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AMENDMENT TO CORE DISTRIBUTION
AGREEMENT
THIS AMENDMENT
TO CORE DISTRIBUTION AGREEMENT (“ Amendment ”)
is entered into as of December 22, 2005 (the “
Effective Date ”), by and between Connetics
Corporation (“ Connetics ”) and McKesson
Corporation (“ McKesson ”). Connetics and
McKesson entered into a Core Distribution Agreement dated
December 23, 2004 (“ Agreement ”).
Capitalized terms not defined herein shall have the meaning
ascribed to such terms in the Agreement. The Parties desire to
amend the Agreement in the manner set forth in this
Amendment.
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1.
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(a) The
following definition in Article 1 of the Agreement is
hereby deleted and replaced in its entirety as follows:
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Commitment
Period . “Commitment
Period” means January 1, 2006 through and including
December 31, 2006, unless this Agreement is terminated earlier
under the provisions of Article 4 .
(b) The following
definition is hereby added to Article 1 of the
Agreement:
SRC
Program . “SRC
Program” means McKesson’s Strategic Redistribution
Center, combining a centralized, single-shipping point for all
Products and improved inventory management and shipping
services.
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2.
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The
following bullet-point is hereby added to Section 2.1
of the Agreement:
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• All other SRC Program administrative
services.
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3.
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Subsection (c) is hereby added
to Section 2.2 of the Agreement as follows:
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(c) All
other SRC Program distribution services.
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4.
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The
first sentence of Section 2.3.1 of the Agreement is
hereby deleted and replaced in its entirety with the
following:
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2.3.1
Inventory Levels . During
the term of this Agreement, McKesson will use its best efforts to
maintain an inventory level of [**] for each SKU of each
Product.
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5.
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Section 2.3.3
of the Agreement is
hereby deleted and replaced in its entirety with the
following:
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2.3.3
Monthly Purchase .
McKesson and Connetics will jointly use best efforts to adjust
inventory levels maintained by McKesson to accurately reflect
market conditions. McKesson shall purchase Product from Connetics
monthly and each purchase shall be based upon the
inventory
** Portions of
this exhibit have been omitted and filed separately with the SEC.
Confidential treatment has been requested with respect to the
omitted portions.
level set forth
in Section 2.3.1 and shall be consistent with market
conditions. [**]
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6.
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The
bullet-points in Section 2.5.1 are hereby deleted in
their entirety, and a new sentence is hereby added following the
bullet-points, as follows:
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•
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On
hand inventory level by distribution center and any other location
and/or facility where Products are stored and/or warehoused through
the SRC Program (including the facility in Aurora, Colorado and
brokerage locations); and
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•
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On
order inventory level by distribution center and any other location
and/or facility where Products are stored and/or warehoused through
the SRC Program (including the facility in Aurora, Colorado and
brokerage locations); and
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•
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Sales out by distribution center and
any other location and/or facility where Products are stored and/or
warehoused through the SRC Program (including the facility in
Aurora, Colorado and brokerage locations).
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7.
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Article 3
of the Agreement is
hereby deleted and replaced in its entirety with the
following:
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(a) In
recognition of McKesson’s performance of the Services,
Connetics will provide McKesson with a fee equal to [**] of
McKesson’s gross purchases of Connetics Products during each
calendar quarter of the Commitment Period (the “ Service
Fee ”). In addition to the Service Fee, subject to
the
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