PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT Prepared by Calderwood & Harkness LLP Matter No. 1006-00008 Draft Date: May 19, 2025
ASSET PURCHASE AGREEMENT
by and among
CRESTLINE PACKAGING SOLUTIONS LLC,
as Buyer,
LAKEWOOD REGIONAL HEALTH PARTNERS, LLC,
as the Company,
DR. RAYMOND ALCOTT and DR. NADIA PETROSIAN,
as the Members (and, together with the Company, the "Sellers"),
and
CPS HOLDINGS, INC.,
solely for purposes of Sections 6.5 and 12.15
Dated as of [●], 2025
DRAFT — PRIVILEGED & CONFIDENTIAL Attorney Work Product Prepared by Calderwood & Harkness LLP 425 Lexington Avenue, 31st Floor, New York, NY 10017 Matter No. 1006-00008 Draft Date: May 19, 2025 Initial Buyer's Draft — Circulated May 19, 2025
PREAMBLE
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of [●], 2025 (the "Effective Date"), by and among:
(a) CRESTLINE PACKAGING SOLUTIONS LLC, a Delaware limited liability company, with its principal offices at 8400 Scioto Darby Road, Suite 300, Columbus, OH 43228 (the "Buyer");
(b) LAKEWOOD REGIONAL HEALTH PARTNERS, LLC, a New York limited liability company, with its principal offices at 450 East Ridge Road, Rochester, NY 14621 (the "Company");
(c) DR. RAYMOND ALCOTT, an individual residing at 14 Tobey Trail, Pittsford, NY 14534, holding a sixty percent (60%) membership interest in the Company, and DR. NADIA PETROSIAN, an individual residing at 2801 Elmwood Avenue, Brighton, NY 14618, holding a forty percent (40%) membership interest in the Company (each, a "Member" and, collectively, the "Members," and, together with the Company, the "Sellers"); and
(d) CPS HOLDINGS, INC., a Delaware corporation, solely for purposes of Sections 6.5 and 12.15 of this Agreement ("CPS Holdings" or the "Parent Guarantor").
The Buyer, the Company, the Members, and, solely for purposes of Sections 6.5 and 12.15, CPS Holdings, are each sometimes referred to herein individually as a "Party" and collectively as the "Parties." The anticipated execution date of this Agreement is June 16, 2025.
RECITALS
A. The Company is engaged in the business of owning and operating multi-specialty outpatient medical clinics and diagnostic centers across eleven (11) locations in the States of New York and Pennsylvania (the "Business"), providing a broad range of primary care, specialty medical, and diagnostic imaging services to patients in the communities served by such facilities.
B. Dr. Raymond Alcott and Dr. Nadia Petrosian are the sole members of the Company, holding sixty percent (60%) and forty percent (40%), respectively, of the outstanding membership interests in the Company, and together they exercise full operational and managerial control over the Business.
C. The Buyer desires to purchase from the Company, and the Company desires to sell to the Buyer, substantially all of the assets used or held for use in the Business, and the Buyer desires to assume certain specified liabilities of the Company, all upon the terms and subject to the conditions set forth herein.
D. The Company was formed in 2014 under the laws of the State of New York and holds New York State Department of Health Article 28 Operating Certificates for eight (8) locations in New York (Certificate Nos. D&TC-4821 through D&TC-4828) and Pennsylvania Department of Health Facility Licenses for three (3) locations in Pennsylvania (License Nos. OPC-20140892 through OPC-20140894).
E. The Company holds Centers for Medicare & Medicaid Services Certification Numbers 33-7021 through 33-7028 for its eight New York clinic locations and 39-6011 through 39-6013 for its three Pennsylvania clinic locations, enabling the Company to participate in and bill under the Medicare and Medicaid programs and other Government Healthcare Programs.
F. The Buyer is an indirect wholly-owned subsidiary of CPS Holdings, Inc., a Delaware corporation, which is a portfolio company of Pinnacle River Capital Partners, LP, a Delaware limited partnership.
G. Contemporaneously with the execution hereof, the Buyer, CPS Holdings, and certain of their Affiliates are entering into an amendment to that certain Credit Agreement dated September 17, 2021 (as amended, restated, supplemented, or otherwise modified from time to time), by and among CPS Holdings, Crestline, Ironclad National Bank, as Administrative Agent, and the lenders party thereto, to provide for an eighty-four million dollar ($84,000,000) incremental term loan facility to fund a portion of the Purchase Price contemplated hereby.
H. As a condition and inducement to the Buyer's willingness to enter into this Agreement, concurrently with the Closing, each of Dr. Alcott and Dr. Petrosian will enter into consulting agreements and restrictive covenant agreements with the Buyer on the terms set forth herein, to ensure the continuity and preservation of the goodwill, patient relationships, referral source relationships, and operational know-how of the Business during the transition period following the Closing.
I. The Parties intend that the transactions contemplated hereby be treated as a purchase of assets for United States federal and applicable state income tax purposes, and the Parties intend to allocate the Purchase Price among the Acquired Assets in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Accounting Firm" means an independent nationally-recognized accounting firm mutually agreed upon by the Buyer and the Sellers' Representative; provided that Hargrove & Whitaker LLP shall be excluded from serving as the Accounting Firm given its role as the Buyer's tax advisor, and any firm that has provided audit or material tax advisory services to either Party during the twenty-four (24) months preceding the date of engagement shall similarly be disqualified.
"Acquired Assets" has the meaning set forth in Section 2.1.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. Without limiting the generality of the foregoing, Pinnacle River Capital Partners, LP and each of its portfolio companies (including CPS Holdings and the Buyer) shall be deemed Affiliates of the Buyer for all purposes of this Agreement.
"Agreement" means this Asset Purchase Agreement, including all Exhibits and Schedules attached hereto, as the same may be amended, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Allocation" has the meaning set forth in Section 3.4.
"Ancillary Agreements" means the Escrow Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Consulting Agreements, the Non-Competition Agreements, the deeds for the Owned Real Property, the FIRPTA Certificates, and each other agreement, instrument, or document executed and delivered in connection with the Closing.
