8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (date of earliest event reported): March 26, 2008

GRAYMARK HEALTHCARE, INC.

(Exact name of registrant as specified in its charter)

Oklahoma	000-50638	20-0180812
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

101 N. Robinson, Suite 920
Oklahoma City, Oklahoma 73102	73102
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (405) 601-5300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14a-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into Material Definitive Agreement.

Purchase of Assets of Newt’s Discount Pharmacy, Inc.

Subject to a number of conditions precedent, on March 24, 2008 ApothecaryRx, LLC, one of our subsidiaries at Graymark Healthcare, Inc., entered into the Pharmacy Purchase Agreement with Newt’s Discount Pharmacy, Inc. and Jeremy Avance (the “Purchase Agreement”).  The Newt’s Discount Pharmacy is located at 102 West Noble, Guthrie, Oklahoma. Prior to execution of the Purchase Agreement, Newt’s Discount Pharmacy, Inc. and Jeremy Avance  did not have a material relationship with ApothecaryRx or us.

On March 31, 3008, ApothecaryRx completed the purchase of the assets of Newt’s Discount Pharmacy, Inc. that comprised its pharmacy business, excluding cash and certain other current assets and assumed the occupancy lease agreement for the building and real property at which Newt’s Discount Pharmacy is located (the “Pharmacy Business”).  ApothecaryRx agreed to pay a “based price” of $1,000,000 plus the inventory merchandise cost and certain accounts receivable that resulted in a total purchase price $1,399,172.  At closing, $899,172 of the asset purchase price was paid to Newt’s Discount Pharmacy, Inc.   The balance of the asset purchase price is payable as follows:

Goodwill Protection Agreement – $100,000 of the asset purchase price is payable to Mr. Avance pursuant to the Goodwill Protection Agreement executed at the closing, as discussed below.

Promissory Note – $400,000 of the asset purchase price is evidenced by a promissory note payable to Newt’s Discount Pharmacy, Inc. executed and delivered at the closing.  The outstanding principal amount of the promissory note bears interest at a 6% rate per diem.  The principal balance of this note and the accrued interest thereon is payable in quarterly installments over a three-year period. This note is secured by the assets comprising the Pharmacy Business acquired pursuant to the Purchase Agreement, the occupancy lease agreement assumed by ApothecaryRx, and certain intangible assets.

As part and condition of the closing of the Purchase Agreement, Newt’s Discount Pharmacy, Inc. assigned its  Lease Agreement dated September 24, 2007 with Treyron Limited Liability Company, to ApothecaryRx, and Newt’s Discount Pharmacy, Inc. and Jeremy Avance entered into the Transition Agreement with us.

Goodwill Protection Agreement.  The purpose of the Goodwill Protection Agreement is to protect the goodwill purchased as part of the Pharmacy Business assets.  Under the terms of this agreement, ApothecaryRx agreed to pay Mr. Avance $100,000 in 60 monthly payments of $1,667 commencing May 1, 2008.  Mr. Avance agreed for a five-year period commencing on March 26, 2008 that he and his affiliates and any person receiving a portion of the purchase price of the Pharmacy Business under the Purchase Agreement will not undertake any plan, program or effort designed or intended to, directly or  indirectly, contract or provide, solicit or offer to prepare, dispense or sell at retail any pharmacy, prescription or over the  counter drugs or pharmaceuticals (the  “Pharmacy Services”) to any person and the family members of any person, or  any entity and the affiliates of any entity, who acquired Pharmacy Services within the past five years from Newt’s Discount Pharmacy, Inc.  Furthermore, Mr. Avance and his parents, subsidiaries, affiliates and shareholders and any person receiving a portion of the purchase price under the Purchase Agreement will not, directly or indirectly, conduct any Pharmacy Business within 20 miles of the location of the Pharmacy Business.

Assignment of Lease.  Pursuant to the Assignment of Lease, on March 26, 2008 ApothecaryRx assumed the obligations of Newt’s Discount Pharmacy, Inc. under and the Lease Agreement dated September 24, 2007 with Treyron Limited Liability Company (the “Treyron Lease”).  ApothecaryRx is obligated to pay monthly rental of $3,000 during the three years ending December 31, 2011, $3,500 during the three years ending December 31, 2014 and $4,000 during the four years ending December 31, 2018.  ApothecaryRx also agreed to carry specific insurance coverage and pay the costs of maintenance and alterations to the leased premises.  In the event of default under this lease by ApothecaryRx, Treyron Limited Liability Company will have the right to terminate the Treyron Lease.

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Transition Agreement. ApothecaryRx entered into the Transition Agreement (and Power of Attorney) with Newt’s Discount Pharmacy, Inc. and Mr. Avance to foster a smooth transition of the Pharmacy Business from them to ApothecaryRx, and to allow ApothecaryRx to use the state and federal licenses of Newt’s Discount Pharmacy, Inc. and Mr. Avance to operate the Pharmacy Business for  a short period of time following the closing.  ApothecaryRx’s right to use the licenses of Newt’s Discount Pharmacy, Inc. and Mr. Avance will  terminate upon the written notice of the earlier of (a) the issuance to ApothecaryRx of the same types of permits, licenses, registrations or certifications as the licenses of Newt’s Discount Pharmacy, Inc. and Mr. Avance; or (b) May 30, 2008; provided, in the event ApothecaryRx has not obtained the licenses within the required time period, the term of  this agreement and the Power of Attorney will be extended 20 days in the event (i) Apothecary has not breached and is not in default of the terms of this agreement, the Purchase Agreement or any document executed in connection with the Purchase Agreement, and (ii) ApothecaryRx is actively seeking and using  best efforts to obtain the licenses as promptly as possible.

ApothecaryRx agreed to indemnify and hold harmless Newt’s Discount Pharmacy, Inc. and Mr. Avance and their partners, employees, agents and affiliated entities for any loss, damage, claim, liability, debt, obligation or expense (including reasonable legal fees and  expenses of litigation)  suffered, sustained or become subject to, as a result of (a) any actions or omissions of ApothecaryRx or any of its employees, agents, representatives or other personnel related to the Pharmacy Business  and the licenses occurring after March 31, 2008; or (b) ApothecaryRx’s use of the licenses held by Newt’s Discount Pharmacy, Inc. or Mr. Avance.

Purchase of Assets of Pendergraph Drugs, Inc.

Subject to a number of conditions precedent, on March 24, 2008 ApothecaryRx, LLC, one of our subsidiaries at Graymark Healthcare, Inc., entered into the Pharmacy Purchase Agreement with Pendergraph Drugs, Inc. and Gary Nichols (the “Purchase Agreement”).  The Pendergraph Drugs, Inc.’s pharmacy operates under the name of “Professional Discount Pharmacy” and is located at 1900 North Classen Boulevard, Oklahoma City, Oklahoma. Prior to execution of the Purchase Agreement, Pendergraph Drugs, Inc. and Gary Nichols  did not have a material relationship with ApothecaryRx or us.

On March 31, 3008, ApothecaryRx completed the purchase of the assets of Pendergraph Drugs, Inc. that comprised its pharmacy business, excluding cash and certain other current assets and assumed the occupancy lease agreement for the building and real property at which Professional Discount Pharmacy is located (the “Pharmacy Business”).  ApothecaryRx agreed to pay a “based price” of $550,000 plus the inventory merchandise cost and certain accounts receivable that resulted in a total purchase price $950,394.  At closing, $675,394 of the asset purchase price was paid to Pendergraph Drugs, Inc.   The balance of the asset purchase price is payable as follows:

Goodwill Protection Agreement – $55,000 of the asset purchase price is payable to Mr. Nichols pursuant to the Goodwill Protection Agreement executed at the closing, as discussed below.

Promissory Note – $220,000 of the asset purchase price is evidenced by a promissory note payable to Pendergraph Drugs, Inc. executed and delivered at the closing.  The outstanding principal amount of the promissory note bears interest at a 6% rate per diem.  The principal balance of this note and the accrued interest thereon is payable in quarterly installments over a three-year period. This note is secured by the assets comprising the Pharmacy Business acquired pursuant to the Purchase Agreement, the occupancy lease agreement assumed by ApothecaryRx, and certain intangible assets.

As part and condition of the closing of the Purchase Agreement, Pendergraph Drugs, Inc. assigned its  Lease Agreement dated December 8, 2005 with Fidelity Property Company to ApothecaryRx, and Pendergraph Drugs, Inc. and Gary Nichols entered into the Transition Agreement with us.

Goodwill Protection Agreement.  The purpose of the Goodwill Protection Agreement is to protect the goodwill purchased as part of the Pharmacy Business assets.  Under the terms of this agreement, ApothecaryRx agreed to pay Mr. Nichols $55,000 in 60 monthly payments of $917 commencing May 1, 2008.  Mr. Nichols agreed for a five-year

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period commencing on March 26, 2008 that he and his affiliates and any person receiving a portion of the purchase price of the Pharmacy Business under the Purchase Agreement will not  undertake any plan, program or effort designed or intended to, directly or  indirectly, contract or provide, solicit or offer to prepare, dispense or sell at retail any pharmacy, prescription or over the  counter drugs or pharmaceuticals (the  “Pharmacy Services”) to any person and the family members of any person, or  any entity and the affiliates of any entity, who acquired Pharmacy Services within the past five years from Pendergraph Drugs, Inc.  Furthermore, Mr. Nichols and his parents, subsidiaries, affiliates and shareholders and any person receiving a portion of the purchase price under the Purchase Agreement will not, directly or indirectly, conduct any Pharmacy Business within 20 miles of 120 West Noble Avenue, Guthrie, Oklahoma and 1900 North Classen Boulevard, Oklahoma City, Oklahoma.

Assignment of Lease.  Pursuant to the Assignment of Lease, on March 26, 2008 ApothecaryRx assumed the obligations of Pendergraph Drugs, Inc. under and the Lease Agreement dated December 8, 2005 with Fidelity Property Company (the “Fidelity Lease”).  ApothecaryRx is obligated to pay monthly rental of $3,048 through April 30, 2008 and $3,282 from May 1, 2008 through November 30, 2010.  ApothecaryRx also agreed to carry specific insurance coverage and pay the costs of maintenance and alterations to the leased premises.  In the event of default under this lease by ApothecaryRx, Fidelity Property Company will have the right to terminate the Fidelity Lease.

Transition Agreement.  ApothecaryRx entered into the Transition Agreement (and Power of Attorney) with Pendergraph Drugs, Inc. and Mr. Nichols to foster a smooth transition of the Pharmacy Business from them to ApothecaryRx, and to allow ApothecaryRx to use the state and federal licenses of Pendergraph Drugs, Inc. and Mr. Nichols to operate the Pharmacy Business for  a short period of time following the closing.  ApothecaryRx’s right to use the licenses of Pendergraph Drugs, Inc. and Mr. Nichols will  terminate upon the written notice of the earlier of (a) the issuance to ApothecaryRx of the same types of permits, licenses, registrations or certifications as the licenses of Pendergraph Drugs, Inc. and Mr. Nichols; or (b) May 30, 2008; provided, in the event ApothecaryRx has not obtained the licenses within the required time period, the term of  this agreement and the Power of Attorney will be extended 20 days in the event (i) Apothecary has not breached and is not in default of the terms of this agreement, the Purchase Agreement or any document executed in connection with the Purchase Agreement, and (ii) ApothecaryRx is actively seeking and using  best efforts to obtain the licenses as promptly as possible.

ApothecaryRx agreed to indemnify and hold harmless Pendergraph Drugs, Inc. and Mr. Nichols and their partners, employees, agents and affiliated entities for any loss, damage, claim, liability, debt, obligation or expense (including reasonable legal fees and  expenses of litigation)  suffered, sustained or become subject to, as a result of (a) any actions or omissions of ApothecaryRx or any of its employees, agents, representatives or other personnel related to the Pharmacy Business  and the licenses occurring after March 31, 2008; or (b) ApothecaryRx’s use of the licenses held by Pendergraph Drugs, Inc. or Mr. Nichols.

Item 2.01Completion of Acquisition or Disposition of Assets.

On March 31, 2008, we closed our acquisition of the Pharmacy Business of Newt’s Discount Pharmacy, Inc. and Jeremy Avance  pursuant to the Pharmacy Purchase Agreement (see “Item 1.01  Entry into a Material Definitive Agreement – Purchase of Assets of Newt’s Discount Pharmacy, Inc.,” above). Furthermore, on March 31, 2008, we closed our acquisition of the Pharmacy Business of Pendergraph Drugs, Inc. and Gary Nichols  pursuant to the Pharmacy Purchase Agreement (see “Item 1.01  Entry into a Material Definitive Agreement – Purchase of Assets of Pendergraph Drugs, Inc.,” above).

Item 9.01  Financial Statements and Exhibits.

(a)  Financial Statements of Business Acquired.

We are not required to file audited financial statements for the Pharmacy Businesses acquired from Newt’s Discount Pharmacy, Inc. and Jeremy Avance and Pendergraph Drugs, Inc. and Gary Nichols.

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(b)  Pro Forma Financial Information.

We are required to file pro forma financial statements for the Pharmacy Businesses acquired from Newt’s Discount Pharmacy, Inc. and Jeremy Avance and Pendergraph Drugs, Inc. and Gary Nichols.

(d) Exhibits.

10.1	Pharmacy Purchase Agreement among ApothecaryRx, LLC, Newt’s Discount Pharmacy, Inc. and Jeremy Avance, dated March 24, 2008.
10.2	Goodwill Protection Agreement among ApothecaryRx, LLC, Newt’s Discount Pharmacy, Inc. and Jeremy Avance, dated March 26, 2008.
10.3	Transition Agreement among ApothecaryRx, LLC, Newt’s Discount Pharmacy, Inc. and Jeremy Avance, dated March 26, 2008.
10.4	Assignment of Lease between ApothecaryRx, LLC and Newt’s Discount Pharmacy, Inc., with an effective date of March 26, 2008.
10.5	Security Agreement between ApothecaryRx, LLC and Newt’s Discount Pharmacy, Inc., dated March 26, 2008.
10.6	Promissory Note issued by ApothecaryRx, LLC payable to Newt’s Discount Pharmacy, Inc., dated March 26, 2008.
10.7	Pharmacy Purchase Agreement among ApothecaryRx, LLC, Pendergraph Drugs, Inc. and Gary Nichols, dated March 24, 2008.
10.8	Goodwill Protection Agreement among ApothecaryRx, LLC, Pendergraph Drugs, Inc. and Gary Nichols, dated March 26, 2008.
10.9	Transition Agreement among ApothecaryRx, LLC, Pendergraph Drugs, Inc. and Gary Nichols, dated March 26, 2008.
10.10	Assignment of Lease between ApothecaryRx, LLC and Pendergraph Drugs, Inc., with an effective date of March 26, 2008.
10.11	Promissory Note issued by ApothecaryRx, LLC payable to Newt’s Discount Pharmacy, Inc., dated March 26, 2008.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GRAYMARK HEALTHCARE, INC.
	(Registrant)
	By:	/S/STANTON NELSON
		Stanton Nelson, Chief Executive Officer
Date: April 11, 2008

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EX-10.1

EXHIBIT 10.1

PHARMACY PURCHASE AGREEMENT

THIS AGREEMENT is made effective the 24th day of March, 2008, among APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Buyer”), NEWT’S DISCOUNT PHARMACY, INC., an Oklahoma corporation (the “Company”) and Jeremy Avance, an individual (“Avance” and together with the Company, jointly and severally, the “Seller”).

B A C K G R O U N D :

A.The Seller owns and operates the pharmacy business located in or near Guthrie, Oklahoma, described at Schedule “A” attached as a part hereof (together, whether one or more, the “Business”).

B.The Buyer desires to acquire and the Seller desires to sell the Business by the Buyer acquiring all assets, rights and properties owned by the Seller which are used in, useful in or related to the ownership, operation or maintenance of the Business, except as specifically excluded herein.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Sale Agreement.  Subject to the terms and conditions of this Agreement, the Buyer agrees to purchase and the Seller agrees to sell the Business, including, without limitation, all assets, rights and property used in, useful in or related to the ownership, operation or maintenance of the Business as of the date of this Agreement and the Closing Date (as hereafter defined) except for the Excluded Assets (collectively, the “Assets”).  Absolute ownership of the Assets will be transferred to the Buyer on the Closing Date free and clear of all liens, claims and encumbrances other than liens securing the Approved Liabilities (as hereafter defined).  The Assets include, without limitation:

1.1.Fixtures and Equipment.  All tangible personal property used in, useful in or related to the ownership, operation or maintenance of the Business, including, without limitation, all equipment, furniture, supplies and trade fixtures.

1.2.Merchandise Inventory.  All of the following inventory located on the premises of the Business (the “Merchandise Inventory”):  (a) all saleable prescription pharmaceutical inventory except: (i) inventory that is damaged, has expired or will expire within ninety (90) days following the Time of Transfer; (ii) non-wholesaler re-packed or misbranded pharmaceutical merchandise; (iii) compounding chemicals; and (iv) any other inventory not transferable due to any applicable local, state or federal law; and (b) all over-the-counter inventory reasonably acceptable to the Buyer.

1.3.Contracts and Leases.  All of the Seller’s interest in all contracts, leases and agreements used in, useful in or related to the ownership, operation or maintenance of the Business or the Assets (the “Contracts”) that are reasonably acceptable to the Buyer.

1.4.Will Call Receivables.  All of the Will Call Receivables (as defined in the Transition Agreement (as hereinafter defined in paragraph 8.10)).

1.5.Intangible Property.  All intangible personal property used in, useful in or related to the ownership, operation, or maintenance of the Business, including, without limitation:  (a) the right to all names (including the names “Newt’s Pharmacy” and “Newt’s Discount Pharmacy”), telephone numbers, pager numbers, cellular and digital phone numbers, internet web sites and electronic mail addresses, if any; (b) all permits, licenses, certificates and operating authorities necessary to operate the Business, to the extent assignable; (c) all customer and prospective customer lists including the exclusive use of such lists; (d) all books, records and files, whether physical or electronic; and (e) all computer software, to the extent assignable.

1.6.Going Concern Assets.  The covenant not to compete and other going concern assets as set forth in the Goodwill Protection Agreement to be executed in connection herewith (the “Goodwill Protection Agreement”).

2.Excluded Assets.  The Assets to be acquired by the Buyer under this Agreement specifically exclude the following (the “Excluded Assets”):  (a) all cash, checks and coupons located at the Business prior to the Time of Transfer (as hereinafter defined in paragraph 11.3), except for a cash change fund in the amount of $500.00 (the “Change Fund”); (b) all accounts receivable, relating to operation of the Business prior to the Time of Transfer other than the Will Call Receivables; (c) any Contracts not approved by the Buyer in writing after the date hereof; and (d) those items described at Schedule “2” attached as a part hereof that the Seller represents are not necessary for the ownership or operation of the Business; and (e) all Merchandise Inventory not purchased by Buyer under paragraph 1.2, above.

3.Liabilities.  The Seller will be solely responsible for and will pay or otherwise satisfy on or before the Closing Date all:  (a) liabilities, obligations and debts of the Seller with respect to the Business in existence as of the Closing Date; and (b) taxes (including sales and income taxes) accruing from operation of the Business or actions taken by the Seller prior to and through the Closing Date.

4.Purchase Price.  Subject to the adjustments and prorations hereafter described, the total purchase price to be paid by the Buyer to the Seller for the purchase of the Business is the amount equal to the sum of (the “Purchase Price”):  (a) One Million Dollars ($1,000,000.00) (the “Base Price”); plus (b) the Merchandise Inventory Price (as hereafter defined) calculated in accordance with paragraph 5 of this Agreement; plus (c) the total amount of the Will Call Receivables (the “Receivables Price”).  The Purchase Price will be adjusted and paid as follows:

4.1.Cash at Closing.  On the Closing Date, the Buyer will pay to the Company in immediately available funds:  (a) fifty percent (50%) of the Base Price; (b) all of

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the Merchandise Inventory Price; (c) all of the Receivables Price; and (d) the amount of the Change Fund not to exceed $500.00.  The Base Price shall be adjusted as provided in paragraphs 4.3 and 4.4.

