Document:

Exhibit 10.82

 

ASSET PURCHASE AGREEMENT

 

AMONG

 

PROCARE PHARMACY, INC.

 

AND

 

PROCARE PHARMACY DIRECT, INC.

 

AS BUYERS

 

AND

 

CURATIVE HEALTH SERVICES OF NEW YORK, INC.,

 

APEX THERAPEUTIC CARE, INC.,

 

AND

 

MEDCARE, INC.

 

AS SELLERS

 

AND

 

CURATIVE HEALTH SERVICES, INC.

 

DECEMBER 1, 2005

 

 

TABLE OF CONTENTS

 

	
  Article 1
  DEFINITIONS AND INTERPRETATION

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Certain
  Definitions

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Other
  Defined Terms

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 2
  SALE AND TRANSFER OF ASSETS

  	
   

  	
  4

  
	
  2.1

  	
   

  	
  Sale and
  Purchase of Assets

  	
   

  	
  4

  
	
  2.2

  	
   

  	
  Excluded Assets

  	
   

  	
  5

  
	
  2.3

  	
   

  	
  Assumed
  Liabilities

  	
   

  	
  6

  
	
  2.4

  	
   

  	
  Excluded
  Liabilities

  	
   

  	
  7

  
	
  2.5

  	
   

  	
  Instrument
  of Transfer

  	
   

  	
  7

  
	
  2.6

  	
   

  	
  Completion
  of Transfers

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 3
  CLOSING

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 4
  PURCHASE PRICE

  	
   

  	
  8

  
	
  4.1

  	
   

  	
  Payment of
  Purchase Price

  	
   

  	
  8

  
	
  4.2

  	
   

  	
  Purchase
  Price Allocation

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 5
  REPRESENTATIONS AND WARRANTIES OF SELLERS

  	
   

  	
  8

  
	
  5.1

  	
   

  	
  Organization
  and Related Matters

  	
   

  	
  8

  
	
  5.2

  	
   

  	
  Authorization

  	
   

  	
  9

  
	
  5.3

  	
   

  	
  No Conflicts

  	
   

  	
  9

  
	
  5.4

  	
   

  	
  No Brokers
  or Finders

  	
   

  	
  9

  
	
  5.5

  	
   

  	
  Title to
  Purchased Assets

  	
   

  	
  9

  
	
  5.6

  	
   

  	
  Payment to
  Creditors

  	
   

  	
  9

  
	
  5.7

  	
   

  	
  Third Party
  Providers and Payors

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 6
  ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS

  	
   

  	
  9

  
	
  6.1

  	
   

  	
  Legal
  Proceedings

  	
   

  	
  9

  
	
  6.2

  	
   

  	
  Compliance
  with Laws

  	
   

  	
  9

  
	
  6.3

  	
   

  	
  Financial
  Information

  	
   

  	
  10

  
	
  6.4

  	
   

  	
  Tax and
  Other Returns and Reports

  	
   

  	
  10

  
	
  6.5

  	
   

  	
  Assumed
  Contracts and Leases

  	
   

  	
  10

  
	
  6.6

  	
   

  	
  Licenses and
  Permits

  	
   

  	
  10

  
	
  6.7

  	
   

  	
  Insurance

  	
   

  	
  11

  
	
  6.8

  	
   

  	
  Labor
  Matters

  	
   

  	
  11

  
	
  6.9

  	
   

  	
  Employee
  Benefits

  	
   

  	
  11

  
	
  6.10

  	
   

  	
  Government
  Payment Programs

  	
   

  	
  12

  
	
  6.11

  	
   

  	
  Absence of
  Certain Changes

  	
   

  	
  12

  
	
  6.12

  	
   

  	
  Transactions
  With Affiliates

  	
   

  	
  12

  
	
  6.13

  	
   

  	
  Litigation

  	
   

  	
  12

  
	
  6.14

  	
   

  	
  Undisclosed
  Liabilities

  	
   

  	
  13

  
	
  6.15

  	
   

  	
  Environmental

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 7
  REPRESENTATIONS AND WARRANTIES OF BUYERS

  	
   

  	
  13

  
	
  7.1

  	
   

  	
  Organization
  and Related Matters

  	
   

  	
  13

  

	
  7.2

  	
   

  	
  Authorization

  	
   

  	
  13

  
	
  7.3

  	
   

  	
  No Conflicts

  	
   

  	
  13

  
	
  7.4

  	
   

  	
  Legal
  Proceedings

  	
   

  	
  13

  
	
  7.5

  	
   

  	
  Ability to
  Perform; Solvency

  	
   

  	
  14

  
	
  7.6

  	
   

  	
  No Brokers
  or Finders

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8 BUYERS’
  CONDITIONS PRECEDENT TO CLOSING

  	
   

  	
  14

  
	
  8.1

  	
   

  	
  Representations
  and Warranties to be True and Correct

  	
   

  	
  14

  
	
  8.2

  	
   

  	
  Supporting
  Documents

  	
   

  	
  14

  
	
  8.3

  	
   

  	
  Undertakings
  and Agreements

  	
   

  	
  15

  
	
  8.4

  	
   

  	
  Pay-off
  Letters

  	
   

  	
  15

  
	
  8.5

  	
   

  	
  Schedules

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 9 SELLERS’
  CONDITIONS PRECEDENT TO CLOSING

  	
   

  	
  15

  
	
  9.1

  	
   

  	
  Representations
  and Warranties to be True and Correct

  	
   

  	
  15

  
	
  9.2

  	
   

  	
  Supporting
  Documents

  	
   

  	
  15

  
	
  9.3

  	
   

  	
  Undertakings
  and Agreements

  	
   

  	
  15

  
	
  9.4

  	
   

  	
  Pay-off
  Letters

  	
   

  	
  15

  
	
  9.5

  	
   

  	
  Purchase
  Price

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 10 ADDITIONAL
  COVENANTS AND AGREEMENTS

  	
   

  	
  16

  
	
  10.1

  	
   

  	
  Employment
  Matters

  	
   

  	
  16

  
	
  10.2

  	
   

  	
  Access to
  Information; Preservation of Records; Cooperation

  	
   

  	
  16

  
	
  10.3

  	
   

  	
  Confidentiality

  	
   

  	
  17

  
	
  10.4

  	
   

  	
  No Intent to
  Induce Referrals

  	
   

  	
  17

  
	
  10.5

  	
   

  	
  Patient
  Notification; Publicity

  	
   

  	
  18

  
	
  10.6

  	
   

  	
  DEA
  Notification

  	
   

  	
  18

  
	
  10.7

  	
   

  	
  Tax Matters;
  Prorations

  	
   

  	
  18

  
	
  10.8

  	
   

  	
  Patient File
  Delivery

  	
   

  	
  18

  
	
  10.9

  	
   

  	
  Use of
  Computers

  	
   

  	
  18

  
	
  10.10

  	
   

  	
  Phone System
  and Phone Numbers

  	
   

  	
  19

  
	
  10.11

  	
   

  	
  Ordinary
  Course

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 11 RESTRICTIVE
  COVENANTS

  	
   

  	
  19

  
	
  11.1

  	
   

  	
  Restrictions
  on Sellers’ Competitive Activities

  	
   

  	
  19

  
	
  11.2

  	
   

  	
  Successors

  	
   

  	
  20

  
	
  11.3

  	
   

  	
  Special
  Remedies and Enforcement

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 12 SURVIVAL;
  INDEMNIFICATION

  	
   

  	
  20

  
	
  12.1

  	
   

  	
  Survival

  	
   

  	
  20

  
	
  12.2

  	
   

  	
  Obligations
  of Sellers and Parent

  	
   

  	
  21

  
	
  12.3

  	
   

  	
  Obligations
  of Buyers

  	
   

  	
  21

  
	
  12.4

  	
   

  	
  Procedure

  	
   

  	
  22

  
	
  12.5

  	
   

  	
  Survival

  	
   

  	
  22

  
	
  12.6

  	
   

  	
  Threshold

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 13 TERMINATION

  	
   

  	
  23

  
	
  13.1

  	
   

  	
  Termination
  of Agreement

  	
   

  	
  23

  

 

 

	
  13.2

  	
   

  	
  Effect of Termination

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  14 ARBITRATION

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  15 MISCELLANEOUS

  	
   

  	
  24

  
	
  15.1

  	
   

  	
  Amendments; Waivers

  	
   

  	
  24

  
	
  15.2

  	
   

  	
  Entire Agreement

  	
   

  	
  25

  
	
  15.3

  	
   

  	
  Applicable Law

  	
   

  	
  25

  
	
  15.4

  	
   

  	
  Headings

  	
   

  	
  25

  
	
  15.5

  	
   

  	
  Counterparts

  	
   

  	
  25

  
	
  15.6

  	
   

  	
  Parties in Interest

  	
   

  	
  25

  
	
  15.7

  	
   

  	
  Notices

  	
   

  	
  25

  
	
  15.8

  	
   

  	
  Expenses

  	
   

  	
  26

  
	
  15.9

  	
   

  	
  Assignments

  	
   

  	
  26

  
	
  15.10

  	
   

  	
  Remedies; Waiver

  	
   

  	
  26

  
	
  15.11

  	
   

  	
  Further Assurances

  	
   

  	
  27

  
	
  15.12

  	
   

  	
  Representation by Counsel; Interpretation

  	
   

  	
  27

  
	
  15.13

  	
   

  	
  Severability

  	
   

  	
  27

  

 

The following schedules to the Procare Pharmacy, Inc. Asset Purchase
Agreement have been omitted. Curative Health Services, Inc. will furnish any
such schedules to the Commission as supplemental information upon request:

 

Schedules

 

	
  Schedule 1.1(e)

  	
   

  	
  Sellers’ Locations

  
	
  Schedule 2.1(b)

  	
   

  	
  Licenses and Permits

  
	
  Schedule 2.1(c)

  	
   

  	
  Assumed Contracts and Leases

  
	
  Schedule 2.1(d)

  	
   

  	
  Phone and Fax Numbers

  
	
  Schedule 2.2(p)

  	
   

  	
  Additional Excluded Assets

  
	
  Schedule 4.2

  	
   

  	
  Purchase Price Allocation

  
	
  Schedule 5.5

  	
   

  	
  Encumbrances

  
	
  Schedule 5.7

  	
   

  	
  Third Party Providers and Payors

  
	
  Schedule 6.3

  	
   

  	
  Business Financials

  
	
  Schedule 6.5

  	
   

  	
  Required Consents

  
	
  Schedule 6.8

  	
   

  	
  Labor Matters

  
	
  Schedule 6.10

  	
   

  	
  Government Payment Programs

  
	
  Schedule 6.11

  	
   

  	
  Absence of Certain Changes

  
	
  Schedule 6.12

  	
   

  	
  Transactions with Affiliates

  
	
  Schedule 6.13

  	
   

  	
  Litigation

  
	
  Schedule 6.14

  	
   

  	
  Undisclosed Liabilities

  
	
  Schedule 10.1(a)

  	
   

  	
  Seller’s Employees to Whom Buyer May Offer Employment

  

 

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT
(this “Agreement”) is entered into
as of the 1st day of December, 2005, by and among CURATIVE HEALTH SERVICES OF NEW YORK, INC., a New York corporation
(“Curative-NY”), APEX THERAPEUTIC CARE, INC., a California
corporation (“Apex”), MEDCARE, INC., a Delaware corporation which
does business as Curative Pharmacy Services, Inc. (“MedCare”), (Curative-NY, Apex, and MedCare are collectively
referred to as “Sellers” and each
individually is referred to as a “Seller”),
CURATIVE HEALTH SERVICES, INC., a
Minnesota corporation and the sole shareholder of each Seller (“Parent”), and PROCARE PHARMACY, INC., a Rhode Island corporation (“PC Pharmacy”), and PROCARE PHARMACY DIRECT, INC., an Ohio
corporation (“PC Pharmacy Direct”)
(PC Pharmacy and PC Pharmacy Direct are collectively referred to as “Buyers” and each individually is referred
to as a “Buyer”).

 

WHEREAS, Buyers
desire to purchase from Sellers and Sellers desire to sell to Buyers certain of
the assets, properties and rights of Sellers relating to the Business on the
terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in
consideration of the above and the mutual representations, warranties, covenants
and agreements set forth herein, the parties hereby agree as follows:

 

ARTICLE 1

DEFINITIONS AND INTERPRETATION

 

1.1                                 Certain
Definitions. In this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1, which shall be equally applicable
to both the singular and plural forms.

 

(a)                                  “Accounts Receivable” means all accounts,
notes, interest and other receivables of Sellers, and all claims, rights,
interests and proceeds related thereto, including all accounts and other receivables,
in any case arising from the rendering of services to patients of the Business,
billed and unbilled, recorded and unrecorded, for services provided by any
Seller whether payable by private pay patients, private insurance, third party
payors, Medicare, Medicaid, or by any other source.

 

(b)                                 “Action” means any action, complaint,
petition, investigation, suit or other proceeding, whether civil or criminal,
in law or in equity, or before any arbitrator or Governmental Entity.

 

(c)                                  “Affiliate” means a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, a specified Person. For purposes of this
definition, “control” means the
possession, directly or indirectly, of the power to elect at least 50% of the
governing board of such Person or to direct to cause the direction of the
management and policies of the Person, whether through ownership of voting
securities, partnership or limited liability interests, nonprofit membership,
contract or otherwise.

 

(d)                                 “Approval” means any approval,
authorization, assignment or consent, or any waiver of any of the foregoing,
required to be obtained from, or any notice, statement or 

 

 

other communication required to be filed with
or delivered to any Person, the receipt of which is necessary to the continued
operation of the Business as it has been operated prior to the Closing Date.

 

(e)                                  “Business” means, with respect to a
specified Seller or the Sellers collectively, the business of providing
specialty injectable and oral medications, including, without limitation, those
relating to oncology, RA/Derm, Hepatitis C, transplants and respiratory
illnesses (including Synagis) from the specific locations listed on Schedule
1.1(e) to patients and providers as conducted by Sellers immediately prior
to the Closing Date in Sellers’ current service areas in and around Albany, New
York, Birmingham, Alabama, Lake Charles, Louisiana; Hurricane, West Virginia
and Columbus Mississippi; provided, however, that nothing herein shall be
construed to include in the term “Business” any home infusion or other business
conducted by any Seller or any
Affiliate of any Seller, including in Birmingham, Alabama.

 

(f)                                    “Code” means the Internal Revenue Code of
1986, as amended.

 

(g)                                 “Consent” means a duly executed, written
consent to the assignment to Buyer of an Assumed Contract or Lease which, under
the terms of such Assumed Contract or Lease, is required to be obtained from a
party or parties other than Buyer or any Seller in connection with such
assignment.

 

(h)                                 “Encumbrance” means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of others, or
restriction (whether on sale, transfer, disposition or otherwise), whether
imposed by agreement, understanding, law, equity or otherwise.

 

(i)                                     “ERISA” means the U.S. Employee Retirement Income Security
Act of 1974, as amended, and the related regulations and published
interpretations.

 

(j)                                     “Government Payment
Program” means Medicare, TRICARE, Medicaid, and all other
government-sponsored healthcare reimbursement and payment programs.

 

(k)                                  “Governmental Entity”
means any government or any agency, bureau, board, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state or local, domestic or foreign.

 

(l)                                     “Indemnified Party” means the Buyer
Indemnified Party or Seller Indemnified Party who is entitled to indemnity
hereunder.

 

(m)                               “Indemnifying Party”
means the party obligated to provide indemnification hereunder.

 

(n)                                 “Knowledge of Buyer”
means the actual knowledge of the General Managers for the branches, based upon
due inquiry. No constructive or imputed knowledge shall be attributed by virtue
of any position held, relationship to any other Person, or for any other
reason, except to the extent due inquiry was not conducted.

 

2

 

(o)                                 “Knowledge of Sellers” means the actual
knowledge of Eric Krause and Drew Walk, based upon due inquiry. No constructive
or imputed knowledge shall be attributed by virtue of any position held,
relationship to any other Person, or for any other reason, except to the extent
due inquiry was not conducted.

 

(p)                                 “Law” means any constitutional provision,
statute or other law, rule, or regulation of any Governmental Entity and any
Order.

