EXHIBIT 10.23
PHARMACY SERVICES FULFILLMENT AGREEMENT
This Pharmacy Services Fulfillment Agreement ("Agreement") is made as of
August ___, 1999 ("Effective Date") by and between MEDI-MAIL, INC., a Nevada
corporation ("Medi-Mail") having an office at ▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, and ePILLS, INC., a Delaware corporation ("ePills"), having an
address at ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
PREAMBLES
Whereas, ePills is creating an Internet web site under the domain name
"▇▇▇▇▇▇.▇▇▇" through which it intends to offer to any consumers with Internet
access the ability to fill prescriptions, purchase pharmacy, health, beauty and
personal care items and to access related information for personalized service;
Whereas, Medi-Mail would like to administer and ePills would like Medi-Mail
to administer, the prescription drug fulfillment aspect of the ePills web site
and to perform certain related functions on the terms and provisions set forth
herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements as
set forth herein, the parties hereto hereby agree as follows:
1. Scope of Medi-Mail Services
a. Generally. Medi-Mail will provide pharmacy dispensing and related
support services for ePills and its consumers, as the case may be, including the
processing, adjudication or verification and fulfillment of prescription drug
orders received by ePills through its web site and their delivery to ePills'
shipper. Orders will be initially placed by ePills' consumers using ePills'
Internet web site. ePills shall forward all orders to Medi-Mail by electronic
data interchange ("EDI") pursuant to paragraph 4(d) at least four (4) times per
day; provided, however, at such time as the HBS system is operational, ePills
will forward all such orders on a real time basis. Orders will set forth a
description of the products, SKU designations, quantities, requested method of
delivery, designated delivery locations and other required information as agreed
upon by the parties from time to time. For purposes of this Agreement, "real
time" means batch processing of individual orders upon completion of such order
by electronic transmission, subject to nominal delays in processing and
transmission. The parties acknowledge and agree that Medi-Mail will not
dispense pursuant to any Medicare or Medicaid programs under this Agreement.
"Exclusive Rx Drugs" will only be shipped to consumers located in the
"Territory." Medi-Mail shall be the exclusive provider of such services to
ePills within the "Territory" with respect to "Exclusive Rx Drugs". Medi-Mail
acknowledges that one of the principal purposes of this Agreement is for ePills
to not have to qualify as a "pharmacy" under applicable federal, state and
territorial laws and regulations and for Medi-Mail to serve as a fulfillment
pharmacy on
CERTAIN INFORMATION ON THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
1
ePills' behalf and to perform those services that can only be performed by a
pharmacy. Medi-Mail further acknowledges that ePills expects Medi-Mail to
perform all its services hereunder in a manner that is consistent with high
standards of quality and customer service as the quality thereof is material to
the growth of ePills' business.
b. For purposes hereof, "Territory" shall mean all states or territories
of the United States where Medi-Mail is registered or licensed as a mail-order
pharmacy or otherwise has such licenses or other governmental approvals, if any,
necessary to provide the services described in this Agreement with respect to
such state or territory. Medi-Mail hereby represents and warrants that annexed
hereto as Schedule I is a true and complete list of all such states and
----------
territories (which are those not marked as pending), that Medi-Mail is in good
---
standing in all of such states and territories and is not aware of any
investigation, complaints or proceedings which could reasonably be anticipated
to result in the forfeiture, revocation or cancellation of any of such licenses
or qualifications and that Medi-Mail is in good standing with and has a valid
number ("NCPDP Number") from the National Association of Boards of Pharmacy
("NABP"). Medi-Mail shall use reasonable efforts to become registered or
qualified in all states and territories on said Schedule marked as pending (the
"Open Areas") by December 31, 1999 and to maintain in good standing all its
licenses and qualifications including a valid NCPDP number during the term of
this Agreement; provided, however, that if either (i) any license or
qualification is revoked, forfeited or canceled for any reason, or (ii) Medi-
Mail reasonably determines that a change in the applicable federal, state or
local laws creates an unreasonable burden (taking into consideration Medi-Mail's
general business, not only its services hereunder) to obtain or maintain a
license or qualification in any part of the Territory or the Open Area, then
Medi-Mail shall give immediate notice thereof (not less than sixty (60) days
prior written notice with respect to (ii)) to ePills. The failure to obtain or
maintain a license or qualification under the foregoing circumstances shall not
be considered a breach hereof (except as contemplated by paragraph 14(b)(vi)
below) and the "Territory" shall thereupon automatically, without the necessity
of further action, be deemed to be amended to reflect such changes. Similarly,
if Medi-Mail does not qualify or obtain a license in the Open Areas by the date
set forth above, it shall not be considered a breach of this Agreement but the
definition of Territory shall automatically, without the necessity of further
action, be deemed to be amended to delete such Open Areas unless ePills agrees
in writing to extend such date. Medi-Mail shall send ePills reasonably
acceptable evidence of qualification or licensing in any of the Open Areas as
soon as possible and in any event prior to said date; the failure to timely
supply any such evidence shall result in the automatic omission of such Open
Area from the Territory as aforesaid, unless ePills has extended the date in
writing.
c. For purposes hereof, "Exclusive Rx Drugs" shall mean all drugs and
related products which are available to consumers on a prescription basis only
and which Medi-Mail maintains in stock in its licensed mail-order facilities (or
in the Bergen ▇▇▇▇▇▇▇▇ Drug Company warehouse supplying such location) in
quantities sufficient to meet the reasonably anticipated "Verified Orders" as
defined in paragraph 21 below. For purposes hereof, Exclusive Rx Drugs
2
specifically excludes Drug Enforcement Administration ("DEA") Schedule II
controlled substances, certain oncology products and vaccines but may include
non-prescription products that are not typically maintained on open pharmacy
shelving (e.g., diabetes testing kits). A list of the drugs and related
products maintained by Medi-Mail, has been provided to ePills for ePills'
initial selection of Exclusive Rx Drugs, which selection may be revised by
ePills from time to time as provided in this Agreement. Medi-Mail shall, from
time to time, update the specific products to be included as Exclusive Rx Drugs
under this Agreement. Medi-Mail may add or delete available Exclusive Rx Drugs
upon ten (10) days' prior written notice to ePills; provided, however, ePills
may elect not to offer added Exclusive Rx Drugs, in which case any deleted
product will no longer be considered an Exclusive Rx Drug; and further provided
that Medi-Mail will not delete available Exclusive Rx Drugs so as to
discriminate against ePills. If Medi-Mail cannot fill a Verified Order for any
particular Exclusive Rx Drug on a timely basis in accordance with the provisions
of this Agreement due to a lack of supply or unavailability thereof (other than
due to manufacturer back orders) more than twenty (20) times in any one (1)
month period, ePills may, on written notice to Medi-Mail, omit such item from
the definition of Exclusive Rx Drugs without the consent of or further action by
Medi-Mail; provided, however, that ePills shall not be able to so omit any item
from the list of Exclusive Rx Drugs if Medi-Mail has maintained a sufficient
inventory of such item in accordance with paragraph 3(a) below.
d. Other Providers. It is contemplated that ePills will be able to
contract with other providers for similar services in areas outside the
Territory and for the fulfillment of Medicare/Medicaid orders and orders for
products other than Exclusive Rx Drugs both within and outside the Territory, as
such terms are amended from time to time in accordance with the provisions of
this Agreement. Should ePills consider contracting with other providers for
similar services in areas outside the United States and its territories, it will
provide Medi-Mail with either a copy of the proposed contract therefor or a
written summary of the relevant terms thereof, including without limitation,
pricing. If Medi-Mail wishes to match such terms, it must send written notice
to such effect to ePills within ten (10) business days of Medi-Mail's receipt of
such notice and enter into an amendment to this Agreement with ePills with
respect to such territory and products within twenty-one (21) days of receipt of
the Notice; the failure to timely send such notice to ePills shall be deemed a
decision by Medi-Mail not to match, TIME BEING OF THE ESSENCE with respect
thereto. Thereafter, ePills may enter into an agreement within ninety (90)
days with a third party for such territory and products on terms and conditions
no less favorable in any material respect to ePills than those set forth in the
Notice.
2. Processing and Pricing.
a. Generally. The parties will act in good faith to develop on or
before August 14, 1999, an operations manual/protocol with respect to the
processing of orders for Exclusive Rx Drugs placed through ePills web site. The
operations manual/protocol will be attached as Schedule V and may be revised by
the parties' mutual agreement from time to time. Unless otherwise specifically
agreed to in the final operations protocol, the parties agree that
3
Medi-Mail will have sole and exclusive responsibility for and will conduct its
services under this Agreement with respect to the processing of all orders for
Exclusive Rx Drugs in accordance with, the following: i. Medi-Mail will use all
reasonable efforts to verify the validity of all orders for Exclusive Rx Drugs,
to determine the availability of health insurance coverage, if applicable, and
to obtain all necessary approvals from health care providers within one business
day of the placement of such order. Medi-Mail may use any practice permitted by
law and customarily used in the industry to verify the validity of a
prescription, including obtaining an original or fax copy of the prescription,
and/or consulting with the prescriber. Such practices will comply in all
respects with applicable federal and state laws and Medi-Mail's determination of
the validity of a prescription will be final. The operations manual will cover
Medi-Mail's obligation to protect and maintain confidentiality of consumers'
patient records.
ii. Any prescription orders that do not become "Verified Orders" by
2:00 pm Pacific Time on any business day will not be shipped on a same-day
basis; no orders that are not Verified Orders will be shipped.
iii. If health insurance coverage is not available or denied for any
reason, Medi-Mail will immediately advise ePills so that ePills can arrange for
payment in full by the consumer. Medi-Mail will not ship any such Verified
Orders unless ePills has advised Medi-Mail that ePills has received payment in
full. If Medi-Mail has not received such advice prior to 2:00 pm Pacific Time
on any business day, such orders will not be shipped on a same-day basis.
iv. Any orders for Exclusive Rx Drugs which become Verified Orders
after 2:00 pm Pacific Time or with respect to which ePills does not advise Medi-
Mail that it has received payment in full (or payment in full of that portion
not covered by any health care provider as applicable) until after 2:00 pm
Pacific Time on any business day, shall be shipped the same day, if possible,
or, if not, on the next business day if Medi-Mail has sufficient quantities in
its pharmacy of the specific Exclusive Rx Drugs.
v. Medi-Mail will offer consumers various shipping options,
including next-day delivery service. Medi-Mail will deliver Exclusive Rx Drugs
to consumers in the manner specified by each consumer (consistent with legal and
product shipping requirements). ePills shall be responsible for all shipping
costs hereunder as a direct pass-through cost.
vi. Medi-Mail will be responsible for keeping track of all orders
for Exclusive Rx Drugs and Verified Orders in order to respond to consumer and
ePills inquiries with respect to the status of their orders and for providing
specific information with respect to verification, health insurance coverage and
shipment, including any applicable shipper's tracking number.
vii. Medi-Mail will not ship any Verified Orders until it has cross
checked the consumer's patient profile as required by paragraph 9 (d) below.
viii. Medi-Mail will use its NCPDP number (formerly known as NABP
number).
