1
EXHIBIT 10.1
4 AUGUST 1997
AMERSHAM INTERNATIONAL PLC
AMERSHAM PHARMACIA BIOTECH LIMITED
==========================================
AGREEMENT RELATING TO THE
PROVISION OF GENERAL SERVICES
==========================================
[FRESHFIELDS LOGO]
2
CONTENTS
CLAUSE PAGE
INTERPRETATION ............................................. 1
SERVICES TO BE PROVIDED .................................... 2
BIOTECH'S OBLIGATIONS ...................................... 3
INTERNATIONAL'S OBLIGATIONS ................................ 4
CHARGES .................................................... 4
LIABILITY .................................................. 6
FORCE MAJEURE .............................................. 7
DURATION AND TERMINATION ................................... 7
EFFECT OF TERMINATION ...................................... 9
NATURE OF AGREEMENT ........................................ 10
NOTICES .................................................... 12
TERMS OF REFERENCE FOR DISPUTES ............................ 13
ARBITRATION AND GOVERNING LAW .............................. 13
SCHEDULE 1 ................................................. 14
Part A: SERVICES TO BE PROVIDED BY INTERNATIONAL .... 14
Part B: SERVICES TO BE PROVIDED BY AMERSHAM
HOLDINGS, INC. ....................................... 21
SCHEDULE 2 ................................................. 26
SHARED SERVICE TERMINATION ......................... 26
3
AN AGREEMENT made on 4 August 1997
BETWEEN
AMERSHAM INTERNATIONAL PLC (Company no. 1002610) whose registered office is at
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (INTERNATIONAL)
AMERSHAM PHARMACIA BIOTECH LIMITED (Company no. 3366621) whose registered office
is at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (BIOTECH)
WHEREAS
(A) Pursuant to the Contribution Agreement dated 10 June 1997, as amended by the
Contribution Amendment Agreement, dated 4 August, 1997 (CONTRIBUTION AGREEMENT),
between International, Pharmacia & Upjohn Inc. (PHARMACIA & UPJOHN) and Biotech,
International and Pharmacia & Upjohn have agreed to merge (the BIOTECH MERGER)
their respective life science businesses to form a new company, Biotech.
(B) Biotech wishes International and certain of its subsidiaries to provide
various services in relation to the Biotech Business (as defined below) and
International is willing to provide the same on the terms and conditions of this
Agreement.
IT IS AGREED as follows:
INTERPRETATION
1.1 The following terms shall, unless the context otherwise requires, have the
following respective meanings:
AM LABS SITE means all that freehold property known as Amersham Laboratories,
White Lion Road, Amersham;
AMERSHAM GROUP means International, any holding company from time to time of
International and any subsidiary of International or of any such holding company
(other than the Biotech Group);
AMERSHAM PARTIES means International and Holdings;
BIOTECH BUSINESS means the business of Biotech, comprising the life science
business of International and the biotechnology business of Pharmacia & Upjohn;
BIOTECH GROUP means Biotech, any holding company from time to time of Biotech
and any subsidiary of Biotech or of any such holding company;
BIOTECH SITES means the sites based at (i) 1st Floor, Amersham Place, Little
Chalfont, Buckinghamshire HP7 9NA, (ii) ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇▇'▇, White
Lion Road, Amersham (iii) Pollards Wood, (iv) Mandeville House; (v) ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇; (vi) 26111
4
Miles-Road, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; and (vii) ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
BUSINESS DAY means any day other than Saturday or Sunday or a Bank or Public
Holiday;
BUSINESS HOURS means the hours of 8.30 a.m. to 5.30 p.m.;
CARDIFF SITE means all that freehold property known as Forest Farm, Whitchurch,
Cardiff;
COMPLETION means completion of the Contribution Agreement in accordance with
clause 6 thereof;
CONTRACT MANUFACTURE AGREEMENTS means the Contract Manufacture and Research and
Development Agreements in the agreed form to be made between International and
Amersham Life Science Limited pursuant to which International agrees to
manufacture certain products and provide certain research and development
services for Amersham Life Science Limited at the Cardiff Site and the Am Labs
Site;
FORCE MAJEURE means in relation to either party, any circumstances beyond the
reasonable control of that party (including, without limitation, any strike,
lockout or similar form of industrial action);
HOLDINGS means Amersham Holdings, Inc. a Delaware company and a wholly owned
subsidiary of International;
INTERNATIONAL YEAR END is, in any one year, 31 December (or such other date as
International may select from time to time);
LIBOR means the arithmetic mean (rounded upward to five decimal places) of the
rates quoted by the principal office in London of Lloyds Bank plc and National
Westminster Bank plc to leading banks in the London Interbank market at or about
11.00 a.m. on the relevant date for the offering of deposits in Sterling for a
one-month period;
SERVICES means the services which are to be provided by the Amersham Parties to
Biotech in accordance with this Agreement set out in Schedule 1.
