STOCK AND INTEREST PURCHASE AGREEMENT

Exhibit 2.1

 

TABLE OF CONTENTS

EXHIBITS

STOCK AND INTEREST PURCHASE AGREEMENT

This STOCK AND INTEREST PURCHASE AGREEMENT (this " Agreement "), dated April 9, 2009, by and between EXPRESS SCRIPTS, INC., a Delaware corporation (" Purchaser ") and WELLPOINT, INC., an Indiana corporation (" Seller ") (each, a " Party " and collectively, the " Parties ").

W I T N E S S E T H :

WHEREAS, Purchaser desires to purchase NextRx, LLC, an Ohio limited liability company (" NextRx LLC "), NextRx, Inc., a Delaware corporation (" NextRx ") and NextRx Services, Inc., a New York corporation (" NextRx Services ") (each, a " Target Company " and collectively, the " Target Companies ") from Seller, and Seller desires to sell the Target Companies to Purchaser;

WHEREAS, the purchase of the Target Companies by Purchaser shall be effected by (i) a sale of all of the limited liability company interests of NextRx LLC by Community Insurance Company (" Community Insurance ") to Purchaser, (ii) a sale of all of the outstanding capital stock of NextRx by UNICARE Specialty Services, Inc. (" Unicare Specialty ") to Purchaser (Community Insurance and Unicare Specialty each a, " Selling Entity " and, collectively, the " Selling Entities "), and (iii) a sale of all of the outstanding capital stock of NextRx Services by Unicare Specialty to Purchaser, each on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, in furtherance thereof, the respective Boards of Directors and Managers, as applicable, of Purchaser, Seller, the Selling Entities, NextRx LLC, NextRx and NextRx Services have approved this Agreement;

WHEREAS, at the Closing, the Parties shall enter into that certain Pharmacy Benefit Management Services Agreement in the form of Exhibit A, with only such changes as are mutually agreed to by Purchaser and Seller (the " PBM Contract ");

WHEREAS, at the Closing, the Parties shall enter into that certain Registration Rights Agreement in the form of Exhibit B, with only such changes as are mutually agreed to by Purchaser and Seller (the " Registration Rights Agreement ");

WHEREAS, at the Closing, the Parties shall enter into that certain Transition Services Agreement in the form of Exhibit C, with only such changes as are mutually agreed to by Purchaser and Seller (the " Transition Services Agreement "); and

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the Parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1     Definitions .  When used in this Agreement, the following terms shall have the respective meanings specified therefor below.

" 338 Valuations and Allocations " shall have the meaning set forth in Section 5.17(a).

" 1060 Allocations " shall have the meaning set forth in Section 5.17(a).

" Action " shall mean any action, claim, complaint, petition, suit, arbitration or other proceeding, whether civil or criminal, at law or in equity, before any Governmental Entity relating to this Agreement or any Other Transaction Document or the transactions contemplated hereby or thereby.

" Affiliate " of any Person shall mean any Person directly or indirectly controlling, controlled by, or under common control with, such Person; provided , that, for the purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract, or otherwise.

" Aggregate Cash Consideration " shall mean the sum of the LLC Interest Cash Consideration, the NextRx Cash Consideration and the NextRx Services Cash Consideration.

" Aggregate Stock Consideration " shall mean the sum of the LLC Interest Stock Consideration, the NextRx Stock Consideration and the NextRx Services Stock Consideration.

" Agreement " shall have the meaning set forth in the Preamble.

" Antitrust Authorities " shall mean the Federal Trade Commission, the Antitrust Division of the United States Department of Justice, the attorneys general of the several states of

the United States of America, and any other Governmental Entity having jurisdiction with respect to the transactions contemplated hereby pursuant to applicable Antitrust Laws.

" Antitrust Laws " shall mean the Sherman Act of 1890, as amended; the Clayton Act of 1914, as amended; the Federal Trade Commission Act of 1914, as amended; the HSR Act; and all other federal, state and foreign Laws or Orders in effect from time to time that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.

" Audited Financial Statements " shall have the meaning set forth in Section 5.20(a).

" Auditor " shall have the meaning set forth in Section 2.5(e).

" Balance Sheet " shall have the meaning set forth in Section 3.7(a).

" Balance Sheet Date " shall have the meaning set forth in Section 3.7(a).

" Balance Sheet Time "   shall have the meaning set forth in Section 2.5(a).

" Benefit Plans " shall have the meaning set forth in Section 3.11(a).

" Board of Directors " of any Person, shall mean the board of directors or similar governing body of such Person.

" Burdensome Term or Condition " shall have the meaning set forth in Section 5.5(g).

" Business Day " shall mean any day except a Saturday, a Sunday or any other day on which commercial banks are required or authorized to close in New York, New York.

" Cap " shall have the meaning set forth in Section 9.4(a)(ii)

" Cash and Cash Equivalents " shall mean cash, checks, money orders, marketable securities, short-term instruments and other cash equivalents, funds in time and demand deposits or similar accounts, cash security deposits and other cash collateral posted with

vendors, landlords, and other parties, and any evidence of indebtedness issued or guaranteed by any Governmental Entity.

" Claim Notice " shall have the meaning set forth in Section 9.5(a).

" Closing " shall have the meaning set forth in Section 2.4(a).

" Closing Balance Sheet " shall have the meaning set forth in Section 2.5(c).

" Closing Date " shall have the meaning set forth in Section 2.4(a).

" CMS " shall have the meaning set forth in Section 3.9(d)(iv).

" CMS Indemnity Matters " shall mean all matters described in that certain letter dated January 12, 2009, from CMS to Seller, together with all actions, conduct or omissions, or alleged actions, conduct or omissions, by Seller or any of its Affiliates relating thereto.

" Code " shall mean the Internal Revenue Code of 1986, as amended.

" Community Insurance " shall have the meaning set forth in the Recitals.

" Company Employees " shall have the meaning set forth in Section 5.6(a).

" Company Material Adverse Effect " shall mean, with respect to the Target Companies, any change, event, development, state of facts or effect which is materially adverse to the results of operations, condition (financial or otherwise), assets or business of the Target Companies, taken as a whole; provided , however , that changes, events, developments, states of facts or effects relating to: (i) changes in general economic or political conditions or the financing, banking, currency or capital markets in general; (ii) except for purposes of Section 3.9(a), Section 3.9(b), Section 3.9(c) and Section 3.9(d), changes in Laws, rules, regulations or Orders of any Governmental Entity or interpretations thereof or changes in accounting requirements or principles, in each case, only to the extent occurring after the date of this Agreement; (iii) changes affecting generally the pharmacy benefits management industry; (iv) except for the purposes of Section 3.2(b) and Section 3.16(b), the announcement or pendency of the transactions contemplated by this Agreement, or any communication by Purchaser or any of its Affiliates of its plans or intentions (including in respect of employees) with respect to any of the businesses of any Target Company or any adverse change in customer, distributor, employee, supplier, financing source, licensor, sub-licensor, stockholder or similar relationships, including

as a result of the identity of Purchaser, directly resulting from any of the foregoing, but, in each case, excluding any governmental litigation arising therefrom; (v) except for the purposes of Section 3.2(b) and Section 3.16(b), the consummation of the transactions contemplated by this Agreement or any Other Transaction Document or any actions by any Party or any Target Company taken pursuant to its obligations under this Agreement or any Other Transaction Document; (vi) any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof, in each case, only to the extent occurring after the date of this Agreement; (vii) any failure in and of itself by Seller or any of the Target Companies to meet any internal projections or forecasts (it being agreed that the facts and circumstances giving rise to such failure that are not otherwise excluded from the definition of Company Material Adverse Effect may be taken into account in determining whether a Company Material Adverse Effect has occurred) and normal seasonal changes in their combined results of operations to the extent consistent in timing and amounts to the prior comparable time periods; or (viii) any change in and of itself in the price or trading volume of Seller's common stock (it being agreed that the facts and circumstances giving rise to such change that are not otherwise excluded from the definition of Company Material Adverse Effect may be taken into account in determining whether a Company Material Adverse Effect has occurred), in each case, shall be deemed to not constitute a "Company Material Adverse Effect" and shall not be considered in determining whether a "Company Material Adverse Effect" has occurred.  Notwithstanding the foregoing, if any matter described in any of subclauses (i), (ii) or (iii) of this paragraph has had a disproportionate effect on the results of operation, condition (financial or otherwise), assets or business of the Target Companies, taken as a whole, relative to other participants in the pharmacy benefits management industry, then, the impact of such event on the Target Companies shall be taken into account for purposes of determining whether a Company Material Adverse Effect has occurred or is reasonably expected to occur.

" Company Records " shall have the meaning set forth in Section 5.10(a).

" Confidentiality Agreement " shall mean that certain Mutual Non-Disclosure Agreement, dated as of September 16, 2008, by and between Seller and Purchaser, as amended.

" Contract " shall mean any legally binding agreement, deed, mortgage, lease, license, instrument, note, commitment, undertaking, arrangement or contract, including all amendments thereto.

" Debt Commitment Letter " shall have the meaning set forth in Section 4.10.

" Dispute Notice " shall have the meaning set forth in Section 2.5(d).

" Divestiture " shall have the meaning set forth in Section 5.5(d)(i).

" End Date " shall have the meaning set forth in Section 8.1(b)(ii).

" Environmental Law " shall mean any Law, Order or other requirement of Law, relating to the protection of the environment, or the manufacture, use, transport, treatment, storage, disposal, release or threatened release of Hazardous Substances.

" ERISA " shall mean the Employee Retirement Income Security Act of 1974, as amended.

" ERISA Affiliate " shall mean any Person that, together with Seller or any of the Target Companies, is treated as a single employer under Sections 414(b) or (c) of the Code (and, for purposes of Section 302 of ERISA and each "applicable section" under Section 414(t)(2) of the Code, under Sections 414(b), (c), (m) or (o) of the Code) or Section 4001 of ERISA.

" Estimated Closing Balance Sheet " shall have the meaning set forth in Section 2.5(a).

" Estimated Working Capital Amount " shall have the meaning set forth in Section 2.5(a).

" Estimated Working Capital Statement " shall have the meaning set forth in Section 2.5(a).

" Exchange Act " shall mean the Securities Exchange Act of 1934, as amended.

" Federal and Consolidated Income Taxes " shall mean all:  (i) U.S. federal income taxes of the Target Companies; and (ii) Income Taxes (other than U.S. federal income taxes or Income Tax imposed by a taxing jurisdiction outside of the United States) of the Target Companies for which any of the Target Companies join with Seller or any Affiliate of Seller that is not a member of the group comprised of the Target Companies to file Tax Returns on a consolidated, unitary or combined basis.

