Exhibit 10.93
AMERISOURCEBERGEN PRIME VENDOR AGREEMENT
This Agreement is entered into this 21st day of July, 2003, between
AmerisourceBergen Drug Corporation (hereinafter referred to as "ABC") located at
0000 Xxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000-0000 and NMHCRx Mail Order, Inc., dba
NMHC MAIL, together with its affiliates and subsidiaries (hereinafter referred
to as "Customer"), located at 0000 Xxxxxxxx Xxxxxxx, Xxxxxxx, XX 00000.
STATEMENT OF THE PARTIES' INTENTIONS
ABC and Customer desire to enter into a Primary Vendor Agreement wherein
ABC shall serve as a Primary Supplier of pharmaceuticals to Customer pursuant to
this Agreement, and Customer shall, in turn, receive special pricing and
services from ABC.
Primary Vendor is defined as a minimum of 85% of all drug purchases,
excluding out of stock, alternate source and generic purchases.
TERMS AND CONDITIONS
NOW THEREFORE, In consideration of the mutual agreements herein contained
and the promises herein expressed, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, and intending to be
legally bound hereby, the Parties do agree as follows:
1. TERM AND RENEWAL: This Agreement shall be an initial term ("Term") of 42
months with one (1) one year automatic renewal unless given thirty (30) days
written notice prior to the end of this agreement.
2. TERMINATION: ABC or Customer may terminate this Agreement upon ninety
(90) days' written notice to the other Party.
3. PRICE OF GOODS:
Pricing Matrix
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Average Monthly Volume Weekly Payment Terms
Per Customer Site
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$ 5,000,000 - $15,000,000 -2.99%
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$15,000,000 - $25,000,000 -3.04%
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$25,000,000 - Above -3.15%
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Contract items will be priced at contract/bid price if one has been
negotiated with the manufacturer of the item in question - goods purchased at
contact/bid pricing shall be applied to volume criteria. ABC agrees to load
contract pricing immediately, but in no event later than 14 business days after
notification.
Pricing matrix is subject to Customer's participation in the ProGenerics
program, for which participation there is neither a charge nor a requirement to
purchase any generic products whatsoever.
ABC agrees to provide Customer market competitive pricing on its Top 40
Generic Products via a specially designed ProGenerics program that will be
customized and reviewed quarterly with NMHCmail staff and ABC.
Pricing Matrix Terms are based on Electronic Funds Transfer (EFT) payments.
For the first twelve (12) months of the Prime Vendor Agreement NMHCmail
Customer will be priced at the lowest volume tier, unless a higher tier is
reached through item purchases for three (3) consecutive months as
averagedduring the first twelve months of this Agreement.
After the first twelve (12) months ABC will audit Customer's purchases for
3 month averages and has the right to decrease or increase the pricing to fit
the average monthly purchase based on the total purchases for the three months.
If monthly purchases fall below $5,000,000 for three (3) consecutive months
commencing 12 months from the effective date of this agreement, ABC reserves the
right to renegotiate the price of goods.
Weekly Payment Terms are defined as: Payments for each week's invoices
(Monday through Friday) are due (via EFT) on the Wednesday of the following week
or the following business day, should Wednesday fall on a legal holiday.
ABC reserves the right to charge and collect interest on late payments,
(excluding amounts disputed in good faith between the parties) at the rate of
1.0% per month and to put the account on credit hold preventing shipment in the
event of late payment. ABC further reserves the right to secure the prepayment
deposit for outstanding balances, fees, and/or charges owed to ABC by Customer
(excluding amounts disputed in good faith between the parties).
Additional Allowances/Stocking Offerings/Generic Incentives
4. Pre-Paid Volume Discount. Customer will receive a prepaid discount in
the amount of One Million Dollars ($1,000,000) payable within 30 days of the
effective date of this agreement, representing a 23.81% volume discount off the
Price of Goods for the first one hundred thousand dollars in Net Purchases
purchased in each month of the 42 month Term of this Agreement. In the event
that Customer does not make Net Purchases exceeding one million dollars
($1,000,000) in that month, Customer agrees that it shall repay an amount equal
to the portion of the discount not earned.
Should Customer terminate the Prime Vendor Agreement for any reason or no
reason, except for a material breach by ABC, or Customer is found to be in
material breach of the terms of the Prime Vendor Agreement and such breach is
not cured by Customer within 30 days of notice thereof, unless the termination
for breach was for breach of the payment terms, which breach will not be cured
by this cure period for purposes of this paragraph, Customer will repay the
volume discount amount pro-rated for the portion of the agreement completed.
