Exhibit 10.40

CONFIDENTIAL

Letter of Agreement between
SmithKline Beecham Corporation
And
Quest Diagnostics Incorporated

This Letter of Agreement (“LOA”), effective as of January 1, 2008, is made
between SmithKline Beecham Corporation d/b/a GlaxoSmithKline with a primary
address at 2301 Renaissance Blvd, King of Prussia, PA 19406 USA, together with
its affiliates (“GlaxoSmithKline” or “GSK”) and Quest Diagnostics Incorporated,
with a primary address at 3 Giralda Farms, Madison, NJ 07940 together with its
affiliates (“Quest Diagnostics”) together “the Parties”, to revise the
relationship previously established in the Amended and Restated Global Clinical
Trials Agreement dated December 19, 2002 (hereinafter “Previous Agreement”).
“Affiliates” for purposes of this LOA shall include any corporation or
non-corporate entity which controls, is controlled by, or is under common
control with a Party to this LOA.

1.      The Parties agree that Quest Diagnostics shall continue to provide
services (hereinafter “Services” as defined in the Previous Agreement) in
accordance with the terms of the Previous Agreement and as supplemented by the
new business terms covered in Exhibit A, attached hereto, while the Parties, in
good faith, draft and negotiate a comprehensive new Global Clinical Trials
Agreement (“Agreement”).

2.      This LOA is not intended to take the place of the Agreement, but to
implement the business terms contained on Exhibit A while the Agreement is
negotiated and executed. This LOA shall remain in effect until the earlier of
(i) the execution of the Agreement by the Parties or (ii) March 31, 2008, which
date may be extended by the mutual agreement of the Parties. Upon its full
execution, the Agreement shall supersede this LOA and the Previous Agreement.

3.      During the term of this LOA, should any dispute arise between the
Parties involving conflict or interpretation of a term or condition of the
Previous Agreement and a term or condition of this LOA, the disputing party
shall promptly notify the other party of the disputed term and the Parties shall
negotiate in good faith to resolve the dispute. Notice of the dispute shall be
in writing to the following individuals:

For Quest Diagnostics:
Daniel P. Megronigle
3 Giralda Farms
Madison, NJ 07940
Phone 973-520-2086

For GlaxoSmithKline:
Paula M. Russella
2301 Renaissance Blvd., #510, RN0410
King of Prussia, PA 19406
Phone: 610-787-3281

 

 

 

 

SMITHKLINE BEECHAM CORPORATION

 

QUEST DIAGNOSTICS INCORPORATED

 

 

 

By:

 

By:

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Name Printed:

 

Name Printed:

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Title:

 

Title:

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Date:

 

Date:

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      Letter of Agreement     GlaxoSmithKline and Quest Diagnostics Incorporated
         

Page 1 of 11

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EXHIBIT A

I.     

Term of Agreement

   

It is agreed by the Parties that the Agreement shall be effective January 1,
2008 and shall continue through December 31, 2014.

  II.     

Compensation

   

The Parties agree that the “Most Favored Nations (MFN”) pricing status
provisions [established under Section XV(1) and XV(1)(i)] from the Previous
Agreement shall be of no further force or effect as of January 1, 2008. Any
references to the MFN status shall be void.

   

Further, Section # XV of the Previous Agreement shall be of no further force or
effect for any studies contracted after December 31, 2007. However, items #4
through #15 of Section XV of the Previous Agreement shall continue to apply to
any studies contracted before December 31, 2007.

   

1.      Billing and Payment Terms. Quest Diagnostics will provide a proposal to
GlaxoSmithKline based on the Fee Schedule attached hereto as Attachment #1.
Quest Diagnostics will bill GlaxoSmithKline for Services once per month. Charges
will be billed at the rates agreed to in the applicable Task Description,
subject to any adjustments for inflation and exchange rates permitted under the
Task Description or this LOA. Laboratory testing services requested by
GlaxoSmithKline that are not included in Attachment #1 shall be billed at Quest
Diagnostics’ then-current general fee schedule, subject to any applicable
discounts (*) from Quest Diagnostics current list prices, unless otherwise
agreed in writing by the Parties. It is a MATERIAL TERM of this Agreement that
GlaxoSmithKline shall pay all undisputed invoiced amounts within thirty (30)
days of receipt of an invoice for Services.

    2.     

