Document:

Exhibit
10.53

 

February 21, 2005

 

Nicholas R. Simmons

Re:                               Incentive Arrangement

 

Dear Nick:

 

As you are aware, there has been considerable
recent change at Specialty, including the fantastic effort all our Team members
put forth to achieve the successful move to our new state-of-the-art Valencia
facility, and more recently, the announcement that Doug Harrington will be
stepping down at the end of March, concluding a very successful term as the
Company’s CEO.  While change can
certainly create uncertainty, it can also create great new opportunities,
including opportunities for our Company, opportunities for all members of the
Specialty Team, and very importantly, opportunities for you and your future.  Specialty’s Board of Directors and Management
recognize you as an important leader at Specialty, and we want to avoid
potential distraction for you and other key employees during this time of
change.  Therefore, an incentive
arrangement has been developed to encourage and reward your continuing
commitment to Specialty, which you have helped make a world-class laboratory.

 

We are offering you an incentive bonus of $100,000
(the “Incentive Bonus”), based on the terms specified herein.  Payment of the Incentive Bonus is contingent
upon your continued employment with Specialty through at least February 20,
2006.  If you are still employed with the
Company on February 20, 2006, and have not been terminated for Cause (as
defined in Exhibit A to this letter) prior to that date, you will receive the
Incentive Bonus (less required withholdings and deductions) in a lump sum.  Should you resign or be terminated for Cause
prior to February 20, 2006, you will not be eligible to receive the
incentive bonus.  You were previously
offered certain severance protections by the Company if you were terminated
other than for Cause, and of course, the terms of that offer will remain in
effect throughout your employment with the Company, including following February 20,
2006.  However, should you be terminated
other than for Cause prior to February 20, 2006, you will not be eligible
to receive both payments, and thus you will receive only the greater of the two
offers (i.e., you will receive the severance protection payments, not the
Incentive Bonus).

 

Specialty’s standard policies and procedures,
and all other terms of your employment with the Company, including your “at
will” employment status, will remain in full effect.  Please also remember that the terms of this
offer are confidential and, as with

 

 

all matters relating to compensation, should not be discussed with
other employees.  If you are in agreement
with the terms herein, please countersign below indicating your acceptance.

 

With your continued dedication and leadership
we will ensure that Specialty is headed for great success in the coming months
and years, and we will continue Specialty’s long tradition of excellence in
laboratory medicine.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Michael R. DeFreece

  	
   

  
	
   

  	
   

  
	
   

  	
  Michael T. DeFreece

  
	
   

  	
  Chairman of the Compensation

  
	
   

  	
  Committee of the Board of Directors

  

 

 

	
  /s/ Nicholas R. Simmons

  	
   

  
	
  Nicholas R. Simmons

  

 

 

Exhibit A

 

“Cause” shall mean a reasonable belief by the Board of Directors or
your supervisor that you have engaged in any one or more of the following:  (i) financial dishonesty, including, without
limitation, misappropriation of a material or substantial quantity of company
funds or property, or any attempt by you to secure any personal profit related
to the business or business opportunities of the Company without the informed,
written approval of the Company’s Board of Directors; (ii) gross
insubordination; (iii) gross negligence or reckless or willful misconduct in
the performance of your duties; (iv) misconduct which has a materially adverse
effect upon the Company’s business or reputation; (v) the conviction of, or
plea of nolo contendre to, any felony involving moral turpitude or fraud; or
(vi) a material violation of Company policies including, without limitation,
the Company’s policies on equal employment opportunity and prohibition of
unlawful harassment.Exhibit 10.54

 

February 21, 2005

 

Mark R. Willig

 

Re:          Incentive
Arrangement

 

Dear Mark:

 

As you are aware, there has been considerable recent change at
Specialty, including the fantastic effort all our Team members put forth to
achieve the successful move to our new state-of-the-art Valencia facility, and
more recently, the announcement that Doug Harrington will be stepping down at
the end of March, concluding a very successful term as the Company’s CEO.  While change can certainly create
uncertainty, it can also create great new opportunities, including
opportunities for our Company, opportunities for all members of the Specialty
Team, and very importantly, opportunities for you and your future.  Specialty’s Board of Directors and Management
recognize you as an important leader at Specialty, and we want to avoid
potential distraction for you and other key employees during this time of
change.  Therefore, an incentive
arrangement has been developed to encourage and reward your continuing
commitment to Specialty, which you have helped make a world-class laboratory.

 

We are offering you an incentive bonus of $50,000 (the “Incentive Bonus”),
based on the terms specified herein. 
Payment of the Incentive Bonus is contingent upon your continued
employment with Specialty through at least February 20, 2006.  If you are still employed with the Company on
February 20, 2006, and have not been terminated for Cause (as defined in
Exhibit A to this letter) prior to that date, you will receive the Incentive
Bonus (less required withholdings and deductions) in a lump sum.  Should you resign or be terminated for Cause
prior to February 20, 2006, you will not be eligible to receive the incentive
bonus.  You were previously offered
certain severance protections by the Company if you were terminated other than
for Cause, and of course, the terms of that offer will remain in effect
throughout your employment with the Company, including following February 20,
2006.  However, should you be terminated
other than for Cause prior to February 20, 2006, you will not be eligible to
receive both payments, and thus you will receive only the greater of the two
offers (i.e., you will receive the severance protection payments, not the
Incentive Bonus).

 

Specialty’s standard policies and procedures, and all other terms of
your employment with the Company, including your “at will” employment status,
will remain in full effect.  Please also
remember that the terms of this offer are confidential and, as with

 

 

all matters relating to
compensation, should not be discussed with other employees.  If you are in agreement with the terms
herein, please countersign below indicating your acceptance.

 

With your continued dedication and leadership we will ensure that
Specialty is headed for great success in the coming months and years, and we
will continue Specialty’s long tradition of excellence in laboratory medicine.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Nicholas R. Simmons

  	
   

  
	
   

  	
   

  
	
   

  	
  Nicholas R. Simmons

  
	
   

  	
  Vice-President & General Counsel

  

 

 

	
  /s/ Mark R. Willig

  	
   

  
	
  Mark R. Willig

  

 

 

Exhibit A

 

“Cause” shall mean a reasonable belief by the Board of Directors or
your supervisor that you have engaged in any one or more of the following:  (i) financial dishonesty, including, without
limitation, misappropriation of a material or substantial quantity of company
funds or property, or any attempt by you to secure any personal profit related
to the business or business opportunities of the Company without the informed,
written approval of the Company’s Board of Directors; (ii) gross insubordination;
(iii) gross negligence or reckless or willful misconduct in the performance of
your duties; (iv) misconduct which has a materially adverse effect upon the
Company’s business or reputation; (v) the conviction of, or plea of nolo
contendre to, any felony involving moral turpitude or fraud; or (vi) a material
violation of Company policies including, without limitation, the Company’s
policies on equal employment opportunity and prohibition of unlawful
harassment.Exhibit 10.55

 

PREMIER PURCHASING PARTNERS, L.P.

GROUP PURCHASING AGREEMENT

CLINICAL LABORATORY SERVICES

 

COVER SHEET

 

	
   

  	
   

  	
  CONTRACT NUMBER:

  	
  PP-LA-146

  	
   

  	
   

  

 

	
  1.

  	
  The “Parties” to
  this Group Purchasing

  	
   

  	
   

  
	
   

  	
  Agreement are:

  	
   

  	
   

  
	
   

  	
  Premier
  Purchasing Partners, L.P.

  	
   

  	
  Specialty Laboratories

  
	
   

  	
  (“Purchasing
  Partners”)

  	
   

  	
  (Seller)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2320 Cascade
  Pointe Boulevard

  	
   

  	
  2211 Michigan Avenue

  
	
   

  	
  Charlotte, NC
  28208

  	
   

  	
  Santa Monica, CA 90404

  
	
   

  	
  Attention:
  Director, Contracting Services

  	
   

  	
   

  	
  Stephen
  Riendeau, Director of Integrated

  
	
   

  	
   

  	
   

  	
   Attention:

  	
  Delivery
  Networks

  
	
   

  	
  704.357.0022

  	
  704.733.4166
  (fax)

  	
   

  	
   

  
	
   

  	
  Contract
  Manager:

  	
  Brian Crowell

  	
   

  	
   800.421.7110

  	
  (phone)

  	
  310.828.1492

  	
  (fax)

  
	
   

  	
  Contract
  Director:

  	
  Barbara Maillet

  	
   

  	
   478.474.4440

  	
   

  	
  478.474.4434

  
	
  2.

  	
  Product
  Category:

  	
   

  	
   Clinical
  Reference Laboratory Testing Services

  
	
  3.

  	
  Effective Date:

  	
   

  	
   1/1/05

  	
   

  
	
  4.

  	
  Expiration Date:

  	
   

  	
   9/30/07

  
	
  5.

  	
  Term of
  Agreement (months):

  	
   

  	
   33 Months

  	
   

  
	
  6.

  	
  Delivery Time
  Period (days):

  	
   

  	
   Defined in
  Section 6.5 

  	
   (Section 6.5)

  
	
  7.

  	
  Purchasing
  Partners Administrative Fee:

  	
   

  	
   [*]%

  	
   (Section 10.1)

  
	
  8.

  	
  Administrative
  Fee Payment Frequency:

  	
   

  	
   Monthly

  	
   (Section 10.2)

  
	
  9.

  	
  Early Payment
  Discount:

  	
   

  	
   [*]%/Net [*]
  days

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  HIPAA
  CERTIFICATION

  	
   

  	
   

  
	
   

  	
             Seller
  to initial here if Seller is NOT a Business Associate within the meaning of
  45 C.F.R. § 160.103, in which case the attached HIPAA Addendum is NOT
  applicable.

