Document:

EX-10.6 SECURITY AGREEMENT DATED JULY 27, 2006

 

 Exhibit
10.6

SECURITY AGREEMENT

             THIS SECURITY AGREEMENT (this “Agreement”), made on the 27th day of July,
2006, by Rainier Home Health Care Pharmacy, Inc., a Washington corporation, having its chief
executive office at 1600 South Lane, Seattle, WA 98144 (Organizational I.D. No. 600 635 804)
(“Rainier”), Precision HealthCare, Inc., a Tennessee corporation, having its chief
executive office at 441 Donelson Pike, Suite 395, Nashville, TN 37214 (Organizational I.D. No.
0384185) (“Precision”), Long Term Rx, Inc., an Indiana corporation, having its chief
executive office at 540 N. Memorial, New Castle, IN 47362 (Organizational I.D. No. 1996010564)
(“Long Term Rx”), Home Med Channel, Inc., an Indiana corporation having its chief executive
office at 10689 North Pennsylvania Street, Indianapolis, Indiana 46280 (Organizational I.D. No.
1996011223) (“Home Med”), Holland Compounding Pharmacy, Inc., a Washington corporation
having its chief executive office at 810 Metcalf, Sedro-Woolley, Washington 98284 (Organizational
I.D. No. 602 536 908) (“Holland CP”), and Holland Drug Stores, Inc., a Washington
corporation, having its chief executive office at 810 Metcalf, Sedro-Woolley, Washington 98284
(Organizational I.D. No. 602 531 315) (“Holland,” and collectively with Rainier, Precision, Long
Term Rx, Home Med, and Holland CP, “Guarantors”) in favor of Michael G. Browning
(“Secured Party”).

WITNESSETH THAT:

             WHEREAS, Guarantors have executed a Guaranty dated as of the date hereof (the
“Guaranty”) in favor of Secured Party to secure the obligations of Standard Management
Corporation (“Borrower”) under a Secured Promissory Note of even date herewith in the
original principal amount of $2,837,087.67 (the “Note”) and under the Fee Letter (as
defined in the Guaranty); and

             WHEREAS, as security for the satisfaction and payment of the Note and the obligations under
the Fee Letter and to secure their obligations under the Guaranty, Guarantors have agreed to grant
Secured Party a security interest in the Collateral (as hereinafter defined), on the terms and
subject to the conditions set forth in this Agreement;

             NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained
and for other good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Guarantors hereby agree as follows:

              1. Grant of Security Interest. Each Guarantor hereby grants to Secured Party a
continuing security interest in all of the following tangible and intangible personal property of
such Guarantor, whether now owned or existing or hereafter acquired or arising, and wherever
located (collectively, the “Collateral”):

          (a) all accounts, contract rights, general intangibles (including without limitation,
Guarantor’s right, title and interest in trademarks, trade names, servicemarks and symbols,
patents and/or patent applications now or hereafter used), investment property, instruments,
chattel paper, invoices, contracts, claims, agreements, commercial tort claims, electronic
chattel paper, letter-of-credit rights, payment intangibles, books and records, securities,
whether constituting uncertificated or certificated securities, policies or certificates of
insurance (including unearned premiums thereon), cash funds, deposits, deposit accounts and
other rights and evidence of rights to cash, now or hereafter created, documents, documents
of title and choses in action;

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           (b) all inventory, equipment, goods, machinery, motor vehicles, and all other goods and
personal property; and

          (c) all additions, accessions and accessories to, substitutions for, replacements,
products and cash and non-cash proceeds of, any or all of the foregoing, including without
limitation, insurance proceeds.

              2. Secured Indebtedness. Guarantors pledge and grant a security interest in the
Collateral to Secured Party, according to the terms of this Agreement, to secure the following
(collectively, the “Liabilities”):

          (a) the due and punctual payment by Borrower of the principal of and interest
(including interest accruing under the terms of the Note during the pendency of any
bankruptcy, insolvency, receivership, or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Note, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise;

          (b) the due and punctual payment and performance by Borrower of its obligations under
the Fee Letter;

          (c) the full and prompt payment and performance of all of the provisions, agreements,
covenants, and obligations herein contained and contained in the Guaranty;

          (d) any and all additional advances made by Secured Party to protect or preserve the
Collateral or the lien created on such property, or for taxes, assessments or insurance
premiums as hereinafter provided, or for performance of any of Guarantors’ obligations
hereunder or Borrower’s obligations under the Note or the Fee Letter or for any other
purpose provided herein or in the Note (whether or not the original Guarantor remains the
owner of the Collateral at the time of such advances and it being understood that Secured
Party is not under any obligation to make future advances);

           (e) all costs and expenses, including attorneys’ fees and expenses, incurred by Secured
Party in the collection or enforcement of any of the Liabilities described in (a), (b), (c),
or (d) above; and

           (f) all extensions, renewals, and modifications of any of the Liabilities described in
(a), (b), (c), (d), or (e) above.

              3. Representations and Warranties of Guarantors. To further secure the payment,
performance and satisfaction of the Liabilities, Guarantors hereby represent and warrant the
following to Secured Party:

           (a) Name. Rainier is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Washington with the exact legal name of
“Rainier Home Health Care Pharmacy, Inc.” and a Washington organizational number of 600 635
804. Precision is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Tennessee with the exact legal name of “Precision Healthcare,
Inc.” and a Tennessee organizational number of 0384185. Long Term Rx is a corporation duly
organized, validly existing, and in good standing under the laws of the State of Indiana
with the exact legal

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name of “Long Term Rx, Inc.” and an Indiana organizational number of 1996010564. Home
Med is a corporation duly organized, validly existing, and in good standing under the laws
of the State of Indiana with the exact legal name of “Home Med Channel, Inc.,” and an
Indiana organizational number of 1996011223. Holland CP is a corporation duly organized,
validly existing and in good standing under the laws of the State of Washington with the
exact legal name of “Holland Compounding Pharmacy, Inc.” and a Washington organizational
number of 602 536 908. Holland is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington with the exact legal name of
“Holland Drug Store, Inc.” and a Washington organizational number of 602 531 315.

          (b) Title. Guarantors have full and absolute title to the Collateral, except
for the lien created hereby and any other liens specifically described on Schedule
3(b) (the “Permitted Liens”), and Guarantors have the right to subject the
Collateral to the security interest granted by this Agreement. There are no security
agreements or financing statements affecting the Collateral, or any part thereof, other than
with respect to (i) the Permitted Liens and (ii) security interests created in Secured
Party.

           (c) Possession. Except for Collateral in the possession of Secured Party, or
any lender holding a Permitted Lien, Guarantors have possession of all the Collateral. All
the Collateral is located at the locations described in Schedule 3(c)
hereto. Each Guarantor maintains its principal place of business at the address set forth
in the introductory paragraph hereto.

           (d) Financing Statements. Fully executed Uniform Commercial Code financing
statements or other appropriate filings, recordings, or registrations containing a
description of the Collateral have been delivered to Secured Party for filing in each
governmental, municipal, or other office required under the Uniform Commercial Code, which
are all the filings, recordings, and registrations that are necessary to publish notice of
and protect the validity of and to establish a legal, valid and perfected security interest
in favor of Secured Party in respect of all Collateral in which a security interest may be
perfected by filing of a financing statement, and no further or subsequent filing, refiling,
recording, rerecording, registration, or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing of
continuation statements.

           (e) Perfection. The security interest granted hereby constitutes (i) a legal
and valid security interest in all the Collateral securing the payment and performance of
the Liabilities, and (ii) subject to the completion of the filings described in Section
3(d) above, a perfected security interest in all Collateral in which a security interest
may be perfected by filing of a financing statement pursuant to the Uniform Commercial Code
or other applicable law in such jurisdictions.

              4. Covenants of Guarantors. To further secure the payment, performance and
satisfaction of the Liabilities, Guarantors hereby covenant and agree as follows:

           (a) Maintenance of Possession. Guarantors will preserve their interest in and
title to the Collateral and will warrant and defend the validity of the lien and security
interest created herein against the claims of all Persons whomsoever, subject to the
Permitted Liens.

 - 3 -

 

          (b) Condition of Collateral. Guarantors will maintain the Collateral in good
condition, repair and operating order, ordinary wear and tear excepted, and from time to
time make, or cause to be made, all reasonable repairs, renewals and replacements thereto
and will not permit it to be wasted, destroyed, or used in material violation of any local,
state or federal ordinance, rule, or law, or contrary to the provisions of any insurance
policy related thereto.

           (c) Inspection. Secured Party, its agents and representatives may enter upon
Borrower’s property to examine and inspect the Collateral at any reasonable time or times.

           (d) Insurance. Guarantors will keep the Collateral at all times insured
against risk of loss or damage by fire and theft, all in such amounts, under such forms of
policies, upon such terms, for such periods and written by such companies as are reasonably
acceptable to Secured Party (such insurance, the “Required Insurance”). Such
policies shall provide that losses will be payable to Secured Party, other lien holders and
Guarantors as their interests may appear, and that Secured Party shall receive at least
thirty (30) days’ prior written notice of any alteration, cancellation or termination
thereof. Upon request by Secured Party from time to time, Guarantors will furnish to
Secured Party certificates of insurance from the insurer with respect to each of the
policies providing Required Insurance.

           (e) Protection of Collateral. Except for disposition of inventory in the
ordinary course of business, Guarantors will not, without the prior written consent of
Secured Party, sell, assign, transfer, or otherwise dispose of any material portion of the
Collateral. Guarantors will give Secured Party at least ten (10) days’ prior written notice
of any change in any Guarantor’s name, the jurisdiction in which such Guarantor is
organized, the location of any Guarantor’s principal place of business or the location of
any part of the Collateral, or records thereof in the case of accounts and general
intangibles.

           (f) Financing Statements, Certificates, Etc. Guarantors will perform such acts
as Secured Party reasonably deems necessary or appropriate to establish and maintain in
Secured Party a valid priority lien and security interest (subject only to Permitted Liens)
in the Collateral to secure full and prompt performance and payment of the Liabilities.
Guarantors authorize Secured Party to sign and file, without Guarantors’ signature, such
financing and continuation statements, amendments and supplements thereto, notices to third
parties, and other documents which Secured Party may from time to time reasonably deem
necessary to perfect, preserve and protect its security interest in the Collateral.
Guarantors will execute and deliver to Secured Party any such financing statements and
documents and furnish, execute, and endorse such other documents, agreements, instruments,
certificates, and certificates of title with Secured Party’s security interest noted thereon
or executed applications for said certificates as Secured Party may from time to time
reasonably request to evidence, perfect, preserve, and protect its security interest in the
Collateral.

     (g) Taxes and Assessments. Guarantors will pay promptly when due all taxes,
assessments, and governmental charges or levies upon or against the Collateral before the
same become delinquent and before penalties accrue thereon. Notwithstanding the foregoing,
Guarantors shall not be required to pay or discharge such obligations, so long as (i) the
applicability, validity, or amount thereof shall be contested in good faith by appropriate
proceedings or actions, and (ii) Guarantors diligently pursues such lawful claims.

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              5. Survival of Warranties and Covenants. All of Guarantors’ representations,
warranties and covenants made herein shall survive the execution of this Agreement, until all
Liabilities are satisfied in full, at which time they shall expire and be of no further force or
effect.

              6. Events of Default. Each of the following (each, an “Event of Default”)
shall constitute a breach of and default under this Agreement:

                 
(a) non-payment or default by Guarantors in the timely and full payment or performance
of any of the Liabilities;

                  (b) non-performance or breach by Guarantors of any covenant or agreement in this
Agreement; or

                  (c) the untruth, inaccuracy or breach of any representation or warranty of Guarantors
contained in this Agreement.

              7. Remedies Upon Default. Time is of the essence under this Agreement. Upon the
occurrence and during the continuance of any Event of Default, Secured Party shall be entitled to
declare all of the Liabilities to be immediately due and payable, whereupon the same shall become
immediately due and payable, without notice, presentation, demand, protest, notice of protest, or
other notice of dishonor of any kind, all of which are hereby expressly waived. In addition, upon
the occurrence and during the continuance of any Event of Default, Secured Party shall have all the
remedies of a secured party under the Uniform Commercial Code as adopted and in effect in the State
of Indiana and as otherwise provided by applicable law, including, but not limited to, the
following:

           (a) Secured Party may take possession of the Collateral and may use it after having
done so. For purposes of taking possession, Secured Party may enter upon any premises on
which the Collateral may be situated without legal process and remove the Collateral.

           (b) Secured Party may notify any Person indebted to Guarantors to pay Secured Party
directly any amounts due Guarantors under any account, general intangible, contract,
instrument, agreement, chattel paper or any other item that is part of the Collateral, and
Secured Party may enforce payment of the same through legal proceedings, or otherwise, in
its own name or in the name of Guarantors.

           (c) Secured Party may require Guarantors to assemble the Collateral and make it
available at a place designated by Secured Party, whether at Guarantors’ premises or
elsewhere.

           (d) Unless the Collateral threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Secured Party shall give Guarantors at least ten
(10) days’ prior written notice, at its address for notices stated in paragraph 9 below, of
the time and place of any public sale thereof or of the time after which any private sale or
any other intended disposition thereof is to be made. A disposition complying with this
subparagraph shall be deemed a commercially reasonable disposition of the Collateral. The
reasonable expenses of retaking, holding, preparing for sale, selling and the like, and
reasonable attorneys’ fees and expenses incurred by Secured Party, may be paid from the
proceeds of the disposition.

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           (e) Secured Party may obtain the appointment of a receiver respecting the Collateral
upon such notice as may be required by applicable law and without notice (if permitted by
such law) or the requirement of the posting of a bond, and may obtain immediate possession
thereof in replevin.

           (f) Guarantors will not insist upon or claim the benefit or advantage of any
appraisement, valuation, stay, extension, moratorium, redemption, or similar law now or
hereafter in force to prevent, delay or hinder the enforcement of this Agreement or the
absolute sale of any part of the Collateral or the possession thereof by any purchaser at
any sale pursuant hereto. Guarantors hereby waive the benefit of all such laws, and all
right to have the Collateral marshaled upon any foreclosure of this Agreement, and agrees
that any court having jurisdiction to foreclose this Agreement may order the sale of the
Collateral as an entirety.

All remedies of Secured Party shall be cumulative to the fullest extent provided by law. Pursuit
by Secured Party of certain judicial or other remedies shall not abate or bar resort to other
remedies with respect to the Collateral, and pursuit of certain remedies with respect to all or
some of the Collateral shall not bar other remedies with respect to the Liabilities or to other
portions of the Collateral. Secured Party may exercise its rights to the Collateral without
resorting or regard to other collateral or sources of security or reimbursement for the
Liabilities.

              8. Nonwaiver, Expenses, Proceeds of Collateral. No waiver by Secured Party of any of
its rights or of any Event of Default shall be effective unless in writing, and in no event shall
such a waiver operate as a waiver of any other of its rights, any other Event of Default or of the
same rights or an Event of Default on any future occasion. No delay or omission on the part of
Secured Party in exercising any right shall operate as a waiver of such right or any other right.
Guarantors shall pay to Secured Party on demand any and all reasonable costs and expenses,
including reasonable attorneys’ fees and costs, incurred or paid by Secured Party in perfecting,
protecting or enforcing its rights and interest with respect to the Collateral. After deducting
all of such costs and expenses the residue of any proceeds of collection or sale of the Collateral
shall be applied to the payment of the Liabilities and Guarantors shall remain fully liable for any
deficiency. Every right and remedy given this Agreement or under any applicable law available to
Secured Party may be exercised from time to time and as often as may be deemed expedient by Secured
Party.

              9. Notices. All notices or other written communications contemplated by this
Agreement shall be deemed to have been properly given (i) upon delivery, if delivered in person or
by facsimile transmission with receipt acknowledged by the recipient thereof, (ii) one (1) business
day after having been deposited for overnight delivery with any reputable overnight courier
service, (iii) on the day of receipt of a confirmed transmission, if delivered by facsimile to the
number set forth below, or (iv) three (3) business days after having been deposited in any post
office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:

	 	 	 	 	 
	 

	 	If to Secured Party:
	 	Mr. Michael G. Browning
	 

	 	 	 	c/o Browning Investments, Inc.
	 

	 	 	 	6100 West 96th Street
	 

	 	 	 	Suite 250
	 

	 	 	 	Indianapolis, IN 46278

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	 	and copy to:
	 	Baker & Daniels LLP
	 

	 	 	 	300 North Meridian Street, Suite 300
	 

	 	 	 	Indianapolis, Indiana 46204
	 

	 	 	 	Facsimile No.: 317-237-1000
	 

	 	 	 	Attention: James M. Carr
	 	 	 
	 

	 	If to Guarantors:
	 	Standard Management Corporation
	 

	 	 	 	10689 N. Pennsylvania St.
	 

	 	 	 	Indianapolis, IN 46280
	 

	 	 	 	Attention: Ronald D. Hunter
	 

	 	 	 	Facsimile No.: 317-574-6227
	 	 	 
	 

	 	and copy to:
	 	Sommer Barnard
	 

	 	 	 	One Indiana Square, Suite 3500
	 

	 	 	 	Indianapolis, IN 46204
	 

	 	 	 	Attention: Robert J. Hicks
	 

	 	 	 	Facsimile No.: 317-713-3699

or addressed as such party may from time to time designate by written notice to the other party.

              10. Governing Law. This Agreement shall be governed, construed, applied and enforced
in accordance with the internal laws of the State of Indiana, without regard to its conflicts of
law rules.

              11. Partial Invalidity. In case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement,
but this Agreement shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.

              12. Titles and Headings; Rules of Construction. Titles and headings to articles and
sections herein are inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. Whenever the context so requires the
use of or reference to any gender includes the masculine, feminine and neuter genders; and all
terms used in the singular shall have comparable meanings when used in the plural and vice versa.

