Exhibit 10.3
MWI Veterinary
Supply
2007 - 2008 MERIAL INDEPENDENT
SALES AGENT AGREEMENT
THIS 2007 - 2008 MERIAL INDEPENDENT
SALES AGENT AGREEMENT (“Agreement”), is executed
as of this 16th day of November, 2006 and effective as of the
“Commencement Date” as defined below, by and between
MERIAL LIMITED, a company limited by shares registered in England
and Wales (registered number 3332751) with a registered office at
P.O. Box 327, Sandringham House, Sandringham Avenue, Harlow
Business Park, Harlow, Essex CM19 5QA, England, and domesticated in
Delaware, U.S.A. as MERIAL LLC, with a place of business at 3239
Satellite Boulevard, Duluth, Georgia 30096-4640 USA (hereinafter
“MERIAL”) and MWI Veterinary Supply Co., with a place
of business at 651 S. Stratford Drive, Meridian, ID 83642
(hereinafter called “Independent Sales
Agent”).
W I T N E S S E T H:
WHEREAS, MERIAL is a company that
researches, develops, manufactures and distributes pharmaceutical
and biological products for animal health use, including products
for companion animals;
WHEREAS, Independent Sales Agent
employs representatives (“Sales Agent Representatives”)
who call upon veterinarians, in person and via telephone, to sell
products to be used for companion animals;
WHEREAS, MERIAL desires to appoint
Independent Sales Agent to sell, market and provide services
related to MERIAL companion animal products; and
WHEREAS, Independent Sales Agent
accepts such appointment under the terms and conditions hereinafter
set forth;
NOW THEREFORE, in exchange for the
promises and covenants described in the Agreement, and other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, MERIAL and Independent Sales Agent hereby
agree as follows:
1. DEFINITIONS AND
INTERPRETATION
1.1
Definitions
In this Agreement and any Schedules
incorporated herein, each expression below shall have the following
meaning unless expressly stated otherwise:
(a)
“Affiliate” shall mean
(i) any business entity fifty percent (50%) or more of which is
owned directly or indirectly by a party to this Agreement; (ii) any
business entity which directly or indirectly owns fifty percent
(50%) or more of a party to this Agreement; or (iii) any business
entity under the direct or indirect control of any business entity
as described in (i) or (ii) above.
(b)
“AMA” shall mean an
Authorized Merial Account.
(c)
“Business Day” shall
mean a day (except a Saturday or Sunday) on which banks in the
U.S.A. are open for the normal range of banking
business;
(d)
“Commencement Date”
shall mean January 1, 2007;
(e)
“Confidential
Information” shall have the meaning given in paragraph 14.6
hereof;
(f)
“EDI” shall mean
Electronic Data Interchange System;
(g)
“EDI Information” shall
mean EDI and procedures set forth in Schedule C, attached hereto
and incorporated herein, such information including MERIAL
companion animal product sales and AMA information consisting at a
minimum of the customer’s name, address and account number as
well as MERIAL companion animal product purchase information,
including MERIAL companion animal product name and quantity of
MERIAL companion animal product purchased by package size and
units;
(h)
“Interest Rate” shall
mean the interest rate that is two percent (2%) above Citibank-New
York branch’s prevailing prime rate in existence in the
U.S.A.;
(i)
“Monthly Business Share”
shall mean the Independent Sales Agent’s percent share of the
respective month’s total of the following: (i)
commissioned sales (for which the Independent Sales Agent is
named), (ii) Net Sales on which EDI transaction fees are paid to
the Independent Sales Agent, and (iii) Net Sales made to NHOs for
which a sales commission is paid to the Independent Sales
Agent. Monthly Business Share percentages are as provided in
Schedule B hereto;
(j)
“Named Sales Agent”
shall mean the Independent Sales Agent that is designated on an
order by an Independent Sales Agent code;
(k)
“Named Sales Agent
Sale(s)” shall mean a sale to an AMA in the Named Sales
Agent’s Territory generated by placement of an order with
MERIAL by (i) the Named Sales Agent; (ii) an AMA designating a
Named Sales Agent; or (iii) an authorized MERIAL representative
designating the Independent Sales Agent as the Named
Agent;
(l)
“Net Sales” shall mean
sales net of all discounts, rebates (including, but not limited to,
free goods, consumer coupons, and free dose offers) and
returns;
(m)
“NHO” shall mean Network
Hospital Organization;
(n)
“Other Products” shall
mean the finished MERIAL companion animal products, jointly and
severally, in such sizes and presentation forms as set forth in
Schedule E, attached hereto and incorporated herein. The list
