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                                                                   EXHIBIT 10.37



                          STRATEGIC ALLIANCE AGREEMENT

      This Strategic Alliance Agreement (the "AGREEMENT") is made and entered
into as of February 14, 2000 (the "EFFECTIVE DATE") by and between
drugstore.com, inc., a Delaware corporation ("DRUGSTORE.COM") and medibuy.com,
Inc., a Delaware corporation ("MEDIBUY.COM"). Certain defined terms shall have
the meanings as set forth in Exhibit A to this Agreement.

The parties agree as follows:

1. CO-BRANDED SITE FOR HOME HEALTH CARE PROCUREMENT

   1.1 HHC Site. medibuy.com shall, at its expense, develop and launch a home
healthcare web site to offer products and services to the home healthcare
industry hosted by medibuy.com (the "HHC SITE") and that uses medibuy.com's
instant catalog technology. The HHC Site will, among other things, allow health
care providers that have registered with medibuy.com ("CLIENTS") to create and
maintain databases of their patients' requirements and access "catalogs" of
suppliers of products that serve such patient requirements. The HHC Site will be
accessible only by registered Clients of medibuy.com. Clients include, among
other entities, home care agencies, integrated delivery network ("IDN")
discharge planners, and healthcare Group Purchasing Organizations ("GPOS").
Clients do not and shall not include end consumers. The HHC Site will be
co-branded using the trademarks and service marks of medibuy.com and
drugstore.com subject to each party's license of such marks and consent to their
particular usage. The HHC Site will not contain advertising or promotions for
any Third Party goods or services other than those offered through other
medibuy.com web sites or www.drugstore.com provided that the HHC Site shall not
contain advertisements or promotions for DS Competitors (as defined below at
Section 10).

   1.2 Launch Plan. Within ninety (90) days following the Effective Date, the
Parties will use their best efforts to jointly complete a project plan that will
set mutually agreeable deadlines for the various stages of development of the
HHC Site, including the design, rollout and implementation of the HHC Site by
medibuy.com and preparation of the Health eCatalog (as defined below) by
drugstore.com, mutually agreeable methods of data transfer and transaction
processing and mutually developed guidelines, processes, procedures and plans
for sales and marketing communications. Each of the parties will appoint a
"Contract Manager," who will act as the point person for communications
regarding the project plan. Subject to drugstore.com's delivery of a Health
eCatalog to medibuy.com at least 30 days prior to the launch date, medibuy.com
will launch the HHC Site as mutually agreed by the parties, and the parties
presently anticipate such launch shall occur no later than December 31, 2000.
For the purposes of this Agreement, the "LAUNCH Date" means the date on which
the HHC Site is operational and generally available to Clients to purchase
products or services.

   1.3 Avenues of Sales. There will be three avenues of sales of drugstore.com
products by means of the HHC Site:

      (i) Health eCatalog

drugstore.com shall, at its expense and in a format determined by its technology
team, develop a "HEALTH ECATALOG" of personal care, wellness, health and beauty
products for the HHC Site, which shall be selected at the sole discretion of
drugstore.com from the products carried at www.drugstore.com subject to
reasonable feedback of medibuy.com as to Client preferences. The Health eCatalog
will be the exclusive source of personal care, wellness, health and beauty
products for the HHC Site. For the purposes of this agreement, "PERSONAL CARE,
WELLNESS, HEALTH, AND BEAUTY PRODUCTS" are those types of products that are
carried by an internet, or bricks and mortar, drugstore. The exclusivity under
this paragraph shall not extend to durable medical equipment or to products and
supplies other than personal care, wellness, health and beauty products. In the
event that an HHC Site database indicates to a Client that a patient needs a
product carried in the Health eCatalog, there will be a direct link from such
database to the Health eCatalog. drugstore.com hereby grants medibuy.com a
royalty-free, non-transferable license during the Term to use the Health
eCatalog in accordance with the terms and provisions of this Agreement.
Following the Term of this Agreement, medibuy.com shall have no rights to the
Health eCatalog and, at drugstore.com's discretion, shall return to
drugstore.com or destroy all copies of the Health eCatalog in its possession.

      (ii) RFP Process

Clients will be able to submit an RFP to drugstore.com by means of the HHC Site,
and drugstore.com, at its sole discretion, may respond with a proposal
particularized to such Client. drugstore.com will respond to



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submitted RFPs within a period of time mutually determined by drugstore.com and
medibuy.com, which shall be consistent with the response time required of other
medibuy.com vendors but in no event more than 5 business days, if drugstore.com
does not respond to the submitted RFP, medibuy.com will submit the RFP to other
registered medibuy.com vendors for a response.

      (iii) E-Specials

At drugstore.com's request, the HHC Site may feature "E Specials" on products
that drugstore.com will offer to all Clients at reduced prices. One purpose of
such E Specials may be to reduce excess inventory of selected products. If, in
the event that a drugstore.com E Special does not sell on the HHC Site within
the timeframe designated by drugstore.com, medibuy.com, with the written
permission of drugstore.com, shall offer the E Special on other medibuy.com
sites.

   1.4 Servers; Metrics. The HHC Site will be hosted by medibuy.com on its
servers (or the servers of its contractors) at medibuy.com's sole cost and
expense. drugstore.com will receive Page view and reach credit for all User
visits to the initial page of the HHC Site, and medibuy.com shall receive Page
view and reach credit for all visits to all other pages of the HHC Site.

   1.5 Shadow Site. medibuy.com shall make available to drugstore.com a
completed HHC Site on a password protected shadow site for review and testing
prior to making the HHC Site publicly available. Neither party shall make the
HHC Site or shadow site publicly available without the other party's prior
approval, which approval shall not be unreasonably withheld.

