THESE TERMS AND CONDITIONS govern the business arrangement between SONORA QUEST LABORATORIES, LLC (“SQL”) and the entity (“Supplier”) providing goods or services (“Services”) to SQL through one or more written agreements, scopes of work or documents (“Agreement(s)”). In the case of any conflict between these Terms and Conditions and the Agreement(s), these Terms and Conditions shall control. Upon accepting any purchase order or other form or payment, or upon commencing to provide the goods or services to SQL, Supplier agrees to these Terms and Conditions and all of the provisions contained herein, to the extent applicable to the Services being provided.

Governing Law. These Terms and Conditions and the Agreement(s) shall be governed by the internal substantive law of the state in which the Services are performed, without regard for conflicts of laws.

Shelf Life of Perishable Products. Supplier agrees that it will only ship products to Sonora Quest that have not less than 75% remaining shelf life.

Non-Exclusive. Unless otherwise agreed to in writing, the Agreement(s) are not exclusive. Supplier is free to contract with other parties to provide the Services, and SQL is free to contract with other Suppliers to obtain such services.

Compliance with Applicable Third-Party Standards. Supplier shall comply with all third-party standards applicable to the Services, as such standards may be amended from time to time, including, but not limited to: (i) the standards of the Clinical Laboratory Improvement Amendments (CLIA) and other accreditation agencies, (ii) the standards, rulings and regulations of any federal, state and local governmental agency, corporate entity or individual having authority to administer, regulate, or otherwise set standards for healthcare facilities, and (iii) third party payor standards and requirements.

No Federal Exclusion. Supplier represents and warrants that neither it nor its employees, directors, officers, equity owners, and agents are excluded from participation or are otherwise ineligible to participate in a “federal health care program” (as defined in 42 U.S.C. §1320a-7b(f)) or in any other government payment program. Supplier will routinely assess the status of its employees, directors, equity owners and agents as required by the US Department of Health and Human Services and shall notify SQL in writing within three (3) days (i) following discovery of any debarment, exclusion, suspension or other event that makes Supplier ineligible to participate in the federal health care programs or in federal procurement or non-procurement programs; or (ii) after Supplier or any of its employees, directors, officers, equity owners or agents has been convicted of a criminal offense that falls within the ambit of 42 U.S.C. § 1320a-7(a), even if they have not yet been excluded, debarred, suspended or otherwise declared ineligible. Upon the occurrence of such exclusion, debarment or conviction, whether or not notice is given, SQL may immediately terminate the Agreement(s). Supplier will be responsible for any and all expenses incurred by SQL as a result of Supplier’s failure to screen or to notify SQL of any such occurrence. Supplier will also be responsible for any and all related expenses directly or indirectly caused by the failure to identify excluded individuals, including reimbursement of SQL for any amounts SQL is required to repay to any federal health care program because of the involvement of any excluded individual in the provision of the Services.

Compliance with Employment Law. SQL is a federal Supplier, and as such, is obligated to comply with federal, state, and local requirements governing immigration, equal employment, and affirmative action including 42 U.S.C. Sec. 2000(e) et seq., the Civil Rights Act of 1964, the Civil Rights Act of 1991, § 503 of the Rehabilitation Act, 29 U.S.C. § 793, the Vietnam Era Veterans Readjustment Assistance Act, 38 U.S.C. § 4212, as amended, Executive Order 11246 of September 24, 1965, and Executive Order 13496 of January 30, 2009. As a contractor providing services to SQL, Supplier may be obligated to comply with certain employment requirements. Specifically, where applicable, Supplier and any subcontractor(s) shall abide by the requirements of 41 C.F.R § 60-300.5(a) and 41 C.F.R § 60-741.5(a) which prohibit the discrimination against qualified protected veterans and qualified individuals on the basis of disability.

