Confidential Treatment Requested
Exhibit 10.1
PRIME VENDOR AGREEMENT
This Prime Vendor Agreement ("Agreement") is made as of March 1, 2006
("Effective Date") by AmerisourceBergen Drug Corporation, a Delaware corporation
("ABDC"), and Standard Management Corporation, an Indiana corporation
("Customer").
A. ABDC is a national distributor of pharmaceutical and other products,
including prescription ("Rx") and over-the-counter ("OTC") pharmaceuticals,
nutritional, health and beauty care ("HBC") and home health care ("DME")
products ("Product" or "Products"), and services ("Services");
B. Customer owns and operates one or more long term care pharmacies
("Facilities"); and
C. The parties intend by this Agreement to set forth their obligations to
each other for an arrangement under which ABDC will provide Products and
Services to Customer ("Program").
NOW THEREFORE, the parties agree as follows:
1. PRICING AND PAYMENT TERMS
ABDC will be the Primary Vendor of all requirements of Customer's
Facilities for Products. Customer will pay, within terms, Product costs and
Program fees pursuant to payment terms in Exhibit "1" ("Pricing/Payment Terms").
"Primary Vendor" means Customer purchases from ABDC no less than ***% of all
prescription pharmaceutical Products it purchases, as verified quarterly, and
meets minimum periodic purchase levels in Paragraph 3(A) of the Pricing/Payment
Terms. Orders for Products will be electronically transmitted (including
Schedule II controlled substances when allowed) and will describe Products that
ABDC will provide to Customer, the quantity and designated delivery location.
All payment plans (except pre-pay) must be by electronic funds transfer (EFT).
2. PRO GENERICS PROGRAM PARTICIPATION
Customer must elect to participate in ABDC's preferred generic formulary
program ("Preferred Rx Options" or "PRxO Generics") pursuant to requirements as
amended from time to time by ABDC. If participating, Customer will purchase no
less than ***% of its purchases of the "Top 100" generic pharmaceutical Products
from ABDC. The Top 100 is a list determined from time to time by ABDC of more
than one hundred commonly used generic pharmaceutical Products. Customer
authorizes ABDC as its sole agent to develop and implement a generic
pharmaceutical Product list for the Term. Customer will purchase from ABDC each
calendar quarter no less than the minimum Net Purchase volume of generic
pharmaceutical Products as set forth in the Pricing/Payment Terms.
3. CUSTOMER LOCATIONS & DELIVERIES
ABDC will deliver Products to each Facility five days a week (Monday -
Friday), once a day except holidays and warehouse physical inventory days.
Additionally, Customer will be entitled to one emergency delivery per calendar
quarter at no additional charge. Customer may be charged for each additional
emergency order. Facility means each of Customer's long term care pharmacies,
together with any other facilities Customer acquires, is affiliated with or
operates during the Term in the United States. Newly acquired facilities with
existing agreements will become Facilities under this Agreement upon the earlier
of expiration of such existing agreement or the date Customer may terminate such
agreement according to its terms, with or without cause, without breaching it or
paying a material termination penalty; provided, however, service to Facilities
outside ABDC's normal service area (which does not include Alaska, Hawaii or
U.S. territories) may be subject to a delivery surcharge.
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*****Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
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Confidential Treatment Requested
Exhibit 10.1
4. RETURNED GOODS POLICY
Customer will only return Products to ABDC in accordance with ABDC's
standard policy for returned Products ("Returned Goods Policy"), as amended from
time to time by ABDC. If Customer returns more than 3% of its OTC Net Purchases,
or 3% of its pharmaceutical Net Purchases in any month, Customer may be assessed
an additional restocking fee over and above any standard stocking fee in the
Returned Goods Policy or ABDC may adjust the Price of Goods or both. Customer
will return only Product purchased from ABDC for which Customer has submitted
the invoice number and date of purchase. ABDC may reject returns not accompanied
by the invoice number and date of purchase or that exceed in amount either the
3% return limit or the amount on the referenced invoice number. ABDC reserves
the right to refuse all future returns from Customer in the event that Customer
submits any counterfeit Product for return. In the event ABDC changes the
Returned Goods Policy, ABDC will provide Customer with written notice of such
change no less than thirty (30) days before it is due to become effective.
