Pharmacy Services Agreement - RxAmerica LLA and DS Pharmacy Inc.
RxAMERICA
PHARMACY SERVICES AGREEMENT
This PHARMACY SERVICES AGREEMENT by and between RxAMERICA L.L.C. ("RxAMERICA")
and DS PHARMACY, INC. ("DS") is effective as of February 8, 1999 ("Effective
Date").
RECITALS
WHEREAS RxAMERICA dispenses prescription drugs through the mail; and
WHEREAS DS is a licensed pharmacy that desires to provide certain prescription
drug services via the Internet; and
WHEREAS DS desires RxAMERICA to dispense prescription drugs through the mail for
certain customers of DS.
THEREFORE, RxAMERICA and DS agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "This Agreement" means and includes this Pharmacy Services Agreement,
Implementation Documents, and all exhibits, addenda, and attachments.
1.2 "Average Wholesale Price" or "AWP" means the current average wholesale
price for the actual package size used of a prescription drug as published
by Medispan, Inc. or another nationally recognized price source selected by
RxAMERICA and reasonably acceptable to DS.
1.3 "Brand Name Drug" means an FDA approved drug, which is manufactured and
distributed by an innovator drug company, or its licensee, which has
undergone testing for safety and efficacy for the FDA under an
Investigational New Drug Application sponsored by the innovator drug
company, and which has a proprietary name assigned to it by the
manufacturer or distributor, or an FDA approved drug which is defined by
Medispan, Inc., or another nationally recognized source selected by
RxAMERICA, as a brand name drug.
1.4 "Co-payment" means a dollar amount or percentage of cost that an Eligible
Person, who is covered for prescription drug benefits by Third Party
Insurance, is responsible for paying for prescription drugs and includes,
without limitation, coinsurance, co-pay, and deductible.
1.5 "Covered Drugs" means: (i) pharmaceutical products sold by DS to Eligible
Persons that are not covered by a third party prescription drug insurance
program, or (ii) a selected list of pharmaceutical products adopted by a
Third Party Prescription Drug Insurance program that may be dispensed by
RxAMERICA to DS for Eligible Persons.
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1.6 "Delivery Point" means the staging area in the RxAMERICA Facility where
packaged and sealed Prescriptions, labeled and ready for shipment, are
delivered by RxAMERICA to DS.
1.7 "Eligible Person" means a person who has an arrangement with DS to obtain
prescription drugs from DS through its Web Site or by other means.
1.8 "Generic Drug" means an FDA approved drug, which is manufactured and
distributed under the approval of the FDA through an Abbreviated New Drug
Application, which is identified by its chemical or non-proprietary name
(as determined by the United States Adopted Names Council), and which is
listed in the FDA's Approved Drug Products with Therapeutic Equivalence
Evaluations publication (the "Orange Book") as therapeutically equivalent
and interchangeable with drugs having an identical amount of the same
active ingredients, or a drug which is defined by Medispan, Inc., or
another nationally recognized source selected by RxAMERICA, as a Generic
Drug.
1.9 "Implementation Document" means the document that DS completes and provides
to RxAMERICA when DS desires RxAMERICA to perform Pharmacy Services for
Eligible Persons covered by Third Party Insurance. The Implementation
Document shall verify that DS is authorized to fill prescriptions for
Eligible Persons under the applicable Third Party Insurance plan and shall
set forth all information that RxAMERICA deems necessary to provide
Pharmacy Services pursuant to the arrangement between DS and such Third
Party Insurance plans. The Implementation Document is to be utilized and
relied upon by RxAMERICA in providing Pharmacy Services under this
Agreement.
1.10 "Maximum Allowable Cost List" or "HCFA MAC List" means the list of certain
drugs generated by the Health Care Financing Administration that states the
amount that HCFA compensates pharmacies for the ingredient cost for
multisource Generic Drugs.
1.11 "Pharmacy Services" means performing the physical activities involved in
filling a Prescription, performing quality control functions for the
filling process, and delivering the prescription drug to DS at the Delivery
Point after DS personnel receive the Prescription, enter the Prescription
into the RxAmerica prescription processing computer system, check the
Prescription for compliance with all applicable laws and regulations, check
the Prescription for therapeutic problems and other problems, and take all
actions necessary to resolve therapeutic problems and other problems.
1.12 "Prescribing Provider" means a doctor of medicine or other health care
professional who is legally authorized to prescribe drugs.
1.13 "Prescription" means a lawful order for a prescription drug authorized by a
Prescribing Provider for an Eligible Person whether communicated or
conveyed to RxAMERICA or DS by the Prescribing Provider, the Prescribing
Provider's agent, the person for whom the prescription is intended, or that
person's agent. Prescription includes an original or refill order for a
prescription drug.
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1.14 "RxAMERICA Facility" means the RxAMERICA licensed pharmacy and distribution
facility located at 5450 North Riverside Dr., Ft. Worth, TX 76137.
1.15 "Shipping Services" means the receipt of a filled, packaged Prescription
from the Delivery Point and the delivery of the Prescription to the
appropriate Eligible Person. Shipping Services may be provided by
RxAMERICA.
1.16 "Third Party Prescription Drug Insurance" or "Third Parry Insurance" means
an insurance or other program by which an insurance company or other entity
compensates a pharmacy directly for prescriptions dispensed to Eligible
Persons.
