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Exhibit 10.25
 
[***] 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.
 
[image00001.jpg]
 
PRIME VENDOR AGREEMENT
 
This Prime Vendor Agreement (the “Agreement”) is effective April 1, 2015 (the
“Effective Date”)  between PharMerica Corporation located at 1901 Campus Place,
Louisville, Kentucky 40299 (“you”, “your” or “Customer”) and Cardinal Health
110, LLC and Cardinal Health 411, Inc., 7000 Cardinal Place, Dublin Ohio
43017 (collectively, “we“, “us” or “our” or “Cardinal Health”), who agree as
follows:

1.                Purchase Requirement, Usage and Prices.  You will designate us
as your primary wholesale pharmaceutical supplier to all the long term care and
home infusion pharmacies that, on the Effective Date, you own, manage or operate
(collectively, the “Facilities” and individually, a “Facility”) and you will buy
branded pharmaceuticals and generic pharmaceuticals (together  the “Rx
Products”) required for each Facility (the “Primary Requirements”) from us,
subject to your purchasing commitment levels herein, if we carry them.  In
addition, you may, at your option, purchase certain other inventory we carry
(the “Non-Rx Products”) (Rx Products and Non-Rx Products are collectively
referred to as the “Merchandise”).  Your obligations related to your purchase of
branded and generic Rx Products from us under this Agreement are set forth on
Schedule B and Schedule C, respectively.  Any auto-substitution logic to be
applied to your Facilities’ orders will be mutually agreed upon by Customer and
Cardinal Health prior to implementation.

A current list of the Facilities is attached as Schedule A.  Additional long
term care and home infusion facilities that you wholly own or for which you make
the purchasing decisions will be added to Schedule A from time to time (via an
amendment to this Agreement), unless either party to this Agreement has received
notice of material breach under Section 7 of this Agreement. The parties agree
that [***]. Additional long term care and home infusion facilities that you do
not wholly own or make the purchasing decisions for may be added to Schedule A
from time to time (via an amendment to this Agreement) at your sole option.

If you acquire by purchase, merger or other combination, a Facility (or multiple
Facilities) that has designated, by written agreement, another pharmaceutical
wholesaler as its primary wholesale pharmaceutical supplier (collectively, the
"Acquired Facilities" and individually, an "Acquired Facility"), you will cause
each such Acquired Facility to designate us as its primary wholesale
pharmaceutical supplier pursuant to the terms and conditions of this Agreement
at the earlier of: (a) the expiration of the then current term of the agreement
with the other wholesaler, or (b) the date that you terminate such agreement
without cause, but in no event will you be required to terminate any such
agreement by breach, or if you would (i) become obligated to pay any termination
penalty or liquidated damages, other than [***], or (ii)  incur a [***].  If you
acquire by purchase, merger or other combination, a Facility (or multiple
Facilities) that utilizes us as its primary wholesale pharmaceutical supplier,
such Facility(ies) will be added to this Agreement as of the effective date of
the purchase, merger or other combination and the other agreement shall be
terminated without penalty to or liability to or payment by you or the Acquired
Facilities, other than (i) payment by the legally responsible party for products
ordered and services provided prior to the effective date of the purchase,
merger or other combination; and (ii) repayment by the legally responsible party
of any unearned upfront discount amounts which are fully set forth and
enumerated in the Acquired Facility’s drug wholesale agreement.
 
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Despite any other provision in this Agreement, you understand that we reserve
the absolute right to determine what Merchandise we will carry; provided however
that if we carry any Rx Products for another customer of ours, we will also make
it available to you.  For any Rx Products subject to allocation, we will provide
to you your fair share allocation of such Rx Products based on your average
purchase volume in accordance with our standard practices.  You must give us
accurate [***] usage figures (including NDC numbers) for all items for each
Facility in compatible electronic format at least [***] before buying for that
Facility begins under this Agreement, and you will give us updated usage
information on an ongoing basis, as requested. Purchase prices for all
Merchandise bought under this Agreement will be as set forth in the attached
Schedule B and Schedule C.