5. ADDITIONAL SERVICES & PROVISIONS.
Services are listed in Exhibit "2". Terms, conditions and other provisions
are set forth in Exhibit "3" ("Provisions"). ABDC may, from time to time,
develop policies and procedures relative to new or existing Services offered to
customers, on an interim or as-needed basis. If ABDC develops such policies or
procedures or changes current ones, ABDC will notify Customer in writing at
least thirty (30) days before such changes are effective.
6. TERM OF AGREEMENT
Subject to Paragraph 5 of the Provisions, the Term will be from the
Effective Date until February 28, 2011. The Term will, thereafter, be extended
on a month-to-month basis until either party gives at least ninety (90) days
prior written notice to the other of its intention not to extend this Agreement.
7. RECORDS
To the extent required by 42 U.S.C. Section 1395x(v)(1), until four (4)
years after termination of this Agreement, ABDC will make available upon written
request to the Secretary of the U.S. Department of Health & Human Services
("HHS"), the Comptroller General, or their authorized representatives, a copy of
this Agreement and all records required to certify the nature and extent of
costs of Products and Services provided by ABDC under this Agreement. ABDC will
ensure, to the extent it carries out its duties through a subcontract with a
value or cost of $10,000 or more in a twelve (12) month period with a related
organization, such subcontract will contain similar provisions. Notwithstanding
the foregoing, ABDC will have no obligation to make public documents subject to
attorney-client privilege.
8. NOTICES
Notices must be in writing and sent certified mail, prepaid, return
receipt requested, or sent by facsimile to the address or facsimile number
below. Parties may change this information by written notice to the other party.
Pursuant to the Telephone Consumer Protection Act of 1991, 47 U.S.C. Section
227, Customer consents to receiving notices, including product updates, recalls,
new product launches and programs, advertisements and other marketing materials
by telephone facsimile ("fax") machine from ABDC, its affiliates and their
related companies, to the fax number set forth below.
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*****Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
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Confidential Treatment Requested
Exhibit 10.1
To Customer: Standard Management Corporation
00000 Xxxxx Xxxxxxxxxxxx Xx.
Xxxxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Fax: 000-000-0000
To ABDC: AmerisourceBergen Drug Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Vice President, Health Systems
Fax: 000-000-0000
with a copy to: AmerisourceBergen Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: General Counsel
Fax: (000) 000-0000
9. EXHIBITS
The following exhibits to this Agreement are incorporated by this reference.
1 Pricing/Payment Terms
2 Value-Added Services
3 Provisions
IN WITNESS WHEREOF, the parties have had a duly authorized officer,
partner or principal execute this Prime Vendor Agreement as of the Effective
Date.
CUSTOMER: ABDC:
Standard Management Corporation AmerisourceBergen Drug Corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx, III
------------------------- ----------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxx, III
Title: Chairman, President & CEO Title: V. P. Strategic Accounts
DATED MARCH 8, 2006 DATED MARCH 8, 2006
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*****Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
3
Confidential Treatment Requested
Exhibit 10.1
EXHIBIT 1 TO
PRIME VENDOR AGREEMENT
PRICING / PAYMENT TERMS
In addition to payment for Products, Customer will pay ABDC the following
Program and other fees for ABDC's Product distribution and Services for Customer
and its Facilities. Except as otherwise provided, payments are due within ten
(10) days from ABDC's invoice date. Pricing does not reflect any administrative
or other fee to a group purchasing organization or buying group ("GPO"). If
Customer contracts with a GPO, Customer will pay any such fees to the applicable
GPO.
1. PROGRAM FEES
A. Price of Goods. Customer will pay the following Price of Goods based
upon the definition of "Cost" below, subject to the following adjustments for
Total Average Annual Volume Net Purchase volume and payment terms, for Products
other than Products and Services designated as ABDC Special Price Products. ABDC
will add to the billed amount any applicable sales, use, business and
occupation, gross receipts or other tax. Price of Goods will begin at Tier No. 1
and may be adjusted quarterly based upon Customer's Total Average Annual Monthly
Net Purchase volume over the prior three (3) months.
PRICING TIERS PRICE OF GOODS
-------------------------------- --------------
NO. Total Annual Net Purchase Volume ******
--- -------------------------------- --------------
1 ****** to ****** ******
2 ****** to ****** ******
3 ****** to ****** ******
4 ****** to ****** ******
5 ****** to ****** ******
6 ****** to ****** ******
7 ****** & ****** ******
"Cost" with respect to any Product means the lower of (i)
********************************** is allocated to Customer or (ii)
***********************, in each case *************************************.
Cost outside the continental U.S. may be higher than manufacturer's/supplier's
normal price list.
