Exhibit 10.29

 

Cardinal Health 110, LLC,

 

Cardinal Health 411, Inc.

 

and

 

Fred’s Stores of Tennessee, Inc.

 

Prime Vendor Agreement

 

(Execution Copy)

August 1, 2014

 

 

 

 

 PRIME VENDOR AGREEMENT

 

This Prime Vendor Agreement (the “Agreement”) is made by and between Cardinal
Health 110, LLC and Cardinal Health 411, Inc. (“Cardinal Health”) and Fred’s
Stores of Tennessee, Inc. (“Buyer”) who hereby agree as follows:

  

1.           Designation as Primary Wholesaler.Buyer will designate Cardinal
Health as its primary wholesale supplier of pharmaceutical products (“Rx
Products”) to all the pharmacy locations owned, managed or operated by Buyer
during the term of this Agreement (collectively, the “Pharmacies” and
individually, a “Pharmacy”). A current list of the Pharmacies is attached hereto
as Exhibit A. Additional pharmacies may be added to Exhibit A from time to time
subject to the prior approval of Cardinal Health, which approval will not
unreasonably be withheld.

 

2.           Purchase Requirement and Usage.

 

2.1.          Purchase Requirement. Throughout the term of this Agreement, Buyer
will purchase from Cardinal Health under this Agreement at least [***] of the
branded Rx Products required for each Pharmacy if they are carried by Cardinal
Health. During the first Contract Year (as defined below) this Agreement is in
effect, the Buyer will purchase from Cardinal Health under this Agreement at
least [***] of the generic Rx Products required for each Pharmacy through the
Cardinal Health Generic Source generic Rx Product program (the “Generic Source
Program”) if they are carried by Cardinal Health. During each Contract Year, or
portion thereof, this Agreement remains in effect thereafter, the Buyer will
purchase from Cardinal Health under this Agreement at least [***] of the generic
Rx Products required for each Pharmacy through the Generic Source Program if
they are carried by Cardinal Health. In addition, Buyer may, at its option,
purchase certain other inventory carried by Cardinal Health (the “Non-Rx
Products”) (Rx Products and Non-Rx Products are collectively referred to as the
“Merchandise”). Notwithstanding any other provision in this Agreement, Cardinal
Health reserves the absolute right to determine what Merchandise it will carry.
The minimum Rx Product purchase requirements set forth in this Section are
sometimes referred to herein as the “Primary Requirements.” As used in this
Agreement, the phrase “Contract Year” shall mean each consecutive twelve month
period commencing on October 1 of a given calendar year and ending on September
30 of the immediately following calendar year that the Agreement remains in
effect.

 

2.2.          Usage. In order to facilitate Cardinal Health’s inventory
management requirements, for any currently owned and operated Pharmacies, Buyer
will provide six (6) months’ usage figures (including NDC numbers) for all items
for each Pharmacy in compatible electronic format at least forty five (45) days
prior to participation under this Agreement by that Pharmacy. For any Pharmacy
acquired by the Buyer after the Effective Date of this Agreement, Buyer agrees
to provide six (6) months’ usage figures (including NDC Numbers) for all items,
unless such data doesn’t exist, with as much notice as reasonably possible,
however, in no event will failure to provide such data excuse Cardinal Health
from timely supplying Rx Products to a Pharmacy. In addition, Buyer will provide
usage information related to new and/or replacement items on an ongoing basis,
as necessary.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

1

 

  

3.           Purchase Price.

 

3.1.          In General. Except as otherwise set forth in this Agreement, Buyer
will pay a purchase price for all branded Rx Products purchased under this
Agreement in an amount equal to Cardinal Health’s Cost for such Merchandise,
plus/minus the percentage specified in the pricing matrix attached hereto as
Exhibit B (the “Pricing Matrix”), plus all applicable taxes or other assessments
on such purchases(“Cost Plus Pricing”). For purposes of this Agreement, (a) the
term “Cardinal Health’s Cost” will mean the manufacturer’s published wholesale
acquisition cost for the Merchandise at the time the Buyer’s order is submitted
to Cardinal Health; and (b) the term “Net Purchases” will mean all purchases
made and paid for by Buyer and/or the Pharmacies under the terms of this
Agreement, net of all returns, credits, service charges, or other similar items,
on an annual, quarterly, or monthly basis, as applicable. The purchase price of
Merchandise that is subject to a Manufacturer Contract (as defined below) will
equal Buyer’s contract price for the applicable Merchandise as set forth in the
Manufacturer Contract.

 

3.2.          Exceptions to Cost Plus Pricing. Notwithstanding the foregoing,
the purchase price for certain Merchandise as defined below and referred to
herein as “Specially Priced Merchandise” will not be based upon Cardinal
Health’s Cost-plus pricing described above. The Specially Priced Merchandise
shall include only the following:

 

Category  Cost Formula Multisource
Pharmaceuticals  [***] OTC/HBA Products  [***] Drop Shipped Products  [***]
Designated Specialty Products
(as defined in the Pricing Matrix)  [***] Indirect Manufacturer Contracted
Products  [***] Cardinal Health Private Label Products  [***] Home Healthcare
/durable medical equipment Products  [***] Medical / Surgical Supplies  [***]
Diabetic Supply Products  [***] Pharmacy Supply Products  [***] All Other
Non-Pharmaceutical Product Categories  [***] Merchandise Acquired from Vendors
Not Offering Customary Cash Discount or Other Standard Terms  [***]

 

Except as otherwise set forth in this Agreement, Buyer may, but will have no
obligation to, purchase any specified volume or percentage of its requirements
of these items.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

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4.           Payment Terms.

 

4.1.          Standard Payment Terms. Buyer’s initial payment terms shall be
[***] payment terms ([***]) as follows: the Buyer will cause Cardinal Health to
receive payment in full of the amount due for all Merchandise delivered and
services provided and properly invoiced in the normal course of business during
a given week (i.e., Monday through Friday) by [***].

 

4.2.          Payment Terms for Purchases Made from [***]. Regardless of the
Buyer’s then current standard payment terms under this Agreement, and except as
set forth in Section 4.6 below, the Buyer’s payment terms for purchases made
under this Agreement from [***] through [***] of each Contract Year this
Agreement is in effect shall be as follows: the Buyer will cause Cardinal Health
to receive payment in full of the amount due for all Merchandise delivered and
services rendered and properly invoiced in the normal course of business from
[***]through [***]of a given calendar year by [***]of the same calendar year.

 

4.3.          In General. All payments due from Buyer to Cardinal Health for
Merchandise delivered and services rendered by Cardinal Health under this
Agreement will be made to the applicable servicing division specified in
Cardinal Health’s invoice (or as otherwise specified by Cardinal Health) by
electronic funds transfer or other method acceptable to Cardinal Health so as to
provide Cardinal Health with good funds by the due date. Deductions for
Merchandise returns or shipping discrepancies (quantity and price) may not be
taken until a valid credit memo is issued by Cardinal Health. Until Merchandise
is paid for in full, Cardinal Health retains, and the Buyer hereby grants
Cardinal Health, a security interest in the Merchandise. Buyer may from time to
time (but not more often than once per calendar quarter) request that its
payment terms be changed as to future Merchandise purchases under this
Agreement, subject to Cardinal Health’s prior written consent. In such event,
Buyer acknowledges and agrees that Buyer’s purchase price may be adjusted by
Cardinal Health to reflect Buyer’s new payment terms and credit considerations
deemed relevant to Cardinal Health.

 

4.4.          Late Payments. Cardinal Health may, at its election, either reduce
payment terms to a shorter number of days or place the Buyer on C.O.D status
under the following circumstances: (i) if Cardinal Health has not received
payment in full when due of undisputed amounts for Merchandise delivered or
services provided to the Buyer, or (ii) there is a material adverse change in
the financial condition of the Buyer. In either instance, the situation would be
immediately elevated to an executive team from both the Buyer and Cardinal
Health in an effort to rectify the situation and restore the Buyer’s then
current payment terms. In the event of such elevation, if the parties are unable
to reach a mutually acceptable resolution and any undisputed amounts remain
unpaid for more than ten (10) calendar days after the due date, Cardinal Health
reserves the right to refuse orders from the Buyer.

 

4.5.          Set- Off. Without limiting either party’s rights under law or in
equity, a party and its affiliates, parent or related entities, collectively or
individually, may exercise a right of set-off against any and all amounts due
the other party. For purposes of this Section, a party, its affiliates, parent
or related entities shall be deemed to be a single creditor.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

3

 

  

4.6.          New Pharmacy Payment Terms. Cardinal Health will allow the Buyer
to order up to [***]of Merchandise as Buyer’s opening store order for either:
(a) a “New Pharmacy” (as defined below) within Cardinal Health’s existing
service area or (b) an instance in which the Buyer acquires the prescription
files of a non-affiliated pharmacy location and begins servicing those files out
of an existing Buyer’s Pharmacy. The Buyer will be entitled to special payment
terms for each such New Pharmacy’s opening store order as follows: (i) [***]of
the purchase price of Merchandise shipped in the New Pharmacy’s opening store
order will be paid by Buyer to Cardinal Health not later than [***]following the
shipment of the opening store order; (ii) [***]of the purchase price of
Merchandise shipped in the New Pharmacy’s opening store order will be paid by
Buyer to Cardinal Health not later than [***]following the shipment of the
opening store order; and (iii) [***]of the purchase price of Merchandise shipped
in the New Pharmacy’s opening store order will be paid by Buyer to Cardinal
Health not later than [***]following the shipment of the opening store order. No
interest will be charged by Cardinal Health on the amount of the New Pharmacy’s
opening store order so long as payments are made at the times described above.
No more than[***]opening store orders may be financed in the manner set forth in
this Section during a given calendar quarter. Any pharmacy receiving an opening
order in the manner described in this Section will be considered a “Pharmacy”
under the Agreement. The Buyer’s eligibility to receive the special payment
terms for opening store orders is contingent upon and subject to: (A) the
Buyer’s ongoing compliance with the terms of the Agreement and all other
agreements with Cardinal Health; and (B) Cardinal Health’s approval of the
Buyer’s advance request (not less than two weeks to the extent reasonably
possible) for such special payment terms, which approval will be based upon
Cardinal Health’s analysis of the Buyer’s ongoing credit-worthiness and will be
supported by such financial and other information as Cardinal Health may
reasonably request from the Buyer in considering such approval. The term “New
Pharmacy” means any new retail location owned, acquired, managed or operated by
the Buyer (which will not include existing pharmacies that are owned by the
Buyer but were closed due to remodeling or relocation).

