Exhibit 10.02
[***] indicates the omission of confidential portions for which confidential
treatment has been requested. Such confidential information has been filed
separately with the Commission.
January 1, 2004
WHOLESALE SUPPLY AGREEMENT
This letter will confirm the agreement ("AGREEMENT") between Cardinal Health*
("CARDINAL") and CVS Pharmacy Inc. ("CVS") under which CVS will purchase certain
pharmaceutical and other products from Cardinal on the following terms and
conditions:
SECTION 1. DESIGNATION AS [***].
(a) Retail Pharmacies. During the term of this Agreement, CVS will
designate Cardinal as [***] operated by CVS (collectively, the
"PHARMACIES" and individually, a "PHARMACY") subject to Section 1(a)
Disclosure Schedule. A list of the Pharmacies (the "[***]") will be
provided by CVS to Cardinal from time to time during the term of this
Agreement.
(b) Distribution Centers. During the term of this Agreement, CVS will
designate Cardinal as [***] operated by CVS ("CVS PHARMACY DCS") subject
to Section 1(b) Disclosure Schedule. A comprehensive list [***] as of
January 1, 2004 (the date of this agreement) (the "Total DC List") is
set forth in the Section 1(b) Disclosure Schedule.
(c) [***]. This Agreement [***] purchases which are made by CVS on
behalf of the CVS [***].
(d) CVS Commitment. This Agreement pertains only [***] to Pharmacies.
SECTION 2. SALE OF MERCHANDISE AND [***].
(a) Primary Requirements. [***] and the CVS Pharmacy [***] purchase from
Cardinal during the term of this Agreement its [***] (as defined in the
Section 2(a) Disclosure Schedule) of pharmaceutical products ("RX
PRODUCTS"), which consist of purchases of Rx Products for (a) [***]
("[***] PURCHASES"); and (b) [***] ("[***] PURCHASES"). CVS may purchase
from Cardinal, at CVS' discretion, [***] its health and beauty aids, home
health care products and other inventory carried by Cardinal ("[***]
PURCHASES"). For purposes of this Agreement, the term "[***]" with respect
to a period means all purchases of Merchandise [***] by CVS (and in some
circumstances, either the CVS Pharmacy [***]) from Cardinal during that
period, [***]. For purposes of this Agreement, the term "MERCHANDISE" will
mean the Rx Products (and [***] Purchases, with respect to the Pharmacies
only).
1
Notwithstanding anything in this Agreement to the contrary, CVS retains
the right [***] Rx Products [***].
(b) [***]. The Section 2(b) Disclosure Schedule describes the terms by
which CVS will make its [***] through Cardinal.
(c) Discontinued Merchandise. Cardinal will [***], subject to such
credit considerations concerning the applicable manufacturer as Cardinal
may reasonably consider appropriate (including but not limited to,
potential insolvency or outstanding balance owed to Cardinal without
legitimate reason for dispute). CVS [***] detailed in Section 2(c)
Disclosure Schedule will be purchased from each of Cardinal's distribution
centers servicing CVS Pharmacies per month. If Cardinal notifies CVS that
[***], then Cardinal [***]. If Cardinal [***], CVS will [***]. Cardinal
will use reasonable efforts to ensure that [***], which may include, but
not be limited to, [***]. Alternatively, Cardinal and CVS may mutually
agree to [***].
(d) Generally. CVS will be liable for any payment owed to Cardinal from
any [***] for purchases made hereunder. [***] to determine what
Merchandise it will carry based upon product quality, manufacturer
indemnity, insurance, and other policies, and other standards determined
by it, and may [***] items of Merchandise with limited or no movement
activity [***]. Notwithstanding the foregoing, Cardinal's decision [***]
for reasons other than product quality (relative to FDA instructions),
manufacturer indemnity, and insurability shall not excuse Cardinal from
complying with the [***] in Section 2(b) Disclosure Schedule and Section 9
Disclosure Schedule. Both parties agree that Cardinal's inability to
provide CVS with the [***] Section 2(b) Disclosure Schedule and Section 9
Disclosure Schedule represents a material breach of this Agreement.
(e) Representation of Status. Cardinal represents that it is, and will
continue to be during the term of this Agreement, [***].
SECTION 3. PURCHASE PRICE. As further described in Sections 3(a) and 3(b)
Disclosure Schedules, CVS will pay a purchase price ("COST OF GOODS") for
products purchased under this Agreement as follows:
(a) [***] Purchases and [***] Purchases. CVS will pay a Cost of Goods
for Merchandise in an amount equal to Cardinal's Cost plus the percentage
set forth in the Section 3(a) Disclosure Schedule. The term "CARDINAL'S
COST" as used herein means [***] for Merchandise as of the date [***],
adjusted to reflect [***].
By way of illustration only and not as a limitation, the [***]. In the
event that a [***] Cardinal would [***] (Pharmacies and CVS Pharmacy
[***], if applicable). Notwithstanding the foregoing, Cardinal will not
[***] without CVS' expressed written consent. It will be Cardinal's sole
responsibility to notify in writing [***] (with copy to CVS subject to
Section 13) [***].
2
As set forth in Section 3(a) Disclosure Schedule, the purchase price for
selected Merchandise, including but not limited to, [***] will not be
based upon Cardinal's [***] described above but will instead be [***] for
such Merchandise. Merchandise described in this paragraph is sometimes
referred to as [***]. CVS may, but will have no obligation to, [***].
(b) [***]. CVS will pay a purchase price for all [***] in an amount
equal to the cost set forth on the Section 3(b) Disclosure Schedule.
(c) Cost of Goods [***]. CVS' Cost of Goods for [***] Purchases and
[***] Purchases will be subject to [***] as described in the Section 3(c)
Disclosure Schedule.
(d) Generally. Each party hereto acknowledges and agrees that its
obligation to pay the purchase price for all [***] and other amounts due
or to become due under this Agreement will not be [***] for any reason,
except as further described in this Agreement.
Each party acknowledges and agrees that its obligation to pay the other
amounts due under this Agreement or become due under this Agreement will
[***] for any reason, except as further described in this Agreement. If a
party to this Agreement that is obligated to pay monies hereunder (the
"Payor") fails to pay the other party (the "Payee") amounts due under this
Agreement (which Payee reasonably believes it is due), [***] amounts due
Payor. Any [***] incorrectly or improperly recognized (i.e., excluding
legitimately disputed amounts) by Payee will be paid to Payor as soon as
possible and in any event no later than [***] following notification from
Payor of such [***] provided Xxxxx agrees that [***] was [***]. Xxxxx
agrees to pay when due any amounts not in dispute.
CVS and Cardinal commit to work with each other to mutually resolve any
disputed amounts.
Furthermore, it is both parties intention that all Agreement components
and [***] stand on their own; there will be [***].
SECTION 4. PAYMENT TERMS.
(a) [***] Purchases and [***] Purchases. CVS will cause Cardinal to
receive payment in full and remittance by [***] for all [***] Purchases
and [***] Purchases according to the schedule set forth in the Section 4
Disclosure Schedule subject to the terms and conditions of this Agreement.
(b) [***]. CVS will cause Cardinal to receive payment in full [***]
according to the schedule set forth in the Section 4 Disclosure Schedule
subject to the terms and conditions of this Agreement.
(c) [***]. All payments made by CVS to Cardinal under this Agreement
will be [***], so as to provide Cardinal with good funds immediately
available to
3
Cardinal on the date such payment is due according to the schedule set
forth in the Section 4 Disclosure Schedule. In the event [***] temporarily
interrupted or cannot be utilized, CVS and Cardinal will seek alternative
payment methods to ensure that Cardinal receives good funds as soon as
practical. To the extent that a specific payment is unnecessarily delayed
due to an issue [***], CVS agrees to work with Cardinal to make such
payment as expeditiously as possible. As indicated in Section 4 Disclosure
Schedule, CVS and Cardinal may mutually agree to a payment arrangement
that is reflective of a change in normal terms to accommodate for [***]
due to the fact that [***].
(d) Generally. If Cardinal reasonably believes that CVS [***], then
Cardinal has the right to request that CVS provide it with information
within [***] from the date CVS receives the request (i.e., if CVS receives
Cardinal's request at 3:00 p.m. [***] (as applicable), in reasonable
detail, [***], and that may resolve any such [***] by Cardinal. In
addition, CVS agrees to [***] Cardinal in the event CVS [***] with respect
to its [***], including, but not limited to an [***]. If Cardinal has
requested such information or CVS has notified Cardinal as set forth above
and Cardinal and CVS cannot [***] any such issues pursuant to a reasonable
solution, then Cardinal may (i) [***] thereafter to the [***] of CVS'
[***] during the immediately preceding [***]; (ii) [***], and (iii) in the
event that [***] (as defined below), give CVS notice of the [***] under
this Agreement by 10:00 a.m. Eastern Standard Time on a business day and
require [***] of payment of such amount by [***] by 2:00 p.m. Eastern
Standard Time on the [***]. As used within this paragraph, a "[***]" shall
mean [***]. [***], the parties will meet every approximate [***] following
the execution of such action to review [***], and to reasonably consider
reinstating the [***] of such action. [***], then CVS may choose to [***]
if it finds Cardinal's [***] unacceptable. If the Agreement is [***]
pursuant to this Section 4(d), the Agreement shall [***] (unless mutually
agreed upon in writing by the parties) until [***] of the [***].
If CVS reasonably believes that Cardinal has suffered [***] that has
materially, adversely affected (or will imminently materially, adversely
affect) Cardinal's [***] any term or condition of this Agreement or
Cardinal's [***] due CVS, then CVS has the right to request that Cardinal
provide it with information within [***] from the date Cardinal receives
the request (i.e., if Cardinal receives CVS' request at 3:00 p.m. [***]
that further [***] (as applicable), in reasonable detail, [***], and that
may resolve any such concerns raised by CVS. In addition, Cardinal agrees
to [***] CVS in the event Cardinal believes it [***] with respect to its
[***], including an [***], that has materially, adversely effected (or
will imminently materially, adversely affect) Cardinal's ability to [***],
or Cardinal's [***]. If CVS has requested such information or Cardinal has
notified CVS as set forth above, then CVS may (i) [***] of any [***] or
any [***] CVS, (ii) [***], and (iii) in the event that Cardinal is in
[***] (as defined below), give Cardinal notice of the [***] under this
Agreement by 10:00 a.m. Eastern Standard Time on a business day and
require [***] of payment of such amount by [***] by 2:00 p.m. Eastern
Standard Time on the [***]. As used within this paragraph, a "[***]" shall
mean [***]. If any of the [***], the parties will meet every approximate
4
[***] following the execution of such action to review [***], and to
reasonably consider reinstating the [***] of such action. [***], then
Cardinal may choose to [***] written notice if it finds CVS' [***]
unacceptable. If the Agreement is [***] pursuant to this Section 4(d), the
Agreement shall [***] (unless mutually agreed upon in writing by the
parties) until [***] of the [***].