Selected Products ("ABDC Special Price Products") including but not limited to
************************************ will not be billed based upon ABDC's Cost
(as defined above), but will instead be billed in accordance with the terms and
conditions established by ABDC from time to time for such Products and Services.
Purchases of ABDC Special Price Products count toward total Monthly Net Purchase
volume.
B. PRxO Generics Rebates. If Customer continues to use ABDC as its Primary
Vendor and otherwise complies with ABDC's PRxO Generics requirements, ABDC will
adjust Customer's Price of Goods for the following calendar quarter if
Customer's PRxO Generics purchases are ******% or more of Customer's total Rx
Net Purchase volume, as follows.
COMPLIANCE LEVEL PRICE OF GOODS REDUCTION
****** *****
****** *****
ABDC will provide electronic price data to customer upon request and match
pricing. Should Customer achieve PRxO Generics compliance levels above **%, ABDC
and Customer will meet to discuss additional opportunities for rebates. Purchase
rebates are not cumulative; only one level will be paid each quarter.
Calculations are quarterly, with no carryover from one quarter to the next.
Customer's PRxO Generics purchases will be invoiced at ABDC's standard ABDC
Special Price. Pending rebates will be noted in Customer's invoices and
statements. Customer hereby indemnifies ABDC pursuant to Provisions Paragraph 6
for any inappropriate use of such invoices. ABDC will issue any credit to
Customer within forty-five (45) days of
*****Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
CONFIDENTIAL
Customer will delete this Exhibit "1" (or request confidential treatment)
if it discloses this Agreement for any reason, including in any SEC filing.
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Confidential Treatment Requested
Exhibit 10.1
the end of each calendar quarter. If Net Purchases of PRxO Generics are less
than ****% of total Rx Net Purchases, no rebate credit will be given and ABDC
may reasonably adjust Price of Goods to reflect the lower than expected purchase
volume. Customer must be compliant with payment terms to be eligible for any
rebate under this paragraph.
C. Additional Value-Added Services. The additional value-added Services in
Exhibit "2" will be provided to Customer by ABDC for ******* for Facilities that
meet minimum Net Purchase levels.
D. Ordering Hardware/Software. In addition to the foregoing value-added
Services fee, Customer will pay the per-month fees in Exhibit "2" for ordering
and reporting software and hardware selected by Customer for each installation
on system hardware at Customer's Facilities and other locations.
E. Contract Administration. In administering Customer's GPO/supplier
contracts, Customer must (i) provide a copy of new contracts, (ii) comply with
supplier's terms, (iii) use all products for its "own use" (as defined in
judicial and legislative interpretations), (iv) notify ABDC at least forty-five
(45) days before it changes suppliers, and (v) upon changing suppliers, assist
ABDC in disposing of any excess inventory acquired for Customer. Additionally,
Customer will notify ABDC before discontinuing purchases of any special
inventory that it has requested that ABDC stock (whether or not pursuant to a
contract) and assist ABDC in disposing of any excess of such inventory. When
invoiced, Customer will promptly reimburse ABDC for any unpaid chargebacks that
are (x) denied by a GPO or manufacturer/supplier or (y) not paid within
forty-five (45) days and, in either case, Customer will look solely to such GPO
or manufacturer/supplier for redress.
2. PAYMENT TERMS
A. Options. Customer agrees to the following payment terms for Product
purchases.
Semi-Monthly Pay (Default if no box checked).
[X] Payment for invoices dated the *** through the *** must be received by the
*** of the same month. Payment for invoices dated the **** through the last day
of each calendar month must be received by the *** of the following calendar
month.
B. Terms. All payments must be received for deposit to ABDC's account by
the due date by EFT . ABDC shall initiate EFT payment. ABDC may change available
payment plans from time to time. Payment term changes may affect Price of Goods.
If Customer does not select an option or the option selected is not available,
ABDC will xxxx Customer on Semi-Monthly terms until otherwise notified by
Customer. Subject to credit approval, Customer may change payment terms upon
thirty (30) days written notice prior to the beginning of a calendar month.
Price of Goods adjustments for different payment terms are subject to change
from time to time by ABDC to reflect ABDC's cost of money and any resulting
credit risk.
