EXHIBIT 10.1


                     Amended and Restated Systems Operations



                               Services Agreement



                                     Between



                               Eckerd Corporation



                                       and



                       IBM Global Services US Division of

                   International Business Machines Corporation



                           Dated as of March 23, 1998



                                TABLE OF CONTENTS



ARTICLE 1        DEFINITIONS..................................................6
ARTICLE 2        TERM.........................................................10
ARTICLE 3        PROVISION OF THE DESIGNATED SERVICES.........................10
   3.01     Designated Services...............................................10
   3.02     Service Locations.................................................10
   3.03     Security and Related Procedures...................................11
   3.04     Migration Services................................................11
   3.05     Client/Server Environment.........................................12
   3.06     Machines..........................................................12
   3.07     Replacements......................................................13
   3.08     Machine Maintenance...............................................13
   3.09     New Releases and Versions of the Software.........................13
   3.10     Software Maintenance..............................................14
   3.11     Consolidation, Installation and Relocation........................15
   3.12     Systems Management................................................15
   3.13     Help Desk.........................................................15
   3.14     VSAT Data Network.................................................16
   3.15     Data Services.....................................................17
   3.16     Field Support Services............................................18
   3.17     Office Automation.................................................18
   3.18     New, Replacement or Eliminated Software...........................19
   3.19     Consultation Services.............................................19
ARTICLE 4        APPLICATION DEVELOPMENT......................................19
   4.01     Application Development...........................................19
   4.02     Provision of AD FTEs..............................................19
   4.03     AD FTE Consumption................................................20
   4.04     Additional Application Development................................20
   4.05     Reduction to AD FTE Baseline......................................20
ARTICLE 5        PROJECTS.....................................................21
   5.01     Project Management................................................21
   5.02     Project Implementation............................................21
   5.03     Technology Refresh................................................21
ARTICLE 6        NEW SERVICES.................................................21
   6.01     New Services......................................................21
   6.02     Third Party Services..............................................22
ARTICLE 7        PERFORMANCE STANDARDS........................................22
   7.01     Designated Performance Standards..................................22
   7.02     New Performance Standards.........................................22
   7.03     Adjustment of Performance.........................................23
   7.04     Root-Cause Analysis...............................................23
ARTICLE 8        PROJECT TEAM.................................................23
   8.01     Joint Advisory Committee..........................................23
   8.02     IBMGS-US Project Executive........................................23
   8.03     Key Employees.....................................................24
   8.04     IBMGS-US Project Executive Staff..................................24
   8.05     Project Staff.....................................................24
   8.06     Subcontractors....................................................24
   8.07     Managerial Control................................................25
   8.08     Non-Competition...................................................25
ARTICLE 9        MANAGEMENT AND CONTROL.......................................25
   9.01     Procedures Manual.................................................25
   9.02     Change Control Procedures.........................................25
ARTICLE 10       ECKERD RESOURCES.............................................26
   10.01    Eckerd Resources..................................................26
   10.02    Eckerd Leased Assets and Eckerd Services Contracts................26
   10.03    Eckerd Third Party Software.......................................26
   10.04    Eckerd Data Network...............................................27
   10.05    Moves, Adds and Changes...........................................27
   10.06    Modification, Extension and Termination of Third Party Agreements.28
   10.07    Failure to Obtain Consents or to Provide Resources................28
   10.08    Appointment of Agent..............................................28
   10.09    Additional Agreements.............................................28
   10.10    Eckerd Help Desk..................................................28
   10.11    Additional Equipment..............................................29
ARTICLE 11       ECKERD OBLIGATIONS...........................................29
   11.01    Eckerd IS Executive...............................................29
   11.02    Eckerd Facilities and Related Services............................29
   11.03    Eckerd Machines...................................................30
   11.04    Application Information Requirements..............................30
   11.05    Voice Communication Services......................................30
   11.06    Retained Resources................................................30
ARTICLE 12       SOFTWARE AND PROPRIETARY RIGHTS..............................31
   12.01    Eckerd Software...................................................31
   12.02    Developed Software................................................31
   12.03    IBMGS-US Software.................................................32
   12.04    IBMGS-US License..................................................32
   12.05    Changes and Upgrades to Software..................................32
   12.06    Access to AD/M Tools and Methodologies............................33
ARTICLE 13        CONSENTS....................................................33
ARTICLE 14        DATA AND REPORTS............................................33
   14.01    Ownership of Eckerd Data..........................................33
   14.02    Correction of Errors..............................................33
   14.03    Return of Data....................................................34
   14.04    Reports...........................................................34
ARTICLE 15        DATA AND SOURCE CODE TAPES..................................34
ARTICLE 16        CONTINUED PROVISION OF SERVICES.............................34
   16.01    Disaster Recovery Plan............................................34
   16.02    Force Majeure.....................................................35
ARTICLE 17        PAYMENTS TO IBMGS-US........................................36
   17.01    Annual Services Charges...........................................36
   17.02    New Services Fees.................................................36
   17.03    Additional Resource Charges and Reduced Resource Charges..........36
   17.04    Cost of Living Adjustment.........................................36
   17.05    Significant Business Changes and New Entities.....................38
   17.06    Extraordinary Decrease in Eckerd Work.............................38
   17.07    Payment Schedule..................................................39
   17.08    Taxes.............................................................39
   17.09    Expenses..........................................................40
   17.10    Proration.........................................................40
   17.11    Rights of Set-Off.................................................40
   17.12    Refundable Items..................................................40
   17.13    Purchasing-Consideration..........................................41
   17.14    Lexington Baseline Adjustment.....................................41
   17.15    IBM Help Desk Baseline Adjustment.................................42
   17.16    Field Services Baseline Adjustment................................42
   17.17    Technology Improvements...........................................43
ARTICLE 18        AUDITS......................................................43
   18.01    Audit of Processing...............................................43
   18.02    Audit of Charges..................................................43
   18.03    IBMGS-US Audit....................................................44
ARTICLE 19        CONFIDENTIALITY.............................................44
   19.01    Confidential Information..........................................44
   19.02    Unauthorized Acts.................................................45
   19.03    Action by IBMGS-US................................................45
ARTICLE 20        REPRESENTATIONS AND WARRANTIES..............................45
   20.01    By Eckerd.........................................................45
   20.02    By IBMGS-US.......................................................46
   20.03    Disclaimer........................................................46
ARTICLE 21        JOINT ADVISORY COMMITTEE AND DISPUTE RESOLUTION.............46
   21.01    Joint Advisory Committee..........................................46
   21.02    Dispute Resolution................................................47
   21.03    Continued Performance.............................................47
ARTICLE 22        TERMINATION.................................................47
   22.01    Termination for Convenience.......................................47
   22.02    Termination for Cause.............................................47
   22.03    Termination for Failure to Provide the Services...................48
   22.04    Other Terminations................................................48
   22.05    Effect of Expiration or Terminations..............................48
   22.06    Client/Server.....................................................49
   22.07    Termination for Change of Control.................................49
ARTICLE 23        TERMINATION FEE.............................................50
   23.01    Termination for Convenience.......................................50
   23.02    Technology Improvements...........................................50
   23.03    No Additional Fees................................................50
   23.04    Termination for Change of Control.................................51
   23.05    Proration.........................................................51
ARTICLE 24        TERMINATION ASSISTANCE......................................51
ARTICLE 25        INDEMNITIES.................................................52
   25.01    Indemnity by Eckerd...............................................52
   25.02    Indemnity by IBMGS-US.............................................52
   25.03    Indemnity and Contribution........................................53
   25.04    Indemnification Procedures........................................53
ARTICLE 26        DAMAGES.....................................................54
   26.01    Consequential Damages.............................................54
   26.02    Credits...........................................................54
   26.03    Limitation of Direct Damages......................................54
   26.04    Exclusion.........................................................54
   26.05    Remedies..........................................................55
ARTICLE 27        MISCELLANEOUS...............................................55
   27.01    Assignment........................................................55
   27.02    Notices...........................................................55
   27.03    Counterparts......................................................56
   27.04    Headings..........................................................56
   27.05    Relationship......................................................56
   27.06    Consents, Approvals and Requests..................................56
   27.07    Severability......................................................57
   27.08    Waiver............................................................57
   27.09    Publicity.........................................................57
   27.10    Entire Agreement..................................................57
   27.11    Amendments........................................................57
   27.12    Governing Law.....................................................57
   27.13    Survival..........................................................57
   27.14    Third Party Beneficiaries.........................................58
   27.15    Insurance.........................................................58
   27.16    Covenant of Further Assurances....................................58
   27.17    Hiring of Employees...............................................58
   27.18    EDI...............................................................59
   27.19    Construction......................................................59
   27.20    Interpretation of Documents.......................................59



                  THIS  AMENDED  AND  RESTATED   SYSTEMS   OPERATIONS   SERVICES
  AGREEMENT  (this  "Agreement"),  dated as of March 23,  1998  (the  "Agreement
  Date"), by and between ECKERD  CORPORATION,  a Delaware  corporation,  with an
  office at 8333 Bryan Dairy  Road,  Largo,  Florida  33777  ("Eckerd")  and IBM
  Global Services US Division of International  Business  Machines  Corporation,
  with an office at Route 100, Somers, NY 10589 ("IBMGS-US") amends and restates
  in its entirety that certain Systems  Operations  Services  Agreement  between
  Jack Eckerd Corporation and Integrated Systems Solutions Corporation, dated as
  of   July   1,   1993   (the    "Original    Agreement").    Eckerd   is   the
  successor-in-interest   to  Jack  Eckerd   Corporation  and  IBMGS-US  is  the
  successor-in-interest to Integrated Systems Solutions Corporation.



                              W I T N E S S E T H:

                  WHEREAS,  pursuant to the Original  Agreement  Eckerd has been
  obtaining  from  IBMGS-US,  and  IBMGS-US has been  providing  to Eckerd,  the
  systems operations and related services described in the Original Agreement on
  the terms and conditions set forth in the Original Agreement,

                  WHEREAS,  Eckerd and  IBMGS-US now desire to amend and restate
  the Original  Agreement in its entirety to reflect certain  agreements between
  Eckerd and IBMGS-US in respect of such services and such terms and conditions-
  and

                  WHEREAS, IBMGS-US intends to perform the services described in
  this Agreement so as to meet the ongoing needs and  requirements  of Eckerd as
  described in this Agreement and to reflect  appropriate new  technologies  for
  providing such services.

                  NOW, THEREFORE,  for and in consideration of the agreements of
  the parties set forth below, Eckerd and IBMGS-US (collectively, the "Parties";
  each, a "Party") agree as follows:


ARTICLE 1          DEFINITIONS.

The following defined terms shall have the meanings  specified in the portion of
the Agreement indicated below:

TERM                                                          DEFINED IN

Actual Inflation                                              Section 17.4
AD FTE ARC Rate                                               Schedule J
AD FTE Base Rate                                              Section 4.03
AD FTE Baseline                                               Section   4.02
AD FTE RRC Rate                                               Schedule J
AD FTEs                                                       Section 4.01
AD Services                                                   Section   4.01
ADIM Services                                                 Section   4.01
Affiliate                                                     Section 3.04
Agreement                                                     Heading
Agreement Date                                                Heading
AM FTE ARC Rate                                               Schedule J
AM FTE Baseline                                               Section 3.10
AM FTE RRC Rate                                               Schedule J
AM FTEs                                                       Schedule J
AM Services                                                   Section 3.10
Annual Services Charges                                       Section 17.01
Applicable CPI-U                                              Section 17.04
Application(s)                                                Section 3.09
Application Development Services                              Section 4.01
Application Maintenance Services                              Section 3.10
ARCs                                                          Section   17.03
Change Control Procedures                                     Section 9.02
Change In Control                                             Section 22.07
Change(s)                                                     Section 9.02
Claim                                                         Section   25.04
Client/Server Environment                                     Section 3.05
COLA                                                          Section 17.04
Commencement Date                                             Article 2
Confidential Information                                      Section 19.01
Consents                                                      Article 13
Contract Year                                                 Article 2
Corporate Campus                                              Section 3.17
CPI-U                                                         Section 17.04
Credit(s)                                                     Section 26.02
Critical Applications                                         Section 16.01
DASD                                                          Section 17.04
Data Center(s)                                                Section 3.02
Data Tapes                                                    Article 15
Data Transmission Equipment                                   Section 10.04
Depot Services                                                Section 3.16
Designated Performance Standard(s)                            Section 7.01
Designated Services                                           Section 3.01
Developed Software                                            Section 12.02
Direct Damages Cap                                            Section 26.03
Disaster                                                      Section 16.01
Disaster Recovery Plan                                        Article 16.01
Distribution Centers                                          Section 3.02
Eckerd                                                        Heading
Eckerd Consents                                               Article 13
Eckerd Data                                                   Section 14.01
Eckerd Data Network                                           Section 10.04
Eckerd Help Desk                                              Section 10.10
Eckerd IS Executive                                           Section 11.01
Eckerd Leased Assets                                          Section 10.02
Eckerd Machines                                               Section 3.06
Eckerd Proprietary Software                                   Section 12.01
Eckerd Resource(s)                                            Section 10.01
Eckerd Service Locations                                      Section 3.02
Eckerd Services Contracts                                     Section 10.02
Eckerd Software                                               Section 12.01
Eckerd Third Party Software                                   Section 12.01
Eckerd Third Party Software Licenses                          Section 10.03
End-User Machines                                             Section 11.06
End-User Software                                             Section 11.06
End-Users                                                     Section 11.06
Extension Period                                              Article 2
Fees                                                          Section 17.07
Field Support Services                                        Section 3.16
Force Majeure Event                                           Section 16.02
FTE                                                           Schedule J
Help Desk Adjusted Baseline                                   Section 17.15
Help Desk Services                                            Section 3.13
Indemnified Party                                             Section 25.04
Indemnifying Party                                            Section 25.04
Inflation Sensitivity                                         Section 17.04
Initial Term                                                  Article 2
IBMGS-US                                                      Heading
IBMGS-US Consents                                             Article 13
IBMGS-US Help Desk                                            Section 3.13
IBMGS-US Machines                                             Section 3.06
IBMGS-US Project Executive                                    Section 8.02
IBMGS-US Proprietary Software                                 Section 12.03
IBMGS-US Service Locations                                    Section 3.02
IBMGS-US Software                                             Section 12.03
IBMGS-US Third Party Software                                 Section 12.03
IVO                                                           Section 17.13
Joint Advisory Committee                                      Section 8.01
Key Employee(s)                                               Section 8.03
Largo Data Center                                             Section 10.11
Largo Data Center Resource Baseline                           Schedule J
Lexington Adjusted Baseline                                   Section 17.14
Lexington Data Center                                         Section 3.04
Lexington Y2K Resources                                       Section 17.14
Level 2 Support                                               Schedule E
Machines                                                      Section 3.06
Migration Plan                                                Section 3.04
New Application(s)                                            Section 6.01
New Performance Standards                                     Section 7.02
New Service(s)                                                Section 6.01
New Services Fees                                             Section 6.01
New Services Work Order                                       Section 6.01
OA                                                            Schedule E
OA End User Blocks                                            Schedule J
OA Services                                                   Section 3.17
Original Agreement                                            Heading
Party(ies)                                                    Recitals
Performance Standards                                         Section 7.02
Planned Store Activity                                        Section 17.05
Procedures Manual                                             Section 9.01
Project Executives                                            Section 8.01
Project Staff                                                 Section 8.05
Protected Inflation                                           Section 17.04
Protection Index                                              Section 17.04
Ramp Down Period                                              Section 10.10
Reassignment Waiver(s)                                        Section 8.02
Refresh Buyout                                                Section 5.03
Report(s)                                                     Section 14.04
Resource Baseline(s)                                          Section 17.03
Retail Consultant                                             Section 3.19
Retained Resources                                            Section 11.06
RRCs                                                          Section 17.03
Service Locations                                             Section 3.02
Services                                                      Section 6.01
Software                                                      Section 12.05
Source Code Tapes                                             Article 15
SSR                                                           Section 3.16
Standard Desktop Configuration                                Section 3.17
Standard Desktop Software                                     Section 3.09
Store(s)                                                      Section 3.02
Store System Support Services                                 Section 3.16
Systems                                                       Section 3.12
Systems Software                                              Section 3.09
Tape Mount                                                    Schedule J
Technology Review                                             Section 17.17
Term                                                          Article 2
Termination Assistance Period                                 Article 24
Termination Assistance Services                               Article 24
Termination Fee                                               Section 23.01
VSAT Data Network                                             Section 3.14
VSAT Per Store Termination Charges                            Section 3.14
VSAT Termination Fee                                          Section 23.1


ARTICLE 2          TERM.

The  initial  term of this  Agreement  shall  commence  on  January 1, 1998 (the
"Commencement  Date") and shall  continue  until 12:00  midnight EST on June 30,
2003,  unless  terminated  earlier  pursuant to Article 22 (the "Initial Term").
IBMGS-US  shall notify Eckerd  pursuant to this Article 2 on or before  December
31, 2001 as to whether  IBMGS-US  desires to renew this  Agreement.  If IBMGS-US
provides  Eckerd  with notice  pursuant  to this  Article 2 of its desire not to
renew this  Agreement,  this  Agreement  shall  expire at the end of the Initial
Term. If IBMGS-US  provides Eckerd with notice pursuant to this Article 2 of its
desire to renew this Agreement,  Eckerd shall provide IBMGS-US with notice on or
before June 30, 2002 as to whether  Eckerd desires to renew this  Agreement.  If
Eckerd provides  IBMGS-US notice pursuant to this Article 2 of its desire not to
renew this  Agreement,  this  Agreement  shall  expire at the end of the Initial
Term. If (1) Eckerd  provides  IBMGS-US  with notice  pursuant to this Article 2
that Eckerd desires to renew this Agreement and (2) Eckerd and IBMGS-US have not
agreed on the applicable  terms and conditions in respect of the renewal of this
Agreement on or before  December 31, 2002,  this Agreement  shall  automatically
renew for up to one additional year (as may be specified by Eckerd upon at least
60  days'  notice  to  IBMGS-US)  (the  "Extension  Period")  on the  terms  and
conditions  set forth in this  Agreement;  provided,  however,  that the Fees in
effect during the  Extension  Period shall be the Fees in effect during the last
Contract Year of the Initial Term (including COLA as described in Section 17.04)
and as may be adjusted  pursuant  to Section  17.03.  Subject to a  Reassignment
Waiver,  IBMGS-US  shall use its best  efforts  during the  Extension  Period to
maintain the  composition  and levels of the Project Staff with the  composition
and levels of the Project  Staff in effect  during the last Contract Year of the
Initial Term. If during the Extension Period,  Eckerd and IBMGS-US are unable to
reach  agreement on the terms and conditions  that will apply during the renewal
period,  this Agreement  shall expire at the end of the Extension  Period.  (The
Initial Term and the Extension Period  collectively,  the "Term".) (The 12-month
period  commencing  on  the  Commencement  Date  or on  any  anniversary  of the
Commencement  Date during the Term and the final six-month period of the Initial
Term,  each,  a "Contract  Year".) As of the  Commencement  Date,  the  Original
Agreement shall be amended and restated in its entirety by this Agreement.


ARTICLE 3          PROVISION OF THE DESIGNATED SERVICES.

3.01 Designated Services.

Commencing on the Commencement Date and continuing throughout the Term, IBMGS-US
shall  provide  to Eckerd  the  systems  operations  and  related  services  (1)
described in Schedule E and (2) otherwise  identified in this Agreement as being
part of the  Designated  Services  ((1) and (2)  collectively,  the  "Designated
Services").  Subject to Section  17.03,  IBMGS-US shall increase or decrease the
amount  of  the  Designated  Services  according  to  Eckerd's  demand  for  the
Designated Services.

3.02 Service Locations.

The Designated Services shall be provided from (1) the IBMGS-US data centers and
locations  described in Schedule I (the "IBMGS-US Service  Locations"),  (2) the
data centers and locations of Eckerd and its Affiliates  described in Schedule I
(the "Eckerd Service  Locations"),  including (a) the retail  locations owned or
operated by Eckerd or its  Affiliates  as an "Eckerd"  store  (each,  a "Store";
collectively,  the "Stores") and (b) the  warehouses  and  distribution  centers
supporting or servicing the Stores  (collectively,  the "Distribution  Centers")
and (3) any other data center or location  designated by IBMGS-US or Eckerd upon
notice to the other Party; provided, however, that any other such data center or
location  must be approved by Eckerd if the  migration of any of the Services to
such other data center or location would result in  incremental  costs to Eckerd
or have an adverse impact on Eckerd's operations ((1), (2) and (3) collectively,
the "Service Locations"). (The IBMGS-US data centers and the Eckerd data centers
described in this Section 3.02 collectively,  the "Data Centers";  each, a "Data
Center".)  Notwithstanding  the  foregoing,  IBMGS-US may not relocate the Largo
Data Center without Eckerd's prior consent.