(e) [***]. As an inducement for Cardinal to supply Merchandise and
provide services to [***] CVS, whether [***], CVS Corporation [***] from
CVS to Cardinal under this Agreement.
SECTION 5. DELIVERY/ORDER SUBMISSION PROCEDURES. Cardinal will deliver the
Merchandise [***] and exercise its [***] provide an efficient delivery schedule
designed to meet the [***] Cardinal and the Pharmacies. All deliveries will be
accompanied by an invoice and all delivery costs ([***]) absorbed by Cardinal.
Cardinal will deliver Merchandise to [***] or other Pharmacies mutually agreed
upon by the parties from time to time) as [***] (exclusive of holidays, etc.).
Any additional deliveries will constitute emergency deliveries, which if
required, will [***] at Cardinal's [***] for such deliveries. Delivery schedules
and purchase order deadlines may be reviewed and changed from time to time
[***]. Delivery of [***] will be subject to the terms and conditions set forth
in the Section 2(b) Disclosure Schedule.
The [***] will submit all orders, except for orders for [***], for all
Merchandise to Cardinal via [***] (to be provided by Cardinal) or other [***].
Any such equipment supplied by Cardinal will be returned to Cardinal by CVS upon
the expiration or termination of this Agreement for any reason, [***],
Cardinal's proprietary rights are threatened. In the event that [***]
temporarily interrupted for reasons beyond the control of CVS or Cardinal, CVS
may place [***] parties will [***] to rectify the problem.
DEA Form 222 may be [***] Cardinal distribution center, or other mutually agreed
upon method. Schedule II orders will be delivered within [***] of Cardinal's
receipt of the signed original DEA Form 222. CVS acknowledges that if CVS gives
the DEA Form 222s to the delivery driver, [***] the DEA Form 222 to the
applicable Cardinal distribution center. Notwithstanding the foregoing, no
Schedule II orders will be delivered other than in compliance with DEA
regulations.
Additionally, CII orders must be shipped [***] and courier must be [***] when
order is received and checked in by CVS, CVS reserves the right to refuse any
CII order that contains any [***].
SECTION 6. OTHER SERVICES.
(a) CardinalCHOICE-HQ(TM). Cardinal will license [***]
CardinalCHOICE-HQ(TM) software systems to CVS' headquarters on the terms
set forth in the Section 6(a) Disclosure Schedule. Such licensing will be
pursuant to the terms and conditions of [***]. In addition, Cardinal will
provide CVS with the related hardware as described in the Section 6(a)
Disclosure Schedule, pursuant to [***].
5
Cardinal [***] to all CVS locations ([***], and support locations) access
to Xxxxxxxx.xxx.
(b) Management Information Services. Cardinal will provide to CVS those
programs and services described in the Base Service Package set forth in
Section 6(b) Disclosure Schedule on the terms and conditions described in
that schedule.
(c) [***]. Cardinal will make available to the Pharmacies participation
in Cardinal's [***] program, [***].
(d) [***].
(i) CVS will [***] a Pharmacy [***] with the necessary skill set to
act as a liaison between Cardinal and CVS. During the term of this
Agreement and for a [***] period thereafter, Cardinal will not
directly or indirectly employ, engage, or otherwise solicit for
employment or engagement such employee, or induce or encourage such
employee to terminate or otherwise modify such employee's
relationship with CVS. Furthermore, [***] as detailed in Section
6(d) Disclosure Schedules. [***] shall keep any and all information
disclosed by Cardinal confidential pursuant to Section 17.
(ii) Cardinal will also [***] a Pharmacy employee with the necessary
skill set to act as a liaison between Cardinal and CVS and work on
matters related to this Agreement. This employee will [***] to CVS
[***] basis and perform [***] on average. CVS and Cardinal will
mutually agree on the appropriate candidate to fill this position as
it becomes necessary from time to time. During the term of this
Agreement and for a [***] period thereafter, CVS will not directly
or indirectly employ, engage, or otherwise solicit for employment or
engagement such employee, or induce or encourage such employee to
terminate or otherwise modify such employee's relationship with
Cardinal. The Cardinal Employee shall keep any and all information
disclosed by CVS confidential pursuant to Section 17.
(e) [***]. CVS will [***] as it relates to CVS' Authorized [***], as
more fully described in the Section 6(e) Disclosure Schedule.
SECTION 7 CVS [***] AND [***] PROGRAM.
(a) Cardinal understands that CVS has established [***], which includes
items CVS stocks in [***] and certain other products as CVS designates
(the "[***]"). Whenever a Pharmacy orders a [***] Cardinal will [***] the
corresponding [***] if applicable. [***] be defined as a [***] as detailed
by First Data Bank's (FDB) NDDF Plus(TM) data dictionary. A [***] will
have the following values assigned to the NDC level by FDB:
- [***]
6
- [***]
All drug products classified with a [***] and [***] will be considered
[***]. In the event CVS, for [***] purposes, decides to elect certain
items as [***]; CVS will furnish Cardinal with notification and the drug
shall be [***] as instructed by CVS.
Cardinal will regularly update its files to ensure all [***] set forth
above is refreshed expeditiously to ensure [***] reflects current
marketplace conditions.
As stated above, whenever a Pharmacy orders a [***] Cardinal will [***] to
the corresponding [***] item if applicable. [***] will be [***] on the
[***] or as specifically directed by CVS. In addition, the program will
ensure the [***] is shipped to the store in a [***] to or [***] the [***],
unless otherwise specifically directed by CVS.
For example; [***]. CVS' required [***] is further defined in Section 7(a)
Disclosure Schedule.
CVS will have the ability to [***]. For example, [***]. Although the
[***]. In addition, [***].
Cardinal will also [***].
For example, [***].
If the item ordered [***] have a corresponding item on the [***] or if the
item is unavailable, Cardinal will [***] such item with the corresponding
[***], if any, from the [***] (the "[***]") in the [***] ordered.
In the event that the [***] item is [***], then Cardinal will [***] the
item with the [***] corresponding item under the [***] (the "[***]") in
the [***] ordered. If a corresponding item [***], Cardinal will ship the
item as [***]. Notwithstanding anything in the foregoing to the contrary,
CVS reserves the right to [***] Cardinal from [***] from the [***] for
corresponding items on the [***].
CVS has provided Cardinal with [***] as of January 1, 2004 (the date of
this Agreement). As items on the [***] change from time to time, CVS [***]
with electronic notice of such changes including the proposed effective
date of such change. As it pertains to [***] only, Cardinal will [***],
and have available for [***] within [***] of receipt of such notice. In
the event that [***] level of any product being deleted from the [***],
then Cardinal will [***] and Cardinal and CVS will mutually agree upon
[***]. In addition, CVS will provide Cardinal [***], in an [***], with a
list setting forth all items on [***] as of the end of the previous month.
Cardinal will use the information on such files to verify its records of
[***] and notify CVS of any discrepancies so that such discrepancies may
be reconciled and corrected.
7
Cardinal will [***] upon request by CVS. [***] are defined as items for
which either the [***] in FDB are not [***]. This definition specifically
excludes items for which Cardinal has been notified by CVS to designate in
a manner regardless of the [***]. In cases where an existing [***] or
changed and a [***], Cardinal will seek approval from CVS prior to any
[***] to said new item.
Cardinal will accommodate [***].
CVS may in the future decide to institute an [***] similar to the [***].
Cardinal will support any [***] as designed by CVS. [***] will be based
entirely on the [***].
Any and all [***] and ([***]) must be in accordance with the most recent
First Data Bank data that is available. Cardinal [***] and [***] data
[***] and [***] will not be passed to CVS. CVS may instruct Cardinal to
[***], specifically as it relates to [***].
(b) CVS will be [***] to a [***] (in the form of a [***]) based on the
[***] of [***] Rx Products purchased by the Pharmacies as described in the
Section 7(b) Disclosure Schedule.
SECTION 8. CONTRACT ADMINISTRATION.
Cardinal will [***] subject to their continued validity in accordance with
applicable laws and subject to such [***] concerning the applicable [***].
Notwithstanding the foregoing, [***] shall not excuse Cardinal from complying
with the [***] detailed in Section 9 Disclosure Schedule or extending the
applicable [***] to CVS (i.e., [***]). Cardinal will begin [***] within the
later of: (i) [***] after Cardinal has received a copy of the [***] from CVS, or
(ii) the [***] date of the [***] by Cardinal directly from [***] must be
forwarded to CVS within [***] for CVS' written approval [***].
SECTION 9. [***].
Cardinal will provide CVS with the [***] in the Section 9 Disclosure Schedule
and Section 2(b) Disclosure Schedules.
SECTION 10. [***] POLICY.
(a) Cardinal will accept [***] in accordance with the [***] process as
detailed in Section 10(a) Disclosure Schedule. Set forth in the Section
2(b) Disclosure Schedule [***].
(b) As it relates to [***] CVS and Cardinal will work in accordance with
the [***] set forth in the Section 10(b) Disclosure Schedule.
8
(c) As it relates to [***], CVS shall use commercially reasonable
efforts to immediately [***] (whether alleged or verified) to Cardinal for
[***]. Cardinal will [***] CVS at CVS' [***] for any and all [***]
Cardinal by CVS and all other [***] incurred by CVS as it pertains to
[***] and Xxxxxxxx's instructions related to [***].
SECTION 11. TERM.