3. MINIMUM ORDER VOLUME
A. Annual Purchases. Customer's minimum annual Net Purchase (total
purchases less returns, credits, rebates, late payment fees and similar items)
volume during Year 1 is ****** . Year 1 is from the Effective Date to February
28, 2007. Subsequent contract years are the following twelve (12) month periods.
Customer's Net Purchases during subsequent years are projected to increase at a
rate of ***% per year during each year of the Term. Customer's aggregate Net
Purchase volume over the life of this Agreement will be no less than .In
addition, Credit limit is set at $****** per pay period(semi-monthly)for first
six months of agreement .ABC will review credit after first six months of
agreement or sooner as conditions permit. Additionally, total monthly PRxO
Generics Net Purchases from all Facilities will be at least ****% of total Rx
purchases from all Facilities. Calculations are quarterly, with no carryover
from one quarter to the next.
B. Small Order Charge. If Customer purchases less than $*** per month, a
delivery charge of $*** per delivery will be assessed for each order that is
less than $****. ABDC may adjust the per-delivery charge from time to time to
reflect ABDC's shipping and handling costs.
C. Price of Goods Adjustments. Customer acknowledges that Price of Goods
and Program fees available under this Agreement are based upon Customer's
meeting such minimum annual, aggregate and
*****Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
CONFIDENTIAL
Customer will delete this Exhibit "1" (or request confidential treatment)
if it discloses this Agreement for any reason, including in any SEC filing.
5
Confidential Treatment Requested
Exhibit 10.1
PRxO Generics and other Net Purchases and, if Customer fails to do so, in
addition to any other remedies, ABDC may reasonably ***** Price of Goods and
Program fees on *** days notice to reflect lower than expected Net Purchase
volume.
CONFIDENTIAL
Customer will delete this Exhibit "1" (or request confidential treatment)
if it discloses this Agreement for any reason, including in any SEC filing.
6
Confidential Treatment Requested
Exhibit 10.1
EXHIBIT 2 TO
PRIME VENDOR AGREEMENT
ADDITIONAL VALUE-ADDED SERVICES
The following Services are offered to Customer by ABDC for the monthly fees in
Paragraph 1(B) of Pricing/Payment Terms.
- Bar-Coded Shelf Labels
- DEA Scheduled Pharmaceuticals Purchased Report
- Monthly Usage and 80/20 Report
- Price stickers - Rx and OTC
ABDC may discontinue any Services as it deems appropriate, in which case ABDC
will make a reasonable proportionate reduction in the monthly fee based upon the
value of the discontinued Services. In addition, from time to time ABDC may
offer such new Services, at such additional fees as it determines.
ORDERING & REPORTING SOFTWARE AND HARDWARE
- Custom Reporting software for **********.
- Internet ordering software (Catalog and Order Entry (XXX), iECHO or
similar software, as appropriate) for ******.
- IScan hardware technology for a purchase fee of $***** per unit and iScan
software and maintenance for $*** per month per installation.
- UltraPhase/Telxon handheld electronic order entry terminal (two per
pharmacy) for ******* per month per installation.
- Ordering hardware will be included for Customer at a cost of $*** per
month per installation. Any such hardware may be used solely with ABDC's
ordering and reporting software. Customer is responsible for hardware
maintenance and repair.
ABDC retains title to all ordering and reporting hardware and software and,
pursuant to Provisions Paragraph 5.3, Customer must return them upon termination
of this Agreement.
Computer consulting and related services will be offered at ABDC's then-current
standard charges for such services.
RECALLS
ABDC will notify Customer of all recalls as instructed in the supplier's
notification.
DROP SHIP SERVICE
ABDC provides drop ship service when Customer's needs dictate this approach and
the supplier meets ABDC's liability insurance and other requirements. Drop
shipments may be subject to an additional charge.
*****Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
7
Confidential Treatment Requested
Exhibit 10.1
EXHIBIT 3 TO
PRIME VENDOR AGREEMENT
PROVISIONS
1. DUTIES OF ABDC
1.1 Orders. Orders may be subject to minimum order size requirements. Other than
supplier back-ordered Products, ABDC will make reasonable efforts to deliver
orders placed by ABDC's normal order cut-off time by the next delivery day.
Hawaii, Alaska, U.S. territories and foreign deliveries may be subject to a
delivery surcharge.
1.2 Emergency Orders. ABDC will use commercially reasonable efforts to meet a
requested delivery time for emergency orders, which may be subject to an
additional charge. If ABDC cannot do so, Customer may fill emergency orders
outside the Program on such occasions using another provider notwithstanding
minimum purchase commitments in this Agreement.