4
b. Pricing. The parties agree to work in good faith to develop on or
before August 14, 1999 a pricing protocol for all services and Exclusive Rx
Drugs provided pursuant hereto. Medi-Mail shall provide to ePills all
Exclusive Rx Drugs pursuant to the pricing protocol, for resale by ePills to
ePills' consumers. The pricing protocol will be attached as Schedule VI and may
be revised by the parties' mutual agreement from time to time. A higher
product-specific dispensing fee may apply to Exclusive Rx Drugs for which there
are additional shipping, record keeping, customer verification or other
obligations on Medi-Mail pursuant to applicable laws or regulations. The
parties acknowledge and agree that all such pricing will be set in advance
consistent with fair market value in an arms-length transaction and, except as
expressly provided, not determined in a manner that takes into account the
volume or value of any referrals or business otherwise generated between the
parties. Pricing for any Exclusive Rx Drugs will change pursuant to changes in
published Average Wholesale Pricing ("AWP"); provided, however, any such change
will not be effective with respect to orders placed by ePills' consumers within
twenty-four (24) hours of Medi-Mail's electronic notice to ePills.
Medi-Mail shall use all reasonable efforts (and shall consult with ePills about
possible sources) to obtain Exclusive Rx Drugs to fulfill Medi-Mail's functions
under this Agreement at the best possible prices available under the
circumstances and shall throughout the term of this Agreement, make available to
ePills pricing for Exclusive Rx Drugs that is as low or lower than prices Medi-
Mail charges for such items to any third party Internet service provider with
similar purchase volume and under contracts with similar terms.
3. Inventory
a. Generally. Medi-Mail will maintain a sufficient supply of the
Exclusive Rx Drugs in order to meet reasonably anticipated Verified Orders. The
parties recognize that ePills is a start-up enterprise and that there is no
operating history on which to base initial estimates of demand. ePills will
periodically provide Medi-Mail with its projections of consumer orders for
Exclusive Rx Drugs which ePills shall be permitted to reasonably modify from
time to time, provided that any such revisions shall not take effect for a
period of at least ten (10) days from the date of the delivery of such
modifications to Medi-Mail in order to allow Medi-Mail to obtain additional
supplies to meet such updated projections. Notwithstanding the foregoing,
ePills will be responsible for any additional costs incurred by Medi-Mail that
are directly attributable to any such revisions if Medi-Mail has advised ePills
in writing prior to incurring such increased costs. In addition, the parties
will discuss on a quarterly basis various strategic considerations, including
projected volumes, work order processing, new generic products to be included in
Medi-Mail's formulary, inclusion of brand name products and the like. Medi-Mail
shall not be considered to have breached its obligations hereunder if it has
maintained a reasonable supply of Exclusive Rx Drugs sufficient to meet such
projections (as supplemented from time to time) even though Verified Orders
therefor have exceeded such projections or to the extent any failure is due to
back orders by a manufacturer or other supplier. Medi-Mail will not process any
of the following shipments of products: (i) international
5
shipments, (ii) COD shipments, (iii) shipments requiring a declared value, (iv)
shipments to freight forwarding agents, (v) shipments of hazardous materials or
other products requiring specialized shipping not generally provided by Medi-
Mail, or (vi) DEA Schedule II controlled substances.
b. Warehouse. Medi-Mail shall keep all of the inventory of Exclusive
Rx Drugs to be used in connection with its services hereunder at any of its
licensed mail-order facilities. The location of Medi-Mail's facilities is
attached as Schedule VIII. Medi-Mail shall give ePills no less than ten (10)
days' written notice prior to any change in the location of its facilities used
in connection with its services hereunder.
c. Return Policy. Medi-Mail and ePills incorporate herein by reference
the Returned Goods Policy in the form of Schedule II.
-----------
4. Collections, Payment and Financial Reconciliation. The parties agree to
work in good faith to develop a financial reconciliation protocol on or before
August 14, 1999, which will provide specific details regarding the collection of
payment for Verified Orders and the payment by ePills for inventory used to fill
Verified Orders. The financial reconciliation protocol will be attached as
Schedule VII and may be revised by the parties' mutual agreement from time to
time. Unless otherwise specifically agreed to in the final financial
reconciliation protocol, the parties agree as follows:
a. ePills shall be solely responsible for the collection of payment from
the consumers of that portion of the purchase price for any Verified Orders
which is not covered by any health care provider which portion shall include,
without limitation, sales tax (if applicable), shipping and handling and insured
consumer co-pays and all collections by ePills shall be promptly paid to Medi-
Mail as its interest appears pursuant to the terms and provisions of this
Agreement.
b. Medi-Mail will be initially responsible for the collection of the
insured portion of all Verified Orders from health care providers. All
collections by Medi-Mail shall be promptly paid to ePills as its interest
appears pursuant to the terms and provisions of this Agreement. Notwithstanding
the foregoing, ePills shall bear the credit risk for any shortfall that may
result from such collection efforts from health care providers; provided that
(i) reasonable collection efforts were diligently pursued, (ii) such shortfall
does not relate to a MM Consumer and (iii) such shortfall does not arise out of
a processing error for which Medi-Mail is responsible. ePills shall have the
right to continue collection efforts from health care providers in Medi-Mail's
name and Medi-Mail shall fully cooperate at ePills' expense '' (unless the
shortfall arises out of a Medi-Mail processing error). ePills will remain
responsible for dispensing fees and postage costs including if the shortfall
arises out of a Medi-Mail processing error.
c. Each party shall remit payment to the other for all Exclusive Rx Drugs
provided to fulfill Verified Orders as follows: (i) if any portion of the
purchase price therefor is covered
6
by health insurance, then from Medi-Mail to ePills within three (3) business
days after Medi-Mail receives both an explanation of benefits ("EOB") and
payment of such portion from the applicable health care provider, or (ii) if
there is no health insurance coverage available, then from ePills to Medi-Mail
within twenty-four (24) hours after ePills receives payment in full for such
Verified Order, provided, however, that in no event shall payment be made to
Medi-Mail later than three (3) business days after such Verified Order has been
shipped. If payment is not received as provided in the financial reconciliation
protocol, a late payment penalty of the lower of one-and-one-half percent (1
1/2%) per month or part thereof or the maximum rate permitted by law shall be
assessed on the outstanding balance, commencing from the first (1st) business
day after such due date. The right to assess penalties for payment delays shall
not relieve either party of its obligation to make prompt payment in accordance
with this paragraph.
d. Medi-Mail and ePills incorporate herein by reference the EDI/EFT
Agreement in the form of Schedule III. All Orders, ePills sales reports and
------------
Medi-Mail invoices shall be transmitted by EDI. All funds shall be transferred
between the parties by electronic funds transfers ("EFT").
5. Sales Taxes
a. ePills shall obtain and maintain a resale tax certificate in Nevada
and each other jurisdiction in which Medi-Mail delivers Exclusive Rx Drugs to
ePills' shipper. ePills shall collect and remit all applicable sales taxes and
other taxes on the sale or provision of Exclusive Rx Drugs to ePills' consumers
to the extent required by law. Medi-Mail shall reasonably cooperate with respect
to ePills' collection of sales and other applicable taxes or governmental
charges.
6. Record Keeping
a. Generally. Medi-Mail shall be responsible for keeping all records with
respect to Verified Orders necessary or reasonably desirable in order to (i)
comply with applicable federal, state and other laws and regulations; (ii)
reasonably respond to consumer inquiries about the status of a Verified Order
(including without limitation health insurance coverage, refill status
availability of product to fill such order, shipment and delivery); once the HBS
system is operational, such automated responses will be in real time; and (iii)
reasonably comply with the requirements of the health care providers in
connection with Verified Orders; such records shall be maintained so as to
reasonably satisfy any potential audit by any federal, state or local agency
having jurisdiction over ePills or Medi-Mail or by any health care provider with
which it transacts business in connection with this Agreement. ePills will
retain all documentation, if any, it is required to maintain by federal and
state laws. Medi-Mail will provide copies of consumer's patient profiles and
confidential patient records to another licensed pharmacy promptly upon the
expiration or earlier termination of this Agreement to the extent ePills (or
such other licensed pharmacy) satisfies applicable legal and regulatory
standards for any such transfer. Such documents will be available for inspection
and audit by Medi-Mail and its authorized
7
representatives, subject to ePills' approval, during the term of this Agreement
and for two (2) years after, but no more frequently than twice in any
consecutive twelve (12) month period and only during reasonable business hours
and upon reasonable notice and terms set by ePills. All expenses of such audits
will be borne by Medi-Mail.
b. Consumer Profiles. Medi-Mail shall be responsible for maintaining
patient profiles for all consumers that have placed a Verified Order dispensed
by Medi-Mail. Such profiles shall include information about a consumer's prior
pharmacy purchases, if applicable, health problems, medications, allergies and
the like in accordance with usual industry practice. Medi-Mail shall not be
responsible for the accuracy of such information and may rely on information
provided by the consumer and his/her medical practitioner unless it has been
negligent in obtaining or analyzing such information. Medi-Mail shall be
responsible for updating such profiles for any new Verified Orders and for any
relevant information it obtains while fulfilling its functions hereunder.
c. Adverse Event Reporting. Each party shall report to the other and
pursuant to the requirements of the Food and Drug Administration, all adverse
events relating to the Exclusive Rx Drugs of which it becomes aware.
d. DEA Registration. ePills shall obtain and maintain such registration
with DEA as is required by DEA and shall report the sale and shipment of all
Exclusive Rx Drugs pursuant to the reporting requirements of DEA and comply with
all comparable state requirements.
e. Product Recalls. Neither party shall be obligated to recall any
Exclusive Rx Drugs which is the subject of a manufacturer or supplier recall but
either party may elect to do so from time to time in its sole discretion. If
either party shall do so, it will first consult with the other party and the
parties will cooperate with each other in any such recall, provided that any
recall undertaken by Medi-Mail on behalf of ePills will be at ePills' sole cost
and expense.