3.03 Security and Related Procedures.

Each of the Parties  shall  perform  its  security  obligations  as set forth in
Schedule L. As part of the  Designated  Services,  IBMGS-US  shall  maintain and
enforce at the IBMGS-US Service Locations (1) operational environmental,  safety
and  facility  security   procedures  with  respect  to  IBMGS-US's   employees,
subcontractors  and agents that are at least as rigorous as those  procedures in
effect at the IBMGS-US  Service  Locations as of the  Commencement  Date and (2)
data  security  procedures  that are at least as rigorous as those data security
procedures in effect at the IBMGS-US  Service  Locations as of the  Commencement
Date.

3.04 Migration Services.

(1)      Subject to Section  3.04(2),  in the event  Eckerd  wishes  IBMGS-US to
         perform  data  center  migration   services,   such  services  will  be
         considered New Services.

(2)      Eckerd may, at any time after the  Commencement  Date, elect to migrate
         the  mainframe   processing   then  being  provided  by  IBMGS-US  from
         IBMGS-US's  Lexington,   Kentucky  data  center  (the  "Lexington  Data
         Center")  or any  other  Service  Location  from  which  the  mainframe
         processing is then being provided to an Eckerd or Eckerd Affiliate data
         center  designated  by  Eckerd.  If Eckerd  desires  to  exercise  such
         election,  Eckerd shall give IBMGS-US notice  thereof.  Upon receipt of
         such notice and subject to Section  6.01,  IBMGS-US  shall  develop and
         provide to Eckerd for its  approval a  migration  plan (the  "Migration
         Plan") no later than three (3) months  after such  notice in respect of
         such   migration.   The  Migration  Plan  will  identify  each  Party's
         respective  responsibilities,  timeframes and schedules.  Upon Eckerd's
         approval of the  Migration  Plan,  IBMGS-US will provide a proposed New
         Services Work Order which  incorporates the approved  Migration Plan in
         respect of IBMGS-US's  execution of the Migration Plan . Upon execution
         of such New  Services  Work Order by the  Parties  each of the  Parties
         shall  perform its  responsibilities  as set forth in the New  Services
         Work Order.  In the case of a migration which will mirror the Lexington
         Data Center environment,  IBMGS-US shall complete such migration within
         one year of notice by Eckerd of its desire to migrate  pursuant to this
         Section  3.04(2).  In case the  desired  migration  will not mirror the
         Lexington Data Center  environment,  IBMGS-US shall use best commercial
         efforts  to  complete  such  migration  within  such one  year  period.
         Commencing  on the date  that the  migration  from the  Lexington  Data
         Center to the  designated  Eckerd or Eckerd  Affiliate  data  center is
         complete, IBMGS-US shall reduce the Annual Services Charge by an amount
         equal to 90 percent of the then  current  Lexington  Data  Center  Base
         Charges  for  each  Contract  Year,  or  portion  thereof,  during  the
         remainder of the Term.

(3)      If as a result of any migration described in Section 3.04(2) or Section
         17.14(3),  the number of IBMGS-US FTEs at the Corporate Campus required
         by IBMGS-US to perform the  Services  is  reduced,  IBMGS-US  will,  at
         Eckerd's option,  either (a) provide to Eckerd an additional  number of
         AM FTEs  with  salaries  and  benefits  equivalent  to the  cost of the
         salaries and benefits of the FTEs so reduced and apply such  additional
         AM FTEs against the AM FTE Baseline or (b) provide to Eckerd an RRC for
         such reduced  FTEs equal to the cost of such  salaries and benefits and
         Eckerd shall be responsible  for any reasonable out of pocket  expenses
         actually  incurred  by  IBMGS-US  in  connection  with the  transfer or
         relocation  of any full time  employees for which such RRC is provided;
         provided,  however,  that such actual  expenses  for all such full time
         employees  reduced in  connection  with any single event giving rise to
         reduction in the number of such full time  employees  shall not exceed,
         on the average, $36,000 per full time employee.

(4)      "Affiliate"  means,  with  respect  to a Party,  any  entity  at a time
         controlling, controlled by or under common control with, such Party.

3.05 Client/Server Environment.

As part  of the  Designated  Services,  IBMGS-US  shall  maintain  and  document
enterprise  wide hardware,  software,  application  and data  architectures  for
Eckerd's client/server environment (the "Client/Server  Environment").  IBMGS-US
shall, subject to the Performance Standards, provide the Services to Eckerd at a
technological  level  that will  maintain  the  integrity  of the  Client/Server
Environment.  The  Joint  Advisory  Committee  shall  meet at least  once  every
Contract   Year  to  assess  the  continued   integrity  of  the   Client/Server
Environment.  If the Joint Advisory Committee determines that there is a concern
regarding the continued  integrity of the Client/Server  Environment,  the Joint
Advisory Committee shall direct IBMGS-US to modify the Client/Server Environment
in a manner specified by the Joint Advisory Committee.

3.06 Machines.

IBMGS-US  shall provide the  Designated  Services using those machines which are
(1)  located at the Service  Locations  or are  otherwise  part of the VSAT Data
Network,  (2) part of the Client/Server  Environment and (3) either (a) provided
by  IBMGS-US,  or  for  which  IBMGS-US  assumes  financial  and  administrative
responsibility,  on or after the  Commencement  Date,  such  machines  as of the
Commencement Date being set forth in Schedule D (the "IBMGS-US Machines") or (b)
owned or leased by Eckerd on or after, or for which Eckerd retains financial and
administrative  responsibility on or after, the Commencement Date, such machines
as of the  Commencement  Date being set forth in Schedule C  (together  with the
End-User  Machines  as set forth in Schedule  S, the  "Eckerd  Machines").  (The
IBMGS-US Machines and the Eckerd Machines collectively the "Machines".)

3.07 Replacements.

As part of the  Designated  Services,  IBMGS-US  shall,  upon  notice to Eckerd,
replace and provide  additional  Machines as may be  necessary  for  IBMGS-US to
perform the Services in  accordance  with the  Performance  Standards.  IBMGS-US
shall (a) be financially responsible for those replacements of IBMGS-US Machines
required for IBMGS-US to provide the Largo Data Center CPU Resource  Baseline as
set forth in the  Supplement  as such Baseline may be adjusted from time to time
pursuant  to this  Agreement  and (b)  retain  all  title and  interest  in such
replacements,  which shall be considered  IBMGS-US Machines for purposes of this
Agreement.  Eckerd  shall (i) have the right to approve the  replacement  of any
Eckerd Machines, (ii) be financially responsible for such approved replacements,
and (iii) retain all title and  interest in such  approved  replacements,  which
shall be considered Eckerd Machines for purposes of this Agreement. In the event
that  Eckerd  does not  approve  the  replacement  of any Eckerd  Machine,  then
IBMGS-US  shall be excused from any failure to meet the  applicable  Performance
Standards  occurring  after  Eckerd's  disapproval to the extent such failure is
caused by such Eckerd Machine not being replaced as requested by IBMGS-US.

3.08 Machine Maintenance.

As part of the  Designated  Services,  IBMGS-US  shall  provide  to  Eckerd  (1)
maintenance and support services,  including upgrades (which upgrades in respect
of Eckerd  Machines will be at Eckerd's  expense),  as necessary for IBMGS-US to
perform the  Services  in  accordance  with the  Performance  Standards  for the
Machines (except for the End-User Machines and the Data Transmission Equipment),
(2)  maintenance  and support  services as necessary for IBMGS-US to perform the
Services in accordance with the Performance  Standards for the End-User Machines
listed in Schedule S in accordance  with the procedures set forth in Schedule P,
and (3)  support  services  for the VSAT Data  Network  by  operating  a network
control center which (a) provides alarm monitoring, trouble analysis and problem
recording,  (b) places  service  calls to perform  corrective  maintenance,  (c)
provides  vendor  performance  analysis  and  (d)  manages  trouble  reports  to
resolution.

3.09 New Releases and Versions of the Software.

(1)      As part of the Designated  Services,  IBMGS-US shall,  after sufficient
         testing,  install on the  Machines  and  maintain  new  releases of the
         operating  systems  software  set  forth in  Schedule  B (the  "Systems
         Software") after such release is commercially  available according to a
         schedule  to be agreed  upon by Eckerd  and  IBMGS-US,  but in no event
         later  than  one  year  from  the date  such  release  is  commercially
         available. IBMGS-US shall (a) not install any new release or version of
         the  Systems  Software  that is a first  installation  or beta  release
         without  Eckerd's consent and (b) install any new release or version of
         the Systems Software within the time period specified by any regulatory
         agency for the  installation  of such new  release or  version.  In the
         event either Party requests the other Party to delay upgrading specific
         Systems  Software beyond such one-year period or to operate or maintain
         multiple  versions  of Systems  Software,  the other Party shall do so,
         provided,  that if such Party (i) is prevented from taking  economic or
         performance advantage of technological advancements in the industry, or
         (ii)  incurs  additional  costs  (e.g.,  Software-support  costs due to
         withdrawal of  maintenance by the licensor,  multiple-version  charges,
         etc.),  then the  requesting  Party  will  either  update  the  Systems
         Software  to the  current  level or  reimburse  the other Party for any
         increased costs incurred as a result thereof.  If IBMGS-US is the Party
         requesting  such delay,  then  IBMGS-US  shall  continue to perform the
         Services in accordance with the applicable  Performance  Standards.  If
         Eckerd is the Party  requesting  such delay,  IBMGS-US shall be excused
         from any failure to meet the applicable Performance Standards occurring
         after such  one-year  period and until such  upgrade is so installed to
         the extent such failure is caused by such  upgrade not being  installed
         within such one-year period.

(2)      IBMGS-US  shall not be  obligated  to make  available to Eckerd any new
         releases or versions of the End-User  Software.  IBMGS-US  shall not be
         obligated to make  available to Eckerd (a) any new releases or versions
         of the standard  desktop  configuration  software set forth in Schedule
         K(the "Standard Desktop  Software") (unless such new release or version
         is  provided  as  part  of  the  maintenance  support  included  in the
         applicable  vendor's  charges) or (b) new versions of the  applications
         software   included   within   the   Software,    (collectively,    the
         "Applications"; each, an "Application"). Applications identified by the
         Parties as being supported by IBMGS-US as of the Commencement  Date are
         set forth in  Schedule A. Prior to January 1, 1999,  the Parties  shall
         jointly  verify  and  update  Schedule  A  to  accurately  reflect  all
         Applications supported by IBMGS-US as of the Commencement Date.

3.10 Software Maintenance.

(1)      As part of the Designated Services,  IBMGS-US shall provide Eckerd with
         (1)  Systems  Software   maintenance  and  Systems  production  support
         services as  described in Schedule E and (2)  Applications  maintenance
         and Applications  production  support services (except for the End-User
         Applications  described in Schedule A) at the staffing levels specified
         in  Schedule  J  in  respect  of  such  Applications   maintenance  and
         Applications production support services (the "Application  Maintenance
         Services" or "AM Services"). IBMGS-US shall achieve the staffing levels
         specified  in the  Supplement  for AM FTEs (the "AM FTE  Baseline")  no
         later than March 1, 1998. The Applications  Maintenance  Services shall
         include  (a) minor  changes and  enhancements  to the  Software  not to
         exceed 176 hours of work per such change or enhancement,  (b) immediate
         preventive and corrective  maintenance to correct  defects and failures
         in the Software,  (c) changes to support the  day-to-day  operations of
         Eckerd's  business  as may be  agreed to by Eckerd  and  IBMGS-US,  (d)
         replacements of the Software or additional Software,  as IBMGS-US deems
         necessary  in order to perform  the  Services  in  accordance  with the
         Performance  Standards,  (e) handling all requests and  inquiries  with
         respect  to the  Software,  (f)  maintaining  all  Application  package
         software  (except  for  the  End-User   Software  unless  installed  by
         IBMGS-US)  at a level  supported  by the  vendor  of  such  Application
         package software,  (g) changes to the Applications  necessary to comply
         with any rule, regulation or law of any Federal, state or local agency,
         (h) installation of new releases and/or versions of  Applications,  and
         (i)   necessary   application-related    inquiries.   The   Application
         Maintenance Services shall not be credited towards or attributed to any
         AD FTE calculations or AD FTE Baselines.

(2)      After  the  Commencement  Date  and  upon  agreement  of  the  Parties,
         Application Maintenance Services for software packages which either are
         or become  Applications  will be provided by the  IBMGS-US AM staff and
         applied against the AM FTE Baseline.

(3)      In the event that  maintenance  support for Software is provided by the
         vendor of such  Software and Eckerd  desires to  terminate  such vendor
         support,  IBMGS-US  will provide to Eckerd a credit in the amount equal
         to the amounts paid by IBMGS-US for such vendor maintenance support.

(4)      During the Term and by giving IBMGS-US six months prior notice,  Eckerd
         may,  at its  option,  from  time to  time,  decrease  the  Application
         Maintenance  FTE Baseline to no less than 31 AM FTES.  Each time Eckerd
         elects to  exercise  this  option (i) the  Parties  shall  review  such
         reduction  and identify the areas to be affected,  (ii)  IBMGS-US  will
         identify  the  level of  impact in each of the  affected  areas,  (iii)
         IBMGS-US  shall be  excused  from any  failure  to meet the  applicable
         Performance  Standards occurring after such decrease is implemented and
         until the Parties  revise such  Performance  Standards  to reflect such
         reduction to the extent such failure is caused by such  reduction,  and
         (iv) IBMGS-US  shall provide to Eckerd an RRC in an amount equal to the
         AM FTE ARC Rate multiplied by the number of AM FTEs reduced.

3.11 Consolidation, Installation and Relocation.

Subject  to  Section  3.02,  upon  reasonable  notice to  Eckerd,  IBMGS-US  may
consolidate,  install and/or relocate  equipment in the Eckerd Service Locations
as IBMGS-US deems  necessary in order to perform the Services in accordance with
the Performance Standards;  provided,  however, that (1) any such consolidation,
installation  and  relocation  shall  not (a)  cause a  disruption  of  Eckerd's
information  technology operations and capabilities,  or business or (b) degrade
the Performance Standards or the integrity of the Client/Server  Environment for
which IBMGS-US is responsible  and (2) IBMGS-US  abides by the security,  safety
and facility  rules and  regulations,  or  obligations  in effect at such Eckerd
Service  Locations at the time of any such  consolidation,  installation  and/or
relocation.

3.12 Systems Management.

As part of the Designated  Services,  IBMGS-US shall be responsible  for (1) the
management  services  described in Schedule E in respect of the Software and the
Machines  (collectively,  the  "Systems")  and (2) creating and  maintaining  an
inventory  and  configuration  diagram  of the   VSAT  Data  Network  equipment,
including  satellite  dishes,   communications  controllers,  and  multiplexors.
IBMGS-US  shall provide to Eckerd (a) once every  three-month  period during the
Term  and  (b)  upon  revision  of such  diagram  a copy  of the  inventory  and
configuration diagram of the VSAT Data Network.

3.13 Help Desk.

As part of the  Designated  Services,  IBMGS-US  shall staff and maintain at the
Corporate  Campus a help desk  dedicated  to Eckerd to provide  store  technical
support of a  "non-procedural"  nature  (e.g.,  Level 2 Support as  described in
Schedule E) to all End-Users in accordance  with Schedule E (the  "IBMGS-US Help
Desk")  and to assist all  End-Users  in  determining,  tracking  and  resolving
questions regarding the Systems,  Systems status and changes to the Systems (the
"Help Desk  Services").  In the event Eckerd  requests  IBMGS-US to relocate the
IBMGS-US  Help Desk,  the costs  associated  with such  relocation  shall be the
responsibility of Eckerd,  unless otherwise agreed by the Parties.  In the event
IBMGS-US,  upon Eckerd's prior  approval,  decides to relocate the IBMGS-US Help
Desk, the costs associated with such relocation shall be the  responsibility  of
IBMGS-US,  unless  otherwise  agreed by the Parties.  IBMGS-US  shall provide to
Eckerd,  once every 30 days after the  Commencement  Date,  a report of all Help
Desk Services provided during the preceding 30-day period.

3.14 VSAT Data Network.

(1)      As part of the Designated  Services and in accordance with Exhibit 1 to
         Schedule E, IBMGS-US shall design, implement,  manage, and maintain all
         the  Machines,   associated  attachments,   features  and  accessories,
         Software,  lines and cabling,  including (i) lines,  (ii) interface and
         transmission equipment, and (iii) satellite or circuit capacity used to
         connect and  transmit  data between the  Lexington  Data Center and the
         Service  Locations  listed  in  Schedule  I  which  are  identified  as
         requiring VSAT Data Network connectivity (the "VSAT Data Network").

(2)      Upon  Eckerd's   approval,   IBMGS-US   shall  arrange  for  or  obtain
         replacements, upgrades or additions for the VSAT Data Network. All such
         replacements,  upgrades or  additions  (other than those  replacements,
         upgrades or additions  resulting  from  maintenance  by IBMGS-US in the
         course of normal operations pursuant to this Agreement),  together with
         any other changes to the VSAT Data Network  requested by Eckerd,  shall
         be deemed New Services in  accordance  with Section  6.01. In the event
         that (i) IBMGS-US  makes such a request in order to continue to provide
         the Services in accordance  with the Performance  Standards,  (ii) such
         request is the  result of a change in the amount or method of  delivery
         of the Services,  and (iii) Eckerd  withholds  its  approval,  IBMGS-US
         shall be excused  from any failure to meet the  applicable  Performance
         Standards  occurring  after  Eckerd's  disapproval  to the extent  such
         failure is caused by such  replacement,  upgrade or addition  not being
         implemented as requested by IBMGS-US.

(3)      Consents  with  respect  to any  facilities  owned or  leased by Eckerd
         necessary to install the VSAT Data Network equipment required to effect
         connectivity shall be Eckerd Consents and shall be obtained by Eckerd.

(4)      As part of the  Designated  Services,  IBMGS-US shall provide to Eckerd
         the network control  services  described in Schedule E for the Machines
         attached to the host environment and the VSAT Data Network.

(5)      Eckerd  may, at any time after the  Commencement  Date and from time to
         time, elect to assume  responsibility  for a task provided or supported
         by the VSAT Data Network. If as a result of the assumption of such task
         the  number  of  IBMGS-US  FTEs at the  Corporate  Campus  required  by
         IBMGS-US to perform the Services is reduced, IBMGS-US will, at Eckerd's
         option,  either (a) provide to Eckerd an  additional  number of AM FTEs
         with  salaries and benefits  equivalent to the cost of the salaries and
         benefits  of the FTEs so  reduced  and apply  such  additional  AM FTEs
         against  the  Application  Maintenance  FTE  Baseline or (b) provide to
         Eckerd an RRC for such reduced FTEs equal to the cost of such  salaries
         and  benefits  and  Eckerd  shall  be  responsible  for any  reasonable
         out-of-pocket expenses actually incurred by IBMGS-US in connection with
         the transfer or  relocation  of any full time  employees for which such
         RRC is provided;  provided,  however, that such actual expenses for all
         such full time  employees  reduced in connection  with any single event
         giving  rise to a reduction  in the number of such full time  employees
         shall not exceed, on average, $36,000 per full time employee.

(6)      Eckerd may, at any time after the Commencement Date, notify IBMGS-US of
         its desire to terminate VSAT Data Network connectivity to any Store. In
         such an event, and upon the effective date of such termination:

         (a)      IBMGS-US  shall  discontinue  VSAT Data  Network  services  in
                  respect of such Store;

         (b)      Eckerd  shall  receive  all right,  title and  interest in the
                  satellite  dish (and  related  equipment)  at such Store on an
                  "As-Is",  "Where-Is"  basis,  after  which  Eckerd may, at its
                  option,  deinstall  or relocate any such  satellite  dish (and
                  related equipment);

         (c)      Eckerd, as prepayment  against the VSAT Termination Fee, shall
                  pay to IBMGS-US the amount set forth in the Supplement for the
                  month  during  which  the  termination  of VSAT  Data  Network
                  connectivity  for the Store is effective  (the "VSAT Per Store
                  Termination Charge");

         (d)      IBMGS-US  shall  adjust  the  monthly  prorata  portion of the
                  Annual Services Charges by $370 for such Store; and

         (e)      Eckerd assumes  responsibility  for dial backup  capability at
                  such Store.

