EXHIBIT 10.17
AGREEMENT
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This Agreement ("Agreement"), dated as of August 31, 1999, is between
Express Scripts, Inc., a Delaware corporation ("ESI") and XxxxxxXx.xxx, Inc., a
Delaware corporation ("PlanetRx").
RECITALS
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Whereas, ESI provides and manages prescription drug programs for its
clients, which programs include claims administration, mail service dispensing
and other pharmacy management services.
Whereas, PlanetRx is a leading Internet Pharmacy (as hereinafter defined)
which owns and operates an internet based online shopping site for the retail
sale of prescription and non-prescription pharmaceuticals and health and beauty
products.
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.
"Competitor" (i) of ESI means any Third Party that is a PBM, and (ii) of
PlanetRx means (a) a Third Party that sells prescription and non-prescription
pharmaceuticals and health and beauty aids via the Internet or (b) the Internet
division of a traditional pharmacy provider which utilizes the Internet for the
sale, order, reorder or mail delivery of Pharmaceutical Products.
"Confidential Information" means all trade secrets, know-how and nonpublic
information that relates to research, development, trade secrets, inventions,
source code, technical data, software programming, concepts, designs,
procedures, manufacturing, purchasing, accounting, engineering, marketing,
merchandising, selling, business plans or strategies and other proprietary or
confidential information, protectable under the laws of the United States or any
other nation, state or jurisdiction (including, but not limited to, any foreign
equivalents thereto).
"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.
"DrugDigest Site" means the website currently located at
xxx.XxxxXxxxxx.xxx.
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
"Effective Time" shall have the meaning as set forth in Section 18.15 of
this Agreement.
"Equity Transaction" means, collectively, the transactions described in
that certain Asset Contribution and Reorganization Agreement dated as of August
31, 1999, among ESI, YPC, PlanetRx, PRX Holding Company and PRX Acquisition
Corp.
"ESI Member" means any individual who is entitled to benefits under a
prescription drug benefit plan provided by ESI, or a Person Controlled by ESI,
to an ESI Plan Sponsor or directly to such individual.
"ESI Networks" means any or all of the networks of retail pharmacies
contracted with ESI to dispense prescription drugs to ESI Members. A pharmacy
network that is contracted by an ESI Plan Sponsor and merely administered by ESI
for such ESI Plan Sponsor shall not be deemed to be an ESI Network for purposes
of this Agreement.
"ESI Plan Sponsor" means a sponsor of a health plan (such as an insurance
company, health maintenance organization, employer, Xxxx-Xxxxxxx plan, or other
Person, or a third party administrator acting on behalf of such a plan sponsor,
including a sponsor of a "cash and carry" or discounted card program) who
contracts with ESI or one of its Affiliates to provide a prescription drug
benefit to members of such health plan.
"ESI Site" means the website currently located at xxx.xxxxxxx-xxxxxxx.xxx
(and any successor site, Mirror site or sites controlled by ESI or sites of any
entity Controlled by ESI).
"Fully Diluted Equity" means the potential number of shares in PlanetRx
which includes: (a) all issued shares of common stock (whether fully or partly
paid), (b) the maximum number of shares of common stock which may be issued
upon: (i) the exercise of options granted by PlanetRx and (ii) conversion of
securities which are convertible into shares of common stock, including but not
limited to, all convertible notes, bonds and shares; and (c) shares issued by
PlanetRx in any other class.
"Home Page" means (i) with respect to the PlanetRx Site, the page that is
displayed to the user when the URL xxx.XxxxxxXx.xxx or any successor URL is
entered, (ii) with respect to the YPC Site, the page that is displayed to the
user when the URL xxx.xxxxXxxxxxxx.xxx or any successor URL is entered, and
(iii) with respect to the DrugDigest Site, the page that is displayed to the
user when the URL xxx.XxxxXxxxxx.xxx or any successor URL is entered.
"Internet Pharmacy" means a pharmacy which does not have a physical
location for patrons to visit for retail sales but that receives orders from
customers only through the Internet, but does not include the Internet division
or operations of pharmacy chains and other retail merchants (such as supermarket
chains and discount stores) that dispense prescription drugs and who, as an
adjunct to their traditional pharmacy operations also accept prescription orders
via the Internet and mail or deliver the Pharmaceutical Products to their
customers.
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"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).
"IP Right" 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).
"Link" means a hypertext link connecting a website to another.
"Member Data" means any and all information regarding ESI Members
(identifiable as such by PlanetRx) including, without limitation, any and all
information reasonably obtainable in connection with any ESI Member purchases
facilitated through the PlanetRx Site, whether in separately identifiable or
aggregated form, including, without limitation, first or last name; E-mail or
other address; postal code; gender or other demographic characteristics; year or
date of birth; social security or other tax identification number; occupation or
other socio-economic or financial information; nature, subject matter, date or
amount paid in any purchase(s), preferences or habits; and any other identifying
information, whether or not actually provided, collected, derived or deduced,
and regardless of its accuracy or completeness.
"Member Impression" means any discrete communication of any nature
whatsoever that is directed to an ESI Member that originates with ESI or with a
Third Party (such as an ESI Plan Sponsor) at ESI's request and that refers to
PlanetRx (by name, logo, or otherwise) or to the services it provides,
including, but not limited to, (i) banner advertisements, commerce buttons and
marketing buttons displayed on a web site, (ii) e-mail or paper mail
communications, (iii) ESI Member informational materials or identification
cards, (iv) mail order package inserts, and (v) taped messages played to ESI
Members waiting in a phone queue.
"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.
"PBM" means any Person which engages in any of the following activities,
whether or not constituting such Person's principal line of business:
contracting with a health plan sponsor to provide prescription drug benefits via
mail order, point-of-sale electronic processing of pharmacy claims, formulary
development and administration, or developing and/or maintaining retail pharmacy
networks for fulfillment of consumer orders for Pharmaceutical Products for
members of a prescription drug benefit plan; provided, that an insurance
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company, HMO or other Person whose principal business involves offering policies
or plans of comprehensive health care and which engages in such activities
solely for the benefit of its policyholders or members of its comprehensive
health plans shall not be deemed to be a PBM for purposes of this Agreement.
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"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 order written by a licensed medical
professional and dispensed by a licensed pharmacy.
"Pharmacy Chain" means any Third Party that is engaged in a retail business
and which owns or operates more than 50 retail outlets at which an individual
consumer may have a prescription order for Pharmaceutical Products filled.
"PlanetRx IPO" shall mean the initial public offering of shares of common
stock of PlanetRx as defined in the Equity Transaction Agreements.
"XxxxxxXx.xxx" means the website currently located at xxx.XxxxxxXx.xxx and
any successor site.
"PlanetRx Site" means the website currently located at xxx.XxxxxxXx.xxx and
any successor site, Mirror site or sites controlled by PlanetRx or sites of any
entity Controlled by PlanetRx.
"Term" means the period commencing on the Effective Time and ending on the
fifth anniversary of such date, subject to extension in accordance with Section
17.5.
"Third Party" means any Person that is not a party hereto or an Affiliate
of a party hereto.
"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.
"website" means a location accessible on the Internet through the World
Wide Web and which provides multimedia content via a graphical user interface.
"World Wide Web" means a method of representing and obtaining graphical
data and linking data items used by Internet users.
"YPC" means xxxxXxxxxxxx.xxx, Inc., a Delaware corporation and wholly owned
subsidiary of ESI.
"YPC Site" means the site currently located at xxx.xxxxXxxxxxxx.xxx (and
any successor site or Mirror site).
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Section 2. Affiliation Grants
2.1 ESI Grant.
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(a) Subject to the terms and conditions of this Agreement and the
conditions described below, ESI agrees that (i) PlanetRx shall be the exclusive
Internet Pharmacy contracted in the ESI Networks in the United States to fulfill
orders for ESI Members for Pharmaceutical Products and (ii) ESI shall not enter
into any agreement with any other Internet Pharmacy to fulfill orders for ESI
Members for non-prescription drugs and health and beauty aids for the Term of
this Agreement. Initially, PlanetRx shall be admitted into the ESI network
solely to fill prescriptions for a 30 or fewer days' supply of Pharmaceutical
Products. The parties may, but are under no obligation to, subsequently
negotiate terms under which PlanetRx may fill orders for Pharmaceutical Products
for a greater than 30 days' supply. Among other things, the parties will discuss
an arrangement pursuant to which PlanetRx will fulfill up to $200 million in
ingredient cost of prescriptions for ESI Members for quantities in excess of a
30-day supply on economic and other terms no less favorable to ESI than those
that ESI would have realized had ESI fulfilled such orders in its own
facilities. If ESI, whether due to legal requirements or a "Competitive Reason"
(as defined below), finds it necessary to permit other Internet Pharmacies into
the ESI Networks, ESI will not promote such other Internet Pharmacies to ESI
Members or ESI Plan Sponsors except as required by law; provided, however, that
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the foregoing shall not preclude the listing of such Internet Pharmacies in
ESI's or an ESI Plan Sponsor's provider directory. ESI shall use its reasonable
best efforts to include PlanetRx in all the ESI Networks but does not guarantee
that PlanetRx shall be included in all of the ESI Networks. PlanetRx
acknowledges that an ESI Plan Sponsor may require that one or more other
Internet Pharmacies be included in the network for that ESI Plan Sponsor, or
that one or more Internet Pharmacies (which might include PlanetRx) be excluded
from the network for that ESI Plan Sponsor. A "Competitive Reason" means a
circumstance that ESI deems, in good faith, to constitute a material competitive
or business disadvantage to ESI in maintaining PlanetRx as the sole Internet
Pharmacy in the ESI Networks. Examples of such circumstances include the
insistence of actual or potential ESI Plan Sponsors that ESI include other
Internet Pharmacies in the network or competitive disadvantage in the sales
process that ESI might suffer if ESI's Competitors open their networks to more
than one Internet Pharmacy. For purposes of this section ESI shall include any
Person Controlled by ESI that is in the pharmacy benefit management business.
(b) The terms and conditions upon which PlanetRx will fulfill orders for
Pharmaceutical Products will be governed by a Pharmacy Provider Agreement in the
form of Exhibit B hereto. The terms of such Agreement will govern over any
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inconsistent term in the body of this Agreement or in any other agreement
between the parties with respect to the matters addressed therein.
(c) The scope of this Agreement is limited to ESI's pharmacy benefit
management business relating to Pharmaceutical Products that are customarily
dispensed from retail pharmacies directly to patients for self-administration,
and shall not be deemed to include or affect in any manner whatsoever ESI's
ancillary health care
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businesses, including, but not limited to, (i) its infusion therapy business
presently conducted by its wholly owned subsidiary, IVTx, Inc.; (ii) its
specialty distribution business, which involves the distribution of prescription
drugs requiring special handling or special eligibility requirements, to
physician offices, or pursuant to special programs operated by pharmaceutical
manufacturers; and (iii) its medical information management business, conducted
by its subsidiary, Practice Patterns Science, Inc.
2.2 PlanetRx Grant.
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(a) PlanetRx agrees that ESI shall be its "Preferred PBM Partner" meaning
that, although PlanetRx shall have the right to contract with other PBMs, the
following conditions shall be met: (i) ESI shall retain the most prominent
position in any promotional placements for PBMs on the PlanetRx Site, and (ii)
ESI shall be given "most favored nation" financial terms compared to any other
PBM, such that the total economic package to ESI under this Agreement shall be
at least [+] more favorable than that offered or given to any other PBM.
