Document:

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                                                                    EXHIBIT 10.1

                               PURCHASE AGREEMENT

                       UAHC HEALTH PLAN OF TENNESSEE, INC.

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                                TABLE OF CONTENTS

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<S>                                                                         <C>
Exhibit A   Definitions
Exhibit B   Notices
Exhibit C   Affiliate Agreements
Exhibit D   Shareholder Agreement

ARTICLE I PURCHASE AND SALE OF SHARES ...................................     1
   1.1  Shares ..........................................................     1
   1.2  Purchase Price ..................................................     2
   1.3  Closing .........................................................     2
   1.4  Transfer of Shares ..............................................     2
   1.5  Deliveries by Buyer at Closing ..................................     2
   1.6  Deliveries by the Company at Closing ............................     3
   1.7  Deliveries by Owner at Closing ..................................     3

ARTICLE II REPRESENTATIONS AND WARRANTIES ...............................     4
   2.1  General Statement ...............................................     4
   2.2  Representations and Warranties of Buyer .........................     4
   2.3  Representations and Warranties of Owner .........................     6
   2.4  Representations and Warranties of the Company and the Owner
        Regarding the Company ...........................................     7
   2.5  Survival of Representations and Warranties ......................    16

ARTICLE III CONDUCT PRIOR TO CLOSING ....................................    17
   3.1  Obligations of the Company ......................................    17
   3.2  Obligations of Owner ............................................    19
   3.3  Joint Obligations ...............................................    19
   3.4  Amended Governing Documents .....................................    20

ARTICLE IV CONDITIONS TO CLOSING ........................................    20
   4.1  Conditions to Buyer's Obligations ...............................    20
   4.2  Conditions to Owner's Obligations ...............................    21
   4.3  Conditions to the Company's Obligations .........................    21

ARTICLE V POST-CLOSING COVENANTS ........................................    22
   5.1  Execution of Documents ..........................................    22
   5.2  Books and Records ...............................................    22
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<S>                                                                         <C>
ARTICLE VI INDEMNIFICATION ..............................................    22
   6.1  Indemnification by Owner ........................................    22
   6.2  Indemnification by Buyer ........................................    23
   6.3  Notice of Claim for Indemnification .............................    23
   6.4  Defense of Undisputed Claims ....................................    23
   6.5  Disputed Claims for Indemnification .............................    24
   6.6  Payment by the Company ..........................................    24
   6.7  Exclusive Remedy ................................................    24

ARTICLE VII TERMINATION .................................................    24
   7.1  Termination of Agreement ........................................    24
   7.2  Effect of Termination ...........................................    25

ARTICLE VIII MISCELLANEOUS ..............................................    25
   8.1  Construction ....................................................    25
   8.2  Press Releases and Public Announcements .........................    25
   8.3  Entire Agreement ................................................    26
   8.4  No Third-Party Beneficiaries ....................................    26
   8.5  Further Assurances ..............................................    26
   8.6  Successors and Assigns ..........................................    26
   8.7  Assignment ......................................................    26
   8.8  Amendment .......................................................    26
   8.9  Notices .........................................................    26
   8.10 Expenses and Attorneys' Fees ....................................    27
   8.11 Waivers .........................................................    27
   8.12 Severability ....................................................    27
   8.13 Binding Arbitration .............................................    27
   8.14 Recitals ........................................................    29
   8.15 Exhibits and Disclosure Schedule ................................    29
   8.16 Disclosure ......................................................    29
   8.17 Counterparts ....................................................    29
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                                LIST OF SCHEDULES

Section 2.4.7       Officers and Managers

Section 2.4.10      Title to Assets

Section 2.4.11(a)   Financial Statements

Section 2.4.11(b)   Unaudited Financial Statements

Section 2.4.11(c)   Reserves

Section 2.4.15(b)   Leases of real property

Section 2.4.16(a)   Intellectual Property

Section 2.4.16(b)   Liens

Section 2.4.16(a)   Claims; Infringements; Copyright registration, Patent and
                    Registered Trademark and application

Section 2.4.17(a)   Undischarged Contracts

Section 2.4.17(d)   Designated Contract

Section 2.4.18      Litigation

Section 2.4.19      [Intentionally Left Blank]

Section 2.4.24(c)   Employee matters; respective base salaries and positions

Section 2.4.26      Suppliers

Section 2.4.27      Insurance

Section 2.4.30      Bank Accounts

Section 2.4.31(a)   Provider Agreements

Section 2.4.31(c)   Negotiations regarding Provider Agreements

Section 2.4.32      Payments under Medicaid Contract

Section 2.4.33      Payments under Medicare Contract

Section 3.1         Conduct of Business

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                               PURCHASE AGREEMENT

     THIS PURCHASE AGREEMENT ("Agreement") is entered into as of March 24, 2008
("Agreement Date"), by and among Molina Healthcare, Inc., a Delaware corporation
("Buyer"), UAHC Health Plan of Tennessee, Inc., a Tennessee corporation ("The
Company"), United American of Tennessee, Inc. ("UAT") and United American
Healthcare Corporation, a Michigan corporation ("UAHC") (collectively, UAT and
UAHC are referred to herein as "Owner"). Each of Buyer, the Company, and Owner
is referred to herein as a "Party" and collectively as the "Parties."

                                   DEFINITIONS

     Unless otherwise defined in the text of this Agreement, capitalized names
and terms herein and in the Exhibits and the Disclosure Schedule shall have the
meaning ascribed to them in Exhibit A.

                                    RECITALS

     A. The Company holds a certificate of authority from the DOI to operate a
health maintenance organization and at Closing will arrange for the provision of
comprehensive health care services pursuant to, and in accordance with, the
Medicaid Contract and the Medicare Contract.

     B. UAT owns one hundred percent (100%) of the issued and outstanding stock
of the Company, and UAHC owns one hundred percent (100%) of the issued and
outstanding stock of UAT.

     C. Owner desires Company to issue the Shares to Buyer, and Buyer desires to
purchase the Shares from Company, pursuant to the provisions of this Agreement.

                                   AGREEMENTS

     NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows:

                                    ARTICLE I
                           PURCHASE AND SALE OF SHARES

     1.1 SHARES. Subject to the provisions of this Agreement, Buyer shall
acquire from Company, and Company shall issue to Buyer, the Shares free and
clear of any restrictions on transfer or Liens for the consideration specified
in Section 1.2.

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     1.2 PURCHASE PRICE. Subject to Section 1.9.2, Buyer shall pay the Purchase
Price to Company at the Closing by wire transfer of immediately available
Federal funds to an account or accounts designated by Company prior to the
Closing.

     1.3 CLOSING. The Closing shall take place at the offices of the Company,
commencing at 9:00 a.m. local time on (a) such date as may be agreed upon by
Buyer and Owner in writing that is no earlier than the date the State Agency
executes the Full-Risk Medicaid contract with Company, and is no later than the
effective date of such Full-Risk Medicaid contract (the go-live date), or (b)
such other date as Buyer and Owner may mutually agree in writing.

     1.4 TRANSFER OF SHARES. At the Closing, Company shall sell, issue, convey
and deliver the Shares to Buyer free and clear of any restrictions on transfer
or Liens.

     1.5 DELIVERIES BY BUYER AT CLOSING. At the Closing, Buyer shall deliver to
Company:

          1.5.1 The Purchase Price;

          1.5.2 A copy of resolutions duly adopted by the Board of Buyer and
signed by the Secretary thereof authorizing the execution, delivery and
performance by Buyer of this Agreement and all related agreements, documents and
instruments;

          1.5.3 A certificate of the Secretary of Buyer certifying (a) the
incumbency of the officers of Buyer on the Agreement Date and on the Closing
Date and bearing the authentic signatures of all such officers who shall execute
this Agreement and any additional documents contemplated by this Agreement, and
(b) that the resolutions identified in Section 1.5.2 remain in full force and
effect on the Closing Date;

          1.5.4 A certificate of the Chairman of the Board of Buyer certifying
that (a) the representations of Buyer set forth in Section 3.2 are true and
correct as of the Closing Date, (b) Buyer has performed and complied in all
material respects with its covenants in this Agreement through the Closing, and
(c) all of the conditions precedent to the obligations of Buyer under Article V
have been satisfied or waived;

          1.5.5 An original certificate of corporate good standing of Buyer,
issued by the Secretary of State of Delaware and dated no earlier than 30 days
prior to the Closing Date;

          1.5.6 A counterpart of the Affiliate Agreements executed by the
appropriate parties;

          1.5.7 A counterpart of the Shareholder Agreement executed by Buyer;
and

          1.5.8 Such other instruments, certificates and other documents as are
(a) reasonably necessary for Buyer to implement, as of the Closing Date, the
transactions contemplated by this Agreement and to comply with the terms hereof,
and (b) required pursuant to the terms of this Agreement.

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     1.6 DELIVERIES BY THE COMPANY AT CLOSING. At the Closing, the Company shall
deliver to Buyer:

          1.6.1 Properly issued stock certificates evidencing the issuance of
the Shares to Buyer;

          1.6.2 Releases of any Liens on the Shares or the assets of the
Company;

          1.6.3 A copy of resolutions duly adopted by the Board of the Company
and signed by the Secretary thereof (a) authorizing the execution, delivery and
performance by the Company of this Agreement and all related agreements,
documents and instruments, (b) approving the issuance of the Shares by the
Company to Buyer, and (c) authorizing the filing of any Amended Articles
effective as of the Closing.

          1.6.4 A certificate of the Secretary of the Company certifying (a) the
incumbency of the officers of the Company on the Agreement Date and on the
Closing Date and bearing the authentic signatures of all such officers who shall
execute this Agreement and any additional documents contemplated by this
Agreement, and (b) that the resolutions identified in Section 1.6.3 remain in
full force and effect on the Closing Date;

          1.6.5 A certificate of the Chairman of the Board of the Company
certifying that the Company has performed and complied in all material respects
with its covenants in this Agreement through the Closing;

          1.6.6 An original certificate of corporate good standing of the
Company, issued by the Tennessee Secretary of State and dated no earlier than 30
days prior to the Closing Date;

          1.6.7 A counterpart of the Affiliate Agreements executed by the
appropriate parties;

          1.6.8 A counterpart of the Shareholder Agreement executed by the
Company; and

          1.6.9 Such other instruments, certificates and other documents as are
(a) reasonably necessary for the Company to implement, as of the Closing Date,
the transactions contemplated by this Agreement and to comply with the terms
hereof, and (b) required pursuant to the terms of this Agreement.

     1.7 DELIVERIES BY OWNER AT CLOSING. At the Closing, Owner shall deliver to
Buyer:

          1.7.1 An original executed certificate by Owner stating that (a) the
representations of Owner set forth in Section 3.3 and Section 3.4 are true and
correct as of the Closing Date, (b) Owner has performed and complied in all
material respects with the covenants of Owner in this Agreement, and (c) all of
the conditions precedent to the obligations of Owners under this Agreement have
been satisfied or waived;

          1.7.2 A copy of resolutions duly adopted by the Board of Owner and
signed by the Secretary thereof (a) authorizing the execution, delivery and
performance by Owner of this

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Agreement and all related agreements, documents and instruments, and (b)
approving the issuance of the Shares by the Company to Buyer;

          1.7.3 A certificate of the Secretary of Owner certifying (a) the
incumbency of the officers of Owner on the Agreement Date and on the Closing
Date and bearing the authentic signatures of all such officers who shall execute
this Agreement and any additional documents contemplated by this Agreement, and
(b) that the resolutions identified in Section 1.7.2 remain in full force and
effect on the Closing Date;

          1.7.4 A certificate of the Chairman of the Board of Owner certifying
that Owner has performed and complied in all material respects with its
covenants in this Agreement through the Closing;

          1.7.5 An original certificate of good standing of Owner, issued by the
Secretary of State of Michigan and dated no earlier than 30 days prior to the
Closing Date;

          1.7.6 A counterpart of the Affiliate Agreements executed by the
appropriate parties;

          1.7.7 A counterpart of the Shareholder Agreement executed by Owner;
and

          1.7.8 Such other instruments, certificates and other documents as are
(a) reasonably necessary for Owner or the Company to implement, as of the
Closing Date, the transactions contemplated by this Agreement and to comply with
the terms hereof, and (b) required pursuant to the terms of this Agreement.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

     2.1 GENERAL STATEMENT. Subject to Section 2.5, all representations and
warranties set forth in this Article III and in any Financial Statement,
Exhibit, the Disclosure Schedule, certificate or other document attached hereto
or delivered by a Party in connection herewith shall survive the consummation of
the transactions contemplated by this Agreement. No specific representation or
warranty shall limit the generality or applicability of a more general
representation or warranty.

     2.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents to
Owner that the following facts and circumstances are true and correct and Buyer
acknowledges that such facts and circumstances constitute a material inducement
for the execution of this Agreement by Owner:

          2.2.1 Organization and Good Standing. Buyer is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.

          2.2.2 Authority and Enforceability. Buyer has full power and
authority, including full corporate power and authority, to execute, deliver and
perform its respective obligations under this Agreement. The execution, delivery
and performance of this Agreement and all other agreements contemplated by this
Agreement have been duly authorized by Buyer.

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Assuming the due authorization, execution and delivery by each other Party, this
Agreement constitutes a valid and legally binding obligation of Buyer,
enforceable in accordance with its terms and conditions.

          2.2.3 Consents. Buyer is not required to give any notice to, make any
filing with or obtain any authorization, consent or approval of any Governmental
Entity in order to consummate the transactions contemplated by this Agreement
other than as may be required of Buyer (a) under the HSR Act, (b) to obtain any
required approvals of the DOI, (c) to obtain any required consent from, or make
any disclosure to, the State Agency, and (d) obtain any required consent from,
or make any disclosure to, CMS.

          2.2.4 Non-Contravention. Neither the execution and the delivery of
this Agreement nor the consummation of the transactions contemplated by this
Agreement will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
Governmental Entity to which Buyer is subject or any provision of its charter,
bylaws or other governing documents, or (b) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
Person the right to accelerate (whether after the giving of notice or lapse of
time or both), terminate, modify or cancel, or require any notice under any
Contract, lease or License to which Buyer is a party, by which it is bound or to
which any of its assets is subject other than those breaches, defaults,
violations or conflicts which have not had, and would not reasonably be likely
to have, individually or in the aggregate, a Material Adverse Effect on Buyer.

          2.2.5 Sufficient Expertise. Buyer has sufficient expertise, including
in business and financial matters, to (a) evaluate the risks related to Buyer's
decision to assume its obligations under this Agreement and the transactions
contemplated hereby, and (b) make an informed investment decision with respect
to such acquisition.

          2.2.6 Investment. Buyer is acquiring the Shares pursuant to this
Agreement for Buyer's own account for investment only and not with a view to, or
for sale in connection with, any distribution of any of the Shares in violation
of the Securities Act. Buyer has no present intention of distributing or selling
the acquired Shares, and Buyer has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition of the acquired Shares. Buyer is an "accredited investor" within
the meaning of Rule 501(a) under the Securities Act. Buyer understands that (a)
the Shares have not been registered under the Securities Act and are "restricted
securities" within the meaning of Rule 144 under the Securities Act, and (b) the
Shares cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from
registration is then available.

          2.2.7 Pending Proceedings. There are no actions, suits, arbitrations,
mediations or other legal proceedings by any Third Party, and there are no
administrative proceedings or governmental investigations, in each instance
which are pending or, to the Knowledge of Buyer, threatened against or affecting
Buyer which, if determined adversely to Buyer, reasonably could be expected to
impact Buyer's ability to consummate the transactions contemplated by this
Agreement.

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          2.2.8 Brokers. Neither Buyer nor any Person acting on Buyer's behalf
has retained or dealt with any Person who is entitled, directly or indirectly,
to a broker's commission, finder's fee, investment banker's fee or similar
payment from Owner or the Company.

          2.2.9 Due Diligence. With respect to its evaluation of the merits and
risks of its decision to assume its obligations under this Agreement and the
transactions contemplated hereby, Buyer has (a) had an adequate opportunity to
conduct due diligence and to obtain such information about the Company as Buyer
deems necessary, (b) conducted due diligence to the extent deemed necessary by
Buyer, and (c) received adequate information about the Company.

          2.2.10 Update of Information. Each of the representations made by
Buyer in this Section 2.2 shall be deemed made and given on the Agreement Date
and continuously thereafter until the Closing. During the period from the
Agreement Date until the Closing, Buyer promptly shall give Owner written notice
at such times as Buyer determines that any representation made in this Section
2.2 would cease to be correct if such representation were made on such date,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make such representation not misleading. To be effective, each
such notice shall (a) identify, by section reference, the representation as to
which the notice relates, and (b) correctly restate the representation.

     2.3 REPRESENTATIONS AND WARRANTIES OF OWNER. UAHC and UAT hereby represent
to Buyer that the following facts and circumstances are true and correct and
UAHC and UAT acknowledge that such facts and circumstances constitute a material
inducement for the execution of this Agreement by Buyer:

          2.3.1 Organization and Good Standing. UAHC is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Michigan. UAT is a corporation, duly incorporated, validly existing and in
good standing under the laws of the State of Tennessee.

          2.3.2 Authority and Enforceability. Owner has full power and
authority, including full corporate power and authority, to execute, deliver and
perform its respective obligations under this Agreement. The execution, delivery
and performance of this Agreement and all other agreements contemplated by this
Agreement have been duly authorized by Owner. Assuming the due authorization,
execution and delivery by each other Party, this Agreement constitutes a valid
and legally binding obligation of Owner, enforceable in accordance with its
terms and conditions.

          2.3.3 Consents. Owner is not required to give any notice to, make any
filing with or obtain any authorization, consent or approval of any Governmental
Entity in order to consummate the transactions contemplated by this Agreement
other than as may be required of Owner (a) under the HSR Act, (b) to obtain the
required approvals of the DOI, (c) to obtain any required consent from, or make
any disclosure to, the State Agency, and (d) obtain any required consent from,
or make any disclosure to, CMS.

          2.3.4 Non-Contravention. Neither the execution and the delivery of
this Agreement nor the consummation of the transactions contemplated by this
Agreement will (a)

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violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any Governmental Entity to
which Owner is subject or any provision of its charter, bylaws or other
governing documents, or (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any Person the right to
accelerate (whether after the giving of notice or lapse of time or both),
terminate, modify or cancel, or require any notice under any Contract, lease or
License to which Owner is a party, by which it is bound or to which any of its
assets is subject other than those breaches, defaults, violations or conflicts
which have not had, and would not reasonably be likely to have, individually or
in the aggregate, a Material Adverse Effect on Owner.

          2.3.5 Brokers. Neither Owner nor any Person acting on Owner's behalf
has retained or dealt with any Person who is entitled, directly or indirectly,
to a broker's commission, finder's fee, investment banker's fee or similar
payment from Buyer, or the Company.

          2.3.6 Pending Proceedings. There are no actions, suits, arbitrations,
mediations or other legal proceedings by any Third Party, and there are no
administrative proceedings or governmental investigations, in each instance
which are pending or, to the Knowledge of Owner, threatened against or affecting
Owner which, if determined adversely to Owner, reasonably could be expected to
impact Owner's ability to consummate the transactions contemplated by this
Agreement.

          2.3.7 Update of Information. Each of the representations made by Owner
in this Section 2.3 shall be deemed made and given on the Agreement Date and
continuously thereafter until the Closing. During the period from the Agreement
Date until the Closing, Owner shall give Buyer written notice within a
reasonable time after Owner determines that any representation made in this
Section 2.3 would cease to be correct if such representation were made on such
date.

     2.4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OWNER REGARDING
THE COMPANY. UAHC and the Company hereby represent to Buyer that the following
facts and circumstances regarding the Company are true and correct and Owner and
the Company acknowledge that such facts and circumstances constitute a material
inducement for the execution of this Agreement by Buyer:

          2.4.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Tennessee.

          2.4.2 Authority and Enforceability. The Company has full power and
authority, including full corporate power and authority, to execute, deliver and
perform its respective obligations under this Agreement. The Company has
obtained all necessary authorizations to execute, deliver and perform this
Agreement and all other agreements contemplated by this Agreement. Assuming the
due authorization, execution and delivery by each other Party, this Agreement
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms and conditions.

          2.4.3 Consents. The Company is not required to give any notice to,
make any filing with or obtain any authorization, consent or approval of any
Governmental Entity in order

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to consummate the transactions contemplated by this Agreement other than (a) as
may be required under the HSR Act, (b) to obtain the required approvals of the
DOI, (c) to obtain any required consent from, or make any disclosure to, the
State Agency, and (d) obtain any required consent from, or make any disclosure
to, CMS.

          2.4.4 Non-Contravention. Neither the execution and the delivery of
this Agreement nor the consummation of the transactions contemplated by this
Agreement will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
Governmental Entity to which the Company is subject or any provision of its
charter, bylaws or other governing documents, or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any Person the right to accelerate (whether after the giving of notice or lapse
of time or both), terminate, modify or cancel, or require any notice under any
Contract, Lease or License to which the Company is a party, by which it is bound
or to which any of its assets is subject other than those breaches, defaults,
violations or conflicts which have not had, and would not reasonably be likely
to have, individually or in the aggregate, a Material Adverse Effect on the
Company.

          2.4.5 Brokers. Neither the Company nor any Person acting on the
Company's behalf has retained or dealt with any Person who is entitled, directly
or indirectly, to a broker's commission, finder's fee, investment banker's fee
or similar payment from Buyer or Owner.

          2.4.6 Pending Proceedings. There are no actions, suits, arbitrations,
mediations or other legal proceedings by any Third Party, and there are no
administrative proceedings or governmental investigations, in each instance
which are pending or, to the Knowledge of Owner, threatened against or affecting
the Company which, if determined adversely to the Company, reasonably could be
expected to impact the Company's ability to consummate the transactions
contemplated by this Agreement.

          2.4.7 Officers and Managers. The name of each officer and manager of
the Company on the Agreement Date and his or her position with the Company are
set forth in Section 2.4.7 of the Disclosure Schedule.

          2.4.8 The Company Documents. True and complete copies of the Company
Articles, bylaws, and other corporate governance documents, agreements or
instruments, each as in effect on the Agreement Date, and organizational minute
books and records of the Company, have been made available for inspection by
Buyer.