(a) The term of this Agreement will begin on [***] (the "COMMENCEMENT
DATE"), and will continue for [***] thereafter (the "INITIAL TERM"). This
Agreement may be renewed for successive renewal periods of one (1) year
each upon mutual written agreement of the parties. In the event either
party desires not to renew the Agreement at the expiration of the Initial
Term or any renewal term, that party shall provide the other party with
[***] written notice prior to the expiration of the then current term. In
the event such notification is not provided with at least the [***] notice
or if no notice is given, the then current term shall be extended for a
period of [***] after the expiration of such term to provide for an
adequate transition period. Any reference in this Agreement to the "term
of this Agreement" will include the Initial Term and any renewal term.
(b) Either party may effect an [***] of this Agreement [***] giving
written notice to the other party, provided such party has first given
written notice to the other party of the occurrence of a material breach
of this Agreement (which notice will specify the nature of such breach)
and the other party has failed to cure such breach within [***] following
its receipt of such notice or, in the event such breach is not capable of
being cured in such [***] period, the breaching party's failure to
diligently prosecute such cure thereafter. Notwithstanding the foregoing,
any failure to make any payment when due under this Agreement or any
failure by the other party to perform as described within this Agreement
which negatively impacts the other party's ability to perform their
respective business functions, such period in which to [***] will be
[***].
(c) Either party will have the [***] upon notice to the other party
following the commencement of any [***] with respect to such other party
or its assets, the [***] by such other party, or the [***] by or for such
other party.
(d) CVS' and [***] to each other which have accrued to date of
termination or expiration will survive termination or expiration of this
Agreement as shall all other obligations which by their nature extend
beyond the term of the agreement, including but not limited to the
obligation in Sections 16, 17, and 18. CVS and Cardinal will mutually
agree on the transition of services provided by the other.
(e) Upon termination of this Agreement for any reason, CVS' rights as a
licensee of CardinalCHOICE-HQ(TM) software and other Cardinal software
will automatically expire, and CVS will (upon request) [***] software and
any related hardware not purchased by CVS to [***]. Upon termination of
this Agreement
9
for any reason, Cardinal [***] provide CVS with access to CVS' historical
purchase data.
(f) This Agreement will supersede and replace that certain Wholesale
Supply Agreement dated August 16, 2000 by and between Cardinal and CVS
(the "ORIGINAL AGREEMENT"), and all extensions thereof. Upon commencement
of this Agreement, the Original Agreement will terminate and be of no
further force or effect whatsoever.
(g) For purposes of this Agreement the term "PROGRAM YEAR" means the
twelve (12) month period beginning on January 1st and ending on December
31st, except for the final Program Year, which will be a six (6) month
period beginning January 1st and ending [***].
(h) In addition to all other [***] rights set forth in this Agreement,
either party shall have the right to [***] this Agreement for [***] with
[***] advance written notice [***] as described in the Section 11(h)
Disclosure Schedule.
SECTION 12. [***].
CVS and Cardinal will implement a [***] as described in the Section 12
Disclosure Schedule.
SECTION 13. NOTICES.
All notices required or permitted under this Agreement will be in writing to the
other party at the address set forth below (or such other address as that party
may give to the other party by written notice hereunder) and will be [***].
If to:
CVS Pharmacy, INC. CARDINAL HEALTH
One CVS Drive 0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 Xxxxxx, Xxxx 00000
Attn: Vice President, Attn: Senior Vice President,
Pharmacy Merchandising Retail Sales and Marketing
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
with copy to: with copy to:
General Counsel Chief Legal Officer at the same address
at the same address Telecopy: (000) 000-0000
Telecopy: (000) 000-0000
10
SECTION 14. TAXES/COMPLIANCE WITH LAWS.
[***] any sales, use, excise, gross receipts, or other federal, state, or local
taxes or other assessments ([***]) and related interest and penalties in
connection with or arising out of the transactions contemplated by this
Agreement. [***].
If and to the extent any [***] or applied by Cardinal with respect to the
Merchandise and/or [***] purchased under this Agreement, then applicable
provisions of the Medicare/Medicaid and state health care fraud and
abuse/anti-kickback laws (collectively, "fraud and abuse laws") may require
disclosure of the applicable price reduction on CVS' claim or cost reports for
reimbursement from governmental or other third parties. [***] applicable
provisions of the fraud and abuse laws and [***] for any failure on [***].
[***] that all of the Pharmacies are properly and completely licensed in
compliance with all applicable state and federal laws, regulations, rules and
orders. [***] will be provided in the form of a schedule listing all of the
Pharmacies, and their respective [***] Cardinal with an updated good faith
schedule no later than [***] which will include information for the [***].
SECTION 15. FORCE MAJEURE.
One or more of Cardinal's or CVS' obligations under this Agreement will be
excused if, but only if, and to the extent that any delay or failure to perform
such obligations is due to fire or other casualty, validated (by Cardinal and
CVS) product or material shortages, strikes or labor disputes, transportation
delays, validated (by Cardinal and CVS) manufacturer out-of-stocks or delivery
disruptions, acts of God, validated (by Cardinal and CVS)seasonal supply
disruptions, or other causes beyond the reasonable control of Cardinal or CVS (a
"FORCE MAJEURE EVENT"). [***] in the Section 3(a) Disclosure Schedule shall be
[***] the event of force majeure.
SECTION 16. RECORDS AND AUDIT.
(a) Cardinal will maintain records pertaining to the Merchandise
purchased by CVS under this Agreement as required by applicable federal,
state and local laws, rules and regulations. Not more than [***] and
following [***] advance written notice to Cardinal, or as required by
administrative ruling or court order, CVS will have the right to appoint
one or more of its agents or employees to review [***] for the sole
purpose of verifying compliance with the [***] of this Agreement or
compliance with any other material terms of this Agreement. Any such
review will be [***] of historical information as of the date such review
begins, except if Cardinal is required by applicable law to maintain
records pertaining to the Merchandise purchased by CVS under this
Agreement for a [***] months, then Cardinal will also allow CVS to access
such information. The information will be subject to [***] the information
prior to beginning the review. Notwithstanding the foregoing, [***].
Further, with respect to [***] which must remain [***] relating to such
[***] through an employee [***] deemed reasonably [***] to
11
verify compliance with the [***] of such [***]. Such [***] complied with
the [***] otherwise disclose to [***].
(b) CVS will maintain records pertaining to the Merchandise purchased
all Pharmacies and CVS Pharmacy DCs, whether now or hereafter owned,
managed or operated by CVS, under this Agreement as required by applicable
federal, state and local laws, rules and regulations. Not more than [***]
or as required by administrative ruling or court order, and following
[***] advance written notice to CVS, Cardinal will have the right to
appoint one or more of its employees or agents to review [***] Rx Products
for the sole purposes of verifying that [***] CVS Pharmacy DC [***] from
Cardinal, as further described in the Section 2(a) Disclosure Schedule or
compliance with any other material terms of this Agreement. Any such
review will be of [***] historical information as of the date such review
begins, except if CVS is required by applicable law to maintain records
pertaining to the Merchandise purchased by CVS under this Agreement for a
[***], then CVS will allow Cardinal to access such information also. The
information will be subject to [***] the information prior to beginning
the review. Notwithstanding the foregoing, [***] and Cardinal. Further,
with respect to [***] which must remain [***] through an employee to
verify compliance with the [***]. Such [***] of this Agreement, but [***]
otherwise disclose to [***].
SECTION 17. CONFIDENTIALITY.
Each party acknowledges that as a result of this Agreement, that party and its
employees and agents, will learn confidential information of the other party
(including, but not limited to, the information Cardinal provides to CVS
pursuant to the [***] set forth in the Section 12 Disclosure Schedule). Neither
party will disclose any confidential information of the other party to any
person or entity, or use, or permit any person or entity to use, any of such
confidential information, excepting only: [***] is provided only on an aggregate
or "blinded" basis and not identified specifically as CVS information other than
as otherwise contemplated or described in this Agreement. The specific material
terms of this Agreement will be deemed to be confidential information of each
party. Each party will be responsible for any breach of this confidentiality
provision by its representatives.
The obligations of confidentiality hereunder will survive the termination of
this Agreement for a period of two (2) years. Upon termination of this Agreement
(for any reason) each party will promptly: (i) return to the other party all
documentation and other materials (including copies of original documentation or
other materials) containing any confidential information of the other party; or
(ii) certify to the other party, pursuant to a certificate in form and substance
reasonably satisfactory to the other party, as to the destruction of all such
documentation and other materials. Notwithstanding the foregoing, each party may
keep one copy of any documentation containing confidential information of the
other party, provided that such copy will be retained and used solely by the
legal department of that party.
12
SECTION 18. INDEMNITY.
Cardinal will indemnify and hold harmless CVS and all future parent
corporations, subsidiaries and affiliates and each of their officers, directors,
employees and representatives (collectively referred to in this paragraph as
CVS) from and against [***] in accordance with this Agreement or in accordance
with applicable law, it being understood, however, that other [***] than as
specifically stated in this paragraph. In addition, Cardinal will [***] to CVS
(on a non-exclusive basis) any [***] and [***]. Notwithstanding anything to the
contrary herein, Cardinal reserves its own rights [***].
CVS will indemnify and hold harmless Cardinal and all future parent
corporations, subsidiaries and affiliates and each of their officers, directors,
employees and representatives (collectively referred to in this paragraph as
Cardinal) from and against [***], it being understood, however, that [***] is
being provided other than as specifically stated in this paragraph. The parties
agree that neither CVS nor Cardinal will be obligated under this section 18 with
respect to any claim that results solely from the [***] of the other party.
SECTION 19. INSURANCE.
Xxxxxxxx and CVS agree to maintain the insurance as set forth in the Section 19
Disclosure Schedule.
SECTION 20. ENTIRE AGREEMENT; SUCCESSORS.
This Agreement, together with the Disclosure Schedules referenced herein,
constitutes the entire Agreement and understanding of the parties with respect
to the subject matter hereof, and supersedes all prior and contemporaneous
agreements, proposals, and understandings between the parties relative to the
subject matter hereof. [***] If all or substantially all of the stock or assets
of CVS Corporation are acquired by an unrelated third party (which expressly
excludes a merger where CVS Corporation is the surviving entity), then Cardinal
[***], by providing written notice to CVS of its [***] to the intended [***].