" Federal and Consolidated Returns " shall mean all Tax Returns for Federal and Consolidated Income Taxes.

" Final 338 Valuations and Allocations " shall have the meaning set forth in Section 5.17(b).

" Final 1060 Allocations " shall have the meaning set forth in Section 5.17(b).

" Final Indebtedness of Target Companies " shall have the meaning set forth in Section 2.5(f).

" Final Working Capital Amount " shall have the meaning set forth in Section 2.5(f).

" Financing " shall have the meaning set forth in Section 4.10.

" Financing Parties " shall have the meaning set forth in Section 5.18.

" Fundamental Representations " shall have the meaning set forth in Section 9.1

" GAAP " shall mean the generally accepted accounting principles of the United States of America.

" Governmental Entity " shall mean any supranational, national, state, municipal, local or foreign government, any instrumentality, subdivision, court, administrative agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority, including any of the Food and Drug Administration, Department of Health and Human Services, state Medicaid agencies, state pharmacy boards, and other federal and state governmental authorities with jurisdiction over the dispensing or distribution of pharmaceutical products or over the provision of health care items or services.

" Hazardous Substance " means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, toxic molds and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

" Hogan " shall have the meaning set forth in Section 5.15(a).

" HSR Act " shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

" Income Tax " shall mean U.S. federal income tax and any other income or franchise tax imposed on or measured by net income.

" Indebtedness " of any Person shall mean, without double counting, all obligations contingent or otherwise, in respect of: (a) borrowed money; (b) indebtedness evidenced by notes, debentures or similar instruments; (c) capitalized lease obligations; (d) the deferred purchase price of assets, services or securities (other than ordinary trade accounts payable); (e) all obligations, under acceptance, letter of credit or similar facilities; (f) all payment obligations under any interest rate swap agreement or arrangement entered into for the purpose of limiting or managing interest rate risk; (g) all obligations of others guaranteed directly or indirectly in any manner by such Person; (h) stay, retention or other bonuses or compensation payable in connection with or as a result of the transactions contemplated by this Agreement and (i) interest, premium, penalties (include prepayment and early termination penalties) and other amounts owing in respect of the items described in the foregoing clauses (a) through (i); provided , however , that Indebtedness shall not include indebtedness owing from a Target Company to another Target Company.

" Indemnified Party " shall have the meaning set forth in Section 9.5(a).

" Indemnified Persons " shall have the meaning set forth in Section 5.7(a).

" Indemnifying Notice Period " shall have the meaning set forth in Section 9.5(b).

" Indemnifying Party " shall have the meaning set forth in Section 9.5(a).

" Indemnity Threshold " shall have the meaning set forth in Section 9.4(a)(i).

" Initial 338 Valuations and Allocations " shall have the meaning set forth in Section 5.17(a).

" Initial 1060 Allocations " shall have the meaning set forth in Section 5.17(a).

" Initial Security Work " shall have the meaning set forth in Section 5.19(c).

" Intellectual Property " shall mean any and all intellectual property throughout the world, including the following: (i) inventions, patents and pending patent applications, including all reissues, continuations, continuations-in-part, divisionals, extensions, and re-examinations thereof; (ii) registered and unregistered trademarks and service marks, including all

logos, slogans, trade dress, trade names, corporate names, Internet domain names and all other source indicators, and all registrations and applications for any of the foregoing and all goodwill associated with and symbolized by any of the foregoing; (iii) original works of authorship, registered and unregistered copyrights and copyrightable works and applications for registration of copyrights and renewals thereof; (iv) trade secrets and other confidential or proprietary information and know-how; and (v) rights in data, databases and compilations.

" Interim Financial Statements " shall have the meaning set forth in Section 5.20(b).

" IRS " shall mean the Internal Revenue Service of the United States of America.

" Knowledge of Purchaser " shall have the meaning set forth in Section 1.3(b).

" Knowledge of Seller " shall have the meaning set forth in Section 1.3(a).

" Law " shall mean any statute, law, ordinance, rule or regulation of any Governmental Entity.

" Leased Real Property " shall have the meaning set forth in Section 3.18(b).

" Leases " shall have the meaning set forth in Section 3.18(b).

" Licensed Intellectual Property " shall have the meaning set forth in Section 5.2(d).

" Lien " shall mean any lien, security interest, mortgage, pledge, encumbrance, restriction on transfer, proxies, voting trusts or agreements, or any restriction on the creation of any of the foregoing.

" LLC Interest " shall have the meaning set forth in Section 3.5.

" LLC Interest Cash Consideration " shall have the meaning set forth in Section 2.3.

" LLC Interest Consideration " shall have the meaning set forth in Section 2.3.

" LLC Interest Stock Consideration " shall have the meaning set forth in Section 2.3.

" Loss " shall mean any and all damages, judgments, awards, liabilities, losses, obligations, claims of any kind or nature, fines, and costs and expenses (including reasonable fees and expenses of attorneys, auditors, consultants and other agents), including lost profits, lost revenues and consequential damages, but excluding punitive damages (other than punitive damages actually paid in connection with a third party claim).

" Managers " of any Person shall mean the managers or similar governing body of such Person.

" Marketing Period " shall mean the first period of thirty (30) consecutive days, commencing not less than thirty (30) days after the delivery of the Audited Financial Statements, throughout which (A) Purchaser shall have the Required Information that the Seller and the Target Companies are required to provide to Purchaser pursuant to Section 5.18 and (B) the conditions set forth in Section 6.1 (other than any such conditions that by their nature are to be satisfied by actions at the Closing, which shall be capable of being satisfied at the Closing) have been satisfied and nothing has occurred and no condition exists that would cause any of the conditions set forth in Section 6.2 to fail to be satisfied assuming the Closing were to be scheduled for any time during such thirty (30) day period; provided that if the Marketing Period has not ended on or prior to (i) August 23, 2009, then the Marketing Period shall commence no earlier than September 8, 2009; or (ii) December 20, 2009, then the Marketing Period shall commence no earlier than January 4, 2010; provided, further, that the “Marketing Period” shall not be deemed to have commenced if, prior to the completion of such thirty (30) day period, (1) Ernst & Young LLP shall have withdrawn its audit opinion with respect to any of the Audited Financial Statements, (2) Seller or any of the Target Companies shall have announced any intention to restate any of its financial information included in the Required Information or that any such restatement is under consideration or may be a possibility, in which case the Marketing Period will not be deemed to commence at the earliest unless and until such restatement has been completed and Seller has amended its relevant filings with the SEC or Seller or the applicable Target Company has determined that no restatement shall be required or (3) the financial statements included in the Required Information that are available to Purchaser on the first day of such thirty (30) day period would not be sufficiently current to permit a registration statement using such financial statements to be declared effective by the SEC on the last day of such period, in which case, subject to clauses (i) and (ii) above, a new Marketing Period shall commence when (x) Purchaser receives updated Required Information that would be sufficiently current to permit a registration statement using the financial statements contained therein to be declared effective by the SEC on the last day of such new Marketing Period and (y) the conditions set forth in clauses (A) and (B) of this definition are satisfied.

" Market Value " shall have the meaning set forth in Section 2.3.

" Material Contract " shall have the meaning set forth in Section 3.16(a).

" Nasdaq " shall have the meaning set forth in Section 2.3.

" Necessary Consents " shall have the meaning set forth in Section 6.3(d).

" NextRx LLC " shall have the meaning set forth in the Recitals.

" NextRx " shall have the meaning set forth in the Recitals.

" NextRx Cash Consideration " shall have the meaning set forth in Section 2.3.

" NextRx Consideration " shall have the meaning set forth in Section 2.3.

" NextRx Services " shall have the meaning set forth in the Recitals.

" NextRx Services Cash Consideration " shall have the meaning set forth in Section 2.3.

" NextRx Services Consideration " shall have the meaning set forth in Section 2.3.

" NextRx Services Share " shall have the meaning set forth in Section 3.5.

" NextRx Services Stock Consideration " shall have the meaning set forth in Section 2.3.

" NextRx Shares " shall have the meaning set forth in Section 3.5.

" NextRx Stock Consideration " shall have the meaning set forth in Section 2.3.

" Non-PBM Business " shall mean any other activities and operations that do not comprise the PBM Business, including all assets and liabilities related to such activities and operations, in each case, as conducted by Seller and its Subsidiaries (other than the Target Companies) on the Closing Date.

" Ohio State Insurance Approval " shall have the meaning set forth in Section 5.5(h).

" Order " shall mean any judgment, order, injunction, decree, writ, stipulation, ruling, determination, award, permit or license of any Governmental Entity or any arbitrator.

" Other Insurance Approvals " shall have the meaning set forth in Section 5.4(a).

" Other Transaction Documents " shall mean the PBM Contract, the Registration Rights Agreement and the Transition Services Agreement, and each is individually referred to herein as an " Other Transaction Document ".

" Owned Real Property " shall have the meaning set forth in Section 3.18(a).

" Party " shall have the meaning set forth in the Preamble.

" PBM Business " shall mean the pharmacy benefits management business operated by Seller and any of its Subsidiaries as of the date hereof.

" PBM Contract " shall have the meaning set forth in the Recitals.

" Permits " shall have the meaning set forth in Section 3.9(e).

" Permitted Liens " shall mean: (i) Liens for Taxes, assessments and other governmental charges that are not yet due and payable or that may be paid thereafter without penalty or the amount or the validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (ii) Liens arising under original purchase price conditional sales Contracts and equipment leases with third parties; (iii) with respect to Real Property, any easements, covenants, conditions and restrictions which would be shown by (A) an investigation of title of the extent and nature which a prudent buyer of property in the relevant jurisdiction would carry out, or (B) a survey, title report or physical inspection (whether or not made); (iv) any zoning or other governmentally established restrictions or encumbrances (except with respect to Real Property, only such restrictions or encumbrances that do not prevent the use of such Real Property substantially as currently used by the Target Companies in their business as currently conducted); (v) pledges or deposits to secure obligations under workers or unemployment compensation Laws or similar legislation or to secure public or statutory obligations; (vi) mechanic's, materialman's, warehouse man's, supplier's, vendor's or similar Liens arising or incurred in the ordinary course of business securing amounts (A) that are not yet due and payable, or (B) the validity of which is being

contested in good faith by appropriate proceedings, and for which adequate reserves under GAAP have been established; and (vii) other Liens in respect of amounts which do not exceed, individually $25,000, or, in the aggregate, $150,000, and with respect to Real Property, that do not or would not be reasonably expected to materially adversely effect the value, use or operation of the applicable Real Property (including, without limitation, Liens disclosed on Schedule 3.18(a) of the Seller Disclosure Letter).

