Document:

Exhibit 10.1

 

 

PARTICIPATION AGREEMENT

 

Healthtrust Purchasing Group

 

 

	
  Member Name:

  	
  Community Health Systems
  Professional Services Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  Effective
  Date:

  	
  January 1,
  2005

  	
   

  

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Purchase
  of Products and Services; Facilities

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Term

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  HPG’s
  Responsibilities

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Representations,
  Warranties and Covenants of Participant

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  GPO Fees
  and Rebates

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Access to Books and Records

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Attorneys’ Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Force Majeure

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Entire Agreement; Amendment

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  No Third-Party
  Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Consent
  to Jurisdiction

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Waiver
  of Jury Trial

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Rights
  Cumulative; Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Audit Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  Data

  	
   

  
	
   

  	
   

  	
   

  

 

 

HPG PARTICIPATION AGREEMENT

 

This
Participation Agreement (this “Agreement”) is entered into as of January 1,
2005 (the “Effective Date”) by and between Community Health Systems Professional
Services Corporation, a Delaware
corporation (“Participant”), with its principal place of business located 155
Franklin Road, Suite 400, Brentwood, TN 37027, and HealthTrust
Purchasing Group, L. P., a Delaware limited
partnership (“HPG”), with its principal place of business located at 104
Continental Place, Suite 300, Brentwood, Tennessee 37027, for the purposes of
permitting Participant and its facilities to obtain certain products and
services under Vendor Contracts between HPG and Vendors (including agreements
between Vendors and third parties which have agreed that Participants in HPG
may purchase under such Vendor agreements).

 

WITNESSETH:

 

WHEREAS, HPG is a “group purchasing organization” that is structured to comply
with the requirements of the “safe harbor” regulations regarding payments to
group purchasing organizations set forth in 42 C.F.R. §1001.952(j) and that
maintains agreements with vendors for purchasing on a national basis various
products, supplies, materials, dietary products, equipment and services used by
hospitals and other healthcare facilities as part of a group purchasing
program; and,

 

WHEREAS, Participant desires to participate in such group purchasing program,
and to purchase certain products and services under such agreements in
accordance with the terms and conditions thereof (subject, however, to those
limitations imposed on Participant under its existing vendor agreements and to
technological limitations related to Participant’s equipment and operations,
all of which are set forth on Exhibit A hereto);

 

WHEREAS, as a result of a contractual relationship between HPG and Purchasing
Alliance for Clinical Therapeutics, L.L.C. (“PACT”), a group purchasing
organization as hereinafter defined, Participant may have the opportunity to be
a participant under the agreements PACT maintains with vendors for purchasing
on a national basis various pharmaceutical and dietary products used by
hospitals and other healthcare facilities as part of a group purchasing
program;

 

NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:

 

1.                                      Definitions.

 

As used herein, the
following terms have the following meanings:

 

(a)                                  “Affiliate” means, with respect
to a specified person or entity, any person or entity that directly or
indirectly controls, is controlled by or is under common control with the
specified person or entity.  A person or
entity shall be deemed to control another person or entity if such first person
or entity has the power to direct or cause the direction of 

 

1

 

the management and policies of such other person or entity, whether
through ownership of voting securities, by contract or otherwise.

 

(b)                                 “Agreement” means this
Participation Agreement, as amended from time to time pursuant to Section 13
hereof.

 

(c)                                  “Calendar Quarter” means the
three-month period commencing on the first day of each of January, April, July and
October.

 

(d)                                 “HCA” means HCA Inc., a Delaware
Corporation, and any successor thereto.

 

(e)                                  “Compliance Level” has the
meaning set forth in paragraph 5(d) hereof.

 

(f)                                    “Effective Date” means the date
indicated in the preamble paragraph of this Agreement.

 

(g)                                 “Event of Force Majeure” has the
meaning set forth in Section 11 hereof.

 

(h)                                 “Facility” or “Facilities” means
the Participant hospitals and other healthcare facilities identified on Exhibit
B hereto, together with any hospitals and other healthcare facilities acquired
by Participant or an Affiliate of Participant after the Effective Date.

 

(i)                                     “GPO Affiliation Certificate”
means a certificate in the form set forth as Exhibit C hereto.

 

(j)                                     “GPO Fees” has the meaning set
forth in Section 6 hereof.

 

(k)                                  “HPG” means HealthTrust
Purchasing Group, L.P., a Delaware limited partnership.

 

(l)                                     “PACT” means the Purchasing
Alliance for Clinical Therapeutics, L.L.C. group purchasing organization d/b/a “PACT”,
with offices at 7115 Northland Terrace, Suite 500, Brooklyn Park, MN 55428, and
which maintains agreements with vendors for purchasing on a national basis
various pharmaceutical, biological and dietary products used by hospitals and
other healthcare facilities as part of a group purchasing program.

 

(m)                               “PACT Products and Services”
means dietary and pharmaceutical products and services, including distribution
services, available pursuant to PACT Vendor Contracts.

 

(n)                                 “PACT Vendor Contracts” means
the contracts and agreements between PACT Vendors and PACT for the purchase of
PACT Products and Services.

 

(o)                                 “PACT Vendor or Vendors” means
the suppliers of PACT Products and Services under the PACT Vendor Contracts.

 

(p)                                 “Participant” means the entity
indicated in the preamble paragraph of this Agreement.

 

(q)                                 “Products and Services” means
the product, supplies, materials, dietary products, pharmaceuticals, equipment
and services, including distribution services, available pursuant to the Vendor
Contracts specified in Exhibit D hereto or as amended.

 

(r)                                    “Program” means the group
purchasing program conducted by HPG, pursuant to which Participant, its
Facilities and other healthcare facilities are provided access to the

 

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Vendor Contracts to purchase Products and Services.

 

(s)                                  “Vendor Contracts” or “HPG
Vendor Contracts” means the purchasing agreements between Vendors and HPG for
the purchase of Products and Services and agreements related thereto, such as
but not limited to, Business Associate Agreements required by HIPAA.

 

(t)                                    “Vendor”, “Vendors”, “HPG Vendor”
or “HPG Vendors” means the supplier of Products and Services under the Vendor
Contracts.

 

2.                                      Purchase of Products and Services;
Facilities.

 

(a)                                  It is the intent of the parties
to establish a business relationship that complies with the Medicare and
Medicaid anti-kickback statute, set forth in 42 U.S.C. §1320a-7b(b).  The parties agree that, for the purposes of
this Agreement, HPG is acting as a group purchasing organization.  The parties intend to comply with the
requirements of the “safe harbor” regulations regarding payments to group
purchasing organizations set forth in 42 C.F.R. 
§1001.952(j) and the parties believe that this Agreement satisfies those
requirements.

