**EMPLOYMENT
      AGREEMENT**


**SENIOR
      VICE PRESIDENT AND CHIEF OPERATING OFFICER**




Agreement
      made as of this 14 day of August, 2006, by and between James E. Searson (the
      “Employee”) and Familymeds Group, Inc. (f/k/a DrugMax, Inc.) (the “Company”).




**PREAMBLE**




The
      Company desires to employ the Employee as Senior Vice President and Chief
      Operating Officer and to compensate him therefore. Employee desires to be
      employed by the Company and to commit himself to serve the Company on the terms
      herein provided. In connection with his employment, Employee shall be eligible
      to participate in the Company’s stock option programs and stock purchase
      programs which may be in effect from time to time for key employees, and
      performance bonus program in accordance with the terms and conditions adopted
      by
      the Company governing such programs.




NOW,
      THEREFORE, in consideration of the foregoing and of the respective covenants
      and
      agreement of the parties, the parties agree as follows:




1. Definitions .




“Affiliates”
      shall mean any corporation, partnership or other legal entity which is
      controlled by or under common control with the Company.




“Benefits”
      shall mean all the fringe benefits approved by the Board from time to time
      and
      established by the Company in its discretion for the benefit of the employees
      generally and/or for key employees of the Company as a class, including, but
      not
      limited to, regular holidays, vacations, absences resulting from illness or
      accident, health insurance, disability and medical plans (including dental
      and
      prescription drug), group life insurance, automobile allowance, pharmacy
      allowance, un-reimbursed medical allowance, fitness or club fee allowance,
      stock
      option plans and stock purchase plans, and pension, profit-sharing or their
      equivalent.




“Board”
      shall mean the Board of Directors of the Company, together with an executive
      committee thereof (if any), as the same shall be constituted from time to time.




“Cause”
      for termination shall mean (i) Employee’s final conviction of or admission to a
      felony involving a crime of moral turpitude, (ii) acts of Employee which, in
      the
      judgment of the Board, constitute willful fraud on the part of Employee in
      connection with his duties under this Agreement, including but not limited
      to
      misappropriation or embezzlement in the performance of duties as an employee
      of
      the Company, or (iii) intentional or repeated acts of the Employee which in
      the
      judgment of the Board are injurious to the Company including the Employee’s
      failure to perform his duties hereunder.




“Chairman”
      shall mean the person designated by the Board from time to time as its Chairman.




“Change
      of Control” shall mean (i) a merger or consolidation of the Company with or into
      another corporation which is not an affiliate of the Company, or a
      recapitalization or reorganization of the Company, as a result of which the
      persons who were the shareholders of the Company immediately prior to such
      merger, consolidation, reorganization or recapitalization immediately thereafter
      own less than fifty percent (50%) of the total voting power of the merged,
      consolidated, reorganized or recapitalized Company’s voting securities entitled
      to vote generally in the election of directors; (ii) the sale of all or
      substantially all of the assets of the Company to another person or entity
      which
      is not an affiliate of the Company; (iii) the acquisition by any person, entity
      or “group” (excluding, for this purpose, the Company, any affiliate of the
      Company, or any employee benefit plan of the Company or of any affiliate of
      the
      Company which acquires beneficial ownership of voting securities of the Company)
      within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of
      beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
      Exchange Act) of either fifty percent (50%) or more of the then outstanding
      shares of Common Stock or fifty percent (50%) or more of the combined voting
      power of the Company’s then outstanding voting securities entitled to vote
      generally in the election of directors; or (iv) during any period of two
      consecutive years during the term of this Agreement, the persons who were
      directors of the Company on the first day of such period cease for any reason
      (other than death or disability) to constitute at least a majority of the Board.
      For purposes of this definition, (A) an “affiliate” is any person or entity
      which, directly or indirectly through one or more intermediaries, controls,
      is
      controlled by or is under common control with the Company, and (B) “control”
(including the terms “controlling,” “controlled by” and “under common control
      with”) means the possession, direct or indirect, of the power to direct or cause
      the direction of the management and policies of a person or entity, whether
      through the ownership of voting securities, by contract or otherwise, and (C)
      “Board” means the board of directors of the Company as constituted at the time a
      determination thereof is required to be made pursuant to this definition.