  
	
   

  	
   

  
	
   

  	
   

  	
  This Group
  Purchasing Agreement (the “Agreement”) is comprised of the following
  documents and is entered into by the Parties as of the effective Date set
  forth in Item 3 above:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  i.

  	
  This Cover
  Sheet;

  
	
   

  	
   

  	
  ii.

  	
  The attached
  Purchasing Partners Standard Terms and Conditions;

  
	
   

  	
   

  	
  iii.

  	
  The attached
  Additional Terms and Conditions (if any);

  
	
   

  	
   

  	
  iv.

  	
  The attached
  HIPAA Addendum (if applicable); and

  
	
   

  	
   

  	
  v.

  	
  The following
  attached exhibits:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit A:
  Products and Services

  	
  Exhibit E:
  Payment Instructions

  
	
   

  	
   

  	
  Exhibit B:
  Membership Roster Access Instructions

  	
  Exhibit F:
  Minority, Woman-Owned and Small

  
	
   

  	
   

  	
  Exhibit C:
  Distributors N/A

  	
  Businesses
  Policy

  
	
   

  	
   

  	
  Exhibit D:
  Reporting Formats Access Instructions

  	
   

  
															

 

* Information for which
confidential treatment has been requested pursuant to Rule 24(b)(2) of the
Securities Exchange Act of 1934, as amended.  The omitted material has been filed separately
with the Securities and Exchange Commission.

 

 

PREMIER PURCHASING PARTNERS, L.P.

GROUP PURCHASING AGREEMENT-

CLINICAL LABORATORY PRODUCTS AND SERVICES

 

	
  SELLER:

  	
   

  	
   

  	
   

  	
  CONTRACT NUMBER:

  	
   

  	
   

  

 

Exhibit
G: Seller Information Sheet

Exhibit
H: Participating Member Connectivity Agreement(s)

 

 

 

	
  PREMIER PURCHASING
  PARTNERS, L.P.

  	
  SELLER:

  	
  Specialty
  Laboratories

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  PREMIER PLANS,
  L.L.C., Its General Partner 

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Robert
  L. Hamon

  	
   

  	
  By:

  	
  /s/ Cheryl Gallarda

  	
   

  
	
  Printed Name:

  	
  Robert L. Hamon

  	
  Printed Name:

  	
  Cheryl Gallarda

  	
   

  
	
  Title:

  	
  Senior Vice
  President, Group

  Purchasing Services

  	
  Title:

  	
  Vice President
  Business Operations

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ John
  H. Biggers, Jr.

  	
   

  
	
  Printed Name:

  	
  John H. Biggers,
  Jr.

  	
   

  
	
  Title:

  	
  Group Vice
  President, Contract

  Negotiations

  	
   

  
														

 

 

WHEREAS,
Purchasing Partners is an affiliate of Premier, Inc. (“Premier”), and an
alliance of hospitals and health care organizations;

 

WHEREAS,
Premier’s core objective is to improve the health of communities;

 

WHEREAS,
such core objective as well as the objective of helping to assure that patients
receive safe and efficacious care can be accomplished, in part, by achieving
economies of scale and innovations through group strategies and shared
resources;

 

WHEREAS,
group purchasing is a fundamental way hospitals and health systems cooperate to
reduce the costs of providing health services;

 

WHEREAS,
Premier’s group purchasing program is operated by Purchasing Partners;

 

WHEREAS,
Seller is a manufacturer and supplier of health care products and services;

 

WHEREAS,
Seller has offered to provide products and services to the Premier membership
consistent with the terms of this Agreement;

 

WHEREAS,
Purchasing Partners has committed to comply with the Best Ethical Practices for
the Group Purchasing Industry, prepared by Professor Kirk O. Hanson and
released on October 23, 2002 (the “Best Ethical Practices”), the
requirements of the Health Industry Group Purchasing Association Code of
Conduct, adopted on July 24, 2002 (the “HIGPA Code”), and the additional
commitments made by Purchasing Partners to Senator Herb Kohl and Senator Mike
DeWine of the Subcommittee on Antitrust, Competition and Business and Consumer
Rights in a letter dated August 5, 2002, (the “Additional Commitments”).  The Best Ethical Practices, HIGPA Code and
Additional Commitments are referred to collectively herein as the “Premier
Ethical Standards”.

 

WHEREAS,
by entering into this Agreement with Seller it is Purchasing Partners’
expectation that Seller, in its dealings with Purchasing Partners under this
Agreement, will respect Purchasing Partners’ commitment to comply with the
Premier Ethical Standards.

 

NOW
THEREFORE, in consideration of the mutual promises contained herein and other
good and sufficient consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties hereto agree as follows:

 

1.0  TERM OF AGREEMENT.  This Agreement will remain in effect for the
period of time set forth in Item 5 of the Cover Sheet.

 

2.0  SERVICES

 

2.1  Services
Covered.  Seller
hereby agrees to provide the reference laboratory testing services set forth in
Exhibit A hereto (the “Services”) pursuant to the terms of this Agreement.  Seller shall provide Purchasing Partners with
written notice of any Services which are not performed by Seller (i.e., those
Services which are performed by a third party), setting forth the
Test/Procedure name and the name of the actual performer of the testing.  Any additions or deletions of Services from
Exhibit A shall not be effective unless evidenced by an amendment signed by both
Parties.

 

2.2  Supplies.  Seller will provide to Participating Members,
at no charge, a reasonable amount of supplies required to facilitate the
collection, transfer and transport of specimens from the Participating Member
to Seller.  Seller will also provide
supplies required for specimen management and reporting such as forms, labels,
test directory, etc...

 

2.3  Couriers.  Seller will provide or cause to be provided
courier service on a daily basis (Monday through Saturday) to pick up specimens
from the laboratory facility of any Participating Member.  Seller will also provide STAT, On-Call and
Sunday pick-up as specified in Exhibit A.

 

2.4  Electronic Interfaces.  See Exhibit A

 

2.5  Repeat testing.  Seller will, upon request
from any

 

Participating Member,
perform repeat testing at no charge if based on an error or negligence of
Seller and the test results do not correlate with other patient information,
unless such repeat testing is necessitated as a result of the fault of the
Participating Member.

 

3.0  PARTICIPATING MEMBERS.  Set forth in Exhibit B of this Agreement are
instructions for accessing and downloading the list of Premier members (“Participating
Members”), who shall have the right to purchase Services in accordance with
this Agreement.  The list of
Participating Members (the “Membership Roster”) may be amended by Purchasing
Partners from time to time and Purchasing Partners reserves the right to
provide the Membership Roster in other suitable forms.  The Parties hereto acknowledge that
Participating Members may include

 

 

PREMIER PURCHASING PARTNERS, L.P.

STANDARD TERMS AND CONDITIONS

GROUP PURCHASING AGREEMENT- CLINICAL LABORATORY
PRODUCTS AND SERVICES

 

	
  Seller:

  	
   

  	
   

  	
   

  	
  Contract Number:

  	
   

  	
   

  

 

entities/facilities which
are accessing the benefits of this Agreement through participation in the group
purchasing programs operated by Purchasing Partners’ affiliate, Provider
Select, Inc. (“Provider Select”) rather than Purchasing Partners itself.  Such entities/facilities shall nonetheless be
deemed Participating Members under this Agreement.  Seller shall be responsible for routinely
maintaining the current Membership Roster.  New Participating Members added to the
Membership Roster shall be eligible to participate under this Agreement upon
the relevant date set forth in the Membership Roster.  Seller shall stop providing the pricing set
forth herein to entities removed from the Membership Roster within thirty (30)
days following the applicable date of removal set forth in the Membership
Roster.

 

On a
quarterly basis, Seller shall provide Purchasing Partners with written notice
of any Participating Members which are also members of group purchasing
organizations other than Purchasing Partners (such notice is referred to as the
“Dual Membership Notice”). Seller shall have no right to challenge or contest
its obligation to pay Purchasing Partners administrative fees in accordance
with Section 10.1, on
the basis that such Participating Member is also a member of another group
purchasing organization, with respect to any Participating Members which
are not listed in the Dual Membership Notice for the applicable quarter.

 

The
form of any agreement between Seller and a Participating Member and any
amendments thereto shall be approved in advance by Purchasing Partners.

 

4.0  REQUIREMENTS.

 

4.1  Participation.  In order to be entitled to the pricing terms
(described in Exhibit A hereto), Participating Members shall comply with the
participation requirements set forth in Exhibit A.

 

4.2  Exempt.  Participating Members that utilize another
Premier Member’s clinical reference laboratory for testing services are exempt
from their obligation to use a Premier contracted vendor

 

5.0  TERMINATION OF EXISTING CONTRACTS.  Any Participating Member desiring to avail
itself of the benefits of this Agreement may, at its option and without
liability, terminate any existing contract(s) or other arrangement(s) with
Seller for the purpose of participating in the group purchasing arrangement set
forth in this Agreement.  Existing
clients, that are also Participating Members, will be “rolled over” to the
pricing set forth in Exhibit A hereto as of the effective date of this
Agreement or within sixty (60) days of the effective date of this Agreement.

 

6.0  ORDERING; RESULT REPORTING; TURNAROUND
TIME; REPORTS

 

6.1  Testing Laboratories.  It is the intent of the Seller to perform
substantially all of the Services.  To
the extent that the Participating Member requests a service not performed by
the Seller, the Seller will refer the specimen to the Seller affiliated
laboratory listed in Exhibit A for the cost designated in Exhibit A.  To the extent that the Participating Member
requests that Seller refer a specimen to a clinical laboratory unaffiliated
with Seller (not listed in Exhibit A), the Seller will be entitled to charge
the fee set forth in Exhibit A.

 

6.2  Payment Terms.  Participating Member will receive an
additional [*] ([*] %) off of the pricing set forth in Exhibit A if full
payment is made to Seller within [*] ([*]) days following either delivery of
Service(s) to or receipt of invoice by the Participating Member, whichever date
is later.  In any event, full payment
must be made within forty-five (45) days following delivery of Service(s) or
receipt of invoice, whichever date is later.

