Document:

exv10w48

 

Exhibit
10.48

EXECUTION COPY

MANUFACTURING AGREEMENT

     This Manufacturing Agreement (this “Agreement”), is entered this 21st day of May,
2007 (the “Agreement Date”), between ACF Industries, LLC, a limited liability company organized
under the laws of Delaware (“Manufacturer”) and American Railcar Industries, Inc., a corporation
incorporated under the laws of Delaware (“ARI”). ARI and Manufacturer are collectively referred to
herein as “Parties”, in singular or plural usage, as required by context.

     Whereas, Manufacturer intends to manufacture railroad tank cars meeting the Product
Specifications (the “Products”);

     Whereas, ARI desires to retain Manufacturer to manufacture the Products upon the
terms and conditions set forth herein at Manufacturer’s plant located in Milton, Pennsylvania (the
“Plant”);

     Whereas, ARI will provide Manufacturer with all of the materials and components
(other than shop-level materials such as welding wire) necessary to manufacture the Products (the
“Materials”) under the terms of this Agreement;

     Now, Therefore, in consideration of the premises and mutual promises, terms and
conditions hereinafter set forth, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, do hereby
agree as follows:

     1. Definitions. Unless context otherwise requires, capitalized terms shall have the
meaning set forth in the attached Appendix 1.

     2. Manufacture and Sale of Products.

          (a) Supply of Certain Requirements; Minimum Volumes. Subject to its manufacturing capacity at
the Plant and the delivery of Purchase Orders by ARI, Manufacturer will manufacture, supply and
deliver to ARI certain of its requirements for the Products during the Term (as defined herein).
Subject to Manufacturer’s manufacturing capacity at the Plant, ARI will purchase certain of its
requirements for the Products from Manufacturer during the Term. Notwithstanding the foregoing,
ARI agrees to purchase and ACF will manufacture a minimum quantity of Products equal to an
aggregate of one thousand four hundred (1400) tank cars (the “Initial Cars”), which shall be
delivered to ARI by approximately March 31, 2009. The cars to be supplied to ARI shall be
manufactured in accordance with the Product Specifications. The Products purchased by ARI shall be
delivered in accordance with a delivery schedule to be agreed upon in writing by the Parties.
Subject to Manufacturer’s manufacturing capacity at the Plant, Manufacturer shall manufacture and
supply
to ARI any and all additional requirements of the Products evidenced by ARI’s written Purchase
Orders.

          (b) Materials. ARI shall, at its own expense and without charge to Manufacturer, procure the
Materials pending manufacture of the Products. ARI shall inventory and store at the Plant the
Materials pending manufacture of the Products, which inventory of Materials shall be in a quantity
sufficient to manufacture ARI’s requirements for the Products. In consideration of the purchase
price for the Products payable by ARI pursuant to Sections 2(c) and 11(a) hereof,

 

 

Manufacturer
shall, at no additional cost to ARI, provide to ARI adequate storage facilities and provide all
necessary services related thereto to enable ARI to inventory and store at the Plant a reasonable
quantity of the Materials pending manufacture of the Products. Title to the Materials shall at all
times remain with ARI. Manufacturer agrees to execute all appropriate documents reasonably
required by ARI to properly evidence ARI is the sole legal owner of the Materials stored at the
Plant and to protect ARI’s interests in the Materials, including, but not limited to, the filing of
any applicable security documentation reasonably requested by ARI. Manufacturer shall insure the
Materials against all risks of loss or damage due to fire, with extended coverage over such other
risks as are customarily insured against, and Manufacturer shall be responsible to and shall
reimburse ARI for all losses of and expenses to ARI resulting from damage to the Materials or
destruction or shortage in the amount thereof or from levy or attachment or any court process or
lien thereon, except losses of and expenses to ARI that may be covered by insurance or that are
otherwise attributable to ARI’s actions or omissions. Manufacturer shall not have the right to
pledge, mortgage, grant security interests in or otherwise encumber any of the Materials.

          (c) ARI Sales of Products. ARI shall sell all Products at their market price and in no event
less than fair market value. ARI and Manufacturer shall split the Profits (as defined below) on
all sales of Products by ARI as follows:

               (1) First, one hundred percent (100%) of Profits shall be paid to Manufacture to retire the
start-up expenses (exclusive of capital expenditures) mutually agreed by the parties (the “Start-Up
Expenses”) until all such Start-Up Expenses have been retired; and

               (2) All Profits in excess of the amount required to retire the Start-Up Expenses shall be
distributed fifty percent (50%) to ARI and fifty percent (50%) to Manufacturer.

For purposes of this Agreement, “Profits” shall mean the amount realized from any sale of Products
to parties other than ARI in excess of the Out of Pocket Incremental Costs (as defined herein) of
such Products, and the cost of the Materials. Upon delivery of the Purchase Price to Manufacture,
ARI shall deliver to Manufacturer a statement showing the calculation of Profits.

          (d) Audit Rights. Each of the Parties shall have the right to require an independent audit by
a third party of the calculation of Profits and the price at which Products are sold by ARI.

      3. Representations and Warranties of Manufacturer.  Manufacturer hereby makes the
following representations and warranties to ARI, each of which shall be true as of the Agreement
Date and throughout the Term of this Agreement:

          (a) Authorization to Conduct Business. Manufacturer is duly authorized to transact business
in the manner contemplated by this Agreement.

          (b) Adherence to Laws. Manufacturer has and will adhere to all Applicable Laws relating to
Manufacturer’s performance of its obligations under this Agreement (including all applicable
environmental, health, safety and labor laws and regulations).

 

 

          (c) Authority. Manufacturer has full power and authority to enter into and perform
(1) this Agreement; (2) any accepted Purchase Order; and (3) all
documents and instruments to be executed by Manufacturer pursuant to this Agreement. This
Agreement has been duly executed and delivered by Manufacturer and is enforceable in accordance
with its terms.

          (d) Permit. Manufacturer warrants that it has obtained, or prior to the time it commences
production of the Products will have obtained, any Permits required in connection with the
production and sale to ARI of the Products, and will furnish copies or other evidence satisfactory
to ARI of all such approvals upon the request of ARI.

          (e) Litigation. There is no pending litigation, which would materially impact or affect this
Agreement or Manufacturer’s execution or performance hereof. Manufacturer represents and warrants
that there are no outstanding Court Orders of any Governmental Authority against or involving
Manufacturer which are reasonably likely to adversely affect Manufacturer’s rights to sell the
Products; there are no Proceedings pending or threatened against or involving Manufacturer.

          (f) Product Warranty. Manufacturer warrants that the Products shall be merchantable and fit
for the purpose for which they are intended to be used. Each of the Products shall conform to the
Product Specifications and all appropriate standards, will be new, and will be free from defects in
materials (other than the Materials) and workmanship at all times during the warranty period
offered by ARI to its customers with respect to the Products, which such period shall not
exceed the warranty period generally provided by ARI to its customers for railcars manufactured by
ARI. The Products will conform to any statements made by Manufacturer on the containers or labels
or advertisements for such Products and that the Products will be adequately contained, packaged,
marked, and labeled. The Products furnished will conform in all respects to samples.
Notwithstanding the foregoing,. Manufacturer does not warrant any of the Materials.

          (g) Title. Except for the Materials, Manufacturer has good and marketable title to the
Products free and clear of all liens and has the unrestricted right to transfer title to the
Products to ARI.

          (h) Intellectual Property. Subject to Section 6(b), Manufacturer owns or has the right to use
all Intellectual Property necessary to perform its obligations hereunder, and none of the Products
infringes or is alleged to infringe any patent or other proprietary right of any other Person.

     4. Representations
and Warranties of ARI.  ARI hereby makes the following representations and
warranties to Manufacturer, each of which shall be true as of the Agreement Date and throughout the
Term of this Agreement:

          (a) Authorization to Conduct Business. ARI is duly authorized to transact business in the
manner contemplated by this Agreement.

          (b) Adherence to Laws. ARI has and will adhere to all Applicable Laws relating to the sale,
export, labeling, and distribution of the Products.

 

 

          (c) Authority. ARI has full power and authority to enter into and perform (1) this
Agreement; (2) any Purchase Order; and (3) all documents and instruments to be
executed by ARI pursuant to this Agreement. This Agreement has been duly executed and delivered by
ARI and is enforceable in accordance with its terms.

          (d) Permit. No Permit is required for the execution and delivery by ARI of this Agreement and
the consummation by ARI of the transactions contemplated by this Agreement including the sale,
export, and distribution of the Products. ARI warrants that it has obtained, or prior to the time
it commences the sale, export, or distribution of the Products will have obtained, any Permits
required in connection with the sale, export, or distribution of the Products, and will
furnish copies or other evidence satisfactory to Manufacturer of all such approvals upon the
request of Manufacturer.

          (e) Intellectual Property. ARI owns all intellectual property rights to which it is providing
a non-exclusive license hereunder.

     5. Other
Covenants of Manufacturer.  Manufacturer hereby covenants as follows:

          (a) Access and Audit Rights. Manufacturer shall provide access to representatives of ARI, at
all reasonable times by appointment during regular business hours, to the Plant and any other
facility in which Materials or Products are being manufactured (individually, a “Facility”) and to
all written records and documents with respect to, without limitation, (1) the manufacture,
packaging and inspection of the Products, (2) the Start-up Expenses, (3) the costs of manufacturing
the Products and performing Manufacturer’s other obligations hereunder, (4) the pricing for the
Products, and (5) Manufacturer’s compliance with any applicable laws. ARI shall have the right
while at any Facility to review and assess such Facility to evaluate work practices and methods and
compliance with all applicable environmental, occupational health and safety laws and regulations,
and good manufacturing and warehousing practices and procedures.

          (b) Quality Control. Prior to shipment, all Products to be supplied to ARI shall be checked
and tested by Manufacturer in a manner intended to ensure that the Products conform to
Manufacturer’s warranties contained herein and in the Purchase Order and Manufacturer shall keep
records of the test results for at least one year after delivery of each Product and, upon request,
provide ARI with copies thereof. Manufacturer will permit ARI to have its representatives present
at any such testing.

          (c) Components. To the extent that any shop-level materials are provided by a third-party
supplier, such supplier shall be approved by ARI prior to use, which approval shall not be
unreasonably withheld, conditioned, or delayed.

     6. Other Covenants of ARI.  ARI hereby covenants as follows:

          (a) Access and Audit Rights. ARI shall provide access to representatives of Manufacturer, at
all reasonable times by appointment during regular business hours, to all written records and
documents with
respect to, without limitation, (1) the costs of Materials, (2) the calculation of Profits,
and (3) the sales price of Products sold by ARI to its customers.

 

 

          (b) Non-Exclusive License of Intellectual Property. ARI shall provide a non-exclusive license
to Manufacturer to any of ARI’s intellectual property necessary for Manufacturer to perform its
obligations hereunder.

          (c) Material Costs. For the purposes of calculating profits, the cost of Materials shall be
the actual cost paid by ARI to its supplier (after taking into consideration any discounts, rebates
or other price reductions), which in no event shall exceed fair market value.

          (d) Sales of Products. ARI shall sell all Products at their market price and in no
event less than fair market value.

     7. Non- Disclosure Covenant.

          (a) Acknowledgments By the Parties. Each of the Parties acknowledges that (a) the covenants
in this Section 7 are a condition to each Party entering into this Agreement; (b) during the Term
and as a part of each Party’s performance as contemplated hereunder, the Parties will be afforded
access to Confidential Information; (c) public disclosure of such Confidential Information could
have an adverse effect on the Parties and their respective businesses; and (d) the provisions of
this Section 7 are reasonable and necessary to prevent the improper use or disclosure of
Confidential Information.

          (b) Agreements Of the Parties. In consideration of the mutual covenants and agreements of the
Parties contained in this Agreement, each of the Parties covenants as follows:

               (1) During and following the Term, each Party receiving Confidential Information hereunder (in
such capacity, the “Receiving Party”) will hold in confidence the Confidential Information of the
other Party hereto (in such capacity, the “Disclosing Party”) and will not disclose it to any
person except with the specific prior written consent of the Disclosing Party or except as required
by law or as otherwise expressly permitted by the terms of this Agreement. The Receiving Party
will not use the Confidential Information of the Disclosing Part, except during the Term in the
course of performing the Receiving Party’s duties under this Agreement. This confidentiality
obligation shall apply to all Confidential Information whether in its original form or a derivative
form, and to all Confidential Information whether received or observed by the Receiving Party prior
to, on or after the commencement of the Term. The Parties agree that no warranties are made
expressly or implicitly regarding accuracy or completeness of Confidential Information provided
under this Agreement.

               (2) None of the foregoing obligations and restrictions applies to any part of the Confidential
Information that the Receiving Party demonstrates was or became generally available to the public
other than as a result of a disclosure by the Receiving Party.

               (3) During the Term, the Receiving Party will safeguard each tangible embodiment of the
Confidential Information (whether in the form of a document, record, notebook, plan, model,
component, device, or computer software or code, whether embodied in a disk or in any other form
(collectively, the “Proprietary Items”)). The Parties recognize that, as between themselves, all
of the Proprietary Items, whether or not developed by the Receiving Party, are the exclusive
property of the Disclosing Party. Upon termination of this Agreement by either Party, or upon the
request of the Disclosing Party during the Term, the Receiving Party

 

 

will return to the Disclosing
Party all of the Proprietary Items in the Receiving Party’s possession or subject to the Receiving
Party’s control, and the Receiving Party shall not retain any copies, abstracts, sketches, or other
physical embodiment of any of the Proprietary Items.

               (4) Any trade secrets of the Parties hereto will be entitled to all of the protections and
benefits under The Missouri Uniform Trade Secrets Act (§§417.450 to 417.467 of the Missouri Revised
Statutes, as amended) and any other applicable law. If any information that a Party deems to be a
trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of
this Agreement, such information will, nevertheless, be considered Confidential Information for
purposes of this Agreement. Each Party hereby waives any requirement that the other Party submit
proof of the economic value of any trade secret or post a bond or other security.

               (5) Except as expressly provided herein, no license or right is granted hereby to either
Party, by implication or otherwise, with respect to or under any patent application, patent, claims
of patent or proprietary rights of the other Party. Without limiting the generality of the
foregoing, neither Party shall have the right to use the other Party’s name, Trademarks, or other
Intellectual Property without such other Party’s prior written consent.

               (6) The Parties recognize that should a dispute or controversy arising from or relating to
this Agreement be submitted for adjudication to any court, arbitration panel, or other third party,
the preservation of the secrecy of Confidential Information may be jeopardized. All pleadings,
documents, testimony, and records relating to any such adjudication will be maintained in secrecy
and will be available for inspection by the Parties and their respective attorneys and experts, who
will agree, in advance and in writing, to receive and maintain all such information in secrecy,
except as may be limited by them in writing.

