FORMERLY KNOWN AS:
AS OF OCTOBER 2009
KENDALL & KENDALL LTP
MEDICAL SUPPLIES
VASCULAR THERAPIES
MALLINCKRODT
IMAGING SOLUTIONS
NELLCOR/PURITAN-BENNETT RESPIRATORY & MONITORING
SOLUTIONS
UNITED STATES SURGICAL
SURGICAL DEVICES
VALLEYLAB
ENERGY-BASED DEVICES
DISTRIBUTOR
2010 POLICIES AND PROCEDURES
Revised 12-9-09
2
TABLE OF CONTENTS
A. DEFINITIONS ..............................................................................……3
B. GENERAL REQUIREMENTS ........................................................……4
C. ADMINISTRATIVE REQUIREMENTS ............................................……5
D. REQUIREMENTS FOR
DISTRIBUTION OF PRIVATE-LABEL PRODUCT ......................……5
E. CONTRACT REBATE PAYMENT PROCESSING.............................……6
F. CONTRACT REBATE SUBMISSION PROCEDURE ........................……8
G. LOGISTICAL PROVISIONS ...........................................................……8
H. TABLE OF AFFILIATE SPECIFIC TERMS
(Standard and Annual Purchases)...........................................……10
I. FREIGHT TERMS ........................................................................…...10
J. RETURNED GOODS POLICIES ....................................................……10
K. E-BUSINESS TRANSACTIONS .....................................................……12
L. GENERAL PROVISIONS...............................................................……14
EXHIBIT A – AFFILIATE LIST ...........................................................……18
EXHIBIT B – INFORMATION REQUIREMENTS .................................……18
EXHIBIT C – SALES ROUNDING PROCEDURES…… ........................……19
EXHIBIT D – RETURNED GOODS POLICIES ....................................……20
EXHIBIT E – REDRESS/RESTOCKING FEES SCHEDULE…………………21
EXHIBIT F – GUIDING PRINCIPLES FOR E-BUSINESS………….…………22
Revised 12-9-09
3
A.
DEFINITIONS
“Affiliate” shall mean a Covidien division or business, or an operating
Company owned by Covidien, which operates under common control with
Covidien named on the Affiliate list attached hereto as Exhibit A.
“Policy Year” shall mean each twelve (12) month period of this Policy,
beginning on the effective date of anniversary thereof.
“Rebate (Charge Back)” shall mean a reimbursement paid to Distributor by
Affiliate via credit memo, of the positive difference, if such difference exists,
between the higher Distributor Purchase Price and the applicable Contract
Prices under a Contract.
“Rebate Claim” shall mean a reimbursement submission made by Distributor
to Affiliate for a reimbursement hereunder.
“Contract” shall mean a contract (other than one arising simply out of an
accepted Purchase Order) between Covidien, or one of its Affiliates, and a
Customer for the purchase of Products covered by this Policy.
“Customer” shall mean a third party entity, which has a Contract with
Covidien or one of its Affiliates, for the purchase of Products.
“Contract Price” shall mean the price charged to a Customer or Participants
for Products under a group purchasing or individual Rebate (charge back)
Contract.
“Distributor Purchase Price” shall mean the amount charged to Distributor
for Products covered on Affiliate price lists.
“Participant” shall mean a group customer, member or site, who is eligible to
purchase Products under a Contract.
“Products” shall mean any products sold by Covidien or an Affiliate that are
distributed under this Policy.
“Authorized Contract Distributor” shall mean any Distributor that has
been approved to access individual or group Rebate (charge-back) Contracts.
“Additional Billing” shall mean any document, such as an invoice, chargeback, or letter generated by Covidien or an Affiliate notifying a Distributor of
funds owed.
Revised 12-9-09
4
B.
GENERAL REQUIREMENTS
1) Minimum annual purchase requirement of $100,000 must be attained in
order to be an authorized direct distributor of Covidien Products. Note,
the $100,000 is per each Covidien Affiliate, not cumulative.
2) Affiliate reserves the right to suspend or refuse orders from a Distributor
if the Distributor is not meeting the requirements of the Affiliate as
outlined in the Policies and Procedures.
3) Covidien Distributor partners agree to implement adequate procedures to
ensure that Covidien confidential information provided to a Distributor is
maintained as confidential with no less than the same degree of care and
protection afforded to Distributors’ own confidential information.
4) Covidien Distributor partners agree to refrain from any disclosure of
Covidien confidential information (including sales data) to third parties
without Covidien’s prior written consent (which may be withheld for any
reason, in Covidien’s sole discretion). For the purposes of this provision,
Covidien agrees that disclosure of confidential information such as sales
data to a Group Purchasing Organization may be made only with respect
to contract sales of Covidien Products with such Group Purchasing
Organization.