              13. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be considered an original hereof and all of which, taken together, shall constitute one
and the same instrument.

[Signature Page Follows]

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

	 	 	 	 	 
	 	 	Rainier Home Health Care Pharmacy, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry
	 

	 	 	 	 
	 	 	Printed: Michael B. Berry
	 	 	Title: Treasurer
	 
	 	 	 	 
	 	 	Precision Healthcare, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry
	 

	 	 	 	 
	 	 	Printed: Michael B. Berry
	 	 	Title: Treasurer
	 
	 	 	 	 
	 	 	Long Term Rx, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry
	 

	 	 	 	 
	 	 	Printed: Michael B. Berry
	 	 	Title: Treasurer
	 
	 	 	 	 
	 	 	Home Med Channel, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry
	 

	 	 	 	 
	 	 	Printed: Michael B. Berry
	 	 	Title: Treasurer
	 
	 	 	 	 
	 	 	Holland Compounding Pharmacy, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry
	 

	 	 	 	 
	 	 	Printed: Michael B. Berry
	 	 	Title: Treasurer
	 
	 	 	 	 
	 	 	Holland Drug Store, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry
	 

	 	 	 	 
	 	 	Printed: Michael B. Berry
	 	 	Title: Treasurer

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Schedule 3(b)

Permitted Liens

 

 

Schedule 3(c)

Collateral LocationsEX-10.7 ASSET PURCHASE AGREEMENT DATED 7/27/2006

 

Exhibit
10.7

[EXECUTION COPY]

ASSET PURCHASE AGREEMENT

by and among

OMNICARE, INC.,

STANDARD MANAGEMENT CORPORATION,

RAINIER HOME HEALTH CARE PHARMACY, INC.,

HOLLAND COMPOUNDING PHARMACY, INC.

and

HOLLAND DRUG STORE, INC.

Dated as of July 28, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	Article I DEFINITIONS AND DEFINED TERMS	 	 	1	 
	 
	 	Section 1.1	 	Definitions and Defined Terms	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	Article II PURCHASE OF ASSETS	 	 	1	 
	 
	 	Section 2.1	 	Purchase and Sale of Transferred Assets	 	 	1	 
	 
	 	Section 2.2	 	Excluded Assets	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	Article III ASSUMPTION OF LIABILITIES	 	 	3	 
	 
	 	Section 3.1	 	Assumed Liabilities	 	 	3	 
	 
	 	Section 3.2	 	Retained Liabilities	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	Article IV PURCHASE PRICE	 	 	4	 
	 
	 	Section 4.1	 	Purchase Price	 	 	4	 
	 
	 	Section 4.2	 	Post-Closing Purchase Price Adjustment	 	 	4	 
	 
	 	Section 4.3	 	Contingent Payment	 	 	5	 
	 
	 	Section 4.4	 	Allocation of Consideration	 	 	6	 
	 
	 	Section 4.5	 	Prorations	 	 	7	 
	 
	 	Section 4.6	 	Withholding Taxes	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	Article V CLOSING	 	 	7	 
	 
	 	Section 5.1	 	Closing	 	 	7	 
	 
	 	Section 5.2	 	Deliveries at Closing	 	 	8	 
	 
	 	Section 5.3	 	Conditions Precedent to Obligations of Each Party	 	 	10	 
	 
	 	Section 5.4	 	Conditions Precedent to Obligations of Purchaser	 	 	10	 
	 
	 	Section 5.5	 	Conditions Precedent to Obligations of Seller and/or Parent	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	Article VI REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT	 	 	13	 
	 
	 	Section 6.1	 	Organization and Good Standing	 	 	13	 
	 
	 	Section 6.2	 	Authorization and Effect of Agreement	 	 	13	 
	 
	 	Section 6.3	 	Consents and Approvals; No Violations	 	 	14	 
	 
	 	Section 6.4	 	No Third Party Options	 	 	14	 
	 
	 	Section 6.5	 	Permits; Compliance with Law	 	 	14	 
	 
	 	Section 6.6	 	Litigation	 	 	15	 
	 
	 	Section 6.7	 	Assets Necessary to Business	 	 	15	 

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	 	 	 	 	 	 	Page	 
	 
	 	Section 6.8	 	Financial Statements	 	 	15	 
	 
	 	Section 6.9	 	Absence of Certain Changes	 	 	15	 
	 
	 	Section 6.10	 	No Default	 	 	16	 
	 
	 	Section 6.11	 	Transactions with Affiliates	 	 	16	 
	 
	 	Section 6.12	 	Contracts	 	 	16	 
	 
	 	Section 6.13	 	Labor Relations	 	 	17	 
	 
	 	Section 6.14	 	Title to Assets	 	 	18	 
	 
	 	Section 6.15	 	Insurance	 	 	18	 
	 
	 	Section 6.16	 	Inventory	 	 	18	 
	 
	 	Section 6.17	 	Accounts Receivable	 	 	19	 
	 
	 	Section 6.18	 	Product Returns and Warranties	 	 	19	 
	 
	 	Section 6.19	 	Customers; Suppliers	 	 	19	 
	 
	 	Section 6.20	 	Absence of Certain Business Practices	 	 	19	 
	 
	 	Section 6.21	 	Certain Healthcare Legal Matters	 	 	20	 
	 
	 	Section 6.22	 	Real Property	 	 	21	 
	 
	 	Section 6.23	 	Environmental	 	 	21	 
	 
	 	Section 6.24	 	No Broker	 	 	23	 
	 
	 	Section 6.25	 	No Misleading Statements	 	 	23	 
	 
	 	Section 6.26	 	Employee Benefits	 	 	23	 
	 
	 	Section 6.27	 	Taxes	 	 	24	 
	 
	 	Section 6.28	 	Proprietary Rights	 	 	25	 
	 
	 	Section 6.29	 	Information Technology	 	 	27	 
	 
	 	Section 6.30	 	Solvency of Parent and Sellers	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	Article VII REPRESENTATIONS AND WARRANTIES OF PURCHASER	 	 	27	 
	 
	 	Section 7.1	 	Corporate Organization	 	 	27	 
	 
	 	Section 7.2	 	Authorization and Effect of Agreement	 	 	27	 
	 
	 	Section 7.3	 	Consents and Approvals; No Violations	 	 	28	 
	 
	 	Section 7.4	 	No Broker	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	Article VIII COVENANTS	 	 	28	 
	 
	 	Section 8.1	 	Conduct of Business	 	 	28	 
	 
	 	Section 8.2	 	Access	 	 	30	 
	 
	 	Section 8.3	 	Notification	 	 	30	 

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	 	 	 	 	 	 	Page	 
	 
	 	Section 8.4	 	No Inconsistent Action	 	 	31	 
	 
	 	Section 8.5	 	Reasonable Best Efforts	 	 	31	 
	 
	 	Section 8.6	 	Further Assurances	 	 	31	 
	 
	 	Section 8.7	 	Transfer Taxes	 	 	32	 
	 
	 	Section 8.8	 	Release of Liens	 	 	32	 
	 
	 	Section 8.9	 	Consents to Transferred Assets	 	 	32	 
	 
	 	Section 8.10	 	Employment Matters	 	 	32	 
	 
	 	Section 8.11	 	Bulk Sales Laws	 	 	33	 
	 
	 	Section 8.12	 	No Solicitation	 	 	33	 
	 
	 	Section 8.13	 	Confidentiality	 	 	33	 
	 
	 	Section 8.14	 	No Solicitation of Employees	 	 	33	 
	 
	 	Section 8.15	 	Non-Competition	 	 	34	 
	 
	 	Section 8.16	 	Collection of Accounts Receivable	 	 	34	 
	 
	 	Section 8.17	 	Post-Closing Agreements	 	 	34	 
	 
	 	Section 8.18	 	Change of Name	 	 	35	 
	 
	 	Section 8.19	 	Payment of Indebtedness	 	 	35	 
	 
	 	Section 8.20	 	Satisfaction of Leases	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	Article IX TERMINATION	 	 	36	 
	 
	 	Section 9.1	 	Termination	 	 	36	 
	 
	 	Section 9.2	 	Procedure and Effect of Termination	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	Article X SURVIVAL; INDEMNIFICATION	 	 	37	 
	 
	 	Section 10.1	 	Survival of Indemnification Rights	 	 	37	 
	 
	 	Section 10.2	 	Indemnification Obligations of Seller and Parent	 	 	37	 
	 
	 	Section 10.3	 	Indemnification Obligations of Purchaser	 	 	38	 
	 
	 	Section 10.4	 	Indemnification Procedure	 	 	39	 
	 
	 	Section 10.5	 	Calculation of Indemnity Payments	 	 	40	 
	 
	 	Section 10.6	 	Tax Treatment of Indemnification	 	 	40	 
	 
	 	Section 10.7	 	Relation of Indemnity to Holdback Payment	 	 	40	 
	 
	 	Section 10.8	 	Exclusive Remedy	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	Article XI MISCELLANEOUS PROVISIONS	 	 	41	 
	 
	 	Section 11.1	 	Notices	 	 	41	 
	 
	 	Section 11.2	 	Expenses	 	 	42	 
	 
	 	Section 11.3	 	Successors and Assigns	 	 	42	 

iii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	Section 11.4	 	Extension; Waiver	 	 	42	 
	 
	 	Section 11.5	 	Entire Agreement; Disclosure Schedules	 	 	42	 
	 
	 	Section 11.6	 	Amendments, Supplements, Etc.	 	 	42	 
	 
	 	Section 11.7	 	Applicable Law; Waiver of Jury Trial	 	 	43	 
	 
	 	Section 11.8	 	Actions by Seller or Parent	 	 	43	 
	 
	 	Section 11.9	 	Execution in Counterparts	 	 	43	 
	 
	 	Section 11.10	 	Titles and Headings	 	 	43	 
	 
	 	Section 11.11	 	Invalid Provisions	 	 	43	 
	 
	 	Section 11.12	 	Publicity	 	 	44	 
	 
	 	Section 11.13	 	Specific Performance	 	 	44	 
	 
	 	Section 11.14	 	No Third Party Beneficiaries	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	Exhibits
 

	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Exhibit A — Definitions and Defined Terms	 	 	 	 
	Exhibit B — Form of Bill of Sale	 	 	 	 
	Exhibit C — Form of Assignment and Assumption Agreement	 	 	 	 
	Exhibit D — Form of Power of Attorney	 	 	 	 
	Exhibit E — Form of Pharmacy Letter	 	 	 	 
	Exhibit F — Form of Trademark Assignment Agreement	 	 	 	 
	 	 	 
	Schedule 1 — Contingent Facilities	 	 	 	 

iv

 

ASSET PURCHASE AGREEMENT

     This ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of July
28, 2006 by and among Omnicare, Inc., a Delaware corporation (“Purchaser”), Standard
Management Corporation, an Indiana corporation (“Parent”), and Rainier Home Health Care
Pharmacy, Inc., Holland Compounding Pharmacy, Inc. and Holland Drug Store, Inc., each a Washington
corporation and each an indirect wholly owned subsidiary of Parent (each a “Seller” and
collectively “Seller”).

RECITALS:

     WHEREAS, Seller is engaged in the business of (a) providing (i) pharmaceutical products,
including, without limitation, prescription and non-prescription drugs, infusion medication and
related medical products and pharmacy-related services, including, without limitation, consultant
pharmacists, services to nursing homes, assisted living facilities and other long-term care
facilities (collectively, “Facilities”) and (ii) durable medical equipment and respiratory
equipment and supplies to Facilities and the retail public and (b) operating related compounding
pharmacies (collectively, the “Business”); and

     WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase, certain of
the rights, properties and assets relating to the Business.

     NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and
agreements herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND DEFINED TERMS

     Section 1.1 Definitions and Defined Terms. Unless the context otherwise requires or
as otherwise defined herein, capitalized terms used in this Agreement shall have the meanings set
forth in Exhibit A hereto.

ARTICLE II

PURCHASE OF ASSETS

     Section 2.1 Purchase and Sale of Transferred Assets. On the terms and subject to the
conditions set forth herein, at the Closing as described in Article V hereto, Seller shall,
and Parent shall cause Seller to, sell, transfer, convey, assign and deliver to Purchaser (or one
or more direct or indirect subsidiaries of Purchaser as Purchaser may designate), and Purchaser (or
one or more designees of Purchaser) shall purchase and acquire from Seller, good and valid title
to, and all rights and interests in, all of the rights, properties and assets used in or held for
use in, necessary for or otherwise relating to the Business, other than the Excluded Assets
(collectively, the “Transferred Assets”), free

 

 

and clear of all Liens (other than Permitted Liens), including, without limitation, good and
valid title to, and all rights and interests in, the following:

     (a) All assets reflected on the balance sheet as of and for the five (5) months ended May 31,
2006 relating to the Business (the “Balance Sheet”) and all assets used to generate revenue
and income reflected on the income statement relating to the Business for the five (5) months ended
May 31, 2006 (the “Income Statement”), which Balance Sheet and Income Statement are set
forth in Section 6.8(a) of the Disclosure Schedule, other than, in each case, assets disposed of
after the date of such Balance Sheet and Income Statement and on or prior to the Closing in the
ordinary course of business consistent with past practice as permitted under Section 8.1
hereto.

     (b) All assets used, or held for use in, necessary for or otherwise relating to the Business
acquired in the ordinary course of business consistent with past practice after May 31, 2006 and on
or prior to the Closing Date.

     (c) All Contracts relating to the Business, including, without limitation, Contracts relating
to the provision of services to (i) Facilities, (ii) to hospice agencies and home health care
companies and (iii) insurers, managed care organizations and other payor organizations (including
Medicare Part D Plans).

     (d) Subject to Section 8.20 hereto, all leases, including, without limitation, real
property leases for the operating facilities, relating to the Business and any improvements
thereunder.

     (e) All rights under Contracts relating to the Business to the extent that such rights relate
to non-competition, confidentiality or non-solicitation obligations enforceable against a third
party.

     (f) All inventory, accounts receivable, rebates receivable earned after May 31, 2006, other
current, fixed or prepaid assets, prepaid items and plant, property and equipment used or held for
use in, necessary for or otherwise relating to the Business.

     (g) All intangibles and intangible property, including, without limitation, all Proprietary
Rights and agreements relating thereto that are used or held for use in, necessary for or otherwise
relating to the Business, including, without limitation, all of the Seller’s Rights and goodwill
included in any of the foregoing.

     (h) All Permits used or held for use in, necessary for or otherwise relating to the Business,
except to the extent that the transfer thereof would violate or would not be permitted or effective
under applicable Law.

     (i) Subject to applicable Law, all patient medical records relating to the Business; provided
that Purchaser shall promptly provide Seller with copies thereof as reasonably requested by Seller
in writing after the Closing.

     (j) Except to the extent solely related to an Excluded Asset, all books and records relating
to the Business or the Transferred Assets.

2

 

     (k) All manufacturer or vendor warranties, service life policies, customer support agreements
and similar items relating to the Business or the Transferred Assets (or to the extent such items
are not assignable, subrogation rights to such items).

     (l) All motor vehicles and other rolling stock, including, without limitation, those items
listed in Section 2.1(l) of the Disclosure Schedule (collectively, the “Motor Vehicles”).

     (m) All Trade Names.

     The Contracts included in the Transferred Assets, all of which are listed on Section 6.12(a),
and include, without limitation, those listed above, are hereinafter collectively referred to as
the “Assumed Contracts.”

     Section 2.2 Excluded Assets. Notwithstanding anything contained in this Agreement to
the contrary, the rights, properties and assets identified in Section 2.2 of the Disclosure
Schedule (collectively, the “Excluded Assets”) will not be included in the Transferred
Assets, and all right, title and interest thereto shall be retained by Seller or Parent, as
applicable.

ARTICLE III

ASSUMPTION OF LIABILITIES

     Section 3.1 Assumed Liabilities. At the Closing, Purchaser will not assume or agree
to undertake to pay, satisfy, discharge or perform, and will not be deemed by virtue of the
execution and delivery of this Agreement or any document delivered at the Closing pursuant to this
Agreement, or as a result of the consummation of the transactions contemplated by this Agreement,
to have assumed, or to have agreed to pay, satisfy, discharge or perform, any liability,
obligation, indebtedness or Taxes (except as expressly set forth in Section 4.5(b) hereto) of
Seller or of any other Person or in any way relating to the Business (whether primary or secondary,
direct or indirect, known or unknown, absolute or contingent, matured or unmatured, or otherwise),
other than the following obligations and liabilities of Seller: (a) the obligations and
liabilities from and after the Closing Date pursuant to the terms of the Assumed Contracts, to the
extent, and only to the extent, that such Assumed Contracts are actually assigned to Purchaser and
such obligations and liabilities relate to the period from and after the Closing and (b) $750,000
of current liabilities, which would not otherwise be Assumed Liabilities, of Seller, which may be
paid off by Purchaser at the Closing or at the time such current liabilities become due, in its
sole discretion (clauses (a) and (b) together, the “Assumed Liabilities”).

     Section 3.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser does not assume or agree or undertake to pay, satisfy,
discharge or perform, and will not be deemed by virtue of the execution and delivery of this
Agreement or any document delivered at the Closing pursuant to this Agreement, or as a result of
the consummation of the transactions contemplated by this

3

 

Agreement, to have assumed, or to have agreed to pay, satisfy, discharge or perform, and, as
between Purchaser and Seller, Seller shall retain any liability, obligation, indebtedness or Taxes
(except as expressly set forth in Section 4.5(b) hereto) of Seller or of any other Person
or in any way relating to the Business or the Transferred Assets (whether primary or secondary,
direct or indirect, known or unknown, absolute or contingent, matured or unmatured, or otherwise)
other than the Assumed Liabilities (such liabilities and obligations retained by Seller, including,
without limitation, all liabilities and obligations with respect to the Excluded Assets, being
referred to herein as the “Retained Liabilities”). It is specifically agreed that Seller
shall be and remain liable for all of the Retained Liabilities.

