CERTAIN INFORMATION IN THIS EXHIBIT IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, SUCH INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE LOCATION OF SUCH OMITTED
INFORMATION HAS BEEN INDICATED WITH AN ASTERISK[*].
1998 MAIL ORDER AND MAIL ORDER HEALTH PLAN PATIENT
TESTING COMPLIANCE AGREEMENT
CONTRACT GM
This Agreement made and effective this 2nd day of October, 1998 by and between
Bayer Corporation, acting through its Diagnostics Division at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ (hereinafter "Bayer"), and Medi-Quik
Services, Inc. located at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
(hereinafter "Distributor").
In consideration of the mutual promises and covenants contained herein, the
parties agree as follows:
1. INTRODUCTION
1.1 Pursuant to this Agreement, Bayer agrees to sell and Distributor agrees
to purchase "For Mail Order, Health Plan Patient Testing Compliance
Program" labeled GLUCOMETER ENCORE-Registered Trademark- Blood Glucose
Test Strips and/or GLUCOMETER ELITE-Registered Trademark- Blood Glucose
Test Strips (individually or collectively "Test Strips") for sale to
patients with diabetes ("End-users").
1.2 Distributor is currently an Authorized Distributor of Bayer's products
pursuant to a separate Agreement between Bayer and Distributor the
terms of which are incorporated herein by reference.
1.3 Distributor currently accepts Medicare/Medicaid assignment.
1.4 Under the conditions of paragraph 1.6 hereof, Bayer will issue an
allowance to the Distributor in accordance with paragraphs 1.7, 2.2, and
2.2.1 for the allowance amount set forth on Attachment A for sales of
Test Strips made to End-users for which Distributor conducts a Mail
Order, Health Plan Patient Testing Compliance Program, as defined below,
for all End-users.
Mail Order, Health Plan Patient Testing Compliance Program is defined as
follows:
- Distributor, through out-bound telephone service, reviews
End-user blood glucose testing supplies and provides
training on Bayer blood glucose monitors ("Meters").
- Distributor must maintain on file a physician letter for
each End-user indicating the level of testing required by
said End-user.
- Distributor must conduct out-bound telephone calls to
End-users quarterly to determine each patient is testing to
the physician recommendation level.
- Distributor offers educational materials to patients
indicating the importance of maintaining normal blood
glucose levels.
1.5 If Distributor sells Test Strips to End-users who are members of
qualified Participating Plans, as set forth on Attachment B or on
a document computer diskette which is in an acceptable format to
Bayer, said Participating Plans must classify Test Strips as a
medical benefit. Participating Plans that classify Test Strips as
a Pharmacy Benefit do not qualify. Distributor does not qualify
for an allowance on Test Strips sold to members of Participating
Plans with which Bayer has entered into a separate Agreement for
Test Strips.
1.6 In consideration of the allowance pricing to the Distributor by
Bayer, Distributor agrees to provide each End-user's name,
address, Social Security Number, product, date of sale, quantity
of product, and name of Participating Plan as set forth on
Attachment B or Medicare/Medicaid coverage ("End-user
Information"), for each End-user to whom Test Strips are sold.
Distributor shall forward such information to Bayer on a monthly
basis as set forth in paragraph 1.7 and 2.2.1. Bayer will provide
an allowance to the Distributor only for those sales for which
End-user Information is provided. Distributor will only be
responsible for payment of net price if the documentation is in a
format acceptable to Bayer when Enduser Information is provided
and it is submitted on a monthly basis.
1.7 Distributor shall keep on file at its premise the names,
addresses, telephone numbers and End-users authorizations for all
End-users, as well as Medicare/Medicaid numbers of End-users who
are Medicare/Medicaid qualified, with respect to whom Distributor
has submitted documentation for an allowance. Distributor must
maintain physician letter of required testing level and phone
records for End-users. Distributor shall provide proof of sale to
End-users on a monthly basis by submitting in a format acceptable
to Bayer the End-user name, address, Social Security Number,
product, date of sale, quantity of product, and name of
Participating Plan or Medicare/Medicaid coverage to Bayer Customer
Order Service Department.