(b) PlanetRx hereby appoints ESI as its exclusive formulary manager, which
shall include the right to negotiate with pharmaceutical manufacturers for
rebates and other retrospective discounts (and associated administrative fees)
for Pharmaceutical Products, and to xxxx and collect any such rebates, discounts
and fees, with respect to purchases of Pharmaceutical Products by PlanetRx
customers whose purchases of such products are not reimbursed, in whole or in
part, under a plan that permits the sponsor of such plan or some other Third
Party a superior right to collect such rebates, discounts or fees. ESI will pay
[+] of any rebates and retrospective discounts collected by ESI with respect to
such PlanetRx customer purchases to PlanetRx, and ESI will retain the balance of
rebates and discounts, and any administrative fees, collected by it as its fee
for developing, implementing and managing the formulary program for PlanetRx.
Rebates, discounts and fees in respect of purchases by ESI Members are not
subject to the rebate-sharing provisions of this section, and shall be retained
100% by ESI. ESI shall collect and pay such rebates to PlanetRx in the same
manner and at the same times that it pays rebates to ESI Plan Sponsors.
PlanetRx acknowledges that drug manufacturers may discontinue payment of
such rebates and discounts at will, that laws governing prescription drug
pricing (including rebates) may change, and that rebate amounts are affected by
physician prescribing patterns and other factors. Accordingly, PlanetRx
acknowledges that no rebate or discount amounts can be guaranteed.
(c) ESI shall be entitled to contract with pharmaceutical manufacturers
relating to ancillary programs, such as compliance, disease management, drug and
disease education and formulary management with respect to any ESI Members. The
parties agree that the restrictions described in this Section are not intended
to prevent PlanetRx from entering into an agreement with a Third Party PBM
provided that such agreement complies with the restrictions described in Section
2.2(a).
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
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(d) During the initial Term of this Agreement PlanetRx grants ESI the
exclusive right to negotiate, in cooperation with PlanetRx, any strategic
alliance or equity investment in PlanetRx by one or more Pharmacy Chains for up
to an aggregate of [+] of the Fully Diluted Equity of PlanetRx calculated at the
time such transaction is proposed to PlanetRx (the "Equity Threshold"), subject
to review and approval of PlanetRx's Board. ESI's exclusive right shall
terminate once the Equity Threshold is reached.
Section 3. Exclusivity and Non-competition
3.1 ESI will not, and will not permit any entity that it Controls to, (i)
directly or indirectly own any interest in or operate an Internet Pharmacy or
(ii) promote any Person that is a PlanetRx Competitor to ESI Members or ESI Plan
Sponsors during the Term of this Agreement; provided, however, that the
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foregoing shall not preclude ESI from (1) holding an ownership interest in
PlanetRx, (2) conducting activities relating to the PlanetRx Site and the YPC
Site as set forth in Section 6.1 of this Agreement, (3) listing Internet
Pharmacies in ESI's or an ESI Plan Sponsor's provider directory, or (4) honoring
contractual obligations of a business or entity acquired by ESI under agreements
existing at the time of such acquisition until such agreements can be lawfully
terminated without financial or other penalty.
3.2 PlanetRx will not, and will not permit any entity that it Controls to
(i) directly or indirectly, engage in business as a PBM, (ii) take any actions
to attempt to convert ESI Members ordering a greater than 30 days' supply of a
Pharmaceutical Product to a 30 or fewer days' supply, or (iii) contact any ESI
Plan Sponsors without ESI's prior written consent; provided, however, that
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general solicitations or promotions targeted at the general population or
PlanetRx's general member base shall not be deemed to violate this provision.
3.3 ESI will not promote any PlanetRx Competitor during the Term of this
Agreement. Without limitation, the foregoing shall not be construed to preclude
(i) the listing of such PlanetRx Competitor in ESI's or an ESI Plan Sponsor's
provider directory or general benefit plan information or (ii) permitting an
ESI member to Link from the "Pharmacy Locator" section of the site currently
located at xxx.xxxxxxx-xxxxxxx.xxx or any successor site to the website of a
pharmacy or pharmacy chain that maintains physical retail locations if (a)
either one of the two largest PBM's or (b) any two of the top four largest PBM's
(excluding ESI) offers such a Linking capability. Subject to the foregoing,
ESI shall not provide a Link to any PlanetRx Competitor on the ESI Site.
3.4 Commencing on the Effective Time and throughout the Term of this
Agreement, PlanetRx shall supply up to 15 employees, on a full-time basis, for
the purpose of converting ESI Members to use the PlanetRx Site. The YPC
employees hired by PlanetRx in the Equity Transaction will initially focus on
converting ESI members to use the PlanetRx Site, but if the former YPC employees
terminate their employment with PlanetRx or have their employment terminated by
PlanetRx, PlanetRx will hire new employees or assign existing employees to focus
solely on such conversion. ESI will
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
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have the right to approve any PlanetRx employees who work on the conversion of
ESI Members.
3.5 Except as contemplated by the Equity Transaction, each party agrees
that neither it nor any Affiliates controlled, directly or indirectly, by such
party will at any time from the date of this Agreement until the second year
anniversary of the date upon which the Term of this Agreement terminates for any
reason, directly or indirectly, solicit for employment or employ (except any
employees whose place of employment is located in California) any individual who
was, at any time during the 6 months immediately preceding such solicitation or
employment, an employee of the other party, except with the consent of the other
party.
Section 4. Brands and Advertising/ Co-Branded Effort
4.1 Promotional Plan. ESI and PlanetRx shall develop a plan to promote
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their products and services and agree to the level of resources each will
commit. The general parameters of the plan will be as follows:
(i) PlanetRx shall designate ESI as its "Preferred PBM Partner" on the
PlanetRx Site.
(ii) ESI shall promote PlanetRx on the ESI Site and the YPC Site and
shall provide a Link to the PlanetRx Site on the YPC Site, and
PlanetRx shall promote the YPC Site and provide a Link to the YPC
Site on the PlanetRx Site. The placement of such Links shall be
mutually agreed upon by the parties. PlanetRx and ESI will develop
Links from the disease state websites to the ESI Site such that ESI
Members can Link to ESI's disease management program.
(iii) ESI Member materials shall indicate that PlanetRx is ESI's Internet
Pharmacy provider, subject to ESI Plan Sponsor review and approval
of the form and content of such communications where so applicable.
(iv) ESI shall use reasonable best efforts to provide PlanetRx with 50
million total Member Impressions in the first year of this
Agreement, 75 million total Member Impressions in the second year,
100 million total Member Impressions in the third year, 125 million
total Member Impressions in the fourth year and 150 million total
Member Impressions in the fifth and any subsequent year. The content
of Member Impressions referring to or relating to PlanetRx shall be
subject to reasonable approval by PlanetRx. In computing the number
of total Member Impressions the parties shall develop mutually
agreed upon standards to apply where precise enumeration is not
practicable, or where a Member Impression can reasonably be expected
to reach more than one ESI Member (as in the case of a mailing sent
to a residence where more than one ESI Member resides).
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4.2 Co-branded Website.
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4.2.1 PlanetRx shall co-brand the PlanetRx Site and all PlanetRx disease
state websites (e.g., xxx.xxxxxxxxx.xxx, xxx.xxxxxxxx.xxx etc.) for ESI Members
(identifiable as such by PlanetRx) in a manner that is mutually agreed upon by
the parties; provided, however, that ESI shall have the right to not have co-
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branding on certain designated areas on any such websites.
4.2.2 The co-branded website will include the respective logo(s) of each
party with the position, placement and prominence of such logos to be mutually
agreed upon by the parties. It is acknowledged that each party's logo(s) and
name are the intellectual property of such party and must be protected.
4.2.3 The co-branded website content, sponsorship and advertising
available to ESI Members (identifiable as such by PlanetRx) may be different
from that which is available to non-ESI Members. For example, in order to
minimize the opportunities for ESI Members to view content or promotional
material on the PlanetRx Site that may be inconsistent with the applicable
formulary or benefit design of the plan to which such ESI Member belongs, the
parties will cooperate to develop methodologies by which ESI Members can be
identified as such and routed to pages on the PlanetRx Site and the PlanetRx
disease state websites that do not contain any such content or promotional
materials.
4.2.4 PlanetRx agrees to cooperate with ESI to develop programs which
demonstrate to ESI Members the benefits of using the PlanetRx Site.
4.2.5 Both parties agree to develop appropriate procedures and technology,
including any requisite technical and web interfaces, in order to identify and
track ESI Member usage of the PlanetRx Site in a mutually agreed upon manner.
4.2.6 At ESI's request, PlanetRx shall expend up to $100,000 per year on
marketing efforts and promotions aimed at ESI Members.
4.3 Promotional Materials. PlanetRx shall co-brand offline collateral
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materials, such as package inserts, for ESI Plan Sponsors and ESI Members
(identifiable as such by PlanetRx) in a mutually agreed upon format. Any form
of branded communication and documentation must be agreed in writing by the
parties before it is issued, published or otherwise made available (in any form
or medium). All outbound communications from PlanetRx to ESI Members
(identifiable as such by PlanetRx) (other than those customarily occurring
between a pharmacist and patient with respect to the dispensing of
Pharmaceutical Products or those reasonably necessary to fulfill a customer's
order) shall require ESI's prior written approval; provided, however, that in
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the event that PlanetRx shall request consent for a specific promotion, ESI
shall provide a response to such request within one (1) business day.
4.4 PlanetRx Home Page
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4.4.1 One of the ESI Trademarks designated by ESI shall be featured on the
Home Page of XxxxxxXx.xxx, in a manner mutually agreeable to the parties.
4.4.2 ESI shall provide PlanetRx with samples of ESI Trademarks for use in
advertising and on the PlanetRx Site. Without ESI's prior written approval,
PlanetRx may not use Trademarks owned by ESI.
4.5 ESI and YPC Home Pages
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4.5.1 One of the PlanetRx Trademarks designated by PlanetRx shall be
featured on the Home Pages of the ESI Site and the YPC Site, in a manner
mutually agreeable to the parties.
4.5.2 PlanetRx shall provide ESI with samples of PlanetRx Trademarks for
use in advertising and on the ESI Site and the YPC Site. Without PlanetRx's
written approval, ESI may not use Trademarks owned by PlanetRx.
4.5.3 At the request of PlanetRx, ESI shall provide PlanetRx with a set of
Frequently Asked Questions ("FAQs") and answers thereto to be used by PlanetRx
at its option in conjunction with PlanetRx's FAQs, provided that PlanetRx must
incorporate any updates provided by ESI into any ESI FAQs and answers it uses.
4.6 Content
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4.6.1 ESI shall not knowingly publish on the ESI Site, and PlanetRx shall
not knowingly publish on the PlanetRx Site, any content, that is contrary to
law, false or misleading in any material respect, that promotes products
generally acknowledged to be injurious to good health (e.g., cigarettes and
other smoking products; alcoholic beverages), or that is in bad taste or can
reasonably be expected to be offensive to ESI Members. 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.
4.6.2 ESI shall have final approval regarding any representations made
relating to the quality of ESI services. PlanetRx shall have final approval
regarding any representations made relating to the quality of PlanetRx services.
4.6.3 ESI shall have the right to approve all prescription related and
other healthcare content and all advertising on the PlanetRx Site to which ESI
Members (identifiable as such by PlanetRx) shall have access.
Section 5. License
5.1 License to Trademarks
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5.1.1 Subject to Section 4, PlanetRx hereby grants to ESI and any of its
wholly owned entities a non-exclusive, royalty-free, non-transferable (except as
provided in
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Section 18.2), non-sublicensable worldwide license in all jurisdictions in which
PlanetRx has any rights, to use, reproduce, distribute and display the PlanetRx
Trademarks in connection with the agreements among the parties with respect to
advertising and promotions and the performance of its obligations hereunder.
