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EXHIBIT 10.42
SERVICES AGREEMENT
BETWEEN
SAFESKIN CORPORATION
AND
XXXXX SYSTEMS CORPORATION
DATED
FEBRUARY 3, 1998
Xxxxx Systems Corporation Proprietary and Confidential
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SERVICES AGREEMENT
This Services Agreement, dated as of February 3, 1998 (the
"Agreement Date"), is between Safeskin Corporation, a Florida corporation
("Safeskin"), and Xxxxx Systems Corporation, a Delaware corporation ("PSC").
Article I. Definitions, Agreement and Term
1.1 Definitions. As used in this Agreement:
(a) "Existing Services" mean those information technology
services and functions described in Section 3.1 performed
by the Transitioned Employees, the Non-Transitioned
Employees, and the Safeskin IT Subcontractors immediately
prior to the Effective Date.
(b) "Pass Through Expenses" mean those expenses (which are not
PSC Direct Costs) to be paid in accordance with Section 5.5
(except as otherwise agreed by the parties as part of the
Service Transition Plan or otherwise) that are described in
Schedule 1.1(b) hereto and payments for services by
subcontractors hired by PSC in accordance with Section 2.5
other than any subcontractors for which Safeskin pays PSC a
Subcontractor Management Fee as defined in Section 5.1(g).
(c) "Project Services" mean information technology services or
resources that are different from, or in addition to, the
Services that PSC provides to Safeskin under Section 3.4.
(d) "PSC Direct Cost" means all costs, other than the
Pass-Through Expenses specified on Schedule 1.1(b) hereto,
incurred by PSC in the performance and provision of the
Services and certain of the Project Services pursuant to
this Agreement, as reflected in the profit and loss
statement for the PSC account supporting Safeskin, prepared
by PSC in the ordinary course of its business, and on a
basis consistent with the profit and loss statements
prepared by PSC for its other commercial accounts. PSC
Direct Costs shall not include any PSC corporate overhead.
(e) "Retained Expenses" mean those expenses to be invoiced to,
and paid by, Safeskin directly including those expenses
described in Schedule 1.1(e) and the expenses associated
with the Safeskin IT Subcontractors other than any of the
Safeskin IT Subcontractors for which Safeskin pays PSC a
Subcontractor Management Fee defined in Section 5.1(g),
unless the parties otherwise agree.
(f) "Safeskin IT Subcontractors" means the Safeskin
subcontractors listed in Schedule 1.1(f).
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(g) "Services" mean (i) prior to the Service Transition Date,
the Existing Services, and (ii) after the Service
Transition Date, those information technology services,
functions and responsibilities mutually agreed upon by the
parties and set forth in the Service Transition Plan.
(h) "Service Levels" mean the operational standards
specifically identified as service levels and set forth in
the Service Transition Plan, as adjusted from time to time
by the mutual agreement of the parties.
(i) "Service Transition Date" means the date on which the
parties mutually agree upon the Service Transition Plan as
described in Section 3.2(a) hereof, which date the parties
anticipate will be on or around the date that is 120 days
after the Effective Date.
(j) "Service Transition Plan" means the written plan described
in Section 3.2(a).
1.2 Other Definitions. Other terms used in this Agreement are defined in
the context in which they are used and shall have the respective
meanings there indicated.
1.3 Agreement. Safeskin will purchase all of its requirements for
information technology services from PSC during the Term in
accordance with the terms of this Agreement, except as otherwise
specifically provided in this Agreement and except as the parties
otherwise agree. Safeskin and PSC may agree to engage other resources
when PSC does not have, or can not hire as an employee in a timely
manner, the necessary expertise or resources to achieve the outcomes
needed to advance Safeskin's business.
1.4 Term. The term of this Agreement will begin on February 3, 1998 (the
"Effective Date") and will end on the fifth anniversary of the
Effective Date (the "Initial Term") unless earlier terminated in
accordance with the terms of this Agreement. The Agreement will
automatically extend at the end of the Initial Term for consecutive
two year renewal terms ("Renewal Terms") unless either party provides
to the other party at least six months prior written notice that the
Agreement will not be extended. The Initial Term and the Renewal
Terms are collectively referred to herein as the "Term."
Article II. Management and Personnel
2.1 PSC Account Manager. PSC shall designate an individual to serve as
its account manager ("PSC Account Manager"). The PSC Account Manager
as of the Effective Date is Xxx Xxx. The PSC Account Manager (i) will
serve as the principal point of contact for coordinating and managing
the performance of PSC's obligations under this Agreement, and (ii)
will be authorized to act for and on behalf of PSC with respect to
all matters relating to this Agreement. PSC shall identify the
candidate or candidates that PSC proposes to designate as the initial
PSC Account Manager (or any candidate or
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candidates which may be proposed by PSC from time to time to fill any
vacancies which occur), and Safeskin shall have the right to reject
any candidate which Safeskin believes in good faith is not suitable
for the position. If, during the Term, Safeskin is reasonably
dissatisfied with the PSC Account manager, Safeskin shall so notify
PSC in writing. If, after 30 days of such notice, Safeskin remains
reasonably dissatisfied with the PSC Account Manager, then at
Safeskin's request, PSC shall reasonably promptly replace the PSC
Account Manager with an individual acceptable to Safeskin. In such
event, PSC agrees that it will provide an interim PSC Account Manager
in a timely manner and will work to provide a replacement for the PSC
Account Manager within 45 days after the existing PSC Account Manager
is removed. For the first 36 months during the Term, PSC shall not
reassign the PSC Account Manager to another account of PSC without
the prior written consent of Safeskin. PSC agrees that the PSC
Account Manager will execute an agreement regarding securities
trading in the form Safeskin requires its own employees to sign with
such changes as the parties agree.
2.2 Safeskin Representative. Safeskin shall designate an individual to
serve as its representative ("Safeskin Representative"). The Safeskin
Representative (i) will serve as the principal point of contact for
coordinating and managing the performance of Safeskin's obligations
under this Agreement, and (ii) will be authorized to act for and on
behalf of Safeskin with respect to all matters relating to this
Agreement.
2.3 Employees.
(a) Transitioned Employees. As of the Effective Date and
thereafter during the Term, PSC may offer employment to
the Safeskin employees listed in Schedule 2.3(a) (those
employees listed in Schedule 2.3(a) who accept PSC's offer
of employment are referred to collectively as the
"Transitioned Employees") in accordance with PSC's
standard employment policies. The parties intend that,
with respect to those Transitioned Employees who accept
PSC's offer of employment as of the Effective Date, the
aggregate value of the compensation and employee benefits
package that the Transitioned Employees will receive from
PSC as of the Effective Date will be comparable in value
to the compensation and employee benefits package
(excluding Safeskin stock options) that they received from
Safeskin immediately prior to the Effective Date. Safeskin
will cooperate with PSC in connection with PSC making such
offers, and Safeskin will be responsible for any severance
obligations that Safeskin may have to its employees
including the Transitioned Employees. Safeskin will not
make any representations to the Transitioned Employees as
it relates to the terms of employment by PSC.
(b) Credit for Service. Transitioned Employees who accept PSC's
offer of employment as of the Effective Date shall receive
credit for their years of service with Safeskin for
purposes of the participation and vesting requirements of
any PSC employee benefits plans, including but not limited
to, any applicable, 401(k) retirement plan, stock purchase,
disability, medical, life insurance, dependent care or
other similar benefit plans, if any, offered by PSC to its
employees unless
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prohibited by law or unless such credit would require an
amendment to such plans.
(c) Pre-Existing Condition. PSC shall waive any pre-existing
condition exclusion in the PSC medical plan for all
Transitioned Employees who accept employment with PSC as of
the Effective Date.
(d) Non-Transitioned Employees. Safeskin will continue to
employ the Safeskin employees listed in Schedule 2.3(a)
who do not accept PSC's offer of employment (the
"Non-Transitioned Employees") to continue to perform the
functions performed by such Non-Transitioned Employees
immediately prior to the Effective Date. Safeskin agrees
that if any of the Non-Transitioned Employees leave the
employment of Safeskin that Safeskin will not replace such
Non-Transitioned Employee. Safeskin agrees that PSC will
manage the Non-Transitioned Employees and such management
will include PSC controlling the salary (including bonuses
other than Safeskin stock options) and performance reviews
of the Non-Transitioned Employees. If PSC is reasonably
dissatisfied with the performance of any of the
Non-Transitioned Employees, PSC will notify Safeskin in
writing. In such event, PSC will provide such
Non-Transitioned Employee with a written performance
improvement plan. PSC will monitor the performance of such
Non-Transitioned Employee against such plan. If PSC is not
reasonably satisfied with the performance of such
Non-Transitioned Employee within 30 days after the
delivery of such plan to such Non-Transitioned Employee or
if PSC is not reasonably satisfied at anytime during such
30 day period with the progress of such Non-Transitioned
Employee then, at PSC's request which will include the
reason and supporting documentation, Safeskin will
transfer such Non-Transitioned Employee from performing
the functions contemplated by this Section 2.3(d) to
another role within Safeskin. The parties agree that
Safeskin, in its sole discretion, will determine whether
such Transitioned Employee's employment should be
terminated.
