Exhibit 10(c)
EXECUTION COPY
SERVICES AGREEMENT
by and among
XXXXXX HEALTHCARE CORPORATION
and
VWR CORPORATION
September 15, 1995
TABLE OF CONTENTS
PAGE
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1. Definitions 1
2. Services 3
3. Term 6
4. Consideration 7
5. Performance of Services 9
6. Remittances and Settlement 10
7. Termination of Services 11
8. Indemnity 14
9. Third Party Claims 15
10. Confidentiality 16
11. Suspension/Termination 17
12. Non-Exclusivity 18
13. Notices 18
14. Miscellaneous 19
LIST OF EXHIBITS
Exhibit A Baxter Operational Regions and Annual Sales
Exhibit B Services
i
SERVICES AGREEMENT
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THIS SERVICES AGREEMENT ("Agreement") dated as of September 15, 1995
by and between XXXXXX HEALTHCARE CORPORATION, a Delaware corporation with its
principal offices at Xxx Xxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (hereinafter
"Baxter"), and VWR CORPORATION, a Pennsylvania corporation with its principal
offices at 0000 Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter
"VWR").
RECITALS
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X. Xxxxxx, VWR, and EM Laboratories, Incorporated, a New York corporation,
have entered into an Asset Purchase Agreement dated as of May 24, 1995, as
amended on September 15, 1995, pursuant to which Baxter has sold to VWR, and VWR
has purchased from Baxter, certain of the assets and business of Xxxxxx'x
"Industrial Distribution Business," as defined in the Asset Purchase Agreement.
II. Baxter and VWR recognize that it is advisable for Baxter and its Affiliates
to continue providing certain administrative and other services to VWR for a
transitional period.
III. This Agreement is a condition to the consummation of the transactions
contemplated by the Asset Purchase Agreement.
AGREEMENT
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In consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Definitions.
1.1 "Affiliate" shall mean any person, firm or corporation controlling,
controlled by or under direct or indirect common control with a party hereto.
For the purpose of this definition, the term "control" means the power to direct
the management or policies of a party, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
1.2 "Industrial Customers" shall mean customers who purchase the Products
for use in laboratories, production plants, and other facilities in all cases
not involved in the care of human patients or the diagnosis of disease or defect
for the purpose of care of human patients, including, without limitation,
analytical, research and development laboratories, educational institutions,
environmental testing laboratories, clean room facilities, biotechnology and
pharmaceutical research and production facilities, medical device manufacturers,
electronic and semiconductor manufacturers, and government research facilities.
1.3 "Products" shall mean the products distributed by the Industrial
Distribution Business immediately prior to the date of this Agreement, including
the following types of products:
1.3.1 "Baxter Products" shall mean Products that are manufactured by
Baxter or any of its Affiliates and sold to VWR for resale by VWR to Industrial
Customers pursuant to the VWR Distribution Agreement entered into by the parties
on the date hereof. The inventories of the Baxter Products shall remain the
property of Baxter until such time as a Baxter Product is used to fulfill an
order from an Industrial Customer pursuant to this Agreement. Baxter shall
retain title in such Baxter Product until the time of shipment from Xxxxxx'x
shipping point (or the manufacturer's shipping point in the case of a drop
shipment) to the Industrial Customer, at which time such Baxter Product shall be
sold by Baxter to VWR; and
1.3.2 "Distributed Products" shall mean Products manufactured by
third parties that are not Affiliates of Baxter (including, without limitation,
Products manufactured for Baxter or any of its Affiliates which bear the
trademark "BAXTER" or any other trademark of Baxter or any of its Affiliates)
and normally distributed by Baxter or any of its Affiliates to Industrial
Customers. Except as otherwise provided herein, the inventories of such
Distributed Products shall remain the property of Baxter until such time as a
Distributed Product is used to fulfill an order from an Industrial Customer.
Baxter shall retain title in such Distributed Product until the time of shipment
from Xxxxxx'x shipping point (or the manufacturer's shipping point in the case
of a drop shipment) to the Industrial Customer at which time such Distributed
Product shall be sold by Baxter to VWR.
1.4 "Region" shall mean any one of the Baxter operational or sales regions
listed on Exhibit A of this Agreement.
1.5 "Territory" shall mean the United States, excluding Puerto Rico and
its other territories and possessions.
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2. Services.
2.1 During the Term, as defined in Section 3 herein, Baxter shall or
shall cause one of more of its Affiliates, to render in the Territory services
to VWR as are described in Exhibit B hereto (the "Services") in connection with
VWR's sales of Products to its Industrial Customers. In addition to the
Services listed on Exhibit B, Baxter shall provide additional services that are
requested by VWR and agreed to in writing by Baxter ("Additional Services").
2.2 Except as otherwise provided for in the Asset Purchase Agreement, VWR
shall not acquire any right, title or interest in any software, systems or other
materials used in the provision of the Services. VWR shall pay the license fees
and other third party charges necessary to enable Baxter to use any software
that Baxter uses during the Term for the benefit of VWR but only to the extent
such fees and charges are attributable to the provision of Services or
Additional Services.
2.3 Notwithstanding anything to the contrary contained herein, including,
without limitation, Exhibit B, Baxter shall not provide legal services, research
and development services or facilities, or insurance or risk management services
anywhere in the Territory. In addition Baxter shall have no responsibility to
arrange for VWR to be added as a named insured on any Baxter insurance policies
or otherwise provide insurance coverage to VWR. Baxter shall not provide
treasury services (including, without limitation, cash management), audit
services (including, without limitation, internal audit), human resources
services (including, without limitation, BEBC administration services), tax
services, personal transportation services (including, without limitation,
access to Xxxxxx'x airplanes, cars or trucks), or use of Baxter facilities, in
each case, except to the extent identified in Exhibit B hereto.