1.2 References to statutory provisions shall, except where the context requires
otherwise, be construed as references to those provisions as respectively
amended or re-enacted or as their application is modified by other statutory
provisions (whether before or after the date hereof) from time to time.
1.3 Headings are inserted for convenience only and shall not affect the
construction of this Agreement or the Schedules hereto.
SERVICES TO BE PROVIDED
2.1 The Amersham Parties will provide the Services to Biotech on the terms and
conditions set out herein during Business Hours of each Business Day, as and
when requested by Biotech, for so long as this Agreement shall remain in force.
5
2.2 The Amersham Parties shall use all reasonable endeavours to ensure that the
personnel providing the Services are suitably qualified. In connection with the
provision of Services hereunder, the Amersham Parties will comply in all
material respects with all applicable laws, regulations and safety guidelines of
all governmental entities.
2.3 Save as otherwise specifically agreed herein, the Amersham Parties shall, in
supplying the Services under this Agreement, comply with such practices and
procedures as were followed in respect of the relevant services prior to the
Biotech Merger and will perform the Services in all material respects in the
same manner and with the same level of efficiency as the Services were performed
prior to Completion.
2.4 The Amersham Parties undertake that they each will use reasonable endeavours
to provide the Services in a cost efficient and effective manner.
2.5 Forthwith upon the termination of this Agreement, howsoever caused, the
Amersham Parties shall return or deliver to Biotech all books, records
(including machine readable records) and documents in the possession or control
of the Amersham Parties and which relate to the provision of the Services
hereunder.
BIOTECH'S OBLIGATIONS
3.1 Biotech shall ensure that all relevant personnel of the Amersham Parties
have such access to the Biotech Sites and to any information or records kept by,
or under the control of, Biotech in relation to the Biotech Business as is
necessary to enable the Amersham Parties to provide the Services. In particular,
without prejudice to the generality of the foregoing, Biotech shall ensure that
appropriate payroll data is supplied, as required, to International on a timely
basis each month and to Holdings on a bi-weekly basis.
3.2 Biotech shall take such reasonable steps as may be necessary to ensure the
safety of any of the personnel of the Amersham Parties who visit any of the
Biotech Sites.
3.3 Biotech shall use reasonable endeavours to respond promptly to any requests
for guidance, instruction or information reasonably required by the Amersham
Parties to enable them to provide the Services.
3.4 Biotech shall keep confidential all information concerning the Amersham
Parties (and other members of the Amersham Group) or the Services imparted or
received under or in connection with this Agreement and shall not divulge the
same to any third party without the prior written consent of International.
Should disclosure of any such information be required by law or by any final,
non-appealable judgement of any court of competent jurisdiction, then Biotech
shall be entitled to disclose the same subject only to prior consultation with
International as to the form and content of such disclosure.
3.5 Biotech undertakes to ensure that any stationery (including, without
limitation, cheques, letterhead and invoices) supplied to the Amersham Parties
6
to enable the Amersham Parties to provide the Services shall be fully compatible
with the systems and equipment maintained by the Amersham Parties.
