{"id":42667,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/pharmacy-supply-and-services-agreement-rite-aid-corp-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"pharmacy-supply-and-services-agreement-rite-aid-corp-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/pharmacy-supply-and-services-agreement-rite-aid-corp-and.html","title":{"rendered":"Pharmacy Supply and Services Agreement &#8211; Rite Aid Corp. and Drugstore.com Inc."},"content":{"rendered":"<pre>                                                                                \n\n                     PHARMACY SUPPLY AND SERVICES AGREEMENT\n\n     This PHARMACY SUPPLY AND SERVICES AGREEMENT (together with the schedules\nhereto, this \"Agreement\"), dated as of  June 17, 1999, is entered into by and\n              ---------                                                      \nbetween Rite Aid Corporation, a Delaware corporation (\"Rite Aid\") and\n                                                       --------      \ndrugstore.com, inc., a Delaware corporation (\"drugstore.com\").  Certain terms\n                                              -------------                  \ncapitalized herein and not defined herein shall have the meanings given to such\nterms in the Main Agreement of even date herewith (the \"Main Agreement\") entered\n                                                        --------------          \ninto by and between Rite Aid and drugstore.com.\n\n     In consideration of the agreements and covenants set forth herein, and\nintending to be legally bound thereby. the parties hereto agree as follows:\n\n \n                                                                               2\n\n    SECTION 1.  EFFECTIVE TIME; TERMINATION    This Agreement shall only become\n                ---------------------------                                    \neffective upon the consummation of the purchase of Series E Preferred Stock of\ndrugstore.com by Rite Aid and General Nutrition Companies, Inc., through its\nwholly owned subsidiary General Nutrition Investment Company (\"GNC\") pursuant to\nthe Series E Preferred Stock Purchase Agreement of even date herewith entered\ninto by and among Rite Aid, drugstore.com and GNC  (such time, the \"Effective\n                                                                    ---------\nTime\"); provided, however, that (x) drugstore.com shall have no obligation to\n----    --------  -------                                                    \npurchase, and Rite Aid shall have no obligation to supply, drugstore.com's\nrequirements of Pharmaceutical Products pursuant to Section 2 hereof and (y)\nRite Aid shall have no obligation to provide Pharmacy Services (as defined in\nSection 3 hereof) to drugstore.com through the Rite Aid Mail-Order Pharmacy (as\ndefined in Section 3 hereof), if performance of such obligations by\ndrugstore.com or Rite Aid, as applicable, would violate or otherwise conflict\nwith any agreement to which drugstore.com is a party, until such time as the\nperformance of such obligations would no longer violate or otherwise conflict\nwith any such agreement.  This Agreement shall automatically terminate, and\nbecome void and of no further effect, concurrently with the termination of the\nPurchase Agreement pursuant to Section 7.16 thereof.  This Agreement shall\ncontinue in effect after the Effective Time until such time as the Main\nAgreement is terminated for any reason, at which time this Agreement shall also\nbe terminated, subject to Section 10.7 hereof.\n\n    SECTION 2.  PHARMACY SUPPLY    From and after the Effective Time, and except\n                ---------------                                                 \nas provided in Section 2.1 hereof, Rite Aid agrees to sell, and drugstore.com\nagrees to buy, all of drugstore.com's requirements of Pharmaceutical Products\nnecessary to fill orders of Pharmaceutical Products placed by customers of\ndrugstore.com on the drugstore.com Site, subject to and in accordance with the\nfollowing terms of this Section 2:\n\n \n                                                                               3\n\n                      2.1   Alternative Sourcing.\n                            --------------------       \n\n          (a)  In the event drugstore.com requires a Pharmaceutical Product that\nis not regularly stocked by Rite Aid in its distribution centers or made\navailable through its wholesaler, Rite Aid shall not be required to supply such\nPharmaceutical Product and drugstore.com shall have the right to obtain such\nPharmaceutical Product from any other source; provided, however, that if Rite\n                                              --------  -------              \nAid subsequently commences to stock such Pharmaceutical Product in its\ndistribution centers, drugstore.com may, but shall not be obligated to,\nthereafter obtain such Pharmaceutical Product from Rite Aid in accordance with\nthis Section 2.\n\n          (b)  In the event Rite Aid (or its wholesaler) consistently fails to\ndeliver substantial portions of orders for Pharmaceutical Products to\ndrugstore.com in a timely manner, pursuant to Section 2.3 hereof, drugstore.com\nshall be relieved of its obligations to obtain its requirements for\nPharmaceutical Products from Rite Aid.\n \n          (c)  In the event drugstore.com receives a written offer (solicited or\nunsolicited), subject only to acceptance by drugstore.com or its designee, from\na Third Party generally engaged in the business of wholesaling Pharmaceutical\nProducts throughout the United States or in a significant region of the United\nStates, to provide it with substantially all of its requirements for\nPharmaceutical Products containing terms with respect to price, timing of\ndelivery, timing and terms of payment and product availability which, in the\naggregate, are more favorable to drugstore.com than the terms provided by Rite\nAid hereunder (an \"Offer\"), drugstore.com shall notify Rite Aid in writing of\n                   -----                                                     \nits receipt of such Offer (such notice, the \"Notice\").  The Notice shall be\n                                             ------                        \naccompanied by the Offer and a written designation of Rite Aid as an authorized\nparty to accept such Offer.  If Rite Aid does not, within 14 business days of\nits receipt of the Notice, (i)  agree to match, for the term proposed in the\nOffer (the \"Offer Period\"), the terms of the Offer, (ii) enter into an agreement\n            ------------                                                        \nwith the Third Party making the Offer to purchase Pharmaceutical Products from\nsuch Third Party on the terms specified in such Offer, including, without\nlimitation, the Offer Period or (iii) agree to modify, for the Offer Period, the\nterms of this Section 2 so that they are at least as favorable to drugstore.com,\nin the aggregate, as those in the Offer, then drugstore.com shall be relieved of\nits obligations to obtain its requirements for Pharmaceutical Products from Rite\nAid; provided, however, that the failure by Rite Aid \n     --------  -------                                                          \n\n \n                                                                               4\n\n\nto take any of such actions shall in no event be deemed to constitute a breach\nby Rite Aid of this Agreement. If Rite Aid takes any of the actions specified in\nclauses (i)-(iii) of the preceding sentence, then drugstore.com shall remain\nobligated to purchase all of its requirements for Pharmaceutical Products from\nRite Aid on the terms of the Offer or, if applicable, of this Section 2 as\nmodified, for the Offer Period and, after the expiration of the Offer Period,\nupon the terms of this Section 2.