Exhibit 10. 32

 

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November 21, 2005

 

VIA OVERNIGHT MAIL

Mark Miller

VP, Investment Purchasing

McKesson Corporation

1220 Senlac Drive

Carrollton, Texas 75006

 

RE:                              Second Amendment to Inventory Management
Agreement by and between Supplier and McKesson Corporation dated 6/10/03
(“Amendment”)

 

Dear Mark:

 

This letter serves to amend the Inventory Management Agreement between First
Horizon (“FHPC”) and McKesson Corporation (“Wholesaler”) dated 6/10/2003 and the
subsequent amendment to that agreement dated November 30, 2004 (collectively,
the “Agreement”).

 

The parties agree to amend the Agreement as follows:

 

Article 2 (Purchasing and Inventory)

 

1.                                       Paragraph 2.1 shall be deleted in its
entirety and replaced with the following paragraph.

 

Purchase and Delivery Requirements. Wholesaler agrees to purchase 100% of its
requirements of Products directly from FHPC. Beginning January 1, 2006, FHPC
shall deliver any and all Products ordered by Wholesaler to Wholesaler’s
centralized distribution center located in Aurora, Colorado.  Wholesaler agrees
to order the minimum quantities for each Product set forth in the attached
Exhibit A.

 

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*  Redacted text has been omitted and filed separately pursuant to a request for
confidential treatment

 

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2.                                       Section 2.3 (Inventory Levels) shall be
deleted in its entirety and replaced with the following:

 

Inventory Levels.  During the term of this Agreement, Wholesaler shall maintain
at all times a stock of Product(s) sufficient to supply the demand of Customers
provided, however, such stock shall be not less than ######### (##) days nor
more than ####### (##) days of Wholesaler’s expected sales to Customers as
determined by its Customary Practice unless otherwise agreed to by FHPC in
writing.   The Inventory Levels set forth in this section reflect an additional
### (#) ##### stock of Product(s) for FHPC’s Disaster Recovery plan.

 

Wholesaler shall have no obligation to maintain the minimum Inventory Level of a
particular Product if such Product is unavailable from FHPC.

 

3.                                       Paragraph 2.5 (Price Increases) shall
be deleted in its entirety and replaced with the following:

 

Price Increase.

 

(a)       In the event, FHPC institutes a New Price for any Product and
provided  Wholesaler has maintained the Inventory Levels set forth in this
Agreement as determined by FHPC,  then Wholesaler shall have the right to
purchase such Product at its Old Price in an amount equal to:

 

(b)       Wholesaler’s average weekly Customary Practice of Product over the
preceding three (3) months less  purchases made by Customers that receive
Federal Statutory Pricing(1) ( collectively “Federal Customers”);

 

Multiplied by

 

(i)          ## ####;

 

Minus

 

(ii)                              Wholesaler’s Aggregate Inventory for such
Product on the business day  immediately preceding the effective date of a New
Price less the  on hand reserve inventory required for Federal Customers.

 

(a)       Wholesaler shall provide via EDI its Aggregate Inventory as of the
business day immediately preceding the effective date of a New Price.  Within
ten (10) days of the latter of the

 

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(1) Customers that receive Federal Statutory Pricing include but not limited to
Department of Defense (DOD), Veterans Administration (VA), Disproportionate
Share Hospitals (DSH), and Public Health Services (PHS).

 

*  Redacted text has been omitted and filed separately pursuant to a request for
confidential treatment

 

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effective date of a New Price or FHPC’s receipt of Wholesaler’s Aggregate
Inventory as provided in the previous sentence, FHPC shall notify Wholesaler of
the amount of Eligible Product (by NDC number) it may purchase. Within ten
(10) days after receipt of such notification, Wholesaler shall send any and all
purchase orders for Eligible Product by overnight express delivery or fax to the
Attention of Customer Service. Wholesaler shall consult with FHPC to develop
mutually acceptable shipping schedules for the Eligible Product.

 

(b)       All Products (other than Eligible Product) purchased or ordered by
Wholesaler after the effective date of a New Price shall be sold and purchased
at the New Price.

 

(c)        When determining Eligible Product under this section, Products
discontinued by FHPC during the term of this Agreement and subsequently replaced
by another Product within the same Product line and drug class shall have the
same Customary Practice (less Federal Customer purchases, if applicable) history
as the discontinued Product.

 

(d)       Inventory Reports shall include sufficient data so that FHPC can
determine and evaluate the Aggregate Inventory, purchases, returns and
chargebacks made by Federal Customers.

 

4.                                       Paragraph 2.6 (Chargebacks) shall be
deleted in its entirety and replaced with the following paragraph.

 

Returns.   FHPC shall credit Wholesaler current Wholesaler Acquisition Cost
(WAC) less #### ####### (##) for returns on Product except for Federal Customers
which shall receive a credit for the purchase price.  Except for the foregoing,
all other terms governing Product returns shall be in accordance with FHPC
Return Goods Policy set forth in Exhibit B.

 

Any capitalized terms used in this Amendment, which are not otherwise defined
herein, shall have the same meanings ascribed to them in the Agreement.  All
other terms and conditions of the Agreement shall remain in full force and
effect and unless as otherwise modified herein, shall also apply to the subject
matter of this Amendment.  In the event there is any inconsistency or conflict
between the provisions in this Amendment and those in the Agreement, the
provisions in this Amendment shall supersede and control.

