MDS INC. - AND - BOREALIS INFRASTRUCTURE MANAGEMENT INC.
-
AND -
BOREALIS
INFRASTRUCTURE MANAGEMENT INC.
Dated
this 4th day October, 2006
Prepared
by:
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Fasken
Xxxxxxxxx XxXxxxxx LLP
Toronto,
Ontario
TABLE OF CONTENTS
1.1
|
1.2
|
References
to Statutes
|
1.3
|
Headings,
etc.
|
1.4
|
Plurality
and Gender
|
1.5
|
Including,
etc.
|
1.6
|
Construction
|
2.1
|
Migration
Projects
|
2.2
|
MDS
Migrating Obligations
|
2.3
|
Buyer
Migrating Obligations
|
2.4
|
2.5
|
Affiliates
and Third Party Providers and New
Contracts
|
2.6
|
Migration
Team
|
2.7
|
Manner
of Performance
|
2.8
|
Buyer
Review and Testing and Successful
Completion
|
2.9
|
Access
to Management etc.
|
3.1
|
3.2
|
Early
Termination of the Agreement
|
3.3
|
Termination
Costs
|
3.4
|
Survival
|
4.1
|
Cost
Allocation and Reimbursement
|
4.2
|
Notice
of Costs
|
4.3
|
Maintain
Documentation
|
5.1
|
Exculpation
|
5.2
|
Direct
Benefit
|
6.1
|
No
Agency, etc.
|
ARTICLE 7
CONFIDENTIALTY
7.1
|
Confidentiality
|
8.1
|
Dispute
Resolution
|
8.2
|
Resolution
by Steering Team and Executive Team
|
9.2
|
Exceptions
To Successful Completion of Migration For Certain Migration
Projects
|
9.3
|
Acceptable
Alternative Solutions
|
9.4
|
Closing
Extension
|
10.1
|
Notice
|
10.2
|
Further
Assurances
|
10.3
|
Currency
|
10.4
|
Waivers
|
10.5
|
10.6
|
Assignment
|
10.7
|
Binding
Effect
|
10.8
|
Governing
Law
|
10.9
|
Entire
Agreement
|
10.10
|
Amendment
|
10.11
|
Counterparts
|
10.12
|
Facsimile
Execution
|
SCHEDULE
2.1
|
MIGRATION
PROJECTS AND MIGRATION
PLAN
|
SCHEDULE
2.1(C)
|
FORM
OF OFFICER’S CERTIFICATE - SUCCESSFUL COMPLETION OF
MIGRATION
|
SCHEDULE
2.6
|
MIGRATION
TEAM GOVERNANCE
|
SCHEDULE
2.8(D)
|
FORM
OF OFFICER’S CERTIFICATE - SUCCESSFUL COMPLETION OF INDIVIDUAL
MIGRATION PROJECT
|
SCHEDULE
4.1 (B)
|
BUDGETED
MIGRATION COSTS
|
SCHEDULE
9.1
|
POST-CLOSING
SERVICES AGREEMENT
PRINCIPLES
|
THIS
MIGRATION AGREEMENT
(“Agreement”)
is
made and entered into as of the 4th day of October, 2006 (the “Effective
Date”)
by and
between MDS Inc., a corporation incorporated under the laws of Canada
(“MDS”)
and
Borealis Infrastructure Management Inc., a company incorporated under the laws
of Canada (“Buyer”).
WHEREAS
MDS
and
Buyer have entered into an asset purchase agreement dated the date hereof (as
such agreement may be amended from time to time, the “Asset
Purchase Agreement”),
as
well as the BC Purchase Agreement (as defined in the Asset Purchase Agreement)
pursuant to which, among other things, MDS has agreed to sell and, subject
to
receipt of all necessary consents, to cause various Affiliates of MDS to sell
to
Buyer, and Buyer has agreed to purchase, certain assets relating to the MDS
Diagnostics Division;
AND
WHEREAS
during
the period of time commencing on the date of the Asset Purchase Agreement and
continuing until the Closing Date, the Parties have agreed to cooperate and
work
together to transition certain aspects of the MDS Diagnostics Division to Buyer,
on the terms and conditions set forth herein;
NOW
THEREFORE,
in
consideration of the foregoing and the respective covenants set forth herein,
and for other good and valuable consideration (the receipt and sufficiency
of
which are hereby acknowledged by each Party), the Parties agree as
follows:
ARTICLE 1
INTERPRETATION
1.1
|
Definitions
|
In
this
Agreement including the recitals,
“Additional
Migration Costs”
has
the
meaning set forth in Section 4.1(c)(iii);
“Affiliate”
has
the
meaning set forth in the Asset Purchase Agreement;
“Agreement”
has
the
meaning set forth in the introductory paragraph hereof and, in addition,
includes all attached schedules, in each case as supplemented, amended, restated
or replaced from time to time;
“Applicable
Law”
means
any domestic or foreign statute, law (including the common law), ordinance,
rule, regulation, or Order, or the terms of any consent, exemption, approval
or
Licence of any Governmental Authority, that applies in whole or in part to
MDS,
Buyer, or the MDS Diagnostics Division;
“Asset
Purchase Agreement”
has
the
meaning set forth in the recitals;
“BC
Purchase Agreement”
has
the
meaning set forth in the Asset Purchase Agreement;
“Books
and Records”
means
those books and records identified as “Books and Records” in the Asset Purchase
Agreement and the BC Purchase Agreement;
“Budgeted
Migration Costs”
means
the dollar amount that the Parties have each agreed shall be budgeted to achieve
Successful Completion of all of the Migration Projects as set forth in Article
4;
“Business
Day”
means
a
day other than a Saturday or Sunday, on which Canadian chartered banks are
open
for the transaction of domestic business in the City of Toronto;
“Buyer”
has
the
meaning set forth in the introductory paragraph hereof;
“Buyer
Costs”
has
the
meaning set forth in Section 4.1(c)(ii);
“Buyer
Migrating Obligations”
has
the
meaning set forth in Section 2.3;
“CBS”
or
“Common
Business System”
means
MDS’ common back office system solution known internally by MDS as the “CBS” and
used to support the business operations of MDS, including the MDS Diagnostics
Division, prior to Closing;
“Closing”
has
the
meaning set forth in the Asset Purchase Agreement;
“Closing
Costs Notice Date”
has
the
meaning set forth in Section 4.2(a);
“Closing
Date”
has
the
meaning set forth in the Asset Purchase Agreement, as may be extended pursuant
to Section 9.4;
“Confidentiality
Agreement”
means
the Confidentiality Agreement dated December 6, 2005, between Buyer and MDS,
as
amended pursuant to a letter agreement between Buyer and MDS dated as of the
Effective Date;
“Confidential
Information”
has
the
meaning set forth in the Confidentiality Agreement;
“Designated
Buyer Affiliate”
has
the
meaning set forth in the Asset Purchase Agreement;
“Diagnostics
Management”
means
the management team of the MDS Diagnostics Division;
“Diagnostics
Operations”
has
the
meaning set forth in Section 2.1(c);
“Dispute”
has
the
meaning set forth in Section 8.1;
“Documentation”
has
the
meaning set forth in Section 4.3;
“Effective
Date”
has
the
meaning set forth in the introductory paragraph hereof;
“Employees”
has
the
meaning set forth in the Asset Purchase Agreement;
“Executive
Team”
means
the Representatives of the Parties identified in Schedule 2.6 as the Executive
Team members;
“Final
Notice of Costs”
has
the
meaning set forth in Section 4.2(c);
“Final
Net Payment”
has
the
meaning set forth in Section 4.2(d);
“Governmental
Authority”
means
any domestic or foreign government whether federal, provincial, state or
municipal and any governmental agency, governmental authority, governmental
tribunal or governmental commission of any kind whatsoever;
“Information”
has
the
meaning set forth in the Post Closing Confidentiality Agreement;
“Initial
Reimbursable Costs”
has
the
meaning set forth in Section 4.1(c)(i);
“Licence”
means
any licence, permit, approval, right, privilege, concession or franchise issued,
granted, conferred or otherwise created by a Governmental
Authority;
“MDS”
has
the
meaning set forth in the introductory paragraph hereof;
“MDS
Diagnostics Division”
has
the
meaning set forth in the Asset Purchase Agreement;
“MDS
Migrating Obligations”
has
the
meaning set forth in Section 2.2;
“MDS
Supported Portion”
has
the
meaning set forth in Section 2.1(c);
“Migrating
Asset”
means
any asset, property, contract, license and any and all work product and
deliverables (whether created or developed by a Seller or Operator or by a
third
party) that are either acquired or developed for Buyer or a Designated Buyer
Affiliate by any Seller or Operator in any connection with the Migration
Projects;
“Migration
Costs”
has
the
meaning set forth in Section 4.1(a);
“Migration
Plan”
has
the
meaning set forth in Section 2.4;
“Migration
Project”
and
“Migration
Projects”
