10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2007
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from          to

SXC HEALTH SOLUTIONS CORP.

(Exact name of registrant as specified in its charter)

Yukon Territory	000-52073	75-2578509
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

2441 Warrenville Road, Suite 610, Lisle, Illinois 60532-3642

(Address of principal executive offices, zip code)

Registrant’s phone number, including area code (800) 282-3232

Title of each class	Name of Each Exchange on Which Registered
Common Stock	NASDAQ Global Market Toronto Stock Exchange

Securities registered pursuant to 12(b) of the Act: Common Stock, no par value

Securities registered pursuant to 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer, large accelerated filer, and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2007 was $575,851,890 based on the closing price of $28.77 as reported on the then NASDAQ Global Market. Solely for the purposes of this calculation, directors and officers of the registrant are deemed to be affiliates.

As of February 29, 2008, there were 20,994,108 shares outstanding of the Registrant’s no par value common stock.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		4
Item 1A.	Risk Factors		17
Item 1B.	Unresolved Staff Comments		29
Item 2.	Properties		29
Item 3.	Legal Proceedings		30
Item 4.	Submission of matters For a Vote of Security Holders		30
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		30
Item 6.	Selected Financial Data		33
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		49
Item 8.	Financial Statements and Supplementary Data		51
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		78
Item 9A.	Controls and Procedures		78
Item 9B.	Other Information		78
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		78
Item 11.	Executive Compensation		82
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		100
Item 13.	Certain Relationships and Related Transactions, and Director Independence		101
Item 14.	Principal Accountant Fees and Services		101
PART IV
Item 15.	Exhibits and Financial Statement Schedules		102
Signatures			105
Certificate of Amalgamation
Certificate of Continuance
Bylaws
Specimen of Common Stock Certificate
Lease Agreement
Memorandum and Amendment
Commencement Date Memorandum
Office Lease Agreement
First Amendment to Multi-Tenant Agreement
Second Amendment to Multi-Tenant Agreement
Agreement of Lease
Amendment
Second Amendment
Employment Agreement
Employment Agreement
Employment Agreement
Employment Agreement
Employment Agreement
Employment Agreement
Employment Agreement
Form of Stock Option Agreement
Empoloyment Agreement
Employment Agreement
List of Subsidiaries
Consent
Certification
Certification
Certification
Certification

2

Special Note Regarding Forward Looking Statements

This Form 10-K contains certain forward-looking statements, including without limitation, statements concerning SXC Health Solutions Corp.’s operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are developed by combining currently available information with SXC Health Solutions Corp.’s beliefs and assumptions and are generally identified by the words “believe,” “expect,” “anticipate” and other similar expressions. Forward-looking statements do not guarantee future performance, which may be materially different from that expressed in, or implied by, any such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

These forward-looking statements are based largely on SXC Health Solutions Corp.’s current expectations and are subject to a number of risks and uncertainties, including, without limitation, those identified under “Risk Factors” and elsewhere in this Form 10-K, including the documents incorporated by reference. Actual results could differ materially from results referred to in the forward-looking statements. In addition, important factors to consider in evaluating such forward-looking statements include changes in external market factors, changes in SXC Health Solutions Corp.’s business or growth strategy or an inability to execute its strategy due to changes in its industry or the economy generally. In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained in this Form 10-K will in fact occur. SXC Health Solutions Corp. undertakes no obligation to, and expressly disclaims any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.

3

PART I

THE COMPANY

ITEM 1.   BUSINESS

The following description of our business should be read in conjunction with the information included elsewhere in this Form 10-K for the year ended December 31, 2007. This description contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from the results discussed in the forward-looking statements due to the factors set forth in “Risk Factors” and elsewhere in this Form 10-K. References in this Form 10-K to “we,” “our,” “us,” or the “Company,” refer to SXC Health Solutions Corp.

OVERVIEW

SXC Health Solutions Corp. (the “Company”) is a leading provider of pharmacy benefit management (PBM) services and healthcare IT solutions to the healthcare benefit management industry. The Company’s product offerings and solutions combine a wide range of PBM software applications, application service provider (ASP) processing and pharmacy benefit management services, and professional services designed for many of the largest organizations in the pharmaceutical supply chain, such as pharmacy benefit managers, managed care organizations, self-insured employer groups, retail pharmacy chains, and state and federal government entities. The Company’s solutions are available on a license basis with on-going maintenance and support or on a transaction fee basis using an ASP model. The Company’s payer customers include over 70 Managed Care Organizations, Blue Cross Blue Shield organizations, government agencies, employers and intermediaries such as PBM’s. The Company’s provider customers include over 1,400 independent, regional chain, institutional, and mail-order pharmacies. The solutions offered by the Company’s services assist both payers and providers in managing the complexity and reducing the cost of their prescription drug programs and dispensing activities.

Effective June 27, 2007, the Company changed its name to SXC Health Solutions Corp. (formerly Systems Xcellence Inc.) and was continued under the Business Corporations Act (Yukon). Shareholders approved the name change and the continuance at the annual and special meeting of shareholders held May 12, 2007. The Company’s principal executive offices are located at 2441 Warrenville Road, Suite 610, Lisle, Illinois 60532. The Company’s telephone number is 800-282-3232.

The Company conducts business in both the United States and Canada. For the years ended December 31, 2007, 2006 and 2005, the Company recognized revenues of $89.2 million, $78.7 million and $53.0 million, respectively, from the United States. Revenues from Canada for the same periods were $3.9 million, $2.2 million and $1.1 million, respectively.

On February 26, 2008, the Company announced that it had entered into a definitive agreement to acquire National Medical Health Card Systems, Inc. (“NMHC”). Pursuant to the merger agreement, Comet Merger Corporation, a newly-formed, wholly-owned subsidiary of the Company, has agreed to commence an exchange offer to acquire all of the outstanding shares of common stock of NMHC. The purchase price will be funded with a combination of cash and the Company’s stock, resulting in an estimated transaction value of, as of February 25, 2008, $143 million, or $11.00 per common and convertible preferred share of NMHC. The boards of directors of both companies have unanimously approved the transaction. In addition, NMHC’s majority shareholders, representing approximately 55% of the total NMHC shares outstanding on an as-converted basis, have agreed to tender their shares into the offer, pursuant to the terms of stockholder agreements entered into in connection with the execution of the merger agreement.

The acquisition is expected to close in the second quarter of 2008, and is subject to various closing conditions, including a requisite number of shares of NMHC common stock being tendered into the offer, the Company obtaining financing pursuant to a commitment letter and regulatory approvals.

Pursuant to the merger agreement, NMHC stockholders will receive $7.70 in cash and 0.217 shares of the Company’s common stock for each share of NMHC common stock tendered into the offer. The amount of Company common stock to be exchanged for each share of NMHC common stock tendered in the offer is fixed at 0.217, and therefore will not change based on fluctuations or changes in the market price of either companies’ stock. The Company will issue approximately 2.9 million shares of its common stock for the transaction to be completed. In addition, the Company intends to finance a portion of the purchase price through a new $48.0 million secured term loan and a $10.0 million secured revolving credit facility.

The Company’s Internet website is www.sxc.com. It will make available free of charge on or through the website the annual report on Form 10-K, future quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC. This reference to the Company’s website is for the convenience of shareholders as required by the SEC and shall not be deemed to incorporate any information on the

4

website into this Form 10-K or other filings with the SEC. The Company will also make available all financial reports filed in accordance with Canadian GAAP with SEDAR through its website.

Products, Solutions and Services

The Company’s solutions address the challenges faced by the two primary participants in the pharmaceutical supply chain: payers and providers. The Company provides comprehensive pharmacy benefit management systems and services, pharmacy practice management systems and related prescription fulfillment services. The Company believes it is unique in that it can deploy its solutions as:

•  informedRx^® — Pharmacy Benefit Management (PBM) services such as pharmacy network management can be provided to the Company’s customers using the Company’s own system software and services;

•  web-enabled technology — the Company provides on-line transaction processing solutions through web-enabled, real-time transaction processing technology;

•  ASP processing — solutions can be “rented” on a transaction or subscription basis from the Company’s data centers in Lisle, Illinois and Scottsdale, Arizona;

•  software solutions — licensed software products can be sold in addition to systems implementation and consulting services and maintenance;

•  custom applications — the Company’s base technology can be coupled with its software development and systems integration services.

Payer Products and Services Offered by the Company

Pharmacy Benefit Management (PBM) Services — informedRx

The Company’s informedRx offering is a broad suite of à la carte pharmacy benefit management services that provide a flexible and cost-effective alternative to traditional PBM offerings typically employed by health plans, government agencies and employers. The Company provides a broad range of pharmacy spend management solutions and information technology capabilities. Its product offerings and solutions combine a wide range of PBM software applications, application service provider (ASP) processing services, and professional services designed for many of the largest organizations in the pharmaceutical supply chain, such as pharmacy benefit managers, managed care organizations, self-insured employer groups, retail pharmacy chains, and state and federal government entities. The Company’s clients have gained increased control of their pharmacy benefit dollars and maximized cost control and quality of care through a full range of pharmacy spend management services, including:

Formulary Administration  — Fully support clients’ existing formularies and preferred drug lists or collaborate to create best-in-class models supported by formulary predictive modeling and impact analysis. Pharmacist, physician and member-focused intervention protocols provide quality controls to drive generics, preferred drug products and appropriate use. As an independent provider, we have no hidden agendas relative to promoting products to our clients. Formularies are administered based on specific plan designs, or by enabling clients with the tools to maintain their own custom formularies online.

Benefit Plan Design and Management — Accommodate any plan design option required and will support an unlimited number of benefit design variations. The Company provides benefit design configuration support to clients, in accordance with mutually developed processes. Benefit designs can be modified online, in real time, by the Company or by the client’s staff.

Pharmacy Network Management — A wide range of retail network options, including supporting existing networks or assisting clients in developing proprietary networks that meet specific geographic access requirements, desired price discounts, or other service requirements. A proprietary national retail network, which consists of more than 56,000 pharmacies in all 50 states and in Puerto Rico, Guam and the Virgin Islands, provides excellent access to the Company’s clients.

Drug Utilization Review — Pre-dispensing DUR edit checks are performed on an online, real-time basis between mail and retail pharmacies. All prescriptions are checked for participant eligibility and plan design features and are then compared against previous histories of prescriptions filled by the same pharmacy, by other participating retail network pharmacies and by the mail service pharmacy.

Clinical Services and Consulting — Consultative and technical expertise to augment, develop, deploy and support any additional clinical programs. Clients also have the option of using the Company’s clinical programs, which incorporate

5

complete prescription drug information to reduce the growth rate of prescription drug costs and increase the quality of care and member safety. A unique approach to managing the prescription drug benefit goes beyond price and product and focuses on utilization. The Company offers a comprehensive clinical management strategy that addresses potential fraud and abuse, compliance and utilization management, to drive the highest quality of care, with potential ingredient cost savings.

Reporting and Information Analysis Solutions — Providing two main levels of reporting: A standard reporting package (which includes a large menu of unique reports), and an online analytical decision support tool, RxTRACK^®, designed to meet and exceed the Company’s clients’ expectations.

Mail Services/Specialty Pharmacy — Preferred relationships with specialty/mail program providers and can interface with any existing provider. The Company provides an approach and philosophy which are consistent with retail, mail service and specialty providers by assisting the Company’s clients in contracting for these services on an exclusive or open participation basis.

Web Services — A suite of Web Services that enables clients to interact with the claims processing system using a standardized protocol in a secure environment. This method of access provides the Company’s clients with the freedom to build products, tools and reports that utilize SXC data throughout their enterprises. Once the raw data is in house, it can be used by the client as appropriate, thus providing far greater flexibility and return on investment. A member Web site, RxPORTAL^tm, invites members to learn more about their prescription benefit programs, medication histories, drug information and related industry news. This site can be customized with a client’s logo and name, links to the organization’s Internet home site, and up-to-date news bulletins about the organization.

Technology Products and Services

RxCLAIM^® is an on-line transaction processing system designed to provide instant on-line adjudication of third-party prescription drug claims at the point of service, including trouble-free claims management and cost-effective review, as well as payment and billing support and real-time functionality for updating benefit, price, member, provider and drug details. RxCLAIM is designed to provide the Company’s customers with automation efficiencies, flexibility and control by facilitating the real-time processing of pharmacy claims and payments against eligibility, plan benefits, formularies, price, drug utilization review, prior authorization and rebates in addition to many other features.

Other payer products

•  RxTRACK^® is a data warehouse and analysis system that delivers information to the desktop of health benefit plan providers, facilitating on-line analytical processing.

•  RxMAX^® is a rebate management system that is designed to assist health plans in managing their relationships with pharmaceutical manufacturers through contract management, record keeping, calculating market share, and creating billing details and summaries.

•  RxSERVER^® functions as a transaction exchange utility for the collection, control and sharing of prescription information between pharmacies within a participating group.

•  RxPORTAL^tm and member web services comprise the Company’s Internet solutions for pharmacy benefit management. Both allow customers to interact with the RxCLAIM set-up in a secure environment, but in different manners depending on their specific needs and resources.

Provider Products and Services Offered by the Company

HBS Retail Pharmacy Management System

The HBS Retail Pharmacy Management System (“RPMS”) is designed to save time by minimizing keystrokes and eliminating manual calculations for quick response in a fast paced retail pharmacy environment. For commonly owned groups of pharmacies, the HBS Common Profile System offers all the features of the RPMS in addition to the ability to centralize the administration of all stores through a single central processing unit. The HBS Chain-Host System is designed for multi-site pharmacies that have a need to share central database information. In addition, HBS provides pharmacy management systems for institutional and mail-order pharmacies as well as a complete suite of services ranging from customer support and training, third-party data, hardware and technical support.

6

RxEXPRESS^®

RxEXPRESS is a pharmacy practice management application that provides information processing and workflow solutions supporting primarily mail-order, managed care and high volume central fill pharmacies. RxEXPRESS provides pharmacy services, such as patient refill orders, patient compliance and patient profile applications, electronic prescribing and refill authorizations, pharmacy website hosting and interfaces and complete mail service, out-patient pharmacy management inventory control and pricing management. The system also provides workflow control, clinical analysis, third-party payment and administrative services support.

The Industry

The Company believes the key market factors that influence spending on information technology solutions and services by participants in the pharmaceutical supply chain are the amount spent on prescription drugs and the associated volume of prescription drugs dispensed and insurance claims processed each year. According to IMS Health (“IMS”), approximately 3.7 billion pharmacy prescriptions were written and filled in the United States during 2006 — representing a retail value in excess of $270 billion. Based on the factors described below, the Company expects drug utilization rates to continue to rise in the future. The Company estimates that the current market opportunity for its information technology and services in its industry approximates $4.5 billion annually, and is growing at a rate in excess of the drug utilization rate alone due to the following factors:

Aging population.  According to the US Census Bureau, the US population is expected to age rapidly through 2030, when 19.5% of the population will be over the age of 65, compared to 12.0% in 2000. Older Americans require more medications than their younger counterparts — often 20 to 40 prescriptions annually, according to the Centers for Medicare and Medicaid Services (“CMS”). The increase in prescriptions due to an aging population is expected to drive demand for senior-focused clinical programs and benefit plans, as well as information technology decision support tools to facilitate on-line analytical assessment of specific population trends, which will address the pharmacy benefit management needs of an aging population.

Rising drug prices.  According to the NACDS, the average prescription price in the US was $68.26 in 2006, a 5.0% increase over 2005, the average brand name prescription was $111.02 in 2006, a 9.2% increase over 2005, and the average generic drug prescription was $32.23 in 2006, a 8.1% increase over 2005. Industry solutions to counter rising drug prices include supporting clinical programs that help promote generic and clinically equivalent, lower-cost preferred drug products, utilization management programs, such as prior authorization and step-therapy, to help ensure that patients who can benefit from therapies are identified and that cost-effective treatment is encouraged, and tools to identify clinically appropriate, cost-saving opportunities.

Growth of “me too” and “life-style” drugs.  Another contributing factor to rising drug costs, and part of the challenge payer customers face today, is making coverage decisions for new, higher-cost brand name drugs including what are known as “me too” and “life-style” drugs. “Life-style drugs”, such as allergy, acid reflux, depression, erectile dysfunction and weight control medication and “me too” drugs that are modified versions of existing brand drugs that typically offer little in terms of new clinical benefit, require focused but flexible plan management. The popularity of these drugs is expected to drive pharmaceutical supply chain solutions that include flexible benefit programs that balance a member’s desires and prudent cost control in order to ensure safe, effective and appropriate drug use.

Direct-to-consumer advertising.  According to IMS, pharmaceutical manufacturers spent over $11.9 billion in sales and marketing related activities in 2004, much of it devoted to “life-style” drugs. The Company believes that the rapid increase in direct-to-consumer advertising for prescription drugs has had a significant impact on drug spending and prescribing. According to IMS, spending on direct-to-consumer advertising, typically to advertise newer, higher-priced drugs, was 15 times greater in 2004 than in 1994. Pharmaceutical benefit management program solutions help to ensure appropriate drug use, and real-time web-based tools provide consumers easy access to plan-specific drug cost, quality and safety information to help identify lower cost clinically equivalent alternatives.

Shortage of registered pharmacists.  According to the NACDS, the US labour pool for pharmacists has failed to keep pace with the growth of prescription drug use. There are currently over 4,000 openings for pharmacists in the retail pharmacy chain industry, and between 2004 and 2010, the supply of community pharmacists is expected to increase only 7.8% compared to an estimated 27% increase in the number of prescriptions dispensed. The Company expects that the shortage of pharmacists and the increased volume of prescriptions will continue to increase demand for information technology solutions that improve workflow and promote efficient pharmacy operations.

Medicare Part D.  The Company believes that the introduction of the Medicare Part D outpatient prescription drug benefit is the most significant recent development affecting prescription drug coverage in the US. Medicare Part D is a program that subsidizes the costs of prescription drugs for Medicare beneficiaries. According to CMS, as of May 2006, over

7

37 million new beneficiaries have enrolled for coverage under the Medicare Part D prescription drug plan which became effective on January 1, 2006. Generally, Medicare Part D beneficiaries represent an older demographic of the population with a higher utilization rate of prescription drugs, thereby increasing the transactions processed. In addition to standard drug benefits, participating drug programs have offered a wide variety of benefit plans. While CMS is currently utilizing technical standards and processes that are already in common use in the pharmacy claims industry, the Company believes that significant new functionality will be needed to meet the future demands of this program. Medicare Part D has impacted the demand for Pharmacy Benefit Management as well as information technology as the Company’s customers were required to update their systems, and the Company believes they will continue to require support to maintain these systems.

Competition

The Company competes with numerous companies that provide the same or similar services. Our competitors include three large publicly traded companies to several small and privately owned companies which compete for a significant part of the market. The principal competitive factors are quality of service, scope of available services and price. The ability to be competitive is influenced by the Company’s ability to negotiate prices with pharmacies and drug manufacturers. Some of the Company’s competitors have been in existence for longer periods of time and are better established. Some of them also have broader public recognition, substantially greater financial and marketing resources, and more experienced management. In addition, some of the Company’s customers and potential customers may find it desirable to perform for themselves those services now being rendered by the Company.

The Company’s ability to attract and retain customers is substantially dependent on its capability to provide competitive pricing, efficient and accurate claims management, utilization review services and related reporting, and consulting services.

The pharmaceutical supply chain market requires solutions which address the unique needs of each constituent in the supply chain. The Company’s payer and provider customers require robust and scaleable technical solutions as well as the ability to ensure cost efficiency for themselves and their customers. The Company’s product offerings include a wide range of pharmacy benefit management services and software products for managing prescription drug programs and for drug prescribing and dispensing. The Company’s payer suite of products includes a wide range of pharmacy benefits management and claims adjudication systems as well as informedRx, the Company’s suite of pharmacy benefit management services. The Company’s provider suite of products includes pharmacy practice management systems, point-of-sale applications and related prescription fulfillment services, which can be integrated with other pharmacy and patient management systems for full enterprise-wide control.

Competitive Strengths

The Company believes that the following competitive strengths are the keys to its success:

•  Flexible service offering and customer choice:  The Company believes a key differentiator between itself and its competitors is not only its ability to provide innovative PBM services, but also to deliver these services on an à la carte basis with transparent pricing. The Company’s informedRx suite offers the flexibility of broad product choice along the entire pharmacy benefit management continuum, enabling enhanced customer control, solutions tailored to the Company’s customer’s specific requirements, and transparent pricing. The market for the Company’s products is divided between large customers that have the sophisticated technology infrastructure and staff required to operate a 24-hour data center and other customers that are not able or willing to operate these sophisticated systems. The Company’s business model allows customers to either license the Company’s products and operate the Company’s systems themselves (with or without significant customization, consulting and systems implementation services from the Company), or to rent the Company’s systems’ capabilities on a fee per transaction or subscription basis through ASP processing from the Company’s data center.

•  Leading technology and platform:  The Company’s technology is robust, scaleable and web-enabled. The Company’s payer offerings supported over 400 million transactions in 2007, efficiently and in real-time. The Company’s platform is able to instantly cross-check multiple processes, such as reviewing claim eligibility, adverse drug reaction and properly calculating member, pharmacy and payer payments. As the Company’s technology is built on flexible, database-driven rule sets and broad functionality applicable for most any book of business, the Company believes it has one of the most comprehensive claims processing platforms in the market. This allows the Company to provide more comprehensive pharmacy benefits management services through informedRx by offering the Company’s customers a selection of what services they would like the Company to perform versus requiring them to accept a one-size-fits-all solution. The Company believes this à la carte offering is a key differentiator from its competitors.

The Company’s provider solutions have been built to address the cost conscious independent, institutional and chain retail pharmacy marketplace. The Company’s offerings offer features and functionality available to larger chains at a cost

8

effective price. By developing technology which focuses on saving key strokes for the pharmacist, the Company develops workflow efficiencies for the pharmacy. In addition, the Company’s RxEXPRESS mail-order system provides a scaleable platform to support the Company’s customer’s complex prescription drug home delivery needs including workflow, imaging and integrated credit, billing and shipping support.

•  Measurable cost savings for the Company’s customers:  The Company provides its customers with increased control over prescription drug costs and drug benefit programs. The Company’s solutions and services are designed to generate in-store and corporate efficiencies related to the fulfillment of prescriptions. The Company’s transparent pricing models and flexible product offerings are designed to deliver measurable cost savings to the Company’s customers. The Company believes transparent pricing is a key differentiator from its competitors for its customers who want to gain control of their prescription drug costs. For example, the Company’s pharmacy network contracts and manufacturer rebate agreements are made available by the Company to each customer. For customers who select the Company’s pharmacy network and manufacturer rebate services on a fixed fee per transaction basis, there is clarity to the rebates and other fees payable by the manufacturer to the client. The Company believes that its transparent model together with the flexibility to select from the Company’s broad range of à la carte services helps its customers realize measurable cost savings.

•  Strong customer relationships and domain expertise:  The Company believes that as a result of its significant experience and a reputation for high quality products and services, it has developed strong relationships with its customers. These customers include over 70 payer customers and over 1,200 provider customers (independent, regional chain, institutional and mail-order pharmacies). Through the Company’s experience developing and supporting pharmacy solutions for millions of lives, it believes it has become a leader in its industry in establishing best practices and has developed substantial domain expertise in its market. The Company uses its proprietary off-the-shelf technology coupled with in-depth technical and domain expertise to develop new proprietary applications in collaboration with its customers that helps to increase its customer base and allows it to sell new services to existing customers.

•  Experienced and proven management team:  The Company has a senior management team of industry veterans with a proven track record for profitable growth both organically and through acquisitions. Many core members of the Company’s senior management also have a long service history with the Company or the companies acquired by the Company and have experience working together as a team. The Company’s management team has a broad network of relationships in the industry and deep product knowledge, and the Company believes this to be a key competitive advantage.

Our Business Strategy

The Company seeks to enhance its position as a leading provider of Pharmacy Spend Management ^tm solutions and pharmacy benefit management services to the pharmaceutical supply chain in the US and Canada. The Company’s primary strategies are:

•  Expand the breadth of the Company’s informedRx services for health plans, self-insured employers and government agencies that sponsor pharmacy benefit plans:  Within the Company’s informedRx suite of products, it has several key initiatives underway which the Company believes will help it to expand its revenue per claim and make the Company more competitive in the broader market. The Company has built the informedRx suite beyond its claims processing capabilities to offer competitively priced pharmacy networks, manufacturer rebate contracts and clinical programs, to enable the Company’s customers to have more control over their drug spending. With the Company’s diversified product portfolio and the market demand for greater transparency in pricing of prescription drugs, the Company believes it is in an attractive market environment for informedRx to prosper.

•  Provide additional informedRx services to the Company’s existing payor customer base:  Based on the success the Company has had to date with informedRx, it intends to sell additional services to the Company’s existing customers through its Company’s informedRx suite of products. The Company may also make capital investments in technology to further improve the quality of its products. By providing a broader range of services, the Company believes that it can increase its customer base and the breadth of products utilized by each customer, thereby increasing the Company’s revenue base.

•  Continue to lead through product innovation built on superior technology:  The Company plans to continue to be an innovator in the development of Pharmacy Spend Management^tm solutions. The Company intends to develop solutions and services that allow payer customers more enhanced financial, operational and decision-making control and more personalized services. The Company plans to broaden the functionality of its product offerings to address the particular needs of payers and providers, which improves the value proposition of the Company’s offerings and also allows the

9

Company to scale its operations without incurring additional expense. The Company has dedicated significant resources toward the development and continuous improvement of its products.

•  Further broaden the Company’s markets and offerings by pursuing significant strategic acquisitions:  The Company continues to explore strategic acquisitions to add new services and/or new markets to grow its business more rapidly. The Company’s successful track record of strategic acquisitions to date has helped to make it a leading provider of information technology solutions and services to participants in the pharmaceutical supply chain. Since 2001, the Company has completed three acquisitions: ComCotec, Inc. (2001), Health Business Systems, Inc. (2004) and Pharmaceutical Horizons, Inc. (2005). On February 26, 2008, the Company announced that it has entered into a definitive agreement to acquire National Medical Health Card Systems, Inc. The Company will continue to evaluate additional acquisition opportunities and may pursue acquisitions of other complementary businesses, technologies or other assets to enhance its business strategy.

REGULATORY DEVELOPMENTS

Foreign Private Issuer Status:  The Company is traded on both the Toronto Stock Exchange and the Nasdaq Global Market. Since a majority of the Company’s outstanding common shares are held by non-U.S. residents, the Company is granted foreign private issuer (“FPI”) status by the Securities and Exchange Commission (“SEC”). As such, the Company is permitted to file its financial statements prepared in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”) with the SEC, with a reconciliation of significant differences from accounting principles generally accepted in the United States (“U.S. GAAP”), so long as it retains its FPI status. However, in the expectation that it may lose its FPI status, the Company has elected to make U.S. GAAP its primary source of accounting principles effective January 1, 2008. In preparation for such change, for its fiscal year ended December 31, 2007 the Company will voluntarily file with the SEC an annual report on Form 10-K, which will include the Company’s consolidated financial statements prepared in accordance with U.S. GAAP. Beginning with the first quarterly report on Form 10-Q for 2008, we will be required to include a reconciliation to Canadian GAAP for two years, ending with the 2009 annual report on Form 10-K.

GOVERNMENT REGULATION

Various aspects of the Company’s business are governed by federal and state laws and regulations. Because sanctions may be imposed for violations of these laws, compliance is a significant operational requirement. The Company believes it is in substantial compliance with all existing legal requirements material to the operation of its business. There are, however, significant uncertainties involving the application of many of these legal requirements to its business. In addition, there are numerous proposed health care laws and regulations at the federal and state levels, many of which could adversely affect the Company’s business, results of operations and financial condition. The Company is unable to predict what additional federal or state legislation or regulatory initiatives may be enacted in the future relating to its business or the health care industry in general, or what effect any such legislation or regulations might have on it. The Company also cannot provide any assurance that federal or state governments will not impose additional restrictions or adopt interpretations of existing laws or regulations that could have a material adverse effect on its business or financial performance.

Some of the state laws described below may be preempted in whole or in part by the Employee Retirement Income Security Act of 1974, “ERISA,” which provides for comprehensive federal regulation of employee benefit plans. However, the scope of ERISA preemption is uncertain and is subject to conflicting court rulings. The Company also provides services to certain clients, such as governmental entities, that are not subject to the preemption provisions of ERISA.

Federal Laws and Regulations Affecting the PBM Industry

The following descriptions identify various federal laws and regulations that affect or may affect aspects of the Company’s PBM business:

Legislation Affecting Drug Prices

Average wholesale price (“AWP”) is a standard pricing unit published by third party data sources and currently used throughout the pharmacy benefits industry as the basis for determining drug pricing under contracts with clients, pharmacies and pharmaceutical manufacturers. One of the published data sources of AWP, First Data Bank (“FDB”) has agreed to reduce the reported AWP of thousands of specific pharmaceutical products by five percent. Additionally, FDB has agreed to cease reporting AWPs for all pharmaceutical products within two years with limited ability to resume publication of AWPs. Changes to AWP will require the Company to amend its current contracts with pharmacies in its retail network, pharmacy manufactures, some of its customers as well as requiring changes to be made to its software and systems to accommodate a new pricing mechanism. The Company believes that payors, pharmacy providers and solution providers will begin to evaluate other pricing benchmarks as the

10

basis for contracting for prescription drugs and benefit management services in the future. The Company is unable to predict whether any such changes will be adopted on a larger scale, and whether such changes would have a material adverse effect on its business, results of operations, financial condition or cash flows.

Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

The Medicare voluntary outpatient prescription drug benefit, “Part D,” established under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or “MMA,” became effective on January 1, 2006. The MMA also created new guidelines for Medicare HMOs, termed Medicare Advantage Plans, which offer both an outpatient prescription drug benefit and health care coverage.

Medicare beneficiaries who elect Part D coverage pay a monthly premium for the covered outpatient drug benefit. Assistance with premiums and cost sharing are provided to eligible low-income beneficiaries. The voluntary outpatient prescription drug benefit requires coverage of essentially the same pharmaceuticals that are approved for the Medicaid program, although selection may be restricted through a formulary. The new outpatient prescription drug benefit is offered on an insured basis by prescription drug plans, “PDPs,” in 34 regions across the United States and by Medicare Advantage Plans, along with health care coverage, in 26 regions across the United States.

The Company is neither a PDP nor a Medicare Advantage Plan; however, in its capacity as a subcontractor with certain Part D Plan clients, the Company is indirectly subject to certain federal rules, regulations, and sub-regulatory guidance pertaining to the operation of Medicare Part D. If the federal Centers for Medicare & Medicaid Services (CMS) determines that the Company has not performed satisfactorily as a subcontractor, CMS may request the Company’s PDP or Medicare Advantage Plan client to revoke its Part D activities or responsibilities under the subcontract. While the Company believes that it provides satisfactory level of service, under its respective subcontracts, it can give no assurances that CMS or a Part D Plan will not terminate its business relationships insofar as they pertain to Medicare Part D.

PDPs and Medicare Advantage Plans are subject to provisions of the MMA intended to deter “fraud, waste and abuse” and are strictly monitored by CMS and its contracted Medicare Drug Integrity Contractors, “MEDICs,” to ensure that Part D program funds are not spent inappropriately. In April 2006, CMS issued a final chapter 9 to the Medicare Prescription Drug Benefit Manual interpreting the fraud, waste and abuse provisions of Part D, referred to as the “FWA Guidance.” Among other things, the FWA Guidance cites the following examples of potential PBM fraud, waste and abuse risks in connection with Part D: prescription drug switching, unlawful remuneration, inappropriate formulary decisions, prescription drug splitting or shorting, and failure to offer negotiated prices. CMS has offered additional sub-regulatory guidance regarding some of these risk areas, particularly with respect to the Part D formulary decision making process which is highly regulated by CMS. No assurance can be given that the Company will not be subject to scrutiny or challenge under one or more of the underlying laws by the government enforcers or private litigants.

Also in 2006, CMS issued guidance to PDPs and Medicare Advantage Plans requiring that such plans report 100% of all price concessions received for PBM services. This CMS guidance suggests that best practices would require PDPs and Medicare Advantage Plans to contractually require the right to audit their PBMs as well as require 100% transparency as to manufacturer rebates paid for drugs provided under the sponsor’s plan, including the portion of such rebates retained by the PBM as part of the price concession for the PBM’s services. The Company does not anticipate that such disclosures, to the extent required by Medicare plan partners, will have a materially adverse effect on its business, results of operations, financial condition, or cash flows.

Federal Anti-Remuneration/Fraud and Abuse Laws.

The federal healthcare Anti-Kickback Statute prohibits, among other things, an entity from paying or receiving, subject to certain exceptions and safe harbors, any remuneration, directly or indirectly, to induce the referral of individuals covered by federally funded health care programs, including Medicare, Medicaid and the Civilian Health and Medical Program of the Uniformed Services, “CHAMPUS,” or the purchase, or the arranging for or recommending of the purchase, of items or services for which payment may be made in whole or in part under Medicare, Medicaid, CHAMPUS or other federally funded health care programs. Sanctions for violating the Anti-Kickback Statute may include imprisonment, criminal and civil fines, and exclusion from participation in the federally funded health care programs.

The federal healthcare Anti-Kickback Statute has been interpreted broadly by courts, the Office of Inspector General, referred to as the “OIG” within the U.S. Department of Health & Human Services, the “DHHS” and other administrative bodies. Because of the statute’s broad scope and the limited statutory exceptions, federal regulations establish certain safe harbors from liability. For example, safe harbors exist for certain properly disclosed and reported discounts received from vendors, certain investment interests, certain properly disclosed payments made by vendors to group purchasing organizations, certain personal services arrangements, and certain discount and payment arrangements between PBMs and HMO risk contractors serving

11

Medicaid and Medicare members. A practice that does not fall within an exception or a safe harbor is not necessarily unlawful, but may be subject to scrutiny and challenge. In the absence of an applicable exception or safe harbor, a violation of the statute may occur even if only one purpose of a payment arrangement is to induce patient referrals or purchases of products or services that are reimbursed by federal health care programs. Among the practices that have been identified by the OIG as potentially improper under the statute are certain product conversion programs in which benefits are given by drug manufacturers to pharmacists or physicians for changing a prescription, or recommending or requesting such a change, from one drug to another. The Anti-Kickback Statute has been cited as a partial basis, along with state consumer protection laws discussed below, for investigations and multi-state settlements relating to financial incentives provided by drug manufacturers to retail pharmacies as well as to PBMs in connection with such programs.

Additionally, it is a crime under the Public Contractor Anti-Kickback Statute, for any person to knowingly and willfully offer or provide any remuneration to a prime contractor to the United States, including a contractor servicing federally funded health programs, in order to obtain favorable treatment in a subcontract. Violators of this law also may be subject to civil monetary penalties.

In April 2003, the OIG published “Final OIG Compliance Program Guidance for Pharmaceutical Manufacturers,” referred to as “Compliance Guidance.” The Compliance Guidance is voluntary and is directly aimed at the compliance efforts of pharmaceutical manufacturers. This Compliance Guidance highlights several transactions as potential risks, including the provision of grants, “prebates” and “upfront payments” to PBMs to support disease management programs and therapeutic interchanges. The Compliance Guidance also indicates that the provision of rebates or other payments to PBMs by pharmaceutical manufacturers may potentially trigger liability under the Anti-Kickback Statute, if not properly structured and disclosed.

The Company believes that it is in substantial compliance with the legal requirements imposed by such anti-remuneration laws and regulations. However, there can be no assurance that the Company will not be subject to scrutiny or challenge under such laws or regulations. Any such challenge could have a material adverse effect on its business, results of operations, financial condition or cash flows.

Federal Statutes Prohibiting False Claims.

The Federal False Claims Act imposes civil penalties for knowingly making or causing to be made false claims with respect to governmental programs, such as Medicare and Medicaid, for services not rendered, or for misrepresenting actual services rendered, in order to obtain higher reimbursement. Private individuals may bring qui tam or whistleblower suits against providers under the Federal False Claims Act, which authorizes the payment of a portion of any recovery to the individual bringing suit. Such actions are initially required to be filed under seal pending their review by the Department of Justice. A few federal district courts have recently interpreted the Federal False Claims Act as applying to claims for reimbursement that violate the anti-kickback statute or federal physician self-referral law under certain circumstances. The Federal False Claims Act generally provides for the imposition of civil penalties and for treble damages, resulting in the possibility of substantial financial penalties for small billing errors that are replicated in a large number of claims, as each individual claim could be deemed to be a separate violation of the Federal False Claims Act. Criminal provisions that are similar to the Federal False Claims Act provide that a corporation may be fined if it is convicted of presenting to any federal agency a claim or making a statement that it knows to be false, fictitious or fraudulent to any federal agency.

In 2007, the Company did not directly contract with the federal government to provide services to beneficiaries of federally funded health programs. Therefore, the Company did not directly submit claims to the federal government. However, the Company does contract with and provide services to entities or organizations that are federal government contractors, such as Medicare Part D PDPs. There can be no assurance that the government would not potentially view one or more of the Company’s actions in providing services to federal government contractors as causing or assisting in the presentment of a false claim. The Company does not believe it is in violation of the Federal False Claims Act and it has a corporate compliance and ethics program, policies and procedures and internal controls in place to help maintain an organizational culture of honesty and integrity.

ERISA Regulation.

ERISA regulates certain aspects of employee pension and health benefit plans, including self-funded corporate health plans. The Company has agreements with self-funded corporate health plans to provide PBM services, and therefore, it is a service provider to ERISA plans. ERISA imposes duties on any person or entity that is a fiduciary with respect to the ERISA plan. The Company administers pharmacy benefits for ERISA plans in accordance with plan design choices made by the ERISA plan sponsors. The Company does not believe that the general conduct of its business subjects it to the fiduciary obligations set forth by ERISA, except when it has specifically contracted with an ERISA plan sponsor to accept fiduciary responsibility and be named as a fiduciary for certain functions. In those cases where the Company has not accepted fiduciary status, there can be no assurance that the U.S. Department of Labor, which is the agency that enforces ERISA, or a private litigant would not assert that the fiduciary obligations imposed by the statute apply to certain aspects of the Company’s operations.

12

Numerous lawsuits have been filed against various PBMs by private litigants, including Plan participants on behalf of an ERISA plan and by ERISA Plan sponsors, alleging that the PBMs are ERISA fiduciaries and that, in such capacity, they allegedly violated ERISA fiduciary duties in connection with certain business practices related to their respective contracts with retail pharmacy networks and/or pharmaceutical manufacturers.

ERISA also imposes civil and criminal liability on service providers to health plans and certain other persons if certain forms of illegal remuneration are made or received. These provisions of ERISA are similar, but not identical, to the federal healthcare Anti-Kickback Statute discussed above. In particular, ERISA does not provide the statutory and regulatory safe harbor exceptions incorporated into the federal healthcare Anti-Kickback Statute. Like the health care anti-kickback laws, the corresponding provisions of ERISA are written broadly and their application to particular cases is often uncertain. The Company has implemented policies regarding, among other things, disclosure to health plan sponsors with respect to any commissions paid by or to it that might fall within the scope of such provisions and accordingly believe it is in substantial compliance with these provisions of ERISA. However, the Company can provide no assurance that its policies in this regard would be found by the appropriate enforcement authorities and potential private litigants to meet the requirements of ERISA.

FDA Regulation.

The U.S. Food and Drug Administration, the “FDA,” generally has authority to regulate drug promotional materials that are disseminated by or on behalf of a drug manufacturer. In January 1998, the FDA issued a Notice and Draft Guidance regarding its intent to regulate certain drug promotion and switching activities of PBMs that are controlled, directly or indirectly, by drug manufacturers. After extending the comment period due to numerous industry objections to the proposed draft, the FDA has taken no further action on the Notice and Draft Guidance. However, there can be no assurance that the FDA will not attempt again to assert jurisdiction over aspects of the Company’s PBM business in the future and, although it is not controlled directly or indirectly by any drug manufacturer, the future impact of the FDA regulation could materially adversely affect the Company’s business, results of operations, financial condition or cash flows.

Antitrust Regulation.

The federal antitrust laws regulate trade and commerce and prohibit unfair competition as defined by those laws. Section One of the Sherman Antitrust Act prohibits contracts, combinations or conspiracies in restraint of trade or commerce. Despite its sweeping language, however, Section One of the Sherman Act has been interpreted to prohibit only unreasonable restraints on competition. Section Two of the Sherman Act prohibits monopolization and attempts at monopolization. Similarly, Section Seven of the Clayton Act prohibits unlawful mergers and acquisitions. In addition, the Robinson Patman Act, which is part of the Clayton Act, prohibits a variety of conduct relating to the sale of goods, including prohibiting practices the statute defines as price discrimination. One section of the Robinson Patman Act prohibits a seller from selling goods of like grade or quality to different customers at different prices if the favorable prices are not available to all customers competing in the same class of trade. Successful plaintiffs in antitrust actions are allowed to recover treble damages for the damage sustained as a result of the violation.

Numerous lawsuits are pending against several PBMs and pharmaceutical manufacturers under various state and federal antitrust laws by retail pharmacies throughout the United States challenging certain branded drug pricing practices. The complaints allege, in part, that the defendant PBMs accepted rebates and discounts from pharmaceutical manufacturers on purchases of brand-name prescription drugs and conspired with other PBMs to fix prices in violation of the Robinson Patman Act and the Sherman Antitrust Act. The suits seek unspecified monetary damages, including treble damages, and injunctive relief. Motions to dismiss are pending in all cases.

The Company believes that it is in substantial compliance with the legal requirements imposed by such antitrust laws. However, there can be no assurance that the Company will not be subject to scrutiny or challenge under such legislation. To the extent that it appears to have actual or potential market power in a relevant market, the Company’s business arrangements and practices may be subject to heightened scrutiny under the antitrust laws. Any such challenge could have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

State Laws and Regulations Affecting the PBM Industry

The following descriptions identify various state laws and regulations that affect or may affect aspects of the Company’s PBM business.

State Anti-Remuneration/False Claims Laws.

Several states have laws and/or regulations similar to the federal healthcare Anti-Kickback Statute and Federal False Claims Act described above. Such state laws are not necessarily limited to services or items for which federally funded health

13

care program payments may be made. Such state laws may be broad enough to include improper payments made in connection with services or items that are paid by commercial payors. Both the 2006 Medco Health Solutions and 2005 Caremark Inc. settlements, discussed above under “Federal Statutes Prohibiting False Claims,” included settlement of civil claims under several state false claims laws. Sanctions for violating these state anti-remuneration and false claims laws may include injunction, imprisonment, criminal and civil fines and exclusion from participation in the state Medicaid programs. Additionally, under the Deficit Reduction Act of 2005, discussed in greater detail below, states are incentivized to pass broad false claims legislation similar to the Federal False Claims Act and there has been activity in several states during 2006 and 2007 to do so.

The Company believes that it is in substantial compliance with the legal requirements imposed by such laws and regulations. However, there can be no assurance that the Company will not be subject to scrutiny or challenge under such laws or regulations. Any such challenge could have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

State Consumer Protection Laws.

Most states have enacted consumer protection and deceptive trade laws that generally prohibit payments and other broad categories of conduct deemed harmful to consumers. These statutes may be enforced by states and/or private litigants. Such laws have been and continue to be the basis for investigations, prosecutions, and settlements of PBMs, initiated by state prosecutors as well as by private litigants.

We believe that we are in substantial compliance with the legal requirements imposed by such laws and regulations. However, no assurance can be given that we will not be subject to scrutiny or challenge under one or more of these laws, or under similar consumer protection theories.

State Comprehensive PBM Regulation.

States continue to introduce legislation to regulate PBM activities in a comprehensive manner. Legislation seeking to impose fiduciary duties or disclosure obligations on PBMs has been proposed in some states. Both Maine and the District of Columbia have enacted statutes imposing fiduciary obligations on PBMs. The U.S. District Court for the District of Columbia has enjoined enforcement of the District of Columbia statute on the grounds that the statute may cause PBMs to disclose proprietary trade secrets and may be preempted by ERISA. However, in November 2005, the First Circuit Court of Appeals upheld the Maine disclosure law, but clarified that the law applies only to contracts entered into in Maine with respect to PBM customers, or covered entities in Maine. Further, the court held that PBMs are not ERISA fiduciaries, but rather that their relationship with their customers is contractual. The U.S. Supreme Court denied review of this case in June 2006. Among other things, the Maine law also requires the benefits of certain pharmaceutical manufacturer price concessions to be passed through to PBM clients. Similarly, both North Dakota and South Dakota have relatively comprehensive PBM laws that, among other things, increase required financial transparency, and regulate therapeutic interchange programs. It is too early to speculate what effect, if any, such state laws will have on PBM business operations or the Company’s ability to negotiate and/or retain rebates and administrative fees from pharmaceutical manufacturers with respect to its customers in those states. Additionally, the Company can give no assurance that other states will not enact similar legislation and the impact of such legislation on its business operations is uncertain.

Many states have licensure or registration laws governing certain types of ancillary health care organizations, including preferred provider organizations, TPAs, companies that provide utilization review services and companies that engage in the practices of a pharmacy. The scope of these laws differs significantly from state to state, and the application of such laws to the activities of PBMs often is unclear.

The Company believes that it is in substantial compliance with all such laws and requirements where required, and continue to monitor legislative and regulatory developments. There can be no assurance, however, regarding the future interpretation of these laws and their applicability to the activities of the Company’s PBM business. Future legislation or regulation, or interpretations by regulatory and quasi-regulatory authorities of existing laws and regulations, could materially affect the cost and nature of our business as currently conducted.

Network Access Legislation.

A majority of states now have some form of legislation affecting the Company’s ability to limit access to a pharmacy provider network, referred to as any willing provider legislation, or removal of a network provider, referred to as due process legislation. Such legislation may require the Company or its clients to admit any retail pharmacy willing to meet the plan’s price and other terms for network participation, or may provide that a provider may not be removed from a network except in compliance with certain procedures. Similarly, there are any willing pharmacy provisions applicable to Medicare Part D plans with which the Company contracts. These statutes have not materially affected the Company’s business.

14

State Legislation Affecting Plan or Benefit Design.

Some states have enacted legislation that prohibits certain types of managed care plan sponsors from implementing certain restrictive design features, and many states have legislation regulating various aspects of managed care plans, including provisions relating to the pharmacy benefits. For example, some states, under so-called freedom of choice legislation, provide that members of the plan may not be required to use network providers, but must instead be provided with benefits even if they choose to use non-network providers. Other states have enacted legislation purporting to prohibit health plans from offering members financial incentives for use of mail service pharmacies. Legislation has been introduced in some states to prohibit or restrict therapeutic intervention, to require coverage of all FDA-approved drugs or to require coverage for off-label uses of drugs where those uses are recognized in peer-reviewed medical journals or reference compendia. Other states mandate coverage of certain benefits or conditions and require health plan coverage of specific drugs, if deemed medically necessary by the prescribing physician. Such legislation does not generally apply to us directly, but may apply to certain of our clients, such as HMOs and health insurers. If legislation were to become widely adopted, it could have the effect of limiting the economic benefits achievable through PBMs. This development could have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

State Regulation of Financial Risk Plans.

Fee-for-service prescription drug plans are generally not subject to financial regulation by the states. However, if a PBM offers to provide prescription drug coverage on a capitated basis or otherwise accepts material financial risk in providing the benefit, laws in various states may regulate the plan. Such laws may require that the party at risk establish reserves or otherwise demonstrate financial responsibility. Laws that may apply in such cases include insurance laws, HMO laws or limited prepaid health service plan laws. Currently, the Company does not believe that its PBM business currently incurs financial risk of the type subject to such regulation. However, if it chooses to become a regional PDP for the Medicare outpatient prescription drug benefit at some time in the future, the Company would need to comply with state laws governing risk-bearing entities in the states where it operates a PDP.

State Discount Drug Card Regulation.

Numerous states have laws and/or regulations regulating the selling, marketing, promoting, advertising or distributing of commercial discount drug cards for cash purchases. Such laws and regulations provide, generally, that any person may bring an action for damages or seek an injunction for violations. The Company administers a limited commercial discount drug card program that it does not consider material to its business. The Company believes its administration of the commercial discount drug card program is in compliance with various state laws. However, there can be no assurance that the existence of such laws will not materially impact the Company’s ability to offer certain new commercial products and/or services in the future.

Combined Federal and State Laws, Regulations and Other Standards Affecting the PBM Industry

Certain aspects of the Company’s PBM business are or may be affected by bodies of law that exist at both the federal and state levels and by other standard setting entities. Among these are the following:

Deficit Reduction Act of 2005.

The Deficit Reduction Act of 2005, the “DRA,” came into law on February 8, 2006 enacting significant changes to the Medicaid system, a state and federally funded program, with respect to prescription drugs. Among other things, the DRA revises the methodology used to determine federal upper payment limits, the maximum amount a state can reimburse, for generic drugs under Medicaid, permits stronger cost-sharing requirements applicable to Medicaid prescription drugs, and contains provisions intended to reduce fraud, waste and abuse in the Medicaid program. The DRA’s fraud, waste and abuse provisions, among other things, incentivize states to enact their own false claims acts, mirrored on the Federal False Claims Act, described above, and appropriate federal funding to increase scrutiny of the Medicaid program. The fraud, waste and abuse provisions also include a provision intended to strengthen Medicaid’s status as payer of last resort relative to private health insurance by specifying that PBMs and self-insured plans may be liable third parties. The provisions in the DRA have the potential to impact the PBM industry by means of increased prosecutorial and private litigant scrutiny of the pharmaceutical industry in general, which may include PBMs. Additionally, the DRA mandates the public availability of pharmaceutical manufacturer average manufacturer prices, or “AMPs,” and creates incentives to states to use AMPs for Medicaid reimbursement, potentially paving the way for a more general market shift in reimbursement mechanisms from average wholesale price-based methodologies to AMP-based methodologies, discussed in more detail, above, under “Legislation and Litigation Affecting Drug Prices.” Additionally, the third party recovery provisions in the DRA may lead to greater financial recoveries from third party PBMs in cases where Medicaid was not properly a primary payor on a drug claim, even where a PBM is not financially at risk.

15

Privacy and Confidentiality Legislation.

The Company’s activities involve the receipt or use of confidential medical information concerning individual members. In addition, the Company uses aggregated and anonymized data for research and analysis purposes. Many state laws restrict the use and disclosure of confidential medical information, and similar new legislative and regulatory initiatives are underway in several states. To date, no such laws adversely impact the Company’s ability to provide its services, but there can be no assurance that federal or state governments will not enact such legislation, impose restrictions or adopt interpretations of existing laws that could have a material adverse effect on its business, results of operations, financial condition or cash flows.

The final privacy regulations, the “Privacy Rule,” issued by the DHHS pursuant to the Health Information Portability and Accountability Act, “HIPAA” imposes extensive restrictions on the use and disclosure of individually identifiable health information by certain entities known under the Privacy Rule as covered entities. PBMs, in general, are not considered covered entities. However, the Company’s clients are covered entities, and are required to enter into business associate agreements with vendors, such as PBMs, that perform a function or activity for the covered entity that involves the use or disclosure of individually identifiable health information. The business associate agreements mandated by the Privacy Rule create a contractual obligation for the PBM to perform its duties for the covered entity in compliance with the Privacy Rule.

The final transactions and code sets regulation, the “Transaction Rule,” promulgated under HIPAA requires that all covered entities that engage in electronic transactions use standardized formats and code sets. It is incumbent upon PBMs to conduct all such transactions in accordance with the Transaction Rule to satisfy the obligations of their covered entity clients. DHHS promulgated a National Provider Identifiers, “NPI,” Final Rule which will require health plans to utilize NPIs in all Standard Transactions. NPIs will replace National Association of Boards of Pharmacy numbers for pharmacies, Drug Enforcement Agency numbers for physicians and similar identifiers for other health care providers.

The Company is undertaking the necessary arrangements to ensure that its standard transactions remain compliant with the Transaction Rule subsequent to the implementation of NPI Final Rule. The final security regulations, the “Security Rule,” issued pursuant to HIPAA mandate the use of administrative, physical and technical safeguards to protect the confidentiality of electronic health care information. Similarly to the other two rules issued pursuant to HIPAA, the Security Rule applies to covered entities. The Company has made the necessary arrangements to ensure compliance with the Security Rule, as it is subject to many of its requirements as a result of its contracts with covered entities.

While implementation of the Privacy Rule, Transaction Rule and the Security Rule, the “HIPAA Regulations,” is relatively new and future regulatory interpretations could alter the Company’s assessment, it currently believes that compliance with the HIPAA Regulations should not have a material adverse effect on its business operations. Also, pursuant to HIPAA, state laws that are more protective of medical information are not pre-empted by HIPAA. Therefore, to the extent states enact more protective legislation, the Company could be required to make significant changes to its business operations.

Independent of any regulatory restrictions, individual health plan sponsor clients could increase limitations on the Company’s use of medical information, which could prevent it from offering certain services.

Future Regulation.

The Company is unable to predict accurately what additional federal or state legislation or regulatory initiatives may be enacted in the future relating to its businesses or the health care industry in general, or what effect any such legislation or regulations might have on it. For example, the federal government and several state governments have proposed Patients’ Bill of Rights or other similar legislation aimed primarily at improving quality of care provided to individuals in managed care plans. Some of the initiatives propose providing greater access to drugs not included on health plan formularies, giving participants the right to sue their health plan for malpractice, and mandating an appeals or grievance process. There can be no assurance that federal or state governments will not impose additional restrictions, via a Patients’ Bill of Rights or otherwise, or adopt interpretations of existing laws that could have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

EMPLOYEES

As of December 31, 2007, the Company had 429 employees, primarily located in Lisle, Illinois, whose services are devoted full time to SXC Health Solutions Corp. and its subsidiaries. The Company has never had a work stoppage. The Company’s personnel are not represented by any collective bargaining unit and are not unionized. The Company considers its relations with its personnel to be good. The Company’s future success will depend, in part, on its ability to continue to attract, retain and motivate highly qualified technical and managerial personnel, for whom competition is intense.

16

CUSTOMERS

We generate a significant portion of our revenue from a small number of customers and for the year ended December 31, 2007, one customer accounted for 10.8% of our total revenues. The loss of this significant customer or the loss of a few customers that would be significant in the aggregate, could have a material adverse effect on our results of operations.

FINANCIAL INFORMATION ABOUT SEGMENTS

The Company operates in one reportable operating segment, which provides both recurring and non-recurring revenues from the pharmaceutical benefits management industry. Financial information about the Company’s two geographical areas is described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 1A.   RISK FACTORS

INDUSTRY RISKS

Our future growth is dependent on further market acceptance and increased market penetration of our products.

Our business model depends on our ability to sell our products and services. Achieving increased market acceptance of our products and services will require substantial sales and marketing efforts and the expenditure of significant financial and other resources to create awareness and demand by participants in the pharmaceutical supply chain. Additionally, pharmaceutical providers and payers, which may have invested substantial resources in other methods of conducting business and exchanging information, may be reluctant to purchase our products and services.

We cannot assure that pharmaceutical providers and payers will purchase our products and services. If we fail to achieve broad acceptance of our products and services by pharmaceutical providers, payers and other healthcare industry participants or if we fail to position our services as a preferred method for information management and pharmaceutical healthcare delivery, our business, financial condition and results of operations will be materially adversely affected.

The electronic healthcare information market is rapidly evolving. A number of market entrants have introduced or developed products and services that are competitive with one or more components of our offerings. We expect that additional companies will continue to enter this market. In new and rapidly evolving industries, there is significant uncertainty and risk as to the demand for, and market acceptance of, products and services. Because the markets for our products and services are evolving, we are not able to predict the size and growth rate of the markets with any certainty. We cannot assure that the markets for our products and services will continue to grow or, if they do, that they will be strong and continue to grow at a sufficient pace. If markets fail to grow, grow more slowly than expected or become saturated with competitors, our business, financial condition and results of operations will be materially adversely affected.

Competition in our industry is intense and could reduce or eliminate our profitability.

The PBM industry is very competitive. If we do not compete effectively, our business, results of operations, financial condition or cash flows could suffer. The industry is highly consolidated and dominated by a few large companies with significant resources, purchasing power and other competitive advantages, which we do not have. A limited number of firms, including national PBM companies such as Medco, Express Scripts, Inc., and CVS/Caremark Rx, Inc., have significant market share of the prescription volume. Our competitors also include drug retailers, physician practice management companies, and insurance companies/health maintenance organizations. We may also experience competition from other sources in the future. PBM companies compete primarily on the basis of price, service, reporting capabilities and clinical services. In most cases, our competitors are large, profitable and well-established companies with substantially greater financial and marketing resources than our resources.

Consolidation in the healthcare industry could materially adversely affect our business, financial condition and results of operations.

Many healthcare industry participants are consolidating to create integrated healthcare delivery systems with greater market power. As provider networks and managed care organizations consolidate, thereby decreasing the number of market participants, competition to provide products and services like ours will become more intense, and the importance of establishing relationships with key industry participants will become greater. In the past we have lost customers as a result of industry consolidation. In addition, industry participants may try to use their market power to negotiate price reductions for our products and services. Further, consolidation of management and billing services through integrated delivery systems may decrease demand for our products. If we are forced to reduce prices as a result of either an imbalance of market power or decreased demand for our products, revenue would be reduced and we could become significantly less profitable.

17

Future changes in laws or regulations in the healthcare industry could adversely affect our business.

The healthcare industry is highly regulated and is subject to changing political, economic and regulatory influences. For example, the Balanced Budget Act of 1997 (Public Law 105-32) contained significant changes to Medicare and Medicaid and had an impact for several years on healthcare providers’ ability to invest in capital intensive systems. In addition, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and Canadian privacy statutes directly impact the healthcare industry by requiring various security and privacy measures in order to ensure the protection of patient health information. More recently, increased government involvement in healthcare, such as the Medicare Prescription Drug, Improvement and Modernization Act of 2003, the Deficit Reduction Act of 2005, and other U.S. initiatives at both the federal and state level could lower reimbursement rates and otherwise change the business environment of our customers and the other entities with which we have a business relationship. Further, existing laws and regulations are subject to changing interpretation by courts, regulatory agencies, and agency officials. These factors affect the purchasing practices and operation of healthcare organizations. U.S. federal and state legislatures have periodically considered programs to reform or amend the US healthcare system and to change healthcare financing and reimbursement systems. Healthcare industry participants may respond by reducing their investments or postponing investment decisions, including investments in our product offerings. The healthcare industry is expected to continue to undergo significant changes for the foreseeable future, and we cannot predict the effect of possible future legislation and regulation on our business, financial condition and results of operations.

BUSINESS RISKS

Demands by our customers for enhanced service levels or possible loss or unfavorable modification of contracts with our customers could negatively affect our profitability.

As our customers face the continued rapid growth in prescription drug costs, they may demand additional services and enhanced service levels to help mitigate the increase in spending. We operate in a very competitive PBM environment, and as a result, may not be able to increase our fees to compensate for these increased services which could negatively affect our profitability.

Due to the term of our contracts with customers, if we are unable to renew those contracts or replace any lost customers, our future business and results of operation would be adversely affected.

Our contracts with customers generally do not have terms longer than three years and, in some cases, are terminable by the customer on relatively short notice. Our larger customers generally seek bids from other PBM providers in advance of the expiration of their contracts. In addition, we believe the managed care industry is undergoing substantial consolidation, and another party that is not our customer could acquire some of our managed care customers. In such case, the likelihood such customer would renew its PBM contract with us could be reduced.

Our business strategy of expansion through acquisitions may result in unexpected integration costs, loss of acquired business and/or dilution to existing shareholders.

We look to the acquisition of other businesses as a way to achieve our strategy of expanding our product offerings and customer base. The successful implementation of this acquisition strategy depends on our ability to identify suitable acquisition candidates, acquire companies on acceptable terms, integrate the acquired company’s operations and technology successfully with our own and maintain the goodwill of the acquired business. We are unable to predict whether or when it will be able to identify any suitable additional acquisition candidates or the likelihood that any potential acquisition will be completed. It is also possible that a potential acquisition will be dilutive to existing shareholders. In addition, while we believe it has the experience and know-how to integrate acquisitions, such efforts entail significant risks including, but not limited to:

•  a diversion of management’s attention from other business concerns;

•  failure to successfully integrate the operations, services and products of an acquired company;

•  possible inconsistencies in standards, controls, procedures and policies among the companies being combined or assimilated which would make it more difficult to implement and harmonize company-wide financial, accounting, billing, information technology and other systems;

•  possible difficulties maintaining the quality of products and services that acquired companies have historically provided;

•  required amortization of the identifiable intangible assets of an acquired business, which will reduce our net income in the years following its acquisition, and we also would be required to reduce our net income in future years if we were to experience an impairment of goodwill or other intangible assets attributable to an acquisition;

18

•  the potential loss of key employees or customers from either our current business or the business of the acquired company; and

•  the assumption of significant and/or unknown liabilities of the acquired company.

Our future success depends upon the ability to grow, and if we are unable to manage our growth effectively, we may incur unexpected expenses and be unable to meet our customers’ requirements.

An important part of our business strategy is to expand the scope of its operations, both organically and through acquisitions. We cannot be certain that our systems, procedures, controls and space will be adequate to support expansion of our operations, and we may be unable to expand and upgrade our systems and infrastructure to accommodate any future growth. Growth in operations will place significant demands on our management, financial and other resources. Our future operating results will depend on the ability of our management and key employees to successfully manage changing business conditions and to implement and improve our technical, administrative, financial control and reporting systems. Our inability to finance future growth, manage future expansion or hire and retain the personnel needed to manage our business successfully could have a material adverse effect on our business, financial condition and results of operations.

Changes in the industry pricing benchmarks could adversely affect our financial performance.

Contracts in the prescription drug industry, including our contracts with our retail pharmacy networks and with our PBM customers, generally use certain published benchmarks to establish pricing for prescription drugs. These benchmarks include, but are not limited to, average wholesale price (AWP), average manufacturer price (AMP), Wholesale Acquisition Cost (“WAC”), Actual Acquisition Cost, Alternative Benchmark Price, Direct Price, Federal Upper Limit, Maximum Reimbursable Amount, Net Wholesale Price and Suggested Wholesale Price. Most of our contracts utilize the AWP standard. Recent events have raised uncertainties as to whether payors, pharmacy providers, PBMs and others in the prescription drug industry will continue to utilize AWP as it has previously been calculated or whether other pricing benchmarks will be adopted for establishing prices within the industry. Specifically, in June 2005, a class action lawsuit was commenced in the U.S. District Court for the District of Massachusetts by New England Carpenters Health Benefits Fund against FDB, one of several companies that report data on prescription drug prices, and McKesson Company. Plaintiffs allege that defendants conspired to arbitrarily raise AWP. On October 6, 2006, a settlement was proposed between plaintiffs and defendant FDB. The terms of the settlement include FDB agreeing to (i) lower the reported AWP, (ii) cease publishing AWP after a two year notice period, and (iii) work with major participants in the healthcare industry in court approved discussions intended to facilitate the establishment of a sustainable benchmark for drug reimbursement. On June 7, 2007, the court granted preliminary approval of the terms of the proposed settlement. However, we cannot predict the precise timing of any of the proposed AWP changes upon final approval.

In the absence of any mitigating action on our part, the proposed reduction in FDB’s AWP would have a material adverse effect on the margin we earn. It may also create disruption in our retail networks due to the adverse impact on AWP-based retail pharmacy pricing. However, most of our contracts with our customers and retail pharmacies contain terms that we believe will enable us to mitigate the adverse effect of this proposed reduction in FDB’s reported AWP.

Whatever the outcome of the FDB case, we believe that payors, pharmacy providers and PBMs will begin to evaluate other pricing benchmarks as the basis for contracting for prescription drugs and benefit management services in the future.

Due to these and other uncertainties, we can give no assurance that the short or long term impact of changes to industry pricing benchmarks will not have a material adverse effect on our financial performance, results of operations and financial condition in future periods.

If we lose relationships with one or more key pharmaceutical manufacturers or if rebate payments we receive from pharmaceutical manufacturers decline, our business, results of operations, financial condition or cash flows could suffer.

We receive fees from our clients for administering a rebate program with pharmaceutical manufacturers based on the use of selected drugs by members of health plans sponsored by our clients, as well as fees for other programs and services. We believe our business, results of operations, financial condition or cash flows could suffer if:

•  we lose relationships with one or more key pharmaceutical manufacturers;

•  we are unable to finalize rebate contracts with one or more key pharmaceutical manufacturers for 2008, or are unable to negotiate interim arrangements;

•  rebates decline due to the failure of our health plan sponsors to meet market share or other thresholds;

19

•  legal restrictions are imposed on the ability of pharmaceutical manufacturers to offer rebates or purchase our programs or services;

•  pharmaceutical manufactures choose not to offer rebates or purchase our programs or services; or

•  rebates decline due to contract branded products losing their patents.

Over the next few years, as patents expire covering many brand name drugs that currently have substantial market share, generic products will be introduced that may substantially reduce the market share of these brand name drugs. Historically, manufacturers of generic drugs have not offered formulary rebates on their drugs. Our profitability could be adversely affected if the use of newly approved, brand name drugs added to formularies, does not offset any decline in use of brand name drugs whose patents expire.

Government efforts to reduce health care costs and alter health care financing practices could lead to a decreased demand for our services or to reduced rebates from manufacturers.

Efforts to control health care costs, including prescription drug costs, are underway at the federal and state government levels. Congress is also currently considering proposals to reform the U.S. health care system. These proposals may increase governmental involvement in health care and PBM services and may otherwise change the way our clients do business. Our clients and prospective clients may react to these proposals and the uncertainty surrounding them by cutting back or delaying the purchase of our PBM services, and manufacturers may react by reducing rebates or reducing supplies of certain products. These proposals could lead to a decreased demand for our services or to reduced rebates from manufacturers.

In addition, both Congress and state legislatures are expected to consider legislation to increase governmental regulation of managed care plans. Some of these initiative would, among other things, require that health plan members have greater access to drugs not included on a plan’s formulary and give health plan members the right to sue their health plans for malpractice when they have been denied care. The scope of the managed care reform proposals under consideration by Congress and state legislatures and enacted by states to date vary greatly, and we cannot predict the extent of future legislation. However, these initiatives could greatly limit our business practices and impair our ability to serve our clients.

If we are unable to compete successfully, our business, financial condition and results of operations will be adversely affected.

The market for our products and services is fragmented, intensely competitive and is characterized by rapidly changing technology, evolving industry standards and user needs and the frequent introduction of new products and services. We compete on the basis of several factors, including: breadth and depth of services; reputation; reliability, accuracy and security of its software programs; ability to enhance existing products and services; ability to introduce and gain market acceptance of new products and services quickly and in a cost-effective manner; customer service; price and cost-saving measures; and industry expertise and experience.

Some of our competitors are more established, benefit from greater name recognition and have substantially greater financial, technical and marketing resources than us. Furthermore, we expect that competition will continue to increase as a result of consolidation in both the information technology and healthcare industries. If our competitors or potential competitors were to merge or partner with one another, the change in the competitive landscape could adversely affect our ability to compete effectively.

In addition, the healthcare information technology market is characterized by rapid technological change and increasingly sophisticated and varied customer needs. To successfully compete in this market, we must continue to enhance our existing products and services, anticipate and develop new technology that addresses the needs of our existing and prospective customers and keep pace with changing industry standards on a timely and cost-effective basis. The development of our proprietary technology entails significant technical and business risks, and it may not be successful in using new technologies effectively or in adapting our proprietary technology to evolving customer requirements or industry practice. Moreover, competitors may develop products that are more efficient, less costly, or otherwise better received by the market than us. We cannot assure that we will be able to introduce new products in a timely manner, or at all, or that such products will achieve market acceptance.

There can be no assurance that we will be able to compete successfully against current and future competitors or that the competitive pressures that we face will not materially adversely affect our business, financial condition and results of operations.

20

Our software products are susceptible to undetected errors or similar problems, which may cause our systems to fail to perform properly.

Complex software such as ours often contains defects or errors that are difficult to detect, even through testing, and despite testing by us, our existing and future software products may contain errors. We strive to regularly introduce new solutions and enhancements to our products and services. If we detect any errors before introducing a product, we may have to delay commercial release for an extended period of time while the problem is addressed and in some cases may lose sales as a result of the delay. If we do not discover software errors that affect our products until after they are sold and become operational, we would need to provide enhancements to correct such errors, which would result in unexpected additional expense and diversion of resources to remedy such errors.

Any errors in our software or enhancements, regardless of whether or when they are detected or remedied, may result in harm to our reputation, product liability claims, license terminations or renegotiations, or delays in, or loss of, market acceptance of our product offerings.

Furthermore, our customers might use our software together with products from other companies. As a result, when problems occur, it might be difficult to identify the source of the problem. Even when our software does not cause these problems, the existence of these errors might cause us to incur significant costs, divert the attention of our technical personnel from development efforts, impact our reputation or cause significant customer relations problems.

We have limited experience with our informedRx expanded service offering, which could constrain our profitability.

An important strategy for us is to increase our revenue per transaction. One of the ways in which we seek to do this is through our informedRx expanded service offering. informedRx offers health plan sponsors a wide variety of pharmacy benefit management services. This service offering consists of benefit plan design, management and claims adjudication, retail pharmacy network management, formulary management and clinical services and rebate management. We are developing this business by leveraging our existing managed care customer base, technology platform and processing infrastructure. Since we do not have significant experience with offering and providing some of these services, there are considerable risks involved with this strategy.

We may be liable for the consequences of the use of incorrect or incomplete data that we provide.

We provide data, including patient clinical information, to pharmaceutical providers for their use in dispensing prescription drugs to patients. Third-party contractors provide us with most of this data. If this data is incorrect or incomplete, adverse consequences, including severe injury or death, may occur and give rise to product liability and other claims against us. In addition, a court or government agency may take the position that our delivery of health information directly, including through pharmaceutical providers, or delivery of information by a third-party site that a consumer accesses through our websites, exposes it to personal injury liability, or other liability for wrongful delivery or handling of healthcare services or erroneous health information. While we maintain product liability insurance coverage in an amount that we believe is sufficient for our business, we cannot assure that this coverage will prove to be adequate or will continue to be available on acceptable terms, if at all. A claim brought against us that is uninsured or under-insured could materially harm our business, financial condition and results of operations. Even unsuccessful claims could result in substantial costs and diversion of management resources.

It is difficult to predict the length of the sales cycle for our healthcare software solutions.

The length of the sales cycle for our healthcare software solutions is difficult to predict, as it depends on a number of factors, including the nature and size of the potential customer and the extent of the commitment being made by the potential customer. Our sales and marketing efforts with respect to pharmaceutical providers and payers generally involve a lengthy sales cycle due to these organizations’ complex decision-making processes. Additionally, in light of increased government involvement in healthcare and related changes in the operating environment for healthcare organizations, our current and potential customers may react by curtailing or deferring investments, including those for our services. In many cases, our acquisition of new business is dependent on us successfully bidding pursuant to a competitive bidding process. If potential customers take longer than we expect to decide whether to purchase our solutions, our selling expenses could increase and our revenues could decrease or be delayed, which could materially harm our business, financial condition and results of operations.

If we become subject to liability claims that are not covered by our insurance policies, we may be liable for damages and other expenses that could have a material adverse effect on our business, results of operations, financial condition or cash flows.

Various aspects of our business may subject us to litigation and liability for damages, for example, the performance of PBM services and the operation of our call centers and Web site. A successful product or professional liability claim in excess of our

21

insurance coverage where we are required to pay damages, incur legal costs or face negative publicity could have a material adverse effect on our business, results of operations, financial condition or cash flows, our business reputation and our ability to attract and retain clients, network pharmacies, and employees. While we intend to maintain professional and general liability insurance coverage at all times, we cannot provide assurances that we will be able to maintain insurance in the future, that insurance will be available on acceptable terms or that insurance will be adequate to cover any or all potential product or professional liability claims.

Our operations are vulnerable to interruption by damage from a variety of sources, many of which are not within our control.

The success of our business depends in part on our ability to operate our systems without interruption. Our products and services are susceptible to all the threats inherent in computer software and other technology-based systems. Our systems are vulnerable to, among other things, power loss and telecommunications failures, software and hardware errors, failures or crashes, computer viruses and similar disruptive problems, and fire, flood and other natural disasters. Although we take precautions to guard against and minimize damage from these and other potential risks, including implementing disaster recovery systems and procedures, they are often unpredictable and beyond our control. Any significant interruptions in our services could damage our reputation in the marketplace and have a material adverse effect on our business, financial condition and results of operations.

We are dependent on key customers.

We generate a significant portion of our revenue from a small number of customers and for the year ended December 31, 2007; one customer accounted for 10.8% of our total revenue. If our existing customers elect not to renew their contracts with us at the expiry of the current terms of those contracts, our recurring revenue base will be reduced, which could have a material adverse effect on our results of operations. Furthermore, we sell most of our computer software and services to pharmacy benefit management organizations, Blue Cross/Blue Shield organizations, managed care organizations and retail/mail-order pharmacy chains. If the healthcare benefits industry or our customers in the healthcare benefits industry experience problems, they may curtail spending on our products and services and our business and financial results could be materially adversely affected. For example, we may suffer a loss of customers if there is any significant consolidation among firms in the healthcare benefits industry or other participants in the pharmaceutical supply chain or if demand for pharmaceutical claims processing services should decline.

Many of our clients put their contract out for competitive bidding prior to expiration. Competitive bidding requires costly and time-consuming efforts on our behalf and, even after we have won such bidding processes, we can incur significant expense in proceedings or litigation contesting the adequacy or fairness of these bidding processes. We could lose clients if they cancel their agreements with us, if we fail to win a competitive bid at the time of contract renewal, if the financial condition of any of our clients deteriorates or if our clients are acquired by, or acquire, companies with which we do not have contracts. Over the past several years, self-funded employers, TPAs and other managed care companies have experienced significant consolidation. Consolidations by their very nature reduce the number of clients who may need our services. A client involved in a merger or acquisition by a company that is not a client of ours may not renew, and in some instances may terminate, its contract with us. Our clients have been and may continue to be, subject to consolidation pressures.

Our business depends on our intellectual property rights, and if we are unable to protect them, our competitive position may suffer.

We do not have any patents on our technology. Nonetheless, our business plan is predicated on our proprietary systems and technology. Accordingly, protecting our intellectual property rights is critical to our continued success and our ability to maintain our competitive position. We protect our proprietary rights through a combination of trademark, trade secret and copyright law, confidentiality and non-disclosure agreements with our employees, consultants, customers and suppliers, and limiting access to our trade secrets and technology. We cannot assure that the steps we have taken will prevent misappropriation of our technology, which could have a material adverse effect on our competitive position. Also, despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our intellectual property by reverse-engineering the functionality of our systems or otherwise obtain and use information that we regard as proprietary. Policing unauthorized use of our intellectual property is difficult and expensive, and we are unable to determine the extent, if any, to which piracy of our intellectual property exists.

In addition, we may have to engage in litigation in the future to enforce or protect our intellectual property rights, and we may incur substantial costs and the diversion of management’s time and attention as a result.

22

We may become subject to claims that we infringe the intellectual property rights of others, which, even if not successful, could have a material adverse impact on our business.

We could be subject to intellectual property infringement claims from third parties as the number of our competitors grows and our applications’ functionality overlaps with their products. There has been a substantial amount of intellectual property litigation in the information technology industries. While we do not believe that we have infringed or are infringing on any proprietary rights of third parties, we cannot assure that infringement claims will not be asserted against us or that those claims will be unsuccessful. Even if a claim brought against us is ultimately unsuccessful, we could incur substantial costs and diversion of management resources in defending any infringement claims. Furthermore, a party making a claim against us could secure a judgment awarding substantial damages as well as injunctive or other equitable relief that could effectively block our ability to develop and market our products and services. We may be required to license intellectual property from third parties in order to continue using our products, and we cannot assure that we will be able to obtain such licenses on commercially reasonable terms, or at all.

We may be unable to obtain, retain the right to use or successfully integrate third-party licensed technologies necessary for the use of our technology, which could prevent us from offering the products and services which depend upon those technologies.

We depend upon third-party licenses for some of the technology used in our solutions, and intend to continue licensing technologies from third parties. These licenses might not continue to be available to us on commercially reasonable terms or at all. Most of these licenses can be renewed only by mutual consent and may be terminated if we breach the terms of the license and fail to cure the breach within a specified period of time. Our inability to obtain or renew any of these licenses could delay development of our new product offerings or prevent us from selling our existing solutions until equivalent technology can be identified, licensed and integrated, or developed by us, and there is no assurance as to when we would be able to do so, if at all. Lack of access to required licenses from third parties could materially harm our business, financial condition and results of operations.

Most of our third-party licenses are non-exclusive. Our competitors may obtain the right to use any of the technology covered by these licenses and use the technology to compete more effectively with us. Our use of third-party technologies exposes us to risks associated with the integration of components from various sources into our solutions, such as unknown software errors or defects or unanticipated incompatibility with our systems and technologies. In addition, if our vendors choose to discontinue support of the licensed technology in the future or are unsuccessful in their continued research and development efforts, are unable to continue their business, decide to discontinue dealings with us or are acquired by a competitor or other party that does not wish to deal with us, we may not be able to modify or adapt our own solutions to use other available technologies in a timely manner, if at all.

We are subject to a number of existing laws, regulations, and industry initiatives, non-compliance with which could adversely affect our business, financial condition and results of operations.

As a participant in the healthcare industry, our operations and relationships, and those of its customers, are regulated by a number of federal, state, provincial and local governmental or regulatory requirements. We are directly subject to these statutes and regulations. We are also impacted by them indirectly, in that our products must be capable of being used by our customers in a manner that complies with those statutory and regulatory requirements. In some situations, our customers are required to ensure us and their compliance with these laws through the terms of our contracts. Our inability to enforce compliance could adversely affect the marketability of our products or expose us to liability. Because the healthcare technology industry as a whole is at a relatively early stage of development, and many of the statutes and regulations that govern the healthcare industry are also relatively recent, the application of many state, provincial and federal regulations to our business operations and to our customers is uncertain. It is possible that a review by courts or regulatory authorities of our business practices or those of our customers could result in a determination that could materially adversely affect us. The laws and regulations that most affect our business and the risks related to these regulations are further discussed in “Business — Government Regulation”.

We cannot predict whether or when future healthcare reform initiatives by US federal or state, Canadian or other foreign regulatory authorities will be proposed, enacted or implemented or what impact those initiatives may have on our business, financial condition or results of operations. Additionally, government regulation could alter the clinical workflow of physicians, hospitals and other healthcare participants, thereby limiting the utility of our products and services to existing and potential customers and resulting in a negative impact on market acceptance of our products and services.

If our security is breached, outsiders could gain access to information we are required to keep confidential, we could be subject to liability and customers could be deterred from using our services.

Our business relies on using the Internet to transmit confidential information. However, the difficulty of securely transmitting confidential information over the Internet has been a significant barrier to engaging in sensitive communications

23

over the Internet, and is an important concern of our existing and prospective customers. Publicized compromise of Internet security, including third-party misappropriation of patient information or other data, or a perception of any such security breach, may deter people from using the Internet for these purposes, which would result in an unwillingness to use our systems to conduct transactions that involve transmitting confidential healthcare information. Further, if we are unable to protect the physical and electronic security and privacy of our databases and transactions, we could be subject to potential liability and regulatory action, our reputation and customer relationships would be harmed, and our business, operations and financial results may be materially adversely affected.

We are highly dependent on senior management and key employees. Competition for our employees is intense, and we may not be able to attract and retain the highly skilled employees that we need to support our business.

Our success largely depends on the skills, experience and continued efforts of our management and other key personnel, and on our ability to continue to attract, motivate and retain highly qualified individuals. Competition for senior management and other key personnel is intense, and the pool of suitable candidates is limited. If we lose the services of one or more of our key employees, we may not be able to find a suitable replacement and our business, financial condition and results of operations could be materially adversely affected.

Our ability to provide high-quality services to our customers also depends in large part upon the experience and expertise of our employees generally. We must attract and retain highly qualified personnel with a deep understanding of the healthcare and healthcare information technology industries. We compete with a number of companies for experienced personnel and many of these companies, including customers and competitors, have greater resources than we have and may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training our employees, which increases their value to customers and competitors who may seek to recruit them and increases the cost of replacing them. If we are unable to attract or retain qualified employees, the quality of our services could diminish and we may be unable to meet our business and financial goals.

Our actual financial results may vary from our publicly disclosed forecasts.

Our actual financial results may vary from our publicly disclosed forecasts and these variations could be material and adverse. We periodically provide guidance on future financial results. These forecasts reflect numerous assumptions concerning our expected performance, as well as other factors, which are beyond our control and which may not turn out to be correct. Although we believe that the assumptions underlying our guidance and other forward-looking statements were and are reasonable when we make such statements, actual results could be materially different. Our financial results are subject to numerous risks and uncertainties, including those identified throughout these risk factors. If our actual results vary from our announced guidance, the price of our Common Shares may decline, and such a decline could be substantial. We do not undertake to update any guidance or other forward-looking information we may provide.

We may experience fluctuations in our financial results because of timing issues associated with our revenue recognition policy.

A portion of our revenue is derived from system sales, where we recognize revenue upon execution of a license agreement and shipment of the software, as long as all vendor obligations have been satisfied and collection of license fees is probable. As the costs associated with system sales are minimal, revenue and income may vary significantly based on the timing of recognition of revenue. Given that revenue from these projects is often recognized using the percentage of completion method, our revenue from these projects can vary substantially on a monthly and quarterly basis. In addition, certain contracts may contain undelivered elements or multiple deliverables, which may cause the applicable revenue to be deferred over multiple periods. Accordingly, the timing and delivery requirements of customers’ orders may have a material effect on our operations and financial results during any reporting period. In addition, to the extent that the costs required to complete a fixed price contract exceed the price quoted by us, our results may be materially adversely affected.

We may not have sufficient liquidity to fund our future capital requirements, and we may not be able to access additional capital.

Our future capital requirements will depend on many factors, including our product development programs. In order to meet capital requirements in excess of our available capital, we will consider additional public or private financings (including the issuance of additional equity securities). There can be no assurance that additional funding will be available or, if available, that it will be available on commercially acceptable terms. If adequate funds are not available, we may have to substantially reduce or eliminate expenditures for marketing, research and development and testing of our proposed products, or obtain funds through arrangements with partners that require us to relinquish rights to certain of our technologies or products. There can be no assurance that we will be able to raise additional capital if our capital resources are exhausted. A lack of liquidity and an inability to raise capital when needed would have a material adverse impact on our ability to continue our operations or expand our business.

24

If we are required to write off goodwill or other intangible assets, our financial position and results of operations would be adversely affected.

We have goodwill and other intangible assets of approximately $25.7 million and $27.2 million as of December 31, 2007 and December 31, 2006, respectively. We periodically evaluate goodwill and other intangible assets for impairment. In the future we may take charges against earnings in connection with acquisitions. Any determination requiring the write off of a significant portion of our goodwill or other intangible assets could adversely affect our results of operations and our financial condition.

Our tax filings are subject to possible review, audit and/or reassessment and we may be liable for additional taxes, interest or penalties if the final tax outcome is different from those provided for in our filings.

Although our primary operations are in the United States, we also have operations in Canada. Our income tax liability is therefore a consolidation of the tax liabilities we expect to have in various locations. Our tax rate is affected by the profitability of our operations in all locations, tax rates and systems of the countries in which we operate, our tax policies and the impact of certain tax planning strategies which we have implemented or may implement. To determine our worldwide tax liability, we make estimates of possible tax liabilities. Our tax filings, positions and strategies are subject to review under local or international tax audit and the outcomes of such reviews are uncertain. In addition, these audits generally take place years after the period in which the tax provision in question was provided and it may take a substantial amount of time before the final outcome of any audit is known. Future final tax outcomes could also differ materially from the amounts recorded in our financial statements. These differences could have a material effect on our financial position and our net income in the period such determination is made.

RISKS RELATED TO STOCK

If we are characterized as a passive foreign investment company (“PFIC”), our shareholders may be subject to adverse US federal income tax consequences.

We do not expect to be a PFIC for US federal income tax purposes for our current taxable year. However, we must make a separate determination each year as to whether we are a PFIC and we cannot assure that we will not be a PFIC for our current taxable year or any future taxable year. A non-US corporation generally will be considered a PFIC for any taxable year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income. The market value of our assets may be determined in large part by the market price of our common shares, which is likely to fluctuate. In addition, the composition of our income and assets will be affected by how, and how quickly, we use the cash we raised in our July 2006 common share offering.

In general, if we are or become a PFIC, any gain recognized on the sale of securities and any “excess distributions” (as specifically defined in the United States Internal Revenue Code of 1986, as amended (the “Code”)) paid on the securities must be ratably allocated to each day in a US taxpayer’s holding period for the securities. The amount of any such gain or excess distribution allocated to prior years of such US taxpayer’s holding period for the securities generally will be subject to US federal income tax at the highest tax applicable to ordinary income in each such prior year, and the US taxpayer will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year.

Alternatively, a US taxpayer that makes a timely qualified electing fund (“QEF”) election with respect to a PFIC in which the US taxpayer owns shares generally will be subject to US federal income tax on such taxpayer’s pro rata share of the PFIC’s “net capital gain” and “ordinary earnings” (as specifically defined under the Code), regardless of whether such amounts are actually distributed by the PFIC. US taxpayers should be aware that there can be no assurance that we will satisfy record keeping requirements or that we will supply U.S. taxpayers with the required information under the QEF rules, in event that the Company is a PFIC and a U.S. taxpayer wishes to make a QEF election. As a second alternative, a US taxpayer may make a “mark-to-market election” if we are a PFIC and our shares are “marketable stock” (as specifically defined under the Code). In general, a US taxpayer that makes a mark-to-market election generally will include in gross income, for each taxable year in which we are a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the shares as of the close of such taxable year over (b) such U.S. taxpayer’s tax basis in such shares. QEF and mark-to-market elections are generally not available with respect to warrants or convertible securities of a PFIC.

The foregoing description is a general description only, and does not seek to describe in detail the tax consequences to US investors if we should be or become a PFIC, or any other potential US tax consequences of purchasing, holding or disposing of securities of ours. Investors should consult their tax advisors concerning these potential tax consequences.

25

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to the Company.

In order to maintain our current status as a foreign private issuer (“FPI”) for U.S. securities law purposes, a majority of our common shares must be either directly or indirectly owned by non-residents of the United States, as we do not currently satisfy any of the additional requirements necessary to preserve this status. We may in the future lose our FPI status if a majority of our shares are held in the U.S. and we continue to fail to meet the additional requirements necessary to avoid loss of FPI status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than the costs the Company incurs as a Canadian foreign private issuer eligible to use the Multi-Jurisdictional Disclosure System (“MJDS”). If we are not a FPI, we would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the U.S. Securities and Exchange Commission (“SEC”), which are more detailed and extensive than the forms available to a FPI. We may also be required to prepare our financial statements in accordance with U.S. generally accepted accounting principles. In addition, we may lose the ability to rely upon exemptions from NASDAQ corporate governance requirements that are available to foreign private issuers. Further, if we engage in capital raising activities after losing our FPI status, there is a higher likelihood that investors may require us to file resale registration statements with the SEC as a condition to any such financing.

In the expectation that we may lose our FPI status, we have elected to make U.S. GAAP our primary source of accounting principles effective January 1, 2008. In preparation for such change, for our fiscal year ended December 31, 2007 we will voluntarily file with the SEC an annual report on Form 10-K, which will include our consolidated financial statements prepared in accordance with U.S. GAAP. Beginning with the first quarterly report on Form 10-Q for 2008, we will be required to include a reconciliation to Canadian GAAP for two years, ending with the 2009 annual report on Form 10-K.

RISKS RELATED TO THE NMHC ACQUISITION

Our business may be adversely affected by the NMHC Acquisition and/or the failure to consummate the acquisition.

We have spent significant time and financial resources preparing for the NMHC Acquisition. There are uncertainties and other factors that may affect our business prior to the consummation of the NMHC Acquisition, including:

•  the outcome of any litigation and judicial actions or proceedings that may be instituted against us and others relating to the NMHC Acquisition, including any legislative or regulatory action;

•  management’s attention to our day to day business and potential growth opportunities may be diverted during the pendency of the NMHC Acquisition;

•  uncertainties with respect to the NMHC Acquisition may adversely affect our existing relationships with our employees, customers and vendors; and

•  certain costs relating to the NMHC Acquisition, such as legal, accounting and financial advisory fees, are payable by us whether or not the NMHC Acquisition is completed.

Additionally, there are uncertainties and other factors that may affect the timing of the consummation of the NMHC Acquisition, as well as whether or not the NMHC Acquisition will be consummated at all, including:

•  the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

•  the failure to satisfy conditions to the consummation of the NMHC Acquisition;

•  the failure of the Company to obtain the necessary financing arrangements; and

•  the failure of the NMHC Acquisition to close for any other reason.

In the event that the NMHC Acquisition is not completed in a timely manner, or at all, we may be subject to several risks, including that the current market price of our common stock may be adversely affected, that our current plans and operations may be disrupted and the potential difficulties related to employee retention as a result of any delay of the completion of the NMHC Acquisition.

The consummation of the NMHC Acquisition is subject to a number of conditions; if these conditions are not satisfied or waived, we will not be able to consummate the transactions contemplated by the Merger Agreement.

The Merger Agreement contains a number of conditions which must be satisfied or waived prior to the closing of the acquisition. These conditions include, among others, (i) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Improvements Act of 1976, as amended, and obtaining other regulatory approvals, (ii) the effectiveness of a

26

registration statement with respect to the issuance of our common stock, (iii) accuracy of the representations and warranties of each of the Company and NMHC, (iv) that no material adverse effect will have occurred with respect to NMHC, and (v) that the Company will have available to it proceeds from a financing on terms consistent with the Debt Commitment Letter or, if unavailable, from an alternative financing described in the Merger Agreement. We cannot assure you that these conditions will be satisfied or waived and consequently whether the NMHC Acquisition will be completed.

The NMHC Acquisition is the largest acquisition we have proposed to date. We will face challenges integrating NMHC’s operations and technology and may not realize anticipated benefits.

The NMHC Acquisition is the largest acquisition we have proposed to date. There is a risk that, due to the size of the acquisition, we will be unable to effectively integrate NMHC into our operations, which would result in fewer benefits to us from this acquisition than are currently anticipated as well as increased costs. The NMHC Acquisition involves numerous integration risks, including:

•  difficulties in the assimilation of operations, services, products and personnel;

•  the diversion of management’s attention from other business concerns;

•  the potential loss of key employees;

•  the consolidation of functional areas, such as sales and marketing operations;

•  possible inconsistencies in standards, controls, procedures and policies, business cultures and compensation structures between NMHC and the Company;

•  the integration and management of the technologies and products of the two companies, including the consolidation and integration of information systems; and

•  the coordination of geographically separate organizations.

If the integration is not successful, or if we fail to implement our business strategy with respect to the acquisition, we may not be able to achieve expected results, we may not be able to support the amount of consideration paid for NMHC, and our business, financial condition and results of operations may be adversely effected.

Among the factors considered by our board of directors in connection with their approval of the merger agreement were the benefits that could result from the transaction. We cannot give any assurance that these benefits will be realized within the time periods contemplated or even that they will be realized at all.

If we experience a high turnover rate of NMHC employees after the acquisition, we may not be able to effectively integrate their operations and technology.

In order to successfully integrate NMHC’s operations and technology into our own, we will require the continued services of NMHC’s sales, software development and professional services employees after the acquisition. The pool of qualified personnel with experience in the healthcare and the healthcare information technology industries is limited. Competition for such qualified personnel can be intense, and we might not be successful in retaining NMHC’s employees. If we experience a high turnover rate for NMHC employees, we may not be able to effectively integrate NMHC’s systems and operations.

We may fail to attract new customers or lose current customers as a result of the NMHC Acquisition.

The NMHC Acquisition may cause disruptions, including potential loss of customers and other business partners, in our or NMHC’s business, which could adversely affect our business, financial condition and results of operations. We may experience difficulty in supporting and transitioning NMHC’s customers, and, consequently, certain of our current or potential new customers may cancel or defer requests for our services. If we fail to attract new customers or generate additional business from our current customers, we may not achieve our planned growth.

The market price of our common shares may decline following the transaction.

The market price of our common shares may decline following the transaction as a result of any number of factors, including:

•  if the integration efforts are unsuccessful, are more difficult than expected or longer than expected;

•  if the expected benefits of the acquisition of NMHC are not achieved as rapidly or to the extent anticipated by financial analysts or investors;

27

•  if the effect of the acquisition of NMHC on our financial results is not consistent with the expectations of financial analysts or investors;

•  changes in key management personnel;

•  changes in the business, operations or our prospects, including as a result of actions by competitors;

•  litigation and/or regulatory developments; and

•  general market and economic conditions.

Many of these factors are beyond our control.

In connection with the NMHC Acquisition, we estimate that the Company will issue approximately 2.9 million additional shares of the Company’s common stock. The increase in the number of shares of issued Company common stock may lead to sales of such shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market price of, our common stock.

The consummation of the NMHC Acquisition and future acquisitions may result in potentially dilutive issuances of our common stock.

After completion of the Merger, our current stockholders will own a smaller percentage of the combined company and its voting stock than they currently own. It is possible that the price of the common stock of the combined company will decrease following consummation of the Merger. To the extent that the price our common stock declines as a result of the belief that the value of the stock to be issued in connection with the Merger is greater than the value of the Company’s business, together with any synergies to be achieved from its combination with NMHC, the Merger could have a dilutive effect on the value of the common stock held by current Company stockholders.

If the NMHC Acquisition is completed we will assume all of NMHC’s liabilities, including contingent liabilities. If these liabilities are greater than expected, or if there are unknown NMHC obligations, our business, financial condition and results of operations could be adversely affected.

As a result of the NMHC Acquisition, the Company will assume all of NMHC’s liabilities, including contingent liabilities. We may learn additional information about NMHC’s business that adversely affects us after we acquire NMHC or issues that could affect our ability to comply with applicable laws and regulatory requirements, including laws and regulations governing the healthcare industry. Among other things, if NMHC’s liabilities are greater than expected, or if there are obligations of NMHC of which we are not aware at the time of completion of the acquisition, our business, financial condition and results of operations could be adversely affected.

Failure to obtain the approval of governmental authorities or consent of third parties under contracts of NMHC could have an adverse effect on our business following completion of the Merger.

There are a number of licenses held by NMHC and contracts to which NMHC is a party that provide that NMHC must obtain the approval of the governmental authority issuing the license or the consent of the other party to the contract, as the case may be, in connection with completion of the transaction. It is not a condition to completion of the transactions that each of these consents under these contracts be obtained or that the approval of the applicable governmental authority that issued the license be obtained, unless in the case of the licenses failure to obtain such approval would make the Merger illegal or would, individually or in the aggregate have a material adverse effect on NMHC or, after the transactions, the Company. Failure to obtain these consents and approvals could have an adverse effect on the Company.

Indebtedness incurred in connection with the NMHC Acquisition could have an adverse effect on our operations and financial condition.

In connection with the NMHC Acquisition we will enter into new $58 million Senior Secured Credit Facilities. Our significantly increased debt level and related debt service obligations following the acquisition, if consummated and will be highly leveraged following completion of the Merger:

•  will require us to dedicate significant amounts of our cash flow to the payment of principal and interest on our debt which will reduce the funds we have available for other purposes;

•  will limit our liquidity and operational flexibility in changing economic, business and competitive conditions which could require us to defer planned capital expenditures, reduce discretionary spending, and/or defer acquisitions or other strategic opportunities;

•  will impose on us additional financial and operational restrictions;

28

•  limit our ability to compete with companies that are not as highly leveraged, or whose debt is at more favorable interest rates and other terms and that, as a result, may be better positioned to withstand economic downturns; and

•  will expose us to increased interest rate risk due to variable interest rates under the Credit Facilities.

Our financial and operating performance is subject to prevailing economic and industry conditions and to financial, business and other factors, some of which are beyond our control. There can be no assurances that we will generate sufficient cash flow from operations or that future borrowings will be available to pay indebtedness or to fund our other liquidity needs.

We may not be able to generate sufficient cash to service the indebtedness incurred in connection with the NMHC Acquisition.

Our ability to make scheduled payments on our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. Based on our current and projected operations, we believe our cash flow from operations, available cash and available borrowings will be adequate to meet our liquidity needs for the foreseeable future. There can be no assurances, however, that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund other liquidity needs.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations or seek additional capital. We cannot assure you that we would be able to take any of these actions or that these actions would be successful and permit us to meet our scheduled debt service obligations. If we cannot make scheduled payments on our debt, we will be in default, and as a result our lenders could declare all outstanding principal and interest to be due and payable, foreclose against the assets securing our borrowings from them and we could be forced into bankruptcy or litigation.

The terms of the Company’s proposed financing agreements impose many restrictions on the Company. If the Company fails to comply with any of these restrictions following the Merger, if consummated, could result in acceleration of the Company’s debt.

The operating and financial restrictions and covenants set forth in the Company’s proposed financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in new business activities. The existing and proposed debt agreements restrict the Company’s ability to, among other things:

•  incur liens;

•  make loans;

•  incur additional indebtedness or make guarantees;

•  make acquisitions and investments;

•  amend or otherwise alter debt and other material agreements; and

•  engage in asset sales.

In addition, the Company’s proposed financing agreements require that the Company comply with certain financial covenants, including certain financial ratios. As a result of these covenants and ratios, the Company will be limited in the manner in which it can conduct its business, and we may be unable to engage in favorable business activities or finance future operations or capital needs. Accordingly, these restrictions may limit our ability to successfully operate the business. A failure to comply with these restrictions or to maintain the financial ratios contained in the existing and proposed debt agreements could lead to an event of default that could result in an acceleration of the indebtedness. We cannot assure you that our future operating results will be sufficient to ensure compliance with the covenants in the proposed debt agreements or to remedy any such default.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

The Company’s principal business operations are conducted from a 65,782 square foot leased office facility located at 2441 Warrenville Road, Suite 610 in Lisle, Illinois (outside of Chicago). This lease expires in January 2018.

29

The Company also leases the following office space related to its various U.S. locations:

•  22,487 square feet of office space at 738 Louis Drive, Warminster, Pennsylvania, which was assumed as a result of the HBS acquisition in 2004 and which expires in September 2008.

•  9,846 square feet of office space located at 8444 North 90th Street, Suite 100, Scottsdale, Arizona, which expires in February 2012.

•  11,127 square feet of office space located at 3025 Windward Plaza, Suite 200, Alpharetta, Georgia (outside of Atlanta), which expires in September 2012.

The Company’s Canadian operations are conducted primarily from an 8,100 square foot leased facility at 555 Industrial Drive in Milton, Ontario, which expires in May 2008. In addition, the Company leases 3,272 square feet of office space located at 3960 Quadro Street, Suite 505 in Victoria, British Columbia. This lease expires in March 2011.

We believe these properties are adequate for the Company’s current operations.

ITEM 3.   LEGAL PROCEEDINGS

From time to time we become subject to legal proceedings and claims in the ordinary course of business. Such claims, even if without merit, could result in the significant expenditure of our financial and managerial resources. We are not aware of any legal proceedings or claims that we believe will, individually or in the aggregate, materially harm our business, results of operations, financial condition or cash flows.

ITEM 4.   SUBMISSION OF MATTERS FOR A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the quarter ended December 31, 2007.

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The Company’s common stock is traded on the Toronto Stock Exchange (“TSX”) and NASDAQ Global Market (“NASDAQ”) under the symbol “SXC” and “SXCI,” respectively. Price information given for the TSX has been adjusted to give effect to the Company’s four-to-one share consolidation, which occurred on June 5, 2006. Amounts related to trading on the TSX are given in Canadian dollars. The following table sets forth for each period indicated the high and low closing prices for the Company’s common stock on the TSX:

	High		Low
2006
First quarter	C$	16.80	C$	10.40
Second quarter	C$	18.12	C$	12.30
Third quarter	C$	19.10	C$	12.75
Fourth quarter	C$	23.47	C$	17.30
2007
First quarter	C$	25.04	C$	20.83
Second quarter	C$	30.62	C$	22.05
Third quarter	C$	31.50	C$	15.65
Fourth quarter	C$	15.00	C$	11.60

30

The Company’s common stock began trading on the NASDAQ on June 23, 2006. The following table sets forth for each period indicated the high and low closing prices for the Company’s common stock on the NASDAQ:

	High		Low
2006
June 23 through June 30	$	11.80	$	10.90
Third quarter	$	17.11	$	11.32
Fourth quarter	$	20.52	$	15.33
2007
First quarter	$	21.20	$	17.91
Second quarter	$	28.77	$	19.08
Third quarter	$	31.38	$	15.63
Fourth quarter	$	15.95	$	11.45

On March 6, 2008, the closing sale price of the common stock, as reported by the TSX and NASDAQ was Cdn.$11.86 and $12.04 per share, respectively. As of March 6, 2008, there were approximately 4,766 holders of the Company’s common stock either of record or in street name.

Dividend Policy

The Company has never paid a dividend on its common stock and has no present intention on commencing the payment of cash dividends. It is possible that the Board could determine in the future, based on the Company’s financial and other relevant circumstances at that time, to pay dividends.

Stock Performance Graphs

The following graph shows a two-year comparison of cumulative returns for the Company’s stock, as compared to the Nasdaq Composite Index, as of December 31 of each year indicated. The graph assumes an initial investment of $100 was made on June 13, 2006 (the date of the initial public offering).

	Cumulative Total Return
	6/13/2006	2006	2007
SXC	$100.00	$143.46	$103.13
Nasdaq Composite	$100.00	$116.54	$127.98
S&P Healthcare index	$100.00	$111.91	$117.94

31

The following graph shows a five-year comparison of cumulative returns for the Company’s stock, as compared to TSX Composite Index, as of December 31 of each year indicated. The graph assumes an initial investment of $100 was made on January 2, 2003.

	Cumulative Total Return
	1/2/2003	2003	2004	2005	2006	2007
SXC	$100.00	$371.43	$201.43	$392.86	$837.14	$520.00
TSX Composite	$100.00	$124.29	$139.79	$170.42	$195.15	$209.13
S&P/TSX Capped Health Care Index	$100.00	$115.10	$95.05	$91.21	$92.17	$68.90

The information in this “Performance Graph” section shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934.

Recent Sales of Unregistered Securities

Not applicable.

32

ITEM 6.   SELECTED FINANCIAL DATA

The following selected financial data as at December 31, 2007, 2006 and 2005 and for each of the years in the three year period ended December 31, 2007 has been derived from the audited financial statements of the Company prepared in accordance with U.S. GAAP contained elsewhere in this annual report. The selected financial data as at December 31, 2004 and for the year ended December 31, 2004 has been constructed from the fiscal 2004 audited financial statements of the Company prepared in accordance with Canadian GAAP and reconciled to U.S. GAAP. Selected financial data for fiscal 2007, 2006, 2005, and 2004 is in accordance with U.S. GAAP. Selected financial data as at and for the 10 month period ended December 31, 2003 is presented in accordance with Canadian GAAP. The Company is unable to present these amounts in accordance with U.S. GAAP without unreasonable effort and expense. The selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements, including notes thereto.

									Ten Months Ended
	For the Years Ended December 31,								December 31,
	2007(6)		2006(4)(5)		2005(3)		2004(2)(5)		2003(1)
	(In thousands except per share data)
Statement of Operations Data:
Revenue	$	93,171	$	80,923	$	54,123	$	33,042	$	28,689
Net income	$	13,146	$	13,647	$	7,722	$	2,294	$	2,910
Net income per share, basic	$	0.63	$	0.73	$	0.52	$	0.19	$	0.27
Net income per share, diluted	$	0.61	$	0.69	$	0.50	$	0.18	$	0.25
Weighted average common shares outstanding:
Basic		20,755,372		18,710,370		14,805,857		11,844,391		10,871,681
Diluted		21,562,754		19,700,139		15,437,138		12,406,018		11,588,050
Balance Sheet Data:
Total assets	$	159,479	$	131,415	$	81,304	$	70,759	$	31,989
Long-term debt	$	—	$	—	$	13,103	$	14,184	$	8,162
Total stockholders’ equity	$	132,457	$	111,490	$	59,471	$	32,553	$	17,844

Notes:

(1)	Information is derived from the audited financial statements for the 10 months ended December 31, 2003 prepared in accordance with Canadian GAAP. On October 14, 2003, the Board of Directors of the Company approved a change in the Company’s year end from February 28 to December 31.
(2)	On December 17, 2004, the Company, through a wholly-owned subsidiary, acquired all of the outstanding shares of Health Business Systems, Inc. (“HBS”), based in Warminster, Pennsylvania, which provides retail pharmacy management systems and workflow technology. The results of operations of the acquired business are included from the date of acquisition on December 17, 2004 and for the entire year subsequently. Refer to Note 5 of the consolidated financial statements for more information.
(3)	On November 29, 2005, the Company completed a public offering in Canada of 2,250,000 common shares at a price of Cdn$10.00 per common share. The gross proceeds of the offering were $19,231,000 (Cdn.$22,500,000) Share issuance costs were approximately $1,300,000..
(4)	On June 22, 2006, the Company completed a public offering in Canada and the U.S. of 3,200,000 common shares at a price of Cdn.$13.50 per common share. The gross proceeds of the offering were $38,660,000 (Cdn.$43,200,000), excluding underwriting fees and issuance costs of $2,596,000 and $1,384,000, respectively..
(5)	As of January 1, 2004, the Company adopted the fair value method of accounting for stock-based compensation accordance with FASB Statement No. 123, Accounting for Stock-Based Compensation. In addition, effective January 1, 2006, the Company is required to apply the provisions of FASB Statement No. 123R, Share based Payment. Both standards were adopted using the modified-prospective transition method and, as a result, no stock based compensation expense was recorded for the ten months ended December 31, 2003. Refer to Note 2(t) of the consolidated financial statements for more information.
(6)	Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes and, as a result, the Company recognized an adjustment in the liability for unrecognized income tax benefits of $155,000 as a reduction in the beginning balance of retained earnings that the other years do not consider.

33

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management Discussion and Analysis (“MD&A”) of SXC Health Solutions Corp., formerly Systems Xcellence, Inc. (the “Company”) should be read in conjunction with the audited consolidated financial statements. This MD&A also contains forward looking statements and should be read in conjunction with the risk factors described in Item 1A “Risks Factors.”

Certain information in this MD&A, in various filings with regulators, in reports to shareholders and in other communications is forward-looking within the meaning of certain securities laws and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, amongst others, information with respect to the Company’s objectives and the strategies to achieve those objectives, as well as information with respect to the Company’s beliefs, plans, expectations, anticipations, estimates and intentions. There are a number of important factors that could cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include, but may not be limited to, the ability of the Company to adequately address: the risks associated with further market acceptance of the Company’s products and services; its ability to manage its growth effectively; its reliance on key customers and key personnel; industry conditions such as consolidation of customers, competitors and acquisition targets; the Company’s ability to acquire a company, manage integration and potential dilution; the impact of technology changes on its products/service offerings, including impact on the intellectual property rights of others; the impacts of regulation and legislation changes in the healthcare industry; and the sufficiency and fluctuations of its liquidity and capital needs.

When relying on forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. In making the forward-looking statements contained in this MD&A, the Company does not assume any significant acquisitions, dispositions or one-time items. It does assume, however, the renewal of certain customer contracts. Every year, the Company has major customer contracts that it needs to renew. In addition, the Company also assumes new customer contracts. In this regard, the Company is pursuing large opportunities that present a very long and complex sales cycle which substantially affect its forecasting abilities. The Company has assumed a certain timing for the realization of these opportunities which it thinks is reasonable but which may not be achieved. Furthermore, the pursuit of these larger opportunities does not ensure a linear progression of revenue and earnings since they may involve significant up-front costs followed by renewals and cancellations of existing contracts. The Company has assumed certain revenues which may not be realized. The Company has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. The foregoing list of factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. For additional information with respect to certain of these and other factors, refer to the risks and uncertainties section of Item 1A of this Form 10-K.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS MD&A REPRESENTS THE COMPANY’S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

All figures are in U.S. dollars unless otherwise stated.

Overview

Effective June 27, 2007, the Company changed its name to SXC Health Solutions Corp. from Systems Xcellence, Inc. and was continued under the Business Corporations Act (Yukon). Shareholders approved the name change and the continuance at the annual and special meeting of shareholders held on May 16, 2007.

The Company is a leading provider of healthcare information technology solutions and services to providers, payers and other participants in the pharmaceutical supply chain in North America. The Company’s product offerings include a wide range of pharmacy benefit management services and software products for managing prescription drug programs and for drug prescribing and dispensing. The Company’s solutions are available on a license basis with on-going maintenance and support or on a transaction fee basis using an Application Service Provider (“ASP”) model. The Company’s payer customers include over 70 managed care organizations, Blue Cross Blue Shield organizations, government agencies, employers and intermediaries such as Pharmacy Benefit Managers. The Company’s provider customers include over 1,400 independent, regional chain, institutional, and mail-order pharmacies. The solutions offered by the Company’s services assist both payers and providers in managing the complexity and reducing the cost of their prescription drug programs and dispensing activities.

The Company’s profitability depends primarily on revenue derived from transaction processing services, software license sales, hardware sales, maintenance, and professional services. Recurring revenue remains a cornerstone of the Company’s business model and consists of transaction processing services and maintenance. Growth in revenue from recurring sources has

34

been driven primarily by growth in the Company’s transaction processing business in the form of claims processing and pharmacy benefit administrative services (InformedRx) for its payer customers and switching services for its provider customers. Through the Company’s transaction processing business, where the Company is generally paid based on the volume of transactions processed, the Company continues to benefit from the growth in pharmaceutical drug use in the United States. The Company believes that aging demographics and increased use of prescription drugs will continue to benefit the transaction processing business. In addition to benefiting from this industry growth, the Company continues to focus on increasing recurring revenue in the transaction processing segment by adding new transaction processing customers to its existing customer base. The recognition of revenue depends on various factors including the type of service provided, contract parameters, and any undelivered elements. For information on the Company’s revenue recognition policies see the “Critical Accounting Policies and Estimates” section of this MD&A.

The Company’s expenses primarily consist of cost of revenue, product development costs and selling, general and administrative (“SG&A”) costs. Cost of revenue includes costs related to the products and services provided to customers and costs associated with the operation and maintenance of the transaction processing centers. These costs include salaries and related expenses for professional services personnel, transaction processing centers’ personnel, customer support personnel, any hardware or equipment sold to customers and depreciation expense related to its data center operations. Product development costs consist of staffing expenses to produce enhancements and new initiatives. SG&A costs relate to selling expenses, commissions, marketing, network administration and administrative costs, including legal, accounting, investor relations and corporate development costs.

2007 Financial Highlights

For the year ended December 31, 2007, the Company’s financial position and growth prospects continued to strengthen in a number of key areas. Selected financial highlights for the years ended 2007 and 2006 are noted below:

•  Total revenue increased $12.3 million, or 15%, to $93.2 million for the year ended December 31, 2007 from $80.9 million for the same period in 2006.

•  Recurring revenue (consisting of transaction processing and maintenance revenue) for the year ended December 31, 2007 represented 76% of total revenue as compared to 66% for the same period in 2006. Recurring revenue increased 32% to $70.7 million for the year ended December 31, 2007 from $53.7 million for the same period in 2006.

•  Transaction processing revenue for the year ended December 31, 2007 increased $15.5 million, or 40%, to $54.3 million as compared to the same period in 2006.

•  Maintenance revenue, which consists of maintenance contracts on system sales, increased $1.6 million, or 11%, to $16.5 million for the year ended December 31, 2007 compared to the same period in 2006.

•  Non-recurring revenue (consisting of professional services and systems sales revenue) decreased $4.8 million for the year ended December 31, 2007 to $22.4 million, representing 24% of total revenue, as compared to $27.2 million, or 34% of total revenue, for the same period in 2006.

•  Net interest income increased $3.5 million for the year ended December 31, 2007 primarily due to the proceeds from the June 2006 equity offering.

•  The Company reported net income of $13.1 million, or $0.61 per share (fully-diluted) for the year ended December 31, 2007 compared to $13.6 million, or $0.69 per share (fully-diluted) for the same period in 2006.

Pending Acquisition

On February 26, 2008, the Company announced that it had entered into a definitive agreement to acquire National Medical Health Card Systems, Inc. (“NMHC”). Pursuant to the merger agreement, Comet Merger Corporation, a newly-formed, wholly-owned subsidiary of the Company, has agreed to commence an exchange offer to acquire all of the outstanding shares of common stock of NMHC. The purchase price will be funded with a combination of cash and the Company’s stock, resulting in an estimated transaction value, as of February 25, 2008, of $143 million, or $11.00 per common and convertible preferred share of NMHC. The boards of directors of both companies have unanimously approved the transaction. In addition, NMHC’s majority shareholders, representing approximately 55% of the total NMHC shares outstanding on an as-converted basis, have agreed to tender their shares into the offer, pursuant to the terms of stockholder agreements entered into in connection with the execution of the merger agreement.

The acquisition is expected to close in the second quarter of 2008, and is subject to various closing conditions, including a requisite number of shares of NMHC common stock being tendered into the offer, the Company obtaining financing pursuant to a commitment letter and regulatory approvals. If not completed, the exchange offer will be followed by a back-end merger for the

35

same consideration as that offered in the exchange offer. Under certain circumstances, the Company and NMHC have agreed that the Company will terminate the exchange offer and will instead seek to consummate the acquisition of NMHC by a one-step merger following the adoption of the merger agreement by NMHC’s stockholders.

Pursuant to the merger agreement, NMHC stockholders will receive $7.70 in cash and 0.217 shares of the Company’s common stock for each share of NMHC common stock tendered into the offer. The amount of Company common stock to be exchanged for each share of NMHC common stock tendered in the offer is fixed at 0.217, and therefore will not change based on fluctuations or changes in the market price of either companies’ stock. The Company will issue approximately 2.9 million shares of its common stock for the transaction to be completed. In addition, the Company intends to finance a portion of the purchase price through a new $48.0 million secured term loan and a $10.0 million secured revolving credit facility.

US Corp. has received a debt commitment letter, dated as of February 25, 2008, from General Electric Capital Corporation (“GE Capital”), pursuant to which, subject to the conditions set forth therein GE Capital has agreed to provide US Corp. senior secured financing of $58 million, consisting of a $10 million senior secured revolving credit facility and a $48 million senior secured term loan. The financing will be used solely to pay the cash consideration for the offer and the second step merger as well as related transaction fees and, in the case of the senior secured revolving credit facility, for working capital and general corporate and similar purposes.

The debt commitment expires on August 1, 2008. The documentation governing the senior secured revolving credit facility and senior secured term loan has not been finalized and, accordingly, the actual terms of such facilities may differ from those described.

Results of Operations

Year ended December 31, 2007 as compared to year ended December 31, 2006

Revenue

The Company’s revenue breaks down into the following components for the years ended December 31, 2007 and 2006 (in thousands):

Products and Services	2007		2006
Recurring
Transaction Processing	$	54,273	$	38,767
Maintenance		16,476		14,931
Total Recurring		70,749		53,698
Non-Recurring
Professional Services		14,031		16,915
System Sales		8,391		10,310
Total Non-Recurring		22,422		27,225
Total Revenue	$	93,171	$	80,923

	2007			2006
Recurring services:
Revenue	$	70,749		$	53,698
Cost of revenue		30,432			22,879
Gross margin		40,317			30,819
Gross margin%		57	%		57	%
Non-Recurring services:
Revenue		22,422			27,225
Cost of revenue		9,163			11,150
Gross margin	$	13,259		$	16,075
Gross margin%		59	%		59	%

36

Total revenue increased $12.3 million, or 15%, to $93.2 million for the year ended December 31, 2007 from $80.9 million for the year ended December 31, 2006. On a percentage basis, recurring revenue accounted for 76% and 66% of consolidated revenue for 2007 and 2006, respectively. Recurring revenue consists of transaction processing and maintenance revenue.

Recurring Revenue:  Recurring revenue increased 32% to $70.7 million for the year ended December 31, 2007 from $53.7 million in 2006. This increase is due primarily to growth in the transaction processing business from the Company’s full service InformedRx offerings of claims processing and pharmacy benefit management services for the Company’s payer customers as a result of new customers, increased volumes from existing customers and maintenance services for license customers. Recurring revenue is subject to fluctuations caused by the following: the number and timing of new customers, fluctuations in transaction volumes, possible termination of contracts and the possibility that customers do not renew current contracts at the end of the term, and new customer contracts.

Transaction processing revenue, which consists of claims processing and pharmacy benefit management services, increased $15.5 million, or 40%, to $54.3 million for the year ended December 31, 2007 compared to the same period in 2006 due to the addition of new customers, as well as growth in the volume of transactions processed for existing customers. During 2007, the Company processed 404.4 million transactions compared to 310.2 million transactions processed for the same period in 2006.

Maintenance revenue, which consists of maintenance contracts on system sales, increased $1.6 million, or 11%, to $16.5 million for the year ended December 31, 2007 compared to the same period in 2006, primarily due to ongoing maintenance on a larger existing customer base as a result of continued system sales.

Non-Recurring Revenue:  Non-recurring revenue decreased 18% to $22.4 million, or 24% of total revenue, for the year ended December 31, 2007 from $27.2 million, or 34% of total revenue, for the year ended December 31, 2006.

Non-recurring revenue for 2006 was bolstered by professional services for the implementation of Medicare Part D programs for the Company’s customers. The reduction of these professional services provided during 2007 resulted in a decrease in non-recurring revenue for the year ended December 31, 2007 as compared to the same period last year.

Professional services revenue decreased $2.9 million, or 17%, to $14.0 million for the year ended December 31, 2007 compared to the same period in 2006. Professional services revenue is derived from providing support projects for both system sales and transaction processing clients, on an as-needed basis. These revenues are dependent on customers continuing to require the Company to assist them on both fixed bid and time and materials basis.

System sales are derived from license upgrades and additional applications for existing and new clients as well as software and hardware sales to pharmacies that purchase the Company’s pharmacy system. Systems sales revenue decreased $1.9 million, or 19%, to $8.4 million for the year ended December 31, 2007 compared to the same period in 2006 primarily due to fewer upgrades for existing clients with tiered license upgrade fees, which are linked to the transaction processing volumes.

Cost of Revenue

Cost of revenue increased 16% to $39.6 million for the year ended December 31, 2007 from $34.0 million for the year ended December 31, 2006. The increase is due primarily to personnel and support costs related to the growing transaction processing business. Cost of revenue includes depreciation expense of $1.5 million and $0.9 million for 2007 and 2006, respectively. This increase is due to data center hardware purchases resulting from an increase in data center capacity required to support the higher transaction processing volume.

In addition, cost of revenue includes stock-based compensation cost of $335,000 and $376,000 for 2007 and 2006, respectively. Stock-based compensation cost for 2007 includes a one-time adjustment of $12,000 in additional expense related to the incorrect determination of the accounting measurement date for options granted to new employees prior to November 2006. No restatement of prior periods is required as the amount is not material to the prior year or current year earnings. The overall decrease in stock-based compensation cost is primarily a result of fewer grants to applicable employees, partially offset by a higher fair value per option granted in 2007 as compared to 2006.

Gross Profit

Gross profit margin was 58% for the year ended December 31, 2007 compared to 58% for the year ended December 31, 2006. Gross profit remained consistent compared to prior year. During 2007 lower system sales, the majority of which is comprised of high margin upgrades to existing license customers were offset by an increase in higher-margin transaction processing revenue, among other things.

37

Product Development Costs

Product development costs for the year ended December 31, 2007 were $10.2 million, representing 11% of revenue, compared to $8.9 million, or 11% of revenue, for the year ended December 31, 2006. Product development continues to be a key focus of the Company as it continues to pursue development efforts for enhancements of existing products, as well as the development of new offerings, to support its market expansion.

Product development costs include stock-based compensation cost of $283,000 and $186,000 for 2007 and 2006, respectively. The increase is due primarily to a higher fair value per option granted in 2007 as compared to 2006.

Selling, General and Administration Costs

SG&A costs for the year ended December 31, 2007 were $26.5 million, or 28% of revenue, compared to $18.7 million, or 23% of revenue, for the year ended December 31, 2006. SG&A costs for 2007 included severance costs of approximately $0.4 million resulting from a re-alignment plan to optimize its cost structure and enhance its growth prospects. The Company reduced its workforce in the third quarter of 2007 by approximately 7% to generate cost savings, of which a portion will be re-deployed to support the fastest growing segments of the Company’s business. The Company currently has reporting obligations in both Canada and the U.S., and has engaged advisors to assist in the preparation of Sarbanes-Oxley control certifications. These additional costs as well as the costs related to the addition of new sales, marketing, finance, and administration resources during the first part of the year to support the growth of the Company’s operations resulted in higher SG&A costs for 2007 as compared to 2006.

SG&A costs include stock-based compensation cost of $2.4 million and $1.3 million for 2007 and 2006, respectively. Stock-based compensation cost for 2007 includes a one-time adjustment of $220,000 in additional expense related to the incorrect determination of the accounting measurement date for options granted to new employees prior to November 2006. No restatement of prior periods is required as the amount is not material to the prior year or current year earnings. The remaining increase is due primarily to more options granted and a higher fair value per option in 2007 as compared to 2006.

Depreciation

The Company’s depreciation expense relates to the purchase of PP&E for all areas of the Company except for those related to the cost of revenue functions. Depreciation related to cost of revenue has been included in that line item on the consolidated statements of operations as noted above in the section “Cost of Revenue.” Depreciation expense increased $0.9 million to $2.5 million for the year ended December 31, 2007 from the year ended December 31, 2006 due primarily to the purchase of assets related to the improvements of the Company’s locations in Scottsdale, Arizona and Lisle, Illinois.

Lease Termination Charge

In March 2006, the Company entered into a new operating lease for office space in Lisle, Illinois. The lease was effective February 1, 2007 and carries a term of 11 years. The Company gave notice to the lessor of the Company’s office located in Lombard, Illinois, to terminate the lease effective March 31, 2007, which was subject to an early termination fee of $0.8 million. The Company received $0.8 million from its new landlord and subsequently paid for the lease termination fee which was expensed in the first quarter of 2006. The amount received will be recognized over the term of the lease as a reduction of rent expense.

Interest Income and Expense

Interest income increased to $4.7 million for the year ended December 31, 2007 from $2.9 million for the year ended December 31, 2006 due to additional cash balances available for investment primarily from the Company’s equity offering in June 2006. Interest expense decreased to $0.1 million for 2007 from $1.9 million for the same period in 2006 due to the repayment of the Company’s long-term debt obligation using proceeds from the June 2006 equity offering.

Income Taxes

The Company’s effective tax rate for the years ended December 31, 2007 and 2006 was 25% and 17%, respectively. The effective rate for 2007 was higher primarily due to a higher statutory rate as compared to 2006, partially offset by $0.9 million related to Scientific Research and Experimental Development (“SRED”) credits utilized. In addition, during 2007 the Company recorded a $0.8 million tax liability, since the Company does not plan to indefinitely reinvest certain undistributed earnings of its U.S. operations. The liability was $0.6 million at December 31, 2007. There was no corresponding amount accrued in 2006.

Taxable benefits utilized by the Company as a result of historical net operating losses (“NOLs”) and tax-related temporary differences are recognized in accordance with SFAS No. 109, Accounting for Income Taxes. In assessing the realizability of

38

deferred tax assets (“DTAs”), management considers whether it is more likely than not that some portion or all of the DTAs will be realized. The ultimate realization of DTAs is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible, in addition to management’s tax planning strategies.

The Company’s DTA before a valuation allowance was $11.7 million at December 31, 2007 compared to $7.6 million at December 31, 2006. Of the $11.7 million of DTA, $7.4 million related to the Canadian operations (2006 - $3.6 million). The increase in the DTA was attributed to the Canadian operations, and was primarily due to deductible temporary differences arising from foreign exchange translation loss on intercompany debt amounting to $3.4 million, the recognition of investment tax credits of $0.6 million and deductible scientific research and development expenses of $1.9 million, offset by a net reduction in deductible temporary differences relating to PP&E and intangible assets of approximately $0.8 million.

The balance of the valuation allowance was $5.3 million at December 31, 2007 compared to $3.1 million at December 31, 2006. All of the valuation allowance is related to the DTA arising from the Canadian operations. In the second and third quarters of 2007, $3.6 million of the valuation allowance was released as it was determined by management that DTAs relating to Canadian NOLs are “more likely than not” to be realized in the balance of the current year and in future periods as a result of tax planning strategies that management expected to implement. This assessment was revised at year end and the valuation allowance was increased in the fourth quarter of 2007 by approximately $5.8 million due to an increase in the DTAs during the quarter and a change in the Company’s tax planning strategies, which is estimated to result in lower taxable income in the Canadian operations. Consequently, the Company has increased its valuation allowance as the Company does not believe that it is more likely than not that it will be able to realize its entire DTA relating to the Canadian operations. The amount of this valuation allowance is subject to adjustment by the Company in future periods based upon its assessment of evidence supporting the degree of probability that DTAs will be realized.

Net Income

The Company reported net income of $13.1 million for the year ended December 31, 2007, representing $0.61 per share (fully-diluted) compared to net income of $13.6 million, or $0.69 per share (fully-diluted), for the year ended December 31, 2006. Net income decreased $0.5 million primarily due to a $1.5 million increase in income tax expense and an $9.3 million increase in expenses, in particular SG&A costs, offset by a $3.5 million increase in net interest income and a $6.7 million increase in gross profit.

Year ended December 31, 2006 as compared to year ended December 31, 2005

Revenue

The Company’s revenue breaks down into the following components for the years ended December 31, 2006 and 2005 (in thousands):

Products and Services	2006		2005
Recurring
Transaction Processing	$	38,767	$	21,446
Maintenance		14,931		13,343
Total Recurring		53,698		34,789
Non-Recurring
Professional Services		16,915		11,109
System Sales		10,310		8,225
Total Non-Recurring		27,225		19,334
Total Revenue	$	80,923	$	54,123

39

	2006			2005
Recurring services:
Revenue	$	53,698		$	34,789
Cost of revenue		22,879			14,141
Gross margin		30,819			20,648
Gross margin %		57	%		59	%
Non-Recurring services:
Revenue		27,225			19,334
Cost of revenue		11,150			7,500
Gross margin	$	16,075		$	11,834
Gross margin %		59	%		61	%

Total revenue increased $26.8 million, or 50%, to $80.9 million for the year ended December 31, 2006 from $54.1 million for the year ended December 31, 2005. On a percentage basis, recurring revenue accounted for 66% and 64% of consolidated revenue for the years ended December 31, 2006 and 2005, respectively. Recurring revenue consists of transaction processing and maintenance revenue.

Recurring Revenue:  Recurring revenue increased 54% to $53.7 million for the year ended December 31, 2006 from $34.8 million in 2005. This increase is due primarily to growth in the transaction processing business from the Company’s full service InformedRx offerings of claims processing and pharmacy benefit management services for the Company’s payer customers as a result of new customers, increased volumes from existing customers and maintenance services for license customers. Recurring revenue is subject to fluctuations caused by the following: the number and timing of new customers, fluctuations in transaction volumes, possible termination of contracts, and the possibility that customers do not renew current contracts at the end of the term.

Transaction processing revenue, which consists of claims processing and pharmacy benefit management services, increased $17.4 million, or 81%, to $38.8 million for the year ended December 31, 2006 compared to the same period in 2005 due to the addition of new customers, as well as growth in the volume of transactions processed for existing customers. During 2006, the Company processed 310.2 million transactions compared to 141.1 million transactions processed for the same period in 2005.

Maintenance revenue, which consists of maintenance contracts on system sales, increased $1.6 million, or 12%, to $14.9 million for the year ended December 31, 2006 compared to the same period in 2005, primarily due to ongoing maintenance on a larger existing customer base as a result of higher system sales.

Non-Recurring Revenue:  Non-recurring revenue increased 41% to $27.2 million, or 34% of total revenue, for the year ended December 31, 2006 from $19.3 million, or 36% of total revenue, for the year ended December 31, 2005. Non-recurring revenue for 2006 was bolstered by professional services for the implementation of Medicare Part D programs for the Company’s customers.

Professional services revenue increased $5.8 million, or 52%, to $16.9 million for the year ended December 31, 2006 compared to the same period in 2005 primarily due to the consulting and implementation services performed in regards to the Medicare Part D program for existing customers, as well as some larger, long-term consulting projects for new and existing customers.

Systems sales revenue, which consists of activities related to existing and new clients, increased $2.1 million, or 26%, to $10.3 million for the year ended December 31, 2006 compared to the same period in 2005 primarily due to upgrades for existing clients with tiered license upgrade fees, which are linked to the transaction processing volumes.

Cost of Revenue

Cost of revenue increased 57% to $34.0 million for the year ended December 31, 2006 from $21.6 million for the year ended December 31, 2005. The increase is due primarily to personnel and support costs related to the growing transaction processing business. Cost of revenue includes depreciation expense of $0.9 million and $0.6 million for 2006 and 2005, respectively. This increase is due to data center hardware purchases required to support the higher transaction processing volume.

In addition, cost of revenue includes stock-based compensation cost of $376,000 and $223,000 for 2006 and 2005, respectively. The increase in stock-based compensation cost is primarily due to an increase in the number of options granted and a higher fair value per option in 2006 as compared to 2005.

40

Gross Profit

Gross profit margin was 58% for the year ended December 31, 2006 compared to 60% for the year ended December 31, 2005. Gross profit decreased primarily due to required increased expenditures to build-out the Company’s PBM services offering as well as other expenses associated with the implementation of the State of Georgia and Kroger contracts.

Product Development Costs

Product development costs for the year ended December 31, 2006 were $8.9 million, representing 11% of revenue, compared to $9.1 million, or 17% of revenue, for the year ended December 31, 2005. The decrease in product development costs is primarily due to the increased utilization of the Company’s employees for professional services projects, as opposed to focusing on development of new products. Product development continues to be a key focus of the Company as it continues to pursue development efforts for enhancements of existing products, as well as the development of new offerings, to support its market expansion.

Product development costs include stock-based compensation cost of $186,000 and $118,000 for 2006 and 2005, respectively. The increase is due primarily to an increase in the number of options granted and a higher fair value per option in 2006 as compared to 2005.

Selling, General and Administration Costs

SG&A costs for the year ended December 31, 2006 were $18.7 million, or 23% of revenue, compared to $12.9 million, or 24% of revenue, for the year ended December 31, 2005. The decrease in SG&A costs as a percentage of revenue is primarily due to the continued focus on cost control and improving operational efficiencies.

In 2006, the Company became subject to reporting obligations in both Canada and the U.S., and engaged advisors to assist in the preparation of Sarbanes-Oxley control certifications. These additional costs as well as the costs related to infrastructural and recruiting expenses to support the Company’s growth resulted in higher SG&A costs for 2006 as compared to 2005.

SG&A costs include stock-based compensation cost of $1.3 million and $0.5 million for 2006 and 2005, respectively. The increase is due primarily to an increase in the number of options granted and a higher fair value per option in 2006 as compared to 2005.

Depreciation

The Company’s depreciation expense relates to the purchase of PP&E for all areas of the Company except for those related to the cost of revenue functions. Depreciation expense increased $0.5 million to $1.6 million for the year ended December 31, 2006 from the year ended December 31, 2005 due primarily to the purchase of assets related to the improvements of the Company’s locations in Scottsdale, Arizona and Lisle, Illinois.

