DISTRIBUTION AGREEMENT

Exhibit 2.1

 

DISTRIBUTION AGREEMENT

HILLENBRAND INDUSTRIES, INC.

AND

BATESVILLE HOLDINGS, INC.

Dated as of March 14, 2008

 

TABLE OF CONTENTS

		Page
ARTICLE I. DEFINITIONS			1
1.01 General			1
1.02 References to Time			10
ARTICLE II. THE DISTRIBUTION			10
2.01 Distribution			10
2.02 Actions Prior to the Distribution			10
2.03 Conditions to Distribution			11
2.04 Certain Shareholder Matters			11
2.05 Intercompany Accounts			13
2.06 Effective Time			13
ARTICLE III. MUTUAL RELEASES; INDEMNIFICATION			13
3.01 Survival of Agreements			13
3.02 Mutual Release of Pre-Effective Time Claims			13
3.03 Indemnification by SpinCo			15
3.04 Indemnification by RemainCo			16
3.05 Covenant of SpinCo			16
3.06 Covenant of RemainCo			17
3.07 Indemnification Obligations Net of Insurance Proceeds and Other Amounts			17
3.08 Procedures for Indemnification of Third Party Claims			18
3.09 Effect of Negligence			20
3.10 Remedies Cumulative			20
3.11 Survival of Indemnities			20
3.12 Indemnification of Directors and Officers			20
3.13 Mitigation of Damages			20
ARTICLE IV. CERTAIN ADDITIONAL COVENANTS			20
4.01 Further Assurances			21
4.02 Receivables Collection and Other Payments			21
ARTICLE V. ACCESS TO INFORMATION			21
5.01 Provision of Corporate Records			21
5.02 Access to Information			21

TABLE OF CONTENTS
(continued)

		Page
5.03 Litigation Support and Production of Witnesses			22
5.04 Reimbursement			22
5.05 Retention of Records			22
5.06 Confidentiality			23
5.07 Harmonization			23
ARTICLE VI. ARBITRATION; DISPUTE RESOLUTION			23
6.01 Agreement to Arbitrate			23
6.02 Escalation			24
6.03 Demand for Arbitration			24
6.04 Arbitrators			25
6.05 Hearings			26
6.06 Discovery and Certain Other Matters			26
6.07 Certain Additional Matters			27
6.08 Continuity of Service and Performance			27
6.09 Law Governing Arbitration Procedures			28
ARTICLE VII. NO REPRESENTATIONS OR WARRANTIES			28
7.01 No Representations or Warranties			28
ARTICLE VIII. INSURANCE			28
8.01 Insurance Policies and Rights			28
8.02 Administration and Reserves			29
8.03 Allocation of Insurance Proceeds: Cooperation			30
8.04 Reimbursement of Expenses			30
8.05 No Reduction of Coverage			30
8.06 Shared Insurance Policies Other Than Executive Liability Policies			30
8.07 Executive Liability Policies			30
ARTICLE IX. JOINT DEFENSE AGREEMENT			31
9.01 Control of Actions			31
9.02 Privileged Information			31
9.03 Communications			31
9.04 Confidentiality			32

TABLE OF CONTENTS
(continued)

		Page
9.05 Limitations			32
9.06 Continued Effectiveness of Article IX			32
9.07 Diversion of Interests or Disputes			32
9.08 Withdrawal			33
9.09 Waiver of Disqualification of Counsel			33
9.10 Certain Acknowledgements			33
9.11 Irreparable Damage for Breach of Article IX			33
ARTICLE X. MISCELLANEOUS			33
10.01 Complete Agreement			33
10.02 Other Agreements			33
10.03 Expenses			34
10.04 Governing Law			34
10.05 Notices			34
10.06 Amendment and Modification			34
10.07 Successors and Assigns: No Third Party Beneficiaries			34
10.08 Counterparts			35
10.09 Interpretation			35
10.10 Legal Enforceability			35
10.11 Performance Standard			35
10.12 Authority			35
10.13 Joint Authorship			35
10.14 References; Construction			35

DISTRIBUTION AGREEMENT

     THIS DISTRIBUTION AGREEMENT, dated as of March 14, 2008 (this “ Agreement ”), is entered into by and between Hillenbrand Industries, Inc., an Indiana corporation (“ RemainCo ”), and Batesville Holdings, Inc., an Indiana corporation (“ SpinCo ”). Capitalized terms used herein and not other otherwise defined shall have the meanings set forth in Article I.