 

5.          Term. The initial term of this Agreement shall commence on October
1, 2014, (the “Effective Date”) and shall continue in effect thereafter through
the longer of: (i) March 31, 2018, or (ii) that certain date upon which the
Buyer’s aggregate Net Purchases of generic Rx Products through the Generic
Source Program equals [***].

 

6.          Termination.

 

6.1.          Breach. Either party may affect an early termination of this
Agreement upon the occurrence of a material breach by the other party. The
non-breaching party must give written notice to the breaching party of the
nature and occurrence of such breach. If the breach is not cured by the
expiration of forty five (45) days from the date of such notice, or if the
breaching party has not made reasonable efforts to effect the cure if the breach
cannot reasonably be cured within such forty five (45) day period, then the
non-breaching party may provide written notice to the breaching party that this
Agreement will be terminated in thirty (30) days following the expiration of
such forty five (45) day period.

 

6.2.          Termination by Buyer. Notwithstanding any other provision in this
Agreement, the Buyer may terminate this Agreement without cause following that
certain date upon which the Buyer’s aggregate Net Purchases of generic Rx
Products through the Generic Source Program equals at least [***]; provided,
however, that the effective date of any such termination under this Section
shall not occur before [***]. In such an instance, the Buyer shall provide
Cardinal Health with written notice of its intent to terminate at least thirty
(30) days prior to the effective date of such termination. Furthermore, once the
parties believe in good faith that the Buyer’s aggregate Net Purchases of
generic Rx Products through the Generic Source Program will equal[***]prior to
the potential effective date of any termination under this Section, the Buyer
and Cardinal Health shall enter into a [***]exclusive negotiation period in good
faith in an effort to negotiate a new prime vendor agreement(the “Negotiation
Period”). During the Negotiation Period, the Buyer shall not directly or
indirectly solicit, initiate, encourage or entertain any proposals from, discuss
or negotiate with, provide any nonpublic information to, or consider the merits
of any inquiries or proposals from any third party seeking to become Buyer’s
primary vendor of pharmaceutical products.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

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7.          Financial Statements. In the event that Fred’s, Inc. fails to remain
a publicly traded company, the Buyer hereby acknowledges and agrees that Buyer
will provide Cardinal Health with annual audited financial statements and
unaudited but reviewed quarterly income statements and balance sheets.

 

8.           Service Charge. Either party will pay a service charge calculated
at the rate of [***]per month (or the maximum rate allowed by law, if such rate
is less than [***]per month) on any amount not paid by such party when due under
the terms of this Agreement from the first day of delinquency until such amount
is paid in full, along with reasonable attorney fees associated with any such
delinquency. Notwithstanding the foregoing, if a party’s failure to make a
payment when due is caused by an event beyond such party’s reasonable control
(up to a maximum of four times in a given Contract Year), the service charge set
forth in this Section shall be paid from the second business day of delinquency
until such amount is paid in full, along with reasonable attorney fees
associated with any such delinquency.

 

9.           Guaranty.

 

9.1.          Buyer Guaranty on Purchases by Subsidiaries and Affiliates. As an
inducement for Cardinal Health to supply Merchandise and provide services to the
subsidiaries and affiliates of Buyer, whether existing now or in the future
(collectively, “Borrowers”), Buyer guarantees to Cardinal Health the punctual
and full payment (and not merely the ultimate collectability) of all sums now or
hereafter due from Borrowers to Cardinal Health and the reasonable cost and
expense incurred by Cardinal Health in attempting to enforce any indebtedness,
liability, or obligation under this Agreement, including, without limitation,
reasonable attorney’s fees. Further, Buyer agrees to indemnify and save harmless
Cardinal Health against and from any and all losses, damages, liabilities, and
claims now or at any time hereafter arising directly or indirectly out of any
failure by Borrowers to promptly and fully perform all of the obligations
hereunder.

 

9.2.          Parent Guaranty. As an inducement for Cardinal Health to supply
Merchandise to the Buyer under this Agreement, Fred’s Inc. hereby guarantees to
Cardinal Health the punctual and full payment (and not merely the ultimate
collectability) of all sums now or hereafter due from the Buyer to Cardinal
Health under this Agreement and the reasonable cost and expense incurred by
Cardinal Health in enforcing any indebtedness, liability, or obligation under
this Agreement (including any damages due Cardinal Health as a result of a
breach of this Agreement).

 

10.         Ordering.

 

10.1.          In General.         Unless otherwise agreed upon by the parties,
to qualify for the pricing set forth in the Pricing Matrix, Buyer must
electronically transmit all orders (excluding Schedule II and emergency orders)
to Cardinal Health via cardinal.com, Order Express, or such other electronic
order entry system as Cardinal Health may approve from time to time. Cardinal
Health will provide Buyer with access to such electronic ordering system at no
additional charge; provided, however, Buyer must supply all hardware required to
access such electronic ordering system, all required Internet access and any
required interfaces or other network enhancements, at Buyer’s expense. Buyer may
not use such electronic ordering system for any purpose unrelated to this
Agreement. If electronic order entry is temporarily interrupted for reasons
beyond the control of Buyer or Cardinal Health, Buyer may place orders manually
and both parties will use reasonable efforts to fix the problem. Orders placed
manually due to interruption of the electronic order entry system shall be
eligible for pricing according to the Pricing Matrix.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

5

 

  

10.2.          Orders for Schedule II Controlled Substances. If available, Buyer
may submit orders for Schedule II controlled substances via Cardinal Health’s
“Controlled Substance Ordering System” (“CSOS”). If Buyer utilizes CSOS,
Schedule II orders will be delivered with Buyer’s next scheduled delivery
following Cardinal Health’s receipt of the CSOS order. In the event that Buyer
does not utilize CSOS for a given Pharmacy location, all orders for Schedule II
controlled substances for such Pharmacy shall be submitted to Cardinal Health on
DEA Form 222. In such an instance, DEA Form 222 may be mailed to the applicable
Cardinal Health distribution center or given to the delivery driver, and
Schedule II orders will be delivered with Buyer’s next scheduled delivery
following Cardinal Health’s receipt of the signed original DEA Form 222. Buyer
acknowledges that if Buyer gives the DEA Form 222s to the delivery driver, such
forms will not be received by Cardinal Health until such time that the delivery
driver physically delivers the DEA Form 222 to the applicable Cardinal Health
distribution center. Notwithstanding any other terms of this Agreement, no
Schedule II orders will be delivered other than in compliance with DEA
regulations.

 

11.         Delivery.

 

11.1.          In General. All Merchandise shall be shipped FOB destination in
accordance with the general delivery schedules as are established from time to
time by the applicable Cardinal Health servicing division (exclusive of
holidays, etc.). Excluding Pharmacies located outside of the contiguous United
States or other Pharmacies mutually agreed upon by the parties from time to
time, each Pharmacy shall be eligible to receive one (1) delivery per day, five
(5) days per week (Monday through Friday) at no additional charge; provided,
however, all deliveries will be subject to the Fuel Surcharge set forth below.
Buyer shall incur a separate per delivery charge for additional scheduled
deliveries and non-standard or custom deliveries.

 

11.2.          Fuel Surcharge. Notwithstanding any other provision in this
Agreement, Buyer shall pay a fuel surcharge, on a per stop basis, for each
delivery made to Buyer or any Pharmacy by Cardinal Health under this Agreement
(the “Fuel Surcharge”). The amount of a given Fuel Surcharge shall be calculated
in accordance with the following table:

 

Regular Unleaded Fuel Price is:  Additional at Least   But Less Than  Surcharge
Amount [***]  [***]  [***] [***]  [***]  [***] [***]  [***]  [***] [***]  [***] 
[***] [***]  [***]  [***]

 

The fuel prices set forth in the table above represent the national average
retail cost per gallon for regular grade gasoline in the U.S. as published by
the U.S. Department of Energy (the “Average Price Per Gallon”). The current
index may be obtained on the Energy Information Administration’s website at the
following address:

 

http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html

 

In the event that the Average Price Per Gallon exceeds [***], the Fuel Surcharge
shall increase in [***] increments for each [***] increase in the Average Price
Per Gallon.

 

By the last day of each calendar month, Cardinal Health shall determine the
Average Price Per Gallon for that month. If, pursuant to the table set forth
above, the Average Price Per Gallon results in the imposition of a Fuel
Surcharge for a given month, then Cardinal Health shall invoice the Buyer’s
corporate location for the aggregate amount of the Fuel Surcharge due for the
month, and the Buyer shall pay such invoice in accordance with the standard
payment terms applicable to the Buyer’s purchases under this Agreement as of the
date of the Fuel Surcharge invoice. For the sake of clarity, the parties hereby
acknowledge and agree that even if the invoice is generated from August 1
through August 21 of a given calendar year, the Buyer’s then current standard
payment terms shall apply, not the Buyer’s special payment terms for Merchandise
purchases made from August 1 through August 21.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

6

 

 

12.         Generics.

 

12.1.          In General. Each of the Buyer’s pharmacy locations shall purchase
its Primary Requirements (as defined above) of generic Rx Products through the
Generic Source Program, and the Buyer hereby acknowledges and agrees that
Cardinal Health shall implement an automatic substitution program for all
applicable Generic Source Program products. Notwithstanding the foregoing, the
parties hereby acknowledge and agree that the following Generic Source Program
Products may be excluded from the calculation of rebates and other incentives
under this Agreement related to the purchases of Generic Source Program
products: (i) exclusive generic Rx Products, (ii) biogeneric products, and (iii)
branded generic Rx Products (the “Excluded Generic Rx Products”). The current
list of Excluded Generic Products is attached hereto as Exhibit C. Additional
Excluded Generic Rx Products may be added to the list upon agreement of both
parties that they are (i) exclusive generic Rx Products, (ii) biogeneric
products, or (iii) branded generic Rx Products.

 

12.2.          [***]

 

D.           Disclosure. Each of the [***]constitutes a “discount or other
reduction in price,” as such terms are defined under the Medicare/Medicaid
Anti-Kickback Statute, on the applicable generic Rx Products purchased by the
Buyer under this Agreement. Cardinal Health and the Buyer agree to use
commercially reasonable efforts to comply with any and all requirements imposed
on sellers and buyers, respectively, under 42 U.S.C. § 1320a-7b(b)(3)(A) and the
“safe harbor” regulations regarding discounts or other reductions in price set
forth in 42 C.F.R. § 1001.952(h). In this regard, Buyer may have an obligation
to accurately report, under any state or federal program which provides cost or
charge based reimbursement for the products or services covered by this
Agreement, or as otherwise requested or required by any governmental agency, the
net cost actually paid by Buyer and/or each Pharmacy.

