Exhibit 8
CATEGORY THREE
LABORATORY DATA ACCESS AGREEMENT
This CATEGORY THREE LABORATORY DATA ACCESS AGREEMENT (this
"AGREEMENT"), dated as of August 16, 1999, between SmithKline Xxxxxxx plc, a
public limited liability company organized under the laws of England
("SMITHKLINE XXXXXXX"), and Quest Diagnostics Incorporated, a Delaware
corporation ("QUEST DIAGNOSTICS").
WHEREAS, SmithKline Xxxxxxx and Quest Diagnostics have entered
into a Stock and Asset Purchase Agreement, dated as of February 9, 1999 (the
"PURCHASE AGREEMENT"), pursuant to which SmithKline Xxxxxxx has agreed to sell,
and Quest Diagnostics has agreed to purchase, SmithKline Xxxxxxx'x clinical
laboratories business, including 100% of the outstanding capital stock of SBCL,
Inc., a Delaware corporation ("SBCL"), and certain other assets, as further
described therein (the "TRANSACTION");
WHEREAS, the clinical laboratory data previously collected by
SBCL becomes the property of Quest Diagnostics pursuant to the Purchase
Agreement; and
WHEREAS, as a condition to completion of the Transaction,
SmithKline Xxxxxxx has required Quest Diagnostics to grant to SmithKline
Xxxxxxx, and Quest Diagnostics is willing to so grant to SmithKline Xxxxxxx,
certain non-exclusive and limited-use license rights on economically preferred
terms for a limited term for the clinical laboratory data identified herein.
WHEREAS, SmithKline Xxxxxxx and Quest Diagnostics have entered
into a Participation Agreement, dated as of the date hereof (the "PARTICIPATION
AGREEMENT"), pursuant to which SmithKline Xxxxxxx will form IX Company ("IX
COMPANY") and will grant Quest Diagnostics an initial 29.5% equity interest in
IX Company. IX Company may, among other activities, use the Data received under
this Agreement, together with other health care related data, to develop, market
and sell products and services under Category Three Uses.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and in the Participation Agreement, and subject to
and on the terms and conditions set forth herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) For purposes of this Agreement:
"AFFILIATE" means with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by, or is under common control
with, a specified Person. For purposes of this definition, the term "CONTROL" as
applied to any Person, means 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; PROVIDED that (1) any
Person that performs Clinical Laboratory Services that generate revenues in any
fiscal year (as determined pursuant to generally accepted accounting principles
in the U.S.) exceeding $250,000,000 shall not be an Affiliate of SmithKline
Xxxxxxx for purposes of Articles III, IV and V and (2) after assignment of this
Agreement to IX Company as provided in Section 10.01(a), neither IX Company nor
any subsidiary of IX Company (collectively, the "IX ENTITIES") shall be an
Affiliate of SmithKline Xxxxxxx or its other Affiliates for purposes of Articles
III, IV and V. For purposes of the foregoing proviso, Clinical Laboratory
Services shall exclude Clinical Laboratory Information Services (provided that
the Person providing such Clinical Laboratory Information Services does not
perform and has not performed clinical laboratory, anatomic pathology or other
diagnostic testing services). SmithKline Xxxxxxx and Quest Diagnostics shall not
be deemed to be Affiliates of each other.
"APPLICABLE LAW" means, with respect to any jurisdiction, all
applicable statutes, laws, ordinances, rules, orders and regulations (to the
extent then in force and effect) of any federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, having authority over an applicable Person in such jurisdiction.
"AUTHORIZED SUBCONTRACTOR" means, with respect to SmithKline
Xxxxxxx, any subcontractor of SmithKline Xxxxxxx or its Affiliates that agrees
in writing not to disclose to Third Parties Data received under this Agreement
except at the direction and on behalf of SmithKline Xxxxxxx.
"CATEGORY THREE USES" means any use of Data by SmithKline
Xxxxxxx and its Affiliates, provided that the utility of the program, service or
product using the Data, from the
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point of view of a reasonable user of such program, service or product, has been
materially enhanced by the inclusion of data, other than laboratory data,
sourced from SmithKline Xxxxxxx or any Third Party. For the avoidance of doubt,
nothing in this Agreement prohibits SmithKline Xxxxxxx and its Affiliates from
including laboratory data sourced from any Third Party in a program, service or
product under a Category Three Use.
"CLIENT" means (a) with respect to Quest Diagnostics and any
of its Affiliates, any Person for whom Quest Diagnostics or any of its
Affiliates is providing laboratory services that generates Laboratory Data and
(b) with respect to SmithKline Xxxxxxx and any of its Affiliates, any Person for
whom SmithKline Xxxxxxx or any of its Affiliates is providing Data pursuant to
this Agreement.
"CLINICAL LABORATORY INFORMATION SERVICES" means providing in
any manner, directly or indirectly, data or information products or services
which substantially consist of laboratory test results and/or related
information (other than initial reporting of laboratory test results and test
development and other similar research activities engaged in by Quest
Diagnostics or its Affiliates).
"CLINICAL LABORATORY SERVICES" means clinical laboratory,
anatomic pathology or other diagnostics testing services (including, without
limitation, routine and esoteric clinical laboratory services (including
genetics testing), clinical laboratory services involved with clinical trials,
point-of-care testing, clinical laboratory services involving corporate
healthcare and services involved with managing hospital laboratories) including
the reports of test results, or providing to any unaffiliated Person, in any
manner, directly or indirectly, data or information products or services which
substantially consist of laboratory test results and/or related information.
"COMMENCEMENT DATE" means the eighteen-month anniversary of
the Effective Date.
"DATA" means Laboratory Data and Encoded Laboratory Data.
"EFFECTIVE DATE" means the date upon which this Agreement is
effective and shall be the Closing Date as defined in the Purchase Agreement.
"ENCODED LABORATORY DATA" means Laboratory Data that has been
encoded through the Encoding Process. Encoded Laboratory Data shall specifically
exclude Patient Identifiers.
"ENCODING KEY" means the unique randomly generated code
assigned by the Information Encoder in the Encoding Process which relates to a
specific person. An Encoding Key shall specifically exclude Encounter Numbers
(as defined in Appendix F).
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"ENCODING PROCESS" means the process and procedures described
in Article VI.
"HEALTH INFORMATION" means that portion of Laboratory Data
that is medical and clinical information associated with any individual person
that relates to the past, present or future (a) physical or mental health
condition of the person, (b) family history of the person, (c) provision of
healthcare to the individual and (d) date of service. Health Information shall
specifically exclude Patient Identifiers and shall specifically include
Encounter Numbers.
"HISTORICAL DATA" means Laboratory Data entered into a
database prior to the Effective Date.
"INFORMATION ENCODER" means that independent Third Party
retained by SmithKline Xxxxxxx to perform the duties of the Encoding Process as
described in Article VI.
"INITIAL TERM" means, unless and until earlier terminated
pursuant to this Agreement, the period beginning on the Effective Date and
ending on the 42-month anniversary of the Effective Date.
"IX COMPETITOR" means a Third Party who is primarily engaged
in the business of developing, marketing, selling and delivering, via the
Internet, programs, services and products using patient specific health
information or, if IX Company is not primarily engaged in such business, a Third
Party primarily engaged in the business then primarily engaged in by IX Company.
"LABORATORY DATA" means and consists of clinical laboratory
data and associated person specific data and other information related to
Clinical Laboratory Services performed by SBCL, Quest Diagnostics or their
Affiliates, but expressly excluding Data that (a) is generated by clinical
trials and forensic toxicology or (b) relates to Clinical Laboratory Services
performed prior to January 1, 1998, by Quest Diagnostics and its Affiliates
(excluding SBCL and its subsidiaries) or prior to January 1, 1997, by SBCL and
its subsidiaries.
"PATIENT DEMOGRAPHIC INFORMATION" means (a) with respect to
any Person, the following person-associated information: date of birth, age,
gender and 5-digit zip code, and (b) with respect to any Person's test order,
laboratory requisition number and identity of the performing laboratory.
"PATIENT IDENTIFIERS" means with respect to any Person, name,
street address, 9-digit zip code, communication numbers (telephone, facsimile,
pager, e-mail), Social Security number and patient benefit member identification
numbers.
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"PERSON" means any individual, firm, corporation, partnership,
limited partnership, limited liability company, trust, joint venture, government
entity or other entity.
"QUEST DIAGNOSTICS INFORMATICS BUSINESS" means any business or
businesses conducted by Quest Diagnostics or its Affiliates, pursuant to which
Quest Diagnostics or any of its Affiliates provides Clinical Laboratory
Information Services using laboratory data from testing services performed by
Quest Diagnostics and its Affiliates.
"QUEST INFORMATICS DATABASE" means the compilation of
Laboratory Data in the centralized clinical laboratory database maintained by
Quest Diagnostics or its Affiliates on the Effective Date, and any comparable or
successor database or databases maintained by Quest Diagnostics or its
Affiliates in connection with the conduct of Clinical Laboratory Information
Services by Quest Diagnostics or its Affiliates.
"SBCL INFORMATICS DATABASE" means the compilation of
Laboratory Data in the centralized clinical laboratory database maintained by
SBCL or its subsidiaries on the Effective Date and any comparable or successor
database or databases maintained by Quest Diagnostics or its Affiliates in
connection with the conduct of Clinical Laboratory Information Services by Quest
Diagnostics or its Affiliates.
"TAX" or "TAXES" shall mean any federal, state, local or
foreign net or gross income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium (including taxes under ss.59A of
the Internal Revenue Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax, governmental fee or like
assessment or charge of any kind whatsoever, including any interest, penalty or
addition thereto, whether disputed or not, imposed by any governmental entity or
other Tax authority or arising under any Tax law or agreement, including,
without limitation, any joint venture or partnership agreement.
"TERM" means, unless and until earlier terminated pursuant to
this Agreement, the Initial Term and any applicable Renewal Term in accordance
with Article IX.
"THIRD PARTY" means any party other than SmithKline Xxxxxxx
and Quest Diagnostics and their respective Affiliates.
"YEAR 2000 COMPLIANCE" includes any requirement that the
design and performance specifications of the relevant items include: accurate
date and century recognition, calculations that accommodate same century and
multicentury formulas and date values, and date/data interface values that
accurately reflect the century.
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(b) The following terms have the meanings set forth in the
Sections set forth below:
Term Section
---- -------
Additional Services............................................ 7.05(b)
Agreement...................................................... Preamble
Applicable Fee................................................. 8.01(a)
Applicable Period.............................................. 8.01(b)
Authorization.................................................. 4.02(a)
Data File 1.................................................... Appendix F
Data File 2.................................................... Appendix F
Deliverables................................................... 6.06
Disputes....................................................... 12.15(a)
Encoder Contract............................................... 6.01(b)
Encounter Number............................................... Appendix F
Indemnified Party.............................................. 11.03(a)
IX Company..................................................... Preamble
Loss........................................................... 11.01
Master Encoding Key Database................................... 6.03(b)
Other Quest Data Access Agreement.............................. 8.01(d)
Participation Agreement........................................ Preamble
Protocols...................................................... 6.02(c)
Purchase Agreement............................................. Preamble
Quest Diagnostics.............................................. Preamble
Quest Diagnostics Indemnified Party............................ 11.01
Renewal Term................................................... 9.02
SBCL........................................................... Preamble
SmithKline Xxxxxxx............................................. Preamble
SmithKline Xxxxxxx Indemnified Party........................... 11.02
Source Identifier.............................................. Appendix F
Superior Internal Service Level................................ 7.05(d)
Superior Service Level......................................... 7.05(d)
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Third Party Claims............................................. 11.03(b)
Transaction.................................................... Preamble
ARTICLE II
RIGHTS IN DATA
SECTION 2.01. RIGHTS IN DATA. The Laboratory Data to be
disclosed to SmithKline Xxxxxxx for use by SmithKline Xxxxxxx is proprietary
information of Quest Diagnostics. SmithKline Xxxxxxx'x rights in the Data are
defined solely by the Category Three Uses and the other terms, conditions and
limitations in this Agreement.