   1.6 Additional Terms and Conditions. The terms and conditions set forth in
Exhibit B are hereby incorporated by reference.

2. TERM; TERMINATION

      2.1 Term. Subject to extension pursuant to Section 2.2 or termination
pursuant to Section 2.3, the term of this Agreement (the "TERM") shall be the
five-year period commencing on the Effective Date. For the purposes of this
Agreement, a "YEAR OF THE TERM" is the 12-month period commencing on the
Effective Date and each successive 12-month period during the Term.

      2.2 Extension. Unless either party provides written notice to the other
party at least 90 days prior to the five-year anniversary of the Effective Date
that it does not wish to extend the Term, the Term will automatically be
extended for an additional five-year period.

      2.3 Termination. In the event of a material breach by either party of any
of its material obligations under this Agreement, which breach is not cured by
the breaching party within thirty (30) days' written notice thereof by the
non-breaching party, the non-breaching party will have the right to terminate
this Agreement. drugstore.com may terminate this Agreement at any time after
December 31, 2001 upon written notice to medibuy.com in the event that (i)
transactions on the HHC Site do not generate Gross Revenue of at least $300
million in 2001 or $800 million in any succeeding year and/or (ii) drugstore.com
does not derive revenue pursuant to Section 9 of this Agreement of at least
$240,000 in 2001 or at least $640,000 in any succeeding year. medibuy.com may
terminate this Agreement at any time after December 31, 2001 upon written notice
to drugstore.com in the event that drugstore.com is not one of the top 5
Internet-only drugstores as measured by annual revenues. For the purposes of
this Agreement, "GROSS REVENUE" includes product revenues as determined by
generally accepted accounting principles ("GAAP"), net of discounts and
provisions for sales returns; "Gross Revenue" does not include revenues from
charging customers for shipping or taxes.

       2.4 Effect of Termination. This Section 2.4 and Sections 14.3, 19, 20,
21, 22, 23 and 24 (but not Section 24.2) shall survive any termination of this
Agreement, and no termination of this Agreement shall release either party from
liability for any breach of this Agreement that occurred prior to such
termination. Except as set forth in this Section 2.4 and with respect to
liabilities already incurred under this Agreement, following termination of this
Agreement neither party shall have any obligation to the other party and all
co-branding of the HHC Site shall be removed by medibuy.com as soon as
practicable but in no event later than 20 days following the date of such
termination. With respect to Section 9.1 of this Agreement, to the extent that
Client transactions are completed on the HHC Site during the Term but revenue
attributable to such transactions is paid to medibuy.com following termination
of this Agreement, such payments shall be included in Net Revenue (as defined
below) for the purpose of determining liabilities owed by medibuy.com to
drugstore.com that shall survive termination of this Agreement.



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3. MEDIBUY.COM MARKETING

      3.1 medibuy.com marketing. medibuy.com will actively promote the HHC Site
and its services to its existing and future Clients. medibuy.com will train its
sales force regarding the HHC Site, and the sale of drugstore.com products via
the HHC Site and other medibuy.com sites. medibuy.com shall include information
about medibuy.com's relationship with drugstore.com in presentations to
prospective Clients, and identify the relationship and the HHC Site as
value-added features of the medibuy.com sites. In addition, medibuy.com shall,
at its expense, place co-branded advertisements for the HHC Site in agreed-upon
trade journals subject to drugstore.com's approval, which shall not be
unreasonably withheld. Each Party agrees to submit to the other Party, for that
Party's reasonable review and approval, any marketing items containing
co-branded material. No co-branded marketing material shall be disseminated by
either Party unless such material has been approved in writing by the other
party prior to dissemination, which approval shall not be unreasonably withheld.
medibuy.com shall bear the expenses related to the marketing activities
described in this Agreement except for the drugstore.com marketing activities
set forth in Section 8 of this Agreement or marketing activities undertaken by
drugstore.com other than as detailed in this Agreement.

      3.2 medibuy.com Marketing Commitment. medibuy.com shall spend $2.0 million
during each year of the Term for marketing (including costs of direct sales to
Clients and prospective Clients) of the HHC Site to Clients and prospective
Clients. medibuy.com will develop and implement marketing programs that are
reasonably agreeable to the Parties and are designed to increase awareness and
use of the HHC Site and drugstore.com. The Parties acknowledge that any such
programs will be tested and modified as appropriate for desired effectiveness.

4. INTEGRATION OF THE HHC SITE WITH CLIENTS

medibuy.com shall, at its expense and subject to the request and consent of its
Clients, integrate the HHC Site with its Clients' current home care information
systems and processes, including, among other things, designing data
requirements for reporting to Clients and suppliers, such as drugstore.com.

5. ACCESS TO HEALTH ECATALOG

medibuy.com, shall, at its expense, connect the Health eCatalog to the HHC Site
and other medibuy.com sites as contemplated by this Agreement and provide the
framework for sales of drugstore.com products by means of the Health eCatalog,
the RFP Process and E Specials. medibuy.com acknowledges that Clients seeking to
purchase products from drugstore.com will have to open an account with
drugstore.com, providing, among other things, contact information and credit
card information or other billing information acceptable to drugstore.com.

6. DRUGSTORE.COM FEES TO MEDIBUY.COM

drugstore.com will share revenue with medibuy.com as set forth on Exhibit C.
drugstore.com shall be responsible for billing and collecting revenue from
Clients for product sales through the Health eCatalog on the HHC Site or any
other medibuy.com site. medibuy.com shall develop appropriate means of data
transfer from the HHC Site to drugstore.com to facilitate billing of Clients by
drugstore.com. Payments shall be payable on a quarterly basis and shall be due
within 30 days of the end of each quarter. drugstore.com will not share with
medibuy.com revenue from products sold through the main drugstore.com site
(currently www.drugstore.com) or its affiliated sites (which currently includes
www.beauty.com).