" Person " shall mean any individual, partnership, limited liability partnership, joint venture, corporation, limited liability company, trust, unincorporated organization, association, Governmental Entity, or other entity.

" Plano Sublease " shall have the meaning set forth in Section 5.21.

" Post-Closing Adjustment " shall have the meaning set forth in Section 2.5(f)(i).

" Post-Closing Covenant " shall have the meaning set forth in Section 9.1.

" Pre-Closing Covenant " shall have the meaning set forth in Section 9.1.

" Post-Closing Taxable Period " shall mean any taxable year or other taxable period ending after the Closing Date or, with respect to any Straddle Period, the portion of such Straddle Period beginning on the day immediately following the Closing Date.

" Post-Closing Tax Liability " shall have the meaning set forth in Section 7.4(a).

" Pre-Closing Taxable Period " shall mean any taxable year or other taxable period that ends on or before the Closing Date or, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date.

" Pre-Closing Working Capital Adjustment " shall mean the absolute value of the difference, if any, between the Estimated Working Capital Amount and the Working Capital Target, as determined in accordance with Section 2.5.

" Purchase Price " shall mean the sum of the LLC Interest Consideration, the NextRx Consideration and the NextRx Services Consideration.

" Purchaser " shall have the meaning set forth in the Preamble.

" Purchaser Affiliates " shall have the meaning set forth in Section 8.2(c).

" Purchaser Cafeteria Plan " shall have the meaning set forth in Section 5.6(g).

" Purchaser Common Stock " shall have the meaning set forth in Section 2.3.

" Purchaser Disclosure Letter " shall have the meaning set forth in the preamble to Article IV.

" Purchaser Financial Statements " shall have the meaning set forth in Section 4.3(a).

" Purchaser Indemnified Parties " shall have the meaning set forth in Section 9.2.

" Purchaser Material Adverse Effect " shall mean, with respect to Purchaser and its Subsidiaries, any change, event, development, state of facts or effect which is materially adverse to the results of operations, condition (financial or otherwise), assets or business of Purchaser and its Subsidiaries, taken as a whole; provided , however , that changes, events, developments, states of facts or effects relating to: (i) changes in general economic or political conditions or the financing, banking, currency or capital markets in general; (ii) changes in Laws, rules, regulations or Orders of any Governmental Entity or interpretations thereof or changes in accounting requirements or principles, in each case, only to the extent occurring after the date of this Agreement; (iii) changes affecting generally the pharmacy benefits management industry; (iv) except for the purposes of Section 4.4(b), the announcement or pendency of the transactions contemplated by this Agreement, or any communication by Purchaser of its plans or intentions (including in respect of employees) with respect to any of the businesses of Purchaser or any adverse change in customer, distributor, employee, supplier, financing source, licensor, sub-licensor, stockholder or joint venture partner or similar relationships, including as a result of the identity of the Target Companies, directly resulting from any of the foregoing, but, in each case, excluding any governmental litigation arising therefrom; (v) except for the purposes of Section 4.4(b), the consummation of the transactions contemplated by this Agreement or any Other Transaction Document or any actions by any Party or any Target Company taken pursuant to its obligations under this Agreement or any Other Transaction Document; (vi) any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof, in each case, only to the extent occurring after the date of this Agreement; (vii) any failure in and of itself by Purchaser to meet any internal projections or fore­casts (it being agreed that the facts and circumstances giving rise to such failure that are not otherwise excluded from the definition of Purchaser Material Adverse Effect may be taken into account in determining whether a Purchaser Material Adverse Effect has occurred) and normal seasonal changes in the results of operations of Purchaser to the extent consistent in timing and amounts to the prior comparable time periods; or (viii) any change in and of itself in the price or

trading volume of Purchaser Common Stock (it being agreed that the facts and circumstances giving rise to such change that are not otherwise excluded from the definition of Purchaser Material Adverse Effect may be taken into account in determining whether a Purchaser Material Adverse Effect has occurred), in each case, shall be deemed to not constitute a "Purchaser Material Adverse Effect" and shall not be considered in determining whether a "Purchaser Material Adverse Effect" has occurred.  Notwithstanding the foregoing, if any matter described in any of subclauses (i),(ii) or (iii) of this paragraph has had a disproportionate effect on the results of operation, condition (financial or otherwise), assets or business of Purchaser, taken as a whole, relative to other participants in the pharmacy benefits management industry, then, the impact of such event on Purchaser shall be taken into account for purposes of determining whether a Purchaser Material Adverse Effect has occurred or is reasonably expected to occur.

" Purchaser NQ Plans " shall have the meaning set forth in Section 5.6(e).

" Purchaser Permits " shall have the meaning set forth in Section 4.7(b).

" Purchaser Persons " shall have the meaning set forth in Section 5.14.

" Purchaser Savings Plan " shall have the meaning set forth in Section 5.6(d).

" Purchaser SEC Documents " shall have the meaning set forth in Section 4.3(a).

" Purchaser Securities " shall mean any outstanding (i) shares of capital stock or voting securities of Purchaser, (ii) securities of Purchaser convertible into or exchangeable for shares of capital stock or voting securities of Purchaser or (iii) options or other rights to acquire from Purchaser or other obligation of Purchaser to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Purchaser.

" Purchaser Taxes " shall have the meaning set forth in Section 7.4(b).

" Qualifying Loss " shall mean any individual indemnifiable Loss or series of related Losses in excess of $100,000.

" Real Property " shall mean the Owned Real Property and the Leased Real Property.

" Registration Rights Agreement " shall have the meaning set forth in the Recitals.

" Representatives " shall have the meaning set forth in the Confidentiality Agreement.

" Required Information " shall have the meaning set forth in Section 5.18.

" Reverse Termination Fee " shall have the meaning set forth in Section 8.2(b).

" Rights " shall have the meaning set forth in the Rights Agreement.

" Rights Agreement " shall mean the agreement between Purchaser and American Stock Transfer & Trust Company dated as of July 25, 2001, as amended.

" Ropes " shall have the meaning set forth in Section 5.15(a).

" Sarbanes-Oxley Act " means the Sarbanes-Oxley Act of 2002, as amended.

" SEC " shall have the meaning set forth in Section 4.3(a).

" Section 338 Company " shall have the meaning set forth in Section 5.16(a).

" Securities Act " shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

" Seller " shall have the meaning set forth in the Preamble.

" Seller Cafeteria Plan " shall have the meaning set forth in Section 5.6(g).

" Seller Damages " shall have the meaning set forth in Section 8.2(c).

" Seller Disclosure Letter " shall have the meaning set forth in the preamble to Article III.

" Seller Indemnified Parties " shall have the meaning set forth in Section 9.3.

" Seller Indemnitee " shall have the meaning set forth in Section 5.14.

" Seller Insurance Policies " shall have the meaning set forth in Section 3.19.

" Seller's Marks " shall have the meaning set forth in Section 5.13.

" Seller Persons " shall have the meaning set forth in Section 5.14.

" Seller Savings Plan " shall have the meaning set forth in Section 5.6(d).

" Selling Entities " shall have the meaning set forth in the Recitals.

" Separate Returns " shall mean all Tax Returns for Separate Taxes.

" Separate Taxes " shall mean all Taxes other than Federal and Consolidated Income Taxes.

" Skadden " shall have the meaning set forth in Section 5.15(a).

" SSA " shall have the meaning set forth in Section 3.9(c)(i).

" Straddle Period " shall mean any taxable year or period beginning on or before the Closing Date and ending after the Closing Date.

" Subsidiary ", of any Person, shall mean any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) at least fifty percent (50%) of (i) the issued and outstanding capital stock or other securities having voting power to elect a majority of the Board of Directors (or others performing similar functions) of such Person (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency); (ii) the economic or ownership interest in the capital or profits of such partnership, joint venture or limited liability company; or (iii) the beneficial interest in such trust or estate, is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries, or by one or more other Subsidiaries of such Person.

" Supply Agreement " shall mean that certain Contract denoted with an asterisk (*) on Schedule 3.16(a) of the Seller Disclosure Letter.

" Target Companies " shall have the meaning set forth in the Recitals.

" Target Companies' Closing Date Indebtedness " means the aggregate Indebtedness of the Target Companies outstanding on the Closing Date.

" Tax Authority " shall mean any Governmental Entity responsible for the collection of Taxes.

" Taxes " shall mean (i) all taxes, assessments, charges, customs, duties, fees, levies, tariffs, imposts or other governmental charges of any kind whatsoever, including all United States of America federal, state, local, foreign and other net or gross income, franchise, profits, capital gains, capital stock, transfer, real property transfer, recordation, sales, use, occupation, property, excise, severance, ad valorem, valued added, windfall profits, stamp, license, payroll, withholding and other taxes, (whether payable directly or by withholding and whether or not requiring the filing of a Return), all estimated taxes, deficiency assessments, and (ii) any interest, penalty, or addition to any of the foregoing.

" Tax Return " shall mean all returns, statements, forms and reports (including elections, waivers or extensions, declarations, disclosures, schedules, estimates and information returns) for Taxes required to be filed with the U.S. Internal Revenue Service or any other federal, foreign, state, local or provincial Tax Authority.

" Transfer Taxes " shall have the meaning set forth in Section 7.8.

" Transition Services Agreement " shall have the meaning set forth in the Recitals.

" Treasury Regulation " shall mean the regulations promulgated under the Code by the U.S. Department of the Treasury.

" Unicare Specialty " shall have the meaning set forth in the Recitals.

“ Valuation Period ” shall have the meaning set forth in Section 2.3.

" W&C " shall have the meaning set forth in Section 5.15(a).

" WARN Act " shall have the meaning set forth in Section 3.12(f).

" Working Capital " means (i) the combined current assets of the Target Companies (consisting of asset account line items as specified on Schedule 2.5 of the Seller Disclosure Letter) minus (ii) the combined current liabilities of the Target Companies (consisting of liability account items as specified on Schedule 2.5 of the Seller Disclosure Letter), in each case determined in accordance with the accounting principles, policies and procedures consistently applied in the preparation of the Balance Sheet; provided , however , that the current assets and current liabilities of the Target Companies for purposes of calculating Working Capital will exclude (a) all Cash and Cash Equivalents of the Target Companies, (b) deferred Tax assets, deferred Tax liabilities and income Taxes payable and (c) Indebtedness, including the current portion thereof.

" Working Capital/Adjustments Statement " shall have the meaning set forth in Section 2.5(c).

" Working Capital Target " means $423,400,000.

