EXHIBIT 10.25
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
PRIME VENDOR AGREEMENT FOR PHARMACEUTICALS
THIS AGREEMENT made December 23, 2003 and effective as of January 1, 2004 (the
"Effective Date"), is between McKesson Corporation ("McKesson"), a Delaware
corporation with its principal place of business at One Post Street, San
Francisco, California 94104, and Omnicare, Inc. ("Omnicare"), a Delaware
corporation with its principal place of business at 1600 RiverCenter 100 East
RiverCenter Blvd. Covington, Kentucky 41011. McKesson Health Systems ("MHS") is
a division of McKesson.
WHEREAS, MHS is engaged in the business of wholesale distribution of
pharmaceuticals and the provision of related goods and services. Omnicare
provides healthcare services to its communities. Omnicare desires to avail
itself on behalf of its owned and managed facilities of MHS' distribution and
other services upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties agree as follows:
1. DEFINITIONS
Except as otherwise stated herein, capitalized terms used in this Agreement
will have the meanings set forth in Exhibit A hereto.
2. APPOINTMENT AND COMMITMENT
2.1 Appointment of Prime Vendor. Omnicare agrees to purchase from MHS at
least [ ** ] of the requirements for Pharmaceutical Products of
Omnicare and the Omnicare Facilities, net of Permitted Purchases, as
hereinafter defined ("Volume Net Purchase Percentage Requirement").
2.1.1 The term "Pharmaceutical Products" shall mean [ ** ] (subject to
clause (vi), below), [ ** ]. The term "Permitted Purchases" shall
mean (i) purchases of [ ** ] pursuant to Section 5.1; (ii)
purchases for [ ** ], but only if such purchase is pursuant to a
contractual commitment of such [ ** ]; (iii) direct purchases of
[ ** ], not to reduce overall compliance to below [ ** ]; (iv)
purchases from [ ** ]; (v) purchases of [ ** ] that, as of the
Effective Date, does not fall within the definition of
Pharmaceutical Products (for example, [ ** ]), but which during
the term of this Agreement [ ** ], but only to the extent [ ** ];
and (vi) purchases of [ ** ]. For the removal of doubt, nothing
in this Agreement shall obligate Omnicare to purchase products or
services now or hereafter offered by divisions of McKesson other
than MHS that are not Pharmaceutical Products (e.g., robotics,
medical surgical supplies, healthcare information systems.)
2.1.2 To fulfill the Volume Net Purchase Percentage Requirement,
Omnicare agrees: (i) to purchase [ ** ] and (ii) to purchase
[**].
2.2 Omnicare Facilities. The term "Omnicare Facility" shall be defined as
a facility now or hereafter owned or controlled by Omnicare that
orders, dispenses, handles, packages, repackages, stores or otherwise
use pharmaceutical products, including, but not limited to, a
pharmacy, repackaging operation and/or warehouse location, and
Omnicare Purchasing Company, L.P.; provided that (i) any such facility
that is controlled but not owned by Omnicare shall not be included as
an "Omnicare Facility" under this Agreement unless such facility meets
MHS's reasonable credit
requirements and (ii) any such facility, whether owned or controlled
by Omnicare, shall not be included as an "Omnicare Facility" under
this Agreement without the prior written consent of McKesson if the
addition of such facility would materially alter the average cost to
serve Omnicare's then existing Omnicare Facilities. A list of all
current Omnicare Facilities, including their respective addresses and
estimated monthly purchasing volume, is attached to this Agreement as
Exhibit B and incorporated herein by this reference. Upon the addition
of any such Omnicare Facility, Exhibit B will be amended.
3. TERM AND TERMINATION
3.1 This Agreement shall supersede the Restated MHS Health Systems
Agreement to Serve Omnicare, Inc. as Primary Supplier of
Pharmaceuticals (dated March 23, 1998), as amended, and shall expire
on October 31, 2010, unless sooner terminated in accordance with its
terms.
3.2 This Agreement may be terminated prior to expiration only as follows:
3.2.1 Omnicare may terminate this Agreement (i) upon McKesson changing
its pricing schedule to Omnicare except in accordance with the
terms hereof, (ii) upon the Omnicare group service level falling
below 90% for a quarter, or (iii) upon the failure of McKesson's
order management systems to perform the ordering functions for a
consecutive fifteen (15) days or more or (iv) in accordance with
Section 13.1. McKesson may terminate this Agreement in accordance
with Sections 4.1.3 and 13.1. Either party may terminate this
Agreement upon (i) the other party's failure to make any payment
due hereunder within fifteen (15) days following written notice
of such failure or (ii) any other material breach of the
Agreement by either party which remains uncured forty-five (45)
days following written notice thereof.
3.2.2 Upon the occurrence of any of the following events to a party,
the other party may, without prejudice to its other rights,
terminate this Agreement upon written notice:
3.2.2.1 If such party shall wind up, liquidate, or dissolve
itself; or
3.2.2.2 If such party shall file any petition under any
bankruptcy, reorganization, insolvency or moratorium laws, or any
other law or laws for the relief of or in relation to the relief of
debtors; or
3.2.2.3 If such party shall file any involuntary petition under
any bankruptcy statute or a receiver or trustee shall be appointed to
take possession of all or a substantial part of its assets which has
not been dismissed or terminated within sixty (60) days of the date of
such filing or appointment; or
3.2.2.4 If such party shall make a general assignment for the
benefit of creditors or shall become unable or admit in writing its
inability to meet its obligations as they mature; or
3.2.2.5 If such party shall institute any proceedings for
liquidation or the winding up of its business other than for purposes
of reorganization, consolidation or merger.
3.2.3 Omnicare shall have the right to terminate this Agreement
immediately if McKesson sells all or substantially all of its
assets to a person who is not controlling, controlled by, or
under common control with McKesson, or there is a change in
control of McKesson. For the purposes of this Agreement, a
"Change In Control" shall mean a merger, consolidation or other
corporate reorganization following which 50% or more of the
outstanding McKesson stock or voting power is owned by a person
or persons other than the owners immediately prior to such event.
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3.2.4 Omnicare shall have the right to terminate this Agreement on [
** ] days' prior written notice if McKesson shall [ ** ].
3.3 Continuing Obligations. In the event of a termination hereunder:
3.3.1 Obligations Incurred Prior to Termination. The liability of
Omnicare Facilities for obligations incurred prior to the
effective termination date, for finance charges and for all costs
of collection, including reasonable attorneys' fees, shall
survive termination.