of Other Products set forth in Schedule E may be amended, as MERIAL
in its sole discretion determines necessary, to (i) include other
products which MERIAL may hereafter develop, manufacture, or
market, or (ii) delete Other Products;
(o)
“Party” shall mean
MERIAL or Independent Sales Agent;
(p)
“Products” shall mean
the finished MERIAL companion animal products, jointly and
severally, in such sizes and presentation forms as set forth in
Schedule A, attached hereto and incorporated herein. The list of
Products set forth in Schedule A may be amended, as MERIAL in its
sole discretion determines necessary, to (i) include
other
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products which MERIAL may hereafter
develop, manufacture, or market, or (ii) delete
Products;
(q)
“Product Literature”
shall mean all advertising, promotional and technical literature,
label and packaging text, package inserts or other material that
bears a Trademark or that is used in the promotion of the Products
and Other Products;
(r)
“Property” shall have
the meaning given in paragraph 9.1 hereof;
(s)
“Sales Agent
Representatives” shall have the meaning given in the second
whereas clause.
(t)
“Sales Goal,” as
specifically set forth in Schedule D hereto, shall mean the sum of
all Net Sales derived from (i) commissioned sales (for which the
Independent Sales Agent is named ), (ii) Net Sales on which EDI
transaction fees are paid to the Independent Sales Agent, and (iii)
Net Sales made to NHOs for which a sales commission is paid to the
Independent Sales Agent;
(u)
“Term” shall mean the
duration of this Agreement as defined in paragraph 3.1 herein and
any renewal(s) hereof;
(v)
“Termination Fee” shall
have the meaning given in paragraph 3.2 hereof;
(w)
“Territory” shall mean
the following geographic area: United States
(x)
“Trademarks” shall mean
all designated proprietary trademarks, and associated trade dress,
tradenames, symbols, brand names, package designs and the like now
or hereafter owned, acquired, used or registered by MERIAL in the
Territory to identify (i) the Products of MERIAL, set forth in
attached Schedule A, and which are to be used only on or in
relation to the Products and (ii) the Other Products of MERIAL, set
forth in attached Schedule E, and which are to be used only on or
in relation to the Other Products;
(y)
“United States” or
“U.S.A” shall mean the fifty (50) states and the
District of Columbia that make up the United States of
America;
(z)
“Veterinary Trade” shall
mean practicing veterinarians and animal hospitals that are in
compliance with the rules of the American Veterinary Medical
Association.
1.2
Interpretation
In this Agreement, unless expressly
stated otherwise:
(a)
a reference to any Party includes
that Party’s executors, administrators and permitted assigns,
or being a company, its successors and permitted
assigns;
(b)
the singular includes the plural and
vice versa;
(c)
a reference to a gender includes
each gender;
(d)
a reference to a person includes an
individual, firm, body, corporation, association (whether
incorporated or not) and authority or agency (whether governmental,
semi-governmental or local);
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(e)
a reference to time of day is to the
time applicable at the relevant date in the Eastern time zone in
the U.S.A.;
(f)
the inclusion of headings, clause
numbers, italics, bold print and underlining is for convenience of
reference only and shall not affect the interpretation of this
Agreement;
(g)
the schedules attached hereto are
incorporated herein and deemed a part of this Agreement;
(h)
a reference to any agreement or
document is to that agreement or document (and, where applicable,
any of its provisions) as amended, novated, supplemented or
replaced from time to time;
(i)
a reference to any statute,
regulation, rule or other legislative provision includes any
amendment to, statutory modification or re-enactment of,
legislative provision substituted for, and any statutory instrument
issued under that statute, regulation, rule or other legislative
provision;
(j)
where the performance of an
obligation under this Agreement falls on a day other than a
Business Day, this Agreement shall be construed as requiring that
obligation to be performed on the next Business Day;
(k)
unless otherwise expressly stated
herein, any reference to dollars or money shall mean the lawful
currency of the United States;
(l)
the word “writing”
includes typewriting, printing, lithography, photography and other
modes of visibly representing words and the word
“written” has a corresponding meaning.