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7. NEW CUSTOMER ACQUISITION FEES

drugstore.com will pay medibuy.com new customer acquisition fees as set forth on
Exhibit D. Payments shall be payable on a quarterly basis and shall be due
within 30 days of the end of each quarter.

A "NEW CUSTOMER" is a Client's patient that (i) has not made a prior purchase
from drugstore.com, and (ii) during the Term, purchases a product from the main
drugstore.com site (currently www.drugstore.com) (x) by means of a MediBuy Promo
(as defined below) or (y) with respect to the patients of one or more GPO member
organizations by means of a link from a medibuy.com site provided that such link
is approved in writing by drugstore.com which approval shall not be unreasonably
withheld. medibuy.com acknowledges that a patient seeking to make a purchase
from drugstore.com will have to open an account with drugstore.com, providing,
among other things, contact information, including without limitation personal
e-mail address, and credit card information.

A "MEDIBUY PROMO" is any promotional link supplied by drugstore.com between a
Client's patient and www.drugstore.com that allows for "customer conversion"
tracking, such as an e-mail with a link to www.drugstore.com or a promotional
mailer that provides a special link for Clients' patients. medibuy.com shall use
all commercially reasonable efforts (subject to privacy obligations and policies
and patients' consent) to obtain for drugstore.com profiles of the patients
served by Clients, including at a minimum each patient's name, e-mail address
and birth date (with respect to each patient, a "PROFILE").

8. DRUGSTORE.COM MARKETING COMMITMENT

drugstore.com shall use all commercially reasonable efforts to deliver a MediBuy
Promo to each patient as to which medibuy.com has provided Profile , including a
financial incentive (a "CONVERSION INCENTIVE") in such MediBuy Promo that is
designed to convert such patient to a New Customer. drugstore.com shall, during
each year of the Term, deliver at least $250,000 in Conversion Incentives
provided that medibuy.com delivers to drugstore.com at least 50,000 patient
Profiles during each such year. Conversion Incentives will be determined by the
drugstore.com marketing group and may include, among other things, "e-coupons"
applicable to a New Customer's first purchase from www.drugstore.com,
complimentary gift packs from drugstore.com and special pricing on certain
products.

In addition, drugstore.com, in consultation with medibuy.com and subject to all
applicable laws and regulations, may promote a program for Clients and/or
Clients' employees (e.g., the health care practitioners that interact with
patients) to convert patients into New Customers and/or to provide Profiles.

9. MEDIBUY.COM FEES TO DRUGSTORE.COM

   9.1 medibuy.com will share revenue with drugstore.com as set forth on Exhibit
E. "NET REVENUE" is the revenue paid to medibuy.com that is attributable to
transactions from Clients on the HHC Site as determined in accordance with GAAP,
other than Net Revenue from transactions in which drugstore.com is the supplier
of products.

    9.2 medibuy.com represents and warrants that, as of the Effective Date, it
does not charge vendors "Subscription Fees" to offer products or services on
medibuy.com sites. For the purposes of this Agreement, a "SUBSCRIPTION FEE" is
any fee or payment to medibuy.com by a seller of products or services on a
medibuy.com site that is not included within the definition of Net Revenue at
Section 9.1 of this Agreement. The parties agree that, in the event that
medibuy.com charges Subscription Fees, the parties will in good faith negotiate
an amendment to this Agreement providing a basis for drugstore.com to share in
the revenue derived from such Subscription Fees in light of the economic
relationship structured in this Agreement. Notwithstanding anything to the
contrary in this Section 9.2, if the total annual Subscription Fees attributable
to the HHC Site is less than $100,000, drugstore.com shall have no right to
share in the Subscription Fees. The amount of a Subscription Fee attributable to
the HHC Site shall be determined by multiplying such Subscription Fee by a
fraction representing the annual Gross Revenue of the products or services sold
by such party on the HHC Site divided by the annual Gross Revenue of the
products or services sold by such party on all medibuy.com sites, including
without limitation the HHC Site.

   9.3 Payments shall be payable on a quarterly basis and shall be due within 30
days of the end of each quarter.



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10. EXCLUSIVITY

No DS Competitor shall provide personal care, wellness, health and beauty
products for any medibuy.com sites. medibuy.com will operate other web sites and
platforms in addition to the HHC Site. For the purposes of this Agreement, all
web sites and platforms owned or operated by medibuy.com or its Affiliates,
including the HHC Site, are referred to as "MEDIBUY.COM SITES." medibuy.com
shall, at its expense and following and drugstore.com's written agreement to act
as a vendor on a particular medibuy.com site in addition to the HHC Site,
connect the Health eCatalog to such medibuy.com web site, provide the framework
for sales of drugstore.com products by means of the Health eCatalog to the
target of such site, and provide purchasing access to the Health eCatalog on
such site. Notwithstanding the terms of this paragraph, in the event that
medibuy.com, at the request of a GPO, creates a site particularized for such GPO
and such GPO specifically excludes drugstore.com from such site, medibuy.com
shall not be obligated to allow drugstore.com to be a vendor on such site.