\n\n\n\n          (d)  drugstore.com will not in any event be deemed to be in violation\nof this Agreement if it obtains Pharmaceutical Products for a specific order\nfrom an alternate source as a result of Rite Aid's failure to fill such order in\naccordance with the terms of this Section 2.\n\n    2.2   Pricing and Other Terms.        Rite Aid will sell branded and generic\n          -----------------------                                               \nPharmaceutical Products to drugstore.com at the prices set forth on Schedule\n                                                                    --------\n2.2.  Except as set forth on Schedule 2.2, drugstore.com will also be afforded\n---                          ------------                                     \nthe same non-price terms as those received from time to time by Rite Aid from\nits suppliers with respect to Rite Aid's purchase of  branded Pharmaceutical\nProducts.\n\n               2.3   Placement and Delivery of Orders.\n                     --------------------------------       \n\n          (a)  With respect to branded Pharmaceutical Products, Rite Aid will\naccept purchase orders from drugstore.com and transmit such orders to its\nwholesaler. Rite Aid will instruct the wholesaler to deliver such Pharmaceutical\nProducts to drugstore.com at the place designated for delivery by drugstore.com.\nSuch orders will be processed by Rite Aid in the normal course and without\ndiscrimination as between drugstore.com and Rite Aid.\n\n          (b)  With respect to generic Pharmaceutical Products,  Rite Aid will\naccept purchase orders from drugstore.com and deliver the Pharmaceutical\nProducts ordered to drugstore.com at the place designated for delivery by\ndrugstore.com.  At drugstore.com's option, it may elect to designate a Rite Aid\ndistribution center as the delivery point for such generic Pharmaceutical\nProducts, in which case Rite Aid shall have no delivery obligation other than to\nmake such products available for pick up at the Rite Aid distribution center\nduring normal business hours.  Such orders will be processed by Rite Aid in the\nnormal course and without discrimination as between drugstore.com and Rite Aid\nstores and will be delivered without discrimination as between drugstore.com and\n\n \n                                                                               5\n\nRite Aid stores of comparable volume, or if Rite Aid at any time has no stores\nof comparable volume, on a schedule sufficient for drugstore.com to operate its\nbusiness at the volume at which it is then operating.\n\n          (c)  If any Rite Aid wholesaler fails to meet the product supply and\ndelivery requirements of its agreement with Rite Aid, Rite Aid will use\ncommercially reasonable efforts to correct or require such wholesaler to correct\nsuch wholesaler's performance failures as soon as practicable, including by\nenforcing against such wholesaler all available penalties, fees, discounts or\nother charges or benefits (the \"Wholesaler Penalties\") as set forth in such\n                                --------------------                       \nagreement and agreed to by the wholesaler and Rite Aid.  Upon collection of any\nsuch Wholesaler Penalties, Rite Aid shall immediately pass to drugstore.com its\npro rata share thereof without deducting any amounts.\n\n                  2.4   Billing and Payment for Orders.\n                        ------------------------------       \n\n          (a)  With respect to orders placed by drugstore.com for branded\nPharmaceutical Products, Rite Aid shall invoice drugstore.com at the time of\nshipment.  Invoices shall be due and payable by drugstore.com to Rite Aid on the\nfifth day of the month following the month in which such shipment was made.  If\nsuch payment date falls on a weekend or on any weekday on which banks are\nclosed, payment shall be due on the business day immediately following such\npayment date.\n\n          (b)  With respect to orders placed by drugstore.com for generic\nPharmaceutical Products, Rite Aid shall invoice drugstore.com at the time of\nshipment. Invoices shall be due and payable by drugstore.com to Rite Aid on the\nfifteenth day of the month following the month in which such shipment was made.\nIf such payment date falls on a weekend or on any weekday on which banks are\nclosed, payment shall be due on the business day immediately following such\npayment date.\n\n          (c)  All payments made by drugstore.com pursuant to this Section 2.4\nshall be made, in immediately available funds, by electronic fund transfer or\nsuch other means reasonably acceptable to both parties.  drugstore.com shall pay\ninterest on the amount of any payments not made within the times specified in\nSections 2.4(a) and 2.4(b) hereof in the amount of one percent for each whole\nmonth after the payment was due, prorated for any partial month.\n\n \n                                                                               6\n\n\n     2.5  Rebates.        drugstore.com shall be entitled to share in any\n          -------                                                        \nrebates and other allowances not taken in account in the Adjusted WAC or the\nAdjusted Rite Aid Cost each as set forth on Schedule 2.2 (collectively,\n\"Rebates\"), however calculated, received by Rite Aid in respect of Rite Aid's\npurchase of Pharmaceutical Products.  Such share shall be based upon the ratio\nof drugstore.com's purchases and drugstore.com's performance that resulted in\nsuch Rebates to Rite Aid's total purchases and to total performance that\nresulted in such Rebates.  Rite Aid shall remit drugstore.com's share for\nRebates received in each fiscal quarter within 30 days of the end of such fiscal\nquarter.  Such payments shall be made, in immediately available funds, by\nelectronic fund transfer or other means reasonably acceptable to the parties.\nAt the time of each such payment, Rite Aid shall deliver, in a form reasonably\nacceptable to the parties, a statement showing in  reasonable detail the sources\nof the Rebates and the method of allocation of such Rebates.\n\n     2.6  Operations.        The parties will cooperate in developing\n          ----------                                                 \noperational standards with respect to ordering, shipment and delivery pursuant\nto this Section 2.