1.17 "Web Site" or "DS's Web Site" means the Internet site developed and
maintained by DS through which individuals can order prescription drugs for
personal use.
ARTICLE 2
RELATIONSHIP OF RXAMERICA AND DS
2.1 The relationship between RxAMERICA and DS is that of independent entities
contracting for the sole purpose of carrying out the provisions of this
Agreement. Nothing herein or otherwise shall be construed to create any
other relationship, including without limitation, that of employee, agent
or representative. The Parties further agree that RxAMERICA shall not be a
plan fiduciary and shall not exercise discretion, authority, or control
regarding administration of any employee benefits plan by virtue of its
activities in performing this Agreement.
2.2 This Agreement is between RxAMERICA and DS and is not intended to create
any rights or remedies in favor of any other person or entity, including
without limitation, any Eligible Person or any Third Party Insurance plan.
ARTICLE 3
RESPONSIBILITIES OF DS
3.1 DS shall compensate RxAMERICA according to the terms in Article 5 and in
Attachment A, and as set forth elsewhere in this Agreement.
3.2 DS is responsible for federal, state and local sales tax liability for
Covered Drugs dispensed to or goods and services supplied to an Eligible
Person or to DS. Sales tax is defined as an excise tax based on consumer
retail sales whether designated as a sales tax, gross receipts tax, retail
occupation tax, value added tax or tax otherwise titled or styled. It
includes any tax in existence or hereafter created, whether or not the
bearer of the tax is the retailer or consumer, but does not include any tax
based on the revenues or income of RxAMERICA.
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3.3 DS shall locate at the RxAMERICA Facility adequately trained and licensed
personnel to perform certain functions in the prescription approval and
authentication process for Prescriptions for Eligible Persons. DS's
personnel shall: (i) receive Prescriptions from Eligible Persons or from
their Prescribing Providers; (ii) enter such Prescriptions into the
RxAMERICA prescription processing computer system; (iii) check and ensure
that all such Prescriptions comply with all applicable laws and
regulations; (iv) check such Prescriptions for therapeutic problems and
other problems; (v) take all actions necessary to resolve any therapeutic
problems and other problems; and (vi) handle all other functions that occur
prior to the time RxAMERICA personnel perform the functions necessary to
physically fill the Prescriptions. All such DS personnel, unless otherwise
agreed to by the parties, will perform these functions at the RxAMERICA
Facility.
3.4 DS shall be responsible for the actions and failures to act of the
personnel it provides under Article 3.3. DS agrees that such personnel
shall be employees or contractors of DS and shall not be employees or
contractors of RxAMERICA. DRUGSTORE shall be responsible for: (i)
compensating such personnel, including but not limited to direct
compensation and all employee benefits; (ii) payroll and other taxes
associated with such personnel; (iii) all insurance associated with such
personnel, including but not limited to workers compensation and liability
insurance; (iv) complying with all state and federal laws and regulations
regarding such personnel, (v) training employees regarding sexual
harassment and implementing reasonable and adequate sexual harassment
policies and procedures; and (vi) all other responsibilities that are
normally associated with employers and/or contractors.
3.5 Prior to the time RxAMERICA is required to provide Pharmacy Services for a
Prescription, DS personnel will enter sufficient information into
RxAMERICA's prescription processing computer system to allow RxAMERICA to
perform Pharmacy Services. RxAMERICA may rely solely on the information
provided by DS to determine whether any prescription should be dispensed
under this Agreement. By entering such information into RxAMERICA's
prescription processing computer system, DS authorizes RxAMERICA to perform
Pharmacy Services for the Prescription so entered.
3.6 DS is responsible for receiving all Prescriptions at the RxAMERICA Facility
that RxAMERICA is expected to fill under this Agreement. As soon as
practical after execution of this Agreement, the parties will establish a
transfer procedure for the transfer of Prescriptions from DS to RxAMERICA
and will obtain approval of the transfer procedure from any required
regulatory authorities.
3.7 DS shall inform Eligible Persons to order refill Prescriptions through the
DS Web Site by entering an appropriate Prescription number and any other
necessary information. Eligible Persons (or their representatives) may
order Prescription refills directly from RxAMERICA; provided, that all such
Prescription refills will be treated as if they originated from the DS site
and all terms of this Agreement shall otherwise apply.
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3.8 DS shall be responsible for collecting all payments from Eligible Persons,
including but not limited to cash, checks, credit and debit cards,
electronic payment, and Co-payments, for all Prescriptions filled under
this Agreement.
3.9 DS shall provide Eligible Persons with all information necessary to allow
Eligible Persons to use Pharmacy Services under this Agreement.
3.10 DS will provide a toll-free number that will be accessible to Eligible
Persons for inquiries regarding medications dispensed under this Agreement.
3.11 DS will develop, at its sole expense, a user-interface to allow Eligible
Persons to order and reorder Prescriptions. DS will own all such user-
interfaces that are external to RxAMERICA's mail order pharmacy system and
that are developed by or paid for by DS and all intellectual property
rights for such user-interfaces. Nothing in this Agreement shall give DS
any right, title, or interest in and to any intellectual property or
computer code in RxAMERICA's mail order pharmacy system.
