Exhibit 10.4
SERVICES AGREEMENT
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This SERVICES AGREEMENT dated as of August 22, 1997 ("Effective Date"), is
entered into between CENTOCOR, INC., a Pennsylvania corporation with its place
of business at 000 Xxxxx Xxxxxx Xxxxxxx, Xxxxxxx, XX 00000 (together with its
subsidiaries except the Company (as defined), collectively, "Contractor") and
CENTOCOR DIAGNOSTICS, INC., a Pennsylvania corporation with its place of
business at 000 Xxxxx Xxxxxx Xxxxxxx, Xxxxxxx, XX 00000 (together with its
subsidiaries, collectively, the "Company").
WITNESSETH:
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WHEREAS, Contractor has facilities and personnel capable of providing
certain services to Company; and
WHEREAS, Company desires to contract with Contractor for the performance of
such services by Contractor on behalf of Company;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
obligations herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Schedule I hereto contains a list of services ("Services") being
provided by Contractor to Company as of the Effective Date. It is understood
that Schedule I shall be deemed to include any other services being provided by
Contractor to Company as of the Effective Date that were omitted in error from
Schedule I. Contractor shall provide to Company the Services under and subject
to the terms and conditions of this Agreement through the departments of
Contractor ("Departments") listed on Schedule I. It is understood that Company
may request additional services not listed on Schedule I. Contractor shall,
upon its consent, perform such additional services on behalf of Company under
and subject to the terms and conditions of this Agreement, and Schedule I shall
be amended to include such additional services. Either party to this Agreement
shall have the right, upon ninety (90) days prior written notice to the other
party, to reduce the level of, or terminate, any Services provided by Contractor
hereunder; provided, however, that one (1) year prior written notice must be
provided to the other party in the case of the reduction or termination of any
of the IMS and telecommunications services listed on Schedule I and the
facilities services listed on Schedule I shall terminate immediately upon the
execution of a Sublease Agreement between Contractor and the Company relating to
certain space occupied by the Company in Contractor's facilities.
2. Company shall be billed for Services rendered from the Effective Date
through September 30, 1997, on October 15, 1997, and thereafter, Company shall
be billed for Services on a quarterly basis on or before the fifteenth business
day of the month following the end of each calendar quarter for Services
performed in the prior calendar quarter. Payment shall be
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made by Company to Contractor by check or wire transfer within forty five (45)
days after the receipt of each invoice for Services performed.
3. In consideration for the Services, with respect to each applicable
period hereunder, the Company shall be charged as follows:
(a) For Services provided by Contractor's IMS and Telecommunications
Departments, the Company shall be charged an amount equal to 1.025 multiplied by
(X), where (X) is equal to (i) the total of such Departments' Costs (as
hereinafter defined) for such period, multiplied by (ii) the percentage
determined by dividing the number of the Company's non-manufacturing Employees
(as hereinafter defined) by the sum of (A) the number of the Company's non-
manufacturing Employees plus the total number of the Contractor's Employees.
(b) For Services provided by Contractor's Facilities Departments, the
Company shall be charged an amount equal to $30.00 per square foot occupied by
the Company in the Contractor's facilities, such determination to be made on the
last day of each period for which an allocation of Costs is calculated under
this Agreement and shall be based on the Contractor's space management system.
Contractor additionally will charge the Company directly for any services
provided by Contractor's Facilities Department pursuant to a work order properly
authorized by the Company. Such charges will include labor and reasonable and
ordinary direct out of pocket costs or such other costs as agreed upon by
Contractor and the Company and specified in the work order. All work orders
shall be prepared using Contractor's standard format and procedures.
(c) For Services provided by the Contractor's Corporate Departments
and Research and Development Departments, the Company shall be charged an amount
equal to 1.025 multiplied by (Y), where (Y) is equal to (i) the total of such
Departments' Costs for such period, including all IMS, Telecommunications and
Facilities Costs allocated to the Corporate Departments and the Research and
Development Departments for such period, multiplied by (ii) a percentage,
determined by the head of each Corporate Department and each Research and
Development Department, equal to the percentage of each such Department's total
effort and activity during such period which was conducted on behalf of the
Company. For each applicable period, the head of each Corporate Department and
each Research and Development Department shall provide such percentage
determination in writing to the Contractor's accounting department.