\n\n            SECTION 3.   PHARMACY SERVICES\n                         -----------------\n\n                   3.1   Description of  Pharmacy Services.\n                         ---------------------------------       \n\n          (a)  Rite Aid shall, as requested by drugstore.com, provide dispensing\nand related services (collectively, the \"Pharmacy Services\") with respect to\n                                         -----------------                  \norders of Pharmaceutical Products received by drugstore.com on the drugstore.com\nSite from customers who are participants in an insurance or prescription benefit\nplan in which Rite Aid is a participating pharmacy (such orders, the \"Serviced\n                                                                      --------\nOrders\").  The Pharmacy Services will be performed, at the direction of\n------                                                                 \ndrugstore.com, either by a Rite Aid retail pharmacy, or, if mailing or a similar\nform of delivery is permitted by applicable law, by a Rite Aid mail-order\npharmacy (the \"Rite Aid Mail-Order Pharmacy\") to be located within a facility\n               ----------------------------                                  \nowned or leased by drugstore.com (the \"drugstore.com Facility\"), from and after\n                                       ----------------------                  \nthe time such facility becomes operational.  drugstore.com will be responsible\nfor filling or contracting for the filling of all other orders for\nPharmaceutical Products placed on the drugstore.com Site, subject to the\nprovisions of Section 4 of the Main Agreement. The Rite Aid Mail-Order Pharmacy\nshall be staffed by licensed pharmacists and technicians employed by Rite Aid;\nprovided, however, that at the election of drugstore.com, the Rite Aid Mail-\n--------  -------                                                          \nOrder Pharmacy may instead be staffed in part by licensed \n\n \n                                                                               7\n\npharmacists and technicians employed by drugstore.com, so long as such staffing\ndoes not (i) impair Rite Aid's ability to lawfully perform the Pharmacy\nServices, (ii) affect the validity of any licenses held by Rite Aid; (iii)\nincrease Rite Aid's insurance costs, or (iv) affect Rite Aid's insurance\ncoverage in any other way. The performance of the Pharmacy Services will\ncommence in accordance with Schedule 7.1(a) to the Main Agreement (the\n\"Technology Integration Schedule\").\n -------------------------------   \n\n          (b)  The Pharmacy Services to be performed with respect to Serviced\nOrders shall consist of :\n \n               (i)    the filling of the Serviced Orders, including the\ndispensing of Pharmaceutical Products, and the delivery thereof (x) in the case\nof orders filled by the Rite Aid Mail-Order Pharmacy, to drugstore.com employees\nat the drugstore.com Facility for further delivery to the drugstore.com customer\nor (y) in the case of orders to be filled by a Rite Aid retail pharmacy, to the\ncustomer for pickup at such Rite Aid retail pharmacy;\n\n               (ii)   the performance of necessary and appropriate drug\nutilization review, including, as necessary, direct communication with the\ndrugstore.com customer or the prescribing physician;\n\n               (iii)  communication with Third Parties, including pharmacy\nbenefit managers and insurers, as necessary for adjudication of a Serviced Order\nand the transmission, within 24 hours, to drugstore.com of the results of such\nadjudication for its billing purposes and, where required, for transmission to\nits customer;\n\n               (iv)   the collection and transmission, in accordance with\nSection 3.4, to drugstore.com of monies received from Third Parties in payment\nof any portion of the price of a particular Pharmaceutical Product, which, with\nrespect to orders to be filled by a Rite Aid retail pharmacy will initially\ninclude, in accordance with the Technology Integration Schedule, the collection\nat the Rite Aid retail pharmacy of the co-payment and other cash payments, if\nany, from the customer and transmission of such monies to drugstore.com; and\n\n               (v)    any additional services, functions or responsibilities\nthat are required for\n\n \n                                                                               8\n\n     the lawful performance and provision of the services described in Section\n     3.1(b)(i)-(iv) inclusive.\n\n     In the process of performing the Pharmacy Services, Rite Aid shall have the\nright, consistent with its normal business practices and in order to achieve\ncost-savings or otherwise in connection with the health and welfare of the\ncustomer, to communicate with the prescribing physician in order to suggest the\nuse of generic Pharmaceutical Products or other Pharmaceutical Products in the\nsame therapeutic class as that prescribed by such physician.\n\n                  3.2   drugstore.com Obligations.\n                        -------------------------       \n\n          (a)  In order to enable Rite Aid to lawfully provide the Pharmacy\nServices, drugstore.com agrees to:  (i) obtain and\/or maintain all licenses\nnecessary to allow it to accept orders from customers for Pharmaceutical\nProducts; (ii) perform all actions necessary to authenticate the prescription\nfor such Pharmaceutical Products, (iii) transmit to Rite Aid  all information\nwith respect to a Serviced Order necessary to enable Rite Aid lawfully to fill\nsuch Serviced Order; (iv) employ duly licensed pharmacists as necessary to\neffect the transfer of prescriptions to a Rite Aid pharmacy for filling; (v)\ndisclose to customers placing orders on the drugstore.com Site that the\nprescription will be filled by Rite Aid and (vi) take such other actions as may\nbe reasonably requested by Rite Aid in order to facilitate the servicing of\ncustomer orders and compliance with applicable law.  Rite Aid shall not be\nobligated to provide Pharmacy Services with respect to any Serviced Order to the\nextent that drugstore.com has failed to comply with its obligations pursuant to\nthis Section 3.2(a).\n \n          (b)  drugstore.com shall be solely responsible for (i) the charging\nand collection of the payment from the customer for the Serviced Order (except\nas set forth in Section 3.1(b)(iv) hereof) and of any and all fees for shipping\nof Pharmaceutical Products to its customers, and (ii) with the exception of\nnecessary customer service to be performed by Rite Aid in connection with the\nfilling of Serviced Orders, all customer service functions with respect to\ndrugstore.com customers, including, without limitation, communication with the\ncustomer as necessary in the event that the adjudication performed by Rite Aid\nresults in Rite Aid being unable to fill the Serviced Order.