No "DS Competitor" may provide such products on any medibuy.com site unless
drugstore.com determines not to connect the Health eCatalog to such site. A "DS
COMPETITOR" means a party that is primarily involved in retail sales to
consumers and of which a significant component of such party's business is the
retail sale of personal care, wellness, health and beauty products and/or
prescription drugs. The DS Competitors, as of the Effective Date, are set forth
on Exhibit F attached hereto and incorporated herein by reference. Exhibit F
shall be updated to include other DS Competitors by written agreement of the
parties provided that a dispute, if any, between the parties as to a proposed
update of Exhibit E shall be resolved in accordance with Section 23 below.

11. PRESCRIPTION DRUGS

   11.1 medibuy.com has no plans to sell prescription drugs by any means but
plans to facilitate the sale by other parties of prescription drugs via the HHC
Site and/or other medibuy.com sites. drugstore.com and medibuy.com each
acknowledge and agree that the sale of prescription drugs, including without
limitation infusion therapy, by drugstore.com via the Health eCatalog on the HHC
Site and/or other medibuy.com sites is subject to the resolution in a manner
satisfactory to each party of legal, regulatory and operational issues related
to the sale of prescription drugs via this medium and the payment of a revenue
share to medibuy.com as described below. Without limiting the foregoing, no
party shall have any obligation to proceed with the sale of prescription drugs
via the Health eCatalog absent an opinion of counsel in a form reasonably
satisfactory to such party as to the legal and regulatory propriety of such
arrangement. The parties will in good faith seek to resolve such issues.

   11.2 In the event that each of the parties resolves to its satisfaction the
legal, regulatory and operational issues discussed in the preceding paragraph,
drugstore.com shall pay medibuy.com 0.5 percent of the Gross Revenue from
prescription drugs sold by drugstore.com via the Health eCatalog through the HHC
site or other medibuy.com sites. medibuy.com acknowledges that persons seeking
to purchase prescription drugs from drugstore.com will have to open an account
with drugstore.com, providing, among other things, contact information,
including without limitation personal e-mail address, health and insurance data
and credit card information or other billing information acceptable to
drugstore.com.

   11.3 Except as otherwise provided in this paragraph, drugstore.com will be
the sole provider of prescription drugs, including without limitation infusion
therapy, via the HHC Site or other medibuy.com sites. Subject to medibuy.com's
good faith cooperation with drugstore.com: (i) to the extent that drugstore.com
has not formulated a plan by September 30, 2000 to offer prescription drugs
other than infusion therapy via the HHC Site and/or other medibuy.com sites
prior to the later of (x) December 31, 2000 or (y) the Launch Date, medibuy.com
may allow a party other than drugstore.com to sell prescription drugs other than
infusion therapy on the HHC Site or other medibuy.com sites; (ii) to the extent
that drugstore.com has not formulated a plan by September 30, 2000 to offer
infusion therapy via the HHC Site and/or other medibuy.com sites prior to the
later of (x) December 31, 2000 or (y) the Launch Date, including without
limitation by means of a contractual arrangement with a Third Party provider of
infusion therapy, medibuy.com may allow a party other than drugstore.com to
offer infusion therapy on the HHC Site or other medibuy.com sites. medibuy.com
acknowledges that infusion therapy is not currently offered by drugstore.com.

    11.4 In the event that drugstore.com provides prescription drugs through a
medibuy.com site:

   (i) drugstore.com represents, warrants and covenants that it will take all
reasonable steps to comply with the provisions of the VIPPS Certification
Program. The VIPPS Certification Program,



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established by the National Association of Boards of Pharmacy with respect to
Verified Internet Pharmacy Practices Sites, sets forth among other things,
quality criteria for the fulfillment and delivery of prescriptions.

      (ii) medibuy.com represents, warrants and covenants that it will take all
reasonable steps to safeguard the accuracy and confidentiality of prescription
information transmitted via a medibuy.com site.

12. WARRANT

Within three days of the Effective Date,medibuy.com will grant and deliver to
drugstore.com a warrant to purchase 50,000 shares of medibuy.com common stock, a
copy of which is attached hereto as Exhibit G and incorporated herein by
reference (the "WARRANT"). In the event that the exercise price per share set
forth in the Warrant is greater than the initial public offering price of
medibuy.com common stock (the "IPO PRICE"), medibuy.com shall as soon as
practicable cancel the Warrant and issue drugstore.com a substitute warrant
identical in all respects to the Warrant except that the exercise price per
share shall be equal to the IPO Price. In the event of an IPO, drugstore.com
shall comply with an underwriter's lock-up request provided that such lockup
shall equal the lesser of (i) 180 days or (ii) the lock-up period generally
requested by underwriters for holders of 50,000 shares.

13. OTHER POSSIBLE RELATIONSHIPS

medibuy.com and drugstore.com will consider extending their business
relationship in other ways. This may include among other things:

      (i) medibuy.com facilitating the use of drugstore.com by hospital
pharmacies

      (ii) medibuy.com and drugstore.com may choose to introduce new co-branded
services to medibuy.com's IDN and GPO clients' web-based healthcare communities.

      (iii) At the current time, medibuy.com does not plan to consumerize the
HHC Site. If, in the future, medibuy.com changes its strategy, drugstore.com and
medibuy.com, each acting in good faith, will work together to determine whether
and the means by which drugstore.com may assist medibuy.com. Any plan to
consumerize the HHC Site shall require the written agreement of drugstore.com.

Except as set forth in the final sentence of clause (iii) of this Section,
neither of the parties is under any obligation pursuant to this Section. In the
event that the parties choose to pursue any one or more of the possible
relationships set forth in this Section, there shall be no binding commitment
until the negotiation and execution of a definitive written agreement governing
such matters.