4.2.Seller Financing; Goodwill Protection.  To satisfy the balance of the Purchase Price, on the Closing Date, the Buyer will:  (a) execute and deliver a promissory note (the “Promissory Note”) in the amount equal to forty percent (40%) of the Base Price in favor of the Company; and (b) enter into the Goodwill Protection Agreement providing for payment of ten percent (10%) of the Base Price to Avance.  The Promissory Note will be secured by a security agreement (the “Security Agreement” and collectively with the Promissory Note, the “Financing Documents”), bear interest at six percent (6%) per annum, be payable in blended quarterly installments of principal and interest and have a term of three (3) years.

4.3.Adjustments.  On the Closing Date, the amount to be paid pursuant to paragraph 4.1 will be decreased for any and all unpaid liabilities incurred by the Company or the Business prior to the Time of Transfer and which are assumed by the Buyer or collateralized by any of the Assets, or for which the Buyer becomes liable and pays.

4.4.Prorations.  On the Closing Date, the amount to be paid pursuant to paragraph 4.1 will be adjusted based on the proration of all rents (including ad valorem taxes and casualty insurance), if any, and utilities for the month in which the Time of Transfer occurs through the Time of Transfer (the “Prorations”).  All accounts payable and other liabilities incurred prior to the Time of Transfer will be the sole responsibility of the Seller.  All accounts payable and other liabilities incurred by the Buyer in connection with the Business on and after the Time of Transfer will be the sole responsibility of the Buyer.  All accounts receivable and other revenues will be apportioned as provided in the Transition Agreement.  Each party shall, promptly upon receipt, deliver to the other party copies of each relevant bill or statement that may be in such party’s records.

4.5.Allocation.  The Purchase Price will be allocated among the Assets by the Buyer and the Seller according to sound accounting practices and such allocation will be incorporated into a supplemental instrument to be executed and delivered by the parties on the Closing Date.

5.Inventory.  A physical inventory (the “Inventory”) will be taken of all Merchandise Inventory and supplies located at the Business prior to the Closing Date on a date acceptable to the Buyer and the Seller.  The inventory is tentatively scheduled for March 25, 2008, and will only be postponed to allow more time for the satisfaction of conditions precedent in paragraphs 9or 10.  The Inventory will be certified and taken by an inventory service selected mutually by the Buyer and the Seller.  The cost of the Inventory will be divided equally between the Seller and the Buyer.  The Inventory will be recorded on duplicate inventory sheets in the presence of the Seller and the Buyer or their representatives, and a copy of such inventory sheets will be furnished to the Seller and the Buyer.  All damaged or unsaleable merchandise, merchandise that is out of date or will become out of date within ninety (90) days after the date the Inventory is

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conducted or merchandise that the Buyer reasonably determines cannot be sold for full retail price (together, the “Excluded Inventory”) will be excluded from the Inventory and set aside.  The Seller will have the right to remove all Excluded Inventory from the Business within forty-eight (48) hours and to return the Excluded Inventory or send it to a reclamation center for processing.  Any Excluded Inventory not timely removed from the Business by the Seller will be deemed abandoned and the Buyer may dispose of the Excluded Inventory as the Buyer deems appropriate and all proceeds from such disposition will belong to the Buyer.  The purchase price for the Merchandise Inventory (the “Merchandise Inventory Price”) will be the actual invoice cost paid by the Seller for each item listed in the Inventory.

6.Representations and Warranties of Seller.  As an inducement to the Buyer to enter into this Agreement, the Seller represents and warrants to the Buyer that as of the date of this Agreement and the Closing Date:

6.1.Financial Statements.  The Seller has delivered to the Buyer the unaudited financial statements for the Business for the periods ending December 31, 2005, December 31, 2006, and December 31, 2007.  There has not been a material change (nor an event which would result in any material change) in the Business, or in the results of operation or financial condition of the Company since the effective date of the most recent financial statements.  The financial statements, copies of which are attached at Schedule “6.1” as a part hereof, consist of a balance sheet, an income statement and all appropriate notes and disclosures.  The financial statements, income statements and notes and disclosures are true and correct in all material respects and present fairly the financial condition and results of operations of the Business at the dates thereof and for the respective periods then ended and have been prepared in accordance with accounting principles consistently applied.

6.2.Absence of Liabilities.  The Seller currently has no debt, liability, obligation or commitment, absolute or contingent, known or unknown, relating to or connected with the Business or the Assets other than:  (a) those set forth (and not exceeding the amounts so set forth) in the most recent financial statements attached at Schedule “6.1” (the “Current Financial Statements”) and not otherwise paid or discharged after the date thereof; (b) and those incurred in the ordinary course of business from the effective date of the Current Financial Statements, through the date of this Agreement consistent with past practices.  Except for the items shown on the Current Financial Statements of the Seller which will be paid from the sale proceeds hereunder, on the Closing Date, the Business will have no claims, debts, liabilities, obligations, guaranties or commitments and the Seller will not be a party to, be bound or subject to any real or personal property leases relating to the Business other than the Contracts.  The Assets and the Business will not be subject to or liable for any claim, debt, liability, obligation, guaranty or commitment as of the Closing Date.  Any such claims, debts, liabilities, obligations or commitments will be the sole responsibility of the Seller, and the Seller hereby agrees to indemnify and hold harmless the Buyer from all such amounts.

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6.3.Title to Assets.  The Seller owns, possesses and has good and marketable title to the Assets free and clear of all mortgages, liens, leases, pledges, charges, encumbrances, equities, easements, rights of way, covenants, conditions, restrictions or claims of every nature and kind whatsoever, other than those described at Schedule “6.3.”  The Assets constitute all the assets used in, useful in or related to the Business.  Each Asset is:  (a) either (i) in good saleable condition or (ii) in good operating condition and repair, and in sound structural condition; and (b) free and clear of any material defects or any restrictions on or conditions to transfer or assignment.

6.4.Contracts.  Schedule “6.4” is a true, correct and complete list (or description, in the case of oral agreements) of all of the Contracts.  Except as disclosed to the Buyer in writing:  (a) such contracts, leases and agreements are in full force and effect; (b) the Seller is in full compliance with all of the Seller’s obligations under the Contracts; (c) the counterparty under each of the Contracts is in full compliance with all of such party’s obligations under the Contracts; (d) no default exists under any of the Contracts; (e) no event of default or event which would become an event of default with the giving of notice or passage of time has occurred; and (f) no condition presently exists which would give any party to any contract the right to terminate such contract.  There are no other material contracts, leases, commitments or agreements in effect related to the Assets or the Business other than those identified at Schedule “6.4.”

6.5.Legal Requirements.  The Seller:  (a) has all requisite power to own, lease and operate the Seller’s properties, including, without limitation, the Assets and to carry on the Seller’s business as now being conducted, including, without limitation, the Business; (b) is duly qualified to carry on the Business in the State where the business is located; and (c) holds all required licenses and permits for carrying on all aspects of the Business.  The Seller and the Business have complied and will continue to comply with all applicable federal, state or local statutes, laws and regulations including, without limitation, any applicable building, zoning or other law, ordinance or regulation affecting the operation of the Business.

6.6.Zoning.  To the best knowledge of the Seller, the zoning of the real property where the Business is located permits the presently existing improvements and the continuation of the Business as presently being conducted.  To the best knowledge of the Seller, the Seller has received no notice of any and there are no:  (a) pending changes in statutes, regulations or local laws (including zoning) that will render any part of the Business illegal; (b) outstanding orders or notices pending from any local authority, governmental body or governmental agency with respect to the Assets or the Business; or (c) plans, studies or efforts by any governmental authority or agency or of any non-governmental person or entity which in any way would materially affect all or any portion of the Business or the Assets.

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6.7.Insurance.  The Seller has and will maintain in full force and effect through the Closing Date insurance against all risks, damages, losses and liabilities usual and customary for Business similar to the Business, including without limitation, general liability, casualty, workers’ compensation and property insurance.  The Seller is not self insured for any risks.  The Seller’s current insurance coverage on the Business is described at Schedule “6.7” attached as a part hereof.

6.8.Environmental Issues.  The Seller has not and to the best knowledge of the Seller no other party has disposed, deposited, discharged, placed or otherwise caused any release of any hazardous or toxic materials, substances, pollutants, contaminants or wastes at, on or near the real property and improvements where each Business is located in contravention of any applicable federal, state or local laws, rules or regulations.

6.9.Consents and Approvals.  Other than in compliance with the provisions of applicable statutes and regulations, no notice to, filing with, or authorization, consent or approval of, any domestic or foreign public body or authority is necessary for the consummation of the transactions contemplated by this Agreement.  The execution, delivery, performance and consummation of this Agreement does not and will not:  (a) violate, conflict with or constitute a default or an event that, with notice or lapse of time or both, would be a default, breach or violation under any term or provision of any instrument, agreement, contract, commitment, license, promissory note, conditional sales contract, indenture, mortgage, deed of trust, lease or other agreement, instrument or arrangement to which the Seller is a party or by which the Seller, the Business or the Assets are bound; (b) violate, conflict or constitute a breach of any statute, regulation or judicial or administrative order, award, judgment or decree to which the Seller is a party or to which the Seller, the Assets or the Business are bound or subject; or (c) result in the creation or imposition of any adverse claim or interest, or any lien, encumbrance, charge, equity or restriction of any nature whatever, upon or affecting the Seller, the Business or the Assets.

6.10.Litigation.  Except as set forth at Schedule “6.10,” there is no:  (a) action, suit or proceeding pending or threatened against the Seller, the Assets or the Business; or (b) proceeding, investigation, charges, audit or inquiry threatened or pending before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality which might result in an adverse effect on the Seller, the Business or the Assets.

6.11.Certain Employee Plans.  Except as set forth at Schedule “6.11,” the Seller:  (a) has no “employee benefit plans,” as defined in the Employee Retirement Security Act of 1974, as amended, including by way of example and not limitation, 401(k), Keogh, SEP and health insurance plans; and (b) is not a party to any multi-employer plan.  Other than at-will employment agreements, there are no employment agreements with any officers, directors, employees, retired employees or former employees of the Seller.

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6.12.Computer Systems.  All computer software which is used in connection with the operation of the Business is either proprietary or held pursuant to a valid, legal and binding license agreement which is in full force and effect, and no event has occurred which would constitute an event of default under any applicable agreement or which, with the lapse of time, the giving of notice or both, would constitute an event of default under any applicable agreement. Other than written industry standard license agreements, each such program or system is complete and is not subject to any lien, claim, encumbrance, security interest, right, restriction, option or purchase obligation held by any person.

6.13.Taxes.  All tax returns and reports of the Seller required by law to be filed have been filed or valid extensions have been obtained.  The returns which have been filed are true and correct and all taxes shown as due thereon have been paid.  All taxes and other governmental charges which are due and payable have been paid and recorded in the appropriate accounting records.  There is no pending or known threatened claim against the Seller for payment of additional taxes in excess of the amounts reflected on such party’s books and financial statements.  The Seller has not executed any waiver of any statute of limitations against assessments of taxes.

6.14.Authority.  The Seller has taken all necessary action to authorize the execution, delivery and performance of this Agreement and has adequate power, authority and legal right to enter into, execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby.  This Agreement is legal, valid and binding with respect to each Seller and is enforceable in accordance with its terms.  On execution, delivery and performance of this Agreement in accordance with its terms, the Buyer will own one hundred percent (100%) of the Business and the Assets free of all claims, liens, encumbrances and liabilities.

6.15.Labor Relations.  The Seller and the Business have not and are not now a party to any collective bargaining or other labor contract.  To the best knowledge of the Seller, there has not been, there is not presently or existing and there has not been any threat of:  (a) any strike, slow down, picketing, work stoppage or employee grievance process; (b) any proceeding against or affecting any of the Business relating to the alleged violation of any federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute or treaty pertaining to labor relations or employment matters, including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission, or any comparable governmental body, organizational activity, or other labor employment dispute against or affecting any of the Business, their premises or the Assets; or (c) any application for certification of a collective bargaining agent.  To the best knowledge of the Seller, no event has occurred or circumstances exist that could provide the basis for any work stoppage or other labor dispute.  There is no lock out of any employees of the Seller, and no such action is contemplated by the Seller.  The Seller and the Business have complied in all respects with all legal requirements relating to the

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employment, equal employment opportunity, non-discrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health and plant closings.  Neither the Seller nor the Business is liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing.

6.16.Full Disclosure.  This Agreement, any schedule referenced in or attached to this Agreement, any document furnished to the Buyer under this Agreement or any certification furnished to the Buyer under this Agreement does not contain any untrue statement of a material fact and does not omit to state a material fact necessary to make such statement, in the circumstances under which it was made, not misleading.  All of the representations, warranties and covenants in this Agreement:  (a) are true and correct as of the date made; (b) will be true and correct as of the Closing Date; and (c) will survive and not be waived, discharged, released, modified, terminated or affected by any due diligence by the Buyer.  For purposes of this Agreement, when a statement is qualified by the phrase “to the best knowledge of the Seller,” such phrase means: (y) the actual knowledge of the Seller; and (z) the knowledge which the Seller, in the exercise of reasonable diligence, could obtain.

7.Representations and Warranties of Buyer.  As an inducement to the Seller to enter into this Agreement, the Buyer represents and warrants to the Seller that as of the date of this Agreement and the Closing Date, the Buyer has delivered to the Seller the unaudited financial statements for the Buyer for the periods ending December 31, 2006, and December 31, 2007.  There has not been a material change (nor an event which would result in any material change) in the financial condition of the Buyer since the effective date of the most recent financial statements.  The financial statements, copies of which are attached at Schedule “7” as a part hereof, consist of a balance sheet, an income statement and all appropriate notes and disclosures.  The financial statements, income statements and notes and disclosures are true and correct in all material respects and present fairly the financial condition and results of operations of the Buyer at the dates thereof and for the respective periods then ended and have been prepared in accordance with accounting principles consistently applied.

8.Covenants.  The parties agree to perform the following prior to the Closing Date:

8.1.Access to Information.  During the period commencing on the date of this Agreement and ending on the Closing Date, the Seller will cause the officers and representatives of the Business, including, without limitation, the Seller’s accountants, lawyers and bankers, to afford the Buyer and the persons expected to enter into financing agreements with respect to the Buyer’s acquisition and the authorized representatives of the foregoing, full access during normal business hours to the properties, books, records, accountants and lawyers of the Business and the Seller to make such investigation as the Buyer desires regarding the Business, the Assets and the Seller.  The Seller will:  (a) furnish such financial, operating data, information and responses as the Buyer might reasonably request; and (b) execute and deliver to the Buyer all written authorizations as the Buyer

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may reasonably request or the representatives of the Seller might require.  The Seller will furnish bank account statements for the months of January and February, 2008, as soon as such statements are available, but in no event later than three (3) business days prior to the Closing Date.

8.2.Inspection.  During the ten (10) day period commencing on the date this Agreement is executed by the Seller (the “Inspection Period”), the Buyer will conduct such investigation and inspection with respect to the properties, books, records, legal documents, financial accounts, contracts, title records and prospects of the Business as the Buyer deems appropriate.  If the Buyer determines in good faith that the Business or the Assets are unsatisfactory for any reason whatsoever, the Buyer will have the option to terminate this Agreement by written notice to the Seller within two (2) days after the expiration of the Inspection Period or to provide written notice to the Seller setting forth the Buyer’s objections.  The Buyer may send multiple objection notices and each such notice will not waive any right to make additional objections within the foregoing time periods.  The Seller will have seven (7) days after receipt of any such objection notice to satisfy the Buyer’s objections.  If the Seller is unable to satisfy the Buyer’s objections, the Buyer will have the option to (i) waive such objections or (ii) terminate this Agreement by written notice to the Seller.

8.3.Conduct of Business.  Prior to the Closing Date, the Seller will operate the Business in a businesslike manner in accordance with the Seller’s prior practices and will use the Seller’s best efforts to maintain and preserve the Business, the goodwill of all customers and good relations with its employees.  In addition, unless the Buyer otherwise consents in writing:

8.3.1.The Seller has not and will not:  (a) transfer, sell, mortgage, pledge, encumber or dispose of any of the Assets (other than the Merchandise Inventory) except to unaffiliated third parties in the ordinary course of business for fair consideration in an amount not less than the book value of such asset as reflected in the Current Financial Statements; (b) transfer, sell, mortgage, pledge, encumber or dispose of the Merchandise Inventory except at retail in the ordinary course of business; (c) make or permit any amendment or termination of any material contract, agreement, lease or commitment to which the Seller may be bound; (d) make any capital expenditures or commit to make any capital expenditure or perform unfulfilled commitments to make capital expenditures, whenever made or entered into, if such capital expenditures are in excess of $5,000.00; or (e) incur any material amount of indebtedness for borrowed money or other obligations except the purchase of Merchandise Inventory in the ordinary course of business.

8.3.2.Except in the ordinary course of business, the Seller will not enter into any new employment agreement, amend or extend any existing employment agreement, grant any severance pay, termination pay or increases in compensation, take any action to vest any overfunded benefits in any

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benefit plan or adopt or amend any bonus, profit sharing, pension, stock option or similar plan, trust or other arrangement.

8.3.3.The Seller will not enter into any new labor or collective bargaining agreement or amend or extend any existing labor or collective bargaining agreement.

8.3.4.The Seller will not enter into any new supply agreement with any supplier of any of the Merchandise Inventory or amend or extend any existing supply agreement.

8.3.5.The Seller will not enter into any agreement, arrangement or understanding involving the sale, transfer, assignment or other disposition of, or grant a security interest in or optional rights to purchase or otherwise acquire the Assets or the Business.

8.3.6.The Seller will not, and will cause each of the Seller’s representatives and affiliates not to, directly or indirectly, solicit, initiate or encourage any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from any person other than the Buyer relating to any transaction involving the sale of the Business or the Assets, or any merger, consolidation, business combination or similar transaction involving the Business.

8.3.7.The Seller will not increase prices of any of the merchandise offered for sale at the Business except as a direct result of an increase in the Seller’s cost of such merchandise and in the ordinary course of business.

8.4.Consents.  The Seller will cooperate with the Buyer to obtain, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Seller as are necessary for the consummation of the transactions contemplated by this Agreement.  However, no contract will be amended to increase the amount payable thereunder and no burden to the Buyer will be increased to obtain any consent, approval or authorization.

8.5.Employment.  On the Closing Date, the Seller will terminate all employees of the Business effective as of the Time of Transfer and be responsible for all compensation, accrued vacation, severance pay or termination pay or other related claims with respect to all such terminated employees through the Time of Transfer.  On the Closing Date, the Buyer will have the right, but not the obligation, to offer to employ those employees of the Business determined by the Buyer in the Buyer’s sole discretion.  The terms of employment for each such retained employee will be determined by the Buyer.  Following the Closing Date, the performance of each employee who continues employment with the Buyer will be evaluated periodically by the Buyer using such criteria as may be

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established from time to time by the Buyer.  The Seller agrees to use its best efforts to ensure that the employees of the Seller selected by the Buyer continue their association with the Business.  Immediately after the closing on the Closing Date, Avance will accompany the Buyer’s representatives to the Business, announce to the employees of the Business that the Business has been sold to the Buyer, and introduce the Buyer’s representatives to the employees.

8.6.Leases.  The Seller will use its best efforts to cause the landlord under the lease where the Business is located (the “Lease”) to enter into amendments of the Lease on terms satisfactory to the Buyer.

8.7.Seller’s Insurance.  Through the Time of Transfer, the Seller will maintain insurance coverage customarily maintained by the parties engaged in the Business and covering all loss, damage, liability and risk allocated to the Sellers in paragraph 11.3 including, without limitation, general liability, casualty, workers’ compensation, vehicle and property insurance in amounts customarily maintained by the Seller.

8.8.Conditions.  The Seller will use its best efforts to cause the conditions in paragraph 9 to be satisfied.  The Buyer will use its best efforts to cause the conditions in paragraph 10 to be satisfied.

8.9.Sales Tax Report.  The Seller will complete and file any sales tax report required to be filed with the tax authorities for the state where the Business is located in connection with the consummation of this transaction.

8.10.Business Transition.  As soon as practicable after the Closing Date, the Buyer will apply for applicable state pharmacy and DEA licenses along with any other permits or licenses required by state or local regulations, and obtain agreements with third party payers necessary to collect reimbursement for prescriptions dispensed and associated fees.  On the Closing Date, the Seller and the Buyer will enter into a Transition Agreement (the “Transition Agreement”), to allow the Buyer to operate the Business after the Closing Date under the Seller’s permits and licenses after the Time of Transfer until the Buyer obtains all necessary permits and licenses.

