Exhibit 10.16
AMENDED AND RESTATED
GLOBAL CLINICAL TRIALS AGREEMENT
BETWEEN
SMITHKLINE XXXXXXX PLC
D/B/A GLAXOSMITHKLINE
AND
QUEST DIAGNOSTICS INCORPORATED
DATED AS OF DECEMBER 19, 2002
TABLE OF CONTENTS
PAGE
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SECTION I. DEFINITIONS..................................................1
SECTION II. STATEMENT OF WORK............................................7
SECTION III. EXCLUSIVITY..................................................9
SECTION IV. RELATIONSHIP MANAGEMENT.....................................13
SECTION V. REVIEW AND IMPROVEMENT OF SERVICES..........................15
SECTION VI. CERTAIN PERFORMANCE METRICS AND MEASURES....................15
SECTION VII. STUDY PREPARATION PHASE.....................................16
SECTION VIII. STUDY MANAGEMENT............................................21
SECTION IX. SPECIMEN TRANSPORT..........................................22
SECTION X. RESULT REPORTS..............................................24
SECTION XI. DATA MANAGEMENT REQUIREMENTS................................25
SECTION XII. MANAGEMENT REPORTING........................................26
SECTION XIII. LABORATORY METHODOLOGY......................................26
SECTION XIV. LABORATORY EQUIPMENT........................................27
SECTION XV. COMPENSATION................................................28
SECTION XVI. AUDITS, INSURANCE AND PERSONNEL CHANGES.....................32
SECTION XVII. SERVICE MINIMUMS AND INCENTIVES.............................34
SECTION XVIII. CONFIDENTIALITY/OWNERSHIP OF SPECIMENS/DATA.................37
SECTION XIX. CANCELLATION................................................39
SECTION XX. TERM AND OBLIGATIONS SURVIVING TERMINATION..................39
SECTION XXI. BREACH......................................................39
SECTION XXII. INDEMNIFICATION.............................................42
SECTION XXIII. ASSIGNABILITY AND AMENDMENTS................................46
SECTION XXIV. CHANGE IN CONTROL OF GSK....................................47
SECTION XXV. GOVERNING LAW...............................................47
SECTION XXVI. INTERPRETATION..............................................47
SECTION XXVII. NOTICES.....................................................48
SECTION XXVIII. ENFORCEMENT.................................................49
SECTION XXIX. INTEGRATION.................................................50
xxxx
EXHIBITS
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A: FORM OF TASK DESCRIPTION
B-1: NORTH AMERICAN TERRITORY CENTRAL LAB WORKSHEET
B-2: EUROPE CENTRAL LAB WORKSHEET
C-1: FEE SCHEDULE-NORTH AMERICAN TERRITORY
C-2: FEE SCHEDULE-EUROPEAN TERRITORY
D: PERFORMANCE METRICS AND MEASUREMENTS
E: RESULT\VIEW(TM) ADDITIONAL SERVICE SCHEDULE
F: MINIMUM CHARGES
G: CHANGE IN SCOPE FORM
H: CHARGES FOR HARD COPY LAB REPORTING
THIS AMENDED AND RESTATED GLOBAL CLINICAL TRIALS AGREEMENT, dated as of
December 19, 2002 (this "Agreement"), is between SMITHKLINE XXXXXXX plc, D/B/A
GLAXOSMITHKLINE, a public limited company organized under the laws of England
("GSK"), and QUEST DIAGNOSTICS INCORPORATED, a Delaware corporation ("Quest") .
WHEREAS, SmithKline Xxxxxxx plc and Quest entered into a Global
Clinical Trials Agreement dated as of August 16, 1999 (the "Original
Agreement"), whereby SmithKline Xxxxxxx plc agreed to contract with Quest to
provide, on an exclusive basis, all of SmithKline Xxxxxxx plc's clinical trials
testing requirements for a period of 10 years, subject to certain exceptions set
forth in the Original Agreement;
WHEREAS, after execution of the Original Agreement, SmithKline Xxxxxxx
plc became a subsidiary of GlaxoSmithKline plc, resulting in the imposition of
certain annual minimum payment requirements on GSK under the Original Agreement;
and
WHEREAS, GSK and Quest desire to amend and restate the Original
Agreement to change the minimum payment requirements and make certain other
revisions to the Original Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
SECTION I. DEFINITIONS
1. For purposes of this Agreement:
"AMS TARGET" means for any year the target for GSK's annual minimum
spend for Services rendered by Quest set forth in Section XVII(1).
"AFFILIATE" means, with respect to any Person, any Person which,
directly or indirectly, Controls, is controlled by, or is under common
Control with, the specified Person. An Affiliate, with respect to GSK,
shall include the GSK Subsidiaries.
"ARCHIVAL SPECIMEN" means a type of specimen which is placed in
long-term storage by Quest, at GSK's request, either for a particular
use or for undefined future use.
"BDS" means the Biomedical Data Sciences department of GSK and any
successor department.
"CHANGE IN CONTROL" means any event where:
(a) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act) of shares representing more than 50% of the combined
voting power of the then outstanding securities entitled to
vote generally in elections of directors of GSK Parent (the
"Voting Stock"); or
(b) GSK consolidates with or merges into any other corporation, or
conveys, transfers or leases all or substantially all of its
assets (other than to a wholly-owned subsidiary of GSK Parent)
or any other corporation merges into GSK Parent, and, in the
case of any such transaction, the outstanding common stock of
GSK Parent is reclassified into or exchanged for any other
property or security, unless the shareholders of the GSK
Parent immediately before such transaction own, directly or
indirectly, immediately following such transaction, at least a
majority of the combined voting power of such outstanding
power of the outstanding voting securities of the corporation
resulting from, or to which its assets were conveyed,
transferred or leased in connection with, such transaction in
substantially the same proportion as their ownership of the
Voting Stock immediately before such transaction;
"CLW" means a clinical laboratory worksheet, a document substantially
in the form of Exhibit B-1 in the case of any Study in the North
American Territory, and in the form of Exhibit B-2 in the case of any
Study in the European Territory, or in such other form as may be
mutually agreed by GSK and Quest. Such document shall be completed by
representatives of both GSK and Quest with respect to any Study. The
CLW for any Study is hereby deemed a part of the Task Description for
such Study and all references herein to any Task Description include
the CLW, as amended, executed in connection therewith.
"CONTROL" means, as applied to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the
management of that Person, whether through ownership of voting
securities or otherwise.
"DMPK" means distribution, metabolism and pharmokinetics of a
pharmaceutical compound (measurement of the pharmaceutical compound or
its metabolites in body fluid).
"EUROPEAN TERRITORY" means the countries of Austria, Belgium, the Czech
Republic, Denmark, Finland, France, Germany, Holland, Hungary, Iceland,
Ireland, Italy, Lithuania, Luxembourg, Norway, Poland, Portugal,
Slovakia, Sweden, Spain, Switzerland and the United Kingdom.
2
"GSK BIOLOGICALS" means GlaxoSmithKline Biologicals S.A., GSK
Biologicals Manufacturing, S.A., GSK Biologicals Services, S.A. and GSK
Biotech, S.A., each a company organized under the laws of Belgium.
"GSK CLINICAL STUDY LEADER" means with respect to any Study, the GSK
contact identified in the Task Description for such Study as the lead
contact at GSK for such Study.
"GSK PARENT" means GlaxoSmithKline plc and, following a Change in
Control, any person or group that becomes the beneficial owner of more
than 50% of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of
GSK or the party into which the then GSK Parent merges or to which it
conveys, transfers or leases all or substantially all of its assets
(other than to a wholly-owned subsidiary of GSK Parent).
"GSK SUBSIDIARY" means (i) any direct or indirect Subsidiary of GSK
Parent existing as of the date hereof or formed or acquired by GSK
Parent during the Term of this Agreement; provided, however, that the
term "GSK Subsidiary" shall not include GSK Biologicals unless, and
only to the extent, GSK elects to have GSK Biologicals conduct any
Studies under this Agreement, and (ii) any Affiliate of GSK Parent
which GSK elects to have Studies conducted under this Agreement, but
only to the extent of such election, in the case of each clauses (i)
and (ii), for so long as such Subsidiary or Affiliate remains a
Subsidiary or Affiliate of GSK Parent.
"INADVERTENT OR DE MINIMIS BREACH" means any breach or series of
breaches which are unintentional, are not reckless or done in bad
faith, and in the aggregate for a given year do not affect Services in
excess of $500,000.
"INVESTIGATOR" means a physician or other clinician who oversees the
conduct of a Study.
"INVESTIGATOR MANUAL" means a document used by the Investigators and
their staffs which provides precise instructions concerning specimen
collection, transport and reporting and includes laboratory
certifications.
"INVESTIGATOR (LAB REQUIREMENT) SUMMARY" means a condensed version of
the Investigator Manual.
"NORTH AMERICAN TERRITORY" means the United States of America,
including Alaska, Hawaii and Puerto Rico, and Canada and Mexico.
"OTHER STUDY" means clinical research or clinical investigations which
are not for a specific drug (including but not limited to research into
disease states and genetics).
"PERSON" means any individual, firm, corporation, partnership, limited
liability company, trust, joint venture, governmental entity or other
entity.
3
"QUEST DIAGNOSTICS CLINICAL TRIALS" means the wholly-owned division of
Quest through which Quest engages, on a global basis, in its clinical
trials central laboratory business in support of clinical trials of
pharmaceutical and bio-technology clients.
"QUEST PROJECT LEADER" means, with respect to any Study, the Person
appointed by Quest to manage the protocol for such Study. The Quest
Project Leader will interact on a regular basis with a designated GSK
contact. Both the Quest Project Leader and the GSK contact for any
Study shall be identified in each Task Description.
"REFERRAL SPECIMEN" means a type of specimen which is sent by Quest to
another laboratory for analysis, with the consent of GSK or a GSK
Subsidiary.
"RESULT/VIEW(TM)" means the Quest software product for providing near
real-time access to clinical trial laboratory data of laboratory tests
performed by Quest.
"SERVICES" means laboratory testing, extraction of DNA, specimen
storage for both analyzed and nonanalyzed specimens, specimen
transportation, other distribution of materials or supplies, study
preparation and management, data management (including access to
Result/View(TM) as provided in Section VII(10), management reporting,
technical support, reporting of test results, maintenance of good
laboratory practices and documentation of quality assurance and control
and all other customary services performed, in each case, in connection
with a Study.
"STUDY" means clinical trials or clinical investigations on humans for
a drug (whether or not the drug is owned by GSK and including but not
limited to a pharmaceutical compound, biological product or vaccine)
and, unless otherwise noted, Other Studies.
"STUDY BLIND" means, with respect to any Study, the confidential
assignment of participants to a treatment group in order to minimize
patient, Investigator and Study sponsor bias.
"SUBSIDIARY" of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least 50% or more of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is
owned by such first Person or by another Subsidiary of such Person.
"3.I SHEETS" means a request form sent to all International
Investigators requesting certain site information, including the
location of the Investigator and Co- Investigators, the primary contact
person and his or her telephone and facsimile numbers, the location for
specimen collection and the location to which patient reports should be
sent.
4
"TERM" means the period of time defined in Section XX(1).
5
2. The following terms have the meanings set forth in the Sections set
forth below:
Term Section
-------------------------------- -----------
Acquired Business III(1)(iii)
Agreement Preamble
Alerts XI(2)
Alternative Laboratory Agreement II(3)
Change in Control Date XXIV
CRO III(1)(ii)
Credit XVII(5)
Custom Tests XV(2)(iii)
DMPK Specimens IX(8)
Existing GSK Compounds XXIV
GSK Preamble
GSK Discount XV(1)(ii)
GSK Group XV(1)
Indemnified party XXII(5)
JOC IV(2)
Lab Test List XIII(2)
Losses XXII(1)
Material Breach XXI
MFN Period XV(2)(ii)
Most Favored Nations Pricing XV(1)(i)
New Capability III(2)(iv)
Other Client XV(2)(iii)
Original Agreement Preamble
Pivotal IV(3)(i)
QDCT Referrals II(2)(iii)
QDCT Referral Laboratory II(2)(iii)
Quest Preamble
Repeated and Continuous Failure XXI(5)
Six Year Period Revenue XVII(2)
Spend Targets III(1)(iii)
Successor Company XXIV
Task Description II(2)
TCV XVII(2)
Third Party Claim XXII(5)
2002 Revenues XVII(1)(i)
2003 Revenues XVII(1)(ii)
Voting Stock I(1)
6
SECTION II. STATEMENT OF WORK
1. For the avoidance of doubt in interpreting this Agreement, the parties
intend that Quest perform, on an exclusive basis, all of the laboratory
testing and other Services needed by GSK in connection with Studies
(subject to the further provisions of this Section II and the
exceptions to exclusivity in Section III). It is also the intention of
the parties that GSK may utilize Quest for additional testing and
service needs in connection with its research and development efforts.
Finally, the parties intend to establish a process for evaluating
opportunities for Quest to perform testing and other services beyond
those customarily performed for GSK within Quest Diagnostics Clinical
Trials.
2. Whenever a member of the GSK Group is required under this Agreement or
otherwise desires to obtain Services from Quest under this Agreement,
GSK shall provide Quest Diagnostics Clinical Trials with all relevant
and necessary information required for Quest to evaluate the request in
accordance with the applicable provisions of this Agreement. The Quest
Supplier Relationship Manager at GSK, or his or her successor or
designees, shall provide such information to the Quest Diagnostics
Clinical Trials' Global Account Director for GSK (or her or his
successor or designees) prior to signing a contract or Task
Description, who shall promptly review the request, provided that GSK
and Quest may, through the JOC or its approved sub-committees,
designate teams for handling certain specific types of Studies or
Services or modify the process described in this sentence based on
experience and with the intent of improving the process for both
parties. The request from GSK shall follow, in order, as many
consecutive parts of the following process as necessary to complete the
evaluation.
(i) If the requested service is (a) part of the Quest Diagnostics
Clinical Trials standard menu of testing and services offered
generally to pharmaceutical industry clients or (b) a New
Capability that Quest Diagnostics Clinical Trials developed
pursuant to Section III(2)(iv) or with the mutual agreement of
GSK, then Quest Diagnostics Clinical Trials shall perform the
Service under this Agreement and in accordance with the Task
Description or other mutually-agreed requirements for the
applicable Study.
