TRANSITION SERVICES AGREEMENT
by and among
▇▇▇▇▇▇▇ LIFESCIENCES LLC,
WORLD HEART INC.
and
WORLD HEART CORPORATION
Dated as of June 30, 2000
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT (the "Agreement") dated as of June 30,
2000, between ▇▇▇▇▇▇▇ Lifesciences LLC, a Delaware limited liability company
("▇▇▇▇▇▇▇"), and formerly known as World Heart Inc., a Delaware corporation and
formerly known as ("Newco"), and World Heart Corporation, an Ontario corporation
("World Heart").
W I T N E S S E T H
WHEREAS, pursuant to that certain Contribution Agreement (the
"Contribution Agreement") dated as of May 24, 2000, by and among ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Novacor LLC, a Delaware limited liability company ("Novacor LLC"), Newco
and World Heart, ▇▇▇▇▇▇▇ contributed all outstanding membership interests in
Novacor LLC to Newco (the "Contribution");
WHEREAS, in order for Newco to operate Novacor LLC effectively in a
transition period following the consummation of the Contribution, World Heart
and Newco desire to enter into certain arrangements with ▇▇▇▇▇▇▇ with respect to
the performance of certain transition services;
WHEREAS, ▇▇▇▇▇▇▇ is willing to enter into such transition arrangements
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
SERVICES TO BE PROVIDED
Section 1.1 Provision of Services. ▇▇▇▇▇▇▇ shall provide the services
listed on Exhibit A hereto and such modified or additional services as may be
agreed upon by Newco and ▇▇▇▇▇▇▇ from time to time and set forth in written
amendments to the Agreement (collectively, the "Services") to Newco or at
Newco's option to Novacor LLC in accordance with the terms and conditions set
forth in this Agreement.
ARTICLE 2
PERFORMANCE STANDARDS
Section 2.1 Performance and Quality. ▇▇▇▇▇▇▇ shall perform the
Services at the levels and in the manner that it has historically performed such
Services and in conformity with commercially reasonable standards.
Section 2.2 Force Majeure. Each party shall be relieved of its
obligations hereunder if and to the extent that any of the following events or
conditions directly or indirectly hinder, limit or make impracticable the
performance by that party of any of its obligations hereunder: act of God, war,
riot, fire, earthquake, explosion, flood, sabotage, national defense
requirement, strike, lockout, job action, injunction, act or order of a
governmental agency or instrumentality thereof (whether of fact or law), act of
a public enemy, embargo or other concerted act of workers, telecommunications
failures or electrical failures; provided that ▇▇▇▇▇▇▇ shall have used
commercially reasonable efforts to mitigate the effects of such occurrence.
Newco shall be liable for all costs incurred by ▇▇▇▇▇▇▇ in connection with any
Service that ▇▇▇▇▇▇▇ fails to complete and provide as a result of any such event
or condition.
ARTICLE 3
COST OF SERVICES AND EXPENSES
Section 3.1 Fees. The prices charged for the Services shall be those
set forth in Exhibit A (the "Service Fees") which ▇▇▇▇▇▇▇ represents and
warrants are the prices currently in effect for such Services. Newco shall pay
to ▇▇▇▇▇▇▇, by wire transfer, within 30 days of receipt of appropriate
documentation evidencing the provision and cost of such Services by ▇▇▇▇▇▇▇,
reasonably acceptable in form and substance to Newco, the Service Fees stated in
such documentation for Services provided under this Agreement.
ARTICLE 4
RELATIONSHIP OF THE PARTIES; COOPERATION
Section 4.1 Relationship of the Parties. Nothing contained in this
Agreement shall be construed to create any relationship of partnership or joint
venture between ▇▇▇▇▇▇▇ and World Heart or Newco, and none of the parties shall
represent to any third party that any relationship other than as described in
this Agreement exists or relates to the arrangements under the Transaction
Agreements (as defined in the Contribution Agreement); provided, however, that
the parties agree that in acting pursuant to this Agreement, ▇▇▇▇▇▇▇ is acting
as the agent of Newco, but only with respect to actions undertaken by ▇▇▇▇▇▇▇ in
accordance with the terms of this Agreement on behalf of Newco and only such
actions shall be deemed to be the acts of Newco.