3.3.2 Obligation for Additional Products. Omnicare shall be obligated
to purchase from MHS all Additional Products that (i) have been
purchased by MHS exclusively for Omnicare as of the date of such
termination or notice of termination and (ii) cannot be returned
by MHS to the vendor for a full refund. Omnicare shall pay the
original invoice price charged to MHS by the vendor of such
Additional Products or the contract price in effect at the time
of purchase by Omnicare, if lower, less any cash discount
received by MHS. Any such Additional Product will be saleable,
undamaged, have at least six months dating (with the exception of
private label items) and will be delivered in one shipment to
Omnicare or to a destination designated by Omnicare. Omnicare
shall also be liable for all shipping charges that would
otherwise be charged pursuant to the terms of this Agreement.
3.3.3 The following provisions of this Agreement will survive
termination or expiration of this Agreement in accordance with
their terms: Section 4.6.6 (Late Payment Fees), Section 4.6.7
(Right to Change Payment Terms), Section 3.3 (Continuing
Obligations), Section 12 (Confidential Information), 13.13
(Special Indemnity), 13.15 (Governing Law) and 13.16 (Entire
Agreement).
4. PRICING AND PAYMENT
4.1 [ ** ]. From the date of this Agreement through [ ** ], sale of
Products to Omnicare shall be [ ** ]. Beginning [ ** ], subject to Section
4.2 below, McKesson agrees to distribute and sell Products to Omnicare
Facilities [ ** ], as set forth in the following Pricing Matrix. Omnicare
may elect to change its payment terms among those set forth in Section
4.6.3, subject to credit approval, [ ** ]. In the event of such change the
pricing set forth in the applicable Pricing Matrix will be adjusted in
accordance with the following table:
Terms Adjustment
- ----- ----------
[ ** ] [ ** ]
[ ** ] [ ** ]
[ ** ] [ ** ]
[ ** ] [ ** ]
PRICING MATRIX FOR NON-RETAIL OMNICARE FACILITIES**
- ------------------------
[ ** ] [ ** ] [ ** ]
- ------------------------
[ ** ] [ ** ] [ ** ]
- ------------------------
3
- ------------------------
[ ** ] [ ** ] [ ** ]
- ------------------------
[ ** ] [ ** ] [ ** ]
- ------------------------
[ ** ] [ ** ] [ ** ]
- ------------------------
[ ** ] [ ** ] [ ** ]
- ------------------------
[ ** ] [ ** ] [ ** ]
- ------------------------
[ ** ] [ ** ] [ ** ]
- ------------------------
PRICING MATRIX FOR RETAIL OMNICARE FACILITIES***
- ------------------------------------
7 Day
Average Monthly Payment
Retail Volume Per Facility Terms
- ------------------------------------
[ ** ] [ ** ]
- ------------------------------------
[ ** ] [ ** ]
- ------------------------------------
[ ** ] [ ** ]
- ------------------------------------
[ ** ] [ ** ]
- ------------------------------------
[ ** ] [ ** ]
- ------------------------------------
[ ** ] [ ** ]
- ------------------------------------
[ ** ] [ ** ]
- ------------------------------------
- ------------------------------------
**Pricing incorporates the elimination of [ ** ]. Omnicare reserves the
right to review[ ** ].
***Retail Facilities will receive [ ** ].
4.1.1 For purchases of Contract Products "Cost" shall mean the
Contract Price.
4.1.2 For purchases of Products that are not Contract Products, "Cost"
shall mean manufacturer's published wholesale acquisition cost
(exclusive of cash discounts) on the date invoice to an Omnicare
Facility, adjusted for selected bonus goods, manufacturers'
off-invoice allowances and special manufacturer's deal prices to
be made available to an Omnicare Facility in accordance with MHS'
established policies.
4.1.3 The pricing matrix is based on Omnicare [ ** ]. If the actual [
** ] falls below [ ** ]. If within [ ** ] the parties are unable
to agree on appropriate [ ** ] prior written notice.
4.1.4 "[ ** ]" will be determined by [ ** ] the most recent [ ** ].
Pricing will be evaluated each [ ** ] based upon the [ ** ].
Should the total [ ** ] purchases. This [ ** ] will result in one
[ ** ]. This [ ** ] together with [ ** ] under this agreement
that are stated to be payable in accordance with this Section
4.1.4, shall be applied within [ ** ] of the end of a [ ** ]. [
** ] on all such [ ** ] at an [ ** ], starting with the [ ** ] in
which the [ ** ]. References in this Agreement to "[ ** ]," "[ **
]" or "[ ** ]" or similar terms other than "[ ** ]" shall mean
the [ ** ].
4.1.5 Pricing in this Agreement is based upon [ ** ]. In the event of
any [ ** ] from any manufacturer [ ** ], Omnicare and MHS will [
** ], as the case may be. Should Omnicare and MHS [ ** ],
provided that [ ** ] after reasonable written notice thereof, and
such purchase [ ** ], provided that nothing in this Section 4.1.5
shall [ ** ].
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4.2 Specially Priced Product. The purchase price for selected Products,
including, without limitation, generic products sold under MHS
proprietary generics programs (e.g., OneStop, Network Net), repackaged
pharmaceuticals, private label products, health and beauty care
products, medical surgical supplies, home health care/durable medical
equipment, Products acquired by MHS from vendors not offering
customary cash discounts or other terms, and other specialty; slow
moving; non-pharmaceutical; and/or net-billed Products will not be
based upon the [**] described in Section 4.1 above, but will instead
be billed in accordance with the terms and conditions established by
MHS (including applicable markup) for such Products. Products
described in this paragraph are sometimes referred to as "Specially
Priced Products." Exhibit C sets forth, for illustration purposes
only, a representative sampling of the principal types of Specially
Priced Product and their prices as of the dates indicated.
4.3 Taxes. The foregoing pricing does not include any applicable sales,
use, business and occupation, or other taxes on the sale of Products
hereunder (other than taxes on McKesson's net income), which will be
added to the pricing of Products sold to Omnicare Facilities.
4.4 [ ** ]. The foregoing pricing [ ** ]. No [ ** ] or a [ ** ] in which [
** ].
4.5 Cost Verification. Upon prior written notification, invoices
reflecting MHS' acquisition cost shall be made available for audit by
a representative of Omnicare during business hours.
4.6 Credit and Payment
4.6.1 MHS will invoice direct to Omnicare for all Products ordered and
shipped. Omnicare shall be responsible for payment of goods and
services provided by MHS to Omnicare.
4.6.2 Invoices shall be in one of MHS's standard forms selected by the
Omnicare.