(e) Confidentiality Agreement. PSC agrees that its employees
who are assigned to the Safeskin account will execute a
confidentiality agreement with Safeskin, the form of which
is attached as Schedule 2.3(e).
2.4 Management Committees. The PSC Account Manager will participate on
Safeskin's officer level operating committees and will participate in
all technology related decisions to the same extent that Safeskin's
chief information officer would participate in such decisions.
2.5 Subcontractors.
(a) Management. PSC may use subcontractors to perform its
obligations under this Agreement. PSC shall manage such
subcontractors and the Safeskin IT Subcontractors. In the
event that Safeskin becomes dissatisfied with the
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performance or non-performance of any PSC subcontractor
utilized by PSC in connection with the performance of the
Services, Safeskin will notify PSC in writing of the
reasons for its concerns. Within 10 days after PSC's
receipt of such notice, the parties will meet to address
and attempt to resolve Safeskin's concerns.
(b) Responsibility. PSC and Safeskin may agree in writing
that, with respect to certain subcontractors (including
the Safeskin IT Subcontractors) that Safeskin will pay to
PSC the Subcontractor Management Fee. In such event, PSC
would be responsible for the performance of such
subcontractor with respect to which Safeskin pays PSC the
Subcontractor Management Fee as if it were an employee of
PSC unless the parties otherwise agree in writing. The
parties agree that PSC will have no liability for the
actions of the subcontractors including the performance or
non-performance of the subcontractors if Safeskin does not
pay PSC the Subcontractor Management Fee for such
subcontractors and the charges for such subcontractors are
paid by Safeskin as a Retained Expense or a Pass Through
Expense.
2.6 PSC Personnel. PSC agrees that it will provide to Safeskin reasonable
opportunity to interview PSC employees who PSC anticipates will be
permanently assigned to provide services to Safeskin for at least 3
months and provide input to PSC regarding such PSC employees prior to
placing them on the Safeskin account.
2.7 Restrictions on Hiring. Except as otherwise specifically provided in
this Agreement, PSC and Safeskin each agree not to hire the other's
employees with whom PSC or Safeskin came into contact in connection
with the activities contemplated by the Agreement during the Term
without the prior written consent of the other party. Notwithstanding
the foregoing, after either party has notified the other party that
the Agreement will not be extended or that the Agreement will be
terminated, Safeskin may notify PSC that it wants to interview and
offer employment to certain of the PSC employees. Within 30 days
after receipt of such notice, PSC will identify up to 15% of the
employees (the "Protected Employees") (other than the Transitioned
Employees) to whom Safeskin will be prohibited from offering
employment. During the Offer Period (hereinafter defined), Safeskin
may offer employment to the PSC employees then providing services to
Safeskin at its facilities on a full time basis other than then
Protected Employees. The "Offer Period" is defined to mean (i) if the
Agreement is terminated under Section 7.6, the 90 day period
immediately prior to the termination of this Agreement, (ii) if this
Agreement expires, the 90 day period immediately prior to the
expiration of this Agreement, (iii) if this Agreement is terminated
under Sections 3.3(b), 5.6, 7.3, 7.4, or 7.5, the 60 day period
beginning upon receipt of the designation of the Protected Employees
by Safeskin.
Article III. Services
3.1 Services Prior to the Service Transition Date. Prior to the Service
Transition Date, PSC shall perform the Existing Services with the
same level of staff and at least at the same level
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as to type, function, availability, scope, quality and performance as
those Existing Services were performed by the Transitioned Employees
and the Non-Transitioned Employees immediately prior to the Effective
Date. In its performance of the Existing Services, and to the extent
performed by the Transitioned Employees and the Non-Transitioned
Employees immediately prior to the Effective Date, PSC will:
(a) Computer Operations. Perform computer operations functions,
twenty-four hours per day, seven days per week, including
batch job scheduling, abend resolution, tape/cartridge
library management, and printing, on substantially the same
time schedule as immediately prior to the Effective Date.
(b) Technical Support. Perform technical support functions for
the operating Safeskin Software including systems
administration, security administration, operating systems
maintenance and updating, data base management and problem
resolution.
(c) Reports. Furnish such information and reports as Safeskin
had been receiving immediately prior to the Effective Date
on approximately the same time schedule and in the same
format, unless PSC and Safeskin otherwise agree.
(d) Voice and Data Communications. Perform voice and data
communications support functions for the Safeskin Software.
(e) Help Desk. Provide a help desk to provide support to
Safeskin. The help desk provides a single point of contact
for Safeskin Software users to report problems or request
routine services. The help desk shall resolve user problems
immediately, if possible, or shall assign a problem to
other technicians for resolution. A priority will be
assigned to all problems which cannot be solved
immediately.
(f) LAN. Perform PC and local area network ("LAN") support
functions.
(g) Performance Monitoring. Monitor and report the performance
and use of distributed Safeskin Software to the extent that
performance monitoring tools are available for such
Safeskin Software as of the Effective Date.
(h) Weekly Review. Perform a weekly review of Safeskin Software
operations performance and any outstanding issues related
to operations with Safeskin.
(i) Manage Third Party Vendors. Manage the use of third party
vendors with respect to the Safeskin Technology, to the
extent provided by the Transitioned Employees and the
Non-Transitioned Employees immediately prior to the
Effective Date, that are related to the delivery of
Existing Services.
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(j) Other Services. Perform those services and functions
described in Schedule 3.2(b) hereto, to the same extent
those services and functions were performed by the
Transitioned Employees and the Non-Transitioned Employees
prior to the Effective Date.
(k) Performance Tools. Should Safeskin not have performance
tools available for PSC's use in performing the Existing
Services, then PSC shall recommend such to Safeskin. PSC
shall work with Safeskin to understand current and future
computer usage requirements and shall make recommendations
for appropriate hardware, operating systems software and
data communications.
(l) Existing Services Work Plan. PSC will perform the
activities described in the Existing Services work plan set
forth in Schedule 3.1 in connection with its performance of
the Existing Services.
3.2 Services After the Service Transition Date.
(a) Service Transition Plan. After the Effective Date, and
until the Service Transition Date, PSC and Safeskin will
work together in good faith to jointly develop and
mutually agree upon a Service Transition Plan that will
include, if applicable, (i) a detailed description of the
Services to be performed by PSC hereunder after the
Service Transition Date, which Services shall include the
Existing Services, unless otherwise mutually agreed, (ii)
the level of resources that PSC will provide in connection
with the provision of the Services after the Service
Transition Date, (iii) the Service Levels applicable to
the Services after the Service Transition Date, and (iv)
any modifications to PSC's charging mechanism applicable
to the period prior to the Service Transition Date.
Schedule 3.2(a) sets forth the process that PSC
anticipates that it will follow for developing a draft of
the Service Transition Plan. PSC will deliver to Safeskin
a draft of the Service Transition Plan within 90 days
after the Effective Date.
(b) Initial Draft of Service Transition Plan. Schedule 3.2(b)
sets forth an initial draft of the description of the
Services that the parties anticipate that PSC will perform
hereunder after the Service Transition Date.
(c) Service Levels. PSC agrees that after the Service
Transition Date, its performance of the Services will meet
or exceed the service levels in accordance with the Service
Transition Plan. PSC agrees that the PSC employees
performing the Services will perform them in a work man
like manner.
(d) Status Reports. PSC shall prepare, at regular intervals and
provide to Safeskin, status reports on PSC's performance
compared to the mutually agreed upon Service Levels. The
Service Levels may be amended on an annual basis or from
time to time by the mutual agreement of the parties.
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3.3 Initial Targets and Floors.
(a) Initial Items. Schedule 3.3 identifies three items against
which PSC will initially measure its performance of the
Existing Services as described in this Section 3.3. With
respect to each of those items, Schedule 3.3 specifies a
target range ("Target") and a floor ("Floor"). Within 30
days after the Effective Date, PSC will notify Safeskin of
the time period it will take for PSC to perform the
Existing Services to meet each of those Targets and Floors
(not to exceed 9 months after the Effective Date) and the
expenditures that Safeskin must make so that PSC may meet
the Targets and Floors.
(b) Targets and Floors. If Safeskin makes the expenditures
specified by PSC within the time period specified by PSC
then PSC's performance of the Existing Services will meet
the Targets and the Floors in the time period specified.