IBMGS-US  shall not  deinstall  or  relocate  any  satellite  dish (and  related
equipment)  installed  at a Store  which is part of the  VSAT  Data  Network  at
Eckerd's  expense  unless  and  until  Eckerd  requests  IBMGS-US  to  do  so in
accordance with this Section 3.14(6).  In the event that Eckerd desires IBMGS-US
to deinstall any satellite dish (and related equipment) pursuant to this Section
3.14(6)  (i)  Eckerd  shall  provide  IBMGS-US  with a minimum  of 90 days prior
notice,  and (ii) IBMGS-US  shall invoice  Eckerd in the amount of $3,600.00 for
each such satellite dish (and related equipment) deinstalled.

3.15 Data Services.

As part of the Designated Services, IBMGS-US shall (1) provide printed output or
electronic  print  files to (a) the local  Eckerd  distribution  systems and (b)
remote sites in accordance  with Schedule E and (2) store,  maintain and provide
security  for all storage  media,  including  tapes and disk packs,  provided by
Eckerd to IBMGS-US in accordance with the Procedures Manual.

3.16 Field Support Services.

(1)      IBMGS-US  will  provide  Field  Support  Services  in  accordance  with
         Schedule  E and  Schedule  J.  Field  Support  Services  consist of (a)
         maintenance and support  services for Stores as described in Schedule E
         ("Store  System   Support   Services")  and  (b)  repair  and  exchange
         maintenance services as described in Schedule E ("Depot Services") ((a)
         and (b)  collectively,  "Field Support  Services").  Each Store Service
         Representative ("SSR") assigned to the Eckerd account will be dedicated
         solely to  providing  Services to Eckerd  under this  Agreement.  Store
         System Support Services include Store opening, renovation,  relocating,
         and closing  activities,  to the extent such  activities  are performed
         Monday  through  Friday between the hours of 8:00 AM and 5:00 PM (local
         time).  Severity one problems  which occur outside such normal  working
         hours will be  handled  in  accordance  with the  Procedures  Manual by
         on-call  personnel  without need for Eckerd's prior approval.  IBMGS-US
         will resolve all other  problems  between the hours of 8:00 AM and 5:00
         PM (local time). In the event that Eckerd requests  IBMGS-US to provide
         Store System Support Services at other than these normal working hours,
         such  activities  will  be  charged  in  accordance  with  Schedule  J.
         Reasonable travel expenses incurred outside of the SSR's normal service
         area at Eckerd's request will be invoiced to Eckerd. Such expenses will
         comply with Eckerd's  expense  guidelines or be previously  approved by
         Eckerd.  In the event Eckerd elects to use SSRs in the  performance  of
         project-related  tasks,  the  statement  of work for such  project will
         identify  the  impact  to  SSR-related  Performance  Standards  and any
         corresponding relief to be provided to IBMGS-US.

(2)      Depot  Services will be performed  Monday  through  Friday  between the
         hours of 8:00 A.M. and 5:00 P.M. (local time). The depot will repair or
         exchange  defective  parts for all Eckerd  Stores.  The charges for all
         such parts  repaired  or  exchanged  by the depot will be  invoiced  to
         Eckerd.

3.17 Office Automation.

IBMGS-US will provide support of the Standard  Desktop Software for End Users in
accordance  with  Schedule E and Schedule J. Such support  shall  consist of (a)
desktop  support for End Users at the  following  Eckerd  Service  Locations  in
Largo,  Florida:  (i) Bryan Dairy Road,  (ii)  Starkey  Road,  and (iii)  Martin
Marietta  ((i),  (ii) and  (iii)  the  "Corporate  Campus");  including  problem
determination  assistance,   problem  resolution,  and  deskside  assistance  as
required;  and (b) remote  support for mobile remote End Users which consists of
problem determination  assistance,  problem resolution,  and depot services ((a)
and  (b)  the  "OA  Services").  IBMGS-US  will  provide  OA  Services  for  the
configurations  of equipment as set forth in Schedule K (the  "Standard  Desktop
Configurations").  Any  changes  to the  number or  complexity  of the  Standard
Desktop  Configurations  must be agreed to by the Parties.  OA Services  will be
available from 7 A.M. to 7 P.M.,  Monday through  Friday,  and 8:00 A.M. to 3:00
P.M., Saturday.  OA Services will not be available on Sundays or Eckerd holidays
except as otherwise agreed to by the Parties.  Deskside  assistance is available
only for the Corporate Campus.  Eckerd shall be financially  responsible for all
parts required to effect repairs,  support for office automation  software which
is not Standard Desktop  Software,  and any IBMGS-US travel in support of mobile
remote End Users.  IBMGS-US travel in support of mobile remote End Users will be
in accordance with Eckerd expense guidelines or be previously approved by Eckerd
and shall be invoiced to Eckerd monthly.

3.18 New, Replacement or Eliminated Software.

(1)      In the event  Eckerd  wishes to add a new  application,  such  addition
         shall be  considered  a New Service and the Parties  shall agree on the
         financial   responsibilities  related  to  the  purchase  of  such  new
         application.

(2)      In the event that Eckerd wishes to replace an existing  Application  at
         any time during the Term, IBMGS-US shall perform the replacement of the
         Application.  Upon  agreement of the Parties,  the  replacement  may be
         considered a New Service.  Also in such event, the Parties shall adjust
         the Annual  Services  Charges to reflect the net difference in costs to
         IBMGS-US  (such as  changes in license  fees and  software  maintenance
         fees)  between  providing  AM  Services  in respect of the  replacement
         Application  and  providing  such  Services in respect of the  replaced
         Application.

(3)      In the event that Eckerd wishes to eliminate an Application at any time
         during the Term,  IBMGS-US  shall  eliminate the  Application.  In such
         event,  the Parties shall adjust the Annual Services Charges to reflect
         the  reduction in costs to IBMGS-US as a result of the  elimination  of
         such Application (such as recurring vendor charges and reductions in AM
         FTE Resources).

3.19 Consultation Services.

As part of the  Designated  Services,  IBMGS-US shall make available to Eckerd a
consultant  from the IBM Retail  Consulting  Group (a "Retail  Consultant")  who
shall participate in Eckerd's quarterly business reviews. IBMGS-US's appointment
of any Retail  Consultant  shall be subject to  Eckerd's  consent.  Subject to a
Reassignment  Waiver,  the same Retail  Consultant shall be assigned to Eckerd's
account  during the first  Contract Year and as is  practicable  after the first
Contract Year.


ARTICLE 4          APPLICATION DEVELOPMENT.

4.01 Application Development.

IBMGS-US  shall  provide  Application  Development  Services (i) as described in
Schedule E through the programming of new applications,  and additional features
or functionality to existing  Applications for which the work effort exceeds the
equivalent  of 176  hours  of  effort  for  projects  ("Application  Development
Services" or "AD Services") (the AD Services and AM Services  collectively,  the
"AD/M Services"),  (ii) through the use of the FTEs designated to perform the AD
Services (the "AD FTEs") in accordance with Schedule J.

4.02 Provision of AD FTEs.

As part of the Designated Services,  IBMGS-US shall provide to Eckerd the number
of AD FTEs  for each  Contract  Year set  forth in the  Supplement  (the "AD FTE
Baseline") and as described in Schedule J and Schedule E. On or before the tenth
business day after the end of each 90-day period during the Term, IBMGS-US shall
provide to Eckerd a report of the  quantity of AD FTEs  delivered by IBMGS-US to
Eckerd during the preceding 90-day period,  in addition to the reports described
in Schedule E.

4.03 AD FTE Consumption.

In the  event  that the total  number of AD FTEs  delivered  by  IBMGS-US  for a
Contract Year varies from the AD FTE Baseline set forth in the Supplement on the
Commencement  Date for that  Contract  Year,  (1) that portion of such  variance
which is no more than +/-10  percent from the AD FTE Baseline  shall be added to
or  subtracted  from the AD FTE Baseline for the  subsequent  Contract  Year, as
appropriate,  and the  Parties  shall  update the  Supplement  to  reflect  such
adjustment,  and (2) for that  portion  of such  variance  which  exceeds  +/-10
percent from the AD FTE  Baseline,  if any,  the Parties  shall make a financial
adjustment based on the ARC or the RRC in respect of AD FTEs, as appropriate, in
effect for such Contract Year, provided,  however, that the RRC for any variance
exceeding 10 percent  below the AD FTE Baseline  shall be calculated at the base
rate for AD FTEs set forth in the  Supplement  (the "AD FTE Base Rate").  In the
event  the  number of AD FTEs  that  IBMGS-US  estimates  will be  necessary  to
complete an Eckerd  project  which is the subject of a New  Services  Work Order
increases by more than 10 percent  between the completion of the internal design
and implementation  phases,  except as attributable to approved changes or other
actions of Eckerd,  any AD FTEs over 110 percent of such  estimate  shall not be
charged to the AD FTE Baseline for the Contract  Year in which such AD FTEs were
provided.

4.04 Additional Application Development.

In the event Eckerd  requests  that  IBMGS-US  provide  Application  Development
Services in addition to those included in the AD FTE Baseline,  such Application
Development  Services  shall be subject to and shall be charged to Eckerd at the
ARC in respect of AD FTEs in accordance  with Schedule J or as otherwise  agreed
to by the Parties.

4.05 Reduction to AD FTE Baseline.

No more than twice during the Term,  Eckerd may notify IBMGS-US that it foresees
a reduction in its requirements for Application  Development  Services.  Upon at
least  180  days'  notice,  IBMGS-US  shall in each case  effect  the  reduction
requested  by Eckerd  for the next  Eckerd  fiscal  year to the AD FTE  Baseline
applicable to such fiscal year. Upon the implementation of any such reduction to
the AD FTE Baseline, IBMGS-US shall credit Eckerd in its invoices for the Annual
Services  Charges  at 75 percent of the ARC rate for  additional  AD FTEs.  Upon
expiration of such Eckerd fiscal year,  the AD FTE Baseline shall be returned to
the AD FTE Baseline  specified in the  Supplement for the Contract Year in which
the fiscal year expires at no additional expense to Eckerd and shall be adjusted
proportionally to reflect the amount of time left in such Contract Year.


ARTICLE 5          PROJECTS.

5.01 Project Management.

As part of the  Designated  Services,  IBMGS-US  shall provide to Eckerd project
management  and support  services in  connection  with those  projects for which
IBMGS-US is responsible.

5.02 Project Implementation.

In the event that Eckerd  desires  IBMGS-US to implement  projects which are not
part  of the  Designated  Services,  such  projects  will be  considered  as New
Services.

5.03 Technology Refresh.

As  part  of the  Designated  Services,  IBMGS-US  shall  provide  to  Eckerd  a
technology refresh in respect of (i) 2,167 point-of-sale controllers, (ii) 1,305
ValuePoint  PCs, and (iii) 549 NCR "3355Rx" PCs. Such  technology  refresh shall
consist of the  provision  and  installation  of then current  versions,  unless
otherwise  agreed by the Parties,  of the above  hardware and  operating  System
Software. Such technology refresh does not include Applications. Eckerd shall be
responsible for any additional  associated costs. The technology refresh will be
performed  during the years 1998 through  2000.  Eckerd  shall give  IBMGS-US at
least six months prior notice of its decision to begin such  technology  refresh
and IBMGS-US  shall  complete  such  technology  refresh no later than 12 months
after such notice;  provided,  however, that Eckerd shall provide such notice no
later than January 1, 2000 and such technology refresh shall begin no later than
July 1, 2000 . Eckerd may, with notice to IBMGS-US  prior to January 1, 2000 and
in  lieu of  such  technology  refresh,  elect  to  receive  for  itself  or its
Affiliate(s)  (i) other IBM hardware and  software  products,  or (ii) other IBM
services except for year 2000 related services,  the aggregate amount of (i) and
(ii) not to exceed  $4,500,000.00 (the "Refresh  Buyout").  If Eckerd elects the
Refresh  Buyout it may use the total  amount  identified  for IBM  hardware in a
single Contract Year;  however,  no more than one-third of the amount identified
for IBM software and/or services may be used in a single Contract Year.


ARTICLE 6          NEW SERVICES.

6.01 New Services.

Eckerd may from time to time request that IBMGS-US  perform services (1) outside
the scope of the Designated  Services or (2) which require resources not covered
by the Annual Services Charges or require additional start-up expenses (the "New
Service(s)").  Upon receipt of such a request from Eckerd, IBMGS-US shall inform
Eckerd as soon as  practicable  after receipt of Eckerd's  request as to whether
IBMGS-US  desires to perform such New Service and, if so, IBMGS-US shall provide
Eckerd  with  (a)  a  written  description  of  the  work  IBMGS-US  anticipates
performing in connection  with such New Service,  (b) a schedule for  commencing
and completing the New Service, (c) IBMGS-US's  prospective charges for such New
Service (the "New Services Fees"),  (d) when  appropriate,  a description of any
Software to be developed  or modified by IBMGS-US  (each,  a "New  Application";
collectively,  the "New Applications") or hardware to be provided by IBMGS-US in
connection  with  such New  Service,  (e) when  appropriate,  the  Software  and
hardware  resources and run-time  requirements  necessary to develop and operate
any New Applications,  (f) the human resources  necessary to develop and operate
the  product  or  provide  the  services,  (g) when  appropriate,  a list of any
existing  Applications or hardware  included in or to be used in connection with
such New Service, (h) when appropriate,  acceptance test criteria and procedures
in respect of any New  Applications  or any  products  or  services,  (i) AD FTE
estimate,  if  applicable,   and  (j)  revised  hardware,   software,  data  and
application   architectures  reflecting  integration  within  the  Client/Server
Environment.  In the  event  Eckerd  elects  to have  IBMGS-US  perform  the New
Service,  Eckerd and IBMGS-US  shall  execute a work order to this  Agreement in
substantially  the form set forth in  Schedule  T (each,  a "New  Services  Work
Order").  IBMGS-US  shall  not  begin  performing  any New  Service  until a New
Services  Work Order in respect of such New Service has been  executed on behalf
of Eckerd.  (the New  Services and the  Designated  Services  collectively,  the
"Services".)

6.02 Third Party Services.

Notwithstanding any request made to IBMGS-US by Eckerd pursuant to Section 6.01,
Eckerd  shall have the right to  contract  with a third party to perform any New
Services  including  systems  operations  and  related  services  to  augment or
supplement  the  Designated  Services or to interface  with the Systems.  In the
event Eckerd  contracts with a third party to perform any New Service,  IBMGS-US
shall  cooperate  with Eckerd and any such third party to the extent  reasonably
required by Eckerd, including by providing: (1) written requirements,  standards
and policies for systems  operations so that the enhancements or developments of
such third  party may be  operated  by  IBMGS-US,  (2)  assistance  and  support
services to such third party at market prices and (3) such third party access to
the Systems and open architecture  configurations as may be reasonably  required
by the third party in connection with such New Service. Eckerd shall require any
such third party to comply with  IBMGS-US's  reasonable  requirements  regarding
operations, Data Center standards, confidentiality and security.


ARTICLE 7          PERFORMANCE STANDARDS.

7.01 Designated Performance Standards.

IBMGS-US  shall provide the  Designated  Services at the  performance  standards
described in Schedule E (collectively,  the "Designated  Performance Standards";
each, a "Designated  Performance  Standard");  provided,  however, that IBMGS-US
shall seek to provide the  Services  during each  Contract  Year at  performance
standards which reflect an improvement  over the  Performance  Standards for the
preceding Contract Year.

7.02 New Performance Standards.

IBMGS-US  shall  provide  the New  Services  at the  performance  standards  (1)
specified in the New Services Work Order or (2) otherwise  established by Eckerd
and IBMGS-US ((1) and (2) collectively,  the "New Performance Standards").  (The
Designated Performance Standards and the New Performance Standards collectively,
the "Performance Standards".)

7.03 Adjustment of Performance.

The Joint Advisory  Committee (1) shall review the Performance  Standards during
the last  quarter of every  Contract  Year,  (2) in  respect of any  Performance
Standards that require periodic  adjustment or are no longer appropriate because
of an increase, decrease or change to the Services, shall adjust the Performance
Standards  for the  subsequent  Contract  Year,  and (3) in respect of all other
Performance  Standards,  may adjust the Performance Standards for the subsequent
Contract  Year.  In addition,  either  Eckerd or IBMGS-US  may, at any time upon
notice to the other Party,  initiate  negotiations to review and, upon agreement
by the Joint  Advisory  Committee,  adjust any  Performance  Standard which such
Party in good faith believes is inappropriate at the time.

7.04 Root-Cause Analysis.

In addition to the remedies set forth in Section  26.02 in respect of IBMGS-US's
failure to provide the Services in accordance with the Performance Standards and
as part of the Designated Services,  IBMGS-US shall, at no cost to Eckerd, after
receipt  of notice  from  Eckerd in respect of  IBMGS-US's  material  failure to
provide the services in accordance with the Performance  Standards (1) perform a
root-cause  analysis to identify  the cause of such  failure,  (2) correct  such
failure,  (3) provide Eckerd with a written  report  detailing the cause of, and
procedure for correcting,  such failure,  and (4) provide Eckerd with reasonable
evidence that such failure will not reoccur.


ARTICLE 8          PROJECT TEAM.

8.01 Joint Advisory Committee.

Eckerd and  IBMGS-US  shall each  appoint up to four  members of its  management
staff,  including  the IBMGS-US  Project  Executive  and the Eckerd IS Executive
(collectively,  the "Project Executives") to serve on a joint advisory committee
(the "Joint Advisory Committee"). Eckerd shall designate one of its four members
on the Joint  Advisory  Committee to act as the  chairman of the Joint  Advisory
Committee.  The Joint Advisory Committee shall be authorized and responsible for
(1) generally overseeing the performance of this Agreement, (2) making strategic
and tactical decisions for Eckerd in respect of the establishment, budgeting and
implementation   of  Eckerd's   priorities   and  plans  for   information   and
communications  technology,  (3) making  strategic  and tactical  decisions  for
Eckerd in respect of Eckerd's  technology  direction,  (4) conducting  quarterly
reviews of the progress of the Projects,  (5)  conducting  annual reviews of (a)
the operating and strategic  plans  prepared by the Project  Executives  and (b)
performance objectives and measurements for the subsequent Contract Year and (6)
resolving disputes between Eckerd and IBMGS-US.

8.02 IBMGS-US Project Executive.

IBMGS-US shall (1) appoint an individual who from the Commencement Date shall be
in charge of implementing the Services on a full-time basis and (2) replace this
individual   when  required  or  permitted  by  this  Section  8.02  (each  such
individual,  an "IBMGS-US  Project  Executive").  IBMGS-US's  appointment of any
IBMGS-US Project Executive shall be subject to Eckerd's consent.  IBMGS-US shall
not  reassign or replace an IBMGS-US  Project  Executive  during the first three
years of his or her  assignment  as the IBMGS-US  Project  Executive  unless (a)
Eckerd  consents  to  such  reassignment  or  replacement  or (b) he or she  (i)
voluntarily  resigns  from  IBMGS-US,  (ii) is  dismissed  by  IBMGS-US  for (x)
misconduct or (y) unsatisfactory performance in respect of his or her duties and
responsibilities  to Eckerd or IBMGS-US  pursuant to this  Agreement or (iii) is
unable to work due to his or her death or disability ((a) and (b)  collectively,
the "Reassignment Waivers"; each a "Reassignment Waiver").  Except as may result
from  death or  disability  or as may be agreed to by  Eckerd,  no more than two
individuals,  including the Project Executive as of the Commencement Date, shall
serve as the IBMGS-US Project Executive during the Initial Term.

8.03 Key Employees.

The Project Staff  members who are assigned to the key  positions  identified in
Schedule U are  designated  by Eckerd and IBMGS-US as key employees and shall be
dedicated to the Eckerd account  full-time  (collectively,  the "Key Employees";
each, a "Key  Employee").  IBMGS-US's  appointment  of any Key Employee shall be
subject to Eckerd's consent. IBMGS-US shall deliver to Eckerd an updated list of
Key Employees upon the replacement or  reassignment of any Key Employee.  Except
for a replacement or  reassignment  of a Key Employee due to the occurrence of a
Reassignment Waiver, IBMGS-US shall (1) not reassign or replace any Key Employee
for three years after his or her designation as a Key Employee, (2) not reassign
or replace any Key Employee if such reassignment or replacement would materially
disrupt Eckerd's operations and (3) only replace or reassign a Key Employee upon
such notice to Eckerd as may be practicable under the  circumstances.  Except as
may result from death or disability or may be agreed to by Eckerd,  no more than
two  individuals,  including  the  Key  Employee  in  such  position  as of  the
Commencement  Date, shall serve in any position  identified in Schedule U during
the Initial Term.