5.1.2 Subject to Section 4, ESI hereby grants to PlanetRx and any of its
wholly owned entities a non-exclusive, royalty-free, non-transferable (except as
provided in Section 18.2), non-sublicensable worldwide license in all
jurisdictions in which ESI has any rights, to use, reproduce, distribute and
display the ESI Trademarks in connection with the agreements among the parties
with respect to advertising and promotions and the performance of its
obligations hereunder.
5.1.3 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 required by the Trademark owner. 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) 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. All goodwill associated with the use of the other's
trademarks hereunder shall inure to the benefit of the owner of such Trademark.
5.1.4 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.
5.2 Maintenance of PlanetRx Site. PlanetRx shall use reasonable efforts
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to maintain the PlanetRx Site such that up-time, scalability, back-up
capability, security and response time meet the then current generally accepted
standards for e-commerce sites on the World Wide Web, and are comparable to or
better than the standards maintained by PlanetRx Competitors.
Section 6. ESI Internet Initiative.
6.1 ESI shall develop, whether alone or with one or more other Third
Parties, its own Internet functionality for the ESI Site which shall link to
XxxxxxXx.xxx so that users of the ESI Site can order and purchase products
through XxxxxxXx.xxx. In addition, ESI
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may develop other Internet functionality which may, among other things, enhance
and support (i) its call center operations, (ii) account information, (iii) the
DrugDigest Site, (iv) a pharmacy locator service, (v) its disease management
programs, (vi) its newsletters, (vii) other PBM services, and (viii) physician
connectivity. The ESI Site will not itself have functionality or operate as an
e-commerce site selling prescription and non-prescription drugs and health and
beauty aids.
6.2 Subject to Section 6.1, PlanetRx shall pay $3 million per year, in
equal quarterly installments, to ESI to fund such activities by ESI throughout
the Term of the Agreement.
6.3 ESI shall establish a committee, to which PlanetRx shall be entitled
to appoint one member, which shall oversee such activities.
6.4 ESI shall own all IP Rights associated with the ESI Site.
Section 7. Drug Digest Site Content License
The parties shall mutually agree to and shall negotiate in good faith
regarding the terms and conditions relating to the license by PlanetRx of
content from the DrugDigest Site.
Section 8. PlanetRx Disease State Websites
8.1 Subject to section 8.3, during the Term of this Agreement, PlanetRx
shall appoint ESI as its exclusive marketing and sales agent for selling
advertising and promotions to Persons engaged primarily in a non-Internet based
healthcare business including, without limitation, manufacturers of
Pharmaceutical Products and non-prescription drugs, medical device manufacturers
and health plan sponsors for its disease state websites (e.g., xxxxxxxxx.xxx,
xxxxxxxx.xxx) to which ESI Members (identifiable as such by PlanetRx) shall have
access throughout the Term of the Agreement.
8.2 Except for any advertising or sponsorship revenue derived by PlanetRx
from any existing agreements at the Effective Time, PlanetRx shall pay ESI a
commission of 15% of the total annual advertising and sponsorship revenue (less
any returns and charge-backs) PlanetRx receives for such disease state websites
from those Persons to which ESI's exclusivity applies pursuant to Section 8.1
above.
8.3 The parties shall develop mutually satisfactory annual advertising
revenue goals for the disease state websites for the fourth and fifth years of
this agreement and for any periods thereafter. In the event that such goals are
not achieved, ESI's right to act as the exclusive marketing and sales agent
shall convert to a non-exclusive right and ESI shall receive the commission set
forth in Section 8.2 for any advertising and sponsorship revenue for which it is
directly responsible.
8.4 The aggregate revenue goal for the disease state websites in
advertising and sponsorship revenue received from those Persons to which ESI's
exclusivity applies pursuant to Section 8.1 above shall be as follows: (i)
[+] for the first 12 months
12
of this Agreement; (ii) [+] for the following 12 month period and (iii) [+] for
the 12 month period thereafter.
Section 9. Compensation
9.1 In consideration of the rights granted to PlanetRx and the obligations
undertaken by ESI under this Agreement, PlanetRx shall pay ESI a base fee and an
incremental fee (collectively, the "Operating Fee") based on the schedule
attached hereto as Exhibit A.
---------
9.2 ESI will be entitled to have a nationally recognized accounting firm
selected by ESI, other than ESI's then current accounting firm, to audit
PlanetRx's applicable books and records on an annual basis in order to monitor
PlanetRx's compliance with its payment obligations described in Section 9.1 and
Section 8.2 above. ESI will provide PlanetRx with at least fifteen days
business notice and such audit shall take place at such location where PlanetRx
maintains its books and records and during reasonable business hours. In
connection with any such audit, PlanetRx shall provide ESI and its accountants
with access to the applicable books and records and shall otherwise cooperate
with such audit in a reasonable manner. All audits shall be at the expense of
ESI; provided, however, that if any annual audit reveals an underpayment by
-------- -------
PlanetRx of 5% or more, such audit shall be at the expense of PlanetRx. In the
event any annual audit reveals a shortfall in PlanetRx's annual payment
obligations under either Section 9.1 or Section 8.2, PlanetRx shall immediately
make payments to ESI in order to cover such shortfall.
9.3 Any Payment obligations of PlanetRx pursuant to Sections 6.2 and the
base fee as set forth on Exhibit A shall be due and payable on a quarterly
---------
basis, in equal quarterly installments, within five (5) days of the end of such
quarter. Any Payment obligations of PlanetRx pursuant to Sections 8.2 of this
Agreement are due and payable on a quarterly basis within 30 days from the end
of such quarter. Any Payment obligations of PlanetRx pursuant to Sections 9.1
relating to the incremental fee as set forth on Exhibit A of this Agreement are
---------
due and payable on a quarterly basis on the later of (i) 30 days from the end
of such quarter or (ii) within 30 days from the date on which ESI provides
PlanetRx with any necessary information to calculate any necessary payment due
ESI pursuant to Sections 9.1 relating to the incremental fee as set forth on
Exhibit A of this Agreement. All payments are payable by wire transfer in
---------
immediately available funds to an account designated by ESI. Any late payments
shall bear interest at the lesser of (i) the prime rate of Citibank N.A. plus
four percent (4%) per year, or (ii) the maximum amount allowed by law.
Section 10. IP Rights Ownership; Member Data
10.1 Ownership by ESI. As between ESI and PlanetRx, ESI shall own all ESI
----------------
IP Rights.
10.2 Ownership by PlanetRx. As between ESI and PlanetRx, PlanetRx shall
------------------------
own all PlanetRx IP Rights.
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
13
10.3 Population of Web Sites. Subject to legal restrictions and to
-----------------------
receiving consent from ESI Members and/or ESI Plan Sponsors, and any other
required consents, the parties will (i) share email addresses, benefit design
and drug profile information for ESI Members to populate the ESI Member profiles
on the parties' respective sites and (ii) systematically and promptly provide
updates to each other's shared customer profiles to reflect any new information
acquired with respect to any such profiles in each case to enhance the ESI
Member's experience in the ordering of products or providing of services by
PlanetRx. PlanetRx's privacy policy with respect to ESI Members (identifiable as
such by PlantetRx) shall be at least as restrictive as the privacy policy ESI
has with respect to the ESI Members.
10.4 Ownership of Data. ESI and PlanetRx will, as between one and the
-----------------
other, own customer data as follows: All records and other data relating to ESI
Members including, but not limited to, their names, identification numbers,
addresses, drug profiles and prescribers, that are received by ESI or PlanetRx
from a Third Party (including the customer) shall remain the property of the
receiving party. Claim adjudication data sent by PlanetRx to ESI for purposes of
having ESI process a claim for payment shall be the joint property of the
parties.
10.5 Restrictions. Notwithstanding the foregoing, however, without the
------------
prior written consent of ESI, PlanetRx will not (i) disclose member information
obtained from ESI under Section 10.3 to a Third Party, and any use of the same
shall be subject to applicable laws and the then current privacy policy of ESI
and (ii) identify in any way ESI Member Data as data obtained from or in any way
relating to ESI Members. Notwithstanding the foregoing, however, without the
prior written consent of PlanetRx, ESI will not (x) disclose member information
obtained from PlanetRx under Section 10.3 to any Third Party, and any use of the
same shall be subject to applicable laws and the then current privacy policy of
PlanetRx and (y) identify in any way that the data obtained under section 10.3
as data obtained from or in any way relating to PlanetRx. Nothing contained
herein shall be interpreted to restrict a party from maintaining records
required by state or federal law or regulation.
10.6 PlanetRx Restriction. PlanetRx shall neither transfer nor disclose,
--------------------
or allow any Third Party access to, any ESI Member specific information
(identifiable as such by PlanetRx) (other than a transfer, disclosure or grant
of access customarily occurring between a pharmacist and a Third Party, such as
the prescriber, with respect to the dispensing of Pharmaceutical Products or
those reasonably necessary to fulfill a customer's order) or ESI Plan Sponsor
specific information to Third Parties without ESI's prior written approval and
any such disclosure shall be in strict accordance with PlanetRx's published
privacy policy and shall comply with all state and federal laws relating to such
disclosure.
Section 11. Technical and Advertising Communications
11.1 Advertising and Promotions. The parties will: (i) each appoint a
--------------------------
liaison to oversee and address issues and disputes regarding ongoing advertising
activities; and (ii) each appoint one senior marketing representative, that will
meet on at least a calendar
14
quarterly basis to discuss opportunities and establish advertising goals of the
parties for the next calendar quarter, establish general long term marketing
strategies. Any advertising-related dispute not resolved by the liaisons shall
be subject to the dispute resolution procedures set forth in Section 16.
11.2 Oversight. Each party will appoint a senior executive officer to
---------
oversee and have overall responsibility for the administration of this Agreement
and the parties' business relationship contemplated by this Agreement and the
Provider Agreement. Such senior executive officers will meet, either in person
or by telephone conference, at least once each calendar quarter.
Section 12. Representations and Warranties
12.1 Representations and Warranties of PlanetRx. PlanetRx hereby
-------------------------------------------
represents and warrants to ESI:
(a) Authorization. All corporate action on the part of PlanetRx, its
-------------
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement by and between PlanetRx and ESI, and the
performance of all obligations of PlanetRx hereunder has been taken, and this
Agreement, when executed and delivered by PlanetRx, will constitute valid and
legally binding obligations of PlanetRx, enforceable against PlanetRx in
accordance with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
(b) Intellectual Property. To its knowledge, PlanetRx owns or possesses
---------------------
sufficient legal rights to all IP Rights necessary for its business as now
conducted without any conflict with, or infringement of, the rights of others.
To its knowledge, PlanetRx technology or Trademarks do not violate any of the IP
Rights of any Third Party.
(c) Compliance with Other Instruments. The execution, delivery and
---------------------------------
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation of or be in conflict with
or constitute, with or without the passage of time and giving of notice, a
default under any provision of PlanetRx's or any of its subsidiaries' charter or
bylaws or any instrument, judgment, order, writ, decree or contract to which
PlanetRx or any of its subsidiaries is a party or by which PlanetRx or any of
its subsidiaries is bound, or any provision of any federal or state statute,
rule or regulation applicable to PlanetRx or any of its subsidiaries, the effect
of which would have a material adverse effect on the ability of PlanetRx or any
of its subsidiaries to perform its obligations under this Agreement or result in
the creation of any lien, charge or encumbrance upon any assets of PlanetRx or
any of its subsidiaries.
(d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, PLANETRX
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, DIRECTLY OR
INDIRECTLY, EXPRESS OR
15
IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY GOODS OR SERVICES TO
BE PROVIDED UNDER THIS AGREEMENT, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS
AGREEMENT.
