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EXHIBIT 10.32
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
LABORATORY SERVICES AGREEMENT
BY AND BETWEEN
SPECIALTY LABORATORIES, INC.
AND
UNILAB CORPORATION
October 15, 1999
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1. GENERAL
When signed, this document dated this 15th day of October 1999 constitutes
an Agreement between SPECIALTY Laboratories, Inc. ("SPECIALTY") with its
principal office located in Santa Monica, California and Unilab Corporation
("Unilab") with principal offices located in Tarzana, Sacramento, and San
Jose, California. All terms and conditions apply to all three (3) sites
with individual differences applicable only to the implementation dates of
fee schedules in Attachment A.
2. TERM AND TERMINATION
2.1 This Agreement shall commence on October 18, 1999 and continue for
a three (3) year period or until terminated in accordance with this
Agreement. In consideration for Unilab's Agreement to enter into a
three-year term,
(a) [***]*;
(b) [***]*.
2.2 TERMINATION WITH CAUSE. Either party may terminate this Agreement with
cause upon thirty (30) days' notice to the other party. "Cause" is
hereby defined as a material breach by either party to comply with any
of the terms of this Agreement after thirty (30) days written notice
of such failure or violation by the other party giving notice of such
default or non-compliance and written notice of its intention to so
terminate unless within such sixty (60) day period the defaulting
party has cured the default.
2.3 RENEWAL. Upon expiration, this Agreement [***]*
3. [***]*
During the term of this Agreement, Unilab shall send to SPECIALTY for
testing [***]*, providing that SPECIALTY offers and desires to perform such
tests for Unilab. The test mix shall be in the same ratio, except in those
circumstances where such tests are no longer sent out [tests are conducted
in-house], as in the base period of August, 1999, and [***]* is
substantially the same ratio as set forth on Attachment B.
Notwithstanding the foregoing, effective upon a change of control of Unilab
(as defined in Section 17), or the purchase by Unilab of a Licensed
Clinical Laboratory with a test menu materially broader than that of
Unilab, the [***]* shall require Unilab to send to SPECIALTY for testing
[***],* provided however that SPECIALTY makes a commercially
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* PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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reasonable effort to [***]*. The test mix shall be in the same ratio,
except in those circumstances where such tests are no longer sent out
[tests are conducted in-house], as in the base period of August 1999, and
[***]* is in substantially the same ratio as set forth on Attachment B.
4. LICENSURE AND ACCREDITATION
SPECIALTY is a duly licensed independent clinical laboratory and fully
accredited by the College of American Pathologists and CLIA, among other
certifying agencies. SPECIALTY agrees to maintain such licensure and
accreditation during the term of this Agreement. SPECIALTY shall maintain
at all times during the term of this Agreement, appropriate professional
liability coverage.
5. SUPPLIES
SPECIALTY shall provide, at no cost to Unilab, all necessary supplies for
the proper preparation and submission of specimens to SPECIALTY.
6. COURIERS AND LOGISTICS
SPECIALTY will provide all courier and logistic services required to
adequately address the laboratory testing submitted by three Unilab
locations; Tarzana, San Jose, and Sacramento.
7. [***]*
In accordance with this Agreement, [***]*, as set forth in Attachment A.
[***]*
8. INVOICE
SPECIALTY shall bill Unilab directly, on a monthly basis for its reference
testing services except [***]*. All bills to Unilab shall be submitted
[***]*. Unilab shall be responsible for any and all taxes (city, state,
etc.) arising as a result of this agreement. SPECIALTY shall submit
invoices electronically to Unilab. SPECIALTY shall make a commercially
reasonable effort to: indicate when [***]* through the identification, of
date of service due to the provisions in sections 10.1, 10.2, 10.3, and
itemize [***]*.
9. PAYMENT TERMS
Unilab agrees to pay SPECIALTY within thirty (30) days of the date invoice
is received by Unilab.
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* PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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10. [***]*
10.1 With respect to [***]*. SPECIALTY will keep all such information
confidential except as required in the normal course of business or as
may be required by law.
10.2 [***]*
10.3 [***]*
11. COMPLIANCE POLICIES
Both Unilab and SPECIALTY agree to comply with all applicable regulatory
agencies including, but not limited to CLIA and HCFA. In addition, each
party shall administer compliance policies throughout their respective
organizations to ensure that such compliance is assured. Examples of such
policy topics would include, but not be limited to, patient
confidentiality, diagnosis coding, anti-kickback statutes, professional
courtesy, Advanced Beneficiary Notice, and CPT-4 coding.
12. SELF-REFERRAL
In the event Unilab shall have any physician owners, and is required under
applicable law to disclose such ownership. Unilab shall notify SPECIALTY of
such fact so that the parties can ensure compliance with self-referral
restrictions under applicable federal and state law.
13. CHANGE IN RULES AND REGULATIONS
In the event that any Medicare or Medicaid law, rules, regulations, policy
(or any other federal, state or local law, rule, regulation, policy, or any
interpretation thereof) at any time during the term of this agreement
prohibits, restricts or has a materially adverse effect on the Agreement,
then the parties to this agreement shall negotiate in good faith to amend
or terminate the Agreement.
14. INDEPENDENT CONTRACTOR
At all times relevant hereto SPECIALTY shall function as an independent
contractor rendering services to Unilab. SPECIALTY shall not be an employee
or agent of Unilab and shall not be entitled to any employee benefits from
Unilab.