have
the meanings set forth in Section 2.1(c);
“Migration
Services Contract”
has
the
meaning set forth in Section 2.2(f)(ii);
“Migration
Team”
has
the
meaning set forth in Section 2.6;
“Moved
Employees”
has
the
meaning set forth in Section 9.2(a)(i);
“New
Contract”
has
the
meaning set forth in Section 2.3(d)(ii);
“Net
Payment” has
the
meaning set forth in Section 4.2(b);
“Notice
of Costs” has
the
meaning set forth in Section 4.2(a);
“Operators”
means
those Persons identified as “Operators” in the Asset Purchase Agreement and the
BC Purchase Agreement;
“Order”
means
any order, judgment, injunction, decree, award or writ of any court, arbitrator
or Governmental Authority having jurisdiction;
“Parties”
means
MDS and Buyer, collectively, and “Party”
means
either one of them;
“Person”
shall
be broadly interpreted and includes an individual, body corporate, partnership,
joint venture, trust, association, unincorporated organization, the Crown,
any
Governmental Authority or any other entity recognized by law;
“Post
Closing Confidentiality Agreement”
means
the Confidentiality Agreement to be entered into as of the Closing Date between
MDS Inc., MDS Laboratory Services Limited Partnership, Laboratories MDS Quebec
Ltee., Metro XxXxxx Clinical Laboratories Ltd., Mether Properties Limited
Partnership, Mether Management Ltd., Borealis Infrastructure Management Inc.,
et
al.;
“Post-Closing
Services”
means
those support services that MDS may be required to provide to Buyer and/or
any
applicable Designated Buyer Affiliate(s) post-Closing pursuant to Section
9.3
hereof
and in accordance with the provisions of the Post-Closing Services
Agreement;
“Post-Closing
Services Agreement”
has
the
meaning set forth in Section 9.3;
“Representative”
means
the directors, officers, employees, agents, solicitors, accountants,
consultants, financial or legal advisers or other representative(s) of the
Party
being referred to;
“Sales
Taxes”
means
any value-added, sales, use, consumption, multi-stage, ad valorem, personal
property, customs, excise, stamp, transfer, or similar taxes, duties, or
charges, required under Applicable Law;
“Shared
Assets”
has
the
meaning set forth in Section 2.1(a);
“Shared
Contracts”
means
those contracts identified as “Shared Contracts” in the Asset Purchase Agreement
and the BC Purchase Agreement;
“Steering
Team”
means
the Representatives of the Parties and other individuals identified in Schedule
2.6 as Steering Team members;
“Successful
Completion”
has
the
meaning set forth in Section 2.8(a);
“Successful
Completion of Migration”
has
the
meaning set forth in Section 2.1(c);
“Term”
has
the
meaning set forth in Section 3.1;
and
“Third
Party Provider”
has
the
meaning set forth in Section 2.5.
1.2
|
References
to Statutes
|
Unless
specified otherwise, reference in this Agreement to a statute refers to that
statute as it may be amended, or to any restated or successor legislation of
comparable effect.
1.3
|
Headings,
etc.
|
The
division of this Agreement into articles, sections, subsections and schedules
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement. The article,
section, subsection and schedule headings in this Agreement are not intended
to
be full or precise descriptions of the text to which they refer and are not
to
be considered part of this Agreement. All uses of the words “hereto”,
“herein”,
“hereof”,
“hereby”
and
“hereunder”
and
similar expressions refer to this Agreement and not to any particular section
or
portion of it. References to an Article, Section, Subsection or Schedule refer
to the applicable article, section, subsection or schedule of this
Agreement.
1.4
|
Plurality
and Gender
|
In
this
Agreement, words in the singular include the plural and vice-versa and words
in
one gender include all genders.
1.5
|
Including,
etc.
|
Reference
in this Agreement to the term “including”
shall
mean “including
without limitation”
and
shall not be construed to limit any general statement which it follows to the
specific or similar items or matters immediately following it.
1.6
|
Construction
|
This
Agreement is the joint product of MDS and Buyer, has been subject to mutual
consultation, negotiation and agreement of the Parties and shall not be
construed for or against any Party.
ARTICLE 2
MIGRATION
PROJECTS AND OBLIGATIONS
2.1
|
Migration
Projects
|
The
Parties acknowledge, confirm and agree that:
(a)
|
certain
assets, property, personnel and undertakings used in respect of the
operation of the MDS Diagnostics Division are shared with other MDS
business units and various MDS Affiliates (the “Shared
Assets”);
|
(b)
|
the
Parties wish to migrate to the Buyer certain aspects of the Shared
Assets
for the purpose of the continued operation of the MDS Diagnostics
Division
by Buyer and/or any applicable Designated Buyer
Affiliate(s);
|
(c)
|
the
Parties have, together with third party providers, identified various
migration projects as set out and described in Schedule 2.1 (each
a
“Migration
Project”
and collectively the “Migration
Projects”),
which they have reasonably concluded are the projects necessary to
enable
the operation of the MDS Diagnostics Division to be carried out by
Buyer
and the applicable Designated Buyer Affiliate(s) in the ordinary
course
independent of MDS and substantially in the same manner and same
degree of
operational effectiveness as existed prior to the Effective Date
(i.e. the
operation of the MDS Diagnostics Division by Buyer and/or any applicable
Designated Buyer Affiliate(s) shall no longer be dependent upon MDS
for
the provision of certain support services in order to conduct such
portion
of its operations to which the Migration Projects relate (such portion
of
operations, the “MDS
Supported Portion”),
having regard to the acknowledgement made in the immediately following
sentence. Buyer acknowledges that MDS has operated the MDS Diagnostics
Division as one of a number of business units within a larger,
multi-division, public corporation, which business units are to some
extent inter-supportive, and that post-Closing Buyer and the applicable
Designated Buyer Affiliate(s) shall operate the MDS Diagnostics Division
as a stand-alone private business enterprise and that in the determination
of whether Buyer and the applicable Designated Buyer Affiliate(s)
shall be
in a position to carry out the MDS Supported Portion in the ordinary
course of business independently of MDS differences that would typically
be expected to result from no longer being such a business unit of
MDS as
referenced in the foregoing acknowledgement shall be taken into account.
The operations of the MDS Diagnostics Division, including the MDS
Supported Portion, are collectively referred to as the “Diagnostics
Operations”.
“Successful
Completion of Migration”
means Successful Completion of all of the Migration Projects has
been
achieved such that the Buyer and any applicable Designated Buyer
Affiliate(s) are in the position to be able to carry out the Diagnostics
Operations independently of MDS in the manner contemplated by the
Parties
as represented in the Migration Plan and above in this Section
2.1(c).
|
(d)
|
Successful
Completion of Migration must be evidenced by the delivery to Buyer
of an
officers’ certificate (in the form attached hereto as Schedule 2.1(c) )
executed by each of the President, Senior Vice-President, Finance,
and
Senior Vice-President, Information Technology of Diagnostics Management
certifying that, in their view, all of the Migration Projects have
achieved Successful Completion such that the Buyer and any applicable
Designated Buyer Affiliate(s) are in the position to be able to carry
out
the Diagnostics Operations independently of MDS in the manner contemplated
by the Parties as represented in the Migration Plan, and above in
Section
2.1(c).