(ii) If the requested services cannot be performed under the option
provided in sub-section II(2)(i), then Quest Diagnostics
Clinical Trials may elect to develop a New Capability in
accordance with the provisions of Section III(2)(iv) or if
Section III(2)(iv) is not applicable, by mutual agreement of
the parties. Once the New Capability is developed, Quest
Diagnostics Clinical Trials shall perform the New Capability
under this Agreement and in accordance with any Task
Description or other mutually-agreed requirements for such
service.
7
(iii) If the requested services cannot be performed under the
options provided in sub-sections II(2)(i) and II(2)(ii) above,
then GSK and Quest Diagnostics Clinical Trials may look to
another laboratory within Quest to obtain the service(s)
needed by GSK (e.g., Quest's regional diagnostic laboratories,
Quest's Xxxxxxx Institute, Quest's Center for Applied Genomic
Technologies). If in such case GSK selects another Quest
laboratory to provide services, it shall so notify Quest
Diagnostics Clinical Trials, and shall negotiate a separate
agreement for such services with such other Quest laboratory
(each, an "Alternative Laboratory Agreement"), provided that
all revenues paid by GSK for such service(s) under such
Alternative Laboratory Agreement shall be counted toward
revenues earned by Quest for purposes of calculating the Spend
Targets. For the avoidance of doubt, if Quest Diagnostics
Clinical Trials does or would obtain referral services ("QDCT
Referrals") as part of the services offered generally to its
pharmaceutical clients (whether from a contracted referral
laboratory (such as the Dorevitch, Australia laboratory)
(each, a "QDCT Referral Laboratory") or from another Quest
laboratory (such as Xxxxxxx Institute)), GSK would not enter
into an Alternative Laboratory Agreement for such service, and
Quest Diagnostics Clinical Trials would perform such service
under sub-section II(2)(i) above and Section XIII below.
(iv) If the requested services cannot be performed under the
options provided in sub-sections II(2)(i) - (iii) above, then
the provisions of Section III(3) shall apply.
3. Except as otherwise provided in Section II(2), for all services
requested by GSK or any member of the GSK Group and performed by Quest
Diagnostics Clinical Trials, GSK and Quest shall execute a Task
Description as an addendum to this Agreement substantially in the form
of Exhibit A or in such other form as may be mutually agreed by GSK and
Quest (as amended from time to time, a "Task Description") setting
forth, among other things, the Services to be performed by Quest
Diagnostics Clinical Trials, the costs for such Services,
implementation times for such Services, estimated transportation fees
for such Study and the clinical protocol for such Study. Each Task
Description shall apply only to the Study for which it is executed and
shall be valid and binding upon its execution by authorized
representatives of GSK and Quest provided, however, that GSK agrees to
cover the cost of Services and related expenses incurred by Quest
Diagnostics Clinical Trials in performing agreed activities on a
specific protocol prior to completion of all required paperwork
incident to such protocol in order to initiate the Study in accordance
with agreed Study timelines. Any change in the scope of Services
described in a Task Description which shall have a material effect on
the total laboratory testing costs and/or costs or fees for other
Services specified in such Task Description shall be set forth in a
written amendment to such Task Description executed by authorized
representatives of GSK and Quest, as provided in Section VII(6) below.
8
4. In providing Services under this Agreement, Quest shall comply with all
applicable governmental laws, rules and regulations, including the
United States Clinical Laboratory Improvements Amendments (CLIA 88),
good clinical laboratory practices, and generally accepted industry
standards for quality assurance and quality control, and shall operate
in accordance with all applicable regulations, standards and guidelines
of the Food and Drug Administration and other relevant regulatory
authorities with respect to the performance of laboratory testing for
clinical trials and related services.
5. Quest and GSK shall work together in good faith to promote and raise
awareness of this Agreement within the GSK and Quest organizations
(including conducting joint presentations within GSK and Quest), and
shall also cooperate reasonably in the drafting and release of a press
release announcing the Agreement's execution and other relevant
information.
SECTION III. EXCLUSIVITY
1. (i) Subject to this Section III(1) and Sections III(2), III(3),
XXI, and XXIV, and in accordance with Section II above, GSK
shall exclusively use (and cause the GSK Subsidiaries to use)
Quest to provide Services in connection with the conduct of
any Study for which GSK or any GSK Subsidiary, in the ordinary
course of its business, would use a clinical trials central
laboratory. As of the date of this Agreement, GSK is required
to use Quest on an exclusive basis only in countries included
within the North American Territory or the European Territory.
GSK and Quest intend to review on an ongoing basis throughout
the Term of this Agreement Quest's ability to provide Services
to GSK in countries other than those included within the North
American Territory and the European Territory. Upon the mutual
agreement of GSK and Quest, additional countries may be added
to the scope of this Agreement, and if so added, GSK shall use
Quest to provide Services to it (and to any GSK Subsidiary)
for Studies performed in these additional countries on an
exclusive basis, subject to the limitations set forth in this
Section III, and Quest shall provide Services to GSK and any
GSK Subsidiary for Studies performed in such additional
countries pursuant to the terms of this Agreement. Similarly,
GSK and Quest may agree to remove countries included within
the definitions of the North American Territory and the
European Territory from the scope of this Agreement. Upon such
mutual agreement of GSK and Quest, GSK and any GSK Subsidiary
shall not be required to use Quest on an exclusive basis for
Studies performed in any countries removed from the scope of
this Agreement.
(ii) The exclusivity provisions of this Section III shall also
apply to any Contract Research Organization ("CRO") retained
by GSK or a GSK Subsidiary, such that for any Studies for
which GSK or its Subsidiary uses a CRO, GSK or its Subsidiary,
as appropriate, shall exclude laboratory
9
services from its contract with such CRO, and GSK or its
Subsidiary shall use Quest to perform the laboratory services
for such Study. In such a situation, Quest shall provide the
laboratory services for such Study and shall provide
laboratory results to the CRO and to GSK, as specified in the
Task Description for the particular Study. GSK shall have
responsibility for oversight of the actions of any CRO
retained by GSK or a GSK Subsidiary to conduct a Study for
which Quest performs Services under this Agreement.
(iii) Notwithstanding the foregoing, in the event that GSK acquires
any other entity or substantially all of the assets of any
other entity or of a business of another entity ("Acquired
Business"), Studies for any pharmaceutical compound conducted
by the Acquired Business within the North American Territory
or the European Territory, other than existing GSK Compounds
("Acquired Business Studies"), shall be subject to the
exclusivity requirements of Section III only if the Acquired
Business Studies are initiated on or after the date which is
18 months after the effective date of the acquisition of the
Acquired Business, unless otherwise agreed by the JOC,
provided that any Acquired Business Studies initiated after
the effective date of such acquisition for which Quest
provides Services shall be conducted pursuant to the terms of
this Agreement and shall count toward satisfaction of the
service minimums and incentives under Section XVII, including
the 2002 Revenues, 2003 Revenues, AMS Targets and the TCV
(collectively, the "Spend Targets"). Notwithstanding the
foregoing, GSK and Quest shall work together in good faith and
to the extent practicable under the circumstances to utilize
Quest to provide Services in connection with Acquired Business
Studies prior to the end of the 18-month period after the
effective date of acquisition of the Acquired Business.
2. Certain Exceptions. Notwithstanding the foregoing, the parties hereto
agree that GSK shall not be required to use (or to cause the GSK
Subsidiaries to use) Quest to conduct:
(i) any laboratory testing required by any of GSK's or a GSK
Subsidiary's clinical pharmacology units in connection with
any Study, including the units currently located at
Presbyterian Medical Center in Philadelphia, Pennsylvania, at
GSK's facilities in Harlow, England, and at Addenbrookes
Hospital in Cambridge, England, or of any similar clinical
pharmacology units under the direct management of GSK
established during the Term, or any clinical pharmacology
testing in connection with a Study which has been
subcontracted out to an investigator, clinical research
organization, hospital or similar entity, provided that all
other central laboratory Services for such Study shall be
performed by Quest subject to the exceptions set forth in (ii)
through (x) below;
10
(ii) any assay for the DMPK of pharmaceutical compounds or any
genotypic or genomic assay which GSK performs internally or by
using a GSK Affiliate;
(iii) for any Study which is being conducted as of the date hereof
(or in the case of an GSK Subsidiary acquired after the date
hereof, for any Study which is being conducted as of the date
of such acquisition or initiated prior to the date which is 18
months thereafter), any laboratory testing which is conducted
as part of that Study by Persons other than Quest, provided
that Studies conducted by Acquired Businesses shall be subject
to Section III(1)(iii);
(iv) any testing in connection with a Study to the extent that such
testing is not offered by Quest or is performed using a
methodology that is not acceptable to GSK or requires rapid
turn-around time that Quest cannot provide, including
microbiology testing (a "New Capability"); provided, however,
that in order for the provisions of this Section III(2) to
apply, GSK shall have first (a) followed the provisions of
Section IV(3)(ii) and (b) followed the provisions set forth in
Section II(2). It is understood that Quest needs at least
three months advance notice to implement new testing
capabilities, and that GSK shall use reasonable efforts to
notify Quest at a sufficiently early stage (no less than three
months prior to Study initiation, to allow full validation and
set up of the desired test(s)). If it is impracticable for GSK
to give Quest at least 3 months advance notice of the need,
then GSK may use another lab to meet those testing needs for
that Study if Quest elects not to (or cannot) develop and
validate in a fashion satisfactory to GSK the New Capability
within GSK's required timeline and if such lab can meet such
testing needs. If GSK needs such testing capabilities for a
future Study, the process outlined above shall be followed
again if it has been more than six months since the last time
GSK has been through such process and provided further that if
Quest expands its capabilities to add a New Capability that
meets GSK requirements, or to meet the rapid turnaround time
required for such Study, GSK shall award work on subsequent
Studies involving such testing to Quest;
(v) any testing in connection with a Study that is usually
performed by the Investigators participating in a Study;
(vi) any Study funded by a Person, in whole or in part, other than
GSK or a GSK Affiliate, where use of a laboratory other than
Quest is required by that Person; provided, however, that GSK
shall use reasonable commercial efforts to have Quest engaged
to perform Services in connection with the conduct of any
Studies required in the course of such research and
development;
(vii) any Phase IV Study in the European Territory which is
performed by a local clinical lab and which is not centrally
funded by GSK;
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(viii) any Study conducted in connection with GSK's (or any GSK
Affiliate's) research and development activities undertaken
pursuant to any co-development, co-promotion, collaborative
research, licensing or similar agreement with a third party
which is not an Affiliate Controlled by GSK (e.g., joint
ventures, partnerships, licensing or co-development contracts)
where use of a laboratory other than Quest is required by that
Person, except for Studies conducted by GSK for diaDexus LLC;
provided, however, that GSK shall use reasonable commercial
best efforts to have Quest engaged to perform Services in
connection with the conduct of any Studies required in the
course of such research and development;
(ix) any Study which requires in GSK's good faith judgment, the
involvement of a national or international "key opinion
leader" in a specified role in providing some or all of the
Services for a Study (for example, use of an internationally
prominent pathologist in reading certain types of specialized
or unusual pathology slides), and where Quest is unable or
elects not to use the key opinion leader in such designated
role;
(x) any Study for a consumer healthcare product, such as an
over-the-counter drug; and
(xi) any Other Study.
Notwithstanding the foregoing exceptions to the exclusivity
requirements, if Quest Diagnostics Clinical Trials is engaged to perform
Services in connection with any such Studies, including without limitation
through the use of QDCT Referrals (as provided in Section II(2) above), such
Studies shall be conducted pursuant to the terms of this Agreement, and the
revenues paid to Quest Diagnostics Clinical Trials (including those for the QDCT
Referrals) for such Services shall count toward satisfaction of the Spend
Targets.
3. Should Quest decline to perform Services in connection with any Study
after GSK has followed the provisions of Section II(2) and complied
with any applicable requirements of Section III(2)(iv), then GSK or the
GSK Subsidiary shall be free to use a clinical laboratory other than
Quest to perform the Services in connection with such Study. In the
event that GSK requests Services of Quest Diagnostics Clinical Trials,
whether or not subject to the exclusivity requirements, that are (a)
part of Quest Diagnostics Clinical Trials standard menu of testing and
services offered generally to pharmaceutical industry clients or (b) a
New Capability Quest Diagnostics Clinical Trials has developed pursuant
to Section III(2)(iv) and Quest elects not to perform such Services for
GSK, then the applicable Spend Targets shall be reduced by 70% of the
amount reasonably paid by GSK to another lab for the work at issue;
provided that Quest shall not be penalized for Inadvertent or De
Minimis Breaches of its obligation to perform Services and provided
further that in order to provide for a transition period the parties
agree that Quest shall not be penalized under this Section III(3) for
12
breaches of any requirement to perform Services requested by GSK after
the execution of this Agreement that occur on or prior to June 30,
2003.
4. In the event that GSK uses another lab to perform Services in violation
of the exclusivity requirements set forth in this Section III, GSK
shall pay to Quest an amount equal to 70% of the amount reasonably paid
by GSK to the other lab for the Services at issue, provided that GSK
shall not be penalized for Inadvertent or De Minimis Breaches of its
exclusivity obligation and provided further that in order to provide
for a transition period the parties agree that GSK shall not be
penalized for breaches of its exclusivity obligation which occur on or
prior to June 30, 2003. Any payments made pursuant to this Section
III(4) shall not count toward the applicable Spend Targets.
SECTION IV. RELATIONSHIP MANAGEMENT
1. Quest shall designate individuals employed by Quest who are approved by
GSK to be located at GSK's facilities in Upper Providence,
Pennsylvania, Collegeville, Pennsylvania, and Harlow, England, or at
such other locations as may be mutually agreed by GSK and Quest, to act
as liaison and relationship managers between Quest Diagnostics Clinical
Trials and GSK's Clinical Research and Development department.
