FIRST AMENDMENT TO WHOLESALE SUPPLY AGREEMENT[GRAPHIC OMITTED]

 

<PAGE>

 

 

                                                                  Exhibit 10.03

 

[***] indicates the omission of confidential portions for which confidential

treatment has been requested. Such confidential information has been filed

separately with the Commission.

 

 

                               FIRST AMENDMENT TO

                   WHOLESALE SUPPLY AGREEMENT[GRAPHIC OMITTED]

 

This first amendment ("FIRST AMENDMENT") dated May 26, 2004 amends the Wholesale

Supply Agreement dated January 1, 2004 ("AGREEMENT") between CVS and Cardinal

Health. CVS and Cardinal Health ("PARTIES") desire to enter into this First

Amendment to amend Sections 1(a), 1(b), 3(c), 6(d), 7(b), 10(a), and 12

Disclosure Schedules all as more particularly set forth below.

 

The Parties agree as follows:

 

      1.     Effective Date of Amendment. This First Amendment shall be effective

            [***]. In the event that the [***] does not close on or [***],

            then this First Amendment shall become null and void and shall be of

            no force or effect.

 

      2.     Scope. Notwithstanding anything else in the Agreement or this First

            Amendment, in no event will CVS be required to designate [***] as a

            [***] as a CVS [***] under the Agreement, if such [***] to [***] by

            CVS for any reason, or which, [***] by CVS would or could, in CVS'

            reasonable business judgment, [***], or [***].

 

      3.     Disclosure Schedules. The Agreement is amended by deleting therefrom

            the following disclosure schedules in their entirety:

 

 

                  "Section 1(a) Disclosure Schedule",

                  "Section 1(b) Disclosure Schedule",

                  "Section 3(c) Disclosure Schedule",

                  "Section 6(d) Disclosure Schedule",

                  "Section 7(b) Disclosure Schedule",

                  "Section 10(a) Disclosure Schedule", and

                  "Section 12 Disclosure Schedule"

 

            and replacing them with the following new Disclosure Schedules:

 

                  "Section 1(a) Disclosure Schedule",

                  "Section 1(b) Disclosure Schedule",

                  "Section 3(c) Disclosure Schedule",

                  "Section 6(d) Disclosure Schedule",

                  "Section 7(b) Disclosure Schedule",

                  "Section 10(a) Disclosure Schedule", and

                  "Section 12 Disclosure Schedule"

 

 

Executed First Amendment 7-26-04        1

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            attached to this First Amendment and incorporated into this First

            Amendment and into the Agreement by this reference, which shall be

            attached by the Parties to their respective copies of the Agreement.

 

      4.     Generally. It is the Parties' intent for the Agreement and this

            Amendment ([***]) to be applied and construed as a single

            instrument. The Agreement, as modified by this First Amendment,

            remains in full force and effect and constitutes the entire

            agreement among the Parties regarding this subject matter and

            supersedes all prior or contemporaneous writings and understandings

            among the Parties with respect thereto. This First Amendment will be

            binding on the Parties and their successor and assigns. If any term

            or provision of this First Amendment is determined to be illegal or

            unenforceable by a court of competent jurisdiction, the remaining

            terms and provisions of this First Amendment and the Agreement will

             remain in full force and effect. Only a subsequent writing signed by

            both Parties may amend this First Amendment or further amend the

            Agreement.

 

 

CVS Pharmacy, Inc                          Cardinal Health*

 

By: /s/ Matthew J. Leonard                 By: /s/ Michael J. Bender

    ----------------------------               ----------------------------------

Print Name: Matthew J. Leonard             Print Name: Michael J. Bender

            --------------------                       --------------------------

Title: VP Pharmacy Merchandising           Title: EVP, Retail Sales and Marketing

       -------------------------                  -------------------------------

 

*The term "CARDINAL HEALTH" means the following pharmaceutical distribution

companies: Cardinal Health 106, Inc. (formerly known as James W. Daly, 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 Whitmire

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.

 

 

 

Executed First Amendment 7-26-04        2

 

<PAGE>

                                               SECTION 1(A) DISCLOSURE SCHEDULE

                                                           AMENDED MAY 26, 2004

 

 

           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 [***]. Furthermore, CVS will designate Cardinal [***]

which are located in the States of [***] and which Cardinal was designated as

the [***] (approximately [***]), and which remain open and continue to operate

[***].

 

In the event CVS [***] representing: (a) [***] of CVS' Pharmacies as of [***],

then CVS will designate Cardinal as [***] 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.

 

 

 

Executed First Amendment 7-26-04        3

 

<PAGE>

 

 

 

                                               SECTION 1(B) DISCLOSURE SCHEDULE

                                                           AMENDED MAY 26, 2004

 

                                      [***]

 

                                  TOTAL DC LIST

 

       CVS New York, Inc.                    CVS D.S., Inc.

       Three Berry Drive                     10017 Kingston Pike

       Lumberton, NJ 08048                   Knoxville, TN 37922

      

       CVS Pharmacy, Inc.                     CVS IN Distribution, Inc.

       150 Industrial Drive                  7590 Empire Drive

       North Smithfield, RI 02896            Indianapolis, IN 46219

      

       CVS Texas Distribution L.P.           CVS Garland TX Distribution, L.P.

       700 CVS Drive                         4409 Action Street

       Ennis, TX 75119                       Garland TX 75042

       (expected open date TBD)

 

       CVS Conroe TX Distribution, L.P.      CVS Orlando FL Distribution, L.L.C.

       Name TBD                               Name TBD

       100 Trade Center Blvd.                8201 Chancellor Drive

       Conroe TX 77385                       Orlando FL 32809

 

 

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 one [***] 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 [***] Cardinal as the [***] to such [***] in a timeframe

so as not to compromise CVS' business operations. In no event will CVS [***].

 

 

Executed First Amendment 7-26-04        4

<PAGE>

 

                                               SECTION 3(A) DISCLOSURE SCHEDULE

                                                           AMENDED MAY 26, 2004

 

 

                            PHARMACIES PURCHASE PRICE

 

PHARMACY [***].

 

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 less than [***] 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.

 

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 Cost of Goods for such item [***].

 

 

Executed First Amendment 7-26-04        5

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                                               SECTION 3(C) DISCLOSURE SCHEDULE

                                                           AMENDED MAY 26, 2004

 

                                      [***]

 

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 [***] 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 [***] of the [***], then such [***].

Regardless of whether the [***] are included or excluded in the determination of

the [***], said [***]. To that end, it has been agreed that the [***] will not

be included in the determination of the [***] volume category only, until [***].

However, the [***] and [***] of such Pharmacies will [***] (Pharmacies excluding

[***]).

 

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.

 

 

Executed First Amendment 7-26-04        6

<PAGE>

 

 

                                                SECTION 6(d) DISCLOSURE SCHEDULE

                                                           AMENDED MAY 26, 2004

 

                                 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:

 

                      ----------------------------------------------

                      [***]                                    [***]

                       ----------------------------------------------

 

 

Executed First Amendment 7-26-04        7

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                                               SECTION 7(B) DISCLOSURE SCHEDULE

                                                           AMENDED MAY 26, 2004

 

                            [***] FOR THE PHARMACIES

 

CVS will be [***] for the following [***] Rx Product [***]:

 

    ------------------------------------------------------------------------

                       [***]                                [***]

    ------------------------------------------------------------------------

                       [***]                               [***]

    ------------------------------------------------------------------------

 

Cardinal will provide CVS with a monthly report detailing th