Document:

EX-10.12

EXHIBIT 10.12

STOCK PURCHASE AGREEMENT

     This Stock Purchase Agreement (this “Agreement”) is entered into as of September 12, 2008 by
and between American Claims Evaluation, Inc., a New York corporation (“Seller”), and Stephen D.
Renz (“Buyer”). Seller and Buyer are referred to herein individually as a “Party” and collectively
as the “Parties.”

RECITALS:

     WHEREAS, Seller owns eight hundred forty-six (846) shares of common stock, par value $1.00 per
share, of RPM Rehabilitation & Associates, Inc., a Washington corporation (the “Company”), which
represents all of the issued and outstanding shares of capital stock of the Company (the “Company
Shares”); and

     WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all of
the outstanding Company Shares on the terms and subject to the conditions set forth in this
Agreement.

     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:

     Section 1. Definitions.

     “AAA” has the meaning set forth in Section 8(h)(ii).

     “Accounting Firm” means an independent accounting firm that is mutually agreed upon by the
Parties; provided, however, that, in the event that the Parties are unable to agree upon such
accounting firm, then each of Seller and Buyer shall designate a regionally recognized independent
accounting firm and the two regionally recognized independent accounting firms shall agree upon and
select a third nationally recognized accounting firm, which shall be the “Accounting Firm” for the
purposes of this definition.

     “Additional Purchase Price” has the meaning set forth in Section 2(b).

     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the
Exchange Act.

     “Agreement” has the meaning set forth in the first paragraph of this Agreement.

     “Business” means the provision of vocational rehabilitation and disability management
services.

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

     “Buyer” has the meaning set forth in the first paragraph of this Agreement.

     “Calculation Period” has the meaning set forth in Section 2(b).

     “Cap” has the meaning set forth in Section 7(b)(ii).

     “Closing” has the meaning set forth in Section 2(c).

     “Closing Date” has the meaning set forth in Section 2(c).

     “Code” means the Internal Revenue Code of 1986, as amended, and the United States Treasury
Regulations thereunder.

     “Commitments” means all written and oral contracts, agreements, leases, arrangements, employee
benefits plans and agreements with employees, understandings and commitments of any nature
whatsoever, and including all amendments thereof and supplements thereto.

 

 

     “Company” has the meaning set forth in the first Whereas clause in the recitals to this
Agreement.

     “Company Shares” has the meaning set forth in the first Whereas clause in the recitals to this
Agreement.

     “Deductible” has the meaning set forth in Section 7(b)(ii).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Governmental Entity” means any foreign or domestic (federal, state or local) government,
governmental instrumentality or governmental or other regulatory or administrative authority,
agency or commission or court, having jurisdiction in the particular matter.

     “Income Tax” or “Income Taxes” means any Company federal, state, local or foreign Tax or Taxes
(a) based upon, measured by, or calculated with respect to, net income or net receipts, proceeds or
profits, or (b) based upon, measured by, or calculated with respect to multiple bases (including,
but not limited to, corporate franchise or occupation Taxes) if such Tax may be based upon,
measured by, or calculated with respect to one or more bases described in (a) above.

     “Indemnified Party” has the meaning set forth in Section 7(d)(i).

     “Indemnifying Party” has the meaning set forth in Section 7(d)(i).

     “IRS” means the Internal Revenue Service.

     “Knowledge” or “aware” means actual knowledge or awareness, without investigation.

     “Laws” means any federal, state, local or foreign law, constitution, treaty, statute or
ordinance, common law, or any rule, regulation, standard, judgment, Order, writ, injunction or
decree of any Governmental Entity.

     “Liability” means any debt, liability or obligation, whether known or unknown, asserted or
unasserted, accrued, absolute, contingent or otherwise, whether due or to become due.

     “Lien” means any mortgage, pledge, lien, encumbrance, charge or other security interest, other
than (a) liens for Taxes not yet due and payable, (b) purchase money liens and liens securing
rental payments under capital lease arrangements, and (c) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of money.

     “Losses” means all actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines,
costs, reasonable amounts paid in settlement, liabilities, obligations, Taxes, Liens, losses,
expenses, and fees, including court costs and reasonable attorneys’ fees and expenses; provided,
however, that Losses shall not include any indirect, special, consequential, diminution in value,
incidental or punitive damages or losses of any kind, except to the extent paid by any Indemnified
Party in a Third Party Claim.

     “Material Adverse Effect” means any effect or change that, individually or in the aggregate,
would be or would reasonably be expected to be materially adverse to the business of the Company,
taken as a whole, or to the ability of any Party to perform its obligations under this Agreement or
to consummate timely the transactions contemplated by this Agreement; provided that none of
the following shall be deemed to constitute, and none of the following shall be taken into account
in determining whether there has been, a Material Adverse Effect: any adverse change, event,
development or effect arising from or relating to (i) general business or economic conditions, (ii)
national or international political or social conditions, including the engagement by the United
States in hostilities, whether or not pursuant to the declaration of a national emergency or war,
or the occurrence of any military or terrorist attack upon the United States, or any of its
territories, possessions, or diplomatic or consular offices or upon any military installation,
equipment or personnel of the United States, (iii) financial, banking or securities markets
(including any disruption thereof and any decline (whether or not material) in the price of any
security or any market index), (iv) changes in United States generally accepted accounting
principles, (v) changes in Laws or other binding

- 2 -

 

directives issued by any Governmental Entity, or (vi) the taking of any action contemplated by
this Agreement and the other agreements contemplated hereby.

     “Material Commitments” has the meaning set forth in Section 3(k).

     “Net Earnings” has the meaning set forth in Section 2(b).

     “Order” means any writ, judgment, decree, settlement, injunction or similar order of any
Governmental Entity, in each case whether preliminary or final.

     “Ordinary Course of Business” means the ordinary course of business of the Company consistent
with past custom and practice.

     “Party” and “Parties” have the meanings set forth in the first paragraph of this Agreement.

     “Permit” means any license, permit, consent, registration, certificate, franchise, approval,
Order or other authorization of any Governmental Entity.

     “Person” means an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated organization, any
other business entity or Governmental Entity (or any department, agency or political subdivision
thereof).

     “Pre-Closing Tax Periods” means all taxable periods, or portions of periods, of the Company
ending on or before the Closing Date.

     “Purchase Price” has the meaning set forth in Section 2(a).

     “Returns” means any report, return, statement, claim, estimate, declaration, notice, form or
other information supplied or required to be supplied to a taxing authority in connection with
Taxes.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Seller” has the meaning set forth in the first paragraph of this Agreement.

     “Subsidiary” means, with respect to any Person, any corporation, limited liability company,
partnership, association, or other business entity of which (i) a majority of the total voting
power of the ownership interests entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers, general partners, trustees thereof, or similar Persons
is at the time owned or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof; or (ii) a majority of the ownership
interests or economic interests thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more Subsidiaries of that Person or a combination thereof; or (iii) such
Person shall be or directly or indirectly control any director, manager, general partner or similar
Person of such business entity. The term “Subsidiary” shall include all Subsidiaries of such
Subsidiary.

     “Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.

     “Tax Indemnified Parties” has the meaning set forth in Section 6(d)(ii).

     “Third Party Claim” has the meaning set forth in Section 7(d)(i).

- 3 -

 

     Section 2. Purchase of Company Shares and Related Transactions.

     (a) Purchase. On and subject to the terms and conditions of this Agreement, Buyer
agrees to, and does hereby, purchase from Seller, and Seller agrees to, and does hereby, sell to
Buyer, all of its Company Shares. The purchase price for all of the Company Shares (the “Purchase
Price”) shall be $150,000.00, payable by wire transfer of immediately available funds to a bank
account designated in writing by Seller prior to the Closing. The Purchase Price is subject to
adjustment in accordance with Section 2(b).