2. Within thirty days of the date of this Agreement, GSK and Quest shall
form a joint operating committee (the "JOC") that shall have oversight
responsibility for the parties' performance of their respective
obligations under this Agreement and the relationship between the
parties. The JOC shall be composed of at least two representatives each
appointed by Quest and GSK, respectively. GSK and Quest may
mutually-agree to include within the JOC representatives from any CRO
routinely used by GSK for the performance of Studies. The JOC will be
co-chaired by Quest Diagnostics' VP, Pharmaceutical Services and GSK's
Vice President, Global Clinical Operations. The JOC may create such
subcommittees consisting of representatives of each party as it
determines to be necessary or prudent.
3. The JOC shall conduct quarterly performance and business review
meetings, at a location to be mutually agreed by GSK and Quest,
provided that the JOC shall meet more often if requested by either
party. The JOC shall, among other things:
(i) review annual budget and quarterly forecasts for Services
under this Agreement and identify Studies that will be
starting within the following three to six months that GSK
identifies as Pivotal (for purposes of this Agreement,
"Pivotal" shall mean that the identified Study is either (a)
of significant strategic importance to GSK or (b) designated
as "pivotal" under the Food and Drug Administration's New Drug
Application process);
13
(ii) prospectively identify and plan GSK turn around time and
capability needs (including investment requirements) to permit
Quest a reasonable amount of time (A) to evaluate the needed
capability and (B) to develop and implement the capability (if
Quest decides to do so). To the extent practicable, such
review shall take place a minimum of six (6) months prior to
GSK's anticipated need, provided that if GSK has not defined
its anticipated needs at such time, GSK will use
commercially-reasonable efforts to notify Quest of its
anticipated needs promptly after those needs are identified
and defined and permit Quest a commercially-reasonable time to
determine whether it will develop the capability;
(iii) be responsible to resolve escalated, significant contract
issues, including, without limitation, exclusivity violations
and performance metric issues in accordance with Section IV(6)
below, and determining capability needs;
(iv) on an annual basis, review the performance metrics set forth
in Section VI, and if necessary, modify or redefine the
performance metrics;
(v) on an annual basis, review a list of all GSK collaborative and
co-development projects;
(vi) determine the application of exclusivity under Section
III(2)(iv), and (viii) and the timing of exclusivity under
Section III(1)(iii) and Section XXIV;
(vii) review pricing for "Custom Tests" upon request of either
party;
(viii) review Quest Diagnostics Clinical Trials' standard menu of
testing and services on an annual basis, including any
additions made since the previous review; and
(ix) discuss any other issues arising under this Agreement.
4. At any time GSK believes that Quest is failing to provide Services
pursuant to the terms of this Agreement, GSK may convene a meeting of
the JOC to discuss such failures at a location to be mutually agreed by
GSK and Quest as promptly as practical after GSK notifies Quest of the
request to have such meeting. The attendees of such meetings shall be
mutually agreed by GSK and Quest.
5. Likewise, at any time Quest believes that GSK is failing to perform its
obligations pursuant to the terms of this Agreement, Quest may convene
a meeting of the JOC to discuss such failures at a location to be
mutually agreed by GSK and Quest as promptly as practical after Quest
notifies GSK of the request to have such meeting. The attendees of such
meetings shall be mutually agreed by GSK and Quest.
6. Either party may refer unresolved issues to the JOC in accordance with
procedures developed therefor by the JOC or (until such procedures are
developed) by notifying both the GSK and Quest leaders of the JOC in
writing of
14
the issue or convening a meeting under Sections IV(4) and IV(5) above.
GSK and Quest shall ensure that their respective representatives on the
JOC meet promptly thereafter to attempt to resolve the issue. If the
JOC cannot resolve the issue within thirty (30) days after receiving
notice thereof, it will promptly notify both Quest's Senior Vice
President, Advanced Diagnostics and GSK's Senior Vice President,
Clinical Development and Medical Affairs in writing of the dispute and
the JOC's efforts to resolve it. The JOC may elect to notify such
executives in less than 30 days if the JOC agrees that further attempts
at resolution by the JOC will be futile. If such executives are unable
to resolve the dispute within 60 days after receipt of notice by the
JOC, the aggrieved party may, as applicable, proceed under Section XXI
or XXII of this Agreement and enforce the Agreement under Section
XXVIII.
SECTION V. REVIEW AND IMPROVEMENT OF SERVICES
1. The parties hereto acknowledge and agree that (a) the pharmaceutical
industry and clinical trials industry frequently undergo change,
including technological advancements in connection with the conduct of
Studies and abilities to communicate the results of the Studies, and
(b) the parties hereto intend the performance by Quest of Services
under this Agreement to reflect the improvements available as a result
of such changes.
2. The JOC shall meet at least one time annually to review the terms of
this Agreement which govern the Services provided by Quest hereunder,
including Sections III and VIII through Section XVI, and to negotiate
in good faith amendments to this Agreement to be executed and delivered
by the parties hereto providing for quality and cycle time improvements
and other changes in such Services in response to technological,
operational or other advancements or changes. It is acknowledged and
agreed that, among other things, Quest may be required to invest in new
equipment and staff as a result of such amendments, and that to fund
such investments, Quest may be required to raise prices for affected
Services consistent with this Agreement.
SECTION VI. CERTAIN PERFORMANCE METRICS AND MEASURES
1. With respect to any Study, Quest shall provide any Services required
pursuant to this Agreement for such Study within the relevant
implementation time specified in Exhibit D, as Exhibit D may be amended
from time to time pursuant to Sections V or XXIII; provided, however,
that, with respect to any Study, to the extent an implementation time
for any Service is expressly set forth in a Task Description, Quest
shall provide such Service for such Study within the implementation
time set forth in such Task Description. In the event Exhibit D is
amended, such that the amendment causes an increase in the costs of
Quest's performance of Services hereunder, Quest and GSK shall
negotiate an
15
appropriate price adjustment under this Agreement with respect to the
amended item(s) only.
2. With respect to each Study, Quest shall maintain a system to monitor
and measure its compliance with the performance metrics and measures
set forth in Exhibit D or in the Task Description for such Study and
shall provide GSK a monthly written report regarding compliance with
such metrics and measures. Quest shall provide GSK with reasonable
access to the data underlying such monthly compliance reports for
verification purposes.
SECTION VII. STUDY PREPARATION PHASE
1. In preparing for any Study, GSK and Quest shall work in accordance with
the guidelines defined in the GSK-Quest "Study Set-up Handbook" (the
"Handbook") For each Study, GSK shall provide a final, approved
protocol to Quest before CLW approval.
2. In order to obtain an early indication of the central laboratory
costings, a GSK Study Leader may submit a completed laboratory
assumptions document to Quest; within five (5) days after receipt
thereof, Quest will provide a preliminary budget to the GSK Study
Leader. After approval of the CLW and within ten (10) days after
receipt of a Request for Proposal from GSK, Quest shall provide to GSK
a good faith estimate based on current information of all costs
associated with a Study. Four weeks before any Study is scheduled to
begin, Quest will provide a cost proposal, based on the final approved
protocol for the Study, to the designated GSK Clinical Study Leader
(with a copy to the GSK Global Resourcing, Grants and Contracts Group)
in the form of a Task Description. All anticipated costs must be
estimated, including dry ice, translations, reporting costs and storage
and transportation costs. Each of GSK and Quest shall use its
reasonable best efforts to agree on the costs for the Study and to sign
the Task Description prior to the Study start date. If GSK makes any
subsequent changes to the final approved protocol that impact the costs
of the Study significantly, GSK shall bear such additional costs;
provided, however, that the additional costs are reasonable and are
itemized for GSK in reasonable detail. In such a situation, Quest shall
incur no additional costs without the prior approval of GSK; provided,
however, that Quest may incur reasonable, additional costs if it is
unable promptly to obtain GSK's approval to such additional costs and
the nature of the Study and requirements for timely performance of
Services require Quest immediately to incur such reasonable, additional
costs.
3. Prior to the initiation of each Study, GSK shall provide Quest with a
copy of all appropriate, approved protocols, amendments and
modifications and other necessary information, provided that in no
event shall Quest have access to patient identifiable information where
disclosure would be contrary to privacy laws or regulations or GSK
privacy policy. Quest will not modify or change such information
without the prior written consent of GSK.
16
4. If the laboratory requirements for a Study involve the extraction of
DNA from a patient's specimen, it is the responsibility of the GSK
Clinical Study Leader, as the Study is being set up, to provide the
Quest Project Leader with the master patient informed consent covering
DNA analysis (if not specified in the protocol for such Study). Quest
shall not extract DNA from any specimen unless the patient informed
consent has been signed, as confirmed to Quest by that patient's
investigator. Quest shall follow GSK's instructions with regard to
adherence to GSK's patient informed consent policy, including
destroying specimens if requested by GSK. Quest will include all
necessary collection supplies in the laboratory test kits.
5. No later than four weeks before the beginning of a Study, a CLW will be
completed by representatives from GSK and Quest and approved by GSK.
Provided that GSK has specified translation/language requirements in
the CLW, no later than two weeks before the beginning of a Study, Quest
will demonstrate to GSK its ability to communicate fluently with
Investigators for such Study and, if necessary, will specify to GSK the
languages used to communicate with the Investigators in the relevant
CLW. Quest shall ship supplies for the Investigators in order to arrive
at the Investigator sites not later than the date requested by GSK.
6. If any significant changes are made to a Study's protocol or central
laboratory worksheet (CLW) following GSK approval of the CLW that
require additional work or resources not included in the original cost
proposal for the Study, such changes shall be charged to GSK in
accordance with Exhibit F (Minimum Charges), attached hereto and
incorporated herein, provided, however, that (a) upon request of GSK,
Quest shall provide reasonable supporting documentation for the fees in
Exhibit F and (b) that the favorable pricing provisions of Sections
XV(1) and XV(2) shall apply to the charges in Exhibit F. Further, GSK
shall provide a formal request to Quest to prepare and submit a Change
in Scope form to address such changes. Quest shall be responsible for
the preparation of an accurate, properly executed Change In Scope form,
in the form of Exhibit G, attached hereto and incorporated herein, for
any such change(s) in the Study's protocol or CLW. Significant changes
made to a Study's protocol or CLW by GSK after a schedule has been
determined which necessitate additional programming time or changing of
kit contents by Quest, shall be made at GSK's expense; provided,
however, that the additional charges are reasonable and are itemized
for GSK in reasonable detail if not already specified in Exhibit F.
Quest shall incur no additional costs without the prior approval of
GSK; provided, however, that Quest may incur reasonable, additional
costs if it is unable promptly to obtain GSK's approval to such
additional costs and the nature of the Study and requirements for
timely performance of Services require Quest immediately to incur such
reasonable, additional costs. For the avoidance of doubt, all minimum
charges or administrative charges paid by GSK under this Agreement to
Quest or its subcontractors shall count as revenues earned by Quest
under this Agreement.
17
In the event GSK makes any significant changes after CLW approval as
described above for any Study, Quest shall use its reasonable best
efforts to ship supplies for the Investigators in order to arrive at
the Investigator sites not later than the date requested by GSK;
however, GSK understands that significant changes to a Study may delay
supply delivery beyond the original date requested. Any additional
shipping charges incurred by Quest to comply with this obligation shall
be the responsibility of GSK.
7. Investigator meetings are intended to assist in the orientation of
Investigators and their staff assigned to a Study with respect to the
laboratory procedures contained in the Investigator Manual, and the
performance of other Services as may be required by the relevant CLW.
Quest shall provide a representative at the GSK-sponsored Investigator
meeting to review specimen preparation, packaging and transportation
requirements. In the European Territory, Quest shall participate in
Investigator meetings at locations and at times specified by GSK upon
two weeks' prior notice. In the North American Territory, Quest shall
participate in Investigator meetings at locations and at times
specified in the relevant CLW.
Provided that GSK has approved the CLW for any applicable Study, Quest
will provide customized presentation materials for the applicable
Investigator meeting upon two weeks' prior notice from GSK.
Upon request by GSK, Quest will provide to GSK for review and comment
in advance of the Investigator meeting copies of the materials to be
presented at such meeting and will make any factual corrections
requested by GSK at no charge to GSK.
If Quest is not given two weeks' prior notice, additional reasonable
charges will apply for (a) Quest's preparation of customized meeting
materials and (b) revisions to customized meeting materials resulting
from changes in GSK's protocol or other changes specified by GSK to
Quest; provided, however, that the expenses underlying such additional
changes are itemized for GSK in reasonable detail if not already
specified in Exhibit F.
8. For Services provided in the North American Territory, Quest will
prepare and distribute to each Investigator a protocol-specific
Investigator Manual. In addition, laminated pictograms are available
for an additional charge. The purpose of the Investigator Manual and
Investigator (Lab Requirement) Summary is to provide the Investigator
and the Investigator's staff with precise instructions concerning
specimen collection, transport and reporting. In the North American
Territory, the Investigator Manual shall be provided in English,
Spanish and French; the last two languages will be available two weeks
after approval of the English Investigator Manual.
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In the European Territory, Quest will prepare and distribute to each
Investigator a customized Investigator Manual. In addition, laminated
pictograms are available for an additional charge. The Investigator
Manual shall be prepared for approval in English, and available in
French, Spanish, Italian, German and Dutch, and in such additional
languages requested by GSK two weeks after approval of the English
Investigator Manual. Upon written request from GSK, Quest will
translate the Investigator Manual and/or Investigator (Lab Requirement)
Summary into other languages for an additional charge per language.
For any additional countries that may be added to this Agreement, Quest
will provide the Investigator Manual and/or the Investigator (Lab
Requirement) Summary and/or pictogram in languages as specified in the
Task Description for the particular Study. Quest shall provide such
materials in English, French, Spanish, Italian, German, and Dutch at no
additional charge, and GSK and Quest shall negotiate in good faith the
costs of any translations into other languages required by GSK.
Quest shall use its reasonable best efforts to provide such additional
translations within two weeks of request.
9. Upon request from GSK, Quest will provide telephone in-service training
to staff at clinical study sites at no additional charge to GSK. Upon
request and with two weeks' prior notification from GSK, Quest will
provide on-site field service training for protocol initiation and/or
ongoing support. Costs associated with this Service (an additional
charge per day plus travel and accommodation expenses) shall be the
responsibility of GSK.
Quest will make available, upon GSK's request, professional laboratory
consulting services at GSK and/or Investigator sites beyond those
consulting services generally provided by Quest in connection with a
Study. Any costs associated with these services shall be agreed to in
advance by Quest and GSK.