2.                Ordering, Delivery and Returns.  You must electronically
transmit all orders (excluding emergency orders) to us via Order Express or such
other electronic order entry system as we may approve from time to time.  We
will provide you with access to Order Express at no additional charge; provided,
however, you must supply all hardware required to access Order Express, all
required Internet access and any required interfaces or other network
enhancements, all at your own reasonable expense.  For the benefit of Customer,
Customer and Cardinal Health will work together to develop and enforce mutually
agreed upon Facility ordering protocols, which shall include a toll free number
for use of the Facilities and routine reporting on the nature and number of
calls at no cost to you.  You may not use Order Express or any other electronic
order entry system for any purpose unrelated to this Agreement.  If electronic
order entry is temporarily interrupted for reasons beyond your or our control,
you may place orders manually and both parties will use reasonable efforts to
fix the problem.  All orders for Schedule II controlled substances must be
submitted to us via our electronic Controlled Substance Ordering System
(“CSOS”).  [***].  Schedule II orders will be delivered with your next scheduled
delivery after our receipt of the CSOS order.    Regardless of any other terms
of this Agreement, no Schedule II orders will be delivered other than in
compliance with DEA regulations.  If we stock inventory under this Agreement at
your request (and agreed to by both of us) that we would not otherwise stock
(“Custom Inventory”), you agree that, before substituting other inventory in
place of such Custom Inventory, and upon termination or expiration of this
Agreement for any reason, you will purchase the remaining Custom Inventory under
the terms of this Agreement until it is depleted.

Orders placed through Order Express by the applicable servicing division’s
cut-off time will be delivered the next scheduled delivery day; provided,
however, deliveries of Merchandise to Hawaii that cannot be shipped via air will
be delivered via sea carrier for arrival as soon as practicable following the
Facility’s order.  Subject to the next sentence, we will deliver the Merchandise
[***]  to the Facilities in accordance with our general delivery schedules
established from time to time by the applicable Cardinal Health servicing
division (exclusive of holidays, etc.) and mutually agreed upon.  Any
adjustments to the delivery schedule will be mutually agreed upon.  Excluding
Facilities located outside of the contiguous United States or other Facilities
mutually agreed upon by the parties from time to time, each Facility set forth
on Schedule A will receive [***] delivery per day (“[***]”), [***] days per week
([***]) at no additional charge; provided, however, all deliveries will be
subject to the Fuel Surcharge set forth on Schedule B.  You will [***] for
non-standard or custom deliveries, additional scheduled deliveries to a Facility
or deliveries to multiple locations or departments within a Facility (i.e.,
materials management, dietary department, etc.) that you request. Before we
honor custom or non-standard deliveries from your Facilities, we will obtain the
prior authorization of a designated representative at your corporate
headquarters.
 
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We will provide a 24-hour, 7-day per week emergency delivery service.  Each
Facility will be eligible to receive up to [***] emergency delivery per month at
[***].  Any additional emergency delivery shall incur a service charge of [***]
plus the applicable courier charge (at Cardinal Health’s cost).  Emergency order
procedures will be supplied to each Facility.  On a monthly basis we will report
to you a summary of emergency delivery services by Facility.

We will assign a dedicated account manager who will be responsible for managing
performance of this Agreement on a day to day basis, including, but not limited
to assuring administration of your Manufacturer Contracts as set forth in
Section 5 of Schedule B.  We will also appoint an executive who will be vested
with the authority for assuring our compliance with the terms of this Agreement.

We will provide you with an aggregate average monthly adjusted service level on
Rx Products of at least [***], calculated on a monthly basis by [***].  The
following items will be excluded from the service level calculation:  (a) [***];
(b) [***] and/or [***] or [***]; (c) [***] shipped within [***] working days of
[***]  (including those [***]), which will instead be counted as [***]; (d)
items where a [***]; (e) items where a [***] over the preceding [***] months;
and (f) [***] than [***] within [***] days.  Cardinal Health’s failure to
maintain an aggregate average monthly adjusted service level on Rx Products of
at least [***] for any month will be considered a material breach of this
Agreement.