Lease Termination Charge

In March 2006, the Company entered into a new operating lease for office space in Lisle, Illinois. The lease was effective February 1, 2007 and carries a term of 11 years. The Company gave notice to the lessor of the Company’s office located in Lombard, Illinois, to terminate the lease effective March 31, 2007, which was subject to an early termination fee of $0.8 million. The Company received $0.8 million from its new landlord and subsequently paid for the lease termination fee which was expensed in the first quarter of 2006. The amount received will be recognized over the term of the lease as a reduction of rent expense.

Interest Income and Expense

Interest income increased to $2.9 million for the year ended December 31, 2006 from $0.5 million for the year ended December 31, 2005 due to additional cash balances available for investment primarily from the Company’s equity offering in June 2006 and November 2005. Interest expense was $1.9 million for 2006 and 2005. In July 2006, the Company repaid its long-term debt obligation using proceeds from its June 2006 equity offering.

Income Taxes

The Company recorded a net tax expense of $2.8 million in 2006 compared to a net tax recovery of $0.6 million in 2005. The change is due primarily to higher income before taxes as compared to 2005. The Company recognized DTAs totalling $3.7 million and $0.7 million in 2006 and 2005, respectively, as a result of management’s determination that the Company will be able to utilize taxable benefits attributable to historical net operating losses and tax-related timing.

41

Net Income

The Company reported net income of $13.6 million for the year ended December 31, 2006, representing $0.69 per share (fully-diluted), compared to net income of $7.7 million, or $0.50 per share (fully-diluted), for the year ended December 31, 2005. Net income increased $5.9 million primarily due to an increase in gross profit of $14.4 million and net interest income of $2.4 million, complemented by a decrease in product development costs of $0.2 million. These increases are partially offset by a one-time lease termination charge of $0.8 million and an increase in the following: SG&A costs ($5.8 million), depreciation and amortization ($0.5 million), and income taxes ($3.4 million).

Liquidity and Capital Resources

The Company’s sources of liquidity have primarily been cash provided by operating activities and proceeds from its public offerings. The Company’s principal uses of cash have been to fund working capital, finance capital expenditures, satisfy contractual obligations and to meet investment needs. The Company anticipates that these uses will continue to be the principal demands of cash in the future.

At December 31, 2007 and 2006, the Company has cash and cash equivalents totalling $90.9 million and $70.9 million, respectively. The Company believes that its cash on hand, together with cash generated from operating activities will be sufficient to support planned operations through the foreseeable future. At December 31, 2007, cash and cash equivalents consist of cash on hand, deposits in banks, and bank term deposits with original maturities of 90 days or less.

The Company has categorized its cash and cash equivalents as held-for-trading. The Company’s amounts receivable are categorized as loans and receivables and its amounts payable and accrued liabilities are classified as other liabilities. As of December 31, 2007, all of the Company’s cash and cash equivalents were exposed to market risks, primarily changes in U.S. and Canadian interest rates. Declines in interest rates over time will reduce interest income from these investments.

Consolidated Balance Sheets

At December 31, 2007, cash and cash-equivalents totalled $90.9 million, up $20.0 million from $70.9 million at December 31, 2006. The increase is primarily related to interest revenue of $4.7 million, proceeds from stock options exercised of $2.5 million, a $3.7 million increase in deferred revenue and a $1.6 million increase in pharmacy benefit management rebates payable.

PP&E increased $3.5 million to $13.6 million at December 31, 2007 from $10.1 million at December 31, 2006 as a result of data center hardware purchases throughout the year and the completion of the renovation of the Company’s Lisle, Illinois location during the first quarter of 2007, which included primarily purchases of leasehold improvements and furniture and fixtures.

Salaries and wages payable decreased $1.3 million to $2.9 million at December 31, 2007 from $4.2 million at December 31, 2006 primarily due to a reduction in the incentive bonus payable resulting from lower than anticipated Company earnings in 2007. The incentive bonus payable decreased to $0.9 million at December 31, 2007 from $2.6 million at December 31, 2006.

Deferred revenue (current and non-current) increased $3.7 million to $6.9 million at December 31, 2007 from $3.2 million at December 31, 2006 primarily due to a $2.0 million deferral in the fourth quarter of 2007 (cash was not collected) related to a new contract, which revenue will be recognized on a percentage-of-completion basis.

Deferred rent increased $0.8 million at December 31, 2007 from December 31, 2006 primarily due to the straight-line rent expense exceeding actual rent paid by the Company for its leased space in Lisle, Illinois. Certain of the Company’s leases provide for free rent periods, which resulted in lower actual rent payments as compared to rent expense incurred.

Cash flows from operating activities

For the year ended December 31, 2007, the Company generated $22.1 million of cash through its operations. Cash from operations consisted of net income of $13.1 million adjusted for $5.6 million in depreciation and amortization, $3.0 million in stock-based compensation expense, and a $0.4 million decrease in all other operating activities. Included in the change in other operating activities is a $3.7 million increase in deferred revenue as well as a $1.6 million increase in pharmacy benefit management rebates payable.

For the year ended December 31, 2006, the Company generated $18.0 million of cash through its operations, which primarily consisted of $13.6 million of net income adjusted for $4.1 million in depreciation and amortization, $1.8 million in stock-based compensation expense, the establishment of a deferred tax asset of $3.7 million, a $0.6 million increase in working capital, the write-off of $0.8 million of deferred charges related to long-term debt and $0.8 million in deferred lease inducements.

42

For the year ended December 31, 2005, the Company generated $11.8 million of cash through its operations, which primarily consisted of net income of $7.7 million adjusted for $3.3 million in depreciation and amortization, $0.8 million in stock-based compensation expense and a $1.3 million increase in working capital, partially offset by a $0.6 million gain on the sale of the Milton, Ontario real property and the establishment of an DTA of $0.7 million.

Cash flows from investing activities

For the year ended December 31, 2007, the Company used $7.3 million of cash for investing activities, which consisted of purchases of PP&E to support increased transaction volume and the cost of the relocation to new facilities.

For the year ended December 31, 2006, the Company used $6.4 million of cash for investing activities, which consisted of purchases of PP&E to support increased transaction volume activity, in addition to the relocation to new facilities.

For the year ended December 31, 2005, the Company used $22.8 million of cash for investing activities, which consisted of the acquisition of Health Business Systems, Inc. (“HBS”) and purchases of PP&E, partially offset by proceeds from the disposal of PP&E.

Cash flows from financing activities

For the year ended December 31, 2007, the Company generated $4.9 million of cash from financing activities, which consisted of $2.5 million in proceeds from the exercise of stock options. In addition, the Company recognized a non-cash tax benefit on stock options exercised of $2.4 million, which results in a reduction in income taxes payable.

For the year ended December 31, 2006, the Company generated $23.4 million of cash from financing activities, which consisted of the net proceeds from a public offering of $34.7 million, proceeds from the exercise of stock options of $0.4 million and the tax benefit on options exercised of $1.4 million. This was partially offset by the repayment of debt of $13.1 million.

For the year ended December 31, 2005, the Company generated $17.3 million of cash from financing activities, which consisted of proceeds from a public offering of $18.0 million and proceeds from the exercise of stock options of $0.4 million. This was partially offset by the repayment of debt of $1.1 million.

Future Capital Requirements

The Company’s future capital requirements depend on many factors, including its product development programs. The Company expects to fund the growth of its business through cash flow from operations and its cash and cash equivalents. The Company expects that purchases of PP&E will remain consistent with prior years. The Company cannot provide assurance that its actual cash requirements will not be greater than expected as of the date of this report. In order to meet capital requirements in excess of its available capital, the Company will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services and technologies, which might impact liquidity requirements or cause the issuance of additional equity or debt securities. Any issuance of additional equity or debt securities may result in dilution to shareholders, and the Company cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to the Company, or at all.

If sources of liquidity are not available or if it cannot generate sufficient cash flow from operations during the next twelve months, the Company might be required to obtain additional funds through operating improvements, capital markets transactions, assets sales or financing from third parties or a combination thereof. The Company cannot provide assurance that these additional sources of funds will be available or, if available, will have reasonable terms.

If adequate funds are not available, the Company may have to substantially reduce or eliminate expenditures for marketing, research and development and testing of proposed products, or obtain funds through arrangements with partners that require the Company to relinquish rights to certain of its technologies or products. There can be no assurance that the Company will be able to raise additional capital if its capital resources are exhausted. A lack of liquidity and an inability to raise capital when needed may have a material adverse impact on the Company’s ability to continue its operations or expand its business.

Pending Acquisition

On February 26, 2008, the Company announced that it had entered into a definitive agreement to acquire NMHC. The purchase price will be funded with a combination of cash and the Company’s stock, resulting in an estimated transaction value, as of February 25, 2008, of $143 million, or $11.00 per common and convertible preferred share of NMHC.

The Company intends to finance a portion of the purchase price through a new $48.0 million secured term loan and a $10.0 million secured revolving credit facility. The proceeds from the borrowings contemplated will only be used by the Company in connection with the consummation of the Merger.

43

If the Merger is consummated, the Company expects that its borrowings under the Term Loan will have a significant impact on liquidity and capital resources. In addition to significant cash outflows at the time of the transaction, which will be incurred in connection with the purchase of all outstanding NMHC stock, a greater portion of the Company’s resources will be required to fund the interest payments resulting from the debt to be incurred under the Term Loan following the Merger. This could require the Company to defer planned capital expenditures, reduce discretionary spending and/or defer other acquisitions or strategic opportunities.

Contractual Obligations

The following table summarizes the Company’s significant contractual obligations as of December 31, 2007 and the effect such obligations are expected to have on the Company’s liquidity and cash in future periods assuming all obligations reach maturity:

			Less than		Years		Years		More than
	Total		1 year		1 - 3		4 - 5		5 years
Operating leases	$	14,943	$	1,818	$	3,221	$	2,995	$	6,909
Purchase obligations(1)		721		644		77		—		—
Total	$	15,664	$	2,462	$	3,298	$	2,995	$	6,909

(1) As of December 31, 2007, certain of the Company’s vendors require payment of a penalty in the event the Company terminates the contract prior to the contractual maturity of such contract and, as such, we characterize them as purchase obligations.

The above table excludes $202,000 related to the Company’s accrued FIN 48 tax liability; the Company is unable to reliably estimate the period of cash settlement with the respective taxing authority.

Off Balance Sheet Arrangements

The Company has no off-balance sheet arrangements or derivative financial instruments.

Outstanding Securities

As of February 29, 2008 the Company had 20,994,108 common shares outstanding and 1,978,427 options outstanding. The options are exercisable on a one-for-one basis into common shares. On June 5, 2006, the Company completed a four-to-one share consolidation, all share data contained herein reflects such share consolidation.

Summary of Quarterly Results

The following quarterly data has been constructed from the unaudited interim financial statements of the Company for the eight quarters ended, and including, December 31, 2007. The following table provides summary quarterly results (unaudited) for the eight quarters prior to and including the quarter ended December 31, 2007:

	2007(1)												2006(2)
	Fourth			Third			Second			First			Fourth			Third			Second			First
	Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter
Recurring revenue	$	18,312		$	17,322		$	17,207		$	17,908		$	14,507		$	14,252		$	12,636		$	12,303
Nonrecurring revenue	$	5,240		$	4,887		$	5,881		$	6,414		$	7,505		$	6,794		$	5,892		$	7,034
Total revenue	$	23,552		$	22,209		$	23,088		$	24,322		$	22,012		$	21,046		$	18,528		$	19,337
Gross profit %		58	%		54	%		58	%		60	%		56	%		59	%		58	%		59	%
Net income	$	3,777		$	2,681		$	2,955		$	3,733		$	3,320		$	2,563		$	2,137		$	5,627
Basic EPS	$	0.18		$	0.13		$	0.14		$	0.18		$	0.16		$	0.12		$	0.12		$	0.33
Diluted EPS	$	0.18		$	0.12		$	0.14		$	0.17		$	0.15		$	0.12		$	0.12		$	0.31

(1)	Effective January 1, 2007, the Company adopted the provisions of FIN 48 retrospectively, without restatement. Refer to “Recently Adopted Accounting Standards” section below for more information. Net income for the fourth quarter of 2007 includes $47,000 in additional expense.
(2)	On June 22, 2006, the Company completed a public offering in Canada and the U.S. of 3,200,000 common shares at a price of Cdn.$13.50 per common share. The gross proceeds of the offering were $38,660,000 (Cdn.$43,200,000).

44

Critical Accounting Policies and Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the period. Significant items subject to such estimates and assumptions include revenue recognition, purchase price allocation in connection with acquisitions, the carrying amount of PP&E, the value of intangible assets acquired and related amortization periods, impairment of goodwill, contingencies and valuation allowances for receivables and future income taxes and income tax uncertainties. Actual results could differ from those estimates. Note 2 of the Company’s 2007 consolidated financial statements includes a Summary of Significant Accounting Policies. The understanding of certain accounting policies used to prepare the consolidated financial statements is critical to understanding the Company’s results of operations and financial condition.

Revenue recognition

The Company’s revenue is derived from transaction processing services, maintenance, professional services, and systems sales (including software license and hardware sales).

The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer and no uncertainties exist surrounding product acceptance; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of fees is reasonably assured.

When the Company enters into arrangements with multiple deliverables, it applies FASB Emerging Issues Task Force (“EITF”) 00-21, Revenue Arrangements with Multiple Deliverables (“EITF 00-21”), and evaluates each deliverable to determine whether it represents a separate unit of accounting based on the following criteria: (1) whether the delivered item has value to the customer on a stand-alone basis, (2) whether there is objective and reliable evidence of the fair value of the undelivered item(s), and (3) if the contract includes a general right of return relative to the delivered item, delivery of performance of the undelivered item(s) is considered probable and substantially in the control of the Company. If objective reliable evidence of fair value exists for all units of accounting in the arrangement, revenue is allocated to each unit of accounting or element based on relative fair values. In situations where there is objective and reliable evidence of fair value for all undelivered elements, but not for delivered elements, the residual method is used to allocate the contract consideration. Under the residual method, the amount of revenue allocated to delivered elements equals the total arrangement consideration less the aggregate fair value of any undelivered elements. Each unit of accounting is then accounted for under the applicable revenue recognition guidance. In cases where elements cannot be treated as separate units of accounting under EITF 00-21, the elements are combined into a single unit of accounting for revenue recognition purposes and revenue is deferred and recognized based on the revenue recognition guidance applicable to the last delivered element within the unit of accounting.

Revenue is recognized for specific types of transactions as follows:

Transaction processing revenue:  Revenue from transaction processing includes application service provider (“ASP”) and switching services. ASP services consist primarily of hosting, claims adjudication, customer support, financial reporting, on-line and off-line data storage and rebate administration services. The Company earns a transaction fee for each transaction processed. The Company recognizes revenue at the time the transaction is processed provided the related contracts include a substantive minimum monthly payment which exceeds the fair value of any undelivered elements. If a substantive monthly minimum payment does not exist in the customer contract, the fair value of any undelivered elements is deferred. The residual amount of the contract is recognized at the time the transaction is processed.

Certain ASP contracts contain performance-based revenue that is not finalized until the end of a period of time specified in the contract. Under such an arrangement, revenue is deferred until the end of the period as the Company may be obligated to pay the customer if the performance objective is not met.

Switching services consist of customers using the Company’s software to connect electronically to their insurance company either through a telephone line or the internet. Each connection is billed to the customers by the Company as an electronic claims submission otherwise known as a “switching transaction”. For switching services, the revenue is recognized as the services are performed.

System sales revenue:  Revenue from software licenses is recognized in accordance with the American Institute of Certified Public Accountant’s Statement of Position (“SOP”) No. 97-2, Software Revenue Recognition, as amended by SOP 98-9, Modification of SOP No. 97-2, Software Revenue Recognition with Respect to Certain Transactions. Revenue is recognized when all the conditions described above are satisfied. In the event the fee is not fixed or determinable, revenue is recognized as the payments become due from the customer. In cases where collectibility is not deemed probable, revenue is recognized upon receipt of cash, assuming all other criteria have been met.

45

Typically, software license agreements are multiple element arrangements as they also include professional services, related maintenance, hardware, and/or implementation services fees. Arrangements that include consulting services are evaluated to determine whether those services are considered essential to the functionality of the software.

When services are considered essential to the functionality of the software and significant customization of the software is required, license and professional services revenues are recognized using the percentage-of-completion method where reasonably dependable estimates of progress toward completion of a contract can be made in accordance with SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, as prescribed by SOP 97-2. The Company estimates the percentage-of-completion on contracts utilizing actual hours worked to date as a percentage of the total budgeted hours at project completion, subject to meeting agreed milestones. In the event that a milestone has not been reached, the associated cost is deferred and revenue is not recognized until the customer has accepted the milestone. Recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions to estimates may occur periodically during the project due to change orders or contract amendments initiated and agreed to by the customer. Revisions in profit estimates are charged to earnings in the period in which the facts that give rise to the revision become known. Contract revenue recognized, based on hours worked toward completion of the project, that are unbilled are accumulated in unbilled revenue within current assets. Billings in excess of revenue recognized to date on contracts are recorded within deferred revenue. If the Company does not have a sufficient basis to estimate the progress towards completion, revenue is recognized using the completed contract method, that is, when the project is complete or when final acceptance is received from the customer.

When services are not considered essential to the functionality of the software and significant customization of the software is required, the entire arrangement fee is allocated to each element in the arrangement based on the respective vendor specific objective evidence (“VSOE”) of the fair value of each element. VSOE used in determining the fair value of license revenues is based on the price charged by the Company when the same element is sold in similar volumes to a customer of similar size and nature on a stand-alone basis. VSOE used in determining fair value for installation, integration and training is based on the standard daily rates for the type of services being provided multiplied by the estimated time to complete the task. VSOE used in determining the fair value of maintenance and technical support is based on the annual renewal rates. The revenue allocable to the consulting services is recognized as the services are performed. In instances where VSOE exists for undelivered elements but does not exist for delivered elements of a software arrangement, the Company uses the residual method of allocation of the arrangement fees for revenue recognition purposes. If VSOE cannot be established for the undelivered elements of a license agreement, the entire amount of revenue under the arrangement is deferred until these elements have been delivered or VSOE can be established.

Maintenance revenue:  Maintenance revenues consist of revenue derived from contracts to provide post-contract customer support (“PCS”) to license holders. These revenues are recognized ratably over the term of the contract. Advance billings of PCS are not recorded to the extent that the term of the PCS has not commenced or payment has not been received.

Professional services revenue:  Professional services revenues are recognized as the services are performed, generally on a time and material basis. Professional services revenues attributed to fixed price arrangements are recognized over the service period based on a proportionate performance method whereby the performance is estimated utilizing direct labor costs incurred to date as a percentage of total estimated direct labor costs to complete the project. Adjustments to revenue due to changes in estimated direct labor hours are recognized in the period in which the change in estimate is determined.

Goodwill

Goodwill is the residual amount that results when the purchase price of an acquired business exceeds the sum of the amounts allocated to the assets acquired, less liabilities assumed, based on their fair values. Goodwill is allocated as of the date of the business combination to the Company’s reporting units that are expected to benefit from the synergies of the business combination.

Goodwill is not amortized but is tested for impairment annually at December 31, or more frequently, if events or changes in circumstances indicate that the asset might be impaired. The impairment test is carried out in two steps. In the first step, the carrying amount of the reporting unit is compared with its fair value. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step of the impairment test is unnecessary. The second step is carried out when the carrying amount of a reporting unit exceeds its fair value, in which case the implied fair value of the reporting unit’s goodwill is compared with its carrying amount to measure the amount of the impairment loss, if any. The implied fair value of goodwill is determined in the same manner as the value of goodwill is determined in a business combination using the fair value of the reporting unit as if it was the purchase price. When the carrying amount of reporting unit goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess and is presented as a separate line item in the consolidated statement of operations. The Company completed its annual goodwill impairment test at December 31, 2007, 2006 and 2005 and determined no impairment existed. During the year ended

46

December 31, 2007, no events or circumstances have occurred that suggests that the carrying amount of goodwill is no longer recoverable.

Impairment of long-lived assets

Long-lived assets or asset groups held and used, including PP&E and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; the accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its previously estimated useful life. Recoverability is assessed based on the carrying amount of the asset and the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset or asset group. An impairment loss is recognized when the carrying amount is not recoverable and exceeds the fair value of the asset or asset group. The impairment loss is measured as the amount by which the carrying amount exceeds fair value. During each of the three year periods ended December 31, 2007, 2006 and 2005 no events or circumstances occurred that indicate that the carrying amounts of the long-lived asset may not be recoverable.

Valuation of Allowance for Doubtful Accounts

In assessing the valuation of the allowance for doubtful accounts, management reviews the collectibility of accounts receivable in aggregate and on an individual account-basis. Delinquency is based primarily on contractual terms. Management then reviews the accounts receivable on an individual customer-basis to determine if events such as subsequent collections, discussions with management of the debtor companies, or other activities lead to the conclusion to either increase or decrease the calculated allowance. Any increase or decreased to the allowance are expensed to the income statement as a bad debt expense.

Contingencies

Contingencies:  From time to time in connection with its operations, the Company is named as a defendant in actions for damages and costs allegedly sustained by the plaintiffs. The Company has considered these proceedings and disputes in determining the necessity of any reserves for losses that are probable and reasonably estimable. In addition, various aspects of the Company’s business may subject it to litigation and liability for damages arising from errors in processing the pricing of prescription drug claims, failure to meet performance measures within certain contracts relating to its services performed or its ability to obtain certain levels of discounts or rebates on prescription purchases from retail pharmacies and drug manufacturers or other actions or omissions. The Company’s recorded reserves are based on estimates developed with consideration given to the potential merits of claims or quantification of any performance obligations. The Company takes into account its history of claims, the limitations of any insurance coverage, advice from outside counsel, and management’s strategy with regard to the settlement or defense against such claims and obligations. While the ultimate outcome of those claims, lawsuits or performance obligations cannot be predicted with certainty, the Company believes, based on its understanding of the facts of these claims and performance obligations, that adequate provisions have been recorded in the accounts where required.

Income taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment.

Taxable benefits utilized by the Company as a result of historical net operating losses (“NOLs”) and tax-related temporary differences are recognized in accordance with SFAS No. 109, Accounting for Income Taxes. In assessing the realizability of deferred income tax assets (“DTAs”), management considers whether it is more likely than not that some portion or all of the DTAs will be realized. The ultimate realization of DTAs is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible, in addition to management’s tax planning strategies. Management considers projected future taxable income, uncertainties related to the industry in which the Company operates, tax planning strategies, and historical taxable income comparing actual levels of taxable income with pretax book income in making this assessment. In consideration of net losses incurred, the Company has provided a valuation allowance to reduce the net carrying value of DTAs to the extent that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net carrying value of DTAs. The amount of this valuation allowance is subject to adjustment by the

47

Company in future periods based upon its assessment of evidence supporting the degree of probability that DTAs will be realized.

Refundable investment tax credits for SRED activities are recorded when the Company has reasonable assurance that the credit will be realized. Management has made a number of estimates and assumptions in determining the expenditures eligible for the investment tax credit claim. It is possible that the allowed amount of the investment tax credit claim could be materially different from the recorded amount upon assessment by Canada Revenue Agency. Refundable investment tax credits are recorded as a reduction of income tax expense on the consolidated statement of income.

Recently Adopted Accounting Standards

FASB Statement No. 123R

Effective January 1, 2006, the Company adopted the provisions of SFAS 123R, which requires all share-based payments to be recognized in the financial statements based on the grant date fair values using either a modified-prospective or modified-retrospective transition method. The Company adopted this standard using the modified — prospective method and, therefore, recognized stock-based compensation expense for any new share-based awards and awards modified, repurchased or cancelled after January 1, 2006 over the requisite service period. In addition, the Company recognizes stock-based compensation expense for previously granted unvested awards outstanding as of January 1, 2006 over the remaining portion of the requisite service period. Under SFAS 123R, the Company is required to determine the grant date fair value of the stock-based awards granted. The Company is continuing to use the Black-Scholes option pricing model to value these options. The related grant date fair value is subsequently recognized as stock-based compensation expense over the requisite service period.

FASB Interpretation No. 48

Effective January 1, 2007 the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), an interpretation of FASB Statement No. 109 Accounting for Income Taxes (“SFAS 109”). FIN 48 prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Benefits from tax positions are recognized in the consolidated financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement.

As a result of the implementation of FIN 48, the Company recognized an adjustment in the liability for unrecognized income tax benefits of $155,000 as a reduction in the beginning balance of retained earnings. As of December 31, 2007, the Company has a liability of $202,000 related to various federal and state income tax matters, all of which would impact the Company’s effective tax rate. The change from January 1, 2007 is a result of recognizing accrued interest and penalties related to the liability for unrecognized income tax benefits.

Changes in the balance of the liability for unrecognized income tax benefits are as follows (in thousands):

Amount recognized in retained earnings and opening balance of liability	$	155
Increase in interest related to tax positions taken in prior years		47
Issues settled during the year		—
Liability at December 31, 2007	$	202

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. Accrued interest at December 31, 2007 was $80,000. The Company does not expect the unrecognized tax benefits to change significantly in the next twelve months.

The Company and its subsidiary file income tax returns in Canadian and U.S. federal jurisdictions, and various provincial, state and local jurisdictions. With few exceptions, the Company is no longer subject to tax examinations by tax authorities for years prior to 2002.

SEC Staff Accounting Bulletin No. 108

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 requires that public companies utilize a “dual-approach” to assessing the quantitative effects of financial misstatements. This dual-approach includes both an

48

income statement focused assessment and a balance sheet focused assessment. The Company adopted SAB 108 effective January 1, 2006 with no impact on the Company’s consolidated financial statements.

FASB Statement No. 154

In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections (“SFAS 154”), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 provides guidance on the accounting for and reporting of changes in accounting principles and error corrections. SFAS 154 requires retrospective application to prior period’s financial statements of voluntary changes in accounting principle and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so. Certain disclosures are also required for restatements due to correction of an error. SFAS 154 is effective for accounting changes and corrections of errors, made in fiscal years beginning after December 15, 2005. The Company adopted this standard effective January 1, 2006. Its impact on the consolidated financial statements will depend on the nature of future accounting changes and the nature of transitional guidance provided in future accounting pronouncements.

Accounting Standards yet to be Adopted

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141(R)”), which applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses. SFAS 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the assets, liabilities, noncontrolling interest and goodwill related to a business combination. SFAS 141(R) also establishes what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009 and will impact the Company with respect to future business combinations entered into on or after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“SFAS 160”), which establishes accounting and reporting standards for entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. A noncontrolling interest is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. SFAS 160 is effective for the Company’s fiscal year beginning January 1, 2009 and will impact the Company with respect to future business combinations entered into on or after January 1, 2009. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 (“SFAS 159”), which permits companies to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for the Company’s fiscal year beginning January 1, 2008 and is not expected to have an impact on the Company’s consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. SFAS No. 157 is effective for the Company’s fiscal year beginning January 1, 2008. In February 2008, FSP FAS 157-2 was issued which defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis. SFAS No. 157 is not expected to have a significant impact on the Company’s consolidated financial statements.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE PRICE SENSITIVITY

As of December 31, 2007, the Company had cash and cash equivalents totaling $90.9 million, most of which earns interest at floating rates, and no long-term debt.

The Company performed a sensitivity analysis as of December 31, 2007, assuming a hypothetical one percentage point decrease in interest rates. Holding other variables constant, a one percentage point decrease in interest rates would affect the Company’s pre-tax income by approximately $0.8 million. However, actual increases or decreases in earnings in the future could differ materially from this analysis based on the timing and amount of both interest rate changes and cash held by the Company.

49

FOREIGN EXCHANGE RISK

The Company is subject to foreign exchange risk related to its operations in Canada. The Company does not enter into derivative instruments to mitigate this risk. Exposure to fluctuations in Canadian-dollar denominated transactions is partially offset by Canadian dollar-denominated assets and liabilities. The realized foreign exchange gains and losses for each of the periods presented were insignificant. The Company performed a sensitivity analysis as of December 31, 2007, assuming a hypothetical 15 percentage point decrease in the U.S. dollar to Canadian dollar exchange rate. Holding other variables constant, a 15 percentage point decrease in the exchange rate would affect the Company’s pre-tax income by approximately $0.2 million.

There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that foreign exchange rate movements are linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect income.

50

ITEM 8.   FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

SXC Health Solutions Corp.

We have audited the accompanying consolidated balance sheets of SXC Health Solutions Corp. (“the Company”) as of December 31, 2007 and 2006 and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2(t) to the consolidated financial statements, the Company changed its method of accounting for income tax uncertainties in 2007.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 14, 2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/  KPMG LLP

Chartered Accountants, Licensed Public Accountants

Toronto, Canada

March 14, 2008

51

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

SXC Health Solutions Corp.

We have audited SXC Health Solutions Corp. (“the Company”)’s internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2007, and our report dated March 14, 2008 expressed an unqualified opinion on those consolidated financial statements.

/s/  KPMG LLP

Chartered Accountants, Licensed Public Accountants

Toronto, Canada

March 14, 2008

52

SXC HEALTH SOLUTIONS CORP.

Consolidated Balance Sheets

	December 31,
	2007		2006
	(In thousands except share data)
ASSETS
Current assets
Cash and cash equivalents (note 11(a))	$	90,929	$	70,943
Accounts receivable, net of allowance for doubtful accounts of		17,990		14,312
$605 (2006 — $214)
Unbilled revenue		1,195		1,976
Prepaid expenses		2,361		2,026
Inventory		242		260
Income tax recoverable		1,073		—
Deferred income tax asset, current (note 9)		3,246		2,360
Total current assets		117,036		91,877
Property, plant and equipment, net of accumulated depreciation of
$13,004 (2006 — $10,055) (note 3)		13,629		10,114
Goodwill (note 5)		15,996		15,996
Other intangible assets, net of accumulated amortization of $4,734
(2006 — $3,150) (note 6)		9,661		11,245
Deferred income tax asset (note 9)		3,157		2,183
Total assets	$	159,479	$	131,415
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,344	$	655
Salaries and wages payable		2,909		4,183
Income taxes payable		—		594
Accrued liabilities		4,807		3,457
Pharmacy benefit management rebates payable		2,766		1,173
Pharmacy benefit claim payments payable		2,059		2,964
Deferred revenue		6,750		3,242
Total current liabilities		20,635		16,268
Accrued liabilities		764		—
Deferred income tax liability (note 9)		1,091		191
Deferred revenue		223		—
Deferred lease inducements (note 4)		3,222		3,169
Deferred rent		1,087		297
Total liabilities		27,022		19,925
Shareholders’ equity
Common stock: no par value, unlimited shares authorized; 20,985,934 issued and outstanding at December 31, 2007 (2006- 20,444,490)		103,520		99,840
Additional paid-in capital		8,299		4,003
Retained earnings		20,638		7,647
Total shareholders’ equity		132,457		111,490
Total liabilities and shareholders’ equity	$	159,479	$	131,415
Commitments and contingencies (note 13)
Subsequent events (note 18)

See accompanying notes to the consolidated financial statements.

53

SXC HEALTH SOLUTIONS CORP.

Consolidated Statements of Operations

	Years Ended December 31,
	2007			2006			2005
	(in thousands except share data)
Revenue:
Transaction processing	$	54,273		$	38,767		$	21,446
Maintenance		16,476			14,931			13,343
Professional services		14,031			16,915			11,109
System sales		8,391			10,310			8,225
Total revenue		93,171			80,923			54,123
Cost of revenue		39,595			34,029			21,641
Gross profit		53,576			46,894			32,482
Expenses:
Product development costs		10,206			8,858			9,075
Selling, general and administration		26,532			18,656			12,860
Depreciation of property, plant and equipment (note 3)		2,476			1,631			1,096
Amortization of intangible assets		1,584			1,584			1,566
Lease termination		—			758			—
		40,798			31,487			24,597
Income before the undernoted		12,778			15,407			7,885
Interest income		(4,690	)		(2,941	)		(549	)
Interest expense		112			1,867			1,896
Net interest (income) expense		(4,578	)		(1,074	)		1,347
Net loss(gain) on disposal of capital assets		133			—			(626	)
Other (income) expense		(221	)		18			—
Income before income taxes		17,444			16,463			7,164
Income tax expense (recovery):
Current		5,258			6,488			122
Deferred		(960	)		(3,672	)		(680	)
		4,298			2,816			(558	)
Net income and comprehensive income	$	13,146		$	13,647		$	7,722
Earnings per share:
Basic	$	0.63		$	0.73		$	0.52
Diluted	$	0.61		$	0.69		$	0.50

See accompanying notes to the consolidated financial statements.

54

SXC HEALTH SOLUTIONS CORP.

Consolidated Statements of Cash Flows

	Years Ended December 31,
	2007			2006			2005
	(In thousands)
Cash flow from operations:
Net income	$	13,146		$	13,647		$	7,722
Items not involving cash, net of effects from acquisition:
Stock-based compensation		3,040			1,838			844
Depreciation of property, plant and equipment		3,994			2,519			1,740
Amortization of intangible assets		1,584			1,584			1,566
Amortization of deferred lease inducements and rent		452			298			—
Write-off of deferred charges- long-term debt		—			788			188
Loss (gain) on disposal of property, plant & equipment		133			—			(626	)
Deferred income taxes		(960	)		(3,672	)		(680	)
(Gain) loss on foreign exchange		(152	)		6			(20	)
Cash received for lease inducement		—			758			—
Changes in operating assets and liabilities:
Accounts receivable		(3,678	)		(5,662	)		(8	)
Unbilled revenue		781			(974	)		(1,002	)
Prepaid expenses		(335	)		(835	)		(387	)
Inventory		18			177			(244	)
Income tax recoverable		(1,073	)		—			—
Income taxes payable		(594	)		404			(57	)
Accounts payable		689			(111	)		329
Accrued liabilities		685			2,940			1,884
Deferred revenue		3,731			111			635
Pharmacy benefit claim payments payable		(905	)		3,021			(84	)
Pharmacy benefit management rebates payable		1,593			1,173			—
Net cash provided by operations		22,149			18,010			11,800
Cash flow from investing activities:
Acquisitions		—			—			(22,611	)
Purchase of property, plant and equipment		(7,651	)		(8,887	)		(2,558	)
Lease inducements received		391			2,442			—
Proceeds from disposal of property, plant and equipment		9			—			2,343
Net cash used in investing activities		(7,251	)		(6,445	)		(22,826	)
Cash flow from financing activities:
Proceeds from exercise of options		2,531			421			421
Tax benefit on option exercises		2,405			1,433			—
Proceeds from public offering, net of issuance costs		—			34,680			17,981
Repayment of debt		—			(13,102	)		(1,081	)
Net cash provided by financing activities		4,936			23,432			17,321
Effect of foreign exchange on cash balances		152			(6	)		20
Increase in cash and cash equivalents		19,986			34,991			6,315
Cash and cash equivalents, beginning of period		70,943			35,952			29,637
Cash and cash equivalents, end of period	$	90,929		$	70,943		$	35,952
Supplemental cash flow information (note 11)

See accompanying notes to the consolidated financial statements.

55

SXC HEALTH SOLUTIONS CORP.

Consolidated Statements of Shareholders’ Equity

					Additional			Retained
	Common Stock				Paid-In			Earnings
	Number		Amount		Capital			(Deficit)			Total
	(In thousands except share data)
Balance at December 31, 2004		14,579,624	$	45,363	$	912		$	(13,722	)	$	32,553
Net income		—		—		—			7,722			7,722
Exercise of stock options		109,209		421		—			—			421
Issuance of common shares		2,250,000		17,931		—			—			17,931
Stock-based compensation		—		—		844			—			844
Balance at December 31, 2005		16,938,833	$	63,715	$	1,756		$	(6,000	)	$	59,471
Net income		—		—		—			13,647			13,647
Exercise of stock options		305,657		1,445		(1,024	)		—			421
Tax benefit on options exercised		—		—		1,433			—			1,433
Issuance of common shares		3,200,000		34,680		—			—			34,680
Stock-based compensation		—		—		1,838			—			1,838
Balance at December 31, 2006		20,444,490	$	99,840	$	4,003		$	7,647		$	111,490
Change in accounting for income tax uncertainties (note 2(t))		—		—		—			(155	)		(155	)
Balance at December 31, 2006, as revised		20,444,490	$	99,840	$	4,003		$	7,492		$	111,335
Net income		—		—		—			13,146			13,146
Exercise of stock options		541,444		3,680		(1,149	)		—			2,531
Tax benefit on options exercised		—		—		2,405			—			2,405
Stock-based compensation		—		—		3,040			—			3,040
Balance at December 31, 2007		20,985,934	$	103,520	$	8,299		$	20,638		$	132,457

See accompanying notes to the consolidated financial statements.

56

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Description of Business

SXC Health Solutions Corp. (the “Company”) is a leading provider of pharmacy benefits management services and healthcare information technology solutions to the healthcare benefits management industry. The Company’s product offerings and solutions combine a wide range of software applications, application service provider processing services and professional services designed for many of the largest organizations in the pharmaceutical supply chain, such as federal, provincial, and state and local governments, pharmacy benefit managers, managed care organizations, retail pharmacy chains and other healthcare intermediaries. The Company’s headquarters are based in Lisle, Illinois with offices in Scottsdale, Arizona; Warminster, Pennsylvania; Alpharetta, Georgia; Milton, Ontario and Victoria, British Columbia.

Effective June 27, 2007, the Company changed its name to SXC Health Solutions Corp. from Systems Xcellence, Inc. and was continued under the Business Corporations Act (Yukon). Shareholders approved the name change and the continuance at the annual and special meeting of shareholders held on May 16, 2007.

2.   Significant accounting policies

Significant accounting policies are summarized below:

(a)   Basis of presentation:

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include its wholly-owned subsidiary, SXC Health Solutions, Inc, a Texas Corporation. All significant inter-company transactions and balances have been eliminated on consolidation. Amounts in the consolidated financial statements are expressed in U.S. dollars, except where indicated.

(b)   Use of estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Significant items subject to such estimates and assumptions include revenue recognition, purchase price allocation in connection with acquisitions, valuation of property, plant and equipment, valuation of intangible assets acquired and related amortization periods, impairment of goodwill, contingencies and valuation allowances for receivables and income taxes. Actual results could differ from those estimates.

(c)   Revenue recognition:

The Company’s revenue is derived from transaction processing services, maintenance, professional services, and systems sales (including software license and hardware sales).

The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer and no uncertainties exist surrounding product acceptance; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of fees is reasonably assured.

When the Company enters into arrangements with multiple deliverables, it applies FASB Emerging Issues Task Force (“EITF”) 00-21, Revenue Arrangements with Multiple Deliverables (“EITF 00-21”), and evaluates each deliverable to determine whether it represents a separate unit of accounting based on the following criteria: (1) whether the delivered item has value to the customer on a stand-alone basis, (2) whether there is objective and reliable evidence of the fair value of the undelivered item(s), and (3) if the contract includes a general right of return relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. If objective reliable evidence of fair value exists for all units of accounting in the arrangement, revenue is allocated to each unit of accounting or element based on relative fair values. In situations where there is objective and reliable evidence of fair value for all undelivered elements, but not for delivered elements, the residual method is used to allocate the contract consideration. Under the residual method, the amount of revenue allocated to delivered elements equals the total arrangement consideration less the aggregate fair value of any undelivered elements.

Each unit of accounting is then accounted for under the applicable revenue recognition guidance. In cases where elements cannot be treated as separate units of accounting under EITF 00-21, the elements are combined into a single unit of accounting

57

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

for revenue recognition purposes and revenue is deferred and recognized based on the revenue recognition guidance applicable to the last delivered element within the unit of accounting.

Revenue is recognized for specific types of transactions as follows:

Transaction processing revenue:  Revenue from transaction processing includes application service provider (“ASP”) and switching services. ASP services consist primarily of hosting, claims adjudication, customer support, financial reporting, on-line and off-line data storage and rebate administration services. The Company earns a transaction fee for each transaction processed. The Company recognizes revenue at the time the transaction is processed provided the related contracts include a substantive minimum monthly payment which exceeds the fair value of any undelivered elements. If a substantive monthly minimum payment does not exist in the customer contract, the fair value of any undelivered elements is deferred. The residual amount of the contract is recognized at the time the transaction is processed.

Certain ASP contracts contain performance-based revenue that is not finalized until the end of a period of time specified in the contract. Under such an arrangement, revenue is deferred until the end of the period as the Company may be obligated to pay the customer if the performance objective is not met.

Switching services consist of customers using the Company’s software to connect electronically to their insurance company either through a telephone line or the internet. Each connection is billed to the customers by the Company as an electronic claims submission otherwise known as a “switching transaction”. For switching services, the revenue is recognized as the services are performed.

System sales revenue:  Revenue from software licenses is recognized in accordance with the American Institute of Certified Public Accountant’s Statement of Position (“SOP”) No. 97-2, Software Revenue Recognition, as amended by SOP 98-9, Modification of SOP No. 97-2, Software Revenue Recognition with Respect to Certain Transactions. Revenue is recognized when all the conditions described above are satisfied. In the event the fee is not fixed or determinable, revenue is recognized as the payments become due from the customer. In cases where collectibility is not deemed probable, revenue is recognized upon receipt of cash, assuming all other criteria have been met.

Typically, software license agreements are multiple element arrangements as they also include professional services, related maintenance, hardware, and/or implementation services fees. Arrangements that include consulting services are evaluated to determine whether those services are considered essential to the functionality of the software.

When services are considered essential to the functionality of the software and significant customization of the software is required, license and professional services revenues are recognized using the percentage-of-completion method where reasonably dependable estimates of progress toward completion of a contract can be made in accordance with SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, as prescribed by SOP 97-2. The Company estimates the percentage-of-completion on contracts utilizing actual hours worked to date as a percentage of the total estimated hours at project completion, subject to meeting agreed milestones. In the event that a milestone has not been reached, the associated cost is deferred and revenue is not recognized until the customer has accepted the milestone. Recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions to estimates may occur periodically during the project due to change orders or contract amendments initiated and agreed to by the customer. Revisions in profit estimates are charged to earnings in the period in which the facts that give rise to the revision become known. Contract revenue recognized, based on hours worked toward completion of the project, that are unbilled are accumulated in unbilled revenue within current assets. Billings in excess of revenue recognized to date on contracts are recorded within deferred revenue. If the Company does not have a sufficient basis to estimate the progress towards completion, revenue is recognized using the completed contract method, that is, when the project is complete or when final acceptance is received from the customer.

When services are not considered essential to the functionality of the software and significant customization of the software is required, the entire arrangement fee is allocated to each element in the arrangement based on the respective vendor specific objective evidence (“VSOE”) of the fair value of each element. VSOE used in determining the fair value of license revenues is based on the price charged by the Company when the same element is sold in similar volumes to a customer of similar size and nature on a stand-alone basis. VSOE used in determining fair value for installation, integration and training is based on the standard daily rates for the type of services being provided multiplied by the estimated time to complete the task. VSOE used in determining the fair value of maintenance and technical support is based on the annual renewal rates. The revenue allocable to the consulting services is recognized as the services are performed. In instances where VSOE exists for undelivered elements but does not exist for delivered elements of a software arrangement, the Company uses the residual method of allocation of the arrangement fees for revenue recognition purposes. If VSOE cannot be established for the undelivered elements of a license

58

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

agreement, the entire amount of revenue under the arrangement is deferred until these elements have been delivered or VSOE can be established.

Maintenance revenue:  Maintenance revenues consist of revenue derived from contracts to provide post-contract customer support (“PCS”) to license holders. These revenues are recognized ratably over the term of the contract. Advance billings of PCS are not recorded to the extent that the term of the PCS has not commenced or payment has not been received.

Professional services revenue:  Professional services revenues are recognized as the services are performed, generally on a time and material basis. Professional services revenues attributed to fixed price arrangements are recognized over the service period based on a proportionate performance method whereby the performance is estimated utilizing direct labor costs incurred to date as a percentage of total estimated direct labor costs to complete the project.

(d)   Cash and cash equivalents:

The Company considers cash on hand, deposits in banks, money market funds and bank term deposits with original maturities of 90 days or less as cash and cash equivalents. The amounts presented in the consolidated financial statements approximate the fair value of cash and cash equivalents.

(e)   Deferred charges:

Deferred charges consisted of deferred financing costs relating to the issuance of long-term debt. Amortization was provided using the effective-interest method over the term of the related debt, which prior to repayment was six years.

(f)   Inventory:

Inventory consists primarily of computer hardware and sub-licensed software held for resale and is carried at the lower of cost or net realizable value. Inventory costs are calculated using the first-in, first-out method.

(g)   Property, plant and equipment:

Property, plant and equipment (“PP&E”) are stated at cost less accumulated depreciation. Depreciation is generally calculated over the expected estimated useful lives of the assets. Assets are depreciated on the following bases and annual rates:

Asset	Basis	Rate
Furniture and equipment	Declining balance/straight line	20%/ 5 years
Computer equipment and software	Straight line	3 to 5 years
Leasehold improvements	Straight line	Over the shorter of lease term or useful life

Effective January 1, 2006, the Company adopted a new basis of depreciation for subsequent additions to a new category of furniture and equipment, straight line over 5 years on a prospective basis. Previously acquired furniture and equipment continue to be depreciated using the 20% declining balance method.

In the fourth quarter of 2006, as a result of the Company’s review of its depreciation policies, the Company changed its accounting estimate regarding the useful life of certain computer equipment. Previously, the equipment had been depreciated over three years; however, the Company determined that five years was a more reasonable useful life for certain data center computer equipment purchased after January 1, 2006. The impact of this change was not material to the consolidated financial statements.

(h)   Valuation of Allowance for Doubtful Accounts:

In assessing the valuation of the allowance for doubtful accounts, management reviews the collectibility of accounts receivable in aggregate and on an individual account-basis. Management then reviews the accounts receivable on an individual customer-basis to determine if events such as subsequent collections, discussions with management of the debtor companies, or other activities lead to the conclusion to either increase or decrease the calculated allowance. Any increase or decreased to the allowance are expensed to the income statement as a bad debt expense.

59

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(i)   Impairment of long-lived assets:

Long-lived assets or asset groups held and used, including PP&E and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; the accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its previously estimated useful life. Recoverability is assessed based on the carrying amount of the asset and the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset or asset group. An impairment loss is recognized when the carrying amount is not recoverable and exceeds the fair value of the asset or asset group. The impairment loss is measured as the amount by which the carrying amount exceeds fair value. During each of the years ended December 31, 2007, 2006 and 2005, no events or circumstances occurred that indicate that the carrying amounts of the long-lived asset may not be recoverable.

(j)   Goodwill:

Goodwill is the residual amount that results when the purchase price of an acquired business exceeds the sum of the amounts allocated to the assets acquired, less liabilities assumed, based on their fair values. Goodwill is allocated as of the date of the business combination to the Company’s reporting unit that is expected to benefit from the synergies of the business combination.

Goodwill is not amortized but is tested for impairment annually on December 31, or more frequently, if events or changes in circumstances indicate that the asset might be impaired. Circumstances that could trigger an impairment test include: a significant adverse change in the business climate or legal factors; an adverse action or assessment by a regulator; unanticipated competition; the loss of key personnel; a change in reportable segments; the likelihood that a reporting unit or significant portion of a reporting unit will be sold or otherwise disposed of; the results of testing for recoverability of a significant asset group within a reporting unit; and the recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit.

The impairment test is carried out in two steps. In the first step, the carrying amount of the reporting unit is compared with its fair value. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step of the impairment test is unnecessary. The second step is carried out when the carrying amount of a reporting unit exceeds its fair value, in which case the implied fair value of the reporting unit’s goodwill is compared with its carrying amount to measure the amount of the impairment loss, if any. The implied fair value of goodwill is determined in the same manner as the value of goodwill is determined in a business combination using the fair value of the reporting unit as if it was the purchase price. When the carrying amount of reporting unit goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess and is presented as a separate line item in the consolidated statement of operations. The Company completed its goodwill impairment test at December 31, 2007 and 2006 and determined no impairment existed.

(k)   Intangible assets:

Intangible assets acquired individually or as part of a group of other assets are initially recognized and measured at cost. The cost of a group of intangible assets acquired in a transaction, including those acquired in a business combination that meet the specified criteria for recognition apart from goodwill, is allocated to the individual assets acquired based on their fair values.

Intangible assets with finite useful lives are amortized over their estimated useful lives on a straight-line basis. The straight-line method reflects the pattern in which customer relationships are consumed, and is also used for acquired software as a consumption pattern cannot be reliably determined. Customer relationships are currently amortized over ten years and acquired software is currently amortized over five years.

(l)   Research and product development:

Research costs are expensed as incurred in accordance with FASB Statement No. 2, Accounting for Research and Development Costs. Costs related to development of software are expensed as incurred unless such costs meet the criteria for capitalization and amortization in accordance with FASB Statement No. 86, Accounting for the Costs of Computer Software to be

60

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Sold, Leased or Otherwise Marketed. The Company has not capitalized any software development costs incurred during 2007, 2006 and 2005.

Expenditures on equipment used in research and development activities are recorded as PP&E.

(m)   Investment Tax Credits:

Refundable investment tax credits for Scientific Research and Experimental Development (“SRED”) activities are recorded when the Company has reasonable assurance that the credit will be realized. Management has made a number of estimates and assumptions in determining the expenditures eligible for the investment tax credit claim. It is possible that the allowed amount of the investment tax credit claim could be materially different from the recorded amount upon assessment by the Canada Revenue Agency. Refundable investment tax credits are recorded as a reduction of income tax expense on the consolidated statements of operations.

(n)   Stock-based compensation:

Effective January 1, 2006, the Company adopted FASB Statement No. 123R Share-Based Payment (“SFAS 123R”), which revises FASB Statement No. 123, Accounting for Stock-Based Compensation (“SFAS 123”). The Company has adopted SFAS 123R using the modified-prospective method and, therefore, recognizes share-based compensation for any new share-based awards and awards modified, repurchased or cancelled after January 1, 2006 over the requisite service period. In addition, the Company recognizes stock-based compensation expense for previously unvested awards outstanding as of January 1, 2006 over the remaining portion of the requisite service period.

The Company voluntarily adopted fair value accounting for share-based awards effective January 1, 2004 (under SFAS 123) using the modified-prospective transition method. The Company did not have any deferred compensation, stock-based compensation liabilities or deferred income taxes recorded as of January 1, 2004. Share-based awards granted or modified on or after January 1, 2004, have been measured using the fair value of the award and recognized over the requisite service period. The remaining costs of these awards will be recognized over the requisite service period following the provisions of SFAS 123R.

Under SFAS 123R, the Company is required to determine the fair value of the stock-based awards granted. For stock options issued to employees and directors, compensation cost related to those awards is measured based on the fair value of the options on the date of the grant that is determined by using the Black-Scholes-Merton option-pricing model. The compensation cost of the options expected to vest is recognized straight-line over the service period as compensation expense and additional paid-in capital. In addition, SFAS 123R requires the Company estimate forfeitures as part of the initial measure of the grant date fair value of the award. The cumulative effect of the change in accounting policy for the adjustment related to the forfeitures for the prior periods was $50,000 at January 1, 2006.

For stock-based awards that are deductible for tax purposes, the cumulative compensation cost is treated as a temporary difference. If a deduction reported on a tax return exceeds the cumulative compensation cost for those awards, any resulting realized tax benefit that exceeds the previously recognized deferred tax asset for those awards (the excess tax benefit) is recognized as additional paid-in capital. If the amount deductible is less than the cumulative compensation cost recognized for financial reporting purposes the write-off of a deferred tax asset related to that deficiency, net of the related valuation allowance, if any, is first offset to the extent of any remaining additional paid-in capital from excess tax benefits from previous awards with the remainder recognized in the income statement.

(o)   Foreign currency:

The Company’s functional currency and reporting currency is the U.S. dollar. Monetary items denominated in foreign currency are translated to U.S. dollars at exchange rates in effect at the balance sheet date and non-monetary items are translated at rates in effect when the assets were acquired or obligations incurred. Revenue and expenses are translated at rates in effect at the time of the transactions. Foreign exchange gains and losses are included in the consolidated statements of operations as “Other (income) expense.”

(p)   Earnings per share:

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted average number of common shares

61

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

adjusted for the dilutive effect of outstanding stock options. The dilutive effect is calculated by assuming that the proceeds from the exercise of in-the-money stock options were used to acquire shares of common stock at the average market price for the period.

(q)   Income taxes:

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment.

Taxable benefits utilized by the Company as a result of historical net operating losses (“NOLs”) and tax-related temporary differences are recognized in accordance with SFAS No. 109, Accounting for Income Taxes. In assessing the realizability of deferred income tax assets (“DTAs”), management considers whether it is more likely than not that some portion or all of the DTAs will be realized. The ultimate realization of DTAs is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible, in addition to management’s tax planning strategies. Management considers projected future taxable income, uncertainties related to the industry in which the Company operates, tax planning strategies, and historical taxable income comparing actual levels of taxable income with pretax book income in making this assessment. In consideration of net losses incurred, the Company has provided a valuation allowance to reduce the net carrying value of DTAs to the extent that it is not more likely than not that the results of future operations will generate sufficient taxable income to realize the net carrying value of DTAs. The amount of this valuation allowance is subject to adjustment by the Company in future periods based upon its assessment of evidence supporting the degree of probability that DTAs will be realized.

(r)   Deferred lease inducements:

Deferred lease inducements represent cash inducements and tenant improvement allowances received from the Company’s landlords that are amortized against rent expense on a straight-line basis over the term of the related lease.

(s)   Deferred rent:

When the terms of an operating lease provide for periods of free rent, rent concessions and/or rent escalations, the Company records rent expense on a straight-line basis over the term of the related lease. The difference between the rent expense recognized and the actual payments made in accordance with the lease agreement is recognized as deferred rent liability.

(t)   Recently Adopted Accounting Standards:

FASB Interpretation No. 48

Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), an interpretation of FASB Statement No. 109, Accounting for Income Taxes (“SFAS 109”). FIN 48 prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Benefits from tax positions are recognized in the consolidated financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement.

As a result of the implementation of FIN 48, the Company recognized an adjustment in the liability for unrecognized income tax benefits of $155,000 as a reduction in the beginning balance of retained earnings.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

62

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

FASB Statement No. 123R

Effective January 1, 2006, the Company adopted the provisions of SFAS 123R, which requires all share-based payments to be recognized in the financial statements based on the grant date fair values using either a modified-prospective or modified-retrospective transition method. The Company adopted this standard using the modified — prospective method and, therefore, recognized stock-based compensation expense for any new share-based awards and awards modified, repurchased or cancelled after January 1, 2006 over the requisite service period. In addition, the Company recognizes stock-based compensation expense for previously granted unvested awards outstanding as of January 1, 2006 over the remaining portion of the requisite service period. Under SFAS 123R, the Company is required to determine the grant date fair value of the stock-based awards granted. The Company is continuing to use the Black-Scholes option pricing model to value these options. The related grant date fair value is subsequently recognized as stock-based compensation expense over the requisite service period.

SEC Staff Accounting Bulletin No. 108

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 requires that public companies utilize a “dual-approach” to assessing the quantitative effects of financial misstatements. This dual-approach includes both an income statement focused assessment and a balance sheet focused assessment. The Company adopted SAB 108 effective January 1, 2006 with no impact on the Company’s consolidated financial statements.

FASB Statement No. 154

In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections (“SFAS 154”), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 provides guidance on the accounting for and reporting of changes in accounting principles and error corrections. SFAS 154 requires retrospective application to prior period’s financial statements of voluntary changes in accounting principle and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so. Certain disclosures are also required for restatements due to correction of an error. SFAS 154 is effective for accounting changes and corrections of errors, made in fiscal years beginning after December 15, 2005. The Company adopted this standard effective January 1, 2006. Its impact on the consolidated financial statements will depend on the nature of future accounting changes and the nature of transitional guidance provided in future accounting pronouncements.

(u)   Accounting Standards yet to be Adopted:

In December 2007, the FASB issued Statement No. 141 (revised 2007), Business Combinations (“SFAS 141(R)”), which applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses. SFAS 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the assets, liabilities, noncontrolling interest and goodwill related to a business combination. SFAS 141(R) also establishes what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009 and will impact the Company with respect to future business combinations entered into on or after January 1, 2009.

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“SFAS 160”), which establishes accounting and reporting standards for entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. A noncontrolling interest is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. SFAS 160 is effective for the Company’s fiscal year beginning January 1, 2009 and will impact the Company with respect to future business combinations entered into on or after January 1, 2009.

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 (“SFAS 159”), which permits companies to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective for the Company’s fiscal year beginning January 1, 2008 and is not expected to have an impact on the Company’s consolidated financial statements.

63

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“SFAS 157”), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. SFAS 157 is effective for the Company’s fiscal year beginning January 1, 2008. In February 2008, FSP FAS 157-2 was issued which defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis. SFAS 157 is not expected to have a significant impact on the Company’s consolidated financial statements.

3.   Property, plant and equipment

			Accumulated			Net Book
December 31, 2007	Cost		Depreciation			Value
			(In thousands)
Furniture and equipment	$	2,680	$	(1,296	)	$	1,384
Computer equipment and software		19,712		(10,842	)		8,870
Leasehold improvements		4,241		(866	)		3,375
	$	26,633	$	(13,004	)	$	13,629

			Accumulated			Net Book
December 31, 2006	Cost		Depreciation			Value
			(In thousands)
Furniture and equipment	$	2,429	$	(944	)	$	1,485
Computer equipment and software		14,157		(8,436	)		5,721
Leasehold improvements		3,583		(675	)		2,908
	$	20,169	$	(10,055	)	$	10,114

Depreciation expense totaled $4.0 million, $2.5 million and $1.7 million for the years ended December 31, 2007, 2006 and 2005, respectively. Of the total depreciation expense, $1.5 million, $0.9 million and $0.6 million was related to the data center operations and allocated to cost of revenue for the years ended December 31, 2007, 2006 and 2005, respectively.

4.   Deferred lease inducements

The following table summarizes activity related to deferred lease inducements for the years ended December 31, 2007 and 2006 (in thousands):

Balance, December 31, 2005	$	—
Additions		3,200
Amortization		(31	)
Balance, December 31, 2006		3,169
Additions		391
Amortization		(338	)
Balance, December 31, 2007	$	3,222

During 2006, the Company entered into two new operating lease agreements for new office space in Lisle, Illinois and Scottsdale, Arizona. As part of these agreements, the Company received certain lease inducements including cash and tenant improvement allowances. The inducements are amortized on a straight-line basis over the term of the lease as a reduction of rent expense.

During 2006, gross lease inducements totalled $3,200,000, of which $758,000 was received in cash as reimbursement for the lease termination fee paid by the Company to the lessor of the U.S. headquarters located in Lombard, Illinois to terminate the lease effective March 31, 2007. The remaining $2,442,000 represents amounts paid by the landlord for leasehold improvements and other assets related to the leased facility acquired on behalf of the Company, as per the lease agreement.

64

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During 2007, additions to gross lease inducements represents amounts paid by the landlord for leasehold improvements related to the leased facility acquired on behalf of the Company, as per the lease agreement.

5.   Goodwill

On December 17, 2004, the Company, through a wholly-owned subsidiary, acquired all of the outstanding shares of Health Business Systems, Inc. (“HBS”), based in Warminster, Pennsylvania, which provides retail pharmacy management systems and workflow technology.

On the date of the acquisition, the Company issued $18 million in notes payable, and agreed to pay $2 million of contingent consideration dependent upon financial earn-out targets. In January 2005, the Company paid $18 million in cash in settlement of the notes it had issued to the shareholders of HBS on the acquisition date. In June 2005, the Company paid $2 million to an interest-bearing escrow account, subject to specified earn-out targets being met. The contingency was resolved in September 2006 and the additional $2 million consideration was reclassified from “Other assets” to “Goodwill.” During January 2007, the $2 million was released from escrow and paid to the former shareholders of HBS.

6.   Other intangible assets

	Gross		Accumulated			Net Book
December 31, 2007	Amount		Amortization			Value
			(In thousands)
Customer relationships	$	12,950	$	(3,874	)	$	9,076
Acquired software		1,445		(860	)		585
Total	$	14,395	$	(4,734	)	$	9,661

	Gross		Accumulated			Net Book
December 31, 2006	Amount		Amortization			Value
			(In thousands)
Customer relationships	$	12,950	$	(2,579	)	$	10,371
Acquired software		1,445		(571	)		874
Total	$	14,395	$	(3,150	)	$	11,245

Amortization expense related to customer relationships will be $1,295,000 for each of the five years ending December 31, 2012. Amortization expense related to acquired software for 2008 and 2009 will be $289,000 each year. The remaining amortization expense related to acquired software will be recorded in 2010, at which time such assets will become fully amortized.

7.   Long-term liabilities

The Company had no long-term liabilities at December 31, 2007 and 2006.

Long-term debt:

In 2004, the Company amended and increased its senior secured credit facility by $6 million to $13.6 million and terminated the revolving line of credit. The amended terms of the Company’s credit facility included a six-year term with quarterly principal payments that commenced on December 31, 2005 and was to mature on December 31, 2010. The interest rate on the amended credit facility was calculated in the same manner noted above. The effective interest rate for the year ended December 31, 2005 was 11.2%.

The deferred charges related to the original debt along with the costs incurred by the Company related to the amended long-term debt were being amortized over the term of the amended debt.

The credit facility was a senior secured arrangement, secured by the Company’s U.S. subsidiary and guaranteed by the Company.

65

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On July 5, 2006, the Company repaid its outstanding line of credit and term loan. The Company paid cash consideration of $12.8 million, which consisted of $12.6 million in principal and $0.2 million in a prepayment fee and accrued interest. The Company wrote off related unamortized deferred financing costs of $0.8 million.

Interest expense relates to the following for the years ended December 31, 2007, 2006 and 2005 (in thousands):

	2007		2006		2005
Long-term liabilities	$	—	$	970	$	1,582
Bank charges		112		109		126
Deferred charges — long-term debt		—		788		188
Total	$	112	$	1,867	$	1,896

8.   Capital stock

(a)   Common shares:

(i) Authorized:  Unlimited no par voting common shares

(ii) Issued and outstanding:

	Number of
	Shares (iii)		Amount
	(In thousands except share data)
Balance, December 31, 2004		14,579,624	$	45,363
Issuance of common shares		2,250,000		17,931
Exercise of options		109,209		421
Balance, December 31, 2005		16,938,833		63,715
Issuance of common shares(iv)		3,200,000		34,680
Exercise of options		305,657		1,445
Balance, December 31, 2006		20,444,490		99,840
Exercise of options		541,444		3,680
Balance, December 31, 2007		20,985,934	$	103,520

For the years ended December 31, 2007, 2006 and 2005, proceeds from the exercise of stock options totalled $2,531,000, $421,000 and $421,000, respectively. The additional amounts relate to the reclassification of the fair value of those options from additional paid-in capital to common shares.

(iii) Share consolidation:

On June 5, 2006, the Company filed articles of amendment to effect a four-to-one share consolidation of the Company’s outstanding common shares. The share consolidation was approved by the shareholders of the Company on May 17, 2006. Accordingly, information relating to the number of shares and net income per share presented in the consolidated statements of operations gives effect to this share consolidation for all periods presented.

(iv) Issuance of common shares:

On November 29, 2005, the Company completed a public offering of 2,250,000 common shares at a price of Cdn.$10.00 per common share with proceeds of $19,231,000 (Cdn.$22,500,000). Share issuance costs were approximately $1,300,000.

On June 22, 2006, the Company filed a short-form prospectus in Canada and a registration statement in the United States. in connection with the issue of 3,200,000 common shares of the Company. The gross proceeds of the issuance were $38,660,000, excluding underwriting fees and issuance costs of $2,596,000 and $1,384,000, respectively.

66

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(b)   Stock Option Plan:

The Company maintains a stock option plan, as amended (the “Plan”) which provides for a maximum number of common shares of the Company to be issued as option grants. A committee of the Board of Directors determines award amounts, option prices and vesting periods, subject to the provisions of the Plan. All officers, directors, employees and service providers of the Company are eligible to receive option awards at the discretion of the committee. Options issued under the Plan entitle holders to purchase one common share as defined by the plan.

On May 16, 2007, shareholders of the Company authorized amendments to the Plan to (i) increase the number of additional common shares to be reserved for issuance under the Plan by 1,000,000 common shares; and (ii) permit any option granted under the Plan that would expire within a trading black-out to be exercised within 10 business days following such trading black-out. As a result of the amendments, there are currently 3,937,500 common shares reserved for issuance under the Plan.

Prior to May 2007, all stock options awarded by the Company were denominated in Canadian dollars as required by the Plan in effect at the grant date. Amendments to the Plan in May 2007 permitted the Company to denominate stock option awards in either Canadian or U.S. dollars. All grants made subsequent to May 2007 are denominated in U.S. dollars.

The following table summarizes activity related to stock options denominated in Canadian dollars for each of the years in the three year period ended December 31, 2007:

	2007					2006					2005
				Weighted					Weighted					Weighted
				Average					Average					Average
	Number of			Exercise		Number of			Exercise		Number of			Exercise
	Options			Price		Options			Price		Options			Price
						(In Cdn. dollars)
Outstanding, beginning of period		2,058,461		$	8.38		1,702,589		$	4.72		1,392,251		$	4.40
Granted		6,000			23.05		734,875			14.56		495,000			6.40
Exercised		(541,444	)		5.15		(359,418	)		3.79		(109,209	)		4.56
Expired		(625	)		14.36		—			—		(68,203	)		10.04
Forfeited		(69,790	)		11.19		(19,585	)		9.33		(7,250	)		7.08
Outstanding, end of period		1,452,602			9.54		2,058,461			8.38		1,702,589			4.72
Options exercisable, end of period		1,200,235		$	8.44		1,417,966		$	6.54		1,255,918		$	4.08

Canadian dollar stock options granted to employees during 2007, 2006 and 2005 vest over three years. Stock options granted to directors during this same period immediately vested. All Canadian dollar options outstanding expire five years from the vest date.

The following table summarizes the information about the Canadian dollar stock options outstanding at December 31, 2007:

			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
Range of	Options		Contractual		Exercise		Options		Exercise
Exercise Price	Outstanding		Life (Years)		Price		Exercisable		Price
	(In Cdn. dollars)
$1.40 - $3.20		289,013		1.67	$	2.51		289,013	$	2.51
$5.36 - $7.32		496,082		3.66	$	6.81		496,082	$	6.81
$9.16 - $24.37		667,507		5.10	$	14.62		415,140	$	14.51
$1.40 - $24.37		1,452,602		3.92	$	9.54		1,200,235	$	8.44

The aggregate intrinsic value and remaining contractual term of exercisable stock options at December 31, 2007, was approximately $7,680,000 (Cdn.$7,533,000) and 3.65 years, respectively. The aggregate intrinsic value and remaining contractual term of all vested options and options that are expected to vest are $7,582,000 (Cdn.$7,437,000) and 3.92 years, respectively.

67

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total intrinsic value of stock options exercised during the year ended December 31, 2007, 2006 and 2005 was as follows (in thousands):

	2007		2006		2005
U.S. dollars	$	8,588	$	4,173	$	398
Canadian dollars	$	9,343	$	4,779	$	470

The total fair value of stock options which vested during the year ended December 31, 2007, 2006 and 2005 was as follows (in thousands):

	2007		2006		2005
U.S. dollars	$	2,158	$	2,115	$	996
Canadian dollars	$	2,117	$	2,464	$	1,158

As of December 31, 2007, there was $2,640,000 (Cdn.$2,590,000) of unrecognized compensation cost related to Canadian dollar stock options which will be recognized over a weighted-average period of approximately 1.75 years.

The following table summarizes activity related to stock options denominated in U.S. dollars for the year ended December 31, 2007 as the Company began issuing these stock options subsequent to May 2007:

	2007
				Weighted
				Average
	Number of			Exercise
	Options			Price
	(In U.S. dollars)
Outstanding, beginning of period		—		$	—
Granted		595,000		$	22.05
Exercised		—		$	—
Expired		—		$	—
Forfeited		(59,000	)	$	23.58
Outstanding, end of period		536,000		$	21.88
Options exercisable, end of period		17,500		$	22.77

U.S. dollar options granted during 2007 primarily bore a graded vesting schedule of four years. All U.S. dollar options granted expire five years from grant date.

The following table summarizes the information about the U.S. dollar stock options outstanding at December 31, 2007:

			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
Range of	Options		Contractual		Exercise		Options		Exercise
Exercise Price	Outstanding		Life (Years)		Price		Exercisable		Price
	(In U.S. dollars)
$12.60 - $18.11		91,000		4.81	$	14.57		—	$	—
$21.69 - $23.58		445,000		4.40	$	23.37		17,500	$	22.77
$12.60 - $23.58		536,000		4.47	$	21.88		17,500	$	22.77

The aggregate intrinsic value and remaining contractual term of exercisable stock options at December 31, 2007 was nil (as all exercisable options were out-of-the-money) and 4.47 years, respectively. The aggregate intrinsic value and remaining contractual term of all vested options and options that are expected to vest are $103,000 and 4.47 years, respectively. There were no options exercised during 2007. The total fair value of stock options which vested during the year ended December 31, 2007 was approximately $125,000.

As of December 31, 2007, there was $4.0 million of unrecognized compensation cost related to U.S. dollar stock options which is expected to be recognized over a weighted-average period of approximately 3.45 years.

68

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(c)   Employee Stock Purchase Plan:

On May 16, 2007, shareholders of the Company approved the creation of the Employee Stock Purchase Plan (“ESPP”) which allows eligible employees to withhold annually up to a maximum of 15% of their base salary, or $25,000, subject to U.S. Internal Revenue Service limitations, for the purchase of the Company’s common shares. Common shares will be purchased on the last day of each offering period at a discount of 5% of the fair market value of the common shares on such date. The aggregate number of common shares that may be issued under the ESPP may not exceed 100,000 common shares.

The common shares available for purchase under the ESPP may be drawn from either authorized but previously unissued common shares or from reacquired common shares, including those purchased by the Company in the open market. During 2007, no common shares were issued under the ESPP.

The ESPP is not considered compensatory under the provisions of SFAS 123R and therefore, no portion of the costs related to ESPP purchases will be included in the Company’s stock-based compensation expense.

(d)   Stock-based compensation:

For the years ended December 31, 2007, 2006, and 2005 the Company recorded stock-based compensation expense of $3,040,000, $1,838,000 and $844,000, respectively.

The Company allocated stock-based compensation costs to the same income statement line item as the cash compensation to those employees. Accordingly, the allocation of the compensation costs is as follows for the years ended December 31, 2007, 2006, and 2005 (in thousands):

	2007		2006		2005
Cost of revenue	$	335	$	376	$	223
Product development costs		283		186		118
Selling, general and administration		2,422		1,276		503
Total stock-based compensation	$	3,040	$	1,838	$	844

The total income tax benefit, using the Company’s statutory tax rates, recognized in the income statement for share-based compensation arrangements for years ended December 31, 2007, 2006, and 2005, was $1,146,000, $636,000, and $305,000, respectively.

The Black-Scholes-Merton option pricing model was used to estimate the fair value of the options at grant date for the years ended December 31, 2007, 2006 and 2005 based on the following assumptions:

	2007	2006	2005
Volatility	40.7 - 54.4%	36.5 - 40.8%	38 - 58%
Risk-free interest rate	3.44 - 4.85%	4.74 - 5.13%	4.00%
Expected life	1 - 5 years	5 years	5 years
Dividend yield	—	—	—
Weighted average grant date fair value:
Canadian dollar stock options	C$5.57	C$5.96	C$3.84
U.S. dollar stock options	$9.01	—	—

The volatility assumption is based on historical volatility at the date of grant for the period equal to the expected life.

The expected life assumption is based on historical exercise patterns. The Company’s employees typically have a longer expected life of 4.5 to 5 years due to the vesting schedules whereas directors have a shorter expected life of 1 to 2.5 years due to the immediate vesting of their options.

The Company does not expect to pay dividends and, therefore, no dividend yield assumption is used in calculating the fair value of stock options.

In the third quarter of 2007, the Company recorded additional non-cash stock-based compensation expense of $232,000 ($178,000 net of tax) related to the incorrect determination of the accounting measurement date for options granted to new employees prior to November 2006. Of the additional expense, $220,000 related to SG&A, with the remaining $12,000 related to

69

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

cost of revenue. No restatement of prior periods is required as the amount is not material to the prior year or to the fiscal 2007 estimated earnings and to the effect on the trend of earnings.

9.   Income taxes

The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows (in thousands).

	December 31,
	2007		2006
Deferred income tax assets:
Non-capital loss carryforwards	$	650	$	871
Deductible research and development expenses		1,937		1,477
PP&E and intangible assets		219		907
Unrealized foreign exchange loss on intercompany loan		3,355		160
Lease inducements and deferred financing		3,405		3,396
Investment tax credits		630		—
Stock-based compensation		1,470		798
Total		11,666		7,609
Less valuation allowance		5,263		3,066
Total deferred tax assets	$	6,403	$	4,543
Deferred tax assets — current	$	3,246	$	2,360
Deferred tax assets — long term		3,157		2,183
Total	$	6,403	$	4,543
Deferred income tax liabilities:
PP&E	$	1,091	$	-
Deferred charges		—		191
Total	$	1,091	$	191

At December 31, 2007, the Company had gross deferred tax assets totaling $11.7 million compared to $7.6 million at December 31, 2006. Of the $11.7 million, $7.4 million of DTA related to its Canadian operations (2006 — $3.6 million). The change in the deferred tax assets occurred mainly in the Canadian operations and is due primarily to increases in the following: unrealized foreign exchange losses on its intercompany note receivable ($3.2 million), tax benefits on stock-based compensation expense ($0.7 million), SRED investment tax credits ($0.6 million), and deductible research and development expenses ($0.5 million). The Company also had deferred tax liabilities which had increased to $1.1 million at December 31, 2007 due to temporary timing differences related to the Company’s PP&E for its U.S. operations.

The balance of the valuation allowance was $5.3 million at December 31, 2007 compared to $3.1 million at December 31, 2006. All of the valuation allowance is related to the DTA arising from the Canadian operations. In the second and third quarters of 2007, $3.6 million of the valuation allowance was released as it was determined by management that DTAs relating to Canadian NOLs are “more likely than not” to be realized in the balance of the current year and in future periods as a result of tax planning strategies that management expected to implement. This assessment was revised at year end and the valuation allowance was increased in the fourth quarter of 2007 by approximately $5.8 million due to an increase in the DTAs during the quarter and a change in the Company’s tax planning strategies, which is estimated to result in lower taxable income in the Canadian operations. Consequently, the Company has increased its valuation allowance as the Company does not believe that it is more likely than not that it will be able to realize its entire DTA relating to the Canadian operations. The amount of this valuation allowance is subject to adjustment by the Company in future periods based upon its assessment of evidence supporting the degree of probability that DTAs will be realized.

70

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2007, the Company has Canadian NOLs available to reduce future years’ taxable income, which expire as follows (in thousands):

2015	$	213
2026		647
2027		2,026
	$	2,886

In addition to the loss carryforwards listed above, the Company has unused SRED credits of approximately $5.8 million, which have no expiration date. The amount of these unused credits are not tax-effected and will, therefore, impact the Company’s effective tax rate in the period recognized. In the fourth quarter of 2007, the Company determined it would be able to utilize $0.9 million of SRED credits related to previous years. These credits are included as a reduction to income tax expense in the consolidated statements of operations.

The differences between the effective tax rate reflected in the provision for income taxes and the statutory income tax rate are as follows (in thousands):

	Years Ended December 31,
	2007			2006			2005
Corporate statutory rate		37.7	%		34.6	%		36.1	%
Income tax expense on income before income taxes	$	6,558		$	5,685		$	2,586
Tax effect of:
Impact of foreign tax rates		725			203			178
Share issuance costs		—			(246	)		(472	)
Change in valuation allowance		(3,610	)		(3,885	)		(3,123	)
Investment tax credits utilized		(875	)		—			—
Permanent differences		62			29			593
Effect of foreign exchange		(312	)		(245	)		(1,125	)
Adjustment to tax reserves		862			—			—
Accrued interest under FIN 48		47			—			—
Impact of state minimum tax rate		—			484			18
Other		841			791			787
	$	4,298		$	2,816		$	(558	)

During the second quarter of 2007, the Company also recorded an accrued tax liability of $0.8 million related to potential tax obligations since the Company does not plan to indefinitely reinvest certain undistributed earnings of its U.S. operations. This liability was $0.6 million at December 31, 2007.

Income from the U.S. operations before income taxes was $9.7 million, $12.0 million and $4.6 million for the years ended December 31, 2007, 2006 and 2005, respectively. Income from the Canadian operations before income taxes was $8.6 million, $4.3 million and $2.6 million for the years ended December 31, 2007, 2006, and 2005, respectively.

Income tax expense related to the U.S. operations was $4.4 million, $5.9 million, and $0.1 million for the years ended December 31, 2007, 2006 and 2005, respectively. The Company recognized an income tax benefit related to the Canadian operations of $0.1 million, $3.1 million and $0.7 million for the years ended December 31, 2007, 2006 and 2005, respectively.

The Company’s effective tax rate for the years ended December 31, 2007 and 2006 was 25% and 17%, respectively. The Company recognized a tax benefit for the year ended December 31, 2005.

Uncertain Tax Positions

As a result of the implementation of FIN 48, the Company recognized an adjustment in the liability for unrecognized income tax benefits of $155,000 as a reduction in the beginning balance of retained earnings. As of December 31, 2007, the

71

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company has an accrued liability of $202,000 related to various federal and state income tax matters on the consolidated balance sheet, all of which would impact the Company’s effective tax rate.

Changes in the balance of the liability for tax uncertainties are as follows (in thousands):

Amount recognized in retained earnings and opening balance of liability	$	155
Increase in interest related to tax positions taken in prior years		47
Issues settled during the year		—
Liability at December 31, 2007	$	202

The change from January 1, 2007 is a result of recognizing accrued interest and penalties related to the liability for tax uncertainties.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. Accrued interest at December 31, 2007 was $80,000. The Company does not expect the liability to change significantly in the next twelve months.

The Company and its subsidiary file income tax returns in Canadian and U.S. federal jurisdictions, and various provincial, state and local jurisdictions. With few exceptions, the Company is no longer subject to tax examinations by tax authorities for years prior to 2002.

10.   Earnings per share

The following table sets forth the computation for basic and diluted EPS for the years ended December 31, 2007, 2006 and 2005 (in thousands except share data):

	2007		2006		2005
Numerator:
Net income available to common shareholders	$	13,146	$	13,647	$	7,722
Denominator for basic EPS — weighted average common shares outstanding		20,755,372		18,710,370		14,805,857
Effect of dilutive securities:
Stock options issued		807,382		989,769		631,281
Denominator for diluted EPS		21,562,754		19,700,139		15,437,138
Earnings per share:
Basic	$	0.63	$	0.73	$	0.52
Diluted	$	0.61	$	0.69	$	0.50

Stock options totalling 451,000, 1,125 and 18,000 were not included in the computation of diluted EPS for 2007, 2006 and 2005, respectively, as the exercise prices were greater than the average market price of the common shares.

11.   Supplemental cash flow information

(a) The components of cash and cash equivalents are as follows (in thousands):

	December 31,
	2007		2006
Cash on deposit	$	28,674	$	21,958
U.S. money market funds		62,219		4,834
Commercial paper (less than 90 days)		—		30,841
Certificates of deposit (less than 90 days)		—		13,280
Canadian dollar deposit (Cdn.$35,000 at 0.9809;
December 31, 2006 — Cdn.$35,000 at 1.165)		36		30
	$	90,929	$	70,943

72

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(b) Other non-cash activities (in thousands):

	Years Ended December 31,
	2007		2006
PP&E purchased with lease inducements (note 4)	$	391	$	2,442
Amortization of deferred lease inducements (note 4)	$	338	$	31
Change in accounting for income tax uncertainties (note 9)	$	155	$	—

There were no non-cash activities during 2005.

(c) Cash paid (received) for income taxes and interest was as follows for the years ended December 31, 2007, 2006 and 2005 (in thousands):

	2007			2006			2005
Income taxes paid	$	3,892		$	4,436		$	122
Interest paid	$	112		$	1,079		$	1,708
Interest received	$	(4,927	)	$	(2,773	)	$	(549	)

12.   Employee Benefit Plans

The Company has a 401(k) savings plan that allows eligible employees to defer a percentage of their salary, not to exceed 30% of their eligible compensation, or $16,000 in 2007. The Company matches an amount equal to 50% of the contributions, up to 4%. All participant contributions are 100% vested. Employer contributions become 100% vested after completion of three years of service. For 2007, 2006 and 2005, the Company’s contributions to this plan were $534,000, $253,000, and $206,000, respectively.

13.   Commitments and contingencies

(a)   Lease Commitments:

The Company maintains lease agreements for office space in its six main operating locations. The Company also leases certain office equipment. Aggregate future minimum payments in respect of these lease agreements, which extend until 2018, are as follows (in thousands):

2008	$	1,818
2009		1,588
2010		1,633
2011		1,582
2012		1,413
Thereafter		6,909
	$	14,943

The total rental expense for the years ended December 31, 2007, 2006 and 2005 was $2,034,000, $1,907,000 and $1,281,000, respectively. The lease agreements for each of the Company’s locations in Lisle, Illinois, Atlanta, Georgia, and Scottsdale, Arizona have renewal options at the end of the current lease term for a period of five years. The lease agreements for the locations in Milton, Ontario and Victoria, British Columbia have renewal options at the end of the current lease term of three years and two years, respectively. The lease agreement for the Company’s Warminster, Pennsylvania location expires in September 2008 and no renewal agreement has been executed as of December 31, 2007.

(b)   Contingencies:

From time to time in connection with its operations, the Company is named as a defendant in actions for damages and costs allegedly sustained by the plaintiffs. The Company has considered these proceedings and disputes in determining the necessity of any reserves for losses that are probable and reasonably estimable. In addition, various aspects of the Company’s business may subject it to litigation and liability for damages arising from errors in processing the pricing of prescription drug claims, failure to

73

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

meet performance measures within certain contracts relating to its services performed or its ability to obtain certain levels of discounts or rebates on prescription purchases from retail pharmacies and drug manufacturers or other actions or omissions. The Company’s recorded reserves are based on estimates developed with consideration given to the potential merits of claims or quantification of any performance obligations. The Company takes into account its history of claims, the limitations of any insurance coverage, advice from outside counsel, and management’s strategy with regard to the settlement or defense against such claims and obligations. While the ultimate outcome of those claims, lawsuits or performance obligations cannot be predicted with certainty, the Company believes, based on its understanding of the facts of these claims and performance obligations, that adequate provisions have been recorded in the accounts where required.

(c)   Guarantees:

The Company provides routine indemnification to its customers against liability if the Company’s products infringe on a third party’s intellectual property rights. The maximum amount of these indemnifications cannot be reasonably estimated due to their uncertain nature. Historically, the Company has not made payments related to these indemnifications.

14.   Segmented information

The Company operates in a single reportable operating segment, which provides transaction processing solutions to the pharmaceutical benefits industry.

The Company operates in two geographic areas as follows (in thousands):

December 31, 2007	Canada		U.S.		Total
Revenue	$	3,925	$	89,246	$	93,171
PP&E	$	117	$	13,512	$	13,629
Goodwill	$	—	$	15,996	$	15,996
Deferred tax assets	$	2,110	$	4,293	$	6,403
Deferred tax liability	$	—	$	1,091	$	1,091
Net assets	$	3,412	$	129,045	$	132,457

December 31, 2006	Canada		U.S.		Total
Revenue	$	2,248	$	78,675	$	80,923
PP&E	$	200	$	9,914	$	10,114
Goodwill	$	—	$	15,996	$	15,996
Deferred tax assets	$	554	$	3,989	$	4,543
Deferred tax liability	$	—	$	191	$	191
Net assets	$	3,047	$	108,443	$	111,490

December 31, 2005	Canada		U.S.		Total
Revenue	$	1,144	$	52,979	$	54,123
PP&E	$	195	$	3,583	$	3,778
Goodwill	$	—	$	13,996	$	13,996
Deferred tax assets	$	682	$	—	$	682
Deferred tax liability	$	2	$	—	$	2
Net assets	$	1,720	$	57,751	$	59,471

74

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s revenue consists of the following for the years ended December 31, 2007, 2006 and 2005 (in thousands):

	2007		2006		2005
Recurring:
Transaction Processing	$	54,273	$	38,767	$	21,446
Maintenance		16,476		14,931		13,343
Total Recurring		70,749		53,698		34,789
Non-Recurring:
Professional Services		14,031		16,915		11,109
System Sales		8,391		10,310		8,225
Total Non-Recurring		22,422		27,225		19,334
Total Revenue	$	93,171	$	80,923	$	54,123

Costs of revenue applicable to each category of revenue are as follows for the years ended December 31, 2007, 2006 and 2005 (in thousands):

	2007		2006		2005
Recurring services:
Revenue	$	70,749	$	53,698	$	34,789
Cost of revenue		30,432		22,879		14,141
	$	40,317	$	30,819	$	20,648
Non-Recurring services:
Revenue	$	22,422	$	27,225	$	19,334
Cost of revenue		9,163		11,150		7,500
	$	13,259	$	16,075	$	11,834

During the years ended December 31, 2007 and 2006, one customer accounted for 10.8% and 10.4% of total revenue, respectively. During the year ended December 31, 2005, no one customer accounted for more than 10% of total revenue.

At December 31, 2007, one customer accounted for 12.0% of total accounts receivable. At December 31, 2006 and 2005, no one customer accounted for more than 10% of the total accounts receivable balance.

15.   Financial instruments

(a) Credit risk:  The Company is subject to concentrations of credit risk through cash equivalents and accounts receivable. Management monitors the credit risk and credit standing of counterparties on a regular basis. Cash equivalents and accounts receivable are with financial institutions and large corporations.

(b) Fair values:  The estimated fair value of the Company’s financial instruments has been determined based on the Company’s assessment of available market information and appropriate valuation methodogies. However, these estimates may not necessarily be indicative of the amounts that the Company could realize in a current market exchange. The Company’s cash and cash equivalents, accounts receivable, unbilled revenue, accounts payable, salaries and wages payable, accrued liabilities (current portion) pharmacy benefit management rebates payable and pharmacy benefit claim payments payable are considered financial instruments. The estimated fair values of these financial instruments approximate their carrying amounts. The Company has determined that it is not meaningful to calculate the fair value of the non-current accrued liabilities as these amounts represent an accrual for tax uncertainties.

(c) Foreign exchange risk:  The Company is subject to foreign exchange risk related to its operations in Canada. The Company does not enter into derivative instruments to mitigate this risk. Exposure to fluctuations in Canadian-dollar denominated transactions is partially offset by Canadian dollar-denominated assets and liabilities.

75

SXC HEALTH SOLUTIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

16.   Sale of land and building

On May 31, 2005, the Company completed the sale and leaseback of its Milton, Ontario headquarters facility for approximately $2,343,000. The net proceeds after repayment of the mortgage on the building was approximately $1,585,000. The Company recorded a gain of $626,000 on the sale.

Concurrent with the sale, the Company has agreed to lease 8,100 rentable square feet of the facility for a three-year term with one three-year renewal option period which represents a minor portion of the property sold.

17.   Termination Benefits

The Company made certain involuntary terminations during the third quarter of 2007 by reducing its workforce approximately 7%. In accordance with SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, the Company incurred severance costs of approximately $0.7 million for the entire amount of benefits to be paid to the terminated employees. The benefits will be settled within twelve months and the severance costs are reflected in the Company’s consolidated financial statements as follows (in thousands):

Cost of revenue	$	243
Product development costs		130
Selling, general and administration		372
	$	745

The Company’s consolidated balance sheet at December 31, 2007 includes a liability of $0.3 million for severance payments which are expected to be paid within the next twelve months.

18.   Subsequent Events

On February 26, 2008, the Company announced that it had entered into a definitive agreement to acquire National Medical Health Card Systems, Inc. (“NMHC”). Pursuant to the merger agreement, Comet Merger Corporation, a newly-formed, wholly-owned subsidiary of the Company, has agreed to commence an exchange offer to acquire all of the outstanding shares of common stock of NMHC. The purchase price will be funded with a combination of cash and the Company’s stock, resulting in an estimated transaction value, as of February 25, 2008, of $143 million, or $11.00 per common and convertible preferred share of NMHC. The boards of directors of both companies have unanimously approved the transaction. In addition, NMHC’s majority shareholders, representing approximately 55% of the total NMHC shares outstanding on an as-converted basis, have agreed to tender their shares into the offer, pursuant to the terms of stockholder agreements entered into in connection with the execution of the merger agreement.

The acquisition is expected to close in the second quarter of 2008, and is subject to various closing conditions, including a requisite number of shares of NMHC common stock being tendered into the offer, the Company obtaining financing pursuant to a commitment letter and regulatory approvals. If not completed, the exchange offer will be followed by a back-end merger for the same consideration as that offered in the exchange offer. Under certain circumstances, the Company and NMHC have agreed that the Company will terminate the exchange offer and will instead seek to consummate the acquisition of NMHC by a one-step merger following the adoption of the merger agreement by NMHC’s stockholders.

Pursuant to the merger agreement, NMHC stockholders will receive $7.70 in cash and 0.217 shares of the Company’s common stock for each share of NMHC common stock tendered into the offer. The amount of Company common stock to be exchanged for each share of NMHC common stock tendered in the offer is fixed at 0.217, and therefore will not change based on fluctuations or changes in the market price of either companies’ stock. The Company will issue approximately 2.9 million shares of its common stock for the transaction to be completed. In addition, the Company intends to finance a portion of the purchase price through a new $48.0 million secured term loan and a $10.0 million secured revolving credit facility.

US Corp. has received a debt commitment letter, dated as of February 25, 2008, from General Electric Capital Corporation (“GE Capital”), pursuant to which, subject to the conditions set forth therein GE Capital has agreed to provide US Corp. senior secured financing of $58 million, consisting of a $10 million senior secured revolving credit facility and a $48 million senior secured term loan. The financing will be used solely to pay the cash consideration for the offer and the second step merger as well as related transaction fees and, in the case of the senior secured revolving credit facility, for working capital and general corporate and similar purposes.

The debt commitment expires on August 1, 2008. The documentation governing the senior secured revolving credit facility and senior secured term loan has not been finalized and, accordingly, the actual terms of such facilities may differ from those described.

76

19.   Supplemental information

	Beginning		Charged to					Ending
Description	Balance		Expense		Deductions			Balance
	(In thousands)
Allowance for accounts receivable:
Year end December 31, 2007		214		412		(21	)		605
Year end December 31, 2006		320		561		(666	)		215
Year end December 31, 2005		469		73		(222	)		320

	Beginning		Charged to					Ending
Description	Balance		Expense		Adjustments			Balance
	(In thousands)
Valuation allowance for deferred tax assets
Year end December 31, 2007		3,066		5,807		(3,610	)		5,263
Year end December 31, 2006		6,951		—		(3,885	)		3,066
Year end December 31, 2005		10,074		—		(3,123	)		6,951

77

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation (under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer), pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the effectiveness of our disclosure controls and procedures as of December 31, 2007 (the “Evaluation Date”), which is the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the Evaluation Date such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Management’s Report on Internal Control Over Financial Reporting

The management of our company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007, based on the criteria set forth in the Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management has concluded that, as of December 31, 2007, our internal control over financial reporting is effective. Our independent registered public accounting firm, KPMG LLP, has issued an audit report that the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the COSO. KPMG LLP’s audit report is included in Item 8 of this Form 10-K.

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.   OTHER INFORMATION

On March 12, 2008, the Company entered into new employment agreements with Gordon S. Glenn, our Chairman and Chief Executive Officer, and Mark Thierer, our President and Chief Operating Officer. Please see the “Employment Agreements” section included in Item 11 of this Annual Report on Form 10-K, which is incorporated into this Item 9B by reference, for further information regarding these employment agreements.

PART III

ITEM 10.   DIRECTORS EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

NASDAQ stock exchange rules require most companies whose stock is quoted on the NASDAQ stock exchange, following their first annual stockholders meeting after January 15, 2004, to have a Board of Directors composed of a majority of independent directors, as determined and defined under NASDAQ Rule 4350(c), and to comply with certain other requirements for committees and independent directors.

The Board of Directors of the Company currently consists of eight members, of which each of Terrence C. Burke, William J. Davis, Philip R. Reddon, Steven Cosler, Curtis Thorne and Anthony Masso are considered independent as required by NASDAQ

78

rules. The current articles of the Company provide that each member of the Board of Directors shall hold office until the close of the next annual meeting or until their successors are elected or appointed, whichever occurs first. All of the current directors’ terms will expire at the Company’s next annual meeting.

Directors

The following text presents certain information concerning our directors:

Terrence C. Burke, 66, has been a director for us since August, 1999. Mr. Burke is a Director and consultant of Chinook Wind Development since 1995, which serves emerging healthcare companies and a strategic advisor to healthcare organizations. He currently holds directorships with two healthcare-related technology companies. Mr. Burke has served on the boards of several healthcare industry associations, including Federation of American Health Care Systems, Group Health Association of America and the National Association of Employers on Health Care. Mr. Burke brings to the Company a wealth of experience and contacts in the managed care and indemnity insurance industries in the U.S. Mr. Burke has a B.A. in History from the University of Washington.

Burke has extensive experience in the managed care and indemnity insurance industry in the U.S. and for the past several years has been an industry consultant. He was a pioneer in managed care with a long track record of strategically introducing and managing new, innovative and profitable products for the employee benefits and group health industry. He has held executive positions with a number of leading managed care companies, which positions include Senior Executive Vice-President of Metrahealth Corporation, Senior Vice-President, Field Operations, Specialty Companies (including pharmacy management) & Planning and Development of Aetna Corporation and President of CIGNA Health Plans as well as Senior Vice-President, National Operations of Cigna Corporation.

William J. Davis, 40, has been a director for us since January, 2007. Mr. Davis is currently the Chief Financial Officer of Chicago-based healthcare information technology provider Allscripts Healthcare Solutions, Inc. Mr. Davis joined Allscripts as CFO in October, 2002 and is responsible for all of its financial operations, as well as its human resource and management information system operations. Prior to joining Allscripts, Mr. Davis was the CFO of Lante Corporation, a leading technology consulting firm. Mr. Davis helped lead that company’s initial public offering in February 2000 and its subsequent sale to SBI and Company in September, 2002. From 1991 through 1999, Mr. Davis was in the Technology Group of PricewaterhouseCoopers LLP. Mr. Davis earned his Bachelors degree in Accounting from the University of Cincinnati and his Masters of Business Administration from Northwestern University. Mr. Davis is also a Certified Public Accountant.

Gordon S. Glenn, 59, has been a director for us since August, 1999. Mr. Glenn joined the Company in June, 1998 as President and Chief Operating Officer and was promoted to Chief Executive Officer on September 1, 1998. On November 2, 2006, Mr. Glenn resigned as President of the Company and was appointed Chairman of the Board. Prior to joining SXC, Mr. Glenn enjoyed a 24-year career with Computer Data Systems Inc. (“CDSI”) in Rockville, MD, of which the last eight years he served as President and CEO. A graduate of the University of Kentucky, Mr. Glenn earned his Bachelor of Science degree in Mechanical Engineering. He received a full scholarship from the Union Carbide Corporation and graduated cum laude.

Philip R. Reddon, 42, has been a director for us since March, 2006. Mr. Reddon joined Covington Capital Corporation in 2002, as Managing Director, his responsibilities include analysis of new investment opportunities for Covington and assisting in the management and monitoring of Covington’s existing investments.

Prior to joining Covington, Mr. Reddon spent six years at Bank of Montreal Capital Corporation (“BMO Capital”) as Managing Director for a private equity fund. He was head of the Technology Investment team, and sat on the investment committee, which was involved in the investment and approval process for over 60 companies. In his role at BMO Capital, he sat on the boards of eight investee companies. Prior to BMO Capital, Mr. Reddon spent six years with the Business Development Bank of Canada.

Mark A. Thierer, 48, has been a director for us since January, 2006. On September 5, 2006, Mr. Thierer was appointed President and Chief Operating Officer of the Company. Prior thereto, Mr. Thierer was the President of Physicians Interactive, a division of Allscripts, Inc. (NASDAQ: MDRX), the leading provider of Electronic Health Records, ePrescribing, and information solutions for physicians. Physicians Interactive provides clinical information and education to physicians and patients through on-line, interactive programs. Their client base includes leading pharmaceutical, biotechnology, and medical device companies worldwide.

Prior to Allscripts, Mr. Thierer spent ten years with CaremarkRx (NYSE: CMX), where he was a corporate officer and key executive in helping to build Caremark into a pharmacy benefits manager and specialty pharmacy company. In his most recent capacity, Mr. Thierer served as the Senior Vice President, New Ventures, responsible for developing Caremark’s growth strategy. Prior to that role, Mr. Thierer managed Caremark’s retail network operations, trade relations, specialty pharmacy, marketing, field operations, and corporate account functions. Prior to Caremark, Mr. Thierer spent ten years with IBM, managing sales of

79

healthcare information management (HIT) solutions. Mr. Thierer holds a B.S. in Finance from the University of Minnesota and an M.B.A. in Marketing from Nova Southeastern University in Florida. He also holds the designation of CEBS (Certified Employee Benefits Specialist) from The Wharton School.

Steven Cosler, 52, has been a director for us since August, 2007. Mr. Cosler is currently an Operating Partner at Water Street Healthcare Partners (“Water Street”), a Chicago-based private-equity firm focused exclusively on the healthcare industry. Mr. Cosler joined Water Street in 2006 and prior to that was President and Chief Executive Officer of Priority Healthcare Corporation (“Priority”), a publicly held specialty pharmacy and distributor that was acquired by Express Scripts in October, 2005. Mr. Cosler was employed by Priority from 1996 to 2005, where he held a number of increasingly senior roles, culminating in his appointment as President and Chief Operating Officer in 2001, and President and CEO in 2002, a position he retained until the acquisition.

Before joining Priority, Mr. Cosler held leadership positions at Coresource, Inc., a Third party Administrator managing healthcare services, and at IBM. Mr. Cosler sits on the board of several privately held healthcare companies including CCS Medical, Inc., Access Mediquip, Inc., Cydex Pharmaceutical, Inc., and Claymore Securities. He is a graduate of Purdue University with a Bachelor of Science degree in Industrial Management.

Curtis Thorne, 48, has been a director for us since August, 2007. Mr. Thorne is currently the President and Chief Executive Officer of MedSolutions, Inc., a company focused on management of medical imaging services. From 1998 to 2000, Mr. Thorne was its President and Chief Operating Officer. Prior to joining MedSolutions, Mr. Thorne was President and COO of Adesso Specialty Services, a California-based specialty physician management company. Mr. Thorne earned his masters in business administration from the Babcock School of Management at Wake Forest University and a bachelor’s degree in chemistry from the University of North Carolina.

Anthony Masso, 66, has been a director for us since August, 2007. Mr. Masso is currently the President and Chief Executive Officer of Consortium Health Plans, Inc., a national coalition of 19 Blue Cross Blue Shield plans that is focused on building market share of its members amongst major employers and benefits consultants. Prior to Consortium, Mr. Masso was President of StrongCastle LLC, an implementation of strategic business plans for corporate clients from 2000 to 2003. Mr. Masso was also previously President of Litho Group, Inc., and Executive Vice President of Integrated Health Services, Inc from 1994 to 2000. Mr. Masso spent four years as Senior Vice President of the Health Insurance Association of America, where he planned and implemented a transformation of indemnity insurers into managed care networks. As Senior Vice President of Aetna Health Plans, Mr. Masso was responsible for East Coast operations for all HMOs and POS health plans.

Executive Officers

Our executive officers, and their ages and positions are:

Name	Age		Office and Position Held
Gordon S. Glenn		59	Chairman of the Board and Chief Executive Officer
Mark A. Thierer		48	President and Chief Operating Office
Jeffrey Park		36	Chief Financial Officer and Senior Vice President, Finance
John Romza		52	Chief Technology Officer and Executive Vice President, Product Development
Mike Bennof		44	Executive Vice President, Healthcare Information Technology
Michael Meyer		52	Senior Vice President, Sales and Marketing
B. Greg Buscetto		46	Senior Vice President and General Manager, informedRx

Gordon S. Glenn, 59, has served as our Chairman of the Board since November 2, 2006. Information about Mr. Glenn’s tenure with us and his business experience is presented under “Directors”.

Mark A. Thierer, 48, has served as our President and Chief Operating Officer since September 5, 2006. Information about Mr. Thierer’s tenure with us and his business experience is presented above under “Directors”.

Jeffrey Park, 36, has served as our Chief Financial Officer since March, 2006. Prior to his appointment, Mr. Park was a member of our board of directors and was Senior Vice President of Covington Capital Corporation, a private equity venture capital firm. Mr. Park, a Chartered Accountant, joined Covington in 1998. Prior to Covington, Mr. Park worked for IBM in several areas of their Global Services Organization.

John Romza, 52, has served as our Executive Vice President of Product Development and Chief Technology Officer since June 2007. Mr. Romza is responsible for the software development, technical infrastructure, and operation activities of our processing centers. Mr. Romza has over 25 years of overall software development experience and 20 years of experience in

80

developing software products for the pharmacy industry. Mr. Romza joined us as a result of our acquisition of ComCoTec in 2001, where he was Vice President, Research and Development.

Mike Bennof, 44, has served as our Executive Vice President of Healthcare Technology since June, 2007.  Mr. Bennof is responsible for executive management and growth of our systems integration and consulting business areas. He is responsible for operations of major accounts including government programs such as Medicare, Medicaid and provincial drug plans in Canada. Mr. Bennof has 18 years in the software and high-technology industries including prior positions with Computer Data Systems Inc. and Decision Systems Technologies, Inc. Mr. Bennof joined us in March, 1999.

Michael Meyer, 52, has served as our Senior Vice President of Sales & Marketing since May, 2004.  Mr. Meyer is responsible for directing the sales and marketing activities for our entire portfolio of products and services. Mr. Meyer has over 20 years of experience in the pharmacy benefit management industry. Before joining us, he was the Vice President of Managed Care Sales for CaremarkRx. Prior to his tenure at CaremarkRx, Mr. Meyer served in executive sales roles at Premier Purchasing Partners LP, PCS Health Systems, Inc. and Allscripts, LLC, where he was responsible for various sales and sales management components.

B. Greg Buscetto, 46, has served as our Senior Vice President and General Manager of informedRx since November, 2007. Mr. Buscetto is responsible for the day-to-day operations and expansion of SXC’s PBM business. Greg has more than twenty years of PBM and technology industry experience and joins the Company from ProCareRx where he was Executive Vice President and Chief Operating Officer. Greg helped lead ProCareRx’s transition from a claims processor to a full service PBM. He held management responsibility for 125 employees and was a key driver of ProCareRx’s revenue growth and increase in its number of lives under management. Prior to ProCareRx, Mr. Buscetto was Vice President of Sales and Marketing, Domestic and International, at Magnitude Information Systems, Inc. At Magnitude he developed and implemented a multi-channel marketing plan and amongst other achievements, held oversight responsibilities for product development, branding and contract negotiations.

Audit Committee

The Company has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of The Exchange Act. The Audit Committee assists the Board of Directors in its oversight of our compliance with all applicable laws and regulations related to financial reporting, which includes oversight of the quality and integrity of our financial reporting, internal controls and audit functions, and is directly and solely responsible for the appointment, retention, compensation and monitoring of the performance of our independent registered public accounting firms, including the services and scope of their audit. The Audit Committee meets at least quarterly with our management and independent public accountants to, among other things, review the results of the annual audit and quarterly reviews, discuss the financial statements, assess management performance and procedures in connection with financial controls and receive and consider comments as to internal controls.

The duties and responsibilities of the Audit Committee are set forth in a written chapter that is available on our website, www.sxc.com.

At the beginning of fiscal 2007, the Audit Committee was composed of Philip R. Reddon (Committee Chair), William J. Davis and James A. Ryan. On September 17, 2007, Mr. Ryan resigned from the Board of Directors and the Audit Committee. On September 17, 2007, Curtis Thorne joined the Board of Directors and the Audit Committee. The Audit Committee is currently composed of Mr. Reddon (Committee Chair), Mr. Davis and Mr. Thorne. The Board of Directors has determined that all current members, including Mr. Ryan, are independent directors within the meaning of NASDAQ Rule 4200 and SEC Rule 10A-3(b)(1)(ii).

In addition, as required by the rules of the SEC and the NASDAQ, our Board of Directors has determined that Mr. Reddon, the Chairman of the Audit Committee, qualifies as an “audit committee financial expert” as defined in Item 407 (d)(5) of Regulation S-K promulgated by the SEC under the Securities Exchange Act of 1934, as amended. Stockholders should understand that the designation is an SEC disclosure requirement relating to Mr. Reddon’s experience and understanding of certain accounting and auditing matters, which the SEC has stated does not impose on the director so designated any additional duty, obligation or liability than otherwise is imposed generally by virtue of serving on the Audit Committee and/or the Board of Directors.

Compensation Committee

The overall purpose of the Compensation Committee is to develop, monitor and assess the Company’s approach to the compensation of its directors, senior officers and employees. Among other things, the Compensation Committee manages on behalf of the Board of Directors and is solely responsible for: (i) reviewing the compensation practices and policies of the Company to ensure they are competitive and that they provide appropriate motivation for corporate performance and increased shareholder value; (ii) oversight of the administration of the Company’s compensation programs, including equity-based compensation programs, and making recommendations to the Board regarding their adoption, amendment or termination;

81

(iii) annually reviewing and recommending the annual base salary and bonus targets for senior executives of the Company other than the CEO; and (iv) reviewing and recommending annual corporate goals and objectives for the CEO and evaluating the CEO’s performance and based on this evaluation, annually reviewing and recommending the CEO’s annual base salary, bonus and any stock option grants or other awards.

The Compensation Committee has authorized the CEO to grant and allocate options in two circumstances. The first relates to the annual option allocation to non-executive employees. The annual option allocation is submitted to the Compensation Committee for consideration and comment and specifically lists recipients and a proposed allocation. The second circumstance is that the CEO is authorized to grant options to newly hired employees provided that:

(1) the number of options granted to new employees is reasonably consistent with past practice in terms of the options granted to an employee in the position and with the responsibility of the new employee; and

(2) such authority does not extend to new employees who are senior officers of the Company.

The Chief Executive Officer in consultation with the Chief Financial Officer and Human Resources will consider the position, requirements, seniority, employment, and market conditions when deciding the options to be granted to new employees.

Terrence C. Burke, Steve Cosler and Anthony Masso are members of the Compensation Committee. Mr. Burke is Chairman of the Compensation Committee. Mr. Ryan served on the Compensation Committee prior to his resignation from the Board of Directors on September 17, 2007. Each member of the Compensation Committee is and Mr. Ryan, while serving on the Compensation Committee, was independent as independence is defined in the listing standards of the Nasdaq Stock Market and in MI 52-110.

The Compensation Committee is responsible for reviewing the adequacy and format of compensation to directors in light of the responsibilities and risks associated with directorship. With respect to the compensation of the Company’s officers, see Item 11 “Executive Compensation”.

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics, (the “Code”), that applies to each of its employees, each employee of its subsidiaries, including our Chief Executive Officer, Chief Financial Officer, and other senior officers. The Code covers all areas of professional conduct, including conflicts of interest, disclosure obligations, confidential information, intellectual property, and a strict adherence to all laws and regulations to conduct our business. We encourage all employees, officers and directors to promptly report any violations of the Code to the appropriate persons identified in the Code. We have satisfied our obligation, imposed under the Sarbanes-Oxley Act of 2002, to disclose promptly on our website amendments to, or waivers from, the Code, if any. No waiver of any requirement of our Code was granted in 2007. A copy of our code is available on our website, www.sxc.com.

The Board is ultimately responsible for the implementation and administration of the Code of Business Conduct and Ethics and has designated a Compliance Officer for the day-to-day implementation and administration of the Code. In addition, the Company’s Audit Committee has adopted a Whistleblower Policy establishing procedures for the submission of complaints and concerns regarding accounting, auditing and other matters.

ITEM 11.   EXECUTIVE COMPENSATION.

Compensation Discussion and Analysis

Introduction

In this Compensation Discussion and Analysis, we address the compensation objectives, policies and practices relating to the 2007 compensation paid or awarded to our Named Executive Officers, or NEOs. Our Named Executive Officers for 2007 were Messrs. Glenn, Thierer, Park, Romza and Bennof. The terms “we”, “our”, and “the company” refer to SXC and not to the Compensation Committee.

Compensation Philosophy and Objectives

The overall compensation program for salaried employees has been designed and is administered to ensure that employee compensation promotes superior job performance and the achievement of business objectives. There are three main objectives of our executive compensation program: first, the maximization of shareholder value over the long term; second, to attract and retain highly qualified executives to ensure that the long-term financial objectives of the Company are met; and third, to provide incentives and reward each executive for his or her contributions to the Company. In particular, the goals of our executive compensation program are to reward past performance, incent future performance, and align executives’ long-term interests with

82

those of investors. The Compensation Committee believes that these objectives can best be accomplished by an executive compensation program that reflects the following four principles:

•  Base salaries should be sufficient to attract and retain qualified management talent, without exceeding competitive practice at similar companies in the healthcare information technology market;

•  Bonus and incentive programs should provide opportunity for significant increases in compensation, based on meeting or exceeding pre-determined company and individual performance targets;

•  A substantial portion of total long-term compensation should reflect performance on behalf of the Company’s shareholders, as measured by increases in the value of the Company stock; and

•  Compensation should be weighted to reflect the performance of the Company compared to its stated goals and relative to selected competitors, taking into consideration, metrics such as, but not limited to, sales growth, margins and earnings per share growth.

Role of Executives in Determining Compensation

The CEO annually reviews the performance of all NEOs based on performance objectives determined by the CEO. The performance objectives are based upon individual performance, business unit financial performance and overall Company financial performance and are approved by the Compensation Committee. The CEO prepares a self-assessment of himself and an assessment of all other NEOs and provides a recommendation regarding base pay increases, incentive compensation awards, and stock option awards. The recommendations submitted by the CEO are reviewed by the Compensation Committee. The Compensation Committee evaluates performance against the performance objectives and solicits feedback from the full board as it relates to the subjective measures. The determination of compensation actions for all NEOs involve thorough processes that include Compensation Committee review and approval of compensation program design and practices, and in depth discussions between the CEO and the Compensation Committee with respect to each NEO’s performance. The recommendations submitted by the CEO are reviewed by the Compensation Committee and, based on such reviews; the Compensation Committee provides recommendations to the CEO for revisions. The Compensation Committee determines the compensation program for all NEOs.

The executive compensation program for these individuals is designed to reward performance as measured against financial objectives and subjective performance objectives. These financial performance factors are based upon the Company’s performance in three sub-sectors -, Health Care IT, PBM and Retail Pharmacy. Half of the bonus opportunity that the CEO, COO and CFO receive is based on the Company’s performance in each of these sub-sectors compared to the Company’s internal financial budget. The remaining bonus opportunity is based on the Company’s performance in each of these sub-sectors compared to the performance of members of the peer group that operate in each of these sub-sectors. The Compensation Committee approves the total compensation package for the each of the NEOs.

Peer Group Information

The CEO and the Compensation Committee use market data of the peer group as a guide to ensure we are competitive in the market place and to help us attract, retain, motivate and increase long-term shareholder value to SXC. The peer group was determined by our CEO. Companies included in the peer group were selected based on a number of factors, including industry, number of employees, market capitalization, and product and services offerings. The Compensation Committee considers the list prepared by the CEO and assesses the information provided and determines if any modifications or amendments are needed to the peer group for compensation and performance comparisons purposes. The peer group consisted of nine healthcare information technology companies and six Pharmacy Benefit Management companies (PBM’s). While many of these organizations are significantly larger than SXC, they were included in the review because they provide industry benchmarks.

The Compensation Committee believes the Companies below to be an appropriate peer group.

83

Peer Group for Fiscal 2007

AllScripts	Healthcare IT	Caremark	Pharmacy Benefit Managers
Emergis (in CAD)	Healthcare IT	Express Scripts	Pharmacy Benefit Managers
Cemer Corp.	Healthcare IT	HealthExtras	Pharmacy Benefit Managers
Eclipsys	Healthcare IT	BioScrip Inc	Pharmacy Benefit Managers
Quovadx	Healthcare IT	National Medical Health Card	Pharmacy Benefit Managers
ProxyMed	Healthcare IT	Medco	Pharmacy Benefit Managers
Trizetto Group	Healthcare IT
McKesson	Healthcare IT Retail Pharmacy
Emdeon	Healthcare IT

We reviewed our relative position among the companies included in the peer group with respect to market capitalization, revenue, net income, employees, earnings per share, and one and three year stockholder return and, based on our review; we were in the lower quartile of the peer group.

In recommending the compensation package for our NEOs, the CEO prepares competitive market data based upon public records of members of our peer group. The competitive market data is one factor used in determining recommendations for the other NEOs. In making recommendations, the CEO considers, among other factors, the Company’s ability to replace the individual in the event of the executive’s departure, size of the organization under the executive’s control including the number of employees, revenue and profitability under the executive’s control, the amount received by others in relatively similar positions, and title. The competitive market data is used as a guide for compensation decisions and the CEO and the Compensation Committee do not target compensation at any particular point against the peer group.

Elements of Compensation and Rationale for Pay Mix

A variety of compensation elements are used to achieve the Company’s goals, including base salary, annual incentive compensation awards and stock option awards, all of which are discussed below. The Compensation Committee relies on its yearly assessment of the performance and business judgment of the CEO, and, in turn, upon the CEO’s assessment regarding the individual performance of the other NEOs and each NEO’s impact on the Company’s overall financial performance, to determine the amount and types of compensation awarded to executives. Factors influencing the Compensation Committee’s assessment include:

•  Our analyses of competitive compensation practices;

•  The Committee’s subjective evaluation of the CEO and other NEOs;

•  The Company’s actual financial performance compared to plan and the role the individual executive played and contribution, such as sales growth, margin, operating expenses and customer satisfaction;

•  Operational management, such as project milestones and process improvements;

•  The NEO’s effectiveness in implementing and delivering the Company’s operational and strategic goals established for the NEO at or around the beginning of the fiscal year;

•  The level of the NEO’s responsibilities within the Company, along with their individual expertise, skills and knowledge;

•  Leadership, including developing and motivating employees, collaborating within SXC, attracting and retaining employees and personal development; and

•  Labor market conditions, the need to retain and motivate, the potential to assume increased responsibilities and the long-term value to SXC.

We do not have a pre-defined framework that determines which of these factors may be more or less important, and the emphasis placed on specific factors may vary among the executive officers. Ultimately, it is the Committee’s judgment of these factors along with competitive market data from our peer group that form the basis for approving the total compensation package for each NEO. In determining total compensation packages for the Company’s Executives, the Compensation Committee considers each executive’s current salary and previous year’s bonus and the need to establish a balance between incentives for long-term and short-term performance.

84

Base Salaries

The Compensation Committee annually reviews the base salaries of the NEOs, including the CEO, and considers increases based on Company profitability, competitive salaries, position, responsibility and individual qualifications and performance. A component of this review is a comparison of current salaries against those reported for comparable positions in the Company’s peer group. The Compensation Committee also factors in internal salary levels within the Company, both with respect to other executive officers and senior employees. Base salaries may be adjusted at the Committee’s discretion when competitive data indicate a significant market lag or in recognition of outstanding individual performance or an increase in the executive’s functional responsibilities.

The salaries that the Company paid to Messrs, Glenn, Thierer, Park, Romza, and Bennof during fiscal 2007 are shown in the “2007 Summary Compensation Table.” The salary increases paid in 2007 to the NEOs were based upon cost of living increases.

Annual Bonus

Executives and certain other key personnel are eligible for cash bonuses after the end of each fiscal year. The bonus program is approved by the Compensation Committee. The Board of Directors, upon the recommendation of the Compensation Committee, determines the bonus for the CEO. The CEO’s bonus is based on the Company’s overall performance and financial results, including its achievement of goals pertaining to revenue growth, Adjusted EBITDA margin%, and EPS growth, relative performance of the Company to competitors, as well as certain individual goals. These factors are weighted and then the Company’s and the CEO’s fulfillment of these goals are evaluated. Bonuses for other executive officers are recommended by the CEO and then submitted to the Compensation Committee for its approval. The bonuses for the other NEOs are based on similar company-wide criteria as those used for the CEO, although individualized goals are customized. In making its final determinations, the Compensation Committee determines how each NEO contributed to the Company’s achievement of its goals as well as each NEO’s fulfillment of his individual goals.

The CEO’s bonus opportunity is based on the achievement of (i) the Company’s financial performance factors, which represents 60% of the CEO’s bonus opportunity, and (ii) individual performance factors, which represents 40% of the CEO’s bonus opportunity. The Company’s financial performance factors are based upon the Company’s performance in three sub-sectors — Health Care IT, PBM and Retail Pharmacy. Half of the financial performance bonus opportunity is based on the Company’s performance in each of these sub-sectors compared to the Company’s internal financial budget. The remaining bonus opportunity is based on the Company’s performance in each of these sub-sectors compared to the performance of members of the peer group that operate in each of these sub-sectors.

										Target
				Company			Peer Group			@ 80% of		Maximum
CEO Measures	Weight			Performance			Performance			Base		@ 200% of Base
Individual Performance		40	%							$	96,000	$	240,000
Financial Performance Factors —		60	%
HealthCare IT					20	%		20	%	$	57,600	$	144,000
PBM					25	%		25	%	$	72,000	$	180,000
Retail Pharmacy					5	%		5	%	$	14,400	$	36,000
		100	%		50	%		50	%	$	240,000	$	600,000

The COO and CFO are evaluated using the same two principal components and formula as the CEO, noted above, except that the COO and CFO have a maximum bonus of 150% of their base salary.

The other two NEOs cash incentive compensation is based upon the following factors:

i) achievement of individual objectives (50%); and ii) the individual’s contributions to the Company’s achievement of the Company’s revenue and adjusted EBITDA targets (50%). The achievement of the Company’s revenue and adjusted EBITDA targets are each weighted equally in evaluating the individual’s contribution to the Company’s achievement of such targets.

The Company did not achieve individual or minimum financial threshold performance factors and, therefore, no payouts were made to the CEO, COO or CFO under our annual bonus plan for 2007. Mr. Romza and Mr. Bennof received a payout under the 2007 annual bonus plan of $25,000 each as a result of achieving individual or financial threshold performance factors.

Executive Incentive Grants

The Compensation Committee believes that stock ownership and the amount or level of ownership by the Company’s NEOs is an important link to motivate the NEOs by the potential appreciation in our stock price. The Compensation Committee has historically awarded stock options because of its belief that stock options have the strongest tie to stock price performance and,

85

therefore, such awards align the interests of the Company’s NEOs with those of our stockholders. The Compensation Committee does not have formal stock ownership guidelines, except to ensure that NEOs maintain meaningful equity stakes in the Company. All option awards are made pursuant to the provisions of an incentive stock option plan (the “Stock Option Plan”) approved by the Company’s stockholders. Performance-based awards are generally determined in conjunction with the annual performance review process, which occurs in February and March of each year concurrently with the compilation of Corporate performance data. Each individual has a performance plan comprised of both individual and financial objectives, which are weighted during the review process. The assessments prepared by the CEO are used to determine any incentive compensation equity awards and to support any recommendations for options grants. The Compensation Committee reviews the assessments and options are awarded on a discretionary basis.

Options grants may be awarded on a discretionary basis in conjunction with a significant promotion, such as to an executive level position, or as a retention strategy. In both cases, the intention is both to reward the individual’s contributions to date and to solidify the individual’s commitment as a key leader/owner of the organization. Options grants may also be distributed as part of a specific recruitment strategy, specifically to provide competitive total compensation packages for individuals who will fill key senior level positions in the Company. The number of options granted will vary based on the targeted total compensation package.

The Stock Option Plan

As noted previously, all option awards are made pursuant to the provisions of the Stock Option Plan. The Stock Option Plan was established for the purpose of encouraging officers, employees, directors and service providers of the Company to participate in the growth and development of the Company. The Stock Option Plan currently provides that there will be a maximum of 3,937,500 Common Shares available for issuance (of which 454,311 remain available at December 31, 2007) and any increase in such maximum number of Common Shares will require approval of the holders of the Common Shares. The aggregate number of Common Shares reserved for issuance to insiders of the Company is not to exceed 10% of the aggregate number of Common Shares outstanding, and the aggregate number of Common Shares that may be issued to insiders in any one year period may not exceed 10% of the number of Common Shares outstanding. The aggregate number of Common Shares reserved for issuance to any one person under the Stock Option Plan and any other share compensation arrangement is not to exceed 5% of the aggregate number of the Common Shares outstanding.

The Compensation Committee oversees the administration of the Stock Option Plan and reports its oversight to the Board of Directors and, subject to the foregoing limitations, grants under the Stock Option Plan will be at the discretion of such committee.

Post-Termination Compensation

The employment agreements with each of our NEOs provides for severance benefits following certain terminations of employment from the Company. We provide these severance benefits because many of the companies with which we compete for executive talent provide similar benefits and these benefits are therefore necessary for retention and recruitment purposes. In the event a change in control, the severance benefits are payable only upon a so-called “double trigger.” This means that severance benefits are triggered within 12 months after the change in control only when the NEO’s employment with the Company is terminated with that period. Please see the “Employment Agreements” and “Potential Payments upon Termination or Change in Control” sections of this Item 11 for a description and amounts of the severance benefits to be paid following each NEO’s termination of employment.

Retirement Plans

The Company provides a 401(k) plan to its employees, including the NEOs. The Company’s NEOs participate on the same terms as all other eligible Company employees. The Company matches 50% of the first 4% of eligible earnings contributed by an employee, to his or her account under the plan.

Perquisites

The Company provides NEOs with perquisites that the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract, retain and motivate superior employees for key positions. The Compensation Committee periodically reviews the levels of perquisites provided to its NEOs. Perquisites include the following:

Automobile Allowance — The Company provides each of its NEOs with an annual automobile allowance of $6,000.

Relocation Assistance — The Company provided Mr. Bennof with a relocation allowance of $35,000 for the purpose of securing a residence in geographical proximity to the Company’s headquarters in Lisle, Illinois.

86

Payment of Health Insurance Premiums — The Company provided Mr. Glenn with company-paid health and dental insurance for himself and his selected covered dependents. The value of the premiums over the 12-month period is equal to $11,116; however, since the Company typically covers 80% of the premiums for its employees, the incremental benefit to Mr. Glenn is $2,223.

Executive Group Life — As a supplement to the standard life insurance policy provided to all of the Company’s employees, the Company provided each of the NEOs with a supplemental, $500,000 life insurance policy. The value of the policy to each NEO is $700 per year.

Accounting for Stock Based Compensation

Effective January 1, 2006, the Company was required to recognize compensation expense of all stock-based awards pursuant to the principles set forth in SFAS 123R. Consequently, the Company began recording a compensation expense in its financial statements for stock options and other equity awards granted during fiscal 2006 and thereafter. Despite the accounting change, the Compensation Committee believes that stock options and other forms of equity compensation are an essential component of the Company’s equity strategy, and it intends to continue to offer options as a major portion of its long-term incentives.

Deductibility of Executive Compensation

Under Internal Revenue Code Sections 162(m), a company generally may not deduct compensation in excess of $1,000,000 paid to “covered employees” under Section 162(m). However, “performance based compensation” is exempt from the deduction limit if certain requirements are met. The structure of SXC’s executive compensation program has not historically given rise to Section 162(m) concerns. The Compensation Committee recognizes the desirability of preserving the deductibility of payments made to the NEOs and will continue to assess the impact of Section 162(m) on its compensation practices. However, the Compensation Committee believes that it must maintain flexibility in its approach in order to structure a program that is the most effective in attracting, motivating and retaining the Company’s key executives.

Compensation Paid to Our NEOs in 2007

Compensation of the Chief Executive Officer

The overall compensation package of Mr. Glenn, as the CEO, is designed to recognize that the CEO bears primary responsibility for increasing the value of shareholders’ investments. Moreover, the Company’s focus on equity-based awards aligns the interests of the CEO with the interests of shareholders. The CEO’s compensation is intended to be directly related to the Company’s overall performance. For instance, our CEO’s annual bonus plan is determined based on a weighting of 60% for Company-wide financial performance factors and 40% for individual performance factors.

Base Salary.  Mr. Glenn’s base salary in 2007 was $300,000, per the terms of his Employment Agreement dated April 3, 2007 and was increased to $310,000 upon the recommendation of the Compensation Committee.

Annual Bonus.  As discussed previously, Mr. Glenn’s bonus is based substantially on the Company’s achievement of financial performance factors, relative to the corporate performance when compared to select competitors, and individual performance. The financial performance factors are based upon three sub-sectors with half weighted based upon the Company’s performance compared to the Company’s internal financial budget and half weighted based upon the Company’s performance compared to the peer group. Mr. Glenn’s target bonus is equal to 80% of his base pay, or $240,000. Mr. Glenn may earn up to 200% of his base pay, based on achievement of the specified performance objectives, as determined by the Compensation Committee. Mr. Glenn did not receive a payout under the 2007 annual bonus plan as a result of not achieving individual or minimum financial threshold performance factors.

Option Awards.  The Compensation Committee, awarded Mr. Glenn 50,000 options in 2007 in accordance with the terms of his employment agreement and to properly reward his contributions, encourage retention, motivate, increase his stock ownership and solidify his commitment to the Company and the interest of our stockholders.

Perquisites.  Mr. Glenn received certain perquisites in 2007. The Company provided Mr. Glenn with an annual automobile allowance of $6,000. The Company provided company-paid health insurance to Mr. Glenn and his covered dependents, with a total value of $11,116; however, since the Company typically covers 80% of the premiums for its employees, the incremental benefit to Mr. Glenn is $2,223. Mr. Glenn received a $500,000 supplemental executive group life policy, valued at $700 per year.

87

Compensation of the President and Chief Operating Officer

The overall compensation package of Mr. Thierer, as the COO, is designed to recognize that the COO shares responsibility for increasing the value of shareholders’ investments. Moreover, the Company’s focus on equity-based awards aligns the interests of the COO with the interests of shareholders. The COO’s overall compensation is intended to be directly related to the Company’s overall performance (40% weight for individual performance and 60% weight for financial performance factors).

Base Salary.  Mr. Thierer’s base salary in 2007 was $275,000, per the terms of his Employment Agreement dated August 28, 2006. In April, 2007 his base pay was increased to $280,000 upon the recommendation of the Compensation Committee.

Annual Bonus.  Mr. Thierer’s bonus is based substantially on the Company’s achievement of financial performance factors, relative corporate performance when compared to select competitors, and individual performance. The financial factors are based upon three sub-sectors with half weighted based on the Company’s performance and half weighted based upon the peer group’s performance. The targets are weighted and sub weighted in order to properly align performance with rewards. Mr. Thierer’s target bonus is equal to 80% of his base pay, or $224,000. Mr. Thierer may earn up to 150% of his base pay, based on achievement of the specified performance objectives, as determined by the Compensation Committee. Mr. Thierer did not receive a payout under the 2007 annual bonus plan as a result of not achieving individual or minimum financial threshold performance factors.

Option Awards.  The Compensation Committee, at its discretion, awarded Mr. Thierer 150,000 options in 2007 to properly reward his contributions, encourage retention, motivate, and solidify his commitment to the Company and the interest of our stockholders. In addition, Mr. Thierer’s award was based upon the Compensation Committee’s desire to increase his stock ownership to a more appropriate level to further align his interest with those of our stockholders.

Perquisites.  Mr. Thierer received certain perquisites in 2007. The Company provided Mr. Thierer with an annual automobile allowance of $6,000. Mr. Thierer received a $500,000 supplemental executive group life policy, valued at $700.

Compensation of the Chief Financial Officer

The overall compensation package of Mr. Park, as the CFO, is designed to recognize that the CFO shares responsibility for increasing the value of shareholders’ investments. Moreover, the Company’s focus on equity-based awards aligns the interests of the CFO with the interests of shareholders. The CFO’s overall compensation is intended to be directly related to the Company’s overall performance (40% weight for individual performance and 60% weight for financial performance factors).

Base Salary.  Mr. Park’s base salary in 2007 was $250,000, per the terms of his Employment Agreement, and was increased to $257,000 upon the recommendation of the Compensation Committee.

Annual Bonus.  Mr. Park’s bonus is based substantially on the Company’s achievement of financial performance factors, relative corporate performance when compared to select competitors, and individual performance. The financial factors are based upon three sub-sectors with half weighted based on the Company’s performance and half weighted based upon the peer group’s performance. The targets are weighted and sub weighted in order to properly align performance with rewards. Mr. Park’s target bonus is equal to 50% of his base pay, or $128,500. Mr. Park may earn up to 150% of his base pay, based on achievement of the specified performance objectives, as determined by the Compensation Committee. Mr. Park did not receive a payout under the 2007 annual bonus plan as a result of not achieving individual or minimum financial threshold performance factors.

Option Awards.  The Compensation Committee, at its discretion, awarded Mr. Park 40,000 options in 2007 to properly reward his contributions, encourage retention, motivate, increase his stock ownership and solidify his commitment to the Company and the interest of our stockholders.

Perquisites.  Mr. Park received certain perquisites in 2007. The Company provided Mr. Park with an annual automobile allowance of $6,000. Additionally, Mr. Park received a $500,000 supplemental executive group life policy, valued at $700.

Compensation of Mr. Romza

The overall compensation package of Mr. Romza, as the Chief Technology Officer and Executive Vice President, Product Development, is designed to recognize that the Mr. Romza shares responsibility for increasing the value of shareholders’ investments. Moreover, the Company’s focus on equity-based awards aligns the interests of Mr. Romza with the interests of shareholders. Mr. Romza’s overall compensation is intended to be directly related to the Company’s overall performance (50% weight for individual performance and 50% weight for financial performance factors).

Base Salary.  Mr. Romza’s base salary in 2007 was $205,000, per the terms of his Employment Agreement. In April, 2007, his base salary was increased to $215,000, upon the recommendation of the Compensation Committee. In June, 2007, Mr. Romza

88

was promoted to Executive Vice President. Per the terms of his Employment Agreement dated June 29, 2007, Mr. Romza’s base salary was increased to $235,000 upon the recommendation of the Compensation Committee.

Annual Bonus.  Mr. Romza’s bonus is based substantially on the Company’s achievement of financial performance factors (50%) and individual performance (50%). The financial factors are based upon revenue targets (50%) and Adjusted EBITDA targets (50%). Mr. Romza may earn up to 65% of his base pay, or $152,750, based on achievement of the specified performance objectives and may receive an additional percentage of his base pay as determined by the Compensation Committee. Mr. Romza received a payout under the 2007 annual bonus plan of $25,000 as a result of achieving individual or financial threshold performance factors.

Option Awards.  The Compensation Committee, at its discretion, awarded Mr. Romza 20,000 options in May, 2007 to properly reward his contributions, encourage retention, motivate, increase his stock ownership and solidify his commitment to the Company and the interest of our stockholders. Under the term of his employment agreement, Mr. Romza was awarded an additional 10,000 options.

Perquisites.  Mr. Romza received certain perquisites in 2007. The Company provided Mr. Romza with an annual automobile allowance of $6,000. Additionally, Mr. Romza received a $500,000 supplemental executive group life policy, valued at $700.