“Chief
      Executive Officer” shall mean the individual having responsibility to the Board
      for direction and management of the financial and operational affairs of the
      Company and who reports and is accountable only to the Board.




“Disability”
      shall mean a written determination by a physician mutually agreeable to the
      Company and Employee (or, in the event of Employee’s total physical or mental
      disability, Employee’s legal representative) that Employee is physically or
      mentally unable to perform his duties of Senior Vice President and Chief
      Operating Officer under this Agreement and that such disability can reasonably
      be expected to continue for a period of six (6) consecutive months or for
      shorter periods aggregating one hundred and eighty (180) days in any twelve
      (12)
      month period.




“Employee”
      shall mean James E. Searson and, if the context requires, his heirs, personal
      representatives, and permitted successors and assigns.




“Person”
      shall mean any natural person, incorporated entity, limited or general
      partnership, business trust, association, agency (governmental or private),
      division, political sovereign, or subdivision or instrumentality, including
      those groups identified as “persons” in Section 13(d)(3) and 14(d)(2) of the
      Securities Exchange Act of 1934.




“Territory”
      shall mean the world wide web and any state of the United States and any
      equivalent section or area of any country in which the Company has operating
      brick and mortar pharmacies or has franchised brick and mortar operations at
      the
      time of the termination of this Agreement.




“Company”
      shall mean DrugMax, Inc., a Connecticut corporation, together with such
      subsidiaries or Affiliates of the Company as may from time to time exist.




2. Position,
      Responsibilities and Term of Employment




2.01 Position .
      Employee shall be engaged on a full time basis and shall serve as Senior Vice
      President and Chief Operating Officer and in such additional management
      position(s) as the Board shall designate. In this capacity, Employee shall
      be
      subject to the bylaws of the Company and to the direction of the Board. Employee
      shall serve the Company and any Affiliates by performing such duties and
      carrying out such responsibilities as are normally related to the position
      of
      Senior Vice President and Chief Operating Officer in accordance with the
      standards of the industry. The Employee shall report to the President and Chief
      Executive Officer. The Employee shall have such other responsibilities as the
      Company may reasonably determine from time to time, including, without
      limitation, such management duties as may be necessary or desirable to further
      the interests of the Affiliates of the Company. Nevertheless, it is understood
      and agreed that the Employee shall not be given duties or responsibilities
      that
      are inconsistent in any material way with his position as a member of the senior
      management of the Company, nor shall the Employee be expected to move, relocate
      or have a principal place of business that is more than fifty (50) miles from
      Farmington, Connecticut.





Employee’s
      responsibilities and capacities shall include, without limitation, the
      following:




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(a)
      overall responsibility for store operations;





(b)
      planning and strategic framework for all operations;




(c)
      handling all operational relationships;




(d)
      set
      standards for operational matters; and





(e)
      overall supervision and responsibility for all operations staff.




2.02 Term .
      The
      term of this Agreement shall commence on May 2, 2006 and, unless sooner
      terminated as provided in Section 4 hereof, terminate on May 2, 2008; provided,
      however, that this Agreement shall automatically renew for successive two (2)
      year periods thereafter without the necessity of any action or notice by either
      party to the other, except that either party may terminate this Agreement
      following the Initial Term by giving the other party written notice of its
      intention to terminate this Agreement at least ninety (90) days prior to the
      proposed termination date.




2.03 Best
      Efforts Covenant .
      Employee will, to the best of his ability, devote his full professional and
      business time and best efforts to the performance of his duties for the Company
      and its Affiliates. The Employee shall at all times comply with all state and
      federal laws, rules and regulations with respect to the operations of the
      Company, or its Affiliates.