     (b) Adjustment to Purchase Price. In addition to the payment provided for in Section
2(a) above, Buyer shall pay Seller an additional purchase price of up to $150,000.00 in cash
contingent upon the future net earnings of the Company (the “Additional Purchase Price”) calculated
over a period of five years from and after the Closing (the “Calculation Period”) as follows:
Beginning with the Closing Date and continuing until the completion of the Calculation Period, the
Net Earnings before taxes and interest (“Net Earnings”) of the Company shall be determined by the
Accounting Firm in accordance with generally accepted accounting principles prepared on an accrual
basis. The calculation of the Additional Purchase Price shall be pro-rated for the initial period
beginning with the Closing Date and ending on March 31, 2009, followed by calculations for the next
four full years and concluding with a final pro-rated calculation for the period April 1, 2013
through September 11, 2013. If the Company’s fiscal year end is changed to a year ending other
than its current year end of March 31st, each calculation during the Calculation Period
shall be pro-rated for any period less than twelve (12) months and the subsequent calculations
shall be adjusted accordingly for the remainder of the Calculation Period. For purposes hereof,
Net Earnings shall mean the gross revenue of the Company for each fiscal year or portion thereof
during the Calculation Period less all expenses and other proper charges (except taxes and
interest). For purposes of the calculation of Net Earnings, Mr. Renz’s annual salary (consisting
of wages and bonuses) shall be capped at $115,000 and shall be increased each year by a five (5%)
percent cost of living adjustment. In addition, Mr. Renz shall be allowed to be reimbursed for
expenses incurred on behalf of the Company and for reasonable employee benefits in keeping with his
position in the Company. The Additional Purchase Price shall then be calculated at 10% of Net
Earnings.

The calculation and yearly payment of the Additional Purchase Price shall be made on an annual
basis until the earlier of (i) the payment of $150,000.00 of Additional Purchase Price to Seller or
(ii) the expiration of the Calculation Period. Buyer shall make its payments to Seller by wire
transfer of immediately available funds in an amount equal to the applicable Additional Purchase
Price to a bank account designated in writing by Seller within thirty (30) days of the annual
calculation.

Until the completion of the Calculation Period, Buyer shall provide Seller with copies of the
quarterly financial statements of the Company within forty five (45) days of the end of each
quarter. Under the terms and conditions of Section 6(c), Seller shall have the right to inspect
the books and records of the Company to determine the accuracy of the calculation of the Additional
Purchase Price.

     (c) Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Seller’s counsel, Siller Wilk LLP, at 675 Third
Avenue, New York, New York 10017, commencing at 10:00 a.m. local time on the date hereof (the
“Closing Date”). The Closing shall be effective as of 11:59 p.m. on the Closing Date.

     (d) Deliveries at Closing. At the Closing, (i) Seller shall deliver or cause to be
delivered to Buyer (A) a stock certificate representing all of its Company Shares, endorsed in
blank or accompanied by a duly executed stock power, (B) resignations of the Company’s directors
and officers (other than Buyer) and (C) complete stock register, Articles of Incorporation and
Bylaws, and amendments thereto, minute books, financial records and any other books and records of
the Company not already in the possession of Buyer and (ii) Buyer shall deliver to Seller (A) the
payment specified in Section 2(a) and (B) payment by wire transfer of immediately available funds
of $4,871.49 representing the cost of computer equipment purchased by the Company on Buyer’s
behalf.

     Section 3. Seller’s Representations and Warranties.

     Seller represents and warrants to Buyer as follows:

     (a) Authorization. Seller has the full and absolute legal right, capacity and power
to (i) execute and deliver this Agreement and all other agreements contemplated hereby to which
Seller is a party and (ii) to perform its obligations hereunder and thereunder. This Agreement
constitutes the valid and legally binding obligation of

- 4 -

 

Seller, enforceable against Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws
affecting creditors’ rights and remedies generally, and, as to enforceability, to general
principles of equity regardless of whether enforcement is sought in a proceeding at law or in
equity.

     (b) Non-Contravention Regarding the Seller. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby, by Seller will (i)
violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other
restriction of any Governmental Entity to which Seller is subject, (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in any party the right
to accelerate, terminate, modify or cancel, or require any notice under, any Material Commitment to
which Seller is a party or by which it is bound or to which any of its assets is subject, (iii)
result in the imposition or creation of a Lien upon or with respect to any Company Shares or (iv)
result in the suspension, revocation, impairment, withdrawal, forfeiture (for dormancy or
otherwise) or non-renewal of any material Permit. Seller need not give any notice to, make any
filing with, or obtain any authorization, consent or approval of any Governmental Entity or other
third party in order to consummate the transactions contemplated by this Agreement.

     (c) Capitalization. The entire authorized capital stock of the Company consists of
fifty thousand (50,000) Company Shares, of which eight hundred forty-six (846) Company Shares are
issued and outstanding.  All of the issued and outstanding Company Shares are held of
record by the Seller as set forth in the first Whereas clause in the recitals to this Agreement.
There are no outstanding or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other Commitments that could require the Company to issue,
sell or otherwise cause to become outstanding any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, deferred compensation or
similar rights with respect to the Company.

     (d) Company Shares. Seller holds of record and owns beneficially the number of
Company Shares set forth in the first Whereas clause in the recitals to this Agreement, free and
clear of any restrictions on transfer (other than restrictions under the Securities Act and state
securities laws), Taxes, Liens, options, warrants, purchase rights, Commitments, equities, claims,
and demands. Seller is not a party to any option, warrant, purchase right, or other Commitment
(other than this Agreement) that could require it to sell, transfer or otherwise dispose of any
capital stock of the Company. Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the voting of any capital stock of the Company.

     (e) Organization, Qualification and Corporate Power of the Company. The Company is a
corporation validly existing and in good standing under the laws of the State of Washington. The
Company does not have, and has never had, any Subsidiaries. The Company is duly authorized to
conduct business and is in good standing under the laws of each other jurisdiction where such
qualification is required, except where the lack of such qualification would not have a Material
Adverse Effect. The Company has full corporate power and authority to carry on the business in
which it is engaged and to own and use the properties owned and used by it. The Company has true
and correct copies of its Articles of Incorporation and Bylaws, including all amendments thereto,
and true copies of the minutes of all shareholder’s and directors’ meetings, and have provided the
same to Buyer.

     (f) Powers of Attorney. There are no outstanding powers of attorney executed on
behalf of the Company.

     (g) Brokers’ Fees. Neither Seller nor the Company has any liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.

     (h) Non-Contravention Regarding the Company. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will (i) violate any
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, material Permit or
other restriction of any Governmental Entity to which the Company is subject or any provision of
the charter or bylaws of the Company, (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice, filing, approval or consent under any
Commitment to which the Company is a party or by which it is bound or to which any of its assets is
subject or (iii) result in the imposition of any Lien upon any of its assets, except (x) for such
notices, filings, approvals or consents which are given, made or obtained prior to the Closing or
(y) where the violation, conflict, breach, default, acceleration,

- 5 -

 

termination, modification, cancellation, failure to give notice, make a filing or obtain an
approval or consent, or Lien would not have a Material Adverse Effect, or (iv) result in the
suspension, revocation, impairment, withdrawal, forfeiture (for dormancy or otherwise) or
non-renewal of any material Permit. The Company need not give any notice to, make any filing with,
or obtain any authorization, consent or approval of any Governmental Entity or other third party in
order to consummate the transactions contemplated by this Agreement.

     (i) Title to Tangible Assets. The Company has good title to, or a valid leasehold
interest in, the material tangible assets used regularly in the conduct of its business.

     (j) Real Property.

          (i) The Company owns no real property.

          (ii) The Company leases real property at 1010 N. Normandie, Spokane, WA 99201 under a lease
which expires on July 31, 2013. .

     (k) Material Commitments. Seller has provided Buyer with a correct and complete copy
of all of the material Commitments to which (i) the Company is a party and/or (ii) the Seller or
any of their respective Affiliates is a party in connection with the Business of the Company, or,
in either case, by or to which the Company or its assets may be bound or subject (“Material
Commitments”). Each Material Commitment is (and immediately after the Closing will be) in full
force and effect and valid, binding and enforceable in accordance with its terms against the
Company, the Seller or any other parties thereto, (ii) neither the Company nor Seller nor, to the
Knowledge of Seller, any other party thereto, is in material default under any Material Commitment
(beyond any applicable notice and cure period), and (iii) to the Knowledge of Seller, no condition
exists which, with the passage of time or the giving of notice, or both, will become a material
default under any Material Commitment.