 

12.3.          [***]

 

E.           Disclosure. The [***] constitutes a “discount or other reduction in
price,” as such terms are defined under the Medicare/Medicaid Anti-Kickback
Statute, on the applicable generic Rx Products purchased by the Buyer under this
Agreement. Cardinal Health and the Buyer agree to use commercially reasonable
efforts to comply with any and all requirements imposed on sellers and buyers,
respectively, under 42 U.S.C. § 1320a-7b(b)(3)(A) and the “safe harbor”
regulations regarding discounts or other reductions in price set forth in 42
C.F.R. § 1001.952(h). In this regard, Buyer may have an obligation to accurately
report, under any state or federal program which provides cost or charge based
reimbursement for the products or services covered by this Agreement, or as
otherwise requested or required by any governmental agency, the net cost
actually paid by Buyer and/or each Pharmacy.

 

13.         Returned Goods Policy. In general, Cardinal Health will accept
Merchandise for return from the Buyer in accordance with the Returned Goods
Policy attached hereto as Exhibit D. Cardinal Health will work with a third
party returned goods processor in accordance with the Third Party Returned Goods
Policy for Unmerchantable Product attached hereto as Exhibit E.

 

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14.         Manufacturer Contract Administration. Cardinal Health will recognize
and administer mutually agreed upon manufacturer pricing contracts between Buyer
and a manufacturer (collectively, “Manufacturer Contracts”): (i) subject to
their continued validity in accordance with applicable laws, (ii) provided such
manufacturer is a vendor in good standing with Cardinal Health, and (iii)
subject to such credit considerations concerning the applicable manufacturers as
Cardinal Health may consider appropriate. However, if manufacturers’ chargebacks
for contract items submitted by Cardinal Health are disallowed, uncollectable,
or unreconcilable, then the applicable charge will be billed back to Buyer.
Buyer will notify Cardinal Health of all applicable pricing information included
in the Manufacturer Contracts, including renewals, replacements or terminations
of Manufacturer Contracts, not less than forty-five (45) days prior to the
effective date of such Manufacturer Contract, renewal, replacement or
termination. Cardinal Health reserves the right to assess a reasonable
processing fee to Buyer for any Manufacturer Contract credit and/or rebill
activity. As set forth above, the purchase price of Merchandise that is subject
to a Manufacturer Contract will equal Buyer’s contract price for the applicable
Merchandise as set forth in the Manufacturer Contract.

 

15.         Custom Inventory. If Cardinal Health stocks inventory under this
Agreement at Buyer’s request that Cardinal Health would not otherwise stock
(“Custom Inventory”), Buyer agrees that, before substituting other inventory in
place of such Custom Inventory, and upon the expiration or earlier termination
of this Agreement for any reason, Buyer will purchase the remaining Custom
Inventory under the terms of this Agreement until it is depleted. Cardinal
Health agrees that it will inform Buyer whether any requested inventory would
constitute Custom Inventory prior to stocking such inventory. Furthermore, the
parties acknowledge and agree that, in such an instance, Cardinal Health shall
only stock a mutually agreed upon amount of such Custom Inventory for the Buyer.

 

16.         [***]

 

17.         Own Use. All purchases under this Agreement will be for Buyer’s
and/or the Pharmacies’ “own use” as that term is defined in judicial or
legislative interpretation and not for resale to anyone other than the end user.
Cardinal Health may terminate this Agreement immediately in the event it
reasonably determines that Buyer or any Pharmacy is in breach of this paragraph.

 

18.         Licensure. Buyer represents, warrants and certifies to Cardinal
Health that it and each of Buyer’s pharmacy locations has all required
governmental licenses, permits and approvals required to purchase, use and/or
store the Rx Products purchased from Cardinal Health under this Agreement. Prior
to purchasing Rx Products from Cardinal Health hereunder, and at all times
during the term of this Agreement, Buyer will provide Cardinal Health with
copies of all such licenses and any renewals, revocations, changes or notices
related thereto.

 

19.         Records and Audit. Cardinal Health will maintain records pertaining
to this Agreement and the pharmaceutical products purchased by Buyer hereunder
as required by applicable FDA requirements. Not more than once in any Contract
Year, and following at least thirty (30) days’ advance written notice to
Cardinal Health, the Buyer shall have the right to retain a mutually agreed upon
independent third party auditor to review those relevant records applicable to
its pharmaceutical purchases for the sole purpose of verifying compliance with
this Agreement, including, but not limited to, the pricing terms of this
Agreement. Such audit will be conducted during the Contract Year following the
Contract Year (or partial Contract Year) to be audited and will be completed
before the end of that same Contract Year. Each audit shall be conducted during
normal business hours. Cardinal Health agrees to cooperate fully with the third
party auditor’s reasonable requests for information needed to conduct the audit.
The third party auditor will enter into a confidentiality agreement with
Cardinal Health in which it agrees not to disclose to the Buyer, or any other
party, any specific dollar results about Cardinal Health’s financial
performance, but only such limited information as necessary to report on
Cardinal Health’s compliance with the Agreement. Within thirty (30) days of
receiving such written statement, Cardinal Health will either reconcile the
identified discrepancies, or notify Buyer in writing that it is disputing such
audit findings and provide Buyer with supporting documentation. The cost of the
audit shall be borne by Buyer, unless there is a discrepancy identified in the
audit and reconciled by Cardinal Health which exceeds the cost of the audit, in
which case Cardinal Health shall pay for the cost of such audit.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

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20.         Service Level. Cardinal Health will exercise commercially reasonable
efforts to provide the Buyer with an adjusted monthly service level on DSD Rx
Products (excluding the bullet point items below) of at least [***] The service
level for a given month will be calculated by [***]. Notwithstanding any other
provision in this Section, the following items of Merchandise shall be excluded
from the monthly service level calculation:

 

·Manufacturer back orders/manufacturer temporary outs;

·Non-stock and/or discontinued items;

·Same item ordered more than once within three (3) days.

·Items where Buyer has failed to provide accurate start up usage figures in the
event that the Buyer has acquired a new pharmacy location; and

·Items where the Pharmacies’ historical demand is exceeded by 125% over the
monthly average for the preceding two months.

 

If Cardinal Health does not meet the service level commitment set forth above
for three consecutive months, Cardinal Health will pay the Buyer a service
penalty in the amount of [***].

 

21.         Compliance with Laws. Each of Buyer and Cardinal Health shall comply
with all federal and state laws, rules and regulations applicable to its
obligations under this Agreement.

 

22.         Compliance Agreement. Buyer agrees to execute and abide by the terms
set forth in the Compliance Representations and Warranties for Customers
attached hereto as Exhibit F. As set forth in the Compliance Representations and
Warranties for Customers, Buyer hereby acknowledges and agrees that,
notwithstanding any other provision in this Agreement, or any provision in any
other agreement between Cardinal Health and the Buyer, Cardinal Health may, in
its sole discretion, immediately suspend, terminate, or limit the distribution
of controlled substances, listed chemicals, and other products monitored by
Cardinal Health to the Buyer at any time if Cardinal Health reasonably believes
that the continued distribution of such products to the Buyer may pose an
unreasonable risk of the diversion of such products based on the totality of the
circumstances and such other considerations as may be deemed relevant by
Cardinal Health. In the event such action(s) occur,or when requested by Buyer,
Cardinal Health shall discuss with Buyer (and, if commercially reasonable to do
so, prior to taking such action) Cardinal Health’s reasons for suspending,
terminating or otherwise limiting the distribution of controlled substances,
listed chemicals or other products in an attempt to determine whether such
restrictions may be mitigated.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

9

 

 

23.         Discount and Rebates. If and to the extent any discount, credit,
rebate or other purchase incentive is paid or applied by Cardinal Health with
respect to the Merchandise purchased under this Agreement, such discount,
credit, rebate or other purchase incentive shall constitute a “discount or other
reduction in price,” as such terms are defined under the Medicare/Medicaid
Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)(3)(A) and the “safe harbor”
regulations regarding discounts or other reductions in price set forth in 42
C.F.R. § 1001.952(h)) on the applicable Merchandise purchased by Buyer under the
terms of this Agreement. Buyer may have an obligation to accurately report,
under any state or federal program which provides cost or charge based
reimbursement for the products or services covered by this Agreement, or as
otherwise requested or required by any governmental agency, the net cost
actually paid by Buyer.

 

24.         Merchandise Warranty Disclaimer and Limitation of Liability. THERE
ARE NO EXPRESSED OR IMPLIED WARRANTIES, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE. NEITHER
PARTY SHALL BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES
EXCPET TO THE EXTENT THAT SUCH DAMAGES WERE CAUSED BY SUCH PARTY’S WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE.

 

25.         Title. Cardinal Health warrants that it has good and marketable
title to the Merchandise sold to the Buyer under this Agreement.

 

26.         Indemnification.

 

26.1.          Indemnification by Cardinal Health. Cardinal Health agrees to
indemnify, defend and hold harmless the Buyer and its affiliates, officers,
trustees, directors, shareholders, employees and agents from and against those
third-party losses and liabilities (including, without limitation, reasonable
attorneys’ fees) that are directly attributable to Cardinal Health’s negligence
or wrongdoing. Cardinal Health further agrees to indemnify, defend and hold
harmless the Buyer its affiliates, officers, trustees, directors, shareholders,
employees and agents from and against those third-party losses and liabilities
(including, without limitation, reasonable attorneys' fees) that are directly
attributable to Cardinal Health’s failure to properly store, handle or
distribute Merchandise in accordance with the Agreement. It is expressly
understood and agreed by Buyer that Cardinal Health is not the manufacturer of
any of the Merchandise and that no indemnification of any type is being provided
hereunder by Cardinal Health other than as specifically stated in this Section.

 

26.2.          Indemnification by the Buyer. The Buyer agrees to indemnify,
defend and hold harmless Cardinal Health and its affiliates, officers, trustees,
directors, shareholders, employees and agents from and against those third-party
losses and liabilities (including, without limitation, reasonable attorneys'
fees) that are directly attributable to the Buyer’s negligence or wrongdoing.

 

27.         Pass Through & Assistance in Tendering Claims.Cardinal Health shall
use commercially reasonable efforts to obtain from the manufacturers of the
Merchandise sold to the Buyer under this Agreement indemnification by the
manufacturer to Cardinal Health’s customers with respect to the Merchandise.
Further, Cardinal Health shall assign and transfer to the Buyer, on a
non-exclusive basis, any representations, warranties, rights and claims to
defense and indemnity made by the manufacturers of the Merchandise purchased by
the Buyer under this Agreement (including, but not limited to, representations,
warranties and rights and claims to defense and indemnity, relating to
intellectual property, product liability or negligence) to the extent that: (i)
such representations, warranties and rights and claims to defense and indemnity
are assignable by Cardinal Health, and (ii) such representations, warranties and
rights and claims to defense and indemnity arise out of or relate to the
Merchandise from such manufacturer which is subsequently sold to Buyer under
this Agreement, and (iii) that Cardinal Health is not prejudiced by such
assignment. Furthermore, Cardinal Health will cooperate with all reasonable
requests made by the Buyer to enforce such representations, warranties and
rights and claims to defense and indemnity against such manufacturers and in
connection with pursuing consents from the manufacturers in providing or
assigning to Buyer such representations, warranties, and rights to defense and
indemnification.