 

Section 1.2    Construction .  In this Agreement, unless the context otherwise requires:

(a)             any reference to "writing" or comparable expressions includes a reference to facsimile transmission, email or comparable means of communication;

(b)             where used with respect to information, the phrases "delivered" or "made available" shall mean that the information referred to has been physically or electronically delivered prior to the date hereof to the relevant parties or their respective Representatives including, in the case of "made available" to Purchaser, material that has been posted in the "data room" (virtual or otherwise) established by Seller and made accessible to Purchaser and its Representatives prior to the date hereof;

(c)             words expressed in the singular number shall include the plural and vice versa; words expressed in the masculine shall include the feminine and neuter gender and vice versa;

(d)             references to Articles, Sections, Exhibits, the Preamble and Recitals are references to articles, sections, exhibits, the preamble and recitals of this Agreement, and the descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement, and shall not affect in any way the meaning or interpretation of this Agreement;

(e)             reference to "day" or "days" are to calendar days;

(f)             references to "the date hereof" shall mean as of the date of this Agreement;

(g)             the words "hereof", "herein", "hereto" and "hereunder", and words of similar import shall refer to this Agreement as a whole and not to any provision of this Agreement;

(h)             this "Agreement" or any other agreement or document shall be construed as a reference to this Agreement or, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or supplemented;

(i)             "include", "includes," and "including" are deemed to be followed by "without limitation";

(j)             "ordinary course of business" is deemed to be followed by "consistent with past practices";

(k)             any reference to any Governmental Entity includes any successor to the Governmental Entity;

(l)             any reference to any statute or regulation refers to the statute or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, includes any rules and regulations promulgated under the statute) and any reference to any section of any statute or regulation includes any successor to the section; and

(m)             references to dollars or "$" are to United States of America dollars.

Section 1.3     Knowledge .

(a)             When any representation, warranty, covenant, agreement or other provision contained in this Agreement is expressly qualified by reference to the " Knowledge of Seller " or words of similar import, it shall mean the knowledge, within the scope of his or her responsibility assuming reasonable inquiry of those employees known to such persons to have specialized knowledge of the subject matter of the representation and warranty, of the individuals set forth on Schedule 1.3(a) of the Seller Disclosure Letter.

(b)             When any representation, warranty, covenant, agreement or other provision contained in this Agreement is expressly qualified by reference to the " Knowledge of Purchaser " or words of similar import, it shall mean the knowledge, within the scope of his or her responsibility assuming reasonable inquiry of those employees known to such persons to

have specialized knowledge of the subject matter of the representation and warranty, of the individuals set forth on Schedule 1.3(b) of the Purchaser Disclosure Letter.

ARTICLE II

SALE OF LLC INTEREST, NEXTRX SHARES AND NEXTRX SERVICES SHARE

Section 2.1    Sale of LLC Interest .  Seller agrees to cause Community Insurance to sell, assign, transfer and deliver to Purchaser on the Closing Date, and Purchaser agrees to purchase from Community Insurance on the Closing Date, the LLC Interest, free and clear of all Liens (other than any transfer restrictions under applicable securities Laws).

Section 2.2    Sale of NextRx Shares and NextRx Services Share .  Seller agrees to cause Unicare Specialty to sell, assign, transfer and deliver to Purchaser on the Closing Date, and Purchaser agrees to purchase from Unicare Specialty on the Closing Date, the NextRx Shares and the NextRx Services Share, in each case, free and clear of all Liens (other than any transfer restrictions under applicable securities Laws).

Section 2.3     Purchase Price .  At the Closing, Purchaser shall pay (x) in consideration for the purchase by Purchaser of the LLC Interest, $3,553,000,000 (the " LLC Interest Consideration "), which will be delivered in the form of $2,489,000,000 in cash (the " LLC Interest Cash Consideration ") and the remainder in shares of common stock, par value $0.01, of Purchaser, together with the associated Rights (" Purchaser Common Stock ") to be issued to Community Insurance (the " LLC Interest Stock Consideration "), each share of Purchaser Common Stock being valued at the average of the closing price for a share of Purchaser Common Stock on the Nasdaq Global Select Market (" Nasdaq ") (as reported by the Wall Street Journal (Northeast edition), or, if not reported thereby, as reported by any other authoritative source) for the sixty (60) days immediately preceding the Closing Date (such period, the “ Valuation Period ”) (the " Market Value "), (y) in consideration for the purchase by Purchaser of the NextRx Shares, an aggregate amount of $841,500,000 (the " NextRx Consideration "), which will be delivered in the form of $589,500,000 in cash (the " NextRx Cash Consideration ") and the remainder in shares of Purchaser Common Stock to be issued to Unicare Specialty (the " NextRx Stock Consideration "), each share of Purchaser Common Stock valued at the Market Value and (z) in consideration for the purchase by Purchaser of the NextRx Services Share, an aggregate amount of $280,500,000 (the " NextRx Services Consideration "), which will be delivered in the form of $196,500,000 in cash (the " NextRx Services Cash Consideration ") and the remainder in shares of Purchaser Common Stock to be issued to Unicare Specialty (the " NextRx Services Stock Consideration "), each share of Purchaser Common Stock valued at the Market Value.  The Aggregate Cash Consideration will be paid at the Closing by wire transfer of immediately available funds to the respective accounts designated in writing by Seller no later than two (2) Business Days prior to the Closing Date.  Notwithstanding the foregoing, (x) the Aggregate Cash Consideration will be subject to adjustment pursuant to Section 2.5 and (y) at the written election of Purchaser (which election shall be delivered to Seller no less than three (3) Business Days prior to the Closing Date), Purchaser may elect to pay all or part (as specified in the election) of the value of any of the LLC

Interest Stock Consideration, NextRx Stock Consideration or NextRx Services Stock Consideration in the form of cash, with any such cash amounts deemed to be added to the Aggregate Cash Consideration.  If Purchaser believes that the amount of the Aggregate Stock Consideration to be delivered at the Closing pursuant to this Section 2.3 would otherwise be greater than 9.99% of the aggregate number of shares of Purchaser Common Stock outstanding immediately after the Closing (and after giving effect to the issuance of the shares representing the Aggregate Stock Consideration), then Purchaser shall use its commercially reasonable efforts to issue shares of Purchaser Common Stock in a public offering for cash consideration, at a price reasonably acceptable to Purchaser, prior to the Closing, so as to obtain sufficient cash proceeds to replace a sufficient portion of the Aggregate Stock Consideration to be delivered at the Closing such that a number of whole shares of Purchaser Common Stock as equal as practicable to, but not in excess of, 9.99% of the aggregate number of shares of Purchaser Common Stock outstanding immediately following the Closing (after giving effect to the issuance of such shares) would be delivered at the Closing pursuant to this Section 2.3.

Section 2.4     Closing; Closing Deliverables .  (a)  Subject to the terms and conditions hereof, the closing of the sales referred to in Section 2.1 and in Section 2.2 (the " Closing ") shall take place at 10:00 A.M. New York time on the third (3 rd ) Business Day after the satisfaction or waiver (subject to applicable Law) of the conditions set forth in Article VI (other than any such conditions which by their terms cannot be satisfied until the Closing Date, which shall be required to be so satisfied or waived (subject to applicable Law) on the Closing Date) unless another time or date is agreed to in writing by the Parties (the actual time and date of the Closing being referred to herein as the   " Closing Date ");   provided , however that, notwithstanding the satisfaction or waiver of the conditions set forth in Article VI, the Parties shall not be obligated to effect the Closing prior to the second (2 nd ) Business Day following the final day of the Marketing Period, unless Purchaser shall request otherwise on two (2) Business Days prior written notice (but, subject in such case, to the satisfaction or waiver (subject to applicable Law) of the conditions set forth in Article VI (other than any such conditions which by their terms cannot be satisfied until the Closing Date, which shall be required to be so satisfied or waived (subject to applicable Law) on Purchaser's requested Closing Date)).  The Closing shall be held at the offices of White & Case LLP, 1155 Avenue of the Americas, New York, New York.

(b)             At the Closing, Seller shall deliver or cause to be delivered to Purchaser:

(c)             At the Closing, Purchaser shall deliver or cause to be delivered to Seller:

representing the NextRx Services Stock Consideration issued in the name of Unicare Specialty;

Section 2.5     Working Capital Adjustment.  (a) Estimated Balance Sheet.  Seller will prepare or cause to be prepared in good faith and delivered to Purchaser not later than five (5) Business Days prior to the anticipated Closing Date, an estimated combined balance sheet of the Target Companies (the " Estimated Closing Balance Sheet ") as of 11:59 p.m. (New York time) on the Business Day immediately preceding the Closing Date (the " Balance Sheet Time "), together with a written statement (such statement, the " Estimated Working Capital Statement ") of Seller, signed by an executive officer of Seller with financial oversight responsibilities for the PBM Business, setting forth in reasonable detail (and together with reasonable supporting documentation) (i) Seller's good faith estimate of Working Capital (the " Estimated Working Capital Amount ") as reflected on the Estimated Closing Balance Sheet and (ii) Seller's good faith estimate of the amount of the Target Companies' Closing Date Indebtedness.  The Estimated Closing Balance Sheet and the Estimated Working Capital Statement will be prepared in accordance with the accounting principles, policies and procedures used in the preparation of the Balance Sheet and the definition of Working Capital, respectively.

(b)             Pre-Closing Working Capital Adjustment .

(c)             Closing Balance Sheet; Other Adjustments .  As promptly as practicable and in any event within sixty (60) days after the Closing Date, Purchaser will prepare or cause to be prepared in good faith, and will provide to Seller, a combined balance sheet of the Target Companies as of the Balance Sheet Time (the " Closing Balance Sheet "), together with a written statement of Purchaser, signed by an officer of Purchaser with financial oversight responsibilities with respect thereto, setting forth in reasonable detail (and together with reasonable documentation)  (i) Working Capital as derived from the Closing Balance Sheet and (ii) the amount of the Target Companies' Closing Date Indebtedness (the " Working Capital/Adjustments Statement ").  Following the Closing and in connection with the preparation of the Closing Balance Sheet and Working Capital/Adjustments Statement, Purchaser will have reasonable access to (i) the employees and other Representatives of Seller who assisted in the preparation of the Estimated Closing Balance Sheet and the Estimated Working Capital Statement, the auditors of Seller and their work papers, and the work papers and other materials used by Seller in the preparation of the Estimated Closing Balance Sheet and the Estimated Working Capital Statement and (ii) copies of the financial information and records (or copies of portions thereof) of Seller to the extent relating to the Target Companies (including such personnel and Representatives of Seller who prepared or assisted in the preparation of such information) and relevant, in Purchaser's good faith and reasonable judgment, to Purchaser's ability to properly prepare the Closing Balance Sheet and the Working Capital/Adjustments Statement.  The Closing Balance Sheet and the Working Capital/Adjustments Statement will be prepared in accordance with the accounting principles, policies and procedures used in the preparation of the Balance Sheet and the Estimated Working Capital/Adjustments Statement.  Following delivery of the Closing Balance Sheet and the Working Capital/Adjustments Statement, in connection with its review thereof, Seller will have reasonable access to the employees and other Representatives of Purchaser who assisted in the preparation of the Closing Balance Sheet and the Working Capital/Adjustments Statement, the auditors of Purchaser and their work papers, and the work papers and other materials used by Purchaser in the preparation of the Closing Balance Sheet and the Working Capital/Adjustments Statement.  To the extent that a Party is obligated to provide the other Party access to its auditor (and/or its auditor's work papers) pursuant to this Section 2.5(c), such Party shall be required to use (and shall have satisfied such obligation to the extent that it has used) its commercially reasonable efforts to provide such access.