5) Covidien Distributor partners agree to purchase Covidien Products direct
from a Covidien Affiliate. Purchasing Affiliate Products from the secondary
markets or from an account under contract pricing is prohibited.
6) Covidien Distributor partners agree to stock, support & service GPO and
National Accounts contracted Products ordered by our mutual customers.
7) Affiliate shall have the right to limit the quantities of Products purchased
by the Distributor during any month to a quantity, measured in units
and/or dollars, at Affiliate’s discretion, equal to one hundred and ten
percent (110%) of one-twelfth of the quantity of Products purchased by
the Distributor during the preceding fiscal year of the Affiliate.
Note,
Affiliate may monitor monthly purchase compliance at the product
center/market section level as well as total purchases.
8) Distributor agrees not to resell, exchange, ship, export, or otherwise
transfer any Products to any entity that is not located within the fifty
states of the United States of America or the District of Columbia (thus
excluding any other territories or possessions of the United States and
any foreign country) without the prior written consent of Covidien. The
making of any such sales shall constitute a breach of this Agreement.
Covidien Affiliates shall be entitled to injunctive relief and all other
equitable and legal remedies available to it in the event of a breach by
Distributor.
Revised 12-9-09
5
9) Audit - Distributor and Affiliate shall have the right, upon reasonable
notice and during regular business hours, to audit the books and records
of the other party to determine whether such party is in compliance with
this Policy and Procedure. Such audits shall be limited to one in any
twelve-month period.
C.
ADMINISTRATIVE REQUIREMENTS
1) Distributor must pay all invoices from Covidien Affiliates within standard,
cash-payment terms. Affiliates offer 1% 30 days net 31 days payment term
options for all distributors. Discount must be taken at time of payment.
2) Distributor will request all Proof of Deliveries from Covidien Affiliates within
30 days of invoice date. POD’s resulting in a shortage claim will not be
accepted if more than 7 days has passed since delivery was made.
3) Distributor will resolve all Covidien Affiliates additional billings for disputed
items within 60 days of add-bill date. Surgical Devices and Energy-Based
Devices do not issue paper “additional billings.” All disputed items will be
reflected as debit residuals on the Distributor accounts receivables file.
4) Distributor will provide a detailed deduction explanation for all adjustments
to invoices from Covidien Affiliates within 30 days of invoice date.
5) Distributor must submit all requests for credit within 90 days of invoice date.
6) Distributor must provide, at minimum, a monthly sales tracing report
detailing Distributor sales of Covidien Affiliates Products during the preceding
month. This report must be in an approved electronic format and provided
within the first ten (10) days of each month, at no charge to the Affiliate.
7) If requested, Distributor must provide, at minimum, a monthly report of each
Affiliate’s Products to Covidien Affiliates within 10 (ten) days of each month
that contains Distributor inventory of Affiliate’s Products for the preceding
month.
D.
REQUIREMENTS FOR DISTRIBUTION OF PRIVATE-LABEL
PRODUCTS
Covidien recognizes that, under some circumstances, its Distributor partners, or
affiliates of its Distributor partners, may also choose to manufacture, market, or
sell products of its own which, directly or indirectly, compete with Covidien’s
Products.
The following guidelines and requirements are intended to protect the integrity of
the manufacturer distributor relationship where such a situation exists. They
are not intended in any way to preclude or hinder Distributors from carrying
competitive products. Instead, they are necessary to ensure that Distributors
who do so are properly (appropriately) dedicated to the Covidien Products and
Revised 12-9-09
6
the consumers to which they are ultimately sold.
1) Distributor must utilize Covidien confidential information, including pricing
information, only for the distribution of Covidien Products.
2) Distributor will implement adequate procedures to ensure that Covidien
confidential information provided to a Distributor is maintained as
confidential with no less than the same degree of care and protection afforded
to Distributor’s own confidential information.
3) Distributor must disseminate Covidien confidential information to only
Distributor’s employees who have a “need to know” such information in order
for Distributor to effectively distribute Covidien Products.
4) Distributor will only use Covidien Product contracts, agreements, and
information for the purpose of the distribution of Covidien Products to
customers.
5) Distributor will refrain from communicating or disseminating any misleading
information to customers concerning Covidien Product availability and
service.
6) Distributor must refrain from false or derogatory comments concerning
Covidien Product quality, availability, service, or support.
7) If requested, Distributor must provide a report that certifies the foregoing and
summarizes what steps the Distributor has taken to comply with the
foregoing requirements for distribution of private-label products.
E.
CONTRACT PRICING REBATE PAYMENT PROCESSING
PROCEDURES
1) Minimum Rebate – Distributor must submit a minimum of $500 per month
and/or $6,000 per year of rebate claims to be eligible for rebate contract
status.