8.11.Employee Pay.  Immediately after execution of this Agreement, the Seller will advise all employees of the Business that they will be paid entirely as employees and not as independent contractors, with all required employer payroll taxes withheld.  The Seller will furnish the Buyer a letter from Paychex, Inc. indicating that all pay to employees of the Business will be shown on forms W-2 with all payroll taxes withheld.  The Seller will promptly advise the Buyer of any communication made by any employee of the Business regarding the Seller’s compliance with this covenant and furnish copies of any written communication (including electronic mail) and written summaries of any oral communication made by such employees.

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9.The Buyer’s Conditions Precedent.  The obligation of the Buyer to consummate the transactions contemplated by this Agreement is subject to the satisfaction or waiver (subject to applicable law) at or prior to the Closing Date of each of the following conditions:  (a) no preliminary or permanent injunction or other order will have been issued by any court of competent jurisdiction or any regulatory body preventing consummation of the transactions contemplated by this Agreement; (b) no action will have been commenced or threatened against the Seller, the Buyer or any of their respective affiliates, associates, officers or directors seeking damages arising from, to prevent or challenge the transactions contemplated by this Agreement; (c) all of the pharmacists and pharmacy technicians employed by the Seller at the Business as of March 1, 2008, will continue to be employed at the Business immediately prior to the Time of Transfer; (d) all representations and warranties of the Seller contained herein will be true and correct in all material respects on and as of the Closing Date; (e) in all material respects, the Seller will have performed or satisfied on and as of the Closing Date, all obligations, covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Seller; (f) there is no material adverse change, nor any event which would result in any material adverse change, so far as can reasonably be foreseen by the Buyer, in the Business or in the results of operations; (g) the Business will not have incurred any material loss on or prior to the Closing Date, whether or not covered by insurance; (h) all actions, proceedings, instruments and documents required to carry out the transactions contemplated hereby will have been initiated, completed, obtained or drafted to the reasonable satisfaction of Buyer’s counsel, and the Seller will have delivered such additional certificates and other documents as the Buyer reasonably requests including, without limitation, such certificates of the Seller dated the Closing Date evidencing compliance with the conditions set forth in this paragraph 9; (i) the Seller will not be the subject of any order, investigation or hearing by any regulatory authority or by the Oklahoma income tax agency, the Internal Revenue Service, the Justice Department of the United States or any public or private consumer protection or other agency, committee or organization that adversely affects the Business or the Assets; (j) the landlord under the Lease will have approved the assignment of the Lease to the Buyer or entered into a new lease with the Buyer; (k) the Lease will have a minimum remaining term of ten (10) years after the Closing Date (including options), with the initial monthly rental payments not to exceed $3,500.00 on terms satisfactory to the Buyer; and (l) the Pharmacy Purchase Agreement of even date herewith between the Buyer and Pendergraft Drugs, Inc. (the “PDP Agreement”) has not been terminated and will close on the Closing Date.

10.Seller’s Conditions Precedent.  The obligation of the Seller to consummate the transactions contemplated by this Agreement is subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions, any or all of which may be waived in whole or in part:  (a) no preliminary or permanent injunction or other order will have been issued by any court of competent jurisdiction or any governmental or regulatory body preventing consummation of the transactions contemplated by this Agreement; (b) no action will have been commenced or threatened against the Seller, the Buyer or any of their respective affiliates, associates, officers or directors seeking damages arising from, to prevent or to challenge the transactions contemplated by this Agreement; (c) all representations and warranties of the Buyer contained herein will be true and correct in all material respects on and as of the Closing Date; and (d) the Buyer will have performed in all material respects all obligations, agreements and conditions contained in this Agreement to be performed or complied with by the Buyer.

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11.The Closing.  This Agreement will be consummated at 9:00 a.m. local time at the offices of Commercial Law Group, P.C. in Oklahoma City, Oklahoma on the later of the following dates (the “Closing Date”):  (a) the first business day after the Inventory is complete and accepted by both parties; or (b) the first business day following the day on which the last of the conditions set forth in paragraph 9 hereof is satisfied or waived which in no event shall be later than April 8, 2008.

11.1.The Buyer’s Deliveries.  On the Closing Date, the Buyer will deliver or cause to be delivered to the Seller the following items (all documents will be duly executed and acknowledged where required):

11.1.1.Payment.  The cash portion of the Purchase Price as adjusted under paragraphs 4.3 and 4.4;

11.1.2.Financing Documents.  The Financing Documents;

11.1.3.Goodwill Protection Agreement.  The Goodwill Protection Agreement;

11.1.4.Evidence of Authority.  Such corporate resolutions, certificates of good standing, incumbency certificates and other evidence of authority with respect to the Buyer as might be reasonably requested by the Seller;

11.1.5.Closing Memorandum.  A memorandum setting forth the items delivered and accounting for the payments made on the Closing Date; and

11.1.6.Additional Documents.  Such additional documents as might be reasonably requested by the Seller to consummate this Agreement.

11.2.Seller’s Deliveries.  On the Closing Date, the Seller will deliver or cause to be delivered to the Buyer the following items (all documents will be duly executed and acknowledged where required):

11.2.1.Assignment.  Bills of sale, assignments and conveyances acceptable to the Buyer necessary to convey to the Buyer all of the Seller’s right, title and interest in and to all of the personal property comprising a portion of the Assets;

11.2.2.Goodwill Protection Agreement.  The Goodwill Protection Agreement;

11.2.3.Documents; Keys.  The originals of all documents to be assigned to the Buyer, including, without limitation, all contracts, books and records; all keys, combination locks and other security devices located at the Business.

11.2.4.Closing Memorandum.  A memorandum setting forth the items delivered and accounting for the payments made on the Closing Date;

11.2.5.Additional Documents.  Such additional documents as might be reasonably requested by the Buyer to consummate this Agreement.

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11.3.Possession.  Possession of the Business and all of the Assets in connection with the Business will be delivered to the Buyer on the Closing Date after closing but to be effective at 12:01 a.m. on the Closing Date (the “Time of Transfer”) free from all parties claiming rights to possession of or having claims against the Business and the Assets.  In addition, with respect to each Asset and the Business, risk of loss, damage, claim, liability or other matter including, without limitation, all liabilities arising from any accident, personal injury, death, property damage or other claim related to operation of the Business will pass from the Seller to the Buyer at the Time of Transfer.

11.4.Costs.  The Seller will pay the following closing costs:  (a) the Seller’s attorneys’ fees, accountants’ fees and fees of other advisors; (b) all sales taxes assessed in connection with consummation of this transaction; and (c) any other charge imposed for the transfer of any item comprising the Assets.  The Buyer will pay the Buyer’s attorneys’ fees, accountants’ fees and fees of other advisors.

12.Indemnification.  The parties agree to indemnify each other as follows:

12.1.Seller’s Indemnification.  The Seller agrees to pay, defend, indemnify, reimburse and hold harmless the Buyer and the Buyer’s directors, officers, agents and employees (the “Buyer Indemnified Parties”) for, from and against any loss, damage, diminution in value, claim, liability, debt, obligation or expense (including interest, reasonable legal fees, and expenses of litigation and attorneys fees in enforcing this Agreement) incurred, suffered, paid by or resulting to any of the Buyer Indemnified Parties and which results from, arises out of or in connection with, is based upon, or exists by reason of:  (a) any breach or default in any representation or warranty of the Seller set forth in this Agreement or in the performance by the Seller of any covenant or obligation set forth in this Agreement which is not cured as provided in paragraph 15 of this Agreement; and (b) any claims, demands, violations, actions, assessments, taxes, penalties, fines, costs, expenses, obligations or other liabilities with respect to the ownership, operation or maintenance of the Business of the Assets prior to the Time of Transfer, that are not accounted for by paragraphs 4.3 or 4.4.

12.2.Buyer’s Indemnification.  The Buyer agrees to indemnify and hold harmless the Seller and the Seller’s officers, directors, managers, employees, agents and members (collectively, the “Seller Indemnified Parties”) against any loss, liability, deficiency, damage, expense or cost (including interest, reasonable legal fees and expenses of litigation and attorneys fees in enforcing this Agreement), whether or not actually incurred or paid that the Seller Indemnified Parties may suffer, sustain or become subject to, as a result of:  (a) any breach or default in any representation or warranty of the Buyer set forth in this Agreement or in the performance by the Buyer of any covenant or obligation set forth in this Agreement which is not cured as provided in paragraph 15 of this Agreement; and (b) any claim made by a third party with respect to the operation of the Business on or after the Time of Transfer.

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12.3.Limitation on Indemnification Obligations.  The parties’ indemnification obligations pursuant to the provisions of paragraph 12 are subject to the following limitations:

12.3.1.Survival of Representations and Warranties.  No party can recover under paragraphs 12.1 or 12.2 unless a claim has been asserted by written notice, delivered to the other party on or prior to the date that is 24 months after the Closing Date.

12.3.2.Basket.  No party can recover under paragraphs 12.1 or 12.2 until the total amount which such party would recover but for this paragraph 12.3.2 exceeds $12,500 (the “Basket”), in which event such party can recover all amounts recoverable hereunder, including the amount less than the Basket. The foregoing limitation shall not apply to breaches of the representations and warranties in paragraph 6.11.

12.3.3.Indemnification Cap.  No party can recover under paragraphs 12.1 or 12.2 an amount in excess of the principal amount of the cash (excluding accrued interest, the Merchandise Inventory Price and the Receivables Price) paid by the Buyer to the Seller pursuant to this Agreement and other documents executed in connection (the “Indemnification Cap”).  The foregoing limitation shall not apply to recovery for breaches of the Representations and Warranties of Organization, Existence, Good Standing, Power and Authority, Enforceability, and Employee Benefit Plans.

12.4.Other Remedies.  The remedies provided by this paragraph 12 are in addition to, and not in lieu of, such other remedies as may be available under applicable laws.  Without limitation, the Buyer is entitled to enforce this Agreement by specific enforcement without the necessity of demonstrating inadequacy of damages or irreparable harm.

12.5.Payment.  Claims for indemnification involving the payment of money will be paid within thirty (30) days after written notification thereof.  Claims for indemnification involving amounts due to third parties will be promptly paid when due, subject to the right to contest the same in good faith.  Unpaid claims will incur interest at a floating rate of interest equal to the prime rate published from time to time in The Wall Street Journal.

13.Set-Off.  To secure the Seller’s obligations under this Agreement, each Seller hereby grants to the Buyer, for a period of one (1) year after the Closing Date, a right of set-off upon and against the Promissory Note, any rights of such Seller under this Agreement and any and all amounts, proceeds, money or other property of such Seller at any time held by the Buyer.  On a default by the Seller to this Agreement which is not cured as provided in paragraph 15 of this Agreement, the Buyer is authorized, for a period of one (1) year after the Closing Date, to appropriate, set-off and apply the property for which a right of set-off is provided under this

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paragraph 13 without notice to the defaulting party.  The limitations on the express grant of set-off hereunder will not limit and will have no effect on any other remedies of the Buyer.

14.Termination.  This Agreement may be terminated and the transactions contemplated hereby may be abandoned by:  (a) mutual consent of the Seller and the Buyer; (b) the Buyer, if the Buyer is not in default and the conditions set forth in paragraph 9 of this Agreement have not been satisfied by the Seller or waived by the Buyer; (c) the Seller, if the Seller is not in default, and the conditions precedent set forth in paragraph 10 of this Agreement have not been satisfied or waived by the Seller; (d) the Buyer, pursuant to paragraph 8.2 of this Agreement; or (e) either party if this Agreement has not closed on or before April 30, 2008.  In the event of termination, written notice thereof will be given to the other party or parties specifying the provision pursuant to which such termination is made.  On termination pursuant to this paragraph 14, this Agreement will become void and have no effect and there will be no liability hereunder on the part of the Buyer or the Seller or any of their respective officers, directors, employees, agents, stockholders or principals.

15.Default.  If a party fails to perform any obligation contained in this Agreement, the party claiming default will serve written notice to the other party specifying the nature of such default and demanding performance.  If such default has not been cured within ten (10) business days after receipt of such default notice, the nondefaulting party will be entitled to exercise all remedies arising at law or in equity by reason of such default, including, without limitation, specific performance of this Agreement or any one or more of the provisions herein contained.

16.Miscellaneous.  It is further agreed as follows:

16.1.Time.  Time is of the essence of this Agreement.

16.2.Notices.  Any notice, demand or communication required or permitted to be given by any provision of this Agreement will be in writing and will be deemed to have been given and received when delivered personally or by telefacsimile to the party designated to receive such notice, or on the date following the day sent by overnight courier, or on the third (3rd) business day after the same is sent by certified mail, postage and charges prepaid, directed to the following addresses or to such other or additional addresses as any party might designate by written notice to the other parties:

If to Buyer:	Apothecary Rx, LLC
	Attn: Mr. Lewis P. Zeidner, President
	5500 Wayzata Boulevard, Suite 210
	Golden Valley, Minnesota 55416
	Fax:      (763) 647-1137
With a copy to:	Michael Meleen, Esquire
	Commercial Law Group, P.C.
	210 Park Avenue, Suite 700
	Oklahoma City, Oklahoma 73102
	Fax:      (405) 232-5553

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To the Seller:	Newt’s Discount Pharmacy, Inc.
	Attn: Jeremy Avance
	102 W. Noble Avenue
	Guthrie, Oklahoma 73044
	Fax:     (   )
With a copy to:	Robert F. Morgan, Jr.
	1900 NW Expressway, Suite 450
	Oklahoma City, Oklahoma 73118
	Fax:     (405) 840-5183

16.3.Representations and Warranties.  The respective representations and warranties of the Seller and the Buyer contained herein or in any certificates or other documents delivered prior to or at the Closing Date will not be deemed waived or otherwise affected by any investigation made by any party hereto.  Each and every such representation and warranty will survive the Closing Date and will not be terminated or extinguished for a period of two years after the Closing Date.  This paragraph 16.3 will have no effect on any other obligation of the parties hereto, whether to be performed before or after the Closing Date.

16.4.Cooperation.  Prior to and at all times following the termination of this Agreement the parties agree to execute and deliver, or cause to be executed and delivered, such documents and do, or cause to be done, such other acts and things as might reasonably be requested by any party to this Agreement to assure that the benefits of this Agreement are realized by the parties.

16.5.Press Release.  The Buyer will prepare and issue all press releases relating to this Agreement and the sale of the Business.  The Seller will refer all inquiries concerning any transaction contemplated by this Agreement to the Buyer.

16.6.Headings.  The paragraph headings contained in this Agreement are for reference purposes only and are not intended to affect in any way the meaning or interpretation of this Agreement.

16.7.Entire Agreement.  This Agreement and any document executed in connection herewith on or after the date of this Agreement (the “Other Documents”) constitute the entire agreement between the parties with respect to the subject matter hereof and there are no agreements, understandings, warranties or representations except as set forth herein or in the Other Documents.

16.8.Assignment.  It is agreed that the parties may not assign such party’s rights nor delegate such party’s duties under this Agreement without the express written consent of the other parties to this Agreement which consent will not be unreasonably denied.  Notwithstanding the foregoing, the Buyer will be permitted to assign this Agreement for all or part of the Assets to a wholly owned subsidiary provided the Buyer remains liable for the performance of this Agreement and

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executes a guaranty for the Seller financing.  The Seller will be permitted to sell or assign the Seller’s interest in the Financing Documents subject to the Buyer’s defenses contained herein.

16.9.Amendment.  Neither this Agreement, nor any of the provisions hereof can be changed, waived, discharged or terminated, except by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.

16.10.Severability.  If any clause or provision of this Agreement is illegal, invalid or unenforceable under any present or future law, the remainder of this Agreement will not be affected thereby.  It is the intention of the parties that if any such provision is held to be illegal, invalid or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provisions as is possible and to be legal, valid and enforceable.

16.11.Governing Law.  This Agreement will be interpreted, construed and enforced in accordance with the laws of the State of Oklahoma, regardless of any applicable principles of conflicts of law.

16.12.Attorney Fees.  If any party institutes an action or proceeding against any other party relating to the provisions of this Agreement, the party to such action or proceeding which does not prevail will reimburse the prevailing party therein for the reasonable expenses of attorneys’ fees and disbursements incurred by the prevailing party.

16.13.Waiver.  Waiver of performance of any obligation or term contained in this Agreement by any party, or waiver by one party of the other’s default hereunder will not operate as a waiver of performance of any other obligation or term of this Agreement or a future waiver of the same obligation or a waiver of any future default.

16.14.Brokerage.  The Seller represents to the Buyer that the Seller has dealt with no broker in connection herewith.  The Seller agrees to hold the Buyer harmless from any claim for brokerage commissions asserted by any other party as a result of dealings with the Seller.  The Buyer agrees to indemnify and hold the Seller harmless from any claim for brokerage commissions asserted by any party as a result of dealings with the Buyer.

16.15.Counterpart Execution.  This Agreement may be executed in counterparts, including by telefacsimile, each of which will be deemed an original document but all of which will constitute a single document.

[Signature Pages Follow]

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SIGNATURE PAGE TO PHARMACY PURCHASE AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

NEWT’S DISCOUNT PHARMACY, INC.,
an Oklahoma corporation
By:	/S/JEREMY AVANCE
	Jeremy Avance, President
/S/JEREMY AVANCE
Jeremy Avance, individually
(together, the “Seller”)

SIGNATURE PAGE TO PHARMACY PURCHASE AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By	/S/LEWIS P. ZEIDNER
Lewis P. Zeidner, President
(the “Buyer”)

SCHEDULES
Schedule “A”	–	Business
Schedule “2”	–	Excluded Assets
Schedule “6.1”	–	Seller’s Financial Statements
Schedule “6.3”	–	Liens
Schedule “6.4”	–	Contracts
Schedule “6.7”	–	Insurance
Schedule “6.10”	–	Litigation
Schedule “6.11”	–	Certain Employee Plans
Schedule “7”	–	Buyer’s Financial Statements

EX-10.2

EXHIBIT 10.2

GOODWILL PROTECTION AGREEMENT

THIS GOODWILL PROTECTION AGREEMENT is made effective the 26th day of March, 2008, between APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Buyer”) and JEREMY AVANCE, an individual (the “Seller”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Pharmacy Purchase Agreement dated effective March 24, 2008, (the “Purchase Agreement”) among the Buyer, the Seller and Newt’s Discount Pharmacy, Inc., the Buyer purchased the Seller’s pharmacy business located in Guthrie, Oklahoma (the “Business”) for a sum in excess of $1,000,000.00;

WHEREAS, the Seller has operated the Business for numerous years during which time the Seller has built a strong patronage which is the predicate on which the Seller’s Business is based;

WHEREAS, the Seller has partnered with the owner of Professional Discount Pharmacy located at 1900 N. Classen Blvd., Oklahoma City, OK 73106 (“PD Pharmacy”) which pharmacy is also being purchased by the Buyer at the same time as the Business; and

WHEREAS, to induce the Buyer to perform the Purchase Agreement and to protect the goodwill purchased by the Buyer in the Business, the Seller has agreed to execute, deliver and perform this Goodwill Protection Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.             Noncompetition Covenant.  The Seller agrees as follows:

1.1.For the five (5) year period beginning on the date of this Goodwill Protection Agreement, the Seller agrees that the Seller, the Seller’s affiliates and any person receiving a portion of the Purchase Price under the Purchase Agreement will not undertake any plan, program or effort designed or intended to, directly or indirectly, contract or provide, solicit or offer to prepare, dispense or sell at retail any pharmacy, prescription or over the counter drugs or pharmaceuticals (the “Pharmacy Services”) to any person and the family members of any person, or any entity and the affiliates of any entity, who acquired Pharmacy Services within the past five (5) years from the Business.

1.2.For the five (5) year period beginning on the date of this Goodwill Protection Agreement, the Seller agrees that the Seller, the Seller’s affiliates and any person receiving a portion of the Purchase Price under the Purchase Agreement will not, directly or indirectly, conduct any Pharmacy Business in Oklahoma County, Oklahoma or Logan County, Oklahoma.

