Vendor Information

LEWIS DRUGS, INC.

Corporate Office -2701 S. Minnesota Avenue, Suite 1, Sioux Falls, SD 57105

TABLE OF CONTENTS

INTRODUCTION. ................................................................................................................................................2.

SUPPLIER "SHIP TO" LOCATION. .....................................................................................................................2.

SUPPLIER "BILL TO" LOCATION. ......................................................................................................................2.

PURCHASE ORDERS. .......................................................................................................................................3.

ELECTRONIC DATA INTERCHANGE (EDI) .......................................................................................................3.

"SHIP PAYMENTTERMS". .................................................................................................................................3.

SHIPPING REQUIREMENTS. ............................................................................................................................3.

PARCEL SHIPMENTS. .......................................................................................................................................4.

BACK ORDERS. ................................................................................................................................................4..

ON-TIME SHIPMENTS. ......................................................................................................................................4.

CASE MARKING, PACKAGING AND DAMAGES. ............................................................................................. 4

DISCREPANT SHIPMENTS. ..............................................................................................................................4.

PALLET PROGRAM. ..........................................................................................................................................5.

DOMESTIC FREIGHT ROUTING INSTRUCTIONS. ..........................................................................................5.

KEY PERFORMANCE INDICATORS. ................................................................................................................6.

SUPPLIER COMPLIANCE. .................................................................................................................................6.

CHARGE BACK CODES AND PENALTIES. .......................................................................................................7.

INSURANCE AND RISK MANAGEMENT REQUIREMENTS. ............................................................................8.

WARRANTY, INDEMNITY, AND GOVERNMENTAL REG. .................................................................................8.



1

INTRODUCTION

The Lewis Drugs, Inc. (Lewis) Supplier Guide has been designed to provide our Suppliers with a reference tool

for fulfillment of Lewis Purchase Orders along with our shipping requirements. All information contained herein

is intended to be linked to our Purchase Order by reference bilaterally and intended to represent understanding

between the Supplier (Seller) and Lewis (Purchaser) regarding the terms and conditions of the agreement of

sale on all Purchase Orders issued by Lewis to the Supplier.

The purpose of this Guide is to establish a "statement of expectations" for the purchase of goods and related

services, which is consistent with good business practices that supports a mutual understanding between our

Suppliers and Lewis and the benefits of which serve both the Supplier and Lewis. Building good business

relationships with our Suppliers is very important to us and we would like to align ourselves with Suppliers who

are dedicated to improving supply chain efficiencies in an effort to best satisfy our customers. This Guide is

only one means of outlining and ensuring program objectives are met.

The requirements contained herein are structured to provide supply chain discipline and efficiencies that

support our business needs and those of our customers. It is our intention to avoid situations that disrupt the

timely and efficient flow of product to our distribution center and stores and avoid unnecessary charge backs to

our Suppliers. However, these guidelines are viewed as essential to our mutual success.

Thank you in advance for your compliance with these requirements. Should there be questions related to any

of these requirements, please feel free to contact a Lewis Purchasing Agent at (605) 367-2800.

Please forward this Guide or Link (www.lewisdrug.com) to all persons within your organization that

may be affected by these requirements.

Written or Fax communications may be forwarded to:

Lewis Distribution Center

700 E 54th Street

Sioux Falls, SD 57104

Telephone: (605) 367-2891

Fax: (605) 367-2895


Lewis Drugs, Inc.

2701 S Minnesota Ave Suite 1

Sioux Falls, SD 57105

Telephone: (605) 367-2800

Fax: (605) 367-2876


LEWIS DRUGS, INC.

2701 S Minnesota Avenue, Suite 1

Sioux Falls, SD 57105

Fax: (605) 367-2876

SUPPLIER "SHIP TO" LOCATION

SUPPLIER "BILL TO" LOCATION



2

PURCHASE ORDERS

All Purchase Orders are intended to be a binding "Agreement of Sale" between Lewis and our Suppliers. All

conditions, terms and requirements contained herein are intended to be part of that Agreement of Sale and it is

so noted by reference on all Purchase Orders issued by Lewis. No terms, conditions or requirements may be

altered by any Supplier "Post-Facto". Once a Purchase Order has been accepted, processed and delivered,

no consideration will be given to requests that alter the original Purchase Order terms and expectations relative

to the sale.