2.4 For Industrial Customers that place orders for Products pursuant to
Section 2.6.1. and 2.6.2, Baxter shall make all credit determinations according
to Xxxxxx'x then-current standard credit procedures (a copy of the current
procedures have been provided to VWR and updates of such procedures shall be
provided to VWR within a reasonable time of the implementation of the same),
unless otherwise directed by VWR. Notwithstanding anything to the contrary
contained herein, VWR shall bear all risks in connection with all accounts
receivable, and Baxter shall have no responsibility or liability with respect to
the same, except for any non-VWR approved credit extensions in violation of such
standard credit procedures.
2.5 VWR shall: (i) be fully responsible for soliciting orders from
Industrial Customers for the sale of the Products and
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the determination of resale prices and terms of payment, other than with respect
to credit determinations as provided for in Section 2.4 herein; (ii) be fully
responsible (subject to Xxxxxx'x required standard of care set forth in Section
5.1) for any Distributed Products returned or rejected by Industrial Customers
for any reason; and (iii) give Baxter access to and use of all assets acquired
by VWR pursuant to the Asset Purchase Agreement to the extent required to enable
Baxter to provide the Services.
2.6 The following procedures shall be implemented by Baxter and VWR in
connection with the Services:
2.6.1 Baxter shall receive orders from Industrial Customers via EDI
transmission and Xxxxxx'x ASAP computer ordering system.
2.6.2 VWR customer service representatives ("CSR's") and telesales
representatives located in Baxter facilities pursuant to this Agreement shall
receive telephone and facsimile orders from Industrial Customers and enter such
orders into Xxxxxx'x system in the same manner as placed prior to the date of
this Agreement.
2.6.3 Baxter shall fulfill the orders with the required Products in
the same manner used by Baxter to fulfill similar orders to similar Industrial
Customers prior to the date of this Agreement, including shipments out of stock
of various Xxxxxx facilities and/or direct shipment from third party
manufacturers.
2.6.4 Baxter shall provide invoices to Industrial Customers, using a
Baxter invoice generated by Xxxxxx'x billing system, but bearing a reference to
VWR except in the case of certain governmental accounts.
2.6.5 Beginning on the fifth business day after the date hereof, on a
daily basis after performing cash application, Baxter shall remit to VWR by wire
transfer or automated clearing house all payments received from Industrial
Customers (including any sales taxes and freight charges collected by Baxter as
agent for VWR) on account of accounts receivable assigned by Baxter to VWR on
the date hereof and all VWR's accounts receivable based upon sales of Products
made to Industrial Customers under this Agreement after the date hereof. For
the first four business days from the date hereof and the first four days of
each succeeding month, Baxter shall remit to VWR by wire transfer an amount
equal to an estimate of such receipts based on a percentage of the historic
average daily cash collected of accounts receivable from Industrial Customers
assigned by Baxter to VWR on the date hereof. At the end of each month of the
Term,
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the parties shall calculate the difference between: (a) estimated payments made
by Baxter to VWR during such four day period; and (b) the actual collections
received on account of the accounts receivable specified in the first sentence
of this Section 2.6.5 during such four day period. If such actual collections
are greater than such estimated payments, Baxter shall pay to VWR such
difference within ten days. If such actual collections are less than such
estimated payments, VWR shall pay to Baxter such difference within ten days.
2.6.6 Baxter shall perform cash application services, matching
payments received from Industrial Customers with the appropriate invoices.
2.6.7 Baxter shall base invoices to Industrial Customers on prices
for Products determined by VWR and communicated to Baxter, provided that VWR
shall provide Baxter with at least 30 days notice in writing of any change in
such prices or any new contracts with Industrial Customers. Baxter shall
continue to provide invoices to Industrial Customers having a contract or price
agreement with Baxter (which may be in writing or may only be reflected in
Baxter computer system) prior to the date of this Agreement, at the price
contained in such contract or price agreement, until notified by VWR to change
such price.
2.6.8 On the first working day following the Closing, Baxter shall
provide VWR with a list of Industrial Customers as of August 31, 1995,
classified on an exempt and non-exempt basis with respect to sales taxes.
Within 30 days following the Closing, Baxter shall provide VWR with a list of
Industrial Customers added between September 1, 1995 and the Closing. Baxter
shall continue to make such information available to VWR from time to time upon
VWR's request. Within 90 days after VWR's receipt of the list provided by
Baxter, VWR shall be responsible for obtaining valid exemption or resale
certificates from these Industrial Customers on the basis of such list. VWR
shall also obtain valid exemption or resale certificates for new Industrial
Customers who are added after the Closing Date.
2.6.9 VWR shall provide Baxter with sale for resale certificates with
respect to the sale of Baxter Products and Distributed Products by Baxter to VWR
under Section 1.3.1 and 1.3.2.
2.6.10 Baxter shall provide VWR with a summary of monthly sales by
state and local taxing jurisdiction which shall be classified on an exempt and
non-exempt basis within seven days of month end. VWR shall be responsible for
filing sales tax returns with the appropriate taxing authorities and remitting
to them the taxes remitted by Baxter to VWR pursuant to Section 2.6.5.
