Related Party Transactions and Outside Related Director Information

Accredo Health, Incorporated (Retired) (ACDO.X)

10/15/2004 Proxy Information

Pursuant to a lease agreement dated January 1, 2001, the CompanyŐs subsidiary, HHS, leases approximately 36,000 square feet of administrative and other space located at 6820 Charlotte Pike, Nashville, Tennessee from the mother of Kyle J. Callahan (who is currently an executive officer of the Company and HHS). The lease contains an initial term of 5 years and a 5-year renewal option. The initial 5-year term expires December 31, 2005. During fiscal 2004, HHS paid Mr. CallahanŐs mother $540,297 under this lease. A predecessor lease with Mr. CallahanŐs mother dated September 1, 1994 and amended on May 1, 1997 and May 25, 1999 was in place when the Company purchased HHS in June 1997. Prior to entering into the current lease, the Company conducted a search for suitable rental property in Nashville and a survey of rental rates for comparable space. The Company believes that the foregoing lease was obtained on terms no less favorable to the Company than could be obtained from unaffiliated third parties.

Payment of Escrowed Funds

In June 1997, the Company purchased all of the outstanding shares of common stock of HHS. The mother of Kyle J. Callahan (who is currently an executive officer of the Company and HHS) was a significant stockholder of HHS. Part of the consideration received by the selling stockholders was placed in an escrow account to satisfy certain accounts payable of HHS that had not been resolved at closing. The bulk of the escrowed funds have been paid to third party payors who claimed the money and the remaining balance of approximately $35,000 was disbursed to Mr. CallahanŐs mother and the other selling stockholder in early calendar year 2004.

Indemnification of Directors and Officers

Commencing April 8, 2003, the Company and certain of its officers were named as defendants in several substantially similar putative class action lawsuits filed in the United States District Court for the Western District of Tennessee, Memphis Division. The lawsuits have been consolidated and a consolidated complaint was filed on September 15, 2003. The Company, David D. Stevens and Joel Kimbrough, were named as Defendants in the consolidated complaint. The putative class representatives seek to represent a class of individuals and entities who supposedly suffered damages from the alleged violations of the securities laws.

In addition, two purported derivative lawsuits were filed in the Circuit Court of Shelby County, Tennessee for the Thirtieth Judicial District at Memphis. These actions were consolidated and a Consolidated Derivative Complaint was filed on July 28, 2003. The derivative action names some of our officers, most of our directors and a former director as defendants: David D. Stevens, John R. Grow, Kyle J. Callahan, Kevin L. Roberg, Kenneth R. Masterson, Kenneth J. Melkus, Dick R. Gourley, Nancy-Ann DeParle, Joel R. Kimbrough, Thomas W. Bell, Jr., and Patrick J. Welsh. The derivative lawsuit alleges that the defendants breached fiduciary duties owed to the Company by engaging in violations of the securities laws. On behalf of the Company, the derivative complaint seeks compensatory damages from the defendants and the disgorgement of profits, benefits and other compensation received by the defendants. Defendants have filed a Motion to Dismiss the Consolidated Derivative Complaint.

During 2004, the Company incurred legal fees and expenses in the defense of the lawsuits described above. The defense includes costs approved by the Board of Directors for the indemnification of the defendants who were named as a defendant in his or her officer/director capacity and in his or her individual capacity, and a former director of the Company who was also named as a defendant.

The Company has agreed to indemnify and hold harmless each present and former director and officer of the Company against any costs or expenses (including attorneysŐ fees), judgments, fines, losses, claims, damages, liabilities or amounts paid in settlement incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, to the fullest extent that the Company would have been permitted under Delaware law and its Certificate of Incorporation or By-Laws.

Section 145 of Chapter 1 of the Delaware General Corporation Law, Section 8.1, Article VIII of the CompanyŐs Certificate of Incorporation, and Article VI of the CompanyŐs By-Laws contain provisions for indemnification of officers and directors of the Company. The indemnification provisions in the Certificate of Incorporation require the Company to indemnify the CompanyŐs officers and directors to the full extent permitted by Delaware law. Each such person will be indemnified in any proceeding provided that such personŐs acts or omissions did not involve intentional misconduct, fraud or knowing violation of law or the payment of dividends in violation of applicable law. Indemnification would cover expenses, including attorneysŐ fees, judgments, fines and amounts paid in settlement.

The CompanyŐs Certificate of Incorporation also provides that the CompanyŐs Board of Directors may cause the Company to purchase and maintain insurance on behalf of any present or past director or officer insuring against any liability asserted against such person incurred in the capacity of director or officer or arising out of such status, whether or not the Company would have the power to indemnify such person. The Company has obtained and maintains such insurance.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.

10/22/2003 Proxy Information

No related party transactions or special relationships reported for this company. Director relationships marked "Outside Related" at this firm will most often be former executives of the company. Additional information regarding these relationships will be added during our regular updates.