3.12 DS is responsible for the development, operation, and maintenance of all
user-interface systems, computer firewall systems between the Web Site
(including all DS systems accessible by the public) and RxAMERICA's mail
order pharmacy system, and the messaging systems external to RxAMERICA's
mail order pharmacy system. DS will own all such user-interfaces and
software which are external to RxAMERICA's mail order pharmacy system
developed by or paid for by DS and all intellectual property rights for
such user-interfaces and software.
3.13 DS shall use commercially reasonable efforts to maintain its Web Site
throughout the term of this Agreement. If DS ceases operating its Web Site,
DS shall notify RxAMERICA as soon as it intends to cease the operation, but
in no event shall DS notify RxAMERICA of the cessation of its Web Site less
that thirty (30) days prior to the date operation of the Web Site ceases.
3.14 DS will provide RxAMERICA with an Implementation Document substantially in
the form attached as Amendment B hereto, signed by an authorized
representative of DS, whenever DS will receive compensation directly from a
Third Party Insurance plan for Prescriptions purchased from and filled by
RxAMERICA under this Agreement. DS shall provide the Implementation
Document for each Third Party Insurance plan within a reasonable time prior
to the time that RxAMERICA will be required to fill Prescriptions for such
Eligible Persons as necessary to permit RxAMERICA to perform its duties
under this Agreement. Each Implementation Document shall be incorporated by
reference as part of this Agreement.
3.15 DS shall be responsible for providing all material information to Third
Party Insurance plans regarding RxAMERICA's role in providing Pharmacy
Services, including, but not limited to, RxAMERICA's use of DS's NCPDP
number.
3.16 DS shall notify RxAMERICA immediately if DS suspends business, becomes
insolvent, makes an assignment for the benefit of creditors or becomes
unable to pay its debts, or if any bankruptcy proceeding is filed by or
against DS or any subsidiary or affiliate of DS, or if a receiver is
appointed for any of DS's property.
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CONFIDENTIAL TREATMENT REQUESTED
3.17 DS shall be responsible for compliance with Federal Trade Commission
regulations regarding mail order merchandise, including, but not limited to
16 CFR 435.
ARTICLE 4
RESPONSIBILITIES OF RXAMERICA
4.1 RxAMERICA will provide Pharmacy Services for Covered Drugs to DS for
Eligible Persons under the terms of this Agreement for the compensation
rate set forth in Attachment A.
4.2 RxAMERICA will provide Pharmacy Services through the RxAMERICA Facility.
4.3 RxAMERICA shall provide Pharmacy Services to DS for Prescriptions for
Eligible Persons in accordance with all applicable federal and state laws
and regulations applicable in Texas and all other states to which
Prescriptions are being sent.
4.4 RxAMERICA will use commercially reasonable efforts fill and package
Prescriptions and deliver such Prescriptions to DS at the Delivery Point
within the time periods specified in Section 1(e) of Attachment A, and in
any event: (i) from commercial launch of the DRUGSTORE Web Site until
April 15, 1999, RxAMERICA shall give first priority to all Prescriptions to
be filled and packaged under this Agreement over all other prescriptions
being filled and packaged at the RxAMERICA Facility; and (ii) thereafter,
filled and packaged at the RxAMERICA Facility; RxAMERICA shall deliver to
the Delivery Point, filled and packaged Prescriptions within 48 hours of
receipt of the Prescription from DS.
4.5 RxAMERICA has no obligation to dispense any drug to any Eligible Person
until:
(a) DS or its agent has provided RxAMERICA the following information:
(i) that the Prescription meets all legal requirements, and (ii)
that DS has not detected any therapeutic problems or other
material problems with the Prescription or that any problems
detected have been satisfactorily resolved.
(b) The dispensing pharmacist determines that in his or her
professional judgment the prescription drug should be dispensed.
(c) By entering a Prescription into the dispensing queue DS and its
employees and agents represent and warrant that the conditions
under Article 4.5(a) have been met.
4.6 RxAMERICA will provide DS with the information necessary for Eligible
Persons to use RxAMERICA's Pharmacy Services.
4.7 RxAMERICA will, in a form mutually agreed upon by the parties, provide DS
with financial reports as agreed to by the parties from time to time and
utilization and quality assurance reports on a monthly basis.
4.8 RxAMERICA will provide reasonable assistance to DS in marketing the DS Web
Site to Eligible Persons. Such assistance shall include distributing DS
promotional materials prepared by DS to Eligible Persons by including such
materials in packages containing Prescriptions and in other communications
to Eligible Persons as set forth in Attachment A and as agreed to by the
parties from time to time. In addition, to the extent permitted by law, all
Prescriptions will identify DS, as well as RxAMERICA.
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4.9 RxAMERICA will deliver all Prescriptions to DS at the Delivery Point at
which point in time title to the Prescription will pass to DS.
4.10 RxAMERICA will ship Prescriptions on behalf of DS from the Delivery Point
to Eligible Persons as instructed by DS. DS will pay RxAMERICA's cost of
shipment as specified in Attachment A.