Our obligations under this Agreement will be excused if and to the extent that
any delay or failure to perform such obligations is due to product or material
shortages or other causes beyond our reasonable control. You may purchase the
Primary Requirements for the affected Facilities from others only during the
period of any such delay or failure. 

The  then-current Returned Goods and, if applicable, Freight Claims Policy of
the Cardinal Health business unit(s) servicing you under this Agreement will
govern all returns and freight claims; provided they are no less beneficial to
you than as set forth in current Returned Goods Policy, a copy of which is
attached hereto as Schedule D.  Notwithstanding anything to the contrary that
may be set forth in the Returned Goods Policy, we will use reasonable efforts to
provide you written notice of any changes to the Returned Goods Policy.

3.                Warranty.  We warrant to you that any product we manufacture
(the term “manufacture”, for purposes of this warranty, does not include product
repackaging) is, as of the date of shipment, fit for the purposes and
indications described in the product labeling.  Unless the product is used in
accordance with its instructions, these warranties are void and of no effect. 
Other products we distribute carry only those warranties made for them by their
manufacturer.  THERE ARE NO OTHER EXPRESSED OR IMPLIED WARRANTIES, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR
PURPOSE. OUR SOLE OBLIGATION AND YOUR EXCLUSIVE REMEDY FOR BREACH OF ANY
WARRANTY WILL BE, AT OUR OPTION, TO REPAIR OR REPLACE THE PRODUCT.

4.                Limitation of Liability.  NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, NEITHER PARTY WILL BE LIABLE FOR INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES.
 
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5.                Payment Terms.  Your initial payment terms and payment term
options will be as set forth on Schedule B to this Agreement.  Any past due
invoice will be assessed interest at a [***] monthly [***] rate or the highest
amount allowed by law, if lower.  Until Merchandise is paid for in full, you
grant us and we retain a security interest in the Merchandise.  We will have a
security interest in any deposit(s) to secure payment to us (or our affiliates)
of all of your obligations, existing and future.  If you default on any payment,
we may exercise a right of setoff against any deposit we hold or any amounts we
(or our affiliates) owe you. You will give us credit information reasonably
necessary that we request not less than [***] days before your initial purchases
under this Agreement and, after that, as we may reasonably request on an annual
basis.

To induce us to supply Merchandise and provide services to your subsidiaries and
affiliates, whether existing now or in the future (collectively, “Borrowers”),
you guarantee to us the punctual and full payment (and not merely the ultimate
collectability) of all sums now or hereafter due from Borrowers to us under this
Agreement and the reasonable costs and expenses we incur in our successful
enforcement any indebtedness, liability, or obligation under this Agreement,
including, without limitation, reasonable attorney’s fees.

6.                Confidentiality.  Neither party may disclose the terms and
conditions of this Agreement to a third party without advance written consent of
the other party, except as required by 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 these cases, the
party required to make the press release or public disclosure must 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 before
issuing it.

7.                Term and Termination.  The Initial Term of this Agreement will
begin on the Effective Date and continue until June 30, 2018.  At the expiration
of the Initial Term, this Agreement will automatically renew for an additional
[***], under the then existing terms and conditions, unless either party
provides written notice of non-renewal not later than [***], in the case of
Customer, and not later than [***], in the case of Cardinal Health, prior to the
expiration of the Initial Term (the “First Renewal Term”).  At the expiration of
the First Renewal Term this Agreement will automatically renew for an additional
[***], under the then existing terms and conditions, unless either party
provides written notice of non-renewal not later than [***], in the case of
Customer, and not later than [***], in the case of Cardinal Health, prior to the
expiration of the First Renewal Term (the “Second Renewal Term”).   References
to the “Term” of this Agreement will include the Initial Term, First Renewal
Term and Second Renewal Term.

