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EXHIBIT 10.38
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 230.406
PREMIER HEALTH EXCHANGE, L.L.C.
E-COMMERCE OUTSOURCING AGREEMENT
This e-Commerce Outsourcing Agreement (the "Agreement"), is entered into
effective March 4, 2000, by and between Premier Health Exchange, L.L.C. ("PHx"),
and Premier Purchasing Partners, L.P. ("Purchasing Partners"), with reference to
the following facts:
A. Purchasing Partners and PHx are affiliates of Premier, Inc.
("Premier"), the nation's largest alliance of hospitals and health care
organizations.
B. Premier's core objective is to improve the health of communities.
C. Such core objective as well as the objective of helping to assure
that patients receive safe and efficacious care can be accomplished, in part, by
achieving economies of scale and innovations through group strategies and shared
resources.
D. Purchasing Partners operates Premier's acute care group purchasing
organization which represents one of the nation's largest groups of acute care
and related facilities that have come together through Purchasing Partners in an
effort to aggregate their supply purchasing volume in order to obtain more
favorable terms from vendors.
E. PHx is a provider of e-commerce systems and solutions to enable the
use of the Internet in streamlining the supply chain management process with
particular focus on more efficient ordering, tracking and processing of medical
product purchases.
F. Purchasing Partners desires to retain the services of PHx to serve as
Purchasing Partners' provider of e-commerce systems through which Purchasing
Partners' member hospitals and related facilities can take full advantage of the
efficiencies and anticipated cost savings offered by Internet-based
technologies.
G. PHx desires to provide such services to Purchasing Partners, subject
to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual promises contained
herein and other good and sufficient consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
1.0 DEFINITIONS. The following terms as used in this Agreement shall have the
meanings set forth below:
1.1 "COMMITMENT PROGRAM". The Purchasing Partners program that requires
Participating Members to purchase specified levels of certain Contracted
Products and Services from designated Vendors.
1.2 "CONTRACTED PRODUCTS AND SERVICES". The products and services which
are covered under a Standard Group Purchasing Agreement between Purchasing
Partners and a Vendor.
1.3 "CALENDAR YEAR". The twelve (12) month period commencing on January
1 and ending on December 31.
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1.4 "DISTRIBUTOR". A distribution or wholesaler company which
distributes to purchasers medical products, pharmaceuticals and other products
or services that have not been manufactured (either by or for) such companies.
1.5 "DISTRIBUTION SERVICES". The warehousing, transport and delivery
services of a Distributor with respect to medical products, pharmaceuticals and
other products or services that have not been manufactured (either by or for)
such Distributor.
1.6 "e-COMMERCE INFORMATION FEE". The fee charged by PHx for providing
value-added information with respect to customer purchasing activity which is
above and beyond the base level of information (equivalent to sales tracings)
customarily provided by PHx.
1.7 "e-COMMERCE OUTSOURCING AGREEMENT". An agreement, such as this
Agreement, between PHx and a Group Purchasing Organization whereby PHx provides
access to the PHx e-Commerce System by the Group Purchasing Organization and its
members and suppliers.
1.8 "e-COMMERCE CONTRACTED PURCHASE VOLUME". The [***] of Contracted
Products and Services purchased by Participating Members from Vendors through
use of the PHx e-Commerce System.
1.9 "e-COMMERCE NON-CONTRACTED PURCHASE VOLUME". The [***] of
Non-Contracted Products and Services purchased by Participating Members through
use of the PHx e-Commerce System.
1.10 "FISCAL YEAR". The twelve (12) month period commencing on July 1
and ending on June 30.
1.11 "GROUP PURCHASING ORGANIZATION". Any entity that meets the
definition of a "Group Purchasing Organization" as set forth in 42 CFR Section
1001.952(j).
1.12 "MATERIALS MANAGEMENT SYSTEMS". Information systems (including
software and hardware) utilized by health care providers to assist in the
organization and management of their product purchasing and materials management
functions.
1.13 "NON-CONTRACTED PRODUCTS AND SERVICES". Products and services which
are not covered under a Purchasing Partners Standard Group Purchasing Agreement.
1.14 "OLM FACILITIES". Any acute care and related facilities that are
owned, leased or managed by a Premier Owner. OLM Facilities are separately
identified as such in Exhibit A hereto.
1.15 "PARTICIPATING MEMBERS". The Premier members set forth on Exhibit A
hereto who shall have the right to access and use the PHx e-Commerce System.
Purchasing Partners shall have the right to provide Exhibit A in electronic form
and shall update Exhibit A on a periodic basis to reflect changes in membership.
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1.16 "PREMIER OWNERS". The limited partners of Purchasing Partners and
the shareholders of Premier. Premier Owners are separately identified as such on
Exhibit A hereto.
1.17 "PERFORMANCE STANDARDS AND SERVICE LEVELS". Objective criteria that
establish the specific elements of PHx's required performance of Services under
this Agreement. The initial Performance Standards and Service Levels are set
forth in Exhibit B hereto. On a quarterly basis, Purchasing Partners and PHx
shall meet to review the Performance Standards and Service Levels and discuss in
good faith any necessary revisions thereto. Any revisions to the Performance
Standards and Service Levels shall be mutually agreed to in writing by the
parties.
1.18 "PHx e-COMMERCE SYSTEM". The Internet-based, electronic commerce
system provided hereunder by PHx to Purchasing Partners, Participating Members,
Vendors and Distributors in accordance with the Performance Standards and
Service Levels. The PHx e-Commerce System enables, without limitation: (i)
online direct ordering, tracking and inventory control by Participating Members
with respect to Contracted Products and Services through use of various
technologies including electronic cataloging technologies such as WebCat (these
functions of the PHx e-Commerce System may be web-based and/or integrated with
ERP systems and Materials Management Systems); (ii) dynamic pricing functions
which include, but are not limited to, online auctions and an electronic request
for quotation system; (iii) an electronic communications infrastructure to
integrate supply chain information with clinical information and other health
care provider-based information as well as provide transaction related
information to Participating Members, Purchasing Partners, Vendors and
Distributors; and (iv) such other capabilities as shall be mutually agreed by
the parties. The PHx e-Commerce System includes all upgrades and enhancements
implemented over time by PHx that are made generally available to PHx customers.
1.19 "PHx RESOURCES". PHx employees and consultants, WebCat and any
other PHx owned, leased or licensed hardware, equipment, software, facilities
and other assets used by PHx in providing the Services.
1.20 "PHx TRANSACTION FEES". The transaction fees charged by PHx in
connection with the use of the PHx e-Commerce System for the purchase, sale
and/or distribution of Non-Contracted Products and Services.
1.21 "PRIVACY POLICY". The online policy that describes PHx's position
regarding privacy and information security issues. The form and content of the
Privacy Policy shall be subject to the mutual agreement of PHx and Purchasing
Partners and shall not be modified without the prior written consent of both
parties. In the event of a conflict between the Privacy Policy and any of the
terms and conditions of this Agreement, the terms and conditions of this
Agreement shall control.
1.22 "PURCHASING PARTNERS ADMINISTRATIVE FEES". The administrative fees
paid by Vendors to Purchasing Partners pursuant to Purchasing Partners Standard
Group Purchasing Agreements based on the volume of purchases by Participating
Members of Contracted Products and Services.
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1.23 "PURCHASING PARTNERS RESOURCES". Purchasing Partners employees and
consultants and all computer hardware, equipment, software (including software
license rights), facilities and other assets owned, leased or licensed by
Purchasing Partners which are reasonably necessary for PHx to provide the
Services.
1.24 "SERVICES". PHx's provision of the PHx e-Commerce System for use by
Participating Members, Purchasing Partners, Vendors and Distributors and the
integration of the PHx e-Commerce System with the information systems utilized
by Purchasing Partners, Participating Members, Vendors and Distributors.
1.25 "STANDARD GROUP PURCHASING AGREEMENT". An agreement with a supplier
of products and/or services to make such products and/or services available for
purchase by a designated group of purchasers that exists for the purposes of
negotiating pricing and/or other terms and conditions, which has a term of [***}
or more (including all extensions and renewals).
1.26 "SYSTEM ADMINISTRATIVE FEES". Fees paid pursuant to an agreement
with Purchasing Partners by Vendors directly to Participating Members that
qualify to receive such fees under such agreement, subject to compliance with
applicable Medicare/Medicaid Fraud and Abuse Safe Harbors.
1.27 "TERMS OF USE". The online terms and conditions under which
Purchasing Partners, Group Purchasing Organizations, Participating Members,
Vendors and Distributors may access and use the PHx e-Commerce System. The form
and content of the Terms of Use shall be subject to the mutual agreement of PHx
and Purchasing Partners and shall not be modified without the prior written
consent of both parties. In the event of a conflict between the Terms of Use and
any of the terms and conditions of this Agreement, the terms and conditions of
this Agreement shall control.
1.28 "TOTAL PREMIER PURCHASE VOLUME". The [***] of Contracted Products
and Services (including e-Commerce Contracted Purchase Volume) and
Non-Contracted Products and Services (including e-Commerce Non-Contracted
Purchase Volume) purchased by Participating Members.