4.11 Once a Prescription is filled and packaged by RxAMERICA and delivered to
the Delivery Point, DS shall bear the risk of loss and damage. However, if
RxAMERICA provides Shipping Services to DS for a Prescription, RxAMERICA
shall bear the risk of in-transit loss and damage, and all transportation
charges for such Prescription if it is returned, including any return
shipping charges.
ARTICLE 5
COMPENSATION
5.1 For performing Pharmacy Services for DS on behalf of an Eligible Person, DS
will compensate RxAMERICA in accordance with the rates set forth in
Attachment A on the payment terms set forth in this Article 5.
5.2 If RxAMERICA provides Shipping Services for DS for a Prescription, DS will
reimburse RxAMERICA for actual posting and shipping charges in accordance
with Section 1(c) on Attachment A.
5.3 RxAMERICA shall invoice DS in accordance with the charges set forth in
Attachments A every two weeks on a schedule agreed to by the parties. for
all Prescriptions delivered by RxAMERICA to DS during the prior two week
period. The invoice format will be mutually agreed upon by both parties.
RxAMERICA will send invoices to DS at the address listed on the signature
line of this Agreement
5.4 DS will pay in full, via wire transfer or next-day delivery, all invoices
submitted by RxAMERICA within ten (10) days of receipt of the invoice.
Invoices that are not paid within ten (10) days of receipt shall be deemed
to be untimely and past due. DS must pay each invoice with one check or
with one wire transfer payment.
5.5 If DS believes it is entitled to an adjustment of an invoice, DS must:
(a) Pay the undisputed amount of the subject invoice in accordance
with Article 5.2;
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(b) Notify RxAMERICA in writing of any requested adjustment within 45
days after the end of each DS fiscal quarter (currently each
calendar quarter); and
(c) Provide RxAMERICA with specific claims, reference invoice, and
the reason DS believes disputed amounts should not be paid.
Notwithstanding Article 21.2, failure to notify RxAMERICA of any adjustment
within the earlier of (i) the time period specified in Article 5.5(b), or
(ii) 30 days after the completion of an audit by DS pursuant to Article 19,
shall be deemed a waiver of DS's right to such adjustment.
5.6 The rates set forth in Attachment A, and any other rates or fees in this
Agreement shall be reviewed at least quarterly and may be adjusted upon the
mutual written consent of the parties.
5.7 Payment for invoices that are past due under Article 5.4 will accrue
interest from the invoice date at a rate of (1-1/2%) per month, or prorated
portion of a month, on the outstanding balance. DS shall reimburse
RxAMERICA for all collection costs, including attorney fees incurred by
RxAMERICA as a result of any payment default by DS under this Agreement.
5.8 In the event invoices that in the aggregate total more than $10,000 become
past due, RxAMERICA has the right to discontinue providing services for
Eligible Persons until DS is current with all payments past due. If DS is
untimely in paying invoices that are greater than $10,000 more than two (2)
times in any quarter, RxAMERICA has the right to deem such untimely
payments a material breach.
5.9 Notwithstanding Article 5.8, in the event any invoice of more than $10,000
becomes past due by more than fifteen (15) days after notice of such
delinquency has been provided to DS, RxAMERICA has the right to deem the
failure to pay such invoices a material breach.
5.10 DS guarantees it has the ability to and will pay RxAMERICA as required by
this Agreement. DS shall provide satisfactory evidence of this ability upon
request to RxAMERICA. DS shall furnish its most recent audited financial
statement to RxAMERICA prior to the Effective Date of this Agreement and
thereafter shall furnish its annual audited statement to RxAMERICA as soon
as practical after the end of each year.
ARTICLE 6
WARRANTIES AND LIABILITY
6.1 RxAMERICA warrants that its provision of Pharmacy Services under this
Agreement will comply at all times with the requirements of the U.S.
Federal Food, Drug and Cosmetic Act, if applicable, and any other federal
or state laws or regulations governing the sale and dispensing of
prescription drugs. EXCEPT FOR THIS WARRANTY AND WARRANTIES EXPRESSLY
STATED ELSEWHERE IN THIS AGREEMENT, NEITHER RxAMERICA NOR DS MAKES ANY
EXPRESS OR IMPLIED WARRANTIES RELATING TO THE PRODUCTS AND SERVICES COVERED
BY THIS AGREEMENT. THE PARTIES EXPRESSLY DISCLAIM
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ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
6.2 NEITHER PARTY NOR ITS AGENT(S), REPRESENTATIVE(S) OR EMPLOYEE(S) SHALL BE
LIABLE TO THE OTHER PURSUANT TO THIS AGREEMENT FOR ANY INDIRECT,
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF THE OTHER PARTY, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY, EVEN IF THE OTHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTHING IN THIS ARTICLE 6.2 IS
INTENDED TO LIMIT A PARTY'S RIGHT TO INDEMNIFICATION OR CONTRIBUTION FROM
THE OTHER PARTY FOR CLAIMS ASSERTED BY A THIRD PARTY.
ARTICLE 7
NO EXCLUSION FROM FEDERAL HEALTH CARE PROGRAMS
7.1 RxAMERICA and DS each warrants and represents that:
(a) It is not excluded from participation in any federal health care
programs, as defined under 42 U.S.C. section 1320a-7b(f); and
(b) To its knowledge, there are no pending or threatened governmental
investigations that may lead to such exclusion.