WITNESSETH:

     WHEREAS, RemainCo currently owns 100 shares of SpinCo’s issued and outstanding Common Stock, without par value (“ SpinCo Common Stock ”), constituting 100% of the outstanding SpinCo Common Stock;

     WHEREAS, the Board of Directors of RemainCo has determined that it is in the best interests of RemainCo to distribute its entire ownership interest in SpinCo through a pro-rata distribution of all of the outstanding shares of SpinCo Common Stock then owned by RemainCo to the holders of RemainCo Common Stock pursuant to the terms and subject to the conditions of this Agreement (the “ Distribution ”);

     WHEREAS, effective promptly following the close of business on the Record Date, the Board of Directors of SpinCo and RemainCo, as the sole shareholder of SpinCo, will approve the split-up of the then outstanding shares of SpinCo Common Stock, and SpinCo will file articles of amendment to its amended and restated articles of incorporation with the Secretary of State of Indiana so that the Distribution Ratio shall be one to one;

     WHEREAS, the shareholders of RemainCo and SpinCo have approved the change of the names of RemainCo and SpinCo to Hill-Rom Holdings, Inc. and Hillenbrand, Inc., respectively, and each of RemainCo and SpinCo will file articles of amendment to its amended and restated articles of incorporation with the Secretary of State of Indiana to effect the foregoing name changes prior to the Effective Time;

     WHEREAS, the Distribution is intended to qualify as a Tax-Free Spin-Off pursuant to Section 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”); and

     WHEREAS, the parties intend in this Agreement, including the Exhibits and Schedules hereto, and the Other Agreements, to set forth the principal arrangements between them regarding the Distribution;

     NOW, THEREFORE, in consideration of the mutual promises, covenants and obligations herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

      1.01 General . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

      AAA: as defined in Section 6.04(a).

      Action : any claim, suit, action, mediation, arbitration, inquiry, investigation or other proceeding of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any mediator, arbitrator or Governmental Authority.

      Advancing Party : as defined in Section 3.12.

      affiliate : with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided, however, that for purposes of this Agreement, no member of either Group and no officer or director of any member of either Group shall be deemed to be an affiliate of any member of the other Group.

      Agreed Termination Event : the first to occur of: (a) the full and complete satisfaction of a trial court judgment in the last pending Action comprising the BSI Litigation or the suspension of the execution of such judgment by the posting of a supersedeas bond; or (b) the settlement or voluntary dismissal of the last pending Action comprising the BSI Litigation as to all members of the RemainCo Group and the SpinCo Group.

      Agreement : as defined in the preamble to this Agreement.

      Applicable Deadline : as defined in Section 6.03(b).

      Applicable Other Agreement : as defined in Section 6.03(b).

      Appropriate Members of the RemainCo Group : as defined in Section 3.04.

      Appropriate Members of the SpinCo Group : as defined in Section 3.03.

      Arbitration Act : the United States Arbitration Act, 9 U.S.C. ss.ss 1-16, as the same may be amended from time to time.

      Arbitration Demand Date : as defined in Section 6.03(a).

      Arbitration Demand Notice : as defined in Section 6.03(a).

      Article IX Third Party Claim : a Third Party Claim in which at least one member of the RemainCo Group and at least one member of the SpinCo Group are codefendants.

      Base Rate : the rate which Citibank, N.A. (or any successor thereto or other major money center commercial bank agreed to by the parties hereto) announces from time to time as its base lending rate, as in effect from time to time.

      best efforts : a Person’s good faith best efforts to achieve a goal as expeditiously as possible, which may require the incurrence of expense or hardship in order to achieve the reasonable expectations of the other party as agreed hereunder.

      BSI Litigation: To the extent not covered by collectible insurance: (a) each Action listed on Schedule 1; (b) each additional Action hereafter asserted prior to the consummation of the Distribution against both a member of the RemainCo Group and a member of the SpinCo Group seeking damages for alleged violations of state and federal antitrust laws based upon the SpinCo Group’s method of distributing caskets exclusively through licensed funeral directors; and (c) any other Action consolidated for purposes of trial with any Action referred to in clause (a) or (b) above.

      Business Day : any day other than a Saturday, a Sunday or a day on which banking institutions located in the State of Indiana are authorized or obligated by law or executive order to close.

      Claims Administration : the processing of claims made under the Insurance Policies, including the reporting of claims to the insurance carrier, management and defense of claims and providing for appropriate releases upon settlement of claims.

      Claims Handling Agreement : any third party administrator or claims handling agreement of any kind or nature to which any member of either Group is directly or indirectly a party, in effect as of the date hereof, related to the handling of Insured SpinCo Claims.

      Code : as defined in the recitals to this Agreement.

