ASSET PURCHASE AGREEMENT

Exhibit 2.1

ASSET PURCHASE AGREEMENT

EFFECTIVE AS OF

APRIL 30, 2007

BY AND AMONG

MAXOR NATIONAL PHARMACY SERVICES CORPORATION, AS PURCHASER

AND SECURE PHARMACY PLUS, LLC, AS SELLER

AND

AND PRISON HEALTH SERVICES, INC., AS GUARANTOR

TABLE OF CONTENTS

TABLE OF EXHIBITS AND SCHEDULES

Disclosure Schedule

ASSET PURCHASE AGREEMENT

     This ASSET PURCHASE AGREEMENT (“ Agreement ”) is made and entered into to be effective as of the 30 ^th day of April, 2007 by and among Maxor National Pharmacy Services Corporation, a Texas corporation (“ Maxor ” and/or “ Purchaser ”), and Secure Pharmacy Plus LLC, a Tennessee limited liability company (“ SPP ” or “Seller”). Prison Health Services, Inc., a Delaware corporation (“ PHS ”), makes certain representations and warranties hereunder and is a signatory to this Agreement in the capacity of a guarantor to the various obligations of SPP.

PRELIMINARY STATEMENTS

     Seller is engaged in the business of providing pharmacy programs, pharmaceuticals and medical/surgical supplies and equipment to correctional facilities and other clients ( the " Business " ) . Purchaser desires to purchase certain assets owned by Seller and used by it in its Business and assume a commercial lease under which Seller is a tenant. Seller desires to sell, transfer and convey such assets to Purchaser on the terms and subject to the conditions herein contained.

AGREEMENTS

     For good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I
PURCHASE AND SALE OF ASSETS

     SECTION 1.1 Agreement to Purchase and Sell . On the terms and subject to the conditions contained in this Agreement, Purchaser agrees to purchase from Seller and Seller agrees to sell to Purchaser, certain assets, properties and rights belonging to SPP as of the Closing Date (as defined herein), wherever situated or located (the “ Purchased Assets ”), free and clear of all liens and encumbrances, excluding Excluded Assets (as defined herein).

     SECTION 1.2 Description of Purchased Assets . The Purchased Assets shall include the following assets owned by SPP:

     (a) prepaid assets defined on Schedule 1.2(a) attached hereto and incorporated herein, and all rights and obligations associated therewith (the “ Prepaid Assets ”);

     (b) SPP’s inventory as set forth on Schedule 1.2(b) attached hereto and incorporated herein (including, but not limited to, medical equipment, medical/surgical supplies, pharmacy products and health-related products, packing materials and supplies; but excluding those medications with an expiration date within ninety (90) days of April 30, 2007) (the “ Inventory ”);

     (c) to the extent of Seller’s ownership interest, if any, all of Seller’s fixed assets, furniture, fixtures, equipment (including office equipment, communications equipment and pharmacy equipment), computer hardware and software, and all other tangible personal property other than the Inventory, including any of the foregoing which has been fully depreciated, as set forth on Schedule 1.2(c) attached hereto and incorporated herein (the “ Equipment ”);

     (d) all of Seller’s rights in leasehold interests and all leasehold improvements in real property (the “ Leased Real Estate ”);

     (e) all of Seller’s rights under any leasehold interests and leasehold improvements created by all leases of personal property as set forth on Schedule 1.2(e) attached hereto and incorporated herein;

     (f) [intentionally omitted];

     (g) [intentionally omitted];

     (h) all of Seller’s rights under those contracts and agreements listed in Schedule 1.2(h) as well as claims and rights (and benefits arising therefrom) with or against any natural individual, corporation, partnership, limited liability company, joint venture, association, bank, trust company, trust or other entity, whether or not legal entities, or any governmental entity, agency or political subdivision (each a “ Person ”) as set forth on Schedule 1.2(h) attached hereto and incorporated herein, including all rights against suppliers under warranties covering any of the Inventory or Equipment;

     (i) all transferable regulatory, environmental, health and safety permits, licenses, registrations, and governmental approvals and authorizations (“ Authorizations ”), related to the operation and use of Purchased Assets as set forth on Schedule 1.2(i) attached hereto and incorporated herein;

     (j) all transferable licenses, permits, registrations and government approvals other than the Authorizations (“ Permits ”) as set forth on Schedule 1.2(j) attached hereto and incorporated herein;

     (k) [intentionally omitted];

     (l) all internally developed and externally developed or purchased computer software and SPP’s rights/licenses in and to such software, to the extent assignable, which relates to use, management or operation of the Purchased Assets (including source code, object code, executable code, data, databases and related documentation), together with all translations, adaptations, modifications, derivations, combination and derivative works thereof as set forth on Schedule 1.2(l) attached hereto and incorporated herein (the “ Software ”);

     (m) all trade secrets, confidential business information (including ideas, research and development, know-how, formulae, compositions, processes and techniques, methods, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals) and other proprietary rights in intangible forms of property (the “ Intellectual Property ”);