7.2 Each party agrees to notify the other party of the commencement of any such
exclusion within seven (7) days of first learning of such an event.
7.3 Either party shall have the right to immediately terminate this Agreement
upon learning of any such exclusion of the other party.
ARTICLE 8
INSURANCE AND INDEMNITY
8.1 RxAMERICA shall indemnify and hold DS, its officers, directors, employees,
agents and its members, parents, subsidiaries, corporate affiliates, and
their officers, directors, employees, and agents (each an "Indemnified
Party") harmless against any claim, injury, damage, loss, expense
(including attorneys' fees), demand, or judgment asserted against or
incurred by any Indemnified Party arising out of: (i) a breach of the
Agreement by RxAMERICA or (ii) any negligent, reckless, willful, or
criminal act or failure to act of RxAMERICA, its agents, representatives,
or employees in performing this Agreement.
8.2 DS shall indemnify and hold RxAMERICA, its officers, directors, employees,
agents, and its members, parents, subsidiaries, corporate affiliates, and
their officers, directors, employees, and agents (each an "Indemnified
Party") harmless against any claim, injury, damage, loss, expense
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(including attorneys' fees), demand, or judgment asserted against or
incurred by any Indemnified Party arising out of: (i) a breach of the
Agreement by DS or (ii) any negligent, reckless, willful, or criminal act
or failure to act of DS, its agents, representatives, or employees in
performing this Agreement.
8.3 In the event DS excludes or restricts any medications, DS agrees to
indemnify and hold RxAMERICA, its officers, directors, employees, agents,
and its members, parents, subsidiaries, corporate affiliates, and their
officers, directors, employees, and agents (each an "Indemnified Party")
harmless against any claim, injury, loss, expense (including but not
limited to attorneys' fees), demand or judgment asserted against or
incurred by any Indemnified Party arising out of DS's exclusion or
restriction of any medication. This Article 8.3 is not intended to limit
the effect of Article 8.2.
8.4 Each party shall procure and maintain at all times while this Agreement is
in effect such policies of general and professional liability insurance as
shall be necessary to insure it and its employees against those claims for
damages arising by reason of personal injury or death occasioned by its
activities in connection with and as required by this Agreement. RxAMERICA
may self-insure (if handled by a third party carrier) and shall provide
sufficient financial data upon the request of DS to support RxAMERICA's
ability to cover such liabilities.
ARTICLE 9
TERM AND TERMINATION
9.1 The parties are bound by this Agreement from the Effective Date or from
time both parties have executed this Agreement, whichever is earlier. The
initial term shall last until one (1) year from the Effective Date. This
Agreement shall thereafter automatically renew for successive terms of one
(1) year each unless either party provides the other party written notice
that it will not renew the Agreement no less than sixty (60) days prior to
the end of the initial term or a successive term.
9.2 In the event of a material breach of this Agreement, by either party, the
other party may notify the party of material breach in writing specifying
the manner in which this Agreement has been materially breached, and this
Agreement shall terminate automatically thirty (30) days after such notice
unless the material breach has been cured to the reasonable satisfaction of
the non-breaching party. If RxAMERICA deems failure to pay a material
breach under Article 5.8 or 5.9, DS shall have no right to cure.
9.3 RxAMERICA shall have failed to perform under this Agreement if RxAMERICA
fails to meet the performance criteria set forth in Section 4.4(i) or (ii)
with respect to 15% or more of the Prescriptions filled during any three
consecutive day period within any 15 consecutive day period. DS will notify
RxAMERICA if it has failed to perform for three consecutive days. RxAMERICA
shall use its best efforts to immediately correct the problem. However, if
such a lack of performance occurs in two consecutive 15-day periods or more
than four times in 90-day period, DS shall have the right to terminate this
Agreement immediately upon notice without any additional cure period.
Notwithstanding termination by DS under this Article 9.3 or
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RxAMERICA's failure to meet performance criteria, DS shall remain obligated
to pay any proper invoices for Pharmacy Services or Shipping Services
performed by RxAMERICA prior to the termination of this Agreement.
9.4 If at any time during the term of this Agreement there shall be filed by or
against either party in any court pursuant to any statute either of the
United States or any State a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or a
portion of that party's property, or if either party makes an assignment
for the benefit of creditors or petitions for or enters into such an
assignment, the other party may immediately terminate this Agreement upon
written notice to such party who filed or against whom was filed such
petition or who made petition or entered into such assignment.
ARTICLE 10
EFFECT OF TERMINATION
Except as herein otherwise provided, this Agreement shall be of no further
force or effect as of the date of termination except that each party will
remain responsible for all obligations or liabilities arising from
activities carried on by such party or its agents or employees during the
period this Agreement was in effect and shall remain responsible for paying
all legitimate invoices outstanding as of the date of termination.
ARTICLE 11
CONFIDENTIALITY
11.1 The software, and similar documents or information provided by RxAMERICA to
DS are proprietary and shall remain the sole property of RxAMERICA. All
software and other information provided by DS to RxAMERICA are proprietary
and shall remain the sole property of DS. The information contained in such
documents and any data obtained by virtue thereof are considered
confidential to the disclosing party and shall not be released by the
receiving party to any third party without the written consent of the
disclosing party. In addition, the terms of this Agreement are confidential
and shall not be disclosed or released by a party without the consent of
the other party, except that either party may disclose the terms of this
Agreement in connection with any financing to a potential investor.