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2.6.11 If VWR becomes aware of a change in the exempt or non-exempt
status of an Industrial Customer, VWR shall amend the exemption or resale
certificate to reflect the change. VWR shall notify Baxter, and Baxter shall
reflect the change in its invoicing and reporting systems.
2.6.12 Baxter shall from time to time make available to VWR upon its
request detailed sales journals (which it shall maintain by state and local
taxing jurisdiction) and all copies of all invoices which it has delivered to
Industrial Customers. All invoices issued by Baxter for Industrial Customers
shall, after the expiration or termination of this Agreement, be retained by
Baxter, but shall be stored for audit purposes by Baxter for seven years and,
from time to time, made available to VWR upon its request.
2.6.13 Baxter shall be solely responsible for sales tax deficiencies,
interest, and penalties with respect to sales of Products to Industrial
Customers for the 60-day period following the Closing Date, other than
deficiencies, interest and penalties attributable to VWR's failure properly to
file sales tax returns and remit the sales taxes remitted by Baxter to VWR.
Baxter shall have the right to participate in VWR's sales tax audits and to
cause VWR to file appeals thereof to the extent of Xxxxxx'x liability to VWR
hereunder. Beginning after the 60th day following the Closing Date, VWR shall
be solely responsible for sales tax deficiencies, interest and penalties with
respect to sales of Products to Industrial Customers.
2.7 During the first six months of the Term, Baxter shall provide to VWR,
at no charge, Facilities Services consisting of access to certain Baxter
facilities for VWR's sales representatives, customer service representatives and
general office personnel ("VWR Representatives") to the same extent that the
persons employed by Baxter in similar capacities had access to such facilities
immediately prior to the date of this Agreement, and voice mail for the VWR
Representatives using such facilities, the number of such VWR Representatives
not to exceed 580 in the aggregate. If requested by VWR and agreed to by Xxxxxx,
Xxxxxx shall provide to VWR Facilities Services after the first six months of
the Term subject to Section 4.8 herein.
3. Term.
Baxter shall render the Services and the Additional Services during
the term of this Agreement ("Term") which shall commence on the date of this
Agreement and terminate no later than two years thereafter. This Agreement
shall terminate with respect to all of the Services or Additional Services on a
Region by Region basis pursuant to the termination schedule which shall be
provided by VWR within 30 days after the date of this
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Agreement. With respect to any Region except Hayward, VWR must give Baxter 120
days notice in the termination schedule prior to the date of termination of the
Services or Additional Services. It is understood that all Services or
Additional Services in the Hayward Region will terminate in January 1996. VWR
may shorten the period during which Services or Additional Services are provided
by Baxter in any Region by giving Baxter 120 days written notice prior to the
effective date of termination of such Services or Additional Services. VWR may
extend the period during which Services or Additional Services are provided to
any Region beyond the applicable termination date in the termination schedule
provided by VWR by giving Baxter 120 days written notice prior to the date of
termination of the Services or Additional Services, provided that such notice
sets forth the time period of such extension, which in no case shall extend
beyond the Term, unless extended by mutual agreement, and the Services or
Additional Services to be provided.
4. Consideration.
4.1 In consideration of Baxter providing Services to VWR, VWR shall make
monthly payments to Baxter for such Services ("Services Payments") as set forth
herein, provided that VWR shall not be required to make any Services Payments
during the first three months of this Agreement.
4.2 The Services Payments for the 12 month period from the beginning of
the fourth month through the end of the fifteenth month of the Term shall equal
5.5% of the total sales of the Products to Industrial Customers which are
serviced by Baxter pursuant to the terms of this Agreement ("IC Sales") during
such 12 month period, provided that in no event shall such Services Payments be
less than $18,645,000 in the aggregate during such 12 month period (such
$18,645,000 figure is based on $452,000,000 multiplied by 5.5% multiplied by
9/12). Payments due during such 12 month period shall be due and payable within
15 days following the end of each such month. If during any quarter during such
12 month period the difference between: (a) $4,661,250, less (b) the actual IC
Sales made during such quarter multiplied by 5.5% is greater than zero, then,
within 15 days after the end of each such quarter, VWR shall pay to Baxter an
amount equal to such difference.
4.3 If VWR has made payments to Baxter totalling at least $18,645,000
pursuant to Section 4.2 and the difference between: (a) the actual Services
Payments made by VWR during such 12-month period (including any end-of-quarter
payments) pursuant to Section 4.2 exceeds (b) 5.5% multiplied by IC Sales during
such 12-month period, then VWR shall be entitled to a credit ("Credit") equal to
such excess, which Credit shall be applied against Services Payments for
Services provided during each month
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during the three month period from the beginning of the sixteenth month through
the end of the eighteenth month of the Term.
4.4 The Services Payments for each month during the period from the
beginning of the sixteenth month through the end of the eighteenth month of the
Term shall be actual IC Sales multiplied by 5.5%, provided that any Credit shall
be applied against such Services Payments until such Credit is depleted. Such
Services Payment shall be paid within 15 days of the end of each month during
such period.
4.5 The Services Payments for each month during the period from the
beginning of the nineteenth month through the end of the twenty-fourth month of
the Term shall be 5.5% of actual IC Sales during each such month. Such Services
Payments shall be paid within 15 days of the end of each month during such
period.
4.6 Except as expressly provided herein, no other consideration or
reimbursement shall be payable to Baxter for the Services unless the parties
otherwise agree in writing.