If Safeskin makes those expenditures within the time
period specified by PSC and PSC's performance of the
Existing Services does not meet the Floor in accordance
with Schedule 3.3, then Safeskin will have the right to
notify PSC of such failure. PSC will have the right to
cure any such failure. If PSC does not cure any such
failure within 60 days after receipt of such notification,
then Safeskin will have the right to terminate the
Agreement by providing PSC with prior written notice of
termination, provided, however, that termination as
described in this Section 3.3 will be Safeskin's sole
remedy for PSC's failure to meet the Targets and Floors.
If Safeskin does not authorize and make the expenditures
specified by PSC in the time periods specified then PSC
will not be obligated to meet the Targets or the Floors.
(c) Measurement. The method and time periods for measurement of
whether PSC meets the Targets and Floors are set forth in
Schedule 3.3. PSC will not be liable for failures to meet
the Targets or Floors if such failure is caused, in whole
or in material part, by Safeskin or any act of God, civil
disturbance, court order, labor dispute, third party
nonperformance (other than a subcontractor for which PSC
receives a Subcontractor Management Fee) or other cause
beyond its reasonable control.
3.4 Project Services. PSC will provide such Project Services which are
beyond the scope of the Services as PSC and Safeskin from time to
time agree and document in writing (a "Project Plan"). PSC's
obligation to provide any services in connection with causing any
software to perform in accordance with its specifications to
accommodate dates on or after January 1, 1999 will be defined in
Project Plans on such terms as the parties agree.
(a) Project Plan. Upon receipt of a request from Safeskin to
perform Project Services, PSC shall provide Safeskin with:
(i) a written description of the Project Services;
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(ii) a description of the responsibilities that
Safeskin will have in connection with the Project
Services;
(iii) a schedule for commencing and completing such
Project Services;
(iv) PSC's charges for such Project Services,
including a breakdown of any estimated charges
and the charging methodology;
(v) when appropriate, a description of any new
software or equipment to be provided by PSC in
connection with such Project Services;
(vi) a written description of the human resources
necessary to develop and operate the product or
provide the Project Services;
(vii) when appropriate, a list of any existing software
or equipment included in or to be used in
connection with such Project Services; and
(viii) when appropriate, acceptance test criteria and
procedures for any new software or any products,
packages or services.
(b) Authorization. PSC shall not begin performing any Project
Services until Safeskin has provided PSC with written
authorization to perform the Project Service from the
Safeskin Representative.
(c) Work Plan. Within 90 days after the Effective Date, PSC
will develop, with the assistance of Safeskin, a high level
plan (the "Work Plan") of the projects on which the parties
anticipate that PSC will work as part of the Project
Services during the initial 12 months after the Effective
Date. The parties agree that PSC's obligations to provide
the Project Services will be defined in the Project Plans
and not in the Work Plan. PSC, with the assistance of
Safeskin, will update the Work Plan annually. An initial
draft of the Work Plan is attached as Schedule 3.4.
(d) Initial Project Plans. Within 90 days after the Effective
Date, PSC will deliver to Safeskin a draft of a Project
Plan for the ERP, summit, data warehousing, and sales force
automation projects.
3.5 Change Control Procedures. All changes to existing application
Safeskin Software or approved application Developed Software
requirements or design documents that would materially alter the
functionality of the affected application Safeskin Software, and all
material changes to Project Services (collectively, "Changes"), shall
be controlled using a formal change control process to be defined by
PSC and Safeskin within 90 days after the Effective Date (the "Change
Control Process"). The parties will establish a Change Control Board
to implement the Change Control Process within 90 days after the
Effective Date. The Change Control Board will consist of two
representatives appointed by Safeskin and two, including the chairman
of the Change Control Board, appointed by PSC. No Changes will be
implemented without (i) approval of the Change Control
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Board, (ii) written approval by Safeskin and (iii) a written
agreement setting forth applicable specifications, schedules, and
resources to be utilized, responsibilities of both parties and
definition of successful completion. If the Change Control Board can
not reach agreement as to any of the Changes, then Safeskin will make
the final decision. However, if Safeskin makes the decision without
PSC agreement and such Change affects PSC's ability to perform its
obligations or causes PSC to incur additional costs in performing its
obligations, then PSC will be relieved of its obligation to meet the
applicable Service Levels and Safeskin would (i) reimburse PSC for
such additional costs that are Pass Through Expenses and (ii) pay PSC
for such additional costs that are PSC Direct Costs plus an amount
equal to 45% of those PSC Direct Costs. The Change Control Process
shall include definition and processes for routine changes which do
not need formal approvals as set forth above.
3.6 Information Technology Plan. As part of the Services, within 180 days
after the Effective Date, PSC will develop, with the assistance of
Safeskin, an information technology plan (the "IT Plan") that will be
the basis for determining Safeskin's investments in its information
technology architecture for the next three years. PSC, with the
assistance of Safeskin, will update the IT Plan annually.
Article IV. Safeskin Responsibilities
4.1 Cooperation. Safeskin shall reasonably cooperate with PSC by, among
other things, making available, as reasonably requested by PSC,
management decisions, information, approvals or disapprovals, and
acceptances or rejections in a reasonably timely manner so that PSC
may fulfill its obligations under this Agreement. In addition,
Safeskin shall perform the responsibilities specifically designated
as Safeskin responsibilities in the Service Transition Plan. Schedule
3.2(b) sets forth an initial draft of the description of the
obligations that the parties anticipate will be Safeskin's
responsibility under the Service Transition Plan. Prior to the
Service Transition Date, Safeskin agrees to perform the obligations
that are specifically designated as Safeskin responsibility in
Schedule 3.2(b) hereto, to the same extent those obligations were
performed by Safeskin prior to the Effective Date excluding those
services performed by the Transitioned Employees prior to the
Effective Date.
4.2 Access to Software.
(a) Safeskin Proprietary Software. Safeskin will provide PSC
with access to, and the necessary rights to operate,
modify, and enhance, its proprietary software listed in
Schedule 4.2(a) and such other proprietary software as is
necessary for PSC to perform its obligations under the
Agreement ("Safeskin Proprietary Software"). Safeskin will
pay any access or other fees associated with obtaining such
rights to the Safeskin Proprietary Software. Safeskin will
pay all license, maintenance and other fees associated with
the Safeskin Proprietary Software as a Retained Expense.
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(b) Safeskin Vendor Software. Safeskin will provide PSC with
access to, and the necessary rights to operate, modify and
enhance, its vendor software listed in Schedule 4.2(b) and
such other vendor software as is necessary for PSC to
perform its obligations under the Agreement ("Safeskin
Vendor Software") and will pay any access or other fees
associated with obtaining such rights to the Safeskin
Vendor Software. Safeskin will pay all license, maintenance
and other fees associated with the Safeskin Vendor Software
as a Retained Expense.
(c) Safeskin Software. Safeskin Proprietary Software and
Safeskin Vendor Software are collectively referred to
herein as "Safeskin Software."
4.3 Access to Safeskin Facilities. Safeskin shall provide PSC access to
its facilities and will provide at such facilities such office
furnishings, janitorial service, telephone service, secretarial
support, utilities (including air conditioning) and office-related
equipment, supplies, and duplicating services as PSC may reasonably
require in connection with the activities contemplated hereunder.
Safeskin will provide such access 24 hours a day, seven days a week.
PSC shall obey all generally applicable rules and procedures at any
Safeskin facility of which Safeskin has notified PSC.
4.4 Access to Technology. Safeskin will provide PSC with access to the
hardware, equipment, and technology related items and services listed
in Schedule 4.4 and such other hardware, equipment and technology
related items and services identified as part of the annual budgeting
process or as otherwise approved by Safeskin at its facilities as is
necessary for PSC to perform its obligations under the Agreement (the
"Safeskin Technology"). Safeskin will pay all costs and expenses,
including without limitation maintenance costs associated with the
Safeskin Technology as a Retained Expense.
4.5 Retained Expenses. Safeskin shall be financially responsible for all
Retained Expenses, and shall indemnify, defend and hold harmless PSC
from any and all claims related to the payment or non-payment of such
Retained Expenses.
Article V. Payments
5.1 Budget Process.
(a) Annual Budget. On an annual basis, PSC and Safeskin will
work together to develop a cash expenditure budget
reflecting the expenditures that will be required during
the following year for the performance of the Services and
the Project Services. The cash expenditure budget will
include Safeskin's Retained Expenses and Pass Through
Expenses. In connection with establishing the cash
expenditure budget for each year after the first year of
the Agreement, the parties will review such factors as
Safeskin's needs for services, changes in size of
Safeskin's business (including divestitures and
acquisitions), and Safeskin's ability
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to absorb new technology. As of the Effective Date, the
parties anticipate that cash expenditures will increase
each year by 25%.