11.2 Unless otherwise provided in this Agreement, neither party will release to
any third party without the other party's consent any information relating
to the other party which was obtained as a result of, or incident to, the
relationship described in this Agreement provided such information is not
publicly known or otherwise available on a non-confidential basis. The
parties may, however, disclose information to third parties: (i) as
required by applicable law or government order (including federal
securities laws); (ii) as necessary to execute and perform this Agreement;
and/or (iii) as necessary in the event of a dispute between RxAMERICA and
DS.
11.3 Each party agrees that the other may use and provide to third parties drug
and related medical data obtained by it in performing this Agreement for
research, cost analysis, cost comparison, or
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other business purposes as long as individual Eligible Persons cannot be
identified by such information. However, RxAMERICA may use such information
only for its own internal business purposes, and shall not sell or
otherwise transfer such information to third parties without DS's prior
written consent. All information relating to Eligible Customers on any
RxAMERICA database or other system, shall be transferred to DS promptly
upon DS's request. RxAMERICA may keep copies of such information to the
extent required by law.
11.4 For the purposes of this Article 11, "third party" shall include, but is
not limited to: (i) any parent or subsidiary corporation of either party to
this Agreement, (ii) any person or entity that is not an employee of a
party to this Agreement or under contract with a party to this Agreement,
and (iii) any individual or entity, including an employee, who does not
have a reasonable need to know the confidential information involved.
11.5 The parties acknowledge that any breach of confidentiality would cause
irreparable harm. In the event of such a breach, the non-breaching party
shall have a right to an injunction or other equitable relief in addition
to any remedies at law.
11.6 This Article 11 shall survive termination of this Agreement.
ARTICLE 12
ADVERTISING
Each party retains the exclusive right to its names and logos, together
with all distinctive trademarks and/or service marks. Upon termination of
this Agreement, each party agrees to immediately discontinue the use of any
name, symbol or trademark belonging to the other party.
ARTICLE 13
NOTICES
13.1 Any notices or other communications required or permitted hereunder shall
be sent by courier, FAX, computer (receipt of which is confirmed), or by
regular U.S. Mail to the address for each party indicated on the signature
page of this Agreement. The address may be changed by written notice
thereof to the other party.
13.2 Any notices or other communications given hereunder shall be deemed given
upon receipt in the case of courier, FAX, or computer delivery and on the
fifth day following the date of mailing in the case of mail delivery.
ARTICLE 14
ASSIGNMENT
14.1 This Agreement may not be assigned to any other person or entity without
the express written consent of the other party to this Agreement, which
consent may not be unreasonably withheld.
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Any attempted assignment without the other party's express written consent
shall be void and of no force and effect.
14.2 Notwithstanding the foregoing Article 14.1, no consent shall be required if
this Agreement is assigned to an entity with equal or greater financial
strength than the assigning party.
14.3 The party attempting assignment shall provide notice to the other party at
least ten (10) business days prior to the assignment.
ARTICLE 15
FORCE MAJEURE
A party shall not be deemed to have breached this Agreement if its delay or
failure to perform all or any part of its obligations hereunder results
from a condition beyond its reasonable control, including without
limitation, acts of God or the public enemy, fire, earthquake, flood,
storm, strike or other labor unrest, power or communication line failure,
or statute, or rule or action of any federal, state or local government or
agency.
ARTICLE 16
AMENDMENTS
This Agreement may not be amended or modified by either party without the
express written consent of the other, except as otherwise provided in this
Agreement and except that RxAMERICA may amend this Agreement to comply with
applicable laws or regulations.
ARTICLE 17
APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Utah without
regard to choice of law provisions. Except as provided in Article 18, the
parties hereby submit to the jurisdiction of the state and federal courts
in Utah. The parties further agree that any action shall be filed in Utah
and that the venue for adjudication shall be Utah.
ARTICLE 18
DISPUTE RESOLUTION
The parties agree to submit all disputes in which the amount in controversy
is $25,000 or less to binding arbitration. No other disputes arising under
this Agreement shall be arbitrated. Except as specifically provided in this
Article 18, the arbitration shall be conducted in accordance with the
American Arbitration Association Commercial Arbitration Rules. However, the
arbitration need not be administered by the American Arbitration
Association. The arbitration under this Article 18 shall be conducted
within one hundred and twenty (120) days of the demand for
13
<PAGE>
arbitration and shall be adjudicated by a single arbitrator chosen by
mutual agreement of the parties. The arbitration hearing shall occur in
Salt Lake City, Utah. The Utah Arbitration Act shall apply to the
arbitration conducted under this Article 18 unless it is preempted by the
Federal Arbitration Act, in which case the Federal Arbitration Act shall
apply. Discovery for the arbitration shall be limited to the exchange of
relevant documents. RxAMERICA and DS shall equally share in the
administrative fees and the fees for the arbitrator. RxAMERICA and DS shall
each bear its own costs and attorneys' fees, except as provided in Article
5.7.