Lewis (Purchaser) and Supplier (Seller) expressly agree that all rights and duties under any Purchase Order

and any Agreement of Sale arising there from shall be governed by and construed in accordance with the laws

of the state of South Dakota without regard to its conflicts of law principles. Any dispute arising out of this

Supplier Guide or any Agreement of Sale which cannot be resolved by agreement shall, whenever diversity or

subject matter jurisdiction exists, be submitted to the United States District Court or state courts, and the

parties submit to the personal jurisdiction of such courts. Purchaser and Seller expressly agree that the United

Nations Convention on Contracts for the International Sale of Goods is specifically excluded from application to

any Purchase Order, any Agreement of Sale and/or this Supplier Guide, as the case may be. Purchaser and

Seller irrevocably submit, consent, and waive any objection to the jurisdiction of such courts on the basis of

venue, inconvenient forum, or otherwise.

ELECTRONIC DATA INTERCHARGE (EDI)

EDI requirements are pending. Currently, Lewis utilizes EDI with a selected group of Suppliers. Our intentions

are to expand the use of EDI. Future updates will detail implementation strategy and transactional

requirements.

"SHIP PAYMENT TERMS"

DOMESTIC SHIPMENTS

Authorized "Ship Payment Terms" on Purchase Orders for product shipping "Collect" are considered "FOB

Destination, Freight Collect". "Prepaid" terms are considered "FOB Destination, Freight Prepaid". Collect or

Prepaid Shipments that ship with any variation other than those described will be considered "Errant Supplier

Shipments". Additionally, Lewis will not accept under any circumstances a Purchase Order shipped as

"Prepaid and Add" ship payment terms. All Lewis Purchase Orders will clearly indicate complete "Ship

Payment Terms".

Any changes or variation in terms must be approved in writing and in advance of shipment by the Manager of

Logistics and Supplier Compliance. There will be no "Post Facto" consideration given to matters relating to

Purchase Order terms and conditions.

SHIPPING REQUIRMENTS

DOMESTIC SHIPMENTS

APPOINTMENTS & CONFIRMATIONS

All collect and prepaid shipments must be appointed a minimum of 24 hours in advance of the requested

appointment for Truckload (TL) and Less-Than-Truckload (LTL) shipments. To schedule an appointment,

please call (605) 367-2891.

Unscheduled freight will not constitute a waiver of the appointment process if accepted by Lewis without a duly

scheduled appointment. Any add-on to a previously scheduled appointment without being scheduled will not

be permitted and may be refused.


3

BILL OF LADING (BOL) REQUIREMENTS

All Bill of Ladings MUST contain the following information; Purchase Order Number, Complete Address of

Origin and Zip Code, Number of Cartons/Cases, Accurate Weight, Number of Pallets, Cube and NMFC.

Incomplete information or use of NOi where deemed inappropriate will be reviewed for compliance. Failure to

properly document the Bill of Lading could result in the appropriate Supplier Charge Back. (See NonCompliance

Charge Backs listed in Liquidated Damages)

PARCEL SHIPMENTS

Purchase Order Numbers MUST be printed on all shipment labels. United Parcel Service (UPS) and Fed Ex

Shipments specifically must include the Purchase Order Number in one of the Package Reference Fields.

BACK ORDERS

All "Back Orders" MUST be approved before shipping any Purchase Order incomplete. This authorization

must be in writing from the issuing Purchasing Agent (Category Manager or Buyer) of Lewis. Otherwise, ALL

Purchase Orders are expected to be shipped complete.

ON-TIME SHIPMENTS

Suppliers should pay close attention to Purchase Order "Arrive by Date". Any shipment received on or before

this date is considered "On-Time". Orders received after the "Arrive by Date" are considered late and subject

to compliance review. Orders shipped by Supplier with transit times that will extend the delivery beyond the

"Arrive by Date" must be approved by the Purchasing Agent (Category Manager or Buyer) in advance.