2) Actual Rebate - Authorized Contract Distributors should submit rebate
claims in an acceptable format by the 10th day of the month for the previous
month’s sales. Affiliate validates each claim and identifies discrepancies,
which are reported to the Distributor for resolution or provision of additional
supporting documentation. Rebate calculation is as follows:
a. Convert Distributor sales units to the equivalent Affiliate sales units and
round to four decimals.
b. The Rebate amount is then calculated based on equivalent Affiliate sales
Revised 12-9-09
7
units from above, multiplied by the Rebate amount.
Sales Rounding Procedures, attached hereto.)
(See Exhibit C –
3) All Rebates and contract payments will be calculated on Distributor
provided sales to end-users (not to exceed Affiliate shipments), based on
invoice (ship date) not order date. Authorized corrections or additions to
contract sales will result in appropriate changes to the Rebate credit.
4) If a Customer returns Product to the Distributor, the return must be
reported as a negative sales tracing and a negative Rebate Claim. Receiving
double Rebates is not permitted.
5) No Rebate Claim will be processed if received more than 90 days from the
date of the Distributor’s invoice to the Customer. Any claims received after
such date will be considered invalid.
6) Prior accounting periods cannot be considered closed without the consent
of the Affiliate.
7) Custom Products - Custom Products are intended for sale to the Customer
specified on the Product label, and are made to the specifications and
requirements of the individual Customer. These Products may not be sold
or rebated to any other Customer without the prior written approval of the
individual Affiliate.
8) Price Changes - In the event of a list price change, Covidien will begin
calculating and paying chargebacks/Rebates at the new list price for orders
shipped by Distributor on or after the effective date of change. In the event
of an overall list price decrease, Covidien will determine if a market-wide
chargeback/Rebate adjustment is appropriate to offset the impact of
monetary loss due to inventory devaluation.
In the event of an
extraordinary Distributor list price increase, Affiliate reserves the right to
add bill the Distributor for the increased value of the Distributor’s on-hand
inventory and in-transit inventory, on the effective date of the price change.
If the Distributor does not provide on-hand inventory and in-transit
inventory, a 30-day calculation will be used. Note, Affiliate will make all
attempts to provide 60-days notice in the event of a Distributor list price
change.
9) Distributor is responsible for credit and re-bill correction to the Customer
for identified price discrepancies.
10) Distributor is eligible to receive a contract Rebate only if the contracted
Product is purchased directly from an Affiliate. No “gray-market/
overstocked dealer” purchases are applicable.
11) Distributor must sell contracted Product directly to a qualified Customer in
Revised 12-9-09
8
the domestic United States duly authorized by Affiliate to purchase that
Product.
12) Unauthorized Rebate Payments – In the event that the Distributor claims
and receives an unauthorized Rebate payment as a result of a violation of
these polices, Covidien reserves the right to recover monies paid by reducing
future Rebate credits, deducting any incentive monies earned by the
Distributor or by direct payment to Covidien. Covidien also reserves the
right to deny future Rebate Claims and to charge the Distributor for
reasonable costs associated with audit procedures.
F.
CONTRACT REBATE RESUBMISSION PROCEDURES
(For Medical Supplies, Vascular Therapies, Imaging Solutions & Respiratory and
Monitoring Solutions)
Rebate discrepancy additional billings require payment within terms.
If
Distributor wishes to resubmit a claim that has been denied the following
procedure should be pursued. Discrepancies not on the resubmission should
be paid within terms.
1. Resubmission must be received by Affiliate within 60 days of add bill.
2. The format used for the resubmission must be the same as that of the
original chargeback denial (i.e. chargeback discrepancy report). The
Distributor should make comments on each line describing the reason
that the Distributor does not agree with the chargeback denial.
3. Once received by Affiliate, resubmissions will be processed within 60 days,
and sent back to Distributor for review.
4. Distributor will have 30 days to review and make final payment on
remaining denials.
5. A second resubmission will not be accepted.
6. Affiliate reserves the right to deny resubmission claims.
G.
LOGISTICAL PROVISIONS
Distribution Parameters – Distributor agrees not to resell, exchange, ship,
export, or otherwise transfer any Products to any entity that is not located
within the fifty states of the United States of America or the District of Columbia
(thus excluding any other territories or possessions of the United States and
any foreign country) without the prior written consent of Covidien. The making
of such sales shall constitute a breach of this Agreement. Covidien Affiliates
shall be entitled to injunctive relief and all other equitable and legal remedies
available to it in the event of a breach by Distributor.
Consolidated Ship Day – Distributor will select 1-2 consolidated ship day(s)
for their stocking orders. All orders placed will consolidate and ship out to the
Distributor each week on this designated ship day. Affiliate limits the number
Revised 12-9-09
9
of consolidated ship days for each Distributor to a maximum of 2 days. This
will maintain an efficient shipping process and provide a consistent delivery
pattern. Affiliate will contact Distributor to make arrangements for consolidated
ship day.