          2.4.9 Ownership of the Company and Related Matters.

               (a) The books and records of the Company correctly reflect that
prior to the Closing, Owner owns one hundred percent (100%) of the issued and
outstanding stock of the Company, and at the Closing, the Shares will either
represent (i) nineteen and nine-tenths percent (19.9%) of the issued and
outstanding stock of the Company in the event the Company executes one (1)
Full-Risk Medicaid Contract, or (ii) forty-nine and nine-tenths percent (49.9%)
of the issued and outstanding stock of the Company in the event the Company
executes two (2) Full-Risk Medicaid Contracts.

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               (b) Each of the Shares has been duly authorized, are validly
issued, fully paid and non-assessable.

               (c) There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights or
other Contracts or commitments which could require the Company to issue, sell or
otherwise cause to become outstanding any of the Company's ownership interests
or any other ownership or equity interest of the Company. The Company has
neither outstanding nor authorized any stock appreciation, phantom stock, profit
participation or similar right.

               (d) The Company is not a party to any Contract or commitment
which could require the Company to issue any ownership interests in the Company.

          2.4.10 Title to Assets. Except as set forth in Section 2.4.10 of the
Disclosure Schedule, the Company has good and marketable title to, or a valid
leasehold interest in, the tangible assets used in the conduct of the Business,
free and clear of all Liens other than Permitted Liens.

          2.4.11 Financial Reports.

               (a) Complete and accurate copies of the Financial Statements are
set forth at Section 2.4.11(a) of the Disclosure Schedule. The audited Financial
Statements for 2005, 2006, and 2007 have been prepared in accordance with SAP,
accurately reflect the books and records of the Business and present fairly in
all material respects the financial condition of the Company as of their
respective dates.

               (b) The unaudited Financial Statements for the period from July
1, 2007 through December 31, 2007, are set forth at Section 2.4.11(b) of the
Disclosure Schedule and have been prepared in accordance with SAP (except that
footnotes have been omitted and such statements are subject to normal, recurring
adjustments), accurately reflects the books and records of the Business and
presents fairly in all material respects the financial condition of the Company
as of the date thereof.

               (c) The reserves reflected in the audited Financial Statements
for the year ended June 30, 2007, and the unaudited Financial Statements for the
period ended December 31, 2007, for unpaid medical benefits, losses, claims and
expenses incurred in connection with all lines of business of the Company were
computed by the Company and reviewed by independent licensed actuaries serving
the Company during the periods covered. There have been no changes in the
methodology used in determining reserves for such unpaid medical costs during
the prior three (3) fiscal years except as set forth in Section 2.4.11(c) of the
Disclosure Schedule.

          2.4.12 Legal Compliance. The Business is in compliance in all material
respects with all Laws and the Company has not received any outstanding notice
from any Governmental Entity that alleges any violations of Laws by the Company.
Further, the Company is in compliance in all material respects with HIPAA,
including, but not limited to, obtaining business associate agreements with all
applicable business associates, and maintaining a record of all disclosures
required to be delivered to any requesting member.

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          2.4.13 Licenses. The Company holds all Licenses, including a
certificate issued by the DOI to operate as a health maintenance organization in
the State, that are necessary for the lawful conduct of the Business. Each such
License is valid, in good standing and in full force and effect and the Company
has duly performed in all material respects all of its obligations under such
Licenses.

          2.4.14 Tax Matters.

               (a) All Tax Returns of the Company have been duly filed and all
Taxes of the Company have been duly paid or an adequate reserve for such payment
has been established therefore in the Financial Statements.

               (b) All Tax Returns of the Company are true, correct and complete
in all material respects, and there is no position taken on any such Tax Return
for which there is not substantial authority within the meaning of Section 6662
of the Code.

               (c) All of the Company's Taxes which accrue or are payable by the
Company (i) in respect of taxable periods which end on or before the Closing
Date, and (ii) for any taxable period which begins before the Closing Date and
ends thereafter, to the extent such Taxes are attributable to the portion of
such period ending on the Closing Date, have or will have been timely paid on or
before the Closing Date or an adequate reserve for such payment has been
established therefore in the Financial Statements.

               (d) Any unpaid Taxes of the Company did not, as of the date of
the relevant Financial Statement, exceed the accrual for such Tax liability set
forth on the relevant Financial Statement.

               (e) The Company is a member of an affiliated group filing a
consolidated federal income Tax Return pursuant to the Tax Allocation Agreement.
Except pursuant to a tax sharing agreement to which the Company is a party, the
Company has no liability for Taxes of any "Person" as defined in Section
7701(a)(1) of the Code or under Treas. Reg. Section 1.1502-6 (or any similar
provision of state or local law), as a transferee or successor, by Contract or
otherwise.

               (f) The Company is classified as an association taxable as a
corporation for all income Tax purposes.

               (g) The Company will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any (i)
change in method of accounting for a taxable period ending on or prior to the
Closing Date under Section 481(c) of the Code (or any corresponding or similar
provision of state or local income Tax law), (ii) "closing agreement" as
described in Section 7121 of the Code (or any corresponding or similar provision
of state or local income Tax law) entered into on or prior to the Closing Date,
or (iii) installment sale made on or prior to the Closing Date.

          2.4.15 Real Property.

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<PAGE>

               (a) The Company does not own any real property.

               (b) Section 2.4.15(b) of the Disclosure Schedule lists all Leases
of real property. Owner has delivered to Buyer a true and complete copy of each
such Lease as of the Agreement Date. Each such Lease is in full force and effect
and constitutes the valid and legally binding obligation of the Company. The
Company is not in breach or default under any such Lease and, to the Knowledge
of Owner, no event has occurred or circumstance exist which, with the delivery
of notice, the passage of time or both, would constitute such a breach or
default.

               (c) No condemnation proceedings are pending, or to the Knowledge
of Owner, threatened, with respect to any real property which is the subject of
a Lease.

          2.4.16 Intellectual Property.

               (a) Section 2.4.16(a) of the Disclosure Schedule lists all
Intellectual Property (except for readily available off-the-shelf software
having an original purchase price of less than $10,000) used in the Business, in
each case specifying whether the Intellectual Property is owned or licensed by
the Company.

               (b) Except as set forth in Section 2.4.16(b) of the Disclosure
Schedule:

                    (i) The Company owns and possesses all right, title and
interest in and to, free and clear of any Liens other than Permitted Liens, or
has a valid, enforceable and effective license to use, all of the Intellectual
Property identified in Section 2.4.16(a) of the Disclosure Schedule;

                    (ii) The Company has received no Claim by any Third Party
contesting the validity, grant, registrability, enforceability, use or ownership
of any Intellectual Property identified in Section 2.4.16(a) of the Disclosure
Schedule and, to the Knowledge of Owner, no such Claim has been threatened;

                    (iii) To the Knowledge of Owner, no Third Party is
infringing upon the Intellectual Property identified in Section 2.4.16(a) of the
Disclosure Schedule;

                    (iv) To the Knowledge of Owner, the use of the Intellectual
Property identified in Section 2.4.16(a) of the Disclosure Schedule does not
infringe upon or otherwise violate the rights of any Third Party; and

                    (v) The Company has not brought or threatened a Claim
against any Person alleging infringement upon or any other violation of the
Intellectual Property identified in Section 2.4.16(a) of the Disclosure Schedule
or challenging any Person's ownership or use of, or the validity, enforceability
or registrability of, any Intellectual Property identified in Section 2.4.16(a)
of the Disclosure Schedule.

               (c) The Company has not licensed or sublicensed its rights in any
of the Intellectual Property identified in Section 2.4.16(a) of the Disclosure
Schedule.

                                       11

<PAGE>

               (d) Each copyright registration, patent and registered trademark
and application identified in Section 2.4.16(a) of the Disclosure Schedule is in
proper form, not disclaimed and has been duly maintained, including the
submission of all necessary filings in accordance with the legal and
administrative requirements of the appropriate jurisdictions.

          2.4.17 Contracts (Other than Provider Agreements).

               (a) Section 2.4.17(a) of the Disclosure Schedule lists the
following undischarged Contracts, including all amendments thereto, to which the
Company is a party:

                    (i) Contracts with any Governmental Entity (including the
Medicaid Contract and Medicare Contract);

                    (ii) All Employment Agreements;

                    (iii) Contracts for consulting services;

                    (iv) The Company policies or Contracts for the payment of
severance benefits or retention bonuses to any Employee;

                    (v) Contracts for the purchase of equipment or other
materials in which the purchase price of such equipment or other materials
exceeds $25,000;

                    (vi) Contracts for the sale of any of the Company's
equipment or other assets;

                    (vii) Contracts for services, other than Provider
Agreements, that provide for the expenditure of more than $25,000 annually;

                    (viii) Leases or subleases, either as lessee or sublessee,
lessor or sublessor, of personal property or intangibles, in which the Lease or
sublease provides for an annual rent in excess of $25,000 and has an unexpired
term as of the Closing Date in excess of one year;

                    (ix) Contracts, other than Provider Agreements, restricting
in any manner the Company's right to compete with any other Person or
restricting the Company's right to sell to or purchase from any other Person;

                    (x) Service Contracts affecting any of the Company's assets
in which the annual service or maintenance charge exceeds $25,000 and the
unexpired term as of the Closing Date exceeds one year;

                    (xi) Contracts for the advertisement, display or promotion
of any products or services which cannot be canceled by the Company without
payment or penalty upon notice of 60 days or less;

                    (xii) Loan or credit agreements, pledge agreements, notes,
security agreements, mortgages, debentures, indentures, factoring agreements or
letters of credit;

                                       12

<PAGE>

                    (xiii) Guarantees, performance, bid or completion bonds, or
surety or indemnification agreements;

                    (xiv) Contracts involving a sharing of profits, losses,
costs or liabilities by the Company and another Person; or

                    (xv) Any other Contracts, other than Provider Agreements,
that provide for the receipt or expenditure of more than $25,000 or that expire,
or may be renewed at the option of any Person other than the Company so as to
expire, more than one year after the Agreement Date.

               (b) All Designated Contracts are in full force and effect and are
valid and enforceable in accordance with their terms. The Company is, in all
material respects, in compliance with all terms and requirements of each
Designated Contract. To the Knowledge of Owner, (i) each other Person who or
which is party to a Designated Contract is in material compliance with the terms
and requirements of such Contract, and (ii) no event has occurred or
circumstance exists which (with or without notice or lapse of time) may
contravene, conflict with or result in a violation or breach of, or give the
Company or any other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify any Designated Contract. There are no renegotiations,
attempts to renegotiate or outstanding rights to negotiate any amount to be paid
or payable to or by the Company under any Designated Contract other than with
respect to non-material amounts in the Ordinary Course of Business, and no
Person has made a written demand for such renegotiation. The Company has not
released or waived any of its rights under any Designated Contract.

               (c) Except for Designated Contracts and Provider Agreements,
there are no material Contracts relating to the Business.

               (d) Except as set forth in Section 2.4.17(d) of the Disclosure
Schedule, the Company has delivered to Buyer (i) a correct and complete copy of
each written Designated Contract, including any amendments thereto, and (ii) a
written description of any oral Designated Contract.

          2.4.18 Litigation. Except as set forth in Section 2.4.18 of the
Disclosure Schedule, the Company is not (a) subject to any outstanding
injunction, judgment, order, decree or ruling by a Governmental Entity, or (b) a
party to or the subject of, or to the Knowledge of Owner, threatened to be made
a party to or the subject of, any action, suit, proceeding, hearing or
investigation in or before any Governmental Entity in which the action, suit,
proceeding, hearing or investigation has had or would reasonably be likely to
have a Material Adverse Effect.

          2.4.19 [Intentionally Left Blank]

          2.4.20 Employee Benefits. Other than a part-time medical director, the
Company has no employees, and the Company has no Benefit Plan, and has no
commitment to create any Benefit Plan.

          2.4.21 Environmental, Health and Safety Matters. The Company is in
compliance in all material respects with all Environmental, Health and Safety
Requirements.

                                       13

<PAGE>

The Company has not received any written notice, demand, request for
information, citation, summons, report or other information regarding any actual
or alleged violation by the Company of any Environmental, Health and Safety
Requirement.

          2.4.22 Certain Business Relationships. No officer or manager of the
Company (a) owns any property or assets necessary for the Business, or (b) has
any material ownership interest in any Person who or which (i) has business
dealings with the Company, or (ii) competes with the Business.

          2.4.23 Undisclosed Liabilities. The Company has no material
liabilities or obligations of any nature, whether absolute, contingent or
otherwise, other than liabilities or obligations (a) accrued or reserved for on
the balance sheets included in the Financial Statements, (b) set forth in the
Disclosure Schedule, or (c) incurred after the date of most recent balance sheet
in the Ordinary Course of Business.

          2.4.24 Labor Matters.

               (a) The Company is not a party to or bound by any collective
bargaining agreement or similar agreement with any union or labor organization
and there are no labor strikes, slowdowns, work stoppages or lockouts currently
involving the Employees.

               (b) To the Knowledge of Owner, (i) no union or labor organization
claims to represent any Employees, and (ii) there is no activity by any labor
organization to organize any Employees.

               (c) Except as set forth in Section 2.4.24(c) of the Disclosure
Schedule, (i) there are no charges with respect to or relating to any Employee
pending before the Equal Employment Opportunity Commission or any other
Governmental Entity responsible for the prevention of unlawful employment
practices, and (ii) the Company has not received notice of the intent of any
Governmental Entity responsible for the enforcement of labor or employment laws
to conduct an investigation with respect to or relating to any Employee.

               (d) The Company has properly classified (i) all Persons providing
services to the Company as employees or independent contractors, as applicable,
and (ii) all Employees as exempt or non-exempt, as applicable, under the Fair
Labor Standards Act or similar Law.

               (e) Section 2.4.24(e) of the Disclosure Schedule lists the names
of all Employees as of the Agreement Date together with their respective base
salaries and positions.

               (f) No Employee has any claim against the Company on account of
or for: (i) overtime pay other than overtime pay for the payroll period covering
the Agreement Date, (ii) wages or salaries other than wages or salaries for the
payroll period overlapping the Agreement Date, or (iii) vacations, sick leave,
time off or pay in lieu of vacation, sick leave or time off other than vacation,
sick leave or time off (or pay in lieu thereof) earned in the 12 month period
immediately prior to the Agreement Date.

                                       14
<PAGE>

               (g) The Company has made all required payments to the relevant
unemployment compensation reserve account with the appropriate governmental
departments with respect to its employees and such accounts have positive
balances.

          2.4.25 Subsidiaries. The Company has no subsidiaries.

          2.4.26 Suppliers. Section 2.4.26 of the Disclosure Schedule sets forth
the names and addresses of the ten largest non-health care related suppliers of
the Business based on the dollar volume of purchases of goods or services
provided to the Company (whether contracting directly with Company or
contracting through Company's Affiliates) during 2006 and 2007, and such
suppliers represent eighty percent (80%) or more of all of the suppliers of the
Business based on dollar volume. Except as identified in Section 2.4.26 of the
Disclosure Schedule, the Company has not received any written notice that any
such supplier will not sell supplies, merchandise or other goods to the Company
at any time after the Closing Date on terms and conditions substantially similar
to those currently in effect, subject only to general and customary price
increases.

          2.4.27 Insurance. Section 2.4.27 of the Disclosure Schedule lists the
policies of fire and casualty, liability and other forms of insurance maintained
by the Company and in such amounts, with such deductibles and against such risks
and losses identified therein. All such policies are in full force and effect,
all premiums due and payable thereon have been paid and no notice of
cancellation or termination has been received with respect to any such policy.

          2.4.28 Conduct of Business. Since January 1, 2008, (a) the Company has
conducted the Business only in the Ordinary Course of Business, (b) there has
not been any Material Adverse Effect, (c) there has been no non-renewal or
material amendment of the Medicaid Contract or Medicare Contract, (d) there has
been no physical damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any of the owned or leased real or personal
property or equipment of the Company in an amount exceeding $25,000,
individually or in the aggregate, and (e) the Company has not taken or permitted
to be taken any action which, if proposed to be taken on or after the Agreement
Date, would require the consent of Buyer pursuant to Section 4.1.

          2.4.29 Statutory Surplus. As of the Closing Date, the Company will be
in full compliance with all Laws applicable to the adequacy and maintenance of
its statutory surplus.

          2.4.30 Bank Accounts. Section 2.4.30 of the Disclosure Schedule lists
(a) the name of each bank, safe deposit the Company or other financial
institution in which the Company has an account, lock box or safe deposit box,
(b) the names of all Persons authorized to draw thereon or to have access
thereto, and (c) all instruments or agreements to which the Company is a party
as an endorser, surety or guarantor other than checks endorsed for collection or
deposit in the Ordinary Course of Business.

          2.4.31 Providers and Provider Agreements.

               (a) Section 2.4.31(a) of the Disclosure Schedule lists all
Provider Agreements.

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<PAGE>

               (b) The Company has compensated and currently compensates each
Provider for covered services provided to Enrollees in accordance with the rates
and fees set forth in the applicable Provider Agreement and the Company's
standard payment policies and procedures.

               (c) Except as set forth in Section 2.4.31(c) of the Disclosure
Schedule, there are no renegotiations, attempts to renegotiate or outstanding
rights to negotiate any amount to be paid or payable to or by the Company under
any Provider Agreement other than with respect to non-material amounts in the
Ordinary Course of Business.

          2.4.32 Payments under Medicaid Contract. Except as set forth in
Section 2.4.32 of the Disclosure Schedule, the Company is not a party to or the
subject of any action, suit, proceeding, hearing or investigation in or before
the State Agency related to the recovery of payments received by the Company
from the State Agency under the Medicaid Contract and, to the Knowledge of
Owner, the Company has not been threatened to be made a party to or the subject
of any such action, suit, proceeding, hearing or investigation.

          2.4.33 Payments under Medicare Contract. Except as set forth in
Section 2.4.33 of the Disclosure Schedule, the Company is not a party to or the
subject of any action, suit, proceeding, hearing or investigation in or before
CMS related to the recovery of payments received by the Company from CMS under
the Medicare Contract and, to the Knowledge of Owner, the Company has not been
threatened to be made a party to or the subject of any such action, suit,
proceeding, hearing or investigation.

          2.4.34 Commercial Bribery. Neither the Company nor any of the
Employees, former employees or current or officers, managers or Representatives
has paid or made, directly or indirectly, with respect to the Business, (a) any
bribes or kickbacks, (b) illegal political contributions, (c) payments from the
Company funds not recorded on the books and records of the Company, (d) payments
from the Company funds to governmental officials in their individual capacities
for the purpose of affecting their action or the action of the Governmental
Entity they represent to obtain favorable treatment in securing business or
Licenses or to obtain special concessions, or (e) illegal payments from the
Company funds to obtain or retain business.

          2.4.35 Update of Information. Each of the representations made by the
Company in this Section 2.4 shall be deemed made and given on the Agreement Date
and continuously thereafter until the Closing. During the period from the
Agreement Date until the Closing, the Company shall give Buyer within a
reasonable time after the Company determines that any representation made in
this Section 2.4 would cease to be correct if such representation were made on
such date, contains any untrue statement of a material fact or omits to state a
material fact necessary to make such representation not misleading. To be
effective, each such notice shall (a) identify, by section reference, the
representation as to which the notice relates, (b) correctly restate the
representation, and (c) if applicable, be accompanied by an amendment to any
Section of the Disclosure Schedule that identifies the exceptions to the
representation.

     2.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Parties made in this Agreement shall survive the Closing for a
period of eighteen (18) months, except that (i) in the case of actual fraud by
the Company or Owner such

                                       16

<PAGE>

fraudulent representations and warranties shall survive until the expiration of
the applicable statute of limitations (taking into account all extensions
thereof), and (ii) the representations and warranties set forth in Section
2.4.14 shall survive the Closing until the expiration of the applicable statute
of limitations (taking into account all extensions thereof).

                                   ARTICLE III
                            CONDUCT PRIOR TO CLOSING

     3.1 OBLIGATIONS OF THE COMPANY.

          3.1.1 Conduct of Business. During the period from the Agreement Date
through the Closing Date, except as may be expressly contemplated by this
Agreement, set forth in Section 3.1 of the Disclosure Schedule, or consented to
in writing by Buyer, the Company shall (and the Owner agrees to cause the
Company to take the actions set forth herein):

               (a) Continue the Ordinary Course of Business;

               (b) Use commercially reasonable efforts to maintain and preserve
intact the Business and maintain the ordinary and customary relationships of the
Company with its Providers, Enrollees, Employees and suppliers;

               (c) Not amend the Company Articles, bylaws, or any other
organizational or governing document of the Company;

               (d) Not issue any equity or ownership interests or other
securities convertible or exchangeable into equity or ownership interests in the
Company or any options, warrants or other rights to purchase any such equity or
ownership interests or any securities convertible into or exchangeable for such
equity or other ownership interests;

               (e) Not recognize, approve or participate in the sale, transfer,
pledge, disposition or other encumbrance of any of the Shares or any other
securities or equity or ownership interests in the Company;

               (f) Not declare, set aside or pay any distribution with respect
to any of the Shares or any other securities or equity or ownership interests in
the Company that will result in cash and cash equivalents at the Company falling
below the Minimum Net Worth;

               (g) Not repurchase, redeem or otherwise acquire directly or
indirectly any of the Shares or any other securities or equity or ownership
interests in the Company;

               (h) Not change in any material respect any of the accounting
methods used with respect to the Business unless required by GAAP or SAP;

               (i) Not transfer, sell, lease, license, mortgage, pledge, grant
any security interest in, create any Lien, other than Permitted Liens, upon or
otherwise dispose of any of the assets or properties of the Business other than
in the Ordinary Course of Business;

                                       17

<PAGE>

               (j) Not sell, transfer, pledge, modify, disclose, dispose of,
abandon or permit to lapse any right under or respecting, or enter into any
settlement regarding the breach or infringement of, any Intellectual Property
used in the Business;

               (k) Not (i) make any loans, advances or capital contributions to,
or investments in, any Person, or (ii) incur, assume or guarantee any
indebtedness for borrowed money other than in the Ordinary Course of Business;

               (l) Not purchase or otherwise acquire any material assets on
behalf of the Company or make commitments therefore involving the expenditure of
more than $150,000 individually and $300,000 in the aggregate per calendar
month, other than in the ordinary course of business;

               (m) Not merge or consolidate with, purchase all or any
substantial part of the assets of, or otherwise acquire, any Person;

               (o) Other than in the Ordinary Course of Business, not (i) enter
into any material Contract with respect to the Business, or (ii) modify in any
material respect, amend in any material respect or terminate any Designated
Contract;

               (p) Not enter into any Contract with respect to the Business
which imposes non-competition, non-solicitation, exclusive dealing or other
similar obligations or limitations on the Company;

               (q) Not enter into any Contract, or amend any Contract, with
Owner or any of Owner's Affiliates;

               (r) Not settle or compromise any material litigation with respect
to the Business or waive, release or assign any material rights or Claims with
respect to the Business;

               (s) Not (i) settle or compromise any Tax liability, (ii) agree to
any adjustment of any Tax attribute, (iii) make, change or revoke any election
with respect to Taxes, (iv) surrender any right to claim, or file a Claim for, a
refund of Taxes, (v) consent to any extension or waiver of the statute of
limitations period applicable to any Taxes or Tax Return, (vi) amend any Tax
Return, (vii) enter into any closing or other agreement with respect to Taxes,
(viii) grant any power of attorney with respect to Taxes, or (ix) except insofar
as may be required by a change in GAAP, SAP or applicable Law, change accounting
methods, principles or practices for Tax or accounting purposes;

               (t) Not fail to maintain or renew any Licenses;

               (u) Not reduce the amount of any insurance coverages identified
in Section 2.4.27 of the Disclosure Schedule or fail to renew any such insurance
policies; and

               (v) Use commercially reasonable best efforts to refrain from
taking (or failing to take) any other action which will result, or reasonably
could be expected to result, in the failure to satisfy any of the conditions set
forth in Section 4.3.