Each such person shall act reasonably in their determination under
this
Section;
|
(e)
|
some
of the Migration Projects contemplate that certain additional technology,
personnel and assets will be acquired, implemented and configured,
and
certain activities will be performed by each of Buyer and MDS, in
order to
establish for Buyer certain systems, processes and infrastructure
currently used by MDS (on a shared basis with other business units
and
other MDS Affiliates) in the operation of the MDS Diagnostics
Division;
and
|
(f)
|
it
is their mutual understanding that none of the Migration Projects
shall
entail the provision of any significant or material enhancements
or
additional functionality to what exists in the MDS Diagnostics Division
at
the Effective Date.
|
2.2
|
MDS
Migrating Obligations
|
With
a
view to achieving Successful Completion of Migration by the Closing Date, MDS
shall, in collaboration with Buyer and/or applicable Designated Buyer
Affiliate(s), undertake and perform such activities as may be reasonably
necessary or required to perform its obligations hereunder and to otherwise
achieve the Successful Completion of the Migration Projects, including
to:
(a)
|
manage
the implementation of those Migration Projects for which MDS has
been
designated as having responsibility in the Migration Plan;
|
(b)
|
perform
the tasks within each Migration Project for which MDS has been designated
as having responsibility in the Migration
Plan;
|
(c)
|
provide
appropriate MDS personnel having (to the extent existing at the Effective
Date) the knowledge and understanding of the subject matter pertaining
to
the applicable Migration Project and the right, power and authority
to
make decisions on behalf of MDS (as set forth in Schedule 2.6) with
respect thereto;
|
(d)
|
provide
Buyer with advice, knowledge and know-how concerning the implementation
of
each of the Migration Projects and otherwise cooperating and working
with
Buyer to complete the Migration
Projects;
|
(e)
|
retain
and provide additional non-MDS
personnel;
|
(f)
|
in
connection with any particular Migration
Project:
|
(i)
|
“split”
applicable Shared Contracts in accordance with Section 5.10 of the
Asset
Purchase Agreement and Section 2.5(b);
|
(ii)
|
liaise
and work with new and existing third party suppliers and service
providers
to negotiate and enter into contracts or statements of work in respect
of
the acquisition of third party products and services related to or
necessary for the performance of the Migration Projects (for example,
third party consulting services), (each a “Migration
Services Contract”),
provided that, for certainty, all contracts
relating to the hiring of individuals shall be entered into (A) by
MDS if
prior to Closing, and (B) by Buyer or the applicable Designated Buyer
Affiliate(s), if after Closing (unless such Migration Services Contract
concerns the provision of Post-Closing Services in which case it
shall be
entered into by MDS);
|
(iii)
|
liaise
and work with new third party suppliers and service providers to
negotiate
and enter into New Contracts on the terms of Section 2.5(b);
|
(iv)
|
use
commercially reasonable efforts to ensure that all Migration Services
Contracts are (unless otherwise agreed by Buyer) assignable to Buyer
or
any Affiliate of Buyer on Closing at no extra charge and without
penalty,
limitation or restriction; provided that Buyer shall agree to be
fully
responsible and liable to such third party for performance under
the
contract upon and after such assignment and to such other reasonable
terms
and conditions as may be required by such third
party,
|
(the
obligations of MDS referred to in this Section 2.2
are
collectively referred to as “MDS
Migrating Obligations”).
2.3
|
Buyer
Migrating Obligations
|
With
a
view to achieving Successful Completion of Migration by the Closing Date, Buyer
shall, in collaboration with MDS undertake and perform such activities as may
be
reasonably necessary or required to perform its obligations hereunder and to
otherwise assist and support MDS to achieve Successful Completion of the
Migration Projects including to:
(a)
|
manage
the implementation of those Migration Projects for which Buyer has
been
designated as having responsibility in the Migration Plan;
|
(b)
|
perform
the tasks within each Migration Project for which Buyer has been
designated as having responsibility in the Migration
Plan;
|
(c)
|
provide
appropriate Buyer personnel having (to the extent existing at the
Effective Date) the knowledge and understanding of the subject matter
pertaining to the applicable Migration Project and the right, power
and
authority to make decisions on behalf of the Buyer (as set forth
in
Schedule 2.6) with respect thereto;
|
(d)
|
provide
MDS with timely decisions, input, feedback and information where
same is
required by the Migration Plan or requested by MDS from time to time,
and
otherwise cooperating and working with MDS to complete the Migration
Projects;
|
(e) in
connection with any particular Migration Project:
(i)
|
“split”
applicable Shared Contracts in accordance with Section 5.10 of the
Asset
Purchase Agreement and Section 2.5(b);
|
(ii)
|
liaise
and work with new and existing third party suppliers and service
providers
to negotiate and enter into New Contracts on
the terms of Section 2.5(b),
|
(the
obligations of Buyer referred to in this Section 2.3
are
collectively referred to as “Buyer
Migrating Obligations”).
2.4
|
Migration
Plan
|
Schedule
2.1 also sets forth a description of the principal tasks and responsibilities
and the schedule for performance of those tasks required for the Parties to
complete each Migration Project (the “Migration
Plan”).
Each
of the Parties shall use reasonable commercial efforts to perform their
respective obligations under the Migration Plan in order to complete the
Migration Projects in accordance with the timetable set out
therein.
2.5
|
Affiliates
and Third Party Providers
and New Contracts
|
(a)
|
For
greater certainty, Buyer acknowledges and agrees that the performance
of
the MDS Migrating Obligations under this Agreement may be provided
directly by MDS or indirectly through an Affiliate of MDS or by their
respective third party providers (a “Third
Party Provider”).
MDS shall be responsible and liable for the performance of the MDS
Migrating Obligations by any such
Affiliate.
|
(b)
|
In
connection with the implementation of any of the Migration Projects,
with
respect to any contracts concerning the acquisition of any products
and
services related to, or necessary for, or desired by Buyer and/or
any
applicable Designated Buyer Affiliate(s) for, the operation of the
MDS
Diagnostics Division after Closing (each a “New
Contract”),
the Parties agree:
|
(i)
|
they
shall act reasonably to determine which of MDS, Buyer or any Designated
Buyer Affiliate(s) is the appropriate contracting party or parties
in the
applicable circumstances for such New Contract and that such agreed-to
entity or entities shall be the contracting
party;
|
(ii)
|
the
terms of each New Contract must comply with the terms of this Section
2.5(b)
and be acceptable to each Party, acting
reasonably;
|
(iii)
|
in
the event that MDS has entered into a New Contract, the terms of
such New
Contract must permit the assignment of such contract to Buyer and/or
any
Designated Buyer Affiliate(s) at no extra charge and without penalty,
limitation or restriction provided that Buyer shall agree to be fully
responsible and liable to such third party for performance under
such
contract upon and after such
assignment;
|
(iv)
|
that
in respect of New Contracts that either replace Shared Contracts
or that
are the result of the splitting of a Shared Contract, such New Contracts
shall (unless otherwise agreed to by the Parties) be on terms and
conditions that are reasonably consistent with the terms of the Shared
Contract that is being replaced or split, taking into consideration
in
each case, the change, if any, in commercial circumstances concerning
the
MDS Diagnostics Division (including purchase volumes); provided however,
for certainty, with respect to pricing and costs associated with
the New
Contracts, such pricing and costs shall be deemed not to be reasonably
consistent with the terms of the Shared Contracts (irrespective of
any
commercial or other circumstances) in circumstances where such pricing
or
costs, in the aggregate with respect to all New Contracts, constitutes
a
material differential from the MDS Diagnostics Division 2006 pro-forma
budget.
|
(c)
|
For
certainty, the Parties acknowledge and confirm that to the extent
that the
procurement of any Migration Services Contract(s) or New Contract(s)
are
required in respect of a particular Migration Project, the procurement
of
such contract(s) or an equivalent substitute therefor shall be required
in
order to achieve the Successful Completion of such Migration
Project.
|
2.6
|
Migration
Team
|
The
Parties have established a migration team (the “Migration
Team”)
comprised of Representatives of each of Buyer and MDS, which Migration Team
shall be responsible for supervising the coordination and management of the
Migration Projects substantially in accordance with Schedule 2.6
hereto.
2.7
|
Manner
of Performance
|
MDS
and
Buyer shall perform their respective obligations hereunder, in a good,
xxxxxxx-like manner and in accordance with a reasonable standard of care, and
each of the Parties represents and warrants to the other that they will perform
same in all material respects in accordance with Applicable Laws. To the extent
that any delay or non-performance of the MDS Migrating Obligations is caused
directly or indirectly by a Third Party Provider, MDS shall (i) exercise the
available remedies under such contract up to but not including the commencement
of arbitration or other legal proceeding or the making of payments to third
parties other than in the normal course in accordance with the contract, and/or
(ii) use commercially reasonable efforts to find a substitute for such Third
Party Provider. Except for the foregoing in this Section and subject to
Article 9 ,
MDS
shall have no responsibility or liability with respect to any non-performance
by
MDS hereunder to the extent caused by a Third Party Provider, and the foregoing
in this Section states MDS’ entire responsibility and liability to Buyer with
respect to such non-performance.
2.8
|
Buyer
Review and Testing
and Successful Completion
|
(a)
|
Upon
the completion of a particular Migration Project Buyer and Diagnostics
Management may review the results of the completed Migration Project
and,
where applicable, conduct such tests as are appropriate (and provided
that
such testing does not unreasonably interfere with or disrupt MDS’
business) to ensure that such Migration Project has been successfully
completed in accordance with the requirements, specifications, objectives
and/or criteria, as applicable, either expressly agreed to by the
Parties
or as is contemplated by the Parties as represented in the Migration
Plan
in respect of such Migration Project, and in any event so as to provide
the functionality and operational effectiveness that existed prior
to the
Effective Date (in respect of the subject matter of such Migration
Project) to enable the Buyer and the applicable Designated Buyer
Affiliate(s) to carry out that portion of the Diagnostics Operations
in
the ordinary course of business independently of MDS (“Successful
Completion”).