4.7 If Baxter renders any Additional Services to VWR pursuant to the
terms of Section 2.1, VWR shall pay to Baxter in addition to the Services
Payments an amount equal to that set forth in any written agreement providing
for such Additional Services (which the parties acknowledge shall be based upon
the variable cost incurred by Baxter in rendering such Additional Services).
Any such payment for Additional Services shall be paid within 15 days of the end
of each month in which such Additional Services have been rendered.
4.8 If Baxter renders any Facilities Services to VWR after the first
six months of the Term pursuant to the terms of Section 2.7, VWR shall, for each
VWR Representative located at a Baxter facility, pay to Baxter in addition to
the Services Payments $192 per each such VWR Representative per month based on
full-time employment. Baxter shall invoice VWR for such Facilities Services and
specify the number of VWR Representatives and their locations broken out by
full-time and part time employees. Any such payment for Facilities Services
shall be paid within 15 days of the end of each month during which such
Facilities Services have been rendered.
4.9 If any payments due hereunder have not been received by Baxter within
15 days after the date on which such payments are due, such overdue amounts
shall bear interest from the applicable due date until the date paid at the
prime rate published by the Wall Street Journal as of such applicable due date.
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4.10 Notwithstanding anything to the contrary contained herein, if,
during any year during the Term, IC Sales in any Region exceed 125% of the 1994
annual sales level for such Region specified in Exhibit A, Baxter shall not be
obligated to provide any Services to any such Region in connection with any IC
Sales in excess of such 125% amount if the provision of such excess Services
would require Baxter to make any capital expansions.
5. Performance of Services.
5.1 Subject to the other provisions of this Section 5, Baxter shall use
reasonable efforts in providing the Services hereunder and shall perform the
Services in a manner consistent with past practice and with the same degree of
care, skill and prudence customarily exercised by Baxter in providing services
similar to the Services to its own operating divisions prior to the date of this
Agreement. Baxter shall stock inventories of the Products at service levels
consistent with those service levels provided by Baxter to the Industrial
Distribution Business prior to the date hereof. Notwithstanding the foregoing
and upon written request to Baxter from VWR specifying VWR's desired inventory
service level for a given Distributed Product in a given Region, during the 120
day period prior to the date upon which Xxxxxx'x performance of Services shall
cease for the applicable Region, Baxter shall use reasonable efforts (subject to
Xxxxxx'x reasonable business judgment regarding Xxxxxx'x continuing business
needs for such Distributed Product) to cooperate with VWR in managing the
inventories to achieve such service levels.
5.2 Baxter shall prepare and deliver monthly sales, cost of goods sold,
accounts receivable and other reports as such reports were prepared by Baxter
for the Industrial Distribution Business immediately prior to the date hereof
(collectively, the "Reports"). Baxter shall from time to time upon advance
notice provide VWR and/or its independent public accountants or principal
financial institutions with full access to all accounting and other records
which were used to produce, or in any way support, the Reports in connection
with VWR's business.
5.3 Baxter and VWR shall cooperate in planning the scope and timing of the
Additional Services in order to minimize or eliminate interference with the
conduct of Xxxxxx'x business activities.
5.4 In providing the Services, neither Baxter nor its Affiliates shall be
responsible for the accuracy, completeness or timeliness of any advice or
Service or any return, report, filing or other document which it provides,
prepares or assists in preparing, except to the extent that any inaccuracy,
incompleteness or untimeliness arises from the gross negligence
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or willful misconduct of Baxter or its Affiliates; provided that in no event,
whether as a result of a breach of this Agreement, tort liability or otherwise,
shall Baxter be liable to VWR for any special, indirect, incidental or
consequential damages. Baxter and its Affiliates shall provide Services with
respect to such returns, reports, filings and other documents with the same
timeliness and accuracy as it prepared such returns, reports, filings and other
documents for the Industrial Distribution Business immediately prior to the date
hereof, provided that Baxter acknowledges that the timeliness of the Reports are
essential to VWR's ability to meet its financial reporting requirements
(including those imposed by the federal securities laws).
6. Remittances and Settlement.
6.1 Baxter shall invoice VWR on a daily basis as follows:
6.1.1 2.6% times net IC Sales for the applicable day to cover freight
from Xxxxxx'x shipping point(s) (or manufacturer's facility in the case of a
drop shipment) to Industrial Customers in the United States; provided, however,
that Baxter shall credit VWR for any freight collected from Industrial
Customers.
6.1.2 for Baxter Products delivered by Baxter to fulfill Industrial
Customers' orders and invoiced on the applicable day. Such Baxter Products
shall be deemed to have been sold to VWR at the point of shipment to the
Industrial Customer. Baxter shall invoice VWR for such Baxter Products at the
prices then in effect under the terms of the VWR Distribution Agreement.
6.1.3 for Distributed Products delivered by Baxter to fulfill VWR's
Industrial Customer orders and invoiced on the applicable day. Such Distributed
Products shall have been sold to VWR at the time of shipment to Industrial
Customers. Baxter shall invoice VWR for such Distributed Products at
then-current merchandise file costs contained on Xxxxxx'x computer system (which
shall include a factor for inbound freight and duty costs) net of applicable
vendor rebates.
6.1.4 VWR shall pay such invoices by wire transfer or via automated
clearing house within 15 days after the date of each such invoice.
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7. Termination of Services.