7. Access and Audit
a. As Between the Parties. Medi-Mail hereby agrees to make its warehouse,
the inventory of Exclusive Rx Drugs and all of the records in connection with
its performance under this Agreement available to ePills and its representatives
and shall further allow ePills' representatives to discuss all operations
hereunder with Medi-Mail's officers, employees and representatives, all at Medi-
Mail's warehouse or other places of business during normal business hours on
reasonable request. Such records will be available for inspection and audit by
ePills and its authorized representatives, subject to Medi-Mail's approval,
during the term of this Agreement and for two (2) years after, but no more
frequently than twice in any consecutive twelve (12) month period and only
during reasonable business hours and upon reasonable notice and terms set by
Medi-Mail. All expenses of such audits will be borne by ePills.
b. Third Party Audit. In the event of an audit by any health care
provider or government agency with a right to do so, both parties agree to fully
cooperate with each other
8
and with such third party with respect to such audit. Each party agrees to
immediately notify the other upon receipt of any notice of or request for an
audit. If a health care provider determines that monies are to be refunded to
the provider or that monies are owed to the provider due to the negligence of
Medi-Mail, it shall be Medi-Mail's responsibility to pay/repay such monies to
the provider and to collect the then unpaid balance from the consumer(s) to the
extent permitted by law. Each party shall reasonably cooperate with the other in
such collection efforts at its own expense except to the degree that either
party has been negligent, in which case the negligent party will bear all such
expenses. Medi-Mail may, in its discretion, enter into negotiations with such
provider regarding any monies which the provider claims are to be refunded or
paid provided that Medi-Mail (i) does not enter into any agreement or commitment
on ePills' behalf without ePills' prior written consent, (ii) keeps ePills
advised of the progress of such negotiations, and (iii) allows ePills to
participate in such discussions, at its own cost and expense, if ePills so
desires. ePills shall bear the credit risk for fraud by a consumer or any
error by providers or others except to the extent Medi-Mail is responsible .
8. Title.
a. Orders and Receivables. For purposes of payment only, title to, and
risk of loss of, all Exclusive Rx Drugs ordered through the ePills web site
(including without limitation Verified Orders from "MM Consumers," as defined in
paragraph 20 below) shall pass from Medi-Mail to ePills immediately prior to
Medi-Mail's delivery of the Exclusive Rx Drugs to the shipper for delivery to
ePills' consumer; provided, however, that Medi-Mail may be entitled to a
commission with respect to sales through the ePills web site to MM Consumers as
provided in the pricing protocol to be developed pursuant to paragraph 2(b)
above. Notwithstanding the foregoing:
(i) If any health care provider will afford coverage for any Exclusive Rx
Drugs only if such product is provided by a licensed pharmacy and, under such
provider's rules and regulations, ePills would not be a qualified pharmacy but
Medi-Mail would be, then the receivables with respect to such sales to ePills
consumers shall be in the name of and shall be the sole property of Medi-Mail.
In such event, however, ePills shall receive as a commission with respect to the
use of its web site compensation in the same amount that it would otherwise be
entitled to and on substantially the same terms as set forth in this Agreement.
Medi-Mail will promptly notify ePills of each and every such situation and shall
provide ePills with reasonable back-up information from such provider with
respect thereto.
(ii) With respect to Verified Orders for Exclusive Rx Drugs, the sale or
title of which may require ePills to register with DEA ("DEA Restricted Drugs"),
ePills will not take title prior to delivery to the shipper, as set forth above,
until ePills has been definitively advised by DEA as to its registration
requirements and obtained any required registration. During any interim
period, to the extent it may lawfully do so, ePills will act as Medi-Mail's
sales agent entitled to a commission in an amount to which it would otherwise be
entitled under terms of this Agreement, less any out-of-pocket costs, including
sales and use taxes, to which Medi-Mail may be obligated
9
due to ePills acting as its sales agent.
b. Records. Medi-Mail agrees that it shall retain all documentation
required by federal and state statutes and regulations and will make available
to ePills, to the maximum extent allowed by law, copies of all records
maintained in connection with Medi-Mail's performance hereunder (including
without limitation records of the verification of orders and availability of
insurance, shipment and delivery, collection from health care providers,
consumer's patient profiles and pharmacy support services). Subject to paragraph
17, Medi-Mail and ePills shall each retain sole ownership of their respective
customer lists and business records.
9. Support Services
a. Pharmacist Support. ePills wishes to offer to its consumers (and may
be required to offer under certain applicable state laws) access to Medi-Mail
pharmacists to provide by phone, e-mail or otherwise personal guidance, advice
or information regarding Exclusive Rx Drugs, other pharmaceuticals and health
concerns, including, without limitation, questions concerning correct usage and
dosage, generic alternatives, potential side-effects and interaction with other
medications the consumer may be taking.
b. Customer Service. ePills also wishes to offer full customer service to
its consumers including without limitation inquiries about Exclusive Rx Drugs,
availability, ordering, shipment options, shipment status, etc.
c. Generally. In connection with pharmacist support and customer service,
ePills will develop and maintain on its web site consumer accessible electronic
information, including frequently asked questions (FAQs) and other information
with the intent of minimizing routine consumer inquires to Medi-Mail's
pharmacist support and customer service. In turn, Medi-Mail will provide
sufficient pharmacist support and customer service to respond to consumer
inquiries from Monday through Friday, 7:00 a.m. through 5:00 p.m. Pacific Time
for pharmacy support and 6:00 am through 5:00 pm Pacific Time for customer
service as long as ePills requires, it being understood that ePills may, in its
sole and absolute discretion, determine at any time to contract with Medi-Mail
to hire additional pharmacist(s) or personnel on staff to provide additional
functions or to provide similar functions during expanded hours and days. The
pricing for any such services provided by Medi-Mail will be negotiated
separately by the parties in good faith, as part of the pricing protocol
referred to in paragraph 2(b) above.
d. Cross Checks. Medi-Mail shall be responsible for checking a consumer's
order for Exclusive Rx Drugs with the consumer's patient profile to ascertain
allergies and potentially harmful reactions resulting from the interaction of
various prescription medications, other health problems or other circumstances
or information provided to Medi-Mail prior to shipment of a Verified Order.
10. Technology and Equipment.
a. Web Site Development. ePills shall be responsible for (a) the
development, testing
10
and implementation of its web site; (b) installing, maintaining repairing or
replacing all technology and equipment including without limitation, interfaces,
encryptions software, programs, hardware and related equipment reasonably
necessary to operate the business except that Medi-Mail shall be responsible for
all service site software and hardware implementation and maintenance and for
such software and hardware (including without limitation the Cyclone software)
necessary or desirable for Medi-Mail's systems to interface properly with
ePills' systems with respect to Medi-Mail's operations; and (c) providing for
credit card processing for consumer payments for Verified Orders. Each screen
applicable to the sale of Exclusive Rx Drugs that is accessible to consumers on
ePills' web site shall clearly identify Medi-Mail as an independent contractor
providing the dispensing pharmacy services. No content on ePills' web site shall
directly or indirectly lead any consumer or potential consumer to believe that
ePills or one of its affiliates is the manufacturer of an Exclusive Rx Drug. The
initial technology to be used by ePills shall be subject to the review and
approval of Medi-Mail, such approval not to be unreasonably withheld. Medi-Mail
shall not have any liability to ePills for Medi-Mail's failure to fulfill its
duties hereunder if such failure is the result of any problem with respect to
the software or hardware that ePills has provided as long as such problem has
not been caused by any negligent act or omission of Medi-Mail or its
representatives.
b. Prohibition Against Publication of Certain Materials. ePills shall not
incorporate in ePills' web site any of the following material (including
pictures, links, or any other content, whether visible or invisible with a web
browser):
i. any material which knowingly violates or infringes any national or
international copyright, trademark, trade secret, patent, statutory, common law
or other proprietary rights of others, including any party's privacy right or
right of publicity, in effect or which may hereafter be enacted and applicable
to this Agreement or web sites; or
ii. any material that is libelous, slanderous, harmful, abusive,
threatening, obscene or pornographic.
c. Intellectual Property Rights. Medi-Mail does not grant to ePills any
rights to any copyright, patent, trademark, trade name or similar rights with
respect to any software, documentation or any other information provided to
ePills by Medi-Mail. Except as provided in this Agreement, ePills will not use
the name, trade name, trademarks, service marks, trade dress, logos or other
intellectual property of Medi-Mail or any of its affiliates in publicity
releases, advertising, sales literature or materials, or in any similar activity
without Medi-Mail's prior written consent. Notwithstanding paragraph 13(c)(i),
ePills shall immediately notify Medi-Mail of any written or oral claim that any
software, documentation or other information provided by Medi-Mail for use by
ePills in its web site or otherwise infringes on the rights of any third party.