 

6.3  Reporting of Results.  When any service is ordered, Seller will
provide a report to Participating Member, which will include patient
demographics, test name, test results, assay reference range and any
appropriate and necessary comments deemed essential by the Seller.

 

6.4  Minimum Order.  Seller shall have no minimum purchase order
requirement applicable to any or all Participating Members.

 

6.5  Guarantee of Turnaround Time.  Seller agrees that all Services ordered by
any Participating Member shall be delivered to such member within no more than
the published turnaround time in the Directory of Services.  If Seller fails to deliver any Service(s)
within the above-mentioned turnaround time period for a period of two
consecutive months, Participating Member may purchase any substitute service(s)
from another source(s), and Seller shall reimburse such member for the
difference between such member’s actual cost for such service(s) and the
price(s) such member would have paid for Seller’s Service(s) under this
Agreement., Seller will be subject to performance penalties as defined in
Exhibit A.  Upon the request of any
Participating Member, Seller will assist any such Participating Member in
finding alternative acceptable sources for any Service(s) which Seller cannot
deliver according to the delivery time specified above.

 

6.6  Guarantee of Turnaround Time under
Emergency Conditions.  In the event of a natural disaster or industry
wide shortage of Services (“Emergency Condition”), Seller agrees to use
commercially reasonable efforts to continue uninterrupted Service for the
Participating Members for the duration of the Emergency Condition.

 

* Information for which
confidential treatment has been requested pursuant to Rule 24(b)(2) of the
Securities Exchange Act of 1934, as amended.  The omitted material has been filed separately
with the Securities and Exchange Commission.

 

©2003 BY
PREMIER PURCHASING PARTNERS, L.P.  THIS
DOCUMENT MAY NOT BE REPRODUCED IN ANY FORM WITHOUT THE EXPRESS PERMISSION OF
PREMIER PURCHASING PARTNERS, L.P.

 

2

 

6.7 Testing Services Utilization Reports.  Seller will deliver monthly to Purchasing
Partners and Participating Member, if requested for the extent of time defined
in Item 5 on the Cover Sheet, utilization reports that describe the following
by Participating Member: Client number, Test Name, Test Number/Code, Test
Volume, Test Charges and CPT code when available, on a monthly basis and a year
to date basis.  Seller and Purchasing
Partners will consult and collaborate to create reports that organize the above
information by system, facility type, facility size and other parameters as
deemed reasonably necessary by Purchasing Partners and Seller.

 

6.8 Laboratory Data.  During the period of time set forth in Item 5
of the Cover Sheet, Seller will provide to Purchasing Partners on a monthly
basis the raw laboratory data (which includes tests ordered and test results)
and associated demographic information as received by Seller from Participating
Members with respect to all Services performed on specimens sent by each
Participating Member, but only to the extent authorized by such Participating
Member and only to the extent permitted by law. 
For this purpose, Services include clinical laboratory services and
anatomic pathology services.  Seller will
cooperate with Purchasing Partners in good faith efforts to obtain consent of
the Participating Members as part of the participation agreement.  Notwithstanding the foregoing, such data will
not include any patient names, or other information that would identify the
patient (excluding specimen identification number) provided by the
Participating Member, which will be included unless and to the extent permitted
by applicable law.  The data will be
provided in HL7 format or in any other manner that is mutually agreed upon by
Purchasing Partners and Seller.  Purchasing Partners and Seller agree that,
except to the extent limited by law, there will be no limitation on the use of
such data by Purchasing Partners except that Purchasing Partners agrees that
neither it nor any of its Affiliates will disclose the data to any third party
other than in an aggregated format that does not indicate patient
identification code or any other information that could identify the patient
and agrees to indemnify and hold harmless Seller from and against any claims
brought by any person with respect to any breach or alleged breach of any
patient confidentiality laws by reason of any disclosure of laboratory data by
Purchasing Partners and its affiliates.

 

7.0  PRICING
TERMS.

 

7.1
Pricing.  Service
pricing is set forth in Exhibit A hereto.  All pricing will remain firm for thirty-six
(36) months (from the effective date of this agreement).

 

7.2 Competitive
Pricing.  Subject
to applicable law, Seller represents and warrants that the prices, terms and
conditions offered by Seller to Purchasing Partners through this Agreement
shall, at all times, be at least as good as those offered to any other customer
which purchases a comparable volume of Services relative to the volume
purchased by Participating Members hereunder. 
Further, Seller represents and warrants that the prices, terms and
conditions offered under this Agreement are proportionally better than the
prices, terms and conditions offered to any other customer which purchases a
lower volume of Services relative to the volume purchased by Participating
Members hereunder.  Seller also agrees to
extend any terms or pricing offered to an individual Participating Member to
all Participating Members.  Notwithstanding
any other provision of this Agreement, upon obtaining the prior written consent
of Purchasing Partners (which may be withheld in Purchasing Partners’ sole
discretion), Seller may, under certain circumstances (e.g., Beta testing,
research and development related activities) and for a specified reasonable
period of time, offer special acquisition programs to certain designated
Participating Members, the terms of which shall be mutually agreed upon by
Seller, Purchasing Partners and such Participating Members.

 

7.3
Pricing of New Services. 
Pricing for any additional and/or new services which the Parties
mutually agree to add to Exhibit A will be negotiated at prices consistent with
the prices of Services already covered by this Agreement.  Seller agrees to notify via regular mail or
electronic mail the Purchasing Partners contract director/manager responsible
for this Agreement (as set forth on the Cover Sheet) of new services that
Seller plans to introduce to the market at least 60 days prior to the introduction
of such new services to the market. 
Seller also agrees to provide to Purchasing Partners, as soon as
practical, a copy of the summary basis of approval or medical officer’s report
for new services approved by the FDA.

 

8.0  MARKETING;
SALES SUPPORT; TRAINING.

 

8.1  Seller Representatives.  Seller will provide representatives to call
upon Participating Members on a periodic basis mutually agreed to by Seller and
each individual Participating Member.

 

8.2
In-Service/Clinical Training.  Included in the price of the Service(s),
Seller will provide to Participating Members in-service and clinical training
related to the Services as required or requested by each Participating Member.

 

9.0 SERVICE PRICING INFORMATION; SALES
DOCUMENTATION; ADMINISTRATIVE FEE REPORTING.

 

9.1  Service Pricing Information (Sales
Catalogs).  Seller
will provide to Purchasing Partners service pricing information including list
prices in the ANSI X.12 v004010 format via EDI VAN Services as described on
Purchasing Partners’ web-site.  Instructions
for accessing such reporting format information on Purchasing Partners’
web-site are set forth in Exhibit D.  If
Seller cannot provide service pricing information in such format, Seller may
utilize the alternative format as detailed on Purchasing Partners’
web-site.  Purchasing Partners shall have
the right to update Exhibit D and the reporting format guidelines on its
web-site from time to time upon notice to Seller.  Further, Purchasing Partners shall have the
right to disclose all such pricing information to Participating Members.  In the case of electronic transfer of data,
the file format described on Purchasing Partner’s web-site must be used.

 

3

 

9.2  Sales Documentation.  Seller will provide to Purchasing Partners
monthly reports of all services of Seller delivered and invoiced to each
Participating Member during each calendar month of the term regardless of
whether such Services are provided directly by Seller or other sources.  Such reports shall identify which Services
have been sold directly by Seller and which Services have been sold through
another reference laboratory.  Seller
shall provide Purchasing Partners such reports no later than thirty (30) days
after the last day of the applicable calendar month.  Such reports shall be sent by Seller to the
attention of the “Analysis Department” at Purchasing Partners’ address set
forth on the Cover Sheet.  Reports will
include, without limitation, reporting period start and end dates, Participating
Member name, city, state, and sales volume per test (totaled per Participating
Member).  Participating Members will be
identified by HIN number, DEA number, and/or, as noted in the Membership
Roster, the Premier Entity Code number.  Seller
will provide such sales information in the ANSI X.12 format as described on Purchasing Partners’ web-site.  Instructions for accessing such reporting
format information on Purchasing Partners’ web-site are set forth in Exhibit
D.  If Seller cannot provide such information
in such format, Seller may utilize the alternative format detailed on
Purchasing Partners’ web-site. 
Purchasing Partners shall have the right to update Exhibit D and the
reporting format guidelines on its web-site from time to time upon notice to
Seller.  In the case of electronic
transfer of data the file format described on Purchasing Partners’ web-site
must be used.

 

9.3  Administrative Fee Reporting.
 Seller will provide Purchasing Partners
with monthly reports setting forth the Purchasing Partners Administrative Fee
(as defined in Article 10 below) amounts generated by each Participating
Member during each calendar month of the term. 
Seller shall provide Purchasing Partners such reports no later than
thirty (30) days after the last day of the applicable calendar month.  Participating Members will be identified by
HIN number, DEA number, and/or, as noted in the Membership Roster, the Premier
Entity Code.  Seller will provide such
information in the ANSI X.12 v004010 format via EDI VAN Services as described
on Purchasing Partners’ web-site.  Instructions
for accessing such reporting format information on Purchasing Partners’
web-site are set forth in Exhibit D.  If
Seller cannot provide such information in this format, Seller may utilize the alternative
format as detailed on Purchasing Partners’ web-site.  Purchasing Partners shall have the right to
update Exhibit D and the reporting format guidelines on its web site from time
to time upon notice to Seller.  In the
case of electronic transfer of data, the file format described on Purchasing
Partners’ web-site must be used.

