PRIME VENDOR AGREEMENT FOR LONG-TERM CARE PHARMACIES

Exhibit 10.4

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

PRIME VENDOR AGREEMENT

FOR LONG-TERM CARE PHARMACIES

This Prime Vendor Agreement for Long-Term Care Pharmacies (“Agreement”) is made as of August 1, 2007 (“Effective Date”) by AmerisourceBergen Drug Corporation, a Delaware corporation (“ABDC”), and PharMerica Corporation, a Delaware corporation, on behalf of itself and its wholly owned subsidiaries (“Customer”).

A. ABDC is a national distributor of pharmaceutical and other products, including prescription (“Rx”) and over-the-counter (“OTC”) pharmaceuticals, nutritional, health and beauty care (“HBC”) and home health care (“DME”) products (“Products”), and related services (“Services”).

B. Customer, Kindred Healthcare, Inc. (“Kindred”), a Delaware corporation, AmerisourceBergen Corporation, a Delaware corporation, PharMerica, Inc., a Delaware corporation (“PharMerica”), and certain other parties have entered into a Master Transaction Agreement dated as of October 25, 2006 (“Master Transaction Agreement”), pursuant to which, as of the Effective Time (as defined in the Master Transaction Agreement), PharMerica and certain of its subsidiaries (“PharMerica LTC”) and Kindred Pharmacy Services, Inc., a Delaware corporation, and certain of its subsidiaries (“KPS”) will be wholly owned subsidiaries of Customer, all as provided in the Master Transaction Agreement.

C. Pursuant to the Master Transaction Agreement, execution of this Agreement is a condition to the consummation of the transactions contemplated thereby.

D. Customer, through its wholly owned subsidiaries PharMerica LTC and KPS and their respective direct and indirect subsidiaries, owns, operates and manages approximately 130 long term care pharmacies as of the Effective Time (as defined in the Master Transaction Agreement) (collectively, the “Facilities”).

E. In addition to Facilities, Customer also manages certain acute care pharmacies for hospitals and other parties. Acute care pharmacies are not subject to this Agreement and will have their own, separately negotiated agreements for the purchase of Products and Services.

F. ABDC and PharMerica, on behalf of PharMerica LTC are parties to that certain Prime Vendor Agreement, dated January 19, 1998, as amended; ABDC and Broadlane, Inc. are parties to that certain Agreement for Distribution Services, dated December 1, 2002, as amended (the term of which expired on December 31, 2006), to which Kindred and its subsidiaries, including KPS, are third party beneficiaries; and ABDC and Kindred and its subsidiaries, including KPS, are parties to that certain interim Prime Vendor Agreement, dated December 15, 2006, and effective January 1, 2007 (collectively, “Prior Agreements”).

G. The parties intend by this Agreement to terminate the Prior Agreements with respect to PharMerica LTC and KPS and to set forth their obligations to each other for an arrangement under which ABDC will provide Products and Services to Customer following the Effective Time (as defined in the Master Transaction Agreement) (“Program”).

NOW THEREFORE , the parties agree as follows:

1. PRICING AND PAYMENT TERMS

ABDC will be the Primary Vendor of all requirements of Customer’s Facilities for Products. Customer will pay, within terms, Product costs and Program fees pursuant to payment terms in Exhibit “1” (“Pricing/Payment Terms”). “Primary Vendor” means Customer purchases from ABDC (including Products purchased from ABDC * that are administered by *) no less than * of all prescription pharmaceutical Products it purchases, as verified *, and meets * in Paragraph 5(A) of the Pricing/Payment Terms. Notwithstanding the foregoing, Customer may

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purchase directly from a manufacturer if, due to a product shortage or allocation, the manufacturer requires that Customer do so. In accordance with Section 4 of this Agreement, the foregoing * will not apply to * with existing agreements with other distributors. Orders for Products will be electronically transmitted (including Schedule II controlled substances when allowed) and will describe Products that ABDC will provide to Customer, the quantity and designated delivery location. Other than supplier back-ordered Products, ABDC will make reasonable efforts to deliver orders placed by ABDC’s normal order cut-off time by the next delivery day. All payment plans must be by electronic funds transfer (EFT). The * in the Pricing/Payment Terms, terms, and conditions under this Agreement * must be * contracting with ABDC as of the date hereof. A * is a third-party pharmacy customer with * purchase volume and *, taking into consideration *.

