EXHIBIT 10-10
PREFERRED PROVIDER AGREEMENT
This Preferred Provider Agreement ("Agreement") dated as of December 24,
1998, is by and between Omnicare, Inc., a Delaware corporation ("Omnicare") and
Extendicare Health Services, Inc., a Delaware corporation ("Extendicare").
RECITALS:
WHEREAS, Extendicare, through its Affiliates (as hereinafter defined), owns
and operates Extendicare Facilities (as hereinafter defined) throughout the
United States, and may build, acquire or operate additional Extendicare
Facilities in the United States, and is authorized to act on behalf of all such
Extendicare Facilities;
WHEREAS, Extendicare desires to make available quality and cost-effective
Pharmacy Services (as hereinafter defined) to residents of the Extendicare
Facilities located in the United States;
WHEREAS, Omnicare is engaged in the business of providing Pharmacy Services
through duly licensed pharmacies located throughout the United States, and has
developed specialized expertise in providing such Pharmacy Services to
Facilities (as hereinafter defined) and their residents;
WHEREAS, certain of the Extendicare Facilities have in effect on the date
of this Agreement one or more Existing Pharmacy Agreements (as hereinafter
defined) with various pharmacies, relating to the provision of some or all
Pharmacy Services to such Extendicare Facilities and their residents;
WHEREAS, Extendicare has determined that it may be possible to enhance the
efficiency and quality of Pharmacy Services by utilizing one pharmacy provider;
WHEREAS, recent reports make clear that misprescription or improper
administration of drugs can undermine patient care and adversely affect survey
and certification results;
WHEREAS, Omnicare provides to many of its Facility customers a variety of
service enhancements to assist Facilities in assessing and managing patients'
care needs and improving outcomes of care, including a clinically-based
formulary management program, disease management programs, and state-of-the-art
information and drug management systems which reduce errors in drug prescription
and administration to long-term care patients;
WHEREAS, the Medicare prospective payment system, with all-inclusive rates,
has created revenue uncertainties and a need for the Extendicare Facilities to
contract with a cost-effective pharmacy provider;
WHEREAS, managed care organizations are continually seeking pricing
concessions and capitated or other non-traditional service arrangements as
conditions to contracting with Extendicare Facilities for patient care services;
WHEREAS, due to Omnicare's volume purchasing arrangements, Omnicare is
capable of offering Pharmacy Services at competitive prices which are typically
at or below those charged by other providers for comparable products and
services;
WHEREAS, because of Omnicare's experience, quality of operations and
cost-effective pricing, Extendicare desires to designate Omnicare as the
preferred provider of Pharmacy Services to the Extendicare Facilities located in
the united States, and to retain Omnicare's pharmacy Affiliates to provide
Pharmacy Services to such Facilities;
WHEREAS, in consideration of its designation as the preferred provider of
Pharmacy Services to the Extendicare Facilities located throughout the United
States, Omnicare is willing to make certain long-term commitments to the
Extendicare Facilities and their
residents, to offer certain favorable pricing arrangements, and to make certain
expenditures for installation and operation of equipment, systems and programs,
and training of personnel;
NOW, THEREFORE, in consideration of the mutual agreements and promises
hereinafter set forth, the sufficiency and adequacy of which are hereby
acknowledged, the parties hereto agree and covenant as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" shall mean, as to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of the
foregoing definition, a Person shall be deemed to "control" another Person if
that Person has the direct or indirect ability to direct or cause the direction
of the management and polices of the "controlled" Person, through ownership of
equity securities, by contract, or otherwise.
"Ancillary Supplies" shall mean (i) oxygen, (ii) nonprescription
medications which a Facility purchases in bulk, not for nay particular resident,
and (iii) enteral and parenteral nutritional products which Extendicare or one
of its Affiliates provides at its expense.
"Bankruptcy Event" shall be deemed to have occurred with respect to a
Person if it shall apply for or consent to the appointment of a receiver,
trustee, or liquidator of all or a substantial part of its assets, file a
voluntary petition in bankruptcy, make a general assignment for the benefit of
creditors, file a petition or an answer seeking reorganization or arrangement
with creditors to take advantage of any insolvency law, or if an order, judgment
or decree shall be entered by any court of competent jurisdiction, on the
application of a creditor, adjudicating it as bankrupt or insolvent or approving
a petition seeking reorganization or appointing a receiver, trustee, or
liquidator of all or a substantial part of its assets, or if an involuntary
petition in bankruptcy shall have been filed against it and shall continue
undismissed for any period of ninety (90) days.
"Extendicare Facility" shall mean any Facility located in the United States
now or hereafter owned or operated by Extendicare or any Affiliate of
Extendicare, or which Extendicare or any of its Affiliates manages under a
management contract (if, under such management agreement, Extendicare or its
Affiliate is entitled to contract for and designate the provider of Pharmacy
Services), in each case during the term of this Agreement; provided that
"Extendicare Facility" shall not include and Facility which Extendicare or one
of its Affiliates leases from a hospital and which is located in such hospital
or on its campus if Extendicare or such Affiliate is not entitled to contract
for and designate the provider of Pharmacy Services for such Facility.
"Existing Pharmacy Agreement" shall mean (i) any agreement to provide
Pharmacy Services to an Extendicare Facility that is in effect as of the date of
this Agreement, (ii) any then-existing agreement to provide Pharmacy Services to
a Facility which becomes an Extendicare Facility after the date of this
Agreement, and (iii) any Out of Area Agreement (as defined in Section 2 below)
entered into by an Extendicare Facility after the date of this Agreement.
"Facility" shall mean any nursing care facility, assisted living facility,
residential care facility, long-term care hospital, and/or other provider of
inpatient institutional health care services.
"Omnicare Geographic Service Area" shall mean the combined geographic
service areas of all Omnicare pharmacy Affiliates, as modified from time to time
based upon Omnicare's acquisition or disposition of pharmacy Affiliates, the
establishment of new Omnicare pharmacy Affiliates, and/or expansion or
contraction of the geographic areas which Omnicare's pharmacy Affiliates are
capable or reasonably should be capable of servicing at any given time.
"Omnicare Pharmacy" shall have the meaning assigned to such term in Section
3.a.below.
"Person" shall mean any individual, corporation, partnership, limited
liability company, governmental authority, or other legal entity of any nature
whatsoever.