14. TRADEMARK LICENSE; INTELLECTUAL PROPERTY RIGHTS

   14.1 Each party ("LICENSOR") shall as soon as practicable provide the other
party ("LICENSEE") with samples of Licensor's Trademarks for use on the
Licensee's Site. Licensor hereby grants Licensee a non-exclusive,
non-transferable, royalty-free license during the Term to use Licensor's
Trademarks for the purposes set forth in Sections 1, 3, 7, 8 and 10 of this
Agreement provided that Licensee's use of Trademarks shall be in a form approved
by Licensor, which approval shall not be unreasonably withheld. Licensee
recognizes the great value of the goodwill associated with the Licensor's
Trademarks and acknowledges that such goodwill belongs exclusively to Licensor.
Licensee agrees that (i) it will not assert any interest or property rights in
any of the Licensor's Trademarks; (ii) all uses of the Licensor's Trademarks by
Licensee shall inure to the benefit of and be on behalf of Licensor, and (iii)
nothing in this Agreement shall give Licensee any interest in the Licensor's
Trademarks other than the right to use the Licensor's Trademarks during the Term
in accordance with this Agreement. Licensee shall neither attempt to register
the Licensor's Trademarks alone or as part of its own trademark nor use or
attempt to register any marks confusingly similar to the Licensor's Trademarks.
Licensee acknowledges that a material breach by Licensee of any of its
covenants, obligations or undertakings pursuant to this Section shall cause
Licensor irreparable damage that cannot be readily remedied in monetary damages
in an action at law, thereby entitling Licensor to equitable remedies, including
but not limited to temporary or permanent injunctive relief, costs and
reasonable attorneys' fees. All right, title and interest in and to the
Licensor's Trademarks, other than the specific rights granted to Licensee in
this Agreement, are retained by Licensor for its own use or license to others.



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   14.2 Subject to the license granted by each party under Section 14.1 and the
license granted by drugstore.com under Section 1.3(i), each of the parties
reserves all of its right, title and interest in its patents, copyrights, trade
secrets, trademarks and other intellectual property rights.

   14.3 medibuy.com will maintain the transaction history of Clients in the
strictest confidence. medibuy.com will aggregate transactional data for purposes
of assessment of market and business trends. Any such aggregate data is the
property of medibuy.com provided that, with respect to the HHC Site, medibuy.com
will provide such data to drugstore.com at no expense to drugstore.com and
hereby grants drugstore.com a royalty-free, perpetual, non-transferable license
to use such data. Such data will be deemed Confidential Information (as defined
below).

15. AUDIT RIGHTS

Each of the parties shall keep all usual and proper records and books of account
and all usual and proper entries relating to this Agreement in accordance with
GAAP. Either party, through any of its authorized employees, agents,
representatives, attorneys, or accountants, shall have the right, at its
expense, to examine the books, records, and files including those on electronic
media, upon reasonable notice and at reasonable times, directly related to the
transactions covered by this Agreement. Any such inspection will be conducted in
a manner that does not unreasonably interfere with the inspected party's
business activities. Any discrepancies or disputes shall be handled in
accordance with the Dispute Resolution Procedure described below. Upon
resolution of any dispute or discrepancy disclosed by the audit, prompt
adjustment will be made to compensate for any errors or omissions, and if the
overdue payment is in excess of $25,000, the inspected party shall also pay the
reasonable cost of such audit. Except as otherwise provided in this Section, any
audit shall be at the inspecting party's expense. Each party shall have the
right to audit the other party's records no more than once each year of the Term
provided that in the event that an audit reveals a material error or omission,
the auditing party shall have the right to audit the other party's books again
during such year of the Term. Each party recognizes and agrees that information
learned during an audit is confidential and that such information may be used
only in further disposition of the audit.

16. TAXES

Each party shall be solely responsible for payment of all of its own taxes,
including without limitation sales and use taxes or fees incurred in connection
with that party's activities under this Agreement. Each party will reasonably
cooperate with the other party in helping such party acquire such resale
certificates, licenses, tax identification numbers, or other documentation that
may be necessary to ensure that applicable sales and use taxes are properly
allocated.

17. MUTUAL REPRESENTATIONS AND WARRANTIES

Each party hereby represents and warrants that: (a) it is a corporation duly
organized and validly existing and in good standing under the laws of the state
of its incorporation, (b) it has full power and authority to enter into this
Agreement and to perform its obligations hereunder; (c) it has obtained all
permits, licenses, and other governmental authorizations and approvals required
for its performance under this Agreement; and (d) the services to be rendered by
each party under this Agreement neither infringe nor violate any patent,
copyright, trademark and/or trade secrets of any Third Party.

18. USER DATA

medibuy.com recognizes and agrees that drugstore.com privacy policies prohibit
it from disclosing any customer identifiable information to medibuy.com or any
Third Party. drugstore.com recognizes and agrees that medibuy.com shall be under
no obligation to provide patient identifiable information to drugstore.com
except in accordance with this Agreement. The Parties agree to consult regarding
conforming with each other's privacy policies and to laws and regulations
concerning data privacy.



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19. DISCLAIMER OF WARRANTIES

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL
WARRANTIES AND CONDITIONS, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE
IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. Each party acknowledges that it has not entered into this
Agreement in reliance upon any warranty or representation except those
specifically set forth herein.

20. LIMITATION OF LIABILITY

EXCEPT IN THE EVENT OF A BREACH OF A LICENSE GRANT, NEITHER PARTY SHALL BE
LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST
PROFITS ARISING OUT OF OR RELATED TO THIS AGREEMENT, EVEN IF A PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

21. INDEMNIFICATION

Each of the parties shall comply with the terms and conditions of the
indemnification procedure attached hereto as Exhibit H (the "INDEMNIFICATION
PROCEDURE").