      Consolidated EBITDA : for any period, consolidated net income of RemainCo or SpinCo, as the case may be, and its Subsidiaries for such period plus, without duplication and to the extent reflected as a charge in the statement of such consolidated net income for such period, the sum of: (a) income tax expense; (b) interest expense, amortization or write-off of debt discount and hedges and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness; (c) depreciation and amortization expense; (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs; (e) any extraordinary or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of consolidated net income for such period, losses on sales of assets outside the ordinary course of business and one time charges associated with the Distribution); and (f) all non-cash items decreasing consolidated net income for such period, (other than any such non-cash item to the extent that it will result in the making of cash payments in any future period), and minus, to the extent of: (i) any extraordinary or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such consolidated net income for such period and gains on sales of assets outside of the ordinary course of business); and (ii) all non-cash items increasing consolidated net income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments

in any future period). Consolidated EBITDA shall be calculated on a pro forma basis to give effect to any proposed acquisition of a Restricted Acquisition Target by RemainCo or SpinCo, as the case may be, as if such acquisition had been effected on the first day of such period.

      Distribution : as defined in the recitals to this Agreement.

      Distribution Agent : as defined in Section 2.04(a).

      Distribution Date : March 31, 2008, being the date on which the Distribution becomes effective.

      Distribution Ratio : as defined in Section 2.04(b).

      Effective Time : as defined in Section 2.06.

      Employee Matters Agreement : the employee benefits and compensation allocation agreement to be entered into prior to the Effective Time between RemainCo and SpinCo.

      Escalation Notice : as defined in Section 6.02(a).

      Executive Liability Policies : Insurance Policies with coverages relating to directors and officers liability, employment practices liability and fiduciary liability.

      Governmental Authority : any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, authority (including, but not limited to, any central bank or taxing authority) or instrumentality (including, but not limited to, any court, tribunal or grand jury) exercising executive, prosecutorial, legislative, judicial, regulatory or administrative functions of or pertaining to government or any other regulatory, administrative or governmental authority.

      Group : the RemainCo Group or the SpinCo Group, as the context requires.

      Incurrence Ratio : the ratio of Pro Forma Consolidated Total Debt divided by pro forma Consolidated EBITDA, calculated as of the most recent fiscal four quarter period ended prior to a Person entering into an agreement for the contemplated acquisition of a Restricted Acquisition Target.

      Indebtedness : as to any Person at a particular time, without duplication, all of the following, but only to the extent included as indebtedness or liabilities in accordance with generally accepted accounting principles in the United States: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all direct or contingent obligations of such Person arising under unreimbursed payments made under letters of credit (including standby and commercial), bankers’ acceptances and bank guarantees; (c) net obligations of such Person under any hedge contract pertaining to interest rates or pertaining to any currency or commodity; (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable incurred in the ordinary course of business); (e) indebtedness (excluding prepaid interest thereon) secured by a lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in

recourse; (f) all obligations of such Person under capital leases; and (g) all guarantees of such Person in respect of any of the foregoing. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation, limited liability company or other limited liability entity) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The following three clauses shall be applicable when computing the Incurrence Ratio for SpinCo or RemainCo: (i) the amount of any net obligation under any hedge contract on any date shall be deemed to be the hedge termination value thereof as of such date; (ii) the amount of any capital lease as of any date shall be deemed to be the amount of attributable indebtedness in respect thereof as of such date; and (iii) Indebtedness shall not include 75% of the principal amount of any mandatorily convertible unsecured bonds, debentures, preferred stock or similar instruments which are payable in no more than three years (whether by redemption, call option or otherwise) solely in common stock or other common equity interests of such Person.

      Indemnifiable Losses : all Losses which are subject to being indemnified by RemainCo or SpinCo pursuant to Article III.

      Indemnifying Party : as defined in Section 3.07(a).

      Indemnitee : as defined in Section 3.07(a).

      Indemnity Payment : as defined in Section 3.07(a).

      information : all records, books, contracts, instruments, computer data and other data and information of a Person.

      Insurance Administration : with respect to each Insurance Policy, (a) the accounting for retrospectively-rated premiums, defense costs, indemnity payments, deductibles and retentions as appropriate under the terms and conditions of each of the Insurance Policies, (b) the reporting to excess insurance carriers of any losses or claims which may cause the per-occurrence or aggregate limits of any Insurance Policy to be exceeded and (c) the distribution of Insurance Proceeds as contemplated by this Agreement.

      Insurance Company Program Agreement : contracts between RemainCo and insurers, Travelers and Discover Re, that outline the payment and collateral obligations associated with the self-funded retentions in the loss sensitive casualty insurance programs.

      Insurance Policy : insurance policies and insurance contracts of any kind that immediately prior to the Effective Time are or have been owned or maintained by, or provide a benefit in favor of, any member of either Group or any of its predecessors, including, without limitation, workers compensation/employers liability (including self-insured workers compensation in the State of Indiana), commercial general liability (including product liability), auto liability, excess/umbrella liability, property/business interruption, marine cargo, blanket crime/fidelity, aviation including airport liability, international liability and Executive Liability Policies. The term “Insurance Policies” expressly excludes any insurance policies relating to Plans to the extent such insurance policies are addressed under the Employee Matters Agreement, other than the above referenced Executive Liability Policies and workers compensation/employers liability policies (including self-insured workers compensation in the State of Indiana).