Immediately upon receipt of such notice from Medi-Mail, ePills shall discontinue
the use of any such material which Medi-Mail determines may subject Medi-Mail or
ePills to liability to any third party. Failure to notify Medi-Mail in writing
within three (3) business days of the receipt of an oral or written claim that
any such material used by ePills in its web site or otherwise
11
infringes on the rights of any third party shall terminate and rescind all of
Medi-Mail's representations, warranties, and indemnification obligations with
respect to the subject matter of the claim.
11. Installation of HBS System. Medi-Mail agrees that the new HBS system will
be installed and operating as soon as possible.
12. Labeling and Name.
a. Labeling. The parties agree to act in good faith to develop on or
before July 14, 1999 a label to be used on all containers and packaging for
Exclusive Rx Drugs shipped by Medi-Mail hereunder. The name, logo and telephone
number for Medi-Mail will appear on the label for Exclusive Rx Drugs ordered by
consumers who place orders using ePills' web site and ePills' name, logo and
telephone number will also appear on such labels if permitted or required by
applicable federal and state law. Such labels shall not be used other than in
connection with this Agreement. The parties currently contemplate the use of one
label or sticker for ePills together with Medi-Mail's usual prescription label
on each vial or container for Exclusive Rx Drugs provided to a consumer. The use
of the two labels will be mutually re-evaluated once the HBS system is
operational.
b. Web site. In addition, subject to reasonable prior approval, ePills
may use Medi-Mail's name and logo and images of Medi-Mail's facilities and
operations and, with permission from each such person, its personnel on ePills'
web site and Medi-Mail may use the ePills name and logo on any web site which
Medi-Mail may in the future develop, provided that the use by either party of
the other's name shall be in the context of either referring to the arrangements
reflected in this Agreement or promoting in a positive way the products and/or
services provided by the other. Each party acknowledges and agrees that it has
no right, title or interest in and to the name of the other party except in
accordance with the terms and provisions hereof.
13. Insurance and Liability
a. Insurance - Each party shall obtain and maintain during the term of
this Agreement and for two (2) years thereafter at its own cost and expense:
(1) Commercial General Liability Insurance covering its premises,
including bodily injury, property damage, broad form
contractual liability, independent contractors and products
liability/completed operations coverages, with limits of not
less than [*] per occurrence, [*] aggregate and [*] single
limit.
(2) Workers' Compensation Insurance as mandated or allowed by all
states in which such party's business is being performed,
including at least [*] coverage for Employer's Liability.
(3) All Risk Property Insurance in an amount adequate to cover
the cost of replacement of all equipment, improvements, and
betterments at such party's
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
12
locations in the event of loss or damage.
(4) Errors and Omissions Insurance in the amount of [*].
All such policies shall be written by a carrier or carriers rated "A" or above
by Best, shall contain a clause requiring the carrier to give the other party at
least thirty (30) days' prior written notice of any material change or
cancellation of coverage for any reason, shall name the other party as an
additional insured and shall further provide that the interests of the other
party shall not be invalidated by any act or negligence of the primary insured.
Each party shall provide the other with evidence of such insurance within five
(5) days after ePills' web site is initially available on the Internet and
annually thereafter throughout the term of this Agreement.
b. Indemnification by ePills. ePills shall indemnify, defend, and hold
harmless Medi-Mail and its officers, directors, agents and affiliates from and
against any and all claims, demands, actions, causes of action, losses,
judgments, damages, costs and expenses (including, but not limited to,
attorneys' fees, court costs, and costs of settlement) ("Claim") to the extent
arising out of claims against Medi-Mail for: (1) the dishonest, fraudulent,
negligent, willful, or criminal acts of ePills or ePills' employees, agents, or
representatives acting alone or in collusion with others; (2) the death of, or
bodily injury to, any person to the extent as a result of any act or omission of
ePills or ePills' employees, agents or representatives; or (3) any breach by
ePills of any of its representations, warranties or covenants in this Agreement.
i. Notice by Medi-Mail. Upon receipt of any notice of a Claim,
Medi-Mail shall promptly notify ePills in writing of any such Claim; provided
however, any failure to so notify ePills shall not relieve Medi-Mail of any
liability it may have to ePills except to the extent such liability was caused
by such failure.
ii. Retention of Counsel. Medi-Mail may retain counsel of its own
choice at Medi-Mail's expense to the extent necessary to protect Medi-Mail's
interests and to act as co-counsel in the litigation or settlement of any Claim
or threatened Claim. So long as ePills does not enter into any settlement
agreement or consent judgment that admits liability on the part of Medi-Mail or
that fails to include an unconditional release of Medi-Mail from all liability
from all asserted or threatened Claims, ePills shall have the right to control
the defense, settlement, and prosecution of any litigation.
c. Indemnification by Medi-Mail. Medi-Mail shall indemnify, defend, and
hold harmless ePills and its officers, directors, agents and affiliates from and
against any and all Claims to the extent arising out of claims against ePills
for: (1) the dishonest, fraudulent, negligent, willful, or criminal acts of
Medi-Mail or Medi-Mail's employees, agents, or representatives acting alone or
in collusion with others; (2) the death of, or bodily injury to, any person to
the extent as a result of any act or omission of Medi-Mail or Medi-Mail's
employees, agents or representatives, including misfilling an Exclusive Rx Drug
prescription or, absent express patient consent or express physician approval,
dispensing an Exclusive Rx Drug despite clear indication in Medi-Mail's records
that use by the patient was absolutely contraindicated; or (3) any breach by
Medi-Mail of any of its representations, warranties or covenants in this
Agreement.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
13
i. Notice by ePills. Upon receipt of any notice of a Claim, ePills
shall promptly notify Medi-Mail in writing of any such claim; provided, however,
any failure to so notify Medi-Mail shall not relieve ePills of any liability it
may have to Medi-Mail except to the extent such liability was caused by such
failure.
ii. Retention of Counsel. ePills may retain counsel of its own
choice at ePills' expense to the extent necessary to protect ePills' interests
and to act as co-counsel in the litigation or settlement of any Claim or
threatened Claim. So long as Medi-Mail does not enter into any settlement
agreement or consent judgment that admits liability on the part of ePills or
that fails to include an unconditional release of ePills from all liability from
all asserted or threatened Claims, Medi-Mail shall have the right to control the
defense, settlement, and prosecution of any litigation.
d. Limit on Liability. EXCEPT TO THE EXTENT THAT A THIRD PARTY IS FINALLY
DETERMINED TO BE ENTITLED TO SUCH DAMAGES, MEDI-MAIL SHALL NOT BE LIABLE TO
EPILLS FOR ANY CLAIM ARISING OUT OF THIS AGREEMENT FOR INDIRECT, CONSEQUENTIAL,
SPECIAL, OR PUNITIVE DAMAGES, WHETHER OR NOT MEDI-MAIL KNEW OR HAD REASON TO
KNOW OF THE POSSIBILITY OF SUCH DAMAGES, AND MEDI-MAIL'S AGGREGATE LIABILITY
UNDER THIS AGREEMENT FOR ANY AND ALL SUCH CLAIMS, WHETHER IN CONTRACT, TORT, OR
OTHERWISE, SHALL NOT EXCEED MEDI-MAIL'S RECEIPTS FOR PRODUCTS SOLD UNDER THIS
AGREEMENT DURING THE TWELVE (12) MONTHS IMMEDIATELY PRECEDING A FINAL
DETERMINATION OF SUCH LIABILITY.
14. General Representations and Warranties
a. Representations and Warranties of Medi-Mail. Medi-Mail hereby
represents and warrants to ePills that (i) it is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it was
organized; (ii) the person executing this Agreement on its behalf is duly
authorized to bind it to all terms of this Agreement; (iii) it shall have good
title to all Exclusive Rx Drugs delivered pursuant to this Agreement (unless
such Exclusive Rx Drugs are subject to a chargeback agreement); (iv) except as
otherwise provided, all such Exclusive Rx Drugs shall be free from any security
interest or other lien (unless such Exclusive Rx Drugs are subject to a
chargeback agreement); (v) all Exclusive Rx Drugs shall be delivered without
damage to ePills' shipper for delivery to ePills' consumer; (vi) this Agreement,
when executed and delivered by it, shall be its legal, valid, and binding
obligation, enforceable against it in accordance with its terms; (vii) its
execution, delivery and performance of this Agreement shall not conflict with or
breach its charter documents, delegations of authority or any material agreement
to which it is a party, or require the consent of or notice to any third party
or governmental authority; and (viii) Medi-Mail holds all valid licenses,
permits and registrations in appropriate jurisdictions to permit Medi-Mail to
operate its fulfillment services.
b. No Representations or Warranties Regarding Exclusive Rx Drugs. Except
as
14
expressly provided herein, Medi-Mail makes, and shall be deemed to make, no
representations or warranties, express or implied, written or oral, as to the
value, absence of defect, absence of infringement, or the absence of any
obligation based on strict liability in tort, or any other representation or
warranty whatsoever, express or implied, with respect to the Exclusive Rx Drugs
provided in this Agreement. MEDI-MAIL EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, WRITTEN OR ORAL, AS TO ANY EXCLUSIVE RX DRUGS, INCLUDING BUT
NOT LIMITED TO THOSE OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
REGARDING THE PRODUCTS PROVIDED IN THIS AGREEMENT. ePills acknowledges that
Medi-Mail is not the manufacturer of any Exclusive Rx Drugs and agrees that
ePills shall settle all claims, defenses, set-offs and counterclaims it may have
with or against any manufacturer directly with the manufacturer and shall not
assert any such claims, defenses, set-offs or counterclaims against Medi-Mail.