               (7) Except as required by applicable law, neither party, without the prior written consent of
the other, shall issue any press release or make any other public announcement or statement
relating to ARI’s purchase of the Products or containing any Confidential Information.

     8. Insurance. Manufacturer shall maintain, throughout the Term, the insurance policies
described in this Section 8.

          (a) Contractual Liability; Additional Insureds. All insurance shall include contractual
liability insurance covering Manufacturer’s obligations to indemnify ARI as required by this
Agreement. All insurance
maintained by Manufacturer shall name ARI, its officers, directors, members, and employees as
additional insureds, with a cross liability clause in effect on behalf of each of such entities.

          (b) Types of Insurance. During the Term, Manufacturer shall maintain the following insurance:

               (1) Commercial General Liability insurance coverage including products and completed
operations, contractual liability, bodily injury and property damage. This coverage shall include
a waiver of subrogation, and shall be the excess over any other valid and

 

 

collectible insurance and
written on an occurrence basis with limits (x) of $95,000,000 per occurrence and in the aggregate in
excess of a $5,000,000 self-insured retention or (y) no less than
those limits Manufacturer maintains as of the Agreement Date; and

               (2) “All Risk” property damage insurance, including earthquake and flood coverage in an amount
not less than 100% of the insurable value thereof. ARI shall be shown as sole loss payee with
respect to ARI’s property (if any). The coverage shall include a waiver of subrogation.

          (c) Certificates of Insurance. Manufacturer shall deliver to ARI, within 10 days of the
execution of this Agreement, Certificates of Insurance in form and substance satisfactory to ARI
evidencing the required coverages with limits not less than those specified in this Section 8.
Further, all policies and Certificates of Insurance shall expressly provide that no less than
thirty (30) days prior written notice shall be given to ARI in the event of alteration,
cancellation, non-renewal or expiration of the coverage contained in such policy or evidenced by
such Certificate of Insurance.

          (d) General Requirements

               All insurance coverage procured by Manufacturer shall be provided by insurance companies
having policyholder ratings no lower than “A” and financial ratings not lower than “XII” in the
Best’s insurance Guide, latest edition in effect as of the date of this Agreement.

     9. Independent Contractors.

          (a) Disclaimer of Intent to Become Partners. ARI and Manufacturer shall not by virtue of this
Agreement be deemed partners or joint venturers. It is expressly understood that each of the
Parties is acting as an independent contractor.

          (b) No Agency. Nothing contained herein shall create an agency whereby either Party may bind
the other Party. Without limiting the generality of the foregoing, neither Party shall, by virtue
of this Agreement, have the right to (a) enter into contracts or commitments on behalf of or in the
name of the other Party; (b) sign the other Party’s name to any commercial paper, contract or other
instrument; (c) contract any debt or enter into any agreement, either express or implied, binding
the other Party to the payment of money; (d) receive or make payment for or on behalf of the other
Party; or (e) make promises or representations on behalf of the other Party.

     10. Order Procedures.

          (a) Submission of Purchase Orders. The purchase by ARI and the sale by Manufacturer of each
allotment of Products shall be governed by a written Purchase Order executed by ARI and delivered
to Manufacturer. Upon receipt of ARI’s Purchase Order, Manufacturer will acknowledge receipt,
verification of information, and required ship date. Manufacturer’s acknowledgment is to be
forwarded to ARI within five (5) days of receipt of Purchase Order.

 

 

          (b) Terms of Purchase Orders. All Purchase Orders shall be subject to and governed by the
provisions contained herein. Unless the Parties specifically agrees to a separate writing that
makes specific reference to this Agreement (which such writing may be included in the applicable
Purchase Order), no additional or different terms and conditions appearing on the face or reverse
side of any Purchase Order, invoice, acknowledgment, or other document shall become part of this
Agreement or any Purchase Order.

     11. Prices and Payment.

          (a) Prices. Prior to ARI placing a Purchase Order, Manufacturer shall quote to ARI the
price, subject to adjustment, of Manufacturer’s direct labor and reasonable, incremental overhead
costs attributable to such Products (the “Out of Pocket Incremental Costs”).

          (b) Payment Terms. ARI will pay (i) for those Products which have an identified end customer
at the time of the Purchase Order, the Purchase Price of any Purchase Order within five (5) days
after ARI’s receipt of payment for the Products from the end customer to which such Products are
delivered, or (ii) for any Products which are ordered which do not have an identified end customer,
ARI shall pay Manufacturer the Manufacturer’s Out of Pocket Incremental Costs attributable to such
Products within five (5) days of delivery, with the balance of the Purchase Price due within five
(5) days after receipt of payment for the Products from an end customer to which such Products are
delivered; provided further that ARI shall have received an invoice reflecting such Out of Pocket
Incremental Costs from Manufacturer by such date. Invoices shall be sent by Manufacturer in
duplicate and shall reference the relevant Purchase Order number and shall identify the address,
bank reference and account number where payment should be made.

     12. Delivery.

          (a) Delivery. Products shall be delivered by Manufacturer to ARI (i) at time of railroad
pickup at the Plant; (ii) in finished packaged form, ready for sale/repackaging and delivery by ARI
to its customers; (iii) in such quantities as specified in ARI’s written Purchase Order; and (iv)
in accordance with the mutually agreed lead-times for the Products, unless ARI specifies a later
date in the Purchase Order. Manufacturer shall furnish a bill of lading to ARI with each delivery
of Products thereto, which bill of lading shall specify, among other information, the lot numbers
and quantity of all Products delivered to ARI pursuant to such bill of lading.

          (b) Title; Risk of Loss. Title to and risk of any loss of and/or damage to the Products and
Materials shall pass from Manufacturer to ARI at time of railroad pickup at the Plant.

          (c) Inspection; Warranties. Inspection, test, acceptance or use of the Products furnished
hereunder shall not affect Manufacturer’s warranty obligations under this Agreement and such
warranties shall survive inspection, test, acceptance and use. Manufacturer’s warranties shall run
to ARI, its successors, assigns and customers, and users of Products sold by ARI. Payment for the
Products delivered hereunder shall not constitute acceptance thereof. ARI shall have the right to
inspect such Products and to reject any or all of said Products which are in

 

 

ARI’s reasonable
judgment defective or nonconforming (except to the extent such defect or nonconformity is
attributable solely to defects in the Materials). Products rejected in accordance with the terms
hereof and Products supplied in excess of quantities called for herein or any Purchase Order may be
returned to Manufacturer at Manufacturer’s expense and, in addition to ARI’s other rights, ARI may
charge Manufacturer all expenses of unpacking, examining, repacking and reshipping such Products.
If ARI receives Products in which defects or nonconformity are not apparent on examination, ARI
reserves the right to require replacement, as well as payment of Damages (except to the extent such
defects or nonconformity are attributable solely to defects in the Materials). Nothing contained
in this Agreement shall relieve Manufacturer in any way from the obligation of testing, inspection
and quality control.

          (d) Defects. Manufacturer agrees to promptly replace or correct defects of any Products not
conforming to the warranties herein without expense to ARI, when notified of such nonconformity by
ARI. In the event of failure of Manufacturer to correct defects in or replace nonconforming
Products promptly, ARI, after reasonable notice to Manufacturer, may make such corrections or
replace such Products and charge Manufacturer for the cost incurred by ARI in doing so.
Notwithstanding the foregoing, Manufacturer shall have no obligation to replace or correct
defective or nonconforming Products to the extent such defects or nonconformity are attributable
solely to defects in the Materials.

     13. Changes/Additions and Modifications.  Any changes, additions or modifications to
the Product, which change affects form, fit or function of the Product, or may influence the use of
Products in combination with other goods sold by ARI, shall be subject to the prior written consent
of ARI. Any changes, additions or modifications to the Products as aforesaid shall not adversely
affect existing equipment used or to be used in connection with the Products.

     14. Indemnification.

          (a) Indemnification by Manufacturer. Manufacturer will indemnify, defend and hold harmless
ARI, ARI’s Affiliates and their customers against all Damages, arising from (1) any
breach of any representation, warranty or covenant of Manufacturer under this Agreement or any
Purchase Order; or (2) any injury to persons or property from the Products that results
from defects in manufacturing or workmanship (other than defects attributable solely to the
Materials).

          (b) Indemnification by ARI. ARI will indemnify, defend and hold harmless Manufacturer and
Manufacturer’s Affiliates against all Damages arising from (1) any breach of any
representation, warranty or covenant of ARI under this Agreement or any Purchase Order; or
(2) any injury to persons or property from the Products that results from defects in
designs provided by ARI or that is solely attributable to the Materials.

          (c) Remedies Non-Exclusive. The remedies provided in this Section 14 shall be in addition to
any other rights and remedies at law or equity.

     15. Term and Termination.

          (a) Effect. This Agreement will enter into force upon signature hereof by all Parties and
shall be effective as of the Agreement Date.

 

 

          (b) Term. This Agreement shall terminate on the fifth anniversary of the Agreement Date,
unless terminated by ARI or Manufacturer upon six (6) months prior written notice; provided,
however, if Manufacturer provides written notice of termination (the “Manufacturer Notice”), then
ARI shall have thirty (30) days from the date of such Manufacturer Notice to notify Manufacturer in
writing (the “ARI Notice”) that ARI commits to purchase at least 1,000 cars from Manufacturer over
the twelve months following the date of the ARI Notice (“Right of First Refusal”). If ARI properly
exercises its Right of First Refusal in accordance with this Section 15(b), then the Manufacturer
Notice shall be deemed automatically revoked without any further
action, and Manufacturer shall manufacture the cars during the applicable period. If ARI
fails to deliver the ARI Notice in accordance with this Section 15(b) or otherwise fails to
properly exercise its Right of First Refusal, then this Agreement shall terminate on such date
specified in the Manufacturer Notice and, neither party shall have any further rights or
obligations hereunder. ARI may exercise its Right of First Refusal each time Manufacturer provides
a Manufacturer Notice during the five-year time. All representations and warranties of the Parties
will survive the termination of this agreement and remain in effect at all times during which ARI’s
warranties to its customer with respect to the Products remain in effect.

          (c) Immediate Termination. Any Party may terminate this Agreement immediately upon written
notice to the other Party, without liability for said termination, if any of the following events
occur: (a) the other Party files a voluntary petition in bankruptcy; (b) the other Party is
adjudged bankrupt; (c) a court assumes jurisdiction of the assets of the other Party under a
federal reorganization act; (d) a trustee or receiver is appointed by a court for all or a
substantial portion of the assets of the other Party; (e) the other Party becomes insolvent or
suspends its business; or (f) the other Party makes an assignment of its assets for the benefit of
its creditors except as required in the ordinary course of business.

          (d) Termination Upon Notice and Cure. Any Party may terminate this Agreement for a material
breach or default of the Agreement by the other, provided that such termination may be made only
following the expiration of a thirty (30) day period during which the other Party has failed to
cure such breach after having been given written notice of such breach.

     16. Miscellaneous.

          (a) Jurisdiction; Service of Process. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement shall be brought against either
of the Parties in the courts of the State of Missouri, County of St. Louis, or, if it has or can
acquire jurisdiction, in the United States District Court for the Eastern District of Missouri, and
each of the Parties consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid therein. Process
in any action or proceeding referred to in the preceding sentence may be served on any Party
anywhere in the world.

          (b) Further Assurances. The Parties agree (1) to furnish upon request to each other
such further information, (2) to execute and deliver to each other such other documents,
and (3) to do such other acts and things, all as the other Party may reasonably request
for the

 

 

purpose of carrying out the intent of this Agreement and the documents referred to in this
Agreement.

          (c) Waiver. The rights and remedies of the Parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any Party in exercising any right, power, or
privilege under this Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right, power, or privilege
or the exercise of any other right, power, or privilege. To the maximum extent permitted by
Applicable Law, (1) no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other Party; (2) no
waiver that may be given by a Party will be applicable except in the specific instance for which it
is given; and (3) no notice to or demand on one Party will be deemed to be a waiver of
any obligation of such Party or of the right of the Party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the documents referred to
in this Agreement.

          (d) Entire Agreement and Modification. This Agreement supersedes all prior agreements between
the Parties with respect to its subject matter and constitutes (along with Appendix I attached
hereto, any Purchase Order issued hereunder, and the other documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement between the Parties with respect
to its subject matter. This Agreement may not be amended except by a written agreement executed by
each of the Parties hereto.

          (e) Assignments, Successors, and No Third-party Rights. Neither Party may assign any of its
rights under this Agreement without the prior consent of the other Party, which may be withheld in
the consenting Party’s sole discretion. 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. 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.

          (f) Severability. If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or unenforceable.

          (g) Section Headings, Construction. The headings of Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation. All references to
“Section” or “Sections” refer to the corresponding Section or Sections of this Agreement. All
words used in this Agreement will be construed to be of such gender or number as the circumstances
require.
Unless otherwise expressly provided, the word “including” does not limit the preceding words
or terms. The Parties have participated jointly in

 

 

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

          (h) Time of Essence. With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.

          (i) Counterparts. This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when taken together, will
be deemed to constitute one and the same agreement.

          (j) Notices. All notices, requests, demands, claims, and other communications hereunder will
be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed
duly given if (and then two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

	 	 	 	 	 	 	 
	If to ARI:

	 	American Railcar Industries, Inc.
	 	If to
	 	ACF Industries, LLC
	 

	 	100 Clark Street
	 	Manufacturer:
	 	101 Clark Street
	 

	 	St. Charles, MO 63301
	 	 	 	St. Charles, MO 63301
	 

	 	Attn: Chief Executive Officer
	 	 	 	Attn: President

     Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Party notice in the manner herein set forth.

          (k) Governing Law. This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of Missouri without giving effect to any choice or conflict of law
provision or rule that would cause the application of the laws of any jurisdiction other than the
State of Missouri. In the event of any dispute under this Agreement, the prevailing party shall be
entitled to recover its attorneys’ fees and court costs from the other party.

          (l) Force Majeure. In the event that Manufacturer is unable to deliver any Product to ARI
within one hundred twenty (120) days after the delivery date set forth in the applicable Purchase
Order as a result of a Force Majeure Event, ARI shall have the option to notify Manufacturer that
it will not purchase such Products as to which delivery has been delayed, and the railcar quantity
obligations in this agreement shall be reduced by the number of railcars that Manufacturer is
unable to deliver, the Purchase Price will be reduced accordingly for each railcar that ARI has
elected not to purchase, and such omitted railcar will not be deemed a “railcar” for purposes of
ARI’s minimum purchase requirement set forth in Section 2(a) of this

 

 

Agreement. As used herein, a
“Force Majeure Event” shall mean and include any delays in the delivery of any Car caused by
strikes, lockouts (other than lockouts by Manufacturer) or other labor disturbances; shortages or
late delivery of material (due to no fault of Manufacturer); unavailability, interruptions or
inadequacy of fuel supplies; acts of God; war, preparation for war or other acts or interventions
the military or other governmental agencies; governmental regulations; priorities given to defense
orders; riot, embargoes, sabotage, act of terrorism, vandalism, malicious mischief, landslides,
floods, hurricanes, earthquakes, collisions or fires; delays of subcontractors or of carriers by
land, sea or air (due to no fault of Manufacturer); quarantine restrictions, shortages of labor or
components and any other circumstances or cause beyond Manufacturer’s reasonable control.

