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EXHIBIT 10.1
AMENDED AND RESTATED
MAIN AGREEMENT
This Amended and Restated Main Agreement (this
"Agreement" ), dated as of September 3, 2008 (the
"Effective Date" ), is between DS Pharmacy, Inc., a Delaware
corporation, on its behalf and on behalf of its parent corporation
and Affiliates ("drugstore.com" ), and Rite Aid Hdqtrs.
Corp., a Delaware corporation, on its behalf as well as on behalf
of its parent corporation and Affiliates ( "Rite Aid" ).
Upon the execution of this Agreement, the Main Agreement dated
June 17, 1999 is amended and restated in its entirety as set
forth herein.
RECITALS
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A.
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Rite Aid is a leading drugstore in
the United States with approximately 5,000 stores.
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B.
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drugstore.com is a leading online
drugstore.
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AGREEMENT
In consideration of the agreements, covenants and conditions set
forth herein, intending to be legally bound, the parties hereto
agree as follows:
Section 1. Definitions
Whenever used in this Agreement with initial letters
capitalized, the following terms will have the following specified
meanings:
"Affiliate" means, with respect to a party, any Person
that, directly or indirectly, Controls, or is Controlled by, or is
under common Control with, such party.
"Control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a Person, whether by contract or through the ownership
of voting securities, including the ownership of more than fifty
percent (50%) of the equity, partnership or similar interest
in such Person.
"Derivative" means (a) any enhancement, improvement
or modification or (b) any "derivative work" (as such term is
defined in the U.S. Copyright Act, as amended from time to
time).
"Drugstore Chain Competitor" means any
Third Party that Controls 10 or more Offline Retail Drugstores,
whether or not all such stores operate under the same name or
Trademark, whose business substantially consists of the sale of
Pharmaceutical Products to retail customers. For the avoidance of
doubt, the term does not include supermarket chains or mass retail
merchandisers (such as Wal-Mart or Target).
"drugstore.com IPR" means (i) any and all IPR owned
or licensable without cost to drugstore.com by drugstore.com or any
entity that it Controls, and (ii) all Rite Aid Technology
Derivatives and Derivatives of Rite Aid Technology Derivatives made
by or at the direction of drugstore.com or any entity that it
Controls.
"drugstore.com Site" means the site currently located at
www.drugstore.com (and any successor site, Mirror site or sites of
any entity Controlled by drugstore.com).
"including" or "included," when used herein, shall
be deemed to be followed by the words "without limitation."
"Internet" means the Internet or the World Wide Web (or
any successor or other online network including those using
delivery over television, cable, set top boxes, intranets,
extranets and personal digital assistants (but not including using
any personal digital assistant or other device as a
telephone)).
"IPR" means any copyright, Trademark, patent, trade
secret, moral right or other intellectual property or proprietary
right of any kind (including applications therefor and, in the case
of patents, any continuation or divisional patent applications
claiming priority thereto), whether arising under the laws of the
United States or any other nation, state or jurisdiction (including
any foreign equivalents thereto).
"LPU" means a service through which customers are able to
place orders for Pharmaceutical Products through the Internet for
pick up at a local offline Rite Aid pharmacy.
"LPU Inventory" means the prescription inventory
purchases paid by drugstore.com to Rite Aid for LPU prescription
orders awaiting pick up as of the close of business on a date to be
determined by the parties. For the avoidance of any doubt, LPU
Inventory does not include any prescription inventory that has been
previously charged to but not yet paid by drugstore.com to Rite
Aid.
"Mirror site" means an Internet site that
(i) contains the exact form and content of a site,
(ii) is located at a geographic location distinct from a site
and (iii) is created for the purpose of improving the
performance of and accessibility to a site.
"New LPU Prescription" means each new prescription in an
LPU order placed by a customer who has not placed an LPU order
during the 12 months prior to the date the customer places the
order in question (a " New LPU Customer "), provided,
however, in
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no event shall a prescription that is paid for in
whole or in part by any state or federally funded program,
including but not limited to Medicaid, Medicare Part D, PACE, PAAD,
EPIC, be considered a New LPU Prescription. For the avoidance of
doubt, (i) a refill of a previous prescription does not
constitute a New LPU Order, and (ii) as an example, an LPU
order placed by a New LPU Customer for three (3) new
prescription medications would constitute three (3) New LPU
Prescriptions.
"Offline Retail Drugstore" means any Third Party physical
(i.e., bricks-and-mortar) drugstore that operates within it a
licensed pharmacy for dispensing Pharmaceutical Products to retail
customers.
"Person" means any individual, corporation, partnership,
limited liability company, trust, association or other entity or
organization, including any governmental or political subdivision
or any agency or instrumentality thereof.
"Pharmaceutical Products" means any product that under
law may not be dispensed except pursuant to a prescription
dispensed by a licensed professional.
