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EXHIBIT 10.17
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
AMERINET, INC.
GROUP PURCHASING AGREEMENT
Between
AMERINET, INC.
And
SPECIALTY LABORATORIES
("Supplier")
This Group Purchasing Agreement (the "Agreement") is entered into
effective as of the date set forth on the signature page hereof,
between AmeriNet, Inc. ("AmeriNet"), and the Supplier named above
("Supplier").
WHEREAS, AmeriNet is a Delaware corporation, representing the member
Institutions served by its Shareholders (which member institutions are
hereinafter referred to as the "Institutions" or Participating
Institutions"); and
WHEREAS, AmeriNet's Shareholders are Hospital Shared Services,
Warrendale, PA; Intermountain Health Care1 Inc., Salt Lake City, UT;
and Vector Healthsystems, Providence, RI. Supplier acknowledges that
any Institution meeting the membership requirements of those
Shareholders shall be eligible for AmeriNet programs and pricing, and
shall be entitled to place purchase orders under the terms of this
Agreement for the duration of this Agreement; and
WHEREAS, AmeriNet heretofore delivered its Request for Proposal to
Supplier, and Supplier has agreed to the terms of the Request for
Proposal and this Agreement; and
WHEREAS, the philosophy of AmeriNet is to secure Agreements with
suppliers that provide to the Participating Institutions products and
services which are of optimum quality, at appropriate pricing and with
appropriate service.
NOW, THEREFORE, Supplier and AmeriNet agree as follows:
1. The term of this Agreement is for a term of THIRTY-SIX (36) months,
commencing on SEPTEMBER 1, 1998, and ending on AUGUST 31, 2001 (the
"Contract Period").
RESPONSE: AGREED. PLEASE SEE SPECIALTY'S "CONTRACT TERMS AND
RESTRICTIONS".
2. Execution of this Agreement shall be construed as a guarantee by the
Supplier of its ability to supply any products included within this
Agreement to all Participating Institutions for the duration of the
Agreement. Should the Supplier fail to make any delivery within
customary time periods, and should such failure cause any Institution
to
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purchase in the open market in order to obtain items not delivered,
then the Supplier shall provide reimbursement to said Institution for
the difference between contract costs and excess costs occasioned by
such open-market purchases. Multiple delinquencies in delivery by the
Supplier may be construed as the Supplier's inability to meet the
reasonable requirements of AmeriNet's Institutions, and shall
constitute a material breach of contract sufficient to cause
cancellation of the Agreement by AmeriNet. Such cancellation shall not
relieve the Supplier of any liability for damages resulting.
RESPONSE: SPECIALTY GUARANTEES THE ABILITY TO PERFORM SERVICES
INCLUDED WITHIN THIS AGREEMENT. SPECIALTY SHALL NOT
BE LIABLE FOR ANY FAILURE TO DELIVER ITS DUTIES UNDER
THIS AGREEMENT DUE TO ACTS OF GOD; ACTS, REGULATIONS
OR LAWS OF ANY GOVERNMENT; WAR OR ANY OTHER CONDITION
OR CAUSE BEYOND REASONABLE CONTROL.
3. If in AmeriNet's sole judgment, the Supplier is unable to supply
Institutions' reasonable requirements for the duration of this
agreement, AmeriNet reserves the right at any time, or from time to
time, to select an alternate or additional supplier in order to
supplant or supplement Supplier.
RESPONSE: AGREED.
4. If in AmeriNet's sole judgment, Supplier does not maintain adequate
equipment, inventory or personnel to properly service Institutions'
requirements, then this Agreement shall be subject to cancellation by
AmeriNet upon thirty (30) days written notice.
RESPONSE: AGREED.
5. AmeriNet reserves the right to terminate this Agreement on twenty-four
(24) hours notice in the event Supplier files for bankruptcy, for
reorganization or for protection from its creditors under federal law
or the laws of any state or nation. AmeriNet further reserves the right
to cancel this Agreement on twenty-four (24) hours notice in situations
where the Supplier transfers assets in fraud of its creditors and in
situations where AmeriNet, in its sole discretion, believes that the
Supplier is financially unable to adequately carry out its obligations
under this Agreement.
RESPONSE: AGREED.
6. Attached as Addendum A to this Agreement is a current AmeriNet
membership list. AmeriNet shall further provide the Supplier with any
membership additions or deletions on a routine basis. The Supplier
shall guarantee that all the benefits of this Agreement shall be
granted to all AmeriNet member Institutions, but only to authorized
AmeriNet member Institutions.
RESPONSE: AGREED.