Section 4.2 Cooperation. Each of the parties shall in good faith
cooperate with and provide assistance to the other consistent with the terms and
conditions hereof to enable (i) the full performance of all obligations
hereunder, (ii) the review and audit of books and administrative records as they
relate to the provision of Services, and (iii) Newco, or any of its affiliates
or third party service provider, to assume the performance of any and all
Services upon termination hereof; such cooperation and assistance to include,
without limitation, providing the other party, its representatives and its
agents (including, without limitation, its outside auditors) with reasonable
access, during normal business hours and upon reasonable advance notice, to its
employees, representatives and agents and its books, administrative records,
offices and properties relating to the Services.
Section 4.3 ▇▇▇▇▇▇▇ Administrative Records. ▇▇▇▇▇▇▇ shall keep
administrative records regarding the provision of Services using commercially
reasonable efforts, and for each Service shall retain such records for a period
of twelve months following the cessation of ▇▇▇▇▇▇▇' provision of that Service
to Newco. Newco, its agents and representatives shall have reasonable access
during normal business hours and upon reasonable advance notice to such records
from the date hereof through the end of the period for retaining such records
pursuant to this Section 4.3.
Section 4.4 Form W-9. On or prior to the Closing Date (as defined in
the Contribution Agreement), ▇▇▇▇▇▇▇ shall provide World Heart with an accurate
and complete executed copy of Internal Revenue Service Form W-9.
ARTICLE 5
INDEMNIFICATION
Section 5.1 Indemnification by World Heart and Newco. Subject to other
provisions of this Article V, World Heart and Newco shall indemnify and hold
harmless ▇▇▇▇▇▇▇ and its officers, directors, employees, agents and sub-agents,
in each case from and against any costs or expenses (including, without
limitation, reasonable attorneys' fees, and the reasonable out-of-pocket
expenses of testifying and preparing for testimony and responding to document
and other information requests, whether or not a party to such litigation),
judgments, fines, losses, claims (whether or not meritorious) and damages
(collectively, "Damages"), as incurred, to the extent they relate to, arise out
of or are the result of: (i) any action taken by ▇▇▇▇▇▇▇, its officers,
directors, employees, agents or sub-agents (or the officers, directors or
employees of any affiliate of ▇▇▇▇▇▇▇) in good faith in connection with the
performance of ▇▇▇▇▇▇▇' obligations hereunder; or (ii) any act done or suffered
by ▇▇▇▇▇▇▇ in connection with its performance under this Agreement in reliance
upon any instruction, order or other instrument given or executed by Newco or
World Heart.
Section 5.2 Claims. (a) If an indemnified party (an "Indemnified
Party") intends to seek indemnification pursuant to this Article V, such
Indemnified Party shall promptly notify the indemnifying party (the
"Indemnifying Party"), in writing, of such claim describing such claim in
reasonable detail, provided, that the failure to provide such notice shall not
affect the obligations of the Indemnifying Party unless and only to the extent
it is actually prejudiced thereby, subject, however, to the time periods
specified in Section 5.4 hereof. In the event that such claim involves a claim
by a third party against an Indemnified Party, the Indemnifying Party shall have
30 days after receipt of such notice to decide whether it will undertake,
conduct and control, through counsel of its own choosing and at its own expense,
the settlement or defense thereof, and if it so decides, the Indemnified Party
shall cooperate with it in connection therewith, provided, that the Indemnified
Party may participate in such settlement or defense through counsel chosen by
it, and provided further, that the reasonable fees and expenses of such counsel
shall be borne by the Indemnified Party. The Indemnifying Party shall not,
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld), settle or compromise any action. If the Indemnifying
Party does not notify the Indemnified Party within 30 days after the receipt of
notice of a claim of indemnity hereunder that it elects to undertake the defense
thereof, the Indemnified Party shall have the right to contest, settle or
compromise the claim but shall not pay or settle any such claim without the
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld).
