Main Agreement - drugstore.com inc. and General Nutrition Corp.
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EXECUTION COPY
MAIN AGREEMENT
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This Main Agreement (this "Agreement"), dated as of June 17, 1999, is
between drugstore.com, inc., a Delaware corporation ("drugstore.com"), and
General Nutrition Corporation, a Pennsylvania corporation ("GNC").
In consideration of the agreements, covenants and conditions set forth
herein, 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:
"Above the Fold" means situated within the portion of a page that is
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designed to be visible on a standard computer screen without requiring the user
to scroll horizontally or vertically through the page, based on a resolution of
800 pixels by 600 pixels (such resolution to be updated through the Term as the
drugstore.com default design resolution changes).
"Action Links" means the hypertext links that direct users to different
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areas of a single site or to new sites entirely.
"Affiliate" means, with respect to a party, any Person that, directly or
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indirectly, Controls, or is Controlled by, or is under common Control with, such
party.
"Confidential Information" means the existence and terms of this Agreement
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and all trade secrets, know-how and nonpublic information that relates to
research, development, trade secrets, know-how, inventions, source codes,
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).
"Consignment Agreement" means the Consignment Agreement dated the date
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hereof between drugstore.com and GNC.
"Control" means the possession, directly or indirectly, of the power to
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direct or cause the direction of the management and policies of a Person,
whether by contract or through the ownership of voting securities, including,
without limitation, the ownership of more than fifty percent (50%) of the
equity, partnership or similar interest in such Person.
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"drugstore.com Site" means the site currently located at www.drugstore.com
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(and any successor site, Mirror site or sites of any wholly owned Affiliate).
"Effective Date" means the date of the consummation of the purchase by
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General Nutrition Companies, Inc., through its wholly owned subsidiary General
Nutrition Investment Comany, of Series E Preferred Stock of drugstore.com
pursuant to the Series E Preferred Stock Purchase Agreement.
"GNC Brand Products" means the products offered for sale in the GNC
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Livewell Store on the drugstore.com site that bear a GNC Trademark.
"GNC Gold Card Customers" shall mean those holders of Gold Cards who
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purchased their Gold Card memberships from a Person other than drugstore.com and
whose memberships are active.
"GNC Livewell Store" shall mean the site within the drugstore.com Site
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primarily branded GNC LiveWell as set forth in Section 4.4.
"GNC Site" means the site currently located at www.gnc.com (and any
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successor site, Mirror site or Affiliate's site.
"GNC Trademarks" means the Trademarks owned by GNC set forth on Exhibit B.
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"Gold Card " means the Gold Card issued in connection with GNC's customer
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discount program as in effect at the time.
"Home Page" means (i) with respect to the drugstore.com Site, the page that
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is displayed to the user when the URL www.drugstore.com is entered, (ii) with
respect to the GNC Site, the page that is displayed to the user when the URL
www.gnc.com (or www.livewell.com if and once GNC has title) is entered.
"Internet" means the Internet or World Wide Web (or any successor or other
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online network including but not limited to those using delivery over
television, cable, set top boxes, Intranets extranets and personal digital
assistants).
"IPR" means any copyright, patent, trade secret, moral right or other
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intellectual property or proprietary right of any kind (including, without
limitation, 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, but not limited to, any foreign equivalents thereto). IPR does not
include any Trademarks.
"Mirror site" means an Internet site that (i) contains the exact form and
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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.
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"Nutrition Product" means (i) a dietary supplement as defined under the
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Dietary Supplement Health and Education Act of 1994, (ii) any sports nutrition
powder or drink, (iii) any food bar or (iv) any meal replacement product.
"Person" means any individual, corporation, partnership, limited liability
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company, trust, association or other entity or organization, including any
governmental or political subdivision or any agency or instrumentality thereof.
"Pharmassure Brand Products" means the products sold under the Pharmassure
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Trademark.
"Term" means the period commencing on the Effective Date of this Agreement
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and ending on the tenth anniversary of such date, subject to extension in
accordance with Section 13.3.
"Third Party" means any Person that is not a party hereto or an Affiliate
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of a party hereto.
"Trademarks" means all common law or registered trademarks, logos, service
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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.
"Wellness Page" means the first page the user sees on drugstore.com Site
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after clicking on the wellness tab, currently located at
www.drugstore.com/wellness.