1.8 Distributor remains responsible for the accuracy of all End-user
Information submitted to Bayer. Distributor agrees that Bayer has
the right to perform random audits of Distributor's records
including phone records, invoices and other books and records of
Distributor to determine that allowances have been paid in
accordance with the provisions of this Agreement and that Test
Strips were sold exclusively to End-users. Such audits will be
performed by Bayer at a reasonable time and in a reasonable
manner, at any time, upon 48 hours prior notice. For audits
conducted at the Distributor's site, End-users' names, addresses,
telephone numbers, physician letters and or Medicare/Medicaid
numbers will not leave the premise with an Auditor or Bayer
representative nor will such information be used for any other
purpose other than to verify that Test Strips were sold to
End-users, and that the Distributor is fully performing within the
terms and conditions of this Agreement. However, the Auditor or
Bayer representative shall be given office and telephone access to
make spot check phone calls to verify the aforementioned
information. If the audit discloses any cases wherein allowances
were issued to the Distributor for non-qualifying purchases, the
Distributor shall reimburse Bayer for such allowance payments
within thirty (30)
days of receipt of notice from Bayer, whether or not such allowances
were paid as a result of an error by Distributor.
1.9 Distributor agrees to purchase directly from Bayer the yearly
committed volume as agreed upon on Attachment A in combination
purchases of "For Mail Order, Health Plan Patient Testing
Compliance Program" labeled GLUCOMETER ELITE Test Strips and
GLUCOMETER ENCORE Test Strips.
1.10 Distributor agrees NOT to trade out End-users to competitors blood
glucose monitoring systems for the term of this Agreement so long
as the net price to the Distributor as shown on Attachment A
remains the same.
1.11 Meters provided to Distributor by Bayer at no cost for End-users
may not be billed to Medicare, Medicaid or any other third party
insurance and, are not eligible for any Bayer manufacturer's
mail-in rebate/trade-in offer, and each meter will have a sticker
indicating the aforementioned. Distributor will complete warranty
card in each End-user's name and return completed cards to Bayer.
1.12 Meters provided to Distributor by Bayer at no cost for End-users
are not for resale and as such it is the sole responsibility of
the Distributor to guarantee that the no cost Meters provided
under this Agreement will be provided only to End-users for
trade-out purposes.
1.13 Distributor shall obtain from End-users' Participating Plan
written authorization to provide End-users with Health Plan
Patient Testing Compliance Program services as described in
paragraph 1.4 above. If an End-user is not a member of a
Participating Plan, Distributor shall obtain End-user's physician
written authorization for End-user to participate in Health Plan
Patient Testing Compliance Program.
1.14 This Agreement is conditional upon Distributor providing Bayer an
acceptable list of Participating Plans as outlined on Attachment B
titled "Participating Plans List". The Participating Plans List
can be submitted on a 3 1/2" floppy disk in a mutually agreeable
format. If Distributor requires a Participating Plan to be added
to this Agreement after the date of initial acceptance by Bayer,
such requests must be made in writing thirty (30) days prior to
the beginning of the next consecutive month. Upon written approval
from Bayer, the Participating Plan will then be eligible for
allowances on Test Strips.
1.15 "Mail Order, Health Plan Patient Test Compliance" Test Strips are not for
retail sale.
1.16 Distributor may not advertise the prices of "Mail Order, Health
Plan Patient Testing Compliance Test Strips".
2. ALLOWANCES
2.1 Distributor agrees to purchase Test Strips directly from Bayer in
the quantities and at the prices designated in subparagraph 2.1.1.
Bayer has no control over the prices for which the Test Strips are
sold by the Distributor to the End-users.
Product
2.1.1 Test Strip Number Unit Price Effective Date*
---------- ------- ---------- ---------------
"For Mail Order, Health Plan
Patient Testing Compliance
GLUCOMETER ENCORE"
Test Strip 50s 2250 (stickered) * 1/1/98
"For Mail Order, Health Plan
Patient Testing Compliance
GLUCOMETER ELITE" 3871 or
Test Strip 50s 3918 (stickered) * 1/1/98
Minimum quantity - 24 boxes (1 Case)
Price may change with 30 day written notice; Allowance Value on
Attachment A will be adjusted to meet the net price at the volume
level agreed upon.
