PRIME VENDOR AGREEMENT

Supply Agreement

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This Supply Agreement involves

LONGS DRUG STORES CORP | AmerisourceBergen Drug Corporation, | Longs Drug Stores California, Inc.,

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Title: PRIME VENDOR AGREEMENT
Governing Law: California Date: 6/1/2006
Industry: RTDRUG Sector: SERVIC

Search Supply Agreement by:

Exhibit 10.1

PRIME VENDOR AGREEMENT

By and Between

AmerisourceBergen Drug Corporation, a Delaware corporation

And

Longs Drug Stores California, Inc., a California corporation

TABLE OF CONTENTS


1. DEFINITIONS; EXHIBITS; RULES OF CONSTRUCTION		1
A.	Definitions	1
B.	Exhibits and Attachments	2
C.	Rules of Construction	2
D.	Prior Agreement	2
2. SUPPLY AND PURCHASE COMMITMENTS		3
A.	Products	3
B.	Pharmacies	5
C.	Contract Administration	6
3. DUTIES OF ABDC		7
A.	Orders and Services	7
B.	Longs Locations and Deliveries	7
C.	Delivery Times	8
D.	Title And Risk Of Loss	8
E.	Emergency Orders	8
F.	Adjusted Service Level Commitment	8
G.	Manufacturer Agreements	8
4. DUTIES OF LONGS		8
A.	Late Fees	8
B.	Longs’ Affiliates	8
5. IMPLEMENTATION OF CONTRACT		9
A.	Orders and Deliveries	9
B.	Returned Goods	9
C.	Services in Hawaii	9
D.	Central Fill Pharmacy Service	9
E.	Program	9
F.	Additional Value-Added Services	9
G.	Additional Facilities	9
H.	RePack Program	9
6. RECORDS; AUDITS		9
A.	Records	9
B.	* Files	9
C.	*	10
D.	Periodic Audit	10
E.	Audit Fees	11
F.	Contract Compliance	11
7. TERM OF AGREEMENT		11
A.	Term	11
B.	ABDC’s Termination Rights	12
C.	Longs’ Termination Rights	12
D.	Mutual Termination Rights	13
E.	Survival Upon Termination	13
F.	Automatic Extension	13
G.	*	13

*	Subject to a request for confidential treatment; Separately filed with the Commission.

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8. REPRESENTATIONS AND WARRANTIES		13
A.	Compliance With Laws	13
B.	Goods	13
C.	Qualified Suppliers	14
9. INSURANCE AND INDEMNITY		14
10. RECALL		15
11. FORCE MAJEURE		15
12. NOTICES		16
13. CONFIDENTIALITY		17
A.	Confidential Information	17
B.	HIPAA Compliance	17
C.	Patient Confidentiality	18
14. SOFTWARE LICENSE		18
A.	License	18
B.	Limited Warranty	18
C.	Remedy	18
15. MISCELLANEOUS		18
A.	Entire Agreement	18
B.	No Assignment	19
C.	EEO Requirements	19
D.	Independent Contractors	19
E.	No Waiver	19
F.	Severability	19
G.	Successors and Assigns	19
H.	Choice of Law; Applicable Law; Remedies	19
I.	Dispute Resolution	19
J.	Billing Disputes; *	20

EXHIBITS

EXHIBIT 1 -

PRICING / PAYMENT TERMS

EXHIBIT 2 -

* PROGRAM

EXHIBIT 3 -

ORDERS AND DELIVERY

EXHIBIT 4 -

RETURNED GOODS POLICY

EXHIBIT 5 -

SERVICES IN HAWAII

EXHIBIT 6 -

CENTRAL FILL PHARMACY SERVICE

EXHIBIT 7 -

* PROGRAM

EXHIBIT 8 -

ADDITIONAL VALUE-ADDED SERVICES

ATTACHMENTS

ATTACHMENT A - Defined Terms

ATTACHMENT B - * Category List (Fine Line Codes)

*	Subject to a request for confidential treatment; Separately filed with the Commission.