5. Extended Dating. ABC will offer Customer extended dating on a one-time
$1,400,000 opening order billed at WAC less contract pricing, that is to be paid
to ABC in six, equal monthly installments, in six months from the date of
shipment. This one-time opening order offer will be available and must be
exercised during the first six (6) months of the Agreement.
6. ProGenerics Discount. ABC will pay Customer a discount in the form of a
credit based on the percentage of ProGenerics purchased within a month as shown
on the grid below. The credit will be paid to Customer within thirty (30) days
of the close of the month. Customer must be within all material terms of the
Prime Vendor Agreement to receive this credit. It is expressly acknowledged that
compliance with the payment terms of this Agreement is a material term of the
Prime Vendor Agreement. If Customer is outside of the terms of the Prime Vendor
Agreement, Customer will forfeit the credit for that month. ABC will notify
Customer in writing and in advance if NMHC has not qualifed for this credit
based on its failure to comply with this Agreement. NMHC will have thirty (30)
days to cure any such alleged defaults in order to receive the credit with the
exception of a failure to comply with payment terms.
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ProGenerics as a Percentage of Percentage of Incentive on All Net Price of Goods to l Customer
Total Customer Monthly Sales Customer Monthly Sales With Incentive
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4% .11% -3.10%
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6% .21% -3.20%
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8% .31% -3.30%
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10% .41% -3.40%
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7. ABC reserves the right, upon 30 days advance written notice to change a
payment term (including imposing the requirement of cash payment upon delivery)
or limit total credit, if (1) ABC reasonably concludes there has been a material
change in the Customer's financial condition based upon the company's publicly
filed 34 Act reporting or in the event that Customer has paid non-disputed
amounts owed to ABC late on three or more occasions in a calendar year. " Late"
shall mean 20 days or more beyond the due date. Upon the occurrence of any of
the above-specified events, or if the total non-disputed amounts owed and past
due to ABC exceed $10,000,000, ABC further shall be entitled to suspend or
discontinue the shipment of any additional orders to Customer's pharmacies.
8. DEFINITION OF COST: "Cost" means (i) the manufacturer's invoice cost on
the date the order is shipped to the customer, or (ii) the contract/bid price of
the item, as the case may be, in each case exclusive of discounts for prompt
payment given to ABC by its vendors. Any reduction in this customary discount
will cause "Cost" to be increased as appropriate, however ABC must provide
written notice of such reduction in discount to Customer. Home health care
items, repackaged drugs, ABC contracted items, generics, ASD items, HBC Source
items, ProGeneric items and slow moving items are excluded from this definition
of cost and are instead net billed. Drop Shipments will be subject to separate
charges. In addition, special rebates given to ABC on generic drugs with vendor
distribution allowances do not affect the determination of Cost.
All excise, gross receipts, sales and other taxes other than net income
taxes of ABC will be paid by Customer.
9. EXCEPTIONS TO COST PLUS PRICING: The following 9items shall not be
subject to Cost plus pricing:
o Family Pharmacy/GNP Products
o Health Expo purchases
o ProGenerics, ABC Repax, Vitamin Lines
o Computer Services
o Drop Shipments
o Other net prices categories, including but not limited to Home
Health Care and School and Office supplies.
10. CONTRACT MANAGEMENT:
A. ABC agrees to service all manufactures' contracts negotiated by
Customer, provided such manufacturers' are approved suppliers of ABC.
Merchandise will be supplied at Customer's negotiated bid price plus
AmeriSource's applicable markup (or markdown, as the case may be) as
described above in the Cost of Goods section 3 hereof
B. Customer's eligibility for participation under a vendor contract must
be authorized by the vendor and Customer's group purchasing
organization, if applicable, before the contract is loaded by ABC for
Customer. Customer shall be liable for unpaid chargebacks resulting
from eligibility issues.
C. In the event a vendor (1) makes an assignment for the benefit of
creditors, files a petition in bankruptcy, is adjudicated insolvent or
bankrupt, or if a receiver of trustee is appointed with respect to a
substantial part of the vendor's property or a proceeding is commenced
against it which will substantially impair its ability to pay on
chargebacks or (2) otherwise defaults in the payment of chargebacks to
ABC, Customer shall be invoiced and become liable for the unpaid
chargebacks allocable to its purchases from such vendor.
D. The service pricing is exclusive of an administrative fee. Any
administration fees allocated by the primary/secondary group
purchasing organization will be added to the quoted cost of goods and
rebated back to the given group purchasing organization as specified
by the agreed terms of the group purchasing organization and ABC. Said
xxxx-up will be a direct pass through of fees directly &
proportionately charged to ABC proximately caused by contracted
NMHCmail purchases, such that if ABC is not charged a fee none can be
charged by ABC to Customer.