Compensation of Mr. Bennof

The overall compensation package of Mr. Bennof, as Executive Vice President, Healthcare Information Technology is designed to recognize that Mr. Bennof shares responsibility for increasing the value of shareholders’ investments. Moreover, the Company’s focus on equity-based awards aligns the interests of Mr. Bennof with the interests of shareholders. Mr. Bennof’s overall compensation is intended to be directly related to the Company’s overall performance (50% weight for individual performance and 50% weight for financial performance factors).

Base Salary.  Mr. Bennof’s base salary in 2007 was $210,000, per the terms of his Employment Agreement. In April, 2007, his base salary was increased to $220,000, upon the recommendation of the Compensation Committee. In June, 2007, Mr. Bennof was promoted to Executive Vice President. Per the terms of his Employment Agreement dated June 29, 2007, Mr. Bennof’s base salary was increased to $235,000 upon the recommendation of the Compensation Committee.

Annual Bonus.  Mr. Bennof’s bonus is based substantially on the Company’s achievement of financial performance factors (50%) and individual performance (50%). The financial factors are based upon revenue targets (50%) and Adjusted EBITDA targets (50%). Mr. Bennof may earn up to 65% of his base pay, or $152,750, based on achievement of the specified performance objectives and may receive an additional percentage of his base pay as determined by the Compensation Committee. Mr. Bennof received a payout under the 2007 annual bonus plan of $25,000 as a result of achieving individual or financial threshold performance factors.

Option Awards.  The Compensation Committee, at its discretion, awarded Mr. Bennof 25,000 options in May, 2007 to properly reward his contributions, encourage retention, motivate, increase his stock ownership and solidify his commitment to the Company and the interest of our stockholders. Under the terms of his employment agreement, Mr. Bennof was awarded an additional 10,000 options.

Perquisites.  Mr. Bennof received certain perquisites in 2007. The Company provided Mr. Bennof with an annual automobile allowance of $6,000. Additionally, Mr. Bennof received a $500,000 supplemental executive group life policy, valued at $700 and a $35,000 relocation allowance to secure a residence in geographical proximity to the Company’s headquarters in Lisle, Illinois.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors of the Company oversees the Company’s compensation program on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Annual Report on Form 10-K.

In reliance on the review and discussions referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

COMPENSATION COMMITTEE

Terrence Burke

Steve Cosler

Anthony Masso

89

2007 Summary Compensation Table

The table below summarizes the total compensation paid or earned by each of the Named Executive Officers (“NEOs”) for the fiscal year ended December 31, 2007:

							Non-Equity		All Other
					Option		Incentive Plan		Compensation
Name and Principal Position	Year		Salary ($)		Awards ($)(1)		Compensation ($)		($)(2)(3)(4)		Total ($)
Gordon S. Glenn,		2007		310,000		476,000		—		8,817		794,817
Chairman and Chief Executive Officer
Mark Thierer,		2007		280,000		1,428,000		—		11,129		1,719,129
President and Chief Operating Officer
Jeffrey Park,		2007		257,000		380,800		—		11,805		649,605
Senior Vice President, Finance and Chief Financial Officer
John Romza,		2007		235,000		272,700		25,000		10,771		543,471
Executive Vice President, Research & Development and Chief Technology Officer
Mike H. Bennof,		2007		235,000		320,300		25,000		45,217		625,517
Executive Vice President, Healthcare Information Technology

(1)	The amounts are valued based on the fair value recognized for financial statement reporting purposes during 2007 for grants made in 2007 and prior years pursuant to SFAS 123R, except that, in accordance with rules of the SEC, any estimate for forfeitures is excluded from, and does not reduce, such amounts. See Note 8 to the Consolidated Financial Statements for the year ended December 31, 2007 in Item 8 of this Annual Report on Form 10-K for more information on the relevant assumptions used in calculating these amounts pursuant to SFAS 123R.
(2)	Other compensation primarily consists of the vehicle allowance of $6,000, 401(k) match, and supplemental life insurance policy valued at $700 per year provided to the respective NEOs.
(3)	The Company provided Mr. Bennof with a relocation allowance of $35,000 for the purpose of securing a residence in geographical proximity to the Company’s headquarters in Lisle, Illinois. This allowance was paid directly to Mr. Bennof and was reported as taxable income to Mr. Bennof.
(4)	The Company provided Mr. Glenn with company paid health and dental insurance for himself and selected covered dependents, above the amount typically covered by the Company, incrementally valued at $2,223.

Employment Agreements

The Company enters into employment agreements with executives to attract , retain and motivate superior employees for key positions. The terms of the employment agreements are based upon our analysis , competitive compensation practices and our ability to attract these individuals.

The Company has entered into employment agreements with each of the NEOs (Mr. Glenn, Mr. Thierer, Mr. Park, Mr. Romza and Mr. Bennof). The employment agreements provide for a certain level of severance payments under various scenarios, including termination by the Company without cause, resignation by the NEO for good reason, and change in control. In return, each executive agrees to certain provisions, including non-competition and non-solicitation of customers or employees for a specified period of time post-employment. The Company believes that these employment agreements serve to document a clear understanding between the Company and the NEO regarding the terms and conditions of the Executive’s employment with the Company, as well as the rights and obligations of each party if the employment relationship ends for any reason. The employment agreements provide additional protection to the NEOs in the event of a change in control, including vesting of options and additional severance benefits. By providing such protection to the NEOs, the Company believes it will enable these executives to focus on their duties without distraction in the face of a possible or an actual change in control, and will ensure that our senior executives are motivated to negotiate the best merger or acquisition consideration for the Company’s shareholders.

In 2007, the entire company, including the executives had the employment agreements reviewed and revised to reflect the Company’s desire to ensure adequate non-competes were in place and appropriate severance and change in control provisions were adequate retention tools, and supported the current changes to deferred compensation requirements.

90

Employment Agreement of the Chief Executive Officer

The Company entered into an employment agreement with Gordon S. Glenn, Chairman and Chief Executive Officer, effective as of April 3, 2007 (the “Glenn Employment Agreement”). The initial term of the Glenn Employment Agreement ends December 31, 2008 with an automatic renewal for successive one year periods unless otherwise terminated. The Glenn Employment Agreement currently provides for an annual base salary of $300,000 (subject to annual review), and for the payment of an annual performance bonus targeted at 80% of such base salary. Mr. Glenn’s base salary was increased to $310,000 during 2007, upon the recommendation of the Compensation Committee. Additionally, the Glenn Employment Agreement provides for a grant of 50,000 options in March, 2007, and for all options held on the effective date of the agreement to vest on the earlier of January 1, 2008, or the termination of the employment period due to the Executive’s resignation or a termination by the Company for any reason. The Glenn Employment Agreement further provides for a monthly car allowance, life insurance and standard health and dental insurance benefits. The Glenn Employment Agreement provides that Mr. Glenn will be entitled to receive a payment for, upon termination by reason of death or disability for incentive compensation bonus, if any, prorated to Mr. Glenn’s date of termination. The Glenn Employment Agreement also provides that Mr. Glenn will be entitled to the greater of: (i) two years base salary, a pro rated payment of his incentive compensation bonus, plus payment of health insurance premiums in the event of termination without cause, resignation for good reason or dissolution of the Company, or (ii) two times the sum of his base salary and two times the average of his last two incentive compensation bonuses, a pro rated payment of his incentive compensation bonus, plus payment of health insurance premiums in the event of a Change in Control of the Company (as such term is defined on the employment agreement). The Glenn Employment Agreement specifies certain post-employment obligations, including (i) non-disclosure of the Company’s trade secrets, confidential and proprietary information at any time; (ii) non-solicitation of the Company’s employees for a period of 12 months following the termination of employment; (iii) non-solicitation of the Company’s customers for a period of 24 months following the termination of employment; and (iv) non-competition for a period of 24 months following the termination of employment.

The Company reviews the executive agreements on an adhoc basis, and in March 2008, the Compensation Committee recommended a new employment agreement that was approved by the Board of Directors for Mr. Glenn. Mr. Glenn’s agreement was extended for an additional year and the options which had been scheduled to vest on January 1, 2008 had been correspondingly deferred until January 2009. In addition, the termination payments were adjusted to accommodate the target bonus amounts to reflect that the payments for 2007 had been adjusted. The terms of the new agreement are substantially similar to the Glenn Employment Agreement discussed above with the exception of the following changes: (1) the initial term of the new agreement will expire on December 31, 2009, (2) annual base salary of $310,000, (3) all options held on the effective date of the agreement to vest on the earlier of January 1, 2009 or the termination of the employment period by the Company for any reason, (4) severance benefit for Termination Without Cause or Resignation for Good Reason of (i) Mr. Glenn’s incentive compensation bonus, if any, prorated to Mr. Glenn’s date of termination, (ii) a payment equal to two times Mr. Glenn’s annual base salary at the time of termination plus one times the average incentive compensation payments over the previous two years, and (iii) payment of health insurance premiums for Mr. Glenn and his dependents until Mr. Glenn is eligible for Medicare benefits; and (5) severance benefit for a termination arising out of a Change in Control of the Company will include (i) Mr. Glenn’s incentive compensation bonus, if any, prorated to Mr. Glenn’s date of termination, (ii) two times the sum of his base salary at the time of termination, (iii) two times the greater of (A) the average of his last two incentive compensation bonuses, or (B) 80% of the average of the previous two year’s base salary, and (iv) payment of health insurance premiums for Mr. Glenn and his dependents until Mr. Glenn is eligible for Medicare benefits. The employment agreement further provides that if severance benefits payable after a change in control would be subject to the excise tax imposed by Section 280G and Section 4999 of the Internal Revenue Code, then Mr. Glenn will be entitled to receive an additional cash payment in an amount necessary to pay such taxes.

Employment Agreement of the President and Chief Operating Officer

The Company entered into an employment agreement with Mark Thierer, President and Chief Operating Officer, effective September 2006 (the “Thierer Employment Agreement”). The initial term of the Thierer Employment Agreement ends December 31, 2008 and will be automatically extended for successive two (2) year calendar periods unless otherwise cancelled. The Thierer Employment Agreement currently provides for an annual base salary of $280,000 (subject to annual review) and the payment of an annual performance bonus in an amount equal to a target bonus of 80% of such base salary subject to the fulfillment of certain pre-determined performance objectives. Mr. Thierer’s base salary was increased to $280,000 during 2007, upon the recommendation of the Compensation Committee. In addition, the Thierer Employment Agreement provided for an initial grant of 250,000 options. 100,000 of these options are “guaranteed” options which will vest according to a prescribed schedule and 150,000 options will become fully vested upon fulfillment of certain predetermined performance objectives, as determined by the Compensation Committee. The Thierer Employment Agreement further provides for a monthly car allowance, life insurance benefits, retirement plan participation (including company matching of employee contributions) and standard health and dental insurance benefits. The Thierer Employment Agreement provides that Mr. Thierer will be entitled to receive a payment upon termination by reason of death or disability of Mr. Thierer’s incentive compensation bonus, if any,

91

prorated to Mr. Thierer’s date of termination. Under the Thierer Employment Agreement, upon termination by the Company without cause or his resignation for good reason, Mr. Thierer is entitled to receive his accrued base salary plus a lump-sum payment equal to two times his annual base salary, and a pro rated payment of his incentive compensation bonus, if any. Additionally, the “guaranteed” options would vest on an accelerated schedule. On termination arising out of a change in control (as such term is defined in the agreement), Mr. Thierer is entitled to receive his accrued base salary, plus a lump-sum payment equal to two times his annual base salary and two times the average of his last two incentive compensation bonuses, and a pro rated payment of his incentive compensation bonus, if any. In addition, all of the unvested guaranteed options would vest immediately. The Thierer Employment Agreement specifies certain post-employment obligations, including (i) non-disclosure of the Company’s trade secrets, confidential and proprietary information at any time; (ii) non-solicitation of the Company’s employees for a period of 12 months following the termination of employment; (iii) non-solicitation of the Company’s customers for a period of 24 months following the termination of employment; and (iv) non-competition for a period of 24 months following the termination of employment.

The Company reviews the executive agreements on an adhoc basis, and in March 2008, the Compensation Committee recommended a new employment agreement that was approved by the Board of Directors for Mr. Thierer. Mr. Thierer’s agreement was extended for an additional year and the termination payments were adjusted to accommodate the target bonus amounts to reflect that the payments made for 2007 had been adjusted. The terms of the new agreement are substantially similar to the Thierer Employment Agreement discussed above with the exception of the following changes: (1) the initial term of the new agreement will expire on January 1, 2009; (2) severance benefit for termination without cause or resignation for good reason of (i) Mr. Thierer’s incentive compensation bonus, if any, prorated to Mr. Thierer’s date of termination, (ii) two times the sum of his base salary at the time of termination plus one times the average of his last two incentive compensation bonuses, (iii) Mr. Thierer and his covered dependents will receive health coverage for a period of eighteen months at the expense of the Company, and (iv) in the event of Mr. Thierer’s termination is on or before December 31, 2008, he would also receive 80% of the average of the previous two year’s base salary; and (3) severance benefit for a termination arising out of a change in control of the Company will receive (i) Mr. Thierer’s incentive compensation bonus, if any, prorated to Mr. Thierer’s date of termination, (ii) two times the sum of his base salary at the time of termination plus two times the greater of (A) the average of his last two incentive compensation bonuses, or (B) 80% of the average of the previous two year’s base salary, and (iii) health coverage for Mr. Thierer and his covered dependents for a period of eighteen months. The employment agreement further provides that if severance benefits payable after a change of control would be subject to the excise tax imposed by Section 280G and Section 4999 of the Internal Revenue Code, then Mr. Thierer will be entitled to receive an additional cash payment in an amount necessary to pay such taxes.

Employment Agreement of the Chief Financial Officer

The Company has also entered into an employment agreement with Jeffrey Park, Senior Vice-President, Finance, Chief Financial Officer and Corporate Secretary, effective October, 2007 (the “Park Employment Agreement”). The initial term of the Park Employment Agreement ends December 31, 2008 and will be automatically extended for successive one (1) year calendar periods unless otherwise cancelled. The Park Employment Agreement currently provides for an annual base salary of $257,000 (subject to annual review) and the payment of an annual performance bonus in an amount equal to a target bonus of 50% of such base salary subject to the fulfillment of certain pre-determined performance objectives. The Park Employment Agreement further provides for a monthly car allowance, life insurance benefits, retirement plan participation (including company matching of employee contributions) and standard health and dental insurance benefits. Under the Park Employment Agreement, on termination by the Company without cause, Mr. Park is entitled to receive a severance payment equal to his then-current annual salary, paid in 24 semi-monthly payments, and a pro rated payment of his incentive compensation bonus, if any. On termination arising out of a change of control (as such term is defined in the agreement), Mr. Park is entitled to receive a lump-sum payment equal to one and one-half times his annual salary plus the average of the previous two incentive compensation payments, and a pro rated payment of his incentive compensation bonus, if any. The Park Employment Agreement specifies certain post-employment obligations, including (i) non-disclosure of the Company’s trade secrets, confidential and proprietary information at any time; (ii) non-solicitation of the Company’s employees for a period of 24 months following the termination of employment; (iii) non-solicitation of the Company’s customers for a period of 24 months following the termination of employment; and (iv) non-competition for a period of 24 months following the termination of employment.

Employment Agreement of Other Named Executives

Mr. Romza

The Company has also entered into an employment agreement with John Romza, Chief Technology Officer and Executive Vice President, Product Development,, effective as of June 29, 2007 (the Romza Employment Agreement”). The initial term of the Romza Employment Agreement ends December 31, 2007 with an automatic renewal for successive one year periods unless otherwise terminated. The Romza Employment Agreement currently provides for an annual base salary of $235,000 (subject to

92

annual review), and for the payment of an annual performance bonus targeted at 65% of such base salary. Additionally, the Romza Employment Agreement provides for a grant of 10,000 options. The Romza Employment Agreement further provides for a monthly car allowance, life insurance and standard health and dental insurance benefits. Under the Romza Employment Agreement, on termination by the Company without cause, Mr. Romza is entitled to receive his accrued base salary, a pro rated payment of his incentive compensation bonus, if any, and a severance payment equal to his then-current base salary, paid in 24 semi-monthly payments. On termination arising out of a change of control (as such term is defined in the agreement), Mr. Romza is entitled to receive his accrued base salary, a pro rated payment of his incentive compensation bonus, if any , plus a lump-sum payment equal to (i) two times his annual base salary and (ii) the average of his last two incentive compensation bonuses, and immediate vesting of all unvested options. The Romza Employment Agreement specifies certain post-employment obligations, including (i) non-disclosure of the Company’s trade secrets, confidential and proprietary information at any time; (ii) non-solicitation of the Company’s employees for a period of 24 months following the termination of employment; and (iii) non-solicitation of the Company’s customers for a period of 24 months following the termination of employment.

Mr. Bennof

The Company has also entered into an employment agreement with Michael H. Bennof, Executive Vice-President, and Healthcare Technology Solutions, effective as of June 29, 2007 (the Bennof Employment Agreement”). The initial term of the Bennof Employment Agreement ends December 31, 2007 with an automatic renewal for successive one year periods unless otherwise terminated. The Bennof Employment Agreement currently provides for an annual base salary of $235,000 (subject to annual review), and for the payment of an annual performance bonus targeted at 65% of such base salary. Additionally, the Bennof Employment Agreement provides for a grant of 35,000 options. The Bennof Employment Agreement further provides for a monthly car allowance, life insurance and standard health and dental insurance benefits. Under the Bennof Employment Agreement, on termination by the Company without cause, Mr. Bennof is entitled to receive his accrued base salary , a severance payment equal to his then-current base salary, paid in 24 semi-monthly payments, and a pro rated payment of his incentive compensation bonus, if any. On termination arising out of a change of control (as such term is defined in the agreement), Mr. Bennof is entitled to receive his accrued base salary, plus a lump-sum payment equal to (i) two times his annual base salary and (ii) the average of his last two incentive compensation bonuses, plus a pro rated payment of his incentive compensation bonus, if any, and immediate vesting of all unvested options. The Bennof Employment Agreement specifies certain post-employment obligations, including (i) non-disclosure of the Company’s trade secrets, confidential and proprietary information at any time; (ii) non-solicitation of the Company’s employees for a period of 24 months following the termination of employment; and (iii) non-solicitation of the Company’s customers for a period of 24 months following the termination of employment.

93

Potential Payments upon Termination or Change in Control

The estimated payments to each Named Executive Officer triggered in the event of an involuntary termination without cause, retirement, death, disability, involuntary termination with cause and voluntary termination, as well as in the event of a change in control of the Company with and without a termination of employment on December 31, 2007, are as follows:

Summary of Potential Payments upon Termination (Fiscal Year 2007)

		Equity Awards
Name	Termination Scenario	Stock Options ($)		Severance Pay ($)		Other ($)		Total ($)
Gordon S. Glenn(1)	Termination for Cause		3,398		—		108,000		111,398
	Resignation, Death, or Total Disability		3,398		—		108,000		111,398
	Termination without Cause		3,398		620,000		108,000		731,398
	Resignation for Good Reason		3,398		620,000		108,000		731,398
	Termination following Change in Control		3,398		1,735,000		108,000		1,846,398
Mark Thierer(2)	Termination for Cause		—		—		—		—
	Resignation, Death, or Total Disability		—		—		—		—
	Termination without Cause		—		560,000		—		560,000
	Resignation for Good Reason		—		560,000		—		560,000
	Termination following Change in Control		—		660,000		—		660,000
Jeffrey Park(3)	Termination for Cause		—		—		—		—
	Resignation, Death, or Total Disability		—		—		—		—
	Termination without Cause		53,012		257,000		—		310,012
	Resignation for Good Reason		—		—		—		—
	Termination following Change in Control		53,012		500,500		—		553,512
John Romza(4)	Termination for Cause		—		—		—		—
	Resignation, Death, or Total Disability		—		—		—		—
	Termination without Cause		—		235,000		—		235,000
	Resignation for Good Reason		—		—		—		—
	Termination following Change in Control		1,699		592,500		—		594,199
Mike H. Bennof(4)	Termination for Cause		—		—		—		—
	Resignation, Death, or Total Disability		—		—		—		—
	Termination without Cause		—		235,000		—		235,000
	Resignation for Good Reason		—		—		—		—
	Termination following Change in Control		1,699		603,500		—		605,199

(1)	In the event of all termination scenarios presented, all unvested stock options become exercisable. Amounts stated represent the intrinsic value of in-the-money unvested options at December 31, 2007 that would have become exercisable upon the termination event. This amount is calculated using the closing market price of the stock on that date. The “Other” amount represents health coverage premiums to be paid by the Company on behalf of Mr. Glenn beginning upon termination and through the age of 65, which at December 31, 2007 represents six years of payments.
(2)	In the event of a Change in Control, all unvested stock options become exercisable. In the event of Resignation for Good Cause and Termination without Cause on or after December 31, 2007, all unvested options become exercisable. At December 31, 2007, the intrinsic value of all unvested options is nil as the options are out-of-the-money, as calculated using the closing market price of the stock on that date.
(3)	In the event of a Change in Control all unvested options become exercisable. In the event of Termination without Cause all unvested options that would otherwise vest within the twelve month period commencing on the effective date of termination, will become exercisable. Amounts stated represent the intrinsic value of in-the-money unvested options at December 31, 2007 that would have become exercisable, as calculated using the closing market price of the stock on that date.
(4)	In the event of a Change in Control all unvested options become exercisable. Amounts stated represent the intrinsic value of in-the-money unvested options at December 31, 2007 that would have become exercisable, as calculated using the closing market price of the stock on that date.

Effective March 2008, Mr. Glenn entered into a new employment agreement with the Company. The terms pursuant to the new agreement will have the following changes to his estimated payments: in the event of termination without cause or

94

resignation for good reason, Mr. Glenn will receive $1,735,000; in the event of termination following a change in control of the Company, Mr. Glenn will receive $1,735,000.

Effective March 2008, Mr. Thierer entered into a new employment agreement. The terms pursuant to the new agreement will have the following changes to his estimated payments: in the event of termination without cause or resignation for good reason, Mr. Thierer will receive $685,578; in the event Mr. Thierer’s termination is on or before December 31, 2008, he will receive $909,578; in the event of termination following a change in control of the Company, Mr. Thierer will receive $809,578.

Under the employment agreements, a change in control is generally defined to include the acquisitions by someone other than the Company of more than 50% of the voting power of the outstanding shares, when the surviving entity of a merger maintains a substantial amount of the voting power or the disposition of all or substantially all of the Company’s assets. Under the employment agreements, a termination arising out of a change in control is generally defined as the resignation of the executive, termination by the Company for cause, or a termination by the Company without cause within 12 months of a change in control.

Under the employment agreements, a resignation for good reason is generally defined as a voluntary termination within 60 days after the Company’s breach of the employment agreement, the Executive is assigned duties that are inconsistent with his or her position or significantly diminish their responsibilities or the relocation of the executive.

Annual Base Pay and Accrued Vacation

Upon termination for any reason, the NEOs listed above are entitled to receive their annual base compensation and accrued but unused vacation time through the termination date.

Incentive Compensation

Upon termination for reasons other than cause the new employment agreement provides for prorated bonus for change in control termination, Mr. Glenn would be entitled to receive a pro rata amount of the annual bonus he would have received if he remained employed throughout the calendar year. Mr. Glenn is not entitled to receive any portion of his annual bonus if he is terminated for cause.

Upon termination without cause, termination due to death or disability resignation for good reason, or termination arising out of a change in control, Mr. Thierer shall receive a pro rata amount of the annual bonus that he would have received if he remained employed throughout the calendar year. Mr. Thierer is not entitled to receive any portion of his annual bonus if his employment terminates during the calendar year for any other reason.

Upon termination of Messrs. Park, Romza, or Bennof during the calendar year due to a termination without cause or a rising out of a change in control, each shall receive a pro rata amount of the annual bonus if they remained employed throughout the calendar year. If Messrs. Park, Romza, or Bennof’s employment terminates during the calendar year for any other reason, then no annual bonus shall be paid for that calendar year.

95

2007 Grants of Plan-Based Awards Table

The following table sets forth information concerning grants under the Company’s Annual Bonus Plan and Stock Option Plan to the NEOs during the fiscal year ended December 31, 2007:

												All Other
												Option
												Awards:					Closing
												Number of			Exercise or		Price of		Grant Date
												Securities			Base Price		Option		Fair Value of
				Date		Estimated Possible Payouts Under						Underlying			of Option		Awards on		Stock and
				Grant was		Non-Equity Incentive Plan Awards						Options			Awards		Grant Date		Option
Name	Type of Award	Grant Date		Approved		Threshold ($)		Target ($)		Maximum ($)		(#)(1)			($/Shr)		($/Sh)(8)		Awards($)(2)
Gordon S. Glenn	Annual bonus plan						—		248,000		620,000
	Stock option plan		05/16/2007		03/02/2007								50,000 (3	)		23.58		23.58		320,901
Mark Thierer	Annual bonus plan						—		224,000		420,000
	Stock option plan		05/16/2007		03/02/2007								150,000 (4	)		23.58		23.58		953,453
Jeffrey Park	Annual bonus plan						—		128,500		385,500
	Stock option plan		05/16/2007		03/02/2007								40,000 (5	)		23.58		23.58		372,351
John Romza	Annual bonus plan						—		117,500		235,000
	Stock option plan		05/16/2007		03/02/2007								20,000			23.58		23.58		124,695
			09/05/2007		06/12/2007								10,000 (6	)		18.11		18.49
Mike H. Bennof	Annual bonus plan						—		117,500		235,000
	Stock option plan		05/16/2007		03/02/2007								25,000			23.58		23.58		121,426
			09/05/2007		06/12/2007								10,000 (7	)		18.11		18.49

(1)	The stock options reported in this column are nonqualified stock options granted under the Amended and Restated Stock Option Plan. The options vest in one-fourth increments annually on the anniversary of the grant date, becoming fully vested four years after the grant date. The options expire five years from the grant date.
(2)	The amounts shown represent the estimated fair value of the stock options on the grant date as determined in accordance with SFAS 123R. The Company uses the Black-Scholes-Merton option-pricing model in estimating the fair value of stock options. For additional information on the valuation assumptions, refer to Note 7 of Item 8 to this Annual Report on Form 10-K. These amounts reflect grant date fair value of the award and do not correspond to the actual value that will be recognized by the NEOs.
(3)	These options were granted pursuant to Mr. Glenn’s employment agreement.
(4)	These options were granted pursuant to the Company’s equity award program.
(5)	These options were granted pursuant to the Company’s equity award program.
(6)	These options were granted pursuant to Mr. Romza’s employment agreement.
(7)	These options were granted pursuant to Mr. Bennof’s employment agreement.
(8)	As defined by the plan, the exercise price is determined using the closing market price on the trading day immediately prior to grant date. In the event the options are granted after the market closes on the date of grant, the exercise price and grant date closing price could be the same.

96

2007 Outstanding Equity Awards at Fiscal Year-End Table

The following table sets forth information on the current holdings of stock options by the NEOs at December 31, 2007:

Outstanding Equity Awards at Fiscal Year-End
Option Awards

	Number of Securities
	Underlying Unexercised		Number of Securities		Option		Option
	Options		Underlying Unexercised		Exercise		Expiration
Name	(#) Exercisable		Options (#) Unxercisable		Price ($)(1)		Date
Gordon S. Glenn		25,000		—	C$	6.60		(2	)
		100,000		—	C$	6.60		(2	)
		40,000		—	C$	1.56		(3	)
		66,250		—	C$	3.08		(4	)
		81,250		—	C$	7.32		(5	)
		33,334		—	C$	2.52		12/31/2008
		33,334		16,666	C$	14.36		(6	)
		—		50,000	USD	23.58		5/16/2012(10	)
Total		379,168		66,666
Mark Thierer		5,000		—	C$	10.80		12/31/2011
		109,334		54,666	C$	15.63		(7	)
		21,500		64,500	C$	15.63		(8	)
		—		150,000	USD	23.58		5/16/2012(10	)
Total		135,834		269,166
Jeffrey Park		108,334		54,166	C$	13.60		(9	)
		—		40,000	USD	23.58		5/16/2012(10	)
Total		108,334		94,166
John Romza		6,250		—	C$	3.20		12/31/2008
		6,250		—	C$	1.40		12/31/2008
		25,000		—	C$	7.32		(5	)
		20,000		—	C$	1.56		(3	)
		33,750		—	C$	3.08		(4	)
		33,750		—	C$	6.60		(2	)
		16,667		8,333	C$	14.36		(6	)
		—		20,000	USD	23.58		5/16/2012(10	)
		—		10,000	USD	18.11		9/5/2012(10	)
Total		141,667		38,333
Mike H. Bennof		8,334		—	C$	2.52		12/31/2008
		16,667		—	C$	1.56		(3	)
		25,000		—	C$	7.32		(5	)
		25,000		—	C$	6.60		(2	)
		27,000		—	C$	3.08		(4	)
		16,667		8,333	C$	14.36		(6	)
		—		25,000	USD	23.58		5/16/2012(10	)
		—		10,000	USD	18.11		9/5/2012(10	)
Total		118,668		43,333

(1)	The Company’s stock option plan allows for grants to be made in both Canadian and U.S. dollars. Prior to May, 2007, stock options were granted in Canadian dollars, with subsequent grants in U.S. dollars.
(2)	This option was granted on March 4, 2005 and, pursuant to the terms of the option grant, this option vested in one-third increments on each of December 31, 2005, 2006, and 2007. Each vested increment expires five years from the respective vest date.
(3)	This option was granted on March 8, 2002 and, pursuant to the terms of the option grant, this option vested in one-third increments on each of December 31, 2002, 2003 and 2004. Each vested increment expires five years from the respective vest date.

97

(4)	This option was granted on March 11, 2003 and, pursuant to the terms of the option grant, this option vested in one-third increments on each of December 31, 2003, 2004, and 2005. Each vested increment expires five years from the respective vest date.
(5)	This option was granted on March 19, 2004 and, pursuant to the terms of the option grant, this option vested in one-third increments on each of December 31, 2004, 2005, and 2006. Each vested increment expires five years from the respective vest date.
(6)	This option was granted on March 8, 2006 and, pursuant to the terms of the option grant, this option vested or will vest, as the case may be, in one-third increments on each of December 31, 2006, 2007, and 2008. Each vested increment expires five years from the respective vest date.
(7)	This option was granted on August 28, 2006 and, pursuant to the terms of the option grant, this option vested or will vest, as the case may be, in one-third increments on each of December 31, 2006, 2007, and 2008. Each vested increment expires five years from the respective vest date.
(8)	This option was granted on August 28, 2006 and, pursuant to the terms of the option grant, this option vested or will vest, as the case may be, in one-fourth increments on each grant date anniversary in 2007, 2008, 2009, and 2010. Each vested increment expires five years from the vest date.
(9)	This option was granted on February 17, 2006 and, pursuant to the terms of the option grant, this option vested or will vest, as the case may be, in one-third increments on each of December 31, 2006, 2007, and 2008. Each vested increment expires five years from the respective vest date.
(10)	This option will vest in one-fourth increments on each grant date anniversary.

2007 Option Exercises

The following table sets forth the stock options exercised by each NEO during the fiscal year ended December 31, 2007:

	Option Awards
	Number of
	Shares		Value
	Acquired on		Realized on
Name	Exercise (#)		Exercise ($)
Gordon S. Glenn		61,667		588,948
Mark Thierer		—		—
Jeffrey Park		—		—
John Romza		22,500		231,659
Mike H. Bennof		18,750		176,192

Compensation of Directors

In April 2007, the Company’s management conducted a competitive analysis of board compensation. Director compensation data was collected on each member of the peer group identified in the Compensation Discussion and Analysis section of this Annual Report. Based on the results of that analysis, the Compensation Committee recommended a new Director compensation package, which was approved by the Board of Directors on November 7, 2007 with an effective date of July 1, 2007. In reviewing the Company’s director compensation arrangements, management considered, in particular, a sub-set of companies in the lower quartile of the peer group because revenue and number of employees of such companies were comparable to the Company’s size.

In accordance with the new Director compensation package, each non-management director receives an annual retainer of $25,000, a fee of $1,400 for each in-person meeting of the Board of Directors, $500 to $700 for in-person committee meetings, and $375 for all meetings held telephonically. Directors will also be reimbursed for travel expenses incurred in connection with their respective attendances. In addition, each non-management director receives an annual grant of 5,000 stock options, which typically vest in one-fourth increments on each grant date anniversary and expire five years from grant date. Directors who are also members of management do not receive director’s fees.

98

The following table sets forth the compensation paid to the directors of the Company during the fiscal year ended December 31, 2007:

	Fees Earned or
	Paid in		Option
Name	Cash ($)		Awards ($)(1)		Total ($)
Terrence C. Burke		36,225		52,425		88,650
Steven D. Cosler		19,800		54,600		74,400
William J. Davis(2)		34,350		40,209		74,559
Anthony R. Masso		14,275		30,600		44,875
Philip R. Reddon		37,440		—		37,440
James A. Ryan		27,625		—		27,625
Curtis J. Thorne		15,400		30,600		46,000

(1)

The amounts are valued based on the fair value recognized for financial statement reporting purposes during 2007 for grants made in 2007 and in prior years pursuant to SFAS 123R, except that, in accordance with rules of the SEC, any estimate for forfeitures is excluded from, and does not reduce, such amounts. See Note 8 to the Consolidated Financial Statements for the year ended December 31, 2007 in Item 8 of this Annual Report on Form 10-K for more information on the relevant assumptions used in calculating the fair value of options granted.

(2)

A portion of Mr. Davis’ option awards were granted in Canadian dollars. The fair value of these options was converted to U.S. dollars using the exchange rate of .9809 Canadian dollars for each U.S. dollar as of December 31, 2007. The Company’s stock option plan allows for grants to be made in both Canadian and U.S. dollars. Prior to May 2007, stock options were granted in Canadian dollars, with subsequent grants in U.S. dollars.

The grant date fair value of each option awarded in 2007 calculated pursuant to SFAS 123R as well as the aggregate number of options outstanding as of December 31, 2007 for each of the directors noted above are as follows:

	Grant Date
	Fair Value of			Aggregate
	Stock and			Option
	Option			Awards
Name	Awards ($)			Outstanding (#)
Terrence C. Burke		52,425			22,500
Steven D. Cosler		54,600			7,500
William J. Davis		(1	)		7,500
Anthony R. Masso		30,600			7,500
Philip R. Reddon		—			—
James A. Ryan		—			—
Curtis J. Thorne		30,600			7,500

(1) The Company’s stock option plan allows for grants to be made in both Canadian and U.S. dollars. Prior to May 2007, stock options were granted in Canadian dollars, with subsequent grants in U.S. dollars. Mr. Davis was granted both Canadian dollar and U.S. dollar options during 2007. Mr. Davis was granted 5,000 options with a grant date fair value of $4.46 in Canadian dollars and 2,500 options with a grant date fair value of $6.99 in U.S. dollars.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Committee was an officer (within the meaning of applicable United States securities laws) or employee of the Company or any of its subsidiaries at any time during 2007. No executive officer of the Company serves on the board of directors or compensation committee of any other entity that has or has had one or more of its executive officers serving as a member of the Company’s Board of Directors.

99

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information, as of January 31, 2008 concerning the persons or entities known to us to be beneficial owner of more than 5% of the shares of common stock as well as the number of shares of common stock that our directors and executive officers own. Except as otherwise indicated below, each of the entities or persons named in the table has sole voting and investment power with respect to all shares of common stock beneficially owned set forth opposite their name. Percentage ownership is based on an aggregate of 20,994,108 common shares outstanding on February 29, 2008. Unless otherwise indicated, the business address of each stockholder listed below is SXC Health Solutions Corp., 2441 Warrenville Rd, Suite 610, Lisle, Illinois 60532.

			Number of Shares		Percentage of
Name and Address of Beneficial Owner	Title of Class		Beneficially Owned		Class
Federated Investors, Inc.(1)
Principal Stockholders:
Federated Investors Tower		Common Shares		1,214,700		5.79	%
5800 Corporate Drive
Pittsburgh, PA 15222
Acuity Investment Management, Inc.(2)		Common Shares		3,291,400		15.68	%
40 King Street West Scotia Plaza, 56th Floor
Toronto, ON M5H 3Y2 Canada
Covington Fund II Inc.(3)		Common Shares		1,331,405		6.34	%
200 Front Street West, Suite 3003
Toronto, ON A6 M5V 3K2

					Aggregate Stock Option Grants
					Exercisable Within 60 Days of		Percentage of
Name of Beneficial Owner	Title of Class		Shares		February 29, 2008		Class
Terrence C. Burke		Common Shares		—		22,500		**
Steven D. Cosler		Common Shares		2,000		7,500		**
William J. Davis		Common Shares		—		7,500		**
Anthony R. Masso		Common Shares		—		—		**
Philip R. Reddon*		Common Shares		*		—		*
Curtis J. Thorne		Common Shares		—		—		**
Gordon S. Glenn		Common Shares		178,224		379,168		2.7	%
Mark Thierer		Common Shares		21,830		135,834		**
Jeffrey Park		Common Shares		965		108,334		**
John Romza		Common Shares		37,893		141,667		**
Mike Bennof		Common Shares		40,701		118,668		**
Other executive officers		Common Shares		—		79,167		**
All executive officers and directors as a group (13 persons)		Common Shares		281,613		1,000,338		6.1	%

*	Mr. Reddon is an officer of Covington Fund II Inc., which manages or advises various funds and which beneficially owns 1,331,405 Common Shares of the Company. Mr. Reddon disclaims beneficial ownership of these shares.
**	Less than 1% owned.
(1)	This information is based upon the Schedule 13G filed by Federated Investors, Inc. with the Securities and Exchange Commission on February 13, 2008. Federated Investors, Inc. has reported therein that it has sole investment and voting discretion over 1,214,700 common shares.
(2)	This information is based upon the Schedule 13G/A filed by Acuity Investment Management, Inc. with the Securities and Exchange Commission on February 14, 2008. Acuity Investment Management, Inc. has reported therein that it has sole investment discretion over 3,291,400 shares, sole voting power over 2,442,450 shares and shared voting power over 848,950 shares.
(3)	This information is based upon information reported on System for Electronic Disclosers by Insiders (Sedi.ca) on February 21, 2008.

100

Securities Authorized for Issuance Under Equity Compensation Plans

At December 31, 2007, the securities authorized for issuance under the equity compensation plan for the Company were as follows:

						Number of Securities
	Number of Securities					Remaining Available for
	to be Issued		Weighted Average			Future Issuance Under
	Upon Exercise of		Exercise Price of			Equity Compensation
Plan Category	Outstanding Options		Outstanding Options			Plans(2)
Equity compensation plan approved by security holders — Stock Option Plan(1)		1,988,602		(3	)		454,311
Equity compensation plan approved by security holders — Employee Stock Purchase Plan		Nil		Nil			100,000

(1)	For a complete description of the Stock Option Plan, see “Executive Compensation — The Stock Option Plan”.
(2)	There are no equity compensation plans that have not been approved by security holders.
(3)	At December 31, 2007, the Company had outstanding 1,452,602 options denominated in Canadian dollars with a weighted average exercise price of C$9.54. The remaining 536,000 options are denominated in U.S. dollars with a weighted average exercise price of $21.88.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

Director Independence

Refer to Item 10 for information related to director independence. Such information is incorporated by reference into this Item 13.

Indebtedness of Directors, Executive Officers and Senior Officers

None of the directors, executive officers or senior officers of the Company, and none of the associates or affiliates of any of the foregoing, is currently indebted to the Company or was indebted to the Company at any time since the beginning of the Company’s most recently completed fiscal year.

Related Party Transactions

The Company or one of its subsidiaries may occasionally enter into transactions with certain “related persons.” Related persons include our executive officers, directors, nominees for directors, a beneficial owner of 5% or more of our common stock and immediate family members of these persons. We refer to transactions involving amounts in excess of $120,000 and in which the related person has a direct or indirect material interest as “related person transactions.” Each related person transaction must be approved or ratified in accordance with the Company’s written Related Person Transactions Policy by the Audit Committee of the Board of Directors. The Audit Committee considers all relevant factors when determining whether to approve a related person transaction.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.

KPMG LLP, Independent Registered Public Accountants, are the current auditors of the Company. In addition to retaining KPMG LLP to audit our financial statements, we engage them from time to time to perform other services. The table below shows the total fees billed by KPMG LLP for their services to us in 2006 and 2007:

Fee Type	2007		2006
Audit Fees(1)	$	869,000	$	257,000
Audit Related Fees(2)		459,000		419,000
Tax Fees(3)		—		64,000
All other fees		4,000		—
Total	$	1,332,000	$	740,000

(1) Audit fees consist of fees for professional services rendered for the audit of the Company’s annual consolidated Financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings. Audit fees also include fees for

101

	professional services rendered for the audits of the effectiveness of internal control over financial reporting during fiscal 2007 and 2006.
(2)	Advice with respect to internal controls over financial reporting of the Company.
(3)	Tax fees consist of fees for professional services rendered for preparation and filing of tax returns.

The Audit Committee has determined that the provision of the non-audit services described above is compatible with maintaining the independence of KPMG LLP.

The Audit Committee has adopted a policy requiring approval by the Audit Committee of all services (audit and non-audit) to be provided to us by our independent registered public accounting firm. In accordance with that policy, the Audit Committee has given its approval for the provision of all audit services performed by KPMG LLP for 2008. All other services must be specifically approved by the Audit Committee or by a member of the Audit Committee to whom the authority to approve the provision of services has been delegated.

PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit Number			Description	Reference
	2	.1	Agreement and Plan of Merger, dated as of February 25, 2008, by and among SXC Health Solutions Corp., SXC Health Solutions, Inc., Comet Merger Corporation and National Medical Health Card Systems, Inc.	Incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by SXC with the Securities and Exchange Commission on February 27, 2008
	3	.1	Certificate of Amalgamation of SYSTEMS XCELLENCE INC.	Filed herewith
	3	.2	Certificate of Continuance of SXC HEALTH SOLUTIONS CORP. (formerly named SYSTEMS XCELLENCE INC.)	Filed herewith
	3	.3	Bylaws of SYSTEMS XCELLENCE INC.	Filed herewith
	4	.1	Specimen of Common Stock Certificate	Filed herewith
	4	.2	Registration Rights Agreement, dated as of February 25, 2008, by and between SXC Health Solutions Corp., New Mountain Partners, L.P. and New Mountain Affiliated Investors, L.P.	Incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by SXC with the Securities and Exchange Commission on February 27, 2008
	10	.1	Lease Agreement between HINES VAF WESTWOOD OF LISLE II, L.P. and SXC HEALTH SOLUTIONS, INC., dated March 24, 2006	Filed herewith
	10	.2	Memorandum and Amendment between GRIFFIN CAPITAL CORPORATION and SXC HEALTH SOLUTIONS, INC., dated January 23, 2008	Filed herewith
	10	.3	Commencement Date Memorandum between PC 101, INC. and SXC HEALTH SOLUTIONS, INC., dated January 25, 2007	Filed herewith
	10	.4	Office Lease Agreement between PC 101, INC. and SXC HEALTH SOLUTIONS, INC., dated April 12, 2006	Filed herewith
	10	.5	First Amendment to Multi-Tenant Agreement between PC 101, INC. and SXC HEALTH SOLUTIONS, INC., dated July 24, 2006	Filed herewith
	10	.6	Second Amendment to Multi-Tenant Agreement between PC 101, INC. and SXC HEALTH SOLUTIONS, INC., dated October 29, 2007	Filed herewith
	10	.7	Agreement of Lease between Commonwealth Management Corporation and Health Business Systems, Inc., dated July 1, 1996	Filed herewith

102

Exhibit Number			Description	Reference
	10	.8	Amendment between Equivest Management Corporation and Health Business Systems, Inc., dated April 24, 2000	Filed herewith
	10	.9	Second Amendment between 730 LOUIS DRIVE, L.P. and Health Business Systems, Inc., dated November 13, 2002	Filed herewith
	10	.10†	Employment Agreement, effective as of April 3, 2007, between SXC Health Solutions, Inc. and Gordon S. Glenn	Filed herewith
	10	.11†	Employment Agreement, effective as of August 24, 2006, between SXC Health Solutions, Inc. and Mark Thierer	Filed herewith
	10	.12†	Employment Agreement, effective as of October, 2007, between SXC Health Solutions, Inc. and Jeff Park	Filed herewith
	10	.13†	Employment Agreement, effective as of June, 2007, between SXC Health Solutions, Inc. and Mike Bennof	Filed herewith
	10	.14†	Employment Agreement, effective as of June 19, 2007, between SXC Health Solutions, Inc. and John Romza	Filed herewith
	10	.15†	Employment Agreement, effective as of May 21, 2007, between SXC Health Solutions, Inc. and Michael Meyer	Filed herewith
	10	.16†	Employment Agreement, effective as of October, 2007, between SXC Health Solutions, Inc. and B. Greg Buscetto	Filed herewith
	10	.17†	Amended and Restated Stock Option Plan	Incorporated herein by reference to Exhibit 4.1 to the Form S-8 (SEC File No. 333-145449) SXC Health Solutions Corp. on August 14, 2007
	10	.18†	2007 Employee Stock Purchase Plan	Incorporated herein by reference to Exhibit 4.1 to the Form S-8 (SEC file No. 333-145450) filed by SXC Health Solutions Corp. on August 14, 2007
	10	.19†	Form of SXC Health Solutions Corp. Stock Option Agreement for certain Employees, Non-Employee Directors and Service Providers	Filed herewith
	10	.20†	Employment Agreement, effective as of March, 2008, between SXC Health Solutions Corp. and Gordon S. Glenn	Filed herewith
	10	.21†	Employment Agreement, effective as of March, 2008, between SXC Health Solutions Corp. and Mark Thierer	Filed herewith
	10	.22	Stockholder Agreement, dated as of February 25, 2008, by and among SXC Health Solutions Corp., New Mountain Partners, L.P. and National Medical Health Card Systems, Inc.	Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by SXC with the Securities and Exchange Commission on February 27, 2008
	10	.23	Stockholder Agreement, dated as of February 25, 2008, by and among SXC Health Solutions Corp., New Mountain Affiliated Investors, L.P. and National Medical Health Card Systems, Inc.	Incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by SXC with the Securities and Exchange Commission on February 27, 2008
	10	.24	Commitment Letter, dated as of February 25, 2008, between GE Healthcare Financial Services and SXC Health Solutions Corp.	Incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by SXC with the Securities and Exchange Commission on February 27, 2008
	21	.1	List of Subsidiaries	Filed herewith
	23	.1	Consent of KPMG LLP	Filed herewith

103

Exhibit Number			Description	Reference
	31	.1	Rule 13a-14(a)/15d-14(a) Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith
	31	.2	Rule 13a- 14(a)/15d-14(a) Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith
	32	.1	Section 1350 Certification of CEO as adopted by Section 906 of the Sarbanes-Oxley Act	Filed herewith
	32	.2	Section 1350 Certification of CFO as adopted by Section 906 of the Sarbanes-Oxley Act	Filed herewith

† Indicates management contract or compensatory plan.

104

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 14, 2008.

SXC HEALTH SOLUTIONS CORP.

By:  /s/  Gordon S. Glenn

Gordon S. Glenn

Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacity and on the dates indicated.

By:	/s/  Gordon S. Glenn Gordon S. Glenn	Chairman and Chief Executive Officer (Principal Executive Officer)	March 14, 2008
By:	/s/  Jeffrey Park Jeffrey Park	Chief Financial Officer and Senior Vice President, Finance (Principal Financial and Accounting Officer)	March 14, 2008
By:	/s/  Mark A. Thierer Mark A. Thierer	Director	March 14, 2008
By:	/s/  Terrence C. Burke Terrence C. Burke	Director	March 14, 2008
By:	/s/  Steven Cosler Steven Cosler	Director	March 14, 2008
By:	/s/  William J. Davis William J. Davis	Director	March 14, 2008
By:	/s/  Anthony R. Masso Anthony R. Masso	Director	March 14, 2008
By:	/s/  Philip R. Reddon Philip R. Reddon	Director	March 14, 2008
By:	/s/  Curtis J. Thorne Curtis J. Thorne	Director	March 14, 2008

105

EX-3.1

EXHIBIT 3.1

Industry Canada Industrie Canada

Certificate of Amalgamation	Certificat de fusion
Canada Business Corporations Act	Loi canadienne sur les sociétés par actions

SYSTEMS XCELLENCE INC.	317087-0
LES SYSTÈMES XCELLENCE INC.
Name of corporation-Dénomination de la société	Corporation number-Numéro de la société
I hereby certify that the above-named corporation resulted from an amalgamation, under section 185 of the Canada Business Corporations Act, of the corporations set out in the attached articles of amalgamation.	Je certifie que la société susmentionnée est issue d’une fusion, en vertu de l’article 185 de la Loi canadienne sur les sociétés par actions, des sociétés dont les dénominations apparaissent dans les statutes de fusion ci-joints.
/s/ Illegible	August 1, 1995/le 1 aoùt 1995
Director — Directeur	Date of Amalgamation — Date de fusion

FORM 9
ARTICLES OF AMALGAMATION
(SECTION 185)

(Illegible) ame of amalgamated corporation

(Illegible) SYSTEMS XCELLENCE INC.
(Illegible) SYSTEMES XCELLENCE INC.

2-The place in Canada where the registered office is to be situated

Illegible gional Municipality of Halton, in the Province of Ontario

(Illegible)The classes and any maximum number of shares that the corporation is authorized to issue unlimited number of common shares without nominal or par value.

(Illegible)Restrictions, if any, on share transfers

(Illegible)No such restrictions.

(Illegible)Number (or minimum and maximum number) of directors

(Illegible)minimum of 3 and a maximum of 10.

(Illegible)Restrictions, if any, on business the corporation may carry on

(Illegible)No such restrictions.

(Illegible)7-Other provisions, if any

(Illegible)such other provisions.

The amalgamation has been approved pursuant to that section or subsection of the Act which is indicated as follows:	o   183
	þ   184(1)
	o  184(2)

9 -	Name of the amalgamating corporations	Corporation No.	Signature	Date	Title
	SYSTEMS XCELLENCE INC. LES SYSTÈMES XCELLENCE INC.	168968-1	/s/ Illegible	7/27/95	(Illegible)
	SYSTEMS XCELLENCE, LTD.	(Illegible)	/s/ Illegible	7/28/95	(Illegible)
	(Illegible)DR DEPARTMENTAL USE ONLY (Illegible)Corporation No. 317087-0		Filed	AUG — 2 1995

STATUTORY DECLARATION OF DIRECTOR
OR OFFICER PURSUANT TO SUBSECTION 185(2)
OF THE CANADA BUSINESS CORPORATIONS ACT

CANADA	)	IN THE MATTER of the Canada
	)	Business Corporations Act
PROVINCE OF ONTARIO	)	and the articles of amalgamation
	)	of Systems Xcellence Inc./Les
	)	Systemes Xcellence Inc. and Systems
TO WIT:	)	Xcellence, Ltd.

I, Stephen J. Hall, of the Town of Oakville, in the Province of Ontario, do solemnly declare that:

1.	I am a director and officer of Systems Xcellence Inc./Les Systemes Xcellence Inc. and Systems Xcellence, Ltd. being the amalgamating corporations in the attached articles of amalgamation, and as such have personal knowledge of the matters herein declared to.
2.	I have conducted such examinations of the books and records of Systems Xcellence Inc./Les Systemes Xcellence Inc. and Systems Xcellence, Ltd. and have made such enquiries and investigations as are necessary to enable me to make this declaration.
3.	There are reasonable grounds for believing that,

(a)	each amalgamating corporation, namely Systems Xcellence Inc./Les Systemes Xcellence Inc. and Systems Xcellence, Ltd. is, and the amalgamated corporation, namely Systems Xcellence Inc./Les Systemes Xcellence Inc., will be able to pay its liabilities as they become due, and
(b)	the realizable value of the amalgamated corporation’s assets will not be less than the aggregate of its liabilities and stated capital of all classes.

4.	There are reasonable grounds for believing that no creditor will be prejudiced by the amalgamation.
	AND I make this solemn declaration conscientiously, believing the same to be true and knowing that it is of the same force and effect as if made under oath and by virtue of the Canada Evidence Act.

DECLARED before me at the	)
City of Toronto, in the	)
Province of Ontario, this 28th	)
day of July        , 1995.	)
	)
/s/ Illegible	)	/s/ Stephen J. Hall
A Commissioner etc.	)

Industry Canada Industrie Canada

Certificate	Certificat
of Amendment	de modification
Canada Business	Loi canadienne sur
Corporations Act	les sociétés par actions

SYSTEMS XCELLENCE INC. LES SYSTÈMES XCELLENCE INC.		317087-0
Name of corporation-Denomination de la société		Corporation number-Numero de la société
I hereby certify that the articles of the above-named corporation were amended		Je certifie que les statuts de la société susmentionnée on été modifies:
(a) under section 13 of the Canada Business Corporations Act in accordance with the attached notice:	o	a) en vertu de 1’article 13 de la Loi canadienne sur les sociétés par actions, conformément à l’avis ci joint;
(b) under section 27 of the Canada Business Corporations Act as set out in the attached articles of amendment designating a series of shares:	o	b) en vertu de l’article 27 de la Loi canadienne sur les sociétés par actions, tel qu’il est indiqué dans les clauses modificatrices ci-jointes désignant une série d’actions;
(c) under section 179 of the Canada Business Corporations Act as set out in the attached articles of amendment;	þ	c) en vertu de l’article 179 de la Loi canadienne sur les sociétés par actions, tel qu’il est indiqué dans les clauses modificatrices ci-jointes;
(d) under section 191 of the Canada Business Corporations Act as set out in the attached articles of reorganization.	o	d) en vertu de l’article 191 de la Loi canadienne sur les sociétés par actions, tel qu’il est indiqué dans les clauses de réorganisation ci-jointes.
/s/ Illegible
Director — Directeur		July 12. 1996/le 12 juillet 1996 Date of Amendment — Date de modification

CANADA BUSINESS CORPORATIONS ACT
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 177)

l-Name of Corporation	2-Corporation No.
SYSTEMS XCELLENCE INC.
LES SYSTÈMES XCELLENCE INC.	317087-0

3-The articles of the above-named corporation are amended as follows:

     By deleting the provision of Article 7 of the Articles of Amalgamation dated August 1, 1995 in its entirety and substituting therefor the following:

“7 — Other provisions if any

The directors of the Corporation may appoint one or more directors, who shall hold office for a term expiring not later than the close of the next annual meeting of shareholders, but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders.”

Date	Signature	Description of Office
1996-07-09	/s/ Stephen J. Hall	Stephen J. Hall — Chief Operating Officer and Secretary
		FOR DEPARTMENTAL USE ONLY Filed

EX-3.2

EXHIBIT 3.2

BUSINESS CORPORATIONS ACT
FORM 3

Certificate of Continuance

SXC HEALTH SOLUTIONS CORP.

I hereby certify that the above-mentioned corporation was continued into Yukon, as set out in the attached Articles of Continuance, under section 190 of the Business Corporations Act.

	/s/ Rhonda Horte
Corporate Access Number:32368	Rhonda Horte
Date of Continuance:2007-06-27	Registrar of Corporations

YUKON
BUSINESS CORPORATIONS ACT
(Section 190)

Form 3-01
ARTICLES OF CONTINUANCE

1.	Name of Corporation: SXC HEALTH SOLUTIONS CORP.
2.	The classes and any maximum number of shares that the Corporation is authorized to issue: An unlimited number of common shares without nominal or par value.
3.	Restrictions, if any, on share transfers: None.
4.	Number (or minimum and maximum number) of Directors: Not less than three (3), nor more than ten (10).
5.	Restrictions, if any, on business the Corporation may carry on: None.
6.	If change of Name effected, previous name: Systems Xcellence Inc./Les Systemes Xcellence Inc.
7.	Details of Incorporation:
	Amalgamation of Systems Xcellence Inc./Les Systemes Xcellence Inc. and Systems Xcellence, Ltd. under the Canada Business Corporations Act dated August 1, 1995, under the name of Systems Xcellence Inc./Les Systemes Xcellence Inc., as amended by Articles of Amendment dated July 12, 1996 and June 5, 2006.
8.	Other provisions, if any:
(a)	A meeting of the shareholders of the Corporation may, in the Directors’ unfettered discretion, be held at any location in Canada or the United States of America specified by the Directors in the Notice of such meeting.
(b)	The Directors may, between annual general meetings, appoint one or more additional Directors of the Corporation to serve until the next annual general meeting, but the number of additional Directors shall not at any time exceed one third of the number of Directors who held office at the expiration of the last annual general meeting of the Corporation, provided that the total number of directors shall not exceed the maximum number of directors fixed pursuant to the Articles.
9.	Date: JUN 19, 2007
	Signature: /s/ GORDON GLENN	CHAIRMAN
		Title
	GORDON GLENN

YUKON
BUSINESS CORPORATIONS ACT
(Sections 107, 114 and 290)

Form 1-03
NOTICE OF DIRECTORS AND OFFICERS OR
NOTICE OF CHANGE OF DIRECTORS AND OFFICERS

1.	Name of Corporation: SXC HEALTH SOLUTIONS CORP.
2.	Notice is given that on the day of continuance, the following person(s) were appointed Director(s):
	Name	Mailing Address
	Terrence C. Burke	26611 North Point Road, Eston, MD 21601
	William J. Davis	311 The Lane, Hinsdale, IL 60521
	Gordons S Glenn	1809 Sycamore Trace, McKinney, TX 75070
	Philip R. Reddon	1207 Appleford Lane, Burlington, ON L7M 3P1
	James A. Ryan	Apt. 903, Building 6 Europlaza, Gibraltar
	Mark A. Thierer	917 Lakewood Drive, Barrington, IL 60010
3.	Notice is given that on the day of , , the following person(s) ceased to hold office as Director(s):
	Name	Mailing Address
	n/a
4.	The officers of the corporation as of this date are:
	Name	Office(s) Held
	Gordon S. Glenn	Chairman and Chief Executive Officer
	Mark Thierer	President and Chief Operating Officer
	Jeffrey Park	Senior V.P., Finance and Chief Financial Officer
	Michael H. Bennof	Senior V.P., Public Sector and Project Services
	John Romza	Senior V.P., Research and Development and Chief Technology Officer
5.	Date: JUN 19, 2007
	Signature: /s/ GORDON GLENN
			Title: Director
	GORDON GLENN

YUKON
BUSINESS CORPORATIONS ACT
(Section 22)

Form 1-02
NOTICE OF ADDRESS OR
NOTICE OF CHANGE OF ADDRESS

1.	Name of Corporation: SXC HEALTH SOLUTIONS CORP.
2.	Address of Registered Office:
	Lackowicz, Shier & Hoffman
	Barristers & Solicitors
	Suite 300, 204 Black Street
	Whitehorse, YT Y1A 2M9
3.	Records Address:
	Lackowicz, Shier & Hoffman
	Barristers & Solicitors
	Suite 300, 204 Black Street
	Whitehorse, YT Y1A 2M9
4.	Post Office Box (address for service by mail):
	Not applicable
5.	Effective Date:
	Upon continuance
6.	Date: JUN 19, 2007
	Signature: /s/ GORDON GLENN
		Title: Director
	GORDON GLENN

EX-3.3

EXHIBIT 3.3

     BY-LAW NO. 1

     A By-law Relating Generally to the Transaction of the Business and Affairs of Systems Xcellence Inc.

     Section One

     INTERPRETATION

1.1 Definitions: In the bylaws of the Corporation, unless the context otherwise requires:

     “Act” means the Yukon Business Corporations Act, and any statute that may be substituted therefore, as from time to time amended;

     “board” means the board of directors of the Corporation;

     “by-laws” means this by-law and all other by-laws of the Corporation from time to time in force and effect;

     “Corporation” means Systems Xcellence Inc.

     “meeting of shareholders” includes an annual meeting of shareholders and a special meeting of shareholders; and

“special meeting of shareholders” includes a meeting of any class or classes of shareholders and/or a special meeting of all shareholders entitled to vote at an annual meeting of shareholders.

Save as aforesaid and/or unless the context otherwise requires, words and expressions defined or otherwise used in or for purposes of the Act have the same meanings when used herein.

     Section Two

     DIRECTORS

2.1 Calling of Meetings: Meetings of the board shall be held from time to time at such time and at such place as the board, the chair of the board, the chief executive officer, the president or any two directors may determine.

2.2 Notice of Meeting: Notice of the time and place of each meeting of the board shall be given to each director not less than 48 hours before the time when the meeting is to be held and may be delivered personally or may be given by mail, facsimile and/or any electronic means of communication. Notwithstanding the foregoing, each newly elected board may without notice hold its first meeting immediately following the meeting of shareholders at which such board is elected.

2.3 Chair: The chair of any meeting of the board shall be the first mentioned of such of the following officers as have been appointed and who is a director and is present at the meeting: chair of the board, chief executive officer or president. If no such officer is present, the directors present shall choose one of their number to be chair.

2.4 Quorum: The directors may establish the quorum of directors for the transaction of business by the board. Until established as aforesaid, a majority of the number of directors in office shall constitute such quorum.

2.5 Meetings by Electronic or Other Means: The directors may participate in directors’ meetings by means of a telephonic, electronic or other communication facility including, without limitation, teleconferencing, video conferencing, computer link, web casting or other similar means that permit all participants to communicate adequately with each other during the meeting, and directors participating in a meeting by such means shall be counted for the purposes of determining quorum.

2.6 Votes to Govern: At all meetings of the board, every question shall be decided by a majority of the votes cast on the question. In case of an equality of votes, the chair of the meeting shall not be entitled to a second or casting vote.

     Section Three

     MEETINGS OF SHAREHOLDERS

3.1 Meetings of shareholders: Meetings of shareholders shall be held at such time and, subject to the Act, at such place as the board, the chair of the board, the chief executive officer or the president may from time to time determine.

3.2 Chair, Secretary and Scrutineers: The chair of any meeting of shareholders shall be the first mentioned of such of the following officers as have been appointed and who is present at the meeting: chair of the board, chief executive officer, president or a vice-president. If no such officer is present within 15 minutes from the time fixed for holding the meeting, the persons present and entitled to vote shall choose one of their number to be chair. If the secretary of the Corporation is absent, the chair shall appoint some person, who need not be a shareholder, to act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chair with the consent of the meeting.

3.3 Persons Entitled to be Present: The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote thereat, the directors and auditor of the Corporation and others who, although not entitled to vote, are entitled or required under any provisions of the Act, other applicable law or the articles to be present at the meeting. Any other person maybe admitted only on the invitation of the chair of the meeting or with the consent of the meeting.

3.4 Meetings by Electronic or Other Means: If the directors of the Corporation call a meeting of shareholders, the directors may determine that the meeting shall be held in whole or in part by means of a telephonic, electronic or other communication facility including, without limitation, teleconferencing, video conferencing, computer link, web casting or other similar means that permit all participants to communicate adequately with each other during the meeting.

3.5 Quorum: A quorum for the transaction of business at any meeting of shareholders shall be two persons present in person, each being a shareholder entitled to vote thereat or a duly appointed proxyholder for an absent shareholder so entitled, and together holding or representing by proxy not less than 25% of the outstanding shares of the Corporation entitled to vote at the meeting.

3.6 Votes to Govern: At any meeting of shareholders every question shall, unless otherwise required by the Act or the articles, be determined by a majority of the votes cast on the question, in case of an equality of votes either upon a show of hands or upon a poll, the chair of the meeting shall not be entitled to a second or casting vote.

     Section Four

     EXECUTION OF DOCUMENTS

4.1 Execution of Documents: Documents requiring execution by the Corporation may be signed, either manually or by facsimile or electronic signature by two separate individual persons:

(a) one of which shall be the chief executive officer, the president, a vice-president, the corporate secretary or a director; and

(b) the other which shall hold any of the positions set forth in paragraph (a) or shall be a divisional president, an assistant corporate secretary or a controller.

All documents so signed shall be binding upon the Corporation without any further authorization or formality. Notwithstanding the foregoing, the board is authorized from time to time to appoint by resolution any person or persons on behalf of the Corporation to sign and deliver documents manually or by facsimile or electronic signature, all as permitted by the Act, and any such documents contemplated by such resolution shall be executed only as contemplated by that resolution. Subject to the Act, wherever a document is required to be created in writing, that requirement is satisfied by the creation of an electronic document with electronic signatures. The term documents shall include contracts, powers of attorney, cheques, drafts or orders for the payment of money, guarantees, notes, acceptances and bills of exchange, deeds, mortgages, hypothecs, charges, conveyances, agreements, written resolutions, proxies, releases, receipts and discharges for the payment of money or other obligations, transfers and assignments of property of all kinds, real or personal, moveable or immoveable, including specifically but without limitation, transfers and assignments of shares, stocks, warrants, bonds, debentures or other securities and all other paper writings or, as permitted by the Act, electronic writings.

     Section Five

     INDEMNIFICATION

5.1 Indemnification of Directors and Officers against actions by Third Parties: Except in respect of an action by or on behalf of the Corporation or body corporate to procure a judgment in its favour, the Corporation shall indemnify a director or officer of the Corporation, a former director or officer of the Corporation or a person who acts or acted at the Corporation’s request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor, or a person who undertakes or has undertaken any liability on behalf of the Corporation or any such body corporate, and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of that Corporation or body corporate, if:

a)	He acted honestly and in good faith with a view to the best interests of the Corporation; and
b)	In the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful.

5.2 Indemnification of Directors and Officers against actions by the Corporation: The Corporation shall, with the approval of the Supreme Court of the Yukon Territory, indemnify a person referred to in paragraph 5.1 in respect of an action by or on behalf of the Corporation or body corporate to procure a judgment in its favour, to which he is made a party by reason of being or having been a director or an officer of the Corporation or body corporate, against all costs, charges and expenses reasonably incurred by him in connection with the action if he

fulfills the conditions set out in subparagraphs 5.1(a) and (b).

5.3 Right of Indemnity not Exclusive. The provisions for indemnification contained in the Bylaws shall not be deemed exclusive of any other rights to which a person seeking indemnification may be entitled under any Bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to an action in his official capacity and as to an action in any other capacity while holding such office. This section shall also apply to a person who has ceased to be a director or officer, and shall ensure to the benefit of the heirs and legal representatives of such person.

Insurance. Subject to the limitations contained in the Act, the Corporation may purchase and maintain such insurance for the benefit of its directors and officers as the Board may from time to time determine.

     Section Six

     NOTICES

6.1 Giving of Notice. Any notice or other document, including electronic documents, to be given or sent by the Corporation to a shareholder, director or officer or to the auditor of the Corporation or any other person may be given or sent by prepaid mail, by facsimile, or by any electronic or other communication facility (provided that the recipient thereof has consented, pursuant to the Act, to receive such notice or document in such form), or may be delivered personally to, the person to whom it is to be given or sent at the persons latest address as shown in the records of the Corporation or in any notice filed in accordance with the provisions of the Act. The board may establish, by resolution, procedures to give, deliver or send a notice or other document to the shareholders, directors, the auditor or other persons by any means permitted under the laws governing the Corporation or pursuant to the articles or by-laws of the Corporation. The accidental omission to give notice to any shareholder, director or officer or to the auditor or other persons or the non-receipt of any notice or any error in a notice not affecting the substance thereof shall not invalidate any action taken at any meeting called by such notice or otherwise founded thereon. Any notice with respect to any shares registered in more than one name may, if more than one address appears on the records of the Corporation in respect of such joint holding, be given the joint shareholders at any such address.

     Section Seven

     EFFECTIVE DATE AND REPEAL

7.1 Effective Date: This by-law shall come into force when made by the board in accordance with the Act.

7.2 Repeal. All previous by-laws of the Corporation are repealed as of the coming into force of this by-law. Such repeal shall not affect the previous operation of any by-law so repealed or affect the validity of any act done or right, privilege, obligation or liability acquired or incurred under or the validity of any contract or agreement made pursuant to any such by-law prior to its repeal. All directors, officers and persons acting under any by-law so repealed shall continue to act as if appointed under the provisions of this by-law and all resolutions of the shareholders or the board with continuing effect passed under any repealed by-law shall continue to be valid until amended or repealed.

EX-4.1

EXHIBIT 4.1

EX-10.1

EXHIBIT 10.1

HINES VAF WESTWOOD OF LISLE II, L.P.,
as Landlord

AND

SXC HEALTH SOLUTIONS, INC.
as Tenant

LEASE AGREEMENT

Dated: March 24, 2006

Building: 2441 Warrenville Road, Lisle, Illinois

TABLE OF CONTENTS

Article			Page
ARTICLE 1 REFERENCE DATA AND DEFINITIONS				1
ARTICLE 2 DEMISED PREMISES AND TERM				3
	Section 2.1.	Demised Premises		3
	Section 2.2.	Term		3
	Section 2.3.	Tenant’s Entry upon Demised Premises before Commencement
		Date		3
ARTICLE 3 RENT AND SECURITY DEPOSIT				5
	Section 3.1.	Fixed Rent		5
	Section 3.2.	Additional Rent		5
	Section 3.3.	Past Due Rent		5
	Section 3.4.	Security Deposit		6
	Section 3.5.	Rent Payments		8
	Section 3.6.	Fixed Rent and Tenant’s Expense Charge Abatement		9
ARTICLE 4 TENANT’S SHARE OF OPERATING COSTS AND TAXES				9
	Section 4.1.	Definitions		9
	Section 4.2.	Tenant’s Payment of Operating Costs and Taxes		13
	Section 4.3.	Refunds; Other Items		15
	Section 4.4.	Controllable Expenses		15
	Section 4.5.	Tenant’s Expense Charge Abatement		16
ARTICLE 5 OCCUPANCY OF DEMISED PREMISES				16
	Section 5.1.	Occupancy of Demised Premises		16
ARTICLE 6 CONDUCT OF BUSINESS BY TENANT				16
	Section 6.1.	Use of Demised Premises		16
	Section 6.2.	Compliance with Laws and Requirements of Public Authorities		16
	Section 6.3.	Rules and Regulations		18
	Section 6.4.	Landlord Compliance		18
ARTICLE 7 COMMON AREA				19
	Section 7.1.	Control of Common Area		19
	Section 7.2.	Parking		19
ARTICLE 8 REPAIRS, ALTERATIONS AND MECHANICS’ LIENS				20
	Section 8.1.	Repairs		20
	Section 8.2.	Alterations		21
	Section 8.3.	Mechanics’ Liens		22
	Section 8.4.	Indemnification		22
	Section 8.5.	Reasonable Consent		23
	Section 8.6.	Non-Consent Alterations		23

i

Article			Page
ARTICLE 9 UTILITIES AND BUILDING SERVICES				24
	Section 9.1.	Heating, Ventilating and Air Conditioning		24
	Section 9.2.	Cleaning Service		25
	Section 9.3.	Elevator Service		25
	Section 9.4.	Electricity		25
	Section 9.5.	Interruption of Services		27
	Section 9.6.	Overtime Services		27
ARTICLE 10 PROPERTY AND OTHER TAXES				28
	Section 10.1.	Tenant’s Property		28
	Section 10.2.	Increased Value of Improvements		28
ARTICLE 11 INSURANCE AND INDEMNITY				28
	Section 11.1.	Tenant’s Insurance		28
	Section 11.2.	Indemnity and Non-Liability		29
	Section 11.3.	Waiver of Subrogation		31
	Section 11.4.	Landlord Insurance/Landlord Indemnity		32
	Section 11.5.	Landlord’s Negligence		32
ARTICLE 12 DAMAGE BY CASUALTY				33
	Section 12.1.	Termination of Lease; Repair by Landlord		33
	Section 12.2.	Repair by Tenant		34
	Section 12.3.	Abatement of Rent; Notices of Status of Repairs/Restoration		35
	Section 12.4.	Untenantability		35
	Section 12.5.	Core and Shell		35
ARTICLE 13 EMINENT DOMAIN				36
	Section 13.1.	Taking of Demised Premises		36
	Section 13.2.	Partial or Temporary Taking of Building		36
	Section 13.3.	Surrender		36
	Section 13.4.	Rent Adjustment for Partial Taking of Demised Premises		37
	Section 13.5.	Awards		37
ARTICLE 14 RIGHTS RESERVED TO LANDLORD				37
	Section 14.1.	Access to Demised Premises		37
	Section 14.2.	Additional Rights		38
ARTICLE 15 ASSIGNMENT AND SUBLETTING				39
	Section 15.1.	Consent Required		39
	Section 15.2.	Notice of Proposed Assignment or Sublease; Recapture		40
	Section 15.3.	Grounds for Withholding Consent		41
	Section 15.4.	Excess Rent Payment		41
	Section 15.5.	Lease Assumption; Subtenant Attornment		42
	Section 15.6.	Prohibition		42
	Section 15.7.	Permitted Transfers		43

ii

Article			Page
ARTICLE 16 INTENTIONALLY OMITTED				43
ARTICLE 17 DEFAULT				43
	Section 17.1.	Events of Default		43
	Section 17.2.	Damages		45
	Section 17.3.	Waiver of Jury Trial		46
	Section 17.4.	Other Remedies		47
	Section 17.5.	Landlord Defaults		47
ARTICLE 18 SURRENDER				47
	Section 18.1.	Possession		47
	Section 18.2.	Merger		47
ARTICLE 19 HOLDING OVER				48
	Section 19.1.	Holding Over		48
ARTICLE 20 REMEDIES CUMULATIVE				48
	Section 20.1.	No Waiver		48
ARTICLE 21 ESTOPPEL CERTIFICATE, SUBORDINATION, ATTORNMENT				48
	Section 21.1.	Estoppel Certificate		48
	Section 21.2.	Subordination		49
	Section 21.3.	Attornment		50
	Section 21.4.	Mortgages		50
	Section 21.5.	Protection of Successor Landlord		50
	Section 21.6.	Mortgagee’s Right To Cure		51
ARTICLE 22 QUIET ENJOYMENT				52
	Section 22.1.	Quiet Enjoyment		52
ARTICLE 23 NOTICES				52
	Section 23.1.	Notices		52
ARTICLE 24 MISCELLANEOUS PROVISIONS				53
	Section 24.1.	Time		53
	Section 24.2.	Applicable Law and Construction		53
	Section 24.3.	Parties Bound		53
	Section 24.4.	No Representations by Landlord		53
	Section 24.5.	Brokers		53
	Section 24.6.	Severability		54
	Section 24.7.	Force Majeure		54
	Section 24.8.	Definition of Landlord		54
	Section 24.9.	No Option		54
	Section 24.10.	Exculpatory Clause		54
	Section 24.11.	Intentionally Omitted		55
	Section 24.12.	No Recording		55
	Section 24.13.	No Light, View or Air Easements		55
	Section 24.14.	Financial Statements		55

iii

Article			Page
ARTICLE 25 TENANT IMPROVEMENTS				55
	Section 25.1.	Tenant’s Improvements		55
	Section 25.2.	Allowance		56
	Section 25.3.	Space Plan Allowance		58
	Section 25.4.	Card Readers		58
ARTICLE 26 SIGNAGE				59
	Section 26.1.	Building Signage		59
ARTICLE 27 RIGHT OF FIRST OFFER				59
ARTICLE 28 EXPANSION OPTION				66
ARTICLE 29 RENEWAL OPTION				72
ARTICLE 30 MARKET RENTAL RATE				74
ARTICLE 31 OPTION TO TERMINATE				76
ARTICLE 32 GENERATOR				78
	Section 32.1.	Installation		79
	Section 32.2.	Maintenance and Repair		80
	Section 32.3.	Assignability		80
	Section 32.4.	Representation		81
ARTICLE 33 EXISTING LEASE PAYMENT				81
	Section 33.1.	Payment		81
ARTICLE 34 SECURED AREA				81
	Section 34.1.	Secured Area		81

EXHIBIT A	Plan Showing Tenant’s Space
EXHIBIT B	Legal Description of Land
EXHIBIT C	Rules and Regulations
EXHIBIT D	Parking Rider
EXHIBIT E	Pre-Approved General Contractors
EXHIBIT F	Form of SNDA
EXHIBIT G	Expansion Space A
EXHIBIT H	Expansion Space B
EXHIBIT I	Building Signage Identification — Name/LOGO Depiction
EXHIBIT J	Cleaning Specifications
EXHIBIT K	HVAC Design Standards

iv

LEASE AGREEMENT

     THIS LEASE AGREEMENT (this “Lease”) is made between Landlord and Tenant named in Article 1 as of the date set forth therein. Landlord and Tenant, in consideration of the covenants and agreements contained herein, agree as follows:

ARTICLE 1
REFERENCE DATA AND DEFINITIONS

     The following are definitions of terms used in this Lease, and each reference in this Lease to any of the following subjects shall be construed to incorporate the data, terms, covenants and provisions stated for that subject in this Article 1, subject to the terms of the balance of this Lease:

DATE OF EXECUTION OF THIS LEASE:	March       , 2006.
LANDLORD	Hines VAF Westwood of Lisle II, L.P.
MANAGING AGENT:	Hines GS Properties, Inc.
LANDLORD’S ADDRESS:	Hines VAF Westwood of Lisle II, L.P. c/o Hines GS Properties, Inc. 2443 Warrenville Road Lisle, Illinois 60532
	with a copy to:
	Hines VAF Westwood of Lisle II, L.P. c/o Hines Interests Limited Partnership 300 Atlantic Street Suite 206 Stamford, Connecticut 06901 Attn: Alan Rubenstein
	and to:
	Hines Interests Limited Partnership One South Dearborn Suite 2000 Chicago, Illinois 60603 Attn: Thomas J. Danilek

TENANT:	SXC Health Solutions, Inc.
STATE OF TENANT’S FORMATION/ INCORPORATION:	Texas
TENANT’S ADDRESS:	2441 Warrenville Road Suite 600 Lisle, Illinois 60532 Attn: Joel Cesario cc: Chief Financial Officer
DEMISED PREMISES:	All of Floors 4 and 5 and a portion of floor 6, as shown on Exhibit A, agreed for all purposes of this Lease to be 65,782 square feet, subject to adjustment as hereinafter provided.
BUILDING:	2441 Warrenville Road, Lisle, Illinois, which includes all improvements, including the office building and parking areas, driveways and landscaped areas, located on the Land, which Building is agreed for all purposes of this Lease to contain 148,423 square feet of rentable area as of the date hereof.
LAND:	The land described on Exhibit B.
PROJECTED TURNOVER DATE:	Within five (5) business days after the mutual execution and delivery of this Lease by Landlord and Tenant.
COMMENCEMENT DATE:	February 1, 2007
EXPIRATION DATE:	January 31, 2018
TERM:	Eleven (11) Years
RENEWAL TERM:	One (1) renewal term of Five (5) Years
FIXED RENT:	Period	Monthly Fixed Rent		Annual Fixed Rent		Annual Fixed Rent Per RSF
	2/1/07 through 1/31/08	$	75,375.21	$	904,502.50	$	13.75
	2/1/08 through 1/31/09	$	78,116.13	$	937,393.50	$	14.25
	2/1/09 through 1/31/10	$	80,857.04	$	970,284.50	$	14.75
	2/1/10 through 1/31/11	$	83,597.96	$	1,003,175.50	$	15.25
	2/1/11 through 1/31/12	$	86,338.88	$	1,036,066.50	$	15.75
	2/1/12 through 1/31/13	$	89,079.79	$	1,068,957.50	$	16.25
	2/1/13 through 1/31/14	$	91,820.71	$	1,101,848.50	$	16.75
	2/1/14 through 1/31/15	$	94,561.63	$	1,134,739.50	$	17.25
	2/1/15 through 1/31/16	$	97,302.54	$	1,167,630.50	$	17.75
	2/1/16 through 1/31/17	$	100,043.46	$	1,200,521.50	$	18.25
	2/1/17 through 1/31/18	$	102,784.38	$	1,233,412.50	$	18.75

2

RENTAL ABATEMENT:	Fixed Rent and Tenant’s Expense Charge shall be abated for the periods described in Section 3.6, subject to the terms set forth therein.
TENANT’S PROPORTIONATE SHARE:	44.321%, determined as set forth in Section 4.1(c).
DEFAULT RATE:	The lesser of (1) three percent (3%) above the Prime Rate, per annum, or (2) the maximum rate of interest permitted by law. For purposes of the foregoing, the “Prime Rate” shall mean the rate of interest announced from time to time by JPMorgan Chase, Chicago, Illinois (or any successor) as its “prime rate” or “corporate base rate”, changing as and when such rate changes, or if such rate is no longer in existence, then such other “prime rate” as may be designated by Landlord, in its reasonable discretion.
SECURITY DEPOSIT AMOUNT:	$300,000.00, as the same may from time to time be adjusted as provided in Section 3.4 below.
NORMAL BUSINESS HOURS:	Monday through Friday 8:00 A.M. to 6:00 P.M. Saturdays 8:00 A.M. to 1:00 P.M.
BROKER:	Staubach Midwest, LLC (“Tenant’s Broker”) and CB Richard Ellis (“Landlord’s Broker”)

ARTICLE 2
DEMISED PREMISES AND TERM

     Section 2.1. Demised Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Demised Premises, upon and subject to the covenants, agreements, terms, conditions, limitations, exceptions and reservations of this Lease.

     Section 2.2. Term. The term of this Lease (sometimes referred to herein as the “Term”) shall be the period of time specified in Article 1 hereof. Except as hereinafter provided, the Term shall commence on the Commencement Date as shown in Article 1 and shall expire without notice to Tenant on the Expiration Date as shown in Article 1, subject to any renewal options provided herein.

     Section 2.3. Tenant’s Entry upon Demised Premises before Commencement Date. Provided that Tenant complies at all times with the provisions and requirements of this Lease (other than the obligation to pay Fixed Rent and, except as provided for below in this Section 2.3, the obligation to pay Additional Rent (as defined in Section 3.2 hereof)), Tenant may enter upon the Demised Premises from and after the “Turnover Date” (as defined in

3

Section 25.1 hereof) and prior to the Commencement Date to perform the Tenant’s Work (as defined in Section 25.1 below), and to otherwise install trade fixtures and furnishings and to make the Demised Premises ready for the conduct of Tenant’s business, provided, however, that any contractors as Tenant may engage to undertake such installations and other preparatory work shall be subject to Landlord’s written approval prior to engagement (not to be unreasonably withheld, conditioned or delayed), and provided further, that Tenant shall undertake such installations and other preparatory work only with such labor organization affiliation or lack of affiliation as Landlord may reasonably approve. For purposes of the foregoing, Landlord hereby pre-approves those general contractors listed on Exhibit E. Any work performed under this Section 2.3 shall comply, in any event, with the terms and requirements set forth in Section 25.1 below. Any such occupancy of all or any portion of the Demised Premises prior to the Commencement Date shall be upon all of the terms and conditions set forth in this Lease relative to occupancy during the Term (other than the obligation to pay Fixed Rent and, except as provided below in this Section 2.3, Additional Rent hereunder). Utility costs (including, but not limited to, HVAC, other than after-hours HVAC as provided below) for utility services furnished to the Demised Premises which, if furnished during the Term, would be included as part of “Tenant’s Expense Charge” under this Lease (i.e., as opposed to being charged and payable separately by Tenant, such as in the case of electricity) (herein, “Base Building Utility Charges”), shall, from and after the Turnover Date, and through the day preceding the Commencement Date, be the responsibility of Landlord. The cost of any utilities (including but not limited to, electricity and after-hours HVAC) to the Demised Premises which, if furnished during the Term, would be payable separately by Tenant and not as part of “Tenant’s Expense Charge” under this Lease (herein, “Direct Utility Charges”), shall, from and after the Turnover Date, and through the day preceding the Commencement Date, be the responsibility of Tenant, and shall be paid for by Tenant either by paying any applicable utility company directly (i.e., if separately metered) or by paying Landlord its Building-standard rates (i.e., if not separately metered), which Building-standard rates, to the extent applicable, shall be based on Landlord’s actual costs therefor, without additional mark-up to Landlord on account thereof. Tenant shall be responsible for installation of separate metering for electricity, as a required part of the Tenant’s Work hereunder, if separate metering is not already present at the Demised Premises (or any portion thereof) as of the Turnover Date. Tenant shall have no right to occupy any portion of the Demised Premises for the conduct of business operations therefrom at any time prior to the Commencement Date, except as expressly provided below in this Section 2.3, or unless otherwise consented to by Landlord (at its sole discretion). Notwithstanding the foregoing, Tenant shall have the right to occupy the following areas of the Demised Premises prior to the Commencement Date, for the conduct of business therefrom, without Landlord’s consent thereto (but subject to the other terms of this Section 2.3): (i) that portion of the Demised Premises located on the 6^th floor of the Building and known as Suite 620, comprised of 2,723 rentable square feet (the “Suite 620 Space”), and/or (ii) that portion of the Demised Premises located on the 6^th floor of the Building and known as Suite 610, comprised of 10,532 rentable square feet (the “Suite 610 Space”). If Tenant occupies the Suite 620 Space prior to the Commencement Date for the conduct of business therefrom, Tenant shall have no obligation to pay Fixed Rent or Additional Rent relative thereto at any time prior to the Commencement Date (other than payment of Direct Utility Charges, as provided above). If Tenant occupies all or any portion of the Suite 610 Space prior to the Commencement Date for the conduct of business therefrom,

4

Tenant shall pay Landlord, in addition to payment of the Direct Utility Charges described above, a contribution toward Landlord’s operating costs, in an amount equal to $6.39 per square feet of rentable area of the overall Suite 610 Space per annum, calculated for the period of such occupancy (payable in monthly installments, in advance, prorated for any partial calendar month, at the same time and place as otherwise applicable to monthly payments of Fixed Rent during the Term hereof). The exact rentable area of any space leased as part of the Demised Premises or otherwise located at the Building from time to time, shall be determined by Landlord, measured in accordance with ANSI/BOMA Z65.1 1996 standards (it being understood and agreed that the rentable area of the Demised Premises and of the Building set forth in Article 1, and the rentable area of the Suite 610 Space and the Suite 620 Space as set forth above in this Section 2.3, have been determined based on such BOMA measurement standard, and the parties stipulate that such measurements shall remain binding on the parties hereunder during the entire Term for all purposes of this Lease, subject to the terms of Section 4. l(c) below). From and after the Commencement Date, Tenant shall pay Fixed Rent and Additional Rent (including Tenant’s Expense Charge and Direct Utility Charges) as otherwise provided in this Lease.

ARTICLE 3
RENT AND SECURITY DEPOSIT

     Section 3.1. Fixed Rent. Tenant shall pay to Landlord, without any prior demand therefor and without any deduction or set-off whatsoever (except as expressly provide in this Lease), the Fixed Rent set forth in Article 1. Fixed Rent shall be due and payable in monthly installments each equal to the Monthly Fixed Rent set forth in Article 1, in advance on the first day of each and every calendar month during the Term.

     Section 3.2. Additional Rent. Any sums or charges to be paid by Tenant pursuant to the provisions of this Lease, other than the Fixed Rent, shall be designated as “Additional Rent”. Any sums or charges to be paid by Tenant pursuant to the provisions of the Lease, other than Fixed Rent and Tenant’s Expense Charge payments (which Fixed Rent and Tenant’s Expense Charge payments shall be payable on a monthly regularly scheduled basis as set forth in Section 3.1 and Section 4.2(b) hereof), shall be payable within thirty (30) days after Landlord gives written notice that payment is due, unless otherwise provided in this Lease. Landlord shall have the same rights against Tenant for default in payment of Additional Rent as for default in payment of the Fixed Rent. As used in this Lease, the term “Rent” shall mean the Fixed Rent and Additional Rent. The payment of Rent hereunder is independent of each and every other covenant and agreement contained in this Lease.

     Section 3.3. Past Due Rent.

     (a) If Tenant shall fail to pay any installment of Rent within five (5) business days following the date when such Rent is due and payable (provided that, on the first two (2) occasion of late payment of Rent occurring in any calendar year, the hereafter described “Late Charge” shall not accrue unless Tenant fails to pay such Rent within ten (10) business days following the date when such Rent is due and payable), Tenant shall pay a charge (the “Late

5

Charge”) which shall be 3% of the amount of such unpaid installment of Rent. The parties agree that the amount of such Late Charge represents a reasonable estimate of the cost and expense that will be incurred by Landlord in processing each delinquent payment of Rent by Tenant and that such Late Charge shall be paid to Landlord as liquidated damages for each delinquent payment.

     (b) Unpaid Rent which is not paid within five (5) business days following the date when due shall bear interest at the Default Rate from the date due until paid (provided that, on the first two (2) occasions of late payment of Rent occurring in any calendar year, such interest shall not accrue unless Tenant fails to pay such delinquency within five (5) business days after Landlord gives written notice of such delinquency to Tenant, but on the third and any subsequent occasion of late payment of Rent occurring in any calendar year, no such notice from Landlord shall be required for Default Rate interest to accrue as otherwise provided in this Section 3). Payment of such interest shall not excuse or cure any default by Tenant under this Lease. The parties agree that the payment of interest and the payment of Late Charges provided for in Section 3.3(a) above are distinct and separate from one another in that the payment of interest is to compensate Landlord for its inability to use the money improperly withheld by Tenant, while the payment of Late Charges is to compensate Landlord for its additional administrative expenses in handling and processing delinquent payments.

     Section 3.4. Security Deposit. Concurrent with Tenant’s execution and delivery of this Lease to Landlord, and as an express condition of Landlord’s obligation to fund any portion of the “Allowance” under Section 25.2 below, or to disburse the “One Time Existing Lease Payment” under Section 33.1 below (and subject, in any event, to the terms of the last paragraph of this Section 3.4 regarding the form of the deposit hereunder and Tenant’s right, at any time, to deliver the same either as a letter of credit or in cash), Tenant shall deposit with Landlord an unconditional and irrevocable letter of credit (as the same may be decreased as hereinafter provided, the “Letter of Credit Security Deposit”) in the amount of $300,000.00 in form reasonably satisfactory to Landlord and issued by such bank with a Chicago, Illinois office reasonably satisfactory to Landlord, as security for the full and faithful performance of every provision of this Lease to be thereafter performed by Tenant (the Letter of Credit Security Deposit, together with (1) any cash from time to time held by Landlord as part of the security deposit following a draw on the Letter of Credit Security Deposit or (2) any cash from time to time held by Landlord as part of the security deposit following Tenant’s election, at its sole discretion, to deposit such cash as all or part of the required security deposit under this Section 3.4 (and subject, in any event, to the terms of the last paragraph of this Section 3.4 regarding the form of the deposit hereunder), is sometimes referred to herein as the “Security Deposit”). If Tenant defaults with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of Rent, and such default remains uncured beyond applicable cure periods provided hereunder, then Landlord may, as applicable, (i) use, apply or retain all or any part of the Security Deposit which is then held by Landlord in the form of cash (herein, the “Cash Security Deposit”), or (ii) draw on the Letter of Credit Security Deposit, in whole or in part, but only to the extent necessary in Landlord’s good faith judgment to cure such default (provided that Landlord may draw upon any Letter of Credit Security

6

Deposit in whole in the event Tenant defaults in its obligation to timely deliver a replacement letter of credit as required hereunder), and Landlord may use, apply or retain all or any part of the proceeds thereof, for the payment of any Rent and any other sum in default, or for the payment of any other amount which Landlord may spend or become obligated to spend by reason of Tenant’s default or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. If any portion of the Cash Security Deposit or proceeds from a draw on the Letter of Credit Security Deposit is so used or applied, Tenant shall, within ten (10) business days after written demand therefor, as applicable, deposit cash with Landlord in an amount sufficient to restore the Cash Security Deposit to its original amount or cause the issuing bank to restore the Letter of Credit Security Deposit to its original amount, and Tenant’s failure to do such shall be a material breach of this Lease, without any additional cure period hereunder. Landlord shall not be responsible for keeping any Cash Security Deposit or any proceeds from a draw on the Letter of Credit Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on either. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it through July 31, 2011, the Cash Security Deposit, the Letter of Credit Security Deposit, or any balance thereof, as applicable, shall be returned to Tenant (or at Landlord’s option to the last assignee of Tenant’s interest hereunder) no later than ten (10) days following Tenant’s request therefor from Landlord (which request shall be delivered no earlier than August 1,2011). Landlord shall deliver the Cash Security Deposit or the Letter of Credit Security Deposit to the purchaser of Landlord’s interest in the Building, in the event that such interest is sold, and, provided that such purchaser agrees in writing to be bound by the terms and conditions of this Lease with respect to such Security Deposit, thereupon Landlord shall be discharged from any further liability with respect to same. Tenant hereby agrees not to look to any mortgagee as mortgagee, mortgagee in possession, or successor in title to the Building for any Cash Security Deposit or Letter of Credit Security Deposit required by Tenant hereunder, unless such items have actually been received by said mortgagee as security for Tenant’s performance of this lease. Landlord agrees to deliver the Security Deposit required to be held by Landlord hereunder to any such mortgagee on or before such time as the mortgagee succeeds to Landlord’s interest hereunder. Nothing herein shall be construed to limit the amount of damages recoverable by Landlord or any other remedy to the Security Deposit.

     Any letter of credit delivered by Tenant hereunder as the Letter of Credit Security Deposit shall expire no earlier than twelve (12) months after issuance and all subsequent replacement letters of credit shall expire no earlier than twelve (12) months from the expiration date of the then outstanding and expiring letter of credit. Subject to the terms of the next succeeding paragraph relative to permitted reductions in the amount of the Security Deposit, Tenant shall ensure that at all times during the Term of this Lease and for fifteen (15) business days after expiration of the term, cash or an unexpired letter of credit in the amount of the Security Deposit required hereunder shall be in the possession of Landlord. During the Term, Tenant shall deliver cash or a replacement letter of credit to Landlord no later than fifteen (15) business days prior to the expiration date of then outstanding and expiring letter of credit; provided, however, that the replacement letter of credit shall not be required to have an effective date earlier than the expiration date of the then existing letter of credit (it being the intent that Tenant not be required to have two outstanding letters of credit at any one time). Failure by Tenant to deliver cash or any replacement letter of credit as required above shall entitle Landlord

7

to draw under the outstanding letter of credit and to retain the entire proceeds thereof for application as the Security Deposit under this Lease (provided that Tenant shall thereafter continue to have the right and, if required by Landlord, the obligation, to substitute a Letter of Credit Security Deposit for such Cash Security Deposit then being held by Landlord, in accordance with the requirements of this Section 3.4). Each letter of credit shall be for the benefit of Landlord and its successors and assigns, shall be expressly transferable without any cost or fee payable by the transferor or transferee thereof, and shall entitle Landlord or its successors or assigns to draw from time to time under the letter of credit in portions or in whole as provided herein upon presentation of a sight draft.

     In the event that Tenant is not in default, with respect to any provision of this Lease as of any respective “Security Deposit Reduction Date,” hereinafter described, then, notwithstanding anything contained hereinabove to the contrary (but subject to the terms of the last paragraph of this Section 3.4 regarding the right to again take the benefit of the following reduction if various defaults are thereafter cured within applicable cure periods hereunder), (i) Landlord shall return to Tenant, no later than ten (10) days following Tenant’s request therefor (which request shall be given no earlier than the applicable Security Deposit Reduction Date), that portion of any Cash Security Deposit or Letter of Credit Security Deposit then being held by Landlord hereunder corresponding to the amount of the “Permitted Security Deposit Reduction” permitted as of such Security Deposit Reduction Date (as hereinafter set forth), or (ii) Tenant shall have the right to deliver an amendment to the then existing letter of credit as a supplement to any Letter of Credit Security Deposit then being held by Landlord hereunder, or a replacement letter of credit for any such Letter of Credit Security Deposit, which amended letter of credit or replacement letter of credit shall be in the amount of the “Remaining Balance of Security Deposit” corresponding to such Security Deposit Reduction Date (as hereinafter set forth).

	Permitted Security		Remaining Balance
Security Deposit	Deposit Reduction		of Security Deposit
August 1,2009	$	150,000.00	$	150,000.00
August 1,2010	$	150,000.00	$	0.00

     If Tenant is not entitled to the foregoing reduction in the Security Deposit solely because Tenant is in default under this Lease as described in the preceding paragraph, then Tenant shall not be entitled to any further reduction in the Security Deposit amount required hereunder; provided, however, that notwithstanding the foregoing, Tenant may again take the benefit of such reduction and subsequent reductions if and when such default and all other subsequent defaults have been cured within applicable cure periods provided hereunder.

     Notwithstanding anything herein to the contrary, Tenant shall have the right, at its sole election, to deposit the Security Deposit required from time to time hereunder with Landlord either in the form of a Cash Security Deposit or in the form of a Letter of Credit Security Deposit, in either case meeting the requirements otherwise set forth in this Section 3.4. relative to the requisite Security Deposit hereunder.

     Section 3.5. Rent Payments. All Rent payments shall be made to Landlord at the address set forth in Article 1, or at such other place designated by Landlord in writing, in lawful

8

currency of the United States of America. Rent payments applicable to partial months falling within the Term or occurring as a result of the application of the Monthly Fixed Rent payable upon Lease execution shall be prorated.

     Section 3.6. Fixed Rent and Tenant’s Expense Charge Abatement. Notwithstanding the foregoing, (a) Fixed Rent and Tenant’s Expense Charge (as defined in Section 4.2 below) attributable to that portion of the initial Demised Premises hereunder situated on the 4^th and 5^th floors of the Building (the “Initial Full Floor Premises”) shall abate for each calendar month commencing with the Commencement Date and continuing through July 31, 2007 (each such calendar month, a “Full Floor Abatement Month”), and (b) Fixed Rent and Tenant’s Expense Charge attributable to that portion of the initial Demised Premises hereunder situated on the 6^th floor of the Building (the “Initial Partial Floor Premises”) shall abate for each calendar month commencing with the Commencement Date and continuing through December 31, 2007 (each such calendar month, a “Partial Floor Abatement Month”); provided that Tenant shall remain responsible for all other obligations of Tenant hereunder during each of the aforedescribed Full Floor Abatement Months and Partial Floor Abatement Months (as the case may be), and provided further, that such applicable abatement of Fixed Rent and Tenant’s Expense Charge shall not apply for any Full Floor Abatement Month or Partial Floor Abatement Month (as the case may be) during which Tenant, at any time, is otherwise in default under this Lease, which default is not thereafter cured within any applicable cure periods hereunder. In connection with a default by Tenant under this Lease, which default is thereafter cured within applicable cure periods, the applicable abatement of Fixed Rent and Tenant’s Expense Charge shall then apply to the full amount of the balance thereof as of the date that such abatement was suspended or not applied.

ARTICLE 4
TENANT’S SHARE OF OPERATING COSTS AND TAXES

     Section 4.1. Definitions. As used herein:

     (a) “Operating Costs” shall mean any and all costs, charges, expenses and disbursements of every kind and nature which Landlord shall pay or become obligated to pay in connection with the operation, ownership, maintenance, management and repair of the Building and the Common Area, including, without being limited to, the following:

     (1) All wage, salary and labor costs of all persons engaged in the operation, maintenance, management and repair of the Building (including, without being limited to, all applicable taxes, insurance and benefits).

     (2) Costs of any utilities supplied by Landlord (including, without being limited to, heat, electricity, gas, water and sewer), fuel and Building supplies and materials and of the operation and maintenance of

9

all Building systems (including, without being limited to, heating, ventilation and air-conditioning (“HVAC”) systems).

     (3) Costs of all insurance, including, without being limited to, casualty, workmen’s compensation, rental and liability insurance.

     (4) Costs of all maintenance and service agreements, including, without being limited to, window and other cleaning, snow removal, line painting, policing, elevator maintenance and janitorial service.

     (5) Costs of repairs, replacements, decorations, and general maintenance, including, without being limited to, exterior building maintenance, paving, curbs, drainage, lighting, sidewalks and landscaping.

     (6) Professional fees and expenses (including, without being limited to, legal, accounting, architectural and engineering fees).

     (7) All costs of making any alterations to the Building for life-safety systems or energy conservation or other capital improvements required by any governmental requirement enacted or amended after the date hereof or which are primarily for the purpose of reducing or stabilizing Operating Costs or providing additional or increased services to the tenants of the Building, amortized on a “straight-line” basis over the useful life of such improvements (as reasonably determined by Landlord consistent with generally accepted accounting principles), using an interest factor for purposes of such amortization equal to 2% over the Prime Rate described in Article 1 above, calculated as of the date the cost of such improvements was incurred). In the case of loss or damage to the Building due to fire or other casualty, the costs of repairing, restoring or replacing any portion of the Building which constitute capital improvements shall be included in Operating Costs (on an amortized basis as provided above) to the extent of (a) deductible amounts under insurance policies, or (b) other uninsured amounts (except for uninsured amounts that would have been covered by insurance had Landlord maintained the insurance required to be maintained by Landlord hereunder). Notwithstanding the foregoing, it is agreed that (A) the amortization amount in respect to any capital improvement for the purpose of reducing or stabilizing Operating Costs as described above in this subclause (7) which may be included in Operating Costs in any calendar year shall not exceed Landlord’s good faith estimate of the reduction in Operating Costs to be achieved for such year as a result of such capital improvement, and (B) there shall be no amount included in Operating Costs under this subclause (7), in any event, for the costs of any Turnover Noncompliance Work, as described in Section 6.4 of this Lease.

     (8) All property management fees, costs and expenses.

10

     (9) All fees or other charges incurred in conjunction with voluntary or involuntary membership in any energy conservation, air quality, environmental, traffic management or similar organizations.

     Notwithstanding the foregoing, Operating Costs shall not include: costs or other items included within the meaning of the term “Taxes” (as hereinafter defined), costs of alterations and other leasehold improvements and relocations of the premises of tenants of the Building; costs of any financial concessions, allowances, abatements or other inducements granted to tenants in the Building; costs of capital improvements to the Building other than those specifically included in subclause (7) set forth above; depreciation or amortization charges other than as provided in subclause (7) above; interest and principal payments on mortgages or any other fees related thereto; ground rental payments; legal fees in connection with negotiating leases with other tenants in the Building, or in connection with consenting to subleases or in connection with enforcing lease obligations of other tenants or subtenants in the Building; interest, fines and penalties on late payments or misconduct by Landlord; real estate brokerage and leasing commissions; any expenditures for which Landlord has been reimbursed by tenants (other than pursuant to tax and operating expense reimbursement provisions in leases); the costs of providing services to other tenants of the Building without a charge (other than through payment by such tenants of operating expenses and taxes, such as Operating Costs and Taxes) that are in excess of those services provided or made available to Tenant without a charge (other than through payment of Operating Costs and Taxes hereunder), to the extent of such excess; legal, appraisal and accounting fees, disbursements and charges incurred in connection with the leasing, sale or refinancing of the Building, or in connection with matters related to Landlord’s organization as a limited partnership (or other entity) or in connection with dealings with Landlord’s partners or members (i.e., as distinguished from matters relating to the ownership, operation, management, maintenance or repair of the Building); legal, appraisal and accounting fees, disbursements and charges incurred in connection with disputes with tenants or occupants of the Building or disputes with any mortgagee or with partners or members of Landlord; costs in performing any Turnover Noncompliance Work as described in Section 6.4 of this Lease; salaries paid to any executive employee above the grade of regional building manager and regional building engineer (which are includable only to the extent that such regional building manager and regional building engineer are engaged in servicing the Building; provided further, that in no event shall more than 20% of the overall respective annual salaries paid to any such regional building manager or regional building engineer ever be included as part of Operating Costs in any given calendar year hereunder); expenses for repairs, maintenance or replacements for which Landlord is reimbursed from or pursuant to insurance or condemnation proceeds (or for which Landlord would have been reimbursed had Landlord maintained any property insurance required to be maintained by Landlord hereunder); advertising, entertainment and promotional expenditures relating to leasing of space at the Building; costs of electricity furnished to individual tenant spaces to the extent such costs are separately charged and payable by such tenants (other than pursuant to provisions in such tenants’ leases providing for reimbursement of operating expenses and taxes of the Building, such as Operating Costs and Taxes); overhead and profit increment paid to subsidiaries or affiliates of Landlord for services to the Building, to the extent only that the cost of such services exceed competitive cost of such services were they not so rendered by a subsidiary or affiliate (provided that this exclusion shall in no way reduce or affect the management fee component of Operating Costs otherwise

11

permitted hereunder); costs of acquisitions of fine art (as distinguished from decorative items and as distinguished from cleaning and maintenance costs for such fine art); rentals of Building systems, elevators or other equipment ordinarily considered to be of a capital nature, except to the extent such amounts would otherwise have been included as Operating Costs under subclause (7) above had such systems, elevators or other equipment been purchased by Landlord; damages awarded to a tenant of the Building against Landlord by reason of Landlord’s breach of that tenant’s lease; costs incurred with respect to Landlord’s sale, financing, re-financing, syndication, mortgaging, hypothecating or transfer of all or any portion of the Building or Landlord’s interest therein; costs for repairs, maintenance, replacements or services for which Landlord is reimbursed from any source (other than payments by tenants of operating expenses and taxes, such as Operating Costs and Taxes); management fees in excess of commercially reasonable management fees determined based upon the prevailing management fees then being charged by management agents of Class A office buildings in Lisle/Naperville, Illinois providing comparable levels of services as those being provided by the management agent for the Building and expensed to tenants of such buildings, provided, however, that “three percent (3%)” of gross rental income of the Building shall, for purposes of this subclause, be conclusively deemed a commercially reasonable management fee (it being understood that the management fees permitted to be included in Operating Costs shall be governed solely by the exclusion, and shall not be affected by any other exclusion described in this Section 4.1); the costs of any judgment, settlement or arbitration award resulting from Landlord’s liability for failure to perform its obligations under any lease or other contract by which it may be bound; costs incurred by Landlord resulting directly from Landlord’s tortious, negligent or other unlawful conduct; Landlord’s political or charitable contributions; and bad debt losses.

     If Landlord is not furnishing any particular work or service (the cost of which if performed by Landlord would constitute an Operating Cost) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Costs shall be increased by an amount equal to the additional Operating Costs which would have been incurred during such period by Landlord if it had at its own expense furnished such work or services to such tenant. In determining the amount of Operating Costs for any calendar year, if less than 100% of the net rentable square feet of the Building shall have been occupied by tenant(s) at any time during such calendar year, Operating Costs shall be determined for such year by adjusting those components of Operating Costs which directly vary with the occupancy level of the Building, to be an amount equal to the like expenses which would have been incurred had such occupancy been 100% throughout such year.

     (b) “Taxes” shall mean the aggregate amount of real estate and personal property taxes and any special assessments levied, assessed or imposed upon the Land and/or the Building (but not including income or franchise taxes or any other taxes imposed upon or measured by the Landlord’s income or profits, except as provided herein), other than any water or sewer charge to the extent the same are included in Operating Costs for the applicable calendar year. If because of any change in the taxation of real estate, any other tax, assessment or surcharge of any kind or nature (including, without being limited to, any franchise, income, profit, sales, use, occupancy, gross receipts or rental tax) is imposed upon, against or with respect to Landlord, or the occupancy, rents or income therefrom, either in

12

lieu of, in substitution for or in addition to any of the foregoing Taxes, such other tax, assessment or surcharge (which shall be measured as if the Land or the Building, as the case may be, were the only asset of Landlord or such owner) shall be deemed part of Taxes. With respect to any calendar year, all expenses, including attorney’s, accounting and experts’ fees and expenses, incurred in contesting the validity or amount of Taxes, the assessed valuation of the Land and/or Building or in obtaining a refund of Taxes shall be considered as part of Taxes for such year. For the purpose of determining Taxes for any given year, the amount to be included for such year shall be Taxes which are paid during such year rather than Taxes which are assessed or become a lien during such year.

     (c) “Tenant Proportionate Share” shall mean a fraction, the numerator of which is the rentable area of the Demised Premises from time to time (i.e., including the rentable area of any expansion space leased by Tenant from time to time hereunder), and the denominator of which is the rentable area of the Building (subject, in any event, to the terms set forth in Section 4.3(c) below).

     Section 4.2. Tenant’s Payment of Operating Costs and Taxes.

     (a) For each calendar year during the Term, Tenant shall pay to Landlord, as Additional Rent, at the times and in the manner provided below, Tenant’s Proportionate Share of the sum of (1) Operating Costs for such calendar year and (2) Taxes for such calendar year (collectively, “Tenant’s Expense Charge”).

     (b) At any time during the Term, Landlord shall have the right to compute and deliver to Tenant a written estimate (an “Estimate”) of Tenant’s Expense Charge for the applicable calendar year and, without further notice, Tenant shall pay to Landlord commencing with the next payment of Monthly Fixed Rent occurring not less than thirty (30) days after Tenant’s receipt of such statement and continuously thereafter with payments of Monthly Fixed Rent until delivery of the next Estimate, monthly installments equal to one-twelfth of the amount set forth in such Estimate, together with, in the case of the first such monthly payment, an amount equal to the difference between (i) the amount of such monthly installment times the number of months in such year preceding the first monthly payment, less (ii) the amount of any monthly installments in respect of the prior Estimate theretofore paid to Landlord. In the event Landlord is required under any mortgage of the Land or the Building to escrow Operating Costs and/or Taxes, Landlord may (without obligation) use the amount required to be escrowed as a basis for determining the Estimate. Without limitation of any of the terms set forth in this Article 4, it is hereby confirmed by Landlord that the estimated aggregate Operating Costs and Taxes for calendar year 2006, for information purposes only, as of the date hereof, is $8.89 per square foot of rentable area of the Building.

13

     (c) Landlord shall deliver to Tenant within 150 days after the end of each calendar year during the Term (or as soon thereafter as is reasonably practicable) a written statement (the “Statement”) setting out in reasonable detail Tenant’s Expense Charge for such year certified to be correct by Landlord. If the aggregate of the monthly installments actually paid by Tenant to Landlord on account of the estimated Tenant’s Expense Charge during any calendar year (the “Actual Payments”) differs from the amount of Tenant’s Expense Charge payable according to the Statement (the “Obligated Payments”), Tenant shall (1) if the Obligated Payments shall exceed the Actual Payments, pay to Landlord, within 30 days after the date of delivery of the Statement, an amount equal to such excess, or (2) if the Actual Payments shall exceed the Obligated Payments, then Landlord shall credit such excess to any Rent theretofore or next due and owing, as applicable; provided, however, that if the amount of the credit due to Tenant exceeds the amount of its next regularly scheduled monthly payment of Rent, then Landlord shall remit to Tenant the amount of such excess in cash, to be paid to Tenant no later than the date on which Tenant’s next regularly scheduled monthly payment of Rent is due. If this Lease shall expire or be terminated prior to full application of such excess, Landlord shall pay to Tenant, within thirty (30) days after expiration or termination of this Lease, the balance thereof not theretofore applied against Rent (except that Landlord may first offset such excess against any rental or other damages due and owing from Tenant resulting from any then existing default of Tenant under this Lease).

     (d) Tenant may examine, and Tenant’s Representatives (as hereinafter defined) may audit, at Tenant’s expense and at all reasonable times, Landlord’s books and records relating to items affecting Tenant’s Expense Charge as set forth in a Statement delivered by Landlord for any year for which Tenant’s Expense Charge payments become due; provided that Tenant’s right to examine and/or audit shall expire one hundred eighty (180) days following the delivery of the Statement pertaining to the items of Tenant’s Expense Charge which are being so examined or audited. If Tenant does not deliver a written notice to Landlord taking written exception to any item of Tenant’s Expense Charge, and specifying in detail the reasons for such exception, within said 180 day period, Landlord’s Statement of Tenant’s Expense Charge shall be considered as final and accepted by Tenant and Landlord. For purposes of the foregoing, the term “Representative” shall mean a nationally or regionally recognized independent certified public accounting firm licensed to do business in the State of Illinois. For each examination of Landlord’s books and records, the employees of Tenant or Tenant’s Representative who personally examine such books and records shall include a certified public accountant, but if deemed necessary or appropriate by the accountant may also include other real estate professionals who are experienced in management of Class-A office buildings. Tenant shall not retain its Representative on a contingent fee basis. In the event any such audit by Tenant’s Representatives determines that Landlord’s Statement of Tenant’s Expense Charge overstated such figure from the actual amount so required hereunder for any calendar year by an amount in excess of three percent (3%),

14

Landlord shall be responsible for the prompt payment of reasonable out-of-pocket audit fees incurred by Tenant under this subparagraph (d); otherwise, Tenant shall be responsible for the prompt payment of all audit fees incurred in connection with such audit and, in addition, Tenant shall also be responsible for payment to Landlord of all out-of-pocket costs and expenses incurred by Landlord in connection with such audit. Notwithstanding any exception timely made by Tenant, Tenant shall pay Landlord the full amount of Tenant’s Expense Charge as determined by Landlord, subject to readjustment at such time as any such exception may be resolved (i.e., either by agreement of Landlord or by a final determination of a court of competent jurisdiction) in favor of Tenant (and Landlord agrees to pay Tenant the amount of any over-payment made by Tenant on account of Tenant’s Expense Charge within thirty (30) days after any such final resolution thereof in favor of Tenant).

     Section 4.3. Refunds; Other Items.

     (a) In the event a refund of any Operating Costs or Taxes is obtained and actually paid to Landlord, Landlord, within thirty (30) days of receipt thereof, shall credit an appropriate portion thereof (after deducting any unrecouped expenses in connection with obtaining such refund) to the next installment(s) of Rent.

     (b) The rendering of a Statement for any year shall not preclude Landlord from issuing a correction thereto at a later time, including a correction for items not included in the original Statement.

     (c) If physical changes are made to the Demised Premises or Building (i.e., not including mere remeasurements at the Building), changing the number of rentable square feet contained in the Demised Premises or Building (as the case may be) from that set forth in Article 1 hereof, Landlord shall make an appropriate adjustment to Tenant’s Proportionate Share (i.e., based upon the same ratio of rentable square feet of the Demised Premises to rentable square feet of the Building as used in calculating Tenant’s Proportionate Share as of the date hereof); it being understood that, in the absence of Tenant’s leasing of additional space (i.e., in addition to the initial Demised Premises hereunder) at the Building, the rentable area of the “Demised Premises”, for purposes of this Lease, shall remain the square footage set forth in Article 1 hereof, and in the absence of physical changes to the rentable area of the Building resulting from casualty or condemnation events, the rentable area of the “Building”, for purposes of this Lease, shall remain the square footage set forth in Article 1 hereof.

     Section 4.4. Controllable Expenses. Notwithstanding anything contained herein to the contrary, for purposes of computing Tenant’s Proportionate Share of Operating Costs for any calendar year starting with calendar year 2008, the “Controllable Expenses” (as hereinafter defined) shall not increase by more than five percent (5%) per calendar year on a compounding and cumulative basis over the course of the Term. To illustrate the foregoing, if Controllable Expenses are Two and no/100 dollars ($2.00) per rentable square foot of the Building for

15

calendar year 2007, then Controllable Expenses for calendar year 2008 shall not exceed Two and 10/100 dollars ($2.10) per rentable square foot of the Building, and Controllable Expenses for calendar year 2009 will not exceed Two and 21/100 Dollars ($2.21) per square foot of rentable area of the Building. For purposes hereof, the term “Controllable Expenses” shall mean all Operating Costs other than costs of capital improvements or other capital expenditures (to the extent same may be included in Operating Costs as provided above), security, insurance, utilities, snow removal and contracts negotiated pursuant to collective bargaining agreements.

     Section 4.5. Tenant’s Expense Charge Abatement. Notwithstanding anything herein to the contrary, Tenant shall be entitled to certain abatements of Tenant’s Expense Charge as and to the extent expressly set forth in Section 3.6 above.

ARTICLE 5
OCCUPANCY OF DEMISED PREMISES

     Section 5.1. Occupancy of Demised Premises. The occupancy of the Demised Premises or any part thereof for business by Tenant or anyone claiming by, under or through Tenant shall be conclusive evidence that (a) Tenant accepts possession; (b) the Demised Premises were in good and satisfactory condition; and (c) Landlord’s work, if any, was satisfactorily completed at the time such occupancy was so taken; provided that the foregoing shall not limit Landlord’s continuing maintenance and repair obligations as expressly set forth in this Lease, including but not limited to Sections 6.4 and 8.1 (a).

ARTICLE 6
CONDUCT OF BUSINESS BY TENANT

     Section 6.1. Use of Demised Premises. Tenant shall use the Demised Premises during the Term solely for general office use, including use for data processing center operations, and for other lawful ancillary purposes, provided that any such other lawful ancillary purpose is consistent with comparable Class-A office buildings in Lisle/Naperville, Illinois, and for no other purpose.

     Section 6.2. Compliance with Laws and Requirements of Public Authorities.

     (a) At all times during the Term, Tenant shall give prompt notice to Landlord of any notice Tenant receives of any violation of any law or requirement of a governmental authority affecting the Demised Premises or the Building or any regulation of the board of fire underwriters having jurisdiction over the Building (“Applicable Law”), and, at its sole cost and expense, shall comply with all Applicable Laws, including any violation, order or duty imposed upon Landlord or Tenant, arising from or relating to (1) Tenant’s use of the Demised Premises; (2) the manner or conduct of Tenant’s business or operation of its installations, equipment or other property therein; (3) any cause or condition created by or at the insistence of Tenant; or (4) breach of any of Tenant’s

16

obligations hereunder. Notwithstanding the foregoing, but subject to the provisions of Section 6.2(c) regarding “Hazardous Materials” and subject to the terms of the last sentence of Section 6.4 below, (A) Tenant shall not be obligated (and instead, Landlord shall be obligated) to make any capital improvements or capital replacements required by changes in Applicable Laws following the Commencement Date, to the extent similar capital improvements or capital replacements will be required to be made in the Building as a whole as a result of such changes in Applicable Law (i.e., as distinguished from alterations or improvements made necessary by Tenant’s particular use of the Demised Premises or required to be made to, or made necessary by, Tenant’s Work or other Tenant Alterations), and all such capital improvements or capital replacements which are not so required to be made by Tenant shall instead be made by Landlord (subject to potential reimbursement as part of “Operating Costs”, as and to the extent permitted in Section 4.1), and (B) Tenant shall not be obligated to correct any violation existing at the Demised Premises as of the Turnover Date of any Applicable Laws in effect as of the Turnover Date, to the extent constituting “Turnover Noncompliance Work” which is Landlord’s obligation under Section 6.4 below.

     (b) Tenant shall not do, permit or suffer any act or thing to be done which is injurious to the Building or the Demised Premises, which is immoral, a nuisance, contrary to Applicable Law or in violation of the certificate of occupancy issued for the Building or which would result in the cancellation of, or any increase in premiums for, insurance maintained by Landlord with respect to the Building or the Demised Premises.

     (c) Tenant shall not use, maintain or allow the use or maintenance of the Demised Premises or any part thereof to treat, store, dispose of, transfer, release, convey or recover Hazardous Materials (as hereinafter defined) nor shall Tenant otherwise, in any manner, possess or allow the possession of any Hazardous Materials on or about the Demised Premises; provided, however, any Hazardous Material lawfully permitted and generally recognized as necessary and appropriate for general office use, including data process center usage, may be stored and used on the Demised Premises so long as (i) such storage and use is in the ordinary course of Tenant’s business permitted under this Lease; (ii) such storage and use is performed in compliance with all applicable laws and in compliance with the highest standards prevailing in the industry for the storage and use of such materials; and (iii) Tenant delivers prior written notice to Landlord of the identity of and information regarding such materials as Landlord may require. “Hazardous Materials” shall mean any solid, liquid or gaseous waste, substance or emission or any combination thereof which may (i) cause or significantly contribute to an increase in mortality or serious illness, or (ii) pose the risk of a substantial present or potential hazard to human health, to the environment or otherwise to animal or plant life, and shall include without limitation hazardous substances and materials described in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended;

17

the Resource Conservation and Recovery Act, as amended; and any other applicable federal, state or local laws. Tenant shall immediately notify Landlord of the presence or suspected presence of any Hazardous Materials on or about the Demised Premises and shall deliver to Landlord any notice received by Tenant relating thereto.

     (d) Tenant agrees that it shall not keep, use, sell or offer for sale in or upon the Demised Premises any article which may be prohibited by any then available standard forms of fire insurance policies with extended coverage. Tenant agrees to pay to Landlord any increase in premiums for insurance maintained by Landlord with respect to the Demised Premises or the Building resulting from the use of the Demised Premises by Tenant; provided that Landlord agrees that the foregoing shall not apply to Tenant’s use of the Demised Premises for general office use, including data processing center usage.

     (e) Tenant shall pay all costs, expenses, fines, penalties or damages which may be imposed upon Landlord by reason of Tenant’s failure to comply with the provisions of this Section 6.2.

     Section 6.3. Rules and Regulations. Tenant and its agents, employees, contractors and invitees shall faithfully observe and comply with the rules and regulations attached hereto as Exhibit C and incorporated herein by this reference, and such reasonable changes thereto, whether by modification, elimination or addition, as Landlord may, at any time and from time to time, make in respect of the Demised Premises and/or the Building (the “Rules and Regulations”). Such changes shall be effective upon notice thereof from Landlord to Tenant. In the case of any conflict or inconsistency between the provisions of this Lease and any of the Rules and Regulations, as originally promulgated or as changed, the provisions of this Lease shall control. Nothing contained in this Lease shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations, or the provisions in any other lease, as against any other tenant; provided, however, that Landlord shall not enforce the Rules and Regulations so as unjustly to discriminate against Tenant. Landlord shall not be liable to Tenant for the nonperformance or violation thereof by any other tenant or anyone else.

     Section 6.4. Landlord Compliance. Without limiting Tenant’s obligations under Section 6.2 above, (A) Landlord shall comply with all Applicable Laws pertaining to the Common Areas of the Building, or otherwise relating to Landlord’s performance of any maintenance or repair obligations imposed upon Landlord hereunder, and (B) Landlord shall be responsible, within a reasonable time frame based on the circumstances, for the remediation or other compliance work (herein, “Turnover Noncompliance Work”) required on account of the Demised Premises not complying, as of the Turnover Date, with any Applicable Laws (including, without limitation, the Americans With Disabilities Act) as in effect as of the Turnover Date. For purposes of this Section 6.4, it is understood and agreed that (i) except for costs of Turnover Noncompliance Work (which shall be at no cost to Tenant), any costs incurred by Landlord relative to such compliance activities under this Section 6.4 may be included as part of “Operating Costs” hereunder (subject to the limitations expressly provided in the definition of Operating Costs in this Lease), and (ii) Tenant shall have no claim against Landlord relative to

18

noncompliance of Applicable Laws under this Section 6.4 if any such noncompliance of Applicable Laws does not adversely impact Tenant’s use and quiet enjoyment of any portion of the Demised Premises in accordance with the terms of this Lease, and (iii) Tenant shall reasonably cooperate with Landlord in allowing access to the Demised Premises, subject to prior scheduling with Tenant, to enable Landlord to perform any compliance work under this Section 6.4 which is required within the Demised Premises.

ARTICLE 7
COMMON AREA

     Section 7.1. Control of Common Area.

     (a) As used in this Lease, the term “Common Area” shall mean that part of the interior and exterior of the Building (including, if applicable, certain areas external to the Building benefiting both the Building and the building commonly known as 2443 Warrenville Road, Lisle, Illinois) designated by Landlord for the common use of all tenants, which includes parking area, sidewalks, landscaping, curbs, driveways, delivery passages, loading areas, private streets and alleys, lighting facilities, drinking fountains, meeting rooms, public toilets and the like. Landlord grants Tenant a nonexclusive license for the Term, to use in common with the invitees of Landlord and Tenant and such other persons as Landlord and Tenant shall designate, the Common Area, subject to the terms and conditions of this Lease and to the Rules and Regulations.

     (b) Landlord reserves the right, at any time and from time to time, without incurring any liability to Tenant therefor, to change the arrangement, dimensions and/or location of public entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets, parking areas or other parts of the Common Area; provided that, except to the extent required by Applicable Laws or in the case of an emergency, no action taken by Landlord under this subclause (b) shall materially adversely affect Tenant’s access to the Demised Premises or Tenant’s right to use and occupy the Demised Premises in accordance with the terms of this Lease. In such event, Landlord shall repair any physical damage caused to the Demised Premises.

     (c) Landlord reserves the right, at any time and from time to time, to use portions of the Common Areas for art and other displays, promotional events and other uses not inconsistent with the character of the Building.

     Section 7.2. Parking. Tenant shall have only such parking rights as are provided in the Parking Rider set forth as Exhibit D attached hereto.

19

ARTICLE 8
REPAIRS, ALTERATIONS AND MECHANICS’ LIENS

     Section 8.1. Repairs.

     (a) Landlord shall (i) keep the core and shell (as defined in Section 12.5), the roof, exterior walls, foundation and structural frame of the Building and the Common Area in good order, repair and condition (excluding, however, all repairs which Tenant is obligated to make or pay for pursuant to this Section 8.1 and all repairs which any other tenant of the Building is required to make pursuant to the terms of such tenant’s lease), consistent with comparable Class A office building standards, at all times during the Term, and (ii) keep in good order, condition and repair, consistent with comparable Class A office building standards, all outside windows of the Demised Premises and the base Building electrical, plumbing, heating, ventilating and air conditioning systems servicing the Demised Premises (other than as set forth in Section 8.1(b) below). Landlord’s repair obligations hereunder shall include the “replacement” of items for which Landlord is responsible for repair hereunder, as opposed to repairs to such items, if such items have reached the end of their useful life (as determined by Landlord, in good faith), and if the replacement (in lieu of repair) of such items would be the commercially reasonable course of action in accordance with comparable Class A office building standards. Tenant shall give Landlord prompt notice of any defective condition in any base Building plumbing, heating system or electrical lines located in, servicing or passing through the Demised Premises and following such notice, Landlord shall use commercially reasonable efforts where practicable to initiate all repairs promptly and to remedy the condition with due diligence, subject to unavoidable delay, but at the expense of Tenant if repairs are necessitated by any default by Tenant hereunder or by any negligence or willful misconduct attributable to Tenant, Tenant’s agents, employees, invitees or licensees; provided, however, that no liability of Landlord to Tenant shall accrue hereunder unless and until Tenant has given notice to Landlord of the specific repair to be made.

     (b) Tenant, at its sole cost and expense, shall (i) keep the Demised Premises (including all Tenant’s Work and other Alterations) in good order, repair and condition at all times during the Term, and (ii) promptly and adequately repair all damage to the Demised Premises, including damage to interior windows and to any portion of the Building air conditioning, heating, electrical, mechanical and plumbing systems which run through the Demised Premises and which serve the Demised Premises, to the extent caused by Tenant or its contractors, agents, employees or invitees (and to the extent not caused by Tenant or it contractors or agents, employees or invitees, then Landlord shall make such repairs as and to the extent provided in Section 8.1 (a) above). All repairs made by or on behalf of Tenant shall be made and performed in accordance with the provisions of Section 8.2 and shall be consistent in quality and design to Class A office buildings in Lisle/Naperville, Illinois. If Tenant fails to proceed with due

20

diligence to make repairs required to be made by Tenant, and such failure shall continue for 10 business days after notice from Landlord (except that no such notice shall be required in the case of an emergency or in the event such failure materially impacts the occupancy of any other Building tenant or occupant or the core and shell [as defined in Section 12.5] of the Building), the same may, at Landlord’s sole discretion and without limiting other rights or remedies available to Landlord, be made by Landlord at the expense of Tenant and the actual costs so incurred by Landlord shall be paid to Landlord by Tenant within thirty (30) days of submission of a bill or statement therefor by Landlord.

     Section 8.2. Alterations. Tenant shall not make any alterations, additions or improvements (collectively, “Alterations”) in or to the Demised Premises without Landlord’s prior written consent (not to be unreasonably withheld, conditioned or delayed, as provided in Section 8.5 below). In the event Tenant requests Landlord to perform any construction management or supervisory services relative to any Alterations, and if Landlord in its sole discretion agrees to perform such services, then in addition to the cost of such Alterations, Tenant agrees to pay Landlord, as Landlord’s charges for all such services, a cost recovery fee in an amount mutually agreeable to Landlord and Tenant at such time; otherwise Tenant shall pay Landlord a cost recovery fee equal to Landlord’s actual out-of-pocket costs (including third-party architectural/engineering review costs) incurred in connection with Landlord’s performance of its customary level of supervision, review, approval and coordination for such type of Alteration (the “Out-of-Pocket Costs”). Tenant shall only utilize contractors approved by Landlord (not to be unreasonably withheld, conditioned or delayed). Tenant shall submit full and complete plans and specifications for any Alterations to Landlord, and shall obtain Landlord’s prior approval thereof, prior to commencing any such Alterations. Tenant shall, before making any Alterations, at its expense, obtain all permits, approvals and certificates required by any governmental or quasi-governmental bodies and (upon completion) certificates of final approval thereof and shall deliver promptly duplicates of all such permits, approvals and certificates to Landlord, and Tenant agrees to carry, and to cause Tenant’s contractors and sub-contractors to carry such workmen’s compensation, general liability, personal and property damage insurance as Landlord may reasonably require. Upon completion of any Alterations, Tenant shall deliver to Landlord one set of “as-built” plans and specifications therefor. All Tenant’s Work and all fixtures, paneling, partitions, railing and other Alterations, installed in the Demised Premises, either by Tenant or by Landlord on Tenant’s behalf, shall become the property of Landlord and shall remain upon and be surrendered with the Demised Premises upon the expiration or earlier termination of the Lease, unless Landlord, by notice to Tenant given at the time of approval of the plans and specifications therefor (or within a reasonable time after Landlord receives notice of any “Non-Consent Alterations” or any “Higher Price Interior Alterations” under Section 8.6 below), elects to have them removed by Tenant, in which event, the same shall be removed from the Demised Premises by Tenant on or before the Expiration Date or earlier termination hereof; provided, however, that such removal requirement shall only be imposed by Landlord if Landlord, in good faith, determines that such item or items would not be customary for office usage at comparable Class-A office buildings in Lisle/Naperville, Illinois or would be excessive costly or hazardous to remove. Nothing in this section shall be construed to give Landlord title to or to prevent Tenant’s removal of trade fixtures, moveable office furniture and equipment (all of which shall be removed by Tenant prior to the Expiration Date or earlier termination hereof),

21

but upon removal of any such equipment and fixtures from the Demised Premises or upon removal of other installations (including, without limitation, items of Tenant’s Work and other Alterations) as may be required by Landlord pursuant to Landlord’s rights to so require removal as described in this Section 8.2, Tenant shall promptly and at its expense, repair and restore the Demised Premises to the condition existing prior to installation (subject to ordinary wear and tear) and repair any damage to the Demised Premises or the Building due to such removal. All property that was permitted or required to be removed by Tenant at the end of the Term but which remains in the Demised Premises for ten (10) business days after Tenant vacates the Demised Premises shall be deemed abandoned and may, at the election of Landlord, and without limitation on other rights or remedies available to Landlord, either be retained as Landlord’s property or may be removed from the Demised Premises by Landlord at Tenant’s expense. Without limitation of the foregoing, Tenant shall have no right or obligation to remove any fixtures, tenant improvements or other items located at the initial Demised Premises as of the Turnover Date hereunder.

