Document:

Exhibit
      10.6

     

    AMENDED
      AND RESTATED PARTICIPATION AGREEMENT

    UNDER
      THE

    FIRST
      UNITED BANK & TRUST SUPPLEMENT EXECUTIVE RETIREMENT
      PLAN

    

    THIS
      AMENDED AND RESTATED PARTICIPATION AGREEMENT (this “Participation Agreement”) is
      entered into this 14th
      day of
      February, 2007 (the “Execution Date”) by and between First
      United Bank & Trust (“Employer”)
      and ___________________________, an executive officer of the Employer (the
      “Participant”).

    

    RECITALS:

    

    WHEREAS,
      the Employer adopted the First United Bank & Trust Supplemental Executive
      Retirement Plan effective as of November 1, 2001 (the “Original Plan”), and the
      Employer and the Participant entered into a Participation Agreement pursuant
      thereto on _________________, _____ (the “Original Participation
      Agreement”);

    

    WHEREAS,
      the Employer amended and restated the Original Plan on February 14, 2007 to
      make
      certain clarifying and other changes, a copy of which is attached hereto as
      Exhibit
      A
      (as
      amended and restated, the “Plan”); and

    

    WHEREAS,
      the Employer and Participant desire to amend and restate the Original
      Participation Agreement so that it conforms with the terms and conditions of
      the
      Plan.

    

    NOW,
      THEREFORE, in consideration of the foregoing, the agreements and covenants
      set
      forth herein, and other valuable consideration, the receipt and sufficiency
      of
      which is hereby acknowledged, the parties agree to amend and restate the
      Original Participation Agreement, effective January 1, 2005, as follows:

    

    1. Definitions.
      Except
      as defined in the Recitals and below, capitalized terms in this Participation
      Agreement shall have the meanings given those terms in the Plan. 

    

    
      	 	
              (a)

            	
              “Cause”
                has the meaning given that term in Section
                8(a)
                hereof.

            

    

    

    
      	 	
              (b)

            	
              “Change
                of Control SERP Benefit” means the SERP Benefits payable pursuant to
                Section
                3(b)
                hereof.

            

    

    

    
      	 	
              (c)

            	
              “Competitive
                Employment” means the Participant engages, directly or indirectly, as an
                owner, partner, member, director, officer, employee or agent of any
                sole
                proprietorship or entity, in the business of providing goods or services
                that are substantially similar to those provided by the Employer
                in any
                county in which the Employer has a
                branch.

            

    

    

    
      	 	
              (d)

            	
              “Disability”
                shall have the meaning given that term under the First United Bank
&
                Trust Long Term Disability Plan, as in effect at the time a determination
                of Disability is to be made. 

            

    

    

    
      	 	
              (e)

            	
              “Disability
                SERP Benefit” means the SERP Benefits payable pursuant to Section
                3(c)
                hereof. 

            

    

    

    
      	 	
              (f)

            	
              “Employer”
                means First United Bank & Trust, a Maryland commercial bank, and any
                successor entity.

            

    

    

    
      	 	
              (g)

            	
              “Final
                Pay” means the sum of (i) the Participant’s annual salary for the year in
                which employment terminates, regardless of whether all such salary
                has
                been paid at the time of termination of employment and (ii) the greater
                of
                (A) the Participant’s targeted cash bonus for the year in which employment
                terminates or (B) the actual cash bonus earned by Participant for
                the year
                immediately prior to the year in which employment
                terminates.

            

    

    

    
      	 	
              (h)

            	
              “Guaranteed
                Payment Lifetime Annuity” means the distribution method described in
                Section
                3(a)(ii)(C)
                hereof.

            

    

    

    
      	 	
              (i)

            	
              “Key
                Employee” means, for the 12-month period beginning on a particular April
                1, a Participant described in Section 416(i) of the Code (applied
                in
                accordance with Section 416 regulations and disregarding Section
                416(i)(5)
                of the Code) at any time during the 12-month period ending on the
                preceding December 31.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    

    
      	 	
              (j)

            	
              “Normal
                Retirement” means Participant’s Separation from Service with the Employer
                for any reason other than Cause after such Participant has both (i)
                completed ten (10) Years of Service and (ii) attained his or her
                Normal
                Retirement Age.

            

    

    

    
      	 	
              (k)

            	
              “Normal
                Retirement Age” means sixty (60) years of
                age.

            

    

    

    
      	 	
              (l)

            	
              “Normal
                Retirement SERP Benefit” means the SERP Benefit spayable pursuant to
                Section
                3(a)(i)
                hereof.

            

    

    

    
      	 	
              (m)

            	
              “Post-Retirement
                Survivor Benefit” means the SERP Benefits payable pursuant to Section
                3(f)
                hereof.

            

    

    

    
      	 	
              (n)

            	
              “Pre-Retirement
                Death Benefit” means the SERP Benefits payable pursuant to Section
                3(e)
                hereof.

            

    

    

    
      	 	
              (o)

            	
              “Pre-Retirement
                Termination SERP Benefit” means the SERP Benefits payable pursuant to
                Section
                3(d)
                hereof.

            

    

    

    
      	 	
              (p)

            	
              “Separation
                from Service” means a termination of the Participant’s employment with the
                Employer in accordance with Section 409A(a)(2)(A)(i) of the Code
                and any
                related regulations or other guidance promulgated with respect to
                Section
                409A of the Code (and any successor section or
                regulations).

            

    

    

    
      	 	
              (q)

            	
              “Total
                Pay” for any given year means the Participant’s salary and targeted cash
                bonus for such year.

            

    

    

    
      	 	
              (r)

            	
              “Triggering
                Event” means the occurrence of any one of the following events subsequent
                to a Change of Control:

            

    

    

    
      	 	
              (i)

            	
              Participant's
                receipt of a letter of intent to dismiss without Cause, as defined
                in the
                Plan; or

            

    

    

    
      	 	
              (ii)
                

            	
              termination
                of the Plan; or

            

    

    

    
      	 	
              (iii)
                

            	
              relocation
                of Participant's employment to a location more than 50 miles from
                the
                Participant’s place of employment at the time of the Change of Control;
                or

            

    

    

    
      	 	
              (iv)

            	
              a
                10% or greater reduction
                in Participant’s Total Pay for the year in which the Triggering Event
                occurs from the prior year’s Total Pay, but disregarding any reduction in
                bonus or incentive compensation payments which occurs in accordance
                with
                the terms of any written bonus or incentive compensation program
                as it
                reads before the occurrence of a Change of Control;
                or

            

    

    

    
      	 	
              (v)

            	
              a
                change to Participant’s position that results in Participant not being
                deemed an executive officer of
                Employer.

            

    

    

    
      	 	
              (s)

            	
              “Pre-Retirement
                Termination” has the meaning given that term in Section
                3(d)
                hereof.

            

    

    

    
      	 	
              (t)

            	
              “Pre-Retirement
                Termination SERP Benefit” has the meaning given that term in Section
                3(d)
                hereof.

            

    

    

    
      	 	
              (u)

            	
              “Year
                of Service” means each twelve (12) consecutive month period of full time
                employment with the Employer. No credit will be received for a partial
                Year of Service. 

            

    

    

    2. Effective
      Date of Participation.
      The
      effective date of the Participant’s participation in the Plan shall be
      __________________, _______. 

    
      
        
        

      

      
        2

        
          

        

      

       

    

    3. SERP
      Benefits.
      

    

    
      	 	
              (a)

            	
              Normal
                Retirement SERP Benefit.
                

            

    

    

    
      	 
              (i)            	
              Subject
                to Section
                3(g) hereof,
                upon Normal Retirement, the Participant shall be entitled to a normal
                retirement SERP benefit, expressed as a monthly lifetime annuity
                under
                Section
                4(a)(ii)
                hereof,
                equal to one-twelfth (1/12) of the sum of (A) two and one-half percent
                (2.5%) of Final Pay for each completed Year of Service, up to a maximum
                of
                twenty-four (24) Years of Service (or sixty percent (60%) of Final
                Pay),
                and (B) one percent (1%) of Final Pay for each Year of Service beyond
                twenty-four (24) Years of Service that is completed after the Participant
                attains Normal Retirement Age, up to a maximum of five (5) Years
                of
                Service (or five percent (5%) of Final Pay) (collectively, the “Normal
                Retirement SERP Benefit”). To avoid any doubt with respect to the
                foregoing sentence, the sum of items (A) and (B) above shall not
                exceed
                sixty-five percent (65%) of the Participant’s Final
                Pay.

            

    

    

    
      	(ii)           	
              Notwithstanding
                anything to the contrary contained in subparagraph
                (i)
                of
                this paragraph
                (a),
                for purposes of calculating the Participant’s Normal Retirement SERP
                Benefit, the Participant shall be deemed to have twenty-four (24)
                Years of
                Service as of the Execution Date; provided,
                however, that,
                if the Participant voluntarily terminates his or her employment with
                the
                Employer for any reason other than because of (A) the relocation
                by the
                Employer of his or her employment to a location more than 50 miles
                from
                the Participant’s place of employment immediately prior to the relocation,
                (B) a 10% or greater reduction
                by the Employer in the Participant’s Total Pay for any year from the prior
                year’s Total Pay, but disregarding any reduction in bonus or incentive
                compensation payments which occurs in accordance with the terms of
                any
                written bonus or incentive compensation program, or (C) a
                change by the Employer to the Participant’s position that results in the
                Participant not being deemed an executive officer of the Employer,
                then
                this subparagraph
                (ii)
                shall be of no force or effect and the Participant’s Normal Retirement
                SERP Benefit shall be calculated based on actual Years of Service.
                

            

    

    

    
      	(iii)      
                	
              The
                Normal Retirement SERP Benefit shall be distributed in accordance
                with the
                election made by the Participant pursuant to Section
                4
                hereof and shall be made or begin not later than the 15th
                day of the third (3rd)
                calendar month following Normal
                Retirement.

            

    

    

    
      	 	
              (b)

            	
              Change
                of Control SERP Benefit. 

            

    

    

    
      	 	
              (i)

            	
              Subject
                to Section
                3(g) hereof,
                in the event the Participant has a Separation from service following
                a
                Change of Control and a subsequent Triggering Event, the Participant
                shall
                be entitled to a change of control SERP benefit, expressed as a monthly
                lifetime annuity under Section
                4(a)(ii) hereof,
                equal to one-twelfth (1/12) of the greater of (A) 60% of Final Pay
                or (B)
                his or her Normal Retirement SERP Benefit earned under Section 3(a)
                hereof
                as of the date of the Separation of Service (the “Change of Control SERP
                Benefit”). Notwithstanding the foregoing, in no event will the Change of
                Control SERP Benefit, together with amounts payable by Employer and
                its
                affiliated companies under all other plans and arrangements upon
                a change
                in the ownership or effective control of the Employer (as contemplated
                by
                Section 280G of the Code), exceed the maximum amount that can be
                paid
                without triggering a loss of Employer deduction under Section 280G
                of the
                Code or imposition of an excise tax under Section 4999 of the Code.
                All
                rights and liabilities associated with the Participant's SERP Benefit
                shall not be adversely affected, limited or reduced in any way due
                to a
                Change of Control and Triggering
                Event.

            

    

    

    
      	 	
              (ii)

            	
              The
                Change of Control SERP Benefit shall be distributed in accordance
                with the
                election made by the Participant pursuant to Section
                4
                hereof and shall be made or begin not later than the 15th
                day of the third (3rd)
                calendar month following the later of (A) the Participant’s Separation
                from Service or (B) the date the Participant attains Normal Retirement
                Age.

            

    

    
      
        
        

      

      
        3

        
          

        

      

       

    

    

    
      	 	
              (c)

            	
              Disability
                SERP Benefit.
                

            

    

    

    
      	(i)     
                    	
              Subject
                to Section
                3(g)
                hereof, if the Participant has a Separation from Service due to the
                Participant's Disability, then the Participant will be entitled to
                receive
                a lump sum equal to the actuarial equivalent of his or her Normal
                Retirement SERP Benefit earned under Section
                3(a)
                hereof as of the date of the Separation from Service, less all payments
                received under any disability insurance benefit provided by the Employer
                regardless of whether the Participant is taxed on premium payments
                made by
                the Employer with respect to such insurance policy (“Disability SERP
                Benefit”). 

            

    

    

    
      	(ii)    
                    	
              The
                Disability SERP Benefit shall be paid not later than the 15th
                day of the third (3rd)
                calendar month following the Participant’s Separation from
                Service.

            

    

    

    
      	 	
              (d)

            	
              Pre-Retirement
                Termination SERP Benefit.
                

            

    

    

    
      	 	
              (i)

            	
              Subject
                to Section
                3(g)
                hereof, in the event the Participant has a Separation from Service
                for any
                reason other than due to Normal Retirement, after a Change of Control
                and
                subsequent Triggering Event, or due to death, Disability, or Cause
                (a
                “Pre-Retirement Termination”), and provided the Participant is vested
                pursuant to Section
                5(d)
                hereof, the Participant shall be entitled to receive his or her Normal
                Retirement SERP Benefit earned under Section
                3(a)
                hereof as of the date of the Separation from Service (the “Pre-Retirement
                Termination SERP Benefit”). 

            

    

    

    
      	 	
              (ii)

            	
              The
                Pre-Retirement Termination SERP Benefit shall be distributed in accordance
                with the election made by the Participant pursuant to Section
                4
                hereof and shall be made or begin not later than the 15th
                day of the third (3rd)
                calendar month following the Participant’s attainment of Normal Retirement
                Age.

            

    

    

    
      	(e)  	
              Pre-Retirement
                Death Benefit.
                

            

    

    

    
      	 	
              (i)

            	
              Subject
                to Section
                3(g)
                hereof, if the Participant dies before the commencement of distribution
                of
                his or her Normal Retirement SERP Benefit, Change of Control SERP
                Benefit,
                or Pre-Retirement Termination SERP Benefit (as the case may be),
                then the
                Participant’s Beneficiary will be entitled to receive a lump sum equal to
                the actuarial equivalent of the Participant’s SERP Benefit earned as of
                the date of death, less any
                death benefits payable to the beneficiary(ies) designated by the
                Participant for purposes of any Employer owned life insurance covering
                the
                life of the Participant (but disregarding any group term life insurance)
                (the “Pre-Retirement Death Benefit”).
                

            

    

    

    
      	 	
              (ii)

            	
              The
                Pre-Retirement Death Benefit shall be
                paid not later than the 15th
                day of the third (3rd)
                calendar month following the Participant’s
                death.

            

    

    

    
      	 	
              (f)

            	
              Post-Retirement
                Survivor Benefit.
                If the Participant dies after the commencement of distribution of
                his or
                her Normal Retirement SERP Benefit, Change of Control SERP Benefit,
                or
                Pre-Retirement Termination SERP Benefit (as the case may be), then
                distribution of such benefits shall continue after the Participant's
                death
                only if the Participant elected one of the following forms of distribution
                methods, as provided in Section
                4
                hereof (“Post-Retirement Survivor
                Benefit”):

            

    

    

    
      	 	
              (i)

            	
              50%
                joint and survivor annuity; or

            

    

    

    
      	 	
              (ii)

            	
              75%
                joint and survivor annuity; or

            

    

    

    
      	 	
              (iii)

            	
              100%
                joint and survivor annuity; or

            

    

    

    
      	 	
              (iv)

            	
              Guaranteed
                Payment Lifetime Annuity, but only until the guaranteed 120 months
                of
                payments have been made.

            

    

    
      
        
        

      

      
        4

        
          

        

      

       

    

    

    
      	 	
              (g)

            	
              Offset
                of SERP Benefits.
                The SERP Benefits paid hereunder shall be offset, dollar-for-dollar,
                by an
                amount equal to fifty-percent (50%) of the Participant's Social Security
                benefits received (or deemed to have been received) by the Participant
                and
                one hundred-percent (100%) of the First United Bank & Trust Pension
                Plan benefits received by the Participant. For purposes of this Plan
                and
                offset calculation (including the calculation of a lump sum payment
                under Section
                4(a)(i)
                hereof paid before the earliest time allowed by law for receipt of
                Social Security benefits), Participant shall be deemed to have begun
                receiving Social Security benefits at the earliest time allowed by
                law. In
                no event shall military service certified to Participant as credited
                service under the First United Bank & Trust Pension Plan cause an
                increase to any offset amount under this Participation Agreement
                and
                Plan.

            

    

    

    
      	 	
              (h)

            	
              Restriction
                on Timing of Distribution for Key Employees.
                Notwithstanding any provision of this Participation Agreement to
                the
                contrary, if the Participant is a Key Employee and any class of securities
                of the Employer (or of any person with whom the Employer would be
                considered a single employer under Section 414(b) and (c) of the
                Code) is
                publicly traded as of the date of the Participant’s Separation from
                Service, no distribution may be made to the Participant on account
                of such
                Separation from Service before the date that is six (6) months after
                the
                date of Separation from Service (or, if earlier, the date of the
                Key
                Employee’s death). Any lump sum payment delayed pursuant to this paragraph
                will be paid, and any annuity payments delayed pursuant to this paragraph
                will be accumulated and paid, during the seventh month following
                the month
                in which the Separation from Service
                occurs.

            

    

    

    
      	 	
              (i)

            	
              Exclusivity
                of SERP Benefits.
                This Section
                3
                is
                not intended to, and does not, confer on the Participant the right
                to
                receive more than one of the SERP Benefits described in paragraphs
                (a) through
                (e)
                of
                this Section
                3.
                

            

    

    

    4. Method
      of Distribution of SERP Benefits.
      

    

    
      	 	
              (a)

            	
              Initial
                Election.
                Concurrently
                with the execution of this Participation Agreement (or at such later
                time
                as is permitted under Section 409A of the Code and applicable Internal
                Revenue Service guidance adopted thereunder), the Participant shall
                elect
                any one of the following distribution methods, which, subject to
                paragraph
                (b) of
                this Section
                4,
                shall be irrevocable:

            

    

    

    
      	 	
              (i)

            	
              lump
                sum payment; or 

            

    

    

    
      	 	
              (ii)

            	
              lifetime
                annuity; or

            

    

    

    
      	 	
              (iii)

            	
              lifetime
                annuity with 120 months of guaranteed payments;
                or

            

    

    

    
      	 	
              (iv)

            	
              50%
                joint and survivor annuity; or

            

    

    

    
      	 	
              (v)

            	
              75%
                joint and survivor annuity; or

            

    

    

    
      	 	
              (vi)

            	
              100%
                joint and survivor annuity.

            

    

    

    
      	 	 	
              In
                the event the Participant fails to elect any of the above forms of
                distribution methods as required herein, the Participant shall be
                deemed
                to have chosen the lifetime annuity described in Section
                4(a)(ii).
                Except for a lump sum distribution, all distributions shall be made
                on a
                monthly basis. 

            

    

    

    
      	 	 	
              If
                the Participant elects a lump sum payment method of distribution,
                the
                Participant acknowledges and accepts that the lump sum payment actually
                received shall be the actuarial equivalent of the lifetime annuity
                described in Section
                4(a)(ii).
                If the Participant elects any joint and survivor annuity method of
                distribution or a Guaranteed Payment Lifetime Annuity method of
                distribution, the Participant acknowledges and accepts the reduction
                of
                his or her monthly distribution to actuarially accommodate such
                distribution election. 

            

    

    
      
        
        

      

      
        5

        
          

        

      

       

    

    

    
      	 	 	
              If
                the Participant elects a distribution method other than a lifetime
                annuity
                described in Section
                4(a)(ii),
                the actuarial equivalent will be determined using the same actuarial
                equivalent assumptions contained in the First
                United Bank & Trust Pension Plan (or any successor or replacement
                plan) in effect as of the date that distributions of SERP Benefits
                commence hereunder.

            

    

    

    
      	 	
              (b)

            	
              Changes
                to Distribution Method.
                The Participant may make one or more subsequent elections with respect
                to
                the manner in which his or her SERP Benefit is to be distributed
                pursuant
                to a written election in such form as is acceptable to the Administrator.
                A subsequent election may be made at any time prior to the commencement
                of
                SERP Benefits; provided, however, that a subsequent election changing
                the
                form of distribution to or from a lump sum payment must (i) be made
                at
                least 12 months prior to the date originally scheduled for distribution
                of
                the SERP Benefit; (ii) provide for an effective date at least 12
                months
                following the subsequent election, and (iii) postpone the commencement
                of
                distribution for a period of not less than five (5) years from the
                previous distribution date.

            

    

    

    5. Vesting.
      Subject
      to Section
      8
      hereof,
      a Participant shall become 100% vested in his or her SERP Benefit upon the
      following events:

    

    
      	 	
              (a)

            	
              upon
                the Participant’s Normal
                Retirement;

            

    

    

    
      	 	
              (b)

            	
              upon
                the Participant’s Separation from Service following a Change of Control
                and subsequent Triggering
                Event;

            

    

    

    
      	 	
              (c)

            	
              upon
                a Separation from Service due to a Disability;

            

    

    

    
      	 	
              (d)

            	
              upon
                completion of ten (10) Years of Service; or

            

    

    

    
      	 	
              (e)

            	
              upon
                the Participant’s death. 

            

    

    

    There
      shall be no partial vesting of SERP Benefits.

    

    6. Taxes;
      Withholding.
      The
      Participant shall be responsible for the payment of all applicable local, state
      and federal taxes associated with the Participant’s participation in the Plan
      and the receipt of SERP Benefits hereunder, and the Employer shall have the
      right to deduct from any distributions hereunder any such taxes or other amounts
      required by law to be withheld therefrom.

    

    7. Beneficiaries.
      

    

    
      	 	
              (a)

            	
              Pre-Retirement
                Death Benefit.
                The
                Participant may designate a Beneficiary for the Pre-Retirement Death
                Benefit in accordance with rules established by the Administrator.
                A
                Participant may change any prior Beneficiary designation, without
                notice
                to or consent of any previously designated Beneficiary, in accordance
                with
                rules established by the Administrator. In the absence of a Beneficiary
                designation or if the Beneficiary predeceases the Participant, the
                Beneficiary will be the death beneficiary designated by the Participant
                for purposes of the life insurance policy owned by the Employer on
                the
                life of the Participant or, if no such beneficiary is named or no
                life
                insurance policy exists, the Participant’s estate. If more than one person
                is the Beneficiary, each Beneficiary will receive equal divisible
                amounts
                of any death benefit payable, unless otherwise indicated on the applicable
                form.

            

    

    

    
      	 	
              (b)

            	
              Post-Retirement
                Survivor Benefit.
                If the Participant elects a joint and survivor annuity or a Guaranteed
                Payment Lifetime Annuity, he or she shall designate, in accordance
                with
                rules established by the Administrator, a Beneficiary to receive
                the
                Post-Retirement Survivor Benefit, if any, upon his or her
                death.

            

    

    
      
        
        

      

      
        6

        
          

        

      

       

    

    

    
      	 	
              (c)

            	
              Lost
                Beneficiary.

            

    

    

    
      	(i)          
               	
              The
                Participant and his or her Beneficiaries shall have the obligation
                to keep
                the Administrator informed of their current address until such time
                as all
                benefits due have been paid.

            

    

    

    
      	(ii)         
               	
              If
                a Participant or Beneficiary cannot be located by the Administrator
                exercising diligence, then, in its sole discretion, the Administrator
                may
                presume that the Participant or Beneficiary is deceased for purposes
                of
                the Participation Agreement and all unpaid amounts (net of due diligence
                expenses) owed to the Participant or Beneficiary shall be paid
                accordingly, or, if a Beneficiary cannot be so located, then such
                amounts
                may be forfeited. Any such presumption of death shall be final,
                conclusive, and binding on all
                parties.

            

    

    

    8. Forfeiture
      of SERP Benefits. 

    

    
      	 	
              (a)

            	
              No
                Benefits Payable Upon Termination for Cause.
                Notwithstanding anything contained herein to the contrary, no SERP
                Benefits shall be payable to the Participant if his or her employment
                with
                the Employer is terminated for Cause, regardless of whether the
                Participant would otherwise be vested in his or her SERP Benefit.
                For
                purposes hereof, a Participant whose employment is terminated for
                any of
                the following reasons shall be regarded as having been terminated
                for
                “Cause”: 

            

    

    

    
      	 	
              (i)

            	
              willful
                or grossly negligent misconduct that is materially injurious to the
                Employer; 

            

    

    

    
      	 	
              (ii)

            	
              embezzlement
                or misappropriation of funds or property of the
                Employer;

            

    

    

    
      	 	
              (iii)

            	
              conviction
                of a felony or the entrance of a plea of guilty or nolo contendere
                to a
                felony;

            

    

    

    
      	 	
              (iv)

            	
              conviction
                of any crime involving fraud, dishonesty, moral turpitude or breach
                of
                trust or the entrance of a plea of guilty or nolo contendere to such
                a
                crime; 

            

    

    

    
      	 	
              (v)

            	
              failure
                or refusal by the Participant to devote full business time and attention
                to the performance of his or her duties and responsibilities if such
                breach has not been cured within fifteen (15) days after notice is
                given
                to the Participant; or 

            

    

    

    
      	 	
              (vi)
                

            	
              issuance
                of a final non-appealable order or other direction by a Federal or
                state
                regulatory agency prohibiting the Participant’s employment in the business
                of banking.

            

    

    

    
      	 	
              (b)

            	
              Competitive
                Employment.
                Notwithstanding
                anything contained herein to the contrary, and regardless of whether
                the
                Participant would otherwise be vested in his or her SERP Benefit,
                the
                Employer’s obligation to make payments to the Participant or a Beneficiary
                under this Participation Agreement will be conditioned upon (i) the
                Participant refraining from Competitive Employment for a period of
                three
                (3) years following his or her Separation from Service with the Employer,
                (ii) the Participant refraining from injurious disclosure of confidential
                information concerning the Employer, and (iii) the Participant remaining
                available, at the Employer’s reasonable request, to provide at least six
                (6) hours’ of transition services per month for twelve (12) months
                following his or her Separation from Service (except in the case
                of a
                Separation from Service due to death or Disability); provided, however,
                that only condition (ii) of this paragraph
                shall
                apply if the Participant has a Separation from Service following
                a Change
                of Control and subsequent Triggering Event. If the Participant violates
                any of the foregoing conditions, then the Participant will forfeit
                all
                then-unpaid amounts under this Participation Agreement and be obligated
                to
                reimburse the Employer for all amounts paid hereunder, plus interest
                thereon at the rate of 10% per year. If the Employer engages an attorney
                that is not its employee to collect any amounts owed by the Participant
                pursuant to this paragraph,
                then the Participant will be obligated to reimburse the Employer
                for any
                associated attorney’s fees and other costs of
                collection.

            

    

    
      
        
        

      

      
        7

        
          

        

      

       

    

    

    
      	
              9.

            	
              General
                Provisions

            

    

    

    
      	 	
              (a)

            	
              No
                Assignment.
                SERP Benefits under this Participation Agreement shall not be subject
                in
                any manner to anticipation, alienation, sale, transfer, assignment,
                pledge, encumbrance, or charge, and any such action shall be void
                for all
                purposes of the Participation Agreement. SERP Benefits shall not
                in any
                manner be subject to the debts, contracts, liabilities, engagements,
                or
                torts of any person, nor shall they be subject to attachments or
                other
                legal process for or against any person, except to such extent as
                may be
                required by law. This paragraph
                (a)
                does not prohibit the transfer or assignment to the Participant’s spouse,
                former spouse or child of the right to receive all or a portion of
                the
                benefits payable to the Participant under this Participation Agreement,
                if
                such transfer or assignment is made pursuant to a domestic relations
                order
                issued by a court that is legally binding on the Participant. Payment
                of
                SERP Benefits pursuant to such an order may not be made before the
                earlier
                of (i) when SERP Benefits are actually paid to the Participant or
                (ii) a
                date specified in the order that is not before the earliest date
                that SERP
                Benefits could actually begin being paid to the Participant if he
                or she
                terminated employment. Any provision of an order for payment of SERP
                Benefits upon the election of the spouse, former spouse or child
                cannot be
                given effect. Any payment of SERP Benefits pursuant to a domestic
                order
                will be subject to tax withholding as provided by law. If a domestic
                relations order is served on the Employer, it will be processed in
                accordance with the Employer’s rules for processing qualified domestic
                relations orders established pursuant to Section 414(p) of the Code.
                

            

    

    

    
      	 	
              (b)

            	
              No
                Employment Rights.
                Participation in the Plan, and the execution of this Participation
                Agreement, shall not be construed to confer upon the Participant
                the legal
                right to be retained in the employ of the Employer, or give the
                Participant or any Beneficiary, or any other person, any right to
                any
                payment whatsoever, except to the extent of the benefits provided
                for
                hereunder. The Participant shall remain subject to discharge to the
                same
                extent as if this Plan had never been
                adopted.

