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EXHIBIT 10.6
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (the "Agreement") is made and
entered into as of this ___ day of _________________ by and between Xxxxxxxx
Laboratories International, Inc., including its subsidiaries and affiliates
(hereinafter collectively referred to as "GLI"), located at 0 Xxxxxxxx Xxxxxx,
Xxxxx, XX 00000-0000 and Xxxxxxxx Micro Science International, Inc. (hereinafter
referred to as "GMS"), located at 0000 Xxxxxx Xxxx, Xxx Xxxxx, XX 00000-0000.
WITNESSETH
WHEREAS, GLI possesses extensive expertise and resources in assisting
the provision, marketing and sale of sterilization services, including but not
limited to the areas of operations, information systems, finance, treasury,
legal, human resources, insurance and risk management, general and strategic
management and administration and other services as hereinafter described
(hereinafter referred to as the "Services"); and
WHEREAS, GMS, on behalf of itself and its subsidiaries and affiliates
(collectively, the "GMS Group"), desires to obtain from GLI its expertise with
respect to the Services in order to enhance its efficiency, productivity and
profitability; and
WHEREAS, GLI is willing to make the Services available to the GMS Group
on the terms and conditions stated herein.
NOW, THEREFORE, in consideration of the foregoing recitals, and of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
1. Services
GMS shall consult with GLI in advance of engaging the performance of
any Services described hereunder which relate to finance and
accounting, legal, treasury and risk management so that the parties may
determine the most effective means of providing such Services, whether
by GLI or otherwise.
Subject to the terms and conditions of this Agreement, during the term
of this Agreement and upon the request of the GMS Group, GLI hereby
agrees to provide the following Services to the GMS Group:
a. Office of the Executive Vice President
GLI agrees that it has or will on behalf of the GMS Group:
i) Review and approve business deals, contracts and
transactions of the GMS Group which would normally
require such level of
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review and approval or if the GMS Group requests such
review; and
ii) Provide where necessary any other assistance normally
required of senior executive talent.
b. Systems and Procedures
GLI shall provide systems and procedures for the GMS Group
with respect to accounting, data processing, payroll, employee
benefits and human resources. GLI further agrees to provide
assistance in establishing, maintaining and explaining such
systems and procedures, if so requested by the GMS Group.
c. Information Systems
GLI shall provide the information and communication system
services to support the operating system software, hardware,
database management programs, application software and local
area network services required for the finance accounting
systems, human resource systems and any other applications
mutually agreed to by the parties.
d. Finance and Accounting
GLI shall provide services to the GMS Group with respect to
accounting, financial reporting, forecasting and analysis for
internal and external business needs. Such services shall
include, but not be limited to, processing accounting
transactions; preparing and distributing various accounting
reports to GMS; providing research and consulting assistance
regarding GMS's external and internal reporting matters;
making available to GMS personnel Hyperion
reporting/accounting systems; providing tax accounting
services, as described in the Tax Matters Agreement entered
into by GMS and Xxxxxxxx Laboratories, Inc. as of ___________
_____ and assisting with the GMS quarterly reviews and
year-end audits performed by GMS's independent outside
accountants. GLI shall also provide assistance in establishing
credit management guidelines, accounts receivable management,
assisting in the formation of strategic plans and annual
budgets, review and approval of capital projects and lease
agreements, establishing finance related policies and
procedures, and other financial evaluations and services as
requested by the GMS Group in the conduct of its business.
e. Treasury
GLI shall provide coordination and assistance with respect to
cash
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management, currency exposure and risk analysis, banking
relationships and advisory services, both local and
centralized, and arrange for appropriate financing, including
without limitation the establishment of current and/or
long-term financing and, at the request of the GMS Group, will
assist the GMS Group in negotiations for other financial
services. If requested by GMS, GLI may also, at its sole
option and discretion, provide guaranties of certain of the
GMS Group's obligations to third parties, for which GLI may
charge a separate fee, as provided for in Section 2 hereof.
f. Legal
GLI shall arrange for legal advice on matters of special
concern to the GMS Group and/or of common concern to the GMS
Group and GLI including, but not limited to assistance in
litigation, acquisitions, joint venture formations, start-up
operations, stock offerings, financing, preparation and review
of contracts, real estate matters (including, but not limited
to negotiation of leases), patents, trademarks and other
intellectual property matters and other matters requiring
legal advice. GLI will also assist with the retention and
management of outside counsel for the GMS Group, and will
assist in the assessment of the applicability and subsequent
compliance with the laws, rules and regulations of the various
authorities which have jurisdiction over the GMS Group.
