power or privilege under this Agreement or any of the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any
such right, power or privilege will preclude any other or further exercise 

  

 Page 60 

 
of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement or any of the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Party,
(b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given, (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of that Party or of the right of
the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement, (d) the subsequent acceptance of performance hereunder by a Party shall not be
deemed to be a waiver of any preceding breach by any other Party of any term, covenant or condition of this Agreement, other than the failure of such other Party to perform the particular duties so accepted, regardless of the accepting Party’s
knowledge of such preceding breach at the time of acceptance of such performance, and (e) the waiver of any term, covenant or condition shall not be construed as a waiver of any other term, covenant or condition of this Agreement. 

 
 12.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS
TO DEMAND A TRIAL BY JURY ARISING FROM ANY SOURCE, INCLUDING THE CONSTITUTION OF THE UNITED STATES OR ANY STATE THEREIN, COMMON LAW OR ANY APPLICABLE STATUTE OR REGULATIONS. EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING
ITS RIGHT TO DEMAND TRIAL BY JURY. 
  
 (Remainder of Page
Intentionally Left Blank) 
  

 Page 61 

 IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the Execution Date. 

 

									
	SELLERS:	 	 	 	 
			
	FOCUS HEALTHCARE, LLC,	 	 	 	FOCUS HEALTHCARE OF OHIO, LLC,
	 a California limited liability company
	 	 	 	 a Delaware limited liability company

					
	By:	 	/S/    BYRON
DEFOOR        	 	 	 	By:	 	/S/    BYRON
DEFOOR        
	 Name:
	 	Byron DeFoor	 	 	 	 Name:
	 	Byron DeFoor
	 Title:
	 	Manager	 	 	 	 Title:
	 	Manager
			
	FOCUS HEALTHCARE OF DELAWARE, LLC,	 	 	 	DELAWARE INVESTMENT ASSOCIATES, LLC,
	 a Delaware limited liability company
	 	 	 	 a Delaware limited liability company

					
	By:	 	/S/    BYRON
DEFOOR        	 	 	 	By:	 	/S/    BYRON
DEFOOR        
	 Name:
	 	Byron DeFoor	 	 	 	 Name:
	 	Byron DeFoor
	 Title:
	 	Manager	 	 	 	 Title:
	 	Manager
			
	FOCUS HEALTHCARE OF FLORIDA, LLC,	 	 	 	HIGHPOINT INVESTMENT ASSOCIATES, LLC,
	 a Delaware limited liability company
	 	 	 	 a Delaware limited liability company

					
	By:	 	/S/    BYRON
DEFOOR        	 	 	 	By:	 	/S/    BYRON
DEFOOR        
	 Name:
	 	Byron DeFoor	 	 	 	 Name:
	 	Byron DeFoor
	 Title:
	 	Manager	 	 	 	 Title:
	 	Manager
			
	FOCUS HEALTHCARE OF GEORGIA, LLC,	 	 	 	 
	 a Georgia limited liability company
	 	 	 	 
					
	By:	 	/S/    BYRON
DEFOOR        	 	 	 	 	 	 
	 Name:
	 	Byron DeFoor	 	 	 	 	 	 
	 Title:
	 	Manager	 	 	 	 	 	 
			
	PURCHASER:	 	 	 	 
			
	HORIZON HEALTH CORPORATION	 	 	 	 
					
	By:	 	/S/    DAVID K.
WHITE        	 	 	 	 	 	 
	 Name:
	 	David K. White	 	 	 	 	 	 
	 Title:
	 	President	 	 	 	 	 	 

  

 Signature Page 1 

 ACCEPTANCE AND AGREEMENT OF SELLER REPRESENTATIVE 
  
 The undersigned, being the Seller Representative designated in
Section 1.14 of the foregoing Asset Purchase Agreement (Focus), agrees to serve as the Seller Representative and to be bound by the terms of such Asset Purchase Agreement pertaining thereto. This Acceptance and Agreement is executed and
delivered as of the Execution Date. 
  

			
		
	 	 	/S/    BYRON
DEFOOR        
	 Name:
	 	Byron DeFoor

  

 Signature Page 2Form of Indenture relating to senior debt securities

 EXHIBIT 4.4 
  
 ARGONAUT GROUP, INC. 
  
 TO 
  
 _________________________________________ 
  
 Trustee

  

  
 SENIOR INDENTURE 
  
 Dated as of                     , 20     
  

 Argonaut Group, Inc. 
 Certain Sections of this Indenture relating to 
 Sections 310 through 318, inclusive, of the 
 Trust Indenture Act of 1939, as amended: 
  

					
	 Provisions of Trust
Indenture Act of 1939,
as amended

	  	Indenture Section

	 Section 310(a)(1)
	 	 	  	6.9
	 (a)(2)
	 	 	  	6.9
	 (a)(3)
	 	 	  	Not Applicable
	 (a)(4)
	 	 	  	Not Applicable
	 (b)
	 	 	  	6.8, 6.10
	 (c)
	 	 	  	Not Applicable
	 Section 311(a)
	 	 	  	6.13
	 (b)
	 	 	  	6.13
	 (c)
	 	 	  	Not Applicable
	 Section 312(a)
	 	 	  	7.1, 7.2(a)
	 (b)
	 	 	  	7.2(b)
	 (c)
	 	 	  	7.2(c)
	 Section 313(a)
	 	 	  	7.3(a)
	 (b)
	 	 	  	7.3(a)
	 (c)
	 	 	  	7.3(a)
	 (d)
	 	 	  	7.3(b)
	 Section 314(a)
	 	 	  	7.4
	 (a)(4)
	 	 	  	1.1, 10.4
	 (b)
	 	 	  	Not Applicable
	 (c)(1)
	 	 	  	1.2
	 (c)(2)
	 	 	  	1.2
	 (c)(3)
	 	 	  	Not Applicable
	 (d)
	 	 	  	Not Applicable
	 (e)
	 	 	  	1.2
	 Section 315(a)
	 	 	  	6.1
	 (b)
	 	 	  	6.2
	 (c)
	 	 	  	6.1
	 (d)
	 	 	  	6.1
	 (e)
	 	 	  	5.14
	 Section 316(a)
	 	 	  	1.1
	 (a)(1)(A)
	 	 	  	5.2, 5.12
	 (a)(1)(B)
	 	 	  	5.13
	 (a)(2)
	 	 	  	Not Applicable
	 (b)
	 	 	  	5.8
	 (c)
	 	 	  	1.4(c)
	 Section 317(a)(1)
	 	 	  	5.3
	 (a)(2)
	 	 	  	5.4
	 (b)
	 	 	  	10.3
	 Section 318(a)
	 	 	  	1.7

	NOTE:  	This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. 

  
 TABLE OF CONTENTS 

 

					
	 ARTICLE I
	  	1
			
	 Section 1.1
	    	 Definitions
	  	1
			
	 Section 1.2
	    	 Compliance Certificates and Opinions
	  	7
			
	 Section 1.3
	    	 Form of Documents Delivered to Trustee
	  	7
			
	 Section 1.4
	    	 Acts of Holders; Record Dates
	  	8
			
	 Section 1.5
	    	 Notices, Etc., to Trustee and Company
	  	9
			
	 Section 1.6
	    	 Notice to Holders; Waiver
	  	9
			
	 Section 1.7
	    	 Conflict with Trust Indenture Act
	  	10
			
	 Section 1.8
	    	 Effect of Headings and Table of Contents
	  	10
			
	 Section 1.9
	    	 Successors and Assigns
	  	10
			
	 Section 1.10
	    	 Separability Clause
	  	10
			
	 Section 1.11
	    	 Benefits of Indenture
	  	10
			
	 Section 1.12
	    	 Governing Law
	  	10
			
	 Section 1.13
	    	 Legal Holidays
	  	10
		
	 ARTICLE II
	  	11
			
	 Section 2.1
	    	 Forms Generally
	  	11
			
	 Section 2.2
	    	 Form of Face of Security
	  	11
			
	 Section 2.3
	    	 Form of Reverse of Security
	  	13
			
	 Section 2.4
	    	 Additional Provisions Required in Book-Entry Security
	  	16
			
	 Section 2.5
	    	 Form of Trustee’s Certificate of Authentication
	  	16
		
	 ARTICLE III
	  	17
			
	 Section 3.1
	    	 Amount Unlimited; Issuable in Series
	  	17
			
	 Section 3.2
	    	 Denominations
	  	19
			
	 Section 3.3
	    	 Execution, Authentication, Delivery and Dating
	  	19
			
	 Section 3.4
	    	 Temporary Securities
	  	20
			
	 Section 3.5
	    	 Registration, Registration of Transfer and Exchange
	  	20
			
	 Section 3.6
	    	 Mutilated, Destroyed, Lost and Stolen Securities
	  	22
			
	 Section 3.7
	    	 Payment of Interest; Interest Rights Preserved
	  	22
			
	 Section 3.8
	    	 Persons Deemed Owners
	  	23

  

 i 

					
			