 

9.4  Participating Members’ EDI Transaction
Sets.  Seller shall
use best efforts to accommodate the requests of Participating Members with
respect to Seller’s use of Electronic Data Interchange ANSI X.12 Transaction
Sets, including without limitation, Transaction Sets 810 (invoice), 820
(payment order/remittance advice), 832 (price/sales catalog), 850 (purchase
order), 855 (purchase order acknowledgment), 856 (ship notice/manifest), 844
(product transfer account adjustment), and 849 (response to product transfer
account adjustment [or charge back or rebate]).

 

9.5  Supplier Qualification Review Process and
Quality Standards Information.  Seller shall comply with Purchasing Partners’
requests for information necessary to assure the qualification of the Seller as
an eligible Seller consistent with the requirements of Purchasing Partners’
Supplier Qualification Review Process. 
Seller shall also comply with requests by Purchasing Partners’ or
Participating Members for information necessary to assure the quality of
Services, to include responses to Contract Products/Supplier Experience Reports
as provided to Seller by Purchasing Partners.

 

9.6  Failure to Provide Reports.  Seller’s failure to provide the information
and reports described in Sections 9.1, 9.2 and/or 9.3 shall be deemed a
material breach of this Agreement.

 

9.7  Test Code Standardization Implementation.
 Seller acknowledges that a universal
test code system for laboratory testing would enhance standardization and
supply chain efficiencies through common use of standard test code numbers or
symbols.  Seller supports Purchasing
Partners’ efforts to implement a universal test code system and Seller will use
all reasonable efforts to implement any universal test code system reasonably
adopted by Purchasing Partners.

 

10.0  FEES.

 

10.1  Purchasing Partners Administrative Fee. 
Seller will pay Purchasing Partners an administrative fee (the “Purchasing
Partners Administrative Fee”) equal to the percentage set forth in Item 7 of
the Cover Sheet of the total dollar volume of Services purchased (net of any
credits) by Participating Members through Seller during the term of this
Agreement,

 

Seller
shall also pay administrative fees on the total dollar volume of reference
laboratory services for Participating Member’s laboratories that are a party to
an outsourcing or management agreement with Seller or a third party outsourcing
or management agreement that is referring testing to Seller.

 

Notwithstanding the foregoing, Seller shall continue
to pay the Purchasing Partners Administrative Fee under this Article 10
with respect to sales of any Services which occur after the expiration or
termination of this Agreement pursuant to a direct contract between Seller and
a Participating Member (a “Member Agreement”) which was entered into during the
term of this Agreement.  Seller’s
obligation to pay such administrative fees shall continue until the expiration
or termination of the then-current term of the Member Agreement.  Further, all other provisions relating to the
Purchasing Partners Administrative Fee, including without limitation, the
obligation to provide sales documentation and administrative fee reporting
pursuant to Sections 9.2 and 9.3 above, shall survive the expiration or
termination of this Agreement and remain in effect with respect

 

4

 

to Services purchases under Member Agreements until
the expiration or termination of the then-current term of the applicable Member
Agreement.

 

10.2  Manner of Payment.  Seller will pay to Purchasing Partners the
Purchasing Partners Administrative Fee monthly, without demand or notice,
within thirty (30) days after the end of each month during the term.  Seller’s first Administrative Fee payment
hereunder shall include amounts due with respect to any “stub” period (i.e.,
the period of time from the Effective Date until the first day of the first
calendar month) and the entire first calendar month.  Seller’s failure to timely pay the Purchasing
Partners Administrative Fee shall be deemed a material breach of this
Agreement.

 

All
payments shall be by wire or electronic transfer to the account of “Premier
Purchasing Partners, L.P.” in accordance with the written instructions set
forth as Exhibit E hereto or by a check payable to “Premier Purchasing
Partners, L.P.”. If paying by check, Seller shall send checks to the following
address:

 

Premier
Purchasing Partners, L.P.

Department
7650

Los
Angeles, CA  90084-7650

 

Seller shall pay to
Purchasing Partners interest on any past due amount owing Purchasing Partners
hereunder at the lesser of (a) one and one-half percent (1-1/2%) per month or
(b) the maximum interest rate legally permitted.

 

11.0  COMPLIANCE
WITH LAWS AND REGULATIONS.

 

11.1  General.  Seller represents and warrants that
throughout the term of this Agreement and any extension hereof, Seller and all
Services shall be and shall remain in compliance with all applicable federal,
state and local laws and regulations, including without limitation all
applicable “safe harbor” regulations relating to group purchasing organizations
and fees, discounts and incentives paid and/or granted to group purchasing
organizations and any participants therein. 
Seller shall disclose to Participating Members, per applicable
regulations, the specified dollar value of discounts or reductions in
price.  The Parties acknowledge and agree
that for purposes of 42 C.F.R. Section 1001.952(h), any reduction in the
amount Seller charges a Participating Member (excluding group purchasing
organization fees, such as the Purchasing Partners Administrative Fee) is a “discount
or other reduction in price” to the Participating Member.  Participating Members shall disclose the
specified dollar value of discounts or reductions in price under any state or
federal program which provides cost or charge-based reimbursement to such
Participating Members for the Services covered by this Agreement in accordance
with applicable regulations.

 

Seller
agrees that, until the expiration of four (4) years after the furnishing of any
services pursuant to this Agreement, it will make available, upon written
request of the Secretary of Health and Human Services or the Comptroller
General of the United States or any of their duly authorized representatives,
copies of this Agreement and any books, documents, records and other data of
Seller that are necessary to certify the nature and extent of the costs
incurred by Participating Members in purchasing such services.  If Seller carries out any of its duties under
this Agreement through a subcontract with a related organization involving a
value or cost of ten thousand dollars ($10,000) or more over a twelve-month
period, Seller will cause such subcontract to contain a clause to the effect
that, until the expiration of four (4) years after the furnishing of any
service pursuant to said contract, the related organization will make available
upon written request of the Secretary of Health and Human Services or the
Comptroller General of the United States or any of their duly authorized
representatives, copies of this Agreement and any books, documents, records and
other data of said related organization that are necessary to certify the
nature and extent of costs incurred by Seller for such goods or services.  Seller shall give Purchasing Partners notice
immediately upon receipt of any request from the Secretary of Health and Human
Services or the Comptroller General of the United States or any of their duly
authorized representatives for disclosure of such information.

 

Seller
represents and warrants that as of the date of this Agreement, Seller has not:
(a) been listed by any federal or state agency as excluded, debarred, suspended
or otherwise ineligible to participate in federal and/or state programs; or (b)
been convicted of any crime relating to any federal and/or state program.  Seller further agrees to immediately notify
Purchasing Partners in writing in the event Seller is listed by a federal or
state agency as excluded, debarred, suspended or otherwise ineligible to
participate in any federal and/or state programs or if Seller is convicted of
any crime relating to any such program.

 

11.2  HIPAA Compliance.  The U.S. Department of Health and Human
Services issued regulations on “Standards for Privacy of Individually
Identifiable Health Information,” which comprise 45 C.F.R. Parts 160 and 164
(the “Privacy Rule”), and “Security Standards,” which comprise 45 C.F.R. Parts 160, 162, and 164 (the “Security Rule”), promulgated pursuant to the Health Insurance Portability and
Accountability Act of 1996).  Seller
shall comply with the Privacy Rule and Security Rule, pursuant to the manner
set forth in the HIPAA Addendum attached hereto, if applicable.

 

12.0  INDEMNIFICATION; WARRANTIES;
SPECIFICATIONS AND NOTICES.

 

12.1  Indemnification.  Seller hereby agrees to indemnify, defend and
hold harmless Purchasing Partners and each Participating Member and their
respective directors, officers, employees, agents and insurers from and against
any and all claims, demands, actions, losses, expenses, damages, liabilities,
costs (including, without limitation, interest, penalties and reasonable
attorneys’ fees) and judgments to the extent arising out of: (a) alleged bodily
injury, property damage or any other damage or injury allegedly caused by,
contributed by or associated with any of the Services

 

5

 

covered by this
Agreement, and (b) alleged acts or omissions of Seller and its employees and agents
acting under its control or supervision.  Purchasing Partners hereby agrees to
indemnify, defend and hold harmless Seller and its directors, officers,
employees, agents and insurers from and against any and all claims, demands,
actions, losses, expenses, damages, liabilities, costs (including, without
limitation, interest, penalties and reasonable attorneys’ fees) and judgments
to the extent arising out of the acts or omissions of Purchasing Partners and
its employees and agents acting under its control or supervision.

 

12.2  Standards of Performance.
 Seller hereby represents and warrants
that in connection with all Services hereunder, its performance under this
agreement shall be conducted with due diligence and in full compliance with the
highest professional standards of practice in the industry and Seller’s
policies and procedures. which shall not be materially altered without prior
written notice to Purchasing Partners. 
Seller shall comply with all laws and safety rules in the course of
performing the Services.  If Seller’s
work requires a license, Seller has obtained that license, and the license is
in full force and effect.

 

Seller
will deliver monthly for the extent of time defined in Item 5 on the Cover
Sheet to Purchasing Partners and to Participating Member, Quality Assurance
reports of Seller’s performance regarding key customer service metrics.  This report should include but is not limited
to customer service metrics such as lost specimens, telephone response time,
billing errors, etc.  If Seller fails to
meet customer service metric thresholds as defined in Exhibit A, Seller will be
subject to non-performance penalties as defined in Exhibit A.

 

12.3 Service
Notices.   Seller
agrees to send all Service notices (including without limitation recall
notices, service availability notices, reference range and methodology change
notices), as well as notices of any other changes affecting the Services and
notices of new Services, to each Participating Member with copies to Purchasing
Partners 60 days (60) days prior to institution.  Seller shall provide Purchasing Partners
written notice of any Class I FDA recall affecting any of the Services within
twenty-four (24) hours of Seller’s receipt of any such recall.  Seller shall provide Purchasing Partners
written notice of any Class II or Class III FDA recall affecting any of the
Services as required under applicable law, as if Purchasing Partners was a
user.  Further, Seller agrees to
immediately notify Purchasing Partners and each Participating Member of any
problems in the performance or reporting of Services and of any situation that
might affect Seller’s ability to meet Seller’s obligations under this
Agreement.  Except as prohibited by law,
upon Purchasing Partners’ request, Seller shall provide Purchasing Partners
copies of any FDA Form 483, regulatory letter, and/or warning letter relating
to the Services and Seller’s response thereto.