Either party may effect 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 thirty (30) days
from the date of such notice, then the non-breaching party may, in addition to
any and all other rights or remedies it may have, provide written notice to the
breaching party that this Agreement will be terminated immediately following the
expiration of such thirty (30) day period.
 
Upon the expiration or termination of this Agreement, for any reason by either
party, we will, upon your written request, for up to a period of sixty (60) days
after the date of such expiration or termination (the “Termination Assistance
Period”): (1) continue to provide the services under this Agreement to the
extent reasonably requested by you; and (2) provide such assistance as you may
require to transfer the services to another vendor.  During the Termination
Assistance Period, we will continue to provide the services in accordance with
the pricing, terms and conditions specified in this Agreement; provided,
however, as you transition your purchases of Rx Products to another vendor, such
that the purchase volume under this Agreement is significantly reduced and/or
affected, we may reasonably adjust the service commitments (i.e., number of
deliveries per week) to reflect your actual purchase volume.  Our continued
provision of products and services during the Termination Assistance Period is
subject to applicable legal and regulatory requirements and our receipt of
adequate assurances regarding payment for any services provided or products
delivered.
 
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8.                Audit.  We will maintain records pertaining to the Rx Products
purchased by you under this Agreement as required by applicable FDA
requirements.  Not more than [***] in any [***] month period, and following
[***] days’ advance written notice to us, you will have the right to appoint one
(1) or more of your employees and third-party auditors (such auditors to be
subject to our approval, such approval not to be unreasonably withheld) to
review those relevant records applicable to your Rx Product purchases for the
sole purpose of verifying compliance with the pricing terms of this Agreement. 
Any such review will be limited to [***] months of historical information as of
the date such review begins and will be subject to a reasonable  confidentiality
agreement prepared by us and signed by you and your employee(s) and third-party
auditors who will have access to the information prior to beginning the review.
The audit rights of this Section 8 are in addition to other audits rights
specifically set forth in this Agreement.

9.                Miscellaneous. You and we will comply with all federal and
state laws, rules and regulations applicable to our respective obligations under
this Agreement. You represent, warrant and certify that you have all required
governmental licenses, permits and approvals required to purchase, use and/or
store the products you buy from us and that all your purchases from us are for
your “own use” in the Facilities, as such term is defined in judicial or
legislative interpretation, and not for resale to anyone other than the end
user. We may terminate this Agreement immediately if we reasonably determine
that you or any Facility have breached this “own use” limitation.  If you
receive any “discounts or other reductions in price” under Section
1128B(b)(3)(a) of the Social Security Act (42 U.S.C.1320- 7b(b)(3)(a)) from us,
you must disclose the discounts or reductions in price under any state or
federal program which provides cost or charge-based reimbursement to you for the
products or services you buy from us, or as otherwise requested or required by
any governmental agency. You must complete the Compliance Representations and
Warranties for Customers attached hereto as Schedule E and return it to the
address indicated therein prior to purchasing any Merchandise under this
Agreement.  This is the entire agreement between the parties with respect to the
subject matter of this Agreement.  This Agreement may not be amended except in a
writing signed by both parties. Failure to enforce any provision of this
Agreement will not be considered a waiver of any right to enforce such
provision.  Neither party may assign its rights or obligations under this
Agreement without the written consent of the other, which consent shall not be
unreasonably withheld or delayed; provided, however, that we may delegate our
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 the parties.

10. Other Agreements.  You represent and warrant that you have the authority to
contractually bind the Facilities to the terms and conditions of this
Agreement.   Customer warrants and represents that it is not currently bound by
any other agreement, contractual or otherwise, which would prevent Customer from
entering into this Agreement with Cardinal Health.  Further, Customer must
indemnify, defend and hold harmless Cardinal Health and its parent and
affiliates and their respective officers, directors, shareholders, affiliates,
employees and agents against any and all claims, actions, losses and/or damages
of any kind (including without limitation all cost and expenses and reasonable
attorneys’ fees) arising out of or relating to any claim that by you entering
into this Agreement you violated another agreement or obligation.
 