1.3 Records, Audits. ABDC will maintain records of transactions during the Term
and for one year after. Customer's employees may audit such records only
pursuant to ABDC's audit policies, as modified from time to time. Such audits
may be conducted only during ordinary business hours and upon reasonable notice
and may only cover ninety (90) days prior to the request or any shorter period
set by the manufacturer for chargeback audits. No audit may cover any period
previously audited. All costs will be borne by Customer, including costs to
produce records. If an audit shows net overcharges or undercharges and ABDC
agrees with such findings, ABDC will credit or charge Customer within thirty
(30) days of receipt of written notice of the net overcharge (or, if later,
within thirty (30) days of receiving an applicable supplier's credit) or
undercharge.
2. DUTIES OF CUSTOMER
2.1 Primary Vendor Orders. For Products required by Facilities, Customer will
submit an electronic order for all Products. If allowed, non-electronic orders
may be subject to additional charges.
2.2 Disclosure. Customer will comply with all laws, including reporting or
reflecting discounts, rebates and other price reductions pursuant to 42 U.S.C.
Section 1320a-7b(b)(3)(A) on cost reports or claims submitted to federal or
state healthcare programs, retaining invoices and related pricing documentation
and making them available on request to healthcare program representatives.
2.3 Notice of Changes. Customer will promptly notify ABDC of changes in
ownership, name, business form (e.g., sole proprietorship, partnership or
corporation) or state of incorporation or formation, or any intent to sell,
close, move or modify its operations.
2.4 No Set-Off. Customer's obligation to pay for Products will be absolute,
unconditional and not subject to reduction, set-off, counterclaim or delay.
2.5 Billing Statements. Billing disputes must be brought to the attention of
ABDC's accounts receivable department within twelve (12) months after receipt of
the first statement containing the amount in dispute or Customer will be deemed
to accept the accuracy of such statements and to waive its right to dispute the
amount.
2.6 Late Payment. All payments must be received in ABDC's account during normal
business hours on the date due. Drivers and other ABDC employees cannot accept
cash. Price of Goods reflects a prompt payment discount. If payment is not
received by the due date, ABDC will invoice Customer such unearned discount by
recalculating Price of Goods based on ******% (or, if greater, **% more than the
invoiced Price of Goods) effective as of the due date. Thereafter, if payment is
delinquent, ABDC may withhold any payments to Customer and will assess a per-day
late payment fee of the lower of ***% (**%/360) or the maximum rate permitted by
law on the outstanding balance until paid, beginning on the first (1st) business
day after such due date. Additionally, ABDC may adjust future Price of Goods to
reflect Customer's payment history. Such rights are in addition to ABDC's other
remedies and will not relieve Customer of its obligation to make prompt payment
in accordance with this Agreement.
2.7 Title And Risk Of Loss. All goods are F.O.B. Customer's location, with
freight prepaid for normal delivery. Expedited delivery is extra. Title and risk
of loss pass upon delivery to Customer.
2.8 Extension Of Credit. Payment terms are an extension of credit based upon an
evaluation of Customer's financial condition upon commencement of this Agreement
as reflected in written information from Customer. Customer will abide by ABDC's
standard credit terms as amended from time to time by ABDC. Customer will
promptly notify ABDC in writing of any Claim that, with an unfavorable result,
would have a material adverse effect on Customer's financial condition or
operation. Upon request, Customer will furnish ABDC complete annual and
quarterly financial statements and other evidence of its financial condition
necessary to establish, in ABDC's opinion, Customer's ability to perform its
obligations. If ABDC reasonably believes Customer's ability to make payments is
impaired or its financial condition has materially deteriorated, ABDC may from
time to time amend Customer's payment terms, require past due amounts to be paid
and/or require posting of adequate security or such other documents as ABDC may
require. Pending receipt of requested items, ABDC may withhold delivery of
Products and providing Services; place Customer on a C.O.D. basis if ABDC has
not received payment when due after giving notice by 10:00 a.m. and giving
Customer until 2:00 p.m. the same day for ABDC to receive payment; and/or
require Customer to pay part or all of any past due amount as a condition to
continued service.