 

(b)                                 Subject to the terms and
conditions set forth in this Agreement and except as otherwise expressly
provided herein, Participant hereby engages HPG to act as its exclusive
independent group purchasing organization (other than PACT), and to provide
access to the Vendor Contracts, pursuant to which Participant and its
Facilities will purchase Products and Services available thereunder for use in
the Facilities.  This exclusive
engagement does not limit Participant from contracting with PACT, or from
purchasing PACT Products and Services under PACT Vendor Contracts.  Participant hereby authorizes HPG, as its
agent for such purposes, to (i) negotiate the terms of and enter into Vendor
Contracts, and to cancel or modify any Vendor Contracts as it deems necessary,
advisable or appropriate; (ii) receive rebates from Vendors based on
Participant’s purchases under Vendor Contracts, for payment by HPG to
Participant pursuant to Paragraph 6(b), and (iii) to receive from Vendors,
distributors, and e-commerce companies, data relating to purchases of Products
and Services under Vendor Contracts by Participant and Facilities.
Notwithstanding the foregoing, the exclusivity provisions stated in this Paragraph
2(b) with respect to HPG and PACT shall not be effective until March 15,
2005 (and thereafter for up to 120 days to permit Participant to effect an
orderly and efficient transition away from the vendors accessed pursuant to
Participant’s group purchasing organization agreement with Broadlane), and
until such time the relationship established pursuant to this Agreement shall
be deemed to be non-exclusive with respect to HPG and PACT; and throughout the
Term of this Agreement, Participant shall have the right (a) to retain
membership with another group purchasing organization solely for the purpose of
accessing that GPO’s contracts for nurse staffing services, provided and
contingent upon such GPO not providing information or notices to HPG Vendors
that indicate Participant is a member of such GPO for accessing contracts other
than those for nursing staffing services; and (b) to retain and perform the
purchasing contracts identified on Exhibit A hereto and identified as “Grandfathered
Contracts”.

 

(c)                                  The Facilities identified on
Exhibit B hereto shall have access to the Program and shall 

 

3

 

have the right to purchase Products and Services under HPG Vendor
Contracts listed in Exhibit D to this Agreement, and as posted on HPG’s website
(www.healthtrustpg.com).

 

(d)                                 Each Facility shall execute and
deliver to HPG the GPO Affiliation Certificate (a copy of which is attached as
Exhibit C) prior to being granted access to the Program.

 

(e)                                  From time to time, Participant
may request in writing that HPG consider approving additional hospitals or
other healthcare related facilities as Facilities.  Upon approval by HPG, which shall not be
unreasonably withheld, HPG will permit such additional Facilities to
participate under the Program, after Exhibit B has been amended to reflect any
Facilities so approved by HPG, and a signed GPO Affiliation Certificate for
each additional Facility has been received by HPG.

 

(f)                                    Any Facilities divested by
Participant or its parent Affiliate, or which no longer qualify as an Affiliate
of Participant, shall be removed from participation under this Agreement at the
conclusion of the transition period described as follows.  In this event, Participant shall provide HPG
with written notice thereof at least thirty (30) days prior to the closing date
of such divestiture or date of ceasing to be an Affiliate of Participant (“Divestiture
Date”).  Such divested Facility shall
have the right to continue to participate under this Agreement for a one hundred
twenty (120) day transition period following the Divestiture Date, unless
otherwise agreed to by the parties.

 

(g)                                 Participation in the Program
under this Agreement by Participant and Facilities shall commence on the
Effective Date.

 

(h)                                 If PACT Vendor Contracts are
listed on Exhibit D, then Participant shall be eligible to become a participant
of PACT by entering into a participation agreement with PACT, and thereby, be
permitted to purchase PACT Products and Services pursuant to PACT Vendor Contracts.

 

3.                                      Term.

 

Subject to termination under Section 7 hereof,
the term of this Agreement shall be for a period of five (5) years commencing
on the Effective Date, with automatic renewals thereafter for terms of one (1)
year each unless either party gives written notice of non-renewal of this
Agreement at least one hundred and twenty (120) days prior to the end of the
initial term or any subsequent renewal term. 
References herein to the term of this Agreement shall refer to the term
as so extended hereby.

 

4.                                      HPG’s Responsibilities.

 

(a)                                  HPG shall deliver, or cause to
be delivered, on a timely basis to Participant a brief summary of the Products
and Services, including pricing, delivery, ordering requirements and other
terms thereof, available for purchase under Vendor Contracts.  HPG shall notify Participant of any changes
thereto, of any termination of any of such Vendor Contracts, and of any
additions of Vendor Contracts.

 

(b)                                 HPG shall provide information,
documentation, and staff to assist Participant in its transition to and
participation in the Program.

 

4

 

(c)                                  HPG shall notify each of the
Vendors under the Vendor Contracts that Participant and its Facilities are
participating in those agreements. 
Subject to the Vendor Contract terms and conditions, Participant and its
Facilities shall be entitled to purchase Products and Services under the Vendor
Contracts for the normal and customary use of such Products and Services for
the provision of healthcare services by such Facilities, and not for resale or
distribution to third parties other than in the course of the provision of
healthcare services by such Facilities.

 

(d)                                 Participant acknowledges that
HPG and partners in HPG have Affiliates that provide healthcare services.  Certain of these Affiliates may, from time to
time, make proposals to, or do business with, Participant or its
Affiliates.  Participant and its
Affiliates shall not be required to accept any such proposal, or to do any such
business, as a result of this Agreement or any other business relationship
between HPG and Participant and their respective Affiliates.  It is understood by the parties that
execution of this Agreement does not give rise to any obligation whatsoever,
either express or implied, on the part of Participant or any of its Affiliates
to provide any business or referrals to HPG, any partner in HPG, or any
Affiliates of HPG or any Affiliates of such partner.  It is understood by the parties that
execution of this Agreement does not give rise to any obligation whatsoever,
either express or implied, on the part of HPG or any of its Affiliates to
provide any business or referrals to Participant or any Affiliates of
Participant.

 

(e)                                  Issuance of Limited Partnership
Interest.  Within a reasonable period following the
execution of this Agreement, HPG will agree to issue to Participant a limited
partnership percentage interest in HPG equal to the ratio of Participant’s
total supply expense for calendar year 2004 (less the amount attributable to
those contracts listed on Exhibit A which will not be converted to Vendor
Contracts), divided by the aggregate total supply expense for Participant and
all other equity owners of HPG for calendar year 2004 (the “Limited Partnership
Interest”), subject to the following limitation.  “Supply expense” as used in this Section 3
is defined to include all medical-surgical supplies and pharmaceutical
products, purchased during the relevant time period.  As a condition to such issuance, Participant
will be required to execute Amendment No. 6 to the Amended and Restated Limited
Partnership Agreement of Healthtrust Purchasing Group, L.P. dated as of May 11,
1999 (the “Limited Partnership Agreement”) and will be subject to all of the
obligations and conditions and entitled to all of the benefits of a limited
partner thereunder.  HPG further agrees
to have the Limited Partnership Agreement amended such that (i) with respect to
allocation under the Limited Partnership Agreement as related to non-equity
participant generated income, Participant will receive an annual allocation
only with respect to that portion of the non-equity participant income that
exceeds that actually received by HPG from January 1, 2004 through October 27,
2004, and (ii) with respect to each partner’s ownership interest, such will be
recalculated annually based on each partner’s prorata portion of purchases
under Vendor Contracts.  The parties
acknowledge that the exact percentage of Participant’s Limited Partnership
Interest may be adjusted based on the addition of new limited partners to
HPG.  HPG agrees to consult with
Participant concerning any possible candidate to become a partner of HPG.  In the event HPG is reorganized into another
legal entity, Participant shall receive a percentage interest in the new HPG
legal entity that is the same as that for its Limited Partnership Interest at
the time of the reorganization.  In the
event this Participation Agreement is terminated by mutual 

 

5

 

consent prior to five (5) years after the Effective Date or HPG
terminates this Agreement with cause prior to five (5) years after the
Effective Date, Participant’s ownership interest in HPG shall be automatically
terminated.

 

(f)                                    During the Term of this agreement, Participant shall
have the right to:

 

(i)                                   designate
one member to the Board of Advisors of HPG;

 

(ii)                                designate
one member to each of the following HPG clinical/advisory boards: laboratory,
nursing, pharmacy, radiology, surgery, materials management, food and
information systems; and designate one member to attend HPG weekly contract
strategy meetings.