2.04 Exclusivity
      Covenant .
      During
      the Agreement’s term, Employee will not undertake or engage in any other
      employment, occupation or business enterprise other than a business enterprise
      in which Employee does not actively participate. Further, Employee agrees not
      to
      acquire, assume, or participate in, directly or indirectly, any position,
      investment, or interest adverse or antagonistic to the Company, its business
      prospects, financial or otherwise, or take any action towards any of the
      foregoing. The provisions of this Section shall not prevent Employee from owning
      shares of any competitor of the company as long as such shares (i) do not
      constitute more than 1% of the outstanding equity of such competitor, and (ii)
      are regularly traded on a recognized exchange, or listed for trading by NASDAQ
      in the over-the-counter market.




2.05 Intentionally
      Omitted .




2.06 Confidential
      Information .
      Employee recognizes and acknowledges that the Company’s trade secrets,
      proprietary information and know-how, as they may exist from time to time
      (“Confidential Information”), are valuable, special and unique assets of the
      Company’s business, and that access to and knowledge of the Confidential
      Information is the term of his employment by the Company, in whole or in part,
      disclose such secrets, information or know-how to any Person for any reason
      or
      purpose whatsoever, nor shall Employee make use of any such Confidential
      Information for his own purposes or for the benefit of any Person (except the
      Company) under any circumstances during or after the term of his employment.
      Notwithstanding the foregoing, after the term of Employee’s employment the
      foregoing restrictions shall not apply to such secrets, information and know-how
      which are then in the public domain (provided that Employee was not responsible,
      directly or indirectly, for such secrets, information or know-how entering
      the
      public domain without the Company’s consent). Employee shall have no obligation
      hereunder to keep confidential any Confidential Information if and to the extent
      its disclosure is specifically required by law; provided, however, that in
      the
      event disclosure is required by applicable law, the Employee shall provide
      the
      Company with prompt notice of such requirement, prior to making any disclosure,
      so that the Company may seek an appropriate protective order. Employee agrees
      to
      hold as the Company’s property all memoranda, books, papers, letters, customer
      lists, processes, computer software, records, financial information, policy
      and
      procedure manuals, training and recruiting procedures and other data, and all
      copies thereof and therefrom, in any way relating to the Company’s business and
      affairs, whether made by him or otherwise coming into his possession, and on
      termination of his employment, or on demand of the Company at any time, to
      deliver the same to the Company.




Employee
      shall use his best efforts to prevent any removal of any Confidential
      Information from the premises of the Company, except as required in his normal
      course of employment by the Company. Employee shall use his best efforts to
      cause all persons or entities to whom any Confidential Information shall be
      disclosed by him hereunder to observe the terms and conditions set forth herein
      as though each such person or entity was bound hereby.




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2.07 Records,
      Files .
      All
      records, file drawings, documents, equipment and the like relating to the
      business of the Company which are prepared or used by Employee during the terms
      of this employment under this Agreement shall be and shall remain the sole
      property of the Company.




2.08 Hired
      to Invent .
      Employee agrees that every improvement, invention, process apparatus, method,
      design, and any other creation that Employee may invent, discover, conceive,
      or
      originate by himself or in conjunction with any other Person during the term
      of
      Employee’s employment under this Agreement that relates to the business carried
      on by the Company during the term of Employee’s employment under this Agreement
      or contemplated by the Company during the term hereof even if not implemented
      during the term of this Agreement (“Work For Hire”) shall be the exclusive
      property of the Company. Employee agrees to disclose to the Company every patent
      application, notice of copyright, or other action taken by Employee or any
      affiliate or assignee to protect intellectual property during the 12 months
      following Employee’s termination of employment at the Company, for whatever
      reason, so that the Company may determine whether to assert a claim under this
      Section or any other provision of this Agreement. The Employee does hereby
      assign to the Company all of the Work For Hire and hereby appoints the Company
      as his attorney-in-fact coupled with an interest to execute such documents
      as
      may be required to evidence such assignment.