4.6.3 Payment Terms: The following payment terms options for Products
covered by this Agreement are available to Omnicare, on at least
thirty (30) days' prior notice, effective beginning in the
quarter following such notice; unless, at the time of any
election by Omnicare to change its payment terms, its financial
condition is not, in the reasonable opinion of MHS, adequate to
support such new terms.
4.6.3.1 7-Day Prepayment Terms: The prepayment is a one-time
payment equivalent to seven (7) days worth of purchases
(based on the most recent three-month purchase history)
which is held as a deposit by MHS. The amount of the
required deposit will be adjusted quarterly, and may be
adjusted as often as monthly, to cover increases or
decreases in purchase volume. Following such one time
payment, all purchases are payable as set forth below under
15 Day Payment Terms. Payment is required via ACH or other
EFT acceptable to MHS.
4.6.3.2 7-Day Payment Terms: Invoices dated from Monday through
Friday are due and payable by Tuesday of the following week.
Payment is required once a week via ACH or other EFT
acceptable to MHS Payment is required via ACH or other EFT
acceptable to MHS.
4.6.3.3 15-Day Payment Terms: Invoices dated from the 1st to the
15th of the month are due and payable on the 22nd day of the
same month. Invoices dated from the 16th to the end of the
month are due and payable on the 7th of the following month.
Payment is required via ACH or other EFT acceptable to MHS.
4.6.3.4 30-Day Payment Terms: Invoices dated from the 1st to the
end of the month are due and payable on the 15th of the
following month. Payment is required via ACH or other EFT
acceptable to MHS.
5
4.6.3.5 Other Payment Terms: As mutually agreed by the parties.
4.6.4 For purposes of this Agreement, "due and payable" means that
Omnicare shall make any payments due hereunder on such earlier
date as shall be required to provide MHS with good funds in hand
on each of the designated due dates specified in the Payment Term
section of this Agreement. Omnicare may defer payment with
respect to any shortage in a shipment, but only to the extent of
such shortage and only if Omnicare has notified MHS of such
shortage within three (3) business days of receipt of the
shipment.
4.6.5 If Omnicare continues to elect 7 Day Payment Terms, if the
payment due date is a holiday, payment is due and payable on the
following day. If Omnicare elects any other Payment Terms, if the
due date falls on a weekend day or holiday, payment is due and
payable on the preceding business day.
4.6.6 Late Payment Fees. Payment by either party other than as stated
will result in a late payment fee equal to [ ** ]. The late
payment fee shall be calculated on the basis of [ ** ]. The late
payment fee shall be payable in arrears on the 10th and 25th of
each month.
4.6.7 Right to Change Payment Terms. Without limiting MHS's rights
under this Agreement or applicable law, which rights are hereby
expressly reserved, MHS reserves the right to change a payment
term (including imposing the requirement of cash payment upon
delivery with an adjustment in pricing consistent with the
pricing matrix in Section 4.1 plus associated additional handling
charges) or limit total credit, if Omnicare fails to make any
payment in accordance with the terms of this Agreement, except
for Excluded Late Payments. "Excluded Late Payments" shall mean
(i) payments made during the [ ** ] and at a time when [ ** ] and
(ii) payments made during the [ ** ] at a time when [ ** ];
provided that the payments described in clauses (i) and (ii)
occur during the [ ** ]; provided further that the payments
described in clauses (i) and (ii) are [ ** ].
4.6.8 [ ** ]. Omnicare shall have the right, on a quarterly basis,
effective for the following quarter, to elect to have part of its
[ ** ]. Until the first such election, Omnicare's [ ** ] will
reflect a [ ** ]. This [ ** ] will be reported and disclosed
consistent with Section 13.11.
4.6.9 [ ** ]. Every [ ** ] that is not [ ** ] will be entitled to
receive a [ ** ], payable at [ ** ]. This [ ** ] will be reported
and disclosed consistent with Section 13.11.
4.6.10 [ ** ]. Omnicare's pricing will be [ ** ]. [ ** ] will be
determined by [ ** ], provided that if the inclusion of any
Omnicare [ ** ].
[ ** ] [ ** ]
o [ ** ]
o [ ** ] [ ** ]
o [ ** ] [ ** ]
4.6.11 [ ** ]. If an Omnicare facility elects to [ ** ], the
appropriate pricing schedule [ ** ]. Omnicare or any Omnicare
Facility may elect to [ ** ]. McKesson reserves the right to
disallow a [ ** ].
5. DISTRIBUTION SERVICES
5.1.1 Agreement to Distribute. Subject to the pricing and other terms
and conditions of this Agreement, MHS agrees to sell and
distribute all pharmaceutical products (whether over-
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the-counter, prescription, or scheduled pharmaceuticals) and
related healthcare products normally stocked by a wholesale
pharmaceutical distributor ("Pharmaceutical Products") to
eligible Omnicare Facilities. An Omnicare Facility may from time
to time request that additional products ("Additional Products")
be stocked by MHS to satisfy such Omnicare Facility's reasonable
needs. Such request shall be in writing, shall be accompanied by
a utilization estimate of the Additional Products meeting the
manufacturer's minimum order requirements. All manufacturers of
Additional Products must offer industry standard trade terms and
must meet MHS' standard indemnification, insurance and other
requirements to become an approved vendor. Subject to Section
2.1.2, sales and distribution may be on a Direct Store Sales or
Dock-to-Dock basis.
5.1.1.1 "Direct Store Delivery" shall mean sales from
McKesson's inventory to non-warehouse Omnicare
Facilities.
5.1.1.2 "Dock-to-Dock" sales shall mean sales of products
pursuant to orders which are outside of normal direct
store delivery to Omnicare Facilities supported by MHS'
forward distribution centers and which are not received
into MHS' inventory system, but are either shipped
directly to Omnicare Facilities by the manufacturer or
are manually received by McKesson and sent to
Heartland/Vanguard, Dock-to-Dock sales shall include,
without limitation, drop shipments,
5.1.2 Ordinary course orders for products to be shipped to Omnicare
non-warehouse facilities in normal volumes and regular purchase
velocity will be handled as Direct Store Delivery. For purposes
of certainty, notwithstanding anything in this Agreement to the
contrary, [ ** ]. Orders that are in excess of [ ** ], except
that the following categories of sales [ ** ]:
5.1.3 Sales of [ ** ], orders which are (i) consistent with [ ** ]
made at least [ ** ]; (ii) repeated in [ ** ]; (iii) from vendors
that have approved such [ ** ]; (iv) as to which Omnicare agrees
to purchase [ ** ].