	 Section 3.9
	    	 Cancellation
	  	24
			
	 Section 3.10
	    	 Computation of Interest
	  	24
		
	 ARTICLE IV
	  	24
			
	 Section 4.1
	    	 Satisfaction and Discharge of Indenture
	  	24
			
	 Section 4.2
	    	 Application of Trust Money
	  	25
		
	 ARTICLE V
	  	25
			
	 Section 5.1
	    	 Events of Default
	  	25
			
	 Section 5.2
	    	 Acceleration of Maturity; Rescission and Annulment
	  	26
			
	 Section 5.3
	    	 Collection of Indebtedness and Suits for Enforcement by Trustee
	  	27
			
	 Section 5.4
	    	 Trustee May File Proofs of Claim
	  	28
			
	 Section 5.5
	    	 Trustee May Enforce Claims Without Possession of Securities
	  	28
			
	 Section 5.6
	    	 Application of Money Collected
	  	28
			
	 Section 5.7
	    	 Limitation on Suits
	  	29
			
	 Section 5.8
	    	 Unconditional Right of Holders to Receive Principal, Premium and Interest
	  	29
			
	 Section 5.9
	    	 Restoration of Rights and Remedies
	  	29
			
	 Section 5.10
	    	 Rights and Remedies Cumulative
	  	30
			
	 Section 5.11
	    	 Delay or Omission Not Waiver
	  	30
			
	 Section 5.12
	    	 Control by Holders
	  	30
			
	 Section 5.13
	    	 Waiver of Past Defaults
	  	30
			
	 Section 5.14
	    	 Undertaking for Costs
	  	31
			
	 Section 5.15
	    	 Waiver of Stay or Extension Laws
	  	31
		
	 ARTICLE VI
	  	31
			
	 Section 6.1
	    	 Certain Duties and Responsibilities
	  	31
			
	 Section 6.2
	    	 Notice of Defaults
	  	31
			
	 Section 6.3
	    	 Certain Rights of Trustee
	  	32
			
	 Section 6.4
	    	 Not Responsible for Recitals or Issuance of Securities
	  	32
			
	 Section 6.5
	    	 May Hold Securities
	  	33
			
	 Section 6.6
	    	 Money Held in Trust
	  	33
			
	 Section 6.7
	    	 Compensation and Reimbursement
	  	33
			
	 Section 6.8
	    	 Disqualification; Conflicting Interests
	  	33
			
	 Section 6.9
	    	 Corporate Trustee Required; Eligibility
	  	33

  

 ii 

					
			
	 Section 6.10
	    	 Resignation and Removal; Appointment of Successor
	  	34
			
	 Section 6.11
	    	 Acceptance of Appointment by Successor
	  	35
			
	 Section 6.12
	    	 Merger, Conversion, Consolidation or Succession to Business
	  	36
			
	 Section 6.13
	    	 Preferential Collection of Claims Against Company
	  	36
			
	 Section 6.14
	    	 Appointment of Authenticating Agent
	  	36
		
	 ARTICLE VII
	  	38
			
	 Section 7.1
	    	 Company to Furnish Trustee Names and Addresses of Holders
	  	38
			
	 Section 7.2
	    	 Preservation of Information; Communications to Holders
	  	38
			
	 Section 7.3
	    	 Reports by Trustee
	  	39
			
	 Section 7.4
	    	 Reports by Company
	  	39
		
	 ARTICLE VIII
	  	39
			
	 Section 8.1
	    	 Company May Consolidate, Etc., Only on Certain Terms
	  	39
			
	 Section 8.2
	    	 Successor Substituted
	  	40
		
	 ARTICLE IX
	  	40
			
	 Section 9.1
	    	 Supplemental Indentures Without Consent of Holders
	  	40
			
	 Section 9.2
	    	 Supplemental Indentures with Consent of Holders
	  	41
			
	 Section 9.3
	    	 Execution of Supplemental Indentures
	  	42
			
	 Section 9.4
	    	 Effect of Supplemental Indentures
	  	42
			
	 Section 9.5
	    	 Conformity with Trust Indenture Act
	  	43
			
	 Section 9.6
	    	 Reference in Securities to Supplemental Indentures
	  	43
		
	 ARTICLE X
	  	43
			
	 Section 10.1
	    	 Payment of Principal, Premium and Interest
	  	43
			
	 Section 10.2
	    	 Maintenance of Office or Agency
	  	43
			
	 Section 10.3
	    	 Money for Securities Payments to Be Held in Trust
	  	44
			
	 Section 10.4
	    	 Statement by Officers as to Default
	  	45
			
	 Section 10.5
	    	 Existence
	  	45
			
	 Section 10.6
	    	 Maintenance of Properties
	  	45
			
	 Section 10.7
	    	 Payment of Taxes and Other Claims
	  	45
			
	 Section 10.8
	    	 Restrictions on Secured Debt
	  	45
			
	 Section 10.9
	    	 Limitation on Sales and Leasebacks
	  	47
			
	 Section 10.10
	    	 Waiver of Certain Covenants
	  	47

  

 iii 

					
	 ARTICLE XI
	  	48
			
	 Section 11.1
	    	 Applicability of Article
	  	48
			
	 Section 11.2
	    	 Election to Redeem; Notice to Trustee
	  	48
			
	 Section 11.3
	    	 Selection by Trustee of Securities to Be Redeemed
	  	48
			
	 Section 11.4
	    	 Notice of Redemption
	  	49
			
	 Section 11.5
	    	 Deposit of Redemption Price
	  	49
			
	 Section 11.6
	    	 Securities Payable on Redemption Date
	  	49
			
	 Section 11.7
	    	 Securities Redeemed in Part
	  	50
		
	 ARTICLE XII
	  	50
			
	 Section 12.1
	    	 Applicability of Article
	  	50
			
	 Section 12.2
	    	 Satisfaction of Sinking Fund Payments with Securities
	  	50
			
	 Section 12.3
	    	 Redemption of Securities for Sinking Fund
	  	51
		
	 ARTICLE XIII
	  	51
			
	 Section 13.1
	    	 Applicability of Article; Company’s Option to Effect Defeasance or Covenant Defeasance
	  	51
			
	 Section 13.2
	    	 Defeasance and Discharge
	  	51
			
	 Section 13.3
	    	 Covenant Defeasance
	  	52
			
	 Section 13.4
	    	 Conditions to Defeasance or Covenant Defeasance
	  	52
			
	 Section 13.5
	    	 Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions
	  	54
			
	 Section 13.6
	    	 Reinstatement
	  	54

  

 iv 

 SENIOR INDENTURE, dated as of
                    , 20     (the “Indenture”), between Argonaut Group, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (herein called the “Company”), having its principal office at 10101 Reunion Place, Suite 500, San Antonio, Texas 78216, and
                                        ,
a _______________, as Trustee (herein called the “Trustee”). 
  
 RECITALS OF THE COMPANY 
  
 The Company has duly
authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the “Securities”), to be issued in one or more
series as in this Indenture provided. 
  
 All things necessary to
make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. 
  
 NOW, THEREFORE, THIS INDENTURE WITNESSETH: 
  
 For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of series thereof, as follows: 
  
 ARTICLE I 
  
 DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION 
  

	Section 1.1	Definitions. 

  
 For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: 
  
 (1) the terms defined in this Article I have the meanings
assigned to them in this Article I and include the plural as well as the singular; 
  
 (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein; 
  
 (3) all accounting
terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with
respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; and 
  

(4) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other subdivision. 
  
 “Act,” when used with respect to any Holder, has the meaning specified in Section 1.4. 
  

 1 

 “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. 
  