7. The Supplier, upon receipt from AmeriNet of membership deletions, shall
immediately make those deleted Institutions ineligible for contract
benefits, and will charge those
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deleted Institutions pricing consistent with lesser volume purchases
than those represented by the Group (AmeriNet).
RESPONSE: AGREED.
8. Should the Supplier distribute its products directly to Institutions,
rather than through dealers, each Institution shall place its purchase
orders directly with the Supplier. It will be the Supplier's
responsibility to obtain payment from Institutions. All disputes and
controversies concerning any purchase order, invoice, products,
shipments or delivery dates shall be handled by Supplier on a direct
basis with the Institutions. With respect to all products supplied by
Suppliers, title shall pass from the Supplier to the Institution at the
point of delivery, and if any sales tax is due, it shall be Supplier's
sole responsibility to collect and pay such tax. Supplier shall defend,
indemnify and hold harmless AmeriNet against any and all suits, claims
and expenses arising out of any failure to pay sales tax on said
purchased products.
RESPONSE: AGREED.
9. Should the Supplier distribute its products in part or in total through
dealers, Supplier shall agree to allow access to these special terms
and pricing only to those dealers approved by AmeriNet. Furthermore,
Supplier agrees to provide written notification of contract terms and
pricing to AmeriNet authorized dealers at least 30 working days prior
to their effective date. Supplier shall be liable for compensation to
AmeriNet authorized dealers for any and all costs incurred by the
dealer for credit and rebilling, or any cost otherwise incurred by the
dealer as a result of Supplier's failure to comply with this provision.
RESPONSE: AGREED.
10. In accordance with state and federal mandates, Supplier is expected to
furnish to all AmeriNet Institutions, affiliates and participants the
most current Material Safety Data Sheet (MSDS) for any hazardous
substance purchased through this Agreement. Failure to comply with this
stipulation may subject the Agreement to cancellation.
RESPONSE: AGREED.
11. Supplier shall present to Institutions a packing slip or invoice copy
upon delivery of products. Information to be contained on these
documents shall include, but not be limited to: purchase order number,
date of shipment, description of products and quantities shipped.
RESPONSE: AGREED.
12. Supplier shall furnish only those brands specified in this Agreement or
in subsequent contract addenda and shall not be allowed to furnish
alternate or substitute brands to any Institution without receiving the
prior approval of said Institutions.
RESPONSE: AGREED.
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13. All products furnished by Supplier shall be packaged and labeled in
accordance with good manufacturing practices and shall be shipped in
containers that conform to all shipping regulations. No product which
has been repackaged from original containers or which has been
relabeled or which contains any effacement reducing its value shall be
acceptable without the express prior consent of the Institutions.
RESPONSE: AGREED. PLEASE SEE SPECIALTY'S "SHIPPING
INSTRUCTIONS".
14. Supplier shall provide for the reporting of all contract sales, by
Participating Institution, to AmeriNet on a monthly basis unless other
arrangements are specified in this Agreement.
In addition, Supplier shall be required to submit an administrative fee
equal to [***]* of all gross sales realized under this Agreement to
AmeriNet.
Supplier shall include the following information when submitting
administrative fees and contract activity reports:
I. Administrative Fees:
A. Checks are to be made payable to "AmeriNet Inc." And
NOT to a division or person's name.
B. Check stubs must include AmeriNet's contract number
and period for which administrative fees are being
paid, i.e. 1/1/99 - 1/31/99. If a payment is being
made on behalf of Supplier by a parent corporation,
the contract Supplier's name should be identified on
the face of the check stub.
II. Contract Activity Reports:
A. Supplier's name and AmeriNet's contract number should
appear on all reports.
B. Reporting period must be identified, i.e. 1/1/99 -
1/31/99.
C. Total product sales volume (not line item detail)
must be identified for each member Institution, along
with the Institution's name, address and zip code
(Note: Zip code is mandatory information). Each
Institution's HIN number may be substituted for name,
address and zip code.
D. At the end of all reports, total sales volume of all
member Institutions must be included.
E. Reports may be submitted in printed form, but
submission via electronic media such as magnetic tape
or diskette is preferred. Please refer to the
enclosed specification sheet (Addendum C) for
details.
All Supplier reports and administrative fee payments are due at
AmeriNet within 30 days of the close of the reporting period. A
quick-payment discount of 1% of the net
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* PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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AmeriNet payment due will be allowed for all checks and reports
received within fifteen (15) days of the close of the reporting period.
A late payment penalty surcharge of 1-1/2% per month of all net
AmeriNet payments due may be assessed by AmeriNet for all checks and/or
reports received more than thirty (30) days past the close of the
reporting period.