     (l) Litigation. (i) To the Knowledge of Seller, there is no investigation by any
Governmental Entity against the Company or its business or assets, (ii) there is no audit or
proceeding by any Governmental Entity or any action, suit, proceeding or claim (including any
employee-related claims (other than routine claims for benefits)) pending or, to the Knowledge of
Seller, threatened within the last six months against the Company or its business or assets and
(iii) there are no existing orders, writs, injunctions or decrees of any court or other
Governmental Entity against the Company or its business or assets.

     (m) Taxes.

          (i) The Company has (a) timely filed in accordance with all applicable Laws (taking into
account valid extensions) all Returns required to be filed by it, (b) paid all Taxes shown to have
become due pursuant to such Returns, and (c) paid all Taxes for which a notice of, or assessment or
demand for, payment has been received or which are or may become otherwise due or payable. All
Returns filed by the Company with respect to Taxes were true and complete in all material respects
as of the date on which they were filed or as subsequently amended as of the date of amendment.
Prior to the date hereof, the Company has provided to Buyer copies of all revenue agent’s reports
and other written assertions of deficiencies or other Liabilities for Taxes of the Company with
respect to past periods. All amounts required to be collected or withheld by the Company with
respect to Taxes have been duly collected or withheld and any such amounts that are required to be
remitted to any taxing authority have been duly remitted. There are no waivers or extensions of
any applicable statute of limitations for the assessment or collection of Taxes with respect to any
Return that relates to the Company which remain in effect. There are no Tax rulings, requests for
rulings, closing agreements or similar agreements relating to the Company. There are no pending
examinations of the Company’s Tax Returns and there have been no such examinations. The Company is
not a party to, nor is it bound by, any Tax allocation or Tax sharing agreement or arrangement and
has no current contractual or legal obligation (actual or potential) to indemnify any other Person
with respect to Taxes (including as a result of being part of the same consolidated, combined or
affiliated group). No taxing authority in a jurisdiction where the Company or any shareholder of
the Company does not file Returns has made a claim, assertion or threat that the Company is or may
be subject to taxation by such jurisdiction. The Company has filed income, excise, sales and use
Tax Returns only with the IRS and the State of Washington.

     (n) Absence of Undisclosed Liabilities. To the Knowledge of Seller, the Company is
not subject to any Liabilities other than (i) Liabilities reflected, reserved against or otherwise
disclosed in its financial statements

- 6 -

 

as of March 31, 2008 and (ii) Liabilities arising since March 31, 2008 in the ordinary course
of business consistent (in amount and kind) with past practice except, with respect to clauses (i)
and (ii), as would not, individually or in the aggregate, have a Material Adverse Effect. The
Company does not have any outstanding accrued dividends.

     (o) Insurance. The Company has not received either a written notice or, to the
Knowledge of Seller, oral notice that would reasonably be expected to be followed by a written
notice of cancellation or non-renewal of any current insurance policy, and, to the Knowledge of
Seller, no basis exists for early termination thereof on the part of the insurer.

     (p) Compliance with Laws; Permits.

     (i) To the Knowledge of Seller, (A) the Company currently has all Permits which are
required for the operation of the Business as currently conducted, (B) such Permits are in
full force and effect, and (C) the Company has made all appropriate filings for issuance or
renewal of such Permits, except where the failure to have any such Permit would not have a
Material Adverse Effect. To the Knowledge of Seller, the Company is not in default or
violation (and no event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any term, condition or provision of any such Permit,
and no condition exists or event has occurred which, in itself or with the giving of notice
or lapse of time or both, would result in suspension, revocation, impairment, withdrawal,
forfeiture (for dormancy or otherwise) or non-renewal of any such Permit, except where such
default, violation, suspension, revocation, impairment, withdrawal, forfeiture (for dormancy
or otherwise) or non-renewal would not have a Material Adverse Effect.

     (ii) To the Knowledge of Seller, the Company is, and for the past three (3) years has
been, in compliance in all material respects with all applicable Laws. To the Knowledge of
Seller, there are no outstanding Orders issued by, and the Company has not received written
notice alleging any defaults under or violations of, Law from any Governmental Entity.

     (iii) To the Knowledge of Seller, no action, suit, consent order, proceeding
(including, without limitation, any proposed certificate action, warning notice, letter of
correction, administrative action, enforcement action, emergency action, order of
compliance, proposed cease and desist order, proposed order of denial, requests for
re-examination, and/or notice of proposed civil penalty) or review by any Governmental
Entity with respect to the Company is pending or, to the Knowledge of the Seller, threatened
within the last six months against the Company.

     (q) Operation of Business. Since April 1, 2008, the Company has conducted the
Business in the Ordinary Course of Business in all material respects, including, without
limitation, with regard to (i) the collection of the Company’s accounts receivable, and (ii) the
payment of the Company’s accounts payable.

     (r) Outstanding Indebtedness. Immediately prior to the Closing, the Company has no
indebtedness for borrowed money.

     (s) Seller’s Claims. Seller has no claims against either Buyer or the Company, and
neither Buyer nor the Company are obligated in any way or for any amounts, except for claims or
obligations which may arise under this Agreement. Seller hereby releases any and all claims which
it may have against Buyer and/or the Company through the Closing Date, except for claims arising
under this Agreement, or claims for which Seller may be entitled to indemnification in accordance
with the provisions of the Company’s Articles of Incorporation or Bylaws.

     (t) Disclosure. To the Knowledge of Seller, nothing in this Agreement contains any
untrue statement of any material fact or omits to state any material fact required to be stated
herein, or necessary in order to make the statements contained herein not misleading. To the
Knowledge of Seller, there is no fact which could have a Material Adverse Affect on Buyer or the
Company, or which in the future may (so far as Seller can now reasonably foresee) have a Material
Adverse Affect on Buyer or the Company or any of its assets, which fact has not been disclosed in
writing to Buyer prior to the date hereof or set forth herein.

- 7 -

 

     Section 4. Disclaimer of Other Representations and Warranties by Seller.

     Except as expressly set forth in Section 3 and except in the case of intentional fraud, Seller
make no representation or warranty, express or implied, at law or in equity, with respect to
Seller, the Company, or any of their respective assets, Liabilities, operations, rights and
obligations, financial conditions or prospects, including with respect to merchantability or
fitness for any particular purpose, and any such other representations or warranties are hereby
expressly disclaimed. Buyer hereby acknowledges and agrees that, except to the extent specifically
set forth in Section 3 and except in the case of intentional fraud, Seller make no representations
or warranties, and, insofar as the Company’s tangible assets, Buyer is effectively acquiring the
Company with its assets on an “as is, where is” basis. Buyer further acknowledges that he has had
an opportunity to complete a due diligence review of the Company and has made his own evaluation
and reached his own conclusions regarding the results of that review without relying on any
statements made by Seller other than as set forth in Section 3 and except in the case of
intentional fraud by Seller.

     Section 5. Buyer’s Representations and Warranties.

     Buyer represents and warrants to Seller as follows:

     (a) Authorization. Buyer has full power and authority to execute and deliver this
Agreement and each of the other agreements contemplated hereby to which he is a party and to
perform his obligations hereunder and thereunder. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar
laws affecting creditors’ rights and remedies generally, and, as to enforceability, to general
principles of equity regardless of whether enforcement is sought in a proceeding at law or in
equity.

     (b) Non-Contravention. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, by Buyer will (i) violate any Laws to which
Buyer is subject or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any Commitment to which Buyer is a party or by which he is bound or to
which any of his assets is subject. Buyer need not give any notice to, make any filing with, or
obtain any authorization, consent or approval of any Governmental Entity or other third party in
order to consummate the transactions contemplated by this Agreement.

     (c) Brokers’ Fees. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions contemplated by this
Agreement.

     (d) Investment. Buyer is purchasing the Company Shares for his own account for
investment only and not with a view towards the sale or distribution thereof. Buyer is an
“accredited investor” as that term is defined in Rule 501 under the Securities Act.

     Section 6. Certain Covenants.  

     (a) Further Actions. If at any time after the Closing any further action not provided
for herein is necessary to carry out the purposes of this Agreement, each of the Parties will take
such further action (including the execution and delivery of such further instruments and
documents) as any other Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification therefor under Section
7).