"Pharmacy Services" means pharmaceutical dispensing and distribution
services and pharmaceutical products (prescription and nonprescription),
including, without limitation, intravenous products, supplies and services, and
related equipment (including, without limitation, medical carts, fax machines,
treatment carts, emergency boxes, convenient boxes, automated dispensing
cabinets, and automated medical supply cabinets), enteral and parenteral
nutritional products, and scheduled training and education programs, pharmacy
consulting services, medical records, a clinically-based drug formulary, and
disease management programs; provided, however, that "Pharmacy Services" shall
not include (i) oxygen; (ii) nonprescription medications which a Facility
purchases in bulk, not for any particular resident, or (iii) enteral and
parenteral nutritional products which Extendicare or one of its Affiliates
provides at it expense.
"Standard Facility Pharmacy Services Contract" shall mean, collectively,
(i) the pharmacy services agreement and (ii) the pharmacy consultant agreement,
in the forms attached hereto as Exhibits A-1 and A-2, respectively, to be
entered into between Omnicare Pharmacies and Extendicare Facilities as set forth
below. Each reference in this Agreement to a Standard Facility Pharmacy Services
Contract shall mean both a pharmacy services and pharmacy consultant agreement,
in the forms attached hereto, and consequently all references to entering into a
Standard Facility Pharmacy Services Contract shall mean entering into both such
pharmacy services and pharmacy consultant agreements.
2. OMNICARE DESIGNATED PREFERRED PROVIDER
During the term of this Agreement, Extendicare, on behalf of itself and
each of the Extendicare Facilities, designates Omnicare as its pharmacy of
choice and as the preferred provider of Pharmacy Services and Ancillary Supplies
("Preferred Provider") for all current and future Extendicare Facilities located
in the United States. Omnicare accepts such designation and agrees to provide
Pharmacy Services and Ancillary Supplies to such Extendicare Facilities and
their residents in accordance with the terms, conditions and procedures set
forth in this Agreement and the Standard Facility Pharmacy Services Contracts to
be entered into hereunder.
In connection with Extendicare's designation of Omnicare as its Preferred
Provider of Pharmacy Services, Extendicare agrees to cause the Extendicare
Facilities which are from time to time party to Standard Facility Pharmacy
Services Contracts with an Omnicare Pharmacy (as hereinafter defined) (i) to
designate such Omnicare Pharmacy as its provider of Pharmacy Services for
regulatory purposes, and to use such Omnicare pharmacy as the provider of those
Pharmacy Services which the Extendicare Facility uses itself, (ii) to use such
Omnicare Pharmacy as the provider of those Pharmacy Services which the
Extendicare Facility provides to its residents at its expense (e.g., under the
current Medicare prospective payment system or a capitated managed care
arrangement, in accordance with the fee schedules attached hereto as Schedule 1
and Schedule 2, respectively), and (iii) to inform its other residents that the
Omnicare Pharmacy is the designated provider of Pharmacy Services for such
Facility for regulatory purposes and such Facility's pharmacy of choice, and to
recommend to such other residents (other than those residents whose applicable
managed care payor will not reimburse the applicable Omnicare Pharmacy for
Pharmacy Services provided to such resident) that they use the Omnicare Pharmacy
as their provider of Pharmacy Services, in preference to any other pharmacy.
Notwithstanding the previous sentence or anything to the contrary set
forth herein, (i) in no event shall this Agreement or any Standard Facility
Pharmacy Service Contract be construed to restrict the right of individual
residents of the Extendicare Facilities to receive pharmaceuticals from the
pharmacy provider of their choice and to be advised of such right, and (ii) any
Extendicare Facility which is located outside of the Omnicare Geographic Service
Area (an "Out of Area Facility") may contract with one or more other pharmacies
for Pharmacy Services, and Omnicare and its Affiliates shall have no
responsibility with respect to such Out of Area Facilities; provided, however,
that such contracts ("Out of Area Agreements") shall be in accordance with
subsection 3.d. below; and provided, further, that if the Omnicare Geographic
Service Area expands such that an Extendicare Facility which was an Out of Area
Facility immediately prior to such expansion thereafter is located in the
Omnicare Geographic Service Area, such Extendicare Facility shall no longer be
an Out of Area Facility and the provisions of Section 3.c.(iv) of this Agreement
shall apply to such Extendicare Facility accordingly.
In connection with Extendicare's designation of Omnicare as its Preferred
Provider of Ancillary Supplies during the term of this Agreement, Extendicare
agrees to cause the Extendicare Facilities to use the Omnicare Pharmacies as the
providers of Ancillary Supplies to such Extendicare Facilities which an Omnicare
Pharmacy is reasonably capable of servicing, except with respect to those
Ancillary Supplies which another provider offers in writing to provide at a
price lower than that charged by the applicable Omnicare Pharmacy (a "Lower
Price Offer") and which the Omnicare Pharmacy declines to sell at such lower
price within fifteen (15) days after delivery of the Lower Price Offer to the
Omnicare Pharmacy. Notwithstanding the foregoing, the Extendicare Facilities
currently serviced by Omnicare Pharmacies shall continue to use such Omnicare
Pharmacies as their providers of Ancillary Supplies, and such Omnicare
Pharmacies shall continue to provide such Ancillary Supplies to such Extendicare
Facilities, at the pricing levels currently in effect, for a period of six (6)
months after the date hereof.
3. CONDITION AND PROCEDURES FOR EXECUTION OF STANDARD FACILITY PHARMACY
SERVICES CONTRACTS
a. DEVELOPMENT OF SERVICE CAPABILITY. Notwithstanding anything to the
contrary et forth herein, the obligation of Omnicare and Extendicare to cause
their respective Affiliates to enter into a Standard Facility Pharmacy Services
Contract with respect to an Extendicare Facility is expressly conditioned upon
Omnicare now having or hereafter acquiring or otherwise establishing a pharmacy
Affiliate which is or reasonably should be capable of providing Pharmacy
Services to that Extendicare Facility (each such pharmacy Affiliate shall be
referred to herein as an "Omnicare Pharmacy").
b. EXISTING PHARMACY AGREEMENTS.
i. List of Extendicare Facilities. Extendicare hereby agrees to
deliver to Omnicare, within ten (10) business days after the date of this
Agreement, a list which will be, to the best knowledge of Extendicare's
executive and elected officers, in all material respects, taken as a whole,
accurate, setting forth, with respect to each Extendicare Facility existing as
of the date hereof, (1) the name, address and number of licensed beds of such
Extendicare Facility, and (2) a description of each an every Existing Pharmacy
Agreement for that Facility, including the parties to such agreement, the date
thereof, the name and address of the company currently providing services
thereunder, the date such agreement expires (including a description of any
terms providing for automatic renewal), and the terms and conditions under which
such agreement may be terminated by the Extendicare Facility prior to its
expiration. Such list shall be attached hereto as Exhibit B.