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PRIME VENDOR AGREEMENT

This Prime Vendor Agreement (“ Agreement ”) is made as of March 14, 2006 (“ Execution Date ”) by AmerisourceBergen Drug Corporation, a Delaware corporation (“ ABDC ”), and Longs Drug Stores California, Inc., a California corporation (“ Longs ”).

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

B. Longs owns and operates a chain of retail pharmacies (“ Pharmacies ”) in various states, including California, Nevada, Oregon, Washington, Hawaii and Colorado and certain central fill pharmacies, warehouses, specialty pharmacies (“ Specialty Pharmacies ”), mail order pharmacies (“ Mail Order ”), and pharmacy benefit management (“ PBM ”) operations (collectively, “ Other Facilities ”);

C. Longs and ABDC are parties to that certain RxD Warehouse and Direct Store Delivery Primary Supplier Agreement, dated February 1, 1999, as amended to date (“ Prior Agreement ”);

D. Longs and ABDC intend by this Agreement to replace and supersede the Prior Agreement and to set forth herein their obligations to each other for an arrangement under which ABDC will provide Products and Services to Longs (“ Program ”) effective as of July 1, 2006 (“ Effective Date ”); and

E. Longs and ABDC or their affiliates are parties to the following additional agreements related to the Products and Services to be supplied hereunder, each of which (as amended to date) shall remain in effect according to its terms after the Effective Date:

certain agreements between Longs and AutoMed Technologies, Inc. (“ AutoMed ”), an affiliate of ABDC;

an agreement between Longs and American Health Packaging, Inc., an affiliate of ABDC, dated as of October 15, 2002 (“ RePack Agreement ”); and

the Pharmacy Data Services Agreement, dated February 25, 2005, between the parties.

NOW THEREFORE, the parties hereto agree as follows:

1.	DEFINITIONS; EXHIBITS; RULES OF CONSTRUCTION

A. Definitions . Terms used as defined terms herein shall have the meanings as set forth in Attachment A, which includes an index to terms defined in the text of this Agreement.

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B. Exhibits and Attachments . The Table of Contents hereto sets forth a list of all Exhibits and Attachments to this Agreement, each of which is incorporated herein by reference.

C. Rules of Construction .

The term “including” means “including, without limitation” unless the context clearly indicates otherwise.

All references in this Agreement to articles, sections, exhibits or attachments, unless otherwise expressed or indicated, are to the articles, sections, exhibits or attachments to this Agreement.

References to terms set forth “herein,” obligations to be performed “hereunder,” and similar phrases shall be construed as references to this Agreement.

Words importing persons include, where appropriate, firms, associations, partnerships, trusts, corporations and other legal affiliates, including public bodies, as well as natural persons.

Words importing the singular include the plural and vice versa. Words of the masculine, feminine or neuter genders are each deemed to include the correlative words of the other genders.

All references to a number of days mean calendar days, unless expressly indicated otherwise.

The article, section and attachment headings and any table of contents (except to the extent it incorporates exhibits and attachments pursuant to Section 1(B)) are for reference and convenience only and shall not be considered in the interpretation of this Agreement.

All references herein to this “Agreement” shall include the attachments and exhibits referenced in the body of this Agreement.

D. Prior Agreement .

The term of the Prior Agreement, as amended, is agreed to be extended through June 30, 2006, and will terminate as of the Effective Date. Except as otherwise agreed, the rights and obligations of the parties under the Prior Agreement that accrued prior to its termination will not be extinguished, but will be satisfied according to the terms of the Prior Agreement. Notwithstanding the foregoing, if Longs meets its obligation to purchase ^* in branded Rx net purchases under the Prior Agreement earlier than June 30, 2006, the Prior Agreement will not expire until June 30, 2006. As of the Effective Date, Longs’ obligation to purchase * in branded Rx net purchases under the Prior Agreement * under Section 11A of the Prior Agreement (as added by the 6th Amendment thereto).