3. NO WARRANTIES
Customer acknowledges that ABDC is not the manufacturer of any Products and ABDC
DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THOSE OF
MERCHANTABILITY, NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE, FOR
PRODUCTS AND SERVICES. No oral or written information provided by ABDC, its
employees or other representatives will create any such warranty. In no event
will ABDC be liable for any special, incidental or consequential damages in
connection with or related to Products, hardware, Software, including ordering
software, or Services.
4. CONFIDENTIALITY
Each party and its employees or representatives ("Receiving Party") will protect
all proprietary and confidential information ("Confidential Information")
disclosed by the other ("Disclosing Party") and not use or disclose it except in
connection with the Program or as otherwise agreed. Confidential Information
does not include information (i) available on a non-confidential basis, (ii)
known or able to be formulated by Receiving Party, or (iii) required to be
disclosed by law. Pricing and payment terms are confidential and may not be
shared with any third party. Customer will remove Exhibit "1" (or request
confidential treatment) if it discloses this Agreement for any reason, including
in a Securities and Exchange Commission filing.
5. TERMINATION OF AGREEMENT
5.1 Termination without Cause. ABDC may terminate this Agreement at any time
upon sixty (60) days written notice.
5.2 Default. In addition to other available remedies, either party may
immediately terminate this Agreement for cause upon written notice to the other
party upon the other party's:
(a) (i) filing an application for or consenting to appointment of a trustee,
receiver or custodian of its assets; (ii) having an order for relief entered in
Bankruptcy Code proceedings; (iii) making a general assignment for the benefit
of creditors; (iv) having a trustee, receiver or custodian of its assets
appointed unless proceedings and the person appointed are dismissed within
thirty (30) days; (v) insolvency within the meaning of Uniform Commercial Code
Section 1-201 or failing generally to pay its debts as they become due within
the meaning of Bankruptcy Code Title 11, Section 303(h)(1) (11 U.S.C. Section
303(h)(1)), as amended; or (vi) certification in writing of its inability to pay
its debts as they become due (and either party may periodically require the
other to
*****Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
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Exhibit 10.1
certify its ability to pay its debts as they become due) (collectively,
"Bankruptcy");
(b) The sale or transfer of the business of Customer, in whole or in part, or a
"Change in Control" in Customer. As used herein, "Change in Control" means (if
applicable) the sale, transfer or assignment of all or substantially all of the
assets of the Customer or of 25% or more of the voting equity in Customer or a
change in the power to vote 25% or more of the voting interest in Customer; or
(c) Failure to pay any amount due and such failure continues *** days after
written notice;
(d) Failure to perform any other material obligation of this Agreement or any
other agreement now or hereafter entered into between the parties and such
failure continues for thirty (30) days after it receives notice of such breach
from the non-breaching party; provided, however, if the other party has
commenced to cure such breach within such thirty (30) days, but such cure is not
completed within such thirty (30) days, it will have a reasonable time to
complete its cure if it diligently pursues the cure until completion; and
further provided that if such breach occurs more than three times during any
twelve (12) month period, the non-breaching party may terminate this Agreement
upon thirty (30) days written notice. "For cause" does not include Customer's
receiving a more favorable offer from an ABDC competitor.
5.3 Survival Upon Termination. Within five (5) days of expiration or earlier
termination of this Agreement for any reason, all amounts owed by Customer will
be immediately due and payable, Customer will (i) pay ABDC any amount owed and
(ii) return to ABDC all hardware, Software and other equipment, including
ordering devices and totes, or pay to ABDC the replacement cost of such items
that are not returned. Obligations in Provisions Paragraphs 4, 5.2, 6 and 9 and
any provision the context of which shows the parties intended it to survive will
remain in effect after the Term.
6. INDEMNIFICATION
Each party ("Indemnifying Party") will indemnify and defend the other, its
employees and representatives ("Indemnified Party") against all claims and
damages (including expenses and attorneys' fees) ("Claim") to the extent arising
out of Indemnifying Party's obligations under this Agreement. Failure to give
prompt written notice of a Claim will not relieve Indemnifying Party of
liability except to the extent caused by such failure. Indemnifying Party will
defend a Claim with counsel reasonably satisfactory to Indemnified Party and
Indemnified Party will cooperate fully in such defense.
7. CUSTOMER'S INSURANCE
Customer will maintain sufficient insurance to cover all unpaid inventory in its
possession. Customer will maintain professional liability insurance with limits
of no less than $2,000,000 per incident and $10,000,000 aggregate. ABDC will be
named on such policies as an additional insured. ABDC may reasonably increase
such required limits from time to time.