7.1 Prior to the date upon which Xxxxxx'x performance of Services shall
cease for any Region, Baxter and VWR shall formulate a mutually acceptable
transition plan, including, without limitation, VWR's purchase of Distributed
Products from Baxter as provided for herein. As part of such transition plan,
VWR shall purchase from the Baxter facility or facilities that have been
servicing customers in that Region, an inventory of Distributed Products at
Xxxxxx'x then-current merchandise file costs (which shall include a factor for
inbound freight and duty costs) which shall include associated excess and/or
no-move Distributed Products (at Xxxxxx'x book value), all F.O.B. the Baxter
facility. The book value of any excess and/or no-move Distributed Products shall
be calculated in accordance with generally accepted accounting principles,
including any associated reserves for inventory write-downs, in a manner
consistent with Xxxxxx'x standard policies.
VWR shall purchase all of Xxxxxx'x inventory of each Distributed
Product that is held by Baxter exclusively for sale to Industrial Customers.
For all other Distributed Products (i.e., those Distributed Products not held
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exclusively for sale to Industrial Customers), the portion of Xxxxxx'x inventory
of each Distributed Product that VWR shall purchase from a given Baxter facility
shall be a fraction ("Fractional Share") of Xxxxxx'x total inventory of such
Distributed Product at such Baxter facility as of 120 days prior to the date
upon which Xxxxxx'x performance of Services shall cease for the applicable
Region. The Fractional Share shall be calculated as follows: the numerator
shall be the unit sales of such Distributed Product to Industrial Customers in
the applicable Region during the 90 day period beginning 210 days and ending 120
days prior to the date upon which Xxxxxx'x performance of Services shall cease
for the applicable Region, and the denominator shall be the total unit sales of
such Distributed Product to all customers in the applicable Region during the 90
day period beginning 210 days and ending 120 days prior to the date upon which
Xxxxxx'x performance of Services shall cease for the applicable Region. For
example if the total inventory of a given Product consists of 100 units and the
sales of such Product during the applicable period consisted of 100 units sold
to Industrial Customers and 100 units sold to customers other than Industrial
Customers, the Fractional Share would be 1/2 and the purchased inventory would
be 50 units. The portion of Xxxxxx'x inventory of each Distributed Product that
VWR shall be obligated to purchase from a given Baxter facility shall be subject
to any reductions in such inventories pursuant to the terms of Section 5.1 of
this Agreement, and in no event shall such portion exceed the Fractional Share
of the inventory of any given Distributed Product as of 120 days prior to the
date upon which Xxxxxx'x performance of Services shall
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cease for the applicable Region. VWR shall pay Baxter the costs for such
Distributed Products within 15 days after the date of termination of Services in
the applicable Region. VWR shall be liable for and shall pay at the time of the
purchase of such Distributed Products all federal, foreign and state sales taxes
and all other sales taxes, duties, documentary stamps, transfer taxes,
registration fees and charges or other like charges properly payable upon and in
connection with the assignment and transfer of such Distributed Products by
Baxter to VWR hereunder. Baxter shall prepare such Distributed Products for
shipment to a VWR location specified by VWR. Pursuant to the implementation of
such transition plan, Baxter shall transfer such Distributed Products as
follows:
7.1.1. Baxter shall provide VWR with a magnetic tape containing the
catalog numbers of such Distributed Products to be purchased;
7.1.2 Baxter shall conduct a physical count of such Distributed
Products to be shipped;
7.1.3 Baxter shall prepare such Distributed Products for shipment to
a specified VWR location pursuant to such transition plan, provided that VWR
shall be solely responsible for all costs associated with such shipment; and
7.1.4 Baxter shall deliver to VWR a detailed invoice (each a "Baxter
Invoice") for such Distributed Products based upon its physical count which
contains prices for each such Distributed Product, which invoice, subject to
Section 7.2. below, shall be final, binding and conclusive on the parties
hereto.
Any adjustments resulting from the physical count (i.e., "ADKS") shall be
provided to VWR within two business days of the reconciliation. VWR shall be
entitled to have its representatives (including its independent auditors)
present during any such physical inventory count.
7.2 VWR, at its own expense, may conduct an audit or review of the
amount set forth on any Baxter invoice, including causing any nationally
recognized firm of independent public accountants designated by VWR to perform
such audit, review or other report. VWR may dispute any Baxter Invoice from
Baxter, but only on the basis that VWR has been invoiced for Distributed
Products at costs other than Xxxxxx'x then-current merchandise file costs (or
book value for excess, no-move) or that such Distributed Products are not in new
or saleable condition (except for such no-move). Any such dispute shall be
initiated by written notice delivered to Baxter within 30 days of VWR's receipt
of any such Products. Such notice shall specify each
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disputed item, the amount thereof and the basis on which such dispute is made.
If Baxter and VWR are unable to reach a written resolution of all disputed items
within 20 days after VWR's written notice of dispute, Baxter and VWR shall
submit the items remaining in dispute for resolution to a firm of independent
public accountants having national standing in the United States which is not
then retained by Baxter, VWR or their respective Affiliates, as mutually
selected by VWR and Baxter (the "Neutral Accounting Firm"). In the event that
Baxter and VWR are unable to agree on the Neutral Accounting Firm, then a
nationally recognized "Big Six" accounting firm shall be selected by lot after
eliminating one such firm selected by Baxter and one such firm selected by VWR.
The Neutral Accounting Firm shall, within 30 days after submission to it of the
disputed items, determine and report in writing to the parties upon such
remaining disputed items in accordance with the provisions hereof; and such
report shall be final, binding and conclusive on the parties hereto. The fees
and disbursements of the Neutral Accounting Firm shall be allocated between
Baxter and VWR in the same proportion that the aggregate amount of such
remaining disputed items so submitted to the Neutral Accounting Firm that is
unsuccessfully disputed by each (as finally determined by the Neutral Accounting
Firm) bears to the total amount of such remaining disputed items so submitted.