INTERNATIONAL'S OBLIGATIONS
4.1 The Amersham Parties shall ensure that all relevant Biotech personnel have
such access to any sites operated by the Amersham Parties and to any information
or records kept by, or under the control of, the Amersham Parties in relation
to the Biotech Business as is necessary to enable Biotech to comply with its
obligations in relation to the Services.
4.2 The Amersham Parties shall take such reasonable steps as may be necessary to
ensure the safety of any of the personnel of Biotech who visit any sites
operated by the Amersham Parties.
4.3 The Amersham Parties shall use reasonable endeavours to respond promptly to
any requests for information reasonably required by Biotech in connection with
the provision of Services under this Agreement.
4.4 The Amersham Parties shall keep confidential all information concerning
Biotech (and any other member of the Biotech Group) or the Services imparted or
received under or in connection with this Agreement and shall not divulge the
same to any third party without the prior written consent of Biotech. Should
disclosure of any such information be required by law or by any final,
non-appealable judgement of any court of competent jurisdiction, the Amersham
Parties shall be entitled to disclose the same subject only to the prior
consultation with Biotech as to the form and content of such disclosure.
CHARGES
5.1 For the period between the date of this Agreement and the International Year
End next following the date of this Agreement, the charges for the provision of
the Services shall be calculated using the bases set out in Schedule 1 (as
revised from time to time in accordance with clause 5.5). For the avoidance of
doubt, in no event shall Biotech be obliged to pay an amount in respect of
Services in excess of the cost to the Amersham Parties of providing such
Services and, for this purpose, the cost to the Amersham Parties shall be
determined in accordance with the bases set out in Schedule 1 (provided that
such bases are no less favourable to Biotech than past practice as previously
disclosed to Pharmacia & Upjohn) and generally accepted accounting principles in
the United Kingdom.
5.2 In respect of the period referred to in clause 5.1 and any period between
the end of such period and any subsequent International Year End, subject to
clause 5.3 below, the Amersham Parties will on the first Business Day of each
calendar month within that period deliver to Biotech an invoice for an amount
equal to one twelfth of the estimated annual charge as specified in Schedule 1
(as revised from time to time in accordance with clause 5.5) in respect of each
service then being provided, in each case together with VAT thereon, if
applicable. Within twenty Business Days of delivery thereof, Biotech shall pay
7
by telegraphic transfer to the accounts from time to time notified to Biotech by
the Amersham Parties the amount specified on such invoice (together with any VAT
thereon, if applicable).
5.3 Within ten Business Days of the last day of each of the four three calendar
month periods ending on an International Year End, the Amersham Parties shall
send to Biotech a statement showing the amount (if any) by which the aggregate
amount of the invoices delivered in such period pursuant to clause 5.2 is either
more or less than the actual aggregate cost of the Services for such quarter
determined in accordance with clause 5.1 and Schedule 1 (as it may be revised
from time to time) and (i) the amount of the excess (if more) shall be deducted
from the next payment due to be made by Biotech to the relevant Amersham Party
under clause 5.2 above (and the amount of the invoice to be delivered by such
Amersham Party shall be reduced accordingly); or (ii) the amount of the
shortfall (if less) shall be added to the next payment due to be made by Biotech
to the relevant Amersham Party under clause 5.2 (and the amount of the invoice
to be delivered by such Amersham Party shall be increased accordingly (including
any VAT thereon, if applicable)).
5.4 If Biotech shall not pay any amount on the due date in accordance with this
Agreement, any amount unpaid shall bear interest at a rate equal to the base
rate from time to time of LIBOR plus 1% from the date of due payment to and
including the date of payment, whether before or after judgement.
5.5 By not later than 30 days prior to the date of each consecutive
International Year End following the date of this Agreement, the Amersham
Parties will produce, and will deliver to Biotech, a revised Schedule 1
containing the estimated charging rates for the provision of the Services for
the following year and the bases for the calculation of such rates.