Payments:

    

2.1       US payments shall be made by wire transfer or check payable to Quest
Diagnostics Incorporated, Tax ID Number 38-2084239:

 

 

 

If payment by check:

 

If payment is by Bank Transfer/Wire Transfer:

 

Quest Diagnostics Incorporated

Send to: Bank of America

Clinical Trials USA

ABA Routing Number:

13747 Collection Center Drive

Account Number:

Chicago, IL 60693

Swift Number

 

Telex Number:

 

*Please identify the invoice numbers being paid.

  2.2  UK payments shall be made in the currency agreed to by the parties by
check or bank transfer (check payable to Quest    

 

Diagnostics Limited, VAT Registration Number GB 731 5475 39):  

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________

* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 2 of 11

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      If payment is by Cheque:
 
      If payment is by Bank Transfer:
  Non US Dollar currencies:   HSBC Bank   Quest Diagnostics Ltd   City of London
Corporate Office Unit B-1 – Parkway West   8 Canada Square, London Cranford Lane
  E14 5XL, United Kingdom Heston Middlesex       England TW5 9QA   Swift Code:  
  US Dollars:   Non US Dollar and Non Euro Deposits: Quest Diagnostics Limited  
           Account: Quest Diagnostics Limited PO Box 13318              Sort
Code:
Number:
Newark              IBAN#   NJ 07101-3318       USA   Euro Deposits:            
     Account: Quest Diagnostics Limited                Sort Code:
Number:
               IBAN#         US Dollar Deposits:                Account: Quest
Diagnostics Limited                Sort Code:
Number:
               IBAN#  

3. Fee Increases. Quest Diagnostics may increase fees for its Services provided
hereunder * to offset any increased costs of operations by providing written
notice to GlaxoSmithKline.

Any such increase shall not exceed *.       .

4. *. The * is designed to provide GlaxoSmithKline with * in *. The * shall
apply to all studies contracted by the Parties as of *. Quest Diagnostics will
offer a * to current studies . This * will apply to * and excludes * by Quest
Diagnostics Laboratory or any of its affiliates. The * shall be applied as a *
on each invoice for testing services rendered during the preceding month.

5. *. GlaxoSmithKline shall earn * of * following adjustment for *. The * shall
exclude *.

The * is as follows:

* * * * * *

The * shall be payable by March 31 of the following calendar year.

The * will continue through the term of the Agreement, although the Parties will
negotiate in good faith * to adjust the * for calendar years *. Until the
parties reach such agreement, the * shall apply.

6. *: A total of * is available to apply against * for the period *, reduced by
any * earned in *, provided the following criteria are met:

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________

* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 3 of 11

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• In any single calendar year (between * and *) if the * (*) is above *, GSK can
apply * of the * as defined above as a * by March 31 of the following calendar
year.

The* of * in aggregate will be reduced by the total amount of * earned by GSK in
*. e.g. If the * amounts to * in * and * in *, the total * available for the
period will be * in aggregate *.

III. Exclusivity Clause

The Parties agree that the Exclusivity Clause [Section III(1)-(4)] and the
Exclusivity Audits [section XVI(3)] of the Previous Agreement shall be of no
further force or effect. As of the Effective Date, Quest Diagnostics shall be a
“Principal Provider” of global central laboratory services for GSK. As Principal
Provider, Quest Diagnostics shall support all of GSK’s annual global central
laboratory needs and shall be awarded all laboratory testing in connection with
*, with the exception of GSK clinical studies in the following specific areas:

*

However, as a Principal Provider GlaxoSmithKline shall provide Quest Diagnostics
*, and GSK shall have the absolute right to *.

 * If * cause the * to fall below *, Quest Diagnostics reserves the right to *.

 * * applies only to new studies that have not already been * by Quest
   Diagnostics.

IV. Miscellaneous. The following are some of the additional terms discussed by
the Parties that will be further negotiated for inclusion in the Agreement.
Other terms may also be included by agreement of the Parties:

a) Relationship Management:

     (i) Relationship Metrics. In addition to Operational Metrics, Quest
Diagnostics and GSK will mutually agree to a Scorecard of Relationship Metrics
inclusive of financial, development economics and operational satisfaction
measures. Attachment #2 hereto contains Potential Key Performance Metrics. The
Parties shall mutually agree to a maximum of 12 metrics from this list as well
as agree to the frequency of the metrics.