ARTICLE III
ENCODED LABORATORY DATA
SECTION 3.01. CATEGORY THREE USES. Quest Diagnostics hereby
grants to SmithKline Xxxxxxx and its Affiliates a non-exclusive, perpetual,
worldwide right and license to use Encoded Laboratory Data received under
Section 3.02 for Category Three Uses, including the rights to receive, copy,
transfer, sublicense, manipulate, integrate, disclose and display, subject to
the terms and conditions of this Agreement. SmithKline Xxxxxxx, without
Authorization, shall have no right to directly or indirectly attempt to match or
link Encoded Laboratory Data with Patient Identifiers and shall refrain from
doing so.
SECTION 3.02. DELIVERY OF ENCODED LABORATORY DATA. During the
Term, if SmithKline Xxxxxxx requests Encoded Laboratory Data from Quest
Diagnostics, Quest Diagnostics shall, at the fees set forth in Article VIII,
electronically deliver, or deliver in electronic format, to a location in the
United States, Encoded Laboratory Data to SmithKline Xxxxxxx. Each transmission
of Encoded Laboratory Data shall be made in accordance with the performance
criteria set forth in Articles VI and VII, to the extent applicable, to one
recipient (which shall be SmithKline Xxxxxxx or an Affiliate or Authorized
Subcontractor designated by SmithKline Xxxxxxx).
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ARTICLE IV
LABORATORY DATA
SECTION 4.01. CATEGORY THREE USES. Quest Diagnostics hereby
grants to SmithKline Xxxxxxx and its Affiliates a non-exclusive, perpetual,
worldwide right and license to use Laboratory Data received under Section 4.02
for Category Three Uses, including the rights to receive, copy, transfer,
sublicense, manipulate, integrate, disclose and display, subject to
Authorization (as defined below) and the other terms and conditions of this
Agreement.
SECTION 4.02. REQUEST FOR LABORATORY DATA. (a) During the
Term, in the event that SmithKline Xxxxxxx requests Laboratory Data from Quest
Diagnostics and accompanies such request by a written or electronic
authorization (an "AUTHORIZATION") granted by a Person with authority to grant
SmithKline Xxxxxxx access to Laboratory Data (as further provided herein), Quest
Diagnostics shall provide, at the fees set forth in Article VIII, SmithKline
Xxxxxxx or its Affiliates (as applicable) with such Laboratory Data in
accordance with the Authorization and the terms and conditions of this
Agreement.
(b) Depending upon the terms of such Authorization, Quest
Diagnostics shall electronically deliver, or deliver in electronic format, to a
location in the United States, (i) the requested Laboratory Data or (ii) at
SmithKline Xxxxxxx'x election in its sole discretion, the Encounter Numbers for
the Data covered by the Authorization, either to SmithKline Xxxxxxx or an
Affiliate or Authorized Subcontractor as designated in the Authorization. Any
such delivery shall be made in accordance with the performance criteria set
forth in Article VII to one recipient designated by SmithKline Xxxxxxx.
SECTION 4.03. AUTHORIZATION. Authorizations shall be
substantially in the form attached hereto as Appendix B, provided that
SmithKline Xxxxxxx may make reasonably appropriate drafting changes to tailor an
Authorization to a particular Client or circumstance. Quest Diagnostics may
revise Appendix B from time to time to reflect changes in its operating
procedures or in any Applicable Laws, subject to SmithKline Xxxxxxx'x approval
not to be unreasonably withheld or delayed. Any dispute between the parties
regarding Appendix B shall be resolved pursuant to Section 12.15. Receipt of an
Authorization executed by (1) a patient or a Person representing himself or
herself to be the legal representative of such patient or (2) a health plan
representing itself to have authority over such patient's Laboratory Data shall
be sufficient for any purpose under this Agreement for which an Authorization is
required with respect to such patient's Laboratory Data. SmithKline Xxxxxxx
shall be responsible for obtaining, at its sole expense, valid Authorizations
for Category Three Uses of Laboratory Data under this Agreement.
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ARTICLE V
DISCLOSURE OF DATA
SECTION 5.01. CATEGORY THREE USES. (a) Quest Diagnostics
acknowledges that Clients of SmithKline Xxxxxxx and its Affiliates are not
restricted by this Agreement from disclosing Data via the Internet provided that
such disclosure complies with the other provisions of this Article V.
(b) Notwithstanding any provision to the contrary, SmithKline
Xxxxxxx shall delete that portion of the Data consisting of information that
identifies the health care payors (except to the extent the health care payor is
the patient or a family member of the patient) from any Data provided to a
Person that is not its Affiliate or Authorized Subcontractor except to the
extent (and only to the extent) that Data is provided to (i) the applicable
payor or provider or patient with respect to the Clinical Laboratory Services
covered by such Data, (ii) a governmental, regulatory or accrediting agency or
(iii) a Person entitled to receive such information as a matter of Applicable
Law.
(c) Any disclosure by SmithKline Xxxxxxx or its Affiliates of
Laboratory Data (that is not Encoded Laboratory Data) shall be consistent with
the terms of the applicable Authorization. Any disclosure by SmithKline Xxxxxxx
and its Affiliates of Data shall be in compliance with Applicable Law and the
terms of this Agreement.
SECTION 5.02. MOST FAVORED NATION TREATMENT REGARDING
DISCLOSURE RESTRICTIONS. Notwithstanding the provisions of Section 5.01, in the
event that Quest Diagnostics or its Affiliates shall provide any Data to an IX
Competitor, with confidentiality and/or disclosure restrictions less stringent
than those contemplated by Section 5.01, then Quest Diagnostics shall promptly
notify SmithKline Xxxxxxx of such less stringent restrictions, in which case
SmithKline Xxxxxxx shall have the right to disclose that same type of Data to
Third Parties subject to such less stringent restrictions rather than the
applicable restrictions provided in Section 5.01.
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ARTICLE VI
ENCODING
SECTION 6.01. SELECTION OF THE INFORMATION ENCODER. (a)
SmithKline Xxxxxxx shall be responsible for the selection of the Information
Encoder, subject to Quest Diagnostics' approval, which approval shall not be
unreasonably withheld or delayed. Quest Diagnostics shall be entitled to meet
with any prospective Information Encoder solely to review its procedures for
maintaining the confidentiality and security of Laboratory Data to be received
by the Information Encoder prior to giving its approval; provided, however, that
the ultimate discretion in such selection belongs to SmithKline Xxxxxxx.
(b) SmithKline Xxxxxxx shall be responsible for the
negotiation with and implementation of an agreement with the Information
Encoder. SmithKline Xxxxxxx shall ensure that the agreement between SmithKline
Xxxxxxx and the Information Encoder (the "ENCODER CONTRACT") shall meet the
requirements set forth in Section 6.07.
(c) SmithKline Xxxxxxx shall be responsible for all fees and
expenses of the Information Encoder.
SECTION 6.02. PROCEDURES AND PROTOCOLS. (a) The procedures and
protocols to be used by the Information Encoder are intended to facilitate
linkage by SmithKline Xxxxxxx of the Encoded Laboratory Data for a given
individual person as received from Quest Diagnostics or its Affiliates with
other anonymous or encoded medical or clinical healthcare information associated
with the same individual person, to which information SmithKline Xxxxxxx or its
Affiliates may otherwise have access. Such procedures and protocols shall be
compatible with Quest Diagnostics' data formats as of the Effective Date and
fields as specified in Appendix A.
(b) Quest Diagnostics shall provide to the Information Encoder
and SmithKline Xxxxxxx copies of documentation relating to the data
specifications, elements and fields and formats used by Quest Diagnostics and
its Affiliates with respect to Data. Quest Diagnostics shall provide the
Information Encoder and SmithKline Xxxxxxx with access to use any standard data
dictionary that Quest Diagnostics or any Affiliate of Quest Diagnostics
maintains or uses with respect to the Laboratory Data and its documentation on
file layouts in connection with the Laboratory Data. Quest Diagnostics will
identify, maintain and make available a single point of contact to assist
SmithKline Xxxxxxx in resolving any questions regarding Data.
(c) The linking of individual data files, creation of the
Encoding Keys and the creation of the Master Encoding Key Database (as defined
below) shall be performed by the Information Encoder in accordance with the
processes and protocols provided to the Information Encoder by SmithKline
Xxxxxxx or its Affiliates from time to time (the "PROTOCOLS").
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Notwithstanding any other terms in this Agreement, in no event shall the
Protocols be shared with Quest Diagnostics or its Affiliates. In no event shall
SmithKline Xxxxxxx, Quest Diagnostics or any of their respective Affiliates
provide, without Authorization, any Laboratory Data other than Patient
Identifiers, Patient Demographic Information, Encoding Keys, Encounter Numbers,
Source Identifiers (as defined in Appendix F) and physician identification
numbers to the Information Encoder.
SECTION 6.03. USE OF INFORMATION. (a) The Information Encoder
shall be authorized to use the Patient Identifiers, Patient Demographic
Information, Encoding Keys, Encounter Numbers, Source Identifiers and physician
identification numbers solely for the purposes set forth in this Article VI.
(b) The Information Encoder shall be authorized to create and
maintain a database of the Patient Identifiers, Patient Demographic Information,
Encoding Keys, Encounter Numbers, Source Identifiers and physician
identification numbers provided by Quest Diagnostics ("MASTER ENCODING KEY
DATABASE") and shall be authorized to create a permanent encoding conversion
table for the individual files which links multiple individual fields for the
Patient Identifiers, Patient Demographic Information, Encoding Keys, Encounter
Numbers, Source Identifiers and physician identification numbers concerning an
individual, while maintaining individual accessibility of each data file
provided. The Information Encoder is authorized to use such Master Encoding Key
Database (subject to the terms of this Agreement, particularly regarding patient
confidentiality and Authorization) to link Encoding Keys to such individual data
files regarding the same individual and to link other demographic data to the
Encoding Key. The Information Encoder may make copies of the Master Encoding Key
Database or portions thereof, provided that the Master Encoding Key Database and
such copies are maintained by the Information Encoder under its control in
secure settings at all times.
SECTION 6.04. HISTORICAL DATA ENCODING. Quest Diagnostics (a)
will provide to the Information Encoder Patient Identifiers, Patient Demographic
Information, physician identification numbers, Encounter Numbers and Source
Identifiers from the Historical Data and (b) will provide to SmithKline Xxxxxxx,
or an Affiliate or Authorized Subcontractor of SmithKline Xxxxxxx, Laboratory
Data from the Historical Data, with the corresponding Patient Identifiers
deleted, in each case in accordance with Appendix F.
