Redacted portions subject to confidential treatment request) DISTRIBUTION SERVICES AGREEMENT
Exhibit 10.1
(Redacted portions subject to confidential treatment request)
DISTRIBUTION SERVICES AGREEMENT
This Distribution Services Agreement (“Agreement”) is made as of the 1st day of January, 2006 (the “Effective Date”), by and between AmerisourceBergen Drug Corporation (“AmerisourceBergen”), with an address at 0000 Xxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000-0000 and Sciele Pharma, Inc. formerly known as First Horizon Pharmaceutical Corporation, with an address of Five Concourse Parkway, Suite 1800, Xxxxxxx, Xxxxxxx 00000, (“Supplier”).
2. PRICE, PAYMENT AND INVENTORY LEVELS
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fulfillment of the obligations set forth in Paragraph 3 below (collectively referred to as “Primary Distribution Services”). The Services Fee amount is set forth in Exhibit C (Services Fee).
AmerisourceBergen shall have no obligation to maintain the minimum Inventory Level of a particular Product if such Product is unavailable from Supplier.
AmerisourceBergen shall include sufficient data in the Inventory and Sales Reports and Data Reports so that Supplier can determine and evaluate the on-hand and on-order inventory, purchases, returns and chargebacks made by Federal Customers.
In addition to the Inventory and Sales Reports above, AmerisourceBergen agrees to provide the following EDI reports: 820-Electronic Funds Transfer; 844 -Electronic Chargeback; and 849-Electronic Chargeback reconciliation (collectively, “Data Reports”). The foregoing Data Reports shall be provided to Supplier on a weekly basis.
3. AMERISOURCEBERGEN OBLIGATIONS
a. Stock Product. AmerisourceBergen will maintain sufficient stock of Products to satisfactorily supply customer base demand.
b. Legal Compliance. AmerisourceBergen will comply with federal, state and local laws governing the purchase, handling, sale, and distribution of Products.
(1) Customers that receive Federal Statutory Pricing include but not limited to Department of Defense (DOD), Veterans Administration (VA), Disproportionate Share Hospitals (DSH), and Public Health Services (PHS).
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e. Drop Shipments. AmerisourceBergen will honor all invoices billed to AmerisourceBergen for drop shipments authorized by AmerisourceBergen, provided that the Product has been delivered and the invoice is not disputed by customer.
f. Storage Conditions. AmerisourceBergen will maintain Products under proper conditions, both in storage and in transit to AmerisourceBergen customers. Product requiring special storage conditions may be subject to an additional handling fee.
g. Short Dated Product. AmerisourceBergen will accept short dated Product in its sole discretion and on a case-by-case basis.
i. AmerisourceBergen agrees to purchase 100% of its requirements of Products directly from First Horizon. Furthermore, AmerisourceBergen agrees to order the minimum quantities for each Product set forth in the attached Exhibit D.
j. [Intentionally Deleted]
k. Within thirty (30) days of signing this Agreement, AmerisourceBergen shall provide to Supplier the names and contact information of the AmerisourceBergen employee primarily responsible for managing and maintaining this Agreement and current Customer contracts that effect this Agreement.
b. Set-up Sheets. Upon the request of AmerisourceBergen, Supplier will provide AmerisourceBergen with completed New Vendor Set-Up form. Supplier will provide AmerisourceBergen with a completed HDMA Form for all new items, in addition to any promotional fact sheets for all promotions. Supplier is responsible for the accuracy of the form. AmerisourceBergen will not be responsible for Supplier’s errors. Incomplete forms will not be processed.
d. [Intentionally Omitted]
e. [Intentionally Omitted]
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AmerisourceBergen Purchase Order Number
Ship-From Address
Ship-To Address
g. Drop Ship Orders. In the event AmerisourceBergen or Supplier elects to drop ship Product(s) to an AmerisourceBergen customer, all other provisions of the Agreement, including returns, remain in effect. Supplier must verify in advance that customer is in good standing with the servicing AmerisourceBergen division.
i. Shipment Charges, Title and Risk of Loss. All orders are to be shipped by Supplier to AmerisourceBergen FOB destination, freight prepaid by Supplier. Supplier shall pay for insurance. Title to and risk of loss of Products sold hereunder will pass to AmerisourceBergen upon delivery at the designated destination by Supplier.
j. Short Dated Product. Supplier agrees to ship Products with not less than 12 months’ shelf life remaining, unless Product is manufactured with a limited shelf life less than the above, in which case such Product will be shipped per Supplier’s/manufacturer’s guidelines. At AmerisourceBergen’s discretion, short dated Product may be accepted on a case-by-case basis in individual purchase situations.