     (n) all customer lists, customer records and mailing lists;

     (o) all sales, marketing and promotional materials, catalogues and advertising literature;

     (p) subject to the access rights granted to SPP or its designee in Section 8 below, all books and records relating to the Purchased Assets and agreed to in writing by the parties, including technical papers, insurance records, inventory, maintenance, and asset history records, ledgers, and books of original entry, and any regulatory files including those concerning the Occupational Safety and Health Administration;

     (q) all telephone numbers;

     (r) all rebates receivable and Secure Release receivables as set forth on Schedule 1.2(r) attached hereto and incorporated herein; and

     (s) all insurance benefits including rights and proceeds arising from or related to the Purchased Assets and that accrue after the Closing Date.

     SECTION 1.3 Excluded Assets . The “ Excluded Assets ” shall consist of all other assets of SPP not identified as Purchased Assets in Section 1.2 above.

ARTICLE II
ASSUMPTION OF LIABILITIES

     SECTION 2.1 Agreement to Assume . At the Closing, Purchaser shall assume and agree to discharge and perform when due the liabilities and obligations of Seller described in Section 2.2 (the “ Assumed Liabilities ”). All other liabilities and obligations of Seller are collectively referred to herein as “ Excluded Liabilities .” Seller shall remain liable for the Excluded Liabilities and shall pay, discharge and perform in full when due all of the Excluded Liabilities.

     SECTION 2.2 Description of Assumed Liabilities . The following liabilities and obligations of SPP (and only the following liabilities and obligations) shall constitute the Assumed Liabilities:

     (a) current commercial lease for SPP’s pharmacy facility, an accurate and current copy of which is attached hereto behind Schedule 2.2(a);

     (b) any ad valorem tax obligation assessed and/or payable on or after January 1, 2007 with respect to the personal property of SPP included in the Purchased Assets;

     (c) all liabilities and obligations (whether direct or indirect, matured or unmatured, known or unknown, absolute, accrued, contingent or otherwise) of SPP for payment or performance arising on or after the Closing Date pursuant to the contracts, agreements, Permits and Authorizations which are assumed by Purchaser on the Closing Date, but only to the extent such liabilities and obligations did not arise out of a breach of such contracts, agreements, Permits and Authorizations prior to the Closing Date;

     (d) all liabilities and obligations (whether direct or indirect, matured or unmatured, known or unknown, absolute, accrued, contingent or otherwise, whether now existing or hereafter arising) of SPP for all vacation and sick leave that had been validly earned but not used by SPP’s employees on or prior to April 30, 2007; and

     (e) all liabilities and obligations (whether direct or indirect, matured or unmatured, known or unknown, absolute, accrued, contingent or otherwise, whether now existing or hereafter arising) arising out of that certain employment agreement by and between SPP and Kendall Lynch, dated January 3, 2006 attached hereto behind Schedule 2.2(e) .

     SECTION 2.3 Excluded Liabilities . The “ Excluded Liabilities ” shall consist of all liabilities and obligations (whether direct or indirect, matured or unmatured, known or unknown, absolute, accrued, contingent or otherwise, whether now existing or hereafter arising) of Seller which are not included within the Assumed Liabilities.

     SECTION 2.4 No Expansion of Third Party Rights . The assumption by Purchaser of the Assumed Liabilities shall not expand the rights or remedies of any third party against Purchaser or Seller as compared to the rights and remedies which such third party would have had against Seller had Purchaser not assumed the Assumed Liabilities. Without limiting the generality of the preceding sentence, the assumption by Purchaser of the Assumed Liabilities shall not create any third party beneficiary rights.

ARTICLE III
PURCHASE PRICE AND CLOSING

     SECTION 3.1 Purchase Price . The purchase price for the Purchased Assets (“ Purchase Price ”) is equal to the net book value of the Purchased Assets as reflected on the books and records of SPP as of April 30, 2007 less the amount of accrued vacation of all SPP employees as reflected on the books and records of SPP as of April 30, 2007, prepared in accordance with generally accepted accounting principles (“ GAAP ”) consistent with past practices. Such value was equal to approximately $4,652,456 as of January 31, 2007 and will be subject to adjustments for inventory fluctuations and related prorations, if any. Taxes and assessments, if any, on the Purchased Assets shall be prorated at Closing, effective as of the Closing Date, utilizing the most recent tax/assessment information available to the parties. Prorations at Closing shall be deemed final.

     SECTION 3.2 Physical Count of Inventory . To assist with the determination of the net book value described in Section 3.1 above, a physical count of SPP’s Inventory shall be conducted by SPP on April 29, 2007, in the ordinary course of its business; provided, however, that both Purchaser and Seller (and their respective representatives or agents) shall be allowed, at their respective sole cost and expense, to inspect such physical count. SPP shall make its most currently available price list/file available to Purchaser in advance of a physical count of the Inventory so Purchaser can use the same to verify the net book value calculation.