\n\n          (c)  drugstore.com will provide, at no cost to Rite Aid, space within\nthe drugstore.com Facility as necessary for the operation of the Rite Aid\n\n \n                                                                               9\n\nMail-Order Pharmacy. drugstore.com shall also, at no cost to Rite Aid, supply\nthe Rite Aid Mail-Order Pharmacy with Pharmaceutical Products from the inventory\nof drugstore.com to fill Serviced Orders and, as necessary for the performance\nof Pharmacy Services by the Rite Aid Mail-Order Pharmacy, access to and use of\npharmacy equipment, pharmacy supplies and communications equipment.\n\n    3.3   Changes to Services.  Each of drugstore.com and Rite Aid\n          -------------------                                           \nacknowledge that the ordering and filling of orders for Pharmaceutical Products\nvia the Internet is a new and emerging form of commerce and that changes in the\nmechanics of the performance by Rite Aid of the Pharmacy Services and the\nobligations of drugstore.com set forth in Section 3.2 hereof may be necessary in\norder to comply with regulatory changes that occur in response to that method of\ncommerce.  drugstore.com and Rite Aid each agree to use commercially reasonable\nefforts to make such changes to the Pharmacy Services or to other provisions of\nthis Agreement as may be necessary or appropriate, in light of applicable laws\nor regulations, as now in effect or as hereafter amended, in order to preserve\nto each party the material benefits of this Agreement.\n\n     3.4  Transmission of Payments.   Rite Aid shall use commercially\n          ------------------------                                         \nreasonable efforts to collect monies payable to Rite Aid on behalf of drugstore.\ncom pursuant to Section 3.1(b)(iv) hereof.  Rite Aid shall, twice per calendar\nweek, transmit to drugstore.com all such monies collected by Rite Aid since the\nprevious transmission of payments pursuant to this section, so long as Rite Aid\nis able by such time to specifically identify the Serviced Order with respect to\nwhich such monies were collected.  In the event that Rite Aid is not able to\nspecifically identify the Serviced Order by such time, it shall specifically\nidentify such Serviced Order as soon as practicable and will transmit such\nmonies to drugstore.com as part of the next transmission of monies occurring\nafter it has done so.  On a monthly basis, the parties will conduct a\nreconciliation of their respective records regarding placement of Serviced\nOrders and transmission of payments to drugstore.com by Rite Aid pursuant to\nthis section.  For any payment not made in accordance with the timing set forth\nin this Section 3.4, a late fee shall be applicable in the amount of one percent\nfor each whole month after the payment was due, prorated for any partial month.\nAll payments made by Rite Aid pursuant to this Section 3.4 shall be made, in\nimmediately available funds, by electronic fund transfer or such other means\nreasonably acceptable to both parties. At the time of each such payment, Rite\nAid will deliver, in a form reasonably acceptable to both parties, \n\n \n                                                                              10\n\na schedule setting forth the Serviced Orders covered by such payment.\n\n    3.5   Service Standards.        Rite Aid will use its commercially\n          -----------------                                           \nreasonable efforts to perform the Pharmacy Services in accordance with the\nfollowing standards:\n\n          (a)  The Rite Aid Mail-Order Pharmacy will be available to fill\nServiced Orders, 24 hours a day, 7 days a week; and\n\n          (b)  Rite Aid will fill all Serviced Orders which it may lawfully fill\nwith commercially reasonable speed, subject to delays caused by interaction with\ninsurers, pharmacy benefit managers, physicians and customers as reasonably\nnecessary to fill a Serviced Order. Such Serviced Orders filled by Rite Aid\nretail pharmacies will receive equal priority with other orders for\nPharmaceutical Products filled by Rite Aid retail pharmacies, and drugstore.com\ncustomers will receive customer service at such Rite Aid retail pharmacies at\nthe same level provided to Rite Aid customers.\n\n            SECTION 4.   PAYMENT FOR SERVICES.\n                         --------------------   \n                   4.1   Payments.\n                         --------       \n\n          (a)  In consideration for the Pharmacy Services to be provided by the\nRite Aid Mail-Order Pharmacy, drugstore.com will pay Rite Aid fees equal to the\nactual costs incurred by Rite Aid in providing such Pharmacy Services,\nincluding, but not limited to, the cost of salaries and benefits for the Rite\nAid pharmacists and technicians employed in the Rite Aid Mail-Order Pharmacy.\n\n          (b)  In consideration for the Pharmacy Services to be provided by Rite\nAid retail pharmacies, drugstore.com will pay Rite Aid a fee with respect to\neach Serviced Order in accordance with the prices and upon the terms set forth\non Schedule 4.1(b).\n   --------------- \n\n    4.2   Payment Obligations of drugstore.com.        Fees for the provision of\n          ------------------------------------                                  \nPharmacy Services by Rite Aid retail stores will become due and payable to Rite\nAid,  will be invoiced by Rite Aid pursuant to the provisions of this Agreement\nand title to the Pharmaceutical Products contained in the Serviced Order will\npass to drugstore.com,  once the Pharmaceutical Products are available for pick\nup by the drugstore.com customer at a Rite Aid retail store.  Such payment will\nbe due and payable to Rite Aid in accordance with the procedures set forth in\nSection 7 hereof regardless of whether \n\n \n                                                                              11\n\ndrugstore.com, for any reason, has not at the time of dispensing or does not\nthereafter receive payment for such Pharmaceutical Product from the\ndrugstore.com customer who placed the order and\/or any Third Party payor and\nregardless of whether the drugstore.com customer actually receives or picks up\nthe Pharmaceutical Product ordered.\n\n          4.3   Sales Tax.  As between the parties, drugstore.com shall be\n                ---------                                                 \nresponsible for any sales tax imposed on any Serviced Order.\n\n   SECTION 5.   MUTUAL COVENANTS\n                ----------------\n\n          5.1   Insurance.    Each party shall maintain at all times and at its\n                ---------  \nown expense insurance in such amounts, and with such coverage and terms, as are\ncommercially reasonable in light of the business conducted by such party.\n\n          5.2   Regulatory Compliance.  Each party shall abide by all applicable\n                --------------------- \nstatutes, laws, regulations, rules, policies, standards, guidelines and\nprocedures now in effect or hereinafter enacted, including without limitation:\n(i) laws regarding the provision of insurance, third party administration and\nprimary health care services, including Medicare and Medicaid; (ii) the\nPrescription Drug Marketing Act; (iii) the Federal Controlled Substances Act;\n(iv) the Federal Food, Drug and Cosmetics Act; (v) any state laws relating to\nthe dispensing of Pharmaceutical Products  and (vi) laws relating to billing or\nsales practices.  