SECTION 6.05. ONGOING DATA ENCODING. Using the same
methodology and programming developed for the encoding of Historical Data
pursuant to the Encoding Process described on Appendix F (but using the service
levels provided in this Section 6.05), Quest Diagnostics no less frequently than
daily (for this purpose, six days a week or seven days a week if the normal
course of business) (with respect to the SBCL Informatics Database, weekly until
updated more frequently as provided in Section 7.01(d), at which point at least
as frequently as the SBCL Informatics Database is updated) shall send (a) to the
Information Encoder a Data
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File 1 and (b) to SmithKline Xxxxxxx or an Affiliate or Authorized Subcontractor
of SmithKline Xxxxxxx a Data File 2, in each case generated by Quest Diagnostics
and its Affiliates from the Quest Informatics Database and the SBCL Informatics
Database, commencing with the most recent submission under this Section 6.05 (or
in the case of the first submission under this Section 6.05, commencing with all
Laboratory Data since the most recent Laboratory Data included in the Historical
Data). The Information Encoder will deliver to SmithKline Xxxxxxx the Encoding
Keys created using the Encoding Process together with the corresponding
Encounter Numbers in Data File 1.
SECTION 6.06. COSTS AND EXPENSES. SmithKline Xxxxxxx shall
reimburse Quest Diagnostics for all reasonable costs and expenses to the extent
associated with the setup of the processes to transfer and process to the
Information Encoder and SmithKline Xxxxxxx (including initial extraction of, but
not for ongoing extraction of) Patient Identifiers, Patient Demographic
Information, Encounter Numbers, Source Identifiers, physician identification
numbers and Laboratory Data in accordance with this Article VI (the
"DELIVERABLES"), including but not limited to costs of acquiring and installing
required hardware and disk space, programming costs, interface development
costs, line charges, and any other such costs and expenses ; PROVIDED that
SmithKline Xxxxxxx shall not be obligated to reimburse Quest Diagnostics more
than $90,000 pursuant to this Section 6.06. Quest Diagnostics shall be
responsible for all costs and expenses relating to the Deliverables in excess of
$90,000 and all costs and expenses associated with the ongoing processes to
transfer and process to the Information Encoder and SmithKline Xxxxxxx
(including ongoing extraction of) the Laboratory Data.
SECTION 6.07. INFORMATION ENCODER CONTRACT. The Encoder
Contract shall meet the following requirements:
(a) The Encoder Contract shall incorporate the duties of the
Information Encoder as set forth in this Article VI, and the relevant
definitions from Article I, including the definitions for Encoded Laboratory
Data, Patient Identifiers, Encoding Keys, Encounter Numbers, Source Identifiers
and Patient Demographic Information.
(b) The Information Encoder shall be subject to the terms of
Section 12.03 regarding confidentiality.
(c) The Information Encoder shall be prohibited from assigning
the Encoder Contract without Quest Diagnostics' consent, which shall not be
unreasonably withheld or delayed.
(d) If the Information Encoder's performance under the Encoder
Contract materially breaches the provisions of this Article VI and such breach
is not cured within 30 days of SmithKline Xxxxxxx'x receipt of written notice of
such breach from Quest Diagnostics or, if
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such breach is not of a type that can reasonably be cured within such period,
within 90 days of SmithKline Xxxxxxx'x receipt of written notice of such breach
from Quest Diagnostics (notwithstanding that the Information Encoder is working
diligently to cure such breach), then Quest Diagnostics may suspend the delivery
of Patient Identifiers, Patient Demographic Information, Encounter Numbers,
Source Identifiers and physician identification numbers to the Information
Encoder pursuant to this Article VI. Any such suspension shall be pursuant and
subject to the provisions of Section 9.05. SmithKline Xxxxxxx shall notify Quest
Diagnostics promptly if it becomes aware that the Information Encoder's
performance under the Encoding Contract materially breaches the provisions of
this Article VI.
(e) The Encoder Contract shall provide that, in consideration
of Quest Diagnostics' provision of Patient Identifiers, Patient Demographic
Information, Encounter Numbers and physician identification numbers to the
Information Encoder, Quest Diagnostics shall have the right to exercise audit
rights with respect to the Information Encoder during normal business hours,
without unreasonably interfering with the Information Encoder's business and at
Quest Diagnostics' expense (and that SmithKline Xxxxxxx shall be empowered to
and shall enforce said rights of Quest Diagnostics). Such audit rights shall be
limited solely to the right to review the Encoder Contract and to verify the
Information Encoder's compliance with the applicable terms of this Article VI
and Section 12.03.
(f) Upon the termination of the Encoder Contract, the
Information Encoder either shall transfer all its files relating to the Master
Encoding Key Database to a successor Information Encoder that has entered into
an Encoder Contract with SmithKline Xxxxxxx that meets the requirements of this
Section 6.07 or, in the event that no Information Encoder is appointed, either
destroy all its files relating to the Master Encoding Key Database (and certify
to Quest Diagnostics that they have been destroyed) or deliver such files to
Quest Diagnostics. Notwithstanding the foregoing, the Information Encoder and
SmithKline Xxxxxxx shall be permitted to retain a copy of any portion of the
Patient Identifiers and Patient Demographic Information that is generally
available from third party sources without violation of Applicable Law; PROVIDED
such information is maintained in a format that is not linked with the Master
Encoding Key Database or any Encoding Keys or otherwise could reasonably be
expected to link Patient Identifiers with the applicable patients' Health
Information. Such information only may be retained and used for the benefit of
SmithKline Xxxxxxx and its Affiliates.
(g) Except as permitted by Section 6.07(f) or this Section
6.07(g), under no circumstances will the Information Encoder provide to
SmithKline Xxxxxxx or its Affiliates or any Person other than Quest Diagnostics
the Master Encoding Key Database or Encoding Keys in any format that could
reasonably be expected to permit such Person to link Patient Identifiers with
the applicable patient's Health Information. Notwithstanding the foregoing, in
the event that SmithKline Xxxxxxx or its Affiliates have delivered to the
Information Encoder an Authorization, then the Information Encoder may provide
to SmithKline Xxxxxxx or its
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Affiliates the Encoding Keys, together with the Patient Identifiers and Patient
Demographic Information, covered by the Authorization. In such event, the
Information Encoder shall deliver to Quest Diagnostics, by electronic or other
means, a copy of the applicable authorization within five business days of the
date on which the Information Encoder delivered such Encoding Keys, Patient
Identifiers and Patient Demographic Information to SmithKline Xxxxxxx or its
Affiliates; PROVIDED that in the event of an Authorization from a healthcare
payor (other than a payor who is the applicable patient or a family member of
the patient), SmithKline Xxxxxxx shall deliver to Quest Diagnostics, by
electronic or other means, a copy of the applicable Authorization not later than
two business days after the date on which SmithKline Xxxxxxx delivers such
Authorization to the Information Encoder and notice that SmithKline Xxxxxxx has
requested the Information Encoder to deliver such Encoding Keys, Patient
Identifiers and Patient Demographic Information to SmithKline Xxxxxxx or its
Affiliates.
ARTICLE VII
QUALITY OF DATA AND SERVICE LEVELS
SECTION 7.01. QUALITY OF DATA. (a) Except as expressly set
forth in this Agreement, Quest Diagnostics makes no representation or warranty
with respect to the quality of any Data provided to SmithKline Xxxxxxx pursuant
to this Agreement and shall provide such Data on an "as is" basis including,
without limitation, (i) any representation or warranty regarding Year 2000
Compliance or (ii) any warranty of merchantability or fitness of use; PROVIDED,
HOWEVER, that Quest Diagnostics will use reasonable commercial efforts to
maximize the accuracy of Data and to cause Laboratory Data relating to Clinical
Laboratory Services performed by Quest Diagnostics or its Affiliates after the
Effective Date to be in Year 2000 Compliance. Any efforts made by Quest
Diagnostics or its Affiliates in the normal course of the Quest Diagnostics
Informatics Business to improve the accuracy of the Data also shall be made for
SmithKline Xxxxxxx and its Affiliates pursuant to this Agreement.
(b) Quest Diagnostics makes no commitment to continue in the
Quest Diagnostics Informatics Business. If Quest Diagnostics and its Affiliates
exit the Quest Diagnostics Informatics Business and no longer maintain the Quest
Informatics Database and/or the SBCL Informatics Database, then Quest
Diagnostics shall provide the Laboratory Data on a "where is" as well as "as is"
basis with SmithKline Xxxxxxx to pay for all reasonable costs associated with
extracting Data from the laboratory information and billing information systems
of Quest Diagnostics and its Affiliates and transmitting such Data to SmithKline
Xxxxxxx; PROVIDED that Quest Diagnostics shall only be obligated to provide
SmithKline Xxxxxxx with Data relating to the data fields set forth on Appendix A
as of the date hereof plus Data relating to any data fields added to Appendix A
after the date hereof, but, subject to Section 7.04, only to the extent that
Quest Diagnostics and its Affiliates collect such Laboratory Data in the course
of
14
performing Clinical Laboratory Services. In furtherance of this Section 7.01(b)
and Section 7.01(e), Quest Diagnostics agrees to use commercially reasonable
efforts to accommodate, at SmithKline Xxxxxxx'x expense, reasonable requests for
any cleaning, collecting and/or transmitting of Laboratory Data, including to
facilitate encoding pursuant to Article VI.
(c) Unless (i) Quest Diagnostics or its Affiliates no longer
maintain the Quest Informatics Database and/or the SBCL Informatics Database or
(ii) Quest Diagnostics is in breach of its obligations set forth in Section
7.01(d) or (e) or Section 7.02(a), Quest Diagnostics' obligation to use
Laboratory Data to create Encoded Laboratory Data pursuant to Article VI for
delivery to SmithKline Xxxxxxx pursuant to Section 3.02 and its obligation to
deliver Laboratory Data to SmithKline Xxxxxxx pursuant to Section 4.02 shall be
limited to the Laboratory Data residing in electronic format in the Quest
Informatics Database and/or the SBCL Informatics Database, except to the extent
provided in Section 7.01(e).
(d) So long as Quest Diagnostics or its Affiliates conduct the
Quest Diagnostics Informatics Business, Quest Diagnostics shall cause the Quest
Informatics Database and the SBCL Informatics Database:
(i) to be updated, (A) in the case of the Quest Informatics
Database on a daily basis (at least five days a week) and (B) in the
case of the SBCL Informatics Database no less frequently than on a
weekly basis, with all Laboratory Data then reasonably available
relating to at least the fields then set forth on Appendix A (but in no
event relating to less than the fields set forth on Appendix A) and
generated by Quest Diagnostics or its Affiliates since the previous
time as of which such database or databases have been so updated, and
(ii) to include in a timely fashion Laboratory Data with
respect to substantially all Clinical Laboratory Services (excluding
Clinical Laboratory Information Services) performed by Quest
Diagnostics and its Affiliates during the preceding three-year period
(but in any event after January 1, 1998).
Without limiting Section 7.01(d)(i), Quest Diagnostics shall use reasonable
commercial efforts to cause the SBCL Informatics Database to be updated pursuant
to the foregoing clause (i) on a daily basis (at least five days a week). Quest
Diagnostics shall use commercially reasonable efforts to cause the Quest
Informatics Database and the SBCL Informatics Database to include, not later
than five days after the applicable laboratory test result is finally reported
to the applicable physician, Laboratory Data with respect to substantially all
Clinical Laboratory Services (excluding Clinical Laboratory Information
Services) performed by Quest Diagnostics and its Affiliates after the date
hereof, provided that, as of any date, Quest Diagnostics shall not be required
to cause such databases to include Laboratory Data with respect to Clinical
15
Laboratory Services performed more than three years prior to such date. Quest
Diagnostics shall use commercially reasonable efforts to cause each laboratory
that transmits Laboratory Data for entry into the Quest Informatics Database
and/or the SBCL Informatics Database to do so on a daily basis.