"Assumed Contracts" means all contracts, agreements, leases, licenses, and instruments included within the Acquired Assets that are to be assigned to and assumed by the Buyer at the Closing, including the Real Property Leases, the Imaging Equipment Leases, the Clearpath License, the Payor Contracts, and all other Material Contracts (other than those that are Excluded Assets).
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Balance Sheet Date" means March 31, 2025.
"Bellweather" means Bellweather Partners LLP, the investment banking firm retained by the Sellers in connection with the transactions contemplated hereby.
"Bill of Sale" means the bill of sale in substantially the form attached hereto as Exhibit B-1.
"Business" means the business of owning and operating multi-specialty outpatient medical clinics, diagnostic centers, and related ancillary healthcare services, as currently conducted by the Company at the Clinic Locations, including all primary care, specialty medical, diagnostic imaging, and laboratory referral services offered in connection therewith.
"Business Day" means any day other than a Saturday, a Sunday, or a day on which commercial banking institutions in New York, New York or Columbus, Ohio are authorized or required by applicable Law to close.
"Buyer Fundamental Representations" means the representations and warranties of the Buyer set forth in Section 6.1 (Organization and Good Standing), Section 6.2 (Authorization; Enforceability), and Section 6.5 (Financing).
"Buyer Indemnified Parties" has the meaning set forth in Section 9.2.
"Cap" means thirty-five million dollars ($35,000,000), representing twenty-five percent (25%) of the Purchase Price.
"Clearpath License" means that certain Enterprise EHR License Agreement No. CP-ENT-2022-0487, dated as of January 15, 2022, between the Company and Clearpath Health Systems, Inc., as amended from time to time, pursuant to which the Company licenses and utilizes Clearpath's electronic health record platform across all Clinic Locations.
"Clinic Locations" means the eleven (11) clinic and diagnostic center locations listed on Schedule 1.1(a), comprising eight (8) locations in the State of New York (Rochester Main, Brighton, Henrietta, Syracuse, Utica, Binghamtonhamton, Ithaca, and Albany) and three (3) locations in the Commonwealth of Pennsylvania (Scranton, Wilkes-Barre, and Towanda).
"Closing" has the meaning set forth in Section 4.1.
"Closing Cash Consideration" means one hundred nineteen million dollars ($119,000,000), subject to adjustment as provided in Section 3.1 and Section 3.3 pursuant to the Purchase Price Adjustment.
"Closing Date" has the meaning set forth in Section 4.1.
"CMS" means the Centers for Medicare & Medicaid Services of the United States Department of Health and Human Services, or any successor agency thereto.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations promulgated thereunder.
"Commitment Letters" means, collectively, the Debt Commitment Letter and the Equity Commitment Letter.
"Company Employee" means any individual employed by the Company (whether full-time, part-time, or temporary) as of the date hereof or as of the Closing Date, including approximately four hundred ten (410) full-time equivalent employees, thirty-eight (38) physicians, and twenty-four (24) nurse practitioners and physician assistants.
"Company intellectual Property" has the meaning set forth in Section 5.13.
"Competing Transaction" means any proposal, offer, or indication of interest from any Person (other than the Buyer and its Affiliates) relating to (a) any merger, consolidation, business combination, recapitalization, or similar transaction involving the Company, (b) any sale, lease, exchange, transfer, or other disposition of all or substantially all of the assets of the Company or the Business, (c) any sale or other disposition of membership interests in the Company, or (d) any other transaction that would be inconsistent with or impede the consummation of the transactions contemplated by this Agreement.
"Consulting Agreements" means the consulting agreements to be entered into at the Closing between the Buyer and each of Dr. Alcott and Dr. Petrosian, substantially in the forms attached hereto as Exhibit D-1 and Exhibit D-2, respectively.
"Covered Contract" means any Material Contract, Real Property Lease, Governmental Authorization, or Payor Contract.
"D&O Tail Policy" has the meaning set forth in Section 7.7(b).
"De Minimis Threshold" means seventy-five thousand dollars ($75,000) per individual claim (or series of related claims arising out of the same or substantially similar facts, circumstances, or conditions).
"Debt Commitment Letter" has the meaning set forth in Section 6.5(a).
"Debt Financing" means the financing contemplated by the Debt Commitment Letter.
"Employee Benefit Plan" means each "employee benefit plan" (as defined in Section 3(3) of ERISA), and each other bonus, incentive compensation, deferred compensation, profit-sharing, pension, retirement, savings, stock option, stock purchase, phantom equity, severance, employment, change-in-control, retention, fringe benefit, paid time off, vacation, sick leave, health, medical, dental, vision, life insurance, disability, workers' compensation, supplemental unemployment, and other employee benefit plan, program, policy, agreement, or arrangement maintained, sponsored, or contributed to by the Company for the benefit of any Company Employee, or with respect to which the Company has any liability or obligation.
"Environmental Laws" means all federal, state, local, and foreign Laws relating to the protection of the environment or human health and safety (as related to exposure to Hazardous Materials), including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §9601 et seq.) ("CERCLA"), the Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.) ("RCRA"), the Clean Water Act (33 U.S.C. §1251 et seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Toxic Substances Control Act (15 U.S.C. §2601 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. §11001 et seq.), and all applicable New York and Pennsylvania state environmental protection statutes, ordinances, and regulations.
"Equity Commitment Letter" has the meaning set forth in Section 6.5(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.
"Escrow Agent" means Apex Title & Escrow Services, LLC, a New York limited liability company.
"Escrow Agreement" means the escrow agreement to be entered into at the Closing among the Buyer, the Sellers' Representative, and the Escrow Agent, substantially in the form attached hereto as Exhibit A.
"Estimated Closing Statement" has the meaning set forth in Section 3.2(a).
"Estimated Working Capital Adjustment" has the meaning set forth in Section 3.2(c).
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"Final Closing Statement" has the meaning set forth in Section 3.3(a).
"Financial Statements" means the audited financial statements of the Company for the fiscal years ended December 31, 2022, December 31, 2023, and December 31, 2024, together with the Interim Financial Statements, each as set forth on Schedule 5.5.
"FIRPTA Certificate" means a certification of non-foreign status in the form attached hereto as Exhibit F, in compliance with Section 1445 of the Code and Treasury Regulations Section 1.1445-2(b).
