EXHIBIT 10.2
Confidential Materials omitted and filed
separately with the
Securities and Exchange Commission. Asterisks
denote omissions.
McKesson
Corporation
Core Distribution
Agreement
This Core Distribution Agreement
(“Agreement”) is entered into between McKesson
Corporation (“McKesson”), a pharmaceutical distributor,
and CollaGenex Pharmaceuticals (“Manufacturer”),
a pharmaceutical manufacturer.
McKesson performs certain Core Services (as
hereinafter defined) in connection with the distribution of
pharmaceutical products manufactured by Manufacturers. The parties
now wish to define more precisely the amount and manner of payment
of the consideration to be received by McKesson for its performance
of the Core Services.
Now, therefore, McKesson and Manufacturer agree
as follows:
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I.
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Obligations of
McKesson
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a.
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McKesson agrees
to provide the following core distribution services to the extent
customarily performed by a full-range pharmaceutical distributor
consistent with then current industry practices (“Core
Services”): Pick, pack, and ship Manufacturer’s product
to McKesson’s customers upon their orders therefore; transmit
852 data including inventory levels on hand and on order in
addition to aggregate sales out; transmit 867 data, not in
violation of McKesson’s contracts with customers, on an
quarterly basis; perform back-end administrative services to
support the distribution of Manufacturer’s product and the
maintenance of efficient inventory levels for servicing
customers.
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If McKesson new product launch
criteria are met McKesson will support Manufacturer’s new
product launch by stocking each distribution center with a
reasonable quantity (not to exceed [**] days).
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b.
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Services that
are not Core Services (“Value Added Services”), are not
included in this Agreement and shall be priced individually and
separate from this Agreement. Value Added Services include the
following: single point distribution through McKesson’s
Regional Distribution Center (“RDC”) or Strategic
Redistribution Center, RDC product backhaul, guaranteed service
levels, product recalls, product returns management, promotional
marketing services, rapid distribution for new product launches,
and all other services not defined as Core Services in Section I.a.
above.
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c.
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McKesson will
use best efforts to maintain Aggregate Inventory levels in the
range of [**] weeks of all products.
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d.
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McKesson agrees
not to engage in forward buying of CollaGenex products. McKesson
further agrees to buy between [**]% and [**]% of Average Monthly
Purchases based on the previous rolling six months of purchases. A
deviation from these collars due to market dynamics (i.e. customer
base change, seasonality, competitive introduction, etc) will not
be seen as a violation.
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e.
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McKesson agrees
not to sell Manufacturer’s products to other wholesalers and
secondary buying groups.
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II.
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Obligations of
Manufacturer
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a.
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Manufacturer
agrees to replenish McKesson’s inventory orders in a timely
and efficient manner. Manufacturer will utilize purchase order
numbers provided by McKesson when placing orders on behalf of
McKesson.
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b.
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Manufacturer
will use commercially reasonable efforts to ensure that
McKesson’s inventory replenishment is operational,
ex
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