Exhibit 2.03
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (this "AGREEMENT") is entered into
effective as of _________, 2002 by and between Celerity Group, Inc., a Delaware
corporation (the "COMPANY", formerly known as Kinetics Holdings Corporation),
Kinetic Systems, Inc., a California corporation ("KSI"), and Kinetics Biopharm,
Inc., a Delaware corporation ("KBI"). The Company, KSI and KBI are sometimes
referred to herein individually as a "PARTY" and collectively as the "PARTIES."
RECITALS
WHEREAS, the Company is issuing shares of common stock to the public in
an offering (the "INITIAL PUBLIC OFFERING") registered under the Securities Act
of 1933, as amended;
WHEREAS, in connection with the Initial Public Offering, the Company
intends to distribute the capital stock of KSI and KBI to the Company's
stockholders and thereby separate the businesses of the Company, KSI and KBI;
WHEREAS, the parties have heretofore shared certain administrative,
financial, management, supply chain and other services;
WHEREAS, on the terms and subject to the conditions set forth herein,
the Company, KSI and KBI desire to retain one another as independent contractors
to provide, directly or indirectly, certain of those services after the Closing
Date (as defined below); and
WHEREAS, on the terms and subject to the conditions set forth herein,
the parties, as applicable, desire to provide such services.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:
"ACTIONS" has the meaning ascribed thereto in Section 4.02.
"ADDITIONAL SERVICES" has the meaning ascribed thereto in Section 2.02.
"AGREEMENT" has the meaning ascribed thereto in the preamble hereto, as
such agreement may be amended and supplemented from time to time in accordance
with its terms, and includes the Service Schedules.
"CLOSING DATE" means the date of the closing of the initial sale of
common stock in the Initial Public Offering.
"COMPANY" has the meaning ascribed thereto in the preamble hereto.
"COMPANY ENTITIES" mean the Company and its Subsidiaries and "COMPANY
ENTITY" shall mean any of the Company Entities.
"EVENT OF FORCE MAJEURE" has the meaning ascribed thereto in Section
2.06.
"EXPIRATION DATE" has the meaning ascribed thereto in Section 5.01.
"IMPRACTICABILITY" has the meaning ascribed thereto in Section 2.06.
"INITIAL PUBLIC OFFERING" has the meaning ascribed thereto in the
recitals to this Agreement.
"INITIAL TERM" has the meaning ascribed thereto in Section 5.01.
"KBI" has the meaning ascribed thereto in the preamble hereto.
"KSI" has the meaning ascribed thereto in the preamble hereto.
"KBI ENTITIES" means KBI and its Subsidiaries and "KBI ENTITY" shall
mean any of the KBI Entities.
"KSI ENTITIES" means KSI and its Subsidiaries and "KSI ENTITY" shall
mean any of the KSI Entities.
"OUTSOURCED SERVICE" has the meaning ascribed thereto in Section 2.04.
"PERSON" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, government (and
any department or agency thereof) or other entity.
"PROVIDER INDEMNIFIED PERSON" has the meaning ascribed thereto in
Section 4.01.
"RECIPIENT INDEMNIFIED PERSON" has the meaning ascribed thereto in
Section 4.03.
"SEPARATION AGREEMENT" means the Separation Agreement dated the date
hereof between the Company, KSI and KBI pursuant to which, among other things,
the business and operations of the Company, KBI and KSI will be separated.
"SERVICE CHARGES" has the meaning ascribed thereto in Section 3.01(c).
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"SERVICE PROVIDER" has the meaning ascribed thereto in Section 2.01.
"SERVICE RECIPIENT" has the meaning ascribed thereto in Section 2.01.
"SERVICE SCHEDULE" has the meaning ascribed thereto in Section 2.01.
"SERVICES" has the meaning ascribed thereto in Section 2.01.
"SUBSIDIARY" means, as to any Person, any corporation, limited
liability company, association, partnership, joint venture or other business
entity of which more than 50% of the voting capital stock or other voting
ownership interests is owned or controlled directly or indirectly by such Person
or by one or more of the Subsidiaries of such Person or by a combination
thereof. The term "Subsidiary" shall, as to the Company, also include Kinetics
Japan K.K.
