Redacted portions have been marked with asterisks (***). Confidential
treatment has been requested for the redacted portions. The confidential
redacted portions have been filed separately with the Securities and Exchange
Commission.
EXHIBIT 10.5
SALES AGENCY AGREEMENT
DATED January 11, 1999
BETWEEN
"AGENT" "BAYER"
PVP Bayer Corporation
00000 "X" Xxxxxx X.X. Xxx 000
Xxxxx, XX 00000 Shawnee Xxxxxxx, XX 00000-0000
1. Appointment of Agent
BAYER hereby appoints AGENT as its non-exclusive agent for the sale of
the BAYER products identified in Exhibit B (hereafter "PRODUCTS")
subject to the terms and conditions of this Agreement. AGENT hereby
accepts such appointment and agrees, at all times, to use its best
efforts to promote the PRODUCTS and secure orders for the sale of
PRODUCTS to CUSTOMERS, as hereinafter defined, in the TERRITORY, as
hereinafter defined. BAYER reserves the right to amend the TERRITORY at
any time upon thirty (30) days advance written notice to AGENT. Nothing
in this Agreement shall mean that AGENT has the exclusive right to
secure orders for the sale of PRODUCTS in the TERRITORY.
2. Term
The initial term of this Agreement shall commence on the date
hereinabove written and shall continue through December 31, 1999.
The Agreement may be renewed for successive periods, upon mutual
agreement, unless earlier terminated.
3. Supply of Products
(a) BAYER shall supply PRODUCTS to AGENT in accordance with the
BAYER ANIMAL HEALTH PRICES, POLICES AND TERMS FOR PRODUCTS
(hereafter the "PRICES, POLICIES AND TERMS") attached hereto
as Exhibit E, as such PRICES, POLICIES AND TERMS may be
amended from time to time by BAYER in its sole discretion.
(b) BAYER reserves the right at any time to allocate its supply
of any PRODUCTS among CUSTOMERS whenever any PRODUCT is
back ordered or otherwise not available for sale in
sufficient quantity to meet all orders then on hand.
Whenever BAYER is requested to make delivery in
full by a date certain, BAYER's exercise of its
rights under this Paragraph shall excuse its failure to
make full delivery by such date. In addition, BAYER
reserves the right at any time to relocate its PRODUCTS
held in Agent's custody, at BAYER's expense, to one or more
of another Agent's custody to meet CUSTOMER's orders.
(c) BAYER reserves the right to limit orders of PRODUCT to
commercially reasonable quantities.
4. Delivery
(a). BAYER shall pay freight and insurance on all shipments of
PRODUCTS to BAYER-approved AGENT's Delivery/Distribution/
Sales Locations set forth in Exhibit A, which approval
BAYER may revoke or modify at any time. BAYER shall
determine the carrier, method of transportation and routing
of all such shipments of PRODUCTS. If AGENT erquests routes
or methods other than those chosen by BAYER, BAYER will try
to comply with AGENT's instructions and will xxxx AGENT for
the additional cost, if any, of shipping via the route or
method requested by AGENT. Other than as provided for herein,
AGENT shall bear the entire costs of shipping PRODUCTS from
AGENT's warehouse(s) to CUSTOMERS.
(b) BAYER shall not be obligated to fill any order submitted by
AGENT on behalf of CUSTOMERS calling for delivery sooner than
BAYER's then-current delivery schedule, nor shall BAYER be
obligated to fill any order for CUSTOMER if payment for any
PRODUCTS previously ordered by that CUSTOMER through AGENT is
past due.
(c) Bayer shall not be liable to AGENT for damages or losses of
whatsoever nature if delivery of PRODUCTS, in whole or in
part, is delayed.
5. Title and Risk of Loss
(a) BAYER shall retain title to PRODUCTS held in AGENT's
custody until such PRODUCTS are actually sold to CUSTOMERS.
Title to PRODUCTS shall pass from BAYER to CUSTOMERS upon
the consummation of such sale. AGENT shall take whatever
action is requested by BAYER to perfect or maintain title
in BAYER to PRODUCTS in the custody of AGENT. AGENT shall
at no time be deemed a purchaser of PRODUCTS nor shall
AGENT be deemed to have any interest, legal or equitable,
in PRODUCTS.
(b) BAYER shall bear the risk of loss to PRODUCTS until their
delivery to CUSTOMERS at the destination specified in the
xxxx of lading.
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6. Sales and Billing to Customers
(a) AGENT will be authorized to operate within any of the
BAYER-authorized approvals and limits in extending to
CUSTOMERS the credit limit in effect at the time of sale
without any further approval from BAYER, provided credit
approval is immediately rescinded by AGENT for any CUSTOMER
who is known to be delinquent sixty (60) days or more in
payment on a BAYER-approved credit account, or who AGENT
knows or has reason to know is insolvent, has filed for
bankruptcy or has had a petition in bankruptcy filed
against it. BAYER reserves the right in its sole discretion
to decline any order received through AGENT and to change
or rescind any credit approval limit at any time. Credit
terms shall be as set forth in Exhibit E, Section IV and
Exhibit F, Section 2.
(b) AGENT is authorized to make cash sales of PRODUCTS to any
CUSTOMER not appearing on the Do Not Ship list on behalf of
BAYER and collect payment thereof without obtaining specific
approval from BAYER. All reporting conditions still apply.
(c) All sales of the PRODUCTS are to be made only to approved
licensed, practicing veterinarians and/or livestock producers
(CUSTOMERS) with a prescription or Veterinary Drug Purchase
Order (VDPO), and AGENT shall invoice only CUSTOMERS for the
sale of such PRODUCTS.
(d) Sale of PRODUCTS to CUSTOMERS shall not be made on order or
prescription issued by any person in the employ of or under
contract with AGENT, or by any person not meeting the
required conditions for a valid Veterinarian Client Patient
Relationship (VCPR), as defined by FDA/CVM within AMDUCA
regulations.