5.1.4 [ ** ], upon such prior notice as is reasonably required for the
parties to obtain [ ** ], which shall initially be no less than [
** ], and which shall be adjusted by good faith agreement of the
parties based on their joint experience in obtaining such
approval.
5.2 Ordering.
5.2.1 Electronic Transmission. All Omnicare Facilities purchasing
Products hereunder are required to transmit their orders
electronically via MHS's toll-free order entry system.
5.3 Delivery.
5.3.1 Scheduled Deliveries. MHS will make one (1) delivery per day,
Monday through Friday (excluding holidays), to each of the
Omnicare Facilities. MHS will make all Monday - Friday regular
deliveries to Omnicare no later than 10:00 am. MHS will pay the
individual Omnicare location [ ** ] for any delivery that is
delivered later than [ ** ].
5.3.2 Order Transmission Times. Orders transmitted to MHS by the local
distribution center's order transmission deadline shall be
delivered on the next business day. Order cut off time for
transmissions Sunday through Thursday shall be no earlier than
7:00 pm.
5.3.3 F.O.B. All deliveries of Products will be F.O.B. destination to
the Omnicare Facilities within the United States at their
respective addresses set forth on Exhibit B, except in the states
of Hawaii and Alaska in which delivery fees may apply.
7
5.3.4 Transportation. MHS may make deliveries to Omnicare Facilities
by MHS's trucks, common carriers or other means selected by MHS.
5.3.6 Emergency Service. MHS provides emergency service twenty-four
(24) hours per day, seven (7) days per week. MHS will make
available to each Omnicare Facility emergency telephone and pager
numbers for primary and secondary contacts at each distribution
center which services such Omnicare Facility. Extraordinary
delivery costs (e.g., air freight shipments and after hours
delivery services) will be at the expense of the Omnicare
Facility. Each Omnicare Facility will be allowed [ ** ]. Each [
** ] will be subject to the fee table below:
------------------
Via: Fee:
------------------
Will Call [ ** ]
------------------
Ground [ ** ]
------------------
Two Day [ ** ]
------------------
Overnight [ ** ]
------------------
*Note: There are restrictions on hazardous items (which are
shipped via ground courier) and controlled substances (which must
be filled by the primary Distribution Center).
5.3.7 Disaster Plan. MHS has a plan to provide for delivery in the
event of a natural disaster. MHS's local distribution center will
assist the Omnicare Facility in developing and implementing a
custom procurement plan to respond to natural disasters which
affect such Omnicare Facility and/or such distribution center.
5.3.8 Alternate Sourcing of Product. In the event a distribution
center is out of a particular product, MHS can ship shorted
product(s) from another MHS distribution center and the product
will be delivered within 48 hours. When requested by an Omnicare
Facility before 1:00 pm, MHS will make reasonable efforts to have
the required product alternate sourced and delivered within 24
hours of the request.
5.3.9 Shipments will be in accordance with all applicable regulations
and packaging requirements. Cytotoxic agents are shipped in
special plastic wrapped bags with special oncology logo attached
for identification purposes. All products that are temperature
sensitive will be shipped with the appropriate protective
packaging.
5.3.10 Order Separation by Department or Cost Center. MHS agrees to
deliver Product to an Omnicare facility sorted by the designated
departments if Omnicare transmits orders separated by department
via McKesson's electronic ordering system.
5.3.11 Material Safety Data Sheet. When requested by an Omnicare
Facility, MHS will provide Material Safety Data Sheets.
5.4 Returned Goods. Subject to applicable law, MHS will process returned
goods for items purchased by Omnicare from MHS, in accordance with
this Return Goods Policy (which is subject to change by MHS under the
circumstances described in Section 5.4.6, effective upon thirty (30)
days' prior notice to Omnicare), as follows:
5.4.1 Definitions
5.4.1.1 Saleable Products shall include the following:
8
o Products are determined saleable by MHS based upon the
ability to resale the item without special handling,
refurbishing or other expense; or
o Saleable Products must have dating of the then current
month plus six (6) months remaining until expiration.
Exceptions to this dating policy are:
i) Refrigerated and other temperature-controlled
Products; or
ii) Products deemed permanently short-dated by MHS
and manufacturers.
In the above-specified instances as set forth in Subsections
5.4.1.1(i) and (ii), the Omnicare Facility shall be
permitted to return the Products within the then current
month plus three (3) months remaining until expiration.
5.4.1.2 Unsaleable Products shall include the following:
o Products with less than the then current month plus six
(6) months remaining until expiration;
o Products with torn or damaged packaging;
o Products without labels attached (prescription or price
sticker);
o Products that are soiled, stained or worn;
o Products that fail to have a safety or security seal
intact; and
o Products requiring special handling (i.e. biological or
other temperature-controlled products) and that do not
require Omnicare Facility's signature to assure that
the Product has been stored and protected under proper
conditions specified by the manufacturer.
5.4.1.3 MHS reserves the right to determine whether a Product is
saleable or unsaleable upon inspection of the returned item.
5.4.2 Products Authorized For Return to MHS:
5.4.2.1 Saleable Product and Unsaleable Product purchased from
MHS, unless otherwise blocked for return by a manufacturer
or by MHS;
5.4.2.2 Unsaleable Products purchased from MHS which can be
returned by MHS to the manufacturer according to their
policy;
5.4.2.3 McKesson Private Label Products (Value-Rite(R), Health
Mart(R), SunMark(R); and
5.4.2.4 Products recalled by a manufacturer or in the case of a
manufacturer withdrawing the Product from market.
5.4.2.5 Products not eligible for return shall include the
following:
o Products that were not purchased from MHS;
o Products that are not physically carried by MHS;
o Expired Products that go beyond a manufacturer's
acceptable return period;
o Saleable Products that have been improperly stored;
o Unsaleable returns on Customer's private label
Products;
9
o Repackaged Products (includes RxPak, overbag or
"Robot-ready" products);
o Products discontinued by manufacturer and no longer
stocked by MHS;
o Partial bottles, liquids and other containers (except
in the instance of recall of a Product);
o Schedule II Controlled Substances (as evaluated on
individual return requests); and
o Products damaged or defaced at the Omnicare Facility's
location or on the shelf.
5.4.3 [ ** ]. MHS will provide the following [ ** ] as calculated from
the date of [ ** ]:
---------------
[ ** ] [ ** ]
[ ** ]
[ ** ]
---------------
[ ** ] [ ** ]
[ ** ]
---------------
[ ** ] [ ** ]
---------------
[ ** ] [ ** ]
---------------
5.4.4 Omnicare Facility Eligibility
Any existing or future owned or managed Omnicare Facility shall
be eligible for returns and percentage of credit provided under
this Agreement.