15. RECORDS
15.1 Both parties agree to retain, and make available to the other party
upon reasonable request, at their own expense for a period of four (4)
years following the furnishing of services under this Agreement itself
and all books, documents and records that are necessary to verify the
nature and extent of the costs thereof, as
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* PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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mandated by the Secretary of Health and Human Services, the
Comptroller General of the United States or any of their duly
authorized representatives, in a manner that complies with the
requirements of Section 1861(v)(1)(I) of the Social Security Act and
any regulations promulgated thereto. Unilab agrees to make available
to SPECIALTY upon reasonable request at their own expense during the
term of this contract, all books, documents and records that are
necessary to verify the accuracy of billing, payor, and test mix
accuracy.
15.2 Both parties agree to notify the other party upon receipt of any such
request, related to this Agreement, from any representative of the
Secretary of Health and Human Services or the Comptroller General.
15.3 Both parties agree that any subcontracts with related parties
involving costs of Ten Thousand Dollars ($10,000) or more during any
twelve (12) months period for the performance of duties under this
Agreement shall be amended immediately to require of said related
parties the same duties. As used herein, the term "related party"
means any party owned or controlled by either party or with whom
either party is to a significant extent associated or affiliated.
16. INDEMNIFICATION
Each party agrees to indemnify, and hold harmless, the other party's
directors, officers, employees, and agents from and against any and all
claims, actions, or liabilities of any nature which may be assessed against
them by third parties in connection with the performance of services under
this Agreement, except to the extent of any willful misconduct or gross
negligence of the party seeking indemnification.
17. BINDING AFFECT & ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns provided,
however that this Agreement may not be transferred or assigned without the
expressed written consent of SPECIALTY, except for the pending transaction
with Kelso, which is specifically deemed to have been consented to by
SPECIALTY.
The parties hereto agree that except for the Kelso transaction, a change of
control of Unilab shall constitute an assignment of this Agreement. For
purposes of this Agreement, change of control means the acquisition of
Unilab by any person, group or entity by means of any transaction or series
of related transactions (including, without limitation, any reorganization,
merger or consolidation, but excluding any merger effected exclusively for
the purpose of changing the domicile of Unilab) in which Unilab's
shareholders of record as constituted immediately prior to such acquisition
will, immediately after such acquisition, hold less than fifty percent
(50%) of the voting power of the surviving or acquiring entity; or a sale
of all or substantially all of the assets of Unilab in a transaction in
which Unilab's shareholders of record as constituted immediately prior to
such sale will immediately after such sale, hold less than 50% of the
voting power of the surviving or acquiring entity.
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18. FORCE MAJEURE
SPECIALTY shall not be liable for any failure to perform its duties under
this Agreement due to acts of God; acts, regulations or laws of any
government; war or any other condition or cause beyond SPECIALTY's
reasonable control. However, if circumstances prevent SPECIALTY from
performing its duties, SPECIALTY agrees to use its commercially reasonable
efforts to facilitate transfer of testing to an alternative laboratory as
mutually agreed.
19. GOVERNING LAWS
This Agreement shall be governed and construed in accordance with the laws
of the State of California.
20. ATTORNEY'S FEE/COSTS
SPECIALTY and Unilab hereby agree that if any action, suit or proceeding is
filed by either party to enforce the terms of this Agreement, the
prevailing party shall be entitled to its actual attorney's fees and costs
in initiating and/or prosecuting said action, suit or proceeding.
21. VENUE
21.1 Unilab agrees and specifically acknowledges that all of the services
undertaken and/or performed by SPECIALTY are rendered from California.
21.2 Unilab agrees that if any actions are to be brought by either
SPECIALTY and/or Unilab, that said action, suit or proceeding shall be
filed in the Los Angeles Superior Court or Los Angeles Municipal
Court. Unilab HEREBY AGREES AND SUBMITS TO PERSONAL JURISDICTION IN
LOS ANGELES COUNTY.
22. CONFIDENTIALITY
Neither party will disclose this Agreement or any of its terms or
conditions to any third party except as and to the extent that such
disclosure may be required by law, and except that either party may make
disclosure to its lenders or investors or to potential buyers if such
lenders, investors and potential buyers execute and deliver to both parties
confidentiality agreements reasonably satisfactory to both parties. Each
party agrees to hold in strictest confidence, and not disclose, divulge or
communicate to, or use for the benefit or, any other person, corporation or
entity, or misuse in any way, and confidential or non-public information of
the other party, other that the disclosure, divulgence or communication of
such confidential or non-public information or trade secret that may be
required by applicable law.
23. NOTICES
All notices to be given by one party to the other under this Agreement
shall be given in writing, mailed or delivered as follows:
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Unilab: Unilab Corporation
18408 Oxnard Street
Tarzana, California 91356
Attention:
SPECIALTY: SPECIALTY Laboratories, Inc.
2211 Michigan Avenue
Santa Monica, California 90404
Attention: Contract Administration
24. ENTIRE AGREEMENT
This agreement contains the entire understanding between the parties hereto
and supersedes any and all prior Agreements and arrangements between the
parties relating to the subject matter hereof. No amendment, change,
modification or alteration of the terms and conditions hereof shall be
binding unless in writing.
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FOR: ACCEPTED:
SPECIALTY LABORATORIES, INC. UNILAB CORPORATION
SANTA MONICA, CALIFORNIA TARZANA, CALIFORNIA
NAME: Paul F. Beyer NAME:
---------------------------- ----------------------------
SIGNATURE: /s/ Paul F. Beyer SIGNATURE: /s/
----------------------- -----------------------
TITLE: President TITLE: Vice President
--------------------------- ---------------------------
DATE: 10/15/99 DATE: 10/15/99
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Please mail the signed Agreements to:
Specialty Laboratories, Inc.
2211 Michigan Avenue
Santa Monica, California 90404-3900
Attention: Contract Administration
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