ARTICLE II
PURCHASE AND SALE OF SERVICES
Section 2.01. Purchase and Sale of Services. On the terms and subject
to the conditions of this Agreement and in consideration of the Service Charges
described in Article III below, the Company, KSI and KBI, as applicable, agree
to provide to the other parties the services described in the Service Schedules
(each service schedule, a "SERVICE SCHEDULE") attached to this Agreement. Each
Service shall be covered by this Agreement upon execution of a Service Schedule
in the form attached hereto. Collectively, the services described on all the
Service Schedules (including Additional Services) shall be referred to herein as
"SERVICES." The party providing a particular Service shall be referred to herein
as the "SERVICE PROVIDER," and the party receiving a particular Service shall be
referred to herein as the "SERVICE RECIPIENT." The Service Provider with respect
to Services to be performed under or in connection with (i) the Tax Sharing
Agreement between the parties (or in the case of KSI and KBI, their respective
shareholders) dated the date hereof and (ii) the Stock Purchase Agreement
between Kinetics Group, Inc. and United States Filter Corporation, dated August
20, 2000, shall be the "Representative of the Affiliated Group and the Combined
Group," as such term is defined in the Tax Sharing Agreement.
For each Service, the Service Schedule shall set forth, among other
things, the names of the Service Provider and Service Recipient; the time period
during which the Service will be provided if different from the term of this
Agreement determined pursuant to Article 5 hereof; a description of the Service;
and the estimated charge, if any, for the Service and any other terms applicable
thereto. Obligations regarding each Service Schedule shall be effective upon
execution of this Agreement, or, if a particular Service Schedule is amended or
a new Service Schedule is executed after the execution of this Agreement, the
obligations created by such amendment or new Service Schedule shall be effective
upon execution of such amendment or such new Service Schedule.
At its option, the Service Provider may cause any Service it is
required to provide hereunder to be provided by any of its Subsidiaries. Unless
otherwise specifically agreed by the Service Provider and the Service Recipient,
the Services to be provided hereunder shall be
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substantially similar in scope, quality and nature to those provided by the
Company prior to the Closing Date, shall be performed by the same or similarly
qualified personnel, and shall be provided only at the locations such Services
are being provided by the Company prior to the Closing Date; provided, however,
that the selection of personnel to perform the Services shall be at the sole
discretion of the Service Provider; and provided, further, that, except as
expressly provided in this Agreement, the Service Provider shall not be required
to increase the volume, scope or quality of the Services provided beyond that
which has been provided by the Company prior to the Closing Date. The Service
Recipient shall use reasonable efforts, in connection with receiving Services,
to follow the policies, procedures and practices in effect before the Closing
Date including providing information and documentation sufficient for the
Service Provider to perform the Services as they were performed before the
Closing Date and making available, as reasonably requested by the Service
Provider, adequate personnel and timely decisions, approvals and acceptances in
order that the Service Provider may accomplish its obligations hereunder in a
timely manner.
Section 2.02. Additional Services. From time to time after the Closing
Date, the parties may identify Services other than those described on the
Service Schedules attached hereto, that a party will provide to another party in
accordance with the terms of this Agreement (the "ADDITIONAL SERVICES").
Accordingly, the parties shall execute additional Service Schedules for such
Additional Services pursuant to this Article II. Each Service Schedule for an
Additional Service shall be signed by a duly authorized representative of the
Service Provider and Service Recipient.
Section 2.03. Obligations as to Additional Services. Except as set
forth in the next sentence, a party shall be obligated to perform, at a charge
determined using the principles consistent with those used for determining fees
for other Services, any Additional Service that: (a) was provided by such party
immediately prior to the Closing Date and that another party reasonably believes
was inadvertently or unintentionally omitted from the list of Services described
in the Service Schedules attached hereto, or (b) is in the reasonable opinion of
the parties necessary or desirable to effectuate an orderly transition of the
parties' businesses under the Separation Agreement unless such performance would
significantly disrupt a party's operations or materially increase the scope of
its responsibility under this Agreement. If a party reasonably believes the
performance of an Additional Service required under subparagraphs (a) or (b)
would significantly disrupt its operations or materially increase the scope of
its responsibility under this Agreement, such party shall negotiate in good
faith with the party seeking such Additional Service to establish terms under
which such Additional Service may be provided, but such party shall not be
obligated to provide such Additional Service if, following good faith
negotiation, the affected parties are unable to reach agreement on such terms.
