TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (the "Agreement") is entered into as of
May 1, 2005 by and between Hospira, Inc., a Delaware corporation ("Hospira"),
and ICU Medical (Utah), Inc., a Delaware corporation ("Medical").
RECITALS
A. Hospira and ICU Medical, Inc., a Delaware corporation ("ICU") have
entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") dated
as of February 25, 2005, providing for the purchase by ICU of certain assets of
Hospira, and a Manufacturing, Commercialization and Development Agreement (the
"MCDA") dated as of February 25, 2005, providing for, among other things, the
manufacture of certain products by ICU and the sale of such products to Hospira.
B. Pursuant to the Assignment and Assumption Agreement dated February 25,
2005, ICU has assigned, granted, sold, conveyed and transferred all of its
right, title and interest in and to the Asset Purchase Agreement and the MCDA to
Medical, ICU's wholly-owned subsidiary, and Medical has assumed and agreed to
observe and perform all of the duties, terms, provisions and covenants in
connection therewith.
C. This Agreement is one of the "Transaction Documents" contemplated by
the Asset Purchase Agreement, and the Closing under the Asset Purchase Agreement
is occurring simultaneously with the delivery of this Agreement.
D. To ensure that the Acquired Assets are transferred to Medical in an
orderly fashion and that the Parties are able to perform under the MCDA as
required, Hospira and Medical wish to provide for certain transition services on
the terms set forth herein.
NOW, THEREFORE, in consideration of the covenants contained herein, in the
Asset Purchase Agreement and in the MCDA, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE I DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 "Agreement" has the meaning set forth in the Preamble.
1.2 "Asset Purchase Agreement" has the meaning set forth in the Recitals.
1.3 "Business Entity" means any corporation, general or limited
partnership, trust, joint venture, unincorporated organization, limited
liability entity or other entity.
1.4 "Charge" and "Charges" have the meanings set forth in Section 2.4.
1.5 "Facility" has the meaning set forth in the MCDA
1.6 "FBEC" shall mean the Fully Burdened Employee Cost and shall equal the
cost of the applicable employee including payroll, bonuses, fringe benefits,
travel, depreciation of personal computers, floor space, communication charges
and other applicable costs in accordance with Hospira's historical practices.
The total FBEC shall not exceed two times the base compensation for the
applicable employee.
1.7 "Governmental Body" - means any: nation, state, county, city, town or
other jurisdiction; federal, state, local municipal, foreign or other
government; or governmental or quasi-governmental authority, including any
agency, branch, department, board, commission, court, tribunal, other entity or
official exercising governmental or quasi-governmental authority.
1.8 "Hospira" has the meaning set forth in the Preamble.
1.9 "Hospira Subsidiary" means any Subsidiary of Hospira.
1.10 "ICU" has the meaning set forth in the Recitals.
1.11 "ICU Subsidiary" means any Subsidiary of ICU.
1.12 "Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, including studies, reports, records, books, contracts, instruments,
surveys, discoveries, ideas, concepts, know-how, techniques, designs,
specifications, drawings, blueprints, diagrams, models, prototypes, samples,
flow charts, data, computer data, disks, diskettes, tapes, computer programs or
other software, marketing plans, customer names, communications by or to
attorneys (including attorney-client privileged communications), memos and other
materials prepared by attorneys or under their direction (including attorney
work product), and other technical, financial, employee or business information
or data.
1.13 "Initial Services" has the meaning set forth in Section 2.1.
1.14 "MCDA" has the meaning set forth in the Recitals hereto.
1.15 "Medical" has the meaning set forth in the Preamble.
1.16 "Person" means any: (i) individual; (ii) Business Entity; or (iii)
Governmental Authority.
1.17 "Parties" means Medical and Hospira.
1.18 "Prime Rate" means the rate which Citibank N.A. (or its successor or
another major money center commercial bank agreed to by the Parties) announces
as its prime lending rate, as in effect from time to time.
1.19 "Provider" means, with respect to any Service, the entity or entities
identified on the applicable Schedule as the "Provider."
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1.20 "Provider Indemnities" has the meaning set forth in Section 5.3.
1.21 "Purchaser" means, with respect to any Service, the entity or
entities identified on the applicable Schedule as the "Purchaser."
1.22 "Service Term" means, with respect to any Service, the term specified
on the Schedule applicable to such Service.
1.23 "Services" has the meaning set forth in Section 2.2.