The Parties agree that in the determination of whether Buyer and
the
applicable Designated Buyer Affiliate(s) shall be in a position to
carry
out the Diagnostics Operations in the ordinary course of business
independently of MDS, differences that would typically be expected
to
result from the MDS Diagnostics Division no longer being such a business
unit of MDS, as referenced in the acknowledgement set forth in Section
2.1(c)
hereof shall be taken into account. Buyer shall have a reasonable
period
of time to conduct its testing of each Migration Project, as provided
for
in the Migration Plan
or
as may be otherwise agreed to by the Parties in
writing.
|
(b)
|
During
the performance of such review and tests, Buyer shall keep MDS reasonably
apprised of the status and findings related to such review and tests
and
will consult and seek the input of MDS, as appropriate, using the
mechanisms contemplated under Schedule 2.6. Upon the conclusion of
such
review and tests, Buyer shall notify MDS that the particular Migration
Project either: (i) has achieved Successful Completion; or (ii) that
there
are deficiencies that require correction by MDS and/or the collective
efforts of the Parties.
|
(c)
|
In
the event that Buyer delivers any notices of deficiencies to MDS,
Buyer
shall provide to MDS in writing details of the nature of such
deficiencies. MDS (and Buyer, to the extent applicable) shall use
commercially reasonable efforts to correct any deficiencies in a
timely
manner and shall thereafter re-review and/or re-test in accordance
with
the terms of this Section, mutatis
mutandis.
The foregoing process shall, subject to the terms hereof, be repeated
until the applicable Migration Project achieves Successful
Completion.
|
(d)
|
Successful
Completion of each Migration Project must be evidenced by the delivery
to
Buyer of an officers’ certificate (in the form attached hereto as Schedule
2.8(d) ) executed by each of the President, Senior Vice-President,
Finance, and Senior Vice-President, Information Technology of Diagnostics
Management certifying that, in their view, the Successful Completion
of
such Migration Project has been achieved, subject to the qualifications
set forth in this Agreement. Each such person shall act reasonably
in
their determination under this
Section.
|
(e)
|
Buyer
acknowledges and agrees that the existence of non-material or minor
bugs,
errors or deficiencies in a particular Migrating Asset that is provided
as
part of a Migration Project and that does not (whether alone or in
the
aggregate) affect in any material respect the functionality or performance
of such Migrating Asset, shall not be taken as a failure to achieve
the
Successful Completion of the applicable Migration Project.
|
(f)
|
For
certainty, the Parties acknowledge and confirm that to the extent
that
certain Books and Records are necessary or required in respect of
a
particular Migration Project, the delivery of such Books and Records
that
are so necessary or required must be delivered or made available
to the
extent required in order to achieve the Successful Completion of
such
Migration Project.
|
(g)
|
Any
disagreement between the Parties as to whether a Migration Project
has
achieved Successful Completion shall be resolved in accordance with
Article 8.
|
2.9
|
Access
to Management etc.
|
MDS
agrees that Buyer shall have reasonable access to all such MDS personnel,
information and data as may be reasonably required or requested by Buyer in
connection with the completion of the Migration Projects. MDS agrees that it
shall, in accordance with the provisions of Schedule 2.6 to the extent
applicable, keep Buyer apprised of its activities concerning the implementation
of all Migration Projects and shall consult and seek the input of Buyer as
is
reasonable and appropriate (having regard to the circumstances of this
Agreement) with respect to the implementation of the Migration Projects and
shall provide Buyer with all reasonable opportunities to assist MDS in the
execution of the Migration Projects. MDS further agrees to consider, in good
faith, all Buyer input and requests provided in the course of completing the
Migration Projects and not to unreasonably refuse to take into account and/or
implement any reasonable Buyer requests or input that is required to achieve
Successful Completion.
ARTICLE 3
TERM
AND TERMINATION
3.1
|
Term
|
The
term
of this Agreement (the “Term”)
shall
commence on the Effective Date and continue until terminated in accordance
with
the terms of this Article 3.
3.2
|
Early
Termination of the
Agreement
|
3.2.1 This
Agreement may be terminated as follows:
(a)
|
upon
mutual agreement of the Parties set out in
writing;
|
(b)
|
by
either Party upon any termination of the Asset Purchase Agreement
prior to
Closing; or
|
(c)
|
automatically
and without any further action required by either Party in the event
that
Successful Completion of Migration has not been achieved by the Closing
Date, unless otherwise agreed to by the Parties in writing or to
the
extent that the exceptions provided for in Article 9 of this Agreement
apply.
|
3.2.2 This
Agreement shall automatically expire and terminate upon Successful Completion
of
Migration (and the payment by each Party of their respective costs payment
obligations hereunder) without any further action or notice required to be
given
by either Party.
3.2.3 Subject
to Article 9, the Parties agree that the failure of certain Migration Projects
to not have achieved Successful Completion by
the
Closing Date shall not result in the termination of this Agreement.
3.3
|
Termination
Costs
|
(a)
|
In
the event that Closing does not occur as a result of Buyer’s failure to
satisfy the closing conditions under Section 6.2 of the Asset Purchase
Agreement (and MDS has not waived any of the unsatisfied conditions),
Buyer shall, notwithstanding the terms of Article 4 hereof, reimburse
MDS
within ten (10) Business Days of the termination of the Asset Purchase
Agreement for all Migration Costs incurred prior to the date of the
termination of the Asset Purchase Agreement by MDS in connection
with the
performance of the Migration
Projects.
|
(b)
|
In
the event that Closing does not occur as a result of MDS’ failure to
satisfy the closing conditions under Section 6.1 of the Asset Purchase
Agreement (and Buyer has not waived any of the unsatisfied conditions),
Buyer shall not, notwithstanding the terms of Article 4 hereof, be
obligated to reimburse MDS for any Migration Costs incurred by MDS
in
connection with the performance of the Migration
Projects.
|
(c)
|
In
the event that Closing does not occur either because: (i) Successful
Completion of Migration has not been achieved in accordance with
the terms
and subject to the qualifications hereof but all other conditions
precedent to Closing under the Asset Purchase Agreement have been
satisfied (and/or waived); or (ii) both Parties had failed to satisfy
one
or more of their respective Closing conditions pursuant to either
Section
6.1 or 6.2 of the Asset Purchase Agreement, Buyer shall reimburse
MDS
fifty percent (50%) of the Migration Costs.
|
3.4
|
Survival
|
Article
1
(Interpretation), Section 3.3
(Termination Costs), Section 4.3
(Maintain Documentation), Article 5 (Exculpation), Article 7 (Confidentiality),
Article 8 (Dispute Resolution), Article 10 (Miscellaneous) and this Section
3.4
(Survival) shall survive any termination or expiry of this Agreement.
ARTICLE 4
FEES
AND PAYMENT
4.1
|
Cost
Allocation
and Reimbursement
|
(a)
|
“Migration
Costs”
means all out-of-pocket costs and expenses incurred in connection
with the
performance of the Migration Projects, including, for certainty,
costs and
expenses relating to the acquisition of Migrating Assets and, third
party
services.
|
(b)
|
The
Parties agree that as of the Effective Date, the Budgeted Migration
Costs
are $7,098,932. The
Budgeted Migration Costs are more particularly set out and described
in
Schedule 4.1(b).
|
(c)
|
Migration
Costs shall be paid by the Parties as
follows:
|
(i)
|
Migration
Costs up to $3,000,000, exclusive of applicable Sales Taxes, (the
“Initial
Reimbursable Costs”)
shall be for the account of MDS.
|
(ii)
|
Any
Migration Costs in excess of the Initial Reimbursable Costs up to
the
Budgeted Migration Costs, exclusive of applicable Sales Taxes, shall
be
for the account of Buyer (the “Buyer
Costs”).
|
(iii)
|
Any
Migration Costs incurred in excess of the Budgeted Migration Costs,
exclusive of applicable Sales Taxes, (the “Additional
Migration Costs”)
shall be for the account of MDS as to fifty percent (50%) and Buyer
as to
fifty percent (50%).
|
(iv)
|
Each
Party shall be responsible to pay all Sales Taxes that are applicable
to
their respective Migration Costs payment obligations as set out above
in
this Section 4.1(c)
and Section 3.3.