5.6 Without prejudice to the generality of clause 4.1, in the event that Biotech
and/or Pharmacia & Upjohn disagrees with any statement delivered by the Amersham
Parties pursuant to clause 5.3 or any revision to Schedule 1 made in accordance
with clause 5.5 or any payments to be made pursuant to clause 9.2, the Amersham
Parties shall, upon request, supply Biotech and/or Pharmacia & Upjohn with such
information as is reasonably necessary to support the calculations contained in
such statement. The Amersham Parties shall also permit Biotech to have such
access as it may reasonably request on reasonable notice to the books and
records maintained by the Amersham Parties in connection with the provision of
the Services to enable Biotech to verify such information. The parties shall use
all reasonable endeavours (in conjunction with their respective accountants) to
meet and discuss the basis of the calculations contained in such statement but
if they fail to reach agreement within twenty Business Days of delivery of the
statement, then, unless the parties agree otherwise, the dispute shall be
referred to a partner of an independent internationally recognised firm of
chartered accountants agreed upon by the parties or, failing agreement, to be
selected by the president for the
8
time being of the Institute of Chartered Accountants in England and Wales. The
terms of reference set out in clause 12 shall apply.
5.7 If, at the request of Biotech, the Amersham Parties provide a service or
services to Biotech which is not specified in Schedule 1, Biotech shall pay to
the Amersham Parties a reasonable sum for such service or services.
LIABILITY
6.1 Without prejudice to any other limitation or exclusion of liability under
this Agreement (and without prejudice to the rights of either party to ▇▇▇ the
other for damages for breach of this Agreement):
(a) the Amersham Parties shall not be liable to Biotech for any loss of
profits or other indirect or consequential loss of any kind, as a result
of the provision of the Services (excluding, for the avoidance of doubt,
any loss or liability arising from death or personal injury due to the
negligence of the Amersham Parties);
(b) the total liability of the Amersham Parties to Biotech in respect of any
one event, or series of connected events, shall not exceed the total
charges paid by Biotech to the Amersham Parties for the Services in the
twelve month period prior to the occurrence of such event or series of
events less any amount already paid in that period to Biotech by the
Amersham Parties under any warranty, indemnity or other obligation under
this Agreement or in respect of any breach of this Agreement.
6.2 Subject to clause 6.1 and to clause 7, Amersham Parties will indemnify
Biotech and hold it harmless from and against any claim or action (including
reasonable litigation costs and expenses including reasonable legal fees)
brought by any third party against Biotech arising from any negligent or
reckless act or omission on the part of the Amersham Parties or any of the
personnel of the Amersham Parties.
6.3 Biotech will indemnify the Amersham Parties for any loss or damage
(including reasonable litigation costs and expenses including reasonable legal
fees) which the Amersham Parties suffer as a result of any claim or action
brought by a third party against the Amersham Parties in respect of any Services
provided by the Amersham Parties hereunder, which claim or action has not arisen
from any negligent or reckless act or omission on the part of the Amersham
Parties or any of the personnel of the Amersham Parties.
6.4 For the avoidance of doubt, the Amersham Parties shall have no liability to
Biotech in respect of or arising out of the performance, or non-performance, of
the Services save as expressly set out in this Agreement.
6.5 In particular, without prejudice to the generality of the foregoing, Biotech
hereby confirms and acknowledges that:
(a) it undertakes to check and verify any accounts and supporting schedules
prepared by International; and
9
(b) it shall in no way hold the Amersham Parties responsible or liable for any
errors or omissions made in financial reporting or administrative support
to the extent that any such errors or omissions arise, whether directly or
indirectly as a result of inaccurate, insufficient or out of date
information having been provided by Biotech after the date of this
Agreement.
FORCE MAJEURE
7.1 If either party is affected by Force Majeure it shall promptly notify the
other party of the nature and extent of the circumstances in question.