"Pharmacy Services Page" means the first page a user sees
on the drugstore.com Site after clicking on the pharmacy tab,
currently located at www.drugstore.com/pharmacy.
"Rite Aid IPR" means any and all IPR owned or licensable
without cost to Ride Aid by Rite Aid or any entity that it
Controls, including the Rite Aid Technology and the Rite Aid
Technology Derivatives and Derivatives of Rite Aid Technology
Derivatives made by or at the direction of Rite Aid or any entity
that it Controls.
"Rite Aid Site" means the site currently located at
www.riteaid.com (and any successor site, Mirror site or sites of
any entity Controlled by Rite Aid).
"Rite Aid Technology" means the software (in both source
and object code forms) set forth on Exhibit A, to the extent
owned or licensable (without cost to Rite Aid) by Rite Aid during
the Term.
"Rite Aid Technology Derivative" means a Derivative of
any Rite Aid Technology.
"Rite Aid Trademarks" means the Trademarks owned by Rite
Aid set forth on Exhibit B.
"Term" means the period commencing on the Effective Date
and ending on the second anniversary of such date, subject to
extension in accordance with Section 11.5.
"Third Party" means any Person that is not a party hereto
or an Affiliate of a party hereto.
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"Trademark(s)" means all common law or
registered trademarks, logos, service marks, trade names, Internet
domain names and trade dress rights and similar or related rights
arising under any of the laws of the United States or any other
country or jurisdiction, whether now existing or hereafter adopted
or acquired.
Section 2. Local Pick-up
2.1 drugstore.com and Rite Aid will work cooperatively and in
good faith to effect a seamless transition of the LPU service
developed, hosted, operated and maintained by drugstore.com to an
LPU service maintained by Rite Aid on the Rite Aid Site; provided,
however, that drugstore.com will continue to host, operate and
maintain the LPU service functionality on the drugstore.com Site
until June 17, 2009 or any earlier date that Rite Aid
identifies as an appropriate transition date for the LPU service
(the date of such transition is referred to as the " LPU
Transition Date "). Until the LPU Transition Date,
drugstore.com will not alter or change the direct interface
technology components related to the LPU service without Rite
Aid’s prior approval, nor will it be required by Rite Aid to
alter or change the direct interface technology components.
2.2 Notwithstanding the earlier transition of LPU service
functionality pursuant to Section 2.1, drugstore.com shall
continue to maintain during the Term of this Agreement (subject to
earlier termination as provided in Section 5.1) the LPU link
on the Pharmacy Services Page with the same placement and
prominence as the existing offering as reflected in Schedule 2.1.
The link shall directly link customers to the LPU service
maintained on the Rite Aid Site. So long as the LPU link to the
Rite Aid Site is maintained on the drugstore.com Site, the Rite Aid
Site shall have a link back to the drugstore.com Site for customers
to return to the drugstore.com Site.
2.3 In consideration of the transfer of LPU services from
drugstore.com to Rite Aid and, subject to Sections 10 and 11,
provided that drugstore.com does not intentionally discontinue its
hosting, operation and maintenance of the LPU service functionality
prior to the LPU Transition Date, Rite Aid agrees to pay
drugstore.com nine million nine hundred ten thousand dollars
($9,910,000) as follows:
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Due Date
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Amount Due
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9/17/08
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$
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991,000.00
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10/17/08
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$
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991,000.00
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11/17/08
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$
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991,000.00
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12/17/08
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$
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991,000.00
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1/19/09
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$
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991,000.00
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2/17/09
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$
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991,000.00
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3/17/09
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$
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991,000.00
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4/17/09
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$
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991,000.00
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5/18/09
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$
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991,000.00
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6/17/09
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$
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991,000.00
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Rite Aid will wire each payment to
drugstore.com’s identified financial institution. In the
event that Rite Aid is late with any monthly payment it will pay a
late payment fee equal to one percent (1%) per month pro-rated
for each partial month.
2.4 The parties further agree that Rite Aid will acquire
from drugstore.com the full balance of drugstore.com’s LPU
Inventory as of the Effective Date. The parties agree to
cooperatively determine: (i) the full balance and identity of
drugstore.com’s LPU Inventory and the methodology to
determine the economic value of the LPU Inventory (the " LPU
Inventory Value "); and (ii) the LPU orders that are in
will call (and not picked up) as of the Effective Date and the
identity and other necessary pharmacy and contact information of
LPU orders for such period prior to the Effective Date as
reasonably requested by Rite Aid in connection with the transition
of the LPU service. Rite Aid will credit the LPU Inventory Value on
the first invoice issued to drugstore.com following the Effective
Date.