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s. Legal Compliance. Supplier will comply with all applicable federal, state and local laws including but not limited to those laws governing the manufacture, purchase, handling, sale, marketing and distribution of Products purchased under this Agreement.
u. Guaranty of Sale for New Product Launches. Recognizing the uncertainty associated with new Product launches, the parties agree that prior to the delivery of the initial stocking order, AmerisourceBergen and Supplier will jointly determine the amount of the initial stocking order that will be sold to AmerisourceBergen in a mutually agreed upon time frame.
a. AmerisourceBergen will have the right to return to Supplier Products in accordance with the Return Goods Policy, as amended. The current Return Goods Policy is attached as Exhibit E.
b. Supplier will accept AmerisourceBergen returned Products from a third party reverse distribution processor. Any fees or expenses associated with the third party reverse distribution processor shall be paid by AmerisourceBergen.
Should Products sold to AmerisourceBergen be received in damaged condition (whether noted at receipt or hidden), AmerisourceBergen will note on the delivery slip the apparent damage and shall request that the Supplier remedy the situation by accepting prompt return of Product and issuance of a credit. Damage will be reported promptly to Supplier’s customer service department to determine the disposition instructions. AmerisourceBergen shall hold such damaged Products for inspection by the insurer, the carrier, or Supplier’s designated representative for up to forty-five (45) days.
In the event of an incomplete shipment, a shortage in shipment, the misdirection of any delivery, or any overshipment resulting from or caused by Supplier’s error, the Supplier shall immediately contact the AmerisourceBergen purchasing department upon discovery and the parties shall mutual agree upon the appropriate action to take. If the shipment error is caused by or resulting from Supplier’s error, then Supplier will be responsible for related freight or accessorial charges.
8. SUPPLIER DIRECT-TO-CUSTOMER CONTRACTS
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a. Participating Customers. Any customer having a current direct purchase contract with Supplier (the “Participating Customer”) may request that such purchases be made through AmerisourceBergen as a vendor. Such request must be made by the Participating Customer to AmerisourceBergen in writing. AmerisourceBergen reserves the right to accept or refuse any such request in its sole discretion. Supplier shall inform AmerisourceBergen of the terms, pricing, and other relevant details of its contract with the Participating Customer. Contract updates and changes should immediately be submitted to the AmerisourceBergen Contract Department for prompt application.
Supplier and AmerisourceBergen agree to maintain complete and accurate records of all transactions related to the conduct of business. During the term of this Agreement and for a period of one year thereafter following termination or expiration of the Agreement, both parties will permit inspection of records upon reasonable notice during regular business hours for the purpose of resolving business disputes. If based on any such inspection or audit it is determined that either party has received excess credits or taken any unearned discounts, the party shall immediately pay any excess amount.
All documents and other information provided to a party by the other party pursuant to this Agreement, including any information concerning prices, quantities purchased by any customer, data or other terms and conditions, shall be held by the receiving party in strict confidence and not disclosed either directly or indirectly to any third party and shall only be used for purposes of fulfilling the receiving party’s obligations under this Agreement. Both parties acknowledges that money damages alone may not be a sufficient remedy for any violation by it of the terms of this Agreement addressing use or disclosure of confidential information of the disclosing party and that the disclosing party may be entitled (in addition to any other remedies which may be available to it at law or in equity) to specific performance and injunctive relief as remedies for any such violation. Each party shall keep the terms and conditions of this Agreement and any amendments or addenda thereto confidential.
Notwithstanding anything to the contrary in this Agreement, the receiving party shall have no liability to the disclosing party for the use or disclosure of such information as the receiving party can establish by written documentation to:
(a) have been publicly known prior to disclosure by the disclosing party of such information to the receiving party;
(b) have become publicly known without fault on the part of the receiving party, subsequent to disclosure to the receiving party;
(c) have been received by the receiving party at any time from a source, other than the disclosing party, lawfully having possession of and the right to disclose such information;
(d) have been otherwise known by the receiving party prior to disclosure by the disclosing party to the receiving party of such information; or
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(e) have been independently developed by the receiving party without use of such information.
A party receiving Confidential Information may disclose such Confidential Information if required to do so by a court (or other tribunal of competent jurisdiction), any governmental body or as required under any applicable laws, rules or regulations provided that (i) the party required to disclose such Confidential Information provides prompt notice of such pending disclosure to the disclosing party so that the disclosing party can seek a protective order, and (ii) the party required to disclose such Confidential Information shall exercise reasonable efforts to ensure that the information is accorded confidential treatment by the court or other tribunal.
The provisions of this Section shall survive for a period of two (2) years following the termination of this Agreement.