Section 2. Gold Card Program and Customer Information
2.1 drugstore.com shall be able to sell Gold Cards to customers on the
drugstore.com Site on the same terms as the general Gold Card program, as
determined from time to time by GNC for all of its stores.
2.2 GNC will share with drugstore.com information about GNC's existing
Gold Card customers sufficient for drugstore.com to identify and permit such
Gold Card customers to purchase products in the GNC Livewell Store with their
Gold Card on the drugstore.com Site; drugstore.com will not use such information
provided by GNC for any other purpose. drugstore.com will notify each Gold Card
customer that information relating to the purchase of Products in the GNC
Livewell store by such customer in connection with the use of their Gold Card
will be made available to GNC as in any GNC store. drugstore.com will share
such information with GNC and will notify the customer that such information
will be shared with GNC and that the customer should not purchase products with
their Gold Card if they do not want this information shared with GNC.
2.3 drugstore.com agrees that it shall not mail (through electronic or
other means) any advertisements to Gold Card Customers that contain an
advertisement for any Nutrition Product that is not a GNC Brand Product;
provided, that drugstore.com may without restriction continue to engage in
standard communications with its
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customers, such as direct email responses from drugstore.com customer service
personnel and automatically generated responses to customers in connection with
orders.
Section 3. Exclusivity
3.1 GNC will not and will not permit any entity it controls or licences
to sell, accept orders for or otherwise distribute any GNC Brand Products,
Pharmassure Brand Products, any other Nutrition Product or any other category of
product currently sold on the drugstore.com Site, via the Internet other than
via drugstore.com; provided, that GNC may advertise its gnc.com Site(s) without
reference to the drugstore.com Site.
3.2 In the event that on the third anniversary or fifth anniversary of
the Effective Date (a) drugstore.com is not one of the top two sites selling
nutrition products on the Internet in terms of visitor traffic for the prior 12
month period or (b) less than 15% of drugstore.com's total revenue from the sale
of Nutrition Products for the prior 12 month period was from the sale of GNC
Brand Products, GNC shall have the right to terminate its exclusivity
obligations under Section 3.1 of this Agreement. drugstore.com will provide the
information relating to (a) and (b) within 60 days of the third and fifth
anniversary. In each case, GNC must exercise its right to terminate exclusivity
under this Section 3.2 within 30 days of receiving the information from
drugstore.com, or it shall be deemed waived. All other rights and obligations
of the parties under this Agreement shall survive any such termination of
Section 3.1, except that drugstore.com's obligations under Sections 3.3, 4.1,
4.3, 4.4 and 4.6 shall terminate.
3.3 drugstore.com will not (i) promote any other retail health food store;
(ii) promote any retailer in connection with the retailer's Nutrition Products;
(iii) offer for sale or promote on the drugstore.com site any private label
nutrition or supplement product of any retailer or such retailer's Affiliate;
(iv) operate or contract with any person to operate or manage a retail health
food store offline on behalf of drugstore.com or any Third Party; and (v)
promote or offer for sale any multilevel marketing company's Nutrition Products
(such as Amway and Herbalife). However, drugstore.com may have a section of its
site that offers for sale Nutrition Products competitive with GNC Brand Products
and may post content concerning these products; provided, that drugstore.com
will give no other brand of Nutrition Product a permanent position on the Home
Page or the Wellness Page and will promote no other manufacturer of Nutrition
Product to a greater extent than GNC Brand Products in terms of interactivity,
depth of content, product representation, customization and other available
features and functionality.
3.4 The exclusivity provisions of this Section 3 are applicable only in the
United States and Canada. drugstore.com shall have the nonexclusive right to
market and sell GNC Brand Products under this Agreement on a worldwide basis,
unless it would cause GNC to be in breach of a written agreement entered into by
GNC prior to the date of this Agreement. GNC will use its best efforts to
prevent any party outside the United States from distributing GNC Brand Products
in the United States
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or Canada, including requiring them to agree not to ship such products to any
address in the United States or Canada.
Section 4. Brands and Advertising
4.1 drugstore.com Home Page
4.1.1 A GNC Trademark designated by GNC shall be featured (i) on the Home
Page all the time and (ii) Above the Fold on the Home Page of the drugstore.com
Site at least 33% of the time each calendar year (the "Frequency"). This GNC
Trademark shall not be smaller than a title of any module on the sidebar of
drugstore.com Home Page. GNC acknowledges that the format of drugstore.com Home
Page may evolve over the Term. The words "GNC Livewell Store" will be included
in the rollover bar for the "Wellness" tab for so long as the rollover bar
exists. In the event that drugstore.com changes its format so that it does not
use modules or titles or a rollover bar, the parties agreed that the GNC
Trademark on the reformatted drugstore.com Home Page shall have the same
prominence and Frequency on the reformatted drugstore.com Home Page, and success
to the rollover bar.