     (ii) Steering Committee. In support of the Strategic relationship between
the Parties a Business Steering Committee shall be established to foster best
practices, creative alternatives and forward thinking. This committee will be
charged with and responsible for the periodic review of all aspects of the
Strategic Relationship to ensure business goals and objectives are achieved.

b) Quest Diagnostics Strategic Investments:

            Quest Diagnostics is in the planning phases of * into a * which will
be targeted to open in the *.

                 • Quest Diagnostics is willing to establish a joint team with
GSK to identify and review mutually beneficial collaboration opportunities to
drive growth.

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________

* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 4 of 11

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     • Quest Diagnostics will establish a new laboratory facility in India no
later than the second quarter of 2008 to begin to support GSK off-shore
operations.

     • Quest Diagnostics will enhance the quality of its Information Technology
and sample management services pursuant to Quest Diagnostics’ June 4, 2007
proposal.

Quest Diagnostics will restructure its existing * through key performance
indicators agreed upon with GSK, including * and improvements to process flow
and communications.

 

 

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________

* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 5 of 11

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Attachment #1

2008 Fee Schedule

 
Proposed RoW

Proposed Americas

Test

 

 

 

 

 

 

 

11-DEHYDROTHROMBOXANE-B2 *   *   *   * ACTH, PLASMA *   *   *   * ADIPONECTIN *
  *   *   * ALBUMIN CREATININE RATIO *   *   *   * ALCOHOL (ETHYL), URINE *   *
  *   * ALDOLASE *   *   *   * ALPHA-1-ACID GLYCOPROTEIN *   *   *   * AMMONIA,
PLASMA *   *   *   * AMYLASE, SERUM *   *   *   * ANA TITER & PATTERN *   *   *
  * APOLIPOPROTEIN A1 *   *   *   * APOLIPOPROTEIN B *   *   *   *
APOLIPOPROTEIN C3 *   *   *   * APPT/PROTHROMBIN TIME WITH INR *   *   *   *
BETA-2 MICROGLOBULIN *   *   *   * BONE ALKALINE PHOSOPHATASE *   *   *   *
BRAIN NATRIURETIC PEPTIDE *   *   *   * CA 19-9 *   *   *   * CARDIO CRP *   *  
*   * CD40L, SOLUBLE *   *   *   * CHEMISTRY ANALYTE *   *   *   * CHEMISTRY
PANEL *   *   *   * CHEMZYME PLUS *   *   *   * CHLAMYDIA TRACHOMATIS PCR *   *
  *   * CHORIONIC GONADOTROPIN, QUALITATIVE *   *   *   * CK-MB *   *   *   *
CMV IGM ANTIBODY *   *   *   * COMPLEMENT COMPONENT C3 *   *   *   * COMPLEMENT
COMPONENT C4 *   *   *   * COMPLETE BLOOD COUNT *   *   *   * CORTISOL, SERUM
(immunoassay) *   *   *   * CORTISOL,FREE, 24HR URINE (immunoassay) *   *   *  
* C-PEPTIDE *   *   *   * C-REACTIVE PROTEIN *   *   *   * CREATININE *   *   *
  * CREATININE CLEARANCE *   *   *   * CREATININE, RANDOM URINE *   *   *   *
CREATININE, URINE *   *   *   * CYSTATIN C, SERUM *   *   *   *

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________
* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 6 of 11

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Proposed RoW

Proposed Americas
  *   *  
*
  *                 Test        

    DERMATAN SULFATE *   *  
*
  * DIGOXIN *   *  
*
  * DIHYDROTESTOSTERONE *   *  
*
  * DNA (DS) ANTIBODIES *   *  
*
  * DNA EXTRACTION/AUTOPREP *   *  
*
  * DRUG ABUSE W/ALCOHOL *   *  
*
  * EGFR, ELISA *   *  
*
  * ESTRADIOL *   *  
*
  * FATTY ACIDS, FREE *   *  
*
  * FERRITIN *   *  
*
  * FIBRINOGEN *   *  
*
  * FOLATE, SERUM *   *  
*
  * FREE KAPPA & LAMBDA LIGHT CHAINS *   *  
*
  * FRUCTOSAMINE *   *  
*
  * FSH *   *  
*
  * GAD ANTIBODIES *   *  
*
  * GLUCOSE, PLASMA *   *  
*
  * GLUCOSE, URINE RANDOM *   *  
*
  * H. PYLORI ANTIBODY (IGG) *   *  
*
  * H. PYLORI ANTIBODY (IGM) *   *  
*
  * HAPTOGLOBIN *   *  
*
  * HCV RNA QUANT, PCR *   *  
*
  * HDL CHOLESTEROL *   *  
*
  * HDL SUBCLASSES *   *  
*
  * HELICOBACTER PYLORI ANTIBODY (IGA) *   *  
*
  * HEMATOCRIT *   *  
*
  * HEMOGLOBIN *   *  
*
  * HEMOGLOBIN A1C *   *  
*
  * HEMOGRAM *   *  
*
  * HEPATITIS A AB TOTAL *   *  
*
  * HEPATITIS A IGM ANTIBODY *   *  
*
  * HEPATITIS B CORE AB *   *  
*
  * HEPATITIS B CORE IGM *   *  
*
  * HEPATITIS B SURFACE AB *   *  
*
  * HEPATITIS B SURFACE ANTIGEN W/ *   *  
*
  * CONFIRMATION        