ARTICLE IV

PURCHASE PRICE

     Section 4.1 Purchase Price. In consideration of the conveyance to Purchaser of all
right, title and interest in and to the Transferred Assets and the other rights granted to
Purchaser hereunder, and subject to the terms and conditions hereof, Purchaser shall:

     (a) at Closing, assume the Assumed Liabilities; and

     (b) pay an aggregate purchase price (the “Purchase Price”) of up to $13,520,000,
adjusted in accordance with the terms of this Article IV and Section 10.6 hereto,
which shall be delivered as follows:

     (i) at Closing, Purchaser shall pay to Seller an aggregate of $12,000,000 in cash (the
“Closing Date Cash Payment”);

     (ii) Subject to the terms of Section 4.2 hereto, Purchaser shall pay to
Seller, within thirty (30) calendar days of the four (4) month anniversary of the Closing
Date (the “Four Month Anniversary”) (or such later date as set forth in Section
4.2 hereto), an aggregate amount of $1,000,000, or such lesser amount as determined in
accordance with Section 4.2(b) and Section 10.6 hereto, in immediately
available funds (the “Holdback Payment”); and

     (iii) Subject to the terms of Section 4.3 hereto, Purchaser shall pay to
Seller the Contingent Payment.

     Section 4.2 Post-Closing Purchase Price Adjustment.

     (a) The parties agree that, on the Closing Date, the Net Asset Value of the Business should be
no less than $6,000,000. “Net Asset Value,” as used herein, shall be defined as the value
of the tangible assets of the Business, including the inventory, accounts receivable, rebates
receivable, prepaid expenses, Motor Vehicles (net of depreciation) and fixed assets (less
accumulated depreciation, depletion and amortization) net of the Assumed Liabilities. In the event
the actual Net Asset Value as of the Closing

4

 

Date, as finally determined pursuant to the terms of this Section 4.2(a) (the “Actual Net
Asset Value”), is less than $6,000,000, the Purchase Price shall be adjusted downward,
dollar-for-dollar, by the extent to which $6,000,000 exceeds the Actual Net Asset Value (the
“Purchase Price Adjustment”). The balance sheet establishing the Actual Net Asset Value,
as finally determined pursuant to the terms of this Section 4.2(a), is hereinafter referred
to as the “Final Closing Date Statement.” All items on the Final Closing Date Statement
shall be (i) determined consistent with the methodology of Net Asset Value used to calculate the
$6,000,000 base number, (ii) computed in accordance with this Section 4.2(a) and U.S.
generally accepted accounting principles, consistently applied (“GAAP”), and (iii) audited
or reviewed by an independent accounting firm at Purchaser’s expense. Purchaser, in conjunction
with its independent accountants (and in concurrence with Seller’s independent accountants), shall
prepare and present to Seller a draft of the Final Closing Date Statement (the “Preliminary
Closing Date Statement”) promptly, but not more than sixty (60) calendar days after the Closing
Date. Seller, together with its representatives and accountants, shall have the right to review
the workpapers of Purchaser and Purchaser’s accountants utilized in preparing the Preliminary
Closing Date Statement for purposes of verifying the accuracy and fairness of the presentation of
the Preliminary Closing Date Statement. Seller shall notify Purchaser of any dispute with the
Preliminary Closing Date Statement promptly, but not more than thirty (30) calendar days after its
receipt by Seller (“Dispute Notice”). If Seller timely delivers a Dispute Notice to
Purchaser, Seller and Purchaser shall, for a period of thirty (30) calendar days from the date the
Dispute Notice is delivered to Purchaser, attempt in good faith to resolve the items in dispute.
The Preliminary Closing Date Statement, together with any adjustments or corrections agreed upon by
Purchaser and Seller, shall comprise the Final Closing Date Statement. If the parties cannot agree
on the Final Closing Date Statement within thirty (30) calendar days after the later of (x) the
delivery of the Preliminary Closing Date Statement to Seller by Purchaser and (y) the delivery of a
Dispute Notice to Purchaser by Seller, as applicable, the parties shall submit the dispute to a
mutually acceptable “Big Four” accounting firm (the “Reviewing Accountants”), whose
determination shall be binding on the parties. The fees of such Reviewing Accountants shall be
divided equally between Purchaser and Seller.

     (b) In satisfaction of the Purchase Price Adjustment, if any, as finally determined pursuant
to Section 4.2(a) hereto, Purchaser shall reduce accordingly any amount otherwise payable
to Seller pursuant to Section 4.1(b)(ii) hereto. If the amount of the Purchase Price
Adjustment exceeds the amount otherwise payable to Seller pursuant to Section 4.1(b)(ii)
hereto, Purchaser shall not be obligated to pay the Holdback Payment and Seller shall pay to
Purchaser such amount in excess of the Holdback Payment in immediately available funds within
thirty (30) calendar days of the Four Month Anniversary or, if there is a disagreement with respect
to the Final Closing Date Statement which is not resolved prior to the Four Month Anniversary,
within thirty (30) calendar days after such disagreement is finally resolved pursuant to the terms
of Section 4.2(a) hereto, and subject to the terms of this Article IV and
Section 10.6.

     Section 4.3 Contingent Payment. Purchaser shall deliver to Seller promptly, but not
more than thirty (30) calendar days, after December 31, 2006 (the “Contingent Payment Determination
Date”) a detailed calculation of the Contingent

5

 

Payment. Seller shall notify Purchaser of any dispute with such calculation of the Contingent
Payment promptly, but not more than thirty (30) calendar days, after its receipt by Seller. If
Seller timely delivers a notice of disagreement to Purchaser, Seller and Purchaser shall, for a
period of thirty (30) calendar days from the date notice is delivered to Purchaser, attempt in good
faith to resolve the dispute with respect to the Contingent Payment. If the parties cannot agree
on the Contingent Payment within thirty (30) calendar days after the delivery of a notice of
disagreement to Purchaser by Seller, the parties shall submit the dispute to a mutually acceptable
third party, whose determination shall be binding on the parties. The fees of such reviewing third
party shall be divided equally between Purchaser and Seller. Purchaser shall pay the Contingent
Payment promptly, but not more than five (5) Business Days, after final resolution of the
calculation of the Contingent Payment. Purchaser agrees to operate the Business after the Closing
through and including December 31, 2006 in the ordinary course and consistent with past practice to
maximize the potential Contingent Payment.

The “Contingent Payment” shall be equal to:

	 	 
	($520,000) x 

	(# of Contingent Beds)
	 

	                    520

“Contingent Beds” for purposes of the above formula shall mean the number of licensed beds in
the Contingent Payment Facilities that are being serviced by the Business as of the Contingent
Payment Determination Date.

     Section 4.4 Allocation of Consideration. All capitalizable costs and other amounts
constituting consideration within the meaning of, and for the purposes of, Section 1060 of the Code
and the regulations thereunder shall be allocated among the Transferred Assets, the
non-solicitation obligations contained in Section 8.14 hereto, the non-competition
obligations contained in Section 8.15 hereto and any other assets or rights acquired by
Purchaser hereunder, as applicable, in the manner required by Section 1060 of the Code and the
regulations thereunder and all applicable Laws. Within sixty (60) calendar days after the Closing
Date, Purchaser shall provide Seller with a proposed schedule (the “Allocation Schedule”)
allocating all such amounts as provided herein. The Allocation Schedule shall become final and
binding on the parties hereto fifteen (15) calendar days after Purchaser provides such schedule to
Seller, unless Seller objects in writing to Purchaser, specifying the basis for its objection and
preparing an alternative allocation. If Seller does object, Purchaser and Seller shall in good
faith attempt to resolve the dispute within fifteen (15) calendar days of receipt by Purchaser of
written notice of Seller’s objection. Any such resolution shall be final and binding on the
parties hereto. Any unresolved disputes shall be promptly submitted to the Reviewing Accountants
for determination, which determination shall be final and binding on the parties hereto. Purchaser
and Seller will each pay one-half of the fees and expenses of the Reviewing Accountants. Seller
and Purchaser shall cooperate with each other and the Reviewing Accountants in connection with the
matters contemplated by this Section 4.3, including, without limitation, by furnishing such
information and access to books, records (including, without limitation, accountants work papers),
personnel and properties as may be reasonably requested. Each of the parties hereto agrees to (a)
prepare and timely file

6

 

all Tax Returns, including, without limitation, Form 8594 (and all supplements thereto) in a
manner consistent with the Allocation Schedule as finalized and (b) act in accordance with the
Allocation Schedule for all tax purposes. The parties hereto will revise the Allocation Schedule
to the extent necessary to reflect any Purchase Price Adjustment, any payment made under
Article X hereto or other post-Closing payment made pursuant to or in connection with this
Agreement. In the case of any such payment, Purchaser shall propose a revised Allocation Schedule,
and the parties hereto shall follow the procedures outlined above with respect to review, dispute
and resolution in respect of such revision.

     Section 4.5 Prorations.

     (a) All payments under or pursuant to the Assumed Contracts relating to periods both before
and after the Closing Date, whether payable before or after the Closing Date, shall be prorated
between Purchaser and Seller, on the basis of a 365-day year and the number of days elapsed in
calendar year 2006 as of the Closing Date. With respect to any products sold (or services
rendered) to Seller pursuant to the Assumed Contracts or other obligations pursuant to which Seller
purchases products (for example, purchase orders), Seller and Purchaser shall use reasonable
commercial efforts to arrange for vendors to bill Seller directly on or prior to the Closing Date
and Purchaser directly after the Closing Date. Notwithstanding anything to the contrary contained
in this Agreement or any Collateral Agreement, amounts due for supplies received from or services
rendered by third-party vendors to Seller on or prior to the Closing Date shall be for the account
of and paid by Seller, except to the extent such amounts are Assumed Liabilities as contemplated in
Section 3.1(b).

     (b) After the Closing, any ad valorem, use, real and personal property and similar Taxes,
installments or special assessments arising from, or relating to, the Transferred Assets or the
conduct of the Business, which become due and payable on or after the Closing Date and relate to
periods both before and after the Closing Date, shall be prorated and adjusted between Seller and
Purchaser as of the Closing Date on a per diem basis and Seller shall be responsible for and, in
any case where payment to the applicable taxing authority is to be made by Purchaser, shall pay
such amount to Purchaser, the portion of such amounts allocable to the period or portion thereof
ending on the Closing Date for which payment is due after the Closing Date at least ten (10)
Business Days prior to the date such Taxes become due and payable.

     Section 4.6 Withholding Taxes. All payments made by Purchaser pursuant to or in
connection with this Agreement shall be net of applicable withholding taxes, if any.

ARTICLE V

CLOSING

     Section 5.1 Closing. Upon the terms and subject to the conditions of this Agreement,
the closing of the transactions contemplated by this Agreement (the

7

 

“Closing”) will take place at the offices of Dewey Ballantine LLP, 1301 Avenue of the
Americas, New York, New York 10019, on the later of August 7, 2006 or the date that is two (2)
Business Days following the satisfaction or waiver of all of the conditions to the Closing (other
than those conditions that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions) or at such other time and place and on such other date
as Purchaser and Seller shall agree in writing (the “Closing Date”); provided that
the effective time of the Closing shall be 12:01 a.m. on the Closing Date.

     Section 5.2 Deliveries at Closing. At the Closing:

     (a) Seller shall, and Parent shall cause Seller to, deliver or cause to be delivered to
Purchaser, the following:

     (i) a Bill of Sale, duly executed by Seller and Parent, in substantially the form
attached hereto as Exhibit B (the “Bill of Sale”);

     (ii) an Assignment and Assumption Agreement, duly executed by Seller and Parent, in
substantially the form attached hereto as Exhibit C (the “Assignment and
Assumption Agreement”);

     (iii) a Power of Attorney from Seller, duly executed by Seller and duly notarized, in
substantially the form attached hereto as Exhibit D (the “Power of
Attorney”);

     (iv) a Pharmacy Letter from each pharmacy of Seller, each duly executed by Seller and
duly notarized, in substantially the form attached hereto as Exhibit E (the
“Pharmacy Letter”);

     (v) releases, in form and substance reasonably satisfactory to Purchaser, evidencing
discharge, removal and termination of all Liens (other than Permitted Liens) to which any
Transferred Assets being conveyed at the Closing are subject, which releases shall be
effective at or prior to the Closing;

     (vi) the officer’s certificate referenced in Section 5.4(c) hereto;

     (vii) a certification from Seller in accordance with United States Treasury Regulation
Section 1.1445-2(b)(2)(i) and in the form provided in United States Treasury Regulation
Section 1.1445-2(b)(2)(iii)(B) (the “FIRPTA Certificate”);

     (viii) Certificates of Title to the Motor Vehicles, duly endorsed, completed and
acknowledged for transfer;

     (ix) copies of the “pay-off” letters in connection with the repayment of the
indebtedness of Seller pursuant to Section 8.19(a) and Section 8.20 hereto
and the letters confirming that all Liens relating to such indebtedness will be removed
effective upon payment of the amount set forth in the pay-off letters;

8

 

     (x) a Trademark Assignment Agreement, duly executed by Seller and Parent and duly
notarized, in substantially the form attached hereto as Exhibit F (the
“Trademark Assignment Agreement”);

     (xi) the Employment Agreements contemplated in Section 5.4(l) hereto;

     (xii) the Non-Competition Agreements contemplated in Section 5.4(m) hereto;
and

     (xiii) such other duly executed documents and certificates as may be required to be
delivered by Seller pursuant to the terms of this Agreement or as may be reasonably
requested by Purchaser prior to the Closing.

     (b) Parent shall deliver, or cause to be delivered to Purchaser, the following:

     (i) the certificates referenced in Section 5.4(d) hereto; and

     (ii) such other duly executed documents and certificates as may be required to be
delivered by Parent pursuant to the terms of this Agreement or as may be reasonably
requested by Purchaser prior to the Closing.

     (c) Purchaser shall deliver, or cause to be delivered to Seller, the following:

     (i) the Closing Date Cash Payment by wire transfer of immediately available funds to
the account or accounts of Seller designated by Seller no later than twenty-four (24) hours
prior to the Closing;

     (ii) the Bill of Sale, duly executed by Purchaser (or any wholly owned, direct or
indirect subsidiaries of Purchaser to which an Assumed Contract is assigned);

     (iii) the Assignment and Assumption Agreement, duly executed by Purchaser (or any
wholly owned, direct or indirect subsidiaries of Purchaser to which an Assumed Contract is
assigned);

     (iv) the Power of Attorney, duly executed by Purchaser;

     (v) the officer’s certificate referenced in Section 5.5(c) hereto;

     (vi) the Trademark Assignment Agreement, duly executed by Purchaser; and

     (vii) such other duly executed documents and certificates as may be required to be
delivered by Purchaser pursuant to the terms of this Agreement or as may be reasonably
requested by Seller prior to the Closing.

9

 

     (d) Purchaser shall deliver, or cause to be delivered to Parent, the following:

     (i) the officer’s certificate referenced in Section 5.5(c) hereto; and

     (ii) such other duly executed documents and certificates as may be required to be
delivered by Purchaser pursuant to the terms of this Agreement or as may be reasonably
requested by Parent prior to the Closing.

     Section 5.3 Conditions Precedent to Obligations of Each Party. The respective
obligation of each party to effect the transactions contemplated by this Agreement is subject to
the satisfaction or waiver of the following conditions:

     (a) All necessary Consents of any Governmental Authority required for consummation of the
transactions contemplated by this Agreement, which are set forth in Section 5.3(a) of the
Disclosure Schedule, shall have been obtained.

     (b) There shall not be in effect any Law of any Governmental Authority of competent
jurisdiction restraining, enjoining or otherwise preventing the consummation of the transactions
contemplated by this Agreement.

     Section 5.4 Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to effect the transactions contemplated by this Agreement is subject to the satisfaction
or waiver of the following conditions (in addition to those set forth in Section 5.3
above):

     (a) The representations and warranties of Seller and Parent in this Agreement shall be true
and correct in all material respects (without regard for any materiality qualifiers therein) as of
the date hereof and at and as of the Closing with the same effect as though such representations
and warranties had been made at and as of such time, other than representations and warranties that
speak as of another specific date or time prior to the date hereof (which need only be true and
correct as of such date or time).

     (b) All of the terms, covenants and conditions to be complied with and performed by Seller and
Parent on or prior to the Closing Date shall have been complied with or performed in all material
respects.

     (c) Purchaser shall have received a certificate, dated as of the Closing Date, executed on
behalf of Seller, by an authorized executive officer thereof, certifying in such detail as
Purchaser may reasonably request that the conditions specified in Section 5.4(a) and
Section 5.4(b) hereto have been fulfilled.

     (d) Purchaser shall have received a certificate, dated as of the Closing Date, executed by
Parent, certifying in such detail as Purchaser may reasonably request that the conditions specified
in Section 5.4(a) and Section 5.4(b) hereto have been fulfilled.

10

 

     (e) All Consents necessary for the assignment of any Contracts Requiring Consent that
Purchaser has agreed to assume shall have been obtained (“Required Third Party Consents”)
(without any limitation, restriction or condition not already applicable to Seller or Parent being
imposed on Purchaser or its ownership or use of any of the Transferred Assets or the conduct or
operation of the Business) in written instruments reasonably satisfactory to Purchaser, unless
otherwise agreed to by Purchaser and subject to the terms of Section 8.9 hereto.