                                       18

<PAGE>

          3.1.2 Full Access. During the period from the Agreement Date through
the Closing Date, the Company shall permit Representatives of Buyer to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Company, to all premises, properties,
personnel, books, records, Tax Returns, Contracts and documents of or pertaining
to the Company or the Business. Further, the Company shall deliver to Buyer as
soon as possible after completion, the unaudited (or audited, as the case may
be) Financial Statements actually prepared by the Company for all periods from
the Agreement Date through the Closing. Any information obtained by Buyer
pursuant to the access accorded under this Section 3.1.2 shall be held by Buyer
subject to the provisions of the Confidentiality Agreement.

          3.1.3 Standstill. During the period from the Agreement Date through
the Closing Date, the Company shall not, and the Company shall cause its
officers, Employees, managers and agents not to, solicit, initiate or encourage
the initiation of inquiries or proposals from, provide any Confidential
Information to or participate in any discussions or negotiations or cooperate
with any Person (other than Buyer, its Affiliates and their respective
Representatives) which could involve, directly or indirectly, any sale by (a)
the Company of all or substantially all of its assets, or (b) Owners of any of
its ownership interests in the Company.

     3.2 OBLIGATIONS OF OWNER. During the period from the Agreement Date through
the Closing Date, Owner shall not, and Owner shall cause its officers,
employees, directors and agents not to, (a) solicit, initiate or encourage the
initiation of inquiries or proposals from, provide any Confidential Information
to or participate in any discussions or negotiations or cooperate with any
Person (other than Buyer, its Affiliates and their respective Representatives)
which could involve, directly or indirectly, any sale by (i) Owner of any of its
ownership interests in the Company, or (ii) the Company of all or substantially
all of its assets, and (b) amend the Company Articles, bylaws, or any other
organizational or governing document of the Company.

     3.3 JOINT OBLIGATIONS.

          3.3.1 Best Efforts. During the period from the Agreement Date through
the Closing Date, each Party shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things reasonably
necessary, desirable or appropriate, including under applicable Laws, to fulfill
its obligations under this Agreement and to make effective the transactions
contemplated by this Agreement.

          3.3.2 Governmental Approvals/Consents.

               (a) Promptly following the Agreement Date, Owner and Buyer shall
file with the Federal Trade Commission and the Department of Justice the
notification required to be filed with respect to the transactions contemplated
by this Agreement under the HSR Act. Buyer and Owner shall jointly pay the
filing fees associated with the filing of such notification under the HSR Act.
Each Party shall respond promptly to any requests for additional information
made by such agencies and shall cooperate with the other Parties in making such
filings and in responding to such information requests.

                                       19

<PAGE>

               (b) Promptly following the Agreement Date, each of Owner and
Buyer shall file such documents as are necessary to obtain the approval of the
DOI to the transactions contemplated by this Agreement. Each Party shall respond
promptly to any requests for additional information made by the DOI and shall
cooperate with the other Parties in making such filings and in responding to
such information requests.

               (c) Promptly following the Agreement Date, the Company shall
apprise the State Agency (and to the extent required, CMS) of the execution of
this Agreement and shall file such documents as are necessary to obtain any
consent from, or make any disclosures to, the State Agency (and to the extent
required, CMS) regarding the transactions contemplated by this Agreement.

               (d) With respect to the obligations of Buyer, Owner and the
Company in Sections 3.3.2(a), 3.3.2(b) and 3.3.2(c), each of them shall (i)
promptly notify the other Parties of any written communication received from any
Governmental Entity, (ii) if practicable, permit the other's respective counsel
to review in advance any proposed written communication to any such Governmental
Entity and incorporate the reasonable comments of such counsel, (iii) not
participate in any substantive meetings or discussions with any such
Governmental Entity in respect of any filing, investigation or inquiry
concerning this Agreement or the transactions contemplated hereby without
consulting with the other's respective counsel in advance, (iv) to the extent
permitted by such Governmental Entity, give the other Parties the opportunity to
participate in any such meetings or discussions, and (v) furnish the other
Parties' respective counsel with copies of all correspondence, filings and
written communications to or from any such Governmental Entity.

     3.4 AMENDED GOVERNING DOCUMENTS. If required by DOI or the State Agency, or
if requested by Buyer, Owner and Company shall file Amended Articles. Buyer and
Owner shall reasonably agree on such Amended Articles.

                                   ARTICLE IV
                              CONDITIONS TO CLOSING

     4.1 CONDITIONS TO BUYER'S OBLIGATIONS. Buyer's obligation to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of each of the following conditions or the waiver thereof in
writing by Buyer prior to the Closing:

          4.1.1 Receipt by Buyer of all deliverables required from the Company
and Owner in Article I;

          4.1.2 No injunction, judgment, order, decree, ruling or charge shall
be in effect which prevents the Closing;

          4.1.3 No event resulting in a Material Adverse Effect has occurred;

          4.1.4 The requisite waiting period, if any, under the HSR Act shall
have expired or terminated;

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<PAGE>

          4.1.5 The DOI shall have approved the transactions contemplated by
this Agreement;

          4.1.6 The Company shall have and maintain the Minimum Net Worth as of
the Closing;

          4.1.7 The State Agency has awarded one or more Full-Risk Medicaid
Contracts to the Company at reimbursement levels acceptable to Buyer in its sole
discretion; and

          4.1.8 All corporate approvals (including the unconditional approval of
UAHC's shareholders and board of directors) of this Agreement and all
transactions contemplated herein (including the option to acquire the remaining
Shares as set forth in the Shareholder Agreement), shall have been obtained in
accordance with all applicable federal and state statutes and regulations
related to the sale of all or substantially all of the assets of a corporation.

     4.2 CONDITIONS TO OWNER'S OBLIGATIONS. Owner's obligation to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of each of the following conditions or the waiver thereof in
writing by Owner prior to the Closing:

          4.2.1 Receipt by Owner of all deliverables required from Buyer in
Article 1;

          4.2.2 No injunction, judgment, order, decree, ruling or charge shall
be in effect which prevents the Closing;

          4.2.3 The requisite waiting period, if any, under the HSR Act shall
have expired or terminated;

          4.2.4 The DOI shall have approved the transactions contemplated by
this Agreement;

          4.2.5 All required consents from, or disclosures to, the State Agency
shall have been received or made; and

          4.2.6 The State Agency has awarded one or more Full-Risk Medicaid
Contracts to the Company at reimbursement levels acceptable to Owner in its sole
discretion.

     4.3 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The Company's obligation to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of each of the following conditions or the waiver
thereof in writing by the Company prior to the Closing:

          4.3.1 No injunction, judgment, order, decree, ruling or charge shall
be in effect which prevents the Closing;

          4.3.2 The requisite waiting period, if any, under the HSR Act shall
have expired or terminated;

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<PAGE>

          4.3.3 The DOI shall have approved the transactions contemplated by
this Agreement; and

          4.3.4 All required consents from, or disclosures to, the State Agency
shall have been received or made.

                                    ARTICLE V
                             POST-CLOSING COVENANTS

     5.1 EXECUTION OF DOCUMENTS. In the event any further action is necessary or
desirable to carry out the purposes of this Agreement following the Closing
Date, each Party shall take such further action, including the execution and
delivery of such further instruments and documents, as the other Party
reasonably may request, all at the sole cost and expense of the requesting Party
unless the requesting Party is entitled to indemnification for such action under
this Agreement.

     5.2 BOOKS AND RECORDS. Following the Closing Date, the Company shall retain
(a) for the greater of (i) ten years, and (ii) the period required by applicable
Laws, all medical and financial records relating to medical services provided to
Enrollees, including for examination and audit by the State Agency and other
authorized Governmental Entities, (b) until the applicable Tax statutes of
limitation (including periods of waiver) have expired, all books, records and
other documents required to support or document information contained on Tax
Returns filed prior to the Closing Date or covering the period ending on the
Closing Date, and (c) until the period a Claim can be asserted under Article VI,
all books, records and other documents required to support or document the
assertion or defense of any such Claim.

     5.3 FINANCIAL STATEMENTS. Within ninety (90) days after the Closing, the
Company shall deliver complete and accurate copies of Financial Statements for
the twelve months ending as of the Closing Date (or if the Closing Date is not
the first of a month, then the Financial Statements shall be for the twelve
months ending as of the first day of the next month immediately after the
Closing Date). The Financial Statements shall be prepared in accordance with
GAAP that accurately reflects the books and records of the Business and present
fairly in all material respects the financial condition of the Company as of the
Closing Date. In the event Buyer does not accept such Financial Statements
within thirty (30) days of delivery, the parties shall meet and confer for an
additional thirty (30) days and resolve any differences regarding such Financial
Statements. In the event the parties cannot resolve any such differences, the
Company shall obtain an audit of such Financial Statements from the current
auditor of the Company (or an Affiliate), and such audit shall be conclusive and
binding upon all of the parties.

                                   ARTICLE VI
                                 INDEMNIFICATION

     6.1 INDEMNIFICATION BY OWNER. Subject to Section 6.5, from and after the
Closing Date, Owner shall indemnify and hold Buyer, its Affiliates (including
the Company) and their respective officers, directors, agents and employees
harmless from and against any and all Claims to the extent such Claims arise
from or are related to (a) a breach by Owner or the Company of any
representation or warranty of Owner or the Company in this Agreement, (b) any

                                       22

<PAGE>

failure by Owner to perform or comply with any of the obligations of Owner in
this Agreement, (c) any failure of the Company to perform or comply with any of
its obligations under this Agreement, and (d) any Pre-Closing Liabilities.

     6.2 INDEMNIFICATION BY BUYER. Subject to Section 6.5.1, from and after the
Closing Date, Buyer shall indemnify and hold Owner, its Affiliates (including
the Company) and their respective officers, directors, agents and employees
harmless from and against any and all Claims to the extent such Claims arise
from or are related to (a) a breach by Buyer of any representation or warranty
of Buyer in this Agreement, and (b) any failure by Buyer to perform or comply
with any of the obligations of Buyer in this Agreement.

     6.3 NOTICE OF CLAIM FOR INDEMNIFICATION. Each Indemnitee shall notify the
indemnifying Party in writing of any Claim that the Indemnitee has determined
has given or could give rise to a Claim for indemnity under this Agreement (such
written notice being hereafter referred to as a "Notice of Claim") promptly
after the Indemnitee has made such a determination. In amplification of the
foregoing:

          6.3.1 A Notice of Claim shall specify in reasonable detail the nature
and estimated amount of any such Claim that the Indemnitee believes does, or
could, give rise to a right of indemnification hereunder.

          6.3.2 Failure of an Indemnitee timely to give a Notice of Claim shall
not release the indemnifying Party of its indemnity obligations except to the
extent that such failure directly causes or results in additional damages,
losses, liabilities or expenses, in which case the indemnifying Party shall be
released of its indemnity obligations only to the extent of such additional
damages, losses, liabilities or expenses.

          6.3.3 If the Indemnitee settles or compromises any such action or
Claim prior to giving a Notice of Claim, the indemnifying Party shall be
released of its indemnity obligations to the extent that the settlement or
compromise was not made with the prior written consent of such indemnifying
Party.

     6.4 DEFENSE OF UNDISPUTED CLAIMS. The indemnifying Party shall defend, in
good faith and at its expense, each Claim encompassed by a Notice of Claim which
it does not dispute. The Indemnitee, at its expense, shall have the right, but
not the obligation, to participate in the defense of such Claim, it being
understood thereby that settlement of such Claim shall, to the extent the
settlement fully resolves such Claim, relieve the indemnifying Party from any
requirement further to defend such Claim. In amplification of the foregoing:

          6.4.1 So long as the indemnifying Party is defending in good faith any
such Claim, the Indemnitee shall not settle or compromise the Claim without the
prior written consent of the indemnifying Party.

          6.4.2 The Indemnitee shall make available to the indemnifying Party
and its Representatives all records and other materials reasonably required for
use in defending against or otherwise contesting the Claim and shall cooperate
in good faith with the indemnifying Party; the indemnifying Party shall keep the
Indemnitee informed regarding the status and progress of the Claim and defense
of the Claim.

                                       23

<PAGE>

          6.4.3 If the indemnifying Party does not defend any Claim encompassed
by a Notice of Claim, the Indemnitee with respect thereto shall have no
obligation to do so, but the Indemnitee shall be permitted to do so at the
expense of the indemnifying Party without releasing or compromising the
Indemnitee's rights against the indemnifying Party in respect of the Claim and,
in such event, the Indemnitee may settle the Claim in any fashion determined by
the Indemnitee in its sole discretion and the indemnifying Party shall be fully
liable to the Indemnitee with respect thereto.

     6.5 DISPUTED CLAIMS FOR INDEMNIFICATION.6.5.1 In the event an indemnifying
Party disputes the validity or extent of any request for indemnification under
this Article VI and such dispute is not resolved amicably by or among the
indemnifying Party and the Indemnitee(s), such dispute shall be resolved
pursuant to Section 8.13.

     6.6 PAYMENT BY THE COMPANY. In the event the payment of any Claim is made
by the Company, the indemnifying Party shall contribute an amount equal to such
payment to the capital of the Company and shall not receive any additional
Shares or interest in the Company.

     6.7 EXCLUSIVE REMEDY. After the Closing, except for the provisions of
Article II, the remedies provided in this Article VI shall be exclusive and
enforceable in lieu of all other remedies for any breach of any representation,
warranty, covenant, obligation, agreement or other provision of this Agreement.

     6.8 LIMITATIONS. Notwithstanding anything in this Agreement to the
contrary, (a) each of Buyer and Owner shall be entitled to a credit or offset
against any liability under this Article VI in the amount of $250,000, and (b)
in no event shall the aggregate liability of Buyer or Owner arising under this
Article VI exceed the sum of the Purchase Price.

                                   ARTICLE VII
                                   TERMINATION

     7.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at any time
prior to the Closing by:

          7.1.1 Mutual written consent of Buyer and Owner;

          7.1.2 Buyer or Owner immediately upon written notice to the other
Parties if (a) any Governmental Entity shall have enacted, promulgated or issued
any statute, rule, regulation, ruling, writ, order or injunction which would
prohibit or render illegal the consummation of the transactions contemplated by
this Agreement, or (b) any authorizations, consents or approvals of any
Governmental Entity, including the DOI, the State Agency and the Federal Trade
Commission (with respect to the HSR Act), which are required to permit the
Closing to take place pursuant to the provisions of this Agreement are denied or
granted with conditions or requirements which are materially adverse to the
terminating Party and all appeals and means of appeal therefrom have been
exhausted;

          7.1.3 Buyer if a material breach of any provision of this Agreement
has been committed by Owner or the Company and such breach has not been (a)
waived in writing by Buyer, (b) cured by the breaching Party to the reasonable
satisfaction of Buyer within 15

                                       24

<PAGE>

Business Days after service by Buyer of a written notice upon the breaching
Party which describes the nature of such breach with reasonable particularity
(with a copy of such notice being provided to all Parties), or (c) the
reimbursement rates proposed by the State Agency for services under the
Full-Risk Medicaid Contract(s) are not adequate as determined by Buyer in its
sole discretion;

          7.1.4 Owner if a material breach of any provision of this Agreement
has been committed by Buyer and such breach has not been (a) waived in writing
by Owner, or (b) cured by Buyer to the reasonable satisfaction of Owner within
15 Business Days after service by Owner of a written notice upon Buyer which
describes the nature of such breach with reasonable particularity (with a copy
of such notice being provided to all Parties), or (c) the reimbursement rates
proposed by the State Agency for services under the Full-Risk Medicaid
Contract(s) are not adequate as determined by Owner in its sole discretion; or

          7.1.5 Buyer or Owner immediately upon written notice to the other
Parties if the Closing has not occurred on the earlier of (i) a final decision
by the State Agency to award the Full-Risk Medicaid Contracts to an unrelated
third party or parties, or (ii) July 1, 2008.

     7.2 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 7.1, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to the other Parties;
provided, however, (a) a Party in breach of this Agreement shall remain liable
for damages resulting from such breach, and (b) the provisions of this Section
7.2, 8.2, 8.10 and 8.13 shall survive any termination of this Agreement.

                                  ARTICLE VIII
                                  MISCELLANEOUS

     8.1 CONSTRUCTION.

          8.1.1 The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.

          8.1.2 Unless the context of this Agreement otherwise requires, the
following shall be applicable herein: (a) words using the singular or plural
number also include the plural or singular number, respectively; (b) headings
and titles of Articles, Sections, Exhibits and Sections of the Disclosure
Schedule are included for convenience only and shall not be considered a part of
this Agreement when interpreting or enforcing this Agreement; (c) references to
Sections, Articles and Exhibits are to the applicable Sections, Articles and
Exhibits of this Agreement; (d) use of the word "including" shall be
illustrative rather than exclusive and shall be interpreted in all instances to
mean "including, without limitation;" and (e) the predicate of any noun or
pronoun shall be the immediately preceding noun.

     8.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Without the prior written
approval of each of the Parties, no Party, either prior to or after the Closing,
shall issue, or consent to or cooperate with the issuance by a third party of, a
press release or other public announcement

                                       25

<PAGE>

regarding (a) the execution of this Agreement, or (b) any or all of the
transactions contemplated by this Agreement; provided, however, nothing herein
shall preclude a Party from complying with its or his respective
responsibilities under applicable Laws.

     8.3 ENTIRE AGREEMENT. Except as set forth in the Confidentiality Agreement,
this Agreement (a) constitutes the entire understanding and agreement of the
Parties with respect to the subject matter hereof, and (b) supersedes all prior
negotiations, correspondence, discussions and agreements, written or oral, among
the Parties with respect to the subject matter hereof.

     8.4 NO THIRD-PARTY BENEFICIARIES. None of the provisions contained in this
Agreement are intended by the Parties, nor shall they be deemed, to confer any
benefit on any person or entity not a Party to this Agreement other than any
Person entitled to indemnification under Article VI.

     8.5 FURTHER ASSURANCES. From and after the Agreement Date, each Party shall
execute and deliver such additional documents and other instruments and do all
such other acts and things as reasonably may be necessary or otherwise
appropriate to effect and implement the transactions contemplated by this
Agreement.

     8.6 SUCCESSORS AND ASSIGNS. All of the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors, assigns and heirs of the Parties.

     8.7 ASSIGNMENT. No Party shall have the right to assign this Agreement
without the prior written consent of each of the other Parties and any attempted
assignment of this Agreement by any of the Parties without such prior written
consents shall be of no force or effect.

     8.8 AMENDMENT. This Agreement may not be amended or modified unless
pursuant to a written instrument which refers specifically to this Agreement and
is executed by the Parties.

     8.9 NOTICES.

          8.9.1 Any notice or other instrument which is required or permitted to
be given under this Agreement to a Party shall be deemed sufficiently given if
(a) delivered personally, (b) sent by registered or certified U.S. Mail, return
receipt requested and postage prepaid, (c) sent by national overnight delivery
service (such as FedEx) with charges prepaid, or (d) sent by telefax, in each
instance, addressed and delivered personally or sent for delivery as set forth
on Exhibit B attached hereto, subject, however, to changes as provided in
Section 8.9.2.

          8.9.2 Each Party shall have the right, from time-to-time, to change
(a) its or his address, (b) the person to whose attention notices and other
communications are to be given, (c) its or his telefax number, and (d) the
entity, and particulars regarding such entity, to which copies of notices and
other communications to such Party are to be given, in each instance by written
notice thereof to the other Parties.

          8.9.3 Any notice or copy thereof (a) personally delivered shall be
deemed given when received by the intended recipient, (b) sent by telefax shall
be deemed given when so sent

                                       26

<PAGE>

to the intended recipient, provided the original of such notice or copy thereof
is given by another means specified in Section 8.9.1, and (c) sent by registered
or certified U.S. Mail or an overnight delivery service shall be deemed given on
the earlier of the date of receipt by the intended recipient or three days after
the date on which such notice or copy thereof is sent.

     8.10 EXPENSES AND ATTORNEYS' FEES. Each Party shall be responsible
exclusively for its own costs and expenses relating to (i) the negotiation and
preparation of this Agreement, (ii) the conduct of any due diligence in
connection with the transactions contemplated by this Agreement, (iii) any
actions taken to consummate the transactions contemplated by this Agreement, and
(iv) fulfillment of its obligations under this Agreement, in each instance
whether the Closing occurs, and (b) in no event shall any Party be responsible
for the fees of, or the costs and expenses incurred by, a Representative of
another Party.