2. PRxO GENERICS PURCHASE PROGRAM

Customer must participate in the generic formulary purchase program (“PRxO Generics Purchase Program”) as provided in this Agreement and pursuant to standard PRxO Generics program requirements as amended from time to time by ABDC. The PRxO Generics Purchase Program is a * which provides Customer *. Customer is able to benefit by having ABDC administer the PRxO Generics Purchase Program for a *, as specified in Paragraph 2 of the Pricing/Payment Terms. Accordingly, Customer will purchase from ABDC * of its generic pharmaceutical purchases, including the “Top 100” generic pharmaceutical Products; provided, however, that Customer may purchase any generic pharmaceuticals (including, without limitation, injectables or Products in unit-dose packages that are not available under the PRxO Generics Purchase Program) from a source other than ABDC, without impact to the requirements under this Agreement if such Products are not available under the PRxO Generics Purchase Program. The Top 100 is a list determined from time to time by ABDC of more than one hundred commonly used generic pharmaceutical Products. Customer authorizes ABDC as its sole agent to develop and implement a generic pharmaceutical Product list for the Term. With respect to each Product purchased by Customer under the PRxO Generics Purchase Program, ABDC shall use its * to provide Customer * prior to changing suppliers of such Products. Customer will purchase from ABDC each * no less than the * of generic pharmaceutical Products as set forth in paragraph 5(A) of the Pricing/Payment Terms. Any changes by ABDC in its PRxO Generics Program or in the Top 100 list as applicable to Customer will be non-discriminatory, generally applicable to ABDC’s customers and consistent with the terms of this Agreement.

3. SPECIALTY DISTRIBUTIONS AND *

ABDC will provide to Customer * that are in * due to, for example, manufacturer shortages or unanticipated demand, including any specialty Products or other Products with limited distribution or supply. ABDC makes such allocations based upon *. Upon request, ABDC will attempt to acquire short-supply Products and, upon their purchase by Customer, such inventory would be * and would not *. Additionally, upon request, ABDC can order short-supply Products, which Products can be “shipped upon arrival” to Customer’s Facilities.

4. CUSTOMER LOCATIONS & DELIVERIES

ABDC will deliver Products to each Facility five days a week (Monday – Friday), once a day except holidays and warehouse physical inventory days. ABDC will provide * at its distribution centers * hours a day, * days a week, for which ABDC will provide Customer with emergency contact information for after-hours access. Additionally, Customer will be entitled to *.

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* delivery per * at *. Customer will be charged * for each additional emergency order delivered to the Facility. Customer may receive * emergency will-call order per Facility * (as long as it is picked up by Customer from ABDC’s distribution center during hours such distribution center is staffed) *. ABDC will use * to meet a requested delivery time for emergency orders. If ABDC cannot do so, Customer may fill emergency orders outside the Program on such occasions using another provider notwithstanding * in this Agreement. A newly acquired Facility shall become a Facility under this Agreement upon acquisition of such facility by Customer, provided that any newly acquired facility with an existing agreement with another distributor will become a Facility under this Agreement upon the earlier of expiration of such existing agreement or the date Customer may terminate such agreement according to its terms, with or without cause, without breaching it or *. Service to Facilities in Alaska, Hawaii and U.S. territories may be subject to a delivery surcharge.

5. RETURNED GOODS POLICY

Customer will only return Products to ABDC in accordance with ABDC’s enhanced policy for return Products, a copy of which is attached as Exhibit 4 (“Returns Policy”). If Customer returns more than * of its OTC Net Purchases, or * of its pharmaceutical Net Purchases in any month, Customer may be assessed an additional restocking fee over any standard stocking fee in the Returns Policy. Customer will return only Product purchased from ABDC for which Customer has submitted the invoice number and date of purchase. ABDC may reject returns not accompanied by the invoice number and date of purchase or that exceed in amount either the * return limit or the amount on the referenced invoice number. ABDC reserves the right to refuse all future returns from Customer in the event that Customer submits any counterfeit Product for return. The calculation of Customer returns, Customer OTC Net Purchases, and all other calculations under this Agreement related to the volume of Customer’s purchases of Products will be based on *.

6. ADDITIONAL SERVICES & PROVISIONS

A. Services are listed in Exhibit “2” . Terms, conditions and other provisions are set forth in Exhibit “3” (“Provisions”).

B. ABDC may, from time to time, develop policies and procedures relative to new or existing Services offered to customers, on an interim or as-needed basis. If ABDC develops such policies or procedures or changes current ones, ABDC will notify Customer in writing at least thirty (30) days before such changes are effective. Any changes by ABDC that apply to Customer from time to time under this Agreement, including its exhibits, must be non-discriminatory, generally applicable to ABDC’s customers, and consistent with the terms of this Agreement.

7. TERM OF AGREEMENT

A. The parties intend by this Agreement to replace and terminate the Prior Agreements as of the Effective Date. Except as otherwise agreed, rights and obligations of the parties under each Prior Agreement that accrued with respect to PharMerica or KPS prior to the Effective Date will survive and be satisfied by Customer according to terms of each Prior Agreement.