 

(g)                                 HPG shall indemnify and hold
Participant and Facilities, and their respective Affiliates, agents, officers,
directors and employees (the “Participant Indemnitees”), harmless, from and
against any and all losses, liabilities, penalties, claims, damages, demands,
costs and expenses (including, without limitation, reasonable attorneys’ fees,
witness fees, investigation expenses) whatsoever that are assessed, imposed,
awarded against or incurred after the date hereof by any of them, relating to
acts or omissions of HPG relating to its failure to perform its obligations
under this Agreement.  If any such claim
is made against HPG, HPG shall notify Participant in writing, and in reasonable
detail, promptly (and in any event within fifteen (15) business days) after
receipt by HPG of written notice of such claim, and shall indemnify and hold
the Participant Indemnitees harmless for any Liabilities arising from any
failure to promptly notify Participant. Likewise, if any such claim is made
against any Participant Indemnitee, Participant shall notify HPG in writing,
and in reasonable detail, promptly (and in any event within fifteen (15)
business days) after receipt by Participant Indemnitees of written notice of
such claim. HPG shall use its reasonable efforts to obtain the dismissal of
Participant Indemnitees from any action or proceeding relating thereto.  Notwithstanding anything in this paragraph or
elsewhere in this Agreement to the contrary, (and excluding instances involving
HPG’s gross negligence or willful misconduct), HPG shall have no liability
whatsoever for any errors or omissions related to communicating to Participant
and its Facilities information and pricing on Products and Services, with HPG’s
sole responsibility in this respect being to correct such errors and omissions
and to provide appropriate notice thereof to Participant.

 

5.                                      Representations, Warranties and Covenants of
Participant.

 

Participant, for itself and for each of the Facilities
that purchase under the Vendor Contracts, whether or not set forth on Exhibit B
hereto, hereby represents and warrants to and covenants with HPG as follows:

 

(a)                                  All purchases under the Vendor
Contracts by Participant and its Facilities for Products and Services shall be
in the name of, and between, Participant or one or more of its Facilities, on
the one hand, and the respective Vendor, on the other hand.  HPG shall not be a party to any such
purchases and shall not have any liability under any such agreement or with
respect to any such purchases or any Products and Services furnished
thereunder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, (i) HPG DOES NOT
MAKE, AND EXPRESSLY DISCLAIMS, ANY WARRANTY OF 

 

6

 

MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED, AS TO ANY PRODUCTS AND SERVICES SOLD BY ANY
VENDOR, AND (ii) PARTICIPANT HEREBY EXPRESSLY RELEASES HPG FROM ANY AND ALL
LIABILITY AND CLAIMS RELATING TO THE PRODUCTS AND SERVICES, AND ANY BREACH OR
ALLEGED BREACH OF WARRANTY IN CONNECTION WITH THE PRODUCTS AND SERVICES.

 

(b)                                 Participant and its Facilities
shall indemnify and hold HPG, the partners in HPG, and their respective
Affiliates, agents, officers, directors and employees (the “Indemnitees”),
harmless, from and against any and all losses, liabilities, penalties, claims,
damages, demands, costs and expenses (including, without limitation, reasonable
attorneys’ fees, witness fees, investigation expenses) whatsoever that are
assessed, imposed, awarded against or incurred after the date hereof by any of
them, relating to acts or omissions of Participant which relate in any way to
this Agreement, including, without limitation, any claims resulting from a
failure to pay for any Products and Services purchased by Participant or any of
its Facilities, any product liability claims associated with the Products and
Services purchased by Participant or any of its Facilities, or any failure to
comply with Participant’s obligations under this Agreement.  If any such claim is made against Participant
or any of its Facilities, Participant shall notify HPG in writing, and in
reasonable detail, promptly (and in any event within fifteen (15) business
days) after receipt by Participant or its Facility of written notice of such
claim, and shall indemnify and hold the Indemnitees harmless for any
Liabilities arising from any failure to promptly notify HPG. Likewise, if any
such claim is made against any Indemnitee, HPG shall notify Participant in
writing, and in reasonable detail, promptly (and in any event within fifteen
(15) business days) after receipt by HPG of written notice of such claim.
Participant shall use its reasonable efforts to obtain the dismissal of HPG
from any action or proceeding relating thereto.

 

(c)                                  Except as provided in Paragraph2
(b) above and Paragraph 5(f) below, during the term of this Agreement, neither
Participant nor any of its Facilities shall utilize, participate in or maintain
membership in any other group purchasing organization, or other similar
agreement or arrangement, for purchasing Products and Services available
pursuant to the Program (except as to PACT). The parties intend that this
Agreement (together with any agreement Participant or any of its Facilities may
sign with PACT as expressly permitted under this Agreement, if any) shall be
the exclusive arrangement that Participant and its Facilities utilize for the
purchase through a group purchasing organization or similar entity of Products
and Services available pursuant to the Program.

 

(d)                                 Except as provided in Paragraph
5(f) below, Participant and its Facilities shall purchase pursuant to the
Vendor Contracts in (i) the twelve-month period commencing on the Effective
Date and (ii) each twelve-month period commencing on the first day of each
Calendar Quarter during the term of this Agreement at least eighty percent
(80%) of each of the Products and Services available under the Program used in
the normal and customary operations of Participant and its Facilities, taken as
a whole (the “Compliance Level”); provided,
however, that if Participant or any of its Facilities purchase any
Products and Services under a Vendor Contract that requires purchase of a
higher percentage of the Products and Services available under such Vendor
Contract

 

7

 

used in the normal and customary operations of Participant or such
Facilities, Participant and its Facilities shall comply with such requirement.

 

(e)                                  At the request of HPG, within
sixty (60) days after the last day of any Calendar Quarter, Participant shall
deliver to HPG a certificate to the effect that Participant and its Facilities
are in compliance with Paragraph 5(d) hereof in respect of the twelve-month
period ending on the last day of such Calendar Quarter.  Such certificate shall set forth the
information described in Exhibit E hereto and such additional information as HPG
shall reasonably request.

 

(f)                                    In the event that Participant’s
existing vendor agreements set forth on Exhibit A hereto do not permit
Participant to comply with Paragraph 5(c) and 5(d) hereof with respect to one
or more Facilities and any one or more particular Vendor Contracts, Participant
shall transition such Facility or Facilities to the particular Vendor Contracts
in the Program at the first appropriate opportunity as set forth at the end of
this Paragraph 5(f). Nothing in this Paragraph 5(f) shall be construed (i)
to require or encourage Participant or any of its Facilities to improperly
terminate or breach in any way any existing vendor agreement to which
Participant or any of its Facilities is a party, (ii) to prematurely sell or
retire capital equipment or effect a information systems interface conversion
in order to purchase or lease new capital equipment and supplies off of HPG
Vendor Contracts, including those listed in Exhibit A, or (iii) to terminate
any existing agreement that would require the payment of a penalty or the
recapture of previously granted rebates or price concessions.  With respect to the agreements listed in
Exhibit A, HPG and Participant hereby agree as follows:

 

•                  For those agreements listed as “Grandfathered
Contracts”, Participant shall have the right to retain membership with another
group purchasing organization solely for the purpose of accessing that GPO’s
contracts for these products/services, for the term of this Agreement.

