EXHIBIT 10.10
AGREEMENT
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AGREEMENT made this ____ day of January, 1996 between VIVRA RENAL CARE,
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INC. ("VIVRA"), a Nevada corporation with offices at 2 Mareblu, Aliso Viejo, CA
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92656 and BELLCO DRUG CORP. ("BELLCO "), a New York corporation with offices at
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000 Xxxx Xxxxxxx Xxx., Xxxxxxxxxxx, XX 00000 and METRO HEALTH CORP. ("METRO
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HEALTH"), a New York Corporation with offices at 000 Xxxxx 000, Xxxx Xxxxxxx, XX
00000 (BELLCO and METRO HEALTH sometimes collectively referred to herein as
"SUPPLIER").
W I T N E S S E T H:
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WHEREAS, SUPPLIER is in the business of providing pharmaceutical and
related supplies and products to kidney dialysis centers and end users; and
WHEREAS, VIVRA owns and operates kidney dialysis units throughout the
United States, and
WHEREAS, SUPPLIER desires to be the primary supplier of pharmaceuticals and
related supplies to VIVRA, and VIVRA desires to utilize SUPPLIER as its primary
supplier of pharmaceuticals and related supplies,
NOW, THEREFORE, in consideration of the premises above recited and the
mutual covenants and obligations hereinafter contained, the parties agree as
follow:
1. TERM OF AGREEMENT.
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The term of this Agreement shall be for ********** years commencing
February 1, 1996 (the "Commencement Date"), provided, however, that either party
may at any time terminate the Agreement upon ********** advance written notice
to the other party. Provided the Agreement is not sooner terminated, upon
expiration of the ********** year term this Agreement shall automatically renew
for successive ********** year periods thereafter.
2. PRICING.
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All products sold to VIVRA will be invoiced at the prices determined in
accordance with the terms of this Agreement. SUPPLIER agrees that the pricing
shall be ********** to any other ********** which is not part of a group of
********** or to any other company that owns and operates a ********** wherein
that number ********** or less than the **********. When VIVRA is eligible for
contract pricing either under a group contract or individual contract for the
same product, SUPPLIER will automatically ********** and which SUPPLIER can
access. All contract pricing is contingent upon VIVRA becoming a member of any
groups suggested by SUPPLIER and maintaining its membership in good standing
with such groups during the term of this Agreement.
(a) Dialysis Purchasing Alliance (DPA) contract pricing. VIVRA
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agrees to promptly submit all necessary enrollment forms in order to
become eligible to participate in DPA. Membership in DPA will be at
********** to VIVRA for the term of this Agreement. DPA contract
products will be billed at a contract price that will be attached to
this Agreement as Schedule A and which will be updated from time to
time. The term of the individual contracts that comprise the DPA
buying group and continued eligibility is subject to each
participating manufacturer's policy.
(b) Direct pharmaceutical contract pricing. Any pharmaceutical
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or prescription drug product contract that VIVRA negotiates directly
with a manufacturer and which SUPPLIER is permitted by manufacturer to
utilize on VIVRA's behalf will be billed at the
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contract price **********. Unless otherwise negotiated on a product by
product basis, SUPPLIER **********.
(c) Non-contract pharmaceutical products. Pharmaceutical
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products that are not available to VIVRA under any pricing contracts
will be billed at SUPPLIER's **********. SUPPLIER **********.
(d) Non-contract medical/surgical products. Medical/surgical
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products will be quoted on a product by product basis.
(e) Epogen pricing. Epogen shall be sold to VIVRA at SUPPLIER's
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********** specified below. For purposes of this Agreement, Net cost
is defined as SUPPLIER's **********. The price to be paid by VIVRA
for shipments of Epogen will vary depending upon the discounts and
service fees available to SUPPLIER from the manufacturer, which
discounts and fees are determined in the manufacturer's sole and
absolute discretion, and are specifically related to VIVRA's purchases
of Epogen from SUPPLIER. Such discounts and fees may also be related
to matters which are beyond the control of SUPPLIER including, without
limitation, agreements between VIVRA and the manufacturer of Epogen to
which SUPPLIER is not a party. Pricing is also dependent upon the
********** chosen by VIVRA. As of the date hereof SUPPLIER
anticipates that the manufacturer will offer to SUPPLIER **********
and **********, for a total discount of ********** from SUPPLIER's
wholesale acquisition cost of Epogen for sale to VIVRA. VIVRA
acknowledges and agrees that such discounts and service fees can be
revised by the manufacturer from time to time and that SUPPLIER's
wholesale acquisition cost and the Net cost to VIVRA shall vary
accordingly.