Accordingly, ePills agrees that, except as otherwise provided, Medi-Mail, its
subsidiaries and affiliates and the directors, officers, shareholders and agents
of each shall not be liable to ePills for any liability, claim, loss, damage
(consequential or otherwise) or expense of any kind caused, directly or
indirectly by (i) the inadequacy of the Exclusive Rx Drugs for any purpose, (ii)
any deficiency or defect, (iii) any delay in providing the Exclusive Rx Drugs,
(iv) failure to provide the Exclusive Rx Drugs, or (v) death or bodily injury
which may be caused by the Exclusive Rx Drugs. The foregoing is not intended to
exculpate Medi-Mail from or limit any liability or obligation Medi-Mail may have
or limit any claim ePills may have against Medi-Mail (other than as set forth in
Section 13d above) to the extent arising out of Medi-Mail's performance of or
its negligence with respect to its services and obligations relating to this
Agreement, including without limitation obligations or claims relating to the
advice given to customers by Medi-Mail pharmacists, the handling, compounding or
storage or any Exclusive Rx Drugs or the failure to maintain or check required
patient profiles in connection with filling any Verified Orders. Further, the
provisions of this paragraph 14(b) or paragraph 13(d) or any other provision of
this Agreement are not intended to prevent or limit ePills' ability to implead
Medi-Mail in any action that is brought against ePills for any claim, liability
or obligation for which Medi-Mail could have liability to the plaintiff therein.
c. Representations and Warranties of ePills. ePills hereby represents and
warrants to Medi-Mail that (i) it is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it was organized; (ii)
the person executing this Agreement on behalf of ePills is duly authorized to
bind ePills to all terms of this Agreement; (iii) this Agreement, when executed
and delivered by it, shall be its legal, valid, and binding obligation,
enforceable against it in accordance with its terms; (iv) its execution,
delivery and performance of this Agreement shall not conflict with or breach its
charter documents, delegations of authority or any material agreement to which
it is a party, or require the consent of or notice to any third party or
governmental authority; and (v) ePills holds all valid licenses, permits and
registrations in appropriate jurisdictions to permit ePills to operate its
Internet services as contemplated by this Agreement.
15. Term; Early Termination
15
a. Term Generally. This Agreement shall commence as of the Effective Date
and shall continue in full force and effect for three (3) years and shall be
automatically extended for additional, successive one (1) year terms
(collectively, the "Term") unless either party gives written notice to the other
of its intention to not extend at least sixty (60) days prior to the end of the
then current Term.
b. Early Termination. Notwithstanding the foregoing, this Agreement shall
terminate earlier upon the occurrence of one or more of the following events:
i. if either party defaults in its obligations under paragraphs 16 or
17 hereof;
ii. if either party shall be in default with respect to any of its
agreements or obligations hereunder or Medi-Mail is in default after a quality
review, and such default shall continue for a period of 30 days (four [4]
business days in the case of any failure to pay) after written notice thereof is
received from the other party (other than as provided for in (b)(I) above);
iii. if a proceeding or case shall be commenced by a party or against
a party in any court of competent jurisdiction seeking (x) its reorganization,
liquidation, dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (y) the appointment of a receiver, custodian,
trustee, examiner, liquidator, or the like, for such party or a substantial part
of its property, or (z) similar relief under any law relating to bankruptcy,
insolvency, reorganization, composition or adjustment of debts, and, in the case
of any such proceeding being commenced against a party rather than by such
party, if such proceeding continues undismissed for a period of sixty (60) days
or more;
iv. if one or more judgments, levies or attachments is entered
against either party in the aggregate amount of $25,000.00 by any party,
administrative tribunals or other bodies having jurisdiction, and the same is
not discharged or stayed within sixty (60) days from the date of entry thereof,
with each party having the duty to report any such entry against it to the other
party within ten (10) days of such entry;
v. if any of the final operations protocol, pricing protocol or
financial reconciliation protocol or labeling is not agreed to by the dates set
forth in paragraphs 2(a), 2(b), 4 or 12 above respectively, unless the
applicable date is extended in writing by the parties;
vi. if (x) any executive employee of Medi-Mail or any licensed
professional employee of Medi-Mail that performs services in connection with
Medi-Mail's fulfillment of its obligations under this Agreement is convicted of
fraud or any similar criminal activity or (z) any employee who is a Medi-Mail
pharmacist and performs services for ePills hereunder has his pharmacist's
license revoked or suspended for a period of more than ninety (90) days; then
upon the occurrence of any such event ePills shall have the option of
terminating this Agreement at any time within sixty (60) days after it becomes
aware of such event, such termination to be effective upon sixty (60) days'
prior written notice.
16
vii. in the event the laws of any jurisdiction change so as to
negatively effect through increased regulations, liability, or otherwise so as
to have a material adverse effect on Medi-Mail's Internet fulfillment operations
generally or the Internet sale of Exclusive Rx Drugs, then either party may
terminate this Agreement upon sixty (60) days' prior written notice to the other
without further obligation.
viii. If any required licenses, permits or registrations of Medi-Mail
or ePills are revoked or suspended so as to materially impair such party's
ability to perform under this Agreement, Medi-Mail or ePills may terminate this
Agreement upon sixty (60) days' written notice without further obligation.
A party terminating this Agreement pursuant to any of paragraphs (i) through (v)
above, shall send written notice thereof to the other party which notice shall
describe in reasonable detail the applicable default and the termination date.
c. Quality Control. ePills may, in its discretion, conduct periodic
quality control reviews with respect to Medi-Mail's performance under this
Agreement. If ePills determines that Medi-Mail is in breach of the standards of
customer service as described generally in paragraph 1(a) above and elsewhere in
this Agreement, then ePills shall so notify Medi-Mail in writing, which notice
shall set forth in reasonable detail the nature of Medi-Mail's breaches or
shortcomings. Medi-Mail shall have a period of thirty (30) days (or such longer
period of time reasonably necessary to take appropriate corrective action
provided that Medi-Mail is diligently proceeding to do so) from its receipt of
such notice to implement procedures to correct such shortcomings and to improve
the quality of customer service (the "Corrective Period"); such corrective
action shall be set forth in a written response to ePills given on or before the
end of such Corrective Period. At any time after the Corrective Period, ePills
may either accept such response, in which event the breach shall be deemed to be
cured, or e-Pills may conduct a subsequent quality review to determine whether
the corrective action is sufficient and has materially improved the quality of
customer care in light of the deficiencies set forth in ePills' original default
notice. Medi-Mail agrees that, provided that ePills is evaluating Medi-Mail's
performance on a reasonable basis consistent with industry standards and good
pharmacy practice, ePills' determination with respect to whether Medi-Mail is
meeting the required standards of customer service and performance shall be
reasonable under such standards and practices.
d. Force Majeure. Notwithstanding the provisions of this Agreement, each
party shall be relieved of its obligations hereunder (other than financial
obligations) to the extent that fulfillment of such obligations shall be
prevented by force majeure; such excuse shall continue as long as the condition
constituting such force majeure continues plus reasonable time thereafter,
during which period such party shall take such action as is required or
reasonably desirable to correct any defaults under this Agreement arising in
connection with such force majeure event. For purposes of this Agreement, force
majeure is defined as follows: causes beyond the reasonable control of the
party claiming the excuse, including, without limitation, war,
17
governmental rules or regulations, civil commotion, destruction of facilities or
supplies by fire, earthquake, storm or other natural cause, labor disturbances
or strikes, epidemic or the failure of public utilities or common carriers.
16. Limited Non-Compete
Medi-Mail agrees that it will not sell any Exclusive Rx Drugs to any
other similar e-commerce or web site prior to August 30, 1999, except that Medi-
Mail can develop its own e-commerce or web site for the sale of prescription or
over-the-counter products. To induce Medi-Mail to agree to the foregoing,
ePills agrees to complete the following on or before August 14, 1999: (a)
execution of written agreements or commitments in favor of ePills with health
care providers for prescription drug insurance coverage for at least 10 million
covered lives, (b) completion of a production ready web site for ePills for
ordering prescription products reasonably comparable to competing web sites in
existence as of the date hereof and (c) completion of the interface with Medi-
Mail's software and hardware to handle orders for Exclusive Rx Drugs '. If
such conditions have not been satisfied by August 14, 1999 or, at any time prior
to August 14, 1999, Medi-Mail reasonably determines they are unlikely to be
satisfied by such date (except to the extent ePills' failure is due to Medi-
Mail's failure to cooperate), then Medi-Mail may, upon written notice to ePills
with an accompanying explanation, terminate the foregoing exclusivity.
17. Confidentiality
a. Confidential Information. "Confidential Information" shall mean any
and all information disclosed in writing, orally or by electronic data
transmission by either party to the other party, which is either confidential or
proprietary in nature. "Confidential Information" shall not include: (i)
information that is or shall become generally available to the public through no
fault of the receiving party; (ii) information that was known to the receiving
party before that party received it under this Agreement and was free of any
obligation of nondisclosure; or (iii) information that is disclosed in good
faith to the receiving party by a third party lawfully in possession of such
information and who is not under an obligation of nondisclosure with respect to
such information.
b. Nondisclosure. During the term of this Agreement and for ten (10)
years thereafter, neither party shall, without the prior written consent of the
other party, disclose to any third party (unless such disclosures are reasonably
required by law) or use for its own purposes (except as contemplated by this
Agreement) this Agreement or any other Confidential Information concerning the
other party's business, operations, or products that is obtained in the course
of performing this Agreement. Notwithstanding the foregoing, the parties may
issue a joint press release as promptly as practicable after the execution of
this Agreement and may continue to communicate with employees, customers,
suppliers, lenders, shareholders and others as may be legally required or
appropriate and not inconsistent with the best interests of the other party or
the prompt consummation of the activities contemplated by this Agreement. If
one party
18
is requested or required to disclose any such information, it shall provide the
other with prompt notice of such request or requirement so that either party or
both may seek an appropriate protective order or waive compliance with these
provisions.