     (f) All Liens (other than Permitted Liens) on the Transferred Assets shall have been released
and evidence thereof delivered to Purchaser.

     (g) Purchaser shall have obtained all Permits necessary to own or use the Transferred Assets
and operate the Business.

     (h) All notifications, applications and other documents required under applicable Law to be
given, made or filed prior to Closing in connection with any Permits necessary for Purchaser’s
ownership or use of the Transferred Assets and the conduct or operation of the Business shall have
been given, made or filed and all periods which are required to pass between the giving, making or
filing of such notifications, applications and other documents and the Closing in connection with
such Permits under applicable Law shall have passed.

     (i) There shall not have occurred any events that have had, or are, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect.

     (j) Seller shall have delivered to Purchaser, on or prior to the Closing Date, the Collateral
Agreements and the FIRPTA Certificate, in each case, duly executed, and, in the case of the Power
of Attorney, the FIRPTA Certificate and the Trademark Assignment Agreement, duly notarized, and in
full force and effect.

     (k) Each pharmacy of Seller shall have delivered to Purchaser and the National Council for
Prescription Drug Programs, on or prior to the Closing Date, the Pharmacy Letter, in each case duly
executed and notarized and in full force and effect.

     (l) Seller shall have delivered to Purchaser, on or prior to the Closing Date, employment
agreements on the terms and with the individuals specified by Purchaser (the “Employment
Agreements”), which shall be in full force and effect as of the Closing Date.

     (m) Seller and Parent shall have delivered to Purchaser, on or prior to the Closing Date,
non-competition agreements on the terms and with the individuals specified by Purchaser (the
“Non-Competition Agreements”), which shall be in full force and effect as of the Closing
Date.

     (n) Seller shall have, on or prior to the Closing Date, entered into a new lease, or Parent
shall have, on or prior to the Closing Date, entered into a sublease with Purchaser providing for
the on-going operations of the long-term care pharmacies

11

 

located at 5415 Rainier Avenue, Seattle, WA and 1600 and 1618 South Lane Street, Seattle, WA
98144, on terms acceptable to the Purchaser.

     (o) Seller shall have, on or prior to the Closing Date, filed with the appropriate
Governmental Authority the necessary documentation for the transfer of any Trade Names.

     (p) An opinion delivered to Seller, as of the Closing Date, stating that Seller is receiving
fair and reasonably equivalent value for the Transferred Assets has not been withdrawn.

     (q) The board of directors of Purchaser shall, on or prior to the Closing Date, have approved
consummation of the transactions contemplated hereby. Without limiting the condition to Closing
set forth in the immediately preceding sentence, Purchaser shall call a meeting of its board of
directors, or a sub-committee of its board of directors with authority to act on the board of
director’s behalf for matters such those contemplated by this Agreement and to consider the
transaction contemplated by this Agreement at the earliest practical date, but in any event on or
prior to August 3, 2006.

     Section 5.5 Conditions Precedent to Obligations of Seller and/or Parent. The
obligation of each of Seller and Parent to effect the transactions contemplated by this Agreement
are subject to the satisfaction or waiver of the following conditions (in addition to those set
forth in Section 5.3 above):

     (a) The representations and warranties of Purchaser in this Agreement shall be true and
correct in all material respects (without regard for any materiality qualifiers therein) as of the
date hereof and at and as of the Closing with the same effect as though such representations and
warranties had been made at and as of such time, other than representations and warranties that
speak as of another specific date or time prior to the date hereof (which need only be true and
correct as of such date or time).

     (b) All of the terms, covenants and conditions to be complied with and performed by Purchaser
on or prior to the Closing Date shall have been complied with or performed in all material
respects.

     (c) Seller and Parent shall have received a certificate, dated as of the Closing Date,
executed on behalf of Purchaser by an authorized executive officer thereof, certifying in such
detail as Seller may reasonably request that the conditions specified in Section 5.5(a) and
Section 5.5(b) hereto have been fulfilled.

     (d) Purchaser shall have delivered to Seller and/or Purchaser, as applicable, on or prior to
the Closing Date the Collateral Agreements, in each case duly executed and in full force and
effect.

     (e) Seller shall have, on or prior to the Closing Date, entered into a new lease, or Parent
shall have, on or prior to the Closing Date, entered into a sublease with Purchaser providing for
the on-going operations of the long-term care pharmacies

12

 

located at 5415 Rainier Avenue, Seattle, WA, and 1600 and 1618 South Lane Street, Seattle, WA
98144, on terms acceptable to the Purchaser.

     (f) All Liens (other than Permitted Liens) on the Transferred Assets shall have been released
and evidence thereof delivered to Purchaser.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT

     Except as otherwise disclosed to Purchaser in a schedule delivered to Purchaser by Seller and
Parent prior to the execution of this Agreement (with specific reference to the representations and
warranties in this Article VI to which the information in such schedule relate) (the
“Disclosure Schedule”), each Seller and Parent, jointly and severally, represent and
warrant to Purchaser as follows:

     Section 6.1 Organization and Good Standing. Each Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of Washington. Parent
is a corporation duly organized and validly existing under the Laws of the State of Indiana. Each
of Seller and Parent has all requisite corporate power and authority to own, lease, operate and
otherwise hold its properties and assets and to carry on its business (including, without
limitation, the Business) as presently conducted. Each Seller is duly qualified or licensed to do
business as a foreign corporation and is in good standing in every jurisdiction in which the nature
of the business conducted by it (including, without limitation, the Business) or the assets or
properties owned or leased by it requires qualification, except where the failure to be so
qualified, licensed or in good standing would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.

     Section 6.2 Authorization and Effect of Agreement. Each Seller and Parent has all
requisite corporate power and authority to execute and deliver this Agreement and the Collateral
Agreements to which they are or are proposed to be a party and to perform their respective
obligations hereunder and under any such Collateral Agreements. The execution and delivery of this
Agreement and the Collateral Agreements by each Seller and Parent and the performance by each
Seller and Parent of their respective obligations hereunder and thereunder, as the case may be, and
the consummation by each Seller and Parent of the transactions contemplated hereby and thereby, as
the case may be, have been duly authorized by their boards of directors and no other corporate or
other action on the part of any of each Seller or Parent is necessary to authorize the execution
and delivery of this Agreement and the Collateral Agreements to which they are or are proposed to
be a party or the consummation of the transactions to which they are or are proposed to be a party
contemplated hereby or thereby. This Agreement has been duly and validly executed and delivered by
each Seller and Parent and constitutes a legal, valid and binding obligation of Seller and Parent,
enforceable against each Seller and Parent in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally.

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     Section 6.3 Consents and Approvals; No Violations. No filing with, and no Permit or
Consent of any Governmental Authority or any other Person is necessary for consummation of the
transactions contemplated by this Agreement or any Collateral Agreement. Neither the execution and
delivery of this Agreement or any Collateral Agreement by each Seller or Parent who is or is
proposed to be a party nor the consummation by each Seller or Parent of the transactions
contemplated by this Agreement or any Collateral Agreement to which they are or are proposed to be
a party nor compliance by each Seller or Parent with any of the provisions hereto or thereto will
(a) conflict with or result in any breach of any provision of the certificate or articles of
incorporation or by-laws of each Seller or Parent, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or give rise to any
right of termination, modification, cancellation or acceleration or loss of material benefits)
under, any of the terms, conditions or provisions of any Contract to which each Seller or Parent is
a party or may be subject or which is included in the Transferred Assets or the Assumed Liabilities
or (c) violate any Permit or Law applicable to each Seller or Parent, the Transferred Assets, the
Assumed Liabilities or the Business.

     Section 6.4 No Third Party Options. There are no existing agreements, options,
commitments or other rights granting any Person the right to acquire Seller’s or Parent’s right,
title or interest in or to any of the Transferred Assets or any interest therein.

     Section 6.5 Permits; Compliance with Law.

     (a) Section 6.5(a) of the Disclosure Schedule lists all Permits held by Seller that are used,
or held for use in, necessary for or otherwise relating to the Business. Seller holds all Permits
necessary for the lawful conduct of the Business under and pursuant to all applicable Laws. All
Permits have been legally obtained and maintained and are valid and in full force and effect.
Seller is duly licensed to conduct the Business as presently conducted in all states in which the
Business is conducted and is in compliance in all material respects with all of the terms and
conditions of such licenses. There has been no material change in the facts or circumstances
reported or assumed in the application for or granting of any Permits. No outstanding violations
are or have been recorded in respect of any of the Permits. No proceeding is pending or, to
Seller’s and Parent’s Knowledge, threatened to suspend, revoke, withdraw, modify or limit any
Permit, and, to Seller’s and Parent’s Knowledge, there is no fact, error or admission relevant to
any Permit that would permit the suspension, revocation, withdrawal, modification or limitation of,
or result in the threatened suspension, revocation, withdrawal, modification or limitation of, or
in the loss of any Permit.

     (b) The Business is being, and has been conducted in compliance, in all material respects,
with all Permits and applicable Laws. To the Knowledge of Seller and Parent, there are no Laws
proposed, as of the date of this Agreement, which are reasonably likely, individually or in the
aggregate, to have an adverse impact on the Business or the timely consummation of the transactions
contemplated hereby.

14

 

     Section 6.6 Litigation. There is no action, proceeding, claim, suit, opposition,
challenge, cancellation proceeding, charge or investigation (collectively, “Proceedings”)
pending or, to Seller’s and Parent’s Knowledge, threatened, that questions the validity of this
Agreement or any Collateral Agreement or any action taken or to be taken in connection with this
Agreement or any Collateral Agreement. There are no Proceedings pending or, to Seller’s and
Parent’s Knowledge, threatened that relate to the Transferred Assets, the Assumed Liabilities or
the Business. There are no outstanding judgments, writs, injunctions, orders, decrees or
settlements that apply, in whole or in part, to the Transferred Assets, the Assumed Liabilities or
the Business that restrict the ownership or use of the Transferred Assets, the Assumed Liabilities
or the Business in any way.

     Section 6.7 Assets Necessary to Business. The Transferred Assets constitute all of
the rights, properties and assets used, or held for use in, necessary for or otherwise relating to
the conduct or operation of the Business as presently conducted. Seller is the sole owner of the
Transferred Assets and the sole obligor with respect to the Assumed Liabilities. Immediately
following the Closing, none of Seller or Parent (or any of their respective Affiliates) will own or
lease any rights, properties or assets which are used or held for use in or necessary for the
conduct of the Business as presently conducted, except for the Excluded Assets.

     Section 6.8 Financial Statements.

     (a) Section 6.8(a) of the Disclosure Schedule sets forth the audited consolidated balance
sheets and statements of income for the Business as of the year ended December 31, 2005,
respectively (the “Financial Statements”), and the unaudited consolidated balance sheets
and statements of income for the Business as of and for the five (5) months ended May 31, 2006,
respectively (the “Interim Financial Statements”).

     (b) The consolidated balance sheets (including, without limitation, the related notes)
included in the Financial Statements and the balance sheet (including, without limitation, the
related notes) included in the Interim Financial Statements fairly present in all material respects
the financial condition of the Business as of the respective dates thereof and the statements of
income (including, without limitation, the related notes) included in the Financial Statements and
the statement of income (including, without limitation, the related notes) included in the Interim
Financial Statements fairly present in all material respects the financial condition and the
results of operations of the Business as of and for the respective periods then ended. Each of the
Financial Statements and the Interim Financial Statements (i) have been prepared in accordance with
GAAP consistently applied during the periods involved, except as otherwise noted therein or in the
notes thereto and (ii) have been prepared in accordance with the books and records of the Business
consistent with past practice.

     Section 6.9 Absence of Certain Changes. Since December 31, 2005, (a) Seller has
operated the Business in the ordinary course of business consistent with past practice, (b) Seller
has not taken, or agreed to take, any of the actions set forth in Section 8.1 hereto, (c)
there has not occurred any event or condition that, individually or

15

 

in the aggregate, has had or is reasonably likely to have a Material Adverse Effect, (d) the
Business has not suffered the loss of service of any Personnel who are material, individually or in
the aggregate, to the operations or conduct of the Business, (e) there have been no cancellations
or terminations by any material supplier, customer or contractor with respect to any of the
Transferred Assets or the Business and (f) there has been no material damage to or loss or theft of
any of the Transferred Assets.

     Section 6.10 No Default. None of Seller or Parent has committed, or received notice
of, any default or violation (and no event has occurred which with notice or lapse of time or both
would constitute a default or violation or loss of any material benefit) of any term, condition or
provision of (a) any Contract to which Seller or Parent is a party or may be subject that is
included in the Transferred Assets or the Assumed Liabilities or otherwise relates to or affects
the Business or (b) any order, writ or injunction, applicable to the Business or any of the
Transferred Assets or the Assumed Liabilities, which in both cases, is or is reasonably likely to
be materially adverse to the Business.

     Section 6.11 Transactions with Affiliates. There are no outstanding liabilities or
obligations for amounts owing or other commitments to or from or Contracts, and within the past
year there have been no transactions, between any Affiliates of Seller or Parent or any of Seller’s
directors (whether a current or former director), officers or employees on the one hand, and
Seller, Parent, on the other hand, relating to the Business, the Transferred Assets or the Assumed
Liabilities.

     Section 6.12 Contracts.

     (a) Section 6.12(a) of the Disclosure Schedule sets forth a complete and accurate list of all
Contracts relating to the Business.

     (b) Section 6.12(b) of the Disclosure Schedule sets forth a complete and accurate list of all
Assumed Contracts requiring consent to the assignment thereof to Purchaser (individually, a
“Contract Requiring Consent” and collectively, the “Contracts Requiring Consent.”

     (c) (i) Each Assumed Contract is legal, valid, binding and enforceable against Seller or
Parent, as the case may be, and to Seller’s and Parent’s Knowledge, against each other party
thereto, is in full force and effect and, subject to obtaining all Required Third Party Consents,
will continue to be so legal, valid, binding and enforceable and in full force and effect following
the assignment of such Contract at the Closing or pursuant to other arrangements in accordance with
Section 8.9 hereto, as the case may be, and (ii) none of Seller or Parent and, to Seller’s
and Parent’s Knowledge, no other party, is in breach or default, and no event has occurred which
would constitute (with or without notice or lapse of time or both) a breach or default (or give
rise to any right of termination, modification, cancellation or acceleration) or loss of any
benefits under any such Contract, except in each case as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.

16

 

     (d) Seller has delivered to Purchaser complete and accurate copies of each Contract, or where
they are oral, complete and accurate written summaries thereof, listed in Section 6.12(a) of the
Disclosure Schedule. Since December 31, 2005, there has been no material modification, waiver,
breach or termination of any such Contract or any material provision thereto. To the Knowledge of
Seller and Parent, no modification, waiver, breach or termination of any Contract listed in Section
6.12(a) of the Disclosure Schedule is contemplated and no Contract listed in Section 6.12(a) of the
Disclosure Schedule (other than those so noted in the Disclosure Schedule) is terminable or
cancelable as a result of the consummation of the transactions contemplated in this Agreement.

     (e) There are no non-competition or non-solicitation agreements or any similar agreements or
arrangements that would restrict or hinder the operation or conduct of the Business or use of any
of the Transferred Assets or any “earn-out” agreements or arrangements to which Seller or Parent is
a party or to which Seller, Parent, the Business or the Transferred Assets is or may be subject
(other than this Agreement or pursuant to this Agreement).

     Section 6.13 Labor Relations.

     (a) Seller is not a party to any collective bargaining agreement with respect to any current
or former employee of the Business and there is no collective bargaining agreement which relates to
the Business.

     (b) There is no unfair labor practice, charge or complaint or other proceeding pending or, to
the Knowledge of Seller and Parent, threatened, against any of the Transferred Assets or Seller or
otherwise relating to the Business before the National Labor Relations Board or any other
Governmental Authority.

     (c) There is no labor strike, slowdown or stoppage pending or, to the Knowledge of Seller and
Parent, threatened, against or affecting the Transferred Assets or Seller or otherwise relating to
the Business, nor has there been any such activity within the past two (2) years affecting the
Transferred Assets or Seller or relating to the Business.

     (d) There are no pending collective bargaining negotiations relating to any employees of the
Business.

     (e) (i) There are no agreements with, or pending petitions for recognition of, a labor union
or association as the exclusive bargaining agent for any or all of the employees of the Business,
(ii) to the Knowledge of Seller and Parent, no such petitions have been pending within the past
five (5) years and (iii) to the Knowledge of Seller and Parent, there has not been any general
solicitation of representation cards by any union seeking to represent the employees of Seller or
of the Business as their exclusive bargaining agent at any time within the past five (5) years.

     (f) Seller is in compliance, in all material respects, with all applicable Laws, rules and
regulations respecting employment, employment practices, terms and

17

 

conditions of employment, health and safety, classification of employment or service status,
withholding and wages and hours, in each case, with respect to current and former employees and
service providers of the Business.

     Section 6.14 Title to Assets. Seller is the lawful owner of, or has the right to use,
and has good, valid and marketable title to, the Transferred Assets free and clear of any Liens
(other than Permitted Liens). Seller has good, legal and valid title to all of its assets
(including, without limitation, its investment assets) free and clear of all Liens (except for
Permitted Liens). Seller owns, has valid leasehold interests in or valid contractual rights to
use, all of the properties and assets, tangible and intangible, used or held for use in, necessary
for or relating to the conduct or operation of, the Business. All of the property referenced in
this Section 6.14, and to the extent applicable, is in good operating condition (subject to
ordinary wear and tear) and has been maintained in a manner consistent with industry standards.