B. Subject to termination of this Agreement pursuant to Paragraph 5 of the Provisions, the Term will be from the Effective Date until July 31, 2012. Unless either party provides notice of termination at least 90 days prior to the expiration of the Term, this Agreement will continue on a month-to-month basis upon expiration of the Term (“Extended Term”), subject to termination pursuant to Paragraph 5 of the Provisions.

8. RECORDS

To the extent required by 42 U.S.C. §1395x(v)(1), until four (4) years after termination of this Agreement, ABDC will make available upon written request to the Secretary of the U.S. Department of Health & Human Services, the Comptroller General, or their authorized representatives, a copy of this Agreement and

[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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all records required to certify the nature and extent of costs of Products and Services provided by ABDC under this Agreement. ABDC will ensure, to the extent it carries out its duties through a subcontract with a value or cost of $10,000 or more in a twelve (12) month period with a related organization, such subcontract will contain similar provisions. Notwithstanding the foregoing, ABDC will have no obligation to make public documents subject to attorney-client privilege.

9. NOTICES

Notices must be in writing and sent certified mail, prepaid, return receipt requested, or sent by facsimile to the address or facsimile number below. Parties may change this information by written notice to the other party. Pursuant to the Telephone Consumer Protection Act of 1991, 47 U.S.C. §227, Customer consents to receiving notices, including product updates, recalls, new product launches and programs, advertisements and other marketing materials by telephone facsimile (“fax”) machine from ABDC, its affiliates and their related companies, to the fax number set forth below.

10. EXHIBITS

The following exhibits to this Agreement are incorporated by this reference.

[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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IN WITNESS WHEREOF, the parties have had a duly authorized officer, partner or principal execute this Prime Vendor Agreement as of the Effective Date.

[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT 1 TO

PRIME VENDOR AGREEMENT

PRICING / PAYMENT TERMS

In addition to payment for Products, Customer will pay ABDC the following Program and other fees for ABDC’s Product distribution and Services for Customer and its Facilities. Except as otherwise provided, payments are due within * days from ABDC’s invoice date. Pricing does not reflect any administrative or other fee to a group purchasing organization or buying group (“GPO”). If Customer contracts with a GPO, Customer will pay any such fees to the applicable GPO (or any increase in such fees) during the Term. In any event, ABDC will not pay a GPO fee unless and until a group designation form signed by Customer is filed with ABDC.

1. PROGRAM FEES

A. Price of Goods . Customer will pay the following Price of Goods based upon the definition of “Cost” below for Products other than Products and Services designated as ABDC Special Price Products. ABDC will add to the billed amount any applicable sales, use, business and occupation, gross receipts or other tax. Price of Goods shall be fixed * for the * quarters of the Term. Thereafter, Price of Goods may be adjusted in accordance with the following matrix at the beginning of the sixth calendar quarter of the Term and each quarter thereafter based upon Customer’s actual total net purchase volume over the immediately prior quarter.

Selected Products *.

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B. Additional * Services . The additional * Services in Exhibit “2” will be provided to Customer’s Facilities, at the election of Customer’s Facilities, by ABDC * if Customer maintains ABDC as its Primary Vendor. In the event Customer does not maintain ABDC as its Primary Vendor, such Services will be provided *.

C. Contract Administration . In administering Customer’s supplier contracts, including those established by Customer on its own or those established by a GPO under which Customer participates, Customer must (i) provide a copy of new contracts, (ii) comply with supplier’s terms, (iii) use all products for its “own use” (as defined in judicial and legislative interpretations), (iv) notify ABDC at least * days before it changes suppliers, and (v) upon changing suppliers, assist ABDC in disposing of any excess inventory acquired for Customer. Additionally, Customer will notify ABDC before discontinuing purchases of any special inventory that it has requested that ABDC stock (whether or not pursuant to a contract) and assist ABDC in disposing of any excess of such inventory. Promptly after receiving notice of the denial of, or failure to pay, GPO or manufacturer/supplier chargebacks, ABDC shall provide Customer written notice of any unpaid chargebacks, and when invoiced, Customer will promptly reimburse ABDC for any unpaid chargebacks that are (x) denied by a GPO or manufacturer/supplier or (y) not paid within * days and, in either case, Customer will look solely to such GPO or manufacturer/supplier for redress; provided that the unpaid chargeback is processed through ABDC’s standard credit and rebill procedures.

2. PRxO GENERICS PURCHASE PROGRAM

A. Administration Services . ABDC will have full responsibility for administering the PRxO Generics Purchase Program, including supplier selection, Product selection, Product price negotiation, contract administration, purchasing, automated compliance assurance, contract management and reporting. Under the PRxO Generics Purchase Program, ABDC will invoice Customer at * under *, * to Customer, * to ABDC’s * .

B. * . ABDC will provide such PRxO Generics Purchase Program services for * of the Contrac