8. SOFTWARE LICENSE
8.1 License. ABDC grants Customer a non-exclusive, nontransferable and revocable
license to use software and related documentation ABDC provides for use in the
Program ("Software"). Customer may not make, or allow others to make, copies
except one backup copy. Customer must include all proprietary notices in
permitted copies. Customer may not modify Software or create derivative works
and may not translate, reverse engineer, disassemble or decompile Software.
8.2 Limited Warranty. ABDC warrants that, for ninety (90) days from the
Effective Date, (i) Software will perform substantially in accordance with its
documentation if operated as directed and (ii) hardware provided by ABDC and
diskettes, CD-ROMs or other media on which the Software is provided will be free
from defects under normal use. ABDC DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THOSE OF MERCHANTABILITY, NON-INFRINGEMENT AND FITNESS FOR A
PARTICULAR PURPOSE, FOR HARDWARE AND SOFTWARE, AND ACCURACY OF ANY DATA. ALL
DATA IS PROVIDED "AS IS." DUE TO THE NATURE OF SOFTWARE, HARDWARD AND DATA,
ERRORS AND INTERRUPTIONS MAY OCCUR AND CUSTOMER HAS ALL RISKS FOR QUALITY AND
PERFORMANCE. No oral or written information provided by ABDC, its employees or
other representatives will create any warranty.
8.3 Remedy. ABDC's liability and Customer's exclusive remedy for breach of
warranties in Paragraph 8.2 will be, at ABDC's option, to (i) repair or replace
Software or hardware so it performs substantially in accordance with its
documentation; (ii) advise Customer how to achieve substantially the same
functionality using different procedures, or (iii) replace defective media
returned within ninety (90) days of the Effective Date. Such replacement will
not extend such ninety (90) day period.
9. MISCELLANEOUS
9.1 Force Majeure. If ABDC's performance is prevented or delayed by labor
disputes, fire, terrorism, acts of God or any other cause beyond its control,
including unavailability of Products, transportation, materials or fuel, delays
by suppliers, loss of facilities, internet, telecommunication or electrical
system failures or interruptions, voluntary foregoing a right in order to comply
with or accommodate government orders or requests, compliance with any law or
any other cause beyond its control ("Force Majeure"), ABDC may reduce or
eliminate Products without liability or obligation during the Force Majeure
period. In addition, if Force Majeure affects ABDC's cost of operations, ABDC
may, at its discretion, add to the cost of Products its increased fuel costs,
including taxes, and other costs associated with Product handling or operations,
so long as Force Majeure affects its costs.
9.2 Security Interest. In addition to any security interest previously or
hereafter provided by Customer to ABDC, Customer hereby grants to ABDC a
security interest which may be a purchase money security interest in Products
that Customer has not paid for and in Customer's or any third party's proceeds
from Products until all amounts are paid. ABDC may do such things as are
necessary to achieve the purposes of this Paragraph.
9.3 Assignment. Customer may only assign its rights or delegate its duties under
this Agreement upon written consent of ABDC. Customer hereby consents to ABDC's
assigning part or all of its obligations to any affiliate and to assigning or
granting a security interest in this Agreement in connection with any financing
or securitization by ABDC or any affiliate.
9.4 Change of Control. In the event of a change of control of Customer, the
Agreement will be binding on any successors or assigns of Customer.
9.5 EEO Requirements. ABDC warrants it does not and will not discriminate
against any employee or applicant for employment because of race, creed, color,
national origin, religion, gender, sexual preference, veteran status, handicap
or as otherwise may be prohibited by law and will meet affirmative action
obligations as are imposed by law.
9.6 Miscellaneous. The successful party in any legal action, including in a
Bankruptcy proceeding, may recover all costs, including reasonable attorneys'
fees. Pennsylvania law will govern this Agreement without reference to conflict
of laws provisions. Any waiver or delay in enforcing this Agreement will not
deprive a party of the right to act at another time or due to another breach.
All provisions are severable. In the event of a conflict between a prior
document between the parties and this Agreement, this Agreement will control.
This Agreement supersedes prior oral or written representations by the parties
that relate to its subject matter other than the security interest, which is in
addition to and not in lieu of any security interest created in other
agreements. Captions are intended for convenience of reference only. The parties
may not modify this Agreement other than by a subsequent writing signed by each
party. This Agreement will be interpreted as if written jointly by the parties.
The parties are independent contractors.
*****Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
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