     (b) Seller as Additional Insured. Until the expiration of five (5) years after the
Closing, the Company shall cause Seller to be named as additional insured on the Company’s (and any
successors) liability insurance policies to the extent that the Company (or any successors) can do
so without the payment of any additional costs or fees to the Company (or any successors); provided
that if there are any additional costs or fees, the Company (or its successor, as applicable) shall
so notify Seller, and if Seller pays such costs or fees to the Company, or directly to the
appropriate insurers, the Company shall cause Seller to be so named as additional insured.

     (c) Access to Records. Until the expiration of five (5) years after the Closing
Date, Buyer and the Company shall upon reasonable request from Seller (a) make available and permit
Seller and its representatives and

- 8 -

 

agents to inspect and copy books and records which relate to the Company; provided,
however, that (i) all such inspection, copying and assistance shall be at the Company’s
place of business at reasonable times and after reasonable notice, (ii) all such inspection,
copying and assistance shall be at the sole cost and expense of Seller, and (iii) Seller shall
treat all such records and information as confidential and not disclose such records or information
to any other person or entity except (A) to Seller’s lawyers, accountants and other advisors,
representatives, and agents, (B) as required by applicable Law or legal process, or (C) in
connection with Seller’s Tax Returns, or any claims, actions or proceedings in which Seller may be
or become involved. Subject to Section 6(d)(v), Buyer shall cause the Company to preserve such
books and records for at least four (4) years after the Closing Date. Subject to Section 6(d)(v),
until the expiration of four (4) years after the Closing Date, Buyer shall ensure that the Company
does not, and the Company agrees that it will not, dispose of such books and records unless Buyer
or the Company shall have notified Seller at least sixty (60) days before such disposition and
given Seller the opportunity (at Seller’s expense) to remove and retain the books and records.

     (d) Tax Provisions.

     (i) Seller shall be responsible for the preparation of the Company’s federal and state
Income Tax Returns for the taxable years which end on or prior to the Closing Date and such
Income Tax Returns shall be prepared in a manner consistent with the prior practice of the
Company. Seller shall provide Buyer with an opportunity to review and comment on such
Income Tax Returns at least ten (10) Business Days prior to the date that such Returns are
due to be filed (taking into account extensions of the due date thereof). Any Company Tax
due with respect to such Income Tax Returns or, in the case of any Income Tax Returns for
taxable years which include the Closing Date, the portions of such Tax relating to
Pre-Closing Tax Periods (including in each case payments of estimated Tax) shall be paid by
Seller to the Company on the later of two (2) days before the first date on which such Tax
becomes due and payable without interest or penalties or two (2) days after Buyer’s request
for such payment, and upon receipt by the Company shall be promptly paid over by the Company
to the relevant taxing authority. If the amount due pursuant to the immediately preceding
sentence is not paid by Seller by the due date specified therein, the same shall carry
interest, without duplication of interest included in the definition of Taxes, from (and
including) such due date to (but not including) the date of payment at an annual rate of
interest equal to the reference or “prime” rate from time to time of the JPMorgan Chase
Bank.

     (ii) Seller shall indemnify and hold harmless, without duplication, Buyer and the
Company (collectively, the “Tax Indemnified Parties”) from and against any and all
Liabilities and Losses of the Company or Buyer based upon, resulting from or arising out of
(A) Company Taxes arising (or deemed to arise) with respect to Pre-Closing Tax Periods. In
the case of any Tax relating to a taxable period of the Company that includes but does not
end on the Closing Date, the portion of such Tax relating to the portion of such taxable
period which ends on the Closing Date shall be computed for purposes of clause (ii) of this
Section 6(d) in a manner which is consistent with the same computation undertaken for
purposes of the preparation of Seller’s financial statements.

     (iii) After the Closing Date, Seller shall make reasonably available to Buyer, and
Buyer shall make reasonably available to Seller, all information, records or documents
within their possession or control relating to Tax Liabilities or potential Tax Liabilities
of the Company with respect to Pre-Closing Tax Periods, and shall preserve all such
information, records and documents until the expiration of any applicable statute of
limitations or extensions thereof. Seller shall afford Buyer, and Buyer shall afford
Seller, the right to take extracts therefrom and to make copies thereof to the extent
reasonably necessary to permit Buyer or Seller to prepare Returns, to conduct negotiations
with tax authorities, and to implement the provisions of, and to investigate any claims
between the Parties arising under this Agreement. Seller and Buyer shall also cooperate, in
all other respects, with each other as is reasonably necessary for Buyer or Seller to
prepare such Returns, conduct any such negotiations, and investigate any such claims
referred to herein.

     (iv) As between Buyer and Seller, Buyer shall to the maximum extent possible pay, and
file all necessary Returns and other documentation with respect to, all transfer (excluding
transfer gains), documentary, sales, use, stamp, registration and other such Taxes
(including any penalties, interest, additions to tax, and costs and expenses relating to
such Taxes) incurred in connection with the consummation of the transactions contemplated by
this Agreement. If Seller is required by applicable Law

- 9 -

 

to pay such Taxes and/or file such Returns, Buyer shall prepare such Returns and/or pay
Seller at Closing or promptly thereafter any amounts Seller is obligated to pay (as
applicable). Seller shall cooperate with Buyer in the preparation of all such Returns.

     (v)

     A. Subject to the provisions of this subsection (d)(v) of this Section 6,
Seller shall have the right, at its own expense, to control, manage and be
responsible for any audit, contest, claim, proceeding or inquiry with respect to
Taxes of the Company for any Tax period ending on or before the Closing Date and
shall have the right to settle or contest in its discretion any such audit, contest,
claim, proceeding or inquiry; provided, however, that (i) Seller
shall not have the right to control, settle or contest any such proceeding unless it
first acknowledges in writing its obligation to fully indemnify the Tax Indemnified
Parties for the Taxes payable by the Company at issue in the proceeding; (ii) no
settlement or disposition of any such proceeding shall be made without Buyer’s prior
written consent, which shall not be unreasonably withheld, if such settlement or
disposition reasonably could be expected to affect the Company’s liability for Tax
in any taxable period or portion of a taxable period ending after the Closing Date
and (iii) Buyer shall have the right to attend and participate in, at his own
expense, any such proceeding controlled by Seller pursuant to this Section 6(d)(v)
only if such proceedings reasonably could be expected to affect the Company’s
liability for Taxes (it being understood that Buyer shall not unreasonably withhold
his consent if Seller requests that certain limited meetings with agents of a taxing
authority be held without Buyer’s representative in attendance, provided that Buyer
is kept fully informed with respect to any such meeting).

     B. The Company shall, at its own expense, control, manage and solely be
responsible for any audit, contest, claim, proceeding or inquiry with respect to
Taxes for any taxable period ending after the Closing Date (including a taxable
period that straddles the Closing Date), and shall have the exclusive right to
settle or contest any such audit, contest, claim, proceeding or inquiry without the
consent of any other Party.

     (vi) The Company shall promptly pay over to Seller any refunds of Income Tax actually
received in cash with respect to Pre-Closing Tax Periods, net of any Income Tax imposed on
the Company as the result of the receipt of such refunds.

     (vii) Notwithstanding anything that may be to the contrary in this Agreement, Buyer
shall not have the right to receive or obtain any information relating to the Taxes of
Seller, other than information relating solely to the Company.

     (e) Acquisition or Sale of the Company. If there is “an acquisition or sale of the
Company” to or by “a third party” during the Calculation Period, Buyer shall pay Seller to cause to
be paid to Seller twenty percent (20%) of the remaining unpaid Additional Purchase Price as a
condition to the closing of such “acquisition or sale of the Company.” Upon payment of this amount
to Seller, neither Buyer nor the Company shall have any further obligation to Seller for payment of
the Additional Purchase Price. For purposes hereof, “an acquisition or sale of the Company” to or
by “a third party” shall mean the occurrence of any transaction or series of transactions during
the Calculation Period which result in (i) greater than fifty percent (50%) of the then outstanding
Company Shares (for cash, property including, without limitation, stock in any corporation or other
third party legal entity, indebtedness or any combination thereof) have been redeemed by the
Company or purchased by a third party not previously affiliated with the Company, or exchanged for
shares in any other corporation or other third party legal entity not previously affiliated with
the Company, or any combination of such redemption, purchase or exchange, (ii) greater than fifty
percent (50%) in book value of the Company’s gross assets are acquired by a third party not
previously affiliated with the Company (for cash, property including, without limitation, stock in
any corporation whether or not unaffiliated with the Company, indebtedness of any person or any
combination thereof), or (iii) the Company is merged or consolidated with another private or public
corporation or other third party legal entity and the former holders of Company Shares own less
than twenty-five percent (25%) of the voting power of the acquiring, resulting or surviving
corporation or other third party legal entity. For the purposes hereof, a director of officer of
the Company shall be considered “affiliated with the Company.”