 

(q)                                 “Leased Real Property” means the premises at
the MedCare Columbus, Mississippi branch.

 

(r)                                    “Loss” means any cost, damage, disbursement,
expense, liability, judgment, claim, demand, loss, deficiency, diminution in
value, obligation, penalty, fine, assessment or settlement of any kind or
nature, whether foreseeable or unforeseeable, including, but not limited to,
interest or other carrying costs, penalties, legal, accounting and other
professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims, actual or threatened, inquiries, hearings or
other reasonable legal or administrative proceedings, and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified Person; provided, however, that “Loss”
shall not include any amount that is received by such specified Person under a
valid and collectible insurance policy.

 

(s)                                  “Order” means any decree, injunction,
judgment, order, ruling, assessment or writ by a Governmental Entity.

 

(t)                                    “Ordinary Course”
means the ordinary and usual course of the conduct of the Business by Sellers
consistent with past custom and practice of Sellers.

 

(u)                                 “Person” means an association, a
corporation, an individual, a partnership, a limited liability company, a trust
or any other entity or organization, including a Governmental Entity.

 

(v)                                 “Tax Return” means a report, return or other
information required to be supplied to a Governmental Entity with respect to
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities.

 

(w)                               “Tax” means all taxes, charges, fees,
levies, or other like assessments, including without limitation income, sales
and use, excise, franchise, real and personal property, transfer, gross
receipt, capital stock, production, business and occupation, disability,
employment, payroll, severance, ad valorem, value added, premium, license or
withholding tax or charge imposed by any Governmental Entity, and any interest,
fines, penalties (civil or criminal), assessments, or additions to tax
resulting from or related thereto or to the non-payment thereof, and any Loss
in connection with the determination, settlement or litigation of any tax
liability.

 

(x)                                   “Territory” means a one hundred (100) mile
radius of each branch location of a Seller reflected on Schedule 1.1(e).

 

(y)                                 “Trade Names” means all trade names, logos,
designs, symbols, emblems, insignias and slogans, whether or not registered or
capable of registration, which are used by any Seller or any Affiliates of any
Seller, including, without limitation, the following: 

 

3

 

Critical Care Systems, Inc., Curative Health
Services, Inc., Curative Critical Care Systems, Curative Health Services Co.,
Curative Pharmacy Services, Wound Care Center, and Wound Management Program, or
any derivation or acronym thereof.

 

1.2                                 Other
Defined Terms. The following terms have the meanings defined for such terms
in the locations set forth below:

 

	
  Term

  	
   

  	
  Location

  
	
   

  	
   

  	
   

  
	
  Agreement

  	
   

  	
  Introductory Paragraph

  
	
  Anti-kickback Statute

  	
   

  	
  Section 10.4

  
	
  Apex

  	
   

  	
  Introductory Paragraph

  
	
  Assumed Contracts and Leases

  	
   

  	
  Section 2.1(c)

  
	
  Assumed Liabilities

  	
   

  	
  Section 2.3

  
	
  Benefit Plan

  	
   

  	
  Section 6.9

  
	
  Bill of Sale

  	
   

  	
  Section 2.5

  
	
  Business Financials

  	
   

  	
  Section 6.3

  
	
  Buyer

  	
   

  	
  Introductory Paragraph

  
	
  Buyer Indemnified Party

  	
   

  	
  Section 12.2

  
	
  Closing

  	
   

  	
  Article 3

  
	
  Closing Date

  	
   

  	
  Article 3

  
	
  Confidential Information

  	
   

  	
  Section 10.3

  
	
  Curative-NY

  	
   

  	
  Introductory Paragraph

  
	
  DEA

  	
   

  	
  Section 10.6

  
	
  Dispute

  	
   

  	
  Article 14

  
	
  Effective Time

  	
   

  	
  Article 3

  
	
  Excluded Assets

  	
   

  	
  Section 2.2

  
	
  Inventory

  	
   

  	
  Section 2.2(b)

  
	
  Licenses and Permits

  	
   

  	
  Section 2.1(b)

  
	
  MedCare

  	
   

  	
  Introductory Paragraph

  
	
  Notice

  	
   

  	
  Section 12.4(a)

  
	
  Patient Files

  	
   

  	
  Section 2.1(e)

  
	
  Personal Property

  	
   

  	
  Section 2.1(a)

  
	
  Preferred Provider Agreement

  	
   

  	
  Section 11.1(b)

  
	
  Purchase Price

  	
   

  	
  Section 4.1

  
	
  Purchased Assets

  	
   

  	
  Section 2.1

  
	
  Seller Indemnified Party

  	
   

  	
  Section 12.3

  
	
  Seller or Sellers

  	
   

  	
  Introductory Paragraph

  
	
  Third Party Claim

  	
   

  	
  Section 12.4(a)

  

 

ARTICLE 2

SALE AND TRANSFER OF ASSETS

 

2.1                                 Sale
and Purchase of Assets. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing on the Closing Date, but effective as
of the Effective Time, the applicable Seller shall sell, convey, assign,
transfer and deliver to the applicable Buyer, and the applicable Buyer shall
purchase, receive and accept from the applicable Seller, as set forth on 

 

4

 

Schedule 1.1(e),
free and clear of any Encumbrances, such Seller’s right, title and interest in
and to those assets of such Seller, real, personal or mixed, tangible and
intangible, used in or for the benefit of the Business, whether tangible,
intangible, real, personal or mixed, described below (but excluding the
Excluded Assets) (the “Purchased Assets”):

 

(a)                                  the
tangible personal property owned by MedCare with respect to the operation of
MedCare’s Business at the Leased Real Property, including all equipment,
furniture, fixtures, machinery, office furnishings, freezers, coolers, computer
hardware, and leasehold improvements located at the Leased Real Property
(collectively, the “Personal Property”);

 

(b)                                 all
of MedCare’s rights, to the extent assignable or transferable in the context of
the transaction contemplated hereby, to the pharmacy licenses, permits,
approvals, franchises, accreditations and registrations and other governmental
licenses, permits or approvals issued to MedCare with respect to the operation
of MedCare’s Business at the Leased Real Property and listed at Schedule 2.1(b)
(collectively, the “Licenses and Permits”);

 

(c)                                  all
of MedCare’s interest in and to those commitments, contracts, leases and
agreements with respect to the operation of MedCare’s Business listed at Schedule
2.1(c) including the lease for the Leased Real Property (collectively, the “Assumed Contracts and Leases”);

 

(d)                                 to
the extent transferable, all telephone and facsimile numbers and lines of the
Business, including, without limitation, all toll-free numbers and lines, local
numbers and lines and doctor lines, all of which are set forth on

Schedule 2.1(d);

 

(e)                                  all
patient files, medical documentation, insurance verification, patient records,
prescription records and related documentation of Sellers’ Businesses for
patients receiving services as of the Closing Date and going back no less than
seven (7) years (or such shorter period if Sellers have not operated for seven
(7) years), including all hard copies and electronic data related thereto in
any form or format maintained by Sellers (the “Patient Files”), provided however, that Sellers may retain
copies of any such materials that are necessary for purposes of resolving
unbilled or outstanding Accounts Receivable and subject to all applicable
confidentiality obligations;

 

(f)                                    all
goodwill associated with the Purchased Assets relating to MedCare’s Business at
the Leased Real Property; and

 

(g)                                 any
and all other assets of MedCare used exclusively for MedCare’s Business at the
Leased Real Property, i.e., not otherwise used by MedCare in its infusion or
other business and not otherwise used by MedCare in its Hurricane, West
Virginia branch.

 

2.2                                 Excluded
Assets. Buyer is not purchasing the following (“Excluded Assets”):

 

(a)          all
tangible personal property owned by Curative-NY and Apex, including all
equipment, furniture, fixtures, machinery, office furnishings, and leasehold
improvements;

 

5

 

(b)         all
of Curative-NY’s and Apex’s rights to the pharmacy licenses, permits,
approvals, franchises, accreditations and registrations and other governmental
licenses, permits or approvals issued to Curative-NY and Apex;

 

(c)          all
of Curative-NY’s and Apex’s interest in and to commitments, contracts, leases
and agreements;

 

(d)         all
goodwill associated with Curative-NY’s and Apex’s Businesses;

 

(e)          all
infusion pumps, pharmacy hoods and other equipment, contracts and leases (other
than the Lease for the Leased Real Property) used by any Seller in connection
with the operations of its infusion business;

 

(f)            all
inventories of supplies, drugs, janitorial and office supplies and other
disposables and consumables owned by Sellers, related to the operation of
Sellers’ Business (collectively, the “Inventory”);

 

(g)         all
software licensed to and/or owned by Sellers or their Affiliates, including
Jazz Rx and CPR+ software;

 

(h)         all
bank accounts of Sellers;

 

(i)             all
cash, cash equivalents and short-term investments of Sellers;

 

(j)             all
Trade Names, except that PC Pharmacy may reference the names “MedCare” and “Critical
Care Systems” as the prior operator for a three (3) month period following
Closing in order to transition to the PC Pharmacy name;

 

(k)          any
assets or rights that relate to employee benefit plans; all books and records
relating to employees; and unemployment compensation, workers’ compensation and
other credits, reserves or deposits with applicable Governmental Entities
relating to employees;

 

(l)             all
claims, rights, interests and proceeds with respect to Tax refunds resulting
from periods prior to the Closing Date, and the right to pursue appeals of
same;

 

(m)       the
corporate charter, taxpayer and other identification numbers, corporate seals,
minute books, and other documents relating to the organization, maintenance,
and existence of each Seller;

 

(n)         all
vendor rebates payable to Sellers that relate to periods prior to the Effective
Time;

 

(o)         all
Accounts Receivable; and

 

(p)         any
other asset of Sellers listed on Schedule 2.2(p) or otherwise not
specifically referenced herein as a Purchased Asset.

 

2.3                                 Assumed
Liabilities. As of the Effective Time, Buyers shall be responsible for all
liabilities and obligations arising after the Effective Time with respect to
Buyers’ operation of the 

 

6

 

Business and the Purchased
Assets (and for obligations arising and accruing after the Effective Time under
the Assumed Contracts and Leases (collectively, the “Assumed Liabilities”).

 

2.4                                 Excluded
Liabilities. Except for the Assumed Liabilities, which shall be liabilities
and obligations of Buyer, Buyer shall not assume any liabilities or obligations
of any kind or nature, whether absolute, contingent, accrued, known or unknown,
of Sellers or any Affiliate of a Seller or the Business.

 

2.5                                 Instrument
of Transfer. The sale of the Assets and the assumption of the Assumed
Liabilities as herein provided shall be effected at Closing by the Assignment,
Assumption and Bill of Sale Agreement in the form attached hereto as Exhibit
2.5 (“Bill of Sale”).

 

2.6                                 Completion
of Transfers.

 

(a)                                  The
entire beneficial interest in and to, and the risk of loss with respect to, the
Purchased Assets and the Assumed Liabilities shall, regardless of when legal
title thereto shall be transferred to Buyer, pass to Buyer at Closing as of the
Effective Time. All operations of the Business shall be for the account of
Sellers up to the Effective Time and shall be for the account of Buyers
thereafter. In the event legal title to any of the Purchased Assets or the
Assumed Liabilities is not transferred at Closing, Seller shall hold such
Purchased Assets or Assumed Liabilities as nominee for Buyers until completion
of such transfers.

 

(b)                                 In
the event that the legal interest in any of the Purchased Assets or the Assumed
Liabilities to be sold, assigned, transferred or conveyed pursuant to this
Agreement, or any claim, right or benefit arising thereunder or resulting
therefrom cannot be sold, assigned, transferred or conveyed hereunder as of the
Effective Time because any waiting or notice period has not expired or any
Consents or Approvals required for such sale, assignment, transfer or
conveyance have not been obtained or waived, the legal interest in such
Purchased Assets or Assumed Liabilities shall not be sold, assigned,
transferred or conveyed unless and until such waiting or notice period shall
have expired or until Approval, Consent or waiver thereof is obtained. In such
event, at Buyers’ option, Buyers may elect to waive the condition to Closing
requiring such Consent or Approval and proceed with the Closing or delay
Closing until such Consent or Approval is obtained by Sellers and delivered to
Buyer. If such Consent or Approval has not been obtained by December 9, 2005, Sellers
may elect to terminate this Agreement. During any such period, Sellers shall at
their expense, use reasonable diligent efforts to seek to obtain such Consents,
Approvals or waivers as may be necessary to complete such transfers as soon as
practicable. Buyers will cooperate with Sellers efforts with respect thereto at
Buyers’ expense. Notwithstanding the foregoing, to the extent a landlord or
lessor under an Assumed Contract or Lease requires that a reasonable
administrative, processing, expediting or legal fee be paid in connection with
obtaining Consent or Approval for assignment, Seller shall pay any such fee.

 

(c)                                  In
the event Buyers elect to close prior to obtaining such Consent or Approval,
(i) Sellers shall hold any such non-assigned, non-conveyed and non-transferred
Purchased Assets or Assumed Liabilities for the benefit and at the risk of
Buyers and shall cooperate with Buyers in any lawful and reasonable
arrangements designed to provide the benefits of ownership thereof to Buyers;
and (ii) Sellers shall not be deemed to be in breach of 

 

7

 

any representation, warranty or covenant
contained herein as a result of not obtaining such Consent or Approval.

 

ARTICLE 3

CLOSING

 

Unless the parties hereto otherwise agree in writing, the actions
contemplated to consummate the transactions under this Agreement (the “Closing”) shall take place by facsimile
transmission of documents including counterpart signature pages (with hard copy
to follow) on December 2, 2005 or as otherwise agreed by the parties (the “Closing Date”). The Closing shall occur at
a time mutually determined by the parties or in such other manner as mutually
determined by the parties (including, without limitation, through the exchange
of counterpart signature pages by the parties by facsimile or other electronic
means), and shall be deemed effective at 11:59 p.m. Eastern Time on the Closing
Date (the “Effective Time”).

 

ARTICLE 4

PURCHASE PRICE

 

4.1                                 Payment
of Purchase Price. The total purchase price (“Purchase Price”) payable by Buyers to Sellers shall be equal
to One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00). The
payment of the Purchase Price shall be made by Buyers on the Closing Date in
readily available funds via wire transfer to accounts designated by each of
Sellers.

 

4.2                                 Purchase
Price Allocation. The Purchase Price shall be allocated among the Assets
purchased hereunder in accordance with Section 1060 of the Code and as set
forth on Schedule 4.2 attached hereto. Buyers and Sellers each hereby
covenant and agree that none of them will take a position on any income tax
return, before any governmental agency, or in any judicial proceeding that is
in any way inconsistent with the allocation set forth on Schedule 4.2.
Buyer and Sellers agree to make all filings required under Section 1060 of the
Code consistent with the allocation of such consideration as set forth on Schedule
4.2. Each party shall duly and timely file Form 8594 with its appropriate
tax returns.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Sellers hereby severally represent and warrant to Buyer that:

 

5.1                                 Organization
and Related Matters. Curative-NY is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and is
qualified to do business and in good standing in Alabama. Apex is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and is qualified to do business and in good standing in New
York and Louisiana. MedCare is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is qualified
to do business and is in good standing in Alabama, West Virginia and
Mississippi. Sellers have all necessary corporate power and authority to
conduct the Business as now conducted. Sellers have the necessary corporate
power and authority to execute, deliver and perform this Agreement and any
related agreements to which they are a party.

 

8

 

5.2                                 Authorization.
The execution, delivery and performance of this Agreement and any related
agreements by Sellers have been duly and validly authorized by all necessary
corporate action on the part of each Seller. This Agreement constitutes the
legal, valid and binding obligation of Sellers, enforceable against Sellers in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors’ rights generally.

 

5.3                                 No
Conflicts. The execution, delivery and performance of this Agreement by
Sellers will not (with notice or passage of time, or both) violate the
provisions of, or constitute a breach or default under, (a) the charter
documents or bylaws of Sellers; or (b) any Law to which Sellers are subject, or
(c) any material contract or agreement to which Sellers are a party.