Section 2.04. Services Performed by Third Parties. At its option, the
Service Provider may cause any Service it is required to provide hereunder to be
provided by any third-party that is providing, or may from time to time provide,
the same or similar services for Service Provider (an "OUTSOURCED SERVICE"). The
Service Provider shall remain responsible, in accordance with the terms of this
Agreement, for performance of any Service it causes to be so provided; provided,
however, that Service Providers and Service Recipients may, by mutual agreement,
seek to effectuate the partial assignment to Service Recipients of any
third-party contracts with Service Providers for Outsourced Services; and
provided further, that Service Recipients of
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Outsourced Services may seek to enter into new contracts for, or otherwise
obtain from alternate sources, the Outsourced Services.
Section 2.05. Additional Resources. Except as provided in a Service
Schedule for a specific Service, in providing the Services, the Service Provider
shall not be obligated to: (i) hire any additional employees; (ii) maintain the
employment of any specific employee; (iii) purchase, lease or license any
additional equipment or software; or (iv) pay any costs related to the transfer
or conversion of the Service Recipient's data to the Service Recipient or any
alternate supplier of Services. Prior to executing a Service Schedule, the
parties shall in good faith attempt to determine whether any of actions
described in immediately preceding clauses (i), (ii), (iii) of (iv) would be
required for the Service Provider to perform the contemplated Services.
Section 2.06 Impracticability and Force Majeure. A Service Provider
shall not be required to provide any Service to the extent the performance of
such Services becomes impracticable as a result of a cause or causes outside the
reasonable control of the Service Provider or to the extent the provision of
such Service would require the Service Provider to violate any applicable laws,
rules or regulations or would result in the breach of any applicable contract or
contracts (collectively, "IMPRACTICABILITY"), subject to Section 2.09 below. A
Service Provider shall have no obligation to perform or cause a Service to be
performed if its failure to do so is caused by or results from any act of God,
governmental action, natural disaster, strike, failure of essential equipment or
any other cause or circumstance beyond the control of the Service Provider or,
if applicable, any third-party provider of services to the Service Provider (an
"EVENT OF FORCE MAJEURE"). The Service Provider will notify the Service
Recipient of any Event of Force Majeure affecting its Services. The Service
Provider agrees that following any Event of Force Majeure, the Service Recipient
shall have no obligation to pay for the Services affected thereby and the
Service Provider will use its reasonable best efforts to restore such Services.
Section 2.07. Responsibility for Errors; Delays. A Service Provider's
sole responsibility to a Service Recipient:
(a) for errors or omissions in a Service (including an
Outsourced Service), other than errors or omissions attributable to the Service
Provider's willful misconduct, shall be to furnish correct information, payment
and/or adjustment in the Service, at no additional cost or expense to the
Service Recipient; provided, the Service Recipient must promptly advise the
Service Provider of any such error or omission of which it becomes aware.
Without in any way limiting the generality of the preceding sentence, a Service
Provider shall have no liability for the negligence, gross negligence or willful
misconduct of a third-party providing an Outsourced Service except as provided
in the preceding sentence; provided that such Service Provider shall provide
reasonable cooperation to the Service Recipient in the exercise of any remedies
sought by the Service Recipient against such third-party.
(b) for failure to deliver any Service because of
Impracticability, shall be to use reasonable efforts to make any portion of the
Services which are not Impracticable available and/or to resume performing the
Services which are or have become Impracticable as promptly as reasonably
practicable.
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Section 2.08. Good Faith Cooperation; Consents. The parties will use
good faith efforts to cooperate with each other in all matters relating to the
provision and receipt of Services. Such cooperation shall include exchanging
information, performing true-ups and adjustments, and obtaining all third-party
consents, licenses, sublicenses or approvals necessary to permit each party to
perform its obligations hereunder and under any Service Schedule (including by
way of example, not by way of limitation, rights to use third party software
needed for the performance of Services). The reasonable and documented costs of
obtaining such third party consents, licenses, sublicenses or approvals shall be
borne by the Service Recipient, as applicable. The parties will maintain in
accordance with their respective standard document retention procedures,
documentation supporting the information relevant to cost calculations contained
in the Service Schedules and cooperate with each other in making such
information available as needed in the event of a tax audit, whether in the
United States or any other country.