10. Quest will provide GSK with technical support Services, including
provision of data transmission and test codes and remark codes, when
appropriate. Quest, with input from GSK, will develop a standard format
for data transmission and will create datasets prior to the initiation
of a Study to transmit records. Quest shall monitor data to ensure
trouble-free transmission to BDS. Quest must confirm to GSK that all
data management systems required for any Study are in place or shall be
in place, prior to the commencement of such Study. The costs for any
data programming requested by GSK over and above Quest's usual
programming and technical Services provided to GSK shall be reimbursed
by GSK; provided, however, that Quest shall provide GSK with an
itemization of such costs prior to implementing any programming
changes.
11. Quest will make available from time to time, for GSK's convenience as a
supplemental means of accessing certain information, Quest's
ResultView(TM) web site and associated software (cumulatively, the
"Site"). Quest does not promise
19
that the Site will be available at all times or at any particular time
and may elect to discontinue the Site or GSK's access to it at any
time, with or without notice. To the extent that GSK requests
additional services beyond Quest's standard support services, such
services (if available) will incur additional charges as set forth in
Exhibit E.
(i) GSK shall provide Quest with a list of authorized employees,
agents, and subcontractors, if any, having a legitimate
business need for access to the Site for whom GSK requests
such access (each a "GSK Authorized User"). GSK shall notify
Quest promptly to remove access for any GSK Authorized User
who ceases to be an employee, agent, or subcontractor of GSK,
who is reassigned by GSK so as not to have a legitimate
business need for such access, or for whom such access
otherwise should be removed.
(ii) All persons who access the Site (including each GSK Authorized
User) will be required to accept certain conditions governing
such person's use of the Site before access to the Site is
permitted by Quest (the "User Agreement"). GSK shall be fully
responsible for each GSK Authorized User's compliance with the
User Agreement and for all other acts and omissions of each
GSK Authorized User relating to the Site. Without limiting the
foregoing, GSK and each GSK Authorized User shall cooperate
with Quest in protecting the security of the Site as set forth
more fully in the User Agreement, and Quest shall have the
right to deny access to any GSK Authorized User as provided in
the User Agreement.
(iii) Subject to this Agreement and in conformity with the User
Agreement, a GSK Authorized User may, at the sole risk and
responsibility of GSK acting through such GSK Authorized User
and solely for the lawful, professional use of GSK acting
through such GSK Authorized User, display the Site on a web
browser and print portions of the Site that are of
professional interest to GSK acting through such GSK
Authorized User, for informational purposes only. Otherwise,
neither GSK nor any GSK Authorized User is licensed to display
or print the Site. In addition, neither GSK nor any GSK
Authorized User shall, in whole or in part, reproduce,
distribute, create derivative works from, reverse engineer,
decompile, disassemble, sell, or sublicense any material on
the Site.
(iv) Notwithstanding anything to the contrary in this Agreement,
and subject to the rights of third-party licensors and GSK's
rights to Study data contained in Section XVIII hereof, Quest
or its affiliates own all copyright, trademark, patent, trade
secret, and other intellectual property and proprietary rights
in the Site, in all media now known or later devised. GSK
shall not remove, conceal, or alter any copyright notice,
disclaimer, or other notice. In addition, the rights of Quest
or its affiliates shall include all right, title, and interest
in and to any aggregate data (other than Study data) derived
from the Site (such as usage patterns) and Quest and its
affiliates reserve
20
the right to use for any lawful purpose any such data
collected from or relating to any use of the Site by GSK or
any GSK Authorized User.
(v) GSK ACKNOWLEDGES AND AGREES THAT THE MATERIAL ON THE SITE IS
FOR INFORMATIONAL PURPOSES ONLY AND THAT NO TEST RESULTS OR
OTHER MATERIAL ON THE SITE SHOULD BE RELIED ON IN ANY
SUBMISSION TO THE UNITED STATES FOOD AND DRUG ADMINISTRATION
OR ANY OTHER REGULATORY BODY. GSK FURTHER ACKNOWLEDGES AND
AGREES THAT THE SITE IS PROVIDED "AS IS," WITH ALL FAULTS.
QUEST DISCLAIMS, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY
AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, IN
ANY WAY RELATING TO THE SITE, INCLUDING WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
WARRANTIES AGAINST INFRINGEMENT OR OF QUIET ENJOYMENT, AND
WARRANTIES OF ACCURACY OR COMPLETENESS. QUEST SHALL HAVE NO
LIABILITY, DIRECT OR INDIRECT, TO GSK OR ANY OTHER PERSON
BASED ON OR OTHERWISE IN ANY WAY RELATING TO THE SITE.
SECTION VIII. STUDY MANAGEMENT
1. The Quest Project Leader for any Study will interact on a regular basis
with the GSK Clinical Study Leader or other designated GSK contact who
shall be specified in each Task Description. Quest shall use its
reasonable best efforts to retain such administrator's services for the
length of each Study to which they have been assigned, in order to
maintain the quality and consistency of Services. In addition, Quest
shall provide a qualified back-up to such Project Leader. If such
administrator's responsibilities change during the course of a Task
Description, Quest shall notify the designated GSK contact of such
change. Quest shall ensure that the level, quality and continuity of
Services are maintained at the levels required by this Agreement
despite any changes in personnel at Quest. The regional Quest Medical
and Regulatory Affairs representative (or his or her designee) will use
reasonable best efforts to review all concept or draft protocols at
least 12 weeks prior to start of the Study (where made available by
GSK) and comment on clinical testing, methodologies, sample
collection/handling and sample stability. Where requested by GSK, Quest
Scientific Affairs will obtain the input of Quest Diagnostics Academic
Associates, Xxxxxxx Institute Scientists/Medical Directors and Xxxxxxx
Institute Diagnostics personnel and use reasonable best efforts to
provide any appropriate recommendations for improvements to the GSK
Clinical Study Leader within 10 working days.
2. Quest will provide to GSK and Investigators a toll-free telephone
number for answering questions related to the Services. Quest shall
also provide to GSK
21
and Investigators the names and telephone numbers of Quest contacts who
can answer testing related questions and take orders for supplies.
3. For Studies in the European Territory, Quest will provide sufficient
personnel to communicate with Investigators and GSK personnel in
English, French, Spanish, Italian, German and Dutch, as need be
depending on the language requirements of the country in which the
particular Study is performed. For Studies in both the North American
and European Territories, Quest will provide GSK with access to a staff
pathologist or an appropriately qualified Ph.D.- or M.D.-level staff
member.
4. Quest technical support will be provided to interact with GSK and any
GSK designated GSK agent or subcontractor for problem resolution. Quest
will use its reasonable best efforts to resolve any technical errors
promptly upon identification of the problem.
SECTION IX. SPECIMEN TRANSPORT
1. In the contiguous United States and as appropriate based on individual
study requirements, Quest generally provides courier service to
clinical trials clients through its proprietary courier network at no
charge. Outside the contiguous United States, Quest generally provides
courier service to clinical trials clients through contracted carriers
(e.g., Federal Express, DHL) at actual charges plus 10%. Quest will
provide for courier service for shipment of specimens from an
Investigator to Quest, the costs, timing and service provider of which
shall be as mutually agreed by Quest and GSK, based upon the
requirements specified in the relevant CLW. In any event, Quest shall
use its reasonable best efforts to provide courier service to
Investigators on weekends or holidays in the event of an unanticipated
patient visit. Quest shall indicate to the GSK Clinical Study Leader or
other designated GSK contact any limitations on courier service which
would impede proper and/or timely collection and delivery of supplies
or specimens.
2. Quest will provide a tracking system to ensure pick up at Study sites
and delivery to Quest in line with the specifications required and
agreed to by protocol and reflected in the Task Description for a
particular Study. The tracking system shall be that which was in place
at SmithKline Xxxxxxx Clinical Laboratories, with such modifications as
Quest has made or may make to the system after the date of this
Agreement to provide specimen pick up Services in both the North
American and European Territories. Such tracking system will be
available to GSK upon request. Any requests by GSK for tracking of
specimens in excess of the usual tracking system provided by Quest in
the North American and European Territories shall be discussed and
agreed to by the parties. Additional costs, if any, associated with the
excess tracking requirements, will be charged to GSK and agreed upon
between GSK and Quest.
22
3. From the point of pick up of specimens from the Investigator by a
courier employed by Quest under any Task Description, Quest shall
ensure that all shipping, handling, storage and disposal of specimens
shall be in accordance with any and all applicable rules and
regulations.
4. Quest shall be compensated at actual cost plus 10% for emergency
delivery and/or transportation Services authorized in writing by GSK
which are not included in the agreed to price on the applicable Task
Description.
5. Quest may be required to provide for shipment of specimens from Quest
to other laboratories or to GSK locations as described in the Task
Description. Quest shall ensure that shipping methods and documentation
for clinical sample shipments shall be in accordance with any and all
applicable rules and regulations, and in compliance with guidelines set
forth by the courier service. In addition, Quest shall be prepared to
receive and analyze specimens that are referred by GSK to Quest from
other laboratories.
6. If requested by GSK, Quest may be required to send Referral Specimens
to other laboratories for analysis. Quest shall be responsible for
obtaining, handling, shipping and reporting Referral Specimens in
accordance with any and all applicable rules and regulations. Quest
will xxxx GSK for the cost of testing Referral Specimens (which is the
amount Quest is billed by the referral laboratory) plus a referral
service fee per specimen. This referral service fee includes specimen
transport from the Investigator sites to Quest in the North American
Territory, specimen referral (including specimen tracking and
transport), and results reporting to GSK. In the European Territory,
inbound transportation costs will be agreed with GSK. Any fee increase
imposed by the referral laboratory will be passed on to GSK.
7. Archival Specimens shall be stored and maintained by Quest for the
length of time and under storage conditions as described in the CLW for
the fees described in Section XV(15). Archival Specimens may be shipped
to GSK or to others as specified in the relevant CLW or as otherwise
requested by the designated GSK contact. Labeling requirements for
Archival Specimens to be returned to GSK shall be specified in each
CLW.
8. If requested by GSK, Quest will be required to send any DMPK specimens
received by Quest in extended storage to other laboratories for
analysis ("DMPK Specimens"). Quest will be responsible for handling and
shipping DMPK Specimens. Quest will xxxx GSK for the cost of storage as
detailed in the applicable Task Description; unless Quest's proprietary
courier network is used for transportation of the DMPK Specimens, all
inbound and outbound transportation costs will be charged to GSK at
actual cost plus 10%. DMPK specimens shipped to Quest designated for
extended storage shall be stored and maintained by Quest for the length
of time and under storage conditions as described in the relevant CLW.
23
SECTION X. RESULT REPORTS
1. Quest shall complete test assays upon specimens received from
Investigators and shall compile patient demographic data which
accompanied such specimens. Results of test assays and patient
demographic data will be reported to Investigators and GSK with the
data specified, by the method and with the frequency of transmission
and turnaround as set forth in the relevant CLW, or as otherwise
requested by GSK. Examples of standard reports are available to GSK
upon request. Additional reports requested by GSK, which require fields
of data not specified in the original CLW, will be provided at an
additional reasonable charge to GSK.
2. Upon request and as directed by GSK, Quest will implement any or all of
the following report format and flagging options: (i) delta flags; (ii)
blinded results; (iii) clinical significance summary; (iv) quick trend
summary; (v) toxicity grading; and (vi) report header and footer text,
and any additional format and flagging options requested by GSK. If GSK
requests a format or flagging which requires significant customization
of Quest's standard report format and flagging options, GSK and Quest
shall negotiate in good faith an additional reasonable charge to GSK
for such request.
3. The following Service options apply to report delivery to the
Investigators and GSK:
Within the North American Territory: One hard copy result report will
be delivered via fax and one will be delivered via U.S. mail. GSK and
Quest shall negotiate in good faith the costs of any alternate
reporting fashion requested by GSK.
From the North American Territory to a Destination Outside the North
American Territory: One result report will be transmitted via facsimile
plus one hard copy report will be sent via standard postal service per
visit for countries other than the North American Territory.
From the United Kingdom to a Destination within the European Territory:
One result report will be transmitted via facsimile plus one hard copy
report will be sent via standard postal service per visit.
Other: GSK may request overnight express report delivery, or multiple
modes of delivery, at an additional charge for any of the reports
described above. The parties hereto acknowledge and agree that as
improved technology becomes reasonably available, Quest will make
available "real-time" communication or other electronic communication
between and among Quest, GSK and the Investigators.
Unless otherwise specifically agreed in writing between the parties,
charges for hard-copy lab reporting (other than the original report, as
to which there is no charge) shall be as set forth in Exhibit H.
24
SECTION XI. DATA MANAGEMENT REQUIREMENTS
1. Quest shall perform edit checks on patient demographic data (consistent
with privacy laws and regulations) on the day that the sample is
received. If Quest detects errors or omissions, including an invalid
Study number, an invalid Investigator number, an invalid Investigator
site number, an invalid patient number, an improper visit sequencing,
or patient demographics that changed from a previous visit, then Quest
shall contact the Investigators by telephone (or other mutually
acceptable method of communication) for resolution. A record of all
such changes shall be maintained by Quest. If Quest is unable to
contact the Investigators or has been unable to reach a resolution
within five business days (or within two business days if after the
last patient visit), then Quest shall notify the designated GSK
contact.
2. Quest shall telephone the Investigators to notify them of lab assay
values which must be made known immediately to the Investigator (and
any medical monitors designated in the Task Description) for proper
patient care and which are defined in the relevant CLW (hereinafter
"Alerts"). In addition, Quest shall immediately provide notification to
the Investigator and medical monitor of lab assay values which would
exclude the patient from the Study and which are defined in each
clinical protocol if requested in the relevant CLW. Quest shall notify
Investigator sites within one working day (limited to Monday through
Friday) of the completion of testing, or as specified in the CLW. If
Quest is unable to reach the Investigator after Quest has made a
minimum of two attempts, Quest shall promptly notify the GSK Clinical
Study Leader, medical monitor or other designated GSK contact. All
Alerts shall be automatically flagged on the hard copy laboratory
report.
3. Quest shall provide to GSK a support service for queries or resolving
errors related to Quest, with such queries or errors to be resolved
within three days (or within 24 hours if after the last patient visit).