Insurance. Supplier shall maintain insurance coverage during the term of the Agreement(s), provided by an insurer with a minimum A-VII rating, and shall provide SQL with thirty (30) days’ advance written notice of termination or substantial coverage change. Coverage shall include at least one million dollars ($1,000,000) per occurrence and three million dollars ($3,000,000) aggregate professional liability, general liability, and business auto. Where Services include control of SQL’s data or PHI, or the use or development of IT hardware or software, coverage shall also include at least one million dollars ($1,000,000) per occurrence and three million dollars ($3,000,000) aggregate cyber insurance coverage. All policies shall stipulate that the insurance shall be primary insurance, that any self-insurance carried by SQL shall not be contributory insurance, and shall name SQL as an additional insured. Supplier must waive, and require its insurers to waive, any and all recovery rights to which any insurer of Supplier may have against SQL by virtue of the payment of any loss under any insurance.

Independent Contractor. Supplier shall at all times be deemed to be an independent contractor of SQL. Supplier’s employees shall not be regarded as employees or agents of SQL for the payment of any employer taxes such as Federal Insurance Contributions Act (FICA), unemployment, and worker’s compensation; SQL shall not be responsible for such taxes or any fringe benefits for Supplier’s employees. Further, the employees of Supplier shall not be regarded as employees of SQL with respect to any intentional or negligent activity in which they may be involved or for any other purpose.

HIPAA. SQL is required to comply with the Standards for Privacy of Individually Identifiable Information under the Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA). Supplier warrants that if it receives Protected Health Information (PHI) it will ensure Services comply with privacy and security requirements imposed by HIPAA, the Health Information Technology for Economic and Clinical Health Act (HITECH), and with SQL’s compliance policies, and will, upon request, execute a Business Associate Agreement on a form prepared by SQL.

Retention and Inspection of Records. All records related to the Agreement(s) shall be kept on file by Supplier for a period of four (4) years (or such longer period of time as may be required by applicable law) from the date the record is made. Upon reasonable prior notice, Supplier shall give SQL, or its authorized representative, and any relevant regulatory agency the ability to inspect, examine, and audit, during normal business hours, Supplier’s business records as are relevant to the Agreement(s). The cost of any SQL inspection, examination, and audit shall be at the sole expense of SQL.

Confidentiality and Nondisclosure. Supplier acknowledges that Supplier may gain access to confidential and proprietary information of SQL through the performance of Services for SQL and agrees that any reports, data, programs, drawings, specifications, plans, concepts, ideas, processes, procedures, designs, discoveries, inventions, including, without limitation, financial information, and other information represents confidential and proprietary information of SQL (collectively the “Proprietary Materials”). Supplier agrees to keep confidential all such Proprietary Material by exercising the same degree of care toward such material as Supplier does with respect to its own confidential information. Supplier shall not disclose, divulge, distribute, publish, transmit, transfer or disassemble the Proprietary Material other than as provided herein during the term of the Agreement(s) and for a period of three (3) years following expiration or termination of the Agreement(s) for any reason. In the event any of such Proprietary Material is considered by SQL to be a “Trade Secret” and is identified as such, Supplier’s nondisclosure obligations as specified herein shall remain in effect for so long as such Proprietary Material remains a trade secret under applicable law. Confidential Information shall not include any information that (i) is now or becomes generally known or available to the public through no fault of Supplier; (ii) was known by the Supplier before receipt from SQL without any obligation of confidentiality; (iii) is rightfully obtained by the Supplier from a third party without breach of any obligation to the disclosing party; or (iv) is independently developed by the Supplier without use of or reference to any of SQL Proprietary Material. Any Non-Disclosure Agreement or Confidentiality Agreement executed and finalized between SQL and Supplier shall take precedence over this paragraph.

Intellectual Property. Supplier represents and warrants that the Services do not infringe the intellectual property rights of any third party or will cause SQL to infringe the intellectual property rights of any third party.