  

10

 

 

28.         Rx Product Dating.Cardinal Health shall use commercially reasonable
efforts to ensure that the Rx Products delivered by Cardinal Health to the Buyer
under this Agreement have at least [***] months dating, unless the only product
available from the manufacturer contains less than [***] months dating.

 

29.         Force Majeure. Either party’s obligations under this Agreement will
be excused if and to the extent that any delay or failure to perform such
obligations is due to fire or other casualty, product or material shortages,
strikes or labor disputes, transportation delays, change in business conditions
(other than insignificant changes), manufacturer out-of-stock or delivery
disruptions, acts of God, seasonal supply disruptions, or other causes beyond
the reasonable control of such Party. During the period of any such delay or
failure by Cardinal Health, Buyer may purchase the Primary Requirements for the
affected Pharmacies from others, but will recommence purchasing from Cardinal
Health upon cessation of such delay or failure.

 

30.         Notices. Any notice or other communication required or desired to be
given to either party under this Agreement shall be in writing and shall be
deemed given when: (a) received by the recipient, after being sent via certified
mail, return receipt requested, and addressed to that party at the address for
such party set forth at the end of this Agreement; (b) received by the recipient
after being sent via Federal Express, Airborne, or any other similar overnight
delivery service for delivery to that party at that address; or (c) received by
facsimile transmission, as evidenced by electronic confirmation, to that party
at its facsimile number set forth at the end of this Agreement. Either party may
change its address or facsimile number for notices under this Agreement by
giving the other party notice of such change.

 

31.         Confidentiality. Neither party may disclose the terms and conditions
of this Agreement to a third party without prior written consent of the other
party, except as required by SEC regulation, law or as necessary to perform its
obligations under this Agreement. Neither party will make any press release or
other public announcement regarding this Agreement or the other party or its
affiliates without the other party's express prior written consent, except as
required under applicable law or by any governmental agency, in which case the
party required to make the press release or public disclosure shall use
commercially reasonable efforts to obtain the approval of the other party as to
the form, nature and extent of the press release or public announcement prior to
issuing the press release or making the public announcement.

 

32.         Miscellaneous. This Agreement and its exhibits constitute the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and this Agreement may not be amended except by a writing signed by each
party. No party may assign its rights or obligations under this Agreement
without the written consent of the others; provided, however, that Cardinal
Health may delegate its rights and obligations to any entity that is controlled
by or under common control with Cardinal Health, Inc. This Agreement does not
create any employment, agency, franchise, joint venture, partnership or other
similar legal relationship between Buyer and Cardinal Health.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

11

 

 

Fred’s Stores of Tennessee, Inc.   Cardinal Health 110, LLC 4300 New Getwell Rd.
  7000 Cardinal Place Memphis, TN 38118   Dublin, Ohio 43017 Telecopy:
901-531-8076   Telecopy: (614) 757-6000          

By /s/ Rick Chambers   By /s/ Jon Giacomin Title VP   Title Pres. US
Pharmaceutical Distribution Date 08/06/2014   Date 8/6/14

 

    Cardinal Health 411, Inc.     7000 Cardinal Place     Dublin, Ohio 43017    
Telecopy: (614) 757-6000      

  By /s/ Jon Giacomin   Title Pres. US Pharmaceutical Distribution   Date 8/6/14

 

As to the Guaranty in Section 9.2 Only:

 

Fred’s Inc.   4300 New Getwell Rd.   Memphis, TN 38118   Telecopy: 901-531-8076
 

 

By /s/ Rick Chambers   Title EVP   Date 08/06/2014  

  

12

 

  

EXHIBIT A

 

Pharmacies

 

Store #   Store Name   Address   Address Line 2   City   State   Zip
Code 1010   Fred's Pharmacy   107 N Meridian Street       Aberdeen   MS   39730
1020   Fred's Pharmacy   905 Highway 278 East       Amory   MS   38821 1025  
Fred's Pharmacy   1001 N. Slappey Blvd         Albany   GA   31701 1027   Fred's
Pharmacy   763 Hwy 28 Bypass       Abbeville   SC   29620 1035   Fred’s Pharmacy
  1311 North Hazel       Arcadia   LA   71001 1045   Fred's Pharmacy   2750 Pine
Street Unit #1       Arkadelphia   AR   71923 1060   Fred's Pharmacy   222 Mabus
Street       Ackerman   MS   39735 1070   Fred's Pharmacy   11888 Highway 70  
P.O. Box 508   Arlington   TN   38002 1085   Fred's Pharmacy   901 Dewitt Henry
Blvd       Beebe   AR   72012 1088   Fred's Pharmacy   215 Bailey Lane      
Benton   IL   62812 1090   Fred's Pharmacy   5760 Highway 80 E       Pearl   MS
  39208 1095   Fred's Pharmacy   170 Hwy 167       Bald Knob   AR   72010 1100  
Fred's Pharmacy   6064 Stage Road       Bartlett   TN   38134 1108   Fred's
Pharmacy   3606 Main Street       Bamberg   SC   29003 1110   Fred's Pharmacy  
2017 East Madison       Bastrop   LA   71220 1113   Fred's Pharmacy   311 East
Main Street       Andrews   SC   29510 1125   Fred's Pharmacy   2675 Highway 15
  P.O. Box 1200   Bay Springs   MS   39422 1135   Fred's Pharmacy   475 Hwy 6
East       Batesville   MS   38606 1145   Fred's Pharmacy   403 W. Calhoun
Street   P.O. Box 310   Bruce   MS   38915 1155   Fred's Pharmacy   502 North
Second Street       Booneville   MS   38829 1158   Fred's Pharmacy   13210 North
Wintzell Ave.       Bayou La Batre   AL   36509 1160   Fred's Pharmacy   520 N.
Hayden Street       Belzoni   MS   39038 1165   Fred's Pharmacy   105 Tennessee
Street       Bolivar   TN   38008 1198   Fred's Pharmacy   214 GA Hwy 49 S.    
  Byron   GA   31008 1205   Fred's Pharmacy   3395 Hwy 5 North       Benton   AR
  72019 1210   Fred's Pharmacy   229 N. Union Street       Canton   MS   39046
1215   Fred's Pharmacy   207 South 2nd Street       Cabot   AR   72023 1220  
Fred's Pharmacy   300 South Pearl Street       Carthage   MS   39051 1235  
Fred's Pharmacy   456 Highway 24       Centreville   MS   39631 1240   Fred's
Pharmacy   1797 Hwy 100 East       Centerville   TN   37033 1255   Fred's
Pharmacy   200 Clinton Plaza       Clinton   MS   39056 1263   Fred's Pharmacy  
5485 New Jesup Hwy       Brunswick   GA   31523 1278   Fred's Pharmacy   1211 S.
Fir Ave.   P.O. Box 2542   Collins   MS   39428 1290   Fred's Pharmacy   245
East Oak Street       Conway   AR   72032 1295   Fred's Pharmacy   8155 US Hwy
165       Columbia   LA   71418 1300   Fred's Pharmacy   236 Desoto      
Clarksdale   MS   38614 1305   Fred's Pharmacy   599 W. Veterans Blvd.   P.O.
Box 1228   Calhoun City   MS   38916

  

13

 

 

1310   Fred's Pharmacy   1125 Morningside Drive       Conway   AR   72034 1320  
Fred's Pharmacy   195 North 641       Camden   TN   38320 1323   Fred's Pharmacy
  109 Chevy Lane Suite B       Bunkie   LA   71322 1340   Fred's Pharmacy   1110
Hwy 13 N. Ste #5       Columbia   MS   39429 1355   Fred's Pharmacy   24 Camden
Bypass       Camden   AL   36726 1358   Fred's Pharmacy   101 North Webster
Street       Cuthbert   GA   39840 1360   Fred's Pharmacy   450 Highway 72 West
      Collierville   TN   38017 1363   Fred's Pharmacy   21665 Hwy 25      
Columbiana   AL   35051 1380   Fred's Pharmacy   425 West 7th Street   Columbia
Plaza S/C   Columbia   TN   38401 1385   Fred's Pharmacy   409 W. Main Street  
    Clarksville   AR   72830 1393   Fred's Pharmacy   15 Colbert Business Pkwy.
W       Colbert   GA   30628 1400   Fred's Pharmacy   9810 Highway 57 South    
  Counce   TN   38326 1405   Fred's Pharmacy   5316 US Hwy 17 North   P.O. Box
1038   Darien   GA   31305 1420   Fred's Pharmacy   808 West Collin RayeDr      
Dequeen   AR   71832 1430   Fred's Pharmacy   340 Virginia Avenue      
Daleville   AL   36322 1440   Fred's Pharmacy   1560 Donelson Parkway      
Dover   TN   37058 1460   Fred's Pharmacy   409 West 3rd Street      
Donalsonville   GA   39845 1470   Fred's Pharmacy   33674 Highway 12      
Durant   MS   39063 1478   Fred's Pharmacy   122 Hillcrest Parkway       Dublin
  GA   31021 1488   Fred's Pharmacy   25096 Hwy 51       Crystal Springs   MS  
39059 1490   Fred's Pharmacy   8487 Highway 22       Dresden   TN   38225 1495  
Fred's Pharmacy   93 Bushrod Johnson Ave.       Chickamauga   GA   30707 1503  
Fred's Pharmacy   1200 West Church Street       Alamo   TN   38001 1510   Fred's
Pharmacy   5011 Fourth Ave.       Eastman   GA   31023 1515   Fred's Pharmacy  
1021 US Hwy 45 North       Eldorado   IL   62930 1518   Fred's Pharmacy   156
Wilford Ash Pkwy       Cleveland   GA   30528 1520   Fred's Pharmacy   1960
Veterans Memorial Blvd.       Eupora   MS   39744 1525   Fred's Pharmacy   2200
West Laurel Ave       Eunice   LA   70535 1533   Fred's Pharmacy   5604 Hwy 3  
    Benton   LA   71006 1535   Fred's Pharmacy   802 Forrest Ave       East
Brewton   AL   36426 1538   Fred's Pharmacy   705 Central Drive       East
Dublin   GA   31027 1540   Fred's Pharmacy   996 Hwy 203       Elba   AL   36323
1550   Fred's Pharmacy   5897 East Main Street       Erin   TN   37061 1560  
Fred's Pharmacy   450 West Front Street       Evergreen   AL   36401 1570  
Fred's Pharmacy   2415 Fairview Blvd.       Fairview   TN   37062 1588   Fred's
Pharmacy   441 N. Fourth Street       Baldwyn   MS   38824 1605   Fred's
Pharmacy   1521 Jefferson Davis Hwy       Camden   SC   29020 1608   Fred's
Pharmacy   611 US Hwy 65 South, Suite A       Dumas   AR   71639 1620   Fred's
Pharmacy   2227 North Washington       Forrest City   AR   72335 1628   Fred's
Pharmacy   733 Lawrence Street       Etowah   TN   37331 1630   Fred's Pharmacy
  237 Woodland Drive       Forest   MS   39074 1638   Fred's Pharmacy   505 US
Hwy 80 West Ste. A       Demopolis   AL   36732