Section 2.09. Alternatives. If a Service Provider reasonably believes
it is unable to provide any Service because of a failure to obtain necessary
consents, licenses, sublicenses or approvals pursuant to Section 2.08 or because
of Impracticability, the Service Provider and Service Recipient shall mutually
and reasonably determine the best alternative approach. Until such alternative
approach is found or the problem is otherwise resolved to the satisfaction of
the affected parties, the Service Provider shall use reasonable efforts to
continue providing the Service. To the extent a mutually agreed upon alternative
approach requires payment above and beyond that which is included in the charge
for the Service in question, the affected parties shall share equally in making
any such payment unless they otherwise agree in writing.
ARTICLE III
SERVICE CHARGES
Section 3.01. Service Charges.
(a) The charge for each Service provided hereunder directly by
a Service Provider or its Subsidiary shall be equal to the amount indicated, or
determined as set forth, in the Service Schedule for such Service, as adjusted
from time to time in accordance with Section 3.01(c).
(b) The charge for each Outsourced Service provided hereunder
shall be equal to the third-party costs and expenses incurred by the Service
Provider or its Subsidiary on behalf of the Service Recipient, plus all direct
costs, if any, incurred by the Service Provider or its Subsidiary in providing
such Outsourced Service. If the Service Provider incurs third-party costs or
expenses on behalf of the Service Recipient as well as any Subsidiary of such
Service Provider, the Service Provider will allocate any such costs or expenses
in good faith between the Service Recipient and the Subsidiaries on behalf of
which such costs or expenses were incurred as the Service Provider shall
determine in the exercise of its reasonable judgment. The Service Provider shall
apply usual and accepted accounting conventions in making such allocations and
the Service Provider or its agents shall keep and maintain such books and
records as may be reasonably necessary to make such allocations. The Service
Provider shall make copies of such books and records available to the Service
Recipient upon request and with reasonable notice.
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(c) The parties intend for the Service charges pursuant to
paragraphs (a) and (b) above (collectively, the "SERVICE CHARGES") to allow the
Service Provider and its Subsidiaries to recover the fully allocated direct
costs of providing the Services hereunder (not to exceed commercially reasonable
rates) plus all out-of-pocket, third-party costs, charges and expenses. The
parties also intend for charges to be easy to administer and justify and,
therefore, the parties acknowledge that it may be counterproductive to try to
recover every cost, charge or expense, particularly those that are insignificant
or de minimis. The parties shall use good faith efforts to discuss any situation
in which any charge, or the methodology for determining any charge, set forth in
the Service Schedules is insufficient to cover or exceeds, or is reasonably
expected to be insufficient to cover or exceed, the actual costs incurred by the
Service Provider and its Subsidiaries in providing any Service hereunder, and on
the basis of such discussions the parties may from time to time, upon mutual
agreement, adjust the charges or methodologies set forth in applicable Service
Schedules.
Section 3.02. Invoicing and Settlement of Costs.
(a) The Service Provider shall invoice the Service Recipient
for all Service Charges for each calendar month within thirty (30) days
following the end of such month, provided that any failure by the Service
Provider to provide an invoice within such time period shall not relieve the
Service Recipient of its obligation to pay an invoice received after such date.
All invoices shall reflect in reasonable detail a description of the Service
performed.
(b) The Service Recipient shall pay within thirty (30) days
following its receipt of any invoice from the Service Provider pursuant to
paragraph (a), by wire transfer of immediately available funds payable to the
order of the Company and without set off (except as such parties may agree to
set off mutual obligations), all amounts invoiced by the Service Provider during
the preceding calendar month. If the Service Recipient fails to pay any monthly
payment within 30 days following its receipt of any invoice from the Service
Provider pursuant to paragraph (a), the Service Recipient shall pay, in addition
to the amount indicated in such invoice, interest on such amount at the prime
interest rate announced by [______] plus 2% per annum compounded monthly for the
period such amount remains unpaid.
(c) In the event of a bona fide dispute as to the propriety of
the amount invoiced, the Service Recipient shall pay all undisputed amounts, but
shall be entitled to withhold payment of any amount in dispute (and shall not be
obligated to pay interest on the amount so withheld) and shall notify the
Service Provider within ten (10) business days from receipt of any disputed
invoice of the disputed amount and the reasons each such charge its disputed by
the Service Recipient. The Service Provider shall provide to the Service
Recipient, or shall cause its Subsidiaries to so provide, records relating to
the disputed amount so as to enable the parties to resolve the dispute. The
parties shall use reasonable efforts to resolve any such dispute promptly.