"Fraud" means common law fraud under the laws of the State of New York, requiring (a) a false representation of a material fact, (b) knowledge or belief by the maker that the representation is false, (c) an intention to induce reliance, (d) justifiable reliance by the other Party, and (e) resulting damage. For the avoidance of doubt, "Fraud" includes intentional misrepresentation but excludes constructive fraud, equitable fraud, promissory fraud, and negligent misrepresentation.
"Fundamental Representations" means (a) with respect to the Company, the representations and warranties set forth in Section 5.1 (Organization and Good Standing), Section 5.2 (Authorization; Enforceability), Section 5.3 (Title to Acquired Assets), Section 5.4 (No Conflicts; Required Consents), Section 5.18 (Brokers and Finders), and Section 5.22 (No Other Representations or Warranties), and (b) with respect to the Members, the representations and warranties set forth in Section 5A.1 (Authority; Enforceability), Section 5A.2 (Ownership of Membership Interests), and Section 5A.4 (Brokers).
"GAAP" means United States generally accepted accounting principles as in effect from time to time, consistently applied throughout the periods indicated.
"Governing Documents" means, with respect to any Person, such Person's certificate or articles of formation, certificate or articles of incorporation, operating agreement, bylaws, limited partnership agreement, or equivalent organizational or governing documents, as applicable and as in effect from time to time.
"Governmental Authorization" means any license, permit, certificate, approval, registration, consent, qualification, or authorization issued, granted, or given by or under the authority of any Governmental Body, including all Healthcare Permits.
"Governmental Body" means any federal, state, local, municipal, or foreign governmental authority, department, commission, board, agency, bureau, court, tribunal, or instrumentality, including CMS, the OIG, the United States Department of Justice, the United States Department of Health and Human Services, state Departments of Health, state Attorneys General, and any other regulatory body with jurisdiction over the Business.
"Government Healthcare Program" has the meaning ascribed to such term in 42 U.S.C. §1320a-7b(f), and includes Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX of the Social Security Act), TRICARE, and any other federal, state, or local healthcare program funded, in whole or in part, by the federal or a state government.
"Hazardous Materials" means any pollutant, contaminant, toxic substance, hazardous substance, hazardous waste, hazardous material, radioactive material, petroleum or petroleum product, asbestos or asbestos-containing material, polychlorinated biphenyls, lead-based paint, or any other material or substance regulated under any Environmental Law.
"Healthcare Laws" has the meaning set forth in Section 5.16(a).
"Healthcare Permits" means all New York Article 28 Operating Certificates, Pennsylvania Facility Licenses, CMS Certifications, CLIA certificates, DEA registrations, state controlled substance licenses, and all other healthcare-related permits, licenses, certifications, approvals, registrations, and authorizations required under applicable Law to own, operate, and conduct the Business as currently conducted.
"HIPAA" means the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH"), and the regulations promulgated thereunder, including the HIPAA Privacy Rule (45 C.F.R. Part 160 and Subparts A and E of Part 164), the HIPAA Security Rule (45 C.F.R. Part 160 and Subparts A and C of Part 164), and the HIPAA Breach Notification Rule (45 C.F.R. Part 160 and Subparts A and D of Part 164).
"Imaging Equipment Leases" means those certain equipment leases with Marlowe Asset Management Medical Equipment Finance, LLC, identified as Lease No. VML-2023-1140 (Rochester Main MRI unit), Lease No. VML-2023-1141 (Syracuse CT unit), and Lease No. VML-2024-0219 (Albany Ultrasound unit), with an aggregate outstanding balance of approximately two million eight hundred seventy thousand dollars ($2,870,000) as of the date hereof.
"Indemnification Escrow Amount" means thirty-five million dollars ($35,000,000), representing twenty-five percent (25%) of the Purchase Price.
"Indemnified Party" has the meaning set forth in Section 9.4.
"Indemnifying Party" has the meaning set forth in Section 9.4.
"Interim Financial Statements" means the unaudited financial statements of the Company consisting of a balance sheet and income statement for the three-month period ended March 31, 2025, and the twelve-month period ended March 31, 2025, prepared in accordance with GAAP (subject to the absence of footnotes and normal year-end adjustments).
"Knowledge of the Company" or "Company's Knowledge" means the actual knowledge, after reasonable inquiry of the individuals who would reasonably be expected to have knowledge of the relevant matter, of Dr. Raymond Alcott, Dr. Nadia Petrosian, and Gretchen Unger (Chief Operating Officer of the Company). For purposes of this definition, "reasonable inquiry" means that each such individual has made inquiry of those employees and agents of the Company reporting directly to such individual who would reasonably be expected to have actual knowledge of the matters in question.
"Law" means any federal, state, local, or foreign statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree, or other requirement enacted, adopted, promulgated, or applied by any Governmental Body.
"Leased Real Property" means the nine (9) leased locations identified on Schedule 5.9(b), together with all buildings, structures, fixtures, and improvements situated thereon, and all easements, rights-of-way, and appurtenances relating thereto.
"Lien" means any mortgage, pledge, hypothecation, security interest, lien (statutory or otherwise), charge, claim, option, right of first refusal, right of first offer, easement, restriction, reservation, encumbrance, or other similar encumbrance or interest.
"Losses" means all losses, damages, liabilities, claims, demands, judgments, settlements, penalties, fines, costs, and expenses (including reasonable and documented attorneys' fees, expert fees, and expenses of investigation, defense, and enforcement), whether or not involving a third-party claim, including consequential damages and diminution-in-value damages (but excluding punitive or exemplary damages except to the extent awarded to a third party in a third-party claim).