(d) For the purposes of this Agreement, (i) the term "Costs," with
respect to any Department, shall mean the total costs and expenses of such
Department during each applicable period, including, without limitation, all
overhead costs and general and administrative costs, whether direct or indirect,
as determined in accordance with generally accepted accounting principles,
provided, however, that "Costs" shall not include any amounts of bonus
compensation paid or payable to Contractor's employees pursuant to Contractor's
bonus program or otherwise and (ii) the term "Employees" shall mean full time
employees of the Company or the Contractor, as applicable, who are based in
Malvern, Pennsylvania, determined
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on the last day of each period for which an allocation of Costs is calculated
under this Agreement.
(d) On or prior to November 15 of each year, Contractor shall provide
to the Company an estimate of the charges for Services that Contractor estimates
will be performed during the subsequent year. Furthermore, as soon as
practicable following the approval by the Board of Directors of Centocor, Inc.
of its annual budget and three-year plan, Contractor shall provide to the
Company a revised estimate of the charges for Services that Contractor estimates
will be performed during the subsequent year.
4. In addition to charges for the Services as provided in Section 3
hereof, Contractor shall be reimbursed by Company for all reasonable and
ordinary direct out-of-pocket expenses incurred by Contractor on behalf of
Company in connection with the furnishing of the Services to Company that are
not included in the determination of Costs.
5. Notwithstanding any provision hereof, for all purposes of this
Agreement, each party shall be and act as an independent contractor and not as a
partner, joint venturer, or agent of the other and shall not bind nor attempt to
bind the other to any contract.
6. Neither party shall be liable to the other on account of any failure
to perform or on account of delay in the performance of any obligation under
this Agreement if and to the extent that such failure or delay shall be due to a
cause beyond the control of such party and which, by the exercise of reasonable
diligence such party could not reasonably have been expected to avoid. In no
event shall Contractor be liable to Company for any delay in performance
occasioned by strikes or other labor or personnel difficulties.
7. In the event Contractor or Company commits a substantial breach hereof
or fails to carry out its obligations hereunder, Contractor or Company, as the
case may be, shall have the right to terminate this Agreement by written notice
to the defaulting party, specifying such breach or failure. Said termination
shall become effective thirty (30) days from the date of receipt of such notice
by the defaulting party unless such breach or failure is corrected within such
thirty (30) day period to the satisfaction, expressed in writing, of the party
first sending such notice.
8. This Agreement shall be terminated automatically in the event that
either party is ordered or adjudged bankrupt; is placed in the hands of a
receiver; compounds or enters into any arrangement with its creditors; or goes
into voluntary or compulsory liquidation.
9. Termination of this Agreement shall be without prejudice to the
existing rights of the parties at the date of such termination, and any covenant
herein which is expressly or impliedly intended to survive such termination
shall remain binding upon the parties hereto subsequent to such termination.
10. The term of this Agreement shall be effective from the date of this
Agreement, and shall continue in force for a period of five (5) years from said
date, unless sooner terminated as provided herein, and shall automatically renew
for successive periods of one (1) year each, unless either party provides notice
of termination to the other party at least ninety (90) days prior to the end of
the initial term, or the then current renewal term.
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11. This Agreement may not be altered, modified or amended except by a
writing signed by duly authorized representatives of Company and Contractor.
This Agreement may be amended at any time upon the mutual consent of the Company
and the Contractor.
12. No failure or delay on the part of a party in exercising any right
hereunder shall operate as a waiver of, or impair, any such right. No single or
partial exercise of any such right shall preclude any other or further exercise
thereof or the exercise of any other right. No waiver of any such right shall
be deemed a waiver of any other right hereunder.
13. This Agreement shall be governed by and construed in accordance with
the internal laws of the Commonwealth of Pennsylvania without regard to
principles of conflict of laws.
14. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same document.
15. This Agreement contains the entire understanding of the parties hereto
with respect of the subject matter hereof. This Agreement supersedes all prior
oral or written agreements or understandings between the parties with regard to
the subject matter hereof.
16. Neither party shall assign this Agreement or any part hereof or any
right or obligation hereunder to any third party without the prior written
consent of the other party hereto.
17. Attached as Appendix A hereto is a statement setting forth the total
charges by Department for the Services provided by Contractor to Company for the
nine-month period ended September 30, 1997.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers.