8.04 IBMGS-US Project Executive Staff.

IBMGS-US shall maintain the organizational  structure in respect of the IBMGS-US
Project  Executive  staff  described  in Schedule U. Subject to Section 8.02 and
Section 8.03,  IBMGS-US  shall provide Eckerd with notice of any changes to such
staff.

8.05 Project Staff.

IBMGS-US  shall  appoint  sufficient  staff of suitable  training  and skills to
provide the Services (the "Project Staff").

8.06 Subcontractors.

IBMGS-US may subcontract  any of the Services  without  Eckerd's  consent to the
subcontractor  firms retained by IBMGS-US as of the  Commencement  Date of which
IBMGS-US has given notice to Eckerd and Eckerd hereby consents to IBMGS-US's use
of such  contractors  and  subcontractors.  IBMGS-US  shall  not  use any  other
subcontractor  firms or  individuals  for  performance of the Services at Eckerd
Service Locations after the Commencement Date without Eckerd's prior approval.

8.07 Managerial Control.

Subject  to the other  provisions  of this  Article 8  IBMGS-US  (1) shall  have
complete  managerial  control  over  its  employees  and (2)  may,  in its  sole
judgment, dismiss, replace or reassign a member of the Project Staff.

8.08 Non-Competition.

Except as approved  by Eckerd,  IBMGS-US  shall not assign an  IBMGS-US  Project
Executive or the Key Employees  identified in Schedule U as two-year  employees,
for two years from the date such IBMGS-US Project Executive or such Key Employee
was  removed  from the  Project  Staff to the  account  of any other  company or
organization  that  through  the  operation  of any of the  following  types  of
business operations:

(1)      retail drug chains similar to those operated by Eckerd;

(2)      "deep discount" drug chains;

(3)      "food/drug" combination retail chains;

(4)      Walmart or any  similar  type of  discount  chain  stores of a regional
         nature  which are  predominantly  operating in the same states in which
         the Stores are located;

(5)      any other chain  retail  organization  whose sales are  comprised of 15
         percent or more of prescription drug sales; or

(6)      mail order retail outlets of prescription  drugs is engaged in the sale
         of  prescription  drugs in any state in which the  Stores of Eckerd are
         located.


ARTICLE 9          MANAGEMENT AND CONTROL.

9.01 Procedures Manual.

By September 1, 1998 and as part of the Designated Services,  IBMGS-US shall, in
the form and scope agreed upon by Eckerd and  IBMGS-US,  deliver to Eckerd,  for
Eckerd's approval as to scope, a management  procedures manual  substantially in
the form set forth in  Schedule  W (the  "Procedures  Manual").  IBMGS-US  shall
periodically  update in  accordance  with  Schedule E and  provide to Eckerd the
Procedures  Manual to  reflect  any  changes  in the  operations  or  procedures
described therein within a reasonable time after such changes were made.

9.02 Change Control Procedures.

As part of the  Designated  Services,  IBMGS-US  shall  deliver to  Eckerd,  for
Eckerd's  approval,  a written  description  of the  change  control  procedures
substantially  in  the  form  set  forth  in  Schedule  W (the  "Change  Control
Procedures").  All  changes  to the  Systems  that  would  materially  alter the
functionality  or technical  environment of the Systems and all material changes
to  any  projects  for  which  IBMGS-US  is   responsible   (each,  a  "Change";
collectively,   "Changes"),  shall  be  made  pursuant  to  the  Change  Control
Procedures.  No Change shall be implemented  without Eckerd's approval except as
may be  necessary  on a  temporary  basis  to  maintain  the  continuity  of the
Services.  IBMGS-US  shall (1)  schedule  all  projects and Changes so as not to
unreasonably  interrupt Eckerd business  operations,  (2) prepare and deliver to
Eckerd each month a rolling  schedule  for  ongoing and planned  Changes for the
next  three-month  period,  (3)  monitor  the  status  of  Changes  against  the
applicable  schedule and (4) document and provide to Eckerd notice (which may be
given  orally  provided  that such oral notice is confirmed in writing to Eckerd
within five days) of all Changes  performed on a temporary basis to maintain the
continuity  of the Services no later than the next business day after the Change
was made.  The Change  Control  Procedures  shall be included in the  Procedures
Manual.


ARTICLE 10         ECKERD RESOURCES.

10.01    Eckerd Resources.

As of the  Commencement  Date and as part of the Designated  Services,  IBMGS-US
shall assume responsibility, including financial responsibility, upon IBMGS-US's
receipt of the applicable Consents, for managing,  administering,  operating and
maintaining  all  resources  in  respect  of the  provision  of  the  Designated
Services, except for (1) the Retained Resources defined in Section 11.06 and (2)
such other resources to be made available to IBMGS-US by Eckerd pursuant to this
Agreement for which IBMGS-US is not  identified as having such  responsibilities
(the "Eckerd Resource(s)").

10.02    Eckerd Leased Assets and Eckerd Services Contracts.

Upon receipt of the  applicable  Consents,  IBMGS-US  shall have  financial  and
operational  responsibility  during the Term for (1) the leased assets listed in
Schedule F, if any,  and such other  leased  assets that Eckerd and IBMGS-US may
agree upon during the Term (the "Eckerd Leased  Assets") and (2) the third party
services  contracts listed in Schedule F and such other services  contracts that
Eckerd and  IBMGS-US may agree upon during the Term  (collectively,  the "Eckerd
Services Contracts";  each, an "Eckerd Services  Contract").  All amounts due in
respect of the Eckerd Leased Assets or under the Eckerd Services  Contracts that
are  attributable  to  the  period  during  which  IBMGS-US  has  financial  and
operational  responsibility  for such  lease and  contract  shall be  payable by
IBMGS-US.  The  failure to make such  payments  shall be deemed a breach of this
Agreement,  unless such  failure  results from a good faith  dispute  (whereupon
IBMGS-US shall indemnify Eckerd in accordance with Section 25.02(9)).

10.03    Eckerd Third Party Software.

As of the  Commencement  Date and subject to obtaining the applicable  Consents,
Eckerd shall make the Eckerd Third Party Software  available to IBMGS-US  solely
for the purpose of providing the Services. IBMGS-US shall be responsible for (1)
managing the licenses for the Eckerd Third Party Software (a) listed In Schedule
A and Schedule B and (b) such other  licenses that Eckerd and IBMGS-US may agree
upon during the Term ((a) and (b)  collectively the "Eckerd Third Party Software
Licenses";  each, an "Eckerd Third Party  Software  License") and (2) paying all
related  expenses,  including  maintenance  fees as set forth in  Schedule A and
Schedule B for which IBMGS-US is identified as having financial  responsibility,
that are  attributable to periods after the  Commencement  Date during the Term.
IBMGS-US  shall  comply  with all  obligations  of  Eckerd,  including  those of
nondisclosure,  under any such Eckerd  Third  Party  Software  Licenses  and any
failure to do so shall be deemed a breach of this Agreement, unless such failure
results from a good faith dispute (whereupon  IBMGS-US shall indemnify Eckerd in
accordance with Section 25.02(9)).

10.04    Eckerd Data Network.

Eckerd shall  design,  implement,  manage and maintain  (including in respect of
Store moves,  relocations and closings) all the necessary  Machines,  associated
attachments,  features and  accessories,  Software,  lines and cabling up to and
including  the wall jack,  including  communication  controllers,  multiplexers,
lines and modems/DSUs in respect of network(s) which are required to connect and
transmit data between the IBMGS-US Data Center(s) and Service  Locations  listed
in Schedule I as requiring  such  connectivity,  including the LANs and WANs for
all Eckerd locations,  but not including the VSAT Data Network (the "Eckerd Data
Network").  Eckerd shall make the Eckerd Data  Network  available to IBMGS-US as
required solely for the purpose of enabling  IBMGS-US to fulfill its obligations
under this Agreement. Consents with respect to any facilities owned or leased by
Eckerd necessary to install the Eckerd Data Network equipment required to effect
connectivity  shall be Eckerd  Consents  and shall be obtained  by Eckerd.  Upon
IBMGS-US's request, solely as required to enable IBMGS-US to meet the applicable
Performance Standards, Eckerd shall arrange for or obtain replacements, upgrades
or  additions,  for the Eckerd Data  Network.  In the event that Eckerd does not
replace any Eckerd Data Network equipment used to provide  connectivity  between
the Service Locations and the Data Network, including interface and transmission
equipment,  line,  satellite or circuit  capacity  for the Data  Network  ("Data
Transmission Equipment"), IBMGS-US shall be excused from any failure to meet the
applicable  Performance  Standards  occurring after Eckerd's  failure to replace
such Data  Transmission  Equipment  to the extent such failure is caused by such
replacement, upgrade or addition not being implemented as requested by IBMGS-US.
All such replacements,  upgrades and additions,  together with any other changes
to the Eckerd Data Network, shall be the responsibility of Eckerd.

10.05    Moves, Adds and Changes.

Eckerd shall manage all moves, adds and changes in respect of Eckerd's voice and
data communications  systems.  IBMGS-US shall manage all moves, adds and changes
in respect of the VSAT Data Network.  Eckerd shall have financial and management
responsibility for Eckerd's agreements with such  telecommunications  providers.
In the event Eckerd requests IBMGS-US to relocate a satellite dish which is part
of the VSAT Data Network,  IBMGS-US shall do so and IBMGS-US will invoice Eckerd
as a New Service for the charges for such relocation.

10.06    Modification, Extension and Termination of Third Party Agreements.

To the extent permitted by the agreements in respect of the Eckerd Resources and
the Retained  Resources (to the extent any such agreements  exist) and as may be
requested  by  IBMGS-US,  Eckerd  shall  modify,  extend or  terminate  any such
agreements.  Any fees or charges imposed upon Eckerd in connection with any such
modification, extension or termination shall be paid by IBMGS-US. Each of Eckerd
and IBMGS-US shall  promptly  inform the other Party of any breach of, or misuse
or fraud in connection  with,  any such  agreement and shall  cooperate with the
other Party to prevent or stay any such breach,  misuse or fraud. IBMGS-US shall
pay all amounts due for any penalties, charges or damages (including amounts due
to a third Party as a result of  IBMGS-US's  failure to promptly  notify  Eckerd
pursuant to the preceding  sentence,  associated taxes, legal expenses and other
incidental expenses) incurred by Eckerd as a result of IBMGS-US's performance or
non-performance  of its  obligations  under this  Agreement with respect to such
agreements.

10.07    Failure to Obtain Consents or to Provide Resources.

In the event  that any  Consent  is not  obtained  with  respect  to any  Eckerd
Resources,  then,  unless and until such  Consent is  obtained in respect of any
such  Eckerd  Resources,  Eckerd and  IBMGS-US  shall use their best  efforts to
implement a suitable workaround to such Eckerd Resources.

10.08    Appointment of Agent.

To the extent  permitted by the applicable  agreements,  Eckerd hereby  appoints
IBMGS-US as its sole agent for all matters  pertaining  to the Eckerd  Resources
and, upon  IBMGS-US's  request,  shall  promptly  notify all  appropriate  third
parties of such appointment. Eckerd may revoke such agency, in whole or in part,
upon notice to IBMGS-US at any time during the Term.

10.09    Additional Agreements.

After the  Commencement  Date,  Eckerd shall not enter into any new or amend any
existing  agreements or  arrangements,  written or oral,  affecting or impacting
upon the Eckerd Leased  Assets,  if any, the Eckerd  Services  Contracts and the
Eckerd Third Party Software Licenses without IBMGS-US's consent.

10.10    Eckerd Help Desk.

No later than March 1, 1998 Eckerd will establish a help desk to provide initial
problem  determination  and  assistance  as described in Schedule E (the "Eckerd
Help Desk") which will be fully  operational  by no later than July 1, 1998. The
Eckerd  Help  Desk  will  answer  End  User  procedural  questions  and  forward
unresolved Store technical  problems to the IBMGS-US Help Desk for follow-up and
closure as further  described  in Schedule E. From March 1, 1998 to July 1, 1998
(the "Ramp Down Period") the IBMGS-US Help Desk Baseline  shall  decrease as set
forth in the Supplement.

10.11    Additional Equipment.

Eckerd  retains  the  financial   responsibility  for  additional  machines  and
equipment  (except for the  Lexington  Data Center)  which are not  specifically
identified  herein as being  the  financial  responsibility  of  IBMGS-US.  This
includes the Hewlett  Packard,  Xerox and Delphax  printers which are located in
the Data Center at 8333 Bryan Dairy Road, Largo,  Florida 33777 (the "Largo Data
Center").  Eckerd shall also be financially  responsible in the event additional
equipment or upgrades  are  necessary in order to increase the Largo Data Center
Resource  Baseline set forth in the  Supplement,  such  additional  equipment or
upgrades to be approved by Eckerd.


ARTICLE 11         ECKERD OBLIGATIONS.

11.01    Eckerd IS Executive.

During the Term, Eckerd shall maintain a designated  representative (the "Eckerd
IS  Executive")  who  shall be  authorized  to (1) act as the  primary  point of
contact  for  IBMGS-US  in dealing  with  Eckerd  with  respect to each  Party's
obligations  under this  Agreement  and (2) issue all consents or approvals  and
make all  requests  on behalf of Eckerd,  or appoint a designee to act in his or
her place.

11.02    Eckerd Facilities and Related Services.

To the extent IBMGS-US  personnel are required by this Agreement to be on Eckerd
Service  Locations,  Eckerd shall  provide to IBMGS-US,  at no cost to IBMGS-US,
such office space (and access thereto), parking, office furnishings,  janitorial
service,  utilities,  office-related  equipment other than hardware and software
and access to  duplicating  machines  (1) as is provided to  similarly  situated
Eckerd  employees at such Eckerd  Service  Location and (2) as may reasonably be
required by IBMGS-US in connection  with its  performance  of the  Services.  If
Eckerd  relocates  its current  Data  Center at 8333 Bryan  Dairy  Road,  Largo,
Florida,  Eckerd shall provide  comparable space,  facilities and resources in a
new location under the terms and conditions of this  Agreement.  In the event of
an Eckerd requested relocation, Eckerd will reimburse IBMGS-US for (i) the costs
associated  with any  relocation,  and (ii) any costs  which are in  addition to
those currently the responsibility of IBMGS-US,  including  employee  additional
commutation  expenses  if distance  traveled is greater  than two (2) miles from
Eckerd's Bryan Dairy Road facility,  which are associated  with the provision of
the Services from such location.  If IBMGS-US requires additional facility space
as a result of New Services,  the requirements and responsibility for such space
will be part of the  consideration  of the New Services.  IBMGS-US's  use of the
Eckerd Service  Locations  does not  constitute or create a leasehold  interest.
Eckerd's  obligations set forth in this Section 11.02 with respect to the Eckerd
Service Locations shall cease as of the date the Eckerd Service Locations are no
longer being used by IBMGS-US to perform the Services.

11.03    Eckerd Machines.

Eckerd  shall  make  available  to  IBMGS-US  the  Eckerd  Machines  for  use in
connection with the Services at no charge to IBMGS-US.  In the event that Eckerd
Machines through no fault of IBMGS-US are either not available to IBMGS-US or do
not perform according to the  manufacturer's  specifications,  IBMGS-US shall be
excused  from any failure to meet the  applicable  Performance  Standards to the
extent such  failure is caused by such  unavailability  or failure of the Eckerd
Machines to perform.

11.04    Application Information Requirements.

Subject to the  procedures to be agreed to by Eckerd and IBMGS-US,  Eckerd shall
designate,  and provide to IBMGS-US,  systems projects and priorities in respect
of the Services.

11.05    Voice Communication Services.

Eckerd shall be responsible for providing all voice  communications  services at
all Eckerd Service  Locations,  including  voice network  analysts and telephone
operators.  To the extent that IBMGS-US  employees  reside at an Eckerd  Service
Location  Eckerd shall provide  voice  communication  services  similar to those
provided to Eckerd  employees  at such Eckerd  Service  Locations.  In addition,
Eckerd shall provide,  maintain and update the telephony  equipment and Software
in use by the IBMGS-US Help Desk and  identified on Schedule C and Schedule A in
such a manner as required to permit  IBMGS-US to perform in accordance  with the
applicable  Performance   Standards.   Charges  for  all  voice  communications,
including those of IBMGS-US  personnel at Eckerd Service Locations in connection
with providing the Services hereunder,  will be the financial  responsibility of
Eckerd.

11.06    Retained Resources.

Eckerd  shall  be  responsible  for  (1)  providing   additions,   upgrades  and
replacements  for all (a) personal  computers,  desk top  terminals and printers
(the  "End-User  Machines")  used by Eckerd's end users (the  "End-Users"),  (b)
Standard   Desktop  Hardware  and  Standard  Desktop  Software  and  (c)  office
automation  software  which is not  Standard  Desktop  Software  (the  "End-User
Software"),  (2)  maintaining  and supporting  the End-User  Machines other than
those  End-User  Machines  listed in  Schedule  S (3)  providing  personnel  and
equipment to ensure the  physical  security of Eckerd  Service  Locations to the
same extent provided as of the Commencement Date, (4) administering user access,
password authorization and software security procedures, (5) providing all paper
forms and  supplies  required  by  End-Users'  work  station  printers as of the
Commencement  Date, (6) payment of all common carrier charges for voice services
and  local,  long  distance  and WATS (in and out)  telecommunications  services
incurred by Eckerd other than with respect to Section  3.14,  (7) payment of all
usage fees for disaster  recovery  services which Eckerd requests in addition to
those disaster  recovery  services which IBMGS-US is obligated to provide as set
forth in  Schedule  G, (8) payment of all  reasonable,  out-of-pocket  costs for
mail, messenger,  postal courier and print distribution services, (9) payment of
all reasonable,  out-of-pocket  costs associated with off-site data storage that
are not  provided  out of the  Lexington  Data  Center or such other Data Center
specified by IBMGS-US,  (10) such other Eckerd  activities  and functions as are
described in this  Agreement,  (11) providing  hardware  maintenance  for AS/400
computers and other  machines (but not End-User  Machines  listed in Schedule S)
located at the  respective  Eckerd  Distribution  Centers,  (12)  providing  and
maintaining  the glue  machines  and bursters at the Largo Data Center which are
required  by  IBMGS-US in order to perform the  Services,  (13)  providing  data
warehouse  applications,  software and hardware, and disaster recovery, (14) EDI
transaction  charges,  (15) data entry,  (16) Largo Data Center print  supplies,
(17) all  operations,  maintenance and support for Eckerd  distribution  centers
(except the Dallas Warehouse  Management System software,  the RISC Machines and
any replacement IBMGS-US Machines),  and (18) all cash registers currently under
ICL  maintenance  contracts  ((1)  through  (18)  collectively,   the  "Retained
Resources").


ARTICLE 12         SOFTWARE AND PROPRIETARY RIGHTS.

12.01    Eckerd Software.

Subject to Section  10.06  Eckerd  hereby  grants to  IBMGS-US a  non-exclusive,
non-transferable  right to use (1) the Eckerd proprietary software either listed
in Schedule A and  Schedule B or  otherwise  provided to IBMGS-US by Eckerd (the
"Eckerd  Proprietary  Software"),  (2) the software licensed or leased by Eckerd
from a third  party  which is listed in  Schedule A or  Schedule B or  otherwise
provided to IBMGS-US by Eckerd (the "Eckerd Third Party  Software")  and (3) any
related  documentation in Eckerd's  possession on or after the Commencement Date
((1), (2) and (3)  collectively,  the "Eckerd  Software")  solely to provide the
Services. Upon expiration of this Agreement or termination of this Agreement for
any  reason,  (a) the rights  granted to IBMGS-US  in this  Section  12.01 shall
immediately revert to Eckerd and (b) IBMGS-US shall (i) deliver to Eckerd, at no
cost to Eckerd except for the reimbursement to IBMGS-US of the cost of the media
containing the Eckerd Software,  a current copy of all of the Eckerd Software in
the  form in use as of the  date of such  expiration  or  termination  and  (ii)
destroy  or  erase  all  other  copies  of the  Eckerd  Software  in  IBMGS-US's
possession.