- 10 -

 

     (f) Covenant Not to Compete. For a period of five (5) years following the Closing,
Seller agrees that neither it, nor any of its shareholders, directors, or officers, will, without
the advance written consent of Buyer, directly or indirectly, whether or not for compensation: (1)
engage in any business or activity similar to the Business of the Company, whether alone, or as a
partner, officer, director, employee, consultant or holder of any beneficial interest in any such
business or activity or in any person or entity engaged in such business or activity in the
geographic area consisting of the States of Washington, Oregon or Idaho, (2) divert or attempt to
divert from the Company any business of any kind in which the Company is engaged on the Closing
Date, or (3) induce or attempt to induce any person who is an employee of the Company on the date
hereof to leave the employ of the Company. The Parties agree that any violation of this Section
6(f) will cause the Buyer and the Company to suffer irreparable harm. As such, in the event of the
violation of this Section 6(f), the Buyer and the Company shall be entitled, in addition to all
legal remedies, to equitable relief, including temporary restraining orders, preliminary
injunctions, and permanent injunctions. The Parties agree that the time and territorial
restrictions of this Section 6(f) are reasonable. Should any court of competent jurisdiction
determine that either the time period or the territorial scope of this Section 6(f) are
unreasonably lengthy or broad, the other provisions shall stand, and the offending provisions shall
be revised to provide for the longest period of time and greatest territorial scope permissible by
law.

     Section 7. Remedies for Breaches of this Agreement.

     (a) Survival. The representations and warranties of the Parties contained in Section
3(a) through Section 3(n), Section 3(p) through Section 3(t) and Section 5 shall survive the
Closing (unless, as to any particular representation or warranty, the damaged Party knew of any
misrepresentation or breach of warranty at the time of the Closing) and continue in full force and
effect after the Closing, with the period of such survival to be subject to any applicable statutes
of limitations. The covenants and agreements of the Parties contained in this Agreement shall
survive the Closing until the satisfaction or performance thereof. The representation and warranty
contained in Section 3(o) shall not survive the Closing hereunder.

     (b) Indemnification Provisions for Buyer’s Benefit.

     (i) Subject to the limitations set forth in this Section 7, in the event Seller breaches any
of its covenants or agreements contained in this Agreement, or any of its representations and
warranties in Section 3, and provided that Buyer makes a written claim for indemnification
against Seller within the survival period (if there is an applicable survival period pursuant to
Section 7(a)), and that Buyer did not have actual knowledge of the breach prior to the Closing,
then Seller shall indemnify Buyer from and against any Losses Buyer shall suffer through and after
the date of the claim for indemnification caused proximately by Seller’s breach.

     (ii) Seller’s indemnification obligations under this Section 7 shall be subject to the
following limitations: (A) Seller shall not be required to indemnify Buyer for Losses under
Section 7(b)(i) until the aggregate amount of all such Losses exceeds $25,000 (the “Deductible”),
in which event Seller shall be responsible only for Losses in excess of the Deductible, (B) the
aggregate amount of Losses for which Seller shall be required to indemnify Buyer from time to time
pursuant to Section 7(b)(i) shall not exceed $100,000 (the “Cap”); provided, that
notwithstanding the foregoing, indemnification for breaches of the (x) representations and
warranties contained in Sections 3(a), (c) and (d), the last sentence of Section 3(e), and Section
3(m) and (y) covenants and agreements of the Seller contained in this Agreement shall not be
subject to the Deductible or the Cap, and (C) amounts indemnified under Section 6(d) shall not also
be indemnified under this Section 7, and the limitations under this Section 7 shall not apply to
indemnification under Section 6(d).

     (c) Indemnification Provisions for Seller’s Benefit. In the event Buyer breaches any
of his covenants or agreements contained in this Agreement or any of his representations and
warranties in Section 5, and provided, that Seller makes a written claim for
indemnification against Buyer or the Company within the survival period, and that Seller did not
have actual knowledge of the breach prior to the Closing, then Buyer and the Company shall jointly
and severally indemnify Seller from and against any Losses suffered caused proximately by Buyer’s
or the Company’s breach.

     (d) Matters Involving Third Parties.

     (i) If any third party shall notify any Party (the “Indemnified Party”) with respect to
any matter (a “Third Party Claim”) which may give rise to a claim for indemnification
against any other Party

- 11 -

 

(the “Indemnifying Party”) under this Section 7, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing (and shall include a copy of the
notification from the third party), provided that the failure to promptly deliver such
notification shall relieve the Indemnifying Party of his or its indemnification obligations
hereunder only to the extent that the indemnifying party is materially prejudiced thereby.

     (ii) Any Indemnifying Party will have the right at any time to assume and thereafter
conduct the defense of the Third Party Claim with counsel of his or its choice reasonably
satisfactory to the Indemnified Party; provided, however, that the
Indemnifying Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be unreasonably withheld) unless the judgment or proposed
settlement involves only the payment of money damages and does not impose an injunction or
other equitable relief upon the Indemnified Party.

     (iii) Unless and until an Indemnifying Party assumes the defense of the Third Party
Claim as provided in Section 7(d)(ii), the Indemnified Party may defend against the Third
Party Claim in any manner he or it may reasonably deem appropriate.

     (iv) In no event will the Indemnified Party consent to the entry of any judgment on or
enter into any settlement with respect to the Third Party Claim without the prior written
consent of each of the Indemnifying Parties (not to be unreasonably withheld).

     (e) Determination of Losses. All indemnification payments under this Section 7 and
Section 6(d) shall be paid by the Indemnifying Party net of any insurance benefits (net of
premiums, fees or other costs of such insurance coverage) paid to or recovered by the Indemnified
Party pursuant to any insurance policy, title insurance policy, indemnity, reimbursement
arrangement or contract. All indemnification payments under this Agreement shall be treated by the
Parties as adjustments to the Purchase Price.

     (f) Exclusive Remedy. The Parties acknowledge and agree that, except with respect to
Section 6(d) and Section 6(f), the foregoing indemnification provisions in this Section 7 shall be
the exclusive remedy of the Parties with respect to this Agreement (including any breach or alleged
breach hereof) and the transactions contemplated by this Agreement, except in the case of
intentional fraud. In no event may any Party seek indemnification hereunder for damages or losses
which are excluded from the definition of “Losses” in Section 1.

     Section 8. Miscellaneous.

     (a) Press Releases and Public Announcements. After the Closing, if any of the Parties
wishes to issue a press release announcing the Closing, the Parties agree to jointly issue a press
release, agreed to in advance by the Parties. Buyer acknowledges and agrees that Seller may need
to publicly disclose the existence of this Agreement pursuant to its obligations as a public
company under the Exchange Act.

     (b) No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors, heirs, personal
representatives and permitted assigns, and is not for the benefit of any third party.

     (c) Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and supersedes and merges into itself any and
all prior understandings, agreements or representations by or among the Parties, written or oral,
to the extent they relate in any way to the subject matter hereof, including, without limitation,
the Letter of Intent between Seller and Buyer dated May 19, 2008.

     (d) Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors, heirs, personal
representatives and permitted assigns. Neither Party may assign its rights hereunder without the
prior written consent of the other Party.

- 12 -

 

     (e) Counterparts. This Agreement may be executed and delivered in one or more
counterparts (including by means of facsimile or electronic transmission), each of which shall be
deemed an original but all of which together will constitute one and the same instrument.

     (f) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning, interpretation or construction of
this Agreement.

     (g) Notices. All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder
shall be deemed duly given (i) when delivered personally to the recipient, (ii) one (1) Business
Day after being sent to the recipient by reputable overnight courier service (charges prepaid),
(iii) one (1) Business Day after being sent to the recipient by facsimile transmission or
electronic mail, or (iv) five (5) Business Days after being mailed to the recipient by express,
certified or registered mail, return receipt requested and postage prepaid, and addressed to the
intended recipient as set forth below:

If to Seller:

American Claims Evaluation, Inc.