(e) If Quest Diagnostics or an Affiliate of Quest Diagnostics
deletes any field from the Quest Informatics Database or the SBCL Informatics
Database which field is marked with an asterisk on Appendix A, SmithKline
Xxxxxxx may request in writing that Quest Diagnostics continue providing
SmithKline Xxxxxxx with the Laboratory Data relating to such field; PROVIDED
that SmithKline Xxxxxxx shall pay for all reasonable costs associated with
extracting such Data from the laboratory information and billing information
systems of Quest Diagnostics and its Affiliates and transmitting such Data to
SmithKline Xxxxxxx unless Quest Diagnostics or its Affiliates deleted such field
from, or failed to include such field in, the Quest Informatics Database or the
SBCL Informatics Database in violation of Section 7.02(a).
(f) Quest Diagnostics shall provide SmithKline Xxxxxxx, on at
least a monthly basis, with the then current schedule for each of its or its
Affiliates' laboratories with respect to such laboratories' transmission of
Laboratory Data for entry into the Quest Informatics Database and/or SBCL
Informatics Database. This obligation shall be suspended during any period that
each such laboratory is transmitting laboratory data on a daily basis.
SECTION 7.02. QUEST INFORMATICS DATABASE. (a) The current data
fields embodied in the Quest Informatics Database and SBCL Informatics Database
are set forth in Appendix A, which Appendix shall be updated from time to time
by Quest Diagnostics to reflect changes in such data fields. Quest Diagnostics
shall notify SmithKline Xxxxxxx in writing at least 30 days in advance of any
changes in the data fields embodied in the Quest Informatics Database or the
SBCL Informatics Database which may impact Data provided to SmithKline Xxxxxxx
or the Information Encoder. Notwithstanding the foregoing, Quest Diagnostics
agrees not to, and to cause its Affiliates not to, delete any data fields from
the Quest Informatics Database or SBCL Informatics Database designated by an
asterisk on Appendix A unless Quest Diagnostics and its Affiliates do not
provide Laboratory Data relating to such fields to any Third Party in connection
with the Quest Diagnostics Informatics Business and Quest Diagnostics provides
SmithKline Xxxxxxx with 12 months' written notice (unless and to the extent such
sooner deletion is required by a change in Applicable Law). If, in the manner
permitted by the preceding sentence, Quest Diagnostics or an Affiliate of Quest
Diagnostics deletes any field from the Quest Informatics Database or the SBCL
Informatics Database which field is marked with an asterisk on Appendix A and
Quest Diagnostics or its Affiliates subsequently provide Laboratory Data
relating to such field to any Third Party in connection with the Quest
Diagnostics Informatics Business, such field shall be added back to the Quest
Informatics Database and the SBCL Informatics Database and shall be deemed added
back to Appendix A (marked with an asterisk).
16
(b) During the Term, Quest Diagnostics shall provide to
SmithKline Xxxxxxx documentation defining the data specifications, elements,
data fields and formats used by Quest Diagnostics and its Affiliates with
respect to Data. Quest Diagnostics and its Affiliates shall provide all
associated reference data needed to interpret the Laboratory Data. All
Laboratory Data shall be linked in such a way that all relationships among data
fields and types are clearly and unambiguously established. During the Term,
Quest Diagnostics shall also provide SmithKline Xxxxxxx with a copy of any
available standard data dictionary that Quest Diagnostics or an Affiliate of
Quest Diagnostics maintains or uses with respect to the Laboratory Data and its
documentation on file layouts in connection with the Laboratory Data. Quest
Diagnostics will identify, maintain and make available a single point of contact
to assist SmithKline Xxxxxxx in resolving any questions regarding Data.
(c) SmithKline Xxxxxxx shall be entitled during the Term to
retain an independent Third Party (subject to Section 12.03 regarding
confidentiality) to audit, in accordance with Section 8.05, the procedures and
processes adopted by Quest Diagnostics for providing Data to SmithKline Xxxxxxx
and its Affiliates in accordance with the terms of this Agreement.
SECTION 7.03. REPAIRS AND REPLACEMENTS. Upon the making of any
material repairs or replacements to Data, Quest Diagnostics agrees to promptly
inform SmithKline Xxxxxxx (and, to the extent necessary, the Information
Encoder) of such material repairs or replacements and to use reasonable
commercial efforts to assist SmithKline Xxxxxxx (and, to the extent necessary,
the Information Encoder) in making any corresponding repairs or replacements to
Data previously provided to SmithKline Xxxxxxx (and, if applicable, the
Information Encoder), including providing SmithKline Xxxxxxx (or to the extent
necessary, the Information Encoder) with such repaired or replaced Data. If
Quest Diagnostics becomes aware of any material or systematic repairs necessary
to maintain the accuracy of the Data, Quest Diagnostics shall promptly notify
SmithKline Xxxxxxx.
SECTION 7.04. MINIMUM DATA FIELDS. Notwithstanding anything to
the contrary in this Article VII, Quest Diagnostics agrees to collect, and to
cause its Affiliates to collect, during the Term, to the extent consistent with
the normal operations of providing Clinical Laboratory Services, Laboratory Data
relating to the data fields set forth in Appendix C.
SECTION 7.05. SERVICE LEVELS. (a) Quest Diagnostics agrees to
the specific service levels set forth in Appendix E for providing Data to
SmithKline Xxxxxxx pursuant to Sections 3.02 and/or 4.02 but only to the extent
such service levels are expressly applicable to Sections 3.02 and/or 4.02.
17
(b) To the extent that (i) SmithKline Xxxxxxx requests service
pursuant to Sections 3.02 and/or 4.02 in excess of any expressly applicable
limits specified in Appendix E or (ii) to the extent SmithKline Xxxxxxx'x
request pursuant to Sections 3.02 and/or 4.02 does not fall within a category
for which there are specified service levels in this Agreement but which is of a
type comparable to the types of requests that are then serviced in the normal
course of the Quest Diagnostics Informatics Business, Quest Diagnostics agrees
to use commercially reasonable efforts to provide Laboratory Data to SmithKline
Xxxxxxx in satisfaction of such request in accordance with the normal business
practices of the Quest Diagnostics Informatics Business, with respect to
services provided to its Clients; PROVIDED that Quest Diagnostics will not
provide services under the foregoing clause (ii) that are in addition to the
services contemplated by this Agreement (including Appendix E as then in effect)
(such additional services, "ADDITIONAL SERVICES"), other than the faster or more
frequent delivery of Data pursuant to Sections 3.02 and/or 4.02. Quest
Diagnostics will treat SmithKline Xxxxxxx no less favorably than any other
Client of the Quest Diagnostics Informatics Business in the normal course of
such business.
(c) To the extent that an applicable service level requested
by SmithKline Xxxxxxx for the provision of Data pursuant to Sections 3.02 and/or
4.02 is not specified on Appendix E as then in effect, upon SmithKline Xxxxxxx'x
request, Quest Diagnostics agrees to negotiate with SmithKline Xxxxxxx in good
faith for the purpose of determining such additional, reasonably appropriate,
service level for providing Data to SmithKline Xxxxxxx pursuant to Sections 3.02
and/or 4.02 and an adjustment to the price paid by SmithKline Xxxxxxx pursuant
to Section 8.01 solely to reflect the additional service level to be provided by
Quest Diagnostics. The parties agree to amend Appendix E from time to time to
reflect such mutually agreed new service levels and fees. If the parties can not
mutually agree on an applicable new service level within 30 days of such
request, the parties shall resolve such dispute pursuant to Section 12.15.
(d) Notwithstanding anything to the contrary in this
Agreement, if Quest Diagnostics or its Affiliates provide to a Third Party any
service level which is superior to the service levels provided pursuant to this
Agreement to SmithKline Xxxxxxx and its Affiliates (a "SUPERIOR SERVICE LEVEL")
then Quest Diagnostics shall promptly provide SmithKline Xxxxxxx with notice of
such Superior Service Level and upon SmithKline Xxxxxxx'x request (which request
shall be delivered by the earlier of (1) twelve months after delivery of notice
from Quest Diagnostics pursuant to this Section 7.05(d) and (2) the latter of
(x) the end of the then current Term and (y) thirty days after delivery of
notice from Quest Diagnostics pursuant to this Section 7.05(d)) this Agreement
shall be deemed amended to reflect such Superior Service Level and Quest
Diagnostics and its Affiliates promptly shall make such Superior Service Level
available to SmithKline Xxxxxxx and its Affiliates. If, in connection with a
program, service or product that is provided by Quest Diagnostics or an
Affiliate of Quest Diagnostics pursuant to which laboratory data is provided to
Third Parties, Quest Diagnostics or an Affiliate of Quest Diagnostics provides
itself or another Affiliate with any service level which is superior to the
18
service levels provided pursuant to this Agreement to SmithKline Xxxxxxx and its
Affiliates (a "SUPERIOR INTERNAL SERVICE LEVEL"), then Quest Diagnostics shall
promptly provide SmithKline Xxxxxxx with notice of such Superior Internal
Service Level, and upon SmithKline Xxxxxxx'x request (which request shall be
delivered within the time periods described in the preceding sentence) this
Agreement shall be deemed amended to reflect such Superior Internal Service
Level and Quest Diagnostics and its Affiliates promptly shall make such Superior
Internal Service Level available to SmithKline Xxxxxxx and its Affiliates. As
used herein "service level" means timeliness of delivery of Data (other than
initial reporting of laboratory test results) and number, manner and frequency
of Data updates and additional data fields related to Data. The foregoing
notwithstanding, in the event that Quest Diagnostics develops a unique product
or service for (i) internal use and not for supply or provision of service to a
Third Party, or (ii) sale or exclusive license to a single Third Party without
retention by Quest Diagnostics or its Affiliates of any residual interest in
such product or service, Quest Diagnostics shall have no obligation to offer
such unique product or service as an Additional Service to SmithKline Xxxxxxx.
Upon any request by SmithKline Xxxxxxx for a Superior Service
Level or a Superior Internal Service Level that is an Additional Service, the
parties shall negotiate an adjustment to the Applicable Fee pursuant to Section
8.01 to reflect such Additional Service.
19
ARTICLE VIII
FEES
SECTION 8.01. CATEGORY THREE USES. (a) During the period
beginning on the Effective Date and ending on the date immediately prior to the
Commencement Date, there shall be no charge for Category Three Uses of Data.
Subject to Section 8.01(b), for each twelve-month period during the Initial
Term, commencing on the Commencement Date or the twelve-month anniversary
thereof, and for each Renewal Term, if the Term is so extended by SmithKline
Xxxxxxx (each such twelve-month period or Renewal Term, an "APPLICABLE PERIOD"),
SmithKline Xxxxxxx shall pay to Quest Diagnostics for Category Three Uses of
Data a fee (the "APPLICABLE FEE") equal to the lowest price charged in the
twelve-month period preceding such Applicable Period by Quest Diagnostics or one
of its Affiliates to an IX Competitor (an "APPLICABLE CLIENT"), for similar use
of laboratory data, PROVIDED that if Quest Diagnostics or its Affiliates do not
provide in the normal course of the Quest Diagnostics Informatics Business
similar use of laboratory data to four or more Applicable Clients, then the
Applicable Fee shall be the lesser of (i) the fair market value of SmithKline
Xxxxxxx'x use of the Data during such Applicable Period and (ii) the lowest
price that Quest Diagnostics or one of its Affiliates charges or reasonably
would charge an Applicable Client for similar use of laboratory data for such
Applicable Period. The lowest price that Quest Diagnostics or one of its
Affiliates charges or reasonably would charge an Applicable Client for similar
use of laboratory data, as provided in the foregoing sentence, shall be
determined using as a reference the prices Quest Diagnostics and its Affiliates
charge Applicable Clients for separate categories of laboratory data and
separate uses of such data, such as, without limitation, for use of patient
identifiable laboratory data and use of encoded laboratory data for programs,
services and products. The use of Data under this Agreement shall be valued
based on such separate categories of laboratory data used under this Agreement
(including any use via sublicenses). All consideration received or provided by
Quest Diagnostics or its Affiliates in connection with this Agreement, other
than equity in IX Company, and in connection with any other applicable agreement
under which Quest Diagnostics or its Affiliates provide laboratory data to
Applicable Clients shall be taken into account for purposes of this Section
8.01; PROVIDED that Quest Diagnostics' or its Affiliates' receipt of equity
securities of a Applicable Client to which any of them provides laboratory data
shall be excluded from the consideration taken into account under this Section
8.01. For purposes of this Section 8.01, an Applicable Client, together with all
of its Affiliates, shall be treated as a single Client of Quest Diagnostics.