 

5.4                                 No
Brokers or Finders. No agent, broker, finder, or investment or commercial
banker, or other Person or firm engaged by or acting on behalf of Sellers or
any Affiliate of Sellers in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any broker’s or finder’s or similar fee or
other commission as a result of this Agreement or such transactions.

 

5.5                                 Title
to Purchased Assets. Sellers have good and marketable title to the
Purchased Assets free and clear of all Encumbrances, except as set forth on Schedule
5.5.

 

5.6                                 Payment
to Creditors. Sellers will supply Buyers with a complete and accurate list
of secured creditors with respect to the Purchased Assets. Sellers will either
pay all such amounts due or obtain releases of collateral prior to Closing and
provide Buyers with satisfactory evidence thereof.

 

5.7                                 Third
Party Providers and Payors. Attached as Schedule 5.7 is a list of
Sellers’ provider agreements, including the Preferred Provider Agreement, third
party prescription payors and providers with provider numbers.

 

ARTICLE 6

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Sellers hereby severally represent and warrant to Buyer that with
respect to the Business of the respective Seller:

 

6.1                                 Legal
Proceedings. (i) There are no claims, proceedings or investigations pending
or, to the Knowledge of Seller, threatened against Seller with respect to any
aspect of the Business; (ii) there are no payments owing from Seller to any
third-party payor other than overpayments being processed in the Ordinary
Course; and (iii) there has not been, for the past three years, any dispute or
Action with any person who was a patient of Seller’s Business or with any third
party payor that relates to matters other than routine payment adjustments or
reconciliations in the Ordinary Course.

 

6.2                                 Compliance
with Laws. Seller has not been charged with or given notice of, and is in
compliance with all applicable material Laws and Orders by any Governmental
Entity relating to the Business.

 

9

 

6.3                                 Financial
Information. Seller has provided Buyer with the pro forma financial
schedules prepared by Seller and related to the Business and attached at Schedule
6.3 (the “Business Financials”).
Except as set forth on Schedule 6.3, the Business Financials fairly
present the financial status of Seller with respect to the Business. The
Business Financials are unaudited and have been prepared from the books and
records of Seller maintained in the Ordinary Course, and are accurate in all
material respects.

 

6.4                                 Tax
and Other Returns and Reports. All required Tax Returns have been timely
and properly filed by or on behalf of Seller and Seller has paid all Taxes due
with respect to the Business and the Purchased Assets used in connection with
the Seller’s Business for all periods ending on or before the Closing Date.
There are no Encumbrances with respect to Taxes upon any of the Purchased
Assets used in connection with the Business, except Encumbrances for current Taxes
not yet due. All required Tax Returns relating to the Seller’s Business,
including amendments to date, have been prepared in good faith by or on behalf
of Seller and, to the Knowledge of Seller, are complete and accurate in all
material respects. All Taxes Seller is required by Law to withhold or to
collect for payment in connection with the Business have been duly withheld and
collected and have been paid or accrued on Seller’s books. There is no
extension or waiver of the period for assertion of any Taxes against Seller
affecting the Purchased Assets used in connection with Seller’s Business.

 

6.5                                 Assumed
Contracts and Leases. Seller has performed all material obligations under
each Assumed Contract and Lease and is not in breach or default, nor do circumstances
exist which, with or without notice or lapse of time or both, would constitute
a breach or default under any Assumed Contract or Lease by Seller (or, to the
Knowledge of Seller, any other party or obligor with respect thereto). None of
the Assumed Contracts and Leases contain covenants that in any way purport to
restrict the business activity or limit the freedom of Seller to engage in any
line of business or to compete with any person. Except as disclosed on Schedule
6.5, (a) none of the Assumed Contracts and Leases requires the Consent of
any third party prior to the consummation by the parties of the transactions
contemplated by this Agreement; (b) the Assumed Contracts and Leases are valid
and effective in accordance with their terms; (c) provided that necessary
Consents and Approvals to assignment are obtained, the continuation, validity
and effectiveness of the Assumed Contracts and Leases will not be affected by
the transactions contemplated hereunder; and (d) such transactions will, subject
to obtaining the requisite Consent of another party thereunder, not result in a
breach of, or default under any of the Assumed Contracts and Leases. There is
no actual or, to the Knowledge of Seller, threatened termination, cancellation
or limitation of any Assumed Contract and Lease. Regardless of whether a
Consent requirement is disclosed on Schedule 6.5, Seller will obtain
such Consent prior to Closing except as otherwise permitted by a written waiver
from a Buyer.

 

6.6                                 Licenses
and Permits. Seller holds all licenses and permits that are necessary to
conduct its Business as now conducted, and all such licenses and permits are
valid and in full force and effect. No notice from any authority with respect
to the suspension, revocation, or termination of any license or permit has been
received by Seller and, to the Knowledge of Seller, there is no proposed or
threatened issuance of any such notice. Sellers will cooperate with Buyers in
the application for new licenses and permits with respect to the operation of
MedCare’s business at the Leased Real Property. In furtherance of the
foregoing, MedCare will execute a Power of Attorney in the form attached as Exhibit
6.6 attached hereto.

 

10

 

6.7                                 Insurance.
Seller is insured or self-insured against risks normally insured against by
similar businesses under similar circumstances, including but not limited to
professional liability coverage and workers’ compensation insurance, which
coverage will remain in full force and effect in accordance with policy terms
with respect to all events occurring prior to the Effective Time, regardless of
whether the claim is asserted before or after the Effective Time.

 

6.8                                 Labor
Matters. Except as set forth on Schedule 6.8:

 

(a)                                  Neither
Seller nor Seller’s Business is a party to or bound by any collective
bargaining, works council, union representation or similar agreement or
arrangement;

 

(b)                                 There
is no controversy existing, pending or, to the Knowledge of Seller, threatened
with any association or union or collective bargaining representative of the
employees of Seller pertaining to the Business;

 

(c)                                  There
is no charge or complaint relating to unfair labor practices pending against
Seller’s Business, nor is there any labor strike, work stoppage, labor
grievance or other labor dispute pending or, to the Knowledge of Seller,
threatened against Seller with respect to the Business;

 

(d)                                 Sellers
are neither engaging nor have engaged in any unfair labor practice;

 

(e)                                  There
is no labor strike, dispute, slowdown or stoppage pending or, to the Knowledge
of Seller, threatened against Seller with respect to the Business;

 

(f)                                    No
right of representation exists respecting Seller’s employees who are employed
in the Business;

 

(g)                                 No
collective bargaining agreement is currently being negotiated and no organizing
effort is currently being made with respect to Seller’s employees who are
employed in connection with the Business; and

 

(h)                                 To
the Knowledge of Seller, no current or former employee of Seller in connection
with the Business has any claim against Seller on account of or for (i)
overtime pay, other than overtime pay for the current payroll period, (ii)
wages or salary (excluding current bonus accruals and amounts accruing under
pension and profit sharing plans) for any period other than the current payroll
period, (iii) vacation, time off or pay in lieu of vacation or time off, other
than that earned in respect of the current fiscal year, or (iv) any violation
of any Law relating to minimum wages or maximum hours of work.

 

6.9                                 Employee
Benefits. Buyer will not have any obligation or liability with respect to,
or on account of, any Benefit Plan maintained by Seller or any Affiliate of
Seller. For the purposes of this Section 6.9, “Benefit Plan” means any (a) bonus, stock option, stock
purchase, phantom stock, incentive compensation, deferred compensation,
pension, profit sharing, thrift, savings, retirement, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, hospitalization, dental, workmen’s compensation or other
insurance, severance, separation, voluntary employees’ beneficiary association
or trust, tuition, company car, club dues, income tax preparation, sick leave,
maternity, paternity or other family leave or other employee benefit, welfare
or fringe benefit plan, practice, policy, agreement or arrangement, whether
qualified 

 

11

 

or nonqualified, whether or not
in writing and whether or not considered legally binding, including, but not
limited to, any “employee benefit plan” within the meaning of Section 3(3) of
ERISA or a multiemployer plan within the meaning of Section 3(37) of ERISA or
(b) any employment, supplemental unemployment, layoff, consulting, “golden
parachute”, engagement or retainer agreement or arrangement. Seller has
complied, in all material respects, with its obligations (including obligations
to make contributions) under the Benefit Plans and such Benefit Plans have been
and are materially in compliance with applicable Law. No Benefit Plan is a
multiemployer plan or single-employer plan as described in Section 4001 of
ERISA, and Seller has never contributed nor been obligated to contribute to
(nor has it been a member of a controlled group in which any other member
contributed to or had an obligation to contribute to) any such plan. In
addition, Seller has not terminated a Benefit Plan which is an employee pension
benefit plan as defined in Section 3(2) of ERISA within the 6-year period
preceding the Closing Date.

 

6.10                           Government
Payment Programs. Seller is certified to participate in the Government
Payment Programs and complies in all material respects with all applicable
state and federal conditions of participation applicable to such Government
Payment Programs in connection with the Business. Except as set forth on Schedule
6.10, Seller is not a party to, or bound by, any Order or corporate
integrity agreement with any Government Payment Program nor has Seller, during
the last three (3) years, been audited or otherwise examined by any Government
Payment Program in connection with the Business. Seller has filed on a timely
basis all claims or other reports required to be filed in order to receive
reimbursement with respect to the provision of services, products and supplies
covered under any Government Payment Program, in accordance with all Laws and
requirements applicable to the Government Payment Programs. Neither Seller nor
any of its officers, directors, shareholders, or employees (a) has been
debarred, excluded or suspended from participation in any Government Payment
Program or (b) to the Knowledge of Seller, is the target or subject of any
current or potential investigation relating to any Government Payment
Program-related offense.

 

6.11                           Absence
of Certain Changes. Except as set forth in Schedule 6.11 or as
expressly required, permitted or contemplated hereby, since July 1, 2005,
Seller has conducted the Business only in the Ordinary Course and (a) there has
not been any damage to or destruction or loss of any Purchased Asset used in
connection with the Business that would have a material adverse effect on the
Business, whether or not covered by insurance, (b) none of the Purchased Assets
used in connection with the Business has been mortgaged, pledged or made
subject to any Encumbrance, and (c) there has not been any termination of or
receipt of notice of termination of any Assumed Contract or Lease.

 

6.12                           Transactions
With Affiliates. Except as set forth on Schedule 6.12, Seller does
not have any contract, agreement or other arrangement providing for the
employment of, furnishing of goods or services by, rental of real or personal
property from or to or otherwise requiring payments or involving other obligations
to any of its Affiliates or any officers or directors of Seller related to the
Business.

 

6.13                           Litigation.
Except as set forth on Schedule 6.13, no Seller is, with respect to the
Business, (i) subject to any outstanding injunction, judgment, order, decree,
ruling or charge, (ii) party to or the subject of any action, suit, proceeding,
hearing or, to Sellers’ Knowledge, investigation of, in or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator, or (iii) the subject of any pending or,
to Sellers’

 

12

 

Knowledge, threatened claim,
demand or notice of violation or liability from any Person. With respect to any
matters set forth on Schedule 6.13, Sellers will retain all liability and
responsibility with respect thereto, and Sellers have adequate insurance in
place to cover any requirements arising therefrom.

 

6.14                           Undisclosed
Liabilities. Seller does not have any liabilities related to the Business
whatsoever, known or unknown, asserted or unasserted, liquidated or
unliquidated, accrued, absolute, contingent, or otherwise, and there is no
basis for any claim against Seller for any such liability, except: (a) as set
forth in Schedule 6.14; or (b) as incurred in the Ordinary Course (none
of which has had or may reasonably be expected to have a material adverse
effect on the Business).

 

6.15                           Environmental.
No Seller has received oral or written notice of any actual or potential claims,
orders, directives, citations or causes of action based on actual or alleged
violations of any local, state or federal statutes, ordinances or regulations
dealing with protection of the environment or public health and safety, or
common law claims or causes of action based upon such Seller’s actual or
alleged involvement with or use of any substance regulated by local, state or
federal statutes, ordinances or regulations dealing with protection of the
environment or public health and safety.

 

ARTICLE 7

REPRESENTATIONS AND WARRANTIES OF BUYERS

 

Buyers hereby severally represent and warrant to Sellers that:

 

7.1                                 Organization
and Related Matters. PC Pharmacy is a corporation duly organized, validly
existing and in good standing under the laws of the State of Rhode Island and
is qualified to do business and in good standing in the States of Alabama and
Mississippi. PC Pharmacy Direct is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio and is
qualified to do business and in good standing in Louisiana, New York, and West
Virginia. Buyers have all necessary corporate power and authority to conduct
their business as now conducted. Buyers have the necessary corporate power and
authority to execute, deliver and perform this Agreement and any related
agreements to which any of them is a party.

 

7.2                                 Authorization.
The execution, delivery and performance of this Agreement and any related
agreements by Buyers have been duly and validly authorized by all necessary corporate
action on the part of Buyers. This Agreement constitutes the legal, valid and
binding obligation of Buyers, enforceable against Buyers in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors’ rights generally.

 

7.3                                 No
Conflicts. The execution, delivery and performance of this Agreement by
Buyers will not (with or without notice or passage of time, or both) violate
the provisions of, or constitute a breach or default under, (a) the charter
documents or bylaws of Buyers; or (b) any Law to which Buyers are subject, or
(c) any material contract or agreement to which any Buyer is a party.

 

7.4                                 Legal
Proceedings. There are no claims, proceedings or investigations pending or,
to the Knowledge of any Buyer, threatened relating to or affecting such Buyer
before any Governmental Entity in which an adverse determination would
materially adversely affect the 

 

13

 

properties or business
condition (financial or otherwise) of such Buyer. No Buyer is subject to any
Order which materially adversely affects the condition (financial or
otherwise), operations or business of such Buyer.

 

7.5                                 Ability
to Perform; Solvency. Buyers have the ability to obtain funds in cash in
amounts equal to the Purchase Price and will at the Closing have immediately
available funds in cash, which are sufficient to pay the Purchase Price. Buyers
are not insolvent and will not be rendered insolvent as a result of the
transactions contemplated by this Agreement. For purposes hereof, the term “solvency” means that: (a) the fair salable
value of a Buyer’s tangible assets is in excess of the total amount of its
liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with U.S. generally
accepted accounting principles, and whether direct or indirect, fixed or
contingent, secured or unsecured, and disputed or undisputed); and (b) a Buyer
is able to pay its debts or obligations in the ordinary course as they mature.

 

7.6                                 No
Brokers or Finders. No agent, broker, finder, or investment or commercial
banker, or other Person or firm engaged by or acting on behalf of Buyer or any
Affiliate of Buyer in connection with the negotiation, execution or performance
of this Agreement or the transactions contemplated by this Agreement, is or
will be entitled to any broker’s or finder’s or similar fee or other commission
as a result of this Agreement or such transactions.

 

ARTICLE 8

BUYERS’ CONDITIONS PRECEDENT TO CLOSING

 

The obligations of Buyers to consummate the transactions described in
this Agreement are subject to the satisfaction, before the Effective Time, of
the following conditions precedent, any of which may be waived in writing by
Buyers:

 

8.1                                 Representations
and Warranties to be True and Correct. The representations and warranties
of Sellers set forth in this Agreement and in the schedules delivered pursuant
hereto shall be true and correct in all respects as of the Effective Time.

 

8.2                                 Supporting
Documents. Buyer shall have received the documents set forth below:

 

(a)                                  A
certificate signed by an authorized officer of each Seller dated the Closing
Date and certifying that he/she knows of no facts which would cause such Seller
to be in breach of any of its representations and warranties hereunder as of
the Effective Time;

 

(b)                                 The
Bill of Sale signed by Sellers;

 

(c)                                  The
Power of Attorney signed by MedCare;

 

(d)                                 The
Assignment of Lease and Assumption Agreement in the form attached as Exhibit
8.2(d) (the “Lease Assignment”)
signed by MedCare and the Landlord; and

 

(e)                                  Such
additional supporting documents and other information with respect to the
operations and affairs of Sellers as the Buyer may reasonably request.

 

14

 

8.3                                 Undertakings
and Agreements. Sellers shall have satisfied and fulfilled all of the
undertakings and agreements required to be satisfied and fulfilled before the
Effective Time by Sellers under this Agreement.