(i) For the initial ********** of this Agreement Epogen
will be billed at SUPPLIER's ********** as defined above plus a
xxxx up of $********** per ********** units of Epogen based upon
compliance with the payment and terms contained in paragraph 5,
sub-paragraph (a) below entitled Phase One Payment Terms.
(ii) At any time after the initial ********** of this
Agreement, upon 30 days advance written notice, VIVRA may elect
for Epogen to be billed at SUPPLIER's ********** as defined above
plus a xxxx up of $********** per ********** units of Epogen
based upon compliance with the payment and terms contained in
paragraph 5, sub-paragraph (b) below entitled Phase Two Payment
Terms.
(iii) At any time after the initial ********** of this
Agreement, upon 30 days advance written notice, VIVRA may elect
for Epogen to be billed at SUPPLIER's ********** as defined above
plus a xxxx up of $********** per ********** units of Epogen
based upon compliance with the payment and terms contained in
paragraph 5, subparagraph (c) below entitled Phase Three Payment
Terms - Pre Pay Option.
The discount offered to SUPPLIER by manufacturer for the sale of
Epogen to VIVRA is subject to change, from time to time, at the sole
discretion of manufacturer. Immediately upon SUPPLIER's receipt of
notice of any discounting change from the manufacturer, SUPPLIER will
forward a copy of same to VIVRA and immediately recompute its
********** in determining the price to be billed to VIVRA for all
orders of Epogen. In the event the discount and service fees
available to SUPPLIER are more favorable than those referenced above
(**********) the xxxx up to be charged by SUPPLIER shall be subject to
upward revision solely by mutual agreement of the parties.
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3. INVOICING.
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(a) SUPPLIER will provide a corresponding invoice and packing slip packed
inside all product shipments SUPPLIER delivers to the kidney dialysis units.
Invoices or copies of same will be in a format ready for standard fax
transmission. Additionally, SUPPLIER will provide via overnight delivery a
statement of invoices to VIVRA each Tuesday representing invoices from shipments
made by SUPPLIER for the preceding Monday through Friday less any applicable
credits issued by SUPPLIER and accepted by VIVRA during the applicable period.
(b) VIVRA and any kidney dialysis unit receiving product from SUPPLIER
will forward written correspondence and copies of any shipping claims or
disputed invoice(s) to SUPPLIER within 5 business days of receipt of a
corresponding invoice related to a disputed order. Once SUPPLIER receives
written correspondence regarding any disputed invoice(s), said disputed
invoice(s) will not be subject to finance charges specified in paragraph 6
below, but will be required to be resolved and reconciled by both parties within
20 business days.
(c) Returns of any products shipped to VIVRA by SUPPLIER shall be made in
accordance with SUPPLIER's return policy, as amended from time to time. A copy
of SUPPLIER's return policy in effect on the date hereof has been provided to
VIVRA by SUPPLIER, and VIVRA acknowledges receipt of same.
4. PAYMENT.
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Payments will be made to SUPPLIER via federal funds wire transfer from
VIVRA's account to a designated BELLCO bank account. Where the payment due date
falls on a holiday or weekend the payment is due on the next business day.
5. TERMS.
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(a) Phase One Payment Terms:
Invoices dated Monday through Friday for any given week will be
payable via federal funds wire transfer to a designated BELLCO account
within ********** from the Wednesday of such week. Therefore, starting the
********** of this Agreement and assuming VIVRA places at least **********,
VIVRA will make a payment every **********.