[The Remainder of this page has intentionally been left blank. Signature page
follows.]

 

 

     In Witness Whereof, the undersigned have entered into this Agreement as of the date
and year first written above.

	 	 	 	 	 
	 

	 	ARI	 	 
	 	 	American Railcar Industries, Inc.
	 
	 	 	 	 
	 

	 	By:  /s/ James J. Unger	 	 
	 
	 	 	 	 
	 

	 	Printed Name:  James J. Unger	 	 
	 
	 	 	 	 
	 

	 	Title:  President and CEO	 	 
	 
	 	 	 	 
	 	 	Manufacturer
	 
	 	 	 	 
	 	 	ACF Industries, LLC
	 
	 	 	 	 
	 

	 	By:  /s/ William L. Finn	 	 
	 
	 	 	 	 
	 

	 	Printed Name:  William L. Finn	 	 
	 
	 	 	 	 
	 

	 	Title:  President and CEO	 	 

 

 

APPENDIX 1—DEFINITIONS

(1) “Affiliate” with respect to any Party, an Affiliate means any Person that such Party
directly or indirectly (a) holds 50% or more of the nominal value of the issued share
capital; (b) has 50% or more of the voting power at general meetings; (c) has the power to
appoint a majority of the directors; or (d) otherwise directs the activities of such Person;
provided, however, that any such Person shall only be deemed to be an Affiliate as long as
such relationship exists.

(2) “Agreement” means this Manufacturing Agreement.

(3) “Agreement Date” means the date of this Agreement.

(4) “Applicable Law” means any statute, law, ordinance, decree, order, injunction, rule,
directive, or regulation of any Governmental Authority.

(5) “ARI” has the meaning set forth in the preamble to this Agreement.

(6) “Materials” has the meaning set forth in the recitals of this Agreement.

(7) “Confidential Information” means any and all: (a) trade secrets concerning the business
and affairs of a Party, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas,
past, current, and planned research and development, current and planned manufacturing or
distribution methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer software and programs
(including object code and source code), computer software and database technologies,
systems, structures, and architectures (and related formulae, compositions, processes,
improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods,
and information) and any other information, however documented, that is a trade secret
within the meaning of The Missouri Uniform Trade Secrets Act (§§417.450 to 417.467 of the
Missouri Revised Statutes, as amended); and (b) information concerning the business and
affairs of a Party (which includes historical financial
statements, financial results and position, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and backgrounds of key
personnel, personnel training, techniques, and materials) however documented; and (c) notes,
analysis, compilations, studies, summaries, and other material prepared by or for a Party
containing or based, in whole or in part, on any information included in the foregoing. The
term “Confidential Information” shall include the terms of this Agreement, the fact that
Manufacturer provides the Products to ARI, and the fact that the Parties have executed this
Agreement.

(8) “Copyrights” means all copyrights in both published works and unpublished works.

 

 

(9) “Court Order” Means any award, decision, injunction, judgment, order, ruling, subpoena,
or verdict entered, issued, made, or rendered by any Governmental Authority or by any
arbitrator.

(10) “Damages” means any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys’ fees) , whether or not involving a
third-party claim.

(11) “Governmental Authority” means any (a) nation, state, county, city, town, borough,
village, district or other jurisdiction; (b) federal, state, local, municipal, foreign or
other government; (c) governmental or quasi-governmental body of any nature (including any
agency, branch, department, board, commission, court, tribunal or other entity exercising
governmental or quasi-governmental powers); (d) multinational organization or body; (e) body
exercising, or entitled or purporting to exercise, any administrative, executive, judicial,
legislative, police, regulatory or taxing authority or power; (f) any regulatory or
self-regulatory authority compliance with which is required by Law; or (g) an official of
any of the foregoing.

(12) “Intellectual Property” includes: Trademarks; Patents; Copyrights; and Confidential
Information.

(13) “Manufacturer” has the meaning set forth in the preamble to this Agreement.

(14) “Party” means either or Manufacturer or ARI.

(15) “Patents” means all patents, patent applications, and inventions and discoveries that
may be patentable.

(16) “Permits” means any approvals, consents, licenses, permits, certificates, orders,
authorizations and approvals from any Person or Governmental Authority.

(17) “Person” means any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental Authority.

(18) “Proceeding” means any action, arbitration, audit, hearing, charge, compliant,
investigation, litigation, petition, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Authority or arbitrator.

(19) “Products” has the meaning set forth in the recitals of this Agreement.

(20) “Product Specifications” means the specifications for the Products, which
specifications shall be provided to Manufacturer by ARI and set forth on any Purchase Order
delivered hereunder.

 

 

(21) “Purchase Order” means a purchase order or pick sheet for Products in form acceptable
to ARI which shall contain at least the following information: (a) description of
Product(s) subject to the Purchase Order; (b) requested delivery date; (c) applicable price;
(d) location to which the Product(s) is to be shipped; and (e) ARI’s purchase order number.

(22) “Purchase Price” means the Out of Pocket Incremental Costs plus that amount of the
profits payable to Manufacturer pursuant to Section 2(c) of this Agreement.

(23) “Trademarks” means any names or marks, including all fictional business names, trading
names, registered and unregistered trademarks, service marks, and applications.EX-10.2 STOCK PURCHASE AGREEMENT

 

Exhibit 10.2

 

STOCK PURCHASE AGREEMENT

 

By and Among

Universal HealthCare Company LLC,

an Indiana limited liability company,

In-House Pharmacies, Inc.,

a California corporation,

and

Jon R. Kurtin and Ralph M. Defay

 

Dated April 27, 2007

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS; CONSTRUCTION	 	 	1	 
	 	1.1	 	 	Definitions
	 	 	1	 
	 	1.2	 	 	Construction
	 	 	6	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE	 	 	6	 
	 	2.1	 	 	Purchase and Sale of Shares
	 	 	6	 
	 	2.2	 	 	Purchase Price
	 	 	6	 
	 	2.3	 	 	Working Capital Adjustment
	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE III THE CLOSING	 	 	9	 
	 	3.1	 	 	Closing
	 	 	9	 
	 	3.2	 	 	Closing Deliveries of Purchaser
	 	 	9	 
	 	3.3	 	 	Closing Deliveries of the Shareholders
	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE IV SHAREHOLDERS’ REPRESENTATIONS AND WARRANTIES	 	 	11	 
	 	4.1	 	 	Organization
	 	 	11	 
	 	4.2	 	 	Authorization
	 	 	11	 
	 	4.3	 	 	Validity; Binding Effect
	 	 	11	 
	 	4.4	 	 	Noncontravention
	 	 	12	 
	 	4.5	 	 	Capital Structure
	 	 	12	 
	 	4.6	 	 	Financial Statements
	 	 	12	 
	 	4.7	 	 	Title to and Sufficiency of Assets
	 	 	13	 
	 	4.8	 	 	Tax Matters
	 	 	14	 
	 	4.9	 	 	Litigation; Claims
	 	 	14	 
	 	4.10	 	 	Legal Compliance
	 	 	15	 
	 	4.11	 	 	Environmental Laws and Regulations
	 	 	17	 
	 	4.12	 	 	Permits
	 	 	17	 
	 	4.13	 	 	Material Contracts
	 	 	17	 
	 	4.14	 	 	Labor and Employment Matters
	 	 	19	 
	 	4.15	 	 	Employee Benefits
	 	 	19	 
	 	4.16	 	 	Intellectual Property
	 	 	20	 
	 	4.17	 	 	Affiliate Transactions
	 	 	20	 
	 	4.18	 	 	Broker’s Fees
	 	 	20	 
	 	4.19	 	 	Warranty
	 	 	20	 
	 	4.20	 	 	Customers; Suppliers
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE V PURCHASER’S REPRESENTATIONS AND WARRANTIES	 	 	21	 
	 	5.1	 	 	Organization of Purchaser
	 	 	21	 
	 	5.2	 	 	Authorization
	 	 	21	 
	 	5.3	 	 	Validity; Binding Effect
	 	 	21	 
	 	5.4	 	 	Noncontravention
	 	 	21	 
	 	5.5	 	 	Broker’s Fees
	 	 	21	 
	 	5.6	 	 	Financing
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VI COVENANTS PENDING CLOSING	 	 	22	 

i

 

	 	 	 	 	 	 	 	 	 
	 	6.1	 	 	General
	 	 	22	 
	 	6.2	 	 	Notices and Consents
	 	 	22	 
	 	6.3	 	 	Due Diligence
	 	 	22	 
	 	6.4	 	 	The Company’s Operation of Business Prior to Closing
	 	 	22	 
	 	6.5	 	 	Governmental Permits and Approvals and Third Party Consent
	 	 	s       23	 
	 	6.6	 	 	Press Releases
	 	 	23	 
	 	6.7	 	 	Update to Schedules
	 	 	23	 
	 	6.8	 	 	Certain Actions
	 	 	23	 
	 	6.9	 	 	No Solicitation
	 	 	24	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VII CONDITIONS PRECEDENT	 	 	24	 
	 	7.1	 	 	The Purchaser’s Conditions Precedent
	 	 	24	 
	 	7.2	 	 	The Shareholders’ Conditions Precedent
	 	 	25	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VIII INDEMNIFICATION	 	 	25	 
	 	8.1	 	 	Indemnification by the Shareholders
	 	 	25	 
	 	8.2	 	 	Indemnification by Purchaser
	 	 	26	 
	 	8.3	 	 	Limitations on Indemnity
	 	 	26	 
	 	8.4	 	 	Third Party Claims
	 	 	27	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE IX ADDITIONAL COVENANTS	 	 	27	 
	 	9.1	 	 	General
	 	 	27	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE X TERMINATION	 	 	28	 
	 	10.1	 	 	Termination Events
	 	 	28	 
	 	10.2	 	 	Effect of Termination
	 	 	28	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE XI MISCELLANEOUS	 	 	29	 
	 	11.1	 	 	Assignment
	 	 	29	 
	 	11.2	 	 	Notices
	 	 	29	 
	 	11.3	 	 	Expenses; Attorneys’ Fees
	 	 	30	 
	 	11.4	 	 	Governing Law; Forum
	 	 	31	 
	 	11.5	 	 	Partial Invalidity
	 	 	31	 
	 	11.6	 	 	Execution in Counterparts; Facsimile Signatures
	 	 	31	 
	 	11.7	 	 	Entire Agreement; Amendments and Waivers
	 	 	31	 
	 	11.9	 	 	No Third Party Beneficiary
	 	 	32	 

ii

 

	 	 	 
	Exhibits
	 	 
	Exhibit A

	 	Working Capital Calculation Procedures
	Exhibit B

	 	Form of Employment Agreement – Schneider
	Exhibit C

	 	Form of Consulting Agreement – Kurtin
	Exhibit D

	 	Form of Consulting Agreement – Defay
	Exhibit E

	 	Promissory Note
	Exhibit F

	 	[Intentionally Omitted]
	Exhibit G

	 	Employee Bonuses
	 
	 	 
	Schedules
	 	 
	 
	 	 
	Schedule 4.1(a)

	 	Foreign Qualifications
	Schedule 4.1(b)

	 	Company Locations
	Schedule 4.4

	 	Noncontravention
	Schedule 4.5

	 	Capitalization
	Schedule 4.6(a)

	 	Financial Statements
	Schedule 4.6(c)

	 	Undisclosed Liabilities
	Schedule 4.6(d)

	 	Material Changes
	Schedule 4.6(e)

	 	Accounts Receivable
	Schedule 4.7(a)

	 	Real Property/Leaseholds
	Schedule 4.7(b)

	 	Permitted Liens
	Schedule 4.9

	 	Litigation; Claims
	Schedule 4.10(b)

	 	Shareholder Medicare/Medicaid Reimbursement
	Schedule 4.10(d)

	 	Medicare/Medicaid Reports
	Schedule 4.10(e)

	 	Company Records
	Schedule 4.10(f)

	 	Health Care Compliance Matters
	Schedule 4.11

	 	Environmental Matters
	Schedule 4.12

	 	Permits
	Schedule 4.13

	 	Material Contracts
	Schedule 4.14

	 	Labor and Employment Matters
	Schedule 4.15

	 	Employee Benefits
	Schedule 4.16

	 	Intellectual Property
	Schedule 4.17

	 	Affiliate Transactions
	Schedule 4.18

	 	Broker’s Fees
	Schedule 4.19

	 	Warranties
	Schedule 4.21(a)

	 	Customers
	Schedule 4.21(b)

	 	Suppliers

iii

 

STOCK PURCHASE AGREEMENT

     THIS AGREEMENT (this “Agreement”), entered into as of April 27, 2007, by and among
Universal HealthCare Company LLC, an Indiana limited liability company (“Purchaser”),
In-House Pharmacies, Inc., a California corporation (the “Company”), and Jon R. Kurtin and
Ralph M. Defay (collectively, the “Shareholders”),

WITNESSETH THAT:

     WHEREAS, the Shareholders collectively own all of the issued and outstanding capital Stock of
the Company; and

     WHEREAS, the Company desires to issue to Purchaser and Purchaser desires to purchase from the
Company all of the New Stock; and

     WHEREAS, the Shareholders desire to sell to Purchaser and Purchaser desires to purchase from
the Shareholders all of the Stock, all on the terms and subject to the conditions set forth in this
Agreement;

     NOW, THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto
hereby agree as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

     1.1 Definitions. All initially-capitalized terms used in this Agreement shall have
the meanings given to such terms in this Section 1.1 below:

     “AAA” has the meaning ascribed to it in Section 11.4(b).

     “Accounts Receivable” has the meaning ascribed to it in Section 4.6(e).

     “Acquisition Transactions” has the meaning ascribed to it in Section 6.9.

     “Affiliate” means, with respect to any Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with, such Person.

     “Agreement” has the meaning ascribed to it in the introductory paragraph hereof.

     “Balance Sheet” has the meaning ascribed to it in Section 4.6(a).

     “Base Working Capital” means the sum of Four Million Six Hundred Thousand
($4,600,000).

 

 

     “Benefit Plans” has the meaning ascribed to it in Section 4.15.

     “Business Day” means a day other than a Saturday or Sunday or a government or bank
holiday on which banks generally are closed in the State of Indiana.