 

8.4                                 Pay-off
Letters. Buyers shall have received copies of pay-off letters or releases
of collateral, as applicable, from all creditors of Sellers in form and substance
acceptable to Buyers with respect to security interests of such creditors, if
any, in the Purchased Assets.

 

8.5                                 Schedules.
Except with respect to Schedule 4.2, Sellers will have delivered the
Schedules and Buyers will be satisfied therewith in Buyers’ sole discretion.
Buyers acknowledge and agree that Sellers may provide Buyers with updates and
supplements to the schedules up to the Closing.

 

ARTICLE 9

SELLERS’ CONDITIONS PRECEDENT TO CLOSING

 

The obligation of Sellers to consummate the transactions described in
this Agreement is subject to the satisfaction, before the Effective Time, of
the following conditions precedent, any of which may be waived in writing by
Sellers:

 

9.1                                 Representations
and Warranties to be True and Correct. The representations and warranties
of Buyer set forth in this Agreement shall be true and correct in all respects
as of the Effective Time.

 

9.2                                 Supporting
Documents. Sellers shall have received the documents set forth below:

 

(a)                                  A
certificate signed by an authorized officer of each Buyer dated the Closing
Date and certifying that he/she knows of no facts which would cause such Buyer
to be in breach of any of its representations and warranties hereunder as of
the Effective Time;

 

(b)                                 The
Bill of Sale signed by Buyers;

 

(c)                                  The
Power of Attorney signed by PC Pharmacy; and

 

(d)                                 Such
additional supporting documents and other information with respect to the
operations and affairs of Buyer as Sellers may reasonably request.

 

9.3                                 Undertakings
and Agreements. Buyer shall have satisfied and fulfilled all of the
undertakings and agreements required to be satisfied and fulfilled before the
Effective Time by Buyer under this Agreement.

 

9.4                                 Pay-off
Letters. Sellers shall have received copies of pay-off letters or releases
of collateral, as applicable, from all creditors of Sellers with respect to
security interests of such creditors, if any, in the Purchased Assets.

 

9.5                                 Purchase
Price. Buyer shall pay the Purchase Price as required in Article 4.

 

15

 

ARTICLE 10

ADDITIONAL COVENANTS AND AGREEMENTS

 

10.1                           Employment
Matters. 

 

(a)                                  On
or after the Closing Date, Buyer may, but is not required to, offer employment
to any or all of Sellers’ employees listed in Schedule 10.1(a) and
employ any of the employees who accept the offer of employment (the “Hired Employees”). Buyer shall not contact
any of Sellers’ employees prior to the date hereof without Seller’s advance
written consent. With respect to any Hired Employees that are subject to
noncompetition agreements with Sellers, they will be released to the extent
necessary for them to work for Buyers.

 

(b)                                 On
and after the Closing Date, Hired Employees shall be eligible for all employee
benefit plans sponsored by Buyer subject to the eligibility provisions of such
plans. Hired Employees shall be given credit for periods of employment with
Sellers, as applicable, prior to the Closing Date for purposes of determining
eligibility to participate, the amount of benefits, and vesting under such
plans, and pre-existing condition limitations will be waived with respect to
Hired Employees and their covered dependents unless such pre-existing condition
limitations were applicable prior to the Closing Date under Sellers’ Benefit
Plans, subject to Buyers’ plan requirements. Buyers further agree to notify
Sellers of the Hired Employees.

 

(c)                                  Buyers
and Sellers acknowledge and agree that Buyers have not offered any terms of
employment to Sellers or any of Sellers’ employees as consideration for the
sale contemplated herein. It is agreed that in the event any employees of
Sellers shall be employed by Buyers in Buyers’ sole discretion, such employees
shall be employed at will, and Buyers shall have no contractual obligation to
Sellers with regard to retention at such employment. Sellers retain all
liabilities with respect to Sellers’ employees and all of Sellers’ Benefit
Plans.

 

10.2                           Access
to Information; Preservation of Records; Cooperation. 

 

(a)                                  Sellers
will provide Buyers and their representatives access at all reasonable times
between the date of this Agreement and Closing, to the Purchased Assets and the
books and records of the Business, and will furnish Buyers with such additional
financial and operating data as Buyers may reasonably request.

 

(b)                                 The
Parties recognize that, in the future, litigation may arise relating to the
Purchased Assets or the Business and the conduct thereof which may relate in
part, directly or indirectly, both to the period prior to the Closing and the
period subsequent to the Closing. Each of the parties agrees that, to the
extent reasonable under the circumstances and at the reasonable request of
another party, it will provide to the requesting party information, records and
documents in its possession relating to the Purchased Assets and the Business
to assist the requesting party in connection with any such litigation or
potential litigation in which such requesting party is or may be involved.

 

(c)                                  Buyer
shall keep and preserve all Patient Files for a period equal to the greater of
(i) ten years following the Closing Date, or (ii) one year past the applicable
statute of limitations for claims. Buyer acknowledges that the Patient Files
are subject to rules and regulations concerning confidentiality and shall abide
by any such rules and regulations relating 

 

16

 

to the Patient Files in
accordance with applicable law (including, if applicable, Section 1861(v)(i)(l)
of the Social Security Act (42 U.S.C. § 1395x(vxi)(I))) and requirements of
relevant insurance carriers. Further, Buyers and Sellers agree to enter into
any agreements that either party reasonably determines may be required by law,
including, but not limited to, entering into a Business Associate Agreement as
contemplated by the Health Insurance Portability and Accountability Act of
1996, and the regulations promulgated thereunder. Buyer shall maintain the
Patient Files in a manner consistent with Buyer’s policies and procedures
applicable to patient records generated by Buyer after the Closing Date,
provided that the remainder of this Section 10.2 shall control in the event of
any conflict between such policies and procedures and this Section 10.2.

 

(d)                                 At
any time following the Closing Date, Buyer will cooperate in good faith with
Sellers and shall promptly provide or cause to be provided to any Seller, at a
Seller’s sole cost and expense, copies of and reasonable access during normal
business hours to any Patient Files that are requested by a Seller for any
reasonable business purposes, including, but not limited to, defending a claim
or lawsuit by a patient or responding to an audit, investigation or other
inquiry by any Governmental Entity or third-party payor, or resolving unbilled
or outstanding Accounts Receivable, subject to any and all applicable
confidentiality obligations.

 

(e)                                  Notwithstanding
anything to the contrary in this Agreement, the provisions of Sections 10.2(a)
and 10.2(d) shall not controvert any discovery process in any Action in which
Buyer, on the one hand, and Sellers, on the other hand, are adverse parties.

 

10.3                           Confidentiality.
Buyer and Sellers recognize and agree that all information, instruments,
documents and details concerning the business and operations of them and their
Affiliates (“Confidential Information”)
are strictly confidential, and Buyer and each Seller expressly covenants and
agrees that it will not, nor will it allow any of its Affiliates and/or its or
their respective officers, directors, employees, or agents to announce or
disclose any matters relating to any Confidential Information of the other
party, the business of the other party or this Agreement, its negotiation,
terms, provisions or conditions, including purchase price, without the prior
written consent of the other party, except as may be reasonably necessary to
effectuate the transactions contemplated hereby; provided, however, that Buyer
and Sellers shall not be prohibited from making any public announcement or
other disclosure of the sale and acquisition of the Purchased Assets as such
party’s counsel shall deem it necessary to maintain compliance with and to
prevent violation of applicable federal or state securities or other laws or
the rules or regulations of any stock exchange. Notwithstanding the foregoing,
such disclosing party shall promptly notify the other party of such required
disclosure prior to making such disclosure and, to the extent feasible, shall
confer with the other party prior to making such disclosure as to the content.
Information (a) ascertainable or obtained from public or published information,
(b) received from a third party not known by a party to be under an obligation
to the other party or any Affiliate of such other party to keep such
information confidential, (c) which is or becomes known to the public (other
than through a breach of this Agreement), or (d) which was in the other party’s
possession prior to disclosure thereof to such party in connection herewith
shall not be deemed Confidential Information.

 

10.4                           No
Intent to Induce Referrals. Buyer and Sellers acknowledge and agree that no
portion of the Purchase Price payable by Buyer to Sellers pursuant to this
Agreement is intended to represent a payment for any referral of future
business to Buyer, or to any of Buyer’s officers, 

 

17

 

directors, employees, or
Affiliates, that is prohibited by 42 U.S.C. §1320a-7b, commonly referred to as
the “Anti-Kickback Statute.”

 

10.5                           Patient
Notification; Publicity. Following the Closing Date, Buyer may provide
written notification to all patients of the Business that Buyer has acquired
the Business from Sellers and will continue to provide the products and
services to patients as previously provided by Seller. The content and timing
of any such communications shall be mutually agreed upon by Buyer and Sellers. Except
as permitted under Section 10.3 above, no party nor any Affiliate of a party
shall issue any press release, publicity statement or other public notice
relating to this Agreement, or the transactions contemplated by this Agreement,
without first consulting with the other party and subject to the other party’s
reasonable approval of the content thereof; provided, however, that the
foregoing shall not prohibit a party from making any such press release,
publicity statement or other public notice to the extent that the legal counsel
of the disclosing party advises that such disclosure is required by law,
including any securities laws. Buyer shall not use any Trade Names in any
communications or publications without the prior consent of Sellers except in
connection with the notification required hereunder for a ninety (90) day
period following Closing, and except as set forth in Section 2.2(j).

 

10.6                           DEA
Notification. Sellers shall provide all required notification to the United
States Drug Enforcement Administration (the “DEA”)
of the license numbers and locations to which the Patient Files are being
transferred.

 

10.7                           Tax
Matters; Prorations.

 

(a)                                  Sellers
shall pay all applicable sales, use or other similar Taxes that are, or become,
due or payable as a result of the sale, conveyance, assignment, transfer or
delivery of the Purchased Assets hereunder levied on Sellers.

 

(b)                                 All
personal property, ad valorem and any other local or state taxes relating to
the Purchased Assets or the Business which shall be accrued but unpaid as of
the Closing Date shall be prorated to the Closing Date as agreed to among the
parties and shall be paid by Sellers to Buyer or Buyer to Sellers, as the case
may be, within 30 days after their assessment or due date.

 

(c)                                  Sellers,
upon request of Buyer, shall use its reasonable efforts to provide or obtain
from any taxing authority any certificate or other document necessary to
mitigate, reduce or eliminate any Taxes (including additions thereto or
interest and penalties thereon) that otherwise would be imposed with respect to
the transactions contemplated in this Agreement.

 

(d)                                 Payments
required under the Real Property Lease or any Assumed Contracts and Leases will
be pro-rated between Sellers and Buyers as of the Effective Time.

 

10.8                           Patient
File Delivery. Sellers will work in good faith with Buyers to transfer the
Patient Files in the most effective and efficient manner promptly following
Closing.

 

10.9                           Use
of Computers. At no additional cost to Buyers, Sellers agree that Buyers
will have “read only” access to the pharmacy application software for each
specified location for a period of one hundred twenty (120) days following the
Effective Time. Sellers warrant that such 

 

18

 

software shall be in working
order as of the Effective Time and for a period of 120 days following Closing,
and that Sellers are not prohibited by their licenses from allowing “read only”
access to Buyers. Notwithstanding any of the foregoing, the computer(s),
including the hardware and printers, used in the Business at the Leased Real
Property location are included in the Purchased Assets.

 

10.10                     Phone
System and Phone Numbers. At no additional cost to Buyers, PC Pharmacy will
have the right to use the phone system at the Leased Real Property for ninety
(90) days following the Effective Time. MedCare will continue to make any
required payments for such phone system during such time. At the end of such
ninety (90) days, MedCare will retrieve the phone system from the Leased Real
Property. Notwithstanding the foregoing, to the extent set forth in Section 2.1,
certain actual phone numbers and lines are included in the Purchased Assets. In
addition, Sellers will take reasonable steps to cause any telephone and
facsimile numbers and lines of the Business which cannot be conveyed to Buyers
under Section 2.1 to cause those numbers to be forwarded to the applicable
Buyer’s location, at such Buyer’s expense.

 

10.11                     Ordinary
Course. During the period from the date of this Agreement through the
Effective Time, Sellers will continue to operate the Business in the Ordinary
Course, including maintaining the Purchased Assets, performing all obligations
under its contracts, agreements and leases, maintaining its relationship with
customers, patients and vendors, and compliance with all applicable Laws.

 

ARTICLE 11

RESTRICTIVE COVENANTS

 

11.1                           Restrictions
on Sellers’ Competitive Activities.

 

(a)                                  Sellers
agree that, after the Closing, Buyer will be entitled to the goodwill and going
concern value of Sellers’ business of providing Synagis and to be entitled to
protect and preserve the same to the maximum extent permitted by Law. Sellers
also acknowledge that their management contributions to Sellers’ business of
providing Synagis have been uniquely valuable and involve proprietary
information that would be competitively unfair to use or to make available to
any competitor providing Synagis. For these and other reasons and as an
inducement to Buyer to enter into this Agreement, Sellers agree that, for a
period of three (3) years after the Closing Date (such period to be extended by
the duration of any period of violation of, or any period of litigation to
enforce, the covenants herein), neither Sellers nor any of their Affiliates
will, directly or indirectly, for their own benefit or as agent for another,
(i) carry on or participate in the ownership, management or control of any
other present or future business enterprise that competes in the Territory with
Buyer in the activities of providing Synagis in the Territory, or (ii) hire,
engage, employ or interfere with or attempt to hire, engage, employ or
interfere with any employees, representatives or agents of Buyers or any
Affiliate of Buyers engaged in providing Synagis in the Territory.

 

(b)                                 Nothing
contained herein shall limit: (i) the right of any Seller or its Affiliates, as
an investor, to hold and make investments in securities of any corporation or
limited partnership that is registered on a national securities exchange or
admitted to trading privileges thereon or actively traded in a generally
recognized over the counter market, provided such Seller’s and its Affiliates’
equity interest therein (in the aggregate) does not exceed 3% of the outstanding
shares or interests in such corporation or partnership that is a competing 

 

19

 

business; (ii) the right of
Sellers and their Affiliates to be acquired by, through merger, consolidation,
member substitution or otherwise, an existing (as of the Closing Date) entity
which already competes or that owns or controls an entity which already
competes with Buyer in the activities of providing Synagis in the Territory at
the time of such acquisition; (iii) the right of Sellers and their Affiliates
to operate their infusion business and injectable drug business which is
incidental to their infusion business (other than Synagis) in the Territory;
(iv) the right of Sellers and their Affiliates to provide on behalf of Buyer or
its Affiliates services and/or items pursuant to the Agreement for Pharmacy
Services dated May 1, 2005 between PharmaCare, Inc. and Curative Health
Services, Inc. (the “Preferred Provider
Agreement”); or (v) the right of Sellers and their Affiliates to
provide supplies and products and related services, including Synagis and all
injectable drugs, in areas outside the Territory.

 

(c)                                  Sellers
will (or will cause their Affiliates to), to the extent permitted by law and
assignable by Sellers (or their Affiliates), assign to Buyers Sellers’ rights
as to that portion of each existing noncompetition covenant which would
restrict an employee of the Business, other than the Hired Employees, from
engaging in the business of providing Synagis, including the right to enforce
such assigned portion of the noncompetition covenant at Buyer’s expense.
Nothing herein shall be deemed to assign any of Sellers’ or their Affiliates rights
which would restrict an employee of the Business from engaging in businesses
other than Synagis which may be covered by such noncompetition covenants, and
Sellers and their Affiliates retain all of their rights to enforce such
noncompetition covenants.

 

11.2                           Successors. Notwithstanding anything herein to the
contrary, the covenants in this Article 11 shall be of no further force or
effect in the event Sellers are acquired by, through merger, consolidation,
member substitution or otherwise, an existing (as of the Closing Date) entity
which already competes or that owns or controls an entity which competes with
Sellers or Buyer in the activities of the Business in the Territory at the time
of such acquisition.