1.3.For the five (5) year period beginning on the date of this Goodwill Protection Agreement, the Seller agrees that the Seller, the Seller’s parents, subsidiaries, affiliates and shareholders and any person receiving a portion of the Purchase Price under the Purchase Agreement will not, directly or indirectly, conduct any Pharmacy Business within twenty (20) miles of the location of the Business.

1.4.For the five (5) year period beginning on the date of this Goodwill Protection Agreement, the Seller agrees that the Seller, the Seller’s parents, subsidiaries, affiliates and shareholders and any person receiving a portion of the Purchase Price under the Purchase Agreement will not, directly or indirectly, conduct any Pharmacy Business within twenty (20) miles of the location of the PD Pharmacy.

For purposes of this Goodwill Protection Agreement, the term “Pharmacy Business” means:  owning, managing, operating, controlling, engaging in or being connected with as a partner, investor, stockholder, creditor, guarantor, advisor, employee, independent contractor or consultant, the business of offering, soliciting, conducting or providing Pharmacy Services.  The Seller’s employment with the Buyer will not violate the terms of this Agreement.

2.             Separate Covenants.  This Goodwill Protection Agreement will be deemed to consist of a series of separate covenants independent from any provision of the Purchase Agreement.  The Seller expressly agrees that the character, duration and geographical scope of this Goodwill Protection Agreement are reasonable in light of the circumstances as existing on the date of this Goodwill Protection Agreement.  However, should a determination nonetheless be made by a court of competent jurisdiction at a later date that the character, duration or geographical scope of this Goodwill Protection Agreement is unreasonable in light of the circumstances as then existing or existing at the execution of this Goodwill Protection Agreement, then it is the intention and the agreement of the Seller and the Buyer that this Goodwill Protection Agreement be construed by the court and given effect in such a manner as to impose only the restrictions on the conduct of the Seller which are reasonable in light of the circumstances as then existing and as are necessary to assure the Buyer of the intended benefit of this Goodwill Protection Agreement.  If, in any judicial proceeding, a court refuses to enforce all of the separate covenants deemed included herein because, taken together such covenants are more extensive than necessary to assure the Buyer of the intended benefit of this Goodwill Protection Agreement, it is expressly understood and agreed between the parties that those covenants not to be enforced in such proceeding will, for the purpose of such proceeding, be deemed eliminated from the provisions hereof.

3.             Periodic Payments.  As additional consideration for the Seller’s execution, delivery and performance of this Goodwill Protection Agreement, the Buyer agrees to pay to the Seller sixty (60) monthly payments each in the amount of $1,666.66.  The monthly payments will commence on May 1, 2008, and be made on the 1st day of each month thereafter through and including April 1, 2013.  Each such payment will be sent by regular mail to the addresses provided under Paragraph 6.1 of this Goodwill Protection Agreement.  The Buyer will be in default if (i) a monthly payment is not delivered to the Seller within five (5) days of its due date and (ii) such payment has not been delivered ten (10) days after the Buyer’s receipt of notice of non-payment.

4.             Default by Seller.  If the Seller fails to perform any obligation contained in this Goodwill Protection Agreement, the Purchase Agreement or any instrument entered into in connection

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therewith, the Buyer will serve written notice to the Seller specifying the nature of such default and demanding performance.  If such default has not been cured within five (5) business days after receipt of such default notice, the Buyer will be entitled to demand specific performance, suspend performance of any obligation under this Goodwill Protection Agreement, the Purchase Agreement or any instrument entered into in connection therewith, or exercise all remedies available at law or in equity.  Given the nature of the Pharmacy Business, the parties acknowledge and agree that the goodwill sold by the Seller and purchased by the Buyer cannot be protected if the provisions of this Goodwill Protection Agreement are not strictly enforced.  Accordingly, the parties acknowledge and agree that if there is a breach by the Seller of the provisions of this Goodwill Protection Agreement, money damages alone will not be adequate and the Buyer will be entitled to an injunction restraining the Seller from violating the provisions of this Goodwill Protection Agreement.  In addition to the foregoing and any other remedies available to the Buyer, at law or in equity, in the event the Seller is in default and the Buyer is diligently pursuing a judicial remedy, the periods specified in paragraphs 1.1, 1.2 and 1.3 will be tolled until the conclusion of the judicial action (the “Tolling Period”) and such periods will be automatically extended by the number of days elapsed during the Tolling Period.  The remedies provided by this Goodwill Protection Agreement are cumulative and will not exclude any other remedy to which a party might be entitled under this Goodwill Protection Agreement.  In the event, a party elects to selectively and successively enforce such party’s rights under this Goodwill Protection Agreement, such action will not be deemed a waiver or discharge of any other remedy.

5.             Default by Buyer.  If the Buyer defaults in the payments under this Agreement or the Promissory Note delivered to the Seller pursuant to the Purchase Agreement, then (i) the Seller’s obligations under this Agreement will immediately terminate, (ii) the remaining payments due under paragraph 3 will be accelerated and will be immediately due and payable, and (iii) the Seller may exercise all remedies available at law or in equity to collect the remaining balance due.

6.             Miscellaneous.  It is further agreed as follows:

6.1.Notices.  Except as expressly provided herein, any notice, demand or communication required or permitted to be given by any provision of this Goodwill Protection Agreement will be in writing and will be deemed to have been given and received when delivered personally or by telefacsimile, or on the date following the day sent by overnight courier, or on the third (3rd) business day after the same is sent by certified mail, postage and charges prepaid, directed to the following addresses or to such other or additional addresses as any party might designate by written notice to the other parties:

To the Buyer:	ApothecaryRx, LLC
	C/o Mr. Lewis P. Zeidner, President
	5500 Wayzata Boulevard, Suite 210
	Golden Valley, Minnesota 55416
	Fax: (763) 647-1137

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With a copy to:	Michael Meleen, Esquire
	Commercial Law Group, P.C.
	210 Park Avenue, Suite 700
	Oklahoma City, Oklahoma 73102
	Fax: (405) 232-5553
To the Seller:	Jeremy Avance
	102 W. Noble Avenue
	Guthrie, Oklahoma 73044
	Fax: (   )
With a copy to:	Robert F. Morgan, Jr.
	1900 NW Expressway, Suite 450
	Oklahoma City, Oklahoma 73118
	Fax: (405) 840-5183

6.2.Severability.  If any clause or provision of this Goodwill Protection Agreement is illegal, invalid or unenforceable under any present or future law, the remainder of this Goodwill Protection Agreement will not be affected thereby.  It is the intention of the parties that if any such provision is held to be illegal, invalid or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provisions as is possible and to be legal, valid and enforceable.

6.3.Entire Agreement.  This Goodwill Protection Agreement, together with the Purchase Agreement and the other instruments executed in connection therewith, constitute the entire agreement between the parties with respect to the subject matter hereof and there are no agreements, understandings, warranties or representations except as set forth herein.  Neither this Goodwill Protection Agreement nor any of the provisions hereof can be changed, waived, discharged or terminated except by an instrument signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.

6.4.Attorneys’ Fees.  If any party institutes an action or proceeding against any other party relating to the provisions of this Goodwill Protection Agreement, the party to such action or proceeding which does not prevail will reimburse the prevailing party therein for the reasonable expenses of attorneys’ fees and disbursements incurred by the prevailing party.

6.5.Waiver.  Waiver of performance of any obligation or term contained in this Goodwill Protection Agreement by any party, or waiver by one party of the other’s default hereunder will not operate as a waiver of performance of any other obligation or term of this Goodwill Protection Agreement or a future waiver of the same obligation or a waiver of any future default.

6.6.Assignment.  The Buyer may assign all or any portion of its rights hereunder to: (a) any other entity or person which at any time controls or is under common control with the Buyer, or (b) any entity or person which acquires all or any portion of the Business.

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6.7.Governing Law.  This Goodwill Protection Agreement will be interpreted, construed and enforced in accordance with the laws of the State of Oklahoma, regardless of any applicable principles of conflicts of law.

[Signature Pages Follow]

5

SIGNATURE PAGE TO GOODWILL PROTECTION AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

/S/JEREMY AVANCE

JEREMY AVANCE, individually

(the “Seller”)

SIGNATURE PAGE TO GOODWILL PROTECTION AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By	/S/LEWIS P. ZEIDNER
Lewis P. Zeidner, President

EX-10.3

EXHIBIT 10.3

TRANSITION AGREEMENT

This TRANSITION AGREEMENT (the “Agreement”) is made effective the 26th day of March, 2008, among APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Buyer”), NEWT’S DISCOUNT PHARMACY, INC., an Oklahoma corporation (the “Company”) and JEREMY AVANCE, an individual (“Avance” and together with the Company, the “Seller”).

WHEREAS, pursuant to the Pharmacy Purchase Agreement dated effective March 24, 2008, (the “Purchase Agreement”) between the Buyer and the Seller, the Buyer purchased the Seller’s pharmacy business in Guthrie, Oklahoma, known as “Newt’s Discount Pharmacy” (the “Business”) effective on the date hereof; and

WHEREAS, the Seller and the Buyer desire to foster a smooth transition of the Business from the Seller to the Buyer and, in the interests of facilitating such transition, the Buyer desires to use the Seller’s Licenses (as hereinafter defined) to operate the Business for a short period of time after the Closing Date, and the Seller is willing to allow the Buyer to use the Seller’s Licenses to operate the Business for a short period of time after the Closing Date, pursuant to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, and in consideration of the execution and performance of the Purchase Agreement, the parties hereto agree as follows:

1.Definitions.  Capitalized terms used and not defined herein shall have the meanings set forth in the Purchase Agreement.

2.Transition Services.  Commencing at the Time of Transfer and continuing until the termination of this Agreement, the Buyer shall be entitled to utilize, in connection with its operation of the Business and in strict accordance with the terms of this Agreement, the following permits, licenses, registrations or certifications of the Seller related to the Business (collectively, the “Licenses”):

2.1.Oklahoma Pharmacy License;

2.2.Oklahoma Narcotics Registration;

2.3.Drug Enforcement Agency Registration;

2.4.National Council for Prescription Drug Programs Provider Number; and

2.5.Credit Card Services.

To effect the foregoing authorization, on the Closing Date, the Seller will execute the Limited Power of Attorney in the form attached at Exhibit “A” authorizing the Buyer to act on the Seller’s behalf in connection with the Licenses, and other documents, if any, as may be required or requested by a government agency, including, without limitation, powers of attorney.  In

addition, during the term of this Agreement, the Seller agrees to keep open the bank accounts used for payments from insurance companies, Medicare, Medicaid and credit card services (whether one or more, the “Accounts”) and furnish to the Buyer all information regarding the Accounts and payments by third parties to the Accounts so that the Buyer may perform the accounting described in paragraph 5 below.

3.Termination of Right to Use Licenses.  The Buyer’s right to use the Licenses will terminate upon the written notice of either party upon the earlier of:  (a) the issuance to the Buyer of the same types of permits, licenses, registrations or certifications as the Licenses (the “Required Licenses”); or (b) sixty (60) days from the Closing Date; provided, in the event that the Buyer has not obtained the Required Licenses within the required time period, the term of this Agreement and the Power of Attorney will be extended by twenty (20) days if (i) the Buyer has not breached and is not in default of the terms of this Agreement, the Purchase Agreement or any document executed in connection therewith, and (ii) the Buyer is actively seeking and using best efforts to obtain the Required Licenses as promptly as possible.

4.Will Call Prescriptions.  The company performing the Inventory will account for all orders at the Business for prescriptions placed but not paid for prior to the Time of Transfer (“Will Call Prescriptions”) and determine the cash amount owed by customers for Will Call Prescriptions (the “Will Call Receivables”).  On the Closing Date, the Buyer will pay the Seller the amount of the Will Call Receivables.  All Will Call Receivables will be the property of the Buyer.  All other receivables from third parties in connection with the Will Call Prescriptions will be the property of the Seller subject to paragraph 5 of this Agreement.

5.Third Party Receivables.  All accounts receivable generated prior to the Time of Transfer other than the Will Call Receivables (the “Seller Receivables”), will be the property of the Seller.  The Buyer will collect the Seller Receivables on behalf of the Seller and furnish an accounting of all Seller Receivables (reconciled to the transaction generating such Seller Receivables) to the Seller on a monthly basis.  The Buyer will pay the Seller all collected Seller Receivables on a weekly basis.  The Buyer will conduct the foregoing collection, accounting and reconciliation at the Buyer’s expense.  All accounts receivable generated after the Time of Transfer will be the property of the Buyer and the Seller agrees to promptly deliver to the Buyer any such receivables delivered to the Seller.  It is anticipated that all mail addressed to the Seller will be forwarded to the Buyer and that for the first thirty (30) days after the Closing Date, the Buyer will simply forward to the Seller all checks received as payment of the Seller Receivables on a weekly basis.

6.Consulting.  During the term of this Agreement, Avance agrees to provide information reasonably requested by the Buyer regarding the Seller’s and the Business’s operations, arrangements, policies and similar matters, regardless of whether Avance is employed by the Buyer or the Buyer’s agents or affiliates.

7.Indemnification.  The Buyer shall indemnify and hold harmless the Seller and the Seller’s partners, employees, agents and affiliated entities (the “Indemnified Parties”) for any loss, damage, claim, liability, debt, obligation or expense (including reasonable legal fees and expenses of litigation), whether or not actually incurred or paid that the Indemnified Parties may suffer, sustain or become subject to, as a result of:  (a) any actions or omissions of the Buyer or any employees, agents, representatives or other personnel of the Buyer related to the Business

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and the Licenses occurring after the Closing Date; or (b) the parties entering into this Agreement or the Buyer’s use of the Licenses.

8.Entire Agreement.  This Agreement, the Purchase Agreement and the documents executed in connection therewith constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior communications, representations, agreements and understandings between the parties hereto, whether oral or written.

9.Assignment.  This Agreement, and all rights and obligations hereunder, shall not be assignable by any party in whole or in part.

10.Amendment.  This Agreement may be amended only by written agreement duly executed by representatives of both parties hereto.

11.Applicable Law.  This Agreement shall be construed in accordance with the laws of the state of Oklahoma, disregarding conflicts of laws principles which may require the application of the laws of another jurisdiction.

12.Audit Rights.  The Seller shall have the right, at all times during the term hereof, to monitor, review and audit at the Seller’s expense the accounts, books, records, documents and procedures relating to the Buyer’s performance under this Agreement and use of the Licenses.

13.No Third Party Rights.  This Agreement is not intended and shall not be construed to create any rights in any parties other than the Seller and the Buyer and no other person shall assert any rights as a third party beneficiary hereunder.

14.Waivers.  Any waiver of rights hereunder must be set forth in writing.  A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive a party’s rights at any time to enforce strict compliance thereafter with every term and condition of this Agreement.

15.Independent Contractor.  By executing this Agreement, the parties intend to create an independent contractor relationship, and nothing contained in this Agreement shall be construed to make either the Seller or the Buyer a partner, joint venturer, principal, agent or employee of the other, and neither party shall have any right, power or authority, express or implied, to bind the other.  Notwithstanding the foregoing, this Agreement does not amend or affect the terms of any other agreements among the parties that may expressly create any of the foregoing relationships.

16.Severability; Partial Invalidity.  If any provision of this Agreement or portion thereof is held to be unenforceable or invalid by any court of competent jurisdiction, such provision or portion thereof shall be deemed amended to conform to applicable law so as to be valid and enforceable, or if the provision or portion thereof cannot be so amended without materially altering the parties’ intent, the provision or portion thereof shall be stricken, and the validity and enforceability of the remainder of this Agreement shall not be affected thereby.

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17.Notices.  All notices permitted or required hereunder shall be given in the manner specified in the Purchase Agreement.

[Signature Pages Follow]

4

SIGNATURE PAGE TO TRANSITION AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

NEWT’S DISCOUNT PHARMACY, INC.,
an Oklahoma corporation
By	/S/JEREMY AVANCE
	Jeremy Avance, President
/S/JEREMY AVANCE
JEREMY AVANCE, individually
(together, the “Seller”)

SIGNATURE PAGE TO TRANSITION AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By	/S/LEWIS P. ZEIDNER
	Lewis P. Zeidner, President
(the “Buyer”)

EXHIBIT “A”

LIMITED POWER OF ATTORNEY

This LIMITED POWER OF ATTORNEY (the “Power”) is made effective the        day of                       , 2008, among NEWT’S DISCOUNT PHARMACY, INC., an Oklahoma corporation (the “Company”), JEREMY AVANCE, an individual (“Avance” and together with the Company, the “Principal”), and APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Agent”).

WHEREAS, pursuant to the Pharmacy Purchase Agreement dated effective March     , 2008, (the “Purchase Agreement”) between the Principal and the Agent, the Agent purchased the Principal’s pharmacy business known as “Newt’s Discount Pharmacy” located at 102 W. Noble Ave., Guthrie, OK 73044 (the “Business”) effective on the date hereof; and

WHEREAS, pursuant to the Transition Agreement between the Principal and the Agent of even date herewith (the “Transition Agreement”), the Principal agreed to allow the Agent to use the Principal’s permits, licenses, registrations and certifications described at Exhibit “A” attached as a part hereof (the “Licenses”) in the operation of the Business.

NOW THEREFORE, the Principal hereby nominates, constitutes and appoints the Agent as the Principal’s attorney-in-fact to take any and all actions in the Principal’s name, place and stead, to the extent permitted by law, to use the Licenses in connection with the operation of the Business as follows:

1.Power.  The Principal hereby irrevocably gives and grants to the Agent the full power and authority to use the Licenses and to perform any actions necessary for the operation of the Business.  This Limited Power of Attorney is a present appointment of the Agent, effective immediately.

2.Acceptance.  The Agent hereby accepts the Principal’s appointment as the Principal’s attorney-in-fact and agrees to be bound by the terms and provisions of this Agreement.

3.Termination.  This Agreement is intended to grant the Agent a power of attorney which will be irrevocable and binding on the Principal until terminated in accordance with paragraph 3 of the Transition Agreement.  The Agent hereby agrees to execute and deliver, on reasonable request by the Principal, any documents necessary or helpful in terminating the Agent’s appointment as the Principal’s attorney-in-fact.

[Signature Pages Follow]

EX-10.4

EXHIBIT 10.4

ASSIGNMENT OF LEASE

THIS ASSIGNMENT is made effective the 26^th day of March, 2008 (the “Effective Date”), by NEWT’S DISCOUNT PHARMACY, INC., an Oklahoma corporation (the “Assignor”) in favor of APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Assignee”).

W I T N E S S E T H :

WHEREAS, the Assignor is the tenant under that certain lease dated September 24, 2007, between Treyron Limited Liability Company, as lessor (the “Landlord”) and the Assignor, as tenant, which is attached to this Assignment at Exhibit “A” (collectively the “Lease Agreement”);

WHEREAS, the Assignor desires to assign to the Assignee all of the Assignor’s right, title and interest in and to the Lease Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.             Assignor’s Warranties.  The Assignor represents and warrants that the Assignor has heretofore duly executed and delivered the Lease Agreement and that there exist no other agreements, amendments or understandings to which the Assignor is a party relating to the Lease Agreement.  The Assignor further represents and warrants that the rent is paid through March 31, 2008, and the Assignor has complied to the date hereof with all covenants on the Assignor’s part in the Lease Agreement, including, without limitation, the payment of rents.

2.             Assignment.  The Assignor hereby assigns and transfers to the Assignee and the Assignee’s successors and assigns all of the Assignor’s right, title and interest in and to the Lease Agreement, together with all of the benefits thereunder.

3.             Assumption.  The Assignor hereby delegates and the Assignee hereby assumes and agrees to perform all of the Assignor’s obligations under the Lease Agreement effective the date hereof.

[Signature Pages to Follow]

SIGNATURE PAGE

(Assignment of Lease)

IN WITNESS WHEREOF, the parties have executed this Assignment effective the date first above written.

NEWT’S DISCOUNT PHARMACY, INC.,
an Oklahoma corporation
By:	/S/JEREMY AVANCE
	Jeremy Avance, President
(the “Assignor”)

SIGNATURE PAGE

(Assignment of Lease)

IN WITNESS WHEREOF, the parties have executed this Assignment effective the date first above written.