CENTOCOR, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President, Finance and Chief
Financial Officer
CENTOCOR DIAGNOSTICS, INC.
By: /s/ R. Xxxxx Xxxxxx
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Name: R. Xxxxx Xxxxxx
Title: President and Chief Executive Officer
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SCHEDULE I
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DEPARTMENTS
A) IMS & TELECOMMUNICATIONS:
Department # Department Name
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290 Telecommunications
293 Business & Office Systems
295 Systems Services
B) FACILITIES:
Department # Department Name
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300 Facilities
320 Engineering
300 CPMC Facilities CPMC
300 CPMC II Facilities CPMC II
C) CORPORATE SERVICES:
Department # Department Name
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100 Executive Administration
106 Corporate Library
165 Corporate Services Administration
107 Accounting
103 Purchasing
109 Treasury
021 Investor Relations
292 Government Relations
130 Regulatory
105 Corporate QA
133 Equipment Validation
132 QA Compliance
163 Radiation Safety
101 Legal
020 Human Resources
100 Nippon
080 External Research
D) RESEARCH AND DEVELOPMENT:
Departments shall be determined as research and development services are
requested by the Company.
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SERVICES
TO BE PROVIDED TO CENTOCOR DIAGNOSTICS
(Listed by Functional Area)
CORPORATE:
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LIBRARY
.Book/journal purchases
.Interlibrary loan activity
.Online literature searches
.Professional society memberships
.Audio/video tape purchase
ACCOUNTING
.Payroll services:
Payment of payroll taxes
Filing of related tax returns and forms
Maintain employee files
Create and input payroll journal entries
Issue payroll reports
Reconcile payroll bank account
Payroll account analysis
Annual workmen's compensation audit
Income calculation, letter issuance and income input into
payroll system for restricted stock vestings and stock
option exercises
Payment of annual bonus
.Fixed assets:
Maintain separate database for Diagnostics fixed assets
Tag, input and create journal entries for additions
Monthly depreciation journal entries
Annual audit of fixed assets
Quarterly roll-forward schedules and other reports as
requested and account analysis
.Tax advice
.Tax return preparation
.General accounting function
Administrative assistance to Diagnostics accounting employees
Record-keeping of Xxxxxx/Xxxxx file retention services for
correspondence/documents/etc.
Oracle Financial Analyzer closing procedures
Oracle Financial Analyzer maintenance
Depositing of checks to the Centocor Diagnostics of PA account.
.Accounts payable services
Vouchering in the Cincom system of invoices, drafts and wires
Issuance of manual checks as requested
Issuance of bi-weekly system checks
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Issuance of foreign exchange drafts
Vendor information maintenance
Opening of accounting related mail
Filing of invoices
Account/department coding of freight invoices
Record-keeping of Xxxxxx/Xxxxx file retention services for
invoices/expense reports
Accounts payable distribution/journal entry
TREASURY
.General treasury services
Cash management
Short term cash management--operating cash and disbursements
Asset management --strategic fixed income and equity investments
Intercompany loans
Transfer agent services
Shares issuance
Financial Reporting
Shares analysis --FASB 123 and Treasury Method, etc.
.Corporate finance
Centocor value management (shareholder value)
Peer Group Analysis
Bench marking of performance on a quarterly basis
Financial analysis --investment decisions
Cost of capital analysis and capital structure
Risk management
Annual insurance review
Federal, state and international regulatory compliance
Alternative risk management programs
Currency risk management
Interest rate management
.Employee benefits:
401(k)
Financial Management
Fiduciary activities
K&M testing
Compliance
Stock Option and Restricted Stock Plans
Issuance of Shares and grants
Semiannual statements
Plan management
Financial Reporting - provide required information for
Proxy, annual report, etc.