5.4.5 Pricing Determination on Returned Goods
MHS will use the invoice price when an Omnicare Facility provides
a valid invoice number.
If no invoice number is provided, the following pricing rules
will apply:
o For Products which are Contract Products on the date the
return authorization is created, an Omnicare Facility will
be credited the contract price.
o For non-Contract Products, an Omnicare Facility will be
credited a weighted average price based on such Omnicare
Facility's past 12 month purchase history.
o For non-Contract, Generic Products, an Omnicare Facility
will be credited the lowest price paid by such Omnicare
Facility over the past 12 months.
o For non-Contract Products purchased more than 12 months
prior to the date the return authorization is created, an
Omnicare Facility will be credited the manufacturer's
published acquisition cost (exclusive of cash discounts) on
the date of the of the return authorization.
Final credit issued is based upon the condition and timing of
returned goods to MHS.
5.4.6 Notification of Changes
MHS reserves the right to change the above stated Returned Goods
Policy at any time with thirty (30) days' notification to
Omnicare, provided such changes are in response to changes in
applicable law or other governmental requirements or reflect
changes in manufacturer return policies.
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5.5 Product Warranty. McKesson warrants and guarantees to Omnicare that as
of the date of delivery, the Products will not be adulterated,
misbranded or counterfeit drugs within the meaning of the Federal
Food, Drug and Cosmetic Act, 21 U.S.C. 301 et seq., as amended (the
"Act") and in effect at the time of such delivery or within the
meaning of any applicable state or municipal law and such Product is
not, at the time of such delivery, merchandise which may not be
introduced into interstate commerce under the provisions of Sections
404 or 405 of the Act (21 U.S.C. 344 and 355).
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6. SERVICE LEVEL
[ ** ]. For purposes of this Agreement, the following inventory management
definitions and service level performance commitments are outlined below:
6.1 Definitions:
6.1.2 [ ** ] shall mean an MHS system that [ ** ]. Items [ ** ]. The [
** ] are determined by [ ** ]. Specifically, the last [ ** ] are
used to determine an [ ** ]. The last [ ** ] towards the most [
** ]. [ ** ] are set at the account level. Items that are [ ** ].
For example, [ ** ]. Items with variability in actual or
anticipated demand are typically [ ** ].
This program is not designed to restrict the customer's ability
to do business effectively. If an Omnicare facility [ ** ]. MHS
requires at least [ ** ]. If the [ ** ] exceeds [ ** ], MHS will
require [ ** ]. A [ ** ] will also require [ ** ]. MHS will
provide Omnicare on a [ ** ]. [ ** ] applied to Omnicare orders
shall be [ ** ].
6.1.3 Manufacturer Unable to Supply (MUS) items are items unable to be
supplied due to the manufacturer's inability to meet market
demand. These are shortages typically greater than 3-5 business
days. Orders received partially complete, orders received after
their scheduled delivery day, and orders not shipped to the
distribution center leading to an omit are classified as a MUS.
MHS will validate with the supplier the reason of the shortage
and expected resolution. The reasons for MUS may include
production delays, quality control issues, raw material
shortages, discontinuation of product, and recalls.
6.1.4 Temporary outs shall mean short term outages that are not
attributed to a manufacturer supply issue. The reasons for
temporary outs may include:
o Lead time variability
o Demand variability
o Cycle count discrepancies
o Delays in receiving
6.2 MHS shall maintain a [ ** ]% line adjusted service level on Omnicare's
top 200 dollar volume items and a [ ** ]% line adjusted service level
on all of Omnicare's items. Service Level is defined as the total
number of lines shipped divided by the total number of lines ordered,
minus the following exclusions:
o Manufacturer Unable to Supply (MUS)
o Products not stocked by MHS
o All discontinued items
o Product reordered within 48 hours of an original shortage
o Products whose usage exceed 150% of the most recent average
without notice
o Products supplied through alternate source or product
substitution delivered by the following day
Partial lines will be counted as the actual percentage of the line
filled (e.g., 6 of 10 equal 60% of the line.
12
6.3 In the event MHS fails to maintain the [ ** ], MHS will credit such
Omnicare Facility in an amount equal to [ ** ]. So long as MHS is
current in the crediting of such amounts, such failure shall not in
itself constitute a default hereunder.
6.4 MHS will provide Omnicare a monthly summary of all items omitted due
to manufacturer unable to supply (MUS). This summary shall be in an
electronic media format to be mutually agreed to by the parties within
thirty (30) days of the start of this Agreement.
6.5 Implementation of New or Newly Acquired Omnicare Facilities. New or
newly acquired Omnicare Facilities [ ** ] of (i) [ ** ] and (ii) such
[ ** ].
7. CONTRACT MANAGEMENT
7.1 MHS agrees to service all manufacturers' contracts negotiated by
Omnicare, provided such manufacturers are approved suppliers of MHS
that have satisfied its indemnification, insurance and other corporate
requirements. Products will be supplied at Omnicare's negotiated
contract price plus MHS' applicable markup or discount as described in
the Cost of Goods section above.
7.2 MHS is able to [ ** ]. MHS will load [ ** ]. MHS will load the files
electronically or manually depending on the medium in which the bid
file data is furnished to MHS. All [ ** ]. As deemed eligible by
manufacturers, for [ ** ], Omnicare will receive [ ** ], unless
Omnicare notifies MHS otherwise.
7.3 MHS shall have up to forty-five (45) days to perform the initial
loading of a group purchasing organization contract from receipt of
the notification from the group purchasing organization. Thereafter,
MHS will load vendor contract updates within five (5) business days
after the applicable bid file data is furnished to MHS by Omnicare's
group purchasing organization and confirmed by the vendor.
7.4 An Omnicare Facility's eligibility for participation under a vendor
contract must be authorized by the vendor, Omnicare and/or Omnicare's
group purchasing organization before the contract is loaded by MHS for
such Omnicare Facility. Each Omnicare Facility and Omnicare shall be
liable for unpaid chargebacks resulting from eligibility issues.
Omnicare is also responsible for denied chargebacks do to the lack of
proper notification of group membership.