12.02    Developed Software.

Any (1) enhancement  modifications  to the Eckerd Software or (2) other software
developed by IBMGS-US upon request of Eckerd  pursuant to Article 4 ((1) and (2)
collectively,  the "Developed  Software") shall be and will remain the exclusive
property of Eckerd or its third party licensor. In consideration of the payments
made  pursuant  to  Section  17.01,  IBMGS-US  hereby  assigns  to Eckerd all of
IBMGS-US's  rights in and  interests to the  Developed  Software.  Eckerd hereby
grants to IBMGS-US a non-exclusive,  non-transferable right to use the Developed
Software  solely to provide the Services.  Upon  expiration of this Agreement or
termination of this Agreement for any reason,  the rights granted to IBMGS-US in
this Section 12.02 shall  immediately  revert to Eckerd,  and IBMGS-US shall (a)
deliver to Eckerd, at no cost to Eckerd except for the reimbursement to IBMGS-US
of the cost of the media containing such Developed  Software,  a current copy of
all such Developed Software in the form in use as of the date of such expiration
or  termination  and (b)  destroy  or erase  all other  copies of the  Developed
Software in IBMGS-US's possession.

12.03    IBMGS-US Software.

All  software  and  related  documentation  (1) (a)  owned  by  IBMGS-US  or its
Affiliates  prior  to the  Commencement  Date,  including  the  POS  Chain  Drug
Applications, or of which IBMGS-US or its Affiliates acquire ownership after the
Commencement  Date,  which  is used in  connection  with  the  Services  and (b)
developed  by  IBMGS-US  after  the  Commencement  Date  which is not  Developed
Software ((a) and (b), the "IBMGS-US Proprietary  Software") and (2) licensed or
leased from a third party by IBMGS-US  prior to or after the  Commencement  Date
which will be used in connection  with the Services (the  "IBMGS-US  Third Party
Software") ((1) and (2) collectively,  the "IBMGS-US  Software") is, or will be,
and shall remain, the exclusive property of IBMGS-US or its third-party licensor
and Eckerd shall have no rights or interests to the IBMGS-US  Software except as
described  in this  Section  12.03 and Section  22.05.  IBMGS-US  shall make the
IBMGS-US Software available to Eckerd during the Term for use in connection with
the Services at no additional cost to Eckerd other than as expressly provided in
this  Agreement.  Subject to Section 22.05 with respect to IBMGS-US  Third Party
Software,  IBMGS-US  shall  deliver to Eckerd a copy of, and hereby  grants,  or
shall  cause to be  granted,  to Eckerd a perpetual  (or,  if  perpetual  is not
commercially   available,  a  commercially   reasonable  term),   non-exclusive,
non-transferable  license to use,  and to permit a third  party to use solely in
connection  with providing  services to Eckerd the IBMGS-US Third Party Software
upon the expiration or termination of this Agreement.  Further,  upon expiration
or termination,  in respect of the IBMGS-US Proprietary Software,  IBMGS-US will
cause  such  IBMGS-US  Proprietary  Software  and  related  documentation  to be
licensed to be licensed to Eckerd, its Affiliates or a third party to use solely
in connection  with  providing  services to Eckerd at the terms,  conditions and
prices  (excluding any initial  license fee or any transfer or assignment  fees)
generally  available  to  licensees  comparable  to  Eckerd  or  its  Affiliates
consistent  with  Section  17.13,  unless  Eckerd  fails to pay  monies  owed to
IBMGS-US pursuant to this Agreement except as set forth in Section 21.03.

12.04    IBMGS-US License.

Eckerd may, in Eckerd's sole  discretion  and upon such terms and at such prices
as Eckerd and IBMGS-US may agree, grant IBMGS-US a license to use and sublicense
the Developed Software.

12.05    Changes and Upgrades to Software.

Except as may be  approved  by Eckerd,  IBMGS-US  shall not make any  changes or
modifications  to the Eckerd Software,  the IBMGS-US  Software and the Developed
Software  (collectively,  the "Software") that would alter the  functionality or
materially degrade the performance of the Software. In addition,  IBMGS-US shall
pay the cost of any  modification or enhancement  to, or  substitution  for, the
Eckerd Software, the Developed Software and any other equipment or software used
in connection with the Services  necessitated by (1) unauthorized changes to the
Eckerd  Software  or the  Developed  Software  or (2)  changes  to the  IBMGS-US
Software  (except as Eckerd may request or as may result from the  provision  of
the  Services  or  the  implementation  of  a  New  Service)  or  the  operating
environment of the IBMGS-US Software.

12.06    Access to AD/M Tools and Methodologies.

As part of the  Designated  Services,  IBMGS-US  shall  provide to the  business
analysts  retained by Eckerd during the Term access to the  Software,  including
AD/M Services tools and methodologies.


ARTICLE 13         CONSENTS.

All  consents or  approvals  necessary  to allow  IBMGS-US to use (1) the Eckerd
Leased  Assets,  if any (2) the  services  provided  under the  Eckerd  Services
Contracts, (3) the Eckerd Third Party Software to provide the Services to Eckerd
during the Term and the Termination  Assistance Period and (4) any other consent
or  approval   specifically   identified   in  this   Agreement   as  being  the
responsibility  of Eckerd (the "Eckerd  Consents") shall be obtained by IBMGS-US
and Eckerd. Eckerd shall pay any costs of obtaining the Eckerd Consents,  except
as may relate to any costs  imposed by IBM or an Affiliate or subsidiary of IBM.
All consents or approvals  necessary to allow (a) IBMGS-US to use (i) and assign
to Eckerd the Developed Software,  (ii) the IBMGS-US Software,  (iii) any assets
leased or owned by IBMGS-US,  including the IBMGS-US Machines,  that are used by
IBMGS-US to provide the Services and (iv) any third-party  services  retained by
IBMGS-US to provide the Services during the Term and the Termination  Assistance
Period and (b) Eckerd to continue  to use (w) the  Developed  Software,  (x) the
IBMGS-US  Software,  (y) any assets  leased or owned by IBMGS-US,  including the
IBMGS-US Machines, that are used by IBMGS-US to provide the Services and (z) any
third-party  services  retained by IBMGS-US  to provide  the  Services  upon the
expiration or termination  of this  Agreement  shall be obtained by IBMGS-US and
Eckerd (the "IBMGS-US Consents").  IBMGS-US shall pay any costs of obtaining the
IBMGS-US  Consents except as described in Section 22.05(5) and Section 22.05(6).
(The Eckerd Consents and the IBMGS-US Consents collectively, the "Consents").


ARTICLE 14         DATA AND REPORTS.

14.01    Ownership of Eckerd Data.

All data and information  submitted to IBMGS-US by Eckerd in connection with the
Services  (the "Eckerd  Data") is and shall  remain the property of Eckerd.  The
Eckerd  Data shall not be (1) used by  IBMGS-US  other than in  connection  with
providing the  Services,  (2)  disclosed,  sold,  assigned,  leased or otherwise
provided to third  parties by IBMGS-US or (3)  commercially  exploited  by or on
behalf of IBMGS-US, its employees or agents.

14.02    Correction of Errors.

At its own expense,  IBMGS-US shall promptly  correct any errors or inaccuracies
in the Eckerd  Data caused by  IBMGS-US.  At Eckerd's  expense,  IBMGS-US  shall
promptly correct any other errors or inaccuracies in the Eckerd Data.  Eckerd is
responsible  for (1) the accuracy and  completeness of the Eckerd Data submitted
by Eckerd to IBMGS-US  and (2) any errors in and with  respect to data  obtained
from IBMGS-US because of any inaccurate or incomplete Eckerd Data.

14.03    Return of Data.

Upon  request by Eckerd at any time,  IBMGS-US  shall (1) at  Eckerd's  expense,
promptly  return to Eckerd,  in the format and on the media requested by Eckerd,
all  Eckerd  Data  and (2)  erase  or  destroy  all  Eckerd  Data in  IBMGS-US's
possession.  Any archival tapes containing  Eckerd Data shall be used solely for
backup purposes.

14.04    Reports.

Commencing  on the  Commencement  Date and as part of the  Designated  Services,
IBMGS-US  shall  provide to Eckerd those  reports (1) prepared by IBMGS-US as of
the  Commencement  Date and the  Agreement  Date or as  reasonably  directed  by
Eckerd,  (2)  described  in  Schedule E and (3), as  otherwise  agreed to by the
Parties during the Term ((1) through (3)  collectively,  the  "Reports",  each a
"Report").  At a minimum,  the Reports shall include:  (a) a monthly performance
report  documenting  IBMGS-US's  performance  with  respect  to the  Performance
Standards,  (b) a monthly project schedule report,  (c) a monthly change control
report  setting forth a record of all Changes  performed,  (d) a monthly  report
describing  Eckerd's  utilization of resources and comparing such utilization to
the  then-applicable  resource  baseline for each resource and (e) at the end of
every six month period,  a report as to the current status of the  Client/Server
Environment  architecture,   including  architectures  for  hardware,  software,
applications and data. IBMGS-US shall provide Eckerd with such documentation and
information  as may be  requested by Eckerd from time to time in order to verify
the accuracy of the Reports.


ARTICLE 15         DATA AND SOURCE CODE TAPES.

As part of the  Designated  Services,  IBMGS-US shall make and maintain tapes in
accordance with the procedures set forth in Schedule E containing  copies of (1)
any Eckerd Data then  residing on the Systems (the "Data  Tapes") and (2) all of
the source code and related  documentation in respect of the Eckerd software and
the Developed Software as may be necessary to recreate the functionality of, and
operate,  the Eckerd Software and the Developed  Software at any time during the
term (the "Source Code  Tapes").  Upon request,  authorized  personnel of Eckerd
shall be  permitted  access to any  facilities  used to store the Data  Tapes or
Source Code Tapes during  normal  business  hours and subject to any  reasonable
security procedures or other restrictions in effect at such facilities. IBMGS-US
shall maintain  copies of the Data Tapes for at least 90 days from the date each
such Data Tape was made.


ARTICLE 16         CONTINUED PROVISION OF SERVICES.

16.01    Disaster Recovery Plan.

As part of the Designated Services,  IBMGS-US shall, in respect of the Lexington
Data Center and the Largo Data Center (except for data warehouse functions,  End
User Machines and office automation  servers) (1) implement  IBMGS-US's standard
business  recovery  services  (the  "Disaster  Recovery  Plan") as  described in
Schedule G, (2)  periodically  update and test the  operability  of the Disaster
Recovery  Plan in effect at that time,  (3) upon  Eckerd's  request,  certify to
Eckerd that the Disaster  Recovery Plan is fully operational at least once every
Contract Year, (4) immediately provide Eckerd with notice of a disaster declared
by IBMGS-US and  implement the Disaster  Recovery Plan upon the  occurrence of a
disaster at a Service Location or otherwise  affecting the provisions or receipt
of the Services (a  "Disaster"),  (5) implement the Disaster  Recovery Plan upon
receipt of a notice from  Eckerd  declaring  that a Disaster  has or is about to
occur,  (6)  consult  with  Eckerd  regarding  the  priority  to be given to the
Services  during  the  pendency  of a  Disaster  and  (7)  not be  excused  from
implementing  the Disaster  Recovery Plan as a result of a Force Majeure  Event.
IBMGS-US may, upon notice to Eckerd, modify or change the Disaster Recovery Plan
at any time-  provided,  however,  that such  change or  modification  shall not
materially adversely affect IBMGS-US's ability to restore the Services. IBMGS-US
shall  restore all critical  services as described in Schedule G (the  "Critical
Applications")  within the period specified in the Disaster Recovery Plan of the
occurrence of a Disaster. In the event the Disaster Recovery Plan is implemented
by (a) IBMGS-US  pursuant to Section  16.01(4) or (b) Eckerd pursuant to Section
16.01(5) and a Disaster did occur, IBMGS-US shall not increase its charges under
this  Agreement or charge  Eckerd usage fees in addition to the Annual  Services
Charges or ARCs other than incurred as a result of a Disaster.  In the event (i)
the Disaster Recovery Plan is implemented by Eckerd pursuant to Section 16.01(5)
despite a written  objection  from  IBMGS-US  and (ii) a Disaster did not occur,
Eckerd shall pay any direct costs  incurred by IBMGS-US in connection  with such
implementation of the Disaster Recovery Plan.

16.02    Force Majeure.

Neither Party shall be liable for any default or delay in the performance of its
obligations  under this  Agreement  (1) provided such default or delay (a) could
not have been prevented by reasonable  precautions and (b) cannot  reasonably be
circumvented by the  non-performing  Party through the use of alternate sources,
work-around  plans or other means and (2) if and to the extent  such  default or
delay is caused, directly or indirectly, by fire, flood, earthquake, elements of
nature  or  acts  of  God,  acts of  war,  terrorism,  riots,  civil  disorders,
rebellions  or  revolutions  in the United  States,  strikes,  lockouts or labor
difficulties not relating to IBMGS-US's employees,  subcontractors or agents, or
any other similar  cause beyond the  reasonable  control of such Party (each,  a
"Force  Majeure  Event").  The occurrence of a Force Majeure Event in respect of
another  customer of IBMGS-US  shall not  constitute a Force Majeure Event under
this Agreement. Upon the occurrence of a Force Majeure Event, the non-performing
Party shall be excused from any further  performance of those of its obligations
pursuant to this  Agreement  affected by the Force  Majeure Event for as long as
(a) such Force Majeure Event  continues and (b) such Party continues to use best
efforts to  recommence  performance  whenever  and to whatever  extent  possible
without  delay.  A Party so delayed  in its  performance  shall (i)  immediately
notify the other by telephone  (to be  confirmed in writing  within five days of
the inception of such delay) and (ii)  describe at a reasonable  level of detail
the circumstances  causing such delay. If any Force Majeure Event  substantially
prevents,  hinders or delays performance of the Services or prevents, hinders or
delays the performance of the Critical  Services for more than 24 hours,  Eckerd
may cease payment of the Annual Services  Charges and procure such Services from
an alternate source,  and IBMGS-US shall be liable for payment for such Services
in excess of  IBMGS-US's  charges  under this  Agreement  for up to 180 days. If
Eckerd is unable to procure the Services from an alternate source or IBMGS-US is
unable to resume the provision of the Services within 180 days of the occurrence
of a Force  Majeure  Event,  Eckerd or IBMGS-US  may  terminate  this  Agreement
without  regard to Section 22.02 as of a date specified by Eckerd in a notice of
termination to IBMGS-US.  This Section 16.02 does not limit or otherwise  affect
IBMGS-US's  obligation to provide disaster  recovery services in accordance with
Section  16.01.  In the  event of a Force  Majeure  Event,  IBMGS-US  shall  not
increase  its  charges  under  this  Agreement  or charge  Eckerd  usage fees in
addition to the Annual Services  Charges or ARCs other than incurred as a result
of a Force Majeure Event.


ARTICLE 17         PAYMENTS TO IBMGS-US.

17.01    Annual Services Charges.

In consideration of IBMGS-US providing the Designated Services, Eckerd shall pay
to  IBMGS-US  the  fees  set  forth  in the  Supplement  (the  "Annual  Services
Charges").

17.02    New Services Fees.

In  consideration of IBMGS-US  providing the New Services,  Eckerd shall pay the
New Services Fees in the manner agreed upon by Eckerd and IBMGS-US in accordance
with Section 6.01.

17.03    Additional Resource Charges and Reduced Resource Charges.

At the end of every six month period during the Term  IBMGS-US  shall review the
amount of Designated  Services used by Eckerd during the preceding six months in
connection  with the  Services  described  in Schedule J. In the event  Eckerd's
average  monthly use of such Services during such six month period (1) increased
pursuant  to  Section  3.01  above the amount  which is  included  in the Annual
Services  Charge for such  resource set forth in the  Supplement ( the "Resource
Baseline"),  Eckerd  shall pay to IBMGS-US,  in addition to the Annual  Services
Charges,  the resource  charges in the amounts  specified in the Supplement (the
"ARCs") in connection with the services set forth in Schedule J or (2) decreased
below the Resource Baselines set forth in the Supplement,  IBMGS-US shall credit
Eckerd the reduced resource  credits in the amounts  specified in the Supplement
in connection  with the Services set forth in Schedule J (the "RRCs")  except as
provided in Section 4.04.  IBMGS-US will invoice or credit  Eckerd,  as the case
may be, semiannually for the ARCs and RRCS, if any, so calculated.

17.04    Cost of Living Adjustment.

The  Annual  Services  Charges,  ARCS,  and RRCs  payable  by Eckerd  under this
Agreement include protection against inflation at a rate of 2.0 percent per year
compounded annually (the "Protection  Index"). In the event the Actual Inflation
(as  described in the formula set forth below) for any calendar year exceeds the
Protected Inflation (as described in the formula set forth below), IBMGS-US may,
once every calendar year after 1998, increase the Annual Services Charges,  ARCs
and all other charges  payable by Eckerd under this Agreement (i) by 100 percent
of the cost of living  adjustment  calculated as set forth below  ("COLA") which
results from the portion of Actual  Inflation  which  exceeds 2.0 percent and is
not more than 3.5 percent,  and (ii) by 75 percent of COLA calculation set forth
below for the portion of Actual  Inflation  which  exceeds 3.5  percent.  In the
event IBMGS-US  increases the ARC rate pursuant to this Section  17.04,  the RRC
rate shall be increased by the same  percentage.  Eckerd and IBMGS-US  shall use
the Consumer Price Index, as published by the Bureau of Labor  Statistics,  U.S.
Department of Labor,  For All Urban  Consumers,  U.S.  City Average,  All Items,
1982-84=100 ("CPI-U") for purposes of calculating the Actual Inflation.  COLA is
payable on a prospective basis, i.e.,  IBMGS-US may increase the Annual Services
Charges, ARCS, RRCs and all other charges payable by Eckerd under this Agreement
for the  subsequent  calendar  year by COLA,  if such  COLA is in  excess of the
Protection  Index. COLA shall be determined as soon as practicable after the end
of each calendar year. COLA shall be determined using the following formula:

COLA Factor = ((Actual Inflation - Protected  Inflation)/  Protected Inflation x
Inflation Sensitivity)

where:

Actual Inflation = CPI-U for the December preceding Contract Year for which COLA
is being calculated;

Protected  Inflation = the Protection  Index for the year preceding the Contract
Year for which COLA is being calculated;

Inflation Sensitivity = 85 percent,  which is the portion of the Annual Services
Charges, ARCS, and RRCs that are inflation sensitive; and

Applicable  CPI-U = CPI-U for  December  of the  Contract  Year  previous to the
Commencement Date.

For example:

To determine  the COLA monies due, in addition to the other  charges,  where the
prorated  portion  of  the  $100,000,000  ASC  for  the  applicable   period  is
$8,333,333,  and there are CPU ARCs of $80,000 due for that period and DASD RRCs
of $30,000 due for that same period, and the Actual Inflation for the applicable
Contract Year is 2.5 percent, the calculation will be as follows-.

COLA     (ASC + ARCs - RRCS) x.85 x.005

COLA     ($8,333,333 + $80,000 - $30, 000 ) x .85 x .005

COLA     $8,383,333 x .85 x .005

COLA     $7,125,833 x .005

COLA     $35,629.17

In the  event the  Bureau of Labor  Statistics  ceases  publishing  the CPI-U or
substantially  changes  its  content  and  format,  Eckerd  and  IBMGS-US  shall
substitute another  comparable index published at least annually.  If the Bureau
of Labor  Statistics  redefines  the base year for the  CPI-U  from  1982-84  to
another year,  Eckerd and IBMGS-US shall  continue to use such CPI-U,  but shall
convert  the  Protection  Index  to  reflect  the  new  base  year by  using  an
appropriate conversion formula.

17.05    Significant Business Changes and New Entities.

If, during the Term, the number of the Stores  increases by more than 25 percent
(not  including  (i) store  openings,  (ii) store  relocations,  and (iii) store
closings  as set  forth in the  Supplement  ((i),  (ii) and  (iii)  collectively
"Planned Store  Activity") due to an acquisition by Eckerd or its Affiliates and
such  acquisition  is  expected  to  cause a  sustained  increase  in  computing
resources  required by Eckerd,  any  increase in  computing  resources  shall be
governed by this Section 17.05. Eckerd shall notify IBMGS-US of any event or set
of events  which shall  increase  the number of the Stores.  Eckerd  shall share
information with IBMGS-US to allow IBMGS-US to determine which resources will be
required  to  meet  Eckerd's  needs,  IBMGS-US  shall  (1)  formulate  a plan to
accommodate Eckerd's needs, without a disruption in service to Eckerd, in a cost
effective  manner and (2) submit such plan,  including  any  adjustments  to the
Annual Services Charges, Resource Baselines, ARCs and RRCs to Eckerd for review.
Upon Eckerd's  acceptance of such plan,  IBMGS-US may adjust the Annual Services
Charges,  Resource  Baselines,  ARCs and RRCS. In the event that Eckerd does not
accept  IBMGS-US's plan and the Parties are unable to agree on the amount of the
increase required by this Section 17.05, such disagreement shall be submitted to
the Joint  Advisory  Committee.  Eckerd  shall not be  obligated  to obtain  the
Services from IBMGS-US with respect to any acquisition.