g. Insurance and Risk Management
GLI shall provide advice and assistance to the GMS Group in
evaluating and controlling risks and in obtaining and
administering liability, property, casualty and employee-based
insurance coverages. GLI shall also provide assistance to the
GMS Group in obtaining, where necessary, directors' and
officers', surety, business interruption, theft and general
corporate insurance coverage and any other types of insurance
coverage required or otherwise deemed necessary. GLI will also
make its risk management staff available for managing
relations with insurers, insurance brokers and claims
processing.
h. Taxation
In order to ensure compliance with tax laws, GLI shall provide
advice and assistance with regard to United States federal,
state, and local tax issues which may be encountered by GMS
and its subsidiaries, including, without limitation tax
planning and research, tax return preparation, financial
statement tax provision and related accounts calculations and
coordination with outside advisors. GLI shall also provide
representation services to the GMS Group with respect to tax
matters and issues raised by
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such United States tax authorities.
i. Traffic, Shipping and Receiving
GLI will provide the GMS Group with transportation support
services, including but not limited to the negotiation of
carrier rates and services, and advising on special routings,
claims handling, freight xxxx payment and dedicated contract
carriage.
j. Human Resources and Employee Benefits
GLI will provide advice and assistance to the GMS Group with
respect to human resource services relating to establishing
and maintaining employee health and welfare benefit plans,
including, but not limited to selection of plans and reporting
requirements; establishing and monitoring employment related
hiring and dismissal policies and procedures; establishing
employee performance appraisal and compensation policies and
procedures and monitoring employee training, education and
counseling programs and special events planning. GLI will also
provide advice and assistance in staff recruitment and
training for GMS Group employees, as reasonably requested by
GMS. In addition, GLI shall provide management assistance to
the GMS Group in connection with employee evaluations and
performance reviews and recommend compensation along with the
review of employee benefits. GLI will also provide payroll and
employee benefit processing and all related payroll and
employee benefit record keeping to GMS and its domestic,
Canadian and Mexican subsidiaries.
k. Strategic Planning
GLI shall provide management services to the GMS Group
concerning strategic planning related to organizational
structure, strategies and goals, human resources, technical
exchange, customer and product categories, investments and
financial evaluations and other related services.
2. Basic and Guaranty Fees
As compensation for the Services rendered under this Agreement, GLI
will charge, and GMS hereby agrees to pay, at the times and in the
manner described below, a service fee (hereinafter referred to as the
"Basic Fee").
The amount of the Basic Fee payable by GMS to GLI shall be based upon a
pro-rata share of the estimated cost of providing the Services which
shall include direct and indirect overhead costs, including, without
limitation salaries, benefits and other administrative costs incurred
by GLI in connection with the provision of
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the Services. The pro-rata share shall be determined by the percentage
of time spent by individuals in each cost center of GLI on the services
provided to the GMS Group applied to the total expenses associated with
such individuals (including but not limited to direct and indirect
overhead costs), plus any charges for additional costs directly
associated with such services, including but not limited to, charges
incurred by GLI for travel and other direct costs. Except as otherwise
specifically set forth in this Agreement, all third party costs
associated with the performance of the Services, including but not
limited to professional fees and registration and other filing or
administrative fees, shall be at the expense of and paid directly by
GMS.
The Basic Fee shall be invoiced to GMS by GLI on a quarterly basis. The
Basic Fee shall be payable in U.S. dollars at GLI's normal place of
business in Alsip, Illinois or at such other location that may be
specified by GLI.
For guaranties provided under Section 1.e. of this Agreement, GMS
agrees to pay GLI quarterly fees of (a) 0.25% (annual rate) of the (i)
daily average amount of the outstanding debt under any loan agreements
or other debt instruments guaranteed by GLI and (ii) annual average
amount remaining to be paid by GMS under any leases or other payment
obligations guaranteed by GLI; and (b) with respect to any other
indemnification and performance obligations guaranteed by GLI, 0.25%
(annual rate) of the daily average of the lesser of (i) the maximum
amount payable by GMS under such indemnity or performance obligation
and (ii) the amount of proceeds received by GMS in the related
transaction. Any fee payable under this Section ceases to be payable
when GMS is no longer legally required to make any such indemnification
or performance payment.