"Material Adverse Effect" means any event, change, circumstance, condition, development, occurrence, or effect that, individually or in the aggregate with all other events, changes, circumstances, conditions, developments, occurrences, or effects, is or would reasonably be expected to be materially adverse to (a) the business, financial condition, assets, liabilities, or results of operations of the Business, taken as a whole, or (b) the ability of the Sellers to consummate the transactions contemplated hereby in accordance with the terms of this Agreement; provided, however, that none of the following (either alone or in combination) shall be taken into account in determining whether a Material Adverse Effect has occurred: (i) general economic, financial, or political conditions affecting the United States economy or the global economy; (ii) changes or conditions generally affecting the healthcare industry in the United States; (iii) changes in applicable Law (including Healthcare Laws) or GAAP or authoritative interpretations thereof; (iv) acts of war (whether or not declared), armed hostilities, sabotage, terrorism, or the escalation or worsening of any such acts; (v) earthquakes, hurricanes, floods, pandemics, epidemics, or other natural or man-made disasters; and (vi) changes in financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index); provided, further, that each of clauses (i) through (vi) shall not be taken into account solely to the extent that the effect of such event, change, circumstance, condition, development, occurrence, or effect is disproportionately adverse to the Business relative to other similarly situated businesses operating in the multi-specialty outpatient healthcare industry in the States of New York and Pennsylvania.
"Material Contract" has the meaning set forth in Section 5.11(a).
"Medicare/Medicaid Programs" means the Medicare program (Title XVIII of the Social Security Act), the Medicaid program (Title XIX of the Social Security Act), TRICARE, and any other Government Healthcare Program as defined in 42 U.S.C. §1320a-7b(f).
"Members" means, collectively, Dr. Raymond Alcott and Dr. Nadia Petrosian.
"Mini-Basket" means seven hundred thousand dollars ($700,000), representing zero point five percent (0.5%) of the Purchase Price. The Mini-Basket shall function as a tipping basket — once the aggregate amount of qualifying Losses exceeds the Mini-Basket, the Buyer Indemnified Parties shall be entitled to recover from the first dollar of such Losses.
"Net Working Capital" has the meaning and shall be calculated in accordance with the Working Capital Methodology set forth in Exhibit C.
"Non-Competition Agreements" means the restrictive covenant agreements to be entered into at the Closing by each of Dr. Alcott and Dr. Petrosian with the Buyer, substantially in the forms attached hereto as Exhibit E-1 and Exhibit E-2, respectively.
"NY DOH" means the New York State Department of Health.
"OIG" means the Office of Inspector General of the United States Department of Health and Human Services.
"OIG Inquiry" means that certain informal inquiry from the OIG regarding CPT code 99214 billing patterns at the Company's Syracuse facility, as more fully described on Schedule 5.16(e), including all related correspondence, communications, requests for information, audits, and investigations.
"Order" means any order, writ, judgment, injunction, decree, stipulation, ruling, determination, or award entered, issued, or made by or with any Governmental Body.
"Outside Date" means December 31, 2025, or such later date as may be agreed in writing by the Buyer and the Sellers' Representative.
"Owned Real Property" means the two (2) real property parcels owned in fee simple by the Company, consisting of (a) the Rochester Main facility located at 450 East Ridge Road, Rochester, NY 14621, with an appraised value of six million nine hundred thousand dollars ($6,900,000), and (b) the Syracuse facility located at the address set forth on Schedule 5.9(a), with an appraised value of four million nine hundred thousand dollars ($4,900,000), for an aggregate appraised value of eleven million eight hundred thousand dollars ($11,800,000).
"PA DOH" means the Pennsylvania Department of Health.
"Parent Guarantor" means CPS Holdings, Inc., a Delaware corporation.
"Party" and "Parties" have the meanings set forth in the Preamble.
"Payor Contracts" means all contracts and agreements with third-party payors, managed care organizations, health maintenance organizations, preferred provider organizations, independent practice associations, and Government Healthcare Programs to which the Company is a party or by which the Company is bound, including the contract with Meridian Shield Health Plans, Inc. (which generates annual revenue of approximately seventeen million two hundred forty-eight thousand dollars ($17,248,000), representing approximately twenty-two percent (22%) of TTM Net Revenue).
"Permitted Liens" means (a) statutory Liens for Taxes that are not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) mechanics', carriers', workers', repairers', materialmen's, warehousemen's, and other similar Liens arising or incurred in the ordinary course of business securing obligations that are not past due, (c) zoning, entitlement, building, and other land use regulations imposed by any Governmental Body having jurisdiction over any real property, which are not violated by the current use and operation of such real property, (d) covenants, conditions, restrictions, easements, rights-of-way, encroachments, and other similar encumbrances affecting real property that do not materially impair the use, occupancy, value, or marketability of such real property as currently used in the Business, and (e) Liens that will be released at or prior to the Closing.
"Person" means any individual, corporation, limited liability company, partnership, limited partnership, association, trust, unincorporated organization, joint venture, or other entity or body, or any Governmental Body.
"Pre-Closing Tax Period" means any taxable period ending on or before the Closing Date and the portion of any Straddle Period ending on and including the Closing Date.
"Protected Health Information" or "PHI" has the meaning ascribed to such term in 45 C.F.R. §160.103.
"Purchase Price" means one hundred forty million dollars ($140,000,000), subject to adjustment as set forth in Section 3.3.
"Purchase Price Adjustment Escrow Amount" means three million five hundred thousand dollars ($3,500,000), representing two and one-half percent (2.5%) of the Purchase Price.
"R&W Policy" means that certain representations and warranties insurance policy to be issued by Keystone Mutual Assurance Company in favor of the Buyer, Policy No. [●], with a policy limit of thirty-five million dollars ($35,000,000), a retention of two million one hundred thousand dollars ($2,100,000), and an estimated premium of nine hundred eighty thousand dollars ($980,000).
"Real Property Leases" has the meaning set forth in Section 5.9(b).
"Representatives" means, with respect to any Person, such Person's officers, directors, managers, members, partners, employees, agents, attorneys, accountants, financial advisors, consultants, and other representatives.
"Restricted Period" means the period commencing on the Closing Date and ending on the third (3rd) anniversary of the Closing Date (estimated as August 15, 2028, based on the Estimated Closing Date).
"Restricted Territory" means the geographic area within a seventy-five (75)-mile radius of any Clinic Location.
"Seller Indemnified Parties" has the meaning set forth in Section 9.3.
"Sellers" means, collectively, the Company and the Members.
"Sellers' Representative" means Dr. Raymond Alcott, in his capacity as representative of the Sellers pursuant to Section 9.8.
"Solvent" means, with respect to any Person, that as of the date of determination (a) the sum of such Person's assets, at a fair valuation, exceeds such Person's liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities), (b) such Person has sufficient capital to carry on its business and all businesses in which it is about to engage, and (c) such Person has not incurred, and does not intend to incur or believe that it will incur, debts beyond its ability to pay such debts as they become due.