Suppliers more than sixty (60) days past the close of the reporting
period in submission of either checks or reports will be subject to
cancellation of this Agreement by AmeriNet.
RESPONSE: SPECIALTY AGREES TO ALL THE SPECIFICATIONS OF ITEM 14
WITH ONE EXCEPTION, 1) SUPPLIER SHALL BE REQUIRED TO
SUBMIT AN ADMINISTRATIVE FEE EQUAL TO [***]* OF ALL
GROSS SALES REALIZED UNDER THIS AGREEMENT TO
AMERINET, INC.
15. During the term of this Agreement, AmeriNet retains the right to audit
or to have audited Supplier's records, such audits to include but not
be limited to tracking of administrative contract fees, Supplier's
costs and Supplier's freight charges. Should any audit produce evidence
that proper credit for administrative contract fees was not given to
AmeriNet, or overcharges were incurred by Institutions, then Supplier
shall respond to such evidence and cure the default within fifteen (15)
days. Failure to cure shall be sufficient cause for AmeriNet to seek
actual damages.
RESPONSE: AGREED.
16. Upon request by AmeriNet, Supplier shall provide, at no charge,
AmeriNet or its Institutions with representative samples of its
products in quantities which are adequate for purposes of evaluation by
the Institutions.
RESPONSE: AGREED.
17. All risk of damage to or loss of products shall be assumed by Supplier
until deliveries are made to, and accepted by, AmeriNet's Institutions.
RESPONSE: AGREED.
18. Supplier acknowledges the Institution's right to return, without
penalty, cost or delay, excess or unnecessary products for full
original purchase price credit.
RESPONSE: AGREED.
19. In the performance of its duties and obligations under this Agreement,
SUPPLIER shall at all times be in compliance with all applicable
Federal, State and Local laws, regulations and ordinances now in effect
or as hereafter amended or promulgated.
RESPONSE: AGREED.
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* PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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20. All products supplied by Supplier shall be warranted to be free from
defects and imperfections in design, material, and workmanship, to be
merchantable, and if intended for a particular purpose, to be fit for
such purpose.
RESPONSE: AGREED.
21. Upon request of AmeriNet, Supplier shall provide evidence of insurance
for a) Worker's Compensation covering its full liability under the
appropriate states' statutes and b) sufficient comprehensive general
(and professional, if applicable) liability insurance. Supplier shall
keep and maintain the foregoing insurance during the term of the
Agreement. Supplier shall immediately (and no later than fifteen (15)
days prior to the effective date of any change) notify AmeriNet in
writing of any changes in the foregoing insurance, including, but not
limited to, cancellation, material change or change in coverage,
AmeriNet shall have the right to change the Agreement on thirty (30)
days notice in the event of any material change in insurance coverage.
RESPONSE: AGREED. CERTIFICATE OF INSURANCE LIABILITY WILL BE
FORWARDED UPON REQUEST.
22. Supplier shall defend, indemnify and hold harmless AmeriNet, its
Shareholders and Institutions against any and all suits, claims and
expenses (including attorneys' fees) for damage to property or for
injury to or death of persons caused by, or in any way arising out of,
Supplier's furnishing of products, equipment or services thereunder,
except those which result from the negligent act or omission of a
purchasing Institution, its officers, agents or employees.
RESPONSE: EACH PARTY AGREES TO MUTUALLY INDEMNIFY AND HOLD
HARMLESS, THEIR DIRECTORS, OFFICERS, EMPLOYEES, AND
AGENTS FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS,
OR LIABILITIES OF ANY NATURE WHICH MAY BE ASSESSED
AGAINST THEM BY THIRD PARTIES IN CONNECTION WITH THE
PERFORMANCE OF SERVICES UNDER THIS AGREEMENT.
23. Supplier shall defend, indemnify and hold harmless AmeriNet, its
Shareholders and Participating Institutions against any and all suits,
claims and expenses (including attorneys' fees) arising out of the use
or sale of any product thereunder being in violation of any rights
under patent, trademark or copyright laws.
RESPONSE: EACH PARTY AGREES TO MUTUALLY INDEMNIFY AND HOLD
HARMLESS, THEIR DIRECTORS, OFFICERS, EMPLOYEES, AND
AGENTS FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS,
OR LIABILITIES OF ANY NATURE WHICH MAY BE ASSESSED
AGAINST THEM BY THIRD PARTIES IN CONNECTION WITH THE
PERFORMANCE OF SERVICES UNDER THIS AGREEMENT.