•                  For those agreements listed as “Dual
or Multi-Source Contracts”, Participant shall continue to complete its
obligations under such agreements without entering into any extensions and
shall transition to the particular Vendor Contracts in the Program at the first
appropriate opportunity.

•                  For those agreements listed as “Optional
Source Contracts”, Participant shall be able to continue under such agreements
for so long as the Vendor Contract for such products/services remains an
optional source agreement.  If HPG
changes an optional source Vendor Contract to a sole, dual, or multi-source arrangement,
then Participant shall not extend its then current relationship and shall
transition to the particular Vendor Contracts in the Program at the first
appropriate opportunity.

•                  For those agreements listed as “Regional
Contracts”, HPG does not have any Vendor Contracts for these products/services
and Participant can contract with its own suppliers for such
products/services.  If HPG enters into a
Vendor Contract for products/services listed under Regional Contracts with a
sole, dual, or multi-source arrangement, then Participant shall not extend its
then current relationship and shall transition to the particular Vendor
Contracts in the Program at the first appropriate opportunity.

 

8

 

(g)                                 Participant agrees to cause each
of the Facilities (i) to comply with all terms of this Agreement as if a party
hereto, (ii) to comply with all terms of the Vendor Contracts, including
without limitation, payment terms and Compliance Levels and (iii) to execute
separate agreements or acknowledgements as reasonably requested by HPG or any
particular Vendor evidencing such Facility’s agreement to comply with the terms
of the relevant Vendor Contract.

 

(h)                                 Participant agrees that all
products purchased by it or its Facilities under the Vendor Contracts will be
for use in the provision of healthcare services in its Facilities, and not for
resale or distribution to third parties other than in the course of the
provision of healthcare services by such Facilities.  Participant acknowledges that such
prohibition on resale and distribution extends to resale or distribution to
physician practices other than those owned by, controlled by, or managed by
Participant and listed in Exhibit B. The parties acknowledge that to the extent
any Vendor Contracts contain prohibition of purchases by physician practices,
any Participant Facilities listed on Exhibit B as physician practices shall not
be able to purchase under those contracts until so advised by HPG.  HPG and Participant will work in good faith
to identify those Vendor Contracts under which Participant’s physician practice
Facilities would like to purchase and if the terms of any of such Vendor
Contracts prohibit purchases by physician practices, HPG will attempt to
negotiate terms under which Participant physician practices can make purchases.

 

(i)                                     Participant agrees, and shall
cause each of its Facilities to agree, to the extent the confidentiality
obligations of Section 9 are applicable to the information disclosed, to
keep all communications between HPG and Participant or its Facilities
confidential, not to discuss or disseminate such communications to other
participants in the Program or to any third parties, and to comply with the
confidentiality requirements of Section 9 thereof.

 

(j)                                     Participant warrants that all
Facilities listed on Exhibit B hereto qualify as Affiliates of Participant and
furnish services to third parties for which payment may be made in whole or in
part under Medicare or a state healthcare program.

 

6.                                      GPO Fees and Rebates. 

 

(a)                                  Participant acknowledges (i)
that HPG and/or PACT will receive payment of fees for administrative and other
services provided by HPG from one or more Vendors based on Products and
Services, or PACT Products or Services, purchased, licensed or leased by
Participant and its Facilities (“GPO Fees”), (ii) that the percentage of the
GPO Fees will generally be three percent (3%) or less if a GPO Fee is paid, but
may in some cases be higher, and (iii) that HPG and PACT may enter into agreements
to allocate such GPO Fees between each other. 
A list of Vendors which have agreed to pay GPO Fees to HPG of three
percent (3%) or less, as well as a list of those Vendors which have agreed to
pay GPO Fees to HPG greater than three percent (3%), including the specific
percentage of the GPO Fees for each such Vendor paying more than a three
percent (3%) GPO Fee is provided in Exhibit F to this Agreement. HPG shall
disclose to Participant on an annual basis, in writing, with respect to
purchases of Products and Services by each of the Facilities, (i) the names of
the Vendors and the PACT Vendors, and the specific amount of such GPO Fees
received from each of such Vendors and 

 

9

 

such PACT Vendors where the amounts received do not exceed three
percent (3%) of the net dollar amount of Products and Services and PACT
Products and Services purchased by Participant and its Facilities; and (ii) the
names of the Vendors and the PACT Vendors and the specific amount of all GPO
Fees received from each Vendor where the amount received exceeds three percent
(3%) of the net dollar amount of Products and Services or PACT Products and
Services purchased by Participant and its Facilities. HPG shall disclose to the
Secretary of the United States Department of Health and Human Services, upon
request, the amount of GPO Fees received by HPG from each Vendor and PACT
Vendor with respect to Products and Services, and PACT Products and Services,
that are purchased, licensed or leased by Participant and its Facilities.
Participant is responsible for disclosing information regarding such GPO Fees
to each of its Facilities.

 

(b)                                 HPG agrees to pay to Participant
any funds received from Vendors designated as Vendor rebates based on purchases
of Products and Services by Participant and its Facilities.   Participant acknowledges that any such
rebates received from HPG in respect to purchases made under the Vendor
Contracts will be allocated among all Facilities participating in the Program
in amounts proportionate to the dollar amount of Products and Services giving
rise to such rebate purchased by each Facility participating in the Program and
as otherwise required by law and/or regulation. 
The amount of any rebate distributed to Participant shall be treated as
a discount to Participant’s cost for the applicable Products and Services.  The Participant is responsible for allocating
any such rebate so received, as well as any rebate received directly from any
Vendor, among its Facilities and for providing all required information
regarding such rebate amounts and allocations to its Facilities as required by
law and/or regulation.  It is the intent
of the parties hereto to establish a business relationship, which complies with
the Medicare, and Medicaid anti-kickback statutes set forth at 42 U.S.C.
§1320a-7b(b).  In certain instances,
invoices from Vendors may not accurately reflect the net cost of Products and
Services to the Participant and/or Facility. 
Where a discount or other reduction in price is applicable, the parties
also intend to comply with the requirements of 42 U.S.C. §1320a-7b(b)(3)(A)
and the “safe harbor” regulations regarding discounts or other reductions in
price set forth in 42 C.F.R. §1001.952(h). 
In this regard, the parties hereto acknowledge that Participant will
satisfy, and ensure that its Facilities satisfy any and all legal and
regulatory requirements imposed on buyers. 
Thus, Participant will accurately report, under any state or federal
program that provides cost or charge based reimbursement for the Products and
Services covered by this Agreement, the net cost actually paid by the
Participant and/or Facility, pursuant to such Vendor Contracts and PACT Vendor
Contracts.

 

(c)                                  Participant acknowledges that
any portion of GPO Fees received from HPG based on Participant’s purchases
under Vendor Contracts, shall be considered a discount and that, with respect
to such portion of the GPO Fees it receives, Participant intends to comply with
the requirements of 42 U.S.C. section 1320a-7b(b)(3)(A) and the “safe
harbor” regulations regarding discounts or other reductions in price set forth
at 42 C.F.R. Section 1001.952(h). 
In this regard, the parties hereto acknowledge that Participant will
satisfy, and ensure that its Facilities satisfy any and all legal and
regulatory requirements imposed on buyers. Thus, Participant will accurately
report, under any state or federal program that provides cost or charge based
reimbursement for the Products and Services and PACT Products and Services
covered by this Agreement, the 

 

10

 

net cost actually paid by the Participant and/or Facility, pursuant to
such Vendor Contracts and PACT Vendor Contracts.