ii. Notice of New Extendicare Facilities. Extendicare agrees that,
within ten (10) business days after any Facility becomes an Extendicare Facility
(e.g., as a consequence of Extendicare's acquisition thereof), Extendicare shall
notify Omnicare in writing of the foregoing information with respect to such
Extendicare Facility, which notice shall be deemed to supplement Exhibit B
hereto.
iii. Notice of Execution of Out of Area Agreements. Within ten
(10) business days after any Out of Area Facility enters into any Out of Area
Agreement, Extendicare shall notify Omnicare in writing of the foregoing
information with respect to such Out of Area Agreement, which notice shall be
deemed to update Exhibit B hereto.
c. PROCEDURE FOR EXECUTION OF STANDARD FACILITY PHARMACY SERVICES
CONTRACTS.
i. Contracts to be Executed Promptly After the Date of this
Agreement. Omnicare and Extendicare acknowledge that each of the Extendicare
Facilities marked with single asterisks (*) on Exhibit B hereto (the
"Immediately Serviceable Facilities") (A) is located within the Omnicare
Geographic Service Area and (B) is not a party to any existing Pharmacy
Agreement with a Person other than an Omnicare Affiliate which would preclude
such Extendicare Facility from entering into a Standard Facility Pharmacy
Services Contract within Omnicare Pharmacy, effective as of the effective date
for such Standard Facility Pharmacy Services Contract set forth on such
Exhibit B. The parties further acknowledge that Omnicare has, on or prior to the
date hereof, delivered Standard Facility Pharmacy Services Contracts for such
Extendicare Facilities to Extendicare, completed with the appropriate
information for the applicable Extendicare Facility (e.g., name, address and
effective dates), each of which has been executed by the applicable Omnicare
Pharmacy. Each such Standard Facility Pharmacy Services Contract shall have a
term of five (5) years from its effective date, with two (2) automatic renewals
of five (5) years each, and shall be subject to termination as provided in
Exhibit A; provided, however, that in no event shall any term of such contract
extend beyond December 31, 2013, or with respect to Facilities which Extendicare
or one of its Affiliates leases or manages pursuant to a management agreement,
beyond the date specified in Section 3(c)(v) below. Promptly after the date of
this Agreement, but in no event later than twenty (20) business days after the
date of this Agreement, Extendicare shall cause such Immediately Serviceable
Facilities to execute and deliver to Omnicare such Standard Facility Pharmacy
Services Contracts. From and after the effective date of each Standard Facility
Pharmacy Services Contract, the applicable Omnicare Pharmacy shall provide
Pharmacy Services to the applicable Extendicare Facility in accordance with the
terms of each such agreement.
ii. Termination of Existing Pharmacy Agreements. Omnicare and
Extendicare acknowledge that each of the Extendicare Facilities marked with
double asterisks (**) on Exhibit B hereto (the "Later Serviceable Facilities")
(A) is located within the Omnicare Geographic Service Area and (B) is currently
party to an existing Pharmacy Agreement, with a Person other than an Omnicare
Affiliate, which would preclude such Extendicare Facility from entering into a
Standard Facility Pharmacy Services Contract with an Omnicare Pharmacy prior to
the expiration or termination of such contract. Extendicare shall cause such
Later Serviceable Facilities to take such actions as may be necessary to
terminate, at the earliest possible time without cost or penalty to such
Extendicare Facility, any such Existing Pharmacy Agreement, and to terminate
immediately any Existing Pharmacy Agreement which is terminable with a cost or
penalty if Omnicare in its discretion agrees to reimburse such Extendicare
Facility for such cost or penalty, in which case Omnicare shall make such
reimbursement not later than ten (10) business days after Omnicare agrees to
make such reimbursement; provided, however, that such termination shall not
result, in Extendicare's reasonable opinion, in any injury or harm to any
resident of such Facility. Extendicare shall promptly notify Omnicare of all
such actions. No sooner than ninety (90) days and no later than forty-five (45)
days before the earliest date that a Later Serviceable Facility's Existing
Pharmacy Agreement(s) will expire or any termination will
be effective, Omnicare shall deliver a Standard Facility Pharmacy Services
Contract for such Extendicare Facility, completed with the appropriate
information for the applicable Extendicare Facility (e.g., name, address and
effective date (which effective date shall be the first day following the date
such Existing Pharmacy Agreement expires or is effectively terminated)), and
executed on behalf of the applicable Omnicare Pharmacy. Each such Standard
Facility Pharmacy Services Contract shall have a term of five (5) years from its
effective date, with two (2) automatic renewals of five (5) years each, and
shall be subject to termination as provided in Exhibit A; provided, however,
that in no event shall any term of such contract extend beyond December 31,
2013, or with respect to Facilities which Extendicare or one of its Affiliates
leases or manages pursuant to a management agreement, beyond the date specified
in Section 3(c)(v) below. Extendicare shall cause the applicable Extendicare
Facility to execute and deliver to Omnicare such Standard Facility Pharmacy
Services Contract within twenty (20) business days after Extendicare's receipt
thereof. From and after the effective date of each Standard Facility Pharmacy
Services Contract, the Omnicare Pharmacy shall provide Pharmacy Services to each
such Extendicare Facility in accordance with the terms of such agreement.
iii. New Extendicare Facilities. If, during the term of this
Agreement, any Facility becomes an Extendicare Facility (e.g., as a consequence
of Extendicare's acquisition thereof) and there is an Omnicare Pharmacy that is
reasonably capable of servicing such Extendicare Facility, (A) if such
Extendicare Facility is not party to an Existing Pharmacy Agreement, Omnicare
and Extendicare shall cause such Extendicare Facility to enter into a Standard
Facility Pharmacy Services Contract as soon as practicable (which would normally
be the date of such acquisition), and (B) if such Extendicare Facility is party
to an Existing Pharmacy Agreement, Extendicare shall cause the Extendicare
Facility to take such actions as may be necessary to terminate, at the earliest
possible time, any such Existing Pharmacy Agreement which is terminable by such
Facility, and the provisions of the subsection 3.c.(ii) of this Agreement shall
apply; provided, however, that in no event shall any term of such contract
extend beyond December 31, 2013, or with respect to Facilities which Extendicare
or one of its Affiliates leases or manages pursuant to a management agreement,
beyond the date specified in Section 3(c(v) below. In any asset acquisition of a
Facility, Extendicare shall use its best efforts to cause its acquiring
Affiliate not to assume (without cost or incurring penalties) any
agreement to provide Pharmacy Services to which the seller may be party with
respect to such Facility, if such Facility is in the Omnicare Geographic Service
Area.