     “Closing” has the meaning ascribed to it in Section 3.1.

     “Closing Date” means the date on which the Closing actually occurs.

     “Closing Date Balance Sheet” has the meaning ascribed to it in Section
2.3(a)(i).

     “Closing Date Working Capital” has the meaning ascribed to it in Section
2.3(a)(ii).

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

     “Company” has the meaning ascribed to it in the introductory paragraph of this
Agreement.

     “Consulting Agreements” has the meaning ascribed to it in Section 3.2(d).

     “Current Assets” has the meaning ascribed to it in Section 2.3(a)(ii).

     “Current Liabilities” has the meaning ascribed to it in Section 2.3(a)(ii).

     “Customers” has the meaning ascribed to it in Section 4.21(a).

     “Deposit Amount” means Three Hundred Thousand Dollars ($300,000).

     “Dispute Notice” has the meaning ascribed to it in Section 2.3(b).

     “Dispute Period” has the meaning ascribed to it in Section 2.3(b).

     “Employment Agreement” has the meaning ascribed to it in Section 3.2(c).

     “Environmental Laws” means all Laws concerning pollution or protection of the
environment, including, without limitation, all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control or cleanup of any Hazardous
Material.

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

     “ERISA Affiliate” means any member of a controlled group of corporations under Section
414(b) of the Code of which the Company is or was a member, and any trade or business
(whether or not incorporated) that is or was under common control with the Company under

2

 

Section 414(c) of the Code, and all other entities which together with the Company are or were
prior to the date hereof treated as a single employer under Section 414(m) or 414(o) of the Code.

     “Financial Statements” has the meaning ascribed to it in Section 4.6(a).

     “GAAP” means generally accepted accounting principles in the United States of America,
consistently applied.

     “GLB” has the meaning ascribed to it in Section 4.10(g).

     “Hazardous Activity” means the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, release, storage, transfer,
transportation, treatment or use of Hazardous Material in, on, under about or from any of the real
estate owned, used or leased by the Company or any part thereof and any other act, business,
operation or thing that violates any Environmental Law, or increases the danger, or risk of danger,
or poses an unreasonable risk of harm, to Persons or property.

     “Hazardous Material” means any substance, material or waste which is be regulated by
any governmental authority, including any material, substance or waste defined as a “hazardous
waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted
hazardous waste,” contaminant,” toxic waste” or “toxic substance” under any provision of
Environmental Law, including lead paint, petroleum, petroleum products, asbestos, presumed
asbestos-containing material or asbestos-containing material, urea formaldehyde and polychlorinated
biphenyls, except such material, substance or waste which may be contained in prescription
pharmaceuticals.

     “HIPAA” has the meaning ascribed to it in Section 4.10(g).

     “Indebtedness” means any and all liabilities and obligations of the Company
outstanding immediately prior to the Effective Time (i) for the repayment of borrowed money
(whether owed to lenders, affiliates or any other Person), including amounts owed in respect of
principal, interest, fees, charges, premiums and prepayment penalties, and (ii) for Pre-Closing
Company Transaction Expenses.

     “Indemnified Person” has the meaning ascribed to it in Section 8.4(a).

     “Indemnifying Person” has the meaning ascribed to it in Section 8.4(a).

     “Independent Accountants” means a recognized accounting firm, that is mutually
agreeable to Buyer and Seller and that neither Buyer nor Seller has previously engaged for any
services.

     “Intellectual Property” has the meaning ascribed to it in Section 4.16.

     “Intellectual Property Agreement” has the meaning ascribed to it in Section
3.2(e).

3

 

     “IRS” means the Internal Revenue Service.

     “Labor and Employment Laws” means all Laws relating to employment, employment
practices, terms and conditions of employment, equal opportunity, nondiscrimination, immigration,
wages, hours, benefits and collective bargaining, the payment of social security and similar taxes,
unemployment compensation, workers compensation and occupational safety and health.

     “Laws” means all laws, statutes, rules, regulations, ordinances, codes, bulletins,
opinions, decisions, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder of federal, state, local and foreign governments (and all agencies thereof).

     “Liens” means any and all liens, security interests, mortgages, easements,
restrictions, encumbrances, pledges, conditional sales contracts, or other similar conflicting
ownership or security interest in favor of any Person.

     “Losses” has the meaning ascribed to it in Section 8.1.

     “Management” means David Schneider, Steve Kelso and Philip Curtis.

     “Material Adverse Effect” means any material and adverse effect on the business,
operations, properties, assets, liabilities, prospects or condition (financial or otherwise) of the
Company.

     “Material Contracts” has the meaning ascribed to it in Section 4.13.

     “Medicare Laws” means any and all Laws applicable to reimbursement by Medicare,
Medicaid or any other governmental healthcare program for services or items rendered by the
Company, including all federal and state laws relating to the referral of patients to the Company’s
business.

     “Multiemployer Plan” means a plan as defined in ERISA Section 4001(a)(3) to which the
Company or any ERISA Affiliate of the Company is making or accruing an obligation to make
contributions or has preceding the date hereof made or accrued an obligation to make contributions.

     “New Stock” means 71 shares of Company stock issued to Purchaser by Company, with an
agreed upon value of $16,515.50 per share.

     “Note” has the meaning ascribed to in in Section 2.2(b).

     “Notice” has the meaning ascribed to it in Section 11.2.

     “Notice Party” has the meaning ascribed to it in Section 11.2.

     “Order” has the meaning ascribed to it in Section 4.9.

4

 

     “Payors” has the meaning ascribed to it in Section 4.10(d).

     “Pension Plan” means an employee pension benefit plan, as defined in ERISA Section
3(2), other than a Multiemployer Plan, which is covered by Title IV of ERISA and which either (i)
is maintained by the Company and/or any ERISA Affiliate of the Company for employees of such
Person, or (ii) has at any time preceding the date hereof been maintained by the Company and/or any
ERISA Affiliate of the Company for employees of such Person.

     “Permits” has the meaning ascribed to such term in Section 4.12.

     “Person” means an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust, unincorporated
association, joint venture, company or other entity or any governmental authority.

     “PHI” has the meaning ascribed to it in Section 4.10(g).

     “Position Statement” has the meaning ascribed to it in Section 2.3(e).

     “Post-Closing Delivery” has the meaning ascribed to it in Section 2.3(a).

     “Pre-Closing Company Transaction Expenses” means any and all fees and expenses
incident to the transactions contemplated by this Agreement and which are incurred by or are for
the account of the Company and/or the Shareholders, including, without limitation, fees and
expenses payable to their representatives (including any accountants, attorneys’, advisors,
broker’s or finder’s fees), in respect of services performed on or before the Closing Date, whether
or not such expenses have accrued or have been billed or become due prior to Closing and all
amounts payable by the Company and/or the Shareholders to consultants or others arising out of or
relating to the transactions contemplated by this Agreement.

     “Purchaser” has the meaning ascribed to it in the introductory paragraph of this
Agreement.

     “Reports” has the meaning ascribed to it in Section 4.10(d).

     “Resolution Period” has the meaning ascribed to it in Section 2.3(d).

     “Restrictions” means any and all Liens, restrictions, restrictions on transfer,
options, pledges, voting agreements, rights of first refusal, tag-along, co-sale or other rights,
claims, charges or encumbrances of any kind or nature whatsoever, other than restrictions on the
transfer of unregistered stock pursuant to state and/or federal securities laws.

     “Required Permits” has the meaning ascribed to it in Section 6.5.

     “Shareholders” has the meaning ascribed to it in the introductory paragraph of this
Agreement.

5

 

     “Stock” has the meaning ascribed to it in Section 4.5.

     “Suppliers” has the meaning ascribed to it in Section 4.21(b).

     “Termination Date” means May 16, 2007.

     “Third-Party Claim” has the meaning ascribed to it in Section 8.4(a).

     “Updated Schedules and Materials” has the meaning ascribed to it in Section
6.7.

     “Working Capital” means the sum of cash on hand plus accounts receivable that
are not more than 90 days old plus the book value of inventory saleable in the ordinary
course of business minus current liabilities calculated in accordance with Exhibit
A.

     1.2 Construction.

          (a) The meanings of terms defined herein are equally applicable to the singular and plural of
such defined terms.

          (b) The headings of articles and sections to this Agreement are provided for convenience only
and will not affect the construction or interpretation hereof.

          (c) This Agreement and all Exhibits and Schedules hereto are a result of negotiations among
the parties hereto. Accordingly, neither this Agreement nor any Exhibit or Schedule hereto shall
be construed against any party hereto because of its or its counsel’s involvement in its
preparation.

          (d) Any disclosure under one of the Schedules to this Agreement shall be deemed disclosed in
any other relevant Schedule to this Agreement if the disclosure under one Schedule is reasonably
sufficient on its face without further inquiry to inform Parent and Merger Sub of the information
required to be disclosed in respect of such other Schedule or Schedules to avoid a
misrepresentation under the relevant counterpart Section of this Agreement.

ARTICLE II

PURCHASE AND SALE 

     2.1 Purchase and Sale of Shares. Subject to and upon the terms and conditions set
forth in this Agreement, (a) the Company shall sell and issue the New Stock to Purchaser free and
clear of any and all Restrictions, (b) each of the Shareholders will sell, transfer, convey, assign
and deliver the Stock to Purchaser free and clear of any and all Restrictions, and (c) Purchaser
will purchase, at the Closing hereunder, the New Stock and the issued and outstanding shares of the
Stock.

     2.2 Purchase Price.

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     (a) Subject to the terms and conditions set forth in this Agreement and in consideration of
the sale, transfer, conveyance, assignment and delivery of the Stock by the Shareholders to
Purchaser, and in reliance upon the representations and warranties made herein by the Shareholders,
Purchaser will pay to the Shareholders an aggregate purchase price of Sixteen Million Six Hundred
Fifty-Four Thousand Eight Hundred Dollars ($16,654,800), payable to the Shareholders as follows:

	 	(i)	 	Fifteen Million Six Hundred Sixty-Eight Thousand Four Dollars
($15,668,400) minus the Deposit Amount in immediately available funds
due at Closing;
	 
	 	(ii)	 	Nine Hundred Eighty Six Thousand Four Hundred Dollars
($986,400) by delivery of the Subordinated Promissory Note, substantially in
the form attached hereto as Exhibit E (the “Note”); and
	 
	 	(iii)	 	the working capital adjustment, if any, pursuant to Section 2.3 below.

     (b) Subject to the terms and conditions set forth in this Agreement and in consideration of
the issuance, sale, transfer, conveyance, assignment and delivery of the New Stock by the Company
to Purchaser, Purchaser will pay to the Company an aggregate purchase price of One Million One
Hundred Seventy Two Thousand Six Hundred Dollars ($1,172,600) in immediately available funds due at
the Closing.

     (c) The Deposit Amount shall be deposited with Shareholder’s counsel, Blanchard, Krasner &
French, PC, in LaJolla, California on the date hereof and shall be administered by Shareholder’s
counsel in accordance with the excrow instruction letter executed as of the date hereof.

     2.3 Working Capital Adjustment.

          (a) Within sixty (60) days after the Closing Date, Purchaser shall prepare and deliver to
Shareholders (such delivery, the “Post-Closing Delivery”): a calculation of the Working
Capital of Company as of the close of business on the Closing Date (the “Closing Date Working
Capital”).

          (b) The Shareholders (acting jointly) shall have thirty (30) days from the date Purchaser
makes the Post-Closing Delivery (such period, the “Dispute Period”) to notify Purchaser, in
writing, as to whether the Shareholders agree or disagree with the calculations set forth on the
Post-Closing Delivery (such written notice, the “Dispute Notice”). During the Dispute
Period, the Shareholders shall be permitted to review (during regular business hours and upon
reasonable prior notice) the working papers of Purchaser and (where applicable) the Purchaser’s
accountants (and any other pertinent documents reasonably required by the Shareholders) relating to
the matters set forth in the Post-Closing Delivery.

          (c) If the Shareholders (acting jointly) fail to deliver a Dispute Notice to Purchaser during
the Dispute Period, (i) the Closing Date Balance Sheet as prepared by

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Purchaser shall be deemed to
have been correctly prepared, and (ii) Purchaser’s calculation of Closing Date Working Capital
shall be deemed to be final and correct and shall be binding upon each of the parties hereto.

          (d) If the Shareholders (acting jointly) deliver a Dispute Notice to Purchaser during the
Dispute Period, the Shareholders (acting jointly) and Purchaser shall, for a period of forty-five
(45) days from the date the Dispute Notice is delivered to Purchaser (such period, the
“Resolution Period”), use their respective reasonable best efforts to amicably resolve the
items in dispute. Any items so resolved by the parties shall be deemed to be final and correct as
so resolved and shall be binding upon each of the parties hereto.

          (e) If the Shareholders (acting jointly) and Purchaser are unable to resolve all of the items
in dispute during the Resolution Period, then either the Shareholders (acting jointly) or Purchaser
may refer the items remaining in dispute to Independent Accountants. The Shareholders (acting
jointly) and Purchaser shall each submit an affidavit to the other evidencing no conflict with the
selected accounting firm, and such firm shall so certify to the Shareholders and Purchaser that no
conflicts exist. Such referral shall be made to the Independent Accountants in writing not later
than thirty (30) days after the end of the Resolution Period, copies of which shall concurrently be
delivered to the non-referring parties hereto. The referring party shall furnish the Independent
Accountants, at the time of such referral, with the Post-Closing Delivery and the Dispute Notice.
The parties shall also furnish the Independent Accountants with such other information and
documents as the Independent Accountants may reasonably request in order for them to resolve the
items in dispute. The Shareholders (acting jointly) and Purchaser shall each also, within ten (10)
days of the date the items in dispute are referred to the Independent Accountants, provide the
Independent Accountants with a written notice (a “Position Statement”) describing in
reasonable detail their respective positions on the items in dispute (copies of which will
concurrently be delivered to the other party hereto). If any party fails to timely deliver its
Position Statement to the Independent Accountants, the Independent Accountants shall resolve the
items in dispute solely upon the basis of the information otherwise provided to them. The
Independent Accountants shall resolve all disputed items in a written determination to be delivered
to the Shareholders and Purchaser within forty-five (45) days after such matter is referred to
them; provided, however, that any delay in delivering such determination shall not
invalidate such determination or deprive the Independent Accountants of jurisdiction to resolve the
items in dispute. The decision of the Independent Accountants as to the items in dispute shall be
final and binding upon the parties hereto and shall not be subject to judicial review. The fees
and expenses of the Independent Accountants incurred in the resolution of any items in dispute
shall be reasonably determined by the Independent Accountants and set forth in their report and
shall be allocated and paid by the Shareholders (jointly) and Purchaser in inverse proportion to
the extent they prevailed on the items in dispute.