22. CONFIDENTIALITY

Each of the parties shall comply with the terms and conditions of the
confidentiality provisions attached hereto as Exhibit I.

23. DISPUTE RESOLUTION

Each of the parties shall comply with the terms and conditions of the dispute
resolution procedure attached hereto as Exhibit J (the "DISPUTE RESOLUTION
PROCEDURE").

24. MISCELLANEOUS

      24.1 Relationship. The parties are independent contractors under this
Agreement. Each party acknowledges and agrees that it is not and will not be
during the Term an employee or an agent of any other party. Nothing in this
Agreement will be deemed to constitute, create, give effect to or otherwise
recognize a joint venture, partnership, franchise or business entity of any
kind. Nothing in this Agreement will be construed as providing for the sharing
of profits or losses arising out of the efforts of the parties hereto.

      24.2 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and the legal representatives, successors in
interest and permitted assigns, respectively, of each such party. This Agreement
shall not be assigned in whole or in part by any party without the prior written
consent of the other party, such consent not to be unreasonably withheld;
provided, however, that a party may, without consent of the other parties,
assign this Agreement to an Affiliate of the assignor, or to an entity acquiring
substantially all of the assets or capital stock of the assignor due to merger,
acquisition or consolidation so long as (a) the assignor remains liable for the
full and faithful performance of its obligations hereunder, (b) such Affiliate
or successor in writing assumes all of the obligations of the assignor under
this Agreement and agrees to comply with the terms set forth in this Agreement,
and (c) a copy of the assignment is provided to the non-assigning parties.

      24.3 Content. Any content on the HHC Site or other medibuy.com site that
either party reasonably determines to be contrary to law or false or misleading
in any material respect shall be removed, upon notice from the determining
party, as soon as practicable by the offending party. After such removal, the
parties may bring the dispute for resolution in accordance with the Dispute
Resolution Procedure.

      24.4 Notices. All notices, requests, demands, applications, services of
process, and other communications that are required to be or may be given under
this Agreement shall be in writing and shall be deemed to have been duly given
if sent by facsimile transmission, answer back requested, or delivered by
courier or mailed, certified first class mail, postage prepaid, return receipt
requested, to the parties to this Agreement at the following addresses:



                                       8
<PAGE>   9
         If to medibuy.com:   medibuy.com
                              10120 Pacific Heights Blvd, #100
                              San Diego, CA 92121
                              Attention: CFO
                              Fax:  858-587-7217

         If to drugstore.com: drugstore.com, inc.
                              13920 SE Eastgate Way
                              Suite 300
                              Bellevue, WA 98005
                              Attn: General Counsel
                              Fax: 425-372-3808

or to such other address as the party shall have furnished to the others by
notice given in accordance with this Section. Such notice shall be effective (i)
if delivered in person or by courier, upon actual receipt by the intended
recipient, or (ii) if sent by telecopy or facsimile transmission, on the date of
transmission unless transmitted after normal business hours, in which case on
the following date, or (iii) if mailed, upon the date of first attempted
delivery.

      24.5 Waiver. No provision of this Agreement shall be deemed to be waived
and no breach excused unless such waiver or consent shall be in writing and
signed by the party that is claimed to have waived or consented. The failure of
a party at any time, or from time to time, to require performance by the other
parties of any provision hereof shall in no way affect the rights of such party
thereafter to enforce the same nor shall the waiver by a party of any breach of
any provision hereof by the other parties constitute a waiver of any succeeding
breach of such provision, or a waiver of any provision itself, or a waiver of
any other provisions hereof.

      24.6 Severability. This Agreement will be enforced to the fullest extent
permitted by applicable law. If for any reason any provision of this Agreement
is held to be invalid or unenforceable to any extent, then such: (a) provision
will be interpreted, construed or reformed to the extent reasonably required to
render the same valid, enforceable and consistent with the original intent
underlying such provision; (b) provision will be void to the extent it is held
to be invalid or unenforceable; (c) provision will remain in effect to the
extent that it is not invalid or unenforceable; and (d) invalidity or
unenforceability will not affect any other provision of this Agreement or any
other agreement between the parties.

      24.7 Remedies. Except as otherwise expressly provided in this Agreement,
each and all of the rights and remedies provided in this Agreement, and each and
all of the remedies allowed at law and in equity, will be cumulative, and the
exercise of one right or remedy will not be exclusive of the right to exercise
or resort to any and all other rights or remedies provided in this Agreement or
at law or in equity.

      24.8 Injunctive Relief. The parties acknowledge that a material breach of
this Agreement would cause irreparable harm, the extent of which would be
difficult to ascertain. Accordingly, they agree that, in addition to any other
legal remedies to which the non-breaching party may be entitled, such party will
be entitled to obtain immediate injunctive relief in the event of a material
breach of this Agreement.

      24.9 Governing Law. This Agreement will be governed by and construed
according to the laws of the State of New York without regard to its choice of
law provisions. Each party irrevocably consents to the exclusive jurisdiction of
the federal courts located in either San Diego County, California or King
County, Washington in connection with any action or proceeding that arises from
or relates to this Agreement. The choice of jurisdiction of San Diego County,
California or King County, Washington shall be at the discretion of the claimant
in such action or proceeding, and each of the parties waives any right to assert
that any such court constitutes an inconvenient or improper forum.

      24.10 Publicity. Neither party shall, without the prior approval of the
other party, make any press release or other public announcement concerning the
transactions contemplated by the Agreement, except as and to the extent that any
such party shall be so obligated by law or by the rules, regulations or policies
of any national securities exchange or association or governmental entity, in
which case the other party shall be advised and the parties shall use their best
efforts to cause a mutually agreeable release or announcement to be issued.