17.06    Extraordinary Decrease in Eckerd Work.

If,  during  the  Term,  the  scope  and  nature  of  Eckerd's  business  change
significantly,  including  (1)  changes to the  Eckerd  Service  Locations,  (2)
changes  to  Eckerd's  products  or  markets,   (3)  mergers,   acquisitions  or
divestitures,  (4) changes in the method of service  delivery (other than use of
another vendor,  Eckerd or its Affiliates) or (5) changes in market  priorities,
and Eckerd  expects such changes to result in a decrease of computing  resources
by more than 25 percent of the  computing  Resource  Baselines  in effect on the
Commencement  Date,  such  changes in the  Services  shall be  governed  by this
Section  17.06.  Eckerd  shall  provide  IBMGS-US  with  a  report  of  any  new
acquisitions or  divestitures,  which shall identify the changes that need to be
made  to  accommodate  the  extraordinary  decrease  of  resource  requirements.
IBMGS-US  shall  reduce  the  Annual  Services  Charges  by the  amount by which
IBMGS-US's  actual and direct expenses for performing the Services are decreased
as a result of such change.  IBMGS-US shall make the  applicable  adjustments to
the  Annual  Services  Charges,  resource  baselines  and RRCs  pursuant  to the
Supplement  to reflect the  decrease.  Upon  request by Eckerd,  IBMGS-US  shall
provide  to Eckerd a written  certificate,  signed by an  officer  of  IBMGS-US,
certifying  that the  methodology  for calculating the adjustments to the Annual
Services Charges referenced in this Section 17.06 conform to accepted accounting
practices and reflect IBMGS-US's actual changes in the operating environment. If
after  receipt of such  certification,  Eckerd in good faith  believes that such
certification  is inaccurate,  Eckerd may, at its option and expense,  employ an
accredited and independent auditor to determine whether IBMGS-US's certification
is accurate.

17.07    Payment Schedule.

The Annual  Services  Charges and the New Service Fees  (together with the ARCs,
collectively,  the "Fees") and any other fees or charges owed by Eckerd shall be
due and payable within 10 days of the end of the calendar month during which the
Services  relating to such charges were  performed;  provided that ARCs and RRCs
will be calculated and billed  semiannually in accordance with Section 17.03 and
shall be due and  payable  within 10 days  after the end of the  calendar  month
during which the invoice was  received.  Each invoice  shall include one or more
reports  describing  (1)  Eckerd's  use of  IBMGS-US  resources  in the units of
measurement  and the dollar amounts used to calculate the invoice amount and (2)
such other  information as may be reasonably  necessary to ascertain  IBMGS-US's
compliance with the Performance  Standards as applicable.  Eckerd shall pay each
invoice by check to IBMGS-US,  Southern Area Customer  Support Office,  P.O. Box
105063,  Atlanta,  Georgia 30348. Any Fees not paid when due shall bear interest
at the rate of one  percent  per month,  but in no event to exceed  the  highest
lawful rate of interest,  calculated from the date such amount was due until the
date payment is received by IBMGS-US.

17.08    Taxes.

(1) IBMGS-US is  responsible  for paying any  applicable  sales,  use,  personal
property or other taxes based upon or measured by  IBMGS-US's  cost in acquiring
or  providing  equipment,  materials,  supplies  services  furnished  or used by
IBMGS-US in  performing  or  furnishing  the  Services,  including  all personal
property,  use and sales taxes,  if any,  due on IBMGS-US  Machines and IBMGS-US
Software. (2) Except as provided in this Section 17.08(3),  Eckerd shall pay the
amount  of any  sales,  excise  or use tax that is  levied  or  assessed  on the
provision  of the  Services by IBMGS-US  to Eckerd or on  IBMGS-US's  charges to
Eckerd under this  Agreement,  however  levied or  assessed.  (3) In the event a
sales,  excise or services  tax is levied or assessed  on the  provision  of the
Services by IBMGS-US to Eckerd in Florida as a result of tax  legislation not in
effect on the Commencement  Date,  IBMGS-US and Eckerd shall each pay 50 percent
of such tax. (4) Eckerd shall pay all personal  property or use taxes in respect
of the Eckerd Machines,  the End-User Machines and for the payment of any excise
taxes for Eckerd Data Network lines and circuits. (5) Each Party shall bear sole
responsibility for all taxes, assessments and other real property-related claims
on its owned or leased real property.  (6) Eckerd and IBMGS-US  shall  cooperate
with each other to more  accurately  determine each Party's tax liability and to
minimize  such  liability  to the  extent  legally  permissible.  (7) Eckerd and
IBMGS-US shall provide and make available to the other any resale  certificates,
information  regarding  out-of-state  sales or use of  equipment,  materials  or
services,  and other exemption  certificates or information reasonably requested
by either  Party.  (8) Eckerd and IBMGS-US  shall work together to segregate the
Fees into separate  payment  streams for (a) taxable  Services,  (b)  nontaxable
Services,  (c)  which a sales,  use or  similar  tax has  already  been  paid by
IBMGS-US and (d) which IBMGS-US functions merely as a paying agent for Eckerd in
receiving  goods,   supplies  or  services   (including  leasing  and  licensing
arrangements)  that otherwise are nontaxable or have  previously been subject to
tax.

17.09    Expenses.

Except as specifically set forth in this Agreement,  any expenses related to the
Designated Services are included in the Annual Services Charges and shall not be
reimbursed  by Eckerd  unless  agreed to by Eckerd.  If agreed upon  pursuant to
Section  6.01,  Eckerd shall pay or reimburse  IBMGS-US for the  reasonable  and
actual  documented  expenses,  including  travel  and  travel-related  expenses,
incurred by IBMGS-US in  connection  with its  performance  of the New Services;
provided,  however,  that such expenses are incurred in accordance with Eckerd's
then-current policy for such expenses.

17.10    Proration.

All  periodic  fees or charges  under this  Agreement  are to be  computed  on a
calendar month basis and will be prorated for any partial month.

17.11    Rights of Set-Off.

With respect to any amount which Eckerd and IBMGS-US in good faith determine (1)
should be reimbursed to Eckerd or (2) is otherwise payable to Eckerd by IBMGS-US
pursuant to this Agreement, Eckerd may upon notice to IBMGS-US deduct the entire
amount owed against the charges  otherwise  payable or expenses owed to IBMGS-US
under this Agreement until such time as the entire amount  determined to be owed
to Eckerd has been paid.  Eckerd shall be relieved of its obligation to make any
payments to IBMGS-US  until such time as all such amounts have been  credited to
Eckerd  (unless  Eckerd has requested that the credit be issued in more than one
invoice and IBMGS-US is issuing such credits according to Eckerd's request).

17.12    Refundable Items.

In the event  Eckerd has  prepaid  amounts  under a lease  governing  the Eckerd
Leased  Assets,  Eckerd  Services  Contract or an Eckerd  Third  Party  Software
License,  IBMGS-US shall refund to Eckerd, upon notice from Eckerd, that portion
of such  prepaid  expense  which is  attributable  to  periods  on and after the
Commencement  Date. In the event IBMGS-US  receives  during the Term any refund,
credit or other rebate in respect of a lease  governing an Eckerd  Leased Asset,
an Eckerd Services  Contract or an Eckerd Third Party Software  License which is
attributable  to a period prior to the  Commencement  Date  (including  deposits
under leases governing the Eckerd Leased Assets),  IBMGS-US will promptly notify
Eckerd of such  refund,  credit or rebate and shall  promptly  pay to Eckerd the
full  amount of such  refund,  credit or rebate.  In the event  Eckerd  receives
during  the Term any  refund,  credit  or other  rebate  in  respect  of a lease
governing an Eckerd Leased Asset, Eckerd Services Contract or Eckerd Third Party
Software License which is attributable to a period after the Commencement  Date,
Eckerd shall promptly notify IBMGS-US of such refund, credit or rebate and shall
promptly pay to IBMGS-US the full amount of such refund, credit or rebate.

17.13    Purchasing-Consideration.

(1)      In the event that Eckerd desires to purchase IBM products Eckerd may do
         so to the extent and level at which  Eckerd is eligible  in  accordance
         with the IBM  Volume  Offering  ("IVO")  in  effect at the time of such
         purchase.

(2)      IBMGS-US's  charges to Eckerd for any project which is the subject of a
         New  Services  Work  Order  delivered  by  IBMGS-US,  which is the sole
         Services  provider for  International  Business  Machines  Corporation,
         shall be at least  as low as the  lowest  charges  by  IBMGS-US  or its
         Affiliates for like or similar services to any of Eckerd's  competitors
         (as  described in Section  8.08 of this  Agreement)  receiving  like or
         similar   services  at  similar   volumes  of  service  during  similar
         timeframes.

17.14    Lexington Baseline Adjustment.

(1)      In the event that Eckerd in good faith  believes from time to time that
         the actual  amount of  Resource  Units for the  Lexington  Data  Center
         mainframe  Services (CPU Application Hours, DASD, and Tape Mounts) will
         vary from the  Baseline(s),  Eckerd may elect to adjust the Baseline(s)
         for the  remainder  of the Term to reflect such  variance.  The Parties
         shall meet at least once each Contract Year to determine whether Eckerd
         will make any such  election.  In the event that Eckerd  shall make any
         such  election,  (a)  Eckerd  shall  provide  notice  of such  election
         (including  the  level  to  which  the  subject  Baseline(s)  are to be
         adjusted  (each a "Lexington  Adjusted  Baseline"))  to  IBMGS-US,  (b)
         IBMGS-US will calculate the adjustment to the Annual Services  Charges,
         ARC Rate and RRC Rate affected by such  adjustment to the  Baseline(s),
         and notify Eckerd of such  adjustments  and (c) upon Eckerd's  approval
         IBMGS-US shall amend the  Supplement to reflect the Lexington  Adjusted
         Baselines and adjustment to the applicable Fees.  Lexington Data Center
         Baselines  may  not be  adjusted  to a level  which  is  lower  than 80
         percent,  in each case, of the Baselines in effect on the  Commencement
         Date pursuant to this Section 17.14(1). Any adjustment to Baselines and
         the Fees  pursuant  to this  Section  17.14 shall be  effective  on the
         anniversary of the  Commencement  Date and shall remain in effect for a
         minimum of twelve (12) months.

(2)      During the  period  between  January  1, 1998 and June 30,  1999 and in
         respect of IBMGS-US's performance of Year 2000 work, if any, whether or
         not performed under this Agreement (a) IBMGS-US will track the Resource
         Units for the Lexington Data Center mainframe Services (CPU Application
         Hours,  DASD, and Tape Mounts)  utilized by IBMGS-US in the performance
         of Year 2000 work (the  "Lexington  Y2K  Resources");  (b) in the event
         that  Eckerd's  average use of Lexington  Y2K  Resources  (i) increased
         above the amount  which is included  in the  applicable  Lexington  Y2K
         Resources set forth in the Supplement, Eckerd shall pay to IBMGS-US, in
         addition  to the  Annual  Services  Charge,  ARCs as set  forth  in the
         Supplement, or (ii) decreased below the amount which is included in the
         applicable  Lexington  Y2K  Resources  set  forth  in  the  Supplement,
         IBMGS-US  shall  credit  Eckerd RRCs in  accordance  with this  Section
         17.14(2),  and (c) beginning July 1, 1998 and semi-annually  thereafter
         until June 30, 1999 IBMGS-US  will  calculate the quantity of Lexington
         Y2K Resources  expended and invoice Eckerd for the net of ARCs and RRCs
         for such period for Lexington Y2K Resources;  provided,  however,  that
         both RRCs and ARCs shall be  calculated at the ARC rate for the purpose
         of determining the amounts due, if any, under this Section 17.14(2).

(3)      Eckerd  may, at any time after the  Commencement  Date and from time to
         time elect to migrate certain mainframe application processing or other
         data center task being  provided by IBMGS-US  from the  Lexington  Data
         Center  to one or  more  Eckerd  or  Eckerd  Affiliate  data  center(s)
         designated by Eckerd  representing,  in aggregate,  up to 20 percent of
         the  aggregate CPU Monthly  Baseline for the Lexington  Data Center set
         forth in the Supplement on the  Commencement  Date. If Eckerd so elects
         IBMGS-US will calculate the adjustment to the Annual Services  Charges,
         ARC and RRC affected by such  adjustment to the  Lexington  Data Center
         Baseline(s),  and  notify  Eckerd  of such  adjustments  and  (c)  upon
         Eckerd's  approval  amend  the  Supplement  to  reflect  the  Lexington
         Adjusted Baselines and adjustment to the applicable Fees.

17.15    IBM Help Desk Baseline Adjustment.

In the event that Eckerd in good faith  believes  the actual  amount of IBM Help
Desk  Services  Call Minutes  will  increase or decrease by more than 10 percent
above or below the applicable Resource Baseline, Eckerd may elect to adjust such
Resource  Baseline for the  remainder  of the Term to reflect  such  increase or
decrease.  If Eckerd so elects (a) Eckerd shall provide  notice of such election
(including the level to which the Resource Baseline is to be adjusted (the "Help
Desk  Adjusted  Baseline")  to  IBMGS-US no later than 90 days prior to the date
upon which such Help Desk  Adjusted  Baseline is to be  effective,  (b) IBMGS-US
will calculate the  adjustment to the Annual  Services  Charges,  ARCS, and RRCs
affected by such  adjustment to the  applicable  Resource  Baseline,  and notify
Eckerd of such  adjustment to the Annual Services  Charges,  ARCS, and RRCS, and
(c) upon Eckerd's  approval and a six (6) month  minimum  commitment to the Help
Desk Adjusted Baseline the Parties will amend the Supplement to reflect the Help
Desk Adjusted  Baseline and  corresponding  adjustment to the charges.  The Help
Desk Resource  Baseline may not be adjusted to a level which is lower than fifty
percent  (50  percent)  of the Help  Desk  Resource  Baseline  in  effect on the
Commencement  Date. Any adjustment to Resource  Baselines and IBMGS-US's charges
to Eckerd which are  implemented  pursuant to this Section 17.15 shall remain in
effect for a minimum of six (6) months.

17.16    Field Services Baseline Adjustment.

In the event that Eckerd  desires from time to time that IBMGS-US  reduce by one
or more the number of SSRs per region  required to provide Store Systems Support
Services in  accordance  with this  Agreement  (i) Eckerd shall  provide  notice
thereof to IBMGS-US,  (ii)  IBMGS-US will reduce the number of SSRs as requested
by Eckerd; provided,  however, that the number of SSR's may not be adjusted to a
level  which is lower than 80 percent  of the  number of SSR's  providing  Store
Systems  Support  Services as of the  Commencement  Date,  (iii)  IBMGS-US  will
calculate  the  adjustment  to the  Annual  Services  Charges  based  upon  such
reduction and notify Eckerd of such adjustment to the Annual  Services  Charges,
(iv) upon Eckerd's  approval  amend the  Supplement to reflect the adjustment to
the  charges,  and (v)  IBMGS-US  shall be excused  from any failure to meet the
applicable  Performance  Standards  occurring after such reduction to the extent
such failure is caused by such reduction in the number of SSRs until the Parties
thereafter  adjust the  applicable  Performance  Standards  in  accordance  with
Section 7.03(2).

17.17    Technology Improvements.

Eckerd and IBMGS-US  anticipate that during the Term the information  technology
costs as a  percentage  of the overall  costs of  providing  the  Services  will
decrease. Accordingly,  significant information technology price and performance
improvements  which  occur  during  the Term may  result in  greater  savings in
respect of the total costs of providing the Services  than  IBMGS-US  assumed in
establishing  the Annual Services  Charges,  ARCs and RRCS. On June 30, 2000, or
such other date as the Parties may agree,  IBMGS-US  shall review with the Joint
Advisory  Committee actual  information  technology  trends during the Term (the
"Technology Review"). In the event Eckerd believes that significant  information
technology  improvements  have occurred  during the Term which have not been (1)
adopted by IBMGS-US on behalf of Eckerd and (2) reflected in IBMGS-US's charges,
(a) Eckerd may notify  IBMGS-US of such belief within 60 days of the date of the
Technology  Review and (b) upon receipt of such notice by  IBMGS-US,  Eckerd and
IBMGS-US shall  negotiate and implement an  appropriate  reduction to the Annual
Services  Charges,  ARCs and RRCS. In the event Eckerd and IBMGS-US cannot agree
on the  amount  of any such  reduction  within  30 days of the date of  Eckerd's
notice  pursuant to this Section  17.17,  Eckerd may terminate this Agreement no
later than April 1, 2001 upon (i) at least 180 days' notice to IBMGS-US and (ii)
payment of the Termination Fee set forth in Section 23.02.


ARTICLE 18         AUDITS.

18.01    Audit of Processing.

Upon  reasonable  notice from Eckerd,  IBMGS-US  shall provide such auditors and
inspectors as Eckerd or any Federal or state regulatory authority may, from time
to time, designate with access to the IBMGS-US Service Locations and the Systems
and for the purpose of performing, at Eckerd's expense, audits or inspections of
the  business  of Eckerd  (including  IBMGS-US's  operations  in  respect of the
Services). IBMGS-US shall provide to such auditors and inspectors any assistance
that they  reasonably  require.  If any audit by a regulatory  authority  having
jurisdiction  over Eckerd or IBMGS-US results in IBMGS-US being notified that it
is not in compliance with any rule,  regulation or law of any Federal,  state or
local agency relating to IBMGS-US's  provision of the Services,  IBMGS-US shall,
within the period of time specified by such  regulatory  authority,  comply with
such  regulatory  authority.  If a change  is  required  by a law or  regulation
relating to Eckerd's  business,  such change  shall be made at Eckerd's  expense
except to the extent such change is included in the Maintenance  services.  If a
change is required by a law or regulation relating to IBMGS-US's business,  such
change shall be made at IBMGS-US's expense.

18.02    Audit of Charges.

Upon at least 24 hours'  notice  from  Eckerd and no more than twice  during any
calendar  year IBMGS-US  shall provide  Eckerd with access to all of the records
necessary  to support  its  charges to  Eckerd.  If, as a result of such  audit,
Eckerd  determines  that IBMGS-US has  overcharged  Eckerd,  Eckerd shall notify
IBMGS-US of the amount of such  overcharge  and IBMGS-US  shall  promptly pay to
Eckerd the amount of the  overcharge,  plus  interest at the rate of one percent
per  month,  but in no event to exceed  the  highest  lawful  rate of  interest,
calculated from the date of receipt by IBMGS-US of the overcharged  amount until
the date of payment to Eckerd. In the event any such audit reveals an overcharge
to Eckerd by  IBMGS-US of five  percent or more of a  particular  fee  category,
IBMGS-US shall reimburse Eckerd for the costs of such audit.

18.03    IBMGS-US Audit.

If,  as a  result  of an  internal  audit of its  charges  to  Eckerd,  IBMGS-US
determines that it has undercharged Eckerd,  IBMGS-US may provide Eckerd with an
invoice in respect of such amount.  Any such  invoice  shall  evidence  that the
amount was not  charged to Eckerd  previously,  Eckerd  shall  promptly  pay the
amount of the  undercharge,  plus interest at the rate of one percent per month,
but in no event to exceed the lawful rate of interest,  calculated from the date
of the invoice which should have included the undercharged amount until the date
of payment by Eckerd;  provided,  however, that Eckerd shall not be obligated to
pay any such charges related to the Services  provided more than 180 days before
the date of the invoice for such charges.


ARTICLE 19         CONFIDENTIALITY.