4.1.2 GNC shall provide drugstore.com with samples of GNC Trademarks and
preapproved statements for use in advertising and on the drugstore.com Site.
drugstore.com may not use GNC Trademarks or statements concerning (i) the GNC
Trademarks or (ii) the GNC Brand Products either on the drugstore.com Site or in
connection with its advertising of the drugstore.com Site without GNC's prior
written approval. GNC shall advise drugstore.com whether the particular text is
approved or rejected within 24 hours of providing GNC with notice of its intent
to use a particular statement or GNC Trademark.
4.2 GNC Home Pages
4.2.1 A drugstore.com Trademark designated by drugstore.com shall be
featured prominently Above the Fold on the Home Pages of the GNC Site. With the
exception of the GNC Trademark, the drugstore.com Trademark shall not be smaller
than any other Trademarks placed on the GNC Site.
4.2.2 drugstore.com shall provide GNC with samples of drugstore.com
Trademarks for use in advertising and on the GNC Site. GNC may not use
drugstore.com Trademarks or statements concerning the drugstore.com Trademarks
either on the GNC Site or in connection with its advertising of the GNC Site or
the drugstore.com Site without drugstore.com's written approval.
4.2.3 drugstore.com shall provide GNC with a set of pre-approved
statements to describe the drugstore.com site. At least one of such statements
shall be featured with the drugstore.com Trademarks on the GNC Home Pages and
certain other advertising materials as may be agreed to between drugstore.com
and GNC from time to time.
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4.2.4 Subject to Section 4.5, GNC and drugstore.com, shall
collaborate on the content included in, and the presentation of, the Action
Links, provided that GNC shall have the final right of approval with respect to
such content and presentation.
4.3 Wellness Page
4.3.1 At the commencement of the Term, and until changed as provided
herein, the GNC Trademark designated by GNC shall appear Above the Fold on the
Wellness Page. Any change in location of such GNC Trademark from Above the Fold
must be preapproved by GNC. The actual placement Above the Fold shall be
determined by drugstore.com and is likely to change from time to time. The GNC
Trademark will be at the top of the left hand navigation bar below the
customer's name. The size of the GNC Trademark will be no smaller than a title
of any module on the sidebar of drugstore.com Wellness Page. GNC acknowledges
that the format of the drugstore.com Wellness Page may evolve over the Term. In
the event that drugstore.com changes its format so that it does not use modules
or titles, the parties agreed that the GNC Trademark shall have the same
prominence on the reformatted drugstore.com Wellness Page.
4.3.2 At the request of drugstore.com, GNC shall provide
drugstore.com with such content and other information as GNC has available about
nutrition and related products and supplements to be used by drugstore.com at
its option in the drugstore.com Resource Center or in the GNC Livewell Store.
drugstore.com will credit GNC for any content and information used by
drugstore.com in the drugstore.com Resource Center.
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4.4 GNC Livewell Store
4.4.1 As soon as practical after the commencement of the Term,
and drugstore.com will develop and implement the GNC Livewell Store at
drugstore.com. drugstore.com will use commercially reasonable efforts to have an
initial version of the GNC Livewell Store by September 30, 1999, provided, that
GNC promptly provides the digital data, images and other information necessary
to open the store based on drugstore.com's current specifications. GNC agrees
that the initial version of the GNC Livewell Store may be substantially similar
to the other portions of the drugstore.com Site except for the prominence of the
GNC Trademark, the color scheme and the products offered. The parties agree
that customers may not be able to use their GNC Gold Cards in the initial
version of the GNC Livewell Store but will be able to use them (subject to GNC
providing all necessary information) by January 15, 2000. The GNC Livewell
Store will be primarily branded the GNC Livewell Store and will also contain the
Trademarks of drugstore.com. In drugstore.com's discretion the GNC Livewell
Store may contain the same navigation bar and look and feel of the drugstore.com
Site, except that the GNC Livewell Trademark will be the most prominent
Trademark on the pages of the GNC Livewell Store. The GNC Livewell Store shall
be accessible through Action Links on the Home Page and Wellness Page of the
drugstore.com Site. drugstore.com will not offer in the GNC Livewell Store any
products that are not sold by GNC, its franchisees or Rite Aid (in its GNC
store) without GNC approval.