(e) All sales of PRODUCTS must be secured by AGENT on BAYER's
behalf through BAYER-approved Delivery/Distribution/Sales
locations (Exhibit A) and by persons employed by AGENT who
are responsible for and assigned to the approved delivery /
distribution / sales locations.
(f) The solicitation, acceptance or confirmation of orders for
PRODUCTS by AGENT shall not commence until September 28,
1998. Any orders obtained by BAYER prior to this date for
PRODUCTS to be shipped through AGENT to CUSTOMERS will be
transmitted to AGENT on or immediately after that date.
(g) AGENT must issue a separate invoice for the sale of the
PRODUCTS for each order. All such invoices for the PRODUCTS
shall contain the following statement printed, stamped, or
typed on the invoice:
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"All Baytril 100 listed on this invoice belongs to
the supplier thereof and is being handled by us on
a consignment basis. The purchase prices of these
products are the supplier's Prices and are to be
paid to us as the supplier's agent."
(h) On all invoices for PRODUCTS, AGENT shall indicate the
PRODUCT is a prescription veterinary drug by using the "Rx"
symbol, or the following statement "Baytril 100 is a
Veterinary Prescription Drug."
(i) AGENT shall collect payments for all PRODUCTS ordered
through AGENT on behalf of BAYER. AGENT shall not be
responsible to BAYER for the ultimate payment for any
PRODUCTS sold hereunder within the limit of BAYER's credit
approval, but if a CUSTOMER defaults in any payment, AGENT
shall use its best efforts, within reason, to assist in the
collection of such payment. If BAYER has not approved
credit to a CUSTOMER, or if credit is negligently extended
to a CUSTOMER by AGENT beyond the limits of approved
credit, AGENT shall be responsible for the non-payment of
such amount beyond the limit of approved credit. In
addition, AGENT shall be responsible for any non-payment of
an account over 90 days past due that has not been properly
reported to BAYER.
(j) AGENT shall comply with all federal, state or local laws or
regulations reasonably related to its performance of this
Agreement.
(k) AGENT shall monitor, supervise and control its employees
acting on BAYER's behalf in performance of this Agreement,
and shall indemnify and defend BAYER against any claims
arising from the negligence of such employees.
(l) AGENT will be responsible for proof of delivery in the event
of disputed delivery of PRODUCT. If AGENT is unable to
document delivery, AGENT will be liable.
7. Commission and Terms of Remittance
(a) At the conclusion of each BUSINESS DAY, as hereafter
defined, AGENT shall electronically transmit to BAYER
through the AHI EDI Special Project invoicing detail on all
sales of PRODUCTS secured through AGENT (including product
returns), including but not limited to CUSTOMER HIN number
and zip code or full name, xxxx and ship-to address;
veterinarian's valid license number; date of sale; invoice
number; lot number; unit quantity and sales price per
PRODUCT and per order. For the purposes of this paragraph
7(a), "sales" shall mean information associated with
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PRODUCTS that have been shipped and/or invoiced by AGENT to
CUSTOMERS on BAYER'S behalf Sales of PRODUCTS secured
through AGENT on Saturdays, Sundays, or Holidays recognized
by BAYER, should be reported at the conclusion of the next
BUSINESS DAY.
(b) BAYER shall compensate AGENT for all services provided or
expenses incurred by AGENT the commissions listed in
Exhibit D on the net sales of each separate order for
PRODUCTS into the TERRITORY that result directly from the
efforts of AGENT and which BAYER authorized for shipment or
delivery into the TERRITORY. "Net Sales" means the invoice
price of PRODUCTS sold less all discounts, allowances,
purchase, sales or other similar taxes, freight, insurance
and duties, and net of returns. BAYER shall not compensate
AGENT with respect to PRODUCTS sold by or as a result of
the efforts of other AGENTS of BAYER, for shipment to
authorized CUSTOMERS out of the TERRITORY, or for orders
not pre-approved by BAYER for which payment remains
uncollected.
(c) BAYER will mail AGENT a statement monthly within five (5)
business days after month end. Month-end statements will show
summary of sales/returns by day and appropriate AGENT
commission for the month. Remittance, for all PRODUCT sold by
AGENT, to BAYER must be received no later than twenty (20)
calendar days following month end. AGENT failure to make
remittance or transmit complete and accurate information via
EDI to BAYER within the specified time periods shall result in
the reduction of the AGENT's commission for the month in which
the failure occurred by 2% of net sales.
(d) AGENT will take a physical inventory of PRODUCTS at the end
of each week and will transmit to BAYER their ending
inventory through the AHI EDI Special Project. Quantities
of PRODUCT that are unreconciled must be supported by
explanation and/or documentation satisfactory to BAYER.
AGENT shall be responsible for the List Price of any
PRODUCTS damaged, destroyed, lost or otherwise deemed
unsaleable through negligence or misconduct of AGENT or its
employees.
(e) All of the information required to be submitted by AGENT to
BAYER under Paragraph 7(a) shall be broken down according to
each of AGENT's individual, approved branch locations.
(f) BAYER shall have the right to change the rate, terms, and
conditions of AGENT's commission at any time upon thirty (30)
days advance written notice to AGENT.
(g) BAYER reserves the right to reject any order for PRODUCTS
received through AGENT, to discontinue the sale of any PRODUCT
or to allocate
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the supply of any PRODUCT as described in Paragraph 3(b)
without incurring liability to AGENT for the payment of
commissions hereunder.
(h) If a CUSTOMER does not pay any amounts due, for PRODUCTS
that have been shipped to such CUSTOMER, within sixty (60)
days after such payment is due, and AGENT had not acted
outside the scope of its authority in extending credit to
such CUSTOMER as set forth herein, AGENT shall notify BAYER
no more than 90 days after payment is due. BAYER shall
credit AGENT in the amount of the unpaid balance of account
less the AGENT commissions received on the unpaid balance.
BAYER will then assume full responsibility for collecting
such outstanding payment.
8. Prices and Terms
(a) AGENT shall secure orders for PRODUCTS on behalf of BAYER at
the LIST PRICES set forth in the PRICES, POLICES AND TERMS.
