1.    Delivery of Product

Promptly following the Effective Date, Customer will receive access to the ComplyScan application on the Pharmitas web portal. The related software programs (the “Software”), supplied hardware (the “Equipment”) and all relevant product documentation (collectively, the “Product”) is solely for use by Customer at those activated store pharmacy locations that are mutually agreed to by the parties from time to time (the “Store Locations”). Pharmitas shall provide the services reasonably necessary to assist Customer in setting-up and configuring the Software.

2.    Limited License to Use the Product at the Store Locations.

(a)    Limited License. Pharmitas hereby grants to Customer a non-sublicensable, non-transferable, non-exclusive license during the Term to use the Product solely for purposes of (i) entry of customer and prospective customer information for those customers who intend to purchase any product (a “Covered Product”) containing a substance identified in the Combat Methamphetamine Epidemic Act of 2005 (as amended, the “Act”) from Customer, (ii) verifying customer’s purchase eligibility based on the purchase limits for Covered Products set forth in the Act using customer purchase information (“Existing Purchase Information”) from the database of customer purchases maintained by Pharmitas (the “Database”) or other mandated customer purchase eligibility verification system, and (iii) submitting purchase information to Pharmitas or other mandated vendor for those customers who are permitted to purchase Covered Products from Customer at the Store Locations (“Customer Purchase Information,” and together with the Existing Purchase Information, the “Content”).

(b)    Restrictions on Use by Customer. In exercising the foregoing license, Customer agrees that it shall strictly comply with all of its obligations under the Act and the instructions set forth in the Documentation provided to Customer by Pharmitas. In addition, Customer agrees that it shall make no attempt to and shall not: (i) de-compile, reverse engineer, disassemble, rent, lease, loan, sublicense or create derivative works from the Product or, as applicable, the Content; (ii) permit unauthorized access to the Product or the Content by any person; (iii) copy, modify, reproduce, republish, distribute, transmit or use for commercial or other purposes the Product or the Content for any purpose, except as expressly permitted by this Agreement; (iv) use or otherwise export or re-export the Product or the Content in violation of the export control laws and regulations of the United States of America; or (v) expose the Software to any material or software programs that contain any viruses or programming routines intended to damage, surreptitiously intercept or expropriate any system, data or personal information (“Harmful Component”).

(c)    Restrictions on Use by Pharmitas. Pharmitas agrees that it shall strictly comply with all of its obligations under, and otherwise comply with, the Act and other applicable law (including, without limitation, the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations (“HIPAA”), to the extent applicable) in connection with its storage, maintenance and use of the Customer Purchase Information. Pharmitas will not disclose personal customer information to any person or entity outside of those defined by the Act.

3.   Ownership

Pharmitas is, and at all times shall be, the sole and exclusive owner of any and all, rights, title and interest in and to the Product, the Database and the Content and any patents, copyrights and other intellectual property incorporated or embodied therein (collectively, the “Pharmitas Property”). Customer shall not acquire any interest in the Pharmitas Property by virtue of this Agreement, except as expressly set forth herein.

4.    Customer Obligations and Responsibilities

During the Term, Customer shall have the following additional responsibilities and obligations:

(a)    Necessary Equipment and Infrastructure. Customer shall be solely responsible, at its expense, for providing telecommunications infrastructure, including Internet connection, identified by Pharmitas as being necessary to the use of the Product in the Store Locations.

(b)    Proper Use of Product. Customer shall be solely responsible for ensuring the proper use of the Product and the Content by its employees and agents in accordance with this Agreement, the Documentation and applicable law. Customer agrees to use up-to-date, industry standard virus protection software to minimize the risk of transmitting any Harmful Component to the Product, the Database or the Content and to ensure the security of its systems to prevent unauthorized access to the Product and the Content.

(c)    Other Commitments. Customer shall: (i) use the Product as specified in the Documentation in connection with all purchases and attempted purchases of Covered Products in the Store Locations, (ii) reasonably cooperate with Pharmitas in correcting any problems associated with the Product or the Content, (iii) report promptly to Pharmitas any problems or errors that Customer observes or discovers with the Product or the Content, (iv) notify Pharmitas, in writing, of all court orders restricting the use of the Product, the Database or the Content, and (v) promptly install (or permit Pharmitas to install) any updates or modifications to the Product at the request of Pharmitas.