 

7.                                      Termination.

 

(a)                                  HPG may terminate this Agreement
on one hundred twenty (120) days notice to Participant if (i) Participant and
its Facilities, taken as a whole, fail to maintain the Compliance Level in
respect to any of the Products and Services for any two consecutive Calendar
Quarters, (ii) Participant or any of its Facilities fails to comply with the
terms and conditions of any of the Vendor Contracts, (iii) Participant or any
of its Facilities otherwise breaches any provision of this Agreement, provided, however, that HPG may so
terminate this Agreement in the event of a breach described above only if HPG
shall have given Participant written notice of the specifics of the breach and
Participant shall not have cured such breach or caused such breach to be cured
within thirty (30) days thereafter, or (iv) termination of the PACT
Participation Agreement between PACT and Participant.

 

(b)                                 HPG shall also have the right to
terminate this Agreement in its entirety upon one hundred twenty (120) days
prior notice (i) upon the transfer, directly or indirectly, by sale, merger or
otherwise, of substantially all of the assets of Participant or its ultimate
parent or any permitted assignee to an independent third party (upon assignment
to such assignee) if the acquiring entity has a ownership or other ongoing business
relationship with a competitor of HPG; (ii) in the event that more than
forty-nine percent (49%) of Participant’s capital stock or equity ownership, or
the capital stock or equity ownership of its ultimate parent, or any such
permitted assignee is transferred to an independent third party entity, if the
acquiring entity has a ownership or other ongoing business relationship with a
competitor of HPG; (iii) upon Participant filing for protection under any
bankruptcy laws or being the subject of any involuntary bankruptcy proceeding;
or (iv) upon Participant and all Facilities as a whole failing to meet the
requirements of Paragraph 5(f).  HPG
shall also have the right to terminate this Agreement in its entirety with
thirty (30) days prior notice upon Participant becoming a member of another
Group Purchasing Organization other than PACT, except as is noted in Paragraph
2(b).  If Participant ceases to do
business as a going concern at the address (addresses) listed in Exhibit B to
this Agreement (except for relocation of Participant to a new office location),
HPG shall have the right to terminate this Agreement effective fifteen (15)
days after sending notice of termination to Participant.

 

(c)                                  HPG shall have the right to
terminate this Agreement with respect to any particular Facility, upon one
hundred twenty (120) days prior notice to Participant and the Facility (i) upon
the transfer, directly or indirectly, by sale, merger or otherwise, of
substantially all of the assets of the Facility to an independent third party;
(ii) in the event that more than forty-nine percent (49%) of the Facility’s
capital stock or equity ownership is transferred to an independent third party
entity; (iii) upon Facility filing for protection under any bankruptcy laws or
being the subject of any involuntary bankruptcy proceeding; or (iv) upon
Facility failing to make any purchases under any HPG Vendor Contracts over any
sixty (60) day period.  HPG shall also
have the right to terminate this Agreement with respect to any Facility with
thirty (30) days prior notice upon the Facility becoming a member of another
Group Purchasing Organization other than PACT. If a Facility ceases to do
business as a going concern at the address (addresses) 

 

11

 

listed in Exhibit B to this Agreement, except for relocation of the
Facility to a replacement facility, HPG shall have the right to terminate this
Agreement with respect to such Facility effective fifteen (15) days after
sending notice of termination to Participant and the Facility.

 

(d)                                 Upon termination of this
Agreement, HPG shall have no further obligations hereunder, including, without
limitation, no obligation to maintain, update or advise Participant or its
Facilities concerning any Products or Services provided hereunder, except to
pay to Participant its allocable portion of any rebates earned prior to
termination and to provide the applicable reporting for rebates and GPO Fees
with respect to Participant purchases from Vendors made prior to termination.
Participant shall remain obligated to pay for all purchases by it and the
Facilities made under Vendor Agreements prior to termination.  Notwithstanding the foregoing, Participants
and its Affiliates shall have access to HPG’s contracted vendors for up to one
hundred twenty (120) days following termination to complete its transition to
new suppliers.

 

(e)                                  The termination of this
Agreement pursuant to this Section 7 shall not affect the validity and
effect of purchases made by Participant under Vendor Contract prior to
termination, Participant’s obligation to pay Vendors in respect of such
purchases, or any obligation of Participant under any specific agreement with a
Vendor.

 

8.                                      Access to Books and Records.

 

Until the expiration of four (4) years after the term
of this Agreement (including any renewal term), HPG shall make available to the
Secretary of the United States Department of Health and Human Services, the
United States Comptroller General, and their duly authorized representatives,
in accordance with 42 C.F.R.  §420.300 et
seq., this Agreement and all books, documents, and records necessary to certify
the nature and extent of the costs of the services provided by HPG hereunder.  If HPG carries out any of its duties
hereunder through a subcontract worth $10,000 or more over a twelve-month
period with a related organization, the subcontract also shall contain an
access clause to permit such access by the Secretary, the Comptroller General,
and their duly authorized representatives to the related organization’s books,
documents and records.  The parties agree
that any attorney-client, accountant-client or any other legal privilege shall
not be deemed waived by virtue of the provisions of this Section 8.

 

9.                                      Confidentiality.

 

(a)                                  Except as permitted in Paragraph
9(d) below, the terms and exhibits of this Agreement, all information,
documents and instruments (including, without limitation, all information
regarding the pricing, rebates, discounts, shipping terms and other terms and
conditions of the Vendor Contracts) delivered or otherwise provided to
Participant or its Facilities, or any of their agents, directors, officers or
employees as well as information relating to quantities of Products and
Services purchased by Participant and/or its Facilities, is confidential
(hereinafter, “Confidential Information”). 
Participant agrees that throughout the term of this Agreement and for a
period of three (3) years thereafter it shall maintain all Confidential
Information in strict confidence, shall use such Confidential Information only as
is required in connection with its provision of healthcare services, and may
disclose such Confidential Information only

 

12

 

on a “need to know” basis to its duly authorized officers, directors,
representatives, consultants, accountants, attorneys and agents and to the duly
authorized officers, directors, representatives and agents of its
Affiliates.  Participant shall
communicate to each such person the confidentiality obligations of this
Agreement, shall cause those persons to hold such Confidential Information in
strict confidence as if party hereto, and shall require the above described
non-employees of Participant or any Facility to sign written confidentiality
agreements with non-disclosure requirements at least as strict as those stated
herein, prior to receipt of any Confidential Information.  HPG agrees to maintain in confidence the
quantities of Products and Services purchased by Participant and its Facilities
and any other information on written documents disclosed to HPG by Participant
and labeled as “Confidential” (“Participant Confidential Information”) and to
not disclose such Participant Confidential Information to any third parties,
except that HPG may use and disclose Participant Confidential Information (i)
in conjunction with the performance of its group purchasing organization
functions, in its sole discretion, (ii) if the information is not associated
specifically with Participant and is combined with information from other
participants of HPG, or (iii) as is required by law or regulation.  Each of HPG and Participant further
acknowledges that the remedy at law for any breach or threatened breach of this
Paragraph 9(a) will be inadequate and, accordingly, that it and its Affiliates
shall, in addition to all other available remedies (including, without
limitation, seeking such damages as it or any of its Affiliates can show it has
sustained by reason of such breach), be entitled to seek injunctive relief.

 

(b)                                 Notwithstanding Paragraph 9(a)
above, in the event that any Facility is a governmental unit and is required by
law to disclose certain confidential information to the public, Participant
shall not be liable pursuant to Paragraph 9(a) above, provided, that such Facility (i) furnishes
only that portion of the information which such Facility is required by law to
disclose; (ii) informs HPG of the required disclosure and the legal basis on
which such disclosure is required to be made prior to making such disclosure,
and (iii) affords HPG the opportunity to intervene for the purpose of seeking
an appropriate protective order or otherwise protecting HPG’s interest in the
information to be disclosed.