7.2 Notwithstanding any other provision of this Agreement, neither party shall
be deemed to be in breach of this Agreement, or otherwise be liable to the
other, for an delay in performance or other non-performance of any of its
obligations under this Agreement to the extent that the delay or non-performance
is due to any Force Majeure of which it has notified the other party.
7.3 Where a Force Majeure prevents performance of any of their obligations under
this Agreement, the Amersham Parties and Biotech undertake to use reasonable
endeavours to bring the Force Majeure to a close. If Biotech has paid to the
Amersham Parties any amount in respect of the cost of Services that the Amersham
Parties has not provided as a result of Force Majeure and the Amersham Parties
have a policy of insurance in force which enables them to make a claim to cover
any loss they suffer as a result of such Force Majeure, the Amersham Parties
shall make a claim under such policy and account to Biotech for the proceeds of
any such claim to the extent that they represent an amount in respect of the
same costs for which the Amersham Parties has been paid by Biotech as referred
to above.
7.4 If at any time any of the Amersham Parties is affected by Force Majeure in
respect of its obligations under this Agreement with regard to the provision of
the Services or any of them, Biotech shall be entitled to obtain from any other
person the provision of such services as such Amersham Party is unable to
provide, but the Amersham Parties shall, in no way, be held liable or
accountable for any additional cost, loss or liability incurred by Biotech in so
doing.
7.5 Where a Force Majeure event comprises any strike, lock out or similar
industrial action involving some or all of International's employees at the
Site, the Amersham Parties shall be obliged to consult with Biotech regarding
such industrial action and the Amersham Parties shall be obliged to take such
course of action in respect of such strike, lock out or similar industrial
action as Biotech may reasonably request.
DURATION AND TERMINATION
8.1 This Agreement shall come into force on the date hereof and shall continue
in force unless and until terminated in accordance with the following provisions
of this clause 8.
10
8.2 Subject to clause 8.3 below, at any time on or after the date which is six
months after the date of this Agreement, Biotech may give the Amersham Parties
at least six months' notice in writing to terminate a11 or part of the Services.
8.3 Termination of all or part of the Services provided (i) on or in connection
with Biotech Sites which are granted by lease by the Amersham Parties may not
occur until the date of expiry of the relevant lease and (ii) on or in
connection with the Am Labs and/or Cardiff Sites may not occur until the
termination of the Contract Manufacture Agreement relating to that Site.
8.4.1 Either party shall be entitled forthwith to terminate this Agreement by
written notice to the other if:
(a) that other party commits any material breach of any of the provisions of
this Agreement (save for any breach which is caused by the party seeking
to rely on it) and, in the case of such a breach which is capable of
remedy, fails to remedy the same within 30 days after receipt of a written
notice giving reasonable information concerning the breach;
(b) an encumbrancer takes possession of, or a receiver is appointed over, a
substantial proportion of the property or assets of that other party;
(c) that other party makes any voluntary arrangement with its creditors or
becomes subject to an administration order;
(d) that other party goes into liquidation (except for the purposes of an
amalgamation, reconstruction or other reorganisation and in such manner
that the company resulting from the reorganisation effectively agrees to
be bound by or to assume the obligations imposed on that other party under
this Agreement); or
(e) that other party ceases, or is likely to cease, to carry on business.
8.4.2 In the event of a Controlling Interest in International being acquired by
a third party, Biotech shall be entitled at any time following such event to
terminate this Agreement by 30 days written notice to International (Controlling
Interest meaning (i) the ownership or control (directly or indirectly) of more
than fifty (50) per cent of the voting share capital of International; or (ii)
the ability to direct the casting of more than fifty (50) per cent of the votes
exercisable at general meetings of International on all, or substantially all,
matters; or (iii) the right to appoint or remove directors of International
holding a majority of the voting rights at meetings of the board on all, or
substantially all, matters).
8.5 For the purpose of sub-clause 8.4(a), a breach shall be considered capable
of remedy if the party in breach can comply with the provision in question in
all respects other than as to the time of performance.