     8.11 WAIVERS. No consent or waiver, express or implied, by any Party to or
for any breach or default by any other Party(ies) or the performance by any
other Party(ies) of their obligations under this Agreement shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance by such Party(ies) of the same or any other obligations of such
Party(ies) hereunder. To be effective, all such consents and waivers shall be in
writing and executed by the Party(ies) giving the consent or waiver. All such
consents and waivers shall be construed strictly. Except to the extent expressly
provided to the contrary herein, failure on the part of any Party to complain of
any act or failure to act of another Party(ies) or to declare another Party(ies)
in default, irrespective of how long such failure continues, shall not
constitute a waiver by such Party of its rights hereunder.

     8.12 SEVERABILITY. If any term, provision, condition or covenant of this
Agreement or the application thereof to any Party or circumstance shall be held
to be invalid or unenforceable to any extent in any jurisdiction, the remainder
of this Agreement and the application of such term, provision, condition or
covenant in any other jurisdiction or to persons or circumstances other than
those as to whom or which it is held to be invalid or unenforceable, shall not
be affected thereby, and each term, provision, condition and covenant of this
Agreement shall be valid and enforceable to the fullest extent permitted by Law.

     8.13 BINDING ARBITRATION. Any Claim by a Party or an Indemnitee against
another Party or Indemnitee, inclusive of a dispute under Article VI, arising
out of or relating to this Agreement or the breach thereof which is not resolved
amicably by the parties involved in the Claim shall be resolved exclusively by
arbitration in accordance with the following provisions:

          8.13.1 Arbitration shall (a) take place in Memphis, Tennessee, and (b)
be administered by the American Arbitration Association.

          8.13.2 Petitioner(s) shall indicate intent to commence arbitration of
a Claim by giving written notice of such intent to the Respondent(s).

          8.13.3 If the Petitioner(s) and Respondent(s) are unable to resolve
the Claim within 15 Business Days following the receipt by the Respondent(s) of
the notice identified in Section 8.13.2, arbitration shall commence upon the
delivery by the Petitioner(s) to the Respondent(s) of a petition complying with
the Arbitration Rules and setting forth at a minimum

                                       27

<PAGE>

(a) the acts or omissions complained of, (b) the Section or Sections of this
Agreement breached or otherwise involved, and (c) the relief sought. The
Respondent(s) shall respond to such petition in conformity with the Arbitration
Rules and counterclaims and cross-petitions shall be permitted if timely filed
and served.

          8.13.4 The arbitration shall be conducted in conformance with the
Arbitration Rules except as otherwise provided in this Section 8.13; provided,
however, (a) the Petitioner(s) and Respondent(s) may provide any instructions to
the arbitrator(s) which deviate from the Arbitration Rules as the Petitioner(s)
and Respondent(s) may mutually agree, and (b) unless the Petitioner(s) and
Respondent(s) mutually agree otherwise, they shall have the right to conduct
discovery in any manner and to the extent authorized by the Federal Rules of
Civil Procedure as interpreted by the Federal courts in the Western District of
Tennessee.

          8.13.5 If the Petitioner(s) and Respondent(s) are able to agree upon a
single arbitrator within ten Business Days following commencement of the
arbitration, such individual shall serve as the arbitrator.

          8.13.6 If the Petitioner(s) and Respondent(s) are unable to agree
timely upon a single arbitrator, there shall be three arbitrators designated as
follows: (a) Petitioner(s) shall designate one arbitrator; (b) Respondent(s)
shall designate one arbitrator; and (c) the respective arbitrators designated by
the Petitioner(s) and Respondent(s) shall select a third arbitrator within ten
Business Days following the date on which the last of them is designated;
provided, however, if the respective arbitrators designated by the Petitioner(s)
and Respondent(s) are unable to agree timely upon the selection of a third
arbitrator, the third arbitrator shall be appointed by the commercial panel of
the American Arbitration Association.

          8.13.7 In the event a single arbitrator is used, the written decision
of that arbitrator shall be final and binding upon the Petitioner(s) and
Respondent(s). In the event three arbitrators are used, the written decision of
at least two of the three arbitrators shall be final and binding upon the
Petitioner(s) and Respondent(s).

          8.13.8 With respect to any award in arbitration, the arbitrator(s):

               (a) Shall issue an award in writing which (i) sets forth findings
of fact, (ii) resolves each specific Claim, (iii) attaches a reasoned opinion,
and (iv) is signed by the single arbitrator or by at least two of the three
arbitrators, as the case may be;

               (b) Shall have no authority to award punitive damages;

               (c) May not award money damages unless the notice identified in
Section 9.13.2 is delivered within two years after the right of action accrues
or, in the case of a counterclaim or cross-petition, within two years after the
delivery of such counterclaim or cross-petition, provided, however, for purposes
of computing this limitation period, all periods during which facts material to
the right of action are not known and reasonably could not be known by the
Petitioner(s) or Respondent(s) seeking money damages shall be excluded;

               (d) May compel specific performance by the Petitioner(s) or the
Respondent(s) of their respective obligations under this Agreement or award
injunctive relief to

                                       28

<PAGE>

restrain any breach of this Agreement by a Petitioner or Respondent, in each
instance without the necessity of the Petitioner(s) (i) alleging or proving
damages as a result of the breach, or (ii) posting any bond; provided, however,
seeking or obtaining equitable relief shall not preclude a party to the
arbitration from also seeking or obtaining an award for money damages in the
arbitration subject to Sections 9.13.8(b) and 9.13.8(c);

               (e) Shall adjust any award to assure that no Petitioner(s) or
Respondent(s) obtains double recovery for any amounts duplicative of amounts for
which such party, directly or indirectly, has already received credit (i) under
another adjustment mechanism set forth in this Agreement, or (ii) in the
calculation of the Final Closing Date Net Worth; and

               (f) Shall assess to the non-prevailing party(ies) all (i)
administrative fees and expenses of the arbitrator(s) and the arbitration, and
(ii) fees and expenses incurred by the prevailing party(ies) in connection with
the arbitration; provided, however, the arbitrator(s) in its(their) discretion
may equitably allocate such fees and expenses between or among the Petitioner(s)
and Respondent(s).

          8.13.9 Judgment upon an award in arbitration may be entered in any
court of competent jurisdiction in the United States.

     8.14 RECITALS. Each recital to this Agreement is incorporated into and
shall constitute an integral part of this Agreement.

     8.15 EXHIBITS AND DISCLOSURE SCHEDULE. Each Exhibit and the Disclosure
Schedule shall be incorporated into, and shall constitute an integral part of,
this Agreement by this reference thereto.

     8.16 DISCLOSURE. At all times after the date of the shareholder approval
described in Section 4.1.8, UAHC shall comply in all material respects with the
applicable requirements of the Securities Act of 1933, as amended from time to
time, and the Securities and Exchange Act of 1934, as amended from time to time,
and the applicable rules and regulations of the SEC promulgated thereunder, with
respect to the disclosure of the existence of this Agreement, the Shareholder
Agreement (and the option granted to Buyer therein).

     8.17 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

                      [SIGNATURE PAGE IMMEDIATELY FOLLOWS]

                                       29

<PAGE>

                     [SIGNATURE PAGE TO PURCHASE AGREEMENT]

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

     THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE
ENFORCED BY THE PARTIES.

BUYER:                                  THE COMPANY:

By: /s/ John C. Molina                 By: /s/ Stephen D. Harris
    ---------------------------------      -------------------------------------
Name: John C. Molina                   Name: Stephen D. Harris
Title: Chief Financial Officer         Title: Chief Financial Officer

UAHC (OWNER):                           UTAT (OWNER):

By: /s/ William C. Brooks               By: /s/ William C. Brooks
    ---------------------------------       ------------------------------------
Name: William C. Brooks                 Name: William C. Brooks
Title: Chairman and Chief Executive     Title: Chairman and Chief Executive
       Officer                                 Officer

                                       30
<PAGE>

                                    EXHIBIT A
                                   DEFINITIONS

     "AFFILIATE" means any Person who or which, directly or indirectly,
controls, is controlled by or is under common control with, the referenced
Person. For purposes of this definition, the term "control" (including
"controlled by" or "under common control with") includes the authority to (a)
approve the admission of a majority of the members, shareholders or partners of
the referenced Person, or (b) appoint, elect or approve a majority of the Board
of the referenced Person.

     "AFFILIATE AGREEMENTS" means (i) the agreement executed by and among Buyer
(or an Affiliate of Buyer) and the Company regarding the administrative and
management services to be provided by Buyer to the Company, and (ii) the
agreement executed by and among Owner (or an Affiliate of Owner) and the Company
regarding the administrative and management services to be provided by Owner to
the Company. The form of such Affiliate Agreements is attached hereto as Exhibit
C, and the Affiliate Agreements shall be effective as of the Closing.

     "AGREEMENT" has the meaning set forth in the preface to the purchase
agreement to which this Exhibit A is attached.

     "AGREEMENT DATE" has the meaning set forth in the preface to the Agreement.

     "AMENDED ARTICLES" means amendments to the articles of incorporation of the
Company as set forth in Section 3.4, and which are to become effective as of the
Closing.

     "ARBITRATION RULES" means the Commercial Arbitration Rules of the American
Arbitration Association.

     "BENEFIT PLAN" means (a) each health, dental, disability, life or other
insurance, (b) all supplemental unemployment benefits, and (c) each
profit-sharing, pension or retirement plan, program, agreement or arrangement,
in each instance, sponsored, maintained or contributed to or required to be
contributed to by the Company for the benefit of Employees, former employees of
the Company or employees of the Company on the Agreement Date who are not
Employees.

     "BOARD" means the Board of Directors, Board of Managers, Board of Trustees
or similar governing body of the referenced Person.

     "BUSINESS" means all of the operations conducted by the Company, including
arranging for the provision of comprehensive health care services pursuant to
the terms of the Medicaid Contract and Medicare Contract.

     "BUSINESS DAY" means any day other than Saturday, Sunday or any day on
which banks in the City of New York, New York are closed.

     "BUYER" has the meaning set forth in the preface to the Agreement.

                                        1

<PAGE>

     "CLAIM" means any and all liabilities (whether asserted or unasserted,
absolute or contingent), obligations, losses, damages, deficiencies, demands,
disputes, claims, fines, penalties, interest, assessments, judgments, Liens,
charges, orders, decrees, rulings, dues, assessments, Taxes, actions,
injunctions, proceedings and suits of whatever kind and nature and all costs and
expenses relating thereto, including fees and expenses of counsel, accountants
and other experts, and other expenses of investigation and litigation.

     "CLOSING" means consummation of the transaction whereby Buyer purchases the
Shares from Owner pursuant to the provisions of this Agreement.

     "CLOSING DATE" means the date on which the Closing occurs.

     "CMS" means the Centers for Medicare and Medicaid Services.

     "CODE" means the Internal Revenue Code of 1986, as amended.

     "THE COMPANY" has the meaning set forth in the preface to the Agreement.

     "THE COMPANY ARTICLES" means the articles of incorporation in effect as of
the Agreement Date.

     "CONFIDENTIAL INFORMATION" means, to the extent not generally available or
ascertainable from public or published information or trade sources or not a
part of the public domain, the following information related to the Company or
the Business: (a) financial statements, (b) rate, price, cost and expense data,
(c) trade secrets, (d) strategic planning information, (e) Enrollee information,
(f) agreements with providers and third party payors, (g) employee lists, (h)
vendor lists, and (i) all other information of a proprietary nature.

     "CONFIDENTIALITY AGREEMENT" means that certain Mutual Confidentiality and
Non-Disclosure Agreement dated October 1, 2007, between Buyer and Owner.

     "CONTRACT" means any contract, agreement, arrangement, understanding or
instrument, whether oral or written.

     "DESIGNATED CONTRACTS" means those Contracts identified in Section 3.4.17
of the Disclosure Schedule.

     "DISCLOSURE SCHEDULE" means the series of disclosures made by the Company
and/or Owner to Buyer on a document titled "Disclosure Schedule" and attached
hereto (or, in certain cases as identified in such attachment, by cd-rom).

     "DOI" means the Tennessee Department of Commerce and Insurance.

     "EMPLOYEE" means an employee of the Company on the Closing Date.

     "EMPLOYMENT AGREEMENT" means a contract, offer letter or agreement of the
Company with any Employee, former employee of the Company or employee of the
Company on the Agreement Date who is not an Employee pursuant to which the
Company has any actual or

                                        2

<PAGE>

contingent liability or obligation to provide compensation or benefits in
consideration for past, present or future services (including payments in
connection with the transactions contemplated by this Agreement).

     "ENROLLEES" means those individuals enrolled in the Medicaid and/or
Medicare managed care health plan established and maintained by the Company.

     "ENVIRONMENTAL, HEALTH AND SAFETY REQUIREMENTS" means all Federal, state
and local statutes, laws, rules, regulations and ordinances concerning public
health and safety, worker health and safety, environmental regulation or control
and pollution or protection of the environment, including all those relating to
the presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control or cleanup of any Hazardous Substances, as
such requirements are enacted and in effect on or prior to the Closing Date.

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

     "FINANCIAL STATEMENTS" means the financial reports described in Section
2.4.11.

     "FULL-RISK MEDICAID CONTRACT(S)" means one or more contracts to be executed
by the Company with the State Agency to provide comprehensive medical services
on a capitated, full-risk basis to Medicaid beneficiaries in either or both the
Western Grand Region of Tennessee or Eastern Grand Region of Tennessee.

     "GAAP" means United States generally accepted accounting principles as in
effect from time to time, consistently applied.

     "GOVERNMENTAL ENTITY" means any Federal, state, regional, county, municipal
or local court, agency, department, division, board, bureau or commission or
other governmental or regulatory authority.

     "HAZARDOUS SUBSTANCE" means petroleum, petroleum by-products,
polychlorinated biphenyls and any other chemicals, materials, substances or
wastes which are currently defined or regulated as "hazardous substances,"
"hazardous materials," "hazardous wastes," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants," "toxic
air pollutants," "hazardous air pollutants," "pollutants" or "contaminants"
under any Law.

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

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

     "IBNR" means the actuarial estimate of Medical Claims which remain unpaid,
including (a) undisputed Medical Claims reported to the Company, (b) Medical
Claims reported to the Company but disputed by the Company, and (c) Medical
Claims incurred but not yet reported to the Company.

                                        3

<PAGE>

     "INDEMNITEE" means a Person entitled to indemnification pursuant to
Sections 6.1 or 6.2, as the case may be.

     "INTELLECTUAL PROPERTY" means any United States or foreign trademarks,
trade names, service marks, Internet domain names, copyrights, inventions,
patents, trade secrets, know-how, proprietary processes, formulae, customer
lists, confidential information, computer software, databases, technology and
all other intellectual property rights, and any applications or registrations
relating to any of the foregoing and the goodwill relating to any of the
foregoing.

     "KNOWLEDGE OF BUYER" means the actual knowledge of Buyer's Chief Executive
Officer, Chief Operating Officer or Chief Financial Officer after reasonable
inquiry of any employees of Buyer who have principal responsibility for the
matter in question or are otherwise likely to have information relevant to the
matter.

     "KNOWLEDGE OF OWNER" means the actual knowledge of Owner's Chief Executive
Officer, Chief Operating Officer or Chief Financial Officer after reasonable
inquiry of any employees of Owner who have principal responsibility for the
matter in question or are otherwise likely to have information relevant to the
matter.

     "LAWS" means all applicable Federal, state and local laws, policies, rules,
regulations, orders, guidance, interpretations, manuals and communications,
including Medicaid, Medicare, the State HMO Law, HIPAA, the Environmental,
Health and Safety Requirements and the Securities Act.

     "LEASES" means all leases and other agreements (written or oral), including
all amendments, extensions, renewals, guarantees and other agreements with
respect thereto in which the Company is the lessee or lessor.

     "LICENSE" means any franchise, approval, permit, order, authorization,
consent, license, registration or filing, certificate, variance and any other
similar right obtained from or filed with any Governmental Entity.

     "LIEN" means any mortgage, pledge, lien, charge, security interest, defect
of title, encroachment, adverse claim of ownership or use, deficiency,
exception, restriction on transfer (such as a right of first refusal) or other
encumbrance of any kind or character.

     "MATERIAL ADVERSE EFFECT" means any event, occurrence, circumstance, change
or other matter which, individually or in the aggregate with any other events,
occurrences, circumstances, changes or other matters, has, or is reasonably
likely to have, (a) an adverse monetary effect on the Business or the prospects
of the Business exceeding $1,000,000 during the period commencing on the
Agreement Date and ending on the Closing Date, exclusive of Medical Claims, or
(b) an adverse effect on the ability of any Party to consummate the transactions
contemplated by this Agreement.

     "MEDICAID" means the Federal-State health insurance programs administered
by the State through the State Agency which provide medical assistance to
eligible persons covered under Title XIX and Title XXI (including the State
Children's Health Insurance Program) of the Social Security Act.

                                        4

<PAGE>

     "MEDICAID CONTRACT" means the agreement between the State Agency and the
Company, as amended from time to time, pursuant to which the Company provides
administrative services to the State Agency.

     "MEDICAL CLAIMS" means all medical claims, liabilities or other obligations
incurred by the Company on or prior to the Closing Date in connection with the
provision of covered health care services to Enrollees.

     "MEDICARE" means the Federal health insurance program administered by CMS
as Medicare Advantage and that provides medical assistance to eligible persons.

     "MEDICARE CONTRACT" means the contract between the Company and CMS
effective as of January 1, 2008, and as amended from time to time, pursuant to
which the Company provides comprehensive health care services to Medicare
Enrollees.

     "MINIMUM NET WORTH" means Fifteen Million Dollars ($15,000,000) in
statutory net worth as determined in accordance with SAP (provided, however, for
purposes of this Agreement, no credit shall be given to any sums attributed to
deferred tax assets or goodwill), and such determination shall be subject to
post-close adjustments made within six months following the Closing Date that
reconcile accrued amounts at the close with actual amounts.

     "NOTICE OF CLAIM" has the meaning set forth in Section 6.3.

     "ORDINARY COURSE OF BUSINESS" means the conduct of the Business in a
commercially reasonable manner in the ordinary course consistent with past
practices and in compliance in all material respects with applicable Laws and
contractual obligations.

     "OWNER" has the meaning set forth in the preface to the Agreement.

     "PARTY" or "PARTIES" has the meaning set forth in the preface to the
Agreement.

     "PERMITTED LIENS" means (a) liens for current Taxes not yet due and payable
or for current Taxes which the taxpayer is contesting in good faith through
appropriate proceedings and for which appropriate reserves have been established
in accordance with GAAP, (b) purchase money liens and liens securing rental
payments under capital lease arrangements, arising in each case in the Ordinary
Course of Business, that would not, individually or in the aggregate, materially
interfere with the present use of or materially impair the value of the affected
assets or properties, (c) liens of landlords, mechanics, materialmen, workmen,
repairmen, warehousemen and carriers arising in the Ordinary Course of Business
which are not overdue and which would not, individually or in the aggregate,
materially interfere with the present use of or materially impair the value of
the affected assets or properties, and (d) all applicable zoning, building and
similar laws which are not violated by current occupancy or use and which would
not, individually or in the aggregate, materially interfere with the present use
of or materially impair the value of the affected assets or properties.

     "PERSON" means an individual, partnership, corporation, limited liability
company, an unincorporated association, joint stock company, trust, joint
venture and any other entity, including a Governmental Entity.

                                        5

<PAGE>

     "PETITIONER" means a Party or an Indemnitee asserting a Claim in
arbitration pursuant to Section 8.13.

     "PRE-CLOSING LIABILITIES" means liabilities or obligations, direct or
indirect, absolute or contingent, known or unknown, whether or not accrued,
arising from or related to the operations of the Business prior to the Closing
Date other than liabilities or obligations (a) accrued or reserved for on the
balance sheets included in the Financial Statements, or (b) set forth in the
Disclosure Schedule.

     "PROVIDER" means any physician, hospital, skilled nursing facility, home
health agency or other Person or network of Persons who or which is engaged in
providing or arranging for the provision of health care or related services or
supplies to or for the benefit of the Company.

     "PROVIDER AGREEMENTS" means Contracts entered into with Providers by the
Company for the provision of health care or related services or supplies to
Enrollees.

     "PURCHASE PRICE" means a sum equal to (i) $4,500,000 in the event the
Company executes one (1) Full-Risk Medicaid Contract, or (ii) $18,040,000 in the
event the Company executes two (2) Full-Risk Medicaid Contracts.

     "REPRESENTATIVE" means, with respect to any Person, any manager, director,
officer, employee, lender, partner or agent, including any accountant,
consultant, banker, attorney or financial advisor, of such Person.

     "RESPONDENT" means a Party or Indemnitee against whom or which a Claim is
asserted by a Petitioner or Petitioners.

     "SAP" means statutory accounting principles as codified by the National
Association of Insurance Commissioners subject to the exceptions mandated by the
DOI.

     "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

     "SHARES" means the issued and outstanding shares to be issued by the
Company to Buyer and that represent the percentage interest set forth in Section
2.4.9(a).

     "SHAREHOLDER AGREEMENT" means the agreement executed by and among Buyer,
Owner, and the Company to be effective as of the Closing regarding the rights
and obligations of the parties as shareholders in the Company. The form of such
Shareholder Agreement is attached hereto as Exhibit D, and the Shareholder
Agreement shall be effective as of the Closing.

     "STATE" means the State of Tennessee.

     "STATE AGENCY" means the State Department of Finance and Administration,
Bureau of TennCare.

     "STATE HMO LAW" means the Tennessee statutes and regulations regulating
health maintenance organizations, as amended from time to time.

                                        6

<PAGE>

     "TAX ALLOCATION AGREEMENT" means the agreement executed by Owner and
certain of its subsidiaries, including the Company, governing the allocation of
Federal income taxes among Owner (as the parent) and its current and future
subsidiaries that are required under the Code to file consolidated income tax
returns.

     "TAX CLAIM" means any pending or threatened audit or assessment, suit,
proposed adjustment, deficiency, dispute, administrative or judicial proceeding
or other similar claim by a taxing authority related to Taxes.