            

    

    

    
      	 	
              (c)

            	
              Incompetence.
                If the Administrator determines that any person to whom a benefit
                is
                payable under this Participation Agreement is incompetent by reason
                of
                physical or mental disability, the Administrator shall have the power
                to
                cause the payments becoming due to such person to be made to another
                individual for the Participant’s benefit without responsibility of the
                Administrator or the Employer to see to the application of such payments.
                Any payment made pursuant to such power shall, as to such payment,
                operate
                as a complete discharge of the Employer, the Administrator, and their
                representatives.

            

    

    

    (d)        
       Identity.
      If, at
      any time, any doubt exists as to the identity of any person entitled to any
      payment hereunder or the amount or time of such payment, the Administrator
      shall
      be entitled to hold such sum until such identity or amount or time is determined
      or until an order of a court of competent jurisdiction is obtained. The
      Administrator shall also be entitled to pay  such
      sum
      into court in accordance with the appropriate rules of law. Any expenses
      incurred by the Employer or Administrator incident to such proceeding or
      litigation shall be charged against the SERP Benefits of the Participant.

    

    
      	 	
              (e)

            	
              Amendment
                and Termination.
                Except as prohibited by applicable law, the Employer may unilaterally
                modify, amend or terminate this Participation Agreement; provided,
                however, that no modification, amendment or termination shall reduce
                any
                vested SERP Benefit to which the Participant has already become entitled
                at the time of the modification, amendment or termination, including,
                without limitation, SERP Benefits to which a Participant became entitled
                due to a Change of Control, unless the Participant consents in writing
                to
                such modification, amendment or termination. Any modification,
                amendment or termination shall be evidenced by a written instrument
                executed by the Employer and delivered to the Participant.
                

            

    

    
      
        
        

      

      
        8

        
          

        

      

       

    

    

    
      	 	
              (f)

            	
              Compliance
                with Law.
                Notwithstanding any other provision of this Participation Agreement
                to the
                contrary, the Employer may amend, modify or terminate this Participation
                Agreement, without the consent of the Participant, as the Employer
                deems
                necessary or appropriate to ensure compliance with any law, rule,
                regulation or other regulatory pronouncement applicable to the Plan,
                including, without limitation, Section 409A of the Code and any related
                regulations or other guidance promulgated with respect to Section
                409A of
                the Code.

            

    

    

    
      	 	
              (f)

            	
              Governing
                Law.
                To the extent not preempted by federal law, this Participation Agreement
                shall be governed by, construed and administered under, the laws
                of the
                State of Maryland, exclusive of the conflict of laws principles of
                that
                State.

            

    

    

    
      	 	
              (g)

            	
              Severability.
                Should any provision of this Participation Agreement be deemed or
                held to
                be unlawful or invalid for any reason, such fact shall not adversely
                affect the other provisions hereof unless such invalidity shall render
                impossible or impractical the functioning of this Participation Agreement
                and, in such case, the Employer shall immediately adopt a new provision
                to
                take the place of the one held illegal or
                invalid.

            

    

    

    
      	 	
              (h)

            	
              Headings.
                The headings contained in this Participation Agreement are inserted
                only
                as a matter of convenience and for reference and in no way define,
                limit,
                enlarge, or describe the scope or intent of this Plan nor in any
                way shall
                they affect this Participation Agreement or the construction of any
                provision thereof.

            

    

    

    
      	 	
              (i)

            	
              Terms.
                Singular nouns shall be read as plural and masculine pronouns shall
                be
                read as feminine, and vice versa, as
                appropriate.

            

    

    

    
      	 	
              (j)

            	
              Successors.
                This Participation Agreement shall be binding upon each of the parties
                and
                shall also be binding upon their respective successors or assigns.
                

            

    

    

    
      	 	
              (k)

            	
              Application
                of the Plan; Entire Agreement.
                The
                Participant acknowledges, by executing this Participation Agreement,
                that
                (i) this Participation Agreement is subject in all respects to the
                provisions of the Plan, as amended from time to time, the terms of
                which
                are incorporated herein by reference and made a part hereof, (ii)
                that a
                copy of the Plan and all amendments thereto through the date hereof
                were
                provided to the Participant on the date hereof, and (iii) he or she
                understands and accepts of all of the terms and conditions of the
                Plan.
                This
                Participation Agreement sets forth the entire agreement of the parties
                with respect to the subject matter hereof. Any and all prior agreements
                or
                understandings with respect to such matters are hereby
                superseded.

            

    

    

    IN
      WITNESS WHEREOF, each of the parties has caused this Participation Agreement
      to
      be executed as of the day first above written. 

     

    
      	ATTEST:	 	    
              FIRST
              UNITED BANK AND TRUST:
	 	 	 	 
	 	 	 	 
	
            	 	
              By:
                

            	
            
	
              

            	 	 	
              
                

              

              Name: William
                B. Grant

              Title: Chairman/Chief
                Executive Officer

            

    
       

      
        	WITNESS:	 	   
                PARTICIPANT
	 	 	 	 
	 	 	 	 
	
              	 	
                By:
                  

              	
              
	
                

              	 	 	
                
                  

                

                Name: 

              

        
          
            
            

          

          
            9Unassociated Document

     

    Execution
      Copy

     

     

     

    ASSET
      PURCHASE AGREEMENT

     

    DATED
      AS OF FEBRUARY 14, 2007

     

    by
      and among

     

    WALGREEN
      CO.,

     

    WALGREEN
      EASTERN CO., INC.

     

    FAMILYMEDS
      GROUP, INC.,

     

    FAMILYMEDS,
      INC.

     

    and

     

    ARROW
      PRESCRIPTION LEASING CORP.

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    TABLE
      OF CONTENTS

    
      	
              ARTICLE
                I

            	 
	 	
              DEFINITIONS

            	
              1

            
	
              1.1.

            	
              Definitions

            	
              1

            
	
              1.2.

            	
              Additional
                Definitions

            	
              10

            
	
              1.3.

            	
              Interpretation

            	
              12

            
	
              ARTICLE
                II

            	
               

            
	 	
              PURCHASE
                AND SALE

            	
              12

            
	
              2.1.

            	
              Purchased
                Assets - File-Transfer Locations

            	
              12

            
	
              2.2.

            	
              Purchased
                Assets - Operate Location Pharmacies and Worksite
                Pharmacies

            	
              12

            
	
              2.3.

            	
              Excluded
                Assets

            	
              14

            
	
              2.4.

            	
              Assumed
                Liabilities

            	
              15

            
	
              2.5.

            	
              Excluded
                Liabilities

            	
              15

            
	
              2.6.

            	
              Bulk
                Sales Laws

            	
              15

            
	
              ARTICLE
                III

            	
               

            
	 	
              PURCHASE
                PRICE

            	
              15

            
	
              3.1.

            	
              Purchase
                Price

            	
              15

            
	
              3.2.

            	
              Payments;
                Indemnity Escrow Account

            	
              16

            
	
              3.3.

            	
              Inventory
                Amount

            	
              17

            
	
              3.4.

            	
              Indemnity
                Fund

            	
              18

            
	
              3.5.

            	
              Allocation
                of Purchase Price

            	
              18

            
	
              ARTICLE
                IV

            	
               

            
	 	
              CLOSING

            	
              18

            
	
              4.1.

            	
              Closing
                Date

            	
              18

            
	
              4.2.

            	
              Closing
                Date Payment; Buyer’s Closing Deliveries

            	
              18

            
	
              4.3.

            	
              Sellers’
                Closing Date Deliveries

            	
              19

            
	
              4.4.

            	
              Inventory
                Closing Date Payment; Sellers’ Inventory Closing
                Deliveries

            	
              20

            
	
              ARTICLE
                V

            	 
	 	
              REPRESENTATIONS
                AND WARRANTIES OF FMRX, FAMILYMEDS AND ARROW

            	
              21

            
	
              5.1.

            	
              Organization
                and Authority.

            	
              21

            
	
              5.2.

            	
              No
                Conflicts

            	
              22

            
	
              5.3.

            	
              Taxes.

            	
              22

            
	
              5.4.

            	
              Title
                and Sufficiency

            	
              23

            

    

     

     

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

     

    
      	
              5.5.

            	
              Financial
                Schedules

            	
              24

            
	
              5.6.

            	
              No
                Undisclosed Liabilities

            	
              24

            
	
              5.7.

            	
              Absence
                of Certain Changes or Events

            	
              24

            
	
              5.8.

            	
              SEC
                Filings

            	
              24

            
	
              5.9.

            	
              Assumed
                Contracts

            	
              25

            
	
              5.10.

            	
              Suppliers,
                Distributors and Third Party Payors

            	
              25

            
	
              5.11.

            	
              Prescription
                Volume

            	
              25

            
	
              5.12.

            	
              Owned
                Real Property

            	
              25

            
	
              5.13.

            	
              Leased
                Real Property.

            	
              25

            
	
              5.14.

            	
              Personal
                Property

            	
              26

            
	
              5.15.

            	
              Intellectual
                Property; Software.

            	
              26

            
	
              5.16.

            	
              Employee
                Matters.

            	
              28

            
	
              5.17.

            	
              Employee
                Relations

            	
              29

            
	
              5.18.

            	
              Legal
                Proceedings.

            	
              29

            
	
              5.19.

            	
              Compliance
                With Law; Permits; Medicare and Medicaid.

            	
              29

            
	
              5.20.

            	
              Warranties

            	
              31

            
	
              5.21.

            	
              Sale
                Process

            	
              31

            
	
              5.22.

            	
              Fairness
                Opinion

            	
              31

            
	
              5.23.

            	
              Solvency.

            	
              31

            
	
              5.24.

            	
              Affiliate
                Transactions

            	
              31

            
	
              5.25.

            	
              Broker

            	
              32

            
	
              ARTICLE
                VI

            	
               

            
	 	
              REPRESENTATIONS
                AND WARRANTIES OF BUYER AND EASTERN

            	
              32

            
	
              6.1.

            	
              Organization
                of Buyer and Eastern

            	
              32

            
	
              6.2.

            	
              Authorization

            	
              32

            
	
              6.3.

            	
              Non-Contravention

            	
              32

            
	
              6.4.

            	
              Sufficient
                Funds

            	
              33

            
	
              6.5.

            	
              No
                Other Representations or Warranties

            	
              33

            
	
              ARTICLE
                VII

            	
               

            
	 	
              ADDITIONAL
                AGREEMENTS

            	
              33

            
	
              7.1.

            	
              Employees.

            	
              33

            
	
              7.2.

            	
              Non-competition.

            	
              35

            

    

     

     

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

     

    
      	
              7.3.

            	
              Records
                and Data.

            	
              36

            
	
              7.4.

            	
              Patient
                Letters

            	
              37

            
	
              7.5.

            	
              Matters
                Related to Prescriptions

            	
              37

            
	
              7.6.

            	
              Interim
                Operations.

            	
              38

            
	
              7.7.

            	
              Signage

            	
              38

            
	
              7.8.

            	
              Telephone
                Numbers

            	
              39

            
	
              7.9.

            	
              Acquisition
                Proposals; Board Recommendation.

            	
              39

            
	
              7.10.

            	
              FMRX
                Stockholder Meeting; FMRX Proxy Statement.

            	
              41

            
	
              7.11.

            	
              Access
                Through Final Closing Date.

            	
              42

            
	
              7.12.

            	
              Taxes.

            	
              43

            
	
              7.13.

            	
              Consent
                of Third Parties; Regulatory and Other Authorizations; HSR
                Act.

            	
              45

            
	
              7.14.

            	
              Avoiding
                Abandonment.

            	
              46

            
	
              7.15.

            	
              Licenses.

            	
              47

            
	
              7.16.

            	
              Excluded
                Pharmacies; Post-Closing Consents.

            	
              48

            
	
              7.17.

            	
              Prospective
                Worksite Pharmacies

            	
              49

            
	
              7.18.

            	
              Nonassignable
                Contracts.

            	
              49

            
	
              7.19.

            	
              Remittance

            	
              49

            
	
              7.20.

            	
              Further
                Assurances

            	
              49

            
	
              7.21.

            	
              Access
                to Records and Management After Closing.

            	
              50

            
	
              7.22.

            	
              Tupelo
                Property

            	
              50

            
	
              7.23.

            	
              Collection
                of Patient Charges

            	
              51

            
	
              7.24.

            	
              Website
                Termination

            	
              51

            
	
              ARTICLE
                VIII

            	
               

            
	 	
              INDEMNIFICATION

            	
              52

            
	
              8.1.

            	
              Indemnification
                by the Sellers.

            	
              52

            
	
              8.2.

            	
              Indemnification
                by Buyer

            	
              53

            
	
              8.3.

            	
              Indemnity
                Fund; Termination of Indemnity Fund.

            	
              53

            
	
              8.4.

            	
              Notice
                and Determination of Claims.

            	
              54

            
	
              8.5.

            	
              Third
                Person Claims.

            	
              54

            
	
              8.6.

            	
              Calculation
                of Losses and Expenses.

            	
              55

            
	
              8.7.

            	
              Tax
                Treatment of Indemnity Payments

            	
              56

            
	
              8.8.

            	
              Indemnification
                as Sole Remedy

            	
              56

            

    

     

     

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

     

    
      	
              ARTICLE
                IX

            	
               

            
	 	
              CONDITIONS
                TO CLOSING

            	
              56

            
	
              9.1.

            	
              Sellers’
                Condition to Closing

            	
              56

            
	
              9.2.

            	
              Buyer’s
                Conditions to Closing

            	
              57

            
	
              ARTICLE
                X

            	
               

            
	 	
              TERMINATION

            	
              58

            
	
              10.1.

            	
              Termination

            	
              58

            
	
              10.2.

            	
              Extension
                of Termination Date

            	
              59

            
	
              10.3.

            	
              Effect
                of Termination.

            	
              59

            
	
              ARTICLE
                XI

            	 
	 	
              GENERAL
                PROVISIONS

            	
              61

            
	
              11.1.

            	
              Survival

            	
              61

            
	
              11.2.

            	
              No
                Public Announcement

            	
              61

            
	
              11.3.

            	
              Notices

            	
              61

            
	
              11.4.

            	
              Successors
                and Assigns; No Third Party Beneficiaries

            	
              62

            
	
              11.5.

            	
              Entire
                Agreement; Amendments

            	
              62

            
	
              11.6.

            	
              Waivers

            	
              62

            
	
              11.7.

            	
              Expenses

            	
              63

            
	
              11.8.

            	
              Disclaimer
                Regarding Projections

            	
              63

            
	
              11.9.

            	
              Partial
                Invalidity

            	
              63

            
	
              11.10.

            	
              Injunctive
                Relief; Remedies.

            	
              63

            
	
              11.11.

            	
              Counterparts

            	
              64

            
	
              11.12.

            	
              Governing
                Law; Jurisdiction

            	
              64

            

    

     

    
      
         

      

      
        iv

        
          

        

      

      
         

        
        

      

    

     

    ASSET
      PURCHASE AGREEMENT

     

    This
      ASSET PURCHASE AGREEMENT (this
      “Agreement”)
      is
      made and entered into as of February 14, 2007, by and among Walgreen Co., an
      Illinois corporation (“Buyer”),
      Walgreen Eastern Co., Inc., a New York corporation (“Eastern”),
      Familymeds Group, Inc., a Nevada corporation (“FMRX”),
      Familymeds, Inc., a Connecticut corporation and wholly-owned subsidiary of
      FMRX
      (“Familymeds”),
      and
      Arrow Prescription Leasing Corp., a Connecticut corporation (“Arrow”).
      FMRX,
      Familymeds and Arrow are collectively referred to as the “Sellers”.

     

    WHEREAS,
      the Sellers, among other things, own and operate clinic, retail, apothecary
      and
      worksite pharmacies;

     

    WHEREAS,
      the Sellers desire to sell to Buyer and Eastern, and Buyer and Eastern desire
      to
      purchase from the Sellers, upon the terms and subject to the conditions set
      forth in this Agreement, (a)
      certain of the assets of the Sellers used in the operation of the clinic
      pharmacies and the apothecary pharmacies identified as “Operate Location
      Pharmacies” on Exhibit
      A
      (the
“Operate
      Location Pharmacies”),
      (b)
      substantially all of the assets of the Sellers used exclusively in the operation
      of the Sellers’ Worksite Business, including the worksite pharmacies identified
      on Exhibit
      A
      (the
“Existing
      Worksite Pharmacies”),
      (c)
      all prescription files and inventory related to the pharmacies identified as
      “File-Transfer Locations” on Exhibit
      A
      (the
“File-Transfer
      Locations”),
      and
      (d) the real property located at the intersection of U.S. Highway No. 45 and
      Chokoha Trail in Tupelo, MS (the “Tupelo
      Property”);
      and

     

    WHEREAS,
      concurrently with the execution and delivery of this Agreement, FMRX has
      provided to Buyer a current draft of the Plan of Complete Liquidation and
      Dissolution.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements hereinafter
      set forth, and for other good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged, the parties agree as
      follows:

    

    ARTICLE
      I

     

    DEFINITIONS

     

    1.1. Definitions.
      In this
      Agreement, the following terms have the meanings specified or referred to in
      this Section 1.1. 

     

    “Acquisition
      Proposal”
means
      any bona fide offer or proposal (whether or not in writing) (other than an
      offer
      or proposal by or on behalf of Buyer or its Affiliates) for, or any indication
      of interest in: (a) a transaction pursuant to which a third party acquires
      or
      would acquire Beneficial Ownership of more than 50% of the outstanding capital
      stock of any Seller, whether from FMRX or pursuant to a tender offer, exchange
      offer or otherwise; (b) a merger, consolidation, business combination,
      reorganization, share exchange, sale of substantially all assets,
      recapitalization, liquidation, dissolution or similar transaction that would
      result in a third party acquiring more than 50% of the fair market value of
      the
      consolidated assets of FMRX and its Subsidiaries, taken as a whole or (c) any
      transaction that would result in a third party acquiring more than 50% of the
      fair market value of the consolidated assets of FMRX and its Subsidiaries,
      taken
      as a whole, immediately prior to such transaction. Notwithstanding the
      foregoing, the term “Acquisition
      Proposal”
shall
      not include any transaction that would not prevent the Sellers from selling
      the
      Purchased Assets to Buyer pursuant to this Agreement, including at the same
      price, and otherwise on the same terms, as contemplated hereby.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

     

    “Affiliate”
means,
      with respect to any Person, any other Person that directly or indirectly
      controls, is controlled by or is under common control with such Person. For
      purposes of the foregoing, (a) “control” shall have the meaning given to it
      under the rules and regulations promulgated under the Exchange Act, and (b)
      except as otherwise expressly set forth herein, no individual officer, director
      or employee of a Person shall be deemed to be an Affiliate of such
      Person.

     

    “Alternative
      Proposal”
means
      any bona fide offer or proposal (whether or not in writing) (other than an
      offer
      or proposal by or on behalf of Buyer or its Affiliates) for, or any indication
      of interest in, a transaction pursuant to which a third party acquires or would
      acquire all or a material portion of the Purchased Assets, other than inventory
      or obsolete equipment in the ordinary course of business. Notwithstanding the
      foregoing, the term “Alternative
      Proposal”
shall
      not include any transaction that would not prevent the Sellers from selling
      the
      Purchased Assets to Buyer pursuant to this Agreement, including at the same
      price, and otherwise on the same terms, as contemplated hereby.

     

    “Antitrust Division” means
      the
      Antitrust Division of the United States Department of Justice.

     

    “Assumed
      Real Estate Leases” means
      all
      Real Estate Leases other than Real Estate Leases related to Operate Location
      Pharmacies that are designated as Excluded Operate Location Pharmacies pursuant
      to Section
      7.16.

     

    “Assumed
      Worksite Agreements” means
      all
      Worksite Agreements other than Worksite Agreements related to Worksite
      Pharmacies that are designated as Excluded Worksite Pharmacies pursuant to
      Section
      7.16.

     

    “Beneficial
      Ownership”
shall
      have the meaning provided under Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder.

     

    “Business”
means
      (i) as of the date hereof, the business of owning and operating all of the
      Operate Location Pharmacies, all of the Worksite Pharmacies and all of the
      File-Transfer Locations and (ii) as of and following the Closing Date, the
      business of owning and operating all of the Purchased Operate Location
      Pharmacies, all of the Purchased Worksite Pharmacies and all of the Purchased
      File-Transfer Assets.

     

    “Buyer
      Group Members”
means
      Buyer and Eastern and their respective Affiliates, directors, officers and
      employees.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

     

    “Closing”
means
      the completion of the initial transfer of the Purchased File-Transfer Assets
      from the Sellers to Buyer and Eastern and “Closing
      Date”
means
      the time and date upon which the Closing actually occurs.

     

    “Closing
      Date Shared Expenses” means
      an
      amount equal to the aggregate of all commercially reasonable Expenses (to be
      determined as of the Closing Date by mutual agreement of the parties) associated
      with the Indemnity Agent and any filing fees related to the HSR
      Act.

     

    “Closing
      Date Shared Expenses Schedule”
means
      a
      mutually prepared schedule setting forth an itemized list of the Closing Date
      Shared Expenses, including the amounts thereof.

     

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

     

    “Confidential
      Information”
means,
      with respect to any Person, information regarding such Person that is not
      previously disclosed to the public or to the trade and includes information
      regarding facilities, strategies, methods, Trade Secrets and other intellectual
      property, Software, systems, procedures, operational policies, manuals,
      confidential reports, product price lists, pricing and cost policies, customer
      lists, inventory information, financial information (including revenue, costs
      or
      profits of the disclosing party), business plans, prospects or
      opportunities.

     

    “Contract”
means
      and includes every agreement or understanding of any kind, written or oral,
      enforceable or not.

     

    “Copyrights”
means
      all copyrights, whether registered or unregistered, and pending applications
      to
      register.

     

    “Disclosure
      Schedules”
means
      the disclosure schedules delivered by the Sellers to Buyer and Eastern on the
      date of the execution of this Agreement.

     

    “Encumbrance”
means
      any lien, encumbrance, claim, charge, security interest, assignment, collateral
      assignment, mortgage, pledge, easement, conditional sale or other title
      retention agreement, defect in title, covenant or other restrictions of any
      kind.

     

    “Environmental,
      Health and Safety Requirements”
means
      all Requirements of Law concerning or relating to public health and safety,
      worker/occupational health and safety, and pollution or protection of the
      environment, including those relating to the presence, use, manufacturing,
      refining, production, generation, handling, transportation, treatment,
      recycling, transfer, storage, disposal, distribution, importing, labeling,
      testing, processing, discharge, release, threatened release, control, or other
      action or failure to act involving cleanup of any Hazardous Substances or
      wastes, chemical substances or mixtures, pesticides, pollutants, process waste
      water, contaminants, toxic chemicals, petroleum products or byproducts,
      asbestos, polychlorinated biphenyls, noise, or radiation, each as amended and
      as
      now in effect, including: the Comprehensive Environmental Response, Compensation
      and Liability Act of 1980, as amended; the Occupational Safety and Health Act
      of
      1970, as amended; the Federal Water Pollution Control Act, as amended; the
      Federal Resource Conservation and Recovery Act, as amended; the Federal Clean
      Water Act, as amended; the Toxic Substances Control Act, as amended; the Federal
      Clean Air Act, as amended, and the Superfund Amendments and Reauthorization
      Act.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

     

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

     

    “Estimated
      Aggregate Inventory Amount”
means
      sum of the Estimated Inventory Amounts. 

     

    “Estimated
      Inventory Amount”
means,
      with respect to any File-Transfer Location, the Sellers’ good faith estimate of
      the Inventory Amount attributable to such File-Transfer Location.

     

    “Estimated
      Inventory Certificate”
means
      a
      certificate delivered by an officer of FMRX to Buyer no later than three (3)
      business days prior to the Closing Date and in form and substance reasonably
      satisfactory to Buyer setting forth each Estimated Inventory Amount and the
      Estimated Aggregate Inventory Amount, together with such supporting
      documentation as may be reasonably requested by Buyer.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Excluded
      Businesses”
means
      the Sellers’ business of operating the Excluded Operate Location Pharmacies, the
      Excluded Worksite Pharmacies, the Sellers’ franchise, medical supplies, internet
      and mail order businesses and any other businesses other than the
      Business.

     

    “Excluded
      Operate Location Pharmacies”
means
      those Operate Location Pharmacies designated as Excluded Operate Location
      Pharmacies pursuant to Section
      7.16. 

     

    “Excluded
      Worksite Pharmacies”
means
      those Worksite Pharmacies designated as Excluded Worksite Pharmacies pursuant
      to
Section
      7.16.

     

    “Expenses”
means
      any and all reasonable expenses incurred in connection with investigating,
      defending or asserting any claim, action, suit or proceeding incident to any
      matter indemnified against hereunder (including court filing fees, court costs,
      arbitration fees or costs, witness fees, and reasonable fees and disbursements
      of legal counsel, investigators, expert witnesses, accountants and other
      professionals).

     

    “Final
      Closing Date” means
      the
      date upon which the final Inventory Closing Date has occurred.

     

    “FMRX
      SEC Reports”
means
      all forms, reports, schedules, statements and other documents filed by FMRX
      with
      the SEC since January 1, 2005.

     

    “FTC”
means
      the United States Federal Trade Commission.

     

    “Governmental
      Body” means
      any
      foreign, federal, state, local or other governmental authority or regulatory
      body.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

     

    “Hazardous
      Substances”
has
      the
      meaning set forth in Section 101(14) of the Comprehensive Environmental
      Response, Compensation and Liability Act of 1980, as amended, and will also
      expressly include petroleum, crude oil and any fraction thereof.

     

    “HIPAA”
means
      the Health Insurance Portability and Accountability Act of 1996, P. L. 104-191,
      and its implementing rules and regulations.

     

    “HSR
      Act”
means
      the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
      and
      the rules and regulations promulgated thereunder.

     

    “Indemnity
      Escrow Agreement” means
      an
      Indemnity Escrow Agreement to be entered into at or prior to Closing among
      Buyer, Eastern, the Sellers and the Indemnity Agent, in form and substance
      to be
      mutually agreed upon. 

     

    “Installation”
means,
      with respect to each Purchased Operate Location Pharmacy and each Purchased
      Worksite Pharmacy, the completion of the installation of wiring and equipment
      for data and communication devices and other store systems required for Buyer
      or
      Eastern to integrate the Business with Buyer’s own business and to operate such
      Purchased Operate Location Pharmacy or Purchased Worksite Pharmacy in a manner
      consistent with the operation of Buyer’s existing pharmacies.

     

    “Instrument
      of Assignment and Assumption”
means
      an Instrument of Assignment and Assumption, to be delivered by Buyer and Eastern
      and the Sellers pursuant to which the Sellers will convey the applicable
      Purchased Assets to Buyer and Eastern, and Buyer and Eastern will assume the
      applicable Assumed Liabilities, in each case, in accordance with the terms
      hereof, in a form reasonably acceptable to the parties.

     

    “Intellectual
      Property”
means
      Copyrights, Patent Rights, Trademarks and Trade Secrets owned or licensed by
      the
      Sellers and primarily used in or primarily related to the ownership or operation
      of the Business.

     

    “Inventory
      Closing Date”
means,
      with respect to each Location, the date on which the Inventory Audit for such
      Location is conducted.

     

    “Inventory
      Closing Shared Expense Amount” means
      the
      aggregate amount (to be determined as of the Closing Date by mutual agreement
      of
      the parties) estimating the total commercially reasonable Expenses associated
      with all of the Inventory Closing Dates for all of the Locations, including
      the
      Independent Valuator and the Data Converter.

     

    “IRS”
means
      the United States Internal Revenue Service.

     

    “Knowledge”
means
      the actual knowledge, after due inquiry appropriate for a person of such
      position, of the persons listed on Schedule
      1.1(i).

     

    “Lease
      Adjustment Amount”
means
      the amount set forth on Schedule
      7.2(c).

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

     

    “Licensed
      Rights”
means
      any Intellectual Property or Software primarily used in or related to the
      ownership or operation of the Business owned by a third party to which any
      of
      the Sellers hold a license pursuant to a valid and enforceable license
      agreement.

     

    “Location” means
      any
      Purchased Operate Location Pharmacy, Purchased Worksite Pharmacy or
      File-Transfer Location.

     

    “Loss”
means
      any and all losses, costs, obligations, liabilities, settlement payments,
      awards, judgments, fines, penalties, damages, Expenses, deficiencies or other
      charges, including any amount payable with respect to Taxes (including any
      amounts relating to Taxes payable pursuant to a Contract or
      otherwise).

     

    “Material
      Adverse Effect”
means
      any change, effect, event, occurrence or development that is or would reasonably
      be expected to be materially adverse to the assets, liabilities, financial
      condition or results of operations of the Business, taken as a whole, excluding
      any such change, effect, event, occurrence or development (a) relating to or
      resulting from economic conditions in general, (b) relating to or resulting
      from
      changes in legal or regulatory conditions, (c) relating to the pharmacy industry
      in general, (d) resulting from the execution or announcement of this Agreement
      and the Plan of Complete Liquidation and Dissolution, but only to the extent
      that any such change, effect, event, occurrence or development would not
      materially adversely affect the ability of Buyer and Eastern to operate the
      Business as of and following the Closing or the value of the Business as of
      and
      following the Closing Date, (e) resulting from any actions taken, or the failure
      to act, by Buyer or its Affiliates after the date hereof and prior to the
      Closing Date in violation of this Agreement or
      (f)
      resulting from compliance by the Sellers with the terms of this Agreement (other
      than Section
      7.6),
      which,
      in the case of clauses (a), (b) and (c) above, does not have a disproportionate
      impact on the Business relative to other businesses of similar size and scope
      operating in the same line of business.