AGENT expressly agrees, for the purposes of insuring
compliance with the Xxxxxxxx-Xxxxxx Act and other applicable
laws, that AGENT shall not rebate any part of its commission
either directly or indirectly, to CUSTOMERS.
(b) AGENT's securing of an order for PRODUCTS at a price other
than the LIST PRICE, or offering terms different than
specified by BAYER, or AGENT's direct or indirect rebate,
distribution, allocation or sharing of commissions or profits
generated from the sales of the PRODUCTS to CUSTOMERS shall
constitute a breach of this Agreement by AGENT.
(c) AGENT shall secure orders for PRODUCTS from CUSTOMERS on
behalf of BAYER on the terms and conditions set out in
Exhibits E and F. These terms and conditions may be
modified from time to time by BAYER without prior notice.
The LIST PRICES and terms and conditions in effect at the
time an order for PRODUCTS is taken by AGENT from a
CUSTOMER shall govern.
9. Records, Audits and Reports
(a) AGENT shall keep proper books of account and records
containing complete information relating to PRODUCTS
received, stored and sold through AGENT, including the
names of CUSTOMERS, HIN numbers, the quantities purchased,
lot numbers, prices, and veterinary license numbers, and
shall transmit this information to BAYER on a daily basis
through the AHI EDI Special Project. AGENT shall also
maintain a file containing copies of prescriptions or
VDPO's for PRODUCT sold to livestock producers.
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(b) BAYER shall have the right to audit, with 24 hours advance
notice, the records and inventory of AGENT relating to this
Agreement at any time upon request during normal business
hours. If an audit reveals that any monies are due BAYER,
BAYER will xxxx AGENT for the difference. AGENT shall pay
such amount to BAYER with AGENT's next succeeding payment
due under Paragraph 7(c), and documented accordingly. BAYER
shall further have the right to offset any payments due to
AGENT under this Agreement by such amount. If an audit
reveals that any monies are due AGENT, such amount may be
withheld by AGENT from its next succeeding payment due
under Paragraph 7(b), and documented accordingly.
(c) During the term of this Agreement, AGENT shall conduct an
internal audit at the end of its fiscal year, of inventory
of PRODUCT and sales records relating to this Agreement and
provide to BAYER certified documentation of such audit. If
any monies are due to BAYER, BAYER will invoice AGENT for
such amounts and AGENT shall make any such payment within
ten (10) days of the date of such invoice.
(d) When requested by BAYER, the AGENT will provide BAYER with a
non-binding forecast of expected PRODUCT sales for each year
that this agreement is in effect, for BAYER's production
planning purposes.
10. Taxes
(a) Property Tax
BAYER shall pay all personal and property taxes assessed on
all unsold PRODUCTS held by AGENT in inventory. AGENT shall
immediately send to BAYER any and all notices received by
AGENT, with respect to the property of BAYER held by AGENT in
its inventory, regarding audits, reviews or other activities
by any tax authorities. BAYER, and not AGENT, will deal with
all local tax authorities with respect to BAYER's property
held by AGENT in its inventory.
(b) Sales/Use Tax
AGENT shall be fully responsible for the assessment,
collection and remittance, to state taxing authorities of all
sales and/or use taxes applicable to sales of PRODUCTS to
CUSTOMERS. AGENT shall maintain on file a copy of a valid Tax
Exemption Certificate or resale certificate for CUSTOMERS to
whom PRODUCT has been sold under an allowed exemption.
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AGENT will allow BAYER, upon prior written notification, to
conduct an audit of applicable tax assessment and
collection activity, and will make available to BAYER a
copy of pertinent Tax Exemption or resale certificates in
the event of an audit of BAYER by taxing authorities.
11. AGENT'S Promotional Efforts
AGENT shares in the commitment of BAYER to promote PRODUCTS in order
to maintain PRODUCTS' high reputation and to maximize appropriate
sales of PRODUCTS. AGENT agrees to use its best efforts to promote
and increase sales of PRODUCTS in the TERRITORY. As part of its
efforts, AGENT shall include PRODUCTS in its regular sales promotion
and shall submit to BAYER copies of its internal bulletins,
instructions and announcements to demonstrate that this promotional
activity has been accomplished. AGENT shall not create or use any
materials, written or otherwise, to promote and/or advertise the
sale of PRODUCTS until AGENT has obtained BAYER's prior written
approval for such creation and use from BAYER. In connection with
promoting PRODUCTS, AGENT shall make no representations or claims
relating to PRODUCTS that are inconsistent with the labeling for
PRODUCTS or any BAYER-approved materials. AGENT agrees to exercise
its best efforts to help ensure that PRODUCTS are used in accordance
with their labeling and applicable federal and state laws and
regulations.
AGENT shall have adequate sales capability and shall organize and
conduct at least one meeting each year, for the purpose of
transferring product or associated technical information between
BAYER and the AGENT's sales personnel. AGENT shall maintain suitable
warehousing and delivery facilities for PRODUCTS. BAYER shall have
the right to inspect such facilities during AGENT's regular business
hours and upon providing AGENT reasonable notice. AGENT shall also
seek new creditworthy CUSTOMERS for PRODUCTS in the TERRITORY.
AGENT shall stay informed concerning the condition of the market in
the TERRITORY and make available to BAYER any non-confidential
information essential to the marketing of PRODUCTS, in particular,
sales possibilities, pricing, trade statistics and competitive
measures.
If AGENT operates a catalog business, AGENT shall not sell PRODUCT
through the catalog without prior written approval of BAYER.
12. Product Returns
(a) PRODUCTS shall at all times be subject to the direction and
control of BAYER, and AGENT shall promptly return to BAYER
any unsold PRODUCTS upon demand by BAYER. Returns of
defective or damaged
8
PRODUCTS shall be governed by the PRICES, POLICIES AND
TERMS. (Refer to Exhibit E, Section 11-B, for Returned
Goods Policies).