     SECTION 3.3 Disputes Regarding Net Book Value Determination .

     (a)  Notice of Dispute . Purchaser and Seller shall have from the Closing Date until 5:00 p.m., Central time, on the date 30 days after the Closing Date (the “ Dispute Period ”) to dispute any elements of or amounts reflected in the calculation of the Inventory’s net book value, as calculated by Seller utilizing the physical inventory count provided for by Section 3.2 hereof, that affect the calculation of the Purchase Price (the “ Dispute ”), but only on the basis that the amounts reflected by SPP and used to calculate the Purchase Price are inaccurate or do not conform to the requirements of Sections 3.1 and 3.2 . If Purchaser or Seller do not give written notice of the Dispute that sets forth in reasonable detail the elements and amounts with which there is disagreement (a “ Dispute Notice ”) to the other parties hereto within the Dispute Period, Seller’s data shall be deemed to have been accepted and agreed to by the parties in the form in which it was delivered and shall be final and binding upon the parties. If a Dispute Notice is properly delivered hereunder, Purchaser and Seller shall use their best efforts to attempt in good faith to resolve the Dispute and agree in writing upon a final resolution of the Dispute within 30 days after delivery of such Dispute Notice.

     (b)  Arbitrating Accountant . If Purchaser and Seller are unable to resolve each element of the Dispute within the 30-day period after receipt of a Dispute Notice, Purchaser and Seller shall jointly engage a nationally recognized certified public accounting firm that has not performed accounting, tax or auditing services for Purchaser, Seller or any of their respective Affiliates during the past three years as the arbitrator of the Dispute (the “ Arbitrating Accountant ”). If Purchaser and Seller are unable to agree on the identity of the Arbitrating Accountant, Purchaser and Seller shall ask their respective independent accountants to select the Arbitrating Accountant. The Arbitrating Accountant’s function shall be to review only those disputed items included in the Consultant’s data and the application thereof to the calculation of the Purchase Price and to resolve such dispute(s).

     (c)  Dispute Resolution Mechanics . In connection with the resolution of the Dispute, the Arbitrating Accountant shall allow Purchaser and Seller to present their respective positions regarding the elements and data in dispute. The Arbitrating Accountant may, at its discretion, conduct a conference concerning the Dispute, at which conference Purchaser and Seller shall have the right to present

additional documents, materials and other information and to have present their respective advisors, counsel and accountants. In connection with the resolution of the Dispute, there shall be no other hearings or oral examinations, testimony, depositions, discovery or other similar proceedings. Each of Purchaser and Seller shall make available to the other party and the Arbitrating Accountant, as the case may be, such documents, books, records, work papers, facilities, personnel and other information as such party or the Arbitrating Accountant may reasonably request to review the calculation of the Purchase Price and to resolve the Dispute.

     (d)  Resolution of Dispute . The Arbitrating Accountant shall as promptly as possible, and in any event within 30 days after the date of its appointment, render its decision on the Dispute in writing to Purchaser and Seller together with a report including any revisions reflecting its decision. The Arbitrating Accountant’s decision shall be final and binding upon the parties and judgment may be entered on the award. The Arbitrating Accountant shall determine the proportion of its fees and expenses to be paid by the Seller and Purchaser, based on the degree to which the Arbitrating Accountant has accepted the positions of the respective parties.

     SECTION 3.4 Manner of Payment of Purchase Price .

     (a) Purchaser shall pay the Purchase Price in full to Seller at Closing, by wire transfer of immediately available funds to the bank account specified by Seller’s written notice to Purchaser delivered at least two business days before the Closing Date.

     (b) Following the Closing, the Purchase Price is subject to being finally determined in accordance with the adjustments and procedures set forth in Section 3.1 , Section 3.2 and Section 3.3 . If the Purchase Price as finally determined exceeds the Purchase Price paid by Maxor at Closing, such amount shall be paid by Purchaser to Seller within two business days following the final determination of the Purchase Price by wire transfer of immediately available funds to the bank account specified by Seller’s written notice to Purchaser. But if the Purchase Price as finally determined is less than the Purchase Price paid by Maxor at Closing, such amount shall be paid by Seller to Purchaser within two business days following the final determination of the Purchase Price by wire transfer of immediately available funds to the bank account specified by Purchaser’s written notice to Seller. Any payment pursuant to this Section 3.4 shall be made together with interest on such payment from the Closing Date until the date of payment in full, at the short-term applicable federal rate.

     SECTION 3.5 Time and Place of Closing . The transactions contemplated by this Agreement shall be consummated (the “ Closing ”) at 9:00 a.m., local time, at the offices of Irwin Merritt Hogue & Price, P.C., 320 S. Polk, Ste. 500, Amarillo, Texas 79101 on May 3, 2007, or on such other date, or at such other time or place, as shall be mutually agreed upon by Seller and Purchaser. The date on which the Closing occurs in accordance with the preceding sentence is referred to in this Agreement as the “ Closing Date .”