(b) Phase Two Payment Terms:
Invoices dated Monday through Friday for any given week will be
payable via federal funds wire transfer to a designated BELLCO account
within ********** from the Wednesday of such week. Therefore, assuming
VIVRA places at least **********, VIVRA will make a payment every
**********.
(c) Phase Three Payment Terms - **********:
Every ********** VIVRA will ********** via federal funds wire transfer
to a designated BELLCO account for ********** Monday through Friday. The
********** will be an amount equal to ********** from the previous month.
Any ********** balance will be reconciled by the ********** of the
following month wherein SUPPLIER will ********** VIVRA and VIVRA will make
********** to SUPPLIER for ********** from the previous month, or SUPPLIER
will issue ********** VIVRA for ********** from the previous month.
(i) In the event VIVRA chooses Phase Three Payment Terms,
SUPPLIER will provide copies of the quarterly financial reports which
BELLCO is required to supply to the financial institution which
provides BELLCO with its operating line of credit. Such reports
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will be provided to VIVRA concurrently with their submission to said
financial institution. All such financial reports provided to VIVRA will
be deemed confidential information and VIVRA agrees to execute a separate
confidentiality agreement acceptable to BELLCO in its sole and absolute
discretion relating to such confidential information.
6. LATE PAYMENT CHARGE.
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VIVRA will be subject to charges for late payments at a rate of 12% per
annum (but in no event more than the maximum rate permitted by law). When
calculating the monthly charge for late payment, all non disputed invoices are
deemed due for payment ********** days from invoice date for Phase One Payment
Terms, and ********** days from invoice date for Phase Two Payment Terms. The
calculation to determine the charge for late payment is as follows:
When the total amount of invoices paid late, weighted by the days
paid late, exceeds the total amount of invoices paid early, weighted
by the days paid early, the difference will be subject to charges at a
rate of 12% per annum (but in no event more than the maximum rate
permitted by law.)
SUPPLIER will create a summary of late charges and a corresponding invoice
for late charges for a given month and deliver same via overnight delivery to
VIVRA by the 10th of the following month. The invoice for late charges will be
payable by the 24th of such month that summary and invoice late charges is
received by VIVRA.
7. DELIVERY.
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All Epogen orders only will be shipped via overnight delivery. Next day
delivery for Epogen is available only for orders transmitted to and received by
SUPPLIER no later than 4:00 p.m. Eastern Standard Time, Monday through Thursday.
Orders for other products will be shipped F.O.B. destination via overland
delivery with all packing, shipping, and delivery charges borne by SUPPLIER.
The pricing of Epogen is contingent upon the understanding that SUPPLIER will
bear full cost of shipment of Epogen to VIVRA or any kidney dialysis unit
operated by it an average of ********** per month per kidney dialysis unit. For
example, based on VIVRA operating 200 kidney dialysis units, SUPPLIER shall bear
the overnight delivery charges for ********** overnight deliveries of Epogen per
month. In the event shipments of Epogen are required to be made by SUPPLIER to
VIVRA or the kidney dialysis units more than an average of $********** per
month, VIVRA will be obligated to pay a delivery surcharge at a rate of
**********, per shipment for each delivery in excess of ********** shipments per
month per kidney dialysis unit. Monthly, SUPPLIER shall prepare a statement
detailing any excess overnight delivery charges incurred by it for the shipment
of Epogen in excess of 1.5 shipments per unit per month for the preceding month.
VIVRA shall pay such amounts within thirty days of receipt of such statement
from SUPPLIER. Not withstanding the foregoing, SUPPLIER shall bear all
overnight delivery costs for all Epogen orders transmitted to and received by
SUPPLIER prior to **********, 1996.
8. VOLUME REQUIREMENTS.
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In order for VIVRA to continue to receive the pricing terms contained in
paragraph 2 above, effective no later than three months from the Commencement
Date VIVRA shall order and purchase from SUPPLIER an amount of products equal to
not less than $********** of product per month based on the pricing terms set
forth in this Agreement. If VIVRA does not reach this monthly minimum for
**********, SUPPLIER reserves the right to adjust upward the pricing contained
in paragraph 2 above. If, solely due to SUPPLIER's fault, SUPPLIER is unable to
provide Epogen to VIVRA for five or more consecutive business days, the monthly
minimum stated above will be reduced by the dollar amount of Epogen orders
transmitted to, received and unfilled by SUPPLIER during the period of time
SUPPLIER is unable to provide Epogen.