 

11.3                           Special
Remedies and Enforcement. Buyer and Sellers recognize and agree that a
breach by any of the parties of any of the covenants set forth in this Article
11 could cause irreparable harm to Buyer in the case of a breach by a Seller
and to Sellers in the case of a breach by Buyer, that such party’s remedies at
Law in the event of such breach would be inadequate, and that, accordingly, in
the event of a breach a restraining order or injunction or both may be issued
against the breaching party in addition to any other rights and remedies which
are available to the harmed party(ies). If this Article 11 is more restrictive
than permitted by the Laws of any jurisdiction in which the harmed party(ies)
seek enforcement hereof, this Article 11 will be limited to the extent required
to permit enforcement under such Laws.

 

ARTICLE 12

SURVIVAL; INDEMNIFICATION

 

12.1                           Survival.
Except as expressly set forth in this Agreement to the contrary, all
representations, warranties, covenants, agreements and indemnifications of
Buyer and Sellers contained in this Agreement or in any document delivered
pursuant hereto shall be deemed to be material and to have been relied upon by
Buyer and Sellers, respectively, and shall continue to be fully effective and
enforceable following the Closing Date for one (1) year and shall thereafter be
of no further force and effect, except that the representations and warranties
in Sections 5.1, 5.2, 5.5, 7.1 and 7.2 shall survive without limitation as to
time, and except covenants contained in Article 10 

 

20

 

and Article 11 shall continue
to be fully effective and enforceable following the Closing Date for the
duration set forth therein, and that the representations, warranties and
covenants contained in Section 10.7, shall survive until the later of the final
resolution of any judicial or administrative proceeding involving any such Tax
or expiration of any statute of limitations (including any statute of
suspensions, tollings or extensions thereof). Any agreements entered into in
connection with this Agreement shall be subject to the survival limitations set
forth therein.

 

12.2                           Obligations
of Sellers and Parent. 

 

(a)                                  Sellers
and Parent agree to jointly and severally indemnify and hold harmless Buyers,
including their directors, officers, employees, Affiliates, agents,
representatives and assigns (“Buyer
Indemnified Parties”), from and against any and all Losses of a
Buyer Indemnified Party, directly or indirectly, as a result of, in connection
with, or based upon or arising from any of the following: (a) any breach or non
performance of any of the representations, warranties, covenants or agreements
made by a Seller in or pursuant to this Agreement or any other agreement
entered into by the parties in connection with this Agreement, subject to the
applicable expiration period set forth in Section 12.1; (b) the failure of a Seller
to perform fully any covenant, provision or agreement to be performed or
observed by it pursuant to this Agreement or any other agreement entered into
by the parties in connection with this Agreement; or (c) any third party or
other claims relating to the Business or the Purchased Assets or regarding the
conduct of the Business arising prior to the Effective Time including, without
limitation, any claims made by a Government Payment Program arising from
conduct or claims filed prior to the Effective Time. Seller agrees to reimburse
the Buyer Indemnified Party promptly upon demand for any unreimbursed payment
made or Loss suffered by such Buyer Indemnified Party at any time after the
Closing Date in respect of any Loss to which the foregoing indemnity relates.

 

(b)                                 In
addition to any other indemnification granted herein and notwithstanding the
survivability or limits, if any, of any representation contained herein or the
absence of any representation herein, Sellers and Parent agree to jointly and
severally indemnify and hold harmless Buyer from and against all Loss,
including a Seller’s liability for its own Taxes or a Seller’s liability, if
any (for example, by reason of transferee liability) for Taxes of others
payable with respect to Taxes claimed or assessed against Buyer relating to the
Purchased Assets and the Business (a) for any taxable period ending on or
before the Closing Date or as a result of this transaction; (b) for any taxable
year or period commencing prior to the Closing Date and ending after the
Closing Date for an amount equal to the portion of such Taxes that relate to
the taxable period ending on the Closing Date.

 

12.3                           Obligations
of Buyers. Buyers agree to jointly and severally indemnify and hold
harmless Sellers, including their directors, officers, employees, Affiliates,
agents, representatives and assigns (“Seller
Indemnified Parties”), from and against any and all Losses of a
Seller Indemnified Party, directly or indirectly, as a result of, in connection
with, or based upon or arising from any of the following: (a) any breach or non
performance of any of the representations, warranties, covenants or agreements
made by a Buyer in or pursuant to this Agreement or any other agreement entered
into by the parties in connection with this Agreement, subject to the
applicable expiration period set forth in Section 12.1; (b) the failure of a
Buyer to perform fully any covenant, provision or agreement to be performed or
observed by it pursuant to this Agreement or any other agreement entered into
by the parties in connection with this Agreement; or (c) any third party or
other claims 

 

21

 

relating to the Business or
Purchased Assets or regarding the conduct of the Business and arising after the
Effective Time. Buyers agree to reimburse Seller Indemnified Party promptly
upon demand for any unreimbursed payment made or Loss suffered by such Seller
Indemnified Party at any time after the Closing Date in respect of any Loss to
which the foregoing indemnity relates.

 

12.4                           Procedure.

 

(a)                                  In
the event any Person or entity not a party to this Agreement shall make a
demand or claim or file or threaten to file or continue any lawsuit, which
demand, claim or lawsuit may result in liability to an Indemnified Party in
respect of matters embraced by the indemnity under this Agreement (a “Third Party Claim”), or in the event that a
potential Loss comes to the attention of any party in respect of matters
embraced by the indemnity under this Agreement, then the party receiving notice
or becoming aware of such event shall promptly deliver notice (each, a “Notice”) to the other party concerning such
event. A Notice shall state: (a) the circumstances giving rise to such event;
and (b) a reasonable estimation of the Losses incurred by the Indemnified
Party. Failure to provide the Notice shall not limit the rights of the
Indemnified Party to indemnification hereunder, except to the extent that such
Indemnified Party’s failure has prejudiced the Indemnifying Party’s rights or
increased its liabilities and obligations hereunder.

 

(b)                                 Within
15 days after delivery of a Notice with respect to a Third Party Claim, the
Indemnifying Party shall have the option, at its sole cost and expense, to
retain counsel for the Indemnified Party to defend any such demand, claim or
lawsuit, provided that counsel who will conduct the defense of such demand,
claim or lawsuit will be approved by the Indemnified Party whose approval may
not be unreasonably withheld. The Indemnified Party shall have the right, at
its own expense, to participate in the defense of any suit, action or
proceeding brought against it with respect to which indemnification may be
sought hereunder; provided, however, that if (a) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential conflicts of interest
between them; (b) the employment of counsel by such Indemnified Party has been
authorized in writing by the Indemnifying Party; or (c) the Indemnifying Party
has not in fact employed counsel to assume the defense of such action within a
reasonable time; then, the Indemnified Party shall have the right to retain its
own counsel at the sole reasonable cost and expense of the Indemnifying Party,
which reasonable costs and expenses shall be paid by the Indemnifying Party on
a current basis. If the Indemnified Party retains its own counsel pursuant to
the previous sentence, such counsel will be approved by the Indemnifying Party
whose approval may not be unreasonably withheld. No Indemnifying Party, in the
defense of any such demand, claim or lawsuit, will consent to entry of any
judgment or enter into any settlement without the consent of the Indemnified
Party, whose consent may not be unreasonably withheld. In the event that the
Indemnifying Party shall fail to respond within fifteen days after receipt of
the Notice, the Indemnified Party may retain counsel and conduct the defense of
such Third Party Claim, as it may in its sole discretion deem proper, at the
sole reasonable cost and expense of the Indemnifying Party, which reasonable
costs and expenses shall be paid by the Indemnifying Party on a current basis.

 

12.5                           Survival.
This Article 12 shall survive the Closing; provided, however, that nothing in
this Article 12 shall be deemed to supersede, extend, or modify the limitation
periods set forth in 

 

22

 

Section 12.1. Any matter as to
which a claim has been asserted by notice to the other party that is pending or
unresolved at the end of the limitation period set forth in Section 12.1 shall
continue to be covered by this Article 12 notwithstanding any applicable
statute of limitations (which the parties hereby waive with respect to any such
asserted claim) until such matter is finally terminated or otherwise resolved
by the parties or by a court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid.

 

12.6                           Threshold.
No Indemnifying Party shall have any obligation to indemnify any Indemnified
Party unless and until the aggregate amount of all Losses for which the
Indemnified Party is otherwise entitled to indemnification pursuant to this Article
12 exceeds Twenty Thousand Dollars ($20,000.00) (the “Threshold”). Thereafter, such Indemnified
Party shall be entitled to indemnification for the amount of Losses in excess
of the Threshold.

 

ARTICLE 13

TERMINATION

 

13.1                           Termination
of Agreement. The parties may terminate this Agreement as provided below:

 

(a)                                  Buyer
and Sellers may terminate this Agreement by mutual written consent at any time
prior to the Closing.

 

(b)                                 Buyer
may terminate this Agreement by giving written notice to Sellers, at any time
prior to the Closing: (a) if a Seller has breached in any material respect any
representation, warranty, or covenant contained in this Agreement and the
breach has continued without cure for a period of 15 days after Buyer’s notice
to such Seller of the breach, and such breach has had a material adverse affect
on the Business; or (b) by reason of the failure (without the reasonable
possibility of cure) of any condition precedent under Article 8 (unless the
failure results primarily from the breach by Buyer of any representation,
warranty, or covenant contained in this Agreement).

 

(c)                                  Sellers
may terminate this Agreement by giving written notice to the Buyer at any time
prior to the Closing: (a) if Buyer has breached in any material respect any
representation, warranty, or covenant contained in this Agreement and the
breach has continued without cure for a period of 15 days after Sellers’ notice
to Buyer of the breach; or (b) by reason of the failure (without the reasonable
possibility of cure) of any condition precedent under Article 9 (unless the
failure results primarily from the breach by a Seller or any of their
Affiliates of any representation, warranty, or covenant contained in this
Agreement).

 

(d)                                 Either
party may terminate this Agreement if the Closing has not occurred by December
9, 2005.

 

13.2                           Effect
of Termination. If a party terminates this Agreement pursuant to Section 13.1,
all rights and obligations of the parties hereunder shall terminate without any
liability of any party to any other party (except for any liability of any
party then in breach and as otherwise specified herein); provided, however,
that the provisions of Section 10.3 shall survive any such termination.

 

23

 

ARTICLE 14

ARBITRATION

 

IN THE EVENT ANY DISPUTE OR CONTROVERSY ARISES BETWEEN THE PARTIES OUT
OF OR RELATING TO OR WITH RESPECT TO ANY OF THE PROVISIONS CONTAINED IN THIS
AGREEMENT (A “DISPUTE”), THE PARTY
RAISING THE DISPUTE SHALL NOTIFY THE OTHER PARTY IN WRITING OF THE EXISTENCE OF
THE DISPUTE. THE PARTIES SHALL (EITHER IN PERSON OR VIA TELEPHONE) NEGOTIATE IN
GOOD FAITH FOR UP TO THIRTY (30) DAYS TO ATTEMPT TO RESOLVE THE MATTER. IF SUCH
EFFORTS DO NOT RESOLVE THE DISPUTE WITHIN THIRTY (30) DAYS OF THE NOTICE, UPON
DEMAND OF ANY PARTY, WHETHER MADE BEFORE OR AFTER THE INSTITUTION OF ANY
JUDICIAL PROCEEDING, THE DISPUTE SHALL BE RESOLVED BY ARBITRATION AS PROVIDED
IN THIS ARTICLE 14. INSTITUTION OF A JUDICIAL PROCEEDING BY A PARTY DOES NOT
WAIVE THE RIGHT OF THAT PARTY TO DEMAND ARBITRATION HEREUNDER. THE PARTIES
SHALL MUTUALLY AGREE UPON AN ARBITRATOR FROM A LIST OF ARBITRATORS RECOGNIZED
BY THE AMERICAN ARBITRATION ASSOCIATION. THE PROCEEDINGS SHALL BE CONDUCTED
UNDER AND GOVERNED BY THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION
ASSOCIATION, AS IN EFFECT FROM TIME TO TIME. ALL ARBITRATION HEARINGS SHALL BE
CONDUCTED IN NEW YORK CITY, NEW YORK. ALL
APPLICABLE STATUTES OF LIMITATION SHALL APPLY TO ANY DISPUTE. THE ARBITRATORS
SHALL HAVE NO POWER TO AWARD PUNITIVE OR EXEMPLARY DAMAGES, TO IGNORE OR VARY
THE TERMS OF THIS AGREEMENT OR ANY OTHER RELATED AGREEMENTS, AND SHALL BE BOUND
TO APPLY CONTROLLING LAW. NO ATTORNEY’S FEES OR COSTS SHALL BE AWARDED AND THE
PARTIES SHALL EQUALLY BEAR THE COST OF THE ARBITRATION. A JUDGMENT UPON THE
AWARD MAY BE ENTERED IN ANY COURT HAVING COMPETENT JURISDICTION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ARTICLE 14, THE
PARTIES PRESERVE, WITHOUT DIMINUTION, CERTAIN REMEDIES THAT EITHER OF THEM MAY EMPLOY
OR EXERCISE FREELY, EITHER ALONE, IN CONJUNCTION WITH, OR DURING A DISPUTE. THE
PARTIES HERETO HAVE THE RIGHT TO PROCEED IN ANY COURT OF PROPER JURISDICTION TO
OBTAIN PROVISIONAL OR ANCILLARY REMEDIES INCLUDING EQUITABLE OR INJUNCTIVE
RELIEF, GARNISHMENT, ATTACHMENT, APPOINTMENT OF A RECEIVER AND FILING AN
INVOLUNTARY BANKRUPTCY PROCEEDING; AND WHEN APPLICABLE, A JUDGMENT BY
CONFESSION OF JUDGMENT. PRESERVATION OF THESE REMEDIES DOES NOT LIMIT THE POWER
OF AN ARBITRATOR TO GRANT SIMILAR REMEDIES THAT MAY BE REQUESTED BY A PARTY IN
A DISPUTE.

 

ARTICLE 15

MISCELLANEOUS

 

15.1                           Amendments;
Waivers. This Agreement and any schedule or exhibit may be amended only by
agreement in writing of the parties. No waiver of any provision nor consent to
any exception to the terms of this Agreement or any agreement contemplated
hereby shall be effective 

 

24

 

unless in writing and signed by
the party or parties to be bound and then only to the specific purpose, extent
and instance so provided.

 

15.2                           Entire
Agreement. This Agreement (together with its schedules and exhibits)
constitutes and contains the entire agreement and final understanding among the
parties concerning the purchase and sale of the Business and all other subject
matters addressed herein or pertaining thereto. This Agreement is intended by
the parties as a final expression of their agreement with respect to such terms
as are included herein and, further, is intended by the parties as a complete
and exclusive statement of the terms of their agreement. This Agreement
supersedes and replaces all prior negotiations and all prior or contemporaneous
representations, promises or agreements, proposed or otherwise, whether written
or oral, concerning the purchase and sale of the Business and all other subject
matters addressed herein or pertaining thereto. Any representation, promise or
agreement not specifically included in this Agreement shall not be binding upon
or enforceable against any party to this Agreement. This is a fully integrated
agreement.

 

15.3                           Applicable
Law. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Delaware, provided that the conflicts
of laws principles of the State of Delaware shall not apply to the extent that
they would operate to apply the laws of another state.

 

15.4                           Headings.
The descriptive headings of the articles and sections of this Agreement are for
convenience only and do not constitute a part of this Agreement.

 

15.5                           Counterparts.
This Agreement and any amendment hereto or any other agreement (or document)
delivered pursuant hereto may be executed in one or more counterparts and by
different parties in separate counterparts. All of such counterparts shall
constitute one and the same agreement (or other document). The parties to this
Agreement may deliver their executed counterparts by facsimile or other
electronic means, provided that original signatures are delivered by U.S. Mail
promptly thereafter.

 

15.6                           Parties
in Interest. This Agreement will be binding upon and inure to the benefit
of each party, and nothing in this Agreement, express or implied, is intended
to confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement is intended to
relieve or discharge the obligation of any third person to any party to this
Agreement.

 

15.7                           Notices.
Any notice or other communication hereunder must be given in writing and either
(a) delivered in person; (b) transmitted by facsimile, provided that any notice
so given is also mailed as provided in clause (c); or (c) mailed, postage
prepaid, as follows:

 

	
  If to Buyer,
  addressed to:

  	
   

  	
  c/o
  PharmaCare Management Services, Inc.