APOTHECARYRX, LLC, an Oklahoma limited liability company
By:	/S/LEWIS P. ZEIDNER
	Lewis P. Zeidner, President
(the “Assignee”)

SIGNATURE PAGE

(Assignment of Lease)

The Landlord hereby consents to this Assignment of Lease and represents and warrants to the Assignee that the Assignor is not in default under the Lease Agreement, the Lease Agreement is in full force and effect, there exist no other agreements, amendments or understandings to which the Assignor or the Landlord is a party relating to the Lease Agreement, and the rent under the Lease Agreement is paid through March 31, 2008.

TREYRON LIMITED LIABILITY COMPANY,

By:

Name:

Title:

(“Landlord”)

EX-10.5

EXHIBIT 10.5

SECURITY AGREEMENT

THIS SECURITY AGREEMENT is executed effective the 26th day of March, 2008, by APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Borrower”), in favor of NEWT’S DISCOUNT PHARMACY, INC., an Oklahoma corporation (the “Lender”).

W I T N E S S E T H:

WHEREAS, the Borrower is liable to the Lender under that certain Promissory Note of even date herewith in the original face amount of Four Hundred Thousand Dollars ($400,000) (the “Note”);

NOW, THEREFORE, for and in consideration of the premises and the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of all of which are hereby acknowledged, the Borrower hereby agrees with the Lender as follows:

1.             Security Interest.  As collateral security for the Secured Indebtedness (as hereafter defined), the Borrower hereby grants to the Lender a security interest in the following property used in connection with the Borrower’s retail pharmacy located at 1900 N. Classen Blvd., Oklahoma City, OK 73106 102 West Noble, Guthrie, Ok 73044 (collectively, the “Property”):  (a) the furniture, fixtures, equipment, computer hardware and software and other articles of tangible personal property acquired by the Borrower under that certain Pharmacy Purchase Agreement dated March 24, 2008, among the Borrower, the Lender and affiliates of the Lender (the “Purchase Agreement”); (b) the intangible personal property acquired under the  Purchase Agreement, including, without limitation, names (including the name “Professional Discount Pharmacy” and “Pendergraft Drugs”), telephone numbers, pager numbers, cellular and digital phone numbers, internet web sites, electronic mail addresses, customer and prospective customer lists, books, records, files and computer software; (c) the Borrower’s interest under the lease agreements for the land and improvements where the pharmacy is located; and (d) customer files and customer records whether paper files, computer data or EMR.

2.             Secured Indebtedness.  The security interest granted hereby in the Property is given to secure the Borrower’s payment of (the “Secured Indebtedness”):  (a) the Note together with interest thereon; and (b) the obligations of the Borrower to the Lender under this Agreement.

3.             Borrower’s Representations and Covenants.  The Borrower hereby warrants, represents and agrees as follows:

3.1.	Location. The Borrower is a limited liability company duly formed and in good standing in the State of Oklahoma.
3.2.	Title. The Borrower has absolute title to the Property free and clear of all liens, encumbrances and security interests except for the security interest hereby granted to the Lender, and the Borrower warrants and will defend the same unto the Lender against the claims and demands of all persons and parties whomsoever.

3.3.	Lender Security Interest. This Agreement creates a valid and binding security interest in the Property securing the Secured Indebtedness. There are no consents required in connection with the grant by the Borrower of the security interests in the Property. The Borrower has good right and lawful authority to pledge the Property in the manner hereby done or contemplated. All filings and other actions necessary or appropriate to perfect or protect such security interest will be or have been duly taken.
3.4.	Inspection. The Lender may from time to time, upon request, inspect all of the Borrower’s records concerning any of the Property.
3.5.	Financing Statement. The Lender is authorized to file a financing statement covering the Property.
3.6.	Notifications. The Borrower will immediately notify the Lender of any change in the Borrower’s name or identity. In any notice furnished pursuant to this paragraph 3.6, the Borrower will expressly state that the notice is required by this Agreement and contains facts that will or may require additional filings of financing statements or other notices for the purpose of continuing perfection of the Lender’ security interest in the Property.

4.             Lender Expenditures.  If the Borrower fails to make any expenditure or pay any sum necessary to discharge any lien, encumbrance, levy, security interest or other charge on the Property as required hereby, the Lender may, but will not be required to, make any expenditure for such purpose or purposes and all sums so expended shall be payable on demand, shall bear interest at the rate specified in the Note and all such sums and interest will additionally be secured hereby.  The Borrower will pay all costs of filing any financing, continuation or termination statements with respect to the security interest granted hereby in the Property.

5.             Subordination.  After the execution of this Agreement, the Borrower may execute one or more security agreements covering the Property in favor of the Borrower’s lender.  On the request of the Borrower from time to time, the Lender agrees to consent to the subordination of this Agreement and the liens created hereunder to the liens of any such security agreement and to execute any certificate or other instrument for such purpose that the holder of such liens might reasonably request.

6.             Default; Remedies.  If the Borrower fails to keep, observe, comply with and perform all of the obligations and undertakings under this Agreement or the Note or fails to pay any principal or interest on the Note when due, then, and in any such event, the Lender may, at its option, declare all or any portion of the Secured Indebtedness to be immediately due and payable and may proceed to enforce payment of the same, to exercise any or all rights and remedies provided herein, by the Oklahoma Uniform Commercial Code and otherwise available at law or in equity.  All remedies hereunder are cumulative, and any indulgence or waiver by the Lender shall not be construed as an abandonment of any other right hereunder or of the power to enforce the same or another right at a later time.

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7.             Lender Duties.  The powers conferred upon the Lender by this Agreement are solely to protect its interest in the Property and will not impose any duty upon the Lender to exercise any such powers.  The Lender shall be under no duty whatsoever to make or give any presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, or other notice or demand in connection with any of the Property or the Secured Indebtedness, or to take any steps necessary to preserve any rights against prior parties.  The Lender shall not be liable for failure to collect or realize upon any or all of the Secured Indebtedness or Property, or for any delay in so doing, nor shall the Lender be under any duty to take any action whatsoever with regard thereto.

8.             Termination.  Upon payment in full of the Secured Indebtedness the Lender will, within three (3) business days after such payment, take all actions necessary to fully release and terminate all of the Lender’s interests in the Property including, without limitation, filing a written termination statement in the form prescribed under the UCC and reassigning to the Borrower, without recourse, the Property and all rights conveyed hereby.

9.             Successors and Assigns.  The covenants and agreements herein contained by or on behalf of the Borrower shall bind the Borrower, and the Borrower’s legal representatives, successors and assigns and shall inure to the benefit of the Lender and the Lender’ successors and assigns.

10.           Invalidity.  If any provision hereof shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof.

[Signature Pages to Follow]

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SIGNATURE PAGE TO SECURITY AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By		/S/LEWIS P. ZEIDNER
	Lewis P. Zeidner, President
(the “Borrower”)

SIGNATURE PAGE TO SECURITY AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

NEWT’S DISCOUNT PHARMACY, INC.,
an Oklahoma corporation
By	/S/JEREMY AVANCE
	Jeremy Avance, President
(the “Lender”)

EX-10.6

EXHIBIT 10.6

PROMISSORY NOTE

$400,000.00	Oklahoma City, Oklahoma
	March 26, 2008

FOR VALUE RECEIVED, APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Borrower”), promises to pay to the order of NEWT’S DISCOUNT PHARMACY, INC., an Oklahoma corporation (the “Lender”), at 102 W. Noble Avenue, Guthrie, Oklahoma 73044, or at such other place as may be designated in writing by the holder of this Note, the principal sum of Four Hundred Thousand Dollars ($400,000), together with interest thereon at the rate hereafter specified, payable as follows:

The unpaid principal balance of this Note will bear interest from the date of this Note until payment in full at a per annum rate equal to six percent (6.0%).  All interest will be computed as a per diem charge for the actual number of days elapsed on the basis of a year consisting of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be.

Provided no uncured default has occurred under this Note, the unpaid principal balance of this Note plus accrued interest thereon will be paid by the Borrower paying to the Lender twelve (12) blended quarterly installments of principal and interest equal to Thirty Six Thousand Six Hundred Seventy Two Dollars ($36,672.00), commencing on June 26, 2008, and on the twenty sixth (26^th) day of each successive September, December, March and June thereafter through March 26, 2011 (the “Maturity Date”).  In the event of an adjustment, prepayment or set-off against the unpaid principal balance of this Note, the annual payment will be recalculated to the amount which would fully amortize the unpaid principal balance of this Note on such date, together with accrued interest thereon, over a term ending on the Maturity Date.  Notwithstanding anything to the contrary, the entire unpaid principal balance of this Note and all accrued and unpaid interest will be due and payable on the Maturity Date.

Each payment will be applied first to the payment of interest on the unpaid principal and the balance, if any, will be applied to the unpaid principal balance of this Note.  The Borrower will have the right to prepay this Note in whole or in part at any time without premium or penalty, but with interest on the unpaid principal balance accrued to the date of prepayment.

The Borrower and the Lender also agree that the Borrower’s obligations under this Note may be set-off against any amounts owing to the Borrower under that certain Pharmacy Purchase Agreement (the “Agreement”) dated March 24, 2008, among the Borrower, the Lender and affiliates of the Lender, subject to the limitations set forth in the Agreement.

The Borrower agrees that if, and as often as, this Note is placed in the hands of an attorney for collection or to defend or enforce any of the holder’s rights hereunder or under any instrument securing payment of the same, the Borrower will pay to such holder its reasonable attorneys’ fees and all expenses incurred in connection therewith.  This Note is to be construed according to the laws of the State of Oklahoma.

This Note is issued subject to the terms of the Agreement.  Payment of this Note is secured by the Financing Documents as more fully described in the Agreement.  If the breach of any provision of this Note is not cured within fifteen (15) days after written notice by the holder to the Borrower, then on written notice by the holder to the Borrower, the entire unpaid indebtedness evidenced by this Note will become due, payable and collectible then or thereafter as the holder may elect, regardless of the date of maturity of this Note.  Failure by the holder to exercise such option will not constitute a waiver of the right to exercise the same in the event of any subsequent default.

The makers, endorsers, sureties, guarantors and all other persons who may become liable for all or any part of this Note severally waive presentment for payment and protest.  The foregoing parties consent to any extension of time (whether one or more) of payment hereof, the modification (whether one or more) of payment hereof, release or substitution of all or part of the security for the payment hereof or release of any party liable for payment of this Note.  Any such extension or release may be made without notice to any such party and without discharging such party’s liability hereunder.

Except as otherwise defined herein, all terms defined or referenced in the Agreement will have the same meanings herein as therein.

IN WITNESS WHEREOF, the Borrower has executed this instrument effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By	/S/LEWIS P. ZEIDNER
	Lewis P. Zeidner, President
(the “Borrower”)

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EX-10.7

EXHIBIT 10.7

PHARMACY PURCHASE AGREEMENT

THIS AGREEMENT is made effective the 24th day of March, 2008, among APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Buyer”), PENDERGRAFT DRUGS, INC., an Oklahoma corporation (the “Company”) and GARY NICHOLS, an individual (“Nichols” and together with the Company, jointly and severally, the “Seller”).

B A C K G R O U N D :

A.The Seller owns and operates the pharmacy business located in or near Oklahoma City, Oklahoma, described at Schedule “A” attached as a part hereof (together, whether one or more, the “Business”).

B.The Buyer desires to acquire and the Seller desires to sell the Business by the Buyer acquiring all assets, rights and properties owned by the Seller which are used in, useful in or related to the ownership, operation or maintenance of the Business, except as specifically excluded herein.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Sale Agreement.  Subject to the terms and conditions of this Agreement, the Buyer agrees to purchase and the Seller agrees to sell the Business, including, without limitation, all assets, rights and property used in, useful in or related to the ownership, operation or maintenance of the Business as of the date of this Agreement and the Closing Date (as hereafter defined) except for the Excluded Assets (collectively, the “Assets”).  Absolute ownership of the Assets will be transferred to the Buyer on the Closing Date free and clear of all liens, claims and encumbrances other than liens securing the Approved Liabilities (as hereafter defined).  The Assets include, without limitation:

1.1.Fixtures and Equipment.  All tangible personal property used in, useful in or related to the ownership, operation or maintenance of the Business, including, without limitation, all equipment, furniture, supplies and trade fixtures.

1.2.Merchandise Inventory.  All of the following inventory located on the premises of the Business (the “Merchandise Inventory”):  (a) all saleable prescription pharmaceutical inventory except: (i) inventory that is damaged, has expired or will expire within ninety (90) days following the Time of Transfer; (ii) non-wholesaler re-packed or misbranded pharmaceutical merchandise; (iii) compounding chemicals; and (iv) any other inventory not transferable due to any applicable local, state or federal law; and (b) all over-the-counter inventory reasonably acceptable to the Buyer.

1.3.Contracts and Leases.  All of the Seller’s interest in all contracts, leases and agreements used in, useful in or related to the ownership, operation or maintenance of the Business or the Assets (the “Contracts”) that are reasonably acceptable to the Buyer.

1.4.Will Call Receivables.  All of the Will Call Receivables (as defined in the Transition Agreement (as hereinafter defined in paragraph 8.10)).

1.5.Intangible Property.  All intangible personal property used in, useful in or related to the ownership, operation, or maintenance of the Business, including, without limitation:  (a) the right to all names (including the names “Professional Discount Pharmacy” and “Pendergraft Drugs”), telephone numbers, pager numbers, cellular and digital phone numbers, internet web sites and electronic mail addresses, if any; (b) all permits, licenses, certificates and operating authorities necessary to operate the Business, to the extent assignable; (c) all customer and prospective customer lists including the exclusive use of such lists; (d) all books, records and files, whether physical or electronic; and (e) all computer software, to the extent assignable.

1.6.Going Concern Assets.  The covenant not to compete and other going concern assets as set forth in the Goodwill Protection Agreement to be executed in connection herewith (the “Goodwill Protection Agreement”).

2.Excluded Assets.  The Assets to be acquired by the Buyer under this Agreement specifically exclude the following (the “Excluded Assets”):  (a) all cash, checks and coupons located at the Business prior to the Time of Transfer (as hereinafter defined in paragraph 11.3), except for a cash change fund in the amount of $500.00 (the “Change Fund”); (b) all accounts receivable, relating to operation of the Business prior to the Time of Transfer other than the Will Call Receivables; (c) any Contracts not approved by the Buyer in writing after the date hereof; and (d) those items described at Schedule “2” attached as a part hereof that the Seller represents are not necessary for the ownership or operation of the Business; and (e) all Merchandise Inventory not purchased by Buyer under paragraph 1.2, above.

3.Liabilities.  The Seller will be solely responsible for and will pay or otherwise satisfy on or before the Closing Date all:  (a) liabilities, obligations and debts of the Seller with respect to the Business in existence as of the Closing Date; and (b) taxes (including sales and income taxes) accruing from operation of the Business or actions taken by the Seller prior to and through the Closing Date.

4.Purchase Price.  Subject to the adjustments and prorations hereafter described, the total purchase price to be paid by the Buyer to the Seller for the purchase of the Business is the amount equal to the sum of (the “Purchase Price”):  (a) Five Hundred Fifty Thousand Dollars ($550,000.00) (the “Base Price”); plus (b) the Merchandise Inventory Price (as hereafter defined) calculated in accordance with paragraph 5 of this Agreement; plus (c) the total amount of the Will Call Receivables (the “Receivables Price”).  The Purchase Price will be adjusted and paid as follows:

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4.1.Cash at Closing.  On the Closing Date, the Buyer will pay to the Company in immediately available funds:  (a) fifty percent (50%) of the Base Price; (b) all of the Merchandise Inventory Price; (c) all of the Receivables Price; and (d) the amount of the Change Fund not to exceed $500.00.  The Base Price shall be adjusted as provided in paragraphs 4.3 and 4.4.

4.2.Seller Financing; Goodwill Protection.  To satisfy the balance of the Purchase Price, on the Closing Date, the Buyer will:  (a) execute and deliver a promissory note (the “Promissory Note”) in the amount equal to forty percent (40%) of the Base Price in favor of the Company; and (b) enter into the Goodwill Protection Agreement providing for payment of ten percent (10%) of the Base Price to Nichols.  The Promissory Note will be secured by a security agreement (the “Security Agreement” and collectively with the Promissory Note, the “Financing Documents”), bear interest at six percent (6%) per annum, be payable in blended quarterly installments of principal and interest and have a term of three (3) years.

4.3.Adjustments.  On the Closing Date, the amount to be paid pursuant to paragraph 4.1 will be decreased for any and all unpaid liabilities incurred by the Company or the Business prior to the Time of Transfer and which are assumed by the Buyer or collateralized by any of the Assets, or for which the Buyer becomes liable and pays.

4.4.Prorations.  On the Closing Date, the amount to be paid pursuant to paragraph 4.1 will be adjusted based on the proration of all rents (including ad valorem taxes and casualty insurance), if any, and utilities for the month in which the Time of Transfer occurs through the Time of Transfer (the “Prorations”).  All accounts payable and other liabilities incurred prior to the Time of Transfer will be the sole responsibility of the Seller.  All accounts payable and other liabilities incurred by the Buyer in connection with the Business on and after the Time of Transfer will be the sole responsibility of the Buyer.  All accounts receivable and other revenues will be apportioned as provided in the Transition Agreement.  Each party shall, promptly upon receipt, deliver to the other party copies of each relevant bill or statement that may be in such party’s records.

4.5.Allocation.  The Purchase Price will be allocated among the Assets by the Buyer and the Seller according to sound accounting practices and such allocation will be incorporated into a supplemental instrument to be executed and delivered by the parties on the Closing Date.

5.Inventory.  A physical inventory (the “Inventory”) will be taken of all Merchandise Inventory and supplies located at the Business prior to the Closing Date on a date acceptable to the Buyer and the Seller.  The inventory is tentatively scheduled for March 25, 2008, and will only be postponed to allow more time for the satisfaction of conditions precedent in paragraphs 9 or 10.  The Inventory will be certified and taken by an inventory service selected mutually by the Buyer and the Seller.  The cost of the Inventory will be divided equally between the Seller and the Buyer.  The Inventory will be recorded on duplicate inventory sheets in the presence of the Seller and the Buyer or their representatives, and a copy of such inventory sheets will be

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furnished to the Seller and the Buyer.  All damaged or unsaleable merchandise, merchandise that is out of date or will become out of date within ninety (90) days after the date the Inventory is conducted or merchandise that the Buyer reasonably determines cannot be sold for full retail price (together, the “Excluded Inventory”) will be excluded from the Inventory and set aside.  The Seller will have the right to remove all Excluded Inventory from the Business within forty-eight (48) hours and to return the Excluded Inventory or send it to a reclamation center for processing.  Any Excluded Inventory not timely removed from the Business by the Seller will be deemed abandoned and the Buyer may dispose of the Excluded Inventory as the Buyer deems appropriate and all proceeds from such disposition will belong to the Buyer.  The purchase price for the Merchandise Inventory (the “Merchandise Inventory Price”) will be the actual invoice cost paid by the Seller for each item listed in the Inventory.

6.Representations and Warranties of Seller.  As an inducement to the Buyer to enter into this Agreement, the Seller represents and warrants to the Buyer that as of the date of this Agreement and the Closing Date:

6.1.Financial Statements.  The Seller has delivered to the Buyer the unaudited financial statements for the Business for the periods ending December 31, 2005, December 31, 2006, and December 31, 2007.  There has not been a material change (nor an event which would result in any material change) in the Business, or in the results of operation or financial condition of the Company since the effective date of the most recent financial statements.  The financial statements, copies of which are attached at Schedule “6.1” as a part hereof, consist of a balance sheet, an income statement and all appropriate notes and disclosures.  The financial statements, income statements and notes and disclosures are true and correct in all material respects and present fairly the financial condition and results of operations of the Business at the dates thereof and for the respective periods then ended and have been prepared in accordance with accounting principles consistently applied.

6.2.Absence of Liabilities.  The Seller currently has no debt, liability, obligation or commitment, absolute or contingent, known or unknown, relating to or connected with the Business or the Assets other than:  (a) those set forth (and not exceeding the amounts so set forth) in the most recent financial statements attached at Schedule “6.1” (the “Current Financial Statements”) and not otherwise paid or discharged after the date thereof; (b) and those incurred in the ordinary course of business from the effective date of the Current Financial Statements, through the date of this Agreement consistent with past practices.  Except for the items shown on the Current Financial Statements of the Seller which will be paid from the sale proceeds hereunder, on the Closing Date, the Business will have no claims, debts, liabilities, obligations, guaranties or commitments and the Seller will not be a party to, be bound or subject to any real or personal property leases relating to the Business other than the Contracts.  The Assets and the Business will not be subject to or liable for any claim, debt, liability, obligation, guaranty or commitment as of the Closing Date.  Any such claims, debts, liabilities, obligations or commitments will be the sole responsibility of the Seller, and the

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Seller hereby agrees to indemnify and hold harmless the Buyer from all such amounts.