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9. AUTOMATED ORDERING SYSTEM.
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(a) It is agreed that as soon as practicable after the Commencement Date
and finalization of Schedule B (referred to below) SUPPLIER will provide at no
cost to VIVRA an electronic ordering System (the "System"). The System will
facilitate the electronic transmission of purchasing, inventory, and receiving
data over standard phone lines from VIVRA's individual kidney dialysis units to
a personal computer-based System (the "Base") at a VIVRA designated centralized
location. The Base will receive this data and then have the capability to
review, edit, print, and transmit this data in batch to SUPPLIER for order
processing. Additionally, the System will be capable of transmitting inventory
counts from the kidney dialysis units to the Base. Finally, the Base will be
capable of exporting data received and accumulated in its database to a
predefined DOS-based file.
(b) The System will include the following:
- Hand-held scanning and order entry device for all current and future
VIVRA kidney dialysis units to which SUPPLIER ships
pharmaceuticals and related supplies.
- Personal computer hardware at the centralized location chosen by VIVRA
to accept transmissions and manage data from the kidney
dialysis units
- Application software to allow VIVRA to perform above specified
functionality
(c) The System will be developed based upon a written specification that
VIVRA & SUPPLIER will mutually develop and attach to and make part of this
Agreement as Schedule B.
(d) During the term of this Agreement SUPPLIER shall maintain the System
in working order in accordance with the specifications contained in Schedule B
at the centralized location chosen by VIVRA and at the kidney dialysis units,
provided however, that SUPPLIER shall not be responsible for maintenance or
repair caused by the substantial negligence of VIVRA, its agents or employees.
If the centralized location is changed by VIVRA during the term of this
Agreement or if VIVRA desires any upgrades, modifications, or peripherals, the
cost for same shall be at VIVRA's expense, except for modifications necessary
for the System to operate in compliance with Schedule B. All upgrades,
enhancements, and modifications shall be the property of SUPPLIER, provided,
however, that VIVRA shall be granted a non-exclusive, perpetual and royalty-free
license to use any such upgrades, enhancements, or modifications.
(e) Upon expiration of the term of this Agreement, VIVRA shall own the
hardware comprising the System. Upon expiration of the term of this Agreement
VIVRA shall have the right and is hereby granted a license to continue to use
the software comprising the System as set forth in Schedule B, provided VIVRA is
not in default of this Agreement. Upon payment of the annual license fee,
SUPPLIER will license said software to VIVRA for an amount not to exceed
$**********, per year. Upon VIVRA's written notice of intent to continue to use
the software comprising the System as set forth in Schedule B sent to SUPPLIER
by VIVRA, an invoice for the annual license fee will be mailed to VIVRA with
said invoice payable within thirty days of invoice date. Annual renewals of the
license to use the software specified in Schedule B shall be at a cost not to
exceed $**********.
(f) It is understood and agreed that SUPPLIER is making a significant
financial investment to develop, provide, and support the System. If this
Agreement is terminated by VIVRA for any reason other than as specified below
after 120 days from the Commencement Date but prior to the expiration of the
three year term, VIVRA will be responsible to purchase all hardware and
peripherals, and to reimburse SUPPLIER for the System's software development
costs. If this Agreement is terminated by VIVRA for any reason other than as
specified below after 120 days from the Commencement Date but prior to the
expiration of the three year term, VIVRA will either return all software and
documentation constituting the System and all copies thereof within 30 days of
such termination, or continue to use the software comprising the System as set
forth in Schedule B at a licensing fee schedule to be determined. The price
VIVRA will pay for the hardware
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constituting the System and the System's software development costs will be
calculated at SUPPLIER's invoiced acquisition cost less straight line
depreciation pro-rated on a three year basis. Software development costs shall
only include costs incurred by SUPPLIER after February 1, 1996 for developing
the System for VIVRA. It is further agreed that such invoiced acquisition cost
will not exceed $**********, and shall be paid within 30 days of SUPPLIER's
invoice date. In the event VIVRA terminates this Agreement solely because the
System fails to perform in accordance with Schedule B, VIVRA shall have no
obligation to reimburse SUPPLIER for any acquisition or development costs, shall
return the hardware, software and documentation (and all copies thereof) within
30 days of such termination, and all licenses granted hereunder shall terminate.