Further, if all or substantially all of the stock or assets of Cardinal Health,
Inc. are acquired by an unrelated third party (which expressly excludes a merger
where Cardinal Health, Inc. is the surviving entity), then CVS [***] this [***],
by providing written notice to Cardinal of its [***] to the intended [***]. This
Agreement will be binding on, and inure to the benefit of, and be enforceable by
and against the respective successors and assigns of each party to this
Agreement.
SECTION 21. AMENDMENTS.
No changes to this Agreement will be made or be binding on any party unless made
in writing and signed by each party to this Agreement.
13
SECTION 22. WAIVER.
Neither party's failure to enforce any provision of this Agreement will be
considered a waiver of any future right to enforce such provision.
SECTION 23. GOVERNING LAW.
This Agreement will be governed by the laws of the State of Ohio, without regard
to choice of law principles.
SECTION 24. RELATIONSHIP OF THE PARTIES.
The relationship of the parties is and will be that of independent contractors.
This Agreement does not establish or create a partnership or joint venture among
the parties.
SECTION 25. SEVERABILITY.
The intention of the parties is to fully comply with all applicable laws and
public policies, and this Agreement will be construed consistently with all such
laws and policies to the extent possible. If and to the extent that a court of
competent jurisdiction determines that it is impossible to so construe any
provision of this Agreement and consequently holds that provision to be invalid,
such holding will in no way affect the validity of the other provisions of this
Agreement, which will remain in full force and effect.
SECTION 26. ANNOUNCEMENTS.
CVS will not issue any press release or other public announcement, verbally or
in writing, referring to Cardinal or any entity which is controlled by or under
common control with Cardinal Health, Inc., without Cardinal's prior written
consent and advice of counsel. CVS will provide Cardinal's Executive Vice
President, Retail Sales and Marketing, 0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000,
with a written copy of any such press release or other public announcement [***]
prior to CVS' intent to issue such release or announcement. CVS is responsible
for confirming in writing that Xxxxxxxx's Executive Vice President, Retail Sales
and Marketing has received any such proposed press release. Any such press
release or other public announcement proposed by CVS will be subject to
Cardinal's revision and final approval. Nothing contained herein will limit the
right of CVS to issue a press release if, in the opinion of CVS' counsel, such
press release is required pursuant to state or federal securities laws, rules or
regulations.
Cardinal will not issue any press release or other public announcement, verbally
or in writing, referring to CVS or any entity which is controlled by or under
common control with CVS Pharmacy, Inc., without CVS' prior written consent and
advice of counsel. Cardinal will provide CVS' Vice President of Pharmacy
Merchandising and Director of Corporate Communications, One CVS Drive,
Woonsocket, Rhode Island 02895, with a written copy of any such press release or
other public announcement [***] prior to Cardinal's intent to issue such release
or announcement. Xxxxxxxx is responsible for confirming in writing that CVS'
Vice President of Pharmacy Merchandising and Director
14
of Corporate Communications has received any such proposed press release. Any
such press release or other public announcement proposed by Cardinal will be
subject to CVS' revision and final approval. Nothing contained herein will limit
the right of Cardinal to issue a press release if, in the opinion of Cardinal's
counsel, such press release is required pursuant to state or federal securities
laws, rules or regulations.
SECTION 27. AUTHORIZED SIGNATORIES.
All signatories to this Agreement represent that they are authorized by their
respective companies to execute and deliver this Agreement on behalf of their
respective companies, and to bind such companies to the terms herein.
Accepted and Agreed to by:
Cardinal Health*
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Its: Group President
-------------------------------
Date: May 17, 2004
------------------------------
CVS Pharmacy, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Its: VP Pharmacy Merchandising
-------------------------------
Date: June 1, 2004
------------------------------
[***]
*The term "CARDINAL HEALTH" means the following pharmaceutical distribution
companies: Cardinal Health 106, Inc. (formerly known as Xxxxx X. Xxxx, Inc.), a
Massachusetts corporation (Peabody, Massachusetts); Cardinal Health 103, Inc.
(formerly known as Cardinal Southeast, Inc.), a Mississippi corporation
(Madison, Mississippi); Cardinal Health 110, Inc. (formerly known as Xxxxxxxx
Distribution Corporation), a Delaware corporation (Folsom, California) and any
other subsidiary of Cardinal Health, Inc., an Ohio corporation ("CHI"), as may
be designated by CHI.
15
SECTION 1(a) DISCLOSURE SCHEDULE
DETERMINATION OF PHARMACIES THAT WILL DESIGNATE CARDINAL AS [***]
As of the Commencement Date, and throughout the term of this Agreement, CVS will
designate Cardinal as [***].
In the event CVS [***] representing: (a) [***] of CVS' Pharmacies as of [***],
then CVS [***] Cardinal [***] pursuant to the terms and conditions of this
Agreement in a timeframe so as not to compromise CVS' business operations; or
(b) [***] of CVS' Pharmacies as of [***], then CVS [***] Cardinal [***] at CVS'
sole discretion (in which case Cardinal and CVS will [***]).
In no event will CVS [***] which may exist related to any retail pharmacies CVS
[***].
[***]
Upon [***], as often as quarterly, CVS will provide [***] from Cardinal, as
further described in the Section 2(a) Disclosure Schedule.
16
SECTION 1(b) DISCLOSURE SCHEDULE
[***]
TOTAL DC LIST
CVS New York, Inc. CVS D.S., Inc.
Three Xxxxx Drive 00000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
CVS Pharmacy, Inc. CVS IN Distribution, Inc.
000 Xxxxxxxxxx Xxxxx 0000 Xxxxxx Xxxxx
Xxxxx Xxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
CVS Texas Distribution L.P.
000 XXX Xxxxx
Xxxxx, XX 00000
(expected open date TBD)
As CVS [***] to support Pharmacies [***] or additional Pharmacies [***] of the
Pharmacies [***], CVS will [***] such [***] pursuant to the terms and conditions
of this Agreement.
[***]
CVS will keep the [***] and notify Cardinal of anticipated additions to or
deletions from the [***] at least thirty (30) days prior to such addition or
deletion. If such addition or deletion could not have been reasonably foreseen
[***], CVS will notify Cardinal as soon as possible thereafter. In no event will
Cardinal [***] pursuant to the terms of this Agreement until [***] after CVS
first notified Cardinal that the [***].
If CVS [***], CVS may [***] in a timeframe so as not to compromise CVS' business
operations. In no event will CVS [***].
17
SECTION 2(a) DISCLOSURE SCHEDULE
[***]
The term "[***]" means:
(a) with respect to the [***], Cardinal will [***] Rx Products [***].
Furthermore, CVS will [***] (as described in the Section 3(a) Disclosure
Schedule).
(b) with respect to [***], CVS will [***] Rx Products [***] in and subject
to Section 12 Disclosure Schedule, excluding [***].
Notwithstanding anything in this Agreement to the contrary, CVS retains the
right to [***] Rx Products which are [***].
18
SECTION 2(b) DISCLOSURE SCHEDULE
[***] -- TERMS AND CONDITIONS
A. ORDERING/DELIVERY.
All CVS [***] for [***] Rx Products (except for [***]) will be [***]. All orders
referenced in this Section 2(b) Disclosure Schedule are intended to refer to
[***] will be handled through [***] located at its corporate headquarters or
such other departments designated by [***]. All references [***] Section 2(b)
Disclosure Schedule are to [***] or other such designated department. [***] will
be generated by specified manufacturer and will include the NDC number, complete
product description and to which [***]. Quantities ordered will [***].
[***], at its option, [***] described in Section 12 Disclosure Schedule with
[***]. The price for such product from [***] will be equal to the [***] as of
[***]. Within [***] of receipt of the order for product, Cardinal will [***] to
the [***] Payment for such product [***] will be due at [***] of [***] or [***]
(by [***] as [***] and detailed in Section 12 Disclosure Schedule). Cardinal
will [***] with respect to [***] and [***] subject to Section 12 Disclosure
Schedule.
B. RECEIVING AND SHIPPING DISCREPANCIES.
1. GENERALLY.
In the event a discrepancy in quantity arises with respect to any
shipment, the applicable [***] notify Cardinal of the discrepancy within
[***] of the receipt date of the shipment, and will pay the undisputed
amount of any such shipment, in accordance with the [***] within this
disclosure schedule. In turn, Cardinal may [***] relative to the disputed
quantity or pricing.
If CVS [***] and CVS [***] to CVS, then CVS will [***] in the amount of
[***]. Cardinal may, at its sole discretion, correspondingly [***]. and
will make such documentation, upon request, available to [***] the
requesting party. Cardinal and CVS will [***] are not supported [***].
2. [***].
[***] is defined as one of the following scenarios:
[***] [***]
Each [***] will provide the applicable [***], which will be transmitted
electronically or via facsimile) of all inbound receiving [***]
discrepancies within. The WDN must be [***] associate with a copy to [***]
Department. Cardinal will use all reasonable efforts to respond to a WDN
within [***] of receipt of each such WDN. [***] CVS
19
will process a [***] (subject to Section 2(b) Disclosure Schedule) for the
value of the discrepancy. Cardinal may request and CVS will provide
additional written documentation in support of [***]. If Cardinal, through
its own review, has documentation which refutes CVS' claim, then CVS and
Cardinal shall review such documentation and any necessary adjustment will
be made. Discrepancies that remain unresolved [***] following the date of
the WDN will be presented to senior management at both Cardinal and CVS,
for resolution.
3. [***].
[***] is defined as one or more of the following scenarios:
[***] [***]
[***] department will provide Cardinal with notice of all [***] on or
before the [***] for the applicable invoice. Prior to submitting such
notice to Cardinal, CVS agrees to re-verify the CVS [***] of the [***].
The written notice for [***] will take the form of [***] which will be
generated and provided to Cardinal by [***] (the "ADN"). This ADN will
include the purchase order number, items involved, quantities, amounts and
nature of the exception. [***] (subject to Section 2(b) Disclosure
Schedule) for the value of the discrepancy. Cardinal may request and CVS
will provide additional written documentation in support [***]. If
Cardinal, through its own review, has documentation which refutes CVS'
claim, then CVS and Cardinal shall review such documentation and any
necessary adjustment will be made. Cardinal and CVS will use all
reasonable efforts to resolve the [***] discrepancies within [***] of
receipt from CVS of the fully completed ADN. Discrepancies that remain
unresolved [***] following the date of the ADN will be presented to senior
management at both Cardinal and CVS for resolution.