(b) Annual Review of Services. As part of the annual budgeting
process, the parties will work together to make revisions
to the Services and Project Services described in Article
III to be provided by PSC during the next year, the
Service Levels at which the Services and Project Services
will be provided during the next year, and the charges for
such Services and Project Services. The parties agree that
as part of the process the parties will review technology
changes, volume of usage changes, economies of scale, the
escalation or reduction of costs, and the parties ability
to absorb changes. If the parties are unable to agree on
the changes to the Services or Project Services, the
Service Levels or the applicable charges then PSC will
continue to provide during the next year the Services or
Project Services, as the case may be, in place during the
prior year (without Service Levels) and Safeskin will
compensate PSC on a cost plus basis as described in
Sections 5.3 and 5.4.
(c) First Year Budget. The cash expenditure budget for
Services, the Project Services, Safeskin's Retained
Expenses and Pass Through Expenses for the first 12 months
after the Effective Date is set forth in Schedule 5.1(c).
(d) Estimated Charges For Existing Services Prior to the
Service Transition Date. Prior to the Service Transition
Date, and as part of the annual budgeting process, if
applicable, the parties will agree on an estimate of (i)
PSC Direct Costs to perform the Existing Services, plus an
amount equal to 45% of those estimated PSC Direct Costs,
(ii) the Subcontractor Management Fee (hereinafter defined)
related to the Existing Services, and (iii) the
Non-Transitioned Employees Fee (hereinafter defined)
related to the Existing Services (collectively, the
"Estimated Existing Services Charges") with respect to each
month prior to the Service Transition Date and, if part of
the annual budget process, with respect to each month of
the following year.
(e) Estimated Charges for Services After the Service Transition
Date. After the Service Transition Date, if the parties are
unable to agree upon the charging methodology for the
Services during the annual budgeting process, as part of
the annual budgeting process, the parties will agree on an
estimate of (i) PSC Direct Costs to perform the Services
plus an amount equal to 45% of those estimated PSC Direct
Costs, (ii) the Subcontractor Management Fee related to the
Services, and (iii) the Non-Transitioned Employees Fee
related to the Services (collectively, the "Estimated
Services Charges") with respect to each month of the
following year.
(f) Estimated Project Services Charges. As part of the annual
budgeting process, the parties will agree on an estimate of
(i) PSC Direct Costs to perform the requirements gathering,
analysis, and implementation phases of any Project
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Services, plus an amount equal to 45% of those estimated
PSC Direct Costs, (ii) the Subcontractor Management Fee
related to the requirements gathering, analysis, and
implementation phases of any Project Services, and (iii)
the Non-Transitioned Employees Fee related to the
requirements gathering, analysis, and implementation phases
of any Project Services (collectively, the "Estimated
Project Services Charges") with respect to each month of
the following year.
(g) Subcontractor Management Fee. PSC and Safeskin may agree in
writing that Safeskin may pay PSC a management fee with
respect to certain subcontractors under Section 2.5(b). In
such event, the management fee will be an amount equal to
the charges paid to such subcontractor plus an amount equal
to such percentage as the parties agree (not to exceed 45%)
of such charges (the "Subcontractor Management Fee").
Without limiting the requirement that the parties reach
agreement as described in this Section including agreement
as to the Subcontractor Management Fee at the time, the
parties anticipate that the Subcontractor Management Fee
will be calculated using between 20% and 45% based on the
circumstances at the time.
(h) Non-Transitioned Employees Fee. The Non-Transitioned
Employees Fee will be an amount equal to 45% of the amounts
paid by Safeskin to the Non-Transitioned Employees for
salary, fringe benefits and bonuses (excluding Safeskin
stock).
(i) Reductions to the Cash Expenditure Budget. If Safeskin
reduces the cash expenditure budget, such reduction
reduces the amounts paid by Safeskin to PSC during such
year (other than payments for Pass Through Expenses) and
causes PSC to incurs costs that it would not have
otherwise incurred, and the charges for the Services or
Project Services are calculated on a cost plus basis under
Sections 5.3, 5.4, and 5.5, then the costs that PSC incurs
in connection with such reduction will be included in the
PSC Direct Costs and Pass-Through Expenses. If Safeskin
reduces the cash expenditure budget, such reduction
reduces the amounts paid by Safeskin to PSC during such
year (other than payments for Pass Through Expenses) and
causes PSC to incur costs that it would not have otherwise
incurred, and the charges for the Services or Project
Services are calculated under the Service Transition Plan,
then Safeskin will reimburse PSC for such costs that would
have constituted Pass-Through Expenses as Pass-Through
Expenses and pay PSC for such costs that would have
constituted PSC Direct Costs an amount equal to such costs
plus 45% of those costs. PSC and Safeskin agree to work
together to try and minimize such costs.
5.2 Budget Management. During each year, Safeskin and PSC will work
together to manage the cash expenditure budget by adjusting the cash
expenditure budget or adjusting the Services and the Project Services
to be provided as overages or other unplanned activities occur or as
savings are realized. The parties intend that the budgeting process
will be a joint activity.
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5.3 Charges for Services.
(a) Charges for the Existing Services Prior to the Service
Transition Date. For each month during the Term prior to
the Service Transition Date, Safeskin will pay PSC for the
Services provided that month an amount equal to the
Estimated Existing Services Charges described in Section
5.1(d). PSC will deliver an invoice to Safeskin for the
Estimated Existing Services Charges on or about the first
day of the month to which the Estimated Existing Services
Charges relate. Such invoice will be due and payable by the
last day of the month in which such invoice is received.
(b) Charges for Services After the Service Transition Date.
For each month during the Term after the Service
Transition Date, Safeskin will pay PSC for the Services
provided that month in accordance with the terms of the
Service Transition Plan as amended from time to time as
part of the annual budgeting process or otherwise as the
parties agree. Notwithstanding the foregoing, if the
parties were unable to agree upon the charging methodology
for the Services during the annual budgeting process, then
Safeskin will pay PSC for the Services provided each month
an amount equal to the Estimated Services Charge described
in Section 5.1(e). PSC will deliver an invoice to Safeskin
for the Estimated Services Charges on or about the first
day of the month to which the Estimated Services Charges
relate. Such invoice will be due and payable by the last
day of the month in which such invoice is received.
(c) True-Up Mechanism Prior to Service Transition Date. Within
15 days after the end of each quarter after the Effective
Date but prior to the Service Transition Date, PSC will
compare the actual (i) PSC Direct Costs incurred by PSC in
performing the Existing Services plus an amount equal to
45% of those PSC Direct Costs, (ii) Subcontractor
Management Fee related to the Existing Services, and (iii)
Non-Transitioned Employees Fee related to the Existing
Services (collectively, the "Actual Existing Services
Charges") during such quarter with the Estimated Existing
Services Charges during such period. If the Actual
Existing Services Charges exceed the Estimated Existing
Services Charges then PSC will include a charge for such
difference on the next monthly invoice. Safeskin will pay
PSC the difference with the payment for the next monthly
invoice. If such comparison results in a determination
that the Estimated Existing Services Charges exceed the
Actual Existing Services Charges for any quarter prior to
the Service Transitions Date, then PSC will issue a credit
to Safeskin for the difference on the next monthly
invoice.
(d) True-Up Mechanism After the Service Transition Date. If
the parties are unable to agree upon the charging
methodology for the Services during the annual budgeting
process, within 15 days after the end of each quarter
after the Effective Date, PSC will compare the actual (i)
PSC Direct Costs incurred by PSC in performing the
Services plus an amount equal to 45% of those PSC Direct
Costs,
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(ii) Subcontractor Management Fee related to the Services,
and (iii) Non-Transitioned Employees Fee related to the
Services (collectively, the "Actual Services Charges")
during such quarter with the Estimated Services Charges
during such period. If the Actual Services Charges exceed
the Estimated Services Charges then PSC will include a
charge for such difference on the next monthly invoice.
Safeskin will pay PSC the difference with the payment for
the next monthly invoice. If such comparison results in a
determination that the Estimated Services Charges exceed
the Actual Services Charges for any quarter, then PSC will
issue a credit to Safeskin for the difference on the next
monthly invoice.
(e) Credit. PSC agrees to issue a credit in 1998 to Safeskin
in the amount of $400,000 for Services rendered in 1998
under this Agreement.
5.4 Charges for Project Services.
(a) Estimated Project Services Charges. For each month during
the Term, Safeskin will pay PSC for the requirements
gathering, analysis, and implementation phases of any
Project Services provided that month an amount equal to the
Estimated Project Services Charges described in Section
5.1(f). PSC will deliver an invoice to Safeskin for the
Estimated Project Services Charges on or about the first
day of the month to which the Estimated Project Services
Charges relate. Such invoice will be due and payable by the
last day of the month in which such invoice is received.
