CLINICAL LAB DEVELOPMENT AND MANAGEMENT SERVICES AGREEMENT

Transcription

1 CLINICAL LAB DEVELOPMENT AND MANAGEMENT SERVICES AGREEMENT This Clinical Lab Development and Management Services Agreement ( Agreement ) is made and entered into as of the day of, 2016, but effective for all purposes as of the date of first live lab test ( Effective Date ), by and between, [SC] [PC] [PA] [PLLC] [LLC], a, with its principal place of business at ( Medical Facility ) and CASTLE MEDICAL, LLC, a Georgia limited liability company; with its principal office address at 5700 Highlands Parkway S.E. Suite100, Smyrna, Georgia ( Castle ), (individually, a Party, and collectively, the Parties ). W I T N E S S E T H: WHEREAS, Medical Facility operates a healthcare business in the state of ( State ), which provides significant medical care requiring clinical laboratory services at the Medical Facility for the Medical Facility s patients ( Clinical Lab ); and WHEREAS, Castle has extensive experience and expertise providing development services, management services and operation services for clinical laboratory departments, which services include, but are not limited to, development expertise, access to financing, assessment of existing laboratory services, contracting with commercial insurance carriers, billing, collection, resource utilization and day-to-day administrative management and clinical operations of physician or hospital owned and stand-alone clinical laboratories; and WHEREAS, Medical Facility wishes to engage the services of Castle on an exclusive and independent contractor basis to provide the services described herein, and Castle desires to be so engaged, all on the terms and conditions set forth herein. NOW, THEREFORE, for and in consideration herein provided, the amount and sufficiency of which is hereby acknowledged; the recitals above, and the mutual covenants and conditions contained herein, the Parties do hereby agree as follows: 1. CASTLE S OBLIGATIONS. 1) Development Services. a) Castle shall have the exclusive right to assist the Medical Facility in the following developmental services regarding the planning, equipping and development of the Clinical Lab at the Medical Facility ( Developmental Services ). Development Service could include: i. Facility planning; ii. Advising Medical Facility on the development budget ( Development Budget ), which will include the development costs and start-up expenses of the Clinical Lab; iii. Coordinating with the Medical Facility on the Clinical Lab s construction, renovation, and build-out services with a vendor approved by Medical Facility;

2 iv. Coordinating with the Medical Facility to identify a general contractor with experience in lab construction to oversee the construction, renovation, and build-out of the Clinical Lab; v. Assisting Medical Facility in selecting equipment, furnishings, and supplies for the Clinical Lab and supervising installation; vi. Assisting Medical Facility in its recruiting and hiring of qualified and adequately trained staff personnel to be employed by Medical Facility; vii. Assisting Medical Facility to determine, as agreed by the Parties, the types of lab tests to perform for its patient population; viii. Assisting Medical Facility to obtain applicable licensure and CLIA certification in the name of the Medical Facility from the required state and federal agencies and departments for the types of lab tests to be performed at the Clinical Lab; ix. Assisting Medical Facility in hiring a Certified Lab Director with the required doctoral degree to assist in the design and equipping of Clinical Lab consistent with the clinical complexity of the lab services to be performed by Medical Facility; and x. Development of Clinical Lab policies and procedures. b) Payment of Development Services. In consideration for the provision of the Development Services incurred in establishing, building out and equipping the Clinical Lab, including personnel involved in the development stage, Medical Facility shall pay Castle the amount charged by Castle against the Development Budget, which will be funded in its entirety by Medical Facility. c) Alterations. The Parties acknowledge that the conduct of efficient operation of the Clinical Lab may require space renovations, space expansion, and equipment additions from time to time. Castle agrees to assist Medical Facility with the design of such renovations or additions upon approval of the renovation or expansion plan by Medical Facility. Medical Facility will be responsible for the cost of such renovation, expansion, or addition by Medical Facility pursuant to an alterations budget established and funded by Medical Facility in the same manner as the Development Budget. 2) Lab Equipment. a) Delivery of Equipment. Castle, after consultation with Medical Facility, will provide the Medical Facility with the clinical lab testing equipment required to perform the clinical lab testing at the Medical Facility. The Equipment will meet all CLIA standards and requirements and, if required, be sufficient for performing high complexity lab testing. Castle shall deliver to and install at the Medical Facility those units of clinical lab testing equipment appearing on Exhibit A attached hereto (the Equipment ). Medical Facility shall provide appropriate space, utility connections and other requirements for the Equipment s proper operation at the Medical Facility. b) Acceptance. Medical Facility accepts the Equipment on an As-Is, Where-Is basis. The Parties agree that Castle has made no representation, warranty, or covenant with respect to the Equipment, and Castle is not and shall not be responsible, liable or bound in any manner to Medical Facility for any expenses or implied warranties, guaranties, statements, representations or other matters pertaining to the Equipment, except as may be expressly set forth herein. Medical Facility further acknowledges and agrees that it has entered into this Agreement based solely upon Medical 2