     "TAXES" means (a) all net income, gross income, gross receipts, sales, use,
ad valorem, franchise, profits, license, lease, service, service use,
withholding, employment, payroll, earnings, net worth, unemployment insurance,
Social Security, Medicare, excise, severance, transfer, value added,
documentary, mortgage, registration, stamp, occupation, real or personal
property, environmental, premium, property, windfall profits, customs, duties
and other taxes, fees, levies, assessments or charges of any kind whatsoever,
together with any interest, penalties, fines and other additions with respect
thereto, imposed by any Federal, state or local government, (b) any penalties,
interest, fines or other additions to tax for the failure to collect, withhold,
file or pay over any of the foregoing, or to file any Tax Return which is
untrue, incorrect or incomplete, and (c) amounts which could become payable, in
whole or in part, by a person liable with respect to the items identified in
subparagraphs (a) and (b) immediately above (including any obligation in
connection with (i) a duty to collect, withhold or pay over any Tax, (ii) any
obligation to contribute to the payment of any Taxes determined on a
consolidated, combined or unitary basis, (iii) any liability as a transferee, or
(iv) any liability as a result of any express or implied obligation to indemnify
or pay the Tax obligations of another person). "Tax" means any one of the
foregoing Taxes.

     "TAX RETURNS" means (a) all reports, declarations, filings, questionnaires,
estimates, returns, information statements and similar documents relating to, or
required to be filed in respect of, any Taxes, including any amendments thereof,
and (b) any statements, returns, reports or similar documents required to be
filed pursuant to Part III of Subchapter A of Chapter 61 of the Code or pursuant
to any similar income, excise or other tax provision of Federal, state or local
law, including any amendments thereof. "Tax Return" means any one of the
foregoing Tax Returns.

     "TERRITORY" means the State of Tennessee.

     "THIRD PARTY" means any Person other than a Party or an Affiliate of a
Party.

     "TRANSFER TAXES" means any sales, use, transfer, stamp, registration,
documentary, recording or similar Taxes, if any, together with any interest,
penalties, fines, costs, fees, additions to tax or additional amounts with
respect thereto, incurred in connection with the transactions contemplated by
this Agreement.

                                        7

<PAGE>

                                    EXHIBIT B
                                     NOTICES

IF TO THE COMPANY:   UAHC HEALTH PLAN
                     ATTN: PRESIDENT
                     1769 PARAGON DRIVE, SUITE 100
                     MEMPHIS, TN 38132

IF TO OWNER:         UNITED AMERICAN OF TENNESSEE, INC.
                     ATTN: CHIEF FINANCIAL OFFICER
                     300 RIVER PLACE, SUITE 4950
                     DETROIT, MI 48207

WITH A COPY TO:      HONIGMAN MILLER SCHWARTZ AND COHN LLP
                     ATTN: ALEX L. PARRISH
                     2290 FIRST NATIONAL BUILDING
                     DETROIT, MI 48226

IF TO BUYER:         MOLINA HEALTHCARE, INC.
                     ATTN: CHIEF FINANCIAL OFFICER
                     200 OCEANGATE, SUITE 100
                     LONG BEACH, CA 90802-4317

WITH A COPY TO:      MOLINA HEALTHCARE, INC.
                     LEGAL AFFAIRS DEPARTMENT
                     ATTN: CHIEF LEGAL OFFICER
                     2277 FAIR OAKS BOULEVARD, SUITE 440
                     SACRAMENTO, CA 95825

IF TO UAHC:          UNITED AMERICAN HEALTHCARE CORPORATION
                     ATTN: CHIEF FINANCIAL OFFICER
                     300 RIVER PLACE, SUITE 4950
                     DETROIT, MI 48207

WITH A COPY TO:      HONIGMAN MILLER SCHWARTZ AND COHN LLP
                     ATTN: ALEX L. PARRISH
                     2290 FIRST NATIONAL BUILDING
                     DETROIT, MI 48226

<PAGE>

                                    EXHIBIT C
                              AFFILIATE AGREEMENTS

              (Omitted from Exhibit 10.1 to Form 8-K Current Report
                    of United American Healthcare Corporation
                   dated March 24, 2008, because not material)

                                        2

<PAGE>

                                    EXHIBIT D
                              SHAREHOLDER AGREEMENT

                                        3
<PAGE>

                                    EXHIBIT D
                              SHAREHOLDER AGREEMENT

                       UAHC HEALTH PLAN OF TENNESSEE, INC.

                              SHAREHOLDER AGREEMENT

     This Shareholder Agreement (this "Agreement") is dated as of _________,
2008, and is executed on the dates set opposite the signatures below by and
among the persons who own (or will own once they are issued) all of the Shares
(as defined below) (each a "Shareholder," collectively the "Shareholders") and
UAHC Health Plan of Tennessee, Inc., a Tennessee corporation (the
"Corporation").

                                    RECITALS

     A. Pursuant to that certain Purchase Agreement dated as of March 24, 2008
("Purchase Agreement"), Molina Healthcare, Inc., a Delaware corporation ("MHI")
has agreed to acquire _________ shares of capital stock of the Corporation from
United American of Tennessee, Inc., a Tennessee corporation ("UAHC"), upon the
condition, among others, that the Shareholders and the Corporation enter in this
Agreement.

     B. Upon the closing of the purchase agreement described above, the
Shareholders will own all of the issued and outstanding shares of capital stock
of the Corporation (the "Shares").

     C. In order to facilitate the management of the Corporation, the
implementation of any administrative services agreements among the Shareholders
and the Corporation, and the ability of the Corporation to effectively govern
its affairs, the Shareholders and the Corporation desire to enter into this
Agreement.

                                    AGREEMENT

                                    ARTICLE 1

                               GENERAL PROVISIONS

     1.1 RESTRICTION ON TRANSFER. To accomplish the purpose of this Agreement,
any transfer, conveyance, sale, gift, assignment, pledge, mortgage,
hypothecation, encumbrance, exchange, or alienation of any of the Shares,
whether voluntary, involuntary or by operation of law (in each event a
"Transfer"), other than according to the terms of this Agreement is void and
transfers no right, title or interest in or to any of these shares to the
purported transferee, buyer, donee, assignee, pledgee, or encumbrance holder.
This Agreement is made with respect to all of

                                        1

<PAGE>

the Shares, whether outstanding now or at any later date. Each Shareholder shall
have the right to vote Shares owned of record in such Shareholder's name and to
receive dividends payable on such Shares until such Shares are sold or
transferred as provided in this Agreement.

     1.2 AGREEMENT AVAILABLE FOR INSPECTION. An original of this Agreement, duly
executed by the Corporation and each of the Shareholders, shall be delivered to
the Secretary of the Corporation, maintained by the Secretary at the principal
executive office of the Corporation, and made available for inspection by any
person requesting to see it.

     1.3 LEGEND ON SHARE CERTIFICATE. Each Shareholder agrees that the
certificates representing Shares (and any certificates issued pursuant to
Section 3.3) shall display the following legend in a prominent manner:

     Notice is hereby given that the transfer, sale, assignment, hypothecation,
     encumbrance, or alienation of the shares represented by this certificate is
     restricted by a Shareholder Agreement among this Corporation and all the
     Shareholders of this Corporation.

     A copy of such agreement is available for inspection during normal business
     hours at the principal executive office of the Corporation. All the terms
     and provisions of such agreement are hereby incorporated by reference and
     made a part of this certificate.

     The shares represented by this certificate have been acquired for
     investment and have not been registered under the Securities Act of 1933,
     as amended. The shares represented by this certificate have been issued
     pursuant to an exemption from qualification under the Tennessee Securities
     Law, as amended.

                                    ARTICLE 2

                    OWNERSHIP, VESTING AND PURCHASE OF SHARES

     2.1 OWNERSHIP OF SHARES. After Closing, as defined in the Purchase
Agreement, the Shareholders will own all of the Shares as follows:

     MHI - ______ shares

     UAHC - _____ shares

     2.2 RIGHT OF FIRST REFUSAL. Except as provided in this Agreement, each of
the Shareholders agrees not to Transfer any Shares by any means without offering
to Transfer such Shares to the other Shareholder as set forth in this Section.

          (a) Pursuant to the terms and conditions set forth in this Section,
each of the Shareholders (the "Selling Shareholder") hereby grants to the other
Shareholder (the "Acquiring Shareholder), and such Acquiring Shareholder hereby
accepts from the Selling Shareholder, a right of first refusal, as more
specifically set forth in this Section. In the event a Selling Shareholder
receives a bona fide written offer, whether or not solicited, from any
unaffiliated

                                        2

<PAGE>

third party, as defined below (the "Third-Party Offer") to purchase any Shares,
and if such Selling Shareholder is willing to accept such offer, then such
Selling Shareholder shall deliver a copy of the Third Party Offer to the
Acquiring Shareholder accompanied by copies of all information previously
delivered to said third-party, along with such Selling Shareholder's written
offer to sell the Shares to the Acquiring Shareholder upon the same terms and
conditions as set forth in such Third-Party Offer (the "Selling Shareholder's
Offer").

          (b) The Acquiring Shareholder shall have the option, exercisable
within fifteen (15) days after receipt of the Selling Shareholder's Offer, to
purchase all of the Shares that are the subject of the Selling Shareholder's
Offer upon the terms and conditions set forth in the Selling Shareholder's
Offer.

               (i) If the Selling Shareholder's Offer includes non-cash
consideration (including, but not limited to, promissory note, marketable or
unmarketable securities, or real estate) the Acquiring Shareholder shall propose
similar non-cash consideration, which such Selling Shareholder, at its sole
option, may accept or reject. In the event the Selling Shareholder rejects the
Acquiring Shareholder's proposal of non-cash consideration, the non-cash
consideration set forth in the Selling Shareholder's Offer shall be valued, as
set forth below, and such valuation shall be paid to such Selling Shareholder in
cash in accordance with the other terms and conditions set forth in the Selling
Shareholder's Offer.

               (ii) If the Acquiring Shareholder and the Selling Shareholder are
unable to reach agreement through negotiations between themselves within fifteen
(15) days after such Selling Shareholder's written rejection of the Acquiring
Shareholder's proposed non-cash consideration, the value of the non-cash
consideration shall be determined by an independent appraiser in the following
manner:

                    (A) Within ten (10) business days, each party shall engage
at their sole expense one (1) appraiser with experience in the health care
industry, and such appraisers shall select a third appraiser with experience in
the health care industry, who shall be engaged as the sole appraiser to
determine the value of the non-cash consideration;

                    (B) Any value of the non-cash consideration determined in
accordance herewith shall, in the absence of fraud or gross negligence, be
binding and conclusive upon the Acquiring Shareholder and the Selling
Shareholder; and

                    (C) The costs, expenses, and fees of such appraiser shall be
paid one-half (1/2) by the Acquiring Shareholder and the Selling Shareholder.

          (c) For purposes of this Agreement, "unaffiliated third party" means
any individual, person, corporation, partnership or other entity (i) of which
any Selling Shareholder, or an immediate family member of any Selling
Shareholder has thirty-three percent (33%) or less ownership or control, (ii)
which is not under common ownership or control with any Selling Shareholder, an
immediate family member of any Selling Shareholder (where control means
thirty-three percent (33%) or greater voting representation of partners,
shareholders, board of directors or other governing body), and (iii) who is not
an immediate family member of any Selling Shareholder.

                                        3

<PAGE>

          (d) If the Acquiring Shareholder fails to timely exercise its right of
first refusal granted herein, then the Shares may be Transferred to the proposed
transferee on the same terms and conditions set forth in the Third Party Offer
for up to sixty (60) days, after which the provisions of this Section must again
be complied with before any Transfer.

          (e) Notwithstanding that the Shares are transferred to a third-party
in accordance with this Agreement, the right of first refusal granted to the
Acquiring Shareholder shall continue to apply to all Shares and to any
subsequent Transfer.

     2.3 TAG-ALONG RIGHTS.

          (a) In the event of a proposed Transfer of Shares by a Shareholder (a
"Transferring Shareholder"), each Shareholder (other than the Transferring
Shareholder) shall have the right to participate on the same terms and
conditions and for the same per Share consideration as the Transferring
Shareholder in the Transfer in the manner set forth in this Section 2.3. Prior
to any such Transfer, following compliance with Section 2.2, the Transferring
Shareholder shall deliver to the Corporation prompt written notice (the
"Transfer Notice"), which the Corporation will forward to the Shareholders
(other than the Transferring Shareholder, the "Tag-Along Participants") within 5
days of receipt thereof, which notice shall state (i) the name of the proposed
Transferee, (ii) the number of Shares proposed to be Transferred (the
"Transferred Securities") and the percentage (the "Tag Percentage") that such
number of Shares constitute of the total number of Shares owned by such
Transferring Shareholder, (iii) the proposed purchase price, including a
description of any non-cash consideration sufficiently detailed to permit the
determination of the fair market value thereof, and (iv) the other material
terms and conditions of the proposed Transfer, including the proposed Transfer
date (which date may not be less than 35 days after delivery to the Tag-Along
Participants of the Transfer Notice). Such notice shall be accompanied by a
written offer from the proposed Transferee to purchase the Transferred
Securities, which offer may be conditioned upon the consummation of the sale by
the Transferring Shareholder, or the most recent drafts of the purchase and sale
documentation between the Transferring Shareholder and the Transferee which
shall make provision for the participation of the Tag-Along Participants in such
sale consistent with this Section 2.3.

          (b) Each Tag-Along Participant may elect to participate in the
proposed Transfer to the proposed Transferee identified in the Transfer Notice
by giving written notice to the Corporation and to the Transferring Shareholder
within the 15 day period after the delivery of the Transfer Notice to such
Tag-Along Participant, which notice shall state that such Tag-Along Participant
elects to exercise its rights of tag-along under this Section 2.3 and shall
state the maximum number of shares sought to be Transferred (which number may
not exceed the product of (i) all such Shares owned by such Tag-Along
Participant, multiplied by (ii) the Tag Percentage). Each Tag-Along Participant
shall be deemed to have waived its right of tag-along with respect to the
Transferred Securities hereunder if it fails to give notice within the
prescribed time period. The proposed Transferee of Transferred Securities will
not be obligated to purchase a number of Shares exceeding that set forth in the
Transfer Notice, and in the event such Transferee elects to purchase less than
all of the additional Shares sought to be Transferred by the Tag-Along
Participants, the number of Shares to be Transferred by the Transferring
Shareholder and each such Tag-Along Participant shall be reduced so that each
such Shareholder

                                        4

<PAGE>

is entitled to sell its Pro Rata Portion of the number of Shares the proposed
Transferee elects to purchase (which in no event may be less than the number of
Transferred Securities set forth in the Transfer Notice).

          (c) Each Tag-Along Participant, if it is exercising its tag-along
rights hereunder, shall deliver to the Transferring Shareholder at the closing
of the Transfer of the Transferring Shareholder's Transferred Securities to the
Transferee certificates representing the Transferred Securities to be
Transferred by such holder, duly endorsed for transfer or accompanied by stock
powers duly executed, in either case executed in blank or in favor of the
applicable purchaser against payment of the aggregate purchase price therefor by
wire transfer of immediately available funds. Each Shareholder participating in
a sale pursuant to this Section 2.3 shall receive consideration in the same form
and per share amount after deduction of such Shareholder's proportionate share
of the related expenses. Each Shareholder participating in a sale pursuant to
this Section 2.3 shall agree to make or agree to the same customary
representations, covenants, indemnities and agreements as the Transferring
Shareholder so long as they are made severally and not jointly and the
liabilities thereunder are borne on a pro rata basis based on the consideration
to be received by each Shareholder; provided, that any general indemnity given
by the Transferring Shareholder, applicable to liabilities not specific to the
Transferring Shareholder, to the Transferee in connection with such sale shall
be apportioned among the Shareholders participating in a sale pursuant to this
Section 2.3 according to the consideration received by each such Shareholder and
shall not exceed such Shareholder's net proceeds from the sale; provided,
further, that any representation relating specifically to a Shareholder and/or
its ownership of the Equity Securities to be Transferred shall be made only by
that Shareholder. The fees and expenses incurred in connection with a sale under
this Section 2.3 and for the benefit of all Shareholders (it being understood
that costs incurred by or on behalf of a Shareholder for his, her or its sole
benefit will not be considered to be for the benefit of all Shareholders), to
the extent not paid or reimbursed by the Corporation or the Transferee or
acquiring Person, shall be shared by all the Shareholders on a pro rata basis,
based on the consideration received by each Shareholder in respect of its Equity
Securities to be Transferred; provided that no Shareholder shall be obligated to
make any out-of-pocket expenditure prior to the consummation of the transaction
consummated pursuant to this Section 2.3 (excluding de minimis expenditures).
The proposed Transfer date may be extended beyond the date described in the
Transfer Notice to the extent necessary to obtain required approvals of
Governmental Entities and other required approvals and the Corporation and the
Shareholders shall use their respective commercially reasonable efforts to
obtain such approvals.

          (d) If the Transferring Shareholder sells or otherwise Transfers to
the Transferee any of its Shares in breach of this Section 2.3, then each
Tag-Along Participant shall have the right to sell to each Transferring
Shareholder, and each Transferring Shareholder undertakes to purchase from each
Tag-Along Participant, the number of Shares that such Tag-Along Participant
would have had the right to sell to the Transferee pursuant to this Section 2.3,
for a per Share amount and form of consideration and upon the terms and
conditions on which the Transferee bought such Shares from the Transferring
Shareholder, but without any indemnity being granted by any Tag-Along
Participant to the Transferring Shareholder; provided that nothing contained in
this Section 2.3(d) shall preclude any Shareholder from seeking alternative
remedies against any such Transferring Shareholder as a result of its breach of
this Section 2.3.

                                        5

<PAGE>

                                    ARTICLE 3

                                ADDITIONAL SHARES

     3.1 ADDITIONAL CAPITAL INVESTMENT; DIVIDENDS. A Shareholder will be issued
additional Shares by the Corporation whenever, upon a capital call issued by the
Board of Directors of the corporation as set forth below, such Shareholder makes
an additional investment in the Corporation either (a) to provide working
capital reasonably required by the Corporation for its operations, or (b) to
provide capital for acquisitions of equipment or other capital expenditures, (c)
as may be required by the State Agency or DOI, or (d) for other business
purposes as may be reasonably determined by the Corporation for its operations.
Such Shareholder shall be issued the number of Shares as the Board of Directors
and the contributing Shareholder shall agree upon at such time. Nothing herein
shall be construed as requiring or mandating any additional investment by any
Shareholder in the Corporation.

                                    ARTICLE 4

                                     OPTION

     4.1 GRANT OF OPTION TO MHI.

          (a) Pursuant to the terms and conditions set forth herein, UAHC grants
to MHI, and MHI accepts from UAHC, the exclusive right and option (the "Option")
to purchase all of UAHC's right, title and interest in and to the stock of the
Corporation then owned by UAHC ("UAHC Stock"). The Option may be exercised at
any time between the dates that are twenty-four (24) months and forty-eight (48)
months (in the event the Corporation executes one (1) Full-Risk Medicaid
Contract), or thirty-six (36) months and sixty (60) months (in the event the
Corporation executes two (2) Full-Risk Medicaid Contracts), from the effective
date of the Full-Risk Medicaid Contract(s) (as described in the Purchase
Agreement). Further, in the event the Corporation executes one (1) Full-Risk
Medicaid Contract, the Option may be exercised at any time (i) the Corporation
requires a capital infusion of more than $5,000,000 upon a capital call by the
Board of Directors as set forth above, or the Corporation requires additional
capital as mandated by the State Agency and/or DOI, and (ii) UAHC declines for
whatever reason to contribute its proportionate share, and (iii) MHI elects to,
and actually contributes one hundred percent (100%) of the required capital.

          (b) The purchase price for the UAHC Stock shall be equal to the then
percentage interest UAHC owns of the Corporation multiplied by the Fair Market
Value of the Corporation, as defined herein;

          (c) The "Fair Market Value of the Corporation" shall be measured as of
the closing date of the purchase as set forth above, and shall be equal to the
sum of (1) the Medicaid membership multiplied by $345 per Medicaid member), plus
(2) the Medicare Advantage and/or Medicare Advantage Special Needs Plan
membership multiplied by $2,500 per Medicare member, plus (3) the market value
of any Medicare Advantage Prescription Drug Program ("PDP") plan business
operations, plus (4) the then sum of capital held by the Corporation in excess
of the statutory minimum capital required. For purposes of establishing the
market value

                                        6

<PAGE>

of the Medicare Advantage PDP line of business, the parties will agree upon a
dispute resolution process in the event the parties cannot reach agreement as to
the value of such line of business.

          (d) The Option shall be exercised by MHI giving a written notice of
exercise, and preparing and delivering a stock purchase agreement ("UAHC Stock
Purchase Agreement") to UAHC. Such UAHC Stock Purchase Agreement shall be in
form and substance similar to the Purchase Agreement; provided, however, such
UAHC Stock Purchase Agreement shall include provisions for indemnification,
non-competition, and non-solicitation that are usual and customary for similar
transactions in which a majority owner is conveying its stock holdings.

          (e) If MHI gives UAHC a timely Notice of Exercise and UAHC Stock
Purchase Agreement, UAHC shall (i) execute and deliver the UAHC Stock Purchase
Agreement to MHI within fifteen (15) days of delivery of the MHI's notice of
exercise, and (ii) pursuant to the UAHC Stock Purchase Agreement, close the
purchase and sale of the UAHC Stock within three (3) days thereafter by delivery
of the UAHC Stock to MHI properly endorsed, and accompanied by any other
instruments necessary to transfer the UAHC Stock to MHI.

          (f) To the extent not previously conveyed, UAHC shall arrange for its
tangible and intangible assets, and the tangible and intangible assets of its
Affiliates, that are used and useful to the business of the Corporation to be
transferred and conveyed to the Corporation prior to the closing at not cost or
charge. In addition, UAHC shall grant the Corporation a royalty-free license in
perpetuity for Healthtrek for use in Tennessee. Such assets shall include
network contracts, vendor contracts, and software licenses; provided, however,
that such assets shall not include the assets set forth in Exhibit A, attached
hereto. In addition, MHI shall have the right to offer employment at the
Corporation to any employees of UAHC or its Affiliates who primarily worked on
the business and operations of the Corporation, and UAHC shall reasonably
cooperate in conveying such offers of employment to such employees.

