EX-10.1 2 d566198dex101.htm EX-10.1 Master Supply and Distribution Agreement Master Supply and Distribution Agreement Supplier Company Milestone Scientific, Inc. and Tri-anim Health Services, Inc. Livingston, New Jersey 07039 Dublin, Ohio 43016...
Exhibit 10.1
![]() | Master Supply and Distribution Agreement |
Master Supply and Distribution Agreement
Supplier | Company | |
Milestone Scientific, Inc. and | Tri-anim Health Services, Inc. | |
000 Xxxxx Xxxxxx Xxxxxx | 0000 Xxxxxx Xxxxxxxx Xxxxxxxxx | |
Xxxxxxxxxx, Xxx Xxxxxx 00000 | Xxxxxx, Xxxx 00000 | |
Attention: Xxxxxxx Xxxxx, CEO | Attention: Xxxxxxx Xxxxxxx, President | |
Telephone: 000-000-0000 | Telephone: 000.000.0000 | |
Facsimile: 000-000-0000 | Facsimile: 614.760.0533 | |
E-mail: xxxxxx@xxxxxxxxxxxxxxxxxxx.xxx | E-mail: xxxx.xxxxxxx@xxxxxxx.xxx |
1. | Scope of Agreement. |
2. | Definitions. The following terms, when capitalized in this Agreement, shall have the meanings set forth below: |
2.1. | “Agreement” means this Master Agreement together with any purchase order issued hereunder during the Term. |
2.2. | “Claims” means all claims, liability, damage, losses, or expenses, including litigation costs and attorneys’ fees. |
2.3. | “Company Party” or “Company Parties” means Company and its affiliates, and each of their officers, members, shareholders, directors, employees, agents, and contractors. |
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2.4. | “Confidential Information” means any proprietary or confidential information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services, customer lists and customers, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, marketing, distribution and sales methods and systems, sales and profit figures, forecasts and inventory information, finances and other information belonging to a Party. Sales tracing reports shall be considered the Confidential Information of Company. However, Confidential Information does not include any of the foregoing items which (i) has become publicly known and made generally available through no act of the Receiving Party; (ii) is developed by the Receiving Party without use of the Confidential Information of the Disclosing Party; (iii) is disclosed to the Receiving Party by a third party who is not under an obligation to preserve its confidentiality; or (iv) is required to be disclosed pursuant to any applicable laws, provided that the Receiving Party shall give the Disclosing Party reasonable prior written notice of any such anticipated disclosure and shall cooperate with the Disclosing Party’s efforts to obtain a protective order. |
2.5. | “Contract Year” means each twelve (12) month period during the Term of this Agreement, commencing on the Effective Date. |
2.6. | “Delivery Date” means the date specified in the Purchase order as of which the entire order is scheduled to be received by Company; provided, however, that in no event shall the Delivery Date be less than 5 days from the date of the Purchase Order. |
2.7. | “Disclosing Party” means the Party disclosing information to the other Party. |
2.8. | “Exclusive Products” means those Products designated on Exhibit A as Exclusive Products. |
2.9. | “Effective Date” shall be the same date in which the FDA approves the 510K of the products. |
2.10. | “Fill Rate” means the quantity of fully conforming Products actually shipped within the Lead Time, divided by the quantity of conforming Products that should have been shipped by the Delivery Date. Fill Rate is determined on a purchase order basis. |
2.11. | “GP Dollars” means the difference between the price at which Product is sold by Company to its customers and the price at which that Product is sold by Supplier to Company. For this purpose price is determined without regard to the application of any discounts or rebates. |
2.12. | “GPO” means Group Purchasing Organization. |
2.13. | “Mandatory Fill Rate” means with respect to a given order, 98% Fill Rate. |
2.14. | “Party” or “Parties” means the Supplier and/or Company, as the context shall require. |
2.15. | “Private Label Products” means all Products identified on Exhibit A as Private Label Products. |
2.16. | “Products” means the products identified on Exhibit A hereto. Products may be added or deleted to Exhibit A by a mutually signed written agreement of the Parties. Products shall include all manuals, usage instructions and limitations, safety devices, and safety information applicable to such Products. The term “Products” includes all Exclusive Products. |
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2.17. | “Receiving Party” means the Party that is the recipient of information from the Disclosing Party. |
2.18. | “Term” means the period beginning on the Effective Date and continuing for a period of 3 years, unless earlier terminated in accordance with Section 15. If not terminated earlier, the Term will be extended for additional one-year periods, unless one Party notifies the other Party in writing of its intention not to extend the Term at least 120 days prior to the end of the then current Term. The initial term together with any extensions thereof are referred to in the aggregate as “Term.” |
2.19. | “Territory” means the United States of America, including all possessions and territories and United States government and military facilities operating outside of the United States of America. |