5.   Product Warranty; Maintenance and Availability of Database. During the Term:

(a)    Product Warranty. Customer shall be entitled to the warranty protections for the Product set forth in Schedule 1 attached hereto.

(b)    Maintenance of Database. Pharmitas shall maintain and update the Database as Customer Purchase Information is transmitted to Pharmitas by Customer, and shall provide or otherwise make available all Customer Purchase Information in respect of Covered Products to those governmental authorities, entities and other persons specified in the Act. Customer acknowledges and agrees that (i) the Database may contain customer purchase information provided to Pharmitas by governmental authorities, law enforcement agencies, or other retailers of Covered Products, (ii) Pharmitas is not responsible for ensuring the accuracy or completeness of any customer purchase information provided by such third parties, and (iii) Pharmitas shall be responsible only for accurately storing, maintaining, and transmitting the Customer Purchase Information provided to Pharmitas by Customer.

(c)    Database Uptime. Subject to subsection (d) below, Pharmitas will use its commercially reasonable efforts to make the Database available for Customer purchase eligibility via the Product during all store hours at the Store Locations. Other than during Scheduled Maintenance, purchase reports will be available anytime via the internet.

(d)    Scheduled Maintenance of Database; Backup of Content. Anything in subsection (c) to the contrary notwithstanding, Pharmitas shall be permitted to perform periodic maintenance on the Database for purposes of system upgrades, maintenance, and backup procedures (“Scheduled Maintenance”). Scheduled Maintenance will either be performed seamlessly to Customer or, if not seamless, will be provided with not less than 24-hour advance notice to Customer. Pharmitas will provide redundant backup using RAID disk storage architecture to maintain duplicate sets of all data on separate disk drives. Pharmitas shall regularly backup the Database and the Content contained therein in accordance with sound commercial practices.

6.   Payment Terms

(a)    Payment Terms. Customer agrees to pay all recurring Fees via Automated Clearing House (“ACH”) or credit card on a monthly basis as designated by Customer. Pharmitas may charge Customer interest on the outstanding balance of any overdue fees, charges or expenses at a rate equal to 1.5% per month or the highest rate permitted by applicable law, whichever is lower. Customer will reimburse Pharmitas for all reasonable costs incurred (including attorneys’ fees and court costs) in collecting past due amounts owned by Customer. Disputes as to the accuracy of an invoice must be presented in writing to Pharmitas by Customer within forty-five (45) days of the date of the invoice. All payment obligations will survive termination of this Agreement. Upon the failure of Customer to pay any invoices, Pharmitas, in its sole discretion, may suspend all Services and/or Third Party Product and/or backups without notice to Customer. Additionally, Pharmitas may cancel this agreement and terminate further services in accordance with Section 7(c) herein.

7.    Term and Termination

(a)    Lease Term. The initial lease term of this Agreement shall commence on the Effective Date and shall continue for a period of one (1) year (the “Initial Term”). At the expiration of any initial or re-newal Lease Term, the Lease Term will automatically renew for additional one (1) year periods unless either party provides the other party with at least ninety 90 days prior written notice of its intent not to renew the Lease Term at the end of the then current Lease Term; provided, however, that if Customer elects not to extend the Lease Term, Customer will be obligated to continue to pay the monthly lease fees for any period during which Customer retains possession of the Product.

(b)    Exclusivity. The parties intend that during the term of this Agreement Pharmitas shall be Customer’s exclusive provider of the services contemplated by use of the Product, and therefore Customer shall not during the term of this Agreement contract with another vendor to provide the same or similar services as those provided by the Product.

(c)    Termination. This Agreement and the licenses granted herein may be terminated as follows:

(c)(i)        Either party shall have the right to terminate this Agreement upon thirty (30) days prior written notice if the other party breaches this Agreement and fails to cure such breach within such 30-day period.

(c)(ii)       This Agreement shall automatically terminate if either party is the subject of bankruptcy, or similar proceedings, elects to wind up or dissolve its operations, suspends its business, or has a liquidator, trustee or custodian appointed over its affairs.

(c)(iii)      Pharmitas shall have the right to terminate this Agreement in accordance with Section 9(e) herein.