12.2 Representations and Warranties of ESI. ESI hereby represents and
-------------------------------------
warrants to PlanetRx:
(a) Authorization. All corporate action on the part of ESI, its officers,
-------------
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement, and the performance of all obligations of ESI
hereunder has been taken, and this Agreement, when executed and delivered by
ESI, will constitute valid and legally binding obligations of ESI, enforceable
against ESI in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
other laws of general application affecting enforcement of creditors' rights
generally, as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
(b) Intellectual Property. To its knowledge, ESI owns or possesses
---------------------
sufficient legal rights to all IP Rights necessary for its business as now
conducted without any conflict with, or infringement of, the rights of others.
To its knowledge, ESI's technology or Trademarks do not violate any of the IP
Rights of any Third Party.
(c) Compliance with Other Instruments. The execution, delivery and
---------------------------------
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation of or be in conflict with
or constitute, with or without the passage of time and giving of notice, a
default under any provision of ESI's or any of its subsidiaries' charter or
bylaws or any instrument, judgment, order, writ, decree or contract to which ESI
or any of its subsidiaries is a party or by which ESI or any of its subsidiaries
is bound, or any provision of any federal or state statute, rule or regulation
applicable to ESI or any of its subsidiaries, the effect of which would have a
material adverse effect on the ability of ESI or any of its subsidiaries to
perform its obligations under this Agreement or result in the creation of any
lien, charge or encumbrance upon any assets of ESI or any of its subsidiaries.
(d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, ESI MAKES
NO REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, DIRECTLY OR INDIRECTLY,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY GOODS
OR SERVICES TO BE PROVIDED UNDER THIS AGREEMENT, OTHER THAN THOSE EXPRESSLY SET
FORTH IN THIS AGREEMENT.
16
Section 13. Indemnification
13.1 Indemnification. Subject to section 13.2, ESI and PlanetRx each
---- ---------------
shall indemnify and hold harmless the other and its divisions, its Affiliates
and its officers, directors, employees, representatives and agents (the
"Indemnified Parties") from and against (i) any and all liabilities, suits,
costs, judgments, penalties, expenses, obligations, losses and damages arising
from or related to claims or actions made by a Third Party, including any
obligation or liability which may be imposed upon any of the Indemnified Parties
as a matter of law, and constituting, or in any way based upon, resulting from
or arising out of any breach or alleged breach by ESI or PlanetRx, as
applicable, of any representation, warranty, agreement or covenant made by such
party in this Agreement, and (ii) any cost or expense (including legal fees and
out-of-pocket expenses) reasonably incurred by any of the Indemnified Parties
(and their counsel) in investigating, preparing for, defending against or
otherwise taking any action in connection with any of the foregoing
(collectively "Damages"). A party's Damages shall be calculated net of any tax
benefit such party would be entitled to in respect of such Damages.
13.2 Procedure. If any claim, demand, assessment or liability or cost
---- ---------
incidental thereto (collectively, an "Indemnified Claim"), is asserted against
an Indemnified Party in respect of which the Indemnified Party proposes to
demand indemnification from the other party (the "Indemnifying Party") pursuant
to Section 13.1, such Indemnified Party will promptly notify the Indemnifying
Party in writing. No failure of an Indemnified Party to so notify the
Indemnifying Party shall relieve the Indemnifying Party from the obligation to
indemnify the Indemnified Party unless and to the extent the Indemnifying Party
is actually prejudiced by such failure. Such Indemnified Party will accord the
Indemnifying Party the opportunity to assume entire control for the defense,
compromise or settlement of any such Indemnified Claim through its own counsel
and at its own expense; provided that no such compromise or settlement shall
include any non-monetary terms and conditions applicable to such Indemnified
Party without the consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, the Indemnified
Party may retain its own counsel at its own expense (the Indemnifying Party
shall only be liable for the reasonable cost of one such counsel for all
Indemnified Parties) if (i) the Indemnifying Party, within thirty (30) days
after notice of any Indemnified Claim, fails to assume the defense of such
Indemnified Claim or (ii) the representation of both the Indemnifying Party and
the Indemnified Party would, in the reasonable judgment of the parties, be
inappropriate due to actual or potential conflicting interests between them. If
the Indemnifying Party does not assume entire control of the defense, compromise
or settlement of such Indemnified Claim, the Indemnified Party may compromise or
settle any such Indemnified Claim. PlanetRx and ESI each agrees to reasonably
cooperate with respect to the defense of any Indemnified Claim, at the
indemnifying party's expense.
Section 14. Infringement Claims
14.1 Legal Action for Infringement of IP Rights.
------------------------------------------
17
14.1.1 ESI reserves any and all rights to commence, prosecute, compromise
and settle any claim, action or proceeding for infringement, unfair competition,
unauthorized use, misappropriation or violation of any of the ESI IP Rights by
any Third Party. ESI may commence, prosecute, compromise or settle any such
claim, action or proceeding, as well as any claim, action or proceeding to
defend any of the ESI IP Rights, in its sole discretion, but shall not have any
obligation to do so.
14.1.2 PlanetRx reserves any and all rights to commence, prosecute,
compromise and settle any claim, action or proceeding for infringement, unfair
competition, unauthorized use, misappropriation or violation of any of the
PlanetRx IP Rights by any Third Party. PlanetRx may commence, prosecute,
compromise or settle any such claim, action or proceeding, as well as any claim,
action or proceeding to defend any of the PlanetRx IP Rights, in its sole
discretion, but shall not have any obligation to do so.
14.1.3 No party shall have the right to commence or prosecute any legal
action with regard to the IP Rights of the other party, without such other
party's prior written consent in such other party's sole discretion.
14.1.4 If either party becomes the subject of a claim, action or
proceeding for infringement, unfair competition, unauthorized use,
misappropriation or violation of any IP Rights of a Third Party as a result of
its use of the other party's IP Rights pursuant to this Agreement, then the
party owning such IP Rights shall upon the request of such other party defend
and indemnify the requesting party from and against such Third Party claim,
action or proceeding ("IP Claim") and shall pay any and all damages,
liabilities, costs and attorneys fees awarded against a party arising out of
such IP Claim; provided, that: the party owning such IP Rights has sole control
--------
over the defense or settlement of such IP Claim, the requesting party shall
provide the party owning such IP Rights prompt notice of the IP Claim, and such
assistance in defense of the claim, action or proceeding as the owning party may
reasonably request and shall comply with any settlement or court order made in
connection with the claim, action or proceeding (e.g., relating to the future
use of any infringing IP Rights). In any case, the requesting party shall be
entitled to participate in the defense of any such claim, action or proceeding,
at its own cost, with counsel of its choice.
14.1.5 In the event either party should have a claim against the other
party for infringement, unfair competition, unauthorized use, misappropriation
or violation of any of its IP Rights as a result of the use of its IP Rights by
the other party pursuant to this Agreement, the parties shall resort to the
dispute resolution provisions set forth in Section 16.
Section 15. Additional Obligations of the Parties
15.1 Nondisclosure.
-------------
15.1.1 A party (the "Receiving party") receiving any Confidential
Information of the other party (the "Disclosing party") will exercise a
reasonable degree of care, but in no event less than the same degree of care
that it uses to protect its own confidential
18
information of a like nature, to keep confidential and not disclose such
Confidential Information and not to use such Confidential Information except as
authorized by this Agreement. Without limiting the generality of the foregoing,
the Receiving Party shall disclose the Confidential Information of the other
party only to those of its employees and contractors (a) who have a need to know
the Confidential Information in order to exercise its license to such
Confidential Information, and (b) who are contractually bound to terms and
conditions protecting against the unauthorized disclosure or use of Confidential
Information.
15.1.2 The obligations set forth in Section 15.1.1 above shall not apply
to any Confidential Information to the extent it: (a) is approved by prior
written authorization of the Disclosing party for release by the Receiving
party; (b) is disclosed in order to comply with a judicial order issued by a
court of competent jurisdiction, in which event the Receiving party shall give
prior written notice to the Disclosing party of such disclosure as soon as
practicable and shall cooperate with the Disclosing party in using all
reasonable efforts to obtain an appropriate protective order or equivalent,
provided that the information shall continue to be Confidential Information to
the extent it is covered by such protective order or equivalent; (c) becomes
generally available to the public through any means other than a breach by the
Receiving party of its obligations under this Agreement; (d) was in the
possession of the Receiving party without obligation of confidentiality prior to
receipt or disclosure under this Agreement as evidenced by written records made
prior to such receipt or disclosure; (e) is developed independently by the
Receiving party without the use of or benefit from any of the Confidential
Information of the other party or without breach of this Agreement, as evidenced
by records of the Receiving party; or (f) is required to be disclosed by any
national securities exchange, by government rule or regulation (e.g., in
connection with a securities filing) or by any other provisions of applicable
law, provided that the Receiving party gives the Disclosing party advance
--------
written notice (to the extent practicable) of the disclosure and cooperates with
the Disclosing party in any reasonable attempt to limit the scope of the
required disclosure. In any dispute over whether information is Confidential
Information under this Agreement, it will be the burden of the Receiving party
to show that such contested information falls within the exceptions set forth in
this Section 15.1.2.
15.2 No Contest of ESI IP Rights. PlanetRx shall not contest or otherwise
---------------------------
challenge (e.g., in any legal action or otherwise), or assist or encourage any
other Person to contest or challenge, the validity of any ESI IP Rights;
provided that the foregoing shall not preclude PlanetRx from claiming that the
IP Rights in question are PlanetRx IP Rights.
15.3 No Contest of PlanetRx IP Rights. ESI shall not contest or otherwise
--------------------------------
challenge (e.g., in any legal action or otherwise), or assist or encourage any
other Person to contest or challenge, the validity of any PlanetRx IP Rights;
provided that the foregoing shall not preclude ESI from claiming that the IP
Rights in question are ESI IP Rights.
19
Section 16. Resolution of Disputes
16.1 General. If any dispute arises between the parties relating to this
-------
Agreement, each party will follow the dispute resolution procedures set forth in
this Section 16 prior to initiating any litigation or pursuing other available
remedies unless otherwise agreed in writing by the parties at the time the
dispute arises. Notwithstanding the foregoing, any party may commence litigation
without having first complied with the provisions of this Section 16 if such
commencement occurs within thirty (30) days prior to the date after which the
commencement of litigation would be barred by any statute of limitations,
statute of repose or other law, rule, regulation, or order of similar import or
in order to request injunctive or other equitable relief necessary to prevent
irreparable harm. In such event, the parties will (except as may be prohibited
by judicial order) nevertheless continue thereafter to follow the procedures set
forth in this Section 16.
16.2 Initiation of Procedures. If a party seeks to initiate the
------------------------
procedures under this Section 16, such party will give written notice thereof to
the other party. Such notice will (i) state that it is a notice initiating the
procedures under this section, (ii) describe briefly the nature of the dispute
and the initiating party's claim or position in connection with the dispute, and
(iii) identify an individual with authority to settle the dispute on such
party's behalf. Within ten (10) days after receipt of any notice under this
Section 16.2, the receiving party will give the initiating party written notice
that describes briefly the receiving party's claims and positions in connection
with the dispute and identifies an individual with the authority to settle the
dispute on behalf of the receiving party.