Purchase Orders delivered past the "Arrive by Date" without advance approval are subject to refused

appointment schedule and penalties.

CASE MARKING, PACKAGING AND DAMAGES

All cases/cartons should be clearly marked and identify the following; Lewis Purchase Order Number,

Manufacturer, Product, Case and individual item UPC, size and quantity contained in each case and dating as

applicable. These are the minimum requirements. Please refer to any special marking and ticketing

instructions provided by purchaser at the time of sale. Any and all special instructions provided at the time of

sale will be deemed part of the agreement and resulting expectations of Lewis. Whenever possible, safety lids

should be used on liquid products to avoid leaks and damage. Every effort MUST be made to minimize mixed

skids and mixed layers of individual product SKU's when shipping. Purchase orders MUST be loaded

separately and NEVER mixed during shipping. Mixed Purchase Orders on the same pallet will result in a

Supplier chargeback for non-compliance.

DISCREPANT SHIPMENTS

OVER SHIPMENTS, MIS-SHIPMENTS AND UNAUTHORIZED SUBSTITUTIONS

Lewis WILL NOT accept any product shipped over order quantity, mis-shipments or unauthorized substitutions.

When situations arise with warehouse receipts that require goods to be returned to Supplier, the Supplier will

have Seven (7) Days from the date of notice to provide Lewis with a "Written Return Authorization". The

Return to Vendor (RTV) will be returned at the Supplier's expense. If goods are not retrieved from Lewis within

thirty (30) days, the Supplier will incur storage fees at a rate of $3.00 per day, per discrepancy. The Supplier

will be notified by the Purchasing Agent within 48 hours of receipt, at which time the Supplier's Free-Time will

begin. Any such occurrence could be subject to a non-compliance chargeback outlined in Liquidated

Damages.

4

PALLET PROGRAM

Shipments are required to be shipped and palletized on CHEP pallets or GMA Standard 48" X 40" four-way

wood pallets, Grade B or better, with no missing boards or protruding nails. Pallets not meeting standards will

require re-palletization upon receipt of goods. Anytime this type of re-handling of product is required, a

Supplier chargeback will be invoked to reimburse for associated costs. All Suppliers will assume responsibility

for any accessorial charges for unloading and detention levied against Lewis as a result of Supplier NonCompliance

requiring re-handling of freight at the time of delivery.

Orders which exceed twenty-five Cartons/Cases must be shipped palletized. No "Shipper Load and

Count" (SLC) is allowed unless the shipment is a sealed full truckload. Bill of Lading should note the

seal number upon conveyance to the Carrier for transit security purposes.

DOMESTIC FREIGHT ROUTING INSTRUCTIONS

COLLECT FREIGHT SHIPMENTS

All "Collect" shipment MUST be routed through the Lewis Carrier/LSP Designate. Shipments shall be routed

as follows;

(Al Truckload (TL)

For the purposes of freight routing, Truckload moves are defined as Shipper Shipments with a weight in

excess of 10,001 pounds (including pallets), or more than 1,400 Cubic Feet. Call (605) 367-2891.

(Bl Less-Than-Truckload (LTL)

For the purposes of routing, Less-Than Truckload (LTL) shipments are defined as; Shipments with a weight

greater than 99 pounds and Less Than 10,001 pounds (including Pallets) and Less Than 1,400 Cubic

Feet. Less-Than-Truckload Shipments MUST be routed through ABF FREIGHTS SYSTEMS, INC. (ABFS)

(Cl Parcel Shipments

For the purposes of routing, Parcel Shipments are defined as; Shipments with a weight of 1-200 pounds.

Shipments MUST be routed through Federal Express, Account #199-149-393

(D) Air Shipments

Air Shipments are Unauthorized unless paid for by Supplier.

Split Shipments

Split Shipments are NOT authorized unless approved by a purchasing agent. All Collect shipments must be

shipped complete. If shipped incomplete, Supplier will be responsible for the incremental cost of freight, plus

an administrative penalty fee of $75.00. Contact a purchasing agent for any exceptions to this policy.

