Document:

Exhibit 10.27

 

FIRST HORIZON PHARMACEUTICAL CORPORATION

 

DIRECTORS’ COMPENSATION FOR 2006 SUMMARY SHEET

 

	
  ANNUAL
  BOARD RETAINER

  	
   

  	
  2005

  	
   

  	
  $

  	
  30,000

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  30,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNUAL BOARD CHAIRMANSHIP RETAINER

  	
   

  	
  2005

  	
   

  	
  $

  	
  10,000

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  10,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNUAL COMMITTEE CHAIRMANSHIP RETAINER:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Nominating/Corporate Governance Committee

  	
   

  	
  2005

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audit Committee

  	
   

  	
  2005

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Compensation Committee

  	
   

  	
  2005

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mergers and Acquisition Committee

  	
   

  	
  2005

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BOARD AND COMMITTEE MEETING FEE (In Person Meeting)

  	
   

  	
  2005

  	
   

  	
  $

  	
  1,500

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  1,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BOARD AND COMMITTEE MEETING FEE (Telephone Meeting)

  	
   

  	
  2005

  	
   

  	
  $

  	
  750

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  750

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AUDIT COMMITTEE ACCOUNTING EXPERT RETAINER

  	
   

  	
  2005

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  2006

  	
   

  	
  $

  	
  5,000

  	
   

  

 

In 2005, in addition to the base compensation, each director who was
not an employee and not affiliated with a greater than 10% stockholder was
granted 5,000 stock options and 2,500 restricted sharesExhibit
10.31

 

December 16,
2005

 

VIA
OVERNIGHT MAIL

Frank Segrave

SVP, Supply Chain Services

Cardinal Health

7000 Cardinal Place

Dublin, OH  43017

 

RE:                            Distribution
and Inventory Management Services Agreement by and between First Horizon
Pharmaceutical Corporation (“First Horizon”) and Cardinal Health with an
Effective Date of January 1, 2005 (the “Agreement”)

 

Dear Neil:

 

This letter agreement shall serve as the
first amendment to the Agreement (the “Amendment”).  Below are the amended terms.

 

NOW THEREFORE, the parties agree to amend the
terms of the Agreement as follows:

 

Article 2
(Purchasing and Inventory)

 

1.                                       Paragraph
2.2A (Inventory Levels) shall be deleted in its entirety and replaced with the
following paragraph.

 

Inventory Levels.  During the term of this
Agreement, Cardinal Health 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 Cardinal Health’s expected
sales to Customers as determined by its Customary Practice unless otherwise
agreed to by First Horizon in writing. The Inventory

 

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

 

1

 

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.

 

2.                                       Section 2.2B
(Purchase Requirements) shall be deleted in its entirety and replaced with the
following:

 

Purchase
and Delivery Requirements. Cardinal Health agrees to
purchase 100% of its requirements of Products directly from First Horizon.  First Horizon shall deliver any and all
Products ordered by Cardinal Health to Cardinal Health’s National Logistics
Center located in Groveport, Ohio. 
Cardinal Health agrees to order the minimum quantities for each Product
set forth in the attached Exhibit A. 
Title and risk loss shall pass to Cardinal Health upon delivery of
Product to Cardinal Health’s carrier.  In
the event Product is shipped by First Horizon’s carrier, then title and risk of
loss shall pass to Cardinal Health upon delivery to Cardinal Health’s National
Logistics Center.

 

3.               The following
Paragraph 2.2D (Inventory and Sales Reports) shall be amended as follows:

 

Inventory
and Sales Reports. Cardinal Health shall prepare
inventory reports detailing the status of its Aggregate Inventory of Products
and movement of Products by NDC number (“Inventory and Sales Reports”)
and, for the duration of this Agreement, provide First Horizon with such
Inventory Reports (852’s) daily and Sales Reports (867’s) monthly. All such
Inventory and Sales Reports shall be transmitted in EDI format pursuant to Section 2.2.1
(E) and shall include such information as reasonably requested by First
Horizon, including but not limited to the following:

 

(a)       On Hand Inventory level by
distribution center for All Distribution Centers; and

(b)       On Order Inventory level by
distribution center for All Distribution Centers; and

(c)        Sales out by distribution
center for All Distribution Centers

(d)       Morgue Reports, upon
request, by distribution center for All Distribution Centers.

 

Cardinal Health may, due to contractual
requirements, be required to block certain data in the 867’s that discloses
customer identity. This may include Customer name and DEA number, and any other
data that would identify a Customer.  In
no event will Cardinal Health be required to provide customer identifying
information to

 

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

 

2

 

First Horizon in the event it is contractually prohibited from doing
so.