          (f) Within five (5) business days after the final determination of the Closing Date Balance
Sheet and the calculation of Closing Date Working Capital (whether through
failure of Shareholders to timely deliver a Dispute Notice, agreement of the parties, or
determination of the Independent Accountants),

8

 

          (i) if Closing Date Working Capital is less than the Base Working Capital, Mr.
Kurtin shall pay Purchaser 50% of the difference and Mr. Defay shall pay Purchaser 50% of
the difference; or

          (ii) if the amount of cash included in Closing Date Working Capital is less than One
Hundred Thousand Dollars ($100,000), Mr. Kurtin shall pay Purchaser 50% of the difference
and Mr. Defay shall pay Purchaser 50% of the difference; or

          (iii) if Closing Date Working Capital is more than the Base Working
Capital and the amount of cash included in Closing Date Working Capital is greater
than One Hundred Thousand Dollars, Purchaser shall pay Shareholders the difference
up to the amount of cash in excess of $100,000.

          (g) Unless otherwise agreed to in writing by Purchaser and the Shareholders, all payments
under Section 2.3(f) above shall be made by wire transfer of immediately available funds to
an account or accounts designated in writing by the Shareholders or Purchaser, as appropriate,
which designation shall be made by the party receiving such payment no later than one (1) business
day prior to the payment date.

          (h) If Purchaser fails to timely deliver the Post-Closing Delivery or if during the Resolution
Period the dispute described in the Dispute Notice is not resolved and Purchaser fails to timely
refer the dispute to the Independent Accountants, Purchaser shall not be entitled to any adjustment
under this Section 2.3.

ARTICLE III

THE CLOSING

     3.1 Closing. The closing of the sale and purchase of the Stock (the
“Closing”) shall take place electronically at or about 1:00 p.m. Eastern Standard Time on
May 16, 2007, through the offices of Purchaser’s counsel, Sommer Barnard PC, in Indianapolis,
Indiana and Shareholder’s counsel, Blanchard, Krasner & French, PC, in LaJolla, California, or at
such other time, date or place as agreed to by the parties hereto.

     3.2 Closing Deliveries of Purchaser. At the Closing, in addition to any other
documents specifically required to be delivered pursuant to this Agreement, Purchaser shall deliver
to the Shareholders:

     (a) the immediately available funds as required by Sections 2.2(a) above;

     (b) the Note, duly executed by Purchaser;

     (c) a counterpart to an Employment and Non-Competition Agreement with David Schneider, in the
form attached hereto as Exhibit B (the “Employment Agreement”);

     (d) counterparts to Consulting Agreements with Jon R. Kurtin and Ralph M. Defay, in the forms
attached hereto as Exhibits C and D, respectively (the “Consulting
Agreements”);

9

 

     (e) a counterpart to a retention bonus letter for each of the employees listed on Exhibit
G, duly executed by the Purchaser (the “Bonus Retention Letters”);

     (f) certificate of the Secretary or Assistant Secretary of Purchaser, dated as of the date
hereof, certifying (i) the resolutions duly adopted by the manager and sole member of Purchaser
authorizing and approving the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, and (ii) that such resolutions have not been
rescinded or modified and remain in full force and effect as of the Closing Date; and

     (g) a certificate to be dated as of the Closing Date, certifying that Purchaser performed and
complied with all the terms, provisions and conditions of this Agreement to be performed and
complied with by it prior to Closing and that its representations and warranties contained herein
are true in all respects as of the date of this Agreement and as of the Closing Date.

     3.3 Closing Deliveries of the Shareholders. At the Closing, in addition to any other
documents specifically required to be delivered pursuant to this Agreement, the Shareholders shall
deliver to Purchaser the following:

     (a) certificates representing all of the Stock, endorsed to Purchaser or in blank by an
effective endorsement sufficient to give Purchaser “control” of the Stock for purposes of Section
303 of Article 8 of the Uniform Commercial Code and free and clear of all Restrictions;

     (b) counterparts to the Employment Agreement and the Consulting Agreements, duly executed by
Messrs. Schneider, Kurtin and Defay (as appropriate);

     (c) [intentionally omitted]

     (d) a certificate of the Secretary or Assistant Secretary of the Company, dated as of the date
hereof, certifying (i) the resolutions duly adopted by the Board of Directors of the Company
authorizing and approving the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, (ii) that such resolutions have not been
rescinded or modified and remain in full force and effect as of the Closing Date, and (iii) the
Articles of Incorporation of the Company, as amended and in effect on the date hereof;

     (e) a certificate of the Shareholders to be dated as of the Closing Date, certifying that the
Shareholders and the Company have performed and complied with all the terms, provisions and
conditions of this Agreement to be performed and complied with by them prior to Closing and that
their representations and warranties contained herein are true in all respects as of the date of
this Agreement and as of the Closing Date;

     (f) the original minute books, stock ledgers and corporate seal (if any) of the Company; and

10

 

     (g) evidence of the payment in full and satisfaction of all Indebtedness.

     3.4 Closing Deliveries of the Company. At the Closing, the Company shall deliver to
Purchaser a certificate or certificates representing the New Stock duly executed and issued by the
Company, subject to any applicable securities law legends.

ARTICLE IV

SHAREHOLDERS’ REPRESENTATIONS AND WARRANTIES

     The Shareholders, severally but not jointly, represent and warrant to Purchaser as follows:

     4.1 Organization.

          (a) The Company is a corporation duly organized, validly existing and in good standing under
the laws of the State of California. Schedule 4.1(a) contains a true, accurate and
complete list of each jurisdiction in which the Company is qualified to do business as a foreign
corporation. The Company is duly qualified to do business as a foreign corporation and is in good
standing under the Laws of each state or other jurisdiction in which either the ownership or use of
the properties owned or used by it, or the nature of the activities conducted by it, requires such
qualification.

          (b) The Company has full corporate power and authority to own or use its properties and assets
and carry on its business activities as now conducted. Schedule 4.1(b) lists the addresses
of all locations at which the Company conducts its business.

          (c) Complete and accurate copies of the Articles of Incorporation, By-Laws, minute books and
stock transfer books of the Company have been delivered to Purchaser. The minute books of the
Company fairly and accurately reflect all material actions of the Board of Directors and the
shareholders of the Company. The stock transfer books of the Company are correct, complete and
current, and, to the extent applicable, all documentary and stock transfer tax stamps required in
connection with the issuance and transfer of shares of the Company’s stock have been duly paid,
affixed or canceled.

     4.2 Authorization. The Company and each Shareholder has full power and authority to
execute and deliver this Agreement and to perform his or its respective obligations hereunder. The
execution, delivery and performance of this Agreement have been duly authorized by all necessary
action on the part of the Company and each Shareholder.

     4.3 Validity; Binding Effect. This Agreement has been duly and validly executed and
delivered by the Company and each Shareholder. This Agreement constitutes a valid and legally
binding obligation of the Company and each Shareholder, enforceable against the Company and each
Shareholder in accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency and similar laws and/or by principals of equity.

11

 

     4.4 Noncontravention. Except as set forth in Schedule 4.4, the
execution, delivery and performance of this Agreement by the Company and each Shareholder, the
consummation by the Company and each Shareholder of the transactions contemplated hereby, and the
compliance by the Company and each Shareholder with or fulfillment by the Company and each
Shareholder of the terms and provisions hereof or of any other agreement or instrument contemplated
hereby, do not and shall not (a) conflict with or result in a breach of any of the provisions of
the constituent documents of the Company, (b) contravene any Order which affects or binds either of
the Shareholders, the Stock, the Company or any of its properties, (c) to the knowledge of
Shareholders and Management, contravene any Law which affects or binds either of the Shareholders,
the Stock, the Company or any of its properties; or (d) conflict with, contravene or constitute a
default or breach of or under, or require the consent of any third party under any Material
Contract or any contract or agreement to which either Shareholder is a party or by which either of
them or the Stock is bound.

     4.5 Capital Structure.

          (a) The authorized capital stock of the Company consists of One Hundred Thousand (100,000)
authorized common shares consisting of Fifty Thousand (50,000) Class A Common shares with no par
value and Fifty Thousand (50,000) Class B Common shares with no par value, of which Nine Hundred
(900) Class A Common and One Hundred Twenty (120) Class B Common shares have been duly and validly
issued, are fully-paid and non-assessable, and all of which are owned, beneficially and of record,
by the Shareholders as described on Schedule 4.5 (collectively, the “Stock”), free
and clear of any and all Restrictions.

          (b) Other than as described on Schedule 4.5, there are no issued and/or outstanding
equity securities of the Company, or securities convertible into or exchangeable or exercisable for
equity securities of the Company, and there are no outstanding options, warrants, rights,
contracts, commitments, understandings or arrangements by which the Company or any other Person is
bound to issue, repurchase or otherwise acquire or retire any equity securities of the Company.
There are no voting trusts, proxies or any other agreements or understandings with respect to the
voting of any equity securities of the Company.

          (c) No equity or other securities of the Company (including the common shares described on
Schedule 4.5), were issued in violation of any Law.

          (d) The Company does not own, or have any right, option or obligation to acquire, any equity
securities of any other Person.

     4.6 Financial Statements.

          (a) Attached hereto as Schedule 4.6(a) are true, accurate and complete copies of the
following: the unaudited balance sheet of the Company as of January 31, 2007 (the “Balance
Sheet”) and the related unaudited statements of operations and comprehensive income,
shareholder’s equity, and cash flows for the fiscal year then ended (collectively, the
“Financial Statements”).

12

 

          (b) The Financial Statements (i) fairly present, in all material respects, the operating
results, the financial condition, changes in shareholder’s equity and cash flow of the Company on
the dates and for the periods indicated, (ii) are correct and complete in all material respects,
(iii) are consistent with the books and records of the Company (which books and records are correct
and complete), and (iv) were prepared in accordance with cash basis accounting, rather than GAAP.

          (c) The Company has no liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise) except for (x) liabilities or obligations reflected or reserved against in
the Balance Sheet, (y) immaterial liabilities or obligations incurred since the date of the Balance
Sheet in the ordinary course of business, and (z) liabilities or obligations set forth in the
Material Contracts or Schedule 4.6(c).

          (d) Except as set forth on Schedule 4.6(d), since the date of the Balance Sheet, (i)
there has not been any material adverse change in the business, operations, assets, prospects, or
condition of the Company, and to the knowledge of the Shareholders no event has occurred or
circumstance exists that could reasonably be expected to result in such a change, (ii) the Company
has operated only in the ordinary course, (iii) no party has accelerated, terminated, modified or
cancelled any material agreement, contract, lease or license to which the Company is a party or by
which the Company is bound, and (iv) the Company has not experienced any material damage,
destruction or loss (whether or not covered by insurance) to any of its material assets.

          (e) All accounts receivable of the Company as of January 31, 2007 are set forth on
Schedule 4.6(e) (collectively, the “Accounts Receivable”) and represent (i) valid
obligations arising from sales actually made or services actually performed in the ordinary course
of business, (ii) rebates owed to the Company by vendors, and (iii) loans made to employees of the
Company. To the knowledge of Shareholders, there is no contest, claim, or right of set-off, other
than returns in the ordinary course of business, under any agreement with any obligor of an Account
Receivable relating to the amount or validity of such Account Receivable.

          (f) To the knowledge of Shareholders, all inventory of the Company, whether or not reflected
in the Balance Sheet, consists of a quality and quantity usable and salable in the ordinary course
of business, except for obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Balance Sheet or in the accounting
records of the Company as of the Closing Date, as the case may be. All inventories not written off
are reflected in the Balance Sheet at cost. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are reasonable in the present
circumstances of the Company.

     4.7 Title to and Sufficiency of Assets.

          (a) Schedule 4.7(a) contains a complete and accurate list of all real property leased
or otherwise occupied by the Company. The Company does not own any real property. The Company
owns all the properties and assets (whether tangible or intangible) that it purports
to own, including all of the properties and assets reflected in the Balance Sheet (except for
assets

13

 

held under capitalized leases and personal property sold since the date of the Balance Sheet
in the ordinary course of business), and all of the properties and assets purchased or otherwise
acquired by the Company since the date of the Balance Sheet (except for personal property acquired
and sold since the date of the Balance sheet in the ordinary course of business).

          (b) Except as set forth in Schedule 4.7(b), all of the properties and assets reflected
in the Balance Sheet are owned by the Company free and clear of any and all Liens and are not, in
the case of real property, subject to any rights of way, building use restrictions, exceptions,
variances, reservations or limitations of any nature except, (i) liens for current taxes not yet
due, (ii) minor imperfections of title, none of which is substantial in amount, materially detracts
from the value or impairs the use of the property subject thereto, or impairs the operations of the
Company, (iii) zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto, and (iv) terms of lease and license agreements.

          (c) The building, plants, structures, equipment and other assets of the Company are sufficient
for the continued conduct of the Company’s business after the Closing in substantially the same
manner as conducted prior to the Closing.

     4.8 Tax Matters. The Company has filed or caused to be filed all tax returns, and all
reports with respect to taxes, required to have been filed by or with respect to the Company prior
to the date hereof. To the knowledge of the Shareholders, all such tax returns or reports were
true, accurate, correct and complete in all material respects. The Company is not the beneficiary
of any extension of time within which to file any tax return or report. To the knowledge of the
Shareholders, the Company has paid, caused to be paid or the Shareholders will cause to be paid all
taxes, penalties and interest required to have been paid by the Company on or before their
respective due dates. The Company has withheld, deducted, collected and paid all taxes required to
have been withheld, deducted, collected and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party by the Company. The
Company has not waived any statute of limitations in respect of taxes or agreed to any extension of
time with respect to a tax assessment or deficiency. No claim has ever been made by a governmental
authority in a jurisdiction where tax returns by the Company have not been filed that the Company
is or may be subject to taxation by such jurisdiction. To the knowledge of the Shareholders, there
are no Liens on any of the Company’s assets or properties that arose in connection with any failure
(or alleged failure) to pay any tax. No tax return of the Company has been audited or is currently
under audit or examination. There is no tax sharing agreement, tax allocation agreement, tax
indemnity obligation or similar written or unwritten agreement, arrangement, understanding or
practice with respect to taxes (including any advance pricing agreement, closing agreement or other
arrangement relating to taxes) that will require any payment by the Company. The Company is not
now and has never been an S-corporation as defined in Code Section 1361.