(b) True-Up Mechanism For Project Services. Within 15 days
after the end of each quarter after the Effective Date,
PSC will compare the actual (i) PSC Direct Costs incurred
by PSC in performing the requirements gathering, analysis,
and implementation phases of any Project Services plus an
amount equal to 45% of those PSC Direct Costs, (ii)
Contractor Management Fee related to the requirements
gathering, analysis, and implementation phases of any
Project Services, and (iii) Non-Transitioned Employees Fee
related to the requirements gathering, analysis, and
implementation phases of any Project Services
(collectively, the "Actual Project Services Charges")
during such quarter with the Estimated Project Services
Charges during such period. If the Actual Project Services
Charges exceed the Estimated Project Services Charges then
PSC will include a charge for such difference on the next
monthly invoice. Safeskin will pay PSC the difference with
the payment for the next monthly invoice. If such
comparison results in a determination that the Estimated
Project Services Charges exceed the Actual Project
Services Charges for any quarter, then PSC will issue a
credit to Safeskin for the difference on the next monthly
invoice .
(c) Project Services Charges for Other Phases. For each month
during the Term, Safeskin will pay PSC, for phases of
Project Services other than the requirements gathering,
analysis, and implementation phases, PSC's charges as
mutually agreed in the applicable Project Plan(s). Such
pricing may include time and material,
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fixed price, or other risk reward pricing. PSC will deliver
an invoice to Safeskin for those charges, and such invoices
will be due and payable, as mutually agreed upon in the
applicable Project Plan(s).
5.5 Pass Through Expenses. Unless otherwise agreed to by the parties in
the Service Transition Plan or as part of the annual budgeting
process, Pass Through Expenses will be either: (i) paid directly to
the appropriate vendor by Safeskin, where (A) PSC requests Safeskin
to do so, or (B) payment directly to the appropriate vendor by
Safeskin does not adversely affect PSC and Safeskin elects to do so,
or (ii) paid to PSC by Safeskin sufficiently in advance to enable PSC
to comply with payment terms as invoiced by the respective vendors.
PSC agrees to comply with Safeskin's standard expense reimbursement
policies in connection with the Pass Through Expenses, provided that
Safeskin provides PSC with prior written notice of such policies. The
parties agree that, to the extent that Safeskin pays for
subcontractors as a Pass Through Expense, PSC will have no liability
for the performance or non-performance of such subcontractors.
5.6 Taxes. Safeskin will pay or reimburse PSC for, amounts equal to any
taxes, however designated or levied, based upon the charges for the
Services and the Project Services or this Agreement, including state
and local taxes, and any taxes or amounts in lieu thereof paid or
payable by PSC in respect of the foregoing, excluding franchise taxes
and taxes based on the net income of PSC. Each party will cooperate
with the other in minimizing any applicable tax and, in connection
therewith, Safeskin will provide PSC any resale certificates,
information regarding out-of-state use of materials, services or
sales, or other exemption certificates or information reasonably
requested by PSC. If any new tax or additional tax on the charges for
the Services and the Project Services or this Agreement is passed and
such new tax or additional tax would result in Safeskin having to pay
during the first 12 months after the date such new tax or additional
tax is effective an amount in excess of the 8% Tax (hereinafter
defined), then Safeskin will have the right to notify PSC of such new
tax or additional tax within 90 days after such new tax or additional
tax is effective. Upon receipt of such notice by PSC, the parties
agree that PSC and Safeskin will discuss renegotiating the charges
for the Services and Project Services under this Agreement. If the
parties are unable to reach agreement as to the terms of the
renegotiated Agreement within 60 days after receipt of such notice,
then, during the 30 day period after the end of such 60 day period,
Safeskin will have the right to terminate the Agreement by providing
PSC with prior written notice of termination, provided, however, that
such termination will not be effective more than 10 days prior to the
effective date of such new tax or additional tax. Safeskin agrees to
pay to PSC within 30 days after receipt of an invoice, an amount
equal to the Shut-Down Costs (but not the Termination Fee) defined in
Section 7.6 incurred by PSC in connection with such termination. The
term "8% Tax" is defined as an amount equal to 8% of all of the
charges for the Services and the Project Services during the 12 month
period prior to the date that the new tax or additional tax was
effective (or, if such tax is effective during the first 12 months
after the Effective Date, the amount that the parties anticipate that
Safeskin would pay PSC for the Services and the Project Services
during the first 12 months after the Effective Date).
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5.7 Time of Payment. All amounts due hereunder for which a due date is
not otherwise specifically provided will be due within 30 days after
receipt by Safeskin of an invoice therefor. Amounts not paid when due
will incur interest until paid at the lesser of (i) 1% per month, or
(ii) the maximum rate permitted by applicable law.
5.8 Verification of Information. Safeskin has disclosed and will continue
to disclose to PSC all relevant information regarding its information
technology expenditures, and Safeskin acknowledges that the charges
to be paid by Safeskin to PSC under this Agreement are based and will
be based on information provided to PSC by Safeskin. PSC has not and
will not independently verify that information. If that information
is incomplete or inaccurate then the parties will make appropriate
adjustments to the provisions of the Agreement, including the
charges.
5.9 Audit of Charges. Within 30 days after the Effective Date, PSC and
Safeskin will agree as to the documentation that PSC will provide to
Safeskin each month in support of the calculation of the Actual
Existing Services Charges, the Actual Services Charges and the Actual
Project Services Charges. Each month after the parties reach such
agreement, PSC will provide to Safeskin with each invoice such
documentation.
Article VI. Confidentiality, Proprietary Rights and Audit Rights
6.1 Confidentiality.
(a) Confidential Information. All Confidential Information
relating to Safeskin or PSC will be held in confidence by
the other party to the same extent and in at least the same
manner as such party protects its own confidential or
proprietary information. Neither PSC nor Safeskin may
disclose, publish, release, transfer or otherwise make
available Confidential Information of the other party to,
or for the use or benefit of, any third party without the
other party's prior written consent. The term "Confidential
Information" is defined to mean, with respect to Safeskin
and PSC, all confidential or proprietary information,
documentation, data, material or know-how concerning or in
any way relating to Safeskin or PSC, respectively, or to
PSC's or Safeskin's respective business, customers or
suppliers that is proprietary or is not, on the date such
information is disclosed, publicly available, including,
without limitation (i) with respect to Safeskin, the
information relating to Safeskin or its customers that is
contained in the data files of Safeskin and the Safeskin
Proprietary Software, (ii) with respect to PSC, all costing
and pricing information of PSC, the PSC Software and the
PSC Tools, and (iii) with respect to each party, the terms
of this Agreement.
(b) Certain Permitted Disclosures. Each of PSC and Safeskin
will, however, be permitted to disclose relevant aspects of
the other party's Confidential Information to its
respective officers, agents, subcontractors and employees
to the extent that
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such disclosure is reasonably necessary for the performance
of its duties and obligations under this Agreement;
provided, however, that such party will take reasonable
measures to prevent, and shall remain responsible for, the
disclosure of Confidential Information of the other party
in contravention of the provisions of this Agreement by
such officers, agents, subcontractors (except as otherwise
specifically provided in this Agreement) and employees.
(c) Disclosures Required by Law. PSC or Safeskin, as the case
may be, may disclose Confidential Information of the other
party if required pursuant to an order or requirement of a
court, administrative agency or other governmental body,
provided that (i) PSC or Safeskin, as the case may be, will
give the other party written notice of such order or
requirement as soon as practicable after it has knowledge
thereof and in any event prior to disclosure of the
Confidential Information, and (ii) PSC or Safeskin, as the
case may be, will disclose no more Confidential Information
than is required by such order or requirement.
(d) Exclusions. The provisions of this Section 6.1 will not
apply with respect to information which (i) is developed by
the other party without violating the disclosing party's
proprietary rights, (ii) is or becomes publicly known
(other than through unauthorized disclosure), (iii) is
disclosed by the owner of such information to a third party
free of any obligation of confidentiality, (iv) is already
known by such party without an obligation of
confidentiality other than pursuant to this Agreement, or
(v) is rightfully received by a party free of any
obligation of confidentiality.
(e) Obligations upon Termination or Expiration. Upon the
termination or expiration of this Agreement, except as
provided in Section 6.4 with respect to the Developed
Software, PSC or Safeskin, as the case may be, will return
to the other party or destroy any Confidential Information
of the other party then held by Safeskin or by PSC, as the
case may be.
(f) Unauthorized Possession or Use. PSC and Safeskin agree to
notify the other promptly of any material unauthorized
possession or use of the other party's Confidential
Information by any person or entity which may become known
to such party. PSC and Safeskin agree to promptly furnish
to the other full details of the unauthorized possession or
use, and use reasonable efforts to assist the other in
investigating or preventing the recurrence of any
unauthorized possession or use of Confidential Information.