      Insurance Proceeds : those monies actually received by or on behalf of an insured from an insurance carrier or paid by an insurance carrier on behalf of the insured.

      Insured Claims : any claim with respect to those Losses that, individually or in the aggregate, are covered within the terms and conditions of any of the Insurance Policies, whether or not subject to deductibles, coinsurance, uncollectibility or retrospectively-rated premium adjustments, but only to the extent that such Losses are within applicable Insurance Policy limits, including aggregates.

      Insured SpinCo Claims : any claim with respect to any Loss, damage or injury that occurred prior to the Effective Time that is against any member of the SpinCo Group or any employee of any member of the SpinCo Group; provided, that in the case of any such claim or any claims identified in (a) through (e) below, such Loss or expense (including costs of defense and reasonable attorneys’ fees) is or may be insured under one or more of the Insurance Policies. Insured SpinCo Claims include, without limitation, (a) claims for property or casualty damage or any other Loss or expense with respect to assets of SpinCo; (b) claims of Loss or expense arising from business interruption of any SpinCo Business; (c) claims against any member of the SpinCo Group whether or not the SpinCo Group has or has assumed liability for such claims under this Agreement or any of the Other Agreements; (d) claims against any member of the RemainCo Group to the extent any member of the SpinCo Group has liability for such claims under this Agreement or any of the Other Agreements; and (e) claims involving or against any director, officer, employee, fiduciary or agent of the SpinCo Group who are entitled or would have been entitled to indemnification by RemainCo had the Distribution not occurred.

      Judgment Sharing Agreement : the Judgment Sharing Agreement dated as of March 14, 2008 among RemainCo, SpinCo and Batesville Casket Company, Inc. relating to the BSI Litigation.

      law : any foreign, federal, state or local statute, ordinance, regulation, code, license, permit, authorization, approval, consent, common law, legal doctrine, order, judgment, decree, injunction or requirement of any Governmental Authority or any order or award of any arbitrator, now or hereafter in effect.

      liabilities : means any and all claims, debts, liabilities, assessments, guarantees, assurances, commitments, obligations, fines, penalties, damages (whether compensatory, punitive, consequential, multiple or other), losses, disgorgements and obligations, of any kind, character or description (whether absolute, contingent, matured, not matured, liquidated, unliquidated, accrued, known, unknown, direct, indirect, derivative or otherwise) whenever arising, including, but not limited to, those arising under or in connection with any law, and those arising under any contract, guarantee, commitment or undertaking, whether sought to be imposed by any Governmental Authority or arbitrator, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise (but excluding, any liabilities for Taxes because the Tax Sharing Agreement will govern those liabilities), and including all costs, expenses and interest relating thereto (including, but not limited to, all expenses of investigation, all attorneys’ fees and all out-of-pocket expenses in connection with any Action or threatened Action).

      Losses : with respect to any Person, all losses, liabilities, damages, claims, demands, judgments or settlements of any nature or kind, known or unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated, including all costs and expenses (legal, accounting or otherwise as such costs are incurred) relating thereto, including punitive damages and criminal fines and penalties, but excluding damages in respect of actual or alleged lost profits, suffered or alleged to be suffered by such Person, regardless of whether any such losses, liabilities, damages, claims, demands, judgments, settlements, costs, expenses, fines and penalties relate to or arise out of such Person’s own alleged or actual negligent, grossly negligent, reckless or intentional misconduct.

      NYSE : the New York Stock Exchange, Inc.

      Other Agreements : the Employee Matters Agreement, the Ownership Agreements, the Shared Services Agreements, the Tax Sharing Agreement, the Transitional Services Agreements, the Judgment Sharing Agreement and any other agreement entered into by members of the RemainCo Group and the SpinCo Group in connection with the Distribution.

      Ownership Agreements : the ownership agreements to be entered into prior to the Effective Time between RemainCo and SpinCo relating to the ownership of the airfield in Batesville, Indiana, the aircraft housed at that facility and the nearby corporate conference facility.

      Person : an individual, a limited or general partnership, a joint venture, a corporation, a trust, a limited liability company, an unincorporated organization, or a Governmental Authority.

      Plan : any Benefit Plan as defined in the Employee Matters Agreement.

      Privileged Joint Defense Material : as defined in Section 9.02.

      Pro Forma Consolidated Total Debt : all Indebtedness of SpinCo or RemainCo, as the case may be, and its Subsidiaries, calculated on a consolidated basis in accordance with generally accepted accounting principles in the United States, plus any Indebtedness proposed to be incurred in connection with the acquisition of a Restricted Acquisition Target.