     4.9 Litigation; Claims. Except as set forth in Schedule 4.9, the Company is
not (a) subject to any outstanding injunction, judgment, order, decree, ruling or charge of any
governmental authority or arbitrator (collectively, an “Order”),
nor (b) a party or, to the knowledge of the Shareholders, threatened to be made a party to any
action, suit, proceeding, hearing, audit or investigation of, in, or before any court or
quasi-judicial or administrative

14

 

agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator or governmental agency or entity having regulatory authority over the
Company. Except as set forth on Schedule 4.9, the Company has not been audited, examined
or otherwise reviewed by any governmental agency or entity, or federal, state or local authorities
during the current or past three (3) fiscal years. No matter described in Schedule 4.9
could reasonably be expected to have a material adverse effect on the business, condition,
operations or prospects of the Company.

     4.10 Legal Compliance. To the knowledge of the Shareholders and Management,

          (a) The Company has complied in all material respects with all applicable Laws, including all
Medicare Laws, Environmental Laws and all Labor and Employment Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been delivered
to or filed or commenced against the Company alleging any failure so to comply. To the knowledge
of the Shareholders, no event has occurred or circumstance exists that (with or without notice or
lapse of time) may constitute or result in a violation by the Company, or a failure on the part of
the Company to comply with, any Law, other than violations that may result from a change of control
of the Company due to the transactions contemplated by this Agreement.

          (b) Except as set forth on Schedule 4.10(b), neither the Shareholders nor any former
holders of any shares of the capital stock of the Company nor any of their Affiliates has ordered,
referred, or requested, directly or indirectly, any items or services from the Company that are
subject or entitled to reimbursement in whole or in part by Medicare, Medicaid or any other state
or federal government reimbursement program.

          (c) Without limiting the generality of the foregoing, the Company is in material compliance
with all conditions and standards for participation in the Medicare and Medicaid programs and is
eligible for participation in Medicare and Medicaid programs. The Company is not operating any
aspect of its business under or subject to a plan of correction or corporate integrity agreement
with a governmental agency or entity. The Company is currently receiving and is entitled to
continue to receive Medicare and Medicaid reimbursement payments, except to the extent the Company
is not entitled to continue receiving Medicare and Medicaid payments as a result of a change of
control due to the transactions contemplated in this Agreement.

          (d) The Company has duly and timely filed all reports and other items required to be filed
prior to the Closing Date (the “Reports”) with any reimbursement program or third party
payor (including, without limitation, Medicare, Medicaid, medically indigent assistance, Blue
Cross, Blue Shield, any health maintenance, preferred provider, independent practice or other
healthcare providers or payors) (collectively, the “Payors”) and has timely paid all
amounts due to such Payors. Except as set forth in Schedule 4.10(d), (i) the Company has
not requested an extension of time in which to file any of the Reports, (ii) the Company is not
delinquent in the payment of any amount due to any Payors, (iii) there are no pending or
threatened audits, claims, assessments, adjustments, challenges or notices from any
governmental agency or entity or Payors with regard to any of the Reports or any reimbursements or
payments that the Company received from the government agency or entity or Payors, (iv) the Company
has not executed any waivers or extension of the statute of

15

 

limitations for the collection or
assessment of any amount due under or in connection with any Report or to any government agency or
entity or Payors, and (v) the Company is not liable for any amounts owed to any Payor or
governmental agency or entity, nor subject to any contractual adjustments, fines or penalties.

          (e) Except as set forth on Schedule 4.10(e), the Company has correctly maintained all
records required to be maintained by the Food and Drug Administration, Drug Enforcement Agency,
State Boards of Pharmacy, Social Security Administration, Health Care Financing Administration, the
Center for Medicare and Medicaid Services, state regulatory agencies and the Medicare and Medicaid
programs.

          (f) To the knowledge of the Shareholders, without limiting the generality of the foregoing,
the Company has not given or received in violation of any Law any payments or any other
remuneration, either directly or indirectly, overtly or covertly, in cash or in kind, in return for
receiving or making referrals for the furnishing or arranging for the furnishing of any item or
service, or in return for purchasing, leasing, ordering, or arranging for or recommending
purchasing, leasing, or ordering any good, facility, service or item in violation of 42 U.S.C.
§1320a 7a and 1320a 7b, commonly known as the “Anti Kickback Statute.” In addition, the Company
has not accepted any referral for the provision of any designated health service, or submitted a
claim for payment to Medicare or Medicaid for the provision of such services, in violation of 42
U.S.C. §1395nn, commonly known as the “Stark Act” or “Stark II.” With respect to any compliance
concerns found to be substantiated, the Company has taken appropriate corrective action and made
all appropriate reports to all applicable governmental agencies or entities, and each such
corrective action and appropriate report is listed and disclosed in Schedule 4.10(f).

          (g) Without limiting the generality of the foregoing, to the extent applicable to the Company,
the Company, in its ordinary business operation, has complied and is currently in compliance with
the requirements of the Health Insurance Portability and Accountability Act of 1996
(“HIPAA”) and its implementing regulations and with the requirements of all applicable
state regulations implementing Title V of the Gramm-Leach-Bliley Act (“GLB”) that are
applicable to the Company’s relationship with any Business Associate (as such term is defined in
HIPAA and/or GLB). To the extent that the Company has access to Protected Health Information (as
such term is defined in HIPAA and/or GLB, “PHI”), and except as necessary to complete the
transactions contemplated by this Agreement or for internal management and compliance purposes, the
Company has not and shall not use or further disclose PHI other than as permitted or required by
HIPAA or as required by Law.

16

 

     4.11 Environmental Laws and Regulations. Except as set forth on Schedule
4.11:

          (a) To the knowledge of the Shareholders, there are no Hazardous Materials present on the
Company’s owned, leased or used real estate or, to the knowledge of the Shareholders, any
geologically or hydrologically adjoining property, including any Hazardous Materials contained in
barrels, aboveground or underground storage tanks, landfills, land deposits, dumps, equipment or
other containers, either temporary or permanent, and deposited or located in land, water, sumps, or
any other part of such owned, leased or used real estate or such adjoining property, or
incorporated into any structure therein or thereon, except in material compliance with
Environmental Laws. The Company has not permitted or conducted any Hazardous Activity except in
material compliance with applicable Environmental Laws.

          (b) To the knowledge of the Shareholders, there has not been a release or threatened release
of any Hazardous Materials at or from the Company’s owned, leased or used real estate (nor by any
Person for whose conduct it is or may be held responsible), except in material compliance with
applicable Environmental Laws.

          (c) To the knowledge of the Shareholders, there has been no release, or any threatened
release, of any Hazardous Materials at or from any site or facility for which the Company is or may
be liable under any applicable Environmental Laws.

     4.12 Permits. Schedule 4.12 contains a complete and accurate list of each
material consent, approval, ratification, waiver or other authorization, license (including import
and export licenses), registration or permit issued, granted, given or otherwise made available by
or under the authority of any governmental authority or pursuant to any Law that is held by the
Company or that otherwise relates to its business, assets or operations (collectively, the
“Permits”). Each Permit is valid and in full force and effect. To the knowledge of the
Shareholders, the Company is, and at all times has been, in material compliance with all of the
terms and requirements of each Permit. To the knowledge of the Shareholders, the Permits listed in
Schedule 4.12 collectively constitute all of the Permits necessary to permit the Company to
lawfully conduct and operate its business and assets in the manner in which it currently conducts
and operates its business and assets.

     4.13 Material Contracts. Schedule 4.13 lists all contracts and agreements
(whether oral or written) to which the Company is a party or by which it is bound that are material
to its business as currently conducted (collectively, the “Material Contracts”), including:

          (a) each agreement that involves performance of services or delivery of goods or materials by
or to the Company of an amount or value in excess of $5,000;

          (b) each lease of personal property requiring payments (in the aggregate) in excess of $10,000
and each lease of real property;

          (c) each agreement with any labor union or other employee representative of a group of
employees relating to wages, hours and other conditions of employment and each employment or
consulting agreement;

17

 

          (d) each agreement (however named) involving a sharing of profits, losses, costs or
liabilities by the Company with any other Person;

          (e) each agreement containing covenants that in any way purport to restrict the Company’s
business activities or limit the freedom of the Company to engage in any line of business or to
compete with any other Person;

          (f) each agreement providing for payments to or by any third parties based on sales, purchases
or profits;

          (g) each power of attorney of the Company that is currently effective and outstanding;

          (h) each agreement that contains or provides for an express undertaking by the Company to
indemnify or hold harmless a third party or to be responsible for consequential damages;

          (i) each agreement for capital expenditures in excess of $5,000;

          (j) each agreement not denominated in U.S. dollars;

          (k) each agreement relating to any of the Intellectual Property;

          (l) each agreement with Medicare, Medicaid, any similar governmental agency or entity, and any
and all Payors; and

          (m) each agreement with any Affiliate of the Company;

          (n) each insurance policy insuring the Company and/or any of its assets, employees, agents or
other representatives; and

          (o) each promissory note, loan agreement or other agreement creating, evidencing or relating
to any Indebtedness.

Except as set forth in Schedule 4.13, with respect to each Material Contract, to the
knowledge of the Shareholders (w) the agreement is legal, valid, binding, enforceable and in full
force and effect, (x) subject to Section 6.5 and to compliance with the terms of the
agreement, the agreement will continue to be legal, valid, binding, enforceable and in full force
and effect on identical terms following the consummation of the transactions contemplated hereby,
(y) the Company and each other party thereto is, and at all times has been, in material compliance
with all applicable terms and requirements of such agreement, and (z) no party thereto has
repudiated any material provision of the agreement. To the knowledge of the Shareholders and
subject to
Section 6.5, each Material Contract that is a Medicare or Medicaid provider/billing
agreements is not subject to any revocation or termination action by any governmental agency or
entity.

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     4.14 Labor and Employment Matters. Schedule 4.14 contains a complete and
accurate list of the following information for each employee of the Company, including each
employee on leave of absence or layoff status: name; job title; date of commencement of employment
or engagement; current compensation paid or payable and any change in compensation since December
31, 2006; sick and vacation leave that is accrued but unused; and service credited for purposes of
vesting and eligibility to participate under any Benefit Plan. Except as set forth in Schedule
4.14 hereto, (a) the Company is not, and has never been, a party to any collective bargaining
agreement or other labor contract; (b) there has not been, there is not presently pending or
existing, and to the knowledge of the Shareholders there is not threatened, any strike, slowdown,
picketing, work stoppage, lock out, or employee grievance process involving the Company; (c) to the
knowledge of the Shareholders, no event has occurred or circumstance exists that could reasonably
be expected to provide the basis for any work stoppage or other labor dispute involving the
Company, (d) there is no pending or, to the knowledge of the Shareholders threatened, against or
affecting the Company any charge or complaint filed with any governmental authority, (e) no
application or petition for an election of or for certification of a collective bargaining agent is
pending with respect to the Company, (f) there is no grievance or arbitration proceeding against
the Company by any employee of the Company, and (g) there is no lockout of any employees by the
Company. All current employees of the Company who provide services for the business of the Company
maintain all necessary certifications, professional qualifications and experience for the their
respective positions and job responsibilities. To the knowledge of the Shareholders, the Company’s
current employees, officers and directors have not been charged with, convicted of or pled guilty
to crimes of theft or dishonesty, financial misconduct, or offenses related to the delivery of
health care; nor have any of the Company’s current officers, directors, or employees been excluded
from participation in Medicare, Medicaid or any other state or federal government reimbursement
program.

     4.15 Employee Benefits. Schedule 4.15 sets forth a true and correct listing of
each profit sharing plan, bonus plan, incentive compensation plan, stock ownership plan, stock
purchase plan, stock option plan, stock appreciation plan, employee benefit plan, employee benefit
policy, retirement plan, fringe benefit program, employee insurance plan, severance plan,
disability plan, health care plan, sick leave plan and death benefit plan of the Company or any
other plan or program which provides retirement income, fringe benefits, welfare benefits, or other
benefits to employees or former employees of the Company and each Pension Plan and Multiemployer
Plan of the Company (collectively, the “Benefit Plans”). Except as set forth in
Schedule 4.15 hereto, neither the Company, nor any ERISA Affiliate of the Company, has
contributed to or accrued an obligation to contribute to a Pension Plan or a Multiemployer Plan.
Neither the Company nor any ERISA Affiliate of the Company has incurred any withdrawal liability to
any Multiemployer Plan. The Company and each ERISA Affiliate of the Company has complied in all
material respects with their respective obligations under the minimum funding standards of ERISA
and the Code with respect to each Pension Plan. To the knowledge of the Shareholders, each Benefit
Plan designated in Schedule 4.15 hereto as being qualified under Section 401(a) of the Code
is
properly qualified and, except as set forth in Schedule 4.15 hereto, nothing has
occurred in the operation of the plan or the adoption or amendment of the plan documents for which
the plan could be disregarded.

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     4.16 Intellectual Property. Schedule 4.16 lists all of the Company’s licensed
(a) registered and unregistered copyrights in both published works and unpublished works (whether
United States or foreign), (b) legal names, assumed fictional business names, trade names,
registered and unregistered trademarks, service marks and applications (whether United States or
foreign), and (c) patents, patent applications and inventions and discoveries that may or may not
be patentable (whether United States or foreign) (collectively, the “Intellectual
Property”). The Company owns no intellectual property. The Intellectual Property,
collectively, constitutes all of the intellectual property necessary for the Company to operate its
business as currently conducted or anticipated to be conducted. To the knowledge of the
Shareholders and other than with respect to the use of the term “Community” in the name of another
pharmacy, none of the Intellectual Property or any of the products manufactured or sold by the
Company, nor any equipment, process or know-how used by the Company infringes, or to the knowledge
of the Shareholders is alleged to infringe, any intellectual property right of any other Person.

     4.17 Affiliate Transactions. Neither the Company, any Shareholder, any former holder
of any shares of the capital stock of the Company nor any of their Affiliates owns or has owned, of
record or as a beneficial owner, an equity interest or any other financial or profits interest in
any Person that has (a) had business dealings with the Company other than business dealings or
transactions disclosed in Schedule 4.17, each of which has been conducted in the ordinary
course of business at substantially prevailing market prices and on substantially prevailing market
terms, or (b) engaged in competition with the Company.

     4.18 Broker’s Fees. Except as set forth in Schedule 4.18, neither the Company
nor the Shareholders have any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement.

     4.19 Warranty. Schedule 4.19 hereto contains a correct and complete copy of
the standard written warranty and return policy of the Company. Except as set forth on
Schedule 4.19 hereto, the Company has not granted to any customer, whether in writing or
otherwise, any other warranty for products sold by the Company. Except as set forth in
Schedule 4.19 hereto, there have been no warranty or product liability claims asserted, or
to the knowledge of the Shareholders threatened to be asserted, against the Company.

     4.20 [Intentionally Omitted]

     4.21 Customers; Suppliers.

          (a) Schedule 4.21(a) is a true and complete list of key customers of the Company which
have purchased products having an aggregate purchase price of $20,000,000 or more from the Company
within the last year (“Customers”). Except as set forth on Schedule 4.20(a), the
Company has not received notice from any key Customer that it has or intends to cease doing
business with the Company, and to the knowledge of the Shareholders and Management, none of the key
Customers intends to cease doing business with the Company.