(b) AGENT shall inspect PRODUCTS at the time of delivery and
shall immediately notify BAYER and the carrier of any
obvious damage, shortages, defects or failure of PRODUCTS
to conform to the order. If AGENT so notifies BAYER, upon
BAYER's request, AGENT shall return to BAYER, at BAYER's
expense, all PRODUCTS that AGENT believes are damaged,
defective or do not otherwise conform to the order. AGENT
shall not sell any PRODUCTS found or claimed to be damaged
or defective. AGENT shall send BAYER an itemized list of
PRODUCTS returned, dated as of the date of delivery by
AGENT to carrier, for reshipment to BAYER. BAYER shall
promptly replace at its own expense all PRODUCTS returned
hereunder which have been determined to be damaged,
defective or otherwise non-conforming by BAYER. (Refer to
Exhibit E, Section 11-B, for Returned Goods Policies).
13. Storage of Products
AGENT at its own expense shall maintain adequate and separate
storage space for PRODUCTS (such that PRODUCTS shall be segregated
from any other products stored by AGENT and shall be clearly marked
as being owned by BAYER). AGENT shall store PRODUCTS in accordance
with BAYER's instructions therefore as set out on PRODUCT label
instructions, and under conditions that will ensure PRODUCT retains
potency, purity, quality, and identity. For the purposes of
inspection, BAYER shall have access to AGENT's premises where
PRODUCTS are stored during AGENT's regular business hours and upon
providing AGENT reasonable notice.
BAYER shall be responsible for insuring all PRODUCTS stored by AGENT
against casualty loss or the like as a result of fire, flood or
other damage or destruction that is not the fault of AGENT or its
employees. Any losses of or damages to PRODUCTS in AGENT's custody
or control shall be reported to BAYER in writing with documentation
satisfactory to BAYER explaining such loss or damage. BAYER shall be
responsible for any PRODUCT losses or damages that are not the
result of the negligence or fault of AGENT or its employees. BAYER
requires that AGENT provide evidence of warehouse insurance coverage
for BAYER property in the possession of AGENT, in the event of
AGENT'S negligence in the loss of BAYER product. The limits of such
insurance coverage should be adequate to reimburse BAYER for the
loss of the sales value of BAYER PRODUCTS stored on the AGENT'S
premises.
14. Product Complaints and Indemnities
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(a) Upon the receipt of a PRODUCT complaint from a CUSTOMER,
AGENT shall report, within one business day, to BAYER's
Veterinary Technical Services Department receipt of such
complaint. AGENT shall cooperate in the investigation of
any complaint at the direction of BAYER. In the event of a
third party claim, suit or demand against either party
involving PRODUCTS supplied or purchased hereunder, the
parties agree to fully cooperate in the defense of such
claim, suit or demand.
(b) Unless AGENT acts outside the scope of its authority under
this Agreement, BAYER shall be liable for and indemnify,
defend and hold AGENT harmless from and against all claims,
suits, demands, losses or damages arising out of this
Agreement, except that AGENT shall be liable for and
indemnify, defend and hold BAYER and its AFFILIATES
harmless from and against all claims, suits, demands,
losses or damages resulting from the negligence or fault of
AGENT or its employees in the handling, storage,
transportation or promotion of PRODUCTS supplied under this
Agreement, whether used singly or in combination with other
products or materials, or resulting from any unauthorized
act by AGENT or its employees in carrying out the
activities under this Agreement.
15. Warranty
BAYER warrants that PRODUCTS shall conform with the description
contained in the labeling therefor. EXCEPT AS SET FORTH ABOVE, BAYER
MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO
PRODUCTS, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
16. Claims and Remedies
(a) No claim of any kind by AGENT against BAYER arising out of
this Agreement shall be for more than the commission earned
by AGENT on the sale of PRODUCTS. BAYER shall not be liable
to AGENT for any special, incidental or consequential
damages, whether arising in contract or tort.
(b) The remedies set forth in this Agreement and the PRICES,
POLICIES AND TERMS shall be AGENT's sole and exclusive
remedies with respect to:
(i) defects in PRODUCTS found or claimed on AGENT's
inspection; and,
(ii) failure of the PRODUCTS to conform to AGENT's
order.
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17. Trademarks and Copyright
(a) All trademarks used or designated by BAYER shall be
displayed by AGENT, without alteration, on all PRODUCTS
bearing any such trademark supplied by BAYER to AGENT
hereunder, and all use of such trademarks shall inure to
BAYER's benefit or that of its AFFILIATES. AGENT shall not
use any trademark, brand or trade dress which is the same
as, or which is likely to cause confusion or mistake with
any trademark, brand or trade dress of BAYER or its
AFFILIATES, except that the trademarks, brands and trade
dress used or designated by BAYER may be used in connection
with the promotion, sale, display, or advertising of
PRODUCTS bearing the same, provided an approved attribution
of BAYER ownership is contained therein.
(b) Any copyright of BAYER or its AFFILIATES that may be
created in any article, package design, label, or the like,
whether or not bearing any trademark of BAYER or its
AFFILIATES, shall be the property of BAYER or its
AFFILIATES, as the case may be.
(c) BAYER warrants and represents that, to the best of its
present knowledge and belief, the use of the trademarks
designated by BAYER for use on the PRODUCTS and any
promotional materials that have been approved for AGENT's
use by BAYER, in the Territory, will not infringe a
trademark of a third party. BAYER agrees to indemnify and
hold AGENT harmless from and against any loss, liability or
expense (including reasonable attorney's fees and cost of
litigation) resulting from the breach of the above
warranty. AGENT shall promptly notify BAYER of any claim of
trademark infringement by a third party resulting from the
use of a trademark designated by BAYER, of which AGENT
becomes aware. AGENT agrees immediately to discontinue use
of any BAYER trademark upon notice by BAYER, and all
liability arising out of AGENT's use of such trademark
after such notice by BAYER shall be borne by AGENT.