16.3 Pre-Litigation Discussion. The parties will cause the individuals
-------------------------
identified in their respective notices under Section 16.2 above to promptly make
such investigation of the dispute as such individuals deem appropriate. Promptly
and in no event later than ten (10) days after the date of the initiating
party's notice under Section 16.2, such individuals will commence discussions
concerning resolution of the dispute. If the dispute has not been resolved
within 30 days after commencement of such discussions, then any party may
request that the other party make its president available to discuss resolution
of such dispute. Each party will cause its president to meet together with the
other party's president to discuss such dispute at a mutually agreed upon time
within 15 days after a party makes such request. If the dispute has not been
resolved within 15 days after the presidents of the parties have first met, then
any party may request that the other party make an independent director
available to discuss resolution of such dispute. "Independent Director" means
any director that is neither an employee of, nor an outside provider of services
to, a party. Each party will cause its Independent Director to meet together
with the other party's Independent Director to discuss such dispute at a
mutually agreed upon time within ten (10) days after a party makes such request.
If the Independent Directors do not resolve the dispute within five (5) days of
their first meeting, the parties shall submit the dispute for non-binding
mediation to a mutually agreed upon mediator or mediation firm. The parties will
use their best efforts to cause the mediator to resolve the dispute within 15
days of its submission thereto. If the mediator is unable to resolve the dispute
within such time period, any party may submit the dispute to litigation. The
parties shall each pay one-half of the costs and expenses of such mediation, and
each shall separately pay its respective counsel fees and expenses.
20
16.4 Waiver of Right to Jury Trial. THE PARTIES HEREBY WAIVE THEIR
-----------------------------
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN THE EVENT THAT ANY DISPUTE PURSUANT TO
THIS AGREEMENT SHALL BE SUBMITTED TO LITIGATION.
Section 17. Termination; Extension
17.1 The following shall be Events of Default under this Agreement:
(a) ESI is in material breach of any of its material obligations
under this Agreement or the Equity Transaction agreements (including any
material breach or inaccuracy of its representations or warranties that has a
material adverse effect on the ability of ESI to perform its obligations under
this Agreement or the Equity Transaction agreements), which breach ESI does not
cure within sixty (60) days after PlanetRx gives ESI written notice thereof;
(b) PlanetRx is in material breach by of any of its material
obligations under this Agreement or the Equity Transaction agreements (including
any material breach or inaccuracy of its representations or warranties that has
a material adverse effect on the ability of PlanetRx to perform its obligations
under this Agreement or the Equity Transaction agreements), which breach
PlanetRx does not cure within sixty (60) days after ESI gives PlanetRx written
notice thereof;
(c) PlanetRx engages in prescribing medicine or referring consumers
to physicians or other medical or dental professionals to obtain prescriptions
for Pharmaceutical Products;
(d) PlanetRx fails to pay any payment due hereunder to ESI when due,
and such failure is not cured within five (5) business days after the receipt of
the notice of such failure; or
(e) PlanetRx fails to maintain its privacy structure in accordance
with state and federal regulatory requirements and industry standards, as may be
reflected in certification standards of organizations such as Trust e, BBB,
VIPPS, the NABP or similar organizations and at a level comparable to that
maintained by other Internet Pharmacies.
17.2 Termination
---- ------------
17.2.1 If an Event of Default occurs under Section 17.1(a) and such
default is not cured within the prescribed notice period, PlanetRx may
immediately terminate this Agreement.
17.2.2 If an Event of Default occurs under Section 17.1(b) and such
default is not cured within the prescribed notice period, ESI may immediately
terminate this Agreement.
21
17.2.3 If an Event of Default occurs under Section 17.1(c), (d) or (e),
ESI shall have the option to (along with any other rights it may have under this
Agreement, law or in equity): (i) immediately terminate this Agreement or (ii)
terminate only those provisions of this Agreement which require ESI to name
PlanetRx as the exclusive Internet Pharmacy in the ESI Network and suspend any
co-branding and co-marketing efforts pursuant to this Agreement, until such
Event of Default is cured.
17.2.4 If either party (i) ceases to do business, or otherwise terminates
its business operation or (ii) is declared insolvent or seeks protection under
any bankruptcy, receivership, trust deed, creditors arrangement, composition or
comparable proceeding, the other party may immediately terminate this Agreement.
17.2.5 In the event that the PlanetRx IPO is not consummated within four
(4) months from the date of this Agreement, ESI shall have the option to
terminate this Agreement. Upon such termination, this Agreement shall become
void and of no further effect.
17.2.6 If there is no early termination pursuant to an Event of Default,
this Agreement will terminate upon the expiration of the Term.
17.3 Remedies and Liabilities for Events of Default.
---- ----------------------------------------------
17.3.1 Upon the first instance that an Event of Default occurs under
Section 17.1(d) which is not cured within the specified cure period, ESI shall
be entitled to irrevocable, worldwide, royalty free, fully paid up license to
any PlanetRx IP Rights relating to the PlanetRx Site, such that ESI may use or
modify any such IP Rights for its own purposes.
17.3.2 If the first Event of Default remains uncured and a subsequent
Event of Default occurs under Section 17.1(d), or if the initial Event of
Default is cured but two or more Events of Default occur within a twelve month
period, ESI shall have additional shares issued to it having a value equal to
two times the amount of all the defaulted payments, and also be entitled to
additional Board representation such that it shall control a majority of the
Board of PlanetRx.
17.4 Survival
---- --------
Sections 3.5, 10.1, 10.2, 10.4, 10.5, 10.6, 13, 14, 15, 16, 17.3, 17.4 and
18 shall survive termination of this Agreement.
17.5 Extension. ESI shall have the option to extend this Agreement by an
---- ---------
additional five year term provided that during the 12 months immediately
preceding the notice of extension PlanetRx realized not less than $250 million
in gross revenue attributable to purchases of goods or services by ESI Members.
If such ESI Member revenue for such period is greater than $500 million, this
Agreement (as amended from time to time prior to such extension) shall be
extended on the same terms and conditions. If such ESI Member revenue for such
period is from $250 million to $500 million, this Agreement (as amended from
time to time prior to such extension) shall be extended on
22
the same terms and conditions except that base fee set forth on Exhibit A hereto
---------
shall be $5,825,000. Notwithstanding the preceding sentence, if in any calendar
year during the extension period, PlanetRx realizes more than $500 million in
gross revenue attributable to purchases of goods or services by ESI Members, the
base fee for such year and each year thereafter shall be $11,650,000. ESI shall
provide PlanetRx with written notice not later than one-hundred and twenty (120)
days prior to the expiration of the Term that it wishes to extend the Term of
this Agreement in accordance with this section 17.5. PlanetRx covenants and
agrees that it will not voluntarily change its accounting and revenue
recognition policies in such a manner as to disadvantage ESI in achieving the
revenue levels described herein.
Section 18. Miscellaneous
18.1 Relationship. The parties are independent contractors under this
------------
Agreement. Each party acknowledges and agrees that it is not and will not be
during the Term an employee or an agent of the other party. Nothing in this
Agreement will be deemed to constitute, create, give effect to or otherwise
recognize a joint venture, partnership, franchise or business entity of any
kind.
18.2 Assignment; Sale of Assets or Capital Stock. This Agreement shall be
-------------------------------------------
binding upon and inure to the benefit of the parties hereto, and the legal
representatives, successors in interest and permitted assigns, respectively, of
each such party. This Agreement shall not be assigned in whole or in part by any
party without the prior written consent of the other party, such consent not to
be unreasonably withheld, except to an entity that acquires all or substantially
all of the business or assets of such party.
18.3 Change in Existing Law. In the event that there is a change in law
----------------------
or regulation, a change in interpretation of existing law or regulation, or new
enforcement of existing law or regulation such that any provision of this
Agreement shall be deemed illegal, invalid or unenforceable, or impractical, the
parties shall in good faith renegotiate such affected terms so as to put the
parties in as close to the same economic position as they would have been in had
the affected provisions not been deemed illegal, invalid or unenforceable.
18.4 Notices. All notices, requests, demands, applications, services of
-------
process, and other communications that are required to be or may be given under
this Agreement shall be in writing and shall be deemed to have been duly given
if sent by telecopy or facsimile transmission, answer back requested, or
delivered by courier or mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties to this Agreement at the following
addresses:
If to ESI: Express Scripts, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
Fax: 000-000-0000
23
With a copy to: Express Scripts, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: 000-000-0000
If to PlanetRx: PlanetRx, Inc.
000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000
Attention: Legal
Fax: 000-000-0000
or to such other address as the party shall have furnished to the other party by
notice given in accordance with this Section 18.4. Such notice shall be
effective (i) if delivered in person or by courier, upon actual receipt by the
intended recipient, or (ii) if sent by telecopy or facsimile transmission, on
the date of transmission unless transmitted after normal business hours, in
which case on the following date, or (iii) if mailed, upon the date of first
attempted delivery.
18.5 Waiver. No provision of this Agreement shall be deemed to be waived
------
and no breach excused unless such waiver or consent shall be in writing and
signed by the party that is claimed to have waived or consented. The failure of
a party at any time, or from time to time, to require performance by the other
party of any provision hereof shall in no way affect the rights of such party
thereafter to enforce the same nor shall the waiver by a party of any breach of
any provision hereof by the other party constitute a waiver of any succeeding
breach of such provision, or a waiver of any provision itself, or a waiver of
any other provisions hereof.
18.6 Severability. This Agreement will be enforced to the fullest extent
------------
permitted by applicable law. If for any reason any provision of this Agreement
is held to be invalid or unenforceable to any extent, then: (a) such provision
will be interpreted, construed or reformed to the extent reasonably required to
render the same valid, enforceable and consistent with the original intent
underlying such provision; (b) such provision will be void to the extent it is
held to be invalid or unenforceable; (c) such provision will remain in effect to
the extent that it is not invalid or unenforceable; and (d) such invalidity or
unenforceability will not affect any other provision of this Agreement or any
other agreement between the parties.
18.7 Remedies. Except as otherwise expressly provided in this Agreement,
--------
each and all of the rights and remedies provided in this Agreement, and each and
all of the remedies allowed at law and in equity, will be cumulative, and the
exercise of one right or remedy will not be exclusive of the right to exercise
or resort to any and all other rights or remedies provided in this Agreement or
at law or in equity.
18.8 Injunctive Relief. The parties acknowledge that a material breach of
-----------------
sections 2.1(a), 2.2(a), 3.1-3.5, 5, 10 and 15 this Agreement would cause
irreparable harm, the extent of which would be difficult to ascertain.
Accordingly, they agree that, in
24
addition to any other legal remedies to which the non-breaching party may be
entitled, such party will be entitled to obtain immediate injunctive relief in
the event of a material breach of this Agreement.
18.9 Governing Law. This Agreement will be governed by and construed
-------------
according to the laws of the State of Delaware without regard to its choice of
law provisions. The parties consent to the jurisdiction of such courts and waive
any right to assert that any such court constitutes an inconvenient or improper
forum.
18.10 Publicity. Neither party shall, without the approval of the other,
---------
make any press release or other public announcement concerning the transactions
contemplated by the Agreements, except as and to the extent that any such party
shall be so obligated by law or by the rules, regulations or policies of any
national securities exchange or association or governmental entity, in which
case the other party shall be advised and the parties shall use reasonable
efforts to cause a mutually agreeable release or announcement to be issued;
provided, however, that the parties hereby acknowledge and agree that
-------- -------
communications among employees of the parties and their attorneys,
representatives and agents necessary to consummate the transactions contemplated
hereby shall not be deemed a public announcement for purposes of this Section
18.10. Upon the execution and delivery of this Agreement, the parties hereto
will cooperate in respect of the immediate issuance of a mutually acceptable
press release relating to the transactions contemplated by the Agreements.