     SECTION 3.6 Allocation of Purchase Price . The Purchase Price shall be allocated among the Purchased Assets in the manner required by Section 1060 of the Code as shown on an allocation schedule to be agreed upon by Purchaser and Seller on or prior to the Closing Date. After the Closing, the parties will make consistent use of the allocations set forth in such allocation schedule for all purposes, including for purposes of any Tax Returns and any forms or reports required to be filed pursuant to Section 1060 of the Code (including Internal Revenue Service Form 8594), or any comparable provision of state, local or foreign law. As soon as practicable after the Closing Date, Purchaser will prepare and deliver to Seller Internal Revenue Service Form 8594 reflecting the agreed allocation, to be filed with the Internal Revenue Service. Any subsequent adjustment to the Purchase Price will be allocated in accordance with Section 1060 of the Code. Purchaser and Seller agree that

the form of the transactions, the consideration provided for in this Agreement and the allocation of the Purchase Price as provided above were arrived at on the basis of arm’s length negotiation between Purchaser and Seller, and shall be respected by each of them and their respective Affiliates for federal, state, local and other tax reporting purposes, including filings on Internal Revenue Service Form 8594, and that none of them will assert or maintain a position inconsistent with the foregoing.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

     SECTION 4.1 General Statement . The parties hereto make the representations and warranties to each other which are set forth in this Article IV . No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. All representations and warranties of Seller and PHS, where applicable, are made subject to the exceptions noted in the schedules delivered by them to Purchaser concurrently herewith and identified by the parties as the “ Disclosure Schedule ”. Each section of the Disclosure Schedule shall be numbered to correspond to the paragraph of Section 4.2 or Section 4.3 to which such section relates. No disclosure in any particular schedule in the Disclosure Schedule (including the listing of a document or item in any schedule or the inclusion of a copy thereof in the Disclosure Schedule) shall be adequate to disclose an exception to a representation or warranty disclosed in any other schedules in the Disclosure Schedule unless the applicability of such disclosure to the other schedules is clear and obvious.

     SECTION 4.2 Representations and Warranties of Purchaser . As a material inducement to the parties to enter into this Agreement and to consummate the transactions contemplated hereby, the Purchaser represents and warrants to Seller as follows.

     (a)  Organization, Existence and Good Standing . Purchaser is a corporation duly organized, existing and in good standing, under the laws of the state of Texas.

     (b)  Power and Authority . Purchaser has full corporate power and authority to enter into and perform this Agreement and all other agreements, certificates, instruments and other documents to be executed or delivered in connection with the transactions contemplated by this Agreement (collectively, the “ Transaction Documents ”) by Purchaser. The execution, delivery and performance of the Transaction Documents by Purchaser and the consummation by Purchaser of the transactions contemplated in this Agreement have been duly and validly approved by the board of directors of Purchaser. No other corporate proceedings are necessary on the part of Purchaser to authorize the execution, delivery and performance of the Transaction Documents by Purchaser and the consummation by Purchaser of the transactions contemplated in this Agreement.

     (c)  Enforceability . This Agreement has been duly executed and delivered by Purchaser and constitutes a legal, valid and binding agreement of Purchaser, enforceable against Purchaser in accordance with its terms, except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies. At the Closing, the Transaction Documents to be executed and delivered by Purchaser will be duly executed and delivered by duly authorized officers of Purchaser and will constitute valid and binding obligations of Purchaser, enforceable in accordance with their terms, except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies.

     (d)  Governmental Consents and Conflicts . No consent, authorization, order or approval of, or filing or registration with, any governmental authority is required for or in connection with the

consummation by Purchaser of the transactions contemplated hereby. Neither the execution and delivery of the Transaction Documents by Purchaser, nor the consummation by Purchaser of the transactions contemplated in this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of any statute or administrative regulation, or of any order, writ, injunction, judgment or decree of any court or governmental authority or of any arbitration award binding on Purchaser or to which Purchaser is a party.

     (e)  Other Consents and Conflicts . Neither the execution nor delivery of the Transaction Documents by Purchaser, nor the consummation by Purchaser of the transactions contemplated in this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of Purchaser’s articles of incorporation or by-laws. Purchaser is not a party to any unexpired, undischarged or unsatisfied written or oral contract, agreement, indenture, mortgage, debenture, note or other instrument under the terms of which performance by Purchaser according to the terms of the Transaction Documents will be a default or an event of acceleration, or grounds for termination, modification or cancellation, or whereby timely performance by Purchaser according to the terms of the Transaction Documents may be prohibited, prevented or delayed.