 

In addition to the Inventory and Sales
Reports above, Cardinal Health agrees to provide the following EDI
reports:  820-Electronic Funds
Transfer;  844 -Electronic
Chargeback;  and 849-Electronic
Chargeback reconciliation (collectively, “Data Reports”) .  The foregoing Data Reports shall be provided
to First Horizon upon generation.

 

Notwithstanding anything to contrary in this
Agreement, Cardinal Health shall include
sufficient data in the Inventory and Sales Reports and Data Reports so that
FHPC can determine and evaluate the Aggregate Inventory, purchases, returns and
chargebacks made by those Customers that receive Federal Statutory Pricing(1) (“Federal
Customers”).

 

4.                                       Paragraph 2.3 (Post Price Increase Buy In
Allocations) shall be amended as follows:

 

Post Price
Increase Buy In Allocations. First Horizon may elect
to provide Cardinal Health, in its sole discretion, allocations of Product at
the price prior to a price increase. The economic benefit realized by Cardinal
Health for such purchase at the old price will be included in the calculation
of the Base Service Fee as set forth in Attachment A, Service Fee Credits.  

	
  ####################################################################################################

  ########################################################################################.

  

 

5.               The following paragraph shall be added
to Article 2 as paragraph 2.7.

 

Returns.  Cardinal Health shall receive a credit in the
amount of the contract purchase price for Federal Customers’ returns.  All other returns of Product shall be in
accordance with Attachment B of the Agreement.

 

6.               Attachment A is
deleted in its entirety and replaced with the Attachment A dated November 2005
set forth in this Amendment.

 

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 

 

(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

 

3

 

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
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]

 

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

 

4

 

IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of December 1, 2005.

 

	
   

  	
  ACCEPTED AND AGREED:

  
	
   

  	
  Cardinal Health

  
	
   

  	
  By:

  	
   

  	
  /s/ Frank Segrave

  	
   

  
	
   

  	
  Title

  	
  SVP Supply & Supplier Relations

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCEPTED AND AGREED:

  
	
   

  	
   

  
	
   

  	
  First Horizon Pharmaceutical Corporation

  
	
   

  	
  By:

  	
   

  	
  /s/ Darrell Borne

  	
   

  
	
   

  	
  Title

  	
  CFO

  	
   

  

 

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

 

5

 

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

  	
   

  	
  ##

  	
   

  

 

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

 

6

 

ATTACHMENT A (revised December 2005)

 

Base
Service Fee: A Base Service Fee of ##### will be
calculated and paid annually based on #### of the total volume purchased by
Cardinal Health in 2005, including brokerage, from First Horizon valued at the
First Horizon list price at the time the Product was purchased. “Base Service Fee” shall mean the #################################
fee that will be paid to Cardinal Health by First Horizon in 2006 based upon ##################################
of the total dollar volume of Product purchased by Cardinal Health during
calendar year 2005.

 

 A
Service Fee of ##### will be calculated and paid annually based on the total
volume exceeding #### of calendar year 2005 on all Products purchased by
Cardinal Health from First Horizon in 2006 except purchases made by Federal
Customers which shall be calculated at ################.  Service Fee shall include brokerage services
and shall be valued at First Horizon’s list price at the time the Product was
purchased. “Service Fee” shall mean the #############
####### fee paid to Cardinal Health by First Horizon for total dollar volume
purchased by Cardinal Health in 2006 that exceeds ##################################
of the total dollar volume of Product purchased by Cardinal Health during
calendar year 2005 excluding those purchases made Federal Customers which shall
be calculated at ################.  Base
Service Fee and Service Fee are collectively known as “Fees.”

 

Cardinal Health shall issue an invoice to
First Horizon for Fees no later then January 30, 2007.  Such invoice shall include sufficient detail
to allow First Horizon to verify and audit Cardinal Health’s invoice. First
Horizon shall pay undisputed invoice amounts within 30 days of First Horizon’s
receipt of invoice.

 

Credits:  First Horizon
will receive credit towards Fees for the following items:

 

a.               Price Appreciation
on Aggregate Inventory after a Customer pricing action.

 

b.              Margin earned on
quarterly promotions, deals, off-invoice allowances, Post Price Increase Buy In
Allocations, or any other method, excluding those that are intended for Service
Supplier’s Providers.

 

Provided Cardinal Health maintains
substantially the same or higher purchase volumes as 2005, under no
circumstances should the Base Service Fee earned on the initial #### volume
purchases in 2006 over 2005 be less than #####, including any credits issued or
inventory appreciation recognized on price increase or post price increase buy
in allocations received.

 

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

 

7

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