     

    “NCPDP”
means
      the National Council for Prescription Drug Programs, Inc.

     

    “NRS”
means
      the Nevada Revised Statutes, as amended.

     

    “Other
      Lease Amendments”
means
      the amendments to, or the extensions of, the existing term of the Real Estate
      Leases as set forth in the “Lease Amendment” form on Exhibit
      B.

     

    “Patent
      Rights”
means
      all patents, provisional patent applications, patent applications,
      continuations, continuations-in-part, divisions, reissues, reexaminations,
      extensions, industrial designs, patent disclosures, inventions (whether or
      not
      patentable or reduced to practice) and improvements thereto.

     

    “Patient
      Charges”
means
      all accounts receivable related to the Purchased Operate Location Pharmacies
      and
      the File-Transfer Locations represented by the “charge accounts” corresponding
      to patients of the Purchased Operate Location Pharmacies and the File-Transfer
      Locations.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

     

    “Patient
      Charges Aggregate Amount”
means
      the sum of the Patient Charges Amount with respect to each of the Purchased
      Operate Location Pharmacies and File-Transfer Locations.

     

    “Patient
      Charges Amount”
means,
      with respect to each of the Purchased Operate Location Pharmacies and
      File-Transfer Locations, the amount of Patient Charges included in the Patient
      Charges Certificate that relates to products sold on or after the 90th day
      prior
      to the applicable Inventory Closing Date.

     

    “Patient
      Charges Certificate”
means
      a
      certificate, with respect to each of the Purchased Operate Location Pharmacies
      and File-Transfer Locations, signed by an officer of FMRX setting forth the
      Patient Charges Amount and all Patient Charges related to such Purchased Operate
      Location Pharmacy or File-Transfer Location.

     

    “Permitted
      Encumbrances”
means
      (a) all statutory liens for current Taxes, assessments or other charge of a
      Governmental Body not yet delinquent or the amount or validity of which is
      being
      in contested in good faith by appropriate proceedings provided an appropriate
      reserve is established therefor; (b) mechanics’, carriers’, workers’, repairers’
and similar Encumbrances arising or incurred in the ordinary course of the
      business which are not yet due or payable; (c) zoning, entitlement and other
      land use and environmental regulations by any Governmental Body provided,
      that
      such regulations have not been violated; (d) title of a lessor under a capital
      or operating lease; (e) any other imperfections in title, charges, easements,
      restrictions and Encumbrances that do not materially affect the value or use
      of,
      or the ability to sell or market, the affected asset; and (f) Encumbrances
      disclosed in Schedule
      5.4.

     

    “Person”
means
      any individual, corporation, partnership, joint venture, trust, Governmental
      Body or other organization or entity.

     

    “Plan
      of Complete Liquidation and Dissolution”
means
      the draft Plan of Complete Liquidation and Dissolution, as of the date hereof,
      providing for the liquidation, dissolution and winding-down of FMRX and all
      of
      its Subsidiaries and their respective businesses, provided,
      that
      such plan may be adjusted by FMRX as necessary after the date
      hereof.

     

    “Premises”
means
      the premises upon which any of the Operate Location Pharmacies or Worksite
      Pharmacies conducts its business.

     

    “Prospective
      Worksite Pharmacies”
means
      those pharmacies which are currently being developed or contemplated (or which
      will be developed or contemplated prior to Closing) by the Sellers in the
      Worksite Business, including those Prospective Worksite Pharmacies identified
      on
Exhibit
      A.
      

     

    “Purchased
      Operate Location Pharmacies”
means
      all of the Operate Location Pharmacies other than the Excluded Operate Location
      Pharmacies.

     

    “Purchased
      Worksite Pharmacies”
means
      all of the Worksite Pharmacies other than the Excluded Worksite
      Pharmacies.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

     

    “Real
      Estate Leases”
means
      the real estate leases, set forth on Schedule
      5.9,
      together with all modifications and supplements thereto, and all subleases
      and
      estoppels related thereto, associated with the Operate Location
      Pharmacies.

     

    “Required
      Lease Consents”
means
      the consents to the transfer of the respective Real Estate Leases to Buyer
      or
      Eastern or their respective Affiliates, the extension of the existing term
      or
      the other amendments from the third parties to the respective Real Estate
      Leases, set forth as “Required Lease Consents” on Exhibit
      B,
      with
      such modifications as may be reasonably acceptable to the parties.

     

    “Required
      Worksite Consents”
means
      the consents from the third parties with respect to the transfer of the
      respective Worksite Agreement to Buyer or Eastern or their respective
      Affiliates, set forth as “Required Worksite Consents” on Exhibit
      B,
      with
      such modifications as may be reasonably acceptable to the parties.

     

    “Requirements
      of Law”
means
      any foreign, federal, state and local laws, statutes, regulations, rules, codes
      or ordinances enacted, adopted, issued or promulgated by any Governmental Body,
      including any Environmental, Health and Safety Requirements.

     

    “Sale
      Process”
means
      the background of the decision of FMRX to enter into this Agreement to the
      extent disclosure thereof is required by the rules and regulations promulgated
      under the Exchange Act.

     

    “SEC”
means
      the United States Securities and Exchange Commission.

     

    “Security
      Deposits”
means
      all security deposits paid by the Sellers to any Person prior to the Closing
      related to the Business (other than with respect to the File-Transfer
      Locations), if such deposits are retained by the party currently holding them
      after the Closing for the benefit of Buyer or Eastern.

     

    “Software” means
      computer software programs and software systems, including all databases,
      compilations, tool sets, compiles, decompilers, higher level or “proprietary”
languages, related documentation and materials, whether in source code, object
      code or human readable form.

     

    “Solvent”
      means
      with
      regard to each of the Sellers and on a particular date that, at fair valuation,
      such Seller’s assets are equal to or greater than the sum of all of such
      Seller’s debts and liabilities, subordinated, probable, contingent or otherwise,
      on such date, and that such Seller is generally paying its debts and
      liabilities, subordinated, contingent or otherwise, as such debts become
      absolute and mature unless such debts or liabilities are the subject of a bona
      fide dispute, and “Insolvent”
means
      that the foregoing is not true with regard to such Seller on the particular
      date.

     

    “Straddle
      Period”
means
      any taxable year or period beginning on or before and ending after the Closing
      Date or the applicable Inventory Closing Date.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

     

    “Subsidiary”
means
      any corporation, limited liability company or other entity of which FMRX (either
      alone or through or together with any other Subsidiary) owns, directly or
      indirectly, 50% or more of the capital stock, membership interests or other
      equity interests.

     

    “Superior
      Proposal”
means
      any written Acquisition Proposal that a majority of the members of the Board
      of
      Directors of FMRX determines in good faith, after consultation with its outside
      legal counsel and financial advisors: (a) provides consideration to FMRX or
      the
      stockholders of FMRX that is directly attributable to the Purchased Assets
      with
      a value that exceeds the value of the consideration provided for in this
      Agreement; (b) would result in a transaction, if consummated, that would be
      more
      favorable to the stockholders of FMRX with respect to the Purchased Assets
      (taking into account all facts and circumstances, including all legal,
      financial, regulatory and other aspects of the proposal and the identity of
      the
      offeror and the other transactions that FMRX is or may be contemplating
      including any transactions contemplated in connection with its Plan of Complete
      Liquidation and Dissolution) than the transactions contemplated hereby; (c)
      is
      reasonably capable of being consummated in a timely manner (taking into account
      all regulatory and other relevant considerations including any financing
      contingencies and due diligence conditions); and (d) is made by a Person or
      a
      group of Persons who have provided FMRX with reasonable evidence that such
      Person or group of Persons has or will have sufficient funds to complete such
      Acquisition Proposal.

     

    “Tax”
means
      any federal, state, local, or foreign income, gross receipts, license, payroll,
      employment, excise, severance, stamp, occupation, premium, windfall profits,
      environmental, customs, ad valorem, duties, capital stock, franchise, profits,
      prescription tax or fee, withholding, social security, unemployment, disability,
      real property, personal property, sales, use, transfer, registration, value
      added, alternative or add-on minimum, estimated, or other tax of any kind
      whatsoever, including any interest, penalty, or addition thereto.

     

    “Tax
      Return”
means
      any return, declaration, report, claim for refund, or information return or
      statement relating to Taxes required to be filed with any Governmental Body,
      including any schedule or attachment thereto, and including any amendment
      thereof.

     

    “Trade
      Secrets”
means
      trade secrets, confidential ideas, know-how, concepts, methods, processes,
      formulae, reports, data, customer lists, mailing lists, business plans and
      other
      proprietary information, all of which derive value, monetary or otherwise,
      from
      being maintained in confidence.

     

    “Trademarks”
means
      all service marks, Internet domain names, logos, designs, slogans, trade dress,
      trade names, corporate names and general intangibles of like nature whether
      registered or reregistered, and registrations and pending applications to
      register the foregoing.

     

    “Worksite
      Agreements”
means
      those agreements set forth on Schedule
      5.9
      associated with Worksite Pharmacies, together with all modifications or
      supplements thereto.

     

    “Worksite
      Business” means
      the
      business of owning and operating pharmacies for the employee population of
      a
      specified employer, including the ownership and operation of the Worksite
      Pharmacies.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

     

    “Worksite
      Pharmacies”
means
      the Existing Worksite Pharmacies and Prospective Worksite
      Pharmacies.

     

    1.2. Additional
      Definitions.
      The
      following terms are defined in the Sections set forth across from such term
      in
      the following table:

     

    
      	
              Aggregate
                Inventory Amount

            	
              3.3

            
	
              Agreement

            	
              Preamble

            
	
              Allocation
                Schedule

            	
              3.5

            
	
              Alternative
                Agreement

            	
              7.9(c)

            
	
              Arrow

            	
              Preamble

            
	
              Assumed
                Contracts

            	
              5.9

            
	
              Assumed
                Liabilities

            	
              2.4

            
	
              Balance
                Sheet Date

            	
              5.5

            
	
              Business
                Employees

            	
              5.16(a)

            
	
              Buyer

            	
              Preamble

            
	
              Buyer
                Applications

            	
              7.14(a)

            
	
              Change
                of Recommendation

            	
              7.9(c)

            
	
              Claim
                Notice 

            	
              8.4(a)

            
	
              Closing
                Date Payment

            	
              3.2(a)

            
	
              Collection
                Period

            	
              7.23

            
	
              Collections
                Deficiency

            	
              7.23

            
	
              Collections
                Excess

            	
              7.23

            
	
              Competing
                Business

            	
              7.2(a)

            
	
              Confidentiality
                Agreement

            	
              7.9(a)

            
	
              Current
                Prescription Volume

            	
              5.11

            
	
              Data
                Converter

            	
              7.3(a)

            
	
              Eastern

            	
              Preamble

            
	
              Employee
                Plans

            	
              5.16(b)

            
	
              Event
                of Loss

            	
              7.16(b)

            
	
              Excluded
                Assets

            	
              2.3

            
	
              Excluded
                Contracts 

            	
              2.3(b)

            
	
              Excluded
                Liabilities

            	
              2.5

            
	
              Existing
                Worksite Pharmacies

            	
              Preamble

            
	
              Fairness
                Opinion

            	
              5.22

            
	
              Familymeds

            	
              Preamble

            
	
              File-Transfer
                Amount

            	
              3.1(a)

            
	
              File-Transfer
                Inventory

            	
              2.1(b)

            
	
              File-Transfer
                Locations

            	
              Preamble

            
	
              File-Transfer
                Records

            	
              2.1(a)

            
	
              FMRX

            	
              Preamble

            
	
              FMRX
                Proxy Statement

            	
              7.10(b)

            
	
              FMRX
                Recommendation

            	
              7.9(c)

            
	
              FMRX
                Stockholder Approval

            	
              5.1(a)

            
	
              FMRX
                Stockholder Meeting

            	
              7.10(a)

            

    

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    
      	
              IOU
                Prescriptions

            	
              7.5

            
	
              Indemnified
                Event

            	
              8.6(b)

            
	
              Indemnified
                Person

            	
              8.4(a)

            
	
              Indemnitor

            	
              8.4(a)

            
	
              Indemnity
                Agent

            	
              3.4

            
	
              Indemnity
                Amount

            	
              3.2(d)

            
	
              Indemnity
                Escrow Account

            	
              3.2(d)

            
	
              Indemnity
                Fund

            	
              3.4

            
	
              Indemnity
                Termination Date

            	
              8.1(b)

            
	
              Independent
                Valuator

            	
              3.3(a)

            
	
              Inventory

            	
              2.2(c)

            
	
              Inventory
                Amount

            	
              3.3

            
	
              Inventory
                Audit

            	
              3.3

            
	
              Inventory
                Closing Date Payment

            	
              3.2(b)

            
	
              Management
                Consulting Period

            	
              7.20(c)

            
	
              Notice
                of Superior Proposal

            	
              7.9(c)

            
	
              Operate
                Amount

            	
              3.1(c)

            
	
              Operate
                Location Pharmacies

            	
              Preamble

            
	
              Payment
                Program

            	
              5.19(c)(i)

            
	
              Pending
                Proposal

            	
              7.9(c)

            
	
              Permits

            	
              5.19(a)

            
	
              Personal
                Property

            	
              2.2(a)

            
	
              PHI

            	
              7.3(c)

            
	
              Power
                of Attorney

            	
              7.14(c)

            
	
              Purchase
                Price

            	
              3.1

            
	
              Purchased
                Assets

            	
              2.2

            
	
              Purchased
                File-Transfer Assets

            	
              2.1

            
	
              Record
                Data

            	
              7.3(a)

            
	
              Records

            	
              2.2(b)

            
	
              Representatives

            	
              7.9(a)

            
	
              Revenue,
                SG&A and Balance Sheet Data

            	
              5.5

            
	
              Revised
                Buyer Proposal

            	
              7.9(c)

            
	
              Rx
                Operations Data

            	
              5.5

            
	
              Sellers

            	
              Preamble

            
	
              Shortfall

            	
              3.2(c)(ii)

            
	
              Termination
                Date

            	
              10.1(e)

            
	
              Title
                Commitment

            	
              7.22

            
	
              Third
                Party Distributor

            	
              7.4

            
	
              Third
                Person Claim

            	
              8.4(a)

            
	
              Transferable
                Permits

            	
              7.14(a)

            
	
              Transferred
                Employee

            	
              7.1(b)

            
	
              Tupelo
                Amount

            	
              3.1(d)

            
	
              Tupelo
                Property

            	
              Preamble

            
	
              Worksite
                Amount

            	
              3.1(b)

            

    

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    1.3. Interpretation.
      Article
      titles and headings to sections herein are inserted for convenience of reference
      only and are not intended to be a part of or to affect the meaning or
      interpretation of this Agreement. The Schedules and Exhibits referred to herein
      shall be construed with and as an integral part of this Agreement to the same
      extent as if they were set forth verbatim herein. Any agreement referred to
      herein shall mean such agreement as amended, supplemented and modified from
      time
      to time to the extent permitted by the applicable provisions thereof and by
      this
      Agreement. As used herein, the word “including” means “including without
      limitation.”

     

    ARTICLE
      II

     

    PURCHASE
      AND SALE

     

    2.1. Purchased
      Assets - File-Transfer Locations.
      Upon
      the terms and subject to the conditions of this Agreement, the Sellers shall
      sell, transfer, assign, convey and deliver to Buyer or Eastern (as determined
      by
      Buyer and Eastern and as set forth on Schedule
      2.1),
      and
      Buyer or Eastern shall purchase from the Sellers, free and clear of all
      Encumbrances (except Permitted Encumbrances), all right, title and interest
      of
      the Sellers in, to and under the following assets and properties of the Sellers
      associated with each of the File-Transfer Locations, as the same shall exist
      on
      the Closing Date for each such File-Transfer Location (collectively, the
“Purchased
      File-Transfer Assets”):

     

    (a) Any
      and
      all prescriptions, prescription files and records, customer lists and patient
      profiles, including refill status reports and insurance coverages, any files
      or
      records maintained electronically, any files or records added between the date
      of this Agreement and the Closing Date, in each case related to the
      File-Transfer Locations (collectively, the “File-Transfer
      Records”);
      and

     

    (b) The
      inventory utilized in connection with, or located on the premises of, any of
      the
      File-Transfer Locations (the “File-Transfer
      Inventory”).

     

    2.2. Purchased
      Assets - Operate Location Pharmacies and Worksite Pharmacies.
      Upon
      the terms and subject to the conditions of this Agreement, the Sellers shall
      sell, transfer, assign, convey and deliver to Buyer or Eastern (as determined
      by
      Buyer and Eastern and as set forth on Schedule
      2.1),
      and
      Buyer or Eastern shall purchase from the Sellers, free and clear of all
      Encumbrances (except Permitted Encumbrances), all right, title and interest
      of
      the Sellers in, to and under the following assets and properties of the Sellers
      associated with each of the Purchased Operate Location Pharmacies and Purchased
      Worksite Pharmacies (not including Excluded Assets), as the same shall exist
      on
      the applicable Inventory Closing Date with respect to each of the Purchased
      Operate Location Pharmacies and Purchased Worksite Pharmacies (collectively,
      and
      together with the Purchased File-Transfer Assets, the “Purchased
      Assets”):

     

    (a) Any
      and
      all personal property owned by any of the Sellers and located at the Purchased
      Operate Location Pharmacies and Purchased Worksite Pharmacies, including all
      furniture, fixtures, equipment, vehicles, leasehold improvements and signage,
      except computer and telecommunications equipment that the parties mutually
      agree
      in writing to exclude (collectively, the “Personal
      Property”);

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

     

    (b) Any
      and
      all prescriptions, prescription files and records, customer lists and patient
      profiles, including refill status reports and insurance coverages, any files
      or
      records maintained electronically, any files or records added between the date
      of this Agreement and Closing Date or the applicable Inventory Closing Date,
      in
      each case exclusively related to the Purchased Operate Location Pharmacies
      and
      Purchased Worksite Pharmacies (collectively, and together with the File-Transfer
      Records, the “Records”);
      

     

    (c) The
      inventory located at any Purchased Operate Location Pharmacies or Purchased
      Worksite Pharmacies (together with the File-Transfer Inventory, the
“Inventory”);

     

    (d) All
      improvements, fixtures, and fittings thereon, and other appurtenants located
      at
      any Purchased Operate Location Pharmacies or Purchased Worksite Pharmacies
      (such
      as appurtenant rights in and to public streets) including any Security Deposits,
      rent credits and tenant improvement credits and allowances paid or made with
      respect to the Premises;

     

    (e) All
      rights and interests in, and assets related to, the long-term care business
      at
      any Purchased Operate Location Pharmacies;

     

    (f) All
      rights and interests in, and assets primarily used in or primarily related
      to,
      the Prospective Worksite Pharmacies, unless excluded pursuant to Section
      7.17;

     

    (g) All
      of
      the other assets and properties primarily used in or primarily related to the
      ownership or operation of the Worksite Business, unless the Prospective Worksite
      Pharmacies are excluded pursuant to Section
      7.17;

     

    (h) To
      the
      extent transferable, all Permits and similar rights obtained from Governmental
      Bodies related exclusively to the ownership or operation of any Purchased
      Operate Location Pharmacies, Purchased Worksite Pharmacies or (unless excluded
      pursuant to Section
      7.22)
      the
      Tupelo Property; 

     

    (i) Copies
      of
      all other books and records of the Sellers relating primarily to the assets,
      properties and operations of the Purchased Operate Location Pharmacies and
      Purchased Worksite Pharmacies or (unless excluded pursuant to Section
      7.22)
      the
      Tupelo Property; 

     

    (j) All
      Intellectual Property and any web sites, including the URL addresses and related
      domain names, in each case, related primarily to the ownership or primarily
      to
      the operation of the Worksite Business, including (i) the name “Worksite
      Pharmacy” and any other trade names, Trademarks and Trade Secrets primarily
      associated with the Worksite Business and the website “www.worksitepharmacy.com”
and (ii) all goodwill associated with the foregoing; provided,
      that
      for the avoidance of doubt, the names “FamilyMeds”, “Arrow” and any derivations
      thereof shall not be Purchased Assets;

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

     

    (k) Any
      guarantees, warranties, indemnities and similar rights to the extent relating
      to
      Purchased Assets; 

     

    (l) All
      rights in, to and under the Assumed Contracts;

     

    (m) All
      rights in, to and under the Patient Charges; 

     

    (n) Unless
      the Tupelo Property is excluded pursuant to Section
      7.22,
      all
      rights, title and interests in, to and under the Tupelo Property; and

     

    (l)
       Any
      other
      mutually agreeable assets related to the Purchased Operate Location Pharmacies
      and Purchased Worksite Pharmacies.

     

    2.3. Excluded
      Assets.
      Notwithstanding the provisions of Sections 2.1
      and
2.2
      the
      Purchased Assets shall not include the following (collectively, the
“Excluded
      Assets”):

     

    (a) All
      cash
      and cash deposits and accounts receivable (other than the Patient Charges),
      including insurance receivables and pre-paid Expenses related to pre-Closing
      periods, of the Sellers or the Business;

     

    (b) All
      agreements, Contracts and understandings of the Sellers (including equipment
      leases and underlying equipment) other than the Assumed Contracts (collectively,
      the “Excluded
      Contracts”);

     

    (c) All
      employee benefit plans, programs or arrangements and all Contracts of insurance
      of the Sellers;

     

    (d) All
      of
      the Sellers’ Software and any web sites, including the URL addresses and related
      domain names (except as set forth in Section 2.2(j));

     

    (e) All
      corporate minute books and the respective corporate seals of the Sellers;

     

    (f) All
      assets primarily used in or related to the ownership or operation of the
      Excluded Businesses; 

     

    (g) All
      Real
      Estate Leases, Worksite Agreements, and other assets, including inventory,
      primarily used in or related to the ownership or operation of the (i) Operate
      Location Pharmacies designated as Excluded Operate Location Pharmacies pursuant
      to Section
      7.16
      and (ii)
      Worksite Pharmacies designated as Excluded Worksite Pharmacies pursuant to
      Section
      7.16;

     

    (h) Except
      to
      the extent set forth in Section
      2.2,
      all
      Intellectual Property owned by the Sellers;

     

    (i) The
      Excluded Inventory (as defined in Exhibit
      C);
      and

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

     

    (j) All
      refunds or credits of any Tax for which the Sellers are liable or to which
      the
      Sellers are entitled pursuant to Section
      7.12.

     

    2.4. Assumed
      Liabilities.
      As
      additional consideration for the Purchased Assets, Buyer or Eastern, as
      applicable, shall assume the obligations of the Sellers under the Assumed
      Contracts arising on or after the applicable Inventory Closing Date
      (collectively, the “Assumed
      Liabilities”).

     

    2.5. Excluded
      Liabilities.
      Notwithstanding anything contained in this Agreement to the contrary, neither
      Buyer nor Eastern shall assume or be obligated to pay, perform or otherwise
      discharge any other liability or obligation of the Sellers whatsoever or any
      liabilities or obligations constituting an Encumbrance upon the Purchased
      Assets, regardless of whether any such liabilities or obligations are absolute
      or contingent, liquidated or unliquidated, or otherwise (collectively, the
      “Excluded
      Liabilities”).
      The
      Sellers shall remain liable for all Excluded Liabilities, including any
      obligations arising prior to Closing or the applicable Inventory Closing Date,
      any liabilities and obligations arising prior to Closing or the applicable
      Inventory Closing Date under any Assumed Contract, any liabilities related
      to
      any Excluded Assets, any liabilities arising under the Excluded Contracts and
      all liabilities in respect of Taxes for which the Sellers are liable pursuant
      to
Section
      7.12.
      Without
      limiting the generality of the foregoing, in no event shall Buyer or Eastern
      assume any legal obligations of the Sellers under HIPAA or other applicable
      Requirements of Law, including the HIPAA privacy standard requiring accounting
      of certain disclosures of PHI made by the Sellers prior to the Closing
      Date.

     

    2.6. Bulk
      Sales Laws.
      Buyer
      hereby waives compliance by Sellers with the requirements and provisions of
      any
“bulk-transfer” laws or other similar Requirements of Law of any jurisdiction
      that may otherwise be applicable with respect to the sale of any or all of
      the
      Purchased Assets to Buyer.

     

    ARTICLE
      III

     

    PURCHASE
      PRICE

     

    3.1. Purchase
      Price.
      In
      consideration for the sale of the Purchased Assets described in this Agreement,
      the aggregate purchase price (the “Purchase
      Price”)
      shall
      be equal to:

     

    (a) the
      “File-Transfer Amount” set forth on Schedule
      3.1
      (such
      amount the “File-Transfer
      Amount”);
      plus

     

    (b) the
      “Total Worksite Amount” set forth on Schedule
      3.1,
      (i)
      less the Purchase Price Adjustments set forth on Exhibit
      B
      for any
      Worksite Pharmacies designated as Excluded Worksite Pharmacies pursuant to
      Section
      7.16,
      and
      (ii) plus the “Prospective Worksite Amount” set forth on Schedule
      3.1
      (unless
      the Prospective Worksite Pharmacies are excluded pursuant to Section
      7.17)
      (such
      amount, the “Worksite
      Amount”);
      plus

     

    (c) the
      “Total Operate Amount” set forth on Schedule
      3.1,
      less
      the Purchase Price Adjustments set forth on Exhibit
      B
      for any
      Operate Location Pharmacies designated as Excluded Operate Location Pharmacies
      pursuant to Section
      7.16
      (such
      amount, the “Operate
      Amount”);
      plus

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

     

    (d) unless
      the Tupelo Property is excluded pursuant to Section
      7.22,
      the
“Tupelo Amount” set forth on Schedule
      3.1
      (such
      amount, the “Tupelo
      Amount”);
      plus

     

    (e) the
      Patient Charges Aggregate Amount; plus 

     

    (f) the
      Aggregate Inventory Amount; plus

     

    (g) the
      Lease
      Adjustment Amount.

     

    3.2. Payments;
      Indemnity Escrow Account.
      The
      Purchase Price shall be payable as follows:

     

    (a) On
      the
      Closing Date, Buyer
      and
      Eastern shall pay to the Sellers an amount equal to (A) the File-Transfer
      Amount, plus (B) unless the Tupelo Property is excluded pursuant to Section
      7.22,
      the
      Tupelo Amount, plus (C) the Estimated Aggregate Inventory Amount, as set forth
      on the Estimated Inventory Certificate, plus (D) with respect to each of the
      File-Transfer Locations, the Patient Charges Amount, as set forth in the
      applicable Patient Charges Certificate, plus (E) the Prospective Worksite Amount
      (unless
      the Prospective Worksites are excluded pursuant to Section
      7.17),
      plus
      (F) the Lease Adjustment Amount, less
      (G)
      one-half of the Inventory Closing Shared
      Expense Amount,
      less (H)
      one-half of the Closing Date Shared
      Expenses, as set forth on the Closing Date Shared Expenses Schedule, less (I)
      any amount paid to the Indemnity Escrow Account on the Closing Date pursuant
      to
Section
      3.2(d)
      (such
      payment, the “Closing
      Date Payment”).

     

    (b) On
      each
      Inventory Closing Date with respect to each Purchased Operate Location Pharmacy
      and Purchased Worksite Pharmacy, Buyer will pay to the Sellers an amount equal
      to (i) the “Location Operate Amount” or the “Location Worksite Amount”, as
      applicable, with respect to such Location as set forth on Schedule
      3.1,
      plus
      (ii) with respect to each of the Purchased Operate Location Pharmacies, the
      Patient Charges Amount, as set forth in the applicable Patient Charges
      Certificate, less (iii) any such amount paid to the Indemnity Escrow Account
      pursuant to Section
      3.2(d) (each
      such payment, as it may be reduced pursuant to Section
      3.2(c)(ii),
      an
“Inventory
      Closing Date Payment”).