      Qualified Investment Banker : Citigroup Global Markets Inc. or Goldman, Sachs & Co., including in each case its successors and assigns, or any other investment banking firm of national stature in the United States mutually approved by RemainCo and SpinCo.

      Record Date : the close of business on March 24, 2008, being the date for determining the holders of RemainCo Common Stock entitled to receive shares of SpinCo Common Stock pursuant to the Distribution.

      RemainCo : as defined in the preamble to this Agreement, including its successors and permitted assigns.

      RemainCo Business : all business and operations (including related joint ventures and alliances) of any member of the RemainCo Group at any time after the Distribution.

      RemainCo Common Stock : the common stock, without par value, of RemainCo.

      RemainCo Core Business : the manufacture or sale of non-implantable devices or any other existing business line conducted by Hill-Rom, Inc. and its Subsidiaries immediately prior to the Distribution (including medical technologies and related services for the health care industry, such as, for example, patient support systems, non-invasive therapeutic products for a variety of acute and chronic medical conditions, medical equipment rentals and workflow technology solutions).

      RemainCo Group : RemainCo and the RemainCo Subsidiaries immediately following the consummation of the Distribution.

      RemainCo Group Liabilities : except as otherwise specifically provided in any Other Agreement, all liabilities and obligations, whether arising before, at or after the Effective Time, (a) of any member of the RemainCo Group or (b) arising from the conduct of, in connection with or in any way relating to, in whole or in part, the businesses and operations of the RemainCo Group or the ownership or use of assets or property in connection therewith, including those allocated by Hillenbrand Industries, Inc. to any member of the RemainCo Group on Schedule 2.03(e).

      RemainCo Indemnitees : as defined in Section 3.03.

      RemainCo Minimum Credit Rating : one credit rating level below the initial credit rating assigned by Standard & Poors or Moody’s Investor Services to RemainCo after giving effect to the Distribution.

      RemainCo Subsidiaries : all of the corporations, limited liability companies or other entities listed on Exhibit A as members of the RemainCo Group, and any other Subsidiaries of RemainCo, in each case including their successors and permitted assigns.

      RemainCo Transfer Agent : the transfer agent for the RemainCo Common Stock.

      representative : with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys and representatives.

      Responsible Party : as defined in Section 3.12.

      Restricted Acquisition Target : any Person engaged in the RemainCo Core Business in the case of RemainCo and the SpinCo Core Business in the case of SpinCo.

      Rules : as defined in Section 6.05.

      SEC: the United States Securities and Exchange Commission

      Section 5.05 Information : as defined in Section 5.05.

      Section 5.05 Requesting Party : as defined in Section 5.05.

      Securities Exchange Act : the United States Securities Exchange Act of 1934, as amended.

      Shared Services Agreements : the shared services agreements to be entered into prior to the Effective Time between RemainCo and SpinCo or their respective Subsidiaries providing for the provision of specified services on a long-term basis.

      SpinCo : as defined in the preamble of this Agreement, including its successors and permitted assigns.

      SpinCo Business : all business and operations (including related joint ventures and alliances) of any member of the SpinCo Group at any time after the Distribution.

      SpinCo Common Stock : as defined in the preamble to this Agreement.

      SpinCo Core Business : (a) the manufacture and/or sale of funeral service products, including burial caskets, cremation caskets, containers and urns, selection room display fixturing, and other personalization and memorialization products, including the SpinCo Business conducted immediately following the Distribution, and (b) any other basic manufacturing or distribution business where it is reasonable to assume that the core competencies developed by SpinCo in the manufacture and sale of the products referred to in clause (a) could add enterprise value .

      SpinCo Distribution Documents : as defined in Section 3.03(e).

      SpinCo Group : SpinCo and the SpinCo Subsidiaries immediately following the consummation of the Distribution.

      SpinCo Group Liabilities : except as otherwise specifically provided in any Other Agreement, all liabilities and obligations, whether arising before, at or after the Effective Time, (a) of any member of the SpinCo Group or (b) arising from the conduct of, in connection with or in any way relating to, in whole or in part, the businesses and operations of the SpinCo Group or the ownership or use of assets or property in connection therewith, including those allocated by Hillenbrand Industries, Inc. to any member of the SpinCo Group on Schedule 2.03(e).

      SpinCo Indemnitees : as defined in Section 3.04.

      SpinCo Minimum Credit Rating : one credit rating level below the initial credit rating assigned by Standard & Poors or Moody’s Investor Services to SpinCo after giving effect to the Distribution.