"Special Indemnity Matters" has the meaning set forth in Section 9.2(d).
"Straddle Period" means any taxable period that begins on or before the Closing Date and ends after the Closing Date.
"Tail Policy" has the meaning set forth in Section 7.7(a).
"Tax" or "Taxes" means all taxes, assessments, charges, duties, fees, levies, imposts, or other governmental charges of any kind, including all federal, state, local, and foreign income, franchise, profits, gross receipts, capital gains, capital stock, transfer, property, sales, use, value-added, occupation, excise, severance, windfall profits, stamp, license, payroll, social security, withholding, employment, unemployment, disability, workers' compensation, environmental, ad valorem, and other taxes, assessments, charges, duties, fees, levies, imposts, or governmental charges of any kind whatsoever, whether computed on a separate or consolidated, unitary, or combined basis or in any other manner, including any interest, penalties, or additions to tax attributable thereto.
"Tax Return" means any return, report, declaration, form, claim for refund, or information return or statement filed or required to be filed with any Governmental Body with respect to Taxes, including any schedule or attachment thereto and any amendment thereof.
"Transaction Expenses" means all fees, costs, and expenses incurred by the Parties in connection with the negotiation, preparation, and consummation of the transactions contemplated by this Agreement, with an estimated aggregate amount for all Parties of ten million four hundred thirty-eight thousand dollars ($10,438,000), allocated among the Parties as provided in Section 12.1.
"Transfer Taxes" has the meaning set forth in Section 10.1.
"Transferred Employee" has the meaning set forth in Section 7.5(a).
"TTM Adjusted EBITDA" means the Company's adjusted earnings before interest, taxes, depreciation, and amortization for the trailing twelve-month period ended March 31, 2025, which is sixteen million one hundred thousand dollars ($16,100,000) as reported in the Interim Financial Statements and the Company's management accounts.
"TTM Net Revenue" means the Company's net revenue for the trailing twelve-month period ended March 31, 2025, which is seventy-eight million four hundred thousand dollars ($78,400,000) as reported in the Interim Financial Statements and the Company's management accounts.
"Working Capital Collar" means plus or minus five hundred thousand dollars (±$500,000) from the Working Capital Target. No adjustment to the Purchase Price shall be made on account of any difference between actual Net Working Capital and the Working Capital Target that falls within the Working Capital Collar.
"Working Capital Methodology" means the methodology for calculating Net Working Capital as set forth on Exhibit C.
"Working Capital Target" means six million two hundred thousand dollars ($6,200,000).
"Working Capital True-Up Deadline" means ninety (90) days after the Closing Date (estimated as November 13, 2025, based on the Estimated Closing Date).
Section 1.2 — Interpretive Provisions
Unless the context of this Agreement otherwise requires, (a) the headings and captions used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement; (b) the words "include," "includes," and "including" shall be deemed to be followed by the words "without limitation"; (c) the word "or" is not exclusive and shall be interpreted in the inclusive sense commonly associated with the term "and/or"; (d) the words "herein," "hereof," "hereby," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision hereof; (e) all references to statutes, regulations, or Laws shall include all amendments thereto and successor statutes, regulations, and Laws and all rules and regulations promulgated thereunder; (f) all references to currency or dollar amounts shall mean the lawful currency of the United States of America; (g) all Schedules and Exhibits attached hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein; (h) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP; (i) the singular shall include the plural and vice versa; (j) the masculine, feminine, and neuter genders shall each include the others; and (k) references to "days" shall mean calendar days unless the term "Business Days" is used.
ARTICLE II — PURCHASE AND SALE OF ASSETS
Section 2.1 — Acquired Assets
At the Closing and upon the terms and subject to the conditions set forth in this Agreement, the Company shall sell, convey, assign, transfer, and deliver to the Buyer, and the Buyer shall purchase, acquire, and accept from the Company, free and clear of all Liens (other than Permitted Liens), all right, title, and interest of the Company in and to all assets, properties, and rights of every kind and nature, whether tangible or intangible, real or personal, owned, leased, licensed, or used or held for use by the Company in connection with the Business (collectively, the "Acquired Assets"), including the following:
(a) Tangible Personal Property. All tangible personal property, including furniture, fixtures, equipment, medical devices and instruments, diagnostic imaging equipment, computers, servers, networking equipment, telecommunications systems, vehicles, office supplies, medical supplies, pharmaceuticals, and other tangible assets located at or used in connection with the Clinic Locations, together with all warranties and service contracts relating thereto;
(b) Owned Real Property. The Owned Real Property, comprising (i) the Rochester Main facility located at 450 East Ridge Road, Rochester, NY 14621 (appraised at six million nine hundred thousand dollars ($6,900,000)), and (ii) the Syracuse facility located at the address set forth on Schedule 5.9(a) (appraised at four million nine hundred thousand dollars ($4,900,000)), together with all buildings, structures, fixtures, improvements, and appurtenances thereon;
(c) Assumed Contracts. All right, title, and interest in and under all Assumed Contracts, including the Material Contracts, Real Property Leases, Imaging Equipment Leases, Clearpath License, Payor Contracts, and all other contracts, agreements, and arrangements to which the Company is a party or by which the Business is bound (other than those that constitute Excluded Assets);
(d) Governmental Authorizations and Healthcare Permits. All Governmental Authorizations and Healthcare Permits, to the extent transferable under applicable Law, including the NY Article 28 Operating Certificates, PA Facility Licenses, CMS Certification Numbers, CLIA certificates, DEA registrations, and state controlled substance licenses;