iv. New Omnicare Pharmacies. After the date on which Omnicare
acquires or otherwise establishes any Omnicare Pharmacy or expands the service
area of any Omnicare pharmacy Affiliate such that such pharmacy becomes
reasonably capable of servicing a previously Out of Area Facility, Omnicare
shall notify Extendicare of such fact, which notice shall include the name and
address of such Omnicare Pharmacy and a list of all previously Out of Area
Facilities which such Omnicare Pharmacy is reasonably capable of servicing. With
respect to each such Extendicare Facility which is not then party to an Existing
Pharmacy Agreement or for which the Existing Pharmacy Agreement expires or is
terminable by the Extendicare Facility without cost or penalty within sixty (60)
days (or, if terminable with cost or penalty, if Omnicare agrees to reimburse
the Extendicare Facility for such cost or penalty, in which case Omnicare shall
make such reimbursement not later than ten (10) business days after Omnicare
agrees to make such reimbursement) (collectively, "Newly Serviceable
Facilities"), Omnicare shall include with such notice a Standard Facility
Pharmacy Services Contract, completed with the appropriate information for the
applicable Newly Serviceable Facility (e.g., name, address and effective date
(which effective date shall not be sooner than ninety (90) days after the date
such notice is given)), and executed on behalf of the applicable Omnicare
Pharmacy. Each such Standard Facility Pharmacy Services Contract shall have a
term of five (5) years from its effective date with two (2) automatic renewals
of five (5) years each, an shall be subject to termination as provided in
Exhibit A; provided that in no event shall any term of such contract extend
beyond December 31, 2013, or with respect to Facilities which Extendicare or one
of its Affiliates leases or manages pursuant to a management agreement, beyond
the date specified in Section 3(c)(v) below. Upon receipt of such materials, (A)
Extendicare shall cause each such Newly Serviceable Facility to execute and
deliver to Omnicare such Standard Facility Pharmacy Services Contract within
twenty (20) days after Extendicare's receipt thereof, and (B) Extendicare shall
cause any Newly Serviceable Facilities which are party to an Existing Provider
Agreement to terminate such existing contracts prior to the effective date of
the Standard Facility Pharmacy Services Contract for the applicable Facility, so
long as such termination does not result, in Extendicare's reasonable opinion,
in any injury or harm to any resident of such Facility.
From and after the effective date of each Standard Facility Pharmacy Services
Contract, the Omnicare Pharmacy shall provide Pharmacy Services to each such
Extendicare Facility in accordance with the terms of such agreement and this
Agreement. With respect to each Extendicare Facility other than a Newly
Serviceable Facility which such new Omnicare Pharmacy is reasonably capable of
servicing which is party to an Existing Pharmacy Agreement, the provisions of
subsection 3.c.(ii) shall apply.
v. Term of Standard Facility Pharmacy Services Contracts for
Leased and Managed Extendicare Facilities. With respect to Extendicare
Facilities which are leased by Extendicare or one of its Affiliates or which are
managed by Extendicare or one of its Affiliates pursuant to a management
agreement, (i) the term of any Standard Facility Pharmacy Service Contract shall
not extend beyond the date that the relevant lease or management contract
expires by its terms (provided that in the event that Extendicare or its
Affiliate thereafter continues to lease or mange such facility on a holdover or
other basis, such Standard Facility Pharmacy Services Contract shall continue in
effect during such period, but in no event later than December 31, 2013) and
(ii) the Standard Facility Pharmacy Services Contract shall be terminable by
Extendicare or its Affiliate without cause or penalty upon termination of the
lease or management agreement effective at such time that Extendicare or its
Affiliate ceases to operate such Facility. To the extent that any lease or
management contract terminates or expires and is thereafter replaced or renewed,
Extendicare or its Affiliate shall enter into a new Standard Facility Pharmacy
Services Contract under the same terms and conditions as set forth herein.
d. TERMS OF EXTENDICARE PROVIDER AGREEMENTS PENDING OMNICARE
DEVELOPING PHARMACY CAPABILITY. The parties hereby acknowledge their mutual
intention that, by virtue of its Preferred Provider designation and the terms of
this Agreement, Omnicare pharmacy Affiliates shall provide Pharmacy Services to
each Extendicare Facility as soon as possible after Omnicare acquires or
otherwise establishes a pharmacy Affiliate which is or reasonably should be
capable of providing Pharmacy Services to that Extendicare Facility.
Accordingly, during the term of this Agreement, Extendicare will cause the
Extendicare Facilities not to enter into or renew any agreement with any Person
other than Omnicare and Omnicare's affiliates pursuant to which any Person other
than Omnicare or Omnicare's Affiliates
is to furnish Pharmacy Services to the residents of any Extendicare Facility,
unless (i) at the time such agreement is entered into or renewed, Omnicare does
not have a pharmacy Affiliate reasonably capable of servicing such Extendicare
Facility, and (ii) such agreement is terminable by the applicable Extendicare
Facility, without cause, cost or penalty, within sixty (60) days or less of such
Facility giving notice of termination.
e. OMNICARE GUARANTY. Omnicare hereby unconditionally guarantees the
Omnicare Pharmacies' timely payment and performance of their respective
obligations under each Standard Facility Pharmacy Services Contract entered into
under this Agreement.