2.
RIGHTS GRANTED
2.1
Subject to the terms and conditions
hereof, MERIAL hereby appoints Independent Sales Agent to sell,
market and provide services related to the Products to the
Veterinary Trade in the Territory during the term of this
Agreement. Independent Sales Agent hereby accepts
MERIAL’s appointment and agrees to use its reasonable efforts
to promote the sale of the Products to the Veterinary Trade in the
Territory. Independent Sales Agent further agrees to perform
such services and other independent sales agent functions in the
Territory as MERIAL may from time to time reasonably request.
Furthermore:
(a)
Independent Sales Agent is
authorized to obtain orders on behalf of MERIAL for the Products
from established AMAs in the Territory and from new accounts within
the Veterinary Trade within the Territory, after MERIAL has
approved such account(s) as an AMA(s). MERIAL shall pay
commissions on the Net Sales of orders for Products from new and
established AMAs within the Territory according to the schedule and
terms outlined in Schedule B, attached hereto and incorporated
herein by this reference.
(b)
Independent Sales Agent is
authorized to obtain orders on behalf of MERIAL for the Products
from established NHOs within the Territory. MERIAL shall pay
commissions on the Net Sales of orders for Products from NHOs
within the Territory according to the schedule and terms outlined
in Schedule B.
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2.2
Subject to the terms and conditions
hereof, MERIAL hereby appoints Independent Sales Agent to sell,
market and provide services related to the Other Products to the
Veterinary Trade in the Territory during the term of this
Agreement. Independent Sales Agent hereby accepts
MERIAL’s appointment. Furthermore:
(a)
Independent Sales Agent is
authorized to obtain orders for the Other Products from established
AMAs in the Territory and from new accounts within the Veterinary
Trade within the Territory, after MERIAL has approved such
account(s) as an AMA(s). MERIAL shall pay Independent Sales
Agent a transaction fee of one percent (1%) for the Net Sales of
each order for products listed as Other Products on Schedule E
within the Territory, which is transmitted to MERIAL via EDI.
No fee will be paid to Independent Sales Agent by MERIAL for orders
within the Territory which are not transmitted to MERIAL via EDI,
as required hereunder.
(b)
Independent Sales Agent is
authorized to obtain orders for the Other Products from NHOs in the
Territory. MERIAL shall pay Independent Sales Agent for the
Net Sales value of each order for Other Products from NHOs within
the Territory which is transmitted to MERIAL via EDI at a rate of
one percent (1%).
2.3
It is expressly understood and
agreed that the Independent Sales Agent is an independent
contractor and Independent Sales Agent shall have no authority, and
shall not represent that it has any authority, to bind MERIAL to
any obligation, to act for or on behalf of MERIAL, to extend any
warranty or make any representation on behalf of MERIAL, or
otherwise to assume, create or enlarge any obligation or
responsibility on behalf of MERIAL or in MERIAL’s name. This
Agreement does not constitute appointment of Independent Sales
Agent as a distributor or franchisee or authorize the same to act
as an agent for MERIAL for any purposes other than those that are
expressly provided for herein.
2.4
Independent Sales Agent expressly
acknowledges and agrees that during the term of this Agreement,
MERIAL may, upon fourteen (14) days written notice, amend Schedule
A, as MERIAL in its sole discretion determines necessary, to (i)
include additional products which MERIAL may hereafter develop,
manufacture, or market, or (ii) delete Products, and such addition
or deletion of products shall not be a breach of this Agreement or
be considered termination of this Agreement.
2.5
Independent Sales Agent expressly
acknowledges and agrees that during the term of this Agreement,
MERIAL may, upon fourteen (14) days written notice, amend Schedule
E, as MERIAL in its sole discretion determines necessary, to
(i) include additional products which MERIAL may hereafter develop,
manufacture, or market, or (ii) delete Other Products, and such
addition or deletion of products shall not be a breach of this
Agreement or be considered termination of this
Agreement.