(b) The Applicable Fee determined pursuant to Section 8.01(a)
(before giving effect to this Section 8.01(b)) for Category Three Uses of the
Data during each Applicable Period set forth below shall be reduced by a
percentage discount of the Applicable Fee (before giving effect to this Section
8.01(b)).
20
First Applicable Period: 25%
Second Applicable Period: 25%
Third Applicable Period: 15%
Fourth Applicable Period: 10%
(c) SmithKline Xxxxxxx and Quest Diagnostics, acting
reasonably and in good faith, shall seek to reach an agreement on the Applicable
Fee to apply for each Applicable Period not later than 90 days prior to the
start of such Applicable Period. If they reach agreement, such Applicable Fee
shall be binding on the parties for the entire Applicable Period, subject to any
adjustment in the Applicable Fee pursuant to Section 7.05. If they cannot timely
reach agreement on such Applicable Fee, then the Applicable Fee for the
twelve-month period of the Term immediately preceding the start of the
Applicable Period in dispute shall apply, pending resolution pursuant to Section
12.15. Payments of the Applicable Fee, whether final or pending resolution,
shall be made annually, in advance, on the first day of each Applicable Period.
Promptly and in any event within 30 days of the resolution of the Applicable Fee
to apply for such Applicable Period in dispute, either (i) Quest Diagnostics
shall refund to SmithKline Xxxxxxx any overpayment by it of the Applicable Fee
or (ii) SmithKline Xxxxxxx shall pay any remaining balance due of the Applicable
Fee to Quest Diagnostics, plus, in the case of each of the foregoing clauses (i)
and (ii), interest on the amount of such refund or balance due at the prime rate
published by Citibank, N.A. on the last business day of each month(s) during the
period from the beginning of such Applicable Period and the date on which the
amount of the refund or additional balance due, as the case may be, is paid.
(d) (i) In connection with the determination of the Applicable
Fee pursuant to Section 8.01(a), during the Term Quest Diagnostics
shall provide SmithKline Xxxxxxx, subject to Section 12.03, with the
relevant terms of each other agreement entered into during the Term
pursuant to which Quest Diagnostics or its Affiliates provide another
Applicable Client use of laboratory data (or encoded laboratory data)
(an "OTHER QUEST DATA ACCESS AGREEMENT"). Quest Diagnostics may exclude
the name of such Applicable Client, project specific data and anything
that could reasonably identify the Applicable Client or the project,
but shall include a brief description of its use of the laboratory data
and/or encoded laboratory data.
(ii) In connection with the determination of the Applicable
Fee pursuant to Section 8.01(b), during the Term, SmithKline Xxxxxxx
shall provide Quest Diagnostics, subject to Section 12.03, with the
terms related to its anticipated use of the Data and other information
that is reasonably necessary in order to determine the Applicable Fee
for each Applicable Period. SmithKline Xxxxxxx may exclude the names of
any of its Clients, project specific data and anything that could
reasonably identify its Clients or its projects, including any drug or
vaccine involved.
21
(e) If SmithKline Xxxxxxx and Quest Diagnostics have not
reached an agreement on the Applicable Fee to apply pursuant to Section 8.01(a)
for an Applicable Period on or prior to 90th day prior to the start of such
Renewal Term, then such dispute shall be resolved pursuant to Section 12.15. If
the dispute is arbitrated pursuant to Section 5 of Appendix D, the arbitrator
shall request that each party present the arbitrator with a proposed Applicable
Fee, which can be based on a fixed amount, volume of use, a royalty rate or any
other reasonable method or combination of methods. The arbitrator shall then
select that party's proposal that most closely approximates the Applicable Fee
due pursuant to Section 8.01(a), before giving effect to Section 8.01(b). The
arbitrator shall not select any other amount as the Applicable Fee unless the
arbitrator determines that either party has not complied with Section 8.01(d).
In selecting which proposal most closely approximates the Applicable Fee, the
arbitrator shall consider, in addition to the other considerations set forth in
Section 8.01, (i) for purposes of determining the fair market value of
SmithKline Xxxxxxx'x use of the Data during such Applicable Period, any evidence
provided by the parties of the fair market value of SmithKline Xxxxxxx'x use of
the Data, (ii) for purposes of determining the lowest price that Quest
Diagnostics charges or reasonably would charge an Applicable Client for similar
use of laboratory data for such Applicable Period, the Other Quest Data Access
Agreements provided to the arbitrator by the parties and (iii) such other
information as the arbitrator shall deem relevant. In comparing the terms of
this Agreement with the terms of other data access agreements, the arbitrator
shall compare the type and scope of use of laboratory data, the volume of use of
laboratory data, the type of customer, the term of the applicable data access
agreement, when such agreement was entered into and any other factors the
arbitrator deems relevant.
SECTION 8.02. CURRENCY AND PAYMENT. All amounts due by
SmithKline Xxxxxxx to Quest Diagnostics under any provision of this Agreement
shall be payable in United States currency by electronic funds transfer (SWIFT)
to an account designated by Quest Diagnostics. Any obligation to pay shall only
be deemed fulfilled on the day on which the relevant amount of money is credited
to the aforesaid account. The fees specified in this Article VIII shall be
denominated in U.S. dollars. Quest Diagnostics shall be responsible on its own
account for its own corporate income taxes. In the event of a breach by Quest
Diagnostics that continues for thirty (30) days after SmithKline Xxxxxxx gives
Quest Diagnostics written notice setting forth the nature of such breach,
SmithKline Xxxxxxx may suspend payment of any amount due under Section 8.01
until Quest Diagnostics cures such breach.
SECTION 8.03. INTEREST. If SmithKline Xxxxxxx shall fail to
pay any amount specified under this Agreement after the due date thereof, the
amount owed shall bear interest at the prime rate published by Citibank, N.A. on
the last business day of the month(s) of the delay plus two (2) percentage
points, from the due date until paid; PROVIDED, HOWEVER, that, if this interest
rate is held to be unenforceable for any reason, the interest rate shall be the
maximum rate allowed by law at the time the payment is due.
22
SECTION 8.04. RECORDS. (a) SmithKline Xxxxxxx shall keep (and
ensure that its Affiliates shall keep) correct and complete records of account
containing all information required to compute and verify fees due to Quest
Diagnostics under this Agreement, to verify SmithKline Xxxxxxx'x overall
compliance with the terms of this Agreement and to verify Authorization.
(b) Quest Diagnostics shall keep (and ensure that its
Affiliates shall keep) correct and complete records of account containing all
information required to verify Quest Diagnostics' overall compliance with the
terms of this Agreement.
SECTION 8.05. AUDIT BY SMITHKLINE XXXXXXX. SmithKline Xxxxxxx
shall be entitled during the Term to retain an independent Third Party (which
shall execute a confidentiality agreement consistent with Section 12.03
reasonably acceptable to Quest Diagnostics) to audit, no more than once per year
at SmithKline Xxxxxxx'x expense, to verify the compliance of any pricing scheme
proposed by Quest Diagnostics with the standards defined in this Article VIII
and Quest Diagnostics' compliance with the other terms of this Agreement. The
auditor is subject to approval by Quest Diagnostics, which approval shall not be
unreasonably withheld or delayed. The auditor shall be enabled to inspect only
those records reasonably relevant to Quest Diagnostics' compliance with the
terms of this Agreement. The auditor shall conduct its review during Quest
Diagnostics' normal business hours and without unreasonably interfering with
Quest Diagnostics' normal operations. All information obtained by such auditor
shall be considered confidential and subject to Section 12.03 of this Agreement.
Such auditor shall provide to SmithKline Xxxxxxx only that information
reasonably required by SmithKline Xxxxxxx in order to verify Quest Diagnostics'
compliance with the terms of this Agreement and shall not provide any
information that would identify a Client of Quest Diagnostics or can be excluded
under Section 8.01(d). The auditor shall simultaneously provide to Quest
Diagnostics copies of all information collected from Quest Diagnostics.
SmithKline Xxxxxxx shall not under any circumstances disclose any information so
provided by such auditor to any Third Party, except as permitted by Section
12.03.
SECTION 8.06. AUDIT BY QUEST DIAGNOSTICS. Quest Diagnostics
shall be entitled during the Term to retain an independent Third Party (which
shall execute a confidentiality agreement consistent with Section 12.03
reasonably acceptable to SmithKline Xxxxxxx) to audit, no more than once per
year at Quest Diagnostics' expense, to verify SmithKline Xxxxxxx'x compliance
with the terms of this Agreement. The auditor is subject to approval by
SmithKline Xxxxxxx, which approval shall not be unreasonably withheld or
delayed. The auditor shall be enabled to inspect only those records reasonably
relevant to SmithKline Xxxxxxx'x compliance with the terms of this Agreement.
The auditor shall conduct its review during SmithKline Xxxxxxx'x normal business
hours and without unreasonably interfering with SmithKline Xxxxxxx'x normal
operations. All information obtained by such auditor shall be considered
confidential and subject to Section 12.03 of this Agreement. Such auditor shall
provide to Quest
23
Diagnostics only that information reasonably required by Quest Diagnostics in
order to verify SmithKline Xxxxxxx'x compliance with the terms of this Agreement
and shall not provide any information that would identify a Client of SmithKline
Xxxxxxx or can be excluded under Section 8.01(d). The auditor shall
simultaneously provide to SmithKline Xxxxxxx copies of all information collected
from SmithKline Xxxxxxx. Quest Diagnostics shall not under any circumstances
disclose any information so provided by such auditor to any Third Party, except
as permitted by Section 12.03.
ARTICLE IX
TERM AND TERMINATION
SECTION 9.01. INITIAL TERM. Unless renewed or otherwise
terminated, this Agreement shall terminate upon the expiration of the Initial
Term.
SECTION 9.02. RENEWAL. Unless this Agreement is otherwise
terminated, SmithKline Xxxxxxx shall have the option to renew this Agreement for
up to seven (7) successive one-year renewal terms (each such renewal term, a
"RENEWAL TERM"). SmithKline Xxxxxxx agrees to notify Quest Diagnostics in
writing of its intent to renew at least ninety (90) days prior to expiration of
the Initial Term. Subject to Section 9.04, if no Renewal Term is elected by
SmithKline Xxxxxxx prior to expiration of the Initial Term or current Renewal
Term, then this Agreement shall expire upon expiration of the Initial Term, or
the Renewal Term, as applicable, and, except as expressly provided otherwise,
all rights and obligations of the parties under this Agreement, including the
right to renew this Agreement, shall terminate.