The Neutral Accounting Firm shall make such determination in its sole
discretion, subject to the terms and conditions of this Agreement; provided,
however, that the amount determined by the Neutral Accounting Firm in respect of
any such remaining disputed item shall not exceed the highest amount claimed by
either of the parties disputing such item, or be less than the lowest amount
claimed by either of the parties disputing such item.
7.3 VWR shall pay each Baxter Invoice, less any disputed amounts
subject to Section 7.2, by wire transfer within 15 days after the date of such
Baxter Invoice.
7.4 Each mutually acceptable transition plan discussed in Section 7.1
shall contain understandings regarding the delivery of all of Xxxxxx'x records,
books, and other data relating exclusively to the Products previously serviced
by Baxter at such Region, including all accounts receivable data.
7.5 Upon the expiration or termination of this Agreement, Baxter
shall assign, transfer, convey and deliver to VWR, and VWR shall acquire from
Baxter, all of Xxxxxx'x right, title and interest in and to any supplier
agreements pursuant to which, during the calendar year 1994, 80% or more of the
total products purchased by Baxter was sold by Baxter to Industrial Customers as
VWR shall request, plus the agreements with Mallincrodt Chemical, Sartorius
Corporation, Texwipe Company, X.X. Xxxxx Inc. and Berkshire (collectively, the
"Supplier Agreements"). Upon the
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transfer and acquisition of the Supplier Agreements, VWR shall assume and agree
to pay, perform or discharge when due in accordance with their respective terms
all liabilities and obligations of Baxter under the Supplier Agreements to be
performed after the date of expiration or termination of this Agreement, except
to the extent that such liabilities and obligations relate to a breach of a
Supplier Agreement by Baxter prior to the termination or expiration of this
Agreement. During the Term, Baxter shall (a) conduct its business in connection
with the Supplier Agreements only in the ordinary course substantially
consistent with past practice, (b) use reasonable efforts to preserve the
goodwill of the suppliers related to the Supplier Agreements, and (c) administer
the Supplier Agreements in good faith. Baxter shall provide notice to and/or
consult with VWR regarding any material changes or proposed material changes to
the Supplier Agreements.
8. Indemnity.
8.1 VWR agrees to indemnify and hold Baxter and the Baxter Indemnified
Parties (as hereinafter defined) harmless from and against, and in respect of,
any and all damages, claims, losses, demands, suits, losses, fines, penalties
and liabilities ("Losses") asserted against or incurred by, and all expenses
(including all reasonable fees and expenses of counsel, travel costs and other
out-of-pocket costs) incurred in connection with pending or threatened
litigation or other proceedings ("Expenses") by, Baxter or any of the Baxter
Indemnified Parties and which arise out of or relate to the provision of
Services hereunder by Baxter or any of the Baxter Indemnified Parties which
arise out of or relate to any claim, action or proceeding asserted by a third
party to the extent arising specifically out of any matter or thing specifically
constituting a breach by VWR hereunder or any wrongful or negligent act or
omission by VWR (or its employees or agents) in its performance of the terms of
this Agreement. The Baxter Indemnified Parties shall mean and include: (x)
Xxxxxx'x Affiliates; and (y) the respective directors, officers, agents and
employees of Baxter and its Affiliates. Expenses shall be reimbursed or advanced
when and as incurred promptly upon submission by Baxter or any Baxter
Indemnified Party of statements to VWR.
8.2 Baxter agrees to indemnify and hold VWR and the VWR Indemnified
Parties (as hereinafter defined) harmless from and against, and in respect of,
any and all damages, claims, losses, demands, suits, losses, fines, penalties
and liabilities ("Losses") asserted against or incurred by, and all expenses
(including all reasonable fees and expenses of counsel, travel costs and other
out-of-pocket costs) incurred in connection with pending or threatened
litigation or other proceedings ("Expenses") by, VWR or any of the VWR
Indemnified Parties and
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which arise out of or relate to the provision of Services hereunder to VWR or
any of the VWR Indemnified Parties which arise out of or relate to any claim,
action or proceeding asserted by a third party to the extent arising
specifically out of any matter or thing specifically constituting a breach by
Baxter hereunder or any wrongful or negligent act or omission by Baxter (or its
employees or agents) in its performance of the terms of this Agreement. The VWR
Indemnified Parties shall mean and include: (x) VWR's Affiliates; and (y) the
respective directors, officers, agents and employees of VWR and its Affiliates.
Expenses shall be reimbursed or advanced when and as incurred promptly upon
submission by VWR or any VWR Indemnified Party of statements to Baxter.
9. Third Party Claims.
If any third party shall make any claim or commence any arbitration
proceeding or suit against any one or more of the Indemnified Persons with
respect to which an Indemnified Person intends to make any claim for
indemnification against VWR under Section 8.1 or against Baxter under Section
8.2, such Indemnified Persons shall promptly give written notice to VWR or
Baxter, as the case may be, of such third party claim, arbitration proceeding or
suit and the following provisions shall apply:
9.1 Subject to Section 9.2, such Indemnified Persons shall have the right
to conduct and control, through counsel of their choosing, the defense of any
third party claim, arbitration proceeding or suit, and such Indemnified Persons
may settle the same; provided that such Indemnified Persons shall give the
indemnifying party advance notice of any proposed settlement. Such Indemnified
Persons shall permit the indemnifying party to participate in the defense of any
such action or suit through counsel chosen by it, provided that the fees and
expenses of such counsel shall be borne by the indemnifying party. Any
settlement with respect to a claim for money damages effected by such
Indemnified Persons after the indemnifying party has notified such Indemnified
Persons in writing of the indemnifying party's disapproval of such settlement,
shall discharge the indemnifying party from liability with respect to the
subject matter thereof under this Agreement, and no claim for indemnification
therefor shall be claimed by such Indemnified Persons under Section 8.1 or
Section 8.2, as the case may be.