  

14

 

 

1640   Fred's Pharmacy   1409 Adams Street, Suite 1A       Fulton   MS   38843
1660   Fred's Pharmacy   1311 North Charlyne       Brinkley   AR   72021 1663  
Fred's Pharmacy   800 North Cross Street       Albany   KY   42602 1665   Fred's
Pharmacy   708 Washington Street       Franklinton   LA   70438 1675   Fred's
Pharmacy   4150 Florence Blvd.       Florence   AL   35634 1683   Fred's
Pharmacy   821 South Main Street       Church Point   LA   70525 1700   Fred's
Pharmacy   101 Mansker Drive       Flora   MS   39071 1710   Fred’s Pharmacy  
228 West Hwy 30       Gonzales   LA   70737 1713   Fred’s Pharmacy   685 Hwy 106
West   P.O. Box 130   Georgiana   AL   36033 1718   Fred’s Pharmacy   57 South
Broadview     P.O. Box 1102   Greenbrier   AR   72058 1723   Fred's Pharmacy  
1207 South Meridian Street       Greenfield   TN   38230 1735   Fred's Pharmacy
  813 W. Park Ave.       Greenwood   MS   38930 1740   Fred's Pharmacy   420
West Main St       Gallatin   TN   37066 1745   Fred's Pharmacy   2616 Hwy 82 E.
      Greenville   MS   38703 1753   Fred's Pharmacy   2616 Highway 82 E.      
Greenwood   MS   38930 1760   Fred's Pharmacy   9720 Hwy 79       Haynesville  
LA   71038 1765   Fred's Pharmacy   535 West Main       Henderson   TN   38340
1773   Fred's Pharmacy   6027 US Hwy 67       Haskell   AR   72015 1783   Fred's
Pharmacy   106 Jimmy Martin Circle       Gaston   SC   29053 1790   Fred's
Pharmacy   06 East Commerce St       Hernando   MS   38632 1800   Fred's
Pharmacy   226 Broadway       Hartsville   TN   37074 1805   Fred's Pharmacy  
308 South 7th Street       Heber Springs   AR   72543 1810   Fred's Pharmacy  
398 Hwy 149       Clarksville   TN   37040 1823   Fred's Pharmacy   5266 Old Hwy
11 Suite 160       Hattiesburg   MS   39402 1825   Fred's Pharmacy   1075
Highway 80 East       Haughton   LA   71037 1830   Fred's Pharmacy   534 Bell
Creek Road       Hiawassee   GA   30546 1838   Fred's Pharmacy   80 Oak Street  
    Hampton   GA   30228 1840   Fred's Pharmacy   3317 Lorna Road       Hoover  
AL   35216 1845   Fred's Pharmacy   615 Highway 62/65 N.       Harrison   AR  
72601 1860   Fred's Pharmacy   535 High Street       Huntingdon   TN   38344
1865   Fred's Pharmacy   1301 North Illinois Avenue       Harrisburg   AR  
72432 1870   Fred's Pharmacy   2549 North Central       Humboldt   TN   38343
1880   Fred's Pharmacy   #2 Forest Park Ave       Holiday Island   AR   72631
1893   Fred's Pharmacy   905 N. Pontotoc Street       Houston   MS   38851 1905
  Fred's Pharmacy   1000 Broadway DrSte 50       Hattiesburg   MS   39401 1907  
Fred's Pharmacy   700 N. Main Street       Hamburg   AR   71646 1910   Fred's
Pharmacy   615 Hwy 25 South       Iuka   MS   38852 1913   Fred's Pharmacy   518
E. Greer Street       Honea Path   SC   29654 1920   Fred's Pharmacy   210
Highway 82 West       Indianola   MS   38751 1928   Fred's Pharmacy   14916 Hwy
16 West       DeKalb   MS   39328 1935   Fred's Pharmacy   2094 NE E Wallace
Blvd       Ferriday   LA   71334 1958   Fred's Pharmacy   7657 Hwy 70      
Bartlett   TN   38133

  

15

 

 

1963   Fred's Pharmacy   502 East Happy Valley St.       Cave City   KY   42127
1965   Fred's Pharmacy   1181 Main Street       Munfordville   KY   42765 1968  
Fred's Pharmacy   1600 South Colorado Street       Greenville   MS   38703 1990
  Fred's Pharmacy   225 Meadowbrook Road       Jackson   MS   39206 1995  
Fred's Pharmacy   540 Raymond Road       Jackson   MS   39204 1998   Fred's
Pharmacy   902 West Main Street       Homer   LA   71040 2003   Fred's Pharmacy
  812 Veterans Drive       Carencro   LA   70520 2013   Fred's Pharmacy   1898
Spillway Rd.       Brandon   MS   39047 2015   Fred's Pharmacy   2308 South
Caraway Rd       Jonesboro   AR   72401 2018   Fred's Pharmacy   265 Industrial
RD.       Greensburg   KY   42743 2020   Fred's Pharmacy   4212 East Johnson
Street       Jonesboro   AR   72401 2028   Fred's Pharmacy   1693 Hwy 90      
Gautier   MS   39553 2040   Fred's Pharmacy   428 S James Street      
Jacksonville   AR   72076 2055   Fred's Pharmacy   650 West Cherry Street      
Jesup   GA   31545 2058   Fred's Pharmacy   500 US Hwy 19 South       Camilla  
GA   31730 2073   Fred's Pharmacy   400 W. McKinley Ave.       Haughton   LA  
71037 2083   Fred's Pharmacy   200 Hospital Drive       Cherokee Village   AR  
72542 2085   Fred's Pharmacy   1102 South Main Street       Hartford   KY  
42347 2088   Fred's Pharmacy   1200 N. McKenzie Street       Foley   AL   36535
2090   Fred's Pharmacy   5590 Barksdale Blvd.       Bossier City   LA   71112
2098   Fred's Pharmacy   15 East Stonewall Rd.       Byhalia   MS   38611 2105  
Fred's Pharmacy   480 Nelson Blvd.       Kingstree   SC   29556 2110   Fred's
Pharmacy   340 Hwy 12 West       Kosciusko   MS   39090 2123   Fred's Pharmacy  
715 First Avenue       Kinder   LA   70648 2128   Fred's Pharmacy   718 Athens
Road       Lexington   GA   30648 2133   Fred's Pharmacy   1705 Philema Road
South       Albany   GA   31701 2145   Fred's Pharmacy   15700 Arch Street      
Little Rock   AR   72206 2150   Fred's Pharmacy   534 N. Military Street      
Loretto   TN   38469 2155   Fred's Pharmacy   1109 Scottsville Road      
LaFayette   TN   37083 2165   Fred's Pharmacy   313 Patton Ave       LaFayette  
GA   30728 2175   Fred's Pharmacy   301 Yazoo Street       Lexington   MS  
39095 2185   Fred's Pharmacy   890 Overton Plaza       Livingston   TN   38570
2208   Fred's Pharmacy   200 Spartanburg Hwy       Lyman   SC   29365 2210  
Fred's Pharmacy   502 South Church Street       Louisville   MS   39339 2213  
Fred's Pharmacy   119 Highway 1 Bypass       Louisville   GA   30434 2215  
Fred's Pharmacy   308 North Squirrel Hollow Drive   P.O. Box 368   Linden   TN  
37096 2220   Fred's Pharmacy   230 East Gay Street       Lebanon   TN   37087
2228   Fred's Pharmacy   11299 Hwy 63 South       Lucedale   MS   39452 2230  
Fred's Pharmacy   1700 Simpson Hwy 49 Suite 1       Magee   MS   39111 2243  
Fred's Pharmacy   59 Frontage Road   P.O. Box 730   Macon   MS   39341 2245  
Fred's Pharmacy   5028 South First Street       Milan   TN   38358 2255   Fred's
Pharmacy   829 W. Main Street   P.O. Box 643   Monteagle   TN   37356

  

16

 

 

2260   Fred's Pharmacy   601 N St Joseph Hwy 9       Morrilton   AR   72110 2270
  Fred's Pharmacy   110 North Main Street       Malvern   AR   72104 2280  
Fred's Pharmacy   438 South Alabama St       Marianna   AR   72360 2283   Fred's
Pharmacy   1208 Homer Rd.       Minden   LA   71055 2285   Fred's Pharmacy  
4280 Getwell Road       Memphis   TN   38118 2295   Fred's Pharmacy   2695 Hwy
77       Marion   AR   72364 2305   Fred's Pharmacy   5016 Summer Ave      
Memphis   TN   38122 2325   Fred's Pharmacy   1042 Highland Circle      
Mountain Home   AR   72653 2333   Fred's Pharmacy   899 Hwy 171 North       Lake
Charles   LA   70611 2335   Fred's Pharmacy   522 Lincoln Road       East Monroe
  LA   71203 2348   Fred's Pharmacy   213 West Randolph Street   P.O. Box 28  
McLeansboro   IL   62859 2350   Fred's Pharmacy   165 Bessemer Super Hwy      
Midfield   AL   35228 2355   Fred's Pharmacy   1701 North 18th Street      
Monroe   LA   71203 2360   Fred's Pharmacy   87 South Main Street       Mckenzie
  TN   38201 2365   Fred's Pharmacy   1509 Hwy 84 West   P.O. Box 2009  
Monticello   MS   39654 2370   Fred's Pharmacy   406 Hwy 425 South      
Monticello   AR   71655 2375   Fred's Pharmacy   912 North Chancery Street      
McMinnville   TN   37110 2385   Fred's Pharmacy   156  8th Street       Helena  
GA   31037 2395   Fred's Pharmacy   3050 Simpson Highway 13       Mendenhall  
MS   39114 2405   Fred's Pharmacy   5186 Hwy 80       Morton   MS   39117 2408  
Fred's Pharmacy   1318 S. Hwy 21 Bypass       Monroeville   AL   36460 2410  
Fred's Pharmacy   126 West Main Street       New Albany   MS   38652 2430  
Fred's Pharmacy   304 Northside Drive       Newton   MS   39345 2438   Fred's
Pharmacy   47950 US Hwy 78       Lincoln   AL   35096 2440   Fred's Pharmacy  
614 South Main Street       Nashville   AR   71852 2445   Fred's Pharmacy   31
Sgt. Prentiss Drive #4       Natchez   MS   39120 2460   Fred's Pharmacy   1164
Highway 133 North       North Crossett   AR   71635 2468   Fred's Pharmacy  
7122 Will Robbins Hwy   P.O. Box 45   Nettleton   MS   38858 2473   Fred's
Pharmacy   67 Watson Dr.       Mantachie   MS   38855 2483   Fred's Pharmacy  
905 West Main Street       Marion   IL   62959 2485   Fred's Pharmacy   951 Main
Street       Leakesville   MS   39451 2490   Fred's Pharmacy   601 S. Mason
Street       Mount Vernon   GA   30445 2498   Fred's Pharmacy   739 Highway 165
S.       Oakdale   LA   71463 2500   Fred's Pharmacy   7105 Cockrum Street      
Olive Branch   MS   38654 2508   Fred's Pharmacy   3176 Bienville Blvd.      
Ocean Springs   MS   39564 2520   Fred's Pharmacy   1930 University       Oxford
  MS   38655 2523   Fred's Pharmacy   2601 South Main Street       Moultrie   GA
  31768 2528   Fred's Pharmacy   652 Hwy 365       Mayflower   AR   72106 2533  
Fred's Pharmacy   511 West Monroe Avenue       Okolona   MS   38860 2538  
Fred's Pharmacy   2932 Hwy 49 S.       Florence   MS   39073 2543   Fred's
Pharmacy   118 Robert B Lee Drive       Leesburg   GA   31763 2548   Fred's
Pharmacy   700 North Main Street       Mt. Pleasant   TN   38474