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CORPORATE COMMUNICATION
.General support to be provided (Diagnostics to perform investor relations,
annual meeting and public relations activities)
.Government affairs
Federal and state
Provide lobbying support at all levels
REGULATORY
.General regulatory affairs
.In vitro diagnostics activities
.External consultants
.Related secretarial, submissions and CDC staff services
CORPORATE QUALITY
.General support
New employee orientation safety, lab practices
Provide regulatory and safety advice on contract activities at Centocor
Ad hoc support as needed in any area of Corporate expertise
Administration of alcohol and controlled substance permits
Review of labeling and advertising materials
.Participation in Quality Steering Committee
.Involvement in development and review of SOPs
.Supplier certification
.Radiation support
Training --new employee and refresher training
Personnel monitoring --film badge program and thyroid scan program
Facility monitoring --air and sink monitoring, periodic lab surveys
Survey meter calibration program
Radioactive waste management
Storage for decay program
Inventory, tracking and disposal
Inventory assessment --every 6 months
Licensing --maintain state(1) and federal(3) licenses
Accident and incident investigations
Coordinate and respond to NRC and consultant inspections
.Environmental support
Medical waste --coordination and tracking
Chemical waste --coordination and tracking
Maintain compliance with environmental regulations
Clean Water Act Valley Forge Sewer Authority Permits
Emergency Planning and Community Right to Know
Pennsylvania Municipal Waste Regulations (residual and infectious
wastes)
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Underground storage tank regulations
East Whiteland Hazardous Operations Permit
Maintain chemical inventory system for XXXX and PA Hazardous Substance
forms
.Safety Support
Maintain compliance with regulations
Bloodborne Pathogens Standard
Laboratory Standard
HAZCOM
Fire Protection and drills
PPE Standard
OSHA 200 Log (accident and injury log)
Forklift Standard
Respirator Standard
HAZWOPER (spill team)
Consult on all environmental issues related to wastes
Hazard assessments and compliance audits for lab safety
Investigate accidents and injuries
Maintain Chemical Hygiene Plan (and training) and Exposure Control Plan
Coordinate medical follow-up to work place injuries
Monthly safety committee meetings
Coordinate safety shoe and eyeglass programs
Coordinate fire and evacuation teams
Coordinate ergonomics program (equipment, work station evaluations)
Maintain Intranet Safety Site and bulletin boards
Develop and maintain MSDS database
Develop MSDSs for Centocor products
Coordinate Biosafety Committee and Biological Agent Registration (BAR)
program
Coordinate hepatitis immunization program for employees
Coordinate monthly safety program for Diagnostics
Maintain safety training database
.GMP Support
Perform ISO 9001 compliance audits
Perform GMP audits
Vendor audits
Participate in team meetings
.GLP/GCP Support
Audit protocols
Audit study reports
Audit analytical plans
Audit 510K submissions
.Calibrations Services --calibrate instruments for compliance to GMPs, GLPs,
ISO, etc.
Calibrate instruments
Send calibration standards out for re-calibration
Calibrate balances and scales, provide for repair and replacement of
balances
Maintain electronic database for all Diag instruments
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Arrange for contractors to assist in performing some of the
calibrations, schedule and monitor contractor's work
Write and maintain calibration SOPs needed for GMP compliance
Maintain hard copy calibration records needed for GMP compliance
Provide instrument trouble shooting (when problem can be addressed by
in-house technical expertise)
Participate in audits by compliance groups, respond to audit findings,
correct deficiencies
Audit and qualify contractors to perform calibrations
.Cleanroom certification and testing
Cleanroom certifications
Laminar airflow bench certifications
Fume hood certifications
Maintain database for all Diagnostics equipment
Write and maintain SOPs needed for GMP Compliance
Maintain hard copy certification records needed for GMP compliance
Provide equipment trouble shooting (when problem can be addressed by
in-house technical expertise)
Arrange for contractors to perform cleanroom certifications, schedule
and monitor contractor's work
Participate in audits by compliance groups, respond to audit findings,
correct deficiencies
Audit and qualify contractors to perform cleanroom certifications
Purchase and maintain instruments needed for the calibration program
.Validation and qualification services
Perform revalidations on production equipment
Write protocols and final reports for the validation studies, includes
installation and operational qualification, and performance
qualification studies
Provide validation support on new manufacturing processes (in-house or
contract services)
Provide estimates for validation work and resources; prepare
validation project schedules