1.29 "VENDORS". Manufacturers and suppliers of medical, pharmaceutical
and other products and services.
1.30 "WEBCAT". The version of PHx's electronic cataloging technology
which is utilized in connection with Purchasing Partners.
2.0 TERM OF AGREEMENT. This Agreement shall commence on March 4, 2000 (the
"Effective Date"), and shall remain in effect for ten (10) years, expiring on
March 3, 2010. Upon the expiration of the initial term hereof, this Agreement
shall automatically renew for successive five (5) year terms unless either party
provides written notice to the other of its intent not to renew, at least ninety
(90) days prior to the expiration of the initial term or any renewal term.
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3.0 PHx OBLIGATIONS.
3.1 SERVICES IN GENERAL. Subject to the terms of this Agreement, PHx
shall provide such professional and technical personnel and other PHx Resources
as shall be required to perform the Services in accordance with the Performance
Standards and Service Levels.
3.2 PROVISION OF THE PHx e-COMMERCE SYSTEM. In connection with its
performance of the Services hereunder, and subject to compliance with the Terms
of Use, PHx shall provide Purchasing Partners, Participating Members, Vendors
and Distributors access to and customary use of the any and all components of
the PHx e-Commerce System. The level of access shall be appropriate for the type
of organization making such access (i.e., a Participating Member, Vendor or
Distributor, as the case may be) and consistent with PHx's standard access
levels for such business types. The PHx e-Commerce System shall, without
limitation, provide for: (i) accurate electronic catalog information; (ii)
online access by Participating Members to detailed product information that is
available on Vendors' information systems, including without limitation,
detailed product descriptions, product photographs or pictures, clinical
specifications, recall notices, and Material Safety Data Sheets (MSDS)
information; (iii) web-based ordering capabilities whereby Participating Members
have the ability to order products and services directly from Vendors and
Distributors; (iv) cataloging of the non-price value elements of Purchasing
Partners' Standard Group Purchasing Agreements; (v) integration of certain
Vendor technologies into the PHx e-Commerce System; and (vi) cataloging of the
field and customer services resources of Vendors and Distributors.
3.3 INTEGRATION OF THE PHx e-COMMERCE SYSTEM WITH OLM FACILITIES'
INFORMATION SYSTEMS. PHx shall make available [***] sufficient PHx Resources in
order to cause the timely integration of the PHx e-Commerce System with the
Materials Management System and enterprise resource planning ("ERP") system of
any and all OLM Facilities in accordance with a mutually acceptable integration
plan (the "OLM Facilities Integration Plan"). PHx agrees to install connector
technology that is relevant to each facilities' Materials Management System or
ERP that processes procurement transactions and manages electronic catalog
information. "Connector Technology" is defined as published subscribed
translation technology that is specific to transaction management and that
enables electronic transfer processes automatically. PHx will install a
pre-configured connector or develop and install a custom connector at each OLM
Facility requesting integration services. The parties shall use best efforts to
finalize the OLM Facilities Integration Plan within [***] after the Effective
Date. Further, PHx shall perform [***} with respect to the PHx components of the
resulting integrated systems. In connection with such activities, PHx shall use
commercially reasonable efforts to integrate the PHx e-Commerce System using its
Connector Technology with the leading Materials Management Systems and ERP
systems utilized by Participating Members. Notwithstanding the foregoing, the
value of [***] that PHx shall make available under this Section 3.3 [***] shall
not exceed [***] per facility, unless otherwise expressly agreed by the
applicable facility and PHx. Further, the value of [***] which PHx shall make
available under this Section 3.3 [***] shall not exceed [***] per facility per
year, unless otherwise agreed by the applicable facility and PHx. The terms and
conditions under which PHx shall perform the
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integration and maintenance services described in this Section 3.3 shall be set
forth in separate written agreements between PHx and the applicable facilities.
The form of any such agreements shall be subject to Purchasing Partners' prior
approval, which approval shall not be unreasonably withheld. Further, the terms
of any such separate agreement shall be consistent with the terms and conditions
of this Agreement.
3.4 INTEGRATION OF THE PHx e-COMMERCE SYSTEM WITH THE INFORMATION
SYSTEMS OF OTHER PARTICIPATING MEMBERS. PHx shall use commercially reasonable
efforts to cause the timely integration of the PHx e-Commerce System with the
information systems of other Participating Members (in addition to OLM
Facilities) in accordance with a mutually acceptable integration plan (the
"General Integration Plan"). The parties shall use best efforts to finalize the
General Integration Plan within a reasonable period of time after the Effective
Date. The terms and conditions under which PHx shall perform the integration
services described in this Section 3.4 shall be set forth in separate written
agreements between PHx and the applicable facilities. The form of any such
agreements shall be subject to Purchasing Partners' prior approval, which
approval shall not be unreasonably withheld. Further, the terms of any such
separate agreement shall be consistent with the terms and conditions of this
Agreement.
3.5 INTEGRATION OF THE PHx e-COMMERCE SYSTEM WITH PURCHASING PARTNERS'
INFORMATION SYSTEM. PHx shall make available [***] sufficient PHx Resources in
order to cause the timely integration of the PHx e-Commerce System with the
following components of the Purchasing Partners' information system (provided
that the maximum amount required to be incurred by PHx for such integration
shall not exceed [***]): (i) [***]; (ii) [***]; (iii) [***]; and (iv) [***]. A
more detailed description of the applicable integration requirements is set
forth in Exhibit C hereto. PHx shall perform all such integration activities in
accordance with the Performance Standards and Service Levels. The PHx
integration solution for Purchasing Partners' information system shall include
without limitation provision for two-way transfer of contract and member
information and detailed purchasing transaction and inquiry data.
3.6 INTEGRATION OF THE PHx e-COMMERCE SYSTEM WITH THE INFORMATION
SYSTEMS OF VENDORS AND Distributors. PHx shall use commercially reasonable
efforts to cause the timely integration of the PHx e-Commerce System with the
information systems of Vendors and Distributors. Integration with Vendors and
Distributors is defined as making the Vendors' and/or Distributors' catalog
available for on-line searching on the PHx e-Commerce System and, to the extent
reasonably possible, enabling on-line order management (including without
limitation, inventory query, order creation, order submission and order
confirmation) and on-line settlement with such Vendor and/or Distributor. The
terms under which PHx shall perform such services shall be set forth in separate
written agreements between PHx and the applicable Vendors or Distributors and
shall be commercially reasonable.
3.7 PHx PRODUCT OFFERINGS TO PARTICIPATING MEMBERS.
A. PROHIBITED USES. PHx represents, warrants and covenants that
it prohibits the use of the PHx e-Commerce System (to the extent accessible by
Participating Members) for anything other than a lawful and
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legitimate business purpose. Examples of other than lawful and legitimate
business uses include, but are not limited to, the following: (i) selling or
offering (x) stolen property, counterfeit items, contraband, controlled
substances (other than in accordance with applicable law), firearms; tobacco;
pornography, (y) products or services that violate any state or federal statute
or regulation regarding the display, promotion, advertising, recommending or
sale of medical supplies, (z) products or services or any other material which
it is unlawful to sell or for a Participating Member to acquire (subsections
(x)-(z) cumulatively the "Illicit Items"); (ii) placement on the PHx e-Commerce
System of any untrue, malicious, fraudulent, harassing, offensive or defamatory
material, or any material that is irrelevant to a legitimate use of the site;
(iii) introduction of viruses, worms or other programming routines that are
intended to disrupt or interfere with the intended operation of the site; (iv)
unauthorized insertion of links to other sites of whatever character; (v)
promotion of any unlawful activity or purpose, including any activity that could
give rise to criminal or civil liability; (vi) manipulation of pricing on
transactions by any means, including the placement of bad faith bids, use of
shills in the auction process or collusion between a buyer and seller to cause
harm to a competitor;(vii) unauthorized alteration of any data or information
supplied by another user of the site: or (viii) any activity that infringes on
the copyright, patent, trademark or other rights of any person or entity.
B. RIGHT OF PURCHASING PARTNERS TO REQUIRE THAT PHx PREVENT THE
OFFERING OF CERTAIN PRODUCTS OR SERVICES TO PARTICIPATING MEMBERS. If Purchasing
Partners reasonably believes that the offering for sale of any product or
service through the PHx e-Commerce System accessible by Participating Members
may harm or cause injury to third parties, or harm the reputation or goodwill of
Purchasing Partners, or is reasonably deemed by Purchasing Partners as failing
to meet reasonable safety and quality standards established from time to time by
Purchasing Partners through its customary product selection and committee review
process involving Participating Members (the "Harmful Items"), PHx shall not
offer, and shall prevent Vendors, Distributors and Participating Members from
offering, the product or service to Participating Members through the PHx
e-Commerce System following the procedure of Section 3.7(c) below.