4. [***].
a. [***].
[***] by reason of overage, wrong item, unapproved, short-dated or
damage relating to [***] (subject to Section 12 Disclosure Schedule) to
the applicable Cardinal servicing division within [***] of physical
receipt of the product. CVS will label the product [***], attach a
completed WDN, and [***]. CVS will process [***] due Cardinal in the [***]
of the [***] subject to Section 2(b) Disclosure Schedule.
b. [***].
[***] by reason of overage, wrong item, unapproved, short-dated or damage
relating to replenishment [***] and [***] (subject to Section 12
Disclosure Schedule) [***], within [***] of physical receipt of the
product. In addition, if CVS [***] a [***] or [***] relating to [***] of
such [***] (that arises while such [***]), then CVS will [***] such [***].
CVS will provide the applicable Cardinal servicing division with a
20
completed WDN. CVS will [***] Cardinal in the [***] of the [***] subject
to Section 2(b) Disclosure Schedule
c. [***].
[***] resulting from [***] (subject to Section 12 Disclosure Schedule)
[***]. CVS will [***] from [***] CVS owes Cardinal with respect to such
[***] subject to Section 12 Disclosure Schedule.
[***] (but not related to [***]) or [***]to CVS' [***], or [***] to the
[***], as CVS [***].
[***] will be handled on an [***] with a process to be mutually agreed
upon by both CVS and Cardinal.
C. CVS [***] DISCREPANCIES
The following provisions apply to [***].
1. [***].
A [***] is defined as one of the following scenarios:
[***] [***]
The Cardinal [***] CVS DC Pharmacy DC with a WDN [***] receiving
discrepancies between physical product and the accompanying CVS packing
list. Cardinal will use its reasonable efforts to notify CVS within [***]
of physical receipt of product; however, in order to [***] CVS, [***] will
be [***] which could [***] of [***] up to an [***] (except for [***],
which Cardinal will [***] notify CVS of physical receipt within [***]).
The WDN must be transmitted directly to the [***] associate with a copy to
CVS' corporate purchasing department. CVS will use all reasonable efforts
to respond to a WDN within [***] of receipt of each such WDN; however, in
order to [***] such notification may be delayed, but not to exceed [***]
will communicate the [***] and corresponding resolution to their
respective [***] departments. CVS will [***] Cardinal (subject to Section
2(b) Disclosure Schedule) for the value of the discrepancy. Cardinal may
request and CVS will provide additional written documentation in support
[***]. If Cardinal, through its own review, has documentation which
refutes CVS' claim, then CVS and Cardinal shall review such documentation
and any necessary adjustment will be made. Discrepancies that remain
unresolved [***] following the date of the WDN will be presented to senior
management at CVS and Cardinal distribution centers, for resolution.
21
2. [***].
[***] is defined as one or more of the following scenarios:
[***] [***]
As a result of the [***] of a [***] (in an [***]) created by CVS, Cardinal
will [***] that exist between the [***]. Prior to submitting [***] report
to CVS, Cardinal [***] to re-[***] the Cardinal DC's claim of the [***].
The [***] for will take the form of a standard exception report (in a form
mutually agreed to by both Cardinal and CVS) which will be generated and
[***]. The ADN must include the CVS packing list, items involved,
quantities received by [***], pricing and nature of the exception. CVS
will [***] (subject to Section 2(b) Disclosure Schedule) for the [***].
Cardinal may request and CVS will provide additional written documentation
in support of [***]. If Cardinal, through its own review, has
documentation which refutes CVS' claim, then CVS and Cardinal shall review
such documentation and any necessary adjustment will be made. Cardinal and
CVS will use all reasonable efforts to resolve the [***] within [***] of
receipt from CVS of the fully completed ADN. Discrepancies that remain
unresolved [***] following the date of the ADN will be presented to senior
management at both Cardinal and CVS for resolution.
D. [***]
[***]
[***]
[***] - [***]
[***]
[***] - [***]
[***]
[***] - [***]
[***]
[***]
[***] - [***]
22
E. [***]
The process relating to [***] is described in the Section 10(b) Disclosure
Schedule. The following process applies to all other [***]. If CVS then will
[***]. Cardinal may, at its sole discretion, correspondingly [***] Cardinal owes
to such [***]. CVS and Cardinal will be responsible to maintain detailed support
documentation for any [***] and will make such documentation, upon request,
available to the requesting party. Cardinal and CVS will not allow [***] if such
[***] are [***] by detailed documentation. The following terms and conditions
apply to the [***]:
a. CVS will [***] which CVS reasonably believes are [***].
Cardinal may, at its sole discretion, correspondingly [***] owes to such [***].
b. CVS and Cardinal will [***] of their [***]. CVS will or [***]
to [***] to for [***]. From time to time, CVS may identify a need to process a
[***] for which Cardinal has a [***], in these cases, CVS will process [***] to
Cardinal for [***] CVS. Upon request, CVS will provide Cardinal with
documentation [***] to substantiate each [***]. This documentation may exclude
[***] if such information is deemed to be confidential information, as
reasonably determined by CVS.
c. Cardinal, at its sole discretion, will [***] from the [***].
d. CVS and Cardinal will work together to mutually [***].
F. [***]
Cardinal and CVS recognize the importance of maintaining adequate inventory of
all CVS warehoused items, without compromising the [***] embedded in this
Agreement. To that end, Cardinal will provide CVS with a [***]. The [***] shall
be defined as the [***]. The [***] will be [***] using the following [***]:
[***]
This [***] is inclusive of any [***].
The [***] shall be maintained with the aggregate number of inventory days in
each of the [***] to not exceed [***]. Execution of the [***] detailed in
Section 12 Disclosure Schedule will not [***] CVS' [***], or CVS' [***] to [***]
Rx Products.
With respect to the [***] (as defined in Section 12 Disclosure Schedule) if CVS
[***] Cardinal that the aggregate [***] to the [***] during any [***] is less
than [***], then Cardinal will [***] to [***] with CVS to [***] its [***]
commitments.
Additionally, Cardinal commits to [***] by [***] that will lead to a [***] at
CVS Pharmacy DCs and Pharmacies.
23
SECTION 2(c) DISCLOSURE SCHEDULE
[***] MERCHANDISE
As of January 1, 2004, Cardinal is [***] on CVS' behalf.
SECTION 3(a) DISCLOSURE SCHEDULE
PHARMACIES PURCHASE PRICE
[***]
During the term of this Agreement [***] through [***], the Pharmacies' aggregate
purchases of [***] (collectively referred to herein as the "[***]").
During Cardinal's quarterly business review, Cardinal will provide CVS with
purchasing information to substantiate the [***] performance.
COST OF GOODS FOR [***]
CVS will pay to Cardinal a Cost of Goods for [***] as follows [***]:
Rx Products (FDB branded) [***]%
[***] [***]
[***] [***]
Home Health Care/DME [***]
HBC/OTC [***]
[***] [***]
For the purpose of this Agreement "[***]" shall mean CVS will [***] (i.e. a
[***]) for all Merchandise for which a purchase order has been issued as of the
date the Merchandise was [***].
CII orders must be shipped [***]. CVS reserves the [***] any CII order that
[***] any [***].
All Merchandise being delivered from Cardinal to CVS Pharmacies must have at
least [***]. Under no circumstances will Merchandise be delivered to Pharmacies
with [***] without expressed written approval by CVS' Vice President of Pharmacy
Merchandising for each occurrence. Furthermore, Cardinal represents that it is,
and will continue to be during the term of this Agreement, an industry leader in
implementation of processes, practices and safeguards to prevent the
distribution of Merchandise will [***] to Pharmacies.
24
The foregoing Cost of Goods does not apply to Merchandise which is subject to a
[***], which will instead be [***] at the [***] for the Pharmacies. Cardinal
[***] the Cost of Goods of [***]of Merchandise in the event that the [***] of
such item [***] which [***] the [***] effective on the Commencement Date with
respect to such item. The [***] to the [***] for such item [***].
SECTION 3(b) DISCLOSURE SCHEDULE
COST OF GOODS [***]
CVS will [***] to Cardinal its [***] with respect to all [***]. [***] means the
[***] for [***]. CVS will [***] and the [***] (except as set forth in the
Section 12 Disclosure Schedule) on its [***] at the time the [***] Cardinal's
[***].
25
SECTION 3(c) DISCLOSURE SCHEDULE
[***]
Pharmacies will be eligible for the following Cost of Goods [***] based upon the
[***]:
[***] [***] [***] [***]
----- ----- ----- -----
[***] [***] [***] [***]
If CVS' [***] during a calendar quarter is less than [***] will be mutually
determined [***].
At the end of each calendar quarter, Cardinal and CVS will evaluate CVS' [***]
during such quarter (i.e., Purchases and [***] Purchases only) of all Pharmacies
[***] will be faxed and subsequently mailed in hard copy form to CVS' Manager of
Wholesaler Programs.
The [***] will be [***] as follows: Cardinal and CVS will [***]. Utilizing this
calculation Cardinal and CVS will [***]to 1 for the [***].
For example, during a calendar quarter, CVS' [***] then CVS' [***] Cardinal's
Cost [***]. Conversely, if CVS' [***] during a calendar quarter, then CVS' [***]
Cardinal's Cost [***].
In addition, if CVS [***] CVS' qualified monthly purchases per Pharmacy [***],
then CVS may elect to [***], and [***] following the date of [***] only. If CVS
[***] Cardinal [***] Cardinal [***] or CVS [***] to [***] such [***] of the
[***], then such [***].
The [***] is a "[***]" as such term is used under section 1128(B)(3)(A) of the
Social Security Act, 42 U.S.C. 1320a-7b(b)(3)(a). [***] and any other "[***]"
received by CVS from Cardinal under any state or federal program which provides
cost or charge-based reimbursement to CVS for the Merchandise purchased by CVS
under this Agreement.