(e) intellectual Property. All Company intellectual Property, including all trade names, trademarks, service marks, logos, domain names, social media accounts, patient databases, the "Lakewood" trade name and all variations and derivations thereof, and all goodwill associated therewith;
(f) Receivables. All accounts receivable, notes receivable, and other receivables of the Business as of the Closing Date, whether billed or unbilled, including all receivables from Medicare, Medicaid, commercial payors, and patients;
(g) Prepaid Expenses and Deposits. All prepaid expenses, security deposits, advance payments, and similar items relating to the Business;
(h) Books and Records. All books and records, files, patient records and medical charts (subject to applicable Law, including HIPAA), documents, correspondence, data, financial records, operational records, and billing records relating to the Business;
(i) Warranties and Guarantees. All rights under or pursuant to warranties, representations, and guarantees made by suppliers, vendors, manufacturers, and contractors in favor of the Company to the extent relating to the Acquired Assets or the Business;
(j) Insurance Proceeds. All insurance proceeds and rights to insurance proceeds to the extent relating to the Acquired Assets or the Assumed Liabilities;
(k) Communications Assets. All telephone and facsimile numbers, email addresses, websites, uniform resource locators (URLs), social media accounts and pages, and internet listings relating to the Business;
(l) Goodwill. All goodwill of the Business, including going-concern value, patient relationships, referral source relationships, and the assembled workforce;
(m) Claims and Causes of Action. All rights to causes of action, claims, demands, counterclaims, rights of recovery, rights of set-off, and rights of recoupment relating to the Acquired Assets or the Assumed Liabilities, in each case arising from or relating to events occurring after the Closing;
(n) Imaging Equipment Leases. The Imaging Equipment Leases with Marlowe Asset Management Medical Equipment Finance, LLC (Lease No. VML-2023-1140 for the Rochester Main MRI unit, Lease No. VML-2023-1141 for the Syracuse CT unit, and Lease No. VML-2024-0219 for the Albany Ultrasound unit), with an aggregate outstanding balance of approximately two million eight hundred seventy thousand dollars ($2,870,000);
(o) Clearpath EHR License. The Clearpath License (Enterprise EHR License Agreement No. CP-ENT-2022-0487, with an annual license fee of eight hundred forty thousand dollars ($840,000) and a term extending through December 31, 2027); and
(p) Other Assets. All other assets set forth on Schedule 2.1 and all other assets, properties, and rights of every kind and nature owned, leased, licensed, or used by the Company in connection with the Business that are not Excluded Assets.
Section 2.2 — Excluded Assets
Notwithstanding anything to the contrary in Section 2.1, the following assets of the Company shall be excluded from the Acquired Assets and shall be retained by the Company (collectively, the "Excluded Assets"):
(a) The Company's Governing Documents, member records, minute books, membership interest ledgers, corporate seal (if any), and Tax Returns and all records and workpapers relating exclusively thereto;
(b) The membership interests in the Company;
(c) All cash, cash equivalents, checking accounts, savings accounts, money market accounts, certificates of deposit, and other bank or investment accounts of the Company as of the Closing Date, except to the extent any such amounts are included in the calculation of Net Working Capital;
(d) The Company's rights under this Agreement, the Ancillary Agreements, and all other agreements, instruments, and documents executed in connection with the transactions contemplated hereby;
(e) All Tax refunds, Tax deposits, and credits or overpayments of Taxes attributable to Pre-Closing Tax Periods;
(f) The Company's insurance policies, and all rights thereunder (including any refunds or return premiums), other than the Tail Policy and the D&O Tail Policy, which shall be Acquired Assets to the extent relating to post-Closing coverage;
(g) The Company's rights under the engagement letter with Bellweather Partners LLP, dated as of February 3, 2025;
(h) The personal effects, personal property, and personal assets of the Members that are not used or held for use in the Business; and
(i) The assets specifically set forth on Schedule 2.2.
Section 2.3 — Assumed Liabilities
Subject to the terms and conditions of this Agreement, at the Closing, the Buyer shall assume and agree to pay, perform, and discharge when due only the following liabilities and obligations of the Company (collectively, the "Assumed Liabilities"):
(a) Post-Closing Contract Liabilities. All liabilities and obligations arising from and after the Closing Date under the Assumed Contracts (including the Real Property Leases, with aggregate annual base rent of approximately two million seven hundred forty thousand dollars ($2,740,000), the Imaging Equipment Leases, with aggregate outstanding balance of approximately two million eight hundred seventy thousand dollars ($2,870,000), and the Clearpath License, with an annual fee of eight hundred forty thousand dollars ($840,000)), to the extent such liabilities and obligations relate to performance required from and after the Closing Date and do not arise from any breach or default by the Company occurring prior to the Closing;
(b) Accrued PTO. All accrued and unused paid time off ("PTO") of Transferred Employees as of the Closing Date, estimated at one million three hundred forty thousand dollars ($1,340,000), which the Buyer shall honor and make available to such Transferred Employees following the Closing;
(c) Trade Payables. All trade accounts payable and other current payables of the Business to the extent arising in the ordinary course of business consistent with past practice and reflected on the Final Closing Statement as current liabilities included in Net Working Capital;
(d) Post-Closing Employee Liabilities. All liabilities relating to Transferred Employees arising from and after the Closing Date, including wages, salaries, benefits, and payroll taxes accruing from and after the Closing Date;
(e) Post-Closing Payor Liabilities. All liabilities under the Payor Contracts arising from and after the Closing Date with respect to services rendered from and after the Closing Date; and
(f) Scheduled Assumed Liabilities. Those liabilities specifically set forth on Schedule 2.3.
For the avoidance of doubt, the Buyer is not assuming any liability or obligation of the Company or the Members other than the Assumed Liabilities expressly set forth in this Section 2.3.