 

12.4  Insurance.  Seller shall maintain adequate Services
liability, general public liability, and property damage insurance against any
claim or claims which might or could arise regarding Services purchased by
Participating Members from it under the Agreement.  Seller shall make Purchasing Partners a named
additional insured in Seller’s insurance policy containing the required
coverage.  When requested by Purchasing
Partners, an insurance certificate indicating the foregoing coverage, issued by
an insurance company licensed to do business in the relevant state or states
and signed by an authorized agent, shall be furnished to Purchasing
Partners.  Seller shall provide
Purchasing Partners with at least thirty (30) days prior written notice of any
cancellation or material modification of such insurance.

 

13.0  TERMINATION.

 

13.1  Termination for Breach.  In the event of breach of any provision of
this Agreement, the non-breaching party shall notify the breaching party in
writing of the specific nature of the breach and shall request that it be
cured.  If the breaching party does not
cure the breach within thirty (30) days of such notice, the non-breaching party
may immediately terminate this Agreement on written notice to the breaching
party, and such termination shall not preclude the non-breaching party from
pursuing any and all remedies available to it at law or in equity.

 

13.2  Orders Placed Prior to Termination.  Seller shall fulfill, in accordance with the
terms of this Agreement, all orders for Services submitted by Participating
Members and received by Seller prior to termination or expiration of this
Agreement.

 

13.3  Termination Without Cause.  Either party may terminate this Agreement at
any time without cause or penalty upon providing the other party with ninety
(90) days’ advance written notice.

 

13.4  Survival.  The following paragraphs of this Agreement shall
survive expiration or termination of this Agreement: (a) the payment of
Administrative Fees pursuant to Article 10.0 including, but not limited
to, fees relating to Services ordered prior to the effective date of expiration
or termination and delivered after expiration or termination, and fees related to sales of Services under
Member Agreements (as described in Section 10.1 above) which occur after
the expiration or termination of this Agreement; (b) the audit
undertakings set forth in Section 15.12; (c) the representations,
warranties and covenants set forth in Section 12.2; (d) the
indemnification undertaking contained in Section 12.1; (e) the designation
of Participating Members as third party beneficiaries pursuant to Section 15.7;
(f) the undertaking to fill orders submitted to and received by Seller prior to
the date of expiration or termination set forth in Section 13.2; (g) the
confidentiality undertakings contained in Article 14; (h) the rights and
limitations on assignment contained in Sections 15.4 and 15.10; (i) the
governing law provisions contained in Section 15.1; (j) reasonable
attorney’s fees provided for in Section 15.9; and (k) compliance with laws
and regulations provided for in Article 11.0.

 

6

 

14.0  CONFIDENTIALITY; OWNERSHIP AND USE OF DATA.

 

14.1  Confidential Information.  For the purposes of this Agreement,
confidential information (“Confidential Information”) shall mean all
proprietary, secret or confidential information or data relating to Purchasing
Partners, Participating Members, or Seller and their respective operations,
employees, services, patients or customers.

 

14.2  Protection of Confidential Information.  Seller and Purchasing Partners acknowledge
that Seller, Purchasing Partners, or Participating Members may disclose
Confidential Information to each other in connection with this Agreement.  If Seller or Purchasing Partners receives
Confidential Information, it shall: (a) maintain the Confidential Information
in strict confidence; (b) use at least the same degree of care in maintaining
the secrecy of the Confidential Information as it uses in maintaining the
secrecy of its own proprietary, secret, or confidential information, but in no
event less than a reasonable degree of care; (c) use Confidential Information
only to fulfill its obligations under this Agreement; and (d) return or destroy
all documents, copies, notes, or other materials containing any portion of the
Confidential Information upon request by Purchasing Partners or Seller.  Notwithstanding the foregoing, Purchasing
Partners shall have the right to disclose Confidential Information to outside
consultants as necessary for Purchasing Partners to provide support services
for Participating Members in connection with this Agreement, provided any such
consultants agree to the same level of confidentiality as described herein.

 

14.3  Agreement Confidentiality.  Neither Purchasing Partners nor Seller shall
disclose the terms of this Agreement to any other person or entity outside its
organization and affiliates other than to a Participating Member or as required
by law.  For purposes of this provision,
an affiliate is an entity in which Purchasing Partners or Seller, as
appropriate, maintains an ownership position in or a contractual relationship
with, and the disclosure is required so that the disclosing party may fulfill
its obligations hereunder.  Neither party
shall make any public announcement concerning the existence of this Agreement
or its terms unless such party receives prior written approval by the other
party.

 

14.4  Limitation on Obligation.  Seller and Purchasing Partners shall have no
obligation concerning any portion of the Confidential Information which: (a)
was known to it before receipt, directly or indirectly, from the disclosing
party; (b) is lawfully obtained, directly or indirectly, by it from a non-party
which was under no obligation of confidentiality; (c) is or becomes publicly
available other than as a result of an act or failure to act by the receiving
party; (d) is required to be disclosed by the receiving party by applicable law
or legal process; or (e) is developed by the receiving party independent of the
Confidential Information disclosed by the disclosing party.  The receiving party shall not disclose any
portion of the Confidential Information to any person except those of its
employees and affiliates having a need to know such portion to accomplish the
purposes contemplated by this Agreement.

 

14.5  License Granted to Seller.  Purchasing Partners has developed
Confidential Information (as defined in Section 14.1 above) and trade
secrets relating to the sale of goods to a large number of customers in the
healthcare industry using proprietary business processes.  Seller acknowledges that Purchasing Partners
and its affiliates have invested substantial money in the development and
maintenance of such processes and in the sourcing and sales of products and
services.  Seller will have a position of
special trust and confidence for the use of such Confidential Information
(including without limitation the roster of Participating Members set forth in
Exhibit B hereto) to support the purposes of this Agreement.  Accordingly, only for the term of this
Agreement, Purchasing Partners hereby grants to Seller a non-exclusive license
to use Confidential Information and such trade secrets for the limited purpose
of providing the Services to Purchasing Partners and Participating Members
under this Agreement.

 

14.6  Data.  Seller hereby acknowledges and agrees that
all information and data generated or otherwise made available to Seller as a
result of the participation of Participating Members under this Agreement (“Participating
Member Data”“) is proprietary to and owned exclusively by the applicable
Participating Member and/or Purchasing Partners.  Seller shall not sell, market or
commercialize Participating Member Data, create derivative products or
applications based on Participating Member Data or otherwise use Participating
Member Data in any manner unrelated to the performance of Seller’s obligations
under this Agreement.  Participating
Member Data shall be deemed Confidential Information of Participating Members
and/or Purchasing Partners and therefore subject to the provisions of Article 14
hereof.  Seller hereby consents to the
release to Purchasing Partners of transactional data relating to purchasing
activity by Participating Members under this Agreement.  Such consent shall extend to the release to
Purchasing Partners of such data by any third party that operates an electronic
marketplace or exchange.

 

15.0  MISCELLANEOUS.

 

15.1  Governing Law and Venue.  This Agreement is being delivered and
executed in the State of Illinois.  In
any action brought by or against Purchasing Partners, the validity, construction
and enforcement of this Agreement shall be governed in all respects by the laws
of the State of Illinois, and venue shall be proper only in a court of
competent jurisdiction located in the State of Illinois in Cook County.  In the event of any dispute arising out of
this Agreement, whether at law or in equity, brought by or against a Premier
Participating Member, venue shall be proper only in a court of competent
jurisdiction located in the county and state in which such member is located.  The parties agree to be subject to personal
jurisdiction in and consent to service of process issued by a court in which
venue is proper as defined in this Section 15.1.

 

15.2  Modification and Waiver.  No modification of this Agreement shall be
deemed effective unless in writing and signed by each of the parties
hereto.  Any waiver of a breach of any
provision(s) of this Agreement shall not be deemed effective unless in writing
and signed by the party against whom enforcement of the waiver is sought.

 

7

 

15.3  Headings.  The descriptive headings of the sections of
this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any provision hereof.

 

15.4  Assignment.   Purchasing Partners shall have the right,
without Seller’s consent, to assign Purchasing Partners’ rights, title and
interest under this Agreement to any entity owned or controlled by Premier,
Premier Purchasing Partners, L.P. (“Purchasing Partners”) and/or Purchasing
Partners or under common ownership or control with Premier, Purchasing Partners
and/or Purchasing Partners.  Except as
set forth in the foregoing sentence, neither party may assign, subcontract,
delegate or otherwise transfer this Agreement or any of its rights or
obligations hereunder, nor may it contract with third parties to perform any of
its obligations hereunder except as contemplated in this Agreement, without the
other party’s prior writtenconsent which would not be unreasonably withheld.

 

15.5  Severability.  If any part of this Agreement shall be
determined to be invalid, illegal or unenforceable by any valid Act of Congress
or act of any legislature or by any regulation duly promulgated by the United
States or a state acting in accordance with the law, or declared null and void
by any court of competent jurisdiction, then such part shall be reformed, if
possible, to conform to the law and, in any event, the remaining parts of this
Agreement shall be fully effective and operative insofar as reasonably
possible.