2.5 Commencing on the Effective Date and throughout the
term of this Agreement, Rite Aid will pay drugstore.com a fee as
set forth in Schedule 2.5(the "LPU Fee" ) for each New LPU
Prescription purchased through the existing drugstore.com Site.
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2.5.1
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drugstore.com will provide Rite Aid
with the identity and other necessary information (including but
not limited to email addresses) associated with each New LPU
Prescription, as well as a copy of each New LPU Prescription, on a
monthly basis in order to confirm such New LPU
Prescription.
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2.5.2
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Rite Aid will pay the LPU Fees no
later than thirty (30) days from its receipt of the
appropriate information from drugstore.com. If such payment date
falls on a weekend or on any weekday on which banks are closed,
payment shall be due on the business day immediately following such
payment date. All payments made by Rite Aid pursuant to this
Section 2.4 shall be made, in immediately available funds, by
electronic fund transfer or such other means reasonably acceptable
to both parties.
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2.5.3
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Late Payments . For any
late payment, a late fee shall be applicable in the amount of one
percent for each whole month after the payment was due, prorated
for any partial month.
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2.6 For the avoidance of doubt, nothing
herein should be construed as amending the terms of the Main
Agreement with respect to payments due from Rite Aid to
drugstore.com under the Main Agreement for LPU orders placed prior
to the Effective Date.
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2.7 Upon the Effective Date and
thereafter:
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2.7.1
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Rite Aid will be the exclusive owner
of every LPU prescription presented through the Rite Aid Site and
every LPU prescription presented through the drugstore.com
Site.
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2.7.2
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Rite Aid will be the exclusive owner
of all customer data related to every LPU prescription presented
through the Rite Aid Site and all customer data related to every
LPU prescription presented through the drugstore.com
Site.
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2.7.3
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Rite Aid will be the exclusive owner
of every new and refilled LPU prescription as well as all
associated revenue and margin.
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Section 3. Pharmacy
Information
Subject to customer and any other required consents, pending the
LPU transition contemplated in Section 2, the parties will
(i) share insurance and drug profile information related to
customers serviced under this Agreement (" Customer
Information ") in order to pre-populate customer profiles on
the drugstore.com Site and (ii) systematically and promptly
update each other’s shared customer profiles to reflect any
new Customer Information acquired with respect to any such
profiles. drugstore.com shall neither transmit nor disclose (except
for purposes of satisfying its obligations under this Agreement)
any Customer Information to Third Parties, nor use such Customer
Information to market to such customers, provided, however, that
nothing in this Agreement will limit drugstore.com’s right to
use or transmit information obtained from customers of the
drugstore.com Site other than in connection with the LPU
services.
Section 4. Exclusivity
4.1 drugstore.com will not offer, will not permit its Affiliates
or any entity that it Controls to offer, and will not contract with
any Third Party to offer on the drugstore.com Site, any competitive
service to the LPU service (i) through June 17, 2009, and
(ii) thereafter for the remaining Term of this Agreement so
long as it is not required by any Third Party purchaser of
drugstore.com’s mail-order pharmacy business to offer such a
service as a condition to such purchase. For the avoidance of
doubt, nothing in this Agreement shall be construed to prohibit
drugstore.com or its Affiliates from offering services similar to
the LPU service for products other than Pharmaceutical Products,
including without limitation, contact lenses, vitamins or
over-the-counter products.
4.2 The provisions of this Section 4 will not be
applicable to drugstore.com’s operations outside the United
States and shall not limit drugstore.com’s ability to partner
with and promote an Offline Retail Drugstore that has no Offline
Retail Drugstore presence in the United States. In the event any
such non-U.S. partner subsequently
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develops any presence in the United States,
including by purchasing an Offline Retail Drugstore in the United
States, drugstore.com shall forthwith take all actions necessary to
place it in compliance with this Agreement.
Section 5. Pharmacy Services Page
5.1 drugstore.com shall maintain an LPU link (which shall be
directly linked to the Rite Aid Site) on the Pharmacy Services Page
or elsewhere (which shall be subject to Rite Aid’s prior
approval) on the drugstore.com Site and any promotion by
drugstore.com in any other media of the LPU service shall be
prominently branded with a Rite Aid Trademark. The Rite Aid
Trademark shall be maintained on the Pharmacy Services Page with
the same placement and prominence as currently existing under the
Main Agreement as reflected in Schedule 2.1. Upon request by
drugstore.com at any time following June 17, 2009, subject to
Section 4.1, the parties agree to meet and confer regarding
early termination of drugstore.com’s maintenance of the LPU
link on the Pharmacy Services Page in the event that there is not a
sufficient number of customers (based upon the reasonable
determination of the parties) utilizing the link from the
drugstore.com Site to the LPU service maintained on the Rite Aid
Site.