11. COST REPORTING: Customer understands that rebates and discounts may
need to be reported as a part of its cost for purposes of federal and/or state
healthcare programs, including for purposes of 42 CFR 1001.952(h).
12. PROPRIETARY SOFTWARE: ABC grants to Customer a non-exclusive
non-transferable license the ("License") to use the ABC's proprietary software
(the "Software"), including without limitation the ECHO system and the iECHO
software, solely for the purposes of this Agreement at the Customer locations,
in accordance with, and subject to, the terms and conditions of this Agreement.
ABC will provide the Software in the form of a CD-ROM, diskettes or other
media containing machine-readable object-code. ABC may provide the Software to
Customer on more than one medium. Regardless of the type or size of the medium
that Customer receives, Customer may only use the medium appropriate for its
designated computer or network server.
ABC or its suppliers retain all rights to the Software and related
documentation (including, but not limited to any images, "applets," photographs,
animations, video, audio, music and text incorporated therein, copyright, trade
secrets and other proprietary rights) which are not expressly granted to
Customer under this Agreement. All updates, enhancements, modifications and
additions to the software developed by ABC or any other entity will be the sole
and exclusive property of ABC.
Customer agrees that it and its locations will not copy, duplicate, or
prepare derivative works from any element of the Software except that (i)
Customer may make one (1) back-up or archival copy of the Software at each
Customer location as permitted by the copyright law of the United States; and/or
(ii) install the Software on a single hard disk at each Customer location.
Customer shall not remove any copyright or proprietary rights notice included in
or on any Program element, and shall reproduce all such notices in or on all
copies made by Customer.
13. HARDWARE: Certain hardware (the "Hardware") will be provided to each
Customer location at no charge for use with the Software only. Title to the
Hardware shall remain in ABC.
14. PROPRIETARY SOFTWARE/HARDWARE LIMITED WARRANTY: ABC warrants that the
Software, if operated as directed, will perform substantially in accordance with
its documentation for a period of ninety (90) days from the effective date of
this agreement. ABC also warrants that the Hardware provided by ABC, and the
diskettes, CD-ROMs, or other media on which the Software is provided, will be
free from defects and workmanship under normal use for a period of ninety (90)
days from the Effective Date. Other than as set forth in this paragraph, (a) ABC
makes no warranty, express or implied, including without limitation, any implied
warranty of merchantability or fitness for a particular purpose, and (b) no oral
or written information provided by ABC or its employees, agents or
representatives will create any representation or warranty.
ABC's entire liability, and Customer's exclusive remedy, for breach of the
warranties contained in this paragraph shall be, at AmeriSource's option, to (i)
repair or replace the Software so that it performs substantially in accordance
with its documentation; (ii) advise Customer how to achieve substantially the
same functionality with the Software as described in any documentation through a
procedure different from that set forth in any documentation, or (iii) replace
defective media returned within ninety (90) days of the Effective Date. Any
replacement software shall not serve to extend the original ninety (90) day
warranty.
15. INDEMNIFICATION: Customer agrees to indemnify, defend and hold harmless
ABC, its subsidiaries and assigns from and against all claims, losses, damages,
liabilities and expenses (including but not limited to attorneys' fees and court
costs) arising as a result of negligence, illegality or wrongdoing of any kind
alleged or actual on the part of Customer.
ABC agrees to indemnify, defend and hold harmless Customer, its
subsidiaries and assigns from and against all claims, losses, damages,
liabilities and expenses (including but not limited to attorneys' fees and court
costs) arising as a result of negligence, illegality or wrongdoing of any kind
alleged or actual on the part of ABC.
16. WARRANTIES. To the extent not prohibited by contract or law, ABC agrees
to assign any Product warranties given by manufacturers to ABC to Customer to
the extent Customer is held liable for claims based on Product defects. Other
than as set forth in this paragraph, (a) ABC makes no warranty, express or
implied, with regard to the Products, including without limitation, any implied
warranty of merchantability or fitness for a particular purpose, and (b) no oral
or written information provided by ABC or its employees, agents or
representatives will create any representation or warranty.
17. LIMITATION OF LIABILITY: In all cases, ABC's liability shall be limited
to actual damages proven by the Customer. In no event shall Customer be entitled
to indirect, special, consequential or punitive damages.
In all cases, Customer's liability shall be limited to actual damages
proven by ABC. In no event shall ABC be entitled to indirect, special,
consequential or punitive damages.