 

15.6  Notices.  Any notice required to be given pursuant to
the terms and provisions hereof shall be in writing, postage and delivery
charges pre-paid, and shall be sent by telecopier, hand delivery, overnight
mail service, first-class mail or certified mail, return receipt requested, to
Purchasing Partners or Seller at the addresses and/or facsimile numbers set
forth on the Cover Sheet.  Any party may
change the address to which notices are to be sent by notice given in
accordance with the provisions of this section. 
Notices hereunder shall be deemed to have been given, and shall be
effective upon actual receipt by the other party, or, if mailed, upon the
earlier of the fifth (5th) day after mailing or actual receipt by
the other party.  Seller shall provide a
copy of any notice to Purchasing Partners provided under this Section to
the Premier Legal Department at the following address:

 

Premier Legal Department

12225 El Camino Real

San Diego, CA 92130-2099

Tel No.: (858) 509-6361

Fax No.: (858) 481-0538

Attn.:  General Counsel

 

Purchasing Partners shall
provide a copy of any notice to Seller provided under this Section to the
Specialty Laboratories Legal Department at the following address:

 

Office
of the General Counsel

Specialty
Laboratories

2211 Michigan Avenue

Santa Monica, CA 90404

Tel No.: (310) 828-6543

Fax No.: (310) 586-7235

 

15.7  Enforceability.  The parties hereto acknowledge and agree that
(a) this Agreement is entered into by Purchasing Partners for the express,
intended benefit of Participating Members, (b) each of the Participating
Members shall be and constitute an intended third-party beneficiary of the
representations, warranties, covenants and agreements of the Seller contained
herein, and (c) each of the Participating Members shall be entitled to enforce
the terms and provisions of this Agreement to the same extent as Purchasing
Partners.

 

15.8  Independent Contractors.  The parties’ relationship hereunder is that
of independent contractors.  This
Agreement does not create any employment, agency, franchise, joint venture,
partnership or other similar legal relationship between Purchasing Partners and
Seller.  Neither party has the authority
to bind or act on behalf of the other party except as otherwise specifically
stated herein.

 

15.9  Attorneys’ Fees.  Should any party engage an attorney for the
purpose of enforcing this Agreement or any judgment based hereon in any court,
including bankruptcy court, courts of appeal or arbitration proceedings, the
prevailing party shall be entitled to receive its reasonable attorneys’ fees
and costs in addition to any other relief granted.

 

15.10  Binding Effect.  This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.

 

15.11  Force Majeure.  The obligations of either party to perform
under this Agreement will be excused during each period of delay caused by acts
of God or by shortages of power or materials or government orders which are
beyond the reasonable control of the party obligated to perform (“Force Majeure
Event”).  In the event that either party
ceases to perform its obligations under this Agreement due to the occurrence of
a Force Majeure Event, such party shall: (a) immediately notify the other party
in writing of such Force Majeure Event and its expected duration; (b) take all
reasonable steps to recommence performance of its obligations under this
Agreement as soon as possible.  In the
event that any Force Majeure Event delays a party’s performance for more than
thirty (30) days following notice by such party pursuant to this Agreement, the
other party may terminate this agreement immediately upon written notice to
such party.

 

8

 

15.12  Audit of Costs.  Seller shall permit Purchasing Partners or
its agent to conduct periodic audits of records relating to Seller’s
performance under this Agreement including without limitation relevant orders,
invoices, volume reports and administrative fees.  At a minimum, Seller shall maintain and have
available for review the following documents in connection with an audit:
electronic copies of volume and administrative fee files previously sent to
Purchasing Partners, copies of the Membership Rosters utilized by Seller in
performing under this Agreement, records of all sales made to Participating
Members under this Agreement (in a format that allows for re-querying of the
data), an electronic listing of all Products purchased during the term of this
Agreement (in a format that allows for re-querying of the data) which can be
used as the basis for confirming total Participating Member purchase volume and
total Purchasing Partners Administrative Fees due under this Agreement, and a
cross reference between Seller’s internal customer numbers and Purchasing
Partners-approved entity code numbers (in the event that Purchasing Partners’
entity code numbers are not loaded into Seller’s information system).  The audits shall be conducted upon reasonable
advance notice during regular business hours at Seller’s principal office and
in such a manner as not to unduly interfere with Seller’s operations.  In the event any audit reveals an
underreporting of Purchasing Partners Administrative Fees in excess of the
lesser of $25,000 or 5% of the total Purchasing Partners Administrative Fees
paid in any reporting period, or in aggregate for the entire audit period, then
the costs of the audit, including reasonable labor, outside consultant fees,
out-of-pocket expenses and administrative charges to perform the review shall
be reimbursed to Purchasing Partners by Seller within thirty (30) days of
Seller’s receipt of an invoice therefore from Purchasing Partners.

 

15.13  Minority, Woman-Owned and Small Businesses.
 On
or before the Effective Date, Seller shall provide to Purchasing Partners a
copy of Seller’s current supplier diversity policy.  Such policy shall set forth the manner in
which Seller intends to comply with Purchasing Partners Minority, Woman-Owned,
and Small Business Policy set forth in Exhibit F hereto.  In this regard, Seller acknowledges that it
will use commercially reasonable efforts to spend a minimum of three
percent (3%) of its annual production and raw material costs with
minority-owned businesses and a minimum of two percent (2%) of such costs with
women-owned businesses.

 

15.14  Entire Agreement.  This Agreement, including the Cover Sheet,
the Additional Terms and Conditions (if any) and all Exhibits hereto,
constitutes the entire understanding and agreement between Seller and
Purchasing Partners concerning the subject matter hereof, and supersedes all
prior negotiations, agreements and understandings between Seller and Purchasing
Partners, whether oral or in writing, concerning the subject matter hereof, including,
but not limited to, all prior agreements between Seller and either Purchasing
Partners, AmHS Purchasing Partners, L.P., American Healthcare Systems, Inc.,
Premier Health Alliance, Inc., or SunHealth Alliance, Inc., whether or not
assigned to Purchasing Partners or Premier.

 

15.15  Labor and Employment Laws.  Seller represents and warrants that it
complies with applicable labor and employment laws and prohibits any form of
child labor or other exploitation of children in the delivery of Services, consistent
with provisions of the International Labor Organization’s Minimum Age
Convention of 1973.  A child is any
person who is less than fourteen (14) years of age or who is younger than the
compulsory age to be in school in the country in which Seller’s business is
being conducted, if that age is higher than fourteen (14).

 

15.16  No Additional Obligations Imposed by
Seller.  Except as
expressly set forth herein, Seller shall not impose any obligations on
Purchasing Partners and/or Participating Members as a condition to receiving
any of the benefits set forth in this Agreement.

 

15.17                 Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same agreement.

 

15.18  Data/Payment Exchange; Electronic Commerce.
 Seller
hereby acknowledges that Purchasing Partners and/or its affiliates are
currently developing technology and electronic commerce (“e-commerce”)
processes which may enable Participating Members and Seller to more efficiently
purchase and sell products, supplies and equipment, exchange information and
make payments (e.g., through use of the Internet).  Seller shall implement any e-commerce system reasonably
adopted by Purchasing Partners and/or its affiliates for group purchasing
activities and shall cooperate in all reasonable respects with Purchasing
Partners and/or its affiliates in integrating any such e-commerce systems into
Seller’s systems.  Any such e-commerce
system shall be owned by and proprietary to Purchasing Partners and/or its
affiliates.  Further, Seller agrees
during the term of this Agreement not to direct or otherwise encourage
Participating Members to use e-commerce systems other than the system promoted,
developed and/or operated by Purchasing Partners and/or its affiliates.

 

15.19  Technology Breakthroughs.   Purchasing Partners believes an essential
element of advancing the core objectives and mission of Premier is to encourage
the development of health care technology which significantly improves the
quality, process and/or outcome of care. 
In support of this belief, the Parties acknowledge that certain Services
which incorporate breakthrough technologies (“Breakthrough Technologies”) have
the potential to significantly improve safety to patients or hospital staff,
significantly improve non-clinical operational efficiency, or deliver dramatic
process of care cost savings or improved clinical outcomes when compared to the
level of safety, operational efficiency, process of care and/or outcomes
delivered through use of the Services. 
Purchasing Partners therefore reserves the right to enter into
agreements with the supplier(s) of such Breakthrough Technologies in order to
make such Services available to Participating Members.  Seller hereby agrees that the purchase of
such Breakthrough Technologies by Participating Members shall not negatively
impact such members’ access to any favorable terms and conditions offered under
this Agreement.

 

9

 

15.20  Controlling Document.  In the event of any conflict between this
Agreement and any document, instrument or agreement prepared by Seller
(including without limitation Seller’s purchase orders, invoices and
warranties), the terms of this Agreement shall control.

 

15.21  Seller Information Sheet.  Concurrent with the execution of this
Agreement, Seller shall complete and return to Purchasing Partners the Seller
Information Sheet set forth as Exhibit G.

 

End of Standard Terms and Conditions

 

10

 

PREMIER PURCHASING PARTNERS, L.P. 

HIPAA ADDENDUM

GROUP PURCHASING AGREEMENT

 

I.  GENERAL
PROVISIONS

 

Section 1.  Effect.  This Addendum supplements, modifies and
amends any and all agreements, whether oral or written, between Purchasing
Partners and Seller and relates to the disclosure of protected health
information (“PHI”) by Participating Members to Seller, or the creation or
receipt of PHI by Seller on behalf of Participating Members (the “Agreement(s)”).  The terms and provisions of this Addendum
shall supercede any other conflicting or inconsistent terms and provisions in
any Agreement(s) between Purchasing Partners and Seller, including all exhibits
or other attachments thereto and all documents incorporated therein by
reference.  Without limitation of the
foregoing, any limitation or exclusion of damages provisions shall not be
applicable to this Addendum.