(g) The System will be managed by a designated employee of SUPPLIER (such
employee hereinafter referred to as the "Project Manager"). The Project Manager
will be the contact person for designated VIVRA staff relating to all
operational aspects of the System, including finalization of Schedule B,
implementation and training, and post-installation technical and application
support.
(h) Exclusively relating to the implementation, training, and
post-installation technical and application support of the System, SUPPLIER will
provide reasonable consultation via telephone at no charge to the designated
VIVRA personnel. Additionally SUPPLIER will provide up to three (3) consecutive
days of on-site training at the VIVRA designated location which is the site of
the Base, with such training and travel related to same at no cost to VIVRA. If
VIVRA elects to request more than three (3) consecutive days on-site training at
the site of the Base, or if VIVRA requests SUPPLIER to perform any form of
on-site training for VIVRA's individual kidney dialysis units, SUPPLIER agrees
to provide, for a fee, the services of the Project Manager and/or other
qualified training staff. SUPPLIER will invoice VIVRA for such services at a
rate of $30 per man hour, with such $30 per hour applicable to travel time. If
VIVRA elects to utilize such services, VIVRA agrees to reimburse SUPPLIER for
all related round trip travel, ground transportation, hotel, and meal expenses,
and to pay such invoices within 30 days.
10. CONSULTATION SERVICES.
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At VIVRA's request and for a fee, SUPPLIER agrees to provide VIVRA
technical or application consultation services to integrate the System
referenced in paragraph 9 to VIVRA's current or future hardware or software
platforms. Any enhancements, modifications, or customization of the software
constituting the System shall be performed by SUPPLIER at an agreed upon fee
plus reimbursement of all out of pocket expenses incurred by SUPPLIER.
Consultation services will also be provided by SUPPLIER to assist VIVRA in the
analysis and/or implementation of future business software applications and/or
hardware platforms on the same fee basis as enhancements, modifications, or
customization. SUPPLIER will invoice VIVRA for such consultation services at a
rate to be negotiated on a project by project basis. If VIVRA elects to utilize
such consultation services, VIVRA agrees to reimburse SUPPLIER for all related
round trip travel, ground transportation, hotel, and meal expense, and to pay
such invoices within 30 days.
11. NOTICES.
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Any notices which is desired or required to be given hereunder shall be
deemed to be sufficiently given if personally delivered or sent by certified
mail and addressed as follows :
If to VIVRA:
VIVRA RENAL CARE, INC.
0 Xxxxxxx
Xxxxx Xxxxx, XX 00000
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If to BELLCO:
BELLCO DRUG CORP.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to METRO HEALTH:
METRO HEALTH CORP.
000 Xxxxx 000
Xxxx Xxxxxxx, XX 00000
12. SEVERABILITY.
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If any one or more of the provisions contained herein shall be held for any
reason to be invalid, illegal or unenforceable in any respect, such provision
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provisions had never
been contained herein.
13. BINDING EFFECT.
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This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, provided, however,
that this Agreement may not be assigned by either party without the prior
written consent of the other.
14. ENTIRE AGREEMENT.
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This Agreement contains the entire understanding and agreement between the
parties concerning the subject matter hereof, and all other prior written and
oral agreements, understandings or arrangements are merged herein. No amendment
or modification hereof shall be binding upon either party unless in writing
signed by the party to be charged therewith.
15. MISCELLANEOUS.
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SUPPLIER shall submit to VIVRA information concerning any material
litigation instituted against SUPPLIER. All such information provided to VIVRA
will be deemed confidential information and VIVRA agrees to execute a separate
confidentiality agreement acceptable to BELLCO in its sole and absolute
discretion relating to such confidential information.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first written above.
VIVRA INC.
By:
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BELLCO DRUG CORP.
By:
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METRO HEALTH CORP.
By:
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