18. Confidential Information
BAYER may give AGENT technical or non-technical information
("Confidential Information") not generally known to the trade or
public, including without limitation information relating to
CUSTOMERS, PRODUCTS or other animal health products, techniques,
technological methods, prospective new animal health products,
research programs or areas, processes, services and other valuable
business information (including the terms of this agreement) of
BAYER. During the term of this Agreement and thereafter for a period
of ten years, AGENT shall not (except as authorized in writing in
advance by BAYER):
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(a) disclose to any third person in any manner whatsoever any
Confidential Information so long as such information is not
generally known to the trade or public; or
(b) use such Confidential Information except for the express
purpose of performing its activities under this Agreement.
19. Security Agreement
AGENT hereby grants to BAYER a security interest on all PRODUCTS in
AGENT'S custody and control under this Agreement, and agrees to allow
BAYER to execute a standard form financing statement with a copy of
this Agreement to be filed with appropriate state and local government
offices, and further agrees that no PRODUCTS will become subject to
liens or other security interests or encumbrances as a result of this
Agreement or otherwise. If AGENT fails to keep PRODUCTS free and clear
of all liens, encumbrances and security interests, AGENT shall pay all
costs associated with securing the release of any such liens,
encumbrances and security interests.
20. Definitions
(a) Status of AGENT: This Agreement describes a sales agency
arrangement between AGENT and BAYER, but does not make
AGENT a distributor, franchisee, partner or employee of
BAYER, nor does it authorize AGENT to act as AGENT for
BAYER for any purpose other than what is expressly provided
for herein. Nothing in this Agreement or otherwise shall be
construed as authorizing AGENT to create or assume any
obligation or liability in the name of, or on behalf of,
BAYER or to subject BAYER to any obligation or liability to
any third person or entity other than as expressly provided
for herein. After termination of this Agreement, AGENT
shall not use, either directly or indirectly, any name,
title or expression that could be construed to mean, or
lead any CUSTOMER or other third party to believe, that
AGENT is still acting as an agent of BAYER.
(b) "CUSTOMER" is any of the following individuals:
(I) A BAYER-authorized licensed and practicing
veterinarian
(ii) A BAYER-authorized livestock producer with a
prescription or Veterinary Drug Purchase Order
(VDPO).
CUSTOMER shall not mean any other agent having a contract
with BAYER similar to this Agreement, or any wholesaler or
distributor. BAYER shall have the right to reject any
orders for PRODUCTS obtained from persons other than those
deemed to be CUSTOMERS hereunder. AGENT
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shall not transfer any PRODUCTS to any of its other
locations (if any), or to any other agent having a contract
with BAYER similar to this Agreement, or to any wholesaler
or distributor, without BAYER's prior written approval.
(c) "LIST PRICE" means the price for PRODUCTS, as set forth in
PRICES, POLICIES AND TERMS.
(d) "PRODUCTS" mean the BAYER animal health products listed in
Exhibit B, as such Exhibit may be amended from time to time
by BAYER in its sole discretion.
(e) "TERRITORY" means the geographic area defined by the state
areas set forth in Exhibit C.
(f) "BUSINESS DAY" means Monday, Tuesday, Wednesday, Thursday,
Friday, excluding days recognized by BAYER as Holidays.
21. Termination
(a) This Agreement may be terminated with or without cause by
either party at any time upon thirty (30) days prior
written notice to the other party. In addition, BAYER shall
have the right to immediately terminate this Agreement,
without incurring any liability to AGENT, at any time upon
written notice to AGENT (such termination to be effective
as of the date of such notice), in the event of a material
breach by the AGENT. Such material breach on the part of
the AGENT shall include but not be limited to:
(i) AGENT's breach of any provision of this Agreement,
which goes uncured for thirty (30) days following
receipt of written notice thereof;
(ii) AGENT's insolvency; dissolution or termination of
existence,
(iii) an assignment for the benefit of creditors by AGENT;
(iv) the appointment of a trustee or receiver for any
part of AGENT's property;
(v) The filing by or against AGENT of any petition in
bankruptcy or under any of the provisions of the
Bankruptcy Act;
(vi) The entry of any judgment against AGENT which
remains undischarged or unbonded of record for
thirty (30) days;
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(vii) The attachment of or levy against any of AGENT's
property by any judicial officer which is not
discharged within thirty (30) days thereafter;
(viii) A change, to any extent or however occurring, in the
ownership of AGENT's business or in the direct or
indirect control or management of AGENT;
(ix) Altering the labeling of the PRODUCTS; or
(x) Failing to obey any Federal, State or local laws or
regulations reasonably related to performance of
this Agreement.
(b) Termination of this Agreement shall not discharge the
rights and obligations of the parties that have accrued
prior to the effective date of such termination.
Termination for any reason shall be without prejudice to
BAYER's rights to any amounts then owing by AGENT under
this Agreement, and BAYER shall pay AGENT its commission
but only for orders accepted in accordance with this
Agreement prior to the effective date of such termination.
Within fifteen (15) days after termination of this
Agreement, AGENT shall return to BAYER:
(i) All unsold PRODUCTS in the custody of AGENT,
properly packed and delivered and, except for
transportation (including insurance) charges,
without expense to BAYER; and
(ii) All advertising, promotional and sales materials for
PRODUCTS supplied by BAYER to AGENT under this
Agreement, and any and all copies of written
Confidential Information supplied by BAYER to AGENT
under this Agreement, and AGENT shall retain no
copies thereof.
(c) Paragraphs 14, 15, 16, 18, 19, and 26 shall survive
termination or expiration of this Agreement.
22. Force majeure
Neither party shall be liable to the other by reason of any failure
or delay in performance of any provision of this Agreement, nor
shall such failure or delay give the other party any right to
terminate this Agreement (except for changes in ownership or control
of AGENT) if such failure or delay is due to any event (other than
financial) beyond the reasonable power of the party failing or
delaying to perform. Without limiting the generality of the
foregoing, governmental action,
14
inability to obtain supplies, material, labor or transportation, and
strikes, boycotts, lockouts and labor disputes shall all be
conclusively deemed beyond the reasonable power of the party failing
or delayed thereby, even though that party might be able to obviate
such failure or delay by agreeing to terms proposed by government,
suppliers, carriers, employees or their bargaining representatives,
labor disputants, or other third parties.