C. REMOVAL OF ILLICIT AND HARMFUL ITEMS. If (i) PHx should
reasonably know or (ii) PHx is notified by Purchasing Partners or a third party
that a Vendor, Distributor or Participating Member is offering to Participating
Members through the PHx e-Commerce System any Illicit or Harmful Item, then PHx
shall use its best efforts to remove the Illicit or Harmful Item from being
offered to Participating Members on the PHx e-Commerce System within seventy-two
(72) hours of PHx reasonably knowing or being notified of any Illicit or Harmful
Item on the PHx e-Commerce System (the "Removal Period"). Such best efforts may
include (i) instructing and having the Vendor, Distributor or Participating
Member (as the case may be) remove the Illicit or Harmful Item from the PHx
e-Commerce System to the extent accessible by Participating Members, (ii) PHx
removing the Illicit or Harmful Item from the PHx e-Commerce System to the
extent accessible by Participating Members, or (iii) preventing access by
Participating Members to the Illicit or Harmful Item. PHx shall promptly notify
Purchasing Partners of all communications between and actions taken by PHx and a
Vendor, Distributor or Participating Member concerning any Illicit or Harmful
Item during the Removal Period and thereafter until Participating Members'
access to the Illicit or Harmful Item through the PHx e-Commerce System is
eliminated.
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3.8 COMMITMENT PROGRAM ISSUES; AUTHORIZATION TO RELEASE INFORMATION TO
PURCHASING PARTNERS. PHx will electronically notify any Participating Member
which requests a price quotation or other product information concerning
Contracted Products and Services and/or Non-Contracted Products and Services
that such Participating Member's consummation of a purchase based on such
request could affect such Participating Member's obligations under the
Commitment Program. The parties shall mutually agree upon the form, content and
mechanism for such notification. In the event a Participating Member consummates
any such purchase, PHx shall provide Purchasing Partners written or electronic
notice thereof as part of PHx's standard monthly report described in Section
3.12. Further, PHx shall provide Purchasing Partners any other information in
its possession that is reasonably requested by Purchasing Partners that relates
to Participating Members' obligations under the Commitment Program. Subject to
Section 3.7 above, PHx shall have no obligation to stop any transaction
requested by a Participating Member. The Terms of Use applicable to
Participating Members shall grant PHx express authorization to provide
Purchasing Partners the notice required under this Section 3.8 and any other
information relevant to the Commitment Program which is reasonably requested by
Purchasing Partners.
3.9 e-COMMERCE OUTSOURCING AGREEMENTS WITH AFFILIATED GROUP PURCHASING
ORGANIZATIONS; PROVIDER SELECT, INC. Upon Purchasing Partners' written request,
PHx shall enter into a separate e-Commerce Outsourcing Agreement with any Group
Purchasing Organization designated by Purchasing Partners which is owned or
controlled by or under common control with Purchasing Partners and/or Premier.
The form and content of such e-Commerce Outsourcing Agreement shall be
substantially similar to this Agreement. Notwithstanding the foregoing, PHx
shall refrain from encouraging or directing customers to choose one Group
Purchasing Organization over another or to switch their affiliation from one
Group Purchasing Organization to another. PHx shall have the right to require
Purchasing Partners, upon providing written notice, to cause Provider Select,
Inc. ("Provider Select") to enter into an e-Commerce Outsourcing Agreement with
PHx (the "Provider Select e-Commerce Outsourcing Agreement") whereby PHx shall
provide the PHx e-Commerce System to support all of the electronic commerce
services provided by Provider Select to physicians and physician groups (the
"Provider Select e-Commerce Services"). The terms and conditions of the Provider
Select e-Commerce Outsourcing Agreement shall be substantially similar to the
terms of this Agreement, including the Covenant Not to Promote. In no event,
however, shall Purchasing Partners and/or Provider Select be obligated to take
any action under the preceding two sentences unless: (i) PHx is able to provide
the same level of functionality as is provided by the Provider Select e-Commerce
Services; and (ii) PHx will provide such services through websites which are
owned or controlled exclusively by PHx, PHx affiliates or Provider Select unless
otherwise agreed by Provider Select. In the event Provider Select in good faith
intends to offer electronic commerce services to any group of Provider Select
members other than physicians and physician groups, Provider Select shall
provide PHx with written notice of such intention and PHx shall, for a period of
120 days, have the right to enter into an e-Commerce Outsourcing Agreement with
Provider Select to provide such services to such group of Provider Select
members upon terms and conditions which are substantially similar to the terms
and conditions of this Agreement, including the Covenant Not to Promote;
provided, however that PHx must provide such services through websites which are
owned or controlled exclusively by PHx, PHx affiliates or Provider Select unless
otherwise agreed by Provider Select. Further, in no event shall Provider Select
sell or allow the sale of products,
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supplies or services for use by an acute care facility. For purposes of this
Section 3.9, a "PHx affiliate" shall mean any entity that is owned by,
controlled by or under common control with PHx.
3.10 NOTICE OF UPGRADES AND ENHANCEMENTS. PHx shall provide Purchasing
Partners with reasonable advance notice (the "Notice") of any Upgrades and
Enhancements (as defined below). Purchasing Partners and Participating Members
and, if applicable, Vendors and Distributors with respect to Contracted Products
and Services only, shall have access to such Upgrades and Enhancements [***].
New Services (as defined below) will be available to Purchasing Partners,
Participating Members, Vendors and Distributors upon terms which are no less
favorable than the terms generally available to other users of PHx's services.
"Upgrades and Enhancements" shall mean bug fixes and functional improvements to
PHx's systems used for purposes of effecting the online purchase and/or sale of
medical, pharmaceutical, surgical, dietary, dental, or veterinarian supplies or
services. "New Services" shall mean services or products offered and/or
developed by PHx other than Upgrades and Enhancements. Purchasing Partners shall
have the right to participate as a beta test site for the testing and evaluation
of such Upgrades and Enhancements and New Services. Notwithstanding the
foregoing, in the event PHx introduces a New Service which substantially
replaces the PHx e-Commerce System as it then exists (the "Legacy PHx e-Commerce
System"), to the extent PHx imposes additional charges for use of such New
Service, PHx shall continue to operate and provide support (consistent with
PHx's prior practices) for the Legacy PHx e-Commerce System for the benefit of
Participating Members and Distributors and Vendors (to the extent use of the
Legacy PHx e-Commerce System by such Distributors and Vendors relates to
Participating Members) at no additional charge throughout the initial term and
any renewal term of this Agreement.
3.11 MARKETING SUPPORT. PHx shall make available sufficient PHx
Resources reasonably necessary to market and promote the PHx e-Commerce System
to Participating Members and to market and promote such other strategic
initiatives related to this Agreement as are designated by Purchasing Partners.
PHx will modify the "Buyer's Center" page of the PHx website to include
prominently placed links to the websites of Purchasing Partners and Premier
(other than the website of Provider Select). Such link(s) shall be designed to
be visible on a standard computer screen set to a resolution of 800 pixels by
600 pixels without requiring the user to scroll horizontally or vertically
through the web page and shall be in a size and form reasonably agreed upon by
the parties.
3.12 REQUIRED REPORTS. PHx shall provide Purchasing Partners with a
monthly written or electronic report of e-Commerce Contracted Purchase Volume
and e-Commerce Non-Contracted Purchase Volume. During the first twelve (12)
months after the Effective Date, PHx shall provide such report to Purchasing
Partners within thirty (30) days of the end of each month. Thereafter, PHx shall
provide such report to Purchasing Partners within fifteen (15) days of the end
of each month. The parties shall mutually agree upon the form and content of
such report. Subject to Section 5.1 below, PHx shall provide Purchasing Partners
such other reports related to the Services as Purchasing Partners may reasonably
request.
3.13 PHx USER GROUP. PHx shall establish an advisory group of users of
the PHx e-Commerce System for the purpose of providing input and direction
regarding the operation,
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functionality, processes, and capabilities of the system (the "PHx User Group").
The PHx User Group will advise PHx on the customer satisfaction, usage,
application, functionality and quality of the PHx e-Commerce System. Such
involvement will include, but not be limited to, the ability to recommend
upgrades and/or enhancements directed at issues including, but not limited to,
quality and/or cost improvements in the supply chain. PHx shall follow-up
appropriately on any such recommendations and prioritize its activities in this
regard with the primary goal of delivering benefit to customers using the PHx
e-Commerce System. PHx agrees that Purchasing Partners shall have the right to
designate up to two (2) individuals to participate in the PHx User Group. PHx
also agrees that Premier Owners and Participating Members shall be given
consideration for participation. PHx covenants that Purchasing Partners, Premier
Owners and Participating Members shall represent a percentage of the membership
of the User Group that is proportional to the Total Premier Purchase Volume
divided by the total purchase volume processed through the PHx e-Commerce System
for all customers of PHx.
3.14 PAYMENT BY PHx OF COMMISSIONS TO PURCHASING PARTNERS. In
consideration of Purchasing Partners' on-going support of Participating Members'
use of the PHx e-Commerce System for the purchase of Non-Contracted Products and
Services, PHx shall pay Purchasing Partners a commission equal to [***] PHx
Transaction Fees collected by PHx as a result of the use of the PHx e-Commerce
System by Participating Members for the purchase of Non-Contracted Products and
Services (the "Transaction Fee Commission"). PHx shall pay Purchasing Partners
the Transaction Fee Commission on a quarterly basis, without demand or notice,
within [***] of the [***]. PHx shall pay to Purchasing Partners interest on any
undisputed past due amount owing Purchasing Partners hereunder at the rate of
[***] per annum.