Each party shall comply with all governmental regulations,\nincluding all reporting and disclosure requirements, with respect to provision\nof the Pharmacy Services.  In addition, each party shall promptly inform the\nother of any regulatory issues that come to its attention affecting its business\nactivities as they relate to this Agreement or the Pharmacy Services.\n\n \n                                                                              12\n\n     SECTION 6.   AUDIT PROCEDURES\n                  ----------------\n            6.1   drugstore.com Audit Procedures.\n                  ------------------------------       \n\n          (a)  drugstore.com shall be entitled, twice per year, to audit Rite\nAid's billings to drugstore.com for the Pharmacy Services for the six months\nprior to such audit to ensure that such billings are accurate. Such audit shall\nonly be conducted upon reasonable advance written notice and subject to Rite\nAid's reasonable security and confidentiality provisions (including but not\nlimited to the requirement that individuals involved in conducting the audit\nenter into confidentiality agreements in form and substance acceptable to Rite\nAid), and may be assisted by drugstore.com's accountants. Rite Aid agrees to\ncooperate in these reviews (so long as such reviews do not directly and\nmaterially cause Rite Aid to impair the performance of the Pharmacy Services,\nunless drugstore.com specifically requests such cooperation regardless of its\nimpairment of the performance of the Pharmacy Services), furnish drugstore.com\nwith reasonably requested information in a timely manner, and provide\ndrugstore.com with reasonably timely access to personnel during normal business\nhours for audit purposes at no charge to drugstore.com; provided, however, that\n                                                        --------  ------- \n                                                            \nRite Aid shall charge drugstore.com (via Rite Aid's bills as described in\nSection 7.1) for its reasonable costs for any technical resources or\nextraordinary personnel time used by Rite Aid and necessary for such audit or\nverification report, so long as Rite Aid, before incurring such costs, notifies\ndrugstore.com that such verification requests will result in costs to Rite Aid\nthat drugstore.com will need to reimburse. drugstore.com agrees to provide Rite\nAid with a copy of any audit or verification report upon its completion.\n\n          (b)  A \"Material Discrepancy\" in billing shall be deemed to occur if\n                  -------------------- \nthe total amount actually billed by Rite Aid during the time period covered by\ndrugstore.com's audit exceeds the amount due based on the audit report by five\npercent (5%) or more. If drugstore.com discovers a Material Discrepancy, Rite\nAid shall review drugstore.com's support documentation for such Material\nDiscrepancy, and the parties shall promptly attempt to agree on such analysis.\nIf it is agreed that a Material Discrepancy occurred, Rite Aid shall reimburse\ndrugstore.com for the cost to drugstore.com of the audit, including costs of\nreimbursing drugstore.com for reasonable costs, technical resources and\nextraordinary personnel time as provided in Section 6.1(a). In all other\ncircumstances,\n\n \n                                                                              13\n\n\ndrugstore.com agrees to bear the costs of audits performed by drugstore.com or\nat its direction.\n\n          (c)  Rite Aid shall credit drugstore.com for any differences in\ninvoicing amounts as described in Section 7.1, as determined by drugstore.com\nduring the course of its audit and agreed to by Rite Aid.\n\n   SECTION 7.   PHARMACY SERVICES BILLING\n                -------------------------\n\n          7.1   Timing of Billings. Rite Aid shall invoice drugstore.com for the\n                ------------------\nPharmacy Services on a monthly basis, using mutually agreed upon media and\naccording to the terms of Section 4 hereof. Such invoices shall be accompanied\nby a reasonably detailed monthly schedule of the Serviced Orders for which\npayment is due. Credits and adjustments that became effective during the period\ncovered by the invoice shall be applied on the first invoice following\ndrugstore.com's eligibility therefor.\n\n          7.2   Billing Procedures, Details and Data. There shall be no\n                ------------------------------------\nadditional charge to drugstore.com for the invoicing services or for non-\nmaterial changes in billing procedures reasonably requested by drugstore.com.\nRite Aid may amend the billing procedures at any time by providing written\nnotice thereof to drugstore.com, and such changes shall be reflected in the next\ninvoicing cycle or as soon as possible thereafter.\n\n          7.3   Payment for Services.\n                --------------------       \n\n          (a)  drugstore.com shall pay each invoice, in immediately available\nfunds, by electronic fund transfer or such other means reasonably acceptable to\nboth parties. Such payment shall be due and payable by drugstore.com to Rite Aid\non the tenth day of the month following the month in which the Serviced Orders\nlisted in the schedule provided by Rite Aid pursuant to Section 7.1 were filled.\nIf such payment date falls on a weekend or a weekday on which banks are closed,\nthe payment shall be due and payable on the following business day. If not so\npaid, drugstore.com shall pay interest on such amount at the rate set forth in\nSection 7.4. In no event shall any payment made by or before such date\nconstitute a breach of this Agreement. Rite Aid shall give drugstore.com at\nleast 30 days' notice of any changes to the format or medium of its invoices.\n\n          (b)  If drugstore.com believes that it is entitled to an adjustment to\nthe amount invoiced, drugstore.com shall promptly notify Rite Aid of such claim\nfor an adjustment and provide to Rite Aid reasonable support for any such claim.\nRite Aid and\n\n \n                                                                              14\n\ndrugstore.com will promptly address and attempt to resolve in good faith any\nclaims as to charges, credits or other aspects of the invoices. Interest shall\naccrue according to Section 7.4, payable to drugstore.com by Rite Aid for any\namount paid by drugstore.com which was subject to a subsequent adjustment in\nfavor of drugstore.com from the date of such payment. Rite Aid shall promptly\nreflect any such adjustments and interest in its bills (as described in Section\n7.1). Rite Aid shall not deny or restrict service during the pendency of a\ndispute as a result thereof, provided that drugstore.com has paid all undisputed\n                             --------\namounts when due.\n\n          7.4   Late Payments.  