     Section 8.3. Mechanics’ Liens. Tenant shall (a) pay before delinquency all costs and expenses of work done or caused to be done by Tenant in the Demised Premises; (b) keep the title to the Building, Land and every part thereof free and clear of any lien or encumbrance in respect of such work; and (c) indemnify and hold harmless Landlord against any claim, loss, cost, demand (including reasonable legal fees), whether in respect of liens or otherwise, arising out of the supply of material, services or labor for such work. Tenant shall immediately notify Landlord of any lien, claim of lien or other action of which Tenant has knowledge and which affects the title to the Building, Land or any part thereof. Tenant shall not permit any lien or claim for lien of any mechanic, labor or supplier or any other lien to be filed against the Building, or the Demised Premises or any part thereof, arising out of any Alterations or other work performed or alleged to be performed, by or at the direction of Tenant. If any such lien or claim for lien is filed, Tenant shall, within fifteen (15) business days of receiving notice of such lien or claim, (i) have such lien or claim for lien released of record, or (ii) deliver to Landlord a bond, title insurance or other security in form, content, and amount reasonably satisfactory to Landlord relative to such lien or claim for lien (whereupon, in the case of this subclause (ii), Tenant shall thereafter diligently contest such lien or claim for lien). Without limitation of the foregoing, Tenant shall indemnify, defend and hold harmless, Landlord from and against any such lien or claim for lien, and the foreclosure or attempted foreclosure thereof, and Tenant shall cause any such lien to be released of record, in any event, prior to final enforcement thereof. If Tenant fails to take the actions described in subclause (i) or subclause (ii) above, then Landlord, without investigating the validity of such lien or claim for lien and without limiting other rights or remedies available to it hereunder, may pay or discharge the same, and Tenant shall, as payment of Additional Rent hereunder, reimburse Landlord upon demand for the amount so paid by Landlord.

     Section 8.4. Indemnification. Without limitation of any other indemnification provisions contained in this Lease, Tenant hereby agrees to indemnify, protect, defend and hold harmless Landlord, and Landlord’s agents, employees, contractors, officers, trustees, directors, shareholders, partners and principles (disclosed or undisclosed) from and against all claims, liabilities, losses, damages and expenses of whatever nature arising out of or in connection with any Alterations, including, without limitation, the cost of any repairs to the Demised Premises or

22

Building necessitated by activities of Tenant or Tenant’s contractors and bodily injury to persons, except to the extent caused by the negligence or willful misconduct of Landlord or of said other parties.

     Section 8.5. Reasonable Consent. With respect to any Alterations, other than Non-Consent Alterations as described in Section 8.6 below, Landlord agrees not to unreasonably withhold, delay or condition its consent to such Alterations; provided, however, that Landlord shall not be deemed to have acted unreasonably if it withholds its consent because, in Landlord’s reasonable opinion, such work would adversely affect Building systems, the structure of the Building or the safety of its occupants; would increase Landlord’s cost of repairs, insurance or furnishing services or otherwise adversely affect Landlord’s ability to efficiently operate the Building or furnish services to Tenant or other tenants; involves toxic or hazardous materials in any unlawful manner; or requires entry into another tenant’s premises or use of public areas (other than use of public areas for prompt movement of materials to the Demised Premises), or otherwise adversely affects another tenant’s premises or the Common Areas. The foregoing reasons, however, shall not be exclusive of the reasons for which Landlord may withhold consent, whether or not such other reasons are similar or dissimilar to the foregoing. Landlord shall give its approval or disapproval (giving reasonably detailed reasons in case of disapproval) of the plans and specifications or other submissions for any Alterations (other than those constituting Tenant’s Work, which shall instead be governed by Article 25) within ten (10) business days after their delivery to Landlord with Tenant’s express written request for Landlord’s approval thereof (and, as to any subsequent revised plans and specifications or other submissions submitted by Tenant to Landlord, within five (5) business days after their delivery to Landlord with Tenant’s express request for Landlord’s approval thereof). In the event Landlord fails to give its approval or disapproval of such plans and specifications or other submissions within said 10-business day (or 5-business day, as applicable) period, then, to the extent Tenant’s request for approval expressly stated thereon that failure to respond within such 10-business day (or 5-business day, as applicable) period shall be deemed Landlord’s approval of such plans and specifications or other submissions, the plans and specifications or other submissions for such Alterations so submitted shall be approved by Landlord.

     Section 8.6. Non-Consent Alterations. Notwithstanding the foregoing provisions of this Section, Tenant may perform certain interior alterations (collectively, “Non-Consent Alterations”) to the Demised Premises such as, but not limited to, carpeting, painting (so long as the odors from the same do not materially or unreasonably interfere with any other tenant’s operations), hanging artwork or wall coverings, installing furniture systems, installing non-load bearing demountable partitions, or other similar interior decorating improvements, without (1) obtaining Landlord’s consent therefor, (2) obtaining Landlord’s approval of the contractors/service providers performing the same, or (3) payment of any cost recovery fee or other supervision fee to Landlord (but subject to the remaining requirements of this Section 8), but only if (i) such items do not affect the Building structure or HVAC, electrical or other Building systems, the public areas of the Building or any other tenant space, (ii) Tenant gives prior written notice to Landlord of such items, including a description of the contemplated work and the types of materials being used, (iii) the cost of such alterations do not exceed an aggregate of $100,000 in any 12-month period (the “Cost Limitation”), and (iv) the contractors/service providers performing such work are reputable and do not cause any labor disharmony at the

23

Building. Approval of plans and specifications shall not be required for the foregoing Non-Consent Alterations, where plans and specifications are not reasonably appropriate for the work to be performed. Without limitation of the foregoing, with respect to any such interior alterations which meet all of the criteria of “Non-Consent Alterations” described above in this Section 8.6 other than the Cost Limitation described in clause (iii) (herein, the “Higher Price Interior Alterations”), Landlord shall have the right to approve such Higher Price Interior Alterations, in accordance with the terms of Section 8.5 above, and all other terms of this Article 8 shall apply with respect thereto; provided that Landlord shall give its approval or disapproval (giving reasonably detailed reasons in case of disapproval) of such Higher Price Interior Alterations within five (5) business days after Tenant’s delivery of the items described in clause (ii) above relative to such items and Tenant’s express written request from Landlord’s approval thereof (and if Landlord fails to give its approval or disapproval within said 5-business day period, then to the extent Tenant’s request for approval expressly stated therein that failure to respond within such 5-business day period shall be deemed Landlord’s approval of such Higher Price Interior Alterations, then the Higher Price Interior Alterations shall be deemed approved by Landlord).

ARTICLE 9
UTILITIES AND BUILDING SERVICES

     Section 9.1. Heating, Ventilating and Air Conditioning.

     (a) Subject to limitations and restrictions imposed by federal, state and/or local authorities, Landlord shall furnish heating and air-conditioning to the Demised Premises during Normal Business Hours, when reasonably necessary to provide a temperature condition required for the comfortable occupancy of the Demised Premises under normal business operations, consistent with the HVAC design standards described in Exhibit K attached hereto. Wherever heat generating machines or equipment (other than standard office equipment, such as reproduction machines) are used in the Demised Premises which may affect the temperature which would otherwise be maintained by the Building air-conditioning system, Landlord reserves the right to install supplementary air-conditioning units for the Demised Premises at the expense of Tenant and the costs of operation and maintenance thereof shall be paid by Tenant to Landlord at rates determined by Landlord. Any air-conditioning units required for Tenant’s computer systems shall be installed at the expense of Tenant and the costs of operation and maintenance of same shall be paid by Tenant to Landlord at rates determined by Landlord.

     (b) Tenant recognizes that, outside of Normal Business Hours, Tenant may require overtime HVAC services in order to render the Demised Premises comfortable and tenantable and that Tenant shall have no claim against Landlord for the condition of the Demised Premises outside of Normal Business Hours, subject to the terms set forth below in this Section 9.1(b). Without limiting the foregoing, if Tenant desires air conditioning or heat during times or on days other

24

than Normal Business Hours, Landlord shall provide such service to Tenant provided that (i) Tenant notifies Landlord on or before 2:00 p.m. on any business day on which Tenant desires air conditioning or heat after Normal Business Hours on such business day, or before 5:00 p.m. on the business day immediately preceding any holiday or weekend day for which Tenant desires such service other than during Normal Business Hours; and (ii) Tenant shall pay Landlord, Landlord’s then after-hours HVAC charges in connection with such after-hours service (which after-hours’ charges, as of the date hereof, are described in Section 9.6 below).

     Section 9.2. Cleaning Service. Landlord shall provide customary janitor and cleaning service in and about the Demised Premises and Common Areas of the Building in accordance with the specifications attached hereto as Exhibit J, with such changes thereto as may be elected by Landlord so long as such changes are consistent with janitorial cleaning services being furnished at comparable Class A office buildings located in the Lisle/Naperville, Illinois area, provided in no event shall the service levels be decreased below what is provided in Exhibit J (provided that Landlord shall have no obligation to provide cleaning services to the Demised Premises prior to the Commencement Date hereunder, except as it relates to the Suite 620 Space and/or the Suite 610 Space described in Section 2.3 above, for which Landlord shall furnish such cleaning services to such respective spaces from and after any earlier date in which Tenant notifies Landlord that Tenant has commenced the conduct of business operations therefrom). Tenant shall not provide any cleaning services without Landlord’s consent and then only at Tenant’s sole responsibility and expense and by cleaning contractors or employees and in a manner at all times satisfactory to Landlord. Tenant shall pay to Landlord the cost of removal of any of Tenant’s refuse and rubbish to the extent that such refuse and rubbish removed by Landlord exceeds the refuse and rubbish normally attendant upon the use of the Demised Premises as offices. Landlord’s obligations under the terms of this Section 9.2 are subject to the terms of Article 34 below relative to certain “Secured Areas” as expressly described therein.

     Section 9.3. Elevator Service. Landlord shall furnish non-attended automatic elevator service during Normal Business Hours, except that one (1) elevator shall be subject to call at all times.

     Section 9.4. Electricity.

     (a) The Demised Premises shall be separately metered for electrical use. Electricity shall be distributed to the Demised Premises either by the electric utility company serving the Building or, at Landlord’s option, by Landlord, and Landlord shall permit Landlord’s wire and conduits, to the extent available, suitable and safely capable, to be used for such distribution. If and so long as Landlord is distributing electricity to the Demised Premises, Tenant shall obtain all of its electricity from Landlord and shall pay all of Landlord’s charges (at rates which shall not exceed the reasonably competitive rates for such service charges to tenants by other electrical utility providers in Lisle/Naperville, Illinois for space comparable in size to the space leased to Tenant). If the electric utility company is distributing electricity to the Demised Premises, Tenant at its cost shall make

25

all necessary arrangements with the electric utility company for metering and paying for electric current furnished to the Demised Premises. Tenant’s use of electricity in the Demised Premises shall be for the operation of building standard lighting, electrical fixtures, computers, other data processing or storage equipment and other office machines and lamps (expressly excluding high electrical consumption business machines and space heaters) and shall not at any time exceed the capacity of any of the electrical conductors and equipment in or otherwise serving the Demised Premises. For information purposes, the electrical capacity (lights and outlets) for the Demised Premises is as follows: electrical lighting and electronic equipment load of six (6) watts/square foot (Demand Load) of floor area. If Tenant determines that it requires additional electrical capacity, Landlord shall reasonably cooperate with Tenant’s reasonable requests and proposals to obtain such extra power; provided that (a) such cooperation, as well as any actions taken by Tenant relative to such additional power needs, shall be at no cost, expense or liability to Landlord, (b) Tenant’s proposed method of obtaining additional power shall not adversely affect Building operations or any other tenant’s space or any Building systems, Common Areas or other core and shell components and (c) any work required to obtain such additional electrical capacity shall be performed by Tenant, at its expense, in accordance with the terms and requirements of Article 8 (including all approval rights of Landlord as set forth therein).

     (b) Tenant shall not, without Landlord’s prior written consent in each instance (not to be unreasonably withheld, conditioned or delayed in accordance with the standards of reasonableness set forth in Section 8 above), connect any additional fixtures, appliances or equipment (other than normal office electrical fixtures, lamps, computers, other data processing or storage equipment and similar office machines) to the Building’s electric distribution system or make any alterations or additions to the electric system of the Demised Premises existing at the commencement of the Term (it being understood that in no event shall any lighting or other fixtures, appliances or equipment, whether of the types described in this clause (b) or otherwise, exceed the overall electrical capacity for the Demised Premises described in the last sentence of Section 9.4(a) above). If Landlord grants such consent, the cost of all additional risers and other equipment required therefor shall be paid as Additional Rent by Tenant to Landlord upon demand.

     (c) Landlord, at Tenant’s expense, shall purchase and install all light bulbs, fluorescent and other lighting tubes, ballasts and any incandescent lamps used in Building-standard lighting fixtures installed by Landlord in the Demised Premises upon notification from Tenant that such installation is required, provided that such changes are at market rates. Tenant shall use only such electrical lighting fixtures and lamps as may be approved by Landlord. Tenant shall replace, as necessary, all bulbs and fluorescent tubes in non-Building- standard lighting fixtures, if any, installed in the Demised Premises. If Tenant shall fail to make any such replacement within five (5) days after written notice

26

from Landlord, Landlord may make such replacement and charge the cost of labor and materials involved therein to Tenant as additional rent.

     Section 9.5. Interruption of Services. Subject to Section 11.5 hereof, Tenant agrees that neither Landlord, nor any of Landlord’s constituent partners or owners, nor any of their respective agents, partners, owners, members or employees, shall be liable for damage or injury to person, property or business or for loss or interruption of business, or for any other matter, in the event there is any failure, delay, interruption or diminution in furnishing any service. Subject to Section 11.5 hereof and except as expressly provided below in this Section, no such failure, delay, interruption or diminution shall be deemed to constitute an eviction or disturbance of Tenant’s use or possession of the Demised Premises, in whole or in part, actual or constructive, nor entitle Tenant to any claim for set-off, abatement or reduction of Rent, nor render Landlord liable for damages, nor relieve Tenant from the performance of or affect any of Tenant’s obligations under this Lease. Notwithstanding the foregoing, if the services described in Sections 9.1, 9.3 or 9.4 (but, as to Section 9.4, only to the extent Landlord has elected to furnish electricity directly to Tenant as provided therein or to the extent the electricity interruption is caused solely by Landlord’s negligence or willful misconduct or Landlord’s failure to maintain and repair the base Building electrical systems as required under this Lease) above, are interrupted, such that Tenant is not able and actually ceases to conduct any of its customary business activities in the Demised Premises or any portion thereof for a period of three (3) consecutive business days, then, Base Rent and Tenant’s Expense Charge shall abate with respect to those portions of the Demised Premises so rendered untenantable as of the fourth (4^th) consecutive business day and thereafter until such time as service is restored so that Tenant is able to or actually resumes occupancy of the Demised Premises (or such affected portion thereof, as applicable) for any of its customary business activities. Landlord shall use commercially reasonable efforts to minimize such failure, delay, interruption or diminution in furnishing the services described in Sections 9.1, 9.3 and 9.4 (but, as to Section 9.4, only to the extent Landlord has elected to furnish electricity directly to Tenant as provided therein) above. Notwithstanding any of the foregoing provisions of this Section, untenantability by reason of damage by fire or other casualty shall be governed by the provisions of Article 12 hereof. Subject to Section 11.5 hereof, in the case of any untenantability of the Demised Premises or any portion thereof as a result of the matters described in this Section, the remedies expressly set forth hereinabove in this Section shall constitute Tenant’s sole and exclusive remedies as against Landlord with respect to such untenantability.

     Section 9.6. Overtime Services. In the event Tenant requires any utilities or services described in this Article 9 during periods other than as provided in this Article 9 and provided that Tenant shall have given Landlord notice no later than 2:00 P.M. of the last business day prior to Tenant’s need for such services, Landlord shall provide Tenant with such services and Tenant shall pay Landlord, as Additional Rent, Landlord’s then existing charges in respect thereto (it being acknowledged that, as of the date hereof, for information purposes only, Landlord’s after-hours charges for HVAC are $4.00 per hour per heat pump).

27

ARTICLE 10
PROPERTY AND OTHER TAXES

     Section 10.1. Tenant’s Property. In addition to the Rent and other charges to be paid by Tenant hereunder, Tenant shall reimburse Landlord, upon demand, for any and all taxes payable by Landlord whether or not now customary or within the contemplation of the parties hereto, levied, assessed or imposed: (1) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Demised Premises or any portion thereof; (2) upon the measured value of Tenant’s personal property owned, installed, used or located in the Demised Premises, it being the intention of Landlord and Tenant that, to the extent possible, such personal property taxes shall be billed to and paid directly by Tenant; (3) upon the leasehold interest or any right of occupancy of Tenant in the Demised Premises; or (4) upon this transaction. Any reimbursement referred to above shall be collectible by Landlord as Additional Rent hereunder.

     Section 10.2. Increased Value of Improvements. If the tenant improvements in the Demised Premises, whether installed or paid for by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, are assessed for real property tax purposes at a valuation higher than the valuation at which tenant improvements conforming to Landlord’s “Building Standard” in other space in the Building are assessed, then the real property taxes and assessment levied against Landlord, or against the Building or any portion thereof, by reason of such excess assessed valuation shall be deemed to be taxes levied against personal property of Tenant and shall be governed by the provisions of Section 10.1 above. If the records of the tax assessor having jurisdiction over the Building are available and sufficiently detailed to serve as a basis for determining whether such tenant improvements are assessed at a higher valuation than Landlord’s “Building Standard,” such records shall be binding on both Landlord and Tenant; otherwise, the actual cost of construction shall be the basis for such determination.

ARTICLE 11
INSURANCE AND INDEMNITY

     Section 11.1. Tenant’s Insurance. At all times from and after the Turnover Date and thereafter during the Term hereof (but subject to the terms set forth below in this Section 11.1 regarding the “Delayed Insurance Delivery”), Tenant shall keep in full force and effect a policy of commercial general liability and property damage insurance with respect to the Demised Premises, in such limits as may be reasonably required from time to time by Landlord (provided that any limits requested by Landlord shall be consistent with the limits required by landlords of comparable Class A office buildings in the Lisle/Naperville, Illinois area for tenants of comparable size and financial leased premises). The limits of commercial general liability insurance on the Commencement Date shall be not less than $3,000,000 for death or injury to any number of persons or for property damage, for each occurrence. Additionally, Tenant, for the mutual benefit of Landlord and Tenant (when used in this Section 11.1 the term “Landlord” shall include Landlord, its constituent partners and the members, partners, directors, officers, agents, servants and employees of each of them), shall keep in force and effect insurance on all alterations, additions, and improvements located at the Demised Premises, and on all personal

28

property located in the Demised Premises, protecting Landlord and Tenant (including Tenant’s partners, directors, officers, agents, servants and employees) from damage or other loss caused by fire or other casualty, including but not limited to vandalism and malicious mischief, perils covered by extended coverage, theft, sprinkler leakage, water damage (however caused), explosion malfunction or failure of heating and cooling or other apparatus, and other similar risks in amounts not less than the full insurable replacement value of such property. Such property insurance shall provide that it is specific and non-contributory and shall contain a replacement cost endorsement. In no event shall the limits of any coverage maintained by Tenant pursuant to this Section 11.1 be considered as limiting Tenant’s liability under this Lease. These policies shall name Landlord, any person, firms or corporations (including, without being limited to, any mortgagee or lessor of Landlord) designated by Landlord and Tenant as insureds, shall include blanket contractual liability coverage which insures contractual liability under the indemnifications set forth in Section 11.2 hereof and shall contain a clause that the insurer will not cancel or change the insurance without first giving Landlord 30 days prior written notice. The insurance shall be written by an insurance company, licensed and qualified to do business in the State in which the Building is located, which is reasonably acceptable to Landlord. An original copy of the policy or a certificate of insurance shall be delivered to Landlord upon the execution and delivery of this Lease and replacement certificates shall be delivered not less than ten (10) days prior to the expiration of any then existing coverage; provided that Tenant shall have ten (10) business days following the mutual execution and delivery of this Lease by both parties to deliver such insurance policy or certificate of insurance to Landlord (the “Delayed Insurance Delivery”). In no event shall Tenant have the right to begin performance of any Tenant’s Work or other alterations or to otherwise commence any other business activities at the Demised Premises prior to delivery of the requisite insurance policy or certificate of insurance to Landlord. The insurance which Tenant is required to maintain in force and effect under this Section 11.1 shall be primary insurance as respects Landlord (and any other additional insureds designated by Landlord) and not excess over or contributory with any other available insurance. Certificates of insurance evidencing the liability insurance coverage required under this Section 11.1 shall contain an endorsement to such effect. In addition, at all times during the Term hereof, Tenant shall procure and maintain Worker’s Compensation Insurance in accordance with the laws of the State in which the Building is located.

     Section 11.2. Indemnity and Non-Liability.

     (a) Neither Landlord nor Landlord’s agents (including, without being limited, to the Managing Agent), employees, contractors, officers, trustees, directors, shareholders, partners or principals (disclosed or undisclosed) shall be liable to Tenant or Tenant’s agents, employees, contractors, invitees or licensees or any other occupant of the Demised Premises, and Tenant shall save Landlord, its successors and assigns and their respective agents, employees, contractors, officers, trustees, directors, shareholders, partners and principals (disclosed or undisclosed) harmless from any loss, cost, liability, claim, damage, expense (including reasonable attorneys’ fees and disbursements), penalty or fine incurred in connection with or arising from any injury to Tenant or to any other person or for any damage to, or loss (by theft or otherwise) of, any of Tenant’s property or of the property of any other person, irrespective of the cause of such injury,

29

damage or loss (including the acts or negligence of any tenant or of any owners or occupants of adjacent or neighborhood property or caused by operations in construction of any private, public or quasi-public work), except, however, to the extent of any personal injury or property damage resulting from the negligence or willful misconduct of Landlord or Landlord’s agents or employees. However, even if such loss or damage is caused by the negligence or willful misconduct of Landlord, its agents or employees, Tenant waives, to the full extent permitted by law, any claim for consequential damages in connection therewith. To the extent of Tenant’s insurance coverage, and to the fullest extent permitted by law, Landlord, and its agents and employees, shall not be liable, for any loss or damage to any person or property due to the negligence of Landlord, its agents or employees.

     (b) Neither any (1) performance by Landlord, Tenant or others of any repairs, improvements, alterations, additions, installations, substitutions, betterments or decorations in or to the Building, the Building equipment and systems, the Common Areas or the Demised Premises, (2) failure of Landlord or others to make any such repairs or improvements, (3) damage to the Building, the Building equipment and systems, the Common Areas, the Demised Premises or Tenant’s property, (4) injury to any persons, caused by other tenants or persons in the Building, or by operations in the construction of any private, public, or quasi-public work, or by any other cause, (5) latent defect in the Building, the Building equipment and systems, the Common Areas or the Demised Premises, nor (6) inconvenience or annoyance to Tenant or injury to or interruption of Tenant’s business by reason of any of the events or occurrences referred to in the foregoing subdivisions (1) through (5) shall impose any liability on Landlord to Tenant, other than, subject to Section 24.10 hereof, such liability relative to injury to persons or property damage as may be imposed upon Landlord by law for Landlord’s negligence or the negligence of Landlord’s agents or employees in the operation or maintenance of the Building, the Building equipment and systems or the Common Areas or for the breach by Landlord of any express covenant of this Lease on Landlord’s part to be performed. No representation, guaranty or warranty is made or assurance given that the communications or security systems, devices or procedures of the Building will be effective to prevent injury to Tenant or any other person or damage to, or loss (by theft or otherwise) of, any of Tenant’s property or of the property of any other person, and Landlord reserves the right to discontinue or modify at any time such communications or security systems or procedures without liability to Tenant.

     (c) Subject to the terms of this Section 11.2 and Section 11.3 below, in addition to and without limiting or being limited by any other indemnity in this Lease, but rather in confirmation and furtherance thereof, to the extent not prohibited by law, Tenant agrees to indemnify, defend by counsel reasonably acceptable to Landlord and hold Landlord, Landlord’s constituent owners, and each such party’s respective agents, employees, contractors, officers, directors, shareholders, owners, partners, members, or principals, harmless of, from and

30

against any and all losses, damages, liabilities, claims, liens, costs and expenses, including court costs and reasonable attorneys’ fees and expenses, in connection with injury to or death of any person occurring within or about the Demised Premises, or with respect to damage to or theft, loss or loss of the use of any property, occurring in or about the Demised Premises, but only to the extent that the foregoing losses, damages, liabilities, claims, liens, costs and expenses arise from or are caused by the undertaking by Tenant or its agents or contractors of Tenant’s Work or other Tenant Alterations or repairs at the Demised Premises, or from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or from any negligent act or omission or willful misconduct of Tenant, or any of its employees, agents, licensees, invitees or contractors. No persons or entities other than Landlord and such other indemnified parties shall be deemed third party beneficiaries of the indemnitees set forth in this Section 11.2(c). Tenant’s obligations under this Section 11.2(c) shall survive the expiration or earlier termination of this Lease.

     (d) Tenant shall pay to Landlord as Additional Rent, within thirty (30) days after submission by Landlord to Tenant of bills or statements therefor, sums equal to all losses, costs, liabilities, claims, damages, fines, penalties and expenses referred to in this Section 11.2.

     Section 11.3. Waiver of Subrogation.

     (a) Landlord and Tenant shall each use commercially reasonable efforts to procure an appropriate clause in, or endorsement to, each of its policies for fire and extended coverage insurance, pursuant to which the insurance company effectively waives subrogation or consents to waiver of its right of recovery against the other party, which, in the case of Tenant, shall be deemed to include any subtenant in the Demised Premises, and having obtained such clause or endorsement of waiver of subrogation or consent to a waiver of the right of recovery, such party hereby agrees that it will not make any claim against or seek to recover from the other for any loss or damage to its property or the property of others covered by such fire or extended coverage insurance; provided, however, that the release, discharge and covenant not to sue herein contained shall be limited by the terms and provisions of the waiver of subrogation clause or endorsement, or the clause or endorsement consenting to a waiver of right of recovery, and shall be co-extensive therewith.

     (b) If either party hereto shall not be able to obtain such clause or endorsement on a particular policy after using reasonable efforts to do so, then that party shall so notify the other party hereto at least 15 days prior to the date the policy is to take effect. If a party shall fail to give notice of inability to obtain such clause or endorsement, then that party shall be deemed to have waived its right of recovery from the other party with respect to any loss or damage insured

31

against by the policy with respect to which notice was not given as provided above.

     Section 11.4. Landlord Insurance/Landlord Indemnity.

     (a) Landlord shall carry during the Term hereof replacement cost property insurance on the Building core and shell (as defined in Section 12.2 below) (including all base Building improvements at the Building, but excluding the Tenant’s Work and all other alterations, additions or improvements to the Demised Premises) against fire and other extended coverage perils in an amount sufficient to prevent Landlord from being deemed a co-insurer of the risks insured under the policy. Landlord shall also carry, during the Term hereof, liability insurance, contractual liability insurance, rent loss insurance and workers’ compensation insurance consistent with insurance coverages maintained by other landlords of other Class A office buildings in Lisle/Naperville, Illinois and otherwise in accordance with all applicable laws.

     (b) Subject to the terms of Sections 11.2 and 11.3 above, in addition to and without limiting or being limited by any other indemnity in this Lease, but rather in confirmation and furtherance thereof, to the extent not prohibited by law, Landlord agrees to indemnify, defend by counsel reasonably acceptable to Tenant and hold Tenant harmless of, from and against any and all losses, damages, liabilities, claims, liens, costs and expenses, including court costs and reasonable attorneys’ fees and expenses, imposed on them in connection with injury to or death of any person, occurring within the Common Areas of the Building, or with respect to damage to or theft, loss or loss of the use of property of third (3^rd) parties, occurring within the Common Areas of the Building, but only to the extent that the foregoing losses, damages, liabilities, claims, liens, costs and expenses arise from or are caused by any breach or default on the part of Landlord in the performance of any covenant or agreement on the part of Landlord to be performed pursuant to the terms of this Lease, or from any negligent act or omission or willful misconduct of Landlord, or any of its employees, agents, officers, directors, partners or contractors. No persons or entities other than Tenant shall be deemed third party beneficiaries of the indemnities set forth in this Section 11.4(b).

     Section 11.5. Landlord’s Negligence. Subject to the provisions of Section 11.3 hereof, no agreement of Tenant in this Lease shall be deemed to exempt Landlord from liability or damages for injury to persons or damage to property caused by or resulting from the negligence, gross negligence or willful misconduct of Landlord, its agents or employees, in the operation or maintenance of the Demised Premises or Building.

32

ARTICLE 12
DAMAGE BY CASUALTY

     Section 12.1. Termination of Lease; Repair by Landlord. If the Demised Premises or the Building (including any portion of the Building providing necessary access to the Demised Premises) shall be damaged by fire or other casualty and if such damage does not render all or a substantial portion of the Demised Premises or the Building untenantable, then Landlord shall proceed with reasonable promptness to repair and restore the core and shell of the Building and the Demised Premises so as to render the Demised Premises tenantable, subject to reasonable delays for insurance adjustments and delays caused by matters beyond Landlord’s reasonable control, and also subject to zoning laws and building codes then in effect. If any such damage renders all or a substantial portion of the Demised Premises or the Building (including any portion of the Building providing necessary access to the Demised Premises) untenantable, Landlord shall, within sixty (60) days after the occurrence of such damage, estimate the length of time that will be required to substantially complete the repair and restoration of the core and shell of the Building and the Demised Premises, as the case may be, necessitated by such damage and shall by notice advise Tenant of such estimate. If it is so estimated that the amount of time required to substantially complete such repair and restoration will exceed two hundred forty (240) days from the date such damage occurred, then either Landlord or Tenant (but Tenant shall have such right only if all or a substantial portion of the Demised Premises [or any portion of the Building providing necessary access to the Demised Premises] is rendered untenantable and the estimated time, in Landlord’s reasonable business judgment, required for Landlord to substantially complete such repair or restoration to render the Demised Premises tenantable will exceed such two hundred forty (240) day period, and only if the damage was not caused by the negligence or willful misconduct of Tenant, its agents, contractors, employees or invitees) shall have the right to terminate this Lease as of the date of notice of such election by giving notice to the other at anytime within twenty (20) days after Landlord gives Tenant the notice containing said estimate (it being understood that Landlord may, if it elects to do so, also give such notice of termination together with the notice containing said estimate). Unless this Lease is terminated as provided in the preceding sentence, Landlord shall proceed with reasonable promptness to repair and restore the core and shell of the Building or the Demised Premises so as to render the Demised Premises tenantable, subject to reasonable delays for insurance adjustments and delays caused by matters beyond Landlord’s reasonable control, and also subject to zoning laws and building codes then in effect. Landlord shall have no liability to Tenant, and Tenant shall not be entitled to terminate this Lease (except as hereinafter provided) if such repairs and restoration are not in fact completed within the time period estimated by Landlord, as aforesaid, or within said two hundred forty (240) days. However, if such repairs and restoration are not completed by a date (“Outside Date”) which is three hundred sixty (360) days after the date of such fire or other casualty (or one hundred twenty (120) days after the expiration of the time period estimated by Landlord as aforesaid, if longer than two hundred forty (240) days and neither party terminated the lease as permitted), which Outside Date shall be extended (as to Tenant’s ability to terminate only) by all periods of delay attributable to the acts or omissions of Tenant or Tenant’s agents, employees or contractors, then, to the extent either party initially had the right to terminate as provided above (or would have had the right to so terminate if the initial estimate exceeded 240 days, as described above), then such party shall again have the right to terminate this Lease, effective as of the date of notice of such election, by giving written notice to the other party

33

within thirty (30) day period after said Outside Date as extended as aforesaid, but prior to substantial completion of repair or restoration; provided, however, that Tenant shall have no right to so terminate this Lease if the only portions of the core and shell which have not then been completed are those which, due to sequencing of the work, cannot be completed until Tenant repairs or restores the portions of the Demised Premises so required by Tenant hereunder, and provided that Landlord shall have no right to so terminate this Lease if the failure to substantially complete the repairs and restoration is a result of Landlord’s failure to take reasonable actions to diligently pursue such repairs and restoration. Notwithstanding anything to the contrary herein set forth: (i) Landlord shall have no duty pursuant to this Article 12 to repair or restore any portion of the Tenant’s Work or any other Alterations or other improvements, additions or alterations made by or on behalf of Tenant in the Demised Premises; (ii) Landlord shall not be obligated (but may, at its option, so elect) to repair or restore the Demised Premises or Building (A) if the damage is due to an uninsurable casualty, or (B) if insurance proceeds are insufficient to pay for such repair or restoration (after taking into account any deductible maintained by Landlord, which deductible amount shall not be considered for purposes of determining whether the insurance proceeds are insufficient for purposes of this clause (ii)), and if Landlord had otherwise maintained the insurance required to be maintained by Landlord hereunder, or (C) if any mortgagee applies proceeds of insurance to reduce its loan balance, and the remaining proceeds, if any, available to Landlord are not sufficient to pay for such repair or restoration (provided that if Landlord elects not to so repair or restore the Demised Premises as a result of any matter described in this clause (ii), Landlord shall promptly notify Tenant of such election, and, to the extent such damage rendered a substantial portion of the Demised Premises [including any portion of the Building providing necessary access to the Demised Premises] untenantable, Tenant shall thereafter have the right to terminate this Lease effective upon written notice thereof to Landlord given not later than fifteen (15) business days after Tenant’s receipt of notice of such election by Landlord, in which event this Lease shall be deemed to have expired by lapse of time as of the tenth (10^th) business day following delivery of such termination notice, as if such date was the stated expiration date of the Term hereof); and (iii) if any such damage rendering all or substantial portion of the Demised Premises or Building (including any portion of the Building providing necessary access to the Demised Premises) untenantable shall occur during the last year of the Term and Tenant has not then validly exercised any option hereunder to renew the Term hereof for a further renewal period hereunder, either party (but as to Tenant’s right, only if all or a substantial portion of the Demised Premises is rendered untenantable and if such damage was not caused by the negligence or willful misconduct of Tenant, its agents, contractors, employees or invitees) shall have the option to terminate this Lease by giving written notice to the other within thirty (30) days after the date such damage occurred, and if such option is so exercised, this lease shall terminate as of the date of such notice.

     Section 12.2. Repair by Tenant. If this Lease is not terminated pursuant to this Article 12, Tenant shall, in accordance with Section 8, proceed with reasonable promptness to repair and restore all Tenant’s Work and other Alterations and all other alterations, additions and improvements in the Demised Premises, other than any repairs or restoration required to be made by Landlord pursuant to Section 12.1 above, to as near the condition which existed prior to the fire or other casualty as is reasonably possible. Tenant agrees and acknowledges that Landlord shall be entitled to the proceeds of any insurance coverage carried by Tenant relating to improvements and betterments to the Demised Premises if this Lease terminates.

34

Notwithstanding anything herein to the contrary, Tenant shall be entitled to all insurance proceeds from insurance which it carries relating to its furnishings, trade fixtures and other items of personalty, irrespective of whether this Lease terminates, and Landlord shall have no claim relative thereto.

     Section 12.3. Abatement of Rent; Notices of Status of Repairs/Restoration. In the event any such fire or casualty damage renders the Demised Premises untenantable and if this Lease shall not be terminated pursuant to the foregoing provisions of this Article 12 by reason of such damage, then Rent shall abate during the period beginning with the date of such damage and ending with the date when Landlord substantially completes its repair or restoration required hereunder. Such abatement shall be in an amount bearing the same ratio to the total amount of Rent for such period as the portion of the Demised Premises which is untenantable and not used by Tenant from time to time bears to the rentable area of the entire Demised Premises. In the event of termination of this Lease pursuant to this Article 12, Rent shall be apportioned on a per diem basis and be paid to the date of the termination. At Tenant’s request from time to time, Landlord shall update Tenant as to the status of the repair or restoration work being performed by Landlord under this Article 12, and as to the then estimate of the time remaining to substantially complete such work.

     Section 12.4. Untenantability. As used in this Article 12, the term “untenantable” means reasonably incapable of being occupied for its intended use due to damage to the Demised Premises or Building. Notwithstanding anything contained to the contrary in this Article 12, the Demised Premises or any portion of the Demised Premises, as applicable, shall be deemed tenantable, for purposes of this Article 12, unless Landlord, pursuant to this Article 12, is required to repair or restore any of the core and shell items located therein. Further, if Landlord, pursuant to this Article 12, is required to repair or restore any of the core and shell items located within the Demised Premises, then the Demised Premises, or portion thereof, as applicable, shall be deemed tenantable following such time as Landlord has substantially completed the repair and restoration work relative to core and shell items located within the Demised Premises required to be performed by Landlord under this Article 12). Notwithstanding the foregoing or anything herein to the contrary, the Demised Premises or any portion thereof, as applicable, shall, in any event, be deemed tenantable for purposes of this Article 12 if Tenant continues to conduct a substantial part of its customary business operations from the subject portion of the Demised Premises.

     Section 12.5. Core and Shell. The term “core and shell” shall include all structural components of the Building (i.e., whether located within the Demised Premises or otherwise), the roof of the Building, all base building electrical, plumbing, heating, ventilating and air conditioning systems (other than those utility systems the maintenance and repair of which are the responsibility of Tenant as set forth in this Lease), and all Common Areas of the Building, but specifically excludes the Tenant’s Work, any other Alterations and any other work related to tenant improvements constructed or to be constructed by or for Tenant or other tenants or installed within the Demised Premises or within any other tenant’s premises.

35

ARTICLE 13
EMINENT DOMAIN

     Section 13.1. Taking of Demised Premises. If during the Term all of the Demised Premises shall be taken for any public or quasi-public use under any statute or by right of eminent domain, or sale-in-lieu of such taking, this Lease shall automatically terminate on the date on which the condemning authority takes possession of the Demised Premises (hereinafter called the “Date of Taking”). If twenty-five percent (25%) or more of the rentable area of the Demised Premises is taken, Tenant or Landlord shall have the right to terminate this Lease by giving written notice to the other party of termination within 30 days after the Date of Taking.

     Section 13.2. Partial or Temporary Taking of Building.

     (a) If during the Term, the Building, or any portion thereof, is taken or sold as set out in Section 13.1, then (1) if in the reasonable opinion of Landlord substantial alteration or reconstruction of the Building is necessary as a result thereof, whether or not the Demised Premises are or may be affected; (2) if one-quarter or more of the value, in Landlord’s sole judgment, of the Building is included in such taking or sale; or (3) if such portion of the Common Areas shall be taken as, in Landlord’s sole judgment, to materially interfere or prevent access to the Building or reduce the value of the Land and the Building by more than one-quarter; then, Landlord shall have the right to terminate this Lease by giving to Tenant at least 30 days’ written notice thereof (provided, however, that Landlord shall not have the right to so terminate this Lease on account of such circumstance unless Landlord also terminates leases for all other similarly situated office tenants at the Building).

     (b) If during the Term the Building or the Common Areas, or any portion thereof, shall be taken as set out in Section 13.1 for a period of less than one (1) year, this Lease shall remain in full force and effect subject to Section 13.4 hereof. If such a taking shall be for a period of one (1) year or more, then the provisions of Section 13.1 and Section 13.2(a), as the case may be, shall be applicable.

     (c) If either party exercises its rights of termination under Section 13.1 or 13.2 (and any such right must be exercised within 30 days after the Date of Taking, failing which such right shall be deemed waived), this Lease shall terminate on the date stated in the notice, provided, however, that no termination pursuant to notice hereunder may occur later than 60 days after the Date of Taking.

     Section 13.3. Surrender. On the date of any termination under Section 13.1 or 13.2, Tenant shall immediately surrender to Landlord the Demised Premises and all interests therein under this Lease and Tenant shall pay Landlord Rent through the date of termination (or through the Date of Taking if such date shall not be the same as the date of termination). Landlord may re-enter and take possession of the Demised Premises and remove Tenant therefrom.

36

     Section 13.4. Rent Adjustment for Partial Taking of Demised Premises. If any portion of the Demised Premises (but less than the whole thereof) is so taken, and no rights of termination herein conferred are timely exercised, the Term shall expire (or, in respect of a taking pursuant to Section 13.2(b) hereof, have no force and effect for the period of such temporary taking) with respect to the portion so taken on (or from) the Date of Taking. In such event, the Rent thereafter payable under this Lease shall be adjusted pro rata by Landlord in order to account for the resulting reduction (either temporarily or permanently) in the number of rentable square feet in the Demised Premises.

     Section 13.5. Awards. Upon any taking or sale described in this Article 13, Landlord shall be entitled to receive and retain the entire award or consideration for the affected lands and improvements, and Tenant shall not have nor advance any claim against Landlord or anyone else for the value of its property or its leasehold estate under this Lease, or for the costs or removal or relocation, or business interruption expense or any other damages arising out of such taking or purchase. Nothing herein shall give Landlord any interest in or preclude Tenant from seeking and recovering on its own account a separate award from the condemning authority attributable to the taking or purchase of Tenant’s trade fixtures, or the removal or relocation of its business and effects, or the interruption of its business provided that Landlord’s award is not diminished thereby. If any such award made or compensation paid to either party specifically includes an award or amount for the other, the party first receiving the same shall promptly account therefor to the other.

ARTICLE 14
RIGHTS RESERVED TO LANDLORD

     Section 14.1. Access to Demised Premises. Landlord and Landlord’s agents shall have the right (but shall not be obligated) to enter the Demised Premises in any emergency at any time, and to perform any acts related to the safety, protection or preservation thereof or of the Building. At other reasonable times, and upon reasonable notice, Landlord may enter the Demised Premises (1) to examine and make such repairs, replacements and improvements as Landlord may deem necessary or reasonably desirable to the Demised Premises or to any other portion of the Building, (2) for the purpose of complying with laws, regulations and other requirements of governmental authorities or the provisions of this Lease (subject to the provisions of Section 14.2(b) below), (3) for the purpose of posting notices of nonresponsibility, or (4) for the purposes of showing the same to prospective purchasers or mortgagees of the Building, and during the last nine (9) months of the Term for the purpose of showing the same to prospective tenants. Tenant shall permit Landlord to use and maintain and replace unexposed pipes and conduits in and through the Demised Premises and to erect new unexposed pipes and conduits therein. Landlord may, during the progress of any work in the Demised Premises, take all necessary materials and equipment into the Demised Premises and close or temporarily suspend operation of entrances, doors, corridors, elevators or other facilities without such interference constituting an eviction. Tenant shall not be entitled to any damages by reason of loss or interruption of business or otherwise during such periods. During such periods Landlord shall use reasonable efforts to minimize any interference with Tenant’s use of the Demised Premises. If Tenant is not present to open and permit an entry into the Demised Premises,

37

Landlord or Landlord’s agents may enter the same whenever such entry may be necessary or permissible by master key or otherwise, provided reasonable care is exercised to safeguard Tenant’s property. Such entry shall not render Landlord or its agents liable therefor, nor in such event shall the obligations of Tenant hereunder be affected.

     Section 14.2. Additional Rights. Landlord shall have the following additional rights exercisable without notice (except as provided below) and without liability to Tenant for damage or injury to property, person or business, all claims for damage being hereby released, and without effecting an eviction or disturbance of Tenant’s use or possession or giving rise to any claim for setoffs, or abatement of Rent:

     (a) To change the name, number or designation by which the Building may be known (with any change in the street address being done upon not less than ninety (90) days notice, unless otherwise obligated to do so sooner by the U.S. post office or other governmental or quasi-governmental body) (provided that if Landlord voluntarily changes the Building’s street address, as opposed to being obligated to do so by the U.S. post office or other governmental or quasi-governmental body, Landlord shall reimburse Tenant for all reasonable costs incurred by Tenant to replace obsolete stationery, business cards and other pre-printed materials used in Tenant’s business office at the Demised Premises, not to exceed, in any event, $10,000.00);

     (b) To make such changes in or to the Building, including the building equipment and systems, as Landlord may deem necessary or desirable, provided that (1) in connection with any work, necessitated by such changes, Landlord uses good faith efforts to maintain reasonable access to the Demised Premises and to minimize unreasonable interference with the conduct of Tenant’s business, and (2) all of such work shall be conducted in such a manner so that the Building remains a Class A office building in Lisle/Naperville, Illinois. Notwithstanding anything contained herein to the contrary, except to the extent required by Applicable Laws or in the case of an emergency or any case where there is material impact upon any other tenant’s occupancy or upon the core and shell of the Building, no action by Landlord under this subclause (b) shall materially adverse affect Tenant’s access to the Demised Premises, and in no event shall any action by Landlord under this subclause (b) (i.e., whether required by Applicable Law or by an emergency or otherwise) increase “Tenant’s Proportionate Share” or the number of rentable square feet of the Demised Premises for purposes of this Lease;

     (c) To grant to anyone the exclusive right to conduct any business or render any services (including, without being limited to, the right to designate all suppliers or persons furnishing sign painting and lettering, beverages, foods, towels, vending machines or toilet supplies used or consumed on the Demised Premises) in the Building, provided such exclusive right shall not operate to exclude Tenant from the use expressly permitted by Article 6;

38

     (d) To close the Building at any such reasonable times after Normal Business Hours as Landlord may determine, subject, however, to Tenant’s right to admittance on a 24-hour, 7-day a week basis (but subject to temporary closure for emergency conditions or as required by Applicable Laws) under such regulations as shall be prescribed from time to time by Landlord; and

     (e) To perform any act, obligation or other commitment required of or by Tenant which Tenant has not performed for any reason whatsoever (including, without being limited to, obtaining insurance coverage); provided that Landlord has delivered written notice to Tenant of such failure as required by the applicable provision of this Lease (which notice shall not in any event be less than five (5) business days, unless otherwise stated in this Lease or unless relating to an emergency situation), and to charge Tenant as Additional Rent all reasonable costs and expenses incurred by Landlord for such performance, together with interest thereon at the Default Rate from the dates of Landlord’s expenditures until paid.

ARTICLE 15
ASSIGNMENT AND SUBLETTING

     Section 15.1. Consent Required.

     (a) Except as provided in Section 15.7 below, Tenant shall not, voluntarily or involuntarily, by operation of law or otherwise: (i) assign, mortgage, pledge, encumber or in any manner transfer this Lease in whole or in part, or (ii) sublet all or any part of the Demised Premises, or allow any other person to occupy all or any part thereof, without the prior written consent of Landlord in each instance, and any attempt to do any of such acts without such consent shall be null and void and of no effect. Tenant shall pay or reimburse Landlord, within thirty (30) days following Landlord’s demand therefor, the actual out-of-pocket expenses by landlord (not exceeding, in any one instance, the sum of One Thousand and No/100 Dollars ($1,000.00)) to cover Landlord’s expenses in reviewing said request. A transfer of control of Tenant, including, without being limited to, a transfer of stock or partnership interest or the merger, consolidation, sale of all or substantially all of the other assets of Tenant or other corporate or other reorganization of Tenant (whether or not Tenant shall be the surviving entity), shall be deemed an assignment under this Lease and shall be subject to all the provisions of this Article, including the requirement of obtaining Landlord’s prior consent (subject, however, to the terms of Section 15.7 below). The consent by Landlord to any assignment, mortgage, pledge, encumbrance, transfer or subletting shall not constitute a waiver of the necessity for such consent to any subsequent assignment, mortgage, pledge, encumbrance, transfer or subletting.

39

     (b) If this Lease be assigned, or if the Demised Premises or any part thereof be sublet or occupied by anyone other than Tenant, Landlord may collect Rent from the assignee, subtenant or occupant, and apply the net amount collected to the Rent herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained.

     (c) Notwithstanding any assignment, mortgage, pledge, encumbrance, transfer or sublease of this Lease, Tenant shall remain fully liable for the performance of all of the terms, covenants, obligations and conditions of this Lease and shall not be released therefrom.

     Section 15.2. Notice of Proposed Assignment or Sublease; Recapture. Except as provided in Section 15.7 below, Tenant shall, by notice in writing, advise Landlord of its intention from, on and after a stated date (which shall not be less than twenty (20) nor more than one hundred eighty (180) days after the date of the giving of Tenant’s notice to Landlord) to assign this Lease or sublet all or any part of the Demised Premises for the balance or any part of the Term, and, in such event, Landlord shall have the right, to be exercised by giving written notice to Tenant within fifteen (15) days after its receipt of Tenant’s notice, (1) to terminate this Lease with respect to the space described in Tenant’s notice as of the date stated in Tenant’s notice for the commencement of the proposed assignment or sublease (provided that Landlord shall only have the right to elect to terminate this Lease, as described in this clause (1), with respect to any proposed assignment or any proposed sublease which, when added to the space covered by other then existing subleases, covers greater than seventy percent (70%) of the rentable area of the Demised Premises), or (2) to consent or refuse to consent to the proposed assignment or sublease, as described in Section 15.3 below. Tenant’s notice shall include the name and address of the proposed assignee or subtenant, a true and complete copy of the proposed assignment or sublease and sufficient information, as Landlord deems reasonably necessary, to permit Landlord to determine (i) the financial responsibility and character and the nature of the business of the proposed assignee or subtenant, and (ii) whether Landlord has the right under this Lease to withhold consent to the proposed assignment or sublease. If Tenant’s notice covers all of the Demised Premises and if Landlord exercises its right to terminate this Lease as to such space, then the Term of this Lease shall expire and end on the date stated in Tenant’s notice for the commencement of the proposed assignment or sublease as fully and completely as if that date had otherwise been the expiration date of the Term hereof. If, however, Tenant’s notice covers less than all of the Demised Premises, and if Landlord exercises its right to terminate this Lease with respect to such space described in Tenant’s notice, then as of the date stated in Tenant’s notice for the commencement of the proposed sublease, Fixed Rent and Tenant’s Proportionate Share shall be adjusted on the basis of the number of square feet of rentable area retained by Tenant, and this Lease as so amended, shall continue thereafter in full force and effect.

     Notwithstanding any of the foregoing to the contrary, if Landlord notifies Tenant that Landlord has elected to terminate this Lease with respect to the space described in a notice from Tenant regarding a prospective assignment or sublease transaction, as described in clause (1)

40

above, then Tenant shall have the right, at its election, to rescind its earlier notice to Landlord regarding such transaction, which rescission shall be exercised by notice to Landlord no later than five (5) business days following Tenant’s receipt of Landlord’s election (time being of the essence), whereupon this Lease shall continue in full force and effect, and Tenant’s earlier notice to Landlord shall be deemed null and void

     Section 15.3. Grounds for Withholding Consent. If Landlord, upon receiving Tenant’s notice with respect to any such space, does not exercise its right to terminate as aforesaid, Landlord will not unreasonably withhold or delay its consent to Tenant’s assignment of this Lease or subletting the space covered by Tenant’s notice. Landlord shall not be deemed to have unreasonably withheld its consent to a proposed assignment of this Lease or to a proposed sublease of part or all of the Demised Premises if its consent is withheld because: (i) Tenant is then in default hereunder (it being understood that if Tenant is then in default under this lease, Landlord shall have the right to condition any consent to a proposed assignment or subletting to Tenant first having cured such default); (ii) any notice of termination of this Lease or termination of Tenant’s right of possession shall have been given under Article 17 which is still outstanding; (iii) either the portion of the Demised Premises which Tenant proposes to sublease, or the remaining portion of the Demised Premises, or the means of ingress or egress to either the portion of the Demised Premises which Tenant proposes to sublease or the remaining portion of the Demised Premises is of such nature that it will violate any Applicable Law, or is of such accessibility, size or irregular shape so as not to be suitable for normal renting purposes as space on a multi-tenant floor within the Building; (iv) the proposed use of the Demised Premises by the proposed assignee or subtenant does not conform with the use set forth in this Lease, or will violate any applicable law, will impose any additional obligation upon Landlord (other than its obligations under this Lease) or increase Landlord’s obligations under or cost of compliance with any laws, or will violate any exclusive right Landlord has granted to any tenant of any part of the Building; (v) in the reasonable judgment of Landlord the proposed assignee or subtenant is of a character or is engaged in a business which would be deleterious to the reputation of the Building, Landlord or any of the constituent partners of Landlord; (vi) in the reasonable judgment of Landlord, the proposed assignee or subtenant is not sufficiently financially responsible to perform its obligations under the proposed assignment or sublease; (vii) the proposed assignee or subtenant is a government (or subdivision or agency thereof); or (viii) the proposed assignee or subtenant is an occupant (or affiliate thereof) of the Building; provided, however, that the foregoing are merely examples of reasons for which Landlord may withhold its consent and shall not be deemed exclusive of any permitted reasons for reasonably withholding consent, whether similar or dissimilar to the foregoing examples, and Landlord may consider all relevant factors in determining whether to give or withhold its consent. Tenant agrees that all advertising by Tenant or on Tenant’s behalf with respect to the assignment of this Lease or subletting of any part of the Demised Premises must be approved in writing by Landlord prior to publication (which approval shall not be unreasonably withheld, conditioned or delayed).

     Section 15.4. Excess Rent Payment. If Tenant (as Tenant or debtor-in-possession) shall assign this Lease or sublet the Demised Premises, or any part thereof, at a rental or for other consideration in excess of the Rent or pro rata portion thereof due and payable by Tenant under this Lease, then Tenant shall pay to Landlord as Additional Rent one-half (1/2) of any such excess rent or other consideration (as described below in this Section) immediately upon receipt under

41

any such assignment or, in the case of a sublease, (i) on the later of the first day of each month during the term of any sublease, or the day of receipt from such subtenant, one-half (½) of the excess of all rent and other consideration (as described below in this Section) paid by the subtenant for such month over the Rent then payable to Landlord pursuant to the provisions of this Lease for said month (or if only a portion of the Demised Premises is being sublet, one-half (½) of the excess of all rent and other consideration due from the subtenant for such month over the portion of the Rent then payable to Landlord pursuant to the provisions of this Lease for said month which is allocable on a rentable area basis to the space sublet), and (ii) immediately upon the receipt thereof, one-half (½) of any other consideration realized by Tenant from such subletting. Landlord shall not be responsible for any deficiency if Tenant shall assign this Lease or sublet the Demised Premises or any part thereof at a rental less than that provided for herein. Whenever reference is made to the “excess” of rent or other consideration, such excess shall be reduced by charging (i.e., on an amortized basis over the term of the sublease or assignment) against the rent or other consideration paid by such assignee or subtenant, reasonable brokerage commissions, leasehold improvements, tenant concessions and other out-of-pocket expenses which Tenant has paid or given in connection with assigning the Lease or subleasing the applicable portion of the Demised Premises.

     Section 15.5. Lease Assumption; Subtenant Attornment. If Tenant shall assign this Lease, the assignee shall expressly assume all of the obligations of Tenant hereunder in a written instrument provided by Landlord and delivered to Landlord not later than ten (10) days prior to the effective date of the assignment. If Tenant shall sublease any part of the Demised Premises, Tenant shall obtain and furnish to Landlord, not later than ten (10) days prior to the effective date of such sublease and in form reasonably satisfactory to Landlord, the written agreement of such subtenant to the effect that the subtenant will attorn to Landlord, at Landlord’s option and written request (at Landlord’s sole election), if this Lease terminates before the expiration of the sublease. Tenant shall, not later than fifteen (15) days after the effective date of any such assignment or sublease, deliver to Landlord a certified copy of the instrument of assignment or sublease.

     Section 15.6. Prohibition. In no event shall Tenant assign this Lease or enter into any sublease, license, concession or other agreement for use, occupancy or utilization of any part of the Demised Premises which provides for a rental or other payment for such use, occupancy or utilization based in whole or in part on the income or profits derived by any person from the Demised Premises leased, used, occupied or utilized (other than an amount based on a fixed percentage or percentages of gross receipts or sales), and Tenant agrees that all assignments, subleases, licenses, concessions or other agreements for use, occupancy or utilization of any part of the Demised Premises shall provide that the person having an interest in the possession, use, occupancy or utilization of the Demised Premises shall not enter into any lease, sublease, license, concession or other agreement for use, occupancy or utilization of space in the Demised Premises which provides for a rental or other payment for such use, occupancy or utilization based in whole or in part on the income or profits derived by any person from the Demised Premises leased, used, occupied or utilized (other than an amount based on a fixed percentage or percentages of gross receipts or sales) and any such purported assignment, sublease, license, concession or other agreement shall be absolutely void and ineffective as a conveyance of any

42

right or interest in the possession, use, occupancy or utilization of any part of the Demised Premises.

     Section 15.7. Permitted Transfers. Notwithstanding any of the foregoing, Landlord’s consent shall not be required for an assignment or sublet to a Tenant Affiliate (as hereinafter defined), and Landlord shall not terminate this Lease with respect to the Demised Premises or any portion of the Demised Premises or otherwise collect any excess rent under Section 15.4 above as a result of such assignment or sublet to a Tenant Affiliate; provided, however, that (i) Tenant shall give reasonable prior notice to Landlord of the proposed assignment or sublet; and (ii) if an assignment, such assignee shall assume the obligations of Tenant under this Lease. As used in this Lease, the term “Tenant Affiliate” shall mean any entity (1) which results from a merger or consolidation with the Tenant under this Lease; (2) which acquires all or substantially all of the assets of the Tenant under this Lease for a purpose other than to circumvent the provisions of this Section 15; or (3) which is controlled by, controls, or is under common control with the then Tenant under this Lease. For purposes of the foregoing, the term “control” shall mean the ownership, directly or indirectly, of more than 50% of the ownership interests and voting interests in Tenant. By way of clarification and not in limitation of the foregoing, any assignment or sublease to a Tenant Affiliate described in this Section 15.7 shall not be subject to the terms of this Section 15 regarding Landlord’s consent rights, Tenant’s requirement to pay to Landlord any excess rent, or Landlord’s recapture right, but such assignment or sublease shall be subject to the other terms of this Section 15, including the terms of Section 15.1(c) regarding the continued liability of any “Tenant” making an assignment or sublease as well as the continued liability of each prior “Tenant” (i.e., unless the assigning “Tenant” and/or prior “Tenant” ceases to exist as a separate legal entity as a result of the transaction giving rise to the permitted assignment under this Section 15.7, such as in the case of a merger).

ARTICLE 16
INTENTIONALLY OMITTED

ARTICLE 17
DEFAULT

     Section 17.1. Events of Default. This Lease and the Term and estate hereby granted are subject to the limitation that, whenever any of the following events of default occur (sometimes referred to in this Lease, in any instance, as a “default”):

     (a) Failure by Tenant to pay any regularly scheduled payment of Rent (including, without limitation, monthly payments of Fixed Rent and Tenant’s Expense Charge) when due if such failure continues for five (5) business days after written notice to Tenant of such failure;

     (b) Any valid transfer of Tenant’s rights in all or any portion of the Demised Premises or Tenant’s rights under this lease, which transfer violates the terms set forth in Article 15;

43

     (c) Failure by Tenant to commence to cure forthwith, immediately after receipt of notice from Landlord, any hazardous condition which Tenant has created or permitted in violation of law or of this Lease, or any failure by Tenant to thereafter diligently pursue and complete such cure within fifteen (15) days after receipt of such notice from Landlord; provided that such 15-day period shall be extended for the time reasonably required to complete such cure (not to exceed, in any event, an additional 255-day period), if such failure cannot reasonably be cured within said 15-day period and Tenant commences to cure such failure within said 15-day period and thereafter diligently and continuously proceeds to cure such failure;

     (d) Failure by Tenant to complete, execute and deliver any instrument or document required to be completed, executed and delivered by Tenant pursuant to Article 21 of this Lease, within the time required for such instrument or document in accordance with such Article;

     (e) Failure by Tenant to observe or perform any other covenant, agreement, condition or provision of this Lease (including any payment of Rent, if not a regularly scheduled payment of Rent), if such failure shall continue for fifteen (15) days after written notice thereof from Landlord to Tenant; provided that, with respect to all defaults under this Section 17.1(e) other than defaults in the payment of Rent, such 15-day period shall be extended for the time reasonably required to complete such cure (not to exceed, in any event, an additional 255-day period), if such failure cannot reasonably be cured within said 15-day period and Tenant commences to cure such failure within said 15-day period and thereafter diligently and continuously proceeds to cure such failure;

     (f) The levy upon execution or the attachment by legal process of the leasehold interest of Tenant, or the filing or creation of a lien in respect of such leasehold interest, which lien shall not be released or discharged within sixty (60) days from the date of such filing;

     (g) Tenant becomes insolvent or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a trustee or receiver for Tenant or for the major part of its property;

     (h) A trustee or receiver is appointed for Tenant or for a major part of its property, without Tenant’s application therefor or consent thereto, and is not discharged within sixty (60) days after such appointment; or

     (i) Any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding for relief under any bankruptcy law or similar law for the relief of debtors, is instituted (A) by Tenant, or (B) against Tenant and is allowed against it or is consented to by it or is not dismissed within seventy-five (75) days after such institution;

44

then regardless and notwithstanding the fact that Landlord has or may have some other remedy under this Lease or by virtue hereof, or in law or in equity, Landlord may give to Tenant a notice (the “Termination Notice”) of intention of Landlord to end the term of this Lease specifying a day not less than five (5) days thereafter and, upon the giving of the Termination Notice, this Lease and the Term and estate hereby granted shall expire and terminate upon the day so specified in the Termination Notice as fully and completely and with the same force and effect as if the day so specified were the Expiration Date and all rights of Tenant shall terminate and Tenant shall remain liable for damages as hereinafter provided. From and after any date upon which Landlord is entitled to give a Termination Notice, Landlord, without further notice and with or without giving such Termination Notice, may enter upon, re-enter, possess and repossess itself of the Demised Premises, by force, summary proceedings, ejectment or otherwise, (but all only to the extent permitted by applicable law) and may dispossess and remove Tenant and all other persons and property from the Demised Premises and may have, hold and enjoy the Demised Premises and the right to receive all rental and other income of and from the same. As used in this Lease the words “enter” and “re-enter” are not restricted to their technical legal meanings. Tenant expressly waives the service of any statutory demand or notice which is a prerequisite to Landlord’s commencement of eviction proceedings against Tenant, including the demands and notices specified in 735 ILCS §§ 5/9-209 and 5/9-210.

     Upon and after such entry into possession Landlord may, but shall have no obligation to (except for any reasonable mitigation obligations as otherwise required by law), relet the Demised Premises, or any part thereof, for the account of Tenant, to any person, firm or corporation, other than Tenant, for such Rent, for such time and upon such terms as Landlord, in Landlord’s sole discretion (subject to any reasonable mitigation requirements imposed by applicable law), shall determine, and Landlord shall not be required to accept any tenant offered by Tenant or to observe any instruction given by Tenant about such reletting.

     Section 17.2. Damages.

     (a) Tenant covenants and agrees that in the event of the termination of this Lease or re-entry by Landlord, under, any of the provisions of this Article 17 or pursuant to law, by reason of default hereunder on the part of Tenant, Tenant shall pay to Landlord, as damages with respect to this Lease, at the election of Landlord:

     (1) a sum which at the time of such termination of this Lease or at the time of any re-entry by Landlord, as the case may be, represents the excess, if any, of:

i. the aggregate of the Rent which would have been payable by Tenant for the period commencing with such earlier termination of this Lease or the date of any such re-entry, as the case may be, and ending with the Expiration Date of this Lease, had this Lease not so terminated or had Landlord not so re-entered the Demised Premises

45

	(discounted to present value using a discount factor equal to the Prime Rate at the time of the default), over
ii.	the aggregate fair market rental value of the Demised Premises for the same period (discounted to present value using a discount factor equal to the Prime Rate at the time of the default); or

     (2) sums equal to the Rent which would have been payable by Tenant had this Lease not so terminated, or had Landlord not so re-entered the Demised Premises, payable upon the days specified in this Lease following such termination or such re-entry and until the Expiration Date of this Lease, provided, however, that if the Demised Premises shall be leased or re-let during said period, Landlord shall credit Tenant with the net rents, if any, received by Landlord from such leasing or re-letting, such net Rent to be determined by first deducting from the gross rents as and when received by Landlord from such leasing or re-letting the reasonable expenses incurred or paid by Landlord in terminating this Lease or of re-entering the Demised Premises and of securing possession thereof, as well as the reasonable expense of leasing and re-letting, including altering and preparing any portion of the Demised Premises for new tenants, brokers’ commissions and all other reasonable expenses properly chargeable against the Demised Premises and the rental therefrom; but in no event shall Tenant be entitled to receive any excess of such net rents over the Rent, payable by Tenant to Landlord hereunder.

     (b) Suit or suits for the recovery of any and all damages, or any installments thereof, provided for hereunder may be brought by Landlord from time to time at its election, and nothing contained herein shall be deemed to require Landlord to postpone suit until the date when the term of this Lease would have expired if it had not been terminated under the provisions of this Article 17, or under provisions of any law, or had Landlord not re-entered the Demised Premises.

     (c) Nothing herein contained shall be construed as limiting or precluding the recovery by Landlord against Tenant of any damages to which Landlord may lawfully be entitled in any case other than those particularly provided for above.

     Section 17.3. Waiver of Jury Trial. The parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this Lease or the interpretation thereof, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Demised Premises, and/or any claim of injury or damage.

46

     Section 17.4. Other Remedies. Landlord may, upon five (5) business days notice thereof (except that no such notice shall be required in the case of an emergency or if there is any material impact upon another tenant’s occupancy or upon the core and shell of the Building) to Tenant (which notice shall state that Landlord intends to exercise its rights hereunder to perform any obligation on Tenant’s behalf and bill Tenant for the costs and expenses incurred by Landlord therefor), but shall not be obligated to, perform any obligation of Tenant under this Lease, and, if Landlord so elects, all costs and expenses paid by Landlord in performing such obligation, together with interest at the Default Rate, shall be reimbursed by Tenant to Landlord on demand. Any and all remedies set forth in this Lease: (a) shall be in addition to any and all other remedies Landlord may have at law or in equity; (b) shall be cumulative; and (c) may be pursued successively or concurrently as Landlord may elect. The exercise of any remedy by Landlord shall not be deemed an election of remedies or preclude Landlord from exercising any other remedies in the future.

     Section 17.5. Landlord Defaults. The occurrence or existence of any one or more of the following shall constitute a “Landlord Default” under this Lease: (i) Landlord fails to pay any amounts when due from Landlord to Tenant hereunder, and such failure continues for five (5) business days after written notice from Tenant to Landlord; or (ii) Landlord fails to observe or perform any of the other covenants, conditions or provisions of this Lease and fails to cure such default within fifteen (15) business days after written notice thereof from Tenant to Landlord, provided that with respect to any such default that cannot reasonably be cured within fifteen (15) business days, such period for cure shall be extended for such period as is reasonably necessary to cure such default, not exceeding an additional two hundred fifty-five (255) days, so long as Landlord commences good faith efforts to cure within the initial 15-business day period and diligently pursues efforts to cure within such additional period. Upon any Landlord Default under this Lease, Tenant shall be entitled to exercise any and all remedies available to Tenant as expressly provided in this Lease or that would be available to Tenant at law or in equity, subject only to the limitations set forth in Section 21.6 and Section 24.10 of this Lease.

ARTICLE 18
SURRENDER

     Section 18.1. Possession. Upon the expiration or earlier termination of this Lease, Tenant shall immediately quit and surrender possession of the Demised Premises in as good a state and condition as they were when entered into, reasonable wear and tear and casualty damage (other than that which Tenant is obligated to repair) excepted, all subject to any property removal rights and requirements set forth in Section 8.2 above. Upon such surrender, all right, title and interest of Tenant in the Demised Premises shall cease.

     Section 18.2. Merger. The voluntary or other surrender of this Lease by Tenant or the cancellation of this Lease by mutual agreement of Tenant and Landlord shall not work a merger, but shall, at Landlord’s option, terminate all or any subleases and subtenancies or operate as an assignment to Landlord of all or any subleases or subtenancies. Landlord’s option hereunder shall be exercised by notice to Tenant and all known sublessees or subtenants in the Demised Premises or any part thereof.

47

ARTICLE 19
HOLDING OVER

     Section 19.1. Holding Over. If Tenant retains possession of the Demised Premises or any part thereof after the expiration or earlier termination of this Lease, Tenant shall pay as Rent a sum equal to 125% (for the first thirty days of such holding over) and 150% (for all subsequent days of such holding over) of the amount, including Fixed Rent and Additional Rent hereunder, payable for the month preceding such holding over computed on a daily basis for each day that Tenant remains in possession. In addition thereto, Tenant shall be liable for and shall pay to Landlord, all damages, consequential as well as direct, sustained by reason of Tenant’s holding over. At Tenant’s written request made at any time during the last six (6) months of the Term, Landlord shall notify Tenant of any leasing of the Demised Premises (or any portion thereof) for a term commencing following the termination or expiration of the Term or of Tenant’s right to possession hereunder, which may give rise to indemnification obligations of Tenant pursuant to this Article 19. No occupancy by Tenant after the expiration of other termination of this Lease shall be construed to extend the Term. The provisions of this section do not waive Landlord’s right of re-entry or right to regain possession by actions at law or in equity or any other rights hereunder, and any receipt of payment by Landlord shall not be deemed a consent by Landlord to Tenant’s remaining in possession or be construed as creating or renewing any lease or right of tenancy between Landlord and Tenant.

ARTICLE 20
REMEDIES CUMULATIVE

     Section 20.1. No Waiver. No waiver by Landlord or Tenant of a breach of any covenants, agreements, obligations or conditions of this Lease shall be construed to be a waiver of any future breach of the same or any other covenant, agreement, obligation or condition hereof. No receipt of money by Landlord from Tenant after notice of default, or after the termination of this Lease or the commencement of any suit or final judgment of possession of the Demised Premises, shall reinstate, continue or extend the term of this Lease or affect any notice, demand or suit. The rights and remedies hereby created are cumulative, and the use of one remedy shall not be construed to exclude or waive the right to the use of another, or exclude any other right or remedy allowed by law.

ARTICLE 21
ESTOPPEL CERTIFICATE, SUBORDINATION, ATTORNMENT

     Section 21.1. Estoppel Certificate. Tenant shall at any time (but not more than twice in any calendar year unless in connection with a pending sale or financing transaction) within ten (10) business days following the request of Landlord, execute and deliver in recordable form and in substance reasonably satisfactory to Landlord, an written estoppel certificate certifying: the date Tenant accepted occupancy of the Demised Premises; the date to which Rent has been paid; the amount of any Security Deposit; that this Lease is in full force and effect and has not been

48

modified or amended (or if modified or amended, describing the same) and that there are no defenses or offsets thereto or defaults of Landlord under this Lease (or if any be claimed, describing the same); that Tenant has accepted the Demised Premises and the condition thereof and of all improvements thereto and has no claims against Landlord or any other party with respect thereto (or if Tenant does not believe the Demised Premises have been satisfactorily completed or believes it has any claims against Landlord, a full and complete explanation thereof); and such other matters as Landlord may reasonably request. If Tenant does not complete, execute and deliver to Landlord the estoppel certificate as and when required herein, then if Landlord serves upon Tenant a second request and Tenant does not complete, execute and deliver to Landlord the estoppel certificate within three (3) business days after service of such second request, then such failure by Tenant shall be deemed a “default” under Section 17.1 (d) above (i.e., without the requirement that Landlord provide Tenant with any further notice and opportunity to cure same).

     Section 21.2. Subordination. This Lease is and shall be subject and subordinate to all ground or underlying leases, mortgages and deeds of trust which now or hereafter affect the Land, Building and/or any ground or underlying leases thereof and to all renewals, modifications, consolidations, replacements and extensions thereof, subject, however, to the condition precedent that any mortgagee under a future mortgage placed on the Building shall execute and deliver to Tenant a subordination, non-disturbance and attornment agreement in recordable form (herein, an “SNDA”) which shall include (i) recognition and non-disturbance agreements to the effect that the mortgagee, will not disturb Tenant’s continued occupancy of the Demised Premises under this Lease so long as Tenant is not in default beyond applicable cure periods hereunder, (ii) such other reasonable terms and conditions as are contained in the mortgagee’s customary form of subordination, non-disturbance and attornment agreement (provided that, with respect to the Initial SNDA (defined below), the form attached hereto as Exhibit F shall constitute the requisite SNDA hereunder, and with respect to any Subsequent SNDA’s (defined below), any of the terms set forth in the Initial SNDA (defined below) and below in this Article 21 shall be deemed acceptable for all purposes hereof), and (iii) provisions consistent within this Article 21 regarding the rights granted to, and obligations of, any such mortgagee. Within thirty (30) days following mutual execution and delivery by Landlord and Tenant of this Lease, and after Tenant’s execution and delivery to Landlord of an original counterpart of a subordination, non-disturbance and attornment agreement in the form attached hereto as Exhibit F (the “Initial SNDA”), Landlord shall use all reasonable efforts to cause the currently existing mortgagee to deliver to Tenant an original counterpart of said Initial SNDA executed on behalf of such currently existing mortgagee. All SNDAs delivered by Landlord to Tenant hereunder after the Initial SNDA are defined as “Subsequent SNDA’s”. Landlord and Tenant shall each be responsible for paying their own respective attorneys’ fees relative to negotiating and/or otherwise processing the aforedescribed SNDAs. In confirmation of any such subordination, Tenant will execute and deliver upon demand of Landlord any and all instruments desired by Landlord subordinating this Lease to such ground or underlying lease, mortgage or deed of trust (subject to receipt of an SNDA, as and to the extent provided herein). Tenant’s failure to execute and deliver any such instruments within ten (10) business days after notice from Landlord requesting the execution and delivery of said instruments, which failure continue for a period of three (3) business days after service of a second request therefor, shall be deemed

49

a “default” under Section 17.1(d) above, hereunder, without any additional notice or cure periods being required hereunder.

     Section 21.3. Attornment. Tenant agrees that, at the option of the landlord under any ground lease now or hereafter affecting the real property of which Demised Premises forms a part, Tenant shall attorn to said landlord in the event of the termination or cancellation of such ground lease and if requested by said landlord, enter into a new lease with said landlord (or a successor ground-lessee designated by said landlord) for the balance of the term then remaining hereunder upon the same terms and conditions as those herein provided (subject, in any event, to the terms of any then existing SNDA).

     Section 21.4. Mortgages. Tenant covenants and agrees that, if by reason of default under any mortgage or deed of trust which may now or hereafter affect the Land and/or the Building, the mortgagee thereunder enters into and becomes possessed of the said mortgaged property either through possession or foreclosure action or proceeding, or in the event of the sale of the said mortgaged property as a result of any action or proceeding to foreclosure the said mortgage, Tenant will attorn to the mortgagee or such then owner as its landlord under this Lease, unless the mortgagee or such then owner shall elect to terminate this Lease and the rights of the tenant hereunder (which termination right shall be subject to any then existing SNDA’s). Tenant agrees to execute and deliver, at any time and from time to time, within ten (10) business days following the request of the mortgagee or the then owner of the said mortgaged property of which the Demised Premises forms a part, any instrument which may be necessary or appropriate to evidence such attornment. Tenant further waives the provisions of any statute or rule of law now or hereafter in effect which may give or purport to give Tenant any right of election to terminate this Lease or to surrender possession of the Demised Premises in the event any proceeding is brought by the mortgagee under any such mortgage to terminate the same, and agrees that unless and until such mortgagee, in connection with any such proceeding, shall elect to terminate this Lease and the rights of Tenant hereunder, this Lease shall not be affected in any way whatsoever by any such proceeding.

     Section 21.5. Protection of Successor Landlord. Notwithstanding anything to the contrary in this Lease or any mortgage, any party that becomes owner of the Demised Premises or the Building as a result of (i) foreclosure under any mortgage, (ii) any other exercise by a Mortgagee (as defined below) of rights and remedies (whether under any mortgage or under applicable law, including bankruptcy law) as holder of a mortgage, or (iii) delivery by Landlord to a Mortgagee (or its designee or nominee) of a deed or other conveyance of Landlord’s interest in the real property in lieu of any of the foregoing (“Successor Landlord”) shall not be liable for or bound by and of the following matters (except as set forth to the contrary in any then applicable SNDA):

     (a) Claims Against Former Landlord. Any right of Tenant to any offset, defense, claim, counterclaim, reduction, deduction or abatement against Tenant’s payment of Rent or performance of Tenant’s other obligations under this Lease, arising (whether under this Lease or under applicable law) from Landlord’s breach or default of under this Lease (“Offset Right”) that Tenant may have against Landlord or any other party that was landlord under this Lease at any time

50

before the occurrence of any attornment by Tenant (“Former Landlord”) relating to any event or occurrence before the date of attornment, including any claim for damages of any kind whatsoever as the result of any breach by Former Landlord that occurred before the date of attornment. The foregoing shall not limit either (i) Tenant’s right to exercise against Successor Landlord any Offset Right otherwise available to Tenant because of events occurring after the date of attornment or (ii) Successor Landlord’s obligation to correct any condition that existed as of the date of attornment and violate Successor Landlord’s obligations as landlord under this Lease or (iii) such Successor Landlord’s obligations under this Lease which are required to be performed from and after the date such Successor succeeds to Former Landlord’s interest hereunder and obligations under this Lease which have not been performed by any prior owner and which continue to be unperformed at the time of the succession and which directly affect Tenant’s quiet enjoyment of the Demised Premises, such as required maintenance, repairs, restoration and furnishing of services.

     (b) Prepayments. Any payment of Rent that Tenant may have made to Former Landlord more than thirty (30) days before the date such Rent was first due and payable under this Lease with respect to any period after the date of attornment other than, and only to the extent that, this Lease expressly required such prepayment.

     (c) Payment; Security Deposit; Work. Any obligation (i) to pay Tenant any sum(s) that any Former Landlord owed to Tenant unless such sums, if any, shall have been actually delivered to Mortgagee by way of an assumption of escrow accounts or otherwise; or (ii) with respect to any security deposited with Former Landlord, unless such security was actually delivered to Mortgagee.

     (d) Modification, Amendment or Waiver. Any modification or amendment of this Lease, or any waiver of the terms of this Lease, made without Mortgagee’s written consent.

     (e) Surrender, Etc. Any consensual or negotiated surrender, cancellation, or termination of this Lease, in whole or in part, agreed upon between Landlord and Tenant, unless effected unilaterally by Tenant pursuant to the express terms of this Lease.

     Section 21.6. Mortgagee’s Right To Cure. Notwithstanding anything to the contrary in this Lease, before exercising any termination right:

     (a) Notice to Mortgagee. Tenant shall provide any holder of a mortgage affecting the Demised Premises, the Building, the land beneath the Building or any interest of Landlord therein (a “Mortgagee”) with notice of the breach or default by Landlord giving rise to same (the “Default Notice”) and, thereafter, the opportunity to cure such breach or default as provided for below.

51

     (b) Mortgagee’s Cure Period. After Mortgagee receives a Default Notice, Mortgagee shall have a period of thirty (30) days beyond the time available to Landlord under this Lease in which to cure the breach or default by Landlord. Mortgagee shall have no obligation to cure (and shall have no liability or obligation for not curing) any breach or default by Landlord, except to the extent that Mortgagee agrees or undertakes otherwise in writing. In addition, as to any breach or default by Landlord the cure of which requires possession and control of the Premises, provided that Mortgagee undertakes by written notice to Tenant to exercise reasonable efforts to cure or cause to be cured by a receiver such breach or default within the period permitted by this paragraph, Mortgagee’s cure period shall continue for such additional time (the “Extended Cure Period”) as Mortgagee may reasonably require to either: (i) obtain possession and control of the Premises with due diligence and thereafter cure the breach or default with reasonable diligence and continuity; or (ii) obtain the appointment of a receiver and give such receiver a reasonable period of time in which to cure the default.

ARTICLE 22
QUIET ENJOYMENT

     Section 22.1. Quiet Enjoyment. Landlord covenants and agrees with Tenant that upon payment by Tenant of the Rent hereunder and upon the observance and performance of all of the terms, covenants and conditions on Tenant’s part to be observed and performed, Tenant may peaceably and quietly enjoy the Demised Premises, free of all claims from Landlord or any party claiming by, through or under Landlord, but subject, nevertheless, to the terms and conditions of this Lease (including, without being limited to, the provisions of Article 21). Without limitation of the foregoing, if any other tenant at the Building is making excessive and unreasonable noise, which causes a material nuisance to Tenant’s operations at the Demised Premises which is inconsistent with comparable Class A office building standards, then Landlord shall exercise such reasonable efforts, consistent with Landlord’s rights under its existing lease with such tenant and in accordance with Applicable Laws, to cause such tenant to take actions to eliminate or reasonably reduce such excessive and unreasonable noise.

ARTICLE 23
NOTICES

     Section 23.1. Notices. Whenever any notice or consent is required or permitted hereunder, such notice or consent shall be in writing. Any notice or document required or permitted to be delivered hereunder shall be deemed to be delivered (a) upon receipt or refusal of receipt when sent by personal delivery or by recognized overnight courier or (b) upon the third (3^rd) business day after being deposited in the United States Mail, postage prepaid, Registered or Certified Mail, Return Receipt Requested, addressed to the parties hereto at the addresses set forth in Article 1, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith.

52

ARTICLE 24
MISCELLANEOUS PROVISIONS

     Section 24.1. Time. Time is and shall be of the essence of this Lease and all its provisions.

     Section 24.2. Applicable Law and Construction.

     (a) This Lease shall be governed by and construed under the laws of the State in which the Building is located.

     (b) The necessary grammatical changes required to make the provisions of this Lease apply in the plural sense where there is more than one tenant and to either corporations, associations, partnerships or individuals, males or females, shall in all instances be assumed as though fully expressed. If there is more than one person or entity who or which are Tenant under this Lease, the obligations imposed upon Tenant under this Lease shall be joint and several. The relationship between Landlord and Tenant created hereunder shall be that of lessor and lessee and nothing herein shall be construed as creating any joint venture or partnership. The captions used in this Lease are for convenience only and do not in any way limit or amplify the terms and provisions hereof.

     Section 24.3. Parties Bound. It is agreed that this Lease, and each and all the covenants and obligations hereof, shall be binding upon and inure to the benefit of, as the case may be, the parties hereto, their respective heirs, executors, administrators, successors and assigns, subject to all agreements and restrictions herein contained with respect to assignment or other transfer of Tenant’s interest herein.

     Section 24.4. No Representations by Landlord. Neither Landlord nor Landlord’s agents have made any representations or promises with respect to the physical condition of the Property or the Building, the Demised Premises, permissible uses of Demised Premises, the rents, leases, expenses of operation or any other matter or thing affecting or related to the Demised Premises except as herein expressly set forth, and no rights, easements, or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this Lease. Tenant has inspected the Building and the Demised Premises and is thoroughly acquainted with their condition, and agrees to accept the same “as is” (provided that the foregoing shall not limit any maintenance and repair obligations of Landlord expressly set forth herein). All understandings and agreements heretofore made between the parties hereto are merged in this Lease, which alone fully and completely expresses the agreement between Landlord and Tenant, and any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it, in whole or in part, or a surrender of this Lease or of the Demised Premises or any part thereof or of any interest of Tenant therein unless such executory agreement is in writing and signed by Landlord and Tenant.

     Section 24.5. Brokers. Landlord and Tenant each represents and warrants to the other party that the party making such representation and warranty did not deal with any brokers in

53

connection with this Lease other than the Brokers identified in Article 1. Landlord hereby agrees to pay the brokerage commissions payable to said Brokers in accordance with a written agreement between Landlord and such Brokers. Each party shall indemnify, defend and hold the other, its agents and their respective partners, members, shareholders and employees harmless of, from and against any and all losses, damages, liabilities, claims, liens, costs and expenses, including without limitation court costs and reasonable attorneys’ fees and expenses, arising from any claims or demands of any other brokers or finders for any commission alleged to be due such other brokers or finders claiming to have dealt with the indemnifying party in connection with this Lease or with whom the indemnifying party hereafter deals or whom such indemnifying party employs.

     Section 24.6. Severability. The invalidity or unenforceability of any provision of this Lease shall not affect or impair the validity of any other provision.

     Section 24.7. Force Majeure. If either party fails to perform timely any of the terms, covenants or conditions of this Lease on such party’s part to be performed, and such failure is due in whole or in part to any strike, lockout, labor trouble, civil disorder, riot, insurrection, act of terrorism, war, accident, fire or other casualty, adverse weather condition, act of God, governmental inaction, restrictive governmental law or regulation, inability to procure materials, electricity, gas, other fuel or water or other utilities at the Building after reasonable effort to do so, act or event caused directly or indirectly by or by default of the other party or any of the other party’s employees or agents, or any cause beyond the reasonable control of such party, then such party shall not be deemed in default under this Lease as a result of such failure so long as such party continues to take all commercially reasonable efforts to cure such failure. Nothing in this Section 24.7 shall affect, in any manner, such party’s obligations to pay amounts otherwise due and owing under this Lease as and when due, and failure to timely pay such amounts shall not be subject to “force majeure” delays or extensions.

     Section 24.8. Definition of Landlord. As used in this Lease, the term “Landlord” shall mean only the owner, or the mortgagee in possession, for the time being, of the Building and the Land or the owner of a lease of the Building or of the Land and the Building, so that in the event of any sale of the Building or of the Land and the Building or of said Lease, or in the event of a lease of the Building or of the Land and the Building, said Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder accruing after such sale or lease and thereafter to be performed or observed, and it shall be deemed and construed without further agreement between the parties or their successors in interest, or between the parties and any such purchaser or lessee, that such purchaser or lessee has assumed and agreed to performed and observe any and all covenants and obligations of Landlord hereunder.

     Section 24.9. No Option. The submission of this Lease for examination or execution does not constitute a reservation of or option for the Demised Premises, and this Lease becomes effective as a lease only upon execution and delivery thereof by Landlord and Tenant.

     Section 24.10. Exculpatory Clause. All separate and personal liability of Landlord or any trustee, director, officer, partner, member, owner, principal (disclosed or undisclosed), agent or

54

employee thereof of every kind or nature, if any, is waived by Tenant, and by every person now or hereafter claiming by, through or under Tenant; and Tenant shall look solely to Landlord’s estate in the Land and the Building for the payment of any claim against Landlord.

     Section 24.11. Intentionally Omitted.

     Section 24.12. No Recording. Tenant shall not record this Lease, or any portion or any reference hereto. In the event Tenant records this Lease, or permits or causes this Lease, or any portion hereof or reference hereto to be recorded, Landlord may declare a default hereunder and pursue any and all of its remedies provided in this Lease.

     Section 24.13. No Light, View or Air Easements. Any diminution or shutting off of light, view or air by any structure which may be erected on lands adjacent to the Property shall in no way affect this Lease or impose any liability on Landlord.

     Section 24.14. Financial Statements. At Landlord’s request, Tenant shall deliver to Landlord, within one hundred eighty (180) days after the end of each fiscal year of Tenant, Tenant’s annual financial statements prepared substantially in accordance with generally accepted accounting principles. All such financial information shall be certified by the chief financial officer of Tenant as being true, accurate and complete in all material respects. Landlord shall not disclose such financial information to any third party other than its lenders, partners, members, agents, consultants, advisors, attorneys and accountants or as may be otherwise required by a government or governmental agency or pursuant to court order.

ARTICLE 25
TENANT IMPROVEMENTS

     Section 25.1. Tenant’s Improvements. Landlord shall deliver possession of the Demised Premises to Tenant on or before the Projected Turnover Date. The date Landlord actually tenders possession of the Premises to Tenant is herein referred to as the “Turnover Date”.

     Subject to the provisions of Section 25.2 below, Tenant shall, at its sole cost and expense, perform such work as may be necessary or desired by Tenant to improve the Demised Premises for occupancy, all subject to and in accordance with the provisions of this Lease, including, without limitation, the provisions of Article 8 hereof. All work referred to in this subparagraph, which work is to be constructed within a period following the Turnover Date and prior to the Commencement Date, is hereinafter referred to as “Tenant’s Work”. Tenant shall have the right to retain its own general contractor for construction of the Tenant’s Work, which general contractor shall be subject to Landlord’s approval (which approval shall not be unreasonably withheld, conditioned or delayed as provided in Article 8 hereof). Without limitation of the foregoing, the parties agree that those general contractors listed on Exhibit E hereto shall be deemed acceptable to Landlord for purposes of this Section 25.1. Without limitation of the requirement of Article 8 hereof that plans and specifications shall be subject to Landlord’s approval, Tenant shall submit full and detailed architectural and engineering plans and specifications to Landlord for Landlord’s approval prior to the commencement of Tenant’s Work

55

(which approval shall not be unreasonably withheld, conditioned or delayed, as provided in Article 8). In the event Tenant elects to employ an engineer designated by Landlord in the preparation of any portion of the plans, or for the performance of any portion of Tenant’s Work, Tenant shall employ and be responsible for all fees of said engineer in preparing the plans or portion thereof and for any portion of Tenant’s Work performed by said engineer. In the event Tenant has elected not to employ Landlord’s designated engineer in the preparation of the plans, Landlord reserves the right to have the plans reviewed by Landlord’s designated engineer (limited to structural, MEP and life/fire safety engineering review), and Tenant shall pay or reimburse Landlord, within thirty (30) days following Landlord’s demand, for the actual out-of-pocket cost and expense incurred by Landlord relative to such engineering review (the “Engineer Review Costs”). Landlord’s approval shall be required of engineering plans and specifications, whether prepared by Landlord’s designated engineer or another engineer. Landlord shall not charge Tenant any supervisory or coordination fee in connection with the Tenant’s Work; and except for payment of Engineer Review Costs, if applicable, as provided above, Landlord shall not be entitled to payment of any other “Out-of-Pocket Costs” (as defined in Section 8.2 above) in connection with the Tenant’s Work, notwithstanding the terms of Article 8 to the contrary. Tenant shall not permit noise from construction of Tenant’s Work to unreasonably or materially disturb other tenants in the Building. Tenant’s Work which does so disturb other tenants shall be performed after regular working hours. Any entry upon the Demised Premises by Tenant or its representatives prior to the Commencement Date hereof in order to perform Tenant’s Work hereunder shall be subject to all of the terms and provisions of this Lease, except that Tenant shall not be obligated to pay Fixed Rent or Tenant’s Expense Charge for any such period prior to said Commencement Date.

     In addition, during normal construction hours for the duration of the phased construction of the Tenant’s Work, fixturing and move-in period, Tenant shall be allowed to use, at no cost to Tenant, the freight elevator in the Building for the purposes of moving materials, equipment and personnel to the Demised Premises. Landlord shall use all reasonable efforts to make the freight elevator available to Tenant, Tenant’s general contractor and Tenant’s sub-contractors on a non-exclusive basis during normal business hours.

     Section 25.2. Allowance. Landlord shall make a contribution (the “Allowance”) towards the cost of Tenant’s Work (including, without limitation, the costs of construction, permits and inspections, design drawings, architectural drawings, mechanical, electrical and plumbing drawings and other miscellaneous items including cabling, telephone, furnishings and signage) and toward moving costs and any other architectural and engineering fees and any other project management fees and fees of other related project consultants, all in connection with such Tenant’s Work, in the amount of $2,499,716.00 (i.e., being $38.00 per square foot of rentable area of the Demised Premises), on the terms and conditions hereinafter set forth:

     (a) Landlord shall disburse the Allowance proceeds from time to time, upon Tenant’s request for payment from time to time (which first request shall be made no earlier than thirty (30) days following the Turnover Date and which requests shall be made no more than once in any calendar month) and certification that the Tenant’s Work for which payment is requested, has been performed and that the amounts for which payment is requested are due and owing, which

56

disbursement shall be made (i) to Tenant (or, at Landlord’s option, by check payable jointly to Tenant and to Tenant’s materialmen and contractors) within thirty (30) days after presentation by Tenant to Landlord of request for payment and appropriate and complete owner’s sworn statements, contractor’s affidavits and waivers of lien showing that the work covered thereby has been performed in the Demised Premises and (ii) to Tenant (or, at Landlord’s option, by check payable jointly to Tenant and to Tenant’s other suppliers) for such other items which are the basis of such request within thirty (30) days after receiving bills of such suppliers and, to the extent their work is lienable, upon presentation of statements, affidavits and waivers as described in (i) above.

     (b) Landlord has no obligation to disburse any portion of the Allowance if Tenant is in default under this Lease (provided that if Tenant cures such default within applicable cure periods, then Tenant shall again be entitled to such disbursement). Disbursement of any portion of the Allowance shall not be deemed a waiver of Tenant’s obligation to comply with such provisions. Tenant shall be responsible for the appropriateness and completeness of the contractors’ affidavits and waivers of lien and approval of any of such work; Landlord shall have no responsibility for any of the foregoing.

     (c) In the event that the cost of Tenant’s Work and such other items for which the Allowance may be applied should for any reason be less than the full amount of the Allowance, Tenant shall be entitled to receive such difference either in cash (within thirty (30) days after notice from Tenant) or as a credit against Fixed Rent for the Demised Premises next coming due under this Lease (with such choice being made at Landlord’s sole election); provided that Tenant shall not be so entitled to any portion of such difference exceeding twenty percent (20%) of the stated amount of the Allowance hereunder. In the event Landlord reasonably determines, at any time, that the cost of Tenant’s Work and such other items for which the Allowance may be applied will be in excess of the amount of the then undisbursed portion of the Allowance, then Tenant shall be solely responsible for payment of such excess, and Tenant, at Landlord’s option, shall pay all such excess amounts before Landlord is obligated to disburse any further portion of the Allowance, and such requirement of Tenant shall be an express condition for Landlord’s obligation to disburse any further portion of the Allowance. For purpose of the foregoing, the estimated cost of Tenant’s Work and other items for which the Allowance may be applied shall be determined by Landlord based on certified cost statements delivered by Tenant to Landlord from time to time, and, in any event, delivered by Tenant to Landlord promptly upon Landlord’s request therefor.

     (d) Tenant shall be required to apply at least $1,249,858.00 of the overall Allowance (i.e., being $19.00 per square foot of rentable area of the Demised Premises) toward so-called “hard construction costs” relative to the Tenant’s Work (the “Hard Cost Allocation”), and as a consequence, in no event shall Tenant be entitled to apply more than $1,249,858.00 of the overall

57

Allowance (i.e., being $19.00 per square foot of rentable area of the Demised Premises) (the “Soft Cost Allocation”) towards the cost of telephone and data cabling, moving expenses, signage, furniture, fees of architects, engineers, project managers and other project consultants, and other so-called “soft” costs, as well as towards any credit against Fixed Rent as provided in Section 25.2(c) above (which credit against Fixed Rent shall be subject to such further limitations, in addition to being required to be taken from the Soft Cost Allocation, as set forth in said Section 25.2(c) above). Without limitation of the foregoing, it is hereby confirmed that the direct costs payable to Tenant’s contractor(s) associated with the acquisition/installation of affixed fire suppression systems and/or raised flooring within the data center portion of the Demised Premises shall be deemed “hard construction costs” for purposes hereof.

     Section 25.3. Space Plan Allowance. Without limitation of the foregoing terms regarding the “Allowance” due and owing from Landlord hereunder, Landlord hereby agrees to make the following contribution (the “Space Plan Allowance”) pursuant to the following terms and conditions:

     (a) A contribution toward the fees and costs due and owing from Tenant to its space planner in connection with the preparation of the initial space plans for Tenant’s Work and up to one revision thereof in the amount not to exceed $7,893.84 (i.e., being $.12 per square foot of rentable area of the Demised Premises).

     Within thirty (30) days following submission by Tenant’s space planner to Landlord of a payment request with respect to the Space Plan Allowance, which request shall include a copy of the invoice(s) showing amounts due and owing to Tenant’s space planner in connection with said space plans, and, if requested by Landlord, a lien waiver from said space planner showing that all amounts so due and owing in connection with the preparation of the space plans have been fully paid, Landlord shall disburse the Space Plan Allowance to Tenant or, at Tenant’s direction, directly to the aforedescribed space planner. In the event that the fees and costs payable by Tenant to its space planner in connection with preparation of the foregoing space plans is, for any reason, less than the full amount of the Space Plan Allowance, then Tenant shall not be entitled to receive any such difference. In the event that the foregoing fees and costs are greater than the Space Plan Allowance, Tenant shall be fully responsible for the payment of all such excess costs and fees.

     Section 25.4. Card Readers. Without limitation of the foregoing terms of this Article 25, Landlord agrees to install, at Landlord’s expense, a card reader in each of two elevator cabs serving the Demised Premises, and Tenant shall the right to integrate its security system at the Demised Premises in a manner so as to utilize such card reader facilities. The foregoing card reader installation work shall be performed by Landlord on or before January 1, 2007. Any such security system and card reader integration work performed by Tenant shall be performed in accordance with the terms of this Article 25 (if included as part of the Tenant’s Work) and Article 8 above.

58

ARTICLE 26
SIGNAGE

     Section 26.1. Building Signage. So long as the original named Tenant herein and/or a Tenant Affiliate (as described in Section 15 hereof) continues to occupy not less than 30,000 square feet of rentable area of the Demised Premises for the conduct of business operations therefrom, Tenant shall have the right to install and maintain, during the Term hereof, at Tenant’s expense, name identification signage (corporate identity name and/or logo) for Tenant located on the top of the Building, in any one of the east, south or north sides of the Building (“Building Signage Identification”). The location of any such Building Signage Identification shall be within the “band” on such applicable side of the Building currently located at the top of the Building, and in no event shall the Building Signage Identification extent past the roofline of the Building. The design and font for such Building Signage Identification shall be consistent with the name/logo depicted in Exhibit I attached hereto and incorporated herein or otherwise acceptable to Landlord, at its sole discretion; provided that block lettering shall also be acceptable to Landlord, in lieu of the font shown on Exhibit I. The colors used for such Building Signage Identification shall be white, black and/or red (as selected by Tenant), or any other color requested by Tenant and approved by Landlord, at its sole discretion. The materials used for such Building Signage Identification shall be consistent with comparable Class A office building standards. Tenant shall have the right, at its expense, to install illuminated Building Signage Identification, so long as the type of illumination is consistent with Class A office building standards, and does not include neon or flashing light elements, and provided that the balance of the terms of this Section 26.1 shall continue to apply relative thereto. It is acknowledged that Exhibit I is attached for illustration purposes relative to certain pre-approved signage elements as expressly described above in this Section 26.1 (it being understood that Tenant shall have the right to install its signage on only one side of the Building, as described above in this Article 26, notwithstanding anything in said Exhibit I to the contrary). All work performed under this Article 26 shall comply and be performed in accordance with the terms and conditions described in the Article 25 (if included as part of the Tenant’s Work) and in Article 8 of this Lease, in any case subject to the necessary approvals and other terms and conditions therein described, and subject to Tenant obtaining all necessary Village of Lisle and other applicable governmental permits and approvals therefor. The signage rights of Tenant set forth in this Article 26 are personal to the original named Tenant hereunder and any permitted Tenant Affiliate assignee, and may not be exercised by any other assignee or by any sublessee of said Tenant unless Landlord otherwise consents thereto (at Landlord’s sole discretion), and shall be used solely to identify the name and/or logo of said original named Tenant or any permitted Tenant Affiliate assignee hereunder.

ARTICLE 27
RIGHT OF FIRST OFFER

     Subject to the provisions hereinafter set forth, Landlord hereby grants to Tenant the right to lease, on the terms and conditions hereinafter set forth, each portion of space on the first (1^st), second (2^nd), third (3^rd) and sixth (6^th) floors of the Building (the “First Offer Space”) which is

59

not otherwise being leased by Tenant hereunder and which becomes available for leasing during the First Offer Period (as hereinafter defined).

     (a) A portion of the First Offer Space shall be deemed to be “available for leasing”upon the occurrence of the following events.

     (1) the expiration of an Existing Lease (as hereinafter defined) of such portion of the First Offer Space (including any renewals or extensions thereof, pursuant to options set forth therein), provided that such portion of the First Offer Space is not then subject to a right or option to lease such space granted in another Existing Lease;

     (2) if such portion of the First Offer Space is subject to a right or option granted in another Existing Lease, which right or option is not exercised, the later to occur of (A) the expiration of such right or option unexercised and (B) the expiration of the Existing Lease of such portion of the First Offer Space (including any renewals or extensions thereof, pursuant to options set forth therein); or

     (3) if such portion of the First Offer Space is subject to a right or option granted in another Existing Lease, which option is exercised, the expiration of the term of such other Existing Lease (including any renewals or extensions thereof, pursuant to options granted therein) or any later date on which the term of the demise of such portion of the First Offer Space created by the exercise of such right or option (including any renewals or extensions thereof, pursuant to options granted in such Existing Lease) expires.

     (b) Prior to Landlord leasing or granting any option to lease, or otherwise marketing for leasing, any portion of the First Offer Space which becomes, or is to become, available for leasing during the First Offer Period, Landlord shall give Tenant written notice (herein, in each case, an “Initial Availability Notice”) of the location and rentable area of such portion of the First Offer Space, the date of commencement of the term of the demise, as determined by Landlord, with respect to such portion of the First Offer Space (the “First Offer Space Commencement Date”), the rental rate for such portion of the First Offer Space (determined as hereinafter provided) and a description of all concessions (rent abatements, tenant improvement allowances, etc.) applicable to such First Offer Space. The First Offer Space Commencement Date for any given First Offer Space shall not be less than sixty (60) days after the date such corresponding Initial Availability Notice is given by Landlord.

     (c) Tenant’s right to lease the First Offer Space described in any such Initial Availability Notice from Landlord shall be exercisable by written notice from Tenant to Landlord of Tenant’s election to exercise said right given not later than ten (10) days after Landlord’s Initial Availability Notice is given, time being

60

of the essence. If such right is not so exercised, Tenant’s right of first offer pursuant to the applicable Initial Availability Notice shall thereupon terminate as to such portion of the First Offer Space, and Landlord may thereafter market the subject First Offer Space for leasing, and enter into proposals or letters of intent for the leasing of, and/or for the granting of options to lease, all or any portion of such First Offer Space, all without notice to Tenant and free of any right in Tenant under this Article 27, except as provided in Section 27(d) below. If any Initial Availability Notice covers less than a full floor at the Building, or pertains to space on the second (2^nd) or sixth (6^th) floors of the Building, then Tenant may not elect to lease less than the entire area of the First Offer Space described in such Initial Availability Notice. If any Initial Availability Notice covers the full third (3^rd) floor and/or the full first (1^st) floor at the Building, then Tenant may elect to either lease (i) the entire area of such full floor(s) described in such Initial Availability Notice, or (ii) one-half of any such full floor(s) included in such Initial Availability Notice. Tenant must designate, in its exercise notice, whether it is exercising its first offer right with respect to less than the entire area described in the Initial Availability Notice, as permitted in the previous sentence, and in the absence of such proper notice so designating less than the entire such First Offer Space, Tenant shall, upon delivery of its exercise notice, be deemed to have exercised its first offer right with respect to the entire area described in the Initial Availability Notice.

     (d) If Tenant, pursuant to Section 27(c) above, does not timely exercise its first offer right relative to any portion of the First Offer Space described in an Initial Availability Notice (such First Offer Space not so exercised being referred to specifically as the “Marketable First Offer Space”), then Landlord may thereafter market and/or enter into proposals/letters of intent relative to all or portions of the Marketable First Offer Space. With respect to any such Marketable First Offer Space, it is agreed that, following such time as Landlord has engaged in serious discussions with a party other than Tenant concerning a lease or option to lease with respect to any portion of such Marketable First Offer Space for a term commencing during the First Offer Period (which shall include, in order to constitute serious discussions, (A) delivery by Landlord to such party of at least one (1) proposal for the leasing of such portion of the Marketable First Offer Space and (B) delivery by such prospect to Landlord of at least one counter-proposal [or delivery by Landlord to such prospect of a revised proposal based on comments received from such prospect]), and in any event prior to leasing or granting an option to lease any portion of the Marketable First Offer Space which is the subject of such serious discussions, Landlord shall give Tenant written notice (in each case, a “Second Availability Notice”) of the location and square feet of rentable area of such portion of the Marketable First Offer Space, the date of commencement of the term of the demise, as determined by Landlord, with respect to such portion of the Marketable First Offer Space (the “Marketable First Offer Space Commencement Date”), the rental rate for such portion of the Marketable First Offer Space (determined pursuant to the “Market Rental Rate” provisions as provided below, and including any applicable

61

concessions, such as free rent, tenant improvement allowances, etc., if and to the extent included as part of such Market Rental Rate determination hereunder) and a description of any expansion rights being offered to the prospective tenant which would be superior to Tenant’s first offer rights under this Article 27. Unless the parties mutually agree otherwise, the Marketable First Offer Space Commencement Date (exclusive of the commencement date for any expansion space described in a Second Availability Notice) shall not be less than sixty (60) days after the date such Second Availability Notice is given by Landlord. Tenant’s right to lease the Marketable First Offer Space described in such a Second Availability Notice from Landlord shall be exercisable by written notice from Tenant to Landlord of Tenant’s election to exercise said right given not later than ten (10) days after Landlord’s Second Availability Notice is given, time being of the essence. If such right is not so exercised, Tenant’s right of first offer shall thereupon terminate as to such portion of the Marketable First Offer Space, and Landlord may thereafter lease or grant options to lease such portion of the Marketable First Offer Space without notice to Tenant and free of any right in Tenant under this Article 27 except as hereinafter provided in this Section 27(d). If Tenant does not timely exercise its first offer rights under this Section 27(d), and if, thereafter, Landlord and the prospect (or an affiliate thereof) which was the subject of the serious discussions giving rise to the Second Availability Notice do not enter into a lease and/or an option to lease with respect to all or any portion of the Marketable First Offer Space, then Landlord agrees that it shall not enter into a lease or grant an option to lease with respect to such portion of the Marketable First Offer Space without again giving a Second Availability Notice to Tenant following such time as Landlord is again in serious discussions with a prospective tenant regarding all or any portion of such Marketable First Offer Space for a term commencing within the First Offer Period. In addition, if Landlord enters into a lease and/or grants option to lease with respect to any such Marketable First Offer Space, then, at the end of such lease (including any renewals thereof, pursuant to options set forth therein), and the expiration of all such options, Tenant shall again have first offer rights with respect to such space under this Article 27, to the extent such space again becomes available for leasing during the First Offer Period. Tenant may not elect to lease less than the entire area of the Marketable First Offer Space described in a Second Availability Notice, and if a third-party lease would include the Marketable First Offer Space together with other space in the Building which is not First Offer Space, Tenant must exercise its right only with respect to such Marketable First Offer Space. Further, if a Second Availability Notice includes a description of any First Offer Space being offered as an expansion space option to the third party prospect, then Tenant, if it so exercises its first offer right pursuant to such Second Availability Notice, shall be granted the same such expansion option relative to the proposed expansion space.

     (e) Unless Landlord otherwise agrees (at its sole discretion), Tenant may only exercise its right to lease a portion of the First Offer Space, and an exercise thereof shall only be effective, if at the time of Tenant’s exercise of said right and on the pertinent First Offer Space Commencement Date or Marketable

62

First Offer Space Commencement Date (as the case may be), this Lease is in full force and effect and Tenant is not in monetary default under this Lease, or in any non-monetary default under this Lease beyond applicable cure periods hereunder, and (inasmuch as this right of first offer is intended only for the benefit of the original Tenant named herein and/or a permitted Tenant Affiliate assignee), if at the time of Tenant’s exercise of said right and as of the pertinent First Offer Space Commencement Date of Marketable First Offer Space Commencement Date (as the case may be), the original named Tenant herein has not assigned this Lease (other than to a permitted Tenant Affiliate), or sublet greater than fifty percent (50%) of the rentable area of the Demised Premises (other than to one or more permitted Tenant Affiliates) pursuant to one or more Long Term Assignment/Sublet Agreements (as hereinafter defined) in effect as of any such date. Without limitation of the foregoing, no sublessee or assignee (other than a permitted Tenant Affiliate assignee) shall be entitled to exercise any first offer right hereunder, and, unless Landlord otherwise agrees (at its sole discretion), no exercise of any first offer right hereunder by the original Tenant named herein or a permitted Tenant Affiliate assignee shall be effective in the event said Tenant assigns this Lease (other then a permitted Tenant Affiliate assignee) or subleases all or greater than fifty percent (50%) of the rentable area of the Demised Premises (other than to one or more permitted Tenant Affiliates) pursuant to one or more Long Term Assignment/Sublet Agreements in effect as of the date of Tenant’s exercise of such first offer right or as of the pertinent First Offer Space Commencement Date or Marketable First Offer Space Commencement Date (as the case may be). If the original Tenant named in this Lease has assigned this Lease to any permitted Tenant Affiliate assignee as of the time of Tenant’s exercise of any first offer rights under this Article 27 or as of the pertinent First Offer Space Commencement Date or Marketable First Offer Space Commencement Date (as the case may be), then, at Landlord’s option, any such exercise of the first offer right under this Article 27 and the corresponding lease amendment under Section 27(g) below shall need to be executed by the original named Tenant in this Lease and each such permitted Tenant Affiliate assignee in order to be effective for purposes hereof (unless, however, the original named Tenant no longer exists as a separate and distinct entity as a direct result of the transaction giving rise to the assignment to such permitted Tenant Affiliate assignee, such as is the case of a merger, in which event only the permitted assignee shall be obligated to execute such first offer exercise notice and corresponding lease amendment hereunder). Notwithstanding anything herein to the contrary, Landlord shall have the right, at its election, to waive any of the conditions precedent to Tenant’s valid exercise of its first offer rights under this Article 27, as such conditions are described above in this Section 27(e), whereupon Tenant’s prior exercise of such first offer rights shall be valid and in full force and effect in all respects. Any such waiver by Landlord must be in writing in order to be effective for purposes of the preceding sentence. For purposes hereof, the term “Long Term Assignment/Sublet Agreement” shall mean any assignment or sublease agreement which has a term, inclusive of

63

extension or renewal options therein, which extends to a date which is later than the last day of the then “Measuring Period” (as hereinafter defined). For purposes hereof, the term “Measuring Period”, as of any date of determination, shall mean a period equal to seventy-five percent (75%) of the then balance of the stated Term hereof.

     (f) If Tenant has validly exercised its right to lease a portion of the First Offer Space, then effective as of the First Offer Space Commencement Date or the Marketable First Offer Space Commencement Date (as the case may be), such portion of the First Offer Space shall be included in the Demised Premises, subject to all of the terms, conditions and provisions of this Lease, except that:

     (1) Rent per square foot of rentable area for such portion of the First Offer Space shall be equal to the Market Rental Rate (as defined in Article 30 below) for such First Offer Space, provided that Tenant shall be entitled to an abatement of Fixed Rent and Tenant’s Expense Charge attributable to such First Offer Space for the period from and after the applicable First Offer Space Commencement Date or Marketable First Offer Space Commencement Date (as the case may be) and through the first to occur of (A) sixty (60) days after such First Offer Space Commencement Date or Marketable First Offer Space Commencement Date (as the case may be), and (B) the day Tenant first occupies such First Offer Space for the conduct of any business operations therefrom;

     (2) the rentable area of the Demised Premises shall be increased by the rentable area of such portion of the First Offer Space (and “Tenant’s Proportionate Share” shall be increased accordingly);

     (3) the term of the demise covering such portion of the First Offer Space shall commence on the First Offer Space Commencement Date or the Marketable First Offer Space Commencement Date (as the case may be), and shall expire simultaneously with the expiration of the term of this Lease, including any extension or renewal thereof;

     (4) any work performed by Tenant during the first six (6) months following the First Offer Space Commencement Date or the Marketable First Offer Space Commencement Date (as the case may be), to initially ready the First Offer Space for occupancy, shall be performed in accordance with the terms and conditions set forth in Article 25 above relative to the “Tenant’s Work” therein described (provided that there shall be no “Allowance” relative to such work, except to the extent provided in Section 27(f)(5) below, as applicable);

     (5) the First Offer Space shall be rented in its “as is” condition as of the First Offer Space Commencement Date or Marketable First Offer Space Commencement Date (as the case may be) (inasmuch as tenant

64

improvement work, allowances and other concessions, if any, as well as market-level security deposit requirements, if any, will be reflected in Market Rental Rate as described in Article 30 below).

     (g) If Tenant has validly exercised its right to lease a portion of the First Offer Space, within thirty (30) days after request by either party hereto, Landlord and Tenant shall enter into a written amendment to this Lease confirming the terms, conditions and provisions applicable to such portion of the First Offer Space as determined in accordance herewith.

     (h) If Tenant has validly exercised its right to lease a portion of the First Offer Space, Landlord shall use commercially reasonable efforts to deliver possession of such First Offer Space to Tenant on the pertinent First Offer Space Commencement Date or Marketable First Offer Space Commencement Date (as the case may be) (including, the filing and diligent prosecution of eviction proceedings, if necessary, with respect to any holdover tenant therein), but in the event Landlord should be unable for any reason to do so, then Landlord shall not be subject to any liability for failure to deliver possession except as provided below in this Section 27(h). Such failure to deliver possession shall not affect either the validity of this Lease or the obligations of either Landlord or Tenant hereunder or be construed to extend the expiration of the term of this Lease either as to such portion of the First Offer Space or the balance of the leased Demised Premises; provided that in such event, the First Offer Space Commencement Date or Marketable First Offer Space Commencement Date (as the case may be) shall be extended until Landlord is able to deliver possession (i.e., with any rental abatement periods under Section 27(f)(l) hereof, as applicable, being deferred accordingly). Without limitation of the foregoing, in the event Landlord fails to deliver possession of any portion of the First Offer Space, which failure continues for ninety (90) days beyond the pertinent First Offer Space Commencement Date or Marketable First Offer Space Commencement Date (as the case may be) (the “Outside First Offer Space Commencement Date”) for any reason whatsoever (including reasons beyond Landlord’s reasonable control), then Tenant shall have the additional right, exercised upon thirty (30) days’ prior written notice thereof to Landlord delivered at any time following such 90-day period and prior to such time as Landlord has tendered the applicable First Offer Space to Tenant (time being of the essence) and Landlord’s failure to deliver possession of such First Offer Space to Tenant within such 30-day period, to revoke its earlier exercise of such applicable first offer right, whereupon this Lease shall continue in full force and effect without regard to such First Offer Space, and neither party shall have any further rights or obligations with respect thereto (provided that Landlord shall again give Tenant the notices under this Article 27 as and when required hereunder, and Tenant shall again have first offer rights as provided in this Article 27, prior to Landlord leasing or marketing for lease any such First Offer Space which remains available for leasing for a term commencing during the First Offer Period). If Tenant fails to so revoke its prior exercise notice within the time

65

periods set forth in the preceding sentence Tenant shall be deemed to have waived such right, and the remaining terms of this Section 27(h) shall continue to apply.

     (i) In the event any portion of the First Offer Space is leased to Tenant other than pursuant to the right of first offer described herein, such portion of the First Offer Space shall thereupon be deleted from the First Offer Space.

     (j) As used herein, the following terms shall have the following meanings:

     (1) the term “First Offer Period” shall mean the term of this Lease and all extensions and renewals thereof; provided, however, that the First Offer Period shall not include the last twenty-four (24) months of the stated Term unless Tenant has then exercised the option granted to Tenant under Article 29 below to extend the term for the Renewal Period described therein (in which event the First Offer Period shall not include the last twenty-four (24) months of the Renewal Period); and

     (2) the term “Existing Lease” shall mean (A) any lease of any space in the Building in effect as of the date hereof (including amendments from time to time thereto which do not grant any additional rights relative to the First Offer Space hereunder, and including extensions or renewals thereof, pursuant to options currently granted therein), whether or not the term of such lease has yet commenced, and/or (B) any lease or lease amendment entered into by Landlord and a third party following a Second Availability Notice to Tenant in accordance with this Article 27 and Tenant’s failure to lease such space pursuant to this Article 27 (including amendments from time to time thereto which do not grant any additional rights relative to the First Offer Space hereunder, and including extensions or renewals thereof, pursuant to options initially granted in such lease or lease amendment).

     (k) If Tenant exercises its termination rights under Article 31 hereof, then Tenant shall no longer have any first offer rights under this Article 27 at any time following the exercise of said termination rights.

ARTICLE 28
EXPANSION OPTION

     Subject to the provisions hereinafter set forth, Landlord hereby grants to Tenant two (2) separate options to lease, on the terms and conditions hereinafter set forth, space (the “Expansion Space”) at the Building the exact area, configuration and location of the applicable Expansion Space and the date of commencement of the term of the demise with respect to the applicable Expansion Space (each such date being referred to as an “Expansion Space

66

Commencement Date”) and the Rent payable relative to such Expansion Space to be designated by Landlord within the parameters set forth below.

     (a) Each of Tenant’s two (2) options to lease Expansion Space (sometimes referred to herein as “Expansion Option 1” and “Expansion Option 2”, respectively) shall be exercisable by written notice from Tenant to Landlord of Tenant’s election to exercise said option given not later than the applicable latest exercise date designated below, time being of the essence:

EXPANSION OPTION	LATEST EXERCISE DATE
1	April 1,2007
2	July 1, 2008

     If Tenant’s option as to either of the two (2) expansion options described above is not so exercised on or before the applicable latest exercise date described above, such applicable option shall thereupon terminate and Tenant shall not thereafter have any right to lease any portion of the Expansion Space pursuant to such designated expansion option (provided that any remaining expansion option under this Article 28 shall continue in full force and effect and provided further that the failure to exercise any given expansion option under this Article 28 shall have no effect whatsoever on Tenant’s rights of first offer under Article 27 above with respect to the First Offer Space therein described). As to either such expansion option, Tenant may not elect to lease less than the entire area of the Expansion Space designated by Landlord in accordance with the parameters described in Section 28(b) below.

     (b) As to each of the two (2) expansion options so exercised by Tenant, Landlord shall determine the applicable Expansion Space Commencement Date, subject to the following conditions:

     (1) the area and location of the Expansion Space for Tenant’s respective expansion options shall meet the requirements designated in the table set forth in Section 28(b)(2) below; and

     (2) the Expansion Space Commencement Date for each of the two (2) expansion options designated above shall fall within the following designated periods:

		WINDOW PERIOD FOR
		EXPANSION SPACE
EXPANSION	EXPANSION	COMMENCEMENT
OPTION	SPACE	DATE
1	10,898 rentable square feet on the sixth (6th) floor of the Building, as identified on Exhibit G hereto (“Expansion Space A”)	Between June 1, 2007 and January 1, 2008 (inclusive)

67

		WINDOW PERIOD FOR
		EXPANSION SPACE
EXPANSION	EXPANSION	COMMENCEMENT
OPTION	SPACE	DATE
2	13,156 rentable square feet on the second (2nd) floor of the Building, as identified on Exhibit H hereto (“Expansion Space B”)	Between January 1, 2009 and July 1, 2009 (inclusive)

     (c) If Tenant has validly exercised its expansion option under this Article 28, then Landlord shall give Tenant written notice of the applicable Expansion Space Commencement Date and, as it relates to Expansion Option 2, the applicable “Market Rental Rate” for Expansion Space B as contemplated by Section 28(e) below, no later than three (3) months prior to the designated Expansion Space Commencement Date (provided that Landlord shall, in any event, give its determination of “Market Rent Rate” for Expansion Space B within fifteen (15) business days after Tenant’s request therefor (an “Expansion Space B Information Request”), which Expansion Space B Information Request shall be made no earlier than the following date:

EARLIEST EXPANSION SPACE B INFORMATION REQUEST DATE

April 1, 2008

     (d) Unless Landlord otherwise agrees (at its sole discretion), Tenant may only exercise said option under this Article 28, and an exercise thereof shall only be effective, if at the time of Tenant’s exercise of said option and on the pertinent Expansion Space Commencement Date, this Lease is in full force and effect and Tenant is not in monetary default under this Lease, or in non-monetary default under this Lease beyond applicable cure periods hereunder, and (inasmuch as said option is intended only for the benefit of the original Tenant named in this Lease and/or a permitted Tenant Affiliate assignee), if at the time of Tenant’s exercise of such right and as of the pertinent Expansion Space Commencement Date, the original Tenant named in this Lease has not assigned this Lease (other than to a permitted Tenant Affiliate) or sublet greater than fifty percent (50%)of the rentable area of the Demised Premises (other than to one or more permitted Tenant Affiliates) pursuant to one or more Long Term Assignment/Sublet Agreements (as defined in Section 27(e) above) in effect as of either such date. Without limitation of the foregoing, no sublessee or assignee (other than a permitted Tenant Affiliate assignee) shall be entitled to exercise said option, and, unless Landlord otherwise agrees (at its sole discretion), no exercise of said option by the original Tenant named in this Lease and/or a permitted Tenant Affiliate assignee shall be effective in the event said Tenant assigns this Lease (other than to a permitted Tenant Affiliate) or subleases all or greater than fifty percent (50%) of the rentable area of the Demised Premises (other than to one or

68

more permitted Tenant Affiliates) pursuant to one or more Long Term Assignment/Sublet Agreements in effect as of the date of Tenant’s exercise of such expansion right or as of the pertinent Expansion Space Commencement Date. In the event of an assignment to a permitted Tenant Affiliate assignee as of the time of Tenant’s exercise of said option under this Article 28 or as of the Expansion Space Commencement Date, then, at Landlord’s election, any exercise of said option under this Article 28 and the corresponding lease amendment under Section 28(f) below must be signed by both the original named Tenant in this Lease and each such permitted Tenant Affiliate assignee in order to be effective (unless, however, the original named Tenant no longer exists as a separate and distinct entity as a direct result of the transaction giving rise to the assignment to such permitted assignee, such as is the case of a merger, in which event only the permitted assignee shall be obligated to execute such expansion exercise notice and corresponding lease amendment hereunder). Notwithstanding anything herein to the contrary, Landlord shall have the right, at its election, to waive any of the conditions precedent to Tenant’s valid exercise of its expansion rights under this Article 28, as such conditions are described above in this Section 28(d), whereupon Tenant’s prior exercise of such expansion rights shall be valid and in full force and effect in all respects. Any such waiver by Landlord must be in writing to be effective for purposes of the preceding sentence.

     (e) If Tenant has validly exercised its option to lease any applicable Expansion Space, then effective as of the pertinent Expansion Space Commencement Date, such Expansion Space shall be included in the Demised Premises, subject to all of the terms, conditions and provisions of this Lease, except that:

     (1) except as provided in Section 28(h) below, Rent per square foot of rentable area of the Expansion Space shall be equal to the Market Rental Rate (as defined in Article 30 below) for such Expansion Space, and shall be payable by Tenant as and when Rent is otherwise due for the balance of the Demised Premises;

     (2) the rentable area of the Demised Premises shall be increased by the rentable area of the Expansion Space for all purposes (including, without limitation, for purposes of determining “Tenant’s Proportionate Share” under this Lease);

     (3) the term of the demise covering the Expansion Space shall commence on the pertinent Expansion Space Commencement Date and shall expire simultaneously with the expiration or earlier termination of the Term of this Lease, including any extension or renewal thereof;

     (4) any work performed at the Expansion Space by Tenant during the first nine (9) months following delivery of the Expansion Space to Tenant to initially ready the Expansion Space for occupancy shall be

69

performed in accordance with the terms and conditions set forth in Article 25 above relative to the “Tenant’s Work” therein described (provided that there shall be no “Allowance” relative to such work except to the extent provided in Section 28(h) below, as applicable); and

     (5) except as provided in Section 28(h) below, the Expansion Space shall be rented in its “as is” condition as of the Expansion Space Commencement Date.

     (f) If Tenant has validly exercised its option to lease any Expansion Space, then, within thirty (30) days after request by either party hereto, Landlord and Tenant shall enter into a written amendment to this Lease confirming the terms, conditions and provisions applicable to the Expansion Space as determined in accordance herewith.

     (g) In the event Landlord should be unable, due to the holding over of any existing tenant(s), or due to a fire or other casualty, or for any other reason, to deliver possession of any Expansion Space on the applicable Expansion Space Commencement Date, Landlord shall not be subject to any liability for failure to deliver possession, except as provided below in this Section 28(g). Such failure to deliver possession shall not affect either the validity of this Lease or the obligations of either Landlord or Tenant hereunder, or be construed to extend the expiration of the Term of this Lease either as to such Expansion Space or the balance of the Demises Premises; provided, however, that under such circumstances, the Expansion Space Commencement Date shall be deferred until Landlord is able to deliver possession. Landlord shall use commercially reasonable efforts to deliver possession of each applicable Expansion Space to Tenant as of the stated Expansion Space Commencement Date described herein, or as soon thereafter as is reasonably practicable, including, if applicable, the commencement of an eviction or similar proceeding to recover possession thereof from a holdover tenant. Without limitation of the foregoing, if any such failure to deliver possession of any Expansion Space persists for a period of ninety (90) days following the foregoing stated Expansion Space Commencement Date (the “Outside Expansion Space Commencement Date”) for any reason whatsoever (including reasons beyond Landlord’s reasonable control), then Tenant shall have the right to terminate its earlier exercise of its expansion option under this Article 29, upon thirty (30) days’ prior written notice thereof given to Landlord at any time following such 90-day period and prior to delivery of possession of such space to Tenant (time being of the essence) and Landlord’s failure to deliver possession of such Expansion Space to Tenant within such 30-day period, whereupon this Lease shall remain in full force and effect without regard to said Expansion Space (provided that Tenant shall continue to have all first offer rights as otherwise set forth in Article 27 above).

     (h) Notwithstanding the foregoing, with respect to the Expansion Space A exercised by Tenant under Expansion Option 1 above, in lieu of paying

70

Market Rental Rate for such space, Tenant shall instead pay Fixed Rent and Additional Rent with respect to such space in accordance with the same provisions as applicable for the initial Demised Premises hereunder (i.e., with Fixed Rent per square foot of rentable area for such Expansion Space being at the same respective rates from time to time as Fixed Rent for the initial Demised Premises, all as determined pursuant to Article 1 above).

     Further, with respect to both Expansion Space A and Expansion Space B, the following terms shall apply:

     (1) Tenant shall be entitled to an abatement of Fixed Rent and Tenant’s Expense Charge attributable to such Expansion Space for the period from and after the applicable Expansion Space Commencement Date and through the first to occur of (A) ninety (90) days after such Expansion Space Commencement Date, and (B) the day Tenant first occupies such Expansion Space for the conduct of any business operations therefrom; and

     (2) such Expansion Space shall be rented in its “as is” condition as of the Expansion Space Commencement Date; provided that, with respect to Expansion Space A only, Tenant shall be entitled to an “Allowance” in the amount of $38.00 per square foot of rentable area of the applicable Expansion Space multiplied by a fraction, the numerator of which is the number of calendar months from and after the applicable Expansion Space Commencement Date therefor and the denominator of which is 132 months. With respect to Expansion Space B only, the “tenant improvement allowance” (if any) shall be determined as part of the calculation of the Market Rental Rate for such space. Any work desired by Tenant to ready such space for occupancy will be performed pursuant to, and the foregoing Allowance or tenant improvement allowance shall be disbursed in accordance with, the same terms as set forth in Article 25 above relative to performance of the “Tenant’s Work” and disbursement of the “Allowance” thereunder.

     (i) If Tenant, pursuant to Article 27 above or otherwise, has leased (with the term “leased”, for purposes of this subparagraph (i), meaning either that the demise of such applicable space has then commenced or that Tenant has otherwise then exercised its first offer rights relative to such applicable space) any portion of Expansion Space A prior to exercising the first (1^st) applicable expansion option under this Article 28, then such portion of Expansion Space A so leased by Tenant shall be deducted from the Expansion Space otherwise required for Expansion Option 1 under this Article 28 (provided that any remaining portion of Expansion Space A for such particular expansion option hereunder and the remaining applicable expansion option under this Article 28 shall continue in full force and effect). Further, if Tenant, pursuant to Article 27 above or otherwise, has leased any portion of Expansion Space B prior to

71

exercising the second (2^nd) applicable expansion option under this Article 28, then such portion of Expansion Space B so leased by Tenant shall be deducted from the Expansion Space otherwise required for Expansion Option 2 under this Article 28 (provided that any remaining portion of Expansion Space B for such particular expansion option hereunder shall continue in full force and effect).

     (j) If Tenant exercises its termination rights under Article 31 hereof prior to the exercise of any expansion option under this Article 28, then Tenant shall no longer have any further expansion rights under this Article 28, and this Article 28 shall thereupon be null and void.

ARTICLE 29
RENEWAL OPTION

     Subject to the provisions hereinafter set forth, Landlord hereby grants to Tenant an option to extend the Term of this Lease on the same terms, conditions and provisions as contained in this Lease, except as otherwise provided herein, for one period of five (5) years (the “Renewal Period”) after the expiration of the initial Term, which Renewal Period shall commence on February 1, 2018 (the “Renewal Period Commencement Date”) and end on January 31, 2023.

     (a) Said option shall be exercisable by written notice from Tenant to Landlord of Tenant’s election to exercise said option given not later than February 1, 2017 (herein, the “Latest Renewal Exercise Date”), time being of the essence. If Tenant’s option is not so exercised, said option shall thereupon expire.

     (b) Unless Landlord otherwise agrees (at its discretion), Tenant may only exercise said option, and an exercise thereof shall only be effective, if at the time of Tenant’s exercise of said option and on the Renewal Period Commencement Date, this Lease is in full force and effect and Tenant is not in monetary default under this Lease, or in non-monetary default beyond applicable cure periods under this Lease, and (inasmuch as said option is intended only for the benefit of the original Tenant named in this Lease and/or a permitted Tenant Affiliate assignee), as of the time of Tenant’s exercise of such right and as of the pertinent Renewal Period Commencement Date, not less than fifty percent (50%) of the rentable area of the Demised Premises are occupied by the original Tenant named herein and/or one or more permitted Tenant Affiliates, and said Tenant has not assigned this Lease (other than to a permitted Tenant Affiliate) or sublet greater than fifty percent (50%) of the rentable area of the Demised Premises (other than to one or more permitted Tenant Affiliates), pursuant to one or more assignments and/or subleases in effect as of either such date. Without limitation of the foregoing, no sublessee or assignee (other than an assignee which is a Tenant Affiliate) shall be entitled to exercise said option under this Article 29, and no exercise of said option by the original Tenant named herein or by a Tenant Affiliate assignee shall be effective, in the event said Tenant or Tenant Affiliate

72

has assigned this Lease (other than to a permitted Tenant Affiliate) or has subleased greater than fifty percent (50%) of the rentable area of the Demised Premises (other than to one or more permitted Tenant Affiliates) pursuant to one or more assignments and/or subleases in effect as of the time of Tenant’s exercise of said right or as of the Renewal Period Commencement Date. In the event of an assignment to a Tenant Affiliate assignee permitted hereunder as of the time of Tenant’s exercise of its renewal rights under this Article 29 or as of the Renewal Period Commencement Date, then, at Landlord’s election, any exercise of the renewal option under this Article 29 and the corresponding lease amendment under Section 29(d) below must be signed by both the original named Tenant and each such successor Tenant Affiliate assignee in order to be effective (unless, however, the original named Tenant no longer exists as a separate and distinct legal entity as a direct result of the transaction giving rise to the assignment to such permitted assignee, such as in the case of a merger, in which case only the permitted assignee shall be obligated to execute the renewal option exercise notice and corresponding lease amendment hereunder). Notwithstanding anything herein to the contrary, Landlord shall have the right, at its election, to waive any of the conditions precedent to Tenant’s valid exercise of its renewal rights under this Article 29, as such conditions are described in this Section 29(b), whereupon Tenant’s prior exercise of such renewal rights shall be valid and in full force and effect in all respects. Any such waiver by Landlord must be in writing in order to be effective for purposes of the preceding sentence.

     (c) Rent per square foot of rentable area of the Demised Premises payable during the Renewal Period with respect to all space included in the Demised Premises as of the Renewal Period Commencement Date and all other concessions shall be equal to or otherwise governed by the Market Rental Rate (as defined in Article 30 below) for the Demised Premises. Landlord shall give Tenant written notice of the Market Rental Rate within thirty (30) days following written request by Tenant, which request shall be made no earlier than fifteen (15) months prior to the Renewal Period Commencement Date.

     (d) If Tenant has validly exercised said option, within thirty (30) days after request by either party hereto and determination of the Market Rental Rate, Landlord and Tenant shall enter into a mutually acceptable written amendment to this Lease, confirming the terms, conditions and provisions applicable to the Renewal Period as determined in accordance herewith, with such revisions to the rental provisions of this Lease as may be necessary to conform such provisions to the Market Rental Rate.

     (e) Tenant shall have no right to extend the Term of this Lease beyond the expiration of the Renewal Period.