 “Attributable Debt” means (except as otherwise provided in this
paragraph), as to any particular lease under which any Person is at the time liable for a term of more than 12 months, at any date as of which the amount thereof is to be determined (the “determination date”), the total net amount of rent
required to be paid by such Person under such lease during the remaining term thereof (excluding any subsequent renewal or other extension options held by the lessee), discounted from the respective due dates thereof to the determination date at the
rate of 8% per annum, compounded monthly. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of the rent payable by the lessee with respect to such period after excluding amounts
required to be paid on account of maintenance and repairs, services, insurance, taxes, assessments, water rates and similar charges and contingent rents (such as those based on sales or monetary inflation). If any lease is terminable by the lessee
upon the payment of a penalty, if under the terms of the lease the termination right is not exercisable until after the determination date, and if the amount of such penalty discounted to the determination date at the rate of 8% per annum
compounded monthly is less than the net amount of rentals payable after the time as of which such termination could occur (the “termination time”) discounted to the determination date at the rate of 8% per annum compounded monthly,
then such discounted penalty amount shall be used instead of such discounted amount of net rentals payable after the termination time in calculating the Attributable Debt for such lease. If any lease is terminable by the lessee upon the payment of a
penalty, if such termination right is exercisable on the determination date, and if the amount of the net rentals payable under such lease after the determination date discounted to the determination date at the rate of 8% per annum compounded
monthly is greater than the amount of such penalty, the “Attributable Debt” for such lease as of such determination date shall be equal to the amount of such penalty. 
  
 “Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.14 to act on behalf
of the Trustee to authenticate Securities of one or more series. 
  
 “Board of Directors” means either the board of directors of the Company or any duly authorized committee of that board. 
  
 “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. 
  
 “Book-Entry Security” means a Security in the form prescribed in Section 2.4 evidencing all or part of a series of Securities, issued to
the Depository for such series or its nominee, and registered in the name of such Depository or nominee. 
  
 “Business Day,” when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment are authorized or obligated by law or executive order to close. 
  

 2 

 “Commission” means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

  
 “Company” means the Person named as the
“Company” in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person. 

 
 “Company Request” or “Company Order” means a written
request or order signed in the name of the Company by its Chairman of the Board, its Chief Executive Officer, its President, an Executive Vice President, a Senior Vice President or a Vice President, and by its Chief Financial Officer, its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. 
  
 “Consolidated Net Assets” means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom all current liabilities, as set forth on the
consolidated balance sheet of the Company and its consolidated subsidiaries prepared as of the end of a fiscal year in accordance with generally accepted accounting principles which the Company shall have most recently distributed to its
shareholders prior to the time as of which “Consolidated Net Assets” shall be determined. 
  
 “Corporate Trust Office” means the principal office of the Trustee in Chicago, Illinois at which at any particular time its corporate trust
business shall be administered. 
  
 “Corporation” means
a corporation, association, company, joint-stock company or business trust. 
  
 “covenant defeasance” has the meaning specified in Section 13.3. 
  
 “Debt” has the meaning specified in Section 10.8. 
  

“Defaulted Interest” has the meaning specified in Section 3.7. 
  
 “defeasance” has the meaning specified in Section 13.2. 
  
 “Depository” means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Book-Entry Securities, the Person designated as Depository for such series by the Company pursuant to Section 3.1, which Person shall be a clearing agency registered under the
Exchange Act. 
  
 “Domestic Subsidiary” means any
Subsidiary substantially all the property of which is located, or substantially all of the business of which is carried on, within the United States of America (excluding its territories and possessions and Puerto Rico), provided, however, that the
term shall not include any Subsidiary which (i) is engaged principally in the financing of operations outside of the United States of America or in leasing personal property or financing inventory, receivables or other property or
(ii) does not own a Principal Domestic Property. 
  
 “Event of Default” has the meaning specified in Section 5.1. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  

 3 

 “Funded Debt” means indebtedness of the Company (other than the Securities or indebtedness
subordinated to the Securities) or indebtedness of a wholly-owned Domestic Subsidiary, for money borrowed, having a stated maturity more than 12 months from the date of application of sale/leaseback proceeds or which is extendible at the option of
the obligor thereon to a date more than 12 months from the date of such application. 
  
 “Holder” means a Person in whose name a Security is registered in the Security Register. 
  
 “Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument, and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term “Indenture” shall also include the terms of particular series of Securities established as contemplated by Section 3.1. 
  
 “interest,” when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest payable after Maturity. 
  
 “Interest Payment Date,” when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.

  
 “Maturity,” when used with respect to any Security,
means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

  
 “Mortgage” means any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other similar encumbrance. 
  
 “Officers’ Certificate” means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, an Executive
Vice President, a Senior Vice President or a Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers’ Certificate given pursuant to Section 10.4 shall be the principal executive, financial or accounting officer of the Company. 
  
 “Opinion of Counsel” means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the
Trustee. 
  
 “Original Issue Discount Security” means
any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2. 
  
 “Outstanding,” when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: 
  
 (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; 
  

 4 

 (ii) Securities for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, however
that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and 
  
 (iii) Securities which have been paid pursuant to Section 3.6 or in exchange for or in lieu of which
other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the Company; 
  
 provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof pursuant
to Section 5.2, (ii) the principal amount of a Security denominated in one or more foreign currencies or currency units shall be the U.S. dollar equivalent, determined in the manner provided as contemplated by Section 3.1 on the date
of original issuance of such Security, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent on the date of original issuance of such Security of the amount determined as provided in
(i) above) of such Security, and (iii) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such other obligor. 
  
 “Paying Agent” means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company. 
  
 “Person” means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or political subdivision thereof. 
  
 “Place of Payment,” when used with respect to the Securities of any series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as contemplated by Section 3.1. 
  
 “Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Security. 
  

 5 

 “Principal Domestic Property” means any building, structure or other facility, together with
the land upon which it is erected and fixtures comprising a part thereof, used primarily for manufacturing, processing, research, warehousing or distribution and located in the United States of America (excluding its territories and possessions and
Puerto Rico) owned or leased by the Company or any Subsidiary the net book value of which on the date as of which the determination is being made exceeds 2% of Consolidated Net Assets, other than any such building structure or other facility or
portion of any thereof (i) which is an air or water pollution control facility financed by obligations issued by a State or local governmental unit, or (ii) which the Chairman of the Board, the President, the Chief Executive Officer, an
Executive Vice President, a Senior Vice President or a Vice President, and the Chief Financial Officer, the Treasurer, or an Assistant Treasurer, of the Company determine in good faith is not of material importance to the total business conducted,
or assets owned, by the Company and its Subsidiaries as an entirety. 
  
 “Redemption Date,” when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. 
  
 “Redemption Price,” when used with respect to any Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture. 
  
 “Regular Record
Date” for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 3.1. 
  
 “Securities” has the meaning stated in the first recital of this Indenture and more particularly means any
Securities authenticated and delivered under this Indenture. 
  
 “Security Register” and “Security Registrar” have the respective meanings specified in Section 3.5. 
  
 “Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7. 
  
 “Stated Maturity,” when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. 
  
 “Subsidiary” means any corporation of which the Company directly or
indirectly owns or controls stock which under ordinary circumstances (not dependent upon the happening of a contingency) has voting power to elect a majority of the board of directors of such corporation; provided, however, that the term shall not
include any such corporation if and so long as (i) such corporation does not own a Principal Domestic Property and (ii) the Chairman of the Board, the Chief Executive Officer, the President, an Executive Vice President, a Senior Vice
President or a Vice President, and the Chief Financial Officer, the Treasurer, or an Assistant Treasurer, of the Company determine in good faith at least annually that the then aggregate investments by the Company and its Domestic Subsidiaries
(including all guarantees and other extensions of credit) in such corporation are not of material importance to the total business conducted, or assets owned, by the Company and its Domestic Subsidiaries. 
  

 6 

 “Trustee” means the Person named as the “Trustee” in the first paragraph of this
instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, “Trustee” as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. 
  
 “Trust Indenture Act” means the Trust Indenture Act of 1939 as in force at the date as of which this instrument
was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

  
 “Vice President,” when used with respect to the
Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title “vice president.” 
  

	Section 1.2	Compliance Certificates and Opinions. 

  
 Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers’ Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture. 
  
 Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include 
  
 (1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the definitions herein relating thereto; 
  
 (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; 
  
 (3) a
statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

  
 (4) a statement as to whether, in the opinion
of each such individual, such condition or covenant has been complied with. 
  

	Section 1.3	Form of Documents Delivered to Trustee. 

  
 In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some 

  

 7 

 
matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several
documents. 
  
 Any certificate or opinion of an officer of the
Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are erroneous. 
  
 Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument. 
  

	Section 1.4	Acts of Holders; Record Dates. 

  
 (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to
Section 6.1) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.4. 
  
 (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution
is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of
the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. 
  
 (c) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders of
Securities of such series. If not set by the Company prior to the first solicitation of a Holder of Securities of such series made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for
any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 7.1) prior to such first solicitation or vote, as the case may be. 
  

 8 

 With regard to any record date for action to be taken by the Holders of one or more series of Securities, only the
Holders of Securities of such series on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. 
  
 (d) The ownership of Securities shall be proved by the Security Register. 
  
 (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any
Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. 
  

	Section 1.5	Notices, Etc., to Trustee and Company. 

  
 Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with, 
  
 (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention:
[                                ], or 
  
 (2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this
instrument, Attention: General Counsel or at any other address previously furnished in writing to the Trustee by the Company. 
  

	Section 1.6	Notice to Holders; Waiver. 

  
 Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed
for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect
to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. 
  
 In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to
give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. 
  

 9 

	Section 1.7	Conflict with Trust Indenture Act. 

  
 If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or to be excluded, as the case may be. 
  

	Section 1.8	Effect of Headings and Table of Contents. 

  
 The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. 
  

	Section 1.9	Successors and Assigns. 

  
 All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. 
  

	Section 1.10	Separability Clause. 

  
 In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby. 
  

	Section 1.11	Benefits of Indenture. 

  
 Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. 
  

	Section 1.12	Governing Law. 

  
 This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. 
  

	Section 1.13	Legal Holidays. 

  
 In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities (other than a provision of the Securities of any series which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal
(and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or
at the Stated Maturity; provided, however, that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. 
  

 10 

 ARTICLE II 
  
 SECURITY FORMS 
  

	Section 2.1	Forms Generally. 

  
 The Securities of each series shall be in substantially the form set forth in this Article II, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary
or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 for the authentication and delivery of such Securities. 
  
 The definitive Securities may be printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. 
  

	Section 2.2	Form of Face of Security. 

  
 [Insert any legend required by the Internal Revenue Code and the regulations thereunder.] 
  
 Argonaut Group, Inc. 
  

							
	No.                         	 	 	 	 	 	$                        

  
 Argonaut Group, Inc.,
a corporation duly organized and existing under the laws of Delaware (herein called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to
__________________________________________, or registered assigns, the principal sum of ____________________ Dollars on ________________________ [if the Security is to bear interest, prior to Maturity, insert -, and to pay interest thereon from
___________ or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on _________________ and _______________ in each year, commencing _______________, at the rate of ________% per annum,
until the principal hereof is paid or made available for payment [if applicable, insert—, and (to the extent that the payment of such interest shall be legally enforceable) at the rate of ______% per annum on any overdue principal and premium
and on any overdue installment of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the ______ or _______ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any
such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the 

  

 11 

 
Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to Holders of Securities of this series not more than 15 days and not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture]. 
  
 [If the Security is not to bear interest prior to Maturity, insert – The
principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the
rate of _________% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for.
Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of _______% per annum (to the extent that the payment of such interest shall be
legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.] 
  
 Payment of the principal of (and premium, if any) and [if applicable
insert—any such] interest on this Security will be made at the office or agency of the Company maintained for that purpose in [_________________], in such coin or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts [if applicable insert -; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear
in the Security Register]. 
  
 Reference is hereby made to the
further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 
  
 Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 
  

 12 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 
  
 Dated: 
  

			
	 ARGONAUT GROUP, INC.

		
	By	 	 

  

	
	 Attest:

	
	  

  

	Section 2.3	Form of Reverse of Security. 

  
 This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or
more series under an Indenture, dated as of [__________________________] (herein called the “Indenture”), between the Company and ________________, as Trustee (herein called the “Trustee”, which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to
$____________________]. 
  
 [If applicable, insert – The
Securities of this series are subject to redemption upon not less than 30 days’ notice by mail, [if applicable, insert – (1) on _______________ in any year commencing with the year ____________ and ending with the year ___________ through
operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [on or after ___________________, 20_____], as a whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount): If redeemed [on or before ___________________, ___%, and if redeemed] during the 12-month period beginning ______________________ of the years indicated, 
  

							
	Price

	  	Redemption
Year

	  	Price

	  	Redemption
Year

  
 and thereafter at a Redemption Price
equal to ________% of the principal amount, together in the case of any such redemption [if applicable insert - (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments
whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.] 
  

 13 

 [If applicable, insert - The Securities of this series are subject to redemption upon not less than 30
days’ notice by mail, (1) on _______________ in any year commencing with the year __________ and ending with the year __________ through operation of the sinking fund for this series at the Redemption Prices for redemption through
operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after __________________], as a whole or in part, at the election of the Company, at the Redemption Prices
for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning _____________________________ of the years
indicated, 
  

			
	 Redemption Price
 For Redemption
 Through Operation
 of the Sinking Fund

	 	 Redemption Price
 For Redemption Other
 Than Through Operation Year
 of the Sinking Fund

	 	 	 

  
 and thereafter at a Redemption Price
equal to __________% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is
on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.] 
  
 [Notwithstanding the foregoing, the Company may
not, prior to ____________________, redeem any Securities of this series as contemplated by [Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of
moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than __________% per annum.] 
  
 [The sinking fund for this series provides for the redemption on _________ in each year beginning with the year
________________ and ending with the year _______________ of [not less than $_____________ (“mandatory sinking fund”) and not more than] $ _____________ aggregate principal amount of Securities of this series. Securities of this series
acquired or redeemed by the Company other than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made [in the inverse order in which they become due].] 

 
 [If the Security is subject to redemption, insert – In the event of
redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.] 
  
 [If the Security is not an Original Issue Discount Security, insert - If an
Event of Default with respect to Securities of this series shall occur and be continuing, the principal of 

  

 14 

 
the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.] 
  
 [If the Security is an Original Issue Discount Security, insert—If an
Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such
amount shall be equal to—insert formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent
that the payment of such interest shall be legally enforceable), all of the Company’s obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.] 
  
 [The Indenture contains provisions for defeasance at any time of [the entire
indebtedness of this Security or] certain restrictive covenants and Events of Default with respect to this Security [, in each case] upon compliance with certain conditions set forth therein.] 
  
 The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this Security. 
  
 No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. 
  
 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register,
upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 
  
 The Securities of this series are issuable only in registered form without coupons in denominations of $ ______________ and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for 

  

 15 

 
a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder
surrendering the same. 
  
 No service charge shall be made for any
such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 
  
 Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary. 
  
 All terms used in this Security which are
defined in the Indenture shall have the meanings assigned to them in the Indenture. 
  

	Section 2.4	Additional Provisions Required in Book-Entry Security. 

  
 Any Book-Entry Security issued hereunder shall, in addition to the provisions contained in Sections 2.2 and 2.3, bear a legend in substantially the
following form: 
  
 “This Security is a
Book-Entry Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depository or a nominee of a Depository. This Security is exchangeable for Securities registered in the name of a person other than
the Depository or its nominee only in the limited circumstances described in the Indenture and may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository.” 
  

	Section 2.5	Form of Trustee’s Certificate of Authentication. 

  
 The Trustee’s certificates of authentication shall be in substantially the following form: 
  
 This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture. 
  

			
	 _____________________________,

	 As Trustee

		
	By	 	 
	 	 	 Authorized Officer

  

 16 

 ARTICLE III 
  
 THE SECURITIES 
  

	Section 3.1	Amount Unlimited; Issuable in Series. 

  
 The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. 
  