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Upon the assertion of any claim, action, loss and/or damage as described in the
above paragraph or the commencement of any suit or proceeding against Cardinal
Health by any third party as described in the above paragraph, Cardinal Health
shall promptly notify Customer thereof, and Customer shall defend and/or settle
the claim, action, suit and/or proceeding at its own expense with counsel of its
own selection.  Failure to provide such prompt notice shall only reduce
Customer’s indemnification obligations to the extent of actual prejudice caused
by such delay in notification.  Cardinal Health shall make available to Customer
all relevant books and records relating to the claim, and the parties agree to
render to each other such assistance as may reasonably be requested in order to
ensure a proper and adequate defense.

11.  [***].  Cardinal Health 110, LLC and Cardinal Health 411, Inc. shall [***]
for the obligations of [***] under the Agreement.

[SIGNATURE PAGE FOLLOWS]
 
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PharMerica Corporation
 
Cardinal Health 110, LLC
 
 
 
 
 
 
 
By
/s/David W. Froesel, Jr.
 
By
/s/Jon Giacomin
 
 
 
 
 

Title 
Executive Vice President, Chief Executive Officer & Treasurer
 
Title 
CEO Pharmaceutical Segment
 
 

 
ADDRESS FOR NOTICES:
Cardinal Health 411, Inc.
 
 
 
  
 
PHARMERICA CORPORATION
 

 
1901 CAMPUS PLACE
 
 
 
LOUISVILLE, KENTUCKY 40299
 

 
ATTENTION: GENERAL COUNSEL
By
/s/Jon Giacomin
 
 
 
 
 
 
Title 
CEO Pharmaceutical Segment
 
     
 
ADDRESS FOR NOTICES:
 
 
 
 
 
 
CARDINAL HEALTH 110, LLC
 
 
CARDINAL HEALTH 411, INC.
 
 
7000 CARDINAL PLACE
 
 
DUBLIN, OHIO 43017
 
 
ATTENTION: VP, ALT CARE SALES
 
 
 
 
 
 
WITH A COPY TO:  GENERAL COUNSEL
 

 
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SCHEDULE A

Facilities

[***]
 
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SCHEDULE B

Pricing and Payment Terms

1.                General

Except as otherwise set forth in this Agreement, we will invoice Merchandise
purchased under this Agreement the applicable Invoice Price as set forth below,
plus all applicable taxes or other assessments levied by a government upon
wholesale purchasers of Merchandise.  The Invoice Price of Merchandise is as
follows:

Product Category
Invoice Price
Branded Rx Products (excluding branded Rx Products listed on Schedule B-1 and
branded Rx Products that are Drop-Shipped Merchandise (as hereinafter defined))
[***]
Branded Rx Products listed on Schedule B-1
[***]
Generic Rx Products purchased through Manufacturer Contracts (as hereinafter
defined)
[***]
All other generic Rx Products (i.e., Generics Source Program products and non-
Manufacturer Contract generic Rx Products)
[***]
Drop-Shipped Merchandise
 
[***]
 
Net Billed Products (as hereinafter defined)
[***]

“Cost” means the manufacturer’s published wholesale acquisition cost (“WAC”) at
the time the Facility’s order is submitted to us, adjusted to reflect your
then-applicable Manufacturer Contract price.
 
“Drop-Shipped Merchandise” means Merchandise that is ordered through us, but
required by the supplier to be shipped directly to you from the supplier.

“Net Billed Products” means all other Merchandise (i.e., other than [***] and
[***] and [***]) you purchase from us.

“Qualified Purchases”  means all purchases you and/or the Facilities have
accepted for delivery  under the terms of this Agreement, net of all returns,
credits, rebates, late charges, or other similar items, on an annual, quarterly,
or monthly basis, as applicable.
 