3 Facility's own independent investigations and inspections, and Medical Facility has not relied, and will not rely, on any representation of Castle, either expressed or implied except as expressly set forth herein. c) Title. Title or the prime leasehold interest to the Equipment is, and shall at all times be and remain, in the name of Castle. All accessories, replacements, additions or modifications which are made part of or attached to any Equipment shall immediately become the property of Castle and be deemed a part of the Equipment and subject to this Agreement. The Parties agree that the Equipment is personal property and not a part of any real property even if the Equipment or any part thereof may become affixed or attached to, or imbedded in, or permanently resting upon, any real estate or part of the Medical Facility building. d) Use of Equipment. Medical Facility shall use the Equipment solely in the performance of clinical laboratory services for the Medical Facility s patients and for no other purpose. Medical Facility shall not move, alter, or encumber the Equipment without Castle s prior written consent. e) Equipment Maintenance. Castle shall maintain the Equipment in good working order and operable condition, and shall make all repairs and replacements necessary for the maintenance of the Equipment at its own costs and expense; provided that Medical Facility shall use the Equipment only in accordance with its intended use and all manufacturer s suggested operating guidelines and/or manuals. Medical Facility agrees to be responsible and to pay for any repairs or maintenance necessitated by any misuse of the Equipment by Medical Facility or its agents, employees or invitees. f) Risk of Loss. After delivery of the Equipment, Medical Facility hereby assumes and shall bear the entire risk of loss, theft, damage, confiscation, requisition or destruction of the Equipment and any part thereof during the term of this Agreement which arises out of any event or circumstance other than Castle s negligence. No loss or damage to the Equipment for which Medical Facility is accountable shall relieve Medical Facility from its obligation to make payments or to perform any other of its obligations under this Agreement. If any item of Equipment becomes lost, stolen, destroyed or damaged beyond repair for any reason due to any act, failure to act, misconduct or negligence of Medical Facility, or if there is any confiscation, theft, or seizure of any part of the Equipment, then Medical Facility shall, at Castle s option and without regard to any insurance payment from coverage maintained by Medical Facility: (a) place the Equipment in good repair, condition and working order; or (b) replace the Equipment (or any part thereof) with like Equipment in good repair, condition and working order and transfer clear title to such replacement Equipment to Castle; or (c) pay to Castle an amount equal to Castle s original cost of the Equipment. Upon Castle s receipt of such payment, Medical Facility shall be entitled to the proceeds of any recovery in respect of any such item of Equipment from insurance or otherwise to the extent that said proceeds exceed the replacement cost. g) Property Insurance. Medical Facility, at its own expense, shall obtain and maintain for the term of this Agreement property damage insurance against all risk of loss or damage to the Equipment for the full replacement value. h) Return of Equipment. Upon the termination of this Agreement for any reason, Medical Facility agrees to deliver possession of the Equipment at its cost in good condition, 3

4 ordinary wear and tear resulting from proper use thereof alone excepted, and free and clear of encumbrances, to Castle. i) True Lease. Castle and Medical Facility hereby declare that the lease of the Equipment by Castle herein to Medical Facility is, and is intended to be, an operating lease and not a sale or a lease in the nature of a security interest. Medical Facility shall not acquire any right, equity, title or interest in any item of Equipment, except the right to use the Equipment as provided in this Agreement. j) Payment for Equipment. Medical Facility shall pay Castle for use of the Equipment as provided in the Development Budget and/or the monthly Management Fee (hereinafter defined). 3) Clinical Lab Management Services. While this Agreement is in effect, Castle shall have the exclusive right to provide Management Services for the Medical Facility s Clinical Lab. Castle agrees to manage and provide oversight of the Clinical Lab consistent with industry standards through trained and qualified personnel (the Personnel ), including a qualified Toxicologist, qualified and certified clinicians ( Clinicians ) and Specimen Collectors ( Collectors ). Castle shall provide these Clinical Lab Management Services (the Clinical Lab Management Services or Management Services ) to Medical Facility, as necessary, every day Medical Facility is open for business. Such management and Clinical Lab Management Services include the following: a) Personnel. Castle shall provide Medical Facility with lab clinicians, specimen collectors and such other non-physician personnel as shall be necessary for the provision of the Clinical Lab Management Services in accordance with all applicable laws, regulations and all relevant professional standards. Castle will also provide or otherwise arrange for the services of a toxicologist to interpret the lab tests results. Such personnel shall at all times be considered employees or contractors of Castle and not of Medical Facility. Castle shall be responsible for all aspects of the employment or other engagement of such personnel, including but not limited to, (i) all employment taxes relating to such personnel, (ii) workers' compensation benefits, (iii) unemployment insurance benefits, (iv) vacation pay, (v) vacation and sick leave, (vi) retirement benefits and any other employee benefits of any kind as applicable. Such personnel shall be under the authority and control of the Medical Facility during the time such individuals are performing services at the Medical Facility. However, Castle shall be solely responsible for all decisions concerning hiring and termination, salaries and other compensation, staffing levels, individual work hours, personnel policies, and employee benefit programs. Decisions concerning hiring and termination and staffing levels shall be undertaken in consultation with Medical Facility and the needs of the Medical Facility s Clinical Lab. b) Personnel Qualifications. Castle shall insure that the Toxicologist and the clinicians provided to Medical Facility shall have the following minimum qualifications: i. Toxicologist Qualifications. The Toxicologist shall have the required degree to: (a) provide toxicology services to a High Complexity Lab and (b) carry out his/her responsibilities in a professional, ethical, and diligent manner in order to serve the best interests of Medical Facility s patients. ii. Clinician Qualifications. Each Clinician who provides Clinical Lab Management Services shall: (1) be duly licensed and qualified as a laboratory clinician in the State and hold all other licenses as may be lawfully required for a laboratory clinician; 4