23. Assignment
(a) This Agreement is personal to AGENT and except as otherwise
provided herein, neither this Agreement nor any rights
hereunder are assignable, delegable or transferable
(including without limitation the right to sub-contract) by
AGENT without the prior written consent of BAYER.
(b) BAYER shall have the right to assign or transfer this
Agreement at any time without the consent of AGENT.
24. Notices
Any notice required or permitted by the terms of this Agreement
shall be given by telegram or by registered mail, prepaid and
properly addressed, or delivered by hand to BAYER or AGENT at its
address set forth in this Agreement or at such other address as
either party hereto may designate by notice given as provided
herein. If mailed, any such notice shall be deemed to have been
given when mailed, and if delivered by hand, when received written.
25. Captions
The captions of the paragraphs herein are for convenience of reference
only and shall not be deemed parts of this Agreement, nor shall they
have any effect on the meaning or interpretation of any of the
provisions of this Agreement.
26. Governing Law
This Agreement shall be governed by and interpreted in accordance with
the law of the State of Kansas applicable to contracts made and
performed entirely within that State, regardless of its or any other
jurisdiction's choice of law principles
15
27. Entire Agreement
This Agreement sets forth the entire understanding of the parties
with respect to the subject matter hereof, and supersedes all prior
writings and discussions relating to such subject matter. Any
amendments or modifications to this Agreement shall not be valid
unless in writing and signed by duly authorized representatives of
both parties.
In witness whereof, the parties have executed this agreement as of the date
first above written.
PVP BAYER CORPORATION
Professional Veterinary Products, Ltd. Agriculture Division
00000 X Xxxxxx Xxxxxx Xxxxxx
Xxxxx, XX 00000 Livestock Business Unit
By /s/ Xx. Xxxxxx X. Xxxxxx By /s/ Xxx Xxxxx
------------------------ --------------------
Xx. Xxxxxx X. Xxxxxx Xxx Xxxxx
President National Sales Manager
16
EXHIBIT A
APPROVED AGENT DELIVERY/DISTRIBUTION/SALES LOCATIONS
BAYER will ship PRODUCTS to the following approved delivery/distribution/sales
locations* which are owned or leased by PROFESSIONAL VETERINARY PRODUCTS, LTD.,
00000 "X" XXXXXX, XXXXX, XX 00000:
*Additional locations may be added subject to the prior written approval of
BAYER.
17
EXHIBIT B
PRODUCTS
PRODUCT CODE NO. UNIT SIZE CASE QUANTITY PALLET QUANTITY
------- -------- --------- ------------- ---------------
Baytril 100 023699 100 ml 24 576
18
EXHIBIT C
"TERRITORY"
AGENT shall be entitled to obtain orders for the sale of PRODUCTS to approved
CUSTOMERS only in the TERRITORY, designated by the following map of the
TERRITORY:
Under no circumstances shall AGENT obtain orders for the sale of PRODUCTS or
transfer any PRODUCTS outside of the TERRITORY without obtaining the prior
written approval of BAYER.
TERRITORY:
THE ENTIRE U.S.
19
EXHIBIT D
AGENT COMMISSION RATES
BAYER will pay AGENT, by approved delivery/distribution/sales locations, for
provision of commissioned field sales, telemarketing or inside sales,
distribution, and administration services at the following rates:
Order/Entry, Warehouse and Shipping Services 3% of Net Sales
Commissioned Field Sales Services 3% of Net Sales*
Telemarketing (outbound phone sales) Services
and/or Retail Sales Location and Service 1% of Net Sales
Administration/Records/Collection Services 1% of Net Sales
*1% of Net Sales is to be paid by AGENT to its Field Sales Personnel
BONUS COMMISSION FOR GOAL ACHIEVEMENT
An additional Bonus Commission of 2% is available for goal achievement. The
AGENT sales goal is listed on Exhibit G. Bonus Commissions are paid at
year-end, and are paid on total net sales for the year, less unpaid balances
BAYER has credited AGENT.
20
EXHIBIT E
BAYER ANIMAL HEALTH
PRICES, POLICIES AND TERMS FOR PRODUCTS
I. List Prices
See the attached BAYER Animal Health Price List for PRODUCTS
(hereafter "Price List"). All prices listed in the Price List are
subject to change by BAYER without notice.
II. Policies for Inventory
A. Minimum Annual Sales Volumes (gross sales minus returns) for
each approved Delivery/Distribution/Sales location shall be
$25,000. AGENT agrees to invoice within a 12 month period of
the effective date of this Agreement PRODUCTS having an
aggregate gross sales value of no less than $25,000 per
approved Delivery/Distribution/Sales location. Such amount
shall be cumulative for each of AGENT's approved
Delivery/Distribution/Sales locations. The sales volume
requirement will be pro-rated on a month basis if the AGENT
enters into this Agency Agreement at any time other than
January.
BAYER reserves the right at all times to set maximum
inventory levels of PRODUCTS that are in AGENT's custody.
B. Returned Goods
1. CUSTOMER Returns to AGENT
BAYER shall allow AGENT to arrange for the return
of PRODUCTS from CUSTOMERS. AGENT shall not pick
up or place PRODUCT returned for any reason back
into saleable inventory. All PRODUCTS returned to
AGENT by CUSTOMER are deemed to be non-saleable,
and must be returned to BAYER. AGENT will issue
credit to CUSTOMER as required based on original
invoice price. Lot number tracking is required.
2. AGENT Returns to BAYER
Upon receipt of non-saleable PRODUCTS returned from
AGENT, BAYER will ship to AGENT an equivalent amount
of PRODUCTS for replacement of inventory.
21
When AGENT is returning product to BAYER, CUSTOMER
returns must be kept separate from AGENT returns.