2.20. | “Market” means health care facilities, home health care market, acute care market, long-term acute care and US government acute care facilities. We define the Tri-anim market as Acute Care only at this time and exclude free-standing, non-hospital affiliated pain management clinics and private pain practices. |
3. | Product Orders and Quantity. |
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4. | Pricing, Invoices, and Payment Terms. |
4.1. | Pricing. Prices for products ordered by distributor shall be set forth on Exhibit A hereto. All prices shall remain firm for the Term, subject only to change once per year, with a maximum increase of three (3) percent. All pricing increases must be submitted with 90 days advance notice and agreed upon by Company following verification of material cost increases provided by supplier as no arbitrary price increases will be accepted by Company. |
4.2. | Taxes, Freight, and other Costs. Other than any applicable sales tax relating to Products, Supplier shall bear the cost of any taxes relating to the Products and/or the supply thereof, including, without limitation, any use, customs, import, medical device tax or excise tax. The Company shall bear the cost of freight, FOB destination freight collect, and all other shipment and delivery costs including, packaging, carrier costs, and additional cost for expedited shipments for all disposable units, which will be warehoused at Tri-anim warehouse facilities before being sent to customers. Supplier shall procure insurance to protect against risk of loss and/or damage until title to Products transfers to Company. All capital units will be drop shipped by the Supplier directly to the end-user customer in a timely fashion upon notification of a customer purchase. Company will procure and maintain inventory on all disposable units based on customer demand creation. Title of Products and liability for Products shall transfer to Company only upon Company or End-User Customer’s acceptance of Products. |
4.3. | Invoices. Supplier shall submit an invoice to Company for all each order after its shipment. All invoices shall specify the purchase order to which it relates and reference any discounts or rebates that may be applicable to such order. |
4.4. | Payment Terms. Payments for each order shall be made in U.S. dollars net 45 days from the date a complete and accurate invoice for an applicable order is received by Company. |
5. | Rebates, Discounts, and Incentives. |
5.1. | Any rebates, credits, incentives, or discount programs provide by Supplier to Company under this Agreement are specified on Exhibit B. The Parties acknowledge that any price reductions or incentive remuneration provided under the terms of this Agreement constitute “discounts or other reductions in price” under section 1128 B(b)(3)(A) of the Social Security Act 42 U.S.C. 1320a-7b(b)(3)(A). Accordingly, Company shall disclose any rebates or discounts to its Customers and require that its Customers for Product properly disclose this and any other “bonus, discount, rebate, or other reduction in price” provided to Company by Supplier to any state or federal program that provides cost or charge-based reimbursement to such Customer for Product. |
6. | Supplier’s Duties. |
6.1. | Supplier shall ready goods for shipment, pack and deliver goods to Company’s designated carriers in accordance with Customer’s order and reasonable shipping schedule.. |
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6.2. | Supplier shall ensure that all Products shall have a shelf life of at least 18 months at its time of delivery to Company or Company’s designee. Product with an expiration date shall have an expiration date of 18 months or greater from the date of delivery to Company or Company’s designee. |
6.3. | Supplier shall refrain from modifying the Products or the key components except if required by the FDA or other government agencies, including, (i) composition or source of any raw material or components; (ii) method of producing or testing Product; (iii) change in subcontractors or suppliers for producing, obtaining, processing, or testing; and (iv) site of manufacture, unless it first receives Company’s written consent for such modifications. |
6.4. | If Company receives a material number of complaints from Company’s customer that relate to Products not performing to Company’s specifications or being otherwise nonconforming, the Supplier is responsible to investigate and report the accuracy of the complaints. A material number of customer complaints, means a number of complaints equal to 6% or more of the rolling average of purchases of such Products over the past two months. |
6.5. | Supplier shall offer Company the right to be the exclusive distributor of any improvement to Product or any product that could be competitive to Product before offering it to any other person or company for distribution. If Company accepts such improved or new product as its exclusive distributor, the terms of this Master Agreement shall apply, subject to Parties’ mutual agreement to the prices for such improved or new product. |
6.6. | Supplier shall maintain the Mandatory Fill Rate on all orders for Products. If Supplier fails to meet the Mandatory Fill Rate by the Delivery Date, Company may charge and Supplier will pay Company a delinquency charge for each day that the Mandatory Fill Rate for the respective purchase order remains unsatisfied. The delinquency charges shall be determined on the basis of the following schedule based on a standard lead time of 60 days for all products: |