26
SECTION 4 DISCLOSURE SCHEDULE
PAYMENT TERMS
[***] PURCHASES AND [***] PURCHASES.
(i) Payment Term. Not later than the [***], CVS will cause Cardinal to
[***] for all Merchandise delivered and services performed [***].
(ii) Form of Remittance. Each payment by CVS to Cardinal will be
accompanied by a remittance in a form deemed acceptable to Cardinal and
CVS ([***]).
(iii) [***]. At the end of each calendar quarter, Cardinal will evaluate
[***] based on [***] in accordance with the table set forth below,
adjusted to reflect legitimately disputed amounts (such as duplicative
invoices and incorrect billing information). CVS and Cardinal acknowledge
that CVS' Cost of Goods is based upon [***] days sales outstanding. CVS
will pay Cardinal [***]% (an effective annual percentage rate of [***]%)
that CVS' [***] (i.e., where CVS' [***] are greater than [***]), up to
[***] days, calculated in accordance with the formula set forth below. CVS
will pay Cardinal a penalty for [***]% (an effective annual percentage
rate of [***]%) per [***], from the first day, that CVS' [***] in excess
of [***] (i.e., where CVS' [***] are greater than [***]). Cardinal will
pay CVS [***] amount equal to [***] (an effective annual percentage rate
of [***]%) per [***] CVS' [***] (i.e., where CVS' [***] are less than
[***]). Notwithstanding the foregoing, [***] either by CVS or Cardinal in
the event that CVS' [***] are greater than [***] but equal to or less than
[***] (i.e., [***]).
For example:
[***] [***] [***] [***] [***] [***] [***]
----- ----- ----- ----- ----- ----- -----
[***] [***] [***] [***] [***] [***] [***]
Cardinal will deliver to CVS an analysis of CVS' [***] in aggregate
format, or other mutually acceptable format, on a weekly basis for
informational purposes [***] (i.e., to assist CVS in managing its[***]).
If the above calculation indicates[***], then CVS will pay Cardinal such
amounts within for [***] such amounts. If the above calculation indicates
that[***], then Cardinal will [***] in the form of [***] within [***] days
following the end of the applicable quarter.
The parties may, but will not be obligated to, agree to a [***] whereby [***].
In such event, [***] (other than that to which the parties mutually agree)
[***].
[***]
CVS will cause Cardinal to receive payment in full for all [***] that are [***]
not later than [***] prior to the date upon which Cardinal [***]. If payment is
due on Saturday, CVS will cause Cardinal to receive payment in full on the[***],
and if payment is due on
27
Sunday, CVS will cause Cardinal to receive payment in full[***]. CVS will cause
Cardinal to receive payment in full for [***] that are [***] not later than
[***] after the date of the invoice (invoice date will equal ship date) for such
product.
Notwithstanding the above paragraph, Cardinal and CVS agree to [***] for [***]
in order to [***] of CVS [***] as detailed in Section 12 Disclosure Schedule.
Cardinal and CVS agree and acknowledge that [***]. Accordingly, in the event
Cardinal or CVS [***], Cardinal or CVS will [***], and the [***]. If the problem
is not cured to Cardinal's or CVS' satisfaction, then such party will [***], as
further described below, that applies [***]. Notwithstanding the foregoing, CVS
or Cardinal will [***]. Any [***] or [***] by Cardinal or CVS to [***]. Cardinal
and CVS will work together in obtaining full value for such [***] as further set
forth in the [***] described in Section 2(b) Disclosure Schedule. Further, CVS
and Cardinal will be responsible to maintain detailed support documentation
[***] and will make such documentation, upon request, available to the
requesting party. Cardinal and CVS will not [***] if such [***] are not
supported by detailed documentation.
With respect to [***], CVS will [***] or [***].
With respect to all [***], or [***] CVS, Cardinal will [***].
The parties may, but will not be obligated to, agree to a [***] whereby [***].
In such event, [***] (other than that to which the parties mutually agree), as
long as payments are made when due in accordance with the agreed upon schedule.
28
SECTION 6(a) DISCLOSURE SCHEDULE
CARDINAL COMPUTER SERVICES
[***]
CARDINALCHOICE(R)-HQ
CVS' Cost
---------
Hardware Estimate [***]
[***] [***]
Software Initialization
[***] [***]
[***] [***]
[***]
[***] [***]
Support
[***] [***]
Cardinal [***] to all CVS' locations ([***], and support locations)
Xxxxxxxx.xxx. CVS may access Xxxxxxxx.xxx, a healthcare internet web portal,
[***], during the term of this Agreement. Cardinal will assist in the
transitioning of CVS locations to Xxxxxxxx.xxx by [***] to their [***] and as
needed [***].
[***] CVS Pharmacies to be [***] or.
29
SECTION 6(b) DISCLOSURE SCHEDULE
BASE SERVICE PACKAGE
PROGRAMS & SERVICES FREQUENCY
[***] [***]
REPORTS FREQUENCY
[***] [***]
BASE PACKAGE FEE: [***]
[***]
SECTION 6(d) DISCLOSURE SCHEDULE
EMPLOYEE [***]
[***] of a CVS [***] Manager ("EMPLOYEE") who will serve as an intermediary
between Cardinal and CVS specifically related to the management of the Store Rx
Purchases. It is understood that the Employee shall be [***] and that the
Employee's [***] and [***] shall be the [***] for all claims and liabilities,
whether alleged or actual, relating to the Employee.
Cardinal will [***] of this Employee pursuant to the schedule defined below:
[***] [***]
SECTION 6(e) DISCLOSURE SCHEDULE
[***] PROGRAM
The [***] program allows CVS Pharmacies to purchase selected[***]. These Rx
Products have been acquired from a division of Cardinal Health registered with
the Food and Drug Administration ("FDA"), that [***] from a larger quantity or
bulk containers into smaller quantities. [***] into FDA approved [***] are
driven by the difference [***] smaller package size. Depending on [***],
Cardinal establishes a [***] that is applied to the smaller equivalent package
size. CVS' [***] is also factored [***] to further [***]. For example:
30
[***]
In order to maximize overall efficiency and profitability Cardinal will [***]
any [***] item which [***] the CVS Authorized [***] as amended from time to time
by CVS. CVS' Authorized [***] as of execution of this Agreement is detailed
below. Cardinal will also [***] items and detailed within Section 6(e)
Disclosure Schedule.
As part of this program, Cardinal will invoice CVS' Pharmacies at [***] for such
Rx Product as of CVS' PO date for all [***] items purchased by Pharmacies. Then
on a monthly basis [***] in the form of a [***] so that CVS receives such [***]
within [***] from the close of said month. The [***] will be mailed in hard copy
form to CVS' Manager of Wholesaler Programs Cardinal will provide CVS with [***]
equal to the [***] related to all [***] items. Such [***] will be accompanied by
a report detailing CVS' [***] for said [***]. The accompanying report will
include but not be limited to: label name, manufacturer, CVS item number, NDC,
quantity, [***]
CVS AUTHORIZED [***]
[***]
[***]
ITEM
LABEL NAME MANUFACTURER NUMBER NDC
[***]
[***] [***] [***] [***] [***]
[***]
[***]
31
SECTION 7(a) DISCLOSURE SCHEDULE
[***]
[***]
[***]
[***]
[***]
[***]
32
SECTION 7(b) DISCLOSURE SCHEDULE
[***] FOR THE PHARMACIES
CVS will be [***] for the following [***] Rx Product [***]:
[***] [***]
----- -----
[***] [***]
Cardinal will provide CVS with a monthly report detailing the Pharmacies' [***]
Rx Products [***]. At the end of each Program Year, Cardinal and CVS will [***]
Rx Products [***] during such Program Year. The [***] will be [***] (as set
forth in the table above) of CVS' [***] Rx Products by the Pharmacies during the
applicable Program Year. The [***], if any, will be [***] in the [***] so that
[***] from the close of said Program Year. The [***] will be faxed and
subsequently mailed in hard copy form to CVS' Manager of Wholesaler Programs. In
the event that the [***] will [***] for any reason, Cardinal will use reasonable
efforts to give CVS notice no later than [***] prior to the end of the
then-current Program Year.
The [***] is a "[***] " as such term is used under section 1128(B)(3)(A) of the
Social Security Act, 42 U.S.C. 1320a-7b(b)(3)(a). [***] and any other "[***] "
received by CVS from Cardinal under any state or federal program which provides
cost or charge-based reimbursement to CVS for the Merchandise purchased by CVS
under this Agreement.
33
SECTION 9 DISCLOSURE SCHEDULE
PHARMACIES [***]
Cardinal will exercise best efforts to provide the Pharmacies with the following
[***] (as defined within this disclosure schedule), calculated [***] as
described below: (a) [***] adjusted with respect to [***] Rx Products; (b) [***]
adjusted with respect to [***]; (c) [***] adjusted with respect to [***]; and
(d) [***] with respect to [***] (the "[***]").
[***]
For purposes of this Agreement, "[***] for during [***] will be calculated using
the following formula:
[***] Rx Products [***].
[***] submitted to Cardinal will be included in the [***], including, but not
limited to: [***].
The following items of merchandise are excluded from the [***] and in aggregate
constitute all "AUTHORIZED ADJUSTMENTS":
1. [***] - [***] will [***] upon agreement between Cardinal and CVS
that [***]. Cardinal will verbally communicate any [***] for which
an adjustment [***] is requested to CVS' Assistant Category [***],
in the event that person is unavailable, Cardinal will notify the
Director, Category [***]. Notification to CVS should only be made
after Cardinal has [***] such product [***] on its own. Upon
notification from Cardinal, CVS will [***] or [***]. Upon CVS [***],
the [***] will be considered an Authorized Adjustment. [***].
2. CVS [***]- CVS may specifically request that [***]; CVS' Assistant
Category [***] will notify Cardinal in writing of these items. In
addition, [***]; if the Pharmacy specifically requests (phone in
orders without a documented detailed specific request by CVS will
[***] Authorized Adjustment) Cardinal [***], then said item will be
considered an Authorized Adjustment. Cardinal will provide CVS on a
monthly basis a report by item of the number of store [***] to
include but not be limited to: CVS store number, NDC, item
description, date, and quantity. Reports should be provided no later
than five (5) days following the close of the respective month.