     Section 6.15 Insurance. Seller or its Affiliates have in place insurance policies
with respect to the Transferred Assets and the Business in amounts and types that are customary in
the industry for similar assets and sufficient to cover the full value of the Transferred Assets
and the Business, and all such policies are valid and in full force and effect. Section 6.15 of
the Disclosure Schedule contains a complete and accurate list and an accurate summary (including,
without limitation, the named insured, whether occurrence or claims made policy, premiums,
coverage, deductibles and expiration dates, broker and carrier) of all insurance policies currently
maintained or maintained for the past year relating to the Transferred Assets or the Business.
Seller has delivered to Purchaser complete and accurate copies of all such policies together with
(a) all riders and amendments thereto. Such policies, as are current, are valid and in full force
and effect, all premiums due thereon have been paid, and Seller and, if applicable, its Affiliates,
have complied in all material respects with the provisions of such policies, and all such policies
either specifically include Seller as named insured or include omnibus named insured language which
generally includes Seller. If requested by Purchaser prior to, from and after the Closing, such
policies shall specifically include Purchaser as a named insured without any modifications of any
of the terms of such policies. In addition, if requested by Purchaser prior to the Closing, Seller
shall procure, at its expense, a “tail” policy for any claims-made malpractice policies, which
policy shall specifically include Purchaser as a named insured. No Proceedings are pending or, to
the Knowledge of Seller and Parent, threatened, or during the prior year were instituted or
threatened, to revoke, cancel, limit or otherwise modify such policies and no notice of
cancellation of any of such policies has been received. Seller is, and for the past year has been,
in full compliance with all material recommendations for the prevention of loss made by all
insurance carriers and is in compliance with all warranties contained in all insurance policies, in
each case with respect to the Transferred Assets and the Business.

     Section 6.16 Inventory. At the Closing, the inventory included in the Transferred
Assets (the “Inventory”), will be items of good quality and usable or saleable by the
Business in the ordinary course of business consistent with past practice. The Inventory delivered
at the Closing will be of a quantity and quality that is reasonable and warranted in the
circumstances of the Business. All of the pharmaceuticals, drugs and

18

 

biologicals included in Inventory have been properly stored in a manner consistent with
industry standards and are in date and are properly labeled and packaged.

     Section 6.17 Accounts Receivable. All accounts receivable, rebates receivable earned
after June 30, 2006, notes receivable and other indebtedness owed to Seller included in the
Transferred Assets (the “Accounts Receivable”) represent bona fide sales actually made or
services actually delivered in the ordinary course of business consistent with past practice and,
in the case of Accounts Receivable, have been billed or invoiced in the ordinary course of business
consistent with past practice in accordance with all applicable Laws. Except to the extent
expressly reserved against or reflected on the Interim Financial Statements, to the Knowledge of
Seller and Parent there is no reason why such Accounts Receivable would not be collectible in the
ordinary course of business consistent with past practice.

     Section 6.18 Product Returns and Warranties. To the Knowledge of Parent and Seller,
there are no liabilities for product returns other than those arising in the ordinary course of the
Business consistent with past practice. To the Knowledge of Seller and Parent, there are no
threatened claims for (a) product returns, (b) warranty obligations or (c) product services, other
than in the ordinary course of the Business consistent with past practice. Seller has not made any
express or implied warranties with respect to products sold or distributed by Seller (other than
passing on warranties made by the manufacturers thereof) and, to the Knowledge of Seller and
Parent, no other warranties have been made by the officers, directors, employees, consultants or
agents of Seller (collectively, “Personnel”). None of Seller or Parent has any Knowledge
of any presently existing circumstances that would constitute a valid basis for any voluntary or
governmental recall of any pharmaceutical or other product sold or distributed by Seller in
connection with or otherwise relating to the Business.

     Section 6.19 Customers; Suppliers. Section 6.19 of the Disclosure Schedule contains a
complete and accurate list of all Facilities, and the number of licensed beds in such Facilities
that are provided products and services by the Business under any Contract or other arrangement.
During the six (6) months ended June 30, 2006, not more than 5% of the revenues of the Business
during such period was attributable to patients serviced by any single customer or group of related
customers. None of Seller or Parent has received any notice (or are otherwise aware) that any
party intends to cancel any Contract or materially reduce the level of business it conducts with
the Business.

     Section 6.20 Absence of Certain Business Practices. None of Seller or Parent, nor any
Affiliate, director, officer, employee or agent of Seller or Parent, nor any other Person acting on
behalf of Seller or Parent, directly or indirectly, have given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other Person which (a) could
reasonably be expected to subject the Business, the Transferred Assets, the Assumed Liabilities or
Purchaser to any damage or penalty in any civil, criminal or governmental litigation or proceeding,
(b) if not given in the past, might have been reasonably likely to, individually or in the
aggregate, have had a Material Adverse Effect or (c) if not continued in the future, might be
reasonably likely

19

 

to, individually or in the aggregate, have a Material Adverse Effect or which might subject
Seller, Parent or Purchaser to suit or penalty in any private or governmental litigation or
proceeding.

     Section 6.21 Certain Healthcare Legal Matters. With respect to the Business, the
Transferred Assets and the Assumed Liabilities:

     (a) Seller, all of its Personnel and Parent have complied in all material respects with all
applicable statutes, regulations, rules, orders, ordinances and other laws of any Governmental
Authority to which they are subject with respect to healthcare regulatory matters (including,
without limitation, The Social Security Act, as amended, Sections 1128, 1128A and 1128B, 42 U.S.C.
Sections 1320a-7, 7(a) and 7(b), including, without limitation, Criminal Penalties Involving
Medicare or State Health Care Programs, commonly referred to as the “Federal Anti-Kickback Statute”
and The Social Security Act, as amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition
Against Certain Referrals), commonly referred to as the “Stark Statute,” the statute commonly
referred to as the “Federal False Claims Act,” the Health Insurance Portability and Accountability
Act of 1996, and the regulations issued pursuant thereto and all statutes and regulations relating
to the possession, distribution, maintenance and documentation of controlled substances)
(collectively, “Healthcare Laws”). Seller has maintained all records required to be
maintained by the Food and Drug Administration, Drug Enforcement Administration and State Board of
Pharmacy and the Medicare and Medicaid programs and the laws of all other applicable federal, state
and local Governmental Authorities as required by applicable Healthcare Laws. To the Knowledge of
Parent and Seller, there are no presently existing circumstances which would result or would be
reasonably likely to result in violations of any such Healthcare Laws.

     (b) Seller is qualified for participation in the Medicare and Medicaid programs. None of
Seller or Parent has received any notice indicating that such qualification may be terminated or
withdrawn nor have any reason to believe that such qualification may be terminated or withdrawn.
Seller has timely filed all claims or other reports required to be filed with respect to the
purchase of products or services by third-party payors (including, without limitation, Medicare and
Medicaid), except where the failure to file such claims and reports would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect, and all such claims or
reports are complete and accurate in all material respects. Seller and Parent have no liability to
any payor with respect thereto, except for liabilities incurred in the ordinary course of business
consistent with past practice. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open Medicare or Medicaid claim
determinations or other reports required to be filed by Seller.

     (c) None of Seller or Parent, or the directors and officers of each of Seller or Parent or, to
the Knowledge of Seller or Parent, any employee, consultant or agent of each of Seller or Parent,
have been convicted of, charged with or investigated for a Medicare, Medicaid or other Federal
Health Care Program (as defined in 42 U.S.C. § 1320a-7b(f)) related offense, or convicted of,
charged with or investigated for a violation of federal or state law relating to fraud, theft,
embezzlement, breach of fiduciary

20

 

responsibility, financial misconduct, obstruction of an investigation or controlled
substances. None of Seller or Parent, or the directors and officers of each of Seller or Parent
or, to the Knowledge of Seller or Parent, any employee, consultant or agent of each of Seller or
Parent, have been excluded or suspended from participation in Medicare, Medicaid or any other
Federal Health Care Program, or have been debarred, suspended or are otherwise ineligible to
participate in federal programs. None of Seller or Parent, or the directors and officers of each
of Seller or Parent or, to the Knowledge of Seller or Parent, any employee, consultant or agent of
each of Seller or Parent have committed any offense which may reasonably serve as the basis for any
such exclusion, suspension, debarment or other ineligibility. To the Knowledge of each of Seller
or Parent, neither Seller nor Parent has arranged or contracted with any individual or entity that
is suspended, excluded or debarred from participation in, or otherwise ineligible to participate
in, a Federal Health Care Program or other federal program.

     (d) There are no pharmaceutical or other products now being sold or distributed or services
provided by Seller that would require any approval of any governmental or administrative body,
whether federal, state, local or foreign, prior to commercial distribution of such products, for
which approval has not been obtained. All pharmaceutical or other products now being distributed
or services provided by Seller and all products included in the inventory of Seller comply, in all
material respects, with all applicable legal requirements of all jurisdictions in which such
pharmaceutical or other products are now being distributed or such services are now being provided.

     (e) None of Seller or Parent or any of their respective Affiliates, or, to the Knowledge of
Parent and Seller, any relatives of any officers, directors or employees of Seller, (i) have or
have had any ownership, leasehold or other interest, whether direct or indirect, in any customer of
the Business, (ii) are or have been employed in any sales or management position, whether directly
or indirectly, by any customer of the Business or (iii) are or have been able to influence the
purchase or procurement of any pharmacy services or related products by any customer from the
Business.

     Section 6.22 Real Property. Section 6.22 of the Disclosure Schedule sets forth the
location and a description of the leased real property included in the Transferred Assets or the
Assumed Liabilities and the general nature of the facilities located on the properties. Seller
does not own any real property. Seller owns, has valid leasehold interests in or valid contractual
rights to use, all real property used or held for use in, necessary for or relating to the conduct
or operation of, the Business.

     Section 6.23 Environmental.

     (a) (i) Seller, the Transferred Assets and the Business comply and at all times have complied
in all material respects with all applicable Environmental Laws, (ii) except in material compliance
with applicable Environmental Laws, as required in the ordinary course of the Business and as could
not reasonably be expected to have a Material Adverse Effect, no Hazardous Substances are present
at or have been Released or, to the Knowledge of Parent and Seller, threatened to be Released from,
onto or under any of the properties (including, without limitation, soils, groundwater, surface
water,

21

 

buildings or other structures) currently owned, leased, operated or otherwise used by Seller
or the Business, (iii) none of Seller or the Business have received any notice, demand, letter,
claim or request for information alleging that Seller in connection with the Business, the
Transferred Assets or the Business are or may be in violation of or liable under any Environmental
Law, (iv) none of Seller or Parent in connection with the Business, the Transferred Assets or the
Business are subject to any order, decree, injunction or other directive of any Governmental
Authority and none of Seller or Parent in connection with the conduct of the Business, the
Transferred Assets or the Business are subject to any indemnity or other agreement with any Person
or entity relating to Hazardous Substances, (v) there are no circumstances or conditions involving
Seller or Parent in connection with the Business, the Transferred Assets or the Business, any
assets (including, without limitation, real property) or businesses previously owned, leased,
operated or otherwise used by Seller or Parent, or any of the assets (including, without
limitation, real property) or businesses of any predecessors of Seller in connection with the
Business that could reasonably be expected to result in any restriction on the ownership, use or
transfer of any of the Transferred Assets arising under or pursuant to any Environmental Law and
(vi) Seller has provided to Purchaser the following: (A) a copy of each Permit or pending
application for any Permit and each order, judgment, decree, consent agreement or similar document
imposing material obligations on Seller issued pursuant to or in connection with any Environmental
Law and relating to the Business or the Transferred Assets; (B) copies of all material reports in
the custody or control of Seller, including, without limitation, “Phase I,” “Phase II,”
“environmental assessment” and similar reports, relating to the environmental condition of the
Business or the Transferred Assets or the compliance of Seller, the Business or the Transferred
Assets with Environmental Laws; (C) documentation, if applicable, showing the compliance of Seller
with any material financial responsibility requirements of any applicable Environmental Law in
connection with the Business or the Transferred Assets; and (D) documentation, if applicable,
demonstrating the compliance of Seller with any applicable Environmental Laws that condition,
restrict, or prohibit the transfer, sale, lease, assignment or closure of any of the Business or
the Transferred Assets, including, without limitation, any so-called “environmental property
transfer laws.”

          (b) As used herein, the term “Environmental Law” means any Law relating to the
protection, investigation or restoration of the environment (including, without limitation, natural
resources) or the health or safety of human or other living organisms, including, without
limitation, the manufacture, introduction into commerce, export, import, handling, use, presence,
disposal, Release or threatened Release of any Hazardous Substance.

          (c) As used herein, the term “Hazardous Substance” means any element, compound,
substance or other material (including, without limitation, any pollutant, contaminant, hazardous
waste, hazardous substance, chemical substance, or product) that is listed, classified or regulated
pursuant to any Environmental Law, including, without limitation, any petroleum product, by-product
or additive, asbestos, presumed asbestos-containing material, asbestos-containing material, medical
waste,

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lead-containing paint or plumbing, polychlorinated biphenyls, radioactive material or radon.

          (d) As used herein, the term “Release” means any release, pumping, pouring, emptying,
injecting, escaping, leaching, migrating, dumping, seepage, spill, leak, flow, discharge, disposal
or emission.

          Section 6.24 No Broker. No agent, broker, investment banker, financial advisor or
other firm or Person is or will be entitled to any broker’s or finder’s fee payable by Seller or
Parent or any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except for Capital Development Services, the fees of which shall be
the responsibility of Parent and/or Seller.

          Section 6.25 No Misleading Statements. The representations and warranties made by
Seller and Parent in this Agreement, including, without limitation, the exhibits and schedules
hereto, do not include any untrue statement of a material fact or omit to state any material fact
necessary to make the statements made herein or therein, in light of the circumstances under which
they were made, not misleading.

          Section 6.26 Employee Benefits.

          (a) Section 6.26(a) of the Disclosure Schedule sets forth a list of all “employee pension
benefit plans” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”)), “employee welfare benefit plans” (as defined in Section 3(1) of
ERISA), any bonus, deferred compensation, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, change in control, retention, consulting, severance or other
employee or fringe benefit plan, program, policy, arrangement and contract (all the foregoing being
herein called “Benefit Plans”) sponsored, maintained or required to be contributed to, by
Seller for the benefit of any current or former directors, officers, employees or independent
contractors of the Business. Seller has made available to Purchaser complete and accurate copies
of (i) each Benefit Plan (or, in the case of any unwritten Benefit Plan, a brief description
thereof), (ii) the most recent annual report on Form 5500 filed with the IRS with respect to any
Benefit Plan (if any such report was required) and (iii) each trust agreement and group annuity
contract relating to any Benefit Plan.

          (b) Each Benefit Plan has been administered in compliance, in all material respects, with its
terms and the applicable provisions of ERISA, the Code and all other applicable Laws. Neither
Seller nor any entity that is treated with Seller as a single employer under Section 414 of the
Code (“ERISA Affiliate”) maintains or contributes to any benefit plan that is subject to
the provisions of Title IV of ERISA. Neither Seller nor any ERISA Affiliate has any unsatisfied
material liability under the Code, ERISA or any foreign law in respect of any Benefit Plan. Each
employee pension benefit plan that is intended to be qualified under Section 401(a) of the Code is
subject to an opinion letter from the IRS stating it is so qualified and Seller and Parent have no
Knowledge of facts that would be reasonably likely to cause revocation of such letter. There are
no material

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pending or, to the Knowledge of Seller and Parent, threatened claims, suits or arbitrations
involving any Benefit Plan except any routine claim for benefits under a Benefit Plan.

          (c) No director, officer, employee or consultant of Seller will be entitled to any additional
economic benefit (including, without limitation, the acceleration of the time of payment or vesting
of any economic benefit) as a result of the consummation of the transactions contemplated by this
Agreement.

          (d) None of Seller or Parent is a party to any Contract, agreement, plan or arrangement that,
individually or in the aggregate, or when taken together with any payment that may be made under
this Agreement or any agreements contemplated by this Agreement, could give rise to the payment of
any “excess parachute payment” within the meaning of Section 280G of the Code.

          Section 6.27 Taxes.

          (a) All Tax Returns required to be filed and relating in any manner to any of the Transferred
Assets or the Business have been timely filed. All such Tax Returns (i) were prepared in the
manner required by applicable Law and (ii) are true, correct and complete in all material respects.

          (b) Seller has paid, or caused to be paid, all Taxes due with respect to any of the
Transferred Assets or the Business whether or not shown (or required to be shown) on a Tax Return;
and such Taxes paid include those for which Seller may be liable in its own right, or as the
transferee of the assets of, or as successor to, any other entity.

          (c) There has been no notice of a deficiency or assessment or other claim relating in any
manner to any of the Transferred Assets or the Business from any Taxing Authority which has not
been fully paid or finally settled. There are no current audits or examinations of, and no notice
of audit or examination of, any Tax Return that relates to any of the Transferred Assets or the
Business. Seller has not given nor has there been given on Seller’s behalf a waiver or extension
of any statute of limitations relating to the payment of Taxes relating to any of the Transferred
Assets or the Business.

          (d) Seller has complied in all material respects with all applicable Laws, rules and
regulations relating to the withholding of Taxes and the payment thereof to the appropriate Taxing
Authority, including, without limitation, Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee or independent contractor.

          (e) No claim has ever been made by any Taxing Authority with respect to any of the Transferred
Assets or the Business in a jurisdiction where Seller does not file Tax Returns that Seller may be
subject to taxation in that jurisdiction.

          (f) There are no encumbrances or security interests on any of the Transferred Assets that
arose in connection with any failure (or alleged failure) to pay any Taxes and, except for Liens
for real and personal property Taxes that are not yet due

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and payable, there are no Liens for any Tax upon any Transferred Asset. Purchaser will not be
liable for, and none of the Transferred Assets will be subject to a Lien (other than Liens for real
and personal property Taxes that are not yet due and payable) with respect to, any Taxes arising
out of, relating to or in respect of the Business or any of the Transferred Assets for any tax
period or portion thereof ending on or before the Closing Date.