 

Section 2.  Amendment.  Seller and Purchasing Partners agree to amend
this Addendum to the extent necessary to allow either Seller or Participating
Members to comply with the Privacy Rule, the Standards for Electronic
Transactions (45 C.F.R. Parts 160 and 162) and the Security Rule (collectively,
the “Standards”) promulgated or to be promulgated by the Secretary or other
regulations or statutes.  Seller agrees
that it will fully comply with all such Standards and that it will agree to
amend this Addendum to incorporate any material terms required by the
Standards.

 

Section 3.  Definitions.   Capitalized terms used herein without
definition shall have the respective meanings assigned to such terms in Part IV
of this Addendum.

 

II.  OBLIGATIONS OF SELLER

 

Section 1.  Use and Disclosure of
Protected Health Information. 
Seller may use and disclose PHI only as required to satisfy its
obligations under the Agreement(s), as permitted herein, or as required by law,
but shall not otherwise use or disclose any PHI.  Seller shall not, and shall ensure that its
directors, officers, employees, contractors and agents do not, use or disclose
PHI received from a Participating Member in any manner that would constitute a
violation of the Privacy Standards if used by the Participating Member, except
that Seller may use PHI (i) for Seller’s proper management and administrative
services, (ii) to carry out the legal responsibilities of Seller or (iii) to
provide data aggregation services relating to the health care operations of
Participating Member if required under the Agreement(s).  Seller hereby acknowledges that, as between
Seller and Participating Members, all PHI shall be and remain the sole property
of Participating Members, including any and all forms thereof developed by
Seller in the course of its fulfillment of its obligations pursuant to this
Addendum.  Seller further represents
that, to the extent Seller requests that a Participating Member disclose PHI to
Seller, such a request is only for the minimum necessary PHI for the
accomplishment of Seller’s purpose.

 

Section 2.  Safeguards Against Misuse
of Information.  Seller
agrees that it will implement appropriate administrative, technical and
physical safeguards to protect the confidentiality, integrity and availability
of PHI and to prevent the use or disclosure of PHI other than pursuant to the
terms and conditions of this Addendum.

 

Section 3.  Reporting of Disclosures
of Protected Health Information.  Seller shall, within thirty (30)
days of becoming aware of any Security Incident (as defined in the Security
Rule) or any use or disclosure of PHI in violation of this Addendum by Seller,
its officers, directors, employees, contractors or agents or by a third party
to which Seller disclosed PHI pursuant to Section II.4 of this Addendum,
report any such disclosure to Purchasing Partners and applicable Participating
Members.

 

Section 4.  Agreements by Third
Parties.  Seller shall
obtain and maintain an agreement with each agent or subcontractor that has or
will have access to PHI, which is received from, or created or received by
Seller on behalf of Participating Members, pursuant to which agreement such
agent or subcontractor agrees to be bound by the same restrictions, terms and
conditions that apply to Seller pursuant to this Addendum with respect to such
PHI.

 

Section 5.  Access to Information.  Within five (5) days of a request by a
Participating Member for access to PHI about an individual contained in a
Designated Record Set, Seller shall make available to the Participating Member
such PHI for so long as such information is maintained in the Designated Record
Set.  In the event any individual
requests access to PHI directly from Seller, Seller shall within two (2) days
forward such request to Participating Member. 
Any denials of access to the PHI requested shall be the responsibility
of Participating Member.

 

1

 

Section 6.  Availability of Protected
Health Information for Amendment.  Within ten (10) days of receipt of a request
from a Participating Member for the amendment of an individual’s PHI or a record
regarding an individual contained in a Designated Record Set (for so long as
the PHI is maintained in the Designated Record Set), Seller shall provide such
information to Participating Member for amendment and incorporate any such
amendments in the PHI as required by 45 C.F.R. §164.526.

 

Section 7.  Accounting of Disclosures.  Within ten (10) days of notice by a
Participating Member to Seller that it has received a request for an accounting
of disclosures of PHI, other than related to the treatment of the patient, the
processing of payments related to such treatment, or the operation of a covered
entity or its business associate and not relating to disclosures made earlier
than six (6) years prior to the date on which the accounting was requested,
Seller shall make available to Participating Member such information as is in
Seller’s possession and is required for Participating Member to make the
accounting required by 45 C.F.R. §164.528. 
At a minimum, Seller shall provide Participating Member with the following
information: (i) the date of the disclosure, (ii) the name of the entity or
person who received the PHI and, if known, the address of such entity or
person, (iii) a brief description of the PHI disclosed, and (iv) a brief
statement of the purpose of such disclosure which includes an explanation of
the basis for such disclosure.  In the
event the request for an accounting is delivered directly to Seller, Seller
shall within two (2) days forward such request to Participating Member.  Seller hereby agrees to implement an
appropriate recordkeeping process to enable it to comply with the requirements
of this Section.

 

Section 8.  Availability of Books and
Records.  Seller hereby
agrees to make its internal practices, books and records relating to the use and
disclosure of PHI received from, or created or received by Seller on behalf of,
a Participating Member available to the Secretary for purposes of determining
Participating Member’s compliance with the Privacy Standards.

 

Section 9.  Indemnification.  Seller hereby agrees to indemnify and hold
Purchasing Partners and Participating Members harmless from and against any and
all liability and costs, including attorneys’ fees, created by a breach of this
Addendum by Seller, its agents or subcontractors, without regard to any
limitation or exclusion of damages provision otherwise set forth in the
Agreement(s).

 

Section 10.  Insurance.  Seller shall obtain and maintain during the
term of this Agreement liability insurance covering claims based on a violation
of the Standards or any applicable state law or regulation concerning the
privacy of patient information.  A copy
of such policy or a certificate evidencing the policy shall be provided to
Purchasing Partners upon written request.

 

III.           TERMINATION
OF AGREEMENT WITH SELLER

 

Section 1.  Term.  This Addendum shall become effective on the
later of April 14, 2003 or the effective date of the Agreement and, unless
otherwise terminated as provided herein, shall continue to be effective until
superseded by another agreement or until the relationship between Participating
Members and Seller ceases.

 

Section 2.   Termination Upon Breach of
Provisions Applicable to Protected Health Information.  Any other provision of the Agreement(s)
notwithstanding, this Addendum and the Agreement(s) may be terminated by
Purchasing Partners upon thirty (30) days written notice to Seller in the event
that Seller breaches any provision contained in this Addendum and such breach
is not cured within such thirty (30) day period.  Participating Member may terminate its
relationship with Seller in the event that Seller breaches any provision
contained in this Addendum with respect to such Participating Member; provided,
however, that in the event that termination of this Addendum with respect to
such Participating Member is not feasible, in Participating Member’s sole
discretion, Seller hereby acknowledges that Participating Member shall have the
right to report the breach to the Secretary, notwithstanding any other
provision of this Addendum or any Agreement(s) to the contrary.

 

Section 3.  Return or Destruction of
Protected Health Information upon Termination.  Upon termination of this Addendum with
respect to a certain Participating Member, Seller shall either return or
destroy all PHI received from such Participating Member or created or received
by Seller on behalf of such Participating Member and which Seller still
maintains in any form.  Seller shall not
retain any copies of such PHI. 
Notwithstanding the foregoing, to the extent that Participating Member
agrees that it is not feasible to return or 

 

2

 

destroy such PHI, the
terms and provisions of this Addendum shall survive termination and such PHI
shall be used or disclosed solely for such purpose or purposes which prevented
the return or destruction of such PHI.

 

IV.                                DEFINITIONS
FOR USE IN THIS ADDENDUM

 

“Data
Aggregation” shall mean, with respect to PHI created or
received by Seller in its capacity as the business associate of a Participating
Member, the combining of such PHI by Seller with the PHI received by Seller in
its capacity as a business associate of another covered entity, to permit data
analyses that relate to the health care operations of the respective covered
entities.

 

“Designated
Record Set” shall mean a group of records maintained by or
for a Participating Member that is (i) the medical records and billing records
about individuals maintained by or for such Participating Member, (ii) the
enrollment, payment, claims adjudication, and case or medical management record
systems maintained by or for a health plan; or (iii) used, in whole or in part,
by or for such Participating Member to make decisions about individuals.  As used herein the term “Record” means any
item, collection, or grouping of information that includes PHI and is
maintained, collected, used, or disseminated by or for Participating Member.

 

“Electronic
Media” shall mean the mode of electronic transmissions.  It includes the Internet, extranet (using
Internet technology to link a business with information only accessible to
collaborating parties), leased lines, dial-up lines, private networks, and
those transmissions that are physically moved from one location to another
using magnetic tape, disk, or compact disk media.

 

“Individually
Identifiable Health Information” shall mean information that
is a subset of health information, including demographic information collected
from an individual, and

 

(i)  is created or received by a health care
provider, health plan, employer, or health care clearinghouse; and

 

(ii)
relates to the past, present, or future physical or mental health or condition
of an individual; the provision of health care to an individual; or the past,
present or future payment for the provision of health care to an individual;
and (a) identifies the individual, or (b) with respect to which there is a
reasonable basis to believe the information can be used to identify the
individual.

 

“Privacy
Rule” shall mean the Standards for Privacy of Individually
Identifiable Health Information, 45 C.F.R. Parts 160 and 164.

 

“Protected
Health Information” shall mean Individually Identifiable
Health Information that is (i) transmitted by electronic media, (ii) maintained
in any medium constituting Electronic Media; or (iii) transmitted or maintained
in any other form or medium.  “Protected
Health Information” shall not include (i) education records covered by the
Family Educational Right and Privacy Act, as amended, 20 U.S.C. §1232g and (ii)
records described in 20 U.S.C.§1232g(a)(4)(B)(iv).

 

“Secretary”
shall mean the Secretary of the U.S. Department of Health and Human Services.

 

“Security
Rule” shall mean the Security Standards, 45 C.F.R. Parts 160,
162 and 164.