11. WARRANTY
Supplier warrants that Product shipped from Supplier will not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder (“Act”), or within the meaning of any applicable state or municipal law in which the definition of adulteration and misbranding are substantially the same as those contained in the Act. (collectively the “Applicable Laws”) THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED AND SUPPLIER EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES INCLUDING WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE EXCEPT AS OTHERWISE CONTAINED HEREIN AND IN ANY CONTINUING GUARANTY AND INDEMNIFICATION AGREEMENT DELIVERED BY SUPPLIER TO AMERISOURCEBERGEN.
a. Except as otherwise specified, AmerisourceBergen is acting pursuant to this Agreement in the capacity of an independent contractor distributing the Products of Supplier as well as products of other manufacturers.
b. AmerisourceBergen shall not have the authority to bind Supplier unless otherwise agreed to between Supplier and AmerisourceBergen.
c. Supplier shall not use AmerisourceBergen’s name, trademarks or commercial symbols without the prior written consent of AmerisourceBergen.
d. Nothing contained in this Agreement shall be interpreted or construed so as to characterize the relationship between the parties as a joint venture, partnership, agency or franchise for any purposes whatsoever.
a. AmerisourceBergen shall indemnify, defend and hold harmless the Supplier, its agents, servants, employees, officers, directors, attorneys, subsidiaries, affiliates, parent and assigns from and against all claims (including, but not limited to, product liability claims) losses, damages, liabilities and expenses (including, but not limited to, reasonable attorneys’ fees and court costs) (collectively, “Claims”) to the extent arising from negligence, willful misconduct, illegality, material breach of this Agreement or wrongdoing of any kind alleged or actual on the part of AmerisourceBergen. This is in addition to any remedies specifically set forth elsewhere in this Agreement. Notwithstanding the foregoing indemnification obligation, AmerisourceBergen shall have no obligation to indemnify Supplier for Claims to the extent resulting from or caused by negligence, willful misconduct or breach of this Agreement by Supplier or its agents, representatives or subsidiaries. Supplier hereby agrees to defend, indemnify and hold AmerisourceBergen and each of its subsidiaries harmless against any Claims to the extent arising as a result
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of (a) actual or alleged violation of Applicable Laws by virtue of which Products at the time of shipment from Supplier are adulterated, misbranded or otherwise not in full compliance with or in contravention of Applicable Laws, (b) possession, distribution, sale and/or use of any Products of Supplier, including any prosecution or action by any governmental body or agency or by any private party for misbranded or adulterated Product within the meaning of Applicable Laws, including claims of bodily injury, death or property damage, (c) any actual or asserted claim that Supplier’s Products infringe any proprietary or intellectual property rights of any person, including infringement of any trademarks or service names, trade names, trade secrets, inventions, patents or violation of any copyright laws or any other applicable federal, state or local laws, and (d) any actual or asserted claim of negligence, willful misconduct or material breach of this Agreement. Notwithstanding the foregoing indemnification obligation, Supplier shall have no obligation to indemnify AmerisourceBergen for Claims to the extent resulting from or caused by negligence, willful misconduct or breach of this Agreement by AmerisourceBergen or its agents, representatives or subsidiaries.
Supplier further agrees to maintain primary and noncontributing Products Liability Insurance of not less than U.S. $5,000,000.00 per occurrence, Combined Single Limit (Bodily Injury and Property Damage) including AmerisourceBergen Corporations and its subsidiary companies as Additional insureds, including a Broad Form Vendors Endorsement, with provision for at least 30 days’ prior written notice to the additional insureds in the event of cancellation or material reduction of coverage, and upon request promptly submit satisfactory evidence of such insurance. All insurance coverage must be with a carrier with at least an A. M. Best rating of A VII including any deductible or self-insurance risk retained by Guarantors. In combination with significant excess liability insurance, any retained risk must be commercially reasonable, actuarially sound, and acceptable to AmerisourceBergen Corporation, at its sole discretion. . In combination with liability insurance, any retained risk must be commercially reasonable and actuarially sound. Supplier warrants that its assets are sufficient to cover any self-insurance liability it assumes under this Agreement.
c. Governing Law/Interpretation. The Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Pennsylvania. The parties have jointly negotiated this Agreement and, thus, neither this Agreement nor any provision will be interpreted for or against any party on the basis that it or its attorney drafted the Agreement or the provision at issue. Headings of the various Sections are not part of the context of this Agreement, and are only labels to assist in locating those Sections, and will be ignored in construing this Agreement. When this Agreement requires approval of one or more parties, such approval may not be unreasonably withheld or delayed. Words, regardless of the number and gender specifically used, will be construed to include any other number, singular or plural, and any gender, masculine, feminine, or neuter, as the context requires. “And” includes “or.” “Or” is disjunctive but not necessarily exclusive. “Including” means “including but not limited to.” The parties hereby consent to jurisdiction of Pennsylvania’s courts and, for any litigation that may arise out of this Agreement, stipulate to venue in the state and federal courts serving Xxxxxxx County, Pennsylvania, as the sole proper venue.