8.6 This Agreement may terminate at any time with the written agreement of all
parties.
11
8.7 International may terminate this Agreement on three months' notice ending On
or after the sale of any interest in Biotech or any holding company of
Biotech (whether by way of flotation or trade sale or otherwise) such that
International ceases to have a direct or indirect interest in at least 50
per cent. of the voting rights attaching to the ordinary shares of Biotech.
8.8 Any waiver by either party of a breach of any provision of this Agreement
shall not be considered as a waiver of any subsequent breach of the same or
any other provision.
8.9 The rights to terminate this Agreement given by this clause 8 shall not
prejudice any other right or remedy of either party in respect of the breach
concerned (if any) or any other breach.
EFFECT OF TERMINATION
9.1 Subject (i) to the remainder of this clause 9 and to the obligations of the
parties under clauses 3.4, 4.4, 6.2 and 6.3 which shall continue to have effect
following termination; (ii) to any rights or obligations which have accrued
prior to termination (including, without limitation, any obligation of either
party to pay any other party pursuant to clause 4 for any Services provided);
and (iii) as otherwise expressly provided in this Agreement, upon the
termination of this Agreement for any reason, neither party shall have any
further obligation to the other under this Agreement.
9.2 Following termination of all or any part of the Services provided hereunder
as a result of any notice given by Biotech under clause 8.2, Biotech will
continue to pay to the Amersham Parties amounts in respect of the actual costs
incurred by the Amersham Parties following such termination as a result of
having made available, inter alia, facilities and personnel so as to have been
able to provide the Services so terminated, such amounts to be determined and
paid in accordance with the provisions of Schedule 2.
9.3 Following termination of all or part of the Services provided hereunder as a
result of any notice given by Biotech under clause 8.2 (whether upon termination
of this Agreement or otherwise), the Amersham Parties shall, in consultation
with and taking into account any requests of Biotech, use reasonable endeavours
to reduce the costs incurred by it referred to in clause 9.2 above. Subject as
provided below, Biotech will reimburse the Amersham Parties for such sums as may
be certified by the Amersham Parties as equal to any costs, expenses or other
liabilities incurred by the Amersham Parties as a result of reducing such
costs as aforesaid (including, but not exclusively limited to, redundancy
payments incurred in respect of the termination of the employment of any person
involved in providing such Services, payments made to third parties, relocation
costs, surrender of leases and writing down of assets); provided that in no
event shall Biotech be required to reimburse the Amersham Parties for sums
which, in the aggregate (and taking into account a discount rate equal to LIBOR
to present value for amounts to be paid by Biotech pursuant to clause 9.2),
exceed the amounts which would otherwise have been paid by
12
Biotech pursuant to clause 9.2 and Schedule 2 in respect of all such terminated
Services. The Amersham Parties will consult with Biotech to determine whether
any such costs, expenses or liabilities may be reduced by Biotech agreeing to
employ any personnel used in providing the relevant Services or otherwise. Any
certificate produced or prepared by the Amersham Parties in accordance with this
clause 9.3 shall be delivered to Biotech on the first Business Day of each of
the four three calendar month periods ending on an International Year End,
together with an invoice in respect of the amount of the costs, expenses and
other liabilities (including VAT, as applicable) incurred in that quarter. Any
amounts payable by Biotech under this clause 9.3 shall be paid within twenty
Business Days of delivery of such invoice.
9.4 The Amersham Parties undertake that if, following the termination of
any Services, they continues to employ any person who had assisted in providing
such Services, all or part of the Amersham Parties' costs in respect of whom are
being charged to Biotech pursuant to this clause 9, they will make available
the relevant proportion of such person's time to assist in the provision of
such of the other Services as that person is capable of assisting with as
continue to be provided to Biotech under this Agreement.