 The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 3.3, set forth, or determined in the manner provided, in an Officers’ Certificate, or established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series, 
  
 (1) the title of
the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series); 
  
 (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7 and except for any Securities which,
pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder); 
  
 (3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest; 
  
 (4) the date or dates on which the principal of the Securities of the series is payable; 
  
 (5) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method of calculating such rate or rates of interest, the date or dates from which such interest shall accrue, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date for
any interest payable on any Interest Payment Date; 
  
 (6) the place or places where the principal of and any premium and interest on Securities of the series shall be payable; 
  
 (7) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may
be redeemed, in whole or in part, at the option of the Company; 
  
 (8) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; 
  

 17 

 (9) if other than denominations of $1,000 and any integral multiple of $1,000 in excess
thereof, the denominations in which Securities of the series shall be issuable; 
  
 (10) the currency, currencies or currency units in which payment of the principal of and any premium and interest on any Securities of the
series shall be payable if other than the currency of the United States of America and the manner of determining the equivalent thereof in the currency of the United States of America for purposes of the definition of “Outstanding” in
Section 1.1; 
  
 (11) if the amount of
payments of principal of or any premium or interest on any Securities of the series may be determined with reference to an index or formula, the manner in which such amounts shall be determined; 
  
 (12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company or a Holder thereof, in one or more currencies or currency units other than that or those in which the Securities are stated to be payable, the currency, currencies or
currency units in which payment of the principal of and any premium and interest on Securities of such series as to which such election is made shall be payable, and the periods within which and the terms and conditions upon which such election is
to be made; 
  
 (13) the application, if any, of
Section 13.2 or 13.3 to the Securities of any series; 
  
 (14) whether the Securities of the series shall be issued in whole or in part in the form of one or more Book-Entry Securities and, in such case, the Depository with respect to such Book-Entry Security or Securities
and the circumstances under which any Book-Entry Security may be registered for transfer or exchange, or authenticated and delivered, in the name of a Person other than such Depository or its nominee, if other than as set forth in Section 3.5;

  
 (15) if other than the principal amount
thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 5.2; 
  
 (16) the right, if any, of the Holders of the Securities to convert the Securities into shares of the
Company’s common stock, par value $0.10 per share, or shares of the Company’s preferred stock, par value $0.10 per share; and 
  
 (17) any other terms or conditions of the Securities of the series to be issued. 
  
 All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 3.3) set forth, or determined in the manner provided, in the Officers’ Certificate referred to above
or in any such indenture supplemental hereto. 
  
 If any of the
terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or 

  

 18 

 
an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers’ Certificate setting forth the terms of
the series. 
  

	Section 3.2	Denominations. 

  
 The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by
Section 3.1. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof. 
  

	Section 3.3	Execution, Authentication, Delivery and Dating. 

  
 The Securities shall be executed on behalf of the Company by its Chairman of the Board, its President, its Chief Executive Officer, an Executive Vice
President, a Senior Vice President or a Vice President of the Company, attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. 
  
 Securities bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at
the date of such Securities. 
  
 At any time and from time to time
after the execution and delivery of this Indenture, the Company may deliver Securities of any Series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and
the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Sections 2.1
and 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in
relying upon, an Opinion of Counsel stating, 
  
 (a) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 2.1, that such form has been established in conformity with the provisions of this Indenture; 
  
 (b) if the terms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 3.1, that such terms have been established in conformity with the provisions of this Indenture; and 
  
 (c) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. 
  
 If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this
Indenture will affect 

  

 19 

 
the Trustee’s own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee. 
  
 Notwithstanding the provisions of
Section 3.1 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers’ Certificate otherwise required pursuant to Section 3.1 or the
Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued. 
  
 Each Security shall be dated the date of its authentication. 
  
 No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.9, for all purposes of this Indenture such Security
shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. 
  

	Section 3.4	Temporary Securities. 

  
 Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. 
  
 If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared
without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. Until so exchanged the temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor. 
  

	Section 3.5	Registration, Registration of Transfer and Exchange. 

  
 The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office
or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the 

  

 20 

 
“Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee is hereby appointed “Security Registrar” for the purpose of registering Securities and transfers of Securities as herein provided. 
  
 Upon surrender for registration of transfer of any Security of any series at
the office or agency in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor. 
  
 At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled
to receive. 
  
 All Securities issued upon any registration of
transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

  
 Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof
or his attorney duly authorized in writing. 
  
 No service charge
shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer. 
  
 The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 11.3 and ending at the close of business on the day of such mailing, or (ii) to register
the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. 
  

Notwithstanding the foregoing, any Book-Entry Security shall be exchangeable pursuant to this Section 3.5 for Securities registered in the name of
Persons other than the Depository for such Security or its nominee only if (i) such Depository notifies the Company that it is unwilling or unable to continue as Depository for such Book-Entry Security or if at any time such Depository ceases
to be a clearing agency registered under the Exchange Act, (ii) the Company executes and delivers to the Trustee a Company Order that such Book-Entry Security shall be so exchangeable or (iii) there shall have occurred and be continuing an
Event of Default with respect to the Securities. Any Book-Entry Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Securities registered in such names as such Depository shall direct. 
  

 21 

 Notwithstanding any other provision in this Indenture, a Book-Entry Security may not be transferred
except as a whole by the Depository with respect to such Book-Entry Security to a nominee of such Depository or by a nominee of such Depository to such a Depository or another nominee of such Depository. 
  

	Section 3.6	Mutilated, Destroyed, Lost and Stolen Securities. 

  
 If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. 
  
 If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and
(ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding. 
  
 In case any such mutilated,
destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. 
  
 Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. 
  
 Every new Security of any series issued pursuant to this Section 3.6 in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued hereunder. 
  
 The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities. 
  

	Section 3.7	Payment of Interest; Interest Rights Preserved. 

  
 Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, interest on any Security which is payable, and
is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such
interest. 
  
 Any interest on any Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of 

  

 22 

 
having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or
(2) below: 
  
 (1) The Company may elect to
make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2). 
  
 (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. 
  
 Subject to the foregoing provisions of this Section 3.7, each Security
delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. 
  

	Section 3.8	Persons Deemed Owners. 

  
 Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 3.7) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. 
  

 23 

	Section 3.9	Cancellation. 

  
 All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and
sold, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section 3.9, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order. 
  

	Section 3.10	Computation of Interest. 

  
 Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months. 
  
 ARTICLE IV 
  
 SATISFACTION AND DISCHARGE 
  

	Section 4.1	Satisfaction and Discharge of Indenture. 

  
 This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when 
  
 (1) either 
  
 (A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or 
  
 (B) all such Securities not theretofore delivered to the Trustee for cancellation 
  
 (i) have become due and payable, or 
  
 (ii) will become due and payable at their Stated Maturity
within one year, or 
  
 (iii) are to be called
for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, 

  

 24 

 
and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; 
  
 (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and 
  
 (3) the Company has delivered to the Trustee an
Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. 
  
 Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of the Trustee to any Authenticating Agent under Section 6.14 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause
(1) of this Section 4.1, the obligations of the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall survive. 
  

	Section 4.2	Application of Trust Money. 

  
 Subject to provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal and any premium and interest for whose payment such money has been deposited with the Trustee. 
  
 ARTICLE V 
  
 REMEDIES 
  

	Section 5.1	Events of Default. 

  
 “Event of Default,” wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

  
 (1) default in the payment of any interest
upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or 
  
 (2) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or 
  
 (3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series; or 
  

 25 

 (4) default in the performance, or breach, of any covenant or warranty of the Company in
this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section 5.1 specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of
Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or 

 
 (5) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or 
  
 (6) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any such action; or 
  
 (7) any event which constitutes an “Event of Default” under the terms governing Securities of that series established as
provided in Section 3.1. 
  

	Section 5.2	Acceleration of Maturity; Rescission and Annulment. 

  
 If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if any of the Securities of that series are Original Issue Discount Securities, such portion of the principal
amount of such Securities as may be specified in the terms thereof) of 

  

 26 

 
all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. 
  
 At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as hereinafter in this Article V provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if 
  
 (1) the Company has paid or deposited with the Trustee a sum sufficient to pay 
  
 (A) all overdue interest on all Securities of that series, 
  
 (B) the principal of (and premium, if any, on) any Securities of that series which have become due
otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities, 
  
 (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in
such Securities, and 
  
 (D) all sums paid or
advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; 
  
 and 
  
 (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that
series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13. 
  
 No such rescission shall affect any subsequent default or impair any right consequent thereon. 
  

	Section 5.3	Collection of Indebtedness and Suits for Enforcement by Trustee. 