24. Supplier shall not assign, transfer, convey, sublet or otherwise
dispose of any of its right title or interest in this Agreement without
the prior written approval of AmeriNet.
RESPONSE: AGREED.
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25. It is hereby understood and agreed that for the term of this Agreement,
the total price paid by any Institution for products or services under
this Agreement shall be [***]*. Supplier furthermore agrees to adjust
the terms and pricing provided under this Agreement to comply with the
terms set forth in this section should any group or entity with [***]*
RESPONSE: AGREED.
26. In the event PRICE INCREASES occur during the term of this Agreement,
which are permitted under the terms of this Agreement, Supplier shall
give AmeriNet at least sixty (60) days prior written notice before
implementing the increases.
RESPONSE: AGREED.
27. Supplier guarantees that it will not persuade or induce any Institution
to terminate its status or relationship with AmeriNet or its
Shareholders by offering more attractive contract prices, terms or
conditions to the Institution directly or to another group purchasing
program. Violation of that guarantee will constitute sufficient cause
for AmeriNet to seek damages from Supplier for loss of all prospective
contract administration fees.
RESPONSE: AGREED.
28. Should Supplier offer to any AmeriNet Institution a price lower than
the contract price, or terms more attractive than the terms stipulated
in this Agreement, then the same offer shall be considered to have been
made to AmeriNet, and if accepted, will constitute an amendment to this
Agreement.
RESPONSE: AGREED.
29. Upon the release of new products, Supplier agrees to add such products
to the Agreement within thirty (30) days, subject to AmeriNet's
approval.
RESPONSE: AGREED.
30. It is understood that new clinical developments in patient care or new
regulatory agency restrictions may result in changed conditions, and if
in AmeriNet's sole discretion, this Agreement or Supplier's products do
not adequately meet such conditions, AmeriNet shall have the option to
pursue alternate or additional contracts.
RESPONSE: AGREED.
31. This Agreement shall be signed by a duly authorized representative or
agent of Supplier, such signature to constitute proof of that person's
authority to bind the Supplier.
RESPONSE: AGREED.
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* PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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32. Supplier represents that it prepared its proposal to AmeriNet without
any collusion whatsoever among or between any other potential or actual
contractors of AmeriNet.
RESPONSE: AGREED.
33. In that many AmeriNet member facilities are providers under the federal
Medicare programs, the provisions of Section 952 of the Omnibus
Reconciliation Act of 1980 {42 U.S.C. Section 1395X(V0(1)} (the "Act")
may be in force. Supplier hereby agrees to abide by the terms of the
Act and its interpretative regulations including, but not limited to,
maintenance of records concerning services and cost incurred under said
Agreement for four (4) years, and obtaining such a written contractual
commitment from any of the Supplier's subcontractors.
RESPONSE: AGREED.
34. The attached "AmeriNet Proposal Data Sheet" (Addendum B) must be
completed and attached to this Agreement, and shall be a part of this
Agreement, binding on Supplier.
RESPONSE: AGREED.
35. The enclosed addendum's referenced as:
A. AmeriNet ValuLab Membership List
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B. Proposal Data Sheet
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C. Supplier Contract Reporting
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D. Supplier Proposal dated:
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37. This document, along with the AmeriNet Request For Proposal, and the
Addendums B and C (Parts A&B) attached, and the Supplier Proposal when
properly executed by authorized parties of AmeriNet and the Supplier,
will constitute the full complete Agreement between the parties as to
the terms outlined herein.
RESPONSE: AGREED.
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I have read and understand AmeriNet's general terms and conditions and any
special terms and conditions contained herein, and agree to supply the products
and services for which prices are proposed in accordance with all provisions,
terms and conditions stated herein.
AGREEMENT ACCEPTED BY:
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SUPPLIER NAME: Specialty Laboratories
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ADDRESS: 2211 Michigan Avenue
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Santa Monica, California 90404-3900
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AUTHORIZED REPRESENTATIVE:
SIGNED: /s/ Gary Nay
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NAME (print): Gary Nay
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TITLE: Contract Administration Supervisor
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DATE: June 19, 1998
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AGREEMENT ACCEPTED BY:
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NAME: AmeriNet, Inc,
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ADDRESS: 2060 Craigshire Road
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P.O. Box 46930
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St. Louis, MO 63146
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AUTHORIZED REPRESENTATIVE:
SIGNED: /s/ Mary Kay Pace
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NAME (print): Mary Kay Pace
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TITLE: Director of Operations
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DATE: July 15, 1998
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AMERINET SHAREHOLDERS:
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Hospital Shared Services Intermountain Health Care Vector Healthsystems