3. [***] - an adjustment to the [***] will be [***] or CVS' [***] as
provided from time to time, which [***]. Adjustment amount will only
be for the [***].
For example, if [***].
4. [***]- CVS [***] in CVS commits to the timely notification of all
such changes in an electronic format; in addition, on a monthly
basis CVS will provide an
34
updated complete [***]. Cardinal will make available to CVS [***]
within [***] from notification. [***] will be adjusted for the
[***]following CVS notification, during which Cardinal may [***] CVS
stores [***] if applicable.
Cardinal's [***] commitment for CVS will become effective as of [***], however,
CVS will not be eligible for [***] until [***].
Both Cardinal and CVS agree the achievement of the [***] on a monthly basis
represents a material aspect of this Agreement. Failure by Cardinal to maintain
a monthly [***] of [***] with respect to the [***] (which includes [***] Rx
Products [***]) (a "[***]") will [***] CVS [***] for its [***] (as defined
herein). For purposes of this Schedule 9 Disclosure Schedule, the term "[***]"
means [***]. CVS will calculate and present [***], if any, to Cardinal before
processing any [***] related to any [***] to CVS in connection with [***].
For example, if the [***] is calculated at [***] for any given month, [***].
Cardinal and CVS agree to meet at CVS' Support Center as necessary to review the
[***] performance and to [***] in order to [***] defined within this Section 9
Disclosure Schedule.
[***]
Cardinal recognizes [***] can have on CVS' ability [***] their customers.
Therefore, both Cardinal and CVS agree that the [***]. To that end, Cardinal and
CVS will mutually agree to terms that will reflect the significance of [***].
The terms will be specific towards each party's responsibilities, the
calculation of [***], and remedies [***]. CVS and Cardinal agree that the
arrived at structure of the [***].
35
SECTION 10(a) DISCLOSURE SCHEDULE
PHARMACIES MERCHANTABLE PRODUCT [***]
GENERAL POLICY.
The parties acknowledge that [***]. Product in "merchantable condition" (as
defined below) may generally be returned to Cardinal from which the product was
originally purchased if the return is made within the timeframes and subject to
the terms and conditions described below: [***].
RETURN MADE WITHIN: NORMAL CREDIT AMOUNT:
[***] Days from Invoice Date [***] of original invoice amount paid by
customer. This policy [***].
More than [***] Days [***] of [***] or other "cost" paid by
customer (i.e., not including any [***].
Merchandise will be considered to be in "MERCHANTABLE CONDITION" except for the
following:
A. Any item which has been [***], is without all original packaging,
labeling, inserts, or operating manuals, or that is stickered, marked,
[***], or otherwise [***].
B. [***] outdated, or [***] and items purchased on a [***].
C. [***] and is specially assured that such merchandise was properly stored
and protected at all times and such merchandise is returned separately in
a package marked as such and accompanied by a separate credit request
form.
D. In order for CVS to achieve compliance [***], CVS will return product (in
Merchantable Condition) to Cardinal [***] in the CVS Pharmacy DCs ([***]
Rx Products [***]). Further, CVS agrees that Cardinal may [***] in the CVS
Pharmacy DCs, as indicated in the CVS monthly on-hand inventory electronic
report provided to Cardinal by CVS.
CONTROLLED SUBSTANCES.
Credit for the return of controlled substances requires a separate Merchandise
Return Authorization Form ("MRA FORM") and must comply with all federal and
state procedures and requirements in addition to the terms and conditions
described herein.
SHORTS AND DAMAGED MERCHANDISE.
Claims of order shortages (i.e., invoiced but not received), order errors and
damage must be reported within [***] from the applicable invoice date.
Controlled substance shortage claims must be reported immediately per DEA
requirements.
36
[***]
CVS Pharmacy returns in dollars [***] of qualified monthly purchases of all of
the Pharmacies (in dollars, each calendar month) excluding [***]. Because [***]
to Cardinal if such [***] (excluding [***]), CVS and Cardinal mutually agree
that Cardinal will [***] of those items which are included in the CVS monthly
on-hand inventory electronic report provided to Cardinal by CVS. This [***] is
designed to [***]. CVS and Cardinal may agree from time to time to implement a
[***] in cases where CVS Pharmacies are [***]. The parties will agree to the
[***] on an individual basis. [***].
[***] AND CARDINAL CREDIT REQUEST FORM.
Prior to returning any product to Cardinal, each customer must [***] verifying
that all returned merchandise has been kept [***]. All requests for credit must
be submitted [***]. A fully completed [***] must accompany [***]. A fully
completed form includes, but is not limited to, the following information: the
invoice number and invoice date for the merchandise to be returned. All return
credit memos will have corresponding reference numbers that will provide CVS
with a complete audit trail for reconciliation.
[***]
[***] must be placed in a proper shipping container and, for merchandise valued
at more than [***] when the product is picked up. All MRAs will be reviewed by
Cardinal for compliance with the [***] within this Section 10(a) Disclosure
Schedule. Cardinal will process credits within [***] of receipt of merchantable
product from CVS. In instance were credit has not been received for product
[***] to Cardinal for which Xxxxxxxx has no record of said [***].
MONTHLY REPORTING.
Cardinal will provide an electronic report on a monthly basis, which will detail
(1) [***], (2) [***], (3) information relating to returns in excess of [***],
and (4) [***].
OTHER RESTRICTIONS.
This policy is further subject to modification as may be deemed necessary to
comply with applicable federal and/or state regulations, FDA guidelines, and
state law.
37
SECTION 10(b) DISCLOSURE SCHEDULE
[***]
The process relating to [***] is described in the Section 2(b) Disclosure
Schedule. The following process applies to [***]"
GENERAL POLICY.
The following process applies to [***]. If CVS [***] and CVS reasonably believes
[***] (as determined by [***]), then CVS and Cardinal will follow the process
detailed below to [***]. CVS and Cardinal will [***].
Instead of [***], CVS will [***] as in effect from time to time will be the
basis of valuing all of [***].
Product may be returned to [***] (a) with which [***], (b) are not either [***],
or (c) which do not have [***]. If CVS elects to [***]. CVS may decide at its
own discretion the most efficient process to [***] to [***], if applicable. Any
[***] selected by CVS must enter into a confidentiality agreement, in a form
mutually acceptable to Cardinal and CVS, prior to accepting [***].
[***]
CVS and Cardinal will [***] under this policy to its selected [***], if
applicable. [***] will [***]. CVS will instruct the [***] to provide [***] on
behalf of CVS.
CVS will instruct each [***] by CVS and is returned through a [***], and to
[***] prepared by the [***]. CVS and Cardinal acknowledge that CVS will handle,
[***] manufacturer or supplier with which [***].
CVS will pay [***] for all of such [***] fees relating [***] hereunder,
including, but not limited to, [***] delivery and [***], reporting, EDI
transactions, which will be [***].
CVS' account will be adjusted in accordance with the following procedure:
1) Once per week, Cardinal will [***]. Cardinal will [***] and will provide said
information to CVS upon request in a mutually acceptable electronic format.
2) Cardinal will [***] received by Cardinal which has been [***]. CVS may [***].
Cardinal may, at its sole discretion, correspondingly [***].
3) In addition, Cardinal [***]. CVS and Cardinal recognize that this general
process will vary [***] with respect to the methods as well as the associated
timelines. That being said, CVS [***]. CVS will use all reasonable means to
expeditiously resolve identified issues to the satisfaction of all associated
parties. For [***], Cardinal will [***].
38
4) At the end of each calendar week, Cardinal will [***] and CVS will [***].
This [***] will consist of [***] from the following detailed transactions
completed in the current calendar week: [***] Cardinal will [***]. Accordingly,
Cardinal will [***]. Cardinal may not [***]. CVS, at its discretion, may notify
Cardinal in writing in order to change either of the [***] detailed in the
preceding sentence. Cardinal will not [***]. Furthermore, CVS stipulates [***].
Therefore, Cardinal may [***]. In addition, upon Cardinal's request (as often as
monthly), CVS will provide Cardinal on a confidential basis (subject to Section
17 of this Agreement) a report that summarizes [***]. Cardinal will not contact
any manufacturer related to the information contained in [***]. In return for
Cardinal's strict confidentiality as it pertains to [***], CVS will [***] listed
in the [***]. Any [***] memo identified in the [***] shall be [***]. CVS will
not be financially responsible if Cardinal takes actions that are not consistent
with this Section 10 (b) Disclosure Schedule.
The [***] will not be subject to Section 16 of this Agreement; instead the
following audit process will apply. Not more than once in any [***] period, and
following [***] advance written notice to CVS, Cardinal will have the right to
appoint an agent(s) (as further described below) to review those relevant
records applicable to such [***]. Said audit will be strictly limited to
verifying the following: 1) [***], and 2) that [***]. No other terms or
conditions contained within the [***] or any other information gained through
such audit process shall be disclosed to Cardinal. Cardinal may only review
records relating to the [***] through an employee of one of the top national
accounting firms deemed reasonably acceptable to CVS (i.e., not a Cardinal
employee). Any such review will be limited to [***] of historical information as
of the date such review begins. The information will be subject to a
confidentiality agreement prepared by CVS and signed by Xxxxxxxx and its
agent(s) who will have access to the information prior to beginning the review.
Notwithstanding the foregoing, Cardinal may only appoint agents who are
employees of one of the top national accounting firms, as may be deemed
reasonably acceptable to CVS.
In addition, the parties hereby acknowledge and agree that upon reasonable
written request from Cardinal, CVS shall deliver to Cardinal a [***]. The [***]
provided will indicate that: (i) CVS has [***], (ii) CVS will [***] and (iii)
Cardinal has, and will have, [***] contained in the [***] so long as Cardinal
does not take actions that are inconsistent with the provisions of this
Disclosure Schedule.
If Cardinal believes it will be harmed due to [***], then Cardinal may at its
option [***]. This resolution process will be executed so that the related
transactions [***]. With that being said, CVS will work with Cardinal to resolve
all [***] to the mutual satisfaction of both parties.