          (b) Schedule 4.21(b) is a true and complete list of each supplier which has provided
goods or services having an aggregate cost of $25,000,000 or more to the Company

20

 

within twelve
months prior to the date of this Agreement (“Suppliers”) and none of the Suppliers has
given notice that is has or intends to cease transaction business with the Company, and to the
knowledge of the Shareholders and Management, none of the Suppliers intends to cease transacting
business with the Company.

ARTICLE V

PURCHASER’S REPRESENTATIONS AND WARRANTIES

     Purchaser represents and warrants to the Shareholders as follows:

     5.1 Organization of Purchaser. Purchaser is a limited liability company duly
organized and validly existing under the laws of the State of Indiana.

     5.2 Authorization. Purchaser has full legal power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary action on the part of
Purchaser.

     5.3 Validity; Binding Effect. This Agreement has been duly and validly executed and
delivered by Purchaser. This Agreement constitutes a valid and legally binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms.

     5.4
Noncontravention. The execution, delivery and performance of this Agreement by
Purchaser, the consummation of the transactions contemplated hereby and the compliance with or
fulfillment of the terms and provisions hereof or of any other agreement or instrument contemplated
hereby, do not and shall not (a) conflict with or result in a breach of any of the provisions of
the Articles of Organization or the Purchaser Operating Agreement, (b) contravene any Law or Order
which affects or binds Purchaser or any of its properties, or (c) require Purchaser to obtain the
approval, consent or authorization of, or to make any declaration, filing or registration with, any
governmental authority or other third party which has not been obtained in writing prior to the
date of this Agreement.

     5.5 Broker’s Fees. Purchaser has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions contemplated by this
Agreement.

     5.6 Financing. Purchaser has, directly or indirectly through binding commitments for
financing or capital contributions, the financial capability to pay and deliver the immediately
available funds required to be paid by Purchaser to the Shareholders and the Company on the Closing
Date pursuant to Section 2.2.

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ARTICLE VI

COVENANTS PENDING CLOSING

     The parties hereto agree as follows with respect to the period between the execution of this
Agreement and the Closing:

     6.1 General. Each of the parties hereto shall use commercially reasonable efforts to,
and shall take all action and to do all things necessary, proper, or advisable in order to,
consummate and make effective the transactions contemplated by this Agreement.

     6.2 Notices and Consents. Each of the parties hereto shall give any notices to third
parties, and will use commercially reasonable efforts, to (a) obtain any third party consents
necessary to consummate the transactions contemplated by this Agreement, and (b) obtain any
authorizations, consents, and approvals of all governmental authorities necessary to consummate the
transactions contemplated by this Agreement.

     6.3 Due Diligence. The Shareholders and the Company have permitted Purchaser and its
representatives to have access to all premises, properties, personnel, books, records, contracts,
and documents of or pertaining to the Company. The Shareholders and the Company have made
available to Purchaser such financial data, operating data, copies of all contracts or documents to
which the Company is a party, and any other information as Purchaser requested (to the extent not
precluded by any confidentiality agreement). Purchaser acknowledges that it has completed its due
diligence review of the Company, and the Shareholders and the Company shall not be obligated to
provide any further access to the premises, properties, personnel, books, records, contracts,
documents or data of the Company, except that (a) in the event that there is a material change in
any of the foregoing, then Company shall provide such documentation relating to such change as is
reasonably requested by Purchaser and (b) the Shareholders and the Company shall provide reasonable
access and shall cooperate with Purchaser in providing additional due diligence information as
reasonably requested by Purchaser’s lender(s) in connection with financing for the transactions
contemplated herein.

     6.4 The Company’s Operation of the Business Prior to Closing.

          (a) From the date hereof through the Closing Date, the Shareholders shall not permit the
Company to and the Company shall not (unless otherwise agreed to in writing by Parent) engage in
any transaction or take any action other than in the ordinary course of business consistent with
past practice.

          (b) From the date hereof through the Closing Date, the Shareholders shall cause the Company to
and the Company shall operate and maintain its assets and properties in substantially the same
manner in which they have been operated and maintained before the date hereof and shall use
commercially reasonable efforts to preserve the Company’s existing business organization and the
relationships the Company currently maintains with its employees, customers and suppliers.

22

 

          (c) From the date hereof through the Closing Date, the Shareholders shall not permit the
Company to, and the Company shall not, issue any additional securities or rights to acquire or
redeem any equity securities of the Company, other than the New Stock.

          (d) From the date hereof through the Closing Date, the Company may pay or accrue bonuses,
payables and other liabilities provided that sufficient Working Capital is available to meet the
Base Working Capital requirements of Section 2.3.

     6.5 Governmental Permits and Approvals and Third-Party Consents. Notwithstanding any
other provision of this Agreement, Purchaser shall be solely responsible for obtaining any consent,
approval, license, waiver, authorization or other action and making any filing or giving any notice
as may be required under any Material Contract or by any governmental authority in connection with
the Permits including, without limitation, the California Board of Pharmacy, the Cities of San
Diego and Chula Vista, or as required under Medicare Laws. Purchaser shall apply in writing, in
all material respects, for all necessary operating licenses and permits required for the operation
of the business of the Company, not otherwise in place and unaffected by the Stock sale transaction
contemplated by this Agreement (such permits or licenses, the “Required Permits”), as soon
as practical after the date hereof. The Company and Shareholders shall give all cooperation
necessary for the timely completion of such application processes and for obtaining any necessary
third-party consents or the giving of any required notices under the Material Contracts.

     6.6 Press Releases. The Company, the Shareholders and the Purchaser shall not issue
any press releases or make any other public announcements or disclosures to the press or other
media relating to this Agreement or the transactions contemplated hereby without the prior written
consent of the other parties to this Agreement.

     6.7 Update to Schedules. The Shareholders shall promptly (a) supplement, amend and
update any and all of the Schedules referred to in Article IV of this Agreement to reflect
each and every change to each Schedule and
every action, matter or event occurring or arising after the date of this Agreement and prior
to the Closing Date which would make any of Shareholders’ representations and warranties and/or any
such Schedule incomplete or inaccurate or which, if in existence or having occurred as of or prior
to the date of this Agreement, would have been required to be set forth or described in any such
Schedule (collectively, the “Updated Schedules and Materials”), and (b) disclose in writing
to Purchaser each and every document, action, matter, event or other information which, if existing
or known to the Shareholders or Management as of the date hereof, would have made any of the
representations or warranties of the Shareholders contained herein inaccurate, untrue or
misleading. No Updated Schedule or Material and no disclosure pursuant to this Section will be
deemed to amend, modify or limit, or to provide any exceptions with respect to, any representation
or warranty or any original Schedule. The Shareholders acknowledge that any delivery by them of
Updated Schedules and Materials shall be subject to, and shall not affect, Purchaser’s rights under
Section 7.1 hereof in the event that any Updated Schedules and Materials reveal any
representation or warranty given as of the date hereof was or is no longer true.

     6.8 Certain Actions. The Company and Shareholders shall not take any action or fail
to take any reasonable action, and shall not permit any of the Company’s directors, employees,

23

 

representatives or agents to take or fail to take, any action which will result in (a) a
misrepresentation or a breach of any covenant or warranty of Shareholders in this Agreement, (b)
Purchaser having the right to terminate this Agreement, or (c) the non-fulfillment of any condition
to the obligation of Purchaser to consummate the transaction contemplated by this Agreement.

     6.9 No Solicitations. On and after the date of this Agreement and until the Closing
Date or until this Agreement is terminated as provided in Section 10.1, the Company and the
Shareholders shall not, and shall not authorize or permit any of the directors, officers,
employees, attorneys, accountants, investment bankers, representatives or agents of the Company to,
directly or indirectly initiate, solicit, encourage, engage or participate in inquiries,
discussions or negotiations with, or provide any information to, any Person concerning any merger,
consolidation, combination, affiliation, share exchange, tender offer, sale of substantial assets
or securities or any other similar transaction relating to the Company (collectively,
“Acquisition Transactions”). Shareholders shall promptly notify Purchaser in writing of
(a) the existence and terms of any proposal or offer which either of them or the Company may
receive with respect an Acquisition Transaction and (b) any request by or indication of interest on
the part of any third party with respect to the initiation of any Acquisition Transaction or any
discussions with respect thereto.

ARTICLE VII

CONDITIONS PRECEDENT

     7.1 The Purchaser’s Conditions Precedent. The obligation of Purchaser to consummate
the transactions contemplated by this Agreement is subject to the fulfillment at or prior to the
Closing of each of
the following conditions, except to the extent any such condition is waived in writing by
Purchaser:

          (a) Performance by the Company and the Shareholders. The Company and the Shareholders
shall have performed and complied, in all material respects, with all of the terms, provisions and
conditions of this Agreement to be performed and complied with by the Company and/or the
Shareholders at or prior to the Closing, and shall have performed and complied in all respects with
the agreements and obligations set forth in Section 3.3.

          (b) Accuracy of Representations and Warranties. All of the representations and
warranties made by the Shareholders in this Agreement shall be true, in all material respects, as
of the date of this Agreement and as of the Closing Date as if made on the Closing Date (without
giving effect to any qualification as to materiality and/or any Updated Schedules and Materials).

          (c) No Injunction. No injunction, restraining order, judgment, decree of any court or
governmental authority shall be in effect and no litigation shall be pending against any of the
parties to this Agreement seeking to restrain, prevent or adversely alter or collect damages
arising out of the transactions contemplated hereby.

24

 

          (d) No Material Adverse Effect. Since the date of this Agreement, there shall not
have been any Material Adverse Effect and (except as may otherwise be consented to in writing by
Purchaser) the Shareholders shall have caused the Company to conduct business only in the ordinary
course consistent with past practice from the date of this Agreement.

          (e) Required Permits. Purchaser shall have obtained all Required Permits.

     7.2 The Shareholders’ Conditions Precedent. The obligation of the Shareholders to
consummate the transactions contemplated by this Agreement is subject to the fulfillment at or
prior to the Closing of each of the following conditions, except to the extent any such condition
is waived in writing by the Shareholders:

          (a) Performance by Purchaser. Purchaser shall have performed and complied, in all
material respects, with all of the terms, provisions and conditions of this Agreement to be
performed and complied with by Purchaser at or prior to the Closing, and shall have performed and
complied in all respects with the agreements and obligations set forth in Section 3.2.

          (b) Accuracy of Representations and Warranties. All of the representations and
warranties made by Purchaser in this Agreement shall be true, in all material respects, as of the
date of this Agreement and as of the Closing Date as if made as of the Closing Date (without giving
effect to any qualification as to materiality).

          (c) No Injunction. No injunction, restraining order, judgment, decree of any court or
governmental authority shall be in effect and no litigation shall be pending against any of the
parties to this Agreement seeking to restrain, prevent or adversely alter or collect damages
arising out of the transactions contemplated hereby.

          (d) Required Permits. Purchaser shall have obtained all Required Permits.

          (e) Employee Bonuses. The Company shall have paid, or made arrangements to pay, the
bonuses to the employees in the amounts set forth opposite such employee’s name on Exhibit
G attached hereto.

ARTICLE VIII

INDEMNIFICATION

     8.1 Indemnification by the Shareholders. Subject to Section 8.3, the
Shareholders, severally but not jointly, shall indemnify Purchaser and the Company from, against
and in respect of any and all losses, liabilities, deficiencies, penalties, fines, costs, damages
and expenses whatsoever (including, without limitation, reasonable professional fees and costs of
investigation, litigation, settlement and judgment and interest) (collectively, “Losses”)
that may be suffered or incurred by Purchaser and/or the Company from or by reason of (a) any
inaccuracy or breach of a representation or warranty made by the Shareholders in this Agreement,
the Schedules or any other certificate or document delivered by the Shareholders pursuant to this
Agreement, (b) any breach of any covenant or agreement made by the Shareholders in this Agreement,
the Schedules or any other certificate or document delivered by

25

 

the Shareholders pursuant to this
Agreement, (c) any Indebtedness of the Company required to be paid at or prior to the Closing which
remains unsatisfied after the Closing, including, without limitation, any claim by any Person for
brokerage or finder’s fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with any Shareholder and/or the Company
(or any Person acting on their behalf) in connection with the transactions contemplated hereby.

     8.2 Indemnification by Purchaser. Purchaser shall indemnify the Shareholders against
any and all Losses that may be suffered or incurred by the Shareholders from or by reason of (a)
any inaccuracy of a representation or warranty made by Purchaser in this Agreement, or any other
certificate or document delivered by Purchaser pursuant to this Agreement, (b) any breach of any
covenant or agreement made by Purchaser in this Agreement, or any other certificate or document
delivered by Purchaser pursuant to this Agreement, and (c) any claim by any Person for brokerage or
finder’s fees or commissions or similar payments based upon any agreement or understanding alleged
to have been made by any such Person with Purchaser (or any Person acting on its behalf) in
connection with the transactions contemplated hereby.

     8.3 Limitations on Indemnity.

     (a) The Shareholders shall not have any liability or obligation to Purchaser or the Company
whatsoever, and no claim shall be asserted against the Shareholders, for indemnification under
Section 8.1(a) unless and until the aggregate amount of Losses incurred by Purchaser and/or
the Company as a result thereof exceeds $100,000, and then only to the extent the aggregate amount
of such Losses exceeds $100,000 and is less than Four Million Seven Hundred and Fifty Thousand
Dollars ($4,750,000); provided, however, that the limitations set
forth above in this Section 8.3(a) shall not apply to (i) any intentional breach of
the Shareholders’ representations or warranties of which any Shareholder had knowledge at any time
prior to or on the date hereof, or (ii) claims for indemnification resulting from the breach or
inaccuracy of the representations and warranties set forth in Sections 4.5(a),
4.6(g) and 4.8. In addition and for the avoidance of doubt, the limitations set
forth above in this Section 8.3(a) shall not apply to claims for indemnification arising
under Sections 8.1(b) and/or 8.1(c).

          (b) All representations and warranties in this Agreement, the Schedules and the certificates
and other documents delivered pursuant hereto shall survive the Closing and be enforceable against
the party making the same for a period of one (1) year from the Closing Date at which time they
shall expire and be of no further force or effect; provided, however, that (i) the
representations and warranties set forth in Section 4.5(a) shall survive for a period of
two (2) years, (ii) the representations and warranties set forth in Section 4.10 shall
survive for a period of eighteen (18) months, and (iii) the representations and warranties set
forth in Section 4.8 shall survive for the period of the statute of limitations applicable
to such representations and warranties. Any claim for indemnification with respect to any such
matter which is not asserted by a notice given as herein provided within such period of survival
may not be pursued and shall be thereafter forever barred. Indemnification pursuant to this
Article 8 shall be the sole remedy of Shareholders and Purchaser for a breach of a representation
or warranty made pursuant to this Agreement; other than fraudulent breaches of representations or
warranties for which common law remedies are available.