5 Facility: (2) if a technician, be certified through either the American Society for Clinical Pathology (ASCP) and the American Association of Bioanalysts (ABB) prior to performing services in the Clinical Lab; and (3) carry out their responsibilities in a professional, ethical, and diligent manner in order to serve the best interests of Medical Facility s patients. c) Clinical Lab Management Services. Castle shall advise and recommend to Medical i. how to develop and maintain its Clinical Lab, including but not limited to developing and operating a High Complexity Lab ; ii. clinical laboratory policies and procedures, which shall be subject to approval by Medical Facility; iii. how to facilitate reasonable accessibility and availability of services consistent with the needs of Medical Facility; iv. how to facilitate the establishment of appropriate quality metrics or improvement standards that will be established and maintained for all procedures with monitoring and reporting of variances; v. qualitative measures that may enhance the provision of patient care and Clinical Lab Management Services; vi. how to facilitate appropriate risk management and quality improvement programs; vii. concerning the acquisition of relevant equipment and the maintenance and use of Clinical Lab equipment; viii. on the preparation of the Clinical Lab for regulatory agency inspections, surveys, audits and tests; ix. how to manage expenditures and enhance income within applicable contractual guidelines and governmental regulations; and x. how to facilitate accurate documentation and capture of all Clinical Lab charges; xi. how to provide such other Clinical Lab Management Services, consistent with the foregoing, as may from time to time be determined by the Parties. 4) Meet Applicable Standards. Castle agrees that all Clinical Lab Management Services provided pursuant to this Agreement shall be performed in material compliance with all applicable standards and protocols set forth by law or as established by the rules and regulations of any federal, state or local agency, department, commission, association, or other pertinent governing, accrediting or advisory body, having authority to set standards for clinical laboratories. Also, each Clinician shall perform all Clinical Lab Management Services in accordance with Clinical Lab s protocols, rules, regulations, procedures, policies. 5) Provide Records and Reports. Castle and its Clinicians shall submit to Medical Facility s medical records administrator and/or the patient s private physician written reports of all clinical procedures performed pursuant to this Agreement. Castle agrees that all records and reports required by this Section shall be exclusive personal property of Medical Facility and shall be 5

6 maintained as agreed upon by the Parties. Castle shall be entitled to access such records and reports as necessary for reasonable purposes, including the defense of medical malpractice actions and filing for reimbursement. Also, Castle shall have access to said data for statistical and research purposes where the patient information has been sufficiently redacted without regard of payment to Medical Facility. 6) Representations And Warranties. Castle represents and warrants to Medical Facility, subject to the required disclosures in Section 10 hereof, and while this Agreement is in effect, as follows: a) Neither Castle nor its Clinicians are bound by any agreement or arrangement which would preclude Castle, its Toxicologist or its Clinicians from entering into, or from fully performing the Clinical Lab Management Services required under this Agreement; b) Neither Castle, its Toxicologist nor its Clinicians have been suspended, excluded, barred, or sanctioned, in any way, whatsoever, under the Medicare or Medicaid Programs, or any government licensing agency, nor have they ever been convicted of a criminal offense related to healthcare, or listed by a federal agency as debarred, excluded or otherwise ineligible for federal program participation, in any way, whatsoever; and c) Castle has knowledge and experience in the licensure and operation of clinical labs; and d) Castle will have sufficient qualified clinical lab personnel and technical staff available as needed during the Term of this Agreement. 2. MEDICAL FACILITY S OBLIGATIONS. 1) Responsibility for Lab. During the Term, Medical Facility is and will remain the responsible licensee of the Clinical Lab and, as such, shall be fully liable and legally accountable at all times to all patients, governmental agencies, and others for patient care, and for all other clinical aspects of the operation and maintenance of the Clinical Lab. 2) Delegation of Duties to Castle. Having contracted with Castle to provide the Clinical Lab Management Services herein, Medical Facility gives Castle the full right to make all decisions and undertake all actions on behalf of Medical Facility over the operations relating to Clinical Lab, subject to the ultimate control and authority of Medical Facility at all times. Medical Facility does not delegate to Castle (and Medical Facility specifically retains) the power, duties and ultimate responsibilities vested in Medical Facility as the owner and licensee of the Clinical Lab. 3) Certain Duties Reserved to Medical Facility. Medical Facility s additional obligations include: a) Office Equipment, Facilities, Supplies, Utilities and Services. Medical Facility shall, at no cost to Castle, provide all office equipment, facilities, supplies, utilities, including telephone and data services, and other services, including, but not limited to, laundry, linen and janitorial services, as Medical Facility shall, in its sole judgment and absolute discretion, after consultation with Castle regarding equipment and supplies for Clinical Lab Management Services, determine, from time to time, to be necessary for the performance of the Clinical Lab Management Services and the proper operation of the Clinical Lab. The Parties expressly agree that all items 6