      24.11 Entire Agreement. All Exhibits to this Agreement are incorporated in
and constitute a part of this Agreement. This Agreement, including the Exhibits
hereto, constitutes the entire understanding



                                       9
<PAGE>   10
between the parties in relation to the subject matter hereof and supersede all
prior discussions, agreements and representations related to this subject
matter, whether oral or written and whether or not executed by a party. Unless
otherwise provided in this Agreement, no modification, amendment or other change
may be made to this Agreement or any part thereof unless reduced to writing and
executed by authorized representatives of all parties.

      24.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.



                       [***NEXT PAGE IS SIGNATURE PAGE***]


                                       10
<PAGE>   11
                 Signature Page to Strategic Alliance Agreement



The parties hereto have duly executed this Agreement as of the date first
written above.



                                 "DRUGSTORE.COM"
                                 drugstore.com, inc., a Delaware corporation


                                 By:     /s/ MARK SILVERMAN
                                    --------------------------------------------
                                    Mark Silverman
                                 Its:  Vice President, Business Development



                                 "MEDIBUY.COM"
                                 medibuy.com, Inc., a Delaware corporation


                                 By:    /s/ DENNIS MURPHY
                                     -------------------------------------------
                                     Dennis Murphy
                                 Its:  Chief Executive Officer

<PAGE>   12
                AMENDMENT NO. 1 TO STRATEGIC ALLIANCE AGREEMENT


      This Amendment No. 1 (the "Amendment") to that certain Strategic Alliance
Agreement (the "Agreement") made and entered into as of February 14, 2000 by and
between drugstore.com, inc., a Delaware corporation ("drugstore.com") and
medibuy.com, Inc., a Delaware corporation ("medibuy.com") is made and entered
into as of March 5, 2000 by and between drugstore.com and medibuy.com. All
defined terms not defined herein shall have the meanings set forth in the
Agreement.

The parties agree as follows:

1. Notwithstanding anything to the contrary in the Agreement or this Amendment,
medibuy.com may permit any members of a group purchasing organization ("GPO") to
purchase by means of any medibuy.com site any products, supplies and/or services
(including without limitation any pharmaceuticals, prescription drugs or other
prescription products) from any GPO-contracted vendor other than a DS Competitor
or GPO-contracted distributor other than a DS Competitor. drugstore.com will be
the sole provider on the HHC Site of pharmaceuticals, prescription drugs or
other prescription products, including without limitation infusion therapy To
the extent that members of a GPO purchase products, supplies and/or services
(including without limitation any pharmaceuticals, prescription drugs or other
prescription products) from any vendor or distributor using the HHC site
(whether under its GPO's contract or otherwise), medibuy.com will be paid
revenue as contemplated by Section 9 of the Agreement and will pay drugstore.com
revenue in accordance with Section 9 of the Agreement.

2. Section 10 of the Agreement is deleted in its entirety and the following is
substituted instead:

      10. EXCLUSIVITY

No DS Competitor shall provide personal care, wellness, health and/or beauty
products and/or prescription drugs, including without limitation prescription
drugs used in infusion therapy, for any medibuy.com sites. medibuy.com will
operate other web sites and platforms in addition to the HHC Site. For the
purposes of this Agreement, all web sites and platforms owned by medibuy.com or
its Affiliates, including the HHC Site, the medibuy.com site that is co-branded
with Healtheon/WebMD and any medibuy.com site that may be created in the future
targeted to dermatologists and/or eye care providers are referred to as
"MEDIBUY.COM SITES." drugstore.com acknowledges that medibuy.com does not
currently and has no future plans to create a medibuy.com site targeted to
dermatologists and eye care providers. medibuy.com shall, at its expense and
following and drugstore.com's written agreement to act as a vendor on a
particular medibuy.com site in addition to the HHC Site, connect the Health
eCatalog to such medibuy.com web site, provide the framework for sales of
drugstore.com products by means of the Health eCatalog to the target of such
site, and provide purchasing access to the Health eCatalog on such site.

No "DS Competitor" may provide such products on any medibuy.com site unless
drugstore.com determines not to connect the Health eCatalog to such site. A "DS
COMPETITOR" means a party that is primarily involved in retail sales to
consumers and of which a significant component of such party's business is the
retail sale of personal care, wellness, health and beauty products and/or
prescription drugs. The DS Competitors, as of the Effective Date, are set forth
on Exhibit F attached hereto and incorporated herein by reference. Exhibit F
shall be updated to include other DS Competitors by written agreement of the
parties provided that a dispute, if any, between the parties as to a proposed
update of Exhibit E shall be resolved in accordance with Section 23 below.

3. Section 11.3 of the Agreement is deleted in its entirety and the following is
substituted instead:

      11.3 The parties agree that, notwithstanding anything in the Agreement to
the contrary, medibuy.com may contract with wholesale vendors or distributors to
supply pharmaceuticals, prescription drugs and other prescription products,
including without limitation prescription drugs used in infusion therapy, to
medibuy.com sites except as follows:

      (i) no DS Competitor may supply prescription drugs, including without
limitation prescription drugs used in infusion therapy, to the HHC Site and/or
any other medibuy.com sites and

      (ii) drugstore.com will be the sole provider of prescription drugs,
including without limitation prescription drugs used in infusion therapy, via
the HHC Site, the medibuy.com site that is co-branded with