73

ARTICLE 30
MARKET RENTAL RATE

     (a) As used herein, the term “Market Rental Rate” per square foot of rentable area shall mean (i) the annual rate of net or base or fixed rent reasonably determined to be the prevailing market net or base or fixed rental rate for comparable space in the Lisle/Naperville, Illinois area which has been built out for occupancy (taking into consideration the age of the build-out and the duration of the terms for which such space is being leased, location and/or floor level within a building, when the applicable rate becomes effective, quality and location of the applicable building, differences in rentable area for the applicable building, and differences in base building standards at the applicable building) and shall include prevailing concessions such as, but not limited to, rental concessions, tenant improvement work, allowances, brokerage commissions, time following delivery of the space for construction of tenant improvements without payment of Rent, etc, for terms commencing on or about the commencement date for the term for which Market Rental Rate is being determined hereunder (provided however, that in determining Market Rental Rate, there shall be no further rent abatement periods following delivery of the space for construction of tenant improvements, with respect to the First Offer Space under Article 27 and with respect to Expansion Space B under Expansion Option 2 pursuant to Article 28 above, if applicable, in that the rental abatement periods for construction of tenant improvements have already been agreed to by the parties and set forth in Section 27(f)(l) and Section 28(h)(l), respectively, above; and in the event that any such pre-agreed free-rent construction periods differ from “market” at the time of determination of Market Rental Rate, then the other components of Market Rental Rate shall be equitably adjusted accordingly), plus (ii) additional components of the Market Rental Rate consistent with additional components of rent charged for comparable space in the Lisle/Naperville, Illinois area, which may include, among the other then prevailing components of rent, periodic adjustments or additions to a fixed rent based on a share of real estate taxes and other expenses (such as Tenant’s Proportionate Share of Operating Costs and Taxes) and increases to adjust for inflation, and which may also include an additional market-level security deposit based upon security deposits being imposed upon other tenants at comparable office buildings in Lisle/Naperville, Illinois leasing comparable space and having comparable concession packages and being of comparable credit worthiness as that of Tenant. Comparable arms length lease transactions (and, as it relates to a determination under Article 29, renewal transactions) at the Building and/or bona fide written proposals or offers to lease comparable space at the Building (and, as it relates to a determination under Article 29, to renew leases of comparable space) received by Landlord from third parties (at arm’s length) or given by Landlord to third parties (at arm’s length) may be used by Landlord and thereupon have preferential value as an indication of the Market Rental Rate.

74

     (b) If Tenant disagrees with Landlord’s determination of Market Rental Rate with respect to any first offer space under Article 27 above which is greater than 5,000 square feet of rentable area, or with respect to Expansion Space B under Article 28 above, or with respect to any renewal option under Article 29 above (which Tenant must do, if at all, in writing setting forth Tenant’s determination of Market Rental Rate within fifteen (15) business days after Tenant’s receipt of notice of Landlord’s determination of Market Rental Rate), and if the parties cannot agree on the Market Rental Rate within thirty (30) days (or, as it relates to the renewal option under Article 29 hereof, sixty (60) days) thereafter, then, at Tenant’s election, and provided that Tenant has theretofore exercised its option for which Market Rental Rate is being determined, such dispute shall be determined by arbitration as hereinafter provided (it being understood and agreed that the binding arbitration process described in this Section 30(b) may only commence if and to the extent Tenant has validly exercised its option for which Market Rental Rate is being so determined). Tenant may initiate the arbitration process by written notice to that effect given to Landlord within fifteen (15) business days after the expiration of such thirty (30) day (or, if applicable, as it relates to a renewal under Article 29, sixty (60) day) period (time being of the essence), and if Tenant fails to so timely deliver such notice so initiating the arbitration process, then Tenant shall be deemed to have waived such right, and Landlord’s determination of Market Rental Rate shall be deemed the applicable Market Rental Rate for all purposes. If Tenant timely exercises such right to initiate the foregoing arbitration process, as described in the preceding sentence, then, within fifteen (15) business days after the giving of such notice, Landlord and Tenant will each select an arbitrator who shall be disinterested and shall be a person that has been actively engaged in the development or leasing of Class A office buildings in the Lisle/Naperville, Illinois area for a period not less than five (5) years immediately preceding his or her appointment. If a party fails to timely select an arbitrator, which failure continues for five (5) business days after written notice thereof from the other, then the arbitrator timely selected shall be the sole arbitrator. Within five (5) business days after the selection of both arbitrators, Landlord and Tenant shall each simultaneously submit to the arbitrators a determination of Market Rental Rate with such supporting materials as they deem appropriate (“Market Rate Supporting Materials”). (If no submittal is made by a party, that party shall be deemed to have submitted its original determination.) The arbitrators shall be directed to select, within fifteen (15) business days after the receipt of such submittals, from the two determinations submitted by Landlord and Tenant the one that is closer to the Market Rental Rate as determined by the arbitrators, and said selection shall thereafter be deemed the Market Rental Rate. If the two arbitrators so appointed fail to agree, within such fifteen (15) business day period, as to which of the determinations submitted by Landlord and Tenant is closer to the actual Market Rental Rate, the two arbitrators shall, within ten (10) business days thereafter, appoint a third arbitrator, using the criteria described above, to decide upon which of the two determinations submitted is closest to the actual

75

Market Rental Rate. In the event the two arbitrators are not able to so agree upon a third arbitrator within such ten (10) business day period, then either party may request that the third arbitrator be appointed by the American Arbitration Association, using the criteria described above. The third arbitrator shall be directed to select, within ten (10) business days after his or her appointment, from the two determinations submitted by the parties the one that is closer to the Market Rental Rate as determined by the third arbitrator, and that selection shall thereafter be deemed the Market Rental Rate. The cost of the foregoing arbitration process shall be borne by the losing party. The determination made by the two arbitrators or the third arbitrator, as the case may be, will be final and binding upon Landlord and Tenant, and will not be subject to reconsideration by the two arbitrators or the third arbitrator, as the case may be, or to review, appeal, or challenge in any court. The determination made by the two arbitrators or the third arbitrator, as the case may be, will have the same force and effect as if a court of final resort had entered a final and binding and unappealable judgment enforcing that determination, and the determination will be an enforceable term of this Lease. If no determination is made prior to the date for commencement of payment of rent for which Market Rental Rate must be determined, then Landlord’s determination shall be used until the arbitration process is completed. If Tenant’s determination is later selected, Landlord shall promptly refund any overpayments to Tenant.

ARTICLE 31
OPTION TO TERMINATE

     Tenant shall have the option, to be exercised as hereinafter provided, to terminate this Lease effective as of January 31, 2014 (the “Termination Date”), subject to the terms and conditions hereinafter set forth.

     (a) Tenant’s option to terminate this Lease shall be exercised, time being of the essence, by written notice to Landlord given on or before January 31, 2013 (the “Latest Termination Exercise Date”). If Tenant fails to so timely exercise its termination right as described in the preceding sentence, then Tenant shall be deemed to have waived such right, and this Article 31 shall thereupon be deemed null and void. Fifty percent (50%) of the Termination Fee (as hereinafter defined) shall be due from Tenant to Landlord on or before the date Tenant so exercises its termination option, hereunder, and the remaining balance of such Termination Fee shall be due on or before the Termination Date, and each such payment shall (at Landlord’s option, at its sole discretion), be an express condition to the effectiveness of Tenant’s early termination election hereunder. Payment of the Termination Fee shall be made in cash or by check or by wire transfer of readily available funds. “Termination Fee” shall mean the “Unamortized Demised Premises Space Costs” (as hereinafter defined). For purposes hereof, “Unamortized Demised Premises Space Costs”, shall be determined for each portion of the Demised Premises being demised hereunder as of the date Tenant

76

delivers its termination notice (including, without limitation, the initial Demised Premises and any First Offer Space and Expansion Space leased by Tenant hereunder), and shall mean an amount calculated in each instance by determining the outstanding principal balance of a loan as of the Termination Date, which loan has (A) an original principal balance equal to the amount of all rent abatements, tenant improvements costs, allowances, concessions (including, without limitation, the One Time Existing Lease Payment described in Article 33 below) and brokerage commissions given or incurred by Landlord and directly associated with the lease of the then Demised Premises (which loan shall be deemed to have been made and disbursed as of the Commencement Date, as it relates to the initial Demised Premises, and as of the respective rent commencement date for each additional portion of the then Demised Premises), (B) an interest rate of nine percent (9%) per annum, (C) a term and full amortization period equal to the scheduled initial Term of the Lease for each portion of the Demised Premises (i.e., meaning from and after the Commencement Date, as it relates to the initial Demised Premises, and from and after the respective rent commencement date for any additional space then included as part of the Demised Premises, and in any such case, through the expiration of the initial Term of this Lease), and (D) payments of principal and interest made, in equal monthly installments, with interest paid in arrears, and assuming that the first payment was made as of the Commencement Date, as it relates to the initial Demised Premises, and as of the respective rent commencement date for any additional space then included as part of the Demised Premises.

     (b) Unless Landlord otherwise agrees (at its discretion), Tenant may only exercise its termination option hereunder, and an exercise thereof shall only be effective, if at the time of Tenant’s exercise of said option and on the Termination Date hereunder, Tenant is not in monetary default under this Lease, or in non-monetary default beyond applicable cure periods under this Lease. Nothing herein shall be deemed a waiver of any rights or remedies available to Landlord or Tenant hereunder in the event of any default by the other party at the time Tenant exercises its termination rights hereunder, or as of the Termination Date, which default remains uncured beyond applicable cure periods hereunder. Any notice to terminate shall be irrevocable by Tenant once given.

     (c) If Tenant so elects to terminate this Lease and pays to Landlord the Termination Fee as and when due hereunder, then effective as of the Termination Date this Lease shall be deemed to have expired by lapse of time. Tenant shall be responsible for all Rent and other charges relating to the Demised Premises which accrue on or before the Termination Date.

     (d) If Tenant exercises its termination right under this Article 31, then Tenant shall vacate and deliver possession of the Demised Premises to Landlord on or before the Termination Date and deliver the Demised Premises to Landlord in the manner set forth in, and the condition required by, this Lease for surrender of the Demised Premises. Any retention of possession by Tenant of all or part of

77

the Demised Premises after the Termination Date shall be deemed a holding over under Article 19 of this Lease without consent of Landlord, and shall be subject to the terms and conditions of said Article 19 with respect to such holdover.

     (e) Unless Landlord otherwise agrees, any exercise of the termination right under this Article 31, in order to be effective, must be signed by the original named Tenant hereunder and each subsequent permitted assignee of Tenant’s interest under this Lease (unless, however, any such party no longer exists as a separate legal entity as a direct result of the transaction giving rise to the assignment of this Lease, such as in the case of a merger). If Tenant exercises its option to terminate under this Article 31, unless Landlord otherwise agrees, Tenant shall be deemed to have represented and warranted to Landlord the following matters as of the Termination Date:

     (1) Tenant owns and holds the entire interest of Tenant under this Lease; and

     (2) There exists no subleases, assignments, liens or encumbrances affecting the Demised Premises or assignments of Tenant’s interest under this Lease which shall survive the Termination Date.

     (f) Tenant acknowledges that the Termination Fee constitutes a non- refundable payment, notwithstanding any subsequent leasing of the Demised Premises by Landlord. Landlord, in its sole discretion, may invalidate the effectiveness of any prior exercise of Tenant’s termination rights under this Article 31, if Tenant fails to pay the Termination Fee when the same is due hereunder; provided that Landlord’s failure to so invalidate the effectiveness of Tenant’s termination of this Lease on the Termination Date shall not affect Tenant’s continued obligation to pay the Termination Fee or any rights and remedies of Landlord on account of any such default by Tenant in paying the Termination Fee as and when due hereunder.

     (g) If Tenant exercises its termination right under this Article 31, then Tenant shall no longer have any additional first offer/expansion rights under Article 27 or Article 28 hereof. Further, if Tenant exercises its right to lease any First Offer Space under Article 27 hereof at any time after January 31, 2012, then, in any such case, Tenant shall no longer have any termination rights under this Article 31, and this Article 31 shall thereupon be null and void.

ARTICLE 32
GENERATOR

     Subject to the terms and conditions hereinafter set forth, Landlord grants to Tenant, during the Term, the right to install one (1) commercially reasonable emergency generator relating to Tenant’s business in the Demised Premises at a location at the Building designated by Landlord and approved by Tenant in its reasonable discretion, for supplying emergency power to

78

the Demised Premises and, except as otherwise provided, to connect such equipment through existing mechanical shafts or vertical riser paths to the Demised Premises. The rights to own, install and use such additional generator under this Article 32 shall be in addition to the Tenant’s exclusive right to use the existing generator currently serving and connected to the Demised Premises and the existing Liebert units located at the Demised Premises as of the Turnover Date (the “Existing Generator/Liebert Units”). Without limitation of the foregoing, Tenant shall have the right, exercised by written notice thereof given on or before one (1) year prior to the Expiration Date (or, if Tenant has exercised its renewal option under Article 29 above, then on or before one (1) year prior to the end of the Renewal Period), to have Landlord convey the Existing Generator/Liebert Units to Tenant, in consideration for the payment of One Dollar ($1.00), in which case (i) Landlord shall convey such Existing Generator/Liebert Units to Tenant effective as of the Expiration Date (or, if Tenant has exercised its renewal option under Article 29 above, then effective as of the last day of the Renewal Period), by quit-claim bill of sale (i.e., without any representations or warranties of any kind or nature whatsoever, express or implied), and (ii) Tenant shall remove such Existing Generator/Liebert Units from the Demised Premises as of the Expiration Date (or, if Tenant has exercised its renewal option under Article 29 above, then as of the last day of the Renewal Period), in accordance with the removal/restoration and other obligations set forth in Section 8.2 above relative to other equipment and improvements which must be removed by Tenant thereunder. In no event shall Tenant have any right to obtain a conveyance of the Existing Generator/Liebert Units pursuant to this Section 32.1 if the Term of this Lease, or Tenant’s right to possession hereunder, is terminated for any reason prior to the stated Expiration Date (or, if Tenant has exercised its renewal option under Article 29 above, then prior to the last day of the Renewal Period) hereunder (i.e., whether due to a default by Tenant, or due to Tenant’s exercise of any early termination rights hereunder, or otherwise). If, during the Term, Tenant’s service provider for the maintenance, repair or operation of the Existing Generator/Liebert Units requests authority from Landlord, as the owner of such items, to allow such service provider to so provide the applicable servicing activities, then Landlord shall promptly respond to such request, provided that any such servicing of the Existing Generator/Liebert Units, and the service arrangement with any such service provider relative thereto, shall otherwise comply with all terms and conditions set forth in this Lease governing the same.

     Section 32.1. Installation. If Tenant desires to exercise such right, Tenant shall give a written notice to that effect to Landlord (a “Generator Notice”). The Generator Notice shall specify in detail the requirements of such installation, all of which shall be subject to the approval of Landlord. Landlord shall not unreasonably withhold or delay its approval provided that such installation and the subsequent use of such generator equipment shall (i) be subject to Landlord’s reasonable supervision, (ii) not adversely affect the structural safety or integrity of the Building or otherwise adversely affect any Building systems or operations, (iii) meet reasonable aesthetic and other standards of Landlord and Landlord’s architect and (iv) satisfy other reasonable conditions hereinafter set forth. If Tenant delivers a Generator Notice to Landlord, then Landlord shall designate by written notice to Tenant an appropriate area for such installation (“Installation Area”), which Installation Area shall be subject to reasonable approval of Tenant. The right granted to Tenant under this Article 32 shall be subject to the following conditions precedent: (1) Landlord’s architect (acting reasonably) shall approve of the location of the Installation Area and the appearance of those portions of the equipment to be visible to the

79

public; (2) Landlord’s structural engineer (acting reasonably) shall approve of the location of the Installation Area, the design and specifications of the equipment, the load to the affected Building areas caused by such equipment, and other structural requirements of the installation; (3) the installation must comply with the applicable requirements of any covenant, condition or restriction of record and any municipal, county, state, federal or other governmental ordinance, law, rule or regulation including, but not limited to zoning ordinances, and with all rules and regulations for the Building; (4) the installation and operation of such equipment shall not interfere with the safety or operations of the Building or reduce or affect its structural integrity, and shall comply with the terms of this Lease; and (5) at Landlord’s request, Tenant shall enter into Landlord’s standard form license agreement used at the Building relative to the rights granted under this Article 32, the terms of which shall not conflict with the terms set forth in this Section.

     Section 32.2. Maintenance and Repair. Tenant shall pay all costs and expenses of any kind related to the installation, operation, maintenance, repair or removal of its generator equipment and the maintenance, repair or operation of the Existing Generator/Liebert Units, including any reasonable architect’s or engineering fees incurred by Landlord in connection with required approvals and any other reasonable out-of-pocket costs incurred by Landlord; provided that Tenant shall not be obligated to pay any rental or license fee on account of usage of the Installation Area or other Building areas as contemplated by this Article 32. Tenant shall maintain all such equipment in good repair. Subject to the terms of this Lease, Tenant shall be responsible for any damage, loss or injury to the Building or other property and for any injury to persons caused by installation, operation, maintenance or removal of such equipment. Upon the expiration or earlier termination of this Lease, Tenant shall, at its sole cost and expense, (i) remove the generator equipment and restore that portion of the Building where the generator equipment was located to its condition existing prior to the installation thereof, ordinary wear and tear excepted, and (ii) repair any damage or destruction caused by such removal. Restoration and repair herein required to be performed by Tenant shall be completed under the reasonable supervision of Landlord or Landlord’s representative. Notwithstanding the foregoing, unless Landlord otherwise requires Tenant to do so, Tenant shall not remove, and shall not be reimbursed for the cost thereof, any portion of the generator equipment which is embedded or permanently attached in or to the Building including, but not limited to, cables and other wiring. To the extent not expressly prohibited by law, and except to the extent resulting from the negligence or willful misconduct of Landlord, Tenant agrees to hold Landlord and its constituent partners, and their agents, and employees, harmless and to indemnify each of them against claims and liabilities, including reasonable attorney’s fees, for injuries to persons and damage to or theft, misappropriation or loss of property occurring in or about the Building and arising out of the installation, maintenance, operation, removal or other use of the generator equipment installed hereunder.

     Section 32.3. Assignability. All work performed by or on behalf of Tenant under this Article 32 shall comply and be performed in accordance with the terms and conditions described in Article 25 (i.e., if included as part of the Tenant’s Work) and in Article 8 of this Lease. The generator and other rights of Tenant set forth in this Article 32 may not be assigned to any party, and may be exercised only by Tenant or any permitted assignee under this Lease designated by Tenant in writing to Landlord (it being understood that only one such party shall have the right,

80

at any given time, to have any generator equipment located at the Building pursuant to this Article 32), and no other party shall have the right to exercise such rights under this Article 32 without the express written consent of Landlord (at Landlord’s sole discretion).

     Section 32.4. Representation. Notwithstanding anything to the contrary contained herein, Landlord does not hereby represent that the Building is suitable for Tenant’s intended use or operation of the generator equipment contemplated by this Article 32.

ARTICLE 33
EXISTING LEASE PAYMENT

     Section 33.1. Payment. Tenant hereby represents to Landlord that Tenant has an early termination charge of $757,815.00 which is due and owing to Tenant’s existing landlord under Tenant’s existing lease for space at the building known as Finley Business Center (2505 Finley) (“Existing Building”), which termination charge is due on or before March 30, 2006. Landlord hereby agrees to pay Tenant, within three (3) business days after the mutual execution and delivery of this Lease by both parties, the sum of $757,815.00 (the “One Time Existing Lease Payment”) as consideration for Tenant obtaining such early termination of its existing lease at the Existing Building, and Tenant shall promptly deliver to Landlord evidence of such payment made by Tenant to its existing landlord at the Existing Building for the early termination of such existing lease, once such payment has been made (which payment shall be made on or before March 30, 2006, as described above). If Landlord has not returned a fully executed original of this Lease to Tenant and otherwise paid the One Time Existing Lease Payment to Tenant on or before 5:00 p.m., Central Time, on March 29, 2006, then Tenant shall have the right, exercised by written notice thereof delivered to Landlord at any time prior to Landlord’s delivery of such executed Lease and such payment to Tenant, to terminate this Lease and any further rights and obligations of the parties hereunder, whereupon Landlord shall return any Security Deposit theretofore deposited by Tenant hereunder, and neither party shall have any further rights or obligations under this Lease. If this Lease has not been terminated pursuant to the preceding sentence, and if Landlord has delivered a fully executed original of this Lease, together with the One Time Existing Lease Payment, to Tenant, then, at either party’s request, the parties shall promptly enter into an instrument confirming that such termination right of Tenant as set forth in this Article 33 is no longer applicable, and that such termination right is null and void in its entirety.

ARTICLE 34
SECURED AREA

     Section 34.1. Secured Area. Prior to termination or expiration of this Lease or Tenant’s right to possession of the Demised Premises hereunder, Landlord shall not, in the exercise of any access rights set forth in this Lease, enter (except in the case of an emergency or as otherwise provided below in this Article 34) certain areas of the Demised Premises that Tenant shall reasonably designate for security purposes from time to time (herein, the “Secured Areas”) (and

81

Landlord shall have no obligation to perform any janitorial or other services therein). If Landlord determines that it is reasonably necessary to enter the foregoing Secured Areas, due to an emergency, it may use such force as it determines, in good faith, to be necessary to gain such access, and shall have no responsibility for damage or injury caused or otherwise resulting from such entry. In the absence of an emergency which Landlord, in good faith, determines to require immediate access to any such Secured Areas, Landlord shall endeavor to give advance written or oral notice to Tenant prior to such entry to such Secured areas so as to permit Tenant to have a representative present during any such entry. In the event Landlord so enters a Secured Area without a representative of Tenant being present, then promptly after such entry, Landlord shall provide Tenant with a written notice of Landlord’s reason for such entry.

[signature page follows]

82

     IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed as of the 24 day of March  , 2006.

	LANDLORD: HINES VAF WESTWOOD OF LISLE II, L.P.
	By:	Hines VAF Westwood of Lisle II GP LLC, its
		general partner
	By:	Hines Interests Limited Partnership,
		its authorized agent
	By:	Hines Holdings, Inc., its
		general partner
TD’A	By:	/s/ Thomas J. Danilek
		Name:	Thomas J. Danilek
		Title:	Senior Vice President
	TENANT: SXC HEALTH SOLUTIONS, INC., a Texas corporation
	By:	/s/ IRWIN STUDEN
		Name:	IRWIN STUDEN
		Title:	CFO

83

EXHIBIT A

PLAN SHOWING TENANT’S INITIAL DEMISED PREMISES

A-1

A-2

A-3

EXHIBIT B

LEGAL DESCRIPTION OF LAND

PARCEL 1:

LOTS 2 AND 3 IN LISLE OFFICE PARK, BEING A SUBDIVISION IN SECTION 4, TOWNSHIP 38 NORTH, RANGE 10 EAST OF THE THIRD PRINCIPAL MERIDIAN. ACCORDING TO THE PLAT THEREOF RECORDED JULY 22, 1988 AS DOCUMENT RBB-80228, IN DUPAGE COUNTY, ILLINOIS.

PARCEL 2:

A NON-EXCLUSIVE, IRREVOCABLE AND PERPETUAL EASEMENT IN FAVOR OF PARCEL 1 AFORESAID FOR INGRESS AND EGRESS TO PROVIDE ACCESS FOR MOTOR VEHICLE AND PEDESTRIAN TRAFFIC TO AND FROM THE UNDERGROUND PARKING STRUCTURE AS CREATED BY ACCESS EASEMENT AGREEMENT DATED FEBRUARY 20, 1990 AND RECORDED MARCH 8, 1990 AS DOCUMENT R90-028602 MADE BY AND BETWEEN BOULEVARD BANK NATIONAL ASSOCIATION AS TRUSTEE UNDER TRUST AGREEMENT DATED MAY 17, 1988 AND KNOWN AS TRUST NUMBER 8775 AND BOULEVARD BANK NATIONAL ASSOCIATION AS TRUSTEE UNDER TRUST AGREEMENT DATED DECEMBER 5, 1989 AND KNOWN AS TRUST NUMBER 9118 OVER, UPON AND ACROSS THE FOLLOWING DESCRIBED LAND:

THAT PART OF LOT 1 IN LISLE OFFICE PARK, BEING A SUBDIVISION IN SECTION 4, TOWNSHIP 38 NORTH, RANGE 10 EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE EAST LINE OF SAID LOT 1 WHICH IS 175.94 FEET SOUTHERLY OF THE NORTHEAST CORNER THEREOF: THENCE CONTINUING ALONG SAID EAST LINE OF LOT 1 SOUTH 01 DEGREE 24 MINUTES 17 SECONDS EAST, 13.06 FEET TO A CORNER OF LOT 1: THENCE SOUTH 88 DEGREES 35 MINUTES 43 SECONDS EAST ALONG THE EAST LINE OF SAID LOT 1, A DISTANCE OF 18.00 FEET TO A CORNER OF LOT 1: THENCE SOUTH 01 DEGREE 24 MINUTES 17 SECONDS EAST ALONG THE EAST LINE OF SAID LOT 1, A DISTANCE OF 201.50 FEET TO A CORNER OF LOT 1: THENCE NORTH 88 DEGREES 35 MINUTES 43 SECONDS WEST 12.00 FEET: THENCE NORTH 01 DEGREE 24 MINUTES 17 SECONDS EAST 181.57 FEET TO A POINT OF CURVATURE; THENCE NORTHWESTERLY ALONG A CURVE CONCAVE TO THE SOUTHWEST, HAVING A RADIUS OF 10.50 FEET, AN ARC DISTANCE OF 18.53 FEET’. THE CHORD OF SAID ARC HAVING A LENGTH OF 16.22 FEET AND A BEARING OF NORTH 49 DEGREES 09 MINUTES 30 SECONDS WEST: THENCE NORTH 09 DEGREES 43 MINUTES 17 SECONDS WEST, 21.00 FEET, THENCE NORTH 80 DEGREES 16 MINUTES 43 SECONDS EAST. 10.78 FEET TO THE PLACE OF BEGINNING, IN DUPAGE COUNTY, ILLINOIS.

PARCEL 3:

A NON-EXCLUSIVE, IRREVOCABLE AND PERPETUAL EASEMENT IN FAVOR OF PARCEL 1 AFORESAID FOR INGRESS AND EGRESS TO PROVIDE PEDESTRIANS WITH ACCESS TO AND USE OF THE PLAZA AREA AS CREATED BY ACCESS EASEMENT AGREEMENT DATED FEBRUARY 20, 1990 AND RECORDED MARCH 8, 1990 AS DOCUMENT R90-028602 MADE BY AND BETWEEN BOULEVARD BANK NATIONAL ASSOCIATION AS TRUSTEE UNDER TRUST AGREEMENT DATED MAY 17, 1988 AND KNOWN AS TRUST NUMBER 8775 AND BOULEVARD BANK NATIONAL ASSOCIATION AS TRUSTEE UNDER TRUST AGREEMENT DATED DECEMBER 5, 1989 AND KNOWN AS TRUST NUMBER 9118 OVER, UPON AND ACROSS THE FOLLOWING DESCRIBED LAND:

(SEE ATTACHED)

B-1

THAT PART OF LOT 1 IN LISLE OFFICE PARK, BEING A SUBDIVISION IN SECTION 4, TOWNSHIP 38 NORTH, RANGE TO EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE EAST LINE OF SAID LOT 1 WHICH IS 78.50 FEET SOUTHERLY OF TIE NORTHEAST CORNER THEREOF: THENCE CONTINUING SOUTHERLY ALONG SAID EAST LINE, 66.00 FEET: THENCE WESTERLY AT RIGHT ANGLES TO SAID EAST LINE, 32.00 FEET: THENCE NORTHERLY PARALLEL WITH SAID EAST LINE, 18.00 FEET: THENCE WESTERLY AT RIGHT ANGLES TO SAID EAST LINE, 18.00 FEET; THENCE NORTHERLY PARALLEL WITH SAID EAST LINE, 18.00 FEET: THENCE EASTERLY AT RIGHT ANGLES TO SAID EAST LINE, 18.00 FEET: THENCE NORTHERLY PARALLEL WITH SAID EAST LINE, 30.00 FEET: THENCE EASTERLY AT RIGHT ANGLES TO SAID EAST LINE, 32.00 FEET TO THE PLACE OF BEGINNING, IN DUPAGE COUNTY, ILLINOIS.

     P.I.N. 08-04-400-010-0000 and 08-04-208-001-0000

     Commonly known as: 2441 Warrenville Road, Lisle, Illinois

B-2

EXHIBIT C

RULES AND REGULATIONS

1.	No sidewalks, entrance, passages, courts, elevators, vestibules, stairways, corridors or halls shall be obstructed or encumbered by Tenant or used for any purpose other than ingress and egress to and from the Demised Premises, the Building or the landscaping, parking facilities and other improvements and appurtenances.
2.	No awning or other projection shall be attached to the outside walls or windows of the Building without the prior written consent of Landlord. No curtains, blinds, shades, drapes or screens shall be attached to or hung in, or used in connection with any window or door of the Demised Premises, without the prior written consent of Landlord. Such awnings, projections, curtains, blinds, shades, drapes, screens and other fixtures must be of a quality, type, design, color, material and general appearance approved by Landlord, and shall be attached in the manner approved by Landlord. All electrical fixtures hung in offices or spaces along the perimeter of the Demised Premises must be fluorescent, of a quality, type, design, bulb color, size and general appearance approved by Landlord, which approval shall not be unreasonably withheld.
3.	No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by Tenant on any part of the outside or inside of the Demised Premises or of the Building without the prior written consent of Landlord. In the event of the violation of the foregoing by Tenant, Landlord may remove same without liability, and may charge the expense incurred by such removal to Tenant. Interior signs on doors and directly tablet shall be inscribed, painted or affixed for Tenant by Landlord at the expense of Tenant, and shall be of a quality, quantity, type, design, color, size style, composition, material, location and general appearance acceptable to Landlord.
4.	The sashes, sash doors, skylights, windows, and doors that reflect or admit light or air into the halls passageways or other public places in the Building shall not be covered or obstructed by Tenant, nor shall any bottles, parcels, or other articles be placed on the window sills, or in the public portions of the Building.
5.	No show cases or other articles shall be put in front of or affixed to any part of the exterior of the Building, nor placed in public portions thereof without the prior written consent of Landlord.
6.	The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags or other substances shall be thrown therein. All damages resulting from any misuse of the fixtures by Tenant shall be borne by Tenant to the extent that Tenant or Tenant’s agents, servants, employees, contractors, visitors, or licensees shall have caused the same.

C-1

7.	Except for hanging pictures, Tenant shall not paint, mark, drill into or in any way deface any part of the Demised Premises or the Building. No boring or cutting shall be permitted, except with the prior written consent of Landlord, and as Landlord may direct.
8.	No animal or bird of any kind shall be brought into or kept in or about the Demised Premises or the Building (except for service animals in the company of a handicapped person).
9.	Tenant shall not make, or permit to be made, any unseemly or disturbing noises or interfere with occupants of the Building or neighboring buildings or premises or those having business with them. Tenant shall not throw anything out of the doors, windows or skylights or down the passageways.
10.	Except as otherwise permitted under the Lease, neither Tenant nor any of Tenant’s agents, servants, employees, contractors, visitors or licensees shall at any time bring or keep upon the Demised Premises or in the Building any flammable, combustible or explosive fluid, chemical or substance.
11.	No additional locks, bolts or mail slots of any kind shall be placed upon any of the doors or windows by Tenant, nor shall any change be made in existing locks or the mechanism thereof; however, the foregoing shall not apply to any card key system which Tenant installs in full compliance with all other provisions of the Lease at its sole expense and with respect to which Landlord is provided with all access cards necessary to fully exercise all of its entry rights under the Lease with respect to the Demised Premises. Tenant must, upon the termination of the tenancy, restore to Landlord all keys of stores, offices and toilet rooms either furnished to or otherwise procured by Tenant and, in the event of the loss of any keys so furnished, Tenant shall pay to Landlord the cost thereof.
12.	All removals, or the carrying in or out of any safes, freight, furniture, fixtures, bulky matter or heavy equipment of any description must take place during the hours which Landlord or its agent may determine from time to time. Landlord reserves the right to prescribe the weight and position of all safes, which must be placed upon two-inch thick plank strips to distribute the weight. The moving of safes, freight, furniture, fixtures, bulky matter or heavy equipment of any kind must be made upon previous notice to the Superintendent of the Building and in a manner and at the time prescribed by him, and the persons employed by Tenant for such work are subject to Landlord’s prior approval. Landlord reserves the right to inspect all safes, freight or other bulky articles to be brought into the Building and to exclude from the Building all safes, freight or other bulky articles which violate any of these Rules and Regulations or the lease of which these Rules and Regulations are a part.
13.	Tenant shall not occupy or permit any portion of the Demised Premises to be occupied as an office that is not generally consistent with the character and nature of an ordinary desk-type office. Nor shall Tenant permit any portion of the Demised Premises to be used (a) for an employment agency, a public stenographer or typist, a labor union office, a physician’s or dentist’s office, a dance or music studio, a school, a beauty salon or

C-2

	barber shop, the business of photographic or multilith or multigraph reproductions or offset printing (not precluding using any part of the Demised Premises for photographic, multilith or multigraph reproductions solely in connection with Tenant’s own business and/or activities), a restaurant or bar, an establishment for the sale of confectionery or soda or beverages or sandwiches or ice cream or baked goods, an establishment for the preparation or dispensing or consumption of food or beverages (of any kind) in any manner whatsoever, or as a news or cigar stand, or as a radio or television or recording studio, theater or exhibition hall, for manufacturing, for the storage of merchandise or for the sale of merchandise, goods or property of any kind at auction, or for lodging, sleeping or for any immoral purpose, or for a banking, trust company, depository, guarantee, or safe deposit business, or as a savings bank, or as savings and loan association, or as a loan company, or for the sale of travelers checks, money orders, drafts, foreign exchange or letters of credit or for the receipt of money for transmission, or as a stock broker’s or dealer’s office or for the underwriting of securities, or as a government office or foreign embassy or consulate, or as tourist or travel bureau, or (b) a use which conflicts with any so-called “exclusive” then in favor of, or is for any use the same as that stated in any percentage lease to, another tenant of the Building (provided that Tenant’s use of the Demised Premises for general office purposes or for customer data processing center operations does not violate any such exclusive), or (c) a use which would be prohibited by any other portion of this Lease (including but not limited to any Rules and Regulations then in effect) or in violation of law. Tenant shall not engage or pay for any employees on the Demised Premises other than those working at the Demised Premises, nor shall Tenant advertise for laborers giving an address at the Demised Premises.
14.	Tenant shall not purchase spring water, towels, janitorial or maintenance or other like service from any company or persons not reasonably approved by Landlord. Landlord shall approve a sufficient number of sources of such service to provide Tenant with a reasonable selection, but only in such instances and to such extent as Landlord in its judgment shall consider consistent with security and proper operation of the Building.
15.	Landlord shall have the right to prohibit any advertising or business conducted by Tenant referring to the Building which, in Landlord’s opinion, tends to impair the reputation of the Building or its desirability as a first class building for offices and, upon notice from Landlord, Tenant shall refrain from or discontinue such advertising.
16.	Landlord reserves the right to exclude from the Building between the hours of 6:00 p.m. and 8:00 a.m. on all days, and at all hours on Saturdays, Sundays and legal holidays, all persons who do not present a pass to the Building issued by Landlord. Landlord may furnish passes to Tenant so that Tenant may validate and issue same. Tenant shall safeguard said passes and shall be responsible for all acts of persons in or about the Building who possess a pass issued to Tenant.
17.	Tenant’s contractors shall, while in the Building, be subject to and under the control and direction of the Superintendent of the Building (but not as agent or servant of said Superintendent or of Landlord) except for supervision of work.

C-3

18.	If the Demised Premises is or becomes infested with vermin as a result of the use or any misuse or neglect of the Demised Premises by Tenant, its agents, servants, employees, contractors, visitors, or licensees, Tenant shall forthwith at Tenant’s expense cause the same to be exterminated from time to time to the satisfaction of Landlord and shall employ such licensed exterminators as shall be approved in writing in advance by Landlord.
19.	The requirements of Tenant will be attended to only upon application at or call to the office of the Building. Building personnel shall not perform any work or do anything outside of their regular duties, unless under special instructions from the office of the Landlord.
20.	Canvassing, soliciting and peddling in the Building are prohibited and Tenant shall cooperate to prevent the same.
21.	No water cooler, air conditioning unit or system or other apparatus shall be installed or used by Tenant without the written consent of Landlord.
22.	There shall not be used in any Common Areas, public halls, plaza areas, lobbies or other space in the Building, either by Tenant or by jobbers or others, in the delivery or receipt of merchandise, any hand trucks or dollies, except those equipped with rubber tires and side guards.
23.	Tenant, Tenant’s agents, servants, employees, licensees or visitors shall not park any vehicles in any driveways, service entrances, or areas posted “No Parking.”
24.	Tenant shall install and maintain, at Tenant’s sole cost and expense, an adequate visibly marked (at all times property operational) fire extinguisher next to any duplicating or photocopying machine or similar heat producing equipment, which may or may not contain combustible material, in the Demised Premises.
25.	Tenant shall not use the name of the Building for any purpose other than as the address of the business to be conducted by Tenant in the Demised Premises, nor shall Tenant use any picture of the Building in its advertising, stationary or in any other manner without the prior written permission of Landlord. Landlord expressly reserves the right at any time to change said name without in any manner being liable to Tenant therefor.
26.	No smoking, eating, drinking or loitering is permitted in the common areas of the Building except in designated areas, if any.
27.	Tenant shall cooperate and participate in all recycling programs, if any, established for the Building by Landlord or nay governmental agency.
28.	Landlord reserves the right to make such other and further reasonable rules and regulations as in Landlord’s judgment may from time to time be needful for the safety, care and cleanliness of the Demised Premises or the Building, or the Property, and for the preservation of good order therein, and upon publication or notice to Tenant, any such

C-4

other or further rules and regulations shall be binding upon Tenant with the same force and effect as if they had been inserted herein at the time of the execution hereof.

C-5

EXHIBIT D

PARKING RIDER

     1. Provided Tenant is not in default under the Lease and has not violated the rules and regulations set forth in this Exhibit D and any attachment hereto, as amended or supplemented in any fashion by Landlord from time to time in its sole and absolute discretion, including without limitation any rules and regulations concerning parking at the Building that Landlord may promulgate from time to time pursuant to this Exhibit D (the “Parking Rules”), then during the term of the Lease, (A) Tenant and its employees and business invitees visiting or conducting business at the Demised Premises shall be entitled, on a non-exclusive and non-reserved basis, to the use the Building’s parking area (excluding, however, those areas thereof designated by Landlord from time to time for the exclusive use of certain occupants of the Building or for no parking), but not greater than use of an aggregate of 4.00 parking spaces per one thousand (1,000) square feet of the area of the Demised Premises (provided that Tenant shall not be in default under the Lease if it uses up to an aggregate of 4.55 parking spaces per one thousand (1,000) square feet of the area of the Demised Premises, notwithstanding anything herein to the contrary), and (B) Tenant and its designated employees shall have the right to use, on an exclusive basis, ten (10) parking spaces in the indoor heated parking garage serving the building (which 10 spaces shall be located in such designated areas within such garage as may be designated by Landlord from time to time, if Landlord so elects). Landlord reserves the right to designate certain of the surface parking area and covered parking area within the Building’s parking areas as reserved parking stalls for other occupants of the Building. Tenant agrees that, except as specifically provided to the contrary in the Lease, Landlord may from time to time and at any time impose charges for parking at or about the Building, which charges are currently (and shall remain fixed for Tenant during the Term at) $60.00 per month for each space in the heated parking garage described above (it being acknowledged that there are no current parking charges imposed by Landlord for the other parking areas described in this Paragraph 1, and that Landlord shall only impose charges for such other parking areas to the extent consistent with market parking charges for surface parking areas at other comparable buildings in Lisle/Naperville, Illinois). All of the payments and charges provided in this Exhibit D shall be collectible as additional rent under the Lease.

     2. Tenant and its employees and business invitees shall not park any vehicle in any stall designated for the exclusive use of any other person and Tenant further agrees to employ reasonable measures to assure that its employees do not park in any such stall. Tenant shall furnish Landlord with a list of its and its employees’ vehicle license numbers within thirty (30) days after the Commencement Date and thereafter notify Landlord of any change in such list within ten (10) days after such change occurs. Tenant agrees to assume responsibility for compliance by its employees with all Parking Rules and for all losses (including the loss of parking entrance key-cards, if any) and other damages caused by Tenant or Tenant’s agents, servants, employees, contractors, visitors or licensees occurring during or relating to any use of the Building’s parking facilities. Tenant hereby authorizes Landlord to tow away from the Building or attach violation stickers, devices or notices to any vehicle belonging to Tenant or its employees which Landlord in good faith determines is parked in violation of the Parking Rules.

D-1

All costs of any such towing or violation device and all applicable violation fees shall be payable by Tenant immediately upon demand by Landlord and, at Landlord’s option, such payment may be required prior to the release of the towed vehicle to its owner.

     3. A condition of any parking shall be compliance by the vehicle operator with all Parking Rules, including, without limitation, displaying any sticker or complying with any other identification system from time to time established by Landlord. Landlord expressly reserves the right to refuse to permit any person or vehicle in violation of the Parking Rules to enter or remain in the parking areas of the Building and to demand return therefrom of all parking stickers or other identification supplied by Landlord and Tenant hereby agrees to assist Landlord in enforcing all Parking Rules.

     4. In the event any surcharge, regulatory fee or parking tax is at any time (even at a time when no parking charges are otherwise due under Section 1 above) imposed by any governmental authority, Tenant shall pay all such amounts applicable to Tenant’s parking privileges hereunder to Landlord either in advance on the first day of each calendar month concurrently with its installment of Monthly Fixed Rent or as otherwise billed from time to time by Landlord.

     5. All parking privileges relative to the parking spaces in the indoor heated parking garage serving the Building are personal to the original named Tenant and any Tenant Affiliate assignee, and may not be assigned to any other party without Landlord’s consent (at its discretion).

     6. Landlord shall not be responsible for enforcing Tenant’s exclusive right to use any of its reserved parking stalls under the Lease nor shall Tenant have any right to impound, tow or impose any penalty on vehicles occupying such spaces; provided, however, that upon notice from Tenant of any other person parking vehicles in Tenant’s reserved parking stalls, Landlord shall use reasonable efforts (e.g., installing “reserved parking” signage and using reasonable efforts to enforce the same) to stop such improper usage by other persons.

D-2

EXHIBIT E

PRE-APPROVED GENERAL CONTRACTORS

Interior Construction Group (ICG)

JC Anderson

Executive Construction (ECI)

Edison

Clune

E-1

EXHIBIT F

FORM OF SNDA

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

          THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is entered into as of                                         , 200__(the “Effective Date”) by and between GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation (together with its successors and assigns, the “Mortgagee”), and                                                             , a                                           (hereinafter, collectively the “Tenant”), with reference to the following facts:

          A.                                         , a                                          , whose address is                                                               (the “Landlord”) owns fee simple title or a leasehold interest in the real property described in Exhibit “A” attached hereto (the “Property”).

          B. Mortgagee has made or intends to make a loan to Landlord (the “Loan”).

          C. To secure the Loan, Landlord has or will encumber the Property by entering into a mortgage or deed of trust in favor of Mortgagee (as amended, increased, renewed, extended, spread, consolidated, severed, restated, or otherwise changed from time to time, the “Mortgage”) to be recorded in the [Recorder of Deeds’ Office] in and for the County of                                         , State of                                         .

          D. Pursuant to the Lease effective                                         , (the “Lease”), Landlord demised to Tenant [all] [a portion] of the Property consisting of the following (the “Leased Premises”):                                                                                                                           .

          E. Tenant and Mortgagee desire to agree upon the relative priorities of their interests in the Property and their rights and obligations if certain events occur.

          NOW, THEREFORE, for good and sufficient consideration, Tenant and Mortgagee agree:

     1. Definitions. The following terms shall have the following meanings for purposes of this Agreement.

     a. Foreclosure Event. A “Foreclosure Event” means: (i) foreclosure under the Mortgage; (ii) any other exercise by Mortgagee of rights and remedies (whether under the Mortgage or under applicable law, including bankruptcy law) as holder of the Loan and/or the Mortgage, as a result of which a Mortgagee becomes owner of the Property; or (iii) delivery by Landlord to Mortgagee (or its designee or nominee) of a deed or other conveyance of Landlord’s interest in the Property in lieu of any of the foregoing.

F-1

     b. Former Landlord. A “Former Landlord” means Landlord and any other party that was landlord under the Lease at any time before the occurrence of any attornment under this Agreement.

     c. Offset Right. An “Offset Right” means any right or alleged right of Tenant to any offset, defense (other than one arising from actual payment and performance, which payment and performance would bind a Successor Landlord pursuant to this Agreement), claim, counterclaim, reduction, deduction, or abatement against Tenant’s payment of Rent or performance of Tenant’s other obligations under the Lease, arising (whether under the Lease or under applicable law) from Landlord’s breach or default under the Lease.

     d. Rent. The “Rent” means any fixed rent, base rent or additional rent under the Lease.

     e. Successor Landlord. A “Successor Landlord” means any party that becomes owner of the Property as the result of a Foreclosure Event.

     f. Termination Right. A “Termination Right” means any right of Tenant to cancel or terminate the Lease or to claim a partial or total eviction arising (whether under the Lease or under applicable law) from Landlord’s breach or default under the Lease.

     g. Other Capitalized Terms. If any capitalized term is used in this Agreement and no separate definition is contained in this Agreement, then such term shall have the same respective definition as set forth in the Lease.

     2. Subordination. The Lease, as the same may hereafter be modified, amended or extended, shall be, and shall at all times remain, subject and subordinate to the terms conditions and provisions of the Mortgage, the lien imposed by the Mortgage, and all advances made under
the Mortgage.

     3.  Nondisturbance, Recognition and Attornment.

     a. No Exercise of Mortgage Remedies Against Tenant. So long as the Tenant is not in default under this Agreement or under the Lease beyond any applicable grace or cure periods (an “Event of Default”), Mortgagee (i) shall not terminate or disturb Tenant’s possession of the Leased Premises under the Lease, except in accordance with the terms of the Lease and this Agreement and (ii) shall not name or join Tenant as a defendant in any exercise of Mortgagee’s rights and remedies arising upon a default under the Mortgage unless applicable law requires Tenant to be made a party thereto as a condition to proceeding against Landlord or prosecuting such rights and remedies. In the latter case, Mortgagee may join Tenant as a defendant in such action only for such purpose and not to terminate the Lease or otherwise adversely affect Tenant’s rights under the Lease or this Agreement in such action.

     b. Recognition and Attornment. Upon Successor Landlord taking title to the Property (i) Successor Landlord shall be bound to Tenant under all the terms and conditions of the Lease (except as provided in this Agreement); (ii) Tenant shall recognize and attorn to Successor Landlord as Tenant’s direct landlord under the Lease as affected by this Agreement;

F-2

and (iii) the Lease shall continue in full force and effect as a direct lease, in accordance with its terms (except as provided in this Agreement), between Successor Landlord and Tenant. Tenant hereby acknowledges notice that pursuant to the Mortgage and assignment of rents, leases and profits, Landlord has granted to the Mortgagee an absolute, present assignment of the Lease and Rents which provides that Tenant continue making payments of Rents and other amounts owed by Tenant under the Lease to the Landlord and to recognize the rights of Landlord under the Lease until notified otherwise in writing by the Mortgagee. After receipt of such notice from Mortgagee, the Tenant shall thereafter make all such payments directly to the Mortgagee or as the Mortgagee may otherwise direct, without any further inquiry on the part of the Tenant. Landlord consents to the foregoing and waives any right, claim or demand which Landlord may have against Tenant by reason of such payments to Mortgagee or as Mortgagee directs.

     c. Further Documentation. The provisions of this Article 3 shall be effective and self-operative without any need for Successor Landlord or Tenant to execute any further documents. Tenant and Successor Landlord shall, however, confirm the provisions of this Article 3 in writing upon request by either of them within ten (10) days of such request.

     4. Protection of Successor Landlord. Notwithstanding anything to the contrary in the Lease or the Mortgage, Successor Landlord shall not be liable for or bound by any of the following matters:

     a. Claims Against Former Landlord. Any Offset Right that Tenant may have against any Former Landlord relating to any event or occurrence before the date of attornment, including any claim for damages of any kind whatsoever as the result of any breach by Former Landlord that occurred before the date of attornment. The foregoing shall not limit either (i) Tenant’s right to exercise against Successor Landlord any Offset Right otherwise available to Tenant because of events occurring after the date of attornment or (ii) Successor Landlord’s obligation to correct any conditions that existed as of the date of attornment and violate Successor Landlord’s obligations as landlord under the Lease.

     b. Prepayments. Any payment of Rent that Tenant may have made to Former Landlord more than thirty (30) days before the date such Rent was first due and payable under the Lease with respect to any period after the date of attornment other than, and only to the extent that, the Lease expressly required such a prepayment.

     c. Payment; Security Deposit; Work. Any obligation: (i) to pay Tenant any sum(s) that any Former Landlord owed to Tenant unless such sums, if any, shall have been actually delivered to Mortgagee by way of an assumption of escrow accounts or otherwise; (ii) with respect to any security deposited with Former Landlord, unless such security was actually delivered to Mortgagee; (iii) to commence or complete any initial construction of improvements in the Leased Premises or any expansion or rehabilitation of existing improvements thereon; (iv) to reconstruct or repair improvements following a fire, casualty or condemnation; or (v) arising from representations and warranties related to Former Landlord.

     d. Modification, Amendment or Waiver. Any modification or amendment of the Lease, or any waiver of the terms of the Lease, made without Mortgagee’s written consent.

F-3

     e. Surrender, Etc. Any consensual or negotiated surrender, cancellation, or termination of the Lease, in whole or in part, agreed upon between Landlord and Tenant, unless effected unilaterally by Tenant pursuant to the express terms of the Lease.

     5. Exculpation of Successor Landlord. Notwithstanding anything to the contrary in this Agreement or the Lease, Successor Landlord’s obligations and liability under the Lease shall never extend beyond Successor Landlord’s (or its successors’ or assigns’) interest, if any, in the Leased Premises from time to time, including insurance and condemnation proceeds, security deposits, escrows, Successor Landlord’s interest in the Lease, and the proceeds from any sale, lease or other disposition of the Property (or any portion thereof) by Successor Landlord (collectively, the “Successor Landlord’s Interest”). Tenant shall look exclusively to Successor Landlord’s Interest (or that of its successors and assigns) for payment or discharge of any obligations of Successor Landlord under the Lease as affected by this Agreement. If Tenant obtains any money judgment against Successor Landlord with respect to the Lease or the relationship between Successor Landlord and Tenant, then Tenant shall look solely to Successor Landlord’s Interest (or that of its successors and assigns) to collect such judgment. Tenant shall not collect or attempt to collect any such judgment out of any other assets of Successor Landlord.

     6. Mortgagee’s Right to Cure. Notwithstanding anything to the contrary in the Lease or this Agreement, before exercising any Offset Right or Termination Right:

     a. Notice to Mortgagee. Tenant shall provide Mortgagee with notice of the breach or default by Landlord giving rise to same (the “Default Notice”) and, thereafter, the opportunity to cure such breach or default as provided for below.

     b. Mortgagee’s Cure Period. After Mortgagee receives a Default Notice, Mortgagee shall have a period of thirty (30) days beyond the time available to Landlord under the Lease in which to cure the breach or default by Landlord. Mortgagee shall have no obligation to cure (and shall have no liability or obligation for not curing) any breach or default by Landlord, except to the extent that Mortgagee agrees or undertakes otherwise in writing. In addition, as to any breach or default by Landlord the cure of which requires possession and control of the Property, provided that Mortgagee undertakes by written notice to Tenant to exercise reasonable efforts to cure or cause to be cured by a receiver such breach or default within the period permitted by this paragraph, Mortgagee’s cure period shall continue for such additional time as Mortgagee may reasonably require to either: (i) obtain possession and control of the Property with due diligence and thereafter cure the breach or default with reasonable diligence and continuity; or (ii) obtain the appointment of a receiver and give such receiver a reasonable period of time in which to cure the default.

     7. Miscellaneous.

     a. Notices. Any notice or request given or demand made under this Agreement by one party to the other shall be in writing, and may be given or be served by hand delivered personal service, or by depositing the same with a reliable overnight courier service or by deposit in the United States mail, postpaid, registered or certified mail, and addressed to the party to be notified, with return receipt requested or by telefax transmission, with the original machine-

F-4

generated transmit confirmation report as evidence of transmission. Notice deposited in the mail in the manner hereinabove described shall be effective from and after the expiration of three (3) days after it is so deposited; however, delivery by overnight courier service shall be deemed effective on the next succeeding business day after it is so deposited and notice by personal service or telefax transmission shall be deemed effective when delivered to its addressee or within two (2) hours after its transmission unless given after 3:00 p.m. on a business day, in which case it shall be deemed effective at 9:00 a.m. on the next business day. For purposes of notice, the addresses and telefax number of the parties shall, until changed as herein provided, be as follows:

i.	If to the Mortgagee, at:
	Greenwich Capital Financial Products, Inc. 600 Steamboat Road Greenwich, Connecticut 06830 Attn: Mortgage Loan Department
	Telecopy No.: (203) 618-2052
ii.	If to the Tenant, at:
	Attn:
	Telecopy No.: (           )

     b. Successors and Assigns. This Agreement shall bind and benefit the parties, their successors and assigns, any Successor Landlord, and its successors and assigns. If Mortgagee assigns the Mortgage, then upon delivery to Tenant of written notice thereof accompanied by the assignee’s written assumption of all obligations under this Agreement, all liability of the assignor shall terminate.

     c. Entire Agreement. This Agreement constitutes the entire agreement between Mortgagee and Tenant regarding the subordination of the Lease to the Mortgage and the rights and obligations of Tenant and Mortgagee as to the subject matter of this Agreement.

     d. Interaction with Lease and with Mortgage. If this Agreement conflicts with the Lease, then this Agreement shall govern as between the parties and any Successor Landlord, including upon any attornment pursuant to this Agreement. This Agreement supersedes, and constitutes full compliance with, any provisions in the Lease that provide for subordination of the Lease to, or for delivery of nondisturbance agreements by the holder of, the Mortgage.

     e. Mortgagee’s Rights and Obligations. Except as expressly provided for in this Agreement, Mortgagee shall have no obligations to Tenant with respect to the Lease. If an attornment occurs pursuant to this Agreement, then all rights and obligations of Mortgagee under

F-5

this Agreement shall terminate, without thereby affecting in any way the rights and obligations of Successor Landlord provided for in this Agreement.

     f. Interpretation; Governing Law. The interpretation, validity and enforcement of this Agreement shall be governed by and construed under the internal laws of the State in which the Leased Premises are located, excluding such State’s principles of conflict of laws.

     g. Amendments. This Agreement may be amended, discharged or terminated, or any of its provisions waived, only by a written instrument executed by the party to be charged.

     h. Due Authorization. Tenant represents to Mortgagee that it has full authority to enter into this Agreement, which has been duly authorized by all necessary actions. Mortgagee represents to Tenant that it has full authority to enter into this Agreement, which has been duly authorized by all necessary actions.

     i. Execution. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

[THIS SPACE INTENTIONALLY LEFT BLANK]

F-6

          IN WITNESS WHEREOF, the Mortgagee and Tenant have caused this Agreement to be executed as of the date first above written.

MORTGAGEE: GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation
By:
	Name:
	Title:
TENANT:
a
By:
	Name:
	Title:

F-7

LANDLORD’S CONSENT

     Landlord consents and agrees to the foregoing Agreement, which was entered into at Landlord’s request. The foregoing Agreement shall not alter, waive or diminish any of Landlord’s obligations under the Mortgage or the Lease. The above Agreement discharges any obligations of Mortgagee under the Mortgage and related loan documents to enter into a nondisturbance agreement with Tenant. Landlord is not a party to the above Agreement.

	LANDLORD:
	By:
		Name:
		Title:
Dated:                                                        ,

F-8

MORTGAGEE’S ACKNOWLEDGMENT

STATE OF	)
	)	ss.
COUNTY OF	)

          On the ___day of                      in the year                      before me, the undersigned, a Notary Public in and for said state, personally appeared                                                             , proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Signature of Notary Public

F-9

TENANT’S ACKNOWLEDGMENT

STATE OF	)
	)	ss.
COUNTY OF	)

          On the ___day of                      in the year                      before me, the undersigned, a Notary Public in and for said state, personally appeared                                                             , proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Signature of Notary Public

F-10

LIST OF EXHIBITS

     If any exhibit is not attached hereto at the time of execution of this Agreement, it may thereafter be attached by written agreement of the parties, evidenced by initialing said exhibit.

Exhibit “A” — Legal Description of the Land

F-11

EXHIBIT G

EXPANSION SPACE A

G-1

EXHIBIT H

EXPANSION SPACE B

H-1

EXHIBIT I

BUILDING SIGNAGE IDENTIFICATION — NAME/LOGO DEPICTION

I-1

EXHIBIT J

CLEANING SPECIFICATIONS

The Landlord shall furnish janitorial services described below:

Daily — Five (5) times a week.

• Sweep, dry mop or vacuum all floors. Remove gum, tar, etc. adhering to the floor.

• Empty and damp wipe all ashtrays located on the outside of the Building.

• Dust all horizontal surfaces, including tops of desks, file cabinets and counters, that can be reached without a ladder with a treated cloth, mitt or duster. (Papers and other objects on horizontal surfaces are not to be disturbed.)

• Clean, polish and sanitize all drinking fountains.

• Sweep all steps, sidewalks, plazas and interior landings leading to building.

• Clean freight and passenger elevator cabs and landing doors including floors.

• Empty all waste containers of waste paper and rubbish in quantities normal for office space.

• Clean all common area washrooms and restrooms.

• Spot clean all entrance doors, switch plates, walls and glass areas adjacent to such doors.

• Dust exterior of all light fixtures other than ceiling fixtures with a feather duster.

Weekly

• Wash glass in building directory.

• Walk parking area and grounds (empty exterior waste container) and sweep areas.

• Dust mop stairwells.

• Damp wipe all waste containers.

• Wash all glass entrance doors and side panels inside and out.

Monthly

• Damp mop stairwell landings and treads.

• Sweep and hose down exterior walks, trucking areas and shipping platforms.

• Remove hard water stains from toilet fixtures.

• Dust with treated dusters all Venetian blinds.

J-1

Every Three Months

• Machine scrub all common area lavatory and vestibule floors

• Shampoo all elevator carpeting.

J-2

EXHIBIT K

HVAC DESIGN STANDARDS

System Criteria — Systems operations are based upon population not to exceed one person/200 square feet of floor area.

Systems Operation Standards — Landlord provided HVAC system for all general office areas, in operation during regular business hours of all business days, shall be sufficient to maintain the following temperatures within the building:

Temperature	Heating Season		Cooling Season
Outside:		-10F.	94F. DB
			74F. WB
Inside:		72F (+/-2F).		74F(±2°F).
Discharge Air Temperature:				55F.

K-1

EX-10.2

EXHIBIT 10.2

MEMORANDUM AND AMENDMENT

     THIS MEMORANDUM AND AMENDMENT (“Memorandum”) dated January 23^rd , 2008, is executed by and between GRIFFIN CAPITAL CORPORATION, a California corporation, as agent for the fee owners of Westwood of Lisle I & II (“Landlord”), and SXC HEALTH SOLUTIONS, INC., a Texas corporation (“Tenant”).

     WHEREAS, Tenant and Hines VAF Westwood of Lisle II, L.P. (“Hines”) entered into that certain Lease Agreement dated March 24, 2006 (“Lease”), for the lease of 65,782 rentable square feet located on floors four and five and a portion of floor six at the Building commonly known as 2441 Warrenville Road, Lisle, Illinois 60532; and

     WHEREAS, By assignment, Landlord has succeeded to Hines’ right, title and interest in the Lease; and

     WHEREAS, Pursuant to Section 28 of the Lease, Tenant has the right, inter alia, to exercise Expansion Option 1 to lease 10,898 rentable square feet on the sixth floor of the Building known as Expansion Space A; and

     WHEREAS, Tenant heretofore exercised Expansion Option 1 for Expansion Space A; and

     WHEREAS, Pursuant to the Lease, Landlord through its agent delivered a letter attached hereto as Exhibit A and made a part hereof (“Hines’ Letter”) to Tenant setting out, inter alia, the Expansion Space Commencement Date; and

     WHEREAS, The Landlord and Tenant desire to modify certain provisions of the Hines’ Letter as further set forth herein; and

     NOW THEREFORE, In consideration of the foregoing premises and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged by the parties hereto, the parties agree otherwise as follows:

1. The Hines’ Letter is hereby modified as set forth below, and Landlord and Tenant agree that except as modified below, all other provisions of the Hines’ Letter remain in full force and effect as originally set forth therein:

a.	The Expansion Space Commencement Date for Expansion Space A is hereby changed to be March 1, 2008.
b.	The revised table of Fixed Rent for Expansion Space A is set forth below:

						Annual Fixed Rent
Period	Monthly Fixed Rent		Annual Fixed Rent			per RSF
3/1/08—1/31/09	$	12,941.38	$	142,355.12	*	$14.25/sf
2/1/09—1/31/10	$	13,395.46	$	160,745.50		$14.75/sf
2/1/10—1/31/11	$	13,849.54	$	166,194.50		$15.25/sf
2/1/11—1/31/12	$	14,303.63	$	171,643.50		$15.75/sf
2/1/12—1/31/13	$	14,757.71	$	177,092.50		$16.25/sf
2/1/13—1/31/14	$	15,211.79	$	182,541.50		$16.75/sf

					Annual Fixed Rent
Period	Monthly Fixed Rent		Annual Fixed Rent		per RSF
2/1/14—1/31/15	$	15,665.88	$	187,990.50	$17.25/sf
2/1/15—1/31/16	$	16,119.96	$	193,439.50	$17.75/sf
2/1/16—1/31/17	$	16,574.04	$	198,888.50	$18.25/sf
2/1/17—1/31/18	$	17,028.13	$	204,337.50	$18.75/sf

* Annual Fixed Rent has been prorated to reflect Monthly Fixed Rent of 11 months

c.	Pursuant to Section 28.h.l of the Lease, the Fixed Rent and Tenant Expanse Charge shall be abated through the first to occur of (i) May 29, 2008 which is ninety (90) days after the Expansion Space Commencement Date of March 1, 2008; or (ii) the date that Tenant first occupies Expansion Space A for the conduct of any business therefrom.
d.	As of the Expansion Space Commencement Date, there will be 119 months remaining in the Lease Term, and the Tenant Improvement Allowance for the Expansion Space A is $34.26 per rentable square foot.

2.	The Lease is hereby modified to provide that effective as of March 1, 2008, Tenant’s Proportionate Share shall be increased to 51.663% based upon 65,782 rentable square feet in the original Demised Premises and 10,898 rentable square feet of Expansion Space A, as a percentage of the total 148,423 rentable square feet of the Building.
3.	Landlord is not in default under the Lease and no act or omission has occurred which, with the giving of notice or the passage of time, or both would be a default by Landlord under the Lease
4.	All capitalized terms not otherwise defined herein shall have the same meaning ascribed to them in the Lease.
5.	This Memorandum may be executed in counterparts. It shall not be necessary that the signatures of all parties appear on each counterpart. All counterparts together shall collectively constitute a single document.

[signature page follows]

     IN WITNESS WHEREOF, Tenant and Landlord have executed this Memorandum and Amendment as the date set forth above.

TENANT SXC HEALTH SOLUTIONS, INC., a Texas corporation
By:	/s/ Jeff Park
	Name:	Jeff Park
	Title:	Chief Financial Officer
LANDLORD GRIFFIN CAPITAL CORPORATION, a California corporation, as authorized agent for the fee owners of Westwood of Lisle I & II
By:	/s/ Julie A. Treinen
	Julie Treinen
	Director of Asset Management

EXHIBIT A

HINES LETTER

[attached hereto]

VIA HAND DELIVERY
VIA ELECTRONIC MAIL

September 11, 2007

Kristen DeLay
SXC Health Solutions, Inc.
2441 Warrenville Road, Suite 610
Lisle, IL
60532

Dear Kristen:

This letter is intended, pursuant to Article 28 of SXC’s lease, to notify SXC, inasmuch as SXC has exercised “Expansion Option 1” by its letter of March 26, 2007, that the Expansion Space Commencement Date for Expansion Space A, which space is comprised of 10,898 rentable square feet on the sixth (6^th) floor of the Building commonly known as 2441 Warrenville Road in Lisle, Illinois, shall be January 1, 2008.

In accordance with the provisions of the lease and per the table below, Fixed Rent and Additional Rent for Expansion Space A will be set at the same respective rates as the initial Demised Premises.

					Annual Fixed Rent
Period	Monthly Fixed Rent		Annual Fixed Rent		per RSF
1/1/08—1/31/08	$	12,487.29		n/a	$13.75/sf
2/1/08—1/31/09	$	12,941.38	$	155,296.50	$14.25/sf
2/1/09—1/31/10	$	13,395.46	$	160,745.50	$14.75/sf
2/1/10—1/31/11	$	13,849.54	$	166,194.50	$15.25/sf
2/1/11—1/31/12	$	14,303.63	$	171,643.50	$15.75/sf
2/1/12—1/31/13	$	14,757.71	$	177,092.50	$16.25/sf
2/1/13—1/31/14	$	15,211.79	$	182,541.50	$I6.75/sf
2/1/14—1/31/15	$	15,665.88	$	187,990.50	$17.25/sf
2/1/15—1/31/16	$	16,119.96	$	193,439.50	$17.75/sf
2/1/16—1/31/17	$	16,574.04	$	198,888.50	$18.25/sf
2/1/17—1/31/18	$	17,028.13	$	204,337.50	$18.75/sf

Per Section 28.h.1 of the Lease, Fixed Rent and Tenant Expense Charge shall be abated through the first to occur of A) April 1, 2008, which is ninety (90) days after Expansion Space Commencement Date of 1/1/2008, or B) the date that SXC first occupies Expansion Space A for the conduct of any business therefrom.

2443 Warrenville Road. Suite 110 Lisle. Illinois 60532 (630) 955-0404 (630) 955-0663 FAX

In addition, per Section 28.h.2 of the Lease, SXC will be entitled to a Tenant Improvement Allowance for Expansion Space A of $34.83/rsf, which number is derived by multiplying the initial Allowance of $38.00/rsf by the ratio of months remaining in the Lease term as of the Expansion Space Commencement Date to months in the total Lease term. As of the Expansion Space Commencement Date there will be 121 months remaining in the Lease term. The total Lease term is 132 months (eleven years). Thus, the calculation is as follows: $38.00/rsf x 121/132 = $34.83/rsf.

Sincerely,

/s/ Joseph H. Harrison III

Joseph H. Harrison III
Property Manager
 

Cc: Tom D’Arcy — Hines
Julie Treinen — Griffin
Diana Riekse — Staubach
Andrea Van Gelder — Staubach
Pete Adamo — CB Richard Ellis

EX-10.3

EXHIBIT 10.3

COMMENCEMENT DATE MEMORANDUM

     THIS MEMORANDUM is made and entered into as of January 25, 2007 by and between PC 101, INC., a Delaware corporation, as Landlord, and SXC HEALTH SOLUTIONS, INC., a Texas corporation, as Tenant.

RECITALS:

     A. Landlord and Tenant are parties to a certain Multi-Tenant Lease Agreement dated as of April 12, 2006, as amended by that certain First Amendment to Multi-Tenant Lease Agreement dated as of July 24, 2006 (“Lease”), relating to certain premises (“Premises”) located in the building commonly known as “Opus Pima Center II”, located at the northwest corner of Via de Ventura Boulevard and Loop 101 Pima Freeway in Scottsdale, Arizona (“Building”).

     B. All capitalized terms not otherwise defined in this Memorandum have the meanings given them in the Lease.

     C. Landlord and Tenant desire to confirm certain facts regarding the Lease, including the Commencement Date, the size of the Premises and Building, the monthly Basic Rent installment amounts, and the date the initial Term of the Lease expires and the notice date(s) and expiration date(s) of any extension periods provided to Tenant under the Lease.

ACKNOWLEDGMENTS:

     Pursuant to Section 1.2 of the Lease and in consideration of the facts set forth in the Recitals, Landlord and Tenant acknowledge and agree as follows:

     1. The Commencement Date under the Lease is October 6, 2006.

     2. The Premises contains 9,623 rentable square feet and 9,361 usable square feet.

     3. The Building contains 40,712 rentable square feet.

     4. Monthly installments of Basic Rent:

Months	Basic Rent
1—4	$	0.00
5—64	$	13,592.49

     5. Initial Tenant’s Share of Property Expenses Percentage: 23.64%.

     6. The initial Term of the Lease expires on February 29, 2012, unless the Lease is sooner terminated in accordance with the terms and conditions of the Lease.

     7. Tenant must exercise its right to extend the Term, if at all, by notifying Landlord no later than May 31, 2011, subject to the conditions and limitations set forth in the Lease.

     8. If so extended, the Term will expire on February 28, 2017, unless the Lease is sooner terminated in accordance with the terms and conditions of the Lease.

     Landlord and Tenant have each caused this Memorandum to be executed and delivered by their duly authorized representatives as of the day and date first written above. This Memorandum may be executed in counterparts, each of which is an original and all of which constitute one instrument.

LANDLORD: PC 101, INC., a Delaware corporation
By	/s/ Thomas W. Roberts
	Name:	Thomas W. Roberts
	Title:	President
TENANT: SXC HEALTH SOLUTIONS, INC., a Texas corporation
By	/s/ Jeff Park
	Name:	JEFF PARK
	Title:	CFO

EX-10.4

EXHIBIT 10.4

02/03/06
02/15/06
03/09/06

MULTI-TENANT LEASE AGREEMENT

PC 101, INC., AS LANDLORD,

AND

SXC HEALTH SOLUTIONS, INC., AS TENANT.

OPUS PIMA CENTER II
SALT RIVER PIMA-MARICOPA INDIAN COMMUNITY

TABLE OF CONTENTS

			Page
DEFINITIONS				1
BASIC TERMS				1
ARTICLE 1	LEASE OF PREMISES AND LEASE TERM			3
	1.1	Premises		3
	1.2	Term; Commencement		3
	1.3	Extension of Term		3
	1.4	Quiet Enjoyment		3
	1.5	Common Area		4
ARTICLE 2	RENTAL AND OTHER PAYMENTS			4
	2.1	Basic Rent		4
	2.2	Additional Rent		4
	2.3	Delinquent Rental Payments		4
	2.4	No Accord and Satisfaction		4
	2.5	Rent Tax		4
ARTICLE 3	PROPERTY EXPENSES			4
	3.1	Payment of Property Expenses		4
	3.2	Estimation of Tenant’s Share of Property Expenses		4
	3.3	Payment of Estimated Tenant’s Share of Property Expenses		5
	3.4	Confirmation of Tenant’s Share of Property Expenses		5
	3.5	Tenant’s Inspection and Audit Rights		5
	3.6	Adjustments to Property Expenses		5
	3.7	Personal Property Taxes		5
	3.8	Landlord’s Right to Contest Property Taxes		5
	3.9	Claim or Assessment of State Taxes		6
ARTICLE 4	TENANT’S USE			6
	4.1	Permitted Use		6
	4.2	Acceptance of Premises		6
	4.3	Laws/Property Rules		6
	4.4	Indemnification		6
ARTICLE 5	HAZARDOUS MATERIALS			7
	5.1	Compliance with Hazardous Materials Laws		7
	5.2	Notice of Actions		7
	5.3	Hazardous Materials Indemnification		7
	5.4	Hazardous Materials Representation		7
ARTICLE 6	SERVICES AND UTILITIES			7
ARTICLE 7	MAINTENANCE AND REPAIR			8
	7.1	Landlord’s Obligations		8
	7.2	Tenant’s Obligations		8
		7.2.1      Maintenance of Premises		8
		7.2.2      Notice to Landlord		8
	7.3	Supplemental Equipment		8
ARTICLE 8	ALTERATIONS			8
	8.1	Landlord Approval		8
	8.2	Tenant Responsible for Cost and Insurance		9
	8.3	Construction Obligations; Ownership of Alterations		9
	8.4	Liens		9
	8.5	Indemnification		9
	8.6	Alterations Required by Laws		9
ARTICLE 9	RIGHTS RESERVED BY LANDLORD			9
	9.1	Landlord’s Entry		9
	9.2	Control of Property		9
	9.3	Common Area		10
	9.4	Right to Cure		10
ARTICLE 10	INSURANCE			10
	10.1	Tenant’s insurance		10
		10.1.1     Liability Insurance		10
		10.1.2     Property Insurance		10

i

			Page
		10.1.3     Other Insurance		10
	10.2	Landlord’s Insurance		10
		10.2.1     Property Insurance		10
		10.2.2     Liability Insurance		11
		10.2.3     Other Insurance		11
	10.3	Waivers and Releases of Claims and Subrogation		11
		10.3.1    Tenant’s Waiver and Release		11
		10.3.2    Landlord’s Waiver and Release		11
		10.3.3    Limitation on Waivers of Claims		11
	10.4	Tenant’s Failure to Insure		11
	10.5	No Limitation		11
ARTICLE 11	DAMAGE OR DESTRUCTION			11
	11.1	Tenantable Within 270 Days		11
	11.2	Not Tenantable Within 270 Days		12
	11.3	Property Substantially Damaged		12
	11.4	Insufficient Proceeds		12
	11.5	Landlord’s Repair; Rent Abatement		12
	11.6	Rent Abatement if Lease Terminates		12
	11.7	Exclusive Casualty Remedy		12
	11.8	Notice to Landlord		12
ARTICLE 12	EMINENT DOMAIN			12
	12.1	Termination of Lease		12
	12.2	Landlord’s Repair Obligations		13
	12.3	Tenant’s Participation		13
	12.4	Exclusive Taking Remedy		13
ARTICLE 13	TRANSFERS			13
	13.1	Restriction on Transfers		13
	13.2	Recapture Right		13
	13.3	Costs		13
	13.4	Landlord’s Consent Standards		14
	13.5	Transfers to Affiliates		14
ARTICLE 14	DEFAULTS; REMEDIES			14
	14.1	Events of Default		14
		14.1.1    Failure to Pay Rent		14
		14.1.2    Failure to Perform		14
		14.1.3    Misrepresentation		14
		14.1.4    Insolvency		14
	14.2	Remedies		15
		14.2.1    Termination of Tenant’s Possession/Re-entry and Reletting Right		15
		14.2.2    Termination of Lease		15
		14.2.3    Present Worth of Rent		15
		14.2.4    Other Remedies		15
	14.3	Costs		15
	14.4	Waiver of Re-entry Claims		16
	14.5	Landlord’s Default		16
	14.6	No Waiver		16
ARTICLE 15	CREDITORS; ESTOPPEL CERTIFICATES			16
	15.1	Subordination		16
	15.2	Attornment		16
	15.3	Mortgagee Protection Clause		16
	15.4	Estoppel Certificates		16
		15.4.1    Contents		16
		15.4.2    Failure to Deliver		17
ARTICLE 16	SURRENDER; HOLDING OVER			17
	16.1	Surrender of Premises		17
	16.2	Holding Over		17
ARTICLE 17	TENANT IMPROVEMENTS			17
	17.1	Base Building improvements		17
	17.2	Tenant Improvements		17
	17.3	Improvement Allowance		18
	17.4	Space Plan		18
	17.5	Construction Drawings and Specifications		18
	17.6	Changes to Construction Drawings and Specifications		18
	17.7	Landlord’s Approval Rights		18
	17.8	Tenant’s Representative		19
	17.9	Substantial Completion		19
	17.10	Punch List		19

ii

			Page
	17.11	Construction Warranty		19
	17.12	Tenant Finish Work		19
	17.13	Signs		19
ARTICLE 18	ADDITIONAL PROVISIONS			19
	18.1	Security Deposit		19
	18.2	Parking		19
	18.3	Expanded Development		20
	18.4	Access to Premises Prior to Substantial Completion		20
	18.5	Exterior Building Signage		20
	18.6	Generator		20
	18.7	Building Compliance		20
	18.8	Access to Premises		20
	18.9	Fuel Storage Tanks		20
ARTICLE 19	MISCELLANEOUS PROVISIONS			21
	19.1	Notices		21
	19.2	Transfer of Landlord’s Interest		22
	19.3	Successors		22
	19.4	Captions and Interpretation		22
	19.5	Relationship of Parties		22
	19.6	Entire Agreement; Amendment		22
	19.7	Severability		22
	19.8	Landlord’s Limited Liability		22
	19.9	Survival		22
	19.10	Attorneys’ Fees		22
	19.11	Brokers		22
	19.12	Chance Events		22
	19.13	Governing Law		23
	19.14	Time is of the Essence		23
	19.15	Joint and Several Liability		23
	19.16	Independent Obligations		23
	19.17	Tenant’s Organization Documents; Authority		23
	19.18	Force Majeure		23
	19.19	Management		23
	19.20	Financial Statements		23
	19.21	No Recording		23
	19.22	Nondisclosure of Lease Terms		23
	19.23	Construction of Lease and Terms		23

EXHIBITS

EXHIBIT “A”	Definitions
EXHIBIT “B”	Legal Description of the Land
EXHIBIT “C”	Floor Plan
EXHIBIT “D”	Commencement Date Memorandum
EXHIBIT “E”	Property Rules
EXHIBIT “F”	Base Building Improvements
EXHIBIT “G”	Generator Locations
EXHIBIT “H”	Form of SNDA Agreement

iii

OFFICE LEASE AGREEMENT

     This Multi-Tenant Lease Agreement is made and entered into as of the Effective Date by and between PC 101, INC., a Delaware corporation, as Landlord, and SXC HEALTH SOLUTIONS, INC., a Texas corporation, as Tenant.

DEFINITIONS

     Capitalized terms used in this Lease and not defined elsewhere have the meanings given them on the attached EXHIBIT “A”.

BASIC TERMS

     The following Basic Terms are applied under and governed by the particular section(s) in this Lease pertaining to the following information:

1.	Premises: Approximately 8,000 rentable square feet (7,767 usable square feet) located within the Building as depicted on EXHIBIT “C”. The Building is located at the northwest corner of Via de Ventura Boulevard and Loop 101 Pima Freeway in Scottsdale, Arizona. The Building contains approximately 40,712 rentable square feet.
2.	Lease Term: five years and four months 7.1.06 — 10.31.11
	Extension Periods: one five-year renewal option notice given between 10.31.10 <—> 2.28.11
3.	Delivery Date: July 1, 2006
4.	Basic Rent:

	Annual NNN Basic Rent per
Months	rentable square foot of the Premises		Monthly NNN Basic Rent
1 - 4	$	0.00	$	0.00
5-64	$	16.95	$	11,300.00

5.	Initial Tenant’s Share of
	Property Expenses Percentage:	19.65%
6.	Permitted Use:	General office purposes
7.	Improvement Allowance:	$35 per square foot of the Premises.
8.	Security Deposit:	$11,300.00
9.	Initial Property Manager/
	Rent Payment Address:	Opus West Management Corporation
		2555 East Camelback Road, Suite 840
		Phoenix, Arizona 85016-9267
		Attn: Accounts Receivable
		Opus Pima Center II
		Telephone: (602) 912-8880
		Facsimile: (602) 912-8881
10.	Address of Landlord
	for Notices:	PC 101, Inc.
		c/o Opus West Corporation
		2555 East Camelback Road, Suite 800
		Phoenix, Arizona 85016-9267
		Attn: Vice President — Real Estate Development
		Opus Pima Center II
		Telephone: (602) 468-7000
		Facsimile: (602) 468-7045
	With a copy to:	Opus West Corporation
		2555 East Camelback Road, Suite 800
		Phoenix, Arizona 85016-9267
		Attn: Legal Department
		Telephone: (602) 468-7000
		Facsimile:(602) 468-7045
	With a copy to:	Gallagher & Kennedy, P.A.
		2575 East Camelback Road

		Phoenix, Arizona 85016-9225
		Attn: Mr. Gregory L. Mast
		Telephone: (602) 530-8000
		Facsimile: (602) 530-8500
	With a copy to:	Property Manager at the address set forth above.
11.	Address of Tenant
	for Notices:	SXC Health Solutions, Inc.
		2505 South Finley, Suite 110
		Lombard, Illinois 60148
		Attn: Chief Financial Officer
		Telephone: (630) 559-3600
		Facsimile: (630) 268-0008
	With a copy to:	Holland & Knight, LLC
		131 South Dearborn,
		30th Floor
		Chicago, Illinois 60603-5506
		Attn: Mr. Larry Zanger
		Telephone: (312) 715-5780
		Facsimile: (312) 578-6666
	With a copy to:	Robert Erven Brown, P.A.
		4535 East Hearn Road
		Phoenix, Arizona 85032-5552
		Attn: Robert Erven Brown
		Telephone: (602) 992-6725
		Facsimile: (602) 294-2363
12.	Broker(s):	Landlord: Lee & Associates (Bill Blake)
		Tenant: The Staubach Company (Pat Williams)

2

ARTICLE 1
LEASE OF PREMISES AND LEASE TERM

     1.1 Premises. In consideration of the covenants and agreements set forth in this Lease and other good and valuable consideration, Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord, upon and subject to the terms and conditions set forth in this Lease. The approximate sizes of the Premises and Building are set forth in the Basic Terms. Pending measurement as provided below, those figures will be used for determining Rent. Prior to or upon Substantial Completion, Landlord’s architect will measure the Premises and the Building. The Premises will be measured from the exterior surface walls to the centerline of all walls common to the premises of other tenants in the Building. The Building will be measured from the exterior surface of all exterior walls of the Building. The square footages so determined will be specified in the Commencement Date Memorandum executed as provided in Section 1.2. Landlord and Tenant agree that such measurement by Landlord’s architect will conclusively establish the size of the Premises and the Building for determining Rent and for all other purposes under this Lease.

     1.2 Term; Commencement. The Term of this Lease is the period stated in the Basic Terms. The Term commences on the Commencement Date and expires at 5:00 p.m. on the last day of the last calendar month of the Term. Landlord will tender possession of the Premises to Tenant upon Substantial Completion of the Tenant Improvements pursuant to Article 17. Promptly after the Commencement Date, Landlord and Tenant will execute a “Commencement Date Memorandum” in substantially the form of EXHIBIT “D” to this Lease.

     1.3 Extension of Term. Provided that no Event of Default exists at the time of exercise, Tenant may extend the Term of this Lease for one period of five years. Tenant must exercise such right of extension by delivering written notice of Tenant’s exercise at least 9, but not more than 12, months prior to the expiration of the Term. The extension of the Term will be on the same terms, covenants and conditions as in this Lease, other than Basic Rent. Basic Rent for the extension period will be the fair market rental rate(s) for the extension period, determined in relation to comparable (in quality, location and size) space located in the Building and/or in the greater Scottsdale metropolitan area (“Fair Market Basic Rent”). Landlord will reasonably determine such Fair Market Basic Rent and deliver Landlord’s determination to Tenant at least 8 months prior to the expiration of the Term. In no event will the Fair Market Basic Rent for the extension of the Term be less than the Basic Rent (exclusive of temporary abatements) payable by Tenant for the Lease Year immediately prior to commencement of the extension period. The extension rights are personal to Tenant and may not be assigned or transferred in any manner except in connection with an approved Transfer under Article 13.

          1.3.1 Selection of Fair Market Basic Rent. If Tenant disputes Landlord’s determination of Fair Market Basic Rent for an extension of the Term, Tenant will deliver notice of such dispute, together with Tenant’s proposed Fair Market Basic Rent, to Landlord within five days of Tenant’s receipt of Landlord’s determination. The parties will then attempt in good faith to agree upon the Fair Market Basic Rent. If the parties fail to agree within 15 days, then either party shall be entitled to give notice to the other electing to have the Fair Market Basic Rent selected by an appraiser as provided in this Section 1.3.1. Upon delivery and receipt of such notice, the parties will within seven days thereafter mutually appoint an appraiser who will select (in the manner set forth below) the Fair Market Basic Rent (the “Deciding Appraiser”). The Deciding Appraiser must have at least five years of full-time commercial appraisal experience with projects comparable to the Property and be a member of the American Institute of Real Estate Appraisers or a similar appraisal association. The Deciding Appraiser may not have any material financial or business interest in common with either of the parties. If Landlord and Tenant are not able to agree upon a Deciding Appraiser within such seven days, each party will within five days thereafter separately select an appraiser meeting the criteria set forth above, which two appraisers will, within seven days of their selection, mutually appoint a third appraiser meeting the criteria set forth above to be the Deciding Appraiser. Within seven days of the appointment (by either method) of the Deciding Appraiser, Landlord and Tenant will submit to the Deciding Appraiser their respective determinations of Fair Market Basic Rent and any related information. Within 21 days of such appointment of the Deciding Appraiser, the Deciding Appraiser will review each party’s submittal (and such other information as the Deciding Appraiser deems necessary) and will select, in total and without modification, the submittal presented by either Landlord or Tenant as the Fair Market Basic Rent; provided, however, that in no event will Fair Market Basic Rent [the Basic Rent] for an extension of the Term be less than the Basic Rent (exclusive of temporary abatements) payable by Tenant immediately prior to commencement of the applicable extension period. Subject to the previous sentence, if the Deciding Appraiser timely receives one party’s submittal, but not both, the Deciding Appraiser must designate the submitted proposal as the Fair Market Basic Rent for the applicable extension of the Term. Any determination of Fair Market Basic Rent made by the Deciding Appraiser in violation of the provisions of this Section 1.3.1 shall be beyond the scope of authority of the Deciding Appraiser and shall be null and void. If the determination of Fair Market Basic Rent is made by a Deciding Appraiser, Landlord and Tenant will each pay, directly to the Deciding Appraiser, one-half (1/2) of all fees, costs and expenses of the Deciding Appraiser. Landlord and Tenant will each separately pay all costs, fees and expenses of their respective additional appraiser (if any) used to determine the Deciding Appraiser.

     1.4 Quiet Enjoyment. So long as Tenant pays all Rent as and when due and keeps, observes and fully satisfies all other covenants, obligations and agreements of Tenant under this Lease, Landlord covenants and agrees that, from and after the Commencement Date, Tenant may quietly hold,

3

occupy and enjoy the Premises during the Term, subject to the terms and conditions of this Lease, free from molestation or hindrance by Landlord or any person claiming by, through or under Landlord.

     1.5 Common Area. Tenant will have the non-exclusive right, together with the other occupants and users of the Property, to use the Common Area during the Term. Such right to use the Common Area is subject to all of the terms and conditions of this Lease, including without limitation all Property Rules and other Laws.

ARTICLE 2
RENTAL AND OTHER PAYMENTS

     2.1 Basic Rent. Tenant will pay Basic Rent in monthly installments to Landlord, in advance, beginning on the Commencement Date and thereafter on the first day of each and every calendar month during the Term. Tenant will make all Basic Rent payments to the Rent Payment Address specified in the Basic Terms or at such other place or in such other manner as Landlord may from time to time designate in writing. Tenant will make all Basic Rent payments without offset or deduction and without any previous demand, invoice or notice for payment. Landlord will prorate, on a per diem basis, Basic Rent for any partial month within the Term. An amount equal to one full month of Basic Rent at the initial rate specified in the Basic Terms will be paid to Landlord by Tenant upon execution of this Lease by Tenant, to be applied against the first installment of Basic Rent by Landlord when due.

     2.2 Additional Rent. Article 3 of this Lease requires Tenant to pay Tenant’s Share of Property Expenses as Additional Rent pursuant to estimates Landlord delivers to Tenant. Tenant will make all such payments in accordance with Section 3.3 without offset or deduction and without any previous demand, invoice or notice for payment. Tenant will pay all other Additional Rent described in this Lease within 30 days after receiving Landlord’s invoice for such Additional Rent. Tenant will make all Additional Rent payments to the same location and, except as described in the previous sentence, in the same manner as Basic Rent payments.

     2.3 Delinquent Rental Payments. If Landlord does not receive any payment of Basic Rent or Additional Rent within three days after the date the payment is due, Tenant will pay Landlord a late payment charge equal to five percent of the amount of the delinquent payment. Further, if Landlord does not receive any payment of Basic Rent or Additional Rent within 30 days after the date the payment is due, Tenant will pay Landlord interest on the delinquent payment calculated at the Maximum Rate from the date the payment is due through the date the payment is received by Landlord. The parties agree that such amounts represent a fair and reasonable estimate of the damages Landlord will incur by reason of such late payment. Such charges will be considered Additional Rent and Landlord’s right to such compensation for the delinquency is in addition to all of Landlord’s rights and remedies under this Lease, at law or in equity.

     2.4 No Accord and Satisfaction. No statement on a payment check from Tenant or in a letter accompanying a payment check is binding on Landlord. Landlord may, with or without notice to Tenant, negotiate such check without being bound to the conditions of any such statement. No acceptance by Landlord of full or partial Rent during the continuance of any breach or default by Tenant constitutes a waiver of any such breach or default. If Tenant pays any amount other than the actual amount due Landlord, receipt or collection of such partial payment does not constitute an accord and satisfaction. Landlord may retain any such partial payment, whether restrictively endorsed or otherwise, without prejudice to Landlord’s right to collect the balance properly due. If all or any portion of any payment is dishonored for any reason, payment will not be deemed made until the entire amount due is actually collected by Landlord. The foregoing provisions apply in kind to the receipt or collection of any amount by a lock box agent or other person on Landlord’s behalf.

     2.5 Rent Tax. Tenant will pay to Landlord all Rent Tax (if any) due in connection with this Lease or the payment of Rent hereunder, which Rent Tax will be paid by Tenant to Landlord concurrently with each payment of Rent made by Tenant to Landlord under this Lease.

ARTICLE 3
PROPERTY EXPENSES

     3.1 Payment of Property Expenses. Tenant will pay, as Additional Rent and in the manner this Article 3 describes, Tenant’s Share of Property Expenses for each calendar year of the Term. If the Term includes any partial calendar years, or Tenant is otherwise required under this Lease to pay Tenant’s Share of Property Expenses for only part of a full calendar year, Landlord will appropriately prorate Tenant’s Share of Property Expenses for such partial calendar year on a per diem basis based on the number of days within such partial calendar year.

     3.2 Estimation of Tenant’s Share of Property Expenses. Landlord will deliver to Tenant a written estimate of the following for each calendar year of the Term: (a) Property Expenses, (b) Tenant’s Share of Property Expenses, and (c) the annual and monthly Additional Rent attributable to Tenant’s Share of Property Expenses. Landlord may re-estimate Property Expenses from time to time during the Term. In such event, Landlord will revise the monthly Additional Rent attributable to Tenant’s Share of Property Expenses to an amount sufficient for Tenant to pay the re-estimated amount over the balance of the calendar year. Landlord will notify Tenant at least 30 days prior to the effective date of any such reestimate.

4

     3.3 Payment of Estimated Tenant’s Share of Property Expenses. Tenant will pay the amount Landlord estimates as Tenant’s Share of Property Expenses under Section 3.2 in equal monthly installments, in advance, beginning on the Commencement Date and thereafter on the first day of each and every calendar month during the Term. If Landlord has not delivered a new estimate to Tenant by the first day of January of the applicable calendar year, Tenant will continue paying Tenant’s Share of Property Expenses based on Landlord’s estimates for the previous calendar year. When Tenant receives Landlord’s estimates for the current calendar year, Tenant will pay the estimated amount for such calendar year (less amounts Tenant paid to Landlord in accordance with the immediately preceding sentence) in equal monthly installments over the balance of such calendar year, with the number of installments being equal to the number of full calendar months remaining in such calendar year.

     3.4 Confirmation of Tenant’s Share of Property Expenses. After the end of each calendar year within the Term, Landlord will determine the actual amount of Tenant’s Share of Property Expenses for the expired calendar year and deliver to Tenant a written statement of such amount. If Tenant paid less than the amount of Tenant’s Share of Property Expenses specified in the statement, Tenant will pay the difference to Landlord as Additional Rent. If Tenant paid more than the amount of Tenant’s Share of Property Expenses specified in the statement, Landlord will, at Landlord’s option, either (a) refund the excess amount to Tenant, or (b) credit the excess amount against Tenant’s next due monthly installment or installments of estimated Additional Rent. If Landlord is delayed in delivering such statement to Tenant, such delay does not constitute a waiver of either party’s rights under this Section.

     3.5 Tenant’s Inspection and Audit Rights. If Tenant desires to audit Landlord’s determination of the actual amount of Tenant’s Share of Property Expenses for any calendar year, Tenant must deliver to Landlord written notice of Tenant’s election to audit within 60 days after Landlord’s delivery of the statement of such amount under Section 3.4. If such notice is timely delivered, and provided that no Event of Default then exists under this Lease, Tenant (but not any subtenant or assignee) may, at Tenant’s sole cost and expense, cause a certified public accountant reasonably acceptable to Landlord to audit Landlord’s records relating to such amounts on a non-contingent basis. Such audit will take place during regular business hours at a time and place reasonably acceptable to Landlord (which may be the location where Landlord or Property Manager maintains the applicable records). Tenant’s election to audit (Landlord’s determination of Tenant’s Share of Property Expenses is deemed withdrawn unless Tenant completes and delivers the audit report to Landlord within 90 days after the date Tenant delivers its notice of election to audit to Landlord under this Section. If the audit report shows that the amount Landlord charged Tenant for Tenant’s Share of Property Expenses was greater than the amount this Article 3 obligates Tenant to pay, unless Landlord reasonably contests the audit, Landlord will refund the excess amount to Tenant, together with interest on the excess amount (computed at 10% per annum from the date Tenant delivers its dispute notice to Landlord), within 30 days after Landlord receives a copy of the audit report. If the audit report shows that the amount Landlord charged Tenant for Tenant’s Share of Property Expenses was less than the amount this Article 3 obligates Tenant to pay, Tenant will pay to Landlord, as Additional Rent, the difference between the amount Tenant paid and the amount determined in the audit. Pending resolution of any audit under this Section, Tenant will continue to pay to Landlord all estimated amounts of Tenant’s Share of Property Expenses in accordance with Section 3.3. Tenant must keep all information it obtains in any audit strictly confidential and may only use such information for the limited purpose this Section describes and for Tenant’s own account.

     3.6 Adjustments to Property Expenses. If any portions of the rentable area of the Building are not occupied at any time during any calendar year pursuant to leases under which the terms and rents have commenced for such calendar year. Landlord may reasonably and equitably adjust its computation of Property Expenses for that calendar year to include all components of Property Expenses (if any) that vary based on occupancy in an amount equal to Landlord’s reasonable estimate of the amount Tenant would have paid for such components of Property Expenses had all of the rentable area of the Building been so occupied at all times during such calendar year. If at any time or from time to time any components of Property Expenses relate to (a) services or benefits that are received by Tenant but not all other tenants in the Building; (b) costs that are incurred by Landlord on behalf of Tenant but not all other tenants in the Building; (c) costs that are incurred by Landlord solely, or in disproportionate amounts, as a result of Tenant’s particular use or occupancy of the Premises or Property as compared to other tenants in the Building; or (d) services, benefits or costs that are otherwise received or incurred in differing amounts by, for or as a result of Tenant’s particular use or occupancy of the Premises or Property as compared to other tenants of the Building, then Landlord may, in Landlord’s reasonable discretion, adjust Landlord’s computation of such components of Property Expenses to equitably allocate such components of Property Expenses among Tenant and the other tenants of the Building, as applicable, in amounts Landlord reasonably determines to be proportionate to the amounts of such services, benefits and costs received by or incurred for or as a result of Tenant and each such other tenant.

     3.7 Personal Property Taxes. Tenant will pay, prior to delinquency, all taxes charged against Tenant’s Personal Property. Tenant will use all reasonable efforts to have Tenant’s Personal Property taxed separately from the Property. If any of Tenant’s Personal Property is taxed with the Property. Tenant will pay the taxes attributable to Tenant’s Personal Property to Landlord as Additional Rent.

     3.8 Landlord’s Right to Contest Property Taxes. Landlord may, but is not obligated to, contest the amount or validity, in whole or in part, of any Property Taxes. If Property Taxes are reduced (or if a proposed increase is avoided or reduced) because Property Taxes are contested, Landlord may

5

include in its computation of Property Taxes the costs and expenses incurred in connection with such contest, including without limitation reasonable attorney’s fees, up to the amount of any Property Tax reduction obtained in connection with the contest or any Property Tax increase avoided or reduced in connection with the contest, as the case may be. Tenant may not contest Property Taxes.

     3.9 Claim or Assessment of State Taxes.

          3.9.1 Tenant will forthwith notify the Community of any claim of right by the State of Arizona or any of its political subdivisions or municipalities to or assessment of taxes and will forthwith send to the Community copies of all notices or other documents received by it in connection with any such claim or assessment of taxes.

          3.9.2 Tenant will make no payment of such taxes without approval of the Community and the Master Lessor under the Ground Lease unless such payment is made under protest that there is no right to assess or claim such taxes.

          3.9.3 Tenant will cooperate in any action undertaken by the Community or the Master Lessor under the Ground Lease in regard to any claim or assessment of such taxes and will further cooperate with the Community and the Master Lessor in any litigation resulting from a payment under protest as set out in Section 3.9.2 hereof. Such cooperation, however, shall not require or subject Tenant to any additional cost or expense except those provided for under the Ground Lease, and any such litigation shall be undertaken by and the expenses thereof shall be borne exclusively by the Community and the Master Lessor. In addition, Tenant shall not be obligated to be a party initiating such action or litigation brought by the Community or the Master Lessor without its written consent thereto.

          3.9.4 Nothing contained herein shall require Tenant to take any action that (i) is inconsistent with its rights and obligations under this Lease; (ii) will subject it to any penalty, fine or lien imposed by any taking authority; or (iii) otherwise diminish or jeopardize its leasehold interest as provided for under this Lease.

          3.9.5 For purposes of this Section 3.9, “taxes” shall mean any ad valorem taxes, including leasehold or possessory interest taxes sought to be assessed by or collected by the State of Arizona or any of its political subdivisions or municipalities having or claiming to have authority by virtue of the Arizona State Constitution or laws, against the property interest in the leasehold subject of this Lease or any other property or possessory interest connected with that leasehold.

ARTICLE 4
TENANT’S USE

     4.1 Permitted Use. Tenant will use the Premises only for the permitted use specified in the Basic Terms and may not use the Premises for any other purposes. Tenant will not conduct such permitted use, or allow such permitted use to be conducted, in violation of any Laws or in any manner that would (a) violate any certificate of occupancy affecting the Property; (b) violate, invalidate or cause a loss of coverage under any insurance now or after the Effective Date in force with respect to the Property; (c) cause injury or damage to the Property or to the person or property of any other tenant on the Property; or (d) cause diminution in the value or usefulness of all or any part of the Property (reasonable wear and tear excepted). Tenant will not commit any nuisance or waste in, on or about the Premises or the Property. Tenant will not use the Common Area in any manner that is inconsistent with Tenant’s permitted use of the Premises nor in any manner that unreasonably interferes with the use of the Property by other occupants or users of the Property. Tenant will obtain and maintain, at Tenant’s sole cost and expense, all permits and approvals required under the Laws for Tenant’s use of the Property. Tenant will not vacate or abandon the Premises prior to 60 days before the expiration of the Term without Landlord’s prior written consent. If Tenant’s particular use or occupancy of the Premises or Property (even though within the scope of Tenant’s permitted use) causes or requires Landlord to incur any unusual or extraordinary costs or expenses (including, without limitation, costs for any (i) special governmental permits, (ii) special maintenance, monitoring, inspection or reporting requirements, (iii) additional insurance premiums, surcharges, policies or coverages, or (iv) other matters required solely as a result of Tenant’s particular use or occupancy of the Premises or Property), Landlord may bill Tenant directly therefor and Tenant will pay all such cost and expense so billed to Landlord as Additional Rent.

     4.2 Acceptance of Premises. Except as may be expressly set forth in this Lease, Tenant acknowledges that neither Landlord nor any agent, contractor or employee of Landlord has made any representation or warranty of any kind with respect to the Premises, the Building or the Property, specifically including, but not limited to, any representation or warranty of suitability or fitness of the Premises, Building or the Property for any particular purpose, and Tenant’s acceptance and occupancy of the Premises conclusively establishes Tenant’s acceptance of the Premises, the Building and the Property in an “AS IS — WHERE IS” condition.

     4.3 Laws/Property Rules. This Lease is subject and subordinate to all Laws. A copy of the current Property Rules is attached to this Lease as EXHIBIT “E”. Landlord may revise the Property Rules from time to time in Landlord’s reasonable discretion.

     4.4 Indemnification. Except for the Claims waived by Landlord in Section 10.3.2, Tenant releases and will, to the fullest extent allowable under the Laws, indemnify, protect, defend (with counsel

6

reasonably acceptable to Landlord) and hold harmless the Landlord Parties from and against all Claims arising from (a) any use of the Premises or Property by Tenant that violates the terms of this Lease; (b) any breach or default by Tenant in the performance of any of Tenant’s covenants or agreements in this Lease, (c) any act, omission, negligence or misconduct of Tenant, (d) any accident, injury, occurrence or damage in or to the Premises, and (e) if caused in whole or in part by Tenant, any accident, injury, occurrence or damage in, about or to the Property. The indemnifications described in this Section 4.4 shall include the Landowner Parties as indemnified parties.

ARTICLE 5
HAZARDOUS MATERIALS

     5.1 Compliance with Hazardous Materials Laws. Tenant will not cause any Hazardous Materials to be brought upon, kept or used on the Property in a manner or for any purpose that violates any Hazardous Materials Laws. Tenant, at its sole cost and expense, will comply with all Hazardous Materials Laws related to Tenant’s use of the Property. On or before the expiration or earlier termination of this Lease, Tenant will completely remove from the Property (regardless whether any Hazardous Materials Law requires removal), in compliance with all Hazardous Materials Laws and at Tenant’s sole cost and expense, all Hazardous Materials Tenant causes to be present in, on, under or about the Property. Upon Landlord’s written request, Tenant will promptly deliver to Landlord documentation acceptable to Landlord disclosing the nature and quantity of any Hazardous Materials Tenant has located at the Property and evidencing the legal and proper handling, storage and disposal of all Hazardous Materials kept at or removed or to be removed from the Property by Tenant. All such documentation will list Tenant or its agent as the responsible party and will not attribute responsibility for any such Hazardous Materials to Landlord or Property Manager. Tenant will comply with and is solely responsible for all reporting and warning obligations required under Hazardous Materials Laws arising from Tenant’s use or occupancy of the Premises or Property.

     5.2 Notice of Actions. Tenant will notify Landlord of any of the following actions affecting Landlord, Tenant or the Property that result from or in any way relate to Tenant’s use of the Property, immediately after receiving notice of the same: (a) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened under any Hazardous Materials Law; (b) any Claims made or threatened relating to any Hazardous Material; and (c) any reports, records, letters of inquiry and responses, manifests or other documents made by any person, including Tenant, to or from any environmental agency relating to any Hazardous Material, including any complaints, notices, warnings or asserted violations. Tenant will not take any remedial action in response to the presence of any Hazardous Materials in, on, under or about the Property, nor enter into any settlement agreement, consent decree or other compromise with respect to any Claims relating to or in any way connected with Hazardous Materials in, on, under or about the Property, without first notifying Landlord of Tenants intention to do so and affording Landlord reasonable opportunity to investigate, appear, intervene and otherwise assert and protect Landlord’s interest in the Property. The indemnifications described in this Section 5.2 shall include the Landowner Parties as indemnified parties.

     5.3 Hazardous Materials Indemnification. Tenant releases and will indemnify, protect, defend (with counsel reasonably acceptable to Landlord) and hold harmless the Landlord Parties from and against any and all Claims whatsoever arising or resulting, in whole or in part, directly or indirectly, from the presence, treatment, storage, transportation, disposal, release or management of Hazardous Materials in, on, under, about or from the Property (including water tables and atmosphere), but only to the extent arising from Tenant’s use or occupancy of the Premises or Property. Tenant’s obligations under this Section include, without limitation and whether foreseeable or unforeseeable, (a) the costs of any required or necessary repair, compliance, investigations, clean-up, monitoring, response, detoxification or decontamination of the Property; (b) the costs of implementing any closure, remediation or other required action in connection therewith; (c) the value of any loss of use and any diminution in value of the Property and adjacent and nearby properties, including groundwater; and (d) consultants’ fees, experts’ fees and response costs. The obligations of Tenant under this Article survive the expiration or earlier termination of this Lease.

     5.4 Hazardous Materials Representation. To Landlord’s knowledge, Landlord is not aware of any Hazardous Material which exists or is located on the Property, except as may be disclosed in that certain Environmental Site Assessment prepared by Geotechnical and Environmental Consultants, Inc., dated February 8, 2005.

ARTICLE 6
SERVICES AND UTILITIES

     Tenant is solely responsible for obtaining all services and utilities Tenant desires in connection with Tenant’s use and occupancy of the Premises. Tenant is also solely responsible for paying directly to the applicable service or utility companies, prior to delinquency, all charges of every nature, kind or description for services and utilities furnished to the Premises or chargeable against the Premises (including, without limitation, any deposits required or charges imposed by any utility or service company as a condition precedent to furnishing or continuing to furnish utilities or services to the Premises), including all charges for water, sewer, heat, gas, light, garbage and rubbish removal, electricity, telecommunications, cable, steam, power, or other public or private utilities and services and any charges or fees for present or future water or sewer capacity to serve the Premises. Tenant will also pay all charges relating to any addition, extension, relocation, or other change in the facilities necessary to

7

provide the Premises with any additional utilities and services. No interruption in, or temporary stoppage of, any utility or service to the Premises will be deemed an eviction or disturbance of Tenant’s use and possession of the Premises, nor does any interruption or stoppage relieve Tenant from any obligations under this Lease, render Landlord liable for damages or entitle Tenant to any Rent abatement.

ARTICLE 7
MAINTENANCE AND REPAIR

     7.1 Landlord’s Obligations. Landlord will keep and maintain in good order, condition and repair, reasonable wear and tear excepted, the (a) exterior surfaces of the exterior walls (excluding windows and plate glass) and roof (including the roof membrane) of the Building; (b) structural integrity of the footings, foundation, exterior walls, roof and other structural elements of the Building, and (c) the Common Area. The costs and expenses incurred by Landlord in performing its obligations under this Section 7.1 will be included in Operating Expenses (but only to the extent provided under the definition thereof).

     7.2 Tenant’s Obligations.

          7.2.1 Maintenance of Premises. Except for Landlord’s obligations described in Section 7.1, Tenant, at its sole cost and expense, will keep and maintain the Premises in good, clean, sanitary, neat and fully operative condition and repair, reasonable wear and tear, Casualty and Taking excepted. Tenant’s obligations under this Section 7.2 include, without limitation, maintenance and repair (including replacements) of all: (a) non-structural interior portions, systems and equipment; (b) interior surfaces of exterior walls; (b) interior moldings, partitions and ceilings; (c) slabs, floors and columns; (d) windows, plate glass, and doors; and (e) electrical, lighting, mechanical, plumbing, heating and air conditioning systems, facilities, fixtures and components exclusively serving the Premises. Tenant will also pay or reimburse Landlord for (or, at Landlord’s option, perform) the repair or replacement of any waste or excessive or unreasonable wear and tear to the Premises or Property caused or permitted by Tenant. Any repairs or replacements performed by Tenant pursuant to this Section 7.2 must be at least equal in quality and workmanship to the original work and be in accordance with all Laws. Tenant will at all times and at Tenant’s sole cost and expense keep a preventative maintenance and repair contract in force and effect for the heating, air conditioning and ventilation system serving the Premises. Such contract (including without limitation the schedule and scope of services provided and the identity and capabilities of the contractor) must be approved by Landlord in Landlord’s reasonable discretion.

          7.2.2 Notice to Landlord. If Tenant believes any maintenance or repair Landlord is obligated under Section 7.1 to perform is needed at the Property, Tenant will promptly provide written notice to Landlord specifying in detail the nature and extent of any condition requiring maintenance or repair. Landlord will not be deemed to have failed to perform its obligations under Section 7.1 with respect to any maintenance or repair unless Tenant has provided such written notice and Landlord has had a commercially reasonable time within which to respond to such notice and effect the needed maintenance or repair.

     7.3 Supplemental Equipment. Any Supplemental Equipment will be maintained, repaired and replaced as needed by Tenant at Tenant’s sole cost and expense. Landlord has no liability for the operation, repair, maintenance or replacement of any such Supplemental Equipment or for any other systems, fixtures or equipment placed within the Premises by Tenant that are not a part of the Building’s standard equipment and systems. If Landlord elects at any time to perform any repair or maintenance upon such Supplemental Equipment, Landlord will do so at Tenant’s sole cost and expense.

ARTICLE 8
ALTERATIONS

     8.1 Landlord Approval. Tenant will not make any Major Alterations without Landlord’s prior written consent, which consent Landlord may grant, withhold or condition in Landlord’s sole and absolute discretion. Tenant will not make any other Alterations without Landlord’s prior written consent, which consent Landlord will not unreasonably condition or withhold. Along with any request for Landlord’s consent, Tenant will deliver to Landlord plans and specifications for the Alterations and names and addresses of all prospective contractors for the Alterations, if Landlord fails to grant or withhold its consent for any Alterations within 10 Business Days after receipt of a request for consent from Tenant, then Landlord will be deemed to have consented to any Alterations that were the subject of such request for consent. If Landlord approves the proposed Alterations, Tenant will, before commencing the Alterations or delivering (or accepting delivery of) any materials to be used in connection with the Alterations, deliver to Landlord certificates evidencing the insurance coverages and copies of any bonds required by Section 8.2, copies of all necessary permits and licenses, and such other information relating to the Alterations as Landlord reasonably requests. Tenant will not commence the Alterations before Landlord has, in Landlord’s reasonable discretion, provided Landlord’s written approval of the foregoing deliveries. Tenant, at its sole cost and expense, will remove any Alterations Tenant constructs without obtaining Landlord’s approval as provided in this Article 8 within 10 days after Landlord’s written request and will thereafter fully and promptly repair and restore the Premises and Property to its previous condition. No approval or inspection of Alterations by Landlord constitutes any representation or agreement by Landlord that the Alterations comply with sound architectural or engineering practices or with all applicable Laws, and Tenant is solely responsible for ensuring such compliance.

8

     8.2 Tenant Responsible for Cost and Insurance. Tenant will pay the entire cost and expense of all Alterations, including, without limitation, for any painting, restoring or repairing of the Premises or the Property necessitated by the Alterations and a reasonable charge for Landlord’s review, inspection and engineering time. Tenant will also obtain and/or require: (a) demolition (if applicable) and payment and performance bonds in an amount not less than the full cost of the Alterations; (b) builder’s “all risk” insurance in an amount at least equal to the replacement value of the Alterations; and (c) liability insurance insuring Tenant and each of Tenant’s contractors against construction related risks in at least the form, amounts and coverages required of Tenant under Article 10. The insurance policies described in clauses (b) and (c) of this Section must name Landlord, Landlord’s lender (if any) and Property Manager as additional insureds, specifically including completed operations.

     8.3 Construction Obligations; Ownership of Alterations. Tenant will notify Landlord in writing 30 days prior to commencing any Alterations in order to provide Landlord the opportunity to record and post notices of non-responsibility or such other protective notices available to Landlord under the Laws. Tenant will cause all Alterations to be constructed (a) promptly by contractors approved by Landlord as provided above; (b) in a good and workmanlike manner; (c) in compliance with all Laws; (d) in a manner that will minimize interference with other tenants’ use and enjoyment of the Property; and (e) in full compliance with all of Landlord’s rules and regulations applicable to third party contractors, subcontractors and suppliers performing work at the Property. Landlord may inspect construction of the Alterations. All Alterations (including all telephone, computer, security and other wiring and cabling located within the walls of and outside the Premises, but excluding Tenant’s Personal Property) become the property of Landlord and a part of the Building immediately upon installation. Unless Landlord requires Tenant to remove the Alterations, Tenant will surrender the Alterations to Landlord upon the expiration or earlier termination of this Lease at no cost to Landlord.

     8.4 Liens. Tenant will keep the Property free from any mechanics’, materialmens’, designers’ or other liens arising out of any work performed, materials furnished or obligations incurred by or for Tenant or any person or entity claiming by, through or under Tenant. Immediately after completing the Alterations, Tenant will furnish Landlord with contractor affidavits and full and final lien waivers covering all labor and materials expended and used in connection with the Alterations. If any liens are filed against the Property and Tenant, within 15 days after such filing, does not release the same of record or provide Landlord with a bond or other security satisfactory to Landlord protecting Landlord and the Property against such liens, Landlord may, without waiving its rights and remedies based upon such breach by Tenant and without releasing Tenant from any obligation under this Lease, cause such liens to be released by any means Landlord deems proper, including, but not limited to, paying the claim giving rise to the lien or posting security to cause the discharge of the lien. In such event, Tenant will reimburse Landlord, as Additional Rent, for all amounts Landlord pays (including, without limitation, reasonable attorneys’ fees and costs).

     8.5 Indemnification. To the fullest extent allowable under the Laws, Tenant releases and will indemnify, protect, defend (with counsel reasonably acceptable to Landlord) and hold harmless the Landlord Parties and the Property from and against any Claims in any manner relating to or arising out of any Alterations or any other work performed, materials furnished or obligations incurred by or for Tenant or any person or entity claiming by, through or under Tenant. The indemnifications described in this Section 8.5 shall include the Landowner Parties as indemnified parties.

     8.6 Alterations Required by Laws. If any governmental authority requires any Alteration to the Property or the Premises as a result of Tenant’s particular use of the Premises or as a result of any Alteration to the Premises made by or on behalf of Tenant, Tenant will pay the cost of all such Alterations. If any such Alterations are Major Alterations, Landlord will have the right to make the Major Alterations, provided that Landlord may first require Tenant to deposit with Landlord an amount sufficient to pay the cost of the Major Alterations (including, without limitation, reasonable overhead and administrative costs). If the Alterations are not Major Alterations, Tenant will make the Alterations at Tenant’s sole cost and expense in accordance with the foregoing provisions of this Article 8.

ARTICLE 9
RIGHTS RESERVED BY LANDLORD

     9.1 Landlord’s Entry. Landlord and its authorized representatives may at all reasonable times and upon reasonable notice to Tenant enter the Premises to: (a) inspect the Premises; (b) show the Premises to prospective purchasers, mortgagees and, within the last 12 months of the Term, tenants; (c) post notices of non-responsibility or other protective notices available under the Laws; or (d) exercise and perform Landlord’s rights and obligations under this Lease. Landlord may in the event of any emergency enter the Premises without notice to Tenant. Landlord’s entry into the Premises is not to be construed as a forcible or unlawful entry into, or detainer of, the Premises or as an eviction of Tenant from all or any part of the Premises. Tenant will also permit Landlord to erect, install, use, maintain, replace and repair pipes, cables, conduits, plumbing and vents, and telephone, electric and other wires or other items, in, to and through the Premises if Landlord determines that such activities are necessary or appropriate for properly operating and maintaining the Building.

     9.2 Control of Property. Landlord reserves all rights respecting the Property and Premises not specifically granted to Tenant under this Lease, including without limitation the right to: (a) change the name or street address of the Building; (b) designate and approve all types of signs, window coverings, lighting and other aspects of the Premises that may be visible from the exterior of the Premises; (c) grant

9

any party the exclusive right to conduct any business or render any service in the Property, provided such exclusive right does not prohibit Tenant from any permitted use for which Tenant is then using the Premises; (d) prohibit Tenant from installing vending or dispensing machines of any kind In or about the Premises other than those Tenant reasonably installs in the Premises solely for use by Tenant’s employees; (e) close the Building after Business Hours, except that Tenant will be allowed to access the Premises after Business Hours in accordance with such rules and regulations as Landlord may prescribe from time to time for security purposes; (f) install, operate and maintain security systems that monitor, by closed circuit television or otherwise, all persons entering or leaving the Building; (g) impose reasonable screening procedures, access limitations, or other procedures designed to limit and control access to the Building by unauthorized persons; (h) install and maintain pipes, ducts, conduits, wires and structural elements in the Premises that serve other parts or other tenants of the Property; and (i) retain and receive master keys or pass keys to the Premises and all doors in the Premises. Notwithstanding the foregoing, Landlord is not responsible for the security of persons or property on or about the Property and Landlord is not and will not be liable in any way whatsoever for any criminal activity or any breach of security on or about the Property.

     9.3 Common Area. Landlord may, at Landlord’s sole and exclusive discretion, make changes to the Common Area. Landlord’s rights regarding the Common Area include, but are not limited to, the right to (a) restrain unauthorized persons from using the Common Area; (b) temporarily close any portion of the Common Area; (c) change the shape and size of the Common Area; (d) add, eliminate or change the location of any improvements located in the Common Area and construct buildings or other structures in the Common Area; (e) place permanent or temporary kiosks, displays, carts or stands in the Common Area and license or lease the same to vendors or tenants; and (f) impose and revise Property Rules concerning use of the Common Area, including without limitation any parking facilities comprising a portion of the Common Area. Notwithstanding the foregoing, Landlord will not exercise such rights in a manner that unreasonably interferes with Tenant’s access to and use of the Premises.

     9.4 Right to Cure. If Tenant fails to perform any of Tenant’s obligations under this Lease Landlord may, but is not obligated to, perform any such obligation on Tenant’s part without waiving any rights based upon such failure and without releasing Tenant from any obligations hereunder. Tenant must pay to or reimburse Landlord for, as Additional Rent, all expenditures reasonably made and obligations reasonably incurred by Landlord pursuant to this Section.

ARTICLE 10
INSURANCE

     10.1 Tenant’s Insurance. Tenant will at all times during the Term (and during any earlier entry into the Premises), at Tenant’s sole cost and expense, maintain the insurance this Section 10.1 requires.

          10.1.1 Liability Insurance. Tenant will maintain commercial general liability insurance providing coverage at least as broad as a current ISO form on an “occurrence” basis, with minimum limits of $2,000,000 each occurrence and $5,000,000 general aggregate (which may include umbrella coverages). Tenant’s liability insurance will (a) name the Landlord Parties and the Landowner Parties as additional insureds with respect to all matters arising out of the occupancy or use of the Premises or Property by Tenant; (b) be primary to any other insurance maintained by the Landlord Parties or Landowner Parties; and (c) be placed and maintained with companies rated at least “A/VII” by A.M. Best Insurance Service and otherwise reasonably satisfactory to Landlord. Such insurance may have a reasonable deductible but may not include self-insured retention in excess of $25,000. If Tenant’s liability insurance is provided under a blanket policy, the above coverage limits must be made specifically applicable to the Premises on a “per location” basis. Tenant will deliver an ACORD Form 27 (or equivalent) certificate or other evidence of insurance satisfactory to Landlord (i) prior to any use or occupancy of the Premises by Tenant, (ii) not later than 30 days prior to the expiration of any current policy or certificate, and (iii) at such other times as Landlord may reasonably request.

          10.1.2 Property Insurance. Tenant is not required by this Lease to maintain property or business interruption insurance. Accordingly, Tenant’s Personal Property is located at the Property at Tenant’s sole risk, and Landlord is not liable for any damage to or loss or destruction of such property (except as provided in the last sentence of Section 10.3.1). Tenant is solely responsible for providing such insurance as Tenant may desire to protect Tenant and Tenant’s Personal Property against any Casualty or other event or occurrence in the Premises or at the Property including, without limitation, any interruption of Tenant’s business or loss of revenues or profits arising therefrom.

          10.1.3 Other Insurance. If insurance obligations generally required of tenants in similar space in similar buildings in the area in which the Property is located increase or otherwise change, Landlord may similarly change Tenant’s insurance obligations under this Lease.

     10.2 Landlord’s Insurance. Landlord will at all times during the Term maintain the insurance this Section 10.2 requires.

          10.2.1 Property Insurance. Landlord will maintain insurance on the Property providing coverage comparable to that provided by a standard ISO special causes of loss form property insurance policy in an amount not less than the full replacement cost of the Building (less foundation, grading and excavation costs). Landlord may, at its option, obtain such additional coverages or endorsements as

10

Landlord deems appropriate or necessary, including, without limitation, insurance covering foundation, grading, excavation and debris removal costs; business income and rent loss insurance; boiler and machinery insurance; ordinance or laws coverage; earthquake insurance; flood insurance; and other coverages. Landlord may maintain such insurance in whole or in part under blanket policies. Such insurance will cover the Tenant Improvements after they have been installed in the Building but will not cover or be applicable to any of Tenant’s Personal Property.

          10.2.2 Liability Insurance. Landlord will maintain commercial general liability insurance for bodily injury, personal injury, and property damage occurring at the Property in such amounts as Landlord deems necessary or appropriate. Such liability insurance will protect only Landlord and, at Landlord’s option, Landlord’s lender and some or all of the Landlord Parties, and does not protect Tenant or replace or supplement the liability insurance this Lease obligates Tenant to carry.

          10.2.3 Other Insurance. If insurance coverages generally maintained by landlords of similar space in similar buildings in the area in which the Property is located increase or otherwise change, Landlord may similarly change the insurance coverages Landlord maintains under this Lease.

     10.3 Waivers and Releases of Claims and Subrogation.

          10.3.1 Tenant’s Waiver and Release. To the fullest extent allowable under the Laws, Tenant, on behalf of Tenant and its insurers, waives, releases and discharges the Landlord Parties and the Landowner Parties from all Claims for any Casualty to the Premises, Property or Tenant’s Personal Property, and any resulting loss of use or business interruption, regardless of the cause even if (subject to the last sentence of this Section 10.3.1) such Casualty is caused by the negligent or intentional acts, omissions, or misconduct of any Landlord Party. Tenant will look only to any insurance coverage Tenant may elect to maintain (regardless whether Tenant actually obtains any such coverage or whether such coverage is sufficient) with respect to the Claims Tenant is waiving, releasing and discharging under this Section 10.3.1. Any property insurance Tenant maintains must permit or include a waiver of subrogation in favor of the Landlord Parties consistent with the provisions of this Section 10.3.1. Notwithstanding the foregoing, Tenant may claim against Landlord for any Casualty to Tenant’s Personal Property which is caused by the active negligence or willful misconduct of any Landlord Party, but (a) only to the extent of property damage which is not covered by insurance (or is not fully reimbursed because of an applicable policy deductible or self-insured retention amount), and (b) only up to a maximum of $25,000 for any single occurrence.

          10.3.2 Landlord’s Waiver and Release. To the fullest extent allowable under the Laws, Landlord, on behalf of Landlord and its insurers, waives, releases and discharges the Tenant Parties from all Claims for any Casualty to the Premises, Property or Landlord’s Personal Property, and any resulting loss of use or business interruption, regardless of the cause even if (subject to the last sentence of this Section 10.3.2) such Casualty is caused by the negligent or intentional acts, omissions, or misconduct of Tenant. Landlord will look only to any insurance coverage Landlord may elect to maintain (regardless whether Landlord actually obtains any such coverage or whether such coverage is sufficient) with respect to the Claims Landlord is waiving, releasing and discharging under this Section 10.3.2. Any property insurance Landlord maintains must permit or include a waiver of subrogation in favor of the Tenant Parties consistent with the provisions of this Section 10.3.2. Notwithstanding the foregoing, Landlord may claim against Tenant for any Casualty to the Premises, Property or Landlord’s Personal Property which is caused by the active negligence or willful misconduct of Tenant, but (a) only to the extent of property damage which is not covered by insurance (or is not fully reimbursed because of an applicable policy deductible or self-insured retention amount), and (b) only up to a maximum of $25,000 for any single occurrence.

          10.3.3 Limitation on Waivers of Claims. The provisions of Sections 10.3.1 and 10.3.2 apply only with respect to the Landlord Parties and the Tenant Parties and do not limit or waive, release or discharge any Claims that either Landlord or Tenant may have against any “third-party” person or entity (including without limitation any contractor, service provider, agent, licensee, or invitee which is not a Landlord Party or a Tenant Party) arising from any Casualty to the Premises, Property, Tenant’s Personal Property or Landlord’s Personal Property caused by any such third party.

     10.4 Tenant’s Failure to Insure. If Tenant fails to provide Landlord with evidence of insurance as required under Section 10.1, and if such failure is not cured by Tenant within five days of Landlord’s request therefor, Landlord may, but is not obligated to, obtain such insurance for Landlord’s benefit without waiving or releasing Tenant from any obligation contained in or default under this Lease. Tenant will pay to Landlord, as Additional Rent, all costs and expenses Landlord reasonably incurs in obtaining such insurance.

     10.5 No Limitation. Landlord’s establishment of minimum liability insurance requirements for Tenant in this Lease is not a representation by Landlord that such limits are sufficient and does not limit Tenant’s liability under this Lease in any manner.

ARTICLE 11
DAMAGE OR DESTRUCTION

     11.1 Tenantable Within 270 Days. If any Casualty renders the whole or any material part of the Premises untenantable and Landlord determines (in Landlord’s reasonable discretion) that Landlord

11

can make the whole Premises tenantable within 270 days after the date of the Casualty, then Landlord will notify Tenant of such determination within 60 days after the date of the Casualty. Landlord’s notice will specify the anticipated date the Premises could be made tenantable. If both (a) such anticipated completion date is more than 60 days after the date of Landlord’s notice, and (b) less than 12 months will remain in the Term upon such completion date, then either Landlord or Tenant may elect to terminate this Lease by notifying the other within 15 days after the date of Landlord’s notice, which termination will be effective 60 days after the date of such notice of termination.

     11.2 Not Tenantable Within 270 Days. If any Casualty renders the whole or any material part of the Premises untenantable and Landlord determines (in Landlord’s reasonable discretion) that Landlord cannot make the whole Premises tenantable within 270 days after the date of the Casualty, then Landlord will notify Tenant of such determination within 60 days after the date of the Casualty. Landlord’s notice will specify the anticipated date the Premises could be made tenantable. Landlord may, in such notice, terminate this Lease effective on the date 60 days after the date of Landlord’s notice. If Landlord does not so terminate this Lease, and provided the Casualty was not caused by Tenant, Tenant may terminate this Lease by notifying Landlord within 15 days after the date of Landlord’s notice, which termination will be effective 60 days after the date of Tenant’s notice.

     11.3 Property Substantially Damaged. If the Property is damaged or destroyed by any Casualty (regardless whether the Premises is affected) and the damage reduces the value of the Building by more than 50% (as Landlord reasonably determines value (absent restoration) before and after the Casualty), then notwithstanding anything to the contrary in Sections 11.1 and 11.2, Landlord may, at Landlord’s option, by notifying Tenant within 60 days after the Casualty, terminate this Lease effective on the date 60 days after the date of Landlord’s notice.

     11.4 Insufficient Proceeds. If Landlord does not receive sufficient insurance proceeds (including the amount of any policy deductible) to repair all damage to the Premises or the Property caused by any Casualty, or if Landlord’s lender does not allow Landlord to use sufficient proceeds to repair all such damage, then notwithstanding anything to the contrary in Sections 11.1, 11.2 and 11.3, Landlord may, at Landlord’s option, by notifying Tenant within 60 days after the Casualty, terminate this Lease effective on the date 60 days after the date of Landlord’s notice.

     11.5 Landlord’s Repair; Rent Abatement. If this Lease is not terminated under any of Sections 11.1 through 11.4 following a Casualty, then this Lease will remain in full force and effect and Landlord will repair and restore the Premises and the Property to as near their condition prior to the Casualty as is reasonably possible with all commercially reasonable diligence and speed. Basic Rent and Tenant’s Share of Property Expenses for any period during which the Premises are untenantable as a result of the Casualty will be abated on a per diem basis; provided that if only a portion of the Premises is untenantable, then any such abatement will be pro rata (based upon the rentable area of the untenantable portion of the Premises from time to time as compared with the rentable area of the entire Premises) and Tenant will continue to pay Rent for any portion of the Premises which is tenantable. In no event is Landlord obligated to repair or restore any Alterations that have not been previously disclosed to and approved by Landlord, any Supplemental Equipment, or any of Tenant’s Personal Property. Landlord will, if necessary, equitably adjust Tenant’s Share of Property Expenses Percentage to account for any reduction in the rentable area of the Premises or Building resulting from a Casualty.

     11.6 Rent Abatement If Lease Terminates. If this Lease is terminated under any of Sections 11.1 through 11.4 following any Casualty, then Basic Rent and Tenant’s Share of Property Expenses for any period during which the Premises are untenantable as a result of the Casualty will be abated on a per diem basis; provided that if only a portion of the Premises is untenantable, then any such abatement will be pro rata (based upon the rentable area of the untenantable portion of the Premises from time to time as compared with the rentable area of the entire Premises) and Tenant will continue to pay Rent for any portion of the Premises which is tenantable until this Lease terminates.

     11.7 Exclusive Casualty Remedy. The provisions of this Article 11 are Tenant’s sole and exclusive rights and remedies in the event of a Casualty. To the fullest extent permitted by the Laws, Tenant waives the benefits of any Law that provides Tenant any abatement or termination rights (by virtue of a Casualty) not specifically described in this Article 11.

     11.8 Notice to Landlord. If any Casualty to any portion of the Premises or Property occurs, Tenant will immediately provide written notice of such Casualty to Landlord. None of the obligations of Landlord under this Article 11 will be deemed to have arisen unless and until Landlord has received actual notice that the Casualty has occurred and has had a commercially reasonable time within which to respond to such notice. Tenant is liable to Landlord for any uninsured loss or other Claims Landlord incurs if (a) Tenant fails to timely report any Casualty to the Premises or (to the extent Tenant has actual knowledge thereof) the Property or Landlord’s Personal Property to Landlord, (b) Landlord does not otherwise have actual knowledge of such Casualty, and (c) the failure to timely report such Casualty results in Landlord’s property insurance carrier refusing to cover all or any portion of the loss.

ARTICLE 12
EMINENT DOMAIN

     12.1 Termination of Lease. If a Condemning Authority desires to effect a Taking of all or any material part of the Property, Landlord will notify Tenant and Landlord and Tenant will reasonably

12

determine whether the Taking will render the Premises unsuitable for Tenant’s intended purposes. If Landlord and Tenant conclude that the Taking will render the Premises unsuitable for Tenant’s intended purposes, Landlord and Tenant will document such determination and this Lease will terminate as of the date the Condemning Authority takes possession of the portion of the Property taken. Tenant will pay Rent to the date of termination. If a Condemning Authority takes all or any material part of the Building or if a Taking reduces the value of the Property by 50% or more (as reasonably determined by Landlord), regardless of whether the Premises is affected and regardless whether the Taking will render the Premises unsuitable for Tenant’s intended purposes, then Landlord, at Landlord’s option, by notifying Tenant prior to the date the Condemning Authority takes possession of the portion of the Property taken, may terminate this Lease effective on the date the Condemning Authority takes possession of the portion of the Property taken.

     12.2 Landlord’s Repair Obligations. If this Lease does not terminate with respect to the entire Premises under Section 12.1 and the Taking includes a portion of the Premises, this Lease automatically terminates as to the portion of the Premises taken as of the date the Condemning Authority takes possession of the portion taken and Landlord will, at its sole cost and expense, restore the remaining portion of the Premises to a complete architectural unit with all commercially reasonable diligence and speed and will reduce the Basic Rent for the period after the date the Condemning Authority takes possession of the portion of the Premises taken to a sum equal to the product of the Basic Rent provided for in this Lease multiplied by a fraction, the numerator of which is the rentable area of the Premises after the Taking and after Landlord restores the Premises to a complete architectural unit, and the denominator of which is the rentable area of the Premises prior to the Taking. Landlord will also equitably adjust Tenant’s Share of Property Expenses Percentage for the same period to account for the reduction in the rentable area of the Premises or the Building resulting from the Taking. Tenant’s obligation to pay Basic Rent and Tenant’s Share of Property Expenses will abate on a proportionate basis with respect to that portion of the Premises remaining after the Taking that Tenant is unable to use during Landlord’s restoration for the period of time that Tenant is unable to use such portion of the Premises.