          (g) All closing costs, including, but not limited to the attorney's
fees of each party, shall be borne solely by the party incurring such costs or
fees.

          (h) Further, in the event the shareholder approval described in
Section 4.1.8 of the Purchase Agreement is not obtained for any reason (and such
condition to closing is waived by Buyer), the option to acquire the remaining
Shares by Buyer set forth herein shall be amended so that Buyer shall have an
option to only acquire the maximum number of Shares that will permit UAHC to
retain a significant continuing business activity as set forth under state and
federal statutes and regulations, and therefore the Purchase Agreement shall
not, and the transactions (including the grant of option to MHI) set forth
herein shall not, require shareholder approval.

     4.2 GRANT OF OPTION TO UAHC.

          (a) Pursuant to the terms and conditions set forth herein, MHI grants
to UAHC, and UAHC accepts from MHI, the exclusive right and option (the
"Option") to purchase all of MHI's right, title and interest in and to the stock
of the Corporation then owned by MHI ("MHI Stock"). The Option may be exercised
at any time between the dates that are sixty (60)

                                        7

<PAGE>

months and seventy-two (72) months from the effective date of the full-risk
Medicaid Contract (as described in the Purchase Agreement).

          (b) The purchase price for the MHI Stock shall be equal to the then
percentage interest MHI owns of the Corporation multiplied by the Fair Market
Value of the Corporation.

          (c) The Option shall be exercised by UAHC giving a written notice of
exercise, and preparing and delivering a stock purchase agreement ("MHI Stock
Purchase Agreement"), to MHI. Such MHI Stock Purchase Agreement shall be in form
and substance similar to the Purchase Agreement; provided, however, such MHI
Stock Purchase Agreement shall include provisions for indemnification,
non-competition, non-solicitation, and true-ups for changes in net worth, IBNR,
and working capital that are usual and customary for similar transactions in
which a minority owner is conveying its stock holdings.

          (d) If UAHC gives MHI a timely Notice of Exercise and MHI Stock
Purchase Agreement, MHI shall (i) execute and deliver the MHI Stock Purchase
Agreement to UAHC within fifteen (15) days of delivery of UAHC's notice of
exercise, and (ii) pursuant to the MHI Stock Purchase Agreement, close the
purchase and sale of the MHI Stock within three (3) days thereafter by delivery
of the MHI Stock to UAHC properly endorsed, and accompanied by any other
instruments necessary to transfer the MHI Stock to UAHC.

          (e) All closing costs, including, but not limited to the attorney's
fees of each party, shall be borne solely by the party incurring such costs or
fees.

     4.3 GRANT OF PUT TO MHI.

          (a) Pursuant to the terms and conditions set forth herein, UAHC grants
to MHI, and MHI accepts from UAHC, the exclusive right and option to require
UAHC to purchase all of the MHI Stock ("Put"). The Put may be exercised at any
time between the dates that are sixty (60) months and seventy-two (72) months
from the effective date of the full-risk Medicaid Contract (as described in the
Purchase Agreement).

          (b) The purchase price for the MHI Stock shall be equal to the then
percentage interest MHI owns of the Corporation multiplied by the Total Value of
the Corporation as set forth below.

          (c) The Put shall be exercised by MHI giving a written notice of
exercise, and preparing and delivering the MHI Stock Purchase Agreement to UAHC,
along with the proposed valuation of the Corporation (the "Total Value of the
Corporation"). Such MHI Stock Purchase Agreement shall be in form and substance
similar to the Purchase Agreement; provided, however, such MHI Stock Purchase
Agreement shall include provisions for indemnification, non-competition, and
non-solicitation that are usual and customary for similar transactions in which
a minority owner is conveying its stock holdings.

          (d) If MHI delivers to UAHC a timely Notice of Exercise and MHI Stock
Purchase Agreement, UAHC shall execute and deliver the MHI Stock Purchase
Agreement to MHI within fifteen (15) days of delivery of MHI's notice of
exercise. At such time, UAHC shall

                                        8

<PAGE>

either agree to the Total Value of the Corporation proposed by MHI or shall
propose an alternative Total Value of the Corporation. If the parties cannot
agree upon the Total Value of the Corporation within thirty (30) days of the
date of the Notice of Exercise, the parties shall arbitrate the Total Value of
the Corporation in accordance with the arbitration procedures set forth in the
Purchase Agreement.

          (e) Pursuant to, and in accordance with, the MHI Stock Purchase
Agreement, the parties shall close the purchase and sale of the MHI Stock by
delivery of the purchase price as soon as possible, but in no event more than
ninety (90) days after the date of the Notice of Exercise. Concurrently
therewith, MHI shall deliver to UAHC the MHI Stock properly endorsed, and
accompanied by any other instruments necessary to transfer the MHI Stock to
UAHC.

          (f) All closing costs, including, but not limited to the attorney's
fees of each party, shall be borne solely by the party incurring such costs or
fees.

                                    ARTICLE 5

                            MISCELLANEOUS PROVISIONS

     5.1 OBLIGATIONS OF TRANSFEREES. Unless otherwise expressly provided by this
Agreement, each transferee and each subsequent transferee of Shares, or any
interest in Shares, shall hold the Shares or interest therein subject to all of
the provisions of this Agreement. Any such transferee shall make no further
transfers except as permitted by this Agreement.

     5.2 NECESSARY ACTS. All parties to the Agreement, the Corporation and all
of the Shareholders, shall perform any and all acts as well as execute any and
all documents that may be reasonably necessary to fully carry out the provisions
and intent of this Agreement.

     5.3 FULL ACCESS. During the period that this Agreement is in effect, the
Shareholders and the Corporation shall permit Representatives of the
Shareholders to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Corporation, to all
premises, properties, personnel, books, records, Tax Returns, Contracts and
documents of or pertaining to the Corporation and its businesses, and the
Corporation shall permit Representatives of MHI to attend as non-participating
observers all Corporation board of directors meetings. In the event MHI's
percentage ownership interest in the Corporation shall increase to twenty-five
percent or more, the parties shall agree to reasonably amend this Agreement to
include the governance provisions set forth in Exhibit "1" attached hereto.

     5.4 NOTICES. Any or all notices, demands, requests or other communications
required or permitted by this Agreement or by law to be served on, given to, or
delivered to any party hereto by any other party to this Agreement shall be in
writing and shall be deemed duly served, given, or delivered when personally
delivered to the party or to an officer of the party, or in lieu of such
personal delivery, when deposited in the United States mail, first class postage
prepaid, addressed to the Corporation at the address of its principal office,
___________________________________, or to a Shareholder at the address then
appearing for him or her on the books and records of the Corporation; provided,
however, any requirement in

                                        9

<PAGE>

this Agreement that an act be done by the Secretary of the Corporation within a
specified time after receipt of any notice or other communication means the act
must be done within the specified time after the notice or other communication
has actually arrived at the office of the Corporation. The Corporation may
change the address of its principal office in the manner required by law for
purposes of this section by giving notice of the change, in the manner required
by this section, to each of the Shareholders.

     5.5 BINDING ON HEIRS. This Agreement shall be binding on the parties hereto
and on each of their heirs, executors, administrators, successors and assigns.

     5.6 SEVERABILITY. It is the intent of the parties hereto that this
Agreement shall comply with and be governed by the provisions of all applicable
state and federal statutes and regulations. To the extent that it may be
determined that any of the provisions hereof are inconsistent with the
provisions of such statutes and regulations, the parties hereto agree that such
provisions of law shall be controlling and that the parties hereto will be bound
by the provisions of such statutes and regulations as though the provisions
thereof were contained herein. Should any provision or portion of this Agreement
be held unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.

     5.7 ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth the entire
agreement between the Shareholders and the Corporation regarding, and supersedes
all prior negotiations and agreements, written or oral, concerning or relating
to, the subject matter of this Agreement, and this Agreement may not be modified
except by a writing executed by all parties in accordance with the terms of this
Agreement.

     5.8 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

     5.9 ATTORNEYS' FEES. If any party to this Agreement brings any arbitration
or action at law or in equity to enforce or interpret the terms of this
Agreement or for an alleged breach of this Agreement, the prevailing party or
parties shall be entitled to recover from the losing party or parties,
reasonable attorneys' fees in addition to other relief to which such party or
parties may be entitled.

                      [SIGNATURE PAGE IMMEDIATELY FOLLOWS]

                                       10

<PAGE>

                       [SIGNATURE PAGE OF UAHC HEALTH PLAN
                               OF TENNESSEE, INC.
                             SHAREHOLDER AGREEMENT]

     IN WITNESS WHEREOF, this Agreement is executed by and among the parties
hereto on the dates set forth opposite their signatures below.

                                        SHAREHOLDERS:

                                        "UAHC"

                                        UNITED AMERICAN OF TENNESSEE, INC.

Date:                                   By:
      ------------------------              ------------------------------------
                                        Its:
                                             -----------------------------------

                                        "MHI"

                                        MOLINA HEALTHCARE, INC.

Date:                                   By:
      ------------------------              ------------------------------------
                                        Its:
                                             -----------------------------------

                                        CORPORATION:

                                        UAHC HEALTH PLAN OF TENNESSEE, INC.

Date:                                   By:
      ------------------------              ------------------------------------
                                        Its:
                                             -----------------------------------

                                       11

<PAGE>

                                   EXHIBIT "1"

                              GOVERNANCE PROVISIONS

                        CONTINGENT GOVERNANCE PROVISIONS

     1.1 BOARD OF DIRECTORS. The Corporation's Board of Directors (the "Board")
shall have twelve (12) authorized members. MHI and UAHC shall elect board
members in proportion to their ownership interests.

     1.2 MATTERS REQUIRING UNANIMOUS APPROVAL OF THE BOARD. In addition to such
other matters as may be required or permitted by law, the following matters
shall require the unanimous approval of the Board:

          (a) other than in the ordinary course of business, expending more than
$100,000 in any transaction or series of related transactions;

          (b) entering into any employment contract that is not terminable at
will;

          (c) adopting an annual capital and operating budget for the
Corporation (the "Annual Budget"), which shall include the Corporation's
staffing plans for such annual period;

          (d) leasing any real or personal property, other than in the ordinary
course of business or except as provided for in the Annual Budget;

          (e) borrowing any money or property or otherwise obtaining financing
for the Corporation, other than credit purchases of goods and services on a
current basis and in the normal course of business;

          (f) causing the Corporation to guarantee or act as surety for the debt
or obligation of any person;

          (g) organizing, acquiring or disposing of an interest in, merging or
combining with, or entering into a corporation, partnership or joint venture
with any other person or entity;

          (h) issuing Shares to any person;

          (i) entering into, or modifying, any agreements with Affiliates;

          (j) selling or otherwise disposing of all or substantially all of the
assets or business of the Corporation.

                                       12exv4w1

 

EXHIBIT 4.1

 

 

WEATHERFORD INTERNATIONAL LTD.,

as Issuer

WEATHERFORD
INTERNATIONAL, INC.,

as
Guarantor

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Trustee

FIRST SUPPLEMENTAL INDENTURE

Dated as of March 25, 2008

To

INDENTURE

Dated as
of October 1, 2003

5.15%
SENIOR NOTES DUE
2013

6.00% SENIOR NOTES DUE 2018

7.00% SENIOR NOTES DUE 2038

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 Relation to Indenture; Definitions
	 	 	1	 
	 
	 	 	 	 
	SECTION 1.01. Relation to Indenture
	 	 	1	 
	SECTION 1.02. Definitions
	 	 	1	 
	SECTION 1.03. General References
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 The Series of Securities
	 	 	1	 
	 
	 	 	 	 
	SECTION 2.01. The Form and Title of the Securities
	 	 	1	 
	SECTION 2.02. Amount
	 	 	2	 
	SECTION 2.03. Stated Maturity and Denominations
	 	 	2	 
	SECTION 2.04. Interest and Interest Rates
	 	 	2	 
	SECTION 2.05. Place of Payment
	 	 	2	 
	SECTION 2.06. Optional Redemption
	 	 	2	 
	SECTION 2.07. Unconditional Guarantee
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 3 Other Amendments to Indenture
	 	 	3	 
	 
	 	 	 	 
	SECTION 3.01. Amendments to Indenture
	 	 	3	 
	 
	 	 	 	 
	ARTICLE 4 Miscellaneous
	 	 	6	 
	 
	 	 	 	 
	SECTION 4.01. Certain Trustee Matters
	 	 	6	 
	SECTION 4.02. Continued Effect
	 	 	6	 
	SECTION 4.03. Governing Law
	 	 	6	 
	SECTION 4.04. Counterparts
	 	 	7	 

	 	 	 	 	 
	EXHIBIT	 	 	 	 
	Exhibit A:

	 	Form of 2013 Note
	 	 
	 

	 	Form of 2018 Note	 	 
	 

	 	Form of 2038 Note	 	 
	Exhibit B:

	 	Form of Guarantee Notation	 	 

First Supplemental Indenture

 

 

     FIRST SUPPLEMENTAL INDENTURE dated as of March 25, 2008 (this “First Supplemental Indenture”),
among Weatherford International Ltd., a Bermuda exempted company (the “Company”),
Weatherford International, Inc., a corporation duly organized and existing under the laws
of the State of Delaware (the “Guarantor”), and Deutsche Bank Trust Company Americas, a
New York banking corporation, as trustee under the Indenture referred to below (in such capacity,
the “Trustee”).

RECITALS OF THE COMPANY

     WHEREAS, the Company, the Guarantor and the Trustee are parties to an Indenture dated as of
October 1, 2003 (the “Original Indenture”) (the Original Indenture, as supplemented from time to
time, including without limitation pursuant to this First Supplemental Indenture being referred to
herein as the “Indenture”); and

     WHEREAS, under the Original Indenture, a new series of Securities may at any time be
established in accordance with the provisions of the Original Indenture, and the terms of such
series may be established by a supplemental indenture executed by the Company, the Guarantor and
the Trustee; and

     WHEREAS, the Company and the Guarantor propose to create under the Indenture three new series
of Securities, which will be guaranteed by the Guarantor pursuant to its Guarantees as set forth in
Article Fourteen of the Original Indenture (as made applicable to the Notes, defined herein,
pursuant to this First Supplemental Indenture); and

     WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee as provided in the Original Indenture and this First
Supplemental Indenture, the valid and binding obligations of the Company, to make the Guarantees of
such Notes by the Guarantor the valid and binding obligation of the Guarantor, and to make this
First Supplemental Indenture a valid and binding agreement in accordance with the Original
Indenture, have been done or performed;

     NOW, THEREFORE, in consideration of the premises, agreements and obligations set forth herein
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of all
Holders of the Notes, as follows:

ARTICLE 1

Relation to Indenture; Definitions

     SECTION 1.01. Relation to Indenture.

     With respect to the Notes and the Guarantees thereof by the Guarantor, this First Supplemental
Indenture constitutes an integral part of the Indenture.

     SECTION 1.02. Definitions.

     For all purposes of this First Supplemental Indenture, capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned thereto in the Original Indenture.

     SECTION 1.03. General References.

     All references in this First Supplemental Indenture to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this First Supplemental Indenture;
and the terms “herein”, “hereof”, “hereunder” and any other word of similar import refers to this
First Supplemental Indenture.

ARTICLE 2

The Series of Securities

     SECTION 2.01. The Form and Title of the Securities.

     There is hereby established three new series of Securities to be issued under the Indenture
and to be designated as the Company’s 5.15% Senior Notes due 2013 (the “2013 Notes”), the Company’s
6.00% Senior Notes due 2018 (the “2018 Notes”) and the Company’s 7.00% Senior Notes due 2038 (the
“2038 Notes” and collectively

First Supplemental Indenture

 

 

with the 2013 Notes and the 2018 Notes, the “Notes”). The Notes shall be substantially in the
forms attached as Exhibit A hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by the Indenture, and
may have such letters, numbers or other marks of identification and such legends or endorsements
placed thereon as the Company may deem appropriate or as may be required or appropriate to comply
with any laws or with any rules made pursuant thereto or with the rules of any securities exchange
or automated quotation system on which the Notes may be listed or traded, or to conform to general
usage, or as may, consistently with the Indenture, be determined by the officers executing such
Notes, as evidenced by their execution thereof.

     The Notes shall be executed, authenticated and delivered in accordance with the provisions of,
and shall in all respects be subject to, the terms, conditions and covenants of the Original
Indenture as supplemented by this First Supplemental Indenture (including the forms of Note set
forth as Exhibit A hereto (the terms of which are incorporated in and made a part of this
First Supplemental Indenture for all intents and purposes)).

     SECTION 2.02. Amount.

     The aggregate principal amount of the Notes which may be authenticated and delivered pursuant
hereto is unlimited. The Trustee shall initially authenticate and deliver Notes for original issue
in initial aggregate principal amounts of up to $500,000,000 of the 2013 Notes, up to $500,000,000
of the 2018 Notes and up to $500,000,000 of the 2038 Notes upon delivery to the Trustee of a
Company Order for the authentication and delivery of such Notes. The Company may, from time to
time, without notice to or the consent of the Holders of the Notes, increase the principal amount
of the Notes under the Indenture and issue such increased principal amount (or any portion
thereof), in which case any additional Notes so issued will have the same form and terms (other
than the date of issuance and, under certain circumstances, the date from which interest thereon
will begin to accrue), and will carry the same right to receive accrued and unpaid interest, as the
Notes previously issued, and such additional Notes will form a single series with the Notes
previously issued.

     SECTION 2.03. Stated Maturity and Denominations.

     The Stated Maturity of the 2013 Notes shall be March 15, 2013, of the 2018 Notes shall be
March 15, 2018 and of the 2038 Notes shall be March 15, 2038. The Notes are issuable only in
registered form without coupons in denominations of U.S. $2,000 and any integral multiple of $1,000
in excess thereof.

     SECTION 2.04. Interest and Interest Rates.

     The rate or rates at which the Notes shall bear interest, the date or dates from which such
interest shall accrue, the Interest Payment Dates on which any such interest shall be payable and
the Regular Record Date for any interest payable on any Interest Payment Date, in each case, shall
be as set forth in the form of applicable Note set forth as Exhibit A hereto.

     SECTION 2.05. Place of Payment.

     As long as any Notes are outstanding, the Company shall maintain an office or agency in the
Borough of Manhattan, The City of New York, where Notes may be presented for payment.

     SECTION 2.06. Optional Redemption.

     At its option, the Company may redeem any series of Notes, in whole or in part, in principal
amounts of $2,000 or an integral multiple of $1,000 in excess thereof, at any time or from time to
time, at the applicable redemption price determined as set forth in the form of applicable Note
attached hereto as Exhibit A, in accordance with the terms set forth in the Note and in
accordance with Article Eleven of the Original Indenture.

     SECTION 2.07. Unconditional Guarantee.

     Article Fourteen of the Original Indenture (as amended and supplemented by this First
Supplemental Indenture) shall be applicable to the Notes, and accordingly, as more fully set forth
in such Article Fourteen, the Guarantor fully, irrevocably, unconditionally and absolutely
guarantees to the Holders of Notes and to the Trustee the due and punctual payment of the principal
of, and premium, if any, and interest on the Notes, and all other

 First Supplemental Indenture

2

 

Indenture Obligations, when and as the same shall become due and payable, whether at the
Stated Maturity, upon redemption or by declaration of acceleration or otherwise.

     To further evidence the Guarantees of the Notes, the Guarantor hereby agrees that a notation
of such Guarantees in substantially in the form attached as Exhibit B hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture, shall be endorsed on each Note authenticated and delivered by the
Trustee and executed by either manual or facsimile signature of an officer of the Guarantor. The
Guarantor hereby agrees that its Guarantees of the Notes shall remain in full force and effect
notwithstanding any failure to endorse on any such Notes a notation relating to the Guarantees
thereof.

ARTICLE 3

Other Amendments to Indenture

     SECTION 3.01. Amendments to Indenture

     The amendments contained in this Section 3.01 shall apply to the Notes only and not to any
other series of Securities issued under the Indenture. Such amendments shall be effective only for
so long as there remain outstanding any Notes. The Original Indenture is hereby amended, subject
to the preamble of this Section 3.01 and with respect to the Notes only, by adding the following as
a new Section 10.10 thereto:

     Section 10.10 Change of Control Repurchase at the Option of Holders

     (a) Upon the occurrence of a Change of Control Triggering Event, Holders of
Securities will have the right to require the Company to make an offer (the “Change
of Control Offer”) to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess thereof) of their Securities at a purchase price in
cash equal to 101% of the aggregate principal amount of Securities repurchased plus
accrued and unpaid interest, if any, on the Securities repurchased, to the date of
purchase (the “Change of Control Payment”). Within 30 days following any Change of
Control Triggering Event, the Company will mail a notice to each Holder of
Securities describing the transaction or transactions that constitute the Change of
Control Triggering Event and stating:

     (1) that the Change of Control Offer is being made pursuant to this
Section 10.10 and that all Securities tendered will be accepted for payment;

     (2) the purchase price and the purchase date, which shall be no earlier
than 30 days and no later than 60 days from the date such notice is mailed
(the “Change of Control Payment Date”);

     (3) that any Securities not tendered will continue to accrue interest;

     (4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Securities accepted for payment pursuant to the Change
of Control Offer will cease to accrue interest after the Change of Control
Payment Date;

     (5) that Holders electing to have any Securities repurchased pursuant
to a Change of Control Offer will be required to surrender the Securities,
with the form entitled “Option of Holder to Elect Purchase” attached to the
Securities completed, or transfer by book-entry transfer, to the Paying
Agent at the address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control Payment Date;

     (6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile, transmission or letter setting forth the name of the
Holder, the principal amount of Securities delivered for purchase, and a
statement that such Holder is withdrawing his election to have the
Securities purchased; and

 First Supplemental Indenture

3

 

     (7) that Holders whose Securities are being purchased only in part will
be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered, which unpurchased portion must be
equal to $2,000 in principal amount or in any integral multiple of $1,000 in
excess thereof.

     The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act, and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with the repurchase of the
Securities as a result of a Change of Control Triggering Event. To the extent that
the provisions of any securities laws or regulations conflict with the provisions of
this Section 10.10 (or compliance with this Section 10.10 would constitute a
violation of any such laws or regulations), the Company will comply with the
applicable securities laws and regulations and will not be deemed to have breached
its obligations under this Section 10.10 by virtue of such conflicts.