  
 The Company covenants that if 
  
 (1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues
for a period of 30 days, or 
  
 (2) default is
made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, 
  
 the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to
the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further

  

 27 

 
amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel. 
  
 If an Event of Default
with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper
remedy. 
  

	Section 5.4	Trustee May File Proofs of Claim. 

  
 In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be
entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7. 
  
 No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

  

	Section 5.5	Trustee May Enforce Claims Without Possession of Securities. 

  
 All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. 
  

	Section 5.6	Application of Money Collected. 

  
 Any money collected by the Trustee pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in
case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: 
  
 FIRST: To the payment of all amounts due the Trustee under
Section 6.7; and 
  

 28 

 SECOND: To the payment of the amounts then due and unpaid for principal of and any
premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and
any premium and interest, respectively. 
  

	Section 5.7	Limitation on Suits. 

  
 No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder, unless 
  
 (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that
series; 
  
 (2) the Holders of not less than 25%
in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; 
  
 (3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; 
  
 (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding;
and 
  
 (5) no direction inconsistent with such
written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; 
  
 it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. 
  

	Section 5.8	Unconditional Right of Holders to Receive Principal, Premium and Interest. 

  
 Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 3.7) any interest on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. 
  

	Section 5.9	Restoration of Rights and Remedies. 

  
 If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any 

  

 29 

 
reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been
instituted. 
  

	Section 5.10	Rights and Remedies Cumulative. 

  
 Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy. 
  

	Section 5.11	Delay or Omission Not Waiver. 

  
 No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be. 
  

	Section 5.12	Control by Holders. 

  
 The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series; provided, however, that 
  
 (1) such direction shall not be in conflict with any rule of
law or with this Indenture, and 
  
 (2) the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. 
  

	Section 5.13	Waiver of Past Defaults. 

  
 The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities
of such series waive any past default hereunder with respect to such series and its consequences, except a default 
  
 (1) in the payment of the principal of or any premium or interest on any Security of such series, or 
  
 (2) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. 
  

 30 

 Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 
  

	Section 5.14	Undertaking for Costs. 

  
 In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted
by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act;
provided, however, that neither this Section 5.14 nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Trustee. 

 

	Section 5.15	Waiver of Stay or Extension Laws. 

  
 The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted. 
  
 ARTICLE VI 
  
 THE TRUSTEE 
  

	Section 6.1	Certain Duties and Responsibilities. 

  
 The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.1. 
  

	Section 6.2	Notice of Defaults. 

  
 If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided, however, that in the case of any default of the character specified in Section 5.1(4) with respect to Securities of such series, no such notice to Holders shall be
given until at least 30 days after the occurrence thereof. For the purpose of this Section 6.2, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to
Securities of such series. 
  

 31 

	Section 6.3	Certain Rights of Trustee. 

  
 Subject to the provisions of Section 6.1: 
  
 (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or
parties; 
  
 (b) any request or direction of the
Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; 
  
 (c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers’ Certificate; 
  
 (d)
the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon; 
  
 (e) the Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; 
  
 (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and

  
 (g) the Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it
hereunder. 
  

	Section 6.4	Not Responsible for Recitals or Issuance of Securities. 

  
 The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the
Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee or any Authenticating
Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. 
  

 32 

	Section 6.5	May Hold Securities. 

  
 The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or
such other agent. 
  

	Section 6.6	Money Held in Trust. 

  
 Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise agreed with the Company. 
  

	Section 6.7	Compensation and Reimbursement. 

  
 The Company agrees: 
  
 (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a trustee of an express trust); 
  
 (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and 
  
 (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. 
  

	Section 6.8	Disqualification; Conflicting Interests. 

  
 If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest
or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. 
  

	Section 6.9	Corporate Trustee Required; Eligibility. 

  
 There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.9,
the combined capital and surplus of such Person shall be deemed to be its 

  

 33 

 
combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.9, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI. 
  

	Section 6.10	Resignation and Removal; Appointment of Successor. 

  
 (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective
until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11. 
  
 (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by Section 6.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. 
  
 (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. 
  
 (d) If at any time: 
  
 (1) the Trustee shall fail to comply with Section 6.8 after written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or 
  
 (2) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or 
  
 (3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, 
  
 then, in any such case, (i) the Company by a Board
Resolution may remove the Trustee with respect to all securities, or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. 
  
 (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in
the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall
comply with the applicable requirements of Section 6.11. If, within one year after such resignation, removal or incapability, or the 

  

 34 

 
occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable
requirements of Section 6.11, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 6.11, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. 
  
 (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the
Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 1.6. Each notice shall include the name of the
successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. 
  

	Section 6.11	Acceptance of Appointment by Successor. 

  
 (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder. 
  
 (b) In case of the
appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor
Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which
the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee 

  

 35 

 
shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor
Trustee relates. 
  
 (c) Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) and (b) of this Section,
as the case may be. 
  
 (d) No successor Trustee
shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VI. 
  

	Section 6.12	Merger, Conversion, Consolidation or Succession to Business. 

  
 Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article VI, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by
the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities. 
  

	Section 6.13	Preferential Collection of Claims Against Company. 

  
 If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). 
  

	Section 6.14	Appointment of Authenticating Agent. 

  
 The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a 

  

 36 

 
corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.14, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.14, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 6.14. 
  
 Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 6.14, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. 
  
 An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section 6.14, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class
mail, postage prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section 6.14. 
  
 The Company
agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.14. 
  

 37 

 If an appointment with respect to one or more series is made pursuant to this Section 6.14, the
Securities of such series may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form: 
  
 This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. 
  

					
	 _________________________,

	 As Trustee

			
	By	 	 	 	 ,

	 	 	 As Authenticating Agent
	 	 
			
	By	 	 	 	,
	 	 	 Authorized Officer
	 	 

  
 ARTICLE VII

  
 HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY

  

	Section 7.1	Company to Furnish Trustee Names and Addresses of Holders. 

  
 The Company will furnish or cause to be furnished to the Trustee: 
  
 (a) semi-annually and not more than 15 days after each record date for the payment of interest on such
Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 3.1 for non-interest bearing securities in each year; and 
  
 (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the
Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; 
  
 excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar. 
  

	Section 7.2	Preservation of Information; Communications to Holders. 

  
 (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished. 
  
 (b) The rights of the Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as
provided by the Trust Indenture Act. 
  
 (c)
Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as
to names and addresses of Holders made pursuant to the Trust Indenture Act. 
  

 38 

	Section 7.3	Reports by Trustee. 

  
 (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. 
  
 (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange. 
  

	Section 7.4	Reports by Company. 

  
 The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided, however, that any such information, documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. 
  
 ARTICLE VIII 
  
 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE 
  

	Section 8.1	Company May Consolidate, Etc., Only on Certain Terms. 

  
 The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: 
  
 (1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all
the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed; 
  
 (2) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event 

  

 39 

 
which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; 
  
 (3) if, as a result of any such consolidation or merger or
such conveyance, transfer or lease, properties or assets of the Company would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by this Indenture, the Company or such successor Person, as
the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) all indebtedness secured thereby; and 
  
 (4) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article VIII and that all conditions precedent
herein provided for relating to such transaction have been complied with. 
  

	Section 8.2	Successor Substituted. 

  
 Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section 8.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under this Indenture and the Securities. 
  
 ARTICLE IX 
  
 SUPPLEMENTAL INDENTURES 
  

	Section 9.1	Supplemental Indentures Without Consent of Holders. 

  
 Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: 
  
 (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or 
  
 (2) to add
to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely
for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or 
  

 40 

 (3) to add any additional Events of Default; or 
  
 (4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of
Securities in uncertificated form; or 
  
 (5) to
add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities; provided, however, that any such addition, change or elimination (i) shall neither (A) apply to any Security of any series
created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (B) modify the rights of the Holder of any such pre-existing series of any Security with respect to such provision or
(ii) shall become effective only when there is no such pre-existing series of a Security Outstanding; or 
  
 (6) to secure the Securities pursuant to the requirements of Section 10.8 or otherwise; or 
  
 (7) to establish the form or terms of Securities of any
series as permitted by Sections 2.1 and 3.1; or 
  
 (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or 
  
 (9) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under this Indenture; provided, however, that such action pursuant to this clause (9) shall not adversely affect the interests of the Holders of Securities of any series in
any material respect. 
  

	Section 9.2	Supplemental Indentures with Consent of Holders. 