6.3.Title to Assets.  The Seller owns, possesses and has good and marketable title to the Assets free and clear of all mortgages, liens, leases, pledges, charges, encumbrances, equities, easements, rights of way, covenants, conditions, restrictions or claims of every nature and kind whatsoever, other than those described at Schedule “6.3.”  The Assets constitute all the assets used in, useful in or related to the Business.  Each Asset is:  (a) either (i) in good saleable condition or (ii) in good operating condition and repair, and in sound structural condition; and (b) free and clear of any material defects or any restrictions on or conditions to transfer or assignment.

6.4.Contracts.  Schedule “6.4” is a true, correct and complete list (or description, in the case of oral agreements) of all of the Contracts.  Except as disclosed to the Buyer in writing:  (a) such contracts, leases and agreements are in full force and effect; (b) the Seller is in full compliance with all of the Seller’s obligations under the Contracts; (c) the counterparty under each of the Contracts is in full compliance with all of such party’s obligations under the Contracts; (d) no default exists under any of the Contracts; (e) no event of default or event which would become an event of default with the giving of notice or passage of time has occurred; and (f) no condition presently exists which would give any party to any contract the right to terminate such contract.  There are no other material contracts, leases, commitments or agreements in effect related to the Assets or the Business other than those identified at Schedule “6.4.”

6.5.Legal Requirements.  The Seller:  (a) has all requisite power to own, lease and operate the Seller’s properties, including, without limitation, the Assets and to carry on the Seller’s business as now being conducted, including, without limitation, the Business; (b) is duly qualified to carry on the Business in the State where the business is located; and (c) holds all required licenses and permits for carrying on all aspects of the Business.  The Seller and the Business have complied and will continue to comply with all applicable federal, state or local statutes, laws and regulations including, without limitation, any applicable building, zoning or other law, ordinance or regulation affecting the operation of the Business.

6.6.Zoning.  To the best knowledge of the Seller, the zoning of the real property where the Business is located permits the presently existing improvements and the continuation of the Business as presently being conducted.  To the best knowledge of the Seller, the Seller has received no notice of any and there are no:  (a) pending changes in statutes, regulations or local laws (including zoning) that will render any part of the Business illegal; (b) outstanding orders or notices pending from any local authority, governmental body or governmental agency with respect to the Assets or the Business; or (c) plans, studies or efforts by any governmental authority or agency or of any non-governmental person or entity

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which in any way would materially affect all or any portion of the Business or the Assets.

6.7.Insurance.  The Seller has and will maintain in full force and effect through the Closing Date insurance against all risks, damages, losses and liabilities usual and customary for Business similar to the Business, including without limitation, general liability, casualty, workers’ compensation and property insurance.  The Seller is not self insured for any risks.  The Seller’s current insurance coverage on the Business is described at Schedule “6.7” attached as a part hereof.

6.8.Environmental Issues.  The Seller has not and to the best knowledge of the Seller no other party has disposed, deposited, discharged, placed or otherwise caused any release of any hazardous or toxic materials, substances, pollutants, contaminants or wastes at, on or near the real property and improvements where each Business is located in contravention of any applicable federal, state or local laws, rules or regulations.

6.9.Consents and Approvals.  Other than in compliance with the provisions of applicable statutes and regulations, no notice to, filing with, or authorization, consent or approval of, any domestic or foreign public body or authority is necessary for the consummation of the transactions contemplated by this Agreement.  The execution, delivery, performance and consummation of this Agreement does not and will not:  (a) violate, conflict with or constitute a default or an event that, with notice or lapse of time or both, would be a default, breach or violation under any term or provision of any instrument, agreement, contract, commitment, license, promissory note, conditional sales contract, indenture, mortgage, deed of trust, lease or other agreement, instrument or arrangement to which the Seller is a party or by which the Seller, the Business or the Assets are bound; (b) violate, conflict or constitute a breach of any statute, regulation or judicial or administrative order, award, judgment or decree to which the Seller is a party or to which the Seller, the Assets or the Business are bound or subject; or (c) result in the creation or imposition of any adverse claim or interest, or any lien, encumbrance, charge, equity or restriction of any nature whatever, upon or affecting the Seller, the Business or the Assets.

6.10.Litigation.  Except as set forth at Schedule “6.10,” there is no:  (a) action, suit or proceeding pending or threatened against the Seller, the Assets or the Business; or (b) proceeding, investigation, charges, audit or inquiry threatened or pending before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality which might result in an adverse effect on the Seller, the Business or the Assets.

6.11.Certain Employee Plans.  Except as set forth at Schedule “6.11,” the Seller:  (a) has no “employee benefit plans,” as defined in the Employee Retirement Security Act of 1974, as amended, including by way of example and not limitation, 401(k), Keogh, SEP and health insurance plans; and (b) is not a party to any multi-employer plan.  Other than at-will employment agreements, there are no

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employment agreements with any officers, directors, employees, retired employees or former employees of the Seller.

6.12.Computer Systems.  All computer software which is used in connection with the operation of the Business is either proprietary or held pursuant to a valid, legal and binding license agreement which is in full force and effect, and no event has occurred which would constitute an event of default under any applicable agreement or which, with the lapse of time, the giving of notice or both, would constitute an event of default under any applicable agreement. Other than written industry standard license agreements, each such program or system is complete and is not subject to any lien, claim, encumbrance, security interest, right, restriction, option or purchase obligation held by any person.

6.13.Taxes.  All tax returns and reports of the Seller required by law to be filed have been filed or valid extensions have been obtained.  The returns which have been filed are true and correct and all taxes shown as due thereon have been paid.  All taxes and other governmental charges which are due and payable have been paid and recorded in the appropriate accounting records.  There is no pending or known threatened claim against the Seller for payment of additional taxes in excess of the amounts reflected on such party’s books and financial statements.  The Seller has not executed any waiver of any statute of limitations against assessments of taxes.

6.14.Authority.  The Seller has taken all necessary action to authorize the execution, delivery and performance of this Agreement and has adequate power, authority and legal right to enter into, execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby.  This Agreement is legal, valid and binding with respect to each Seller and is enforceable in accordance with its terms.  On execution, delivery and performance of this Agreement in accordance with its terms, the Buyer will own one hundred percent (100%) of the Business and the Assets free of all claims, liens, encumbrances and liabilities.

6.15.Labor Relations.  The Seller and the Business have not and are not now a party to any collective bargaining or other labor contract.  To the best knowledge of the Seller, there has not been, there is not presently or existing and there has not been any threat of:  (a) any strike, slow down, picketing, work stoppage or employee grievance process; (b) any proceeding against or affecting any of the Business relating to the alleged violation of any federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute or treaty pertaining to labor relations or employment matters, including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission, or any comparable governmental body, organizational activity, or other labor employment dispute against or affecting any of the Business, their premises or the Assets; or (c) any application for certification of a collective bargaining agent.  To the best knowledge of the Seller, no event has occurred or circumstances exist that could provide the basis for any

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work stoppage or other labor dispute.  There is no lock out of any employees of the Seller, and no such action is contemplated by the Seller.  The Seller and the Business have complied in all respects with all legal requirements relating to the employment, equal employment opportunity, non-discrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health and plant closings.  Neither the Seller nor the Business is liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing.

6.16.Full Disclosure.  This Agreement, any schedule referenced in or attached to this Agreement, any document furnished to the Buyer under this Agreement or any certification furnished to the Buyer under this Agreement does not contain any untrue statement of a material fact and does not omit to state a material fact necessary to make such statement, in the circumstances under which it was made, not misleading.  All of the representations, warranties and covenants in this Agreement:  (a) are true and correct as of the date made; (b) will be true and correct as of the Closing Date; and (c) will survive and not be waived, discharged, released, modified, terminated or affected by any due diligence by the Buyer.  For purposes of this Agreement, when a statement is qualified by the phrase “to the best knowledge of the Seller,” such phrase means: (y) the actual knowledge of the Seller; and (z) the knowledge which the Seller, in the exercise of reasonable diligence, could obtain.

7.Representations and Warranties of Buyer.  As an inducement to the Seller to enter into this Agreement, the Buyer represents and warrants to the Seller that as of the date of this Agreement and the Closing Date, the Buyer has delivered to the Seller the unaudited financial statements for the Buyer for the periods ending December 31, 2006, and December 31, 2007.  There has not been a material change (nor an event which would result in any material change) in the financial condition of the Buyer since the effective date of the most recent financial statements.  The financial statements, copies of which are attached at Schedule “7” as a part hereof, consist of a balance sheet, an income statement and all appropriate notes and disclosures.  The financial statements, income statements and notes and disclosures are true and correct in all material respects and present fairly the financial condition and results of operations of the Buyer at the dates thereof and for the respective periods then ended and have been prepared in accordance with accounting principles consistently applied.

8.Covenants.  The parties agree to perform the following prior to the Closing Date:

8.1.Access to Information.  During the period commencing on the date of this Agreement and ending on the Closing Date, the Seller will cause the officers and representatives of the Business, including, without limitation, the Seller’s accountants, lawyers and bankers, to afford the Buyer and the persons expected to enter into financing agreements with respect to the Buyer’s acquisition and the authorized representatives of the foregoing, full access during normal business hours to the properties, books, records, accountants and lawyers of the Business and the Seller to make such investigation as the Buyer desires regarding the

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Business, the Assets and the Seller.  The Seller will:  (a) furnish such financial, operating data, information and responses as the Buyer might reasonably request; and (b) execute and deliver to the Buyer all written authorizations as the Buyer may reasonably request or the representatives of the Seller might require.  The Seller will furnish bank account statements for the months of January and February, 2008, as soon as such statements are available, but in no event later than three (3) business days prior to the Closing Date.

8.2.Inspection.  During the ten (10) day period commencing on the date this Agreement is executed by the Seller (the “Inspection Period”), the Buyer will conduct such investigation and inspection with respect to the properties, books, records, legal documents, financial accounts, contracts, title records and prospects of the Business as the Buyer deems appropriate.  If the Buyer determines in good faith that the Business or the Assets are unsatisfactory for any reason whatsoever, the Buyer will have the option to terminate this Agreement by written notice to the Seller within two (2) days after the expiration of the Inspection Period or to provide written notice to the Seller setting forth the Buyer’s objections.  The Buyer may send multiple objection notices and each such notice will not waive any right to make additional objections within the foregoing time periods.  The Seller will have seven (7) days after receipt of any such objection notice to satisfy the Buyer’s objections.  If the Seller is unable to satisfy the Buyer’s objections, the Buyer will have the option to (i) waive such objections or (ii) terminate this Agreement by written notice to the Seller.

8.3.Conduct of Business.  Prior to the Closing Date, the Seller will operate the Business in a businesslike manner in accordance with the Seller’s prior practices and will use the Seller’s best efforts to maintain and preserve the Business, the goodwill of all customers and good relations with its employees.  In addition, unless the Buyer otherwise consents in writing:

8.3.1.The Seller has not and will not:  (a) transfer, sell, mortgage, pledge, encumber or dispose of any of the Assets (other than the Merchandise Inventory) except to unaffiliated third parties in the ordinary course of business for fair consideration in an amount not less than the book value of such asset as reflected in the Current Financial Statements; (b) transfer, sell, mortgage, pledge, encumber or dispose of the Merchandise Inventory except at retail in the ordinary course of business; (c) make or permit any amendment or termination of any material contract, agreement, lease or commitment to which the Seller may be bound; (d) make any capital expenditures or commit to make any capital expenditure or perform unfulfilled commitments to make capital expenditures, whenever made or entered into, if such capital expenditures are in excess of $5,000.00; or (e) incur any material amount of indebtedness for borrowed money or other obligations except the purchase of Merchandise Inventory in the ordinary course of business.

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8.3.2.Except in the ordinary course of business, the Seller will not enter into any new employment agreement, amend or extend any existing employment agreement, grant any severance pay, termination pay or increases in compensation, take any action to vest any overfunded benefits in any benefit plan or adopt or amend any bonus, profit sharing, pension, stock option or similar plan, trust or other arrangement.

8.3.3.The Seller will not enter into any new labor or collective bargaining agreement or amend or extend any existing labor or collective bargaining agreement.

8.3.4.The Seller will not enter into any new supply agreement with any supplier of any of the Merchandise Inventory or amend or extend any existing supply agreement.

8.3.5.The Seller will not enter into any agreement, arrangement or understanding involving the sale, transfer, assignment or other disposition of, or grant a security interest in or optional rights to purchase or otherwise acquire the Assets or the Business.

8.3.6.The Seller will not, and will cause each of the Seller’s representatives and affiliates not to, directly or indirectly, solicit, initiate or encourage any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from any person other than the Buyer relating to any transaction involving the sale of the Business or the Assets, or any merger, consolidation, business combination or similar transaction involving the Business.

8.3.7.The Seller will not increase prices of any of the merchandise offered for sale at the Business except as a direct result of an increase in the Seller’s cost of such merchandise and in the ordinary course of business.

8.4.Consents.  The Seller will cooperate with the Buyer to obtain, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Seller as are necessary for the consummation of the transactions contemplated by this Agreement.  However, no contract will be amended to increase the amount payable thereunder and no burden to the Buyer will be increased to obtain any consent, approval or authorization.

8.5.Employment.  On the Closing Date, the Seller will terminate all employees of the Business effective as of the Time of Transfer and be responsible for all compensation, accrued vacation, severance pay or termination pay or other related claims with respect to all such terminated employees through the Time of Transfer.  On the Closing Date, the Buyer will have the right, but not the obligation, to offer to employ those employees of the Business determined by the

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Buyer in the Buyer’s sole discretion.  The terms of employment for each such retained employee will be determined by the Buyer.  Following the Closing Date, the performance of each employee who continues employment with the Buyer will be evaluated periodically by the Buyer using such criteria as may be established from time to time by the Buyer.  The Seller agrees to use its best efforts to ensure that the employees of the Seller selected by the Buyer continue their association with the Business.  Immediately after the closing on the Closing Date, Nichols will accompany the Buyer’s representatives to the Business, announce to the employees of the Business that the Business has been sold to the Buyer, and introduce the Buyer’s representatives to the employees.

8.6.Leases.  The Seller will use its best efforts to cause the landlord under the lease where the Business is located (the “Lease”) to enter into amendments of the Lease on terms satisfactory to the Buyer.

8.7.Seller’s Insurance.  Through the Time of Transfer, the Seller will maintain insurance coverage customarily maintained by the parties engaged in the Business and covering all loss, damage, liability and risk allocated to the Sellers in paragraph 11.3 including, without limitation, general liability, casualty, workers’ compensation, vehicle and property insurance in amounts customarily maintained by the Seller.

8.8.Conditions.  The Seller will use its best efforts to cause the conditions in paragraph 9 to be satisfied.  The Buyer will use its best efforts to cause the conditions in paragraph 10 to be satisfied.

8.9.Sales Tax Report.  The Seller will complete and file any sales tax report required to be filed with the tax authorities for the state where the Business is located in connection with the consummation of this transaction.

8.10.Business Transition.  As soon as practicable after the Closing Date, the Buyer will apply for applicable state pharmacy and DEA licenses along with any other permits or licenses required by state or local regulations, and obtain agreements with third party payers necessary to collect reimbursement for prescriptions dispensed and associated fees.  On the Closing Date, the Seller and the Buyer will enter into a Transition Agreement (the “Transition Agreement”), to allow the Buyer to operate the Business after the Closing Date under the Seller’s permits and licenses after the Time of Transfer until the Buyer obtains all necessary permits and licenses.

8.11.Employee Pay.  Immediately after execution of this Agreement, the Seller will advise all employees of the Business that they will be paid entirely as employees and not as independent contractors, with all required employer payroll taxes withheld.  The Seller will furnish the Buyer a letter from Paychex, Inc. indicating that all pay to employees of the Business will be shown on forms W-2 with all payroll taxes withheld.  The Seller will promptly advise the Buyer of any communication made by any employee of the Business regarding the Seller’s

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compliance with this covenant and furnish copies of any written communication (including electronic mail) and written summaries of any oral communication made by such employees.

9.The Buyer’s Conditions Precedent.  The obligation of the Buyer to consummate the transactions contemplated by this Agreement is subject to the satisfaction or waiver (subject to applicable law) at or prior to the Closing Date of each of the following conditions:  (a) no preliminary or permanent injunction or other order will have been issued by any court of competent jurisdiction or any regulatory body preventing consummation of the transactions contemplated by this Agreement; (b) no action will have been commenced or threatened against the Seller, the Buyer or any of their respective affiliates, associates, officers or directors seeking damages arising from, to prevent or challenge the transactions contemplated by this Agreement; (c) all of the pharmacists and pharmacy technicians employed by the Seller at the Business as of March 1, 2008, will continue to be employed at the Business immediately prior to the Time of Transfer; (d) all representations and warranties of the Seller contained herein will be true and correct in all material respects on and as of the Closing Date; (e) in all material respects, the Seller will have performed or satisfied on and as of the Closing Date, all obligations, covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Seller; (f) there is no material adverse change, nor any event which would result in any material adverse change, so far as can reasonably be foreseen by the Buyer, in the Business or in the results of operations; (g) the Business will not have incurred any material loss on or prior to the Closing Date, whether or not covered by insurance; (h) all actions, proceedings, instruments and documents required to carry out the transactions contemplated hereby will have been initiated, completed, obtained or drafted to the reasonable satisfaction of Buyer’s counsel, and the Seller will have delivered such additional certificates and other documents as the Buyer reasonably requests including, without limitation, such certificates of the Seller dated the Closing Date evidencing compliance with the conditions set forth in this paragraph 9; (i) the Seller will not be the subject of any order, investigation or hearing by any regulatory authority or by the Oklahoma income tax agency, the Internal Revenue Service, the Justice Department of the United States or any public or private consumer protection or other agency, committee or organization that adversely affects the Business or the Assets; (j) the landlord under the Lease will have approved the assignment of the Lease to the Buyer or entered into a new lease with the Buyer; (k) the Lease will have a minimum remaining term of ten (10) years after the Closing Date (including options), with the initial monthly rental payments not to exceed $3,500.00 on terms satisfactory to the Buyer; and (l) the Pharmacy Purchase Agreement of even date herewith between the Buyer and Newt’s Discount Pharmacy, Inc. (the “NDP Agreement”) has not been terminated and will close on the Closing Date.

10.Seller’s Conditions Precedent.  The obligation of the Seller to consummate the transactions contemplated by this Agreement is subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions, any or all of which may be waived in whole or in part:  (a) no preliminary or permanent injunction or other order will have been issued by any court of competent jurisdiction or any governmental or regulatory body preventing consummation of the transactions contemplated by this Agreement; (b) no action will have been commenced or threatened against the Seller, the Buyer or any of their respective affiliates, associates, officers or directors seeking damages arising from, to prevent or to challenge the transactions contemplated by this Agreement; (c) all representations and warranties of the Buyer

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contained herein will be true and correct in all material respects on and as of the Closing Date; and (d) the Buyer will have performed in all material respects all obligations, agreements and conditions contained in this Agreement to be performed or complied with by the Buyer.

11.The Closing.  This Agreement will be consummated at 9:00 a.m. local time at the offices of Commercial Law Group, P.C. in Oklahoma City, Oklahoma on the later of the following dates (the “Closing Date”):  (a) the first business day after the Inventory is complete and accepted by both parties; or (b) the first business day following the day on which the last of the conditions set forth in paragraph 9 hereof is satisfied or waived which in no event shall be later than April 8, 2008.