19.01    Confidential Information.

(1) All confidential or proprietary information and documentation (including the
terms of this  Agreement,  the Eckerd Data, the Eckerd  Software,  the Developed
Software,   the  Eckerd  Third  Party   Software  and  the  IBMGS-US   Software)
("Confidential  Information") relating to a Party shall be held in confidence by
the other Party to the same extent and in at least the same manner as such Party
protects its own  confidential or proprietary  information.  Neither Party shall
disclose,  publish,  release, transfer or other-wise make available Confidential
Information of the other Party in any form to, or for the use or benefit of, any
person or entity without the other Party's consent.  Each Party shall,  however,
be  permitted to disclose  relevant  aspects of the other  Party's  Confidential
Information  to its officers,  agents and employees and to the officers,  agents
and employees of its corporate  Affiliates or subsidiaries  solely to the extent
that such  disclosure is reasonably  necessary for the performance of its duties
and obligations under this Agreement;  provided,  however, that such Party shall
take all  reasonable  measures to ensure that  Confidential  Information  of the
other Party is not disclosed or duplicated in contravention of the provisions of
this Agreement by such officers,  agents and employees.  (2) The  obligations in
this Section 19.01 shall not restrict any disclosure by either Party pursuant to
any  applicable  law,  including the  Securities  Act of 1933 and the Securities
Exchange  Act of  1934,  both as  amended,  or the  SEC  rules  and  regulations
promulgated thereunder,  or pursuant to any court or government agency (provided
that the disclosing Party shall give prompt notice to the  non-disclosing  Party
of such  order) and shall not apply with  respect  to  information  which (a) is
developed  by  the  other  Party  without   violating  the  disclosing   Party's
proprietary  rights,  (b) is or  becomes  publicly  known  (other  than  through
unauthorized disclosure), (c) is disclosed by the owner of such information to a
third party free of any obligation of  confidentiality,  (d) is already known by
such Party without an obligation of confidentiality  other than pursuant to this
Agreement or any confidentiality agreements entered into before the Commencement
Date between  Eckerd and IBMGS-US or (e) is rightfully  received by a Party free
of any  obligation  of  confidentiality.  (3)  Except  as may  relate  to ideas,
concepts,  know-how or techniques relating to the provision of pharmacy services
(which  shall be  deemed  Confidential  Information  of Eckerd  subject  to this
Section  19.01),  neither Party is restricted  pursuant to this  Agreement  from
using any data processing or network  management ideas,  concepts,  know-how and
techniques,  including  in the  development  and  manufacturing  of products and
services.  Except as prohibited  by Section 8.02,  Section 8.03 and Section 8.08
the receipt of  Confidential  Information by a Party shall not limit or restrict
assignment or reassignment of employees of IBMGS-US and Eckerd within or between
the respective Parties and their Affiliates.

19.02    Unauthorized Acts.

Each  Party  shall  (1)  notify  the  other  Party   promptly  of  any  material
unauthorized  possession,  use or knowledge,  or attempt  thereof,  of the other
Party's Confidential  Information by any person or entity which may become known
to such  Party,  (2)  promptly  furnish to the other  Party full  details of the
unauthorized  possession,  use or knowledge,  or attempt thereof, and assist the
other Party in  investigating or preventing the reoccurrence of any unauthorized
possession,  use or knowledge, or attempt thereof, of Confidential  Information,
(3) use  reasonable  efforts to cooperate with the other Party in any litigation
and  investigation  against third parties deemed necessary by the other Party to
protect its  proprietary  rights and (4) promptly use all reasonable  efforts to
prevent a reoccurrence of any such unauthorized possession,  use or knowledge of
Confidential Information.  Each Party shall bear the cost it incurs as result of
compliance with this Section 19.02.

19.03    Action by IBMGS-US.

Neither  Party shall  commence any legal action or  proceeding in respect of any
unauthorized  possession,  use or knowledge,  or attempt  thereof,  of the other
Party's  Confidential  Information by any person or entity which identifies such
Party or such Confidential Information without such Party's consent.


ARTICLE 20         REPRESENTATIONS AND WARRANTIES.

20.01    By Eckerd.

Eckerd represents and warrants that: (1) it is a corporation duly  incorporated,
validly existing and in good standing under the laws of Delaware, (2) it has all
the requisite corporate power and authority to execute,  deliver and perform its
obligations under this Agreement, (3) the execution, delivery and performance of
this   Agreement  has  been  duly   authorized  by  Eckerd,   (4)  no  approval,
authorization or consent of any governmental or regulatory authority is required
to be  obtained  or made by it in order  for it to enter  into and  perform  its
obligations  under  this  Agreement,  (5) it shall  comply  with all  applicable
Federal,  state and local laws and  regulations  and shall obtain all applicable
permit and licenses,  in connection with its  obligations  under this Agreement,
(6) it has not, and will not, disclose any Confidential Information of IBMGS-US,
(7) the Eckerd Software owned by Eckerd does not, as of the  Commencement  Date,
infringe upon the  proprietary  rights of any third Party,  and (8) it is either
the  owner of each  Eckerd  Machine  or is  authorized  by its  owner to  permit
IBMGS-US to use such Eckerd Machines under this Agreement.

20.02    By IBMGS-US.

IBMGS-US  represents and warrants that: (1) it is an unincorporated  division of
International  Business Machines  Corporation,  a corporation duly incorporated,
validly existing and in good standing under the laws of New York, (2) it has all
requisite  corporate  power and  authority  to execute,  deliver and perform its
obligations under this Agreement, (3) the execution, delivery and performance of
this  Agreement  has  been  duly  authorized  by  IBMGS-US,   (4)  no  approval,
authorization or consent of any governmental or regulatory authority is required
to be  obtained  or made by it in order  for it to enter  into and  perform  its
obligations  under  this  Agreement,  (5) it shall  comply  with all  applicable
Federal,  state and local laws and  regulations  and shall obtain all applicable
permit and licenses in connection with its obligations under this Agreement, (6)
it has not, and will not, disclose any Confidential  Information of Eckerd,  (7)
the Services  shall be rendered by qualified  personnel,  or trainees  under the
supervision  of  qualified   personnel,   in  accordance  with  the  Performance
Standards,  (8) all Services  performed by IBMGS-US for Eckerd will be performed
at least in accordance with industry  standards and practices  applicable to the
performance  of such  Services,  (9) it will maintain the Machines in accordance
with the Performance Standards,  (10) it will maintain-the End-User Machines for
which  it  has  maintenance  responsibilities  pursuant  to  this  Agreement  in
accordance  with the terms and  conditions  set forth in  Schedule P, (11) it is
either the owner of each  IBMGS-US  machine or is authorized by its owner to use
it under this Agreement and (12) the Services and the Developed Software (except
for any Eckerd Data or programs  provided by Eckerd)  will not, and the IBMGS-US
Software  does not and will not,  infringe  upon the  proprietary  rights of any
third party.

20.03    Disclaimer.

SUBJECT TO THE PERFORMANCE STANDARDS AND IBMGS-US'S OTHER OBLIGATIONS UNDER THIS
AGREEMENT, IBMGS-US DOES NOT ASSURE UNINTERRUPTED OR ERROR-FREE OPERATION OF THE
MACHINES.  EXCEPT AS  SPECIFIED  IN SECTION  20.01 AND  SECTION  20.02,  NEITHER
IBMGS-US NOR ECKERD MAKES ANY OTHER WARRANTIES IN RESPECT OF THE SERVICES OR THE
SYSTEMS AND EACH EXPLICITLY DISCLAIMS ALL OTHER WARRANTIES,  EXPRESS OR IMPLIED,
INCLUDING THE IMPLIED WARRANTIES OF  MERCHANTABILITY  AND FITNESS FOR A SPECIFIC
PURPOSE.


ARTICLE 21         JOINT ADVISORY COMMITTEE AND DISPUTE RESOLUTION.

21.01    Joint Advisory Committee.

The Joint Advisory  Committee shall meet at least once each  three-month  period
during the Term (or such other time as the Joint  Advisory  Committee  may agree
upon from time to time) for the  purpose of  resolving  disputes  that may arise
under this Agreement.  The Joint Advisory  Committee shall consider the disputes
in the order such  disputes  are brought  before it. In the event that the Joint
Advisory Committee is unable to resolve a dispute,  the Joint Advisory Committee
shall  notify  the  senior  management  of each  Party.  No  dispute  under this
Agreement shall be the subject of litigation or other formal proceeding  between
Eckerd and IBMGS-US  before being  considered by the Joint  Advisory  Committee,
provided,  however,  that either Party may seek injunctive  relief to prevent or
stay a breach  of  Article  19  without  appearing  before  the  Joint  Advisory
Committee.

21.02    Dispute Resolution.

In the event of a dispute  between the Parties  concerning  the rights,  duties,
obligations or meaning of this Agreement relating to Section 4.02, Section 4.04,
Section 4.05 and Schedule  E-2 or the subject of  calculation  or delivery of AD
FTEs, including any claim that this Agreement has been breached, and the Parties
are unable to resolve  such  dispute to their  mutual  satisfaction  in a timely
manner,  either party may submit the facts of the dispute to binding arbitration
in accordance  with the alternate  dispute  resolution  rules of the Information
Technology Association of America, as administered by a Judicate. Arbitration of
any dispute, may not be commenced until the earlier to occur of (1) an agreement
by the Parties  that further  informal  attempts  described in Section  21.01 to
resolve the dispute are not warranted and (2) 60 days after the initial  request
for arbitration have passed.

21.03    Continued Performance.

In the event of a good faith dispute between Eckerd and IBMGS-US  regarding this
Agreement  that cannot be resolved by the Joint Advisory  Committee  pursuant to
which Eckerd in good faith believes it is entitled to withhold  payment,  Eckerd
shall,  upon  request  by  IBMGS-US  and on the date  which  any of the Fees are
required to be made during the pendency of such dispute, deposit the full amount
of the Fees in an  interest-bearing  escrow  account  in the bank or  depository
specified by IBMGS-US and furnish  evidence of such deposit to IBMGS-US.  For as
long as Eckerd makes such escrow  deposits  during the pendency of such dispute,
IBMGS-US  shall  continue  to provide  the  Services  until the amount in escrow
exceeds $6,000,000.  Upon resolution of the dispute,  the Parties shall allocate
the  money in the  escrow  account,  plus any  interest  earned  on such  money,
according to the resolution of the dispute.


ARTICLE 22         TERMINATION.

22.01    Termination for Convenience.

(1)      Eckerd  may  terminate   this  Agreement  with  an  effective  date  of
         termination  on or after  January 1, 2000 upon at least 180 days' prior
         notice to IBMGS-US.

(2)      Eckerd  may  terminate  the  VSAT  Data  Network  Services  under  this
         Agreement at any time after the  Commencement  Date upon 180 days prior
         notice to IBMGS-US.

22.02    Termination for Cause.

Upon notice to the other  Party,  either  Party may  terminate  this  Agreement,
without charge to the  terminating  Party,  in the event of a material breach by
the other;  provided,  however, that the Party seeking termination shall provide
the other  Party with  notice of such  breach and the  opportunity  to cure such
breach,  as  follows:  (1) in the event of a failure  to pay any  amount due and
payable under this  Agreement when due, 10 business days and (2) in the event of
any other material  breach (except as specified in Section  22.03),  30 days. If
the nature of any  non-monetary  breach is such that it would be unreasonable to
expect a cure  within a 30-day  period,  the  breaching  Party shall be given an
additional 15 days to cure such breach  (except as specified in Section  22.03).
In the event the material breach is not cured within the periods specified above
after delivery of notice, the non-breaching  Party may terminate this Agreement,
upon  notice to the  breaching  Party as of a date  specified  in such notice of
termination.  The terminating Party shall have all rights and remedies generally
afforded  by  law or  equity,  subject  to the  limitations  expressed  in  this
Agreement.

22.03    Termination for Failure to Provide the Services.

If IBMGS-US  fails to provide the  Critical  Applications  (except as may result
from the  occurrence  of a Force  Majeure  Event) and does not,  within 48 hours
after  receipt of a notice  from  Eckerd in respect of such  failure,  cure such
failure or, if such failure cannot be cured within such 48-hour period,  provide
Eckerd  with  a  workaround   that  allows   Eckerd  to  perform  such  Critical
Applications, then Eckerd may, upon notice to IBMGS-US, terminate this Agreement
as of the date specified in the notice of termination.

22.04    Other Terminations.

This Agreement may terminate pursuant to Section 16.02,  Section 17.17,  Section
22.07, and Section 26.02.

22.05    Effect of Expiration or Terminations.

Upon the  expiration of this  Agreement or termination of this Agreement for any
reason:

(1)      IBMGS-US  shall  provide  the   Termination   Assistance   Services  in
         accordance with Article 24;

(2)      each Party shall have the rights  specified in Article 12 in respect of
         the Software;

(3)      IBMGS-US  shall transfer title to the IBMGS-US owned Machines which are
         not IBMGS-US  Machines used to provide Services from the Lexington Data
         Center upon receipt by IBMGS-US of the applicable  Termination  Fee, if
         any;  further,  IBMGS-US  shall  promptly  return to Eckerd  all Eckerd
         Machines,  including any such machines  located at the IBMGS-US Service
         Locations;

(4)      Upon Eckerd's request, with respect to generally commercially available
         IBMGS-US Third Party Software, which IBMGS-US has licensed or purchased
         and is using  solely to  provide  the  Services  as of the date of such
         expiration  or  termination,  (a) IBMGS-US  shall  transfer,  assign or
         sublicense  such  IBMGS-US  Third Party  Software to Eckerd and pay any
         transfer fee or  nonrecurring  charge imposed by the applicable  vendor
         and (b) Eckerd shall reimburse IBMGS-US for initial license or purchase
         charges for such  IBMGS-US  Third Party  Software in an amount equal to
         the remaining  unamortized  cost of such IBMGS-US Third Party Software,
         if any, depreciated over a five-year life;

(5)      Upon Eckerd's request, with respect to generally commercially available
         IBMGS-US Third Party Software, which IBMGS-US has licensed or purchased
         and is using to  provide  services  to other  IBMGS-US  customers  in a
         shared  environment as of the date of such  expiration or  termination,
         IBMGS-US  shall  (a)  assist  Eckerd  in  obtaining  licenses  for such
         IBMGS-US  Third  Party  Software  and (b) pay any license fee or charge
         imposed by any applicable vendor; and

(6)      Upon Eckerd's request,  with respect to any contracts applicable solely
         to  services  being  provided  to  Eckerd  for  maintenance,  disaster'
         recovery  services and other necessary third party services (other than
         subcontractor  services) being used by IBMGS-US to perform the Services
         as of the  expiration or  termination,  IBMGS-US (a) shall  transfer or
         assign  such  agreements  to  Eckerd  or its  designee,  on  terms  and
         conditions  acceptable  to both parties and (b) pay any transfer fee or
         non-recurring charge imposed by the applicable vendors.

22.06    Client/Server.

Upon payment of the fees  described in Section  22.05 and  assumption of license
obligations described in Section 22.05 and as part of the Termination Assistance
Services,  IBMGS-US shall deliver to Eckerd within 30 days of notice from Eckerd
at the location specified by Eckerd all equipment, Software, related accessories
and documentation (1) used by IBMGS-US to provide the Services as of the date of
the  expiration or  termination of this Agreement and (2) as may be necessary to
recreate the functionality of the Client/Server Environment.

22.07    Termination for Change of Control.

In the event of a Change  in  Control  of  Eckerd,  Eckerd  may  terminate  this
Agreement  upon 90 days' notice to IBMGS-US  given no later than 12 months after
the effective date of such Change in Control.

In the  event  of a  Change  in  Control  of  IBMGS-US  to any  business,  firm,
corporation,  partnership, enterprise or organization that through the operation
of retail  stores,  mail-order  businesses,  health  maintenance  organizations,
hospitals or any other  entity in which  prescription  drugs are sold,  competes
with the  business  engaged or  hereafter  engaged in by Eckerd in any states in
which  Eckerd or any of its  subsidiaries  is engaged in business at the time of
any such Change in Control,  Eckerd may terminate  this  Agreement upon 90 days'
notice to IBMGS-US  given no later than 12 months  after the  effective  date of
such Change in Control.

"Change in  Control"  shall  mean,  in respect of an entity or group of entities
which is not an Eckerd  Affiliate,  the (1)  consolidation  or merger of a Party
with or into any  entity,  (2) sale,  transfer  or other  disposition  of all or
substantially  all of the assets of a Party or (3) acquisition by an entity,  or
group of entities  acting in concert,  of  beneficial  ownership of more than 35
percent of the  outstanding  voting  securities  or  partnership  interests of a
Party.


ARTICLE 23         TERMINATION FEE.

23.01    Termination for Convenience.

(1)      In the event of a  termination  of this  Agreement  pursuant to Section
         22.01(1)  Eckerd  shall pay to  IBMGS-US on the  effective  day of such
         termination (a) an amount equal to the appropriate fee specified in the
         Supplement  (the  "Termination  Fee") as may be  adjusted  pursuant  to
         Section  23.05,   (b)  all  of  IBMGS-US's   reasonable  and  customary
         relocation  expenses  incurred  for human  resource  placement up to 50
         percent of the number of non-Lexington  Data Center full time employees
         who are  relocated  from Eckerd  Service  Locations as a result of such
         termination,  multiplied by  $36,000.00,  and (c) the VSAT Data Network
         Termination Charges specified in the Supplement. Upon Eckerd's request,
         IBMGS-US will annually provide Eckerd with a estimate of such expenses.

(2)      In the event of termination pursuant to Section 22.01(1), IBMGS-US will
         invoice  Eckerd  (i) for  charges  set forth in  Section  23.01(a)  and
         Section 23.01(d),  no later than 30 days prior to the effective date of
         termination,  (ii) for  charges set forth in Section  23.01(c),  on the
         effective  date of  termination,  and  (iii) for  charges  set forth in
         Section  23.01(b)  no later than one year after the  effective  date of
         termination,  each such invoice to be due and payable within 40 days of
         receipt.  The Parties  agree that (i), (ii) and (iii) are Eckerd's sole
         and exclusive liability for such termination.

(3)      In the event that  Eckerd  elects to  terminate  the VSAT Data  Network
         Services  under this  Agreement  in its  entirety  pursuant  to Section
         22.01(2),  Eckerd  shall pay to IBMGS-US on the  effective  day of such
         termination  an amount equal to the fee specified in the Supplement for
         termination  of the VSAT Data  Network  (the "VSAT  Termination  Fee"),
         minus any VSAT Per Store Termination Charges paid by Eckerd pursuant to
         Section 3.14(c), and Eckerd shall receive all right, title and interest
         in the satellite dish (and related equipment) at the Store(s) which are
         part of the VSAT Data Network on the effective date of such termination
         on an "As-Is", "Where-Is" basis, after which Eckerd may, at its option,
         deinstall or relocate any such satellite dish (and related equipment).

23.02    Technology Improvements.

In the event of a  termination  pursuant to Section  17.17,  Eckerd  shall pay a
termination fee of $14,000,000 on the effective date of such termination.

23.03    No Additional Fees.

In the event of a termination  pursuant to Section 22.01(1) or Section 22.01(2),
Eckerd shall not pay to IBMGS-US any fees or charges  other than the  applicable
Termination  Fee set  forth in the  Supplement  and  other  charges  related  to
termination as set forth in Section 23.01 except charges otherwise payable under
this Agreement and any charges payable pursuant to Article 24.

23.04    Termination for Change of Control.

In the event of  termination  of this  Agreement  pursuant to Section 22.07 as a
result of a Change in  Control  of  Eckerd,  Eckerd  shall pay  IBMGS-US  on the
effective date of such  termination  (a) an amount equal to the  appropriate fee
specified in the Supplement as may be adjusted  pursuant to Section  23.05,  (b)
all of IBMGS-US's  reasonable  and customary  relocation  expenses  incurred for
human resource  placement up to 50 percent of the number of  non-Lexington  Data
Center full time employees who are relocated from Eckerd Service  Locations as a
result of such  termination,  multiplied  by  $36,000.00,  and (c) the VSAT Data
Network Termination Charges specified in the Supplement.  Upon Eckerd's request,
IBMGS-US will annually provide Eckerd with a estimate of such expenses.

In the event of  termination  of this  Agreement  by Eckerd  pursuant to Section
22.07 as a result of a Change in Control of  IBMGS-US on the  effective  date of
such  termination  (a) an amount equal to the  appropriate  fee specified in the
Supplement as may be adjusted  pursuant to Section 23.05,  and (b) the VSAT Data
Network Termination Charges specified in the Supplement.  Upon Eckerd's request,
IBMGS-US will annually provide Eckerd with a estimate of such expenses.

23.05    Proration.

Any Termination Fee will be prorated according to the following formula:

[{(A-B) / 12 months) x C] + B = Prorated Termination Fee where:

A = the  Termination  Fee specified in the  Supplement  for the Contract Year in
which termination is effective;

B = the  Termination Fee specified in the Supplement for the Contract Year after
the Contract Year in which termination is effective; and

C = the number of months remaining during the Contract Year in which termination
is effective.


ARTICLE 24         TERMINATION ASSISTANCE.