(d) Any invoice or payment not disputed in writing by either
party within 90 days of such invoice or payment, as the case may be, shall be
considered final and no longer subject to adjustment.
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Section 3.03. Error Corrections; True-Ups; Accounting. The parties
shall reasonably agree in writing on a process and procedure for conducting
internal audits and making adjustments to charges as a result of the movement of
employees and functions between parties, the discovery of errors or omissions in
charges, as well as a true-up of amounts owed. In no event shall such processes
and procedures extend beyond one (1) year after completion of a Service.
Section 3.04. Pricing Adjustments. In the event of a tax audit
adjustment relating to the pricing of any or all Services provided pursuant to
this Agreement in which it is determined by a taxing authority that any of the
charges, individually or in combination, did not result in an arm's-length
payment, as determined under internationally accepted arm's-length standards,
then the parties, including any subcontractor providing Outsourced Services
hereunder, may agree to make corresponding adjustments to the charges in
question for such period to the extent necessary to achieve arm's-length
pricing. Any adjustment made pursuant to this Section 3.04 at any time during
the term of this Agreement or after termination of this Agreement shall be
reflected in the parties' legal books and records, and the resulting
underpayment or overpayment shall create, respectively, an obligation to be paid
in the manner specified in Section 3.02, or shall create a credit against
amounts owed under this Agreement.
ARTICLE IV
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 4.01. Limitation of Liability. Each party (as a Service
Recipient) agrees that the other parties (as Service Providers) and their
respective Subsidiaries and their respective directors, officers, agents, and
employees (each, a "PROVIDER INDEMNIFIED PERSON") shall not have liability,
whether direct or indirect, in contract or tort or otherwise, for or in
connection with the Services rendered or to be rendered by any Provider
Indemnified Person pursuant to this Agreement, the transactions contemplated
hereby or any Provider Indemnified Person's actions or inactions in connection
with any such Services or transactions, except for damages which have resulted
from such Provider Indemnified Person's willful misconduct in connection with
any such Services, actions or inactions.
Section 4.02. Indemnification by Service Recipients. Each party (as a
Service Recipient) agrees to indemnify and hold harmless each other party (as a
Service Provider) from and against any damages, and to reimburse each Provider
Indemnified Person for all reasonable expenses as they are incurred in
investigating, preparing, pursuing, or defending any claim, action, proceeding,
or investigation, whether or not in connection with pending or threatened
litigation and whether or not any Provider Indemnified Person is a party
(collectively, "ACTIONS"), arising out of or in connection with Services
rendered or to be rendered by any Provider Indemnified Person pursuant to this
Agreement, the transactions contemplated hereby or any Provider Indemnified
Person's actions or inactions in connection with any such Services or
transactions; provided that a party will not be responsible for any damages of
any Provider Indemnified Person that have resulted from such Provider
Indemnified Person's willful misconduct in connection with any of the actions,
inactions, or Services referred to above.
Section 4.03. Indemnification by Service Providers. Each party (as a
Service Provider) agrees to indemnify and hold harmless each other party (as a
Service Recipient) and its
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Subsidiaries and their respective directors, officers, agents, and employees
(each, a "RECIPIENT INDEMNIFIED PERSON") from and against any damages, and will
reimburse each Recipient Indemnified Person for all reasonable expenses as they
are incurred in investigating, preparing, or defending any Action, arising out
of the willful misconduct of any Provider Indemnified Person in connection with
the Services rendered or to be rendered pursuant to this Agreement.
Section 4.04. Further Indemnification. To the extent that any other
Person has agreed to indemnify any Provider Indemnified Person or to hold a
Provider Indemnified Person harmless and such Person provides service to the
Service Provider or any affiliate of the Service Provider relating directly or
indirectly to any employee plan or benefit arrangement for which Services are
provided under this Agreement, the Service provider will exercise reasonable
efforts (x) to make such agreement applicable to any Recipient Indemnified
Person so that each Recipient Indemnified Person is held harmless or indemnified
to the same extent as any Provider Indemnified Person or (y) otherwise make
available to each Recipient Indemnified Person the benefits of such agreement.
Section 4.05. Disclaimer of Warranties. EACH SERVICE PROVIDER DISCLAIMS
ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO THE SERVICES. EACH SERVICE PROVIDER MAKES NO REPRESENTATIONS OR WARRANTIES AS
TO THE QUALITY, SUITABILITY OR ADEQUACY OF THE SERVICES FOR ANY PURPOSE OR USE.