(c)(iv)      Either party shall have the right to terminate this Agreement upon thirty (30) days prior written notice in the event that, in the reasonable discretion of either party, legislative changes (including changes to the Act) substantially and adversely impact the Product, the Content, the Database or nature of the services Pharmitas provides to the Customer.

(d)     Rights and Obligations on Termination. In the event of termination of this Agreement, the parties shall have the following rights and obligations:

(d)(i)        Customer shall immediately cease using the Product and shall no longer have access to the Database;

(d)(ii)       Customer shall promptly return the Product to Pharmitas; and

(d)(iii)      Pharmitas shall, at its election, either (A) maintain and make available to Customer upon request accurate records of all Customer Purchase Information submitted to Pharmitas by Customer for a period of twenty-four (24) months (or such longer or shorter period as the Act may require) after the effective date of termination or (B) provide to Customer a data file (whether electronically or on a compact disk or other medium agreed to by the parties) containing an accurate record of all Customer Purchase Information submitted to Pharmitas by Customer.

(d)(iv)      If Pharmitas shall elect to provide Customer with a data file of Customer Purchase Information following termination of this Agreement, or shall otherwise provide Customer Purchase Information to Customer pursuant to Section 6(c)(iii) above, Pharmitas shall be deemed to have granted Customer a perpetual, non-exclusive, fully paid up right and license to use such Customer Purchase Information solely for purposes of complying with the Act and other applicable law.

(e)    Survival. The parties’ respective rights and obligations under Sections 2(b), 2(c), 3 and 6-11 will survive termination of this Agreement.

8.   Limitation of Liability and Damages

NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER IN AN ACTION IN TORT OR CONTRACT, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, DATA OR GOODWILL. IN ADDITION, IN NO EVENT WILL A PARTY’S AGGREGATE LIABILITY TO THE OTHER FOR DIRECT DAMAGES UNDER THIS AGREEMENT EXCEED THE GREATER OF (A) ONE HUNDRED DOLLARS ($100.00), OR (B) THE AMOUNT OF INSURANCE COVERAGE FOR THE PARTICULAR CLAIM THAT IS PAYABLE BY THE PARTY’S INSURANCE CARRIER. Notwithstanding the foregoing, the provisions of this paragraph shall not apply to Customer’s breach of the ownership or license provisions contained in this Agreement, either party’s indemnification obligations under this Agreement, to the extent relating to third party claims, or a party’s gross negligence or willful misconduct. This Section 8 allocates the risks between Customer and Pharmitas, and Customer acknowledges that it has reviewed and understands such allocation, and has had the opportunity to seek the advice of counsel regarding the terms hereof.

9.   Indemnification

(a)    Indemnification by Pharmitas. Subject to the limitations set forth in Section 8, Pharmitas agrees to indemnify, defend and hold harmless Customer, its affiliates, and their respective directors, officers, shareholders, employees, agents, successors, and assigns, from and against any and all losses, liabilities, and damages of any and every kind (including, without limitation, any costs, expenses or reasonable attorneys’ fees) (“Losses”), to the extent arising out of or relating to (i) any breach by Pharmitas of this Agreement, (ii) any bodily injury, death, or tangible property damage (excluding loss of or damage to software or data) to the extent that such injury, death or damage is caused by any gross negligence or willful misconduct of Pharmitas, (iii) any claim that the Product, the Database or the Content infringes any intellectual property right of a third party, or (iv) any violation of applicable law (including HIPAA) by Pharmitas, to the extent relating to its performance of this Agreement or its storage, maintenance or use of the Content.

(b)    Indemnification by Customer. Subject to the limitations set forth in Section 8, Customer agrees to indemnify, defend and hold harmless Pharmitas, its affiliates, and their respective directors, officers, shareholders, employees, agents, successors, and assigns, from and against any and all Losses to the extent arising out of or relating to (i) any breach by Customer of this Agreement, (ii) any violation of applicable law by Customer, its employees or agents (including, without limitation, in connection with Customer’s misuse or unauthorized disclosure of the Content), (iii) any claim or action brought or asserted by any customer or prospective customer of Customer or any governmental authority in connection with Customer’s refusal to allow (or failure to refuse to allow) the purchase of any Covered Product, (iv) any bodily injury, death, or tangible property damage arising out of Customer’s use of the Product (except to the extent caused by the gross negligence or willful misconduct of Pharmitas); or (v) the fraudulent use of the Product or the Content by Customer or any employee or agent of Customer.