|
(d)
|
At
Closing, Buyer shall (in accordance with the procedures set forth
in
Section 4.2)
reimburse MDS for all Buyer Costs incurred and, if applicable, Buyer’s
portion of any Additional Migration Costs (as provided in Section
4.1(c)(iii)),
provided that in the event that Successful Completion of Migration
has not
been achieved at the Closing Date and the Closing has occurred
notwithstanding, then:
|
(i)
|
Buyer
shall on Closing only reimburse MDS for the Buyer Costs and, if
applicable, Buyer’s portion of any Additional Migration Costs, that have
been incurred up to the Closing Costs Notice Date; and
|
(ii)
|
Buyer
shall upon Successful Completion of Migration reimburse MDS for any
Buyer
Costs and, if applicable, Buyer’s portion of any Additional Migration
Costs, incurred during the period between the Closing Costs Notice
Date
and Successful Completion of
Migration.
|
(e)
|
MDS
shall, if applicable, reimburse Buyer for any Additional Migration
Costs
on the terms of Section 4.1(d) mutatis
mutandis.
|
(f)
|
In
the event that Closing does not occur, each Party shall reimburse
the
other pursuant to the terms of Section 3.3,
as applicable, within ten (10) Business Days of the scheduled Closing
Date, as same may have been extended pursuant to Section 9.4.
|
4.2
|
Notice
of Costs
|
(a)
|
On
the date that is ten (10) Business Days prior to the Closing Date,
each
Party shall provide to the other Party, a statement identifying in
reasonable detail all Migration Costs (inclusive of any Additional
Migration Costs) that have been incurred by it up to the date
(“Closing
Costs Notice Date”)
of the statement (“Notice
of Costs”).
|
(b)
|
Based
on the Notice of Costs, the Parties shall calculate the net amount
owing
on Closing by either MDS to Buyer, or Buyer to MDS, as applicable
on the
terms hereof (the “Net
Payment”),
and payment of the Net Payment shall be made by the applicable Party
to
the other on Closing, subject to Section 4.2(e).
|
(c)
|
Upon
Successful Completion of Migration, each Party shall provide to the
other
Party within ten (10) Business Days, a statement identifying in reasonable
detail all Migration Costs (inclusive of any Additional Migration
Costs)
that have been incurred by it during the period between Closing Costs
Notice Date and Successful Completion of Migration (“Final
Notice of Costs”).
|
(d)
|
Based
on the Final Notice of Costs, the Parties shall calculate the net
amount
finally owing by either MDS to Buyer, or Buyer to MDS, as applicable
on
the terms hereof (the “Final
Net Payment”),
and payment of the Final Net Payment shall be made by the applicable
Party
to the other within ten (10) Business Days of the receipt of the
Final
Notice of Costs, subject to Section 4.2(e).
|
(e)
|
In
the event that either Party, in good faith and acting reasonably,
disputes
the amount of any Migration Costs in any Notice of Costs or Final
Notice
of Costs submitted by the other, then: (i) within five (5) Business
Days
of receipt of the applicable notice the disputing Party shall send
to the
other Party a written notice of such dispute; (ii) the Parties shall
pay
the undisputed portion of the Net Payment or Final Net Payment, as
the
case may be (and, for certainty, not such disputed portion); and
(iii) the
dispute shall be resolved in accordance with Article 8 .
|
4.3
|
Maintain
Documentation
|
Each
Party shall maintain copies of all records that a reasonably prudent person
would retain concerning the Migration Projects and the performance of their
respective obligation hereunder (including its internally prepared cost-tracking
records and any third party invoices in each case relating to the Migration
Costs) and in any event such records that such Party would normally retain
in
the ordinary course of its business in connection with projects and undertakings
that are reasonably similar in nature to those undertaken hereunder (the
“Documentation”).
Such
Documentation shall be retained during the Term and for a period of eighteen
(18) months following the termination or expiry of this Agreement and during
such period each Party may reasonably request at any time access to the
Documentation of the other Party and the other Party shall promptly provide
access to such Documentation, provided that any such access to the Documentation
shall be made during regular business hours and without unreasonably interfering
with or disrupting the business of the other Party.
ARTICLE 5
EXCULPATION
5.1
|
Exculpation
|
5.1.1 EXCEPT
AS
SET FORTH IN SECTION 2.7
AND
SECTION 4.1.4 OF THE ASSET PURCHASE AGREEMENT, EACH PARTY ACKNOWLEDGES THAT
THE
OTHER PARTY HAS NOT MADE, DOES NOT MAKE, AND THERE ARE NO REPRESENTATIONS,
WARRANTIES OR CONDITIONS OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, STATUTORY
OR ARISING OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF TRADE,
INCLUDING IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABLE QUALITY AND FITNESS
FOR A PARTICULAR PURPOSE, IN CONNECTION WITH THE PERFORMANCE OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER, INCLUDING WITH RESPECT TO ANY HARDWARE OR SOFTWARE USED
OR PROVIDED BY EITHER PARTY IN CONNECTION THEREWITH.
5.1.2 NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THE ASSET PURCHASE AGREEMENT, NEITHER PARTY SHALL
HAVE ANY LIABILITY FOR ANY LOSS SUFFERED OR INCURRED BY THE OTHER PARTY ARISING
OUT OF, IN CONNECTION WITH OR RELATED TO THE PERFORMANCE OF ITS OBLIGATIONS
HEREUNDER, EXCEPT (A) IN RESPECT OF A PARTY’S COST PAYMENT OBLIGATIONS PURSUANT
TO THIS AGREEMENT; AND (B) FOR ANY LOSS SUFFERED OR INCURRED BY THE OTHER PARTY
AS A RESULT OF ITS WILFUL DEFAULT OR GROSS NEGLIGENCE.
5.1.3 NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THE ASSET PURCHASE AGREEMENT AND EXCEPT IN RESPECT
OF A PARTY’S COST PAYMENT OBLIGATIONS UNDER THIS AGREEMENT, IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, PUNITIVE,
INCIDENTAL OR CONSEQUENTIAL LOSSES OR DAMAGES (INCLUDING LOSS OF DATA, LOSS
OF
REVENUE, LOSS OF CUSTOMERS OR CLIENTS, LOSS OF GOODWILL, LOSS OF PROFITS, DAMAGE
TO OR LOSS OF USE OF ANY PROPERTY, ANY INTERRUPTION OR LOSS OF SERVICE, OR
ANY
LOSS OF BUSINESS), ARISING IN ANY MANNER FROM THIS AGREEMENT AND THE PERFORMANCE
OR NON-PERFORMANCE OF OBLIGATIONS HEREUNDER, INCLUDING ANY SUCH DAMAGES
RESULTING FROM THE HARDWARE OR SOFTWARE USED OR PROVIDED, BY EITHER PARTY IN
THE
PERFORMANCE OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER WHETHER BASED IN CONTRACT
(INCLUDING FUNDAMENTAL BREACH OR BREACH OF A FUNDAMENTAL TERM), TORT (INCLUDING
NEGLIGENCE), MISREPRESENTATION OR OTHERWISE, IN LAW OR EQUITY, EVEN IF THE
OTHER
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
5.1.4 NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THE ASSET PURCHASE AGREEMENT AND EXCEPT IN RESPECT
OF A PARTY’S COST PAYMENT OBLIGATIONS UNDER THIS AGREEMENT, EACH PARTY’S
LIABILITY TO THE OTHER OR TO ANY OTHER PERSON FOR DAMAGES, WHETHER IN CONTRACT
(INCLUDING A FUNDAMENTAL BREACH OF A FUNDAMENTAL TERM), TORT (INCLUDING
NEGLIGENCE), MISREPRESENTATION OR OTHERWISE, FOR ANY BREACH OR SERIES OF
BREACHES UNDER THIS AGREEMENT OR ARISING FROM OR RELATED TO THE SERVICES, SHALL
BE FOR DIRECT DAMAGES ONLY AND SHALL NOT EXCEED A TOTAL AGGREGATE AMOUNT OF
ONE
HUNDRED THOUSAND DOLLARS ($100,000).
5.2
|
Direct
Benefit
|
This
Agreement is for the sole and exclusive benefit of the Parties, and it shall
not
be deemed to be for the direct or indirect benefit of any other Person,
including either Party’s customers, suppliers or employees.
ARTICLE 6
NO
AGENCY, JOINT VENTURE OR PARTNERSHIP
6.1
|
No
Agency, etc.
|
In
performing its obligations hereunder, MDS shall operate as and have the status
of an independent contractor. No Party’s employees shall be considered employees
or agents of the other Party, nor shall the employees of any Party be eligible
or entitled to any benefits, perquisites or privileges given or extended to
any
of the other Party’s employees. Nothing contained in this Agreement shall be
deemed or construed to create a joint venture or partnership between the
Parties. No Party shall have any power to control the activities and/or
operations of the other Party. No Party shall have any power or authority to
bind or commit any other Party.