      SpinCo Subsidiaries : all of the corporations, limited liability companies or other entities listed on Exhibit A as members of the SpinCo Group, and any other Subsidiaries of SpinCo, in each case including their successors and permitted assigns.

      SpinCo Transfer Agent : the transfer agent for the SpinCo Common Stock.

      Subsidiary : with respect to any specified Person, any corporation or other legal entity of which such Person or any of its Subsidiaries controls or owns, directly or indirectly, more than 50% of the stock or other equity interest entitled to vote on the election of members to the board of directors or similar governing body, in each case including its successors or assigns; provided,

however, that for purposes of this Agreement, no member of the SpinCo Group shall be deemed to be a Subsidiary of any member of the RemainCo Group.

      Tax : as defined in the Tax Sharing Agreement.

      Tax Sharing Agreement : the tax sharing and indemnification agreement to be entered into prior to the Effective Time between RemainCo and SpinCo.

      Third Party : a Person who is not a party hereto or a wholly-owned Subsidiary thereof.

      Third Party Claim : as defined in Section 3.08(a).

      Transitional Services Agreements : the transitional services agreements to be entered into prior to the Effective Time between RemainCo and SpinCo or their respective Subsidiaries providing for the provision of specified services on a short-term basis.

      1.02 References to Time . All references in this Agreement to times of the day shall be to Batesville, Indiana time, except as otherwise specifically provided herein.

ARTICLE II.

      2.01 Distribution . RemainCo’s Board of Directors today authorized the Distribution payable as promptly as practicable following the Effective Time to shareholders of record of RemainCo on the Record Date. In connection with such authorization, the Board of Directors of RemainCo received a favorable advance letter ruling from the Internal Revenue Service and such opinions and reports as it deemed necessary, appropriate or desirable to conclude that the Distribution may be made under IND. CODE § 23-1-28-1, et seq.

      2.02 Actions Prior to the Distribution . Prior to the Effective Time, the parties will take the actions set forth in this Section 2.02.

          (a) Required Information . SpinCo will prepare and RemainCo will mail, prior to the Distribution Date, to the holders of RemainCo Common Stock, the Information Statement filed as an exhibit to and incorporated by reference into SpinCo’s Registration Statement on Form 10. Each of RemainCo and SpinCo will file with the SEC and secure the effectiveness, if required, of all such documentation that it determines is necessary, appropriate or desirable to effect the Distribution, including, without limitation, a Registration Statement on Form 10 and related Information Statement by SpinCo and a Current Report on Form 8-K by RemainCo.

          (b) Governmental Approval s. RemainCo and/or SpinCo, as appropriate, will take all necessary action to obtain the governmental approvals and material consents that are the subject of Section 2.03(b).

          (c) Other Agreements . The Other Agreements shall be executed and delivered by the parties thereto.

          (d) Shareholder Approval of Name Change . The shareholders of RemainCo shall have approved and not rescinded the change of RemainCo’s name to Hill-Rom Holdings, Inc. effective prior to the Effective Time.

      2.03 Conditions to Distribution . The consummation of the Distribution will be subject to the satisfaction, or waiver by RemainCo in its sole and absolute discretion, of the conditions set forth in this Section 2.03; any determination by RemainCo regarding the satisfaction or waiver of any of such conditions will be conclusive:

          (a) Section 2.02 Matters . Consummation of the actions set forth in Section 2.02.

          (b) Approvals and Consents . The receipt of any governmental approvals and material consents determined by RemainCo to be necessary to consummate the Distribution, which approvals and consents will be in full force and effect.

          (c) No Injunction . No order, injunction, decree or regulation issued by any Government Authority or other legal restraint or prohibition preventing the consummation of the Distribution will be in effect and no other event outside the control of RemainCo will have occurred or failed to occur that prevents the consummation of the Distribution.

          (d) Listing Approval . The SpinCo Common Stock to be distributed in the Distribution will have been accepted for listing on the NYSE, subject to official notice of issuance.

          (e) Rearrangement of Assets, Indebtedness and Employees . The rearrangement of assets, indebtedness and employees between the RemainCo Group and the SpinCo Group referred to on Schedule 2.03(e) shall have been completed.

          (f) Change in Circumstances . No determination will have been made by RemainCo’s Board of Directors, in its sole discretion, that the Distribution is no longer in the best interest of RemainCo or its shareholders or that market conditions or other circumstances are such that it is no longer advisable to separate the RemainCo Business and the SpinCo Business.

          (g) Effect of Delayed Distribution. In the event the Distribution Date is for any reason postponed more than 120 days after the date hereof, RemainCo’s Board of Directors shall have redetermined, as of such postponed Distribution Date, that the Distribution satisfies the requirements of the Indiana Business Corporation Law governing distributions.