Distributor Pick Up Policy – Distributors are not allowed to pick up Affiliate
Products at distribution center.
Receipt of Palletized Goods – For goods shipped on pallets, Distributors must
sign the Bill of Lading or Delivery Receipt in Pallet count, not case or piece
count. Claims for shortages and/or concealed damages will be processed per
the guidelines in the Returned Goods section of this policy. Signing the Bill of
Lading or Delivery Receipt, “Subject to Count,” or similar language will not be
considered valid for purposes of claims raised after the notification period. Only
full pallet overages/shortages and/or damages noticed upon delivery should be
noted on the carrier’s documentation.
Sort and Segregate – Covidien Affiliates will not make arrangements with
carriers to provide Distributors with ‘Sort and Segregate” services. If these
services are required, Affiliates will provide carrier “Point of Contact”
information so Distributors can arrange for the service. Should Distributors
choose to make such arrangements, it is with the understanding that Affiliates
will not accept financial responsibility for the service.
Minimum Order Requirements – Minimum order requirements by Affiliate are
outlined in the Table of Affiliate Specific Terms below. These minimum fees will
be charged to any purchase order that does not satisfy the minimum invoice
amount.
Drop-Shipment Policy - A drop shipment is defined as an order, which is
invoiced by Affiliate to the Distributor and shipped directly by Affiliate to the
Distributor’s Customer. Drop-ship fees will be assessed to the Distributor to
cover additional handling and shipping costs per the Table of Affiliate Specific
Terms below. In addition to the “Drop-Ship Fees” listed, applicable airfreight
and handling charges will be assessed to the Distributor. Affiliate reserves the
right to classify a Product as “drop ship only.” Due to the additional processing
required for drop shipments, Distributors are requested to use the drop-ship
alternative as a last alternative to traditional distribution channels.
Revised 12-9-09
10
H.
TABLE OF AFFILIATE SPECIFIC TERMS
Standard and Annual Purchases
Minimum-Purchase
Order Terms
Affiliate
Medical
Supplies/Vascular
Therapies
Surgical
Devices/EnergyBased Devices
Imaging Solutions**
Respiratory and
Monitoring
Solutions**
Drop-Ship Terms
Annual
Minimum
Purchase
Terms
Minimum
(Gross Dollars)
Below
Minimum Fee
Drop Ship Fee
Annual Minimum
Requirement
$1,000
$90 per order
$90 per order
$100,000
$1,500
$90 per order
$90 per order*
$100,000
36 case minimum
$175 per order
$90/per order
$100,000
$1,500
$90 per order
$90 per order –
$25 per order
For Shiley
Tracheostomy Tubes
$100,000
* Drop-ship orders at or above $1,500 will be assessed a drop-ship fee of 5% of the total order value.
I.
FREIGHT TERMS
Standard Orders – Standard orders will be shipped FOB destination, freight
prepaid, by Covidien Affiliate preferred method including, but not limited to,
common carrier, parcel or air depending on size of order, customer location and
product requirements.
Expedited Orders – Expedited orders will be shipped freight prepaid and add,
using most timely and efficient delivery option based on carriers delivery
schedule to Customer’s location. Orders expedited at the request of the
Customer will incur a fee for premium service. The fee will reflect the current
published rate for the designated carrier and mode of transportation less a 20%
discount.
J.
RETURNED GOODS
1) Subject to the following policies for returned goods and credit apply for
all Affiliates:
a. All standard saleable Products may be returned for credit. Credit is
issued based upon the reason for the return (see Exhibit E for credit
amount). Product must be returned in original packaging to receive
credit. Affiliate reserves the right to refuse any return.
b. All returns must be authorized by appropriate Affiliate Customer Service
Revised 12-9-09
11
or Returned Goods Department. All Product returns must be sent freight
prepaid unless prior approval from Affiliate is granted.
c. Overstock returns will be processed by appropriate sales contact.
Customer Service will assign a Product return authorization number once
the following information is provided:
i.
Reason for return,
ii.
Item number,
iii. Quantity of item,
iv.
Original invoice number,
v.
Purchase order number,
vi.
Lot number.