To arrange for a return of PRODUCT, AGENT shall
contact the Baytril Inventory Control Specialist
at 000-000-0000, who will make any appropriate
adjustments to inventory and arrange for pick-up.
In most cases a Return Authorization (RA) will be
issued by BAYER for the return of PRODUCT. The
cost of return freight will be borne by BAYER.
III. Delinquent Remittance Terms
Should any remittance due from AGENT be delinquent, BAYER shall be
entitled to (1) freeze and/or retrieve inventory in AGENT's
possession, and/or (2) terminate this Agency Agreement on thirty
(30) days prior written notice to AGENT. The remedies provided for
herein are not exhaustive and BAYER shall have the right to pursue
other legal remedies against AGENT for AGENT's delay or failure to
remit payments for PRODUCTS.
IV. Credit
A. Approval
1. AGENT shall have the authority to open accounts
with an initial credit limit which will be
predetermined by BAYER. Such amount may be amended
as needed by BAYER on not less than five (5) days
written notice to the AGENT. AGENT will extend or
deny credit within such limit based upon AGENT'S
professional judgement, which shall encompass the
following:
a. Evaluation of the CUSTOMER'S credit
worthiness, if such information appears in
the AGENT'S database, and if permitted by
law. The AGENT will review such credit
worthiness for all CUSTOMERS and restrict
credit accordingly.
x. XXXXX Credit will notify AGENT of any
CUSTOMER that does not qualify for
shipments, based on inadequate credit
worthiness or for marketing reasons (DNS).
c. Any CUSTOMER past due more than 60 days
with no payment activity, or which the
AGENT knows to be insolvent, which has
filed for bankruptcy or has had a
petition in Bankruptcy filed against it,
will be placed on DO NOT SHIP status.
BAYER should be notified immediately of
such a situation.
22
2. Any credit line above the then applicable credit
limit set forth in Paragraph A.1 above, shall
require the prior written approval of the BAYER
Credit Department.
B. At month-end, AGENT will provide the BAYER Credit Department
with an Aging Schedule of all outstanding receivables over 60
days.
1. Any credit line above the then applicable credit
limit set forth in Paragraph A.1 above, shall
require the prior written approval of the AGENT
must notify the BAYER Credit Department of any
account over 60 days past due with no payment
activity, and place the CUSTOMER on DO NOT SHIP
status.
2. If AGENT elects to turn an account over to BAYER
after 90 days past due, AGENT must provide BAYER
with copies of outstanding invoices and proofs of
delivery (POD).
23
EXHIBIT F
BAYER ANIMAL HEALTH PRODUCTS
SALES TERMS AND CONDITIONS
1. All product orders are subject to acceptance by BAYER.
2. See the attached BAYER Animal Health Price List for PRODUCTS
(hereafter "Price List"). All prices listed in the Price List are
subject to change by BAYER without prior notice. Payment terms are
net thirty (30) days.
3. All returns of PRODUCTS to BAYER are to be arranged by AGENT and
accomplished following prior authorization by the Baytril 100
Inventory Control Specialist. Return freight from AGENT to BAYER
will be paid by BAYER.
4. To obtain assistance concerning your Baytril inventory or consignment
orders contact the Baytril Inventory Control Specialist at
000-000-0000. For customer or technical service call 000-000-0000, or
notify your local BAYER sales representative.
5. BAYER reserves the right at any time to allocate its supply of any
product among CUSTOMERS in proportion to their orders, or otherwise
partially fill their orders, whenever any product is back ordered or
otherwise not available for sale in sufficient quantity to meet all
orders then on hand. BAYER reserves the right to limit orders to
commercially reasonable quantities. Whenever BAYER is requested to
make delivery in full by a certain date, BAYER'S exercise of its
rights under this Paragraph shall excuse its failure to make full
delivery by such date.
6. BAYER shall not be obligated to fill any order requesting delivery
sooner than BAYER'S then current delivery schedule, nor shall BAYER be
obligated to fill any order for a customer if payment for any products
previously sold to such customer is past due
7. BAYER shall retain title to and bear the risk of loss for products
until their delivery to customer at the destination specified in the
xxxx of lading.
8. BAYER warrants that products shall conform with the description
contained in the labeling thereof EXCEPT AS SET FORTH ABOVE, BAYER
MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO
PRODUCTS, INCLUDTNG ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
24
9. No claim of any kind by CUSTOMER against BAYER arising out of the
sale of the PRODUCTS shall be for more than the value of that
portion of the PRODUCTS for which any claim is made. BAYER shall not
be liable for any special, incidental or consequential damages,
whether arising in contract or tort.
The remedies set forth herein shall be CUSTOMER's sole and exclusive
remedies with respect to any defective or damaged PRODUCTS.
25
EXHIBIT G
BAYTRIL 100 AGENT SALES GOAL
BONUS COMMISSION
Agent will be eligible for a 2% bonus commission on all sales of Baytril 100
after achieving the sales goal identified below. This bonus commission will
be paid on an annual basis on all sales of Baytril 100 which have been made
in the effective time period.
Effective Dates: January 1, 1999 through December 31, 1999
Agent: PVP
Sales Goal: $*******
***Confidential material omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
26
PRODUCTS PRICE LIST
Effective date: January 1, 1999
PRODUCT CODE SIZE QUANTITY UNIT PRICE
------- ---- ---- -------- ----------
Baytril 100 023699 100 mi 1-23 Units $**** ea
Baytril 100 023699 100 mi 24 + Units $**** ea
***Confidential material omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
27
Terms and Conditions of Sale
All prices based on $***** minimum purchase. No orders for less than
case quantity will be accepted.
Terms of Sale
The terms and conditions of sale established by Bayer conform to
current commercial and legal requirements. Accordingly, acceptance of
Distributor's orders are expressly made conditional on Distributor's assent
to these terms and conditions. No modification or addition hereto shall be
affected by acknowledgement or acceptance of purchase orders containing
additional or differing terms. Any changes or additions must specifically
refer to this Agreement and be signed by Bayer.