3.15 ADVERTISING. PHx shall not include on the PHx e-Commerce
System any advertisement, promotional placement or other promotional media
accessible by Participating Members (and Vendors and Distributors to the extent
such access by Vendors and Distributors relates to Participating Members)
without the prior written or electronic consent of Purchasing Partners.
4.0 PURCHASING PARTNERS' OBLIGATIONS.
4.1 SUPPORT AGREEMENT. Concurrent with the execution of this Agreement,
Purchasing Partners shall cause Premier to enter into the Support Agreement in
the form attached hereto as Exhibit D whereby Premier shall provide back-office,
administrative support in connection with PHx's dynamic pricing functions as
well as certain relationship management and marketing services in connection
with Participating Members' introduction to and use of the PHx e-Commerce
System.
4.2 ORIENTATION. Purchasing Partners will provide orientation to its
information systems department standards, appropriate technical manuals, and
other support reasonably necessary for PHx's performance of the Services.
Purchasing Partners will also provide to PHx relevant documentation of
procedures, system instruction manuals and internal documentation to the extent
available.
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4.3 SPACE AND FACILITIES. When Services are performed by PHx at
Purchasing Partners' sites, Purchasing Partners will provide a reasonable work
environment to the extent reasonably necessary for PHx personnel to perform
Services under this Agreement. Purchasing Partners will also provide adequate
storage space for spare parts and test equipment, if required by PHx, and
adequate working space, heat, light, ventilation, electric current and outlets
for use by PHx's maintenance personnel, which facilities shall be provided at no
charge to PHx and shall be within a reasonable distance to the network
configuration. Any additional space required to meet Purchasing Partners'
information systems function needs during the term of this Agreement shall be
provided by PHx at its sole cost and expense at locations of PHx's choice and
the parties agree that Purchasing Partners shall not be required to provide
space to PHx other than as herein expressly provided.
4.4 ACCESS TO COMPUTER FACILITIES. Purchasing Partners will provide
PHx's personnel access to Purchasing Partners' computer facilities reasonably
required to perform Services under this Agreement on a twenty-four (24) hour per
day, seven (7) day per week basis. Access may be via physical entry to the
facility or via telecommunications, as needs dictate. Purchasing Partners shall
conform to PHx's reasonable security policies and procedures for physical and
on-line access to PHx computer facilities.
4.5 ACCESS TO INFORMATION NETWORK. Purchasing Partners, subject to
appropriate mutually agreed upon security measures consistent with Purchasing
Partners' network security policies and protocol, will permit PHx to connect the
PHx e-Commerce System to Purchasing Partners' local area network and to equip
existing PC Workstations owned by Purchasing Partners with the necessary
software for Purchasing Partners' personnel using such PC Workstations to have
access to the PHx e-Commerce System. PHx will be responsible for all costs
related to such connectivity including software, hardware and telecommunications
costs.
4.6 COMPATIBLE SPECIFICATIONS. Purchasing Partners will maintain, or
allow PHx to maintain, Purchasing Partners' network servers at specifications
compatible with the PHx e-Commerce System.
4.7 TIMELY ACTION. Purchasing Partners will make decisions and
communicate information in a timely manner to enable PHx to provide the Services
in accordance with this Agreement.
4.8 MARKETING SUPPORT. Purchasing Partners shall make available
sufficient Purchasing Partners Resources reasonably necessary to market and
promote the PHx e-Commerce System to Participating Members in accordance with
Exhibit E hereto.
5.0 LICENSES.
5.1 PURCHASING PARTNERS LICENSES TO USE PHx SOFTWARE AND OTHER
PROPRIETARY MATERIAL. PHx has developed or will develop Confidential Information
(as defined in Section 11.1 below) and trade secrets relating to its services
using proprietary business processes. Purchasing Partners acknowledges that PHx
and its affiliates have invested substantial money in the development and
maintenance of such processes. Purchasing Partners will have a position of
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special trust and confidence for the use of such Confidential Information.
Accordingly, only for the term of this Agreement, PHx hereby grants to
Purchasing Partners and Participating Members a non-exclusive license to use
such Confidential Information and such trade secrets (including without
limitation, PHx logos and trade names and WebCat and any other software included
in the PHx Resources) solely in connection with the Services. Title to WebCat
and all software included in the PHx Resources shall remain in PHx. Purchasing
Partners and Participating Members shall not have the right to assign,
sublicense or otherwise transfer or distribute the license described in this
Section 5.1 to any other person or entity. PHx also hereby grants Purchasing
Partners a non-exclusive license during the term of this Agreement to access and
use (for internal purposes only, including without limitation, dissemination to
Participating Members) transaction data with respect to customers of PHx which
are not Participating Members provided that such data is aggregated (as opposed
to customer or vendor specific) and presented in a form that is mutually agreed
upon by the parties.
5.2 PHx LICENSES TO USE PURCHASING PARTNERS PROPRIETARY INFORMATION.
Purchasing Partners has developed Confidential Information (as defined in
Section 11.1 below) and trade secrets relating to the sale of goods to a large
number of customers in the healthcare industry using proprietary business
processes. PHx acknowledges that Purchasing Partners and its affiliates have
invested substantial money in the development and maintenance of such processes
and in the sourcing and sales of products and services. PHx will have a position
of special trust and confidence for the use of such Confidential Information
(including without limitation the roster of Participating Members set forth in
Exhibit A hereto, pricing and related information with respect to Contracted
Products and Services, Purchasing Partners and Premier logos and trade names,
and Purchasing Partners newsletters and marketing materials) solely to support
the purposes of this Agreement. Accordingly, only for the term of this
Agreement, Purchasing Partners hereby grants to PHx a non-exclusive license to
use such Confidential Information and such trade secrets for the limited purpose
of providing the Services under this Agreement. Purchasing Partners also hereby
grants PHx a non-exclusive license during the term of this Agreement to access
and use (i) supplier-specific transaction data relating to Contracted Products
and Services for the sole purpose of providing information to Vendors (with
respect to purchases of such vendor's products only); and (ii) general
transaction data relating to Contracted Products and Services for the sole
purpose of providing such data to suppliers provided that such data is
aggregated (as opposed to customer, vendor or product specific) and presented in
a form that is mutually agreed upon by the parties.
6. COMPENSATION.
6.1 TRANSACTION PROCESSING FEE. In consideration of the Services
provided hereunder by PHx in connection with the processing of transactions by
Participating Members through the PHx e-Commerce System, throughout the initial
term of this Agreement and any renewal term, Purchasing Partners shall pay PHx
an amount equal to [***] of the Purchasing Partners Administrative Fees
collected by Purchasing Partners as a result of purchases of Contracted Products
and Services by Participating Members through use of the PHx e-Commerce System
(the "Transaction Processing Fee"). Notwithstanding the foregoing, for purposes
of determining the Transaction Processing Fee hereunder, in no event shall the
Purchasing Partners Administrative Fees for any Standard Group Purchasing
Agreement be
* Confidential Treatment Requested
13
deemed to [***] or be [***] under such agreement.
6.2 SOFTWARE/HARDWARE ROYALTY AND MAINTENANCE FEE. In consideration of
PHx's provision of electronic catalog information to Participating Members,
maintenance of Purchasing Partners' electronic catalog functionality, and PHx's
provision to Purchasing Partners of other electronic tools to effect contracting
in a timely, more efficient manner, as well as the beneficial access by
Participating Members to the PHx e-Commerce System, Purchasing Partners agrees
to pay PHx [***] Software/Hardware Royalty and Maintenance Fee equal to [***]
(the "Royalty and Maintenance Fee"). Notwithstanding the foregoing, the Royalty
and Maintenance Fee [***].
Upon the expiration of the Covenant Not to Promote described in Section
7.1 below, in the event the Royalty and Maintenance Fee [***] of the actual
[***] during [***] multiplied by [***], the Royalty and Maintenance Fee for
such [***] shall be [***] for purposes of this Section 6.2. The amount of [***]
for the applicable [***] in the event the Covenant Not to Promote expires prior
to the end of a [***].
Notwithstanding the foregoing, Purchasing Partners shall receive a [***]
due hereunder [***] for the applicable Calendar Year multiplied by [***]. The
amount of any Royalty and Maintenance Fee due hereunder shall be determined by
Purchasing Partners within [***] of each December 31 during the term and upon
the expiration of the term of this Agreement (with respect to the Royalty and
Maintenance Fee attributable to the portion of the [***] prior to such
expiration). The Royalty and Maintenance Fee due hereunder shall be prorated for
[***].
6.3 EXCLUSION OF SYSTEM ADMINISTRATIVE FEES AND REVENUE RELATED TO
[***]; ADMINISTRATIVE FEES PAID IN THE FORM OF SECURITIES. [***]. In the event a
Vendor pays Purchasing Partners Administrative Fees in the form of securities,
any gain realized on the sale of such securities by Purchasing Partners shall be
taken into account at the time of such sale in determining the Transaction
Processing Fee due PHx hereunder to the extent the original value underlying
such securities was generated by purchases of Contracted Products and Services
through use of the PHx e-Commerce System. Any such amount shall be paid along
with the [***] Transaction Processing Fee payment due under Section 6.1 above.