18. INSOLVENCY: In the event of any proceedings, voluntary or involuntary,
in bankruptcy or insolvency by or against Customer or ABC, the inability of
Customer or ABC to meet its debts as they become due, or in the event of the
appointment, with or without Customer's or ABC's consent, of an assignee for the
benefit of creditors or of a receiver, then ABC or Customer, as the case may be,
shall be entitled, at its sole option, to terminate this Agreement without
notice and to withhold shipment of any order without any liability whatsoever.
19. INSURANCE: Customer and ABC shall maintain professional liability and
errors and omissions insurance in the amounts of not less than one million
dollars ($1,000,000.00) per incident and two million dollars ($2,000,000.00) in
the aggregate. Customer shall be named on ABC's policy as an additional insured.
20. ENTIRE AGREEMENT: This Agreement supersedes all prior agreements
between the parties with regard to the subject matter hereof and there are no
other understandings or agreements between them. No representations, warranties,
or promises pertaining to this Agreement have been made by, or shall be binding
on, any of the parties, except as expressly stated in this Agreement. This
Agreement may not be changed orally, but only by an agreement signed by the
party against whom enforcement of any such change is sought.
21. SEVERABILITY: If any provision or clause of this Agreement conflicts
with applicable law, such conflict shall not affect other provisions of the
Agreement if the provisions can be given effect without the conflicting
provision. To this end the provisions of this Agreement are declared to be
severable. If any provision of this Agreement is held to be invalid or
unenforceable for any reason whatsoever, including any conflict with applicable
law, the remaining provisions shall remain valid and unimpaired, and shall
continue in full force and effect.
22. WAIVERS: Failure of either party to enforce strict performance of any
obligations under this Agreement shall not constitute a waiver of such party's
right to thereafter enforce every term and condition hereof.
23. FORCE MAJEURE: If either party to this Agreement is delayed in or
prevented from performing any of its obligations hereunder (other than payment
obligations) by reason of labor problems, inability to procure materials, power
failure, restrictive government laws or regulations, acts of God or other
similar events beyond the reasonable control of such party, then such
performance shall be excused for the period of the delay.
24. NOTICES: All notices required to be given hereunder shall be made in
writing and shall be deemed sufficiently given if delivered by certified or
registered mail return receipt requested, overnight or same-day delivery (such
as Federal Express or special courier), at the addresses set forth. The notice
shall be effective on the date indicated on the return receipt in the case of
certified or registered mail, effective on the date following the date of
mailing in the case of overnight delivery and effective the date of delivery in
the case of same-day delivery at the addresses below or at such addresses as may
subsequently be provided in writing to the respective parties:
Xxxx Clock Xxxx Xxxxxxxxx
AmerisourceBergen NMHCRx Mail Order, Inc.
0000 Xxxxxx Xxxxx 0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000 Xxxxxxx, XX 00000
with a copy to: with a copy to:
General Counsel Xxxxxxxx Xxxxxxxx
AmerisourceBergen Drug Corporation NMHCRx Mail Order, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 000 00 Xxxxxx Xxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000 Xxxx Xxxxxxxxxx, XX 00000
25. GOVERNING LAW: The construction, application and enforcement of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania.
26. SERVICE LEVEL: For any two (2) consecutive months that the service
level performance by ABC falls below 99% on a location-by-location basis (using
the criteria for calculation Service Level Performance Definition defined
below), ABC shall remit to the Customer pharmacy a rebate of 0.05% based on that
month's total dollars purchased by the pharmacy.
o Service level performance ("Service Level Performance") by ABC is
measured and evaluated by the order fill rate defined as (a.) the
percentage of lines delivered by ABC divided by (b.i.) the total
number of lines ordered by the pharmacy, minus (ii.) manufacturer
originating out-of-stock and exclusion items.
o The quantity in an individual line item must be filled at least fifty
percent (50%) in order to be considered complete.
o Items shorted by the manufacturer due to backorder, temporarily out-of
-stock, or delayed shipment shall be excluded from the Service Level
Performance calculation.
o Non-stocks and/or products discontinued from inventory due to lack of
movement for 120 days or discontinued by manufacturer shall be
excluded from the Service Level Performance calculation.
o Items received at facility from an alternate ABC Distribution Center
within forty-eight (48) hours of original order placement shall be
considered filled.
o Items where Customer pharmacy demands exceed 120% of the average
monthly historical demand shall be excluded from the Service Level
Performance calculation.
o Items where the manufacturers or on hand inventory dating does not
comply with Customer's requirement shall be considered filled.
o Item for which no established purchase figures are supplied to ABC
shall be excluded from the Service Level Performance calculation.