Quest also shall provide guidance for any general lab questions and
shall ensure the complete resolution of all data issues at the
completion of the Study (ensuring satisfactory completion of the
relevant Study). Quest shall track all queries raised in each Study,
provided that GSK has entered such queries in the relevant database
established by GSK.
4. Quest will retain all patient records and test results from any Study
for five years following the termination of each Study or for such
longer period as specified in the Task Description for a Study or for
such longer period as required by applicable laws or regulations. Quest
shall maintain all specimens from a Study following the termination of
the Study for the period specified in the Task Description for a Study
or for such longer period of time as required by applicable law or
regulations. Upon GSK's request, Quest shall return any specimens or
data from a Study to GSK, at an additional charge to be agreed upon by
GSK and Quest. GSK and Quest shall agree on long-term specimen
retention and specimen destruction on a Study-by-Study basis. Quest
shall comply with all data and specimen retention methods established
by relevant regulatory authorities. GSK shall advise Quest in writing
of data or specimen retention
25
requirements in excess of these standards, and Quest will use its
reasonable best efforts to accommodate GSK's requirements. Additional
reasonable charges may apply to any deviations to data and specimen
retention standards specified herein. Archived data may be maintained
on microfiche or electronic record, provided that a back-up exists and
a hard copy can be obtained from it if required.
SECTION XII. MANAGEMENT REPORTING
Quest will provide, upon request from GSK, any or all of the following
management reports generated from Studies under this Agreement: (i) new activity
report, (ii) study status report, (iii) patient visit history report, (iv)
patient trend analysis, (v) trend analysis, (vi) tracking report, (vii) toxicity
grade report, and/or (viii) selected abnormal report, and any other standard
reporting entries as they become available. Quest will make such reports
available as frequently as GSK specifies, and such reports shall be incorporated
into the Result/View(TM) format if requested by GSK. Distribution will be by
standard postal service or electronically, at GSK's option. An additional charge
may apply for customization or deviations to Quest's standard Study management
reports and methods of distribution. Result\View(TM) should be the primary
source for all management reports for all requestors who have access to
Result\View(TM).
SECTION XIII. LABORATORY METHODOLOGY
1. Quest shall not subcontract tests to any third party or send out
Referral Specimens without the prior written approval of GSK. Quest
shall require any subcontractor so approved by GSK to enter into
written agreements requiring such subcontractor to perform the Services
for which it is the subcontractor pursuant to the terms of this
Agreement, including the terms of the confidentiality provisions in
Section XVIII. Quest shall be responsible for ensuring that (a) all
subcontracted tests are correctly validated and (b) each
subcontractor's sites have passed appropriate quality audits conducted
by third parties hereto within the previous 12 months. If GSK approves
Quest's use of a subcontractor, GSK shall pay the costs of any testing
performed by such third party, as charged by the third party to Quest,
plus Quest's then-current, standard referral fee (currently $25/test in
the North American Territory and $33/test in the European Territory),
except as otherwise described in Section XV(1). If GSK requires that
Quest utilize a particular laboratory for testing and Quest is unable
to perform its customary site visits and inspection and/or obtain a
referral agreement with such laboratory (due to small volume of tests,
short time before Study start, etc.), Quest and GSK shall agree to a
reasonable solution that addresses the concerns of both Quest and GSK.
2. On or prior to the date hereof and to the extent available, Quest has
provided to GSK a current list of all laboratory tests Quest
Diagnostics Clinical Trials is capable of conducting as updated from
time to time, (the "Lab Test List") and a
26
summary of Quest Diagnostics Clinical Trials laboratory methodology for
such tests. Quest shall update the Quest Diagnostics Clinical Trials
Lab Test List and methodology summaries semi-annually or more
frequently as otherwise necessary if significant changes occur and
deliver it to GSK. Quest shall also update the Xxxxxxx Institute Lab
Test List and methodology summaries annually or more frequently as
otherwise necessary if significant changes occur and deliver it to GSK.
3. From time to time, Quest may determine it necessary to change existing
methodology and/or reference ranges as a result of modifications in the
type of reagents and/or methodologies or the discontinuance of
materials and/or supplies to support existing equipment. To the extent
practicable, Quest shall notify GSK of any such change not less than
thirty days before such change is implemented, together with an
assessment of the potential impact on either validation of assays or
changes in normal ranges for tests. Quest shall not change any
methodology and/or reference ranges during the course of a Study
without the prior written consent of GSK. Upon request from GSK, Quest
shall provide GSK with any and all method comparison data.
4. Quest shall investigate any significant trends identified during
quality control of its laboratory testing that might affect Services
provided hereunder. Quest shall notify GSK of such trends and provide
an explanation to GSK regarding these trends.
SECTION XIV. LABORATORY EQUIPMENT
1. Quest will ensure at all times that its computer equipment is in good,
working condition and that it has made reasonable provision for backup
equipment to avoid delays in the analysis of GSK's specimens.
2. Quest will ensure that any changes in equipment being used in Studies
that will require revalidation of assays or that may have an impact on
normal ranges of tests will be communicated to GSK in a timely fashion.
Quest will make no change in laboratory equipment during the course of
a Study that would require revalidation of assays, without the prior
written approval of GSK. Quest shall notify GSK if a failure in its
equipment causes changes in test results.
3. Quest shall ensure that the reagents and equipment used in performing
any Service hereunder, at all times, are in compliance with the reagent
and equipment standards set forth by applicable regulatory authority's
standards for such equipment and reagents.
27
SECTION XV. COMPENSATION
1. Quest Diagnostics Clinical Trials shall price Services under this
Agreement (as specified in each Task Description), to GSK, a GSK
Subsidiary, or GSK's co-promotion, co-development, collaborative or
similar partners (together with GSK and the GSK Subsidiaries, the "GSK
Group") at the lower of Most Favored Nations Pricing (as defined in
subsection (i) below) or the applicable GSK Discount (as defined in
subsection (ii) below). For the avoidance of doubt, the favorable
pricing afforded GSK under this Section XV(1) and (2) shall (a) apply
for any Services requested by the GSK Group in accordance with this
Agreement and provided by Quest Diagnostics Clinical Trials (including
without limitation the QDCT Referrals) to the GSK Group under this
Agreement, whether or not such Services are subject to the exclusivity
obligations of Section III and (b) not apply to Services performed
under Alternative Laboratory Agreements. Notwithstanding the foregoing
and for the avoidance of doubt in interpreting this Section XV with
respect to the QDCT Referrals, it is understood that Quest Diagnostics
Clinical Trials prices the QDCT Referrals for its clients as follows:
testing performed by the Dorevitch and DSP laboratories (and any other
laboratory with which Quest Diagnostics Clinical Trials establishes a
similar relationship) is priced at set fees per test, and GSK does not
receive the GSK Discount on such testing; testing performed by Quest
laboratories other than Quest Diagnostics Clinical Trials is priced at
set fees per test, and GSK does receive the GSK Discount on such tests;
testing performed by all other referral laboratories is priced at
actual cost plus a referral fee, and GSK does not receive the GSK
Discount on such tests. In all cases, however, GSK will receive a price
equal to or lower than that charged to all other Quest Diagnostics
Clinical Trials clients.
(i) "Most Favored Nations Pricing" shall mean the then lowest
price for any Service or group of Services being charged by
Quest Diagnostics Clinical Trials (including without
limitation the QDCT Referrals) to any other client in the
North American Territory (with respect to Services to be
provided in the North American Territory) or in the European
Territory (with respect to Services to be provided in the
European Territory). To the extent such other client's(s')
prices are in currencies other than US Dollars (for the North
American Territory) or Pounds Sterling (for the European
Territory), such prices shall be calculated in US Dollars or
Pounds Sterling, as applicable, using exchange rates on the
date on which Quest Diagnostics Clinical Trials prepared the
bid that was submitted to such other client in such other
currency.
(ii) The "GSK Discount" shall mean the price for any laboratory
testing Service calculated using a 32% discount off the then
applicable fee schedule for such Service or group of Services
being charged by Quest Diagnostics Clinical Trials to any
other client in the North American Territory (with respect to
Services to be provided in the North American Territory) or
20% discount off the then applicable fee schedule for such
28
Service or group of Services being charged by Quest
Diagnostics Clinical Trials for clients in the European
Territory (with respect to Services to be provided in the
European Territory).
(iii) Any Service or group of Services other than a laboratory
testing Service (including without limitation such Service or
group of Services performed as a QDCT Referral) shall be
provided to the GSK Group at a price equal to or less than the
price for such Service or group of Services charged to any
other client of Quest Diagnostics Clinical Trials in the North
American Territory or in the European Territory, as the case
may be.
2. (i) For purposes of calculating, pursuant to Section XV(1), prices
subject to a GSK Discount, (a) the fee schedule for the most
frequently ordered laboratory testing Services performed in
2003 shall be as set forth in Exhibit C attached hereto along
with the discounted price to be charged to GSK and (b) the
prices for laboratory testing Services performed after 2003
shall be as agreed to between GSK and Quest pursuant to
Section XV(3). All laboratory testing Services requested by
the GSK Group at any time for which fees are not specified in
the Task Description shall be billed in accordance with Quest
Diagnostics Clinical Trials' then current fee schedule,
including the applicable discount, unless otherwise agreed to
by the parties.
(ii) For purposes of calculating the Most Favored Nations Pricing
pursuant to Section XV(1) during the Term of this Agreement,
Quest shall include all discounts and reductions in price
provided by Quest Diagnostics Clinical Trials to its clients
in the North American and European Territories excluding any
discounts and reductions in price provided by Quest or
SmithKline Xxxxxxx Clinical Laboratories for Services in
connection with Studies that were bid prior to August 16,
1999, and have not terminated. Most Favored Nations Pricing
shall apply on a test by test basis to invoices for Applicable
Studies (as defined in the next sentence) that are submitted
to GSK during the time period beginning on the date of the
first invoice to another Quest Diagnostics Clinical Trials
client containing a discount greater than 32% (in the North
American Territory) and 20% (in the European Territory) and
ending on the date of the last invoice to such other client
containing such greater discount (the "MFN Period"). The term
"Applicable Studies" shall mean any GSK Study for which Quest
Diagnostics Clinical Trials has prepared a final budget
proposal and overview of services during the MFN Period. For
example, if Quest Diagnostics Clinical Trials provides a 40%
discount to a client for a particular laboratory test in a
Study, Quest Diagnostics Clinical Trials must, during the MFN
Period, invoice GSK for that test at a 40% discount for all
Applicable Studies.
(iii) On a quarterly basis, Quest Diagnostics Clinical Trials shall
notify GSK if any of the pricing offered to other clients in
either the North America or the European Territory is lower
than pricing provided to GSK in such
29
Territories in accordance with this Section XV. If Quest
Diagnostics Clinical Trials has provided more favorable
pricing to a client other than GSK in contravention of this
Section XV (the "Other Client"), Quest Diagnostics Clinical
Trials shall promptly make any necessary credits to GSK's
account(s) and ensure that GSK receives the applicable Most
Favored Nations Pricing during the MFN Period as provided in
this Section XV. GSK shall have the right to audit Quest's
records related to pricing provided to other clients of Quest
Diagnostics Clinical Trials in accordance with Section XVI for
purposes of ensuring Quest's compliance with this Section XV.
For Services developed exclusively for the GSK Group or as to
which the GSK Group is the sole or predominant customer of
Quest Diagnostics Clinical Trials ("Custom Tests"), Most
Favored Nations Pricing shall not be greater than Quest
Diagnostics Clinical Trials' fully burdened cost to perform
such Service plus 20%, subject to the review of the JOC, and
in such event the parties shall, prior to commencing any
substantive work on creating any Custom Tests, engage in good
faith discussions regarding the intellectual property rights
to such Custom Tests.
3. On December 1 of each year, Quest Diagnostics Clinical Trials shall
submit to GSK's World Wide Medical Director a list of the new clinical
trials testing prices for the twelve-month period beginning January 1
of the subsequent year. The total increase in the new clinical trials
testing prices from the prior year shall not exceed the annual
inflation rate during the previous twelve month period ending on the
preceding August 30th, as measured (a) in the North American Territory
by the change in the overall Consumer Price Index for the United States
and (b) in the European Territory, by the change in the overall Retail
Price Index for the United Kingdom. The limitation on price changes set
forth in this Section XV(3) shall not apply to non-testing charges, or
to changes in test prices resulting from changes in methodology or
equipment; provided GSK is notified in writing of such changes and
approves of them in writing in advance of implementation.
4. If any Study is revised after such Study's CLW has been approved in
writing, GSK agrees to pay Quest for Services rendered and actual
documented costs incurred in the revision of such Study.
5. If the initiation or conduct of the applicable Study is delayed by
GSK's direct actions for more than two months such that specimen
collection/ transport supplies and/or specialized testing reagents
expire, GSK agrees to pay Quest for Services rendered and actual and
documented costs incurred to replace expired supplies and/or
specialized testing reagents. Quest will provide documentation
reasonably evidencing the replacement of such expired supplies or
specialized testing reagents.
6. Quest shall be compensated for supplies properly sent to the
Investigators which were not used due to patient drop-out or
cancellation or termination of any Task Description. Quest will provide
documentation reasonably evidencing the delivery of such supplies.
30
7. Upon written request from GSK, Quest, for an additional charge per
language translation, will translate the Investigator Manual into
languages other than English and Spanish for the U.S. and English,
Spanish, French, Italian, German and Dutch for the European Territory.
8. Upon request and with two weeks' prior notification from GSK, Quest
will provide on-site field service training for protocol initiation
and/or ongoing support. Costs associated with this service (additional
reasonable charge per day plus travel and accommodation expenses) shall
be borne by GSK.
9. GSK is responsible for the cost of travel and accommodation for Quest's
representatives at Investigator meetings to the extent GSK has approved
their attendance, provided that expenses are incurred in accordance
with GSK's travel policy, a copy of which has been provided to Quest.
10. Quest will make available, upon GSK's request, professional laboratory
consulting services at GSK and/or Investigator sites. Any costs
associated with these services shall be agreed to in advance by Quest
and GSK.