For any late payment or adjustment pursuant to \n                -------------\nSection 7.3(a) or (b), a late fee shall be applicable in the amount of one\npercent  for each whole month after the payment was due (or in the case\ndescribed in Section 7.3(b), made), prorated for any partial month.\n\n    SECTION 8.  CONFIDENTIALITY\n                ---------------\n\n          8.1   Confidential Information. \"Confidential Information\" means,\n                ------------------------   ------------------------\nsubject to Section 8.2, the terms of this Agreement, information protected by\nthe intellectual property laws of the United States, information regarding\ncustomers disclosed by either party in connection with the provision of the\nPharmacy Services, information relating to drugstore.com's or Rite Aid's\nbusiness practices (including account information, information regarding\nbusiness planning and operations, and information regarding administrative,\nfinancial or marketing activities), or information marked as \"Confidential.\"\nEach of Rite Aid and drugstore.com shall not, and shall cause its affiliates,\nemployees, representatives and consultants (including any accountants used by\ndrugstore.com in connection with audits under Section 6) not to, disclose,\npublish or disseminate any Confidential Information of the other party and its\ncustomers to Third Parties, or use such information for any use not required\npursuant to this Agreement or the Main Agreement. All Confidential Information\nof one party shall be held and protected by the other party in strict\nconfidence, shall be used by the other party only as required to render\nperformance under this Agreement or the Main Agreement, and the other party\nshall use commercially reasonable efforts to prevent any unauthorized use or\ndisclosure thereof by the personnel and other persons to whom such Confidential\nInformation is disclosed by such other party in accordance with the foregoing.\n\n          8.2   Exceptions.  Notwithstanding the foregoing, the terms of this\n                ----------\nSection 8 shall not apply to \n\n \n                                                                              15\n\nany information that (a) is publicly available or is in the public domain at the\ntime disclosed, (b) is or becomes publicly available or enters the public domain\nthrough no fault of the recipient, (c) is rightfully communicated to the\nrecipient by persons not bound by confidentiality obligations with respect\nthereto, (d) is already in the recipient's possession free of any\nconfidentiality obligations with respect thereto at the time of disclosure, (e)\nis independently developed by the recipient, (f) is approved for release or\ndisclosure by the disclosing party without restriction, (g) is disclosed in\nresponse to an order of a court or a requirement of any other governmental\nagency, provided that the party making the disclosure pursuant to the order\n        --------\nshall first have given notice to the other party and made a reasonable effort to\nobtain a protective order, (h) is otherwise required by any national securities\nexchange, or by law or regulation to be disclosed or (i) is disclosed in any\nlegal proceeding or otherwise to establish a party's rights and obligations\nunder this Agreement, provided that the party so disclosing has requested,\npursuant to any procedures available in such proceeding, that such information\nbe designated as confidential information.\n\n          8.3   Irreparable Harm.  drugstore.com and Rite Aid acknowledge that\n                ----------------\nany disclosure or misappropriation of Confidential Information in violation of\nthis Agreement would cause irreparable harm, the amount of which may be\nextremely difficult to estimate, thus making any remedy at law or in damages\ninadequate. Each party therefore agrees that the other party shall have the\nright to apply to any court of competent jurisdiction for an order restraining\nany breach or threatened breach of this Section 8 and for any other relief as\nsuch other party deems appropriate. This right shall be in addition to any other\nremedy available in law or equity.\n\n          8.4   Return of Confidential Information.  Upon the expiration or \n                ----------------------------------\ntermination of this Agreement, each of drugstore.com and Rite Aid shall return\nor deliver to the other party, or shall destroy, all Confidential Information of\nthe other party that is in its possession in tangible form.  Each party shall\nfurther provide written confirmation that nothing required to be returned,\ndelivered or destroyed has been retained, and that no unauthorized disclosure\nhas occurred.\n\n    SECTION 9.   LIABILITIES; INDEMNIFICATION\n                 ----------------------------\n \n          9.1    Liabilities.\n                 ----------- \n\n \n                                                                              16\n\n            (a)  Rite Aid shall be responsible for any errors or omissions\nmade by its own employees in connection with its performance of its obligations\npursuant to this Agreement. drugstore.com shall be responsible for any errors or\nomissions made by its own employees in connection with its performance of its\nobligations pursuant to this Agreement, including, without limitation, any\nerrors or omissions made by any of its employees which it elects to have staff\nthe Rite Aid Mail-Order Pharmacy in accordance with Section 3.1.\n\n            (b)  Each party shall be responsible for liabilities arising from\nerrors or omissions made by it in the transmission of information to the other\nparty, and each party shall be entitled to assume the accuracy of all\ninformation transmitted to it by the other party, and to rely on such\ninformation, for all purposes under this Agreement.\n\n            (c)  Neither party shall be responsible for a failure to meet its\nobligations under this Agreement to the extent caused by the following: (i)\nmaterially inaccurate data submitted by the other party; (ii) any failure by the\nother party to meet its obligations stated in this Agreement; (iii) any failure\nof equipment, facilities or services not controlled or supplied by such party;\nor (iv) failure(s) caused by acts of God, acts of nature, riots and other major\ncivil disturbances, strike by such party's personnel, sabotage, injunctions or\napplicable laws or regulations, in each case without breach by such party of any\nobligations under this Agreement with regard to either such event or such\nfailure. Rite Aid or drugstore.com, as applicable, agrees to use its\ncommercially reasonable efforts to restore performance of its obligations\nhereunder as soon as reasonably practicable following any such event.\n\n            (d)  In no event will either party have any liability, whether based\nin contract, tort (including, without limitation, negligence) warranty or any\nother legal or equitable grounds, for any loss of interest, profit or revenue by\nthe other party or for any consequential, indirect, incidental, special,\npunitive or exemplary damages suffered by the other party, arising from or\nrelated to this Agreement, even if such party has been advised of the\npossibility of such losses or damages.