Assignment of Rights. Unless otherwise agreed to by SQL in writing, Supplier expressly acknowledges that any work product resulting from the Services shall be considered a “work made for hire” as defined by the federal Copyright Act 17 U.S.C. § 101 et seq. SQL shall be the sole and exclusive owner and copyright holder of all rights and title in the work product, and any derivative works, but such ownership shall not extend to the methods and tools owned or licensed to Supplier and used by Supplier to perform the Services. If for any reason, and at any time, the work product is determined not to be a “work made for hire” under the scope of the Copyright Act, Supplier hereby assigns all rights, title, and interest therein to SQL. Supplier agrees that SQL is authorized to make changes to the work product, hire others to make changes to the work product, and protect copyrights to the work product without any attribution to Supplier.

Conflict of Interest. Supplier represents and warrants that, to the best of its knowledge, it is not aware of any information bearing on the existence of any actual or potential conflict of interest where any SQL employee has a financial interest in Supplier or in the Services that (i) may compromise or bias the judgment or objectivity; (ii) appear to compromise that person’s objectivity in the performance of his/her responsibilities in respect to these Terms and Conditions or the Agreement(s); or (iii) creates an excess benefit for such person. Supplier agrees that if it identifies any such actual or potential conflict of interest then Supplier will immediately make a full disclosure in writing to SQL. Upon discovery of any such actual or potential conflict of interest after the execution of the Agreement(s), SQL may terminate the Agreement(s) immediately if it deems such termination necessary and appropriate. If Supplier was aware of an actual or potential conflict of interest prior to the execution of the Agreement(s), or discovers an actual or potential conflict after execution and does not disclose it or misrepresents relevant information to SQL, SQL may terminate the Agreement(s) for breach and may also pursue other remedies for breach of contract.

No Inducement or Referrals. Nothing in these Terms and Conditions or the Agreement(s) is intended to induce either Party to refer patients or any business to the other Party.

Assignment. The Agreement(s) may not be assigned by either Party without the prior written consent of the other Party. If consent to an assignment is obtained, these Terms and Conditions and the terms of the applicable Agreement(s) will be binding on the successors and assigns of the Parties to these Terms and Conditions. Notwithstanding any provision of these Terms and Conditions or the Agreement(s) to the contrary, SQL shall have the right to assign or otherwise transfer its interest under the Agreement(s) to any related entity. For the purposes of this section, a related entity shall be deemed to include a parent, subsidiary, any entity that acquires all or substantially all of SQL’s assets or operations relating to the Agreement(s), and the surviving entity of any merger or consolidation involving SQL. Any assignment to a related entity shall not require the consent or approval of Supplier in order to be effective.

Enforceability. If any term of these Terms and Conditions or the Agreement(s) is found to be unenforceable or contrary to law, it shall be modified to the least extent necessary to make it enforceable, and the remaining portions of these Terms and Conditions or the Agreement(s) will remain in full force and effect and shall be enforced to the fullest extent permitted by law.

SQL Rules and Regulations. Where Supplier provides Services on SQL’s premises, Supplier and Supplier Personnel shall comply with and observe all SQL rules and regulations, to include to the extent applicable security, InfoSec and IT requirements. If providing on-site facility-type services, Supplier shall adhere to SQL’s facilities services business protocols, including, where applicable, background check and drug testing requirements. Supplier agrees to defend and hold SQL harmless from any loss, claims, damages or liability that SQL may incur as a result of Supplier’s failure to follow any applicable SQL rules and regulations.

Health Standards. Supplier shall assure that all Supplier Personnel comply with annual influenza immunizations (due on or before December 1st of each year), and Measles, Mumps, and Rubella (MMR), Varicella, and Tuberculosis (TB) health standards prior to Supplier Personnel providing Services in a SQL clinical facility, and Supplier shall provide proof of such tests upon request. If Supplier is unable to assure compliance with this Section for any Supplier Personnel, Supplier shall assure that such Supplier Personnel entering any SQL facility are wearing surgical masks (if such Supplier Personnel have not obtained influenza immunizations) and whenever entering a patient care area (if such Supplier Personnel have not obtained the MMR, Varicella and TB health tests or influenza immunization). Upon request, surgical masks will be provided by SQL at no cost to Supplier.