11. Inbound transportation will be charged from the Investigator site to
Quest laboratories for actual commercial carrier costs (exclusive of
any periodic or volume rebates but inclusive of discounts) plus a 10%
administrative fee. Outbound transportation of starter kits,
resupplies, dry ice and reports from Quest laboratories to the
Investigator sites will be charged at actual commercial carrier costs
plus a 10% administrative fee. Actual charges for transportation costs
will be reviewed annually, beginning at March 30, 2003.
12. In the event that the actual costs to Quest of courier services for (i)
specimen transport, (ii) supply shipment, or (iii) result reporting,
changes at any time during the term of a Study, whether because of a
change in the fees charged by Quest's proprietary or commercial
courier, a change in the cost of packaging materials used to ship
specimens, or a mandatory change in applicable regulations, Quest shall
have the right to change the courier fees quoted herein to the same
extent as the actual change in the invoiced cost of courier services.
13. Quest shall be compensated at actual cost plus 10% for emergency
delivery and/or transportation Services authorized by GSK which are not
included in fees noted in the relevant Task Description.
14. If, at any time, GSK chooses to change the level of service provided by
the courier and that change is accompanied by an increase in the fee to
Quest, Quest reserves the right to pass that increase on to GSK;
provided, however, that Quest shall make no change that decreases the
level of courier service provided without the consent of GSK.
15. Quest will charge GSK an annual fee for each Archival Specimen stored
on behalf of GSK. The fees for North American Territory and European
storage are as stated in the Applicable Task Description. Quest
Diagnostics Clinical Trials
31
will inform GSK in writing by December 1 of each year of the fees for
such storage the proposed fees to be in effect for the subsequent year
beginning January 1, if different than the then-existing prices, and
Quest and GSK will negotiate in good faith to agree on such fees as
promptly as practicable after such notification.
16. Quest shall promptly invoice GSK for all testing Services provided
hereunder on a monthly basis. All invoices submitted by Quest to GSK
shall identify the Services rendered by Study, Investigator's name,
patient designation, tests and testing date. All payments due Quest for
Services provided shall be made to Quest within 30 days of GSK's
receipt of an invoice including the above information for Services
provided in the North American Territory and within 45 days of GSK's
receipt of an invoice including the above information for Services
provided in the European Territory. GSK shall not be required to make
payment to Quest on any invoice unless the invoice contains all
information specified herein.
SECTION XVI. AUDITS, INSURANCE AND PERSONNEL CHANGES
1. Financial Audits. During the Term of this Agreement, and until two
years after its expiration or termination, GSK may direct the audit of
any financial records of Quest relating to Services provided under this
Agreement, or any Addenda hereunder. Such records may include invoice
records, invoices from third parties, contracts with third parties and
payments relating to any Studies hereunder. To the extent that such
records are not separable from other customer records or GSK is
auditing compliance with the compensation terms of Section XV, Quest
shall give reasonable access to Quest's records to such independent
auditor selected by GSK and reasonably agreeable to Quest, who shall
audit the records pertaining to the Addenda, and may disclose the
results of the audit only to the extent that it relates to any Study
hereunder, or to this Agreement. In no event shall other customer
information be disclosed to GSK except on a blind basis with respect to
pricing.
2. Quality Audits. GSK, at reasonable times and upon reasonable advance
notice, may, at its sole cost and expense, visit Quest Diagnostics
Clinical Trials' and any QDCT Referral Laboratory's testing facilities
to conduct quality assurance audits of Quest Diagnostics Clinical
Trials' and the QDCT Referral Laboratory's facilities and the
procedures implemented for any Study. At its option, GSK may elect to
use a third party to conduct such audit. GSK or its agent must sign
Quest Diagnostics Clinical Trials' or the QDCT Referral's (as
applicable) standard Confidentiality Agreement at the time of its visit
to Quest Diagnostics Clinical Trials' or the QDCT Referral Laboratory's
testing facilities. Quest Diagnostics Clinical Trials and the QDCT
Referral Laboratories will maintain adequate records so as to allow GSK
or its agent to conduct and audit testing Services relative to Studies
as well as Quest Diagnostics Clinical Trials' tracking and measurement
of performance metrics for each Study. Quest Diagnostics Clinical
32
Trials and the QDCT Referral Laboratory also shall maintain records
demonstrating the training and qualifications of their respective
employees. GSK shall advise Quest Diagnostics Clinical Trials and the
QDCT Referral Laboratory in writing of any special or unusual record
keeping needs for any Study, and Quest Diagnostics Clinical Trials and
the QDCT Referral Laboratory will use their reasonable best efforts to
accommodate GSK's requirements. Additional charges will apply for any
requirements in excess of Quest Diagnostics Clinical Trials' and the
QDCT Referral Laboratory's usual record keeping process; provided,
however, that Quest Diagnostics Clinical Trials must itemize such
charges for GSK in reasonable detail. Quest Diagnostics Clinical Trials
agrees to maintain such records in confidence in accordance with
applicable laws, rules and regulations. GSK shall notify Quest
Diagnostics Clinical Trials of any serious quality deficiencies
identified in any GSK audit or GSK sponsored audit, and Quest
Diagnostics Clinical Trials or the QDCT Referral Laboratory, as the
case may be, shall have three months from the date of such notification
to remedy such deficiencies. With respect to deficiencies identified at
a QDCT Referral Laboratory, if the QDCT Referral Laboratory has not
remedied such deficiencies within such three-month period, GSK may
require that the affected Services being performed by the QDCT Referral
Laboratory be performed by another QDCT Referral Laboratory or that GSK
and Quest Diagnostics Clinical Trials work together expeditiously to
identify an alternative referral laboratory satisfactory to GSK at
which such Services shall be performed. With respect to deficiencies
identified at Quest Diagnostics Clinical Trials, if Quest Diagnostics
Clinical Trials does not remedy such deficiencies within such
three-month period, GSK shall (a) refer the matter to the JOC for
resolution under Sections IV(3) and IV(6) or (b) engage a reputable and
experienced third party to audit Quest Diagnostics Clinical Trials with
respect to such deficiencies. If the matter remains unresolved after
consideration by the JOC and the parties' executives under Section
IV(6) or if the second audit confirms the results of GSK's or its
agent's initial audit, Quest Diagnostics Clinical Trials' failure to
remedy such deficiencies shall be deemed to constitute a Material
Breach under this Agreement for purposes of Section XXI. Quest
Diagnostics Clinical Trials and the QDCT Referral Laboratories shall
afford GSK at least equal priority with their other preferred customers
in maintaining the continuity and quality of performance of Services,
and shall make diligent and timely efforts to comply with each of their
respective obligations in this Section XVI.
3. Exclusivity Audits. Quest, at reasonable times and upon reasonable
advance notice, may, at its sole cost and expense, direct the audit of
relevant GSK records to determine if testing is being performed by
parties other than Quest in violation of Section III of this Agreement.
Such records may include invoice records, invoices from third parties,
contracts with third parties and payments relating to any Studies
conducted by GSK. To the extent that such records are not separable
from other records of GSK, GSK shall give reasonable access to GSK's
records to such independent auditor selected by Quest and reasonably
agreeable to GSK, who shall audit the records pertaining to the
exclusivity requirement under Section III, and may disclose the results
of the audit only to
33
the extent that it relates to compliance with Section III of this
Agreement. In no event shall other information regarding Studies be
disclosed to Quest except on a blind basis with respect to the
exclusivity requirement under Section III. At its option, Quest may
elect to use a third party to conduct such audit. Quest or its agent
must sign GSK's standard Confidentiality Agreement prior to the time
GSK makes its records available. Quest shall notify GSK of any breaches
of Section III of this Agreement identified in any Quest audit or Quest
sponsored audit.
4. Other. Quest shall provide GSK with copies of (a) any audits (other
than financial or tax audits) conducted by any regulatory authority,
which audit uncovers deficiencies in the quality of Services provided
by Quest Diagnostics Clinical Trials to GSK or a GSK Subsidiary, and
(b) any written communication by any regulatory authority alleging a
failure to comply with any applicable law or regulation, including any
483 notices received by Quest Diagnostics Clinical Trials or a QDCT
Referral from the United States Food and Drug Administration.
5. Insurance. Quest agrees to keep and maintain in full force and effect
professional liability and/or comprehensive liability insurance or self
insurance that covers liability arising in connection with the Services
performed under this Agreement with minimum coverage of $2,000,000 for
each occurrence or claim and $30,000,000 in the aggregate annually.
Upon the signing of this Agreement and annually thereafter, Quest
agrees to furnish GSK with a current and valid certificate of insurance
or self-insurance evidencing the extent of professional and/or
comprehensive liability coverage.
6. Personnel. To ensure the continuing quality of its Services, Quest
shall notify GSK of any changes in key personnel of Quest Diagnostics
Clinical Trials, including any change in the Quest Director or the
liaisons to GSK facilities. In addition, Quest shall immediately notify
GSK of any change in the Project Leader for a Study.
SECTION XVII. SERVICE MINIMUMS AND INCENTIVES
1. Annual Minimum Spend.
(i) In the event the revenues earned by Quest for Services
rendered under this Agreement by Quest from January 1, 2002
through December 31, 2002 ("2002 Revenues") are less than
$31,800,000, GSK will pay Quest on or before February 28,
2003, the amount of $31,800,000 minus 2002 Revenues.
(ii) In the event the revenues earned by Quest for Services
rendered under this Agreement by Quest from January 1, 2003
through December 31, 2003 ("2003 Revenues") are less than
$31,800,000, GSK will pay Quest on or before February 28,
2004, an amount equal to $31,800,000 minus the 2003 Revenues.
34
(iii) The parties understand and agree that due to the nature of
invoicing and payment cycles, it is possible that the 2003
Revenues may be over- or under-stated by a small amount. If
after formal closing of the annual financial records of the
parties it is agreed by the parties that GSK overpaid or
underpaid under Section XVII(1)(ii) above, the parties will
make any required reconciliation of the financial accounts
promptly, and any difference will be either paid to Quest by
GSK or credited to GSK by Quest no later than March 31, 2004.
(iv) The AMS Targets shall be as follows:
AMS TARGET
Year 2003 2004 2005 2006 2007 2008 2009
---- ------ ------- ------- ------- ------- ------- -------
Millions $34.98 $38.478 $42.326 $46.559 $51.215 $56.337 $61.950
2. Minimum Total Contract Value. The minimum total contract value for
revenue earned by Quest for Services rendered under this Agreement
("TCV") from January 1, 2004 through December 31, 2009 shall be
$276,700,000, net of any portion of the Credit actually used by GSK
with respect to such period as provided in Section XVII(5). If the
aggregate revenue earned by Quest for Services rendered under this
Agreement from January 1, 2002 through December 31, 2003 exceeds
$66,800,000 (net of any portion of the Credit actually used by GSK with
respect to such period), the TCV shall be reduced by the difference
between the actual revenue earned by Quest for Services rendered under
this Agreement from January 1, 2002 through December 31, 2003 and
$66,800,000. In the event the actual revenue earned by Quest for
Services rendered under this Agreement for the period from January 1,
2004 through December 31, 2009 ("Six Year Period Revenue") is less than
the TCV, GSK shall pay an amount equal to the TCV (as adjusted) less
the Six Year Period Revenue on or before February 28, 2010, unless
otherwise mutually agreed in writing by the parties.
3. AMS Target Incentives. If GSK exceeds the AMS Target for any individual
calendar year (net of any portion of the Credit actually used with
respect to such Period), GSK shall be entitled to a discount calculated
by using the following formula:
35
YEARS 2003 - 2005
Annual Revenue Range of
Above AMS Additional Discount Additional Discount
US$ % Applied to Tier $ Earned on Tier
---------------------- ------------------- -------------------
Tier 1 1 -- 7,500,000 5% 0 -- 375,000
Tier 2 7,500,001 -- 15,000,000 10% 0 -- 750,000
Tier 3 15,000,001 and above 15%
YEARS 2006 - 2009
Annual Revenue Range of
Above AMS Additional Discount Additional Discount
US$ % Applied to Tier $ Earned on Tier
---------------------- ------------------- -------------------
Tier 1 1 -- 5,000,000 2 1/2% 0 -- 125,000
Tier 2 5,000,001 -- 10,000,000 5% 0 -- 250,000
Tier 3 10,000,001 and above 10%
For example and for illustrative purposes only, if in year 2004 annual
revenue were $17 million above the AMS Target, the discount would be
$1,425,000 ($375,000 + $750,000 + $300,000). Any additional discounts
earned by GSK in any individual calendar year, as described in the
tables above, may, at GSK's discretion, be either applied to subsequent
invoices for the remainder of that calendar year or paid by Quest to
GSK on or before February 28 of the subsequent calendar year.
4. It is expressly agreed by the parties that the AMS Targets are solely
for the purpose of calculating entitlement to or use of credits and/or
additional discounts, and in no way create an obligation to generate an
annual minimum amount of revenue for Quest after 2003. In addition, for
the avoidance of doubt, for purposes of calculating under this
Agreement the amount of the revenues earned by Quest for Services
rendered under this Agreement, all Services requested by GSK in
accordance with this Agreement (including without limitation Section
II(1)) and provided under this Agreement or under Alternative
Laboratory Agreements to the GSK Group shall be included, whether or
not such Services are subject to the exclusivity obligations of Section
III.
5. Subject to the further conditions of this Section XVII(5), in 2003 GSK
shall receive a credit for $4,200,000 of Services at no charge from
Quest (the "Credit"). The Credit shall be applied only after
satisfaction of the AMS Target in any given year, beginning in 2003,
and only to a maximum of $2,000,000 in any year. (By way of example, in
2003 GSK will first be required to reach the 2003 AMS Target of
$34,980,000 before the Credit will be applied. The Credit will then be
applied dollar for dollar to the next $2,000,000 of revenue earned by
Quest in
36
excess of $34,980,000 during such year. The balance of the Credit shall
carry forward from year to year under this Agreement until exhausted or
until the Agreement expires or is terminated. The Credit shall not be
counted toward achieving the TCV, any AMS Target Incentives set forth
in Section XVII(3) above, or the incentive described in Section XVII(6)
below. The Credit (or any balance thereof) shall not survive past the
termination of this Agreement, and any unused portion of the Credit
shall expire on December 31, 2009.