Participate in audits by compliance groups, respond to audit findings,
correct deficiencies
Arrange for contractors to perform validations, schedule and monitor
contractor's work
Audit and qualify contractors to perform validations
Maintain database for tracking Diagnostic validation studies
Submit validation documents to CDC for storage
Write and maintain SOPs needed for GMP compliance
Provide advice on facility design to meet cGMPs
Review validation documents written by Diagnostic personnel
Purchase, validate and maintain equipment needed to perform validation
studies
Prepare validation master plans as required
HUMAN RESOURCES
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.Medical (CHA PPO & U.S. Healthcare HMO) Delta Dental, UNUM Life, UNUM Long Term
Disability, Intracorp Short Term Disability, ACORN Employee Assistance Program
and UNUM Dependent Care Reimbursement Account
Daily: claims resolution
Weekly: Enrollments; payroll deduction authorizations; status changes;
terminations
Monthly: Invoice audits; COBRA Administration
Annually: Contract renewal; open enrollment; payroll deduction updates
for medical, life long term disability, dependent care account;
Business Travel Accident census
As required: Short term disability; long term disability; FMLA;
worker's compensation
.401(k) Savings Plan
Weekly: Enrollment of new hires; status changes
Quarterly: Open enrollment for payroll deduction changes
.LifeBalance Resources & Vitality Magazine
Monthly: Communication; invoice audits
.Company sponsored events
Annually: Picnic; United Way Campaign; Holiday Event; Corporate
Wellness Program
.New Hire Orientation
Weekly: Preparation of materials and 1.5 hour preparation
.Citadel Credit Union, CoreStates Direct Financial Benefits, Time Saving
Services
As needed: Communication, maintenance of promotional materials
.Affirmative Action Plan
Annually: Run reports off the system and with applicant tracking forms forward
to outside consultant for plan preparation
.HRIS
Daily: Data entry, status changes, reporting
EXTERNAL RESEARCH
.Serve as the principal medical consultants to Diagnostics
.Evaluate clinical utility and disease management potential of Diagnostic
business unit proposals
.Review and approve all clinical trial protocols.
.Provide project management design and assistance to Diagnostic business units.
.Implement the program priorities of the Pharmaceutical-Diagnostics synergy team
for P-selectin and cA2.
.Develop a process with Diagnostics to identify and develop future synergy
products.
.Survey literature and evaluate potential analytes in context of health
economics and clinical utility.
NIPPON
.Promotion and execution of contract revenue (i.e. Free PSA kit, Mitsubishi
contract, Eiken, etc.)
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.Provision of managerial support for planning and development of new business
(i.e. contact with key operators in business related with XXXX, etc.)
.Monitoring and reporting of sales activities of TFB, market trend, partner
issues on monthly basis.
.Maintenance of business partners (i.e. Fujirebio, TFB, BM, etc.) Through daily
communication on business issues and assisting trouble shootings.
.Arrangement and participation of meetings between Diagnostics and partners
(i.e. 3-4 times a year)
.Attendance to business meeting between Diagnostics and TFB twice a year to
support kit price negotiation
.Provide information on changes of regulatory systems and regulations, market
trend, new competitive products, etc. through attendance to the industry
meetings, ACCJ meetings, industry exhibit, etc.
.Developing oncology kit business in China through participating in meetings for
planning and setting annual target with the distributor and arranging exhibit
and lecture meetings for sales promotion.
RESEARCH AND DEVELOPMENT
.Research and development services to be provided shall be determined upon
request for such services by the Company.
IMS AND TELECOMMUNICATIONS
.Telecommunication; purchase, installation and maintenance of:
Telephones
PBX
Wiring
Local and long distance
800 service
Phone credit cards
Pagers
Cell Phones
FAX machines
Voicemail
.Desktop; purchase, installation and maintenance of:
Desktop PCS
Home PCS
Laptops
Printers
Standard and point solution software
E-mail
Internet Access
Laptop Pool
Dial-in from Home
Training
General HELPDESK support
Moves
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.Business Systems; on-going maintenance and licensing of:
Cincom
OFA
DSA
Goldmine
Gaps Support
TMS Support
.Systems and Networks; on going purchase, installation and maintenance of:
Central computers and networking equipment
Remote access computers
Backup of Data and offsite storage of Data
Nightly Operations
Disaster recovery
FACILITIES:
.Occupancy Costs:
Rent
Property taxes
Utilities
Leasehold Depreciation
Building Depreciation
Building 1 Water System Depreciation
Building Maintenance
Repairs - Contractors
Equipment Depreciation
Housekeeping
Grounds
.Facility Services:
Security
Cafeteria
Waste Removal
Furniture - Moving
Postage
Copy Center
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