If there are any pre-routing questions concerning mode designation, please call the Lewis Logistics

Department at (605) 367-2891.

PREPAID FREIGHT SHIPMENTS

General Routing Comments

Only the Lewis Logistics Department can authorize changes in routing instructions. When and if any such

changes become necessary, the Supplier will be provided supplemental instructions via written communication

via email or fax. Otherwise, there will be no authorized changes permitted that are not contained in this

Routing Guide.



5

KEY PERFORMANCE INDICATORS

Lewis is currently monitoring the following:

• Fill Rates

• On-Time Delivery

• Receipt Efficiency

• Order Cycle Time Performance

• Shipping compliance

SUPPLIER COMPLIANCE

Liquidated Damages & Compliance Charge Backs (Domestic Shipments)

All Suppliers and Carriers shall adhere to the special requirements contained herein. Compliance with these

instructions will be essential for proper carriage, delivery, and receipt of the product pursuant to a valid Purchase

Order. Non-compliance with these instructions and requirements often create unnecessary expense and

inefficiencies detrimental to our operation. Any non-compliance with these specified requirements may result in

reasonable financial penalties being assessed to the Shipper or Carrier for their failure to meet service

requirement and/or conditions of sale.

The intention of these instructions and requirements is not to focus on non-compliance, but rather to

encourage compliance with agreed upon service expectations.

Compliance with this Supplier Guide is considered part of the terms and conditions of every Purchase Order

and thus a condition of sale. As such, terms and conditions are considered to be a binding Agreement of Sale

by both Lewis and the Supplier upon acceptance and fulfillment of the Purchase Order by the Supplier.

Lewis will open for dispute any charge back within 45 days of issuance of the charge back. Any charge back

contested beyond the 45 day dispute period will not be reversed and will be considered a closed matter.



6

CHARGE BACK CODES AND PENALTIES

Code 1 (A) - Failure to arrive for a scheduled appointment "On-Time" or failure to secure an appointment

($200).

Code 1 (B) - Missed Scheduled Appointment ($300).

Code 2 - Failure to Follow Routing Instructions ($ Actual Freight Charges) Assessed when Shipper shipped

"Collect" shipment through unauthorized Carrier or Mode of Transportation.

Code 3 - Order Discrepancies ($100 per SKU- $300 Maximum) Includes: (A) Overages, (B) Shortages, (C)

Unauthorized Substitutions, (D) Incorrect Pack Size, (E) Incorrect UPC, (F) Incorrect Pricing, (G) Items not on

Purchase Order, (H) Split Shipments, (I) Dating Compliance, and (J) Product Past PO Cancellation Date.

Code 4 - Supplier Carton Labeling ($100 per SKU)

Code 5- Improper Freight Bill ($100)

Code 6- Late Ship ($25/$100 Per SKU, Maximum $500) Shipment Shipped late and failed to meet the

Purchase Order "Arrive by Date". Promotional Product Orders will be assessed maximum penalty.

Code 7 - Special Handling Required ($200) Shipment Requires Repack. This would include items not shipped

on pallets. All exceptions must be pre-approved by Lewis Logistics Department.

Code 8 - Incomplete "Collect" Shipments ($100-Actual Freight Cost) Supplier Split Ships or Ships Incomplete

Order Collect.

Code 9 -Administrative Fee/Storage Fee ($475 Admin Fee/$3 Per Day Storage) Administrative Fee can be

assessed against all violations. Suppliers failing to rectify Return-To-Vendors (RTV's) in a timely manner are

subject to Administrative Fee and a Per Day Storage assessment.

Code 10 - Certificate of Insurance Penalty ($75) Supplier fails to comply with Insurance Requirement and

provide Certificate of Insurance in the form required.

If penalties are invoked at the time of receipt, charges will be deducted against the appropriate Supplier

invoice. When this occurs, the supporting detail will be forwarded with the Suppliers Invoice Remittance. If it is

determined at a later date, that a situation requiring a validated deduction has occurred, the deduction will be

issued and deducted against a subsequent Invoice with the appropriate back-up detail.