4. PRICING OF PHARMACY SERVICES TO BE PROVIDED UNDER STANDARD FACILITY
PHARMACY SERVICES CONTRACTS.
a. COMPETITIVE PRICING. Each Omnicare Pharmacy shall charge for
Pharmacy Services provided to Extendicare Facilities and their residents under
Standard Facility Pharmacy Services contracts using rates which are competitive
within the applicable local marketplace, provided that with respect to those
Pharmacy Services which a governmental program pays an Omnicare Pharmacy to
provide, the foregoing shall not be deemed to preclude any Omnicare Pharmacy
from receiving the maximum reimbursement permitted under such program.
b. MOST FAVORABLE PRICING. With respect to those Pharmacy Services
which are paid for by Extendicare or one of its Affiliates (e.g., under the
current Medicare prospective payment system or a capitated managed care
arrangement), such rate shall not be higher than the most favorable rates
concurrently charged for Pharmacy Services provided to residents of the same
payor type in like Facilities by that Omnicare Pharmacy or other Omnicare
Pharmacies reasonably capable of servicing such Extendicare Facility in the same
state and for reasonably comparable volumes of product and upon reasonably
comparable terms and conditions (including distance of the Facility from the
Omnicare Pharmacy, dispensing system used, services included and service
levels), as such rates may be changed by the Omnicare Pharmacies from time to
time; and provided, that with respect to those Pharmacy Services which
are paid for by Extendicare or one of its Affiliates under the current Medicare
prospective payment system as currently being implemented, pricing shall be as
set forth on Schedule 1 hereto for the period from the date of this Agreement
through the third (3rd) anniversary of the effective date hereof. Schedule 2
hereto sets forth the initial pricing established by the parties for residents
covered under a capitated managed care arrangement, which pricing shall be
adjusted from time to time in accordance with the foregoing sentence. Within
sixty (60) days after the beginning of each calendar year after the date hereof
(commencing in the year 2000), Omnicare shall certify to Extendicare that the
prices charged during the preceding calendar year by the Omnicare Pharmacies to
the Extendicare Facilities and their residents complied with subsection 4.0 and
this subsection 4.b. of the Agreement (or shall specify any respects in which
such prices failed to so comply); provided, that Omnicare shall not be obligated
to conduct any audit of such prices in order to make such certification, and if
any audit conducted by Extendicare pursuant to subsection 4.c. indicates any
item(s) of actual or potential noncompliance, or Extendicare other wise believes
that one or more items of actual or potential noncompliance occurred which are
not indicated in such certification, then the parties shall proceed as set forth
in the second paragraph of subsection 4.c., and Omnicare's liability as a
consequence of any such certification proving to be false in any respect shall
be limited to the obligations expressly set forth in such paragraph.
c. AUDITS. Omnicare shall cause the Omnicare Pharmacies to permit
Extendicare to audit, at Extendicare's sole cost, at mutually agreed reasonable
times and not more frequently than once per year, the records of such Omnicare
Pharmacies which indicate the prices charged by them for Pharmacy Services
furnished to like Facilities and their residents in the same state as the
relevant Extendicare Facilities during the most recently completed calendar
year, for reasonably comparable volumes of products and upon reasonably
comparable terms and conditions (each a "Pharmacy Audit"). For a period of
thirty (30) days after any termination or expiration of this Agreement,
Extendicare may commence one or more Pharmacy Audits with respect to the prices
charged by such Omnicare Pharmacies for Pharmacy Services rendered during the
final year of this Agreement, which pharmacy Audits shall be completed within
six (6) months of the termination or expiration of this Agreement, and,
notwithstanding such termination or expiration, Extendicare and its Affiliates
shall be entitled to receive any refunds resulting from incorrect pricing, in
accordance with the next paragraph.
In the event that Extendicare believes, as the result of any such audit or
otherwise, that the relevant Omnicare Pharmacy has charged an Extendicare
Facility prices higher than those specified in this Section 4, then Extendicare
shall notify Omnicare and the Omnicare Pharmacy of such fact and the parties
shall meet and review the information which Extendicare believes indicates the
same. If the parties agree that the prices charged exceeded those which are
called for by this Section 4, then the Omnicare Pharmacy (i) shall, within
thirty (30) days thereafter, correct its pricing for the Extendicare Facilities
and their residents, and (ii) shall refund to Extendicare or any of its
Affiliates which paid for such Pharmacy Services the amount of any overcharges
plus interest at the prevailing LIBOR rate within thirty (30) days after the
respective amounts of the overcharges are calculated and agreed upon in writing
by the parties (and the parties agree to cooperate in good faith to determine
such amounts promptly). In the event that the parties are unable to agree upon
whether there were any overcharges or the amount(s) of same, either party may
submit such dispute to binding arbitration in accordance with Section 8.n.
below, and, within thirty (30) days after any arbitration decision determining
that overcharges did occur, the Omnicare Pharmacy (i) shall correct its pricing
for the Extendicare Facilities and their residents, and (ii) shall refund to
Extendicare or any of its Affiliates which paid for such Pharmacy Services the
amount of any overcharges plus interest at the prevailing LIBOR rate. In no
event shall Omnicare be deemed to be in breach of this Section 4 unless the
parties shall have agreed upon the amount of the relevant overcharges or an
arbitrator shall have determined the same and, in either such case, the Omnicare
Pharmacy shall have failed to take any action specified in clauses (i) or (ii)
in this Section 4 (c) within the applicable time period set forth herein.
In the event that it is determined, pursuant to the preceding paragraph,
that Omnicare pharmacy Affiliates have failed to comply with subsection 4.b. in
more than two out of any five consecutive calendar years and that such
noncompliance has caused Extendicare Facilities to be charged, in the aggregate,
five percent (5%) or more in excess of what they otherwise would have been
charged in the aggregate in more than two out of any five consecutive calendar
years had all Omnicare pharmacy Affiliates complied with subsection 4.b., then,
in addition to the refunds and corrective actions specified in the previous
paragraph, Omnicare shall pay to Extendicare or any of its overcharged
Affiliates an additional three
hundred fifty (350) basis points over the prevailing LIBOR rate described in the
preceding paragraph.
d. CONFIDENTIALITY. Extendicare agrees that the information provided
to it and its agents and representatives by any Omnicare Pharmacy in connection
with any audit conducted pursuant to Section 4(c) ("Confidential Information")
shall be held in confidence and shall not be disclosed or used by Extendicare or
any such agent or representative, other than in any arbitration proceeding to
enforce this Agreement (and the parties shall cooperate in obtaining
confidential treatment therefore in any such proceeding). If Extendicare or its
agents or representatives are requested or become legally compelled (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil or criminal investigative demand, or similar process) or are required by a
regulatory body to disclose Confidential Information, Extendicare will promptly
notify Omnicare to permit Omnicare to seek a protective order or take other
appropriate action. Extendicare will also cooperate in Omnicare's efforts to
obtain a protective order or other reasonable assurance that confidential
treatment will be accorded the Confidential Information. If, in the absence of a
protective order, Extendicare or any of its agents or representatives are, in
the written opinion of Extendicare's counsel addressed to Omnicare, compelled as
a matter of law to disclose the Confidential Information, such party will advise
and consult with Omnicare and its counsel as to such disclosure and the nature
and wording of such disclosure, and the parties will use their best efforts to
obtain confidential treatment therefore.