2.1.2. Payment terms are as stated in Attachment A.
2.2 In consideration of the Distributor's services set forth herein
and the submission of documentation which is acceptable to Bayer,
Bayer will provide an allowance to the Distributor as per pricing
levels indicated on Attachment A.
2.2.1. Distributor shall submit documentation as required in
paragraph 1.7, in a format acceptable to Bayer, to the
Bayer Customer Order Services Department not later than the
tenth day of the month following the month that Test Strips
were sold to End-user. Allowances will not be honored if
documentation submitted to Bayer is 90 days or more after
Distributor sold Test Strips to Enduser.
2.3 Distributor will accept short-dated Test Strips. Short-dated is
defined as Test Strips having less than 12 months dating.
Distributor may refuse to accept Test Strips with less than 5
months dating. Bayer will maintain lot numbers of the short-dated
Test Strips sold to Distributor and will accept returns if these
short-dated Test Strips cannot be sold. Distributor will be
notified if short-dated product will be shipped.
2.4 If the documentation submitted by Distributor is insufficient to
support the claimed allowances for sales to End-users, or if
Bayer's periodic audits, as detailed in
----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
paragraph 1.8, fail to substantiate such information, Bayer will so
notify the Distributor who will have ten (10) days from the date of such
notification to provide any additional documentation. If Bayer
does not receive the documentation within this period, the
allowances issued will be billed back for the unearned allowance
and the Distributor shall pay same within five (5) days thereof.
2.5 To the extent it may be required, any allowances or other price
reductions issued by Bayer to Distributor under this Agreement may
constitute a discount under Section 1128B(b)(3)(A) of the
Social Security Act [42 USC 1320a-7b(b)(3)(A)]. Accordingly,
Distributor agrees to properly disclose and appropriately reflect
the allowance or reduction in price in any costs claimed or
charges made to Medicare, Medicaid, or other federal or state
health insurance programs which reimburse the Test Strips and
require such disclosure. Distributor shall retain all allowance or
other price reduction information and make it available to
Medicare, Medicaid or other government agencies in compliance with
the discount disclosure requirement.
2.6 Test Strips are for distribution in the United States and District of
Columbia only.
3. TERM
3.1 This agreement will commence on October 2, 1998, and shall
terminate on October 1, 2000. It may be extended or modified only
upon execution of a writing by authorized representatives of both
parties.
3.2 Bayer may terminate this Agreement immediately upon written notice
to the Distributor if Bayer, in its sole judgment, determines that
the Distributor has:
3.2.1. Knowingly claimed allowances for sales that were not made to
End-users; or
3.2.2. Submitted claims for End-users covered under Participating
Plans that classify Test Strips as a Pharmacy Benefit; or
3.2.3. Collected or attempted to collect from End-users in an
amount in excess of the Medicare/Medicaid reimbursement
rate and co-payment rate and the Distributor has submitted
allowance claims to Bayer for such uses; or
3.2.4. Sold the Test Strips provided to Distributor under this
Agreement to parties other than End-users and the
Distributor has submitted allowance claims to Bayer for
such uses; or
3.2.5. Failed to keep and provide access to Bayer of the
documentation set forth in paragraph 1.7; or
3.2.6. Acquired Test Strips at a price other than in 2.1.1. less
Test Strip Allowance Value of committed yearly volume.
3.2:7. Failed to meet any current or new Medicare/Medicaid
regulations or other requirements pertaining to this
Agreement or diabetes care services.
3.3 If Distributor violates any terms of this Agreement (including
without limitation the failure to make any payment required under
this Agreement when such payment becomes due) Bayer may, in its
discretion and without further liability whatsoever, immediately
terminate this Agreement. Distributor waives prior notice, service
of process and preseizure hearing as prior conditions to
repossessions of all Meters and Test Strips still in Distributor's
possession provided hereunder through this Agreement and shall pay
all costs incurred in connection with such repossession (including
reasonable attorney's fees). If Bayer becomes aware of any breach
Bayer will so notify the Distributor in writing so the Distributor
may immediately correct the breach.