     (f)  Brokers . Neither Purchaser, nor any of its Affiliates has dealt with any Person who is entitled to a broker’s commission, finder’s fee, investment banker’s fee or similar payment from Seller for arranging the transactions contemplated hereby or introducing the parties to each other. As used in this Agreement, (i) “ Affiliate ” with respect to any Person means any other Person who directly or indirectly Controls, is Controlled by, or is under common Control with such Person including, in the case of any Person who is an individual, his or her spouse, any of his or her descendants (lineal or adopted) or ancestors, and any of their spouses; and (ii) “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through ownership of securities, by contract or otherwise.

     SECTION 4.3 Representations and Warranties of Seller and PHS . As a material inducement to the parties to enter into this Agreement and to consummate the transactions contemplated hereby, Seller (and PHS where specifically noted) each represents and warrants to Purchaser that, except as set forth in the Disclosure Schedule:

     (a)  Organization, Existence and Good Standing . Secure Pharmacy Plus LLC, is a Tennessee limited liability company organized, existing and in good standing under the laws of the State of Tennessee. Prison Health Services, Inc. is a Delaware corporation organized, existing and in good standing under the laws of the State of Delaware. Seller and PHS are in good standing under the laws of all jurisdictions where the nature of their respective businesses or the nature or location of their assets requires such qualification; except where the failure to so qualify would not have a material adverse effect on the Business as currently conducted or as currently contemplated to be conducted, or any material adverse change in the operations (including results of operations), assets, liabilities, condition (financial or otherwise) of the Business (each a " Material Adverse Effect ”).

     (b)  Power and Authority . Seller and PHS have all necessary company or corporate power and authority to carry on the Business as the Business is now being conducted. Seller and PHS have full company or corporate power and authority to enter into and perform this Agreement and all other Transaction Documents to be executed or delivered in connection with the transactions contemplated by this Agreement by Seller and PHS. The execution, delivery and performance of the Transaction Documents by Seller and PHS and the consummation by Seller of the transactions contemplated in this Agreement have been duly authorized by all respective company or corporate action and approved by the members and managers of SPP. No other proceedings are necessary on the part of Seller or PHS to

authorize the execution, delivery and performance of the Transaction Documents by Seller and PHS and the consummation by Seller of the transactions contemplated in this Agreement.

     (c)  Enforceability . This Agreement has been duly executed and delivered by Seller and PHS and constitutes a legal, valid and binding agreement of Seller and PHS, enforceable against them in accordance with its terms, except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies. At the Closing, the Transaction Documents to be executed and delivered by Seller and PHS will be duly executed and delivered by duly authorized officers, members or managers of each such entity, and will constitute valid and binding obligations of each, enforceable in accordance with their terms, except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies.

     (d)  Governmental Consents and Conflicts . Except as set forth on Schedule 4.3(d) attached hereto and incorporated herein and except as would not have a Material Adverse Effect, no consent, authorization, order or approval of, or filing or registration with, any governmental authority is required for or in connection with the consummation by Seller of the transactions contemplated hereby. Except as set forth on Schedule 4.3(d) attached hereto and incorporated herein and except as would not have a Material Adverse Effect, neither the execution and delivery of the Transaction Documents by Seller or PHS, nor the consummation by Seller of the transactions contemplated hereby, will conflict with or result in a breach of any of the terms, conditions or provisions of any statute or administrative regulation, or of any order, writ, injunction, judgment or decree of any court or governmental authority or of any arbitration award binding on any Seller or to which any Seller is a party.

     (e)  Other Consents and Conflicts . Neither the execution nor delivery of the Transaction Documents by Seller, or PHS nor the consummation by Seller of the transactions contemplated in this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of SPP’s operating agreement or articles of organization nor will such conduct conflict with or result in a breach of any of the terms, conditions or provisions of PHS’s bylaws, articles of incorporation or shareholder agreements (if any). Except as set forth on Schedule 4.3(e) attached hereto and incorporated herein, neither Seller nor PHS is not a party to any material unexpired, undischarged or unsatisfied written or oral contract, agreement, indenture, mortgage, debenture, note or other instrument under the terms of which performance by any of them according to the terms of the Transaction Documents will be a default or an event of acceleration, or grounds for termination, modification or cancellation, or whereby timely performance by any such entity according to the terms of the Transaction Documents may be prohibited, prevented or delayed. Notwithstanding the foregoing, PHS makes no representations or warranties as to whether performance in accordance with the terms of the Transaction Documents will be a default or an event of acceleration, or grounds for termination, modification or cancellation of its contracts and agreements for the provision of correctional health services. PHS shall use its best efforts to obtain consents from its clients, as may be required, for Buyer to serve as PHS’ pharmacy services supplier or subcontractor on those correctional health services contracts and agreements in which Seller currently provides such pharmacy services.