Upon the expiration of this  Agreement or the  termination of this Agreement for
any reason,  IBMGS-US shall, upon request by Eckerd (1) cooperate with Eckerd in
effecting  the  orderly  transfer  of  the  Services  to a  third  party  or the
resumption  of the  Services by Eckerd and (2) perform  such  services as may be
requested by Eckerd in  connection  with the transfer of the Services to a third
party or the resumption of the Services by Eckerd (the  "Termination  Assistance
Services").  The Termination Assistance Services shall be provided for up to 180
days after the expiration of this Agreement or termination of this Agreement for
any reason (the  "Termination  Assistance  Period").  As part of the Termination
Assistance Services, IBMGS-US shall (a) freeze all non-critical Systems changes,
(b) notify all third party  vendors of  procedures  to be  following  during the
Termination  Assistance  Period,  (c) review all  Systems  libraries  (tests and
production)   with,  the  new  service  provider  and  Eckerd,   (d)  assist  in
establishing  naming  conventions for the new production site, (e) analyze space
required for the  databases  and Systems  libraries  (f) generate and deliver to
Eckerd a tape and computer listing of the source code for the Developed Software
in a form  reasonably  requested by Eckerd,  (g) unload the  production and test
databases,  (h) deliver  tapes or other media  requested by Eckerd of production
databases (and test content  listings) to the new operations  staff,  (i) assist
with the loading of the databases,  (j) assist with the  communications  network
turnover  and (k)  assist in the  execution  of a  parallel  operation  and user
acceptance testing until the effective date of termination or expiration.  After
the expiration of the Termination  Assistance Period,  IBMGS-US shall (i) answer
questions  regarding  the  Services on an "as needed"  basis and (ii) deliver to
Eckerd any remaining  Eckerd-owned reports and documentation still in IBMGS-US's
possession.  If, in conjunction with the Termination Assistance Services, Eckerd
requests that IBMGS-US  perform New Services,  IBMGS-US shall provide and Eckerd
shall pay  IBMGS-US  for such New  Services  during the  Termination  Assistance
Period the lesser of (x) IBMGS-US's  then-current  rate for such New Services or
(y) the charges for such New Services set forth in the  applicable  New Services
Work Order.


ARTICLE 25         INDEMNITIES.

25.01    Indemnity by Eckerd.

Eckerd shall indemnify IBMGS-US from, and defend IBMGS-US against, any liability
or expenses  (including  attorneys'  fees) arising out of or relating to (1) any
claim that the Eckerd  Software,  the Eckerd  Machines  or any other  equipment,
systems,  products or other  resources  or items  provided to IBMGS-US by Eckerd
infringe upon the proprietary rights of any third party (except as may have been
caused by a modification by IBMGS-US or Eckerd's  combination,  operation or use
with  devices,  data or programs not  furnished  by Eckerd),  (2) any claim by a
third party arising out of or relating to Eckerd's use of the Systems or receipt
of the Services (except as may arise pursuant to Section 25.02),  (3) any duties
or obligations  accruing prior to the Commencement Date by Eckerd arising out of
or in connection with any agreements  relating to the Eckerd Resources,  (4) the
inaccuracy  or  untruthfulness  of  any  warranty  made  by  Eckerd  under  this
Agreement,  (5) any amounts,  including taxes, interest and penalties,  assessed
against  IBMGS-US which are obligations of Eckerd pursuant to Section 17.08, (6)
(a) a violation of Federal state or other laws in regulations for the protection
of persons or members of a  protected  class or category of persons by Eckerd or
its employees, subcontractors or agents, (b) sexual discrimination or harassment
by Eckerd or its employees,  subcontractors or agents,  (c) work-related  injury
except as may be covered by IBMGS-US's  workers  compensation or death caused by
Eckerd, (d) accrued employee benefits not expressly retained by IBMGS-US and (e)
any other  aspect  of the  employment  relationship  or the  termination  of the
employment  relationship (including claims for breach of an expressed or implied
contract of employment)  relating to Eckerd's  performance  under this Agreement
and (7) the failure to pay any taxes,  charges,  levies or  assessments  owed by
Eckerd pursuant to Section 17.08.

25.02    Indemnity by IBMGS-US.

IBMGS-US shall indemnify  Eckerd from, and defend Eckerd against,  any liability
or expenses  (including  attorneys'  fees) arising out of or relating to (1) any
claim that the Services,  the Developed  Software,  the IBMGS-US  Software,  the
IBMGS-US Machines, any modifications to Eckerd Software performed by IBMGS-US or
any other equipment,  systems,  products or other resources or items provided to
Eckerd by  IBMGS-US  infringe  upon the  proprietary  rights of any third  party
(except  as may have  been  caused  by a  modification  by  Eckerd  or  Eckerd's
combination,  operation  or use with  devices,  data or  programs  furnished  by
Eckerd),  (2) any claim by a third  party in  respect  of  services  or  systems
provided by IBMGS-US to a third party, (3) any duties or obligations accruing on
or  after  the  Commencement  Date  arising  out of or in  connection  with  any
agreements   relating  to  the  Eckerd   Resources,   (4)  the   inaccuracy   or
untruthfulness  of any  representative  or warranty made by IBMGS-US  under this
Agreement,  (5) any amounts,  including taxes, interest and penalties,  assessed
against Eckerd which are obligations of IBMGS-US  pursuant to Section 17.08, (6)
IBMGS-US's failure to provide data to any entity that purchases data from Eckerd
(up to $80,000 per occurrence of such failure), (7) IBMGS-US's failure to obtain
the IBMGS-US  Consents,  (8) (a) a violation of Federal,  state or other laws in
regulations  for the  protection  of persons or members of a protected  class or
category of persons by IBMGS-US or its employees,  subcontractors or agents, (b)
sexual discrimination or harassment by IBMGS-US or its employees, subcontractors
or agents, (c) work-related  injury except as nay be covered by Eckerd's workers
compensation  or death caused by  IBMGS-US,  (d) accrued  employee  benefits not
expressly  retained  by  Eckerd  and  (e) any  other  aspect  of the  employment
relationship or the termination of the employment relationship (including claims
for breach of an expressed  or implied  contract of  employment),  (9) any claim
arising-out of or relating to IBMGS-US's  obligations with respect to the Eckerd
Leased Assets, the Eckerd Services Contracts and the Eckerd Third Party Software
Licenses,  (10) IBMGS-US's failure to pay the amounts specified in Section 10.06
and (11) the failure to pay any taxes,  charges,  levies or assessments  owed by
IBMGS-US pursuant to Section 17.08.

25.03    Indemnity and Contribution.

Each Party shall contribute to the amount paid or payable by the other Party for
any and all losses for which such Party is legally  liable and in  proportion to
such Party's  comparative fault in causing such losses,  arising in favor of any
person,  corporation or other entity,  including the parties,  their  employees,
contractors  and  agents,  on account of personal  injuries,  death or damage to
tangible personal or real property in any way incident to, or in connection with
or arising out of (1) this Agreement, (2) the Services, (3) the presence of such
Party,  its employees,  contractors or agents on the premises of the other Party
or (4) the act or omission of such Party, its employees, contractors or agents.

25.04    Indemnification Procedures.

If any civil,  criminal,  administrative  or investigative  action or proceeding
(each, a "Claim") is commenced  against any Party  entitled to  indemnifications
under Section  25.01,  Section 25.02 or Section 25.03 (an  "Indemnified  Party")
notice  thereof  shall  be given  to the  Party  that is  obligated  to  provide
indemnification  (the  "Indemnifying  Party") as promptly as practicable.  After
such notice,  if the  Indemnifying  Party shall  acknowledge  in writing to such
Indemnified  Party that this Agreement  applies with respect to such Claim, then
the Indemnifying Party shall be entitled, if it so elects, in a notice delivered
to the  Indemnified  Party  not less  than 10 days  prior to the date on which a
response to such Claim is due, to take control of the defense and  investigation
of such Claim and to employ and engage  attorneys  of its sole  choice to handle
and defend the same,  at the  Indemnifying  Party's sole cost and  expense.  The
Indemnified   Party  shall  cooperate  in  all  reasonable   respects  with  the
Indemnifying Party and its attorneys in the investigation,  trial and defense of
such  Claim  and any  appeal  arising  therefrom;  provided,  however,  that the
Indemnified  Party may, at its own cost and  expense,  participate,  through its
attorneys or otherwise,  in such investigation,  trial and defense of such Claim
and any appeal  arising  therefrom.  No  settlement  of a Claim that  involves a
remedy  other  than the  payment  of money by the  Indemnifying  Party  shall be
entered into without the consent of the Indemnified  Party.  After notice by the
Indemnifying  Party to the  Indemnified  Party of its  election  to assume  full
control of the defense of any such Claim,  the  Indemnifying  Party shall not be
liable to the Indemnified  Party for any legal expenses  incurred  thereafter by
such  Indemnified  Party in  connection  with the defense of that Claim.  If the
Indemnifying  Party does not assume  full  control  over the  defense of a Claim
subject to such  defense as provided in this  Section  25.04,  the  Indemnifying
Party  may  participate  in such  defense,  at its sole  cost and  expense,  and
the-Indemnified Party shall have the right to defend the Claim in such manner as
it may deem appropriate, at the cost and expense of the Indemnifying Party.


ARTICLE 26         DAMAGES.

26.01    Consequential Damages.

Neither Party shall be liable for any indirect, special or consequential damages
or lost  profits  arising out of or relating to such Party's  performance  under
this Agreement.

26.02    Credits.

In the event  IBMGS-US  fails to provide  the  Services in  accordance  with the
Performance  Standards,  IBMGS-US shall incur charges  according to the schedule
set forth in Schedule E (each, a "Credit";  collectively, the "Credits") against
the Fees owed to IBMGS-US in respect of the month  following  the month in which
the Credit(s) was (were)  incurred.  If the Credits  exceed (1) one third of the
monthly  charge (as  determined  pursuant  to the formula in Schedule E) for any
calendar month or (2)  two-thirds of the monthly charge (as determined  pursuant
to the formula in Schedule E) in any 90-day period during the Term,  then Eckerd
may upon notice to IBMGS-US, terminate this Agreement.

26.03    Limitation of Direct Damages.

In the event one Party  shall be liable to the other  Party for  direct  damages
arising out of or relating to such  Party's  performance  under this  Agreement,
such Party may recover  from the other Party its direct  damages up to an amount
not to exceed $40,000,000 in the aggregate (the "Direct Damages Cap").

26.04    Exclusion.

The limitations set forth in Section 26. 01, Section 26.02 and Section 26.03 are
not  applicable  to (1) any breach of Article  19, (2) the  failure of Eckerd to
make payments due under this Agreement,  (3) indemnification claims as set forth
in Article 25 (except Section 25.01(4), Section 25.02(4) and Section 25.02(6) or
(4) the gross  negligence  or  willful  misconduct  of either  Party;  provided,
however,  that a Party's  liability for damages  relating to the  exclusions set
forth in this Section 26.04 shall not exceed $100,000,000.

26.05    Remedies.

In the event  IBMGS-US  fails to provide  the  Services in  accordance  with the
Performance  Standards,  Eckerd  may,  at its  option,  (1)  seek  all  remedies
available to it under the law,  subject to the limitations  specified in Section
26.01,  Section 26.03 and Section 26.04 or (2) recover as liquidated damages the
Credit(s). If Eckerd elects to recover Credit(s), Eckerd's recovery of Credit(s)
shall constitute  acknowledgment  by Eckerd of full satisfaction of any claim by
Eckerd  (except  with respect to the right to  termination  described in Section
22.02, Section 22.03 or Section 26.02) that IBMGS-US has breached its obligation
under this  Agreement with respect to such event or set of events giving rise to
the Credit(s).


ARTICLE 27         MISCELLANEOUS.

27.01    Assignment.

Neither Party may assign this Agreement, without the consent of the other Party;
provided, however, that either Party may, upon notice to the other Party, assign
this  Agreement,  without  the  other  Party's  consent,  to any  subsidiary  or
Affiliate of such Party,  or pursuant to a corporate  reorganization  or sale of
substantially  all of the assets of such Party.  Any assignment in contravention
of this Section 27.01 shall be void.

27.02    Notices.

All notices, requests,  approvals and consents and other communications required
or  permitted  under this  Agreement  shall be in  writing  and shall be sent by
telecopy to the telecopy number specified below. A copy of any such notice shall
also be personally delivered or sent by (1) first class U.S. Mail, registered or
certified, return receipt requested,  postage pre-paid or (2) U.S. Express Mail,
Federal Express, or other, similar overnight bonded mail delivery services.

                  In the case of IBMGS-US:
                  c/o Eckerd Corporation
                  8333 Bryan Dairy Road
                  Largo, Florida 33777
                  Attn:  IBMGS-US Project Executive
                  Facsimile No.:  (813) 395-6403

For termination, with a copy to:

                  IBMGS-US
                  Route I 00
                  Somers, NY 10589
                  Attn:  General Counsel
                  Facsimile No.:  (914) 766-8444

In the case of Eckerd:

                  Eckerd Corporation
                  8333 Bryan Dairy Road
                  Largo, Florida 33777
                  Attn:  Eckerd Senior Vice President - Information Technology
                  Facsimile No.:  (813) 395-6403

With a copy to:

                  Eckerd Corporation
                  8333 Bryan Dairy Road
                  Largo, Florida 33777
                  Attn:  General Counsel
                  Facsimile No.:  (813) 395-6468

                  Either  Party may change its  address or  telecopy  number for
purposes  of notice  by giving  the other  Party  notice of the new  address  or
telecopy number and the date upon which it will become effective.

27.03    Counterparts.

This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one single agreement between the parties.

27.04    Headings.

The article and section headings and the table of contents are for reference and
convenience  only and  shall not be  considered  in the  interpretation  of this
Agreement.

27.05    Relationship.

Except as otherwise provided in Section 10.03 and Section 10.08. the performance
by IBMGS-US of its duties and obligations  under this Agreement shall be that of
an independent  contractor and nothing  contained in this Agreement shall create
or imply an agency  relationship  between  IBMGS-US  and Eckerd,  nor shall this
Agreement be deemed to  constitute a joint  venture or  partnership  between the
Parties.

27.06    Consents, Approvals and Requests.

Except as specifically  set forth in this Agreement,  all consents and approvals
to be given by either  Party  under  this  Agreement  shall not be  unreasonably
withheld  and  each  Party  shall  make  only  reasonable  requests  under  this
Agreement.

27.07    Severability.

If any provision of this Agreement is held by a court of competent  jurisdiction
to be contrary to law, then the  remaining  provisions  of this  Agreement  will
remain in full force and effect.

27.08    Waiver.

No delay or omission by either Party to exercise any right or power it has under
this Agreement  shall impair or be construed as a waiver of such right or power.
A waiver by any Party of any breach or covenant  shall not be  construed to be a
waiver of any succeeding  breach or any other  covenant.  All waivers must be in
writing and signed by the Party waiving its rights.

27.09    Publicity.

Each  Party  shall  (1)  submit  to the other  all  advertising,  written  sales
promotion, press releases and other publicity matters relating to this Agreement
in which the other  Party's name or mark is mentioned or language from which the
connection  of said name or mark may be  inferred or implied and (2) not publish
or use such  advertising,  sales promotion,  press releases or publicity matters
without the other  Party's  consent;  provided,  however,  that either Party may
include the other Party's name and a factual  description  of the work performed
under this Agreement on employee  bulletin boards, in its list of references and
in the experience  section of proposals to third parties,  in internal  business
planning  documents  and in its  Annual  Report to  stockholders,  and  whenever
required by reason of legal, accounting or regulatory requirements.

27.10    Entire Agreement.

This Agreement, the Schedules and the Supplement,  which are hereby incorporated
by reference into this Agreement,  is the entire  agreement  between the parties
with  respect to its  subject  matter,  and there are no other  representations,
understandings or agreements between the parties subject matter.

27.11    Amendments.

No  amendment  to, or change,  waiver or  discharge  of, any  provision  of this
Agreement  shall  be  valid  unless  in  writing  and  signed  by an  authorized
representative  of the Party against  which such  amendment,  change,  waiver or
discharge is sought to be enforced.

27.12    Governing Law.

This Agreement shall be governed by the laws of the State of Florida.

27.13    Survival.

The terms of Article 13, Article 19, Article 20, Article 24, Article 25, Article
26, Section 8.08, Section 12.01,  Section 12.02,  Section 12.03,  Section 14.01,
Section 14.03,  Section 16.02,  Section  21.02,  Section 22.05,  Section 23. 01,
Section 27.09,  Section 27.12, this Section 27.13,  Section 27.14, Section 27.16
and Section 27.17 shall survive the  expiration of this Agreement or termination
of this Agreement for any reason.

27.14    Third Party Beneficiaries.

Each Party intends that this Agreement shall not benefit, or create any right or
cause of action in or on behalf of, any person or entity  other than  Eckerd and
IBMGS-US.

27.15    Insurance.

During the Term, IBMGS-US shall maintain insurance of the following types and in
the following amounts:  (1) statutory workmen's  compensation in accordance with
all Federal,  state and local requirements and (2) comprehensive  general public
liability (including contractual liability insurance) in an amount not less than
$2,000,000. All insurance polices obtained or maintained by IBMGS-US pursuant to
this Agreement  shall name Eckerd as an additional  insured,  IBMGS-US shall not
cancel (or permit any lapse) under any such  insurance  policy.  Each  insurance
policy shall  contain the  agreement  of the insurer that the insurer  shall not
cancel such policy without 30 days' notice to Eckerd.  IBMGS-US shall deliver to
Eckerd a certificate of insurance  evidencing the above insurance coverage prior
to the Commencement Date.

27.16    Covenant of Further Assurances.

Eckerd and IBMGS-US  covenant and agree that,  subsequent  to the  execution and
delivery of this  Agreement and without any  additional  consideration,  each of
Eckerd and IBMGS-US will execute and deliver any further legal  instruments  and
perform any acts which are or may become necessary to effectuate the purposes of
this Agreement.

27.17    Hiring of Employees.

Eckerd may offer employment to and employ any non-Lexington Data Center IBMGS-US
employees  upon the  expiration  or the  termination  of this  Agreement for any
reason. The effective date of hire with Eckerd of these IBMGS-US employees shall
not be prior to the expiration or termination  of this  Agreement.  In the event
this  Agreement  is  extended  pursuant  to  Article  2,  Eckerd  offers to such
employees  must  remain  valid  during any  Extension  Period  and shall  become
effective  after  expiration of such  Extension  Period.  Eckerd may at any time
directly  or  indirectly  solicit and hire any  employee of IBMGS-US  after such
employee is  dismissed  by IBMGS-US or  terminates  his or her  employment  with
IBMGS-US without the intention of accepting employment from Eckerd. In addition,
Eckerd may at any time hire any IBMGS-US  employee  that responds to an indirect
solicitation   (e.g.,   through  a   newspaper,   magazine   or  trade   journal
advertisement). IBMGS-US shall not transfer or relocate any IBMGS-US employee to
whom Eckerd has made an offer pursuant to this Section 27.17 until such IBMGS-US
employee has rejected  Eckerd's offer of employment or Eckerd has withdrawn such
offer of  employment.  In the event of the  expiration of this  Agreement or the
termination of this Agreement pursuant to Section 22.0l(l), any offers by Eckerd
must be made  no  later  than  120  days  prior  to the  effective  date of such
expiration or termination. In addition, IBMGS-US shall not directly solicit such
employees  prior  to 120 days  prior  to the  effective  date of  expiration  or
termination of this Agreement  pursuant to Section  22.01(1).  In any event, the
IBMGS-US  employees  who have been made offers by Eckerd  must either  accept or
reject such offers  within 10 days of such offer.  IBMGS-US  shall not  directly
solicit  any  Eckerd  employees  during  the  Term and for one  year  after  the
expiration of this Agreement or termination of this Agreement for any reason.

27.18    EDI.

IBMGS-US  shall  not  resell  any of the EDI  Services  provided  from an Eckerd
Service Location or use such EDI services to provide services to a third party.

27.19    Construction.

The word "including" shall mean "including, without limitation," throughout this
Agreement.

27.20    Interpretation of Documents.

In the event of a conflict  between this  Agreement and the terms and conditions
of the Schedules, the terms of this Agreement shall prevail.


IN WITNESS  WHEREOF,  IBMGS-US and Eckerd have each caused this  Agreement to be
signed and delivered by its duly authorized representative.



ECKERD CORPORATION



By: /s/ Kenneth G. Petersen                  
    Vice President - Information Technology


IBM GLOBAL SERVICES US DIVISION OF INTERNATIONAL
  BUSINESS MACHINES CORPORATION


By: /s/ Mario J. Naranjo
    Senior Project Executive