18.11 Entire Agreement. All Exhibits and Schedules to this Agreement are
----------------
incorporated in and constitute a part of this Agreement. This Agreement,
including the Exhibits and Schedules hereto, each as amended from time to time,
constitute the entire understanding between the parties in relation to the
subject matter hereof and supersede all prior discussions, agreements and
representations related to this subject matter, whether oral or written and
whether or not executed by a party. Unless otherwise provided in this Agreement,
no modification, amendment or other change may be made to this Agreement or any
part thereof unless reduced to writing and executed by authorized
representatives of all parties.
18.12 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
18.13 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement and in the Exhibits and Schedules hereto are used for convenience only
and are not to be considered in construing or interpreting this Agreement.
18.14 Force Majeure. Neither party shall be responsible for a failure to
-------------
meet its obligations under this Agreement to the extent caused by the following:
(i) materially inaccurate data submitted by the other party; (ii) any failure of
equipment, facilities or services not controlled or supplied by such party; or
(iii) failure(s) caused by acts of God, acts of nature, riots and other major
civil disturbances, strike by such party's personnel, sabotage, injunctions or
applicable laws or regulations, in each case without breach by
25
such party of any obligations under this Agreement with regard to either such
event or such failure. ESI or PlanetRx, as applicable, agrees to use its
commercially reasonable efforts to restore performance of its obligations under
this Agreement as soon as reasonably practicable following any such event.
18.15 Effective Time. This Agreement shall only become effective (the
--------------
"Effective Time") upon (i) the consummation of the PlanetRx IPO and the Equity
Transaction; (ii) the execution of the Provider Agreement as set forth in
Exhibit B hereto and (iii) the assumption of all of the obligations pursuant to
---------
this Agreement by the entity into which PlanetRx merges pursuant to the Equity
Transaction and any entity that Controls or is Controlled by such new entity.
[Signature Page Follows]
26
IN WITNESS WHEREOF, the parties have duly entered into this Agreement as of
the date first written above.
ESI: PlanetRx:
EXPRESS SCRIPTS, INC. XXXXXXXX.XXX, INC.
By: _______________________________ By: _______________________________
Name: _______________________________ Name: _______________________________
Title: _______________________________ Title: ______________________________
27
EXHIBIT A
Operating Fee to be Paid to ESI
A. Base Fee.
--------
PlanetRx shall pay ESI a base fee of $11,650,000/year, payable in equal
quarterly installments.
B. Incremental Fee
---------------
[+]
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
28
[+]
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
29
EXHIBIT B
Provider Agreement
30
EXHIBIT B
TO AGREEMENT DATED AS OF
AUGUST 31, 1999,
BETWEEN EXPRESS SCRIPTS, INC.
AND XXXXXXXX.XXX, INC.
INTERNET PHARMACY
PROVIDER AGREEMENT
------------------
THIS INTERNET PHARMACY PROVIDER AGREEMENT ("Agreement") is effective as of
this ___________________ day of ______________________________________ , 1999
(the "Effective Date"), by and between Express Scripts, Inc., a Delaware
corporation ("ESI"), and XxxxxxXx.xxx, Inc. a Delaware corporation
("Provider").
RECITALS
A. ESI provides and manages prescription drug programs for its clients,
which programs include claims administration, mail service dispensing and
other pharmacy benefit management services.
B. Provider, a Web-based pharmacy, wishes to provide Internet Pharmacy
services to eligible members of certain prescription drug programs by
participating in one or more of ESI's pharmacy networks, all in accordance
with and subject to the terms and conditions set forth herein.
TERMS AND CONDITIONS
1. DEFINITIONS For purposes of this Agreement, the following capitalized
-----------
terms shall have the meanings set forth below:
"Average Wholesale Price" or "AWP" means the average wholesale price of a
prescription drug based upon the most current information provided to ESI
by drug pricing services such as First Databank, Redbook or other source
generally recognized in the retail prescription drug industry selected by
ESI.
"Benefit Plan" means a health care plan pursuant to which prescription drug
benefits are available to Members.
"Copayment" means that portion of the total charge for each prescription
drug that a Member is required to pay to Provider in accordance with that
Member's Prescription Drug Program and the provisions of Section 2.A
hereof, whether designated as a "copayment" or "deductible" under the
applicable Prescription Drug Program.
"Covered Medications" means those prescription drugs, supplies and other
items prescribed by an authorized, licensed medical practitioner that are
covered by a Benefit Plan.
"DAW Code" means the "dispense as written" codes as developed by the NCPDP,
as may be revised from time to time.
"Formulary" means a list of preferred drugs developed by ESI or a Sponsor
and revised periodically, which drugs physicians are encouraged to
prescribe and pharmacists are encouraged to dispense, consistent with their
professional judgment and applicable medical and pharmaceutical laws and
procedures, and which Members are encouraged to use. ESI will send
Formulary information to the Provider on-line at time of claim
adjudication, or in such other manner as ESI deems appropriate.
"Internet Pharmacy" means a pharmacy which does not have a physical
location for patrons to visit for retail sales but that receives orders
from customers only through the Internet, but does not include the Internet
division or operations of pharmacy chains and other retail merchants (such
as supermarket chains and discount stores) that dispense prescription drugs
and who, as an adjunct to their traditional pharmacy operations also accept
prescription orders via the Internet and mail or deliver the Pharmaceutical
Products to their customers.
"MAC" means the maximum allowable cost that ESI will pay Provider for
generic drugs and multi-source brand drugs where a generic drug is
available (except in cases where the prescriber or Member insist upon
receiving the multi-source brand drug. MAC is determined by ESI, in its
sole discretion, based on industry wholesale trends and related current
pricing data for generic drugs.
"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).
"Member" means a subscriber and his or her eligible dependents to whom
benefits are available pursuant to a Prescription Drug Program.
"NCPDP" means the National Council for Prescription Drug Programs, or any
successor organization.
"Operating Agreement" means the Operating Agreement entered into by
Provider and ESI, dated as of August 31, 1999, which agreement provides for
certain operations and co-marketing arrangements.
"Prescription Drug Program" means prescription drug program services
provided to a Sponsor pursuant to an agreement with ESI, including any
Formulary.
"Provider Manual" is a written description of ESI's generally applicable
practices, policies, rules and procedures provided by ESI for pharmacies
dispensing Covered Medications to Members, including such provisions as are
specific to Internet
2
Pharmacies. The Provider Manual may be revised from time to time by ESI in
its sole discretion.
"Sponsor" means any health maintenance organization (HMO), insurance
company, employer or other organization having principal financial
responsibility for payment of Covered Medications provided to Members under
a Prescription Drug Program, or a person or entity (such as a third party
administrator) contracting on behalf of such an entity, or a person or
entity sponsoring a "cash and carry" or discounted card program.
"Usual and Customary Retail Price" means the Provider's usual and customary
retail price of a Covered Medication in a cash transaction (in the quantity
dispensed) on the date that it is dispensed, including any discounts or
special promotions offered on such date.
2. PHARMACY SERVICES
-----------------
A. Provider shall provide Internet Pharmacy services to Members through
its Internet Pharmacy website in connection with ESI's Prescription
Drug Programs, and agrees to perform the following:
1. Verification of Eligibility. Verify on-line with ESI that the
---------------------------
Member submitting the prescription request is eligible for
benefits under the Prescription Drug Program. Provider shall
require the Member provide a health plan identification number.
2. Dispensing. Dispense Covered Medications to each Member (not to
----------
exceed a one month's supply) in accordance with all applicable
laws and regulations and the applicable Prescription Drug
Program. Any prescription for a Member for a Covered Medication
greater than one-month's supply shall be transferred to ESI for
fulfillment unless otherwise mutually agreed to by the parties.
The parties will develop procedures for the transfer of such
prescription orders to ESI. Initially, however, Provider will
create an order for each Member request for such a prescription;
obtain approval from the credit card issuer for the amount of the
Copayment; and remit the Copayment to ESI when received, net of
the credit card issuer's fee.
3. Claims Processing. Submit each and every prescription drug claim
-----------------
for a Member to ESI in a current and industry accepted NCPDP
telecommunications format for processing and payment in
accordance with the requirements set forth in the Provider
Manual, which submission shall include, among other things, (a)
the DAW Code, (b) the nationally determined unique provider
identifier, when such identifier is readily available (or the DEA
number) or such other identifier agreed to by ESI for the
prescribing medical practitioner, and (c) the NDC number for the
original package size from which the Covered Medication was
dispensed.
3
If a claim cannot be transmitted on-line, Provider will make
reasonable attempts to retransmit the claim. In no event shall a
claim be submitted later than 30 days after the prescription is
filled. All messages and DUR information transmitted by ESI for
paid or rejected claims will be displayed for the dispensing
pharmacist at the time of claim processing. Provider will respond
to on-line messages received from ESI.
4. Copayments. Charge Members and collect the applicable Copayment
-----------
indicated on-line or if on-line processing is unavailable, then
as outlined in the Provider Manual, subject to the provisions of
Section 2.B. hereof regarding coupons. Copayments for Members
may not be waived or discounted without ESI's consent, nor may
Provider accept coupons issued by any person other than ESI in
lieu of collecting the Copayment in cash (including charge or
debit cards) for Members submitting prescriptions for Covered
Medications. In no event (including but not limited to
nonpayment by ESI or ESI's insolvency) shall Provider xxxx,
charge, collect a deposit from, or seek any other fees, taxes or
surcharges or any other compensation from any Member for any
Covered Medications or services provided in connection herewith
other than (i) the applicable Copayment (and in no event shall
ESI be liable for any Copayment), and (ii) standard shipping
charges, which shall not be less favorable than the charges to
Provider customers that are not Members. This Section 2.A.4
shall survive termination of this Agreement, regardless of the
cause of termination, and shall be construed for the benefit of
Members.
5. Verification of Dispensing. Maintain order detail and method of
--------------------------
shipment records (or other evidence specifically approved by ESI)
for each Covered Medication dispensed to Members.
6. Consultation Services. Provide reasonable consultation services
---------------------
with regard to Covered Medications that the Member is taking.
Reasonable consultation services shall include, at a minimum,
such consultation as is required under applicable federal or
state law or regulation.
B. Standards of Service. Provider shall perform the services required of
--------------------
it under this Agreement with at least the same standard of care, skill
and diligence that is customarily used by pharmacies, including VIPPS
certified internet pharmacies, in the community and that Provider uses
in serving other customers. Provider shall not engage in prescribing
prescription drugs or in referring Members to physicians or other
medical or dental professionals for prescriptions for Covered
Medications. Provider agrees that the administrative and billing
practices applied and the prices charged for products and services
that are not Covered Medications provided to Members shall be no less
favorable than such practices applied or such prices charged to other
customers. Provider shall not refuse to provide services required
under a Benefit Plan or attempt to disenroll any Member.
4
Further, Provider agrees to implement and maintain a tracking program
for orders identified by Members as lost in the mail. Provider will
comply with the Pharmacy Practice Standards promulgated from time to
time by the Pharmaceutical Care Management Association (PCMA), whether
or not Provider is a member of such association, or, if such
association ceases to promulgate such standards, the comparable
standards of any generally recognized successor organization that
promulgates standards for mail and/or Internet pharmacies.
C. Compliance with Applicable Law; Permits and Licenses. Provider shall
----------------------------------------------------
be bound by and comply with the provisions of all applicable laws,
rules and regulations of the state board of pharmacy and other
governmental bodies having jurisdiction over Provider, including non-
resident pharmacy requirements. Where required by a Sponsor that is a
health maintenance organization, this Agreement shall be subject to
the Federal Health Maintenance Organization Act, 42 U.S.C. 300 et.
seq., or any successor statutes and the rules and regulations
thereunder, and to the comparable laws and regulations of any
applicable state, which laws, rules and regulations shall take
precedence over this Agreement to the extent of any inconsistency.