     12.3 Tenant’s Participation. Landlord is entitled to receive and keep all damages, awards or payments resulting from or paid on account of a Taking. Accordingly, Tenant waives and assigns to Landlord any interest of Tenant in any such damages, awards or payments. Tenant may prove in separate Taking proceedings and may receive a separate award for damages to or Taking of Tenant’s Personal Property and for moving expenses; provided however, that Tenant has no right to receive any award for its interest in this Lease or for loss of leasehold.

     12.4 Exclusive Taking Remedy. The provisions of this Article 12 are Tenant’s sole and exclusive rights and remedies in the event of a Taking. To the fullest extent permitted by the Laws, Tenant waives the benefits of any Law that provides Tenant any abatement or termination rights or any right to receive any payment or award (by virtue of a Taking) not specifically described in this Article 12.

ARTICLE 13
TRANSFERS

     13.1 Restriction on Transfers. Except as provided in Section 13.5, Tenant will not cause or allow a Transfer without obtaining Landlord’s prior written consent, which consent will not be unreasonably withheld, provided that Landlord may elect to recapture any portion of the Premises that would be affected by such Transfer as provided in Section 1.1. Tenant’s request for consent to a Transfer must describe in detail the parties, terms, portion of the Premises, and other circumstances involved in the proposed Transfer. Landlord will notify Tenant of Landlord’s election to consent, withhold consent or recapture within 30 days of Landlord’s receipt of such a written request for consent to the Transfer from Tenant. Tenant will provide Landlord with any additional information Landlord reasonably requests regarding the proposed Transfer or the proposed transferee. No Transfer releases Tenant from any liability or obligation under this Lease and Tenant remains liable to Landlord after such a Transfer as a principal and not as a surety. If Landlord consents to any Transfer, Tenant will pay to Landlord, as Additional Rent, 50% of any amount Tenant receives on account of the Transfer (net of Tenant’s reasonable, documented out-of-pocket leasing costs and commissions incurred in connection with the Transfer) in excess of the amounts this Lease otherwise requires Tenant to pay. Any attempted Transfer in violation of this Lease is null and void and constitutes an Event of Default under this Lease.

     13.2 Recapture Right. Instead of giving or withholding consent pursuant to Section 13.1, Landlord may, within the 30 day period provided in Section 13.1, elect by written notice to Tenant to recapture (that is, to terminate this Lease with respect to) the Premises or, if a proposed Transfer affects only a portion of the Premises, that portion of the Premises. If Landlord so exercises Landlord’s recapture right, Tenant may negate such recapture by delivering written notice to Landlord, within five days of Tenant’s receipt of Landlord’s recapture notice, canceling the proposed Transfer and withdrawing Tenant’s request for consent to the Transfer. If Landlord elects to recapture some or all of the Premises as set forth above, and Tenant does not so negate the recapture, then this Lease will terminate with respect thereto (pursuant to the provisions of this Lease, including without limitation Article 16) as of the date the Transfer would otherwise have occurred as if the Term therefor had expired on such date.

     13.3 Costs. Tenant will pay to Landlord, as Additional Rent, all costs and expenses Landlord incurs in connection with any Transfer, including, without limitation, reasonable attorneys’ fees and costs, regardless whether Landlord consents to the Transfer, provided that such costs and expenses will not exceed $2,000 per Transfer.

13

     13.4 Landlord’s Consent Standards. For purposes of Section 13.1 and in addition to any other reasonable grounds for denial, Landlord’s consent to a Transfer will be deemed reasonably withheld if, in Landlord’s good faith judgment, any one or more of the following apply: (a) the proposed transferee does not have the financial strength to perform the Tenant’s obligations under this Lease; (b) the business and operations of the proposed transferee are not of comparable quality to the business and operations being conducted by other tenants in the Building; (c) either the proposed transferee, or any Affiliate of the proposed transferee, occupies or is negotiating with Landlord to lease space in the Building; (d) the proposed transferee does not have a good business reputation; (e) the presence in the Premises of the proposed transferee would, in Landlord’s reasonable judgment, impact the Building or the Property in a negative manner; (f) if the subject space is only a portion of the Premises and the physical subdivision of such portion is, or would render the Premises, not regular in shape with appropriate means of ingress and egress and facilities suitable for normal renting purposes, or is otherwise not readily divisible from the Premises; (g) the Transfer would require Alteration to the Building or the Property to comply with applicable Laws; (h) the transferee is a government (or agency or instrumentality thereof); or (i) an Event of Default exists under this Lease at the time Tenant requests consent to the proposed Transfer.

     13.5 Transfers to Affiliates. Provided that no Event of Default exists under this Lease, Tenant may, without Landlord’s consent, assign or sublet all or a portion of this Lease or the Premises to an Affiliate of Tenant if (a) Tenant notifies Landlord at least 30 days prior to such Transfer; (b) Tenant delivers to Landlord, at the time of Tenant’s notice, current financial statements of Tenant and the proposed transferee that are reasonably acceptable to Landlord; and (c) the transferee assumes and agrees in a writing reasonably acceptable to Landlord to perform Tenant’s obligations under this Lease and to observe all terms and conditions of this Lease. A Transfer to an Affiliate does not release Tenant from any liability or obligation under this Lease. Landlord’s rights to recapture or share in any profit Tenant receives from a Transfer do not apply to any Transfer this Section 13.5 permits.

ARTICLE 14
DEFAULTS; REMEDIES

     14.1 Events of Default. The occurrence of any of the following constitutes an “Event of Default” by Tenant under this Lease. Landlord and Tenant agree that the notices required by this Section 14.1 are intended to satisfy any and all notice requirements imposed by the Laws and are not in addition to any such requirements.

          14.1.1 Failure to Pay Rent. Tenant fails to pay Basic Rent, any monthly installment of Tenant’s Share of Property Expenses or any other Additional Rent amount as and when due and such failure is not cured within five days after Landlord notifies Tenant of Tenant’s failure to pay Rent when due.

          14.1.2 Failure to Perform. Tenant breaches or fails to perform any of Tenant’s nonmonetary obligations under this Lease and such breach or failure is not cured within 15 days after Landlord notifies Tenant of Tenant’s breach or failure; provided that if Tenant is not able through the use of commercially reasonable efforts to cure such breach or failure within a 15 day period, Tenant’s breach or failure is not an Event of Default if Tenant commences to cure such breach or failure within the 15 day period and thereafter diligently pursues the cure and effects the cure within a period of time that does not exceed an additional 60 days after the expiration of the initial 15 day period. Notwithstanding the foregoing, Tenant is not entitled to any cure period before a breach or failure of this Lease becomes an Event of Default if either (a) the same breach or failure has previously occurred at least two times during the prior 12 months, or (b) the breach or failure cannot be cured by Tenant.

          14.1.3 Misrepresentation. The existence of any material misrepresentation or omission in any financial statements, correspondence or other information provided to Landlord by or on behalf of Tenant or any Guarantor in connection with (a) Tenant’s negotiation or execution of this Lease; (b) Landlord’s evaluation of Tenant as a prospective tenant at the Property; (c) any proposed or attempted Transfer; or (d) any consent or approval Tenant requests under this Lease.

          14.1.4 Insolvency. The occurrence of any one or more of the following: (a) Tenant’s filing of a petition under any chapter of the Bankruptcy Code, or under any federal, state or foreign bankruptcy or insolvency statute now existing or hereafter enacted, or Tenant’s making a general assignment or general arrangement for the benefit of creditors; (b) the filing of an involuntary petition under any chapter of the Bankruptcy Code, or under any federal, state or foreign bankruptcy or insolvency statute now existing or hereafter enacted, or the filing of a petition for adjudication of bankruptcy or for reorganization or rearrangement, by or against Tenant and such filing not being dismissed within 60 days; (c) the entry of an order for relief under any chapter of the Bankruptcy Code, or under any federal, state or foreign bankruptcy or insolvency statute now existing or hereafter enacted; (d) the appointment of a “custodian,” as such term is defined in the Bankruptcy Code (or of an equivalent thereto under any federal, state or foreign bankruptcy or insolvency statute now existing or hereafter enacted), for Tenant, or the appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets (or Tenant’s assets located at the Premises) or of Tenant’s interest in this Lease; or (e) the subjection of all or substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease to attachment, execution or other judicial seizure. If a court of competent jurisdiction determines that any act described in this Section 14.1.4 does not constitute an Event of Default, and the court appoints a trustee to take possession of the Premises (or if Tenant remains a debtor in possession

14

of the Premises) and such trustee or Tenant Transfers Tenant’s interest hereunder, then Landlord is entitled to receive the same amount of Additional Rent as Landlord would be entitled to receive if such a Transfer had occurred pursuant to Section 13.1.

     14.2 Remedies. Upon the occurrence of any Event of Default, Landlord may at any time and from time to time, without notice or demand and without preventing Landlord from exercising any other right or remedy, exercise any one or more of the following remedies:

          14.2.1 Termination of Tenant’s Possession/Re-entry and Reletting Right. Terminate Tenant’s right to possess the Premises by any lawful means with or without terminating this Lease, in which event Tenant will immediately surrender possession of the Premises to Landlord. In such event, this Lease continues in full force and effect (except for Tenant’s right to possess the Premises) and Tenant continues to be obligated for and must pay all Rent as and when due under this Lease. Unless Landlord specifically states that it is terminating this Lease, Landlord’s termination of Tenant’s right to possess the Premises is not to be construed as an election by Landlord to terminate this Lease or Tenant’s obligations and liabilities under this Lease. If Landlord terminates Tenant’s right to possess the Premises, Landlord is not obligated to, but may re-enter the Premises and remove all persons and property from the Premises. Landlord may store any property Landlord removes from the Premises in a public warehouse or elsewhere at the cost and for the account of Tenant, and if Tenant fails to pay the storage charges therefor Landlord may deem such property abandoned and cause such property to be sold or otherwise disposed of without further obligation or any accounting to Tenant. Upon such re-entry, Landlord is not obligated to, but may relet all or any part of the Premises to a third party or parties for Tenant’s account. Tenant is immediately liable to Landlord for all Re-entry Costs and must pay Landlord the same within five days after Landlord’s notice to Tenant. Landlord may relet the Premises for a period shorter or longer than the remaining Term. If Landlord relets all or any part of the Premises, Tenant remains obligated to pay all Rent when due under this Lease; provided that Landlord will, on a monthly basis, credit any Net Rent received for the current month against Tenant’s Rent obligation for the next succeeding month. If the Net Rent received for any month exceeds Tenant’s Rent obligation for the succeeding month, Landlord may retain the surplus.

          14.2.2 Termination of Lease. Terminate this Lease effective on the date Landlord specifies in Landlord’s notice to Tenant. Upon termination, Tenant will immediately surrender possession of the Premises to Landlord as provided in Article 16. Such termination will not extinguish any obligations that survive termination as provided elsewhere in this Lease. If Landlord terminates this Lease, Landlord may recover from Tenant and Tenant will pay to Landlord on demand all damages Landlord incurs by reason of Tenant’s default, including, without limitation, (a) all Rent due and payable under this Lease as of the effective date of the termination; (b) any amount necessary to compensate Landlord for any detriment proximately caused Landlord by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course would likely result from Tenant’s failure to perform, including, but not limited to, any Re-entry Costs and the unamortized amounts of any Improvement Allowance and real estate commissions paid in connection with this Lease; (c) an amount equal to the amount by which (i) the present worth, as of the effective date of the termination, of the Basic Rent for the balance of the Term remaining after the effective date of the termination (assuming no termination) exceeds (ii) the present worth, as of the effective date of the termination, of a fair market Rent for the Premises for the same period (as Landlord reasonably determines the fair market Rent); and (d) Tenant’s Share of Property Expenses to the extent Landlord is not otherwise reimbursed for such Property Expenses. For purposes of this Section, Landlord will compute present worth by utilizing a discount rate of 8% per annum. Nothing in this Section limits or prejudices Landlord’s right to prove and obtain damages in an amount equal to the maximum amount allowed by the Laws, regardless whether such damages are greater than the amounts set forth in this Section.

          14.2.3 Present Worth of Rent. Recover from Tenant, and Tenant will pay to Landlord on demand, an amount equal to the sum of (a) all Rent past due (together with interest thereon at the Maximum Rate), plus (b) the then present worth, as of the date of such recovery, of the aggregate of the Rent and any other charges payable by Tenant under this Lease for the then-unexpired portion of the Term. Landlord will employ a discount rate of 8% per annum to compute present worth.

          14.2.4 Other Remedies. Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Property is located. All rights and remedies of Landlord under this Lease are cumulative and the exercise of any one or more remedies at any time or from time to time does not limit or preclude the further exercise by Landlord of the same or any other rights or remedies at any time or from time to time.

     14.3 Costs. Tenant will reimburse and compensate Landlord on demand and as Additional Rent for any actual loss Landlord incurs in connection with, resulting from or related to any breach or default of Tenant under this Lease, regardless of whether the breach or default constitutes an Event of Default, and regardless of whether suit is commenced or judgment is entered. Such loss includes all reasonable legal fees, costs and expenses (including paralegal fees, expert fees, and other professional fees and expenses) Landlord incurs investigating, negotiating, settling or enforcing any of Landlord’s rights or remedies or otherwise protecting Landlord’s interests under this Lease. In addition to the foregoing, Landlord is entitled to reimbursement of all of Landlord’s fees, expenses and damages, including, but not limited to, reasonable attorneys’ fees and paralegal and other professional fees and expenses, Landlord incurs in connection with any bankruptcy or insolvency proceeding involving Tenant including, without limitation, any proceeding under any chapter of the Bankruptcy Code; by exercising and

15

advocating rights under Section 365 of the Bankruptcy Code; by proposing a plan of reorganization and objecting to competing plans; and by filing motions for relief from stay. Such fees and expenses are payable on demand, or, in any event, upon assumption or rejection of this Lease in bankruptcy.

     14.4 Waiver of Re-entry Claims. Tenant waives and releases all Claims Tenant may have resulting from Landlord’s re-entry and taking possession of the Premises pursuant to this Article 14 by any lawful means and removing, storing or disposing of Tenant’s property as permitted under this Lease, regardless of whether this Lease is terminated and, to the fullest extent allowable under the Laws, Tenant releases and will indemnify, protect, defend (with counsel reasonably acceptable to Landlord) and hold harmless the Landlord Parties and Landowner Parties from and against any and all Claims arising therefrom. No such re-entry is to be considered or construed as a forcible entry by Landlord.

     14.5 Landlord’s Default. Landlord will not be in default under this Lease unless Landlord breaches or fails to perform any of Landlord’s obligations under this Lease and the breach or failure continues for a period of 30 days after Tenant notifies Landlord in writing of Landlord’s breach or failure; provided that if Landlord is not able through the use of commercially reasonable efforts to cure the breach or failure within such 30 day period, Landlord’s breach or failure is not a default as long as Landlord commences to cure its breach or failure within the 30 day period and thereafter diligently pursues the cure to completion.

     14.6 No Waiver. No failure by either Landlord or Tenant to insist upon the performance of any provision of this Lease or to exercise any right or remedy upon a breach or default hereof constitutes a waiver of any such breach or default. Any such waiver may be made only by a writing signed by the party providing the waiver. One or more waivers by a party is not to be construed as a waiver by that party of a subsequent breach or default of the same provision.

ARTICLE 15
CREDITORS; ESTOPPEL CERTIFICATES

     15.1 Subordination. This Lease, all rights of Tenant in this Lease, and all interest or estate of Tenant in the Property, is subject and subordinate to any existing or future Mortgage. The automatic subordination to any future Mortgage provided for in this Section is expressly conditioned upon the Mortgage holder’s agreement that as long as no Event of Default occurs under this Lease, the holder of the Mortgage will not disturb Tenant’s rights of possession under this Lease. Tenant will, upon request, execute and deliver to Landlord or to any other person Landlord designates any instruments, releases or other documents reasonably required to confirm the self-effectuating subordination of this Lease as provided in this Section to any Mortgage. The lien of any existing or future Mortgage will not cover Tenant’s Personal Property. Tenant will also execute and deliver to Landlord, concurrently with Tenant’s execution of this Lease and delivery thereof to Landlord, a subordination, non-disturbance and attornment agreement in the form of EXHIBIT “G” attached hereto (“SNDA Agreement”). Landlord will use its commercially reasonable efforts to cause the Mortgage holder to execute the SNDA Agreement. Upon receipt from the Mortgage holder of the executed SNDA Agreement, Landlord shall promptly provide Tenant with a fully executed copy of the SNDA Agreement.

     15.2 Attornment. If any ground lessor, the holder of any Mortgage at a foreclosure sale or any other transferee acquires Landlord’s interest in this Lease, the Premises or the Property, Tenant will attorn to and recognize such transferee or successor as Landlord under this Lease. Tenant waives the protection of any statute or rule of law that gives or purports to give Tenant any right to terminate this Lease or surrender possession of the Premises upon the transfer of Landlord’s interest.

     15.3 Mortgagee Protection Clause. Tenant will give the holder of any Mortgage, by registered mail, a copy of any notice of default Tenant serves on Landlord, provided that Landlord or the holder of the Mortgage previously notified Tenant (by way of notice of assignment of rents and leases or otherwise) of the address of such holder. Tenant further agrees that if Landlord fails to cure such default within the time provided for in this Lease, then Tenant will provide written notice of such failure to such holder and such holder will have an additional 30 days after the later of (a) receipt of such notice, or (b) the expiration of Landlord’s cure period, within which to cure the default. If the default cannot be cured within that additional 30 day period, then the holder will have such additional time as may be necessary to effect the cure if, within the 30 day period, the holder has commenced and is diligently pursuing the cure. If Landlord, Tenant, and the holder of any Mortgage enter into any separate agreement regarding the matters addressed in Sections 15.1, 15.2 and 15.3 of this Lease, then to the extent of any conflict between the provisions of such separate agreement and the provisions of Section 15.1, 15.2 or 15.3 of this Lease, the provisions of such separate agreement shall control.

     15.4 Estoppel Certificates.

          15.4.1 Contents. Upon Landlord’s written request, Tenant will execute, acknowledge and deliver to Landlord a written statement in form satisfactory to Landlord certifying: (a) that this Lease (and all guaranties, if any) is unmodified and in full force and effect (or, if there have been any modifications, that this Lease is in full force and effect, as modified, and stating the modifications); (b) that this Lease has not been canceled or terminated; (c) the last date of payment of Rent and the time period covered by such payment; (d) whether there are then existing any breaches or defaults by Landlord under this Lease known to Tenant, and, if so, specifying the same; (e) specifying any existing claims or defenses in favor of Tenant against the enforcement of this Lease (or of any guaranties); and (f) such

16

other factual statements as Landlord, any lender, prospective lender, investor or purchaser may request. Tenant will deliver the statement to Landlord within 10 Business Days after Landlord’s request. Landlord may give any such statement by Tenant to any lender, prospective lender, investor or purchaser of all or any part of the Property and any such party may conclusively rely upon such statement as true and correct.

          15.4.2 Failure to Deliver. If Tenant does not timely deliver to Landlord the statement referenced in Section 15.4.1, Landlord and any lender, prospective lender, investor or purchaser may conclusively presume and rely that, except as otherwise represented by Landlord, (a) the terms and provisions of this Lease have not been changed; (b) this Lease has not been canceled or terminated; (c) not more than one month’s Rent has been paid in advance; and (d) Landlord is not in default in the performance of any of its obligations under this Lease.^: In such event, Tenant is estopped from later contesting any inaccuracy in such presumptions.

ARTICLE 16
SURRENDER; HOLDING OVER

     16.1 Surrender of Premises. Tenant will surrender the Premises to Landlord at the expiration or earlier termination of this Lease in good order, condition and repair, reasonable wear and tear, Casualty and Taking excepted, and will surrender all keys to the Premises to Property Manager or to Landlord at the place then fixed for Tenant’s payment of Basic Rent or as Landlord or Property Manager otherwise directs. Tenant will at such time remove all of Tenant’s Personal Property from the Property and, if Landlord so requires, all specified Alterations Tenant placed on the Property. Tenant will promptly repair any damage to the Premises or the Property caused by such removal. Tenant will also inform Landlord of all combinations on locks, safes and vaults, if any, that Tenant is allowed to leave at the Property. Tenant releases and will indemnify, protect, defend (with counsel reasonably acceptable to Landlord) and hold harmless Landlord from and against any Claim resulting from Tenant’s failure or delay in surrendering the Premises in accordance with this Section, including, without limitation, any Claim made by any succeeding occupant founded on such delay. All property of Tenant not removed on or before the last day of the Term is deemed abandoned. Landlord may remove all such abandoned property from the Property and cause its transportation and storage in a public warehouse or elsewhere at the cost and for the account of Tenant, and if Tenant fails to pay the storage charges therefor Landlord may cause such property to be sold or otherwise disposed of without further obligation or any accounting to Tenant. Landlord will not be liable for damage, theft, misappropriation or loss of any such property or in any other manner in respect thereto.

     16.2 Holding Over. If Tenant remains in possession of the Premises after the Term expires or is otherwise terminated without executing a new lease but with Landlord’s prior written consent, then unless provided otherwise by Landlord in such written consent (a) Tenant is deemed to be occupying the Premises as a tenant from month-to-month, subject to all provisions, conditions and obligations of this Lease applicable to a month-to-month tenancy, (b) Basic Rent during the holdover period will equal 125% of the greater of the Basic Rent payable by Tenant in the last year of the Term or Landlord’s then current basic rent for the Premises according to Landlord’s rental rate schedule for prospective tenants, (c) Tenant will also pay Tenant’s Share of Property Expenses and all other Additional Rent applicable to such holdover period as described in this Lease, and (d) either Landlord or Tenant may terminate the month-to-month tenancy at any time upon 30 days prior written notice to the other party. If Tenant remains in possession of the Premises after the Term expires or is otherwise terminated without executing a new lease and without Landlord’s prior written consent, then Tenant is deemed to be occupying the Premises without claim of right (but subject to all provisions, conditions and obligations of this Lease) and, in addition to Tenant’s liability for failing to surrender possession of the Premises as provided in Section 16.1 and all other rights and remedies of Landlord related to such holding over, Tenant will pay Landlord a charge for each day of occupancy after the Term in an amount equal to 200% of the Basic Rent payable by Tenant in the last year of the Term (on a daily basis), plus Tenant’s Share of Property Expenses and all other Additional Rent applicable to such holdover period as described in this Lease.

ARTICLE 17
TENANT IMPROVEMENTS

     17.1 Base Building Improvements. Landlord will provide, as a part of the base Building and at no cost to Tenant, the base building improvements described on the attached EXHIBIT “F”.

     17.2 Tenant improvements. Landlord will cause to be constructed, at Tenant’s sole cost and expense (subject to the Improvement Allowance), the Tenant Improvements. The Tenant Improvements will be designed and constructed as described in this Article 17. Contractor will be the general contractor for the Tenant Improvements. Tenant will pay all direct and indirect costs Landlord incurs in connection with the design and construction of the Tenant Improvements. Such costs Landlord incurs may include, without limitation, all costs of space planning, construction document preparation, design, construction drawings, general conditions, labor, materials, and other construction costs, the fees (on an hourly basis) of Contractor’s project manager and site superintendent for the Tenant Improvements, all costs incurred in connection with obtaining permits for the Tenant improvements, and a fee of 12% of the sum of all such direct and indirect costs for Contractor’s overhead and profit. For all purposes of ownership, including risk of loss thereto, the Tenant Improvements will immediately upon installation be and remain a part of the Building and the property of Landlord.

17

     17.3 Improvement Allowance. Landlord will credit an amount, not to exceed the Improvement Allowance, against Tenant’s obligation to pay for the design and construction of the Tenant Improvements. Landlord is not obligated to pay or incur any amounts that exceed the Improvement Allowance. If the cost of the Tenant Improvements exceeds the Improvement Allowance, Tenant will pay the excess to Landlord in cash as Additional Rent. Tenant will also pay, as Additional Rent, all of Landlord’s costs (including lost rent) resulting from Tenant Delay. If Landlord reasonably estimates that the cost of the Tenant improvements will exceed the Improvement Allowance, Landlord may require Tenant to deposit such excess amount with Landlord before construction of the Tenant Improvements begins.

     17.4 Space Plan. On or before March 10, 2006, Tenant will provide Landlord with a space plan for the Tenant Improvements. The space plan must (a) be compatible with the base building (both aesthetically and mechanically, as reasonably determined by Landlord); (b) be adequate, in Landlord’s reasonable discretion, for the preparation of construction drawings and specifications for the Tenant Improvements; (c) show, in reasonable detail, the design and appearance of the finishing materials to be used in connection with installing the Tenant Improvements; (d) contain such other detail or description as Landlord may reasonably deem necessary to adequately outline the scope of the Tenant Improvements; (e) conform to all applicable governing codes and ordinances; and (f) contain all information necessary for construction cost estimating. All space plan drawings must be not less than 1/8” scale. Without limiting those general requirements, the space plan must expressly specify and include (without limitation) all of the following: (1) wall types and heights and insulation, if needed; (2) door types and hardware groups; (3) door frame types; (4) ceiling heights; (5) ceiling materials; (6) floor covering materials and locations; (7) all wall finishes; (8) any appliances, special systems or equipment to be furnished as a part of the construction; (9) any mechanical requirements beyond that provided in the base building; (10) any fire protection requirements beyond that provided in the base building; (11) any plumbing requirements; (12) all power and data locations; (13) any power required other than building standard power distribution; (14) any power requirements for modular furniture; (15) any emergency power requirement; (16) any lighting requirements beyond that provided in the base building; (17) millwork elevations and details; (18) specific floor material selections and designations; and (19) specific wall material selections and designations. Landlord will provide building standard materials, systems and capacities if not otherwise noted. The space plan must also include enlarged sketch layouts for any non-standard rooms, including reflected ceiling plans, and must state the approximate usable and rentable square footage of the Premises. If Tenant fails to provide Landlord with a space plan meeting the foregoing requirements by the date set forth above in this Section, then such delay is a Tenant Delay until such space plan is delivered to Landlord.

     17.5 Construction Drawings and Specifications. After Landlord receives Tenant’s space plan as provided above, Landlord will provide Tenant with construction drawings and specifications for the Tenant Improvements. Tenant will approve or disapprove (specifically describing any reasons for disapproval) the construction drawings and specifications in writing within five Business Days after receiving them. Any failure by Tenant to timely deliver such approval or disapproval is a Tenant Delay until received. If Tenant disapproves the construction drawings and specifications, Landlord will provide appropriately revised construction drawings and specifications to Tenant for approval (or disapproval) within five Business Days on the same basis as set forth above. If the review and approval process is not concluded (with Tenant having approved the construction drawings and specifications) on or before April 10, 2006, then such delay is a Tenant Delay until Tenant’s approval is received. After Tenant’s approval, Landlord will submit the construction drawings and specifications for permits and construction bids. Tenant will not withhold any approval except for reasonable cause and will not act in an arbitrary or capricious manner in connection with the review, revision, approval or disapproval of the construction drawings and specifications. If Tenant specifies any long lead time items that would delay Substantial Completion of the Tenant improvements, Landlord will promptly notify Tenant and Tenant will cooperate with Landlord to select a reasonable substitute.

     17.6 Changes to Construction Drawings and Specifications. Tenant will immediately notify Landlord if Tenant desires to make any changes to the Tenant Improvements after Tenant has approved the construction drawings and specifications. If Landlord approves the revisions, Landlord will notify Tenant of the anticipated additional cost and delay in completing the Tenant Improvements that would be caused by such revisions. Tenant will approve or disapprove the increased cost and delay within five Business Days after such notice. If Tenant approves, Landlord will prepare, and Landlord and Tenant will execute, a change order describing the revisions and the anticipated additional cost and delay. Any delay relating to a request for revisions or a change order is a Tenant Delay. If Landlord reasonably estimates that the change order will cause the cost of the Tenant Improvements to exceed the Improvement Allowance (or if the cost of the Tenant Improvements already exceeds the Improvement Allowance), Landlord may require Tenant to deposit such estimated additional cost with Landlord before the change order work is performed.

     17.7 Landlord’s Approval Rights. Landlord may withhold its approval of any space plan, construction drawings and specifications, change orders, or other work requested by Tenant which Landlord reasonably determines may require work which: (a) exceeds or adversely affects the structural integrity of the Building; (b) adversely affects, or exceeds Tenant’s pro rata capacity of, any part of the heating, ventilating, air conditioning, plumbing, mechanical, electrical, communication or other systems of the Building: (c) will increase the cost of operation or maintenance of any of the systems of the Property; (d) does not conform to applicable building codes or is not approved by any governmental authority with jurisdiction over the Premises; (e) is not a building standard item or an item of equal or higher quality; (f)

18

may detrimentally affect the uniform appearance of the Property; or (g) is reasonably disapproved by Landlord for any other reason.

     17.8 Tenant’s Representative. Tenant designates Joel D. Cesario as the representative of Tenant having authority to approve the construction drawings and specifications, request or approve any change order, give and receive all notices, consents, approvals and directions regarding the Tenant Improvements, and to otherwise act for and bind Tenant in all matters relating to the Tenant Improvements.

     17.9 Substantial Completion. Landlord will use commercially reasonable efforts to achieve Substantial Completion of the Tenant Improvements on or before the Delivery Date. If Landlord is unable to achieve Substantial Completion on or before the Delivery Date for any reason, this Lease remains in full force and effect and Landlord is not liable to Tenant for any resulting loss or damage; provided, however, that Landlord will appropriately adjust the Commencement Date.

     17.10 Punch List. Not later than Substantial Completion, Landlord and Tenant will inspect the Premises and develop a “punch list” of any Tenant Improvement items which were either not properly completed or are in need of repair. Landlord will complete (or repair, as the case may be) the items listed on the punch list with commercially reasonable diligence and speed. If Tenant does not inspect the Premises with Landlord as reasonably requested by Landlord prior to or upon Substantial Completion, Tenant will be deemed to have accepted the Premises as delivered, subject to any punch list items Landlord develops and Tenant’s rights under Section 17.11.

     17.11 Construction Warranty. Landlord warrants the Tenant Improvements against defective workmanship and materials for a period of one year after Substantial Completion. Landlord’s sole obligation under this warranty is to repair or replace, as necessary, any defective item caused by poor workmanship or materials if Tenant delivers specific written notice of the defective item to Landlord within such one-year period. Landlord has no obligation to repair or replace any item after such one-year period expires. THIS EXPRESS WARRANTY IS GIVEN AS THE SOLE AND EXCLUSIVE RIGHT AND REMEDY OF TENANT FOR INCOMPLETE OR DEFECTIVE WORKMANSHIP OR MATERIALS OR OTHER DEFECTS IN THE PREMISES, AND AS ADDITIONAL CONSIDERATION FOR THIS WARRANTY TENANT HEREBY WAIVES AND RELEASES ALL OTHER CLAIMS AND CAUSES OF ACTION AGAINST LANDLORD AND ALL LANDLORD PARTIES BASED ON BREACH OF CONTRACT, TORT, BREACH OF WARRANTY OR OTHER RIGHTS OR CLAIMS, WHETHER EXPRESS OR IMPLIED, THAT MIGHT OTHERWISE BE AVAILABLE UNDER APPLICABLE LAW AS A CONSEQUENCE OF ANY DEFECTS ARISING OUT OF OR RELATING TO THE CONSTRUCTION OF THE BUILDING AND TENANT IMPROVEMENTS. ALL OTHER WARRANTIES ARE EXPRESSLY DISCLAIMED TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS.

     17.12 Tenant Finish Work. All finish work and decoration and other work desired by Tenant and not included within the Tenant Improvements to be performed by Landlord as set forth in the approved construction drawings and specifications (including specifically, without limitation, the design and installation of all computer systems, telephone systems, telecommunications systems, removable fixtures, furnishings, and equipment) will be designed, furnished and installed by Tenant at Tenant’s sole expense and will not be chargeable against the Improvement Allowance. Tenant will perform all such work in the same manner and following the same procedures as are provided in this Lease for Alterations. Landlord is under no obligation to perform, inspect, or supervise any such work, and Landlord shall have no liability or responsibility whatsoever therefor.

     17.13 Signs. Landlord will initially provide to Tenant (a) one building standard tenant identification sign adjacent to the entry door of the Premises and (b) one standard building directory listing; provided, however, that the cost of such signage will be charged against the improvement Allowance. The signs will conform to Landlord’s sign criteria.

ARTICLE 18
ADDITIONAL PROVISIONS

     18.1 Security Deposit. Concurrently with Tenant’s execution of this Lease, Tenant will deposit with Landlord the Security Deposit. If an Event of Default occurs, Landlord may use, apply or retain the whole or any part of the Security Deposit for the payment of any Rent due or any other sum which Landlord expends by reason of Tenant’s default. Tenant is not entitled to any interest on the Security Deposit. It is expressly agreed that the Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in the case of Tenant’s default. Upon application of all or any part of the Security Deposit, Tenant must upon demand restore the Security Deposit to its original amount. No application of the Security Deposit by Landlord will be deemed to have cured Tenant’s default. Tenant waives all provisions of Law, now or hereinafter in force, which restrict the amount or types of claim that a landlord may make upon a security deposit or imposes upon a landlord (or its successors) any obligation with respect to the handling or return of security deposits. The Security Deposit will be released to Tenant within 45 days of the surrender of the Premises to Landlord subject to any deductions made by Landlord pursuant to the terms of this Lease.

     18.2 Parking. During the Term of this Lease, Landlord licenses 13 covered Reserved Spaces and 22 Unreserved Spaces to Tenant. Unless otherwise notified by Landlord, Tenant will pay Landlord’s then-current fee for each such space as Additional Rent at the same time, place and manner as Basic

19

Rent. Landlord may change its parking charges at any time on not less than 30 days prior notice to Tenant, provided that Landlord will not change such parking charges during the initial Term. Initially, Landlord’s parking charges will be $35 per month for each covered Reserved Space and $0.00 per month for each Unreserved Space. Parking at the Property by Tenant is subject to the other provisions of this Lease, including without limitation the Property Rules. In no event will Landlord be liable for any loss, damage or theft of, to or from any vehicle at the Property.

     18.3 Expanded Development. Tenant acknowledges and agrees that the Building may be included within a larger, integrated real estate development including additional buildings and land. Landlord may elect, in Landlord’s sole discretion, to operate such larger or modified development as a unit and compute any Property Expenses under Article 3 accordingly. If Landlord does so, then Tenant’s Share of Property Expenses will be appropriately adjusted to compare the rentable area of the Premises to the total rentable area within such development for which expenses are included under Article 3. Nothing herein will be deemed to require Landlord to develop or construct any such additional buildings or to combine the Building with any other buildings.

     18.4 Access to Premises Prior to Substantial Completion. So long as such entry will not interfere with Landlord’s construction of the Tenant Improvements, Landlord will allow Tenant limited access to the Building 30 days prior to Substantial Completion to begin installing equipment, fixtures, furniture and cabling and/or to properly coordinate such work with the construction of the Tenant Improvements. Any such use of the Building is also subject to, and Tenant must comply with and observe, all applicable laws, all safety rules and procedures, and all other terms and conditions of this Lease. In no event may Tenant conduct business in the Building during such early access period.

     18.5 Exterior Building Signage. Provided Tenant is able to obtain all necessary Community, governmental and quasi-governmental approvals therefor, Tenant may, at Tenant’s expense, install a sign on the exterior of the Building displaying Tenant’s name. Tenant must pay all annual and other permit fees therefor, must pay all costs of maintenance thereof, must keep same in good condition, order and repair at its sole cost and expense, must remove same prior to the expiration or earlier termination of the Term, and must repair and restore any damage to the Building caused by such installation and/or removal. Any such sign and the display of Tenant’s name thereon will be subject to the terms of any restrictive covenants applicable thereto and all Laws, and will be subordinate to all building designation signs (if any). Such sign must conform to the comprehensive sign plan prepared by Landlord and approved by the Community. Tenant may not install such sign until it has obtained Landlord’s prior written approval as to the size, location, design and all other aspects thereof, including the conformance thereof to such comprehensive sign plan. When Tenant requests Landlord’s approval of such sign, Tenant will concurrently submit to Landlord the proposed fabrication drawings thereof which will be sufficiently detailed for Landlord to determine whether the sign complies with such comprehensive sign plan.

     18.6 Generator. Subject to obtaining (i) all necessary Community, governmental and quasi-governmental approvals therefor and (ii) Landlord’s prior written approval of the plans, specifications and manner of installation of same, Tenant shall be permitted to install one backup generator (the “Generator”) to serve the Premises at one of the locations identified on EXHIBIT “G” attached hereto. Tenant shall, at Tenant’s sole cost and expense, maintain and repair the Generator and keep same in good, operable condition and repair. Not less frequently than annually, Tenant will provide to Landlord copies of all current maintenance records and permits relating to the Generator. If Tenant fails to repair or maintain the Generator within five (5) days after written notice thereof from Landlord, then Landlord may, but is not obligated to, make any such maintenance or repair at Tenant’s sole cost and expense. Tenant agrees to reimburse Landlord for all costs incurred by Landlord in connection with the Generator as Additional Rent. Tenant’s installation and maintenance of the Generator must comply with all restrictive covenants applicable thereto and any and all applicable Laws, and must comply with all other provisions of this Lease. Tenant will be entitled to run the Generator to provide backup power during power outages. Any required periodic testing of the Generator will only be performed during hours other than Business Hours. If Landlord so requires, Tenant shall remove the Generator from the Property at the expiration or earlier termination of the Term, and Tenant must repair any and all damage to the Property and/or the Building resulting from such removal. Such removal and the repair of damage caused thereby shall be at Tenant’s sole cost and expense.

     18.7 Building Compliance. Landlord will use commercially reasonable efforts to complete Landlord’s construction of the Building and Premises in compliance with (a) the applicable building code; (b) the Americans with Disabilities Act of 1990 (“ADA”); and (c) other applicable Laws (including without limitation those Laws relating to asbestos, soil and ground water condition), in each case as such matters in (a)—(c) are enforced, interpreted and applied to the Property as of the Effective Date. Such compliance will be conclusively established by the issuance of all governmental permits necessary for the initial occupancy of the Building.

     18.8 Access to Premises. Subject to the terms of this Lease, Tenant and its employees and invitees may access the Premises and the parking areas after Business Hours in accordance with such rules and regulations as Landlord may reasonably prescribe from time to time for security purposes.

     18.9 Fuel Storage Tanks. if required for Tenant’s operation of the generator referenced in Section 18.6 of this Lease, Tenant, at its sole cost and expense, may install, operate, maintain and repair

20

an underground or aboveground fuel storage tank (“Storage Tank”) in a location determined by Landlord in Landlord’s sole and absolute discretion, subject to the following conditions and obligations:

          18.9.1 Installation of the Storage Tank will be deemed an Alteration (as defined in Article 8) to the Premises and will be governed by the applicable provisions of this Lease relating to Alterations. Tenant will submit to Landlord, at least 20 days prior to the proposed installation date, (i) Tenant’s proposed plans and specifications relating to the installation, operation and use of the Storage Tank, and (ii) all other information required pursuant to Article 8 for such Alteration. Tenant may not commence any work to install a Storage Tank until it has received Landlord’s prior written approval of all such deliveries.

          18.9.2 Tenant will comply with Landlord’s reasonable directives and all Community, federal, state, and local Laws, regulations, rules and guidelines relating to the installation, operation, maintenance and repair of the Storage Tank, including, but not limited to (i) obtaining and maintaining, or causing to be obtained and maintained, all applicable permits required for the installation, operation, maintenance and repair of the Storage Tank (ii) implementing a Spill Prevention Control and Countermeasures Plan (as required by Community, federal, state, or local regulations) or best management practices plan (iii) providing evidence of financial responsibility or insurance covering the Storage Tank and (iv) maintaining and inspecting the Storage Tank and related equipment and keeping records related thereto. Upon Landlord’s request, Tenant will promptly provide Landlord with copies of all records relating to the installation, operation, maintenance and repair of the Storage Tank.

          18.9.3 If Community, federal, state or local Laws, rules or regulations require evidence of financial responsibility or insurance, Tenant will provide Landlord with a certificate of insurance naming Landlord as an additional insured under such policy, or other evidence of financial responsibility necessary for compliance.

          18.9.4 Tenant may not use the Storage Tank for any purpose other than the use specifically approved by Landlord and permitted under any applicable permit

          18.9.5 At any time within 30 days prior to and 30 days following the expiration or earlier termination of the Lease, Landlord may, at Tenant’s cost and expense, perform an environmental Investigation to determine whether a release has occurred. Prior to the expiration or earlier termination of the Lease, Tenant will, if Landlord requests, remove the Storage Tank in accordance with all applicable Laws and promptly repair any damage to the Premises or the Property caused by the installation, operation and removal of the Storage Tank, including any environmental remediation, all at Tenant’s sole cost and expense. Tenant must document the removal of a Storage Tank with a report prepared by a qualified consultant approved by Landlord, evidencing either no impact to soil and groundwater or that any impacted soil or groundwater has been remediated in a manner and to a level satisfactory to Landlord in its sole discretion.

          18.9.6 Tenant will immediately report to Landlord any spill or release and any citations or notices of violation and will provide Landlord with copies thereof. Such notification will not relieve Tenant from its obligations to notify governmental agencies. Any cleanup or remediation will be completed by Tenant in accordance with applicable law and in a manner and to a level satisfactory to Landlord in its sole discretion.

          18.9.7 This provision does not modify Tenant’s permitted use of the Premises, and does not relieve Tenant of any environmental liability under this Lease.

          18.9.8 Landlord may make periodic inspections to ensure regulatory compliance and the proper operation, maintenance and repair of the Storage Tank. Any costs incurred by Landlord in making inspections or other costs of compliance will be charged directly to Tenant.

          18.9.9 To the fullest extent allowable under law, Tenant (i) waives all claims it may have against Landlord arising out of or relating to damage to or destruction of the Storage Tank and (ii) will indemnify and defend (with counsel reasonably acceptable to Landlord) Landlord from and against all claims, actions, demands, liabilities, damages, costs, penalties, forfeitures, losses or expenses, including, without limitation, court costs, and reasonable attorneys fees incurred by Landlord in connection with the foregoing or in enforcing Tenant’s obligations under this Section 18.9, arising out of or relating to the Storage Tank, including, without limitation, the installation, operation, repair, maintenance, and removal of the Storage Tank.

ARTICLE 19
MISCELLANEOUS PROVISIONS

     19.1 Notices. All Notices must be in writing and must be sent by personal delivery, by United States registered or certified mail (postage prepaid), or by an independent overnight courier service, addressed to the addresses specified in the Basic Terms or at such other place as either party may designate to the other party by written notice given in accordance with this Section. Notices given by mail are deemed delivered within four Business Days after the party sending the Notice deposits the Notice with the United States Post Office. Notices delivered by courier are deemed delivered on the next Business Day after the day the party delivering the Notice timely deposits the Notice with the courier for overnight (next day) delivery.

21

     19.2 Transfer of Landlord’s Interest. If Landlord Transfers (other than for collateral security purposes) its ownership interest in the Premises, the transferor is automatically relieved of all obligations on the part of Landlord accruing under this Lease from and after the date of the Transfer, but only to the extent that (a) the transferee agrees in writing to assume such obligations, and (b) the transferor delivers or credits to the transferee any funds the transferor holds in which Tenant has an interest (such as a security deposit). Landlord’s covenants and obligations in this Lease bind each successive Landlord only during and with respect to its respective period of ownership. However, notwithstanding any such Transfer, each transferor and its respective “Landlord Parties” remain entitled to the benefits of Tenant’s releases and indemnity and insurance obligations (and similar obligations) under this Lease with respect to matters arising or accruing during such transferor’s period of ownership.

     19.3 Successors. Subject to the express provisions of this Lease, the covenants and agreements contained in this Lease bind and inure to the benefit of Landlord, its successors and assigns, bind Tenant and its successors and assigns and inure to the benefit of Tenant and its permitted successors and assigns.

     19.4 Captions and Interpretation. The captions of the articles and sections of this Lease are to assist the parties in reading this Lease and are not a part of the terms or provisions of this Lease. Whenever required by the context of this Lease, the singular includes the plural and the plural includes the singular.

     19.5 Relationship of Parties. This Lease does not create, between the parties to this Lease, the relationship of principal and agent, or of partnership or joint venture, or any other association or relationship, other than that of landlord and tenant.

     19.6 Entire Agreement; Amendment. The Basic Terms and all exhibits, addenda and schedules attached to this Lease are incorporated into and made a part of this Lease as though fully set forth in this Lease and together with this Lease contain the entire agreement between the parties with respect to the improvement and leasing of the Premises. All prior and contemporaneous negotiations, including, without limitation, any letters of intent or other proposals and any drafts and related correspondence, are merged into and superseded by this Lease. No subsequent alteration, amendment, change or addition to this Lease (other than to the Property Rules) is binding on Landlord or Tenant unless it is in writing and signed by the party against whom its enforcement is sought.

     19.7 Severability. If any covenant, condition, provision, term or agreement of this Lease is, to any extent, held invalid or unenforceable, the remaining portion thereof and all other covenants, conditions, provisions, terms and agreements of this Lease will not be affected by such holding, and will remain valid and in force to the fullest extent permitted by law.

     19.8 Landlord’s Limited Liability. Tenant will look solely to Landlord’s interest in the Property for recovering any judgment or collecting any obligation from Landlord or any other Landlord Party. Tenant agrees that neither Landlord nor any other Landlord Party will be personally liable for any judgment or deficiency decree. In no event is Landlord or any Landlord Party liable to Tenant or any other person for consequential, indirect, special or punitive damages.

     19.9 Survival. All of Tenant’s obligations under this Lease accruing prior to expiration or other termination of this Lease, or which this Lease contemplates are to survive termination, will survive the expiration or other termination of this Lease until fully paid and/or performed by Tenant. Interest on surviving payment obligations will continue to accrue at the rates stated in this Lease until fully paid. Further, all of Tenant’s releases and indemnification, defense and hold harmless obligations under this Lease survive the expiration or other termination of this Lease until any possible Claims to which the same might apply have been absolutely barred by all applicable statutes of limitation.

     19.10 Attorneys’ Fees. If either Landlord or Tenant commences any litigation or judicial action to determine or enforce any of the provisions of this Lease, the prevailing party in any such litigation or judicial action is entitled to recover all of its costs and expenses (including, but not limited to, reasonable attorneys’ fees, costs and expenditures) from the non-prevailing party.

     19.11 Brokers. Landlord and Tenant each represents and warrants to the other that it has not had any dealings with any realtors, brokers, finders or agents in connection with this Lease (except as may be specifically set forth herein) and each releases and agrees to indemnify the other from and against any Claims based on the failure or alleged failure to pay any realtors, brokers, finders or agents (other than any brokers specified herein) and from any cost, expense or liability for any compensation, commission or charges claimed by any realtors, brokers, finders or agents (other than any brokers specified herein) claiming by, through or on behalf of it with respect to this Lease or the negotiation of this Lease. Landlord will pay any brokers named in the Basic Terms in accordance with the applicable listing agreement executed by Landlord for the Property.

     19.12 Chance Events. To the fullest extent allowable under the Laws, but subject to the last sentence of this Section 19.12, Tenant agrees that the Landlord Parties are not liable to Tenant for, and Tenant releases the Landlord Parties from and waives, any and all Claims resulting or arising, directly or indirectly, from (a) any breakage, defect, insufficiency, inadequacy, malfunction, interruption, failure, breakdown or similar problem in the Premises or on the Property; or (b) any occurrence, event, situation, activity, injury, emergency, condition or happening whatsoever at the Property, regardless of the cause

22

(including, without limitation, any (i) act, omission, negligence, fault or misconduct of other tenants or occupants of, or visitors to, the Property; (ii) Force Majeure; or (iii) other cause or reason whatsoever) and regardless whether insured or insurable. Nothing in this Section, however, relieves Landlord from any liability to Tenant (A) for the breach of any obligation of Landlord which is expressly set forth in this Lease; or (B) with respect to any remedy of Tenant which is expressly set forth in this Lease.

     19.13 Governing Law. This Lease is governed by, and must be interpreted under, the internal laws of the state in which the Property is located. Any suit against Landlord or Tenant relating to this Lease must be brought in the county in which the Property is located or, if the suit is brought in federal court, in any federal court appropriate for suits arising in such county; Landlord and Tenant waive the right to bring suit against each other elsewhere. The parties acknowledge and agree that the Premises are located on federal Indian trust lands within the territorial jurisdiction of the Salt River Pima-Maricopa Indian Community and, notwithstanding the foregoing provisions of this Section 19.13, as between Tenant and the Community and/or the Master Lessor, disputes under this Lease shall be governed pursuant to the provisions of the Ground Lease.

     19.14 Time is of the Essence. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.

     19.15 Joint and Several Liability. All parties signing this Lease as Tenant and any Guarantor(s) of this Lease are jointly and severally liable for performing all of Tenant’s obligations under this Lease.

     19.16 Independent Obligations. Except for any right of offset or abatement which may be expressly and specifically set forth in this Lease, Tenant’s covenants and obligations to pay Rent are independent from any of Landlord’s covenants, obligations, warranties or representations in this Lease.

     19.17 Tenant’s Organization Documents; Authority. If Tenant is an entity, Tenant will, within 10 days after Landlord’s written request, deliver to Landlord: (a) Certificate(s) of Good Standing from the state of formation of Tenant and, if different, the State, confirming that Tenant is in good standing under the laws governing formation and qualification to transact business in such state(s); and (b) a copy of Tenant’s organizational documents and any amendments or modifications thereof, certified as true, correct and complete by an appropriate official of Tenant. Tenant and each individual signing this Lease on behalf of Tenant represents and warrants that they are duly authorized to sign on behalf of and to bind Tenant and that this Lease is a duly authorized, binding and enforceable obligation of Tenant.

     19.18 Force Majeure. If either party is delayed in or prevented from performing any obligation under this Lease (excluding, however, the payment of money) by reason of Force Majeure, such party’s performance of such obligation will be excused for a period equal to the period of delay actually caused by the Force Majeure event. In no event will the occurrence of any event of Force Majeure excuse or suspend any of Tenant’s obligations to pay Rent under this Lease after the Commencement Date has occurred.

     19.19 Management. Property Manager is authorized to manage the Property. Landlord appointed Property Manager to act as Landlord’s agent for leasing, managing and operating the Property. The Property Manager then serving is authorized to take actions and give notices and demands under this Lease on Landlord’s behalf.

     19.20 Financial Statements. Tenant will, prior to Tenant’s execution of this Lease and within 10 days after Landlord’s request at any time during the Term, deliver to Landlord complete, accurate and up-to-date financial statements with respect to Tenant and any Guarantor(s) or other parties obligated upon this Lease, which financial statements must be (a) prepared according to generally accepted accounting principles consistently applied, and (b) certified by an independent certified public accountant or by Tenant’s (or Guarantor’s, as the case may be) chief financial officer that the same are a true, complete and correct statement of Tenant’s (or Guarantor’s) financial condition as of the date of such financial statements.

     19.21 No Recording. Tenant will not record this Lease or any memorandum of this Lease.

     19.22 Nondisclosure of Lease Terms. The terms and conditions of this Lease constitute proprietary information of Landlord that Tenant will keep confidential. Tenant’s disclosure of the terms and conditions of this Lease could adversely affect Landlord’s ability to negotiate other leases and impair Landlord’s relationship with other tenants. Accordingly, Tenant will not, directly or indirectly, disclose the terms and conditions of this Lease to any other tenant or prospective tenant of the Property or to any other person or entity other than Tenant’s employees and agents who have a legitimate need to know such information (and who will also keep the same in confidence) unless, and only to the extent, any such disclosure is required by law or appropriate judicial order.

     19.23 Construction of Lease and Terms. The terms and provisions of this Lease are the result of negotiations between Landlord and Tenant, each of which are sophisticated parties and each of which has been represented or been given the opportunity to be represented by legal counsel and/or Other advisors of its own choosing, and neither of which has acted under any duress or compulsion, whether legal, economic or otherwise. Consequently, the terms and provisions of this Lease are to be interpreted and construed in accordance with their usual and customary meanings, and Landlord and

23

Tenant each waive the application of any rule of law that ambiguous or conflicting terms or provisions are to be interpreted or construed against the party who drafted the same. Landlord’s submission of this instrument to Tenant in draft or final form for examination or signature does not constitute any reservation of, or agreement or option to lease, the Premises. When executed by Tenant and delivered to Landlord, this Lease will be construed as an offer from Tenant to lease the Premises on the terms set forth in this Lease. Tenant’s offer to lease may be accepted, and a binding agreement between Tenant and Landlord created, only by Landlord’s execution of this Lease and delivery of the fully-executed Lease to Tenant. Once so delivered by Landlord, this Lease shall be deemed effective as of the Effective Date.

[SIGNATURE PAGE FOLLOWS]

24

     Landlord and Tenant have each caused this Lease to be executed and delivered by their duly authorized representatives.

	LANDLORD:
Effective Date: April 12, 2006 (to be completed by Landlord)	PC 101, INC., a Delaware corporation

By	/s/ JOHN W. GREER
	Name:	JOHN W. GREER
	Title:	VICE PRESIDENT
TENANT: SXC HEALTH SOLUTIONS, INC., a Texas corporation
By	/s/ JEFF PACK
	Name:	JEFF PACK
	Title:	SVP CFO

25

EXHIBIT “A”
DEFINITIONS

“Additional Building” means those buildings owned by Landlord at the time in question or its Affiliate, other than the Building, within the Pima Center development located at the northwest corner of Via de Ventura Boulevard and Loop 101 Pima Freeway in Scottsdale, Arizona.

“Additional Rent” means any charge, fee or expense (other than Basic Rent) payable by Tenant under this Lease, however denoted.

“Affiliate” means, with respect to any person or entity, any other person or entity that, directly or indirectly, controls, is controlled by or is under common control with such person or entity. For purposes of this definition, “control” means possessing the power to direct or cause the direction of the management and policies of the entity by the ownership of a majority of the voting securities of the entity.

“Alteration” means any change, alteration, addition or improvement to the Premises or Property.

“Bankruptcy Code” means the United States Bankruptcy Code as the same now exists and as the same may be amended, including any and all rules and regulations issued pursuant to or in connection with the United States Bankruptcy Code now in force or in effect after the Effective Date.

“Basic Rent” means the basic rent payable by Tenant under this Lease, initially in the amounts specified in the Basic Terms.

“Basic Terms” means the terms of this Lease identified as the “Basic Terms” located before Article 1 of this Lease.

“Building” means that certain office building now existing on the Land.

“Business Days” means any day other than Saturday, Sunday or a legal holiday in the state in which the Property is located.

“Business Hours” means Monday through Friday from 7:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m. to 1:00 p.m., excluding holidays.

“Casualty” means any physical loss, destruction or damage to property which is caused by fire, windstorm, hail, lightning, vandalism, theft, explosion, collision, accident, flood, earthquake, collapse, or any other peril (including, without limitation, malfunctions or failures of equipment, machinery, sprinkling devices, or air conditioning, heating or ventilation apparatus; occurrences or presence of water, snow, frost, steam, gas, sewage, sewer backup, odors, noise, hail or excessive heat or cold; broken or falling plaster, ceiling tiles, fixtures or signs; broken glass; or the bursting or leaking of pipes or plumbing fixtures). “Casualty” does not include (a) any waste or excessive or unreasonable wear and tear, or (b) any loss, destruction or damage arising or resulting from the placement, disposal or release of Hazardous Materials in, on, under, about or from the Property by either Landlord or Tenant.

“Certificate of Occupancy” means a certificate of occupancy, governmental sign-off or other document, permit or approval (whether conditional, unconditional, temporary or permanent) which must be obtained by Landlord from the appropriate governmental or quasi-governmental authority as a condition to the lawful initial occupancy by Tenant of the Premises.

“Claims” means all claims, actions, demands, liabilities, damages, costs, penalties, forfeitures, losses or expenses including, without limitation, reasonable attorneys’ fees and the costs and expenses of enforcing any obligation under this Lease.

“Commencement Date” means the earlier of (a) Substantial Completion of the Tenant Improvements, (b) the date Tenant commences business operations in the Premises, or (c) the date Substantial Completion of the Tenant Improvements would have occurred but for Tenant Delay.

“Common Area” means parking areas, driveways, sidewalks, landscaped areas, shared entry lobbies and corridors, shared restrooms, and such other areas (outside of the Premises) that Landlord may designate from time to time as common areas of the Property.

“Community” means the Salt River Pima-Maricopa Indian Community.

“Condemning Authority” means any person or entity with a statutory or other power of eminent domain.

“Contractor” means Opus West Construction Corporation, a Minnesota corporation.

“Delivery Date” means the target date for Landlord’s delivery of the Premises to Tenant, which initially is the delivery date specified in the Basic Terms.

“Declaration” means that certain Declaration of Easements, Covenants, Conditions and Restrictions executed by the Master Lessor and Pima Freeway Commerce Center, L.L.C., a Delaware limited liability

A-1

company, recorded September 26, 2003 as Instrument No. 20031354273 in the office of the County Recorder of Maricopa County, Arizona, as the same may now or hereafter be amended.

“Effective Date” means the date set forth as such by Landlord when Landlord executes this Lease, as indicated on the signature page.

“Event of Default” means the occurrence of any of the events specified in Section 14.1 of this Lease, or the occurrence of any other event that this Lease expressly labels as an “Event of Default”.

“Floor Plan” means the floor plan attached to this Lease as EXHIBIT “C”.

“Force Majeure” means acts of God; strikes; lockouts; labor troubles; inability to procure materials; acts of war; terrorist actions; inclement weather; governmental laws or regulations; Casualty; orders or directives of any legislative, administrative, or judicial body or any governmental department; inability to obtain any licenses, permissions or authorities (despite commercially reasonable pursuit of such licenses, permissions or authorities); and other similar or dissimilar causes beyond Landlord’s reasonable control.

“Ground Lease” means that certain Substitute Business Lease 8-040-IV dated July 19, 2004 by and between the Master Lessor and MS-PFA 4, LLC, a Delaware limited liability company.

“Guarantor” means any person or entity at any time providing a guaranty of all or any part of Tenant’s obligations under this Lease.

“Hazardous Materials” means any of the following, in any amount: (a) any petroleum or petroleum product, asbestos in any form, urea formaldehyde and polychlorinated biphenyls; (b) any radioactive substance; (c) any toxic, infectious, reactive, corrosive, ignitable or flammable chemical or chemical compound; and (d) any chemicals, materials or substances, whether solid, liquid or gas, defined as or included in the definitions of “hazardous substances,” “hazardous wastes,” “Hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “solid waste,” or words of similar import in any federal, state, Community or local statute, law, ordinance or regulation now existing or existing on or after the Effective Date as the same may be interpreted by government offices and agencies, including, without limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and other chlorinated solvents, (ii) oil or any petroleum products or fractions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi) urea formaldehyde, (vii) radioactive materials and waste, and (viii) infectious waste. It is the intent of the parties hereto to construe the term “Hazardous Materials” in its broadest sense.

“Hazardous Materials Laws” means any federal, state, Community or local laws, ordinances, codes, statutes, regulations, administrative rules, policies and orders, and other authority, existing now or in the future, which classify, regulate, list or define Hazardous Materials.

“Improvement Allowance” means the amount specified in the Basic Terms to be applied to the costs of designing and installing the Tenant Improvements pursuant to the terms of Article 17.

“Land” means that certain real property legally described on the attached EXHIBIT “B”.

“Landlord” means only the ground sublessee of the Property pursuant to the Sublease at the time in question.

“Landlord Parties” means Landlord, Property Manager, their Affiliates, and their respective officers, directors, partners, shareholders, members and employees.

“Landlord’s Personal Property” means any trade fixtures, inventory, equipment, vehicles, or other personal property of any type or kind located at or about the Property which is owned or leased by, or is otherwise under the care, custody or control of, Landlord or its agents, employees, contractors, or invitees.

“Landowner Parties” means Master Lessor, the Community and all of their respective officers, directors, employees, attorneys, agents and their successors and assigns.

“Laws” means any law, regulation, rule, order, statute or ordinance of any governmental or private entity including, without limitation, the Community, in effect on or after the Effective Date and applicable to the Property or the use or occupancy of the Property, including, without limitation, Hazardous Materials Laws, Property Rules and Permitted Encumbrances.

“Lease” means this Multi-Tenant Lease Agreement, as the same may be amended or modified after the Effective Date.

“Major Alterations” means Alterations involving any modifications to (a) the structural, mechanical, electrical, plumbing, fire/life safety or heating, ventilating and air conditioning systems of the Building, or (b) any portion of the Property outside of the interior of the Premises.

“Master Lessor” means certain allotted owners of land within the Community as the same are identified on Exhibit C-3 in the Ground Lease.

A-2

“Maximum Rate” means interest at a rate equal to the lesser of (a) 10% per annum, or (b) the maximum interest rate permitted by law.

“Mortgage” means any mortgage, deed of trust, security interest or other security document of like nature that at any time may encumber all or any part of the Property and any replacements, renewals, amendments, modifications, extensions or refinancings thereof, and each advance (including future advances) made under any such instrument.

“Net Rent” means all Rent Landlord actually receives from any reletting of all or any part of the Premises, after first deducting the Re-entry Costs and any other amounts owed by Tenant to Landlord.

“Notices” means all notices, deliveries, demands or requests that may be or are required to be given, provided, demanded or requested by either party to the other as provided in this Lease, excluding communications by Landlord regarding the Tenant Improvements which are made to the “tenant representative” appointed by Tenant under Article 17.

“Operating Expenses” means, subject to the exclusions listed below, all costs, expenses and charges which Landlord pays or incurs in connection with owning, managing, maintaining, repairing and operating the Property, as reasonably determined by Landlord, including without limitation all related to the following: (a) insurance premiums and deductible amounts under any insurance policy; (b) steam, electricity, water, sewer, gas, telephone, cable and other utility charges; (c) lawn care and landscaping; (d) re-painting, re-striping, seal-coating, cleaning, sweeping, patching and repairing parking areas and other paved surfaces serving the Building; (e) snow removal; (f) maintenance and repair of the Building and Common Areas; (g) janitorial services, window washing, cleaning, rubbish removal and other services provided to the Property; (h) property association fees, dues and assessments and all payments under any Permitted Encumbrance (except Mortgages) affecting the Property; (i) wages, benefits and other related costs and expenses payable to and associated with persons at the level of manager and below whose duties are connected with managing, maintaining, repairing and operating the Property (but only for the portion of such persons’ time allocable to the Property); (j) uniforms, supplies, materials and equipment used in connection with managing, maintaining, repairing and operating the Property; (k) replacements required for the normal maintenance, repair and operation of the Property; (I) reasonable management fees and the costs (including rental) of maintaining a building or management office in the Building; (m) capital improvements installed by Landlord (i) to comply with changes in Laws or the interpretation or enforcement thereof occurring after the Effective Date, or (ii) with a reasonable expectation of reducing energy costs or other Operating Expenses; provided that in computing Operating Expenses Landlord will amortize the cost of such capital improvements (including reasonable charges for interest on the unamortized amount) over the shorter of (A) their useful life (as reasonably determined by Landlord), and (B) five years; (n) costs, expenses and charges incurred by Landlord in connection with public sidewalks, walkways, rights of way or other public facilities, or any easements or other appurtenances to the Property; (o) security and access control equipment and services; and (p) such other costs, expenses and charges as may ordinarily be incurred in connection with managing, maintaining, repairing and operating an office building project similar to the Property.

     Operating Expenses do not include the following: (aa) the cost of capital improvements to the Property, except as provided in clause (m) above; (bb) marketing costs, leasing commissions and tenant expenses Landlord incurs in connection with leasing or procuring tenants or renovating space for new or existing tenants; (cc) legal expenses incident to Landlord’s enforcement of any lease; (dd) interest or principal payments on any Mortgage of Landlord (except as allowed under clause (m) above); (ee) any expense for which Landlord is directly reimbursed by another tenant other than as an Operating Expense; (ff) the cost of any repairs, restoration or other work for which Landlord is directly reimbursed by insurance proceeds or Taking awards; (gg) any amount paid for products or services to an entity that is an Affiliate of Landlord, but only if and to the extent such amount exceeds the fair market value of such services and products; (hh) the costs of any utilities which are separately metered to the Premises or to another tenant’s premises; (ii) any fines or penalties imposed on Landlord for failing to timely perform its obligations under this Lease; (jj) salaries of employees not related to the management, operation, repair or maintenance of the Property; (kk) any ground rent payable under any ground lease now or hereafter affecting the Property; (II) any bad debt loss, rental loss, or reserves for bad debts or rental loss; (mm) costs (other than the cost of routine maintenance and monitoring) of remediation of Hazardous Materials which are in or on the Property as of the Effective Date and which are classified as Hazardous Materials under Laws in effect as of the Effective Date; or (nn) any costs which would allow Landlord a “double recovery” of any other costs for which Landlord is directly reimbursed other than as an Operating Expense.

“Permitted Encumbrances” means all easements, declarations, encumbrances, covenants, conditions, reservations, restrictions and other matters now or after the Effective Date affecting title to the Property, including, without limitation, the Ground Lease, the Pima II Declaration, the Sublease and the Declaration.

“Pima II Declaration” means that certain Declaration of Covenants, Conditions and Restrictions and Grant of Easements for Opus Pima Center Phase II recorded in the office of the County Recorder of Maricopa County, Arizona, as Instrument Number 2051902427, as the same may now or hereafter be amended.

“Premises” means that certain space situated in the Building shown and designated on the Floor Plan and described in the Basic Terms.

A-3

“Property” means, collectively, the Land, Building and all other improvements on the Land.

“Property Expenses” means the total amount of Property Taxes and Operating Expenses due and payable with respect to the Property during any calendar year of the Term, as the same may be adjusted pursuant to Section 3.6 of this Lease.

“Property Manager” means the property manager named in the Basic Terms or any successor property manager Landlord may appoint from time to time to manage the Property.

“Property Rules” means those certain rules attached to this Lease as EXHIBIT “E,” as Landlord may amend the same from time to time.

“Property Taxes” means any general real property tax, improvement tax, assessment, special assessment, reassessment, commercial rental tax, in lieu tax, levy, charge, penalty or similar imposition imposed by any authority having the direct or indirect power to tax, including but not limited to, (a) any city, county, state, federal or Community entity, (b) any school, agricultural, lighting, drainage or other improvement or special assessment district, (c) any governmental agency, or (d) any private entity having the authority to assess the Property under any of the Permitted Encumbrances. The term “Property Taxes” includes all charges or burdens of every kind and nature Landlord incurs in connection with using, occupying, owning, operating, leasing or possessing the Property, without particularizing by any known name and whether any of the foregoing are general, special, ordinary, extraordinary, foreseen or unforeseen; any tax or charge for fire protection, street lighting, streets, sidewalks, road maintenance, refuse, sewer, water or other services provided to the Property. The term “Property Taxes” does not include Landlord’s state or federal income, franchise, estate or inheritance taxes. If Landlord is entitled to pay, and elects to pay, any of the above listed assessments or charges in installments over a period of two or more calendar years, then only such installments of the assessments or charges (including interest thereon) as are actually paid in a calendar year will be included within the term “Property Taxes” for such calendar year.

“Re-entry Costs” means all costs and expenses Landlord incurs re-entering or reletting all or any part of the Premises after an Event of Default, including, without limitation, all costs and expenses Landlord incurs (a) maintaining or preserving the Premises; (b) recovering possession of the Premises, removing persons and property from the Premises and storing such property (including court costs and reasonable attorneys’ fees); (c) renovating or altering the Premises; and/or (d) reletting the Premises (including without limitation real estate commissions, advertising expenses and similar expenses paid or payable in connection with reletting all or any part of the Premises). “Re-entry Costs” also includes the value of free rent and other concessions Landlord gives in connection with re-entering or reletting all or any part of the Premises.

“Rent” means, collectively, Basic Rent and Additional Rent

“Rent Tax” means any tax or excise on rents, all other sums and charges required to be paid by Tenant under this Lease, and gross receipts tax, transaction privilege tax or other tax, however described, which is levied or assessed by the United States of America, the Community, the state in which the Building is located or any city, municipality or political subdivision thereof, against Landlord in respect to the Basic Rent, Additional Rent or other charges payable under this Lease or as a result of Landlord’s receipt of such rents or other charges accruing under this Lease; provided, that “Rent Tax” does not include any federal, state or local income tax or other tax, however denominated, which is applied to or measured by the net income of Landlord.

“Reserved Spaces” means vehicular parking spaces located in the parking facilities provided for the Building which are designated for the exclusive use of a specific tenant, as the same may be relocated or redesignated from time to time by Landlord.

“Security Deposit” means the security deposit to be provided to Landlord in the amount set forth in the Basic Terms.

“Substantial Completion” means either (a) the date a Certificate of Occupancy (or all approvals required for the issuance thereof) is obtained for the Premises, or (b) if a Certificate of Occupancy is not required as a condition to Tenant’s lawful occupancy of the Premises, the date that the Tenant Improvements are substantially completed (subject to punch list items), as confirmed in writing by Landlord’s architect; provided that if either (a) or (b) is delayed or prevented because of work Tenant is responsible for performing in the Premises, “Substantial Completion” means the date that all of Landlord’s work which is necessary for either (a) or (b) to occur has been performed (subject to punch list items) and Landlord has made the Premises available to Tenant for the performance of Tenant’s work.

“Sublease” means that certain Ground Sublease dated July 19, 2004 by and between MS-PFA ___, LLC, a Delaware limited liability company, and Landlord.

“Supplemental Equipment” means any of the following items that, in each case; are (a) installed within the Premises by Tenant or at Tenant’s request, (b) serve only the Premises, and (c) are not included by Landlord in the building standard systems, fixtures and equipment of the Building: (i) any supplemental or specialty electrical, mechanical, plumbing, heating, ventilation or air conditioning systems, fixtures or

A-4

equipment; (ii) any supplemental or specialty fire, life, safety or security systems, fixtures or equipment; or (iii) any video, audio, communications or computer systems, fixtures or equipment (including cabling).

“Taking” means the exercise by a Condemning Authority of its power of eminent domain on all or any part of the Property, either by accepting a deed in lieu of condemnation or by any other manner.

“Tenant” means the tenant identified in this Lease and such tenant’s permitted successors and assigns. In any provision relating to the conduct, acts or omissions of “Tenant,” the term “Tenant” includes the tenant identified in this Lease and such tenant’s agents, employees, contractors, invitees, successors, assigns and others using the Premises or on the Property with Tenant’s express or implied permission.

“Tenant Delay” means any delay caused or contributed to by Tenant, including, without limitation, with respect to the Tenant Improvements, Tenant’s failure to timely prepare or approve a space plan for the Tenant Improvements, Tenant’s failure to timely prepare or approve construction drawings and specifications, and any delay from any revisions Tenant proposes to the approved construction drawings and specifications. A Tenant Delay excuses Landlord’s performance of any obligation related thereto for a period equal to (a) the duration of the act, occurrence or omission that constitutes the Tenant Delay, or (b) if longer, the period of delay actually caused by such Tenant Delay.

“Tenant Improvements” means the initial improvements to the Premises that are designed and installed as provided in Article 17.

“Tenant Parties” means the tenant identified in this Lease, it’s Affiliates, and their respective officers, directors, partners, shareholders, members and employees.

“Tenant’s Personal Property” means any trade fixtures, inventory, equipment, vehicles, or other personal property of any type or kind located at or about the Property which is owned or leased by, or is otherwise under the care, custody or control of, Tenant or its agents, employees, contractors, or invitees.

“Tenant’s Share of Property Expenses” means the product obtained by multiplying the amount of Property Expenses for the period in question by Tenant’s Share of Property Expenses Percentage.

“Tenant’s Share of Property Expenses Percentage” means the percentage computed by (a) dividing the rentable square feet of the Premises by the total rentable square feet of the Building and (b) multiplying the quotient by 100.

“Term” means the initial term of this Lease specified in the Basic Terms and, if applicable, any exercised extension period then in effect.

“Transfer” means an assignment, mortgage, pledge, transfer, sublease, license or other encumbrance or conveyance (voluntarily, by operation of law or otherwise) of this Lease or the Premises or any right, title or interest in or created by this Lease or the Premises. The term “Transfer” also includes any assignment, mortgage, pledge, transfer or other encumbering or disposal (voluntarily, by operation of law or otherwise) of any ownership interest in Tenant or any Guarantor that results or could result in a change of control of Tenant or any Guarantor.

“Unreserved Spaces” mean vehicular parking spaces located in the parking facilities provided for the Building which are not designated for the exclusive use of a specific tenant or for use by visitors to the Property, as the same may be relocated or redesignated from time to time by Landlord.

A-5

EXHIBIT “B”
LEGAL DESCRIPTION OF THE LAND

Parcel 4

A portion of Section 31, Township 3 North, Range 5 East of the Gila and Salt River Meridian, Maricopa County, Arizona, more particularly described as follows:

COMMENCING at a GLO cap at the North Quarter corner of said Section 31; thence S00⁰01’13”E (an assumed bearing), along the East line of the Northwest Quarter of said Section 31, for a distance of 2638.99 feet to a Brass Cap at the Center of said Section 31; thence N89⁰48’40”W, along the South line of the Northwest Quarter of said Section 31, for a distance of 1700.85 feet; thence S00⁰06’49”W for a distance of 786.45 feet; thence WEST for a distance of 231.27 feet to the POINT OF BEGINNING;

Thence SOUTH for a distance of 673.50 feet; thence WEST for a distance of 206.37 feet; thence NORTH for a distance of 673.50 feet; thence EAST for a distance of 206.37 feet to the POINT OF BEGINNING.

A gross and net area containing 3.1908 acres, more or less.

B-1

EXHIBIT “C”
FLOOR PLAN

C-1

EXHIBIT “D”
COMMENCEMENT DATE MEMORANDUM

     THIS MEMORANDUM is made and entered into as of                                         , 200__ by and between PC 101, INC., a Delaware corporation, as Landlord, and SXC HEALTH SOLUTIONS, INC., a Texas corporation, as Tenant.

RECITALS:

     A. Landlord and Tenant are parties to a certain Office Lease Agreement dated as of                                         , 200__ (“Lease”), relating to certain premises (“Premises”) located in the building commonly known as “Opus Pima Center II”, located at the northwest corner of Via de Ventura Boulevard and Loop 101 Pima Freeway in Scottsdale, Arizona (“Building”).

     B. All capitalized terms not otherwise defined in this Memorandum have the meanings given them in the Lease.

     C. Landlord and Tenant desire to confirm certain facts regarding the Lease, including the Commencement Date, the size of the Premises and Building, the monthly Basic Rent installment amounts, and the date the initial Term of the Lease expires and the notice date(s) and expiration date(s) of any extension periods provided to Tenant under the Lease.

ACKNOWLEDGMENTS:

     Pursuant to Section 1.2 of the Lease and in consideration of the facts set forth in the Recitals, Landlord and Tenant acknowledge and agree as follows:

     1. The Commencement Date under the Lease is                                         .

     2. The Premises contains                      rentable square feet and                      usable square feet.

     3. The Building contains                      rentable square feet.

     4. Monthly installments of Basic Rent:

Months	Basic Rent
	$
	$
	$

     5. Initial Tenant’s Share of Property Expenses Percentage:                     %.

     6. The initial Term of the Lease expires on [                                        ], unless the Lease is sooner terminated in accordance with the terms and conditions of the Lease.

     7. Tenant must exercise its right to extend the Term, if at all, by notifying Landlord no later than                                         , subject to the conditions and limitations set forth in the Lease.]

     8. If so extended, the Term will expire on                                         , unless the Lease is sooner terminated in accordance with the terms and conditions of the Lease.

     Landlord and Tenant have each caused this Memorandum to be executed and delivered by their duly authorized representatives as of the day and date first written above. This Memorandum may be executed in counterparts, each of which is an original and all of which constitute one instrument.

LANDLORD: PC 101, INC., a Delaware corporation
By:
	Name:
	Title:
TENANT: SXC HEALTH SOLUTIONS, INC., a Texas corporation
By:
	Name:
	Title:

D-1

EXHIBIT “E”
PROPERTY RULES

     The following Properly Rules apply to and govern Tenant’s use of the Premises and Property. Capitalized terms have the meanings given in the Lease, of which these Property Rules are a part. Tenant is responsible for all Claims arising from any violation of the Property Rules by Tenant.

     1. No awning or other projection may be attached to the outside walls of the Premises or Property. No curtains, blinds, shades or screens visible from the exterior of the Premises may be attached to or hung in, or used in connection with, any window or door of the Premises without the prior written consent of Landlord. Such curtains, blinds, shades, screens or other fixtures must be of a quality, type, design and color, and attached in a manner, approved by Landlord in writing.

     2. No sign, lettering, picture, notice or advertisement which is visible from the exterior of the Premises or Property may be installed on or in the Premises without Landlord’s prior written consent, and then only in such manner, character and style as Landlord may have approved in writing.

     3. Tenant will not obstruct sidewalks, entrances, passages, corridors, vestibules, halls, or stairways in and about the Property that are used in common with other tenants or any other portion of the Common Area. Tenant will not place objects against glass partitions or doors or windows that would be unsightly from any of the corridors of the Property or from the exterior of the Property and will promptly remove any such objects upon notice from Landlord.

     4. Tenant will not create or allow obnoxious or harmful fumes, odors, smoke or other discharges that may be offensive to the other occupants of the Property or neighboring properties, or otherwise create any nuisance.

     5. The Premises shall not be used for cooking (as opposed to heating of food), lodging, sleeping or for any immoral or illegal purpose.

     6. Tenant will not make excessive noises, cause disturbances or vibrations or use or operate any electrical or mechanical devices or other equipment that emit excessive sound or other waves or disturbances or which may be offensive to the other occupants of the Property, or that may unreasonably interfere with the operation of any device, equipment, computer, video, radio, television broadcasting or reception from or within the Property or elsewhere, or otherwise use any apparatus or device in or about the Premises that causes substantial noise, odor or vibration.

     7. Machines and mechanical equipment belonging to Tenant, which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a degree as to be objectionable to Landlord or to any tenants in the Building, shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration.

     8. No dog or other animal or bird is allowed in the Property, except for animals assisting the disabled.

     9. Tenant will not waste electricity, water or air conditioning and will cooperate with Landlord to ensure the most effective operation of the Property’s heating, air conditioning, ventilation and utility systems. Tenant will not use any method of heating or air conditioning (including without limitation fans or space heaters) other than that supplied by Landlord or approved in writing. Tenant will not connect any apparatus or device to electrical current or water except through the electrical and water outlets installed by Landlord in the Premises.

     10. Tenant assumes full responsibility for protecting its space from theft, robbery and pilferage, which includes keeping valuable items locked up and doors locked and other means of entry to the Premises closed and secured after Business Hours and at other times the Premises is not in use.

     11. No additional locks or similar devices shall be attached to any door or window and no keys other than those provided by Landlord shall be made for any door. If more than two keys for one lock are desired by the Tenant, Landlord will provide the same upon payment by the Tenant. Upon termination of this Lease or of Tenant’s possession, Tenant will surrender all keys of the Premises and shall explain to Landlord all combination locks on safes, cabinets and vaults.

     12. Tenant will not bring into the Property inflammables, such as gasoline, kerosene, naphtha and benzine, or explosives or any other article of intrinsically dangerous nature.

     13. Tenant shall not bring any bicycles or other vehicles of any kind into the Building, except for appropriate vehicles necessary for assisting the disabled.

     14. If any carpeting or other flooring is installed by Tenant using an adhesive, such adhesive will be an odorless, releasable adhesive.

     15. If Tenant requires telegraphic, telephonic, security alarm, satellite dishes, antennae or similar services, Tenant shall first obtain Landlord’s written approval, and comply with Landlord’s instructions in their installation.

E-1

     16. The water and wash closets, drinking fountains and other plumbing fixtures will not be used for any purpose other than those for which they were constructed, and no sweepings, rubbish, rags, coffee grounds or other substances shall be thrown therein.

     17. Tenant will not overload any utilities serving the Premises.

     18. All loading, unloading, receiving or delivery of goods, supplies, furniture or other items will be made only through entryways provided for such purposes. Deliveries during normal office hours shall be limited to normal office supplies and other small items. No deliveries shall be made which impede or interfere with other tenants or the operation of the Building. No equipment, materials, furniture, packages, supplies, merchandise or other property will be received in the Building or carried in the passenger elevators except between such hours and in such elevators as may be designated by Landlord.

     19. Tenant’s initial move in and subsequent deliveries of heavy or bulky items such as furniture, safes and similar items shall be made only outside of Business Hours and only in such manner as shall be prescribed in writing by Landlord. Landlord will in all cases have the right to specify the proper position of any safe, equipment or other heavy article, which shall only be used by Tenant in a manner which will not interfere with or cause damage to the Premise or the Property, or to the other tenants or occupants of the Property. Tenant will not overload the floors or structure of the Building.

     20. Tenant will be responsible for all Claims arising from any injuries sustained by any person whomsoever resulting from the delivery or moving of any articles by or for Tenant.

     21. Canvassing, soliciting, and peddling in or about the Property is prohibited and Tenant will cooperate to prevent the same.

     22. Persons may enter the Building only in accordance with such regulations as Landlord may from time to time establish. Persons entering or departing from the Building may be questioned as to their business in the Building, and Landlord may require the use of an identification card or other access device or procedures, and/or the registration of persons as to the hour of entry and departure, nature of visit, and other information deemed necessary for the protection of the Building. All entries into and departures from the Building shall be through one or more entrances as Landlord shall from time to time designate. Landlord may elect not to enforce some or all of the foregoing during Business Hours or other times, but reserves the right to do so at Landlord’s discretion. Landlord may also, at its discretion, utilize other procedures (including without limitation screening devices, physical inspections, and/or other means) reasonably designed to prevent weapons or dangerous items from being brought into the Building. Tenant will cooperate with all such procedures.

     23. In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to limit or prevent access to the Property during the continuance of the same by closing the doors or taking other appropriate steps. Landlord will in no case be liable for damages for any error or other action taken with regard to the admission to or exclusion from the Property of any person at any time.

     24. Smoking is not permitted anywhere upon the Property, except in such areas (if any) located outside of the Building as may be expressly designated as permitted smoking areas in writing from time to time by Landlord in its sole and absolute discretion. Tenant will not allow any smoking anywhere within the Building. All smoking materials must be disposed of in ashtrays or other appropriate receptacles provided for that purpose.

     25. The Building directory will be provided exclusively for the display of the name and location of tenants only and Landlord reserves the right to exclude any other names therefrom and to limit the amount of space thereon dedicated to Tenant.

     26. Unless otherwise approved by Landlord in writing, all janitorial services for the Property and the Premises will be provided exclusively through Landlord, and except with the written consent of Landlord, no person or persons other than those approved by Landlord will be employed by Tenant or permitted to enter the Property for the purpose of performing janitorial services. Tenant shall not cause any unnecessary labor by carelessness or indifference to the good order and cleanliness of the Property.

     27. Landlord reserves the right to exclude or expel from the Property any person who, in Landlord’s judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the Property Rules or any Laws.

     28. Tenant will store all its trash and garbage in proper receptacles within its Premises or in other facilities provided for such purpose by Landlord. Tenant will not place in any trash box or receptacle any Hazardous Materials or any other items or materials that cannot be safely and properly disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal will be made in accordance with directions issued from time to time by Landlord. Tenant will cooperate with any recycling program at the Property.

     29. Tenant will not use in the Premises or Common Area of the Property any hand truck except those equipped with rubber tires and side guards or such other material-handling equipment as Landlord may approve.

E-2

     30. Tenant will not use the name of the Building or the Property in connection with or in promoting or advertising the business of Tenant except as Tenant’s address.

     31. Tenant will comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

     32. Tenant’s service or other requests regarding the operation of the Property will be made by appropriate application to Landlord’s property management office for the Property by an authorized individual.

     33. Tenant will not park or permit parking in any areas designated by Landlord for parking by visitors to the Property or for the exclusive use of other tenants or occupants of the Property. Only passenger vehicles may be parked in the parking areas.

     34. Parking stickers or any other device or form of identification supplied as a condition of use of the parking facilities will remain the property of Landlord. Such parking identification device must be displayed as requested and may not be mutilated or obstructed in any manner. Such devices are not transferable and any device in the possession of an unauthorized holder will be void. Landlord may charge a fee for parking stickers, cards or other parking control devices supplied by Landlord.

     35. No overnight or extended term parking or storage of vehicles is permitted.

     36. Parking is prohibited (a) in areas not striped for parking; (b) in aisles; (c) where “no parking” signs are posted; (d) on ramps; (e) in cross-hatched areas; (f) in loading areas; and (g) in such other areas as may be designated by Landlord.

     37. All responsibility for damage, loss or theft to vehicles and the contents thereof is assumed by the person parking their vehicle.

     38. Tenant and/or each user of the parking area may be required to sign a parking agreement, as a condition to parking, which agreement may provide for the manner of payment of any parking charges and other matters not inconsistent with this Lease and these Property Rules.

     39. Landlord reserves the right to refuse parking identification devices and parking rights to Tenant or any other person who fails to comply with the Property Rules applicable to the parking areas. Any violation of such rule will subject the vehicle to removal, at such person’s expense.

     40. A third party may own, operate or control the parking areas, and such party may enforce these Property Rules relating to parking. Tenant will obey any additional rules and regulations governing parking that may be imposed by the parking operator or any other person controlling the parking areas serving the Property.

     41. Tenant will be responsible for the observance of all of the Property Rules by Tenant (including, without limitation, all employees, agents, clients, customers, invitees and guests).

     42. Landlord may, from time to time, waive any one or more of these Property Rules for the benefit of Tenant or any other tenant, but no such waiver by Landlord shall be construed as a continuing waiver of such Property Rule(s) in favor of Tenant or any other tenant, nor prevent Landlord from thereafter enforcing any such Property Rule(s) against Tenant or any or all of the tenants of the Property.

     43. These Property Rules are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the other terms, covenants, agreements and conditions of the Lease. To the extent there is any conflict between a Property Rule and any express term or provision otherwise set forth in the Lease, such other express term or provision will be controlling.

E-3

EXHIBIT “F”
BASE BUILDING IMPROVEMENTS

NOT APPLICABLE

F-1

EXHIBIT “G”
GENERATOR LOCATIONS

G-1

EX-10.5

EXHIBIT 10.5

FIRST AMENDMENT TO MULTI-TENANT LEASE AGREEMENT

     THIS FIRST AMENDMENT TO MULTI-TENANT LEASE AGREEMENT (this “First Amendment”) is made and entered into as of the 24 day of July, 2006, by and between PC 101, INC., a Delaware corporation, as “Landlord”, and SXC HEALTH SOLUTIONS, INC., a Texas corporation, as “Tenant”.

WITNESSETH:

     WHEREAS, Landlord and Tenant entered into that certain Multi-Tenant Lease Agreement dated as of April 12, 2006 (the “Lease”), for the lease of certain space in the Building commonly known and described as Opus Pima Center II, Building C, in Scottsdale, Arizona; and

     WHEREAS, the parties desire to modify the Lease to expand the size of the Premises as hereinafter set forth in this First Amendment.

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

     1. The terms and provisions of this First Amendment shall be effective on the date of this First Amendment. All capitalized terms used in this First Amendment, unless otherwise defined herein, shall have the same meanings given to them in the Lease.

     2. Tenant desires to expand the Premises to include that certain expansion space containing approximately 1,623 rentable square feet (1,594 usable square feet) located in the Building as shown on the floor plan attached hereto and incorporated herein by this reference as EXHIBIT “A” (the “Expansion Space”). Commencing on the earlier to occur of (i) Substantial Completion of the Expansion Space Improvements (as defined below), (ii) the date Tenant commences business operations in the Expansion Space, or (iii) the date Substantial Completion of the Expansion Space Improvements would have occurred but for Tenant Delay (such date of substantial completion being hereinafter referred to as the “Expansion Space Commencement Date”), and continuing for the remainder of the Term (as may be extended), Tenant will lease from Landlord, in addition to the space currently being leased by Tenant from Landlord, the Expansion Space. Tenant’s lease of the Expansion Space will be coterminous with Tenant’s lease of the remainder of the Premises. For purposes of this First Amendment, “Substantial Completion of the Expansion Space Improvements” means either (a) the date a Certificate of Occupancy (or all approvals required for the issuance thereof) is obtained for the Expansion Space, or (b) if a Certificate of Occupancy is not required as a condition to Tenant’s lawful occupancy of the Expansion Space, the date that the Expansion Space Improvements (as defined below) are substantially completed (subject to punch list items), as confirmed in writing by Landlord’s architect; provided that if either (a) or (b) is delayed or prevented because of work Tenant is responsible for performing in the Expansion Space, “Substantial Completion of the Expansion Space Improvements” means the date that all of Landlord’s work which is necessary for either (a) or (b) to occur has been performed (subject to punch list items) and Landlord has made the Expansion Space available to Tenant for the performance of Tenant’s work therein. The parties hereby acknowledge and agree that Substantial Completion of the Tenant Improvements is likely to occur prior to Substantial Completion of the Expansion Space Improvements and that Landlord will incur no liability to Tenant in the event Substantial Completion of the Expansion Space Improvements occurs after Substantial Completion of the Tenant Improvements.

     3. The following provisions will be effective on the Expansion Space Commencement Date:

          (a) Subject to the last sentence of this paragraph, the term “Premises”, as defined in the Lease, will be deemed to include, in addition to the space currently leased by Tenant from Landlord, the Expansion Space, and all of the terms and provisions of the Lease, as specifically amended hereby, will be applicable to the entire Premises (including the Expansion Space). Accordingly, the references to “8,000” and “7,767” (the approximate rentable and usable square footages of the Premises, respectively, prior to the expansion contemplated under this First Amendment) within Item 1 of the Basic Terms are hereby deleted and replaced with “9,623” and “9,361”, respectively. Notwithstanding the foregoing, the Premises will not be deemed to include the Expansion Space for purposes of calculating the Improvement Allowance (i.e., the allowance for the Expansion Space is addressed in Section 4 of this First Amendment).

          (b) The Basic Rent table set forth at Item 4 of the Basic Terms of the Lease is hereby deleted in its entirety and is replaced with the following table:

          4. Basic Rent:

	Annual NNN Basic Rent per
	rentable square foot of the		Monthly NNN Basic
Months	Premises		Rent
1 — 4	$	0.00	$	0.00
5 — 64	$	16.95	$	13,592.49

          (c) The Initial Tenant’s Share of Property Expenses Percentage of “19.65%” set forth at Item 5 of the Basic Terms of the Lease is hereby deleted and is replaced with “23.64%”.

          (d) The Security Deposit of “$11,300.00” set forth at Item 8 of the Basic Terms of the Lease is hereby deleted and is replaced with “$13,592.49”.

          (e) The third Landlord notice address (i.e., Gallagher & Kennedy, P.A.) set forth at Item 10 of the Basic Terms of the Lease is hereby deleted and is replaced with the following:

With a copy to:	Valenzuela & Broadfoot PLC
	2398 East Camelback Road, Suite 760
	Phoenix, Arizona 85016
	Attn: Alexander L. Broadfoot, Esq.
	Telephone: (602) 474-5750
	Facsimile:    (602) 474-5755

          (f) In connection with Tenant’s lease of the Expansion Space, in addition to the parking spaces licensed to Tenant under Section 18.2 of the Lease, Landlord will license to Tenant seven Unreserved Spaces. As such, the reference to “22” within Section 18.2 of the Lease is hereby deleted and is replaced with “29”.

          (g) EXHIBIT “C” to the Lease is hereby deleted in its entirety and is replaced with EXHIBIT “C” attached hereto and incorporated herein.

     4. Landlord will cause to be constructed all Leasehold Improvements within the Expansion Space (collectively, the “Expansion Space Improvements”) in accordance with (i) construction drawings and specifications prepared by Landlord’s architect (which construction drawings and specifications will be (a) prepared in substantial accordance with the Tenant-approved space plan for the Expansion Space Improvements, such space plan to be prepared in accordance with the requirements of Section 17.4 of the Lease and provided from Tenant to Landlord on or before June 27, 2006 [the “Space Plan Delivery Date”] and (b) reviewed and approved by Tenant in accordance with Section 17.5 of the Lease on or before July 7, 2006 [the “Construction Drawings and Specifications Approval Date”]) and (ii) the provisions of Section 17 of the Lease as though the Expansion Space Improvements were the “Tenant Improvements” for purposes of such Section 17. If Tenant fails to provide Landlord with a space plan for the Expansion Space Improvements by the Space Plan Delivery Date, then such delay is a Tenant Delay until such space plan is delivered to Landlord. Likewise, if the construction drawings and specifications review and approval process is not concluded (with Tenant having approved the construction drawings and specifications) on or before the Construction Drawings and Specifications Approval Date, then such delay is a Tenant Delay until Tenant’s approval is received. Landlord shall provide to Tenant an amount not to exceed the product of Thirty-Five and No/100ths Dollars ($35.00) multiplied by the number of usable square feet of the Expansion Space (“Expansion Space Improvement Allowance”) to cover the cost of the construction and installation of the Expansion Space Improvements (which shall include, without limitation, all architect, engineering and other construction planning fees as well as all permit, license and other fees in connection with the Expansion Space Improvements). If Landlord reasonably estimates that the cost of the Expansion Space Improvements will exceed the Expansion Space Improvement Allowance, Landlord may require Tenant to first deposit with Landlord an amount equal to the amount by which the cost of the Expansion Space Improvements will exceed the Expansion Space Improvement Allowance.

     5. Concurrently with Tenant’s execution of this First Amendment, Tenant shall deliver to Landlord a security deposit relating to the Expansion Space in an amount equal to $2,292.49, which amount shall constitute a part of the Security Deposit under the Lease. In addition to the foregoing, concurrently with the full execution of this First Amendment, Tenant shall deliver to Landlord the first monthly installment of Base Rent for the Expansion Space in the amount of $2,292.49. Such amount will be applied by Landlord against the first installment of Base Rent payable with respect to the Expansion Space.

     6. Tenant represents that Tenant has dealt with no brokers in connection with this First Amendment other than the Brokers and that insofar as Tenant knows, no other broker negotiated or

2

participated in negotiations of this First Amendment or is entitled to any commission in connection therewith. Landlord and Tenant agree that no broker other than the Brokers shall be entitled to any commission in connection with the expansion of the Premises. Any commission payable to the Brokers shall be paid by Landlord pursuant to a separate agreement. Tenant shall defend, indemnify and hold harmless Landlord from and against any and all claims of brokers, finders or any like third party claiming any right to commission or compensation by or through acts of Tenant in connection herewith. Landlord shall defend, indemnify and hold harmless Tenant from and against any and all claims of brokers, finders or any like third party claiming any right to commission or compensation by or through acts of Landlord in connection herewith.

     7. Except as otherwise expressly modified in this First Amendment, the terms and conditions of the Lease are and shall remain in full force and effect. In the event of any conflict or inconsistency between the terms and provisions of the Lease and the terms and provisions of this First Amendment, the terms and provisions of this First Amendment shall govern and control.

     8. This First Amendment may be executed in any number of counterparts, all of which together shall be deemed to constitute one instrument, and each of which shall be deemed an original.

     IN WITNESS WHEREOF, the parties have executed this First Amendment to Multi-Tenant Lease Agreement as of the day and year first above written.

LANDLORD: PC 101, INC., a Delaware corporation
By	/s/ JOHN W. GREER
	Name:	JOHN W. GREER
	Title:	VICE PRESIDENT

TENANT: SXC HEALTH SOLUTIONS, INC., a Texas corporation
By	/s/ JEFF PARK
	Name:	JEFF PARK
	Title:	CFO

3

EXHIBIT “A”
EXPANSION SPACE

EXHIBIT A
(Page 1 of 1)

EXHIBIT “B”
INTENTIONALLY DELETED

EXHIBIT B
(Page 1 of 1)

EXHIBIT “C”
FLOOR PLAN

EXHIBIT C
(Page 1 of 1)

EX-10.6

EXHIBIT 10.6

SECOND AMENDMENT TO MULTI-TENANT LEASE AGREEMENT

     THIS SECOND AMENDMENT TO MULTI-TENANT LEASE AGREEMENT (this “Second Amendment”) is made effective as of the 29^th day of October, 2007, by and between PC 101, INC., a Delaware corporation, as “Landlord”, and SXC HEALTH SOLUTIONS, INC., a Texas corporation, as “Tenant”.

WITNESSETH:

     WHEREAS, Landlord and Tenant entered into that certain Multi-Tenant Lease Agreement dated as of April 12, 2006, as amended by that certain First Amendment to Multi-Tenant Lease Agreement dated as of July 24, 2006 (as amended, the “Lease”), for the lease of certain space in the Building commonly known and described as Opus Pima Center II, Building C, in Scottsdale, Arizona;

     WHEREAS, Landlord and Tenant also entered into that certain Commencement Date Memorandum dated as of January 25, 2007 (the “Commencement Date Memorandum”); and

     WHEREAS, the parties desire to modify the Lease as hereinafter set forth in this Second Amendment.

     NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows;

     1. The terms and provisions of this Second Amendment shall be effective on the date of this Second Amendment. All capitalized terms used in this Second Amendment, unless otherwise defined herein, shall have the same meanings given to them in the Lease.

     2. Notwithstanding anything to the contrary contained in the Lease or in the Commencement Date Memorandum, Landlord and Tenant acknowledge and agree that the Premises contains 9,846 rentable square feet of space. From and after December 1, 2007, Basic Rent and Tenant’s Share of Property Expenses Percentage will be adjusted based upon a Premises consisting of 9,846 rentable square feet of space. Prior to December 1, 2007, Basic Rent and Tenant’s Share of Property Expenses Percentage will be calculated based upon a Premises consisting of 9,623 rentable square feet of space, as contemplated under the Commencement Date Memorandum.

     3. Commencing on December 1, 2007 and continuing thereafter during the remainder of the initial 64-month Term of the Lease, monthly Installments of Basic Rent will be increased to equal $13,907.48 (which amount is equal to 1/12^th of the product of $16.95 multiplied by a Premises consisting of 9,846 rentable square feet of space).

     4. Commencing on December 1, 2007 and continuing thereafter during the remainder of the initial 64-month Term of the Lease, the Tenant’s Share of Property Expenses Percentage will be increased to equal 24.17% (which amount is equal to the quotient of 9,846 [i.e., the rentable square footage of the Premises] divided by 40,736 [i.e., the rentable square footage of the Building]).

     5. Tenant represents that Tenant has dealt with no brokers in connection with this Second Amendment and that insofar as Tenant knows, no broker negotiated or participated in negotiations of this Second Amendment or is entitled to any commission in connection herewith. Landlord and Tenant agree that no broker shall be entitled to any commission in connection with this Second Amendment. Tenant shall defend, indemnify and hold harmless Landlord from and against any and all claims of brokers, finders or any like third party claiming any right to commission or compensation by or through acts of Tenant in connection herewith. Landlord shall defend, indemnify and hold harmless Tenant from and against any and all claims of brokers, finders or any like third party claiming any right to commission or compensation by or through acts of Landlord in connection herewith.

     6. Except as otherwise expressly modified in this Second Amendment, the terms and conditions of the Lease are and shall remain in full force and effect. In the event of any conflict or inconsistency between the terms and provisions of the Lease (and/or the Commencement Date Memorandum) and the terms and provisions of this Second Amendment, the terms and provisions of this Second Amendment shall govern and control.

     7. This Second Amendment may be executed in any number of counterparts, all of which together shall be deemed to constitute one instrument, and each of which shall be deemed an original.

[SIGNATURES APPEAR ON NEXT PAGE]

     IN WITNESS WHEREOF, the parties have executed this Second Amendment to Multi-Tenant Lease Agreement as of the day and year first above written.

LANDLORD: PC 101, INC., a Delaware corporation
By	/s/ Illegible
	Name:	Illegible
	Title:	Vice President

TENANT: SXC HEALTH SOLUTIONS, INC., a Texas corporation
By	/s/ Jeff Park
	Name:	Jeff Park
	Title:	CFO

2

EX-10.7

EXHIBIT 10.7

730 LOUIS DRIVE
WARMINSTER, PENNSYLVANIA
INDEX TO LEASE
BETWEEN COMMONWEALTH MAGT.
AND
HEALTH BUSINESS SYSTEMS, INC.

	Page
1. Premises		1
2. Improvements to Premises		1
3. Term		2
4. Use of Premises		3
5. Rent		3
(a) Increase in Expenses of Operation		3
(b) Estimate of payment of Increased Expenses of Operation		4
(c) Rent Escalation		5
6. Insurance		5
(a) Liability		5
(b) Waiver of Subrogation		6
(c) Increase of Premiums		6
7. Repairs and Maintenance		6
8. Limitation of Liability		7
9. Utilities		7
10. Janitorial Services		8
11. Governmental Regulations		8
12. Signs		8
13. Alterations, Additions and Fixtures		8
14. Mechanics’ Liens		9
15. Landlord’s Right of Entry		10
16. Damage by Fire or Other Casualty		10
17. Non-Abatement of Rent		11
18. Indemnifications of Landlord		11
19. Condemnation		12
(a) Termination		12
(b) Partial Condemnations		12
(c) Award		13
(d) Temporary Taking		13
20. Quiet Enjoyment		13
21. Assignment and Subletting		14
(a) Restricted Assignment		14
(b) Percentage Agreements		15
22. Environmental Compliance and Indemnification		15
(a) Hazardous Materials		15
(b) Tenant Representations		15
(c) Compliance with Environmental Laws		16
(d) Indemnification		16

i

	Page
23. Landlord’s Security Interest		17
24. Tenant Financing		17
25. Subordination		17
26. Memorandum of Lease; Tenant’s Certificate		17
27. Curing Tenant’s Default		18
28. Surrender; Holding Over		18
29. Defaults — Remedies		19
(a) Defaults		19
(b) Remedies		20
(c) Non-Waiver		22
(d) Grace Period		23
(e) Waiver of Trial By Jury		23
(f) Rights and Remedies Cumulative		23
(g) Attorneys Fees		23
30. Condition of Title and of Premises		23
31. Objections to Notices		24
32. Interpretation		24
(a) Captions		24
(b) Entire Agreement		24
(c) Exhibits		24
(d) Covenants		24
(e) Arbitration		24
(f) Interest		25
33. Definitions		25
(a)“Landlord”		25
(b)“Tenant”		25
(c)“Mortgage” and “Mortgagee”		25
(d)“Person”		25
(e)“Date of this Lease”		26
(f)“Index”		26
34. Notices		26
35. Security Deposit		26
36. Additional Articles		27

EXHIBITS:

Exhibit “A”          The Premises
Exhibit “B”          Landlord Improvements
Exhibit “D”          Rules and Regulations

ii

AGREEMENT OF LEASE
730 LOUIS DRIVE
WARMINSTER, PENNSYLVANIA

     THIS AGREEMENT OF LEASE, made this 1^st day of July 1996, by and between Commonwealth Management Corporation, Agent, organized and existing under the laws of Delaware (herein Called “Landlord”) and Health Business Systems, Inc. organized and existing under the laws of Pennsylvania (herein called “Tenant”).

WITNESSETH:

     1. Premises. As used in this Article the term building shall mean the building(s) containing approximately 51,575 rentable square feet (herein called the “Building”) on a tract of land (herein called the “Lot”) located at 730 Louis Drive, Warminster, Pennsylvania (the Building, the Lot and any other improvements thereon being herein collectively called the “Property”) . Landlord does hereby demise and let unto Tenant and Tenant does hereby lease and take from Landlord for the term and upon the terms, covenants, conditions and provisions set forth herein all that certain portion of the Building containing approximately                                          rentable square feet as shown outlined in red on Exhibit “A” hereto which shall be completed in accordance with Article 2 hereof having a street address of 730 Louis Drive, Warminster, PA (herein called the “Premises”) together with the right, in common with other occupants of the Building, to use driveways, sidewalks and loading and parking areas, lobbies, hallways and other common area facilities.

     2. Improvements to Premises. The Premises are accepted “as is” except for improvements to be made by Landlord, as specified in the Rental Rider attached hereto (herein called “Landlord Improvements”). All necessary construction of Landlord Improvements shall be commenced promptly and shall be substantially completed ready for use and occupancy by Tenant on the date set forth in Article 3. Provided, however, that the time for substantial completion of the Premises shall be extended for additional periods of time equal to the time lost by Landlord or Landlord’s contractors, subcontractors or suppliers due to strikes or other labor troubles, governmental restrictions and limitations, scarcity, unavailability or delays in obtaining fuel, labor or materials, war or other national emergency, accidents, floods, defective materials, fire damage or other casualties, adverse weather conditions, or any cause similar or dissimilar to the foregoing beyond the reasonable control of Landlord or Landlord’s contractors, subcontractors or suppliers. All construction shall be done in a good and workmanlike manner and shall comply at the time of completion with all applicable laws, ordinances, regulations and orders of the federal, state, county or other governmental authorities having jurisdiction thereof. Tenant and its authorized agents, employees and contractors shall have the right, at Tenant’s own risk, expense and responsibility, at all reasonable times prior to the Commencement Date as hereinafter defined, to enter the Premises for the purpose of taking measurements and installing its furnishing and equipment; provided that Tenant, in so doing, shall not interfere with or delay the work to be performed hereunder by Landlord, and Tenant shall use contractors and workmen compatible with the contractors and workmen engaged in the work to be performed hereunder by Landlord. Tenant shall contribute to the cost of Landlord Improvements, the sum of N/A upon the signing of this lease.

     In the event that Tenant is responsible for any construction, Tenant and its contractors shall be responsible for transportation, safekeeping and storage of materials and equipment used in the performance of Tenant’s Work, and for the removal of waste and debris resulting from the performance of Tenant’s Work and Landlord

1

shall not be responsible for the coordination of the work of Landlord’s contractors with the work of Tenant’s contractors. Without specific charge being made therefor, Landlord shall allow Tenant and its contractors during normal working hours to use utilities, to the extent available, as may be reasonably required in the Premises for the performance of Tenant’s Work.

     Prior to commencement of Tenant’s Work, Tenant shall obtain and maintain, at its expense, Workmen’s Compensation and Bodily Injury and Property Damage Public Liability Insurance and so called “Builder’s Risk” Insurance (other than the Workmen’s Compensation Insurance) which shall name Landlord as additional insured and shall submit certificates as evidence thereof to Landlord.

     3. Term. The term of this lease shall be for five years and three months commencing on July 1, 1996 or the date that the premises have been delivered to Tenant (herein called the “Commencement Date”). Landlord shall be deemed to have delivered possession of the Premises upon providing Tenant with notice in writing that the Premises are ready for occupancy. If the date of substantial completion is delayed as a result of changes requested by Tenant, the term of the lease shall commence as if the Premises were substantially complete on the originally scheduled date, as extended for reasons other than those caused by Tenant. Landlord shall not have any liability to Tenant for delay in delivery. Unless sooner terminated in accordance with the terms hereof, the term of this lease shall end without the necessity for notice from either party to the other at noon on September 30, 2001 (herein called the “Expiration Date”).

     4. Use of Premises. Tenant shall occupy the Premises throughout the term and shall use the same for and only for general office purposes. The building is designed to normal office building standards for floor-loading capacity. Tenant shall not use the Premises in such a way as to exceed such load limits.

     5. Rent. All rent shall be payable in accordance with the attached RENTAL RIDER.

     (a) Rent Escalation — In order to adjust the rent payable under the lease, Tenant agrees to pay Landlord, with the installments of annual Gross Base Rent called for hereinabove, and as additional monthly rent under the lease, an amount representing rent escalation as provided in the Rental Rider attached to this lease.

     6. Insurance.

     (a) Liability. Tenant, at Tenant’s sole cost and expense, shall maintain and keep in effect throughout the term insurance against liability for bodily injury (including death) or property damage in or about the Premises or the Property under a policy of comprehensive general public liability insurance, with such limits as to each as may be reasonably required by Landlord from time to time, but not less than $500,000 for each person and $1,000,000 for each occurrence of bodily injury (including death) and $500,000 for property damage. In no event shall the limits of coverage maintained by Tenant be considered to limit Tenant’s liability under this lease. Throughout the term of this lease, Tenant shall further provide, at its expense, personal property insurance for all of Tenant’s trade fixtures and personal property located in the Premises, insuring against loss or damage by fire and other such risks as are now or hereafter included under “All Risk” coverage. If the nature of Tenant’s operation is such as to place any or all of its employees under the coverage of local workmen’s compensation or similar statutes, Tenant shall also keep in force, at its sole cost and expense, workmen’s compensation or similar insurance affording statutory coverage and containing statutory limits. The policies of comprehensive general public liability insurance shall name Landlord and Tenant as the insured parties. Each such policy

2

shall provide that it shall not be cancelable without at least thirty (30) days prior written notice to Landlord and to any mortgagee named in an endorsement thereto and shall be issued by an insurer and in a form satisfactory to Landlord. At least ten (10) days prior to the Commencement Date, a certificate of insurance shall be delivered to Landlord. If Tenant shall fail, refuse or neglect to obtain or to maintain any insurance that it is required to provide or to furnish Landlord with satisfactory evidence of coverage on any such policy, Landlord shall have the right to purchase such insurance. All such payments made by Landlord shall be recoverable by Landlord from Tenant, together with interest thereon, as Additional Rent promptly upon being billed therefor.

          (b) Waiver of Subrogation. Each of the parties hereto hereby releases the other, to the extent of the releasing party’s insurance coverage, from any and all liability for any loss or damage covered by such insurance which may be inflicted upon the property of such party even if such loss or damage shall be brought about by the fault or negligence of the other party, its agents or employees provided, however, that this release shall be effective only with respect to loss or damage occurring during such time as the appropriate policy of insurance shall contain a clause to the effect that this release shall not affect said policy or the right of the insured to recover thereunder. If any policy does not permit such a waiver, and if the party to benefit therefrom requests that such a waiver be obtained, the other party agrees to obtain an endorsement to its insurance policies permitting such waiver of subrogation if it is available. If an additional premium is charged for such waiver, the party benefiting therefrom agrees to pay the amount of such additional premium promptly upon being billed therefor.

          (c) Increase of Premiums. Tenant shall not do anything or fail to do anything which shall cause the cost of Landlord’s insurance to increase or which shall prevent Landlord from procuring policies (including but not limited to public liability) from companies and in a form satisfactory to Landlord. If any breach of this Paragraph (c) by Tenant shall cause the rate of fire or other insurance to be increased, Tenant shall pay the amount of such increase as Additional Rent promptly upon being billed therefor.

     7. Repairs and Maintenance.

          (a) Tenant, at its sole cost and expense and throughout the term of this lease, shall keep and maintain the Premises in a neat and orderly condition. Tenant shall not use or permit the use of any portion of the common areas for other than their intended use.

          (b) Throughout the term of this lease, Landlord shall make all necessary repairs to the Premises within a timely manner and other improvements located on the Property; provided, however, that Landlord shall have no responsibility to make any repair unless and until Landlord receives written notice of the need for such repair or until Landlord has actual knowledge of the need for such repair. Landlord shall keep and maintain all common areas of the Property and any sidewalks, parking areas, curbs and access ways adjoining the Property in a clean and orderly condition, free of accumulation of dirt, rubbish, snow and ice, and shall keep and maintain all landscaped areas in a neat and orderly condition.

          (c) Repairs and replacements to the Premises and the Property arising out of or caused by Tenant’s misuse, manner of use or occupancy of the Premises or by Tenant’s installation in or upon the Premises or by any act or omission of Tenant or any employee, agent, contractor, or invitee of Tenant shall be made at the sole cost and expense of Tenant. If Landlord shall perform such repairs, Landlord shall bill Tenant therefor and Tenant shall promptly reimburse Landlord for the cost of any such repairs as

3

Additional Rent. Tenant shall not bear the expense of any repairs or replacements to the Premises or the Property arising out of or caused by any other Tenant’s use, manner of use or occupancy of the Property or by any other Tenant’s installation in or upon the Property, or by any act or omission of any other Tenant or any other Tenant’s employees, agents, contractors or invitees. Nothing herein above shall preclude Landlord’s responsibility for normal and ordinary repairs and maintenance to the premises.

     8. Limitation of Liability. If Landlord is in breach or default with respect to Landlord’s obligations under this lease or otherwise, Tenant shall look solely to the equity of Landlord in the Premises for the satisfaction of Tenants remedies.

     9. Utilities.

          (a) Landlord shall furnish the Premises with electricity, heating and air conditioning for the normal use and occupancy of the Premises as general office between 7:00 a.m. and 9:00 p.m. Monday through Friday of each week during the term (legal holidays excepted). If Tenant shall require electricity or install electrical equipment including, but not limited to, electrical heating, refrigeration, equipment, electronic data processing machines, or machines or equipment using current in excess of 110 volts, which shall in any way increase the amount of the electricity usually furnished for use as general office space or, if Tenant shall attempt to use the Premises in such a manner that the services to be furnished by Landlord would be required during periods other than or in addition to business hours referred to above, Tenant shall obtain prior written approval therefor from Landlord and shall pay for the resulting additional direct expense, including the expense resulting from the installation of such equipment and meters as Additional Rent promptly upon being billed therefor. Landlord shall not be liable for any damages to Tenant resulting from Landlord’s failure to deliver services as stated herein.

          (b) If at any time during the term of this lease utility services supplied to the Premises are separately metered, the cost of installing Tenant’s meter and the cost of such separately metered utility service shall be paid by Landlord.

     10. Janitorial Services. Tenant shall be solely responsible for its own janitorial services for its demised premises.

     11. Governmental Regulations.

          (a) Tenant shall not violate any laws, ordinances, notices, orders, rules, regulations or requirements of any federal, state or municipal government or any department, commission, board or officer thereof, or of the National Board of Fire Underwriters or any other body exercising similar functions, relating to the Premises or to the use or manner of use of the Property.

     12. Signs. Landlord shall allow Tenant the right to place its’ name on the Building standard directory sign on Louis Drive and mount a sign above its new building entrance. The tenant shall be responsible for the cost of these signs. Except for signs which are located wholly within the interior of the Premises and which are not visible from the exterior of the Premises, no signs shall be placed, erected, maintained or painted at any place upon the Premises or the Property.

     13. Alterations. Additions and Fixtures.

          (a) Subject to the provisions of Article 13 hereof, Tenant shall have the right to install in the Premises any trade

4

fixtures from time to time during the term of this lease; provided, however, that no such installation or removal thereof shall affect the structural portion of the Premises and that Tenant shall repair and restore any damage or injury to the Premises or the Property caused thereby.

          (b) Tenant shall not make or permit to be made any alterations, improvements or additions to the Premises or Property without on each occasion first presenting to Landlord plans and specifications therefor and obtaining Landlord’s prior written consent thereto. If Landlord shall consent to any such proposed alterations, improvements or additions, then Tenant shall make the proposed alterations, improvements and additions at Tenant’s sole cost and expense provided that: (i) Tenant supplies any necessary permits and certificates of insurance therefor; (ii) such alterations and improvements do not impair the structural strength of the Building or any other improvements or reduce the value of the Property; (iii) Tenant shall take or cause to be taken all steps that are required by Article 13 hereof and that are required or permitted by law in order to avoid the imposition of any mechanic’s, laborers or materialman’s lien upon the Premises, Building or Lot, including, but not limited to, providing Landlord with a Waiver of Liens in advance of commencement of construction and/or Release of Liens upon completion thereof; (iv) Tenant shall use a contractor approved by Landlord, which approval shall not be unreasonably withheld; and (v) the occupants of the Building and of any adjoining real estate owned by Landlord are not annoyed or disturbed by reason thereof. Any and all alterations, improvements and additions to the Property which are constructed, installed or otherwise made by Tenant shall be the property of Tenant until the expiration or sooner termination of this lease; at that time all such alterations and additions shall remain on the Property and become the property of Landlord without payment therefor by Landlord; unless, upon the termination of this lease, Landlord shall give written notice to Tenant to remove the same, in which event Tenant shall remove such alterations, improvements and additions and repair and restore any damages to the Property caused by the installation or removal thereof.

     14. Mechanics’ Liens. Tenant shall promptly pay any contractors and materialmen who supply labor, work or materials to Tenant at the Premises or the Property so as to minimize the possibility of a lien attaching to the Premises or the Property. Tenant shall take all steps permitted by law in order to avoid the imposition of any mechanic’s, laborers or materialman’s lien upon the Premises, the Property or the Lot, including, but not limited to, obtaining a Waiver of Liens prior to the commencement of construction and/or a Release of Liens upon completion of construction. Should any such lien or notice of lien be filed for work performed for Tenant other than by Landlord, Tenant shall bond against or discharge the same within fifteen (15) days after the lien or claim is filed or formal notice of said lien or claim has been issued regardless of the validity of such lien or claim. Nothing in this lease is intended to authorize Tenant to do or cause any work or labor to be done or any materials to be supplied for the account of Landlord, all of the same to be solely for Tenant’s account and at Tenant’s risk and expense. Throughout this lease the term “mechanic’s lien” is used to include any lien, encumbrance or charge levied or imposed upon the Premises or the Property or any interest therein or income therefrom on account of any mechanic’s, laborer’s or materialman’s lien or arising out of any debt or liability to or any claim or demand of any contractor, mechanic, supplier, materialman or laborer and shall include without limitation any mechanic’s notice of intention given to Landlord or Tenant, any stop order given to Landlord or Tenant, any notice of refusal to pay naming Landlord or Tenant and any injunctive or equitable action brought by any person entitled to any mechanic’s lien.

5

     15. Landlord’s Right of Entry.

          (a) Tenant shall permit Landlord and the authorized representatives of Landlord and of any mortgagee or any prospective mortgagee to enter the Premises at all reasonable times for the purpose of (i) inspecting them or (ii) making any necessary repairs thereto or to the Property and performing any work therein. During the progress of any work on the Premises or the Property, Landlord shall attempt not to inconvenience Tenant, but shall not be liable for inconvenience, annoyance, disturbance, loss of business or other damage to Tenant by reason of making any repair or by bringing or storing materials, supplies, tools and equipment in the Premises during the performance of any work, and the obligations of the Tenant under this lease shall not be thereby affected in any manner whatsoever.

          (b) Landlord shall have the right at all reasonable times to enter and to exhibit the Premises for the purpose of sale or mortgage, and during the last nine (9) months of the term of this lease, to enter and to exhibit the Premises to any prospective tenant.

     16. Damage by Fire or Other Casualty.

          (a) If the Premises or Building shall be damaged or destroyed by fire or other casualty, Tenant shall promptly notify Landlord, and Landlord, subject to the mortgagee’s consent and to the conditions set forth in this Article 16, shall repair, rebuild or replace such damage and restore the Premises to substantially the same condition in which they were immediately prior to such damage or destruction provided, however, that Landlord shall only be obligated to restore such damage which is covered by the fire and other extended coverage insurance policies.

          (b) The work shall be commenced promptly and completed with due diligence, taking into account the time required by Landlord to effect a settlement with, and procure insurance proceeds from, the insurer, and for delays beyond Landlord’s reasonable control. If the time necessary to complete such work is determined by Landlord to be in excess of six (6) months, Tenant may terminate this agreement by giving Landlord written notice within ten days of notification by Landlord.

          (c) The net amount of any insurance proceeds (excluding proceeds received pursuant to a rental coverage endorsement) recovered by reason of the damage or destruction of the Building in excess of the cost of adjusting the insurance claim and collecting the insurance proceeds (such excess amount being hereinafter called the “net insurance proceeds”) shall be applied towards the reasonable cost of restoration. If in Landlord’s sole opinion the net insurance proceeds will not be adequate to complete such restoration, Landlord shall have the right to terminate this lease and all the unaccrued obligations of the parties hereto by sending a written notice of such termination to Tenant, the notice to specify a termination date no less than ten (10) days after its transmission; provided, however, that except during the last two (2) years of the term, Tenant may require Landlord to withdraw the notice of termination by agreeing to pay the cost of restoration in excess of the net insurance proceeds and by giving Landlord adequate security for such payment prior to the termination date specified in Landlord’s notice of termination. If the net insurance proceeds are more than adequate, the amount by which the net insurance proceeds exceed the cost of restoration shall be retained by Landlord or applied to repayment of any mortgage secured by the Premises.

          (d) Landlord’s obligation or election to restore the Premises under this Article shall not include the repair,

6

restoration or replacement of the fixtures, improvements, alterations, furniture or any other property owned, installed, made by, or in the possession of Tenant.

          (e) Landlord shall maintain insurance against loss or damage to the Building by fire and such other casualties as may be included within fire and extended coverage insurance or all risk insurance, together with a rental coverage endorsement or other comparable form of coverage. Tenant shall receive an abatement of its Minimum Annual Rent to the extent of payments received by Landlord from the carrier providing the rental coverage endorsement.

     17. Non-Abatement of Rent.

     Except as otherwise expressly provided as to damage by fire or by any other casualty in Paragraph 16(e) and as to condemnation and in Paragraphs 19(a) and (b), there shall be no right of setoff, abatement or reduction of the Minimum Rent, Additional Rent or other sums payable hereunder for any cause whatsoever, and this lease shall not terminate, and Tenant shall not be entitled to surrender the Premises.

     18. Indemnifications of Landlord.

     Tenant shall indemnify Landlord and save Landlord harmless from and against any and all claims, actions, damages, liability and expense (including without limitation fees of attorneys, investigators and experts) in connection with loss of life, personal injury or damage to property, or caused to any person in or about the Premises or arising out of the occupancy or use by Tenant of the Premises or any part thereof or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, licensees or invitees; unless such loss, injury or damage was caused by the negligence of Landlord, its agents, contractors, employees, licensees or invitees. Without limiting the foregoing, Tenant shall forever release and hold Landlord harmless from all claims arising out of damage to Tenant’s property unless such damage occurs as a result of Landlord’s negligence. In case any such claim, action or proceeding is brought against Landlord, upon notice from Landlord and at Tenant’s sole cost and expense, Tenant shall resist or defend such claim, action or proceeding or shall cause it to be resisted or defended by an insurer.

     19. Condemnation.

          (a) Termination. (i) If all of the Premises are covered by a condemnation; or (ii) if any part of the Premises is covered by a condemnation and the remainder thereof is insufficient for the reasonable operation therein of Tenant’s business; or, (iii) subject to the provisions of Paragraph (b)(i) hereof, if any of the Property is covered by a condemnation and, in Landlord’s sole opinion, it would be impractical or the condemnation proceeds are insufficient to restore the remainder of the Property; then, in any such event, this lease shall terminate and all obligations hereunder shall cease as of the date upon which possession is taken by the condemnor and the rent herein reserved shall be apportioned and paid in full by Tenant to Landlord to that date and all rent prepaid for periods beyond that date shall forthwith be repaid by Landlord to Tenant.

          (b) Partial Condemnations.

          (i) If there is a partial condemnation and Landlord decides to terminate pursuant to Paragraph (a) hereof, except during the last two (2) years of the term, Tenant may require Landlord to withdraw its notice of termination by: (a) giving Landlord written notice thereof within ten (10) days from transmission of Landlord’s notice to Tenant of Landlord’s intention

7

to terminate, (b) agreeing to pay the cost of restoration in excess of the condemnation proceeds reduced by those sums expended by Landlord in collecting the condemnation proceeds, and (c) giving Landlord adequate security for such payment within such ten (10) day period.

               (ii) If there is a partial condemnation and this lease has not been terminated pursuant to Paragraph (a) hereof, Landlord shall restore the Building and the improvements which are part of the Premises to a condition and sizes as nearly comparable as reasonably possible to the condition and size thereof immediately prior to the date upon which possession shall have been taken by the condemnor. If the condemnation proceeds are more than adequate to cover the cost of restoration and the Landlord’s expenses in collecting the condemnation proceeds, any excess proceeds shall be retained by Landlord or applied to repayment of any mortgage secured by the Premises.

               (iii) If there is a partial condemnation and this lease has not been terminated by the date upon which the condemnor shall have obtained possession, the obligations of Landlord and Tenant under this lease shall be unaffected by such condemnation except that there shall be an equitable abatement for the balance of the term of the Minimum Rent according to the value of the Premises before and after the date upon which the condemnor shall have taken possession. In the event that the parties are unable to agree upon the amount of such abatement, either party may submit the issue to arbitration.

          (c) Award. In the event of a condemnation affecting Tenant, Tenant shall have the right to make a claim against the condemnor for removal expenses, business dislocation damages and moving expenses; provided and to the extent, however, that such claims or payments do not reduce the sums otherwise payable by the condemnor to Landlord. Except as aforesaid, Tenant hereby waives all claims against Landlord and against the condemnor, and Tenant hereby assigns to Landlord all claims against the condemnor including, without limitation, all claims for leasehold damages and diminution in value of Tenant’s leasehold interest.

          (d) Temporary Taking. If the condemnor should take only the right to possession for a fixed period of time or for the duration of an emergency or other temporary condition, then, notwithstanding anything hereinabove provided, this lease shall continue in full force and effect without any abatement of rent, but the amounts payable by the condemnor with respect to any period of time prior to the expiration or sooner termination of this lease shall be paid by the condemnor to Landlord and the condemnor shall be considered a subtenant of Tenant. Landlord shall apply the amount received from the condemnor applicable to the rent due hereunder net of costs to Landlord for the collection thereof, or as much thereof as may be necessary for the purpose, toward the amount due from Tenant as rent for that period; and, Tenant shall pay to Landlord any deficiency between the amount thus paid by the condemnor and the amount of the rent, or Landlord shall pay to Tenant any excess of the amount of the award over the amount of the rent.

     20. Quiet Enjoyment. Tenant, upon paying the Minimum Rent, Additional Rent and other charges herein provided for, and observing and keeping all covenants, agreements and conditions of this lease on its part to be kept, shall quietly have and enjoy the Premises during the term of this lease without hindrance or molestation by anyone claiming by or through Landlord, subject, however, to reasonable rules and regulations (herein called the “Rules and Regulations”) having uniform applicability to all tenants of the Building and governing the use and enjoyment of the Premises and the remainder of the Property; provided that the Rules and Regulations shall not materially interfere with the Tenant’s use and enjoyment of the Premises in accordance with the provisions

8

of this lease for general office purposes. The Tenant shall adhere to the Rules and Regulations and shall cause its agents, employees, invitees, visitors and guests to do so. A copy of the Rules and Regulations in effect on the date hereof is attached hereto as Exhibit “D”.

     21. Assignment and Subletting.

          (a) Restricted Assignment. Tenant shall not assign, mortgage, pledge or encumber this lease, or sublet the whole or any part of the Premises, without the prior written consent of Landlord, which consent shall not be unreasonably withheld. This prohibition against assigning or subletting shall be construed to include a prohibition against any assignment or subletting by operation of law, and/or a transfer by any person or persons controlling Tenant on the date of the lease of such control to a person or persons not controlling Tenant on the date of the lease. Without limiting the generality of the foregoing, if Tenant is a corporation or partnership, any transfer, sale, pledge or other disposition of fifty percent (50%) or more of the stock or partnership units of the Tenant shall necessitate notice being given to landlord.

          It is expressly agreed by Tenant, however, that in no event shall Landlord consent to an assignment or sublet unless the rent thereunder is at a rate equal to or greater than the then prevailing rate for unoccupied space in the Building or a comparable building in the area and Landlord shall have approved the credit of the proposed subtenant. In the event any assignment of this lease is made with or without Landlord’s consent (i.e, in violation of this lease), Tenant nevertheless shall remain liable for the performance of all of the terms, conditions and covenants of this lease and shall require any assignee to execute and deliver to Landlord an assumption of liability agreement in form satisfactory to Landlord, including an assumption by the assignee of all of the obligations of Tenant and the assignee’s ratification of and agreement to be bound by all the provisions of this lease. Landlord shall be entitled to, and Tenant shall promptly remit to Landlord as Additional Rent, any profit which may inure to the benefit of Tenant as a result of any subletting of the Premises or assignment of this lease, whether or not consented to by Landlord. Landlord’s consent to an assignment or sublet shall not be construed as consent to any subsequent assignment or sublet. Tenant agrees to pay to Landlord, on demand, reasonable costs, including attorneys’ fees incurred by Landlord in connection with review of any request by Tenant for Landlord’s consent to an assignment or sublet.

     Notwithstanding anything herein contained to the contrary, it is expressly agreed by Tenant and Landlord that Landlord shall be required to consent to an assignment or sublet if the rent thereunder is at a rate equal to or greater than the rent due under this lease, or if Tenant agrees to pay Landlord the difference between the rent due under this lease and the rent due under the sublease or the assignment agreement and if Landlord approves the credit of the proposed subtenant.

          (b) Percentage Agreements. It is agreed that Tenant shall not enter into any assignment, sublease, license, concession or other agreement for use, occupancy or utilization of the whole or any part of the Premises with or without Landlord’s consent, which provides for rental or other payment for such use, occupancy or utilization based, in whole or in part on the net income or profits derived by any person or entity from the space leased, used, occupied or utilized (other than an amount based on a fixed percentage or percentages of receipts or sales), and any such purported assignment, sublease, license, concession or other agreement shall be absolutely void and ineffective as a conveyance of any right or interest in the possession, use, occupancy or utilization of any part of the Premises.

9

     22. Environmental Compliance and Indemnification.

          (a) Hazardous Materials. The term “Hazardous Materials” as used herein shall mean any substance or waste defined or designated as hazardous or toxic waste, material, substance or similar term by any present or future federal, state or municipal environmental statute, code, ordinance, order, judgment, decree, injunction, restriction, requirement, rule or regulation, and shall include, without limitation, all of the following:

          (1) hazardous substances, as such term is defined in the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. Section 9601(14), as amended by the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (Oct. 17, 19868) (“SARA”); (2) regulated substances, within the meaning of Title I of the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. Sections 6991-6991 (i) , as amended by SARA; (3) any element, compound or material which can pose a threat to the public health or the environment when released into the environment; (4) hazardous waste, materials or substances or contaminants as defined in and by the laws of the State of Pennsylvania; (7) an object or material which is contaminated with any of the foregoing; (8) any other substance designated by any of the Environmental Laws or a federal, state or local agency as detrimental to public health, safety and the environment.

          (b) Tenant Representations. Tenant hereby covenants, represents and warrants that it shall not use the Premises, the Common Areas and the Property for the purpose of refining, producing, storing, handling, transferring, processing or transporting Hazardous Materials or in violation of the Environmental Laws.

          (c) Compliance with Environmental Laws. Tenant shall operate the Premises or cause it to be operated in compliance with the Environmental Laws and all applicable laws, rules and regulations promulgated by the Environmental Protection Agency and the Department of Natural Resources and Environmental Control of Pennsylvania, or any successor agencies thereto including, without limitation, regulations governing underground storage tanks.