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The Invoice Prices are net of group purchasing organization administrative fees
we pay to your designated group purchasing organization. If the applicable
administrative fee is increased or if you or any Facility use a different group
purchasing organization than used on the Effective Date, we reserve the right to
adjust the branded Rx Product discount percentage to account for the differences
between the current group purchasing organization administrative fee and the new
group purchasing organization administrative fee.

2.                Branded Rx Products Purchase Requirement

In any given year of the Initial Term or Renewal Term you are only required to
purchase [***] of all branded drug Rx Products required by your Facilities
(except as otherwise set forth in this Agreement) from us to be entitled to the
discount on Cost for branded Rx Products set forth above.  You will provide us a
schedule of branded Rx Products you did not purchase from us within [***] after
the [***].

3.                Generic Source Program and Generic Source Rebate

Cardinal Health will make available to you through Cardinal Health’s generic
Source program (the “Generic Source Program”) all generic Rx Products which we
make available to all of our long term care, home infusion, and retail customer
segments.

You will receive a rebate off the Invoice Price of your purchases of Generic
Source Program products (the “Generic Source Rebate”).  Prior to the Effective
Date of this Agreement, the [***] applicable to each [***] will be established,
and [***], subject to the applicable terms and conditions of this Agreement. 
Within [***] the Generic Source Rebate will be calculated by [***] and paid to
you in the form of a check, credit memo or EFT.  The Generic Source Rebate
constitutes 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 Generic Source Program
products purchased by you or any or your Facilities under the terms of this
Agreement.  You and each of your Facilities 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 your and/or each of your Facilities.

The “Net Item Price” for Generic Source Program products is the [***].

4.                Net Billed Products

We will provide you regular updates to identify Net Billed Products and their
Invoice Price.  You may, but will have no obligation under this Agreement to,
purchase from us any specified volume or percentage of your requirements of
Merchandise from the Net Billed Products.  We will provide to you a monthly
report of the Net Billed Products purchased by you during such quarter.
 
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5.                Contract Administration

We will recognize and administer manufacturer pricing contracts for Rx
Products between you and any manufacturer and between a manufacturer and your
group purchasing organization (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 us, and (iii)
subject to such credit considerations concerning the applicable manufacturers as
we consider appropriate.  We will notify you of any Manufacturer Contracts we
will not administer due to the foregoing limitations.  However, if
manufacturers’ chargebacks for contract items submitted by us are disallowed,
uncollectable, or unreconcilable, then the applicable charge will be billed back
to you.  You must notify us of all applicable pricing information included in
the Manufacturer Contracts, including renewals, replacements or terminations of
Manufacturer Contracts not less than thirty (30) days before the effective date
of such Manufacturer Contract, renewal, replacement or termination.

6.                Fuel Surcharge

You will pay a fuel surcharge, on a per Stop basis, for each delivery made to
each Facility (the “Fuel Surcharge”).  The Fuel Surcharge will be included on
our invoice to you, in an amount as set forth below:

Regular Unleaded Fuel Price
Fuel Surcharge
Amount
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

FSC# 4082392

The fuel prices in the table above represent the national average retail cost
per gallon for regular grade gasoline as published by the U.S. Department of
Energy (the “Average Price Per Gallon”), available at: 
http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html. 
By the last day of each calendar month, we will determine the Average Price Per
Gallon for that month, and any required adjustments to the Fuel Surcharge will
be applicable as of the first (1st) day of the immediately following calendar
month.
 
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7.                Payment Terms

Your initial payment terms will be: [***] - Payment is due in full by the [***]
of each [***] of the amount due for all Merchandise delivered and services
provided during the immediately preceding [***] (i.e., [***]).  We agree that
this payment schedule will yield a [***] of [***].  You may, not more often than
[***], request that your payment terms be changed as to future Merchandise
purchases, subject to our advance written consent.  In such event, you
acknowledge and agree that your branded Rx Product discount percentage will be
adjusted as follows:  We will adjust the [***] discount percentage by [***] for
each [***] less than [***].  By example, an [***] will increase the discount
percentage from [***].  If you desire longer payment terms, your discount
percentage will be adjusted by [***] for each [***] more than [***].