  
 With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected thereby: 
  
 (1) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that 

  

 41 

 
would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change any Place of Payment where, or
the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or 
  
 (2) reduce the
percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or 
  
 (3) modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.10, except to increase any such percentage
or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section 9.2 and Section 10.10, or the deletion of this proviso, in accordance with the requirements of Sections
6.11(b) and 9.1(8). 
  
 A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. 
  
 It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof. 
  

	Section 9.3	Execution of Supplemental Indentures. 

  
 In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel each stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise. 
  

	Section 9.4	Effect of Supplemental Indentures. 

  
 Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. 
  

 42 

	Section 9.5	Conformity with Trust Indenture Act. 

  
 Every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act. 
  

	Section 9.6	Reference in Securities to Supplemental Indentures. 

  
 Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. 
  
 ARTICLE X 
  
 COVENANTS 
  

	Section 10.1	Payment of Principal, Premium and Interest. 

  
 The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and
interest on the Securities of that series in accordance with the terms of the Securities and this Indenture. 
  

	Section 10.2	Maintenance of Office or Agency. 

  
 The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or
surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands. 
  
 The Company may also from
time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee
of any such designation or rescission and of any change in the location of any such other office or agency. 
  

 43 

	Section 10.3	Money for Securities Payments to Be Held in Trust. 

  
 If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. 
  
 Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of or any premium
or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its action or failure so to act. 
  
 The Company
will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 10.3, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities of that series) in
the making of any payment in respect of the Securities of that series, and upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities of that series.

  
 The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

  
 Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid
to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any
such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in
[                    ], notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30
days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. 
  

 44 

	Section 10.4	Statement by Officers as to Default. 

  
 The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers’
Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. 
  

	Section 10.5	Existence. 

  
 Subject to Article VIII, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that
the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders. 
  

	Section 10.6	Maintenance of Properties. 

  
 The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 10.6 shall prevent the Company from discontinuing the operation or maintenance of
any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. 
  

	Section 10.7	Payment of Taxes and Other Claims. 

  
 The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become
a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings. 
  

	Section 10.8	Restrictions on Secured Debt. 

  
 The Company will not itself, and will not permit any Domestic Subsidiary to, incur, issue, assume or guarantee any indebtedness for money borrowed
represented by notes, bonds, debentures or other similar evidences of indebtedness for money borrowed (such notes, bonds, debentures or other similar evidences of indebtedness for money borrowed being hereinafter in this Article called
“Debt”), secured by a Mortgage on any Principal Domestic Property of the Company or any Domestic Subsidiary, or any shares of stock or Debt of any Domestic 

  

 45 

 
Subsidiary, without effectively providing that the Outstanding Securities (together with, if the Company shall so determine, any other Debt of the Company or
such Domestic Subsidiary then existing or thereafter created which is not subordinate to the Securities) shall be secured equally and ratably with (or prior to) such secured Debt (for the purpose of providing such equal and ratable security, the
principal amount of Outstanding Securities of any series of Original Issue Discount Securities shall be such portion of the principal amount as may be specified in the terms of that series that would be payable upon acceleration of the Maturity
thereof at the time of such determination), so long as such secured Debt shall be so secured, unless, after giving effect thereto, the aggregate amount of all such secured Debt plus all Attributable Debt of the Company and its Domestic Subsidiaries
in respect of sale and leaseback transactions (as defined in Section 10.9) would not exceed [15%] of Consolidated Net Assets; provided, however, that this Section 10.8 shall not apply to, and there shall be excluded from secured Debt in
any computation under this Section 10.8, Debt secured by: 
  
 (1) Mortgages on property of, or on any shares of stock or Debt of, any corporation existing at the time such corporation becomes a Domestic Subsidiary; 
  
 (2) Mortgages in favor of the Company or any Domestic Subsidiary; 
  
 (3) Mortgages on property of the Company or a Domestic
Subsidiary in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country, or any political
subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute; 
  
 (4) Mortgages on property, shares of stock or Debt existing at the time of acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the purchase price or construction or improvement cost thereof or to secure any debt incurred prior to, at the time of, or within 120 days after, the acquisition of such property or
shares or Debt or the completion of any such construction or improvement for the purpose of financing all or any part of the purchase price or construction or improvement cost thereof; 
  
 (5) Mortgages existing on the first date on which a Security is authenticated by the Trustee hereunder;

  
 (6) Mortgages incurred in connection with
pollution control, industrial revenue or similar financing; and 
  
 (7) Any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Debt secured by any Mortgage referred to in the foregoing clauses (1) through (6),
inclusive; provided, however, that (i) such extension, renewal or replacement Mortgage shall be limited to all or a part of the same property, shares of stock or Debt that secured the Mortgage extended, renewed or replaced (plus improvements on
such property) and (ii) the Debt secured by such Mortgage at such time is not increased. 
  

 46 

	Section 10.9	Limitation on Sales and Leasebacks. 

  
 The Company will not itself, and it will not permit any Domestic Subsidiary to, enter into any arrangement with any bank, insurance company or other
lender or investor (not including the Company or any Subsidiary) or to which any such lender or investor is a party, providing for the leasing by the Company or any Domestic Subsidiary for a period, including renewals, in excess of three years of
any Principal Domestic Property which has been or is to be sold or transferred, more than 120 days after the acquisition thereof or the completion of construction and commencement of full operation thereof, by the Company or any Domestic Subsidiary
to such lender or investor or to any person to whom funds have been or are to be advanced by such lender or investor on the security of such Principal Domestic Property (herein referred to as a “sale and leaseback transaction”) unless
either: 
  
 (1) the Company or such Domestic
Subsidiary could create Debt secured by a Mortgage pursuant to Section 10.8 on the Principal Domestic Property to be leased back in an amount equal to the Attributable Debt with respect to such sale and leaseback transaction without equally and
ratably securing Outstanding Securities, or 
  
 (2) the Company, within 120 days after the sale or transfer shall have been made by the Company or by any such Domestic Subsidiary, applies an amount equal to the greater of (i) the net proceeds of the sale of the Principal Domestic
Property sold and leased back pursuant to such arrangement or (ii) the fair market value of the Principal Domestic Property so sold and leased back at the time of entering into such arrangements (as determined by any two of the following: the
Chairman of the Board of the Company, its President, its Chief Executive Officer, an Executive Vice President, a Senior Vice President or a Vice President, and the Chief Financial Officer, the Treasurer or an Assistant Treasurer) to the retirement
of Funded Debt; provided, however, that the amount to be applied to the retirement of Funded Debt shall be reduced by (a) the principal amount of any Securities delivered within 120 days after such sale to the Trustee for retirement and
cancellation, and (b) the principal amount of such Funded Debt, other than Securities, voluntarily retired by the Company within 120 days after such sale. Notwithstanding the foregoing, no retirement referred to in this clause (2) may be
effected by payment at maturity or pursuant to any mandatory sinking fund payment or any mandatory prepayment provision. 
  

	Section 10.10	Waiver of Certain Covenants. 

  
 The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 10.8 and 10.9, with respect to the
Securities of any series if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. 
  

 47 

 ARTICLE XI 
  
 REDEMPTION OF SECURITIES 
  

	Section 11.1	Applicability of Article. 

  
 Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 3.1 for Securities of any series) in accordance with this Article XI. 
  

	Section 11.2	Election to Redeem; Notice to Trustee. 

  
 The election of the Company to redeem any Securities shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of
less than all the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the
principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers’ Certificate evidencing compliance with such restriction. 
  

	Section 11.3	Selection by Trustee of Securities to Be Redeemed. 

  
 If less than all the Securities of any series are to be redeemed (unless all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of
Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. If less than all of the Securities of such series and of a specified tenor are to be redeemed, the particular Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence.

  
 The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. 
  
 For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. 
  

 48 

	Section 11.4	Notice of Redemption. 

  
 Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the Security Register. 
  
 All notices of redemption shall state: 
  
 (1) the Redemption Date, 
  
 (2) the Redemption Price, 
  
 (3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption of any Securities, the principal amounts) of the particular Securities to be
redeemed, 
  
 (4) that on the Redemption Date the
Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date, 
  
 (5) the place or places where such Securities are to be surrendered for payment of the Redemption Price, and

  
 (6) that the redemption is for a sinking
fund, if such is the case. 
  