(c)    Indemnification Procedures: Any party (the “Indemnified Party”) seeking indemnification from the other (the “Indemnifying Party”) pursuant to this Section 9 shall (i) notify the Indemnifying Party of any such claim in writing, promptly and, in any event, within twenty (20) days after becoming aware of such claim (except that any failure to so notify the Indemnifying Party will not relieve Indemnifying Party from its obligations under this Section 9 unless the Indemnifying Party is prejudiced thereby); (ii) tender to the Indemnifying Party the right to defend and settle such claim through counsel of its choice; and (iii) provide the Indemnifying Party with any and all assistance, information and authority necessary for the defense and settlement of such claim and as necessary for the Indemnifying Party to perform its obligations under this Section. Reasonable, out-of-pocket expenses incurred by the Indemnified Party in providing such assistance will be reimbursed by the Indemnifying Party.

(d)    Exclusion. Pharmitas shall have no liability under Section 9(a)(iii) of this Agreement to the extent that any Losses result from (i) Customer’s unauthorized or unintended use of the Product or the Content, (ii) any modification of the Product or the Content by Customer, (iii) Customer’s use of other than the then-most current version of the Product, provided that all applicable updates have been provided or made available to Customer by Pharmitas, or (iv) any combination of the Product (or any component thereof) with any other software or product.

(e)    Remedies in the Event of Intellectual Property Infringement. In the event the Product, the Database or the Content is held or is believed by Pharmitas to infringe the intellectual property rights of any third party, Pharmitas shall have the option to: (i) obtain for Customer a license to continue to use the Product, the Database or the Content, as the case may be; (ii) replace or modify the Product, the Database or the Content, as applicable, to make it non-infringing or (iii) terminate this Agreement. If (i) or (ii) are not available to Pharmitas, Customer shall return the Pharmitas Property to Pharmitas and Pharmitas shall refund to Customer any unearned fees paid to Pharmitas hereunder. WITH THE EXCEPTION OF CUSTOMER’S RIGHT TO INDEMNIFICATION FOR LOSSES SUSTAINED IN CONNECTION WITH THIRD PARTY CLAIMS, THIS SUBSECTION (E) STATES PHARMITAS’S ENTIRE LIABILITY TO CUSTOMER AND CUSTOMER’S EXCLUSIVE REMEDY FOR INFRINGEMENT OF INTELLECTUAL PROPERTY.

10. Confidentiality

(a)    Definition. For purposes of this Agreement, the term “Confidential Information” means proprietary information now or hereafter owned by or otherwise within the possession of a party, including, but not limited to, patented and unpatented inventions, copyright, business and trade secrets, marketing plans, programs (including source code), data, listings, flowcharts, manuals, instructions, notes and other documentation, customer and shareholder information, other information related to the business of that party and the existence of this Agreement. The terms and conditions of this Agreement (including the pricing); the Software (including the software code, Documentation, and design and layout of the user interface); and the Database and the Content shall be deemed the Confidential Information of Pharmitas.

(b)    Exclusions. The term Confidential Information does not include: (i) information that was in the receiving party’s possession or was known to it prior to its receipt from the disclosing party as evidenced in writing in the receiving party’s files; (ii) information that is or becomes public knowledge without the fault of the receiving party; or (iii) information that is or becomes rightfully available on an unrestricted basis to the receiving party from a source other than the disclosing party.

(c)    Obligations. Each party acknowledges that the other party owns or otherwise possesses valuable Confidential Information. Neither party will at any time without the prior written consent of the other party publish, disclose or otherwise disseminate, duplicate or use, directly or indirectly, Confidential Information of the other party to or for its own benefit; provided, that Customer shall be permitted to use the Content in the manner contemplated herein solely for the purposes of complying with the Act. Other than Pharmitas’ obligation to provide Content and access to the Database to Customer in accordance with the terms herein, nothing in this Agreement shall be deemed to obligate either party to disclose any Confidential Information to the other.

(d)    Return of Confidential Information. Upon termination of this Agreement, all Confidential Information of one party then in the possession of the other party shall, at the direction of the disclosing party, be destroyed or returned to the disclosing party.