5.2 Rite Aid shall not knowingly publish on the Rite Aid
Site, and drugstore.com shall not knowingly publish on the
drugstore.com Site, any content that is contrary to law or false or
misleading in any material respect. Any content that either party
reasonably determines to be contrary to law or false or misleading
in any material respect shall be removed, upon notice from the
determining party, as soon as practicable by the offending party.
After such removal, the parties may bring the dispute to the
advertising liaisons for immediate resolution.
5.3 Rite Aid shall have final approval regarding any
representations made relating to the quality of Rite Aid pharmacy
and Rite Aid pharmacist services with respect to LPU services
offered by Rite Aid.
Section 6. Technology License and Integration
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6.1
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License to
Technology
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6.1.1 Rite Aid hereby grants to
drugstore.com, and its wholly owned Affiliates, a royalty-free,
worldwide, nonexclusive license (without any right to transfer or
sublicense) to use, copy, publicly display, publicly perform, and
create Derivatives of the Rite Aid Technology and
Rite Aid Technology Derivatives made by Rite Aid for use in
connection with the drugstore.com business. The foregoing license
grant is subject to any limitations imposed by Third Parties on
Rite Aid and the terms and conditions of this Agreement, including
the exclusivity provisions set forth in Section 4.
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6.1.2 drugstore.com hereby grants to
Rite Aid, and its wholly owned Affiliates, a royalty-free,
worldwide, nonexclusive license (without any right to transfer or
sublicense) to use, copy, publicly display, publicly perform, and
create Derivatives of the Rite Aid Technology Derivatives made by
drugstore.com for use in connection with the Rite Aid business. The
foregoing license grant is subject to any limitations imposed by
Third Parties on drugstore.com and the terms and conditions of this
Agreement, including the exclusivity provisions set forth in
Section 4.
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6.2
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License to
Trademarks
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6.2.1 drugstore.com hereby grants to
Rite Aid and any of its wholly owned Affiliates a non-exclusive,
royalty-free, worldwide license in all jurisdictions in which
drugstore.com has any rights to use, reproduce, distribute and
display the drugstore.com Trademarks in connection with Rite
Aid’s rights and obligations under this Agreement.
6.2.2 Rite Aid hereby grants to drugstore.com and any of
its wholly owned entities a non-exclusive, royalty-free, worldwide
license in all jurisdictions in which Rite Aid has any rights to
use, reproduce, distribute and display the Rite Aid Trademarks in
connection with drugstore.com’s rights and obligations under
this Agreement.
6.2.3 Each party shall have the right to exercise quality
control over the use of its Trademarks by the other party to the
degree necessary, in the sole opinion of the owner of such
Trademarks, to maintain the validity and enforceability of such
Trademarks and to protect the goodwill associated therewith. Each
party shall, in its use of the other’s Trademarks, adhere to
a level of quality at least as high as that used by such party in
connection with its use of its own Trademarks. If the owner of a
Trademark, in its reasonable opinion, finds that use of such
Trademark by the other party materially threatens the goodwill of
such Trademark, the user of such Trademark shall, upon notice from
the owner, immediately, and no later than ten (10) business
days after receipt of such owner’s notice, take all measures
reasonably necessary to correct the deviation(s) or
misrepresentation(s) in, or misuse of, the applicable
Trademark.
6.2.4 Each party shall use the other’s Trademarks
in accordance with sound trademark and trade name usage principles
and in compliance with all applicable laws and regulations of the
United States (including all laws and regulations relating to the
maintenance of the validity and enforceability of such Trademarks)
and shall not use the Trademarks in any manner that might tarnish,
disparage, or reflect adversely on the Trademarks or the owner of
such Trademarks. Each party shall use, in connection with the
other’s Trademarks, all legends, notices and markings
required by law. No party may materially alter the appearance of
another’s Trademarks in any advertising, marketing,
distribution, or sales materials, or any other publicly distributed
materials without the prior written consent of the other party.
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6.3
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Access to Rite Aid
Technology
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6.3.1 Rite Aid will provide
drugstore.com with user identifications and passwords on an
as-needed basis for the purpose of filling prescriptions for
Pharmaceutical Products. All use of the user identifications,
passwords and Rite Aid Technology shall be subject to Rite
Aid’s then-current privacy, data access, and other applicable
policies. The user identifications and passwords shall only be used
to perform the services described herein at the Rite Aid
Pharmacy.
6.3.2 As reasonably requested by drugstore.com, Rite Aid
will provide to drugstore.com copies of the Rite Aid Technology, or
necessary portions thereof, in such manner as mutually agreed upon
by the parties for use by drugstore.com in accordance with the
terms of this Agreement and for no other reason whatsoever.
6.3.3 The parties will provide to each other updated
copies, if any, of the Rite Aid Technology and the Rite Aid
Technology Derivatives on a periodic basis when available
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