PSC and Safeskin agree to use reasonable efforts to
cooperate with the other in any litigation and
investigation against third parties deemed necessary by the
other to protect its Confidential Information. PSC and
Safeskin agree to promptly use reasonable efforts to
prevent a recurrence of any such unauthorized possession or
use of Confidential Information.
(g) Injunctive Relief. Each party agrees that, in the event of
a breach or threatened breach by either party of the
provisions of this Section 6.1, for purposes of
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determining the right to injunctive relief under this
Section 6.1(g), the non-breaching party will have no
adequate remedy in money damages and, accordingly, may be
entitled to seek an injunction against such breach, in
addition to any other legal or equitable remedies available
to it.
6.2 Safeskin Proprietary Software. Safeskin Proprietary Software,
including any modifications to any Safeskin Proprietary Software,
will be and remain the property of Safeskin, and PSC will have no
rights or interests therein except as required to perform the
Services, the Project Services or as described in this Agreement.
6.3 PSC Software and PSC Tools. Any software that is proprietary to PSC
that PSC uses or to which PSC provides Safeskin access ("PSC
Software") and any tools or methodologies which are proprietary to
PSC and used in connection with the activities contemplated by this
Agreement ("PSC Tools"), including any modifications to any PSC
Software and the PSC Tools, will be and remain the property of PSC,
and Safeskin will have no rights or interests therein. Upon
termination or expiration of this Agreement, Safeskin may request
that PSC grant to Safeskin a license to any of the PSC Software and
the PSC Tools then being used on the Safeskin account for itself on
such terms as the parties agree. PSC agrees that it will not
unreasonably refuse to grant such license, unless such grant would
materially impair a competitive advantage to PSC or grant a material
competitive advantage to a competitor of PSC. For purposes of this
Section, a competitor of PSC is any company that competes (or whose
affiliates compete) directly with the (i) then current businesses or
(ii) planned businesses as documented in PSC's strategic plan.
6.4 Rights in Developed Software.
(a) Ownership. PSC and Safeskin agree that Safeskin will own
the copyright to software developed by the parties
hereunder and that is delivered to Safeskin by PSC but
excluding modifications to any PSC Software and any
Embedded Software ("Developed Software"). PSC may from time
to time request that Safeskin grant to PSC a license to the
Developed Software for itself and for its customers on such
terms as the parties agree. Safeskin agrees that it will
not unreasonably refuse to grant such license, unless such
grant would materially impair a competitive advantage to
Safeskin or grant a material competitive advantage to a
competitor of Safeskin. For purposes of this Section 6.4(a)
a competitor of Safeskin is any company that competes (or
whose affiliates compete) directly with the (i) then
current businesses or (ii) planned businesses as documented
in Safeskin's written strategic plan..
(b) Embedded Software. The term "Embedded Software" is defined
to mean pre-existing software that is owned by PSC or
licensed by Safeskin or PSC from a third party that is
embedded in the Developed Software. PSC will retain its
rights to any Embedded Software that is owned by PSC,
provided, however, that PSC grants to Safeskin a perpetual,
transferable, non-exclusive license to use, modify, and
enhance the Embedded Software that is owned by PSC as part
of the Developed
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Software. If any Embedded Software is owned by a third
party, then the terms of the applicable license will
define each party's rights to such Embedded Software.
6.5 Residual Knowledge. Safeskin acknowledges that PSC is in the business
of providing information technology services. Without limiting PSC's
obligations under Section 6.1, nothing in this Agreement will limit
PSC's right to provide services or resources to PSC's other customers
or other third parties that are similar to the activities performed
or resources provided by PSC hereunder, and PSC will be free to use
residual information retained by PSC in a nontangible form.
6.6 Access to PSC Third Party Software. PSC shall provide Safeskin with
access to the third party software listed in Schedule 6.6 and such
other third party software as the parties agree ("PSC Third Party
Software") in connection with the activities contemplated by this
Agreement. PSC will obtain any third-party consents necessary for
Safeskin to have access to and use the PSC Third Party Software.
Safeskin shall reasonably cooperate with PSC in obtaining such
consents. PSC shall pay any license, access or other fees for any PSC
Third-Party Software.
6.7 Audit of Safeskin's Business. PSC shall provide reasonable support in
connection with an audit of Safeskin's business at Safeskin's
expense. PSC shall not be obligated by this Agreement to disclose to
Safeskin or any other person or entity any information which is not
reasonably necessary to conduct an audit of Safeskin's business, nor
shall PSC be obligated to divulge any Confidential Information of PSC
or any third party except to the extent reasonably necessary to
satisfy the purpose of the audit. In no event shall PSC be obligated
to disclose any Confidential Information to any competitor, or
affiliate of a competitor, of PSC. Safeskin may utilize third parties
to conduct such audit, provided, however, that Safeskin shall be
responsible for causing such third parties to maintain the
confidentiality of any of PSC's Confidential Information obtained by
such third parties in connection with such audit. Safeskin agrees to
allow PSC to reallocate resources or adjust PSC's obligations to
accommodate the audit or to reimburse PSC for additional costs
incurred as a result of such audit that are Pass-Through Expenses and
to pay PSC an amount equal to such costs that are PSC Direct Costs
plus 45% of those costs.
Article VII. Performance Review and Termination
7.1 Performance Review. Appropriate representatives of Safeskin and PSC
will meet as often as may be reasonably requested by either party to
review the performance of PSC under this Agreement and to discuss any
questions or concerns relating to such performance. On at least a
monthly basis, PSC and Safeskin will meet to review the account
operations.
7.2 Resolution of Dispute. Any controversy, claim or other dispute
arising from or relating to this Agreement or the Warrant
(hereinafter defined) will be resolved as follows:
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(a) Designated Representatives. Upon the written request of
either party, each of the parties will appoint a designated
representative who will meet with the designated
representative of the other party and negotiate in good
faith to resolve the dispute. No mediation, arbitration or
other formal proceedings for the resolution of the dispute
may be commenced until the earlier of (i) the date that the
designated representatives conclude in good faith that
amicable resolution of the dispute through continued
negotiation does not appear likely, or (ii) the date that
is 60 days after the date that such negotiations commence.
(b) Non-Binding Mediation. Any dispute that is not resolved
through negotiation as provided in Section 7.2(a) will be
submitted to non-binding mediation conducted in accordance
with the Commercial Mediation Rules of the American
Arbitration Association then in effect and the parties will
use good faith efforts to resolve the dispute through such
mediation. No arbitration or other formal proceedings for
the resolution of the dispute may be commenced until the
earlier of (i) the date that the mediator concludes that
resolution of the dispute through continued mediation does
not appear likely, or (ii) the date that is 60 days after
the date that such mediation commences.
(c) Binding Arbitration. Any dispute that is not resolved by
negotiation or mediation as provided in Sections 7.2(a) and
7.2(b) above will be resolved by binding arbitration that,
except as may be otherwise mutually agreed, will be
conducted in accordance with and subject to the Commercial
Arbitration Rules of the American Arbitration Association
then in effect by three neutral arbitrators selected in
accordance with those Rules. Any award rendered in any such
arbitration will be final and conclusive and judgment
thereon may be enforced in any court of competent
jurisdiction.
(d) Other Rights. The fact that the foregoing dispute
resolution procedures have been or may be invoked will not
prevent either party from exercising any termination or
other rights that it may have under this Agreement or from
seeking injunctive or other equitable relief from any
appropriate court.
(e) Continuation of Services. In the event of a dispute between
Safeskin and PSC, each Party, shall continue to so perform
its obligations under this Agreement in good faith during
the resolution of such dispute unless and until this
Agreement is terminated in accordance with the provisions
hereof.
(f) Location of Mediation and Arbitration. The parties agree
that any mediation or arbitration proceeding contemplated
by this Section 7.2 shall be conducted in California,
Arizona, or Colorado or such other location as the parties
may reasonably agree; provided that the parties agreement
on any such location (and agreement to mediate or
arbitrate) is conditioned on the understanding that the
mediators or arbitrators will exclusively apply Delaware
law in the resolution of the disputed matter in accordance
with the agreement of the parties as to
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governing law set forth in Section 9.12. In the event any
mediator or arbitrator in any proceeding does not agree to
exclusively apply, or fails to exclusively apply, Delaware
law in accordance with Section 9.12, then the affected
mediation or arbitration shall be null and void and such
mediation or arbitration proceeding shall instead take
place and be conducted in Wilmington, Delaware. In such
circumstances, each of the parties consents to jurisdiction
in any court of competent jurisdiction in the State of
Delaware or the United States District Court for the
District of Delaware with respect to all issues affecting
such matter including, without limitation, seeking to
obtain an order in aid of arbitration or enforcing an
arbitration award or enjoining an arbitration that is in
violation of the provisions of this Section 7.2(f). Each
party agrees that service of a complaint or other process
in any such matter may be made and given in the same manner
as specified in Section 9.2 hereof for the giving of
notices hereunder. Any process so given shall be as
effective as personal service in the State of Delaware.
