Exhibit
10.55


 


McKesson Corporation 

Core Distribution Agreement


 


This agreement (“Agreement”) is entered into
between McKesson Corporation (“McKesson”), a pharmaceutical distributor, and Reliant Pharmaceuticals, Inc. (“Manufacturer”),
a pharmaceutical manufacturer.


 


McKesson performs certain Core Services (as
hereinafter defined) in connection with the distribution of pharmaceutical
products manufactured by Manufacturer.  The
parties now wish to define more precisely the amount and manner of payment of
the consideration to be received by McKesson for its performance of the Core
Services.


 


Now, therefore, McKesson and Manufacturer
agree as follows:


 


I.                                         Obligations of McKesson


 


a.                                       McKesson agrees to provide the
following core distribution services to the extent customarily performed by a
full-range pharmaceutical distributor consistent with then current industry
practices (“Core Services”):  Pick, pack,
and ship Manufacturer’s product to McKesson’s customers upon their orders
therefore; transmit monthly 852 data including inventory levels on hand and on
order in addition to aggregate sales out; perform back-end administrative
services to support the distribution of Manufacturer’s product and the
maintenance of efficient inventory levels for servicing customers.


 


•                                          McKesson
will also provide SRC Services


 


b.                                      Services that are not Core Services
(“Value Added Services”), are not included in this Agreement and shall be
priced individually and separate from this Agreement.  Value Added Services include the following:  single point distribution through McKesson’s
Regional Distribution Center (“RDC”), RDC product backhaul, guaranteed service
levels, product recalls, product returns management, electronic 867 sales data
not in violation of McKesson’s contracts with customers, promotional marketing
services, new product launches, and all other services not defined as Core
Services in Section I.a. above.


 


II.                                     Obligations of Manufacturer


 


a.                                       Manufacturer agrees to replenish
McKesson’s inventory orders in a timely and efficient manner.  Manufacturer will utilize purchase order
numbers provided by McKesson when placing orders on behalf of McKesson.


 


b.                                      Manufacturer will use commercially
reasonable efforts to ensure that McKesson’s inventory replenishment is
operational, except for any scheduled down time needed to maintain effective
operations and/or when interruptions are necessary or caused by conditions
outside of Manufacturer’s control.  Furthermore,
in the


 


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event of a Force Majeure (as defined herein)
or supply or manufacturing issue, Manufacturer shall be permitted to apportion
its available production capacity among McKesson and other licensees and/or
distributors of its Products, in its sole discretion.


 


c.                                       In consideration of the Core
Services to be provided pursuant to this Agreement, Manufacturer will pay a fee
to McKesson determined in accordance with Attachment A.


 


III.                                 Additional Terms and Conditions


 


a.                                       Payment calculations are all based
on gross branded pharmaceutical purchases (invoices for product received) by
McKesson.


 


b.                                      All fees hereunder will be due and
payable monthly with respect to any gross receipts (purchases) by McKesson at
the time of McKesson’s payment for such purchases and will be paid in the form
of a credit reflected on the invoice for such products, or if no such credit is
so indicated, by automatic deduction by McKesson.


 


c.                                       In the event any law, rule,
regulation, judicial decree or interpretation invalidates or adversely impacts
the Manufacturer as related to the Service Fee contained in Schedule A, the
Core Services and SRC Services to be provided hereunder by McKesson to
Manufacturer shall continue uninterrupted and the parties shall meet in good
faith to discuss and implement a new fee structure to compensate McKesson for
the Core Services contemplated herein.


 


d.                                      According to the Centers for
Medicare and Medicaid Services (CMS), certain service fees paid to wholesalers
by manufacturers should not be included in the manufacturer’s calculation of
Average Sales Price (ASP).


 


To assist
Manufacturer in determining whether the services fees paid to Wholesaler under
this Agreement should be included in or excluded from the calculation of ASP,
Wholesaler represents and warrants that it does not pass on, in whole or in
part, services fees payable to Wholesaler by Manufacturer under this Agreement
to its clients or customers.


 


Wholesaler
understands that Manufacturer will rely upon this representation when it
calculates ASP for its products subject to ASP reporting and submits those
values to CMS quarterly along with a certification attesting to its good faith
belief in the accuracy and completeness of its ASP calculations.  If Wholesaler elects to change its current
practice with respect to the pass through of service fees to its clients or
customers, Wholesaler will notify Manufacturer of the effective date of the
change within 30 days.


 


Manufacturer
represents and warrants that it will not use Wholesaler’s representation about
its handling of service fees to monitor or enforce any understanding between
the parties regarding Wholesaler’s prices or pricing


 


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practices.  Manufacturer expects Wholesaler to decide
unilaterally whether to pass on all or part of the service fees paid under this
Agreement to its clients or customers.


 


IV.                                 Adjustment of Terms


 


[***]


 


V.                                     Confidentiality and Disclosure


 


This Agreement
and all information which is provided by each party to the other party pursuant
to this Agreement are confidential.  Each
party agrees to maintain all such information confidential and except as may be
required by law or order of any court or governmental agency, not to disclose
to any third party any such information unless such party shall obtain a written
release from the other party.  Each party
further agrees to limit access to such information to only those of its
officers and employees, attorneys, agents and consultants who reasonably need
to know such information.