9.2 Notwithstanding Section 9.1, if the remedy sought in any claim,
arbitration proceeding or suit referred to in this Section 9 is solely money
damages, the indemnifying party shall have 15 business days after receipt of the
notice referred to above in this Section 9 to notify such Indemnified Persons
that it elects to conduct and control the defense of such claim, proceeding or
suit. If the indemnifying party does not give the
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foregoing notice, such Indemnified Persons shall have the right to defend or
settle such claim, proceeding or suit in the exercise of their exclusive
discretion, and the indemnifying party shall, upon request from any of such
Indemnified Persons, promptly pay to them in accordance with Section 8.1 or
Section 8.2, as the case may be, the amount of any liabilities, damages, losses
and expenses, including reasonable attorney's fees, resulting from such claim,
proceeding or suit. If the indemnifying party gives the foregoing notice, the
indemnifying party shall have the right to undertake, conduct and control,
through counsel of its own choosing and at the sole expense of the indemnifying
party, the conduct and control of the defense and any settlement of such claim,
proceeding or suit, and such Indemnified Persons shall cooperate with the
indemnifying party in connection therewith; provided that: (a) the indemnifying
party shall not thereby permit to exist any lien, encumbrance or other adverse
charge upon any asset of any of such Indemnified Persons; (b) the indemnifying
party shall permit such Indemnified Persons to participate in such defense or
settlement through counsel chosen by such Indemnified Persons, but the fees and
expenses of such counsel shall be borne by such Indemnified Persons except as
provided in clause (c) below; and (c) the indemnifying party shall agree to
reimburse promptly under Section 8.1 or Section 8.2, as the case may be, such
Indemnified Persons for the full amount of any liabilities, damages, losses and
expenses, including reasonable attorneys' fees, resulting from such claim,
proceeding or suit, except in each case for any fees and expenses of counsel for
such Indemnified Persons incurred after the assumption of the conduct and
control of such claim, proceeding or suit by the indemnifying party. So long as
the indemnifying party is contesting any such claim, proceeding or suit in good
faith, such Indemnified Persons shall not pay or settle any such claim,
proceeding or suit; provided, however, that such Indemnified Persons shall have
the right to pay or settle any such claim, proceeding or suit; provided,
further, that in such event such Indemnified Persons shall be deemed to have
waived any right to indemnity therefor by the indemnifying party under Section
8.1 or Section 8.2, as the case may be.
10. Confidentiality.
10.1 Each of Baxter and VWR undertakes to the other, on behalf of itself
and its employees, officers, directors, agents and Affiliates, that it shall
keep confidential and shall not, without the prior written consent of the party
to whom the information relates, disclose to any person, nor use or exploit
commercially for its own purposes, any information obtained relating to the
subject matter or performance of this Agreement; provided, however, that each of
Baxter and VWR may disclose such information: (a) to its Affiliates for any
purposes reasonably incidental to the purposes of this Agreement; (b) to its
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respective advisors for use in connection with rendering advice with respect to
the performance of this Agreement; and (c) as is required to be disclosed by
operation of law, legal process or any stock exchange regulations or any binding
judgment or order, or by any requirement or any competent, federal, provincial,
state, local or foreign court, administrative agency or governmental or
regulatory authority or body. In performing its obligations under this Section
10.1, each of Baxter and VWR shall use all reasonable efforts to ensure that its
employees, officers, directors and agents and Affiliates observe the foregoing
confidentiality obligations.
10.2 Section 10.1 shall not apply to information:
10.2.1 acquired from a third party with the right to divulge the same;
10.2.2 which, prior to or after the date of this Agreement, Baxter
and VWR jointly decided to disclose; or
10.2.3 which is or becomes within the public domain (otherwise than
through the fault of the recipient party).
11. Suspension/Termination.
Baxter may suspend the provision of any Services, Additional Services
or Facilities Services for which payment has not been received within 30 days
following the date on which such payment is due until such payments have been
received by Baxter and any such failure to pay within such 30-day period shall
be considered a material default hereunder, provided that the foregoing shall
not apply to any portion of any invoice that is disputed in good faith by VWR.
Either party shall have the right to terminate this Agreement effective upon
delivery of written notice to the other party if the other party: (a) makes an
assignment for the benefit of creditors, or becomes bankrupt or insolvent, or is
petitioned into bankruptcy, or takes advantage of any federal, provincial or
foreign bankruptcy or insolvency act, or if a receiver or receiver/manager is
appointed for all or any substantial part of its property and business and such
receiver or receiver/manager remains undischarged for a period of 30 days, or if
the corporate existence of the other party is terminated by voluntary or
involuntary dissolution; or (b) materially defaults in the performance of any of
its covenants or obligations contained in this Agreement and such default is not
remedied to the non-defaulting party's reasonable satisfaction within 30 days
after written notice to the defaulting party of such default, or if such default
is not capable of rectification within 30 days, if the defaulting party has not
promptly commenced to rectify the default within such 30 day period, and
thereafter proceeds diligently to rectify same, provided that
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such right of rectification shall not extend the Term as provided in Section 3.