     

    (c) On
      the
      second business day following the date on which the Independent Valuator
      delivers an Inventory Audit:

     

    (i) with
      respect to a Purchased Operate Location Pharmacy or a Purchased Worksite
      Pharmacy, Buyer shall pay the Sellers an amount equal to the Inventory Amount
      for such Location; and

     

    (ii) with
      respect to File-Transfer Locations, (x) if the Inventory Amount with respect
      to
      such File-Transfer Location is greater than the Estimated Inventory Amount
      for
      such File-Transfer Location, then Buyer shall pay the Sellers an amount equal
      the Inventory Amount for such File-Transfer Location, less the Estimated
      Inventory Amount for such File-Transfer Location, and (y) if the Inventory
      Amount with respect to such File-Transfer Location is less than the Estimated
      Inventory Amount for such File-Transfer Location (a “Shortfall”),
      then
      the amount of the next following Inventory Closing Date Payment shall be reduced
      by the amount of such Shortfall; provided,
      that in
      no event shall any Inventory Closing Date Payment be reduced to less than zero;
      and provided,
      further,
      that if
      any portion of any Shortfall remains unrecovered, Buyer shall be permitted
      to
      recover such amount under this Agreement by reducing subsequent Inventory
      Closing Date payments in a similar fashion or by making a claim under the
      Indemnity Escrow Agreement to recover such amount until all Shortfalls are
      fully
      recovered.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

     

    (d) Buyer
      and
      Eastern shall be entitled, pursuant to the terms of the Indemnity Escrow
      Agreement, to fund an indemnity escrow account (the “Indemnity
      Escrow Account”),
      with
      up to a total amount of $3,000,000 (the “Indemnity
      Amount”)
      from
      any payments that would otherwise be made to Sellers pursuant to this
Article
      III,
      provided,
      that,
      at any time, the total amount of payments made to the Indemnity Escrow Account
      shall not exceed ten percent (10%) of the total amount of the payments already
      made, or to be made concurrently therewith (not including any payments made
      with
      respect to Inventory), to Sellers pursuant to this Article
      III.

     

    (e) All
      payments made by Buyer and Eastern hereunder shall be by wire transfer of
      immediately available funds to an account specified by the Sellers or, in the
      case of payments to the Indemnity Escrow Account, by the Escrow
      Agent.

     

    3.3. Inventory
      Amount.
      The
      parties shall commission Washington Inventory Service, RGIS, or another
      independent valuator (the “Independent
      Valuator”)
      to
      conduct a full review and valuation of the Inventory, to be valued in tenths,
      at
      each of the Purchased Operate Location Pharmacies, Purchased Worksite Pharmacies
      and File-Transfer Locations as of the applicable Inventory Closing Date (each,
      an “Inventory
      Audit”);
      provided,
      that if
      the Sellers have not made a Purchased Operate Location Pharmacy or a Purchased
      Worksite Pharmacy available for Installation at least thirty (30) days (or
      longer, if mutually agreed upon by the parties) prior to the Closing Date,
      the
      Inventory Audit shall not take place with respect to such Purchased Operate
      Location Pharmacy or Purchased Worksite Pharmacy prior to the completion of
      the
      Installation at such Purchased Operate Location Pharmacy or Purchased Worksite
      Pharmacy. Each of the Sellers and Buyer shall be permitted to have
      representatives present to observe each Inventory Audit. The costs and Expenses
      of the Independent Valuators are to be shared equally by Buyer, on the one
      hand,
      and the Sellers, on the other hand, as part of the Inventory Closing Shared
      Expense Amount. The Independent Valuators will determine the aggregate value
      of
      the Inventory at each of the Purchased Operate Location Pharmacies, Purchased
      Worksite Pharmacies and File-Transfer Locations as of the applicable Inventory
      Closing Date (such amount, with respect to any individual Location, the
“Inventory
      Amount”,
      and
      the aggregate amount of the Inventory Amounts for all of the Locations, the
      “Aggregate
      Inventory Amount”)
      in
      accordance with the procedures and in the manner set forth on Exhibit
      C.
      Unless
      otherwise agreed by the parties, the Inventory Amount as determined by the
      Independent Valuator in conducting the Inventory Audit shall be binding upon
      the
      Sellers and Buyer.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

     

    3.4. Indemnity
      Fund. Notwithstanding
      anything to the contrary in this Agreement, the Indemnity Amount shall be
      deposited by Buyer on the Closing Date with The Bank of New York Trust Company,
      N.A., as indemnity escrow agent (the “Indemnity
      Agent”).
      The
      Indemnity Amount so deposited with the Indemnity Agent shall initially
      constitute the indemnity escrow fund (the “Indemnity
      Fund”)
      to be
      held and released in accordance with the provisions of Article
      VIII
      and the
      Indemnity Escrow Agreement. Pursuant to the terms and conditions of the
      Indemnity Escrow Agreement, all interest, dividends and proceeds received on
      the
      Indemnity Amount shall be retained by the Indemnity Agent as part of the
      Indemnity Fund. The Indemnity Fund shall be governed by the terms set forth
      herein and in the Indemnity Escrow Agreement. The Indemnity Fund shall be
      available to indemnify the Buyer Group Members from any Loss or Expense as
      set
      forth in Article
      VIII.
      All
      fees and Expenses of the Indemnity Agent shall be shared equally by Buyer and
      Eastern on the one hand and the Sellers on the other as provided in Closing
      Date
      Shared Expense Schedule.

     

    3.5. Allocation
      of Purchase Price.
      On or
      before the Closing Date, Buyer, Eastern and the Sellers shall negotiate and
      draft a schedule (the “Allocation
      Schedule”)
      allocating the Purchase Price (including, for the purpose of this Section
      3.5,
      any
      other consideration paid to the Sellers and the Assumed Liabilities) among
      the
      Purchased Assets. The Allocation Schedule shall be reasonable and shall be
      prepared in accordance with Section 1060 of the Code and the Treasury
      regulations thereunder. Each of Buyer, Eastern and the Sellers agrees to file
      Internal Revenue Service Form 8594, and all federal, state, local and foreign
      Tax Returns, in accordance with the Allocation Schedule.

     

    ARTICLE
      IV

     

    CLOSING

     

    4.1. Closing
      Date.
      The
      Closing shall be consummated as promptly as practicable (and in any event no
      later than five (5) business days) following satisfaction of the conditions
      precedent contained herein (or such other date as shall be mutually agreed
      upon
      by the parties), at a time mutually agreed upon by the parties. 

     

    4.2. Closing
      Date Payment; Buyer’s Closing Deliveries.
      At
      Closing, Buyer and/or Eastern shall deliver to the Sellers each of the
      following:

     

    (a) An
      amount
      equal to the Closing Date Payment, by wire transfer of immediately available
      funds to an account specified by the Sellers; 

     

    (b) A
      certificate, dated as of the Closing Date, signed by an officer of Buyer and
      Eastern to the effect set forth in clauses (a) and (b) of Section 9.1;

     

    (c) The
      Instrument of Assignment and Assumption with respect to the File-Transfer
      Assets, duly executed by an authorized officer of Buyer and Eastern;

     

    (d) The
      Indemnity Escrow Agreement, duly executed by an authorized officer of Buyer
      and
      Eastern; 

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

     

    (e) The
      Closing Date Shared Expenses Schedule, duly executed by an authorized officer
      of
      Buyer; and

     

    (f) Such
      other instruments or documents as may be necessary or appropriate to carry
      out
      the transactions contemplated hereby.

     

    At
      Closing, Buyer and/or Eastern shall also be permitted to make payments to the
      Indemnity Escrow Account pursuant to Section
      3.2(d).

    

    4.3. Sellers’
      Closing Date Deliveries.
      At or
      prior to Closing, the Sellers shall deliver to Buyer and/or Eastern (as
      instructed by Buyer and Eastern) each of the following:

     

    (a) A
      certificate, dated as of the Closing Date, signed by an officer of FMRX,
      Familymeds and Arrow to the effect set forth in clauses (a) and (b) of
Section 9.2;

     

    (b) Certificates
      of the secretary or an assistant secretary of each of FMRX, Familymeds and
      Arrow, respectively, dated as of the Closing Date, in form and substance
      reasonably satisfactory to Buyer, as to (i) the certificate or Articles of
      Incorporation of each of FMRX, Familymeds and Arrow, respectively; (ii) the
      by-laws (or similar document) of each of FMRX, Familymeds and Arrow,
      respectively; (iii) the authority of each of FMRX, Familymeds and Arrow,
      respectively, regarding the due execution and performance of this Agreement
      and
      the contemplated transactions; (iv) the good standing of FMRX, Familymeds and
      Arrow, respectively, in their respective states of incorporation; and (v) the
      incumbency and signatures of the officers of each of FMRX, Familymeds and Arrow,
      respectively, executing this Agreement and any document or agreement required
      to
      be delivered hereunder;

     

    (c) The
      Instrument of Assignment and Assumption with respect to the File-Transfer
      Assets, duly executed by an authorized officer of FMRX, Familymeds and
      Arrow;

     

    (d) The
      Indemnity Escrow Agreement, duly executed by an authorized officer of FMRX,
      Familymeds and Arrow; 

     

    (e) The
      Required Worksite Consents, to the extent obtained by the Sellers, duly executed
      by an authorized officer of FMRX, Familymeds and Arrow, as applicable, and
      each
      third party to such Assumed Worksite Agreement; 

     

    (f) The
      Other
      Lease Amendments and the Required Lease Consents, in each case to the extent
      obtained by the Sellers, duly executed by an authorized officer of FMRX,
      Familymeds and Arrow, as applicable, and each third party to such Assumed Real
      Estate Lease; 

     

    (g) An
      opinion of counsel to the Sellers with respect to the matters set forth on
      Exhibit
      D;

     

    (h) The
      Patient Charges Certificate with respect to the File-Transfer
      Locations;

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

     

    (i) Any
      documents required to be delivered by the Sellers to release all Encumbrances
      (except Permitted Encumbrances) on the Purchased Assets, including customary
      pay-off letters or similar acknowledgements of the discharge of any indebtedness
      for borrowed money of the Sellers setting forth the amount owed as of the
      Closing Date and indicating that upon payment of such amount, such indebtedness
      will be discharged in full and all related Encumbrances (except Permitted
      Encumbrances) on the Purchased Assets will be released and removed;

     

    (j) The
      Powers of Attorney as contemplated by Section
      7.14(c),
      duly
      executed by authorized officers of FMRX, Familymeds and Arrow; 

     

    (k) Unless
      the Tupelo Property is excluded pursuant to Section
      7.22,
      a deed
      with respect to the Tupelo Property duly executed by the Sellers; 

     

    (l) The
      Estimated Inventory Certificate;

     

    (m) The
      Closing Date Shared Expenses Schedule, duly executed by an authorized officer
      of
      FMRX, Familymeds and Arrow;

     

    (n) Possession
      of the File-Transfer Inventory and the File-Transfer Records in accordance
      with
Section
      7.3;
      

     

    (o) A
      schedule showing the amount of accrued and unpaid sales and use Taxes as of
      a
      date within five (5) days of the Closing Date; and

     

    (p) Such
      other instruments or documents as may be necessary or appropriate to carry
      out
      the transactions contemplated hereby.

     

    4.4. Inventory
      Closing Date Payment; Sellers’ Inventory Closing Deliveries.
      Each of
      Buyer, Eastern and the Sellers will use its commercially reasonable efforts
      to
      consummate the applicable Inventory Closing Dates as soon as practical following
      the later of the Closing Date or the applicable Installation on a mutually
      agreed upon schedule. On the applicable Inventory Closing Date with respect
      to
      each Location, Buyer and/or Eastern will pay to the Sellers the applicable
      Inventory Closing Date Payment, and the Sellers shall deliver to Buyer and/or
      Eastern (as instructed by Buyer and Eastern):

     

    (a) The
      Instrument of Assignment and Assumption with respect to the Purchased Assets
      for
      such Location;

     

    (b) All
      Record Data related to such Location in accordance with Section
      7.3;
      and

     

    (c) With
      respect to the Operate Location Pharmacies, the Patient Charges Certificate
      related to such Location.

     

    On
      each
      Inventory Closing Date, Buyer and/or Eastern shall also be permitted to make
      payments to the Indemnity Escrow Account permitted pursuant to Section
      3.2(d).

    
      
         

      

      
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    ARTICLE
      V

     

    REPRESENTATIONS
      AND WARRANTIES OF FMRX, FAMILYMEDS AND ARROW

     

    Except
      as
      otherwise set forth in reasonable detail in the FMRX SEC Reports filed with
      the
      SEC prior to the date hereof (but not including any exhibits (other than FMRX’s
      consolidated financial statements) or schedules thereto or forward-looking
      statements contained in the FMRX SEC Reports) or the Disclosure Schedules (which
      Disclosure Schedules set forth items of disclosure with specific reference
      to
      the particular Section or subsection of this Agreement to which the information
      in the Disclosure Schedules relates; provided,
      however,
      that
      any information set forth in one Section of the Disclosure Schedules will be
      deemed to apply to each other Section or subsection of this Agreement to which
      its relevance is reasonably apparent from the face of the disclosure), FMRX,
      Familymeds and Arrow, as applicable, represent and warrant to Buyer and Eastern
      as follows:

     

    5.1. Organization
      and Authority. 

     

    (a) FMRX
      is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of the State of Nevada and has the corporate power and other authority, subject
      to the FMRX Stockholder Approval, to execute, deliver and perform this
      Agreement, the Indemnity Escrow Agreement and all other documents and agreements
      required to be delivered hereunder. This Agreement, the Indemnity Escrow
      Agreement and the transactions contemplated hereby and thereby have been
      approved by the Board of Directors of FMRX. This Agreement has been duly
      authorized, executed and delivered by FMRX and, subject to the FMRX Stockholder
      Approval, is the legal, valid and binding obligation of FMRX enforceable in
      accordance with its terms, and the Indemnity Escrow Agreement and all other
      documents and agreements required to be delivered hereunder, have been duly
      authorized by FMRX and upon execution and delivery thereof by FMRX will be
      legal, valid and binding obligations of FMRX enforceable in accordance with
      their terms, in each case subject to bankruptcy, insolvency, reorganization,
      moratorium and similar laws of general application relating to or affecting
      creditors’ rights and to general equity principles. The approval of the holders
      of FMRX’s outstanding common stock in compliance with FMRX’s bylaws and Section
      78.565 of the NRS (the “FMRX
      Stockholder Approval”)
      is the
      only action of any holders of capital stock of FMRX that is necessary for the
      approval of this Agreement and the transactions contemplated hereby by the
      holders of FMRX’s capital stock.

     

    (b) Familymeds
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Connecticut and has the corporate power and other authority
      to execute, deliver and perform this Agreement, the Indemnity Escrow Agreement
      and all other documents and agreements required to be delivered hereunder.
      This
      Agreement, the Indemnity Escrow Agreement and the transactions contemplated
      hereby have been approved by the Board of Directors of Familymeds. This
      Agreement has been duly authorized, executed and delivered by Familymeds and
      is
      the legal, valid and binding obligation of Familymeds enforceable in accordance
      with its terms, and the Indemnity Escrow Agreement and all other documents
      and
      agreements required to be delivered hereunder, have been duly authorized by
      Familymeds and upon execution and delivery thereof by Familymeds will be legal,
      valid and binding obligations of Familymeds enforceable in accordance with
      their
      terms, in each case subject to bankruptcy, insolvency, reorganization,
      moratorium and similar laws of general application relating to or affecting
      creditors’ rights and to general equity principles. The approval of FMRX, as
      sole shareholder of Familymeds, is the only action of any holder of capital
      stock of Familymeds that is necessary for the approval of this Agreement and
      the
      transactions contemplated hereby by the holders of Familymeds’ capital
      stock.

     

    
      
         

      

      
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    (c) Arrow
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of the State of Connecticut
      and has
      the corporate power and other authority to execute, deliver and perform this
      Agreement, the Indemnity Escrow Agreement and all other documents and agreements
      required to be delivered hereunder. This Agreement, the Indemnity Escrow
      Agreement and the transactions contemplated hereby have been approved by the
      Board of Directors of Arrow. This Agreement has been duly authorized, executed
      and delivered by Arrow and is the legal, valid and binding obligation of Arrow
      enforceable in accordance with its terms, and the Indemnity Escrow Agreement
      and
      all other documents and agreements required to be delivered hereunder, have
      been
      duly authorized by Arrow and upon execution and delivery thereof by Arrow will
      be legal, valid and binding obligations of Arrow enforceable in accordance
      with
      their terms, in each case subject to bankruptcy, insolvency, reorganization,
      moratorium and similar laws of general application relating to or affecting
      creditors’ rights and to general equity principles. The approval of FMRX, as
      sole shareholder of Arrow, is the only action of any holder of capital stock
      of
      Arrow that is necessary for the approval of this Agreement and the transactions
      contemplated hereby by the holders of Arrow’s capital stock.

     

    5.2. No
      Conflicts.
      Subject
      to the FMRX Stockholder Approval, the filing of the FMRX Proxy Statement and
      obtaining any consents set forth on Schedule
      5.2
      or
Exhibit
      B,
      neither
      the execution and delivery of this Agreement nor the consummation of any of
      the
      transactions contemplated hereby will: (a) conflict with, result in a material
      breach of the terms, conditions or provisions of, or constitute a material
      default, a material event of default or an event creating rights of
      acceleration, termination or cancellation or a loss of rights under, or result
      in the creation or imposition of any Encumbrance upon any of the Purchased
      Assets, under (i) the articles or certificate of incorporation or bylaws of
      any
      of the Sellers or (ii) any Assumed Contract or material Contract, agreement
      or
      understanding to which any of the Sellers is a party; (b) conflict with any
      order from a Governmental Body or any Requirements of Law to which any of the
      Purchased Assets is subject or by which any of the Sellers is bound; or (c)
      require in any material respect, the approval, consent, authorization or act
      of,
      or the making by any of the Sellers of any declaration, filing or registration
      with, any Person, except as provided under the HSR Act.

     

    5.3. Taxes.

     

    (a) Except
      as
      set forth on Schedule
      5.3,
      (i) the
      Sellers have, in respect of the Business and the Purchased Assets, filed all
      Tax
      Returns which are required to be filed and have paid all Taxes which have become
      due pursuant to such Tax Returns or pursuant to any assessment which has become
      payable or for which Buyer or Eastern may otherwise have any transferee
      liability; (ii) all such Tax Returns are complete and accurate in all material
      respects; (iii) the Sellers’ Tax Returns in respect of the Business and the
      Purchased Assets for taxable periods for which the period of limitations for
      the
      assessment of Taxes has not expired have not been audited by the relevant taxing
      authorities; (iv) no Seller is currently the beneficiary of any extension of
      time within which to file any Tax Return in respect of the Business and the
      Purchased Assets; (v) there is no action, suit, investigation, audit, claim
      or
      assessment pending or proposed or threatened with respect to Taxes of the
      Business and the Purchased Assets, and, to the best of the Sellers’ knowledge,
      no basis exists therefor; (vi) the Sellers have not waived or been requested
      to
      waive any statute of limitations in respect of Taxes associated with the
      Business and the Purchased Assets which waiver is currently in effect; (vii)
      all
      Taxes required to be withheld by the Sellers (including from employees of the
      Business for income Taxes and social security and other payroll Taxes) have
      been
      collected or withheld, and either paid to the respective taxing authorities,
      set
      aside in accounts for such purpose, or accrued, reserved against and entered
      upon the books of the Business; and (viii) none of the Purchased Assets is
      properly treated as owned by persons other than the Sellers for income Tax
      purposes.

     

    
      
         

      

      
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    (b) No
      payment or other benefit, and no acceleration of the vesting of any options,
      payments or other benefits, will be, as a direct or indirect result of the
      transactions contemplated by this Agreement, an “excess parachute payment” to a
“disqualified individual” as those terms are defined in Section 280G of the Code
      and the Treasury regulations thereunder. Except as set forth on Schedule
      5.3,
      no
      payment, or other benefit to any Transferred Employee, and no vesting of any
      options, payments or other benefits to any Transferred Employee will, as a
      direct or indirect result of the transactions contemplated by this Agreement,
      be
      (or under Section 280G of the Code and the Treasury regulations thereunder
      be
      presumed to be) a “parachute payment” to a “disqualified individual” as those
      terms are defined in Section 280G of the Code and the Treasury regulations
      thereunder, without regard to whether such payment or acceleration is reasonable
      compensation for personal services performed or to be performed in the
      future.

     

    (c) None
      of
      the Sellers is a “foreign person” within the meaning of Section 1445 of the
      Code.

     

    5.4. Title
      and Sufficiency.
      The
      Sellers own all of the Purchased Assets, free and clear of all Encumbrances
      (except (a) Permitted Encumbrances, (b) Encumbrances under the terms of the
      Sellers’ indebtedness as set forth on Schedule
      5.4,
      all of
      which shall be released as of the Closing Date or the applicable Inventory
      Closing Date, (c) restrictions on assignability or changes in ownership set
      forth in Assigned Contracts or under applicable Requirements of Law, and (d)
      as
      set forth in Schedule
      5.4).
      The
      Sellers have good and marketable title to the Tupelo Property free and clear
      of
      all Encumbrances (except Permitted Encumbrances and except as set forth on
      Schedule
      5.4).
      On the
      Closing Date or the applicable Inventory Closing Date, the Sellers will transfer
      to Buyer and Eastern all of the Purchased Assets subject to no Encumbrances
      (except Permitted Encumbrances and Encumbrances of the kind referred to in
      clause (c) of the parenthetical in the immediately preceding sentence). Except
      for corporate and administrative services, on-site technology, software,
      corporate-level equipment, “point of sale” systems, computers, any leased
      equipment that is not subject to an Assumed Contract, third-party payor
      agreements and any non-transferable permits from any Governmental Body, the
      Purchased Assets constitute all the assets necessary, in all material respects,
      for the operation of the Purchased Worksite Pharmacies and the Purchased Operate
      Location Pharmacies as currently conducted. 

     

    
      
         

      

      
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    5.5. Financial
      Schedules.
      Set
      forth on Schedule
      5.5
      are
      selected unaudited prescription operations data (the “Rx
      Operations Data”)
      for
      each of the Operate Location Pharmacies, Existing Worksite Pharmacies and
      File-Transfer Locations, in each case, for the period commencing January 1,
      2006
      and ending November 25, 2006, and (ii) unaudited total revenues reports and
      certain unaudited balance sheet data (subject to purchase) and unaudited
      selling, general and administrative expenses for (w) each of the Operate
      Location Pharmacies, Existing Worksite Pharmacies and File-Transfer Locations,
      (x) Sellers’ pharmacies not being purchased by Buyer or Eastern, (y) Sellers’
corporate and administrative services, and (z) Sellers’ other businesses,
      including its internet business (collectively, the “Revenue,
      SG&A and Balance Sheet Data”),
      in
      each case as of (in the case of the balance sheet data) and for the period
      ended
      (in the case of the revenue and selling, general and administrative data)
      September 30, 2006 (the “Balance
      Sheet Date”).
      The
      Rx Operations Data and the Revenue, SG&A and Balance Sheet Data have been
      compiled from source books, records, pharmacy system and financial reports
      of
      FMRX and its Subsidiaries. The Rx Operations Data and the Revenue, SG&A and
      Balance Sheet Data fairly reflects in the aggregate, in all material respects,
      the prescription operating data, revenues and balance sheet data (subject to
      purchase), and the selling, general and administrative expenses, in each case,
      for the locations specified on Schedule
      5.5
      and for
      the periods set forth therein. The Sellers cost files for inventory at any
      date,
      and from time to time, reflect the actual costs of inventory that would be
      charged by McKesson or other applicable suppliers as of such date.

     

    5.6. No
      Undisclosed Liabilities.
      The
      Sellers have no material liabilities, claims or indebtedness related primarily
      to the Business of any kind whatsoever, whether accrued, contingent, absolute,
      determined, determinable or otherwise, whether due or to become due, except
      liabilities that (i) are set forth in the financial schedules in Schedule
      5.5
      or in
      the FMRX SEC Reports filed with the SEC prior to the date hereof or (ii) were
      incurred in the ordinary course of business and consistent with past practice
      since the Balance Sheet Date and are of the same nature and amount as the
      liabilities set forth on Schedule
      5.5.

     

    5.7. Absence
      of Certain Changes or Events.
      From
      the Balance Sheet Date through the date hereof, the Sellers have conducted
      the
      Business in the ordinary course in all material respects consistent with past
      practice, and, since such date, there has not been any Material Adverse Effect.
      Except as set forth in Schedule
      5.7,
      from
      the Balance Sheet Date through the date hereof, the Sellers have not taken
      any
      action that, if taken after the date of this Agreement, would constitute a
      breach of Section
      7.6
      hereof.

     

    5.8. SEC
      Filings.
      FMRX
      has made available to Buyer (through reference to documents filed by EDGAR
      or
      otherwise) accurate and complete copies of all FMRX SEC Reports. As of their
      respective filing dates (or if amended or superseded by a filing prior to the
      date of this Agreement, then on the filing date of such amending or superseding
      filing), all of the FMRX SEC Reports (i) were prepared in accordance with and
      complied in all material respects with the requirements of the Securities Act
      of
      1933, as amended, or the Exchange Act, as the case may be, and the rules and
      regulations of the SEC thereunder applicable to such FMRX SEC Reports and,
      (ii)
      to the Knowledge of FMRX, did not contain any untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      in order to make the statements therein, in the light of the circumstances
      under
      which they were made, not misleading.

     

    
      
         

      

      
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    5.9. Assumed
      Contracts.
      The
      Sellers have made available to Buyer true, correct and complete copies of all
      of
      the Contracts listed on Schedule
      5.9,
      including all Real Estate Leases and Worksite Agreements, together with all
      modifications and supplements thereto (the “Assumed
      Contracts”).
      Each
      of the material Assumed Contracts is in full force and effect in accordance
      with
      its terms. None of the Sellers is in breach of any of the material provisions
      of
      any such material Assumed Contract, nor, to the Knowledge of the Sellers, is
      any
      other party to any such material Assumed Contract in default thereunder. Each
      of
      the Sellers have performed all material obligations required to be performed
      by
      it to date under each material Assumed Contract. 

     

    5.10. Suppliers,
      Distributors and Third Party Payors.
      Set
      forth in Schedule
      5.10
      are the
      names and addresses of (during the twelve months ending December 31, 2006)
      (a)
      the ten (10) largest suppliers or wholesalers to the Sellers, measured by value
      of goods supplied, (b) all Persons who have, since January 1, 2006, provided
      shipping and distribution services to the Business in excess of $25,000 in
      fees,
      and (c) the Sellers’ twenty-five (25) largest payors, measured by percentage of
      revenue. To the Knowledge of the Sellers, as of the date hereof, no distributor,
      payor, wholesaler, customer, supplier or other Person with a material business
      relationship with the Sellers has any intention to cease or substantially reduce
      the use or supply of products, goods or services of or to the Business or return
      any products of the Business,

     

    5.11. Prescription
      Volume.
      Schedule
      5.11
      sets
      forth, as of the date of this Agreement, the average weekly prescription count
      at each of the Operate Location Pharmacies, Worksite Pharmacies and
      File-Transfer Locations over the preceding twelve months (the “Current
      Prescription Volume”).
      Such
      prescriptions have arisen from bona fide, legal transactions. 

     

    5.12. Owned
      Real Property.
      Except
      for the Tupelo Property, the Sellers do not own, beneficially or of record,
      any
      real property used in the Business. Except
      as
      set forth on Schedule
      5.12,
      none of
      the Sellers has granted any leasehold interests or other rights to any third
      parties with respect to the Tupelo Property. All public utilities, including
      water, sewer, gas, electric, telephone and drainage facilities, give adequate
      service to the Tupelo Property, and the Tupelo Property has unencumbered access
      to and from publicly dedicated streets, the responsibility for maintenance
      of
      which has been accepted by the appropriate Governmental Body. Complete and
      correct copies of any title policies, surveys, appraisals and environmental
      reports in the Sellers’ possession or any policies of title insurance currently
      in force and in the possession of the Sellers with respect to the Tupelo
      Property have heretofore been delivered by the Sellers to Buyer.

     

    
      
         

      

      
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    5.13. Leased
      Real Property. 

     

    (a) The
      Real
      Estate Leases and Worksite Agreements set forth on Exhibit
      B
      comprise
      all leasehold interests in the Premises. None of the Sellers have pledged,
      encumbered or hypothecated its right, title or interest in any Real Estate
      Lease, Worksite Agreement or Premises.
      The
      Sellers have provided Buyer with true and correct copies of each Real Estate
      Lease and Worksite Agreement and all amendments, addendums and attachments
      thereto. Subject to obtaining the Required Lease Consents and subject to the
      occurrence of the Closing, the Sellers will transfer to Buyer or Eastern, as
      applicable, the Sellers’ interests in the leasehold estates covered by the
      Assumed Real Estate Leases free of any Encumbrance granted by any of the
      Sellers. Subject to obtaining the Required Worksite Consents subject to the
      occurrence of the Closing, the Sellers will transfer to Buyer or Eastern, as
      applicable, the Sellers’ interests in the leasehold estates covered by the
      Assumed Worksite Agreements free of any Encumbrances granted by any of the
      Sellers. The Sellers enjoy peaceful and undisturbed possession of all the
      Premises, and each of the Sellers have in all material respects performed all
      the obligations with respect thereto required through the date of this Agreement
      to be performed by it.