11.1.The Buyer’s Deliveries.  On the Closing Date, the Buyer will deliver or cause to be delivered to the Seller the following items (all documents will be duly executed and acknowledged where required):

11.1.1.Payment.  The cash portion of the Purchase Price as adjusted under paragraphs 4.3 and 4.4;

11.1.2.Financing Documents.  The Financing Documents;

11.1.3.Goodwill Protection Agreement.  The Goodwill Protection Agreement;

11.1.4.Evidence of Authority.  Such corporate resolutions, certificates of good standing, incumbency certificates and other evidence of authority with respect to the Buyer as might be reasonably requested by the Seller;

11.1.5.Closing Memorandum.  A memorandum setting forth the items delivered and accounting for the payments made on the Closing Date; and

11.1.6.Additional Documents.  Such additional documents as might be reasonably requested by the Seller to consummate this Agreement.

11.2.Seller’s Deliveries.  On the Closing Date, the Seller will deliver or cause to be delivered to the Buyer the following items (all documents will be duly executed and acknowledged where required):

11.2.1.Assignment.  Bills of sale, assignments and conveyances acceptable to the Buyer necessary to convey to the Buyer all of the Seller’s right, title and interest in and to all of the personal property comprising a portion of the Assets;

11.2.2.Goodwill Protection Agreement.  The Goodwill Protection Agreement;

11.2.3.Documents; Keys.  The originals of all documents to be assigned to the Buyer, including, without limitation, all contracts, books and records; all keys, combination locks and other security devices located at the Business.

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11.2.4.Closing Memorandum.  A memorandum setting forth the items delivered and accounting for the payments made on the Closing Date;

11.2.5.Additional Documents.  Such additional documents as might be reasonably requested by the Buyer to consummate this Agreement.

11.3.Possession.  Possession of the Business and all of the Assets in connection with the Business will be delivered to the Buyer on the Closing Date after closing but to be effective at 12:01 a.m. on the Closing Date (the “Time of Transfer”) free from all parties claiming rights to possession of or having claims against the Business and the Assets.  In addition, with respect to each Asset and the Business, risk of loss, damage, claim, liability or other matter including, without limitation, all liabilities arising from any accident, personal injury, death, property damage or other claim related to operation of the Business will pass from the Seller to the Buyer at the Time of Transfer.

11.4.Costs.  The Seller will pay the following closing costs:  (a) the Seller’s attorneys’ fees, accountants’ fees and fees of other advisors; (b) all sales taxes assessed in connection with consummation of this transaction; and (c) any other charge imposed for the transfer of any item comprising the Assets.  The Buyer will pay the Buyer’s attorneys’ fees, accountants’ fees and fees of other advisors.

12.Indemnification.  The parties agree to indemnify each other as follows:

12.1.Seller’s Indemnification.  The Seller agrees to pay, defend, indemnify, reimburse and hold harmless the Buyer and the Buyer’s directors, officers, agents and employees (the “Buyer Indemnified Parties”) for, from and against any loss, damage, diminution in value, claim, liability, debt, obligation or expense (including interest, reasonable legal fees, and expenses of litigation and attorneys fees in enforcing this Agreement) incurred, suffered, paid by or resulting to any of the Buyer Indemnified Parties and which results from, arises out of or in connection with, is based upon, or exists by reason of:  (a) any breach or default in any representation or warranty of the Seller set forth in this Agreement or in the performance by the Seller of any covenant or obligation set forth in this Agreement which is not cured as provided in paragraph 15 of this Agreement; and (b) any claims, demands, violations, actions, assessments, taxes, penalties, fines, costs, expenses, obligations or other liabilities with respect to the ownership, operation or maintenance of the Business of the Assets prior to the Time of Transfer, that are not accounted for by paragraphs 4.3 or 4.4.

12.2.Buyer’s Indemnification.  The Buyer agrees to indemnify and hold harmless the Seller and the Seller’s officers, directors, managers, employees, agents and members (collectively, the “Seller Indemnified Parties”) against any loss, liability, deficiency, damage, expense or cost (including interest, reasonable legal fees and expenses of litigation and attorneys fees in enforcing this Agreement), whether or not actually incurred or paid that the Seller Indemnified Parties may suffer, sustain or become subject to, as a result of:  (a) any breach or default in any

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representation or warranty of the Buyer set forth in this Agreement or in the performance by the Buyer of any covenant or obligation set forth in this Agreement which is not cured as provided in paragraph 15 of this Agreement; and (b) any claim made by a third party with respect to the operation of the Business on or after the Time of Transfer.

12.3.Limitation on Indemnification Obligations.  The parties’ indemnification obligations pursuant to the provisions of paragraph 12 are subject to the following limitations:

12.3.1.Survival of Representations and Warranties.  No party can recover under paragraphs 12.1 or 12.2 unless a claim has been asserted by written notice, delivered to the other party on or prior to the date that is 24 months after the Closing Date.

12.3.2.Basket.  No party can recover under paragraphs 12.1 or 12.2 until the total amount which such party would recover but for this paragraph 12.3.2 exceeds $12,500 (the “Basket”), in which event such party can recover all amounts recoverable hereunder, including the amount less than the Basket. The foregoing limitation shall not apply to breaches of the representations and warranties in paragraph 6.11.

12.3.3.Indemnification Cap.  No party can recover under paragraphs 12.1 or 12.2 an amount in excess of the principal amount of the cash (excluding accrued interest, the Merchandise Inventory Price and the Receivables Price) paid by the Buyer to the Seller pursuant to this Agreement and other documents executed in connection (the “Indemnification Cap”).  The foregoing limitation shall not apply to recovery for breaches of the Representations and Warranties of Organization, Existence, Good Standing, Power and Authority, Enforceability, and Employee Benefit Plans.

12.4.Other Remedies.  The remedies provided by this paragraph 12 are in addition to, and not in lieu of, such other remedies as may be available under applicable laws.  Without limitation, the Buyer is entitled to enforce this Agreement by specific enforcement without the necessity of demonstrating inadequacy of damages or irreparable harm.

12.5.Payment.  Claims for indemnification involving the payment of money will be paid within thirty (30) days after written notification thereof.  Claims for indemnification involving amounts due to third parties will be promptly paid when due, subject to the right to contest the same in good faith.  Unpaid claims will incur interest at a floating rate of interest equal to the prime rate published from time to time in The Wall Street Journal.

13.Set-Off.  To secure the Seller’s obligations under this Agreement, each Seller hereby grants to the Buyer, for a period of one (1) year after the Closing Date, a right of set-off upon and

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against the Promissory Note, any rights of such Seller under this Agreement and any and all amounts, proceeds, money or other property of such Seller at any time held by the Buyer.  On a default by the Seller to this Agreement which is not cured as provided in paragraph 15 of this Agreement, the Buyer is authorized, for a period of one (1) year after the Closing Date, to appropriate, set-off and apply the property for which a right of set-off is provided under this paragraph 13 without notice to the defaulting party.  The limitations on the express grant of set-off hereunder will not limit and will have no effect on any other remedies of the Buyer.

14.Termination.  This Agreement may be terminated and the transactions contemplated hereby may be abandoned by:  (a) mutual consent of the Seller and the Buyer; (b) the Buyer, if the Buyer is not in default and the conditions set forth in paragraph 9 of this Agreement have not been satisfied by the Seller or waived by the Buyer; (c) the Seller, if the Seller is not in default, and the conditions precedent set forth in paragraph 10 of this Agreement have not been satisfied or waived by the Seller; (d) the Buyer, pursuant to paragraph 8.2 of this Agreement; or (e) either party if this Agreement has not closed on or before April 30, 2008.  In the event of termination, written notice thereof will be given to the other party or parties specifying the provision pursuant to which such termination is made.  On termination pursuant to this paragraph 14, this Agreement will become void and have no effect and there will be no liability hereunder on the part of the Buyer or the Seller or any of their respective officers, directors, employees, agents, stockholders or principals.

15.Default.  If a party fails to perform any obligation contained in this Agreement, the party claiming default will serve written notice to the other party specifying the nature of such default and demanding performance.  If such default has not been cured within ten (10) business days after receipt of such default notice, the nondefaulting party will be entitled to exercise all remedies arising at law or in equity by reason of such default, including, without limitation, specific performance of this Agreement or any one or more of the provisions herein contained.

16.Miscellaneous.  It is further agreed as follows:

16.1.Time.  Time is of the essence of this Agreement.

16.2.Notices.  Any notice, demand or communication required or permitted to be given by any provision of this Agreement will be in writing and will be deemed to have been given and received when delivered personally or by telefacsimile to the party designated to receive such notice, or on the date following the day sent by overnight courier, or on the third (3rd) business day after the same is sent by certified mail, postage and charges prepaid, directed to the following addresses or to such other or additional addresses as any party might designate by written notice to the other parties:

If to Buyer:	Apothecary Rx, LLC
	Attn: Mr. Lewis P. Zeidner, President
	5500 Wayzata Boulevard, Suite 210
	Golden Valley, Minnesota 55416
	Fax:     (763) 647-1137

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With a copy to:	Michael Meleen, Esquire
	Commercial Law Group, P.C.
	210 Park Avenue, Suite 700
	Oklahoma City, Oklahoma 73102
	Fax:     (405) 232-5553
To the Seller:	Pendergraft Drugs, Inc.
	Attn: Gary Nichols
	P.O. Box 722580
	Norman, Oklahoma 73070
	Fax:     (405) 310-2532
With a copy to:	Robert F. Morgan, Jr.
	1900 NW Expressway, Suite 450
	Oklahoma City, Oklahoma 73118
	Fax:     (405) 840-5183

16.3.Representations and Warranties.  The respective representations and warranties of the Seller and the Buyer contained herein or in any certificates or other documents delivered prior to or at the Closing Date will not be deemed waived or otherwise affected by any investigation made by any party hereto.  Each and every such representation and warranty will survive the Closing Date and will not be terminated or extinguished for a period of two years after the Closing Date.  This paragraph 16.3 will have no effect on any other obligation of the parties hereto, whether to be performed before or after the Closing Date.

16.4.Cooperation.  Prior to and at all times following the termination of this Agreement the parties agree to execute and deliver, or cause to be executed and delivered, such documents and do, or cause to be done, such other acts and things as might reasonably be requested by any party to this Agreement to assure that the benefits of this Agreement are realized by the parties.

16.5.Press Release.  The Buyer will prepare and issue all press releases relating to this Agreement and the sale of the Business.  The Seller will refer all inquiries concerning any transaction contemplated by this Agreement to the Buyer.

16.6.Headings.  The paragraph headings contained in this Agreement are for reference purposes only and are not intended to affect in any way the meaning or interpretation of this Agreement.

16.7.Entire Agreement.  This Agreement and any document executed in connection herewith on or after the date of this Agreement (the “Other Documents”) constitute the entire agreement between the parties with respect to the subject matter hereof and there are no agreements, understandings, warranties or representations except as set forth herein or in the Other Documents.

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16.8.Assignment.  It is agreed that the parties may not assign such party’s rights nor delegate such party’s duties under this Agreement without the express written consent of the other parties to this Agreement which consent will not be unreasonably denied.  Notwithstanding the foregoing, the Buyer will be permitted to assign this Agreement for all or part of the Assets to a wholly owned subsidiary provided the Buyer remains liable for the performance of this Agreement and executes a guaranty for the Seller financing.  The Seller will be permitted to sell or assign the Seller’s interest in the Financing Documents subject to the Buyer’s defenses contained herein.

16.9.Amendment.  Neither this Agreement, nor any of the provisions hereof can be changed, waived, discharged or terminated, except by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.

16.10.Severability.  If any clause or provision of this Agreement is illegal, invalid or unenforceable under any present or future law, the remainder of this Agreement will not be affected thereby.  It is the intention of the parties that if any such provision is held to be illegal, invalid or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provisions as is possible and to be legal, valid and enforceable.

16.11.Governing Law.  This Agreement will be interpreted, construed and enforced in accordance with the laws of the State of Oklahoma, regardless of any applicable principles of conflicts of law.

16.12.Attorney Fees.  If any party institutes an action or proceeding against any other party relating to the provisions of this Agreement, the party to such action or proceeding which does not prevail will reimburse the prevailing party therein for the reasonable expenses of attorneys’ fees and disbursements incurred by the prevailing party.

16.13.Waiver.  Waiver of performance of any obligation or term contained in this Agreement by any party, or waiver by one party of the other’s default hereunder will not operate as a waiver of performance of any other obligation or term of this Agreement or a future waiver of the same obligation or a waiver of any future default.

16.14.Brokerage.  The Seller represents to the Buyer that the Seller has dealt with no broker in connection herewith.  The Seller agrees to hold the Buyer harmless from any claim for brokerage commissions asserted by any other party as a result of dealings with the Seller.  The Buyer agrees to indemnify and hold the Seller harmless from any claim for brokerage commissions asserted by any party as a result of dealings with the Buyer.

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16.15.Counterpart Execution.  This Agreement may be executed in counterparts, including by telefacsimile, each of which will be deemed an original document but all of which will constitute a single document.

[Signature Pages Follow]

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SIGNATURE PAGE TO PHARMACY PURCHASE AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

PENDERGRAFT DRUGS, INC.,
an Oklahoma corporation
By:	/S/GARY NICHOLS
	Gary Nichols, President
/S/GARY NICHOLS
GARY NICHOLS, individually
(together, the “Seller”)

SIGNATURE PAGE TO PHARMACY PURCHASE AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By	/S/LEWIS P. ZEIDNER
Lewis P. Zeidner, President
(the “Buyer”)

SCHEDULES

Schedule “A”	–	Business
Schedule “2”	–	Excluded Assets
Schedule “6.1”	–	Seller’s Financial Statements
Schedule “6.3”	–	Liens
Schedule “6.4”	–	Contracts
Schedule “6.7”	–	Insurance
Schedule “6.10”	–	Litigation
Schedule “6.11”	–	Certain Employee Plans
Schedule “7”	–	Buyer’s Financial Statements

EX-10.8

EXHIBIT 10.8

GOODWILL PROTECTION AGREEMENT

THIS GOODWILL PROTECTION AGREEMENT is made effective the 26th day of March, 2008, between APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Buyer”) and GARY NICHOLS, an individual (the “Seller”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Pharmacy Purchase Agreement dated effective March 24, 2008, (the “Purchase Agreement”) among the Buyer, the Seller and Pendergraft Drugs, Inc., the Buyer purchased the Seller’s pharmacy business located in Oklahoma City, Oklahoma (the “Business”) for a sum in excess of $550,000.00;

WHEREAS, the Seller has operated the Business for numerous years during which time the Seller has built a strong patronage which is the predicate on which the Seller’s Business is based;

WHEREAS, the Seller has partnered with the owner of Newt’s Discount Pharmacy located at 102 W. Noble Ave., Guthrie, OK 73044 (“ND Pharmacy”) which pharmacy is also being purchased by the Buyer at the same time as the Business; and

WHEREAS, to induce the Buyer to perform the Purchase Agreement and to protect the goodwill purchased by the Buyer in the Business, the Seller has agreed to execute, deliver and perform this Goodwill Protection Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Noncompetition Covenant.  The Seller agrees as follows:

1.1.

For the five (5) year period beginning on the date of this Goodwill Protection Agreement, the Seller agrees that the Seller, the Seller’s affiliates and any person receiving a portion of the Purchase Price under the Purchase Agreement will not undertake any plan, program or effort designed or intended to, directly or indirectly, contract or provide, solicit or offer to prepare, dispense or sell at retail any pharmacy, prescription or over the counter drugs or pharmaceuticals (the “Pharmacy Services”) to any person and the family members of any person, or any entity and the affiliates of any entity, who acquired Pharmacy Services within the past five (5) years from the Business.

1.2.

For the five (5) year period beginning on the date of this Goodwill Protection Agreement, the Seller agrees that the Seller, the Seller’s affiliates and any person receiving a portion of the Purchase Price under the Purchase Agreement will not, directly or indirectly, conduct any Pharmacy Business in Oklahoma County, Oklahoma or Logan County, Oklahoma.

1.3.	For the five (5) year period beginning on the date of this Goodwill Protection Agreement, the Seller agrees that the Seller, the Seller’s parents, subsidiaries, affiliates and shareholders and any person receiving a portion of the Purchase Price under the Purchase Agreement will not, directly or indirectly, conduct any Pharmacy Business within twenty (20) miles of the location of the Business.
1.4.	For the five (5) year period beginning on the date of this Goodwill Protection Agreement, the Seller agrees that the Seller, the Seller’s parents, subsidiaries, affiliates and shareholders and any person receiving a portion of the Purchase Price under the Purchase Agreement will not, directly or indirectly, conduct any Pharmacy Business within twenty (20) miles of the location of the ND Pharmacy.

For purposes of this Goodwill Protection Agreement, the term “Pharmacy Business” means:  owning, managing, operating, controlling, engaging in or being connected with as a partner, investor, stockholder, creditor, guarantor, advisor, employee, independent contractor or consultant, the business of offering, soliciting, conducting or providing Pharmacy Services.  The Seller’s employment with the Buyer will not violate the terms of this Agreement.

2.Separate Covenants.  This Goodwill Protection Agreement will be deemed to consist of a series of separate covenants independent from any provision of the Purchase Agreement.  The Seller expressly agrees that the character, duration and geographical scope of this Goodwill Protection Agreement are reasonable in light of the circumstances as existing on the date of this Goodwill Protection Agreement.  However, should a determination nonetheless be made by a court of competent jurisdiction at a later date that the character, duration or geographical scope of this Goodwill Protection Agreement is unreasonable in light of the circumstances as then existing or existing at the execution of this Goodwill Protection Agreement, then it is the intention and the agreement of the Seller and the Buyer that this Goodwill Protection Agreement be construed by the court and given effect in such a manner as to impose only the restrictions on the conduct of the Seller which are reasonable in light of the circumstances as then existing and as are necessary to assure the Buyer of the intended benefit of this Goodwill Protection Agreement.  If, in any judicial proceeding, a court refuses to enforce all of the separate covenants deemed included herein because, taken together such covenants are more extensive than necessary to assure the Buyer of the intended benefit of this Goodwill Protection Agreement, it is expressly understood and agreed between the parties that those covenants not to be enforced in such proceeding will, for the purpose of such proceeding, be deemed eliminated from the provisions hereof.

3.Periodic Payments.  As additional consideration for the Seller’s execution, delivery and performance of this Goodwill Protection Agreement, the Buyer agrees to pay to the Seller sixty (60) monthly payments each in the amount of $916.66.  The monthly payments will commence on May 1, 2008, and be made on the 1st day of each month thereafter through and including April 1, 2013.  Each such payment will be sent by regular mail to the addresses provided under Paragraph 6.1 of this Goodwill Protection Agreement.  The Buyer will be in default if (i) a monthly payment is not delivered to the Seller within five (5) days of its due date and (ii) such payment has not been delivered ten (10) days after the Buyer’s receipt of notice of non-payment.

4.Default by Seller.  If the Seller fails to perform any obligation contained in this Goodwill Protection Agreement, the Purchase Agreement or any instrument entered into in connection

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therewith, the Buyer will serve written notice to the Seller specifying the nature of such default and demanding performance.  If such default has not been cured within five (5) business days after receipt of such default notice, the Buyer will be entitled to demand specific performance, suspend performance of any obligation under this Goodwill Protection Agreement, the Purchase Agreement or any instrument entered into in connection therewith, or exercise all remedies available at law or in equity.  Given the nature of the Pharmacy Business, the parties acknowledge and agree that the goodwill sold by the Seller and purchased by the Buyer cannot be protected if the provisions of this Goodwill Protection Agreement are not strictly enforced.  Accordingly, the parties acknowledge and agree that if there is a breach by the Seller of the provisions of this Goodwill Protection Agreement, money damages alone will not be adequate and the Buyer will be entitled to an injunction restraining the Seller from violating the provisions of this Goodwill Protection Agreement.  In addition to the foregoing and any other remedies available to the Buyer, at law or in equity, in the event the Seller is in default and the Buyer is diligently pursuing a judicial remedy, the periods specified in paragraphs 1.1, 1.2 and 1.3 will be tolled until the conclusion of the judicial action (the “Tolling Period”) and such periods will be automatically extended by the number of days elapsed during the Tolling Period.  The remedies provided by this Goodwill Protection Agreement are cumulative and will not exclude any other remedy to which a party might be entitled under this Goodwill Protection Agreement.  In the event, a party elects to selectively and successively enforce such party’s rights under this Goodwill Protection Agreement, such action will not be deemed a waiver or discharge of any other remedy.