7

INSURANCE AND RISK MANAGEMENT

REQUIREMENTS

All Suppliers supplying Goods and/or Services to Lewis are required to carry Commercial General Liability

and/or Product Liability coverage and supply proof of coverage as a condition of conducting business with

Lewis. Such policy limits should be sufficient to support the scope and nature of business. Lewis' minimum

requirements for product and service suppliers are as follows:

General Aggregate Limit of $2,000,000 (other than products-completed operations),

Products - Completed Operations Aggregate Limit of $2,000,000, Personal and Advertising

Injury Limit of $1,000,000, Each Occurrence Limit of $1,000,000.

Lewis requires to be named as an "Additional Insured" on the Certificate of Insurance (COi) and the

appropriate endorsements attached to the certificate. All Certificates of Insurance can be either

forwarded by USPS to the Lewis Corporate Office, 2701 S. Minnesota Avenue, Suite 1, Sioux Falls, SD

57105, electronically by email to bmeyer@lewisdrug.com or by fax to (605) 367-2876. It is the sole

responsibility of the Supplier to supply Lewis with the "Current" Certificates of Insurance upon annual

renewals, Carrier changes, Breaches of Coverage, etc. If at any time, Lewis must engage compliance

activities to secure the proper COi, the Supplier will be assessed the appropriate fee for facilitating

compliance.

Material Safety Data Sheets (MSDS) are to be provided to Lewis for all products of potentially

hazardous or dangerous products. These MSDS sheets may be forwarded by the aforementioned

means indicated for Certificates of Insurance. (COi)

For complete insurance requirements, please see link provided at www.lewisdrug.com. Follow the Supplier

information link to the "Supplier Insurance and MSDS Requirements" link. Any questions regarding this section

should be requested in writing at our "Contact Us" link provided at the Lewis website home page.

WARRANTY, INDEMNITY AND GOVERNMENTAL REGULATORY COMPLIANCE

Supplier represents and warrants that all merchandise purchased by Lewis is of merchantable quality and fit

for the purpose for which it is intended. Such warranty by the Supplier is in addition to all other warranties

made in writing or verbally in connection with the merchandise, whether expressed or implied, including any

warranties provided by any applicable statute or regulation.

By shipping the products ordered and/or performing services requested, the Supplier certifies and warrants

that it has complied with all applicable laws, regulations and certification and testing requirements with regard

to the manufacture, distribution and sale of the products shipped and/or services performed. By shipping the

products ordered and/or performing services requested, Supplier further certifies and warrants that the sale of

such products, services, packaging, labels, and/or logos do not violate any patent, trademark, and/or copyright

laws. Supplier agrees to indemnify, defend and hold Lewis and/or its affiliates and their directors, officers,

employees and other agents harmless from and against any and all damages, claims, breach of any provisions

of this Supplier Guide, any Agreement of Sale and/or relating to or arising by virtue of bodily injury, death or

property damage, arising from purchase, or use of products or services purchased from Supplier. Without

limiting the foregoing provisions of this Supplier Guide, the foregoing indemnity provisions are effective

whether the said damages, claims and/or fines of any nature (including, without limitation, reasonable attorney

fees) result from any patent or hidden defects in quality of such products and/or services or dangerous

condition thereof, whether based on claim of breach of express or implied warranty or any other legal theory

based on contract or tort law, whether brought pursuant to a class action statue or not, or whether resulting

from any regulatory or legal basis. If the provisions of this Agreement shall conflict with the provisions of any

documents creating binding legal obligations between the Lewis and Supplier, it intended that the provisions

providing the most favorable benefit to Lewis shall be controlling.


8

LEWIS DRUGS, INC.

SUPPLIER INSURANCE REQUIREMENTS

Re: Notice of Request for Certificate of Insurance, Material Safety Data Sheets & Vendor Compliance

Requirements

Dear Supplier or Service Provider:

Please consider this letter a formal request for a Certificate of Insurance indicating your current general liability coverage.