5) As long as CVS causes the [***] (if applicable) to transmit to Cardinal
information required by Cardinal [***] acceptable to Cardinal, then Cardinal
will [***]. However, due to the excessive labor expenses Cardinal will incur if
the information is not transmitted in an [***] acceptable to Cardinal, including
but not limited to [***], CVS will [***]. In addition, Cardinal will use its
reasonable efforts to notify CVS promptly if the [***] is unable to deliver the
required information in [***].
39
With the weekly credit information, Cardinal will [***]. As well, as often as
monthly, Cardinal will provide CVS with [***]. Cardinal [***].
If Cardinal [***], Cardinal will [***].
[***]
If Cardinal is unable to execute the process detailed within this disclosure
schedule with [***] for any reason, then CVS may [***] in accordance with the
financial process established within this disclosure schedule. Cardinal may, at
its sole discretion, correspondingly [***] according to its [***] to the
applicable manufacturer or supplier. With that being said, CVS will work with
Cardinal to resolve [***] to the mutual satisfaction of both parties.
[***]
CVS currently [***]. In the event that [***] (Pharmacies and CVS Pharmacy DCs,
if applicable). Notwithstanding the foregoing, Cardinal will not [***]. It will
be [***] sole responsibility [***] (with copy to [***] subject to Section 13)
[***] that CVS utilizes its [***].
Cardinal and CVS may mutually agree to modify this [***] in writing from time to
time, except where required by law (in which case, Cardinal or CVS may modify
this [***] without mutual agreement).
40
SECTION 11(h) DISCLOSURE SCHEDULE
[***]
[***] Agreement [***] to Section 11(h) [***] the expiration of the Initial Term,
then [***] within [***] after the date of [***], an amount equal to [***] (the
"[***]").
In the event [***] this Agreement [***] pursuant to Section 11(h) [***] the
expiration of the Initial Term, then [***] an amount equal to [***] within [***]
after the date of [***] (the "[***]").
The parties hereby acknowledge and agree that the amount of the [***]
represents, among other factors, [***] during the Initial Term of this
Agreement. The parties hereby acknowledge and agree that the amount of the
[***], among other factors, a [***] during the Initial Term of this Agreement.
Furthermore, the parties acknowledge and agree that the [***] negotiated in good
faith and [***]. Finally, upon [***] of this Agreement for any reason, CVS will
work with Cardinal in accordance with a reasonable schedule agreed to by the
parties so that all outstanding amounts due and owing to Cardinal are paid [***]
date and all outstanding issues are resolved.
41
SECTION 12 DISCLOSURE SCHEDULE
[***]
The goal of the [***] is to [***] under which Cardinal will [***] which are or
become part of this Agreement. The parties agree and acknowledge that this [***]
is part of this Agreement, and is not a separate or distinct agreement.
Notwithstanding anything in this Agreement to the contrary, the [***].
The [***] is designed to [***]. CVS will [***].
As part of the [***], Cardinal will [***] (in addition to [***]) for the
respective [***] during the term of this Agreement. The [***] will be faxed and
subsequently mailed in hard copy form to CVS' Manager of Wholesaler Programs.
Additionally, Cardinal will [***] with the [***] detailed in Section 2(b)
Disclosure Schedule [***]. In return for [***] and the [***], Cardinal [***]
through certain [***] as described below.
[***] as of the execution of this Agreement with the exception of [***] (as
detailed in and subject to Section 12 Disclosure Schedule) . Cardinal will
[***]. In return for [***] from [***] until [***], by [***], Cardinal will
[***]. The timing of [***].
CVS will not be required to [***] sole determination. The [***] Exhibit below
details [***] CVS will [***] to Section 12 Disclosure Schedule) and the
corresponding [***] to be amended in writing pursuant to Section 13 upon mutual
agreement of CVS and Cardinal. While CVS and Cardinal may both agree that it is
in the best interest of both parties to [***] and will occur at [***].
CVS is under no obligation to [***] at its sole discretion. With that said, CVS
and Cardinal may [***] sole discretion. So that Cardinal and CVS can [***],
Cardinal will provide to CVS in an electronic format a detailed weekly report
detailing said [***] The [***] will include but not be limited to the following
elements as it pertains to Cardinal [***]. As it pertains to [***] Report only,
Cardinal will [***]. All other data elements will be updated [***] and
immediately sent to CVS [***] accurately representing Cardinal's [***] available
to CVS as of the creation of the [***].
[***]
For all of [***] etc, CVS will [***] within [***] of the end of each CVS fiscal
quarter in the form of [***] (in addition to [***]) [***] during the term of
this Agreement. [***]. CVS and Cardinal will agree with [***].
For example; [***], then Cardinal will [***].
Further terms and conditions of the [***] are as follows:
42
1) CVS and Cardinal will [***] within [***]of the respective CVS fiscal
month's end or as soon as practical.
2) The [***] will not be applied [***]. The [***] will be automatically
applied [***].
3) CVS contract pricing on [***].
4) The [***] is based on the assumption that Cardinal will not [***].
5) Cardinal will not [***]. However, Cardinal will [***]:
a. [***].
b. [***].
c. [***].
6) At the start of this Agreement, Cardinal will [***]. To that end,
CVS and Cardinal have agreed that [***] under this Agreement.
7) [***] For example, if [***].
8) For all [***].
9) If CVS [***], then Cardinal will not [***].
10) If CVS [***] (as defined below) [***], then Cardinal will not [***].
[***]
As a function of the [***], Cardinal will [***] as defined below. Through the
[***], Cardinal will [***] as further defined below. Notwithstanding anything
else in this Agreement to the contrary, Cardinal will [***].
The "[***]" for the [***] are limited to:
[***]
[***]
[***].
Further terms and conditions of the [***] are as follows:
1) CVS will [***]; CVS will not be required to [***].
2) CVS [***]to include but not limited to:
[***]
3) [***]In the event that [***] (Pharmacies and CVS Pharmacy DCs, if
applicable). Notwithstanding the foregoing, Cardinal will [***]. It will
be [***] sole responsibility to notify [***] in writing (with copy to
[***] subject to Section 13) [***] related to [***].
43
4) CVS will only accept product [***] to CVS Pharmacy DCs that has at least
[***]. All products shipped with less than [***] will be considered
"[***]". On an exception basis, CVS will [***] with at least [***].
However, both parties agree that no more than [***]. In addition, upon CVS
request (as often as monthly), Cardinal will provide CVS a [***]. The
[***] will contain all [***] and will [***] (both CVS and Cardinal agree
that the [***] will be made available to CVS no later than September 1,
2004). Notwithstanding anything in this Agreement to the contrary, at no
time will Cardinal ship [***] with less than [***] to CVS Pharmacy DCs.
With that said, CVS will [***].
Additional terms and conditions of the [***] are as follows:
1. Term - The [***] will commence as of [***], and terminate upon [***].
2. [***] - Cardinal will [***]
3. [***] - If Cardinal's [***], and if CVS is [***] then CVS will, upon
request by Cardinal, [***]. With respect to the foregoing [***], CVS will
[***]. CVS will [***].
(a) [***]. On the same day as CVS receives a shipment of [***]
ordered as part of a [***] related to this [***], CVS will [***].
Cardinal will [***]. CVS will [***] and CVS will [***] based on the
applicable payment terms. CVS will [***] and Cardinal will [***].
The process outlined in the Section 2(b) Disclosure Schedule will
apply to any discrepancies.
(b) [***]. As it pertains to [***] purchases only, on the same
day as CVS receives the shipment of [***]
As it pertains to the payment of [***], Cardinal will receive an invoice
from the applicable manufacturer for the [***], and Cardinal will [***],
based on the applicable payment terms. As the [***] for such [***] in
accordance with the terms of this Agreement. The process outlined in the
Section 2(b) Disclosure Schedule will apply to any discrepancies.
4. Purchase Information - CVS will provide Cardinal with [***] on behalf of
the CVS Pharmacy DCs pursuant to the [***]. Such information will include
details regarding all [***] and other information reasonably required by
Cardinal to administer the [***]. To assist Cardinal with [***], CVS will
provide Cardinal with information reasonably requested by Cardinal
including but not limited to [***], and a change in CVS Pharmacy DC that
services a particular Pharmacy.
5. Limitations - All [***]. All [***]. CVS will not [***] (outside of this
[***]) on behalf of the Pharmacies [***]. It is understood and agreed that
Cardinal will not [***]. Furthermore, the parties acknowledge and agree
that all information associated with the [***] is confidential information
subject to the provisions of Section 17 of this Agreement.
44
6. Records, Audit and Confidentiality - The [***] is subject to the record
keeping and audit provisions set forth in Section 16 of this Agreement.
Cardinal may [***]. Cardinal will notify CVS in writing (subject to
Section 13) prior to the [***] Further, Cardinal will use reasonable
efforts to [***]CVS if needed.
7. [***] - All payments for invoicing under the [***] will be made [***].
8. Waiver - [***]
9. [***] Relating to the [***] - CVS and Cardinal acknowledge that either
party may from time to time may, in good faith,[***]. In the event that
either party [***], each party agrees to use all reasonable efforts to
resolve all such [***] as expeditiously as possible on a fair and
equitable basis. To that end, Cardinal and CVS will assemble a panel
consisting of [***] (the "EXECUTIVE COMMITTEE") to resolve [***] and
address other issues as they may determine. With respect to [***], a copy
of the terms of this Agreement, as amended from time to time, agreed upon
facts and [***], and a concise summary of the basis for each side's
contentions will be provided to the executives who will review the same,
confer, and attempt to reach a mutual resolution of the issue within [***]
following either party's receipt of notice of [***].
[***] EXHIBIT.
[***] [***]
----- -----
[***] [***]
45
SECTION 19 DISCLOSURE SCHEDULE
INSURANCE
During the term of the Agreement, CVS and Cardinal will each maintain commercial
general liability insurance having a limit of not less than $[***], pursuant to
one or more insurance policies with reputable insurance carriers. Upon request,
each party will deliver to the other certificates evidencing such insurance.
Cardinal's certificate of insurance to CVS will reflect that CVS [***]. Neither
party will cause nor permit such insurance to be canceled or modified (exclusive
of appropriate replacement policies) to materially reduce its scope or limits of
coverage during the term of the Agreement.
46