          (g) None of the Transferred Assets is (i) “tax-exempt use property” within the meaning of
Section 168(h) of the Code, (ii) “tax-exempt bond financed property” within the meaning of Section
168(g)(5) of the Code or (iii) property that is required to be treated as owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended,
and in effect immediately prior to the enactment of the Tax Reform Act of 1986.

          (h) The Transferred Assets do not include any shares of capital stock of, or any other
interest in, any Affiliate of Seller, or any other Person.

     (i) For purposes of this Agreement:

     (i) “Tax” and “Taxes” mean any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions, levies and
liabilities, including, without limitation, taxes based upon, measured by, or with respect
to income, net income, gross income, earnings, profits or gross receipts, or any sales,
use, ad valorem, transfer, franchise, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, environmental,
alternative, add-on minimum, custom duties, capital stock, social security (or similar),
unemployment, disability, gains, recapture, estimated, or other taxes, fees, assessments or
charges of any kind whatsoever, together with any interest, penalty, and addition thereto.

     (ii) “Tax Return” means any return, declaration, report, claim, election,
notice or information return or statement or other document (including, without limitation,
any related or supporting information, schedules, or exhibits) filed or required to be
filed with any federal, state, local or foreign Governmental Authority or other authority
in connection with any Tax or estimated Tax.

     Section 6.28 Proprietary Rights. (a)

     (i) Seller is the sole owner of, free and clear of all Liens (other than Permitted
Liens), or has a valid right to use, without the payment of any royalty, except with
respect to off-the-shelf software licensed on commercially reasonable terms, and
immediately following the Closing, Purchaser will be the sole owner of, free and clear of
all Liens (other than Permitted Liens), or will have a valid right to use on the same terms
as Seller (without the payment of any sublicense or other payment relating to the
transactions contemplated by this Agreement) to, all U.S. and non-U.S. trademarks, service
marks, logos, designs, trade names, internet domain names and corporate names, and the
goodwill of the business

25

 

connected therewith and symbolized thereby, patents, registered designs, copyrights,
computer software (including, without limitation, all information systems, patient and
other data files and databases, source and object codes, user interfaces, manuals and other
specifications and documentation related thereto and all intellectual property and
proprietary rights incorporated therein), web sites and web pages and related items (and
all intellectual property and proprietary rights incorporated therein) and all trade
secrets, research and development information, formulae, proprietary data and know-how
(“Trade Secrets”) and all other proprietary and intellectual property rights and
information, including, without limitation, all grants, registrations and applications
relating thereto (all of the foregoing to be collectively referred to as the
“Proprietary Rights”) used or held for use in, necessary or advisable for or
otherwise relating to the conduct of the Business as now conducted or as contemplated to be
conducted (such Proprietary Rights, the “Seller’s Rights”);

     (ii) the Seller’s Rights are valid and enforceable, and, immediately following the
Closing, Purchaser’s rights in such Seller’s Rights will be valid and enforceable;

     (iii) no action or proceeding is outstanding or pending, or to the Knowledge of Seller
or Parent, threatened, that seeks to cancel, limit or challenge the ownership, use, value,
validity or enforceability of any Seller’s Rights;

     (iv) none of Seller or Parent has received any demand, claim, notice or inquiry from
any Person in respect of any Seller’s Rights which challenges, threatens to challenge or
inquires as to whether there is any basis to challenge, the validity of, or the rights of
Seller in, any Seller’s Rights, and none of Seller or Parent have Knowledge of any basis
for any such challenge;

     (v) neither Seller nor the Business as presently conducted by Seller is in violation
or infringement of, nor have Seller nor the Business as currently or in the past conducted
by Seller violated or infringed, any Proprietary Rights of any other Person;

     (vi) to the Knowledge of Seller and Parent, no Person is violating or infringing any
Seller’s Rights; and

     (vii) to the Knowledge of Seller and Parent, none of Seller or Parent has divulged,
furnished to or made accessible to any Person, any Trade Secrets without prior thereto
having obtained an enforceable agreement of confidentiality from such Person; or without
such Person being otherwise under an obligation of confidentiality.

     (b) Section 6.28(b) of the Disclosure Schedule contains a complete and accurate list of
Seller’s Rights, other than non-material unregistered copyrights and Trade Secrets, and all
licenses and other agreements relating thereto.

26

 

          Section 6.29 Information Technology. (a) (i) the IT Systems are in good working
condition to effectively perform all information technology operations necessary for the conduct of
the Business as now conducted or as contemplated to be conducted; (ii) none of Seller or Parent has
experienced within the past twelve (12) months any material disruption to, or material interruption
in, its conduct of the Business attributable to a defect, bug, breakdown or other failure or
deficiency on the part of the IT Systems; (iii) Seller has taken commercially reasonable steps to
provide for the backup and recovery of the data and information critical to the conduct of the
Business; and (iv) Seller has taken commercially reasonable actions, consistent with standards in
the Business, with respect to the IT Systems to detect and prevent the disclosure to unauthorized
Persons of, and keep secure, any and all confidential information, Trade Secrets, or other
proprietary information stored on the IT Systems.

          (b) As used herein, “IT Systems” means any and all information technology and computer
systems (including, without limitation, software, hardware and other equipment, firmware and
embedded software) relating to the transmission, storage, maintenance, organization, presentation,
generation, processing or analysis of data and information whether or not in electronic format,
which technology and systems are used in or necessary or advisable to the conduct of the Business.

          Section 6.30 Solvency of Parent and Sellers. Parent is not insolvent, or will not be
rendered insolvent by any of the transactions contemplated by this Agreement. As used herein,
“insolvent” means that the sum of the debts and other probable liabilities of the Parent exceeds
the fair present value of Parent’s assets. Immediately after giving effect to the consummation of
the transaction contemplated by this Agreement: (i) Parent will be able to pay its liabilities as
they become due in the ordinary course of business of Parent; and (ii) Parent will not have
unreasonably small capital with which to conduct its present or proposed business.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF PURCHASER

          Purchaser represents and warrants to Seller and Parent as follows:

          Section 7.1 Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. Purchaser has full
power and authority to own, lease, operate and otherwise hold its properties and assets and to
carry on its business as presently conducted. Purchaser is duly qualified or licensed to do
business as a foreign corporation and is in good standing in every jurisdiction in which the nature
of the business conducted by it or the assets or properties owned or leased by it requires
qualification, except where the failure to be so qualified, licensed or in good standing would not,
individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.

          Section 7.2 Authorization and Effect of Agreement. Purchaser has the full power and
authority to execute and deliver this Agreement and the Collateral

27

 

Agreements and to perform its obligations hereunder and thereunder. The execution and
delivery by Purchaser of this Agreement and the Collateral Agreements to which it is a party and
the performance by it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Purchaser. This Agreement has been duly executed
and delivered by Purchaser and constitutes a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally.

          Section 7.3 Consents and Approvals; No Violations. No filing with, and no Permit or
Consent of any Governmental Authority is necessary for the consummation by Purchaser of the
transactions contemplated by this Agreement and any Collateral Agreements. Neither the execution
and delivery of this Agreement and any Collateral Agreement by Purchaser nor the consummation by
Purchaser of the transactions contemplated by this Agreement and any Collateral Agreements, nor
compliance by Purchaser with any of the provisions hereof or thereof will (a) conflict with or
result in any breach of any provision of the certificate of incorporation or by-laws of Purchaser,
(b) result in a violation or breach of, or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or acceleration or loss
of material benefits) under, any of the terms, conditions or provisions of any Contract to which
Purchaser is a party or by which Purchaser or any of their properties or assets may be bound or (c)
violate any order, writ, injunction, decree, statute, treaty, rule or regulation applicable to
Purchaser, or any of its properties or assets, except in the case of clauses (b) or (c) for
violations, breaches or defaults which would not, in the aggregate, prevent or materially delay the
consummation of the transactions contemplated by this Agreement.

          Section 7.4 No Broker. No agent, broker, investment banker, financial advisor or
other firm or Person is or will be entitled to any broker’s or finder’s fee or any other commission
or similar fee payable by Purchaser in connection with any of the transactions contemplated by this
Agreement.

ARTICLE VIII

COVENANTS

          Section 8.1 Conduct of Business. During the period from the date hereof through and
including the Closing, except as otherwise expressly provided in this Agreement or as agreed to by
Purchaser in writing, Seller shall, and Parent shall cause Seller to, operate the Business only in
the ordinary course of business consistent with past practice. Seller shall use its reasonable
commercial efforts to preserve intact the Inventory, the Transferred Assets and present
organization of the Business, keep available the services of the present officers and employees of
Seller that are associated with the Business and preserve relationships with customers, suppliers,
licensors, licensees, contractors, distributors and others having business dealings with the
Business. Without limiting the generality of the foregoing, from the date of this Agreement
through

28

 

and including the Closing, Seller shall not, and Parent shall not permit Seller to, without
the prior written consent of Purchaser:

          (a) sell, lease, encumber, transfer or dispose of any assets or rights or acquire any assets
or rights which would be included in the Transferred Assets, other than the sale or purchase of
inventory in the ordinary course of business, consistent with past practice;

          (b) engage in any trade loading, including, without limitation, sales of products (i) with
payment terms longer than terms customarily offered by the Business for such product, (ii) at a
greater discount from listed prices than customarily offered for such products, other than pursuant
to a promotion of a nature previously used in the normal course of business by Seller in connection
with the Business for such products, (iii) at a price which does not give effect to any previously
announced general increase in the list price for such products, (iv) with shipment terms more
favorable to the customer than shipment terms customarily offered by Seller in connection with the
Business for such products, (v) in a quantity greater than the reasonable retail or wholesale (as
the case may be) resale requirement of the particular customer or (vi) in conjunction with other
benefits to the customer not in the ordinary course of business consistent with past practice with
such customer;

          (c) collect any accounts receivables or rebates receivables or fail to pay any accounts
payable, other than in the ordinary course of business consistent with past practice;

          (d) enter into any material commitment or transaction;

          (e) permit any Transferred Asset to become encumbered by a Lien (other than Permitted Liens);

          (f) change (or permit to be changed) any accounting or Tax procedure, election or practice or
financial structure or make (or permit to be made) any Tax election or settle or compromise any
liability for Taxes, in each case, relating to the Business or any of the Transferred Assets;

          (g) enter into, adopt, amend, modify or terminate any employee benefit plan, program or
arrangement, increase in any manner the compensation or benefits of any officer or employee of or
associated with the Business or pay any benefit not required by any existing employee benefit plan,
or enter into any Contract to do any of the foregoing, except for normal periodic increases in
compensation in the ordinary course of the Business consistent with past practice;

          (h) enter into or offer to enter into any employment or consulting arrangement with any Person
in connection with the Business, except as contemplated in clause (i) below;

29

 

          (i) except in the ordinary course of business consistent with past practice, hire or terminate
the employment or contractual relationship of any officer, employee, consultant, registered
representative or agent of the Business;

          (j) except in the ordinary course of business consistent with past practice, make, or become
obligated to make any capital expenditures with respect to the Business or the Transferred Assets;

          (k) enter into, amend, modify or terminate any Contract, except in the ordinary course of
business consistent with past practice;

          (l) enter into any transaction or any Contract with any Affiliate relating to the Business;

          (m) assign, license, sublicense, abandon, fail to maintain or, except in the ordinary course
of business consistent with past practice, enter into, amend or terminate any Contract with respect
to, any Seller’s Rights;

          (n) waive any material rights with respect to the Transferred Assets, Assumed Liabilities of
the Business; or

          (o) take, or agree to take, any of the foregoing actions or any affirmative action which
either intentionally would or is reasonably likely to make any representation or warranty of Seller
and Parent contained in this Agreement untrue or incorrect as of any future date (as if made as of
such date) or which could prevent the satisfaction of any condition to Closing set forth in
Article V hereto.

          Section 8.2 Access. Subject to applicable law, Seller shall, and Parent shall cause
Seller to, afford to officers, employees, accountants, counsel and other representatives of
Purchaser reasonable access to all of the assets, properties, personnel, books and records of
Seller relating to the Business, the Transferred Assets and the Assumed Liabilities.

          Section 8.3 Notification.

          (a) Seller and Parent shall promptly notify Purchaser, and Purchaser shall promptly notify
Seller and Parent, of any litigation, arbitration or administrative proceeding pending or, to their
Knowledge, threatened against Seller, Parent or Purchaser, as the case may be, which challenges the
transactions contemplated by this Agreement or any Collateral Agreement.

          (b) Seller shall, and Parent shall cause Seller to, provide prompt written notice to Purchaser
of any change in any of the information contained in the representations and warranties made by
Seller and Parent in Article VI hereto or any exhibits or schedules referred to herein or
attached hereto and shall promptly furnish any information which Purchaser may reasonably request
in relation to such change; provided that such notice shall not operate to in any way
modify or cure any breach of the

30

 

representations and warranties made by Seller and Parent in Article VI hereto or any
exhibits or schedules referred to herein or attached hereto.

          Section 8.4 No Inconsistent Action. None of Purchaser, Seller or any of Parent will
take any action which is inconsistent with its respective obligations under this Agreement.

          Section 8.5 Reasonable Best Efforts.

          (a) Upon the terms and subject to the conditions of this Agreement, each of the parties hereto
shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement and the Collateral Agreements as
promptly as practicable, including, without limitation, (i) the prompt preparation and filing of
all forms, registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the Collateral Agreements and the taking of such commercially
reasonable actions as are necessary to obtain any requisite Consents, orders, exemptions or waivers
by any Governmental Authority or any other Person and (ii) using its reasonable best efforts to
cause the satisfaction of all conditions to Closing. Each party shall promptly consult with the
others with respect to, provide any necessary information with respect to and provide the other (or
its counsel) copies of, all filings made by such party with any Governmental Authority or any other
Person or any other information supplied by such party to a Governmental Authority or any other
Person in connection with this Agreement and the transactions contemplated by this Agreement.

          (b) Each party hereto shall promptly inform the others of any communication from or with any
Governmental Authority regarding any of the transactions contemplated by this Agreement and the
Collateral Agreements. If any party or Affiliate thereof receives a request for additional
information or documentary material from any such Governmental Authority with respect to the
transactions contemplated by this Agreement, then such party will endeavor in good faith to make,
or cause to be made, as soon as reasonably practicable and after consultation with the other party,
an appropriate response in compliance with such request.

          Section 8.6 Further Assurances. From time to time after the Closing, without
additional consideration, each party hereto will (or, if appropriate, cause its Affiliates to)
execute and deliver such further instruments and take such other action as may be necessary or
reasonably requested by the other party to make effective the transactions contemplated by this
Agreement and the Collateral Agreements and to provide the other party with the intended benefits
of this Agreement and the Collateral Agreements. Without limiting the foregoing, upon reasonable
request of Purchaser, Seller shall, Parent shall cause Seller to, and Seller and Parent shall cause
their respective Affiliates to, as applicable, execute, acknowledge and deliver all such further
assurances, deeds, assignments and other instruments and paper as may be required to sell,
transfer, convey, assign and deliver to Purchaser all right, title and interest in, to and under
the Transferred Assets. If any party to this Agreement shall, following the Closing, have in

31

 

its possession any asset or right (including, without limitation, with respect to any Seller’s
Rights) which under this Agreement should have been delivered to the others, such party shall
promptly deliver such asset or right to the others.

          Section 8.7 Transfer Taxes. Notwithstanding any other provision of this Agreement,
all transfer, registration, stamp, documentary, sales, use and similar taxes (including, without
limitation, all applicable real estate transfer or gains taxes), and any penalties, interest and
additions to tax, incurred in connection with this Agreement or the transfer of the Business and
the Transferred Assets shall be the responsibility of and be timely paid by Seller. Seller, Parent
and Purchaser shall cooperate in the timely making of all filings, returns, reports and forms as
may be required in connection therewith.

          Section 8.8 Release of Liens. At or prior to the Closing, if release of all Liens
(other than Permitted Liens) have not previously occurred, Seller shall, and Parent shall cause
Seller to, cause the release of all Liens (other than Permitted Liens) on the Transferred Assets,
so that such Transferred Assets and rights are free and clear of any Liens (other than Permitted
Liens).

          Section 8.9 Consents to Transferred Assets. Seller and Parent agree that if any
Required Third Party Consent to the assignment of any Transferred Asset to Purchaser as provided
for herein is not obtained prior to the Closing, and is not otherwise provided for in this
Agreement, Seller shall, and Parent shall cause Seller to reasonably cooperate with Purchaser so
that Purchaser enjoys all of the benefits of such Transferred Asset as though the Required Third
Party Consents had been obtained (but only to the extent that Seller may provide Purchaser with
such benefits without violating the terms of such Contract Requiring Consent), and, to the extent,
but, notwithstanding anything herein to the contrary, only to the extent, such benefits are
provided, Purchaser shall assume the corresponding obligations under such Assumed Contract. After
the Closing, Seller shall reasonably cooperate with Purchaser to obtain any Required Third Party
Consents not obtained prior to the Closing. Purchaser agrees to perform at its sole expense all of
the obligations of Seller to be performed after the Closing Date under such Assumed Contracts the
benefits of which Purchaser is receiving after the Closing Date, and to reimburse Seller for any
required expenses incurred by Seller on Purchaser’s behalf in keeping such Assumed Contracts in
effect.

          Section 8.10 Employment Matters.