Replacement of Supplier Personnel. If SQL, in its reasonable discretion, requests that Supplier replace Supplier Personnel providing Services on SQL premises under These Terms and Conditions or the Agreement(s), Supplier shall promptly replace Supplier Personnel with another qualified individual. Supplier agrees that if SQL believes any Supplier Personnel providing the Services in any SQL facility is impaired or ill, SQL may escort the individual off the SQL facility premises and the individual shall not be able to return to any SQL facility until SQL has approved that individual’s return.

Physician Ownership. Supplier expressly represents and warrants that one of the following provisions applies: (i) no physician, no physician organization and no member of any physician’s immediately family owns or holds an ownership or financial interest in Supplier, including any affiliated or related entity or person, that is not the subject of an exception or “safe harbor” under applicable law, such as the exception for publicly-traded securities under 42 C.F.R. §411.356(a); or (ii) that Supplier is a publicly traded company and is the subject of an exception under 42 C.F.R. § 411.356(a)(1) and (a)(2); or (iii) one or more the physicians or a member of a physician’s immediate family own or have a financial relationship with Supplier, and that the Agreement(s) are the subject of an arms-length negotiation and is for fair market value compensation, is not tied to or based on an expectation by SQL that Supplier or Supplier’s physician owners shall refer patients to SQL, and that the volume or value of referrals by any physician is not a part of the consideration for the Agreement(s).

No Offshore Activities. Supplier expressly represents and warrants that none of the Services under the Agreement(s) are provided in an Offshore location by either Supplier or any of its subcontractors. For purposes of this paragraph, the term “Offshore” refers to any country that is not one of the fifty United States or one of the United States Territories (American Samoa, Guam, Northern Marianas, Puerto Rico and Virgin Islands). This provision applies regardless of whether the workers are employees of American or foreign companies. In the event Supplier begins performing any portion of the Services at an Offshore location or through an Offshore subcontractor, Supplier will immediately notify SQL of this change. Upon receipt of notice, SQL may in its sole discretion determine whether to immediately terminate or amend the Agreement(s) to include required insurance, auditing and compliance language. If Supplier fails to notify SQL or misrepresents any statement under this paragraph, SQL may immediately terminate the Agreement(s) for breach and may also pursue any or all other remedies for breach of contract.


Title and Risk of Loss. Title and risk of loss to the material and supplies purchased hereunder shall pass to SQL at the point of destination, subject to the right of SQL to reject upon inspection.

Indemnification. Supplier shall defend, indemnify and hold harmless SQL and SQL's officers, employees and agents from and against any and all third-party claims, liabilities, damages, demands, losses, causes of action and suits, including reasonable attorney's fees incident thereto, to the extent they result directly from or out of (A) Any injury or death of any person or damage to or destruction of any property caused by the negligent acts, errors, omissions or willful misconduct of Supplier or its or agents or employees; or (B) Any violation of federal or state regulations, orders, rules or the violation of any other governmental entity by Supplier, its agents or employees; or (C) Any breach of warranty or any negligent performance by Supplier of its obligations under these Terms and Conditions or the Agreement(s). Supplier shall further indemnify and hold SQL harmless against all damages, judgments and attorneys’ fees arising out of a claim that the purchase or use of the Services infringes any patent, copyright, trade secret or other proprietary right. SQL shall give Supplier prompt written notice of any such claim and shall be given the opportunity to participate in the defense thereof.

Warranty. All Personnel selected by Supplier to perform Services shall bring sufficient skills and experience so as to be able to perform the Services in a highly professional and workman-like manner and shall have adequate training, licensure and experience in the relevant subject matter in accordance with applicable commercial standards. The products and services furnished under the Agreement(s) shall be covered by the most favorable warranties the Suppler offers to any customer for the same or similar products or services. The rights and remedies so provided are in addition to and do not limit any rights afforded to SQL by any other term in the Agreement(s).

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