Provider shall maintain at all times all required federal, state and
local licenses, non-resident pharmacy registrations and licenses,
certificates and permits that are necessary to allow Provider to
dispense Covered Medications to Members. Provider shall notify ESI in
writing immediately in the event of any suspension, revocation,
restriction or limitation on any such license, registration,
certificate or permit.
D. Drug Utilization Review; Compliance with Formularies and Provider
-----------------------------------------------------------------
Manual. Provider shall (1) cooperate with ESI's procedures for drug
------
utilization review and generic substitution, as set forth from time to
time in the Provider Manual; (2) comply with ESI's procedures for
calling prescribers to facilitate generic substitution and Formulary
compliance, and other programs established by a Sponsor; and (3)
comply with the Provider Manual. Provider shall use commercially
reasonable efforts to comply with the applicable Formulary when
dispensing Covered Medications to Members. Without limiting the
generality of the foregoing, in no event will Provider (i) attempt to
switch a Member's prescription to a drug that is not a Formulary drug
on the applicable Formulary, except for generic substitution
opportunities or where required by medical necessity. Provider agrees
that ESI's manufacturer agreements, therapeutic programs and
formularies take precedence with the manufacturers over any such
agreements or programs to which Provider is a party with respect to
Covered Medications dispensed to Members. Provider will not implement
any substitution program for Members of Prescription Drug Programs
that is inconsistent with such Prescription Drug Program, including
the applicable Formulary.
E. Hours of Service. Provider shall operate and be available to Members
----------------
on-line 24 hours a day, 7 days a week.
5
F. Member Communications. All outbound communications from Provider to
---------------------
ESI Members (identifiable as such by Provider) (other than those
customarily occurring between a pharmacist and a patient with respect
to the dispensing of Pharmaceutical Products or those reasonably
necessary to fulfill a Member's order) shall require ESI's prior
written approval, provided, however, that in the event that Provider
shall request consent for a specific promotion, ESI shall provide a
response to such request within one (1) business day.
3. PROVIDER COMPENSATION
---------------------
A. Reimbursement Pricing -- 30-Day Prescriptions. In addition to any
---------------------------------------------
Copayments, Provider shall receive payments from ESI for pharmacy
services described in Section 2 hereof, for prescriptions for
medication for a 30-day supply of medication or less, in accordance
with the payment schedule set forth in the applicable Exhibit A, or in
---------
any special pricing rider for a specific ESI network to which Provider
may agree (less the applicable Copayments). Payments shall be based
upon the prescription drug claims submitted to ESI pursuant to Section
2.A.3 hereof. The parties agree to negotiate in good faith adjustments
to the transfer pricing/reimbursement fees for a particular network
if, during the term, ESI recontracts one or more of its retail
pharmacy networks (e.g., PerxCare, PerxSelect or any successors
thereto), as necessary to maintain the positive rate differential
between Provider and the retail network pharmacies.
B. Payment Schedule for Reimbursement Pricing. ESI shall pay Provider
------------------------------------------
for approved claims for pharmacy services prescribed in Section 2
hereof for prescriptions for medication for a 30-day supply of
medication or less, on a twice monthly payment cycle; approved claims
will be paid on average of thirty (30) days from date of acceptance.
Rejected or disputed claims must be resubmitted within 30 days of the
initial rejection. ESI may deny payment for any claim not submitted
within these time periods. Further, Provider and ESI hereby agree that
ESI may refuse to pay any claim not submitted in accordance with the
provisions of this Section 3.A. and of Section 2.A.3 hereof. Except
with respect to Copayments, Provider shall look solely to ESI for
compensation for Covered Medications and other services provided to
Members pursuant to this Agreement. ESI will not reverse any of its
approvals for properly submitted claims with respect to which Provider
has complied with the terms of this Agreement.
C. Fulfillment Pricing. For prescriptions ordered by a Member through
-------------------
Provider but fulfilled/dispensed by ESI ("Fulfillment Claims"),
Provider shall receive payments from ESI equal to ESI's drug
ingredient cost upon ESI's collection of payment from the applicable
Sponsor. Provider shall bear the risk of loss for the inability of ESI
to collect from the Sponsor. If ESI is unable to collect from the
Sponsor, ESI will assign its rights in such receivable to Provider.
Provider will remit the Copayments on all Fulfillment Claims to ESI,
net of any credit card issuer's fee on the transaction.
6
D. Payment Schedule for Fulfillment Pricing. ESI shall pay Provider for
----------------------------------------
Fulfillment Claims based on a schedule mutually agreeable to the
parties.
E. Order Fees. ESI shall pay Provider an order processing fee for
----------
Fulfillment Claims of [+] per prescription, payable monthly.
F. Preferred Product Fees. ESI shall pay Provider a preferred product
----------------------
fee of [+] per prescription for each attempt to convert a prescription
for a non-preferred product to a preferred product for prescriptions
filled by Provider. The method of communication to the Member or the
prescriber shall be at the discretion of Provider.
G. Remittance Advices. Provider agrees that it is obligated to review
------------------
remittance advices to verify their accuracy, and must notify ESI in
writing within 45 days of receipt of each such remittance advice of
any disputed information thereon. Upon proper notice to ESI and
verification of amounts to be paid, if any, ESI shall only be
responsible for remitting additional payments to a Provider in
connection with the specific disputed remittance advice. If Provider
does not notify ESI in the manner and time provided herein, ESI shall
have no further responsibility with respect to such remittance.
H. Taxes: Transmission Charges. With respect to Covered Medications
----------------------------
dispensed to Members by Provider, if permitted by the terms of its
contract with the Sponsor, ESI will xxxx the Sponsor for any Federal,
state, or local sales taxes payable with respect to any sales of
Covered Medications to a Member, and will remit to Provider any such
taxes collected from Sponsors. Provider shall remit any such sales
taxes to the appropriate taxing authority. Provider shall be solely
responsible for any other taxes or surcharges associated with its
performance under this Agreement (but not for income taxes payable on
ESI's income). For purposes of this section "sales tax" means any
excise tax on Covered Medications now or hereafter in existence
required to be collected or paid by a retail seller on consumer retail
sales, whether designed as a sales tax, gross receipts tax, retail
occupation tax, value added tax, or otherwise. Provider shall be
solely responsible for expenses included in transmitting claims to
ESI. If Provider transfers a prescription order to ESI for
fulfillment, ESI shall be solely responsible for any applicable sales
taxes and any other taxes or surcharges associated with fulfilling
such prescription order (but not for income taxes payable on
Provider's income).
4. COMPENSATION TO ESI. For prescriptions ordered by a Member through Provider
-------------------
but fulfilled/dispensed by ESI because the quantity dispensed exceeded a 30
days supply, Provider shall reimburse ESI for its drug ingredient cost and
remit the applicable Copayment to ESI. Provider shall be responsible for
collecting the Copayment from the Member. Provider shall make such
payments to ESI based on a schedule mutually agreeable to the parties.
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
7
5. LIABILITY INSURANCE; INDEMNITY
------------------------------
A. Provider shall obtain and maintain in full force and effect and
throughout the term of this Agreement such policies of general
liability, professional liability and other insurance of the types and
amounts as are reasonably and customarily carried by pharmacies with
respect to their operations. Provider shall obtain and maintain
during the term of this Agreement, comprehensive general liability
insurance coverage in the amount of at least $1,000,000 per
occurrence, including pharmacist's professional liability insurance,
for protection from claims for bodily injury and personal injury to
Members from Provider's operation under this Agreement. By signing
this Agreement, Provider represents that these insurance requirements
are being met. Provider shall furnish not less than 30 days' prior
written notice to ESI in the event of termination or material
modification of any such policies of insurance which renders Provider
non-compliant with the foregoing. Upon ESI's request, Provider shall
provide ESI with evidence of such insurance coverage satisfactory to
ESI. If the insurance purchased to satisfy the requirements of this
Section is of the "claims made" variety, Provider shall purchase an
extended period of indemnity so that ESI is protected from any and all
claims brought against ESI for a period of not less than three years
subsequent to the date of termination of this Agreement.
B. With respect to any prescription orders filled by Provider, ESI shall
not be liable or suffer loss for any claim, injury, demand, or
judgment of any kind whatsoever arising out of the sale, compounding,
dispensing, manufacturing, consultation or use of any prescription
drug or any service provided by Provider pursuant to this Agreement.
Regardless of the insurance coverage required herein above, Provider
shall indemnify, defend and hold harmless ESI, its officers, directors
and employees, against the full amount of any and all loss, expense,
claim, or damage (including expert and professional fees and attorneys
fees) arising out of or attributable to any of the foregoing.
C. With respect to any prescription orders that are referred by Provider
to ESI for fulfillment, Provider shall not be liable or suffer loss
for any claim, injury, demand, or judgment of any kind whatsoever
arising out of the sale, drug or any service provided by ESI in
fulfilling such prescription order. ESI shall indemnify, defend and
hold harmless Provider, its officers, directors and employees, against
the full amount of any and all loss, expense, claim, or damage
(including expert and professional fees and attorneys fees) arising
out of or attributable to any of the foregoing as related to such
prescriptions dispensed by ESI.
D. If any claim, injury, demand, or judgment (collectively, an
"Indemnified Claim"), is asserted against a person entitled to
indemnification hereunder (an "Indemnified Party") in respect of which
the Indemnified Party proposes to demand indemnification from the
other party (the "Indemnifying Party") pursuant to Sections 4.B or 4.C
above, such Indemnified Party will promptly notify the Indemnifying
Party in writing. No failure of an Indemnified Party to so notify the
8
Indemnifying Party shall relieve the Indemnifying Party from the
obligation to indemnify the Indemnified Party unless and to the extent
the Indemnifying Party is actually prejudiced by such failure. Such
Indemnified Party will accord the Indemnifying Party the opportunity
to assume entire control for the defense, compromise or settlement of
any such Indemnified Claim through its own counsel and at its own
expense; provided that no such compromise or settlement shall include
--------
any non-monetary terms and conditions applicable to such Indemnified
Party without the consent of the Indemnified Party, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, the Indemnified Party may retain its own counsel at its own
expense (the Indemnifying Party shall only be liable for the
reasonable cost of one such counsel for all Indemnified Parties) if
(i) the Indemnifying Party, within fifteen (15) days after notice of
any Indemnified Claim, fails to assume the defense of such Indemnified
Claim or (ii) the representation of both the Indemnifying Party and
the Indemnified Party would, in the reasonable judgment of the
parties, be inappropriate due to actual or potential conflicting
interests between them. If the Indemnifying Party does not assume
entire control of the defense, compromise or settlement of such
Indemnified Claim, the Indemnified Party may compromise or settle any
such Indemnified Claim. Provider and ESI each agrees to reasonably
cooperate with respect to the defense of any Indemnified Claim, at the
Indemnifying Party's expense.
6. RECORDS
-------
Provider shall maintain medical, financial and administrative records
relating to Members and their prescriptions for Covered Medications in
accordance with applicable law and as required for quality assurance and
peer review programs for a minimum of 5 years from the date any such
prescription is dispensed. The parties agree that such records shall be
treated as confidential so as to comply with all applicable state and
Federal laws regarding the confidentiality of patient records. Provider
shall permit ESI or a third party authorized by ESI to inspect, review,
audit and reproduce, during regular business hours and without charge, any
business, financial and prescription records maintained by Provider
pertaining to ESI, Members or this Agreement as ESI deems necessary to
determine compliance with the terms of this Agreement.