7 supplied by Medical Facility pursuant to this section shall remain the exclusive personal property of Medical Facility, with no claim on the part of Castle therein or thereto, in any form or manner, whatsoever. b) Non-Clinical Personnel. Medical Facility shall employ all such non-clinical Lab personnel as Medical Facility, after consultation with Castle, deems necessary for the proper operation of the Clinical Lab or for any other obligation set forth in this Agreement. The Parties hereby agree that all such personnel shall be subject to the direction and control of Medical Facility or its designee in the performance of services at the Clinical Lab and Medical Facility shall pay the salaries and benefits for its non-clinical Lab personnel. c) Lab Director. Medical Facility shall, after consultation with Castle, employ a Lab Director who shall have the required doctoral degree to supervise and direct a High Complexity Lab. The Lab Director shall work under the direction and supervision of Castle and carry out his/her responsibilities in a professional, ethical, and diligent manner in order to serve the best interests of Medical Facility s patients. 4) Representations and Warranties. Medical Facility represents and warrants to Castle while this Agreement is in effect as follows: a) Each physician at the Medical Facility: (1) is licensed and qualified as a doctor of medicine or doctor of osteopathy in the State and holds all other licenses and certificates as may be lawfully required for the practice of medicine; (2) is Board Certified or Board Eligible in his/her medical specialty; and (3) has not been suspended, excluded, barred, or sanctioned, in any way, whatsoever, under the Medicare or Medicaid Programs, or any government licensing agency, nor has he/she ever been convicted of a criminal offense related to healthcare, or listed by a federal agency as debarred, excluded or otherwise ineligible for federal program participation, in any way, whatsoever. b) Medical Facility has not been suspended, excluded, barred, or sanctioned, in any way, whatsoever, under the Medicare or Medicaid Programs, or any government licensing agency, nor has it ever been convicted of a criminal offense related to healthcare, or listed by a federal agency as debarred, excluded or otherwise ineligible for federal program participation, in any way, whatsoever. c) Medical Facility acknowledges that the above representations and warranties are continuing in nature and that each is a material condition to the creation and continuation of this Agreement. 3. CASTLE S COMPENSATION. 1) Management Fee. As consideration for all of the Clinical Lab Management Services rendered by Castle for each full or partial calendar month during the Term of this Agreement and for a period afterward necessary for the interpretation of tests in process at the time of termination (the "Run Out Period"), Medical Facility shall pay to Castle a management fee ( Management Fee ) as described on Exhibit B attached hereto. 2) Fees for Services. The Parties agree that the Management Fee charged by Castle for Services shall be comparable to the fees customarily charged in the community for comparable services. Medical Facility shall be obligated to pay the Management Fee when due in full without deduction for counterclaim or set-off. The fees for the Clinical Lab Management Service have been 7

8 negotiated on an arm-length basis between the Parties and represent the fair market value for the services provided. The Management Fee covers all Clinical Lab Management Services, except for specific costs and expenses set forth herein. 3) Security Interest. As collateral security for the payment of all amounts owed to Castle pursuant to this Agreement, Medical Facility grants to Castle a security interest in all Medical Facility revenues from the Clinical Lab ( Lab Revenues ) that may be created or arise during the term that are not otherwise assigned by this Agreement, together with all proceeds regardless of the manner in which the entitlement to payment for Lab Revenues exists whether as accounts, accounts receivable, notes receivable or other evidence of entitlement to the Lab Revenues and all of its rights, title and interest (including right to control the same), if any, in the Medical Facility s bank account and the sums on deposit (collectively, the "Collateral"). The security interest shall not apply to Lab Revenues which may not be assigned under applicable law or regulation. In granting this security interest, Medical Facility agrees to the following: (i) this Agreement shall create and constitute a valid and perfected first priority security interest in the Collateral enforceable by Castle against all parties; (ii) Medical Facility has and shall continue to have good indefeasible and merchantable title to and ownership of the Collateral free and clear of all liens excluding liens by Castle or imposed under law; (iii) this grant of a security interest in the Collateral shall not result in a violation of any other agreement to which Medical Facility is or becomes a party; and (iv) Medical Facility shall take all action necessary to perfect Castle's security interest in the Collateral, including the execution of financing statements and authorization to file the same in the appropriate recording offices. 4) Guaranty. Medical Facility s Shareholders or Members shall guaranty payment of the Management Fee during the Term of this Agreement, so long as required by Castle, such guaranty to be evidenced by an instrument in the form of Exhibit D. Castle shall have a first priority of payment of Management Fees from any revenue produced by Clinical Lab over any payment to Shareholders or Members. 4. INDEPENDENT CONTRACTOR. This Agreement does not create, and shall not be construed as creating, a partnership or joint venture, or any other types of relationship between Castle and Medical Facility, other than that of independent contractors. All services provided pursuant to this Agreement are provided by Castle as an independent contractor and all personnel performing services in the Clinical Lab pursuant to this Agreement, except the lab employees of Medical Facility, are employees or independent contractors of Castle. Castle shall be solely responsible for all compensation and benefits for Castle s employees or independent contractors and shall comply with all state and federal laws pertaining to employment taxes, income withholding, unemployment compensation contributions and other employment related statutes applicable to Castle and its employees or independent contractors. 5. TERMS AND TERMINATION. 1) Term. The initial term of this Agreement ( Initial Term ) shall be three (3) years, commencing on the Effective Date and terminating at midnight on the last day of the Initial Term. At the end of the Initial Term and of each Renewal Term (hereinafter defined), if any, this Agreement will renew for an additional term of two (2) years ( Renewal Term ), unless either Party gives written notice to the other Party of not less than one hundred and eighty (180) days prior 8