12. Non-Exclusivity.
Nothing in this Agreement shall preclude VWR from obtaining the
Services, in whole or in part, from its own employees or from providers other
than Baxter at any time; provided that VWR shall be responsible for paying to
Baxter Services Payments as provided for herein. Subject to the terms and
conditions of Section 4.11 of the Asset Purchase Agreement, nothing shall
preclude Baxter or any of its Affiliates from providing services comparable to
the Services to any other person or entity at any time.
13. Notices.
Any notice, request, demand or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given
if delivered or sent by facsimile transmission, upon receipt, or if sent by
registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of 3 days after deposit in United States post
office facilities properly addressed with postage prepaid. All notices to a
party shall be sent to the address set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
To VWR: c/o VWR Corporation
Goshen Corporate Park West
0000 Xxxxxx Xxxxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: President
With a copy to: Drinker Xxxxxx & Xxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxx
To Baxter: Xxxxxx Healthcare Corporation
Xxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
With a copy to: Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
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Facsimile: (000) 000-0000
Attention: Xxxx X. X'Xxxx
Any notice given hereunder may be given on behalf of any party by its counsel or
other authorized representatives.
14. Miscellaneous.
14.1 This Agreement shall constitute the entire agreement between
Baxter and VWR with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.
14.2 This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Illinois and the federal laws of the
United States of America applicable therein. Any lawsuit arising from or
related to this Agreement shall be brought before the United States District
Court for the Northern District of Illinois or the Eastern District of
Pennsylvania or an Illinois state court sitting in Lake County, Illinois, or any
Commonwealth Court sitting in Xxxxxxx County, Pennsylvania. The parties hereby
consent to the jurisdiction of such courts.
14.3 This Agreement may not be amended or modified, nor may compliance
with any condition or covenant set forth herein be waived, except by a writing
duly and validly executed by each party hereto, or in the case of a waiver, the
party waiving compliance.
14.4 This Agreement shall be binding upon and enure to the benefit of
the parties hereto and their respective successors and assigns, provided,
however, that neither party shall have the right to transfer or assign its
interest in this Agreement without the prior written consent of the other party,
which consent shall not be unreasonably withheld.
14.4.1 Notwithstanding the foregoing, either party may assign its
rights and obligations, in whole or in part, to any Affiliate
provided that the assigning party guarantees performance by
such Affiliate.
14.4.2 Notwithstanding the foregoing provisions of this Section
14.4, Baxter may assign its rights and obligations under this
Agreement to any corporation or other entity that shall
acquire all or substantially all of Xxxxxx'x business and
assets and who shall assume in writing all of Xxxxxx'x
obligations hereunder
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and deliver a signed copy of such assumption instrument to
VWR; provided, further, that upon VWR's receipt of such
assumption instrument, Baxter shall be fully released and
discharged from its obligations under this Agreement.
14.4.3 Notwithstanding the foregoing provisions of this
Section 14.4, to the extent that any corporation or other
entity shall acquire all or substantially all of Xxxxxx'x
business and assets relating to any of the Products, Baxter
may assign a corresponding portion of its rights hereunder to
such corporation or entity, provided that any such
corporation or entity shall assume in writing all of Xxxxxx'x
obligations hereunder which correspond to the portion of
rights assigned, and shall deliver a signed copy of such
assumption instrument to VWR.
14.5 The terms and provisions of this Agreement are intended solely for
the benefit of Baxter and VWR and their respective Affiliates, successors or
permitted assigns, and it is not the intention of the parties to confer third
party beneficiary rights upon any other person.
14.6 Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall be ineffective to the extent of such prohibition or
unenforceability without affecting, impairing or invalidating the remaining
provisions or the enforceability of this Agreement.
14.7 The failure at any time of either party to require performance by the
other party of any responsibility provided for in this Agreement shall in no way
affect the right to require full performance of any such responsibility at any
time thereafter, nor shall the waiver by either party of a breach of any
provision of this Agreement by the other party constitute a waiver of any
succeeding breach of the same or any other provision nor shall it constitute a
waiver of the responsibility itself.
14.8 Baxter is acting as an independent contractor in connection with
providing the Services and neither party constitutes the other as its agent,
partner, joint venturer, or legal representative or has express or implied
authority to bind the other in any manner whatsoever. All employees and
representatives of Baxter providing the Services to VWR shall be deemed for
purposes of all compensation and employee benefits to be employees of
representatives of Baxter and not employees or
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representatives of VWR. In performing the Services, such employees and
representatives shall be under the direction, control and supervision of Baxter
(and not of VWR) and Baxter shall have the sole right to exercise all authority
with respect to the employment (including termination of employment), assignment
and compensation of such employees and representatives.
14.9 The obligations of either party to perform under this Agreement shall
be excused during each period of delay caused by matters (not including lack of
funds or other financial causes) such as strikes, supplier delays, shortages of
raw materials, government orders or acts of God, which are reasonably beyond the
control of the party obligated to perform. Any delay occasioned thereby shall
not constitute a default under this Agreement, and the obligations of the
parties shall be suspended during the period of delay so occasioned.
* * * * * * *
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IN WITNESS WHEREOF, the parties have by their duly authorized officers
executed this Agreement as of the date first above written.
XXXXXX HEALTHCARE CORPORATION
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
Strategic Initiatives
VWR CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
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