2.6
MERIAL reserves the right to
independently audit commissions and transaction fees paid by
Independent Sales Agent to its Sales Representatives, pursuant to
Schedule B, for sales related to MERIAL Products and/or Other
Products.
2.7
Independent Sales Agent expressly
acknowledges and agrees that nothing contained herein authorizes
Independent Sales Agent to appoint or create other or sub
independent sales agents in the Territory without the prior written
consent of MERIAL. MERIAL reserves the right to expand or reduce
the Territory upon thirty (30) days’ written notice to
Independent Sales Agent and to authorize other
independent
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sales agents to sell MERIAL Products
and/or Other Products, with or without commission or transaction
fee, in the Territory. The expansion or reduction in the
geographic boundaries of the Territory shall not be a breach of
this Agreement or be considered a termination of this
Agreement.
2.8
Independent Sales Agent shall
refrain, in relation to the sale and promotion of Products or Other
Products, from establishing any branch or distribution depot
outside the United States and from actively seeking customers or
orders outside the United States, without the prior written consent
of MERIAL.
2.9
Independent Sales Agent shall sell
the Product(s) and/or Other Product(s) only to those AMAs or
Veterinary Trade accounts in which the veterinarian dispenses the
Product(s) and/or Other Product(s) to clients with whom the
veterinarian has an existing veterinarian-client-patient
relationship and which accounts comply with other MERIAL criteria
as communicated from time to time by MERIAL to Independent Sales
Agent in writing.
2.10
If Independent Sales Agent becomes
aware or MERIAL notifies Independent Sales Agent that any AMA or
Veterinary Trade account does not comply with any criteria set
forth pursuant to Paragraph 2.9 (giving reasons if so requested),
Independent Sales Agent shall promptly cease to sell to that
account and shall not resume sales until MERIAL is satisfied that
MERIAL criteria are met. MERIAL’s decision as to
whether an AMA or Veterinary Trade account complies with MERIAL
criteria shall be final.
3.
TERM AND
TERMINATION
3.1
This Agreement will be deemed to
have commenced on the Commencement Date and, subject to its terms
and conditions, shall continue in full force and effect from the
Commencement Date through and until 31 December 2008. This
Agreement may be renewed for successive terms by mutual agreement
expressed in writing and signed by MERIAL and Independent Sales
Agent.
3.2
Either party may terminate this
agreement without cause and without penalty upon one hundred twenty
(120) days’ prior written notice. In the event that
either party terminates this Agreement without cause upon less than
one hundred twenty (120) days’ prior written notice, such
party will be obligated to pay a sum equal to the total commissions
earned by Independent Sales Agent during the preceding four (4)
month period (the “Termination Fee”); provided,
however, that MERIAL’s obligation to pay the Termination Fee
shall be subject to its rights under paragraph 7.1(c). Except
as otherwise provided in this Agreement, this Agreement shall
terminate thirty (30) days after (i) either Party gives the other
Party written notice of the other Party’s default of any of
its material obligations under this Agreement, and (ii) the other
Party fails to cure such default within such thirty (30) day
period.
3.3
MERIAL may terminate this Agreement
immediately by giving written notice of such termination to
Independent Sales Agent, and such termination shall take effect
upon receipt of such notice, in the event of any of the
following:
(a)
Independent Sales Agent informs
MERIAL in writing or its creditors generally that Independent Sales
Agent is insolvent or is otherwise unable to meet its
obligations;
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(b)
an application is made to a court
for the winding up of Independent Sales Agent’s
business;
(c)
an order is made or a petition is
issued or a resolution is passed for the winding up of Independent
Sales Agent’s business;
(d)
execution is levied against
Independent Sales Agent by creditors, debenture holders or trustees
under a floating charge;
(e)
Independent Sales Agent enters into
a scheme of arrangement or composition with its
creditors;
(f)
a receiver, manager or administrator
is appointed to control the assets, or any part of the assets, of
Independent Sales Agent, or a petition for an administration order
or a petition for the appointment of a receiver is
issued;
(g)
Independent Sales Agent seeks
protection from its creditors in a bankruptcy court or takes
advantage of any other law or procedure for the protection of
creditors;
(h)
Independent Sales Agent makes any
assignment for the benefit of creditors; or
(i)
there is a change in the beneficial
interest in the shareholding of Independent Sales Agent, or all or
substantially all of the assets of Independent Sales Agent are
acquired by any other entity, or there is a change in the
management of Independent Sales Agent which has the effect of
altering the effective control of Independent Sales Agent, without
the prior consent in writing of MERIAL, which consent shall not be
unreasonably withheld.