18. Equitable Relief
In the event of a breach of certain provisions hereof, including those set
forth in paragraphs 16 or 17 hereof, each party acknowledges that monetary
damages may be insufficient compensation for the other party and that the other
party shall be entitled to a temporary restraining order or a permanent
injunction restraining it from said breach or a continuing breach or other
equitable relief. The foregoing shall not be construed as prohibiting the other
party from pursuing other remedies available to it for such breach or threatened
breach, including the recovery of damages.
19. Stock Warrant Rights
As additional compensation, ePills and Medi-Mail will enter into a Common
Stock Purchase Warrant in the form of Schedule IV for purchase of ePills common
-----------
stock (not to exceed [*] of all such stock) at [*]. Such rights are in addition
to any equity Medi-Mail or any of its affiliates may otherwise agree to
purchase.
20. Independent Contractor
Each party is an independent contractor and is solely responsible for all
taxes, withholdings, and other similar statutory obligations, including, but not
limited to, workers' compensation insurance. None of a party's employees,
agents, or associates are employees of the other party and each party agrees to
defend, indemnify and hold the other harmless from any and all claims made by
any of its employees, agents, or associates, or by any entity or agency on
account of an alleged failure to satisfy any such tax or withholding
obligations. Neither party has authority to act on behalf of or to enter into
any contract, incur any liability, or make any representation on behalf of the
other.
21. Certain Definitions
a. "MM Consumer" shall mean any person that either is a member of a plan
that Medi-Mail is servicing as of the date hereof or to whom Medi-Mail has
shipped an order for an Exclusive Rx Drug since July 1, 1998. To the extent any
reasonable dispute arises between the parties as to whether a consumer is a MM
Consumer, Medi-Mail will, consistent with Medi-Mail's obligation to protect
confidential patient records, provide adequate business records to demonstrate
to ePills reasonable satisfaction that such consumer is a MM Consumer.
b. "ePills Consumer" shall mean any consumer other than a MM Consumer
placing an order for Exclusive Rx Drugs using ePills' web site.
c. "Verified Order" shall mean any order for an Exclusive Rx Drug the
prescription
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
19
for which has been verified by Medi-Mail as being, in the sole and absolute
determination of Medi-Mail, to be a valid prescription that may be lawfully
dispensed by Medi-Mail.
d. Any reference herein to a "health care provider" shall include any and
all governmental agency or third party that provide health care insurance or
benefits including without limitation health maintenance organizations, pharmacy
benefit management companies or other third party payers.
e. Any references to this "Agreement" or "hereunder" or "herewith" shall
mean this Agreement and all written amendments or supplements relating thereto.
f. A "business day" shall mean any day Monday through Friday inclusive
which is not a legal holiday in the state where a warehouse is located in
accordance with the provisions of paragraph 3(b) above.
g. Any reference to "web site" shall mean the Internet web site maintained
by ePills using the domain name (URL) "▇▇▇▇▇▇.▇▇▇", and excludes facsimile,
telephone and other non-Internet technologies (other than their incidental use
in support of the web site).
22. Notice
a. All notices to be given hereunder shall be deemed to have been given
when received or refused and shall be sent by certified mail, postage prepaid,
by in person or by hand delivery, or by Federal Express or similar overnight
delivery service, and shall be addressed to the parties at their respective
addresses as set forth below each party's signature or to such other address(es)
as may be furnished by notice given in accordance with this paragraph.
23. Miscellaneous
a. Further Assurances. The parties each hereby agree, at their own
respective cost and expense, to execute and deliver any agreement, document or
instrument and to take any further action which the other may reasonably request
in order to more fully give effect to the matters contemplated hereby.
b. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without giving
effect to the principals of conflict of law. In the event of any dispute with
respect to the terms and provisions hereof, the parties hereby irrevocably
submit to the exclusive jurisdiction of any federal or state court in Orange
County in the State of California with respect thereto. The prevailing party
shall be entitled to the reimbursement from the other party of all costs and
expenses incurred, if any, including attorney's fees, to enforce its rights and
remedies hereunder. THE PARTIES EACH HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY
IN ANY SUCH ACTION OR PROCEEDING.
c. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement
20
and understanding of the parties and supersedes any and all other agreements or
understanding, oral or written. This Agreement cannot be amended nor can any of
the terms or provisions hereof be waived except in writing signed by the party
affected thereby. Any waiver shall not operate as a waiver of or estoppel with
respect to any subsequent breach. Revisions to the operations, pricing and
financial reconciliations protocols that are adopted by the parties' mutual
agreement from time to time will, to the extent of any inconsistency, will
supercede this Agreement as to such matters.
d. Successors and Assigns. This Agreement shall be binding upon and shall
be for the benefit of the parties hereto and their respective successors,
assigns, heirs and executors. Notwithstanding the foregoing, neither party may
assign any rights or delegate any duties under this Agreement without the prior
written consent of the other party which shall not be unreasonably withheld or
delayed; provided, however, that neither party may sell or transfer its assets
and liabilities nor may it suffer a change in 50% or more (measured from the
date hereof) of its issued and outstanding shares of stock (other than pursuant
to an initial public offering) without the prior written consent of the other
party, which consent may not be unreasonably withheld or delayed; and further
provided, however, ePills acknowledges that Medi-Mail has affiliates and
subsidiaries and may subcontract performance of some or all of the terms of this
Agreement to one or more such related entities if Medi-Mail remains obligated
hereunder and such subcontracting does not have a material adverse effect on
ePills or the terms of this Agreement. Notwithstanding the foregoing, this
Agreement may be assigned by either party to a wholly-owned parent, subsidiary
or affiliate under common ownership.
e. Counterparts; Facsimiles. This Agreement and any documents, agreements
or instruments delivered in connection herewith can be executed in counterparts,
which, together, shall constitute a single agreement. The parties agree that
they may rely upon facsimile signatures hereto and to any amendments, documents,
agreements or instruments delivered in connection therewith.
f. Waivers. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other rank, power or privilege.
g. Captions. The captions and heading in this Agreement are for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
h. Interpretation. In the event of any claimed conflict, omission or
ambiguity in this Agreement, no presumption or burden of proof or persuasion
shall be implied by virtue of the fact that this Agreement was prepared by or at
the request of a particular party. This Agreement shall be interpreted equally
as to both parties and not against the party that drafted it. Whenever the
context requires, the gender of all words shall include the masculine, feminine
and neuter, and the number of all words shall include the singular and plural.
The word "and" includes the
21
word "or". The word "or" is disjunctive but not necessarily exclusive.
i. Parties in Interest. Nothing in this Agreement shall confer any rights
on any third parties other than ePills and Medi-Mail and their respective
successors and assigns, nor shall any provision give any third person any right
of subrogation or action over or against any party to this Agreement.
j. Information Reviewed. Each party has received and reviewed all
information it considers necessary or appropriate for deciding whether to enter
into this Agreement and has further had an opportunity to ask questions and
receive answers regarding its terms and to obtain all information which it deems
necessary to evaluate it and to otherwise verify the accuracy of information
provided.
k. Reliance on Authority of Person Signing Agreement. Neither ePills nor
Medi-Mail shall be required to determine the authority of the individual signing
this Agreement to make any commitment or undertaking on behalf of such entity or
to determine any fact or circumstance bearing upon the existence of the
authority of such individual.
22
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
MEDI-MAIL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_______________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
Title: CEO Medi Mail
____________________________________
▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairman & CEO
with a copy to: Bergen ▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Executive Vice President,
Chief Legal Officer & Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ePILLS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
_______________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
______________________________________
Title: Treasurer
--------------------------------------
ePills, Inc.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ #▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
23
Attachments:
Schedule I The Territory
Schedule II Returned Goods Policy
Schedule III Form of EDI/EFT Agreement
Schedule IV Common Stock Purchase Warrant
Schedule VIII The Licensed Mail-Order Facilities
In addition, the following protocols are to be signed or initialed by the
parties and are to be attached or deemed to be attached hereto when agreed to in
accordance with the terms hereof:
Schedule V The Operations Protocol (paragraph 2(a))
Schedule VI The Pricing Protocol (paragraph 2(b))
Schedule VII The Financial Reconciliation Protocol (paragraph 4)
24
SCHEDULE I
THE TERRITORY
[See attached list]
25
Medi-Mail, Inc. - Licensing Status 8/02/99
------------------------------------------------------------------------------------
State Status License # Expiration Pending Status
------------------------------------------------------------------------------------
Current
Exempt
Pending
------------------------------------------------------------------------------------
Alabama [*] [*] [*]
------------------------------------------------------------------------------------
Alaska [*] [*] [*]
------------------------------------------------------------------------------------
Arizona [*]
------------------------------------------------------------------------------------
Arkansas [*] [*] [*]
------------------------------------------------------------------------------------
California [*] [*] [*]
------------------------------------------------------------------------------------
Colorado [*] [*] [*]
------------------------------------------------------------------------------------
Connecticut [*] [*] [*]
------------------------------------------------------------------------------------
Delaware [*] [*] [*]
------------------------------------------------------------------------------------
District of Columbia [*]
------------------------------------------------------------------------------------
Florida [*] [*] [*]
------------------------------------------------------------------------------------
Georgia [*]
------------------------------------------------------------------------------------
Hawaii [*] [*] [*]
------------------------------------------------------------------------------------
Idaho [*] [*] [*]
------------------------------------------------------------------------------------
Illinois [*] Processing app. Should
have license in 4-8
weeks
------------------------------------------------------------------------------------
Indiana [*] [*]
------------------------------------------------------------------------------------
Iowa [*] [*] [*]
------------------------------------------------------------------------------------
Kansas [*] [*] [*]
------------------------------------------------------------------------------------
Kentucky [*] [*] [*]
------------------------------------------------------------------------------------
Louisiana [*] [*] [*]
------------------------------------------------------------------------------------
Maine [*] [*] [*]
------------------------------------------------------------------------------------
Maryland [*] [*] [*]
------------------------------------------------------------------------------------
Massachusetts [*]
------------------------------------------------------------------------------------
Michigan [*] Pharmacist needs to
be licensed in
Michigan
------------------------------------------------------------------------------------
Minnesota [*] [*] [*]
------------------------------------------------------------------------------------
Mississippi [*] [*] [*]
------------------------------------------------------------------------------------
Missouri [*] [*] [*]
------------------------------------------------------------------------------------
Montana [*] [*] [*]
------------------------------------------------------------------------------------
Nebraska [*] [*] [*]
------------------------------------------------------------------------------------
Nevada [*] [*] [*]
------------------------------------------------------------------------------------
New Hampshire [*]
------------------------------------------------------------------------------------
New Jersey [*]
------------------------------------------------------------------------------------
[*] [*]
New Mexico [*] [*] [*]
------------------------------------------------------------------------------------
New York [*]
------------------------------------------------------------------------------------
North Carolina [*] [*] [*]
------------------------------------------------------------------------------------
North Dakota [*] [*] [*]
------------------------------------------------------------------------------------
Ohio [*] [*] [*]
------------------------------------------------------------------------------------
Oklahoma [*] [*] [*]
------------------------------------------------------------------------------------
Pennsylvania [*]
------------------------------------------------------------------------------------
Rhode Island [*] [*] [*]
------------------------------------------------------------------------------------
[*] = CERTAIN INFORMATION IN THIS COLUMN HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTION.