Customer Service will forward a copy of the Product-Return Authorization
to the appropriate Customer contact along with return instructions. The
Product Return Number must be included with all paper work.
d. Distributors should not return Product per the conditions below. Credit
will not be given and the Product will not be returned to the Distributor:
i. All Made-To-Order or Custom-Manufactured Products,
ii. Discontinued Products, divested Products, and Products not
listed in current price lists,
iii. Expired Products or Products within Affiliate “required months
from expiration” (see Exhibit D).
iv. Used Products or unreported damaged Products.
v. Products that are not in original packaging - standard selling
unit-of-measure (i.e., full, unopened cases of Product).
vi. Products that were not purchased directly from Affiliate.
vii. Products for which no “authorization to return” has been given.
e. To ensure appropriate credit is issued in the event goods are damaged in
transit or a shortage occurs, Distributors should accept all Products
delivered by the carrier, note visible damages or shortages on the carrier
delivery documents, and contact the Affiliate Customer Service
Department. Affiliate will issue a credit or make arrangements for a
replacement shipment in the event of a shortage, or a Returned Goods
Authorization will be issued for the damaged Products(s) only. We will
arrange for a carrier to pick up the damaged Product(s) within a
reasonable timeframe. Credit for damages will be issued upon physical
receipt of the damaged Product(s) in the designated Affiliate distribution
center, subject to the following conditions:
i.
Revised 12-9-09
Damages and/or shortages must be reported to Affiliate
Customer Service Department within 7 days of delivery. This
applies to both palletized and small package shipments, and
includes shortages or damages within an over-pack
corrugate.
12
ii.
Damages and/or shortages (manufacturer’s) within full cases
should be reported to Affiliate Customer Service immediately
when encountered.
g. Returned Goods Authorization Numbers not processed or utilized
within 60 days are cancelled or null and void. Distributor must
contact Affiliate for new Returned Goods Authorization Number after 60
days have lapsed.
2) Exceptions to Returned Goods Policies
a. Any Customer reports of defective Product received by the Distributor
should be telephoned to Affiliates’ Customer Service Department within
24 hours, providing all information below. Affiliate will contact the
Customer, investigate the problem, and notify the Distributor of the
outcome and any action taken.
1)
2)
3)
4)
5)
K.
Name and address of Customer,
Customer contact and phone number,
Product catalog number and description,
Lot number, and
Nature of problem and quantity involved.
E-BUSINESS TRANSACTIONS
Current technology provides the tools to rapidly automate manual business
processes and transactions throughout the health-care supply chain. Increased
use of this automation will streamline product selection, purchasing, and
utilization for the mutual benefit of all parties. A full statement of Affiliate’s EBusiness principles is included. (See Exhibit F – Guiding Principles for EBusiness attached.)
1. Covidien utilizes the EDI standard HIBCC subset of the ANSI X.12 format.
2. E-Business solution is via the XML standard over the internet. Covidien
supports transactions via Global Health Exchange (GHX). GHX offers a variety
of connection solutions for our distribution partners.
Revised 12-9-09
13
Business
Transaction
End-user Sales
Purchase Order
Purchase Order
Acknowledgement
Invoice
Funds Transfer
Advanced Ship
Notice
Preferred
Format
Acceptable
Format
Availability
Status
X.12
EDI 867/844
Currently
available
None
EDI 850
Currently
available
None
X.12 Direct
EDI XML via
GHX
X.12 Direct
EDI XML via
GHX
EDI 855
X.12
EDI 810
X.12
X.12, XML not
available via
GHX
EDI 820
EDI 856
Currently
available
Currently
available
Currently
available
Currently
available
Nonconformance
Fee
None
None
None
None
We are committed to the use of electronic automation (E-Business) between all
Affiliates and Distributors, and we are willing to comply with any of the open EBusiness XML standards.
Distributor’s E-business will be implemented
according to the aforementioned schedule.
1) End-User Sales (Transaction Set #867)
a. To improve Product flow through the supply chain, Affiliate is requiring
approved E-Business Distributors to supply rebates and tracings, at no
charge to Affiliate for all transactions. This requirement applies to both
contracted and non-contracted Products, as follows:
i. End-user sales (including the end-customer invoice for regular
and drop-ship sales),
ii. Product returns (from Customer to Distributor/ from Distributor
to Affiliate),
iii. Product transfers,
iv. Any other changes to inventory, or
v. Credit re-bills/price adjustments.
b. Rebate and tracing reports must contain standard information needed by
Affiliate. (See Exhibit B – Information Requirements, attached hereto).
c. If a Distributor manufactures kits containing Affiliate Products, sales must
be reported by Affiliate component Product code numbers.
d. Non-EDI Distributors must report all transactions through the last
calendar day of the month within 10 days following the close of the
calendar month. EDI transactions should be sent daily, but not less
than monthly.
Revised 12-9-09
14
2) Purchase-Order (Transaction Set #850) - The electronic transmission of
purchase order data using industry standard format:
a. (HIBCC approved version of ANSI x .12 or XML).
3) Purchase-Order Acknowledgement (Transaction Set #855) - The
electronic transmission of purchase-order confirmation data using industry
standard format.
4) Invoicing (Transaction Set #810) - The electronic transmission of invoice
information from Affiliate to the Distributor. This data will be provided in
industry approved ANSI x.12 format, and will enable the Distributor to
automatically match invoices to the original purchase order and receipt.