 

(c)                                  To the extent that a party
hereto, any Affiliate of a party hereto, any Facility or, to the knowledge of
such party, any current or former employee of any such party or entity is
requested (by oral questions, interrogatories, requests for information or
documents, government agency audit, subpoena, civil investigative demand or
similar process) to disclose any information required to be kept confidential
pursuant to Paragraph 9(a) above, such party agrees to take all necessary
action to maintain, or cause to be maintained (and to cause any such Affiliate
or Facility, or in respect of a current or former employee, to use its
reasonable efforts to cause such employee to maintain) the confidentiality of
such information and to provide prompt notice to the other party, so that such
other party may seek an appropriate protective order or waive compliance with
Paragraph 9(a) above.  If, in the absence
of a protective order or the receipt of a waiver hereunder, the person who has
received such a request is, nonetheless, in the reasonable written opinion of
counsel, legally required to disclose such information, such person may
disclose such information, and no party shall be liable pursuant to Paragraph
9(a) above, provided, that such
person (i) furnishes only that portion of the information which it is advised
by counsel to disclose and (ii) exercises its reasonable efforts to obtain
assurance that confidential treatment will be accorded to the disclosed 

 

13

 

portion of the information. 
Notwithstanding the foregoing, each party shall be permitted to disclose
confidential information in any proceeding in which it is in an adversarial
position to the other party.

 

(d)                                 Notwithstanding the foregoing,
no party hereto shall be prohibited from using or permitting the use of and no
party shall be required to hold in confidence any information to the extent
that (i) such information has been or is in the public domain through no fault
of such party, or (ii) such information is lawfully acquired by such party from
sources other than a party hereto, any Facility or Affiliate of such party, or
any of their respective agents, directors, officers or employees, and the
acquisition of such information is without restriction of further disclosure
and, to the knowledge of the acquiring party, is not in breach of any
confidentiality obligation to which the party providing such information is
subject.

 

10.                               Attorneys’ Fees.

 

If either party commences legal action related to any
claim or controversy between the parties for any matter arising out of this
Agreement, the non-prevailing party shall pay all costs and reasonable
attorneys’ fees incurred by the prevailing party in connection therewith.

 

11.                               Force Majeure.

 

Neither party shall be liable to the other party for
any delay or failure to perform its obligations hereunder if such delay or
failure results from causes beyond its reasonable control. Such causes may
include, without limitation, acts of God, fires or other catastrophes,
telecommunications failures, equipment failures, power failures, labor
disputes, strikes, delays in transportation, riots, war, terrorist action or
threats of imminent action, governmental regulations, non-performance by
suppliers and Vendors, or problems experienced by HPG as a result of its own,
HCA, Inc. or any other third party’s computer software or hardware failures (an
“Event of Force Majeure”). Each party shall give the other party prompt notice
of any Event of Force Majeure that may cause delay or non-performance of its
obligations hereunder.

 

12.                               Notices.

 

All formal notices or other communications required or
permitted under this Agreement shall be in writing, shall be deemed given upon
the earlier of the date of receipt or four (4) days following the date it was
sent, and shall be sent by certified mail, postage prepaid, or by reputable
express delivery service, or delivered personally. Notices shall be addressed
to each party as set forth below or as otherwise designed by a party:

 

Address
for Notice:

 

HealthTrust
Purchasing Group, L.P.

104 Continental Place, Suite 300

Brentwood, Tennessee 37027

Fax
No. (615) 344-3166

Attn:  Vice-president, Membership

 

With a
copy to:

 

14

 

Senior
Corporate Counsel

HealthTrust
Purchasing Group, L.P.

104
Continental Place, Suite 300

Brentwood,
Tennessee 37027

Fax
No. (615) 344-3166

 

Participant:

 

Senior
Vice President – Operations

Community
Health Systems

155
Franklin Road, Suite 400

Brentwood,
TN 37027

Fax
No.:  615/309-5142

 

With a
copy to:

 

Senior
Vice President & General Counsel

Community
Health Systems

155
Franklin Road, Suite 400

Brentwood,
TN 37027

Fax
No.:  615/376-3447

 

Any party may change the person and address to which
notices or other communications are to be sent to it by giving written notice
of any such change in the manner provided herein.

 

13.                               Entire Agreement; Amendment.

 

(a)                                  This Agreement, together with
the exhibits thereto, as such exhibits may be modified or supplemented from
time to time pursuant to the terms of this Agreement, sets forth the entire
agreement and understanding of the parties hereto in respect of the
transactions contemplated hereby, and supersedes all prior agreements,
arrangements and understandings relating to the subject matter hereof.  No party hereto has relied upon any oral or
written statement, representation, warranty, covenant, condition, understanding
or agreement made by any other party or any representative, agent or employee
thereof, except for those expressly set forth in this Agreement or in the
exhibits hereto.

 

(b)                                 This Agreement may be amended,
modified, superseded or supplemented only by a written instrument expressly
stating an intent to amend, modify, supercede, or supplement this Agreement,
executed and delivered by each of the parties hereto, except as to Exhibits D
and F.  Updated lists of HPG Vendor
Contracts and Vendors paying GPO Fees to HPG shall periodically be placed on
the members section of the HPG website (www.healthtrustpg.com), and shall
be deemed to amend Exhibits D and F hereto accordingly.

 

14.                               Assignment.

 

Neither Participant nor any Facility may assign this
Agreement, or any of its rights or duties set forth herein, without the prior
written consent of HPG; provided, however, that each of the 

 

15

 

Facilities, upon execution and delivery of the
Facility Letter pursuant to Section 2(c) hereof, may participate in the
Program in accordance with the terms hereof. 
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and permitted
assigns; provided, however, that no assignment in
violation of the provisions of this Agreement, shall vest any rights in any
purported assignee.  Participant hereby
consents to assignment by HPG of its rights and obligations under this
Agreement to any entity wholly owned (directly or indirectly) by HCA Inc.   HPG
may assign without consent from Participant, HPG’s rights and obligations under
this Agreement to a successor entity of HPG as part of an internal reorganization
of HPG which results in HPG being organized in a different legal entity or
corporate form, whether through conversion or merger.

 

15.                               No Third-Party Beneficiaries.

 

This Agreement is solely for the benefit of the
parties hereto, and should not be construed to confer upon any other person any
remedy, claim, liability, right of reimbursement, claim of action or other
right.

 

16.                               Severability.

 

This Agreement shall be construed to be in accordance
with any and all applicable federal and state laws and regulations.  In the event there is a change in such laws
and regulation, whether by statute, regulation, agency or judicial decision
that has any material effect on the legality of any provision of this Agreement
(“Affected Provision”), then the Affected Provision shall be deemed ineffective
to the extent of such change in law or holding without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
Affected Provision in any other jurisdiction, subject to renegotiation in good
faith by the parties at the written request of either party (the party making
such request is hereinafter referred to as the “Requesting Party”).  If the parties are unable to renegotiate the
Affected Provision to bring it into compliance with the applicable law or
regulation within forty-five (45) days of the date on which the Requesting
Party provides notice of the change, the Affected Provision will be terminated
and be of no further force and effect. 
In such event, the remainder of the Agreement shall remain in full force
and effect.