6.4 MANNER OF PAYMENT. Purchasing Partners shall pay the Transaction
Processing Fee and an estimated, prorated Royalty and Maintenance Fee on a
quarterly basis, without demand or notice, within [***] of its receipt of the
e-Commerce Contracted Purchase Volume and e-Commerce Non-Contracted Purchase
Volume report required to be provided by PHx pursuant
* Confidential Treatment Requested
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to Section 3.12 above with respect to the [***]. The estimated Royalty and
Maintenance Fee shall be based on the information contained in such reports.
Purchasing Partners shall determine the actual Royalty and Maintenance Fee due
in accordance with Section 6.2. In the event Purchasing Partners determines that
the total of estimated Royalty and Maintenance Fee payments for the applicable
[***] is less than the actual Royalty and Maintenance Fee due in accordance with
Section 6.2, Purchasing Partners shall pay PHx the amount of such shortfall
within [***] of the determination of the actual Royalty and Maintenance Fee due
in accordance with Section 6.2. In the event Purchasing Partners determines that
the total of any estimated Royalty and Maintenance Fee payments for the
applicable [***] is more than the actual Royalty and Maintenance Fee due in
accordance with Section 6.2, Purchasing Partners shall apply the amount of such
overpayment as a credit toward the [***] Transaction Processing Fee payment due
in accordance with Section 6.1. Notwithstanding the foregoing, Purchasing
Partners shall have the right to require Vendors to pay PHx the Transaction
Processing Fee applicable to such Vendors' Standard Group Purchasing Agreements
in lieu of Purchasing Partners making such payment, provided such Vendors make
any such payment within the time period set forth in the first sentence of this
Section 6.4. Purchasing Partners shall pay to PHx interest on any undisputed
past due amount owing PHx hereunder at the rate of [***] per annum.
6.5 PHx TRANSACTION FEES FOR NON-CONTRACTED PRODUCTS AND SERVICES;
e-COMMERCE INFORMATION FEES. PHx shall have the right to charge Vendors and
Distributors reasonable PHx Transaction Fees for the use of the PHx e-Commerce
System in connection with the purchase, sale and distribution of Non-Contracted
Products and Services. PHx shall have the right to charge Participating Members
reasonable PHx Transaction Fees only in connection with their purchases of
Non-Contracted Products and Services from Vendors which have been expressly
requested by the applicable Participating Member (i.e., the offer of such
products and services was placed on the PHx e-Commerce System as result of the
request of the Participating Member that is charged the PHx Transaction Fees).
The PHx Transaction Fees shall be no less favorable than rates charged to other
PHx customers for comparable services. PHx shall have the right to charge
Vendors and Distributors reasonable e-Commerce Information Fees in exchange for
providing such Vendors and Distributors the information subject to such fees.
6.6 PHx COMPENSATION FOR INTEGRATION SERVICES. PHx shall have the right
to charge Vendors, Distributors and/or Participating Members (once the
applicable dollar limits described in Section 3.3 above have been reached)
reasonable service fees in connection with any integration services provided by
PHx in response to a specific request for such services. Such service fees shall
be consistent with market rates for comparable services. Further, any such
services shall be documented in a separate statement of work signed by PHx and
the party responsible for payment of such service fees.
6.7 FULL COMPENSATION; SERVICES UNDERLYING TRANSACTION PROCESSING AND
ROYALTY AND MAINTENANCE FEE. Except as otherwise provided in this Article 6, the
amount received by PHx under this Article 6 shall be compensation in full for
the Services and PHx shall not charge Purchasing Partners or Participating
Members any additional amounts or fees for the Services.
* Confidential Treatment Requested
15
7.0 ADDITIONAL COVENANTS OF THE PARTIES.
7.1 COVENANT NOT TO PROMOTE. Subject to Section 7.2 below, each of
Premier and Purchasing Partners agrees that, for a period of six (6) years after
the Effective Date and except in connection with Provider Select (provided that
Provider Select does not sell or allow the sale of products, supplies or
services for use by an acute care facility), it will not, and that it will
prevent any entity owned by, controlled by, or under common control with it
(collectively, "Affiliates"), from doing any of the following: (i) advertising
or promoting, directly or indirectly, access to or use of any on-line commerce
web site of a PHx Competitor for the procurement of medical, pharmaceutical,
surgical, dietary, dental, or veterinarian supplies or services, whether on-line
or in off-line media, or in any other communication made by or on behalf of
Purchasing Partners or such Affiliate, including, without limitation, e-mail,
links, direct mail, press releases or advertising, (ii) offering, operating
and/or marketing an on-line marketplace for the sale or on-line sales of
medical, pharmaceutical, surgical, dietary, dental, or veterinarian supplies or
services directly to hospitals and health care organizations; (iii) integrating
their information systems with the information systems of any PHx Competitor;
(iv) providing integration services for any Participating Member, Vendor or
Distributor with respect to any PHx Competitor's electronic commerce system; or
(v) providing direct access by PHx Competitors to pricing information through
Purchasing Partners related to Contracted Products and Services. Such agreement
not to promote and the covenants in the preceding sentence are referred to
herein as the "Covenant Not to Promote." "PHx Competitor" means a third party
having a principal business of providing an on-line marketplace for the sale or
on-line sales of medical, pharmaceutical, surgical, dietary, dental, or
veterinarian supplies or services to hospitals and health care organizations,
but excluding: (i) Provider Select (provided that Provider Select does not sell
or allow the sale of products, supplies or services for use by an acute care
facility); and (ii) Distributors and Vendors with which Purchasing Partners has
or will enter into a formal agreement in the ordinary course of business
(provided Purchasing Partners shall refrain from promoting any electronic
commerce capabilities of such Distributors or Vendors to the extent such
capabilities are competitive with the PHx e-Commerce System). Upon the
expiration of the Covenant Not to Promote (or earlier waiver thereof by PHx in
accordance with Section 12.4 below), Purchasing Partners shall have the right to
promote to Participating Members up to two (2) additional providers of
electronic commerce solutions for medical, pharmaceutical, surgical, dietary,
dental, or veterinarian supplies or services (in addition to PHx).
7.2 REVIEW OF PHx SERVICES. Within [***] prior to the end of the [***],
Purchasing Partners shall conduct a review of PHx's provision of the Services to
determine if PHx is meeting the standards set forth in Exhibit F hereto.
Notwithstanding Section 7.1 above, in the event Purchasing Partners reasonably
determines that PHx has failed to meet one or more of such standards, Purchasing
Partners shall provide PHx written notice thereof not later than [***] prior to
the end of the [***], as the case may be, and the Covenant Not to Promote shall
expire effective as of the last day of the [***], as the case may be.
7.3 PHx AGREEMENT NOT TO ENTER INTO STANDARD GROUP PURCHASING
AGREEMENTS. Throughout the term of this Agreement, PHx agrees that it will
refrain from entering into any Standard Group Purchasing Agreements. Breach of
this Section 7.3 shall be deemed a material breach of this Agreement.
* Confidential Treatment Requested
16
7.4 AUCTIONS OF CONTRACTED PRODUCTS AND SERVICES. PHx shall provide
Purchasing Partners reasonable advance notice of any auction accessible to
Participating Members relating to Contracted Products and Services. Further,
prior to commencing any auction accessible to Participating Members with respect
to any Contracted Products and Services which are also included in the
Commitment Program (other than used equipment), PHx shall obtain Purchasing
Partners' consent to allow access by Participating Members to such auction,
which shall not be unreasonably withheld. Such consent shall be deemed to have
been given in the event Purchasing Partners fails to respond to a PHx request
for consent within one (1) business day after Purchasing Partners' receipt of
such request.
7.5 PERFORMANCE OF INFORMATION TECHNOLOGY OUTSOURCING SERVICES BY PHx;
RIGHT OF FIRST OPPORTUNITY. During the period of time that the Covenant Not to
Promote remains in effect, PHx shall refrain from performing any information
technology outsourcing services except for services that are related to
Materials Management Systems, capital equipment asset management systems and
related electronic commerce solutions. Purchasing Partners shall have the right
of first opportunity to provide (or arrange for the provision through Premier)
any supply chain consulting services requested by a Participating Member. Prior
to performing any such supply chain consulting services itself or directing a
Participating Member to a provider of such services other than Purchasing
Partners or Premier, PHx shall first provide Purchasing Partners with written
notice of any request for such services received from a Participating Member.