9 to the expiration of the then applicable term of its intent not to renew this Agreement. Collectively these may be referred to as the Term. 2) Termination. This Agreement may be terminated as follows: a) Termination Without Cause. During the Initial Term or Renewal Term, either Party may, in its sole discretion, terminate this Agreement at the end of the respective term without cause by giving the other Party at least one hundred and eighty (180) days prior written notice. b) Termination for Breach. Castle may terminate this Agreement immediately upon notice to Medical Facility for cause, defined to mean the Medical Facility s failure to perform any material duty or obligation imposed upon it by this Agreement and the default continues for thirty (30) days after written notice from Castle specifying the default, or, if the default is not capable of being cured within the thirty (30) day period in Castle s reasonable determination, Medical Facility fails to commence to cure the default within the thirty (30) day period and/or fails to diligently pursue a cure thereafter (the time for cure in any event not to exceed ninety (90) days after such written notice). Notwithstanding the foregoing, the cure period for Medical Facility s failure to pay any part of a fee or amount due to Castle shall be five (5) days from the date of written notice of non-payment; c) Termination due to Bankruptcy. If either Party files a petition in voluntary bankruptcy or makes an assignment for the benefit of creditors, or if any other action is taken or suffered, voluntarily or involuntarily, under any federal or state law for the benefit of insolvency or otherwise granting relief from creditors, except for the filing of a petition of involuntary bankruptcy against the Party that is dismissed within thirty (30) days after filing; or d) Violation of Federal Law. Either Party or any employee or independent contractor of either Party is civilly or criminally charged with violation of any law or regulation applicable to Medicare or Medicaid, TRICARE, including the False Claims Act applicable thereto. Either Party may remedy any breach involving its employee or independent contractor, if there is no involvement by the Party in the alleged violations, by immediately terminating the employee s or independent contractor s services with the Party. 3) Effects of Termination. Upon any termination or expiration of this Agreement: a) Neither Party shall have any further obligations under this Agreement, other than (i) Medical Facility s obligation to pay all amounts due to Castle for services performed through the date of termination, (ii) amounts due to Castle during the Run-Off Period, (iii) any other amounts otherwise required to be paid under this Agreement, (iv) each Party s confidentiality, indemnity, non-competition and non-solicitation obligations to the other Party, and (v) any other obligation whose performance herein is contemplated to extend past the date of termination; b) Medical Facility will return the Equipment to Castle as provided herein; c) Each Party shall return to the other Party all originals and copies of any Confidential Information, as defined below, in the possession of the returning Party or any person or entity to whom it has delivered originals or copies (other than originals or copies of Confidential Information given to a third Party); and d) Castle and Medical Facility shall undertake in good faith all matters reasonably necessary to wind up their activities under this Agreement in an orderly manner, 9

10 including Castle s delivery to Medical Facility of patient billing records on paper or by electronic medium, as directed by Medical Facility. 6. STATUS. 1) Castle shall act at all times under this Agreement as an independent contractor. Except with the prior written approval of the other Party, nothing in this Agreement shall authorize or empower any Party to assume or create any obligation or responsibility, whatsoever, expressed or implied, on behalf of, or in the name of, the other Party, or to bind the other Party, in any manner, whatsoever, or to make any representation, warranty or commitment on behalf of the other Party. Any Party hereto, who violates the provisions hereof, shall fully save, indemnify and hold harmless the other Party therefrom and on account thereof. 2) The Parties hereto shall not use the other Party s name on any office door or letterhead, or at any time, place or manner, or in any way whatsoever, without the specific prior written approval of such other Party. 7. INSURANCE. 1) Castle s Insurance. Throughout the term of this Agreement, Castle shall procure and maintain, with commercial carriers the following policies of insurance: a) Comprehensive general liability insurance in such amounts, on such basis and upon such terms and conditions as Castle deems appropriate, covering activities relating to its services to Medical Facility; b) Professional liability insurance in such amounts, on such basis and upon such terms and conditions as Castle deems appropriate, covering Castle and its Clinicians in the Clinical Lab; c) Worker s Compensation insurance in not less than the amount required by applicable law, covering Castle s employees and independent contractors at Castle s office and in the Clinical Lab; d) Such additional types of insurance as Medical Facility and Castle may from time to time determine are necessary and appropriate for the efficient and proper operation of the Clinical Lab; e) Castle shall provide Medical Facility with certificates or other written documentation evidencing the insurance coverage required by this Section and as requested, and as to the comprehensive general liability insurance required above, Castle shall provide for at least thirty (30) days advance written notice to Medical Facility from the insurer as to any alteration of coverage, cancellation, or proposed cancellation for any cause. 2) Medical Facility s Insurance. Throughout the term of this Agreement, Medical Facility shall procure and maintain, with commercial carriers reasonably acceptable to Castle, the following policies of insurance: a) Comprehensive general liability insurance in such amounts, on such basis and upon such terms and conditions as Medical Facility deems appropriate, covering activities relating to Medical Facility listing Medical Facility as the insured and Castle as an additional named insured; 10