     

    (b) No
      Seller
      is, or, to the Knowledge of the Sellers, alleged to be, in material breach
      or
      default under any Real Estate Lease or Worksite Agreement and, to the Knowledge
      of the Sellers, there is no event that, but for the passage of time or the
      giving of notice or both, would constitute or result in any such material breach
      or default. To the Knowledge of the Sellers, no third party to any Real Estate
      Lease or Worksite Agreement is in material breach or default of any Real Estate
      Lease or Worksite Agreement. To the Knowledge of the Sellers, there is no event
      that, but for the passage of time or the giving of notice or both, would
      constitute or result in any such material breach or default.

     

    (c) The
      Tupelo Property is not, and, to the Knowledge of the Sellers, none of the
      Premises are, subject to any pending suit for condemnation or other taking
      by
      any Governmental Body, and, to the Knowledge of the Sellers, no such
      condemnation or other taking is threatened or contemplated.

     

    5.14. Personal
      Property.
      Schedule
      5.14
      contains
      a list of all machinery, equipment, vehicles, furniture and other tangible
      personal property (other than inventory) owned by the Sellers having an original
      cost of $2,500 or more and used in or relating to the Business (not including
      the File-Transfer Locations). The property listed on Schedule
      5.14
      is and
      shall be as of the applicable Inventory Closing Date in good working order
      and
      condition, in all material respects, free of defect or damage, ordinary wear
      and
      tear excepted. Between the date hereof and the applicable Inventory Closing
      Date, there will not be a material reduction in the property listed on
Schedule
      5.14.
      Except
      for leases of computers, photocopiers, postage machines and other similar office
      equipment, there is no personal property leased to Sellers located at any of
      the
      Locations. Within thirty (30) days of the date hereof, Sellers shall deliver
      to
      Buyer a list of all such equipment subject to a lease. To the extent Buyer
      or
      Eastern desire to assume any such lease, Sellers shall use commercially
      reasonable efforts to assign such lease (or the applicable portion thereof)
      to
      Buyer or Eastern, as applicable.

     

    
      
         

      

      
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    5.15. Intellectual
      Property; Software. 

     

    (a) Schedule
      5.15(a)
      contains
      a list of all registered Copyrights, applications to register Copyrights, in
      each case, owned by any of the Sellers with respect to the Worksite Pharmacies,
      and Patent Rights and Trademarks (including all assumed or fictitious names
      under which any of the Sellers are conducting business or have within the
      previous five years conducted business) owned by, licensed to or used by any
      of
      the Sellers with respect to the Worksite Pharmacies.

     

    (b) Schedule
      5.15(b)
      contains
      a list and description (showing in each case any owner, licensor or licensee)
      of
      all Software owned by, licensed to or used by any of the Sellers with respect
      to
      the Worksite Pharmacies, except Software licensed to any of the Sellers that
      is
      commercially available and subject to “shrink-wrap,” “click-through” or similar
      license agreements.

     

    (c) Schedule
      5.15(c)
      contains
      a list and description of all material agreements, Contracts, licenses,
      sublicenses, assignments and indemnities with respect to the Worksite Pharmacies
      that relate to: (i) any Copyrights, Patent Rights or Trademarks required to
      be
      identified on Schedule
      5.15(a);
      (ii)
      any Trade Secrets owned by or licensed to any of the Sellers or (iii) any
      Software required to be identified on Schedule
      5.15(b).

     

    (d) Except
      as
      expressly stated in Schedule
      5.15(d):
      (i) the
      Intellectual Property included in the Purchased Assets is not subject to any
      license (royalty bearing or royalty free) and is not subject to any other
      arrangement requiring any payment to any Person or the obligation to grant
      rights to any Person in exchange; (ii) the Licensed Rights included in the
      Purchased Assets are free and clear of any royalties, obligations or
      Encumbrances; and (iii) the Sellers have the sole and exclusive right to bring
      actions for infringement or unauthorized use of the Intellectual Property
      included in the Purchased Assets.

     

    (e) Except
      as
      expressly stated in Schedule
      5.15(e),
      the
      Intellectual Property and the Licensed Rights included in the Purchased Assets
      are in all material respects valid and in force, and the validity of the
      Intellectual Property and title thereto and validity of the Licensed Rights
      included in the Purchased Assets: (i) have not been questioned in any prior
      action, suit, investigation or proceeding; (ii) are not being questioned in
      any
      pending action, suit, investigation or proceeding; and (ii) to the Knowledge
      of
      the Sellers, are not the subject(s) of any threatened action, suit,
      investigation or proceeding.

     

    (f) Except
      as
      expressly stated in Schedule
      5.15(f):
      (i) the
      Worksite Business, as presently conducted, does not conflict with and, to the
      Knowledge of the Sellers, has not been alleged to conflict with any Patents,
      Trademark, Trade Secret, Copyrights or other rights of others; (ii) the
      consummation of the transactions contemplated hereby will not result in the
      loss
      or impairment of any of the Intellectual Property or the right to use any of
      the
      Licensed Rights included in the Purchased Assets; and (iii) there are no third
      parties using any of the Intellectual Property that is material to the Worksite
      Business as presently conducted.

     

    
      
         

      

      
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    (g) Except
      as
      expressly stated in Schedule
      5.15(g):
      (i) the
      Sellers own, or possesses valid rights to, all Software that is material to
      the
      conduct of the Worksite Business; and (ii) there are no infringement suits,
      actions or proceedings pending or, to the Knowledge of the Sellers, threatened
      against any of the Sellers with respect to any Software owned or licensed by
      the
      Sellers. 

     

    5.16. Employee
      Matters.

     

    (a) Set
      forth
      on Schedule
      5.16(a)
      is a
      list of all employees of the Sellers who are employed at any of the Operate
      Location Pharmacies, Worksite Pharmacies or File-Transfer Locations on the
      date
      hereof (each, a “Business
      Employee”),
      including their full legal name, position, salary, bonus and other compensation
      information. Schedule
      5.16(a)
      shall be
      updated as necessary to reflect new hires or other personnel changes occurring
      between the date hereof and Closing or to add employees, other than Business
      Employees, whom Buyer (in consultation with such employee) hires in connection
      with this transaction. Except set forth on Schedule
      5.16(a),
      no
      Seller is bound by any oral or written employment agreement, consulting
      agreement, or deferred compensation agreement, in each case with respect to
      any
      Business Employee. Except as described on Schedule
      5.16(a),
      no
      Business Employee is a party to any collective bargaining agreement. As related
      to the Business Employees, no Seller is nor has ever been subject to any
      affirmative action obligations under any Requirements of Law with respect to
      any
      current or former Business Employees, including Executive Order 11246, or is
      or
      has been a government contractor for purposes of any Requirements of Law with
      respect to the terms and conditions of employment of any current or former
      Business Employees.

     

    (b) Set
      forth
      on Schedule
      5.16(b)
      is a
      correct and complete list identifying each material “employee benefit plan,” as
      defined in Section 3(3) of ERISA, each material employment, retention, severance
      or similar Contract, plan, arrangement or policy and each other material plan
      or
      arrangement (written or oral) providing for compensation, bonuses,
      profit-sharing, stock option or other stock-related rights or other forms of
      incentive or deferred compensation, vacation benefits, insurance (including
      any
      self-insured arrangements), health or medical benefits, employee assistance
      program, disability or sick leave benefits, workers’ compensation, supplemental
      unemployment benefits, severance or retention benefits and post-employment
      or
      retirement benefits (including compensation, pension, health, medical or life
      insurance benefits) which is maintained, administered or contributed to by
      FMRX
      or any of its Affiliates or by which any of them are bound, and which covers
      any
      Business Employee as of the date hereof (all of the foregoing collectively
      referred to as the “Employee
      Plans”).
      Each
      Employee Plan that is intended to be qualified under Section 401(a) of the
      Code
      has received a favorable determination letter from the Internal Revenue Service
      that it is so qualified, and no fact or event has occurred since the date of
      such determination letter that would reasonably be expected to adversely affect
      such qualification. Each Employee Plan is now and has been operated in all
      material respects in accordance with its terms and the Requirements of Law,
      including ERISA and the Code. FMRX has made all required contributions to the
      Employee Plans, except for any contribution which is not yet due and payable.
      None of the Purchased Assets is the subject of any lien arising under Section
      302(f) of ERISA or Section 412(n) of the Code.

     

    
      
         

      

      
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    5.17. Employee
      Relations.
      Except
      as set forth in Schedule
      5.17,
      with
      respect to the Business, each of the Sellers have complied in all material
      respects with all applicable Requirements of Laws relating to prices, wages,
      hours, discrimination in employment and collective bargaining and to the
      operation of the Business and is not liable for any arrears of wages or any
      Taxes or penalties for failure to comply with any of the foregoing. Each of
      the
      Sellers believe that, as of the date hereof, its relations with its employees
      with respect to the Business are satisfactory. No Seller is a party to, and
      no
      Seller with respect to the Business is affected by or, to the Knowledge of
      Sellers, threatened with, any dispute or controversy with a union or with
      respect to unionization or collective bargaining involving the employees of
      such
      Seller with respect to the Business. No Seller, with respect to the Business,
      is
      adversely affected by any dispute or controversy with a union or with respect
      to
      unionization or collective bargaining involving any supplier or customer of
      such
      Seller with respect to the Business. Schedule
      5.17
      sets
      forth a description of any union organizing or election activities involving
      any
      non-union employees of any of the Sellers with respect to the Business that
      have
      occurred since January 1, 2005 or, to the Knowledge of the Sellers, are
      threatened as of the date hereof.

     

    5.18. Legal
      Proceedings. 

     

    (a) Except
      as
      described in Schedule
      5.18,
      there
      are no material claims, actions, suits or proceedings pending or, to the
      Sellers’ Knowledge, threatened by or against any of the Sellers relating to or
      affecting the Business or the Purchased Assets. 

     

    (b) Except
      as
      described in Schedule
      5.18,
      there
      are no material judgments, decrees, orders, writs, injunctions, rulings,
      decisions or awards of any court or Governmental Body to which the Business
      or
      any of the Purchased Assets is subject. No Seller has received any notice of
      material complaints filed against such Seller under HIPAA or applicable patient
      privacy and data protection laws and, to the Sellers’ Knowledge, no such
      violation exists.

     

    5.19. Compliance
      With Law; Permits; Medicare and Medicaid. 

     

    (a) Each
      of
      the Sellers have obtained all material licenses, permits, approvals and other
      authorizations from a Governmental Body that are necessary to entitle the
      Sellers to own or lease, and operate and use the Purchased Assets and to carry
      on the Business as currently conducted. Schedule
      5.19
      sets
      forth a list of all such material licenses, permits, approvals and other
      authorizations used in the Business (collectively, the “Permits”),
      and
      Sellers shall provide a list of all NCPDP, Medicare, Medicaid or other billing
      or similar numbers used in the Business no later than 10 days after the date
      hereof.

     

    (b) No
      Seller
      is in violation, nor has been in violation in the preceding three years, in
      any
      material respect of any Requirements of Laws with respect to the Business or
      the
      Purchased Assets. None of the Sellers nor, to the Knowledge of the Sellers,
      anyone acting on behalf of the Sellers has received or filed for any
      Medicare or Medicaid overpayments. To the Sellers’ Knowledge, all Medicare,
      Medicaid and third party reports and claims filed or required to be filed by
      or
      on behalf of the Sellers have been timely filed and are complete and accurate
      in
      all material respects. Such reports and claims properly claim and disclose
      all
      information and other items to be disclosed for the periods covered thereby.
      None of the Sellers, any director, officer or employee of the Sellers or any
      Affiliate of the Sellers has been excluded from participation in any government
      healthcare payment program, including Medicare or Medicaid, nor are any of
      the
      foregoing Persons aware of any pending or threatened investigation or government
      action that may lead to such exclusion, fine or other remedy.

     

    
      
         

      

      
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    (c) Without
      limiting the generality of the foregoing, 

     

    (i) to
      the
      Knowledge of the Sellers except as set forth on Schedule
      5.19,
      (x) no
      payment program, including Medicare, TRICARE, Medicaid, worker’s compensation,
      Blue Cross/Blue Shield programs, and all other health maintenance organizations,
      preferred provider organizations, health benefit plans, health insurance plans,
      and other third party reimbursement and payment programs (the “Payment
      Programs”),
      has
      requested or threatened any material recoupment, refund, or set-off from any
      of
      the Sellers except in the ordinary course of the Business consistent with past
      practice; and (y) since January 1, 2005, no Payment Program has imposed a fine,
      penalty or other sanction on any of the Sellers and no Seller has been excluded
      or suspended from participation in any material Payment Program;
      and

     

    (ii) since
      January 1, 2005, none of the Sellers, nor, to the Knowledge of the Sellers,
      any
      employee, with respect to actions taken in connection with their employment
      by
      the Sellers, (A) has been assessed a civil money penalty under Section 1128A
      of
      the Social Security Act or any regulations promulgated thereunder, (B) has
      been
      excluded from participation in any federal health care program or state health
      care program (as such terms are defined by the Social Security Act), including
      Medicare or Medicaid, nor, to the Knowledge of the Sellers, are any of the
      foregoing Persons aware of any pending or threatened investigation or government
      action that would be reasonably likely to lead to such an exclusion, (C) has
      been convicted of any criminal offense relating to the delivery of any item
      or
      service under a federal health care program relating to the unlawful
      manufacture, distribution, prescription, or dispensing of a prescription drug
      or
      a controlled substance, (D) has failed to comply with the requirements of
      Section 340B of the Public Health Service Act, (E) is now or has ever been
      listed on the office of the Inspector General’s excluded persons list, or (F)
      has been a party to or subject to any action concerning any of the matters
      described above in clauses (A) through (E).

     

    (d) Except
      as
      may be disclosed in any environmental audit, assessment or study conducted
      pursuant to Section
      7.22,
      none of
      the Sellers has, and to the Sellers’ Knowledge, no other Person has, used any
      Hazardous Substances, or placed or stored any Hazardous Substances at, in,
      under, or about, either the Purchased Assets (other than the File-Transfer
      Locations) or the Premises in a manner that requires response, remedial,
      corrective action or cleanup of any kind under any applicable Environmental,
      Health and Safety Requirements and no Hazardous Substances generated by the
      operation of the Business or Purchased Assets have be sent for treatment or
      disposal at any site that requires response, remedial, corrective action or
      cleanup of any kind under any applicable Environmental, Health and Safety
      Requirements. 

     

    
      
         

      

      
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    5.20. Warranties.
      Except
      as set forth on Schedule
      5.20,
      all
      pharmaceuticals and other products marketed, sold, distributed, delivered or
      licensed by the Sellers or their Affiliates with respect to the Business at
      any
      time since May 1, 2003 have been in conformity, in all material respects, with
      all applicable express or implied warranties. 

     

    5.21. Sale
      Process.
      Schedule
      5.21,
      sets
      forth a materially complete description of the Sale Process undertaken by FMRX
      and its agents in offering the Purchased Assets for sale to third parties and
      a
      substantially similar description will be included in the FMRX Proxy Statement.
      FMRX and its agents acted diligently, in good faith and at arm’s length to
      achieve the highest value in the marketing of the Purchased Assets and the
      solicitation of proposals from potential purchasers.

     

    5.22. Fairness
      Opinion.
      FMRX
      has received an opinion from JMP Securities dated as of February 7, 2007, to
      the
      effect that, as of such date, and subject to the qualifications, limitations
      and
      assumptions set forth therein, assuming consummation of certain transactions
      (including the transactions contemplated by this Agreement) and actions
      authorized by the Plan of Complete Liquidation and Dissolution, the
      consideration to be received by holders of the common stock of FMRX would be
      fair, from a financial point of view, all as more fully set forth in such
      fairness opinion (the “Fairness
      Opinion)”.
      A
      true, correct and complete copy of the Fairness Opinion has been delivered
      to
      the Buyer as of the date hereof.

     

    5.23. Solvency.

     

    (a) The
      Sellers are and will be Solvent as of the Closing Date and the transactions
      contemplated by this Agreement will not render the Sellers
      Insolvent.

     

    (b) As
      of the
      Closing Date, no Seller is engaged in business or transactions, nor is about
      to
      engage in business or transactions, for which any property remaining with such
      Seller immediately after the Closing Date constitutes unreasonably small capital
      with which to engage in such business or transactions.

     

    (c) By
      entering into this Agreement and consummating the transactions contemplated
      in
      this Agreement, none of the Sellers intend to incur, nor believe that it will
      incur, debts that will be beyond such Seller’s ability to pay as such debts
      mature.

     

    (d) The
      Sellers are not entering into the transactions contemplated by this Agreement
      or
      incurring any obligation pursuant to this Agreement with the intent to hinder,
      delay or defraud any creditor to which the Sellers are indebted on the Closing
      Date or any creditor to which the Sellers may become indebted after the Closing
      Date.

     

    5.24. Affiliate
      Transactions.
      Except
      as set forth on Schedule
      5.24,
      no
      Affiliate of any of the Sellers and no employee, officer or director of any
      of
      the Sellers or any of their respective Affiliates (a) owns, directly or
      indirectly, in whole or in part, any Permits, real property, leasehold interests
      or other property, the use of which is necessary for the operation of the
      Business (other than with respect to the File-Transfer Locations), (b) has
      any
      claim or cause of action or any other action, suit or proceeding against, or
      owes any amount to any of the Sellers related to the Business, or (c) is a
      party
      to any Contract related to the Business (other than with respect to the
      File-Transfer Locations) pursuant to which any of the Sellers provide to, or
      receive services from, any such Person, except as to any such individual in
      his
      or her capacity as a Business Employee.

     

    
      
         

      

      
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    5.25. Broker.
      Except
      as set forth on Schedule
      5.25,
      none of
      the Sellers, nor any Person acting on any of the Sellers’ behalf has paid or
      become obligated to pay any fee or commission to any broker, finder or
      intermediary for or on account of the transactions contemplated by this
      Agreement.

     

    ARTICLE
      VI

     

    REPRESENTATIONS
      AND WARRANTIES OF BUYER AND EASTERN

     

    As
      an
      inducement to the Sellers to enter into this Agreement and to consummate the
      transactions contemplated hereby, Buyer and Eastern, as applicable, hereby
      represent and warrant to each of the Sellers and agree as follows: 

     

    6.1. Organization
      of Buyer and Eastern.
      Buyer
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Illinois and has full corporate power and authority to
      carry on its business as now conducted. Eastern is a corporation duly organized,
      validly existing and in good standing under the laws of the State of New York
      and has full corporate power and authority to carry on its business as now
      conducted

     

    6.2. Authorization.
      Each of
      Buyer and Eastern has the full corporate power and authority to enter into
      this
      Agreement, the Indemnity Escrow Agreement and all documents and agreements
      required to be delivered hereunder to which Buyer or Eastern is or will be
      a
      party, to consummate the transactions contemplated hereby and thereby and to
      comply with the terms, conditions and provisions hereof and thereof. The
      execution, delivery and performance by each of Buyer and Eastern of this
      Agreement, the Indemnity Escrow Agreement and the actions contemplated hereby
      and thereby have been duly and validly authorized by the Board of Directors
      of
      each of Buyer and Eastern and no other corporate proceedings on the part of
      Buyer and Eastern are necessary with respect hereto or thereto. This Agreement
      has been duly authorized, executed and delivered by each of Buyer and Eastern
      and is the legal, valid and binding obligation of Buyer and Eastern enforceable
      in accordance with its terms, and the Indemnity Escrow Agreement and all other
      documents and agreements required to be delivered hereunder by either Buyer
      or
      Eastern have been duly authorized by Buyer and Eastern, as applicable, and
      upon
      execution and delivery by Buyer and Eastern will be a legal, valid and binding
      obligation of Buyer and Eastern enforceable in accordance with their terms,
      in
      each case subject to bankruptcy, insolvency, reorganization, moratorium and
      similar laws of general application relating to or affecting creditors’ rights
      and to general equity principles.

     

    6.3. Non-Contravention.
      Neither
      the execution and delivery of this Agreement, the Indemnity Escrow Agreement
      or
      the consummation of any of the transactions contemplated hereby or thereby
      nor
      compliance with or fulfillment of the terms, conditions and provisions hereof
      or
      thereof, in each case by Buyer and Eastern, as applicable, will:

     

    
      
         

      

      
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    (a) conflict
      with, result in a breach of the terms, conditions or provisions of, or
      constitute a default, an event of default or an event creating rights of
      acceleration, termination or cancellation or a loss of rights under, or result
      in the creation or imposition of any Encumbrance upon, any of the assets of
      Buyer or Eastern, under (i) the certificate of incorporation or by-laws of
      Buyer
      or Eastern, (ii) any material agreement, note, instrument, mortgage, lease,
      license, franchise, permit or other authorization, right, restriction or
      obligation to which Buyer or Eastern is a party or any of their respective
      assets or business is subject or by which Buyer or Eastern is bound, (iii)
      any
      order, writ, injection or decree to which Buyer or Eastern is a party or any
      of
      their respective assets or business is subject or by which Buyer or Eastern
      is
      bound or (iv) any Requirements of Laws affecting Buyer or Eastern or their
      respective assets or business, except as provided under the HSR Act;
      or

     

    (b) require
      the approval, consent, authorization or act of, or the making by Buyer or
      Eastern of any declaration, filing or registration with, any Person, and such
      other approvals, consents, authorizations or acts the failure of which to be
      obtained or made would not materially impair the ability of Buyer or Eastern
      to
      perform their respective obligations hereunder or prevent the consummation
      of
      any of the transactions contemplated hereby.

     

    6.4. Sufficient
      Funds. Buyer
      and
      Eastern have, and on the Closing Date and the Inventory Closing Dates, as
      applicable, will have, sufficient funds available to enable Buyer and Eastern
      to
      pay the Purchase Price pursuant to the terms of this Agreement. Buyer and
      Eastern will not require any third party financing to consummate the
      transactions contemplated by this Agreement

     

    6.5. No
      Other Representations or Warranties.
      Buyer
      and Eastern acknowledge that none of the Sellers nor any other Person is making
      or has made any express or implied representation or warranty with respect
      to
      any of the Sellers or any of their respective Affiliates, except as expressly
      set forth in this Agreement.

     

    ARTICLE
      VII

     

    ADDITIONAL
      AGREEMENTS

     

    7.1. Employees.

     

    (a) Unless
      otherwise agreed to by Buyer, between the date hereof and the applicable
      Inventory Closing Date, the Sellers shall (i) continue to offer employment
      to
      each of the Business Employees, subject to normal workplace practices and
      discipline, and (ii) not transfer the Business Employees, or offer the Business
      Employees an employment position, outside of the Purchased Operate Location
      Pharmacies, Purchased Worksite Pharmacies or File-Transfer Locations, in each
      case except for short-term assignments that terminate prior to the applicable
      Inventory Closing Date as required for the prudent operation of the Sellers’
business, taken as a whole. In addition, between the date hereof and the
      applicable Inventory Closing Date, the Sellers shall inform Buyer if any
      Business Employee has terminated or given notice of their termination of
      employment at the Purchased Operate Location Pharmacies, Purchased Worksite
      Pharmacies or File-Transfer Locations.

     

    
      
         

      

      
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    (b) After
      the
      applicable Inventory Closing Date for the respective Location, Buyer shall
      offer
      employment to all or substantially all of the Business Employees from such
      Location who satisfy Buyer’s generally-applicable hiring standards. The
      foregoing shall be applicable with respect to any such Business Employee who
      is
      absent from active employment as of the Closing Date only to the extent that
      the
      Employee has legally-protected reemployment rights. Such a Business Employee
      described in the preceding sentence who presents himself or herself to Buyer
      ready for active work within the time required by law to preserve such
      legally-protected reemployment rights shall be offered employment by Buyer
      as of
      the date on which he or she presents himself or herself to Buyer ready for
      active work. Any employees who accept Buyer’ offer of employment (each, a
“Transferred
      Employee”)
      shall
      be employed on substantially similar terms as currently available to similarly
      situated employees of Buyer. Any Transferred Employee will be deemed terminated
      by the Sellers and hired by Buyer, effective upon the hiring of such employee
      by
      Buyer. Any Business Employee who is not a Transferred Employee will be
      terminated or retained by the Sellers, in their discretion. 

     

    (c) Nothing
      herein contained shall be considered or construed as an agreement to employ
      any
      Business Employee for any period of time. Buyer assumes no obligation with
      respect to any of the Sellers’ employees, whether hired by Buyer or not, for any
      benefit, perquisite or remuneration accrued or earned while under the Sellers’
employ. Without limiting the generality of the foregoing, Buyer shall have
      no
      obligation or liability for such employees’ accrued vacation time, bonuses,
      awards, commissions, salaries, reimbursements of any kind, health or disability
      benefit, insurance, severance pay, pension or profit sharing interests or any
      other benefits, compensation or remuneration of any nature whatsoever.

     

    (d) The
      benefits of Transferred Employees under the Employee Plans (if and to the extent
      applicable) will be determined as of Closing in accordance with the terms of
      the
      applicable Employee Plans. Except as expressly set forth herein, no assets
      or
      liabilities of any Employee Plan shall be transferred to Buyer or any of its
      Affiliates or to any plan of Buyer or any of its Affiliates.

     

    (e) Buyer
      will make available to Transferred Employees such benefits as are currently
      made
      available to similarly situated employees of Buyer. Within the time period
      required by applicable law, the Sellers shall pay to each Transferred Employee
      the amount of all accrued unpaid vacation pay credited to the Transferred
      Employee as of the applicable Inventory Closing Date. Buyer will cause all
      employee benefit plans and programs of Buyer and its Affiliates to recognize
      all
      service of Transferred Employees with the Sellers or any of their respective
      Affiliates (to the extent such service was recognized under the comparable
      Employee Plans as of the applicable Inventory Closing Date) for purposes of
      vesting and eligibility under Buyer’s employee benefit plans (other than any
      retiree health benefit plan) and for purposes of determining the length of
      annual vacation, number of sick days and amount of severance
      benefits.

     

    (f) No
      provision of this
      Section
      7.1
      shall
      create any third party beneficiary or other rights in any Business Employee
      (including any beneficiary or dependent thereof, and further including the
      Transferred Employees) of the Sellers or of any of their respective Affiliates
      in respect of employment with Buyer or any of its Affiliates and no provision
      of
      this Section
      7.1
      shall
      create any rights in any such Persons in respect of any benefits that may be
      provided, directly or indirectly, under any Employee Plan or any plan or
      arrangement which may be established by Buyer or any of its Affiliates. No
      provision of this Agreement shall constitute a limitation on rights to amend,
      modify or terminate after Closing any such plans or arrangements of Buyer or
      any
      of its Affiliates.

     

    
      
         

      

      
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    7.2. Non-competition. 

     

    (a) In
      furtherance of the sale of the Purchased Assets to Buyer and Eastern hereunder
      by virtue of the transactions contemplated hereby and more effectively to
      protect the value and goodwill of the Purchased Assets so sold, for a period
      of
      three (3) years after the Closing Date, FMRX shall not, and shall cause its
      Subsidiaries not to, in any manner whatsoever, directly or indirectly operate,
      own, lease, engage or participate in as an owner, landlord, partner, employee,
      joint venturer, shareholder, director, assignor, seller, transferor, or as
      a
      sales or marketing agent or otherwise, in, for, or in connection with any
      Competing Business. For purposes of this Agreement, “Competing
      Business”
means:
      (i) any Worksite Business or (ii) any retail drug store, clinic pharmacy,
      pharmacy business or other business which (x) requires a pharmacy license and
      (y) competes with the Business as conducted by Buyer or Eastern after the date
      hereof within a radius of five (5) miles from any Operate Location Pharmacies
      (other than any Excluded Operate Location Pharmacies), any Worksite Pharmacies
      (other than any Excluded Worksite Pharmacies) or any File-Transfer
      Locations.

     

    (b) For
      a
      period of three (3) years after the Closing Date, FMRX shall not, and shall
      cause its Subsidiaries not to, directly or indirectly solicit or induce any
      Person who filled a prescription in the twelve (12) month period ending on
      the
      Closing Date at any File-Transfer Locations, Purchased Worksite Pharmacies
      or
      Purchased Operate Location Pharmacies to discontinue such Person’s practice of
      filling prescriptions at such Locations.

     

    (c) For
      a
      period of three (3) years after the Closing Date, to the extent that any of
      the
      Sellers remain a party to any Real Estate Lease at any File-Transfer Location
      or
      own the real property at a File-Transfer Location after the Closing Date, FMRX
      shall not, and shall cause its Subsidiaries not to, transfer, lease or sublease
      the real property at such File-Transfer Location to any Competing Business.
      In
      addition, the parties agree to the matters set forth in Schedule
      7.2(c).

     

    (d) For
      a
      period of two (2) years after the Closing Date, FMRX shall not, and shall cause
      its Subsidiaries not to, solicit, recruit or hire any employee of the Business
      at the date of this Agreement who becomes a Transferred Employee and shall
      not
      encourage any such employee to leave the employment of Buyer or Eastern;
provided,
      that
      the provisions of this Section
      7.2(d)
      shall
      not apply with respect to any employee who responds to a public advertisement
      by
      FMRX.

     

    (e) Each
      of
      the Sellers covenants and agrees that, except as required by any Requirements
      of
      Law, it shall not and it shall use commercially reasonable efforts to ensure
      that its Affiliates do not, divulge to any Person any Confidential Information
      of Buyer or Eastern or the Business. 