4.4.2 drugstore.com will be responsible for the technical,
software development and maintenance of the GNC Livewell Store and its ongoing
enhancement. All orders placed in the GNC Livewell Store will be processed,
serviced and handled by drugstore.com as if the orders were placed outside of
the GNC Livewell Store on the drugstore.com Site. drugstore.com shall be
responsible for all shipping, billing and collection for such orders.
4.4.3. The parties shall collaborate on the design of the GNC
Livewell Store, as well as certain cross-marketing efforts within the GNC
Livewell Store. drugstore.com shall have final approval with respect to any
decisions relating to the design, product selection, content and other aspects
of the GNC Livewell Store; provided, that GNC will have approval over the
general look of the initial version and any major redesign of the GNC Livewell
Site (as opposed to any day-to-day site changes).
4.5 Content
4.5.1. GNC shall retain ownership of any content provided by GNC.
drugstore.com shall retain ownership of all content provided by drugstore.com.
GNC shall not knowingly publish on the GNC Site or the GNC Livewell Store, and
drugstore.com shall not publish on the drugstore.com Site, any content that is
contrary to law or false or misleading. Any content that either party
reasonably determines to be contrary to law or false or misleading 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.
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4.5.2. GNC shall have sole and final approval regarding any
representations made relating to GNC or the quality of its products.
drugstore.com shall have sole and final approval regarding any representations
made relating to drugstore.com or the quality of its products or services. GNC
shall be solely responsible for any inaccurate, false or misleading
representations it makes relating to GNC or GNC Branded Products. drugstore.com
shall be solely responsible for any inaccurate, false or misleading
representations it makes relating to drugstore.com or the products or services
it sells on the drugstore.com Site (other than statements about the GNC Products
approved by GNC).
4.5.3. drugstore.com agrees not to compare a brand Nutrition Product
with a GNC Brand Product or Pharmassure Brand Product except where GNC approves
such comparison; provided, that GNC agrees that drugstore.com will not be
required to make (or request any manufacturer or vendor to make) changes to any
labelling or other information provided from the manufacturer or vendor of any
Nutrition Products.
4.6 drugstore.com Advertising Obligations
4.6.1 All drugstore.com advertising through a medium other than the
drugstore.com Site and primarily focused on the Wellness section of the
drugstore.com site shall include a reference to the GNC Livewell Store or the
GNC Brand Products sold in the GNC Livewell Store and shall comply with Section
4.1.2.
4.7 GNC Advertising and Other Marketing Obligations
4.7.1 GNC will use reasonable efforts to advertise the GNC
Livewell Store at drugstore.com, subject to its concerns about the impact on its
other channels of distribution.
4.7.2 The parties will agree upon a campaign promoting the GNC
Livewell Store at least once each quarter. Both parties will fund the campaign.
4.7.3 The parties obligations under this Section 4 shall begin as
soon as commercially reasonable following the initial promotion on
drugstore.com's Home Page of GNC.
4.7.4 In the event of any dispute concerning the parties'
advertising-related obligations, the parties will follow the dispute resolution
procedures set forth in Section 12.
Section 5. Products and Merchandising
5.1 GNC Assistance
GNC or its Affiliate will sell to drugstore.com all non-GNC Brand Products
that GNC purchases for sale in its stores or the stores of its franchisees on
terms no less favorable than those provided to any franchisee (including price,
shipping and handling charges).
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5.2 Assortment
drugstore.com will determine in its sole discretion the assortment,
pricing (excluding any product sold on consignment), promotions and other
marketing and merchandising activities associated with the drugstore.com Site
and the GNC Livewell Store. Each party will present to the other party their
relevant product assortment plans in accordance with the quarterly review
process outlined below, although both parties acknowledge that these plans may
change after the review process in the sole discretion of the planning party.
5.3 GNC Product Purchasing
All GNC Brand Products listed in Exhibit A to the Consignment Agreement
(except as otherwise indicated) shall be purchased pursuant to the terms of the
Consignment Agreement entered into as of the date of this Agreement.
drugstore.com will provide, for each month, total revenue of GNC products sold
by zip code.