5.Default by Buyer.  If the Buyer defaults in the payments under this Agreement or the Promissory Note delivered to the Seller pursuant to the Purchase Agreement, then (i) the Seller’s obligations under this Agreement will immediately terminate, (ii) the remaining payments due under paragraph 3 will be accelerated and will be immediately due and payable, and (iii) the Seller may exercise all remedies available at law or in equity to collect the remaining balance due.

6.Miscellaneous.  It is further agreed as follows:

6.1. Notices.  Except as expressly provided herein, any notice, demand or communication required or permitted to be given by any provision of this Goodwill Protection Agreement will be in writing and will be deemed to have been given and received when delivered personally or by telefacsimile, or on the date following the day sent by overnight courier, or on the third (3rd) business day after the same is sent by certified mail, postage and charges prepaid, directed to the following addresses or to such other or additional addresses as any party might designate by written notice to the other parties:

To the Buyer:	ApothecaryRx, LLC
	C/o Mr. Lewis P. Zeidner, President
	5500 Wayzata Boulevard, Suite 210
	Golden Valley, Minnesota 55416
	Fax:	(763) 647-1137

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With a copy to:	Michael Meleen, Esquire
	Commercial Law Group, P.C.
	210 Park Avenue, Suite 700
	Oklahoma City, Oklahoma 73102
	Fax:	(405) 232-5553

To the Seller:	Gary Nichols
	1900 N. Classen Ave.
	Oklahoma City, Oklahoma 73106
	Fax:	(405) 310-2532

With a copy to:	Robert F. Morgan, Jr.
	1900 NW Expressway, Suite 450
	Oklahoma City, Oklahoma 73118
	Fax:	(405) 840-5183

6.2.	Severability. If any clause or provision of this Goodwill Protection Agreement is illegal, invalid or unenforceable under any present or future law, the remainder of this Goodwill Protection Agreement will not be affected thereby. It is the intention of the parties that if any such provision is held to be illegal, invalid or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provisions as is possible and to be legal, valid and enforceable.
6.3.	Entire Agreement. This Goodwill Protection Agreement, together with the Purchase Agreement and the other instruments executed in connection therewith, constitute the entire agreement between the parties with respect to the subject matter hereof and there are no agreements, understandings, warranties or representations except as set forth herein. Neither this Goodwill Protection Agreement nor any of the provisions hereof can be changed, waived, discharged or terminated except by an instrument signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.
6.4.	Attorneys’ Fees. If any party institutes an action or proceeding against any other party relating to the provisions of this Goodwill Protection Agreement, the party to such action or proceeding which does not prevail will reimburse the prevailing party therein for the reasonable expenses of attorneys’ fees and disbursements incurred by the prevailing party.
6.5.	Waiver. Waiver of performance of any obligation or term contained in this Goodwill Protection Agreement by any party, or waiver by one party of the other’s default hereunder will not operate as a waiver of performance of any other obligation or term of this Goodwill Protection Agreement or a future waiver of the same obligation or a waiver of any future default.
6.6.	Assignment. The Buyer may assign all or any portion of its rights hereunder to: (a) any other entity or person which at any time controls or is under common control with the Buyer, or (b) any entity or person which acquires all or any portion of the Business.

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6.7. Governing Law.  This Goodwill Protection Agreement will be interpreted, construed and enforced in accordance with the laws of the State of Oklahoma, regardless of any applicable principles of conflicts of law.

[Signature Pages Follow]

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SIGNATURE PAGE TO GOODWILL PROTECTION AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

/S/GARY NICHIOLS

GARY NICHOLS, individually

(the “Seller”)

SIGNATURE PAGE TO GOODWILL PROTECTION AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By	/S/LEWIS P. ZEIDNER
	Lewis P. Zeidner, President

EX-10.9

EXHIBIT 10.9

TRANSITION AGREEMENT

This TRANSITION AGREEMENT (the “Agreement”) is made effective the 26th day of March, 2008, among APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Buyer”), PENDERGRAFT DRUGS, INC., an Oklahoma corporation (the “Company”) and GARY NICHOLS, an individual (“Nichols” and together with the Company, the “Seller”).

WHEREAS, pursuant to the Pharmacy Purchase Agreement dated effective March 24, 2008, (the “Purchase Agreement”) between the Buyer and the Seller, the Buyer purchased the Seller’s pharmacy business in Oklahoma City, Oklahoma, known as “Professional Discount Pharmacy” (the “Business”) effective on the date hereof; and

WHEREAS, the Seller and the Buyer desire to foster a smooth transition of the Business from the Seller to the Buyer and, in the interests of facilitating such transition, the Buyer desires to use the Seller’s Licenses (as hereinafter defined) to operate the Business for a short period of time after the Closing Date, and the Seller is willing to allow the Buyer to use the Seller’s Licenses to operate the Business for a short period of time after the Closing Date, pursuant to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, and in consideration of the execution and performance of the Purchase Agreement, the parties hereto agree as follows:

1.             Definitions.  Capitalized terms used and not defined herein shall have the meanings set forth in the Purchase Agreement.

2.             Transition Services.  Commencing at the Time of Transfer and continuing until the termination of this Agreement, the Buyer shall be entitled to utilize, in connection with its operation of the Business and in strict accordance with the terms of this Agreement, the following permits, licenses, registrations or certifications of the Seller related to the Business (collectively, the “Licenses”):

2.1.Oklahoma Pharmacy License;

2.2.Oklahoma Narcotics Registration;

2.3.Drug Enforcement Agency Registration;

2.4.National Council for Prescription Drug Programs Provider Number; and

2.5.Credit Card Services.

To effect the foregoing authorization, on the Closing Date, the Seller will execute the Limited Power of Attorney in the form attached at Exhibit “A” authorizing the Buyer to act on the Seller’s behalf in connection with the Licenses, and other documents, if any, as may be required or requested by a government agency, including, without limitation, powers of attorney.  In

addition, during the term of this Agreement, the Seller agrees to keep open the bank accounts used for payments from insurance companies, Medicare, Medicaid and credit card services (whether one or more, the “Accounts”) and furnish to the Buyer all information regarding the Accounts and payments by third parties to the Accounts so that the Buyer may perform the accounting described in paragraph 5 below.

3.             Termination of Right to Use Licenses.  The Buyer’s right to use the Licenses will terminate upon the written notice of either party upon the earlier of:  (a) the issuance to the Buyer of the same types of permits, licenses, registrations or certifications as the Licenses (the “Required Licenses”); or (b) sixty (60) days from the Closing Date; provided, in the event that the Buyer has not obtained the Required Licenses within the required time period, the term of this Agreement and the Power of Attorney will be extended by twenty (20) days if (i) the Buyer has not breached and is not in default of the terms of this Agreement, the Purchase Agreement or any document executed in connection therewith, and (ii) the Buyer is actively seeking and using best efforts to obtain the Required Licenses as promptly as possible.

4.             Will Call Prescriptions.  The company performing the Inventory will account for all orders at the Business for prescriptions placed but not paid for prior to the Time of Transfer (“Will Call Prescriptions”) and determine the cash amount owed by customers for Will Call Prescriptions (the “Will Call Receivables”).  On the Closing Date, the Buyer will pay the Seller the amount of the Will Call Receivables.  All Will Call Receivables will be the property of the Buyer.  All other receivables from third parties in connection with the Will Call Prescriptions will be the property of the Seller subject to paragraph 5 of this Agreement.

5.             Third Party Receivables.  All accounts receivable generated prior to the Time of Transfer other than the Will Call Receivables (the “Seller Receivables”), will be the property of the Seller.  The Buyer will collect the Seller Receivables on behalf of the Seller and furnish an accounting of all Seller Receivables (reconciled to the transaction generating such Seller Receivables) to the Seller on a monthly basis.  The Buyer will pay the Seller all collected Seller Receivables on a weekly basis.  The Buyer will conduct the foregoing collection, accounting and reconciliation at the Buyer’s expense.  All accounts receivable generated after the Time of Transfer will be the property of the Buyer and the Seller agrees to promptly deliver to the Buyer any such receivables delivered to the Seller.  It is anticipated that all mail addressed to the Seller will be forwarded to the Buyer and that for the first thirty (30) days after the Closing Date, the Buyer will simply forward to the Seller all checks received as payment of the Seller Receivables on a weekly basis.

6.             Consulting.  During the term of this Agreement, Nichols agrees to provide information reasonably requested by the Buyer regarding the Seller’s and the Business’s operations, arrangements, policies and similar matters, regardless of whether Nichols is employed by the Buyer or the Buyer’s agents or affiliates.

7.             Indemnification.  The Buyer shall indemnify and hold harmless the Seller and the Seller’s partners, employees, agents and affiliated entities (the “Indemnified Parties”) for any loss, damage, claim, liability, debt, obligation or expense (including reasonable legal fees and expenses of litigation), whether or not actually incurred or paid that the Indemnified Parties may suffer, sustain or become subject to, as a result of:  (a) any actions or omissions of the Buyer or any employees, agents, representatives or other personnel of the Buyer related to the Business

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and the Licenses occurring after the Closing Date; or (b) the parties entering into this Agreement or the Buyer’s use of the Licenses.

8.             Entire Agreement.  This Agreement, the Purchase Agreement and the documents executed in connection therewith constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior communications, representations, agreements and understandings between the parties hereto, whether oral or written.

9.             Assignment.  This Agreement, and all rights and obligations hereunder, shall not be assignable by any party in whole or in part.

10.           Amendment.  This Agreement may be amended only by written agreement duly executed by representatives of both parties hereto.

11.           Applicable Law.  This Agreement shall be construed in accordance with the laws of the state of Oklahoma, disregarding conflicts of laws principles which may require the application of the laws of another jurisdiction.

12.           Audit Rights.  The Seller shall have the right, at all times during the term hereof, to monitor, review and audit at the Seller’s expense the accounts, books, records, documents and procedures relating to the Buyer’s performance under this Agreement and use of the Licenses.

13.           No Third Party Rights.  This Agreement is not intended and shall not be construed to create any rights in any parties other than the Seller and the Buyer and no other person shall assert any rights as a third party beneficiary hereunder.

14.           Waivers.  Any waiver of rights hereunder must be set forth in writing.  A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive a party’s rights at any time to enforce strict compliance thereafter with every term and condition of this Agreement.

15.           Independent Contractor.  By executing this Agreement, the parties intend to create an independent contractor relationship, and nothing contained in this Agreement shall be construed to make either the Seller or the Buyer a partner, joint venturer, principal, agent or employee of the other, and neither party shall have any right, power or authority, express or implied, to bind the other.  Notwithstanding the foregoing, this Agreement does not amend or affect the terms of any other agreements among the parties that may expressly create any of the foregoing relationships.

16.           Severability; Partial Invalidity.  If any provision of this Agreement or portion thereof is held to be unenforceable or invalid by any court of competent jurisdiction, such provision or portion thereof shall be deemed amended to conform to applicable law so as to be valid and enforceable, or if the provision or portion thereof cannot be so amended without materially altering the parties’ intent, the provision or portion thereof shall be stricken, and the validity and enforceability of the remainder of this Agreement shall not be affected thereby.

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17.           Notices.  All notices permitted or required hereunder shall be given in the manner specified in the Purchase Agreement.

[Signature Pages Follow]

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SIGNATURE PAGE TO TRANSITION AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

PENDERGRAFT DRUGS, INC.,
an Oklahoma corporation
By	/S/GARY NICHOLS
Gary Nichols, President
/S/GARY NICHOLS
GARY NICHOLS, individually
(together, the “Seller”)

SIGNATURE PAGE TO TRANSITION AGREEMENT

IN WITNESS WHEREOF, this Agreement has been executed by the parties effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By	/S/LEWIS P. ZEIDNER
Lewis P. Zeidner, President
(the “Buyer”)

EXHIBIT “A”

LIMITED POWER OF ATTORNEY

This LIMITED POWER OF ATTORNEY (the “Power”) is made effective the        day of                       , 2008, among PENDERGRAFT DRUGS, INC., an Oklahoma corporation (the “Company”), GARY NICHOLS, an individual (“Nichols” and together with the Company, the “Principal”), and APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Agent”).

WHEREAS, pursuant to the Pharmacy Purchase Agreement dated effective March     , 2008, (the “Purchase Agreement”) between the Principal and the Agent, the Agent purchased the Principal’s pharmacy business known as “Professional Discount Pharmacy” located at 1900 N. Classen Blvd., Oklahoma City, OK 73106 (the “Business”) effective on the date hereof; and

WHEREAS, pursuant to the Transition Agreement between the Principal and the Agent of even date herewith (the “Transition Agreement”), the Principal agreed to allow the Agent to use the Principal’s permits, licenses, registrations and certifications described at Exhibit “A” attached as a part hereof (the “Licenses”) in the operation of the Business.

NOW THEREFORE, the Principal hereby nominates, constitutes and appoints the Agent as the Principal’s attorney-in-fact to take any and all actions in the Principal’s name, place and stead, to the extent permitted by law, to use the Licenses in connection with the operation of the Business as follows:

1.             Power.  The Principal hereby irrevocably gives and grants to the Agent the full power and authority to use the Licenses and to perform any actions necessary for the operation of the Business.  This Limited Power of Attorney is a present appointment of the Agent, effective immediately.

2.             Acceptance.  The Agent hereby accepts the Principal’s appointment as the Principal’s attorney-in-fact and agrees to be bound by the terms and provisions of this Agreement.

3.             Termination.  This Agreement is intended to grant the Agent a power of attorney which will be irrevocable and binding on the Principal until terminated in accordance with paragraph 3 of the Transition Agreement.  The Agent hereby agrees to execute and deliver, on reasonable request by the Principal, any documents necessary or helpful in terminating the Agent’s appointment as the Principal’s attorney-in-fact.

[Signature Pages Follow]

EX-10.10

EXHIBIT 10.10

ASSIGNMENT OF LEASE

THIS ASSIGNMENT is made effective the 26^th day of March, 2008 (the “Effective Date”), by PENDERGRAFT DRUGS, INC., an Oklahoma corporation (the “Assignor”) in favor of APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Assignee”).

W I T N E S S E T H :

WHEREAS, the Assignor is the tenant under that certain lease dated December 8, 2005, between American Fidelity Property Company, an Oklahoma corporation, as lessor (the “Landlord”) and the Assignor, as tenant, which is attached to this Assignment at Exhibit “A” (collectively the “Lease Agreement”);

WHEREAS, the Assignor desires to assign to the Assignee all of the Assignor’s right, title and interest in and to the Lease Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.             Assignor’s Warranties.  The Assignor represents and warrants that the Assignor has heretofore duly executed and delivered the Lease Agreement and that there exist no other agreements, amendments or understandings to which the Assignor is a party relating to the Lease Agreement.  The Assignor further represents and warrants that the rent is paid through March 31, 2008, and the Assignor has complied to the date hereof with all covenants on the Assignor’s part in the Lease Agreement, including, without limitation, the payment of rents.

2.             Assignment.  The Assignor hereby assigns and transfers to the Assignee and the Assignee’s successors and assigns all of the Assignor’s right, title and interest in and to the Lease Agreement, together with all of the benefits thereunder.

3.             Assumption.  The Assignor hereby delegates and the Assignee hereby assumes and agrees to perform all of the Assignor’s obligations under the Lease Agreement effective the date hereof.

[Signature Pages to Follow]

SIGNATURE PAGE

(Assignment of Lease)

IN WITNESS WHEREOF, the parties have executed this Assignment effective the date first above written.

PENDERGRAFT DRUGS, INC.,
an Oklahoma corporation
By:	/S/GARY NICHOLS
Gary Nichols, President
(the “Assignor”)

SIGNATURE PAGE

(Assignment of Lease)

IN WITNESS WHEREOF, the parties have executed this Assignment effective the date first above written.

APOTHECARYRX, LLC, an Oklahoma limited liability company
By:	/S/LEWIS P. ZEIDNER
Lewis P. Zeidner, President
(the “Assignee”)

SIGNATURE PAGE

(Assignment of Lease)

The Landlord hereby consents to this Assignment of Lease and represents and warrants to the Assignee that the Assignor is not in default under the Lease Agreement, the Lease Agreement is in full force and effect, there exist no other agreements, amendments or understandings to which the Assignor or the Landlord is a party relating to the Lease Agreement, and the rent under the Lease Agreement is paid through March 31, 2008.

AMERICAN FIDELITY PROPERTY COMPANY,
an Oklahoma corporation

By:

Name:

Title:

(“Landlord”)

EX-10.11

EXHIBIT 10.11

PROMISSORY NOTE

$220,000.00	Oklahoma City, Oklahoma
	March 26, 2008

FOR VALUE RECEIVED, APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Borrower”), promises to pay to the order of PENDERGRAFT DRUGS, INC., an Oklahoma corporation (the “Lender”), at 1900 North Classen, Oklahoma City, Oklahoma 73106, or at such other place as may be designated in writing by the holder of this Note, the principal sum of Two Hundred Twenty Thousand Dollars ($220,000.00), together with interest thereon at the rate hereafter specified, payable as follows:

The unpaid principal balance of this Note will bear interest from the date of this Note until payment in full at a per annum rate equal to six percent (6.0%).  All interest will be computed as a per diem charge for the actual number of days elapsed on the basis of a year consisting of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be.

Provided no uncured default has occurred under this Note, the unpaid principal balance of this Note plus accrued interest thereon will be paid by the Borrower paying to the Lender twelve (12) blended quarterly installments of principal and interest equal to Twenty Thousand One Hundred Sixty Nine and 60/100 Dollars ($20,169.60), commencing on June 26, 2008, and on the twenty sixth (26^th) day of each successive September, December, March and June thereafter through March 26, 2011 (the “Maturity Date”).  In the event of an adjustment, prepayment or set-off against the unpaid principal balance of this Note, the quarterly payment will be recalculated to the amount which would fully amortize the unpaid principal balance of this Note on such date, together with accrued interest thereon, over a term ending on the Maturity Date.  Notwithstanding anything to the contrary, the entire unpaid principal balance of this Note and all accrued and unpaid interest will be due and payable on the Maturity Date.

Each payment will be applied first to the payment of interest on the unpaid principal and the balance, if any, will be applied to the unpaid principal balance of this Note.  The Borrower will have the right to prepay this Note in whole or in part at any time without premium or penalty, but with interest on the unpaid principal balance accrued to the date of prepayment.

The Borrower and the Lender also agree that the Borrower’s obligations under this Note may be set-off against any amounts owing to the Borrower under that certain Pharmacy Purchase Agreement (the “Agreement”) dated March 24, 2008, among the Borrower, the Lender and affiliates of the Lender, subject to the limitations set forth in the Agreement.

The Borrower agrees that if, and as often as, this Note is placed in the hands of an attorney for collection or to defend or enforce any of the holder’s rights hereunder or under any instrument securing payment of the same, the Borrower will pay to such holder its reasonable attorneys’ fees and all expenses incurred in connection therewith.  This Note is to be construed according to the laws of the State of Oklahoma.

This Note is issued subject to the terms of the Agreement.  Payment of this Note is secured by the Financing Documents as more fully described in the Agreement.  If the breach of any provision of this Note is not cured within fifteen (15) days after written notice by the holder to the Borrower, then on written notice by the holder to the Borrower, the entire unpaid indebtedness evidenced by this Note will become due, payable and collectible then or thereafter as the holder may elect, regardless of the date of maturity of this Note, and, at the option of Lender, and to the extent permitted by law, interest shall be payable on the outstanding principal under this note at a per annum rate equal to fifteen (15%) percent per annum calculated from the date of default until all amounts payable under this note are paid in full.  Failure by the holder to exercise such option will not constitute a waiver of the right to exercise the same in the event of any subsequent default.

The makers, endorsers, sureties, guarantors and all other persons who may become liable for all or any part of this Note severally waive presentment for payment and protest.  The foregoing parties consent to any extension of time (whether one or more) of payment hereof, the modification (whether one or more) of payment hereof, release or substitution of all or part of the security for the payment hereof or release of any party liable for payment of this Note.  Any such extension or release may be made without notice to any such party and without discharging such party’s liability hereunder.

Except as otherwise defined herein, all terms defined or referenced in the Agreement will have the same meanings herein as therein.

IN WITNESS WHEREOF, the Borrower has executed this instrument effective the date first above written.

APOTHECARYRX, LLC,
an Oklahoma limited liability company
By:	/s/ LEWIS P. ZEIDNER
	Lewis P. Zeidner, President
(the “Borrower”)

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