  

17

 

 

2550   Fred's Pharmacy   1310 West Morton       Oakland City   IN   47660 2553  
Fred's Pharmacy   224 E. 4th Street       Ocilla   GA   31774 2555   Fred's
Pharmacy   850 Volunteer Drive       Paris   TN   38242 2558   Fred's Pharmacy  
7965 E. Shelby Drive       Memphis   TN   38125 2560   Fred's Pharmacy   7143
Winchester Road       Memphis   TN   38125 2563   Fred's Pharmacy   6500 Quince
Road       Memphis   TN   38119 2565   Fred's Pharmacy   10710 Greenwell Springs
Road       Baton Rouge   LA   70814 2568   Fred's Pharmacy   6311 Hwy 1 S.      
Brusly   LA   70719 2570   Fred's Pharmacy   3857 St. Marys Rd       Columbus  
GA   31906 2575   Fred's Pharmacy   1388 South Main Street       Poplarville  
MS   39470 2578   Fred's Pharmacy   2511 Ingalls Ave.       Pascagoula   MS  
39567 2590   Fred's Pharmacy   3499 Main Street   P.O. Box 742   Pikeville   TN
  37367 2595   Fred's Pharmacy   198 North Curtis       Pea Ridge   AR   72751
2598   Fred's Pharmacy   1290 Lamar Ave.       Memphis   TN   38104 2613  
Fred's Pharmacy   404 Second Street       Pelahatchie   MS   39145 2615   Fred's
Pharmacy   303 East Main Street       Piggott   AR   72454 2620   Fred's
Pharmacy   235 George Wallace Drive       Pearl   MS   39208 2630   Fred's
Pharmacy   714 Pecan Ave. Ste # 1       Philadelphia   MS   39350 2640   Fred's
Pharmacy   170 Hwy 15 North P. O. Box 824       Pontotoc   MS   38863 2643  
Fred's Pharmacy   4628 Hwy 28 East       Pineville   LA   71360 2645   Fred's
Pharmacy   114 West Knight Street       Portland   TN   37148 2650   Fred's
Pharmacy   2809 S. Camden Rd.       Pine Bluff   AR   71603 2653   Fred's
Pharmacy   5751 Shed Rd.       Bossier City   LA   71111 2658   Fred's Pharmacy
  312 Main Street       Baker   LA   70714 2660   Fred's Pharmacy   1670 West
College Street       Pulaski   TN   38478 2670   Fred's Pharmacy   1635 Columbia
Ave.  P. O. Box 1106       Prentiss   MS   39474 2678   Fred's Pharmacy   5907
Old Mooringsport Road       Shreveport   LA   71107 2695   Fred's Pharmacy   509
Hwy 589       Purvis   MS   39475 2748   Fred's Pharmacy   403 Front Street    
  Richton   MS   39476 2750   Fred's Pharmacy   525 4th Avenue S.E.   P.O. Box
2004   Red Bay   AL   35582 2753   Fred's Pharmacy   134 7th Street NW      
Reform   AL   35481 2758   Fred's Pharmacy   16100 Hwy 72       Rogersville   AL
  35652 2780   Fred's Pharmacy   20917 Hwy 61 N       Rolling Fork   MS   39159
2783   Fred's Pharmacy   1876 E. Blackstock Rd.       Roebuck   SC   29376 2788
  Fred's Pharmacy   2866 Bienville Hwy       Ringgold   LA   71068 2798   Fred's
Pharmacy   2019 Farmerville Hwy       Ruston   LA   71270 2805   Fred's Pharmacy
  3303 W Main Place Skyline S/C Hwy 64       Russellville   AR   72801 2845  
Fred's Pharmacy   290 South Washington       Ripley   TN   38063 2850   Fred's
Pharmacy   706 City Avenue North       Ripley   MS   38663 2870   Fred's
Pharmacy   111 Willowbrook Drive   P.O. Box 1469   Saltillo   MS   38866 2883  
Fred's Pharmacy   159 West Turntable Drive       Sparta   TN   38583 2890  
Fred's Pharmacy   801 South Arkansas Bldg #2       Springhill   LA   71075

  

18

 

 

2895   Fred's Pharmacy   4233 Rocky Branch Rd   P.O. Box 707   Sumrall   MS  
39482 2900   Fred's Pharmacy   401 East Lee Street       Sardis   MS   38666
2915   Fred's Pharmacy   2706 East Race Street       Searcy   AR   72143 2925  
Fred's Pharmacy   624 South Rock Street       Sheridan   AR   72150 2935  
Fred's Pharmacy   102 Norfleet Drive       Senatobia   MS   38668 2945   Fred's
Pharmacy   8912 Office Park Plaza Dr       Southaven   MS   38671 2953   Fred's
Pharmacy   710 Church Road       Southaven   MS   38671 2955   Fred's Pharmacy  
399 Mulberry Ave       Selmer   TN   38375 2958   Fred's Pharmacy   1567 N.
Cherokee Road       Social Circle   GA   30025 2960   Fred's Pharmacy   605 S
Jackson       Starkville   MS   39759 2970   Fred's Pharmacy   Highway 64 West  
P.O. Box 7   Somerville   TN   38068 2980   Fred's Pharmacy   1309 North Lincoln
Hwy 425 North       Star City   AR   71667 2990   Fred's Pharmacy   7130 U.S.
Hwy 61   P.O. Box 2668   St. Francisville   LA   70775 3005   Fred's Pharmacy  
4828 Shreveport Hwy       Pineville   LA   71360 3010   Fred's Pharmacy   730
Everett Street       Tiptonville   TN   38079 3045   Fred's Pharmacy   809
Varsity Drive       Tupelo   MS   38801 3048   Fred's Pharmacy   1776 McCullough
Blvd.       Tupelo   MS   38801 3050   Fred's Pharmacy   2045 S. Highway 45    
  Trenton   TN   38382 3053   Fred's Pharmacy   402 Pine Street      
Taylorsville   MS   39168 3055   Fred's Pharmacy   1401 Woodmont Drive      
Tuscumbia   AL   35674 3063   Fred's Pharmacy   1317 East Main Street      
Tupelo   MS   38804 3070   Fred's Pharmacy   3000 Plaza Drive       Tylertown  
MS   39667 3073   Fred's Pharmacy   604 Northside Drive       Statesboro   GA  
30458 3083   Fred's Pharmacy   2110 Goodman Road East       Southaven   MS  
38671 3108   Fred's Pharmacy   422 W. Cunningham Ave.       Terry   MS   39170
3145   Fred's Pharmacy   12101 Hwy 57       Vancleave   MS   39565 3170   Fred's
Pharmacy   181 W. Carolina Ave.   P.O. Box 1326   Varnville   SC   29944 3175  
Fred's Pharmacy   9574 Hwy 18       Vernon   AL   35592 3178   Fred's Pharmacy  
10 Eagle Street       Vilonia   AR   72173 3185   Fred's Pharmacy   1514 Sampson
Street       Westlake   LA   70669 3210   Fred's Pharmacy   409 Duncan Street  
    Water Valley   MS   38965 3220   Fred's Pharmacy   4928 Highway 70      
White Bluff   TN   37187 3225   Fred's Pharmacy   307 Highway 64 East      
Waynesboro   TN   38485 3230   Fred's Pharmacy   2001 West Court Street      
Winnfield   LA   71483 3235   Fred's Pharmacy   116 2nd Street South      
Wiggins   MS   39577 3240   Fred's Pharmacy   603 Middleton Road       Winona  
MS   38967 3245   Fred's Pharmacy   826 N Sebastian Street       West Helena  
AR   72390 3250   Fred's Pharmacy   5305 New Hwy 31 E.  P. O. Box 367      
Westmoreland   TN   37186 3255   Fred's Pharmacy   2615 N. 7th St Westgate S/C  
    West Monroe   LA   71291 3270   Fred's Pharmacy   207 Washington Street    
  West Monroe   LA   71292 3275   Fred's Pharmacy   515 West Main Street Ste. A
      Waverly   TN   37185 3280   Fred's Pharmacy   297 South Hwy 20      
Pelzer   SC   29669

  

19

 

 