Days Delinquent | Daily Penalty | |
1st through 14th day delinquent | % 2 | |
15th through 30th day delinquent | % 5 | |
31st day and any day thereafter | % 10 |
6.7. | If due to a delay in Product delivery or nonconforming Product quality, Company deems it necessary to obtain substitute product from another supplier. To the extent the acquirement of such substitute product, including freight costs, exceeds the price Company would have paid under the Agreement for timely delivered conforming Product, Supplier will pay Company an amount equal to the extra costs incurred by Company to acquire such substitute product. |
6.8. | Supplier shall obtain and maintain any governmental approvals, consents, licenses, authorizations, declarations, filings, and registrations as may be necessary or advisable for the performance of the terms and conditions of this Agreement, including, without limitation, any approvals and licensing by the United States Food and Drug Administration (“FDA”) Drug Enforcement Administration (“DEA”), and pharmaceutical boards, as applicable. |
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6.9. | Company shall be responsible for installation, user education and service, required with respect to Product sold by Company, including all related costs and expenses. |
6.10. | Supplier shall make available to Company at least once during the first 6-months and at least once during the second 6-months of each Contract Year, comprehensive training to Company’s sales and customer service teams, at such time(s) and place(s) as are mutually agreed by the Parties to be convenient. All Supplier costs and expenses relating to such training, including but not limited to travel expenses of Supplier’s employees and agents, but not the Company’s employees or agents, shall be borne by Supplier. |
6.11. | Upon Company’s request, Supplier shall provide Company with (i) demo instruments to be used by Company’s sales personnel, at a thirty-five (35) percent reduction in contract price and (ii) additional demo instruments, at Supplier’s cost, to be used in clinical studies and to produce white papers. No more than five (5) percent of the annual purchase order quantity can be product samples. |
6.12. | Supplier shall use its best efforts to provide a website link from Supplier’s website to Company’s website within 30-days after the Effective Date. |
6.13. | Supplier shall provide Material Safety Data sheets for potentially harmful substances provided to Company by Supplier, to the extent required by law. |
7. | Company’s Duties. |
7.1. | Company shall use commercially reasonable efforts (i) to sell Products to appropriate institutions, (ii) to develop and maintain a qualified sales force for promotion and sale of Products, (iii) to maintain sufficient inventory of Products to service the needs of its customers, (iv) to timely expedite shipping of Products in Company’s inventory to customers ordering Products, (v) to comply in all material respects with all laws that relate to the importation, sale, or distribution of any Products in the Market, and (vi) to refrain from knowingly taking any action that it knows violates any laws, regulations, treaties, or conventions that apply to its activities. |
7.2. | Company shall collaborate with Supplier to develop joint marketing and branding plans for Products. |
7.3. | Company shall use, market, sell, and distribute Products according to the Products specifications, instructions, packaging, and labeling provided to Company by Supplier without alteration, modification, or tampering, unless consented to in writing by Supplier. |
7.4. | Company shall maintain electronic records of each Product sold by Company and to whom it was sold for at least 3 years following the date of the sale of Product to its customer. |
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7.5. | Company shall refrain from selling, marketing, or distributing Products outside the Territory. |
7.6. | Upon Supplier’s request, Company shall provide Supplier with tracing reports at such frequency as the Parties shall mutually agree; provided, for the period beginning on the date of the initial request reports until the termination of this Agreement. |
8. | Warranty. |
8.1. | In addition to any warranty included in manual or other documentation provided by Supplier with Product, all of which are incorporated herein by reference, Supplier warrants that Products shall conform to the specifications contained in the Agreement and be free from defects in materials, workmanship, and design. Supplier warrants that it has title to the Products it sells to Company and that such Products will be free and clear of all liens, claims, or encumbrances and will be patient-ready condition at the time of transfer to Company. Supplier further warrants that the Product delivered to Company under this agreement shall have been manufactured in accordance with all applicable statues, ordinances and regulations, including, without limitation, U.S. Food, Drug & Cosmetic Act and the regulations promulgated there under (the “Act”), including the Good Manufacturing Practice regulations that are now in force or herein after adopted (“Good Manufacturing Practices”) by the FDA. Supplier warrants that all expiration dates on Products are accurate. Supplier warrants that Products shall be properly branded and unadulterated at the time of shipment from the Supplier’s facility, in accordance with all applicable laws. |