5.4 Private Label Products
Within 30 days after the Effective Date, drugstore.com and GNC agree to
negotiate in good faith a supply Agreement whereby (i) GNC's Affiliate, General
Nutrition Products Inc., shall manufacture certain of drugstore.com's private
label Nutrition Products during the Term of this Agreement; and (ii)
drugstore.com will purchase for sale on the drugstore.com Site GNC's Basic
Nutrition Product Line from GNC or its Affiliates at a price that is no greater
than the cost to any GNC Franchisee.
Section 6. License to Trademarks
6.1 drugstore.com hereby grants to GNC a non-exclusive, royalty-free
license to use, reproduce, distribute and display the drugstore.com Trademarks
in connection with the terms of this Agreement.
6.2 GNC hereby grants to drugstore.com a non-exclusive, royalty-free
license to use, reproduce, distribute and display the GNC Trademarks in
connection with the terms of this Agreement.
6.3 Each party shall have the right to exercise quality control over the
use of its Trademarks by the other party to the degree necessary, in the sole
opinion of the owner of such Trademarks, to maintain the validity and
enforceability of such Trademarks and to protect the goodwill associated
therewith. Each party shall, in its use of the other's Trademarks, adhere to a
level of quality at least as high as that used by such party in connection with
its use of its own Trademarks. If the owner of a Trademark, in its reasonable
opinion, finds that use of the Trademark by the other party of such Trademark
threatens the goodwill of the Trademark, the user of such Trademark shall, upon
notice from such owner, immediately, and no later than ten (10) days after
receipt of such owner's notice, take all measures reasonably necessary to
correct the deviations or misrepresentation in, or misuse of, the respective
items.
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6.4 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 without limitation 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 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.
Section 7. Maintenance of drugstore.com Site
drugstore.com shall use reasonable efforts to maintain the drugstore.com
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.
Section 8. Advertising Communications
8.1 Advertising
The parties will:
(a) each appoint a liaison to develop a long-term advertising
strategy and to oversee and address issues and disputes regarding ongoing
advertising activities; and
(b) each appoint one senior marketing representative, which will
meet on at least a calendar quarterly basis to discuss opportunities and
establish advertising goals of the parties for the next calendar quarter.
Any advertising-related dispute not resolved by the liaisons shall be
subject to the dispute resolution procedures set forth in Section 12.
8.2 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. Such senior executive
officers will meet, either in person or by telephone conference, at least once
each calendar quarter.
Section 9. Representations and Warranties
9.1 Representations and Warranties of drugstore.com
9.1.1 drugstore.com hereby represents and warrants to GNC:
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(a) Authorization. All corporate action on the part of
drugstore.com, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the Consignment
Agreement of even date herewith (the "Consignment Agreement", and together with
this Agreement, the "Agreements"), and the performance of all obligations of
drugstore.com hereunder and thereunder has been taken, and the Agreements, when
executed and delivered by drugstore.com, will constitute valid and legally
binding obligations of drugstore.com, enforceable against drugstore.com in
accordance with their 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) Compliance with Other Instruments. The execution, delivery and
performance of the Agreements and the consummation of the transactions
contemplated thereby 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 drugstore.com's charter or bylaws or any
instrument, judgment, order, writ, decree or contract to which drugstore.com is
a party or by which it is bound, or any provision of any federal or state
statute, rule or regulation applicable to drugstore.com, the effect of which
would have a material adverse effect on the ability of drugstore.com to perform
its obligations under the Agreements.
(c) In connection with all advertisements for, or content contained
in, the GNC Livewell Store, drugstore.com will comply with the GNC Consent
Orders set forth in Exhibit A hereto for so long as they are in effect.
(d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY,
DRUGSTORE.COM 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 THE AGREEMENTS, OTHER THAN
THOSE EXPRESSLY SET FORTH IN THE AGREEMENTS.
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9.2 Representations and Warranties of GNC
9.2.1 GNC hereby represents and warrants to drugstore.com:
(a) Authorization. All corporate action on the part of GNC, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of the Agreements, and the performance of all obligations of GNC
thereunder has been taken, and the Agreements, when executed and delivered by
GNC, will constitute valid and legally binding obligations of GNC, enforceable
against GNC in accordance with their 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) Compliance with Other Instruments. The execution, delivery and
performance of the Agreements and the consummation of the transactions
contemplated thereby 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 GNC's charter or bylaws or any instrument,
judgment, order, writ, decree or contract to which GNC is a party or by which it
is bound, or any provision of any federal or state statute, rule or regulation
applicable to GNC, the effect of which would have a material adverse effect on
the ability of GNC to perform its obligations under the Agreements.