7.3 Termination for Cause. In the event that either party materially
defaults in the performance of any of its duties or obligations under
this Agreement (other than Safeskin's failure to pay PSC which is
addressed under Section 7.4), which default is not substantially
cured within 60 days after written notice is given to the defaulting
party specifying the default (or, with respect to any such default
which cannot reasonably be cured within such 60 day period if the
defaulting party fails to proceed within such 60 day period to
commence curing the default and thereafter to proceed with all due
diligence to substantially cure the default), then the nondefaulting
party may, by giving prior written notice thereof to the defaulting
party, terminate this Agreement as of a date specified in such notice
of termination.
7.4 Termination for Non-Payment. In the event that Safeskin defaults in
the payment when due of any amount due to PSC hereunder, and does not
cure the default within 30 days after being given written notice of
the default, then PSC may, by giving prior written notice thereof to
Safeskin, terminate this Agreement as of a date specified in the
notice of termination.
7.5 Termination for Insolvency. In the event that either party (the
"Insolvent Party") becomes or is declared insolvent or bankrupt, is
the subject of any proceedings relating to its liquidation,
insolvency or for the appointment of a receiver or similar officer
for it (which, in the case of involuntary proceedings, remains
undismissed for at least 60 days), makes an assignment for the
benefit of all or substantially all of its creditors, or enters into
an agreement for the composition, extension or readjustment of all or
substantially all of its obligations, then the other party may, by
giving prior written notice thereof to the Insolvent Party, terminate
this Agreement as of a date specified in such notice of termination.
This Agreement may not be terminated pursuant to this Section once
the Insolvent Party ceases to be insolvent or be the subject of a
proceeding relating to its liquidation, insolvency or the appointment
of a receiver.
7.6 Termination for Convenience. Safeskin will have the right to
terminate this Agreement effective at anytime after the second year
of the Agreement but before the end of the
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Term by providing PSC at least 180 days prior written notice. In
order for Safeskin to terminate the Agreement under this Section,
Safeskin must pay to PSC the Termination Fee prior to termination.
The term "Termination Fee" is defined to mean an amount equal to (i)
Shut-Down Costs reasonably incurred or to be incurred by PSC in
winding down the account, and (ii) $500,000. The term "Shut-Down
Costs" is defined to mean all of PSC's direct and actual costs
incurred by PSC in connection with the wind-down and termination of
this Agreement, including but not limited to, the costs described in
Schedule 7.6. PSC and Safeskin agree to work together to try and
minimize the amount of the Shut-Down Costs.
7.7 Obligations Upon Termination or Expiration. During the Transition
Period, PSC will provide to Safeskin the termination assistance
described in this Section; provided, however, that Safeskin has paid
to PSC all amounts owed by Safeskin to PSC under this Agreement and
Safeskin is not otherwise in default under this Agreement. The
"Transition Period" is defined to mean (i) if the Agreement is
terminated under Section 7.6, the period beginning upon receipt of
notice of termination by either party pursuant to Section 7.6 through
the termination of this Agreement, (ii) if the Agreement expires, the
period beginning upon receipt of the notice that this Agreement will
not be extended under Section 1.4 through the expiration of this
Agreement, or (iii) if this Agreement is terminated under Sections
3.3(b), 5.6, 7.3, 7.4, or 7.5, the 60 day period beginning upon
receipt of the notice of termination of this Agreement. If PSC
terminates the Agreement under Section 7.4, all of PSC's charges
hereunder for the termination assistance services described herein
shall be invoiced by PSC and paid by Safeskin in advance. To the
extent that the termination assistance described in this Section
requires PSC to use resources not otherwise used on the account,
Safeskin will pay PSC for such additional resources on a time and
materials basis at PSC's then standard commercial billing rate or on
such other rates as the parties agree. PSC will provide to Safeskin
the following termination assistance:
(a) Services. PSC will continue to perform any or all of the
Services and Project Services then being performed by PSC.
(b) Transition Plan. PSC will work with Safeskin to develop a
plan for the transition of the Services and Project
Services from PSC to Safeskin.
(c) Training. PSC will provide reasonable training for
personnel of Safeskin in the performance of the Services
and Project Services then being transitioned to Safeskin.
(d) Equipment. PSC will assign to Safeskin, pursuant to
mutually acceptable terms and conditions, any leases to
equipment leased by PSC that is then dedicated to the
performance of the Services and the Project Services then
being provided to Safeskin subject to the terms of any
applicable lease; provided, however that Safeskin assumes
PSC's obligations with respect to any such lease and PSC is
released by the lessor of any obligations under the lease
after the date of such
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assignment. PSC will sell to Safeskin any such equipment
owned by PSC at PSC' then-current book value.
Article VIII. Indemnities and Liability Limitation
8.1 Cross Indemnity. PSC and Safeskin each agree to indemnify, defend and
hold harmless the other from any and all claims, actions, damages,
losses, liabilities, costs and expenses, including reasonable
attorneys' fees and expenses, arising out of or relating to the death
or bodily injury of any agent, employee, customer, business invitee
or business visitor of the indemnitor, or arising out of or relating
to the loss of or damage to tangible real or tangible personal
property of the indemnitor.
8.2 Intellectual Property.
(a) By PSC. PSC shall defend Safeskin from any third-party
claims brought against Safeskin alleging that (i) the
Developed Software infringes a third person's copyright or
trade secret enforceable where the Developed Software was
installed by PSC or was, to the knowledge of PSC as
determined at the time of installation, to be used by
Safeskin, or (ii) the method chosen and used by PSC in its
sole discretion to implement the specifications for the
Developed Software infringes a third party's patent issued
prior to the date the Developed Software was delivered to
Safeskin and enforceable where the Developed Software was
installed by PSC or was, to the knowledge of PSC as
determined at the time of installation, to be used by
Safeskin. PSC shall pay any judgments finally awarded by a
court of competent jurisdiction and any settlements to
which PSC agrees in writing.
(b) By Safeskin. Safeskin shall defend PSC from any third-party
claims brought against PSC alleging that the functionality
required by the specifications for the Developed Software
infringes a third party's patent issued prior to the date
the Developed Software was delivered to Safeskin and
enforceable where the Developed Software was installed by
PSC or was, to the knowledge of Safeskin as determined at
the time of installation, to be used by Safeskin. Safeskin
shall pay any judgments finally awarded by a court of
competent jurisdiction and any settlements to which
Safeskin agrees in writing. The fact that Safeskin approved
the specifications for the Developed Software will not by
itself create a presumption that the method chosen and used
by PSC to implement the specifications for the Developed
Software was not in PSC's sole discretion.
(c) Mitigation. Upon receiving notice of an infringement claim,
the indemnitor may, in its sole discretion, (i) modify the
allegedly infringing item to be non-infringing without
materially impairing its functionality, (ii) replace the
allegedly infringing item with a noninfringing item of
substantially equivalent functionality, or (iii) obtain for
the indemnitee the right to continue to use the item in
accordance with the terms of this Agreement.
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(d) Exclusions. Notwithstanding the other provisions of this
Section 8.2, the indemnitor shall have no liability to the
indemnitee for any claim of infringement to the extent that
such claim is based on modifications or enhancements to the
Developed Software created by the indemnitee or the use of
the Developed Software by the indemnitee in a manner not
intended by the indemnitor.
8.3 Employment Indemnification.
(a) Indemnification by PSC. PSC agrees to indemnify, defend and
hold harmless Safeskin against any and all claims, actions,
damages, losses, liabilities, costs and expenses including
reasonable attorneys' fees and expenses, arising out of or
relating to any Transitioned Employee, attributable to any
period commencing on or after the date on which such
Transitioned Employee accepts employment with PSC and
arising out of PSC's employment of that Transitioned
Employee, including without limitation claims relating to
salary, employee benefits, employment taxes and other
payments in connection therewith, but excluding claims
relating to agreements, arrangements or commitments made by
Safeskin with or to that Transitioned Employee.
(b) Indemnification by Safeskin. Safeskin agrees to indemnify,
defend and hold harmless PSC from any and all claims,
actions, damages, losses, liabilities, costs, and expenses
including reasonable attorneys' fees and expenses, arising
out of or relating to any Transitioned Employee or
Non-Transitioned Employee, attributable to any period
during which such Transitioned Employee or Non-Transitioned
Employee was employed by Safeskin and arising out of
Safeskin's employment of that Transitioned Employee or
Non-Transitioned Employee, including without limitation
claims relating to salary, employee benefits, and other
payments in connection therewith and any claims relating to
agreements, arrangements, or commitments made by Safeskin
with or to that Transitioned Employee or Non-Transitioned
Employee.