1.24 "Subsidiary" of any Party means another Business Entity that is
directly or indirectly controlled by such Party. As used herein, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Business Entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
1.25 "Third Party" means any Person other than Medical, ICU, any ICU
Subsidiary, Hospira and any Hospira Subsidiary.
ARTICLE II SERVICES.
2.1 Initial Services. Commencing on the date hereof, the Party designated
as the Provider on the Schedules hereto agrees to provide, or with respect to
any service to be provided by a Subsidiary of such Party, to cause such
Subsidiary to provide, to the Party designated as the Purchaser on the Schedules
hereto, or with respect to any service to be provided to a Subsidiary of such
Party, to such Subsidiary, the applicable services (the "Initial Services") set
forth on TSA #1 through TSA #19 attached hereto.
2.2 Additional Services. From time to time after the date hereof, the
Parties may identify additional services that one Party will provide to the
other Party in accordance with the terms of this Agreement (the "Additional
Services" and, together with the Initial Services, the "Services"). The Parties
shall cooperate and act in good faith to create a Schedule for each Additional
Service on commercially reasonable terms. Notwithstanding the foregoing, neither
Party shall have any obligation to agree to provide Additional Services until a
Schedule for such Additional Services has been agreed to by the Parties in
writing.
2.3 Performance Of Services.
(a) Each Provider shall perform, or cause its Subsidiaries to
perform, all Services to be provided by such Provider in a commercially
reasonable manner.
(b) Neither Provider nor any of its Subsidiaries shall be liable or
held accountable, in damages or otherwise, for any error of judgment or
any mistake of fact or law or for anything that the Provider or any of its
Subsidiaries does or refrains from doing in good faith hereunder, except
in the case of its gross negligence or willful misconduct, and except that
Medical shall perform the Design-a-Set for Pumps services to be provided
by Medical to Hospira in conformity and subject to the provisions of
Sections 3.4, 3.5 and 3.6 of the MCDA.
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(c) Nothing in this Agreement shall require a Provider to perform or
cause to be performed any Service in a manner that would constitute a
violation of applicable laws.
(d) Neither Provider nor any of its Subsidiaries will be required to
perform or to cause to be performed any of the Services for the benefit of
any Third Party or any other Person other than the applicable Purchaser or
its Subsidiaries.
2.4 Charges For Services. The charges for each Service, if any, shall be
determined as set forth on the applicable Schedule (each a "Charge" and together
the "Charges").
2.5 Changes To Services. Except as provided in Section 2.8 below, each
Provider may make changes from time to time in the manner of performing the
Services if such Provider is making similar changes in performing analogous
services for itself and if such Provider furnishes to the applicable Purchaser
substantially the same notice (in content and timing) as such Provider shall
furnish to its own organization respecting such changes. No such change shall
affect the Charges for the applicable Service.
2.6 Transitional Nature Of Services. The Parties acknowledge the
transitional nature of the Services and agree to cooperate in good faith and to
use commercially reasonable efforts to effectuate a smooth transition of the
Services from the Provider to the Purchaser (or its designee).
2.7 Cooperation. In the event that (i) there is nonperformance of any
Service as a result of an event described in Section 5.4, or (ii) the provision
of a Service would violate applicable law, the Parties agree to work together in
good faith to arrange for an alternative means by which the applicable Purchaser
may obtain, at the Purchaser's sole cost, the Services so affected.
2.8 Use Of Third Parties To Provide The Services. Each Provider may
perform its obligations through its Subsidiaries or, if such Provider is
obtaining analogous services for itself from agents, subcontractors or
independent contractors, the Provider may perform its obligations hereunder
through the use of agents, subcontractors or independent contractors, if such
Provider furnishes to the applicable Purchaser substantially the same notice (in
content and timing) as such Provider shall furnish to its own organization
respecting such use of Third Parties. If the Provider is not obtaining analogous
services for itself from Third Parties, the Provider may perform its obligations
hereunder through the use of agents, subcontractors or independent contractors
only upon obtaining the prior written consent of the Purchaser which shall not
be unreasonably withheld or delayed. Notwithstanding the foregoing, the Provider
shall not be relieved of its obligations under this Agreement by use of such
Subsidiaries, agents, subcontractors or contractors. Delegation of performance
of any Service by a Provider in accordance with this Section 2.8 shall not
affect the Charges for the applicable Service.
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ARTICLE III BILLING; TAXES.
3.1 Procedure. Charges for the Services, if any, shall be charged to and
payable by the applicable Purchaser. Any charges payable pursuant to the terms
of this Agreement shall be paid to the applicable Provider, as directed by such
Provider, on a monthly basis, which amounts shall be due within thirty (30) days
after the date of invoice. All amounts due and payable hereunder shall be
invoiced and paid in U.S. dollars.