(c) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, GNC
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 THE AGREEMENTS, OTHER THAN THOSE
EXPRESSLY SET FORTH IN THE AGREEMENTS.
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Section 10. Indemnification
10.1 Indemnification
GNC and drugstore.com each shall indemnify and hold harmless the other
and its divisions, its Affiliates and its officers, directors, employees,
representatives and agents franchises and licensees (the "Indemnified Parties")
from and against any and all liabilities, suits, costs, judgments, penalties,
expenses, obligations, losses, damages, claims and actions made by a Third
Party, including, but not limited to, (a) any obligation or liability which may
be imposed upon any of the Indemnified Parties as a matter of law, constituting,
or in any way based upon, resulting from or arising out of any breach or alleged
breach by GNC or drugstore.com, as applicable, of any representation, warranty,
agreement or covenant made by such party in this Agreement, (b) any obligation
or liability which may be imposed on drugstore.com resulting from or arising out
of the GNC Brand Products or products manufactured by GNC, statements or
Trademarks of, or provided by GNC to drugstore.com (in which case GNC will
indemnify the drugstore.com Indemnified Parties unless the obligation or
liability was caused by drugstore.com's negligence or willful act), (c) any
obligation or liability which may be imposed on GNC resulting from or arising
out of the drugstore.com business (in which case drugstore.com will indemnify
the GNC Indemnified Parties unless the obligation or liability was caused by
GNC's negligence or willful acts), and (d) any cost or expense (including, but
not limited to, 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").
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10.2 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 this Section 10,
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; and provided further, that the Indemnified Party may
retain its own counsel at the Indemnifying Party's expense 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. drugstore.com and GNC each agrees to cooperate fully with
respect to the defense of any Indemnified Claim.
Section 11. Additional Obligations of the parties
11.1 Nondisclosure
11.1.1 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 information of a like nature, to
keep confidential and not disclose such Confidential Information. 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 obligated to comply with the disclosure and usage restrictions set
forth in this Agreement. In addition, each party may, with the prior written
consent of the other party (which consent shall not be unreasonably withheld),
disclose the existence and terms of this Agreement to potential sources of
financing who are contractually obligated to maintain the confidentiality of
such information; provided, however, that if, after receipt of a written request
for consent, the other party does not respond to the request within three (3)
business days, consent will be deemed to have been given so long as the
requested disclosure is not to a person selling goods or services with those
that compete with the goods or services sold by the nondisclosing party.
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11.1.2 The obligations set forth in Section 11.1.1 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 written records of the Receiving party in existence as of disclosure by the
Disclosing party; or (f) is required to be disclosed by government rule or
regulation (e.g., in connection with a securities filing) or any other
provisions of applicable law, provided that the Receiving party gives the
Disclosing party advance written notice of the disclosure and cooperates with
the Disclosing party in any 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
11.1.2.
11.2 No Contest of GNC Trademarks
drugstore.com 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 GNC Trademark; provided that the foregoing shall
not preclude drugstore.com from claiming that the Trademark in question is
drugstore.com Trademark.
11.3 No Contest of drugstore.com Trademarks
GNC 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 drugstore.com Trademarks; provided that the foregoing shall
not preclude GNC from claiming that the Trademark in question is GNC Trademark.
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11.4 Insurance
drugstore.com shall procure and maintain in full force and effect during
the term of this Agreement, at drugstore.com's expense, an insurance policy or
policies protecting (or shall self insure) the GNC Products that are consigned
to drugstore.com under the Consignment Agreement against any loss or damage or
any expense whatsoever arising out of or occurring upon or in connection with
the storage of such GNC Products at the distribution center or the delivery of
such GNC Products from the DC to the purchaser of such GNC Product up to the
full replacement value of the Product.
Section 12. Resolution of Disputes
12.1 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 12
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 12 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 12.
12.2 Initiation of Procedures
If a party seeks to initiate the procedures under this Section 12, such
party will give written notice thereof to the other party. Such notice will (a)
state that it is a notice initiating the procedures under this section, (b)
describe briefly the nature of the dispute and the initiating party's claim or
position in connection with the dispute, and (c) 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 12.2, 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.
