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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

 

 

A.

Rite Aid is a leading drugstore in the United States with approximately 5,000 stores.

 

 

B.

drugstore.com is a leading online drugstore.

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:

 

 

       

Due Date

  

Amount Due

9/17/08

  

$

991,000.00

10/17/08

  

$

991,000.00

11/17/08

  

$

991,000.00

12/17/08

  

$

991,000.00

1/19/09

  

$

991,000.00

2/17/09

  

$

991,000.00

3/17/09

  

$

991,000.00

4/17/09

  

$

991,000.00

5/18/09

  

$

991,000.00

6/17/09

  

$

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.

 

 

2.5.1

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.

 

 

2.5.2

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.

 

 

2.5.3

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.

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:

 

 

2.7.1 

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.

 

 

2.7.2 

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.

 

 

2.7.3 

Rite Aid will be the exclusive owner of every new and refilled LPU prescription as well as all associated revenue and margin.

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


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