11 b) Professional liability insurance in the amount of One Million Dollars ($1,000,000.00) single incident and Three Million Dollars ($3,000,000.00) in the aggregate, covering Medical Facility and its employees and agents; and law. c) Other insurance as required by applicable law in such amounts required by d) Each policy maintained by Medical Facility pursuant to this Section shall name Castle as an additional insured, and shall provide for at least thirty (30) days advance written notice to Castle from the insurer as to any alteration of coverage, cancellation or proposed cancellation for any cause. Medical Facility shall provide Castle with certificates or other written documentation evidencing the insurance coverage required by this Section. In no event shall an insurance carrier be replaced or changed without written notice to Castle. 8. INDEMNIFICATION. 1) Medical Facility (as the Indemnitor ) hereby agrees to indemnify and hold harmless Castle (as the Indemnitee ), its shareholders, members, affiliates, officers, managers, directors, employees, owners and agents from and against any and all demands, claims, costs, damages, losses, liabilities, expenses of any nature (including reasonable fees and disbursements of accounts, attorneys and experts), judgments, settlement, fines, penalties or other amounts (collectively, "Damages") arising from any and all claims, proceedings, demands, actions, suits (whether civil, criminal, investigative or otherwise) relating to or arising out of Indemnitor s negligent or willful acts or omissions under this Agreement, except for those acts or omissions caused by Indemnitee s gross negligence or willful misconduct. 2) If there is asserted any claim, liability or obligation that in the judgment of the Indemnitee may give rise to any indemnified losses (the "Indemnified Losses"), or if the Indemnitee determines the existence of the foregoing, whether or not the same shall have been asserted, such Indemnitee shall give Medical Facility (the "Indemnitor") notice (a "Notice of Claim") within thirty (30) business days of the assertion of any claim, liability or obligation, or within ten (10) business days of receipt of notice of the filing of any lawsuit based upon such assertion, or, with respect to a claim not yet asserted against the Indemnitee, promptly upon the determination by an officer of the Indemnitee of the existence of the same, and shall give the Indemnitor a reasonable opportunity of assuming the defense of such claim, liability or obligation, using counsel reasonably acceptable to the Indemnitee. However, the Indemnitee shall have the right to participate in such defense, except that if the Indemnitee retains separate counsel, other than in the event of a conflict of interest requiring the retention of separate counsel, the Indemnitee shall assume the expense of the separate counsel. Failure by the Indemnitee to give timely notice pursuant to this Section shall not relieve the Indemnitor of its obligations, except to the extent that the Indemnitor is actually prejudiced by such failure to give timely notice. No settlement or adjustment shall be made without the Indemnitee's prior written consent, which consent shall not be unreasonably withheld. If the Indemnitor fails to contest in good faith any such claim, liability or obligation, the Indemnitee shall have the right to defend, settle or pay the same and pursue its remedies against the Indemnitor hereunder. The Indemnitee shall cooperate with the Indemnitor in any such defense which the Indemnitor elects to assume in the event the Indemnitor makes such request to the Indemnitee and such request is reasonable, provided the Indemnitor shall hold the Indemnitee harmless from all of its out-of-pocket expenses, including reasonable attorneys' fees, incurred in connection with the Indemnitee's cooperation. In the event of a 11