26

 

     8.4 Third-Party Claims.

          (a) Promptly after receipt by a party hereto entitled to indemnity under Section 8.1
or Section 8.2 (an “Indemnified Person”) of notice of the assertion of a claim for
which such party hereto is entitled to indemnity hereunder against it by a third party (a
“Third-Party Claim”), such Indemnified Person shall give notice to the party hereto
obligated to indemnify under such Section (an “Indemnifying Person”) of the assertion of
such Third-Party Claim, provided that the failure to notify the Indemnifying Person will not
relieve the Indemnifying Person of any liability that it may have to any Indemnified Person, except
to the extent that the Indemnifying Person demonstrates that the defense of such Third-Party Claim
is prejudiced by the Indemnified Person’s failure to give such notice.

          (b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to Section
8.4(a) of the assertion of a Third-Party Claim, the Indemnifying Person shall be entitled to
participate in the defense of such Third-Party Claim and, to the extent that it wishes, to assume
the defense of such Third-Party Claim with counsel satisfactory to the Indemnified Person. After
notice from the Indemnifying Person to the Indemnified Person of its election to assume the defense
of such Third-Party Claim, the Indemnifying Person shall not, so long as it diligently conducts
such defense, be liable to the Indemnified Person under this Article VIII for any fees or
costs of other counsel or any other expenses with respect to the defense of such Third-Party Claim,
in each case subsequently incurred by the Indemnified Person in connection with the defense of such
Third-Party Claim. If the Indemnifying Person assumes the defense of a Third-Party Claim, (i) such
assumption will establish for purposes of this Agreement that the claims made in that Third-Party
Claim are within the scope of and subject to indemnification, and (ii) no compromise or settlement
of such Third-Party Claims may be effected by the
Indemnifying Person without the Indemnified Person’s consent unless (A) there is no finding or
admission of any violation of Law or any violation of the rights of any party; and (B) the sole
relief provided is monetary damages that are paid in full by the Indemnifying Person. If notice is
given to an Indemnifying Person of the assertion of any Third-Party Claim and the Indemnifying
Person does not, within ten (10) days after the Indemnified Person’s notice is given, give notice
to the Indemnified Person of assumption of the defense of such claim as set forth above, the
Indemnifying Person will be bound by any determination made in such Third-Party Claim or any
compromise or settlement effected by the Indemnified Person, and shall be liable to the Indemnified
Person for any costs and expenses incurred in the defense of such claim.

ARTICLE IX

ADDITIONAL COVENANTS

     9.1 General. If any further action is necessary or desirable to carry out the
purposes of this Agreement, each of the parties hereto will take such further action (including,
without limitation, the execution and delivery of such further instruments and documents) as any
other party reasonably may request, all at the sole cost and expense of the requesting party
(unless the requesting party is entitled to indemnification therefor under Article VIII
above).

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ARTICLE X

TERMINATION

     10.1 Termination Events. This Agreement may be terminated:

          (a) by Purchaser, on the one hand, or the Shareholders (acting jointly), on the other hand, if
a material breach of any provision (including representations and warranties) of this Agreement has
been committed by the other party and such breach has not been waived in writing or, if capable of
being cured, not cured before the earlier of (i) ten (10) days after such breach, or (ii) the
Termination Date;

          (b) (i) by Purchaser if any of the conditions precedent set forth in Section 7.1 have
not been satisfied as of the Termination Date or if satisfaction of such a condition becomes
impossible (other than through failure of Purchaser to comply with its obligations under this
Agreement) and Purchaser has not waived such condition in writing on or before the Termination
Date, or (ii) by the Shareholders (acting jointly) if any of the conditions precedent set forth in
Section 7.2 have not been satisfied as of the Termination Date or if satisfaction of such a
condition becomes impossible (other than through failure of the Company and/or the Shareholders to
comply with their obligations under this Agreement) and the Shareholders (acting jointly) has not
waived such condition in writing on or before the Termination Date; or

          (c) by mutual written agreement of Purchaser and the Shareholders (acting jointly).

     10.2 Effect of Termination. If this Agreement is terminated under Section
10.1 above, no party hereto shall have any further obligation under this Agreement.

     10.3 Termination Fee.

          (a) If all of the conditions of Section 7.1 are met on or before the Termination Date,
and Purchaser fails or refuses to close for any reason the transaction contemplated by this
Agreement on or before the Termination Date, the Shareholders shall be entitled to retain the
entire Deposit Amount as liquidated damages. The parties hereto expressly agree and acknowledge
that Shareholder’s actual damages in the event of a default by Purchaser would be extremely
difficult or impracticable to ascertain and that the Deposit Amount plus any interest accrued
thereon represents the parties’ reasonable estimate of such damages. The payment of such amount as
liquidated damages is not intended as a forfeiture or penalty within the meaning of California
Civil Code Sections 3275 or 3369, but is intended to constitute liquidated damages to the
Shareholders pursuant to California Civil Code Section 1671.

          (b) If all of the conditions of Section 7.2 are met on or before the Termination Date,
and the Company and the Shareholders fail or refuse to close for any reason the transaction
contemplated by this Agreement on or before the Termination Date, the entire Deposit Amount shall
be paid back to Purchaser, and Purchaser shall, at its option, be entitled to payment by the
Shareholders and the Company of $300,000 as liquidated damages (in addition to any portion of the
Deposit Amount retained by the Company) within ten (10) business days after termination of this
Agreement. The parties hereto expressly agree and acknowledge that Purchaser’s actual

28

 

damages in
the event of a default by Company or the Shareholders would be extremely difficult or impracticable
to ascertain and that $300,000 plus any interest accrued thereon represents the parties’ reasonable
estimate of such damages. The payment of such amount as liquidated damages is not intended as a
forfeiture or penalty within the meaning of California Civil Code Sections 3275 or 3369, but is
intended to constitute liquidated damages to the Purchaser pursuant to California Civil Code
Section 1671.

          (c) In the event Purchaser fails to close the transaction contemplated by this Agreement on or
before the Termination Date because of a failure to satisfy the condition set forth in Section
7.1(a), and such failure is due to a breach by the Company or the Shareholders of this
Agreement, or Purchaser terminates this Agreement pursuant to Section 10.1(a) above for
breach by the Shareholders or the Company, the entire Deposit Amount shall be paid back to
Purchaser.

          (d) If the Purchaser terminates this Agreement pursuant to Section 10.1(b)(i) above
for a failure of satisfaction of the condition set forth in Section 7.1(e), or the Company
or the Shareholders terminate this Agreement pursuant to Section 10.1(b)(ii) above for
failure of satisfaction of the condition set forth in Section 7.2(d), the Shareholders
shall be entitled to retain the entire Deposit Amount as liquidated damages.

ARTICLE XI

MISCELLANEOUS

     11.1 Assignment. No party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the other party hereto,
except that Purchaser may, without the prior written consent of the Company or the Shareholders (a)
collaterally assign its rights hereunder to any financial institution or other lender in connection
with the financing of the transactions contemplated hereby, (b) assign its rights and/or
obligations hereunder (in whole or in part) to one or more subsidiaries or other Affiliated
entities, and/or (c) after the Closing, assign to any person or entity who acquires the Company or
its business (regardless of the form of such acquisition) any of its rights under this Agreement.

     11.2 Notices. All notices, requests, consents and other communications hereunder
(each, a “Notice”) shall be in writing and shall be deemed to have been given (a) if
mailed, two (2) business days after such Notice is sent, when sent via first class United States
registered mail, return receipt requested, postage prepaid to the address listed below for the
party to whom the Notice is being sent (the “Notice Party”), (b) if hand delivered or
delivered by courier, upon actual delivery of such Notice to the Notice Party at the address listed
below for such Notice Party, or (c) if sent by facsimile, on the first business day after the date
of the sender’s receipt of a confirmed transmission of such Notice to the Notice Party at the
facsimile number, if any, listed below for such Notice Party provided the party giving such Notice
mails a copy of such Notice within two (2) business days after the transmission of such Notice by
facsimile to the Notice Party. The addresses and facsimile numbers for each party to this
Agreement, as of the date hereof, are:

29

 

	 	 	 
	If to Purchaser (or the

	 	Universal HealthCare Company LLC
	Company, after Closing):

	 	10689 N. Pennsylvania St.
	 

	 	Indianapolis, IN 46280
	 

	 	Facsimile No.: 317-574-6227
	 

	 	Attention: Ronald D. Hunter
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Sommer Barnard
	 

	 	One Indiana Square, Suite 3500
	 

	 	Indianapolis, IN 46204
	 

	 	Facsimile No.: 317-713-3699
	 

	 	Attention: Robert J. Hicks
	 
	 	 
	If to the Shareholders or

	 	Jon R. Kurtin
	the Company (prior to

	 	12672 Caminito Radiante
	Closing:

	 	San Diego, CA 92130
	 

	 	Facsimile No.: 858-793-7977
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Robert W. Blanchard
	 

	 	Blanchard, Krasner & French, P.C.
	 

	 	800 Silverado Street, Second Floor
	 

	 	La Jolla, Ca. 92037
	 

	 	Facsimile No: 858 551-2434

Either party may change its address or facsimile number by providing written notice, in accordance
with the foregoing provisions of this Section 11.2, to the other party of such change.

     11.3 Expenses; Attorneys’ Fees.

          (a) Each party hereto will pay all costs, fees and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all agreements contained
herein on its part to be performed, including the fees, expenses and disbursements of its
respective counsel and accountants.

          (b) In any litigation between the parties regarding this Agreement, the losing party shall pay
to the prevailing party all reasonable expenses and court costs, including, without limitation,
reasonable attorneys’ fees and costs, incurred by the prevailing party. A party shall be
considered the prevailing party if (i) it initiated the litigation and obtains substantially all of
the relief or remedy it sought, either through a judgment or the losing party’s voluntary action,
(ii) the other party withdraws its action without substantially obtaining the relief or remedy it
sought, or (iii) it did not initiate the litigation and judgment is entered for either party, but
without substantially granting the relief or remedy sought by the initiating party.

30

 

     11.4 Governing Law; Forum.

          (a) This Agreement shall be governed by and construed in accordance with the Laws of the State
of California, without regard to such jurisdiction’s conflict of laws principles.

          (b) Except as otherwise set forth in this Agreement, any controversy, claim or dispute arising
out of or relating to this Agreement or the breach, termination, enforceability or validity of this
Agreement, shall be determined exclusively by binding arbitration (i) in the City of Indianapolis,
Indiana if brought by the Company (prior to Closing) or the Shareholders (or either of them), and
(ii) in the City of San Diego, California if brought by the Company (after the Closing) or
Purchaser. The arbitration shall be governed by the rules and procedures of the American
Arbitration Association (the “AAA”) under its Commercial Arbitration Rules. No provision
of, nor the exercise of any rights under, this Section 11.4 shall limit the right of any
party to request and obtain from a court of competent jurisdiction before, during or after the
pendency of any arbitration, provisional or ancillary remedies and relief including injunctive or
mandatory relief or the appointment of a receiver. The institution and maintenance of an action or
judicial proceeding for, or pursuit of, provisional or ancillary remedies shall not constitute a
waiver of the right of any party, even if it is the plaintiff, to submit the dispute to
arbitration if such party would otherwise have such right. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.

     11.5 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.

     11.6 Execution in Counterparts; Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be considered an original counterpart, and all of
which shall be considered to be but one agreement and shall become a binding agreement when each
party shall have executed one counterpart and delivered it to the other party hereto. A signature
affixed to a counterpart of this Agreement and delivered by facsimile by any Person is intended to
be its, his or her signature and shall be valid, binding and enforceable against the party on whose
behalf it has been affixed.

     11.7 Entire Agreement; Amendments and Waivers. This Agreement contains the entire
understanding of the parties hereto with regard to the subject matter contained in this Agreement
and supersedes all prior agreements or understandings of the parties (including, without
limitation, the Letter of Interest, dated October 19, 2005). The parties, only by mutual agreement
in writing, may amend, modify or supplement this Agreement. The failure of any party to this
Agreement to enforce at any time any provision of this Agreement shall not be construed to be a
waiver of such provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of such party thereafter to enforce each and every such provision. No waiver
of any
breach of this Agreement shall be held to constitute a waiver of any

31

 

other or subsequent
breach. Time shall be of the essence in the payment and performance by each party of all of its
obligations under this Agreement.

     11.8 No Third Party Beneficiary. This Agreement is intended and agreed to be solely
for the benefit of the parties hereto, and no third party shall accrue any benefit, claim or right
of any kind whatsoever pursuant to, under, by or through this Agreement.

[Signature Page Follows]

32

 

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

	 	 	 	 	 	 	 	 	 
	Universal HealthCare Company LLC	 	In-House Pharmacies, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Ronald D. Hunter, its                                        
	 	Printed:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Jon R. Kurtin	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Ralph M. Defay	 	 

S-1

 

 

EXHIBIT G

Employee Cash Bonuses

	 	 	 	 	 
	Employee Name:	 	Bonus:
	David W. Schneider
	 	$	328,000.00	 
	Philip Curtis
	 	$	328,000.00	 
	Michelle Darnelle
	 	$	328,000.00	 
	Steve W. Kelso
	 	$	164,000.00	 
	Naomi T. Peters
	 	$	16,400.00	 
	Kathleen Pitcher
	 	$	8,200.00	 

Provided that the following employees are employed by the Company or Purchaser on May 16, 2009,
they shall be entitled to the following additional retention bonus:

	 	 	 	 	 
	Employee Name:	 	Retention Bonus:
	David W. Schneider
	 	$	328,000.00	 
	Philip Curtis
	 	$	328,000.00	 
	Michelle Darnelle
	 	$	328,000.00	 
	Steve W. Kelso
	 	$	164,000.00	 
	Naomi T. Peters
	 	$	16,400.00	 
	Kathleen Pitcher
	 	$	8,200.00	 

In the event any of the above employees voluntarily terminates his or her employment or the Company
terminates his or employment “for cause” (as defined in the employee’s Retention Bonus Letter
attached hereto as Exhibit G-1) prior to May 16, 2009, and the retention bonus is not paid to such
employee, the amount not paid to the terminated employee shall be paid to the above employees
remaining employed by Purchaser or the Company on May 16, 2009, pro rata, based upon the amounts of
their respective retention bonuses set forth above. If none of the employees listed above is
eligible to receive a bonus on May 16, 2009, then all of the retention bonuses shall be paid to the
Shareholders (50% to Mr. Kurtin and 50% to Mr. Defay).

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