     

    
      
         

      

      
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    (f) The
      parties hereby recognize, acknowledge and agree that the territorial and time
      limitations contained in this Agreement are reasonable and properly required
      for
      the adequate protection of the business to be conducted by Buyer and Eastern
      with the Purchased Assets. The parties further agree that the geographical
      and
      temporal restrictions referred to in this Section
      7.2
      are
      divisible and severable. The parties acknowledge that inclusion of this
Section
      7.2
      in the
      Agreement is a material inducement to Buyer and Eastern to enter into this
      Agreement and pay the Purchase Price

     

    (g) Notwithstanding
      the foregoing, nothing in this Section
      7.2
      shall
      prevent the Sellers or their successors from (i) owning and operating the
      Excluded Businesses in their current locations or (ii) purchasing or otherwise
      acquiring, up to a non-controlling interest, of any class of securities of
      any
      Competing Business enterprise that may be competitive with Buyer and Eastern
      and
      the Purchased Operate Location Pharmacies or the Purchased Worksite Pharmacies
      (but without other participation in the activities of such enterprise) as long
      as such securities are listed on any national or regional securities exchange
      or
      have been registered under Section 12 of the Exchange Act.

     

    7.3. Records
      and Data. 

     

    (a) The
      parties agree that Buyer and the Sellers will engage Infowerks (the
“Data
      Converter”)
      to
      convert the Sellers’ prescription file and record data in electronic form that
      are included in the Purchased Assets (the “Record
      Data”)
      to a
      format specified by Buyer. After obtaining the FMRX Stockholder Approval, the
      Sellers shall provide such access, information and cooperation to the Data
      Converter as may be required to enable the Data Converter to deliver the Record
      Data to Buyer (i) with respect to each of the File-Transfer Locations, at least
      two (2) business days prior to the Closing Date and (ii) with respect to each
      of
      the Purchased Operate Location Pharmacies and Purchased Worksite Pharmacies,
      at
      least two (2) business days prior to the applicable Inventory Closing Date;
      provided,
      that
      prior to the applicable Inventory Closing Date (or, with respect to the
      File-Transfer Records, the Closing Date) such Record Data shall be maintained
      and segregated in Buyer’s computer systems and access to such data shall not be
      transferred and made accessible to any pharmacy locations until the applicable
      Inventory Closing Date (or, with respect to the File-Transfer Records, the
      Closing Date), and shall be limited to corporate-level employees and only for
      purposes of quality assurance and preparing to transition such data from the
      Sellers to Buyer; provided,
      further,
      that if
      any Inventory Closing Date does not occur within 90 days of the Closing Date,
      Buyer shall delete and destroy the applicable Record Data (and any copies
      thereof) so that such Record Data may not be accessed by Buyer or Eastern or
      any
      of their respective Affiliates. In the event that the Sellers fail to comply
      with their obligations as set forth in this Section
      7.3(a)
      and as a
      result of such failure the Record Data is not or cannot be delivered from
      Buyer’s corporate-level systems to the applicable pharmacy systems as of the
      applicable Inventory Closing Date, Buyer, at Buyer’s sole discretion, may delay
      the applicable Inventory Closing Date until the Record Data is delivered to
      Buyer’s pharmacy systems. For the avoidance of doubt, the costs and Expenses of
      the Data Converter are to be shared equally by Buyer, on the one hand, and
      the
      Sellers, on the other hand, as part of the Inventory Closing Shared Expense
      Amount. Notwithstanding anything else to the contrary, upon Buyer’s receipt of
      the File-Transfer Records pursuant
      to this Section
      7.3(a),
      Buyer
      or Eastern, as applicable, will be obligated to pay to Sellers the portion
      of
      the Purchase Price allocable to such File-Transfer Records, Sellers will be
      obligated to sell, transfer and assign to Buyer or Eastern all of its rights,
      title and interest to such File-Transfer Records, free and clear of all
      Encumbrances (other than Permitted Encumbrances) and each of the parties will
      be
      obligated to make the other deliveries required by Article
      IV
      with
      respect to such File-Transfer Records.

     

    
      
         

      

      
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    (b) In
      addition, the Sellers agree to make the computer hardware, computer software
      and
      electronic data currently used for record keeping purposes available to Buyer
      and Eastern for up to six (6) months after the Closing Date.

     

    (c) The
      Sellers have, with respect to each of the Purchased Operate Location Pharmacies,
      Purchased Worksite Pharmacies and File-Transfer Locations, maintained an
      accurate log of all disclosures, to the extent any have been made, as of April
      14, 2003, of Protected Health Information (“PHI”),
      as
      that term is defined in HIPAA.

     

    7.4. Patient
      Letters.
      Buyer
      will, at its own expense, engage Tribune Direct (the “Third
      Party Distributor”)
      to
      notify each customer who has had a prescription filled or refilled at any
      File-Transfer Location within the last two years by mailing each of them a
      letter in form and substance reasonably satisfactory to the parties;
provided,
      that
      (a) such mailing will occur after the Closing Date or applicable Inventory
      Closing Date and (b) FMRX shall have the right to review and comment on the
      contents of any such correspondence prior to mailing, and Buyer shall
      incorporate FMRX’s reasonable comments in such correspondence. The parties agree
      that, promptly after its delivery of the Record Data related to the File
      Transfer Locations to Buyer in accordance with Section
      7.3,
      and
      subject to obtaining reasonable assurance from Buyer of compliance with
      applicable Requirements of Law regarding patient confidentiality, the Data
      Converter will provide the Record Data to the Third Party Distributor in order
      to enable the Third Party Distributor to assemble and distribute such letters
      promptly after the Closing Date or the applicable Inventory Closing Date.
      Sellers shall instruct the Data Converter not to deliver the File-Transfer
      Records to the Third Party Distributor until after it delivers such Record
      Data
      to Buyer in accordance with Section
      7.3.
      Buyer
      shall instruct the Third Party Distributor not to distribute such letters prior
      to the Closing Date or the applicable Inventory Closing Date. 

     

    7.5. Matters
      Related to Prescriptions.
      Prior
      to the applicable Inventory Closing Date, the Sellers shall use commercially
      reasonable efforts to fill and deliver to customers of Operate Location
      Pharmacies and Worksite Pharmacies any partial-fill prescriptions with a
      remaining quantity balance (“IOU
      Prescriptions”).
      For
      any IOU Prescriptions remaining on the applicable Inventory Closing Date, the
      Sellers shall credit the prescription to the customer or to the third party
      payor, as appropriate, on the applicable Inventory Closing Date. Buyer assumes
      no liability for IOU Prescriptions. In addition, prior to the applicable
      Inventory Closing Date, the Sellers shall reverse and return to stock any filled
      prescriptions that have not been picked up, providing all necessary notice
      to
      any third party payors, and shall provide Buyer with a list of such
      prescriptions so that Buyer is prepared to fill such prescriptions on or after
      the applicable Inventory Closing Date.

     

    
      
         

      

      
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    7.6. Interim
      Operations. 

     

    (a) Between
      the date hereof and the Final Closing Date, the Sellers shall operate and carry
      on the Business (except to the extent a portion thereof has previously been
      transferred to Buyer or Eastern as of the Closing Date or prior Inventory
      Closing Date) only in the ordinary course and substantially as presently
      operated. Consistent with the foregoing, the Sellers shall (i) keep and maintain
      the Purchased Assets in good operating condition and repair, normal
      wear-and-tear excepted; (ii) use their commercially reasonable efforts to
      preserve the goodwill of the suppliers, contractors, licensors, employees,
      customers, distributors and others having business relations with the Business;
      (iii) maintain the Inventory at levels adequate and not excessive in the present
      circumstances of the Business and at levels reasonably based on past practices
      and historical sales of the Business; and (iv) maintain the Sellers’ current
      operating practices with respect to Patient Charges. In furtherance of the
      foregoing, the Sellers shall maintain normal operating hours, staffing levels,
      inventory levels and merchandise mix. For the avoidance of doubt, changes
      imposed or required by third parties of a kind and nature typical for a company
      that has announced an intent to wind down its business or dissolve shall not
      be
      deemed to violate the terms of this Agreement (but may be included in any
      determination of the existence of a Material Adverse Effect).

     

    (b) Except
      as
      expressly contemplated by this Agreement or except with the express written
      approval of Buyer, the Sellers shall not: (i) take any action that is intended
      or may reasonably be expected to result in (x) any of the representations
      and warranties set forth in this Agreement being or becoming untrue in any
      material respect, (y) any of the conditions to the Closing set forth in
      this Agreement not being satisfied or (z) any violation of any provision of
      this Agreement, except, in each case, as may be required by applicable
      Requirements of Law; (ii) except in the ordinary course of business consistent
      with past practice, enter into any lease, agreement, Contract or commitment
      of
      any nature, oral or written, nor make any capital investment or expenditures,
      primarily related to the ownership or operation of the Operate Location
      Pharmacies, Worksite Pharmacies or Transfer Locations; (iii) except in the
      ordinary course of business consistent with past practice, enter into any
      Contract with respect to, or make any increase in (or commitment to increase)
      the compensation payable to any of its employees or agents primarily related
      to
      the Operate Location Pharmacies, Worksite Pharmacies or Transfer Locations;
      (provided,
      that
      the foregoing shall not prohibit the granting of “stay-bonuses” or similar
      commitments) or (iv) sell, lease, transfer or otherwise dispose of (including
      any transfers from any of the Sellers to any of their respective Affiliates),
      or
      impose or suffer to be imposed any Encumbrance on, any of the Purchased Assets,
      other than inventory and minor amounts of personal property sold or otherwise
      disposed of for fair value in the ordinary course of the Business consistent
      with past practice. 

     

    7.7. Signage.
      To the
      extent not prohibited under each real estate lease related to the File-Transfer
      Locations, if any, (a) the Sellers shall permit Buyer or Eastern to place a
      sign
      at the front entrance of each File-Transfer Location for a period of ninety
      (90)
      days after the Closing Date advising customers that all prescription files
      have
      been transferred to a Walgreen drug store or other location designated by Buyer
      or Eastern and (b) subject to any consent required by a landlord or lessor
      (which the Sellers shall use commercially reasonable efforts to obtain),
      concurrently with the delivery of the File-Transfer Records to Buyer in
      accordance with Section
      7.3,
      the
      Sellers shall permit Buyer to place a sign and distribute flyers at the
      File-Transfer Locations advising customers that all prescription files will
      be
      transferred to such drug store or other location.

     

    
      
         

      

      
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    7.8. Telephone
      Numbers.
      Upon
      the applicable Inventory Closing Date, the Sellers shall disconnect existing
      telephone lines and terminate any existing telephone accounts, including
      advertising and yellow pages agreements, for the File-Transfer Locations. The
      Sellers shall arrange, in a manner approved by Buyer and at Buyer’s sole cost
      and expense, for call referral for all calls to the numbers so canceled to
      a
      Walgreen drug store or other location designated by Buyer. 

     

    7.9. Acquisition
      Proposals; Board Recommendation.

     

    (a) Sellers
      shall, and shall cause their respective Subsidiaries to, and shall direct and
      use commercially reasonable efforts to cause their respective directors,
      officers, employees, advisors, agents and other representatives (collectively,
      the “Representatives”)
      to,
      immediately cease any discussions or negotiations with any parties that may
      be
      ongoing with respect to an Acquisition Proposal or any other proposal or offer
      to acquire any or all of the Purchased Assets, other than the sale of inventory
      or obsolete equipment in the ordinary course of business. From the date hereof
      until the Final Closing Date, except as provided in this Section
      7.9
      and
      subject to compliance herewith, Sellers shall not, and shall cause their
      respective Subsidiaries not to, and shall direct and use commercially reasonable
      efforts to cause their respective Representatives not to, directly or indirectly
      (i) solicit, initiate, encourage or take any other action to facilitate any
      proposal, inquiry or request that constitutes, or may reasonably be expected
      to
      lead to, an Acquisition Proposal or an Alternative Proposal, (ii) participate
      or
      engage in discussions or negotiations with, or disclose or provide any
      non-public information relating to FMRX to, or afford access to any of the
      properties, books or records of FMRX to, any Person in connection with an
      Acquisition Proposal or an Alternative Proposal, (iii) approve, endorse or
      recommend any Acquisition Proposal or any Alternative Proposal, (iv) enter
      into
      any letter of intent, agreement or agreement in principle with any Person that
      has made an Acquisition Proposal or an Alternative Proposal or (v) waive, amend,
      modify or grant any release under any employee non-solicitation, standstill
      or
      similar agreement or confidentiality agreement to which FMRX or any of its
      Subsidiaries is a party; provided,
      however,
      that
      prior to obtaining the FMRX Stockholder Approval, Sellers, their respective
      Subsidiaries and respective Representatives may take any of the actions
      described in clause (ii) of this Section
      7.9(a)
      in
      respect of a Person that makes an Acquisition Proposal subsequent to the date
      hereof if, but only if, (x) such Person has entered into a confidentiality
      agreement with FMRX on terms that are substantially similar to the terms of
      the
      Confidentiality Agreement, dated October 13, 2006, between FMRX and Buyer (the
      “Confidentiality
      Agreement”),
      (y) a
      majority of the Board of Directors of FMRX has determined in good faith,
      following consultation with outside counsel including counsel expert in Nevada
      law, that (A) such Acquisition Proposal constitutes, or is reasonably likely
      to
      result in, a Superior Proposal and (B) the failure of the Board of Directors
      of
      FMRX to do so would be reasonably likely to result in a breach of the directors’
fiduciary obligations to FMRX’s stockholders under applicable Requirements of
      Law, and (z) the Acquisition Proposal was received and developed without any
      intentional breach, or any material violation, of the provisions of this
Section
      7.9(a).

     

    
      
         

      

      
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    (b) FMRX
      shall advise Buyer, telephonically and in writing, of any Sellers’ receipt of
      any Acquisition Proposal, Alternative Proposal or any request for Confidential
      Information in connection with a possible Acquisition Proposal or Alternative
      Proposal, and the identity of the Person making any such proposal or request,
      in
      any case within two (2) business days of any Sellers’ receipt thereof. FMRX
      shall include in such written notice the material terms and conditions of any
      such Acquisition Proposal. FMRX will keep Buyer reasonably and promptly informed
      of the status of, and material information concerning (including amendments,
      modifications or proposed amendments or modifications), any Acquisition
      Proposal. If the Board of Directors of FMRX determines that an Acquisition
      Proposal constitutes a Superior Proposal, FMRX shall deliver to Buyer a written
      notice advising Buyer that the Board of Directors of FMRX has so determined,
      specifying in detail the terms and conditions of such Superior
      Proposal.

     

    (c) The
      Board
      of Directors of FMRX has adopted a resolution recommending the adoption and
      approval of this Agreement and the transactions contemplated hereby by the
      stockholders of FMRX (the “FMRX
      Recommendation”).
      Except as set forth in this Section
      7.9(c),
      neither
      the Board of Directors of FMRX nor any committee thereof may (i) amend,
      withdraw, modify, change, qualify or condition, or propose publicly to amend,
      withdraw, modify, change, qualify or condition in a manner adverse to Buyer,
      the
      FMRX Recommendation (a “Change
      of Recommendation”),
      (ii)
      approve or recommend, or propose publicly to approve or recommend, any
      Acquisition Proposal or Alternative Proposal or (iii) cause or permit FMRX
      to
      accept any Acquisition Proposal or Alternative Proposal or enter into any letter
      of intent, agreement in principle, acquisition agreement or other similar
      agreement (each, an “Alternative
      Agreement”)
      related to any Acquisition Proposal or Alternative Proposal. Notwithstanding
      the
      foregoing, in the event that, prior to obtaining the FMRX Stockholder Approval,
      the Board of Directors of FMRX determines in good faith, after consultation
      with
      FMRX’s outside legal counsel, that the failure of the Board of Directors of FMRX
      to do so would be reasonably likely to result in a breach of the directors’
exercise of their fiduciary obligations to FMRX’s stockholders under applicable
      Requirements of Law, the Board of Directors of FMRX may (x) make a Change of
      Recommendation, (y) approve or recommend a Superior Proposal or (z) terminate
      this Agreement in order to accept a Superior Proposal or enter into an
      Alternative Agreement with respect to a Superior Proposal, but in each case
      (1)
      only at a time that follows Buyer’s receipt of written notice (a “Notice
      of Superior Proposal”)
      advising Buyer that the Board of Directors of FMRX has received a Superior
      Proposal, specifying the material terms and conditions of such Superior Proposal
      and identifying the Person making such Superior Proposal and (2) after having
      provided Buyer five (5) days prior written notice that FMRX or its Board of
      Directors intends to recommend such Superior Proposal to its stockholders or
      terminate this Agreement in order to accept a Superior Proposal or enter into
      an
      Alternative Agreement with respect to such Superior Proposal, and having
      negotiated in good faith with Buyer to revise the Buyer’s offer such that the
      Superior Proposal no longer qualifies as a Superior Proposal, and in the case
      of
      clause (z) above, making the payment required by Section
      10.3(c),
      provided,
      that if
      in response to a Superior Proposal (a “Pending
      Proposal”),
      Buyer
      revises its offer (the “Revised
      Buyer Proposal”)
      such
      that the Pending Proposal no longer qualifies as a Superior Proposal, and
      subsequent thereto any Seller receives any revisions or amendments to the
      Pending Proposal which causes such Pending Proposal to constitute a Superior
      Proposal, the Sellers shall promptly give notice of such revision or amendment
      and shall again negotiate in good faith with Buyer (to revise the Revised Buyer
      Proposal such that the Superior Proposal no longer qualifies as a Superior
      Proposal) for two (2) business days prior to FMRX’s, Familymeds’ or Arrow’s
      Board of Directors recommending such Superior Proposal to its stockholders
      or
      Sellers terminating this Agreement in order to accept a Superior Proposal or
      enter into an Alternative Agreement with respect to such Superior Proposal.
      For
      the avoidance of doubt, the parties acknowledge that the five (5) day period
      specified above shall apply to each and every Superior Proposal other than
      a
      Superior Proposal resulting from a revision or amendment to a Pending Proposal
      in response to a Revised Buyer Proposal, in which case the two (2) business
      day
      period specified above shall apply.

     

    
      
         

      

      
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    (d) Nothing
      contained in this Agreement shall prohibit FMRX or its Board of Directors from
      (i) disclosing to its stockholders a position contemplated by Rules 14d-9
      and 14e-2(a) promulgated under the Exchange Act, or from issuing a “stop, look
      and listen” statement pending disclosure of its position thereunder, or (ii)
      making any disclosure to its stockholders if the Board of Directors determines
      in good faith, after consultation with FMRX’s outside legal counsel, that the
      failure of the Board of Directors of FMRX to make such disclosure would be
      reasonably likely to result in a breach of the directors’ exercise of their
      fiduciary obligations to FMRX’s stockholders under applicable Requirements of
      Law. Subject to Section
      7.9,
      FMRX
      shall take all lawful acts to obtain the FMRX Stockholder Approval.

     

    7.10. FMRX
      Stockholder Meeting; FMRX Proxy Statement.

     

    (a) FMRX
      shall, subject to compliance by Buyer and Eastern with their respective
      obligations pursuant to Section
      7.10(d),
      as soon
      as practicable after the date on which the FMRX Proxy Statement is cleared
      by
      the SEC, duly call, give notice of, convene and hold a meeting of its
      stockholders (the “FMRX
      Stockholder Meeting”)
      for
      the purpose of obtaining the FMRX Stockholder Approval.

     

    (b) In
      connection with this Agreement and the FMRX Stockholder Meeting, FMRX shall,
      subject to compliance by Buyer and Eastern with their respective obligations
      pursuant to Section
      7.10(d),
      prepare
      and file with the SEC, as promptly as practicable and at FMRX’s expense, a proxy
      statement relating to the FMRX Stockholder Meeting (together with any amendments
      thereof or supplements thereto and any other required proxy materials, the
      “FMRX
      Proxy Statement”).
      FMRX
      shall provide Buyer with a reasonable opportunity (but not less than three
      (3)
      business days) to review and comment on the FMRX Proxy Statement (including
      any
      amendment or supplement thereto) prior to the filing thereof with the SEC.
      FMRX
      shall use its commercially reasonable efforts to respond to the comments of
      the
      SEC and to cause the FMRX Proxy Statement to be mailed to the stockholders
      of
      FMRX as promptly as practicable. FMRX shall promptly notify Buyer of the receipt
      of comments of the SEC and of any request from the SEC for amendments or
      supplements to the FMRX Proxy Statement or for additional information, and
      will
      promptly supply Buyer with copies of all correspondence between FMRX and the
      SEC
      or members of its staff with respect to the FMRX Proxy Statement. If at any
      time
      prior to the FMRX Stockholder Meeting any event should occur that is required
      by
      applicable Requirements of Law to be set forth in an amendment of, or a
      supplement to, the FMRX Proxy Statement, FMRX will prepare and mail such
      amendment or supplement. Subject to the provisions of Section
      7.9,
      the
      FMRX Recommendation shall be included in the FMRX Proxy Statement.

     

    
      
         

      

      
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    (c) FMRX
      covenants that, subject to compliance by Buyer and Eastern with their respective
      obligations pursuant to Section
      7.10(d),
      the
      FMRX Proxy Statement (including the description of the Sale Process included
      therein) will (i) as of the time of the FMRX Proxy Statement (or any amendment
      thereof or supplement thereof) is first mailed to its stockholders and as of
      the
      time of the FMRX Stockholder Meeting, not contain any untrue statement of a
      material fact or omit to state any material fact required to be stated therein
      or necessary in order to make the statements therein not misleading and (ii)
      comply as to form in all material respects with the provisions of the Exchange
      Act.

     

    (d) Buyer
      and
      Eastern shall promptly provide to FMRX all relevant information related to
      Buyer
      and Eastern for inclusion in the FMRX Proxy Statement, and any amendments
      thereto, and so assure that the information does not contain any untrue
      statement of material fact, or omit to state any material fact required to
      be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances in which they are made, not misleading.

     

    7.11. Access
      Through Final Closing Date. 

     

    (a) Upon
      reasonable notice, subject to applicable Requirements of Law, each Seller shall,
      and shall cause each of its directors, officers, agents and employees to, afford
      Buyer and its representatives reasonable access during regular business hours
      from the date hereof through the Final Closing to the Premises, the Tupelo
      Property, and any and all properties, Contracts, books, records, data and
      personnel of the Sellers relating to the Business; provided,
      however,
      that
      neither Buyer nor any of its representatives shall initiate contact (whether
      by
      written correspondence, telephone, in-person meeting, e-mail or otherwise)
      with
      any employee of any Seller regarding the transactions and matters contemplated
      by this Agreement without the prior written consent of FMRX (which may include
      an e-mail consent from any officer of FMRX or the designee of any such officer),
      which consent shall not be unreasonably withheld, conditioned or delayed; and
      provided,
      further,
      that a
      representative of FMRX designated by any officer of FMRX shall have the right
      to
      attend or participate in any such conversations or meetings between Buyer and
      Sellers’ employees. Notwithstanding the foregoing, the parties agree jointly to
      schedule and cause to occur preliminary meetings with all Business Employees
      within five (5) days after the date of this Agreement for the purpose of
      providing such general information as the parties deem appropriate. In addition,
      each Seller shall afford to Buyer and its representatives reasonable access
      to
      and an opportunity to speak with any third parties to the Real Estate Leases
      and
      Worksite Agreements (including any doctor groups, employers or persons related
      to the Prospective Worksite Pharmacies) as well as Sellers’ third party payors
      and vendors; provided,
      however,
      that
      FMRX and its representatives shall have the right to attend such conversations
      or meetings between Buyer and its representatives and any third parties to
      the
      Real Estate Leases and Worksite Agreements, any third party payors or vendors.
      The Sellers shall provide to Buyer such information and documents concerning
      the
      Business as reasonably may be requested by Buyer. In exercising its rights
      under
      this Section
      7.11(a),
      Buyer
      shall not unreasonably interfere with the Sellers’ business and shall coordinate
      the exercise of such rights through the Sellers. Any information obtained by
      Buyer pursuant to this Section
      7.11
      shall be
      subject to the terms and conditions of the Confidentiality Agreement. Buyer
      shall notify each of those employees of Buyer responsible for transitioning
      the
      Locations to Buyer or Eastern pursuant to the transactions contemplated by
      this
      Agreement of the foregoing restrictions and shall be liable for any action
      by
      any of such Persons that, if taken by Buyer, would have been a violation of
      this
Section
      7.11(a).

     

    
      
         

      

      
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    (b) Upon
      reasonable notice, the Sellers shall permit Buyer access to all of the Premises
      in order to install wiring and equipment for communication devices and other
      store systems and to prepare for the integration of the Business with Buyer’s
      own business, all at Buyer’s cost and without causing material damage to such
      Premise. If this Agreement is terminated and the Closing Date or applicable
      Inventory Closing Date shall not have occurred with respect to one or more
      Locations, Buyer shall remove all such wiring and equipment at its sole cost
      and
      expense. Buyer agrees to repair any damage which may be caused due to the
      exercise of its rights or the performance of its obligations pursuant to this
      Section
      7.11(b)
      and to
      indemnify, defend and hold harmless the Sellers from any and all Losses arising
      out of or in any way connected with Buyer’s exercise of its rights pursuant to
      this Section
      7.11(b).
      In
      exercising its rights under this Section
      7.11(b),
      Buyer
      shall not unreasonably interfere with Sellers’ Business and shall coordinate the
      exercise of such rights through the Sellers and Buyer shall act diligently
      to
      conduct such installations and integrations as promptly as reasonably
      practicable. 

     

    7.12. Taxes.

     

    (a) The
      Sellers shall be liable for and covenant to pay and, pursuant to Article
      VIII,
      shall
      indemnify and hold harmless each Buyer Group Member from and against (i) any
      and
      all Loss and Expense incurred by any of them in connection with or arising
      from,
      all Taxes (whether assessed or unassessed) applicable to the Business or the
      Purchased Assets, in each case attributable to taxable years or periods ending
      prior to the Closing Date and, with respect to any Straddle Period, the portion
      of such Straddle Period ending on and including the Closing Date, and (ii)
      all
      Taxes (and all Loss and Expense incurred by Buyer in connection with such Taxes)
      applicable to the Business or Purchased Assets and attributable to taxable
      years
      or periods ending prior to the Closing Date and, with respect to any Straddle
      Period, the portion of such Straddle Period ending on and including the Closing
      Date, for which Buyer has transferee liability; provided,
      however,
      that
      the Sellers shall not be liable for or pay, and shall not indemnify or hold
      harmless any Buyer Group Member from and against, any Taxes for which the Buyer
      is liable under this Agreement. Buyer shall be liable for and covenants to
      pay
      and, pursuant to Article
      VIII,
      shall
      indemnify and hold harmless the Sellers and their respective Affiliates,
      directors, officers, employees and agents from and against any and all Loss
      and
      Expense incurred by any of them in connection with or arising from, all Taxes
      (whether assessed or unassessed) applicable to the Business or the Purchased
      Assets, in each case attributable to taxable years or periods beginning on
      or
      after the Closing Date and, with respect to any Straddle Period, the portion
      of
      such Straddle Period beginning after the Closing Date; provided,
      however,
      that
      Buyer shall not be liable for or pay, and shall not indemnify or hold harmless
      the Sellers and their respective Affiliates, directors, officers, employees
      or
      agents from and against, any Taxes for which the Sellers are liable under this
      Agreement, including without limitation, pursuant to the preceding sentence
      or
Section
      5.3.
      For
      purposes of this Section
      7.12
      any
      Straddle Period shall be treated on a “closing of the books” basis as two
      partial periods, one ending at the close of the Closing Date and the other
      beginning on the day after the Closing Date, except that Taxes (such as property
      Taxes) imposed on a periodic basis shall be allocated on a daily basis. If
      the
      actual amount of property Taxes for a Straddle Period is not known on the
      Closing Date, the amount of such Taxes prorated by the parties shall equal
      (i)
      with respect to real property Taxes, one-hundred and ten percent (110%) of
      the
      amount of such real property Taxes payable for the prior taxable year and (ii)
      with respect to personal property Taxes, one-hundred percent (100%) of the
      amount of such personal property Taxes payable for the prior taxable
      year.

     

    
      
         

      

      
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    (b) The
      Sellers or Buyer, as the case may be, shall provide reimbursement for any Tax
      for a Straddle Period paid by one party all or a portion of which is the
      responsibility of the other party in accordance with the terms of this
Section
      7.12
      without
      regard to the terms of the Indemnity Escrow Agreement. Within a reasonable
      time
      prior to the payment of any such Tax, the party paying such Tax shall give
      notice to the other party of the Tax payable and the portion which is the
      liability of each party, although failure to do so will not relieve the other
      party from its liability hereunder.