SECTION 9.03. TERMINATION. Either party may terminate this
Agreement:
(a) If at any time the other party shall file in any court or
agency, pursuant to any statute or regulation of any state or country, a
petition in bankruptcy or insolvency or for reorganization or for an arrangement
or for the appointment of a receiver or trustee of such other party or of its
assets, or if the other party proposes a written agreement of composition or
extension of its debts, or if the other party shall be served with an
involuntary petition against it, filed in any insolvency proceeding, and such
petition shall not be dismissed with sixty (60) days
24
after the filing thereof, or if the other party shall propose or be a party to
any dissolution or liquidation, or if the other party shall make an assignment
for the benefit of creditors.
(b) In the event of a breach by the other party upon the
giving of thirty (30) days' written notice setting forth the nature of such
breach. However, if such breach is cured within the thirty (30) day period (or a
longer period where the nature of the breach is such that it is not curable
within thirty (30) days but actions to cure such breach within a reasonable
period of time have promptly been initiated and continue to be diligently
pursued, meeting reasonable milestones to cure), then such notice shall be
deemed to be withdrawn. Any dispute regarding this Section 9.03 shall be
resolved pursuant to Section 12.15.
(c) In the event of a material breach of the provisions of the
Participation Agreement by the other party, upon the giving of 60 days' written
notice setting forth the nature of such breach. However, if such breach is cured
within the 60-day period (or a longer period where the nature of the breach is
such that it is not curable within 60 days but actions to cure such breach
within a reasonable period of time have promptly been initiated and continue to
be diligently pursued, meeting reasonable milestones to cure), then such notice
shall be deemed to be withdrawn.
(d) In the event the Closing (as defined in the Participation
Agreement) does not occur on or before the one-year anniversary of the Effective
Date, upon such party giving written notice to the other party.
(e) In the event that SmithKline Xxxxxxx or an Affiliate of
SmithKline Xxxxxxx (other than IX Company or a subsidiary of IX Company)
consolidates, merges or combines with, conveys, sells, transfers or leases all
or substantially all its assets to, or enters into another type of business
combination with IX Company or a subsidiary of IX Company, upon the giving of
written notice to the other party.
SECTION 9.04. POST-TERM OBLIGATIONS. (a) Following the Term,
Quest Diagnostics agrees to continue to provide Data, as applicable, to
SmithKline Xxxxxxx otherwise in accordance the terms of this Agreement for up to
12 months following such expiration for the sole purpose of allowing SmithKline
Xxxxxxx to continue providing existing programs or services to Third Parties to
the extent SmithKline Xxxxxxx'x contractual obligations as of the expiration of
the Term to provide such programs or services extend past the expiration of this
Agreement; PROVIDED, HOWEVER, that Quest Diagnostics has no such obligation in
the event Quest Diagnostics terminates this Agreement pursuant to Section 9.03.
Fees for providing such continued use of Data will be determined in accordance
with Article VIII as if such Data is being provided during a Renewal Term.
25
(b) Upon termination of this Agreement, both parties shall
have the right to retain any sums already paid by the other party hereunder, and
each party shall pay all sums accrued hereunder which are then due.
(c) Upon termination of this Agreement, SmithKline Xxxxxxx,
its Affiliates and its sublicensees shall have the non-exclusive, perpetual,
royalty-free, worldwide right and license to use Data previously received by
them under Article III and/or Article IV.
(d) Expiration or termination of this Agreement in accordance
with the provisions hereof shall not limit remedies which may be otherwise
available in law or equity.
(e) Upon expiration or termination of this Agreement, this
Agreement shall be of no further force or effect, except for (i) any obligations
or liabilities of either party then accrued and unpaid or not performed and (ii)
Articles V and XI, and Sections 3.01, 4.01, 4.03, 12.03, 12.07, 12.15, 12.16,
12.17 and this Section 9.04 shall survive such expiration or termination.
Notwithstanding the foregoing, during the twelve-month period contemplated by
Section 9.04(a), the terms of this Agreement shall remain in effect except as
contemplated by this Section 9.04.
SECTION 9.05. SUSPENSION. If (a) SmithKline Xxxxxxx, its
Affiliates, the Information Encoder or any Person who obtained Data, directly or
indirectly, from SmithKline Xxxxxxx or any of its Affiliates has breached any
obligations contained in this Agreement related to patient confidentiality or
(b) a civil violation with respect to patient confidentiality attributable to
SmithKline Xxxxxxx, its Affiliates, the Information Encoder or any Person who
obtained Data, directly or indirectly, from SmithKline Xxxxxxx or any of its
Affiliates has occurred under this Agreement or (c) Quest Diagnostics reasonably
believes as a result of a change in Applicable Law or a new judicial or
administrative interpretation of existing Applicable Law binding on Quest
Diagnostics that a criminal violation with respect to patient confidentiality
attributable to SmithKline Xxxxxxx, its Affiliates, the Information Encoder or
any Person who obtained Data, directly or indirectly, from SmithKline Xxxxxxx or
any of its Affiliates has occurred under this Agreement (provided that (i) Quest
Diagnostics provides SmithKline Xxxxxxx with written notice of its determination
as promptly as reasonably practicable and (ii) Quest Diagnostics provides
SmithKline Xxxxxxx with a written opinion of counsel, reasonably qualified to
opine on the law of patient confidentiality, disclosures and use of healthcare
data, supporting Quest Diagnostics' contention), then in addition to its other
rights Quest Diagnostics, upon written notice to SmithKline Xxxxxxx has the
right to immediately suspend the transmission of Patient Identifiers, Patient
Demographic Information and physician identification numbers to the Information
Encoder and the providing of Data to SmithKline Xxxxxxx solely to the extent
necessary to prevent the continuation of such breach or violation and only until
such time as (i) SmithKline Xxxxxxx puts in place a remedy reasonably acceptable
to Quest Diagnostics or (ii) Quest Diagnostics and SmithKline Xxxxxxx, each
acting reasonably and in good faith, agree that no such breach or violation or
change in Applicable Law has occurred. If, within 5 business days, SmithKline
Xxxxxxx and Quest Diagnostics cannot
26
agree on the appropriate remedy or on whether or not such alleged breach or
violation has occurred, the parties shall resolve such dispute pursuant to
Section 12.15. If Quest Diagnostics suspends the provision of Data pursuant to
the foregoing clause (c), SmithKline Xxxxxxx shall not be obligated to pay the
fees provided in Section 8.01 for such suspended Data during the period of such
suspension.
ARTICLE X
ASSIGNMENT
SECTION 10.01. ASSIGNMENT. (a) SmithKline Xxxxxxx may not
assign this Agreement in whole or in part, except upon the occurrence of the
Closing (as defined in the Participation Agreement); provided however,
SmithKline Xxxxxxx may assign this Agreement in whole and not in part to IX
Company and SmithKline Xxxxxxx shall be released from all of its obligations
hereunder arising after such assignment.
(b) So long as SmithKline Xxxxxxx, directly or indirectly,
beneficially owns an equity interest in IX Company of 38.5% or greater, IX
Company shall not sublicense to SmithKline Xxxxxxx or any Affiliate of
SmithKline Xxxxxxx (other than subsidiaries of IX Company) any right to use Data
under this Agreement; PROVIDED that (A) SmithKline Xxxxxxx may use the Data for
research and other use within SmithKline Xxxxxxx and (B) IX Company may
sublicense the Data to SmithKline Xxxxxxx or one of its Affiliates for any use
permitted under this Agreement if IX Company and SmithKline Xxxxxxx agree in
writing that SmithKline Xxxxxxx will pass through to IX Company all of the net
profits of SmithKline Xxxxxxx'x use of the Data (PROVIDED that SmithKline
Xxxxxxx shall be entitled to reimbursement of its reasonable out-of-pocket costs
and expenses related to such use).
(c) This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by IX Company to SmithKline Xxxxxxx or
an Affiliate of SmithKline Xxxxxxx (other than subsidiaries of IX Company or any
Affiliate of IX Company that is not an Affiliate of SmithKline Xxxxxxx) without
the prior written consent of the other party hereto.
(d) For purposes of this Section 10.01, SmithKline Xxxxxxx and
its Affiliates (other than IX Company and its subsidiaries) shall be deemed to
not be Affiliates of IX Company and its subsidiaries.
(e) This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by IX Company or by Quest Diagnostics
(other than by operation of law in connection with a merger, or sale of
substantially all the assets, of IX Company or Quest Diagnostics) without the
prior written consent of the other party hereto; PROVIDED, HOWEVER, that
27
either party may assign its rights hereunder in whole and not in part to its
Affiliate without the prior written consent of the other party; PROVIDED
FURTHER, HOWEVER, that no assignment shall limit or affect the assignor's
obligations hereunder. In the event that any such assignee ceases to be an
Affiliate of the assignor, all rights and obligations hereunder shall revert to
the assignor. Any attempted assignment in violation of this Section 10.01 shall
be void.
ARTICLE XI
INDEMNIFICATION
SECTION 11.01. INDEMNIFICATION BY SMITHKLINE XXXXXXX. Quest
Diagnostics, its Affiliates and their successors and permitted assigns, and the
officers, directors, employees and agents of Quest Diagnostics, its Affiliates
and their successors and permitted assigns, in accordance with Section 10.01
(each a "QUEST DIAGNOSTICS INDEMNIFIED PARTY"), shall be indemnified and held
harmless by SmithKline Xxxxxxx for any and all liabilities, losses, damages,
claims, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, reasonable attorneys' and consultants' fees and
expenses) actually suffered or incurred by any Quest Diagnostics Indemnified
Party (including, without limitation, any Action brought or otherwise initiated
by any of them) (hereinafter a "LOSS"), to the extent arising out of or
resulting from:
(a) the breach by SmithKline Xxxxxxx or any of its Affiliates
of any of the terms of this Agreement;
(b) the use or disclosure, by SmithKline Xxxxxxx or any of its
Affiliates, of any Data, whether or not in accordance with the terms of this
Agreement, but not the disclosure of Encoded Laboratory Data to SmithKline
Xxxxxxx or any of its Affiliates by Quest Diagnostics pursuant to this Agreement
(unless such disclosure is prohibited by the terms of an agreement entered into
by SBCL or its Affiliates prior to the Effective Date);
(c) the use or disclosure by any Third Party of any Data,
whether or not in accordance with the terms of this Agreement, when such Data
was obtained, directly or indirectly, from SmithKline Xxxxxxx or any of its
Affiliates, but not the disclosure of Encoded Laboratory Data to SmithKline
Xxxxxxx or any of its Affiliates by Quest Diagnostics pursuant to this
Agreement; or
(d) any disclosure by the Information Encoder to any Person
(other than Quest Diagnostics) of any portion of the Master Encoding Key
Database in violation of Applicable Law or the terms of this Agreement;
28
PROVIDED that SmithKline Xxxxxxx shall not indemnify and hold harmless any Quest
Diagnostics Indemnified Party for any Loss to the extent arising out of or
resulting from such Quest Diagnostics Indemnified Party's negligence or wilful
misconduct, Quest Diagnostics' breach of this Agreement or from any inaccuracy
in the Data excluding Data in the SBCL Informatics Database in the form such
Data and the SBCL Informatics Database existed on the Effective Date; PROVIDED
further that the provision of Data by Quest Diagnostics under this Agreement
shall not be deemed to be negligence. Nothing herein shall be deemed to
supersede SmithKline Xxxxxxx'x indemnification obligation under the Purchase
Agreement with respect to testing performed by SBCL prior to the Effective Date.
