SECOND AMENDMENT TO CORE DISTRIBUTION AGREEMENT
Exhibit 10.3
SECOND AMENDMENT TO CORE DISTRIBUTION AGREEMENT
THIS SECOND AMENDMENT TO CORE DISTRIBUTION AGREEMENT (“Second Amendment”) is entered into as of
October 11, 2006, by and between Connetics Corporation (“Connetics”) and McKesson Corporation
(“McKesson”). Connetics and McKesson entered into a Core Distribution Agreement dated December 23,
2004 (“Original Agreement”), as amended by that certain Amendment to Core Distribution Agreement
dated as of December 22, 2005 (“First Amendment”; the Original Agreement together with the First
Amendment shall hereinafter be collectively referred to as the “Agreement”). Capitalized terms not
defined herein shall have the meaning ascribed to such terms in the Agreement.
AGREEMENT
| 1. | Section 2.3.1 of the Agreement is hereby deleted and replaced in its entirety with the following: |
2.3.1 Inventory Levels. During the term of this Agreement, McKesson will
use its best efforts to maintain an inventory level of ** inventory level shall be
referred to herein as the “SKU Inventory Level”). The SKU Inventory Level shall be
based on EDI 852 reports. Each SKU Inventory Level shall include Product located at
both the SRC and all other facilities where Product is stored or warehoused. If at
any time the inventory level of a particular SKU exceeds the SKU Inventory Level **,
the Parties shall use best efforts to work together to maintain the inventory level
for such SKU at the SKU Inventory Level.
| 2. | Section 2.3.2 of the Agreement is hereby deleted and replaced in its entirety with the following: |
2.3.2 Purchase Limits. Connetics agrees to ship any McKesson purchase order
in full with respect to any SKU of Product provided the purchase order is consistent
with the SKU Inventory Level. Connetics has the right to question any purchase
order that exceeds McKesson’s Average Weekly Movement or that is not consistent with
the SKU Inventory Level and has the right to cancel any quantities for which
McKesson is not able to provide reasonable justifications and/or explanations.
Connetics will notify McKesson prior to canceling any questionable purchase orders.
McKesson will have three (3) business days to provide reasonable justification
and/or explanation for such questioned purchase orders.
| 3. | Section 2.3.3 of the Agreement is hereby deleted and replaced in its entirety with the following: |
2.3.3 Weekly Purchasing. During the term of this Agreement, McKesson will
use its best efforts to purchase Product weekly from Connetics based on the SKU
Inventory Level. The Parties do not intend that any reduction in inventory shall be
achieved by McKesson’s return of Product to Connetics.
| 4. | The remaining provisions of the Agreement shall continue in full force and effect as though fully set forth in this Second Amendment. Any conflict between the provisions of this Second Amendment and the Agreement shall be resolved in favor of this Second Amendment. |
| ** | Portions of this exhibit have been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. |
The Parties have duly executed this Second Amendment as of the day first written above.
| MCKESSON CORPORATION | CONNETICS CORPORATION | ||||||||
By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | By: | /s/ ▇▇▇▇ ▇▇▇▇▇ | ||||||
Name:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | Name: | ▇▇▇▇ ▇▇▇▇▇ | ||||||
Title:
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V.P. Brand RX Product Mgmt | Title: | President & COO | ||||||