All payments for Merchandise and services provided under this Agreement must be
made to the applicable servicing division specified in our invoice (or as we
otherwise specify) by electronic funds transfer or other method acceptable to us
so as to provide us with good funds by the due date.  Without limiting your
rights under law or in equity, you and your affiliates, parent or related
entities, collectively or individually, may exercise a right of set-off against
(i) any and all amounts due to us or (ii) amounts which you dispute in a
commercially reasonable manner in writing to us where such dispute has not been
resolved within thirty (30)  days after such written notice.

We may, at our election, either reduce your payment terms or place you on C.O.D.
status if (i) we have not received payment in full when due of undisputed
amounts for Merchandise delivered or services provided to you; or (ii) there is
a material adverse change in your financial condition that is reasonably likely
to result in your inability to make payments when due hereunder.  In either
instance, the situation would be immediately elevated to an executive team from
both parties in an effort to rectify the situation and restore your applicable
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 [***] after the due date, we reserve the right to refuse orders
from you.

8.                Additional Programs and Services

SureCost.  We will support your request to provide certain information to
SureCost (excluding real-time on-hand inventory) via an interface [***], subject
to SureCost being able to provide requested information back to us (i.e., a
total spend report for your purchases).
 
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SCHEDULE B-1

Branded Rx Products not subject to the [***]

Branded Rx Product
Discount
Percentage
[***]
[***]
                       

If at any time, we apply a [***] (as hereinafter defined) [***] percentage to
such [***] of a [***] listed on this Schedule B-1, we will apply your [***]
percentage ([***]) to the same [***].

We reserve the right, in our sole discretion, to [***] set forth herein and to
[***] to/from this Schedule B-1 only upon [***].  During such [***],
representatives from Cardinal Health and Customer will [***] for the applicable
[***]. If the parties [***], the matter will be [***].

You [***] under this Agreement to, [***] or [***] of [***].
 
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SCHEDULE C

[***]

1.            [***]

We will have the right to appoint an independent certified public accountant
(such accountant to be subject to your approval, such approval not to be
unreasonably withheld) to, not more than [***] in any [***] month period,
conduct an audit on [***] days’ advance written notice to you, of your records
at your principal place of business to verify the actual net price you paid for
each generic Rx Product.  The audit will be confined to the aggregate purchases
by generic Rx Product and we agree not to require disclosure of unit level
prices or other information that would reveal your contract terms with a
manufacturer from which you directly purchased generic Rx Products.  Any such
review will be limited to [***] months of historical information as of the date
such review begins and will be subject to a reasonable confidentiality agreement
prepared by you and signed by you and your accounting firm.

[***]

2.            [***]

3.            [***]

4.            [***]

5.            [***]

6.            [***]

7.            [***]

8.            [***]

(i)            [***]

(ii)          [***]

(iii)        [***]

(iv)         [***]

(v)           [***]

(vi)         [***]
 
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SCHEDULE C-1

Excluded Products

The Excluded Products as of the Effective Date of this Agreement are those as
set forth in [***].
 
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SCHEDULE 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 [***] 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 [***] 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.

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.
 
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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 [***] 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 [***] 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 sole discretion
of Cardinal Health.

Products must be returned to the customer’s servicing Cardinal Health
distribution center within [***] 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

Excessive returns may result in higher restocking fees as deemed necessary by
Cardinal Health.

This policy is subject to change without notice by Cardinal Health.   This
policy is further subject to modification as may be deemed necessary or
appropriate by Cardinal Health to comply with applicable federal and/or state
regulations, FDA guidelines, state law, and other restrictions applicable to
returned products.
 
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SCHEDULE E

Compliance Representations and Warranties for Customers

PharMerica Corporation (“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 believes that the continued
distribution of  such products to the Customer may pose an unreasonable risk of
the diversion of controlled substances based on the totality of the
circumstances and such other considerations as may be deemed relevant by
Cardinal Health.

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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