Transportation F. O. B.
Origin of Bayer's choice with freight allowed to a single common
carrier destination in Distributor's area of responsibility, provided each
order must be at least $***** per shipping location. If the order is for less
than the specified minimum, freight shall be charged to the distributor and
included on the invoice. Bayer shall select transportation mode and carrier
routing. If Distributor requires a transportation mode and/or carrier routing
other than that selected by Bayer, and is satisfactory to Bayer, Distributor
shall pay additional costs.
Title and Risk of Loss
Title and risk of loss in all goods sold hereunder shall pass to
Distributor at shipping point. In the event of loss or damage, Distributor
should xxxx receiving documents appropriately and initiate a claim with
carrier. Damage claims or carrier's freight xxxx and an inspection report
should support shortages. Bayer will provide reasonable assistance to
Distributor in claim filing, if notified within 3 business days.
Delivery
Bayer reserves the right to make shipments in installments.
Distributor's orders will be supplied subject to availability of product and,
in the event of product shortage for any reason, Bayer reserves the right to
restrict or allocate its supply of products.
Contingencies
In the event of war, flood, strike, labor trouble, riot, acts of
governmental authority, natural disasters, or other contingencies beyond the
reasonable control of the parties, interfering with the production, supply,
or transportation to Distributor of goods covered herein, or with the supply
of any raw materials used in connection therewith,
***Confidential material omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
28
quantities so affected shall be eliminated from the order without liability,
but the order shall otherwise remain unaffected.
Warranty and Damages
Bayer warrants that products shall conform with the description
contained on the labeling thereof. EXCEPT AS SET FORTH ABOVE, BAYER MAKES NO
OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO PRODUCTS. INCLUDING ANY
WARRANTY OF MERCHANTABILTY OR FITNESS FOR A PARTICULAR PURPOSE. Distributor's
exclusive remedy for breach of the foregoing warranty by Bayer and Bayer's
sole liability shall be replacement or refund of the purchase price for the
goods involved. In no event shall Bayer be liable for consequential or
incidental damages.
Patents and Trademarks
Bayer has been advised that the sale of its products outside the
United States and its possessions may or may not infringe the patent and
trademark rights of others.
Price, Taxes and Payment Terms
Price shall be as specified in the Bayer Price List in effect at the
time of Distributor's order, provided Distributor places no restrictions
against immediate shipment. Prices are subject to change without notice. Any
list or resale prices referred to Distributor are suggested only. Goods are
invoiced without sales or use tax, provided Distributor maintains properly
executed resale certificate on file at Bayer.
Normal terms of sale are Net 30 days.
Controlling Law
Differences and disputes arising out of the sale of Bayer products
shall be resolved in accordance with the laws of the State of Kansas.
Return Goods Policy
1. Outdated merchandise cannot be returned without prior authorization
from a Bayer Sales Representative.
2. Credit for or exchange of merchandise will be issued only to the
original purchaser.
3. A Returned Merchandise Authorization Form approved by a Bayer Sales
Representative must accompany outdated returns.
29
4. Outdated merchandise in unopened containers may be returned if within
120 days of expiration. Product received more than 120 days beyond
expiration date is not eligible for credit.
5. Outdated returns will receive:
Biologicals
-----------
Biologicals approved for return can, at distributor's discretion, be
replaced with IDENTICAL products (same product codes), or credit can
be issued for 80% of current published price.
If replacement is selected, Bayer will issue a credit memo and
subsequent invoice at the same price for tracking purposes.
All Other Bayer Products
------------------------
All other Bayer products approved for return for credit will be issued
at 100% of price paid.
6. Merchandise labeled and/or sold as nonrefundable cannot be returned
for credit.
7. In-date merchandise cannot be returned without prior approval by the
Bayer Sales Management.
8. Returns should be prepaid with shipping labels affixed to the outside
of all shipping containers, and shipped freight prepaid to:
Bayer Corporation
Agriculture Division
Animal Health
0000 Xxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
30
Sales Agreement
This document will identify the conditions and terms of the Sales
Agreement between Professional Veterinary Products, Ltd. and Bayer
Corporation, Agriculture Division, Animal Health.
1. The term of the Agreement shall be January 1, 1999 through
December 31, 1999.
2. Bayer understands that Professional Veterinary Products
Ltd. is in a class of trade called a Veterinary Buying
Group. This will entitle P.V.P. to sell the Bayer product
ADVANTAGE. P.V.P. will transmit ADVANTAGE orders to be
processed by Bayer via E.D.I. The ADVANTAGE orders will
then be shipped and billed by Bayer.
3. Bayer will provide P.V.P., whenever possible, advance
notice of all ADVANTAGE promotional programs to allow
incorporation into P.V.P. programs, if appropriate.
4. The ANNUAL purchase goal and total for the period of this
Agreement is:
Annual Total $*******
--------
5. Bayer will pay P.V.P. a rebate based on sales of ADVANTAGE.
This rebate will be paid monthly at the rate of 5 % of
P.V.P. ADVANTAGE sales to its members.
6. The Bayer Regional Manager will have the primary
responsibility for P.V.P., and will coordinate and direct
the frequent support of the local Bayer sales
representative.
7. P.V.P. will comply with, and is entitled to respectively,
the terms and conditions of sale and return goods policy to
veterinarians as set forth in the 1999 ADVANTAGE conditions
of sale.
8. P.V.P. represents that it sells Advantage only to licensed,
practicing veterinarians whose activities are engaged
substantially, if not predominantly, in the private
practice of veterinary medicine.
***Confidential material omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
31
9. This Agreement can be terminated by either party within 10
days by providing written notice of their intent to the
other party.
Signature of this document by both parties signify agreement on the
above conditions.
BAYER CORPORATION PROFESSIONAL VETERINARY
PRODUCTS, LTD.
/s/ Xxxxx Xxxxxx /s/ Xx. Xxxxxx X. Xxxxxx
----------------- ------------------------
Director of Sales President
March 1, 1999 February 23, 1999
32