7.5 In the event a vendor: (i) makes an assignment for the benefit of
creditors, files a petition in bankruptcy, is adjudicated insolvent or
bankrupt, or if a receiver or trustee is appointed with respect to a
substantial part of the vendor's property or a proceeding is commenced
against it which will substantially impair its ability to pay on
chargebacks; or (ii) otherwise defaults in the payment of chargebacks
to MHS, each Omnicare Facility shall be invoiced and become liable for
the unpaid chargebacks allocable to its purchases from such vendor.
7.6 Price Discrepancy Process. The MHS contract pricing specialist
assigned to Omnicare will [ ** ] to address price file accuracy.
Omnicare will submit to MHS at [ ** ]. Omnicare will use [ ** ] to
submit all claims for such credits and any other documentation related
to the pricing discrepancy [ ** ]. With the data received from
Omnicare, MHS will [ ** ]. All discrepancies between Omnicare's
information and the MHS file information will be [ ** ].
7.7 Should pricing information from Omnicare and the MHS contract pricing
file conflict, the documentation from the manufacturer shall take
precedence. Omnicare has the right to directly contact the
manufacturer for verification of contract pricing.
7.8 As a result of MHS research, if credit is required to correct a
contract pricing error, MHS will complete this process within fifteen
(15) days of verification of the correct price.
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7.9 MHS will credit Omnicare for all price errors that are validated
during this fifteen (15) day period; in the event that MHS is unable
to complete its research within the fifteen (15) day period, MHS will
reimburse Omnicare for the reported price discrepancies. Such credit
will be offset by researched and reconciled addbills from denied
chargebacks by manufacturers, and approved for payment according to
the then current payment terms if the dollar amount of addbills exceed
credit and rebills.
7.10 Omnicare shall be responsible for notifying vendors and MHS of any
change in membership. Each Omnicare Facility's membership must be
authorized by the vendor and the group purchasing organization before
contracts are loaded to the account. (Notification should be sent to
the National Processing Center, McKesson Health Systems, 1220 Senlac,
Carrollton, TX 75006.) The membership notification process can be set
up for electronic transmission.
7.11 When requested by Omnicare, MHS will provide reasonable pricing
verification and/or proof of delivery for shipments pursuant to a bona
fide request by Omnicare.
8. ORDERING EQUIPMENT AND REPORTS
8.1 One (1) Telxon hand held electronic order entry unit with a bar code
scanning wand will be supplied to each Omnicare Facility at no charge
upon such Omnicare Facility's request. Additional Telxon units are
available for Thirty-Five Dollars ($35.00) per month per Telxon. To
accommodate annual physical inventories, a reasonable number of
additional Telxon units will be loaned to Omnicare Facilities at no
charge for a 3-week period, not to exceed four such requests per year.
8.2 MHS will provide each Omnicare Facility one (1) EconoLink system
(hardware and software) at no charge. Additional EconoLink systems
(software and hardware) are available for One Hundred Fifty Dollars
($150.00) per month per system.
8.3 MHS shall provide Omnicare Corporate Headquarters with three (3) Group
EconoLink2000 Group Reporting systems for IHN and corporate office
management reporting.
8.4 MHS shall retain title to all hardware provided hereunder and Omnicare
Facilities shall return same to MHS upon the earlier of termination of
this Agreement or termination of such Omnicare Facility's use of MHS
as Prime Vendor.
8.5 As an alternative to the EconoLink system, Supply Management Online is
offered to each Omnicare Facility at no additional charge.
8.6 In the event MHS discontinues use of Telxon, EconoLink2000 system,
Group EconoLink2000 system and/or Supply Management Online during the
term of this Agreement, and replaces it with another service offering,
MHS will make such replacement offering available to Omnicare
Facilities at no additional charge.
8.7 Shelf Labels & Price Stickers. MHS will supply each Omnicare Facility
with bar-coded shelf labels and price stickers free of charge via the
EconoLink or SMO functionality.
9. ACCOUNT MANAGEMENT
9.1 Account Manager. MHS shall furnish to all Omnicare Facilities a
professional account manager knowledgeable in the various aspects of
pharmacy purchasing to assist on an as-necessary basis in inventory
control and management, ordering processes and problem solving.
Routine visits shall be made monthly unless otherwise determined
between MHS and the Omnicare Facility. Business Planning and Review
Meetings will be scheduled quarterly.
14
9.2 Quarterly Business Reviews. Omnicare and MHS shall conduct quarterly
business reviews to include appropriate management and maintain focus
on the critical metrics of performance within the scope of this
Agreement, and the key initiatives for the success of both
organizations. Following execution of this Agreement, the parties will
work together in good faith to develop a plan for achieving additional
savings, based on automation, McKesson consulting services, supply
chain management and other appropriate savings mechanisms, beyond
those savings realized by Omnicare due to pricing and inventory turns
under this Agreement and the prior supply agreement between the
parties.
10. OMNICARE'S REPRESENTATION
Omnicare represents that:
10.1 Omnicare understands that nothing herein shall restrict or limit MHS
in any way with respect to the prices it may charge to Omnicare
Facilities for products not covered under this program.
10.2 All purchases hereunder by Omnicare Facilities are for their "own use"
as that term is defined in Abbott Laboratories et al. v. Portland
Retail Druggists Association, Inc., et al., decided by the U.S.
Supreme Court on March 24, 1976.
15
11. [ ** ]
11.1 [ ** ]
11.2 [ ** ]
11.3 [ ** ]
11.4 [ ** ]
11.5 [ ** ]
12. CONFIDENTIAL INFORMATION
12.1 Confidential Information. Except as specifically set forth in Section
12.2, neither party shall, without the prior written consent of the
other party, provide, disclose, transfer or otherwise make available
any Confidential Information, or any portion or copy thereof, to any
third party. Each party shall take the same security precautions to
protect against disclosure or unauthorized use of the Confidential
Information that it takes with its own confidential information of a
similar kind, which in no event shall be less than a reasonable
standard of care to prevent any such disclosure or unauthorized use.
For purposes of this Agreement, "Confidential Information" shall mean
all non-public information relating to the other party's business,
including (i) technical, marketing, financial, personnel, planning,
medical records, (ii) other information that is marked confidential or
which the receiving party should reasonably to know to be confidential
given the nature of the information and the circumstance of
disclosure, and (iii) this Agreement and the terms and conditions
hereof; provided, however, that Confidential Information will not
include any information:
12.1.1 lawfully obtained or created by either party independently
of, and without use of, Confidential Information and without
breach of any obligation of confidence;
12.1.2 that is in or enters the public domain without breach of
any obligation of confidence; or
12.1.3 required to be disclosed by law, to the extent required to
comply with that legal requirement, provided that the party
making such disclosure will promptly notify the other party
of such requirement and allow the other party a reasonable
opportunity to request confidential treatment of such
information.