          (a) Seller shall, and Parent shall cause Seller to, make available to Purchaser all employees
of the Business for the purposes of interviewing and, if desired by Purchaser, hiring at the
Closing. Subject to applicable Law, Seller shall, and Parent shall cause Seller to, furnish to
Purchaser copies of such employee information and records and such descriptions of personnel
policies, procedures and benefits plans applicable to employees of the Business as Purchaser may
reasonably request. Seller shall reasonably cooperate with the efforts of Purchaser to cause such
employees to accept any offers of employment by Purchaser and shall not make any competing offer of
continued employment to any individual whom Purchaser desires to employ in the Business. Seller
shall be liable for any liability or obligations under the Consolidated

32

 

Omnibus Budget Reconciliation Act of 1985, as amended, with respect to employees of the
Business (and their eligible dependents) arising in connection with their termination of employment
with Seller.

          (b) Effective as of the Closing Date, Seller shall, and Parent shall cause Seller to,
terminate its employment of all of the employees providing substantial services to the Business.
Seller shall be responsible for any severance payments, accrued payroll, vacation, sick pay and
associated payroll tax liabilities, pension or other retirement plan obligations, COBRA rights,
WARN Act liability and any other liabilities associated with such terminations.

          Section 8.11 Bulk Sales Laws. The parties hereto hereby waive compliance with the
provisions of any applicable bulk sales laws, including, without limitation, Article 6 of the
Uniform Commercial Code as it may be in effect in any applicable jurisdiction (“Bulk Sales
Laws”). This provision shall not be deemed to in any way limit the indemnity provided for in
Article X hereto.

          Section 8.12 No Solicitation.

          (a) (i) Seller shall, and Seller shall cause its officers, directors, employees, subsidiaries,
Affiliates, agents and other representatives to and (ii) Parent will, and Parent shall cause its
agents, representatives and Affiliates and Seller to, immediately cease any existing discussions or
negotiations with respect to any Alternative Proposal and will not, and shall cause such Persons
not to, directly or indirectly, encourage, solicit, participate in, initiate or facilitate
discussions or negotiations with, or provide any information to, any corporation, partnership,
Person or other entity or group (other than Purchaser or its directors, officers, employees,
subsidiaries, agents or other Affiliates) concerning any Alternative Proposal. Seller and Parent
shall immediately communicate to Purchaser any such inquiries or proposals regarding an Alternative
Proposal, including, without limitation, the terms thereof.

          (b) “Alternative Proposal” shall mean any of the following involving Seller, the
Business, the Transferred Assets or the Assumed Liabilities (other than the transactions expressly
contemplated by this Agreement): any inquiry or proposal relating to a sale of stock, merger,
consolidation, share exchange, business combination, partnership, joint venture, disposition of
assets (or any interest therein) or other similar transaction.

          Section 8.13 Confidentiality. The parties hereto agree that all information shall be
kept confidential in accordance with the terms of the Confidentiality Agreement, dated as of June
1, 2006, between Purchaser and Seller (the “Confidentiality Agreement”).

          Section 8.14 No Solicitation of Employees. For a period of three (3) years after the
Closing Date, Seller and Parent shall not, and shall cause their Affiliates not to, directly or
indirectly, without the prior written consent of Purchaser, solicit, employ or contract with any
party to an Employment Agreement or any employee of the

33

 

Business who has accepted employment with Purchaser pursuant to Section 8.10 hereto
(each, a “Transferred Employee”); provided that nothing shall prohibit Seller and
Parent and their Affiliates from performing, or having performed on their behalf, a general
solicitation for employees not specifically focused at the Transferred Employees through the use of
media, advertisement, electronic job boards or other general, public solicitations.

          Section 8.15 Non-Competition. From the Closing and for a period of five (5) years
thereafter, Seller and Parent shall not, and shall cause their Affiliates not to, directly or
indirectly, lend funds to, or provide any management, consulting, financial, administrative or
other services to, or own any interest or invest in, any business which, within the State of
Washington, engages in a business or businesses similar to the Business as presently conducted.

          Section 8.16 Collection of Accounts Receivable.

          (a) As of the Closing Date, Seller and Parent hereby authorize Purchaser to open any and all
mail addressed to Seller and Parent relating to the Business and delivered to the offices of the
Business or otherwise to Purchaser if received on or after the Closing Date, and hereby appoint
Purchaser their attorney-in-fact to endorse, cash and deposit any monies, checks or negotiable
instruments received by Purchaser after the Closing Date with respect to the Accounts Receivable
and any accounts receivables or rebates receivables made payable or endorsed to Seller or Parent or
their order, for Purchaser’s own account.

          (b) As of the Closing Date, Seller and Parent agree that they promptly shall forward to
Purchaser any monies, checks or negotiable instruments received by Seller and Parent after the
Closing Date relating to the Accounts Receivable and any accounts receivables or rebates
receivables for Purchaser’s own account.

          Section 8.17 Post-Closing Agreements.

          (a) The parties acknowledge that Purchaser may not have all required Permits to take title to
all of the Transferred Assets at the Closing and thereafter operate all aspects of the Business.
Seller agrees to reasonably cooperate with Purchaser in timely obtaining such Permits, and further
agrees (i) to hold such of the Transferred Assets that cannot be transferred at the Closing in a
constructive trust for the benefit of Purchaser until such transfer is permissible and (ii) to
operate such aspects of the Business as may not be operated by Purchaser after the Closing for the
benefit of Purchaser until such operation by Purchaser is permissible.

          (b) Notwithstanding the foregoing:

     (i) Seller shall not be required to incur any costs or expenses or to expend any sums
in connection with the operation of the Business after the Closing; and

34

 

     (ii) Purchaser promptly shall pay all costs and expenses in connection with the
operation of the Business, and shall indemnify, defend and save harmless Seller from and
against any and all liability, of every kind and nature in connection with the operation of
the Business by Seller after the Closing.

          (c) Section 8.17(b) hereto shall not be deemed to limit the representations,
warranties, covenants and indemnification obligations therefore of Seller and Parent contained
elsewhere in this Agreement.

          Section 8.18 Change of Name. On the Closing Date, Seller and Parent shall discontinue
any business operations under any trademarks, corporate names, internet domain names or trade names
owned or used by Seller, or any similar names (collectively, the “Trade Names”), other than
such business as is in furtherance of the terms and provisions of this Agreement and as is for the
benefit of, or at the express request of, Purchaser. Seller and Parent agree that they shall cause
their Affiliates to refrain from conducting any business after the Closing Date under the Trade
Names, other than such business as is in furtherance of the terms and provisions of this Agreement
and as is for the benefit of, or at the express request of, Purchaser.

          Section 8.19 Payment of Indebtedness.

          (a) No fewer than one (1) Business Day prior to the Closing, Seller shall provide to Purchaser
(i) copies of “pay-off” letters from the holders of all indebtedness for borrowed money of Seller
who hold Liens on the Transferred Assets and (ii) copies of letters from such holders of
indebtedness confirming that all Liens relating to such indebtedness will be removed effective upon
payment of the amount set forth in the applicable pay-off letter, in each case in form and
substance reasonably satisfactory to Purchaser. At the Closing Seller shall pay to the holders of
indebtedness of Seller those amounts set forth in the applicable pay-off letters. This Section
8.19(a) shall not apply to any indebtedness and/or financing relating to the Motor Vehicles,
which is subject to Section 8.19(b) hereto.

          (b) As soon as is reasonably practical after the Closing, but in any event within fifteen (15)
Business Days after the Closing, Seller shall pay off any and all indebtedness and/or financing
relating to the Motor Vehicles and shall provide to Purchaser (i) evidence, in form and substance
reasonably satisfactory to Purchaser, that all Liens relating to such indebtedness and/or financing
have been removed and (ii) certificates of title to the Motor Vehicles, duly endorsed, completed
and acknowledged for transfer.

          Section 8.20 Satisfaction of Leases. No fewer than one (1) Business Day prior to the
Closing, Seller shall present to Purchaser written statements prepared by the owner of any
equipment and other personal property (but not any real property) governed by any capital lease,
providing the full amount to be paid to satisfy all liabilities and obtain good and marketable
title to such equipment and property (the “Payoff Amount”). Simultaneous with the Closing,
Seller shall pay such Payoff Amount in

35

 

immediately available funds to the lessor under such capital lease, except to the extent such
Payoff Amount is an Assumed Liability as contemplated Section 3.1(b).

ARTICLE IX

TERMINATION

          Section 9.1 Termination. This Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned at any time prior to the Closing:

     (a) by written consent of each of Seller, Parent and Purchaser;

     (b) by either of Seller, Parent or Purchaser if:

     (i) a Governmental Authority shall have issued an order, decree or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their reasonable
best efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and nonappealable; or

     (ii) the Closing shall not have occurred on or before August 14, 2006 (other than due
principally to the failure of the party seeking to terminate this Agreement to perform any
obligations under this Agreement required to be performed by it at or prior to the
Closing);

          (c) by Purchaser if there is a default or breach by Seller or Parent with respect to the due
and timely performance of any of its covenants or agreements contained herein, or if the
representations or warranties of Seller or Parent contained in this Agreement shall have become
inaccurate, in either case such that the conditions set forth in Section 5.4 hereto would
not be satisfied and such breach or default or inaccuracy is not curable or, if curable, has not
been cured or waived within fifteen (15) calendar days after written notice to Seller and Parent
specifying, in reasonable detail, such claimed default, breach or inaccuracy and demanding its cure
or satisfaction; or

          (d) Seller or Parent if there is a default or breach by Purchaser with respect to the due and
timely performance of any of its covenants or agreements contained herein, or if its
representations or warranties of Purchaser contained in this Agreement shall have become
inaccurate, in either case such that the conditions set forth in Section 5.5 hereto would
not be satisfied and such breach or default or inaccuracy is not curable or, if curable, has not
been cured or waived within fifteen (15) calendar days after written notice to Purchaser
specifying, in reasonable detail, such claimed default, breach or inaccuracy and demanding its cure
or satisfaction.

          Section 9.2 Procedure and Effect of Termination. In the event of termination and
abandonment of the transactions contemplated by this Agreement

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pursuant to Section 9.1 hereto, written notice thereof shall forthwith be given to the
other parties to this Agreement and this Agreement shall terminate (subject to the provisions of
this Section 9.2) and the transactions contemplated by this Agreement shall be abandoned,
without further action by any of the parties hereto. If this Agreement is terminated as provided
herein:

          (a) Upon the written request therefor, each party will (i) redeliver or (ii) destroy with
certification thereto in form and substance reasonably satisfactory to the other party, all
documents, work papers and other materials of any other party relating to the transactions
contemplated by this Agreement, whether obtained before or after the execution hereof, to the party
furnishing the same; and

          (b) Subject to Article X hereto, in the event of the termination and abandonment of
this Agreement pursuant to Section 9.1 hereto, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party hereto or its Affiliates,
directors, officers or stockholders, other than the provisions of Sections 11.1,
11.2, 11.3, 11.7 and 11.12 hereto. Nothing contained in this
Section 9.2 shall relieve any party from liability for any breach of this Agreement.

ARTICLE X

SURVIVAL; INDEMNIFICATION

          Section 10.1 Survival of Indemnification Rights. Survival of Indemnification
Rights. Subject to the limitations and other provisions of this Agreement, the representations
and warranties of Seller and Parent contained in this Agreement and the Collateral Agreements shall
survive the Closing and remain in full force and effect for a period of two (2) years following the
Closing Date, at which time they shall expire and be of no further force or effect, and shall be
thereafter forever barred; provided that, if a claims notice has been provided by such
date, they shall remain in full force and effect until final resolution thereof; provided
further that (i) the representations and warranties contained in Section 6.21 (Certain
Healthcare Legal Matters) and Section 6.27 (Taxes) shall survive and remain in full force
and effect until sixty (60) calendar days after the expiration of the applicable statute of
limitations (including any extension thereof) and (ii) any representation or warranty that is
fraudulently given shall remain in full force and effect indefinitely. The representations and
warranties of Purchaser contained in Article VII hereto shall survive and remain in full
force and effect for two (2) years following the Closing Date. The covenants and agreements of
Seller, Parent and Purchaser contained in this Agreement shall survive and remain in full force and
effect for the applicable period specified therein, or if no such period is specified,
indefinitely. The provisions of this Article X shall survive for so long as any other
Section of this Agreement shall survive. None of the Closing, Purchaser’s waiver of any condition
to the Closing or Purchaser’s knowledge of any breach prior to the Closing, shall constitute a
waiver of any of the rights Purchaser may have hereunder.

          Section 10.2 Indemnification Obligations of Seller and Parent. Subject to the
limitations set forth herein, Seller and Parent shall jointly and severally indemnify,

37

 

defend and hold harmless Purchaser and any subsidiary, associate, Affiliate, director,
officer, stockholder or agent of Purchaser, and their respective representatives, successors and
permitted assigns (all of the foregoing are collectively referred to as the “Purchaser
Indemnified Parties”) from and against and pay on behalf of or reimburse such party in respect
of, as and when incurred, all out-of-pocket losses, liabilities, demands, claims, actions or causes
of action, costs, damages, judgments, debts, settlements, assessments, deficiencies, Taxes,
penalties, fines or expenses, whether or not arising out of any claims by or on behalf of a third
party, including, without limitation, interest, penalties, reasonable attorneys’ fees and expenses
and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing
(collectively, “Losses”) which any such party may suffer, sustain or become subject to, as
a result of, in connection with, or relating to or by virtue of:

          (a) any inaccuracy in, or breach of, any representation or warranty made by Seller or Parent
under this Agreement or any Collateral Agreement;

          (b) any breach or non-fulfillment of any covenant or agreement on the part of Seller or Parent
under this Agreement or any other Collateral Agreement;

          (c) the ownership or operation of the Transferred Assets or the conduct or operation of the
Business or the activities of Seller or Parent in connection with the Transferred Assets or the
Business on or prior to the Closing Date;

          (d) any applicable Bulk Sales Laws as a result of the actions contemplated by Section
8.11 hereto;

          (e) any fees, expenses or other payments incurred or owed by Seller or Parent to any agent,
broker, investment banker or other firm or Person retained or employed in connection with the
transactions contemplated by this Agreement; or

          (f) the Retained Liabilities;

provided that none of Seller or Parent will have any liability (for indemnification or
otherwise) with respect to the matters described in Section 10.2(a) or (b) hereto (A) until
the aggregate of all Losses with respect to such matters exceeds $100,000, and then only to the
extent the aggregate amount of such Losses exceeds $100,000, and (B) in excess of $1,650,000.

          Section 10.3 Indemnification Obligations of Purchaser. Purchaser shall indemnify,
defend and hold harmless Parent and Seller and any subsidiary, associate, Affiliate, director,
officer, stockholder or agent of Parent or Seller, and their respective representatives, successors
and permitted assigns (all of the foregoing are collectively referred to as the “Seller
Indemnified Parties”) from and against and pay on behalf of or reimburse such party in respect
of, as and when incurred, all Losses which any such party may suffer, sustain or become subject to,
as a result of, in connection with, or relating to or by virtue of:

38

 

          (a) any inaccuracy in, or breach of, any representation or warranty made by Purchaser under
this Agreement or any Collateral Agreement;

          (b) any breach or non-fulfillment of any covenant or agreement on the part of Purchaser under
this Agreement or any other Collateral Agreement;

          (c) any fees, expenses or other payments incurred or owed by Purchaser to any agent, broker,
investment banker or other firm or Person retained or employed by Purchaser in connection with the
transactions contemplated by this Agreement;

          (d) the ownership or operation of the Transferred Assets or the conduct or operation of the
Business or the activities of Purchaser or any of its Affiliates and assigns in connection with the
Transferred Assets or the Business after the Closing Date; or

          (e) the Assumed Liabilities.

          Section 10.4 Indemnification Procedure.

          (a) If any Purchaser Indemnified Party or Seller Indemnified Party (each, an “Indemnified
Party”) intends to seek indemnification pursuant to this Article X, such Indemnified
Party shall promptly notify Seller and Parent, or Purchaser, as the case may be (the
“Indemnifying Parties”) in writing of such claim. The Indemnified Party will provide the
Indemnifying Parties with prompt notice of any third party claim in respect of which
indemnification is sought. The failure to provide either such notice will not affect any rights
hereunder except to the extent the Indemnifying Parties are materially prejudiced thereby.

          (b) If such claim involves a claim by a third party against the Indemnified Parties, the
Indemnifying Parties may, within thirty (30) calendar days after receipt of such notice and upon
notice to the Indemnified Parties, assume, through counsel of their own choosing and at their own
expense, the settlement or defense thereof, and the Indemnified Parties shall reasonably cooperate
with them in connection therewith; provided that the Indemnified Parties may participate in
such settlement or defense through counsel chosen by it; provided further that if the
Indemnified Parties reasonably determine that representation by the Indemnifying Parties’ counsel
of the Indemnifying Parties and the Indemnified Parties may present such counsel with a conflict of
interests, then the Indemnifying Parties shall be responsible for the reasonable fees and expenses
of the Indemnified Parties’ counsel. Notwithstanding anything in this Section 10.4 to the
contrary, no Indemnifying Party may, without the prior written consent of the Indemnified Parties,
settle or compromise any action or consent to the entry of any judgment, such consent not to be
unreasonably withheld or delayed. So long as the Indemnifying Parties are contesting any such
claim in good faith, the Indemnified Parties shall not pay or settle any such claim without the
Indemnifying Parties’ consent, such consent not to be unreasonably withheld or delayed. If the
Indemnifying Parties are not contesting such claim in good faith, then the Indemnified Parties may
conduct and

39

 

control, through counsel of their own choosing and at the expense of the Indemnifying Parties,
the settlement or defense thereof, and the Indemnifying Parties shall cooperate with it in
connection therewith. The failure of the Purchaser Indemnified Parties to participate in, conduct
or control such defense shall not relieve the Indemnifying Parties of any obligation it may have
hereunder.