One Jericho Plaza

Jericho, NY 11753

Fax: 516-938-0405

Attn: Gary Gelman

with a copy to:

Siller Wilk LLP

675 Third Avenue

New York, NY 10017

Fax: (212) 752-6380

Attn: Joel I. Frank, Esq.

If to Buyer or (after the Closing) the Company:

RPM Rehabilitation & Associates, Inc.

1010 N. Normandie, Suite 302

Spokane, WA 99201

Fax: (509)536-7713

Attn: Stephen D. Renz

with a copy to:

Douglas, Eden, Phillips, DeRuyter & Stanyer, P.S.

422 W. Riverside Avenue, Suite 909

Spokane, WA 99223

Fax: (509) 455-5348

Attn: Brent T. Stanyer, Esq.

Any Party may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Party notice in the manner herein
set forth.

     (h) Governing Law; Arbitration.

     (i) This Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of New York.

     (ii) Any dispute or controversy arising under or in connection with this Agreement and
the transactions contemplated thereby shall be resolved by confidential binding arbitration
which shall be

- 13 -

 

conducted before a panel of three (3) arbitrators in New York, New York, or at such
other location as the parties involved may mutually agree upon, in accordance with the Rules
of the American Arbitration Association (“AAA”) then in effect. Unless the parties involved
agree otherwise, the panel of arbitrators will be selected by the AAA. The panel of
arbitrators shall not have the authority to add to, detract from or modify any provision of
this Agreement nor to award punitive damages to any injured party. A decision by a majority
of the panel of arbitrators shall be final and binding and judgment may be entered on the
award of the arbitrators by any court of competent jurisdiction. All fees and expenses of
the arbitration proceeding, including the fees and expenses of the AAA and the panel of
arbitrators, and the reasonable legal fees and expenses of the prevailing party, shall be
borne by, and be the responsibility of, the non-prevailing party.

     (i) Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by each of the Parties. No waiver by any
Party of any provision of this Agreement or any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing
and signed by the Party making such waiver, nor shall such waiver be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in
any way any rights arising by virtue of any prior or subsequent such occurrence. No delay on the
part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver
thereof.

     (j) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.

     (k) Expenses. Except as otherwise specifically provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions contemplated hereby shall
be borne by the Party incurring such expense.

     (l) Construction. 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. Any reference to any federal, state, local or foreign statute
or Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word “including” shall mean including without limitation. The
use herein of the masculine, feminine or neuter forms also shall denote the other forms, as in each
case the context may require. Definitions shall apply equally to both the singular and plural
forms of the terms defined. The use of the “$” symbol herein means United States Dollars.
References herein to any notice received by the Company shall be deemed to mean only notices of
which Seller has Knowledge.

* * *

- 14 -

 

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

	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	AMERICAN CLAIMS EVALUATION, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gary Gelman	 	 
	 

	 	Name:
	 	 

Gary Gelman
	 	 
	 

	 	Title:
	 	Chairman, President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Stephen D. Renz	 	 
	 	 	 	 	 
	 	 	Stephen D. Renz	 	 

THE PROVISIONS OF SECTIONS 6 AND 7(c)

ARE HEREBY AGREED TO:

RPM REHABILITATION & ASSOCIATES, INC.

	 	 	 	 	 
	By:

	 	/s/ Stephen D. Renz	 	 
	Name:

	 	 

Stephen D. Renz
	 	 
	Title:

	 	President	 	 

15exv4w4

Exhibit 4.4

DR PEPPER SNAPPLE GROUP, INC.

DR PEPPER SNAPPLE GROUP, INC

LEGACY LONG TERM INCENTIVE PLAN

Effective as of May 7, 2008

 

 

THE RULES OF THE DR PEPPER SNAPPLE GROUP, INC.

LEGACY LONG TERM INCENTIVE PLAN

DR PEPPER SNAPPLE GROUP, INC. LEGACY LONG TERM INCENTIVE PLAN

	 	 	 	 	 
	1. INTERPRETATION AND CONSTRUCTION
	 	 	1	 
	1.1. Definitions
	 	 	1	 
	1.2. Construction of the Rules
	 	 	2	 
	1.3. Governing Law
	 	 	2	 
	1.4. Administration
	 	 	2	 
	1.5. Disputes
	 	 	3	 
	2. GRANTING AWARDS
	 	 	3	 
	3. TRANSFER OF SHARES
	 	 	3	 
	3.1. Transfer of Shares
	 	 	3	 
	3.2. Death of a Participant
	 	 	3	 
	3.3. Termination of Employment
	 	 	3	 
	4. CHANGE IN CONTROL AND LIQUIDATION
	 	 	3	 
	4.1. Effect of a Change in Control
	 	 	3	 
	4.2. Overriding Provision
	 	 	4	 
	5. SUBSTITUTE AWARDS FOLLOWING CHANGE IN CONTROL
	 	 	4	 
	5.1. Application
	 	 	4	 
	5.2. Release of Awards
	 	 	4	 
	5.3. Deemed Release
	 	 	5	 
	5.4. Consequences of Release
	 	 	5	 
	6. VARIATION OF CAPITAL
	 	 	5	 
	7. GENERAL
	 	 	5	 
	7.1. Availability of Shares
	 	 	5	 
	7.2. Non-transferability of Awards
	 	 	5	 
	7.3. Relationship to Contract of Employment
	 	 	6	 
	7.4. Notices and Circulars to Shareholders
	 	 	6	 

 

 

	 	 	 	 	 
	7.5. Costs and Expenses
	 	 	6	 
	7.6. Rights of New Shares Issued
	 	 	6	 
	7.7. Listing
	 	 	6	 
	7.8. Company Trading Policies
	 	 	6	 
	7.9. Withholding Obligations
	 	 	7	 
	7.10. Notices to Participants
	 	 	7	 
	7.11. Notices to the Company
	 	 	8	 
	8. SECTION 409A OF THE CODE
	 	 	8	 
	9. CHANGING AND ENDING THE PLAN
	 	 	8	 
	9.1. Power of Change — General
	 	 	8	 
	9.2. Power of Change — Limitations
	 	 	8	 
	9.3. Power of Change — Exceptions
	 	 	9	 
	9.4. Notification of Changes
	 	 	9	 

 

 

Introduction

Cadbury Schweppes Public Limited Company, registered in England with No. 52457 (“CS”),
Cadbury plc and the Company have entered into a Separation and Distribution Agreement
effective as of May 1, 2008 (the “Separation Agreement”) pursuant to which (i) CS will
become a wholly-owned subsidiary of Cadbury plc; (ii) CS and/or one or more members of the
Cadbury business will, collectively, retain or acquire beneficial ownership of all of the
assets of the Cadbury business and assume all of the liabilities of the Cadbury business,
and the Company and/or one or more of its Subsidiaries will, collectively, retain or
acquire beneficial ownership of all of the Beverages Assets and assume all of the Beverages
Liabilities (as such terms are defined in the Separation Agreement); and (iii) the Company
will distribute to the holders of Cadbury plc Ordinary Shares, on a pro rata basis, without
any consideration being paid by such holders, all of the outstanding Shares of the Company
(the “Distribution”).

In connection with the Distribution, the Company, CS and Cadbury plc have entered into the
Employee Matters Agreement (as defined herein). The Employee Matters Agreement, among
other things, sets forth the treatment of the awards granted to employees of the Company
under the CS Long Term Incentive Plan 2004 (the “CS LTIP”) and converted to awards under
this Dr Pepper Snapple Group, Inc. Legacy Long Term Incentive Plan (the “Plan”). The
Company has established this Plan to set forth rules to facilitate in the payment and
settlement of the converted awards, consistent with the terms and conditions of the
Employee Matters Agreement.

 

 

DR PEPPER SNAPPLE GROUP, INC.