12.2 Use and Disclosure. Notwithstanding the requirements of Section 12.1,
each party may (i) disclose Confidential Information to its employees
or contractors solely to the extent that they need to know such
Confidential Information for the purposes of this Agreement, and who
are bound by confidentiality terms with respect to that Confidential
Information no less restrictive than those contained in Section 12.1;
and (ii) use Confidential Information only for the purpose of
performing its obligations under this Agreement.
12.3 Return of Confidential Information. Each party will return to the
other party, and destroy or erase all of the other party's
Confidential Information in tangible form, upon the expiration or
termination of this Agreement, and each party will promptly certify in
writing to the other party that it has done so.
16
12.4 Use of Purchase Information. Without limiting the generality of the
foregoing provisions of this Section 12, McKesson will not distribute
Omnicare purchase information for reasons other than the submission of
chargeback requests to the manufacturer, without the express written
authorization of an officer of Omnicare.
13. MISCELLANEOUS
13.1 External Event.
13.1.1 For purposes of this Section, an "External Event" shall
mean an event or series of events [ ** ] that has or is
likely to have a [ ** ]. By way of illustration and not of
limitation, an External Event may include [ ** ]. In
response to a [ ** ]. The [ ** ] shall identify the [ ** ].
As soon as practicable after receipt of such [ ** ], but in
any event [ ** ]. Simultaneously with such receipt, [ ** ],
which notice shall set forth the [ ** ]. If, [ ** ], the
parties [ ** ]. If there [ ** ].
13.1.2 Each party agrees that prior to filing any lawsuit or
other legal action against the other party regarding any
issue or dispute arising out of or otherwise relating to
this Section 13.1, the parties will submit such issue or
dispute to mediation pursuant to Section 11.5 of this
Agreement.
13.2 Assignment. Neither party may assign its rights or obligations under
this Agreement without the prior written consent of the other party,
which consent will not be unreasonably withheld; provided, however,
that Omnicare may assign its rights and obligations under this
Agreement, without the prior written consent of McKesson, to a
successor to Omnicare's business by reason of merger, sale of all or
substantially all of Omnicare's assets or similar transaction;
provided, further, however, that MHS may assign its rights and
obligations under this Agreement, without the prior written consent of
Omnicare, to a subsidiary or parent of MHS.
13.3 Severability. If all or part of a provision of this Agreement is found
illegal or unenforceable, it will be enforced to the maximum extent
permissible, and the legality and enforceability of the remainder of
that provision and all other provisions of this Agreement will not be
affected.
13.4 Notices. All notices directed to the parties' legal rights and
remedies, under this Agreement will be provided in writing and will
reference this Agreement. Such notices will be deemed given: (i) if
sent by facsimile, when complete transmission to the recipient is
confirmed by the sender's facsimile machine; (ii) if sent by postage
prepaid registered or certified U.S. Post mail, then five (5) working
days after sending; or (iii) if sent by commercial courier, then at
the time of receipt confirmed by the recipient to the courier on
delivery. All notices to a party will be sent to its address set forth
below, or to such other address as may be designated by that party by
notice to the sending party in accordance with this section:
If to MHS:
McKesson Health Systems
One Post Street, 30th Floor
San Francisco, California 94104
Attention: Director, Sales Proposals & Contract Development
McKesson Pharmaceutical
Fax: (415) 983-8430
With a copy to:
Law Department
17
McKesson Corporation
One Post Street, 34th Floor
San Francisco, California 94104
Attention: Counsel
McKesson Health Systems
Fax: (415) 983-9369
If to Omnicare, Inc.:
Omnicare, Inc.
1600 RiverCenter II
100 East RiverCenter Blvd.
Covington, Kentucky 41011
Attention: Timothy Bien
Senior Vice President,
Professional Services and Purchasing
Fax: (859) 392-3300
Phone: (859) 392-3360
13.5 Waiver. Any failure of a party to exercise or enforce any of its
rights under this Agreement will not act as a waiver of such rights.
13.6 Force Majeure. A party will not be liable to the other party for any
failure or delay in performance caused by fires, shortage of materials
or transportation, government acts, acts of terrorism, or any other
matters beyond the first party's reasonable control, and such failure
or delay will not constitute a material breach of this Agreement.
13.7 Amendment. This Agreement may be modified, or any rights under it
waived, only by a written document executed by both parties.
13.8 Publicity. Following the execution of this Agreement, the parties may
issue a joint press release or other public announcement regarding the
execution of this Agreement, in such form as mutually agreed by the
parties. No other public announcement or press release regarding this
Agreement or the activities performed under this Agreement shall be
made by either party except as may be required, upon the advice of
independent counsel to such party, in order to prevent liability to
such party under applicable securities laws or otherwise with the
prior written consent of the other party.
13.9 Counterparts. The parties may execute this Agreement and each Contract
Supplement in one or more counterparts, each of which will be an
original, and which together will constitute one instrument.
13.10 Relationship of Parties. Each party enters into and performs this
Agreement as an independent contractor of the other party. This
Agreement will not be construed as constituting a relationship of
employment agency, partnership, joint venture or any other form of
legal association, except as expressly set forth in this Agreement.
Each party will have no power, and will not represent that it has any
power, to bind the other party or to assume or to create any
obligation or responsibility on behalf of the other party or in the
other party's name.
13.11 Antikickback Compliance. IT IS THE INTENT OF THE PARTIES TO ESTABLISH
A BUSINESS RELATIONSHIP WHICH COMPLIES WITH THE MEDICARE AND MEDICAID
ANTI-KICKBACK STATUTE AS SET FORTH AT 42 U.S.C. Section 1320a-7b (b).