 

17.                               Governing Law.

 

This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Tennessee.

 

18.                               Consent to Jurisdiction.

 

Participant and HPG each hereby expressly (a) submits
and consents in advance to the jurisdiction of any Tennessee State Court
sitting in Nashville, Tennessee or the United States District Court for the
Middle District of Tennessee with respect to any legal proceedings arising out
of or relating to this Agreement; (b) waives any objection which it may have
based upon lack of personal jurisdiction, improper venue or forum non conveniens; (c) agrees that all claims with
respect to such legal proceedings may be heard and determined in any Tennessee
State Court sitting in Nashville, Tennessee or the United States District Court
for the Middle District of Tennessee; (d) agrees not to commence any legal
proceeding relating to this Agreement other than in a Tennessee State Court
sitting in Nashville, Tennessee or the United States District Court for the
Middle District of Tennessee, and (e) agrees that a final judgment 

 

16

 

in any such legal proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.

 

19.                               Waiver of Jury Trial.

 

PARTICIPANT AND HPG EACH HEREBY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT WHICH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.  EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (a) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (b) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (c) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY AND, (d) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTON 19.

 

20.                               Rights Cumulative; Waiver.

 

All rights and remedies conferred under this Agreement
or by any other instrument or law shall be cumulative and may be exercised
singularly or concurrently.  The failure
by either party to enforce any term shall not be deemed to be a waiver of
future enforcement of that or any other term of this Agreement.

 

21.                               Counterparts.

 

This Agreement may be executed in any number of
separate counterparts, each of which shall be deemed to constitute an original,
but which together shall constitute one and the same instrument.  A facsimile of a signed copy of this
Agreement shall have the same force and effect as a copy with an original
signature of one or both parties.

 

22.                               Headings.

 

The section headings contained in this Agreement
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.

 

23.                               Audit Rights.

 

HPG shall have the right, at its expense, to review
and audit the books, records, and documents relating to purchases under Vendor
Agreements (whether in hardcopy, electronic or other form) of Participant and
the Facilities to verify compliance with their obligations under this
Agreement, the volumes of purchases of Products and Services under Vendor
Contracts, and to obtain any data and information required for HPG to fulfill
its responsibilities as a group purchasing organization for healthcare
providers.  The audit shall be conducted
only after reasonable notice and during normal business hours, and may be
conducted by HPG’s 

 

17

 

employees or agents, or by a third party auditor.  This right of audit may be exercised no more
than one (1) time per year for Participant and each Facility.  Participant agrees to cooperate with HPG to
provide the above-stated materials, and to provide any reasonable assistance to
HPG and its auditors necessary for HPG to carry out any audit as permitted
herein, at no cost to HPG.

 

24.                               Data.

 

HPG shall be the exclusive owner of the compilation of
pricing data related to Products and Services. All purchasing transaction data
(other than pricing data related to Products and Services) resulting from
purchase of Products and Services by Participant shall be owned by Participant.
Participant hereby authorizes HPG to have access to Participant’s purchasing
transaction data, whether through Vendors, distributors, or any
business-to-business e-commerce companies through which orders for Products and
Services are placed by Participant and its Facilities. Participant further
authorizes HPG to aggregate Participant purchasing transaction data with
purchasing transaction data from other Participants of HPG for statistical
analysis and other similar purposes, and to provide such aggregate data to
third parties provided no portion of the data 

contains any patient identification information or
information that can be specifically traced to Participant.

 

IN WITNESS WHEREOF, each party hereto has duly executed, or has caused
this Agreement to be duly executed, as of the date first above written.

 

	
  HealthTrust Purchasing Group, L.P.

  By its general partner, CMS GP, LLC

  	
  Community Health Systems Professional Services

  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Jim Fitzgerald

  	
   

  	
  By:

  	
  /s/
  Wayne T. Smith

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Jim
  Fitzgerald

  	
  Name:

  	
  Wayne
  T. Smith

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President
  & CEO

  	
  Title:

  	
  Chairman,
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  1-5-05

  	
  Date:

  	
  1-4-05

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Participant
  Federal Tax ID No: 51-0335957

  
						

 

18Exhibit
10.1

 

 

McCORMICK & COMPANY, INCORPORATED

2001  STOCK OPTION PLAN

NON-QUALIFIED STOCK OPTION  NO.
{NUMBER}

 

 

                THIS AGREEMENT, made
and entered into this __ day of January, 2005, by and between McCORMICK &
COMPANY, INCORPORATED, a Maryland corporation, with its principal offices in
Baltimore County, Maryland (hereinafter called the “Company”) and  {EMPLOYEE) (hereinafter called “Employee”).

 

R E C I T A L S:

 

 

                WHEREAS, the Board
of Directors of the Company is of the opinion that the interest of the Company
and its shareholders will be advanced and the Company’s overall managerial
strength will be enhanced by encouraging its officers, directors, and other key
employees to become owners of capital stock in the Company; and

 

                WHEREAS, the Board,
on January 23, 2001, authorized and approved the 2001 Stock Option Plan (the
“Plan”), which provides for the grant of options to certain key employees of
the Company and its subsidiaries and affiliates to purchase capital stock of
the Company.

 

                NOW THEREFORE, in consideration
of the foregoing and of the covenants and agreements below set forth, the
parties agree as follows:

 

 

                1.             The Company hereby grants to the
Employee a non-qualified stock option to purchase, on the terms and conditions
hereinafter set forth, an aggregate of {CS} shares of stock of the Company,
consisting of {CSV} shares of Common Stock, without par value, and  {CSNV} shares of Common Stock Non-Voting,
without par value, at a purchase price of $_____ per share, which price is not
less than 100% of the fair market value as of the date of this grant.  In lieu of cash payments, the Employee may
surrender shares of Company stock owned by the Employee having a market value
equal to the option price for the number of shares to be purchased pursuant to the
exercise of all or part of this option. 
The option granted hereunder shall be exercisable, as hereinafter
provided, between January __, 2005 and January __, 2015.  Employee may exercise this option as follows:

 

	
  January
  __, 2005 - January __, 2006

  	
   

  	
  None
  of the shares granted hereunder;

  
	
   

  	
   

  	
   

  
	
  January
  __, 2006 - January __, 2007

  	
   

  	
  Not
  more than 25% of the shares granted hereunder;

  
	
   

  	
   

  	
   

  
	
  January __, 2007 - January __, 2008

  	
   

  	
  Not
  more than 50% of the shares granted hereunder less any shares for which the
  option has been previously exercised;

  

 

 

	
  January __, 2008 -
  January __, 2009

  	
   

  	
  Not more than 75% of
  the shares granted hereunder less any shares for which the option has been
  previously exercised;

  
	
   

  	
   

  	
   

  
	
  January
  __, 2009 - January __, 2015

  	
   

  	
  100%
  of the shares granted hereunder less any shares for which the option has been
  previously exercised.

  

 

                2.             This option is not transferable by
the Employee otherwise than by will or by the laws of descent and distribution
and is exercisable during the Employee’s lifetime only by the Employee.

 

                                (a)           Subject to the provisions of
subparagraphs 2(b) and 2(c), all rights to exercise this option shall terminate
thirty (30) days after the Employee ceases to be an employee of the Company or
of a subsidiary or affiliate of the Company.

 

                                (b)           If the Employee ceases to be an
employee on account of total and permanent disability or retirement, the
Employee may exercise this option in full, or from time to time in part,
regardless of the restrictions that might otherwise apply with respect to the
number of shares which may be purchased pursuant to Paragraph 1 hereof, for a
period of five (5) years after termination of employment or until the
expiration date of this option, if earlier.