3.2 Taxes. Each Purchaser shall pay any and all taxes incurred in
connection with the applicable Provider's provision of the Services, including
all sales, use, value-added, and similar Taxes, but excluding Taxes based on
such Provider's net income.
3.3 No Set-Off. A Purchaser's obligation to make any required payments
under this Agreement shall not be subject to any unilateral right of offset,
set-off, deduction or counterclaim, however arising.
ARTICLE IV TERM AND TERMINATION.
4.1 Term. This Agreement will terminate with respect to any Service at the
close of business on the last day of the Service Term for such Service.
4.2 Information Transmission. On or prior to the last day of each relevant
Service Term, the Provider shall use commercially reasonable efforts and shall
cause its Subsidiaries to use commercially reasonable efforts to support any
transfer of Information concerning the relevant Services to the applicable
Purchaser. If requested by the Purchaser, the Provider shall deliver and shall
cause its Subsidiaries to deliver to the applicable Purchaser, within such time
periods as the Parties may reasonably agree, all Information received or
computed for the benefit of such Purchaser during the Service Term, in
electronic and/or hard copy form; provided, however, that (i) the Provider shall
not have any obligation to provide or cause to provide Information in any
non-standard format, and (ii) the Provider and its Subsidiaries shall be
reimbursed for their reasonable out-of-pocket costs for providing Information in
any format other than its standard format.
ARTICLE V MISCELLANEOUS.
5.1 Mutual Cooperation. The Parties and their respective Subsidiaries
shall cooperate with each other in connection with the performance of the
Services hereunder, including producing on a timely basis all Information that
is reasonably requested with respect to the performance of Services and the
transition of Services at the end of the term of this Agreement; provided,
however, that such cooperation shall not unreasonably disrupt the normal
operations of the Parties and their respective Subsidiaries.
5.2 Limitations On Liability.
(a) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT,
EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES RESULTING FROM
ANY BREACH OF THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, AND EACH PARTY HEREBY WAIVES ON BEHALF OF
ITSELF AND ITS AFFILIATES (AS DEFINED IN THE MCDA) ANY CLAIM FOR SUCH
DAMAGES, INCLUDING ANY CLAIM FOR PROPERTY DAMAGE OR LOST PROFITS, WHETHER
ARISING IN CONTRACT OR TORT.
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(b) The foregoing limitations on liability in this Section 5.2 shall
not apply to either Party's obligations under Section 5.3 (Third Party
Claims).
5.3 Third Party Claims. Each Purchaser shall indemnify, defend and hold
harmless the Provider, its Subsidiaries and each of their respective directors,
officers and employees, and each of the successors and assigns of any of the
foregoing (collectively, the "Provider Indemnitees"), from and against any and
all claims of Third Parties relating to, arising out of or resulting from the
Provider's furnishing or failing to furnish the Services provided for in this
Agreement, other than Third Party claims arising out of the gross negligence or
willful misconduct of any Provider Indemnitee. The Party seeking indemnification
shall promptly notify the other Party of any claims for which indemnification is
sought. The indemnified Party shall cooperate fully with the indemnifying Party
in the investigation and defense of any claims and shall allow the indemnifying
Party to control the defense of any such claims with counsel reasonably
satisfactory to the indemnified Party. No settlement or compromise shall be made
without the prior written consent of the indemnifying Party, which consent shall
not be unreasonably withheld or delayed.
5.4 Force Majeure. Neither Party shall be liable to the other if, and to
the extent that, the performance or delay in performance of any of its
obligations under this Agreement is prevented, restricted, delayed or interfered
with due to any delay in the performance of any of the duties or obligations of
either Party hereto (except the payment of money) and such delay shall not be
considered a breach of this Agreement and the time required for performance
shall be extended for a period equal to the period of such delay; provided that
such delay has been caused by or is the result of any acts of God, acts of
public enemy, insurrections, riots, embargoes, labor disputes, including
strikes, lockouts, job actions, or boycotts, fires, explosions, earthquakes,
floods, shortages of energy, order by any governmental agency or
instrumentality, or other unforeseeable causes beyond the control and without
the fault or negligence of the Party so affected. The Party so affected shall
give prompt notice to the other Party of such cause, and its expected duration.
In such event, the Parties shall meet promptly to determine an equitable
solution to the effects of any such event, and the Party claiming the force
majeure event shall thereafter take whatever reasonable steps are necessary to
relieve the effect of such cause as rapidly as possible.