ARTICLE 19
AUDIT RIGHTS
RxAMERICA will allow DS to conduct audits of RxAMERICA's current activities
or of activities for the period of one year prior to the date of DS's
request for an audit or such longer period as may be required by law,
including applicable pharmacy regulations, or up to three years prior to
the date of DS's request if such request is pursuant to requirements under
agreements between DS and Third Party Insurance plans. Such audit may be
conducted by DS's employee or agent who is mutually agreed upon by
RxAMERICA and DS. RxAMERICA's approval of such employee or agent shall not
be unreasonably withheld. If an audit of RxAMERICA is permitted or required
by an agreement between DS and a Third Party Insurance plan for Pharmacy
Services rendered by RxAMERICA under this Agreement, such audit shall be
conducted by the Third Party Insurance plan's employee or agent who is
agreed upon by RxAMERICA. RxAMERICA's approval of such employee or agent
shall not be unreasonably withheld. The Third Party Insurance plan
representative must sign an agreement to keep all information discovered
during the audit confidential and to not disclose any information
discovered during the audit to any person or entity other than the Third
Party Insurance plan, DS or RxAMERICA or as otherwise required by law. Each
of DS and each Third Party Insurance plan is permitted to conduct only one
audit in any six (6) month period unless a prior audit has exposed material
problems. Any audit conducted under this Article 19 is limited to reviewing
Pharmacy Services provided by RxAMERICA under this Agreement and to the
RxAMERICA Facility's records, pharmacy licenses, registration and
operations directly relating to performing Pharmacy Services. Such audits
will be conducted at DS's or the Third Party Insurance plan's expense
during normal business hours upon at least fourteen (14) days prior written
notice to RxAMERICA and shall not unreasonably interfere with RxAMERICA's
normal business operations. RxAMERICA shall retain records that may be
audited under this Article 19 for the longer of (i) the period required by
applicable laws and (ii) five years. No person or entity other than DS has
a right to obtain payment from RxAMERICA under this Agreement on the basis
of any information discovered during an audit or on any other basis.. To
the extent any Third Party Insurance plan desires different terms than
those outlined above, the parties will negotiate in good faith the terms
under which RxAMERICA and DS will implement such requests.
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<PAGE>
ARTICLE 20
RxAMERICA COVERED LIVES
RxAMERICA provides certain pharmacy services under agreements with third
parties ("Other Agreements"). These services may be provided through a mail
service pharmacy, a network of retail pharmacies, or by a combination of
these two. For services provided under this Agreement for persons covered
by Other Agreements ("Covered Lives"), the parties to this Agreement
anticipate that RxAMERICA will receive compensation as set forth in the
Other Agreements. Furthermore, the parties to this Agreement anticipate
that RxAMERICA will pay DS a per Prescription fee for each Prescription
ordered by Covered Lives via the DS Web Site and that RxAMERICA will
compensate DS, in a manner yet to be determined, for Prescriptions filled
under its retail agreements, as authorized by those agreements. The parties
will negotiate in good faith the specific arrangements for handling
Prescriptions covered by Other Agreements by February 15, 1999.
ARTICLE 21
MISCELLANEOUS PROVISIONS
21.1 This Agreement constitutes the entire Agreement between RxAMERICA and DS
and supersedes any and all prior agreements or understandings between the
parties.
21.2 No waiver of any provision of this Agreement shall be deemed to constitute
or shall constitute a waiver of any other provision hereof, whether or not
similar, nor shall any waiver constitute a continuing waiver. Except as
provided elsewhere in this Agreement, no waiver shall be binding unless
executed in writing by the party making the waiver.
21.3 In the event any term or provision contained in this Agreement shall be
determined to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforcement of any other
term or provision in this Agreement.
21.4 The parties agree that this Agreement was reached through the negotiation
of the parties, and that no presumption shall attach to the party drafting
this Agreement regarding the construction, operation or interpretation of
this Agreement.
21.5 If there is a conflict between the language of this Pharmacy Services
Agreement and the language of the Implementation Document, attachments,
exhibits, addenda, or other documents that are incorporated as part of this
Agreement, the language of this Pharmacy Services Agreement shall govern.
21.6 The headings used in this Agreement are solely for convenience and shall
have no effect on the interpretation of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
DS PHARMACY, INC. RxAMERICA L.L.C.
By: /s/ Tracy R. Nolan By: /s/ Jerry Mark De Bruin
---------------------------- -----------------------------------
Signature Signature
Tracy R. Nolan Jerry Mark De Bruin
---------------------------- -----------------------------------
Name Name
Vice President - Operations General Manager
---------------------------- -----------------------------------
Title Title
Address: 18650 NE 67th Court Address: 369 Billy Mitchell Road
-------------------------- ----------------------------
Redmond, WA 98052 Salt Lake City, UT 84116
-------------------------- ----------------------------
Telephone: (425) 881-5131 Telephone: (801) 961-6000
-------------------------- ----------------------------
Fax: (425) 881-8931 Fax: (801) 961-6008
-------------------------- ----------------------------
Date: 2-10-99 Date: 2-10-99
-------------------------- ----------------------------
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CONFIDENTIAL TREATMENT REQUESTED
ATTACHMENT A
to
PHARMACY MAIL SERVICE AGREEMENT
1. DS shall compensate RxAMERICA for Pharmacy Services as follows:
a. For prescription drugs dispensed between the Effective Date and April 15,
1999 DS shall pay RxAMERICA based on the following rates:
Brand Name Drugs: For each prescription dispensed by RxAMERICA, DS will
reimburse RxAMERICA [*].