Section 4.06 Limitation of Liability. IN NO EVENT SHALL A PARTY OR ITS
SUBSIDIARIES BE LIABLE TO ANOTHER PARTY OR ITS SUBSIDIARIES FOR ANY SPECIAL,
CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY
OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
ARTICLE V
TERM AND TERMINATION
Section 5.01. Term. Except as otherwise provided in this Article V or
as otherwise agreed in writing by the parties, this Agreement shall have an
initial term (the "INITIAL TERM") of one year from the Closing Date (the last
day of the Initial Term being the "EXPIRATION DATE"). This Agreement may be
extended beyond the Expiration Date by the parties in writing, either in whole
or with respect to one or more of the Services; provided, however, that such
extension shall only apply to the Services and the parties for which the
Agreement was extended. The parties shall be deemed to have extended this
Agreement with respect to a specific Service if the Service Schedule for such
Service specifies a completion date beyond the Expiration Date. The parties may
agree on an earlier expiration date respecting a specific Service by specifying
such date on the Service Schedule for that Service.
Section 5.02. Termination.
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(a) Notwithstanding the Initial Term or any extension of this
Agreement, a Service Recipient may at any time terminate this Agreement with
respect to one or more of the Services, in whole or in part, upon giving at
least 30 days prior written notice to the Service Provider.
(b) After the Initial Term of this Agreement, a Service
Provider may from time to time terminate this Agreement with respect to one or
more of the Services, in whole or in part, upon giving at least 60 days prior
written notice to a Service Recipient.
(c) This Agreement will be subject to early termination by a
Service Provider on 30 days prior written notice to a Service Recipient if there
is a change in the person or persons with power to direct, or to cause the
direction of, management or policies of such Service Recipient, or such Service
Recipient is a party to a merger, consolidation or business combination in which
it is not the surviving entity, or such Service Recipient sells or otherwise
disposes of all or a substantial portion of its assets.
(d) A Service Provider may terminate any affected Service at
any time if (i) a Service Recipient shall have failed to perform any of its
material obligations under this Agreement relating to any such Service, the
Service Provider has notified the Service Recipient in writing of such failure,
and such failure shall have continued for a period of 30 days after receipt by
the Service Recipient of notice of such failure or (ii) a Service Recipient
shall become a debtor in a bankruptcy or insolvency proceeding, shall make an
assignment for the benefit of creditors, shall have a receiver or trustee
appointed with respect to any of its assets, or shall become the subject of a
voluntary or involuntary liquidation or dissolution.
(e) Each party agrees that prior to exercising its rights
under this Section 5.02 it will consult for a reasonable period with the other
affected party or parties in advance of such termination as to its
implementation.
(f) In the event of termination of an Outsourced Service under
subsections (a) or (d) above, the Service Recipient shall reimburse, and
indemnify and hold harmless, the Service Provider for any claims, damages,
losses or other amounts incurred by the Service Provider due to the failure to
meet minimum purchase commitments as a result of the Service Recipient's
termination of the Outsourced Service.
5.03. Effect of Termination.
(a) Other than as required by law, upon termination of any
Service pursuant to Section 5.01 or Section 5.02, and upon termination of this
Agreement in accordance with its terms, a Service Provider will have no further
obligation to provide the terminated Service (or any Service, in the case of
termination of this Agreement) and the Service Recipient will have no obligation
to pay any fees relating to such Service or make any other payments hereunder;
provided that notwithstanding such termination, (i) the Service Recipient shall
remain liable to the Service Provider for fees owed and payable in respect of
Services provided prior to the effective date of the termination; (ii) the
Service Provider shall continue to charge the Service Recipient for
administrative and program costs relating to benefits paid after but incurred
prior to the termination of any Services and other services required to be
provided after the termination
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of such Services and the Service Recipient shall be obligated to pay such
expenses in accordance with the terms of this Agreement; and (iii) the
provisions of Articles III, IV, V and VI shall survive any such termination. All
program and administrative costs attributable to associates of a Service
Recipient for Service Provider plans that relate to any period after the
effective date of any such termination shall be for the account of the Service
Recipient.