(b) The parties shall cooperate fully in all aspects of any
investigation, defense, pre-trial activities, trial, compromise, settlement or
discharge of any claim in respect of which indemnity is sought pursuant to
Article V, including, but not limited to, by providing the other party with
reasonable access to employees and officers (including as witnesses) and other
information.
Section 5.3 Duplication. Any liability for indemnification hereunder
shall be determined without duplication of recovery by reason of the state of
facts giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement; provided, however, that subject
to there being no duplication of recovery, the Indemnified Party shall be
entitled to recover to the maximum extent provided in this Agreement.
Section 5.4 Survival of Indemnification Provisions. The obligations
under this Article V shall survive until the third anniversary of the date of
termination or expiration of this Agreement.
ARTICLE 6
CONFIDENTIALITY
Section 6.1 Confidentiality. Each party hereto shall, and shall cause
their respective affiliates to, keep confidential all information concerning the
other parties' financial and business affairs known to it, and none of the
parties hereto and their respective affiliates shall use any such information
for its own business, except that such information may be disclosed (i) if
required by court order or decree or applicable law, (ii) if it was or becomes
generally available to the public, (iii) if it is received by any party hereto
or any of their respective affiliates on a non-confidential basis from a third
party or (iv) for use by employees, agents and representatives of any party
hereto and any of their respective affiliates who need to know for purposes of
this Agreement or to carry out any obligations of ▇▇▇▇▇▇▇, Newco or World Heart
with respect hereto provided that such employees, agents or representatives are,
prior to receipt of such information, informed of the confidential nature of
such information and agree to be bound by the non-disclosure provisions hereof.
Section 6.2 Enforcement of Article 6. The parties hereto each
acknowledge that its failure or threatened failure to comply with the provisions
of this Article 6 will result in immediate, irreparable and continuing damage to
the other parties, for which there will be no adequate remedy at law and that,
in the event of its failure or threatened failure so to comply, Newco, World
Heart or ▇▇▇▇▇▇▇, as the case may be, and their respective successors, legal
representatives and assigns shall be entitled to temporary and permanent
injunctive relief and to such other and further relief as may be proper and
necessary to ensure compliance with the provisions of this Article 6.
ARTICLE 7
TERM; TERMINATION OF SERVICES
Section 7.1 Term. (a) The term of this Agreement shall commence on the
date hereof and shall continue in effect until the close of business on December
31, 2001.
(b) Notwithstanding anything to the contrary in this Agreement, the
provisions of Articles 5 and 6 and Sections 8.1, 8.2, 8.7, 8.9 and 8.11 shall
survive any termination of this Agreement or the provision of Services
hereunder.
Section 7.2 Termination of Services. Newco, may at any time, upon two
weeks' irrevocable written notice to ▇▇▇▇▇▇▇, terminate all the Services or any
Service (or any portion thereof) on a Service-by-Service basis. The provision of
all Services pursuant hereto shall in any event terminate on December 31, 2001.
Upon termination of any Service, all administrative records relating to that
Service as such records relate solely to Newco which have not already been
transferred to the sole possession of Newco shall be so transferred, it being
understood that ▇▇▇▇▇▇▇ may retain copies of such records.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Governing Law. This Agreement shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
State of New York, including, without limitation, Sections 5-1401, 5-1402 of the
New York General Obligations Law and New York Civil Practice Laws and Rules
327(b).