5) Funds Transfer (Transaction Set #820) - Electronic Funds Transfer
provides a means for a Distributor to electronically transfer funds and
remittance data from the Distributor to Affiliate. The data would be provided
in industry-approved banking standards (CTX). Affiliate can provide support
for working through the necessary testing and communications with the
Distributor’s bank to help facilitate the setup of this transaction.
6) Additional electronic business transactions supported by Covidien divisions
are: Contract, Advance Ship Notice, Pricing, and Availability. Please contact
Covidien E-Business Group for specifics.
L.
GENERAL PROVISIONS
1)
Covidien Affiliates reserve the right to maintain their own policies and
criteria regarding Distributor sales and business partners, including
suitability of Distributor for certain divisions and Affiliates. Accordingly, not
all Distributors may be qualified to serve as Distributors of Products of all
Covidien Affiliates and divisions.
2)
Changes in Products - If the regulatory status of a Product (e.g., “may be
dispensed by prescription only”) changes, then Affiliate may delete that
Product from the Product list by notice to Distributor.
Affiliate may
discontinue or modify any Product at any time. Affiliate may, at their
discretion, restrict the sale of specific Products to Distributor.
3)
Terms - Affiliate may amend or terminate all or part of this Policy by giving
a 30-day notice to the Distributor. The terms of these General Provisions and
any other terms hereof, which, by their nature or in order to be effective for
their stated purpose, must survive amendment or termination of this Policy
shall survive.
4)
Notices - Any notice given in connection with this Policy shall be sufficient
if in writing and delivered by messenger, by postage-prepaid mail, or by
facsimile to the Distributor, provided notices or communications shall be
Revised 12-9-09
15
effective when received by, or otherwise known to the recipient or its legal
representative. The methods of delivery described above are not intended to
be exclusive, and any written notice actually received shall be sufficient.
5) Modification by Affiliate - Affiliate may modify the “Availability Status” and
“Non-conformance Fees” in the “E-Business Transactions” section, Payment
Terms, Table of Affiliate-Specific Terms, Returned Goods Policies, and any
Exhibit by notice to Distributor per the previous paragraph. This Policy and
Procedure may be modified only by an Affiliate. The terms of any purchase
order, invoice, or similar document related to implement this Policy and
Procedures shall not modify this Policy and shall be subject to this Policy.
6)
Assignment - Neither Distributor nor Affiliate may assign this Policy or any
of its rights or obligations hereunder without the prior written consent of the
other party, provided Distributor may not unreasonably withhold, condition,
or delay such consent, in the event of any assignment by Affiliate to an
affiliated entity, or any assignment which results from the change in control
of any business or division of Affiliate. For purposes of this provision,
assignment shall include any assignment by operation of law and any change
in control of a party.
7) Relationship of Parties - The relationship of Distributor to Affiliate is that of
independent contractor.
This Policy does not create a partnership,
association, or other business entity. Neither party has the right to bind the
other.
8) No Third-Party Beneficiaries - Unless specifically provided elsewhere
herein, nothing in this Policy is intended to benefit any person or entity not a
party hereto.
9)
Publicity - Neither Distributor nor Affiliate shall permit or generate any
publicity, advertising, nor promotion concerning this Policy without the
prior written consent of the other party.
10) Force Majeure - Non-compliance with any obligation under this Policy for
reasons of force majeure (such as: acts, regulations, or laws of any
government; war or civil commotion; destruction of production facilities or
materials; fire, earthquake or storm; labor disturbances; failure of public
utilities or common carriers; and any other causes beyond the reasonable
control of the party affected) shall not constitute a breach of this Policy.
11) Legal Compliance - Both parties will comply with all applicable Federal,
State, and Local laws in connection with this Policy and the sale of any
Products hereunder or by Distributor to Customers. This Policy or any
contract may involve a discount or other reduction in price with respect to
one or more Products under 42 USC 1320A-7B§ 1128B(b) (3) (A) of the
Social Security Act (42 USC § 1320a-1128B(b)(3)(A), and regulations issued
thereunder.
Under such circumstances, Distributor or Customer is
responsible for accurately reporting and/or providing information on any
Revised 12-9-09
16
such discounts, including rebates or reductions in price, to reimbursement
agencies (including Medicare and Medicaid) and other entities in accordance
with all applicable laws and regulations, including, without limitation, 42
CFR § 1001.952(h). Distributor agrees that it shall properly disclose and
appropriately reflect any discount or other reduction in price in its cost
claimed under Medicare or any State Health Program and shall advise any
Customer of its responsibilities under such laws. If the use of the Products
sold hereunder require the reporting of costs on a cost report, then the
benefit of any discount will be claimed in the fiscal year and Distributor
and/or Customer (as applicable) will fully and accurately report any such
discount in the applicable cost report.