(d)             Dispute Notice .  The Closing Balance Sheet and the Working Capital/Adjustments Statement will be final, conclusive and binding on the Parties unless Seller provides a written notice (a " Dispute Notice ") to Purchaser no later than forty-five (45) days

after delivery of the Working Capital/Adjustments Statement setting forth in reasonable detail any item on the Closing Balance Sheet and/or the Working Capital/Adjustments Statement (including any item described in Section 2.5(c) above) that Seller believes has not been prepared correctly in accordance with the definition of Working Capital.  Any item to which no dispute is raised in the Dispute Notice will be final, conclusive and binding on the Parties.

(e)             Resolution of Disputes .  Purchaser and Seller will attempt to resolve the items raised in a Dispute Notice in good faith for a period of twenty-five (25) days following the delivery of a Dispute Notice.  Amounts resolved by such attempts within the twenty-five (25) day period will be deemed to have been finally resolved for purposes of the Dispute Notice and will be final, conclusive and binding on the Parties.  If Purchaser and Seller are unable to resolve all or any disputed items in the Dispute Notice during such twenty-five (25) day period, Purchaser and Seller will submit, as promptly as practicable but not later than ten (10) days after the expiration of the twenty-five (25) day period, the unresolved disputed items (together with the Closing Balance Sheet, the Working Capital/Adjustments Statement, the Dispute Notice (as modified to reflect any mutually agreed upon resolution to any one or more items) and such other analysis and work papers as each Party may believe is relevant to, or in support of, its position concerning the unresolved disputed items ( provided , that the Party submitting (or who wishes to submit) such other analysis and work papers have made such analysis and work papers reasonably available to the other Party for review prior to the expiration of the twenty-five (25) day period referred to above) for determination to Deloitte & Touche LLP (the " Auditor ") or, if such firm is unable or unwilling to act as Auditor, such other nationally recognized independent public accounting firm selected by the mutual agreement of the Parties in writing.  Purchaser and Seller will use their respective reasonable best efforts to cause the Auditor to render its decision within forty-five (45) days (and in any event as soon as practicable) after the submission to the Auditor of the disputed items, including by promptly complying with all reasonable requests by the Auditor for access to working papers, information, books, records and similar items and personnel and Representatives of the Parties and their Affiliates to the extent practicable.  The Auditor will review only those items and amounts specifically submitted by Purchaser and Seller and shall resolve the unresolved disputes by adopting a position that is either equal to Purchaser's proposed position, Seller's proposed position, or between the positions proposed by Seller and Purchaser.  The Auditor's determination will be (A) in writing, (B) furnished to each of the Parties within forty-five (45) days, to the extent practicable, and in any event as promptly as practicable, after the items or amounts in dispute have been referred to the Auditor, (C) made in accordance with this Section 2.5(e), and (D) final, conclusive and binding on the Parties.  Nothing herein will be construed as to authorize or permit the Auditor to determine any question or matter whatsoever under or in connection with this Agreement, except as set forth in the immediately preceding sentence.  The fees and expenses of the Auditor with respect to the dispute referred to in this Section 2.5(e) shall be borne equally by each of Seller and Purchaser.

(f)             Post-Closing Purchase Price Adjustments . Promptly, and in any event no later than the fifth (5th) Business Day, after final determination of each of the Working Capital amount and Target Companies' Closing Date Indebtedness in accordance with Section 2.5(d)

and/or Section 2.5(e) (respectively, the " Final Working Capital Amount " and the " Final Indebtedness of Target Companies ") the Purchase Price shall be adjusted as follows:

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the letter (the " Seller Disclosure Letter ") delivered by Seller to Purchaser concurrently with the execution of this Agreement (it being understood that any matter disclosed on any Schedule of the Seller Disclosure Letter will be deemed to be disclosed on any other Schedule of the Seller Disclosure Letter only to the extent that it is reasonably apparent on the face of such disclosure that such disclosure is applicable to such other Schedule or Schedules), Seller hereby represents and warrants to Purchaser as follows:

Section 3.1     Due Organization, Good Standing and Corporate Power of Seller and Selling Entities .  Seller is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Indiana and it has all requisite corporate power and authority to carry on its business as now being conducted.  Community Insurance is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Ohio and it has all requisite corporate power and authority to carry on its business as now being conducted.  Unicare Specialty is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and it has all requisite corporate power and authority to carry on its business as now being conducted.

Section 3.2     Authorization; No Conflicts . (a) Seller and each of the Selling Entities (if any) and each other Subsidiary of Seller, if any,   has, or solely in the case of each such other Subsidiary of Seller will have at or prior to the Closing Date, the requisite corporate power and authority, and has, or solely in the case of each such other Subsidiary of Seller will have at or prior to the Closing Date, taken all corporate action necessary to execute and deliver this Agreement and each Other Transaction Document to which it is, or shall become a party, to perform its obligations hereunder and thereunder (including, if not a signatory hereto or thereto,

but actions are contemplated to be taken by such Person hereunder or thereunder), and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance (including, if not a signatory hereto or thereto, but actions are contemplated to be taken by such Person hereunder or thereunder) of this Agreement and each Other Transaction Document by Seller and each of the Selling Entities and each other Subsidiary of Seller, if applicable, and the consummation (including, if not a signatory hereto or thereto, but actions are contemplated to be taken by such Person hereunder or thereunder) by Seller, each of such Selling Entities and each such other Subsidiary of Seller of the transactions contemplated hereby and thereby, have been, or solely in the case of each such other Subsidiary of Seller will have been at or prior to the Closing Date, duly authorized and approved by the Boards of Directors or Managers, as applicable, of Seller, the Selling Entities and such other Subsidiaries of Seller, and no other corporate action on the part of Seller, the Selling Entities or such other Subsidiaries of Seller is, or solely in the case of each such other Subsidiary of Seller will be at the Closing,   necessary to authorize the execution, delivery and performance of this Agreement and, if applicable, the Other Transaction Documents by Seller, each Selling Entity, and each such other Subsidiary of Seller and the consummation of the transactions contemplated hereby and thereby.  This Agreement and the Other Transaction Documents to be executed and delivered by Seller , each Selling Entity, if any, and each such other Subsidiary of Seller , if any, which may be a party to any Other Transaction Documents have been or, to the extent not executed as of the date hereof, will be duly executed and delivered by Seller , any such Selling Entity   (if applicable) and any such other Subsidiary of Seller, if applicable, and, assuming that this Agreement and each of the Other Transaction Documents constitutes a valid and binding obligation of Purchaser, constitutes, or solely in the case of each such other Subsidiary of Seller will constitute as of the Closing Date, a valid and binding obligation of Seller , each such Selling Entity (if applicable)   and each such other Subsidiary of Seller , enforceable against Seller , each such Selling Entity ( if applicable) and each such other Subsidiary of Seller, in accordance with their terms, except to the extent that their enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors' rights generally and by general equitable principles.

(b)             The execution and delivery of this Agreement and each Other Transaction Document to be executed and delivered by Seller and each Selling Entity, if any, which may be a party to any Other Transaction Document as contemplated hereby do not, and the consummation of the transactions contemplated by this Agreement and the Other Transaction Documents will not, (i) conflict with any of the provisions of the certificate of incorporation or by-laws or other equivalent charter documents, as applicable, of Seller, any Selling Entity or any Target Company, (ii) conflict with or result in a breach of, or constitute a default under, any Permit or Contract of Seller or any Selling Entity or Target Company, as applicable or (iii) subject to the receipt or making of the consents, approvals, authorizations, and filings referred to in Section 3.6, contravene any Law or Order currently in effect, except in the case of clauses (ii) and (iii) above, for such conflicts, breaches, defaults or contraventions, which would not reasonably be expected to (x)  have, individually or in the aggregate, a Company Material Adverse Effect or (y) impair or delay Seller's ability to consummate the transactions contemplated by this Agreement or the Other Transaction Documents.

Section 3.3     Ownership of Shares and LLC Interest .  All of the NextRx Shares and the NextRx Services Share are beneficially and of record owned by Unicare Specialty, free and clear of all Liens.  The LLC Interest is beneficially and of record owned by Community Insurance, free and clear of all Liens.  Each of the Selling Entities is an indirect, wholly-owned Subsidiary of Seller.  The consummation of the transactions contemplated by this Agreement will convey to Purchaser good title to the LLC Interest, NextRx Shares and NextRx Services Share, free and clear of all Liens, except for those created by Purchaser or arising out of ownership of the LLC Interest, NextRx Shares and NextRx Services Share by Purchaser and other than restrictions on transfer of unregistered securities arising under applicable federal, state or foreign securities Laws.

Section 3.4     Target Companies .  (a) NextRx LLC is a limited liability company validly existing and in good standing under the Laws of the State of Ohio and has all requisite limited liability company power and authority to carry on its business as now being conducted, except where the failure to have such power and authority would not reasonably be expected to have a Company Material Adverse Effect.  NextRx is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now being conducted, except where the failure to have such power and authority would not reasonably be expected to have a Company Material Adverse Effect.  NextRx Services is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of New York and has all requisite corporate power and authority to carry on its business as now being conducted, except where the failure to have such power and authority would not reasonably be expected to have a Company Material Adverse Effect.  Each Target Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the character or location of the properties owned, leased or operated by such Target Company or the nature of the business conducted by it makes such qualification necessary, except for such jurisdictions where the failure to be so qualified or licensed and in good standing would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  Prior to the execution of this Agreement, Seller has made available to Purchaser true, complete and correct copies of the certificates of incorporation and bylaws (or other similar governing documents) for each Target Company.

(b)             None of the Target Companies has any Subsidiaries.