To the extent that a Quest Diagnostics Indemnified Party is
entitled under the terms of the applicable Authorization to indemnification or
to otherwise recover damages from a Client of Quest Diagnostics for any Losses
incurred by the Quest Diagnostics Indemnified Party for which SmithKline Xxxxxxx
also has an indemnification obligation under this Section 11.01 and such Client
is not the subject of an involuntary case or proceeding under federal or state
bankruptcy, insolvency, reorganization or other similar law, (i) the Quest
Diagnostics Indemnified Party shall seek, using commercially reasonable efforts,
to recover the full amount of such Losses from such Client before making any
claim against SmithKline Xxxxxxx under this Section 11.01 and (ii) SmithKline
Xxxxxxx shall be obligated to indemnify the Quest Diagnostics Indemnified Party
pursuant to this Section 11.01 for such Losses solely to the extent that such
Losses exceed the amount of indemnification or other damages recovered by the
Quest Diagnostics Indemnified Party from such Client, PROVIDED that the Quest
Diagnostics Indemnified Party has complied with its obligations under the
foregoing clause (i). For purposes of this Section 11.01, "commercially
reasonable efforts" shall include pursuing a claim for indemnification or to
otherwise recover damages from a Client of Quest Diagnostics until the matter is
finally determined by a court of competent jurisdiction, unless SmithKline
Xxxxxxx otherwise gives the Quest Diagnostics Indemnified Party its written
consent (which shall not be unreasonably withheld).
To the extent any obligation of SmithKline Xxxxxxx in this
Section 11.01 may be unenforceable, SmithKline Xxxxxxx shall contribute the
maximum amount that it is permitted to contribute under Applicable Law to the
payment and satisfaction of all Losses incurred by the Quest Diagnostics
Indemnified Parties for which SmithKline Xxxxxxx has an indemnification
obligation under this Section 11.01.
SECTION 11.02. INDEMNIFICATION BY QUEST DIAGNOSTICS.
SmithKline Xxxxxxx, its Affiliates and their successors and permitted assigns,
and the officers, directors, employees and agents of SmithKline Xxxxxxx, its
Affiliates and their successors and permitted assigns, in accordance with
Section 10.01 (each a "SMITHKLINE XXXXXXX INDEMNIFIED PARTY"), shall be
indemnified and held harmless by Quest Diagnostics for any and all Losses to the
extent arising out of or resulting from (i) the breach by Quest Diagnostics or
any of its Affiliates of any of the terms of this Agreement or (ii) any
inaccuracy in the Data excluding (A) Data in the SBCL
29
Informatics Database in the form such data and the SBCL Informatics Database
existed on the Effective Date and (B) Data transferred without error (to the
extent such error relates to the Loss) to the SBCL Informatics Database after
the Effective Date solely to the extent such Data relates to testing performed
by SBCL on or prior to the Effective Date. To the extent any obligation of Quest
Diagnostics in this Section 11.02 may be unenforceable, Quest Diagnostics shall
contribute the maximum amount that it is permitted to contribute under
Applicable Law to the payment and satisfaction of all Losses incurred by the
SmithKline Xxxxxxx Indemnified Parties for which Quest Diagnostics has an
indemnification obligation under this Section 11.02.
SECTION 11.03. CERTAIN PROCEDURES. (a) A Quest Diagnostics
Indemnified Party or SmithKline Xxxxxxx Indemnified Party (an "INDEMNIFIED
PARTY") shall give the indemnifying party written notice of any matter which
such Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement within 30 days of such determination,
stating the indemnifiable amount, if known, and method of computation thereof,
and containing a reference to the provisions of this Agreement in respect of
which such right of indemnification is claimed or arises. The failure by any
Indemnified Party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to such Indemnified
Party under this Article XI, except to the extent that the indemnifying party
demonstrates that it has been materially prejudiced by such failure (except that
the indemnifying party shall not be liable for any expense incurred during the
period, if any, from the date that is thirty days after such determination to
the date the Indemnified Party provides notice hereunder). If the indemnifying
party does not notify the Indemnified Party within 30 days following its receipt
of such notice that the indemnifying party disputes its liability to the
Indemnified Party under this Article XI, such claim specified by the Indemnified
Party in such notice shall be conclusively deemed a liability of the
indemnifying party under this Article XI 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 pursuant to Section 12.16.
(b) The obligations and liabilities of the indemnifying party
under this Article XI with respect to claims of any third party that are subject
to the indemnification provided for in this Article XI ("THIRD PARTY CLAIMS")
shall be governed by and contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, such Indemnified Party shall give the indemnifying party written notice
of such Third Party Claim within 30 days of the receipt by such Indemnified
Party of such notice and shall deliver copies of all notices and documents
(including court papers) received by the indemnified
30
party relating to the Third Party Claim during such 30-day time period;
PROVIDED, HOWEVER, that the failure to provide such notice shall not release the
indemnifying party from any of its obligations under this Article XI, except to
the extent that the indemnifying party demonstrates that it has been materially
prejudiced by such failure (except that the indemnifying party shall not be
liable for any expenses incurred during the period, if any, from the date that
is thirty days after receipt by the Indemnified Party of such notice to the date
the Indemnified Party provides notice hereunder). If an indemnifying party
acknowledges in writing its obligation to indemnify an Indemnified Party
hereunder against any Losses or other amounts indemnified against that may
result from such Third Party Claim, then the indemnifying party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice; 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. In the
event an indemnifying party exercises the right to undertake any such defense
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the indemnifying party in such defense and the 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 in a case where the indemnifying party
shall not have assumed the defense of such Third Party Claim 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.
SECTION 11.04. ADJUSTMENTS; LIMITATIONS ON INDEMNITY. (a) Any
amount indemnified against under this Article XI shall be net of any amounts
recovered by the Indemnified Party under insurance policies with respect to such
indemnified amount, shall be paid free and clear of any present or future
withholding taxes or other similar charges, and shall be (i) increased to take
account of any net Tax cost incurred by the Indemnified Party arising from the
receipt of indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net Tax benefit realized by the Indemnified Party
arising from the incurrence or payment of any such indemnified amount; PROVIDED,
HOWEVER, that (i) the indemnifying party shall be subrogated to the rights of
the Indemnified Party to recover amounts under insurance policies of the
Indemnified Party with respect to such indemnified amount and (ii) to the extent
31
that the Indemnified Party receives payment of amounts under such policies for
Losses for which the indemnifying party has already made payments under this
Article XI, the Indemnified Party shall pay over such amounts to the
indemnifying party. In computing the amount of any such Tax cost or Tax benefit,
the Indemnified Party shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item arising from the
receipt or accrual of any indemnity payment hereunder or incurrence or payment
of any indemnified amount except that carrybacks of net operating losses or
other tax attributes shall be applied in making such computation after
recognizing any item arising from the receipt or accrual of any indemnity
payment or incurrence or payment of an indemnified amount. Any indemnification
payment hereunder shall initially be made without regard to adjustment for net
Tax benefit or net Tax cost under this Section 11.04 and shall be increased or
reduced to reflect any such net Tax cost (including gross-up) or net Tax benefit
within ten days after the Indemnified Party has actually realized such cost or
benefit. For purposes of this Agreement, an Indemnified Party shall be deemed to
have "actually realized" a net Tax cost or a net Tax benefit to the extent that,
and at such time as, the amount of Taxes payable (including Taxes payable on an
estimated basis) by such Indemnified Party is increased above or reduced below,
as the case may be, the amount of Taxes that such Indemnified Party would be
required to pay but for the receipt or accrual of the indemnity payment or the
incurrence or payment of such indemnified amount as the case may be. The parties
shall make any adjusting payment between each other as is required under this
Section 11.04 within ten (10) days of the date an Indemnified Party is deemed to
have actually realized each net Tax benefit or net Tax cost. The amount of any
increase or reduction hereunder shall be adjusted to reflect any final
determination (which shall include the execution of Form 870-AD or successor
form) with respect to the Indemnified Party's liability for Taxes and payments
the Indemnified Party and the Indemnifying Party to reflect such adjustment
shall be made if necessary within ten (10) days of such determination.
(b) SmithKline Xxxxxxx shall not have any liability under this
Article XI or in connection with its breach of any other provision of this
Agreement for any consequential, punitive, indirect, special or incidental
damages incurred by any Quest Diagnostics Indemnified Party other than
consequential, punitive, indirect, special or incidental damages actually paid
to any third party by such Quest Diagnostics Indemnified Party.
(c) Quest Diagnostics shall not have any liability under this
Article XI or in connection with its breach of any other provision of this
Agreement for any consequential, punitive, indirect, special or incidental
damages incurred by any SmithKline Xxxxxxx Indemnified Party other than
consequential, punitive, indirect, special or incidental damages actually paid
to any third party by such SmithKline Xxxxxxx Indemnified Party.
ARTICLE XII
32
MISCELLANEOUS
SECTION 12.01. INTERPRETATION. (a) The headings contained in
this Agreement, in any Appendix hereto, 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 Appendices annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein. Any capitalized terms used in any Appendix but
not otherwise defined therein shall have the meaning as defined in this
Agreement.
(b) In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
(c) 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, (i) 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), (ii) any reference
herein to any Person shall be construed to include the Person's successors and
permitted assigns, (iii) 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 (iv) all references herein to
Articles, Sections and Appendices shall be construed to refer to Articles,
Sections and Appendices of this Agreement.
(d) All references in this Agreement to Laboratory Data,
Encoded Laboratory Data and Data expressly exclude (i) Laboratory Data used by
SmithKline Xxxxxxx and/or its Affiliates pursuant to the Category One Data
Access Agreement dated the date hereof, between SmithKline Xxxxxxx and Quest
Diagnostics and (ii) any other Laboratory Data not used by SmithKline Xxxxxxx
and/or its Affiliates pursuant to this Agreement.
SECTION 12.02. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State other than
Section 5-1401 of the New York General Obligations Law.
33
SECTION 12.03. CONFIDENTIALITY. (a) During the Term of this
Agreement and for five (5) years thereafter, SmithKline Xxxxxxx and Quest
Diagnostics shall not, and shall ensure that their respective Affiliates do not,
use or disclose to Third Parties any confidential information received from the
other (disclosing) party, except as otherwise expressly permitted by this
Agreement, without first obtaining the written consent of the disclosing party.
This confidentiality obligation shall not apply to such information which is or
becomes a matter of public knowledge through no fault of the receiving party or
its Affiliates, or is in the rightful possession of the receiving party as of or
following the Effective Date, or is disclosed to the receiving party by a Third
Party having the right to do so, or is subsequently and independently developed
by employees of the receiving party or Affiliates thereof who had no knowledge
of the confidential information disclosed, or is required by law to be disclosed
(PROVIDED that to the extent feasible, the disclosing party is provided
reasonable advance notice of such disclosure and provided with an effective
opportunity to appear, protest, and seek to limit such disclosure). The parties
shall take all reasonable measures to assure that no unauthorized use or
disclosure is made to Third Parties by Affiliates to whom access to such
information is granted.
(b) Nothing herein shall be construed as preventing SmithKline
Xxxxxxx from disclosing any information received from Quest Diagnostics
hereunder to an Affiliate; PROVIDED that such Affiliate has undertaken a similar
written obligation of confidentiality to SmithKline Xxxxxxx with respect to the
confidential information. Nothing herein shall be construed as preventing Quest
Diagnostics from disclosing any information received from SmithKline Xxxxxxx
hereunder to an Affiliate; PROVIDED that such Affiliate has undertaken a similar
written obligation of confidentiality to Quest Diagnostics with respect to the
confidential information.