 

3

 

	
  SELLER:

  	
   

  	
  Specialty
  Laboratories

  	
   

  
	
  CONTRACT NUMBER:

  	
   

  	
  PP-LA-146

  	
   

  
	
  SERVICE:

  	
   

  	
  Clinical
  Reference Laboratory Testing Services

  	
   

  

 

1.              Volume:  Pricing tiers for Services shall vary
according to total dollar volume of Services purchased per calendar year by
Participating Members according to the following:

 

	
  VOLUME TIERS

  	
   

  	
  TOTALSERVICES

  PURCHASES

  ($ PER CALENDAR YEAR)

  	
   

  	
  Hotlist

  Discounting

  	
   

  	
  ATB Discounts *

  	
   

  
	
  TIER 1

  	
   

  	
  < [*]

  	
   

  	
  n/a

  	
   

  	
  [*]%

  	
   

  
	
  TIER 2

  	
   

  	
  $[*] to < $[*]

  	
   

  	
  [*] Tests

  	
   

  	
  [*]%

  	
   

  
	
  TIER 3

  	
   

  	
  $[*] to < $[*]

  	
   

  	
  [*] Tests

  	
   

  	
  [*]%

  	
   

  
	
  TIER 4

  	
   

  	
  $[*] to < [*]

  	
   

  	
  [*] Tests

  	
   

  	
  [*]%

  	
   

  
	
  TIER 5

  	
   

  	
  $[*] +

  	
   

  	
  [*] Tests

  	
   

  	
  [*]%

  	
   

  

 

Pricing
for tests that are unique to Specialty will be mutually negotiated per terms of
Section 7.3. * Across-The-Board (ATB) Discounts will initially apply to
new tests that are introduced by Specialty after the contract effective date.  However, within 60 days of introduction,
Seller and Purchasing Partners will mutually negotiate contracted tier pricing.
 Tests that are referred to another
laboratory for testing will be billed to Participating Member at Seller’s cost
per Exhibit A.

 

2.              Pricing: 
The attached price list sets forth the net prices to be offered to
Participating Members.

 

3.              Price Protection:  Seller agrees to hold firm the
Service prices set forth in the attached price list throughout the term of this
Agreement.

 

4.               Aggregation Pricing Option:
Participating Members which operate multi-facility systems and/or have
established networks of facilities for purposes of group purchasing and have
the ability to influence the purchasing decisions of such facilities shall be
entitled to aggregate the purchasing volume and participation levels within
their respective systems and networks in order to meet the desired volume tier
and participation level.

 

5.               Market Checks:  Upon Purchasing Partners’ reasonable request,
Seller shall meet and confer in good faith with Purchasing Partners to
determine the on-going competitiveness of Service pricing under this
Agreement.  To the extent necessary to
address competitive conditions, and upon the parties’ mutual written consent,
Service prices shall be reduced. 
Examples of competitive conditions requiring a price decrease include
without limitation industry-wide price decreases or situations where a group
purchasing organization which competes with Purchasing Partners enters into a
contract with a competitor of Seller for services which are competitive with
the Services at prices significantly below the prices charged for Services
under this Agreement.

 

6.               Designation Form:  Attached hereto is a Designation Form which,
if reasonably deemed necessary by Seller, shall be used by Participating
Members to indicate their desired level of participation under the Volume Tiers
and designate whether they wish to invoke the Aggregation Pricing Option
described in Section 4 above.  The
Designation Form shall not be required if Seller already possesses sufficient
information indicating Participating Members’ preferences with respect to these
issues (“Member Preference Information”) or Seller and Purchasing Partners
mutually agree that the Designation Form will not be utilized.  Purchasing Partners shall have the right to
confirm the accuracy of any such Member Preference Information prior to Seller’s
reliance thereon.  In instances where
Seller reasonably determines that completion of the Designation Form by
Participating Members is necessary for the administration of this Agreement,
Seller hereby acknowledges that Participating Members which purchase Services
without completing and returning the Designation Form shall nonetheless be
deemed to have purchased Services under this Agreement at Volume Tier 1 and
without application of the Aggregation Pricing Option until such time as a
Designation Form is completed and returned which indicates a different preference.
 The Purchasing Partners Administrative
Fees described in Section 10.1 of the Agreement shall be due and payable
by Seller with respect to all purchases of Services by Participating Members
whether

 

* Information for which
confidential treatment has been requested pursuant to Rule 24(b)(2) of the
Securities Exchange Act of 1934, as amended.  The omitted material has been filed separately
with the Securities and Exchange Commission.

Rev 01/04

 

 

or not
the applicable Participating Member has completed and returned the Designation
Form.  Seller and Purchasing Partners
shall use their commercially reasonable efforts to implement a system whereby
Designation Forms  (or Participating
Members’ Volume Tier and Aggregation Pricing Option elections in lieu of the
Designation Form) may be transmitted electronically rather than in paper
form.  Seller reserves the right to
perform bi-annual review of Participating Member’s conformance to desired level
of participation and associated Volume Tier requirements.  In cases where conformance is not being met,
Seller shall provide sixty (60) days written notice of its intent to revise
Participating Member’s Tier Designation and associated pricing.

 

7.               Reporting:  Upon request, Seller shall provide Purchasing
Partners copies of Participating Members’ Designation Forms and any other
information in Seller’s possession indicating Participating Members’ Volume
Tier and Participation Levels. 

 

8.               Priority Courier Pick-up Service Fees:  If a client requests
priority testing courier service, a pickup will be done to ensure it is
included in the next scheduled test set up at no additional charge.

 

9.               Electronic Interfaces: Specialty
will cover the costs of electronic interfaces in facilities that are designated
as Tier 2 or higher.  All costs will be
covered with the exception of annual maintenance fees payable to the LIS vendor
and any facility in-house programming required. 
Please note that such interfaces and any associated equipment purchased
by Specialty can be used solely for inquiry, test ordering and resulting from
Specialty Laboratories.  During the
course of transition planning, a test dictionary building plan will be
established.  Specialty will offer
assistance in building the client’s database and if desired by the facility,
will provide the necessary resources at no additional charge.  Offered resources may include sending
individuals on-site to assist in this process or in providing direct payment to
client employees for ancillary work performed to accomplish this task.

 

10.         Performance Standards and Penalties:

 

= Lost
Specimens (For specimens lost after receipt into the
laboratory):

Standard
– Seller shall not lose a specimen from Participating Member.

Penalty
- Specimens lost after receipt in the laboratory will be subject to a $200
penalty per accession.

This
penalty will be applied as a credit on the applicable Participating Member’s
monthly invoice.

 

= Billing
Errors

Standard - Seller shall provide accurate invoices to
Participating Member.

Penalty - If greater than 1 inaccurate invoice is
received by Participating Member, the following penalties

will apply to subsequent inaccurate invoices:

 

	
  < or equal to
  5 items in error

  	
   

  	
  [*]% credit off
  entire invoice

  
	
  6-10 items in
  error

  	
   

  	
  [*]% credit off
  entire invoice

  
	
  11-25 items in
  error

  	
   

  	
  [*]% credit off
  entire invoice

  
	
  26-50 items in
  error

  	
   

  	
  [*]% credit off
  entire invoice

  
	
  >50 items in
  error

  	
   

  	
  [*]% credit off
  entire invoice

  

 

Each Participating Member shall report all suspected
billing errors within 30 days of the Member’s receipt of Seller’s invoice.  Errors will be investigated and corrected by
Seller within 30 days of its receipt of any such report and any credits, if
due, will appear on the following month’s invoice.  If errors are not corrected and credits
applied in this timeframe, an additional [*]% penalty will be applied to each
monthly invoice sent by Seller to the Participating Member until the
appropriate credit is completed.

 

= Turnaround
Time (TAT)

Standard
– Seller shall complete all services of Participating Member, within their
published TAT.

Penalty
– Seller shall reimburse Participating Member for the difference between such
member’s actual cost for the substitute service(s) from another source(s) and
the price(s) such member would have paid for Seller’s Service(s) under this
Agreement.

 

If the TAT does not return to stated TAT in the Directory
of Services after 2 months or 3 occurrences (not accessions), the Seller will
credit [*]% of the cost of the service that is not meeting stated TAT
to the Participating Member in their next invoice.  For every week and/or occurrence that passes
after the original 2 months or 3 occurrences have been met, the credit will
increase another [*]%.

 

* Information for
which confidential treatment has been requested pursuant to Rule 24(b)(2) of
the Securities Exchange Act of 1934, as amended.  The omitted material has been filed separately
with the Securities and Exchange Commission.

 

 

	
  1-2 occurrences
  or < 2 months 

  	
   

  	
  Reimburse: $$ Substitute
  minus $$ Fee Schedule

  
	
  3 occurrences or
  2 months 

  	
   

  	
  Reimburse: $$ Substitute
  minus ($$ Fee Schedule – [*]%)

  
	
  4 occurrences or
  2 months, 1 week 

  	
   

  	
  Reimburse: $$ Substitute
  minus ($$ Fee Schedule – [*]%)

  
	
  5 occurrences or
  2 months, 2 weeks 

  	
   

  	
  Reimburse: $$ Substitute
  minus ($$ Fee Schedule – [*]%)

  
	
  6 occurrences or
  2 months, 3 weeks 

  	
   

  	
  Reimburse: $$ Substitute
  minus ($$ Fee Schedule – [*]%)

  
	
  ETC

  	
   

  	
  ETC

  

 

* Information for which
confidential treatment has been requested pursuant to Rule 24(b)(2) of the
Securities Exchange Act of 1934, as amended.  The omitted material has been filed separately
with the Securities and Exchange Commission.

 

 

Exhibit A Pricing

Clinical Reference Laboratory Testing
Services

 

Price List is attached.

 

[*]

 

* Information for which
confidential treatment has been requested pursuant to Rule 24(b)(2) of the
Securities Exchange Act of 1934, as amended. The omitted material has been
filed separately with the Securities and Exchange Commission.

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