  
	
   

  	
   

  	
  695 George
  Washington Highway

  
	
   

  	
   

  	
  Lincoln, RI
  02865

  
	
   

  	
   

  	
  Attn:
  PharmaCare Specialty Pharmacy

  
	
   

  	
   

  	
  Carmine
  DeNardo

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax: (401)
  335-7433

  

 

25

 

	
  With a
  simultaneous copy to:

  	
   

  	
  Wyrick
  Robbins Yates & Ponton LLP

  
	
   

  	
   

  	
  4101 Lake
  Boone Trail, Suite 300

  
	
   

  	
   

  	
  Raleigh, NC
  27607

  
	
   

  	
   

  	
  Attn: Lisa
  D. Inman

  
	
   

  	
   

  	
  Fax: (919)
  781-4865

  
	
   

  	
   

  	
   

  
	
  If to
  Sellers, addressed to:

  	
   

  	
  Curative
  Health Services, Inc.

  
	
   

  	
   

  	
  61 Spit
  Brook Road

  
	
   

  	
   

  	
  Nashua, NH
  03060

  
	
   

  	
   

  	
  Attn:
  Corporate Counsel

  
	
   

  	
   

  	
  Fax:                                        

  	
   

  
	
   

  	
   

  	
   

  
	
  With a
  simultaneous copy to:

  	
   

  	
  Bryan Cave
  LLP

  
	
   

  	
   

  	
  One
  Metropolitan Square

  
	
   

  	
   

  	
  211 N.
  Broadway, Suite 3600

  
	
   

  	
   

  	
  St. Louis,
  MO 63102

  
	
   

  	
   

  	
  Attn: Mark
  H. Goran

  
	
   

  	
   

  	
  Fax: (314)
  552-8686

  

 

or to such
other address or to such other Person as any party shall have last designated
by such notice to the other parties. Each such notice or other communication
shall be effective (i) if given by mail, three days after such communication is
deposited in the mail with first class postage prepaid, addressed as aforesaid,
(ii) if given by facsimile, when transmitted to the applicable number so
specified in (or pursuant to) this Section 15.7 provided that appropriate
confirmation of receipt is generated by the facsimile and a duplicate copy is
mailed, postage prepaid, or (iii) if given by any other means, when actually
delivered at such address.

 

15.8                           Expenses.
Each party shall pay its own expenses incident to the negotiation, preparation
and performance of this Agreement and the transactions contemplated hereby,
including, but not limited to, the fees, expenses and disbursements of its
respective investment bankers or brokers, accountants and counsel.

 

15.9                           Assignments.
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party without the prior written
consent of the others, except that either party may assign their rights to an
Affiliate thereof or to any entity which acquires substantially all of the
assets of or survives any merger with such party. Nothing contained herein,
express or implied, is intended to confer on any Person other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

 

15.10                     Remedies;
Waiver. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available
under applicable law. No failure on the part of any party to exercise, or delay
in exercising, any right hereunder shall be deemed a waiver thereof, nor shall
any single or partial exercise preclude any further or other exercise of such
or any other right.

 

26

 

15.11                     Further
Assurances. Each party will use its commercially reasonable efforts to
perform and fulfill all obligations on its part to be performed and fulfilled
under this Agreement, to the end that the transactions contemplated by this
Agreement shall be effected substantially in accordance with its terms as soon
as reasonably practicable. The parties shall cooperate with each other in such
actions and in securing requisite Approvals. Each party shall execute and
deliver after the Closing such further certificates, agreements and other
documents and take such other actions as the other parties may reasonably
request to consummate or implement the transactions contemplated hereby or to
evidence such events or matters.

 

15.12                     Representation
by Counsel; Interpretation. Buyer and Sellers acknowledge that each has
been represented by counsel in connection with this Agreement and the
transactions contemplated by this Agreement. Accordingly, any rule of Law or
any legal decision that would require interpretation of any claimed ambiguities
in this Agreement against the party that drafted it has no application and is
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intent of Buyer and Sellers.

 

15.13                     Severability.
If any provision of this Agreement is determined to be invalid, illegal or
unenforceable by any court or Governmental Entity, the remaining provisions of this
Agreement to the extent permitted by law shall remain in full force and effect
provided that the economic and legal substance of the transactions contemplated
are not affected in any manner materially adverse to any party. In the event of
any such determination, the parties agree to negotiate in good faith to modify
this Agreement to fulfill as closely as possible the original intents and
purposes hereof. To the extent permitted by law, the parties hereby to the same
extent waive any provision of law that renders any provision hereof prohibited
or unenforceable in any respect.

 

[The next page is the signature page.]

 

27

 

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

 

	
   

  	
  SELLERS:

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES OF NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Paul F.
  McConnell

  	
   

  	
   

  
	
   

  	
  By:

  	
  Paul F.
  McConnell

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  APEX
  THERAPEUTIC CARE, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Paul F.
  McConnell

  	
   

  	
   

  
	
   

  	
  By:

  	
  Paul F.
  McConnell

  	
   

  	
   

  
	
   

  	
  Its:

  	
  C.E.O.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEDCARE,
  INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Paul F.
  McConnell

  	
   

  	
   

  
	
   

  	
  By:

  	
  Paul F.
  McConnell

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PARENT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Paul F.
  McConnell

  	
   

  	
   

  
	
   

  	
  By:

  	
  Paul F.
  McConnell

  	
   

  	
   

  
	
   

  	
  Its:

  	
  C.E.O. and
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BUYERS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PROCARE
  PHARMACY, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Charles D.
  Phillips

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  D. Phillips

  	
   

  	
   

  
	
   

  	
  Its:

  	
  S.V.P.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PROCARE
  PHARMACY DIRECT, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Charles D.
  Phillips

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  D. Phillips

  	
   

  	
   

  
	
   

  	
  Its:

  	
  S.V.P.

  	
   

  	
   

  

 

 

SCHEDULE 1.1

( Sellers’ Locations)

 

SCHEDULE 2.1(b)

( Licenses and Permits)

 

SCHEDULE 2.1 (c)

(Assumed Contracts and Leases)

 

SCHEDULE 2.1 (d)

(Phone and Fax Numbers)

 

SCHEDULE 2.2 (p)

(Additional Excluded Assets)

 

SCHEDULE 4.2

(Purchase Price Allocation)

 

SCHEDULE 5.5

(Encumbrances)

 

SCHEDULE 5.7

(Third Party Providers and Payors)

 

SCHEDULE 6.3

(Business Financials)

 

SCHEDULE 6.5

(Required consents)

 

SCHEDULE 6.8

(Labor Matters)

 

SCHEDULE 6.10

(Government Payment Programs)

 

SCHEDULE 6.11

(Absence of Certain Changes)

 

SCHEDULE 6.12

(Transactions with Affiliates)

 

SCHEDULE 6.13

(Litigation)

 

SCHEDULE 6.14

(Undisclosed Liabilities)

 

 

SCHEDULE 10.1 (a)

(Seller’s Employees to Whom Buyer May Offer
Employment)Exhibit 10.50

 

NOTE:  Portions of this document marked “***” have
been omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment of the omitted and separately
filed portions.

 

SUPPLY
AGREEMENT

 

THIS SUPPLY AGREEMENT (the “Agreement”) is made and
entered into as of March 10, 2006, (the “Effective Date”) between AVI
BIOPHARMA, INC. (as defined below, “Supplier”), an Oregon corporation, and
COOK GROUP INCORPORATED (as defined below, “Company”), an Indiana corporation.

 

WITNESSETH:

 

WHEREAS, Supplier is establishing manufacturing
facilities to manufacture drugs such as the Drug (as defined below);

 

WHEREAS, Company and Supplier have entered into a
License and Development Agreement of even date herewith with respect to the
Drug (the “License and Development Agreement”);

 

WHEREAS, Company and Supplier have entered into an
Investment Agreement of even date herewith with respect to the Drug (the “Investment
Agreement”);

 

WHEREAS, Supplier and Company wish to enter into this
Agreement regarding Supplier’s supplying the Drug (as defined below) to
Company;

 

AGREEMENTS:

 

NOW THEREFORE, in consideration of the
representations, warranties, covenants and agreements contained herein, and for
other valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties mutually agree as follows:

 

ARTICLE 1.

 

DEFINITIONS

 

1.1.                                                     Specific
Definitions. As used in this Agreement, the following terms shall have the
meanings set forth or as referenced below:

 

“Actual Cost” means the cost of
non-manufacturing activities performed by AVI personnel pursuant to this
Agreement, including direct labor, materials, travel, and allocated overhead
costs.

 

“Affiliate” of a
specified person (natural or juridical) means a person that directly, or

 

 

indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the person specified. “Control” shall mean ownership of more than
50% of the shares of stock entitled to vote for the election of directors in
the case of a corporation, and more than 50% of the voting power in the case of
a business entity other than a corporation.

 

“Agreement” means
this Agreement and all Exhibits and Schedules hereto.

 

“Company” means
Cook Group Incorporated and its Affiliates.

 

“Confidential
Information” means know-how, trade secrets, and unpublished information
disclosed (whether before or during the term of this Agreement) by one of the
parties (the “disclosing party”) to the other party (the “receiving party”) or
generated under this Agreement, excluding information which:

 

(a)                       was
already in the possession of receiving party prior to its receipt from the
disclosing party (provided that the receiving party is able to provide the
disclosing party with reasonable documentary proof thereof and, if received
from a third party, that such information was acquired without any party’s
breach of a confidentiality or non-disclosure obligation to the disclosing
party related to such information);

 

(b)                      is
or becomes part of the public domain by reason of acts not attributable to
the receiving party;

 

(c)                       is
or becomes available to receiving party from a source other than the disclosing
party which source, has rightfully obtained such information and has no
obligation of non-disclosure or confidentiality to the disclosing party with
respect thereto; or

 

(d)                      has
been independently developed by the receiving party without breach of this
Agreement or use of any Confidential Information of the other party.

 

“Drug” has the
meaning given such term in the License and Development Agreement.

 

“Effective Date”
has the meaning set forth in the recitals hereto. 

 

“FDA” means the
United States Food and Drug Administration.

 

“Force Majeure”
means any event or condition, not existing as of the date of this Agreement,
not reasonably foreseeable as of such date and not reasonably within the
control of either party, which prevents in whole or in material part the
performance by one of the parties of its obligations hereunder, such as an act
of government, war or related actions, civil insurrection, act of terrorism,
riot, sabotage, strike, epidemic, fire, flood, windstorm, and similar events.

 

“GMP” means Good
Manufacturing Practices as defined in 21 CFR Parts 210 through 226 and Parts
600 through 680 and any successor provisions thereof that apply to production
of the Drug under this Agreement.

 

“Intellectual Property”
means U.S. and foreign patents and patent applications, trademarks, service
marks and registrations thereof and applications therefor, copyrights and

 

2

 

copyright registrations
and applications, mask works and registrations thereof, know-how, trade
secrets, inventions, discoveries, ideas, technology, data, information,
processes, drawings, designs, licenses, computer programs and software, and
technical information including but not limited to information embodied in
material specifications, processing instructions, equipment specifications,
product specifications, confidential data, electronic files, research
notebooks, invention disclosures, research and development reports and the like
related thereto and all amendments, modifications, and improvements to any of
the foregoing.

 

“Indemnifiable Losses”
has the meaning set forth in Section 7.1. 

 

“Indemnitee” has
the meaning set forth in Section 7.3. 

 

“Indemnitor” has
the meaning set forth in Section 7.3.

 

“Investment Agreement”
has the meaning set forth in the recitals hereto.

 

“License and
Development Agreement” has the meaning set forth in the recitals hereto.

 

“Product Liability
Damages” means any liability, claim or expense, including but not limited
to reasonable attorneys’ fees and medical expenses, arising in whole or in part out
of claims of third parties for personal injury or loss of or damage to property
relating to or arising out of the Products, whether based on strict liability
in tort, negligent manufacture of product, or any other allegation of liability
arising from the design, testing, manufacture, packaging, labeling (including
instructions for use), or sale of the Products.

 

“Product” means
the final formulation or configuration of the Drug with or without a device or
delivery mechanism such as a stent, catheter, or microbubble formulation.

 

“Specifications”
means the specifications and formulations for the Products as agreed to by the
parties. Within sixty (60) days of the Effective Date, the parties will agree
in writing to initial Specifications for each Product to be developed. Thereafter,
Specifications for a particular Product may be amended from time to time
upon mutual agreement of the parties. Specifications specifically developed by
Company or included in any FDA approval of the Drug, but excluding in either
case Supplier Specifications (as defined herein), shall be referred to as “Company
Specifications.”  “Supplier Specifications” shall mean
specifications developed by Supplier and incorporated into the Specifications
without modification by Company.

 

“Supplier” means
AVI BioPharma, Inc. and its Affiliates.

 

“Term” has the
meaning set forth in Section 8.1. 

 

“Warranty Exclusions”
has the meaning set forth in Section 5.1.

 

1.2.                                                     Other
Terms. Other terms may be defined elsewhere in the text of this
Agreement and shall have the meaning indicated throughout this Agreement.

 

3

 

1.3.                                                     Definitional
Provisions.

 

(a)                       The
words “hereof,” “herein,” and “hereunder” and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provisions of this Agreement.

 

(b)                      The
terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa.

 

(c)                       References
to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of
the Exhibits or Schedules attached to or referenced in this Agreement, and
references to an “Article” or a “Section” are, unless otherwise specified, to
one of the Articles or Sections of this Agreement.

 

(d)                      The
term “person” includes any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.

 

ARTICLE 2.

 

SUPPLY

 

2.1.                                                     Supply
of Drug. Commencing upon the closing of transactions contemplated by the
Investment Agreement, Supplier
shall manufacture, or have manufactured, and supply to Company all of Company’s
orders for Drug made under Article 3, in accordance with the
Specifications in effect at the time of order for each Product and with Company’s
schedule for deliveries. In the event of any Drug or material shortages or
temporary or long-term production capacity restraints or Force Majeure events,
Supplier may allocate production capacity among customers, but, in all
events will supply Company on a priority basis over supplying any other
customers.

 

2.2.                                                     Promotion
and Training. Upon a reasonable request by Company and subject to staff and
support availability, Supplier will assist Company in preparing promotional,
marketing and training literature and instructions for the Products, including
any artwork,  will conduct training courses and seminars to educate
medical professionals on the use of Products and their use in connection with
Company’s medical devices and for training its marketing, sales, and
distribution groups, and will provide Company with training related to the sale
of Products. Company shall reimburse Supplier’s Actual Costs in providing all
services and support pursuant to this Section 2.2. Within thirty (30) days
of the end of each calendar quarter in which costs were incurred, Supplier will
send Company an invoice specifying the Actual Cost of services and support
provided in the just-ended quarter and the payment due. Within thirty (30) days
of receiving each such invoice, Company will make a payment to Supplier for the
full amount due.

 

2.3.                                                     Packaging
and Labeling. Supplier shall package and label the Drug in accordance with
packaging and labeling specifications to be mutually agreed upon by Company and
Supplier and approved by the FDA.