          (d) Indemnification. Tenant shall indemnify, defend and hold harmless Landlord, its trustees, directors, officers, employees, agents, servants, successors and assigns from and against any and all claims, liabilities, obligations, damages, penalties, causes of action, costs and expenses (including attorneys’ fees, investigation, consultant and management fees and court costs) arising from (i) Tenant or any of Tenant’s agents’ contractors’, employees’, invitees’, or licensees’ use or occupancy of the Premises, the Common Areas or the Property including, but not limited to, the release or discharge of Hazardous Materials in, on or about the Premises, the Common Areas or the Property or (ii) the conduct of Tenant’s business or the business of any of Tenant’s agents, contractors, employees, invitees, or licensees if such conduct involves the use or misuse of hazardous material or (iii) any activity, work or things done, permitted or suffered by Tenant or any of Tenant’s agents, contractors, employees, invitees, or licensees, involving the use or misuse of hazardous material, including, but not limited to, the use, treatment, production, handling, refining, transfer, processing, transporting, generating, manufacturing, disposing or storage of any Hazardous Materials including, without limitation, petroleum products, radon, asbestos, or polychlorinated biphenyls in, about or affecting the Premises, the Common Areas, the Property or elsewhere or (iv) the violation of any Environmental Laws or any federal, state or municipal environmental present and future laws, statutes, codes, or, ordinances, orders, judgments, decrees, injunctions, rules, regulations, restrictions and requirements, or (v) any act, event or occurrence affecting the Premises, the Common Areas or the

10

Property which results from the use, treatment, production, handling, refining, transfer, processing, transporting, generating, manufacturing, disposing or storage of any Hazardous Materials. In case any action or proceeding is brought against Landlord by reason of any such claim or action of tenant, Tenant upon notice from Landlord shall defend the same at Tenant’s expense by counsel satisfactory to Landlord. The provision of this Section shall survive the termination or expiration of this lease and the surrender of the Premises by Tenant.

     23. Tenant Financing.

     Tenant agrees not to enter into, execute or deliver any financing agreement or create any security interest on improvements, furniture or fixtures in the Premises other than with Landlord as secured party without the prior written consent of Landlord and, in the event Tenant does so execute or deliver such other financing agreement or create a security interest, such action on the part of Tenant shall be considered an event of default under this lease entitling Landlord to such remedies as are provided for herein.

     24. Subordination. This lease and Tenant’s rights hereunder shall be subject and subordinate at all times in lien and priority to any first mortgage or other primary encumbrance now or hereafter placed upon or affecting the Premises, and to any second mortgage or encumbrance with the consent of the first mortgagee, and to all renewals, modifications, consolidations and extensions thereof, without the necessity of any further instrument or act on the part of Tenant. Tenant shall execute and deliver upon demand any further instrument or instruments confirming the subordination of this lease to the lien of any such first mortgage or to the lien of any other mortgage if requested to do so by Landlord with the consent of the first mortgagee, and any further instrument or instruments of attornment that may be desired by any such mortgagee or Landlord. Notwithstanding the foregoing, any mortgagee may at any time subordinate its mortgage to this lease, without Tenant’s consent, by giving notice in writing to Tenant, and thereupon the lease shall be deemed prior to such mortgage without regard to their respective dates of execution and delivery, and in that event such mortgagee shall have the same rights with respect to this lease as though this lease has been executed prior to the execution and delivery of the mortgage and had been assigned to such mortgagee.

     25. Memorandum of Lease; Tenant’s Certificate.

          (a) Tenant, at any time and from time to time and within five (5) days after receipt of Landlord’s written request, shall execute, acknowledge and deliver to Landlord a short form or memorandum of this lease provided by Landlord for recording purposes.

          (b) Tenant, at any time and from time to time and within five (5) days after receipt of Landlord’s written request, so long as there are no material and substantial defects in the Premises which Landlord is obligated to remedy and which Landlord is not proceeding to remedy and as long as Landlord is not otherwise in default of this lease, shall execute, acknowledge and deliver to Landlord a written instrument in recordable form prepared by Landlord certifying that this lease is unmodified and in full force and effect (or, if there have been modifications, that it is in full force and effect as modified) and stating that the improvements required by Article 2 hereof have been completed, certifying that Tenant has accepted possession of the Premises; stating the date on which the term of the lease commenced and the dates to which Minimum Rent, Additional Rent and other charges have been paid in advance, if any; stating that to the best knowledge of the signer of such instrument Landlord is not in default of this

11

lease; stating any other fact or certifying any other condition reasonably requested by Landlord or required by any mortgagee or prospective mortgagee or purchaser of the Premises or any interest therein; and stating that it is understood that such instrument shall be addressed to Landlord and to any mortgagee, prospective mortgagee, purchaser or other party specified by Landlord.

     26. Curing Tenant’s Default. If Tenant shall be in default in the performance of any of its obligations hereunder, Landlord, without any obligation to do so, in addition to any other rights it may have in law or equity, may elect to cure such default on behalf of Tenant after ten (10) days written notice (except in the case of emergency) has been received by Tenant. Tenant shall reimburse Landlord upon demand for any sums paid or costs incurred by Landlord in curing such default, including interest thereon from the respective dates of Landlord’s making the payments and incurring such costs, provided that notice of such sums and costs are given within a reasonable time, which sums and costs together with interest thereon shall be deemed Additional Rent payable —promptly upon being billed therefor.

     27. Surrender; Holding Over.

          (a) At the expiration or earlier termination of the term hereof, Tenant shall promptly yield up, clean and neat, and in the same condition, order and repair in which they are required to be kept throughout the term hereof, the Premises and all improvements, alterations and additions thereto, and all fixtures and equipment servicing the Building, ordinary wear and tear excepted.

          (b) If Tenant, or any person claiming through Tenant, shall continue to occupy the Premises after the expiration or earlier termination of the term or any renewal thereof, such occupancy shall be deemed to be under a month-to-month tenancy under the same terms and conditions set forth in this lease; except, however, that the Minimum Rent during such continued occupancy shall be double the amount set forth in Paragraphs 5 (a) and (b) hereof. Anything to the contrary notwithstanding, any holding over by Tenant without Landlord’s prior written consent shall constitute a default hereunder and shall be subject to all the remedies set forth in Article 29 hereof.

     28. Defaults — Remedies.

          (a) Defaults. It shall be an event of default:

               (i) If Tenant does not pay in full when due and without demand any and all installments of Minimum Rent or Additional Rent or any other charges or payments whether or not herein included as rent; or

               (ii) If Tenant violates or fails to perform or otherwise breaches any agreement, term, covenant or condition herein contained; or

               (iii) If Tenant abandons the Premises or removes or attempts to remove Tenant’s goods or property therefrom other than in the ordinary course of business without having first paid to Landlord in full all Minimum Rent, Additional Rent and other charges that may have become due as well as all which will become due thereafter; or

               (iv) If Tenant becomes insolvent or bankrupt in any sense or makes an assignment for the benefit of creditors or offers a composition or settlement to creditors, or if a petition in bankruptcy or for reorganization or for an arrangement with creditors under any federal or state law is filed by or against Tenant, or a bill in equity or other proceeding for the appointment of a receiver, trustee, liquidator, custodian, conservator or

12

similar official for any of Tenant’s assets is commenced, or if any of the real or personal property of Tenant shall be levied upon by any sheriff, marshal or constable; provided, however, that any proceeding brought by anyone other than the parties to this lease under any bankruptcy, reorganization, arrangement, insolvency, readjustment, receivership or similar law shall not constitute a default until such proceeding, decree, judgment or order has continued unstayed for more than sixty (60) consecutive days.

               (v) If any of the events enumerated in Paragraph (a) (iv) of this Article shall happen to any guarantor of this lease;

          (b) Remedies. Then, and in any such event, Landlord shall have the following rights which shall be cumulative:

               (i) To charge a late payment penalty of five (5%) percent of any amount owed to Landlord pursuant to this lease which is not paid within five (5) days of the date which is set forth in the lease if a date is specified, or, if a date is not specified, within thirty (30) days of the mailing of a bill therefor by Landlord. If Landlord incurs a penalty directly related to any payment which Tenant has failed to make within the times required in this lease, Tenant shall pay Landlord, in addition to the late payment set forth above, the full amount of such penalty incurred by Landlord.

               (ii) Only in events of monetary default or gross misuse of the property, to accelerate the whole or any part of the rent for the entire unexpired balance of the term of this lease, as well as all other charges, payments, costs and expenses herein agreed to be paid by Tenant, and any rent or other charges, payments, costs and expenses if so accelerated shall, in addition to any and all installments of rent already due and payable and in arrears, and any other charge or payment herein reserved, included or agreed to be treated or collected as rent and any other charge, expense or cost herein agreed to be paid by Tenant which may be due and payable and in arrears, be deemed due and payable as if, by the terms and provisions of this lease, such accelerated rent and other charges, payments, costs and expenses were on that date payable in advance.

               (iii) Only in events of monetary default or gross misuse of the property, to enter the Premises and without further demand or notice proceed to distress and sale of the goods, chattels and personal property there found, to levy the rent and other charges herein payable as rent, and Tenant shall pay all costs and officers’ commissions which are permitted by law, including watchmen’s wages and sums chargeable to Landlord, and further including five per cent (5%) commission(s) to the constable or other person making the levy, and in such case all costs, officers’ commissions and other charges shall immediately attach and become part of the claim of Landlord for rent, and any tender of rent without said costs, commissions and charges made after the issuance of a warrant of distress, shall not be sufficient to satisfy the claim of Landlord.

               (iv) To re-enter the Premises, together with all additions, alterations and improvements, and, at the option of Landlord, remove all persons and all or any property therefrom, either by summary dispossess proceedings or by any suitable action or proceeding at law or by force or otherwise, without being liable for prosecution or damages therefor, and repossess and enjoy the Premises. Upon recovering possession of the Premises by reason of or based upon or arising out of a default on the part of Tenant, Landlord may, at Landlord’s option, either terminate this lease or make such alterations and repairs as may be necessary in order to relet the Premises and relet the Premises or any part or parts thereof, either in Landlord’s name or otherwise, for a term or terms which may, at Landlord’s option, be less than or exceed the

13

period which would otherwise have constituted the balance of the term of this lease and at such rent or rents and upon such other terms and conditions as in Landlord’s sole discretion may seem advisable and to such person or persons as may in Landlord’s discretion seem best; upon each such reletting all rents received by landlord from such reletting shall be applied; first, to the payment of any costs and expenses of such reletting, including brokerage fees and attorney’s fees and all costs of such alterations and repairs; second, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; third, to the payment of rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in payment of future rent as it may become due and payable hereunder. If such rentals received from such reletting during any month shall be less than that to be paid during that month by Tenant, Tenant shall pay any such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of the Premises or the making of alterations or improvements thereto or the reletting thereof shall be construed as an election on the part of Landlord to terminate this lease unless written notice of such intention be given to Tenant. Landlord shall in no event be liable in any way whatsoever for failure to relet the Premises or, in the event that the Premises or any part or parts thereof are relet, for failure to collect the rent thereof under such reletting. Tenant, for Tenant and Tenant’s successors and assigns, hereby irrevocably constitutes and appoints Landlord Tenant’s and their agent to collect the rents due and to become due under all subleases of the Premises or any parts thereof without in any way affecting Tenant’s obligations to pay any unpaid balance of rent due or to become due hereunder. Notwithstanding any such reletting without termination, Landlord may at any time hereafter elect to terminate this lease for such previous breach.

               (v) To terminate this lease and the term hereby created without any right on the part of Tenant to waive the forfeiture by payment of any sum due or by other performance of any condition, term or covenant broken. Whereupon Landlord shall be entitled to recover, in addition to any and all sums and damages for violation of Tenant’s obligations hereunder in existence at the time of such termination, damages for Tenant’s default in an amount equal to the amount of the rent reserved for the balance of the term of this lease, as well as all other charges, payments, costs and expenses herein agreed to be paid by Tenant, all discounted at the rate of six percent (6%) per annum to their then present worth, less the fair rental value of the Premises for the remainder of said term, also discounted at the rate of six percent (6%) per annum to its then present worth, all of which amount shall be immediately due and payable from Tenant to Landlord.

               (vi) Whenever not prohibited by the law of the state in which the Property is located, when this lease and the term or any extension or renewal thereof shall have been terminated on account of any default by Tenant, or when the term hereby created or any extension or renewal thereof shall have expired, it shall be lawful for any attorney of any court of record to appear as attorney for Tenant as well as for all persons claiming by, through or under Tenant, and to sign an agreement for entering in any competent court an amicable action in ejectment and judgment against Tenant and all persons claiming by, through or under Tenant and therein confess judgment for the recovery by Landlord of possession of the Premises, for which this lease shall be his sufficient warrant; thereupon, if Landlord so desires, an appropriate writ of possession may issue forthwith, without any prior writ or proceeding whatsoever, and provided that if for any reason after such action shall have been commenced it shall be determined that possession of the Premises remain in or be restored to Tenant, Landlord shall have the right for the same default and upon any subsequent default or defaults, or upon the termination of this lease or Tenant’s right of possession as hereinbefore set forth, to bring one or more further amicable

14

action or actions as hereinbefore set forth to recover possession of the Premises and confess judgment for the recovery of possession of the Premises as hereinbefore provided.

          (c) Non-Waiver. No waiver by Landlord of any breach by Tenant of any of Tenant’s obligations, agreements or covenants herein shall be a waiver of any subsequent breach or of any obligation, agreement or covenant, nor shall any forbearance by Landlord to seek a remedy for any breach by Tenant be a waiver by Landlord of any rights and remedies with respect to such or any subsequent breach.

          (d) Grace Period. Notwithstanding anything hereinabove stated, except in the case of emergency set forth in Article 27 and except in the event of any default enumerated in Paragraphs (a) (iii), (iv) and (v) of this Article, neither party hereto shall exercise any right or remedy provided for in this lease or allowed by law because of any default of the other, except those remedies contained in Paragraph (b)(i) of this Article unless such party shall have first given ten (10) days written notice thereof to the defaulting party for monetary default, thirty [30] days for nonmonetary default, and the defaulting party shall have failed to cure the default within such period; provided, however, that if the default consists of something other than the failure to pay money which cannot reasonably be cured within ten (10) days, neither party hereto shall exercise any such right or remedy if the defaulting party begins to cure the default within the ten (10) days and continues actively and diligently in good faith to completely cure said default; and further provide that Landlord shall not be required to give such ten (10) days notice more than two (2) times during any twelve (12) month period.

          (e) Waiver of Trial By Jury. It is mutually agreed by and between Landlord and Tenant that the respective parties hereto shall and they do hereby waive trial by jury in any action, proceeding, or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this lease.

          (f) Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy provided herein or by law, but each shall be cumulative and in addition to every other right or remedy given herein or now or hereafter existing at law or in equity or by statute.

          (g) Attorneys Fees. In any action, proceeding or cause of whatever kind taken by Landlord in connection with the enforcement of the terms of this lease, Landlord shall be entitled to collect, in addition to all costs, expenses, interest and late fees, its attorneys’ fees in the highest amount permitted by law.

     29. Condition of Title and of Premises. Tenant represents that the Property, the Lot and the Premises, the title thereto, the zoning thereof, the street or streets, sidewalks, parking areas, curbs and access ways adjoining them, any surface and sub-surface conditions thereof, and the present uses and non-uses thereof, have been examined by Tenant, and Tenant accepts them in the condition or state in which they now are, or any of them now is, without relying on any representation, covenant or warranty, express or implied, in fact or in law, by Landlord and without recourse to Landlord, as to the title thereto, the encumbrances thereon, the appurtenances thereto, the nature, condition or usability thereof or the use or uses to which the Premises and the Property or any part thereof may be put, except as to work to be performed by Landlord pursuant to Article 2 hereof. Tenant’s occupancy of the Premises shall constitute acceptance of the work performed by Landlord pursuant to Article 2 hereof.

15

     30. Objections to Notices. Tenant’s failure to object to any statement, invoice, or billing within a period of thirty (30) days after receipt thereof shall constitute Tenant’s acquiescence with respect thereto and shall render such statement, invoice, or billing an account stated between Landlord and Tenant.

     31. Interpretation.

          (a) Captions. The captions in this lease are for convenience only and are not a part of the lease and do not in any way define, limit, describe or amplify the terms and provisions of this lease or the scope or intent thereof.

          (b) Entire Agreement. This lease represents the entire agreement between the parties hereto and there are no collateral or oral agreements or understandings between Landlord and Tenant with respect to the Premises or the Property. No rights, easements or licenses are acquired in the Property or any land adjacent to the Property by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease. This lease shall not be modified in any manner except by an instrument in writing executed by the parties. Tenant agrees to make such changes to this lease as are required by any mortgagee, provided such changes do not substantially affect Tenant’s rights and obligations hereunder. The masculine (or neuter) pronoun, singular number, shall include the masculine, feminine and neuter genders and the singular and plural number.

          (c) Exhibits. Each writing or plan referred to herein as being attached hereto as an Exhibit or otherwise designated herein as an Exhibit hereto is hereby made a part hereof.

          (d) Covenants. The terms, covenants and obligations set forth herein all constitute conditions and not covenants of this lease.

          (e) Arbitration. Wherever arbitration is set forth herein as the appropriate resolution of a dispute, issues shall be submitted for arbitration to the American Arbitration Association in the city nearest to the Premises in which offices of the American Arbitration Association are located. Landlord and Tenant will comply with the rules then obtaining of the American Arbitration Association and the determination of award rendered by the arbitrator(s) shall be final, conclusive and binding upon the parties and not subject to appeal, and judgment thereon may be entered in any court of competent jurisdiction.

          (f) Interest. Wherever interest is required to be paid hereunder, such interest shall be at the highest rate permitted under law.

     32. Definitions.

          (a) “Landlord”. The word “Landlord” is used herein to include the Landlord named above as well as its heirs, successors and assigns, each of whom shall have the same rights, remedies, powers, authorities and privileges as he would have had he originally signed this lease as Landlord. Any such person, whether or not named herein, shall have no liability hereunder after he ceases to hold title to the Premises except for obligations which may have theretofore accrued. Neither Landlord nor any principal of Landlord nor any owner of the Building or the Lot, whether disclosed or undisclosed, shall have any personal liability with respect to any of the provisions of this lease or the Premises.

          (b) “Tenant”. The word “Tenant” is used herein to include the Tenant named above as well as its successors and assigns, each of which shall be under the same obligations, liabilities and disabilities and each of which shall have the same rights, privileges and powers as it would have possessed had it

16

originally signed this lease as Tenant. Each and every of the persons named above as Tenant shall be bound jointly and severally by the terms, covenants and agreements contained herein. However, no such rights, privileges or powers shall inure to the benefit of any assignee of Tenant immediate or remote, unless the assignment to such assignee is permitted or has been approved in writing by Landlord. Any notice required or permitted by the terms of this lease may be given by or to any one of the persons named above as Tenant, and shall have the same force and effect as if given by or to all thereof.

          (c) “Mortgage” and “Mortgagee”. The word “mortgage” is used herein to include any lien or encumbrance on the Premises or the Property or on any part of or interest in or appurtenance to any of the foregoing, including without limitation any ground rent or ground lease if Landlord’s interest is or becomes a leasehold estate. The word “mortgagee” is used herein to include the holder of any mortgage, including any ground lessor if Landlord’s interest is or becomes a leasehold estate. Wherever any right is given to a mortgagee, that right may be exercised on behalf of such mortgagee by any representative or servicing agent of such mortgagee.

          (d) “Person”. The word “person” is used herein to include a natural person, a partnership, a corporation, an association, and any other form of business association or entity.

          (e) “Date of this Lease”. The “date of this lease” shall be the date upon which this lease has been fully executed by both parties.

          (f) “Index”. The word “index” is used herein to mean the U.S. City Average Consumer Price Index for Urban Wage Earners and Clerical Workers (Philadelphia Region) (revised series, 1982-1984-10D) issued from time to time by the Federal Bureau of Labor Statistics or any successor agency that shall issue the index or any other measure hereafter employed by the Federal Bureau of Labor Statistics or any successor agency in lieu of such Index. If there be any controversy as to the measure to be substituted, then the controversy shall be resolved by arbitration. The arbitrators shall be guided by the intention of the parties hereto to modify the Minimum Annual Rent to reflect upward changes in the cost of living. The fees and expenses of the arbitration shall be borne by Landlord and Tenant.

     33. Notices. All notices, demands, requests, consents, certificates and waivers required or permitted hereunder from either party to the other shall be in writing and sent by United States certified mail, return receipt requested, postage prepaid. Notices to Tenant shall be addressed to                                         . Notices to Landlord shall be addressed to Commonwealth Management Corporation, Agent, 62 Read’s Way, New Castle, Delaware 19720, with a copy to any mortgagee or other party designated by Landlord. Either party may at any time, in the manner set forth for giving notices to the other, specify a different address to which notices to it shall be sent. Notices mailed shall be presumed to have been received two (2) business days from the mailing thereof.

     Notice required or permitted by the terms of this lease must be given to an officer of one of the persons named above as Tenant, and shall have the same force and effect as if given by or to all thereof.

     34. Security Deposit. At the time of signing this lease, Tenant shall deposit with Landlord the one months base rent to be retained by Landlord as cash security for the faithful performance and observance by Tenant of the covenants, agreements and conditions of this lease and/or to serve as security against damage or destruction to the Premises caused by Tenant’s use and occupancy

17

of the Premises. Notwithstanding anything to the contrary contained in any law or statute now existing or hereafter passed (i) Tenant shall not be entitled to any interest whatever on the cash security, (ii) Landlord shall not be obligated to hold the cash security in trust or in a separate account, and (iii) Landlord shall have the right to commingle the cash security with its other funds. Landlord may use, apply or retain the whole or any part of the cash security to the extent required for the payment of any Minimum Rent, any Additional Rent or any other sums payable hereunder as to which Tenant is in default or to the extent required for the reimbursement to Landlord of any sum which Landlord may expend or may be required to expend by reason of Tenant’s default in respect to any of the covenants, agreements or conditions of this lease. If Tenant shall fully and faithfully comply with all of the covenants, agreements and conditions of this lease, the cash security shall be promptly returned to the Tenant after the expiration or termination of this lease and surrender of the Premises to the Landlord be returned to Tenant after the date fixed as the expiration of the term of this lease and surrender of the Premises to Landlord. If the Premises are sold to a bona fide purchaser, Landlord shall have the right to transfer the aforesaid cash security to such purchaser, by which transfer Landlord shall be released from all liability for the return thereof, and Tenant shall look solely to the new landlord for the return thereof.

     IN WITNESS WHEREOF, and in consideration of the mutual entry into this lease and for other good and valuable consideration, and intending to be legally bound, each party hereto has caused this agreement to be duly executed under seal.

Date signed: 7-1-96

LANDLORD: COMMONWEALTH/MANAGEMENT, CORP., AGENT
By:	/s/ Illegible
Witness: (Illegible)
Date signed: 6/20/96 TENANT: HEALTH BUSINESS SYSTEMS, INC.
By:	/s/ Louis Greenberg, CFO
Attest: Diane Silva
		[CORPORATE SEAL]

18

RENTAL RIDER

     Tenant hereby agrees to pay when due, in monthly installments, on the first day of each month, without notice, the following base rent on the 17,695 square feet of rentable area leased in the building:

	Rent Per		Monthly
Term	Square Feet		Rental
07/01/96 — 09/30/97	$	11.25	$	16,589.06
10/01/97 — 09/30/98	$	11.50	$	16,957.71
10/01/98 — 09/30/99	$	11.75	$	17,326.35
10/01/99 — 09/30/2000	$	12.00	$	17,695.00
10/01/2000 — 09/30/2001	$	12.25	$	18,063.65

     Landlord will give three months of free rent to the Tenant to be taken as the second, third and forth months of rent in the above lease term.

     Landlord will agree to provide the following improvements to the space at its sole cost and expense:

     1) Construct two bathrooms within the premises, complete with fixtures. Womens’ to contain three stalls; Mens’ to contain two stalls and two urinals. Approximate size of each 10’ by 15’. Also construct one executive bathroom adjacent to the two executive offices;

     2) Construct demising walls to provide a secure premises;

     3) Rework the existing HVAC to provide for control of the units servicing the demised area;

     4) Repair and paint all walls as necessary;

     5) Construct walls within the main conference room to create three defined areas;

     6) Demolish a few interior walls and patch existing drywall where needed;

     7) Provide the Tenant the right to affix a sign on the exterior of the building above the new entrance door to the suite;

     8) Provide the Tenant the right to place its’ name on the building monument sign which fronts on the street.

     Tenant shall be allowed the right to terminate this lease at the end of the third lease year if the principals of the company have sold greater than fifty percent (50%) of the company prior to this date. In order to exercise this right of termination, the Tenant must give Landlord six months prior written notice of the intent to terminate along with the payment of the unamortized

portion of the initial occupancy costs which, for the purposes of this rider, will equal seventy five thousand dollars ($75,000).

Witness:	LANDLORD:
	COMMONWEALTH MANAGEMENT CORP., AGENT
/s/ Illegible	/s/ Illegible
Witness:	TENANT:
	HEALTH BUSINESS SYSTEMS, INC.
/s/ Diane Silva	/s/ Louis Greenberg, CFO

RENTAL RIDER

     Tenant hereby agrees to pay when due, in monthly installments, on the first day of each month, without notice, the following base rent on the 17,695 square feet of rentable area leased in the building:

	Rent Per		Monthly
Term	Square Feet		Rental
07/01/96 — 09/30/97	$	11.25		$16,589.06
10/01/97 — 09/30/98	$	11-50		$16,957.71
10/01/98 — 09/30/99	$	11.75		$17,326.35
10/01/99 — 09/30/2000	$	12.00	7/1/00 $17,695.00 + 5140* + Electric on 5140
10/01/2000 — 09/30/2001	$	12.25	$18,063.65 + 5247 X plus electric on all
10/01/2001 — 9/30/2003				18,432.29 + 5354.16

     Landlord will give three months of free rent to the Tenant to be taken as the second, third and forth months of rent in the above lease term.

     Landlord will agree to provide the following improvements to the space at its sole cost and expense:

     1) Construct two bathrooms within the premises, complete with fixtures. Womens’ to contain three stalls; Mens’ to contain two stalls and two urinals. Approximate size of each 10’ by 15’. Also construct one executive bathroom adjacent to the two executive offices;

     2) Construct demising walls to provide a secure premises;

     3) Rework the existing HVAC to provide for control of the units servicing the demised area;

     4) Repair and paint all walls as necessary;

     5) Construct walls within the main conference room to create three defined areas;

     6) Demolish a few interior walls and patch existing drywall where needed;

     7) Provide the Tenant the right to affix a sign on the exterior of the building above the new entrance door to the suite;

     8) Provide the Tenant the right to place its’ name on the building monument sign which fronts on the street.

     Tenant shall be allowed the right to terminate this lease at the end of the third lease year if the principals of the company have sold greater than fifty percent (50%) of the company prior to this date. In order to exercise this right of termination, the Tenant must give Landlord six months prior written notice of the intent to terminate along with the payment of the unamortized

portion of the initial occupancy costs which, for the purposes of this rider, will equal seventy five thousand dollars ($75,000).

Witness:	LANDLORD:
	COMMONWEALTH MANAGEMENT CORP., AGENT
Witness:	TENANT:
	HEALTH BUSINESS SYSTEMS, INC.

EX-10.8

EXHIBIT 10.8

AMENDMENT

This Amendment dated this 24^th day of April, 2000 to be made part of a certain Lease between Commonwealth Management Corporation, Agent and now superceded by Equivest Management Corporation, Agent, (hereinafter called Landlord) and Health Business Systems (hereinafter called Tenant) executed July 1, 1991, for space in the Building located at 730 Lo is Drive, Warminster, PA.

Now, Thereby, for full and valuable consideration, receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby agree as follows;

1.	The term shall be extended to 9/30/03.
2.	Tenant shall lease an additional 5140 rentable square feet.
3.	The rental for the additional space only shall be:

06701/00-09/30/00 — $5140.00/Month plus electric

10/01/00-09/30/01 — $5247;00/Month plus electric

10/01/01-09/30/03 — $5354;16/Month plus electric

4.	Tenant shall pay electric oh the original 17695 rentable square feet as of 10/01/01.
5.	The rentals for the original 17695 rentable square feet shall be $18432.29 as of 10/01/01.
6.	Landlord at their sole cost shall perform the improvements as per the approved Plan along with building standard carpet and paint.
7.	All other terms and conditions of the original Lease shall remain the same,

AGREED AND ACCEPTED BY	AGREED AND ACCEPTED BY
/s/ Illegible	/s/ 04/26/2000
Equivest Management, Agent	Health Business Systems, Inc.

EX-10.9

EXHIBIT 10.9

SECOND AMENDMENT TO AGREEMENT OF LEASE

     THIS AMENDMENT TO LEASE AGREEMENT (the “Amendment”) is made as of the13^TH day of November, 2002, by and between HEALTH BUSINESS SYSTEMS, INC., a Pennsylvania corporation with an address of 738 Louis Drive, Warminster, Pennsylvania 18974 (the “Tenant”) and 730 LOUIS DRIVE, L.P., a Pennsylvania limited partnership having an address at c/o Obermayer Rebmann Maxwell & Hippel LLP, One Penn Center—19^th Floor, 1617 John F. Kennedy Boulevard, Philadelphia, Pennsylvania 19103-1895, and successor in interest to all prior landlords (the “Landlord”).

WITNESSETH:

     WHEREAS, Tenant and Landlord’s predecessor landlord through its representative Commonwealth Management Corporation, entered into an Agreement of Lease (the “Original Lease”) dated June 20, 1996 for the Premises, as said term is defined in the Original Lease, which has been expanded pursuant to prior amendments to the Original Lease (along with the Original Lease, all the modifications thereto, including but not limited to that certain amendment dated April 24, 2000 (the “Amendment” and collectively with the Original Lease, the “Lease”) regarding the rental of the Premises which are a portion of the office building located at 730 Louis Drive, Warminster, Pennsylvania (the “Building”); and

     WHEREAS, the parties wish to amend some of the provisions of the Lease, including an extension of the term of the Lease.

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

     1. Premises. The parties hereto agree that the Lease shall be amended to reflect that the Premises comprise approximately 22,487 square feet, which number shall be used to calculate all applicable rent or payments by the Tenant.

     2. Tenant’s Proportion of Expenses Relating to the Premises and Building. The parties hereto agree that the Premises comprise 43.60% of the Building, and as such, said percentage shall be the Tenant’s share of expenses relating to the Building (the “Tenant’s Share”).

     3. Term of Lease. The term of the Lease shall be extended until September 30, 2008.

     4. Rent. As of October 1, 2003, the Tenant shall pay rent as detailed below:

Year	Rate		Monthly Rent
10/1/03-9/30/04		12.50	$	23,423.96
10/1/04-9/30/05		12.50	$	23,423.96

Year	Rate		Monthly Rent
10/1/05-9/30/06		13.00	$	24,360.92
10/1/06-9/30/07		13.25	$	24,829.40
10/1/07-9/30/08		13.50	$	25,297.88

     5. Improvement Allowance. Tenant may deduct up to Three Thousand Five Hundred Dollars ($3,500.00) from the Rent payment due October 1, 2003, provided such funds are used to improve the Premises.

     6. Utilities. Tenant shall reimburse the Landlord for the proportion of the utilities’ expenses of the Building equal to the Tenant’s Share.

     7. Security Deposit. The parties acknowledge that, pursuant to Section 34 of the Original Lease, Landlord is presently holding Sixteen Thousand Five Hundred Eighty Nine Dollars and Six Cents ($16,598.06) as the Tenant’s security deposit for the Premises.

     8. Real Estate Broker. Landlord represents and warrants that it has not dealt with any broker or finder in connection with this Amendment except for Matthew Frederick of the Arden Group (the “Arden Group”). Tenant represents and warrants that it has not dealt with any broker in connection with this Amendment nor is any broker entitled to any commission in connection therewith, except for the Arden Group. Tenant and Landlord each agree to indemnify, defend and hold the other party harmless from and against any and all claims for a commission or other compensation in connection with this Amendment, made by any and all brokers or finders, who may claim to have dealt with or communicated to Tenant or Landlord, as applicable, in connection with this Amendment.

     9. Definitions. All capitalized terms used herein, which are not defined herein, shall have the meanings ascribed to them in the Lease.

     10. Counterparts. This Amendment may be executed in counterparts, each of which shall be considered an original hereof and all of which, when taken together, shall be considered one and the same document.

     11. Effect on Lease. Except as specifically modified herein, the parties hereto confirm the terms, conditions and covenants of the Lease which remain unmodified and in full effect.

2

     IN WITNESS WHEREOF, the parties hereto hereby set forth their hands and seals.

	TENANT:
Attest	HEALTH BUSINESS SYSTEMS, INC.
/s/ Illegible	By:	/s/ Louis Greenberg
coo		Name: Louis Greenberg
		Title: President

LANDLORD: 730 LOUIS DRIVE, L.P.
By:	Pintzuk Organization,
	Agent for Landlord
By:	/s/ Scott G. Homel
	Name:	Scott G. Homel
	Title:	President

3

EX-10.10

EXHIBIT 10.10

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the 3rd day of April, 2007 by and between Gordon S. Glenn (“Executive”) and Systems Xcellence Inc. and its subsidiary, SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to continue to employ Executive, and Executive wishes to continue to be employed by the Company, as its Chairman of its Board of Directors (the “Board”) and Chief Executive Officer and Executive desires to continue his employment with the Company under the terms and conditions set forth in this Agreement.

     B. In order to induce the Executive to enter into this Agreement, and to incentivize and reward Executive’s continued effort, loyalty and commitment to the Company, concurrent with the execution and delivery of this Agreement the Company has granted to Executive stock options to purchase shares of common stock of the Company.

     C. Executive acknowledges that as a member of the Company’s senior management team, Executive is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Executive is one of only a few Executives who will have regular access to various confidential and/or proprietary information relating to the Company. Further, Executive acknowledges that Executive’s covenants to the Company hereinafter set forth, specifically including but not limited to Executive’s covenant not to engage in competition with the Company, are being made in partial consideration of the Company’s willingness to continue to employ Executive under the terms and conditions set forth in this Agreement. As a condition of that continued employment, the Company requires that this Agreement be entered into pursuant to which Executive furnishes the Company with, among other things, certain covenants of Executive, including Executive’s covenant not to compete with the businesses of the Company for a reasonable period of time. Executive further acknowledges that Executive’s covenants to the Company hereinafter set forth, specifically including but not limited to the Executive’s covenant not to engage in competition with the Company also are being made in partial consideration of the Company’s grant stock options to purchase shares of common stock of the Company.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to continue to employ Executive to serve as the Company’s Chairman of the Board and Chief Executive Officer, and Executive hereby accepts such employment, and agrees to perform his duties and responsibilities to the best of Executive’s abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Executive shall be the Company’s Chairman of the Board and Chief Executive Officer, and shall participate as a member of the Company’s Senior Executive Team. In addition, Executive shall be responsible for, among other things, the overall performance of the company

with an emphasis on mergers and acquisition and investor relations, and such other duties as may be reasonably requested by the Company. Executive shall report to the Board.

     1.3 Resignation of Officer Position and Board Membership Upon Termination. Executive shall resign his position as an officer of the Company and membership on the Board if Executive’s employment with the Company terminates for any reason, with Executive’s resignation being effective no later than the effective date of Executive’s termination of employment.

     1.4 Exclusive Employment. While employed by the Company hereunder, Executive covenants to the Company that he will devote his entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity), and use his good faith best efforts to promote the interests of the Company. The foregoing shall not be construed as prohibiting Executive from spending such time as may be reasonably necessary to attend to Executive’s personal affairs and investments so long as such activities do not conflict or interfere with Executive’s obligations and/or timely performance of his duties to the Company.

     1.5 Executive Representations and Warranties as to Employability. Executive hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Executive of this Agreement and any other agreements contemplated hereby to which Executive is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound;

     (b) Executive is not a party to or bound by any employment agreement, non-competition agreement or confidentiality agreement with any other person or entity (or if a party to such an agreement, Executive has disclosed the material terms thereof to the Board prior to the execution hereof and promptly after the date hereof shall deliver a copy of such agreement to the Board);

     (c) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms; and

     (d) Executive hereby acknowledges and represents that he has been given the opportunity to consult with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Executive’s employment hereunder shall commence on Executive’s signing of this Agreement, and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the “Employment Period”).

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date set forth in Section 2.1, above, and ending on December 31, 2008 (the “Initial Term”). The Employment Period shall be automatically extended for successive one (1) calendar year periods following the expiration of the Initial Term (each period being hereinafter referred to as an “Extension Term”) upon the same terms and conditions provided for herein

2

unless either party provides the other party with advance written notice of its or Executive’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than thirty (30) days prior to the expiration of the Initial Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Executive by the Company, and Executive’s employment with the Company terminates as a result thereof, then the termination shall not be deemed a Termination by the Company Without Cause and Executive shall be entitled only to the benefits provided in Section 5.2(a) and the medical insurance premium payment benefits described in subsection 5.2(b)(iv) of this Agreement.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Executive an annual base salary (the “Annual Base Compensation”) in the amount of Three Hundred Thousand and 00/100 Dollars (U.S.) ($300,000.00 (U.S.)). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Executive’s Annual Base Compensation shall be reviewed annually by the Compensation Committee of the Board.

     3.2 Executive Performance Bonus. In respect of each fiscal year falling within the Employment Period, Executive shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Executive’s performance objectives, as mutually agreed to by the parties (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at eighty percent (80%) of the Executive’s Annual Base Compensation (the “Target Amount”), with the specific percentage determined by the Company’s Board after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Executive at the same time other members of the senior executive team are paid their respective incentive compensation bonuses. If Executive is terminated for Cause, then no Incentive Compensation Bonus shall be paid to Executive for the calendar year in which the termination occurred. If Executive’s employment terminates during the calendar year for reasons other than Cause, then Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. The Incentive Compensation Bonus also shall be pro rated if Executive’s employment with the Company under this Agreement commenced during the calendar year. To the extent practicable, the Company will notify Executive of Executive’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Executive shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Executive’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Executive shall be entitled to accrue over the course of the calendar year twenty (20) days of paid vacation time, pro rated during the Initial Term, in accordance with the Company’s then current vacation policy (the “Vacation Benefit”); provided that unused vacation may be used by Executive in the following calendar year only in accordance with and as permitted by the Company’s then current vacation policies in effect from time to time. The Vacation Benefit shall be increased over the Employment Period in accord with Company policy. Nothing in this Agreement shall cause Executive to forfeit any accrued but unused paid vacation time Executive had prior to entering into this Agreement.

3

     3.5 Grant of Stock Options.

     a. Executive and the Company acknowledge that the “Exercise Conditions” set forth in the two Stock Option Agreements entered into between Systems Xcellence Inc. and Executive, each dated September 27, 2006 (the “Contingent Option Agreements”), have been satisfied, thereby removing the contingencies, set forth in paragraph 2(a) of the Contingent Option Agreements, that were placed on exercising the stock options referenced in the Contingent Option Agreements.

     b. All existing options for shares of the Company stock held by Executive at the time Executive’s signs this Agreement shall vest on the earlier of January 1^st 2008, or upon any termination of the Employment Period as a result of the Executive’s resignation; or upon any termination of the Employment Period by the Company regardless of the Triggering Event.

     c. Between March 1 and March 31, 2007, Executive shall be granted options (“Options”) to purchase Fifty Thousand (50,000) shares of common stock of the Company; provided Executive must be employed by the Company at the time the Options are granted as a condition of receiving the Options. The exercise price per share under any Option shall be 100% of the fair market value of the common stock of the Company at the time of grant. The Options shall be fully vested upon issuance and otherwise be subject to the Company’s then current stock option plan.

     d. During the Employment Period, for the period covering Fiscal Year 2008 and thereafter, Executive shall be entitled to participate in the Company’s stock option plan and receive options to purchase shares of common stock of the Company in the same manner as other members of the Company’s Board.

     3.6 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other senior executives of the Company, including, without limitation, health, dental and vision insurance; life insurance; short and long-term disability insurance; accidental death and dismemberment insurance; automobile allowance and participation in the Company’s 401(k) and other deferred compensation plan. Executive shall participate in these and any other Company employee benefit plans in accordance with the terms and provisions of those plans.

ARTICLE IV
COVENANTS OF EXECUTIVE

     4.1 Covenants Regarding Developments. Executive agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Executive conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

     (a) Executive shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written records of such Developments and all modifications, research, and studies made or undertaken by Executive with respect thereto.

4

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Executive has any rights thereto, Executive hereby assigns all such rights, title, and interest to the Company.

     (c) Upon request by the Company, Executive, at any time, whether during or after Executive’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments, and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) The foregoing provisions regarding assignments do not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Executive’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Executive for the Company.

     4.2 Ownership and Covenant to Return Documents, etc. Executive agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Executive by the Company or are prepared, compiled or otherwise acquired by Executive during the Employment Period, shall be the sole and exclusive property of the Company. Executive shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Executive agrees that Executive will deliver all of the aforementioned documents and objects that may be in Executive’s possession to the Company on the termination of Executive’s employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Executive recognizes that by virtue of Executive’s employment with the Company, Executive will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This information (“Confidential and Proprietary Information”) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Executive, or which Executive should know by virtue of Executive’s position or the circumstances in which Executive learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of this Agreement or Executive’s obligations under a statutory or common law obligation) or (ii) obtained by Executive from a third party subsequent to the termination of Executive’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a statutory or

5

common law obligation). Executive agrees that during the Employment Period and at all times thereafter (a) Executive will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for Executive’s own purposes or the purposes of another, except as required in the course of Executive’s employment for the benefit of the Company or as required by law, and (b) Executive will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

     4.4 Noninterference with Employees Covenant. Executive agrees that during the Employment Period and for the twelve (12) month period thereafter, Executive will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other employee of the Company (who is employed by the Company at the end of the Executive’s employment with the Company) to leave the employ of the Company.

     4.5 Covenant of Nonsolicitation of Customers. Executive acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Executive’s employment. Accordingly, Executive agrees that during the Restricted Period (defined below), Executive will not: (a) directly or indirectly, solicit or accept business from, or provide products or services to, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Executive sold or provided the Company’s products or services at any time during the twenty four (24) month period immediately preceding the termination of Executive’s employment, (ii) any entity for which Executive orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the twenty four (24) month period immediately preceding the termination of Executive’s employment, or (iii) any entity as to which Executive acquired Confidential and Proprietary Information at any time during Executive’s employment with the Company. “Restricted Period” means the Employment Period and the twenty four (24) month period thereafter; provided, that if the Employment Period is not extended because Executive chooses not enter into an Extension Term as provided in Section 2.2 of this Agreement and Executive receives no compensation or benefits after the Employment Period (except as required by law), then the Restriction Period shall be twelve (12) months.

     4.6 Covenant Not to Compete. Executive acknowledges that (i) the Company is and will be engaged in the business of providing healthcare transaction processing services and information technology solutions to the pharmaceutical industry, including without limitation: (x) pharmacy benefits services and analytics software and related ASP services, including claims processing, pharmacy networks, data warehousing and information analysis, rebate contracting and formulary management, clinical initiatives, and consumer web services; and (y) pharmacy practice management and point of sale (POS) systems for retail pharmacy (independents and chains), institutional/nursing home pharmacy, and high-volume mail order pharmacy; (ii) Executive is one of a limited number of persons who has extensive knowledge and expertise relevant to the businesses of the Company; (iii) Executive’s performance of Executive’s services for the Company hereunder will afford Executive full and complete access to and cause Executive to become highly knowledgeable about the Company’s Confidential and Proprietary Information; (iv) the agreements and covenants contained in this Section 4.6 are essential to protect the business and goodwill of the Company, because, if Executive enters into any activities competitive with the businesses of the Company, Executive will cause substantial harm to the Company; (v) Executive will be exposed to the Company’s largest customers, which Executive acknowledges Executive would not have been exposed to but for Executive’s employment with the Company; (vi) the business territory of the

6

Company at the time this Agreement was entered into constitutes the United States and Canada (the “Existing Business Territory”); and (vii) Executive’s covenants to the Company set forth in this Section 4.6 are being made in partial consideration of the Company’s willingness to employ him and to grant him the Options. Accordingly, Executive hereby agrees that during the Restricted Period, and within the Existing Business Territory and any additional markets the Company has entered into as of the time the Executive’s employment with the Company terminates, Executive shall not directly or indirectly own any interest in, invest in, lend to, borrow from, manage, control, participate in, consult with, become employed by, render services to, or in any other manner whatsoever engage in, any business which is competitive with any business actively being engaged in by the Company or actively (and demonstrably) being considered by the Company for entry into on the date of the termination of Executive’s employment with the Company. The preceding to the contrary notwithstanding, Executive shall be free to make investments in the publicly traded securities of any corporation, provided that such investments do not amount to more than 1% of the outstanding securities of any class of such corporation.

     4.7 Remedies for Breach. Executive recognizes that the rights and privileges granted to Executive by this Agreement, and Executive’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Executive might be entitled from the Company. Accordingly, Executive understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Executive also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Executive’s death; (b) Executive’s Total Disability; (c) Executive’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; (f) Termination arising out of a Change of Control; (g) Resignation for Good Reason; or (h) the shareholders of the Company approve a plan of complete liquidation or dissolution of Systems Xcellence Inc. or SXC Health Solutions, Inc. (“Dissolution”).

     5.2 Rights Upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death, Total Disability, Resignation, and Termination by the Company for Cause. If the Triggering Event was Executive’s Death, Total Disability (defined below), Resignation (other than a Resignation for Good Reason), or a Termination by the Company for Cause (defined below), then Executive shall be entitled to receive Executive’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s Executive welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

7

     (b) Termination by Company Without Cause, Resignation for Good Reason or Dissolution. If the Triggering Event was a Termination by the Company Without Cause, a Resignation for Good Reason (defined below) or Dissolution, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) two (2) times Executive’s Annual Base Compensation at the time of the Triggering Event; (iii) payment of a Executive’s Incentive Compensation Bonus for the fiscal year in which the Triggering Event occurs, if any, pro rated to Executive’s date of termination; and (iv) payment of health insurance premiums for a health insurance policy for the benefit of Executive, his spouse and his dependents, with substantially the same benefits as for full-time employees, until Executive is eligible for Medicare benefits. Executive’s entitlement to the benefits provided in section 5.2(b) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (c) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination arising out of a Change of Control (defined below), then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof plus; (ii) to two (2) times the sum of (x) Executive’s Annual Base Compensation at the time of the Triggering Event and (y) the average of the Executive’s last two Incentive Compensation Bonuses; (iii) payment of a Executive’s Incentive Compensation Bonus for the fiscal year in which the Triggering Event occurs, if any, pro rated to Executive’s date of termination; and (iv) payment of health insurance premiums for a health insurance policy for the benefit of Executive, his spouse and his dependents, with substantially the same benefits as for full-time employees, until Executive is eligible for Medicare benefits. Executive’s entitlement to the benefits provided in section 5.2(c) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (d) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Executive’s rights to salary, Executive benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any loans, cash advances or fixed amounts which Executive owes the Company against any amounts it owes Executive under this Agreement.

     (e) Method and Timing of Certain Payments. Subject to subsections 6.11(a) and (b) of this Agreement, all payments due to Executive pursuant to sections 5.2(b)(i), (ii) and (iii) and 5.2(c)(i), (ii) and (iii) of this Agreement (“Payments Due”) shall be paid as follows: Fifty percent (50%) of the Payments Due shall be paid in a lump sum, less required federal, state and local tax withholding, within twenty-one (21) days of Executive’s signing of any required Separation Agreement and General Release and fifty percent (50%) of the Payments Due shall be paid on the first anniversary of the last day of the Employment Period. The insurance premium payments provided pursuant to sections 5.2(b)(iv) and 5.2(c)(iv) shall be initially satisfied through the payment of the COBRA insurance continuation benefits available to Executive, his spouse and his dependents, and those payments are contingent upon Executive, his spouse and his dependents making a timely COBRA election; provided, however, that any obligations of the Company to make insurance premium payment beyond the COBRA insurance continuation period shall be satisfied, at the Company’s sole discretion, through paying the premiums on either (1) the conversation of the applicable health insurance policies into individual policies; or (2) the securing of individual policies providing comparable coverage to the Company’s group health insurance policies.

8

     For further clarity, the payments provided for in subsections 5.2(b) and 5.2(c) will not be subject to any reduction, except as provided by subsection 5.2(d), or if Executive breaches any Executive’s obligations under Article IV, but will not be reduced should Executive obtain alternative employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV, and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Executive’s employment with the Company that is not a Resignation for Good Reason.

     (b) “Termination by the Company for Cause” means termination by the Company of Executive’s employment for:

     (i) A material breach by Executive of this Agreement (other than as a result of incapacity due to physical or mental illness);

     (ii) A conviction of Executive by a court of competent jurisdiction of a felony;

     (iii) Executive’s refusal, failure or neglect to perform his duties under this Agreement in a manner that is materially detrimental to the business or reputation of the Company;

     (iv) Executive’s engagement in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of the Company; or

     (v) Executive’s pursuit of interests that are materially adverse to the Company;

provided, however, that in the case of clauses (i), (iii), or (v), the Company first shall have given Executive thirty (30) days written notice of and opportunity to cure any conduct or deficiency in performance by Executive and Executive shall have failed to cure any such conduct or deficiency during such notice period.

     (c) “Termination by the Company Without Cause” means a termination of Executive’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

     (d) “Total Disability” means Executive’s inability to engage in any substantial gainful activity because of any medically determinable physical or mental impairment which lasts for at least twelve (12) consecutive months (as determined by an independent physician licensed in the State of Illinois to be chosen mutually by the parties for making this determination), in which case such Total Disability shall be deemed to have occurred on the last day of such twelve-month period.

9

     (e) A “Termination Arising Out of a Change of Control” occurs when Executive resigns within twelve (12) months of a “Change of Control,” which shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than Systems Xcellence Inc. or an executive benefit plan of the Systems Xcellence Inc., acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting security of Systems Xcellence Inc. and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of Systems Xcellence Inc.; or

     (ii) The shareholders of Systems Xcellence Inc. approve a merger, consolidation, recapitalization, or reorganization of Systems Xcellence Inc., a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 65% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 65% of the holders of outstanding voting securities of Systems Xcellence Inc. immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction.

     (f) “Resignation for Good Reason” means a voluntary termination of Executive’s employment hereunder on account of, and within sixty (60) days after, the occurrence of one or more of the following events:

     (i) Executive is assigned duties inconsistent with his position as Chairman of the Board and Chief Executive Officer of the Company;

     (ii) The Company materially breaches this Agreement;

     (iii) Executive ceases to a member of the Board of Directors of the Company for any reason other than death or resignation;

     (iv) Executive is directed to report to someone other than the Board; or

     (v) Any announcement by the Board that the Company is seeking Executive’s replacement, other than with respect to the period after December 31, 2008;

provided, however, that in the case of clauses (i) or (ii), Executive first shall have given the Company thirty (30) days written notice of and opportunity to cure any conduct or deficiency in performance by the Company and the Company shall have failed to cure any such conduct or deficiency during such notice period. For clarity, a “Resignation for Good Reason” shall not include the mutual agreement of the Executive and the Board to fill only the role of Chairman of the Board and not Chief Executive Officer.

10

ARTICLE VI
GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Executive may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Executive and Executive’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Executive expressly agrees for Executive and on behalf of Executive’s executors, administrators and heirs, that this Agreement and Executive’s obligations, rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Executive, Executive’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Executive.

     6.4 Complete Understanding. This Agreement constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Executive by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Executive and the Company.

     6.5 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

     6.6 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent breach by Executive. The waiver by Executive of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.7 Venue. Jurisdiction. Etc. Executive hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Executive hereby submits to the jurisdiction of each such court. Executive hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Executive is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Executive consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Executive at Executive’s address listed in the business records of the Company. Executive and the Company do each hereby waive any right to trial by jury, Executive or it may have concerning any matter relating to this Agreement.

11

     6.8 Indemnification of Executive.

     (a) Executive is hereby entitled to indemnification for Executive’s acts or omissions in Executive’s capacity as an Executive or officer of the Company to the same extent as the Company’s other senior vice presidents and in the manner provided by the Company’s bylaws. In addition the Company shall indemnify Executive for any damages suffered or incurred by Executive as a result of serving as an Officer of the Company provided that Executive has acted honestly and in good faith with a view to the best interest of the Company. Within ten (10) days after receipt of a claim for indemnification accompanied by evidence of the liability or expense subject to indemnification, the Company shall pay or cause to be paid the indemnification claim. Executive shall give notice to the Company no later than ten (10) days after such Executive shall have been served with written notice of any claim that may give rise to a claim for indemnification.

     (b) Subject to any rights of or duties to any insurer, reinsurer or other third party having liability for any claim made or brought against Executive, the Company shall have the right, at its option, to assume, at its own expense, the control of the defense thereof, including the employment of legal counsel reasonably satisfactory to Executive. If the Company exercises the foregoing right, Executive shall cooperate with the Company and make available to it all information under the control of Executive, which is relevant to the claim. If the Company does not exercise the foregoing right, Executive shall keep the Company reasonably apprised of the progress of the defense of the claim. Nothing herein shall preclude Executive, at Executive’s expense, from employing legal counsel of Executive’s choosing to participate in the defense of any claim made or brought against Executive in addition to legal counsel employed by the Company.

     (c) If the Company elects to assume control of the defense of any claim, the Company shall not settle or compromise the claim for and on behalf of Executive without the written consent of Executive; provided, however, that if the Company receives an offer of settlement or compromise from the other party or parties to the claim in a particular amount or obtains a commitment from such party or parties to accept a compromise or settlement in such amount if offered, and if such settlement or compromise requires only the payment of such amount, the granting of an appropriate release or similar accommodation, and no other relief, and Executive refuses to consent thereto and elects to continue to defend the claim, then the extent of the indemnity to which Executive shall be entitled hereunder shall be limited to such amount and the legal fees and expenses that Executive would have been entitled to receive from the Company if such compromise or settlement had been accepted.

     (d) This indemnification obligation shall continue notwithstanding that Executive has ceased to be an officer or employee of the Company.

     6.9 Directors & Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board in its reasonable discretion.

     6.10 Employee’s Attorney’s Fees. Executive shall be entitled to be reimbursed for up to Five Thousand and 00/100 Dollars (U.S. ) ($5,000.00 (U.S.)) for his reasonable attorney’s fees incurred in connection with his and his counsel’s review and negotiation of this Agreement and the underlying term sheet. Executive shall be responsible for any tax liability incurred in connection with the payment provided by this section.

12

     6.11 Tax Provisions.

     (a) Compliance With Section 409A of the Internal Revenue Code. To the extent applicable, it is intended that this Agreement comply with the provisions of section 409A of Internal Revenue Code of 1986, as amended (the “Code”), so as to prevent the inclusion in gross income of any amounts payable or benefits provided hereunder in a taxable year that is prior to the taxable year or years in which such amounts or benefits would otherwise actually be distributed, provided or otherwise made available to Executive. This Agreement shall be construed, administered, and governed in a manner consistent with this intent. Any provision that would cause any amount payable or benefit provided under this Agreement to be includable in the gross income of Executive under Code section 409A(a)(l) shall have no force and effect unless and until amended to cause such amount or benefit to not be so includable (which amendment shall be mutually agreed upon by the parties in good faith and may be retroactive to the extent permitted by Code section 409A). In particular, to the extent Executive becomes entitled to receive a payment or a benefit upon an event that does not constitute a permitted distribution event under Code section 409A(a)(2), then notwithstanding anything to the contrary in this Agreement, such payment or benefit will be made or provided to Executive on the earlier of (i) the effective date of Executive’s “separation from service” with Company (determined in accordance with Code section 409A); provided however, that if Executive is a “specified employee” (within the meaning of Code section 409A), this date will be the date which is 6 months after the effective date of Executive’s separation from service with Company, or (ii) the date of Executive’s death. Any reference in this Agreement to Code section 409A shall also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service.

     (b) Compliance With Section 162(m) of the Code. Notwithstanding anything herein to the contrary, if the Company reasonably anticipates that the deduction of any payment to Executive hereunder will be limited or eliminated by the application of Code section 162(m), which generally limits the deduction of compensation paid by public corporations in excess of $1 million annually to certain executives, the payment of such amount shall be delayed until the earliest date at which the Company reasonably anticipates that the deduction of the payment would not be limited or eliminated by the application of Code section 162(m).

     (c) Excise Taxes Under Sections 280G and 4999 of the Code. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that the Executive shall become entitled to payments and/or benefits provided by this Agreement or any other amounts in the “nature of compensation” (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or any affiliate, any person whose actions result in a change of ownership or effective control of the Company covered by Section 280G(b)(2) of the Code or any person affiliated with the Company or such person) as a result of such change in ownership or effective control of the Company, (a “Payment”) would be subject to the excise tax imposed by section 4999 or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

13

     6.12 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.13 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.14 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

Notices to Executive:

To the last known address of
Executive as reflected on the
books and records of the Company.

Notices to Company:

SXC Health Solutions, Inc.
Attn: Jeff Park, Chief Financial Officer
                                        
Lisle, Illinois                     

With Copies to:

Larry Zanger, Esq.
Holland & Knight LLP 131
South Dearborn, 30^thFloor
Chicago, Illinois 60603

     6.15 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:			EXECUTIVE:
SYSTEMS XCELLENCE INC. and SXC HEALTH SOLUTIONS, INC.
By:	/s/ Illegible		/s/ Gordon S. Glenn
	Their:	DIRECTOR	Gordon S. Glenn

14

EXHIBIT A
To Employment Agreement
Between Gordon S. Glenn and
Systems Xcellence Inc. and SXC Health Solutions, Inc.

CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE

     This Confidential Separation Agreement and General Release (“Agreement”) is entered into by and between Gordon S. Glenn, an individual (“Executive”), and Systems Xcellence Inc. and its subsidiary, SXC Health Solutions, Inc. (collectively, the “Company”):

     1. Termination of Employment. Executive acknowledges that Executive’s employment with the Company terminated effective                         , 200   .

     2. Compensation owed. Executive acknowledges receipt of all compensation (including, but not limited to, any and all overtime, commission, bonus payments and all other benefits except accrued but unused vacation time) due from the Company through the payroll period immediately prior to                         , 200   . Executive and the Company acknowledge that Executive will receive a lump-sum payment equal to any final compensation (including Executive’s accrued but unused vacation time of                     (     ) days) accrued but not yet paid to Executive on the Company’s next regular payday.

     3. Separation Benefit: Subject to the provisions of this Agreement, the Company will pay Executive the separation benefit set forth in Article V, Section 5.2(b) [or (c)] of Executive’s Employment Agreement with the Company (“Separation Benefit”), commencing on the first regular payday following the twenty-first day after Executive’s signing of this Agreement. The Separation Benefit does not constitute nor is it intended to be any form of compensation to Executive for any services to the Company.

     4. Consideration. Executive acknowledges that Executive would not be entitled to the Separation Benefit provided for in paragraph 3 above in the absence of Executive’s signing of this Agreement, that the Separation Benefit constitutes a substantial economic benefit to Executive, and that it constitutes good and valuable consideration for the various commitments undertaken by Executive in this Agreement.

     5. Parties Released. For purposes of this Agreement, the term “Releasees” means the Company, its past and present parents, subsidiaries, divisions, and affiliated companies; their respective predecessors, successors, assigns, benefit plans, and plan administrators; and their respective past and present shareholders, directors, trustees, officers, Executives, agents, attorneys and insurers.

     6. General Release. Executive, for and on behalf of Executive and each of Executive’s personal and legal representatives, heirs, devisees, executors, successors and assigns, hereby acknowledges full and complete satisfaction of, and fully and forever waives, releases, acquits, and discharges Releasees from any and all claims, causes of action, demands, liabilities, damages, obligations, and debts (collectively referred to as “Claims”), of every kind and nature, whether known or unknown, suspected or unsuspected, or fixed or contingent, which Executive holds as of the date Executive signs this Agreement, or at any time previously held against Releasees, or any of them, arising out of any matter whatsoever (with the exception of breaches of this Agreement). This General Release specifically includes, but is not limited to, any and all Claims:

     a. Arising out of or in any way related to Executive’s employment with the Company,
or the termination of Executive’s employment;

     b. Arising out of or in any way related to any contract or agreement between Executive
and the Company;

     c. Arising under or based on the Equal Pay Act of 1963; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; 42 U.S.C. §1981; the Americans With

Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Fair Labor Standards Act of 1938; the National Labor Relations Act; the Worker Adjustment and Retraining Notification Act of 1988; the Executive Retirement Income Security Act of 1974 (ERISA) (excepting claims for vested benefits, if any, to which Executive is legally entitled thereunder); the Illinois Constitution; the Illinois Human Rights Act;

     d. Arising under or based on any federal, state, county or local law, statute, ordinance, decision, order, policy or regulation prohibiting employment discrimination; providing for the payment of wages or benefits; or otherwise creating rights or claims for Executives, including, but not limited to, any and all claims alleging breach of public policy; the implied obligation of good faith and fair dealing; or any express, implied, oral or written contract; handbook; manual; policy statement or employment practice; or alleging misrepresentation; defamation; libel; slander; interference with contractual relations; intentional or negligent infliction of emotional distress; invasion of privacy; false imprisonment; assault; battery; fraud; negligence; or wrongful discharge; and

     e. Arising under or based on the Age Discrimination in Employment Act of 1967 (ADEA), as amended by the Older Workers Benefit Protection Act (OWBPA), and alleging a violation thereof based on any action or failure to act by Releasees, or any of them, at any time prior to the effective date of this Agreement.

     7. Intended Scope of Release. It is the intention of the parties and is fully understood and agreed by them that this Agreement includes a General Release of all Claims (with the exception of breaches of this Agreement and claims for vested benefits, if any, to which Executive is legally entitled under ERISA), which Executive holds or previously held against Releasees, or any of them, whether or not they are specifically referred to herein. No reference herein to any specific claim, statute or obligation is intended to limit the scope of this General Release and, notwithstanding any such reference, this Agreement shall be effective as a full and final bar to all Claims of every kind and nature, whether known or unknown, suspected or unsuspected, or fixed or contingent, released in this Agreement.

     8. Executive Waiver of Rights. As part of the foregoing General Release, Executive is waiving all of Executive’s rights to any recovery, compensation, or other legal, equitable or injunctive relief (including, but not limited to, compensatory damages, liquidated damages, punitive damages, back pay, front pay, attorneys’ fees, and reinstatement to employment), from Releasees, or any of them, in any administrative, arbitral, judicial or other action brought by or on behalf of Executive in connection with any Claim released in this Agreement.

     9. Covenant Not to Sue. In addition to all other obligations contained in this Agreement, Executive agrees that Executive will not initiate, bring or prosecute any suit or action against any of Releasees in any federal, state, county or municipal court, with respect to any of the Claims released in this Agreement. Notwithstanding the forgoing, nothing in this Agreement shall preclude Executive from bringing suit to challenge the validity or enforceability of this Agreement under the Age Discrimination in Employment Act as amended by the Older Workers Benefit Protection Act.

     10. Remedies for Breach. If the Executive, or anyone on Executive’s behalf, initiates, brings or prosecutes any suit or action against Releasees, or any of them, in any federal, state, county or municipal court, with respect to any of the Claims released in this Agreement (except to challenge the validity or enforceability of this Agreement under the Age Discrimination in Employment Act as amended by the Older Workers Benefit Protection Act), or if the Executive breaches any of the terms of this Agreement, then Executive shall be liable for the payment of all damages, costs and expenses (including attorneys’ fees) incurred by Releasees, or any of them, in connection with such suit, action or breach.

     11. No Admission of Liability. Nothing in this Agreement constitutes or shall be construed as an admission of liability on the part of Releasees, or any of them. Releasees expressly deny any liability of any

-A 2 -

kind to Executive, and particularly any liability arising out of or in any way related to Executive’s employment with the Company or the termination of Executive’s employment.

     12. Covenants of Nondisclosure and Confidentiality and Not to Access the Company’s Computer Network.

     (a) Executive hereby reaffirms and agrees to abide by all confidentiality and nondisclosure obligations to which Executive is subject under any contract or agreement between Executive and the Company as well as the Illinois Trade Secrets Act.

     (b) Executive shall keep confidential the circumstances surrounding the termination of Executive’s employment with the Company, as well as the existence of this Agreement and its terms, and agrees that neither he, nor Executive’s attorneys, nor any of Executive’s agents, shall directly or indirectly disclose any such matters (other than to the Equal Employment Opportunity Commission, the Illinois Human Rights Commission, or any other federal, state or local fair employment practices agency), unless written consent is given by the Company’s President, or unless required to comply with any federal, state or local law, rule or order. However, this paragraph will not prohibit Executive from disclosing the terms of this Agreement to Executive’s attorneys, accountants or other tax consultants as necessary for the purpose of securing their professional advice, or in connection with any suit or action alleging a breach of this Agreement.

     (c) Executive agrees that Executive will not access or attempt to access, directly or indirectly, by any matter whatsoever, the Company’s computer network, including without limitation, the Company’s e-mail system, the Company’s electronic document storage and retrieval system, and the Company’s computer network servers and related equipment.

     13. Warranty of Return of Company Property. Executive warrants and acknowledges that Executive has turned over to the Company all equipment or other property issued to Executive’s by the Company, along with all documents, notes, computer files, and other materials which Executive had in Executive’s possession or subject to Executive’s control, relating to the Company and/or any of its customers. Executive further warrants and acknowledges that Executive has not retained any such documents, notes, computer files or other materials (including any copies or duplicates thereof).

     14. Warranty and Covenant of Nondisparagement. Executive (i) warrants that during the time period between when Executive was notified of the termination of Executive’s employment with the Company and Executive’s signing of this Agreement Executive has not made any disparaging remarks about Releasees or their products and services (“Disparaging Remarks”) and (ii) agrees that Executive shall not make any Disparaging Remarks following Executive’s signing of this Agreement.

     15. Consideration Period. Executive is advised of to consult with an attorney or other representative of Executive’s choice prior to signing this Agreement. Executive has a period of twenty-one (21) days within which to consider and accept the Agreement. This twenty-one (21) day period begins to run from                         , 200   , which Executive acknowledges is the date on which Executive received a copy of this Agreement (if not earlier). Executive agrees that any changes or modifications (material or otherwise) made to this Agreement prior to its execution by Executive shall not restart the twenty-one (21) day consideration period.

     16. Revocation Period. Executive understands that Executive has the right to revoke this Agreement at any time within seven (7) days after Executive signs it and that the Agreement shall not become effective or enforceable until this revocation period has expired without revocation.

     17. Resignation of Officer Position. Executive shall resign from Executive’s position as an officer of the Company effective no later than the effective date of Executive’s termination of employment with the Company.

-A 3 -

     18. Warranty of Understanding and Voluntary Nature of Agreement. Executive acknowledges that Executive has carefully read and fully understands all of the provisions of this Agreement; that Executive knows and understands the rights Executive is waiving by signing this Agreement; and that Executive has entered into the Agreement knowingly and voluntarily, without coercion, duress or overreaching of any sort.

     19. Severability. The provisions of this Agreement are fully severable. Therefore, if any provision of this Agreement is for any reason determined to be invalid or unenforceable, such invalidity or unenforceability will not affect the validity or enforceability of any of the remaining provisions. Furthermore, any invalid or unenforceable provisions shall be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, or, if such provision cannot under any circumstances be modified or restricted, it shall be excised from the Agreement without affecting the validity or enforceability of any of the remaining provisions. The parties agree that any such modification, restriction or excision may be accomplished by their mutual written agreement or, alternatively, by disposition of a court or other tribunal.

     20. Entire Agreement/Integration. This Agreement constitutes the sole and entire agreement between Executive and the Company with respect to the subjects addressed in it, and supersedes all prior or contemporaneous agreements, understandings, and representations, oral and written, with respect to those subjects.

     21. No Waiver By the Company. No waiver, modification or amendment of any of the provisions of this Agreement shall be valid and enforceable unless in writing and executed by Executive and the Company’s President.

     22. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, Executive and Executive’s personal and legal representatives, heirs, devisees, executors, successors and assigns, and the Company and its successors and assigns.

     23. Choice of Law. This Agreement and any amendments hereto shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to conflicts of law principles.

COMPANY:		EXECUTIVE:
SYSTEMS XCELLENCE INC. and SXC HEALTH SOLUTIONS, INC.
By:	/s/ Illegible
	DIRECTOR	Gordon S. Glenn

-A 4 -

EX-10.11

EXHIBIT 10.11

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the 24th day of August, 2006, by and between Mark Thierer (“Executive”) and Systems Xcellence Inc. and its subsidiary, SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to employ Executive, and Executive wishes to be employed by the Company, as its President and Chief Operating Officer and Executive desires to accept employment with the Company under the terms and conditions set forth in this Agreement.

     B. In order to induce the Executive to enter into this Agreement, and to incentivize and reward Executive’s continued effort, loyalty and commitment to the Company, concurrent with the execution and delivery of this Agreement the Company has granted to the Executive stock options to purchase 250,000 shares of common stock of the Company.

     C. Executive acknowledges that as a member of the Company’s senior management team, Executive is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Executive is one of only a few Executives who will have regular access to various confidential and/or proprietary information relating to the Company. Further, Executive acknowledges that Executive’s covenants to the Company hereinafter set forth, specifically including but not limited to Executive’s covenant not to engage in competition with the Company, are being made in partial consideration of the Company’s willingness to employ Executive under the terms and conditions set forth in this Agreement. As a condition of that employment, the Company requires that this Agreement be entered into pursuant to which Executive furnishes the Company with, among other things, certain covenants of Executive, including Executive’s covenant not to compete with the businesses of the Company for a reasonable period of time. Executive acknowledges that Executive’s covenants to the Company hereinafter set forth, specifically including but not limited to the Executive’s covenant not to engage in competition with the Company are being made in partial consideration of the Company’s grant stock options to purchase 250,000 shares of common stock of the Company.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ or continue to employ Executive to serve as the Company’s President and Chief Operating Officer, and Executive hereby accepts such employment, and agrees to perform his duties and responsibilities to the best of Executive’s abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Executive shall be the Company’s President and Chief Operating Officer, and shall participate as a member of the Company’s Senior Executive Team. In addition, Executive shall be responsible for, among other things, the oversight of all of the Company’s operations, business development, product development and information technology operations, and such other duties as may

be reasonably requested by the Company. Executive shall report to the Company’s Chief Executive Officer. Executive shall perform his duties under this Agreement at the Company’s facilities in Lombard, Illinois or any subsequent location of the Company’s primary administrative operations.

     1.3 Officer Position/Resignation of Board Membership. Concurrent with Employee’s employment with the Company, it is anticipated that Employee will be elected as an officer of the Company and may be elected to the Company’s Board of Directors. Employee shall resign his/her position as an officer of the Company and membership on the Company’s Board of Directors if Employee’s employment with the Company terminates for any reason, with Employee’s resignation being effective no later than the effective date of the effective date of Employee’s termination of employment.

     1.4 Exclusive Employment. While employed by the Company hereunder, Executive covenants to the Company that he will devote his entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity), and use his good faith best efforts to promote the interests of the Company; provided, Executive shall be permitted spend a reasonable amount of time to engage activities related to the transition of his duties at his former employer for the first thirty (30) days of the Initial Term or as otherwise authorized in writing by the Company’s Chief Executive Officer. The foregoing shall not be construed as prohibiting Executive from spending such time as may be reasonably necessary to attend to Executive’s personal affairs and investments so long as such activities do not conflict or interfere with Executive’s obligations and/or timely performance of his duties to the Company.

     1.5 Executive Representations and Warranties as to Employability. Executive hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Executive of this Agreement and any other agreements contemplated hereby to which Executive is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound;

     (b) Executive is not a party to or bound by any employment agreement, non-competition agreement or confidentiality agreement with any other person or entity (or if a party to such an agreement, Executive has disclosed the material terms thereof to the Board prior to the execution hereof and promptly after the date hereof shall deliver a copy of such agreement to the Board);

     (c) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms; and

     (d) Executive hereby acknowledges and represents that he/she has been given the opportunity to consult with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Executive’s employment hereunder shall commence on September 1,2006, and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the “Employment Period”).

2

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date set forth in Section 2.1, above, and ending on December 31, 2008 (the “Initial Term”). The Employment Period shall be automatically extended for successive two (2) calendar year periods following the expiration of the Initial Term (each period being hereinafter referred to as an “Extension Term”) upon the same terms and conditions provided for herein unless either party provides the other party with advance written notice of its or Executive’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than sixty (60) days prior to the expiration of the Initial Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Executive by the Company, and Executive’s employment with the Company terminates as a result thereof, then Executive’s termination shall be a treated as a Termination by the Company Without Cause.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Executive an annual base salary (the “Annual Base Compensation”) in the amount of Two Hundred Seventy-five Thousand and 00/100 Dollars ($275,000.00). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Executive’s Annual Base Compensation shall be reviewed annually by the Company’s Chief Executive Officer and/or the Compensation Committee of the Company’s Board of Directors.

     3.2 Executive Performance Bonus. In respect of each calendar year falling within the Employment Period, Executive shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Executive’s performance objectives (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at eighty percent (80%) of the Executive’s Annual Base Compensation, with the specific percentage determined by the Company’s Board of Directors after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Executive at the same time other members of the Senior Executive Team are paid their respective incentive compensation bonuses. If Executive is terminated for Cause, then no Incentive Compensation Bonus shall be paid to Executive for the calendar year in which the termination occurred. If Executive’s employment terminates during the calendar year for reasons other than Cause, then Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. The Incentive Compensation Bonus also shall be pro rated if Executive’s employment with the Company commenced during the calendar year. To the extent practicable, the Company will notify Executive of Executive’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Executive shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Executive’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Executive shall be entitled to accrue over the course of the calendar year twenty (20) days of paid vacation time, pro rated during the Initial Term, in accordance with the Company’s then current vacation policy; provided that unused vacation may be used by Executive in the

3

following calendar year only in accordance with and as permitted by the Company’s then current vacation policies in effect from time to time.

     3.5 Insurance. The Company shall provide Executive with the following insurance benefits during the Employment Period:

     a. Dental, vision and supplemental health insurance commencing on your date of employment with the Company in accordance with the terms and conditions of the applicable plans and Company policies then in effect.

     b. A term life insurance policy with a death benefit in the amount of 2.5 times Executive’s Annual Base Compensation in accordance with the applicable plans and Company policies then in effect, subject to a maximum death benefit of $500,000.00 and subject to evidence of insurability.

     c. Additional Executive Group Life Insurance in the amount of $500,000 (contingent upon insurance company approval) beginning on the first of the month following one month of employment.

     d. Accidental death and dismemberment insurance commencing upon the date of your employment with the Company in accordance with the applicable plans and Company policies then in effect.

     e. Short and long-term disability insurance commencing upon the date of your employment with the Company in accordance with the applicable plans and Company policies then in effect.

     3.6 Retirement Plan. After six (6) months of employment, Executive shall be eligible to participate in the Company’s deferred compensation plans, including its 401(k) plan.

     3.7 Grant of Stock Options/Existing Stock.

     a. Upon the commencement of the Initial Term, Executive shall be granted options (“Options”) to purchase 250,000 shares of common stock of the Company. The exercise price of the Options shall be equal to the closing price of the Company’s common stock on the date the Initial Term commences. The Options shall be subject to the Company’s current Stock Option Plan. One hundred thousand of the Options (the “Guaranteed Options”) shall vest in one-third increments annually, commencing on December 31,2006. The remaining 150,000 Options (the “Contingent Options”) shall vest, in their entirety, upon Executive being appointed the Company’s Chief Executive Officer (provided, Executive accepts appointment as the Company’s Chief Executive Officer). For clarification, the Contingent Options shall not vest if Executive is not appointed the Company’s Chief Executive Officer (or Executive declines appointment as the Company’s Chief Executive Officer).

     b. Except as otherwise provided in section 5.2(f) of this Agreement, once vested, the Options shall have a five (5) year life.

     c. Upon a Change of Control (defined below), all of the Guaranteed Options shall vest.

4

     d. Upon either Executive’s Resignation for Good Reason (defined below) or Executive’s employment terminates through a Termination by the Company Without Cause (defined below), then the Guaranteed Options shall vest on the following basis:

Date of Termination	Cumulative Percentage Vested
Prior to December 31, 2006		33.33	%
On or after December 31, 2006, but		66.67	%
before December 31, 2007
On or after December 31, 2007		100.00	%

     e. Executive acknowledges that immediately prior to his employment with the Company, he held approximately $100,000.00 worth of common stock of the Company (the “Preexisting Shares”). Executive agrees that he will not sell or otherwise dispose of his Preexisting Shares during the Initial Term or any Extension Term without the written consent of the Compensation Committee of the Company’s Board of Directors.

     3.8 Stock Option Plan. Executive shall be permitted to participate in the Company’s Stock Option Plan in the same manner as the Company’s other Senior Executive Team members, with future annual grants based on Executive’s performance as determined by the Company’s Chief Executive Officer.

     3.9 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other Executives of the Company on the Senior Executive Team.

     3.10 Vehicle Allowance. Executive shall receive a monthly payment of Five Hundred and 00/100 Dollars ($500.00) for Executive’s use of a personal automobile for business use (“Vehicle Allowance”). The Vehicle Allowance shall be subject to all required federal, state and local withholding.

     3.11 Attorney’s Fees. The Company shall reimburse Executive for his reasonable attorney’s fees, up to Five Thousand and 00/100 Dollars ($5,000.00), incurred in connection with the negotiation of the term sheet and this Agreement. Executive shall be required to submit invoices from his attorney, detailing the legal services provided, including time spent, service performed, hourly rate of the legal services provider and any associated expenses.

ARTICLE IV
COVENANTS OF EXECUTIVE

     4.1 Covenants Regarding Developments. Executive agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Executive conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

     (a) Executive shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written

5

records of such Developments and all modifications, research, and studies made or undertaken by Executive with respect thereto.

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Executive has any rights thereto, Executive hereby assigns all such rights, title, and interest to the Company.

     (c) Upon request by the Company, Executive, at any time, whether during or after Executive’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments, and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) The foregoing provisions regarding assignments do not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Executive’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Executive for the Company.

     4.2 Ownership and Covenant to Return Documents, etc. Executive agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Executive by the Company or are prepared, compiled or otherwise acquired by Executive during the Employment Period, shall be the sole and exclusive property of the Company. Executive shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Executive agrees that Executive will deliver all of the aforementioned documents and objects that may be in Executive’s possession to the Company on the termination of Executive’s employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Executive recognizes that by virtue of Executive’s employment with the Company, Executive will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This information (“Confidential and Proprietary Information’’) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Executive, or which Executive should know by virtue of Executive’s position or the circumstances in which Executive learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of

6

this Agreement or Executive’s obligations under a statutory or common law obligation) or (ii) obtained by Executive from a third party subsequent to the termination of Executive’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a statutory or common law obligation). Executive agrees that during the Employment Period and at all times thereafter (a) Executive will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for Executive’s own purposes or the purposes of another, except as required in the course of Executive’s employment for the benefit of the Company or as required by law, and (b) Executive will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

     4.4 Noninterference Covenant. Executive agrees that during the Employment Period and for the twelve (12) month period thereafter, Executive will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other Executive of the Company (who is employed by the Company at the end of the Executive’s employment with the Company) to leave the employ of the Company.

     4.5 Covenant of Nonsolicitation of Customers. Executive acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Executive’s employment. Accordingly, Executive agrees that during the Restricted Period, Executive will not: (a) directly or indirectly, solicit or accept business from, or provide products or services to, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Executive sold or provided the Company’s products or services at any time during the two (2) year period immediately preceding the termination of Executive’s employment, (ii) any entity for which Executive orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the two (2) year period immediately preceding the termination of Executive’s employment, or (iii) any entity as to which Executive acquired Confidential and Proprietary Information at any time during Executive’s employment with the Company. “Restricted Period” means the Employment Period and the two (2) year period following the termination of Executive’s employment.

     4.6 Covenant Not to Compete. Executive expressly acknowledges that (i) the Company is and will be engaged in the business of providing healthcare transaction processing services and information technology solutions to the pharmaceutical industry, including without limitation: (x) pharmacy benefits services and analytics software and related ASP services, including claims processing, pharmacy networks, data warehousing and information analysis, rebate contracting and formulary management, clinical initiatives, and consumer web services; and (y) pharmacy practice management and point of sale (POS) systems for retail pharmacy (independents and chains), institutional/nursing home pharmacy, and high-volume mail order pharmacy; (ii) Executive is one of a limited number of persons who has extensive knowledge and expertise relevant to the businesses of the Company; (iii) Executive’s performance of Executive’s services for the Company hereunder will afford Executive full and complete access to and cause Executive to become highly knowledgeable about the Company’s Confidential and Proprietary Information; (iv) the agreements and covenants contained in this Section 4.6 are essential to protect the business and goodwill of the Company, because, if Executive enters into any activities competitive with the businesses of the Company, Executive will cause substantial harm to the Company; (v) Executive will be exposed to the Company’s largest customers; (vi) the business territory of the Company at the time this Agreement was entered into constitutes the United States and Canada

7

(“Business Territory”); and (vii) Executive’s covenants to the Company set forth in this Section 4.6 are being made in consideration of the Company’s willingness to employ him. Accordingly, Executive hereby agrees that during the Restricted Period, Executive shall not directly or indirectly own any interest in, invest in, lend to, borrow from, manage, control, participate in, consult with, become employed by, render services to, or in any other manner whatsoever engage in, any business which is competitive with any business actively being engaged in by the Company or actively (and demonstrably) being considered by the Company for entry into on the date of the termination of Executive’s employment with the Company, within the Business Territory. The preceding to the contrary notwithstanding, Executive shall be free to make investments in the publicly traded securities of any corporation, provided that such investments do not amount to more than 1% of the outstanding securities of any class of such corporation.

     4.7 Remedies for Breach. Executive recognizes that the rights and privileges granted to Executive by this Agreement, and Executive’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Executive might be entitled from the Company. Accordingly, Executive understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Executive also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in Section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Executive’s death; (b) Executive’s Total Disability; (c) Executive’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; (f) Termination arising out of a Change of Control; or (g) Resignation for Good Reason.

     5.2 Rights Upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death or Total Disability. If the Triggering Event was Executive’s Death or Total Disability (defined below), then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; and (ii) payment of a Executive’s Incentive Compensation Bonus, if any, pro rated to Executive’s date of termination.

     (b) Resignation or Termination by the Company for Cause. If the Triggering Event was Executive’s Resignation (other than a Resignation for Good Reason) or a Termination by the Company for Cause (defined below), then Executive shall be entitled to receive Executive’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s executive welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

8

     (c) Termination by Company Without Cause. If the Triggering Event was a Termination by the Company Without Cause (defined below) not within twelve (12) months of a Change of Control (defined below), then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus, if any, pro rated to Executive’s date of termination; and (iii) the Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(b)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (d) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination for any reason arising within twelve (12) months of a Change of Control (defined below), then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus, if any, pro rated to Executive’s date of termination; and (iii) the Change of Control Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(c)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (e) Resignation for Good Reason. If the Triggering Event was a Resignation for Good Reason (defined below) not within twelve (12) months of a Change of Control (defined below), then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus, if any, pro rated to Executive’s date of termination; and (iii) the Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(d)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (f) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Executive’s rights to salary, Executive benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any loans, cash advances or fixed amounts which Executive owes the Company against any amounts it owes Executive under this Agreement

     (g) Treatment of Options. Executive shall be required to exercise any vested options within ninety (90) days from date of the termination of his employment.

     For further clarity, the payments provided for in subsections 5.2(b), 5.2(c) and 5.2(d) will not be subject to any reduction, except as provided by subsection 5.2(e), or if Executive breaches any Executive’s obligations under Article IV, but will not be reduced should Executive obtain alternative employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV, and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Executive’s employment with the Company that is not a Resignation for Good Reason.

9

     (b) “Resignation for Good Reason” means a voluntary termination of Executive’s employment hereunder on account of, and within sixty (60) days after, the occurrence of one or more of the following events:

     (i) The assignment to Executive of any duties inconsistent in any material respect with Executive’s position (including status, offices and titles), authority, duties or responsibilities as contemplated by Section 1.2 hereof which results in a diminution of Executive’s position, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of written notice thereof given by Executive;

     (ii) The failure of the Company to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of written notice thereof given by Executive;

     (iii) Executive is required to relocate his principal business office or his principal residence outside of the Chicago metropolitan area, or the Company assigns Executive duties that could reasonably require such a relocation unless, within thirty (30) days of receipt of written notice by the Executive, the Company removes the assignment of the duties that necessitated or could necessitate the relocation; or

     (iv) Executive is not named the Company’s Chief Executive Officer by January 1, 2008.

     (c) “Severance Benefit” means a lump-sum payment, less required tax withholding, equal to two (2) times Executive’s Annual Base Compensation. Except as provided by Section 5.5 of this Agreement, the Severance Benefit shall be paid within thirty (30) days of Executive’s signing of the Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (d) “Change of Control Severance Benefit” means a lump-sum payment, less required tax withholding, equal to two (2) times the sum of (i) Executive’s Annual Base Compensation and (ii) the average of the Executive’s last two Incentive Compensation Bonuses. Except as provided by Section 5.5 of this Agreement, the Change of Control Severance Benefit shall be paid within thirty (30) days of Executive’s signing of the Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (e) “Termination by the Company for Cause” means termination by the Company of Executive’s employment for:

     (i) The failure of Executive to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (ii) A conviction of Executive by a court of competent jurisdiction of a felony;

     (iii) The refusal, failure or neglect of Executive to perform his duties under his employment agreement in a manner that is materially detrimental to the business or

10

reputation of the Company unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (iv) The engagement by the Executive in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of SXC; or

     (v) The pursuit by Executive of interests that are materially adverse to SXC unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company.

     (f) “Termination by the Company Without Cause” means a termination of Executive’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

     (g) A “Termination Arising Out of a Change of Control” occurs when Executive resigns or if Executive is subject to a Termination Without Cause within twelve (12) months of a “Change of Control,” which shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than Systems Xcellence Inc. or an Executive benefit plan of the Systems Xcellence Inc., acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting security of Systems Xcellence Inc. and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of Systems Xcellence Inc.;

     (ii) The shareholders of Systems Xcellence Inc. approve a merger, consolidation, recapitalization, or reorganization of Systems Xcellence Inc., a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 75% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 75% of the holders of outstanding voting securities of Systems Xcellence Inc. immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or

     (iii) The shareholders of Systems Xcellence Inc. approve a plan of complete liquidation of Systems Xcellence Inc. or SXC Health Solutions, Inc. or an agreement for the sale or disposition by Systems Xcellence Inc. of all or a substantial portion of assets (i.e., 50% or more) of the total assets of Systems Xcellence Inc. or SXC Health Solutions, Inc.

     (h) “Total Disability” means Executive’s inability, because of illness, injury or other physical or mental incapacity, to perform Executive’s duties hereunder (as determined by the Board in good faith) for a continuous period of one hundred eighty (180) consecutive days, or for a total of one hundred eighty (180) days within any three hundred sixty (360) consecutive day

11

period, in which case such Total Disability shall be deemed to have occurred on the last day of such one hundred eighty (180) day or three hundred sixty (360) day period, as applicable.

     5.5 Six Month Delay in Payments. Notwithstanding any other provision of this Agreement, if as of the date of termination of the Executive’s employment with the Company the Executive is a “specified employee” within the meaning of Section 409 A of the Internal Revenue Code of 1986, as amended (the “Code”), no payments may be made hereunder before the date which is six months after the Executive’s separation from service within the meaning of Section 409A of the Code with the Company or, if earlier, the date of death of the Executive, to the extent necessary to comply with Section 409A of the Code. Payments to which the Executive would otherwise be entitled during the first six months following separation from service will be accumulated, without interest, and paid in one lump sum of cash on the first day of the seventh month following the date of the Executive’s separation from service. Additionally, this Agreement is intended to comply with the applicable requirements of Section 409A of the Code, and any provision of the Agreement which is inconsistent with Section 409A shall be void and without effect.

ARTICLE VI
GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Executive may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Executive and Executive’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Executive expressly agrees for Executive and on behalf of Executive’s executors, administrators and heirs, that this Agreement and Executive’s obligations, rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Executive, Executive’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Executive.

     6.4 Complete Understanding. This Agreement constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Executive by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Executive and the Company.

     6.5 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

     6.6 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent breach by Executive. The

12

waiver by Executive of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.7 Venue, Jurisdiction, Etc. Executive hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Executive hereby submits to the jurisdiction of each such court. Executive hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Executive is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Executive consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Executive at Executive’s address listed in the business records of the Company. Executive and the Company do each hereby waive any right to trial by jury, Executive or it may have concerning any matter relating to this Agreement.

     6.8 Indemnification of Executive. Executive is hereby entitled to indemnification for Executive’s acts or omissions in Executive’s capacity as an Executive or officer of the Company to the same extent as the Company’s other senior executives and in the manner provided by the Company’s bylaws.

     6.9 Directors & Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board of Directors in its reasonable discretion.

     6.10 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.11 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.12 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

          Notices to Executive:

          Mark Thierer
          917 Lakewood Drive
          Barrington, Illinois 60010

          Notices to Company:.

          SXC Health Solutions, Inc.
          Attn: Gordon Glenn, CEO
          2905 South Finley Road, Suite 110
          Lombard, Illinois 60148-4867

13

          With Copies to:

          Larry Zanger, Esq.
          Holland & Knight LLP
          131 South Dearborn, 30^th Floor
          Chicago, Illinois 60603

     6.13 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:		EXECUTIVE:
SYSTEMS XCELLENCE INC. and SXC HEALTH SOLUTIONS, INC.
By:	/s/ Gordon S. Glenn	/s/ Mark Thierer	8/28/06
	Their: President & CEO	Mark Thierer

14

EX-10.12

EXHIBIT 10.12

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the ___ day of October 2007, by and between Jeff Park (“Executive”) and SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to continue to employ Executive, and Executive wishes to continue to be employed by the Company, as its Senior Vice President, Finance and Chief Financial Officer, and Executive desires to continue employment with the Company under the terms and conditions set forth in this Agreement.

     B. Executive acknowledges that as a member of the Company’s senior management team, Executive is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Executive is one of only a few Executives who will have regular access to confidential and/or proprietary information relating to the Company. Further, Executive acknowledges that Executive’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s willingness to employ Executive under the terms and conditions set forth in this Agreement. As a condition of that employment, the Company requires that this Agreement be entered into pursuant to which Executive furnishes the Company with, among other things, certain covenants of Executive, including Executive’s covenant not to compete with the businesses of the Company for a reasonable period of time.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ or continue to employ to serve as Senior Vice President, Finance and Chief Financial Officer, and Executive hereby accepts such employment, and agrees to perform his duties and responsibilities to the best of Executive’s abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Executive shall be the Company’s Senior Vice President, Finance and Chief Financial Officer and shall participate as a member of the Company’s Senior Executive Team. In addition, Executive shall be responsible for, among other things, managing the financial growth and development of the company, driving strategic mergers and acquisitions, managing investor and analyst relations, directing and overseeing the Company’s internal finance and accounting activities, and such other duties as may be reasonable requested by the Company, and such other duties as may be reasonably requested by the Company. Executive shall report to the Company’s CEO. Executive shall perform his duties under this Agreement at the Company’s facilities in Lisle, Illinois or any subsequent location of the Company’s primary administrative operations.

     1.3 Exclusive Employment. While employed by the Company hereunder, Executive covenants to the Company that he/she will devote his/her entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other

incapacity), and use his/her good faith best efforts to promote the interests of the Company. The foregoing shall not be construed as prohibiting Executive from spending such time as may be reasonably necessary to attend to Executive’s personal affairs and investments so long as such activities do not conflict or interfere with Executive’s obligations and/or timely performance of his/her duties to the Company.

     1.4 Executive Representations and Warranties as to Employability. Executive hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Executive of this Agreement and any other agreements contemplated hereby to which Executive is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he/she is bound;

     (b) Executive is not a party to or bound by any employment agreement, non-competition agreement or confidentiality agreement with any other person or entity (or if a party to such an agreement, Executive has disclosed the material terms thereof to the Board prior to the execution hereof and promptly after the date hereof shall deliver a copy of such agreement to the Board);¹

     (c) The Company has not requested, directly or indirectly, expressly or implicitly, that Executive use or disclose the trade secrets or other confidential information of any prior employer or other third party, and Executive warrants that he will not use or disclose such information;

     (d) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms; and

     (e) Executive hereby acknowledges and represents that he/she has been given the opportunity to consult with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that he/she fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Executive’s employment hereunder shall commence on the date this Agreement is executed, and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the “Employment Period”).

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date this Agreement is executed, above, and ending on December 31, 2008 (the “Initial Term”). The Employment Period shall be automatically extended for successive one (1) calendar year periods following the expiration of the Initial Term (each period being hereinafter referred to as an “Extension Term”) upon the same terms and conditions provided for herein unless either party provides the other party with advance written notice of its or Executive’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than sixty (60) days prior to the expiration of the Initial

2

Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Executive by the Company, and Executive’s employment with the Company terminates as a result thereof, then Executive’s termination shall be a treated as a Termination by the Company Without Cause.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Executive, at minimum, an annual base salary (the “Annual Base Compensation”) in the amount of two hundred fifty seven thousand and 00/100 dollars ($257,000). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Executive’s Annual Base Compensation shall be reviewed annually by the Company’s Chairman and CEO and the SXC Compensation Committee.

     3.2 Executive Incentive Compensation Bonus. In respect of each calendar year falling within the Employment Period, Executive shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Executive’s performance objectives (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at fifty percent (50%) of the Executive’s Annual Base Compensation, with the specific percentage determined by the Company’s Board of Directors after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Executive at the same time other members of the Senior Executive Team are paid their respective incentive compensation bonuses. If the Executive’s employment terminates during the calendar year due to a Change In Control (5.4.d) or Termination Without Cause (5.4.c), the Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. If the Executive’s employment terminates during the calendar year for any other reason, then no Incentive Compensation bonus shall be paid for that calendar year. To the extent practicable, the Company will notify Executive of Executive’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Executive shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Executive’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Executive shall be entitled to accrue over the course of the calendar year twenty (20) days of paid vacation time in accordance with the Company’s then current vacation policy; provided that unused vacation may be used by Executive in the following calendar year only in accordance with and as permitted by the Company’s then current vacation policies in effect from time to time. Nothing in this Agreement shall cause Executive to forfeit any accrued but unused paid vacation time Executive had prior to entering into this Agreement.

     3.5 Insurance. During the Employment Period Executive shall be eligible to participate in the Company’s insurance programs on terms and conditions no less favorable than those made available generally to other similarly situated Executives, as such programs may be revised from time to time.

3

     3.6 Retirement Plan. Executive shall be eligible to participate in the Company’s deferred compensation plans, including its 401(k) plan.

     3.7 Grant of Stock Options

     a. Executive shall be permitted to participate in the Company’s Stock Option Plan in the same manner as the Company’s other Senior Vice Presidents, with future annual grants based on Executive’s performance as determined by the Company’s Chief Executive Officer.

     b. Except as otherwise provided in Section 5.2(e) of this Agreement, once vested, the Options shall have a five (5) year life.

     c. Upon a Change of Control (defined below), all of the Options shall vest.

     d. Upon a Termination without Cause (defined below), all unvested options that would otherwise vest within the twelve (12) month period commencing on the effective date of Executive’s termination, will immediately vest.

     3.8 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other Executives of the Company on the Senior Executive Team.

     3.9 Vehicle Allowance. Executive shall receive a monthly payment of Five Hundred and 00/100 dollars ($500.00) for Executive’s use of a personal automobile for business use (“Vehicle Allowance”). The Vehicle Allowance shall be subject to all required federal, state, and local withholding.

ARTICLE IV
COVENANTS OF EXECUTIVE

     4.1 Covenants Regarding Developments. Executive agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Executive conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

     (a) Executive shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written records of such Developments and all modifications, research, and studies made or undertaken by Executive with respect thereto.

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Executive has any rights thereto, Executive hereby assigns all such rights, title, and interest to the Company.

     (c) Upon request by the Company, Executive, at any time, whether during or after Executive’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments,

4

and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) The foregoing provisions regarding assignments do not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Executive’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Executive for the Company.

     4.2 Ownership and Covenant to Return Documents, etc. Executive agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Executive by the Company or are prepared, compiled or otherwise acquired by Executive during the Employment Period, shall be the sole and exclusive property of the Company. Executive shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Executive agrees that Executive will deliver all of the aforementioned documents and objects that may be in Executive’s possession to the Company on the termination of Executive’s employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Executive recognizes that by virtue of Executive’s employment with the Company, Executive will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This information (“Confidential and Proprietary Information”) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Executive, or which Executive should know by virtue of Executive’s position or the circumstances in which Executive learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of this Agreement or Executive’s obligations under a statutory or common law obligation) or (ii) obtained by Executive from a third party subsequent to the termination of Executive’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a statutory or common law obligation). Executive agrees that during the Employment Period and at all times thereafter (a) Executive will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for Executive’s own purposes or the purposes of another, except as required in the course of Executive’s employment for the benefit of the Company or as required by law, and (b) Executive will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

5

     4.4 Noninterference Covenant. Executive agrees that during the Employment Period and for the Restricted Period, Executive will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other Executive of the Company (who is employed by the Company at the end of the Executive’s employment with the Company) to leave the employ of the Company. “Restricted Period” means (i) the Employment Period and (ii) the two (2) year period following the termination of Executive’s employment.

     4.5 Covenant of Nonsolicitation of Customers. Executive acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Executive’s employment. Accordingly, Executive agrees that during the Restricted Period, Executive will not: (a) directly or indirectly, solicit or accept business from, or provide products or services to, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Executive sold or provided the Company’s products or services at any time during the two (2) year period immediately preceding the termination of Executive’s employment, (ii) any entity for which Executive orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the two (2) year period immediately preceding the termination of Executive’s employment, or (iii) any entity as to which Executive acquired Confidential and Proprietary Information at any time during Executive’s employment with the Company.

     4.6 Covenant Not To Compete. Executive expressly acknowledges that (i) the Company is and will be engaged in the business of providing healthcare transaction processing services and information technology solutions to the pharmaceutical industry, including without limitation: (x) pharmacy benefit services and analytics software and related ASP services, including claims processing, pharmacy networks, data warehousing and information analysis, rebate contracting and formulary management, clinical initiatives, and consumer web services; and (y) pharmacy practice management and point of sale (POS) systems for retail pharmacy (independents and chains), institutional /nursing home pharmacy, and high-volume mail order pharmacy; (ii) Executive is one of a limited number of persons who has extensive knowledge and expertise relevant to the business of the Company; (iii) Executive’s performance of his services for the Company hereunder will afford him full and complete access to and cause him to become highly knowledgeable about the Company’s confidential and Proprietary Information; (ivO the agreements and covenants contained in the section 4.6 are essential to protect the business and goodwill of the Company, because, if Executive enters into any activities competitive with the businesses of the Company, he will cause substantial harm to the Company; (v) he will be exposed the the company’s largest customers, which Executive acknowledges he would not have been exposed to but for his employment with the Company; (vi) the business territory of the Company at the time this Agreement was entered into constitutes the Untied States and Canada (Business Territory); and (vii) his covenants to the Company set forth in this Section 4.6 are being made in consideration of the Company’s willingness to employ him. Accordingly, Executive hereby agrees that during the Restricted Period, he shall not directly or indirectly own any interest in, invest in, lend to, borrow from, manage, control, participate in, consult with, become employed by, render services to, or in any other manner whatsoever engage in, any business which is competitive with ay business actively being engaged in by the Company or actively (and demonstrably) being considered by the Company for entry into on the date of the termination of Executives employment with the Company, within the Business Territory. The preceding to the contrary notwithstanding, Executive shall be free to make investments in the publicly traded securities of any corporation, provided that such investments do not amount to more than 1% of the outstanding securities of any class of such corporation.

6

     4.7 Remedies for Breach. Executive recognizes that the rights and privileges granted to Executive by this Agreement, and Executive’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Executive might be entitled from the Company. Accordingly, Executive understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Executive also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in Section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Executive’s death; (b) Executive’s Total Disability; (c) Executive’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; or (f) Termination Arising Out of a Change of Control.

     5.2 Rights Upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death, Total Disability, Resignation, and Termination by the Company for Cause. If the Triggering Event was Executive’s Death, Total Disability (defined below), Resignation, or a Termination by the Company for Cause (defined below), then Executive shall be entitled to receive Executive’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s employee welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

     (b) Termination by Company Without Cause. If the Triggering Event was a Termination by the Company Without Cause, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of Executive’s Incentive Compensation Bonus, if any, pro rated to the Executive’s date of termination; and (iii) the Severance Benefit. “Severance Benefit” means a payment equal to the Executive’s Annual Base Compensation as of the date of termination, payable in twenty-four (24) semi-monthly payments, less required tax withholding, commencing within thirty (30) days from the day Company receives the Separation Agreement and General Release, executed by Executive. . Executive’s entitlement to the benefits provided in subsections 5.2(b)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release provided by the Company.

     (c) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination Arising Out of a Change of Control (defined below), then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus, if any, pro rated to Executive’s date of termination; and (iii) the Change of Control Severance Benefit. Executive’s

7

entitlement to the benefits provided in subsections 5.2(c)(ii) and (iii) is contingent on Executive signing a Separation Agreement and General Release provided by the Company within a reasonable period of time following the date the Separation Agreement and General Release is provided to Executive. “Change of Control Severance Benefit” means a lump-sum payment, less required tax withholding, equal to one and one/half times the Executive’s Annual Base Compensation at the time of termination, plus the average of the previous two Incentive Compensation payments. The Change of Control Severance Benefit payments shall commence not later than thirty (30) days following the date the Company receives the executed Separation Agreement and General Release. Notwithstanding anything to the contrary contained in this Agreement, if and to the extent that any payments and rights provided under this Agreement would cause Executive to be subject to excise tax under Section 280G or Section 4999 of the Internal Revenue Code, or the corresponding section(s) of any future federal tax law, then the amount of the payments shall be reduced to the extent necessary to avoid imposition of any such excise tax. All determinations of the amount of the reduction shall be made by the Company’s tax counsel, and the cost of making such determination shall be paid by the Company.

     (d) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Executive’s rights to salary, Executive benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any loans, cash advances or fixed amounts which Executive owes the Company against any amounts it owes Executive under this Agreement.

     (e) Treatment of Options. Executive may be required to exercise any vested options within ninety (90) days from date of the termination of his employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV, and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Executive’s employment with the Company, including Executive’s declining of continued employment in the same or comparable position with the Company following a Change of Control.

     (b) “Termination by the Company for Cause” means termination by the Company of Executive’s employment for:

     (i) The failure of Executive to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (ii) A conviction of Executive by a court of competent jurisdiction of a felony;

     (iii) The refusal, failure or neglect of Executive to perform his duties under his employment agreement in a manner that is materially detrimental to the business or reputation of the Company unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

8

     (iv) The engagement by the Executive in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of SXC; or

     (v) The pursuit by Executive of interests that are materially adverse to SXC unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (c) “Termination by the Company Without Cause” means a termination of Executive’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

     (d) A “Termination Arising Out of a Change of Control” occurs when Executive resigns or is terminated without cause within twelve (12) months of a “Change In Control”, which shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than SXC Health Solutions Corp. or an employee benefit plan of SXC Health Solutions Corp. or the Company, acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting security of SXC Health Solutions Corp. and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of SXC Health Solutions Corp.;

     (ii) The shareholders of SXC Health Solutions Corp. approve a merger, and such merger is completed, consolidation, recapitalization, or reorganization of SXC Health Solutions Corp. or the Company, a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 75% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 75% of the holders of outstanding voting securities of SXC Health Solutions Corp. immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or

     (iii) The shareholders of SXC Health Solutions Corp. approve a plan of complete liquidation of SXC Health Solutions Corp. or the Company or an agreement for the sale or disposition by SXC Health Solutions Corp. of all or a substantial portion of assets (i.e., 50% or more) of the total assets of SXC Health Solutions Corp. or the Company.

     (e) “Total Disability” means Executive’s inability, because of illness, injury or other physical or mental incapacity, to perform Executive’s duties hereunder (as determined by the Board in good faith) for a continuous period of one hundred eighty (180) consecutive days, or for a total of one hundred eighty (180) days within any three hundred sixty (360) consecutive day period, in which case such Total Disability shall be deemed to have occurred on the last day of such one hundred eighty (180) day or three hundred sixty (360) day period, as applicable.

9

ARTICLE VI
GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Executive may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Executive and Executive’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Executive expressly agrees for Executive and on behalf of Executive’s executors, administrators and heirs, that this Agreement and Executive’s obligations, rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Executive, Executive’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Executive.

     6.4 Complete Understanding. This Agreement constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Executive by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Executive and the Company.

     6.5 Tax Provisions.

     (a) Compliance With Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of section 409A of Internal Revenue Code of 1986 (the “Code”), so as to prevent the inclusion in gross income of any amounts payable or benefits provided hereunder in a taxable year that is prior to the taxable year or years in which such amounts or benefits would otherwise actually be distributed, provided or otherwise made available to Executive. This Agreement shall be construed, administered, and governed in a manner consistent with this intent. Any provision that would cause any amount payable or benefit provided under this Agreement to be includable in the gross income of Executive under Code section 409A(a)(l) shall have no force and effect unless and until amended to cause such amount or benefit to not be so includable (which amendment may be retroactive to the extent permitted by Code section 409A and may be made by Company without the consent of Executive). In particular, to the extent Executive becomes entitled to receive a payment or a benefit upon an event that does not constitute a permitted distribution event under Code section 409A(a)(2), then notwithstanding anything to the contrary in this Agreement, such payment or benefit will be made or provided to Executive on the earlier of (i) Executive’s “separation from service” with Company (determined in accordance with Code section 409A); provided however, that if Executive is a “specified Executive” (within the meaning of Code section 409A), Executive’s date of payment shall be made on the date which is 6 months after the date of Executive’s separation of service with Company or (ii) Executive’s death. Any reference in this Agreement to Code section 409A shall also include any

10

proposed, temporary or final regulations, or any other guidance, promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service.

     (b) Compliance With Section 162(m) of the Code. Notwithstanding anything herein to the contrary, if the Company reasonably anticipates that the deduction of any payment to Executive hereunder will be limited or eliminated by the application of Code section 162(m), which generally limits the deduction of compensation paid by public corporations in excess of $1 million annually to certain executives, such payment shall be delayed until the earliest date at which the Company reasonably anticipates that the deduction of the payment would not be limited or eliminated by the application of Code section 162(m) or the calendar year during which the Executive’s employment with the Company terminates.

     6.6 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

     6.7 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent breach by Executive. The waiver by Executive of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.8 Venue, Jurisdiction, Etc. Executive hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Executive hereby submits to the jurisdiction of each such court. Executive hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Executive is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Executive consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Executive at Executive’s address listed in the business records of the Company. Executive and the Company do each hereby waive any right to trial by jury, Executive or it may have concerning any matter relating to this Agreement.

     6.9 Indemnification of Executive.

          (a) Executive is hereby entitled to indemnification for Executive’s acts or omissions in Executive’s capacity as an Executive or officer of the Company to the same extent as the Company’s other senior Executives and in the manner provided by the Company’s bylaws. In addition the Company shall indemnify Executive for any damages suffered or incurred by Executive as a result of serving as an Officer of the Company provided that Executive has acted honestly and in good faith with a view to the best interest of the Company. Within ten (10) days after receipt of a claim for indemnification accompanied by evidence of the liability or expense subject to indemnification, the Company shall pay or cause to be paid the indemnification claim. Executive shall give notice to the Company no later than ten (10) days after such Executive hall have been served with written notice of any claim that may give rise to a claim for indemnification.

          (b) Subject to any rights of or duties to any insurer, reinsurer or other third party having liability for any claim made or brought against Executive, the Company shall have the right, at its option, to assume, at its own expense, the control of the defence thereof, including the employment of legal counsel reasonable satisfactory to Executive. If the Company exercised the foregoing right, Executive shall cooperate with the Company, and make available to it all information under the control of

11

the Executive, which is relevant to the claim. If the Company does not exercise the foregoing right, Executive shall keep the Company reasonably apprised of the progress of the defence of the claim. Nothing herein shall preclude Executive, at Executive’s expense, from employing legal counsel of Executive’s choosing to participate in the defence of any claim made or brought against Executive in addition to legal counsel employed by the Company.

          (c) If the Company elects to assume control of the defence of any claim, the Company shall not settle or compromise the claim for and on behalf of Executive without the written consent of Executive; provided, however, that if the Company receives and offer of settlement or compromise from the other party or parties to the claim in a particular amount or obtains a commitment from such party or parties to accept a compromise or settlement in such amount if offered, and if such settlement or compromise requires only the payment of such amount, the granting of an appropriate release or similar accommodation, and no other relief, and Executive refuses to consent thereto and elects to continue to defend the claim, then the extent of the indemnity to which Executive shall be entitled hereunder shall be limited to such amount and the legal fees and expenses that Executive would have been entitled to receive from the Company if such compromise or settlement had been accepted.

     6.10 Directors and Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board of Directors at its reasonable discretion.

     6.11 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.12 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.13 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

Notices to Executive:

Jeffrey Park

Notices to Company:

SXC Health Solutions, Inc.
Attn: Chief Executive Officer
2441 Warrenville Road, Suite 610
Lisle, IL. 60532-3642

12

With Copies to:

Larry Zanger, Esq.
Holland & Knight LLP
131 South Dearborn, 30^th Floor
Chicago, Illinois 60603

     6.13 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:		EXECUTIVE:
SXC HEALTH SOLUTIONS, INC.
By:	/s/ Gordon S. Glenn	/s/ Jeffrey Park
Its:	Chairman & CEO	Jeffrey Park

13

EX-10.13

EXHIBIT 10.13

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the day          of June, 2007, by and between Mike Bennof (“Employee”) and SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to continue to employ Employee, and Employee wishes to continue to be employed by the Company, as its Executive Vice President, Healthcare Technology Solutions, and Employee desires to accept employment with the Company under the terms and conditions set forth in this Agreement.

     B. In order to induce the Employee to enter into this Agreement, and to incentivize and reward Employee’s continued effort, loyalty and commitment to the Company, concurrent with the execution and delivery of this Agreement the Company expresses its intention to grant to the Employee stock options to purchase 10,000 shares of Systems Xcellence Inc., the Company’s parent. These options are in addition to the 25,000 options committed to you in May 2007, for a total grant of 35,000 options.

     C. Employee acknowledges that as a member of the Company’s senior management team, Employee is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Employee is one of only a few Employees who will have regular access to confidential and/or proprietary information relating to the Company. Further, Employee acknowledges that Employee’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s willingness to employ Employee under the terms and conditions set forth in this Agreement. As a condition of that employment, the Company requires that this Agreement be entered into pursuant to which Employee furnishes the Company with, among other things, certain covenants of Employee, including Employee’s covenant not to disclose the Company’s confidential and proprietary information and non-solicitation of employees and customers for a reasonable period of time. Employee acknowledges that Employee’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s grant stock options to purchase shares of common stock of Systems Xcellence Inc.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ or continue to employ Employee to serve as Executive Vice President, Healthcare Technology Solutions, and Employee hereby accepts such employment, and agrees to perform his duties and responsibilities to the best of Employee’s abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Employee shall be the Company’s Executive Vice President, Healthcare Technology Solutions. Employee shall be responsible for oversight and profitability of all legacy business, U.S. and Canadian Public Sector business, and the Company’s consulting group and will

perform other duties as assigned. Employee shall report to the Company’s President and Chief Operating Officer. Although Employee may choose not to relocate his principal residence in Lusby, Maryland, Employee shall perform his duties under this Agreement at the Company’s facilities in Lisle, Illinois or at any subsequent location of the Company’s primary administrative operations.

     1.3 Exclusive Employment. While employed by the Company hereunder, Employee covenants to the Company that he/she will devote his/her entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity), and use his/her good faith best efforts to promote the interests of the Company. The foregoing shall not be construed as prohibiting Employee from spending such time as may be reasonably necessary to attend to Employee’s personal affairs and investments so long as such activities do not conflict or interfere with Employee’s obligations and/or timely performance of his/her duties to the Company.

     1.4 Employee Representations and Warranties as to Employability. Employee hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Employee of this Agreement and any other agreements contemplated hereby to which Employee is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Employee is a party or by which he/she is bound;

     (b) Employee is not a party to or bound by any employment agreement, non-competition agreement or confidentiality agreement with any other person or entity (or if a party to such an agreement, Employee has disclosed the material terms thereof to the Board prior to the execution hereof and promptly after the date hereof shall deliver a copy of such agreement to the Board);¹

     (c) The Company has not requested, directly or indirectly, expressly or implicitly, that Employee use or disclose the trade secrets or other confidential information of any prior employer or other third party, and Employee warrants that he will not use or disclose such information;

     (d) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Employee, enforceable in accordance with its terms; and

     (e) Employee hereby acknowledges and represents that he/she has been given the opportunity to consult with independent legal counsel regarding Employee’s rights and obligations under this Agreement and that he/she fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Employee’s employment hereunder shall commence on the date this Agreement is executed and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the “Employment Period”).

2

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date set forth in Section 2.1, above, and end on December 31, 2007 (the “Initial Term”). The Employment Period shall be automatically extended for successive one (1) calendar year periods following the expiration of the Initial Term (each period being hereinafter referred to as an “Extension Term”) upon the same terms and conditions provided for herein unless either party provides the other party with advance written notice of its or Employee’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than sixty (60) days prior to the expiration of the Initial Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Employee by the Company, and Employee’s employment with the Company terminates as a result thereof, then Employee’s termination shall be a treated as a Termination by the Company Without Cause.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Employee an annual base salary (the “Annual Base Compensation”) in the amount of Two Hundred Thirty Five and 00/100 Dollars ($235,000). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Employee’s Annual Base Compensation shall be reviewed annually by the Company’s Chairman and CEO and the SXC Compensation Committee.

     3.2 Employee Performance Bonus. In respect of each calendar year falling within the Employment Period, Employee shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Employee’s performance objectives (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at sixty-five percent (65%) of the Employee’s Annual Base Compensation, with the specific percentage determined by the Company’s Board of Directors after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Employee at the same time other members of the Senior Employee Team are paid their respective incentive compensation bonuses. If the Executive’s employment terminates during the calendar year due to Termination without Cause (5 4.c) or Change of Control (5 4.d), the Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. If Executive employment terminates during the calendar year for any other reason, then no Incentive Compensation Bonus shall be paid to Employee for the calendar year in which the termination occurred. To the extent practicable, the Company will notify Employee of Employee’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Employee shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Employee’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Employee shall be entitled to accrue over the course of the calendar year twenty (20) days of paid vacation time, in accordance with the Company’s then current vacation policy; provided that unused vacation may be used by Employee in the following calendar year only in accordance with and as permitted by the Company’s then current vacation policies in effect from time to time. Nothing in this Agreement shall cause Employee to forfeit any accrued but unused paid vacation time Employee had prior to entering into this Agreement.

3

     3.5 Insurance. During the Employment Period Employee shall be eligible to participate in the Company’s insurance programs on terms and conditions no less favorable than those made available generally to other similarly situated employees, as such programs may be revised from time to time.

     3.6 Retirement Plan. After six (6) months of employment, Employee shall be eligible to participate in the Company’s deferred compensation plans, including its 401(k) plan.

     3.7 Grant of Stock Options

     a. Upon the commencement of the Initial Term, Employee shall be granted options (“Options”) to purchase 35,000 shares of common stock of Systems Xcellence Inc. The grants of Options provided by Section 3.7(a) are contingent upon approval by Systems Xcellence Inc.’s Board of Directors and shareholders. The Options shall be subject to the Company’s current Stock Option Plan. The options shall vest in one-fourth increments annually, commencing on the anniversary date of the grant.

     b. Except as otherwise provided in Section 5.2(e) of this Agreement, once vested, the Options shall have a five (5) year life.

     c. Upon a Change of Control (defined below), all of the Options shall vest.

     3.8 Stock Option Plan. Employee shall be permitted to participate in the Company’s Stock Option Plan in the same manner as the Company’s other Executive Vice Presidents, with future annual grants based on Employee’s performance as determined by the Company’s Chief Executive Officer.

     3.9 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other Executives of the Company on the Senior Executive Team.

     3.10 Vehicle Allowance. Executive shall receive a monthly payment of Five Hundred and 00/100 dollars ($500.00) for Executive’s use of a personal automobile for business use (“Vehicle Allowance”). The Vehicle Allowance shall be subject to all required federal, state, and local withholding.

ARTICLE IV
COVENANTS OF EMPLOYEE

     4.1 Covenants Regarding Developments. Employee agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Employee conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

     (a) Employee shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written records of such Developments and all modifications, research, and studies made or undertaken by Employee with respect thereto.

4

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Employee has any rights thereto, Employee hereby assigns all such rights, title, and interest to the Company.

     (c) Upon request by the Company, Employee, at any time, whether during or after Employee’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments, and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) The foregoing provisions regarding assignments do not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Employee’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Employee for the Company.

     4.2 Ownership and Covenant to Return Documents, etc. Employee agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Employee by the Company or are prepared, compiled or otherwise acquired by Employee during the Employment Period, shall be the sole and exclusive property of the Company. Employee shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Employee agrees that Employee will deliver all of the aforementioned documents and objects that may be in Employee’s possession to the Company on the termination of Employee’s employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Employee recognizes that by virtue of Employee’s employment with the Company, Employee will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This information (“Confidential and Proprietary Information”) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Employee, or which Employee should know by virtue of Employee’s position or the circumstances in which Employee learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of this Agreement or Employee’s obligations under a statutory or common law obligation) or (ii) obtained by Employee from a third party subsequent to the termination of Employee’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a

5

statutory or common law obligation). Employee agrees that during the Employment Period and at all times thereafter (a) Employee will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for Employee’s own purposes or the purposes of another, except as required in the course of Employee’s employment for the benefit of the Company or as required by law, and (b) Employee will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

     4.4 Noninterference Covenant. Employee agrees that during the Employment Period and for the Restricted Period, Employee will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other Employee of the Company (who is employed by the Company at the end of the Employee’s employment with the Company) to leave the employ of the Company. “Restricted Period” means (i) the Employment Period and (ii) the two (2) year period following the termination of Employee’s employment.

     4.5 Covenant of Nonsolicitation of Customers. Employee acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Employee’s employment. Accordingly, Employee agrees that during the Restricted Period, Employee will not: (a) directly or indirectly, solicit or accept business from, or provide products or services to, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Employee sold or provided the Company’s products or services at any time during the two (2) year period immediately preceding the termination of Employee’s employment, (ii) any entity for which Employee orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the two (2) year period immediately preceding the termination of Employee’s employment, or (iii) any entity as to which Employee acquired Confidential and Proprietary Information at any time during Employee’s employment with the Company.

     4.6. Remedies for Breach. Employee recognizes that the rights and privileges granted to Employee by this Agreement, and Employee’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Employee might be entitled from the Company. Accordingly, Employee understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Employee also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in Section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Employee’s death; (b) Employee’s Total Disability; (c) Employee’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; or (f) Termination Arising Out of a Change of Control.

6

     5.2 Rights Upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death, Total Disability, Resignation, and Termination by the Company for Cause. If the Triggering Event was Employee’s Death, Total Disability (defined below), Resignation, or a Termination by the Company for Cause (defined below), then Employee shall be entitled to receive Employee’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s employee welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

     (b) Termination by Company Without Cause. If the Triggering Event was a Termination by the Company Without Cause, then Employee shall be entitled to receive (i) Employee’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of Employee’s Incentive Compensation Bonus, if any, pro rated to the Employee’s date of termination; and (iii) the Severance Benefit. “Severance Benefit” means a payment equal to the Employee’s Annual Base Compensation as of the date of termination, payable in twenty-four (24) semi-monthly payments, less required tax withholding, commencing six (6) months from the date Employee’s employment with the Company terminated. Employee’s entitlement to the benefits provided in subsections 5.2(b)(ii) and (iii) are contingent on Employee signing a Separation Agreement and General Release provided by the Company.

     (c) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination Arising Out of a Change of Control (defined below), then Employee shall be entitled to receive (i) Employee’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Employee’s Incentive Compensation Bonus, if any, pro rated to Employee’s date of termination; and (iii) the Change of Control Severance Benefit. Employee’s entitlement to the benefits provided in subsections 5.2(c)(ii) and (iii) is contingent on Employee signing a Separation Agreement and General Release provided by the Company within a reasonable period of time following the date the Separation Agreement and General Release is provided to Employee. “Change of Control Severance Benefit” means a lump-sum payment, less required tax withholding, equal to two times the Employee’s Annual Base Compensation at the time of termination, plus the average of the previous two Incentive Compensation payments. The Change of Control Severance Benefit shall be paid six (6) months from the date Employee’s employment with the Company terminated. Notwithstanding anything to the contrary contained in this Agreement, if and to the extent that any payments and rights provided under this Agreement would cause Employee to be subject to excise tax under Section 280G or Section 4999 of the Internal Revenue Code, or the corresponding section(s) of any future federal tax law, then the amount of the payments shall be reduced to the extent necessary to avoid imposition of any such excise tax. All determinations of the amount of the reduction shall be made by the Company’s tax counsel, and the cost of making such determination shall be paid by the Company.

     (d) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Employee’s rights to salary, Employee benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any

7

loans, cash advances or fixed amounts which Employee owes the Company against any amounts it owes Employee under this Agreement.

     (e) Treatment of Options. Employee may be required to exercise any vested options within ninety (90) days from date of the termination of his employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV, and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Employee’s employment with the Company, including Employee’s declining of continued employment in the same or comparable position with the Company following a Change of Control.

     (b) “Termination by the Company for Cause” means termination by the Company of Employee’s employment for:

     (i) The failure of Employee to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (ii) A conviction of Employee by a court of competent jurisdiction of a felony;

     (iii) The refusal, failure or neglect of Employee to perform his duties under his employment agreement in a manner that is materially detrimental to the business or reputation of the Company unless remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (iv) The engagement by the Employee in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of SXC; or

     (v) The pursuit by Employee of interests that are materially adverse to SXC unless remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (c) “Termination by the Company Without Cause” means a termination of Employee’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

8

     (d) A “Termination Arising Out of a Change of Control” means, following a Change of Control (defined below), Employee is not offered or retained in his current or a comparable position. A “Change of Control” shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than Systems Xcellence Inc. or an employee benefit plan of Systems Xcellence Inc. or the Company, acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting security of Systems Xcellence Inc. and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of Systems Xcellence Inc.;

     (ii) The shareholders of Systems Xcellence Inc. approve a merger, and such merger is completed, consolidation, recapitalization, or reorganization of Systems Xcellence Inc. or the Company, a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 75% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 75% of the holders of outstanding voting securities of Systems Xcellence Inc. immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or

     (iii) The shareholders of Systems Xcellence Inc. approve a plan of complete liquidation of Systems Xcellence Inc. or the Company or an agreement for the sale or disposition by Systems Xcellence Inc. of all or a substantial portion of assets (i.e., 50% or more) of the total assets of Systems Xcellence Inc. or the Company.

     (e) “Total Disability” means Employee’s inability, because of illness, injury or other physical or mental incapacity, to perform Employee’s duties hereunder (as determined by the Board in good faith) for a continuous period of one hundred eighty (180) consecutive days, or for a total of one hundred eighty (180) days within any three hundred sixty (360) consecutive day period, in which case such Total Disability shall be deemed to have occurred on the last day of such one hundred eighty (180) day or three hundred sixty (360) day period, as applicable.

ARTICLE VI
GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Employee may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Employee and Employee’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Employee expressly agrees for Employee and on behalf of Employee’s executors, administrators and heirs, that this Agreement and Employee’s obligations, rights, interests and

9

benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Employee, Employee’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Employee.

     6.4 Complete Understanding. This Agreement constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Employee by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Employee and the Company.

     6.5 Tax Provisions.

     (a) Compliance With Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of section 409 A of Internal Revenue Code of 1986 (the “Code”), so as to prevent the inclusion in gross income of any amounts payable or benefits provided hereunder in a taxable year that is prior to the taxable year or years in which such amounts or benefits would otherwise actually be distributed, provided or otherwise made available to Employee. This Agreement shall be construed, administered, and governed in a manner consistent with this intent. Any provision that would cause any amount payable or benefit provided under this Agreement to be includable in the gross income of Employee under Code section 409A(a)(l) shall have no force and effect unless and until amended to cause such amount or benefit to not be so includable (which amendment may be retroactive to the extent permitted by Code section 409A and may be made by Company without the consent of Employee). In particular, to the extent Employee becomes entitled to receive a payment or a benefit upon an event that does not constitute a permitted distribution event under Code section 409A(a)(2), then notwithstanding anything to the contrary in this Agreement, such payment or benefit will be made or provided to Employee on the earlier of (i) Employee’s “separation from service” with Company (determined in accordance with Code section 409 A); provided however, that if Employee is a “specified Employee” (within the meaning of Code section 409A), Employee’s date of payment shall be made on the date which is 6 months after the date of Employee’s separation of service with Company or (ii) Employee’s death. Any reference in this Agreement to Code section 409A shall also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service.

     (b) Compliance With Section 162(m) of the Code. Notwithstanding anything herein to the contrary, if the Company reasonably anticipates that the deduction of any payment to Employee hereunder will be limited or eliminated by the application of Code section 162(m), which generally limits the deduction of compensation paid by public corporations in excess of $1 million annually to certain executives, such payment shall be delayed until the earliest date at which the Company reasonably anticipates that the deduction of the payment would not be limited or eliminated by the application of Code section 162(m) or the calendar year during which the Employee’s employment with the Company terminates.

     6.6 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

10

     6.7 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee. The waiver by Employee of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.8 Venue, Jurisdiction, Etc. Employee hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Employee hereby submits to the jurisdiction of each such court. Employee hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Employee is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Employee consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Employee at Employee’s address listed in the business records of the Company. Employee and the Company do each hereby waive any right to trial by jury that Employee or it may have concerning any matter relating to this Agreement.

     6.9 Indemnification of Employee. Employee is hereby entitled to indemnification for Employee’s acts or omissions in Employee’s capacity as an Employee or officer of the Company to the same extent as the Company’s other senior Employees and in the manner provided by the Company’s bylaws.

     6.10 Directors and Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board of Directors at its reasonable discretion.

     6.11 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.12 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.13 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

Notices to Employee:

Mike Bennof
12877 Bay Drive
Lusby, Maryland 20657

Notices to Company:

11

SXC Health Solutions, Inc.
Attn: Chief Executive Officer
2441 Warrenville Road Suite 610
Lisle, IL 60532-3642

With Copies to:

Larry Zanger, Esq.
Holland & Knight LLP
131 South Dearborn, 30^th Floor
Chicago, Illinois 60603

     6.13 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:			EMPLOYEE:
SXC HEALTH SOLUTIONS, INC.
By:	/s/ Jeffrey Park		/s/ Mike Bennof
	Its:	CFO	Mike Bennof

12

EX-10.14

EXHIBIT 10.14

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the 19 day of June 2007, by and between John Romza (“Employee”) and SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to continue to employ Employee, and Employee wishes to continue to be employed by the Company, as its Executive Vice President, Research and Development and Chief Technology Officer, and Employee desires to continue employment with the Company under the terms and conditions set forth in this Agreement.

     B. In order to induce the Employee to enter into this Agreement, and to incentivize and reward Employee’s continued effort, loyalty and commitment to the Company, concurrent with the execution and delivery of this Agreement the Company expresses its intention to grant to the Employee stock options to purchase 10,000 shares of Systems Xcellence Inc., the Company’s parent. These options are in addition to the 20,000 options committed to you in May 2007, for a total of 30,000 options.

     C. Employee acknowledges that as a member of the Company’s senior management team, Employee is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Employee is one of only a few Employees who will have regular access to confidential and/or proprietary information relating to the Company. Further, Employee acknowledges that Employee’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s willingness to employ Employee under the terms and conditions set forth in this Agreement. As a condition of that employment, the Company requires that this Agreement be entered into pursuant to which Employee furnishes the Company with, among other things, certain covenants of Employee, including Employee’s covenant not to disclose the Company’s confidential and proprietary information and non-solicitation of employees and customers for a reasonable period of time. Employee acknowledges that Employee’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s grant stock options to purchase shares of common stock of Systems Xcellence Inc.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ or continue to employ Employee to serve as Executive Vice President, Research ad Development and Chief Technology Officer, and Employee hereby accepts such employment, and agrees to perform his duties and responsibilities to the best of Employee’s abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Employee shall be the Company’s Executive Vice President, Research and Development and Chief Technology Officer. Employee shall be responsible for all research, development, and information technology efforts, and such other duties as may be reasonably requested by the Company. Employee shall report to the Company’s President and COO. Employee shall perform

his duties under this Agreement at the Company’s facilities in Lisle, Illinois or any subsequent location of the Company’s primary administrative operations.

     1.3 Exclusive Employment. While employed by the Company hereunder, Employee covenants to the Company that he/she will devote his/her entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity), and use his/her good faith best efforts to promote the interests of the Company. The foregoing shall not be construed as prohibiting Employee from spending such time as may be reasonably necessary to attend to Employee’s personal affairs and investments so long as such activities do not conflict or interfere with Employee’s obligations and/or timely performance of his/her duties to the Company.

     1.4 Employee Representations and Warranties as to Employability. Employee hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Employee of this Agreement and any other agreements contemplated hereby to which Employee is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Employee is a party or by which he/she is bound;

     (b) Employee is not a party to or bound by any employment agreement, non-competition agreement or confidentiality agreement with any other person or entity (or if a party to such an agreement, Employee has disclosed the material terms thereof to the Board prior to the execution hereof and promptly after the date hereof shall deliver a copy of such agreement to the Board);¹

     (c) The Company has not requested, directly or indirectly, expressly or implicitly, that Employee use or disclose the trade secrets or other confidential information of any prior employer or other third party, and Employee warrants that he will not use or disclose such information;

     (d) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Employee, enforceable in accordance with its terms; and

     (e) Employee hereby acknowledges and represents that he/she has been given the opportunity to consult with independent legal counsel regarding Employee’s rights and obligations under this Agreement and that he/she fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Employee’s employment hereunder shall commence on the date this Agreement is executed, and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the "Employment Period”).

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date this Agreement is executed, above, and ending on

2

December 31, 2007 (the “Initial Term”). The Employment Period shall be automatically extended for successive one (1) calendar year periods following the expiration of the Initial Term (each period being hereinafter referred to as an “Extension Term”) upon the same terms and conditions provided for herein unless either party provides the other party with advance written notice of its or Employee’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than sixty (60) days prior to the expiration of the Initial Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Employee by the Company, and Employee’s employment with the Company terminates as a result thereof, then Employee’s termination shall be a treated as a Termination by the Company Without Cause.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Employee an annual base salary (the “Annual Base Compensation”) in the amount of two hundred thirty five and 00/100 dollars ($235,000). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Employee’s Annual Base Compensation shall be reviewed annually by the Company’s Chairman and CEO and the SXC Compensation Committee.

     3.2 Employee Incentive Compensation Bonus. In respect of each calendar year falling within the Employment Period, Employee shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Employee’s performance objectives (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at sixty-five percent (65%) of the Employee’s Annual Base Compensation, with the specific percentage determined by the Company’s Board of Directors after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Employee at the same time other members of the Senior Employee Team are paid their respective incentive compensation bonuses. If the Executive’s employment terminates during the calendar year due to a Change In Control (5 4.d) or Termination Without Cause (5.4.c), the Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. If the Executive’s employment terminates during the calendar year for any other reason, then no Incentive Compensation bonus shall be paid for that calendar year. To the extent practicable, the Company will notify Employee of Employee’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Employee shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Employee’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Employee shall be entitled to accrue over the course of the calendar year twenty (20) days of paid vacation time in accordance with the Company’s then current vacation policy; provided that unused vacation may be used by Employee in the following calendar year only in accordance with and as permitted by the Company’s then current vacation policies in effect from time to time. Nothing in this Agreement shall cause Employee to forfeit any accrued but unused paid vacation time Employee had prior to entering into this Agreement.