      2.04 Certain Shareholder Matters .

          (a) Arrangements with Distribution Agent. Subject to Section 2.03, as promptly as practicable following the Effective Time RemainCo will deliver to the RemainCo Transfer Agent, or other agent selected by it, as settlement and distribution agent for the benefit of holders of record of RemainCo Common Stock on the Record Date (the “ Distribution Agent ”), one or more stock certificates, endorsed by RemainCo in blank, representing all of the outstanding shares of SpinCo Common Stock then owned by RemainCo, and RemainCo will instruct the RemainCo

Transfer Agent to deliver to the Distribution Agent true, correct and complete copies of the stock and transfer records reflecting the holders of RemainCo Common Stock entitled to receive shares of SpinCo Common Stock in connection with the Distribution. RemainCo will cause the Distribution Agent to distribute as soon as reasonably practicable after the Effective Time, in settlement of the transfer of the securities associated with the Distribution, the appropriate number of shares of SpinCo Common Stock to each such holder or designated transferee(s) of such holder and to credit the appropriate number of such shares to book entry accounts for each such holder or designated transferee. For shareholders who hold RemainCo Common Stock through a broker or other nominee, their shares of SpinCo Common Stock will be credited to their respective accounts by such broker or nominee. RemainCo will cooperate, and will instruct the Distribution Agent to cooperate, with SpinCo and the SpinCo Transfer Agent, and SpinCo will cooperate, and will instruct the SpinCo Transfer Agent to cooperate, with RemainCo and the Distribution Agent, in connection with all aspects of the Distribution and all other matters relating to the delivery of the shares of SpinCo Common Stock to be distributed to the holders of RemainCo Common Stock in connection with the Distribution.

          (b) Distribution Ratio . Subject to Section 2.03, each holder of RemainCo Common Stock on the Record Date (or such holder’s designated transferee(s)) will be entitled to receive in the Distribution one share of SpinCo Common Stock for each share of RemainCo Common Stock held by such holder on the Record Date (the “ Distribution Ratio ”).

          (c) No Fractional Shares . Fractional shares of SpinCo Common Stock will not be issued as part of the Distribution nor will any fractional shares of SpinCo Common Stock be credited to book entry accounts. Instead, the Distribution Agent will, as soon as practicable after the Effective Time, aggregate into whole shares the fractional shares of SpinCo Common Stock that holders of RemainCo Common Stock would otherwise be entitled to receive. The Distribution Agent will sell these whole shares of SpinCo Common Stock in the open market at prevailing market prices and distribute the aggregate sales proceeds, net of applicable expenses including brokerage fees, ratably to such Persons who would otherwise have been entitled to receive fractional shares. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient. Because the Distribution Ratio is one share of SpinCo Common Stock for each share of RemainCo Common Stock outstanding on the Record Date, RemainCo believes that the payment of cash in lieu of fractional shares will only apply to certain shareholders of RemainCo that hold shares of RemainCo Common Stock through the BYDS By Direct Stock Program maintained by the RemainCo Transfer Agent.

          (d) Deemed Owner of SpinCo Common Stock . Until such SpinCo Common Stock is duly transferred in accordance with applicable law, SpinCo will regard the Persons entitled to receive such SpinCo Common Stock as record holders of SpinCo Common Stock in accordance with the terms of the Distribution without requiring any action on the part of such Persons. SpinCo agrees that, subject to any transfers of such stock, (i) each such holder will be entitled to receive all dividends payable on, and exercise voting rights and all other rights and privileges with respect to, the shares of SpinCo Common Stock then held by such holder, and (ii) each such holder will be entitled, without any action on the part of such holder, to receive a book entry credit to such holder’s account for the shares of SpinCo Common Stock then held by such holder.

      2.05 Intercompany Accounts . Except as provided in Schedule 2.05, all intercompany loans or advances between any member of the RemainCo Group and any member of the SpinCo Group, and all other intercompany balances between such Group members shall be paid by the obligor to the obligee within 30 days after the Distribution Date.

      2.06 Effective Time . The Distribution shall be effective as of 11:59 p.m. on the Distribution Date (the “ Effective Time ”).

ARTICLE III.

MUTUAL RELEASES; INDEMNIFICATION

      3.01 Survival of Agreements . All covenants and agreements of the parties hereto contained in this Agreement and all covenants and agreements of the parties hereto and their respective Subsidiaries contained in the Other Agreements shall survive the Distribution Date in accordance with their respective terms and shall not be merged into any deeds or other transfer or closing instruments or documents.