 

4

 

2.4.                                                     Compliance
With Laws and Regulations.

 

(a)                       Supplier
shall be responsible for compliance with present and future applicable
statutes, laws, ordinances and regulations of national, federal, state and
local governments now or hereafter in effect materially relating to its
manufacture of the Drug. If required or necessary in connection with sales of
Products by Company, Supplier shall have its manufacturing facilities become
ISO 9001 certified. Without limitation of the foregoing, Supplier represents
and warrants to Company that all Drugs sold and delivered to Company under this
Agreement will have been manufactured, labeled and packaged in accordance with
applicable FDA GMP requirements and, if applicable, Supplier’s ISO 9001
certifications, and that continually during the term of this Agreement no Drugs
delivered by Supplier to Company shall be adulterated or misbranded at the time
of delivery within the meaning of the U.S. Food, Drug and Cosmetic Act and
regulations thereunder or any similar law or regulation. Supplier shall cause
Company’s regulatory personnel to be provided with reasonable access from time
to time to the facilities and records of Supplier for the purpose of confirming
Supplier’s compliance with any applicable FDA GMP and all other applicable
requirements noted in this Article 2. Supplier agrees to provide
Company with reasonable prior written notice of any FDA inspection of Supplier’s
facilities or records prior to such FDA inspection, or if such prior written
notice is not feasible, then within three business days thereafter. Supplier
also agrees to provide Company with written notice of its receipt of any claim
by the FDA or other governmental agency of any actual or alleged violation by
Supplier of any GMP or other applicable requirements as soon as practicable
following receipt of such notice (but in no event more than 5 business days
thereafter). Company shall have the right, at any time and from time-to-time
upon not less than 72 hours prior notice to the Supplier, to inspect Supplier’s
manufacturing facilities in order to examine all phases of the manufacturing
process and inspect or audit any or all of the Supplier’s data and records
related thereto and the Products compliance with the terms and conditions
hereunder or with respect to any applicable law, rule or regulation. In
the event Supplier uses a sub-contractor or third party to perform any part of
the manufacturing, Supplier shall obtain the agreement of such sub-contractor
or third party that Company shall have similar inspection rights.

 

(b)                      Company and
Supplier (except where Supplier has the responsibility under Section 2.4(a) or
elsewhere herein) shall comply with all applicable laws, rules, regulations,
codes, and standards of all federal, state, local and municipal government
agencies which affect their respective performance and activities under this
Agreement. Notwithstanding anything contained herein, Company shall be
responsible for compliance with present and future applicable statutes, laws,
ordinances and regulations of national, federal, state and local governments
now or hereafter in effect including applicable import and export laws
materially relating to its purchase, distribution or sale of the Products.

 

2.5.                                                     Exclusivity.
During the term of this Agreement, or if longer, the term of the License and
Development Agreement, (a) Supplier shall not promote, make, have made,
market or sell the Drug for use in the Field (as defined in the License and
Development Agreement) to any person or entity other than Company, and (b) Company
shall purchase 100% of its requirements for the Drug for use in the Field from
Supplier. Prior to any sale, transfer or other disposition to any third party
of Drug for use outside the Field, Supplier shall obtain the agreement of such
third party that it will not use, promote, market or sell the Drug in the Field
or resell the Drug for use in the Field.

 

5

 

2.6.                                                     Complaints
and Adverse Events. Each party agrees to inform the other party
promptly (but in no event no later than forty-eight (48) hours after becoming
aware of same) of any information concerning any complaint involving the
Products or that might be applicable to the Products or adverse drug experience
(as defined in 21 C.F.R. § 314.80), injury, toxicity, or sensitivity
reaction associated with the use of the Products or that might be applicable to
the Products, provided that:

 

(a)                       if the
adverse drug experience is serious, as defined in 21 C.F.R. § 314.80
(including any adverse drug reaction that is fatal or life-threatening, is
permanently disabling, requires inpatient hospitalization, or is a congenital
anomaly, cancer or overdose), then each party shall notify the other party
within twenty-four (24) hours;

 

(b)                      all
notifications to Company shall be by facsimile and on Company’s designated
adverse event forms; and

 

(c)                       all
notifications to Supplier shall be by facsimile and on Supplier’s designated
adverse event forms.

 

2.7.                                                     Records
and Recall. Company shall maintain complete and accurate records of all
Products sold by Company in sufficient detail to enable Supplier to conduct an
effective recall of Drugs purchased by Company under this Agreement if Supplier
determines that such a recall is required or otherwise necessary or appropriate.
In the event of a recall of any of the Drugs by Supplier, Company will
cooperate with and assist Supplier in effecting such recall, including promptly
contacting any purchasers that Supplier reasonably desires to be contacted and
promptly communicating to such purchasers the information or instructions
Supplier reasonably desires to be transmitted relating to such recall. Company
shall be responsible for all costs of effecting such recall of Products,
including any shipping costs related to returning recalled Drugs to Supplier
and replacing such recalled Drugs with new Drugs, except, such costs shall
instead be paid by Supplier (directly or through reimbursement of Company for
costs reasonably incurred by Company) where the recall relates to a matter for
which Supplier would be required to indemnify Company under Article 7
of this Agreement. Notwithstanding the foregoing, Company shall control any
recall of any products sold by Company to third parties that may incorporate
the Drug.

 

2.8.                                                     Certain
Responsibilities. Notwithstanding anything contained herein, Supplier shall
not be responsible for any loss or damage,
including Products Liability Damages, from the use or performance of the Drugs
manufactured under this Agreement where (a) such use or performance did
not result from a breach of this Agreement by Supplier, including, without
limitation, Supplier’s warranties, (b) the Drugs complied with the
description and form described in any documents used for all governmental
approvals, applications, submissions, and approvals filed by Company with the
FDA, or given to Company by the FDA, and (c) the Drugs complied with the
packaging, shipping, and labeling for the Drugs. Company further agrees that no
Products will be released for public use or consumption until all requisite
governmental approvals therefore have been obtained for such use and
consumption.

 

6

 

2.9.                                                     Supply.
Supplier agrees:  (i) to have in
place prior to the first regulatory approval of the commercial sale of the
Product an agreed upon reserve supply of the Drug to support the Product and
maintain during the term of this Agreement a commercially reasonable supply for
the Drug and (ii) to produce commercially reasonable quantities of the
Drug in compliance with FDA GMP requirements and other regulatory requirements.
The Company agrees to pay for the agreed upon reserve supply of Drug prior to
the first regulatory approval. Supplier agrees to store in a safe and secure
off-site location a reserve supply of the Drug and Supplier agrees to exercise
commercially reasonable efforts to replenish such supply if it is used. The
Drugs shall be stored in compliance with the Specifications and any applicable
law or regulation.

 

ARTICLE 3.

 

ORDERS
AND DELIVERY

 

3.1.                                                     Purchase
Orders. To assist the Supplier in determining the reserve supply of Drug to
be maintained, the Company will make its commercially reasonable efforts to
forecast its requirements for Drugs six (6) months in advance of ordering
Drugs and updating a rolling forecast at three (3) month intervals. Such
rolling forecasts by Company shall be used for purposes of facilitating Company’s
clinical, sales and marketing plans and meeting the lead times required by
certain of Supplier’s suppliers, but they are not legally binding on Company in
any manner. Company shall submit purchase orders for the Drugs to Supplier in
writing, whether by mail, facsimile, email or otherwise, which shall, at a
minimum, set forth the product numbers, quantities, delivery dates, and
shipping instructions and shipping addresses for all Drugs ordered. Each
purchase order shall constitute a contract between Company and Supplier for the
sale of the Drugs ordered and shall be subject to and governed by the terms of
this Agreement. The terms and conditions of this Agreement shall so govern and
supersede any additional or contrary terms set forth in Company’s purchase
order or any Supplier or Company acceptance, confirmation, invoice or other
document unless duly signed by an officer of Company and an executive officer
of Supplier and expressly stating and identifying which specific additional or
contrary terms shall supersede the terms and conditions of this Agreement. With
respect to all purchase orders submitted at least sixty (60) days in advance of
the earliest scheduled delivery date set forth in such order, Supplier shall
fill such orders in accordance with the scheduled delivery dates set forth
therein, and with respect to all other purchase orders, Supplier shall exercise
commercially reasonable efforts to fill such orders in accordance with the
scheduled delivery dates set forth therein.

 

3.2.                                                     Modification
of Orders. No purchase order shall be modified or canceled except upon the
mutual agreement of the parties; provided, however, that Company may cancel
a purchase order based upon actions of a regulatory authority and Company may make
changes to a purchase order in quantities that do not exceed ten (10) percent
of such outstanding order, provided that Company will reimburse Supplier for
costs incurred on any such cancelled orders to the extent Supplier is not able,
after reasonable effort, to recover its costs in connection therewith. Mutually
agreed change orders shall be subject to all provisions of this Agreement,
whether or not the change order so states. Notwithstanding the foregoing, any
purchase order may be cancelled by Company, without any liability to

 

7

 

Company, as to any Drug that is not delivered within sixty (60) days
after the delivery date requested by Company, and any such cancellation shall
not limit or affect any contract remedies available to Company with respect
thereto. Any such cancellation by Company must be by written notice to Supplier
given within sixty-five (65) days after the delivery date requested by Company.

 

3.3.                                                     Delivery
Terms. All deliveries of Drugs shall be F.O.B. Supplier’s manufacturing
facility. Supplier shall have no further responsibility for risk of damage to
or loss or delay of Drugs upon delivery by Supplier at the F.O.B. location to
the common carrier specified by Company or, in the event that no carrier shall
have been specified by Company on or before the date fifteen (15) days prior to
the requested shipment date, a common carrier reasonably selected by Supplier. Company
shall be responsible for all shipping, handling, and insurance costs.

 

3.4.                                                     Product
Changes. Supplier shall not, without Company’s prior written consent,
materially alter the Specifications for Drugs. Supplier shall not, without
Company’s prior written consent, modify the manufacturing processes, methods or
procedures for the Drug in any manner that increases the manufacturing costs. Such
consent will not be unreasonably withheld by Company if specifications,
processes, methods, or procedures must be changed based upon demands by a
regulatory authority or changes in applicable law.

 

ARTICLE 4.

 

PRICES
AND PAYMENTS

 

4.1.                                                     Prices.
Unless and until otherwise mutually agreed by the parties in writing, the
purchase price for Drugs manufactured by Supplier for Company under this
Agreement shall be determined under Exhibit A.

 

4.2.                                                     Payment
Terms. Payments made by Company for Drugs purchased hereunder shall be due
and payable in full within thirty (30) days after the date the invoice is
received by Company.

 

ARTICLE 5.

 

WARRANTY
AND SERVICE

 

5.1.                                                     Warranty.

 

(a)                       Supplier
represents and warrants to Company that all Drugs sold under this Agreement
will have been manufactured, labeled and packaged in accordance with all
applicable laws and regulations, including (as applicable) FDA GMP requirements
and, if applicable, ISO 9001 certifications, or successor requirements, and all
other applicable manufacturing requirements, as well as the Specifications. Supplier
represents, warrants and covenants that it will have, or will contract for, the
facilities, equipment, licenses, permits and personnel to manufacture and
supply the Drugs in accordance with the current forecasted requirements of
Company.

 

8

 

(b)                      Supplier
represents and warrants to Company that Drugs shall, when delivered to Company,
meet the Specifications and warranties set forth herein and shall be free from
defects in materials and workmanship. Company shall invoice Supplier for, and
Supplier shall promptly pay, all shipping, transportation, insurance and other
expenses actually incurred in replacing defective Drugs where either the defect
arises from a breach of any representation or warranty of Supplier herein or
from a matter for which Supplier would be required to indemnify Company
hereunder. Supplier will, at Company’s option, replace or credit Company’s
account for any Drug that Company reasonably determines, in accordance with Section 5.3,
was defective at the time of shipment to Company or that does not conform to
the express warranties of Supplier herein; provided, however, that Supplier
shall have no obligation under this warranty to make replacements or grant
credits necessitated in whole or in part by accidents; failure to maintain
in accordance with any transportation, storage, handling, or maintenance
instructions supplied by Supplier; damage due to Company Specifications where
Supplier followed such specifications and the damage was due to defects in such
Company Specifications; where Company is specifically liable for such damages
or defect under the terms of Article 7; damage by acts of nature,
vandalism, burglary neglect or misuse; or other fault or negligence of Company
or (except for any strict liability of Supplier) the customer or user
(collectively, “Warranty Exclusions”).

 

5.2.                                                     Limited
Warranty. THE EXPRESS WARRANTIES SET FORTH ABOVE ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY SPECIFICALLY DISCLAIMED, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE.

 

5.3.                                                     Inspection
of Drug. In the event of any shortage, damage or discrepancy in or to a
shipment of Drug or in the event any shipment of Drug fails to comply with the
then current Specifications (excluding Warranty Exclusions) or Supplier
warranties for the Drugs, Company shall report the same to Supplier within
thirty (30) days after its discovery and in no event more than three (3) months
after receipt of the Drug after delivery thereof to Company and, if requested
in writing by Supplier, furnish such written evidence or other documentation
and such samples of the Drug deemed to be nonconforming as Supplier reasonably may deem
appropriate in connection therewith. If Supplier agrees that the shipment of
Drug is nonconforming, or if the Drug is not delivered within the time periods
required, Company may reject the Drugs and return the Drugs to Supplier,
at Supplier’s expense (including handling, insurance and shipping charges),
unless the Products’ defect results from matters that are Company’s
responsibility under Article 7 or constitute Warranty Exclusions. Should
the parties disagree as to whether or not a Drug shipment meets Specifications,
a sample of such shipment will be sent for analysis to an independent
laboratory mutually agreeable to the parties. If the independent laboratory
determines that the Drug shipment meets Specifications, Company will accept the
Drug shipment, pay Supplier pursuant to the payment terms herein, and shall pay
the cost of testing by the independent laboratory. If the independent
laboratory determines the Drug shipment to be out of Specification, Supplier
will replace the nonconforming Drug shipment at its cost as soon as practicable
and shall pay the cost of testing by the independent laboratory.  Following acceptance of a Drug shipment by
Company, the sole remedies of Company with respect to damage to or defects in
the Drugs shall be those set forth in Sections 5.1 and 7.1.

 

9

 

Company shall not be obligated to conduct any tests or inspections of
the Drugs prior to or after its acceptance. Supplier shall promptly notify
Company in writing if it has reason to believe that any delivery of the Drug
fails to meet the Specifications, fails to satisfy the representations and
warranties made under this Article 5, or is otherwise not free from
defects in material and workmanship.

 

ARTICLE 6.

 

CERTAIN
REPRESENTATIONS AND WARRANTIES

 

6.1.                                                     Representations
and Warranties.

 

(a)                   Supplier
represents and warrants to Company that the execution and delivery by Supplier
of this Agreement and the performance by Supplier of its obligations hereunder
have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or Bylaws of Supplier, as amended, or
any provision of any indenture, agreement or other instrument to which Supplier
or any of its properties or assets is bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge, restriction, claim or encumbrance
of any nature whatsoever upon any of the properties or assets of Supplier. This
Agreement has been duly executed and delivered by Supplier and constitutes the
legal, valid and binding obligation of Supplier, enforceable in accordance with
its terms, subject, as to the enforcement of remedies, to the discretion of the
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the rights of
creditors generally.

 

(b)                  Company
represents and warrants to Supplier that the execution and delivery by Company
of this Agreement and the performance by Company of its obligations hereunder
have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or Bylaws of Company, as amended, or
any provision of any indenture, agreement or other instrument to which Company
or any of its properties or assets is bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge, restriction, claim or encumbrance
of any nature whatsoever upon any of the properties or assets of Company. This
Agreement has been duly executed and delivered by Company and constitutes the
legal, valid and binding obligation of Company, enforceable in accordance with
its terms, subject, as to the enforcement of remedies, to the discretion of the
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the rights of
creditors generally.

 

10

 

ARTICLE 7.

 

INDEMNIFICATION

7.1.                                                     Supplier’s
Liability.

 

(a)                   Supplier shall
indemnify, defend and hold harmless Company and its subsidiaries, and their
respective officers, directors, employees, shareholders and distributors from
and against and in respect of any and all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, interest and penalties,
costs and expenses (including, without limitation, reasonable legal fees and
disbursements incurred in connection therewith and in seeking indemnification
therefor, and any amounts or expenses required to be paid or incurred in
connection with any action, suit, proceeding, claim, appeal, demand, assessment
or judgment) finally awarded (“Indemnifiable Losses”), resulting from, arising
out of, or imposed upon or incurred by any person to be indemnified hereunder
by reason of:  (i) any breach of representation, warranty or
agreement on the part of Supplier under this Agreement (collectively, “Supplier
Breach”); (ii) Product Liability Damages with respect to the Drugs arising
from or related to a Supplier Breach; (iii) any charges of patent or other
intellectual property infringement due to the manufacture of the Drugs, the sale
of the Drugs for use in the Field (as defined in the License and Development
Agreement) or the formulation of the Drug, except to the extent such
formulation is required specifically for the Company Specifications, and such
infringement would have been avoided by compliance with Supplier Specifications
(which indemnity shall be in addition to, and not in lieu of, Supplier’s
indemnity made in the License and Development Agreement), or (iv) other
negligence or intentional misconduct of Supplier; provided that in no event
shall Supplier be liable for matters for which Company is responsible under Section 7.2
below or for punitive or exemplary damages.