3.4
MERIAL may terminate this Agreement
at any time before its expiration by giving thirty (30) days notice
in writing to Independent Sales Agent in the event that any
representation or warranty given or made pursuant to this Agreement
by Independent Sales Agent shall prove to have been incorrect or
untrue in any respect.
3.5
Independent Sales Agent shall
strictly comply with all applicable state, federal and other laws
and regulations, including those relating to animal drugs,
biologicals and pesticides. Independent Sales Agent agrees
that its failure to strictly comply with such laws and regulations
shall result in automatic termination of this Agreement without the
need for any prior notice by MERIAL. In addition, either
Party may terminate this Agreement immediately by sending written
notice to the other Party if the other Party’s actions under
this Agreement conflict in any way with its obligations regarding
Ethical Business Practices, as set forth in paragraph
16.
3.6
Upon the effective date of
expiration or termination of this Agreement by either Party, all
Products, Other Products, Product Literature and promotional items
in the possession of Independent Sales Agent shall be (a) returned
by Independent Sales Agent to MERIAL; (b) delivered to such agent
as MERIAL may designate; or (c) disposed of according to
MERIAL’s instructions. Transportation of such Products,
Other Products, Promotional Literature and promotional items shall
be at MERIAL’s sole expense in the event this Agreement is
terminated by MERIAL without Independent Sales Agent’s
default or breach under any provision of this Agreement. Upon
termination or expiration of this Agreement, Independent Sales
Agent shall
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promptly remove from its letterhead,
advertising, literature and place of business and from all
telephone and business directories and all commercial registries of
any kind, all reference to MERIAL and the Products and/or Other
Products. Independent Sales Agent shall not thereafter use
any confusingly similar corporate name, trade name or trademarks,
tending to give the impression that any relationship continues to
exist between MERIAL and Independent Sales Agent for the Products
and/or the Other Products.
3.7
Merial shall have no obligation to
Independent Sales Agent arising from expiration or termination of
this Agreement, nor shall Independent Sales Agent be entitled to
compensation from Merial by reason of the expiration or termination
of this Agreement. Expiration or termination shall not
extinguish obligations and liabilities accrued prior to expiration
or termination. However, in the event of expiration or
termination, Merial shall not be liable for any claims of lost
future sales, profits, transaction fees or commissions,
consequential damages of any type or on account of expenditures,
investments, leases or other commitments relating to the business
of goodwill of Independent Sales Agent.
4.
REMEDIES
INDEPENDENT SALES AGENT EXPRESSLY
ACKNOWLEGES AND AGREES THAT MERIAL SHALL NOT BE RESPONSIBLE OR
LIABLE FOR ANY LOSS OR DAMAGE (INCLUDING LOST COMMISSIONS,
TRANSACTION FEES OR PROFITS OR OTHER CONSEQUENTIAL OR INCIDENTAL
LOSS OR DAMAGE) HOWEVER CAUSED (WHETHER BY NEGLIGENCE, BREACH OF
CONTRACT OR OTHERWISE) WHICH MAY BE SUFFERED OR INCURRED OR WHICH
MAY ARISE DIRECTLY OR INDIRECTLY FROM THIS AGREEMENT. To the
extent liability cannot by law be waived in its entirety,
Independent Sales Agent expressly acknowledges and agrees that it
shall not be entitled to any lost commissions, transaction fees or
profits or any other consequential or incidental damages or losses,
and that its sole remedy under this Agreem