     

    (c) After
      the
      Closing Date, each of the Sellers and Buyer shall (and cause their respective
      Affiliates to): (i) assist the other party in preparing any Tax Returns which
      such other party is responsible for preparing and filing; (ii) cooperate fully
      in preparing for any audits of, or disputes with taxing authorities regarding,
      any Tax Returns of the Business or the Purchased Assets; (iii) make available
      to
      the other party and to any taxing authority as reasonably requested all
      information, records, and documents relating to Taxes of the Business or the
      Purchased Assets; (iv) provide timely notice to the other party in writing
      of
      any pending or threatened Tax audits or assessments relating to Taxes of the
      Business or the Purchased Assets for taxable periods for which the other party
      may have a liability under this Section
      7.12;
      and (v)
      furnish the other party with copies of all correspondence received from any
      taxing authority in connection with any Tax audit or information request with
      respect to any such taxable period.

     

    (d) Notwithstanding
      the foregoing, any Tax (including a sales tax, use tax, real property transfer
      or gains tax, or documentary stamp tax) attributable to the sale or transfer
      of
      the Purchased Assets shall be shared equally by the Sellers on one hand and
      Buyer and Eastern on the other.

     

    
      
         

      

      
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    (e) Sellers
      shall, from the date hereof through the date of the final distribution of assets
      to FMRX’s stockholders or dissolution of FMRX, promptly notify Buyer of the
      commencement and resolution of, and any oral or written communications with
      taxing authorities regarding, any audit with respect to state and local Taxes
      of
      the Business and the Purchased Assets.

     

    7.13. Consent
      of Third Parties; Regulatory and Other Authorizations; HSR Act. 

     

    (a) The
      Sellers will use commercially reasonable efforts to secure before the Closing
      Date (i) each consent, approval or waiver, in form and substance reasonably
      satisfactory to Buyer, required to be satisfied or obtained prior to Closing
      in
      order to avoid any breach, default or termination of any agreement, Contract,
      Permit, license or other instrument and (ii) each Other Lease Amendment (it
      being acknowledged that “commercially reasonable efforts” with regard to the
      Other Lease Amendment shall mean sending a proposed amendment substantially
      in
      the form of the Other Lease Amendment to the applicable counterparty and
      negotiating in good faith to obtain amendments substantially similar to those
      set forth in the Other Lease Amendment); provided,
      that
      the Sellers shall not make any agreement or understanding affecting, in any
      material respect, the Business or the Purchased Assets as a condition for
      obtaining any such consents or waivers except as set forth on Exhibit
      B,
      and
      except with the prior written consent of Buyer, which consent shall not be
      unreasonably withheld. During the period prior to the Closing Date, Buyer shall
      use commercially reasonable efforts to cooperate with the Sellers to obtain
      the
      consents, approvals and waivers contemplated by this Section
      7.13(a).

     

    (b) During
      the period prior to the Closing Date, the Sellers and Buyer shall use
      commercially reasonable efforts, and shall cooperate with each other, to (1)
      secure any consents and approvals of any Governmental Body required to be
      obtained by them in order to permit the consummation of the transactions
      contemplated hereby or (2) otherwise satisfy the conditions set forth in
Sections
      9.1
      and
9.2;
      provided,
      that
      the Sellers shall not make any agreement or understanding affecting, in any
      material respect, the Business or the Purchased Assets as a condition for
      obtaining any such consents or waivers except with the prior written consent
      of
      Buyer, which consent shall not be unreasonably withheld.

     

    (c) As
      promptly as practicable after the date hereof and in no event more than ten
      (10)
      days after the date hereof, Buyer and FMRX shall file with the FTC and the
      Antitrust Division the notifications and other information required to be filed
      under the HSR Act with respect to the transactions contemplated hereby. Each
      party warrants that all such filings by it are, as of the date filed, true
      and
      accurate and in accordance with the requirements of the HSR Act. Each of the
      Sellers and Buyer agrees to make available to the other such information as
      each
      of them may reasonably request relative to its business, assets and property
      (including, in the case of the Sellers, the Business) as may be required of
      each
      of them to file any additional information requested by such agencies under
      the
      HSR Act. Each of the Sellers and Buyer agree to provide to the other copies
      of
      all correspondence between it (or its advisors) and any such agency relating
      to
      this Agreement or any of the matters described in this Section
      7.13(c);
      provided,
      that
      such correspondence does not contain or reveal Confidential Information of
      Buyer, the Sellers or their respective Affiliates. Each of the Sellers and
      Buyer
      agree that, except as either party may otherwise agree, all telephonic calls
      and
      meetings with such agencies regarding the transactions contemplated hereby
      or
      any of the matters described in this Section
      7.13(c)
      shall
      include representatives of each of Buyer and FMRX. All filing fees associated
      with this Section
      7.13(c)
      are to
      be shared equally by Buyer, on the one hand, and the Sellers, on the other,
      as
      provided in the Closing Date Shared Expenses Schedule; provided,
      that if
      the Closing shall not occur, the parties agree to share equally the costs of
      all
      filing fees incurred with respect to the HSR Act (including reimbursing one
      party or the other, as applicable).

     

    
      
         

      

      
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    7.14. Avoiding
      Abandonment. 

     

    (a) Effective
      as of the applicable Inventory Closing Date with respect to each of the
      Purchased Operate Location Pharmacies and Purchased Worksite Pharmacies, the
      Sellers hereby authorize Buyer and Eastern to operate under each Permit related
      to the Business at such Location after the Closing, to the extent permitted
      by
      applicable Requirements of Law and to the extent necessary to enable Buyer
      and
      Eastern to conduct the Business at such Location while Buyer and Eastern seek
      to
      replace such Permit with their own license, authorization, permit or waiver
      (such Permits, the “Transferable
      Permits”).
      Buyer
      and Eastern shall promptly after execution of this Agreement prepare and submit
      the necessary applications (the “Buyer
      Applications”)
      to the
      applicable regulatory agencies to obtain the licenses required to operate the
      Business. The Sellers will take all steps reasonably necessary to maintain
      their
      respective authorizations under the Transferable Permits that Buyer and Eastern
      operate under during the period between Closing and the issuance of Buyer’s and
      Eastern’s own licenses, authorizations, permits or waivers and the Sellers will
      cooperate with Buyer and Eastern in preparing and submitting the Buyer
      Applications. Buyer shall reimburse the Sellers for any out-of-pocket costs
      (including reasonable attorney fees and Expenses) incurred by the Sellers in
      connection with such cooperation, and shall indemnify and hold harmless the
      Sellers and their respective Affiliates and employees against any Losses
      incurred by such Persons as a result of the foregoing.

     

    (b) Prior
      to
      the Closing, the Sellers agree to use commercially reasonable efforts as may
      be
      reasonably requested by Buyer to assist Buyer and Eastern in (i) obtaining
      all
      licenses, authorizations, permits or waivers as may be necessary for Buyer
      and
      Eastern to conduct the Business at the Operate Location Pharmacies and the
      Worksite Pharmacies (including, taking all steps reasonably necessary to
      relinquish the Permits) and (ii) making such licenses, authorizations, permits
      or waivers effective as of the Closing Date or as promptly thereafter as is
      practicable. The parties further agree that, prior to the Closing, they will
      cooperate as may be reasonably necessary to enable Buyer and Eastern to (x)
      obtain either a new license or the approval of the transfer of Buyer’s and
      Eastern’s existing license issued by the pharmacy boards of the states in which
      the Operate Location Pharmacies and the Worksite Pharmacies are located, and
      (y)
      obtain any other required authorizations, permits or licenses. Buyer shall
      reimburse the Sellers for any out-of-pocket costs (including reasonable attorney
      fees and Expenses) incurred by the Sellers in connection with such cooperation,
      and shall indemnify and hold harmless the Sellers and their respective
      Affiliates and employees against any Losses incurred by such Persons as a result
      of the foregoing.

     

    
      
         

      

      
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    (c) Effective
      as of the applicable Inventory Closing Date with respect to each of the
      Purchased Operate Location Pharmacies and Purchased Worksite Pharmacies, the
      Sellers shall execute a power of attorney, in form and substance reasonably
      acceptable to the parties, authorizing Buyer and Eastern to operate the Business
      at such Location under state pharmacy and Drug Enforcement Agency permits
      included in the Transferable Permits (the “Power
      of Attorney”)
      and
      such other powers of attorney, pharmacy management and other agreements,
      assignments, amendments, addenda and other documents as may be necessary to
      enable Buyer and Eastern to conduct the Business at such Location, in each
      case
      as are reasonably requested by Buyer and Eastern.

     

    (d) During
      the term of the Real Estate Leases and any extensions, the Sellers will not
      take
      or fail to take any action under the Real Estate Leases that would impair the
      ability of the Sellers to perform their respective obligations under the Real
      Estate Leases.

     

    7.15. Licenses.

     

    (a) For
      a
      period of 120 days after the applicable Inventory Closing Date, Buyer and
      Eastern shall have the non-exclusive right to use the tradenames and Trademarks
      associated with the Purchased Operate Location Pharmacies in connection with
      store signage, advertisements, solicitations, announcements and similar matters
      related to any Purchased Operate Location Pharmacies; provided,
      however,
      that
      Buyer and Eastern shall have obtained the prior written consent of FMRX (which
      consent shall not be unreasonably withheld) with respect to the use in
      connection with store signage, advertisements, solicitations, announcements
      and
      similar matters (other than with respect to use that is limited to announcing
      a
      change in the name or location of a particular pharmacy, for which prior consent
      is not required); provided, further,
      that
      such period shall be extended to the extent necessary if re-branding is not
      permitted by the applicable Requirements of Law before the expiration of such
      period. For a period of 120 days after the applicable Inventory Closing Date,
      Buyer and Eastern shall be permitted to continue using existing store signage
      located at the Purchased Operate Location Pharmacies and Purchased Worksite
      Pharmacies.

     

    (b) After
      the
      Closing Date, Buyer and Eastern shall have the right to use existing packaging,
      labeling, containers, supplies, advertising materials and any similar materials,
      to the extent Buyer and Eastern have purchased such materials from the Sellers,
      bearing the tradenames and Trademarks primarily used in or related to the
      ownership or operation of the Purchased Operate Location Pharmacies for 90
      days
      following the applicable Inventory Closing Date. Buyer and Eastern shall have
      the right to use the tradenames and Trademarks associated with the Purchased
      Operate Location Pharmacies in advertising that cannot be changed by Buyer
      or
      its Affiliates or resellers using commercially reasonable efforts for a period
      not to exceed 180 days after the applicable Inventory Closing Date. Buyer and
      Eastern shall comply with all applicable Requirements of Law in any use of
      packaging or labeling containing the tradenames and Trademarks primarily used
      in
      or related to the ownership or operation of the Purchased Operate Location
      Pharmacies. Buyer and Eastern shall not be obligated to change the tradenames
      and Trademarks primarily used in or related to the ownership or operation of
      the
      Purchased Operate Location Pharmacies on goods in the hands of dealers,
      distributors and customers at the time of the expiration of the time period
      set
      forth herein.

     

    
      
         

      

      
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    (c) For
      a
      period of one-hundred twenty (120) days after the Closing Date, the Sellers
      shall have a non-exclusive right to use the Intellectual Property included
      in
      the Purchased Assets and used in the operation of any Excluded Worksite
      Pharmacies. Additionally, the Sellers shall have a perpetual, royalty-free,
      non-exclusive license to use the existing tradename of any Excluded Worksite
      Pharmacy, provided,
      that
      the Sellers will act diligently to re-brand any such Excluded Worksite Pharmacy
      and such license may only be transferred to a purchaser of such Excluded
      Worksite Pharmacy. If the Sellers are able to re-brand any such Excluded
      Worksite Pharmacy, the license granted pursuant to the preceding sentence will
      automatically terminate and be of no further force or effect.

     

    7.16. Excluded
      Pharmacies; Post-Closing Consents. 

     

    (a) The
      parties agree that on or prior to the Closing Date, Buyer may (i) designate
      any
      Operate Location Pharmacies for which Required Lease Consents are not obtained
      as an “Excluded Operate Location Pharmacy” and (ii) designate any Worksite
      Pharmacies for which Required Worksite Consents are not obtained as an “Excluded
      Worksite Pharmacy”. The parties agree Buyer or Eastern, as applicable, will
      purchase and the Sellers will sell to Buyer or Eastern, as applicable, any
      Operate Location Pharmacies designated as an Excluded Operate Location Pharmacy
      or any Worksite Pharmacies designated as an Excluded Worksite Pharmacy pursuant
      to this Section 7.16(a)
      if the
      Sellers are able to obtain the Required Lease Consent or Required Worksite
      Consent for such location within sixty (60) days after the Closing Date on
      the
      terms set forth in this Agreement.

     

    (b) The
      parties agree that the risk of loss or damage to the Purchased Assets after
      the
      Closing Date, but prior to the assets being transferred to Buyer on the
      applicable Inventory Closing Date, shall be on the Sellers. Notwithstanding
      anything in the Agreement to the contrary, if any Purchased Assets at a
      particular Operate Location Pharmacy or Worksite Pharmacy are damaged or
      destroyed prior to the applicable Inventory Closing Date (any such event, an
      “Event
      of Loss”)
      and
      such Event of Loss shall materially affect the value of the Purchased Assets
      at
      such Operate Location Pharmacy or Worksite Pharmacy, Buyer may designate such
      Operate Location Pharmacy or Worksite Pharmacy as an “Excluded Operate Location
      Pharmacy” or “Excluded Worksite Pharmacy”, as applicable. The parties agree
      Buyer or Eastern, as applicable, will purchase and the Sellers will sell to
      Buyer or Eastern, as applicable, any Operate Location Pharmacy or Worksite
      Pharmacy designated as an Excluded Operate Location Pharmacy or Excluded
      Worksite Pharmacy pursuant to this Section
      7.16(b)
      if the
      Sellers are able to cure the applicable Event of Loss within sixty 60 days
      of
      the Event of Loss, on the terms set forth in this Agreement. If any Event of
      Loss results in any Operate Location Pharmacy or Worksite Pharmacy being
      designated as an Excluded Operate Location Pharmacy or Excluded Worksite
      Pharmacy, the parties shall negotiate in good faith to cause such Excluded
      Operate Location Pharmacy or Excluded Worksite Pharmacy to be purchased and
      sold
      as though it were a File-Transfer Location (taking into account all relevant
      consideration, including the proximity of existing pharmacies owned and operated
      by Buyer or Eastern or their respective subsidiaries and Buyer’s and Eastern’s
      expected retention of the business generated by such Excluded Operate Location
      Pharmacy or Excluded Worksite Pharmacy if any such pharmacy were purchased
      and
      sold as though it were a File-Transfer Location).

     

    
      
         

      

      
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    7.17. Prospective
      Worksite Pharmacies.
      Between
      the date hereof and the Closing Date, the Sellers shall continue to pursue
      and
      develop Prospective Worksite Pharmacies consistent with past practices and
      the
      Sellers shall not enter into any Worksite Agreements with respect to any
      Prospective Worksite Pharmacies without the written consent of Buyer. To the
      extent that Sellers do not receive any of the Required Worksite Consents and
      Buyer and Eastern designate all three (3) of the Worksite Pharmacies as
“Excluded Worksite Pharmacies” pursuant to Section
      7.16,
      the
      Sellers will not sell to Buyer, and Buyer will not purchase from the Sellers,
      the Prospective Worksite Pharmacies. The parties agree Buyer or Eastern, as
      applicable, will purchase and the Sellers will sell to Buyer or Eastern, as
      applicable, the Prospective Worksite Pharmacies on the terms set forth in this
      Agreement if Buyer or Eastern purchase an Excluded Worksite Pharmacy after
      the
      Closing Date pursuant to Section
      7.16(a).

     

    7.18. Nonassignable
      Contracts. 

     

    (a) To
      the
      extent that the assignment by the Sellers of any Assumed Contract is not
      permitted without the consent of the other party to the Contract, then this
      Agreement shall not be deemed to constitute an assignment or an attempted
      assignment of the same, if such assignment or attempted assignment would
      constitute a breach thereof.

     

    (b) If
      any
      necessary consent or approval is not obtained, the Sellers shall cooperate
      with
      Buyer and Eastern in any reasonable arrangement designed to provide Buyer or
      Eastern with all of the benefits under such Contract, as if such consent or
      approval had been obtained. Nothing herein shall excuse the Sellers from
      responsibility for any of their respective representations and warranties or
      covenants hereunder. 

     

    7.19. Remittance.
      The
      parties agree that (a) in the event Buyer or Eastern receives payment from
      any
      parties for services rendered by the Sellers before the applicable Inventory
      Closing Date with respect to any Location (including payment from Medicare
      and
      Medicaid programs), Buyer or Eastern will remit such payment to the Sellers
      as
      soon as reasonably practicable after receipt thereof (but in no event later
      than
      fifteen (15) days) and (b) in the event the Sellers receive payment from any
      parties for services rendered by Buyer or Eastern after the applicable Inventory
      Closing Date with respect to any Location (including payment from Medicare
      and
      Medicaid programs), the Sellers will remit such payment to Buyer or Eastern
      as
      soon as reasonably practicable after receipt thereof (but in no event later
      than
      fifteen (15) days). 

     

    7.20. Further
      Assurances.
      At any
      time and from time to time at or after the Closing, the parties agree to
      cooperate with each other to execute and deliver such other documents,
      instruments of transfer or assignment, files, books and records and do all
      such
      further acts and things as may be reasonably required in order to carry out
      the
      purposes of this Agreement.

     

    
      
         

      

      
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    7.21. Access
      to Records and Management After Closing. 

     

    (a) From
      the
      Closing Date through the earlier of (i) the third anniversary of the Closing
      Date or (ii) FMRX’s final distribution of assets to FMRX’s stockholders or
      dissolution of FMRX, the Sellers shall afford to Buyer and, upon request,
      Buyer’s counsel, accountants and other representatives, reasonable access at
      reasonable times and occasions to access and inspect information not included
      in
      the Purchased Assets but relating to the Purchased Assets, the Business, any
      Transferred Employee, or a claim by any Buyer Member for indemnification
      pursuant to Section
      8.1.
      From
      the Closing Date through the earlier of (i) the third anniversary of the Closing
      Date or (ii) FMRX’s final distribution of assets to FMRX’s stockholders or
      dissolution of FMRX, Buyer shall afford to the Sellers and, upon request, the
      Sellers’ counsel, accountants and other representatives, reasonable access at
      reasonable times and occasions (and for any reasonable business purposes) to
      information previously provided to Buyer by the Sellers relating to the
      Purchased Assets, Transferred Employees, Records related to periods before
      the
      Closing Date or a claim by the Sellers for indemnification pursuant to
Section
      8.2.
      If FMRX
      determines to dissolve itself prior to the third anniversary of the Closing
      Date, FMRX will notify Buyer at least thirty (30) days in advance and give
      Buyer
      an opportunity, at its sole expense, to make copies of any of the Sellers’
records relating to the Purchased Assets.

     

    (b) Buyer
      and
      FMRX agree that for a period of four (4) months following the Closing (the
      “Management
      Consulting Period”),
      upon
      reasonable advance notice from Buyer, FMRX shall cause its senior management
      to
      provide reasonably requested consulting services to Buyer (relating the
      ownership and operation of the Business prior to Closing); provided,
      however,
      that
      such consulting services shall be limited to services that can reasonably be
      performed by those members of senior management who are at such time employed
      by
      FMRX throughout any time period in which such services are to be performed,
      and
      shall not interfere with FMRX’s operation of its businesses or with senior
      management’s duties and responsibilities to the Sellers. Buyer shall compensate
      FMRX for such management time at an hourly rate equal to each employee’s time on
      a fully loaded basis, provided,
      that
      Buyer shall not be required to compensate FMRX for (i) any cooperation required
      by Section
      7.20
      or (ii)
      any services provided pursuant to the Consulting and Non-Competition Agreement
      to be executed between Buyer and Edgardo Mercadante.

     

    7.22. Tupelo
      Property.
      Buyer
      shall, at its expense, be permitted to conduct a Phase I environmental audit
      with respect to the Tupelo Property. Additionally, Buyer shall have the right
      to
      obtain prior to the Closing Date, at its expense, a title commitment setting
      forth the current state of title (the “Title
      Commitment”).
      If
      (i) the results of any such environmental audit, assessment or study reveals
      any
      environmental defects or liabilities or violations of Environmental, Health
      and
      Safety Requirements, (ii) if the Buyer shall have attempted in good faith and
      been unable to obtain an acceptable Title Commitment or the Title Commitment
      is
      obtained and reveals any Encumbrance, other than a Permitted Encumbrance, (iii)
      the Tupelo Property is subject to condemnation or a taking under eminent domain
      or (iv) Sellers do not deliver a deed with respect to the property in form
      and
      substance acceptable to Buyer, in the case of clauses (i) or (ii) that
      materially and adversely affects the value of the Tupelo Property, then Buyer
      may elect to exclude the Tupelo Property from this Agreement, in which case
      the
      Sellers will not sell to Buyer, and Buyer will not purchase from the Sellers,
      the Tupelo Property; provided,
      that
      such election shall constitute the sole remedy of Buyer or Eastern with respect
      to any breach of representation, warranty or covenant hereunder with respect
      to
      the Tupelo Property; and provided,
      further,
      that no
      such election, nor any breach of any representation, warranty or covenant
      hereunder regarding the Tupelo property, shall alter the obligations of the
      parties regarding the purchase and sale of the other Purchased
      Assets.

     

    
      
         

      

      
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    7.23. Collection
      of Patient Charges.
      During
      the 90 day period that begins on the applicable Inventory Closing Date with
      respect to each File-Transfer Location and Purchased Operate Location Pharmacy
      (the “Collection
      Period”),
      Buyer
      and Eastern shall collect and receive payment in the ordinary course of business
      with respect to the Patient Charges transferred to Buyer and Eastern with
      respect to each File-Transfer Location and Purchased Operate Location Pharmacy,
      generally in accordance with the billing and collection practices presently
      applied by the Sellers in the collection of patient charges, except that Buyer
      and Eastern shall be under no obligation to commence or threaten any litigation
      to effect collection and may, after reasonable consultation with, and written
      consent (which shall not be unreasonably withheld) from, the Sellers, make
      any
      adjustment, concession or settlement which in the good faith judgment of Buyer
      or Eastern is commercially reasonable. The Sellers agree to use commercially
      reasonable efforts to assist in the collection of the Patient Charges when
      so
      requested by Buyer and Eastern; provided,
      that
      the Sellers shall not be required to incur any out-of-pocket Expenses in
      connection with such efforts. If the cumulative principal amount of the
      collections received with respect to the applicable Patient Charges as of the
      expiration of the applicable Collection Period, less Buyer’s collection costs,
      exceeds 110% of the Patient Charges Aggregate Amount (such collection amount
      in
      excess of 110% of the Patient Charges Aggregate Amount, less Buyer’s collection
      costs, the “Collections
      Excess”),
      Buyer
      shall pay promptly to the Sellers an amount equal to the Collections Excess.
      If
      the cumulative principal amount of the Patient Charges collected as of the
      expiration of the Collection Period is less than 90% of the Patient Charges
      Aggregate Amount (such difference between the collection amount and 90% of
      the
      Patient Charges Aggregate Amount, the “Collections
      Deficiency”),
      the
      Sellers shall promptly pay to Buyer an amount equal to such Collections
      Deficiency. At the end of the applicable Collection Period, Buyer shall cease
      to
      have any further responsibilities to the Sellers with respect to the applicable
      Patient Charges.

     

    7.24. Website
      Termination.
      As of
      or immediately following the Closing Date and any Inventory Closing Date,
      Sellers shall disable any connection between the Sellers’ websites, including
      www.familymeds.com, and the Locations purchased by Buyer or Eastern on such
      Closing Date or Inventory Closing Date.

     

    
      
         

      

      
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    ARTICLE
      VIII

     

    INDEMNIFICATION

     

    8.1. Indemnification
      by the Sellers.

     

    (a) The
      Sellers jointly and severally agree to indemnify and hold harmless each Buyer
      Group Member from and against any and all Losses and Expenses incurred by such
      Buyer Group Member in connection with or arising from:

     

    (i) any
      breach of any warranty or the inaccuracy of any representation of the Sellers
      contained or referred to in this Agreement or any certificate delivered by
      or on
      behalf of the Sellers pursuant hereto;

     

    (ii) any
      breach by the Sellers of any of their respective covenants or agreements, or
      any
      failure of the Sellers to perform any of their respective obligations, in this
      Agreement;

     

    (iii) the
      failure of the Sellers to pay, perform or discharge any Excluded Liability;
      

     

    (iv) the
      failure of Seller to comply with any applicable Uniform Commercial Code filing
      provisions with respect to “bulk transfers”; or

     

    (v) any
      and
      all claims from or on behalf of any former, current or future (A) holder of
      capital stock of, or other rights or interests in FMRX or (B) creditor of the
      Sellers (other than with respect to Assumed Liabilities), in either case,
      arising from or relating to the execution, delivery and performance of this
      Agreement and the transactions contemplated hereby

     

    provided,
      however,
      that:

     

    (A)
      the
      Sellers shall not be required to indemnify and hold harmless Buyer Group Members
      under clause (i) of this Section
      8.1(a)
      with
      respect to Losses and Expenses incurred by Buyer Group Members (other than
      Losses and Expenses incurred as a result of inaccuracies of the representations
      and warranties contained in Sections
      5.1,
      5.4
      and
5.25,
      as to
      which this proviso shall have no effect) unless the aggregate amount of such
      Losses and Expenses subject to indemnification by the Sellers exceeds $200,000,
      and once such amount is exceeded, the Sellers shall indemnify the Buyer Group
      Members only for the amount in excess of such amount; and

     

    (B)
      in no
      event shall the aggregate amount required to be paid by the Sellers pursuant
      to
      clause (i) of this Section
      8.1(a)
      (other
      than Losses and Expenses incurred as a result of inaccuracies of the
      representations and warranties contained in Sections
      5.1,
      5.4
      and
5.25,
      as to
      which there shall be no limitation) exceed $10,000,000.

     

    
      
         

      

      
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    (b) The
      indemnification provided for in clause (i) of Section
      8.1(a)
      shall
      terminate on the earlier of (i) one (1) year after the Closing Date or (ii)
      the
      final distribution of assets to FMRX’s stockholders or dissolution of FMRX (the
“Indemnity
      Termination Date”)
      (and
      no claims shall be made by any Buyer Group Member under clause (i) of
Section
      8.1(a)
      after
      the Indemnity Termination Date), except that the indemnification by Seller
      shall
      continue as to:

     

    (i) the
      representations and warranties set forth in Sections
      5.1,
      5.4
      and
5.25,
      as to
      which no time limitation shall apply; and

     

    (ii) any
      Loss
      or Expense arising under or related to a claim pursuant to clause (i) of
Section
      8.1(a)
      of which
      any Buyer Group Member has notified the Sellers in accordance with the
      requirements of Section
      8.4
      on or
      prior to the date such indemnification would otherwise terminate in accordance
      with this Section
      8.1,
      as to
      which the obligation of the Sellers shall continue until the liability of the
      Sellers shall have been determined pursuant to this Article
      VIII,
      and the
      Sellers shall have reimbursed all Buyer Group Members for the full amount of
      such Loss and Expense in accordance with this Article
      VIII.

     

    8.2. Indemnification
      by Buyer.
      Buyer
      agrees to indemnify and hold harmless the Sellers and their respective
      Affiliates, directors, officers and employees from and against any and all
      Losses and Expenses incurred by any of them in connection with or arising from:
      (a) any breach by Buyer of any of its representations or warranties in this
      Agreement or in any agreement or document required to be delivered by Buyer
      hereunder; (b) any breach by Buyer of any of its covenants, agreements or
      obligations in this Agreement or in any agreement or document required to be
      delivered by Buyer hereunder, (c) any Assumed Liability; (d) the acts or
      omissions of Buyer or its Affiliates, employees, agents and contractors, in
      connection with the transactions contemplated by this Agreement. The
      indemnification provided for in Section
      8.2
      shall
      terminate on the Indemnity Termination Date (and no claims shall be made by
      Seller under Section
      8.2
      thereafter).

     

    8.3. Indemnity
      Fund; Termination of Indemnity Fund. 

     

    (a) For
      purposes of satisfying any amounts owed to any Buyer Group Member under this
      Agreement, the Buyer Group Members shall be entitled (subject to final
      determination of the right to, and amount of, indemnification pursuant to
Section
      8.4(b)
      to
      either (a) set off and reduce any amounts owed to the Sellers under this
      Agreement, or (b) charge the amount of any Loss and Expense against (and be
      entitled to receive payment from) the Indemnity Fund, until the amounts owed
      under this Article
      VIII
      exceed
      the Indemnity Fund.