LEGACY LONG TERM INCENTIVE PLAN

	1.	 	INTERPRETATION AND CONSTRUCTION
	 
	1.1.	 	Definitions
	 
	 	 	In this Plan, the following expressions have the meanings shown next to them:
	 
	 	 	Act — United Kingdom Income and Corporation Taxes Act 1988;
	 
	 	 	Accountants  — such nationally recognized accountant firm or company as the Board may select;
	 
	 	 	Award  — the right to receive Shares granted to a Participant, subject to and in accordance with the Rules and with Article
3 of the Employee Matters Agreement, to replace a corresponding Basic Award;
	 
	 	 	Award Shares — the number of Shares in respect of which the Award was granted, such number being determined in accordance
with Article 3 of the Employee Matters Agreement.
	 
	 	 	Basic Award — an “Award” (as defined in the CS LTIP) held by a Participant under the CS LTIP which is replaced by an
Award;
	 
	 	 	Board  — the Board or Directors of the Company or a duly appointed committee of it;
	 
	 	 	Certification Date — the date on which the earned amount of an applicable Basic Award would have been determined under
the CS LTIP.
	 
	 	 	Change in Control  — an occurrence where any person, partnership, corporation, trust or similar entity or group acquires in
a transaction or in a series of transactions 30% or more of the voting securities of the Company;
	 
	 	 	Code — the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder;
	 
	 	 	Committee  — the Compensation Committee of the Board;
	 
	 	 	Company — Dr Pepper Snapple Group, Inc.;
	 
	 	 	Control — the same meaning as in section 840 (Meaning of “control” in certain contexts) of the Act;
	 
	 	 	Effective Date — the Plan shall be effective on May 7, 2008;

 

 

	 	 	Employee Matters Agreement — the Employee Matters Agreement between and among CS, the Company and Cadbury plc dated to be
effective as of May 7, 2008, 2008;
	 
	 	 	Holding Company  — the same meaning as in section 736 (“Subsidiary”, “holding company” and “wholly-owned subsidiary”) of
the United Kingdom Companies Act 1985;
	 
	 	 	Participant  — the holder of an Award or, after his death, his personal representatives;
	 
	 	 	Participating Employer  — the Company and any Subsidiary of the Company;
	 
	 	 	Release Date — subject to Rule 7.8 (Company trading policies), in relation to an Award, the date (certified by CS) which
would have been the Certification Date for the Basic Award under the CS LTIP;
	 
	 	 	Rules  — the rules of this Plan;
	 
	 	 	Share  — a share of common stock of the Company;
	 
	 	 	Social Security Liability  — a liability to pay national insurance contributions in the United Kingdom (or their
equivalent, in the opinion of the Board, outside the United Kingdom) by reference to an Award;
	 
	 	 	Subsidiary  — the same meaning as in section 736 (“Subsidiary”, “holding company” and “wholly-owned subsidiary”) of the
United Kingdom Companies Act 1985;
	 
	 	 	US Taxpayer  — any Participant who is subject to US taxation on compensation paid under the
Plan.

	1.2.	 	Construction of the Rules
	 
	1.2.1.	 	Where the context so requires, any reference in these Rules:

	 	(i)	 	to the singular includes the plural and vice versa;
	 
	 	(ii)	 	to the masculine gender includes the feminine; and
	 
	 	(iii)	 	to an enactment includes that enactment as for the time being amended or
re-enacted.

	1.2.2.	 	The headings to the Rules are for references purposes only and are not to affect the meaning
or construction of the Rules.
	 
	1.3.	 	Governing Law
	 
	 	 	Unless the Rules provide otherwise, this Plan and any Award granted under it will be
governed by and construed in accordance with the laws of the State of Delaware.
	 
	1.4.	 	Administration

2

 

	 	 	Unless the Rules provide otherwise, the Committee will administer the
Plan and shall have full authority to make all legal and factual
determinations, construe and interpret the Plan in accordance with
the terms herein.

	1.5.	 	Disputes
	 
	 	 	The Committee’s decision on the construction of the Rules and on any
disputes arising under the Plan is final and binding on all persons.
	 
	2.	 	GRANTING AWARDS
	 
	 	 	In accordance with the Employee Matters Agreement, the Company shall grant the Awards on
the Effective Date or before the Effective Date (in which case the Awards will be
conditional upon the Distribution occurring). No additional Awards shall be granted under
the Plan.
	 
	 	 	The Company shall notify each Participant of his Awards as soon as practicable after the
date of grant and of the number of Shares subject to them.
	 
	3.	 	TRANSFER OF SHARES
	 
	3.1.	 	Transfer of Shares
	 
	3.1.1.	 	Subject to Rule 8, within 28 days after the Certification Date applicable to an Award, the
Company shall transfer, or procure the transfer of, the Award Shares to a Participant or such
Participant’s representatives.
	 
	3.1.2.	 	The Company’s obligation under Rule 3.1 is, however, subject to (i) any necessary consents
or approvals as may be required by any competent authority have first been obtained; and (ii)
Rule 7.9 (Withholding obligations).
	 
	3.2.	 	Death of a Participant
	 
	 	 	If a Participant dies before the Release Date, his Award Shares shall be transferred to his
personal representatives in accordance with Rule 3.1 (as soon as practicable after a
Participant’s death).
	 
	 	 	Termination of Employment
	 
	 	 	The termination of a Participant’s employment for any reason shall have no effect on his
Award, except as provided for in Rule 3.2.
	 
	4.	 	CHANGE IN CONTROL AND LIQUIDATION
	 
	4.1.	 	Effect of a Change in Control
	 
	 	 	This Rule applies if:

	 	(i)	 	there is a Change in Control;

3

 

	 	(ii)	 	any person (either alone or together with any person acting in concert with
him) already having 30% or more of the voting securities of the Company, makes a
general offer to acquire all the Shares of the Company (other than those which are
already owned by him and/or any person acting in concert with him); or
	 
	 	(iii)	 	a resolution is passed for the winding-up, or an order is made for the
compulsory winding-up, of the Company.
	 
	 	The Company shall transfer, or procure the transfer of, the Award
Shares to a Participant within 28 days of the relevant event.

	4.2.	 	Overriding Provision
	 
	 	 	This Rule applies if all of the following conditions are satisfied:

	 	(i)	 	the events referred to in Rule 4 form part of a scheme or arrangement as a
result of which the Company will be under the Control of another company;
	 
	 	(ii)	 	the persons who will own shares in that company immediately after the scheme
or arrangement will be substantially the same as the persons who own shares in the
Company immediately before the scheme or arrangement; and
	 
	 	(iii)	 	Participants are to be offered substitute awards in accordance with Rule 5
(Substitute Awards following a Change in Control).
	 
	 	
The Committee may decide that the previous provisions of Rule 4.1 will not apply but that
the Rules will instead apply to the replacement awards which a Participant receives in
substitution for his Awards.

	5.	 	SUBSTITUTE AWARDS FOLLOWING CHANGE IN CONTROL
	 
	5.1.	 	Application
	 
	 	 	Rule 5 applies where an acquiring company:

	 	(i)	 	obtains Control in the Company as a result of making a general offer to
acquire the whole of the issued share capital of the Company made on a condition such
that if it is satisfied the acquiring company will have Control of the Company: or
	 
	 	(ii)	 	obtains Control in the Company as a result of making a general offer to
acquire all the Shares.

	 	 	The acquiring company’s offer need not extend to shares which are already owned by it
and/or by its Holding Company and/or by the Subsidiaries of it or of its Holding Company.

	5.2.	 	Release of Awards
	 
	 	 	Subject to Rule 8, with the agreement of the acquiring company, a Participant may release
his Award (the “Old Award”) in consideration of the grant to him of a

4

 

	 	 	replacement award (the “New Award”) over shares in the acquiring company or some other
company.
	 
	 	 	The number of shares over which (or in respect of which) the New
Award is granted must have the same fair market value as the Shares
subject to the Old Award or otherwise be determined on such terms as
the Committee considers to be fair and reasonable to preserve the
intrinsic value of the Old Award.

	5.3.	 	Deemed Release
	 
	 	 	If Rule 4.2 (Overriding provision) applies, the Committee may decide
that a Participant will be deemed to have agreed to the release of
his Old Award in return for the grant of a New Award under this Rule
5.
	 
	5.4.	 	Consequences of Release
	 
	 	 	If a Participant is granted a New Award under Rule 5, the Rules will
apply to the New Award:

	 	(i)	 	as if references to Shares were references to the shares in respect of, or by
reference to, which the New Award is granted; and
	 
	 	(ii)	 	as if references to the Company (including any such references as occur in
expressions which are defined in Rule 1 and used in those Rules) were references to
the company in respect of whose shares the New Award is granted.