Section 2.4 — Excluded Liabilities
Notwithstanding anything to the contrary contained in this Agreement, the Buyer shall not assume and shall have no liability or obligation whatsoever with respect to any liabilities or obligations of the Company or the Members other than the Assumed Liabilities (all such non-assumed liabilities and obligations being referred to herein as the "Excluded Liabilities"). Without limiting the generality of the foregoing, the Excluded Liabilities shall include each of the following:
(a) Pre-Closing Tax Liabilities. All liabilities for Taxes of the Company, the Members, or any of their respective Affiliates arising from or relating to Pre-Closing Tax Periods, including all income taxes, employment taxes, and franchise taxes, and all liabilities for Taxes arising from or attributable to the Acquired Assets or the Business for any Pre-Closing Tax Period;
(b) Excluded Asset Liabilities. All liabilities arising from or relating to any Excluded Asset;
(c) Malpractice Claims. All liabilities arising from or relating to professional malpractice claims based on acts or omissions occurring prior to the Closing Date, including any pending or threatened claims, regardless of when such claims are asserted or reduced to judgment;
(d) OIG Inquiry and Government Investigations. All liabilities arising from or relating to the OIG Inquiry (with estimated exposure of three hundred fifty thousand dollars ($350,000) to nine hundred thousand dollars ($900,000)), or any other governmental investigation, audit, or enforcement action relating to the pre-Closing operation of the Business, including any civil monetary penalties, fines, treble damages, repayment obligations, costs of compliance with any corporate integrity agreement, and associated legal fees and expenses;
(e) Pre-Closing Government Healthcare Program Liabilities. All liabilities under the Medicare/Medicaid Programs or any other Government Healthcare Program for services rendered prior to the Closing Date, including overpayment obligations, recoupments, refund demands, penalty assessments, and cost report settlements;
(f) Seller Transaction Expenses. All Transaction Expenses of the Sellers, including the Bellweather success fee of two million eight hundred thousand dollars ($2,800,000), fees and expenses of Whitfield, Ames & Greer LLP, and all other advisor fees and expenses of the Sellers;
(g) Indebtedness. All indebtedness for borrowed money of the Company outstanding as of the Closing Date, including all principal, interest, prepayment penalties, breakage costs, and fees associated therewith;
(h) Non-Transferred Employee Liabilities. All liabilities relating to Company Employees who do not become Transferred Employees, including any obligations under the Worker Adjustment and Retraining Notification Act of 1988, as amended (the "WARN Act"), and any analogous state or local Law, arising from events occurring prior to or in connection with the Closing;
(i) Environmental Liabilities. All liabilities arising from Environmental Laws or Hazardous Materials to the extent arising from or relating to pre-Closing conditions at the Owned Real Property or Leased Real Property or arising from the pre-Closing operation of the Business; and
(j) Other Excluded Liabilities. All other liabilities set forth on Schedule 2.4 and all other liabilities and obligations of the Company or the Members not expressly assumed by the Buyer as Assumed Liabilities.
Section 2.5 — Non-Assignable Contracts and Permits
(a) Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall constitute an assignment or attempted assignment of any Acquired Asset, or any claim, right, or benefit arising thereunder or resulting therefrom, if such assignment or attempted assignment, without the consent, approval, or waiver of a third party (including a Governmental Body), would constitute a breach, violation, or default thereof, or would be ineffective or void under applicable Law.
(b) With respect to any Acquired Asset that requires any consent, approval, authorization, waiver, or novation of a third party (including a Governmental Body) for its valid assignment to the Buyer, the Company and the Buyer shall use commercially reasonable efforts to obtain all such necessary consents, approvals, authorizations, waivers, and novations prior to or promptly following the Closing, including from the NY DOH and PA DOH (applications to be filed by no later than June 26, 2025, being ten (10) Business Days after the anticipated execution date of this Agreement), CMS (for the reassignment or re-enrollment of all eleven CMS Certification Numbers), and all third-party lessors, licensors, and counterparties to the Assumed Contracts.
(c) Pending receipt of any required consent, approval, or authorization, the Parties shall cooperate in good faith to establish lawful and reasonable arrangements (including subcontracting, sublicensing, or sub-leasing arrangements, or arrangements under which the Company would enforce, at the Buyer's expense, for the benefit of the Buyer, any and all rights of the Company against the other party to such Acquired Asset) designed to provide the Buyer with the economic benefits and burdens of any such non-assigned Acquired Asset, including the performance by the Buyer of the obligations of the Company thereunder, to the fullest extent permissible under applicable Law and the terms of such Acquired Asset.
(d) Without limiting the generality of the foregoing, the Parties acknowledge that the following specific regulatory approvals are required in connection with the consummation of the transactions contemplated hereby and shall be diligently pursued by the Parties in accordance with the timeline and procedures set forth in Section 7.3:
(i) NY DOH approval under Public Health Law Article 28 for the transfer or re-issuance of the Article 28 Operating Certificates (D&TC-4821 through D&TC-4828) for the eight New York facilities;
(ii) PA DOH approval for the transfer or re-issuance of the Facility Licenses (OPC-20140892 through OPC-20140894) for the three Pennsylvania facilities; and
(iii) CMS re-enrollment or reassignment for all eleven CMS Certification Numbers (33-7021 through 33-7028 and 39-6011 through 39-6013).
Section 2.6 — Further Assurances
From and after the Closing, each Party shall execute and deliver such additional documents, instruments, conveyances, and assurances, and take such further actions, as may be reasonably necessary or desirable to carry out the provisions of this Agreement and to give effect to the transactions contemplated hereby, including to vest in the Buyer good and valid title to all Acquired Assets free and clear of all Liens (other than Permitted Liens) and to put the Buyer in actual possession and operating control of the Business. Without limiting the generality of the foregoing, the Company and the Members shall cooperate with the Buyer in connection with all post-Closing filings, registrations, and applications with Governmental Bodies relating to the Acquired Assets and the Business.
ARTICLE III — PURCHASE PRICE
Section 3.1 — Purchase Price
The aggregate purchase price for the Acquired Assets shall be one hundred forty million dollars ($140,000,000) (the "Purchase Price"), subject to adjustment as set forth in Section 3.3, payable as follows:
(a) Closing Cash Consideration. At the Closing, the Buyer shall pay to the Company (or, at the Company's direction, to such other accounts as the Company may designate in a written payment direction delivered at least two (2) Business Days prior to the Closing), by wire transfer of immediately available funds, an amount (the "Closing Cash Consideration") equal to:
(i) one hundred forty million dollars ($140,000,000); minus
(ii) the Indemnification Escrow Amount of thirty-five million dollars ($35,000,000); minus
(iii) the Purchase Price Adjustment Escrow Amount of three million five hundred thousand dollars ($3,500,000); plus or minus
(iv) the Estimated Working Capital Adjustment (as defined in Section 3.2(c)),
resulting in a base Closing Cash Consideration of one hundred one million five hundred thousand dollars ($101,500,000), plus or minus the Estimated Working Capital Adjustment.