Medi-Mail, Inc. - Licensing Status 8/02/99
------------------------------------------------------------------------------------
State Status License # Expiration Pending Status
------------------------------------------------------------------------------------
South Carolina [*] [*] [*]
------------------------------------------------------------------------------------
South Dakota [*] [*]
------------------------------------------------------------------------------------
Tennessee [*]
------------------------------------------------------------------------------------
Texas [*] [*] [*]
------------------------------------------------------------------------------------
Utah [*]
------------------------------------------------------------------------------------
Vermont [*]
------------------------------------------------------------------------------------
Washington [*] [*] [*]
------------------------------------------------------------------------------------
West Virginia [*] [*] [*]
------------------------------------------------------------------------------------
Wisconsin [*]
------------------------------------------------------------------------------------
[*] [*]
Wyoming [*] [*] [*]
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
SUMMARY:
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
3 Pending Licenses-
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
1 States- have all required information. Waiting for
application to be processed
------------------------------------------------------------------------------------
2 States- require an appearance and/or test by the
Pharmacist in Charge
------------------------------------------------------------------------------------
Total 3 pending licenses
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
[*] = CERTAIN INFORMATION IN THIS COLUMN HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTION.
SCHEDULE II
RETURNED GOODS POLICY
There will be no return of prescription product to Medi-Mail by ePills'
consumer unless it was incorrectly dispensed by Medi-Mail.
All such prescription product returns must be sent by consumers directly to
Medi-Mail.
If any such prescription products (other than DEA Schedule II controlled
substances) are returned by a consumer to ePills in error, ePills will promptly
notify the appropriate authorities and Medi-Mail.
In the event any DEA Schedule II controlled substance is returned by a
consumer to ePills rather than to Medi-Mail, ePills must hold such product and
notify DEA and/or ePills' state board of pharmacy to arrange for its handling
and destruction.
26
SCHEDULE III
FORM OF EDI-EFT AGREEMENT
[See attached]
27
ELECTRONIC PAYMENTS AGREEMENT
This Electronic Payments Agreement ("Agreement") effective as of August __, 1999
is entered into by and between ePills, Inc., a Delaware corporation, located at
▇▇▇▇ ▇▇▇▇▇▇. ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Originator") and Medi-Mail, Inc.,
a Nevada corporation, located at ▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
("Beneficiary").
RECITALS
--------
A. Originator and Beneficiary are or may become parties to one or more Business
Agreements, including the Pharmacy Services Fulfillment Agreement dated August
__, 1999, pursuant to which Originator may, from time to time, become obliged to
make payments to Beneficiary.
B. Originator and Beneficiary desire to establish terms and conditions upon
which Originator shall make such payments and communicate associated Remittance
Information in electronic form.
AGREEMENT
---------
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS
1.1 Terms as Defined in this Agreement. As used in this Agreement, the
----------------------------------
following terms have the following meanings:
(a) Beneficiary's Account: The deposit account at Beneficiary's Bank
---------------------
designated in Appendix 1.1, that is to be credited with payments
from Originator.
(b) Beneficiary's Bank: The bank designated by Beneficiary in
------------------
Appendix 1.1 for receiving payment from Originator.
(c) Business Agreements: All contractual relationships between the
-------------------
parties giving rise to an obligation of Originator to pay
Beneficiary, designated in Appendix 1.4.
(d) Payment Obligation: An obligation of Originator to pay money to
------------------
Beneficiary pursuant to the Business Agreements.
(e) Remittance Information: The information relating to a payment
----------------------
designated in Appendix 2.2.
(f) Third Party Service Provider: An entity designated by a party in
----------------------------
Appendix 1.2 to assist the party in the communication of
Transaction Sets and notice between the parties separate from any
payment order.
(g) Transaction Set: A collection of data that is communicated
---------------
between the parties, as designated in Appendix 2.1 or as
otherwise agreed by the parties.
1.2 Terms Defined in Article 4A. Terms used in this Agreement but not
---------------------------
otherwise defined shall be defined as provided in Uniform Commercial Code
Article 4A as enacted in the jurisdiction whose law governs this Agreement.
2. AGREEMENT AND AUTHORIZATION
2.1 Credits. Originator agrees and Beneficiary authorizes Originator to
-------
(i) satisfy its Payment Obligation by initiating funds transfers that result in
payment to the Beneficiary by credit to Beneficiary's Account, and (ii)
communicate associated Remittance Information to Beneficiary in accordance with
this Agreement.
2.2 Debits. Neither party shall initiate a transaction in connection with
------
a Payment Obligation for the purpose of debiting a bank account of the other
party.
3. PAYMENT AND REMITTANCE PROCEDURE
3.1 Payment. Originator shall instruct its bank to process funds
-------
transfers hereunder using the funds-transfer system or other mechanism specified
in Appendix 1.3, in accordance with this Agreement and the rules of such funds-
transfer system.
3.2 Remittance Information. For each funds transfer initiated under this
----------------------
Agreement, Originator shall communicate the associated Remittance Information to
Beneficiary as specified in Appendix 2.
3.3 No Warranty of Funds. Beneficiary acknowledges that its receipt of
--------------------
Remittance Information communicated separately from the funds transfer to which
the Remittance Information relates will not constitute a warranty by Originator
that the funds transfer has been initiated on a timely basis or that any
resulting payment order will be accepted by Beneficiary's Bank on any date
specified therein.
4. TIMING OF PAYMENTS
4.1 Timeliness. A payment from Originator to Beneficiary shall be
----------
considered timely with respect to any payment due date determined in accordance
with the applicable Business Agreement if the corresponding funds transfer is
completed on the day such payment is due. If the funds transfer cannot be
completed on such date, Originator's payment is timely if the funds transfer is
completed on the next day completion can occur.
4.2 Effect of Delay. Originator shall not be in breach of this Agreement
---------------
or the applicable Business Agreement, or suffer any loss of discount or other
penalty, with respect to a funds transfer that was initiated properly and timely
by Originator to the extent its completion is delayed because of failure or
delay by the funds-transfer system or other mechanism designated in Appendix
1.3, the operation of a funds-transfer system rule which could not be
anticipated by the Originator, or rejection by the Beneficiary's Bank.
However, any such failure, delay or rejection does not extinguish the
Originator's obligation to pay the Beneficiary as soon as practical after the
failure, delay or rejection is discovered.
5. DISCHARGE OF PAYMENT OBLIGATIONS
5.1 Discharge: Credit to Originator. Upon completion of a funds transfer
-------------------------------
authorized by Agreement 2.1, the corresponding Payment Obligation of the
Originator shall be discharged to the same extent as if such payment had been
received in cash. Beneficiary shall credit Originator for the amount of such
payment, as of the date the funds transfer was completed.
5.2 Disallowance of Credits Taken. If Beneficiary disallows any
-----------------------------
discounts, allowances, adjustments or other credits against a Payment Obligation
taken by Originator in conjunction with a funds transfer, Beneficiary shall
promptly notify Originator of the amount of and reason for such disallowance in
accordance with Appendix 2.1
5.3 Partial Payments. Notwithstanding any statement contained in any
----------------
Remittance Information or related Transaction Set, the completion of any funds
transfer hereunder shall not constitute full satisfaction of any portion of the
corresponding Payment Obligation greater than the amount paid.
5.4 Effect of Payment on Other Rights. Notwithstanding the terms of
---------------------------------
Agreement 5.1, the completion of a funds transfer shall not constitute a waiver
of any contract right under the corresponding Business Agreement that would be
deemed waived by the acceptance of such payment in cash if within ten (10)
business days after the completion of such funds transfer or such other time
period as allowed by applicable law or Business Agreement, Beneficiary sends an
equivalent payment amount to Originator in accordance with Agreement 5.5 and
notifies Originator of the reason for the return in accordance with Agreement
11.1.
5.5 Payment Returns, Adjustments, Credits and Rebates. If Beneficiary
-------------------------------------------------
elects to exercise a right to return a payment received from Originator or is
required to pay Originator any adjustment, rebate, or other credit because of,
for example, duplicate payments (rather than by crediting Originator's account
balance), Beneficiary shall make such payment by initiating a new payment in the
manner specified in Appendix 1.6.