 Notice of redemption of Securities
to be redeemed at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company. 
  

	Section 11.5	Deposit of Redemption Price. 

  
 Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be
redeemed on that date. 
  

	Section 11.6	Securities Payable on Redemption Date. 

  
 Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by
Section 3.1, installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section 3.7. 
  

 49 

 If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the
principal and any premium shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. 
  

	Section 11.7	Securities Redeemed in Part. 

  
 Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and
in exchange for the unredeemed portion of the principal of the Security so surrendered. If a Book-Entry Security is so surrendered, such new Security so issued shall be a new Book-Entry Security. 
  
 ARTICLE XII 
  
 SINKING FUNDS 
  

	Section 12.1	Applicability of Article. 

  
 The provisions of this Article XII shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.1 for Securities of such series. 
  
 The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an “optional sinking fund payment.” If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in
Section 12.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. 
  

	Section 12.2	Satisfaction of Sinking Fund Payments with Securities. 

  
 The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided, however, that such
Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly. 
  

 50 

	Section 12.3	Redemption of Securities for Sinking Fund. 

  
 Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers’
Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to Section 12.2 and will also deliver to the Trustee any Securities to be so delivered. Not less than 45 days before each such sinking fund payment date the Trustee shall
select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in
Section 11.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 11.6 and 11.7. 
  
 ARTICLE XIII 
  
 DEFEASANCE AND COVENANT DEFEASANCE 
  

	Section 13.1	Applicability of Article; Company’s Option to Effect Defeasance or Covenant Defeasance. 

  
 If pursuant to Section 3.1 provision is made for either or both of (a) defeasance of the Securities of a series
under Section 13.2 or (b) covenant defeasance of the Securities of a series under Section 13.3, then the provisions of such Section or Sections, as the case may be, together with the other provisions of this Article XIII, shall be
applicable to the Securities of such series, and the Company may at its option by Board Resolution, at any time, with respect to the Securities of such series, elect to have either Section 13.2 (if applicable) or Section 13.3 (if
applicable) be applied to the Outstanding Securities of such series upon compliance with the conditions set forth below in this Article XIII. 
  

	Section 13.2	Defeasance and Discharge. 

  
 Upon the Company’s exercise of the above option applicable to this Section 13.2, the Company shall be deemed to have been discharged from its
obligations with respect to the Outstanding Securities of such series on and after the date the conditions precedent set forth below are satisfied (hereinafter, “defeasance”). For this purpose, such defeasance means that the Company shall
be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities of such series and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned
(and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged thereunder: (A) the rights of Holders of
Outstanding Securities of such series to receive, solely from the trust fund described in Section 13.4 as more fully set forth in such Section, payments of the principal of (and premium and interest, if any, on) such Securities when such
payments are due, (B) the Company’s obligations with respect to such Securities under Sections 3.4, 3.5, 3.6, 10.2 and 10.3 and such obligations as shall be ancillary thereto, (C) the rights, powers, trusts, duties, immunities and
other provisions in respect of the Trustee hereunder and (D) this Article XIII. Subject to compliance with this Article XIII, the Company may exercise its option under this Section 13.2 notwithstanding the prior exercise of its option
under Section 13.3 with respect to the Securities of such series. 
  

 51 

	Section 13.3	Covenant Defeasance. 

  
 Upon the Company’s exercise of the above option applicable to this Section 13.3, the Company shall be released from its obligations under
Sections 8.1, 10.8 and 10.9 (and any covenant applicable to such Securities that are determined pursuant to Section 3.1 to be subject to this provision) and the occurrence of an event specified in Section 5.1(4) (with respect to any of
Sections 8.1, 10.8 or 10.9) (and any other Event of Default applicable to such Securities that are determined pursuant to Section 3.1 to be subject to this provision) shall not be deemed to be an Event of Default with respect to the Outstanding
Securities of such series on and after the date the conditions set forth below are satisfied (hereinafter, “covenant defeasance”). For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities of such
series, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section or clause whether directly or indirectly by reason of any reference elsewhere herein to any such
Section or clause or by reason of any reference in any such Section or clause to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby. 
  

	Section 13.4	Conditions to Defeasance or Covenant Defeasance. 

  
 The following shall be the conditions precedent to application of either Section 13.2 or Section 13.3 to the Outstanding Securities of such
series: 
  
 (1) The Company shall irrevocably
have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 6.9 who shall agree to comply with the provisions of this Article XIII applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, without reinvestment, in
the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, the principal of (and premium and interest, if any on) the Outstanding Securities of such series on the Maturity of such principal, or premium and interest, if any. Before such a deposit the Company may make arrangements satisfactory
to the Trustee for the redemption of Securities at a future date or dates in accordance with Article XI, which shall be given effect in applying the foregoing. For this purpose, “U.S. Government Obligations” means securities that are
(x) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. 

  

 52 

 
Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depositary receipt. 
  
 (2) No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to the
Securities of such series shall have occurred and be continuing (A) on the date of such deposit or (B) insofar as subsections 5.1(5) and (6) are concerned, at any time during the period ending on the 121st day after the date of such
deposit or, if longer, ending on the day following the expiration of the longest preference period applicable to the Company in respect of such deposit (it being understood that the condition in this condition shall not be deemed satisfied until the
expiration of such period). 
  
 (3) Such
defeasance or covenant defeasance shall not (A) cause the Trustee for the Securities of such series to have a conflicting interest as defined in Section 6.8 or for purposes of the Trust Indenture Act with respect to any securities of the
Company or (B) result in the trust arising from such deposit to constitute, unless it is qualified as, a regulated investment company under the Investment Company Act of 1940, as amended. 
  
 (4) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound. 
  
 (5) In the case of an election under Section 13.2, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (y) since the date of this Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred. 
  
 (6) In the case of an election under Section 13.3, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax
on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred. 
  
 (7) Such defeasance or covenant defeasance shall be effected in compliance with any additional terms, conditions or limitations which may
be imposed on the Company in connection therewith pursuant to Section 3.1. 
  

 53 

 (8) The Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance under Section 13.2 or the covenant defeasance under Section 13.3 (as the case may be) have been complied with. 
  

	Section 13.5	Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions. 

  
 Subject to the provisions of the last paragraph of Section 10.3, all money and U.S. Government Obligations (including
the proceeds thereof) deposited with the Trustee (or other qualifying trustee—collectively, for purposes of this Section 13.5, the “Trustee”) pursuant to Section 13.4 in respect of the Outstanding Securities of such series
shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (but not including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required
by law. 
  
 The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the money or U.S. Government Obligations deposited pursuant to Section 13.4 or the principal and interest received in respect thereof. 
  
 Anything herein to the contrary notwithstanding, the Trustee shall deliver or
pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 13.4 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance. 
  

	Section 13.6	Reinstatement. 

  
 If the Trustee or the Paying Agent is unable to apply any money in accordance with Section 13.2 or 13.3 by reason of any order or judgment or any
court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under the Securities of such series shall be revived and reinstated as though no deposit had occurred pursuant to
this Article XIII until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 13.2 or 13.3; provided, however, that if the Company makes any payment of principal of (and premium, if any) or
interest on any such Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or the Paying Agent. 

 
 This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 
  

 54 

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

			
	 ARGONAUT GROUP, INC.

		
	 By
	 	 
	 Name:
	 	 
	 Title:
	 	 
	
	 _______________________________,

	 as Trustee

		
	 By
	 	 
	 Name:
	 	 
	 Title:
	 	 

			
	STATE OF ILLINOIS	  	)
	 	  	)             ss:
	COUNTY OF LAKE	  	)

  
 On the _____ day of
______________, 20    , before me personally came ________________, to me known, who, being by me duly sworn, did depose and say that he is _______________ of Argonaut Group, Inc., one of the corporations described in and
which executed the foregoing instrument and that he signed his name thereto by authority of the Board of Directors of said corporation. 
  

	
	
	 

  

			
	STATE OF ILLINOIS	  	)
	 	  	)             ss:
	COUNTY OF COOK	  	)

  
 On the ____ day of
___________, 20    , before me personally came _____________________, to me known, who, being by me duly sworn, did depose and say that he is ___________________ of ____________________, one of the corporations described
in and which executed the foregoing instrument and that he signed his name thereto by authority of the Board of Directors of said corporation.

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