(b) Following termination of this Agreement with respect to
any Service, the affected parties agree to cooperate in providing for an orderly
transition of such Service to the Service Recipient or to a successor service
provider. Without limiting the foregoing, the Service Provider agrees to (i)
provide, within 90 days of the termination, copies in a format designated by the
Service Provider, of all records relating directly or indirectly to benefit
determinations of Service Recipient associates, including but not limited to
compensation and service records, correspondence, plan interpretive policies,
plan procedures, administration guidelines, minutes, or any data or records
required to be maintained by law, and (ii) work with the Service Recipient in
developing a transition schedule. Each of the parties shall use good faith
efforts at the termination or expiration of this Agreement, any specific Service
hereunder or any Service Schedule to ensure that all applicable user IDs and
passwords issued to such party by another party are canceled or returned, as
applicable.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Performance under Ancillary Agreements. Notwithstanding
anything to the contrary contained herein, a Service Recipient shall not be
charged anything under this Agreement for any Services that are specifically
required to be performed under the Separation Agreement or any other Ancillary
Agreement (as defined in the Separation Agreement) and any such other Services
shall be performed and charged for in accordance with the terms of the
Separation Agreement or such other Ancillary Agreement.
Section 6.02. Relationship Between the Parties. It is expressly acknowledged
that the parties are "independent contractors," and nothing in this Agreement is
intended and nothing shall be construed to allow one party to exercise control
or direction over the manner or method by which the another party performs the
Services that are the subject matter of this Agreement; provided, that the
Services to be provided hereunder shall be furnished in a manner consistent with
the standards governing such Services and the provisions of this Agreement. Each
party understands and agrees that (i) a party will not withhold on behalf of
another party any sums for income tax, unemployment insurance, social security
or any other withholding pursuant to any law or requirement of any governmental
body or make available any of the benefits afforded to its employees, (ii) all
of such payments, withholdings and benefits, if any, are the sole responsibility
of the party incurring the liability, and (iii) each party will indemnify and
hold the other harmless from any and all loss or liability arising with respect
to such payments, withholdings and benefits, if any. Nothing in this Agreement
shall constitute or be deemed to constitute a partnership or joint venture
between the parties hereto or constitute or be deemed to constitute any party
the agent or employee of another party for any purpose whatsoever and a party
shall not have authority or power to bind another party or to contract in the
name of, or create a liability against, another party in any way or for any
purpose.
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Section 6.03. Sole Beneficiary. Each party acknowledges that the
Services shall be provided only with respect to its (and its Subsidiaries')
business as currently operated or as mutually agreed by the parties hereto. A
party shall not request performance of any Service for the benefit of any entity
other than itself and its Subsidiaries. Each party represents and agrees that it
will use the Services only in accordance with all applicable federal, state and
local laws and regulations, and in accordance with the reasonable conditions,
rules, regulations and specifications which may be set forth in any manuals,
materials, documents and instructions furnished from time to time by a Service
Provider to a Service Recipient. Each party reserves the right to take all
actions, including termination of any particular Service, that it reasonably
believes to be necessary to assure compliance with applicable laws and
regulations. A Service Provider will notify a Service Recipient of the reasons
for any such termination of Services.
Section 6.04. Entire Agreement. This Agreement (including the Service
Schedules constituting a part of this Agreement) and any other writing signed by
the parties that specifically references this Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 6.05. Information. Subject to applicable law and privileges,
each party hereto covenants and agrees to provide the other parties with all
information regarding itself and transactions under this Agreement that the
other party reasonably believes are required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
Section 6.06. Confidential Information. Each party hereby covenants and
agrees to hold in trust and maintain confidential all confidential information
relating to the other parties, including all information disclosed by one party
to the other(s) in connection with this Agreement, in accordance with the
Confidential Disclosure Agreement entered into by the parties of even date
herewith. A Service Provider shall require that any third-party performing an
Outsourced Service agree in writing to be bound by confidentiality obligations
at least as protective as the confidentiality terms applicable to the Service
Provider.
Section 6.07. Dispute Resolution. Article VII of the Separation
Agreement shall be applicable with respect to any claims, controversies or
disputes arising under or related to this Agreement; provided, however, that any
dispute regarding the following is not required to be negotiated prior to
seeking relief from a court of competent jurisdiction: breach of any obligation
of confidentiality; infringement, misappropriation, or misuse of any
intellectual property right; or any other claim where interim relief from the
court is sought to prevent serious and irreparable injury to a party.