12) Trademarks and Proprietary Information
a. Packaging and labeling of Products shall contain Covidien’s trademarks
and trade names. Each party’s trademarks and trade names shall remain
their exclusive property, and nothing herein shall be construed as
transferring any right, title, or interest of any kind or nature whatsoever
thereto, to the other party hereto. Except as specifically provided herein,
neither party shall use in any way the trademarks or trade names of the
other party, and will not do any act which would in any way infringe upon
or be in derogation of the validity of such other party’s trademarks or trade
names, and will notify the other party of any conflicting claims that
challenge any trademarks or trade names of such party of which it is
aware.
b. Distributor shall hold in confidence Proprietary Information supplied to it
by Covidien, and shall not divulge the same to any other person or entity
without the prior permission of Covidien. The confidentiality obligations in
this section shall not apply to Proprietary Information which:
i.
ii.
iii.
iv.
v.
becomes public other than through the receiving party,
Is already known to the receiving party as evidenced by its
written records,
becomes known by the receiving party in the future from
another source which is under no obligation of confidentiality
to disclosing party, or
is subsequently developed by the receiving party in a manner
that it can conclusively establish was independent of the
disclosure hereunder.
The obligations of Distributor pursuant to the provisions of
this Section, shall survive termination of this Policy.
For purposes of this Policy, “Proprietary Information” shall mean all data
and other information relating to Covidien’s business that could
reasonably be expected to be valuable to a competitor, a potential
competitor, or a distributor for any such competitor of Covidien, including,
without limitation, any product specifications.
Revised 12-9-09
17
13)
Product Tracing/Incident Notification - To facilitate any necessary
Product tracing or recall, Distributor shall maintain a written recall
procedure in effect and shall make available, upon request, the lot number
(or serial number, if applicable) with
a) Customer name,
b) Address shipped to, and
c) Date of shipment for each Product sold.
If lot numbers or serial numbers are not available, Distributor shall
provide a comprehensive list of all Customers to whom shipments of the
affected Product were made during the timeframe Covidien shall request,
including
a) Address,
b) Shipped to, and
c) Shipment dates.
In addition, Distributor shall:
1) Immediately notify the applicable Covidien Affiliate of:
a) Any event that might require an Affiliate to file a report or otherwise
comply with any applicable law, rule, or regulation governing
medical devices,
b) Any Product malfunction which, were it to recur, would be likely to
cause serious injury or death, or
c) Any serious device effects to a patient and/or operator, and
2) Report all Product and service complaints to the applicable Affiliate,
including the following information:
a)
b)
c)
d)
e)
14)
Product model number,
Product serial number (if applicable and available),
Nature of complaint or situation,
Any action taken, and
Confirmation by Distributor of stated complaint or situation.
Additional Distributor policies and procedures may be set forth in any
Contract between Affiliate and a Distributor or in attachments /schedules
incorporated in any such Contract or transaction for the purchase and sale
of goods with the approval of the Affiliate President and Vice
President/Controller.
Revised 12-9-09
18
EXHIBIT A - AFFILIATE LIST






MEDICAL SUPPLIES
VASCULAR THERAPIES
IMAGING SOLUTIONS
RESPIRATORY AND MONITORING SOLUTIONS
SURGICAL DEVICES
ENERGY-BASED DEVICES
EXHIBIT B - INFORMATION REQUIREMENTS
(Refer to HIBCC Subset of ANSI x 12.867 Transaction)
1) Distributor Branch Number,
2) Distributor Customer “Bill To and Ship To” Number or Health
Industry Number (HIN),
3) Customer “Bill To and Ship To” Name,
4) Complete Customer “Bill To and Ship To” Address:
 Street
 City
 State
 Zip
5) Affiliate Product Code,
6) Distributor Unit of Measure,
7) Quantity Shipped,
8) Invoice Number,
9) Invoice or Ship Date,
10) Distributor Cost or Selling Price,
11) Expected Rebate Amount,
12) Type of activity transaction, e.g., direct sale to Customer,
warehouse transfer, returns from Distributor to Affiliate, or
returns from Customer to Distributor,
13) Contract Number (where contract/rebated sale),
Revised 12-9-09
19
14) Debit memo number,
15) Affiliate’s Lot/Serial Number for shipped Products.
EXHIBIT C - SAMPLE OF SALES ROUNDING PROCEDURES
1.
CONTRACT NOTIFICATION
Affiliate
2.
Product Code
123
Rebate Amount
$ 23.31/case (cs)
Distributor U.O.M.
Each (ea.)
Quantity
1
UNIT CONVERSION
Product Code
123
4.
Quantity
1
END-USER SALES REPORTED
Product Code
87123
3.
Sales Unit
Case (cs)
Sales Unit
Case (cs)
Stated in Dist. Units
3 Each (ea.)
REBATE CALCULATION
Rebate for one [1] each = $23.31/cs x .3333 cs (rounded to four [4]
decimals using rule of five [5] = $7.7692 = $7.77 (rounded to two [2]
decimals using the rule of five [5]).