9.5 Without prejudice to the generality of clause 4.1, in the event that Biotech
and/or Pharmacia & Upjohn disagrees with the amount of the actual costs referred
to in clause 9.2 or any amount certified under clause 9.3, the Amersham Parties
shall upon request, supply Biotech and/or Pharmacia & Upjohn with such
information as is reasonably necessary to support the calculations of such
costs. The Amersham Parties shall also permit Biotech to have such access as it
may reasonably request on reasonable notice to the books and records maintained
by the Amersham Parties in connection with the provision of the Services to
enable it to verify such information. The parties shall use all reasonable
endeavours to (in conjunction with their respective accountants) to meet and
discuss the basis of the calculations of each costs but if they fail to reach
agreement within twenty business days of delivery of the statement, then, unless
the parties agree otherwise, the dispute shall be referred to a partner of an
independent internationally recognised firm of chartered accountants agreed upon
by the parties or, failing agreement, to be selected by the president for the
time being of the Institute of Chartered Accountants in England and Wales. The
terms of reference set out in clause 12 shall apply.
NATURE OF AGREEMENT
10.1 The Amersham Parties shall be entitled to perform any of the obligations
undertaken by them and to exercise any of the rights granted to them under this
Agreement with respect to the Services through any other company in the Amersham
Group and any act or omission of any Such company shall for the purposes of this
Agreement be deemed to be the act or omission of International.
13
10.2 The Amersham Parties shall be entitled to carry out their obligations under
this Agreement with respect to the Services through any agents or
sub-contractors appointed by them in their absolute discretion for that purpose.
Prior to appointing any such agents or sub-contractors, the Amersham Parties
shall whenever reasonably practicable consult with Biotech in connection with
such appointments.
10.3 Except as provided in clauses 10.1 and 10.2, this Agreement is personal to
the parties and neither of them may (without the written consent of the other)
assign, mortgage, charge or dispose of any of its rights hereunder, or
subcontract or otherwise delegate any of its obligations under this Agreement.
10.4 Nothing in this Agreement shall create, or be deemed to create, a
partnership or joint venture between the parties.
10.5 Nothing in this Agreement shall constitute one party as the agent of any
other party.
10.6 Nothing in this Agreement shall make any of the employees of one party the
employees of any other party.
10.7 Any provision of this Agreement may be modified or amended or waived only
by an instrument in writing signed by duly authorised representatives of each of
the parties, in the case of a modification or an amendment, or by the party
against whom the waiver is to be effective, in the case of a waiver.
10.8 Each party acknowledges that, in entering into this Agreement, it does not
do so on the basis of or relying upon any representation, warranty or other
provision except as expressly provided in this Agreement and, accordingly, all
conditions, warranties or other terms implied by statute or common law are
hereby excluded to the fullest extent permitted by law.
10.9 If any of the provisions of this Agreement is or becomes invalid, illegal
or unenforceable, the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired. If any provision of
this Agreement, or the application thereof to any person or entity or any
circumstance, is invalid or unenforceable, the parties shall make suitable and
equitable provision therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision.
10.10 This Agreement sets out the entire agreement and understanding between the
parties with respect to the subject matter hereof. This Agreement replaces the
agreement between International and Amersham Life Science UK Ltd, dated 2 June
1997 which shall cease and determine with effect that the execution of this
Agreement, save in respect of any rights and obligations which have accrued
prior thereto. It is agreed that:
(a) neither party has entered into this Agreement in reliance upon any
representation, warranty or undertaking of the other party which is not
expressly set out or referred to in this Agreement; and
14
(b) this clause shall not exclude any liability for fraudulent
misrepresentation.