Generic Drugs: For each prescription dispensed by RxAMERICA, DS will
reimburse RxAMERICA [*] or [*], whichever amount is less.
b. For prescription drugs dispensed after April 15, 1999, DS shall pay
RxAMERICA based on the following rates. The rates shall be calculated at the end
of each calendar quarter on a quarterly basis. The rates shall become effective
for all Prescriptions filled more than fourteen (14) days after the end of each
calendar quarter.
Less than 50,000 prescriptions per year (4,167/month):
Brand Name Drugs: For each prescription dispensed by RxAMERICA, DS will
reimburse RxAMERICA [*].
Generic Drugs: For each prescription dispensed by RxAMERICA, DS will
reimburse RxAMERICA [*] or [*], whichever amount is less.
Between 50,000 and 99,999 prescriptions per year (up to 8,333/month):
Brand Name Drugs: For each prescription dispensed by RxAMERICA, DS will
reimburse RxAMERICA [*].
Generic Drugs: For each prescription dispensed by RxAMERICA, DS will
reimburse RxAMERICA [*], whichever amount is less.
Over 100,000 prescriptions per year (over 8,333/month):
Brand Name Drugs: For each prescription dispensed by RxAMERICA, DS will
reimburse RxAMERICA [*].
Generic Drugs: For each prescription dispensed by RxAMERICA, DS will
reimburse RxAMERICA [*] or [*], whichever amount is less.
[*] Represents a confidential provision for which confidential treatment has
been requested from the Securities and Exchange Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
c. In addition to the compensation set forth in sections 1(a) and (b) in this
Attachment A, DS shall pay RxAMERICA the following fees:
Shipping and Handling: For each Prescription RxAMERICA ships to an Eligible
Person on behalf of DS, DS shall pay RxAMERICA the actual cost RxAMERICA
pays for postage and shipping.
Days Supply Surcharge: For each Prescription that RxAMERICA dispenses that
constitutes less than a 45 day supply of prescription drugs, DS shall pay
an additional [*].
d. In addition to the compensation set forth in sections 1(a) through (c) in
this Attachment A, for each Prescription that DS personnel perform the functions
described in Article 3, RxAMERICA agrees to deduct [*] from the price of each
such Prescription.
e. If RxAMERICA meets the following dispensing and delivery requirements, DS
shall pay RxAMERICA the following bonus:
If Prescriptions received for Pharmacy Services by 3:00 P.M. each day are
dispensed, packaged and delivered to the Delivery Point by RxAMERICA not
later than 6:00 P.M. the same day at a rate equal to or greater than 98% of
the time, DS shall pay RxAMERICA an additional [*] per each such
prescription. Such bonus shall be paid within 45 days of the end of each DS
fiscal quarter.
2. DS and RxAMERICA will mutually agree on the sharing of revenue from
therapeutic intervention and rebate programs. The parties will negotiate in good
faith to arrive at an agreement concerning how such revenues will be shared.
3. DS is responsible for all transaction and switching costs associated with
RxAMERICA providing Pharmacy Services for Eligible Persons covered by Third
Party Insurance if DS does not use RxAMERICA's Switch. "Switch" means the
service that provides routing of electronic data for adjudication of a
Prescription claim.
4. RxAMERICA shall use commercially reasonable efforts to increase staff and
capacity to meet the needs of DS as the number of Prescriptions filled for
Eligible Persons increases over the term of this Agreement.
5. DS will pay for and produce all marketing materials to be included in
packaged Prescriptions. RxAMERICA shall pick and pack marketing materials at the
request of DS. However, if the picking and packing of such items materially
increases the cost of providing Pharmacy Services, RxAMERICA shall notify DS.
The parties will, within five days of such notice, discuss methods to reduce or
eliminate the additional cost to RxAMERICA, including reducing the picking and
packing requirements for such
[*] Represents a confidential provision for which confidential treatment has
been requested from the Securities and Exchange Commission.
<PAGE>
materials or paying RxAMERICA its cost for picking
and packing such materials (or the labor costs of hiring an additional employee
to undertake such tasks). In the event the parties fail to reach an agreement to
reduce or eliminate the additional costs to RxAMERICA within 10 days from the
date of RxAMERICA's notice to DS, RxAMERICA may discontinue the picking and
packing of samples, leaflets and other marketing materials until such time the
parties may so agree; and any such failure by RxAMERICA to pick and pack any
such samples, leaflets or other marketing materials shall not be considered a
terminable event by either party under the terms of this Agreement.
<PAGE>
ATTACHMENT B
to
PHARMACY MAIL SERVICE AGREEMENT
Third-Party Insurance Programs
Implementation Document
Minimum data set to be provided to RxAmerica to set up new Third Party Insurance
plans pursuant to Section 3.14 of the Pharmacy Services Agreement between
RxAmerica L.L.C. and DS Pharmacy, Incdated February 8, 1999 (the "Agreement").
1. Processor Name
2. Processor Phone Number
3. BIN Number
4. Processor Control Number