ARTICLE 7
CONFIDENTIALTY
7.1
|
Confidentiality
|
The
terms
and conditions of the Confidentiality Agreement are hereby incorporated by
reference into this Agreement and shall apply to the disclosure of Confidential
Information by MDS and the use of such Confidential Information by Buyer in
connection with this Agreement up to and including the Closing Date. As of
the
Closing Date, the terms and conditions of the Post Closing Confidentiality
Agreement are incorporated by reference into this Agreement and shall apply
to
the disclosure of Information and the use of such Information by the Parties
in
connection with this Agreement subsequent to the Closing Date.
ARTICLE 8
DISPUTE
RESOLUTION
8.1
|
Dispute
Resolution
|
Any
disagreement or dispute between Buyer and MDS arising out of or in connection
with this Agreement, and any failure by either Party to perform its obligations
under this Agreement, (a “Dispute”),
shall
be subject to the process set forth in the remainder of this Article
8.
8.2
|
Resolution
by Steering Team and Executive
Team
|
Each
Dispute shall be initially referred to the Steering Team for resolution. Any
Dispute that cannot be resolved in a timely manner by the Steering Team in
the
ordinary course of the performance of this Agreement but in any event with
three
(3) Business Days of referral to the Steering Team, as determined by either
Party acting reasonably, shall be referred by either Party’s Representative(s)
on the Steering Team to the Executive Team. The Executive Team shall meet as
soon as reasonably possible after a Dispute is referred to them giving due
regard to the nature and impact of the issue under consideration, but in any
event within five (5) Business Days, and each shall use reasonable commercial
efforts to promptly resolve the Dispute.
ARTICLE 9
CLOSING
9.1
|
Obligation
to Complete Closing
|
Provided
that all conditions precedent in the Asset Purchase Agreement have been
satisfied or waived, MDS and Buyer shall be obliged to complete the Closing
if:
(a)
|
Successful
Completion of Migration has been achieved on or before the Closing
Date;
or
|
(b)
|
Successful
Completion of Migration has not been achieved but Buyer has in writing
waived all, or any part of, any Migration Project(s) that have not
achieved Successful Completion; or
|
(c)
|
except
in respect of those Migration Projects that are the subject of Section
9.1(b)
or
have been addressed under the terms of Section 9.3,
only the Migration Projects identified in Section 9.2
have not achieved Successful Completion and such Migration Projects
are
dealt with in accordance with the requirements of Section 9.2.
|
9.2
|
Exceptions
To Successful Completion of Migration For Certain Migration
Projects
|
Provided
that all conditions precedent in the Asset Purchase Agreement have been
satisfied or waived, notwithstanding that Successful Completion has not been
achieved in respect of any of the specific Migration Projects identified in
this
Section 9.2,
MDS and
Buyer shall nevertheless be obliged to complete the Closing in the circumstances
described and subject to the requirements and terms and conditions of this
Section 9.2,
as
follows:
(a)
|
Real
Estate & Facilities Migration Project: In
the event that the Real Estate & Facilities Migration Project has not
achieved Successful Completion, Closing shall occur provided that
the
following elements of the Real Estate & Facilities Migration Project
have been satisfied:
|
(i)
|
the
2nd
floor at 100 International, and parts of the 3rd
and 4th
floor at 100 International (totalling a minimum 66% of the employee
stations) ready for employee moves, in each case in accordance with
the
Migration Plan, and 66% of Diagnostic Operations employee moves complete
(the “Moved
Employees”)
within or to 100 International;
|
(ii)
|
call
centre, including PBX infrastructure used in connection with the
call
centre, relocated to 100
International;
|
(iii)
|
servers
and other IT infrastructure and the personal computers for the Moved
Employees set up at 100 International, except where cabling work
continues; and
|
(iv)
|
Parties
appear to be on track for Successful Completion at 100 International
no
later than four (4) weeks after the Closing
Date.
|
(b)
|
Common
Business System (CBS) Migration Project:
In
the event that the CBS Migration Project has not achieved Successful
Completion, Closing shall occur provided that MDS provides to Buyer
the
benefit of MDS’ existing Common Business System so as to enable the Buyer
to conduct Diagnostic Operations on an interim basis (until such
CBS
Migration Project is Successfully Completed) in the same manner as
is
provided at the date hereof (or on such other basis as the Parties
may
mutually agree to) and at no cost to Buyer, provided that Buyer
acknowledges: (A) such CBS shall, as long as service levels and
functionality are not negatively affected in any material respect,
be
provided in circumstances where certain MDS personnel involved in
the
operation of the CBS may also be involved in the continued performance
of
the MDS Migrating Obligations hereunder; and (B) the Employees who
prior
to Closing were performing the activities relating to the existing
CBS and
who subsequent to Closing become Employees of Buyer will continue
to be
available to MDS (at Buyer’s cost), to conduct such activities to the same
extent as previously conducted.
|
(c)
|
CBS
Dependent Migration Projects:
The Parties acknowledge that the Successful Completion of the Migration
Projects identified in Schedule 9.2(c) contain elements (as identified
in
Schedule 9.2(c)) that include a requirement to convert data and/or
upload
data to or otherwise create or test an interface to the CBS (the
“CBS
Dependent Migration Projects”).
In the event that:
|
(i)
|
Successful
Completion of the CBS Migration Project has not been achieved but
MDS is
in compliance with the terms of Section 9.2(b);
and
|
(ii)
|
as
at the Closing Date any of the CBS Dependent Migration Projects have
not
achieved Successful Completion because the activity identified in
the
column titled “CBS Dependent Task” in Schedule 9.2(c) has not been
completed; then
|
provided:
(iii)
|
there
are no other remaining incomplete items included in the CBS Dependent
Migration Project such that it would otherwise achieve Successful
Completion; and
|
(iv)
|
an
Acceptable Alternative Solution is available in respect of the CBS
Dependent Migration Project (which, for certainty, includes the
satisfaction of the requirements of Section 9.2(b)
and MDS providing any applicable data using the
CBS),
|
the
Closing shall occur despite the fact that such CBS Dependent Migration Project
has not achieved Successful Completion.
(d)
|
Any
Migration Project - Hiring and Training:
In
the event that the completion of the hiring and training of individuals
who are not employees of MDS or an Affiliate of MDS or those individuals
who are employees of IBM and dedicated or assigned to the support
of the
MDS Diagnostics Division is included in or forms a part of any Migration
Project, then, provided that:
|
(i)
|
MDS
has exercised reasonable diligence in its efforts to complete the
hiring
and training of such individuals; and
|
(ii)
|
MDS
continues to provide the necessary personnel resources on an interim
basis
(until such Migration Project is Successfully Completed) in the same
manner as is provided at the date hereof (or on such other basis
as the
Parties may mutually agree to) and at no cost to Buyer,
|
to
the
extent such hiring and training activities are incomplete at the Closing Date,
the Closing shall occur despite the fact that such Migration Project(s) have
not
achieved Successful Completion.
(e)
|
Non-Material
Migration Projects:
Buyer agrees that, notwithstanding the obligations contained in this
Agreement to the contrary, the Migration Projects set out in Schedule
9.2
(e) are not required to have achieved Successful Completion as a
condition
precedent to Closing.
|
9.3
|
Acceptable
Alternative Solutions
|
(a)
|
The
Parties acknowledge that it is their strong preferred intention that
Closing occur on November 29, 2006, and that neither Party wishes
to
extend the Closing beyond such date if there is a mutually acceptable
alternative to the Successful Completion of one or more of the Migration
Projects which will enable Buyer and/ or the applicable Designated
Buyer
Affiliates to carry out the Diagnostics Operations (including, for
greater
certainty, the MDS Supported Portion) in the ordinary course of business
with the provision of any Post Closing Services that are required
as part
of any such mutually acceptable alternative being immaterial (“Acceptable
Alternative Solution”).