(b) Indemnification Escrow. At the Closing, the Buyer shall deposit the Indemnification Escrow Amount of thirty-five million dollars ($35,000,000) with the Escrow Agent by wire transfer of immediately available funds, to be held and disbursed in accordance with the terms and conditions of Article IX and the Escrow Agreement.
(c) Purchase Price Adjustment Escrow. At the Closing, the Buyer shall deposit the Purchase Price Adjustment Escrow Amount of three million five hundred thousand dollars ($3,500,000) with the Escrow Agent by wire transfer of immediately available funds, to be held and disbursed in accordance with the terms and conditions of Section 3.3 and the Escrow Agreement.
Section 3.2 — Estimated Closing Statement
(a) No later than three (3) Business Days prior to the Closing Date, the Company shall prepare and deliver to the Buyer a statement (the "Estimated Closing Statement") setting forth the Company's good-faith estimate of the Net Working Capital of the Business as of the close of business on the day immediately preceding the Closing Date (the "Estimated Net Working Capital"), prepared in accordance with the Working Capital Methodology attached hereto as Exhibit C and in a format consistent with the sample calculation included in Exhibit C.
(b) The Buyer shall have the right to review the Estimated Closing Statement and the underlying workpapers and supporting documentation, and to raise objections with respect thereto prior to the Closing; provided, however, that the Closing shall not be delayed or conditioned on account of any unresolved objection by the Buyer to the Estimated Closing Statement, and the Company's good-faith estimate as set forth in the Estimated Closing Statement shall be used for purposes of calculating the Closing Cash Consideration, subject to post-Closing true-up in accordance with Section 3.3.
(c) The "Estimated Working Capital Adjustment" shall be the amount, if any, by which the Estimated Net Working Capital exceeds (expressed as a positive number) or is less than (expressed as a negative number) the Working Capital Target of six million two hundred thousand dollars ($6,200,000); provided, however, that no Estimated Working Capital Adjustment shall be made if the Estimated Net Working Capital falls within the Working Capital Collar (i.e., within plus or minus five hundred thousand dollars ($500,000) of the Working Capital Target), in which case the Estimated Working Capital Adjustment shall be zero.
Section 3.3 — Post-Closing Working Capital Adjustment
(a) Final Closing Statement. Within sixty (60) days after the Closing Date, the Buyer shall prepare and deliver to the Sellers' Representative a statement (the "Final Closing Statement") setting forth the Buyer's good-faith calculation of Net Working Capital as of the close of business on the day immediately preceding the Closing Date, prepared in accordance with the Working Capital Methodology. The Buyer shall provide the Sellers' Representative with reasonable access to the books and records and working papers used in preparing the Final Closing Statement.
(b) Review Period. The Sellers' Representative shall have thirty (30) days following receipt of the Final Closing Statement (the "Review Period") to review the Final Closing Statement and deliver to the Buyer a written notice of disagreement (a "Notice of Disagreement") specifying in reasonable detail each item on the Final Closing Statement as to which the Sellers' Representative disagrees, setting forth the Sellers' Representative's calculation of each such item and the aggregate amount in dispute. If the Sellers' Representative does not deliver a Notice of Disagreement within the Review Period, the Final Closing Statement as prepared by the Buyer shall be deemed final, binding, and conclusive upon the Parties for all purposes of this Agreement.
(c) Dispute Resolution. If a Notice of Disagreement is timely delivered by the Sellers' Representative, the Buyer and the Sellers' Representative shall negotiate in good faith for a period of fifteen (15) days (or such longer period as the Buyer and the Sellers' Representative may mutually agree) to resolve any items in dispute. If the Buyer and the Sellers' Representative are unable to resolve all items in dispute within such fifteen (15)-day period, the unresolved items shall be promptly submitted to the Accounting Firm for final determination. The Accounting Firm shall act as an expert and not as an arbitrator and shall determine only those items remaining in dispute (and in no event shall the Accounting Firm assign a value to any item greater than the highest value or less than the lowest value claimed by either Party for such item). The Accounting Firm's determination shall be final, binding, and non-appealable, absent manifest error. The costs and expenses of the Accounting Firm shall be allocated between the Buyer, on the one hand, and the Sellers, on the other hand, in inverse proportion to the amounts determined in each Party's favor (such that the Party whose position is closer to the Accounting Firm's determination shall bear a lesser proportion of such costs).
(d) True-Up Payment. Within five (5) Business Days following the final determination of Net Working Capital pursuant to this Section 3.3 (whether by expiration of the Review Period without a Notice of Disagreement, by agreement of the Parties, or by determination of the Accounting Firm):
(i) If the final Net Working Capital exceeds the Working Capital Target by more than the Working Capital Collar (i.e., by more than five hundred thousand dollars ($500,000)), the excess amount shall be paid to the Sellers' Representative from the Purchase Price Adjustment Escrow (and, to the extent the Purchase Price Adjustment Escrow is insufficient, by the Buyer by wire transfer of immediately available funds within five (5) Business Days after written demand by the Sellers' Representative);
(ii) If the final Net Working Capital is less than the Working Capital Target by more than the Working Capital Collar (i.e., by more than five hundred thousand dollars ($500,000)), the deficiency amount shall be paid to the Buyer from the Purchase Price Adjustment Escrow (and, to the extent the Purchase Price Adjustment Escrow is insufficient, by the Sellers by wire transfer of immediately available funds within five (5) Business Days after written demand by the Buyer); and
(iii) If the final Net Working Capital is within plus or minus five hundred thousand dollars (±$500,000) of the Working Capital Target, no adjustment shall be made.
(e) Release of Remaining Purchase Price Adjustment Escrow. Promptly following the final determination of Net Working Capital pursuant to this Section 3.3 and the payment of any true-up amount, any remaining amounts in the Purchase Price Adjustment Escrow (after giving effect to any disbursement required under Section 3.3(d)) shall be released by the Escrow Agent to the Sellers' Representative for the account of the Sellers.
Section 3.4 — Allocation of Purchase Price
(a) Within sixty (60) days after the final determination of the Purchase Price (as adjusted pursuant to Section 3.3), the Buyer shall prepare and deliver to the Sellers' Representative a proposed allocation of the Purchase Price (together with any Assumed Liabilities and other amounts treated as additional consideration for Tax purposes) among the Acquired Assets in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the "Allocation").
(b) The Seller