Section 3.5     C apitalization of Target Companies .  The authorized capital stock of NextRx consists of 1000 shares of common stock, par value $0.01 per share, of which 1000 shares are issued and outstanding (the " NextRx Shares ").  The NextRx Shares constitute all the issued and outstanding equity interests of NextRx.  The authorized capital stock of NextRx Services consists of 200 shares of common stock, without par value, of which 1 share is issued and outstanding (the " NextRx Services Share ").  The NextRx Services Share constitutes all the issued and outstanding equity interests of NextRx Services. The authorized capital of NextRx LLC consists of 1 membership interest, which is issued and outstanding (the " LLC Interest ").  The LLC Interest constitutes all of the issued and outstanding equity interests of NextRx LLC.  The NextRx Shares, the NextRx Services Share and the LLC Interest have been duly authorized and validly issued and are fully paid and nonassessable, and were not issued in violation of, and

are not subject to, any preemptive rights.  There are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments contingent or otherwise, relating to the capital stock of, or other equity or voting interest in, any Target Company, pursuant to which Seller or any of its Subsidiaries, including any Target Company, is or may become obligated to issue, deliver or sell or cause to be issued, delivered or sold, shares of capital stock of or other equity or voting interests in, any Target Company or any securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire, any shares of the capital stock of or other equity or voting interests in, any Target Company.  There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to the capital stock of, or other equity or voting interests in, any Target Company.  No Target Company has any authorized or outstanding bonds, debentures, notes or other Indebtedness the holders of which have the right to vote (or convertible into, exchangeable for, or evidencing the right to subscribe for or acquire securities having the right to vote) with the equityholders of any Target Company on any matter.  There are no proxies and no voting agreements or voting trusts or other voting arrangements with respect to any capital stock of, or other equity or voting interests in, any Target Company.

 

Section 3.6     Consents and Approvals .  Assuming all filings required under the Antitrust Laws are made and any waiting periods thereunder have been terminated or expired, no other consent, approval, authorization or filing of or with any Governmental Entity (other than as may be required by any Contract with Governmental Entities that are conducting business with Seller or any of its Subsidiaries, including any Target Company, each of which is set forth on Schedule 3.6 of the Seller Disclosure Letter), which has not been received or made, is necessary or required by or with respect to Seller or the Selling Entities in connection with the execution and delivery of this Agreement and the Other Transaction Documents by Seller or any Selling Entity which is a party thereto, if any, or the consummation by Seller or any Selling Entity which is a party thereto, if any, of the transactions contemplated by this Agreement and the Other Transaction Documents, except for any other consents, approvals, authorizations or filings which, if not made or obtained, would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.7     Financial Statements; Undisclosed Liabilities .  (a)  The unaudited combined balance sheet of the Target Companies (the " Balance Sheet ") as at December 31, 2008 (such date being referred to herein as the " Balance Sheet Date "), and the related unaudited combined income statement of the Target Companies for the fiscal year then ended, were, and the Interim Financial Statements, when delivered to Purchaser pursuant to Section 5.20(b), will be, prepared in accordance with GAAP, consistently applied throughout the periods involved, and, in the case of the Interim Financial Statements, in accordance with the methods, principles and classifications used in preparing the Balance Sheet and the related unaudited combined income statement, in each case, except as otherwise noted therein.  Prior to the date hereof, true and complete copies of the Balance Sheet and the related unaudited combined income statement of the Target Companies have been made available to Purchaser.  The Audited Financial Statements, when delivered to Purchaser pursuant to Section 5.20(a), will be prepared in accordance with GAAP, consistently applied throughout the periods involved, and in accordance with the methods, principles and classifications used in preparing the Balance Sheet and the

related unaudited combined income statement, except as otherwise noted therein, and the requirements of Regulation S-X promulgated under the Exchange Act.  Notwithstanding anything to the contrary herein, revenue shall be presented in the Audited Financial Statements and the Interim Financial Statements on a "gross" basis as opposed to a "net" basis.

(b)             As of the date of such financial statements, the Balance Sheet fairly presented, in all material respects, the combined financial position of the Target Companies as at the Balance Sheet Date, and the related unaudited combined income statement fairly presented, in all material respects, the combined results of operations of the Target Companies for the fiscal year then ended.  Each of the Balance Sheet and the income statement was, the Audited Financial Statements, when delivered to Purchaser pursuant to Section 5.20(a) will be, and the Interim Financial Statements, when delivered to Purchaser pursuant to Section 5.20(b) will be, prepared in all material respects in accordance with the books and records of each Target Company, except for certain adjustments (that will not be, individually or in the aggregate, material in amount) to present the Audited Financial Statements and the Interim Financial Statements as if the combined operations of the Target Companies were reflected on a stand-alone basis in accordance with Regulation S-X.  Each of the Audited Financial Statements, when delivered to Purchaser pursuant to Section 5.20(a), and the Interim Financial Statements, when delivered to Purchaser pursuant to Section 5.20(b), will fairly present, in all material respects, the combined financial position and the combined results of operations of the Target Companies as of the dates and for the periods presented therein.  Each Target Company maintains accurate books and records reflecting its assets and liabilities and maintains, and has maintained for all periods reflected in the Balance Sheet and the accompanying income statement, the Interim Financial Statements and the Audited Financial Statements, proper and adequate internal accounting controls that provide assurance that (i) transactions are recorded as necessary to permit accurate preparation of its financial statements and to maintain accurate accountability for its assets; (ii) the reporting of its assets is compared with existing assets at regular intervals; and (iii) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.  Neither Seller nor any Target Company nor, to the Knowledge of Seller, any auditor, accountant or representative of Seller or any Target Company has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of any Target Company or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that any Target Company has engaged in questionable accounting or auditing practices.

(c)             Seller is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act to the extent such compliance is applicable to the Target Companies.

(d)             To the Knowledge of Seller, as of the date of this Agreement, there are no SEC inquiries or investigations, other governmental inquiries or investigations or internal investigations pending or threatened, in each case regarding any accounting practices of Seller

which relate to the Target Companies, except for such inquiries or investigations which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(e)             The Target Companies do not have any obligations or liabilities (whether accrued, absolute, contingent or otherwise), except (i) liabilities reflected on the Balance Sheet or disclosed in the notes thereto, (ii) liabilities incurred in the ordinary course of business since the Balance Sheet Date and which are not material to the Target Companies, (iii) liabilities that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (iv) liabilities incurred in connection with the transactions contemplated hereby or by the Other Transaction Documents or (v) performance obligations incurred after the Balance Sheet Date pursuant to the terms of Contracts (1) in effect as of the date hereof or (2) entered into after the date hereof not in violation of this Agreement.

(f)             The Target Companies (i) do not have any material outstanding obligations or liabilities under escheat or similar laws; and (ii) are not, and since January 1, 2007 have not been, subject to any actions, audits or other proceedings with any Governmental Entity with respect to escheat or similar laws.

Section 3.8     Absence of Certain Changes .  Since the Balance Sheet Date and to the date of this Agreement:  (i) the businesses of the Target Companies have been conducted in all material respects in the ordinary course; and (ii) none of the Target Companies have taken any action that would, after the date hereof, be prohibited (or for which Seller would be required to seek Purchaser's consent) pursuant to Section 5.2(a) hereof.  Since the Balance Sheet Date there has not been any change in the results of operations, condition (financial or otherwise), assets or business of the Target Companies, taken as a whole, which has had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.9     Compliance with Laws; Permits .  (a)  The Target Companies are being operated, and since January 1, 2007 have been operated, in compliance with all Laws and Orders applicable to the Target Companies, except for any such non-compliances that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  Since January 1, 2007, no Person has asserted in writing (and to the Knowledge of Seller, no Person has otherwise asserted or intends to assert) that any event has occurred or circumstance exists that is reasonably likely to constitute or result in a violation of or failure to comply with any term or requirement of any Order or any Law, other than any such violation or noncompliance as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b)             Without limiting the generality of clause (a) above, none of the Target Companies or, to the Knowledge of Seller, their respective officers, directors, managing employees or agents has, except in each case as does not have, or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, engaged

in any activity, whether alone or in concert with one or more of their business associates, which would constitute a violation of:

(c)             Without limiting the generality of clause (a) above, none of the Target Companies or, to the Knowledge of Seller, their respective officers, directors, managing employees, agents or persons with direct or indirect ownership interests of any Target Company (as those terms are used in 42 C.F.R. § 1001.1001), except in each case as does not have, or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:

(d)             Without limiting the generality of clause (a) above, none of the Target Companies or, to the Knowledge of Seller, their respective officers, directors, managing employees, agents or persons with direct or indirect ownership interests of any Target Company (as those terms are used in 42 C.F.R. § 1001.1001), except in each case as does not have, or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:

(e)             The Target Companies hold all material federal, state, local and foreign permits, approvals, licenses, authorizations, certificates, rights, exemptions and Orders from and Contracts with Governmental Entities (collectively, the " Permits ") that are necessary for the operation of the businesses of the Target Companies as presently conducted, or that are necessary for the lawful ownership of their respective properties and assets, except to the extent that any such failure to hold any Permit or any such default would not reasonably be expected to

have, individually or in the aggregate, a Company Material Adverse Effect.   Schedule 3.9(e) of the Seller Disclosure Letter sets forth a list of all Permits held by the Target Companies.  Each of the Permits is valid, subsisting and in full force and effect, except when the failure to be valid, subsisting and in full force and effect would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  To the Knowledge of Seller, no written notice of cancellation of, revocation of, suspension of or default under any Permit has been received since January 1, 2007 by any Target Company.

(f)             Each Target Company has fulfilled and performed in all material respects its respective obligations under each of the Permits, and is not in material breach or violation of any Permit or terms and conditions thereof.  No written notice of cancellation of, revocation of, suspension of or default under any Permit has been received since January 1, 2007 by any Target Company.

(g)             To the Knowledge of Seller, there are no acts that furnish a reasonable basis for a warning letter or other regulatory letter, other adverse regulatory communication or action, or civil or criminal investigation or action involving or relating to the Target Companies, except in each case as does not have, or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(h)             Notwithstanding the foregoing, the representations and warranties contained in this Section 3.9 do not apply to benefit plans and related matters, labor matters (other than those expressly set forth above), taxes, intellectual property, and environmental laws and environmental matters, which subject matters are addressed in their entirety and exclusively in Sections 3.11, 3.12, 3.13, 3.14 and 3.17, respectively.

 

Section 3.10    Litigation .  There is no, and since January 1, 2007, there has not been, any legal action, lawsuit, proceeding at law or in equity, inspection, audit, arbitration, or administrative or other proceeding or, to the Knowledge of Seller, any investigation, by or before any Governmental Entity pending or, to the Knowledge of Seller, threatened, against or affecting any Target Company, or any of their respective businesses, properties, assets, rights or Permits, other than any such actions, suits, proceedings at law or in equity, arbitrations or administrative or other proceedings or investigation, inspection or audit that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  As of the date hereof, there is no Action pending, or, to the Knowledge of Seller, threatened in writing, against or affecting Seller or any of its Affiliates that challenges the validity or enforceability of this Agreement or seeks to enjoin or prohibit consummation of, or seek other material equitable relief with respect to, the transactions contemplated by this Agreement or that would reasonably be expected to impair or delay Seller's ability to consummate the transactions contemplated by this Agreement.