MDS agrees to provide pursuant to an agreement that reflects the
principles set out in Schedule 9.1 (the “Post-Closing
Services Agreement”)
Post Closing Services to Buyer at no cost to Buyer to the extent
required
to effect an Acceptable Alternative Solution, while at the same time
continuing to perform the MDS Migration Obligations necessary to
achieve
Successful Completion of the Migration
Projects.
|
(b)
|
The
Executive Team shall meet on October 16th and October 31st
and November 15th to assess the progress of the Migration Plan and
discuss
and negotiate in good faith any modifications to the Migration Plan
or
potential Acceptable Alternative Solutions to the extent same are
required
on or before Closing. Any such modification and/or Acceptable Alternative
Solution shall be in writing and executed by both of the
Parties.
|
(c)
|
For
certainty, notwithstanding that Closing has occurred, to the extent
any
Migration Project has not achieved Successful Completion (including
if any
Acceptable Alternative Solution has been undertaken), each Party
covenants
and agrees to continue to work diligently to complete such Migration
Projects so as to achieve Successful Completion at the earliest practical
opportunity and that their obligations hereunder with respect to
such
Migration Projects shall continue in full force and effect until
all
Migration Projects have achieved Successful
Completion.
|
9.4
|
Closing
Extension
|
If
after
the meeting of the Executive Team on November 15th
the
Parties are not reasonably satisfied that Successful Completion of Migration
has
been or is reasonably likely to be achieved on or before the Closing Date and
have not agreed to an Acceptable Alternative Solution, then provided that all
of
the other conditions precedent to Closing that are set forth in the Asset
Purchase Agreement have been satisfied or waived in accordance with the terms
of
the Asset Purchase Agreement (the “Automatic
Closing Date Extension Trigger”)
the
Closing Date shall automatically be extended for ten (10) Business Days. The
Executive Team shall meet within eight (8) Business Days of the original or
extended Closing Date, as applicable. The automatic extension of the Closing
Date by ten (10) Business Days upon the occurrence of the Automatic Closing
Date
Extension Trigger and the process set forth in this Section shall continue
until
the earlier of Successful Completion of Migration is achieved and March 15,
2007.
ARTICLE 10
MISCELLANEOUS
10.1
|
Notice
|
The
notice provisions set forth in Section 10.3 of the Asset Purchase Agreement
shall govern the provision of any notices hereunder.
10.2
|
Further
Assurances
|
Each
Party shall do such acts and shall execute such further documents, conveyances,
deeds, assignments, transfers, elections and the like, and will cause the doing
of such acts and will cause the execution, filing and registration of such
further documents as are within its power, as the other Party may in writing
at
any time and from time to time reasonably request be done and or executed,
in
order to give full effect to the provisions of this Agreement.
10.3
|
Currency
|
All
references to dollar amounts in this Agreement and its Schedules are, unless
otherwise explicitly stated in this Agreement or on such Schedule, in Canadian
Dollars.
10.4
|
Waivers
|
No
waiver
of any provision of this Agreement shall be implied, and no waiver shall be
valid unless it is in writing and signed by the Party waiving its rights. No
waiver of any breach of any of the terms, provisions or conditions of this
Agreement shall be construed as or held to be a waiver of any other breach,
or a
waiver of, acquiescence in, or consent to, any further or succeeding breach
hereof.
10.5
|
Severability
|
If
any
provision of this Agreement shall be determined by an arbitrator or any court
of
competent jurisdiction to be illegal, invalid or unenforceable, that provision
shall be severed from this Agreement to the extent of its illegality, invalidity
or unenforceability and the remaining provisions of this Agreement shall
continue in full force and effect.
10.6
|
Assignment
|
In
the
event of the assignment of the Asset Purchase Agreement (as and to the extent
permitted by its terms) this Agreement may be assigned by a Party subject to
and
on the same terms and conditions Asset Purchase Agreement, mutatis
mutandis,
and no
other assignment of this Agreement, or any rights or benefits or obligations
by
either Party hereunder (other than, for certainty, any permitted subcontracting
on the terms hereof) shall be of any effect against the other Party except
to
the extent that the other Party has first consented to it in
writing.
10.7
|
Binding
Effect
|
This
Agreement shall be binding upon and enure to the benefit of the Parties and
their respective successors (including any successor by reason of amalgamation
or statutory arrangement of any Party) and permitted assigns.
10.8
|
Governing
Law
|
This
Agreement shall be subject to and governed by the laws of the province of
Ontario, and the laws of Canada applicable therein without regard to the
conflicts of law principles of such province. Subject to Article 8, the Parties
irrevocably attorn and submit to the non-exclusive jurisdiction of the courts
of
the Province of Ontario. The Parties expressly exclude the application of the
United Nations Convention on Contracts for the International Sale of
Goods.
10.9
|
This
Agreement constitutes the entire agreement between the Parties and contain
all
agreements between the Parties with respect to the subject matter hereof. All
Schedules attached hereto are incorporated herein by reference. This Agreement
supersedes any and all other agreements, negotiations, discussions and
understandings, either oral or written, between the Parties with respect to
the
subject matter hereof.
10.10
|
No
modification or amendment of this Agreement will be binding upon either Party
unless in writing, expressly referencing this Agreement and duly executed by
each Party.
10.11
|
This
Agreement may be executed in any number of counterparts. Each executed
counterpart shall be deemed to be an original. All executed counterparts taken
together shall constitute one agreement.
10.12
|
To
evidence the fact that it has executed this Agreement, a Party may send a copy
of its executed counterpart to the other Party by Transmission. That Party
shall
be deemed to have executed this Agreement on the date it sent such Transmission.
In such event, such Party shall forthwith deliver to the other Party the
counterpart of this Agreement executed by such Party.
[THE
REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
IN
WITNESS WHEREOF,
the
Parties have executed this Agreement as of the Effective Date.
MDS INC. | ||
|
|
|
By: | /s/ Xxxxxxx X. XxXxxxx | |
Name: Xxxxxxx X. XxXxxxx |
||
Title: Chief Executive Officer |
|
|
|
By: | /s/ Xxx Xxxxxx | |
Name: Xxx Xxxxxx |
||
Title: Executive Vice-President And Chief Financial Officer |
BOREALIS INFRASTRUCTURE MANAGEMENT INC. | ||
|
|
|
Date: | By: | /s/ J. Xxxxxxx Xxxxxxx |
Name: J. Xxxxxxx Xxxxxxx |
||
Title: Senior Vice-President |
|
|
|
Date: | By: | /s/ Xxxx Xxxxxxxx |
Name: Xxxx Xxxxxxxx |
||
Title: Secretary |
SCHEDULE
2.1
MIGRATION
PROJECTS AND MIGRATION PLAN
[REDACTED]
SCHEDULE
2.1(C)
FORM
OF OFFICER’S CERTIFICATE - SUCCESSFUL COMPLETION OF
MIGRATION
CERTIFICATE
OF OFFICER
TO: BOREALIS
INFRASTRUCTURE MANAGEMENT INC.
(“Buyer”)
Reference
is made to the Migration Agreement dated ●, 2006 (the “Agreement”)
between MDS Inc. (“MDS”)
and
the Buyer. Capitalized terms used in this certificate without definition have
the meanings specified in the Agreement.
I,
■,
the
■ of the MDS Diagnostics Division certify for and on behalf of MDS as
follows:
1. This
certificate is being delivered pursuant to Section 2.1(c)
of the
Agreement.
2. All
of
the Migration Projects have achieved Successful Completion.
3. In
my
view, as of the date of this certificate, all of the Migration Projects have
achieved Successful Completion such that the Buyer and any applicable Designated
Buyer Affiliate(s) are in the position to be able to carry out the Diagnostics
Operations independently of MDS in the manner contemplated by the Parties as
represented in the Migration Plan and in Section 2.1(c)
of the
Agreement.