The minimum policy requirements for conducting business with Lewis Drugs, Inc., as well as Certificates, MSDS Sheets,

Vendor Compliance Instruction requirements are as follows:

1) Verification that a Commercial General and/or Product Liability Policy is in force.

2) Renewal certificates will be required 15 days prior to the current policy's expiration date.

3) We must be given at least 30 days advance notice of any lapse or cancellation in coverage.

4) Policy limits: a.) General Aggregate· Limit of $2,000,000 (other than products-completed operations), b.) Products

- Completed Operations Aggregate, Limit $2,000,000, Personal &Advertising Injury Limit of $1,000,000, Each

Occurrence Limit of $1,000,000

5) If your policy is renewed on a yearly basis, we require an updated certificate each year.

6) We require that the certificate list Lewis Drugs, Inc. as an "additional insured" on your policy and require the

appropriate endorsements be attached to the certificate.

7) This document is required to be signed, dated and wff.nessed acknowledging item #6 as a contractual requirement

for performing obligations as a Lewis Supplier or SeNice provider.

8) MSDS Sheets are required as indicated in the Vendor Compliance and Freight Routing Instructions. This

information may be obtained on the Lewis websffe atwww.lewisdrug.com or by contacting a Purchasing Agent

at (605) 367-2800.

Thank you in advance for your cooperation.

LEWIS DRUGS, INC.

Bob Meyer

General Merchandise Manager

& Certificate of Insurance Request

Company Name

Lewis Drugs Purchasing Agent

Representative Signature

Department

Date

Date

(Original Signed Document should be returned to the Lewis Drug Purchasing Agent and a copy provided to the Supplier Company

Representative)


9

I ISSUE DATE (MM/DD/VY)

CERTIFICATE OF INSURANCE I 2/01/2012

PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION

William Storie Cell 630 461 7253 ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE

MPRS LLC Insurance Brokers HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR

ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.

2200 S Main Suite 100 COMPANIES AFFORDING COVERAGE

Lombard, IL 60148-5364

Phone 630 282 1776 Fax 630 282 1770

A

Great American E &S Ins Co 37532

B

Commerce and Industry

INSURED

Wachsmuth & Krogmann Inc & Crane USA ,Inc

C

621 RT 83 Suite 202

Bensenville , IL 60106

D

E

COVERAGES

THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY

PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO

WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HERIN IS SUBJECT TO ALL

THE TERMS, EXCLUSIONS, AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.

co POLICY POL. EFF. POL. EXP.

LTR TYPE OF INSURANCE NUMBER DATE DATE LIMITS LIMITS

A GENERAL LIABILITY EACH OCCURRENCE $1,000,000

GENERAL AGGREGATE $2,000,000

COMMERCIAL GL PL 642073102 2/1/2012 2/1/2013 PRODUCTS-COMP/OP AGG. $2,000,000

Occurrence form Blanket vendors PERSONAL & ADV INJURY $1,000,000

Included when required

by written contract

OWNERS & CONTRAC.

PROTECTION CG 20150 7/04 FIRE DAMAGE-ANY ONE FIRE $50,000

MED. EXPENSE-ANY ONE PER. $5,000

B EXCESS LIABILITY BE 042297502 EACH OCCURRENCE $8,000,000

UMBRELLA FORM 2/1/2012 2/1/2013 AGGREGATE $8,000,000

OTHER THAN UMB.

CLAIMS-MADE PER INCIDENT

OCCURRENCE AGGREGATE

DESCRIPTION OF OPERATIONS/LOCATIONS/SPECIAL ITEMS.

CERTIFICATE HOLDER CANCELLATION

This certificate does not alter any coverage contained in the policy. SHOULD ANY OF THE ABOVE-DESCRIBED POLICIES BE CANCELLED

BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING COMPANY

WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE TO THE

CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO MAIL

SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY OF

ANY KIND UPON THE COMPANY, ITS AGENTS OR

REPRESENTATIVES.

AUTHORIZED REPRESENTATIVE