12 disagreement among the Parties as to whether any claim, liability or obligation may give rise to an Indemnified Loss, then the Indemnitee shall have the right to defend, settle or pay the same, or to pursue its remedies against Indemnitor hereunder; provided, however, the Indemnitor shall have the right to participate in such defense and no settlement or adjustment shall be made without Indemnitor's prior written consent, which consent shall not be unreasonably withheld. 3) Notwithstanding anything contained elsewhere in this Section, if an offer of compromise is received by the Indemnitor with respect to a claim related to any of the Indemnified Losses, such Indemnitor may notify the Indemnitee in writing of the Indemnitor' s willingness to compromise or settle such claim on the basis set forth in such notice. If the Indemnitee declines to accept such compromise or settlement, the Indemnitee may continue to contest such claim, free of any participation by the Indemnitor, at the Indemnitee's sole expense. In such event, the obligation of the Indemnitor to the Indemnitee with respect to such claim shall be equal to the lesser of (a) the amount of the offer of compromise or settlement which the Indemnitee declined to accept, and (b) the actual out-of-pocket amount the Indemnitee is obligated to pay as a result of the Indemnitee's continuing to contest such claim. An Indemnitor shall be entitled to recover (by setoff or otherwise) from Indemnitee any additional expenses incurred by the Indemnitor as a result of the Indemnitee's decision to continue to contest such claim. 9. CONFIDENTIAL INFORMATION. 1) Medical Facility Information. Castle recognizes and acknowledges that, by virtue of entering into this Agreement and providing Services to Medical Facility hereunder, Castle and its personnel may have access to certain information of Medical Facility or of its designees that is confidential and constitutes the valuable, special and unique property of Medical Facility or of its designees. Accordingly, Castle agrees that none of its personnel will, at any time, either during or subsequent to the term of this Agreement, disclose to others, use, copy or permit to be copied, without Medical Facility and/or its designees express prior written consent, except pursuant to Castle s duties hereunder, any confidential or proprietary information, whatsoever, of Medical Facility, including, but not limited to, information which concerns Medical Facility s patients, costs, or treatment methods developed by Medical Facility or of its designees, and which is not otherwise available to the public. Castle shall comply with the Healthcare Insurance Portability and Accountability Act of 1996 ( HIPAA ). Castle will enter into the Business Associate Agreement with Medical Facility to comply with HIPPA, attached hereto as Exhibit C. 2) Castle Information. Medical Facility recognizes and acknowledges that, by virtue of entering into this Agreement and having Castle provide services to Medical Facility hereunder, Medical Facility and its personnel may have access to certain information of Castle that is confidential and constitutes the valuable, special and unique property of Castle. Accordingly, Medical Facility agrees that none of its personnel will, at any time, either during or subsequent to the Term, disclose to others, use, copy or permit to be copied, without Castle s express prior written consent any confidential or proprietary information, whatsoever, of Castle, including, but not limited to, information which concerns Castle s costs, techniques, or methods developed by Castle for the Clinical Lab, or otherwise, and which is not otherwise available to the public. Medical Facility and its personnel shall comply with the Healthcare Insurance Portability and Accountability Act of 1996 ( HIPAA ). Medical Facility and its personnel will enter into any additional agreements necessary with Castle to comply with HIPAA. 12

13 3) Terms of this Agreement. Except for disclosure to their legal counsel, accountant or financial advisors, neither Party shall disclose the terms of this Agreement to any person, who is not a Party or signatory to this Agreement, unless disclosure thereof is required by law, or otherwise authorized by this Agreement or consented to by the other Party, in writing. Unauthorized disclosure of the terms of this Agreement shall be a material breach of this Agreement and shall provide the non-breaching Party with the option of pursuing remedies for breach or immediate termination of this Agreement in accordance with Section 5 hereof. 4) Patient Information. Neither Castle nor its personnel shall disclose to any third party, whomsoever, except where permitted or required by law, or where such disclosure is expressly approved by Medical Facility, in writing, which is inclusive of obtaining reimbursement from insurance carriers or defense of a patient lawsuit against Castle, any patient or medical record information regarding Medical Facility s patients, and Castle and its personnel shall strictly comply with any and all federal and state laws and regulations, and all policies of Medical Facility, regarding the confidentiality of such information. Castle, acknowledges that in receiving or otherwise dealing with any records or information from Medical Facility about its patients receiving treatment for alcohol or drug abuse, Castle and Castle personnel are fully bound by the provisions of the federal regulations governing Confidentiality of Alcohol and Drug Abuse Patient Records (42 C.F.R. Part 2, as amended from time to time). 5) Survival. The provisions of this Section 9 shall survive the expiration or other termination of this Agreement, regardless of the cause of such termination. 10. REQUIRED DISCLOSURES. The Parties shall notify each other in writing, within three (3) days after its receipt of notice of any of the following events occurs, regarding a Clinician, a Specimen Collector, the Lab Director or Toxicologist ( Lab Professional ) providing Clinical Lab Management Services: 1) If any Lab Professional s license or authority to practice in the State or in any other jurisdiction lapses, or is denied, suspended, revoked, terminated, relinquished or made subject to terms of probation or of any other restriction, whatsoever; 2) If any Lab Professional is required to pay damages in any amount in any malpractice action, by way of judgment or settlement; 3) If any Lab Professional becomes the subject of an investigatory, disciplinary, or other proceeding before any governmental, professional, licensing board, medical staff, or peer review body; 4) If any event occurs that materially adversely affects any Lab Professional s ability to perform Castle s obligations hereunder; or 5) If any Lab Professional s arrest, indictment and/or conviction of a criminal offense related to healthcare or to a crime of moral turpitude, or of any Lab Professional s listing by a federal agency as being debarred, excluded or otherwise made ineligible for federal program participation. 11. RESTRICTIVE COVENANTS. 1) Non-compete. None of Medical Facility or any of its owners, members, or employed or contracted physicians shall directly or indirectly, own, manage, operate, join, control, participate in the ownership, management, operation or control of, or contract or be connected with any person 13