6. Extension Agreement. As a mutual incentive to encourage the extension
of this Agreement for three years after its termination on December 31,
2009, GSK shall be entitled to utilize a "renewal" credit in each of
2010, 2011, and 2012 equal to one-third of the amount of the aggregate
discount GSK earns in the period from January 1, 2003 through December
31, 2009 under the provisions of Section XVII(3) above. Such credit
shall be available to GSK if and only if the following conditions are
satisfied:
(i) GSK and Quest agree to extend this Agreement for an additional
three-year period; and
(ii) the aggregate revenue earned by Quest for Services rendered
under this Agreement from January 1, 2004 through December 31,
2009 under this Agreement (net of any portion of the Credit
actually used by GSK during such period) exceeds the TCV of
$276,700,000 (as adjusted).
Utilization of the renewal credit in any year is subject to a maximum
of 2% (two percent) of the aggregate revenue earned by Quest for
Services rendered under this Agreement in that same calendar year. The
unused credit balance at the end of the extension shall expire.
SECTION XVIII. CONFIDENTIALITY AND OWNERSHIP OF SPECIMENS AND DATA
1. During the performance of this Agreement, GSK may provide to Quest or
Quest may generate data, test results, Studies, and other information
regarding the drug under Study, or regarding the protocols or other
information relating to research programs being conducted by GSK or the
business of GSK. Quest understands that GSK considers such information
to be confidential. Quest will not use such confidential information
except for the purpose of conducting the Study for GSK and will
maintain the information in confidence to the extent that it is not
already known to the public and for such time as it remains unknown to
the public. Quest may disclose such information to only those
employees, agents, contractors and consultants who are reasonably
necessary to carry out the terms of this Agreement and shall take
reasonable measures to ensure that such employees, agents, contractors
and consultants maintain the confidentiality of this information. Quest
may disclose such confidential information to any QDCT Referral
Laboratory for purposes of providing Services to GSK. Quest shall
37
ensure that any QDCT Referral Laboratory to whom Quest refers testing
shall be obligated in writing to maintain the confidentiality of such
confidential information (whether received from Quest or GSK or
generated by such laboratory in connection with its testing for GSK) to
the same extent as Quest hereunder. For the avoidance of doubt, this
provision is not intended to supersede the confidentiality provisions
of any Alternative Laboratory Agreements.
2. During the performance of this Agreement, Quest may provide to GSK
information regarding Quest's standard operating procedures, processes,
testing procedures, pricing and other information relating to the
clinical trials testing business conducted by Quest. GSK understands
that Quest considers such information to be confidential. GSK will not
use such confidential information except for the purpose of conducting
its Study and will maintain the information in confidence to the extent
it is not already known to the public and such information remains
unknown to the public. GSK may disclose such confidential information
to only those employees, agents, contractors and consultants who are
reasonably necessary to carry out the terms of this Agreement and shall
take reasonable measures to ensure that such employees, agents,
contractors and consultants maintain the confidentiality of this
information.
3. To the extent confidential information is already known to the public
or becomes known to the public from any source other than the party
bound hereunder by this obligation of confidentiality, there shall be
no obligation of confidentiality. The obligation of confidentiality as
set forth in this paragraph shall survive for ten years following the
termination of this Agreement. Upon termination of this Agreement, all
documents containing confidential information shall be returned to the
party who disclosed the confidential information within sixty days of a
written request. If either party is required by law or valid court
order to disclose confidential information of the other party, it shall
promptly notify the other party of the disclosure requirement.
4. All right, title, and interest in and to any specimens obtained by GSK
during the course of any Study and any data generated from any Study,
whether by GSK or its Affiliates, an Investigator, subcontractor or
other Person or by Quest in the course of providing Services pursuant
to this Agreement are the proprietary rights of GSK and its Affiliates,
and all ownership rights in such specimens and data shall remain with
GSK and its Affiliates. Nothing herein or in any Task Description shall
grant or be deemed to grant to Quest any rights in such property of GSK
or its Affiliates. Quest acknowledges and agrees that it shall have no
claim to any specimens or data obtained by GSK or its Affiliates or
generated on its behalf by Quest or any Investigator, subcontractor,
agent or Person during the course of any Study. Upon request of GSK,
Quest shall return all specimens and data to GSK; provided, however,
that Quest may retain copies of any data necessary to satisfy
applicable regulatory requirements.
5. Data Privacy Laws. Each party shall be responsible for ensuring that
the performance of its obligations under this Agreement complies with
any applicable
38
provisions of the Health Insurance Portability and Accountability Act
and its implementing regulations, as amended from time to time
("HIPAA"). In the event that this Agreement or any practices which are
employed in performance of this Agreement do not satisfy either party's
obligations under HIPAA, the parties shall agree in good faith upon an
appropriate amendment to this Agreement and to execute and deliver any
documents required to comply with HIPAA.
SECTION XIX. CANCELLATION
In the event that a Study is canceled by GSK after Quest has been authorized to
render start-up Services, including (a) the purchase of specialized testing
reagents and/or supplies, (b) preparation and/or distribution of specimen
collection/transport supplies, or (c) protocol administration and/or data
management Services, Quest, at its sole option, may charge GSK, and GSK agrees
to reimburse Quest, for actual Services rendered and actual costs incurred in
the set-up of the Study in each case, upon receipt by GSK of reasonable
documentation evidencing such Services and such costs.
SECTION XX. TERM AND OBLIGATIONS SURVIVING TERMINATION
1. The Term of this Agreement shall commence on the date hereof and shall
end on the earlier to occur of (a) December 31, 2009 and (b) the date
this Agreement is otherwise terminated pursuant to its terms; provided,
however, that the parties by mutual written agreement may extend this
Agreement through December 31, 2012 or any other mutually agreed
period.
2. If this Agreement is terminated, this Agreement shall become void and
of no further force or effect, except that (a) the obligations set
forth in this Agreement (including in the Addenda) with respect to any
Study which has not been completed at the time of such termination and
(b) the obligations set forth in Sections XV, XVI, XVIII, XX, XXII and
XXV shall, in each case, survive such termination, unless otherwise
separately terminated or canceled in writing by GSK and Quest;
provided, however, that in the event that this Agreement is terminated
by GSK as a result of a Material Breach, GSK may elect, in its sole
discretion, also to terminate any Study which has not been completed at
the time of such termination with no further obligation to Quest except
for liabilities accrued but unpaid at the time of such termination.
SECTION XXI. BREACH
1. A "MATERIAL BREACH" by Quest of this Agreement means any of the
following:
(i) Any failure to provide Services with respect to any Study
pursuant to the terms of this Agreement which failure results
in (or, if after GSK becomes aware of such failure, without
the use of substantial resources of GSK not
39
initially planned or budgeted and not reimbursed by Quest
would have caused) a substantial delay, which delay is caused
solely by the failure of Quest to provide Services under this
Agreement, in any of
(a) the initiation or completion of the conduct of a
Study that GSK or a GSK Subsidiary identifies as
Pivotal; provided, however, that GSK shall advise
Quest at the quarterly JOC meetings of which Studies
it deems to be Pivotal;
(b) the completion of the reporting of the laboratory
results of such Study or of a clinical Study report
or other regulatory submission for such Study;
(c) the acceptance by the relevant regulatory authority
of the results of such Study, clinical Study report
or regulatory submission for such Study; or
(d) the completion of the regulatory review process
(e.g., such failure results in additional for-cause
audits or regulatory questions related to laboratory
issues);
(ii) Any failure to satisfy, in any material respect, the U.S.
Clinical Laboratory Improvements Amendments (CLIA 88), or good
clinical laboratory practices or generally accepted industry
standards for quality assurance and quality control, including
the standards set forth in the United States Federal Food,
Drug and Cosmetics Act or promulgated by the College of
American Pathologists, or any failure by Quest promptly to
remedy any deficiencies uncovered in any audit by the FDA or
equivalent European regulatory authority where any of the
foregoing failures in this sub-section XXI(1)(ii) jeopardizes
Quest's ability to perform Services under this Agreement;
(iii) Repeated and continued material failure to provide Services
pursuant to the terms of this Agreement which failures have
been raised pursuant to Section IV of this Agreement and
resolution thereof attempted under Section IV(6), and which
remain unresolved, including, without limitation:
(a) repeated and continued failures to satisfy in any
material respect the requirements of this Agreement
with respect to data management and reporting of test
results;
(b) repeated and continued failure to satisfy the
standards or requirements for Study preparation,
management or conduct in this Agreement (e.g., the
timely and accurate provision of supplies and
materials and maintaining the Study Blind);
(c) the failure, with respect to 5% of Studies within any
12 month period, to provide 90% of the testing sites
for any such Studies with
40
the supplies required for such Study in the
implementation time specified in this Agreement for
such Studies;
(d) any error in, or repeated and continued failure in
quality of, Services provided by Quest under this
Agreement which causes Investigators for any Study to
withdraw their participation in any Study;
(iv) Any Material Breach that occurs pursuant to Section XVI(2)
provided that the issue(s) causing the alleged Material Breach
have been raised pursuant to Section IV of this Agreement and
resolution thereof attempted under Section IV(6), and such
issues remain unresolved; and
(v) Any other material breach by Quest of the terms of this
Agreement which breach has been raised pursuant to Section IV
of this Agreement and resolution thereof attempted under
Section IV(6), and which remains unresolved.
2. A "MATERIAL BREACH" by GSK means any material breach by GSK of the
terms of this Agreement which breach has been raised pursuant to
Section IV of this Agreement and resolution thereof attempted under the
provisions of Section IV(6), and which remains unresolved.
3. Remedies for Breach.
(i) Remedies. In the event of an unresolved Material Breach under
Sections XXI(1)(ii) through XXI(v), and provided Quest has
failed to cure the breach (if curable) within the cure period
set forth below in Section XXI(4), or in the event of a
Material Breach by Quest pursuant to Section XXI(1)(i), GSK
may:
(a) Terminate this Agreement immediately; or
(ii) In its sole discretion, terminate only its obligation in
Section III to exclusively use Quest without terminating the
entire Agreement. For the avoidance of doubt, in connection
with termination of exclusivity under this Section
XXI(3)(i)(b), GSK shall retain the right to favorable pricing
under Section XV and the obligation to meet all Spend Targets.
(iii) Additional Remedies for Material Breach. If there is any
uncured Material Breach by either party under this Agreement,
the non-breaching party shall be entitled to any and all
remedies available at law and equity or under this Agreement,
including, without limitation, injunctive relief against the
breaching party to require it to comply with its obligations
under this Agreement.
4. Cure Periods Related to Breach. For any Material Breach by GSK and any
Material Breach or Repeated and Continuous Failure (as defined in
Section
41
XXI(5) below) by Quest pursuant to Sections XXI(1)(ii) through (v) or
XXI(5) hereof, the non-breaching party shall provide notice to the
breaching party of the Material Breach or Repeated and Continuous
Failure, with 30 days to cure such breach. If the Material Breach or
Repeated and Continuous Failure is cured during the 30 day period (or
if not curable within a 30 day period, the breaching party has
commenced the cure and continues to diligently work, meeting mutually
agreed to milestones, to cure the breach), the notice of breach will be
deemed withdrawn. For the avoidance of doubt: (a) before the
non-breaching party may provide the notice of breach under this Section
XXI(4), the non-breaching party shall have attempted to resolve the
issues underlying the alleged Material Breach or Repeated and
Continuous Failure through the structure set out in Section IV(6); and
(b) the cure periods provided in this Section XXI(4) shall be in
addition to and separate from the time established for the parties to
attempt to resolve the alleged Material Breach(es) or Repeated and
Continuous Failure(s) pursuant to Section IV above or XXI(5) below. Any
Material Breach by Quest pursuant to Section XXI(1)(i) shall not be
subject to the cure period specified herein and, upon the occurrence of
such Material Breach, GSK may immediately exercise its rights as
provided in Section XXI(3) above.
5. Repeated and Continuous Failure by Quest. If Quest has repeatedly and
continually failed to provide Services hereunder in accordance with the
generally-accepted quality standards in the clinical trials central
laboratory testing industry, which failures do not rise to the level of
a Material Breach under Section XXI(1) (a "Repeated and Continuous
Failure"), GSK shall escalate its concerns to the JOC under Section
IV(6) of this Agreement. After completion of the process described in
Section IV(6), GSK may send Quest a notice under Section XXI(4) above;
if GSK does not send such notice within 180 days after completion of
such process, GSK shall be deemed to have waived that Repeated and
Continuous Failure (provided that any such waiver shall not operate as
a waiver of future, similar Repeated and Continuous Failures).
6. Excluded Breaches. For the avoidance of doubt, breaches by parties
performing Services for GSK under Alternative Laboratory Agreements
shall not be grounds for Material Breaches or Repeated and Continuous
Failures by Quest under this Agreement.
SECTION XXII. INDEMNIFICATION
1. Indemnification by Quest. Quest agrees to defend, indemnify and hold
harmless GSK, its Affiliates, and their respective officers, directors,
employees, stockholders, agents and representatives from claims,
demands, costs, expenses (including reasonable attorney's fees) and
liabilities or losses (collectively, "Losses") which may be asserted
against or incurred by GSK, its Affiliates, and their respective
officers, directors, employees, stockholders, agents and
representatives, caused or alleged to be caused by Quest, or its
respective Affiliates, officers, directors, employees, agents or
representatives in
42
providing Services under the terms of the Agreement; provided, however,
that Quest shall have no liability under this Section XXII(1) to the
extent such Loss arises solely as a result of any negligent, improper
or illegal act or failure to act on the part of GSK, its Affiliates or
their respective officers, directors, employees, stockholders, agents,
or representatives.
2. Indemnification by GSK. GSK agrees to defend, indemnify and hold
harmless Quest, its respective Affiliates, officers, directors,
employees, stockholders, agents and representatives from any and all
Losses which may be asserted against Quest, its respective Affiliates,
officers, directors, employees, stockholders, agents and
representatives which result from or arise out of (a) the manufacture,
distribution, sale or use in any manner of the pharmaceutical compound
being tested by Quest, or (b) the conduct of clinical trials by GSK,
its Affiliates, or their respective officers, directors, employees,
agents or representatives; provided, however, that GSK shall not have
any liability under this Section XXII(2) to the extent such Loss arises
solely as a result of any negligent, improper or illegal act or failure
to act on the part of Quest, or its respective Affiliates, officers,
directors, employees, stockholders, agents, or representatives.