2.09 Equitable
      Relief .
      Employee acknowledges that his services to the Company are of a unique character
      which give them a special value to the Company. Employee further recognizes
      that
      violations by Employee of any one or more of the provisions of this Section
      2
      may give rise to losses or damages for which the Company cannot be reasonably
      or
      adequately compensated in an action at law and that such violations may result
      in irreparable and continuing harm to the Company. Employee agrees that,
      therefore, in addition to any other remedy which the Company may have at law
      and
      equity, including the right to withhold any payment of compensation under
      Section 3 of this Agreement, the Company shall be entitled to injunctive relief
      to restrain any violation, actual or threatened, by Employee of the provisions
      of this Agreement.




3. Compensation .




3.01  Minimum
      Annual Compensation .
      The
      Company shall pay to Employee for the services to be rendered herein a base
      salary at the annual rate of Two Hundred Seventy Five Thousand ($275,000.00)
      Dollars (“Minimum Annual Compensation”), which base salary shall be subject to
      annual review and increase to be determined by the Compensation Committee of
      the
      Board. Employee’s salary shall be payable bi-weekly. For fiscal years beginning
      2007 and thereafter, the Board shall examine and modify Executive’s base salary
      with reference to prevailing competitive standards for comparable positions
      in
      organizations similar to the Company, as determined by an independent consultant
      approved by the Board and Executive.





3.02 Incentive
      Compensation .
      In
      addition to Minimum Annual Compensation, Employee shall be entitled to
      participate in, at the discretion of the Board, any bonus or incentive
      compensation plan adopted by the Compensation Committee of the Board for key
      employees of the Company, up to seventy-five percent (75%) of Minimum Annual
      Compensation, provided the Employee attained the goals (the “Performance Goals”)
      which may be set by the Board from time to time.




3.03 Participating
      in Benefits .
      Employee shall be entitled to all Benefits made available to similarly situated
      employees of the Company, other than medical and dental benefits, for as long
      as
      such Benefits may remain in effect. In addition, Employee shall be entitled
      to
      any substitute or additional Benefits made available in the future to similarly
      situated employees of the Company.





Employee’s
      entitlement to the aforementioned Benefits shall be subject to and on a basis
      consistent with the terms, conditions and overall administration of such
      Benefits adopted by the Company and in the discretion of the Company. Benefits
      paid to Employee shall not be deemed to be in lieu of other compensation to
      Employee hereunder as described in this Section 3.




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3.04 Specific
      Benefits .
      During
      the term of this Agreement (and thereafter to the extent this Agreement shall
      require):




(a) Vacation .
      Employee shall be entitled to four (4) weeks of paid vacation time per year,
      to
      be taken at time mutually acceptable to the Company and Employee.




(b) Insurance
      Policies .
      The
      Company may, at its discretion, and at any time after the execution of this
      Agreement, and for so long as Employee remains employed by the Company, apply
      for and procure, as owner and for its own benefit, insurance on the life of
      the
      Employee, in such amounts and in such form or forms as the Company may choose.
      The Employee shall have no interest whatsoever in the policy or policies, but
      the Employee shall, at the request of the Company, subject himself to such
      medical examinations, supply such information, and execute such documents as
      may
      be required by the insurance company or companies to which it has applied for
      such insurance. At the termination of employment hereunder either for cause
      or
      otherwise, the Company shall either: (i) surrender such policies to the issuer;
      or (ii) transfer ownership of any policies procured pursuant to this Agreement
      to the Employee who shall thereafter be responsible for the payment of any
      premiums thereunder. It is the intention of the parties that the Company shall
      retain no insurance on the life of the Employee after employment hereunder
      has
      been terminated for any reason whatsoever.




(c) Disability .
      If
      Employee is unable to perform his obligations under this Agreement because
      of
      illness and/or disability, Employee shall continue to receive his full
      compensation and benefits under this Agreement for a period not to exceed six
      (6) consecutive months; provided, however, Employee’s base salary from the
      Company shall be reduced by the amount, if any, of income payments received
      by
      Employee as a result of group or individual disability insurance coverage
      maintained at the cost of the Company.




(d) Purchasing
      Allowance .
      The
      Company shall reimburse Employee for expenditures made by the Employee at any
      Arrow Prescription Center location in an amount not to exceed Two Hundred
      Dollars ($200) per month.