Section 8.2 Jurisdiction and Consent to Service. In accordance with
the laws of the State of New York, and without limiting the jurisdiction or
venue of any other court, the parties (a) agree that any suit, action or
proceeding arising out of or relating to this Agreement may be brought in the
state or federal courts of New York; (b) consent to the non-exclusive
jurisdiction of each such court in any suit, action or proceeding relating to or
arising out of this Agreement; (c) waive any objection which any of them may
have to the laying of venue in any such suit, action or proceeding in any such
court and waive any defense of forum non conveniens; and (d) agree that service
of any court paper in any such suit, action or proceeding may be made in the
same manner in which notices may be given pursuant to Section 8.3 of this
Agreement.
Section 8.3 Notices. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
which are given with respect to this Agreement shall be in writing and shall be
delivered (charges prepaid, receipt confirmed or return receipt requested (if
available)) by hand, by nationally recognized air courier service, by certified
mail or facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice. Notice shall be
deemed given and effective (i) if delivered by hand or by nationally recognized
courier service, when delivered at the address specified in this Section 8.3 (or
in accordance with the latest unrevoked written direction from such party), (ii)
if by certified mail, upon mailing or (iii) if given by facsimile when such
facsimile is transmitted to the fax number specified in this Section 8.3 (or in
accordance with the latest unrevoked written direction from such party),
provided the appropriate confirmation is received.
To Newco or World Heart:
World Heart Corporation
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
The ▇▇▇▇▇▇▇▇
▇▇▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Victoria:
▇▇▇▇▇▇▇ Lifesciences LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Associate General Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.4 Interpretation. When a reference is made in this Agreement
to a Section, Schedule or Exhibit, such reference shall be to a Section,
Schedule or Exhibit of this Agreement unless otherwise indicated. When a
reference is made in this Agreement to a specific Schedule, such reference shall
be deemed to include, to the extent applicable, all the other Schedules. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When the words "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." All accounting terms not defined in this Agreement shall have the
meanings determined by generally accepted accounting principles as of the date
hereof. All capitalized terms defined herein are equally applicable to both the
singular and plural forms of such terms.
Section 8.5 Severability. If any provision of this Agreement or the
application of any such provision shall be held invalid, illegal or
unenforceable in any respect for any reason, the parties shall negotiate in good
faith with a view to the substitution therefor of a suitable and equitable
solution in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid provision; provided, however, that the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
Section 8.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Schedules and Exhibits hereto (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and (b) is
not intended to confer upon any person, other than the parties hereto, any
rights or remedies hereunder.
Section 8.8 Further Assurances. Each party shall execute, deliver,
acknowledge and file such other documents and take such further actions as may
be reasonably requested from time to time by the other party hereto to give
effect to and carry out the transactions contemplated herein.
Section 8.9 Amendments and Modifications; Waivers and Extensions.
(a) No provision of this Agreement may be amended or modified unless
such amendment or modification is in writing and signed by the parties hereto
intending to be bound thereby;
(b) Any party to this Agreement may waive any right, breach or default
which such party has the right to waive; provided that such waiver will not be
effective against the waiving party unless it is in writing, is signed by such
party, and specifically refers to this Agreement. Waivers may be made in advance
or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No failure or delay in exercising any right, power or
privilege hereunder shall be deemed a waiver or extension of the time for
performance of any other obligations or acts nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
Section 8.10 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties, except that (a) any party may
assign all its rights and obligations to the assignee of all or substantially
all of the assets of such party including an acquisition through merger,
provided that such party shall in no event be released from its obligations
hereunder without the prior written consent of the other party and (b) ▇▇▇▇▇▇▇
may subcontract to any party so long as ▇▇▇▇▇▇▇ remains liable for the
performance of Services provided by any such subcontractor and provided that
such Services continue to be provided for prices not greater than the Service
Fees. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. Any attempted assignment in contravention hereof shall
be null and void.