11. Miscellaneous

(a)    Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Washington, without giving effect to the principles of conflicts of law. The jurisdiction for any legal action shall be exclusively a state or federal court in King County, Washington, U.S.A.

(b)    Notices. Wherever provision is made in this Agreement for the giving, service or delivery of any notice, statement or other instrument, such notice shall be in writing and shall be deemed to have been duly given, served and delivered, if delivered by hand or mailed by United States registered or certified mail or sent by facsimile (with receipt confirmed) to the addresses set forth on the first page of this Agreement.

(c)    Force Majeure. In the event that a delay or failure of a party to comply with any obligation set forth in this Agreement is caused by Force Majeure, that obligation will be suspended during the continuance of the Force Majeure condition. A party whose performance is suspended hereunder will give prompt written notice of any event of Force Majeure and such party’s best reasonable estimate of when such event will abate. For purposes of this Agreement, “Force Majeure” shall mean any event beyond the reasonable control of the parties, including without limitation, fire, flood, storm, riot, strike, epidemic, war (declared or undeclared), embargo and governmental action and decree.

(d)    Assignment. Customer may not assign or delegate any part of this Agreement without prior notice to and the express written consent of Pharmitas, which consent shall not be unreasonably withheld.

(e)    Entire Agreement. This Agreement, together with all Exhibits and Schedules hereto, constitutes the entire agreement between the parties and supersedes all previous agreements, promises, proposals, representations, understanding and negotiations, whether written or oral, between the parties respecting the subject matter hereof.

(f)      Construction. The parties agree that each has participated equally in the formation of this Agreement and that the language, terms and conditions of this Agreement shall not be presumptively construed against either party.

(g)    No Third Party Beneficiaries. Nothing in this Agreement will entitle any person or entity (other than a party hereto and its respective permitted assigns) to any claim, cause of action, remedy or right of any kind, and no such person or entity will be deemed to be an intended or unintended third party beneficiary of this Agreement.

(h)    Publicity. Pharmitas shall have the right to reference Customer’s name as a customer of Pharmitas in electronic formatted (including the Internet, audio, video) and/or paper-based sales, marketing and advertising documents of Pharmitas, worldwide. Neither Customer or Pharmitas shall have the right to any other publicity, including issuing press releases, making any other disclosures regarding this Agreement or its terms, or using any trade name, trademark, service mark or logo of Pharmitas or Customer in any advertising or promotion without the other party’s prior written consent.

For good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree to be bound by the terms and conditions contained herein as of the Effective Date.

Schedule 1 – Pharmitas Warranty

PERFORMANCE WARRANTIES: During the Term, Pharmitas guarantees that the Product will perform substantially in accordance with the Documentation provided to Customer. If the Product does not perform as described therein, Pharmitas will repair or replace (at its option) the defective Product (or component thereof).

REMEDIES AND DAMAGES: If repair is not possible or economical for Pharmitas, Pharmitas has the choice to refund any unearned amounts paid by Customer or to deliver a new or refurbished Product. Pharmitas’ liability for faulty or non-performing Product shall be strictly limited to replacing, repairing or issuing refunds at its option.

EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE PRODUCT IS PROVIDED TO CUSTOMER “AS IS” AND PHARMITAS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, NATURE OR DESCRIPTION, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS OF THE GOODS FOR ANY PARTICULAR PURPOSE, OR NONINFRINGEMENT, AND PHARMITAS HEREBY DISCLAIMS THE SAME.

THE FOREGOING STATES PHARMITAS’S SOLE AND EXCLUSIVE OBLIGATION TO CUSTOMER, AND CUSTOMER’S SOLE REMEDY, WITH RESPECT TO PRODUCT DEFECTS OF ANY KIND.

WARRANTY CLAIMS: Pharmitas shall not incur any liability under the above warranty provisions unless:

(a)    Pharmitas is promptly notified in writing upon discovery by Customer that the Product does not conform to the warranty;

(b)    The alleged defective Product is returned to Pharmitas carriage pre-paid or otherwise made available to Pharmitas (Pharmitas will return repaired or replaced components to Customer carriage pre-paid); and

(c)    Examination by Pharmitas of the Product confirms that the alleged defect exists and has not been caused by misuse, neglect, method of storage, faulty installation, handling, or by alteration or accident.