 

(b)                  During the term
of this Agreement, Supplier shall maintain, at its expense, a policy of
comprehensive general liability insurance sufficient to honor the indemnity
made herein, with products liability endorsement, but in no event less than
Seven Million Five Hundred Thousand U.S. Dollars ($7,500,000) in the aggregate
with a maximum deductible per occurrence of not more than One Million U.S.
Dollars ($1,000,000) per occurrence and in the annual aggregate. Said policy
shall name Company and its Affiliates as additional beneficiaries. Supplier
shall furnish Company with a certificate of insurance evidencing such coverage
within thirty (30) days of the execution of this Agreement, which certificate
shall provide for not less than thirty (30) days notice to Company prior to
material change in coverage or policy cancellation.

 

7.2.                                                     Company’s
Liability. Company shall indemnify, defend and hold harmless Supplier and
its subsidiaries and their respective officers, directors, employees,
shareholders and suppliers from and against and in respect of any and all
Indemnifiable Losses resulting from, arising out of, or imposed upon or
incurred by any person to be indemnified hereunder by reason of: (a) any
breach of representation, warranty or agreement on the part of Company
under this Agreement; (b) Product Liability Damages with respect to the
Products other than those arising from or related to a Supplier Breach;  (c) any
charges of patent or other intellectual property infringement that does not
relate to a claim described in

 

11

 

Section 7.1(a)(iii) and
involves the marketing, distribution and sale of the Product by Company; or (d) 
negligent handling by Company of the Drugs or changes, additions or
modifications to the Drugs by Company (other than changes, additions or
modifications made to the Products by Company in connection with or related to
the incorporation of the Drugs into or onto, or the utilization of the Drugs in
connection with, a medical device, such as a balloon, catheter or stent), or (e) other
negligent or intentional misconduct of Company; provided that in no event shall
Company be liable for matters for which Supplier is responsible under Section 7.1
above or under the License and Development Agreement, or for punitive or
exemplary damages.

 

7.3.                                                     Procedure.
If a claim by a third party is made and a party (the “Indemnitee”) intends to
claim indemnification under this Article 7, the Indemnitee shall
promptly notify the other party (the “Indemnitor”) in writing of any claim in
respect of which the Indemnitee or any of its subsidiaries, directors,
officers, employees, shareholders, suppliers or distributors intends to claim
such indemnification. If the Indemnitor accepts liability for indemnifying
Indemnitee hereunder, Indemnitor shall have sole control of the defense and/or
settlement thereof; provided that the Indemnitee may participate in any
such proceeding with counsel of its choice at its own expense. The indemnity
agreement in this Article 7 shall not apply to amounts paid in
settlement of any Indemnifiable Losses if such settlement is effected without
the consent of the Indemnitor, which consent shall not be withheld unreasonably.
The failure to deliver written notice to the Indemnitor within a reasonable
time after the commencement of any such action, if adversely prejudicial to its
ability to defend such action, shall relieve such Indemnitor of any liability
to the Indemnitee under this Article 7 but the omission to so
deliver written notice to the Indemnitor shall not relieve the Indemnitor of
any liability that it may otherwise have to any Indemnitee other than
under this Article 7. If the Indemnitor fails to provide defense of
the claim, and diligently defend or settle the same after receipt of notice
from Indemnitee of, and a reasonable opportunity to cure, such failure, the
Indemnitee may defend or settle the claim without prejudice to its rights
to indemnification hereunder, provided that the Indemnitee does so diligently
and in good faith and further does not enter into any settlement or agree to
any stipulation that would adversely affect the rights of the Indemnitor or
impose any additional obligation on the Indemnitor without the Indemnitor’s
prior written consent (which consent will not be unreasonably withheld). The
Indemnitee under this Article 7, its employees and agents, shall
cooperate fully with the Indemnitor and its legal representatives and provide
full information in the investigation of any Indemnifiable Losses covered by
this indemnification.

 

ARTICLE 8.

TERM
AND TERMINATION

 

8.1.                                                     Term.
This Agreement shall take effect as of the date hereof and shall continue in
force until the earlier of (a) the date on which this Agreement is
terminated pursuant to Section 8.2, or (b) the date of termination of
the License and Development Agreement (the “Term”). Nothing contained in this
Agreement will be interpreted as

 

12

 

requiring either party to renew or extend this Agreement beyond the
initial term or any renewal term hereof.

 

8.2.                                                     Termination.
Notwithstanding the provisions of Section 8.1 above, this Agreement
may be terminated in accordance with the following provisions:

 

(a)                   A party may terminate
this Agreement by giving notice in writing to the other party if the other
party is in material breach of any representation, warranty or covenant of this
Agreement and, except as otherwise provided herein, shall have failed to cure
such breach within thirty (30) days after receipt of written notice thereof
from the first party;

 

(b)                  Either party may terminate
this Agreement at any time by giving notice in writing to the other party,
which notice shall be effective upon dispatch, if the other party (i) becomes
insolvent; (ii) commences any action or proceeding under any bankruptcy or
insolvency law for the reorganization, arrangement, composition or similar relief,
(iii) has commenced against it any action or proceeding under any
bankruptcy or insolvency law, or (iv) makes an assignment for the benefit
of creditors, goes into liquidation or receivership or otherwise loses legal
control of its business; or

 

(c)                   Company may terminate
this Agreement upon sixty (60) days prior written notice to Supplier if
Supplier has been in material breach of any of the representations, warranties
or covenants contained herein on three or more occasions within any three
hundred sixty (360) day period. In order to exercise such termination right,
Company must provide Supplier with written notice of such termination within
sixty (60) days after the end of any applicable three hundred sixty (360) day
period.

 

(d)                  Company may terminate
this Agreement upon sixty (60) days prior written notice to Supplier if
Supplier is unable to produce sufficient quantities of Drug to fulfill Company’s
purchase orders on a timely basis.

 

(e)                   Supplier shall
have the right to terminate this Agreement upon sixty (60) days prior written
notice if, following an assignment of Company’s rights under the License and
Development Agreement pursuant to Section 10.13(b)(iv) or (v) thereof,
the permitted assignee terminates its development efforts under the License and
Development Agreement or it fails to meet the Performance Standards contained
in Exhibit C of the License and Development Agreement.

 

8.3.                                                     Rights
and Obligations on Termination. In the event of termination of this
Agreement for any reason, the parties shall have the following rights and
obligations:

 

(a)                   Termination of
this Agreement shall not release either party from the obligation to make
payment of all amounts previously due and payable.

 

(b)                  The terminating
party shall have the right, at its option, to cancel any or all purchase orders
that provide for delivery after the effective date of termination.

 

(c)                   Nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination.

 

13

 

(d)                  The parties will
return and deliver to the other party all of such party’s materials and
documents developed during the performance of this Agreement provided that a
party may retain one copy of such materials and documents for legal
purposes.

 

(e)                   The parties’
obligations pursuant to Articles 5, 6, 7 and 8 and Sections
2.5, 2.6 and 2.7 hereof and any and all other terms and
provisions hereof intended to be observed and performed by the parties after
the termination hereof, shall survive termination of this Agreement. All other
provisions of this Agreement shall terminate upon termination of this
Agreement.

 

ARTICLE 9.

 

FORCE
MAJEURE

 

9.1.                                                     Notice
of Force Majeure. Upon giving notice to the other party, a party affected
by an event of Force Majeure shall be released without any liability on its part from
the performance of its obligations under this Agreement, except for the
obligation to pay any amounts due and owing hereunder, but only to the extent
and only for the period that its performance of such obligations is prevented
by the event of Force Majeure.

 

9.2.                                                     Suspension
of Performance. During the period that the performance by one of the
parties of its obligations under this Agreement has been suspended by reason of
an event of Force Majeure, the other party may likewise suspend the
performance of all or part of its obligations hereunder (except for the
obligation to pay any amounts due and owing hereunder) to the extent that such
suspension is commercially reasonable.

 

ARTICLE 10.

 

MISCELLANEOUS

 

10.1.                                               Nondisclosure.
The parties agree not to disclose or use (except as permitted or required for
performance by the party receiving such Confidential Information of its rights
or duties hereunder or under other agreement between the parties or their
Affiliates) any Confidential Information of the other party obtained during the
term of this Agreement until the expiration of any and all Patents. Each party
further agrees to take appropriate measures to prevent any such prohibited
disclosure of Confidential Information by its present and future employees,
officers, agents, subsidiaries, or consultants during such period.

 

10.2.                                               Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and the successors or assigns of the parties hereto;
provided, that (a) the rights and obligations of Supplier herein may not
be assigned except to any person who succeeds to substantially all of the
assets and business of Supplier to which this Agreement relates, and (b) the
rights and obligations of Company herein may not be assigned except that
Company may assign any or all of its rights, interests and obligations
hereunder without Supplier’s consent (i) to Company’s direct or indirect
parent, (ii) to any 

 

14

 

subsidiary of
Company at least 50% of the voting power of which is owned, directly or
indirectly, by Company or its Affiliates, (iii) to a wholly-owned, direct
or indirect subsidiary of Company, (iv) to an entity that acquires the
entire equity interest or substantially all of the assets of Company or Company’s
parent, or (v) to any person who acquires the product line to which this
Agreement pertains; provided that any assignee under this clause (b) shall
expressly agree to be bound by all of the provisions of this Agreement,
including Section 4.3, and (c) the Company may collaterally
assign its rights under this Agreement to parties providing financing in
connection with the transactions contemplated hereby. The Supplier may enter
into agreements with third parties to provide for performance by third parties
of any or all of its obligations to manufacture and supply the Drugs; provided
that such agreement is consistent with this Agreement in all material respects.
Notwithstanding the provisions of any such agreement, the Supplier shall remain
obligated and liable to Company for the performance of its obligations and
duties hereunder.

 

10.3.                                               Complete
Agreement. This Agreement and the License and Development Agreement, and
the Schedules and Exhibits hereto and thereto, constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersede all prior agreements whether written or oral relating hereto.

 

10.4.                                               Governing
Law. The formation, legality, validity, enforceability and interpretation
of this Agreement shall be governed by the laws of the State of Oregon, without
giving effect to the principles of conflict of laws.

 

10.5.                                               Waiver,
Discharge, Amendment, Etc. The failure of any party hereto to enforce at
any time any of the provisions of this Agreement shall not, absent an express
written waiver signed by the party making such waiver specifying the provision
being waived, be construed to be a waiver of any such provision, nor in any way
to affect the validity of this Agreement or any part thereof or the right
of the party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to be a waiver of any other or
subsequent breach. Any amendment to this Agreement shall be in writing and
signed by the parties hereto.

 

10.6.                                               Notices.
All notices or other communications to a party required or permitted hereunder
shall be in writing and shall be delivered personally or by facsimile (receipt
confirmed electronically) to such party (or, in the case of an entity, to an
executive officer of such party) or shall be sent by a reputable express
delivery service or by certified mail, postage prepaid with return receipt
requested, addressed as follows:

 

	
  If to Company, to:

  	
   

  	
  Cook Group Incorporated

  
	
   

  	
   

  	
  750 Daniels Way

  
	
   

  	
   

  	
  Bloomington, Indiana
  47204

  
	
   

  	
   

  	
  Attn: Pete Yonkman

  
	
   

  	
   

  	
  Facsimile:
  (812)-339-5369

  

 

15

 

	
  with a copy to:

  	
   

  	
  Ice Miller LLP

  
	
   

  	
   

  	
  One American Square, Suite 3100

  
	
   

  	
   

  	
  Indianapolis, Indiana
  46282

  
	
   

  	
   

  	
  Attn: Stephen J.
  Hackman

  
	
   

  	
   

  	
  Facsimile: (317)
  592-4666

  
	
   

  	
   

  	
   

  
	
  If to Supplier, to:

  	
   

  	
  AVI BioPharma, Inc.

  
	
   

  	
   

  	
  One SW Columbia, Suite 1105

  
	
   

  	
   

  	
  Portland OR 97258

  
	
   

  	
   

  	
  Attn: Alan Timmins

  
	
   

  	
   

  	
  Facsimile: (503)
  227-0554

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Davis Wright Tremaine
  LLP

  
	
   

  	
   

  	
  1300 SW Fifth Avenue, Suite 2300

  
	
   

  	
   

  	
  Portland OR 97201-5682

  
	
   

  	
   

  	
  Attn: Michael Phillips

  
	
   

  	
   

  	
  Facsimile: (503)
  778-5299

  

 

Any party may change the above–specified recipient and/or mailing
address by notice to all other parties given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by facsimile) or on the day shown on the
return receipt (if delivered by mail or delivery service).

 

10.7.                                             Expenses.
Except as expressly provided herein, Supplier and Company shall each pay their
own expenses incident to this Agreement and the preparation for, and
consummation of, the transactions provided for herein.

 

10.8.                                             Titles
and Headings; Construction. The titles and headings to the Articles and
Sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of
this Agreement. This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.

 

10.9.                                             Severability.
If any provision of this Agreement is held invalid, illegal or unenforceable,
such provision shall be enforced to the maximum extent permissible and the
remaining provisions shall nonetheless be enforceable according to their terms.

 

10.10.                                         Relationship.
This Agreement does not make either party the employee, agent or legal
representative of the other for any purpose whatsoever. Neither party is
granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. In fulfilling its obligations pursuant to this Agreement, each party
shall be acting as an independent contractor.

 

10.11.                                         Benefit.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors or assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.

 

16

 

10.12.                                         Survival.
All of the representations, warranties, and covenants made in this Agreement,
and all terms and provisions hereof intended to be observed and performed by
the parties after the termination hereof, shall survive such termination and
continue thereafter in full force and effect, subject to applicable statutes of
limitations.

 

10.13.                                         Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed as original and all of which together shall constitute
one instrument.

 

10.14.                                         Execution
of Further Documents. Each party agrees to execute and deliver without
further consideration any further applications, licenses, assignments or other
documents, and to perform such other lawful acts as the other party may reasonably
require to fully secure and/or evidence the rights or interests herein.

 

10.15.                                         Public
Announcement. In the event any party proposes to issue any press release or
public announcement concerning any provisions of this Agreement or the
transactions contemplated hereby, such party shall so advise the other parties
hereto, and the parties shall thereafter use their best efforts to cause a
mutually agreeable release or announcement to be issued. Neither party will
publicly disclose or divulge any provisions of this Agreement nor the
transactions contemplated hereby without the other party’s written consent,
except as may be required by applicable law or stock exchange regulation,
and except for communications to such party’s employees or customers or
investors or prospective investors (subject to appropriate confidentiality
obligations); provided that, prior to disclosure of any provision of this
Agreement that either party considers particularly sensitive or confidential to
any governmental agency or stock exchange, the parties shall cooperate to seek
confidential treatment or other applicable limitations on the public
availability of such information. In particular, prior to such disclosure, each
party shall use its best efforts to redact the payment terms specified herein
and each party shall provide the other the opportunity to redact other
information and seek confidential treatment of any such disclosure.

 

[SIGNATURE PAGE FOLLOWS]

 

17

 

IN WITNESS WHEREOF, each of the parties has caused
this Supply Agreement to be executed in the manner appropriate to each, as of
the date first above written.

 

	
  COOK GROUP INCORPORATED

  	
  AVI BIOPHARMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Printed:

  	
   

  	
   

  	
  Printed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
											

 

18

 

EXHIBIT A

 

Pricing

 

For the first three grams of the Drug purchased by
Company hereunder, the price shall be:  ***
per mg.

 

For all subsequent purchases of the Drug hereunder,
the price shall be:  *** per mg.

 

As a reference point:

 

•                  It is anticipated that the weight of
drug on a stent platform will be approximately *** mg;

 

•                  For the AVAIL clinical trial, the
weight of drug used for catheter delivery was *** mg;

 

•                  For AVI’s ongoing APRAISAL trial in
Germany for systemic delivery, the weight of drug used in the microbubble
formulation is *** mg.

 

19

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