     (b) On or before the Change of Control Payment Date, the Company will be
required, to the extent lawful, to:

     (1) accept for payment all Securities or portions of Securities
properly tendered pursuant to the Change of Control Offer;

     (2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Securities or portions of Securities
properly tendered; and

     (3) deliver or cause to be delivered to the Trustee the Securities
properly accepted.

     The Paying Agent will promptly (but in any case not later than five days after
the Change of Control Payment Date) mail to each Holder of Securities properly
tendered the Change of Control Payment for such Securities, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to each
Holder a new Security equal in principal amount to any unpurchased portion of the
Securities surrendered, if any; provided that each new Security will be in a
principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. The
Company will publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.

     If Holders of not less than 95% in aggregate principal amount of a series of
outstanding Securities validly tender and do not withdraw such Securities in a
Change of Control Offer and the Company, or any third party making a Change of
Control Offer in lieu of the Company as described below, purchases all of such
Securities validly tendered and not withdrawn by such Holders, the Company will have
the right, upon not less than 30 nor more than 60 days’ prior notice, given not more
than 30 days following such purchase pursuant to the Change of Control Offer
described above, to redeem such Securities that remain outstanding following such
purchase at a redemption price in cash equal to the applicable Change of Control
Payment plus, to the extent not included in the Change of Control Payment, accrued
and unpaid interest, if any, to the date of redemption.

     (d) Notwithstanding anything to the contrary in this Section 10.10, the Company
will not be required to make a Change of Control Offer with respect to a series of
Securities upon a Change of Control Triggering Event if (1) a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance with
the requirements set forth in this Section 10.10 and purchases all Securities
properly tendered and not withdrawn under the Change of Control Offer, or (2) notice
of redemption has been given pursuant to Section 11.4 with respect to a redemption
of all such Securities then outstanding pursuant to Article Eleven, unless and until
there is a default in payment of the applicable redemption price.

     (e) For purposes of this Section 10.10, the following definitions shall be
applicable:

 First Supplemental Indenture

4

 

     (1) “Below Investment Grade Rating Event” means, with respect to a
series of Securities, the Securities are rated below an Investment Grade
Rating by each of the Rating Agencies on any date from the date of the
public notice of an arrangement that could result in a Change of Control
until the end of the 60-day period following public notice of the occurrence
of the Change of Control (which 60-day period shall be extended so long as
the rating of the Securities is under publicly announced consideration for
possible downgrade by either of the Rating Agencies).

     (2) “Change of Control” means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger, amalgamation or consolidation of the Company),
in one or a series of related transactions, of all or substantially all of
the properties or assets of the Company and its Subsidiaries taken as a
whole to any person (as such term is used in Section 13(d) of the Exchange
Act) other than the Company or one of its Subsidiaries or a Person
controlled by the Company or one of its Subsidiaries; (2) the consummation
of any transaction (including, without limitation, any merger, amalgamation
or consolidation) the result of which is that any person (as such term is
used in Section 13(d) of the Exchange Act) becomes the beneficial owner,
directly or indirectly, of more than 50% of the then outstanding number of
the Company’s voting shares (excluding a Redomestication of the Company); or
(3) the first day on which a majority of the members of the Company’s Board
of Directors are not Continuing Directors.

     (3) “Change of Control Triggering Event” means the occurrence of both a
Change of Control and a Below Investment Grade Rating Event.

     (4) “Continuing Directors” means, as of any date of determination, any
member of the Board of Directors of the Company who (1) was a member of such
Board of Directors on the date of the issuance of the Securities; or (2) was
nominated for election or appointed or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were members
of such Board of Directors at the time of such nomination, appointment or
election (either by a specific vote or by approval of the Company’s proxy
statement in which such member was named as a nominee for election as a
director, without objection to such nomination).

     (5) “Investment Grade Rating” means a rating equal to or higher than
Baa3 (or the equivalent under any successor ratings categories of Moody’s)
by Moody’s and BBB- (or the equivalent under any successor ratings
categories of S&P) by S&P.

     (6) “Moody’s” means Moody’s Investors Service, Inc.

     (7) “Rating Agencies” means (1) each of Moody’s and S&P; and (2) if
either of Moody’s or S&P ceases to rate the Securities or fails to make a
rating of the Securities publicly available for reasons outside of the
Company’s control, a “nationally recognized statistical rating organization”
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act,
selected by the Company (as certified by a resolution of the Company’s Board
of Directors) as a replacement agency for Moody’s or S&P, or both of them,
as the case may be.

     (8) “Redomestication” means:

     (a) any amalgamation, merger, conversion or consolidation of the Company with
or into any other person (as such term is used in Section 13(d) of the Exchange
Act), or of any other person (as such term is used in Section 13(d) of the Exchange
Act) with or into the Company, or the sale or other disposition (other than by
lease) of all or substantially all of the properties or assets of the Company and
its Subsidiaries taken as a whole to any other person (as such term is used in
Section 13(d) of the Exchange Act),

First Supplemental Indenture

5

 

     (b) any continuation, discontinuation, amalgamation, merger, conversion,
consolidation or domestication or similar action with respect to the Company
pursuant to the law of the jurisdiction of its organization and of any other
jurisdiction, or

     (c) the formation of a Person that becomes, as part of the transaction, the
owner of 100% of the voting shares of the Company (the “New Parent”),

     if as a result thereof

               (x) in the case of any action specified in clause (a), the entity that
is the surviving, resulting or continuing Person in such merger,
amalgamation, conversion or consolidation, or the transferee in such sale or
other disposition,

               (y) in the case of any action specified in clause (b), the entity that
constituted the Company immediately prior thereto (but disregarding for this
purpose any change in its jurisdiction of organization), or

               (z) in the case of any action specified in clause (c), the New
Parent (in any such case, the “Surviving Person”) is a corporation or other entity,
validly incorporated or formed and existing in good standing (to the extent
the concept of good standing is applicable) under the laws of Delaware or
another State of the United States or under the laws of the United Kingdom,
The Kingdom of the Netherlands or under the laws of any other jurisdiction,
whose voting shares of each class of capital stock issued and outstanding
immediately following such action, and giving effect thereto, shall be
beneficially owned by the same Persons, in the same percentages, as was such
capital stock or shares of the entity constituting the Company immediately
prior thereto and, if the Surviving Person is the New Parent, the Surviving
Person continues to be owned, directly or indirectly, 100% by Persons who
were shareholders of the Company immediately prior to such transaction.

          (9) “S&P” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc.

ARTICLE 4

Miscellaneous

     SECTION 4.01. Certain Trustee Matters.

     The recitals contained herein shall be taken as the statements of the Company and the
Guarantor, and the Trustee assumes no responsibility for their correctness.

     The Trustee makes no representations as to the validity or sufficiency of this First
Supplemental Indenture or the Notes or the proper authorization or the due execution hereof or
thereof by the Company.

     SECTION 4.02. Continued Effect.

     Except as expressly supplemented and amended by this First Supplemental Indenture, the
Original Indenture shall continue in full force and effect in accordance with the provisions
thereof, and the Original Indenture is in all respects hereby ratified and confirmed. This First
Supplemental Indenture and all of its provisions shall be deemed a part of the Original Indenture
in the manner and to the extent herein and therein provided.

     SECTION 4.03. Governing Law.

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

First Supplemental Indenture

6

 

     SECTION 4.04. Counterparts.

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

(Signature Pages Follow)

 First Supplemental Indenture

7

 

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

	 	 	 	 	 	 	 
	 	 	WEATHERFORD INTERNATIONAL LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Burt M. Martin 	 	 
	 

	 	Name:
	 	 

Burt M. Martin
	 	 
	 

	 	Title:

	 	Senior Vice President and Corporate Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	WEATHERFORD INTERNATIONAL, INC.,	 	 
	 	 	as Guarantor	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Burt M. Martin 	 	 
	 

	 	Name:
	 	 

Burt M. Martin
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

First Supplemental Indenture

 

 

	 	 	 	 	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,

by Deutsche Bank National Trust Company,

as Trustee

 	 
	 	By:  	/s/ Irina Golovashchuk
 	 
	 	 	Name:  	Irina Golovashchuk 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	 	 
	 	By:  	/s/ David Contino
 	 
	 	 	Name:  	David Contino 	 
	 	 	Title:  	Vice President 	 
	 

 

 

EXHIBIT A

Form of 2013 Note

[FORM OF FACE OF NOTE]

[If a Global Security, insert—THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE
THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES
REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH
TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

[If a Global Security, insert—EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF
TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO
THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.]

[If a Global Security, insert—UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (“DTC”) (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO., OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

First Supplemental Indenture

A-1-1

 

WEATHERFORD INTERNATIONAL LTD.

5.15% Senior Note due 2013

	 	 	 	 	 
	Rate of Interest	 	Maturity Date	 	Original Issue Date
	5.15%
	 	March 15, 2013
	 	March 25, 2008

			
	No. 1
	 	U.S.$500,000,000
	 	 	 
	CUSIP No. 947075 AC1	 	 

     Weatherford International Ltd., a Bermuda exempted company (herein called the “Company”), for
value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
FIVE HUNDRED MILLION United States Dollars on the maturity date shown above, and to pay interest
thereon, at the annual rate of interest shown above, from the original issue date shown above or
from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid
or duly provided for, payable semi-annually on March 15 and September 15 of each year (each, an
"Interest Payment Date”) and at such maturity date, commencing on the first such date after the
original issue date hereof, except that if such original issue date is on or after a Regular Record
Date (as defined below) but before the next Interest Payment Date, interest payments will commence
on the second Interest Payment Date following the original issue date.

     The interest so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the person in whose name this Note is
registered at the close of business on the “Regular Record Date” for any such Interest Payment
Date, which shall be the fourteenth calendar day (whether or not a Business Day) preceding the
applicable Interest Payment Date. Any such interest not so punctually paid or duly provided for,
and any interest payable on such defaulted interest (to the extent lawful), will forthwith cease to
be payable to the Holder on such Regular Record Date and shall be paid to the person in whose name
this Note is registered at the close of business on a special record date for the payment of such
defaulted interest to be fixed by the Company, notice of which shall be given to Holders of Notes
not less than 14 days prior to such special record date. Payment of the principal of and interest
on this Note will be made at the agency of the Company maintained for that purpose in New York, New
York and at any other office or agency maintained by the Company for such purpose, in United States
dollars; provided, however, that, at the option of the Company, payment of interest, other than
interest due on the maturity date shown above, may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Security Register.

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

(Signature Page Follows)

First Supplemental Indenture

A-1-2

 

     IN WITNESS WHEREOF, Weatherford International Ltd. has caused this instrument to be executed
in its corporate name by the signature of its duly authorized officer.

	 	 	 	 	 
	 	 	WEATHERFORD INTERNATIONAL LTD.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

     DATED: March 25, 2008

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the 5.15% Senior Notes due 2013 referred to in the within-mentioned Indenture.

	 	 	 	 	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,

by Deutsche Bank National Trust Company,

     as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

First Supplemental Indenture

A-1-3

 

[REVERSE OF NOTE]

WEATHERFORD INTERNATIONAL LTD.

5.15% Senior Note due 2013

     This Note is one of a duly authorized issue of Securities of the Company (which term includes
any successor corporation under the Indenture hereinafter referred to) designated as its 5.15%
Senior Notes due 2013 (the “Notes”), issued or to be issued pursuant to an Indenture dated as of
October 1, 2003, between the Company and Deutsche Bank Trust Company Americas, a New York banking
corporation, as Trustee (the “Trustee,” which term includes any successor trustee under such
Indenture), as amended and supplemented by the First Supplemental Indenture thereto dated as of
March 25, 2008 (such Indenture, as so amended and supplemented being referred to herein as the
“Indenture”). The terms of this Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended. Reference is hereby
made to the Indenture and all further supplemental indentures thereto for a statement of the
respective rights, limitation of rights, duties and immunities thereunder of the Company, the
Guarantor, the Trustee and the Holders and of the terms upon which the Notes are, and are to be,
authenticated and delivered.

     As provided in the Indenture, Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at different times, may
bear interest, if any, at different rates, may be subject to different redemption provisions, if
any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to
different covenants and Events of Default and may otherwise vary as in the Indenture provided or
permitted. This Note is one of the series designated on the face hereof.

     This Note is the general, unsecured, senior obligation of the Company and is guaranteed
pursuant to a guarantee (the “Guarantee”) by Weatherford International, Inc., a Delaware
corporation (the “Guarantor”).

     The Notes are subject to redemption upon not less than 30 nor more than 60 days’ notice by
mail, at any time, as a whole or in part, at the election of the Company at a Redemption Price
equal to the greater of: (a) 100% of the principal amount of Securities then outstanding to be
redeemed, plus accrued and unpaid interest thereon to the redemption date; or (b) the sum of the
present values of the remaining scheduled payments of principal and interest on the Securities then
outstanding to be redeemed (not including any portion of such payments of interest accrued as of
the redemption date), discounted to the redemption date on a semi-annual basis (computed based on a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus 45 basis
points (0.45%), as calculated by an Independent Investment Banker, plus accrued and unpaid interest
thereon to the redemption date; but interest installments whose Stated Maturity is on or prior to
such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.

     “Adjusted Treasury Rate” means, with respect to any redemption date: (a) the yield, under the
heading which represents the average for the immediately preceding week, appearing in the most
recently published statistical release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant maturity under the
caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the remaining life, as defined below,
yields for the two published maturities most closely corresponding to the Comparable Treasury Issue
will be determined and the Adjusted Treasury Rate will be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month); or (b) if such release (or any
successor release) is not published during the week preceding the calculation date or does not
contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption
date. The Adjusted Treasury Rate will be calculated on the third business day preceding the
redemption date.

     “Comparable Treasury Issue” means the United States Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining term of the
Securities to be redeemed that would be used, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Securities.

First Supplemental Indenture

A-1-4

 

     “Comparable Treasury Price” means (1) the average of five Reference Treasury Dealer Quotations
for the redemption date, after excluding the highest and lowest Reference Treasury Dealer
Quotations, or (2) if an Independent Investment Banker obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such quotations.

     “Independent Investment Banker” means Goldman, Sachs & Co., Deutsche Bank Securities Inc. or
Merrill Lynch, Pierce, Fenner & Smith Incorporated or any of their respective successors, as
designated by us, or if all such firms are unwilling or unable to serve as such, an independent
investment and banking institution of national standing appointed by the Company.

     “Reference Treasury Dealer” means: (a) Goldman, Sachs & Co., Deutsche Bank Securities Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and each of their respective successors;
provided that, if any such Reference Treasury Dealer ceases to be a primary U.S. Government
securities dealer in the United States (Primary Treasury Dealer), the Company will substitute
another Primary Treasury Dealer; and (b) up to two other Primary Treasury Dealer selected by the
Company.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by an Independent Investment Banker, of the bid
and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to an Independent Investment Banker at 3:00 p.m., New York City
time, on the third business day preceding such redemption date.

     In the event of redemption of this Note in part only, a new Security or Securities of this
series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the Guarantor and the rights of
the Holders of the Securities of each series to be affected under the Indenture at any time by the
Company and the Guarantor and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified percentages in principal
amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company and the Guarantor with certain
provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest on this Note at the times, place(s) and rate, and
in the coin or currency, herein prescribed.

     This Global Security or portion hereof may not be exchanged for Definitive Securities of this
series except in the limited circumstances provided in the Indenture. The holders of beneficial
interests in this Global Security will not be entitled to receive physical delivery of Definitive
Securities except as described in the Indenture and will not be considered the Holders thereof for
any purpose under the Indenture.

     The Notes are issuable only in registered form without coupons in denominations of U.S. $2,000
and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     Prior to due presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and
none of the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to
the contrary.

First Supplemental Indenture

A-1-5

 

     No recourse under or upon any obligation, covenant or agreement of or contained in the
Indenture or of or contained in any Note, or the Guarantee endorsed thereon, or for any claim based
thereon or otherwise in respect thereof, or in any Security or in the Guarantee, or because of the
creation of any indebtedness represented thereby, shall be had against any incorporator,
shareholder, member, officer, manager or director, as such, past, present or future, of the Company
or the Guarantor or of any successor Person, either directly or through the Company or the
Guarantor or any successor Person, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that
all such liability is hereby expressly waived and released by the acceptance hereof and as a
condition of, and as part of the consideration for, the Notes and the execution of the Indenture.

     The Indenture provides that the Company and the Guarantor (a) will be discharged from any and
all obligations in respect of the Notes (except for certain obligations described in the
Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each
case if the Company or the Guarantor deposits, in trust, with the Trustee money or U.S. Government
Obligations (or a combination thereof) which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money, in an amount sufficient to pay all the
principal of and interest on the Notes, but such money need not be segregated from other funds
except to the extent required by law.

     As more fully provided in the Indenture, no Holder may pursue any remedy under the Indenture
unless the Trustee shall have failed to act after notice of an Event of Default and written request
by Holders of at least 25% in principal amount of a series of the Securities and the offer to the
Trustee of indemnity satisfactory to it; however, such provision does not affect the right to sue
for enforcement of any overdue payment on any Security.

     Except as otherwise defined herein, all terms used in this Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

     Customary abbreviations may be used in the name of a Holder or any assignee, such as: TEN COM
( = tenants in common), TEN ENT ( = tenants by the entireties), JT TEN ( = joint tenants with right
of survivorship and not as tenants in common), CUST ( = Custodian) and U/G/M/A ( = Uniform Gifts to
Minors Act).

     The Company will furnish to any holder of record of this Note, upon written request, without
charge, a copy of the Indenture. Requests may be made to: Weatherford International Ltd., 515 Post
Oak Blvd., Suite 600, Houston, Texas 77027, Attention: Corporate Secretary.

     This Note shall be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of law.

First Supplemental Indenture

A-1-6

 

ASSIGNMENT FORM

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
                         (Please Print or Typewrite Name and Address of Assignee) the within
instrument of WEATHERFORD INTERNATIONAL LTD. and does hereby irrevocably constitute and appoint
                          Attorney to transfer said instrument on the books of the within-named
Company, with full power of substitution in the premises.

Please Insert Social Security or

Other Identifying Number of Assignee:

	 	 	 	 	 
	 	 	 
	 
	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	(Signature)

	 	 	 
	Signature Guarantee:

	 

	 	 

(Participant in a
Recognized Signature

Guaranty Medallion Program)

     NOTICE: The signature to this assignment must correspond with the name as written upon the
face of the within instrument in every particular, without alteration or enlargement or any change
whatever.

First Supplemental Indenture

A-1-7

 

OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Note purchased by the Company pursuant to Section 10.10 or
11.6 of the Indenture, check the appropriate box below:

	 	 	 	 	 	 	 
	 

	 	o Section 10.10
	 	o Section 11.6
	 	 

     If you want to elect to have only part of the Note purchased by the Company pursuant to
Section 10.10 or Section 11.6 of the Indenture, state the amount you elect to have purchased:

$                    

Date:                     

	 	 	 	 	 
	 

	 	Your Signature:	 	 
	 	 	(Sign exactly as your name appears on the face of this Note)
	 
	 	 	 	 
	 

	 	Tax Identification No.:
	 

	 	 	 	 

Signature Guarantee*:                    

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

First Supplemental Indenture

A-1-8

 

 

     [If a Global Security, insert as a separate page—

SCHEDULE OF INCREASES OR DECREASES

IN GLOBAL SECURITY

     The following increases or decreases in this Global Security have been made:

	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	 	 	Principal Amount of	 	 
	 	 	Decrease in	 	Amount of Increase	 	this Global Security	 	Signature of
	 	 	Principal	 	in Principal Amount	 	following such	 	authorized signatory
	 	 	Amount of this	 	of this	 	decrease	 	of Trustee or
	Date of Exchange	 	Global Security	 	Global Security	 	(or increase)	 	Depositary
	 
	 	 	 	 	 	 	 	 

First Supplemental Indenture

A-1-9

 

 

EXHIBIT A

Form of 2018 Note

[FORM OF FACE OF NOTE]

[If a Global Security, insert—THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE
THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES
REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH
TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

[If a Global Security, insert—EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF
TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO
THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.]

[If a Global Security, insert—UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (“DTC”) (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO., OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

First Supplemental Indenture

A-2-1

 

 

WEATHERFORD INTERNATIONAL LTD.

6.00% Senior Note due 2018

	 	 	 	 	 	 	 	 	 
	Rate of Interest	 	Maturity Date	 	Original Issue Date
	6.00%
	 	March 15, 2018	 	March 25, 2008

	 	 	 
	No. 1
	 	U.S.$500,000,000

CUSIP No. 947075 AD9

     Weatherford International Ltd., a Bermuda exempted company (herein called the “Company”), for
value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
FIVE HUNDRED MILLION United States Dollars on the maturity date shown above, and to pay interest
thereon, at the annual rate of interest shown above, from the original issue date shown above or
from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid
or duly provided for, payable semi-annually on March 15 and September 15 of each year (each, an
"Interest Payment Date”) and at such maturity date, commencing on the first such date after the
original issue date hereof, except that if such original issue date is on or after a Regular Record
Date (as defined below) but before the next Interest Payment Date, interest payments will commence
on the second Interest Payment Date following the original issue date.

     The interest so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the person in whose name this Note is
registered at the close of business on the “Regular Record Date” for any such Interest Payment
Date, which shall be the fourteenth calendar day (whether or not a Business Day) preceding the
applicable Interest Payment Date. Any such interest not so punctually paid or duly provided for,
and any interest payable on such defaulted interest (to the extent lawful), will forthwith cease to
be payable to the Holder on such Regular Record Date and shall be paid to the person in whose name
this Note is registered at the close of business on a special record date for the payment of such
defaulted interest to be fixed by the Company, notice of which shall be given to Holders of Notes
not less than 14 days prior to such special record date. Payment of the principal of and interest
on this Note will be made at the agency of the Company maintained for that purpose in New York, New
York and at any other office or agency maintained by the Company for such purpose, in United States
dollars; provided, however, that, at the option of the Company, payment of interest, other than
interest due on the maturity date shown above, may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Security Register.

