**Exhibit 10.32**

 

 

November 21,2005

 

**VIAOVERNIGHT MAIL**

Mark Miller

VP, Investment Purchasing

McKesson Corporation

1220 Senlac Drive

Carrollton, Texas 75006

 

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

 

Dear Mark:

 

This letter serves to amend the InventoryManagement 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 asfollows:

 

**Article 2(Purchasing and Inventory)**

 

1.                                       Paragraph2.1 shall be deleted in its entirety and replaced with the following paragraph.

 

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

 

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

 

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

 

*Wholesaler shall have no obligation tomaintain the minimum Inventory Level of a particular Product if such Product isunavailable from FHPC.*

 

3.                                       Paragraph2.5 (Price Increases) shall be deleted in its entirety and replaced with thefollowing:

 

*PriceIncrease.*

 

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

 

*(b)**       Wholesaler’saverage weekly Customary Practice of Product over the preceding three (3) monthsless  purchases made by Customers thatreceive 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 aNew Price less the  on hand reserveinventory required for Federal Customers.*

 

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

 

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

 

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*effective date****of a New Price or FHPC’s receipt of Wholesaler’s AggregateInventory as provided in the previous sentence, FHPC shall notify Wholesaler ofthe amount of Eligible Product (by NDC number) it may purchase. Within ten (10) daysafter receipt of such notification, Wholesaler shall send any and all purchaseorders for Eligible Product by overnight express delivery or fax to the Attentionof Customer Service. Wholesaler shall consult with FHPC to develop mutuallyacceptable shipping schedules for the Eligible Product.*

 

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

 

*(c)**        When determining Eligible Product under this section, Productsdiscontinued by FHPC during the term of this Agreement and subsequentlyreplaced by another Product within the same Product line and drug class shallhave the same Customary Practice (less Federal Customer purchases, ifapplicable) history as the discontinued Product.*

 

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

 

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

 

*Returns.   FHPC shall credit Wholesaler currentWholesaler Acquisition Cost (WAC) less #### ####### (##) for returns on Productexcept for Federal Customers which shall receive a credit for the purchaseprice.  Except for the foregoing, allother terms governing Product returns shall be in accordance with FHPC ReturnGoods Policy set forth in Exhibit B.*

 

Any capitalized terms used in this Amendment,which are not otherwise defined herein, shall have the same meanings ascribedto them in the Agreement.  All otherterms and conditions of the Agreement shall remain in full force and effect andunless as otherwise modified herein, shall also apply to the subject matter ofthis Amendment.  In the event there isany inconsistency or conflict between the provisions in this Amendment andthose in the Agreement, the provisions in this Amendment shall supersede andcontrol.

 

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

 

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

 

 
|   | Very truly yours,       |
|--------|-------------------------|
|   |                    |
|   |                    |
|   | Darrell Borne           |
|   | Chief Financial Officer |

 

 

[SIGNATURES ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed thisAmendment 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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EXHIBIT A - Minimum OrderQuantities

 

 
| **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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EXHIBIT B

 

RETURN GOODS POLICY

 

 

**RETURN GOODS POLICY**

 

**AUTHORIZATION:**

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

 

**RETURNABLE ITEMS:**

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

•                  Productmust be in original, unaltered container

 

**CONDITIONS FOR CREDIT:**

•                  Avalid Return Authorization (RA) number **must**accompany all returns for proper credit

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

•                  Allproducts must be returned to FHPC or agent of FHPC within 75 days to receivecredit Products that have been destroyed by customer or agent of customer willnot receive credit

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

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

•                  Nocredit will be issued for liquid partial returns

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

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

 

**SHIPPING ERRORS/DAMAGED SHIPMENTS:**

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

 

**TRANSPORTATION CHARGES:**

Prepaidby customer except when error is due to FHPC

 

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**TERMS OF RETURN POLICY:**

•                  FHPCwill not reimburse fees due to processing third party returns, destructioncharges, shipping costs or processing

•                  Allreturns are subject to review by FHPC.  Issuanceof RA number does not guarantee credit.  Creditissuance is dependent on confirmed receipt/review of return goods by FHPC orFHPC contracted return facilitator

•                  Nocredit will be issued for return goods received without a valid RA number.  Unauthorized return goods will be destroyed.

 

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