Thereafter, Purchasing Partners or Premier shall have sixty (60) days in which
to finalize a contract for the provision of such services. If a contract is not
finalized within such time or the Participating Member, Purchasing Partners or
Premier otherwise elects not to pursue such a contract, PHx shall have the right
to perform the supply chain consulting services on its own or refer the
applicable Participating Member to another provider of such services. In the
event Purchasing Partners elects to engage the services of a third party
consultant or consulting firm other than Premier or an Affiliate (as defined in
Section 7.1) to provide supply chain consulting services to any Participating
Member, then PHx shall have a right of first opportunity to offer and provide
such services. Upon any such election to engage the consulting services of a
third party other than Premier or an Affiliate, Purchasing Partners shall
provide to PHx in writing all of the relevant terms related to the provision of
such services, including the performance requirements and proposed timeframe for
delivery of, and compensation for, such services. PHx shall have the right for
five (5) business days from the date of receipt of such notice to propose terms
for its provision of such services, including staffing, costs and timeframe for
delivery of the services. Purchasing Partners shall in good faith consider PHx's
proposal and confer with PHx regarding its consideration of the proposal.
Purchasing Partners' determination of whether to accept such proposal shall be
based upon commercially reasonable factors, including, without limitation, the
relevant capabilities and level of expertise of PHx's staff. If Purchasing
Partners elects not to accept PHx's proposal, it shall notify PHx of its
determination and provide a summary of its rationale for its determination.
Thereafter, Purchasing Partners shall be free to engage the services of a third
party consultant.
7.6 OWNERSHIP OF DATA. Purchasing Partners shall be the exclusive owner
of all pricing data related to Contracted Products and Services. All purchasing
transaction data (other than pricing data related to Contracted Products and
Services) generated by Participating Members through the use of the PHx
e-Commerce System shall be co-owned by PHx and Purchasing Partners. Each party
may freely use and disclose any information (both individual and aggregated,
17
but, in the case of PHx, excluding pricing information related to Contracted
Products and Services) it collects in connection with its performance under this
Agreement, except that use and disclosure of a party's Confidential Information
shall be governed by Section 11 of this Agreement.
7.7 COMPLIANCE WITH APPLICABLE LAWS. PHx and Purchasing Partners
represent, warrant and covenant that throughout the term of this Agreement and
any extension hereof, each shall be and shall remain in compliance with all
applicable federal, state and local laws and regulations, including without
limitation all applicable "safe harbor" regulations relating to Group Purchasing
Organizations and fees, discounts and incentives paid and/or granted to Group
Purchasing Organizations. PHx and Purchasing Partners each represent and warrant
to the other that as of the date of this Agreement, it has not: (i) been listed
by any federal or state agency as excluded, debarred, suspended or otherwise
ineligible to participate in federal and/or state programs; or (ii) been
convicted of any crime relating to any federal and/or state program. Each party
further agrees to immediately notify the other party in writing in the event the
notifying party is listed by a federal or state agency as excluded, debarred,
suspended or otherwise ineligible to participate in any federal and/or state
programs or if the notifying party is convicted of any crime relating to any
such program.
7.8 PURCHASING PARTNERS CO-BRANDED URL OPTION. Subject to the provisions
of this Agreement, Purchasing Partners shall have the option and the right, upon
reasonable written notice to PHx (the "New Site Notice), to create a new
co-branded PHx/Purchasing Partners Internet web site at a URL to be selected,
owned and controlled by Purchasing Partners, having the attributes set forth in,
and for the purposes of offering services as specified in, this Section 7.8 (the
"New Site").
a. DEVELOPMENT AND CREATION OF THE NEW SITE. In the event
Purchasing Partners exercises its right under this Section 7.8 above, the
parties agree that within sixty (60) days following the receipt by PHx of the
New Site Notice, the parties will use commercially reasonable efforts to
complete a plan for the development, creation, and implementation of the New
Site subject to the following requirements: (i) all of the intellectual property
related to the New Site will be owned and controlled by Purchasing Partners
(except for information contained in the PHx Frame, which shall be governed by
other sections of this Agreement including without limitation Section 7.6); (ii)
except as set forth in Section 7.8(b)(2) below, the New Site will be created and
hosted by Purchasing Partners on its servers or the servers of its affiliates or
contractors; (iii) the New Site will be accessible to Participating Members
directly or through links from other sites owned or operated by, or for the
benefit of, Purchasing Partners, Participating Members, Vendors, Distributors,
affiliates of Purchasing Partners, or other entities under contract with
Purchasing Partners, provided that PHx shall establish and maintain on the
"Buyer's Center" page of the PHx website a prominently placed link to the New
Site which shall be designed to be visible on a standard computer screen set to
a resolution of 800 pixels by 600 pixels without requiring the user to scroll
horizontally or vertically through the web page and shall be in a size and form
reasonably agreed upon by the parties (provided that such link will not
reference or link directly to the website of Provider Select); (iv) the New Site
will be primarily identified and branded as a Purchasing Partners and/or Premier
site but the PHx Frame (as defined in Section 7.8(b)(2) below) will have
prominent reference to the relationship to PHx described in this Agreement
(e.g., "Powered by PHx") in a location and size and style to be mutually agreed
upon between the parties.
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b. SCOPE OF THE NEW SITE; RESTRICTIONS.
(1) Subject to Purchasing Partners' obligations under this
Agreement, including, without limitation, the Covenant Not to Promote,
Purchasing Partners will be entitled to provide through the New Site content to
its users including, for example, content related to quality, clinical, safety,
and other informational offerings of Purchasing Partners or others, data
products and data product offerings, and supply chain consulting, IT consulting
and other consulting services and information.
(2) The New Site will include a prominently placed link to
the PHx e-Commerce System to be hosted on the New Site and served within a frame
(the "PHx Frame"). Purchasing Partners will not offer or provide any links to
any other electronic commerce services providers that are PHx Competitors (as
defined in Section 7.1). All users of the New Site that utilize the PHx
e-Commerce System shall be deemed to be Participating Members for purposes of
Sections 6.1, 6.2 and 6.6 of this Agreement.
(3) Other than transaction information relating to
electronic commerce transactions (the rights of which are governed under Section
7.6 of this Agreement), Purchasing Partners shall own all data collected at the
New Site, provided that PHx may use such data to the extent necessary to provide
the Services and facilitate usage by Participating Members.
(4) The parties shall enter into a license agreement
containing customary mutually acceptable terms with respect to any intellectual
property, including without limitation, any object code, that is necessary or
desired to be used in connection with the development and operation of the New
Site.
c. DEVELOPMENT COSTS. Each of Purchasing Partners and PHx shall
bear its own costs related to the development of the New Site. Notwithstanding
the foregoing, Purchasing Partners' election to exercise the option for the
creation of the New Site described in this Section 7.8 and the parties'
obligations and rights under this Section 7.8(c) are not intended to impact the
obligations and/or financial responsibilities of either party as set forth in
Articles 3 and 4 of this Agreement.
8.0 INSURANCE AND INDEMNIFICATION.
8.1 INSURANCE. Each party shall maintain adequate general public
liability, property damage and workers compensation insurance against any claim
or claims which might or could arise as a result of this Agreement. When
requested by either party, an insurance certificate indicating the foregoing
coverage, issued by an insurance company licensed to do business in the relevant
state or states and signed by an authorized agent, shall be furnished by the
other party to the requesting party. Each party shall provide the other with at
least thirty (30) days prior written notice of any cancellation or material
modification of such insurance.
8.2 INDEMNIFICATION. Subject to Section 8.3 below, each party hereby
agrees to indemnify, defend and hold harmless the other party and the other
party's respective directors, officers, managers, employees, partners,
affiliates and agents from and against any and all claims, demands, actions,
losses, expenses, damages, liabilities, costs (including, without limitation,
interest,
19
penalties and reasonable attorneys' fees) and judgments arising out of the
negligent acts or omissions of the indemnifying party and its employees and
agents acting under its control or supervision. Purchasing Partners hereby
agrees to indemnify, defend and hold harmless PHx and PHx's directors, officers,
managers, employees, partners, affiliates and agents from and against any and
all claims, demands, actions, losses, expenses, damages, liabilities, costs
(including, without limitation, interest, penalties and reasonable attorneys'
fees) and judgments arising out of the application of laws or regulations to PHx
to the extent relating to the business of Purchasing Partners and except to the
extent arising out of PHx's negligence or willful misconduct. PHx hereby agrees
to indemnify, defend and hold harmless Purchasing Partners and Purchasing
Partners' directors, officers, managers, employees, partners, affiliates and
agents from and against any and all claims, demands, actions, losses, expenses,
damages, liabilities, costs (including, without limitation, interest, penalties
and reasonable attorneys' fees) and judgments arising out of the application of
laws or regulations to Purchasing Partners to the extent relating to the
business of PHx and except to the extent arising out of Purchasing Partners'
negligence or willful misconduct.
8.3 LIMITATION OF LIABILITY. PHx HEREBY DISCLAIMS AND EXCLUDES ALL
WARRANTIES OF ANY KIND (EXCEPT FOR THE WARRANTIES CONTAINED IN SECTIONS 7.7 AND
12.16), EXPRESS OR IMPLIED (WHETHER ARISING UNDER LAW OR EQUITY OR CUSTOM OR
USAGE), INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, AND PURCHASING PARTNERS HEREBY EXPRESSLY
WAIVES RELIANCE UPON ANY SUCH WARRANTIES. PHx MAKES NO WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE DATA ACCESSED OR GENERATED BY THE PHx e-COMMERCE
SYSTEM, OR THE SUITABILITY OR COMPATIBILITY OF THE PHx e-COMMERCE SYSTEM WITH
THE HARDWARE OR OTHER SOFTWARE OF PURCHASING PARTNERS, PARTICIPATING MEMBERS,
VENDORS OR DISTRIBUTORS.