\n\n      9.2   Indemnified Parties.  Rite Aid and drugstore.com each shall\nindemnify and hold harmless the other and its divisions, its Affiliates (as\ndefined below), and its officers, directors, employees, representatives and\nagents (the \"Indemnified Parties\") from and against (a) any and all liabilities,\n             -------------------\nsuits,\n\n \n                                                                              17\n\ncosts, judgments, penalties, expenses, obligations, losses, or damages arising\nfrom or related to claims and actions made by a Third Party, including, but not\nlimited to, any obligation or liability which may be imposed upon any of the\nIndemnified Parties as a matter of law, constituting, or in any way based upon,\nresulting from or arising out of any breach or alleged breach by drugstore.com\nor Rite Aid, as applicable, of any agreement or covenant made by such party in\nthis Agreement, and (b) any cost or expense (including, but not limited to,\nlegal fees and out-of-pocket expenses) reasonably incurred by any of the\nIndemnified Parties (and their counsel) in investigating, preparing for,\ndefending against or otherwise taking any action in connection with any of the\nforegoing (collectively \"Damages\"). \"Affiliate\" means with respect to a party\n                         -------                                              \nany entity at a time controlling, controlled by or under common control with\nsuch party (with \"control\" meaning the legal, beneficial or equitable ownership,\ndirectly or indirectly, of more than fifty percent (50%) of the aggregate of all\nvoting interests in such entity).\n\n        9.3   Indemnified Claims.  If any claim, demand, assessment or\n              ------------------\nliability, or cost incidental thereto (collectively, an \"Indemnified Claim\"), is\n                                                         -----------------\nasserted against an Indemnified Party in respect of which the Indemnified Party\nproposes to demand indemnification from the Indemnifying Party pursuant to\nSection 9.2, such Indemnified Party will promptly notify Rite Aid or\ndrugstore.com, as the case may be (the \"Indemnifying Party\"), in writing. No\n                                        ------------------\nfailure of an Indemnified Party to so notify the Indemnifying Party shall\nrelieve the Indemnifying Party from the obligation to indemnify the Indemnified\nParty unless and to the extent the Indemnifying Party is actually prejudiced by\nsuch failure. Such Indemnified Party will accord the Indemnifying Party the\nopportunity to assume entire control of the defense, compromise or settlement of\nany such Indemnified Claim through its own counsel and at its own expense;\nprovided that no such compromise or settlement shall include any non-monetary\n--------\nterms and conditions applicable to such Indemnified Party without the consent of\nthe Indemnified Party; and provided further, that the Indemnified Parties may\n                           -------- -------\nretain their own counsel at the Indemnifying Party's expense (the Indemnifying\nParty shall only be liable for the cost of one such counsel for all Indemnified\nParties) if (i) the Indemnifying Party, within thirty (30) days after notice of\nany Indemnified Claim, fails to assume the defense of such Indemnified Claim or\n(ii) the representation of both the Indemnifying Party and the Indemnified Party\nwould, in the reasonable judgment of the parties, be inappropriate due to actual\nor potential conflicting interests between them. If the Indemnifying Party does\n\n \n                                                                              18\n\nnot assume entire control of the defense, compromise or settlement of such\nIndemnified Claim, the Indemnified Party may compromise or settle any such\nIndemnified Claim. drugstore.com and Rite Aid each agrees to cooperate fully\nwith respect to the defense of any Indemnified Claim.\n\n  SECTION 10.   MISCELLANEOUS\n                -------------\n\n         10.1   Binding Effects; No Assignment; Sale of Assets or Capital\n                ---------------------------------------------------------\nStock. This Agreement shall be binding on and inure to the benefit of the \n-----\nparties hereto, and the legal representatives, successors in interest and\npermitted assigns, respectively, of each such party. This Agreement shall not be\nassigned in whole or in party by any party without the prior written consent of\nthe other party, such consent not to be unreasonably withheld; provided,\n                                                               --------  \nhowever, that a party may, without consent of the other party, assign this \n-------\nAgreement to an Affiliate of the assignor, or to an entity acquiring all or\nsubstantially all of the assets or capital stock of the assignor due to merger,\nacquisition or consolidation so long as (a) the assignor remains liable for the\nfull and faithful performance of its obligations hereunder, (b) such Affiliate\nor successor assumes in writing all of the obligations of the assignor under\nthis Agreement and agrees to comply with the terms set forth in this Agreement,\nand (c) a copy of the assignment is provided to the non-assigning party. The\nrespective rights and obligations of the parties under this Agreement shall\nsurvive any transaction pursuant to which a Third Party acquires all or\nsubstantially all of the assets or capital stock of either party, whether due to\nmerger, acquisition, consolidation or otherwise.\n\n         10.2   Severability.  If any term or condition of this Agreement shall\n                ------------\nbe held invalid in any respect by any court or governmental agency of competent\njurisdiction and all appeals have been exhausted, the parties shall use\ncommercially reasonable efforts to agree on either (a) an amendment which would\nrestore the validity of the term or condition or (b) a comparable, valid term or\ncondition. If no such Agreement can be reached, the other provisions of this\nAgreement that are valid are severable and remain in effect.\n\n         10.3   Notices.  All notices, requests, demands, waivers and other\n                -------\ncommunications required or permitted to be given under this Agreement shall be\nin writing and may be given by any of the following methods:  (a) personal\ndelivery by hand; (b) facsimile transmission, followed within one business day\nby overnight delivery or (c) overnight delivery service.  \n\n \n                                                                              19\n\nNotices shall be sent to the appropriate party at its address or facsimile\nnumber given below (or at such other address or facsimile number for such party\nas shall be specified by notice given hereunder):\n\n          If to Rite Aid, to:\n\n          Rite Aid Corporation\n          30 Hunter Lane\n          Camp Hill, PA  17011\n          Attention: General Counsel\n          Facsimile: (717) 760-7867\n          Telephone: (717) 761-2633\n\n          with a copy to:\n\n          Skadden, Arps, Slate, Meagher &amp; Flom LLP\n          919 Third Avenue\n          New York, NY  10022\n          Attention: Nancy A. Lieberman, Esq.