5. REPRESENTATIONS AND WARRANTIES.
a. BINDING OBLIGATION. Each party represents and warrants to the other
party that this Agreement has been duly authorized, executed and delivered by
such party and constitutes its valid and binding obligation.
b. GOVERNMENTAL AUTHORIZATIONS. Omnicare represents and warrants to
Extendicare that it and each Omnicare Pharmacy, employee, agent, or
subcontractor that will provide services to the Extendicare Facilities under a
Standard Facility Pharmacy
Services Contract holds, or prior to entering into such Standard Facility
Pharmacy Services contract will obtain, and shall continue to maintain in good
standing throughout the term of this Agreement, all licenses, permits,
registrations, certifications and authorizations in all applicable jurisdictions
where such licenses, permits, registrations, certifications and authorizations
are necessary to provide Pharmacy Services.
6. TERM.
a. DURATION. The term of this Agreement shall commence as of the date
hereof and shall continue in effect until the fifth (5th) anniversary hereof
unless sooner terminated as herein provided. Upon the expiration of such five
(5) year term, the term of this Agreement shall automatically be renewed for an
additional term of five (5) years unless the parties mutually agree in writing
not to so renew such term, and likewise upon the expiration of such five (5)
year renewal term the term of this Agreement shall automatically be renewed for
a further term of five (5) years unless the parties mutually agree in writing
not to so renew such term.
b. TERMINATION. This Agreement may be terminated, and neither party
shall thereafter have any obligation hereunder (except as to liabilities or
claims of either party hereto which shall have theretofore accrued or arisen),
as follows:
(i) By Extendicare. By Extendicare, upon delivery of written
notice to Omnicare specifying such termination, if:
(A) A Bankruptcy Event shall occur with respect to Omnicare;
or
(B) Omnicare shall breach in any material respect its
obligations hereunder and such breach shall not have been cured within thirty
(30) days (or fifteen (15) days in the case of an obligation to pay money)
following delivery by Extendicare to Omnicare of written notice specifying such
breach in reasonable detail (which notice shall
expressly state that it is a notice of breach pursuant to this subsection of
this Agreement); provided that Extendicare shall not be entitled to terminate
this Agreement unless all Extendicare Facilities are current within established
payment terms in all payments owed by the Extendicare Facilities to the Omnicare
Pharmacies (which payments shall not be deemed to include those subject to a
good faith dispute or payments owed by third party payors to Omnicare
Pharmacies); and provided, further, that if Omnicare's breach of this Agreement
materially xxxxx the health or safety of the residents of any Extendicare
Facility which is party to a Standard Facility Pharmacy Services Contract,
Extendicare may terminate such Standard Facility Pharmacy Services Contract by
delivery of written notice to Omnicare if Extendicare shall have notified
Omnicare and the Omnicare Pharmacy of such breach both in writing and by
telephone or in person ("Emergency Notice"), and such breach has not been cured
by the Omnicare Pharmacy within such reasonable time after the Omnicare
Pharmacy's receipt of the Emergency Notice as Extendicare deems appropriate in
its reasonable discretion and specifies in the Emergency Notice.
(ii) By Omnicare. By Omnicare, upon delivery of written notice to
Extendicare specifying such termination, if:
(A) A Bankruptcy Event shall occur with respect to
Extendicare; or
(B) Extendicare shall breach in any material respect its
obligations hereunder and such breach shall not have been cured within thirty
(30) days (or fifteen (15) days in the case of an obligation to pay money)
following delivery by Omnicare to Extendicare of written notice specifying such
breach in reasonable detail (which notice shall expressly state that it is a
notice of breach pursuant to this subsection of this Agreement).
No termination of this Agreement under this Section shall (i) release or
otherwise affect any liability of either party for failure to perform this
Agreement prior to the effectiveness of such termination, or (ii) terminate or
otherwise affect the obligations of any Omnicare
Pharmacy or Extendicare Facility under any Standard Facility Pharmacy Services
Contract then in effect.
7. MATERIAL CHANGE IN LAW. In the event that, after the date of this
Agreement, there is a material change in law which results in this Agreement or
the parties' performance of their obligations hereunder being in violation of
applicable law, the parties shall negotiate in good faith with one another to
amend this Agreement so as to promptly eliminate such violation, provided that
such amendment shall give the fullest possible effect to the intent of the
parties as expressed herein. If the parties are unable to agree upon such
amendment, either party may submit the matter to binding arbitration before a
single arbitrator in Chicago, Illinois in accordance with the American Health
Lawyers Association Alternative Dispute Resolution Service Rules of Procedure
for Arbitration, and judgment upon the award of the arbitrator may be entered in
any court having jurisdiction. The arbitrator shall make a determination as to
whether it is more likely than not that a material change in law after the date
of this Agreement has resulted in this Agreement or the parties' performance of
their obligations hereunder being in violation of applicable law, and, if the
arbitrator determines that it has, such arbitrator shall either (i) draft and
require the parties to enter into an amendment to this Agreement which
eliminates the violation of law and conforms as closely as possible to the
original terms of this Agreement, or (ii) if the arbitrator determines that no
such amendment is feasible, order the termination of this Agreement. Until the
earlier of (i) the date any such dispute is resolved through mutual agreement or
binding arbitration or (ii) six (6) months after any such arbitration is
commenced, each party shall continue to observe all other terms of this
Agreement and shall cause each of its Affiliates to continue to perform such
Affiliate's obligations under all Standard Facility Pharmacy Services Contracts.