     (f)  Financial Statements . Copies of the unaudited balance sheet and statement of operations of SPP as of and for the year ended December 31, 2006 (the “ Financial Statements ”), are contained in the Disclosure Schedule. Copies of the unaudited balance sheets and statements of operations as of and for the three months ended March 31, 2007 (the “ Interim Financial Statements ”) are also contained in the Disclosure Schedule. The Financial Statements and the Interim Financial Statements present fairly, in all material respects, the financial position of SPP as of the dates thereof and the results of operations of SPP

for the periods covered by said statements, in accordance with GAAP consistently applied through the periods covered thereby, except, in the case of the Interim Financial Statements, for normal year-end adjustments. The books and records of SPP have been maintained in accordance with GAAP and properly reflect all of the transactions entered into by it.

     (g)  Undisclosed Liabilities . With respect to the Purchased Assets, SPP does not have any material obligations or liabilities of any nature whatsoever (direct or indirect, matured or unmatured, absolute, accrued, contingent or otherwise) (each a “ Liability ”), except for: (i) Liabilities provided for or reserved against in the Financial Statements or the Interim Financial Statements and not discharged subsequent to the dates of the Financial Statements or the Interim Financial Statements; (ii) Liabilities which have been incurred by Seller subsequent to the date of the Interim Financial Statements in the ordinary course of the Business consistent with the past operation of the Business; (iii) Liabilities under the executory portion of any Contract by which Seller is bound and which was entered into in the ordinary course of Business consistent with the past operation of the Business; and (iv) Liabilities under the executory portion of Permits and Authorizations (each as defined herein) issued to, or entered into by, SPP in the ordinary course of business consistent with the past operation of the Business. With respect to the Purchased Assets, SPP does not have any Liability that relates to or has arisen out of a breach of contract, breach of warranty, tort, or infringement by or against SPP or any claim or lawsuit involving SPP.

     (h)  Material Adverse Changes . Since December 31, 2006, with respect to the Purchased Assets, Seller has conducted the Business in the ordinary course consistent with past practices, except for actions expressly contemplated or required under this Agreement, and has not, in connection with or related the Business of Purchased Assets, suffered a material or adverse effect. Except as disclosed on Schedule 4.3(h) attached hereto and incorporated herein, neither Seller nor PHS has suffered or been threatened with, nor does Seller or PHS have knowledge of any facts or circumstances which may cause or result in, any material adverse change in either entity’s business as currently conducted or as currently contemplated to be conducted, or any material adverse change in the operations (including results of operations), assets, liabilities, condition (financial or otherwise) or prospects of either entity’s business.

     (i)  Title to Assets . With respect to the Purchased Assets, except as set forth on Schedule 4.3(i) attached hereto and incorporated herein, SPP has good title to the Purchased Assets, free and clear of any claims, liens, security interests, pledges, charges, mortgages, indentures, deeds of trust, judgments and other encumbrances of any kind and nature whatsoever, whether arising by agreement, operation of law or otherwise ( “Liens" ) , except for: (i) statutory liens for Taxes not yet due; (ii) statutory liens of landlords, carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due; (iii) liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security; and (iv) liabilities to lenders of SPP that are to be released at Closing and that are, in fact, released at Closing (“ Permitted Liens ”). With respect to the Purchased Assets, except as set forth on Schedule 4.3(i) attached hereto and incorporated herein, no unreleased mortgage, trust deed, chattel mortgage, security agreement, financing statement or other instrument encumbering any of SPP’s assets has been recorded, filed, executed or delivered.

     (j)  Sufficiency and Condition of Assets . The Purchased Assets include the assets described herein as used in the operation of the Business as currently conducted. The Purchased Assets are adequate to conduct the Business as it is presently being conducted, and will be adequate to enable Purchaser to continue to conduct the Business as it is presently being conducted and as it is currently contemplated to be conducted.

     (k)  Inventory . To the best of SPP’s knowledge, materially all of SPP’s Inventory is current, merchantable and usable and salable in the ordinary course of business, using sales practices consistent with Seller’s past practices. To the best of Seller’s knowledge, the Inventory is materially free from defects. SPP’s Inventory supply exists in quantities not inconsistent or materially out of balance in relation to the sales experience of the Business during the past two years and is consistent with Seller’s expectations of the demands of the customers of the Business. The Inventory is not excessive in kind or amount, or slow moving, in light of the business of Seller done or expected to be done. The Inventory reflected on the Financial Statements and the Interim Financial Statements is valued at the lower of cost or market, with cost determined using the first in first out (FIFO) method. Substantially all Inventory is located at either the Leased Real Estate or at the pharmacy located in Alameda County, California. Seller does not have any outstanding sales on consignment, sales on approval, sales on return or guaranteed sales of any variety.

     (l) [intentionally omitted]

     (m) [intentionally omitted]

     (n)  Permits . Schedule 4.3(n) , attached hereto and incorporated herein, contains a true and correct list of, and Seller possesses, all licenses, permits, registrations and government approvals that are required in order to conduct the Business as presently conducted. Seller has delivered complete and accurate copies of each Permit to Purchaser. Seller is in full compliance with each of its Permits.