          Section 10.5 Calculation of Indemnity Payments. The amount of any Loss for which
indemnification is provided under this Article X shall be (a) increased to take account of
any net Tax cost actually incurred by the Purchaser Indemnified Party arising from the receipt or
accrual of indemnity payments hereunder (grossed up for such increase) and (b) reduced to take
account of any net Tax benefit actually realized by the Purchaser Indemnified Party arising from
the incurrence of payment or accrual of any such indemnified amount. The amount of any Loss for
which indemnification is provided under this Article X shall further adjusted so as to be
net of all insurance proceeds actually received by an Indemnified Party from a third party relating
to the matter for which indemnification was claimed. Any liability for indemnification under this
Agreement shall be determined without duplication of recovery by reason of the state of facts
giving rise to such liability constituting a breach of more than one representation, warranty,
covenant or agreement.

          Section 10.6 Tax Treatment of Indemnification. For all Tax purposes, unless otherwise
required by law, the parties hereto agree to treat (and shall cause each of their respective
Affiliates to treat) any indemnity payment under this Agreement as an adjustment to the Purchase
Price.

          Section 10.7 Relation of Indemnity to Holdback Payment. The amount of the Holdback
Payment shall be reduced by any amount that is owed hereunder by Parent or Seller to any Purchaser
Indemnified Party at or prior to the time of payment thereof. The rights of any Purchaser
Indemnified Party under the preceding sentence are in addition to any other rights and remedies
that such Purchaser Indemnified Party may have under this Agreement. For purposes of clarity, the
Purchaser Indemnified Parties shall reduce the Holdback Payment before pursuing Parent or Seller
for collection of amounts determined to be subject to indemnification by Parent or Seller
hereunder.

          Section 10.8 Exclusive Remedy. The parties acknowledge that their sole and exclusive
remedy after the Closing for any breach of any representation, warranty or covenant contained in
this Agreement shall be the indemnification provisions set forth in this Article X. In
addition, each party acknowledges that all of its obligations in this Agreement to indemnify any
other party are subject to and shall be in accordance with this Article X. Remedies in
connection with Losses arising from a representation or warranty that is fraudulently given shall
not be limited by this Section 10.8.

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ARTICLE XI

MISCELLANEOUS PROVISIONS

          Section 11.1 Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement, will be deemed to
have been duly given when delivered in person or when dispatched by electronic facsimile transfer
(confirmed in writing by mail simultaneously dispatched) or one (1) Business Day after having been
dispatched by a nationally recognized overnight courier service to the appropriate party at the
address specified below:

	 	 	 	 	 	 	 
	 	 	(a) If to Purchaser, to:
	 
	 	 	 	 	 	 
	 

	 	 	 	Omnicare, Inc.
	 	 
	 

	 	 	 	1600 RiverCenter II	 	 
	 

	 	 	 	100 East RiverCenter Boulevard	 	 
	 

	 	 	 	Covington, Kentucky 41011	 	 
	 

	 	 	 	Telecopy: 859-392-3333	 	 
	 

	 	 	 	Attention: Tracy Finn	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	with a copy to:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Dewey Ballantine LLP	 	 
	 

	 	 	 	1301 Avenue of the Americas	 	 
	 

	 	 	 	New York, New York 10019	 	 
	 

	 	 	 	Telecopy: 212-259-6333	 	 
	 

	 	 	 	Attention: Morton A. Pierce	 	 
	 

	 	 	 	                    Michael J. Aiello	 	 
	 
	 	 	 	 	 	 
	 	 	(b) If to Seller or Parent, to:
	 
	 	 	 	 	 	 
	 

	 	 	 	Standard Management Corporation	 	 
	 

	 	 	 	10689 N. Pennsylvania Street	 	 
	 

	 	 	 	Indianapolis, IN 46280-1087	 	 
	 

	 	 	 	Facsimile No.: 317-574-6227	 	 
	 

	 	 	 	Attention: Stephen M. Coons, Ex. VP	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	with a copy to:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Sommer Barnard, PC	 	 
	 

	 	 	 	One Indiana Square, Suite 3500	 	 
	 

	 	 	 	Indianapolis, IN 46204	 	 
	 

	 	 	 	Facsimile No.: 317-713-3699	 	 
	 

	 	 	 	Attention: Robert J. Hicks	 	 

or to such other address or addresses as any such party may from time to time designate as to
itself by like notice.

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          Section 11.2 Expenses. Except as otherwise expressly provided herein, each party
hereto will pay any expenses incurred by it incident to this Agreement and in preparing to
consummate and consummating the transactions provided for herein.

          Section 11.3 Successors and Assigns. No party to this Agreement may assign any of its
rights under this Agreement without the prior written consent of the other parties hereto. Subject
to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure
to the benefit of the successors and permitted assigns of the parties hereto. Notwithstanding
anything to the contrary in this Section 11.3, upon written notice to Seller and Parent,
Purchaser shall be permitted to assign this Agreement and the rights and obligations under it to a
wholly owned direct or indirect subsidiary of Purchaser; provided that, in the event of any
such assignment, Purchaser shall remain liable in full for the performance of its obligations
hereunder. Nothing expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or claim under or
with respect to this Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement
and their successors and assigns.

          Section 11.4 Extension; Waiver. Any party hereto may, by written notice to the other
parties hereto (a) extend the time for performance of any of the obligations of the other party
under this Agreement, (b) waive any inaccuracies in the representations or warranties of the other
party contained in this Agreement, (c) waive compliance with any of the conditions or covenants of
the other party contained in this Agreement or (d) waive or modify performance of any of the
obligations of the other party under this Agreement; provided that no such party hereto
may, without the prior written consent of the other parties hereto, make or grant such extension of
time, waiver of inaccuracies or compliance or waiver or modification of performance with respect to
its representations, warranties, conditions or covenants hereunder. Except as provided in the
immediately preceding sentence, no action taken pursuant to this Agreement will be deemed to
constitute a waiver of compliance with any representations, warranties, conditions or covenants
contained in this Agreement and will not operate or be construed as a waiver of any subsequent
breach, whether of a similar or dissimilar nature.

          Section 11.5 Entire Agreement; Disclosure Schedules. This Agreement, which includes
the schedules and exhibits hereto, supersedes any other agreement, whether written or oral, that
may have been made or entered into by any party relating to the matters contemplated by this
Agreement (including, without limitation, the Confidentiality Agreement) and constitutes the entire
agreement by and among the parties hereto.

          Section 11.6 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be determined by
Purchaser, Parent and Seller to be necessary, desirable or expedient to further the purposes of
this Agreement or to clarify the intention of the parties hereto.

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          Section 11.7 Applicable Law; Waiver of Jury Trial. This Agreement shall be governed
by and construed under the laws of the State of New York (without regard to the conflict of law
principles thereof). Each of the parties hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement or for recognition and enforcement of any judgment in
respect hereof shall be brought and determined in any federal or state court located within New
York County, New York. Each of the parties hereto hereby (a) irrevocably submits with regard to
any such action or proceeding to the exclusive personal jurisdiction of the aforesaid courts in the
event any dispute arises out of this Agreement or any transaction contemplated hereby and waives
the defense of sovereign immunity, (b) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court or that such action
is brought in an inconvenient forum and (c) agrees that it shall not bring any action relating to
this Agreement or any transaction contemplated hereby in any court other than any New York state or
federal court sitting in New York County, New York. Each of the parties hereby waives trial by
jury in any action to which they are parties involving, directly or indirectly, any matter in any
way arising out of, related to or connected with this Agreement and the transactions contemplated
hereby and thereby.

          Section 11.8 Actions by Seller or Parent. Where any provision of this Agreement
indicates that Seller or Parent will take any specified action (or refrain from taking any
specified action) or requires Seller or Parent to take any specified action (or to refrain from
taking any specified action), then, regardless of whether this Agreement specifically provides that
Parent will do so, Parent shall cause Seller to take such action (or to refrain from taking such
action, as applicable). Parent will be responsible for the failure of Seller to take any such
action (or to refrain from taking any such action, as applicable).

          Section 11.9 Execution in Counterparts. This Agreement may be executed in two (2) or
more counterparts, each of which will be deemed an original, but all of which together will
constitute one (1) and the same agreement.

          Section 11.10 Titles and Headings. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of or to affect the
meaning or interpretation of this Agreement.

          Section 11.11 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations
under this Agreement of Seller on the one hand and Purchaser on the other hand will not be
materially and adversely affected thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal, invalid, or unenforceable provision
or by its severance from this Agreement and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as
may be possible.

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          Section 11.12 Publicity. Except as otherwise required by applicable Law or the rules
and regulations of any national securities exchange, no party hereto shall issue any press release
or otherwise make any public statement with respect to the transactions contemplated by this
Agreement or the Collateral Agreements without prior consultation with and consent of the other
parties hereto, which consent shall not be unreasonably withheld, conditioned or delayed.

          Section 11.13 Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their specific terms or were
otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and
damages would be difficult to determine, and that the parties hereto shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or equity.

          Section 11.14 No Third Party Beneficiaries. Nothing in this Agreement shall confer
any rights upon any person or entity other than the parties hereto and their respective heirs,
successors and permitted assigns.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

	 	 	 	 	 	 	 
	 	 	OMNICARE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tracy Finn
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Tracy Finn, Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RAINIER HOME HEALTH CARE PHARMACY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Michael B. Berry, Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	HOLLAND DRUG STORE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Michael B. Berry, Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	HOLLAND COMPOUNDING PHARMACY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael B. Berry	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Michael B. Berry, Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	STANDARD MANAGEMENT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ronald D. Hunter	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Ronald D. Hunter, Chairman, CEO & President	 	 

Asset Purchase Agreement

Counterpart Signature Page

 

 

EXHIBIT A

DEFINITIONS AND DEFINED TERMS

          (a) As used in this Agreement, the following terms shall have the following
meanings:

          “Affiliate” shall mean with respect to any Person, any other Person who, directly or
indirectly, controls, is controlled by or is under common control with that Person. For purposes
of this definition, a Person has control of another Person if it has the direct or indirect ability
or power to direct or cause the direction of management policies of such other Person or otherwise
direct the affairs of such other Person, whether through ownership of at least fifty percent (50%)
of the voting securities of such other Person, by Contract or otherwise.

          “Business Day” shall mean a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.

          “Code” shall mean the Internal Revenue Code of 1986, as amended.

          “Collateral Agreements” shall mean the Bill of Sale, the Assignment and Assumption
Agreement, the Power of Attorney, the Trademark Assignment Agreement and the other assignment or
transfer documents delivered at the Closing.

          “Consent” shall mean any consent, approval or authorization of, notice to, or
designation, registration, declaration or filing with, any Person.

          “Contract” shall mean any note, bond, mortgage, indenture, contract, agreement,
permit, license, lease, purchase order, sales order, arrangement or other commitment, obligation or
understanding, written or oral, to which a Person is a party or by which a Person or its assets or
properties are bound.

          “Contingent Payment Facilities” shall mean those facilities listed on Schedule
1 hereto.

          “Governmental Authority” shall mean any federal, state, local or foreign government or
any subdivision, agency, instrumentality, authority, department, commission, board or bureau
thereof or any federal, state, local or foreign court, tribunal or arbitrator.

          “IRS” shall mean the Internal Revenue Service.

          “Knowledge” shall mean the actual knowledge of John Tran, Mark Long, Ron Hunter, and
Michael Edwards, as applicable, after due inquiry.

          “Laws” shall mean all federal, state, local or foreign laws, orders, writs,
injunctions, decrees, ordinances, awards, stipulations, statutes, judicial or administrative

A-1

 

 

doctrines, rules or regulations enacted, promulgated, issued or entered by a Governmental
Authority.

          “Liens” shall mean all title defects or objections, mortgages, liens, claims, charges,
pledges or other encumbrances of any nature whatsoever, including, without limitation, licenses,
leases, chattel or other mortgages, collateral security arrangements, pledges, title imperfections,
defect or objection liens, security interests, conditional and installment sales agreements,
easements, encroachments or restrictions, of any kind and other title or interest retention
arrangements, reservations or limitations of any nature.

          “Material Adverse Effect” shall mean a material adverse effect on (a) the Transferred
Assets or the Assumed Liabilities or the business, operations, assets, liabilities, condition
(financial or otherwise), or results of operations or prospects of the Business, taken as a whole
or (b) the timely consummation of the transactions contemplated by this Agreement.

          “Permits” shall mean all permits, licenses, approvals, franchises, notices and
authorizations issued by any Governmental Authority that are used or held for use in, necessary or
otherwise relate to the ownership, operation or other use of any of the Business or the Transferred
Assets, including, without limitation, all provider agreements and other authorizations necessary
for the Business to obtain reimbursement under the Medicare program, each state Medicaid program
and all other governmental reimbursement programs under which the Business has obtained
reimbursement since January 1, 2006.

          “Permitted Liens” shall mean (a) mechanics’, carriers’, workmen’s, repairmen’s or
other like Liens arising or incurred in the ordinary course of business for amounts which are not
material and not yet due and payable and which secure an obligation that is an Assumed Liability,
(b) Liens arising under sales Contracts and equipment leases with third parties entered into in the
ordinary course of business which constitute Assumed Liabilities in respect of amounts still owing,
which Liens are reflected in the Interim Financial Statements and (c) Liens for Taxes and other
governmental charges that are not due and payable or delinquent.

          “Person” shall mean any individual, partnership, joint venture, corporation, trust,
unincorporated organization, Governmental Authority or other entity.

          “Taxing Authority” shall mean any national, provincial, state or local government, or
any subdivision, agency, commission or authority thereof exercising tax regulatory, enforcement,
collection or other authority.

2

 

          (b) Each of the following terms is defined in the Section set forth opposite such term:

	 	 	 
	Term	 	Section
	Actual Net Asset Value
	 	4.2(a)
	Accounts Receivable
	 	6.17
	Agreement
	 	Preamble
	Allocation Schedule
	 	4.3
	Alternative Proposal
	 	8.12(b)
	Assumed Contracts
	 	2.1
	Assumed Liabilities
	 	3.1
	Assignment and Assumption Agreement
	 	5.2(a)(ii)
	Balance Sheet
	 	2.1(a)
	Benefit Plans
	 	6.26(a)
	Bill of Sale
	 	5.2(a)(i)
	Bulk Sales Laws
	 	8.11
	Business
	 	Recitals
	Closing
	 	5.1
	Closing Date
	 	5.1
	Closing Date Cash Payment
	 	4.1(b)(i)
	Contingent Beds
	 	4.3
	Contingent Payment
	 	4.3
	Contingent Payment Determination Date
	 	4.3
	Contract(s) Requiring Consent
	 	6.12(b)
	Disclosure Schedule
	 	Preamble Article VI
	Dispute Notice
	 	4.2(a)
	Employment Agreements
	 	5.4(n)
	Environmental Law
	 	6.23(b)
	ERISA
	 	6.26(a)
	ERISA Affiliate
	 	6.26(b)
	Excluded Assets
	 	2.2
	Facilities
	 	Recitals
	Final Closing Date Statement
	 	4.2(a)
	Financial Statements
	 	6.8(a)
	FIRPTA Certificates
	 	5.2(a)(viii)
	Four Month Anniversary
	 	4.1(b)(ii)
	GAAP
	 	4.2(a)
	Hazardous Substance
	 	6.23(c)
	Healthcare Laws
	 	6.21(a)
	Holdback Payment
	 	4.1(b)(ii)
	Income Statement
	 	2.1(a)
	Indemnified Parties
	 	10.4(a)
	Indemnifying Parties
	 	10.4(a)
	Interim Financial Statements
	 	6.8(a)
	Inventory
	 	6.16
	IT Systems
	 	6.29(b)

3

 

	 	 	 
	Term	 	Section
	Losses
	 	10.2
	Motor Vehicles
	 	2.1(l)
	Net Asset Value
	 	4.2(a)
	Non-Competition Agreements
	 	5.4(o)
	Owned Rights
	 	6.28(a)
	Parent
	 	Preamble
	Payoff Amount
	 	8.20
	Personnel
	 	6.18
	Pharmacy Letter
	 	5.2(a)(iv)
	Power of Attorney
	 	5.2(a)(iii)
	Preliminary Closing Date Statement
	 	4.2(a)
	Proceedings
	 	6.6
	Proprietary Rights
	 	6.28(a)
	Purchase Price
	 	4.1(b)
	Purchase Price Adjustment
	 	4.2(a)
	Purchaser
	 	Preamble
	Purchaser Indemnified Parties
	 	10.2
	Release
	 	6.23(d)
	Required Third Party Consents
	 	5.4(e)
	Retained Liabilities
	 	3.2
	Reviewing Accountants
	 	4.2(a)
	Seller
	 	Preamble
	Seller’s Rights
	 	6.28(a)
	Tax(es)
	 	6.27(i)(i)
	Tax Return
	 	6.27(i)(ii)
	Trademark Assignment Agreement
	 	5.2(a)(x)
	Trade Names
	 	8.18
	Trade Secrets
	 	6.28(a)
	Transferred Assets
	 	2.1
	Transferred Employee
	 	8.14

4

 

EXHIBIT B

FORM OF BILL OF SALE

 

 

EXHIBIT C

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

 

 

EXHIBIT D

FORM OF POWER OF ATTORNEY

 

 

EXHIBIT E

FORM OF PHARMACY LETTER

 

 

EXHIBIT F

FORM OF TRADEMARK ASSIGNMENT AGREEMENT

 

 

SCHEDULE 1

CONTINGENT FACILITIES

MOORE CARE

CASCADE PARK COMMUNITIES

MESSANGER HOUSE

ENCORE COMMUNITIES ASSISTED LIVING

REHABCO INC — LYNNWOOD PROGRAM

MAKSU INC — PROGRAMS 2 & 3

PARK WEST CARE CENTER

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