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12.3 Pre-Litigation Discussion
The parties will cause the individuals identified in their respective
notices under Section 12.2 above to promptly make such investigation of the
dispute as such individuals deem appropriate. Promptly and in no event later
than ten days after the date of the initiating party's notice under Section
12.2, 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 outsider 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 10 days
after a party makes such request. If the independent directors do not resolve
the dispute within five 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.
Section 13. Breach; Termination; Extension
13.1 Breach by GNC
13.1.1 In the event of a material breach by GNC of any of its
material obligations under this Agreement, including any material breach or
inaccuracy of its representations and warranties, which breach (except for a
breach under Section 5.6) GNC does not cure within sixty (60) days after
drugstore.com gives GNC written notice thereof, drugstore.com will have any and
all of the following rights:
(a) the right to terminate this Agreement; and
(b) the right to sue for breach.
13.2 Breach by drugstore.com
13.2.1 In the event of a material breach by drugstore.com of any
of its material obligations under this Agreement, including any material breach
or inaccuracy of its representations and warranties, which breach drugstore.com
does not cure within sixty (60) days after GNC gives drugstore.com written
notice thereof, GNC shall have any and all of the following rights:
(a) the right to terminate this Agreement; and
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(b) the right to sue for breach.
13.3 Termination
13.3.1 This Agreement will terminate upon the earlier of (i)
expiration of the Term and (ii) a termination pursuant to Section 13.1 or 13.2.
13.3.2 Upon expiration of the Term or termination of this
Agreement pursuant to either Section 13.1 or 13.2, all rights and obligations of
the parties under this Agreement shall terminate, except for those rights and
obligations of the parties existing under Sections 10 and 11.1.
13.4 Extension
Unless either party gives the other party written notice not later than 180
days prior to the expiration of the initial ten year Term that it does not wish
to extend the Term, the Term will automatically be extended for successive one
year periods. Any additional one year term will automatically be renewed unless
either party gives the other party written notice to the contrary not later than
thirty (30) days prior to the expiration of the then current term.
Section 14. Miscellaneous
14.1 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 any 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. Nothing in this
Agreement will be construed as providing for the sharing of profits or losses
arising out of the efforts of the parties hereto.
14.2 Assignment
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; provided,
however, that a party may, without consent of the other parties, assign this
Agreement to an Affiliate of the assignor, or to an entity acquiring
substantially all of the assets or capital stock of the assignor due to merger,
acquisition or consolidation so long as (a) the assignor remains liable for the
full and faithful performance of its obligations hereunder, (b) such Affiliate
or successor in writing assumes all of the obligations of the assignor under
this Agreement and agrees to comply with the terms set forth in this Agreement,
and (c) a copy of the assignment is provided to the non-assigning parties.
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14.3 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 GNC:
Attn:
If to drugstore.com: drugstore.com, inc
13920 SE Eastgate Way,
Suite 300
Bellevue, WA 98005
Attn: General Counsel
Fax: 425-372-3800
or to such other address as the party shall have furnished to the others by
notice given in accordance with this Section 14.3. 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.
14.4 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 parties 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 parties 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.
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14.5 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 such: (a) 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) provision will be void to the extent it is held to be
invalid or unenforceable; (c) provision will remain in effect to the extent that
it is not invalid or unenforceable; and (d) invalidity or unenforceability will
not affect any other provision of this Agreement or any other agreement between
the parties.
14.6 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.
14.7 Injunctive Relief
The parties acknowledge that a material breach of this Agreement would
cause irreparable harm, the extent of which would be difficult to ascertain.
Accordingly, they agree that, in 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.
14.8 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.
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14.9 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 their best 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 14.9. Upon the execution and
deliver 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.
14.10 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, constitutes 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.
14.11 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.
14.12 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.
[Signature Page Follows]
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In witness whereof, the parties have duly entered into this Main
Agreement as of the date first written above.
GNC: drugstore.com:
GENERAL NUTRITION CORPORATION DRUGSTORE.COM, INC.
By: /s/ James M. Sander By: /s/ Peter M. Neupert
Name: James M. Sander Name: Peter M. Neupert
Title: Vice President Title: President and CEO
Address: 300 Sixth Avenue Address: 13920 SE Eastgate Way
Pittsburgh, PA 15222 Suite 300
Bellevue, WA 98005