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i Publicity. Neither party shall have the right to issue a press release, statement or publication regarding the terms and conditions of or the existence of this Agreement.
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AMERISOURCEBERGEN DRUG CORPORATION |
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By: |
/s/ Xxxxxxx Xxxxx |
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By: |
/s/ Xxxxxxx X. Xxxxxxx |
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Title: |
Xxxxxxx Xxxxx, CFO |
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Title: |
VP Brand RX |
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Date: |
07/12/06 |
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Date: |
07/19/06 |
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Exhibit A
Data Elements for Inventory and Sales Reports
1. Current inventory quantity available - indicates the quantity available to be sold or shipped by distribution center for All Distribution Centers
2. Quantity on order, not yet received - total quantity expected to be received from Supplier for current reporting period, but not yet received by distribution center for All Distribution Centers
3. Quantity sold by distribution center for All Distribution Centers
4. Quantity out of stock
5. Additional demand quantity - sums the last three months of order quantity from order detail file, subtracts the sum of the last three months of credit quantity from credit detail file, and divides by number of days over past three months
6. Planned inventory quantity for replenishment purposes
7. Morgue Reports shall be generated monthly and sent to First Horizon by distribution center for All Distribution Centers
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EXHIBIT C - Services Fee
A Service Fee will be paid annually based on purchases made by AmerisourceBergen during the term of the Agreement at the price of the Product at the time of purchase.
The term “Service Fee” shall mean the **** ******* **** fee that will be paid to AmerisourceBergen by Supplier in each year based upon the total dollar volume of Product purchased by AmerisourceBergen during such year.
Supplier will receive Credits towards the Service Fee for the Economic Benefit received or realized by AmerisourceBergen. “Economic Benefit” means the total savings received or realized by Amerisource Bergen including the economic benefit derived from price appreciation on Aggregate Inventory after a Supplier’s pricing action. In the event AmerisourceBergen elects to participate in Post Price Increase Buy In Allocations; discounts; off invoice allowances; or any other promotional deals or discounts offered by Supplier (collectively “Discounts”) , any economic benefit received or realized by AmerisourceBergen from Discounts shall be credited toward the Service Fee.
Service Fee shall be calculated based upon the following formula:
Service Fee Formula:
(Total AmerisourceBergen purchases) X **** less Credits
AmerisourceBergen shall invoice Supplier semi-annually for the previous two calendar quarters. Such invoices shall be delivered to Supplier on or before the July 15th and January 15th.
Invoices shall include sufficient detail to allow Supplier to verify and audit AmerisourceBergen’s calculation set forth in the invoice. Supplier shall pay undisputed invoice amounts within forty-five (45) days of Supplier’s receipt of invoice.
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Exhibit D
Minimum Order Quantities
Product |
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NDC # |
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Order Qty |
Robinul 100’s |
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5963020010 |
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** |
Robinul Forte |
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5963020510 |
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** |
Nitrolingual Pumpspray 200 |
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5963030020 |
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*** |
Nitrolingual Pumpspray 60 |
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5963030065 |
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** |
Ponstel 100’s |
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5963040010 |
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** |
Tanafed DP 4oz |
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5963046504 |
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** |
Tanafed DP 16oz |
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0000000000 |
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** |
Tanafed DMX 4 oz |
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5963047004 |
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** |
Tanafed DMX 16oz |
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5963047016 |
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** |
Sular 10mg |
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5963044010 |
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** |
Sular 20mg |
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5963044110 |
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** |
Sular 30mg |
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5963044210 |
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** |
Sular 40mg |
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5963044310 |
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** |
Cognex 10 |
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5963019012 |
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** |
Cognex 20 |
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5963019112 |
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** |
Cognex 30 |
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5963019212 |
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** |
Cognex 40 |
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5963019312 |
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** |
Furadantin 470 mL |
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5963045016 |
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* |
Prenate Elite 90’s |
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5963041190 |
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** |
Optinate 30s |
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5963041230 |
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** |
Xxxx |
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5963013503 |
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** |
Fortamet 1000mg |
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6202257560 |
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** |
Fortamet 500mg |
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6202257460 |
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** |
Altoprev 20mg |
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6202262830 |
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** |
Altoprev 40mg |
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0000000000 |
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** |
Altoprev 60mg |
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6220226303 |
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** |
Triglide 50mg |
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0000000000 |
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** |
Triglide 160mg |
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5963048590 |
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** |
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Exhibit E
RETURN GOODS POLICY
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