(e) Medical
      Reimbursement .
      The
      Company shall reimburse Employee for medical expenses incurred by Employee
      for
      himself or his immediate family which are not covered expenses pursuant to
      the
      health insurance policies provided by Company pursuant to paragraph (b), above,
      in an amount not to exceed Three Thousand Dollars ($3,000) per annum.




(f) Expense
      Reimbursement .
      Employee shall be entitled to receive prompt reimbursements for all reasonable
      expenses incurred by him (in accordance with the policies and procedures
      established by the Company or the Board for the similarly situated employees
      of
      the Company) in performing services hereunder.




(g) Automobile
      Allowance .
      Employee shall be entitled to an automobile allowance in an amount not to exceed
      six hundred dollars ($600) per month.




(h) Fitness
      or Club Allowance .
      Employee shall be entitled to a fitness or club allowance in an amount not
      to
      exceed two hundred dollars ($200) per month.







4. Termination .




4.01 Termination
      by Company for Other Than Cause .
      If
      during the term of this Agreement the Company terminates the employment of
      Employee and such termination is not for Cause then the Company shall pay to
      Employee an amount equal to the monthly portion of Employee’s Minimum Annual
      Compensation multiplied by twelve (12) months (the “Severance Period”). If
      during the term of this Agreement there is a Change of Control resulting in
      a
      change of position of Employee’s employment, and if Employee’s annual
      compensation in his new position shall be less than the Minimum Annual
      Compensation, then the difference shall be paid to Employee for the balance
      of
      the Severance Period. If the Employee’s employment in a new position shall
      terminate or if the Employee is reassigned to a location more than fifty (50)
      miles from Farmington, Connecticut, then for the purposes of this paragraph
      4.01, Employee shall be entitled to continuation of the Minimum Annual
      Compensation until the earlier of the conclusion of the Severance Period or
      the
      date when he shall again become reemployed, in which case only the difference
      shall be payable as aforesaid. If the Employee’s reemployment in a new position
      shall terminate, Employee shall use his best efforts to become reemployed as
      soon as reasonable possible in a position consistent with Employee’s experience
      and stature. Any amounts due hereunder shall be paid at such times and in such
      manner as the Employee had previously been paid his Minimum Annual Compensation.
      The payments provided herein are in lieu of any other payments due the Employee
      hereunder, including but not limited to, any claim for breach of contract.




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4.02 Termination
      by the Company for Cause .
      The
      Company shall have the right to terminate the employment of Employee for Cause,
      however, nothing herein shall be deemed to constitute a waiver of the right
      of
      the Employee to challenge the Company’s determination of Cause. Effective as of
      the date that the employment of Employee terminates for Cause, this Agreement,
      except for Sections 2.04 through 2.09, shall terminate and no further payments
      of the Compensation described in Section 3 (except for such remaining payments
      of Minimum Annual Compensation under Section 3.01 relating to periods during
      which Employee was employed by the Company, benefits which are required by
      applicable law to be continued, and reimbursement of prior expenses under
      Section 3.04) shall be made.




4.03 Termination
      on Account of Employee’s Death .




(a)
      In
      the event of Employee’s death during the term of this Agreement;




(1)
            This
                Agreement shall terminate except as provided in this Section; and




(2)
            The
                Company shall pay to Employee’s beneficiary or beneficiaries (or to his
                estate if he fails to make such designation) an amount equal to the
                Employee’s Minimum Annual Compensation as in effect on the date of his
                death. This amount shall be paid in one lump sum as soon as practicable
                after the date of his death.




(b)
      Employee may designate one or more beneficiaries for the purposes of this
      Section by making a written designation and delivering such designation to
      the
      Treasurer of the Company. If Employee makes more than one such written
      designation, the designation last received before Employee’s death shall
      control.




4.04 Termination
      on Account of Disability .
      The
      Company shall have the right to terminate the employment of Employee in case
      of
      Disability of the Employee. In such case, the provisions of Section 3.04(c)
      of
      this Agreement shall apply and the provisions of Section 4.01 of this Agreement
      shall not apply, notwithstanding the terms of said Section 4.01.