3.4 Either party may terminate this Agreement for any reason upon one
hundred and twenty (120) days prior written notice.
3.5 Either party may terminate this Agreement upon thirty (30) days
prior written notice upon the happening of any of the following
events.
3.5.1. the adjudication of either party to be bankrupt or insolvent;
3.5.2. the filing by either party of a petition in bankruptcy or
insolvency;
3.5.3. the filing by either party of a petition or answer seeking
reorganization or readjustment under any law relating to
insolvency or bankruptcy;
3.5.4. the appointment of a receiver with respect to all or
substantially all of the property of either party;
3.5.5. any assignment by either party of its assets for the
benefit of creditors;
3.5.6. the institution by either party of any proceedings for
liquidation or the winding up of its business other than
for purposes of reorganization, consolidation or merger.
3.6 For the term and purpose of this 1998 Mail Order and Mail Order
Health Plan Patient Testing Compliance Agreement-Contract GM, all
of the Distributor's Test Strip requirements for Meters must be
purchased directly from Bayer.
3.7 If the Distributor diverts or sells any Test Strips or Meters
intended for Distributor's End-users to any other Distributor or
third party such action shall constitute grounds for termination
of this Agreement immediately upon written notice and removal of
Distributor as an Authorized Distributor of Bayer. Bayer has the
right to recover all allowances paid to the Distributor under this
Agreement.
3.8 If the Distributor displays or advertises Bayer's "For Mail Order,
Health Plan Patient Testing Compliance Program" labeled product to
End-users, or if Meters and Test Strips are used for anything
other than mail order to End-users as described in this Agreement
such action shall constitute grounds for termination of this
Agreement immediately upon written notice. Bayer has the right to
recover all allowances paid to the Distributor under this
Agreement.
3.9 If Distributor fails to comply with a request by Bayer to submit
documentation as required in sections 1.6, 1.7, or 2.2.1 then
Bayer may at its option terminate this Agreement immediately upon
written notice. Bayer has the right to recover all allowances paid
to Distributor that were not documented in accord with provisions
of this Agreement.
4. WARRANTY
4.1 Bayer's standard warranty terms shall apply to Test Strips provided
under this Agreement.
5. GENERAL
5.1 GOVERNING LAW: This Agreement will be governed by the laws of the
State of New York.
5.2. ASSIGNMENT: This Agreement shall not be assigned by Distributor
without the prior written consent of Bayer.
5.3 MODIFICATION: This Agreement contains all the agreements and
conditions applicable to this undertaking. All prior oral and
written agreements of any kind are excluded. The terms and
conditions of this Agreement shall not be added to, modified,
superseded or otherwise altered except by a written modification
signed by authorized representatives of both parties.
5.4 NO WAIVER OF CONDITIONS: Failure of Bayer to insist on strict
performance shall not constitute a waiver of any of the provisions
of this Agreement or waiver or any other default of the
Distributor.
5.5 INDEPENDENT CONTRACTOR AND INDEMNIFICATION
5.5.1. This Agreement does not create a special or fiduciary
relationship between the parties; Distributor is an
independent contractor,
and nothing in this Agreement is intended to constitute
either party as an agent, legal representative, subsidiary,
joint venturer, partner, employee, or servant of the other for
any purpose whatsoever.
5.5.2 Nothing in this Agreement authorizes Distributor to make
any contract, warranty, or representation on Bayer's behalf
or to incur any debt or other obligation in Bayer's name.
Distributor shall indemnify and hold Bayer, and Bayer's
affiliates and parent company's officers, directors,
shareholders, employees and representatives, harmless
against any and all claims, losses, costs, expenses,
liabilities, and damages arising solely and directly, as a
result of, or in connection with Distributor's breach of
its obligations under this Agreement including the costs,
including attorney's fees, of defending against them.
5.5.3 Nothing in this Agreement authorizes Bayer to make any
contract, warranty, or representation on Distributor's
behalf or to incur any debt or other obligation in
Distributor's name.
5.6 Distributor and Bayer shall maintain confidentiality of all the
terms and conditions of the Agreement throughout the duration
hereof and for a period of two (2) years following the effective
date of expiration or termination.