DATED
the
_______day of __________________, 2006.
Per: ________________________________
Name:
Title:
SCHEDULE
2.6
MIGRATION
TEAM GOVERNANCE
PRINCIPLES
·
|
Four
Stage Decision Structure:
|
o
|
Executive
Team;
|
o
|
Steering
Team;
|
o
|
Project
Management Office (“PMO”);
and
|
o
|
Stream
Lead Team
|
·
|
Full
delegation of decision-making authority within ‘approved’ Migration
Project budget (as identified
below)
|
·
|
Equal
representation of Buyer and MDS/Diagnostics on Steering
Team
|
·
|
Executive
Team to have final decisions on critical dispute resolution (from
Steering
Team, funding decisions on amount above Budgeted Migration Costs,
and
Closing Date issues referred to Executive Team for final
decision
|
·
|
No
formal third party arbitration
|
·
|
1
Buyer Representative and 1 MDS Representative (Senior Vice-President
-
Borealis and Executive Vice-President, Corporate Development & General
Counsel MDS)
|
·
|
Final
decision making on deviations on Budgeted Migration Costs, dispute
resolution, and Closing condition
issues
|
Steering
Team
·
|
2
Buyer Representatives, 1MDS Representative, and 1 MDS Diagnostics
Representative (4 total). Unanimous decisions
only
|
·
|
Issue
resolution
|
·
|
Critical
Path project timeline management
|
·
|
Contingency
development
|
·
|
Post-Closing
Services evaluation and Post-Closing Services Agreement development
as
applicable
|
·
|
Authority
to adjust Stream Lead work plans
|
·
|
Review
of budget proposals outside Migration Project plan, approval of major
spending items over $100,000, and evaluation of implementation risks
and
contingency plans
|
·
|
1
Buyer Representative, 1 MDS
Representative
|
·
|
Project
tracking and control
|
·
|
Project
funding approvals (within project budget and
scope)
|
·
|
Monitor
Migration Plan budget and ensure appropriate
invoicing
|
·
|
Identification
of risks and development of contingency
plans
|
·
|
Overall
support and facilitation (removing ‘rocks in the road’) for Stream Lead
implementation
|
Stream
Lead Team
·
|
Plan
and execute projects within their
stream
|
·
|
Engage,
contract and purchase required resources as per Migration Project
plan
|
·
|
Ensure
accountability within projects
|
·
|
Lead
projects and accountable for completion, schedule and
costs
|
·
|
Inform
PMO of deviations from plan, cost, or
time
|
·
|
Develop
contingency plans for risks that occur and table to
PMO
|
·
|
Work
with other Stream Leads to resolve
issues
|
·
|
Escalate
issues as appropriate to PMO
|
·
|
Members
identified by MDS/Diagnostics as
appropriate
|
MEETING
SCHEDULE
·
|
Executive
Team: as
appropriate or called by either
Party
|
·
|
Steering
Team: minimum
once per week or as requested by Buyer or
MDS
|
· Project
Management Team: minimum
once per week or as requested by Stream Leads
·
|
Stream
Lead Team: minimum
once per week or as requested by PMO or any individual Stream
Leader
|
1.
|
Any
member of the Executive Team or Steering Team may attend any of the
PMO or
Stream Lead Meetings by giving appropriate notice but shall not have
voting rights.
|
2.
|
The
Steering Team shall approve any contingency spending line items (as
identified in Schedule 4.1(b).
|
3.
|
For
certainty, the Parties confirm that the amounts specified for Migration
Projects as more particularly set out and described in Schedule 4.1(b)
have been approved by the Parties.
|
SCHEDULE
2.8(D)
FORM
OF OFFICER’S CERTIFICATE - SUCCESSFUL COMPLETION OF INDIVIDUAL
MIGRATION PROJECT
CERTIFICATE
OF OFFICER
TO: BOREALIS
INFRASTRUCTURE MANAGEMENT INC. (“Buyer”)
Reference
is made to the Migration Agreement dated ●, 2006 (the “Agreement”)
between MDS Inc. (“MDS”)
and
the Buyer. Capitalized terms used in this certificate without definition have
the meanings specified in the Agreement.
I,
■,
the
■ of the MDS Diagnostics Division certify for and on behalf of MDS as
follows:
1. This
certificate is being delivered pursuant to Section 2.8(a)
of the
Agreement.
2.
|
Reference
is made to the ■ Migration Project described in Schedule 2.1 to the
Agreement (the “Subject
Migration Project”).
|
3.
|
In
my view, as of the date of this certificate, the
Successful Completion of the Subject Migration Project has been achieved,
subject to the qualifications set forth in the
Agreement.
|
DATED
the
_______day of __________________, 2006.
Per: ________________________________
Name:
Title:
SCHEDULE
4.1 (B)
BUDGETED
MIGRATION COSTS
[REDACTED]
SCHEDULE
9.1
POST-CLOSING
SERVICES AGREEMENT PRINCIPLES
·
|
Parties:
MDS, Buyer, the applicable Designated Buyer Affiliate(s) (the
“Parties”).
|
Completion:
The
Parties shall continue to work towards Successful Completion of the
outstanding Migration Projects (as provided for in the Migration
Agreement).
|
·
|
Standard
of Performance of Post-Closing Services: MDS
shall perform the Post-Closing Services so as to enable the Buyer
to
conduct Diagnostic Operations on an interim basis (until such Successful
Completion of Migration is achieved) in the same manner and at a
level
that is consistent with that which was provided at the date hereof
(or on
such other basis as the Parties may mutually agree to) and at no
cost to
Buyer; provided that Buyer acknowledges: (A) such Post Closing Services
shall, as long as service levels and functionality are not negatively
affected in any material respect, be provided in circumstances where
certain MDS personnel involved in the provision of Post Closing Services
may also be involved in the continued performance of the MDS Migrating
Obligations hereunder; and (B) the Employees who prior to Closing
were
performing the activities relating to such Post Closing Services
and who
subsequent to Closing become Employees of Buyer will continue to
be
available to MDS (at Buyer’s cost), to conduct such activities to the same
extent as previously conducted. The obligation of MDS to perform
the
Post-Closing Services shall continue until all Migration Projects
have
achieved Successful Completion.
|
·
|
Liability:
MDS shall be liable for any losses and/or damages suffered by Buyer,
the
applicable Designated Buyer Affiliate(s) or their Affiliates as a
result
of MDS’ failure to perform the Post Closing Services, in an aggregate
maximum amount not to exceed: (a) in the case of Post Closing Services
concerning the CBS as provided under Section 9.2(c)
of
the Migration Agreement, $2,000,000; and (b) in the case of Post
Closing
Services other than as described in (a), $250,000. Recovery of such
damages shall be from the first dollar up to the maximums set forth
above.
|
If
Buyer
has access (either on-site or remotely) to any of MDS’ computer systems and/or
information stores (for greater certainty, including where such information
is
stored on behalf of MDS) in connection with the Post-Closing Services (or other
services as may be agreed to by the Parties), it shall limit such access solely
to the use of such systems and information stores as required to receive the
Post-Closing Services (or other services as may be agreed to by the Parties),
as
applicable, and shall not access or attempt to access any of MDS’ computer
systems, information stores, files, software or services other than those
required to receive the Post-Closing Services (or other services as may be
agreed to by the Parties), or those that are publicly available (e.g., public
websites). Buyer shall limit such access to those of its employees, agents
or
contractors with a bona fide need to have such access to receive or provide
the
applicable Post-Closing Services and who have agreed to maintain the
confidentiality of all confidential information communicated to them in the
course of their employment or retention with Buyer or otherwise, and shall
cause
such employees, agents and contractors to refrain from using MDS’ computer
systems and information stores for any purposes other than the purposes
identified in the preceding sentence. Buyer shall, and shall cause its agents
and contractors, to follow all of MDS’ security rules and procedures
communicated to it for restricting access to its computer systems and
information stores. Buyer represents and warrants that it shall, and shall
cause
its agents and contractors to, take commercially reasonable precautions to
prevent disabling codes, routines, devices or instructions or any virus or
other
contaminant from being communicated into the computer systems and/or information
stores of MDS in connection with the Post-Closing Services. All user
identification numbers and passwords disclosed to Buyer or its agents and
contractors and any information obtained by Buyer or its agents and contractors
as a result of its access to and use of MDS’ computer systems and information
stores shall be deemed to be, and treated as, the confidential information
of
MDS. Buyer shall, and shall cause its employees, agents and contractors to,
provide full cooperation in the investigation of any apparent unauthorized
access to any of MDS’ or Third Party Providers’ computer systems and/or
information stores (for greater certainty, including where such information
is
stored on behalf of MDS) in connection with the Post-Closing
Services.
Buyer
acknowledges that in connection with the performance of certain Services,
actions may need to be taken by or on behalf of MDS to insulate MDS’ and its
Affiliates’ operations, assets, proprietary information, software, equipment or
data from the assets being transferred to Buyer (such insulation being referred
to hereinafter as a “Firewall”) and other access restrictions and protections
may need to be implemented by or on behalf of MDS. Buyer shall, and shall cause
its employees, agents and contractors to, not penetrate or circumvent any such
Firewall, restrictions or protections or attempt same.
SCHEDULE
9.2(C)
CBS
DEPENDENT MIGRATION PROJECTS
Item
|
Migration
Project Category
|
Migration
Project Task
|
CBS
Dependent Task
|
1.
|
Finance
|
FIN-03
AP Migration
|
Activities
related to the set-up, testing and cut-over of access to the AP system
through CBS
|
2.
|
Finance
|
FIN-04
GA Migration
|
Activities
related to the set-up, testing and cut-over of access to the GA system
through CBS
|
3.
|
IT
|
IT-06
ADP Infrastructure
|
Activities
related to the set-up, testing and cut-over of data feeds from
CBS
|
SCHEDULE
9.2(E)
NON-MATERIAL
MIGRATION PROJECTS
1.
|
Media
Function
|
2.
|
Learning
|
3.
|
Service
Awards
|
4.
|
Privacy
& Security Functions
|
5.
|
Greenbelt/Blackbelt
|