In addition to the Basic Fee and the guaranty fees described above, GMS
shall be responsible for all taxes, including without limitation any
sales, use and value-added taxes (but excluding any tax based upon the
net income of GLI) if imposed by any government or governmental
authority as a result of the services rendered or the fees paid
hereunder.
3. Term
The Initial Period of this Agreement will commence on the date first
above written and end on the fifth anniversary thereof. After the
Initial Period, this Agreement will be extended automatically for
annual periods, unless either of the parties terminates the
Agreement on written notice to the other party provided not less than
six months prior to the renewal date. Notwithstanding the foregoing,
this Agreement may be terminated: (i) at any time upon the mutual
agreement of both parties; or (ii) in GLI's sole discretion in the
event GLI's direct or indirect ownership of GMS stock is or becomes
less than 20.1% of the outstanding stock of the company. In the case of
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a termination, GMS will be liable for all charges for Services provided
through the effective date of termination.
4. Standard of Care: Waiver of Claims Against GLI
a. In performing the Services under this Agreement, GLI shall at
all times act in good faith and in a manner which it believes
to be in or not opposed to the best interest of GMS.
b. Any input or information needed by GLI to perform the
Services pursuant to the provisions of this Agreement shall
be provided by GMS or its subsidiaries or affiliates, as the
case may be, in a manner consistent with the practices
employed by the parties during the year prior to the
execution of this Agreement. Should the failure to provide
such input or information render the performance of the
Services impossible or unreasonably difficult, GLI may, upon
reasonable notice to GMS, refuse to provide such Services.
c. GMS acknowledges that GLI shall be obligated to provide
the Services only with respect to the business (including,
without limitation, joint ventures and partnerships) of the
GMS Group as such business exists as of the execution of this
Agreement or as otherwise mutually agreed by the parties. GLI
shall have no obligation to provide Services to or for the
benefit of any entity other than the GMS Group. The GMS Group
agrees that it will use the Services only in accordance with
all applicable federal, provincial, state and local laws,
regulations and tariffs, and in accordance with reasonable
conditions, rules, regulations and specifications which are
or may be set forth in any manuals, materials, documents or
instructions of GLI. The parties hereto each reserve the
right to take all actions, including, without limitation, the
termination of any Services, in order to assure that the
Services are provided in accordance with any applicable laws,
regulations and tariffs.
d. Notwithstanding anything to the contrary contained in this
Agreement or provided by law, to the maximum extent permitted
by law, the GMS Group hereby unconditionally and irrevocably
waives all claims and causes of action against GLI (and its
parents, affiliates and their shareholders, officers,
directors and employees), of every kind and character,
including without limitation claims and causes of action for
loss of or injury to business or property, caused by or
deriving from any act or omission of GLI (or its
shareholders, officers, directors or employees) under this
Agreement, including, but not limited to acts and omissions
constituting negligence or gross negligence, except for such
acts or omissions of GLI made or omitted in bad faith.
e. GMS shall indemnify and hold GLI (and its parents, affiliates
and their shareholders, officers, directors and employees)
harmless from and against
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any losses, liabilities, claims, damages, obligations,
payments, costs and expenses which may be asserted against
GLI (and its parents, affiliates and their shareholders,
officers, directors and employees) by any third party by
reason or as a result of any acts or omissions of GLI in
connection with the Services provided under this Agreement,
except for claims arising out of the negligence of GLI in
connection with, or related to the Services provided under
this Agreement.
5. Confidentiality of Information
All Confidential Information (as hereinafter defined) disclosed by any
of the parties to any other party hereunder is confidential and
proprietary to such disclosing party. Confidential Information
furnished by any of the parties to any other in connection with this
Agreement (or previously disclosed prior to execution of this
Agreement) and the transactions contemplated hereby will be kept in
confidence by such other party, including its affiliates or
subsidiaries, in accordance with its policies for maintaining the
confidence of its own information of similar content. The term
"Confidential Information" shall mean and include: (i) all trade
secrets and other confidential business information learned in the
course of performance by any party of its obligations hereunder, and
(ii) any information, data, software or computer programs which are
disclosed by any party to the other party under or in contemplation of
this Agreement. Confidential Information may be either the property of
the disclosing party or information provided to the disclosing party by
a corporate affiliate of the disclosing party or by a third party.