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

(Signature Page Follows)

First Supplemental Indenture

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     IN WITNESS WHEREOF, Weatherford International Ltd. has caused this instrument to be executed
in its corporate name by the signature of its duly authorized officer.

     WEATHERFORD INTERNATIONAL LTD.

	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

      DATED: March 25, 2008

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the 6.00% Senior Notes due 2018 referred to in the within-mentioned Indenture.

	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,
	 	 	by Deutsche Bank National Trust Company,
	 	 	     as Trustee
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Authorized Signatory
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Authorized Signatory

First Supplemental Indenture

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[REVERSE OF NOTE]

WEATHERFORD INTERNATIONAL LTD.

6.00% Senior Note due 2018

     This Note is one of a duly authorized issue of Securities of the Company (which term includes
any successor corporation under the Indenture hereinafter referred to) designated as its 6.00%
Senior Notes due 2018 (the “Notes”), issued or to be issued pursuant to an Indenture dated as of
October 1, 2003, between the Company and Deutsche Bank Trust Company Americas, a New York banking
corporation, as Trustee (the “Trustee,” which term includes any successor trustee under such
Indenture), as amended and supplemented by the First Supplemental Indenture thereto dated as of
March 25, 2008 (such Indenture, as so amended and supplemented being referred to herein as the
“Indenture”). The terms of this Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended. Reference is hereby
made to the Indenture and all further supplemental indentures thereto for a statement of the
respective rights, limitation of rights, duties and immunities thereunder of the Company, the
Guarantor, the Trustee and the Holders and of the terms upon which the Notes are, and are to be,
authenticated and delivered.

     As provided in the Indenture, Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at different times, may
bear interest, if any, at different rates, may be subject to different redemption provisions, if
any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to
different covenants and Events of Default and may otherwise vary as in the Indenture provided or
permitted. This Note is one of the series designated on the face hereof.

     This Note is the general, unsecured, senior obligation of the Company and is guaranteed
pursuant to a guarantee (the “Guarantee”) by Weatherford International, Inc., a Delaware
corporation (the “Guarantor”).

     The Notes are subject to redemption upon not less than 30 nor more than 60 days’ notice by
mail, at any time, as a whole or in part, at the election of the Company at a Redemption Price
equal to the greater of: (a) 100% of the principal amount of Securities then outstanding to be
redeemed, plus accrued and unpaid interest thereon to the redemption date; or (b) the sum of the
present values of the remaining scheduled payments of principal and interest on the Securities then
outstanding to be redeemed (not including any portion of such payments of interest accrued as of
the redemption date), discounted to the redemption date on a semi-annual basis (computed based on a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus 40 basis
points (0.40%), as calculated by an Independent Investment Banker, plus accrued and unpaid interest
thereon to the redemption date; but interest installments whose Stated Maturity is on or prior to
such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.

     “Adjusted Treasury Rate” means, with respect to any redemption date: (a) the yield, under the
heading which represents the average for the immediately preceding week, appearing in the most
recently published statistical release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant maturity under the
caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the remaining life, as defined below,
yields for the two published maturities most closely corresponding to the Comparable Treasury Issue
will be determined and the Adjusted Treasury Rate will be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month); or (b) if such release (or any
successor release) is not published during the week preceding the calculation date or does not
contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption
date. The Adjusted Treasury Rate will be calculated on the third business day preceding the
redemption date.

     “Comparable Treasury Issue” means the United States Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining term of the
Securities to be redeemed that would be used, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Securities.

First Supplemental Indenture

A-2-4

 

     “Comparable Treasury Price” means (1) the average of five Reference Treasury Dealer Quotations
for the redemption date, after excluding the highest and lowest Reference Treasury Dealer
Quotations, or (2) if an Independent Investment Banker obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such quotations.

     “Independent Investment Banker” means Goldman, Sachs & Co., Deutsche Bank Securities Inc. or
Merrill Lynch, Pierce, Fenner & Smith Incorporated or any of their respective successors, as
designated by us, or if all such firms are unwilling or unable to serve as such, an independent
investment and banking institution of national standing appointed by the Company.

     “Reference Treasury Dealer” means: (a) Goldman, Sachs & Co., Deutsche Bank Securities Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and each of their respective successors;
provided that, if any such Reference Treasury Dealer ceases to be a primary U.S. Government
securities dealer in the United States (Primary Treasury Dealer), the Company will substitute
another Primary Treasury Dealer; and (b) up to two other Primary Treasury Dealer selected by the
Company.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by an Independent Investment Banker, of the bid
and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to an Independent Investment Banker at 3:00 p.m., New York City
time, on the third business day preceding such redemption date.

     In the event of redemption of this Note in part only, a new Security or Securities of this
series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the Guarantor and the rights of
the Holders of the Securities of each series to be affected under the Indenture at any time by the
Company and the Guarantor and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified percentages in principal
amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company and the Guarantor with certain
provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest on this Note at the times, place(s) and rate, and
in the coin or currency, herein prescribed.

     This Global Security or portion hereof may not be exchanged for Definitive Securities of this
series except in the limited circumstances provided in the Indenture. The holders of beneficial
interests in this Global Security will not be entitled to receive physical delivery of Definitive
Securities except as described in the Indenture and will not be considered the Holders thereof for
any purpose under the Indenture.

     The Notes are issuable only in registered form without coupons in denominations of U.S. $2,000
and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     Prior to due presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and
none of the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to
the contrary.

First Supplemental Indenture

A-2-5

 

     No recourse under or upon any obligation, covenant or agreement of or contained in the
Indenture or of or contained in any Note, or the Guarantee endorsed thereon, or for any claim based
thereon or otherwise in respect thereof, or in any Security or in the Guarantee, or because of the
creation of any indebtedness represented thereby, shall be had against any incorporator,
shareholder, member, officer, manager or director, as such, past, present or future, of the Company
or the Guarantor or of any successor Person, either directly or through the Company or the
Guarantor or any successor Person, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that
all such liability is hereby expressly waived and released by the acceptance hereof and as a
condition of, and as part of the consideration for, the Notes and the execution of the Indenture.

     The Indenture provides that the Company and the Guarantor (a) will be discharged from any and
all obligations in respect of the Notes (except for certain obligations described in the
Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each
case if the Company or the Guarantor deposits, in trust, with the Trustee money or U.S. Government
Obligations (or a combination thereof) which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money, in an amount sufficient to pay all the
principal of and interest on the Notes, but such money need not be segregated from other funds
except to the extent required by law.

     As more fully provided in the Indenture, no Holder may pursue any remedy under the Indenture
unless the Trustee shall have failed to act after notice of an Event of Default and written request
by Holders of at least 25% in principal amount of a series of the Securities and the offer to the
Trustee of indemnity satisfactory to it; however, such provision does not affect the right to sue
for enforcement of any overdue payment on any Security.

     Except as otherwise defined herein, all terms used in this Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

     Customary abbreviations may be used in the name of a Holder or any assignee, such as: TEN COM
( = tenants in common), TEN ENT ( = tenants by the entireties), JT TEN ( = joint tenants with right
of survivorship and not as tenants in common), CUST ( = Custodian) and U/G/M/A ( = Uniform Gifts to
Minors Act).

     The Company will furnish to any holder of record of this Note, upon written request, without
charge, a copy of the Indenture. Requests may be made to: Weatherford International Ltd., 515 Post
Oak Blvd., Suite 600, Houston, Texas 77027, Attention: Corporate Secretary.

     This Note shall be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of law.

First Supplemental Indenture

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ASSIGNMENT FORM

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
                                                             (Please Print or Typewrite Name and Address of Assignee) the
within instrument of WEATHERFORD INTERNATIONAL LTD. and does hereby irrevocably constitute and
appoint                                          Attorney to transfer said instrument on the books of the
within-named Company, with full power of substitution in the premises.

Please Insert Social Security or

Other Identifying Number of Assignee:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	(Signature)	 	 

	 	 	 
	Signature Guarantee:
	 	 
	 

	 	 
	 

	 	(Participant in a Recognized Signature

Guaranty Medallion Program)

     NOTICE: The signature to this assignment must correspond with the name as written upon the
face of the within instrument in every particular, without alteration or enlargement or any change
whatever.

First Supplemental Indenture

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OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Note purchased by the Company pursuant to Section 10.10 or
11.6 of the Indenture, check the appropriate box below:

	 	 	 	 	 
	o  Section 10.10
	 	o   Section 11.6
	 	 

     If you want to elect to have only part of the Note purchased by the Company pursuant to
Section 10.10 or Section 11.6 of the Indenture, state the amount you elect to have purchased:

$                    

	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Your Signature:	 	 
	 

	 	 	 	 	 	 
	 	 
	 

	 	 	 	 	 	(Sign exactly as your name appears on the face of this Note)
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Tax Identification No.:	 	 
	 

	 	 	 	 	 	 
	 	 

	 	 	 	 	 
	Signature Guarantee*:

	 	 	 	 
	 

	 	 	 	 

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

First Supplemental Indenture

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     [If a Global Security, insert as a separate page—

SCHEDULE OF INCREASES OR DECREASES

IN GLOBAL SECURITY

     The following increases or decreases in this Global Security have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	 	 	 	 	Principal Amount of	 	
	 	 	Decrease in	 	Amount of Increase	 	this Global Security	 	Signature of
	 	 	Principal	 	in Principal Amount	 	following such	 	 authorized signatory 
	 	 	Amount of this	 	of this	 	decrease	 	of Trustee or
	Date of Exchange	 	Global Security	 	Global Security	 	(or increase)	 	Depositary
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

First Supplemental Indenture

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EXHIBIT A

Form of 2038 Note

[FORM OF FACE OF NOTE]

[If a Global Security, insert—THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE
THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES
REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH
TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

[If a Global Security, insert—EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF
TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO
THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.]

[If a Global Security, insert—UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (“DTC”) (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO., OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

			
	HOU:2784235.5
	 	First Supplemental Indenture

A-3-1

 

WEATHERFORD INTERNATIONAL LTD.

7.00% Senior Note due 2038

	 	 	 	 	 
	Rate of Interest	 	Maturity Date	 	Original Issue Date
	7.00%
	 	March 15, 2038
	 	March 25, 2008

	 	 	 
	No. 1

	 	U.S.$500,000,000
	 
	 	 	 	 
	CUSIP No. 947075 AE7	 	 

     Weatherford International Ltd., a Bermuda exempted company (herein called the “Company”), for
value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
FIVE HUNDRED MILLION United States Dollars on the maturity date shown above, and to pay interest
thereon, at the annual rate of interest shown above, from the original issue date shown above or
from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid
or duly provided for, payable semi-annually on March 15 and September 15 of each year (each, an
“Interest Payment Date”) and at such maturity date, commencing on the first such date after the
original issue date hereof, except that if such original issue date is on or after a Regular Record
Date (as defined below) but before the next Interest Payment Date, interest payments will commence
on the second Interest Payment Date following the original issue date.

     The interest so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the person in whose name this Note is
registered at the close of business on the “Regular Record Date” for any such Interest Payment
Date, which shall be the fourteenth calendar day (whether or not a Business Day) preceding the
applicable Interest Payment Date. Any such interest not so punctually paid or duly provided for,
and any interest payable on such defaulted interest (to the extent lawful), will forthwith cease to
be payable to the Holder on such Regular Record Date and shall be paid to the person in whose name
this Note is registered at the close of business on a special record date for the payment of such
defaulted interest to be fixed by the Company, notice of which shall be given to Holders of Notes
not less than 14 days prior to such special record date. Payment of the principal of and interest
on this Note will be made at the agency of the Company maintained for that purpose in New York, New
York and at any other office or agency maintained by the Company for such purpose, in United States
dollars; provided, however, that, at the option of the Company, payment of interest, other than
interest due on the maturity date shown above, may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Security Register.

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

(Signature Page Follows)

	 	 	 
	 
	 	First Supplemental Indenture

A-3-2

 

     IN WITNESS WHEREOF, Weatherford International Ltd. has caused this instrument to be executed
in its corporate name by the signature of its duly authorized officer.

	 	 	 	 	 
	 

	 	WEATHERFORD
	 	INTERNATIONAL LTD.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 

	 

	 	Name:	 	 
	 

	 	 

	 

	 	Title:	 	 
	 

	 	 

DATED: March 25, 2008

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the 7.00% Senior Notes due 2038 referred to in the within-mentioned Indenture.

	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,
	 	 	by Deutsche Bank
National Trust Company,
  as Trustee
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Authorized Signatory
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Authorized Signatory

	 	 	 
	 
	 	First Supplemental Indenture

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[REVERSE OF NOTE]

WEATHERFORD INTERNATIONAL LTD.

7.00% Senior Note due 2038

     This Note is one of a duly authorized issue of Securities of the Company (which term includes
any successor corporation under the Indenture hereinafter referred to) designated as its 7.00%
Senior Notes due 2038 (the “Notes”), issued or to be issued pursuant to an Indenture dated as of
October 1, 2003, between the Company and Deutsche Bank Trust Company Americas, a New York banking
corporation, as Trustee (the “Trustee,” which term includes any successor trustee under such
Indenture), as amended and supplemented by the First Supplemental Indenture thereto dated as of
March 25, 2008 (such Indenture, as so amended and supplemented being referred to herein as the
“Indenture”). The terms of this Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended. Reference is hereby
made to the Indenture and all further supplemental indentures thereto for a statement of the
respective rights, limitation of rights, duties and immunities thereunder of the Company, the
Guarantor, the Trustee and the Holders and of the terms upon which the Notes are, and are to be,
authenticated and delivered.

     As provided in the Indenture, Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at different times, may
bear interest, if any, at different rates, may be subject to different redemption provisions, if
any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to
different covenants and Events of Default and may otherwise vary as in the Indenture provided or
permitted. This Note is one of the series designated on the face hereof.

     This Note is the general, unsecured, senior obligation of the Company and is guaranteed
pursuant to a guarantee (the “Guarantee”) by Weatherford International, Inc., a Delaware
corporation (the “Guarantor”).

     The Notes are subject to redemption upon not less than 30 nor more than 60 days’ notice by
mail, at any time, as a whole or in part, at the election of the Company at a Redemption Price
equal to the greater of: (a) 100% of the principal amount of Securities then outstanding to be
redeemed, plus accrued and unpaid interest thereon to the redemption date; or (b) the sum of the
present values of the remaining scheduled payments of principal and interest on the Securities then
outstanding to be redeemed (not including any portion of such payments of interest accrued as of
the redemption date), discounted to the redemption date on a semi-annual basis (computed based on a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus 45 basis
points (0.45%), as calculated by an Independent Investment Banker, plus accrued and unpaid interest
thereon to the redemption date; but interest installments whose Stated Maturity is on or prior to
such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.

     “Adjusted Treasury Rate” means, with respect to any redemption date: (a) the yield, under the
heading which represents the average for the immediately preceding week, appearing in the most
recently published statistical release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant maturity under the
caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the remaining life, as defined below,
yields for the two published maturities most closely corresponding to the Comparable Treasury Issue
will be determined and the Adjusted Treasury Rate will be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month); or (b) if such release (or any
successor release) is not published during the week preceding the calculation date or does not
contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption
date. The Adjusted Treasury Rate will be calculated on the third business day preceding the
redemption date.

     “Comparable Treasury Issue” means the United States Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining term of the
Securities to be redeemed that would be used, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Securities.

	 	 	 
	 
	 	First Supplemental Indenture

A-3-4

 

     “Comparable Treasury Price” means (1) the average of five Reference Treasury Dealer Quotations
for the redemption date, after excluding the highest and lowest Reference Treasury Dealer
Quotations, or (2) if an Independent Investment Banker obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such quotations.

     “Independent Investment Banker” means Goldman, Sachs & Co., Deutsche Bank Securities Inc. or
Merrill Lynch, Pierce, Fenner & Smith Incorporated or any of their respective successors, as
designated by us, or if all such firms are unwilling or unable to serve as such, an independent
investment and banking institution of national standing appointed by the Company.

     “Reference Treasury Dealer” means: (a) Goldman, Sachs & Co., Deutsche Bank Securities Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and each of their respective successors;
provided that, if any such Reference Treasury Dealer ceases to be a primary U.S. Government
securities dealer in the United States (Primary Treasury Dealer), the Company will substitute
another Primary Treasury Dealer; and (b) up to two other Primary Treasury Dealer selected by the
Company.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by an Independent Investment Banker, of the bid
and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to an Independent Investment Banker at 3:00 p.m., New York City
time, on the third business day preceding such redemption date.

     In the event of redemption of this Note in part only, a new Security or Securities of this
series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the Guarantor and the rights of
the Holders of the Securities of each series to be affected under the Indenture at any time by the
Company and the Guarantor and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified percentages in principal
amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company and the Guarantor with certain
provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest on this Note at the times, place(s) and rate, and
in the coin or currency, herein prescribed.

     This Global Security or portion hereof may not be exchanged for Definitive Securities of this
series except in the limited circumstances provided in the Indenture. The holders of beneficial
interests in this Global Security will not be entitled to receive physical delivery of Definitive
Securities except as described in the Indenture and will not be considered the Holders thereof for
any purpose under the Indenture.

     The Notes are issuable only in registered form without coupons in denominations of U.S. $2,000
and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     Prior to due presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and
none of the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to
the contrary.

	 	 	 
	 
	 	First Supplemental Indenture

A-3-5

 

     No recourse under or upon any obligation, covenant or agreement of or contained in the
Indenture or of or contained in any Note, or the Guarantee endorsed thereon, or for any claim based
thereon or otherwise in respect thereof, or in any Security or in the Guarantee, or because of the
creation of any indebtedness represented thereby, shall be had against any incorporator,
shareholder, member, officer, manager or director, as such, past, present or future, of the Company
or the Guarantor or of any successor Person, either directly or through the Company or the
Guarantor or any successor Person, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that
all such liability is hereby expressly waived and released by the acceptance hereof and as a
condition of, and as part of the consideration for, the Notes and the execution of the Indenture.

     The Indenture provides that the Company and the Guarantor (a) will be discharged from any and
all obligations in respect of the Notes (except for certain obligations described in the
Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each
case if the Company or the Guarantor deposits, in trust, with the Trustee money or U.S. Government
Obligations (or a combination thereof) which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money, in an amount sufficient to pay all the
principal of and interest on the Notes, but such money need not be segregated from other funds
except to the extent required by law.

     As more fully provided in the Indenture, no Holder may pursue any remedy under the Indenture
unless the Trustee shall have failed to act after notice of an Event of Default and written request
by Holders of at least 25% in principal amount of a series of the Securities and the offer to the
Trustee of indemnity satisfactory to it; however, such provision does not affect the right to sue
for enforcement of any overdue payment on any Security.

     Except as otherwise defined herein, all terms used in this Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

     Customary abbreviations may be used in the name of a Holder or any assignee, such as: TEN COM
( = tenants in common), TEN ENT ( = tenants by the entireties), JT TEN ( = joint tenants with right
of survivorship and not as tenants in common), CUST ( = Custodian) and U/G/M/A ( = Uniform Gifts to
Minors Act).

     The Company will furnish to any holder of record of this Note, upon written request, without
charge, a copy of the Indenture. Requests may be made to: Weatherford International Ltd., 515 Post
Oak Blvd., Suite 600, Houston, Texas 77027, Attention: Corporate Secretary.

     This Note shall be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of law.

	 	 	 
	 
	 	First Supplemental Indenture

A-3-6

 

ASSIGNMENT FORM

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
                                        
(Please Print or Typewrite Name and Address of Assignee) the within instrument of WEATHERFORD INTERNATIONAL LTD. and does hereby irrevocably constitute and appoint
                                        
Attorney to transfer said instrument on the books of the within-named Company, with full power of substitution in the premises.

Please Insert Social Security or

Other Identifying Number of Assignee:

	 	 	 
	 

	 	 
	 
	 	 
	 	 	 
	 	 	 
	Dated:
	 	(Signature)
	 
	Signature Guarantee:	 	 
	 

(Participant in a Recognized Signature

Guaranty Medallion Program)

     NOTICE: The signature to this assignment must correspond with the name as written upon the
face of the within instrument in every particular, without alteration or enlargement or any change
whatever.

	 	 	 
	 	 	First Supplemental Indenture

A-3-7

 

OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Note purchased by the Company pursuant to Section 10.10 or
11.6 of the Indenture, check the appropriate box below:

	 	 	 
	o Section 10.10
	 	o Section 11.6

     If you want to elect to have only part of the Note purchased by the Company pursuant to
Section 10.10 or Section 11.6 of the Indenture, state the amount you elect to have purchased:

$                    

Date:                                         

Your
Signature:                                         

(Sign exactly as your name appears on the face of this Note)

Tax
Identification No.:                                         

Signature
Guarantee*:                                         

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

	 	 	 
	 
	 	First Supplemental Indenture

A-3-8

 

 

     [If a Global Security, insert as a separate page—

SCHEDULE OF INCREASES OR DECREASES

IN GLOBAL SECURITY

     The following increases or decreases in this Global Security have been made:

									
	 	 	Amount of 	 	 	 	 	 	Principal Amount of	 	
	 	 	Decrease in 	 	Amount of Increase	 	this Global Security 	 	Signature of
	 	 	Principal 	 	in Principal Amount	 	following such	 	authorized signatory 
	 	 	Amount of this	 	of this	 	 decrease	 	of Trustee or
	Date of Exchange	 	Global Security	 	Global Security	 	(or increase)	 	Depositary

First
Supplemental Indenture

A-3-9

 

EXHIBIT B

[FORM OF GUARANTEE NOTATION]

     The Guarantor (which term includes any successor Person in such capacity under the Indenture),
has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture, the due and punctual payment of the principal of, and
premium, if any, and interest on the Securities of this series and all other amounts due and
payable under the Indenture and such Securities by the Company.

     The obligations of the Guarantor to the Holders of Securities and to the Trustee pursuant to
the Guarantee and the Indenture are expressly set forth in Article Fourteen of the Indenture and
reference is hereby made to the Indenture for the precise terms of the Guarantee.

	 	 	 	 	 
	 	 	Guarantor:
	 
	 	 	 	 
	 	 	WEATHERFORD INTERNATIONAL, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

	 	 	 
	 
	 	First Supplemental Indenture

B-1

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