Section 6.08. Notices. Any notice, demand, offer, request or other
communication required or permitted to be given by a party pursuant to the terms
of this Agreement shall be in writing and shall be deemed effectively given the
earlier of (i) when received, (ii) when delivered personally, (iii) one (1)
Business Day after being delivered by facsimile (with receipt of appropriate
confirmation), (iv) one (1) Business Day after being deposited with a nationally
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recognized overnight courier service or (v) four (4) days after being deposited
in the U.S. mail, First Class with postage prepaid, and addressed to the
attention of:
(a) If to the Company, to:
-----------------------------------
(b) If to KSI, to:
-----------------------------------
(c) If to KBI, to:
-----------------------------------
Or to such other addresses or telecopy numbers as may be specified by
like notice to the other parties.
Section 6.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California, excluding its conflict of
law rules and the United Nations Convention on Contracts for the International
Sale of Goods. The Superior Court of Santa Xxxxx County, California and/or the
United States District Court for the Northern District of California, San Xxxx
Division, shall have jurisdiction and venue over all disputes between the
parties that are permitted to be brought in a court of law pursuant to Section
6.07 hereof.
Section 6.10. Severability. The parties hereto have negotiated and
prepared the terms of this Agreement in good faith with the intent that each and
every one of the terms, covenants and conditions herein be binding upon and
inure to the benefit of the respective parties. Accordingly, if any one or more
of the terms, provisions, promises, covenants or conditions of this Agreement or
the application thereof to any person or circumstance shall be adjudged to any
extent invalid, unenforceable, void or voidable for any reason whatsoever by a
court of competent jurisdiction, such provision shall be as narrowly construed
as possible, and each and all of the remaining terms, provisions, promises,
covenants and conditions of this Agreement or their application to other persons
or circumstances shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law. To the extent this Agreement
is in violation of applicable law, then the parties agree to negotiate in good
faith to amend the Agreement, to the extent possible consistent with its
purposes, to conform to law.
Section 6.11. Amendment. Except as expressly provided herein, this
Agreement may only be amended by a written agreement executed by all parties
hereto.
Section 6.12 Binding Effect; Nonassignability. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective legal representatives, successors and permitted assigns, and nothing
in this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement. This Agreement may be enforced separately by each Company
Entity, each KSI Entity, and each KBI Entity. Except as herein specifically
provided to the contrary, a party may not assign this Agreement or any rights or
obligations hereunder (including, without
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limitation, in connection with a sale of all or substantially all of such
party's assets), without the prior written consent of each of the other parties.
Section 6.13. Waiver of Breach. The waiver by a party hereto of a
breach or violation of any provision of this Agreement shall not operate as, or
be construed to constitute, a waiver of any subsequent breach of the same or
another provision hereof.
Section 6.14. Authority. Each party hereto represents to the others
that (a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it has been duly authorized by all necessary corporate or
other actions, (c) it has duly and validly executed and delivered this
Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
Section 6.15. Descriptive Headings. The headings contained in this
Agreement or in any Schedule hereto are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Any
capitalized term used in any Schedule but not otherwise defined therein, shall
have the meaning assigned to such term in this Agreement. When a reference is
made in this Agreement to an Article or a Section, or Schedule, such reference
shall be to an Article or Section of, or a Schedule to, this Agreement unless
otherwise indicated.
Section 6.16. Gender and Number. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine
and neuter, and the number of all words herein shall include the singular and
plural.
Section 6.17. Additional Assurances. Except as may be specifically
provided herein to the contrary, the provisions of this Agreement shall be
self-operative and shall not require further agreement by the parties; provided,
however, at the request of a party, another party shall execute such additional
instruments and take such additional acts as are reasonable, and as the
requesting party may reasonably deem necessary, to effectuate this Agreement.
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Section 6.18. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized representatives.
CELERITY GROUP, INC. (formerly known as Kinetics Holdings Corporation)
By:__________________________________________________
Name:
Title:
KINETIC SYSTEMS, INC.
By:__________________________________________________
Name:
Title:
KINETICS BIOPHARM, INC.
By: __________________________________
Name:
Title:
[SIGNATURE PAGE TO MANAGEMENT SERVICES AGREEMENT]
15
[SERVICES, SERVICE CHARGES AND SERVICE SCHEDULES TO BE DETERMINED AND COMPLETED
BY THE CLOSING DATE]