Section 3.11    Benefit Plans .  (a)  Each material employee compensation or benefit plan, contract, policy or arrangement which is sponsored, maintained, contributed to or required to be contributed to by Seller in which Company Employees participate as of the date

 

hereof (collectively, the " Benefit Plans ") is listed on Schedule 3.11(a) of the Seller Disclosure Letter.  The Target Companies have never sponsored, maintained or contributed to (or been required to contribute to) any Benefit Plan.  Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither Seller nor any ERISA Affiliate has any liability under Title IV of ERISA or Section 4980B of the Code which has not been satisfied in full, and no events have occurred which are reasonably likely to result in such liability.  As of the date hereof, no Benefit Plan maintained by Seller or its ERISA Affiliate and covered by Title IV of ERISA has been terminated and no proceedings have been instituted to terminate or appoint a trustee to administer any such plan.  Copies of all Benefit Plans and any amendments thereto, or, in either case, summaries thereof, have been provided or made available to Purchaser.

(b)             The Seller Savings Plan is "qualified" within the meaning of Section 401(a) of the Code, the trust (if any) forming a part thereof is exempt from taxation under Section 501(a) of the Code, and, to the Knowledge of Seller, no event has occurred that would adversely affect such qualification or tax-exempt status.  Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS.

(c)             Each individual who is classified by the Target Company as an "employee" or as an "independent contractor" is properly so classified, and each Company Employee has been properly classified as an "exempt" or "non-exempt" employee under applicable law.

(d)             Seller has provided or made available to Purchaser a list of each Company Employee, which list set forth such employee's current annual compensation (including, where applicable, bonus or incentive compensation opportunity), years of credited service, full or part time status, exempt/nonexempt status (where applicable), hourly or salaried status, date of hire, work location and job title.

Section 3.12    Labor Matters .  (a)  Each Target Company is, and since January 1, 2007 has been, in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practice, other than any such non-compliance or unfair labor practice that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b)             As of the date hereof, to the Knowledge of Seller, no material unfair labor practice complaint against any Target Company is pending before the National Labor Relations Board.

(c)             There is no, and since January 1, 2007 has not been, any labor strike, dispute, slowdown or stoppage actually pending or, to the Knowledge of Seller, threatened in

writing, against or involving any Target Company that would reasonably be expected to have a Company Material Adverse Effect.

(d)             As of the date hereof, no Target Company is, and since January 1, 2007 has not been, party to or bound by any labor agreement or collective bargaining agreement and, to the Knowledge of Seller, no employee of any Target Company is, and since January 1, 2007 has not been, represented by any labor organization with respect to his or her employment with any Target Company.  As of the date hereof, no union is currently certified, and there is no union representation question and no union or other organizational activity that would be subject to the National Labor Relations Act (20 U.S.C. § 151 et   seq .) existing or, to the Knowledge of Seller, threatened, with respect to the operations of any Target Company.

(e)             With respect to any Target Company, no grievance exists, and since January 1, 2007 none has existed, and no arbitration proceeding arising out of or under any collective bargaining agreement is, or since January 1, 2007 has been, pending, other than any such grievance or arbitration proceeding that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(f)             The Target Companies are, and since January 1, 2007 have been, in compliance with all notice and other requirements under the Workers' Adjustment and Retraining Notification Act and similar applicable state, local and foreign Law relating to plant closings and layoffs (the " WARN Act "), and no Target Company has any obligations pursuant to the WARN Act.  On or before the Closing Date, each Target Company shall provide a list of the name and site of employment of any and all employees of any Target Company who had experienced any employment loss or layoff, as defined by the WARN Act, within 90 days prior to the Closing Date.  The Target Companies shall update this list up to and including the Closing Date.

Section 3.13    Tax Matters .  (a)  Tax Returns .  The Target Companies have timely filed or caused to be timely filed, or shall timely file or cause to be timely filed, all material Tax Returns that are required to be filed by, or with respect to, the Target Companies on or prior to the date hereof (taking into account any applicable extension of time within which to file).  All such Tax Returns referred to in the preceding sentence, to the extent such Tax Returns relate to the Target Companies, are true, correct and complete in all material respects and except as is not reasonably expected to have a Company Material Adverse Effect, all material consolidated, combined or unitary Tax Returns that include the Target Companies and that are required to be filed on or prior to the date hereof (taking into account any applicable extension of time within which to file) are true, correct and complete.

(b)             Payment of Taxes .  All material Taxes and Tax liabilities of the Target Companies that are due and payable on or prior to the date hereof (whether or not shown on a Tax Return referred to in clause (a) of this Section 3.13) have been paid or accrued and adequately disclosed on the Closing Balance Sheet.  All material Taxes of any combined,

consolidated or unitary group of which the Target Companies are currently members that are required to be paid on or prior to the date hereof have been paid or accrued on the books and records of Seller or its Subsidiaries in accordance with GAAP.

(c)             Withholding .  All material Taxes which the Target Companies were required to withhold (i) under Sections 1441 and 1442 of the Code and (ii) by applicable Law in connection with payments made to any employee, independent contractor, creditor, shareholder, customer, vendor, supplier or other third party have, in each case, been withheld and timely paid over to the appropriate Tax Authority to the extent due and payable.

(d)             Disputes .  No claims, written proposed deficiencies, actions, audits or other proceedings with any Tax Authority are presently pending, or have been threatened in writing, for a material amount of unpaid Taxes asserted against the Target Companies.  During the past five years, no claim has been made in writing by any Tax Authority in a jurisdiction where any Target Company does not file Tax Returns to the effect that such Target Company may be subject to material taxation by that jurisdiction.

(e)             Waivers .  There are no outstanding waivers of the statute of limitations applicable to any Separate Return of the Target Companies or any outstanding extension of time with respect to an assessment or deficiency for Separate Taxes related to the Target Companies.

(f)              Liens .  Except for Permitted Liens, there are no material Liens for Taxes against any of the assets or properties of the Target Companies.

(g)             Consolidated Groups .  None of the Target Companies has been a member of an affiliated group filing a consolidated United States federal income Tax Return (other than a group the common parent of which is a Target Company or Seller).  None of the Target Companies has any liability for Taxes of another Person (other than members of the consolidated group of which Seller is the parent) under Treasury Regulation Section 1.1502-6 (or any corresponding provisions of state, local or foreign Tax law).

(h)             Tax Agreements .  None of the Target Companies is a party to any Tax allocation, Tax sharing or other similar agreement the subject of which is indemnification for Taxes with any person other than Seller or its Subsidiaries (including the Target Companies).

(i)             Post-Closing Inclusions .  None of the Target Companies will be required to include any item of income in or exclude any item of deduction from, Taxable income for any Post-Closing Taxable Period as a result of any (i) any request for a ruling, advance pricing agreement, "closing agreement" as defined in Section 7121 of the Code (or any corresponding  or similar provision of state, local or foreign Tax law), (ii) installment sale or open transaction disposition made on or before the Closing Date; (iii) adjustment pursuant to Section 481(a) of the

Code or any similar provision of state, local or foreign Tax law; (iv) deferred intercompany gain or excess loss account as described under Treasury Regulation Section 1504 or any similar provision of state, local or other Tax law; or (v) prepaid amount received on or prior to the Closing Date.

 

(j)             Tax Status .  NextRx LLC has, at all times since its formation, been treated as an entity disregarded as separate from its owner for United States federal income tax purposes.

(k)             Section 355 .  None of the Target Companies has been a "distributing corporation" or a "controlled corporation" in a distribution intended to qualify under Section 355(a) of the Code.

 

(l)              Listed Transactions; Certain Reportable Transactions .  None of the Target Companies has participated in a "listed transaction" within the meaning of Treasury Regulation Section 1.6011-4(b)(2).  During the past three years, none of the Target Companies has participated in a "reportable transaction" within the meaning of Treasury Regulation Section 1.6011-4(b).

(m)             Non-Foreign Person .  No Seller Entity is a foreign person within the meaning of Section 1445(f)(3) of the Code.

(n)              Seller has made available to Purchaser all Separate Returns for Income Taxes filed by the Target Companies for the fiscal year ended December 31, 2007.

Section 3.14     Intellectual Property .  (a)  Schedule 3.14(a) of the Seller Disclosure Letter contains a list of all (i) registered and applied-for Intellectual Property (including domain names) and (ii) material proprietary software, in each case, owned by the Target Companies.  As to the Intellectual Property listed on Schedule 3.14(a) of the Seller Disclosure Letter, a Target Company is the exclusive beneficial and, to the extent registered or applied-for, record owner of all such listed Intellectual Property and all such listed Intellectual Property is subsisting, and, to the Knowledge of Seller, valid and enforceable.

(b)             Each of the Target Companies owns, licenses, or otherwise possesses the valid right to use, free and clear of all Liens (except Permitted Liens), all of the Intellectual Property owned or used in their respective businesses as currently conducted.  The conduct of the businesses of the Target Companies does not infringe, misappropriate, or otherwise violate the Intellectual Property of any third party, and there are no unresolved claims or written notices of any threatened claims alleging that any of the Target Companies are infringing, misappropriating, or otherwise violating the Intellectual Property of any third party, or challenging the use or ownership by any Target Company of any Intellectual Property, except for claims that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse

Effect.  To the Knowledge of Seller, no Person is infringing, misappropriating, or otherwise violating any Intellectual Property owned by any of the Target Companies, and no such claims have been asserted or threatened against any Person by any of the Target Companies.

(c)             Each Target Company takes and has taken commercially reasonable actions to protect the integrity and security, as applicable, of the software, databases, systems, networks and Internet websites that it owns or is licensed to use and all information stored or contained therein or transmitted thereby from any unauthorized use, access, interruption or modification by any other Person.  Each Target Company has implemented commercially reasonable back-up, security and disaster recovery technology.  Other than (i) the cessation of use of the Seller's Marks as provided for under Section 5.13, (ii) plan, member, client and claims information and data (and any related rights) which will be provided as set forth under the PBM Contract and the Transition Services Agreement, and (iii) the Licensed Intellectual Property (some of which Licensed Intellectual Property is being provided pursuant to, and for the time periods set forth in, the Transition Services Agreement and any other Licensed Intellectual Property material to the PBM Business is identified in Schedules 3.14(c) or 5.2(d) of the Seller Disclosure Letter), the consummation of the transactions contemplated by this Agreement will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, the Target Companies' right to own or use any Intellectual Property (including any member and claims data) as owned or used in the conduct of their respective businesses as currently conducted.