14 or entity in the clinical laboratory management business, other than with Castle during the term of this Agreement within the Restricted Area. During the Term of this Agreement and for two (2) years thereafter, the restricted area shall include a radius of Seventy Five (75) miles from the Medical Facility s principal office ( Restricted Area ). Medical Facility shall require its owners, members and employed physicians to execute the Joinder Agreement in the form of Exhibit E attached hereto to indicate their agreement to the covenants set forth in this Section 11. 2) Non-solicitation of Employees and Independent Contractors. Medical Facility agrees that during the term of this Agreement and for a period of two (2) years following the termination or expiration of this Agreement for any reason, Medical Facility shall not, without the prior written consent of Castle, employ, hire or contract for services with any employee, independent contractor or former employee of Castle, nor shall Medical Facility solicit any such person to leave the employ of Castle. For purposes of this Section, a "former employee" shall be any person who worked for Castle within six (6) months prior to the termination or expiration of this Agreement. 3) Recognition of Costs Incurred to Provide Services. Medical Facility agrees and acknowledges that the services to be provided by Castle under this Agreement are feasible only if Castle devotes full time and attention. Medical Facility recognizes and acknowledges that Castle has and will incur substantial costs, time and effort in advising regarding the development of the Clinical Lab, providing the Clinical Lab equipment and some of the Lab Professionals, and other items and services that are the subject matter of this Agreement and that the covenants contained in this Section are necessary for the protection of Castle and that Castle would not have entered into this Agreement without such covenants. 4) Enforcement of Covenants. Medical Facility recognizes and hereby acknowledges that Castle shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any breach or violation of any or all of the covenants and agreements contained in this Agreement by Medical Facility and/or its associates, affiliates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other rights or remedies Castle may possess hereunder, at law or in equity. Each Party hereby waives any requirement for securing or posting bond in connection with Castle s obtaining any injunctive or other equitable relief. Castle may pursue injunctive relief prior to or concurrent with any resolution attempts contemplated in Section RESOLUTION OF DISPUTES. 1) Negotiation and Mediation. If a dispute ( Dispute ) arises out of or relates to this Agreement, or the breach thereof, and if the Dispute cannot be settled through negotiation, the Parties agree first to try in good faith to settle the dispute by mediation to be held at Castle s office (or at any time or at any other place mutually acceptable to the Parties so involved) under the Commercial Mediation Rules of the American Arbitration Association ("AAA") before resorting to binding arbitration. 2) Arbitration. a) If any Dispute cannot be resolved through good faith mediation or, if the Parties are not able to mediate, then within sixty (60) days of either Party filing a request with AAA to mediate, the Parties agree that any Party may submit the Dispute to final and binding arbitration before a single arbitrator who is knowledgeable in healthcare business matters. The arbitration shall 14

15 be under the AAA Commercial Arbitration Rules and shall be held at Castle s office (or at any time or at any other place or under any other form of arbitration mutually acceptable to the Parties so involved). In addition, the arbitration shall be conducted in accordance with the applicable federal or state rules of civil procedure, evidence and appellate procedure. In cases not premised on federal jurisdiction, the applicable State rules of civil procedure, evidence and appellate procedure shall apply. However, no arbitration of any dispute as required hereunder shall include class action claims or a claim for equitable relief brought in any court of applicable jurisdiction. If the Parties encounter difficulty in agreeing on an arbitrator, they agree that the AAA shall select the arbitrator. b) The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections The arbitrator shall decide the arbitrability of the matter and any motions submitted by the Parties to the Dispute. The award shall be based upon the law of Georgia, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. The arbitrator, if requested by either Party, shall write an opinion stating all findings of fact and conclusions of law with respect to the arbitration decision and decisions regarding any motions. 3) Discovery. Either Party may conduct discovery of the other by deposition, interrogatories, requests for production of documents and things, and requests for admissions as allowed by the arbitrator. Neither Party, however, may request more than three (3) oral depositions. Discovery will be concluded within ninety (90) days after service of the answer to the arbitration demand. Unresolved discovery disputes will be presented to the arbitrator for final resolution. 4) Costs and Fees. The Parties shall bear their respective costs in connection with the dispute resolution procedures described above, except that the Parties hereto shall share, equally, the filing fees, as well as other fees and expenses of any neutral third Party or mediator or arbitrator and the costs of any facility used in connection with mediation or arbitration procedures. All other costs and expenses associated with the arbitration, including, but not limited to, any attorneys fees, shall be borne by the Party incurring the expense. The arbitrator may award attorneys fees and costs to the prevailing Party, at his/her discretion. 5) Invalidity. The invalidity, illegality or unenforceability of any provision of this Section shall not affect the validity, legality or enforceability of the remaining provisions of this Section. 6) Confidentiality of Negotiations. All negotiations are confidential and shall be treated as compromise and settlement negotiations for purposes of the rules of evidence of all applicable jurisdictions. 13. MISCELLANEOUS. 1) Entire Agreement; Modification. This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes all prior agreements, oral or written, and all other communications between the Parties relating to such subject matter. This Agreement may not be amended or modified except by mutual written agreement. 2) Governing Law. This Agreement shall be construed in accordance with the laws of the State of Georgia. The provisions of this Section shall survive expiration or other termination of this Agreement regardless of the cause of such termination. 3) Counterparts. This Agreement may be executed in one or more counterparts, all of which, together, shall constitute only one Agreement. 15