Revised 12-9-09
20
EXHIBIT D - RETURNED GOODS POLICY
AFFILIATE
Medical
Supplies
Contained in lot
number.
Contact Customer
Service for more
information
Contact your
Sales Representative
or call
1-800-962-9888
Will be provided by
Customer Service
upon receiving return
authorization
See Exhibit E
Stamped on Product
Packaging
Contact your
Sales Representative
or call
1-800-962-9888
Will be provided by
Customer Service
upon receiving return
authorization
See Exhibit E
Stamped on Product
Packaging
Contact your
Sales Representative
or call
1-888-744-1414
Will be provided by
Customer Service
upon receiving return
authorization
See Exhibit E
12 months
Stamped on Product
Packaging
Contact your
Sales Representative
or call
1-888-744-1414
Will be provided by
Customer Service
upon receiving return
authorization
See Exhibit E
12 months
Contained in lot # or
batch # - contact
Customer Service
for more information
Contact Distributor
Returns
Department
1-800-722-8772
Contact Distributor
Returns
Department
1-800-722-8772
See Exhibit E
Contained in lot # or
batch # - contact
Customer Service
for more information
Contact Distributor
Returns
Department
1-800-722-8772
Contact Distributor
Returns
Department
1-800-722-8772
3 months
Respiratory
and
Monitoring
Solutions
1Disposition
RETURN LOCATION
1REDRESS/
RESTOCKING
FEES
6 months
Imaging
Solutions
EnergyBased
Devices
MANUFACTURING
DATE
IDENTIFICATION
EQUIPMENT/
PRODUCTS REQUIRING
SALES
REPRESENTATIVE
RETURN
AUTHORIZATION
6 months
Vascular
Therapies
Surgical
Devices
MONTHS
PRIOR TO
EXPIRATION
FOR
ACCEPTABLE
RETURNED
PRODUCT
12 months
See Exhibit E
or need for redress is determined by Affiliate and is deducted from the credit amount.
Revised 12-9-09
21
EXHIBIT E - REDRESS/RESTOCKING FEES SCHEDULE
Medical
Supplies*
Vascular
Therapies
Imaging
Solutions
Respiratory
and
Monitoring
Solutions
Surgical
Devices
EnergyBased
Devices*
Defective Product –
Sales Representative
must initiate
and authorize.
Invoiced price
Invoiced price
Invoiced price
Invoiced price
Suture credit
on invoiced
price – AS
credit on
invoiced price
or replacement
upon receipt
Affiliate Shipping
error
Invoiced price
within 90 days
Invoiced price
within 90 days
Invoiced price
within 90 days
Invoiced price
within 90 days
Invoiced price
within 90 days
Invoiced price
within 90 days
Affiliate Order error
Invoiced price
within 90 days
Invoiced price
within 90 days
Invoiced price
within 90 days
Invoiced price
within 90 days
Invoiced price
within 90 days
Invoiced price
Invoiced price
Invoiced price
Invoiced price
Invoiced price
within 90 days
Invoiced price
within 90 days
Customer order error
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Refused shipment
(not Affiliate error)
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Distributor Stock
Reduction –
Sales Representative
must initiate and
authorize return.
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Invoiced price
less 20%
Restock fee
Order damaged in
transit – claim made
within 7 days of
delivery.
* For equipment returns, call for schedule
Revised 12-9-09
Invoiced price
within 90 days
Invoiced price
22
EXHIBIT F
Covidien’s Guiding Principles for E-Business
At Covidien, meeting our Customer needs is our top priority. We are committed
to making available internet enabled purchasing services at no incremental cost
to our Customers. Covidien believes that supply chain efficiencies derived from
E-Business will be reallocated over time throughout the entire supply chain. We
also believe this will make product selection, purchase and utilization more
efficient for all connected parties. To this end, Covidien will allocate resources to
all mutually beneficial initiatives. The following are our guiding principles:

Covidien will work with its Customers to create quantifiable savings and
efficiencies in our E-Business efforts.

Covidien is committed to holding down supply chain costs and will not pay
incremental fees that will result in increased supply chain costs.

Covidien will accept transactions from e-commerce companies when our
Customers request it.

Covidien cannot be responsible for keeping information up-to-date on any
third party or e-commerce company’s websites or portals, as it will only
increase the costs and inefficiencies of doing business.

Covidien does not approve, condone, nor authorize transaction or pricing data
to be available to any parties other than the purchaser and Affiliate(s) involved
in the transaction.

Covidien will support industry data standardization efforts if they measurably
benefit all constituents in the supply chain.

All e-commerce messages and transactions to Covidien must be either X12
EDI or XML.
Revised 12-9-09