    HEPATITIS BE AB *   *  
*
  * HEPATITIS BE AG *   *  
*
  * HEPATITIS C ANTIBODY *   *  
*
  * HER2, ELISA *   *  
*
  * HER-2/NEU FISH *   *  
*
  * HETEROPHILE, MONO SCREEN *   *  
*
  * HIV-1 AB WESTERN BLT *   *  
*
  * HIV-1 RNA 1.5 ULTRA *   *  
*
  *

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________
* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 7 of 11

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Proposed RoW

Proposed Americas
  *   *   *   * Test                               HIV-1 RNA BY PCR (1.5) QUANT
*   *   *   * HIV-1/HIV-2 AB SCREEN *   *   *   * HIV-2 ANTIBODY WB *   *   *  
* HPV DNA (HIGH RISK) *   *   *   * HTLV I/II ANTIBODY *   *   *   * IGE, SERUM
*   *   *   * IMMUNOFIXATION, SERUM *   *   *   * IMMUNOFIXATION, URINE *   *  
*   * IMMUNOGLOBULIN A *   *   *   * IMMUNOGLOBULIN AP *   *   *   *
IMMUNOGLOBULIN G *   *   *   * IMMUNOGLOBULIN M *   *   *   * IMMUNOGLOBULIN Mp
*   *   *   * IMMUNOGLOBULIN SERUM *   *   *   * IMMUNOREACTIVE INSULIN (LINCO
RIA) *   *   *   * INSULIN (IMMULITE) *   *   *   * INTERLEUKIN-6 HIGHLY
SENSITIVE *   *   *   * IRON, TOTAL, IBC & SATURATION *   *   *   * LACTATE
DEHYDROGENASE ISOENZYMES *   *   *   * LDL Calculation *   *   *   * LIPASE
SERUM (when ordered with a Chem panel) *   *   *   * LIPID PANEL *   *   *   *
LIPID PANEL (BETA QUANT) *   *   *   * LIPOPROTEIN (A) *   *   *   * LITHIUM *  
*   *   * Lp-PLA2 ACTIVITY, COLORIMETRIC - GSK ONLY *   *   *   * LUTEINIZING
HORMONE *   *   *   * LYMPHOCYTE SUBSET PANEL 2 (CD4/CD8) *   *   *   *
LYMPHOCYTE SUBSET PANEL 3 *   *   *   * MICROALBUMIN, RANDOM URINE *   *   *   *
MMP-9 EIA (TOTAL) *   *   *   * MULTISPOT HIV 1/2 *   *   *   * NEISSERIA
GONORRHOEAE PCR *   *   *   * N-TELOPEPTIDE (U) *   *   *   * PAP, LIQUID-BASED
*   *   *   * PARATHYROID HORMONE *   *   *   * PARTIAL THROMBOPLASTIN TIME,
ACTIVATED *   *   *   * PEPSINOGEN I *   *   *   * PHENYTOIN *   *   *   *
POTASSIUM, URINE *   *   *   * PROGESTERONE *   *   *   * PROINSULIN *   *   *  
* PROLACTIN *   *   *   *