8.2. | All warranties under this Agreement, including, but not limited to, any warranty included in a manual or other documentation provided with Product, shall remain in effect for at least 12 months following the date of the Products delivery by Company to its customers or, if longer, the date specified in the manuals or other documentation provided by Supplier with Products. |
9. | Shipping and Marking. |
9.1. | Supplier shall xxxx and ship Products to Company in accordance with (i) all legal requirements for shipment of such Products, and (ii) the instructions set forth in this Agreement and any purchase orders issued with respect hereto. Each shipment shall include paperwork specifying the purchase order and a description of the Products (including quantity) included in each shipment. |
9.2. | The receiving hours at Company’s locations shall be Monday through Friday 8 am to 3 pm in the time zone of delivery destination. In the event other shipping arrangements are proposed, Supplier’s shipper or carrier must obtain prior approval from the receiving agent at the delivery location. No more than three trucks per day may be sent to Company for unloading, unless previously agreed between the Parties. Company will not pay demurrage or any other charges for any trucks sent in excess of this number per day or for trucks that arrive too late to be unloaded. |
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9.3. | A complete Supplier’s “xxxx of material” or advance shipping notice containing all special handling, storage or lifting requirements, is required to be delivered to Company’s carrier prior to shipment. This information should also be submitted to the receiving agent at Company’s designated location via fax or E-mail. |
9.4. | Company shall inspect Products within 30 days of delivery for count and readily discernible non-conformities in the overall order, including, without limitation, package condition, product codes, package labels, and expiration dates. Company shall notify Supplier of any non-conformity found in this initial inspection. Supplier shall have 30 days to correct the initial order by providing conforming replacement Products, at no additional cost to Company. After the order is found to satisfy this initial inspection and all non-conformities, if any, have been remedied, Company will have 30 additional days to thoroughly inspect the Products. Company shall notify Supplier of any non-conformity found in this initial inspection. Supplier shall have 30-days to correct the initial order by providing conforming replacement Products, at no additional cost to Company. Supplier shall reimburse Company for the price (including any taxes and fees incurred for such order) of any Products remaining non-conforming after this second cure period. At the conclusion of this period, Products shall be deemed to be accepted by Company. Title and risk of loss with respect to the Products shall pass to Company upon Company’s acceptance of Products. Supplier shall bear all risk of loss and shall insure all Products until acceptance by Company |
9.5. | If after acceptance of Products in accordance with paragraph (a) above, Company determines that any Products fail to meet any of the warranties stated in Section 9, Company will give Supplier notice of nonconforming Products and return such nonconforming Products to Supplier, and Supplier shall, at Supplier’s option and at Supplier’s expense: (i) replace within 30 days such Products with new Products that comply with this Agreement and the Specifications (as hereinafter defined); or (ii) issue Company a refund or credit in the full amount of the price of the nonconforming units. |
10. | Indemnification. |
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10.3.1. | Procure for Company the unrestricted right to continue using the Product for the term of this Agreement; |
10.3.2. | Replace Products with non-infringing, non-violating, compatible products with specifications and performance equal to or better than the unmodified Products; or |
10.3.3. | Modify Products so they are no longer infringing or violating while maintaining compatibility, specifications, and performance equal to or better than the unmodified Products. |
10.3.4. | If, in the course of any Claim described under this paragraph c, Supplier, Company, or any customer of Company is enjoined or is sought to be enjoined from use of any Product, or any method or operation performed by a Product, pending final resolution of such Claim, Supplier shall immediately post a bond in a form and in an amount sufficient to allow Supplier to continue its obligations to Company and to enable Company and its customers to use the Products and all methods and operations performed by the Product, until the Claim is resolved. |
12. | Quality and Regulatory. |
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15. | Termination. Generally this Agreement shall terminate at the end of the Term or as otherwise provided hereinabove. In addition: |
15.3. | Termination upon Mutual Agreement. The Parties may terminate this Agreement upon mutual written agreement of the Parties. |
15.4. | Consequence of Termination of Agreement. Upon the termination of the Agreement, the following provisions shall apply: |