6. All notices to the respective parties shall be in writing and
shall be sent via certified mail return receipt requested or
express courier to the following addresses:
To Bayer Corporation: To Distributor:
Bayer Corporation, Diagnostics Division Medi-Quik Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 600 ▇▇▇▇▇▇, Suite 6500
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
7. This 1998 Mail Order Health Plan Patient Testing Compliance
Agreement-Contract GM supersedes the Contract G accepted by
Medi-Quick Services, Inc., on July 27, 1998, which will be
rendered null and void with the acceptance by Bayer of this 1998
Mail Order Health Plan Patient Testing Compliance Agreement
Contract GM.
8. This Agreement will be effective only upon receipt of the
requisite information on Attachments A and B, and counter
signature of Bayer hereon. Distributor should acknowledge their
acceptance of this Agreement by signing both copies and returning
them to Bayer Corporation by the close of business October 9, 1998
after which time this proposal will be considered null and void.
If the required information is acceptable to Bayer, Bayer will
countersign both copies of the Agreement and return one to
Distributor for its records.
Bayer Corporation Medi-Quik Services, Inc.
By: /s/ By: /s/
------------------------------------- ------------------------------
Authorized Signature Authorized Signature
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Manager Strategic
------------------------------------- ------------------------------
Contracting-Self Test Grant M. Gables, President
------------------------------------- ------------------------------
Print Name and Title Print Name and Title
10/6/98 10/2/98
------------------------------------- ------------------------------
Date Date
ATTACHMENT A
FOR CONTRACT GM
a) If Distributor does not meet committed yearly volume, as set forth below,
the Distributor will be charged back the price difference which is equal to the
price at the committed volume level minus the price at the volume level achieved
in the given contract year. Volumes are in combined purchases of Products.
----------------------------------------------------------------------------------------------------------
Committed Net ELITE
Yearly Pricing ELITE Net ENCORE ENCORE
Volume After Allowance % Pricing After Allowance % Payment
In 50s Allowance Value Allowance Allowance Value Allowance Terms
----------------------------------------------------------------------------------------------------------
50,000 * * * * * * *
----------------------------------------------------------------------------------------------------------
100,000 * * * * * * *
----------------------------------------------------------------------------------------------------------
200,000 * * * * * * *
----------------------------------------------------------------------------------------------------------
250,000 * * * * * * *
----------------------------------------------------------------------------------------------------------
300,000 * * * * * * *
----------------------------------------------------------------------------------------------------------
b) If Distributor commits to * unit yearly volume and does not meet such
committed volume in each contract year, Bayer will charge the Distributor
back the price difference which is equal to the price at the committed volume
level minus the price of the volume achieved as per the following schedule.
Yearly Volume ELITE Net ENCORE
In 50s Pricing Pricing
10,000 * *
25,000 * *
36,000 * *
Medi-Quick Services, Inc. agrees to purchase directly from Bayer, a committed
yearly volume of * boxes of 50s in combined purchases of GLUCOMETER
ELITE and GLUCOMETER ENCORE Test Strips.
/s/ Grant Gables
----------------------------------
Distributor's authorized signature
----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
Attachment B
Bayer Corporation, Diagnostics Division
Participating Plans List
===============================================================================================================================
Participating Plan Name Address City ST Zip Number of Covered Model Type*
Lives
===============================================================================================================================
Global Medical Solutions ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 280,000 At risk Provider
-------------------------------------------------------------------------------------------------------------------------------
Multi Plan ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇ 21 million Network Provider
Floor
-------------------------------------------------------------------------------------------------------------------------------
Health Care Services ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 7 million Network Provider
USA Managed Care Org Inc. Hwy
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Integranet Phy. ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 1,800,000 mso
Resource Inc. Houston Pkwy
National Healthcare ▇▇▇ ▇. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 600,000 Network Provider
Alliance Inc. ▇▇▇▇▇ ▇▇▇
-------------------------------------------------------------------------------------------------------------------------------
Foundation Health ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 50,000 Network Provider
Preferred Suite 850
===============================================================================================================================