8. MISCELLANEOUS PROVISIONS
a. PUBLICITY. No party hereto shall use the name of the other party or
any of its Affiliates in any advertising, publication, or promotional materials
without prior written approval of such party, which approval shall not be
unreasonably withheld, conditioned
or delayed; provided that the forgoing shall not be deemed to restrict any party
from making any disclosure required by applicable law or the rules of any
applicable securities exchange.
b. INDEMNIFICATION. Each Party (the "Indemnitor") hereby agrees to
indemnify and hold harmless the other party, its employees, officers, directors,
shareholders, and agents (the "Indemnitees") from all charges, claims, causes of
action, damages, expenses and liability, including reasonable attorneys' fees,
asserted against, imposed upon or incurred by any such Indemnitee which are
based upon or arise out of illness or injury, including, without limitation,
death of any person, or property damage arising from or relating to any wrongful
act or omission of such Indemnitor or such Indemnitor's employees or agents.
c. NOTICES. Any notice, demand, or communication required, permitted,
or desired to be given hereunder, shall be given in writing and shall be deemed
sufficiently given when personally delivered, or five (5) business days after
mailed by prepaid certified mail, return receipt requested, or one (1) business
day after sent by nationally-recognized overnight courier, or when sent by
facsimile transmission (receipt confirmed), addressed as follows:
To Extendicare: Extendicare Health Services, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Chief Financial Officer
Fax: (000) 000-0000
Phone: (000) 000-0000
With a required copy to : Extendicare Health Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
Phone: (000) 000-0000
To Omnicare: Omnicare, Inc.
000 Xxxx Xxxxx Xxxxxx Xxxx.
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
Phone: (000) 000-0000
With a required copy to: Xxxx Xxxxx Xxxx & XxXxxx, LLP
0000 X Xxxxxx, X. X.
Xxxxx 0000 - East Tower
Washington, DC 20005
Attn: Xxxxxx X. Xxx, Esq.
Fax: (000) 000-0000
Phone: (000) 000-0000
Or at such other addresses and to such other persons as either party may from
time to time designate by notice given as herein provided; provided, however,
that any Emergency Notice shall be deemed given only upon actual receipt by
Omnicare.
d. RELATIONSHIP BETWEEN PARTIES. Neither Omnicare nor any of its
Affiliates on the one part, and Extendicare nor any of its Affiliates on the
other part, is for any purposes, an agent, partner or employee of the other.
This Agreement does not constitute a joint venture between the parties, their
Affiliates or any of their respective successors or assigns. It is agreed that
in performing Pharmacy Services pursuant to Standard Facility Pharmacy Services
Contracts, Omnicare and its Affiliates and each of their employees will, at all
times, be an independent contractor to Extendicare, the Extendicare Facilities
and their residents.
e. GOVERNING LAW. THE VALIDITY OF THIS AGREEMENT, THE INTERPRETATION
OF THE IGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THE CONSTRUCTION OF THE
TERMS HEREOF, SHALL BE GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
f. EQUITABLE REMEDIES; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereunder shall be cumulative and shall be enforceable in equity
as well
as at law; provided, however, that nothing contained herein is intended
to, nor shall it, limit or affect any rights at law, by statute or otherwise, of
any party aggrieved.
g. WAIVER. A waiver by either party of a breach or a failure to
perform shall not constitute a waiver of any subsequent breach or failure.
h. SEVERABILITY. In the event that any provision of this Agreement or
the application of any provision to the parties with respect to their
obligations hereunder shall be held by a tribunal of competent jurisdiction to
be unlawful or unenforceable, the remaining provisions of this Agreement shall
continue in full force and effect and the parties shall endeavor in good faith
to replace the unlawful or unenforceable provision with one which is lawful and
enforceable and which gives the fullest effect to the intent of the parties as
expressed herein.
i. SUCCESSORS AND ASSIGNS: ACQUIROR OF ALL OR SUBSTANTIALLY ALL
EXTENDICARE FACILITIES IN UNITED STATES. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, and each of their
respective successors and permitted assigns. Except as provided in this
paragraph, this Agreement shall not be assigned in whole or in part by any party
without the prior written consent of the other party. Notwithstanding the
previous sentence, in the event that any Person (an "Acquiror") purchases or
otherwise acquires the assets and operations of Extendicare with respect to a
majority of the beds of the Extendicare Facilities located in the United States
(a "Large Facility Acquisition"), as calculated immediately prior to such sale
or other acquisition, Extendicare shall cause such Acquiror to enter into a
Preferred Provider Agreement with Omnicare in form and substance identical to
this Agreement, effective for the remaining term of this Agreement and renewable
as set forth in Section 6 hereof, but with the application thereof limited to
the Extendicare Facilities so purchased or otherwise acquired. In such event,
this Agreement shall remain in effect with respect to the assets and operations
of all Extendicare Facilities not sold or otherwise transferred in such
transaction, but Extendicare shall be released hereunder with respect to the
assets and operations of the Extendicare Facilities so purchased or acquired. In
the event that any Acquiror purchases or otherwise acquires all of the assets
and operations of Extendicare with respect to the Extendicare Facilities (such
transaction shall also constitute a "Large Facility Acquisition"), Extendicare
shall assign this
Agreement to such Acquiror and shall cause the Acquiror to assume all
obligations of Extendicare hereunder, in which event Extendicare shall be
released hereunder. Any failure by Extendicare to comply with the provisions of
this subsection 8.i. with respect to any sale or other disposition shall
constitute a material breach of this Agreement. The parties acknowledge that
Omnicare's damages in the event of any such material breach would be difficult
to calculate, and consequently they agree that, upon any such material breach by
Extendicare, Omnicare shall be entitled to liquidate damages in an amount equal
to its Lost Profits (as hereinafter defined), which amount represents the
parties' reasonable estimate of the actual damages which will be incurred in the
event of any such material breach.
For purposes of this Agreement, "Lost Profits" shall mean (i) the number of
years (and portions thereof) remaining in the term of this Agreement (including
any remaining renewal terms) as of the date of such material breach, multiplied
by (ii) the aggregate annual revenue which would be realized from providing
Pharmacy Services to the Extendicare Facilities as to which the applicable
Acquiror has purchased or otherwise acquired Extendicare's assets and operations
(other than Extendicare Facilities which are party to Standard Facility Pharmacy
Services Contracts), as reasonably estimated by Omnicare based upon (A) its
revenues from providing Pharmacy Services to Extendicare Facilities or other
reasonably comparable Facilities in the same respective states and (B) all other
available information, multiplied by (iii) (A) with respect to the portion of
the remaining term of this Agreement (including renewal terms) falling within
the first five (5) years after the date of this Agreement, fifteen percent
(15%), (B) with respect to the portion of the remaining term of this Agreement
(including renewal terms) falling within the second five (5) years after the
date of this Agreement, fourteen percent (14%), and (C) with respect to the
portion of the remaining term of this Agreement (including renewal terms)
falling within the third five (5) years after the date of this Agreement,
thirteen percent (13%) (provided, that such percentage shall be subject to
revision, up or down, in the event that the average earnings before interest,
taxes, depreciation and amortization of Omnicare Pharmacies appropriately
comparable to the Omnicare Pharmacies which would be servicing such Extendicare
Facilities represents a greater or smaller percentage of those Omnicare
Pharmacies' average revenues from Pharmacy Services).