Notwithstanding the foregoing, the term "Confidential Information"
shall not include information which: (i) is already known to such other
party when received (except for information previously disclosed which
the parties have identified as Confidential Information and subject to
the confidentiality requirements of this Agreement), (ii) thereafter
becomes generally obtainable by a party other than as a result of an
unauthorized disclosure by the party taking advantage of this clause,
(iii) is required by law, regulation or court order to be disclosed by
such party, provided that in the case of this clause, prior notice of
such disclosure has been given to the party which furnished such
information, when legally permissible, and that such other party which
is required to make the disclosure uses its best efforts to provide
sufficient notice to permit the party which furnished such information
to take legal action to prevent the disclosure, or (iv) is reasonably
necessary, in the opinion of counsel, to be disclosed in the context of
a legal proceeding or regulatory investigation provided that prior
notice shall be given to the party which furnished the information.
This Section 5 shall survive any termination of this Agreement for five
(5) years.
6. Conflict Resolution
Any dispute, controversy or claim relating to this Agreement (a
"Dispute") shall initially be referred to the officers of each of the
parties to the Dispute. In the event the officers cannot come to an
agreement on a particular Dispute, then the
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matter shall be submitted to the respective Chief Executive Officers
and General Counsel ("Designated Officers") of the parties to the
Dispute. The Designated Officers of each party then shall investigate
and evaluate the Dispute. The parties agree to cooperate in this
process by exchanging relevant information unless such information is
privileged. The Designated Officers or their respective designees shall
meet as appropriate to, in good faith, resolve the Dispute. If the
Designated Officers are unable to resolve the Dispute within sixty (60)
days of submission, the Dispute will be submitted to arbitration. The
arbitrators shall be appointed as follows: GLI and GMS shall each
appoint one arbitrator; the two arbitrators thus appointed shall choose
the third arbitrator, who shall act as the presiding arbitrator of the
tribunal. The parties agree that all arbitrations shall be governed by
the Rules of Commercial Arbitration of the American Arbitration
Association; that such arbitrations shall take place in Chicago,
Illinois, or such other location as may be mutually agreed upon by the
parties; and that the result of such arbitration shall be binding upon
the parties, and may be entered as a judgment in any court or tribunal
with jurisdiction over any party with the same force and effect as a
judgment rendered by such court or tribunal.
7. Notices
All communications to any party hereunder shall be in writing and shall
be delivered in person or sent by facsimile, telegram, telex, by
registered or certified mail (postage prepaid, return receipt
requested) or by reputable overnight courier to the respective parties
at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 7)
(and shall be deemed to have been given as of the date so delivered or
sent):
if to GLI, to:
Xxxxxxxx Laboratories International, Inc.
0 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attn.: Chief Financial Officer
if to the GMS Group, to:
Xxxxxxxx Micro Science International, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000-0000
Attn.: Chief Financial Officer
8. Independent Contractors
The parties shall operate as, and have the status of, independent
contractors with respect to the Services described hereunder and shall
not act as or be an agent, partner, co-venturer or employee of the
other party. Neither party shall have any
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right or authority to assume or create any obligations or to make any
representations or warranties on behalf of any other party, whether
express or implied, or to bind the other party in any respect
whatsoever.
9. Additional Actions and Documents
Each of the parties hereto agrees to take or cause to be taken such
further actions, to execute, acknowledge, deliver and file or cause to
be executed, acknowledged, delivered and filed such further documents
and instruments, and to use all reasonable efforts to obtain such
consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this
Agreement.
10. No Third Party Benefits
Nothing contained in this Agreement, express or implied, shall grant to
or confer upon any person or entity other than the parties hereto any
rights or remedies whatsoever.
11. Successors and Assigns
The rights and obligations of the parties hereto under this Agreement
shall be binding upon and shall inure to the benefit of the parties
hereto, their successors and assigns. GLI hereby expressly reserves the
right to assign or delegate to any third party its rights or
obligations hereunder, which assignment or delegation may be affected
without notice to GMS; provided, however, that if GLI assigns to a
third party its rights to receive payments of the Basic Fee, then GLI
shall notify GMS of such assignment sufficiently prior thereto to allow
GMS to make payments of the Basic Fee in a timely manner.
12. Entire Agreement
This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter hereof.
13. Governing Law
The validity, construction, interpretation and enforcement of this
Agreement, or any breach thereof, shall be governed by the laws of the
State of Illinois.
14. Amendment
This Agreement may be modified or amended only upon the mutual written
agreement of the parties hereto.
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