3300   Fred's Pharmacy   1755 Decherd Blvd       Decherd   TN   37324 3310  
Fred's Pharmacy   507 W. Pine Street       Warren   AR   71671 3340   Fred's
Pharmacy   8515 Dollar Way Road       WhiteHall   AR   71602 3350   Fred's
Pharmacy   505 Laurens Rd.       Woodruff   SC   29388 3365   Fred's Pharmacy  
1130 South McCrary       Woodbury   TN   37190 3368   Fred's Pharmacy   211 U.S.
Hwy 61 South       Woodville   MS   39669 3370   Fred's Pharmacy   605 North
Main Street       Wrens   GA   30833 3410   Fred's Pharmacy   320 Highway 14
South   P.O. Box 530   Yellville   AR   72687 3415   Fred's Pharmacy   9215 Hwy
19       Zebulon   GA   30295 3517   Fred's Pharmacy   1015 Delaware Avenue
Suite A       McComb   MS   39648 3533   Fred's Pharmacy   622 W. Market Street
Suite 200       Bolivar   TN   38008 3543   Fred's Pharmacy   2012 E. Shiloh Rd.
      Corinth   MS   38834 3553   Fred's Pharmacy   224 S. Three Notch Street  
    Andalusia   AL   36420 3563   Fred's Pharmacy   132 South Main Street      
Brundidge   AL   36010 3568   Fred's Pharmacy   1128 Second Ave. NE      
Fayette   AL   35555 3578   Hudson Drug Store   600 Nuckolls Rd.       Bolivar  
TN   38008 3580   Burden Drug Center   418A West Central Avenue       Jamestown
  TN   38556 3582   Fred's Pharmacy   1524 Hospital Avenue       Franklin   LA  
70538 3584   Fred's Pharmacy   129 N. Pine Street       DeQuincy   LA   70633
3586   Family Pharmacy   200 Marion Ave.       McComb   MS   39648 3588   Fred's
Pharmacy   808 NC Hwy 69       Hayesville   NC   28904 3607   Fred's Pharmacy  
101 W. Main Street       Easley   SC   29640 3633   Fred's Xpress   40474 Hwy 45
S.   P.O. Box 60   Hamilton   MS   39746 3637   Fred's Xpress   814  20th Street
      Haleyville   AL   35565 3643   Fred's Pharmacy   202 E. Starling St.      
Greenville   MS   38701 3647   Fred's Pharmacy   1221 East Union      
Greenville   MS   38703 3650   Fred's Xpress   2005 North Pine Ave.  P. O. Box
605       Heidelberg   MS   39439 3653   Fred's Pharmacy   1427 South Main
Street       Greenville   MS   38701 3657   Fred's Pharmacy   1467 Hwy 1 South  
    Greenville   MS   38701 3665   Fred's Xpress   118 Humphrey   P.O. Box 346  
IttaBena   MS   38941 3700   Fred's Xpress Pharmacy   1261 Military Street S.  
    Hamilton   AL   35570 3709   Fred's Pharmacy   415 Mott Street       New
Madrid   MO   63869 3713   Fred's Pharmacy   1301 N. Roan Street       Johnson
City   TN   37601 3715   Fred's Pharmacy   115 Alabama Street       Columbus  
MS   39702 3737   Fred's Pharmacy   8525 US Hwy 60 West       Lewisport   KY  
42351 3763   Fred's Pharmacy   7818 Highway 613       Moss Point   MS   39563
3773   Fred's Pharmacy   21361 Whyte Hardee Boulevard   P.O. Box 613  
Hardeeville   SC   29927 3783   Fred's Pharmacy   40 West Main Street   P.O. Box
910   Old Fort   NC   28762 3793   Fred's Pharmacy   7072 Hwy 64       Oakland  
TN   38060 3860   Fred's Xpress   705 Plank Road Hwy 128 P. O. Box 5       St.
Joseph   LA   71366 3863   Fred's Pharmacy   405 North Main Street       Opp  
AL   36467 3867   Lovelace Drugs   801 Washington Avenue       Ocean Springs  
MS   39564

  

20

 

 

3870   Fred's Xpress   201 Lake View Drive Ste C   P. O. Box 189   Somerville  
TN   38068 3873   Fred's Pharmacy   205 N. Main Street       Sweetwater   TN  
37874 3877   Fred's Pharmacy   541 Jackson Blvd       Tarrant   AL   35217 3885
  Fred's Pharmacy   251 S. Washington       Ripley   TN   38063 3887   Fred's
Xpress     2173 S. Lamar Blvd       Oxford   MS   38655 3900   C & G Pharmacy  
9311 Jefferson Hwy       River Ridge   LA   70123 3903   Fred's Pharmacy   103
Hwy 48       Summerville   GA   30747 3905   Fred's Pharmacy   4097 West Main
St.       Soperton   GA   30457 3910   Fred's Pharmacy   300 N. Congress Blvd.  
    Smithville   TN   37166 3915   Fred's Pharmacy   101 West Commercial Ave.  
    Monterey   TN   38574 3917   Fred's Pharmacy   640 Hwy 114 South      
Scotts Hill   TN   38374 3920   Fred's Xpress   801 East Jackson Street   P.O.
Box 301   Union      MS   39365 3923   Fred's Pharmacy   6216 Highway 10   P.O.
Box 70   Greensburg   LA   70441 3925   Fred's Xpress   101 West Sweet Potato
Ave.   P.O. Box 398   Vardaman   MS   38878 3935   Fred's Xpress   502 West St.
Louis Street       West Frankfort   IL   62896 3937   Fred's Pharmacy   734 N.
Greenwood Ave.       Ware Shoals   SC   29692 3947   Fred's Pharmacy   717
Avenue G       Kentwood   LA   70444 3957   Fred's Pharmacy   303 N. Hood Street
      Lake Providence   LA   71254 3959   Fred's Pharmacy   420 N. Main Street  
    Franklin   KY   42134 3989   Big D's Discount Drugs   38 Oak Street      
Jackson   GA   30233 3991   Fred's Pharmacy   1850 Redmond Circle NW Ste. 200  
    Rome   GA   30165 3993   Fred's Pharmacy   11997 S. Main Street      
Trenton   GA   30752 6015   Getwell Drug & Dollar   700 S. Main Street      
Middleton   TN   38052 6017   Getwell Drug & Dollar   6 East Second Ave.      
Glenwood   GA   30428 6019   Getwell Drug & Dollar   302 N. Main Street      
Leland   MS   38756 6021   Getwell Drug & Dollar   5705 Hwy 278       Sulligent
  AL   35586 6025   Getwell Drug & Dollar   206 Greensboro Ave.       Eutaw   AL
  35462 6027   Getwell Drug & Dollar   509 N. Main Street       Tompkinsville  
KY   42167 7600   Fred's Pharmacy   1039 Martin Luther King Drive       Marks  
MS   38646 7680   Fred's Pharmacy   626 22nd Avenue South       Meridian   MS  
39301 7780   Fred's Pharmacy   501 Tennessee Ave North       Parsons   TN  
38363 7840   Fred's Pharmacy   125 Main Street       Quitman   MS   39355 8075  
Fred's Pharmacy   2431 Clay Street         Vicksburg   MS   39183

 

21

 

 

EXHIBIT B

 

[***]

  

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

22

 

 

EXHIBIT C

 

[***]

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

  

23

 

 

 

EXHIBIT D

 

Cardinal Health Pharmaceutical Distribution

Returned Goods Policy

 

Products in “merchantable condition” (as defined below) and originally purchased
from Cardinal Health may generally be returned to the customer’s servicing
Cardinal Health distribution center in accordance with, and subject to, the
terms and conditions of this policy.

 

Return Made Within: Normal Credit Amount:     [***] [***]

 

Returns made greater than 12 months from the invoice date will not be accepted.
No credit will be issued, and the product will be returned to customer.

 

“Merchantable condition” will be determined by Cardinal Health based upon its
ability to return the product to its inventory for resale in the normal course
of its business, without special preparation, testing, handling, or expense and
will exclude the following:

 

A.           Any product purchased from any supplier other than Cardinal Health.

B.           Any product which has been used or opened; is a partial dispensing
unit or unit of sale; is without all original packaging, labeling, inserts, or
operating manuals; or that is stickered, marked, damaged, defaced, or otherwise
cannot readily be resold by Cardinal Health for any reason.

C.           Short-dated (less than seven (7) months expiration dating),
outdated, or seasonal products and products purchased on a “special order”
basis, including non-stock and drop-shipped products.

D.           Any product not intended for return to a wholesaler in accordance
with the return policies of the applicable manufacturer.

E.           Any product listed by any state or federal regulatory agency as a
high-risk pedigree item that is returned without a valid invoice number that
cannot otherwise be verified by Cardinal Health.

 

Unmerchantable Products

 

Any product not eligible for return in accordance with this policy (i.e., the
product is not in “merchantable condition” as set forth above) will require
return directly to the manufacturer. If any such products are returned to
Cardinal Health, they will be returned to customer and no credit will be issued.
Stickered products will be handled as follows: Cardinal Health will remove the
sticker, retain the product and credit the customer (as applicable pursuant to
this policy). If the product is damaged during the removal of the sticker, no
credit will be issued to customer and the product will be returned to customer.

 

Notwithstanding the foregoing, in any case where Cardinal Health accepts the
return of such products and agrees to return such products to the applicable
manufacturer on behalf of customer (provided the manufacturer allows the return
of such products), any credit issued to customer will be determined by Cardinal
Health.

 

Required Return Documentation

 

Prior to returning any product to Cardinal Health, customer must execute and
deliver to Cardinal Health a Cardinal Health Returned Goods Authorization
Ongoing Assurance verifying that all returned products have been kept under
proper conditions for storage, handling, and shipping.

 

All requests for credit must be submitted via EOE, Cardinal.com,
CardinalCHOICE®, or approved EDI interface.

 

A fully completed and signed Merchandise Return Authorization Form (the “MRA
Form”)must accompany all products to be returned. Note: An MRA Form cannot be
fully completed without a valid invoice number. The request for an MRA Form will
be rejected if a valid invoice number is not provided.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

  

24

 

 

Third Party Return Processors

 

At the request of customer, Cardinal Health will work with third party return
processors for returns of unmerchantable products. Such arrangement will be
subject to mutually agreed upon terms and conditions, to include administrative
fees payable to Cardinal Health.

 

Controlled Substances

 

Credit for the return of controlled substances requires a separate MRA Form and
such returns must comply with all applicable laws, rules and regulations in
addition to the terms and conditions of this policy.

 

Refrigerated, Chemotherapy and Hazardous Products

 

Refrigerated, chemotherapy and hazardous products must be returned in packaging
that complies with applicable regulatory requirements. All such products that
are not returned in packaging that complies with applicable regulatory
requirements will be considered damaged and unsaleable. This product will be
destroyed and no credit will be issued to customer.

 

Shorts and Damaged Products

 

Claims of order shortages (e.g., products invoiced but not received), filling
errors and damage must be reported within two (2) business days from the
applicable invoice date, or no credit will be issued. Returns of damaged
products or products shipped in error must be received by the Cardinal Health
servicing distribution center within ten (10) business days from the applicable
invoice date, or no credit will be issued. Controlled substance shortage claims
must be reported immediately per DEA requirements. In all instances, credit will
not be issued until verification of the claim by Cardinal Health.

 

No deductions may be taken by customer until a valid credit memo is issued by
Cardinal Health.