(d)             To the Knowledge of Seller, since January 1, 2007, the Target Companies have complied with all applicable Laws, and their own rules, policies, and procedures, relating to privacy, data protection, and the collection and use of personal information, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  No written claims have been asserted or threatened against any of the Target Companies alleging a violation of any Person's privacy rights, personal information, or data rights, and the consummation of the transactions contemplated by this Agreement will not, to the Knowledge of Seller, result in any such violation.

Section 3.15    Broker's or Finder's Fee .  Except for the fees of Bank of America Securities LLC or any of its Affiliates (the fees and expenses of which, in all such cases, shall be paid by Seller), no agent, broker, Person or firm acting on behalf of Seller is, or shall be, entitled to any broker's fees, finder's fees or commissions from Seller in connection with this Agreement or any of the transactions contemplated hereby.

Section 3.16    Material Contracts .  (a)  Schedule 3.16(a) of the Seller Disclosure Letter contains a list, as of the date hereof, of the following Contracts (each a " Material Contract ") to which a Target Company is a party, or bound by, or under which their respective businesses or assets are bound and, in each case, will continue to be a party to, bound by, or continue to have any obligation under, or under which Purchaser or any of its Subsidiaries may be bound or have any obligations, following the Closing:  (i) Contracts that contain restrictions with respect to the payment of dividends or any other distribution in respect of the capital stock or other equity interests of any Target Company; (ii) the top twenty (20) external customer

Contracts of the Target Companies, taken as a whole, based on sales for the fiscal year ended December 31, 2008; (iii) the top six (6) retail pharmacy Contracts of the Target Companies, taken as a whole, based on sales for the fiscal year ended December 31, 2008; (iv) the top ten (10) commercial rebate  Contracts of the Target Companies, taken as a whole, based on sales for the fiscal year ended December 31, 2008; (v) the top ten (10) Part D rebate Contracts of the Target Companies, taken as a whole, based on sales for the fiscal year ended December 31, 2008; (vi) Contracts between a Target Company and each vendor that contain a minimum annual purchase requirement of $1,000,000 or more or under which a Target Company annually spends more than $1,000,000 and that cannot be cancelled without penalty on less than one hundred and twenty (120) days' notice; (vii) Contracts that restrain, limit or impede the Target Companies' or their Affiliates' ability to (A) compete with or conduct any business or line of business (exclusive of Contracts by which Company Employees may be bound to which no Target Company nor any of its Affiliates is bound), (B) solicit the customers or employees of another Person or (C) disclose confidentiality or proprietary information (other than customary language of a type ordinarily present in Contracts related to the PBM Business); (viii) Contracts that contain "most favored nation" or equivalent preferential pricing terms for the benefit of any Person other than a Target Company; (ix) any letter of intent, letter of understanding, memorandum of understanding, proposal, bid or other similar document with regard to  any acquisition currently proposed or contemplated (including by merger) of capital stock or assets (except for ordinary course purchases of inventory or similar goods) of any other Person; (x) Contracts containing any standstill or similar agreement pursuant to which any Target Company (or, following the Closing, any Affiliate thereof, including Purchaser and its Subsidiaries) has agreed not to acquire assets or securities of another Person, or propose or offer to do so; (xi) all employment and consulting Contracts of the Target Companies (other than those pursuant to which the base compensation to be paid by the Target Companies collectively to the offeree is less than $150,000 per year) and all bonus, pension, profit sharing or other deferred compensation plans of the Target Companies; (xii) all Contracts (or group of related Contracts) or options to sell or lease (as lessor) any property or asset of the Target Companies in excess of $250,000 per year, except for sales in the ordinary course of business; (xiii) all Contracts (or group of related Contracts) pursuant to which any Target Company (A) possesses or uses, or has agreed to acquire or lease, any property or asset and (B) is required to make payments, accrue expenses or incur charges in excess of $500,000 per year; (xiv) all Contracts (or group of related Contracts), plans or programs pursuant to which material payments, or an acceleration of or material increase in benefits, may be required upon a change of control of any Target Company; (xv) all collective bargaining agreements; (xvi) written contracts by which (A) any Target Company is granted or obtains any right to use any material Intellectual Property of any other Person (other than readily commercially available click-wrap or shrink wrap software licenses) or (B) any Target Company is restricted in its right to use or register, or licenses or otherwise permits any other Person to use or register, material Intellectual Property; and (xvii) material Contracts between a Target Company and any Governmental Entity.  True and complete copies of all Material Contracts have been made available to Purchaser, together with all material amendments, waivers or changes thereto.

(b)             Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each Material Contract is in full force and effect

and is the legal, valid and binding obligation of the Target Company which is party thereto, and, to the Knowledge of Seller, of the other parties thereto enforceable against each of them in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors' rights generally and by general equitable principles (except those which are cancelled, rescinded or terminated after the date hereof in accordance with their terms).  Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, no Target Company is in default under, or in material breach or violation of, nor has an event occurred that (with or without notice, lapse of time or both) would constitute a material default by any Target Company under any such Material Contract.  To the Knowledge of Seller, no other party to any such Material Contract is in material default under any such Material Contract.  As of the date hereof, to the Knowledge of Seller, no Target Company has received any notice in writing or claim of default under, any Material Contract, or any written notice of any intent to terminate, not renew or challenge the validity or enforceability of any Material Contract.

Section 3.17    Environmental Matters .  (a)  Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the Target Companies are in compliance with all applicable Environmental Laws, and have obtained, and are in compliance with, all Permits required under applicable Environmental Laws in connection with the operation of their respective properties, assets and business; and (ii) there are no actions, suits, investigations or other proceedings by any Governmental Entity or other Person pending or, to the Knowledge of Seller, threatened in writing with respect to a Target Company under any Environmental Law.

(b)             To the Knowledge of Seller, there are no past or continuing releases of any Hazardous Substance into the environment at any real property currently or previously leased or owned by any Target Company, except for releases that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.18     Real Property .  (a)   Schedule 3.18(a) of the Seller Disclosure Letter contains a list, as of the date hereof, of all real property owned in whole or in part by a Target Company (collectively, the " Owned Real Property ").  A Target Company has title in fee simple to the Owned Real Property, free and clear of all Liens, other than Permitted Liens and Liens that will be released at or prior to the Closing.  There are no outstanding options, rights of first offer, rights of reverter or rights of first refusal to purchase the Owned Real Property or any portion thereof or interest therein.  None of the Target Companies are a party to any agreement or option to purchase any real property or interest therein unless otherwise disclosed on Schedule 3.18(a) of the Seller Disclosure Letter.

(a)             Schedule 3.18(b) of the Seller Disclosure Letter contains a list, as of the date hereof, setting forth the street address of each leased facility (the " Leased Real Property ") of the Target Companies (as lessee, sublessee, sublessor or lessor).  Seller has made true and complete copies of all leases of the Leased Real Property (the " Leases ") available to Purchaser.  Except as would not reasonably be expected to have, individually or in the aggregate, a

Company Material Adverse Effect, each Lease is in full force and effect and the legal, valid and binding obligation of the Target Company party thereto, and, to the Knowledge of Seller, of the other parties thereto, enforceable against each of them in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors' rights generally and by general equitable principles.  To the Knowledge of Seller, no action has been taken or omitted by any Target Company and, no other event has occurred or condition exists, that constitutes, or after notice or lapse of time or both would constitute, a default by a Target Company under any of the Leases, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.19     Insurance .  Set forth on Schedule 3.19 of the Seller Disclosure Letter is a list, as of the date hereof, of each current material insurance policy (the " Seller Insurance Policies ") that covers the Target Companies or their businesses, properties, assets or employees (including a description of any self-insurance program).  There is no material claim pending under any such Seller Insurance Policy which relates to the PBM Business or any of the Target Companies, as the case may be, as to which coverage has been questioned, denied or disputed by the underwriter of such Seller Insurance Policy.

Section 3.20     Investment Intent; Risk; Ownership of Common Stock .  (a)  The Selling Entities are acquiring the Purchaser Common Stock for their own account, for investment purposes only, and not with a view toward, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the Purchaser Common Stock, in violation of the federal securities Laws.

(b)             The Selling Entities qualify as "accredited investors", as such term is defined in Rule 501(a) promulgated pursuant to the Securities Act.

(c)             The Selling Entities understand that the Purchaser Common Stock to be acquired by them pursuant to this Agreement has not been registered under the Securities Act.  The Selling Entities acknowledge that such securities may not be transferred, sold, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act and any other provision of applicable state securities Laws or pursuant to an applicable exemption therefrom.

(d)             The Selling Entities are informed and sophisticated participants in the transactions contemplated hereby and have sufficient knowledge and experience to evaluate the technical, commercial, financial, legal and other risks associated with the acquisition by the Selling Entities of the Purchaser Common Stock on the terms hereunder.  The Selling Entities understand that the acquisition of the Purchaser Common Stock to be acquired by them pursuant to the terms of this Agreement involves substantial risk.  The Selling Entities can bear the economic risk of their investment (which may be for an indefinite period).

Section 3.21    Sufficiency of Assets .  The Target Companies have good and valid title to all of their material owned tangible properties and assets and a valid leasehold interest in all of their material leased properties and assets, in each case, owned or leased by them in connection with the operation of the PBM Business as presently conducted, free and clear of all Liens, except for Permitted Liens.  Such properties and assets are in all material respects in good operating condition and in all material respects free from defects, in each case, subject to ordinary wear and tear.  The properties and assets owned and leased by the Target Companies constitute all of the material properties and assets used primarily in the PBM Business as currently conducted by the Target Companies as of the date of this Agreement and, subject to the proviso below, constitute assets sufficient to conduct the PBM Business immediately following the Closing in substantially the same manner as conducted by the Target Companies as of the date of this Agreement; provided, however, that Purchaser acknowledges and agrees that (v) Purchaser will not acquire any assets or properties sold or otherwise disposed of after the date hereof and prior to the Closing in accordance with the terms of this Agreement, (w) Purchaser will not acquire ownership of any of the assets and properties that the Parties have agreed will be retained by Seller and its Affiliates as necessary for the provision of the services to be provided by Seller to Purchaser and the Target Companies pursuant to the Transition Services Agreement or are necessary for the provision of any other services (including, without limitation, finance, accounting, financial planning and other related services, human resources, payroll and other related services, tax and treasury services, and procurement services) provided by Seller or any of its Affiliates to the PBM Business immediately prior to the Closing that will terminate as of the Closing, (x) the Target Companies will not have Cash or Cash Equivalents immediately following the Closing, (y) Purc