Exhibit 10.1
AMENDMENT
TO
AGENCY, SERVICES, AND DISTRIBUTION
by and between
▇▇▇▇▇▇ HEALTHCARE CORPORATION
as Baxter
and
ALLEGIANCE HEALTHCARE CORPORATION
as Allegiance
AMENDMENT TO
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AGENCY, SERVICES, AND DISTRIBUTION AGREEMENT
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This is an Amendment to the October 1, 1996, Agency, Services, and
Distribution Agreement (the "Agreement") by and between ▇▇▇▇▇▇ Healthcare
Corporation, a Delaware corporation with its principal offices at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called "Baxter") and Allegiance
Healthcare Corporation, a Delaware corporation with its principal offices at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called
"Allegiance").
Baxter and Allegiance desire to amend and do hereby amend the Agreement as
follows:
1. This Amendment is effective as of January 1, 1998.
2. Sections 1.1.3, 1.1.4, and 1.1.15 of the Agreement are deleted in their
entirety. New Section 1.1.4 is added as follows:
1.1.4 "Best Value Products" shall mean a select offering of
Allegiance-distributed and Allegiance-manufactured products which perform
consistently, offer the best value for the price, and provide good
economics throughout the supply chain. Best Value Products are specially
promoted externally to Allegiance customers and internally to Allegiance
sales personnel through financial incentives. All Best Value Products are
required to meet the following specific criteria: (a) the product must be a
market leader as demonstrated by sales volume or have the potential to
become a market leader; (b) the product must provide a return on managed
capital greater than 30% after tax; and (c) the product must meet a minimum
of silver status on the supplier scoreboard attached as Exhibit E.
Notwithstanding the foregoing criteria, the Products listed on Exhibits A
and B from time to time will be deemed Best Value Products; provided,
however, that endotracheal tubes, temperature probes, and heat and moisture
exchangers (whether with or without filters) identified on Exhibit A will
not be considered to be Best Value Products solely on account of their
being
listed on Exhibit A. Nothing in this Section shall obligate Allegiance to
treat Products as Best Value Products for purposes of sales compensation or
customer incentives.
3. The penultimate sentence of Section 4.1.1 is deleted.
4. The parties desire to extend the Agreement for two additional years.
Accordingly, Section 5 of the Agreement deleted in its entirety and replaced
with the following:
5. Term. The initial Term of this Agreement shall begin on the effective
date of this Agreement and, except as otherwise provided in this Agreement,
end at the end of the day on December 31, 2003. On November first of each
calendar year beginning in 2000, the Term shall be extended automatically
for successive additional periods of one (1) year each, unless and until
either Allegiance or Baxter has given written notice to the other that the
Agreement will expire at the end of its then-current term.
5. Section 6, subsections 6.1, 6.3, 6.4, and 6.6.1 are deleted in their
entirety.
6. New Sections 6.1, 6.3, 6.4, and 6.19 are added to the Agreement as follows:
6.1 Fees. Baxter shall pay to Allegiance a service fee in the amounts set
forth on the attached Schedule 1 to this amendment for each of the calendar
years during the Term of the Agreement in consideration of performance by
Allegiance of its duties in respect of the Products in addition to amounts
otherwise set forth.
6.3 Fee Increase. If Contract Net Sales in any calendar year exceed by
more than $20 million the Target set forth on the attached Schedule 2 to
this amendment for such calendar year, then the service fee for that year
will be increased by an amount calculated by multiplying the percentage set
forth for that year on Schedule 2 by the amount of the Contract Net Sales
in excess of the Target.
6.4 Fee Decrease. If Contract Net Sales in any calendar year are greater
than $20 million below the Target set forth on the attached Schedule 2 to
this amendment for such calendar year, then the service fee for that year
will be decreased by an amount calculated by multiplying the percentage set
forth for that year on Schedule 2 by the amount of the shortfall in
Contract Net Sales compared to the Target.
6.19 Sales Promotions. Baxter and Allegiance may agree from time to time
on Special Promotions and Programs subject to agreement on the scope, cost,
Product inclusions, duration, customers, and appropriate compensation of
Allegiance's sales reps to which such Special Promotions or Programs will
apply.
7. The first line of Section 6.14.1 is amended to replace the phrase "Sections
6.1 and 6.3" with the phrase "Section 6.1".
8. Sections 8.1.1, 8.1.2, and 8.1.3 are deleted in their entirety and replaced
with the following:
8.1.1 The service fee for each year, subject to adjustment as set forth in
Sections 6.3 or 6.4 above, will be paid monthly, on the fifteenth day of
the following month, according to the following percentages:
January, February, March 7.5% of the service fee per month
April, May, June 8.0% of the service fee per month
July, August, September 8.5% of the service fee per month
October, November 9.0% of the service fee per month
December the balance due.
If at any time during the Term of this Agreement Baxter forecasts that
Contract Net Sales will be more than $20 million above or below the target
level set forth above, then the service fee and the remaining monthly
installments of the service fee paid to Allegiance for that year pursuant
to Sections 6.1 and 8.1.1 will be increased or decreased, as appropriate.
8.1.2 Allegiance shall make payment to Baxter, at the aggregate Suggested
Sales Prices, for its aggregate purchases of Products sold by Allegiance
under the Distributor Model, net 30 days from the date of shipment of the
Product by Allegiance to the customer for Products on consignment to
Allegiance.
8.1.3 On or before the fifth business day of each calendar month during
the Term, Baxter shall report to Allegiance its Agency Net Sales for the
previous calendar month. Each business day during the Term, Allegiance
shall report to Baxter its aggregate sales and returns of Products for the
previous business day by code and by customer for Distributor Model and BCS
Kit Model transactions, and such reports shall also include, with respect
to Distributor Model transactions, the Suggested Sales Price and
Allegiance's actual purchase price of the Products.
9. Effective upon addition of new Schedules C-1 and D-1, in respect of Section
16.1.1, Baxter agrees not to exercise its right of termination in the event of a
Change of Control, as defined therein, unless the Change of Control involves a
Person which is, or is owned by or under common direct or indirect control by or
with any party identified on the attached Schedule 3 to this amendment.
The following sentence is added to the end of Section 16.1.1 of the
Agreement: In the event a Change of Control affecting Allegiance occurs and as
to which Baxter has agreed not to exercise its right of termination, this
Agreement shall expire no later than three (3) years following the effective
date of the Change of Control.
10. New Schedule C-1, setting forth performance standards in connection with
Allegiance's performance of its duties pursuant to Section 9, will be attached
hereto and made a part of the Agreement as soon as practicable.
11. New Schedule D-1, setting forth performance standards in connection with
▇▇▇▇▇▇'▇ performance of its duties pursuant to Section 10, will be attached
hereto and made a part of the Agreement as soon as practicable.
12. All other terms, conditions, and Exhibits of the Agreement remain in full
force and effect.
In Witness Whereof, the parties have by their duly authorized offices
executed this Agreement as of the date first above written.
BAXTER: ALLEGIANCE:
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▇▇▇▇▇▇ HEALTHCARE CORPORATION ALLEGIANCE HEALTHCARE
CORPORATION
By:______________________________ By:______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Corporate Vice President Title: President & COO
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Date: March 27, 1998 Date: March 26, 1998
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