Section 8.11 Sole Remedy; No Damages. If World Heart or Newco becomes
dissatisfied with the quality or level of Services provided hereunder, claims
any breach of this Agreement by ▇▇▇▇▇▇▇ or otherwise becomes dissatisfied with
any matter relating hereto or arising herefrom, its sole remedy shall be
termination of all or a part of the Services without right to seek actual,
compensatory or consequential damages. WORLD HEART AND NEWCO HEREBY ACKNOWLEDGE
AND AGREE THAT THEY ARE HEREBY WAIVING CERTAIN LEGAL RIGHTS AND REMEDIES, AND
THAT THIS WAIVER IS A FUNDAMENTAL ELEMENT OF THE BARGAIN BETWEEN THE PARTIES
HERETO, WITHOUT WHICH ▇▇▇▇▇▇▇ WOULD NOT HAVE ENTERED INTO THIS AGREEMENT. WORLD
HEART AND NEWCO HEREBY ACKNOWLEDGE AND AGREE FURTHER THAT, NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN, ▇▇▇▇▇▇▇ MAY, BUT SHALL IN NO EVENT BE
OBLIGATED TO, ADVANCE FUNDS OR INCUR COSTS IN CONNECTION WITH ITS PERFORMANCE
HEREUNDER.
IN WITNESS WHEREOF, the parties have each caused this Agreement
to be executed by its duly authorized representative as of the day and year
first above written.
▇▇▇▇▇▇▇ LIFESCIENCES LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
WORLD HEART INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
WORLD HEART CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
[Signature Page of Transition Services Agreement]
Exhibit A
Schedule of Services and Service Fees
Description of
No. Service or Function Service Fee*
--- ------------------- -----------
1 Regulatory $26,345 / year
(a) Assist with evaluation of Customer
Experience Reports received from customers and
report findings to Newco
(b) Statistical Support Services: (i)
evaluation of statistical significance of clinical
outcomes and events and design of clinical study
protocols; and (ii) generation of reports and data
extracts
(c) Prepare and Submit requests for product
approvals and modifications to regulatory
authorities and other interface with regulatory
agencies worldwide
2 Development - Assist with engineering and $150 /hour
development of new or improved products or product
improvements, such as conduits, related to current
and second generation heart assist devices which
use commercially available ▇▇▇▇▇▇▇ valves,
including without limitation, ▇▇▇▇▇▇▇' pericardial
tissue valves. ▇▇▇▇▇▇▇ will assist in the design
and development of means of attaching conduits and
other improvements to its commercially available
valves but shall not be required to modify its
valves or to customize the design of any of its
valves in the performance of this service.
Additionally, ▇▇▇▇▇▇▇ shall not be responsible for
any testing or other evaluation of the safety or
efficacy of any improvement or new product with
respect to usage in a heart assist device.
3 Information Technology $75,665 / year
(a) Provide access to ▇.▇. ▇▇▇▇▇▇▇ financial
system software (Order Entry, Accounts Receivable,
General Ledger, Fixed Assets, Accounts Payable)
for a limited period of time but not beyond
December 31, 2000, until completion of migration
to World Heart finance system.
(b) Temporary support for email on Lotus
Notes system during transition to own system.
(c) Maintain network connection between
Oakland and Irvine for email and financial system
access.
4 Environmental Health & Safety Consulting - provide $7,000 / year
advice with respect to EHS matters.
5. Biomaterials/Sterility Testing services (MBC Lab) $10,382 / year
for implantable materials.
6. Full-time services of ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ At the fully
▇▇▇▇▇▇▇▇ ("European Employees") pursuant to terms burdened cost
mutually agreed upon pursuant to a consulting, of such
secundment or other arrangement for a period of up employees and
to one (1) year following the date of this services to
Agreement. As part of such service, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
provide payroll, benefits, perquisites and
administrative services for the European Employees
at its fully burdened cost. Either party may
terminate payroll and administrative services with
two weeks advance notice to the other party.
* All Services Fees listed on this schedule are exclusive of
incidental expenses including, without limitation, travel expenses,
to be paid by Newco.