<PAGE>   13
Healtheon/WebMD andany medibuy.com site that may be created in the future
targeted to dermatologists and/or eye care providers Subject to medibuy.com's
good faith cooperation with drugstore.com, with respect to each such site: (A)
to the extent that drugstore.com fails to provide prescription drugs other than
infusion therapy to such site by the later of (x) December 31, 2000 or (y) three
months after medibuy.com notifies drugstore.com that such products will be
offered on such site, medibuy.com may allow a party other than drugstore.com to
sell prescription drugs other than infusion therapy on such site; and (B) to the
extent that drugstore.com fails to provide infusion therapy to such site,
including without limitation by means of a contractual arrangement with a Third
Party provider of infusion therapy, by the later of (x) December 31, 2000 or (y)
three months after medibuy.com notifies drugstore.com that infusion therapy will
be offered on such site, medibuy.com may allow a party other than drugstore.com
to provide infusion therapy to such site. medibuy.com acknowledges that infusion
therapy is not currently offered by drugstore.com. drugstore.com acknowledges
that medibuy.com currently does not offer prescription drugs on the medibuy.com
site that is co-branded with Healtheon/WebMD.

4. As soon as practicable following medibuy.com's acquisition of Premier Health
Exchange, LLC, medibuy.com shall cause its vice president with responsibility
over strategic relationships to meet with the drugstore.com Vice President of
Business Development to discuss potential business relationships in addition to
those set forth in the Agreement and the Plan (as defined below). medibuy.com
shall use best efforts to market a drugstore.com awareness plan targeted at
patients of entities that make purchases via one or more medibuy.com sites (the
"Plan"), including, among other things, providing information regarding
patients' obtaining prescription drug refills and non-prescription products from
drugstore.com.

5. Within three days of the Effective Date of this Amendment, medibuy.com will
grant and deliver to drugstore.com a warrant to purchase 200,000 shares of
medibuy.com common stock at an exercise price of $0.01 per share in the form
attached hereto as Exhibit A ("Pre-IPO Warrant"). Upon grant and delivery of the
Pre-IPO Warrant, the original warrant to grant 50,000 shares of medibuy.com
common stock granted by medibuy.com to drugstore.com pursuant to the Agreement
(prior to this Amendment) will be canceled by medibuy.com and be null and void.

medibuy.com represents and warrants that there have been no stock splits and/or
dividends of any of its capital stock from January 13, 2000 up to and including
the date of this Amendment. medibuy covenants that, in the event that it
effected or effects a stock split and/or dividend of any of its capital stock at
any time from January 13, 2000 up to and including the date of grant to
drugstore.com of the Pre-IPO Warrant, the number of shares subject to the
Pre-IPO Warrant and the exercise price per share shall be accordingly adjusted
so that drugstore.com shall be entitled to receive the kind and number of shares
of securities of the medibuy.com which it would have owned or would have been
entitled to receive immediately after such action had the Pre-IPO Warrant
already been exercisable by drugstore.com and exercised immediately prior to
such action. medibuy.com represents and warrants that it currently intends to
"split" its common stock on a 2:1, 2.5:1 or 3:1 basis prior to the medibuy.com
initial public offering.

6. Within five days of the closing of the medibuy.com initial public offering,
medibuy.com will grant and deliver to drugstore.com a warrant to purchase
200,000 shares of medibuy.com common stock at an exercise price of $0.01 per
share in the form attached hereto as Exhibit B ("Post-IPO Warrant").

7. In the event of a medibuy.com initial public offering, drugstore.com shall
comply with an underwriter's lock-up request provided that such lockup shall
equal the lesser of (i) 180 days or (ii) the lock-up period generally requested
by underwriters for holders of 200,000 shares (as split-adjusted). In the event
that medibuy.com elects not to complete an initial public offering but an
Affiliate of medibuy.com completes an initial public offering within six months
of this Amendment, medibuy.com shall cause drugstore.com to be granted a
warrant, within 5 days of the closing of such initial public offering, (i) to
purchase that number of shares of common stock of such Affiliate that would give
drugstore.com an equity interest in such entity equal to drugstore.com's equity
interest in medibuy.com as of the date first written above assuming that
drugstore.com's Pre-IPO Warrant and Post-IPO Warrant were exercisable as of the
date first written above and (ii) that shall be on the same terms as the Pre-IPO
Warrant, including without limitation an exercise price of $.01 and an exercise
period of at least one year following the expiration of a 180-day lock-up period
following such IPO. The issuance of any such warrants to purchase stock of the
Affiliate will cancel the Pre-IPO Warrant and Post-IPO Warrant upon delivery.

8. Except as modified by this Amendment, the Agreement remains in full force and
effect. The Agreement and the Amendment, taken together as a whole, constitute
the entire understanding between the parties in relation to the subject matter
hereof and supersede all prior discussions, agreements and

<PAGE>   14
representations related to this subject matter, whether oral or written and
whether or not executed by a party. Unless otherwise provided in the Agreement,
no modification, amendment or other change may be made to the Agreement and/or
the Amendment or any part thereof unless reduced to writing and executed by
authorized representatives of all parties. This Amendment may be executed in two
or more counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.




                          [Next page is Signature Page]

<PAGE>   15
       SIGNATURE PAGE TO AMENDMENT NO. 1 TO STRATEGIC ALLIANCE AGREEMENT


      The parties hereto have duly executed this Agreement as of the date first
written above.

                                 "DRUGSTORE.COM"
                                 drugstore.com, inc., a Delaware corporation


                                  By:  /s/ MARK SILVERMAN
                                     -------------------------------------------
                                    Mark Silverman
                                  Its:  Vice President, Business Development


                                  "MEDIBUY.COM"
                                  medibuy.com, Inc., a Delaware corporation


                                  By:  /s/ DENNIS MURPHY
                                     -------------------------------------------
                                     Dennis Murphy
                                  Its:  Chief Executive Officer