15.4.1. | Company may sell any Products that are in its possession or which are subsequently delivered pursuant to an outstanding Purchase order under this Agreement; provided however, Supplier shall repurchase from Company all Products then owned by Company upon notice and request by Company, at prices equal to those at which Company purchased them from Supplier should Supplier terminate Company. If Company terminates Supplier then Supplier will have the option to repurchase. Company shall submit to Supplier a list of Products subject to repurchase upon termination, within 30 days after receipt of notice of termination or the expiration of the Term or any renewal term. Supplier will promptly pay Company for returned Products. |
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15.4.2. | Company will have the right to represent itself as an authorized distributor of Supplier until all of Company’s inventory of Products has either been returned for credit by Supplier or has been sold by Company. As of the later of the date as of which (A) the expiration or termination of this Agreement occurs or (B) Company no longer has possession or control of any Products of Supplier, the rights of Company shall immediately terminate and Company shall cease to identify itself as an authorized Company of Products and Company shall not use Supplier’s name on any products sold after such termination. The acceptance of any Purchase order from or the sale of any Products to Company after the expiration or termination of this Agreement shall not be construed as a renewal or extension hereof, nor as a waiver of termination of this Agreement; however, the processes and obligations for each such order shall be governed by provisions identical to the applicable provisions of this Agreement. |
15.4.3. | After termination of the Agreement, Company shall have the ability to continue to purchase Product, for a period of not more than 90 days to the extent necessary for Company to honor existing contractual relationships with customers at the Prices in effect at the date of termination of the Agreement. |
15.4.4. | Each Party shall return or destroy any Confidential Information of the other Party in its possession as of any termination. |
15.4.5. | If this Agreement is terminated by Supplier for any reason other than cause, during the initial Term, in addition to other remedies available to Company, Supplier will reimburse Company its actual out-of-pocket direct expenses incurred training Company’s personnel, on any aspect of Supplier’s Products. |
15.5. | Survival. Sections 8, 10, 11, 13, 15, and 20shall survive termination of this Agreement. |
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Notices.
21.1. | All notices or other communications that are required or permitted hereunder shall be in writing and delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier as provided herein), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, to the addresses first specified hereinabove, or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith, to the attention of the Chief Executive Officer. In addition, a copy of any notice to Company must be sent to General Counsel, Sarnova, Inc., 0000 Xxxxxx Xxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxx 00000 (such copy shall not constitute legal notice) and a copy of any notice to Supplier must be sent to Morse, Zelnick, Rose & Lander, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxx X. Xxxxxxx, Esq. |
21.2. | Any such communication shall be deemed to have been given (a) when delivered, if personally delivered or sent by facsimile on a business day, (b) on the business day after dispatch, if sent by nationally-recognized overnight courier, and (c) on the third business day following the date of mailing, if sent by mail. It is understood and agreed that this Section 21 is not intended to govern the day-to-day business communications necessary between the Parties in performing their duties, in due course, under the terms of this Agreement. |
22. | Headings. The headings of this Agreement are for convenience only and shall not affect the meaning of the terms of this Agreement. |
23. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. |
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27. | Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. |
Milestone Scientific, Inc. | Tri-anim Health Services Inc. | |||||
By: | /s/ Xxxxxxx Xxxxx | By: | /s/ Xxxxxxx Xxxxxxx | |||
Title: | President and CEO | Title: | President |
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EXHIBIT A
PRODUCTS
Exclusive Products
Product * | Price | Private Labeled | ||||||
Epidural Instrument | $ | 3,500 each | N/A | |||||
Epidural disposable | $ | 75.00 each | N/A |
Products denoted with a * may be private labeled.
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EXHIBIT B
1. | GPO Rebate. With respect to each Contract Year, Supplier shall provide a rebate to Company equal to the amount of any fees paid by Company to members to which Company sells Products. The terms of the rebate described under this Exhibit B Section 1 shall be set forth in a written rebate agreement executed by the Parties. |
4. | Other Rebates, Discounts, or Incentives. Supplier may establish such additional rebate, credit, incentive, or discount programs as the Parties shall from time to time desire. |
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