<PAGE>
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
<PAGE>
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
<PAGE>
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 Payee agrees that [***] was [***]. Payee
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
<PAGE>
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
<PAGE>
[***]
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
<PAGE>
Cardinal
[***] to all CVS locations ([***], and support locations)
access
to
Cardinal.com.
(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
<PAGE>
-
[***]
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
<PAGE>
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
<PAGE>
(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
Cardinal'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
<PAGE>
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
7000 Cardinal Place
Woonsocket, RI 02895
Dublin, Ohio 43017
Attn: Vice
President,
Attn: Senior Vice
President,
Pharmacy Merchandising
Retail Sales and Marketing
Telecopy:
(401) 769-9473
Telecopy: (614)
757-8787
with copy
to:
with copy to:
General
Counsel
Chief Legal Officer at the same address
at the
same address
Telecopy: (614)
757-8919
Telecopy:
(401) 765-7887
10
<PAGE>
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
<PAGE>
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
<PAGE>
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.
Cardinal 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
<PAGE>
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. SE