j. LIMITATION ON LIQUIDATED DAMAGES PROVISIONS IN STANDARD FACILITY
PHARMACY SERVICES CONTRACTS. Notwithstanding anything to the contrary set forth
in any Standard Facility Pharmacy Services Contract:
(i) If Extendicare or its Affiliates engage in a transaction or
series of transactions in which they sell, to a single purchaser and/or its
Affiliates, three (3) or fewer Extendicare Facilities which are party to
Standard Facility Pharmacy Services Contract (a "Small Facility Acquisition"),
then they shall not be deemed to be in violation of Section 5.5 thereof if they
cause such purchaser(s) to enter into new pharmacy services and pharmacy
consultant agreements with the applicable Omnicare Pharmacy, in substantially
the form of the Standard Facility Pharmacy Services Contract attached hereto
(but with respect to the Pharmacy Services Agreement attached as Exhibit A-1,
subsection 1.1(j) thereof shall be deleted, and with respect to both the
Pharmacy Services Agreement and Pharmacy Consulting Agreement attached hereto,
all references to this Agreement shall be deleted therefrom, and Sections 3.1
and 3 of each agreement, respectively, shall be modified to provide for pricing
reflecting prevailing market conditions for the number of Facilities included in
such sale, as negotiated by the Omnicare Pharmacy, such purchaser, and
Extendicare) for a term of at least three (3) years or a lesser period if fewer
than three (3) years remain under this Agreement (including any renewal terms).
Each such Extendicare Facility which causes such purchaser(s) to enter into such
contracts for at least such three (3) year term is sometimes hereinafter
referred to as a "Small Sale Facility."
(ii) If Extendicare or its Affiliates engage in a transaction or
series of transactions in which they sell, to a single purchaser and/or its
Affiliates, more than three (3) Extendicare Facilities which are party to
Standard Facility Pharmacy Services Contracts, then they shall not be deemed to
be in violation of Section 5.5 thereof if , after giving effect to such sale,
the total number of beds in Extendicare Facilities in the Unites Sates which are
then serviced by Omnicare Pharmacies exceeds the Base Number (as hereinafter
defined), and Extendicare and its Affiliates cause such purchaser(s) to enter
into new pharmacy services and pharmacy consultant agreements with the
applicable Omnicare Pharmacy, in substantially the form of the Standard Facility
Pharmacy Services Contract attached hereto (but with respect to the Pharmacy
Services Agreement attached as Exhibit A-1, subsection 1.1(j) thereof shall be
deleted,
and with respect to both the Pharmacy Services Agreement and Pharmacy Consulting
Agreement, all references to this Agreement shall be deleted therefrom, and
Section 3.1 and 3 of each agreement, respectively, shall be modified to provide
for pricing reflecting prevailing market conditions for the number of Facilities
included in such sale, as negotiated by the Omnicare Pharmacy, such purchaser
and Extendicare) for a term of at least three (3) years or a lesser period if
fewer than three (3) years remain under the Agreement (including any renewal
terms). For such purposes, the "Base Number" shall mean (A) 20,651 beds as of
the date of this Agreement, increased by three percent (3%) beginning January 1,
2000 and compounded annually thereafter for each year which shall have passed
after the date of such sale, less (B) the number of beds contained in any Small
Sale Facilities for which the sale occurred prior to such date; provided, that
in the event Extendicare or one of its Affiliates sells a Facility and
thereafter leases it back or agrees to manage it pursuant to a management
agreement, such Facility shall be considered an "Extendicare Facility" for
purposes of this Section 8.j(ii) only if the Standard Facility Pharmacy Services
Contract in effect for such Facility after such sale has a term expiring no
sooner than the term of the Standard Facility Pharmacy Services Contract which
was in effect when Extendicare or its Affiliate owned such Facility.
k. AMENDMENTS, WAIVERS IN WRITING. This Agreement cannot be
changed or modified, nor may any party's rights hereunder be waived, except by a
written amendment or waiver duly executed by the party sought to be charged
therewith.
l. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which, when taken
together, shall constitute one and the same agreement.
m. EXTENDICARE A PREFERRED PROVIDER OF CONTRACT RESEARCH.
Omnicare hereby designates Extendicare as a preferred provider for clinical
research, to the extent Extendicare has the necessary qualifications and
capabilities, and will afford to Extendicare the opportunity to participate
(such participation to be in Extendicare's sole discretion) in Omnicare's
contract research organization relationships, provided that the Extendicare
Facilities are approved as appropriate under such project.
n. DISPUTES. The parties agree to meet and confer in good faith
to resolve, through discussions between the parties, any disputes with respect
to any provisions of this Agreement. If the parties are unable to resolve the
dispute through such discussion, such dispute shall be submitted to binding
arbitration before a single arbitrator in Chicago, Illinois in accordance with
the American Health Lawyers Association Alternative Dispute Resolution Service
Rules or Procedure for Arbitration (or a reasonable successor thereof) then in
effect. In any such arbitration, neither party shall assert that this Agreement
or any provision hereof is illegal, unenforceable or unconscionable, except as a
result of a change in law, in which event Section 7 hereof shall apply. Judgment
upon the award of the arbitrator may be entered in any court having
jurisdiction. The prevailing party in any such arbitration (as determined by the
arbitrator) shall be entitled to its costs and reasonable attorney fees incurred
in connection with the arbitration.
o. CONSUMER SATISFACTION SURVEYS. Omnicare or its Affiliates
shall conduct consumer satisfaction surveys as requested by Extendicare with
respect to the services rendered by the Omnicare Pharmacies to the Extendicare
Facilities and their residents, provided that in no event shall such surveys be
conducted more frequently than once per year at any Extendicare Facility. The
parties shall cooperate in good faith to develop the survey questions.
Extendicare and the applicable Extendicare Facilities shall be notified promptly
of the results of such surveys, and the parties shall use reasonable efforts to
respond to the survey results.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Preferred Provider Agreement effective as of the day and year first above
written.
EXTENDICARE HEALTH SERVICES, INC.
By: ________________________________________
Name: ______________________________________
Title:______________________________________
OMNICARE, INC.
By: ________________________________________
Name: ______________________________________
Title: _____________________________________