	6.	 	VARIATION OF CAPITAL
	 
	 	 	If there is a variation in the capital of the Company or in such other circumstances as the
Board considers appropriate, the Board may adjust each Award in any way that it decides is
appropriate. The Board’s decision will be final and binding on all parties. The Company
shall inform each Participant of any adjustment to his Award as soon as practicable after
the Board’s decision.
	 
	 	 	No adjustments may be made pursuant to Rule 6 unless and until the Accountants (acting as
experts and not as arbitrators) have confirmed in writing to the Board that the adjustment
is, in their opinion, fair and reasonable.
	 
	7.	 	GENERAL
	 
	7.1.	 	Availability of Shares
	 
	 	 	The Company shall ensure that sufficient Shares are available for all
subsisting Share Awards.
	 
	7.2.	 	Non-transferability of Awards

5

 

	 	 	An Award is personal to a Participant and his personal
representatives. It will lapse immediately if:

	 	(i)	 	a Participant transfers it or creates any interest in it in favor of any
third party; or
	 
	 	(ii)	 	if a bankruptcy order or judgment is made in respect of him in under the laws
of any applicable jurisdiction.

	7.3.	 	Relationship to Contract of Employment
	 
	 	 	Participation in the Plan is a matter entirely separate from, and does not affect, a
Participant’s pension rights and terms of employment.
	 
	7.4.	 	Notices and Circulars to Shareholders
	 
	 	 	Unless otherwise required by applicable law, the Company need not give Participants copies
of any documents sent by the Company to its shareholders.
	 
	7.5.	 	Costs and Expenses
	 
	 	 	The costs of the preparation and operation of this Plan will be borne by the Company. The
Company may, however, require Participating Employers to share the costs on such a basis as
the Board considers fair.
	 
	7.6.	 	Rights of New Shares Issued
	 
	 	 	Shares issued pursuant to this Plan will rank equally in all respects with Shares then in
issue, save as regards any rights attaching to Shares by reference to a record time or date
prior to the time or date of issue.
	 
	7.7.	 	Listing
	 
	 	 	The Company must at its expense apply to the New York Stock Exchange for permission to list
the Shares. The Company need not do so, however, if the Shares are not then traded on the
New York Stock Exchange.
	 
	7.8.	 	Company Trading Policies
	 
	7.8.1.	 	Notwithstanding any other Rule, the Release Date applicable to an Award may not occur,
during a period when the buying or selling of securities by a director or employee of the
Company would breach the Company’s securities trading policies. If the Committee so decides,
this restriction applies even if a Participant is not at that time forbidden by the Company’s
securities trading policies from buying or selling securities. This restriction does not,
however, apply if permission is given:

	 	(i)	 	in the case of a Participant who is bound by the Company’s securities trading
policies, in accordance with the procedures laid down in the Company’s securities
trading policies; and

6

 

	 	(ii)	 	in the case of any other Participant, by such person as the Committee may
nominate for this purpose.

	7.8.2.	 	In the case of a Participant who is a US Taxpayer, the transfer of Shares and the Release
Date applicable to an Award may be delayed only when the Committee reasonably anticipates that
the transfer of Shares or the occurrence of the Release Date will violate applicable law or as
otherwise required under Section 409A of the Code.
	 
	7.9.	 	Withholding Obligations
	 
	7.9.1.	 	This Rule applies in the following circumstances:

	 	(i)	 	If the Board considers that:

	 	(a)	 	a Participant may be liable to tax, duties, social security
contributions or other amounts in circumstances related to his participation
in this Plan; and
	 
	 	(b)	 	any other person may have to make a payment to the
appropriate authorities on account of that liability; or

	 	(ii)	 	if the Award has been granted subject to a condition that a Participant must
reimburse any person for some or all of the Social Security Liability arising in
relation to that Award or if a Participant has subsequently agreed to do so or if he
has entered into an election to transfer some or all of that Social Security Liability
to himself.

	7.9.2.	 	A Participant must either remit to the Company such amount which it is required to pay (or
has paid) the appropriate authorities or agree to other arrangements approved by the Company.
If he does not do so within such period as is specified by the Company, then, to the extent
necessary to make sure that the person is reimbursed for the amount due (or paid) to the
appropriate authorities or to comply with his obligations, a Participant will be deemed to
have authorized the disposal of the Shares issuable or transferable to him in respect of his
Award and the payment of the net proceeds of sale to that person.
	 
	7.10.	 	Notices to Participants
	 
	7.10.1.	 	Any notice under the Plan to any Participant may be given personally or through the
internal post or by sending it by ordinary post, e-mail or facsimile or by other electronic
means (including the internet and the intranet) to the address or number given by that person.
	 
	7.10.2.	 	Where a notice or document is sent to Participants by post, it will be treated as being
received 72 hours after it was put into the post properly addressed and stamped. In all other
cases, the notice or document will be treated as received when it is given.
	 
	7.10.3.	 	All notices and documents given or sent to Participants will be given or sent at the risk
of the addressee. Neither the Company nor any of its Subsidiaries, have any liability in

7

 

	 	 	respect of any notice or document sent, nor any
obligation to check that the addressee actually
receives it.

	7.11.	 	Notices to the Company
	 
	 	 	A person must give notice to the Company or the Committee by such means as the Board may
from time to time decide, Such means may include, but are not limited to, delivering it
personally or through the internal post or by post to the Company’s registered office (or
at such other place or places as the Board may from time to time determine) marked for the
attention of the Company Secretary or by sending it by facsimile or e-mail or other
electronic means (including the internet and the intranet) to such address or number as the
Board may from time to time determine. Unless otherwise agreed by the Company, a notice
will only be effective when it is received by the Company.
	 
	8.	 	SECTION 409A OF THE CODE
	 
	8.1.1.	 	If a Participant is a “specified employee,” as defined in Section 409A of the Code, and is
subject to the imposition of certain excise taxes, interest and other penalties with respect
to amounts payable under the Plan in connection with his separation from service hereunder,
then notwithstanding anything to the contrary in the Plan, any payments due to a Participant
hereunder shall not commence until the Payment Date (as defined below).
	 
	8.1.2.	 	For purposes of this Rule, the earlier of (i) the first business day following the six-month
anniversary of the date of a Participant’s separation from service pursuant to Section 409A of
the Code and (ii) the 15th business day following the Company’s receipt of notice of a
Participant’s death is referred to as the “Payment Date”.
	 
	8.1.3.	 	If any provision of the Plan contravenes Section 409A of the Code, or could cause any
amounts or benefits hereunder to be subject to taxes, interest or penalties under Section
409A, the Company may, in its sole discretion and without a Participant’s consent, modify the
Plan to: (i) comply with, or avoid being subject to, Section 409A of the Code and avoid the
imposition of taxes, interest and penalties under Section 409A of the Code, and (ii) maintain,
to the maximum extent practicable, the original intent of the applicable provision without
contravening the provisions of Section 409A of the Code. This Rule is not intended to create
an obligation on the part of the Company to modify the Plan and does not guarantee that the
amounts or benefits owed under the Plan shall not be subject to interest and penalties under
Section 409A of the Code.
	 
	9.	 	CHANGING AND ENDING THE PLAN
	 
	9.1.	 	Power of Change — General
	 
	 	 	Subject to the limitations in Rule 9.2, the Committee may change the Plan in any way.

	 
	9.2.	 	
 Power of Change — Limitations
	 
	 	 	
No change may be made which would affect adversely any of the subsisting rights of a Participant except with his consent.

8

 

	9.3.	 	Power of Change — Exceptions
	 
	9.3.1.	 	The Committee may change the Plan to take account of any amendments to the Act or other
applicable legislation.
	 
	9.3.2.	 	The Committee may change the Plan to obtain or keep favorable tax, exchange control or
regulatory treatment for Participants or for any member of the Group.
	 
	9.3.3.	 	The Committee may make minor changes to the Plan to benefit the administration of the Plan.
	 
	9.4.	 	Notification of Changes
	 
	 	 	The Company must inform a Participant of any change made under this Rule 9 which affects
his rights.

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]