IN NO EVENT SHALL EITHER PARTY BE LIABLE IN CONTRACT (INCLUDING
BREACH OF WARRANTY), TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR OTHERWISE
TO THE OTHER PARTY, PARTICIPATING MEMBERS, VENDORS OR DISTRIBUTORS FOR ANY LOST,
DELAYED OR DIMINISHED PROFITS, REVENUES OR OPPORTUNITIES, LOST DATA OR
APPLICATION SOFTWARE, DOWNTIME OR ANY INCIDENTAL, SPECIAL, PUNITIVE, INDIRECT OR
CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER ARISING OUT OF OR RELATED
TO THIS AGREEMENT.
NEITHER PARTY SHALL BE LIABLE FOR ANY FAILURE TO PERFORM WHICH IS DUE TO
CAUSES BEYOND ITS REASONABLE CONTROL, INCLUDING WITHOUT LIMITATION FORCE MAJEURE
EVENTS AS DEFINED IN SECTION 12.10. PHx'S MAXIMUM LIABILITY ON ANY CLAIM ARISING
OUT OF THIS AGREEMENT SHALL IN NO EVENT EXCEED THE EQUIVALENT OF THE SUM OF THE
TRANSACTION PROCESSING FEE AND ROYALTY AND MAINTENANCE FEE PAID HEREUNDER FOR
THE CALENDAR YEAR ENDING IMMEDIATELY PRIOR TO THE DATE OF THE CLAIM.
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9.0 TERMINATION.
9.1 TERMINATION FOR BREACH. In the event of a breach of a material
provision of this Agreement, the non-breaching party shall give the other party
written notice of such breach and such other party shall have a period of ninety
(90) days in which to cure the breach. In the event the breaching party fails to
cure the breach within the cure period, in addition to whatever other remedies
may be available at law or equity, the non-breaching party shall have the right
to terminate this Agreement upon providing the other party written notice of
termination. Notwithstanding the foregoing, however, the 90-day cure period
described above shall not apply and Purchasing Partners may terminate this
Agreement upon providing at least ten (10) days prior written notice to PHx in
the event of a Substantial Breach as defined in Sections 9.3(b)(2) or 9.3(b)(3)
below.
9.2 INSOLVENCY. If either party becomes or is declared insolvent,
becomes subject to a voluntary or involuntary bankruptcy or similar proceeding,
or makes an assignment for the benefit of all or substantially of all of its
creditors (all such events are referred to herein as "Bankruptcy Events"), then
in such event the other party to this Agreement may terminate this Agreement
immediately upon providing written notice of termination to the other party.
9.3 RIGHTS UPON TERMINATION.
a. TRANSITION ISSUES.
In the event Purchasing Partners terminates this Agreement
pursuant to Sections 9.1 or 9.2 above as a result of an uncured Substantial
Breach (as defined below) by PHx, Purchasing Partners and Participating Members
shall be deemed to have a fully paid license to continue their use of the PHx
e-Commerce System for a period of time equal to [***]. Such license
shall be non-assignable and non-sublicenseable and shall be limited to the right
to use the PHx e-Commerce System to support the reasonable electronic commerce
requirements of Participating Members with at least the same level of
connectivity by and among Participating Members, Vendors and Distributors that
existed immediately prior to the effective date of termination. Further, in the
event of any such termination by Purchasing Partners: (i) PHx shall provide at
no charge transition and maintenance support of the PHx e-Commerce System for a
period of [***] from the date of termination; and (ii) Purchasing
Partners shall be deemed to have a fully paid, perpetual, non-assignable,
non-sublicenseable license to use the PHx database of purchasing activity
information relating to Participating Members existing as of the date of
termination for the limited purpose of supporting Participating Members'
reasonable electronic commerce requirements. In no event shall Purchasing
Partners use the licenses described in this Section 9.3 in a manner other than
is necessary to support the reasonable electronic commerce requirements of
Participating Members and Purchasing Partners may not use any aspect of the PHx
e-Commerce System to provide services to any person that is not a Participating
Member or a Vendor or Distributor (provided, however, that any such services to
a Vendor or Distributor must relate solely to Participating Members). This
Section 9.3 shall survive the termination of this Agreement.
* Confidential Treatment Requested
21
b. SUBSTANTIAL BREACH. A "Substantial Breach" shall only be
deemed to occur if:
(1) At any time following the first anniversary of the
Effective Date, PHx shall have failed to integrate more than [***] of the OLM
Facilities as required under the OLM Facilities Integration Plan;
(2) The PHx e-Commerce System becomes unavailable to
Participating Members generally for any single period of [***] other than as a
result of hacker attacks, natural disasters, war, or other events outside of
PHx's control;
(3) The PHx e-Commerce System becomes unavailable to
Participating Members generally for a total of [***] not including reasonable
scheduled downtime for maintenance and repair (which in no event shall occur
during the hours of 7 AM through 12:01 AM EST), and other than as a result of
hacker attacks, natural disasters, war, or other events outside of PHx's
control; or
(4) PHx becomes subject to, or takes any action
constituting a Bankruptcy Event.
10.0 TRADEMARKS. Each party hereby grants to the other party a non-exclusive,
non-sublicenseable, worldwide license to use the party's trademarks and logos
only as necessary to perform in accordance with the Agreement. The trademark
owner may terminate the foregoing trademark license if, in its reasonable
discretion, the licensee's use of the marks tarnishes, blurs or dilutes the
quality associated with the trademark or the associated goodwill and such
problem is not cured within 10 days of notice of breach; alternatively, instead
of terminating the license in total, the owner may specify that certain licensee
uses may not contain such trademarks. Title to and ownership of the owner's
trademarks will remain with the trademark owner. The licensee will use the
owner's trademarks exactly in the form provided and in conformance with any
trademark usage policies. The licensee will not take any action inconsistent
with the owner's ownership of its trademarks, and any benefits accruing from use
of such trademarks will automatically vest in the trademark owner. The licensee
will not form any combination marks with the other party's trademarks.
11.0 CONFIDENTIALITY.
11.1 CONFIDENTIAL INFORMATION. For the purposes of this Agreement,
confidential information ("Confidential Information") shall mean all
proprietary, secret or confidential information, manuals, systems, processes or
data relating to PHx , Purchasing Partners and Participating Members and their
respective operations, employees, services, patients or customers, including
without limitation any trade secret as defined in Section 3426.1 of the
California Civil Code.
11.2 PROTECTION OF CONFIDENTIAL INFORMATION. PHx and Purchasing Partners
acknowledge that Purchasing Partners and PHx may disclose Confidential
Information to each other in connection with this Agreement. If Purchasing
Partners and/or PHx receives Confidential Information, it shall: (a) maintain
the Confidential Information in strict confidence; (b) use at least the same
degree of care in maintaining the secrecy of the Confidential Information
* Confidential Treatment Requested
22
as it uses in maintaining the secrecy of its own proprietary, secret, or
confidential information, but in no event less than a reasonable degree of care;
(c) use Confidential Information only to fulfill its obligations under this
Agreement; and (d) return or destroy all documents, copies, notes, or other
materials containing any portion of the Confidential Information upon request by
PHx or Purchasing Partners and upon termination or expiration of this Agreement.
The receiving party shall not disclose any portion of the Confidential
Information to any person except those of its employees and affiliates having a
need to know such portion to accomplish the purposes contemplated by this
Agreement.
11.3 AGREEMENT CONFIDENTIALITY. Except as required by law (including
disclosures necessary or appropriate in filings with the Securities Exchange
Commission or any other governmental body) or generally accepted accounting
principles, and except to assert its rights hereunder or for disclosures on a
"need-to-know" basis to its own officers, directors, employees and professional
advisers, neither PHx nor Purchasing Partners, nor any of their Affiliates,
shall disclose the terms of this Agreement to any other person or entity without
the prior written approval of the other party. Neither party shall make any
public announcement concerning the existence of this Agreement or its terms
unless such disclosure is required by applicable law or such party receives
prior written approval by the other party. Each party consents to the filing of
this Agreement with the U.S. Securities and Exchange Commission by the other
party and to reference such party's name and a description of this Agreement in
any such filings. In connection with any public disclosure or filing with any
governmental agency, including the Securities and Exchange Commission, each
party agrees to seek confidential treatment of certain agreed upon terms and
conditions of this Agreement. In addition, any description of this Agreement, or
any redacted version of this Agreement, intended to be filed or attached to any
publicly filed document by a party shall be submitted to the other party for
review and input prior to filing.