3. Limitations on Quest's Liability. Notwithstanding Section XXII(1), the
liability of Quest under this Agreement shall be no greater than:
(i) in the case where Quest's breach has not rendered a Study
invalid, a reduction in the total contract price for the Study
in an amount equal to the difference between (a) the total
contract price for the Study and (b) the value of the work
properly performed; and
(ii) in the case where Quest's breach renders a Study invalid, a
refund of the total contract price paid by GSK or an GSK
Subsidiary to Quest, plus the difference in such contract
price and any additional, commercially reasonable amounts that
GSK or an GSK Subsidiary must incur to have the Study
performed over; provided, however, that any Study that GSK
shall have performed over shall be performed using similar
standards that were required by GSK or an GSK Subsidiary of
Quest initially for the Study. In such a situation where
Quest's breach renders a Study invalid, GSK or the GSK
Subsidiary shall have the option to have Quest re-perform the
Study at no additional expense to GSK or the GSK Subsidiary
or, alternatively, to have a clinical laboratory other than
Quest perform the Study. If GSK or the GSK Subsidiary elects
to have another laboratory perform the Study, GSK and the GSK
Subsidiary shall be released from the obligations under
Section III to use Quest on an exclusive basis, but only for
the particular Study that was invalidated by Quest's breach.
UNDER NO CIRCUMSTANCES SHALL GSK BE ENTITLED TO, NOR SHALL QUEST BE
RESPONSIBLE FOR, ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL OR SPECIAL
DAMAGES (INCLUDING, WITHOUT
43
LIMITATION, LOST PROFITS) ARISING AS A RESULT OF OR IN CONNECTION WITH
QUEST'S DEFAULT OR BREACH OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR
ANY GIVEN STUDY, OR ANY DOCUMENTS RELATED THERETO.
4. Limitations on GSK's Liability.
(i) If GSK terminates this Agreement as a result of a Repeated and
Continuous Failure, the liability of GSK under this Agreement,
including, without limitation, liability for lost profits and
interest of Quest, shall not exceed the greater of:
(a) Twenty percent of the number equal to [$340,300,000
minus the revenue earned by and paid to Quest for
Services rendered under this Agreement and the
Alternative Laboratory Agreements after January 1,
2002]; or
(b) $30,000,000.
For the avoidance of doubt, the limitations on GSK's liability
to Quest as provided for in this Section XXII(4)(i) shall
apply if, and only if, Quest has committed a Repeated and
Continuous Failure and GSK subsequently terminates this
Agreement; otherwise, the limitations provided for in this
Section XXII(4)(i) shall not apply.
(ii) UNDER NO CIRCUMSTANCES SHALL QUEST BE ENTITLED TO, NOR SHALL
GSK BE RESPONSIBLE FOR, ANY INCIDENTAL, INDIRECT,
CONSEQUENTIAL OR SPECIAL DAMAGES, OTHER THAN LOST PROFITS AND
INTEREST THEREON, ARISING AS A RESULT OF OR IN CONNECTION WITH
GSK'S TERMINATION OF THIS AGREEMENT OR DEFAULT OR BREACH OF
ITS OBLIGATIONS UNDER THIS AGREEMENT OR ANY GIVEN STUDY, OR
ANY DOCUMENTS RELATED THERETO.
(iii) Notwithstanding anything in this Section XXII(4) to the
contrary, this Section XXII(4) shall have no effect on Section
XXII(2).
5. Procedures Relating to Indemnification of Third Party Claims. In order
for a party (the "indemnified party") to be entitled to any
indemnification provided for under this Agreement in respect of,
arising out of or involving a claim or demand made by any Person
against the indemnified party (a "Third Party Claim"), such indemnified
party must notify the indemnifying party in writing, and in reasonable
detail, of the Third Party Claim within 15 business days after receipt
by such indemnified party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of
such failure (except that the indemnifying party shall not be liable
for any expenses incurred during the period in which the indemnified
44
party failed to give such notice). Thereafter, the indemnified party
shall deliver to the indemnifying party, within five business days
after the indemnified party's receipt thereof, copies of all notices
and documents (including court papers) received by the indemnified
party relating to the Third Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense
thereof and, if it so chooses and acknowledges its obligation to
indemnify the indemnified party therefor, to assume the defense thereof
with counsel selected by the indemnifying party; provided that such
counsel is not reasonably objected to by the indemnified party. Should
the indemnifying party so elect to assume the defense of a Third Party
Claim, the indemnifying party shall not be liable to the indemnified
party for legal expenses subsequently incurred by the indemnified party
in connection with the defense thereof. If the indemnifying party
assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the indemnifying party,
it being understood that the indemnifying party shall control such
defense. The indemnifying party shall be liable for the fees and
expenses of counsel employed by the indemnified party for any period
during which the indemnifying party has failed to assume the defense
thereof (other than during the period prior to the time the indemnified
party shall have given notice of the Third Party Claim as provided
above).
If the indemnifying party so elects to assume the defense of any Third
Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the indemnifying
party's request) the provision to the indemnifying party of records and
information which are reasonably relevant to such Third Party Claim,
and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Whether or not the indemnifying party shall have assumed the
defense of a Third Party Claim, the indemnified party shall not admit
any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written
consent (which consent shall not be unreasonably withheld). If the
indemnifying party shall have assumed the defense of a Third Party
Claim, the indemnified party shall agree to any settlement, compromise
or discharge of a Third Party Claim which the indemnifying party may
recommend and which by its terms obligates the indemnifying party to
pay the full amount of the liability in connection with such Third
Party Claim, which releases the indemnifying party completely in
connection with such Third Party Claim.
The indemnification required by this Section XXII shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred. All claims under this
Section XXII other than Third Party Claims shall be governed by Section
XXII(6).
45
6. Procedures Relating to Other Claims. In the event any indemnified party
should have a claim against any indemnifying party under this Section
XXII that does not involve a Third Party Claim being asserted against
or sought to be collected from such indemnified party, the indemnified
party shall deliver notice of such claim with reasonable promptness to
the indemnifying party. The failure by any indemnified party to so
notify the indemnifying party shall not relieve the indemnifying party
from any liability which it may have to such indemnified party under
this Section XXII, except to the extent that the indemnifying party
demonstrates that it has been materially prejudiced by such failure. If
the indemnifying party does not notify the indemnified party within 30
calendar days following its receipt of such notice that the
indemnifying party disputes its liability to the indemnified party
under this Section XXII, such claim specified by the indemnified party
in such notice shall be conclusively deemed a liability of the
indemnifying party under this Section XXII and the indemnifying party
shall pay the amount of such liability to the indemnified party on
demand or, in the case of any notice in which the amount of the claim
(or any portion thereof) is estimated, on such later date when the
amount of such claim (or such portion thereof) becomes finally
determined. If the indemnifying party has timely disputed its liability
with respect to such claim, as provided above, the indemnifying party
and the indemnified party shall proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations,
such dispute shall be resolved by litigation in an appropriate court of
competent jurisdiction.
SECTION XXIII. ASSIGNABILITY AND AMENDMENTS
1. This Agreement and the rights and obligations hereunder shall not be
assignable in whole or in part by any party without the prior written
consent of the other parties hereto (such consent not to be
unreasonably withheld or delayed); provided, however, that (i) subject
to clause (ii) below, any party may assign its rights and obligations,
in whole or in part, to an Affiliate of such party which (a) is
Controlled by such party and (b) agrees in writing to be bound by the
terms of this Agreement (including clause (ii) below); provided,
however, that if GSK assigns this Agreement to an Affiliate, the
Agreement will continue to be applicable to GSK and the GSK
Subsidiaries, and (ii) upon such assignee ceasing to be an Affiliate of
such party or an Affiliate Controlled by such party, such rights and
obligations must be assigned back to such party or to another permitted
assignee of such party and, in any event, the parties hereto agree that
the original assignment shall have no further force and effect. Any
transaction or series of transactions by which Quest or any of its
respective Affiliates transfers, directly or indirectly, responsibility
for, control of, or ownership of, the operations of Quest's clinical
trials business to a third party, including through a management
contract, a sale of assets, a business combination, liquidation,
dissolution, merger or other transaction, shall constitute an
assignment requiring GSK's prior written consent (such consent not to
be unreasonably withheld or delayed). Should GSK withhold its consent
to any transfer by Quest described
46
above, and Quest elects to continue with such transfer, GSK shall have
the right to immediately terminate this Agreement. Any attempted
assignment in violation of this Section XXIII shall be void.
2. No amendment, modification or waiver of this Agreement shall be
effective unless it shall be in writing and signed by all the parties
hereto.
SECTION XXIV. CHANGE IN CONTROL OF GSK
In the event of a Change in Control of GSK Parent, the successor company to GSK
as a result of such Change in Control (the "Successor Company") shall be
required to obtain Services under Section III of this Agreement in connection
with the conduct of Studies under this Agreement for any pharmaceutical compound
which immediately prior to the date of such Change in Control (the "Change in
Control Date") (a) GSK or any GSK Subsidiary owns or has interests in, or (b) is
in development by GSK or any GSK Subsidiary (the "Existing GSK Compounds"), in
each case to the extent such Services are required by the terms of Section III.
In addition, unless otherwise agreed by the JOC, the Successor Company shall not
be required to obtain Services required in connection with Studies as provided
under Section III for any pharmaceutical compound that is not an Existing GSK
Compound until and unless the initiation date of such Study is on or after the
date which is 18 months after the Change of Control Date. Notwithstanding the
foregoing, the Successor Company and Quest shall work together in good faith and
to the extent practicable under the circumstances to utilize Quest to provide
Services in connection with Studies for compounds in addition to Existing GSK
Compounds prior to the end of the 18-month period after the Change of Control
Date.
SECTION XXV. GOVERNING LAW
This Agreement shall be construed, interpreted and enforced under the laws of
the State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
SECTION XXVI. INTERPRETATION
1. The headings contained in this Agreement, in any Exhibit hereto, in any
Task Description executed pursuant to this Agreement and in the table
of contents to this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
All Exhibits annexed hereto or referred to herein and all Addenda
executed pursuant to this Agreement are hereby incorporated in and made
a part of this Agreement as if set forth in full herein (e.g., any
requirement for Quest to perform Services for any Study "pursuant to
the terms set forth in this Agreement," is a requirement to perform
such Services as set forth in the terms included in all Sections of
this Agreement,
47
in the relevant Task Description (including the relevant CLW) and in
any Exhibit or Schedule to this Agreement). Any capitalized terms used
in any Exhibit or Task Description but not otherwise defined therein,
shall have the meanings set forth in this Agreement.
2. The definitions of the terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires
otherwise (A) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to
such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (B) any reference herein to any Person shall be construed to
include the Person's successors and permitted assigns, (C) the words
"herein", "hereof" and "hereunder", and words of similar import, shall
be construed to refer to this Agreement in its entirety and not to any
particular provision hereof, and (D) all references herein to
paragraphs, Sections, Exhibits, or Addenda shall be construed to refer
to paragraphs, Sections, Exhibits, Schedules and Addenda of this
Agreement.
3. All references to Quest's laboratory in the United Kingdom are hereby
deemed to be references to any replacement laboratory Quest may
establish in the future.
SECTION XXVII. NOTICES
All notices permitted or required to be given under the terms of this Agreement
shall be deemed to have been given when sent by telex or facsimile followed by
letter to the respective addresses of each party as indicated as set forth below
(or any new addresses with which as either party may provide the other party in
writing from time to time):
If to Quest: Quest Diagnostics Incorporated
0000 Xxxx Xxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Vice President, Clinical Trials
With a required copy to:
Quest Diagnostics Incorporated
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: General Counsel
48
000-000-0000
000-000-0000 (fax)
If to GSK: GlaxoSmithKline
0000 Xxxxxxxxxxx Xxxx.
Mailstop REN 0000
Xxxx xx Xxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxxx
Vice President
Global Clinical Operations
000-000-0000
and
GlaxoSmithKline
Xxxxx Xxxxxx
Xxxxxx, Xxxxx
XX00 0XX Xxxxxx Xxxxxxx
Attn: Xxxxxxx Xxxxxxxx
44-127-9-644086
With a required copy to:
GlaxoSmithKline
Corporate Law Department
709 Swedeland Road
X.X. Xxx 0000
Xxxx xx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esquire
Research and Development General Counsel
000-000-0000
000-000-0000(fax)
SECTION XXVIII. ENFORCEMENT
1. Each party irrevocably submits to the exclusive jurisdiction of (a) any
Federal court located in the Commonwealth of Pennsylvania and (b) any
court of the Commonwealth of Pennsylvania, for the purposes of any
suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each party agrees to commence any
action, suit, or proceeding relating hereto either in a Federal Court
located in the Commonwealth of Pennsylvania or in a court of the
Commonwealth of Pennsylvania. Each party further agrees that service of
any process, summons, notice or document by U.S. registered mail to
such party's address as listed in Section XXIX shall constitute
effective service of process for any action, suit or proceeding in
Pennsylvania with respect to any matters to which it has submitted to
jurisdiction in this Section XXVIII. Each party
49
irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) any Federal court
located in the Commonwealth of Pennsylvania or (ii) any court of the
Commonwealth of Pennsylvania, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
2. Each party hereby waives to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect to any
litigation directly or indirectly arising out of, under or in
connection with this Agreement or any transaction contemplated hereby.
Each party (a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seeks to enforce
that foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications in this Section
XXVIII.
SECTION XXIX. INTEGRATION
This Agreement shall constitute the entire agreement between Quest and GSK
regarding the subject matter hereof.
[Signatures continue on next page]
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IN WITNESS WHEREOF, GSK and Quest have duly executed this Global
Clinical Trials Agreement as of the first day above written.
SMITHKLINE XXXXXXX PLC
D/B/A GLAXOSMITHKLINE
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Attorney-in-Fact
By /s/
-------------------------------------
Name:
Title:
QUEST DIAGNOSTICS INCORPORATED
By /s/ Xxxxx Xxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxx Xxxxx
Title: Senior V.P. - Advanced
Diagnostics
By /s/
-------------------------------------
Name:
Title:
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