(c) SmithKline Xxxxxxx covenants for itself and its Affiliates
that they shall not use Data or any subportions thereof in any manner that
discloses or utilizes Patient Identifiers, in any way that violates any
Applicable Laws governing confidentiality of patient identifiable healthcare
information.
(d) Each party shall keep confidential, and shall cause its
Affiliates, officers, directors and employees to keep confidential and shall use
commercially reasonable efforts to cause its advisors to keep confidential, (i)
the existence of any notice delivered by a party hereto to another party hereto
in accordance with this Agreement and (ii) the content of any such notice,
except as required by Applicable Law and except for information which is
available to the public, or thereafter becomes available to the public other
than as a result of a breach of this Section 12.03(d). In the event disclosure
is required under Applicable Law, each party shall, and shall cause its
applicable Affiliate, officer, director or employee to, provide the other party
with prompt prior written notice of such requirement so that such party may seek
a protective order or other appropriate remedy, and otherwise cooperate in all
commercially reasonable respects in obtaining the same.
34
(e) Nothing in this Section 12.03 shall enlarge or diminish
any right or obligations undertaken by either party in any other provision of
this Agreement. To the extent that the general restrictions of this Section
12.03 conflict in any respect with any other specific provision of this
Agreement, that specific provision shall control.
SECTION 12.04. AMENDMENTS AND WAIVER OF PERFORMANCE. (a) No
amendment, modification or waiver in respect of this Agreement shall be
effective unless it (i) shall be in writing making specific reference to this
Agreement and setting forth the plan or intention to amend, modify or waive this
Agreement; and (ii) shall be signed by the parties hereto.
(b) The failure of either party at any time or times to
require performance of any provision hereof shall in no manner affect its rights
at a later time to enforce the same. No waiver by either party of any condition
or term in any one or more instances shall be construed as a further or
continuing waiver of such condition or term or of another condition or term.
SECTION 12.05. NO THIRD-PARTY BENEFICIARIES. This Agreement is
for the sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied shall give or be construed to give to any
Person, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
SECTION 12.06. NOTICES. All notices or other communications
required or permitted to be given hereunder, except as provided in Sections
6.02(b) and 7.02(b), shall be in writing and shall be delivered by hand or sent
by prepaid telex, cable or telecopy or sent, postage prepaid, by registered,
certified or express mail or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(a) if to Quest Diagnostics:
Quest Diagnostics Incorporated
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
35
(b) if to SmithKline Xxxxxxx,
SmithKline Xxxxxxx plc
Xxx Xxx Xxxxxxxx Xxxxx
Xxxxxxxxx XX0 0XX
Xxxxxxxxx, Xxxxxxx
Attention: General Counsel
with copies to:
SmithKline Xxxxxxx Corporation
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: U.S. General Counsel
SECTION 12.07. TRADEMARKS AND TRADE NAMES. (a) SmithKline
Xxxxxxx shall not be permitted to use the trademarks or trade names of Quest
Diagnostics in connection with the use of Data or the distribution, marketing or
sale of programs or services which use Data without prior written approval of
Quest Diagnostics for each such use; PROVIDED that SmithKline Xxxxxxx shall be
permitted to properly identify Quest Diagnostics as the source of Data provided
that such identification is merely of Quest Diagnostics as the source of such
Data and is made in accordance with Quest Diagnostics' then current policy for
identifying itself (as provided in writing to SmithKline Xxxxxxx).
(b) So long as this Agreement is in effect, SmithKline Xxxxxxx
shall, upon Quest Diagnostics' written request, accompany all Data delivered or
published via the Internet with Quest Diagnostics' then-current corporate logo.
Pursuant to guidelines to be established by SmithKline Xxxxxxx in good faith,
such logo shall be displayed, together with such Data and with comparable
prominence regarding location, presentation and relative size as any other
provider of data used by SmithKline Xxxxxxx in programs, services and products
under Category Three Uses (taking into account the relative importance and
quantities of the various categories and sources of data included in the
program, service or product and the relative terms and conditions on which such
categories and sources of data are provided); PROVIDED that so long as Quest
Diagnostics is the largest supplier of laboratory data (in terms of volume of
data supplied) to SmithKline Xxxxxxx, Quest Diagnostics' then-current corporate
logo shall be displayed together with such Data and with superior location (i.e.
first in order), and otherwise with not less favorable prominence regarding
presentation and relative size, as compared with any other provider of
laboratory data to SmithKline Xxxxxxx.
SECTION 12.08. CHANGE IN APPLICABLE LAW. In the event of a
change in or addition to any Applicable Law which has, or could reasonably be
expected to have, a material
36
effect upon the access to or use of Data as provided in this Agreement, then
either party may give the other party notice of the need for the parties to
bring this Agreement into compliance with such revised Applicable Law. Unless
waived by the receiving party, the notifying party shall support its contention
of the need to amend this Agreement due to the contended change in Applicable
Law with a written legal opinion to such effect from outside counsel reasonably
qualified to opine on the law of patient confidentiality, disclosures and use of
health care data and reasonably acceptable to the receiving party. If the
parties agree that the change in or addition to Applicable Law has occurred and
that the Agreement must be brought into compliance with such change or addition,
the parties shall then negotiate reasonably and in good faith to amend this
Agreement solely to the extent necessary to bring the terms of this Agreement
into such compliance while preserving to the extent possible the original intent
of, and all the rights and relative benefits of each party under, this
Agreement. If, within five business days, the parties can not mutually agree on
whether or not a modification to the Agreement is required pursuant to this
Section 12.08 or on the terms of such modification to this Agreement as
contemplated by the immediately preceding sentence, such matter shall be
resolved pursuant to Section 12.15.
SECTION 12.09. DISENROLLMENT. SmithKline Xxxxxxx agrees (a) to
promptly notify Quest Diagnostics of any complaints by a Person concerning such
Person's inclusion in any product or service provided by SmithKline Xxxxxxx or
SmithKline Xxxxxxx'x Affiliate pursuant to this Agreement and (b) to cooperate
with Quest Diagnostics in resolving such complaints in a commercially reasonable
manner, including without limitation promptly disenrolling any Person who so
requests. SmithKline Xxxxxxx shall promptly disenroll from inclusion in any
product or service provided by SmithKline Xxxxxxx or SmithKline Xxxxxxx'x
Affiliate pursuant to this Agreement any Person who so requests.
SECTION 12.10. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 12.10; PROVIDED that receipt of copies of such
counterparts is confirmed.
SECTION 12.11. ENTIRE AGREEMENT. This Agreement and the
Participation Agreement contains the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter including,
without limitation, the Purchase Agreement and its Exhibits (including the
"Summary of Terms - Data Access Agreement"). Neither party shall be liable or
bound to any other party in any manner by any representations, warranties or
covenants relating to such subject matter except as specifically set forth
herein.
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SECTION 12.12. SEVERABILITY. If any provision of this
Agreement (or any portion thereof) or the application of any such provision (or
any portion thereof) to any Person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof (or the remaining portion thereof) or the application of such
provision to any other Persons or circumstances.
SECTION 12.13. FORCE MAJEURE. If the performance of any part
of this Agreement by either party, or of any obligation under this Agreement, is
prevented, restricted, interfered with or delayed by reason of any cause beyond
the reasonable control of the party obligated to perform (including any computer
system or connectivity failures), unless conclusive evidence to the contrary is
provided, the party so affected shall, upon giving written notice to the other
party, be excused from such performance to the extent of such prevention,
restriction, interference or delay, PROVIDED that the affected party shall use
reasonable commercial efforts to avoid or remove such causes of non-performance
and shall promptly continue performance at such time when such causes are
removed. When such circumstances arise, the parties shall negotiate in good
faith what, if any, modification of the terms of this Agreement may be required
in order to arrive at an equitable solution.
SECTION 12.14. RECORDING. Either party may, at any time,
record, register or otherwise notify this Agreement in appropriate governmental
or regulatory offices anywhere in the world, and the other party shall provide
reasonable assistance to such party at such party's expense in effecting such
recording, registering or notifying.
SECTION 12.15. DISPUTE RESOLUTION. (a) All controversies,
claims or disputes ("Disputes") that arise out of or relate to Articles VI, VII
and VIII, Sections 4.03, 5.02, 9.03, 9.05 and 12.08 and any other provision of
this Agreement which expressly provides that this Section 12.15 applies to such
provision shall be resolved in accordance with the provisions of Appendix D.
(b) Either party may elect to cause any Dispute that arises
out of or relates to Sections 4.03, 5.02, 9.03, 9.05, 12.08, or otherwise arises
out of or relates to a change in Applicable Law relating to patent
confidentiality or the suspension by Quest Diagnostics of the transmission of
Data to SmithKline Xxxxxxx to be resolved pursuant to Sections 3 and 6 of
Appendix D.
(c) The costs and expenses of an arbitration pursuant to
Section 6 of Appendix D of any Dispute that arises out of or relates to Section
7.05(c) or 8.01(b), and the related costs and expenses of each of the parties,
shall be borne by the "Losing" party unless the arbitrator or arbitrators
determine that another allocation of such costs and expenses is equitable.
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SECTION 12.16. CONSENT TO JURISDICTION. Both SmithKline
Xxxxxxx and Quest Diagnostics irrevocably submit to the exclusive jurisdiction
of (a) a Federal court for the Southern District of New York and (b) any New
York state court located in the County of New York, for the purposes of any
suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Both SmithKline Xxxxxxx and Quest Diagnostics
agree to commence any action, suit or proceeding relating hereto either in a
Federal court for the Southern District of New York or in a New York state court
located in the County of New York. Both SmithKline Xxxxxxx and Quest Diagnostics
further agree that service of any process, summons, notice or document by U.S.
registered mail to each such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction in this Section
12.16. Both SmithKline Xxxxxxx and Quest Diagnostics irrevocably and
unconditionally waive 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 for the Southern District of New York or (ii)
any New York state court located in the County of New York, and hereby further
irrevocably and unconditionally waive and agree 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.
SECTION 12.17. WAIVER OF JURY TRIAL. Subject to their
obligations under Section 12.15, each of SmithKline Xxxxxxx and Quest
Diagnostics hereby waives to the fullest extent permitted by Applicable Law any
right it may have to a trial by jury with respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement or any
transaction contemplated hereby. Both SmithKline Xxxxxxx and Quest Diagnostics
(a) certify 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, seek to enforce that foregoing waiver and (b) acknowledge
that each of them 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 12.17.
SECTION 12.18. EQUITABLE RELIEF. (a) Quest Diagnostics
acknowledges that access to Laboratory Data and Encoded Laboratory Data for
SmithKline Xxxxxxx is a unique resource for which breach by Quest Diagnostics
could cause SmithKline Xxxxxxx immediate and irreparable harm and may entitle
SmithKline Xxxxxxx to preliminary, and permanent injunctive relief and other
equitable relief to remedy such breach or the threat of such a breach without
the necessity of proving actual damages.
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(b) SmithKline Xxxxxxx acknowledges SmithKline Xxxxxxx'x
breach of the terms of this Agreement and the unauthorized disclosure of Data as
to which it has access under this Agreement could cause Quest Diagnostics
immediate and irreparable harm and under such circumstances may entitle Quest
Diagnostics to preliminary, and permanent injunctive relief and other equitable
relief to remedy such breach or the threat of such a breach without the
necessity of proving actual damages.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
SMITHKLINE XXXXXXX PLC,
By /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Authorized Signatory
QUEST DIAGNOSTICS
INCORPORATED,
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