 

Shipping of Return Products

 

Products to be returned must be placed in a proper shipping container and signed
for by the driver when picked up.

 

Signed MRA Forms shall be included in totes with the returned products. Only one
(1) MRA Form shall be included in each tote.

 

-If the MRA Form is not signed, no credit will be issued, and the products will
be returned to the customer.

-If the MRA Form is not inside the tote with the returned products, Cardinal
Health will attempt to identify the customer that returned the products. The
tote will then be returned to the customer with a request for a completed MRA
Form(s).

-No credit will be issued for products returned but not listed on the
accompanying MRA Form. Such products will be returned to the customer.

 

All MRA Forms will be reviewed by Cardinal Health for compliance with this
policy. The acceptability and valuation of any return is at the reasonable
discretion of Cardinal Health.

 

Products must be returned to the customer’s servicing Cardinal Health
distribution center within thirty (30) days from the date of customer’s request
for an MRA Form, or no credit will be issued.

 

In addition to the requirements set forth in this policy, Customer shall comply
with all return procedures required by the Cardinal Health servicing
distribution center.

 

Other Restrictions

 

If the Buyer’s returns during a calendar quarter exceed 8.00% of the Buyer’s
aggregate Net Purchases under the Agreement during the calendar quarter,
Cardinal Health may reasonably increase the restocking fees under this policy
until such time as the Buyer’s returns decrease to levels.

 

This policy is subject to change without notice by Cardinal Healthas maybe
deemed reasonably necessary or appropriate to comply with applicable federal
and/or state regulations, FDA guidelines, state law, and other restrictions
applicable to returned products.

 

25

 

 

EXHIBIT E

 

Returned Goods Policy for Unmerchantable Product

 

General Policy

 

Cardinal Health and Buyer have agreed to pursue a return process whereby
Cardinal Health will assist Buyer in receiving value for certain unmerchantable
Product. Product which may not be returned pursuant to Cardinal Health's
Standard Returned Goods Policy may be returned to an authorized manufacturer
through Inmar (the “Third Party”) pursuant to this policy. Products which are
“unmerchantable” include, but are not limited to, those items which Cardinal
Health determines are not in “merchantable condition” (as defined in Cardinal
Health’s Returned Goods Policy), and the following:

 

A.           Any item which has been used or opened, is a partial dispensing
unit or unit of sale, is without all original packaging, labeling, inserts or
operating manuals, or that is stickered, marked, damaged, defaced or otherwise
cannot readily be resold by Cardinal Health for any reason.

 

B.           Short-dated (less than seven (7) months expiration dating),
outdated, or seasonal product and items purchased on a “special order” basis,
including non-stock and drop ship items.

 

C.           Any sterile or refrigerated Merchandise, unless Cardinal Health is
specially assured that such Merchandise was properly stored and protected at all
times and such Merchandise is returned separately in a package marked as such
and accompanied by a separate credit request form.

 

D.           Any low stability product, including Epogen™, Eminase™, or other
products which are usually sensitive to temperature and handling conditions.

 

E. Any product not intended for return to a wholesaler in accordance with the
return policies of the applicable manufacturer.

 

Product in “unmerchantable condition” may generally be returned to vendors (a)
with which Cardinal Health has a current relationship, (b) are not either
insolvent or subject to a petition in bankruptcy, or (c) which do not have an
outstanding balance due Cardinal Health at the date on which such Product is
submitted for return (each such vendor, an “Active Manufacturer”).
Unmerchantable Product may only be returned through the Third Party in
accordance with the terms and conditions described in this policy. Cardinal
Health will provide the Third Party with a current list of all Active
Manufacturers. The Third Party must enter into a Confidentiality Agreement, in a
form acceptable to Cardinal Health, prior to accepting any returns from Buyer.

 

Procedures for Returns

 

Buyer and Cardinal Health will notify each Active Manufacturer of their
relationship as buyer/wholesaler. Buyer will send all returns of unmerchantable
Product to the Third Party. The amount identified by the Third Party as the
amount to which Buyer is entitled in exchange for the return will be determined
in accordance with the return policy of the applicable Active Manufacturer as
described in the Third Party’s database. Buyer will instruct the Third Party to
provide Cardinal Health with documentation (either in paper or electronic
format) to substantiate each debit memo submitted to Active Manufacturers on
behalf of Buyer.

 

Buyer will instruct each Active Manufacturer to issue any and all credits to
Cardinal Health for Merchandise that was purchased by Buyer from Cardinal Health
and is returned through the Third Party in unmerchantable condition, and to
reference the debit memo number corresponding to the debit memo prepared by the
Third Party. Buyer and Cardinal Health acknowledge that Buyer will handle,
without Cardinal Health’s involvement, all matters relating to returns to
manufacturers with which Buyer has a direct contracting relationship (whether or
not such manufacturer is an Active Manufacturer).

 

26

 

 

 

Within thirty (30) days after Cardinal Health’s receipt of a report from the
Third Party that details the debit memoranda submitted by the Third Party to
Active Manufacturers during the applicable period, Cardinal Health shall pay to
Buyer an amount equal to[***] of the returnable value of each debit memo
submitted by the Third Party to an Active Manufacturer on behalf of Buyer during
the applicable period. Each such payment shall be made to Buyer by Cardinal
Health in the form of credit memo. The parties hereby expressly acknowledge and
agree that, following such payment by Cardinal Health to Buyer for a given debit
memo: (i) Buyer shall not be entitled to receive any credits that Cardinal
Health receives from the Active Manufacturers with respect to such returns and
(ii) that Buyer shall not be liable in the event that Cardinal Health does not
receive credit (or adequate credit) from a given Active Manufacturer with
respect to a given debit memo.

 

If Buyer directly receives any value from a manufacturer for Merchandise for
which Buyer has received value from Cardinal Health under this Policy, Buyer
shall provide written notice of such value to Cardinal Health within five (5)
business days after receipt. Any such written notice shall identify: (i) the
products for which value was received, (ii) the value received by Buyer for each
such product, and (iii) the debit memo number corresponding to the original
debit memo prepared by the Third Party that contained the products for which
value was received. In such an instance, the amount of the value directly
received by Buyer shall be deducted from the amount of the immediately following
Third Party returns credit provided to Buyer by Cardinal Health under this
Policy.

 

Cardinal Health will pay the Third Party directly for the Third Party’s fees
associated with returns made by Buyer under this Returned Goods Policy for
Unmerchantable Product. Buyer will promptly notify Cardinal Health of any
material revisions to the agreement between Buyer and the Third Party.

 

To the extent that Buyer desires to return Product to a supplier which is not an
approved Active Manufacturer, Cardinal Health will credit Buyer’s account only
after Cardinal Health receives payment either through check, money order or wire
transfer. If check, wire transfer or any other payment method is employed which
does not guarantee Cardinal Health immediately available funds, Cardinal Health
will credit Buyer’s account only upon receiving such funds in Cardinal Health’s
account.

 

Buyer may not offset payments due from Buyer to Cardinal Health for Product
purchases against any amounts Buyer deems are due and owing pursuant to this
Third Party Returned Goods Policy.

 

Cardinal Health may modify this Third Party Returned Goods Policy in its
reasonable discretion from time to time.

 

[***] Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

 

27

 

 

EXHIBIT F

 

[tlogo.jpg] 

 

Compliance Representations and Warranties for Customers

 

______________________________ [Insert full, legal name of Customer]
(“Customer”) represents and warrants that it:

 

1.          will abide by all applicable laws, rules, regulations, ordinances
and guidance of the federal Drug Enforcement Administration (“DEA”), the states
into which it dispenses or sells controlled substances and/or listed chemicals,
and the states in which it is licensed, including, without limitation, all of
the foregoing concerning the purchase, sale, dispensation, and distribution of
controlled substances; and

 

2.          will not dispense or sell controlled substances and/or listed
chemicals if it suspects that a prescription or drug order is not issued for a
legitimate medical purpose or the actions conducted on the part of the
prescriber or Customer and its employees are not performed in the normal course
of professional practice.

 

In addition, Customer warrants that it understands that Cardinal Health is
required by DEA regulations to report to the DEA suspicious orders of controlled
substances and listed chemicals, and Customer agrees to act in good faith in
assisting Cardinal Health to fulfill its obligations. To that end, Customer
agrees that it will be alert for red flags of suspicious orders and listed
chemicals, including, but not limited to:

 

1.          Numerous controlled substance prescriptions written for the same
drugs, in the same quantities for the same time period by the same or different
prescribers or group of prescribers for the same patient;

 

2.          Numerous controlled substance prescriptions written for the same
person or several persons by the same prescriber or group of prescribers; and

 

3.          Numerous prescriptions written for the same patient by prescribers
located in different states than the patient.

 

Customer agrees that if any of the above-noted or other red flags exist, it is
prudent to contact the prescriber to validate the legitimacy of the prescription
and/or to discontinue filling prescriptions from the prescriber, group of
prescribers, or customer in question. In addition, the pharmacist should contact
the State Board of Pharmacy or local DEA Diversion Field Office (see Appendix N,
DEA Pharmacist’s Manual, 2010 Edition).

 

Customer acknowledges that Cardinal Health may provide a copy of this document
to the DEA or any other state or federal regulatory agency or licensing board.

 

Customer hereby acknowledges and agrees that, notwithstanding any other
provision herein, or any provision in any other agreement between Cardinal
Health and the Customer, Cardinal Health may, in its sole discretion,
immediately suspend, terminate or limit the distribution of controlled
substances, listed chemicals, and other products monitored by Cardinal Health to
the Customer at any time if Cardinal Health reasonably believes that the
continued distribution of such products to the Customer may pose an unreasonable
risk of the diversion of such products based on the totality of the
circumstances and such other considerations as may be deemed relevant by
Cardinal Health. In the event such action(s) occur and when requested by Buyer,
Cardinal Health shall discuss with Buyer Cardinal Health’s reasons for
suspending, terminating or otherwise limiting the distribution of controlled
substances, listed chemicals or other products in an attempt to determine
whether such restrictions may be mitigated.

 

The Customer further acknowledges and agrees that it will not file any claims
against Cardinal Health, or any related entity, including legal and equitable
claims, regarding any decision by Cardinal Health to suspend, limit or terminate
its distribution of controlled substances, listed chemicals, and other products
monitored by Cardinal Health to the Customer.

 

Agreed to by a duly authorized officer, partner, or principal of Customer:

 

Signature:_________________________________________

 

Full Name (print): _________________________________________

 

Title:_________________________________________

 

Date:__________________________________________

 

Please sign and return to: Cardinal Health; Attn: Anti-Diversion Group,
Corporate QRA; 7000 Cardinal Place; Dublin; OH 43017 or Fax (614) 652-9631 

 

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