IN CERTAIN INSTANCES, INVOICES MAY NOT ACCURATELY REFLECT THE NET COST
OF PRODUCT TO OMNICARE. IN ACCORDANCE WITH 42 C.F.R. Section
1001.952(h), MHS (AS SELLER) WILL (A) FULLY AND ACCURATELY REPORT ANY
DISCOUNT ON INVOICES, STATEMENTS, OR REPORTS SUBMITTED TO OMNICARE OR
OMNICARE FACILITIES, OR (B) WHERE THE VALUE OF A
18
DISCOUNT IS NOT KNOWN AT THE TIME OF A SALE, FULLY AND ACCURATELY
REPORT THE EXISTENCE OF A DISCOUNT PROGRAM ON THE INVOICE, STATEMENT,
OR REPORTS SUBMITTED TO OMNICARE OR OMNICARE FACILITIES AND, WHEN THE
VALUE OF THE DISCOUNT BECOMES KNOWN, PROVIDE OMNICARE AND OMNICARE
FACILITIES WITH DOCUMENTATION OF THE CALCULATION IDENTIFYING THE
SPECIFIC GOODS OR SERVICES PURCHASED TO WHICH THE DISCOUNT WILL BE
APPLIED TO OMNICARE AS BUYER. WHERE A DISCOUNT OR OTHER REDUCTION IN
PRICE IS APPLICABLE, THE PARTIES ALSO INTEND TO COMPLY WITH THE
REQUIREMENTS OF 42 U.S.C. Section 1320a-7b (b) (3) (A) AND THE "SAFE
HARBOR" REGULATIONS REGARDING DISCOUNTS OR OTHER REDUCTIONS IN PRICE
SET FORTH AT 42 C.F.R. Section 1001.952(h). IN THIS REGARD, THE
PARTIES ACKNOWLEDGE THAT MHS WILL SATISFY ANY AND ALL REQUIREMENTS
IMPOSED ON SELLERS BY THE SAFE HARBOR AND OMNICARE AND/OR OMNICARE
FACILITIES WILL SATISFY ANY AN ALL REQUIREMENTS IMPOSED ON BUYERS.
THUS, OMNICARE AND/OR OMNICARE FACILITIES WILL ACCURATELY REPORT,
UNDER ANY STATE OR FEDERAL PROGRAM WHICH PROVIDES COST OR CHARGE BASED
REIMBURSEMENT FOR THE PRODUCTS AND SERVICES COVERED BY THIS AGREEMENT,
THE NET COST ACTUALLY PAID BY A OMNICARE FACILITY. IN THE EVENT EITHER
PARTY DETERMINES THAT THIS DISCOUNT PROGRAM MAY NOT COMPLY WITH SUCH
STATUTES, THE PARTIES AGREE TO WORK TOGETHER TO ESTABLISH A DISCOUNT
STRUCTURE THAT MEETS THE REQUIREMENTS OF SUCH STATUTES. TO THE EXTENT
ANY APPLICABLE LAW, REGULATION, OR GOVERNMENTAL OR JUDICIAL ORDER
REQUIRES DISCLOSURE TO ANY GOVERNMENTAL AGENCY OF ANY INFORMATION
REGARDING MHS'S SALE OF PRODUCTS TO OMNICARE UNDER THIS AGREEMENT MHS
WILL USE REASONABLE BEST EFFORTS TO PROVIDE OMNICARE PRIOR NOTICE
BEFORE MAKING SUCH DISCLOSURE.
13.12 Construction of Agreement. This Agreement has been negotiated by the
parties and its provisions will not be presumptively construed for or
against either party. The headings and section titles in this
Agreement are used for convenience only, and will not affect the
construction or interpretation of this Agreement.
13.13 Special Indemnity
13.13.1 In addition to all other amounts to be paid to MHS in
connection with this Agreement, Omnicare agrees to indemnify MHS as
provided herein from [ ** ]. Specifically, Omnicare shall indemnify
MHS for [ ** ] in which MHS has received the full benefit of this
Agreement or the prior supply agreement between MHS and Omnicare [ **
]. Omnicare agrees to pay any indemnified loss amount to MHS in
immediately available [ ** ], and Omnicare guarantees that MHS will
timely receive such a payment of that supplemental amount to cover
such part of that loss.
13.13.2 "[ ** ]" shall mean any of the following occurring on or
before [ ** ]:
13.13.2.1 [ ** ] and
13.13.2.2 any of the following by Omnicare:
13.13.2.2.1 If Omnicare shall [ ** ]; or
13.13.2.2.2 If Omnicare shall [ ** ]; or
13.13.2.2.3 If Omnicare shall [ ** ]; or
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13.13.2.2.4 If Omnicare shall [ ** ]; or
13.13.2.2.5 If Omnicare shall [ ** ].
13.14 [ ** ]. MHS shall use [ ** ] to provide Omnicare [ ** ].
13.15 Governing Law. This Agreement and all rights and liabilities of the
parties shall be subject to and governed by the substantive law (and
not the choice of law rules) of the State of New York.
13.16 Entire Agreement. This Agreement embodies the entire agreement
between the parties with regard to the subject matter hereof and
supersedes all prior agreements, understandings and representations
with the exception of any promissory note, security agreement or other
credit or financial related document(s) executed by Omnicare or
between Omnicare and McKesson. This Agreement may not be modified,
supplemented or extended except by a writing signed by both parties.
This Agreement supersedes any and all prior MHS agreements and
discount plans in which any Omnicare Facility may currently be
participating.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
OMNICARE, INC. MCKESSON CORPORATION
By: /s/ Timothy E. Bien By: /s/ Paul C. Julian
- ------------------------------- -------------------------------------
Signature Signature
Timothy E. Bien Paul C. Julian
- ------------------------------- -------------------------------------
Printed Name Printed Name
Senior Vice President President, Supply Solutions
- ------------------------------- -------------------------------------
Title Title
December 23, 2003 December 23, 2003
- ------------------------------- -------------------------------------
Date Date
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EXHIBIT A
DEFINITIONS
"ACH" has the meaning set forth in Section 4.6.4.1.
"Additional Products" has the meaning set forth in Section 5.1.
"Confidential Information" has the meaning set forth in Section 12.1.
"Contract Price" means the cost (before distribution fees) for a Contract
Product determined pursuant to the pricing contract (to which MHS has access)
negotiated by Omnicare or the group purchasing organization to which it is a
member and the manufacturer of the Contract Product.
"Omnicare Facilities" has the meaning set forth in Section 2.2.
"Cost" has the meanings set forth in Section 4.
"EFT" has the meaning set forth in Section 4.6.4.1
"Pharmaceutical Products" has the meaning set forth in Section 2.1.1 and Section
5.1.
"Prime Vendor" means that MHS shall be the first choice for the purchase of all
Pharmaceutical Products normally purchased through wholesale pharmaceutical
distributors.
"Products" means collectively Pharmaceutical Products, Additional Products and
any and all of the pharmaceutical products and related healthcare products
available for sale from MHS.
"Service Level" has the meaning set forth in Section 6.
"Slow Moving Inventory" means Products that MHS determine are not moving or slow
moving.
EXHIBIT B
OMNICARE FACILITIES LIST
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Estimated Monthly
Omnicare Facility Name Omnicare Facility Address Purchasing Volume
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