     

    (b) In
      the
      event that on the Indemnity Termination Date, no claims for indemnification
      by
      any Buyer Group Member are pending or remain unpaid, the Indemnity Fund shall
      terminate and any funds then remaining in the Indemnity Fund shall be
      distributed in accordance with the terms of the Indemnity Escrow Agreement.
      Alternatively, in the event that on the Indemnity Termination Date, any such
      good faith claims for indemnification are pending or remain unpaid, the
      Indemnity Fund shall not terminate and any funds remaining in the Indemnity
      Fund
      shall not be distributed to the Sellers or any of their respective creditors
      or
      stockholders unless and until all such claims have been resolved and, if
      appropriate, paid in accordance with this Article
      VIII;
      provided,
      however,
      that if
      the aggregate maximum amount of such claims is less than the then existing
      Indemnity Fund, the Indemnity Agent shall distribute such difference in
      accordance with the terms of the Indemnity Escrow Agreement. The parties agree
      that if six (6) months after the Indemnity Termination Date, any good faith
      claims for indemnification remain pending or unpaid, the party making such
      claim
      shall bring an action to adjudicate such claims as promptly as
      practicable.

     

    
      
         

      

      
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    8.4. Notice
      and Determination of Claims. 

     

    (a) The
      party
      which is entitled to indemnification hereunder (the “Indemnified
      Person”)
      may
      make claims for indemnification hereunder by promptly giving written notice
      thereof to the party required to indemnify (the “Indemnitor”)
      within
      the period in which indemnification claims can be made hereunder. If
      indemnification is sought for a claim or liability asserted by a third party
      (the “Third
      Person Claim”),
      the
      Indemnified Person shall also give written notice thereof to the Indemnitor
      promptly after it receives notice of the claim or liability being asserted,
      but
      the failure to do so, or any delay in doing so, shall not relieve the Indemnitor
      of its indemnification obligation under this Article VIII,
      unless,
      and then only to the extent that, the rights and remedies of the Indemnitor
      are
      prejudiced as a result of the failure to give, or delay in giving, such notice.
      Such notice shall in good faith summarize the bases for the claim for
      indemnification (the “Claim
      Notice”)
      describing such Loss or Expense, the amount thereof, if known, and the method
      of
      computation of such Loss or Expense, all with reasonable particularity and
      containing a reference to the provisions of this Agreement, any certificate
      or
      other agreement delivered pursuant hereto in respect of which such Loss or
      Expense shall have occurred. 

     

    (b) Within
      fourteen (14) days after receiving such notice (or sooner as is reasonably
      necessary, in the case of a Third Person Claim), the Indemnitor shall give
      written notice to the Indemnified Person stating whether it in good faith
      disputes the claim for indemnification and whether it will defend against any
      Third Person Claim at its own cost and expense. If the Indemnitor fails to
      give
      notice that it disputes an indemnification claim within 14 days after receipt
      of
      notice thereof (or sooner as is reasonably necessary, in the case of a Third
      Person Claim), it shall be deemed to have accepted and agreed to the claim,
      and
      the
      amount of indemnification to which an Indemnified Person shall be entitled
      under
      this Article VIII
      shall be
      determined: (i) by the written agreement between the Indemnified Person and
      the Indemnitor; (ii) by a final, non-appealable judgment or decree of any
      court of competent jurisdiction; or (iii) by any other means to which the
      Indemnified Person and the Indemnitor shall agree. The judgment or decree of
      a
      court shall be deemed final when the time for appeal, if any, shall have expired
      and no appeal shall have been taken or when all appeals taken shall have been
      finally determined. 

     

    
      
         

      

      
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    8.5. Third
      Person Claims. 

     

    (a) Subject
      to Section
      8.5(b),
      the
      Indemnitor shall have the right to conduct and control, through counsel of
      its
      choosing (subject
      to the consent of the Indemnified Person, which consent shall not be
      unreasonably withheld),
      the
      defense, compromise or settlement of any such Third Person Claim against such
      Indemnified Party as to which indemnification will be sought by any Indemnified
      Party from any Indemnitor hereunder if the Indemnitor has acknowledged and
      agreed in writing that, if the same is adversely determined, the Indemnitor
      has
      an obligation to provide indemnification to the Indemnified Party in respect
      thereof, and in any such case the Indemnified Party shall cooperate in
      connection therewith and shall furnish such records, information and testimony
      and attend such conferences, discovery proceedings, hearings, trials and appeals
      as may be reasonably requested by the Indemnitor in connection therewith;
provided,
      that
      the Indemnified Party may participate, through counsel chosen by it and at
      its
      own expense, in the defense of any such Third Person Claim as to which the
      Indemnitor has so elected to conduct and control the defense thereof.
      Notwithstanding anything herein to the contrary, the Indemnitor shall not settle
      or compromise any Third Person Claim without the prior written consent of the
      Indemnified
      Party which shall not be unreasonably withheld, unless the terms of any
      settlement or compromise provide for (i) no relief other than the payment of
      monetary damages for which the Indemnified Party will be indemnified in full
      and
      (ii) a full release of the Indemnified Party for all liability in respect of
      such claim or litigation.

     

    (b)Notwithstanding
      the provisions of paragraph (a) above which grant to the Indemnitor the right
      to
      assume the defense of a Third Person Claim, if (i) the Indemnitor elects not
      to
      assume the defense or fails to assume the defense in a timely manner, (ii)
      the
      Indemnitor and any Indemnified Party are both parties to or subjects of such
      Third Person Claim and a conflict of interests exists between the Indemnitor
      and
      such Indemnified Party which has the potential of materially and adversely
      affecting the interests of the Indemnified Party in the defense of such Third
      Person Claim or (iii) the Indemnified Party reasonably determines in good faith
      that the Indemnified Party or its Affiliates could be adversely affected in
      any
      material respect in such Third Person Claim other than as a result of monetary
      damages, then the Indemnified Party may conduct its own defense and employ
      counsel reasonably satisfactory to the Indemnitor to represent or defend it
      against such Third Person Claim, in which case the Indemnitor will pay the
      reasonable Expenses of such counsel. If the Indemnified Party retains its own
      counsel, the Indemnitor shall reasonably cooperate in providing information
      to
      and consulting with the Indemnified Party about the Third Person
      Claim.

     

    8.6. Calculation
      of Losses and Expenses.

     

    (a) Any
      indemnity payment hereunder with respect to any Loss or Expense shall be
      calculated on an “After-Tax Basis”, which shall mean an amount which is
      sufficient to compensate the Indemnified Person for the event giving rise to
      such Loss or Expense (the “Indemnified
      Event”),
      determined after taking into account (1) all increases in federal, state, local
      or other Taxes (including estimated Taxes) payable by the Indemnified Person
      as
      a result of the receipt of the indemnity payment (as a result of the indemnity
      payment being included in income, resulting in a reduction of Tax basis, or
      otherwise), (2) to the extent not previously taken into account in computing
      the
      amount of the such Loss or Expense, all increases in federal, state, local
      and
      other Taxes (including estimated Taxes) payable by the Indemnified Person as
      a
      result of the Indemnified Event for all affected taxable years or periods ending
      on or before the Closing Date or the applicable Inventory Closing Date and,
      with
      respect to any Straddle Period, the portion of such Straddle Period ending
      on
      and including the Closing Date or the applicable Inventory Closing Date, and
      (3)
      to the extent not previously taken into account in computing the amount of
      such
      Loss or Expense, all reductions in federal, state, local and foreign Taxes
      (including estimated Taxes) realized by the Indemnified Person as a result
      of
      the Indemnified Event for all affected taxable years or periods ending on or
      before the Closing Date or the applicable Inventory Closing Date and, with
      respect to any Straddle Period, the portion of the Straddle Period ending on
      and
      including the Closing Date or the applicable Inventory Closing
      Date.

     

    
      
         

      

      
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    (b) Notwithstanding
      anything to the contrary elsewhere in this Agreement, no party shall, in any
      event, be liable to any other Person for any consequential, incidental,
      indirect, special or punitive damages of such other Person; provided,
      that
      such exclusion shall not be interpreted to include any actual out-of-pocket
      Losses or Expenses.

     

    8.7. Tax
      Treatment of Indemnity Payments.
      The
      Sellers and Buyer agree to treat any indemnity payment made pursuant to this
      Article
      VIII
      as an
      adjustment to the Purchase Price for federal, state, local and foreign income
      Tax purposes.

     

    8.8. Indemnification
      as Sole Remedy.
      Except
      as permitted under Section
      11.11
      and
      except with respect to claims for Losses and Expenses which cannot be waived
      as
      a matter of law (including fraud), the indemnity provided herein will be the
      sole and exclusive remedy of the Buyer Group Members and the Sellers and their
      respective Affiliates, directors, officers, employees and agents with respect
      to
      any and all claims for Losses and Expenses sustained, incurred or suffered,
      directly or indirectly, relating to or arising out of this
      Agreement.

     

    ARTICLE
      IX

     

    CONDITIONS
      TO CLOSING

     

    9.1. Sellers’
      Condition to Closing.
      The
      obligations of the Sellers under this Agreement are subject to the satisfaction
      at or prior to the Closing of each of the following conditions, but compliance
      with any or all of such conditions may be waived, in writing, by the
      Sellers:

     

    (a) The
      representations and warranties of Buyer and Eastern contained in this Agreement
      that are qualified as to materiality shall be true and correct in all respects
      and those representations and warranties not so qualified shall be true and
      correct in all material respects, in each case, on the date hereof and on the
      Closing Date (except to the extent that they expressly relate to an earlier
      date);

     

    (b) Buyer
      and
      Eastern shall have performed and complied in all material respects with all
      of
      the covenants and agreements contained in this Agreement and satisfied all
      of
      the conditions required by this Agreement to be performed or complied with
      or
      satisfied by Buyer and Eastern at or prior to the Closing;

     

    
      
         

      

      
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    (c) The
      waiting period under the HSR Act shall have expired or been terminated and,
      on
      the Closing Date, there shall be no injunction, restraining order or decree
      of
      any nature of any court or Governmental Body in effect that restrains or
      prohibits the consummation of the transactions contemplated by this Agreement
      and no action, suit or proceeding shall have been instituted by any Person
      or
      entity, or threatened by any Governmental Body, before a court or Governmental
      Body, to restrain or prevent the carrying out of the transactions contemplated
      by this Agreement;

     

    (d) The
      FMRX
      Stockholder Approval shall have been obtained; and

     

    (e) Buyer
      and
      Eastern shall have delivered all documents required to be delivered under
Section
      4.2.
      

     

    9.2. Buyer’s
      Conditions to Closing.
      The
      obligations of Buyer and Eastern under this Agreement are subject to the
      satisfaction at or prior to the Closing of each of the following conditions,
      but
      compliance with any or all of any such conditions may be waived, in writing,
      by
      Buyer and Eastern: 

     

    (a) The
      representations and warranties of each of the Sellers contained in this
      Agreement shall have been true and correct when made and shall be true and
      correct as of the Closing Date, with the same force and effect as if made as
      of
      the Closing Date (other than such representations and warranties as are made
      as
      of another date which shall be true and correct as of such date), except where
      the failure to be so true and correct (without giving effect to any limitations
      or qualifications as to “materiality” (including the word “material” or
“Material Adverse Effect” set forth therein)) would not, individually or in the
      aggregate, have, or reasonably be expected to have, a Material Adverse
      Effect;

     

    (b) Each
      of
      the Sellers shall have performed and complied in all material respects with
      all
      the covenants and agreements contained in this Agreement and satisfied all
      the
      conditions required by this Agreement to be performed or complied with or
      satisfied by it or them at or prior to the Closing Date;

     

    (c) The
      waiting period under the HSR Act shall have expired or been terminated and,
      on
      the Closing Date, there shall be no injunction, restraining order or decree
      of
      any nature of any court or Governmental Body in effect that restrains or
      prohibits the consummation of the transactions contemplated by this Agreement
      and no action, suit or proceeding shall have been instituted by any Person
      or
      entity, or threatened by any Governmental Body, before a court or Governmental
      Body, to restrain or prevent the carrying out of the transactions contemplated
      by this Agreement;

     

    (d) Between
      the date hereof and the Closing Date, there shall not have been any Material
      Adverse Effect;

     

    (e) The
      FMRX
      Stockholder Approval shall have been obtained;

     

    
      
         

      

      
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    (f) The
      Sellers shall have delivered to Buyer and Eastern documents, in form and
      substance reasonably satisfactory to Buyer, demonstrating the release of all
      Encumbrances (except Permitted Encumbrances) on the Purchased Assets, including
      customary pay-off letters or similar acknowledgements of the discharge of any
      indebtedness for borrowed money of the Sellers setting forth the amount owed
      as
      of the Closing Date and indicating that upon payment of such amount, such
      indebtedness will be discharged in full and all related Encumbrances (except
      Permitted Encumbrances) on the Purchased Assets will be released and
      removed;

     

    (g) The
      Sellers shall have delivered all documents required to be delivered under
Section
      4.3;

     

    (h) Buyer
      and
      Edgardo Mercadante shall have entered into a definitive Consulting and
      Non-Competition Agreement on the terms set forth in the term sheet attached
      as
Exhibit
      E
      and such
      other customary terms mutually agreed upon by Buyer and Edgardo Mercadante;
      and

     

    (i) Buyer
      and
      Eastern shall have obtained all pharmacy licenses and pharmacy permits required
      to operate the Business (either by transfer of Seller’s Transferable Permits to
      the extent permitted by law or its receipt of new licenses, permits or numbers,
      provided,
      however,
      that
      prior to Closing, Buyer and Eastern will file their respective applications
      for
      the required licenses).

     

    ARTICLE
      X

     

    TERMINATION

     

    10.1. Termination.
      Notwithstanding anything contained in this Agreement to the contrary, this
      Agreement may be terminated at any time prior to the Closing Date whether before
      or after the FMRX Stockholder Approval shall have been obtained (except for
      any
      termination pursuant to Section
      10.1(h)):

     

    (a) by
      the
      mutual written consent of Buyer and each of the Sellers;

     

    (b) by
      Buyer
      in the event of any material breach by any Seller of any of such Seller’s
      agreements, covenants, representations or warranties contained herein and such
      material breach is incapable of being cured or, if capable of being cured,
      shall
      not have been cured within thirty (30) days following receipt by such Seller
      of
      notice of such material breach from Buyer;

     

    (c) by
      any of
      the Sellers in the event of any material breach by Buyer of any of Buyer’s
      agreements, covenants, representations or warranties contained herein and such
      material breach is incapable of being cured or, if capable of being cured,
      shall
      not have been cured within thirty (30) days following receipt by Buyer of notice
      of such material breach from the Sellers;

     

    
      
         

      

      
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    (d) by
      any of
      the Sellers or Buyer if any Governmental Body shall have issued a final and
      non-appealable order, decree or ruling permanently restraining, enjoining or
      otherwise prohibiting the consummation of the transactions contemplated hereby;
      

     

    (e) by
      any of
      the Sellers or Buyer if the Closing shall not have occurred on or before 180
      days after the date hereof (or such later date as may be mutually agreed to
      in
      writing by Buyer and the Sellers) (the “Termination
      Date”);
      provided,
      that
      the party seeking to exercise such right of termination has not breached its
      obligations hereunder;

     

    (f) by
      any of
      the Sellers or Buyer if, at the FMRX Stockholder Meeting or any adjournment
      thereof at which this Agreement has been voted upon, the FMRX Stockholder
      Approval shall have not been obtained; or

     

    (g) by
      Buyer
      if (i) the Board of Directors of FMRX shall (A) make a Change of Recommendation
      or shall fail to include the FMRX Recommendation in the FMRX Proxy Statement,
      (B) approve or recommend to the stockholders of FMRX an Acquisition Proposal
      or
      an Alternative Proposal, (C) fail to confirm the FMRX Recommendation within
      five
      (5) business days of Buyer’s request to do so, (D) approve or recommend that the
      stockholders of FMRX tender their stock in FMRX in any tender or exchange offer
      that is an Acquisition Proposal or an Alternative Proposal (or fail to recommend
      to FMRX’s stockholders rejection of such tender or exchange offer within ten
      (10) days after such tender or exchange offer is first published, sent or
      given), or (E) publicly propose, approve a resolution or agree to do any of
      the
      foregoing, in each case, whether or not permitted by the terms of this
      Agreement; (ii) FMRX shall have breached its obligations under this Agreement
      by
      reason of a failure to call and hold the FMRX Stockholder Meeting in accordance
      with Section
      7.10(a)
      or a
      failure to prepare and mail to its stockholders the FMRX Proxy Statement in
      accordance with Section
      7.10(b);
      or
      (iii) prior to the record date with respect to the FMRX Stockholder Approval,
      any Person or group (other than Buyer or its Affiliates) acquires Beneficial
      Ownership of a majority of the outstanding stock of any of the Sellers;
      or

     

    (h) by
      FMRX,
      pursuant to Section
      7.9(c).

     

    10.2. Extension
      of Termination Date.
      Notwithstanding the foregoing, any of the Sellers or Buyer shall have the option
      to extend, from time to time, the Termination Date for additional periods of
      time not to exceed sixty (60) days in the aggregate if all other conditions
      to
      the Closing are satisfied or capable of then being satisfied and the sole reason
      that the Closing has not been consummated is that the FMRX Stockholder Meeting
      has not yet been held as a result of the time required to complete the SEC
      review process related to the FMRX Proxy Statement; provided,
      that
      the right to extend the Termination Date pursuant to this Section
      10.2
      shall
      not be available to any party whose breach of any provision of this Agreement
      has been the cause of, or resulted, directly or indirectly, in, the failure
      of
      the Closing to be consummated by the Termination Date.

     

    
      
         

      

      
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    10.3. Effect
      of Termination. 

     

    (a) In
      the
      event of the termination of this Agreement pursuant to Section
      10.1,
      all
      further obligations of the parties under this Agreement shall be terminated
      without further liability of any party or its stockholders, directors or
      officers to the other parties, provided,
      (a)
      that this Section
      10.3
      and
Sections
      11.2,
      11.7
      and
11.13
      shall
      survive any such termination, and (b) that nothing herein shall relieve any
      party from liability or damages for its willful breach of this
      Agreement.

     

    (b) If:

     

    (i)    (A) (x)
      any
      of the Sellers or Buyer shall terminate this Agreement pursuant to Section
      10.1(e)
      or
(y)
      Buyer
      shall terminate this Agreement pursuant to Section
      10.1(b),
      and

     

    (B) at
      any
      time after the date of this Agreement and before such termination, a Superior
      Proposal shall have been publicly announced, become publicly known or otherwise
      communicated to senior management, the Board of Directors and stockholders
      of
      FMRX (whether or not conditional and whether or not withdrawn), and

     

    (C) within
      twelve months of such termination FMRX or any of its Subsidiaries enters into
      a
      definitive agreement with respect to, or consummates, any Acquisition Proposal
      or Alternative Proposal;

     

    (ii) Buyer
      shall terminate this Agreement pursuant to Section
      10.1(g);
      or

     

    (iii) FMRX
      shall terminate this Agreement pursuant to Section
      10.1(h);

     

    then
      the
      Sellers shall promptly, but in no event later than the date of such termination
      (or, in the case of clause (i), if later, the date any of the Sellers or any
      of
      their respective Subsidiaries enters into such agreement with respect to or
      consummates such Acquisition Proposal or Alternative Proposal), (x) pay Buyer
      an
      amount equal to $2,500,000 and (y) assume and pay, or reimburse Buyer for,
      all
      reasonable, out-of-pocket Expenses incurred by Buyer in connection with this
      Agreement and the transactions contemplated hereby (but not in excess of
      $500,000) by wire transfer of immediately available funds.

     

    (c) If
      any of
      the Sellers or Buyer shall terminate this Agreement pursuant to Section
      10.1(f),
      then
      the Sellers shall on the date of such termination assume and pay, or reimburse
      Buyer for, all reasonable, out-of-pocket Expenses incurred by Buyer in
      connection with this Agreement and the transactions contemplated hereby (but
      not
      in excess of $500,000) by wire transfer of immediately available funds. In
      addition, if any of the Sellers or Buyer shall terminate this Agreement pursuant
      to Section
      10.1(f),
      and at
      any time after this date of this Agreement and before the FMRX Stockholder
      Meeting, (i) there shall have been a Change of Recommendation or (ii) a Superior
      Proposal shall have been publicly announced, become publicly known or otherwise
      communicated to senior management, the Board of Directors and stockholders
      of
      FMRX (whether or not conditional and whether or not withdrawn) and within twelve
      months of such termination any of the Sellers or any of their respective
      Subsidiaries enters into a definitive agreement with respect to, or consummates,
      any Acquisition Proposal or Alternative Proposal, then the Sellers shall pay
      Buyer an amount equal to $2,500,000 (x) in the case of clause (i) above, upon
      the date of such termination or (y) in the case of clause (ii) above, upon
      the
      date any of the Sellers or any of their respective Subsidiaries enters into
      such
      agreement with respect to or consummates any Acquisition Proposal.

     

    
      
         

      

      
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    ARTICLE
      XI

     

    GENERAL
      PROVISIONS

     

    11.1. Survival.
      All
      representations and warranties made in this Agreement shall survive the Closing
      Date until the indemnity obligations with respect thereto, as set forth in
      Article
      VIII,
      shall
      terminate.

     

    11.2. No
      Public Announcement.
      Neither
      party shall, without the approval of the other party, make any press release
      or
      other public announcement concerning the transactions contemplated by this
      Agreement, except as and to the extent that a party may be so obligated by
      law,
      in which case the parties shall use their commercially reasonable efforts to
      cause a mutually agreeable release or announcement to be issued.

     

     

    11.3. Notices.
      All
      notices or other communications required or permitted under this Agreement
      shall
      be in writing and shall be deemed to have been given when delivered in person,
      by telex or telecopier, when delivered to a recognized next business day
      courier, or, if mailed, when deposited in the United States mail, first class,
      registered or certified, return receipt requested, with proper postage prepaid,
      addressed as follows or to such other address as notice shall have been given
      pursuant hereto:

     

    If
      to the
      Sellers, to:

     

    Familymeds
      Group, Inc.

    312
      Farmington Avenue 

    Farmington,
      CT 06032

    Attention:
      Allison D. Kiene R.Ph., Esq. 

    Sr.
      Vice
      President, General Counsel and Secretary 

    Phone:
       (860)
      676-1222 ext. 117 

    Fax:
       (860)
      676-8764

    

    with
      a
      copy to:

     

    Jones
      Day

    555
      California Street

    San
      Francisco, CA 94104

    Attention:
      Tobias S. Keller

    Phone:
       (415)
      875-5869

    Fax:
       (415)
      875-5700

    
      
         

      

      
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    If
      to
      Buyer, to:

     

    Walgreen
      Co. Law Department

    104
      Wilmot Road, M. S. #1425 

    Deerfield,
      Illinois 60015 

    Attention: Allan
      M.
      Resnick

    Mark
      E.
      Vainisi 

    Phone:
       (847)
      315-4185

    Fax:
       (847)
      315-4826

    

    

    with
      a
      copy to:

     

    Sidley
      Austin LLP

    One
      South
      Dearborn

    Chicago,
      Illinois 60603

    Attention:
      Chris Abbinante

    Phone:
       (312)
      853-7000

    Fax:
       (312)
      853-7036

     

    11.4. Successors
      and Assigns; No Third Party Beneficiaries.
      Either
      party may assign any of its rights hereunder, but no such assignment shall
      relieve it of its obligations hereunder. This Agreement shall be binding upon
      and inure to the benefit of the parties hereto and their successors and
      permitted assigns. Except as set forth in Article
      VIII,
      nothing
      in this Agreement, expressed or implied, is intended or shall be construed
      to
      confer upon any Person other than the parties and successors and assigns
      permitted by this Section
      11.4
      any
      right, remedy or claim under or by reason of this Agreement.

     

    11.5. Entire
      Agreement; Amendments.
      This
      Agreement, the Confidentiality Agreement and the Exhibits and Schedules referred
      to herein and the documents delivered pursuant hereto contain the entire
      understanding of the parties hereto with regard to the subject matter contained
      herein or therein, and, except with respect to the Confidentiality Agreement,
      supersede all prior agreements, understandings or letters of intent between
      or
      among any of the parties hereto. This Agreement shall not be amended, modified
      or supplemented except by a written instrument signed by an authorized
      representative of each of the parties hereto.

     

    11.6. Waivers.
      Any
      term or provision of this Agreement may be waived, or the time for its
      performance may be extended, by the party or parties entitled to the benefit
      thereof. Any such waiver shall be validly and sufficiently authorized for the
      purposes of this Agreement if, as to any party, it is authorized in writing
      by
      an authorized representative of such party. The failure of any party hereto
      to
      enforce at any time any provision of this Agreement shall not be construed
      to be
      a waiver of such provision, nor in any way to affect the validity of this
      Agreement or any part hereof or the right of any party thereafter to enforce
      each and every such provision. No waiver of any breach of this Agreement shall
      be held to constitute a waiver of any other or subsequent breach.

     

    
      
         

      

      
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    11.7. Expenses.
      Except
      for the Closing Date Shared Expenses and Expenses included in the Inventory
      Closing Shared Expense Amount, each party hereto will pay all costs and Expenses
      incident to its negotiation and preparation of this Agreement and to its
      performance and compliance with all agreements and conditions contained herein
      on its part to be performed or complied with, including the fees, Expenses
      and
      disbursements of its counsel and accountants. All items of income and Expense
      incurred in connection with the Business of the Purchased Operate Location
      Pharmacies or the Purchased Worksite Pharmacies and, unless excluded pursuant
      to
Section
      7.22,
      the
      Tupelo Property (including rent, Expenses,
      utilities, prepayments, deposits and similar items)
      shall
      be prorated between the Sellers and Buyer such that Sellers shall receive and
      be
      responsible for all items of income and Expense earned or incurred on or prior
      to the Closing Date or applicable Inventory Closing Date. Notwithstanding the
      foregoing, at the Closing Date or the applicable Inventory Closing Date, Buyer
      will reimburse to Sellers the aggregate amount of any lease deposits transferred
      to Buyer (and acknowledged to be transferred to Buyer by the applicable landlord
      or sub-lessor) in connection with any Purchased Operate Location. For
      administrative convenience, Buyer agrees to pay and be liable for the Closing
      Date Shared Expenses and Expenses included in the Inventory Closing Shared
      Expense Amount. In consideration therefore, the parties agree that Buyer will
      be
      reimbursed, through a credit against the Purchase Price at Closing, in an amount
      equal to one-half of the Inventory Closing Shared Expense Amount and one-half
      of
      the Closing Date Shared Expenses.

     

    11.8. Disclaimer
      Regarding Projections.
      In
      connection with Buyer’s investigation of FMRX, Buyer has received from FMRX
      certain projections and other forecasts and certain business plan information.
      Buyer acknowledges that there are uncertainties in attempting to make such
      projections and other forecasts and plans, that Buyer is familiar with such
      uncertainties, that Buyer is taking full responsibility for making its own
      evaluation of the adequacy and accuracy of all projections and other forecasts
      and plans so furnished to it, and that Buyer will have no claim against anyone
      with respect thereto. Accordingly, Buyer acknowledges that FMRX does not make
      any representation or warranty with respect to such projections, forecasts
      or
      plans.

     

    11.9. Partial
      Invalidity.
      Wherever possible, each provision hereof shall be interpreted in such manner
      as
      to be effective and valid under applicable Requirements of Law, but in case
      any
      one or more of the provisions contained herein shall, for any reason, be held
      to
      be invalid, illegal or unenforceable in any respect, such provision shall be
      ineffective to the extent, but only to the extent, of such invalidity,
      illegality or unenforceability without invalidating the remainder of such
      invalid, illegal or unenforceable provision or provisions or any other
      provisions hereof, unless such a construction would be
      unreasonable.

     

    11.10. Injunctive
      Relief; Remedies. 

     

    (a) The
      parties agree that any breach or threatened breach by any party or its
      Affiliates of this Agreement, including Section
      7.2,
      would
      result in substantial and irreparable damage to the other parties, the amount
      of
      which would be difficult, if not impossible, to ascertain. Therefore, each
      party
      agrees that in the event of any such breach or threatened breach thereof, each
      non-breaching party shall have the right to enforce this Agreement by
      preliminary or permanent injunctive or other relief in equity, without the
      necessity of proving any actual damages or providing any bond or other security.
      The right of each party to obtain injunctive or other equitable relief to
      enforce the terms hereof shall be in addition to all other rights and remedies
      it may otherwise have at law, in equity, or otherwise. Such right to obtain
      injunctive or other equitable relief may be exercised, at the option of the
      non-breaching parties, concurrently with, prior to, after, or in lieu of the
      exercise of any other rights or remedies which the non-breaching party may
      have
      as a result of any breach or threatened breach of any of the terms hereof.
      

     

    
      
         

      

      
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    (b) The
      prevailing party or parties in any action brought to enforce any provision
      of
      this Agreement shall be entitled to recover all reasonable attorneys’ fees and
      disbursements and other out-of-pocket costs incurred in connection
      therewith.

     

    11.11. Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      considered an original instrument, but all of which shall be considered one
      and
      the same agreement.

     

    11.12. Governing
      Law; Jurisdiction.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws (as opposed to the conflicts of law provisions) of the State of New
      York.

     

    *
      * * * *
      * *

    

     

    
      
         

      

      
        64

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