GlaxoSmithKline –Letter of Agreement
Date: January 1, 2008

_____________________________________
* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 8 of 11

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Proposed RoW

Proposed Americas
  *   *   *   *                 Test               PROTEIN ELECTROPHORESIS,
SERUM (SERUM *   *   *   * PEP)               PROTEIN ELECTROPHORESIS, URINE
(URINE PEP) *   *   *   * PROTEIN TOTAL, URINE *   *   *   * PROTEIN/CREATININE
RATIO, URINE *   *   *   * PROTHROMBIN TIME WITH INR *   *   *   * PSA FREE &
TOTAL *   *   *   * PSA, TOTAL (Centaur) *   *   *   * RECOMBIGEN HIV-1 *   *  
*   * RETICULOCYTE CELL COUNT *   *   *   * RHEUMATOID FACTOR *   *   *   * RPR
(MONITOR) *   *   *   * SALICYLATE *   *   *   * T-3 UPTAKE *   *   *   * T-4
(THYROXINE) TOTAL *   *   *   * T-4 (THYROXINE), FREE *   *   *   *
TESTOSTERONE, TOTAL *   *   *   * THEOPHYLLINE *   *   *   * THYROID STIMULATING
HORMONE *   *   *   * TRIGLYCERIDES *   *   *   * TRIIODOTHYRONINE, FREE *   *  
*   * TRIIODOTHYRONINE, TOTAL *   *   *   * TROPONIN I *   *   *   * URINALYSIS
W/UROBILINOGEN *   *   *   * URINALYSIS, MACROSCOPIC *   *   *   * URINALYSIS,
MICROSCOPIC *   *   *   * URINALYSIS, ROUTINE *   *   *   * VALPROIC ACID *   *
  *   * VITAMIN B12 *   *   *   * VITAMIN B12/FOLIC ACID *   *   *   *

GlaxoSmithKline –Letter of
Agreement Date: January 1, 2008

_____________________________________
* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 9 of 11

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Other Fees            * Fees   RoW                                Americas  
2008 Quest 2009 Quest 2008Quest 2009 Quest   Proposal Proposal Proposal Proposal
 Project Management *        * * *  Data Management *        * * *  Logistics *
       * * *  Management                                                  
 Total *        * * *    * Fees           Quest
Quest Proposal
      Proposal        Project Management *        *      Data Management *      
 *      Logistics *        *            Kits           RoW Americas       2008
Quest 2009 Quest       Proposal Proposal      *-* components *        *      *-*
components *        *      <* components *        *          Quest *        
 (Americas only) Americas Americas      * *        *            Storage        
  RoW Americas      In *        *      Maintenance *        *      Pull *      
 *    

GlaxoSmithKline –Letter of
Agreement Date: January 1, 2008

_____________________________________
* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 10 of 11

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Attachment #2
                          Potential Key Performance Metrics        

         

 
Implementation
Category
 
Performance Metric
 
Qualifier
 
Target
  Status Protocol   Approval of CLW within    Percentage of studies that   100 %
* Initiation   agreed specified    receive CLW approval by date            
timeline in CLW    specified in CLW                           Site Initiation  
On-time study start    Percentage of kits to first site per   100 % *        
 study delivered on time                           Site Support   Data query
turn-    Percentage within 24 hours: time   100 % *                   Services  
around-time    of receipt of data query to date                
 closed on database
                          Lab Operations   Turn-around-time for    Percentage of
samples received   100 % *     sample receipt    in lab within 36 hours of      
           collection time.                           Lab Operations  
Percentage of test    The elapsed time from when the   100 % *     reported
within    specimen is received in the             expected turn around  
 laboratory until the analytical             time    result is approved and
released                  into TopCat and available for                
 reporting to the Investigator site.                           Lab Operations  
Percentage of tests not    Percentage of tests not   0 % *     performed/not  
 performed/not reportable by             reportable    reason                  
        Lab Operations   Percentage of    Percentage of samples shipped   100 %
*     shipments/samples    on time as per defined timelines             shipped
on time to third                 party                               Lab
Operations   Number of lost    Number of lost samples   0   *     samples  
 (internally and externally) by                  reason                        
  Data   Complete Data Set    Percentage of data   95 % * Management   delivered
on time and    transmissions delivered on time             defect free    error
free (number of                  resubmissions)                          
Financial   Budget reconciliation to    Variance between budgeted vs   95 % *
Management   plan    actual costs                           Financial  
Comparison of    Variance between budgeted vs   95 % * Management   budgeted to
actual    actual costs             transportation costs                        
      Financial   Days sales outstanding    Percentage of invoices paid   100 %
* Management        within 30 days        

GlaxoSmithKline –Letter of Agreement Date:
January 1, 2008

_____________________________________
* Confidential treatment has been requested. The redacted material has been
separately filed with the Commission.

Page 11 of 11

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