11.4 LIMITATION ON OBLIGATION. PHx and Purchasing Partners shall have no
obligation concerning any portion of the Confidential Information which: (a) was
known to it before receipt, directly or indirectly, from the disclosing party;
(b) is lawfully obtained, directly or indirectly, by it from a non-party which
was under no obligation of confidentiality; (c) is or becomes publicly available
other than as a result of an act or failure to act by the receiving party; (d)
is required to be disclosed by the receiving party by applicable law or legal
process; or (e) is developed by the receiving party independent of the
Confidential Information disclosed by the disclosing party.
12.0 MISCELLANEOUS.
12.1 GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the state of California.
12.2 MODIFICATION AND WAIVER. No modification of this Agreement shall be
deemed effective unless in writing and signed by each of the Parties hereto. Any
waiver of a breach of any provision(s) of this Agreement shall not be deemed
effective unless in writing and signed by the party against whom enforcement of
the waiver is sought.
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12.3 HEADINGS. The descriptive headings of the sections of this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any provision hereof.
12.4 ASSIGNMENT. Neither party may assign, subcontract, delegate or
otherwise transfer this Agreement or any of its rights or obligations hereunder,
nor may it contract with third parties to perform any of its obligations
hereunder except as contemplated in this Agreement, without the other party's
prior written consent; provided, however, that either party may assign this
Agreement to its parent entity provided that such assignment shall not release
the assigning party from its obligations hereunder. Without limiting the
foregoing, during the period of time that the Covenant Not to Promote is in
effect, the following shall be deemed to be an assignment for purposes of this
section and shall require advance written approval by the non-assigning party in
order for this Agreement to remain in effect: the assignment by way of merger,
consolidation, reorganization or Change in Control (as defined below) or the
acquisition of substantially all of the business and assets of a party relating
to this Agreement. Upon the expiration of the Covenant Not to Promote or in the
event PHx elects to permanently waive in writing the effectiveness of the
Covenant Not to Promote (which thereafter shall be of no further force or
effect), the following shall be deemed to be an assignment for purposes of this
section and shall require advance written approval of the non-assigning party in
order for this Agreement to remain in effect: the assignment by way of merger,
consolidation, reorganization or Change in Control or the acquisition of
substantially all of the business and assets of the party relating to this
Agreement by a Competitor of the other party. If Purchasing Partners is the
assigning party, "Competitor" for purposes of this Section 12.4 shall mean a PHx
Competitor as defined in Section 7.1. If PHx is the assigning party,
"Competitor" for purposes of this Section 12.4 shall mean: (i) any entity which
enters into agreements with suppliers of products and/or services to make such
products and/or services available for purchase by a designated group of
purchasers that exists for the purposes of negotiating pricing and/or other
terms and conditions; and/or (ii) any entity or person which owns, leases,
manages or operates, or is owned by, controls or is under common control with an
entity which owns, leases, manages or operates hospitals and/or other health
care providers. For purposes of this Section 12.4, "Change in Control" of an
entity shall mean a merger or consolidation (other than with a subsidiary of
such entity) in which such entity is not the surviving entity, or the sale of
substantially all the assets of such entity, or a sale or other transaction or
series of related transactions in which more than forty percent (40%) of the
outstanding common stock or general voting securities (other than the sale of
securities in any public offering) of such entity (or the common stock or
general voting securities of the new parent entity of such entity) immediately
after such sale or other transaction or series of related transactions is not
owned by the persons or entities who, immediately prior to such sale or other
transaction or series of related transactions, owned more than forty percent
(40%) of the common stock or general voting securities of such entity.
12.5 SEVERABILITY. If any part of this Agreement shall be determined to
be invalid, illegal or unenforceable by any valid Act of Congress or act of any
legislature or by any regulation duly promulgated by the United States or a
state acting in accordance with the law, or declared null and void by any court
of competent jurisdiction, then such part shall be reformed, if possible, to
conform to the law and, in any event, the remaining parts of this Agreement
shall be fully effective and operative insofar as reasonably possible.
24
12.6 NOTICES. Any notice required to be given pursuant to the terms and
provisions hereof shall be in writing, postage and delivery charges pre-paid,
and shall be sent by telecopier, hand delivery, overnight mail service,
first-class mail or certified mail, return receipt requested, to PHx or
Purchasing Partners at the following addresses:
To PHx: To Purchasing Partners:
Premier Health Exchange, L.L.C. Premier Purchasing Partners, L.P.
12225 El Camino Real 00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000-0000 Xxx Xxxxx, XX 00000-0000
Attention: President Attention: Chief Financial Officer
000.000.0000 Fax: 000.000.0000 000.000.0000 Fax: 000.000.0000
Any party may change the address to which notices are to be sent by notice given
in accordance with the provisions of this section. Notices hereunder shall be
deemed to have been given, and shall be effective upon actual receipt by the
other party, or, if mailed, upon the earlier of the fifth (5th) day after
mailing or actual receipt by the other party.
12.7 INDEPENDENT CONTRACTORS. The parties' relationship hereunder is
that of independent contractors. This Agreement does not create any employment,
agency, franchise, joint venture, partnership or other similar legal
relationship between PHx and Purchasing Partners. Neither party has the
authority to bind or act on behalf of the other party except as otherwise
specifically stated herein.
12.8 ATTORNEYS' FEES. Should any party engage an attorney for the
purpose of enforcing this Agreement or any judgment based hereon in any court,
including bankruptcy court, courts of appeal or arbitration proceedings, the
prevailing party shall be entitled to receive its reasonable attorneys' fees and
costs in addition to any other relief granted.
12.9 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective permitted
successors and permitted assigns.
12.10 FORCE MAJEURE. The obligations of either party to perform under
this Agreement will be excused during each period of delay caused by acts of
God, by shortages of power or materials, by government orders or by other events
which are beyond the reasonable control of the party obligated to perform
("Force Majeure Event"). In the event that either party ceases to perform its
obligations under this Agreement due to the occurrence of a Force Majeure Event,
such party shall: (1) immediately notify the other party in writing of such
Force Majeure Event and its expected duration; (2) take all reasonable steps to
recommence performance of its obligations under this Agreement as soon as
possible. In the event that any Force Majeure Event delays a party's performance
for more than thirty (30) days following notice by such party pursuant to this
Agreement, the other party may terminate this agreement immediately upon written
notice to such party.
12.11 RIGHT TO AUDIT. Each party shall permit the other or its agent to
conduct periodic audits of relevant records relating to the parties' performance
under this Agreement. The audits
25
shall be conducted upon reasonable advance notice during regular business hours
at the applicable party's principal office and in such a manner as not to unduly
interfere with operations. Any such audits shall be conducted at the auditing
party's sole expense.
12.12 ACCESS TO RECORDS. Until the expiration of four (4) years after
the furnishing of any services under this Agreement, PHx shall make available
upon written request of the Secretary of the Department of Health and Human
Services or upon the written request of the Comptroller General or any of their
duly authorized representatives, this Agreement and the books, documents and
records of PHx that are necessary to certify the nature and extent of costs
incurred under this Agreement. This clause shall apply if, and solely to the
extent that Section 1861 (v)(1)(I) of the Social Security Act applies to this
Agreement.
12.13 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, constitutes the entire understanding and agreement between
Purchasing Partners and PHx concerning the subject matter hereof, and supersedes
all prior negotiations, agreements and understandings between Purchasing
Partners and PHx, whether oral or in writing, concerning the subject matter
hereof.
12.14 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same agreement.
12.15 CONTROLLING DOCUMENT. In the event of any conflict between this
Agreement and any document, instrument or agreement prepared by either party
(including without limitation, the Terms of Use, the Privacy Policy or any
agreement between PHx and a Participating Member), the terms of this Agreement
shall control.
12.16 YEAR 2000 COMPLIANCE. PHx and Purchasing Partners each represent
and warrant that any software and hardware included in their respective
information systems (and with respect to PHx, the PHx e-Commerce System) shall
operate properly prior to, during and after the year 2000 and shall not cause
any business interruptions or response time delays (i.e., such software and
hardware is "Year 2000 Compliant"). In this regard, the parties agrees that such
software and hardware shall contain, at a minimum: (i) date formats that have
century recognition; (ii) calculations that accommodate same-century and multi
century formulas and date values; (iii) date interface values that reflect the
century; and (iv) calculations that accommodate the occurrence of leap years.
Upon any party's request, the other party agrees to provide reasonable
documentation demonstrating that its systems are Year 2000 Compliant.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties' authorized representatives have
executed this Agreement effective as of the Effective Date.
Purchasing Partners: PHx:
Premier Purchasing Partners, L.P. Premier Health Exchange, L.L.C.
By: Premier Plans, L.L.C.
Its General Partner
By: /s/ XXXX XXXXXX By: /s/ XXXXX XXXXXXXXX
----------------------------- -----------------------------
Printed Name: Xxxx X. Xxxxxx Printed Name: Xxxxx Xxxxxxxxx
----------------------------- ------------------
Title: Treasurer Title: President
----------------------------- ------------------
Solely for purposes of acknowledging that it is bound by certain obligations
under Section 7.1 hereof.
Premier
Premier, Inc.
By: /s/ XXXXXXX XXXXXXX
--------------------------
Printed Name: Xxxxxxx X. Xxxxxxx
--------------------------
Title: Chief Executive Officer
--------------------------