 

                                (c)           If the Employee dies prior to
termination of this option without having exercised this option, the estate or
other representative may exercise this option in full, or from time to time in
part, regardless of the restrictions that might otherwise apply with respect to
the number of shares which may be purchased pursuant to Paragraph 1 hereof, for
a period of five (5) years after the Employee’s death or until the expiration
date of this option, if earlier.

 

                                (d)           In no event may either the Employee
or the estate exercise all or any portion of this option after its expiration
date.

 

                                (e)           An exercise of this option with
respect to a part of the shares to which it relates shall not preclude a
subsequent exercise as to any remaining part.

 

3.             Notwithstanding any provision of this
Agreement to the contrary, the option granted hereunder shall be exercisable
for 100% of the shares subject to the option, less any shares for which the
option has been previously exercised, upon the occurrence of any of the
following events (each an “Event”) at any time prior to the expiration or
exercise of the option:

 

(a)           the consolidation or merger of the Company with or into
another entity where the Company is not the continuing or surviving
corporation, or pursuant to which shares of the Company’s capital stock are
converted into cash, securities or other property, except for any consolidation
or merger of the Company in which the holders (excluding any “Substantial
Stockholders” as defined in Section 4 Common  Stock subsection (b)(2)(H)
of the Certificate of

 

 

Incorporation of the Company as in effect
as of the date hereof (the “Charter”)) of the Company’s (i) voting common
stock, (ii) non-voting common stock, and (iii) other classes of voting stock,
if any, immediately before the consolidation or merger shall, upon consummation
of the consolidation or merger, own in excess of 50% of the voting stock of the
surviving corporation;

 

(b)           any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any party
as a single plan) of all or substantially all of the assets of the Company;

 

(c)           any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) shall as of the date hereof become the beneficial owner (as defined in
Section 4 Common  Stock subsection (b)(2)(C) of the Charter),
directly or indirectly, of securities of the Company representing more than 13%
(the “Specified Percentage”) of the voting power of all the outstanding
securities of the Company having the right to vote in an election of the Board
(after giving effect, to the extent applicable, to the operation of Section 4 Common
Stock subsection (b) of the Charter) (including, without limitation, any
securities of the Company that any such person has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, which shall be deemed beneficially owned by such
person), provided, however, that in the event that the vote
limitation with respect to Substantial Stockholders set forth in Section 4 Common
Stock subsection (b) of the Charter becomes inoperative by virtue of the
operation of Section 4 Common  Stock subsection (b)(12) of the
Charter or otherwise, the “Specified Percentage” shall be increased, without
requirement for further action, to 35%; or

 

(d)           individuals who as of the date hereof constitute the
entire Board and any new directors whose election by the Board, or whose
nomination by the Board to stand for election by the Company’s stockholders,
shall have been approved by a vote of at least a majority of the directors then
in office (which directors then in office either were directors as of the date
hereof or whose election or nomination for election shall have been so
approved), shall cease for any reason to constitute a majority of the members
of the Board.

 

                                Upon the occurrence of an Event, the
Employee shall have the right to surrender the option outstanding immediately
prior to the Event in exchange for a cash payment equal to the excess of the
Transaction Value (defined below) of the shares subject to the option over the
option exercise price.  If the Employee
has more than one option subject to the terms set forth in this Paragraph 3, such
right with respect to each option may be exercised independently of the other
option(s).  No later than five days
following the Event, the Company shall provide the Employee with written notice
of the Event.  The Employee may exercise
such right by surrendering such options to the Company either within 30 days
after receipt of the notice or within 10 days after the consummation of the
Event, whichever is later.  The Company
shall make the payment in a cash lump sum within 30 days after the Employee
surrenders such options.  The Employee’s
option shall terminate upon receipt of payment therefor pursuant to this
provision.

                                The Transaction Value shall be equal
to the greater of (i) the highest fair market value of a share of the Company’s
Common Stock at the time of, or at any time during the 60

 

 

days preceding, the Event, or
(ii) the highest price paid for a share of the Company’s Common Stock in any
bona fide transaction related to the Event occurring no later than the closing
date of the Event.

 

                                In connection with an Event, and
solely with respect to options not surrendered in connection with such Event as
provided above, the Company may make provision for the assumption of
outstanding options by, or the substitution for outstanding options of new
options covering the stock of, a surviving or successor corporation or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices so as to prevent dilution or enlargement of the value of
the original options, all as determined by the Company at its discretion.

 

                4.             The Company shall not be required
to issue or deliver any certificate or certificates for shares of its capital
stock purchased upon the exercise of the option herein granted until and unless
the offering and sale of the shares represented thereby may legally be made
under the Securities Act of 1933, as amended, and the applicable rules and
regulations of the Securities and Exchange Commission.

 

                5.             The Company may require the
Employee to agree that any shares of capital stock purchased upon the exercise
of this option shall be acquired for investment and not for distribution and
that each notice of the exercise of any portion of this option shall be
accompanied by a written representation that the shares of capital stock are
being acquired in good faith for investment and not for distribution.

 

                6.             In the event that, prior to the
delivery by the Company of all the shares of the capital stock in respect of
which this option is hereby granted, there is any change in the Common Stock or
Common Stock Non-Voting of the Company through the declaration of stock
dividends, or through recapitalization resulting in stock splits, or
combinations or exchanges of shares, or otherwise, the number of shares subject
to this option and the option price shall be proportionately adjusted.

 

                7.             The Employee shall not have any of
the rights or privileges of a stockholder of the Company in respect of any of
the shares issuable upon the exercise of the option herein granted unless and
until certificates representing such shares have been issued and delivered.

 

                8.             Except as otherwise herein
provided, the option herein granted and the rights and privileges conferred
hereby shall not be transferred, assigned, pledged, or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment, or similar process. 
Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise
dispose of said option or of any right or privilege conferred hereby contrary
to the provisions hereof or upon the levy of any attachment or similar process
upon the rights and privileges conferred hereby, this option and the rights and
privileges conferred hereby shall immediately become null and void.

 

                9.             This option may be exercised by
sending a written notice together with full payment for the number of shares to
be purchased to the Company or Agents designated by the

 

 

Company.  Such notice and any other
notice to be given under the terms of this agreement shall be addressed to the
Company in care of its Treasurer at 18 Loveton Circle, Sparks, Maryland
21152-6000 or to Agents of the Company at addresses designated by the Company,
and any notice to be given to the Employee shall be sent  to the address the Employee has given to the
Company or at such other address as either party may hereafter designate in
writing to the other.  Any such notice
shall be deemed to have been duly given if it is personally delivered to the
Treasurer or when enclosed in a properly sealed envelope or wrapper addressed
as aforesaid, registered and deposited, postage and registry fee prepaid, in a
post office or branch post office regularly maintained by the United States
Government, or maintained by the government of the country in which the
Employee resides.

 

                10.           This option shall be binding upon and
inure to the benefit of any successor or successors of the Company.

 

                IN WITNESS WHEREOF,
the Company has caused this document to be executed on its behalf by its duly
authorized officers.

 

 

	
  ATTEST:

  	
   

  	
   

  	
  McCORMICK
  & COMPANY, INCORPORATED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Robert W. Skelton

  	
   

  	
   

  	
  Robert J. Lawless

  
	
  Secretary

  	
   

  	
   

  	
  Chairman, President

  
	
   

  	
   

  	
   

  	
   

  	
  & Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Employee

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