\n          Facsimile: (212) 735-2000\n          Telephone: (212) 735-3000\n\n          If to drugstore.com, to:\n\n          drugstore.com, inc.\n          13920 S.E. Eastgate Way, Suite 300\n          Bellevue, WA 98005\n          Attention: General Counsel\n          Facsimile: (425) 372-3800\n          Telephone: (425) 372-3200\n\nAll such notices, requests, demands, waivers and communications shall be deemed\nreceived upon (x) actual receipt thereof by the addressee, (y) actual delivery\nthereof to the appropriate address or (z) in the case of a facsimile\ntransmission, upon transmission thereof by the sender and issuance by the\ntransmitting machine of a confirmation slip that the number of pages\nconstituting the notice has been transmitted without error.\n\n         10.4   No Waiver.  No delay or omission by either party hereto to \n                ---------\nexercise any right or power hereunder shall impair such right or power or be\nconstrued to be a waiver thereof. A waiver by any of the parties hereto of any\nof the covenants to be performed by any other party or any breach thereof shall\nnot be construed to be a waiver of any succeeding breach thereof or of any other\ncovenant herein contained.\n\n         10.5   Written Amendments.  No modification, amendment, supplement to,\n                ------------------\nor waiver of this Agreement or any of its provisions shall be binding upon the\nparties\n\n \n                                                                              20\n\nhereto unless made in writing and duly signed by the party against whom\nenforcement thereof is sought.\n\n         10.6   No Third Party Beneficiaries.  This Agreement is intended to\n                ----------------------------\nbenefit the parties hereto and their respective successors and permitted\nassigns, and shall not confer upon any other person or entity any rights or\nremedies.\n\n         10.7   Survival.  The terms of Sections 2.4, 4, 6, 7, 8, 9 and 10 shall\n                --------\nsurvive any termination of this Agreement. Except with respect to such sections,\nupon the termination of this Agreement, neither party shall have any liability\nto the other, except for (a) any breach or default of any provision of this\nAgreement and (b) any Damages (including, but not limited to, past due amounts\nas specified in Sections 2.4 and 7) incurred prior to the termination.\n\n         10.8   Governing Law.  This Agreement shall be governed by and\n                -------------\nconstrued in accordance with the laws of the State of Delaware as to all\nmatters, including but not limited to, matters of validity, construction,\neffect, performance and remedies, but without regard to conflicts of laws\nprinciples applicable therein; provided, however, that to the extent legally\n                               --------  -------\nrequired, the provision of Pharmacy Services will be governed by the law of the\nsitus in which the Pharmacy Services are provided and\/or the law of the situs in\nwhich the Serviced Order is delivered to drugstore.com by Rite Aid.\n\n         10.9   Relationship of Parties.  Each of Rite Aid and drugstore.com and\n                -----------------------\ntheir respective employees and agents are independent contractors in relation to\nthe other party to this Agreement with respect to all matters arising hereunder.\nNothing herein shall be deemed to establish a partnership, joint venture,\nassociation, agency or employment relationship between Rite Aid and\ndrugstore.com.  Each of Rite Aid and drugstore.com shall remain responsible for,\nand shall indemnify and hold harmless the other party against, any and all\nFederal, state and local personal income, sickness and disability insurance\ntaxes, payroll levies or employee benefit obligations now existing or\nhereinafter incurred by Rite Aid or drugstore.com, as applicable, with respect\nto its employees and agents.\n\n         10.10  Headings.  All headings herein are not to be considered in the\n                --------\nconstruction or interpretation of any provision of this Agreement.\n\n         10.11  Entire Agreement.  This Agreement, the Main Agreement and the\n                ----------------\nschedules hereto and thereto form a part hereof and set forth the entire\nagreement of \n\n \n                                                                              21\n\nthe parties hereto in respect of the subject matter contained herein and\nsupersede all prior agreements, promises, covenants, arrangements,\ncommunications, representations or warranties, whether oral or written, by an\nofficer, director, employee, agent or representative of any party hereto.\n\n        10.12   Dispute Resolution.  The provisions of Section 14 of the Main\n                ------------------                                           \nAgreement shall be applicable to any dispute between the parties relating to\nthis Agreement.\n\n\n\n                            [Signature Page Follows]\n\n \n                                                                              22\n\n\n     IN WITNESS WHEREOF, the parties hereto have caused this Pharmacy Supply and\nServices Agreement to be duly executed as of the date set forth above.  This\nAgreement may be executed in several counterparts, each of which shall be an\noriginal and all of which when taken together shall constitute but one and the\nsame agreement.\n\n                                       RITE AID CORPORATION\n\n\n\n                                       By: \/s\/ Elliot S. Gerson\n                                          -------------------------------\n                                          Name: Elliot S. Gerson\n                                          Title: Executive Vice President\n\n\n\n                                       DRUGSTORE.COM, INC.\n\n\n\n                                       By: \/s\/ Peter Neupert\n                                          ------------------------------\n                                          Name: Peter Neupert\n                                          Title: Chief Executive Officer\n\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8693],"corporate_contracts_industries":[9496],"corporate_contracts_types":[9613,9619],"class_list":["post-42667","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-rite-aid-corp","corporate_contracts_industries-retail__drug","corporate_contracts_types-operations","corporate_contracts_types-operations__sales"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42667","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42667"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42667"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42667"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}