     (o)  No Other Owners . Except as set forth on Schedule 4.3(o), attached hereto and incorporated herein, Seller warrants that no Person or entity, other than SPP, has any ownership, interest, control or management, either directly or indirectly, in, to, or over any of the Purchased Assets to be conveyed hereunder.

     (p)  Conduct of Business . Since the date of the most recent Interim Financial Statements, and with respect to the Purchased Assets, Seller has not:

     (i) [intentionally omitted];

     (ii) [intentionally omitted];

     (iii) sold or transferred any portion of the assets or property that would be material to Seller as a whole, except for sales of its inventory and transfers of cash in payment of trade payables, all in the usual and ordinary course of business;

     (iv) suffered any loss, or any interruption in use, of any assets or property (whether or not covered by insurance), on account of fire, flood, riot, strike or other hazard or Act of God, which could reasonably be expected to have a Material Adverse Effect;

     (v) [intentionally omitted];

     (vi) made or suffered any material change in the conduct or nature of any aspect of the Business, whether or not made in the ordinary course of business and whether or not the change had a material adverse effect;

     (vii) paid or delayed payment of accounts payable, or collected or accelerated collection of accounts receivables, in each case other than in the ordinary course of business consistent with past practices;

     (viii) waived any right or canceled or compromised any debt or claim other than in the ordinary course of business consistent with past practices;

     (ix) made any capital expenditure in an amount which exceeds $25,000, or capital expenditures in an aggregate amount which exceeds $100,000;

     (x) made any payment or increase in the bonus, salary or other compensation or fringe benefits of any officer or employee of Seller, except for annual salary increases and bonuses paid to non-executive employees in the ordinary course of business consistent with past practices;

     (xi) hired any employee who has an annual salary in excess of $100,000, or employees with aggregate annual salaries or wages in excess of $250,000;

     (xii) terminated any employee who had an annual salary or wages in excess of $100,000, or employees with aggregate annual salaries or wages in excess of $250,000;

     (xiii) instituted or amended any employee benefit program or fringe benefit program with respect to the employees of Seller;

     (xiv) entered into or modified any written employment agreement with any Person;

     (xv) paid or incurred any management, investment advisor or consulting fees;

     (xvi) except as set for on Schedule 4.3(p)(xvi), attached hereto and incorporated herein, borrowed any money or issued any bonds, debentures, notes or other corporate securities evidencing money borrowed that is secured by the Purchased Assets;

     (xvii) taken any act or omitted to take any act, or permitted any act or omission to occur, which will cause a material breach by any Seller of any of the Contracts;

     (xviii) to the best of its knowledge, failed to comply in a material manner with any applicable law;

     (xix) made any change to its accounting methods, principles or practices;

     (xx) prepaid any of its material obligations other than in the ordinary course of business consistent with past practices;

     (xxi) without limitation by the enumeration of any of the foregoing, entered into any material transaction other than in the usual and ordinary course of business; or

     (xxii) to the best of its knowledge, infringed in any material respect on any trade name, trademark, service mark or copyright belonging to any other person, firm or corporation

     (q)  Contracts . To the best of its knowledge, and with respect to the Purchased Assets, SPP has made available to the Purchaser all material undischarged written or oral contracts, agreements, leases and other instruments to which SPP is a party. All of the contracts listed in Schedule 1.2 (h) herein (the “Contracts”), are in full force and effect and are valid and enforceable in accordance with their terms. SPP is in compliance with all material terms and requirements of each Contract to which it is a party and, to the knowledge of Seller, each other Person that is party to a Contract is in material compliance with the

terms and requirements of such Contract. Except as set forth in Schedule 4.3(q) attached hereto and incorporated herein, no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with or result in a violation or breach of, or give SPP or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any Contract. There are no renegotiations, attempts to renegotiate or outstanding rights to negotiate any amount to be paid or payable to or by Seller under any Contract, and no Person has made a written demand for such renegotiation. SPP has not released or waived any of its rights under any Contract.

     (r)  Taxes . As used in this Agreement, the following terms have the meanings set forth below:

     (A) “ Taxes ” means all state, local, foreign and other sales, use, ad valorem, taxes, fees, assessments or charges, together with any interest and any penalties with respect thereto, and the term “ Tax ” means any one of the foregoing Taxes.

     (B) “ Tax Returns ” means all returns, declarations, reports, statements and other documents required to be filed in respect of Taxes, and the term “ Tax Return ” means any one of the foregoing Tax Returns.

     (i) There have been properly completed and filed on a timely basis all Tax Returns required to be filed by any Seller. The foregoing Tax Returns correctly and completely reflected the facts regarding the income, business, assets, operations, activities, status and other matters of or information regarding Sellers required to be shown thereon. No issues have been raised or threatened and are currently pending by any taxing authority in connection with any of such Tax Returns. No waivers of statutes of limitation with respect to any such Tax Returns have been given by or requested from any Seller. No Seller has requested or been granted an extension of time within which to file any Tax Return.