7. QUALITY ASSURANCE
-----------------
Provider shall cooperate and participate with ESI in any and all quality
assurance procedures, peer review, credentialing process, audit systems and
any complaint resolution procedures established by ESI or required by a
Sponsor from time to time, and Provider shall abide by, comply with and
carry out all determinations resulting from such processes or procedures.
9
8. ADVERTISING, MARKETING AND RESERVATION OF RIGHTS
------------------------------------------------
(A) During the term of the Operating Agreement dated August 31, 1999,
between ESI and Provider, such agreement shall govern the parties'
respective rights and obligations with respect to advertising and
marketing. Thereafter, this section shall govern.
(B) Subject to compliance with Provider's trademark quality control
guidelines, ESI may use Provider's name, URL and description of
services for purposes of advertising or marketing prescription drug
programs in all media, including any website operated by ESI, subject
to compliance with Provider's trademark quality control guidelines.
ESI reserves the exclusive rights to, and control of, the use of the
name "Express Scripts, "PERx" and all other names, symbols and service
marks presently existing or hereinafter adopted by ESI. Provider shall
not advertise or use any names, symbols or trademarks of ESI in any
advertising or promotional materials or otherwise without the prior
written consent of ESI. It is understood and agreed that any decal
incorporating an ESI servicemark or logo is solely for on-line screen
display by Provider in connection with its performance under this
Agreement and that all such use and display shall terminate upon
termination of the Agreement.
9. TERM
----
A. The term of this Agreement shall commence on the Effective Date and
continue for ten (10) years, unless terminated as provided in this
Section 9.
B. Notwithstanding any provision to the contrary, the parties hereto
agree that in the event either (i) Provider, on the one hand, or (ii)
ESI, on the other, shall default in performance of any of their
respective obligations under this Agreement and good faith efforts to
cure such default have not begun within 10 days after the receipt of
written notice thereof, the nondefaulting party shall have the right
by further written notice to the defaulting party to terminate this
Agreement effective as of any future designated date, not less than 30
days from the date of the termination notice.
C. ESI shall have the right to automatically and immediately terminate
this Agreement upon written notice in the event that (i) Provider
ceases to be licensed by the appropriate licensing authorities, or is
excluded as a sanction for misconduct from participation in any
government health care programs, (ii) Provider submits a fraudulent
prescription drug claim or any information in support thereof, knowing
it to be fraudulent, (iii) Provider is declared insolvent, goes into
receivership or bankruptcy or any other action is taken on behalf of
its creditors, or (iv) the Operating Agreement is terminated due to
Provider's breach of such agreement.
10
D. Notwithstanding termination pursuant to Section 8.B.(i) above, for
each Prescription Drug Program in effect as of the termination date of
this Agreement, the obligations of the parties under Sections 2, 3, 4,
5, 6, 9.D, and 9.E hereof shall remain in full force and effect until
the earlier of one year following termination of this Agreement or
expiration date of each such Prescription Drug Program. ESI agrees,
upon termination of this Agreement, to furnish Provider with a list of
all Prescription Drug Programs covered under this Agreement and the
expiration dates of those programs.
10. MISCELLANEOUS
-------------
A. Any notice required to be given pursuant to the terms hereof shall be
in writing and sent by ordinary or express mail to the other party at
the address listed below or to the last reported address of such
party:
If to Express Scripts, Inc., to:
Attn: Provider Relations
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
with a copy to General Counsel at the same address.
If to PlanetRx, Inc., to:
XxxxxxXx.xxx, Inc.
0000 Xxxxxx Xxxx Xx. Xxxxx 000
Xxxxxxx XX 00000
Attn: Legal
and to:
PlanetRx, Inc.
000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000
Attention: Legal
Fax: 000-000-0000
B. Any reference to the parties in this Agreement shall include, apply
to, bind and benefit the permitted assigns and successors of the
parties and any corporation, partnership, individual, or person acting
in a fiduciary capacity on their behalf.
C. This Agreement, including the Exhibit(s) and the Provider Manual,
constitute the entire understanding of the parties hereto with respect
to the subject matter hereof and, upon execution by the parties,
supersedes all prior oral or written agreements between the parties
with respect to the subject matter hereof. No modification,
11
alteration or waiver of any term, covenant or condition of this
Agreement shall be valid unless agreed to in writing by both parties,
except as hereinafter set forth. Notwithstanding the foregoing,
Provider and ESI agree that ESI may amend this Agreement to comply
with any changes required or suggested by the appropriate regulatory
authorities in the course of discharging their responsibilities under
applicable laws and regulations. ESI shall furnish Provider with
written notice of such amendments. In the event any such amendment
constitutes a material change in the terms of the Agreement that is
unacceptable to Provider, Provider may elect to terminate this
Agreement by giving written notice of such election to terminate to
ESI within 20 days of receipt of amendment, and such termination
shall be effective no earlier than 180 days after receipt of written
notice by ESI. If Provider does not so elect to terminate this
Agreement within such 20-day period, such amendment will be deemed
approved by Provider and ESI and shall automatically become a part of
this Agreement. Provider further agrees that ESI may amend the
Provider Manual and all policies and procedures of ESI, in its sole
discretion, and such amendment shall not require consent of Provider.
D. Provider and ESI each acknowledge that in the performance of the
services to be rendered hereunder, each Party will have access to
certain confidential business information regarding the other,
including but not limited to the following: trade secrets, know-how
and nonpublic information that relates to research, development,
software programming, concepts, designs, procedures, purchasing,
accounting, engineering, marketing, merchandising, selling, business
plans or strategies, inventions, source code, pricing and other
financial and contractual arrangements with Sponsors and vendors,
manuals, marketing strategies, customer lists, Member information
protectable under the laws of the United States or any other nation,
state or jurisdiction (including, but not limited to, any foreign
equivalents thereto) (collectively, the "Confidential Information").
The receiving party shall not disclose or use or enable anyone else to
disclose or use, in whole or in part, any such Confidential
Information other than for the purpose of providing the services to be
provided hereunder and shall promptly return all Confidential
Information to the providing party upon request. The obligations set
forth in Section 9.D above shall not apply to any Confidential
Information to the extent it: (a) is approved by prior written
authorization of the disclosing party for release by the receiving
party; (b) is disclosed in order to comply with a judicial order
issued by a court of competent jurisdiction, in which event the
receiving party shall give prior written notice to the disclosing
party of such disclosure as soon as practicable and shall cooperate
with the disclosing party in using all reasonable efforts to obtain an
appropriate protective order or equivalent, provided that the
information shall continue to be Confidential Information to the
extent it is covered by such protective order or equivalent; (c)
becomes generally available to the public through any means other than
a breach by the receiving party of its obligations under this
Agreement; (d) was in the possession of the receiving party without
obligation of confidentiality prior to receipt or disclosure under
this Agreement as evidenced by written records made prior to such
receipt or disclosure; (e) is developed independently by the receiving
party without the
12
use of or benefit from any of the Confidential Information of the
other party or without breach of this Agreement, as evidenced by
records of the receiving party; or (f) is required to be disclosed by
any national securities exchange, by government rule or regulation
(e.g., in connection with a securities filing) or by any other
provisions of applicable law, provided that the receiving party gives
--------
the disclosing party advance written notice (to the extent
practicable) of the disclosure and cooperates with the disclosing
party in any reasonable attempt to limit the scope of the required
disclosure. In any dispute over whether information is Confidential
Information under this Agreement, it will be the burden of the
receiving party to show that such contested information falls within
the exceptions set forth in this Section.
E. Provider further agrees during the term of this Agreement and for a
period of one year thereafter it will not solicit the trade or
patronage of any of the Sponsors or potential sponsors of ESI with
respect to prescription drug programs, services, .products or other
matters referred to in this Agreement without ESI's prior written
consent. Notwithstanding termination of this Agreement, the rights
and obligations of the parties under this Subsection shall remain in
full force and effect for a period of one year following termination.
F. This Agreement shall be construed and governed in all respects
according to the internal laws in the State of Missouri.
G. The relationship created hereunder is that of independent contractors
and nothing herein shall create or be deemed to create an agency,
partnership or joint venture relationship between the parties. No
provision of this Agreement or any part of any Sponsor's Prescription
Drug Program shall be construed to require any pharmacist to dispense
any Covered Medication to any Member if, in the pharmacist's
reasonable professional judgment, such Covered Medication should not
be dispensed to such person. In such event, Provider agrees to notify
ESI of the circumstances of the decision not to dispense such Covered
Medication.
H. No waiver of a breach of any covenant or condition shall be construed
to be a waiver of any subsequent breach. No act, delay or omission
done, suffered, or permitted by the parties shall be deemed to exhaust
or impair any right, remedy or power of the parties hereunder.
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I. This Agreement will be enforced to the fullest extent permitted by
applicable law. If for any reason any provision of this Agreement is
held to be invalid or unenforceable to any extent, then: (i) such
provision will be interpreted, construed or reformed to the extent
reasonably required to render the same valid, enforceable and
consistent with the original intent underlying such provision; (ii)
such provision will be void to the extent it is held to be invalid or
unenforceable; (iii) such provision will remain in effect to the
extent that it is not invalid or unenforceable; and (iv) such
invalidity or unenforceability will not affect any other provision of
this Agreement or any other agreement between the parties.
J. This Agreement shall not be assigned, in whole or in part, by either
party without the prior written consent of the other, except in
connection with an acquisition of a party or of all or substantially
all of a party's assets, provided, that in any such case the assignee
--------
agrees in writing to be bound by all of the obligations of the
assignor hereunder.
IN WITNESS WHEREOF, the undersigned have executed this Provider Agreement
as of the day and year first above written.
XXXXXXXX.XXX, INC. EXPRESS SCRIPTS, INC.
By: By:
---------------------------- ----------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
---------------------------- ----------------------------
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EXHIBIT A
----------
FEES
----
Reimbursement Rates. The reimbursement rates (i.e., rates at which ESI
-------------------
shall pay Provider) for 30 or fewer days Internet Pharmacy prescriptions
dispensed to ESI Members by Provider shall be the lesser of:
(A) The following rates for the applicable networks:
[+]
or
(B) [+]
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
15
EXHIBIT B
---------
PERFORMANCE STANDARDS
---------------------
For prescriptions dispensed by Provider, the following performance standards
will apply:
1. Mail Service Prescription Accuracy
-------------------------------------
Standard
--------
While Provider strives for 100 percent accuracy, Provider guarantees [+] percent
accuracy in dispensing the correct drug, at the correct strength and at the
correct dosage, unless the error is a prescriber error. This standard will be
measured quarterly.
Guarantee
---------
Provider places 33.3 percent of the dispensing fee at risk, if performance is
below the stated standard.
2. Turnaround time for routine prescriptions
--------------------------------------------
Standard
--------
Provider guarantees dispensing and shipping (or return) of 95 percent of all
fillable prescriptions not subject to intervention within an average of 4
business days of receipt of the order at Provider. This standard will be
measured and reported quarterly. "Interventions" include all calls to members or
prescribers to clarify the prescriber's direction, to obtain consent for generic
or therapeutic substitution, or otherwise.
Guarantee
---------
Provider places 33.3 percent of the dispensing fee at risk, if performance is
below the stated standard for one full day or more.
3. Turnaround time for prescriptions subject to intervention
-------------------------------------------------------------
Standard
--------
Provider guarantees dispensing and shipping (or return) of 95 percent of all
prescriptions subject to intervention within an average of 5 business days of
receipt of the order at Provider, if the prescriber provides a response on the
initial attempts at intervention. This standard will be measured quarterly.
Guarantee
---------
Provider places [+] percent of the dispensing fee at risk if performance is
below the stated standard for one full day or more.
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
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