4.05 Benefits
      Upon Termination .
      Upon
      the termination of the Employee’s employment hereunder for Cause, the Employee
      shall not receive any other benefits except as required by law. In the case
      of
      termination without Cause, any health insurance, dental insurance, life
      insurance and disability insurance coverage provided under the Company’s benefit
      programs shall be continued for a period of twelve months or such earlier date
      that the Employee obtains other employment.





5. Miscellaneous .




5.01 Assignment .
      The
      Company shall have the right to assign all of its rights under this Agreement
      to
      any affiliate or to any purchaser of substantially all of the assets of the
      Company; provided, however, any such assignment shall not release the Company
      from any of its obligations under this Agreement. Upon any such assignment,
      this
      Agreement shall be binding upon and inure to the benefit of such assigns and
      the
      Employee. If any such purchaser of substantially all of the assets of the
      Company is unwilling to accept an assignment of this Agreement and to assume
      the
      obligations hereof, then Company shall remain fully liable hereunder
      notwithstanding the sale of its assets and the resulting cessation of its
      business operations. The Employee shall have no right to assign or delegate
      any
      rights or obligations under this Agreement.




6


5.02 Governing
      Law .
      This
      Agreement shall be construed in accordance with and governed for all purposes
      by
      the laws of the State of Connecticut.




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




5.04 Notice .
      Any
      notice required or permitted to be given hereunder shall be effective when
      received and shall be sufficient if in writing and if personally delivered
      or
      sent by prepaid cable, telex or registered air mail, return receipt requested,
      to the party to receive such notice at its address set forth at the end of
      this
      Agreement or at such other address as a party may by notice specify to the
      other.




5.05 Amendment
      and Waiver .
      This
      Agreement may not be amended, supplemented or waived except by a writing signed
      by the party against which such amendment or waiver is to be enforced. The
      waiver by any party of a breach of any provision of this Agreement shall not
      operate to, or be construed as a waiver of, any other breach of that provision
      nor as a waiver of any breach of another provision.




5.06 Binding
      Effect .
      This
      Agreement shall be binding on the successors and assigns of the parties hereto.




5.07 Survival
      of Rights and Obligations .
      All
      rights and obligations of Employee or the Company arising during the term of
      this Agreement shall continue to have full force and effect after the
      termination of this Agreement unless otherwise provided herein.




5.08 Entire
      Agreement .
      This
      Agreement contains the entire understanding of the parties and supersedes all
      prior agreements between the parties. There are no oral understandings, terms
      or
      conditions and no party has relied upon any representation, express or implied,
      not contained in this Agreement. The rights and protection afforded by any
      and
      all provisions of this Agreement shall inure to the benefit of (and may be
      fully
      enforced by) any Affiliate of the Company, it being understood such Affiliates
      are intended third party beneficiaries of this Agreement.




5.09 Partial
      Invalidity .
      The
      invalidity of one or more of the phrases, sentences, clauses, sections or
      articles contained in the Agreement shall not affect the validity of the
      remaining portions.




5.10 Genders .
      Any
      reference to the masculine gender shall be deemed to include the feminine and
      neuter genders, and vice versa, and any reference to the singular shall include
      the plural, and vice versa, unless the context otherwise requires.




5.11 Company
      Policies .
      The
      Company’s Policies as amended from time to time will govern all terms,
      privileges and conditions of employment of the Employment which are not
      specifically addressed in this Agreement and shall include all rules and
      regulations adopted by the Company from time to time in its sole discretion.





6.  Effective
      Date **.** The
      “Effective Date” of this Agreement is May 2, 2006.





7





IN
      WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
      first written above.




FAMILYMEDS
                GROUP, INC.Date:
            By:
            /s/ Edgardo
              A. MercadanteEdgardo
                A. MercadanteIts
                Chairman and Chief Executive Officer/s/ James
              E. SearsonJames
                E. Searson








ADDRESSES:




Company:
            
            312
                Farmington AvenueFarmington,
                CT 06032





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