^*	Subject to a request for confidential treatment; Separately filed with the Commission.

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2.	SUPPLY AND PURCHASE COMMITMENTS

A. Products . This Agreement encompasses several categories of Products to be supplied by ABDC to Longs hereunder, each of which is subject to different pricing terms, and some of which are governed by different sets of commercial terms.

1.	Quantity, Price and Terms . These categories and the supply and purchase commitments hereunder applicable to each are as follows:

Branded Rx Products.


Category Definition		Branded Prescription Pharmaceuticals.

Quantity		ABDC will be the “primary vendor” of Branded Rx Products to Longs, meaning that ABDC agrees to supply to Longs ^* of all Branded Rx Products purchased by Longs for its: (i) Pharmacies; (ii) central fill pharmacies; (iii) Mail Order; (iv) pharmacies primarily serving assisted-living and long-term-care facilities (“ LTC Pharmacies”) ; (v) Specialty Pharmacies; and (vi) PBM operations, and that Longs agrees to purchase the Total Branded Rx Net Purchase Volume within a period as set forth in Section 7(A) hereof and in Exhibit 1 , Section 3 .

Pricing		All Branded Rx Products shall be priced at * as in effect at the time Longs places its order, *

Special Terms		* Products will be priced as and included in Branded Rx Products as set forth in Exhibit 1 , Section 1(A)(2) .

* Products, Longs Contracted Generic Products and Other Generic Rx Products .

(i)

* Products.


Category Definition		* Products.

Quantity		As provided in Exhibit 2 , Longs will participate in ABDC’s preferred generic formulary program (“ * Program ”), pursuant to which ABDC will supply to Longs * , and Longs will purchase from ABDC * , of those Generic Rx Products represented in the ABDC * Program ( * ); provided , however , Longs may elect to * .

Pricing and Terms		Pricing of Generic Rx Products purchased pursuant to the * Program (“ * Products ”) is based on *

^*	Subject to a request for confidential treatment; Separately filed with the Commission.

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(ii)

Longs Contracted Generic Products.


Category Definition		“ Longs Contracted Generic Products ” consist of those Generic Rx Products that Longs purchases pursuant to contract directly with such Product’s manufacturer, or through a collective buying group or other group purchasing organization (“ GPO ”) or any other party, and which ABDC administers on behalf of Longs and for which ABDC provides warehousing and delivery services hereunder.

Quantity		Longs’ Contracted Generic Products that are ^* .

Pricing and Terms		Longs pricing for Longs Contracted Generic Products will be based on the * of such Products ( * ).

(iii)

Other Generic Rx Products.


Category Definition		“ Other Generic Rx Products ” consist of Generic Rx Products that Longs buys from ABDC, but which are not offered under the * Program and are not Longs Contracted Generic Products.

Quantity		As ordered by Longs, provided , however , that Longs has no minimum obligation with respect to Other Generic Rx Products.

Pricing and Terms		Pricing for Other Generic Rx Products will be * , unless the parties mutually agree an adjustment is appropriate.

Non-Rx Products.

“ Non-Rx Products ” include all non-prescription Products other than those non-prescription Products that are * Products. Non-Rx Products consist of (i) * Non-Rx Products and (ii) any * Non-Rx Products (as such terms are defined, respectively, in * below).

(i)

* Non-Rx Products.


Category Definition		The category “ * Non-Rx Products ” includes all Non-Rx Products (which does not include * Products) other than * Non-Rx Products.

Quantity		As ordered by Longs.

Pricing		Pricing of * Non-Rx Products for Mainland delivery is based on * , and subject to the * .

Special Terms		As set forth in Section 1(D) of Exhibit 1 . * Non-Rx Products in Hawaii are treated under Exhibit 5 .

^*	Subject to a request for confidential treatment; Separately filed with the Commission.

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