8.4 Indemnification Procedures. With respect to third-party claims
subject to the indemnities set forth in this Article, the indemnitee
will notify the indemnitor promptly of any matters in respect of
which the foregoing indemnity may apply and of which the indemnitee
has knowledge and will give the indemnitor full opportunity to
control the response thereto and the defense thereof, including,
without limitation, any agreement relating to the settlement thereof,
provided that the indemnitee will have the right to approve any
settlement or any decision not to defend, which approval will not be
unreasonably withheld. The indemnitee's failure to promptly give
notice will affect the indemnitor's obligation to indemnify the
indemnitee only to the extent that the indemnitor's rights are
materially prejudiced thereby. The indemnitee may participate, at its
own expense, in any defense and any settlement directly or through
counsel of its choice. If the indemnitor elects not to defend, the
indemnitee will have the right to defend or settle the claim as it
may deem
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appropriate, at the cost and expense of the indemnitor, which will
promptly reimburse the indemnitee for such costs, expenses and
settlement amounts.
8.5 Limitation of Liability. Except as provided in Section 8.7, with
respect to all claims arising out of, under or in connection with
this Agreement (including without limitation claims for breach of an
obligation to provide indemnification), Safeskin shall only be liable
under this Agreement for direct damages. With respect to all claims
arising out of, under or in connection with this Agreement (including
without limitation claims for breach of an obligation to provide
indemnification) and all confidentiality agreements signed by PSC
employees pursuant to Section 2.3(e), PSC shall only be liable under
this Agreement for direct damages. Except as provided in Section 8.7,
with respect to all claims arising out of, under or in connection
with this Agreement (including without limitation claims for breach
of an obligation to provide indemnification) and all confidentiality
agreements signed by PSC employees pursuant to Section 2.3(e),
neither PSC's nor Safeskin's liability will exceed, in the aggregate,
an amount equal to the charges actually paid by Safeskin to PSC
during the first six months after the Effective Date (excluding
amounts paid as reimbursement of expenses, including Pass Through
Expenses, and taxes).
8.6 Limitation on Type of Damages. With respect to all claims arising out
of, under or in connection with this Agreement (including without
limitation claims for breach of an obligation to provide
indemnification) and all confidentiality agreements signed by PSC
employees pursuant to Section 2.3(e), the measure of damages payable
by PSC will not include, and PSC will not be liable for, any amounts
for indirect, incidental, reliance, special, consequential (including
without limitation lost profits or lost revenue) or punitive damages
of Safeskin or any third parties. Except as provided in Section 8.7,
with respect to all claims arising out of, under or in connection
with this Agreement (including without limitation claims for breach
of an obligation to provide indemnification), the measure of damages
payable by Safeskin will not include, and Safeskin will not be liable
for, any amounts for indirect, incidental, reliance, special,
consequential (including without limitation lost profits or lost
revenue) or punitive damages of PSC or any third parties.
8.7 Exclusion from the Limitations. The limitations in Sections 8.5 and
8.6, shall not apply to Safeskin's obligations to make payments to
PSC under this Agreement or the Common Stock Warrant executed by
Safeskin as of the date hereof (the "Warrant").
8.8 Statute of Limitations. Neither party may assert a claim against the
other party more than two years after the date that such claim arose.
8.9 Disclaimer of Warranty. EXCEPT AS MAY BE SPECIFICALLY PROVIDED IN
THIS AGREEMENT, PSC DOES NOT MAKE, AND HEREBY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF THE MERCHANTABILITY, SUITABILITY, FITNESS
FOR A PARTICULAR PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE OF
ANY RESOURCES, SERVICES OR MATERIALS PROVIDED PURSUANT TO THIS
AGREEMENT.
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8.10 Force Majeure. Each party will be excused from the performance of its
obligations under this Agreement (other than Safeskin's obligation to
make payments to PSC hereunder) for any period and to the extent that
such performance is prevented, in whole or in part, as a result of
delays caused by the other party or any act of God, civil
disturbance, court order, labor dispute, third party nonperformance
(except as otherwise specifically provided in this Agreement) or
other cause beyond its reasonable control, and such nonperformance
will not be a default hereunder or grounds for termination hereof.
Article IX. Miscellaneous
9.1 Binding Nature and Assignment. This Agreement will be binding on the
parties and their respective successors and assigns, but neither
party may, nor will have the power to, assign this Agreement without
the prior written consent of the other party.
9.2 Notices. Wherever under this Agreement one party is required or
permitted to give notice to the other, such notice will be deemed
given when delivered in hand or when mailed by overnight mail, or
registered or certified mail, return receipt requested, postage
prepaid, and addressed as follows:
In the case of PSC:
Xxxxx Systems Corporation
00000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: PSC Account Manager
with a copy to:
Xxxxx Systems Corporation
00000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
In the case of Safeskin:
Safeskin Corporation
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
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with a copy to:
Safeskin Corporation
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Either party hereto may from time to time change its address for
notification purposes by giving the other prior written notice of the
new address and the date upon which it will become effective.
9.3 Counterparts. This Agreement may be executed in several counterparts,
all of which taken together constitute one single agreement between
the parties hereto.
9.4 Headings. The article and section headings and the table of contents
used herein are for reference and convenience only and will not enter
into the interpretation hereof.
9.5 Relationship of Parties. PSC, in performing its obligations
hereunder, is acting only as an independent contractor. PSC does not
undertake by this Agreement or otherwise to perform any obligation of
Safeskin, whether regulatory or contractual, or to assume any
responsibility for Safeskin's business or operations. PSC has the
sole right and obligation to supervise, manage, contract, direct,
procure, perform or cause to be performed, all work to be performed
by PSC hereunder.
9.6 Approvals and Similar Actions. Where agreement, approval, acceptance,
consent or similar action by any party to this Agreement is required
by any provision of this Agreement, such action will not be
unreasonably delayed or withheld.
9.7 Media Releases. All media releases, public announcements and public
disclosures by Safeskin or PSC relating to this Agreement, including
without limitation, promotional or marketing material (but not
including any announcement intended solely for internal distribution
within Safeskin or PSC, as the case may be, or any disclosure
required by legal, accounting or regulatory requirements beyond the
reasonable control of Safeskin or PSC, as the case may be) will be
coordinated with and approved by the other prior to the release
thereof.
9.8 Severability. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void, then the parties will be
relieved of all obligations arising under such provision, but only to
the extent that such provision is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement
will be deemed amended by modifying such provision to the extent
necessary to make it legal and enforceable while preserving its
intent or, if that is not possible, by substituting therefor another
provision that is legal and enforceable and achieves the same
objective. If such illegal, unenforceable or void provision does not
relate to the payments to be made to PSC hereunder and if the
remainder of this Agreement will not be affected by such declaration
or finding and is
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capable of substantial performance, then each provision not so
affected will be enforced to the extent permitted by law.
9.9 Waiver. No delay or omission by either party hereto in exercising any
right or power hereunder will impair such right or power or be
construed to be a waiver thereof. A waiver by either party hereto of
any of the covenants to be performed by the other or any breach
thereof will not be construed to be a waiver of any succeeding breach
thereof or of any other covenant herein contained. Except as
otherwise provided in this Agreement, all remedies provided for in
this Agreement will be cumulative and in addition to and not in lieu
of any other remedies available to either party at law, in equity or
otherwise.
9.10 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any
of the provisions of this Agreement, the prevailing party will be
entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
9.11 Entire Agreement. This Agreement, including any Schedules referred to
herein and attached hereto, each of which is incorporated herein for
all purposes, and all documents executed contemporaneously herewith,
constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and there are no
representations, understandings or agreements relative hereto which
are not fully expressed herein. No change, waiver, or discharge
hereof will be valid unless in writing and signed by an authorized
representative of the party against which such change, waiver, or
discharge is sought to be enforced.
9.12 Governing Law. In accordance with 6 Del. C. Section 2708, this
Agreement shall be governed by, and construed and enforced in
accordance with, the domestic laws of the State of Delaware without
giving effect to any choice of law or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
9.13 No Third-Party Beneficiaries. The parties agree that this Agreement
is for the benefit of the parties hereto and is not intended to
confer any rights or benefits on any third-party, including any
employee of either party, and that there are no third-party
beneficiaries to this Agreement or any part or specific provision of
this Agreement.
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In Witness Whereof, PSC and Safeskin have each caused this Agreement
to be signed and delivered by its duly authorized representative, all as of the
Agreement Date.
Xxxxx Systems Corporation Safeskin Corporation
By: /s/ H. XXXXXX XXXX By: /s/ XXXX X. XXXXXX
------------------------------- --------------------------------------
Name: H. XXXXXX XXXX Name: XXXX X. XXXXXX
----------------------------- -----------------------------------
Title: Vice-President Title: Vice-President
--------------------------- -----------------------------------
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