     (ii) With respect to all Taxes imposed upon any Seller or for which any Seller is or could be liable, whether to taxing authorities or to other Persons (as, for example, under tax allocation agreements), with respect to all taxable periods or portions of periods ending on or before the Closing Date, all applicable Tax laws have been complied with and all taxes and other amounts required to be paid by each Seller to Taxing authorities or to any other Person on or before the Closing Date have been paid.

     (iii) Seller is not a party to or bound by any tax indemnity, tax sharing or tax allocation agreement.

     (iv) No dispute or claim concerning any Tax liability of Seller has been claimed or raised by any taxing authority, and Seller is not presently contesting any Tax liability alleged to be owed by Seller.

     (v) No claim has ever been made by an authority in a jurisdiction where Seller does not file Tax Returns that such Seller is or may be subject to taxation by that jurisdiction.

     (vi) No power of attorney with respect to any Taxes of or relating to Seller has been filed with any governmental authority.

     (s)  Employee Relations . With respect to the employees of SPP:

     (i) To the knowledge of Seller, no employee of SPP is a party to, or is otherwise bound by, any agreement, including any confidentiality, non-competition or proprietary rights agreement, between such employee and SPP or, to the knowledge of Seller, any other Person that materially adversely affects or will affect the performance of that employee’s duties as an employee of the Business following the Closing. To the knowledge of Seller, no officer or other key employee of SPP intends to terminate employment prior to, at or following the Closing.

     (ii) There are not presently pending or, to the knowledge of Seller, threatened any: (A) strike, slowdown, picketing, work stoppage or employee grievance process; (B) charge, grievance proceeding or other claim against or affecting SPP relating to the alleged violation of any law pertaining to labor relations or employment matters (including discrimination claims), including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission or any comparable governmental authority; (C) union organizational activity or other labor or employment dispute against or affecting SPP; or (D) application for certification of a collective bargaining agent.

     (iii) To the knowledge of Seller, no event has occurred or circumstances exist that could provide the basis for any work stoppage or other labor dispute with respect to SPP. There is no lockout of any employees of SPP, and no such action is contemplated by Seller.

     (iv) No employee of SPP has any claim against SPP (whether under law, any employment agreement or otherwise) on account of or for: (A) overtime pay, other than overtime pay for the current payroll period; (B) wages or salaries, other than wages or salaries for the current payroll period; or (C) vacations, sick leave, time off or pay in lieu of vacation, sick leave or time off, other than vacation, sick leave or time off (or pay in lieu thereof) earned in the twelve month period immediately prior to the date of this Agreement. Except is as reflected in the Interim Financial Statements, Seller has made all required payments to the relevant unemployment compensation reserve account with the appropriate governmental departments with respect to their employees and such accounts have positive balances.

     (v) The Disclosure Schedule contains a true and correct list of all employees of SPP as of the date of this Agreement, together with their base salaries, bonuses, and positions. The Disclosure Schedule correctly states the number of employees laid off by SPP in the 90 days preceding the date hereof. No employee of SPP is an undocumented alien.

     (vi) The employment of each of SPP’s employees is terminable at will without cost to SPP except for possible payments required under employment benefit plans, if any, and the payment of accrued salaries or wages and vacation pay. No employee or former employee has any right to be rehired by SPP or Purchaser prior to their hiring a Person not previously employed by SPP.

     (vii) Seller has not taken, and has no knowledge of, any action which was calculated to dissuade any present employees, representatives or agents of Seller from continuing their employment with Purchaser following the Closing.

     (t)  Real Estate .

     (i) The Disclosure Schedule identifies SPP’s commercial real estate leases (the “Leased Real Estate”). SPP leased the Leased Real Estate pursuant to written leases, complete and accurate copies of which have been previously delivered to Purchaser, and all of which are in full force and effect. SPP has not subleased any Leased Real Estate. To Seller’s knowledge, the

Leased Real Estate is not subject to any leases or tenancies of any kind, except for SPP’s leases. All options in favor of SPP to purchase any of the Leased Real Estate, if any, are in full force and effect. The Leased Real Estate constitutes all real property and improvements leased by SPP.

     (ii) To Seller’s knowledge, the Leased Real Estate is not in possession of any adverse possessors, is used in a manner which is consistent and permitted by applicable zoning ordinances and other laws or regulations without special use approvals or permits, is served by all water, sewer, electrical, telephone, drainage and other utilities required for normal operations of the Business, is in good condition and repair, and requires no work or improvements to bring it into compliance with any applicable law or regulation or to repair or maintain the improvements thereon.

     (iii) To Seller’s knowledge, Seller is not in default of any provisions of any commercial real estate lease associated with the Leased Real Estate.

     (iv) Seller is not aware of any landlord who is in default of any provisions of any commercial real estate lease associated with the Leased Real Estate.

     (v) To Seller’s knowledge, there are no challenges or appeals pending regarding the amount of the real estate Taxes on, or the assessed valuation of, the Leased Real Estate