6. RECEIPT, ACKNOWLEDGMENT AND VERIFICATION
6.1 Receipt. A Transaction Set or notice communicated in accordance with
-------
this Agreement shall be considered received when it is accessible by the
intended recipient as specified in Appendix 2.3.
6.2 Acknowledgment. To the extent required by Appendix 2.1, a party that
--------------
receives a Transaction Set or notice from the other party shall acknowledge that
such Transaction Set or notice was received and is syntactically correct by
communicating the Acknowledgment specified in Appendix 2.1 to the sender within
five (5) business days of receipt.
6.3 Verification. The recipient of a Transaction Set or notice shall take
------------
reasonable steps to verify the claimed identity of the sender and the integrity
of the content of a Transaction Set or notice (as specified in Appendix 4)
before relying upon it. If a Transaction Set or notice is received in garbled
form, or cannot be so verified, the recipient shall notify the sender of the
problem within five (5) business days unless the sender's identity cannot be
discerned. In the absence of such notice to an identifiable sender, the sender's
version of the Transaction set or notice shall control.
6.4 Validity and Enforceability. Neither party shall contest the validity
---------------------------
or enforceability of Transaction Sets or notices communicated in electronic form
pursuant to this Agreement on grounds related to the absence of paper-based
writings, signing or originals. Each Transaction Set or notice communicated in
electronic form pursuant to this Agreement shall be considered to be:
(a) "in writing" and "written" to an extent no less than as if in
paper form;
(b) "signed" where the signer includes data intended as a signature
to an extent no less than as if undertaken with pen and paper;
and
(c) an original.
7. SECURITY PROCEDURES
7.1 Procedures. Each party shall employ reasonable security procedures to
----------
ensure that Transaction Sets, notices and other information specified in this
Agreement that are electronically created, communicated, processed, stored,
retained or retrieved are authentic, accurate, reliable, complete and
confidential.
7.2 Effect of Non-Party Security. The communication of any Transaction
----------------------------
Set or notice via a funds-transfer system shall not constitute a breach of
Agreement 7.1.
8. CONFIDENTIALITY
8.1 Confidential Information. Information that is considered confidential
------------------------
by either party is identified in Appendix 3. Such information shall be held in
confidence by the recipient and shall be disclosed only to those of its
employees or authorized representatives who require access in the performance of
their duties to the recipient. The recipient will exercise reasonable care in
the safeguarding of such confidential information.
8.2 Exceptions. Neither party shall be liable for the disclosure or use
----------
of any information designated in Appendix 3 as confidential that: (a) is, or
becomes publicly known, other than by breach of this Agreement; (b) is obtained
by the recipient from another person without restriction; (c) is previously
known by the recipient without restrictions; (d) is, at any time, developed by
the recipient independently of any disclosures hereunder; (e) is disclosed
pursuant to the consent of the party that considers such information
confidential; or (f) is required to be disclosed by law, provided that prior to
disclosing such information the recipient shall promptly notify the other party
of the demand to disclose or provide the information and the recipient agrees to
reasonably cooperate if the other party deems it necessary to seek a protective
order.
8.3 Survival of Obligation. These obligations and restrictions shall
----------------------
survive the termination of this Agreement for a period of ten (10) years.
9. LIABILITY
9.1 Breach of Business Agreements. Except as otherwise specifically
-----------------------------
provided herein, this Agreement neither enlarges nor diminishes the respective
rights and obligations of the parties under any Business Agreement, and the
liability of a party for breach of a Business Agreement shall be determined by
the provisions of that agreement and applicable law.
9.2 Conduct of Third Parties. Except as otherwise limited herein, each
------------------------
party shall be liable to the other for the acts or omissions of its respective
banks and Third Party Service Providers designated hereunder with respect to
their conduct in connection with such party's performance under this Agreement.
Neither party shall be liable to the other for the acts or omissions of any
funds-transfer system operator, or for the acts or omissions of any banks or
third party not selected by such party.
9.3 Consequential Damages. Neither Party shall be liable to the other
---------------------
under this Agreement for any special, indirect or consequential damages, even if
such party has been advised of the possibility of such damages (except for
liability directly resulting from a breach of the confidentiality or security
obligations of this agreement).
9.4 Costs. Each party shall bear the respective fees and other charges
-----
assessed by its designated banks and Third Party Service Providers (except as
otherwise provided in Appendix 1.5).
10. CHANGES, SUSPENSIONS AND TERMINATION
10.1 Change of Designations. Either party may change its designations of
----------------------
an account, bank, or Thirty Party Service Provider by notice to the other party.
Any such change shall be effective twenty-five (25) business days after notice
of such change from the party entitled to make the original designation is
received by the other party.
10.2 Suspension of Operations. Either party may suspend operations under
------------------------
this Agreement:
(a) upon notice to the other party, in the event that the notifying
party has a good faith belief that the information of either
party may be materially threatened or compromised; or
(b) if the performance of a party under this Agreement is delayed
or prevented by an act of God, natural disaster, computer or
communications failure or other cause beyond the affected
party's reasonable control.
10.3 Termination of Agreement. Either party may terminate this
-------------------------
Agreement at any time upon ninety (90) days' notice to the other.
Notwithstanding such termination, this Agreement shall remain in effect as to
all funds transfers and Transaction Sets that have been initiated by the
Originator and not canceled prior to termination of this Agreement.
11. MISCELLANEOUS
11.1 Notice. Unless otherwise specified herein, any notice required or
------
permitted under this Agreement shall be communicated in the manner specified in
Appendix 5 and addressed to the intended recipient at its notice address by
notifying the other party. Either party may from time to time designate a
different notice address by notifying the other party.
11.2 Waiver. No provision of this Agreement or any breach thereof shall
------
be deemed waived unless such waiver is in writing and signed/communicated by the
party claimed to have waived such provision or breach. No waiver of a breach
shall constitute a waiver or excuse any different or subsequent breach.
11.3 Assignment. This agreement is binding upon and inures to the
----------
benefit of the parties hereto and their respective successors and assigns.
However, neither party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the
other party, which consent shall not be unreasonably withheld, conditioned or
delayed.
11.4 Choice of Law. This Agreement is governed by and interpreted in
-------------
accordance with the laws of the State of California.
11.5 Conflict Rules. In the event of any inconsistency between this
--------------
Agreement and another agreement between the parties addressing the subject
matter of this agreement, this agreement shall control. Any remittance
instructions contained in purchase order from Originator
are superseded by this Agreement. The parties agree to be bound by the rules of
the funds-transfer system or other mechanism used to communicate a payment
order.
11.6 Entire Agreement. This Agreement and the Appendix hereto constitute
----------------
the entire agreement of the parties relating to the matters specified in this
Agreement and supersede all prior communications and agreements with respect to
such matters.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ePills, Inc., a Delaware corporation Medi-Mail, Inc. a Nevada corporation,
By:_________________________________ By:_________________________________
Name:_______________________________ Name:_______________________________
Title:______________________________ Title:______________________________
APPENDIX
SECTION 1. DESIGNATIONS
1.1 Beneficiary's Bank
------------------
ABA Transit Routing Number:
Beneficiary's Account Number:
Administrative Contact:
Special Instruction:
1.2 Third Party Service Providers.
-----------------------------
1.2.1 Originator's Third Party Service Provider:
1.2.2 Beneficiary's Third Party Service Provider:
1.3 Funds Transfer System or Other Mechanism
----------------------------------------
Originator will pay Beneficiary via _______
1.4 Business Agreement.
------------------
The original Pharmacy Services Fulfillment Agreement dated August __, 1999
and any current addendum or extension.
1.5 Allocation of Costs.
-------------------
1.6 Procedure for Payment Returns.
-----------------------------
Check payable to ___________________________
SECTION 2. TRANSACTION SETS
2.1 Transaction Sets.
----------------
Transaction Set Transaction Set Method of Acknowledgment
Function Format Communication Requirement
------------------- ------------------- ------------- -----------------
Remittance
Disallowance of Credits
Acknowledgment
Other Specify
2.2 Remittance Information.
----------------------
For each payment, the Remittance Information Transaction Set must contain
the following specified data:
(i) invoice number and date, (ii) invoice amount, (iii) discounts
and allowances taken against each invoice, (iv) net amount paid on each
invoice, and (v) identification of adjustments.
2.3 Receipt of Transaction Sets.
---------------------------
A Transaction Set will not be deemed to have been properly
received by the intended recipient, and no Transaction Set shall give rise to
any obligation, until it is accessible to the receiving party at such party's
receipt computer described below:
2.3.1 Originator's computer make and model:_______________________
___________________________________________________________
2.3.2 Beneficiary's computer make and model: ______________________
___________________________________________________________
SECTION 3. CONFIDENTIAL INFORMATION
All data is to be kept confidential.
SECTION 4. VERIFICATION AND SECURITY PROCEDURES
All transactions by both parties (Originator and Beneficiary) are carried
out through their respective banks. Appropriate verification and security
procedures are the responsibility of each party and its bank.
SECTION 5. NOTICE
5.1 Originator Notice Address
-------------------------
ePills, Inc.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:____________________
5.2 Beneficiary Notice Address
--------------------------
Medi-Mail, Inc.
▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairman & CEO
with a copy to:
Bergen ▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Executive Vice President,
Chief Legal Officer & Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
5.3 Method for Communication of Notice
----------------------------------
The method for communication of notice shall be in written form.
SCHEDULE IV
COMMON STOCK PURCHASE WARRANT
[intentionally omitted]
28
SCHEDULE V
OPERATIONS PROTOCOL
[To be attached]
29
SCHEDULE VI
PRICING PROTOCOL
[To be attached]
30
SCHEDULE VII
FINANCIAL RECONCILIATION PROTOCOL
[To be attached]
31
SCHEDULE VIII
LICENSED MAIL-ORDER FACILITIES
Location of Medi-Mail licensed mail-order facilities:
▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
32