     3.5 Insurance. During the Employment Period Employee shall be eligible to participate in the Company’s insurance programs on terms and conditions no less

3

favorable than those made available generally to other similarly situated employees, as such programs may be revised from time to time.

     3.6 Retirement Plan. Employee shall be eligible to participate in the Company’s deferred compensation plans, including its 401(k) plan.

     3.7 Grant of Stock Options

     a. Upon the commencement of the Initial Term, Employee shall be granted options (“Options”) to purchase 10,000 shares of common stock of Systems Xcellence Inc. The grants of Options provided by Section 3.7(a) are contingent upon approval by Systems Xcellence Inc.’s Board of Directors and shareholders. The Options shall be subject to the Company’s current Stock Option Plan. The options shall vest in one-fourth increments annually, commencing on the anniversary date of the grant.

     b. Except as otherwise provided in Section 5.2(e) of this Agreement, once vested, the Options shall have a five (5) year life.

     c. Upon a Change of Control (defined below), all of the Options shall vest.

     3.8 Stock Option Plan. Employee shall be permitted to participate in the Company’s Stock Option Plan in the same manner as the Company’s other Executive Vice Presidents, with future annual grants based on Employee’s performance as determined by the Company’s Chief Executive Officer.

     3.9 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other Executives of the Company on the Senior Executive Team.

     3.10 Vehicle Allowance. Executive shall receive a monthly payment of Five Hundred and 00/100 dollars ($500.00) for Executive’s use of a personal automobile for business use (“Vehicle Allowance”). The Vehicle Allowance shall be subject to all required federal, state, and local withholding.

ARTICLE IV
COVENANTS OF EMPLOYEE

     4.1 Covenants Regarding Developments. Employee agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Employee conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

     (a) Employee shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written records of such Developments and all modifications, research, and studies made or undertaken by Employee with respect thereto.

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Employee has any rights thereto, Employee hereby assigns all such rights, title, and interest to the Company.

4

     (c) Upon request by the Company, Employee, at any time, whether during or after Employee’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments, and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) The foregoing provisions regarding assignments do not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Employee’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Employee for the Company.

     4.2 Ownership and Covenant to Return Documents, etc. Employee agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Employee by the Company or are prepared, compiled or otherwise acquired by Employee during the Employment Period, shall be the sole and exclusive property of the Company. Employee shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Employee agrees that Employee will deliver all of the aforementioned documents and objects that may be in Employee’s possession to the Company on the termination of Employee’s employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Employee recognizes that by virtue of Employee’s employment with the Company, Employee will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This information (“Confidential and Proprietary Information”) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Employee, or which Employee should know by virtue of Employee’s position or the circumstances in which Employee learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of this Agreement or Employee’s obligations under a statutory or common law obligation) or (ii) obtained by Employee from a third party subsequent to the termination of Employee’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a statutory or common law obligation). Employee agrees that during the Employment Period and at all times thereafter (a) Employee will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for Employee’s own purposes or the purposes

5

of another, except as required in the course of Employee’s employment for the benefit of the Company or as required by law, and (b) Employee will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

     4.4 Noninterference Covenant. Employee agrees that during the Employment Period and for the Restricted Period, Employee will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other Employee of the Company (who is employed by the Company at the end of the Employee’s employment with the Company) to leave the employ of the Company. “Restricted Period” means (i) the Employment Period and (ii) the two (2) year period following the termination of Employee’s employment.

     4.5 Covenant of Nonsolicitation of Customers. Employee acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Employee’s employment. Accordingly, Employee agrees that during the Restricted Period, Employee will not: (a) directly or indirectly, solicit or accept business from, or provide products or services to, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Employee sold or provided the Company’s products or services at any time during the two (2) year period immediately preceding the termination of Employee’s employment, (ii) any entity for which Employee orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the two (2) year period immediately preceding the termination of Employee’s employment, or (iii) any entity as to which Employee acquired Confidential and Proprietary Information at any time during Employee’s employment with the Company.

     4.6 Remedies for Breach. Employee recognizes that the rights and privileges granted to Employee by this Agreement, and Employee’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Employee might be entitled from the Company. Accordingly, Employee understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Employee also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in Section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Employee’s death; (b) Employee’s Total Disability; (c) Employee’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; or (f) Termination Arising Out of a Change of Control.

6

     5.2 Rights Upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death, Total Disability, Resignation, and Termination by the Company for Cause. If the Triggering Event was Employee’s Death, Total Disability (defined below), Resignation, or a Termination by the Company for Cause (defined below), then Employee shall be entitled to receive Employee’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s employee welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

     (b) Termination by Company Without Cause. If the Triggering Event was a Termination by the Company Without Cause, then Employee shall be entitled to receive (i) Employee’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of Employee’s Incentive Compensation Bonus, if any, pro rated to the Employee’s date of termination; and (iii) the Severance Benefit. “Severance Benefit” means a payment equal to the Employee’s Annual Base Compensation as of the date of termination, payable in twenty-four (24) semi-monthly payments, less required tax withholding, commencing six (6) months from the date Employee’s employment with the Company terminated. Employee’s entitlement to the benefits provided in subsections 5.2(b)(ii) and (iii) are contingent on Employee signing a Separation Agreement and General Release provided by the Company.

     (c) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination Arising Out of a Change of Control (defined below), then Employee shall be entitled to receive (i) Employee’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Employee’s Incentive Compensation Bonus, if any, pro rated to Employee’s date of termination; and (iii) the Change of Control Severance Benefit. Employee’s entitlement to the benefits provided in subsections 5.2(c)(ii) and (iii) is contingent on Employee signing a Separation Agreement and General Release provided by the Company within a reasonable period of time following the date the Separation Agreement and General Release is provided to Employee. “Change of Control Severance Benefit” means a lump-sum payment, less required tax withholding, equal to two times the Employee’s Annual Base Compensation at the time of termination, plus the average of the previous two Incentive Compensation payments. The Change of Control Severance Benefit shall be paid six (6) months from the date Employee’s employment with the Company terminated. Notwithstanding anything to the contrary contained in this Agreement, if and to the extent that any payments and rights provided under this Agreement would cause Employee to be subject to excise tax under Section 280G or Section 4999 of the Internal Revenue Code, or the corresponding section(s) of any future federal tax law, then the amount of the payments shall be reduced to the extent necessary to avoid imposition of any such excise tax. All determinations of the amount of the reduction shall be made by the Company’s tax counsel, and the cost of making such determination shall be paid by the Company.

     (d) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Employee’s rights to salary, Employee benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any loans, cash advances or fixed amounts which Employee owes the Company against any amounts it owes Employee under this Agreement.

7

     (e) Treatment of Options. Employee may be required to exercise any vested options within ninety (90) days from date of the termination of his employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV, and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Employee’s employment with the Company, including Employee’s declining of continued employment in the same or comparable position with the Company following a Change of Control.

     (b) “Termination by the Company for Cause” means termination by the Company of Employee’s employment for:

     (i) The failure of Employee to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (ii) A conviction of Employee by a court of competent jurisdiction of a felony;

     (iii) The refusal, failure or neglect of Employee to perform his duties under his employment agreement in a manner that is materially detrimental to the business or reputation of the Company unless remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (iv) The engagement by the Employee in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of SXC; or

     (v) The pursuit by Employee of interests that are materially adverse to SXC unless remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (c) “Termination by the Company Without Cause” means a termination of Employee’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

     (d) A “Termination Arising Out of a Change of Control” means, following a Change of Control (defined below), Employee is not offered or retained in his current or a comparable position. A “Change of Control” shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than Systems Xcellence Inc. or an employee benefit plan of Systems Xcellence Inc. or the Company, acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of

8

1934, as amended) of any voting security of Systems Xcellence Inc. and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of Systems Xcellence Inc.;

     (ii) The shareholders of Systems Xcellence Inc. approve a merger, and such merger is completed, consolidation, recapitalization, or reorganization of Systems Xcellence Inc. or the Company, a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 75% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 75% of the holders of outstanding voting securities of Systems Xcellence Inc. immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or

     (iii) The shareholders of Systems Xcellence Inc. approve a plan of complete liquidation of Systems Xcellence Inc. or the Company or an agreement for the sale or disposition by Systems Xcellence Inc. of all or a substantial portion of assets (i.e., 50% or more) of the total assets of Systems Xcellence Inc. or the Company.

     (e) “Total Disability” means Employee’s inability, because of illness, injury or other physical or mental incapacity, to perform Employee’s duties hereunder (as determined by the Board in good faith) for a continuous period of one hundred eighty (180) consecutive days, or for a total of one hundred eighty (180) days within any three hundred sixty (360) consecutive day period, in which case such Total Disability shall be deemed to have occurred on the last day of such one hundred eighty (180) day or three hundred sixty (360) day period, as applicable.

ARTICLE VI
GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Employee may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Employee and Employee’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Employee expressly agrees for Employee and on behalf of Employee’s executors, administrators and heirs, that this Agreement and Employee’s obligations, rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Employee, Employee’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Employee.

9

     6.4 Complete Understanding. This Agreement constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Employee by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Employee and the Company.

     6.5 Tax Provisions.

     (a) Compliance With Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of section 409 A of Internal Revenue Code of 1986 (the “Code”), so as to prevent the inclusion in gross income of any amounts payable or benefits provided hereunder in a taxable year that is prior to the taxable year or years in which such amounts or benefits would otherwise actually be distributed, provided or otherwise made available to Employee. This Agreement shall be construed, administered, and governed in a manner consistent with this intent. Any provision that would cause any amount payable or benefit provided under this Agreement to be includable in the gross income of Employee under Code section 409A(a)(l) shall have no force and effect unless and until amended to cause such amount or benefit to not be so includable (which amendment may be retroactive to the extent permitted by Code section 409A and may be made by Company without the consent of Employee). In particular, to the extent Employee becomes entitled to receive a payment or a benefit upon an event that does not constitute a permitted distribution event under Code section 409A(a)(2), then notwithstanding anything to the contrary in this Agreement, such payment or benefit will be made or provided to Employee on the earlier of (i) Employee’s “separation from service” with Company (determined in accordance with Code section 409A); provided however, that if Employee is a “specified Employee” (within the meaning of Code section 409A), Employee’s date of payment shall be made on the date which is 6 months after the date of Employee’s separation of service with Company or (ii) Employee’s death. Any reference in this Agreement to Code section 409A shall also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service.

     (b) Compliance With Section 162(m) of the Code. Notwithstanding anything herein to the contrary, if the Company reasonably anticipates that the deduction of any payment to Employee hereunder will be limited or eliminated by the application of Code section 162(m), which generally limits the deduction of compensation paid by public corporations in excess of $1 million annually to certain executives, such payment shall be delayed until the earliest date at which the Company reasonably anticipates that the deduction of the payment would not be limited or eliminated by the application of Code section 162(m) or the calendar year during which the Employee’s employment with the Company terminates.

     6.6 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

     6.7 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee. The waiver by Employee of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.8 Venue, Jurisdiction, Etc. Employee hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Employee hereby submits to the jurisdiction of

10

each such court. Employee hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Employee is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Employee consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Employee at Employee’s address listed in the business records of the Company. Employee and the Company do each hereby waive any right to trial by jury, Employee or it may have concerning any matter relating to this Agreement.

     6.9 Indemnification of Employee. Employee is hereby entitled to indemnification for Employee’s acts or omissions in Employee’s capacity as an Employee or officer of the Company to the same extent as the Company’s other senior Employees and in the manner provided by the Company’s bylaws.

     6.10 Directors and Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board of Directors at its reasonable discretion.

     6.11 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.12 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.13 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

Notices to Employee:

John Romza
2104 Yale Ave.
Arlington Heights, IL. 60004

Notices to Company:

SXC Health Solutions, Inc.
Attn: Chief Executive Officer
2441 Warrenville Road, Suite 610
Lisle, IL. 60532-3642

With Copies to:

Larry Zanger, Esq.
Holland & Knight LLP
131 South Dearborn, 30^th Floor
Chicago, Illinois 60603

11

     6.13 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:			EMPLOYEE:
SXC HEALTH SOLUTIONS, INC.
By:	/s/ Jeffrey Park Its: CFO	6/19/07	/s/ John Romza John Romza	6/19/2007

12

EX-10.15

EXHIBIT 10.15

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the 21^st day of May 2007, by and between Michael Meyer (“Employee”) and SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to continue to employ Employee and Employee wishes to continue to be employed by the Company, as its Senior Vice President, Sales & Marketing, and Employee desires to continue employment with the Company under the terms and conditions set forth in this Agreement.

     B. In order to induce the Employee to enter into this Agreement, and to incentivize and reward Employee’s continued effort, loyalty and commitment to the Company, concurrent with the execution and delivery of this Agreement the Company expresses its intention to grant to the Employee stock options to purchase 10,000 shares of Systems Xcellence Inc., the Company’s parent. This grant is contingent upon approval by Systems Xcellence Inc.’s Board of Directors and shareholders, expected to occur in May 2007.

     C. Employee acknowledges that as a member of the Company’s senior management team, Employee is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Employee is one of only a few Employees who will have regular access to confidential and/or proprietary information relating to the Company. Further, Employee acknowledges that Employee’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s willingness to employ Employee under the terms and conditions set forth in this Agreement. As a condition of that employment, the Company requires that this Agreement be entered into pursuant to which Employee furnishes the Company with, among other things, certain covenants of Employee, including Employee’s covenant not to disclose the Company’s confidential and proprietary information and non-solicitation of employees and customers for a reasonable period of time. Employee acknowledges that Employee’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s grant stock options to purchase shares of common stock of Systems Xcellence Inc.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ or continue to employ Employee to serve as Senior Vice President, Sales & Marketing, and Employee hereby accepts such employment, and agrees to perform his duties and responsibilities to the best of Employee’s abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Employee shall be the Company’s Senior Vice President, Sales & Marketing. Employee shall be responsible for building and maintaining the sales pipeline such that the Company’s revenue targets are achieved, and such other duties as may be reasonably requested by the Company. Employee shall report to the Company’s President and COO. Employee shall perform his duties under

this Agreement at the Company’s facilities in Lisle, Illinois or any subsequent location of the Company’s primary administrative operations.

     1.3 Exclusive Employment. While employed by the Company hereunder, Employee covenants to the Company that he/she will devote his/her entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity), and use his/her good faith best efforts to promote the interests of the Company. The foregoing shall not be construed as prohibiting Employee from spending such time as may be reasonably necessary to attend to Employee’s personal affairs and investments so long as such activities do not conflict or interfere with Employee’s obligations and/or timely performance of his/her duties to the Company.

     1.4 Employee Representations and Warranties as to Employability. Employee hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Employee of this Agreement and any other agreements contemplated hereby to which Employee is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Employee is a party or by which he/she is bound;

     (b) Employee is not a party to or bound by any employment agreement, non-competition agreement or confidentiality agreement with any other person or entity (or if a party to such an agreement, Employee has disclosed the material terms thereof to the Board prior to the execution hereof and promptly after the date hereof shall deliver a copy of such agreement to the Board);¹

     (c) The Company has not requested, directly or indirectly, expressly or implicitly, that Employee use or disclose the trade secrets or other confidential information of any prior employer or other third party, and Employee warrants that he will not use or disclose such information;

     (d) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Employee, enforceable in accordance with its terms; and

     (e) Employee hereby acknowledges and represents that he/she has been given the opportunity to consult with independent legal counsel regarding Employee’s rights and obligations under this Agreement and that he/she fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Employee’s employment hereunder shall commence on the date this Agreement is executed, and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the “Employment Period”).

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date this Agreement is executed, above, and ending on

2

December 31, 2008 (the “Initial Term”). The Employment Period shall be automatically extended for successive one (1) calendar year periods following the expiration of the Initial Term (each period being hereinafter referred to as an “Extension Term”) upon the same terms and conditions provided for herein unless either party provides the other party with advance written notice of its or Employee’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than sixty (60) days prior to the expiration of the Initial Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Employee by the Company, and Employee’s employment with the Company terminates as a result thereof, then Employee’s termination shall be a treated as a Termination by the Company without Cause.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Employee an annual base salary (the “Annual Base Compensation”) in the amount of two hundred fifteen thousand and 00/100 dollars ($215,000). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Employee’s Annual Base Compensation shall be reviewed annually by the Company’s Chairman and CEO and the SXC Compensation Committee.

     3.2 Employee Incentive Compensation Bonus. In respect of each calendar year falling within the Employment Period, Employee shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Employee’s performance objectives (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at fifty percent (50%) of the Employee’s Annual Base Compensation, with the specific percentage determined by the Company’s Board of Directors after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Employee at the same time other members of the Senior Employee Team are paid their respective incentive compensation bonuses. If the Executive’s employment terminates during the calendar year due to a Change In Control (5 4.d) or Termination Without Cause (5 4.c), the Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. If the Executive’s employment terminates during the calendar year for any other reason, then no Incentive Compensation bonus shall be paid for that calendar year. To the extent practicable, the Company will notify Employee of Employee’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Employee shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Employee’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Employee shall be entitled to accrue over the course of the calendar year twenty (20) days of paid vacation time in accordance with the Company’s then current vacation policy; provided that unused vacation may be used by Employee in the following calendar year only in accordance with and as permitted by the Company’s then current vacation policies in effect from time to time. Nothing in this Agreement shall cause Employee to forfeit any accrued but unused paid vacation time Employee had prior to entering into this Agreement.

     3.5 Insurance. During the Employment Period Employee shall be eligible to participate in the Company’s insurance programs on terms and conditions no less

3

favorable than those made available generally to other similarly situated employees, as such programs may be revised from time to time.

     3.6 Retirement Plan. Employee shall be eligible to participate in the Company’s deferred compensation plans, including its 401(k) plan.

     3.7 Grant of Stock Options

     a. Upon the commencement of the Initial Term, Employee shall be granted options (“Options”) to purchase 10,000 shares of common stock of Systems Xcellence Inc. The grants of Options provided by Section 3.7(a) are contingent upon approval by Systems Xcellence Inc.’s Board of Directors and shareholders. The Options shall be subject to the Company’s current Stock Option Plan. The options shall vest in one-fourth increments annually, commencing on the anniversary date of the grant.

     b. Except as otherwise provided in Section 5.2(e) of this Agreement, once vested, the Options shall have a five (5) year life.

     c. Upon a Change of Control (defined below), all of the Options shall vest.

     3.8 Stock Option Plan. Employee shall be permitted to participate in the Company’s Stock Option Plan in the same manner as the Company’s other Senior Vice Presidents, with future annual grants based on Employee’s performance as determined by the Company’s Chief Executive Officer.

     3.9 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other Executives of the Company on the Senior Executive Team.

     3.10 Vehicle Allowance. Executive shall receive a monthly payment of Five Hundred and 00/100 dollars ($500.00) for Executive’s use of a personal automobile for business use (“Vehicle Allowance”). The Vehicle Allowance shall be subject to all required federal, state, and local withholding.

ARTICLE IV
COVENANTS OF EMPLOYEE

     4.1 Covenants Regarding Developments. Employee agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Employee conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

     (a) Employee shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written records of such Developments and all modifications, research, and studies made or undertaken by Employee with respect thereto.

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Employee has any rights thereto, Employee hereby assigns all such rights, title, and interest to the Company.

4

     (c) Upon request by the Company, Employee, at any time, whether during or after Employee’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments, and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) The foregoing provisions regarding assignments do not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Employee’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Employee for the Company.

     4.2 Ownership and Covenant to Return Documents, etc. Employee agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Employee by the Company or are prepared, compiled or otherwise acquired by Employee during the Employment Period, shall be the sole and exclusive property of the Company. Employee shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Employee agrees that Employee will deliver all of the aforementioned documents and objects that may be in Employee’s possession to the Company on the termination of Employee’s employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Employee recognizes that by virtue of Employee’s employment with the Company, Employee will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This information (“Confidential and Proprietary Information”) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Employee, or which Employee should know by virtue of Employee’s position or the circumstances in which Employee learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of this Agreement or Employee’s obligations under a statutory or common law obligation) or (ii) obtained by Employee from a third party subsequent to the termination of Employee’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a statutory or common law obligation). Employee agrees that during the Employment Period and at all times thereafter (a) Employee will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for Employee’s own purposes or the purposes

5

of another, except as required in the course of Employee’s employment for the benefit of the Company or as required by law, and (b) Employee will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

     4.4 Noninterference Covenant. Employee agrees that during the Employment Period and for the Restricted Period, Employee will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other Employee of the Company (who is employed by the Company at the end of the Employee’s employment with the Company) to leave the employ of the Company. “Restricted Period” means (i) the Employment Period and (ii) the two (2) year period following the termination of Employee’s employment.

     4.5 Covenant of Nonsolicitation of Customers. Employee acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Employee’s employment. Accordingly, Employee agrees that during the Restricted Period, Employee will not: (a) directly or indirectly, solicit or accept business from, or provide products or services to, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Employee sold or provided the Company’s products or services at any time during the two (2) year period immediately preceding the termination of Employee’s employment, (ii) any entity for which Employee orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the two (2) year period immediately preceding the termination of Employee’s employment, or (iii) any entity as to which Employee acquired Confidential and Proprietary Information at any time during Employee’s employment with the Company.

     4.6 Remedies for Breach. Employee recognizes that the rights and privileges granted to Employee by this Agreement, and Employee’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Employee might be entitled from the Company. Accordingly, Employee understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Employee also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in Section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Employee’s death; (b) Employee’s Total Disability; (c) Employee’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; or (f) Termination Arising Out of a Change of Control.

6

     5.2 Rights upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death, Total Disability, Resignation, and Termination by the Company for Cause. If the Triggering Event was Employee’s Death, Total Disability (defined below), Resignation, or a Termination by the Company for Cause (defined below), then Employee shall be entitled to receive Employee’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s employee welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

     (b) Termination by Company without Cause. If the Triggering Event was a Termination by the Company Without Cause, then Employee shall be entitled to receive (i) Employee’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of Employee’s Incentive Compensation Bonus, if any, pro rated to the Employee’s date of termination; and (iii) the Severance Benefit. “Severance Benefit” means a payment equal to the Employee’s Annual Base Compensation as of the date of termination, payable in twenty-four (24) semi-monthly payments, less required tax withholding, commencing six (6) months from the date Employee’s employment with the Company terminated. Employee’s entitlement to the benefits provided in subsections 5.2(b) (ii) and (iii) are contingent on Employee signing a Separation Agreement and General Release provided by the Company.

     (c) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination Arising Out of a Change of Control (defined below), then Employee shall be entitled to receive (i) Employee’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Employee’s Incentive Compensation Bonus, if any, pro rated to Employee’s date of termination; and (iii) the Change of Control Severance Benefit. Employee’s entitlement to the benefits provided in subsections 5.2(c) (ii) and (iii) is contingent on Employee signing a Separation Agreement and General Release provided by the Company within a reasonable period of time following the date the Separation Agreement and General Release is provided to Employee. “Change of Control Severance Benefit” means a lump-sum payment, less required tax withholding, equal to one and one half times the Employee’s Annual Base Compensation at the time of termination, plus the average of the previous two Incentive Compensation payments. The Change of Control Severance Benefit shall be paid six (6) months from the date Employee’s employment with the Company terminated. Notwithstanding anything to the contrary contained in this Agreement, if and to the extent that any payments and rights provided under this Agreement would cause Employee to be subject to excise tax under Section 280G or Section 4999 of the Internal Revenue Code, or the corresponding section(s) of any future federal tax law, then the amount of the payments shall be reduced to the extent necessary to avoid imposition of any such excise tax. All determinations of the amount of the reduction shall be made by the Company’s tax counsel, and the cost of making such determination shall be paid by the Company.

     (d) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Employee’s rights to salary, Employee benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any loans, cash advances or fixed amounts which Employee owes the Company against any amounts it owes Employee under this Agreement.

7

     (e) Treatment of Options. Employee may be required to exercise any vested options within ninety (90) days from date of the termination of his employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Employee’s employment with the Company, including Employee’s declining of continued employment in the same or comparable position with the Company following a Change of Control.

     (b) “Termination by the Company for Cause” means termination by the Company of Employee’s employment for:

     (i) The failure of Employee to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (ii) A conviction of Employee by a court of competent jurisdiction of a felony;

     (iii) The refusal, failure or neglect of Employee to perform his duties under his employment agreement in a manner that is materially detrimental to the business or reputation of the Company unless remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (iv) The engagement by the Employee in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of SXC; or

     (v) The pursuit by Employee of interests that are materially adverse to SXC unless remedied by Employee within thirty (30) days after receipt of written notice thereof given by the Company;

     (c) “Termination by the Company Without Cause” means a termination of Employee’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

     (d) A “Termination Arising Out of a Change of Control” means, following a Change of Control (defined below), Employee is not offered or retained in his current or a comparable position. A “Change of Control” shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than Systems Xcellence Inc. or an employee benefit plan of Systems Xcellence Inc. or the Company, acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of

8

1934, as amended) of any voting security of Systems Xcellence Inc. and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of Systems Xcellence Inc.;

     (ii) The shareholders of Systems Xcellence Inc. approve a merger, and such merger is completed, consolidation, recapitalization, or reorganization of Systems Xcellence Inc. or the Company, a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 75% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 75% of the holders of outstanding voting securities of Systems Xcellence Inc. immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or

     (iii) The shareholders of Systems Xcellence Inc. approve a plan of complete liquidation of Systems Xcellence Inc. or the Company or an agreement for the sale or disposition by Systems Xcellence Inc. of all or a substantial portion of assets (i.e., 50% or more) of the total assets of Systems Xcellence Inc. or the Company.

     (e) “Total Disability” means Employee’s inability, because of illness, injury or other physical or mental incapacity, to perform Employee’s duties hereunder (as determined by the Board in good faith) for a continuous period of one hundred eighty (180) consecutive days, or for a total of one hundred eighty (180) days within any three hundred sixty (360) consecutive day period, in which case such Total Disability shall be deemed to have occurred on the last day of such one hundred eighty (180) day or three hundred sixty (360) day period, as applicable.

ARTICLE VI
GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Employee may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Employee and Employee’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Employee expressly agrees for Employee and on behalf of Employee’s executors, administrators and heirs, that this Agreement and Employee’s obligations, rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Employee, Employee’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Employee.

9

     6.4 Complete Understanding. This Agreement constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Employee by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Employee and the Company.

     6.5 Tax Provisions.

     (a) Compliance With Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of section 409A of Internal Revenue Code of 1986 (the “Code”), so as to prevent the inclusion in gross income of any amounts payable or benefits provided hereunder in a taxable year that is prior to the taxable year or years in which such amounts or benefits would otherwise actually be distributed, provided or otherwise made available to Employee. This Agreement shall be construed, administered, and governed in a manner consistent with this intent. Any provision that would cause any amount payable or benefit provided under this Agreement to be includable in the gross income of Employee under Code section 409A(a)(1) shall have no force and effect unless and until amended to cause such amount or benefit to not be so includable (which amendment may be retroactive to the extent permitted by Code section 409A and may be made by Company without the consent of Employee). In particular, to the extent Employee becomes entitled to receive a payment or a benefit upon an event that does not constitute a permitted distribution event under Code section 409A(a)(2), then notwithstanding anything to the contrary in this Agreement, such payment or benefit will be made or provided to Employee on the earlier of (i) Employee’s “separation from service” with Company (determined in accordance with Code section 409A); provided however, that if Employee is a “specified Employee” (within the meaning of Code section 409A), Employee’s date of payment shall be made on the date which is 6 months after the date of Employee’s separation of service with Company or (ii) Employee’s death. Any reference in this Agreement to Code section 409A shall also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service.

     (b) Compliance With Section 162(m) of the Code. Notwithstanding anything herein to the contrary, if the Company reasonably anticipates that the deduction of any payment to Employee hereunder will be limited or eliminated by the application of Code section 162(m), which generally limits the deduction of compensation paid by public corporations in excess of $1 million annually to certain executives, such payment shall be delayed until the earliest date at which the Company reasonably anticipates that the deduction of the payment would not be limited or eliminated by the application of Code section 162(m) or the calendar year during which the Employee’s employment with the Company terminates.

     6.6 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

     6.7 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee. The waiver by Employee of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.8 Venue, Jurisdiction, Etc. Employee hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Employee hereby submits to the jurisdiction of

10

each such court. Employee hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Employee is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Employee consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Employee at Employee’s address listed in the business records of the Company. Employee and the Company do each hereby waive any right to trial by jury, Employee or it may have concerning any matter relating to this Agreement.

     6.9 Indemnification of Employee. Employee is hereby entitled to indemnification for Employee’s acts or omissions in Employee’s capacity as an Employee or officer of the Company to the same extent as the Company’s other senior Employees and in the manner provided by the Company’s bylaws.

     6.10 Directors and Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board of Directors at its reasonable discretion.

     6.11 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.12 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.13 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

Notices to Employee:

Michael Meyer
972 Johnson Drive
Naperville, IL 60540

Notices to Company:

SXC Health Solutions, Inc.
Attn: Chief Executive Officer
2441 Warrenville Road, Suite 610
Lisle, IL. 60532-3642

With Copies to:

Larry Zanger, Esq.
Holland & Knight LLP
131 South Dearborn, 30^th Floor
Chicago, Illinois 60603

11

     6.13 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:			EMPLOYEE:
SXC HEALTH SOLUTIONS, INC.
By:	/s/ Jeffrey Park		/s/ Michael Meyer
			Michael Meyer
	Its:	CFO.

12

EX-10.16

EXHIBIT 10.16

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the          day of October, 2007, by and between B. Greg Buscetto (“Executive”) and SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to employ Executive, and Executive wishes to be employed by the Company, as its Senior Vice President and General Manager, InformedRx, and Executive desires to accept employment with the Company under the terms and conditions set forth in this Agreement.

     B. In order to induce the Executive to enter into this Agreement, and to incentivize and reward Executive’s continued effort, loyalty and commitment to the Company, concurrent with the execution and delivery of this Agreement the Company expresses its intention to grant to the Executive stock options to purchase 30,000 shares of SXC Health Solutions Corp., the Company’s parent. The Company expresses its intention to grant to Executive an additional 20,000 stock options in the Spring of 2008, concurrently with the distribution of stock options to similarly situated Executives.

     C. Executive acknowledges that as a member of the Company’s senior management team, Executive is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Executive is one of only a few Executives who will have regular access to confidential and/or proprietary information relating to the Company. Further, Executive acknowledges that Executive’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s willingness to employ Executive under the terms and conditions set forth in this Agreement. As a condition of that employment, the Company requires that this Agreement be entered into pursuant to which Executive furnishes the Company with, among other things, certain covenants of Executive, including Executive’s covenant not to disclose the Company’s confidential and proprietary information and non-solicitation of employees and customers for a reasonable period of time. Executive acknowledges that Executive’s covenants to the Company hereinafter set forth are being made in partial consideration of the Company’s grant stock options to purchase shares of common stock of SXC Health Solutions Corp.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ Executive to serve its as Senior Vice President and General Manager, InformedRx, and Executive hereby accepts such employment, and agrees to perform his duties and responsibilities to the best of Executive’s abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Executive shall be the Company’s Senior Vice President and General Manager, InformedRx. Executive shall be responsible for oversight and profitability of the InformedRx business and will perform other duties as assigned. Executive shall report to the Company’s President

and Chief Operating Officer. Although Executive will not be required to relocate his principal residence in Dacula, Georgia for a period of twenty (20) months following the commencement of his employment with SXC, Executive shall perform his duties under this Agreement at the Company’s facilities in Lisle, Illinois or at any subsequent location of the Company’s primary administrative operations.

     1.3 Exclusive Employment. While employed by the Company hereunder, Executive covenants to the Company that he/she will devote his/her entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity), and use his/her good faith best efforts to promote the interests of the Company. The foregoing shall not be construed as prohibiting Executive from spending such time as may be reasonably necessary to attend to Executive’s personal affairs, investments, and other financial interests, so long as such activities do not conflict or interfere with Executive’s obligations and/or timely performance of his/her duties to the Company.

     1.4 Executive Representations and Warranties as to Employability. Executive hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Executive of this Agreement and any other agreements contemplated hereby to which Executive is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he/she is bound;

     (b) Executive is not a party to or bound by any employment agreement, non competition agreement or confidentiality agreement with any other person or entity, except that Executive is party to a protective covenants agreement with Burgess Information Systems, Inc., d/b/a ProCareRx, ProCare Pharmacy Benefit Manager Inc., amd ProCare Pharmacy Care, LLC. Company acknowledges that it is in receipt of a copy of said Agreement;

     (c) The Company has not requested, directly or indirectly, expressly or implicitly, that Executive use or disclose the trade secrets or other confidential information of any prior employer or other third party, and Executive warrants that he will not use or disclose such information;

     (d) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms; and

     (e) Executive hereby acknowledges and represents that he/she has been given the opportunity to consult with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that he/she fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Executive’s employment hereunder shall commence on November 19, 2007 and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the “Employment Period”).

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date set forth in Section 2.1, above, and end on December

2

31, 2008 (the “Initial Term”). The Employment Period shall be automatically extended for successive one (1) calendar year periods following the expiration of the Initial Term (each period being hereinafter referred to as an “Extension Term”) upon the same terms and conditions provided for herein unless either party provides the other party with advance written notice of its or Executive’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than sixty (60) days prior to the expiration of the Initial Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Executive by the Company, and Executive’s employment with the Company terminates as a result thereof, then Executive’s termination shall be a treated as a Termination by the Company Without Cause.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Executive an annual base salary (the “Annual Base Compensation”) in the amount of Two Hundred Forty Thousand and 00/100 Dollars ($240,000). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Executive’s Annual Base Compensation shall be reviewed annually by the Company’s Chairman and CEO and the SXC Compensation Committee.

     3.2 Executive Performance Bonus. In respect of each calendar year falling within the Employment Period, Executive shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Executive’s performance objectives (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at fifty percent (50%) of the Executive’s Annual Base Compensation, with the specific percentage determined by the Company’s Board of Directors after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Executive at the same time other members of the Senior Executive Team are paid their respective incentive compensation bonuses. The Incentive Compensation Bonus for the performance year 2008, payable in March 2009, will be equal to at least fifty percent (50%) of the Incentive Compensation Bonus target. Additionally, the Company will establish a set of stretch performance objectives which if achieved, will provide Executive the opportunity to earn in excess of one hundred percent (100%) of the Incentive Compensation Bonus target.

If the Executive’s employment terminates during the calendar year due to Termination without Cause (5.4.c) or a Termination Arising Out of a Change of Control (5.4.d), the Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. If Executive employment terminates during the calendar year for any other reason, then no Incentive Compensation Bonus shall be paid to Executive for the calendar year in which the termination occurred. To the extent practicable, the Company will notify Executive of Executive’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Executive shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Executive’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Executive shall be entitled to accrue over the course of the calendar year twenty (20) days of paid vacation time, in accordance with the Company’s then current vacation policy; provided that unused vacation may be used by Executive in the following calendar year only in

3

accordance with and as permitted by the Company’s then current vacation policies in effect from time to time. Nothing in this Agreement shall cause Executive to forfeit any accrued but unused paid vacation time Executive had prior to entering into this Agreement.

     3.5 Insurance. During the Employment Period Executive shall be eligible to participate in the Company’s insurance programs on terms and conditions no less favorable than those made available generally to other similarly situated Executives, as such programs may be revised from time to time.

     3.6 Retirement Plan. Upon commencement of the Initial Term, Executive shall be eligible to participate in the Company’s deferred compensation plans, including its 401(k) plan, including any Employer match per the terms and conditions defined in the corresponding Plan Documents.

     3.7 Grant of Stock Options

     a. Upon the commencement of the Initial Term, Executive shall be granted options (“Options”) to purchase 30,000 shares of common stock of SXC Health Solutions Corp. In the Spring of 2009, Executive shall be granted an additional 20,000 shares of common stock of SXC Health Solutions Corp., provided Executive is an employee in good standing with the Company on the date of said grant. The grants of Options provided by Section 3.7(a) are contingent upon approval by the SXC Health Solutions Corp. Board of Directors and shareholders. The Options shall be subject to the Company’s current Stock Option Plan. The options shall vest in one-fourth increments annually, commencing on the anniversary date of the grant.

     b. Except as otherwise provided in Section 5.2(e) of this Agreement, once vested, the Options shall have a five (5) year life.

     c. Upon a Change of Control (defined below), all of the Options shall vest.

     3.8 Stock Option Plan. Executive shall be permitted to participate in the Company’s Stock Option Plan in the same manner as the Company’s other Senior Vice Presidents, with future annual grants based on Executive’s performance as determined by the Company’s Chief Executive Officer.

     3.9 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other Executives of the Company on the Senior Executive Team.

     3.10 Vehicle Allowance. Executive shall receive a monthly payment of Five Hundred and 00/100 dollars ($500.00) for Executive’s use of a personal automobile for business use (“Vehicle Allowance”). The Vehicle Allowance shall be subject to all required federal, state, and local withholding.

     3.11 Relocation Package. Upon Executive’s decision to relocate his primary residence, pursuant to paragraph 1.2, the Company will provide to Executive a relocation package in accordance with the then-current SXC Relocation Policy & Procedures. At minimum, the relocation package shall include shipment of household goods and closing costs related to the purchase of a new home and the sale of an existing home.

4

ARTICLE IV
COVENANTS OF EXECUTIVE

     4.1 Covenants Regarding Developments. Executive agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Executive conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

     (a) Executive shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written records of such Developments and all modifications, research, and studies made or undertaken by Executive with respect thereto.

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Executive has any rights thereto, Executive hereby assigns all such rights, title, and interest to the Company.

     (c) Upon request by the Company, Executive, at any time, whether during or after Executive’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments, and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) Section 4.1 does not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Executive’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Executive for the Company.

     4.2 Ownership and Covenant to Return Documents, etc. Executive agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Executive by the Company or are prepared, compiled or otherwise acquired by Executive during the Employment Period, shall be the sole and exclusive property of the Company. Executive shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Executive agrees that Executive will deliver all of the aforementioned documents and objects that may be in Executive’s possession to the Company on the termination of Executive’s employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Executive recognizes that by virtue of Executive’s employment with the Company, Executive will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This

5

information (“Confidential and Proprietary Information”) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Executive, or which Executive should know by virtue of Executive’s position or the circumstances in which Executive learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of this Agreement or Executive’s obligations under a statutory or common law obligation) or (ii) obtained by Executive from a third party subsequent to the termination of Executive’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a statutory or common law obligation). Executive agrees that during the Employment Period and at all times thereafter (a) Executive will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for Executive’s own purposes or the purposes of another, except as required in the course of Executive’s employment for the benefit of the Company or as required by law, and (b) Executive will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

     4.4 Noninterference Covenant. Executive agrees that during the Employment Period and for the Restricted Period, Executive will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other employee of the Company (who is employed by the Company at the end of the Executive’s employment with the Company) to leave the employ of the Company. “Restricted Period” means (i) the Employment Period and (ii) the two (2) year period following the termination of Executive’s employment.

     4.5 Covenant of Nonsolicitation of Customers. Executive acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Executive’s employment. Accordingly, Executive agrees that during the Restricted Period, Executive will not: (a) directly or indirectly, solicit or accept business from, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Executive sold or provided the Company’s products or services at any time during the two (2) year period immediately preceding the termination of Executive’s employment, (ii) any entity for which Executive orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the two (2) year period immediately preceding the termination of Executive’s employment, or (iii) any entity as to which Executive acquired Confidential and Proprietary Information at any time during Executive’s employment with the Company.

     4.6. Remedies for Breach. Executive recognizes that the rights and privileges granted to Executive by this Agreement, and Executive’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Executive might be entitled from the Company. Accordingly, Executive understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and

6

permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Executive also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in Section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Executive’s death; (b) Executive’s Total Disability; (c) Executive’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; or (f) Termination Arising Out of a Change of Control.

     5.2 Rights Upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death, Total Disability, Resignation, and Termination by the Company for Cause. If the Triggering Event was Executive’s Death, Total Disability (defined below), Resignation, or a Termination by the Company for Cause (defined below), then Executive shall be entitled to receive Executive’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s employee welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

     (b) Termination by Company Without Cause. If the Triggering Event was a Termination by the Company Without Cause, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of Executive’s Incentive Compensation Bonus, if any, pro rated to the Executive’s date of termination; and (iii) the Severance Benefit. “Severance Benefit” means a payment equal to the Executive’s Annual Base Compensation as of the date of termination, payable in twenty-four (24) semi-monthly payments, less required tax withholding, commencing within thirty days from the date Company receives the Separation Agreement and General Release executed by Executive. Executive’s entitlement to the benefits provided in subsections 5.2(b)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release provided by the Company.

     (c) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination Arising Out of a Change of Control (defined below), then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus, if any, pro rated to Executive’s date of termination; and (iii) the Change of Control Severance Benefit. Executive’s entitlement to the benefits provided in subsections 5.2(c)(ii) and (iii) is contingent on Executive signing a Separation Agreement and General Release provided by the Company within a reasonable period of time following the date the Separation Agreement and General Release is provided to Executive. “Change of Control Severance Benefit” means a lump-sum payment, less required tax withholding, equal to one and one-half times the Executive’s Annual Base Compensation at the time of termination, plus the average of the previous two Incentive

7

days from the date the executed Separation Agreement and General Release is received by the Company. The Change of Control Severance Benefit may be suspended during the first six (6) months from the end of the Employment Period only to the extent that it exceeds permissible payment thresholds under section 409 A of the Code. Notwithstanding anything to the contrary contained in this Agreement, if and to the extent that any payments and rights provided under this Agreement would cause Executive to be subject to excise tax under Section 280G or Section 4999 of the Internal Revenue Code, if the corresponding section(s) of any future federal tax law, then the amount of the payments shall be reduced to the extent necessary to avoid imposition of any such excise tax.

     (d) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Executive’s rights to salary, Executive benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any loans, cash advances or fixed amounts which Executive owes the Company against any amounts it owes Executive under this Agreement.

     (e) Treatment of Options. Executive may be required to exercise any vested options within ninety (90) days from date of the termination of his employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV, V and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Executive’s employment with the Company, including Executive’s declining of continued employment in the same or comparable position with the Company following a Change of Control.

     (b) “Termination by the Company for Cause” means termination by the Company of Executive’s employment for:

     (i) The failure of Executive to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (ii) A conviction of Executive by a court of competent jurisdiction of a felony;

     (iii) The refusal, failure or neglect of Executive to perform his duties under his employment agreement in a manner that is materially detrimental to the business or reputation of the Company unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (iv) The engagement by the Executive in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of SXC; or

8

     (v) The pursuit by Executive of interests that are materially adverse to SXC unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (c) “Termination by the Company Without Cause” means a termination of Executive’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

     (d) A “Termination Arising Out of a Change of Control” means, following a Change of Control (defined below), Executive is not offered or retained in his current or a comparable position with comparable compensation. A “Change of Control” shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than SXC Health Solutions Corp. or an employee benefit plan of SXC Health Solutions Corp. or the Company, acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting security of SXC Health Solutions Corp. and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of SXC Health Solutions Corp

     (ii) The shareholders of SXC Health Solutions Corp. approve a merger, and such merger is completed, consolidation, recapitalization, or reorganization of SXC Health Solutions Corp. or the Company, a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 75% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 75% of the holders of outstanding voting securities of SXC Health Solutions Corp.immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or

     (iii) The shareholders of SXC Health Solutions Corp. approve a plan of complete liquidation of SXC Health Solutions Corp. or the Company or an agreement for the sale or disposition by SXC Health Solutions Corp. of all or a substantial portion of assets (i.e., 50% or more) of the total assets of SXC Health Solutions Corp. or the Company.

     (e) “Total Disability” means Executive’s inability, because of illness, injury or other physical or mental incapacity, to perform Executive’s duties hereunder (as determined by the Board in good faith) for a continuous period of one hundred eighty (180) consecutive days, or for a total of one hundred eighty (180) days within any three hundred sixty (360) consecutive day period, in which case such Total Disability shall be deemed to have occurred on the last day of such one hundred eighty (180) day or three hundred sixty (360) day period, as applicable.

ARTICLE VI

9

GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Executive may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Executive and Executive’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Executive expressly agrees for Executive and on behalf of Executive’s executors, administrators and heirs, that this Agreement and Executive’s obligations, rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Executive, Executive’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Executive.

     6.4 Complete Understanding. This Agreement and it’s exhibits constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Executive by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Executive and the Company.

     6.5 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

     6.6 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent breach by Executive. The waiver by Executive of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.7 Venue, Jurisdiction. Etc. Executive hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Executive hereby submits to the jurisdiction of each such court. Executive hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Executive is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Executive consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Executive at Executive’s address listed in the business records of the Company. Executive and the Company do each hereby waive any right to trial by jury that Executive or it may have concerning any matter relating to this Agreement.

     6.8 Indemnification of Employee.

10

     (a) Corporate Acts. Employee is hereby entitled to indemnification for Employee’s acts or omissions in Employee’s capacity as an Employee or officer of the Company to the same extent as the Company’s other senior Employees and in the manner provided by the Company’s bylaws.

     (b) Lawsuits by Former Employer. In the event Employee’s former employer initiates a lawsuit against Employee alleging that Employee has breached Employee’s contractual post-employment obligations to his former employer, the Company shall pay any judgements, awards, settlements and damages in addition to the Employee’s reasonable attorneys’ fees, costs and expenses incurred by Employee in defending that lawsuit, subject to the following conditions: (i) The Company shall retain legal counsel to defend Employee; (ii) the Company shall have the right, along with Employee, to direct Employee’s defense; (iii) Employee shall execute any conflict of interest waiver consistent with the applicable rules of professional conduct; and (iv) the Company’s obligations under this Section 6.9(b) shall be relieved if the Company determines, at any time, that Employee breached any of his representations and warranties in Section 1.4 of this Agreement. For the purposes of this paragraph, “Former Employer” shall be defined as Burgess Information Systems, Inc. d/b/a ProCare Rx, ProCare Pharmacy Benefit Manager, Inc., or ProCare Pharmacy Care LLC, or any of their affilitiates, related entities, or any of their successors or assigns.

     6.9 Directors and Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board of Directors at its reasonable discretion.

     6.10 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.11 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.12 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

Notices to Executive:

B. Greg Buscetto
2781 Hillgrove Drive
Dacula, Georgia 30019

Notices to Company:

SXC Health Solutions, Inc.
Attn: Chief Executive Officer
2441 Warrenville Road Suite 610
Lisle, IL 60532-3642

11

With Copies to:

Larry Zanger, Esq.
Holland & Knight LLP
131 South Dearborn, 30^th Floor
Chicago, Illinois 60603

     6.13 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:			EXECUTIVE:
SXC HEALTH SOLUTIONS, INC.
By:	/s/ Mark Thierer		/s/ B. Greg Buscetto
	Its:	President & COO	B. Greg Buscetto

12

EX-10.19

EXHIBIT 10.19

Agreement Number#______

SXC Health Solutions Corp.

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT dated the ____ day of                     , _____

BETWEEN:

SXC Health Solutions Corp.,
a corporation incorporated under the laws of Canada,

(hereinafter called the “Corporation”)
— and —

Name of

(hereinafter called the “Optionee”),

as follows:

1) Pursuant to the Stock Option Plan of the Corporation, as amended from time to time (the “Plan”), the Corporation hereby grants to the Optionee on the date hereof (the “Grant Date”) the option (the “Option”) to purchase up to _________ common shares (the “Common Shares”) of the authorized and unissued capital stock of the Corporation, as presently constituted, for cash, at a price of US$_________ per Common Share, upon the terms and conditions set out herein. The Option is not intended to qualify as an incentive stock option within the meaning of Section 422(b) of the United States Internal Revenue Code of 1986, as amended (the “Code”), and the provisions hereof shall be construed consistent with that intent.

a)	Date of Exercise. On the first, second, third and fourth anniversary of the Grant Date, the Option shall become exercisable with respect to twenty-five percent (25%) of the total number of Common Shares subject to the Option (computed in each case to the nearest full share) (the “Exercisable Portion”), and all or any part of the Common Shares as to which the Option shall have become exercisable may be purchased at any time, or from time to time, thereafter, until expiration or termination of the Option.
b)	Expiry of Option. The Option shall expire with respect to each Exercisable Portion, and all rights to purchase Common Shares comprising such Exercisable Portion hereunder shall cease and become null and void, at 5:00 o’clock p.m. (Toronto time) on the date which is five years after the Grant Date (the “Expiry Date”) or upon the happening of certain events as hereinafter provided.
c)	Method of Exercise. The Option may only be exercised by the Optionee, or by the person or persons entitled to exercise the same pursuant to the provisions of subparagraph (f) below, on or prior to the Expiry Date, by: (i) the delivery to the Corporation at its head office of written notice of election to exercise the same,

specifying the number of Common Shares with respect to which the Option is being exercised, and accompanied by payment in full of the purchase price of the Common Shares then purchased by way of cash or certified cheque in favour of the Corporation, or (ii) under the terms of the Company’s cashless exercise program, which is subject to change, specifying the number of Common Shares with respect to which the Option is being exercised and accompanied by payment in full of any taxes required to be paid in connection with such cashless exercise. Concurrently with its receipt of any such notice and payment, the Corporation shall issue the Common Shares purchased by the Optionee. The Corporation may at its election require that this Agreement be presented for appropriate endorsement upon any such exercise.

d) Compliance with Applicable Law. THE GRANTING OF THE OPTION AND THE ISSUANCE OF COMMON SHARES UPON EXERCISE OF THE OPTION SHALL BE CARRIED OUT IN COMPLIANCE WITH APPLICABLE STATUTES AND WITH REGULATIONS OF GOVERNMENTAL AUTHORITIES AND APPLICABLE STOCK EXCHANGES AND SHALL BE CONDITIONAL UPON ALL NECESSARY APPROVALS, INCLUDING SHAREHOLDER APPROVAL, BEING OBTAINED. IF THE FOREGOING CONDITION IS NOT SATISFIED, THIS AGREEMENT SHALL BE VOID AND OF NO FORCE OR EFFECT AS OF THE DATE OF EXECUTION AND THE CORPORATION AND THE OPTIONEE SHALL BE RELEASED FROM ANY AND ALL RIGHTS, BENEFITS, OBLIGATIONS AND LIABILITIES HEREUNDER OR ARISING HEREFROM. The Optionee hereby acknowledges and undertakes to comply, to the satisfaction of the Corporation and its counsel, with all applicable requirements of any stock exchange or exchanges upon which any securities of the Corporation may from time to time be listed and of any applicable securities regulatory authorities. Such requirements may include the placing of legends on share certificates restricting transfer of such Common Shares, the making of representations by the Optionee that he or she is acquiring such Common Shares for investment and not with a view to distribution, the filing of any required information or statements with the aforesaid authorities and the making of arrangements with the Optionee’s employer to withhold income taxes which may become payable under the Optionee’s exercise of the Option under this Agreement.

e)

Options Not Assignable. The Option shall not be transferable or assignable other than by will or by the laws of descent and distribution.

f)

Exercise in the Event of Death or Termination of Employment. Subject to the following provisions of this subparagraph 1(f) and to any express resolution passed by the board of directors of the Corporation with respect to the Option, the Option and all rights to purchase Common Shares pursuant hereto shall expire and terminate immediately upon the Optionee ceasing to be an employee, officer or director of, or ceasing to provide services to, the Corporation or an affiliate or subsidiary of the Corporation:

i) Exercise Upon Death: If the Optionee shall die (A) while an employee, officer or director of or providing services to the Corporation, or of an affiliate or subsidiary of the Corporation, or (B) within thirty (30) days after termination of the Optionee’s employment, office or directorship with or service to the Corporation, or an affiliate or subsidiary of the Corporation, in accordance with clause (ii) or (iii) below, the Option may be exercised, to the extent that the Optionee shall have been entitled to do so at the date of death, by the person or persons to whom the Optionee’s rights under the

2

Option pass by will or applicable law, or if no such person has such right, by the Optionee’s executors or administrators at any time, or from time to time, within twelve (12) months from the date when the Secretary of the Corporation shall have given notice of this clause to the executors or administrators of the Optionee following the Optionee’s death, but in no event later than the Expiry Date.

ii)	Exercise Upon Permanent Disability: If an Optionee’s (or, if the Optionee is a personal holding company controlled by, or a registered retirement savings plan established by, an officer, director, employee or service provider, then if such person’s) employment, office or directorship with or services to the Corporation, or an affiliate or subsidiary of the Corporation, shall terminate because of the Optionee’s permanent disability, the Optionee may exercise the Option, to the extent the Optionee may be entitled to at the date of the termination of the Optionee’s employment, office, directorship or services, at any time, or from time to time, within six (6) months of the date of the termination of the Optionee’s employment, office, directorship or services, but in no event later than the Expiry Date.
iii)	Exercise Upon Resignation: If the Optionee’s (or, if the Optionee is a personal holding company controlled by, or a registered retirement savings plan established by, an officer, director, employee or service provider, then if such person’s) employment, office or directorship with or services to the Corporation, or an affiliate or subsidiary of the Corporation, shall terminate for any reason other than the Optionee’s death or permanent disability or dismissal for cause, the Optionee may exercise the Option, to the extent that the Optionee may be entitled to do so at the date of the termination of the Optionee’s employment, office, directorship or services, at any time or from time to time, within ninety (90) days of the date of termination of the Optionee’s employment, office, directorship or services; but in no event later than the Expiry Date.
iv)	Exercise Upon Termination for Cause: If the Optionee’s (or, if the Optionee is a personal holding company controlled by, or a registered retirement savings plan established by, an officer, director, employee or service provider, then if such person’s) employment, office, directorship with or services to the Corporation, or an affiliate or subsidiary of the Corporation, shall be terminated for cause, the Optionee may exercise the Option, to the extent that the Optionee would be entitled to do so at the date of the termination of his or her employment, office, directorship or services, at any time or from time to time, within thirty (30) days of the date of termination of the Optionee’s employment, office, directorship or services, but in no event later than the Expiry Date.

g) Required Approvals. If at any time, the board of directors of the Corporation shall determine, in its discretion, that the registration, qualification or other approval of or in connection with the Plan or the Common Shares covered thereby is necessary or desirable under any provincial, state, or federal law, then the Option may not be exercised, in whole or in part, unless and until such registration, qualification or approval shall have been obtained, free of any condition not acceptable to the board of directors of the Corporation. The Optionee shall, to the extent applicable, cooperate with the Corporation in relation thereto and shall have no claim or cause of action against the Corporation or any of its officers, directors or

3

shareholders as the result of any failure by the Corporation to take any steps to obtain any such registration, qualification or approval.

h) Adjustment to Number of Shares. Subject to any rules under Section 409A of the Code required to be applied to an Option in order for the Option to not constitute nonqualified deferred compensation under such Section, and subject to any required approvals of applicable regulatory authorities and stock exchanges, in the event of any change in the Common Shares by reason of any stock dividend, recapitalization, merger, consolidation, split-up, combination or exchange of shares, or rights offering to purchase Common Shares at a price substantially below fair market value, or of any similar change affecting the Common Shares, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the board of directors of the Corporation may deem equitable to prevent substantial dilution or enlargement of the rights granted to, or available for, the Optionee.

i)	Liquidation. In the event the board of directors of the Corporation shall adopt a plan of complete liquidation, the Option shall become immediately exercisable in full, notwithstanding that it may have been initially granted on an installment basis.
j)	No Rights as Shareholder. The Optionee shall not have any rights as a shareholder with respect to any Common Shares subject to the Option prior to the date of issuance to the Optionee of a certificate or certificates for such Common Shares.
k)	Exercise of Option. No part of the Option may be exercised until the Optionee shall have remained in the employ or as an officer or director of or provided services to the Corporation, or of an affiliate or subsidiary of the Corporation, for a period of no less than three (3) months after the date hereof.

2) Option and Employment. Nothing in this Agreement shall confer upon the Optionee any right with respect to continuance of employment or as an officer or director with or service provider to the Corporation, or any affiliate or subsidiary of the Corporation, nor shall it interfere in any way with the right of the Corporation, or any affiliate or subsidiary of the Corporation, by which the Optionee is employed or of which the Optionee is a director or service provider to terminate the Optionee’s employment or directorship or services at any time in accordance with applicable law.

3) Effect of Change of Control Transaction.

a) If a bona fide offer for common shares of the Corporation (whether by way of take-over bid, plan of arrangement, amalgamation or similar transaction) is made to the Optionee or to shareholders of the Corporation generally or to a class of shareholders of the Corporation which includes the Optionee, and the offer, if accepted in whole or in part by any person or persons, would result in the offeror (the “Offeror”), beneficially owning a sufficient number of shares to control the Corporation within the meaning of subsection 1(3) of the Securities Act (Ontario) (as amended from time to time) (a “Change of Control Transaction”), then the Corporation shall immediately notify the Optionee with full particulars thereof. In such circumstances, notwithstanding the provisions of subsection 1(a) of this Agreement, the Option granted pursuant to this Agreement shall be exercisable immediately on a conditional basis as hereinafter provided with respect to all of the Common Shares under the Option, subject to completion of the Change of

4

Control Transaction. If the Offeror completes the Change of Control Transaction, the Corporation shall immediately notify the Optionee, and any exercise of the Option by the Optionee pursuant to this subparagraph 3(a) will be deemed to have been completed immediately prior to the completion of the Change of Control Transaction. If the Change of Control Transaction is not completed for any reason, then the Corporation will immediately notify the Optionee, and any exercise of the Option by the Optionee pursuant to this subparagraph 3(a) will be deemed to be cancelled and void, the Corporation will immediately return to the Optionee the payment which accompanied the Optionee’s exercise of the Option pursuant to this subparagraph 3(a), and the Option will again be exercisable only to the extent otherwise provided by this agreement.

b)	If the Offeror will complete the purchase contemplated by the Change of Control Transaction only if the Offeror acquires all of the issued and outstanding Common Shares of the Corporation subject to the Change of Control Transaction, the Corporation shall be entitled to deliver written notice (a “Compulsory Sale Notice”) to the Optionee within 10 days following the making of the Change of Control Transaction, stating that the Optionee shall be required to sell to the Offeror at the time of completion of, and upon the same terms and conditions as those contained in, the Change of Control Transaction the particular number of Common Shares acquired by the Optionee pursuant to subparagraph 3(a) hereof as a result of the Option having become immediately exercisable.
c)	If the Corporation gives a Compulsory Sale Notice to the Optionee, then the Optionee shall be obligated to sell all of the Common Shares of the Corporation held by him or her upon the terms specified in the Change of Control Transaction to the Offeror, conditional upon the completion of the Change of Control Transaction.
d)	The Optionee acknowledges that in the event he or she receives a Compulsory Sale Notice which the Corporation is entitled to deliver hereunder and he or she fails to execute or cause to be executed all such agreements and documents as may be necessary to enable the common shares of the Corporation held by him or her to be sold to the Offeror as provided herein, the Corporation may, as the true and lawful attorney for such shareholder with full power of substitution in the name of and on behalf of such shareholder in accordance with the Substitute Decisions Act, 1992 (Ontario), with no restriction or limitation in that regard, and declaring that such power of attorney may be exercised during any subsequent legal incapacity on such shareholder’s part, execute and deliver all such agreements and documents as may be necessary to permit the sale of such common shares of the Corporation to the Offeror to be completed as herein provided and reflected on the books of the Corporation. This power of attorney shall not be revoked or terminated by any act or thing unless this Agreement is terminated or unless the Optionee ceases to be bound by the provisions hereof.

4) Plan Incorporated into Agreement. The Optionee acknowledges receipt of a copy of the Plan, the terms of which are incorporated into this Agreement by reference. In the event of any conflict between the terms of the Plan and this Agreement, the terms of the Plan shall prevail.

5) General. Time shall be of the essence hereof. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns, as the case may be. This Agreement shall be

5

governed by and construed in accordance with the laws of the Province of Ontario.

DATED as of the date first above written.

SXC Health Solutions Corp.
 

	)	By:
	)	Officer
Witness	) )	Signature of Optionee
	) )	type or print name of Optionee

Plan Coordinator
[Contact information]

Chief Financial Officer
[Contact information]

6

EX-10.20

EXHIBIT 10.20

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the 1st day of January, 2008, by and between Gordon S. Glenn (“Executive”) and SXC Health Solutions Corporation and its subsidiary, SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to continue to employ Executive, and Executive wishes to continue to be employed by the Company as its Chairman of its Board of Directors (the “Board”) and Chief Executive Officer and Executive desires to continue his employment with the Company under the terms and conditions set forth in this Agreement.

     B. Executive and the Company previously entered into an Employment Agreement (“Original Agreement”). The Original Agreement contained substantially identical post-employment confidentiality and noncompetition obligations as this Agreement. Executive acknowledged in the Original Agreement that his covenants to the Company, including his post-employment obligations, were made in partial consideration of the Company’s grant of stock options to purchase shares of the common stock of the Company. The parties have entered into this Agreement because of their mutual desire to alter certain terms of the Original Agreement.

     C. Executive acknowledges that as a member of the Company’s senior management team (“Senior Executive Team”), he is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Executive is one of only a few employees who will have regular and complete access to various confidential and/or proprietary information relating to the Company. Further, Executive acknowledges that his covenants to the Company hereinafter set forth, specifically including but not limited to his covenant not to engage in competition with the Company, are being made in partial consideration of the Company’s willingness to continue to employ Executive under the terms and conditions set forth in this Agreement. As a condition of that employment, the Company requires that this Agreement be entered into pursuant to which Executive furnishes the Company with, among other things, certain covenants of Executive, including Executive’s covenant not to compete with the businesses of the Company for a reasonable period of time.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to continue to employ Executive to serve as the Company’s Chairman of the Board and Chief Executive Officer, and Executive hereby accepts such continued employment, and agrees to perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Executive shall be the Company’s Chairman of the Board and Chief Executive Officer, and shall participate as a member of the Company’s Senior Executive Team. In addition, Executive shall be responsible for, among other things, the overall performance of the company

with an emphasis on mergers and acquisition and investor relations, and such other duties as may be reasonably requested by the Company. Executive shall report to the Board.

     1.3 Resignation as Officer and Board Position. Executive shall resign his position as an officer of the Company if Executive’s employment with the Company terminates for any reason, with Executive’s resignation being effective no later than the effective date of Executive’s termination of employment. Executive shall resign his position as a member of the Company’s Board of Directors if Executive’s employment with the Company terminates through a Termination by the Company for Cause, with Executive’s resignation being effective no later than the effective date of Executive’s termination of employment.

     1.4 Exclusive Employment. While employed by the Company hereunder, Executive covenants to the Company that he will devote his entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity), and use his good faith best efforts to promote the interests of the Company. The foregoing shall not be construed as prohibiting Executive from spending such time as may be reasonably necessary to attend to his personal affairs and investments so long as such activities do not conflict or interfere with Executive’s obligations and/or timely performance of his duties to the Company.

     1.5 Executive Representations and Warranties as to Employability. Executive hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Executive of this Agreement and any other agreements contemplated hereby to which Executive is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound;

     (b) Executive is not a party to or bound by any employment agreement, non-competition agreement or confidentiality agreement with any other person or entity (or if a party to such an agreement, Executive has disclosed the material terms thereof to the Board prior to the execution hereof and promptly after the date hereof shall deliver a copy of such agreement to the Board);

     (c) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms; and

     (d) Executive hereby acknowledges and represents that he has been given the opportunity to consult with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Executive’s employment hereunder shall commence on January 1, 2008, and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the “Employment Period”).

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date set forth in Section 2.1, above, and ending on

2

December 31, 2009 (the “Initial Term”). The Employment Period shall be automatically extended for successive one (1) calendar year periods following the expiration of the Initial Term (each period being hereinafter referred to as an “Extension Term”) upon the same terms and conditions provided for herein unless either party provides the other party with advance written notice of its or Executive’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than sixty (60) days prior to the expiration of the Initial Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Executive by the Company, and Executive’s employment with the Company terminates as a result thereof, then Executive’s termination shall be a treated as a Termination by the Company Without Cause.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Executive an annual base salary (the “Annual Base Compensation”) in the amount of Three Hundred Ten Thousand and 00/100 Dollars ($310,000.00). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Executive’s Annual Base Compensation shall be reviewed annually by the Compensation Committee of the Company’s Board of Directors who shall make a recommendation for approval by the Company’s Board of Directors.

     3.2 Executive Performance Bonus. In respect of each calendar year falling within the Employment Period, Executive shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Executive’s performance objectives (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at eighty percent (80%) of the Executive’s Annual Base Compensation, with the specific percentage determined by the Company’s Board of Directors after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Executive at the same time other members of the Senior Executive Team are paid their respective incentive compensation bonuses. If Executive is terminated for Cause, then no Incentive Compensation Bonus shall be paid to Executive for the calendar year in which the termination occurred. If Executive’s employment terminates during the calendar year for reasons other than Cause, then Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. To the extent practicable, the Company will notify Executive of Executive’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Executive shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Executive’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Executive shall be entitled to accrue over the course of the calendar year paid vacation time in accordance with the Company’s then current vacation policy.

     3.5 Insurance. The Company shall provide Executive with the following company funded insurance benefits during the Employment Period:

3

     a. Dental, vision and supplemental health insurance commencing on your date of employment with the Company in accordance with the terms and conditions of the applicable plans and Company policies then in effect.

     b. A term life insurance policy with a death benefit in the amount of 2.5 times Executive’s Annual Base Compensation in accordance with the applicable plans and Company policies then in effect, subject to a maximum death benefit of $500,000.00.

     c. Additional Executive Group Life Insurance in the amount of $500,000.00 (contingent upon insurance company approval) beginning on the first of the month following one month of employment.

     d. Accidental death and dismemberment insurance commencing upon the date of your employment with the Company in accordance with the applicable plans and Company policies then in effect.

     e. Short and long-term disability insurance commencing upon the date of your employment with the Company in accordance with the applicable plans and Company policies then in effect.

     3.6 Retirement Plan. Executive shall continue to be eligible to participate in the Company’s deferred compensation plans, including its 401(k) plan.

     3.7 Grant of Stock Options.

     a. All existing options for shares of the Company stock held by Executive at the time Executive’s signs this Agreement shall vest on the earlier of January 1, 2009, or upon any termination of the Employment Period by the Company regardless of the triggering event.

     b. During the Employment Period, for the period covering Fiscal Year 2009 and thereafter, Executive shall be entitled to participate in the Company’s stock option plan and receive options to purchase shares of common stock of the Company in the same manner as other members of the Company’s Board.

     3.8 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other Executives of the Company on the Senior Executive Team.

     3.9 Vehicle Allowance. Executive shall receive a monthly payment of Five Hundred and 00/100 Dollars ($500.00) for Executive’s use of a personal automobile for business use (“Vehicle Allowance”). The Vehicle Allowance shall be subject to all required federal, state and local withholding.

ARTICLE IV
COVENANTS OF EXECUTIVE

     4.1 Covenants Regarding Developments. Executive agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Executive conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

4

     (a) Executive shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written records of such Developments and all modifications, research, and studies made or undertaken by Executive with respect thereto.

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Executive has any rights thereto, Executive hereby assigns all such rights, title, and interest to the Company.

     (c) Upon request by the Company, Executive, at any time, whether during or after Executive’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments, and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) The foregoing provisions regarding assignments do not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Executive’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Executive for the Company.

     4.2 Ownership and Covenant to Return Documents, etc. Executive agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Executive by the Company or are prepared, compiled or otherwise acquired by Executive during the Employment Period, shall be the sole and exclusive property of the Company. Executive shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Executive agrees that he will deliver all of the aforementioned documents and objects that may be in his possession to the Company on the termination of his employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Executive recognizes that by virtue of Executive’s employment with the Company, Executive will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This information (“Confidential and Proprietary Information”) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Executive, or which Executive should know by virtue of his position or the

5

circumstances in which he learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of this Agreement or Executive’s obligations under a statutory or common law obligation) or (ii) obtained by Executive from a third party subsequent to the termination of Executive’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a statutory or common law obligation). Executive agrees that during the Employment Period and at all times thereafter (a) Executive will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for his own purposes or the purposes of another, except as required in the course of his employment for the benefit of the Company or as required by law, and (b) Executive will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

     4.4 Noninterference Covenant. Executive agrees that during the Employment Period and for the twelve (12) month period thereafter, he will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other employee of the Company (who is employed by the Company at the end of the Executive’s employment with the Company) to leave the employ of the Company.

     4.5 Covenant of Nonsolicitation of Customers. Executive acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Executive’s employment. Accordingly, Executive agrees that during the Restricted Period, Executive will not: (a) directly or indirectly, solicit or accept business from, or provide products or services to, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Executive sold or provided the Company’s products or services at any time during the two (2) year period immediately preceding the termination of Executive’s employment, (ii) any entity for which Executive orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the two (2) year period immediately preceding the termination of Executive’s employment, or (iii) any entity as to which Executive acquired Confidential and Proprietary Information at any time during Executive’s employment with the Company. “Restricted Period” means (i) the Employment Period and the two (2) year period thereafter of the termination of Executive’s employment.

     4.6 Covenant Not to Compete. Executive expressly acknowledges that (i) the Company is and will be engaged in the business of providing healthcare transaction processing services and information technology solutions to the pharmaceutical industry, including without limitation: (x) pharmacy benefits services and analytics software and related ASP services, including claims processing, pharmacy networks, data warehousing and information analysis, rebate contracting and formulary management, clinical initiatives, and consumer web services; and (y) pharmacy practice management and point of sale (POS) systems for retail pharmacy (independents and chains), institutional/nursing home pharmacy, and high-volume mail order pharmacy; (ii) Executive is one of a limited number of persons who has extensive knowledge and expertise relevant to the businesses of the Company; (iii) Executive’s performance of his services for the Company hereunder will afford Executive full and complete access to and cause Executive to become highly knowledgeable about the Company’s Confidential and Proprietary Information; (iv) the agreements and covenants contained in this Section 4.6 are essential to protect the business and goodwill of the Company, because, if Executive enters into any activities competitive with the businesses of the Company, Executive will cause substantial harm to the Company; (v) Executive will

6

be exposed to the Company’s largest customers; (vi) the business territory of the Company at the time this Agreement was entered into constitutes the United States and Canada (“Business Territory”); and (vii) Executive’s covenants to the Company set forth in this Section 4.6 are being made in consideration of the Company’s willingness to employ him. Accordingly, Executive hereby agrees that during the Restricted Period, Executive shall not, within the Business Territory, directly or indirectly own any interest in, invest in, lend to, borrow from, manage, control, participate in, consult with, become employed by, render services to, or in any other manner whatsoever engage in, any business which is competitive with any business actively being engaged in by the Company or actively (and demonstrably) being considered by the Company for entry into on the date of the termination of Executive’s employment with the Company. The preceding to the contrary notwithstanding, Executive shall be free to make investments in the publicly traded securities of any corporation, provided that such investments do not amount to more than 1% of the outstanding securities of any class of such corporation.

     4.7 Remedies for Breach. Executive recognizes that the rights and privileges granted to Executive by this Agreement, and Executive’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Executive might be entitled from the Company. Accordingly, Executive understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Executive also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in Section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Executive’s death; (b) Executive’s Total Disability; (c) Executive’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; (f) Termination arising out of a Change of Control; or (g) Resignation for Good Reason.

     5.2 Rights Upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death or Total Disability. If the Triggering Event was Executive’s Death or Total Disability, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; and (ii) payment of a Executive’s Incentive Compensation Bonus for the year in which the termination occurred, if any, pro rated to Executive’s date of termination.

     (b) Resignation or Termination by the Company for Cause. If the Triggering Event was Executive’s Resignation (other than a Resignation for Good Reason) or a Termination by the Company for Cause, then Executive shall be entitled to receive Executive’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s Executive welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

7

     (c) Termination by Company Without Cause. If the Triggering Event was a Termination by the Company Without Cause that is not a Termination Arising Out of a Change of Control, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus for the year in which the termination occurred, if any, pro rated to Executive’s date of termination; and (iii) the Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(c)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (d) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination Arising Out of a Change of Control, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus for the year in which the termination occurred, if any, pro rated to Executive’s date of termination; and (iii) the Change of Control Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(d)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (e) Resignation for Good Reason. If the Triggering Event was a Resignation for Good Reason that is not a Termination Arising Out of a Change of Control, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus for the year in which the resignation occurred, if any, pro rated to Executive’s date of termination; and (iii) the Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(e)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (f) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Executive’s rights to salary, Executive benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any loans, cash advances or fixed amounts which Executive owes the Company against any amounts it owes Executive under this Agreement.

     (g) Treatment of Options. Executive shall be required to exercise any vested options within ninety (90) days from date of the termination of his employment.

     (h) No Duplication of Benefits. For clarification, if Executive receives benefits under subsection 5.2(c) or 5.2(d), then Executive shall not be entitled to benefits under any other subsection in Section 5 of this Agreement.

     For further clarity, the payments provided for in subsections 5.2(b), 5.2(c), 5.2(d) and 5.2(e) will not be subject to any reduction or elimination, except as provided by subsection 5.2(f), or if Executive breaches any Executive’s obligations under Article IV, but will not be reduced should Executive obtain alternative employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV, and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

8

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Executive’s employment with the Company that is not a Resignation for Good Reason.

     (b) “Resignation for Good Reason” means a voluntary termination of Executive’s employment hereunder on account of, and within sixty (60) days after, the occurrence of one or more of the following events:

     (i) The assignment to Executive of any duties inconsistent in any material respect with Executive’s position (including status, offices and titles), authority, duties or responsibilities as contemplated by Section 1.2 hereof which results in a diminution of Executive’s position, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of written notice thereof given by Executive;

     (ii) The failure of the Company to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of written notice thereof given by Executive;

     (iii) Executive is required to relocate his principal business office or his principal residence outside of the Chicago metropolitan area, or the Company assigns Executive duties that could reasonably require such a relocation unless, within thirty (30) days of receipt of written notice by the Executive, the Company removes the assignment of the duties that necessitated or could necessitate the relocation; or

     (c) “Severance Benefit” means

     (i) A lump-sum payment, less required tax withholding, equal to two (2) times Executive’s Annual Base Compensation at the time of the termination of Executive’s employment; plus one (1) times the average incentive compensation payments over the previous two years; and

     (ii) Payment of health insurance premiums for a health insurance policy for the benefit of Executive, his spouse and his dependents, with substantially the same benefits as for full-time employees, until Executive is eligible for Medicare benefits.

Except as provided by Section 6,10 of this Agreement, the Severance Benefit shall be paid within thirty (30) days of Executive’s signing of the Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (d) “Change of Control Severance Benefit” means

     (i) A lump-sum payment, less required tax withholding, equal to (x) two times Executive’s Annual Base Compensation at the time of the termination of Executive’s employment plus (y) two times the greater of either (i) the average of Executive’s last two Incentive Compensation Bonuses or (ii) 80% of the average of the Executive’s Annual Base Compensation measured over the twenty-four month period preceding the termination of Executive’s employment; and

9

     (ii) Payment of health insurance premiums for a health insurance policy for the benefit of Executive, his spouse and his dependents, with substantially the same benefits as for full-time employees, until Executive is eligible for Medicare benefits.

Except as provided by Section 6.10 of this Agreement, the Change of Control Severance Benefit shall be paid within thirty (30) days of Executive’s signing of the Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (e) “Termination by the Company for Cause” means termination by the Company of Executive’s employment for:

     (i) The failure of Executive to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (ii) A conviction of Executive by a court of competent jurisdiction of a felony;

     (iii) The refusal, failure or neglect of Executive to perform his duties under his employment agreement in a manner that is materially detrimental to the business or reputation of the Company unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (iv) The engagement by the Executive in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of the Company; or

     (v) The pursuit by Executive of interests that are materially adverse to the Company unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company.

     (f) “Termination by the Company Without Cause” means a termination of Executive’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

     (g) A “Termination Arising Out of a Change of Control” occurs when Executive resigns or if Executive is subject to a Termination by the Company with Cause or a Termination by the Company without Cause within twelve (12) months of a “Change of Control,” which shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than SXC Health Solutions Corporation or an employee benefit plan of SXC Health Solutions Corporation, acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting security of SXC Health Solutions Corporation and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of SXC Health Solutions Corporation;

10

     (ii) The shareholders of SXC Health Solutions Corporation approve a merger, consolidation, recapitalization, or reorganization of SXC Health Solutions Corporation, a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 75% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 75% of the holders of outstanding voting securities of SXC Health Solutions Corporation immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or

     (iii) The shareholders of SXC Health Solutions Corporation approve a plan of complete liquidation of SXC Health Solutions Corporation or SXC Health Solutions, Inc. or an agreement for the sale or disposition by SXC Health Solutions Corporation of all or a substantial portion of assets (i.e., 50% or more) of the total assets of SXC Health Solutions Corporation or SXC Health Solutions, Inc.

     (h) “Total Disability” means Executive’s inability, because of illness, injury or other physical or mental incapacity, to perform Executive’s duties hereunder (as determined by the Board in good faith) for a continuous period of one hundred eighty (180) consecutive days, or for a total of one hundred eighty (180) days within any three hundred sixty (360) consecutive day period, in which case such Total Disability shall be deemed to have occurred on the last day of such one hundred eighty (180) day or three hundred sixty (360) day period, as applicable.

     5.5 Payment of Insurance Continuation Benefits. The insurance premium payments provided pursuant to sections 5.4(c)(ii) and 5.2(d)(ii) shall be initially satisfied through the payment of the COBRA insurance continuation benefits available to Executive, his spouse and his dependents, and those payments are contingent upon Executive, his spouse and his dependents making a timely COBRA election; provided, however, that any obligations of the Company to make insurance premium payment beyond the COBRA insurance continuation period shall be satisfied, at the Company’s sole discretion, through paying the premiums on either (1) the conversion of the applicable health insurance policies into individual policies; or (2) the securing of individual policies providing comparable coverage to the Company’s group health insurance policies.

ARTICLE VI
GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Executive may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Executive and Executive’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Executive expressly agrees for Executive and on behalf of Executive’s executors, administrators and heirs, that this Agreement and Executive’s obligations, rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Executive, Executive’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or

11

any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Executive.

     6.4 Complete Understanding. This Agreement constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Executive by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Executive and the Company.

     6.5 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

     6.6 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent breach by Executive. The waiver by Executive of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.7 Venue, Jurisdiction, Etc. Executive hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Executive hereby submits to the jurisdiction of each such court. Executive hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Executive is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Executive consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Executive at Executive’s address listed in the business records of the Company. Executive and the Company do each hereby waive any right to trial by jury, Executive or it may have concerning any matter relating to this Agreement.

     6.8 Indemnification of Executive.

     (a) Executive is hereby entitled to indemnification for Executive’s acts or omissions in Executive’s capacity as an Executive or officer of the Company to the same extent as the Company’s other senior vice presidents and in the manner provided by the Company’s bylaws. In addition the Company shall indemnify Executive for any damages suffered or incurred by Executive as a result of serving as an Officer of the Company provided that Executive has acted honestly and in good faith with a view to the best interest of the Company. Within ten (10) days after receipt of a claim for indemnification accompanied by evidence of the liability or expense subject to indemnification, the Company shall pay or cause to be paid the indemnification claim. Executive shall give notice to the Company no later than ten (10) days after such Executive shall have been served with written notice of any claim that may give rise to a claim for indemnification.

     (b) Subject to any rights of or duties to any insurer, reinsurer or other third party having liability for any claim made or brought against Executive, the Company shall have the right, at its option, to assume, at its own expense, the control of the defense thereof, including the employment of legal counsel reasonably satisfactory to Executive. If the Company exercises the

12

foregoing right, Executive shall cooperate with the Company and make available to it all information under the control of Executive, which is relevant to the claim. If the Company does not exercise the foregoing right, Executive shall keep the Company reasonably apprised of the progress of the defense of the claim. Nothing herein shall preclude Executive, at Executive’s expense, from employing legal counsel of Executive’s choosing to participate in the defense of any claim made or brought against Executive in addition to legal counsel employed by the Company.

     (c) If the Company elects to assume control of the defense of any claim, the Company shall not settle or compromise the claim for and on behalf of Executive without the written consent of Executive; provided, however, that if the Company receives an offer of settlement or compromise from the other party or parties to the claim in a particular amount or obtains a commitment from such party or parties to accept a compromise or settlement in such amount if offered, and if such settlement or compromise requires only the payment of such amount, the granting of an appropriate release or similar accommodation, and no other relief, and Executive refuses to consent thereto and elects to continue to defend the claim, then the extent of the indemnity to which Executive shall be entitled hereunder shall be limited to such amount and the legal fees and expenses that Executive would have been entitled to receive from the Company if such compromise or settlement had been accepted.

     (d) This indemnification obligation shall continue notwithstanding that Executive has ceased to be an officer or employee of the Company.

     6.9 Directors & Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board in its reasonable discretion.

     6.10 Tax Provisions.

     (a) Compliance With Section 409A of the Internal Revenue Code. To the extent applicable, it is intended that this Agreement comply with the provisions of section 409A of Internal Revenue Code of 1986, as amended (the “Code”), so as to prevent the inclusion in gross income of any amounts payable or benefits provided hereunder in a taxable year that is prior to the taxable year or years in which such amounts or benefits would otherwise actually be distributed, provided or otherwise made available to Executive. This Agreement shall be construed, administered, and governed in a manner consistent with this intent. Any provision that would cause any amount payable or benefit provided under this Agreement to be includable in the gross income of Executive under Code section 409A(a)(l) shall have no force and effect unless and until amended to cause such amount or benefit to not be so includable (which amendment shall be mutually agreed upon by the parties in good faith and may be retroactive to the extent permitted by Code section 409A). In particular, to the extent Executive becomes entitled to receive a payment or a benefit upon an event that does not constitute a permitted distribution event under Code section 409A(a)(2), then notwithstanding anything to the contrary in this Agreement, such payment or benefit will be made or provided to Executive on the earlier of (i) the effective date of Executive’s “separation from service” with Company (determined in accordance with Code section 409A); provided however, that if Executive is a “specified employee” (within the meaning of Code section 409A), this date will be the date which is 6 months after the effective date of Executive’s separation from service with Company, or (ii) the date of Executive’s death. Any reference in this Agreement to Code section 409A shall also

13

include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service.

     (b) Compliance With Section 162(m) of the Code. Notwithstanding anything herein to the contrary, if the Company reasonably anticipates that the deduction of any payment to Executive hereunder will be limited or eliminated by the application of Code section 162(m), which generally limits the deduction of compensation paid by public corporations in excess of $1 million annually to certain executives, the payment of such amount shall be delayed until the earliest date at which the Company reasonably anticipates that the deduction of the payment would not be limited or eliminated by the application of Code section 162(m).

     (c) Excise Taxes Under Sections 280G and 4999 of the Code. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that the Executive shall become entitled to payments and/or benefits provided by this Agreement or any other amounts in the “nature of compensation” (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or any affiliate, any person whose actions result in a change of ownership or effective control of the Company covered by Section 280G(b)(2) of the Code or any person affiliated with the Company or such person) as a result of such change in ownership or effective control of the Company, (a “Payment”) would be subject to the excise tax imposed by section 4999 or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

     6.11 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.12 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.13 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

Notices to Executive:

To the last known address of
Executive as reflected on the books
and records of the Company.

14

Notices to Company:

SXC Health Solutions, Inc.
Attn: Chairman of the Compensation Committee of the Board of Directors
2441 Warrenville Road, Suite 610
Lisle, Illinois 60532-3642

With Copies to:

Larry Zanger, Esq.
Holland & Knight LLP
131 South Dearborn, 30^th Floor
Chicago, Illinois 60603

     6.14 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:		EXECUTIVE:
SXC HEALTH SOLUTIONS CORPORATION
and SXC HEALTH SOLUTIONS, INC.
By:	/s/ Jeff Park	/s/ Gordon S. Glenn
	Jeff Park, Senior Vice President and	Gordon S. Glenn
	Chief Financial Officer

15

EXHIBIT A
To Employment Agreement
Between Gordon S. Glenn and
SXC Health Solutions Corporation and SXC Health Solutions, Inc.

CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE

     This Confidential Separation Agreement and General Release (“Agreement”) is entered into by and between Gordon S. Glenn, an individual (“Executive”), and SXC Health Solutions Corporation, and its subsidiary, SXC Health Solutions, Inc. (collectively, the “Company”): 1. Termination of Employment. Executive acknowledges that Executive’s employment with the Company terminated effective                                           , 200          .

     2. Compensation owed. Executive acknowledges receipt of all compensation (including, but not limited to, any and all overtime, commission, bonus payments and all other benefits except accrued but unused vacation time) due from the Company through the payroll period immediately prior to                                          , 200          . Executive and the Company acknowledge that Executive will receive a lump-sum payment equal to any final compensation (including Executive’s accrued but unused vacation time of                     (___) days) accrued but not yet paid to Executive on the Company’s next regular payday.

     3. Separation Benefit: Subject to the provisions of this Agreement, the Company will pay Executive the benefits set forth in Article V, Subsection 5.2(c) [or (d)] [or(e)](ii) and (iii) of Executive’s Employment Agreement with the Company (“Separation Benefit”), commencing on the first regular payday following the twenty-first day after Executive’s signing of this Agreement. The Separation Benefit does not constitute nor is it intended to be any form of compensation to Executive for any services to the Company.

     4. Consideration. Executive acknowledges that Executive would not be entitled to the Separation Benefit provided for in paragraph 3 above in the absence of Executive’s signing of this Agreement, that the Separation Benefit constitutes a substantial economic benefit to Executive, and that it constitutes good and valuable consideration for the various commitments undertaken by Executive in this Agreement.

     5. Parties Released. For purposes of this Agreement, the term “Releasees” means the Company, its past and present parents, subsidiaries, divisions, and affiliated companies; their respective predecessors, successors, assigns, benefit plans, and plan administrators; and their respective past and present shareholders, directors, trustees, officers, employees, agents, attorneys and insurers.

     6. General Release. Executive, for and on behalf of Executive and each of Executive’s personal and legal representatives, heirs, devisees, executors, successors and assigns, hereby acknowledges full and complete satisfaction of, and fully and forever waives, releases, acquits, and discharges Releasees from any and all claims, causes of action, demands, liabilities, damages, obligations, and debts (collectively referred to as “Claims”), of every kind and nature, whether known or unknown, suspected or unsuspected, or fixed or contingent, which Executive holds as of the date Executive signs this Agreement, or at any time previously held against Releasees, or any of them, arising out of any matter whatsoever (with the exception of breaches of this Agreement). This General Release specifically includes, but is not limited to, any and all Claims:

     (a) Arising out of or in any way related to Executive’s employment with the Company, the termination of his employment;

     (b) Arising out of or in any way related to any contract or agreement between Executive and the Company;

     (c) Arising under or based on the Equal Pay Act of 1963; Title VII of the Civil Rights Act of 1964, as amended; Section 1981 of the Civil Rights Act of 1866; the Americans With Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Fair Labor Standards Act of 1938; the National Labor Relations Act; the Worker Adjustment and Retraining Notification Act of 1988; Employee Retirement Income Security Act of 1974 (ERISA) (excepting claims for vested benefits, if any, to which Executive is legally entitled thereunder); the Illinois Constitution; the Illinois Wage Payment and Collection Act; the Illinois Minimum Wage Law, the Illinois Human Rights Act; and the Illinois Whistleblower Act;

     (d) Arising under or based on the Age Discrimination in Employment Act of 1967 (ADEA), as amended by the Older Workers Benefit Protection Act (OWBPA), and alleging a violation thereof based on any action or failure to act by Releasees, or any of them, at any time prior to the effective date of this Agreement; and

     (e) Arising out of or in any way related to any federal, state, county or local constitutional provision, law, statute, ordinance, decision, order, policy or regulation prohibiting employment discrimination, providing for the payment of wages or benefits, providing for a paid or unpaid leave of absence; otherwise creating rights or claims for employees , including, but not limited to, any and all claims alleging breach of public policy, whistleblowing, retaliation, the implied obligation of good faith and fair dealing; any express or implied oral or written contract, handbook, manual, policy statement or employment practice; or alleging misrepresentation, defamation, libel, slander, interference with contractual relations, intentional or negligent infliction of emotional distress, invasion of privacy, false imprisonment, assault, battery; fraud, negligence, or wrongful discharge.

     7. Intended Scope of Release. It is the intention of the parties and is fully understood and agreed by them that this Agreement includes a General Release of all Claims (with the exception of breaches of this Agreement and claims for vested benefits, if any, to which Executive is legally entitled under ERISA), which Executive holds or previously held against Releasees, or any of them, whether or not they are specifically referred to herein. No reference herein to any specific claim, statute or obligation is intended to limit the scope of this General Release and, notwithstanding any such reference, this Agreement shall be effective as a full and final bar to all Claims of every kind and nature, whether known or unknown, suspected or unsuspected, or fixed or contingent, released in this Agreement.

     8. Executive Waiver of Rights. As part of the foregoing General Release, Executive is waiving all of Executive’s rights to any recovery, compensation, or other legal, equitable or injunctive relief (including, but not limited to, compensatory damages, liquidated damages, punitive damages, back pay, front pay, attorneys’ fees, and reinstatement to employment), from Releasees, or any of them, in any administrative, arbitral, judicial or other action brought by or on behalf of Executive in connection with any Claim released in this Agreement.

-A 2-

     9. Covenant Not to Sue. In addition to all other obligations contained in this Agreement, Executive agrees that Executive will not initiate, bring or prosecute any suit or action against any of Releasees in any federal, state, county or municipal court, with respect to any of the Claims released in this Agreement. Notwithstanding the forgoing, nothing in this Agreement shall preclude Executive from bringing suit to challenge the validity or enforceability of this Agreement under the Age Discrimination in Employment Act as amended by the Older Workers Benefit Protection Act.

     10. Remedies for Breach. If the Executive, or anyone on Executive’s behalf, initiates, brings or prosecutes any suit or action against Releasees, or any of them, in any federal, state, county or municipal court, with respect to any of the Claims released in this Agreement (except to challenge the validity or enforceability of this Agreement under the Age Discrimination in Employment Act as amended by the Older Workers Benefit Protection Act), or if the Executive breaches any of the terms of this Agreement, then Executive shall be liable for the payment of all damages, costs and expenses (including attorneys’ fees) incurred by Releasees, or any of them, in connection with such suit, action or breach.

     11. No Admission of Liability. Nothing in this Agreement constitutes or shall be construed as an admission of liability on the part of Releasees, or any of them. Releasees expressly deny any liability of any kind to Executive, and particularly any liability arising out of or in any way related to Executive’s employment with the Company or the termination of Executive’s employment.

     12. Post-Employment Covenants.

     (a) Executive hereby reaffirms and agrees to abide by all confidentiality and nondisclosure obligations, nonsolicitation obligations, noncompetition obligations and any other post-employment obligations to which Executive is subject under any contract or agreement between Executive and the Company as well as the Illinois Trade Secrets Act, any other Illinois statute and Illinois common law.

     (b) Executive shall keep confidential the circumstances surrounding the termination of Executive’s employment with the Company, as well as the existence of this Agreement and its terms, and agrees that neither he, nor Executive’s attorneys, nor any of Executive’s agents, shall directly or indirectly disclose any such matters (other than to the Equal Employment Opportunity Commission, the Illinois Human Rights Commission, or any other federal, state or local fair employment practices agency), unless written consent is given by the Company’s President, or unless required to comply with any federal, state or local law, rule or order. However, this paragraph will not prohibit Executive from disclosing the terms of this Agreement to Executive’s attorneys, accountants or other tax consultants as necessary for the purpose of securing their professional advice, or in connection with any suit or action alleging a breach of this Agreement.

     (c) Executive agrees that Executive will not access or attempt to access, directly or indirectly, by any matter whatsoever, the Company’s computer network, including without limitation, the Company’s e-mail system, the Company’s electronic document storage and retrieval system, and the Company’s computer network servers and related equipment.

     13. Warranty of Return of Company Property. Executive warrants and acknowledges that Executive has turned over to the Company all equipment or other property issued to Executive’s by the Company, along with all documents, notes, computer files, and other materials which Executive had in Executive’s possession or subject to Executive’s control, relating to the Company and/or any

-A 3-

of its customers. Executive further warrants and acknowledges that Executive has not retained any such documents, notes, computer files or other materials (including any copies or duplicates thereof).

     14. Warranty and Covenant of Nondisparagement. Executive (i) warrants that during the time period between when Executive was notified of the termination of Executive’s employment with the Company and Executive’s signing of this Agreement Executive has not made any disparaging remarks about Releasees which are likely to cause harm to Releasees, collectively or individually, or their products and services (“Disparaging Remarks”) and (ii) agrees that Executive shall not make any Disparaging Remarks following Executive’s signing of this Agreement.

     15. Consideration Period. Executive is advised of to consult with an attorney or other representative of Executive’s choice prior to signing this Agreement. Executive has a period of twenty-one (21) days within which to consider and accept the Agreement. This twenty-one (21) day period begins to run from                                          , 200          , which Executive acknowledges is the date on which Executive received a copy of this Agreement (if not earlier). Executive agrees that any changes or modifications (material or otherwise) made to this Agreement prior to its execution by Executive shall not restart the twenty-one (21) day consideration period.

     16. Revocation Period. Executive understands that Executive has the right to revoke this Agreement at any time within seven (7) days after Executive signs it and that the Agreement shall not become effective or enforceable until this revocation period has expired without revocation.

     17. Resignation of Officer Position. Executive shall resign from Executive’s position as an officer of the Company effective no later than the effective date of Executive’s termination of employment with the Company.

     18. Warranty of Understanding and Voluntary Nature of Agreement. Executive acknowledges that Executive has carefully read and fully understands all of the provisions of this Agreement; that Executive knows and understands the rights Executive is waiving by signing this Agreement; and that Executive has entered into the Agreement knowingly and voluntarily, without coercion, duress or overreaching of any sort.

     19. Severability. The provisions of this Agreement are fully severable. Therefore, if any provision of this Agreement is for any reason determined to be invalid or unenforceable, such invalidity or unenforceability will not affect the validity or enforceability of any of the remaining provisions. Furthermore, any invalid or unenforceable provisions shall be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, or, if such provision cannot under any circumstances be modified or restricted, it shall be excised from the Agreement without affecting the validity or enforceability of any of the remaining provisions. The parties agree that any such modification, restriction or excision may be accomplished by their mutual written agreement or, alternatively, by disposition of a court or other tribunal.

     20. Entire Agreement/Integration. This Agreement constitutes the sole and entire agreement between Executive and the Company with respect to the subjects addressed in it, and supersedes all prior or contemporaneous agreements, understandings, and representations, oral and written, with respect to those subjects.

     21. No Waiver By the Company. No waiver, modification or amendment of any of the provisions of this Agreement shall be valid and enforceable unless in writing and executed by Executive and the Company’s President.

-A 4-

     22. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, Executive and Executive’s personal and legal representatives, heirs, devisees, executors, successors and assigns, and the Company and its successors and assigns.

     23. Choice of Law. This Agreement and any amendments hereto shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to conflicts of law principles.

COMPANY:	EXECUTIVE:
SXC HEALTH SOLUTIONS CORPORATION
and SXC HEALTH SOLUTIONS, INC.
By:
	Gordon S. Glenn

-A 5-

EX-10.21

EXHIBIT 10.21

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is effective as of the 1^st day of January 1, 2008, by and between Mark Thierer (“Executive”) and SXC Health Solutions Corporation and its subsidiary, SXC Health Solutions, Inc. (collectively, the “Company”).

RECITALS

     A. The Company wishes to continue to employ Executive under the terms and conditions set forth in this Agreement and Executive wishes to continue to be employed by the Company under the terms and conditions set forth in this Agreement.

     B. Executive and the Company previously entered into an Employment Agreement, effective August 24, 2006 (the “Original Agreement”). The Original Agreement contained substantially identical post-employment confidentiality and noncompetition obligations as this Agreement. Executive acknowledged in the Original Agreement that his covenants to the Company, including his post-employment obligations, were made in partial consideration of the Company’s grant of stock options to purchase 250,000 shares of the common stock of the Company. The parties have entered into this Agreement because of their mutual desire to alter certain terms of the Original Agreement.

     C. Executive acknowledges that as a member of the Company’s senior management team (“Senior Executive Team”), he is one of the persons charged with responsibility for the implementation of the Company’s business plans, and that Executive is one of only a few employees who will have regular and complete access to various confidential and/or proprietary information relating to the Company. Further, Executive acknowledges that his covenants to the Company hereinafter set forth, specifically including but not limited to his covenant not to engage in competition with the Company, are being made in partial consideration of the Company’s willingness to continue to employ Executive under the terms and conditions set forth in this Agreement. As a condition of that employment, the Company requires that this Agreement be entered into pursuant to which Executive furnishes the Company with, among other things, certain covenants of Executive, including Executive’s covenant not to compete with the businesses of the Company for a reasonable period of time.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereby agree as follows:

ARTICLE I
EMPLOYMENT RELATIONSHIP

     1.1 Employment. Subject to the terms and conditions of this Agreement, the Company hereby agrees to continue to employ Executive to serve as the Company’s President and Chief Operating Officer, and Executive hereby accepts such continued employment, and agrees to perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

     1.2 Duties. The Executive shall continue to be the Company’s President and Chief Operating Officer, and shall continue to participate as a member of the Company’s Senior Executive Team. In addition, Executive shall be responsible for, among other things, the oversight of all of the Company’s operations, business development, product development and information technology operations, and such other duties as may be reasonably requested by the Company. Executive shall report to the Company’s

Chief Executive Officer. Executive shall perform his duties under this Agreement at the Company’s facilities in Lisle, Illinois or any subsequent location of the Company’s primary administrative operations.

     1.3 Officer Position/Resignation of Board Membership. Executive is an officer of the Company and may be elected to the Company’s Board of Directors. Executive shall resign his position as an officer of the Company and membership on the Company’s Board of Directors if his employment with the Company terminates for any reason, with his resignation being effective no later than the effective date of the termination of his employment.

     1.4 Exclusive Employment. While employed by the Company hereunder, Executive covenants to the Company that he will devote his entire business time, energy, attention and skill to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity), and use his good faith best efforts to promote the interests of the Company. The foregoing shall not be construed as prohibiting Executive from spending such time as may be reasonably necessary to attend to his personal affairs and investments so long as such activities do not conflict or interfere with Executive’s obligations and/or timely performance of his duties to the Company.

     1.5 Executive Representations and Warranties as to Employability. Executive hereby represents and warrants to the Company that:

     (a) The execution, delivery and performance by Executive of this Agreement and any other agreements contemplated hereby to which Executive is a party do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound;

     (b) Executive is not a party to or bound by any employment agreement, non-competition agreement or confidentiality agreement with any other person or entity (or if a party to such an agreement, Executive has disclosed the material terms thereof to the Board prior to the execution hereof and promptly after the date hereof shall deliver a copy of such agreement to the Board);

     (c) Upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms; and

     (d) Executive hereby acknowledges and represents that he has been given the opportunity to consult with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

ARTICLE II
PERIOD OF EMPLOYMENT

     2.1 Employment Period. Executive’s employment hereunder shall commence on January 1, 2008, and shall continue hereunder until the date fixed by the provisions of Section 2.2 hereof, subject to the early termination provisions of Article V hereof (the “Employment Period”).

     2.2 Initial Term of Employment Period and Extension Terms. The Employment Period shall initially continue for a term commencing on the date set forth in Section 2.1, above, and ending on December 31, 2009 (the “Initial Term”). The Employment Period shall be automatically extended for successive one (1) calendar year periods following the expiration of the Initial Term (each period being

2

hereinafter referred to as an “Extension Term”) upon the same terms conditions provided for herein unless either party provides the other party with advance written notice of its or Executive’s intention not to extend the Employment Period; provided, however, that such notice must be delivered by the non-extending party to the other party not later than sixty (60) days prior to the expiration of the Initial Term or any Extension Term, as the case may be. If the Employment Period is not extended as a result of notice to Executive by the Company, and Executive’s employment with the Company terminates as a result thereof, then Executive’s termination shall be a treated as a Termination by the Company Without Cause.

ARTICLE III
COMPENSATION

     3.1 Annual Base Compensation. During the Employment Period the Company shall pay to Executive an annual base salary (the “Annual Base Compensation”) in the amount of Two Hundred Eighty Thousand and 00/100 Dollars ($280,000.00). The Annual Base Compensation shall be paid in regular installments in accordance with the Company’s regular payroll practices, and shall be subject to all required federal, state and local withholding taxes. Executive’s Annual Base Compensation shall be reviewed annually by the Company’s Chief Executive Officer and/or the Compensation Committee of the Company’s Board of Directors who shall make a recommendation for approval by the Company’s Board of Directors.

     3.2 Executive Performance Bonus. In respect of each calendar year falling within the Employment Period, Executive shall be eligible to earn an incentive compensation bonus, depending upon the achievement of the Company’s and Executive’s performance objectives (the “Incentive Compensation Bonus”). The amount of the Incentive Compensation Bonus shall be targeted at eighty percent (80%) of the Executive’s Annual Base Compensation, with the specific percentage determined by the Company’s Board of Directors after the close of the Company’s fiscal year (December 31). The Incentive Compensation Bonus, if any, shall be paid to Executive at the same time other members of the Senior Executive Team are paid their respective incentive compensation bonuses. If Executive is terminated for Cause, then no Incentive Compensation Bonus shall be paid to Executive for the calendar year in which the termination occurred. If Executive’s employment terminates during the calendar year for reasons other than Cause, then Executive shall receive a pro rata amount of the Incentive Compensation Bonus that Executive would have received if Executive remained employed throughout the calendar year. To the extent practicable, the Company will notify Executive of Executive’s performance objectives for the year in January of that year.

     3.3 Expenses. During the Employment Period, Executive shall be entitled to reimbursement of all business expenses reasonably incurred in the performance of Executive’s duties for the Company, including reasonable travel-related expenses, upon submission of all receipts and accounts with respect thereto, and approval by the Company thereof, in accordance with the then current business expense reimbursement policies of the Company.

     3.4 Vacation. Executive shall be entitled to accrue over the course of the calendar year paid vacation time in accordance with the Company’s then current vacation policy.

     3.5 Insurance. The Company shall provide Executive with the following insurance benefits during the Employment Period:

     a. Dental, vision and supplemental health insurance commencing on your date of employment with the Company in accordance with the terms and conditions of the applicable plans and Company policies then in effect.

3

     b. A term life insurance policy with a death benefit in the amount of 2.5 times Executive’s Annual Base Compensation in accordance with the applicable plans and Company policies then in effect, subject to a maximum death benefit of $500,000.00.

     c. Additional Executive Group Life Insurance in the amount of $500,000.00 (contingent upon insurance company approval) beginning on the first of the month following one month of employment.

     d. Accidental death and dismemberment insurance commencing upon the date of your employment with the Company in accordance with the applicable plans and Company policies then in effect.

     e. Short and long-term disability insurance commencing upon the date of your employment with the Company in accordance with the applicable plans and Company policies then in effect.

     3.6 Retirement Plan. Executive shall continue to be eligible to participate in the Company’s deferred compensation plans, including its 401(k) plan.

     3.7 Grant of Stock Options/Existing Stock.

     a. Upon the commencement of the Initial Term of the Original Agreement, Executive was granted options (“Options”) to purchase 250,000 shares of common stock of the Company at an exercise price equal to the closing price of the Company’s common stock on the date the Initial Term commenced. The Options are subject to the Company’s Stock Option Plan then in operation at the time of their purchase. One hundred thousand of the Options (the “Guaranteed Options”) began vesting in one-third increments annually, commencing on December 31, 2006. The remaining 150,000 Options (the “Contingent Options”) shall vest, in their entirety, upon Executive being appointed the Company’s Chief Executive Officer (provided, Executive accepts appointment as the Company’s Chief Executive Officer). For clarification, the Contingent Options shall not vest if Executive is not appointed the Company’s Chief Executive Officer (or Executive declines appointment as the Company’s Chief Executive Officer) except as otherwise provided in this Agreement.

     c. Except as otherwise provided in section 5.2(g) of this Agreement, once vested, the Options shall have a five (5) year life.

     d. Upon a Change of Control (defined below), all of the Guaranteed Options and Contingent Options shall vest.

     e. Upon either Executive’s Resignation for Good Reason (defined below) or Executive’s employment terminates through a Termination by the Company Without Cause (defined below), then the Guaranteed Options shall vest on the following basis:

Date of Termination	Cumulative Percentage Vested
Prior to December 31, 2009	66.67%
On or after December 31, 2009	100.00%

4

     f. Executive acknowledges that immediately prior to his employment with the Company, he held common stock of the Company (the “Preexisting Shares”). Executive agrees that he will not sell or otherwise dispose of his Preexisting Shares during the Initial Term or any Extension Term without the written consent of the Compensation Committee of the Company’s Board of Directors.

     3.8 Stock Option Plan. Executive shall be permitted to participate in the Company’s Stock Option Plan in the same manner as the Company’s other Senior Executive Team members, with future annual grants based on Executive’s performance as determined by the Company’s Chief Executive Officer.

     3.9 Other Fringe Benefits. During the Employment Period, Executive shall be entitled to receive such of the Company’s other fringe benefits as are being provided to other Executives of the Company on the Senior Executive Team.

     3.10 Vehicle Allowance. Executive shall receive a monthly payment of Five Hundred and 00/100 Dollars ($500.00) for Executive’s use of a personal automobile for business use (“Vehicle Allowance”). The Vehicle Allowance shall be subject to all required federal, state and local withholding.

ARTICLE IV
COVENANTS OF EXECUTIVE

     4.1 Covenants Regarding Developments. Executive agrees as follows with regard to any developments that relate to the Company’s business or Confidential and Proprietary Information (defined below), or that Executive conceives, makes, develops or acquires, including, but not limited to, any trade secrets, discoveries, inventions, improvements, ideas, programs, formulas, diagrams, designs, plans and drawings, whether or not reduced to writing, patented, copyrighted or trademarked (“Developments”):

     (a) Executive shall promptly and fully disclose all Developments to the Company, and shall prepare, maintain, and make available to the Company adequate and current written records of such Developments and all modifications, research, and studies made or undertaken by Executive with respect thereto.

     (b) All Developments and related records shall become and remain the exclusive property of the Company and, to the extent Executive has any rights thereto, Executive hereby assigns all such rights, title, and interest to the Company.

     (c) Upon request by the Company, Executive, at any time, whether during or after Executive’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary or desirable to: (i) vest the Company with full and exclusive right, title, and interest to such Developments, and (ii) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, trademark registrations, and copyrights covering such Developments.

     (d) The foregoing provisions regarding assignments do not apply to any Developments for which no equipment, supplies, facility or trade secret information of the Company was used, and which were developed entirely on Executive’s own time, unless the Developments: (i) relate to the Company’s business or to its actual or demonstrably anticipated research or development, or (ii) result from any work performed by Executive for the Company.

5

     4.2 Ownership and Covenant to Return Documents, etc. Executive agrees that all Company work product and all documents or other tangible materials (whether originals, copies or abstracts), including without limitation, price lists, quotation guides, outstanding quotations, books, records, manuals, files, sales literature, training materials, customer records, correspondence, computer disks or print-out documents, contracts, orders, messages, phone and address lists, invoices and receipts, and all objects associated therewith, which in any way relate to the business or affairs of the Company either furnished to Executive by the Company or are prepared, compiled or otherwise acquired by Executive during the Employment Period, shall be the sole and exclusive property of the Company. Executive shall not, except for the use of the Company, use, copy or duplicate any of the aforementioned documents or objects, nor remove them from the facilities of the Company, nor use any information concerning them except for the benefit of the Company, either during the Employment Period or thereafter. Executive agrees that he will deliver all of the aforementioned documents and objects that may be in his possession to the Company on the termination of his employment with the Company, or at any other time upon the Company’s request.

     4.3 Nondisclosure Covenant. Executive recognizes that by virtue of Executive’s employment with the Company, Executive will be granted otherwise prohibited access to trade secrets and other confidential and proprietary information that is not known to its competitors or within the industry generally, that was developed by the Company over a long period of time and/or at substantial expense, and which is confidential in nature or otherwise of great competitive value to the Company. This information (“Confidential and Proprietary Information”) includes, but is not limited to, the Company’s trade secrets; information relating to the Company’s production practices and methods of doing business; sales, marketing, and service strategies, programs, and procedures; contract expiration dates, customers and prospective customers, including, but not limited to, their particularized requirements and preferences, and the identity, authority, and responsibilities of their key contact persons; payment methods; service and product costs; pricing structures and incentive plans; vendors; financial position and business plans; computer programs and databases; research projects; new product and service developments; and any other information of the Company or any of its vendors or customers that the Company informs Executive, or which Executive should know by virtue of his position or the circumstances in which he learned it, is to be kept confidential. Confidential and Proprietary Information does not include information that is (i) in the public domain (except as a result of a breach of this Agreement or Executive’s obligations under a statutory or common law obligation) or (ii) obtained by Executive from a third party subsequent to the termination of Executive’s employment with the Company (except where the third party obtains the information in violation of a contractual obligation, a statutory or common law obligation). Executive agrees that during the Employment Period and at all times thereafter (a) Executive will not disclose, use or permit others to use any Confidential and Proprietary Information, or otherwise make use of any of it for his own purposes or the purposes of another, except as required in the course of his employment for the benefit of the Company or as required by law, and (b) Executive will take all reasonable measures, in accordance with the Company’s policies, procedures, and instructions, to protect the Confidential and Proprietary Information from any accidental or unauthorized disclosure or use.

     4.4 Noninterference Covenant. Executive agrees that during the Employment Period and for the twelve (12) month period thereafter, he will not, for any reason, directly or indirectly solicit, hire, or otherwise do any act or thing which may induce any other employee of the Company (who is employed by the Company at the end of the Executive’s employment with the Company) to leave the employ of the Company.

     4.5 Covenant of Nonsolicitation of Customers. Executive acknowledges the Company’s legitimate interest in protecting its customers for a reasonable period of time following the termination of Executive’s employment. Accordingly, Executive agrees that during the Restricted Period, Executive will

6

not: (a) directly or indirectly, solicit or accept business from, or provide products or services to, any Customer, where such business, products or services would be competitive with the Company’s business, products or services, or (b) do any act or thing which may interfere with or adversely affect the relationship (contractual or otherwise) of the Company with any Customer or vendor of the Company or induce any such Customer or vendor to cease doing business with the Company. For purposes of this paragraph, the term “Customer” means (i) a customer of the Company to which Executive sold or provided the Company’s products or services at any time during the two (2) year period immediately preceding the termination of Executive’s employment, (ii) any entity for which Executive orchestrated, developed, supervised, coordinated or participated in marketing strategy, marketing plans and marketing campaigns on behalf of the Company at any time during the two (2) year period immediately preceding the termination of Executive’s employment, or (iii) any entity as to which Executive acquired Confidential and Proprietary Information at any time during Executive’s employment with the Company. “Restricted Period” means (i) the Employment Period and the two (2) year period thereafter of the termination of Executive’s employment.

     4.6 Covenant Not to Compete. Executive expressly acknowledges that (i) the Company is and will be engaged in the business of providing healthcare transaction processing services and information technology solutions to the pharmaceutical industry, including without limitation: (x) pharmacy benefits services and analytics software and related ASP services, including claims processing, pharmacy networks, data warehousing and information analysis, rebate contracting and formulary management, clinical initiatives, and consumer web services; and (y) pharmacy practice management and point of sale (POS) systems for retail pharmacy (independents and chains), institutional/nursing home pharmacy, and high-volume mail order pharmacy; (ii) Executive is one of a limited number of persons who has extensive knowledge and expertise relevant to the businesses of the Company; (iii) Executive’s performance of his services for the Company hereunder will afford Executive full and complete access to and cause Executive to become highly knowledgeable about the Company’s Confidential and Proprietary Information; (iv) the agreements and covenants contained in this Section 4.6 are essential to protect the business and goodwill of the Company, because, if Executive enters into any activities competitive with the businesses of the Company, Executive will cause substantial harm to the Company; (v) Executive will be exposed to the Company’s largest customers; (vi) the business territory of the Company at the time this Agreement was entered into constitutes the United States and Canada (“Business Territory”); and (vii) Executive’s covenants to the Company set forth in this Section 4.6 are being made in consideration of the Company’s willingness to employ him. Accordingly, Executive hereby agrees that during the Restricted Period, Executive shall not, within the Business Territory, directly or indirectly own any interest in, invest in, lend to, borrow from, manage, control, participate in, consult with, become employed by, render services to, or in any other manner whatsoever engage in, any business which is competitive with any business actively being engaged in by the Company or actively (and demonstrably) being considered by the Company for entry into on the date of the termination of Executive’s employment with the Company. The preceding to the contrary notwithstanding, Executive shall be free to make investments in the publicly traded securities of any corporation, provided that such investments do not amount to more than 1% of the outstanding securities of any class of such corporation.

     4.7 Remedies for Breach. Executive recognizes that the rights and privileges granted to Executive by this Agreement, and Executive’s corresponding covenants to the Company, are of a special, unique, and extraordinary character, the loss of which cannot reasonably or adequately be compensated for in damages in any action at law or through the offset or withholding of any monies to which Executive might be entitled from the Company. Accordingly, Executive understands and agrees that the Company shall be entitled to equitable relief, including a temporary restraining order and preliminary and permanent injunctive relief, to prevent or enjoin a breach of this Agreement. Executive also understands and agrees that any such equitable relief shall be in addition to, and not in substitution for, any other relief to which the Company may be entitled.

7

ARTICLE V
TERMINATION

     5.1 Termination and Triggering Events. Notwithstanding anything to the contrary elsewhere contained in this Agreement, the Employment Period shall terminate at the expiration of the Initial Term or any Extension Term upon notice as provided in Section 2.2, or prior to the expiration of the Initial Term or any Extension Term upon the occurrence of any of the following events (hereinafter referred to as “Triggering Events”): (a) Executive’s death; (b) Executive’s Total Disability; (c) Executive’s Resignation; (d) Termination by the Company for Cause; (e) Termination by the Company Without Cause; (f) Termination arising out of a Change of Control; or (g) Resignation for Good Reason.

     5.2 Rights Upon Occurrence of a Triggering Event. Subject to the provisions of Section 5.3 hereof, the rights of the parties upon the occurrence of a Triggering Event prior to the expiration of the Initial Term or any Extension Term shall be as follows:

     (a) Death or Total Disability. If the Triggering Event was Executive’s Death or Total Disability, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; and (ii) payment of a Executive’s Incentive Compensation Bonus for the year in which the termination occurred, if any, pro rated to Executive’s date of termination.

     (b) Resignation or Termination by the Company for Cause. If the Triggering Event was Executive’s Resignation (other than a Resignation for Good Reason) or a Termination by the Company for Cause, then Executive shall be entitled to receive Executive’s Annual Base Compensation and accrued but unused vacation time through the date of the Triggering Event, and to continue to participate in the Company’s Executive welfare plans and programs (including, without limitations, health insurance plans) through the date of the Triggering Event and, thereafter, only to the extent permitted under the terms of such plans and programs.

     (c) Termination by Company Without Cause. If the Triggering Event was a Termination by the Company Without Cause that is not a Termination Arising Out of a Change of Control, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus for the year in which the termination occurred, if any, pro rated to Executive’s date of termination; and (iii) the Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(c)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (d) Termination Arising Out of a Change of Control. If the Triggering Event was a Termination Arising Out of a Change of Control, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus for the year in which the termination occurred, if any, pro rated to Executive’s date of termination; and (iii) the Change of Control Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(d)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (e) Resignation for Good Reason. If the Triggering Event was a Resignation for Good Reason that is not a Termination Arising Out of a Change of Control, then Executive shall be entitled to receive (i) Executive’s Annual Base Compensation and accrued but unpaid vacation

8

through the date thereof; (ii) payment of a Executive’s Incentive Compensation Bonus for the year in which the resignation occurred, if any, pro rated to Executive’s date of termination; and (iii) the Severance Benefit (defined below). Executive’s entitlement to the benefits provided in subsections 5.2(e)(ii) and (iii) are contingent on Executive signing a Separation Agreement and General Release similar to that attached hereto as Exhibit A.

     (f) Cessation of Entitlements and Company Right of Offset. Except as otherwise expressly provided herein, all of Executive’s rights to salary, Executive benefits, fringe benefits and bonuses hereunder (if any) which would otherwise accrue after the termination of the Employment Period shall cease upon the date of such termination. The Company may offset any loans, cash advances or fixed amounts which Executive owes the Company against any amounts it owes Executive under this Agreement.

     (g) Treatment of Options. Executive shall be required to exercise any vested options within ninety (90) days from date of the termination of his employment.

     (h) No Duplication of Benefits. For clarification, if Executive receives benefits under subsection 5.2(c) or 5.2(d), then Executive shall not be entitled to benefits under any other subsection in Section 5 of this Agreement.

     For further clarity, the payments provided for in subsections 5.2(b), 5.2(c), 5.2(d) and 5.2(e) will not be subject to any reduction or elimination, except as provided by subsection 5.2(f), or if Executive breaches any Executive’s obligations under Article IV, but will not be reduced should Executive obtain alternative employment.

     5.3 Survival of Certain Obligations. The provisions of Articles IV, and VI shall survive any termination of the Employment Period, whether by reason of the occurrence of a Triggering Event or the expiration of the Initial Term or any Extension Term.

     5.4 Definitions. For purposes of Article V, the following definitions apply:

     (a) “Resignation” means a voluntary termination of Executive’s employment with the Company that is not a Resignation for Good Reason.

     (b) “Resignation for Good Reason” means a voluntary termination of Executive’s employment hereunder on account of, and within sixty (60) days after, the occurrence of one or more of the following events:

     (i) The assignment to Executive of any duties inconsistent in any material respect with Executive’s position (including status, offices and titles), authority, duties or responsibilities as contemplated by Section 1.2 hereof which results in a diminution of Executive’s position, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of written notice thereof given by Executive;

     (ii) The failure of the Company to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of written notice thereof given by Executive;

9

     (iii) Executive is required to relocate his principal business office or his principal residence outside of the Chicago metropolitan area, or the Company assigns Executive duties that could reasonably require such a relocation unless, within thirty (30) days of receipt of written notice by the Executive, the Company removes the assignment of the duties that necessitated or could necessitate the relocation; or

     (iv) Executive is not named the Company’s Chief Executive Officer by January 1, 2009.

     (c) “Severance Benefit” means

     (1) A lump-sum payment, less required tax withholding, equal to two (2) times Executive’s Annual Base Compensation at the time of the termination of Executive’s employment; plus, one (1) times the average incentive compensation payment over the previous two years.

     (2) Payment of the COBRA insurance continuation benefit on behalf of Executive, his spouse and their eligible dependents for to a maximum of eighteen months following the termination of Executive’s employment; provided, the necessary elections are made by Executive, his spouse and their dependents and Executive, his spouse and their dependents remain eligible to receive COBRA insurance continuation benefits; and

     (3) Provided Executive’s employment with the Company terminates on or prior to December 31, 2008, a lump-sum payment, less required tax withholding, equal to 80% of the average of Executive’s Annual Base Compensation for the two-year period prior to the termination of Executive’s employment.

Except as provided by Section 6.10 of this Agreement, the Severance Benefit shall be paid within thirty (30) days of Executive’s signing of the Separation Agreement and General Release similar to that attached hereto as Exhibit A.

(d) “Change of Control Severance Benefit” means

     (1) A lump-sum payment, less required tax withholding, equal to (x) two times Executive’s Annual Base Compensation at the time of the termination of Executive’s employment plus (y) two times the greater of either (i) the average of Executive’s last two Incentive Compensation Bonuses or (ii) 80% of the average of the Executive’s Annual Base Compensation measured over the twenty-four month period preceding the termination of Executive’s employment; and

     (2) Payment of the COBRA insurance continuation benefit on behalf of Executive, his spouse and their eligible dependents for to a maximum of eighteen months following the termination of Executive’s employment; provided, the necessary elections are made by Executive, his spouse and their dependents and Executive, his spouse and their dependents remain eligible to receive COBRA insurance continuation benefits.

Except as provided by Section 6.10 of this Agreement, the Change of Control Severance Benefit shall be paid within thirty (30) days of Executive’s signing of the Separation Agreement and General Release similar to that attached hereto as Exhibit A.

10

     (e) “Termination by the Company for Cause” means termination by the Company of Executive’s employment for:

     (i) The failure of Executive to comply with any of the material provisions of this Agreement, other than an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (ii) A conviction of Executive by a court of competent jurisdiction of a felony;

     (iii) The refusal, failure or neglect of Executive to perform his duties under his employment agreement in a manner that is materially detrimental to the business or reputation of the Company unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company;

     (iv) The engagement by the Executive in illegal, unethical or other wrongful conduct that is materially detrimental to the business or reputation of the Company; or

     (v) The pursuit by Executive of interests that are materially adverse to the Company unless remedied by Executive within thirty (30) days after receipt of written notice thereof given by the Company.

     (f) “Termination by the Company Without Cause” means a termination of Executive’s employment by the Company which is not a Termination by the Company for Cause, provided that the termination of the Employment Period on account of the failure of the Company to extend the Employment Period in accordance with the provisions of Section 2.2 hereof shall constitute a Termination by the Company Without Cause.

     (g) A “Termination Arising Out of a Change of Control” occurs when Executive resigns or if Executive is subject to a Termination by the Company with Cause or a Termination by the Company without Cause within twelve (12) months of a “Change of Control,” which shall be defined under this Agreement to mean any of the following occurrences:

     (i) Any person, other than SXC Health Solutions Corporation or an employee benefit plan of SXC Health Solutions Corporation, acquires directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting security of SXC Health Solutions Corporation and becomes, immediately after and as a result of such acquisition, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of SXC Health Solutions Corporation;

     (ii) The shareholders of SXC Health Solutions Corporation approve a merger, consolidation, recapitalization, or reorganization of SXC Health Solutions Corporation, a reverse stock split of outstanding voting securities, or consummation of any such transaction if shareholder approval is not sought or obtained, other than any such transaction that would result in at least 75% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after, and as a result of such transaction, being Beneficially Owned by at least 75% of the holders of outstanding voting securities of SXC Health Solutions Corporation immediately prior to

11

the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or

     (iii) The shareholders of SXC Health Solutions Corporation approve a plan of complete liquidation of SXC Health Solutions Corporation or SXC Health Solutions, Inc. or an agreement for the sale or disposition by SXC Health Solutions Corporation of all or a substantial portion of assets (i.e., 50% or more) of the total assets of SXC Health Solutions Corporation or SXC Health Solutions, Inc.

     (h) “Total Disability” means Executive’s inability, because of illness, injury or other physical or mental incapacity, to perform Executive’s duties hereunder (as determined by the Board in good faith) for a continuous period of one hundred eighty (180) consecutive days, or for a total of one hundred eighty (180) days within any three hundred sixty (360) consecutive day period, in which case such Total Disability shall be deemed to have occurred on the last day of such one hundred eighty (180) day or three hundred sixty (360) day period, as applicable.

ARTICLE VI
GENERAL

     6.1 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Illinois without regard to any choice of law or conflicts of law rules or provisions (whether of the State of Illinois or any other jurisdiction), irrespective of the fact that Executive may become a resident of a different state.

     6.2 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Executive and Executive’s executors, administrators, personal representatives and heirs.

     6.3 Assignment. Executive expressly agrees for Executive and on behalf of Executive’s executors, administrators and heirs, that this Agreement and Executive’s obligations, rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by Executive, Executive’s executors, administrators or heirs, and shall not be subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of this Agreement or any such rights, interests and benefits thereunder contrary to the foregoing provisions, or the levy of any attachment or similar process thereupon shall be null and void and without effect and shall relieve the Company of any and all liability hereunder. This Agreement shall be assignable and transferable by the Company (but the Company shall not be required to assign or transfer this Agreement) to any successor in interest without the consent of Executive.

     6.4 Complete Understanding. This Agreement constitutes the complete understanding among the parties hereto with regard to the subject matter hereof, and supersedes any and all prior agreements and understandings relating to the employment of Executive by the Company, including without limitation any prior compensation plans or compensation agreements entered into between Executive and the Company.

     6.5 Amendments. No change, modification or amendment of any provision of this Agreement shall be valid unless made in writing and signed by all of the parties hereto.

     6.6 Waiver. The waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent breach by Executive. The

12

waiver by Executive of a breach of any provision of this Agreement by the Company shall not operate as a waiver of any subsequent breach by the Company.

     6.7 Venue, Jurisdiction, Etc. Executive hereby agrees that any suit, action or proceeding relating in any way to this Agreement shall be brought and enforced in the Eighteenth Judicial Circuit, DuPage County, State of Illinois or in the District Court of the United States of America for the Northern District of Illinois, Eastern Division, and in either case Executive hereby submits to the jurisdiction of each such court. Executive hereby waives and agrees not to assert, by way of motion or otherwise, in any such suit, action or proceeding, any right of removal, any claim that Executive is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Executive consents and agrees to service of process or other legal summons for purpose of any such suit, action or proceeding by registered mail addressed to Executive at Executive’s address listed in the business records of the Company. Executive and the Company do each hereby waive any right to trial by jury, Executive or it may have concerning any matter relating to this Agreement.

     6.8 Indemnification of Executive. Executive is hereby entitled to indemnification for Executive’s acts or omissions in Executive’s capacity as an Executive or officer of the Company to the same extent as the Company’s other senior executives and in the manner provided by the Company’s bylaws.

     6.9 Directors & Officers Liability Insurance. The Company shall maintain adequate Directors and Officers liability insurance coverage, which shall include Executive in Executive’s capacity as an Officer. The adequacy of the Directors and Officers liability insurance coverage shall be determined annually by the Board of Directors in its reasonable discretion.

     6.10 Tax Provisions.

     (a) Compliance With Section 409A of the Internal Revenue Code. To the extent applicable, it is intended that this Agreement comply with the provisions of section 409A of Internal Revenue Code of 1986, as amended (the “Code”), so as to prevent the inclusion in gross income of any amounts payable or benefits provided hereunder in a taxable year that is prior to the taxable year or years in which such amounts or benefits would otherwise actually be distributed, provided or otherwise made available to Executive. This Agreement shall be construed, administered, and governed in a manner consistent with this intent. Any provision that would cause any amount payable or benefit provided under this Agreement to be includable in the gross income of Executive under Code section 409A(a)(l) shall have no force and effect unless and until amended to cause such amount or benefit to not be so includable (which amendment shall be mutually agreed upon by the parties in good faith and may be retroactive to the extent permitted by Code section 409A). In particular, to the extent Executive becomes entitled to receive a payment or a benefit upon an event that does not constitute a permitted distribution event under Code section 409A(a)(2), then notwithstanding anything to the contrary in this Agreement, such payment or benefit will be made or provided to Executive on the earlier of (i) the effective date of Executive’s “separation from service with Company (determined in accordance with Code section 409A); provided however, that if Executive is a “specified employee” (within the meaning of Code section 409A), this date will be the date which is 6 months after the effective date of Executive’s separation from service with Company, or (ii) the date of Executive’s death. Any reference in this Agreement to Code section 409A shall also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service.

13

     (b) Compliance With Section 162(m) of the Code. Notwithstanding anything herein to the contrary, if the Company reasonably anticipates that the deduction of any payment to Executive hereunder will be limited or eliminated by the application of Code section 162(m), which generally limits the deduction of compensation paid by public corporations in excess of $1 million annually to certain executives, the payment of such amount shall be delayed until the earliest date at which the Company reasonably anticipates that the deduction of the payment would not be limited or eliminated by the application of Code section 162(m).

     (c) Excise Taxes Under Sections 280G and 4999 of the Code. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that the Executive shall become entitled to payments and/or benefits provided by his Agreement or any other amounts in the “nature of compensation” (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or any affiliate, any person whose actions result in a change of ownership or effective control of the Company covered by Section 280G(b)(2) of the Code or any person affiliated with the Company or such person) as a result of such change in ownership or effective control of the Company, (a “Payment”) would be subject to the excise tax imposed by section 4999 or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

     6.11 Severability. If any portion of this Agreement shall be for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect.

     6.12 Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

     6.13 Notices. All notices under this Agreement shall be in writing and shall be deemed properly sent, (i) when delivered, if by personal service or reputable overnight courier service, or (ii) when received, if sent by certified or registered mail, postage prepaid, return receipt requested to the recipient at the address indicated below or otherwise subsequently provided by one party to the other party:

Notices to Executive:

Mark Thierer
917 Lakewood Drive
Barrington, Illinois 60010

Notices to Company:

SXC Health Solutions, Inc.
Attn: Gordon Glenn, CEO
2441 Warrenville Road, Suite 610
Lisle, Illinois 60532-3642

14

With Copies to:

Larry Zanger, Esq.
Holland & Knight LLP
131 South Dearborn, 30^th Floor
Chicago, Illinois 60603

     6.14 Counterparts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.

COMPANY:		EXECUTIVE:
SXC HEALTH SOLUTIONS CORPORATION
and SXC HEALTH SOLUTIONS, INC.
By:	/s/ Terrence C. Burke,	/s/ Mark Thierer
	Terrence C. Burke, Chairman of the	Mark Thierer
	Compensation Committee of the Board of
	Directors

15

EX-21.1

EXHIBIT 21.1

List of Subsidiaries

Subsidiary	Province/State of Incorporation	D/B/A
1131836 Ontario Inc.	Ontario
SXC Health Solutions, Inc. (formerly named Systems Xcellence USA, Inc.)	TX	SXC
Health Business Systems, Inc.	PA	HBS HBS, Inc. HBS, an SXC Company
InformedRx, Inc. (formerly named HxBenefit, Inc.)	AZ	InformedRx, an SXC Company

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

SXC Health Solutions Corp:

We consent to the incorporation by reference in the registration statements (No. 333-145450, 333-145449 and 333-136402) on Form S-8 of SXC Health Solutions Corp (the “Company”) of our reports dated March 14, 2008, with respect to the consolidated balance sheets of the Company as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2007, and the effectiveness of internal control over financial reporting as of December 31, 2007, which reports appear in the December 31, 2007 annual report on Form 10-K of SXC Health Solutions Corp.

Our audit report in the consolidated financial statements refers to a change in accounting for income tax uncertainties.

/s/KPMG LLP, Licensed Public Accountants

Toronto, Ontario

March 14, 2008

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Gordon S. Glenn, certify that:

1.	I have reviewed this annual report on Form 10-K of SXC Health Solutions Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have:

A)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
B)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
C)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
D)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

A.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
B.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 14, 2008
By:	/s/ Gordon S. Glenn
	Gordon S. Glenn
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey Park, certify that:

1.	I have reviewed this annual report on Form 10-K of SXC Health Solutions Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have:

A)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
B)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
C)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
D)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

A.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
B.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 14, 2008
By:	/s/ Jeffrey Park
	Jeffrey Park
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Gordon S. Glenn, the Chief Executive Officer of SXC Health Solutions Corp., certify that (i) the Annual Report on Form 10-K of SXC Health Solutions Corp. for the year ended December 31, 2007 (the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of SXC Health Solutions Corp.

/s/ Gordon S. Glenn

Gordon S. Glenn

Chief Executive Officer

March 14, 2008

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey Park, the Chief Financial Officer of SXC Health Solutions Corp., certify that (i) the Annual Report on Form 10-K of SXC Health Solutions Corp. for the year ended December 31, 2007 (the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of SXC Health Solutions Corp.

/s/ Jeffrey Park

Jeffrey Park

Chief Financial Officer

March 14, 2008