 

Please sign two copies of this letter agreement to acknowledge your acceptance
of this Amendment to the Agreement and return one signed copy to:  First Horizon

 

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*  Redacted text has been omitted and filed separately pursuant to a request for
confidential treatment

 

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Pharmaceutical Corporation, Attention: Toi Wilson, 6195 Shiloh Road, Alpharetta,
GA.  30005.  The second copy should be retained for your records.

 

 

 

Very truly yours,

 

 

 

 

 

Darrell Borne

 

Chief Financial Officer

 

 

[SIGNATURES ON FOLLOWING PAGE]

 

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*  Redacted text has been omitted and filed separately pursuant to a request for
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of
December 1, 2005.

 

 

 

ACCEPTED AND AGREED:

 

McKesson Corporation

 

 

 

By:

 

/s/ Mark Miller

 

 

Title

VP Investment Purchasing

 

 

 

 

 

 

ACCEPTED AND AGREED:

 

 

 

First Horizon Pharmaceutical Corporation

 

 

 

By:

 

/s/ Darrell Borne

 

 

Title

CFO

 

 

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*  Redacted text has been omitted and filed separately pursuant to a request for
confidential treatment

 

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EXHIBIT A - Minimum Order Quantities

 

 

Product

 

NDC #

 

#####
###

 

Robinul 100’s

 

5963020010

 

##

 

Robinul Forte

 

5963020510

 

##

 

Nitrolingual Pumpspray 200

 

5963030020

 

###

 

Nitrolingual Pumpspray 60

 

5963030065

 

##

 

Ponstel 100’s

 

5963040010

 

##

 

Tanafed DP 4oz

 

5963046504

 

##

 

Tanafed DP 16oz

 

5963046516

 

##

 

Tanafed DMX 4 oz

 

5963047004

 

##

 

Tanafed DMX 16oz

 

5963047016

 

##

 

Sular 10mg

 

5963044010

 

##

 

Sular 20mg

 

5963044110

 

##

 

Sular 30mg

 

5963044210

 

##

 

Sular 40mg

 

5963044310

 

##

 

Cognex 10

 

5963019012

 

##

 

Cognex 20

 

5963019112

 

##

 

Cognex 30

 

5963019212

 

##

 

Cognex 40

 

5963019312

 

##

 

Furadantin 470 mL

 

5963045016

 

#

 

Prenate Elite 90’s

 

5963041190

 

##

 

Optinate 30s

 

5963041230

 

##

 

Zoto

 

5963013503

 

##

 

Fortamet 1000mg

 

6202257560

 

##

 

Fortamet 500mg

 

6202257460

 

##

 

Altoprev 20mg

 

6202262830

 

##

 

Altoprev 40mg

 

6202262930

 

##

 

Altoprev 60mg

 

6220226303

 

##

 

Triglide 50mg

 

5963048090

 

##

 

Triglide 160mg

 

5963048590

 

##

 

 

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*  Redacted text has been omitted and filed separately pursuant to a request for
confidential treatment

 

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EXHIBIT B

 

RETURN GOODS POLICY

 

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RETURN GOODS POLICY

 

AUTHORIZATION:

•                  Prior authorization from FHPC is required for all returns. 
Return Authorization number must be displayed on the shipping carton containing
return goods.  Please call FHPC Return Goods department at 800-849-9707 ext.
1468.

 

RETURNABLE ITEMS:

•                  6 months prior to expiration date or up to 12 months after
expiration date

•                  Product must be in original, unaltered container

 

CONDITIONS FOR CREDIT:

•                  A valid Return Authorization (RA) number must accompany all
returns for proper credit

•                  RA Numbers are valid for 75 days from issuance.  Expired RA
numbers will be considered invalid and no credit will be issued

•                  All products must be returned to FHPC or agent of FHPC within
75 days to receive credit Products that have been destroyed by customer or agent
of customer will not receive credit

•                  Product must be in original, unopened, unaltered container to
receive full credit

•                  Partial returns (other than liquids) will be credited at 50%
of original sale price

•                  No credit will be issued for liquid partial returns

•                  Credit issued is based on price at time of original sale. 
Adjustments will be made for products purchased through buying groups and
special deals/promotions

•                  Returns due to overstock are subject to 20% restocking fee. 
Prior approval is required

 

SHIPPING ERRORS/DAMAGED SHIPMENTS:

Products shipped in error by FHPC or products damaged in transit must be
reported to FHPC within 5 working days of receipt and must be returned to FHPC
within 15 days of receipt.  Contact FHPC Customer Service at 800-849-9707 ext.
1429.

 

TRANSPORTATION CHARGES:

Prepaid by customer except when error is due to FHPC

 

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*  Redacted text has been omitted and filed separately pursuant to a request for
confidential treatment

 

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TERMS OF RETURN POLICY:

•                  FHPC will not reimburse fees due to processing third party
returns, destruction charges, shipping costs or processing

•                  All returns are subject to review by FHPC.  Issuance of RA
number does not guarantee credit.  Credit issuance is dependent on confirmed
receipt/review of return goods by FHPC or FHPC contracted return facilitator

•                  No credit will be issued for return goods received without a
valid RA number.  Unauthorized return goods will be destroyed.

 

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*  Redacted text has been omitted and filed separately pursuant to a request for
confidential treatment

 

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