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3. Rebate Payment Terms
<br />Subject to the conditions set forth herein, Administrator will receive from ESI the quarterly Rebate payments
<br />within approximately one hundred eighty (180) days following calendar quarter adjudicated for Rebates
<br />received during the prior calendar quarter. Administrator shall pay Client the guaranteed amounts set forth
<br />in Section 1 above within approximately thirty (30) days following receipt of the Rebate payments from ESI.
<br />4. Conditions
<br />4.1. ESI contracts with pharmaceutical manufacturers for Rebates on its own behalf and for its own benefit,
<br />and not on behalf of Client. Accordingly, ESI retains all right, title and interest to any and all actual
<br />Rebates received from manufacturers. ESI will pay Client amounts equal to the Rebate amounts
<br />allocated to Client, as specified above, from ESI's general assets (neither Client, its Members, nor
<br />Client's plan retains any beneficial or proprietary interest in ESI's general assets). Client acknowledges
<br />and agrees that neither it, its Members, nor its Plan will have a right to interest on, or the time value of,
<br />any Rebate payments received by ESI during the collection period or moneys payable under this Section.
<br />No amounts for Rebates will be paid until this Agreement is executed by Client. ESI will have the right
<br />to apply Client's allocated Rebate amount to unpaid Fees.
<br />4.2 Client acknowledges that it may be eligible for Rebate amounts under this Agreement only so long as
<br />Client, its affiliates, or its agents do not contract directly or indirectly with anyone else for discounts,
<br />utilization limits, rebates or other financial incentives on pharmaceutical products or formulary programs
<br />for claims processed by ESI pursuant to the Agreement, without the prior written consent of ESI. In the
<br />event that Client negotiates or arranges with a pharmaceutical manufacturer for Rebates or similar
<br />discounts for any Covered Drugs hereunder, but without limiting EST's right to other remedies, ESI may
<br />immediately withhold any Rebate amounts earned by, but not yet paid to, Client as necessary to prevent
<br />duplicative rebates on Covered Drugs. To the extent Client knowingly negotiates and/or contracts for
<br />discounts or rebates on claims for Covered Drugs without prior written approval of ESI, such activity
<br />will be deemed to be a material breach of this Agreement, entitling ESI to suspend payment of Rebate
<br />amounts hereunder and to renegotiate the terms and conditions of this Agreement.
<br />4.3 Under its Rebate program, ESI may implement ESI's Formulary management programs and controls,
<br />which may include, among other things, cost containment initiatives, and communications with
<br />Members, Participating Pharmacies, and/or physicians. ESI reserves the right to modify or replace such
<br />programs from time to time. Guaranteed Rebate amounts, if any, set forth herein, are conditioned on
<br />adherence to various Formulary management controls, benefit design requirements, claims volume, and
<br />other factors stated in the applicable pharmaceutical manufacturer agreements, as communicated by ESI
<br />to Client from time to time. If any government action, change in law or regulation, change in the
<br />interpretation of any law or regulation, or any action by a pharmaceutical manufacturer has an adverse
<br />effect on the availability of Rebates, then ESI may make an adjustment to the Rebate terms and
<br />guaranteed Rebate amounts, if any, hereunder.
<br />4.4 Rebate Acknowledgment; No Representation; Rebate Limitations. Client acknowledges that
<br />Administrator is not making any representation, warranty or guaranty of any kind or nature, either
<br />express, implied or otherwise, regarding the amount of Rebates to be paid or remitted to Client pursuant
<br />to this Agreement, except as specifically set forth in writing herein. In addition, Client waives, releases
<br />and forever discharges PBM and Administrator from any Losses arising from a pharmaceutical
<br />company's (a) failure to pay Rebates; (b) breach of an agreement related to Rebates; or (c) negligence
<br />or misconduct. Client acknowledges that whether and to what extent pharmaceutical companies are
<br />willing to provide Rebates to Client may depend upon a variety of factors, including the content of the
<br />PDL, the Plan's design features, Client meeting criteria for Rebates, and the extent of participation in
<br />PBM's formulary management programs, as well as PBM/Administrator receiving sufficient
<br />information regarding each Claim for submission to pharmaceutical companies for Rebates. Client
<br />acknowledges and agrees that PBM may, but shall not be required to, initiate any collection action to
<br />collect any Rebates from a pharmaceutical company. In the event PBM does initiate collection action
<br />NOT FOR DISTRIBUTION. THE INFORMATION CONTAINED HEREIN IS CONFIDENTIAL, PROPRIETARY
<br />AND CONSTITUTES TRADE SECRETS OF ESI AND RXBENEFITS
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