 


VI.                                 Effective Date


 


a.                                       This Agreement shall become
effective as of January 1, 2005 and shall remain in effect until terminated in
accordance with Section b., below.


 


b.                                      Manufacturer or McKesson may
terminate this Agreement at any time, at the sole and absolute discretion of
either party, upon thirty (30) days’ advance written notice to McKesson or the
other party, without further obligation or penalty hereunder.


 


VII.                             General


 


a.                                       This Agreement is in addition to and
shall not supersede any existing agreement in effect between McKesson and Manufacturer,
including but not limited to the McKesson Buying Terms Form and any Inventory
Management Agreement entered into between the parties.


 


b.                                      This Agreement will be governed by
and construed in accordance with the laws of California, without regard to or
application of conflict of law, rules or principles.


 


c.                                       In no event shall McKesson be liable
to Manufacturer for any special, consequential, incidental or indirect damages,
however caused, on any theory of


 


 


 






[***] Certain information on this page has
been omitted and filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.


 


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                                                liability and whether or not
McKesson has been advised of the possibility of such damages.


 


d.                                      The parties to this Agreement are
independent contractors.  Accordingly,
this Agreement does not constitute a partnership or other joint venture between
the parties and neither party shall be deemed to be an agent or representative
of the other.


 


e.                                       The failure of either party to
enforce at any time or for any period of time any one or more of the provisions
hereof shall not be construed to be a waiver of such provisions or of the right
of such party thereafter to enforce each such provision.


 


f.                                         Except for the obligation to pay
money, neither party will be liable to the other party for any failure or delay
in performance caused by reasons beyond such party’s reasonable control,
including but not limited to acts of God, war, riot, acts of terrorism, fire,
shortage of materials or transportation, strikes or acts of civil or military
authorities, provided such party gives prompt written notice thereof to the
other party.


 


g.                                      In the event Manufacturer requires
services (i.e. distribution, pharmacy, marketing or logistics) that McKesson
Specialty can provide, McKesson Specialty will be given the opportunity to bid
on providing these services to Manufacturer at the time they may be put out for
bid, along with any other competitor(s) that Manufacturer may so choose.


 


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  For:

  	
  Reliant Pharmaceuticals, Inc.,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Martin Driscoll

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Martin Driscoll

  	
   

  
	
   

  	
  (Print or
  Type)

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  SVP

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  2/1/05

  	
   

  
	
   

  
	
   

  
	
  For McKesson:

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Robert V. James

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert V. James

  	
   

  
	
   

  	
  (Print or Type)

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  V.P. Brand Rx Product

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  2-2-05

  	
   

  
					



 


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Attachment A—


 


McKesson
SRC/Core Distribution Agreement Fee 

Services Fee Schedule


 


Core Services


 


1.                                       Pick, pack, and shipment of product
to customers


 


2.                                       Back end administrative services to
support the distribution of Manufacturer’s product


 


a.                                       Returns processing


 


b.                                      Contract administration


 


c.                                       Chargebacks, etc.


 


3.                                       Maintenance of efficient inventory
levels for servicing customers


 


4.                                       Electronic transmission of monthly
852 data including inventory levels and aggregate sales out by DC


 


* Reliant may audit 852 EDI reports with
respect to the data only, restricted to the previous 12 month period.


 


SRC Services


 


1.                                       Single destination for existing
product line (including items for warehouse business).


 


2.                                       Initial balancing of inventory in
McKesson network.


 


3.                                       Reduced ordering pattern:  one purchase order, one invoice, inventory visibility,
and inventory management of expiration dating.


 


4.                                       SRC will provide quarterly “Hot List
Report” consisting of listing of “short dated” product at the SRC in lieu of a “morgue
report”.


 


5.                                       McKesson agrees to maintain service
levels of [***]% or greater on all Reliant product as long as Reliant agrees to
ship sufficient quantities of product with normal expiration dates in a timely
manner.  For purposes of this Agreement,
the service level percentage will be calculated by dividing total units of each
Product shipped by the number of units of each Product ordered, on a Product by
Product basis.  The following items will
be excluded from the service level calculation: 
recalled and/or discontinued items.


 


Total Annual Fee for Services Provided – [***]%
of Gross Receipts or invoices, billed Monthly
based on the total value of all Products invoiced to McKesson by Manufacturer
during the month, including brokerage and drop ship products.  Manufacturer shall pay such fees no later
than thirty (30) days after the end of each month.


 


Other


 


1.                                       Product Recall Management will fall
under the McKesson Buying Terms Form (BTF) and will be done as agreed under the
HDMA guidelines.


 


2.                                       Credits for Non-Recall Returns will
be at [***]% as negotiated with McKesson Product Management and the Returns
Management team in Carrollton in July 2003.


 


 






[***] Certain information on this page has
been omitted and filed separately with the Commission. Confidential treatment
has been requested with respect to the omitted portions.


 


 


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