The parties shall negotiate in good faith on whether to continue the
service level requirements above as stated, or to replace them with different
requirements. In the event that the parties have not reached an agreement within
10 business days of the execution of this Agreement, either party may terminate
this agreement immediately upon written notice to the other party. In the event
that the parties have not reached an agreement on service level requirements
within 30 days of execution of this Agreement, but neither party has exercised
its right to terminate this Agreement, this right of termination shall be deemed
to have been waived.
27. DELIVERY. ABC will deliver merchandise FOB to the facilities 6 days per
week. Orders transmitted by 8PM local time Sunday -Thursday will be delivered as
mutually agreed-upon by the parties.
28. EMERGENCY DELIVERY: ABC will provide Customer emergency deliveries 24
hours a day, seven days a week at no additional charges other than the actual
cost of delivery, if any. A listing of key management personnel and emergency
order procedures will be supplied to each Pharmacy upon execution of this
contract.
29. SATURDAY DELIVERY OPTION: ABC agrees to offer Customer Saturday
deliveries, if needed, with no additional charges or change in pricing. Orders
must be transmitted by 4PM local time on Friday to receive delivery by 9:30AM on
Saturday. Customer agrees to provide ABC with a minimum of thirty (30) days
written notice along with an estimate of approximate average size of orders with
the written notice. This service may be eliminated if Customer initiates this
service then fails to use it for four (4) consecutive weeks. Order cut-off and
delivery time will vary from the normal Monday thru Friday process. However, in
the event ABC eliminates this service, ABC will reinstitute the service, upon
Customers request, in the event Customer's business reasonably requires such
service due to material increases in volume.
30. MINIMUM PRODUCT EXPIRATION DATING: ABC agrees to provide Customer,
through reasonable commercial efforts, a minimum of six (6) months expiration
dating excluding the current month on all pharmaceutical products, unless
product is manufactured with a limited shelf life of less than seven (7) months,
in which case such product will be shipped per manufacturer's guidelines. When
this dating is not available through reasonable commercial efforts, ABC will
notify Customer with as much advance notice as possible of available product
dating
31. DEA FORM 222. The original DEA form 222 will be given to the driver and
delivery of goods will be one (1) day from receipt at the servicing ABC
Distribution Center of the correctly completed and signed original DEA 222.
32. RIGHT TO INSPECT AND AUDIT: Not more than twice per calendar year,
unless reasonable under the circumstances, during normal working hours and upon
reasonable notice to ABC, Customer shall have the right, at Customer's sole cost
and expense, to inspect ABC's books and records relating to the invoices
provided pursuant to this Agreement or any payments (including charge backs)
that may be due to Customer under the terms of this Agreement. In connection
therewith, the parties acknowledge that ABC shall maintain accurate books and
records for a period of two (2) years beyond the expiration or earlier
termination of this Agreement or, if earlier, two (2) years beyond the date on
which Pharmaceuticals were last provided.
33. CUSTOMER PHYSICAL INVENTORIES: ABC agrees to offer the use of four (4)
ABC Physical Inventory hand held units twice a year for the Customer to utilize
when conducting Physical Inventories. Customer will give ABC a minimum of thirty
(30) days notice prior to the appropriate ABC representative prior to the
Physical Inventory.
34. REPORTS: ABC agrees to provide Customer with a comprehensive range of
reports available via its Echo and On-Line ordering system. ABC will offer
Customer additional reasonably requested customized reports as needed for data
or information that is not covered or available through ABC's standard reports
including a report of ProGeneric purchases on monthly basis.
35. TECH RX INTERFACE: ABC agrees to provide Customer with its portion of
an EDI interface with Customer's Tech Rx system to effectuate ordering. Any
fees, programming or any other costs associated with the Customer's use of the
Tech Rx system for any purpose other than ordering, or for any purpose including
ordering if necessitated by customization of Customer's Tech Rx system, will be
the responsibility of the Customer.
36. RECEIVING TECHNOLOGY: ABC will offer customer the use of its iScan
Technology for the purpose of receiving its orders. For the first three (3)
months this service will be at no charge. If the Customer decides to continue to
use the service thereafter, the Customer will be responsible for the cost of the
scanning hardware.
IN WITNESS WHEREOF, the Parties, intending to be bound by the terms of this
Agreement and having the authority to bind their respective corporations, hereby
execute this Agreement by placing their signatures below:
AMERISOURCEBERGEN DRUG NMHCRx MAIL ORDER, Inc.
CORPORATION
By:___________________________ By:_______________________________
Title:__________________________ Title:______________________________
Date:_________________________ Date:______________________________