5.5 Independent Contractors. The Parties hereto are independent
contractors. Nothing contained in this Agreement shall be construed to
constitute a Party as a partner, agent or joint venturer with the other Party or
as a participant in a joint or common undertaking with the other Party. Each
Party shall be individually responsible for its own obligations and liabilities
as herein provided. Neither Party shall be under the control or shall be deemed
to control the other Party. Neither Party shall be the agent of or have the
right or power to bind the other Party without such Party's express written
consent, except as may be expressly provided in this Agreement.
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5.6 Parties in Interest. Nothing in this Agreement, expressed or implied,
is intended to confer on any Person or entity other than Hospira and Medical any
right or remedy under or by reason of this Agreement.
5.7 Governing Law. The validity, construction and performance of this
Agreement shall be governed by the laws, without regard to the laws as to choice
or conflict of laws, of the State of New York.
5.8 Dispute Resolution. The Parties recognize that bona fide disputes may
arise which relate to the Parties' rights and obligations under this Agreement.
The Parties agree that any such dispute shall be resolved by Alternative Dispute
Resolution in accordance with the procedures set forth on Exhibit 14.4 to the
MCDA.
5.9 Amendment; Assignment. Neither Party shall assign this Agreement or
any part hereof without the prior written consent of the other Party; provided,
however, that (i) Hospira may assign this Agreement in whole or in part without
consent of Medical to a Subsidiary of Hospira; provided that any such assignment
shall not release Hospira from its obligations hereunder; (ii) Hospira may
assign this Agreement, in whole or in part, without such consent in connection
with the assignment, transfer, sale or spin-off to a Third Party of
substantially its entire business to which this Agreement pertains, the sale of
a product line, or in the event of its merger or consolidation with another
company; (iii) Medical may assign this Agreement in whole or in part without
such consent to a Subsidiary of ICU; provided that any such assignment shall not
release Medical from its obligations; and (iv) Medical may assign this Agreement
without such consent in connection with its merger or consolidation with another
company or the assignment, sale, transfer or spin-off to a Third Party of all or
substantially all of its assets. No assignment shall relieve any Party of
responsibility for the performance of any accrued obligation which such Party
then has hereunder.
5.10 Notices. All notices hereunder shall be delivered personally; by
registered or certified mail, postage prepaid; by facsimile with a confirmation
copy sent by registered or certified mail, postage prepaid; or by overnight
courier service, to the following addresses of the respective Parties:
If to Hospira: Hospira, Inc.
Building H1; Department 0960
000 X. Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000-0000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
With a copy to: Hospira, Inc.
Building H1; Department NLEG
000 X. Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
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If to Medical: ICU Medical (Utah), Inc.
000 Xxxxx Xxxxxxxx
Xxx Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: 949-366-8368 and (000) 000-0000
With a copy to: Xxxxxx Xxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Notices shall be effective upon receipt if personally delivered or delivered by
facsimile, on the third business day following the date of mailing or on the
first business day following deposit with an overnight courier service. A Party
may change its address listed above by notice to the other Party.
5.11 Counterparts. This Agreement may be executed in one or more
counterparts (including by means of faxed signature pages), all of which shall
be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the Parties and delivered to
the other Party.
5.12 Entire Agreement. This Agreement and the Schedules hereto contain the
entire agreement and understanding between the Parties with respect to the
subject matter hereof and supersede all previous agreements, negotiations,
discussions, writings, understandings, commitments and conversations with
respect to such subject matter and there are no agreements or understandings
between the Parties other than those set forth or referred to herein or therein.
Notwithstanding the foregoing, the Parties acknowledge that they have entered
into other agreements pertaining to other subject matters, including the Asset
Purchase Agreement, the Transaction Documents (as defined in the Asset Purchase
Agreement) and the MCDA.
5.13 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
hereof or thereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any Party. Upon such
determination, the Parties shall negotiate in good faith in an effort to agree
upon such a suitable and equitable provision to effect the original intent of
the Parties.
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5.14 Confidentiality. The Parties acknowledge that the confidentiality
provisions of the MCDA apply to Confidential Information (as defined in the
MCDA) received by either Party in connection with this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement to be
executed as of the date first written above.
ICU MEDICAL (UTAH), INC.
By: /s/ Xxxxxxx X. X'Xxxxx
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Name: Xxxxxxx X. X'Xxxxx
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Title: CFO
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HOSPIRA, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
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Title: Senior V.P. and Chief Financial Officer
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