      3.02 Mutual Release of Pre-Effective Time Claims .

          (a) SpinCo Release . Except as expressly provided in, arising pursuant to or in connection with this Agreement, the Other Agreements or as set forth in Schedule 3.02(a), effective as of the Effective Date, SpinCo does hereby, for itself and each other member of the SpinCo Group and their respective successors and assigns, remise, release and forever discharge RemainCo, each member of the RemainCo Group and their respective successors and assigns, from any and all liabilities whatsoever to SpinCo and each other member of the SpinCo Group, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed before the Effective Time, including in connection with the transactions contemplated herein and all other activities to implement the Distribution.

          (b) RemainCo Release . Except as expressly provided in, arising pursuant to or in connection with this Agreement, the Other Agreements or as set forth in Schedule 3.02(b), effective as of the Effective Time, RemainCo does hereby, for itself and each other member of the RemainCo Group and their respective successors and assigns, remise, release and forever discharge SpinCo, each member of the SpinCo Group and their respective successors and assigns, from any and all liabilities whatsoever to RemainCo and each other member of the RemainCo Group, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed before the Effective Time, including in connection with the transactions contemplated herein and all other activities to implement the Distribution.

          (c) Surviving Liabilities . Nothing contained in Section 3.02(a) or Section 3.02(b) shall impair any right of any Person to enforce this Agreement, any Other Agreement, any claim to the extent covered by insurance or any other agreements, arrangements, commitments or understandings that are specified in, or are contemplated to continue pursuant to, this Agreement or any Other Agreement. Furthermore, nothing contained in Section 3.02(a) or Section 3.02(b) shall release any Person from:

          (i) any liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other liability of any member of any Group under, this Agreement or any Other Agreement;

          (ii) any liability for unpaid amounts for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of any other Group within 180 days prior to the Distribution Date;

          (iii) any liability for unpaid amounts for products or services or refunds owing on products or services for work done by a member of one Group at the request or on behalf of a member of another Group within 180 days prior to the Distribution Date;

          (iv) any liability that the parties may have with respect to indemnification or contribution pursuant to this Agreement or any Other Agreement, which liability shall be governed by the provisions of this Article III and, if applicable, the appropriate provisions of such Other Agreement; or

          (v) any liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 3.02; provided that the parties agree not to bring suit, seek to collect any amounts from or file any liens or encumbrances against any Person, or permit any member of their Group to bring suit, seek to collect any amounts from or file any liens or encumbrances against any Person, with respect to any liability to the extent that such Person would be released with respect to such liability by this Section 3.02 but for the provisions of this clause (v).

          (d) Agreement to Make No Claims . Except as provided in this Article III, SpinCo shall not make, and shall not permit any member of the SpinCo Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against RemainCo or any member of the RemainCo Group, or any other Person released pursuant to Section 3.02(a), with respect to any liabilities released pursuant to Section 3.02(a). Except as provided in this Article III, RemainCo shall not make, and shall not permit any member of the RemainCo Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against SpinCo or any member of the SpinCo Group, or any other Person released pursuant to Section 3.02(b), with respect to any liabilities released pursuant to Section 3.02(b).

          (e) Further Assurances . Except as expressly set forth in Section 3.02(c), it is the intent of each of RemainCo and SpinCo by virtue of the provisions of this Section 3.02 to provide for a full and complete release and discharge of all liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed before the Effective Time, between or among SpinCo or any member of the SpinCo Group, on the one hand, and RemainCo or any member of the RemainCo Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members before the Effective Time). At any time, at the request of any other party, each party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.

      3.03 Indemnification by SpinCo . Excluding all Losses arising with respect to the BSI Litigation and except as otherwise provided in this Article III or in the Other Agreements, SpinCo and the Appropriate Members of the SpinCo Group (as defined below) shall indemnify, defend and hold harmless RemainCo, each member of the RemainCo Group, their respective successors and assigns and the officers and directors of each member of the RemainCo Group (collectively, the “ RemainCo Indemnitees ”), from and against any and all Losses of the

RemainCo Indemnitees relating to, arising out of or resulting from any of the following (without duplication):

          (a) SpinCo Group Liabilities . Any SpinCo Group Liability, including the failure of SpinCo or any other member of the SpinCo Group or any other Person to pay, perform or otherwise promptly discharge any SpinCo Group Liabilities in accordance with their respective terms, whether prior to or after the Effective Time;

          (b) SpinCo Business . The SpinCo Business;

          (c) Breaches . Any breach by SpinCo or any member of the SpinCo Group of this Agreement or any of the Other Agreements;

          (d) Actions Other Than BSI Litigation . Any Action (other than the BSI Litigation) to which SpinCo or the SpinCo Subsidiaries are or become parties that relate to liabilities and obligations of the sort referred to in clause (ii) of the definition of SpinCo Group Liabilities, including any Action in which any member of the RemainCo Group is a named codefendant; and

          (e) Inaccurate Statements . Any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, with respect to all information (i) contained in SpinCo’s Registration Statement on Form 10, the related Information St