NOTICES
11.1 All notices, requests, demands, or other communications made pursuant to
this Agreement shall be made by telefax, overnight express courier or hand
delivered against receipt to the applicable Party as indicated below:
(a) if to International, to:
Fax No: ▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
For the attention of: G.F.B. ▇▇▇▇ (Company Secretary)
(b) if to Holdings, to:
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
Address: Amersham Holdings, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
For the attention of: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (Secretary)
(c) if to Biotech, to:
Fax No: ▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
For the attention of: ▇▇ ▇▇▇▇▇▇ (Company Secretary)
With a copy to Pharmacia & Upjohn at:
Fax No: ▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
For the attention of: Executive Vice President, General Counsel and
Secretary
11.2 Communications shall be deemed to have been made upon receipt if by
telefax, overnight express courier or by hand delivery, except that a telefax,
that is received on a day which is not a Business Day or after Business Hours
shall be deemed to have been made at the opening of business on the first
following day that is a Business Day.
15
TERMS OF REFERENCE FOR DISPUTES
12. In the event of a dispute arising under clause 5.6 or 9.5, the following
terms of reference shall apply:
(a) the parties shall each use all reasonable endeavours to assist the firm to
resolve the matter and to ensure that the independent firm has such access
to all relevant working papers of each party as are reasonably necessary
for the purpose;
(b) any such independent firm shall act as an expert (and not as an arbitrator)
in making any such determination which shall be binding on the parties;
(c) the expenses of any such determination by an independent firm shall be
borne between the parties in such proportions as the firm shall in its
discretion determine.
ARBITRATION AND GOVERNING LAW
13.1 In the event of any dispute between the Amersham Parties and Biotech
arising in connection with this Agreement, the parties shall use all reasonable
endeavours to resolve the matter on an amicable basis. If one party serves
formal written notice on the other that a material dispute of such a
description has arisen and the parties are unable to resolve the dispute within
a period of thirty days from the service of such notice, then the dispute shall
be referred to the respective chief executive officers of International,
Pharmacia & Upjohn and Biotech with a view to the dispute being resolved as
early as possible.
13.2 If any dispute is unresolved by the chief executive officers within a
period of thirty days from the date such referral of such dispute to them, such
dispute may after the expiry of such period of thirty days be referred by either
party to and finally settled by arbitration under the Rules of the London Court
of International Arbitration by one or more arbitrators appointed in accordance
with those Rules. The place of arbitration shall be London. The language of
arbitration proceedings shall be English.
13.3 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
AS WITNESS this Agreement has been signed by the duly authorised
representatives of the Parties the day and year first before written.
16
SCHEDULE 1
PART A: SERVICES TO BE PROVIDED BY INTERNATIONAL
1 GROUP LOGISTICS ESTIMATED
ANNUAL
COST
1.1 Distribution other than Warehouse, Freight Transport and (pound sterling) 1,193,000
GLD Packaging Design
NATURE
Management of logistics, stores, freight administration, pack
design and ensuring compliance with Customs and Excise
regulations.
BASIS OF THE CHARGE
In proportion to the estimated number of staff supporting
this business
1.2 WAREHOUSE (pound sterling) 931,000
NATURE
The warehouse provides a picking, packaging and a
shipment consolidation service for all products manufactured
by Amersham International plc.
BASIS OF CHARGE
2.0.1 Warehouse - This is charged in proportion to the
estimated number of staff supporting this business
2.0.2 Packaging - Costs are either:
- Specific to a business with separate analysis codes (eg
100% LS - dry ice and expanded polystyrene);
or
- If shared (where the packaging is used by more than
one business) on the basis of the number of line items
by business.
1.3 FREIGHT (pound sterling) 2,240,000
17
NATURE
This covers the cost of distribution from Amersham
International plc to any of its subsidiaries, distributors or
customers in the United Kingdom. The costs of final delivery
to the customer are borne locally. Charges also include the
cost of manufacturing freight (i.e. for moving products other
than to customers, e.g. moving intermediates and stocks
between Cardiff and Amersham).
BASIS OF THE CHARGE
The distribution model calculates the actual cost of freight by
business. Where this differs from actual costs the difference
is allocated pro rata.
Cost of third party freight forwarders is allocated across
each of the businesses.
1.4 TRANSPORT (pound sterling)168,000
NATURE
This is the cost of distribution to customers and internal
transport between different sites of Amersham International plc.
BASIS OF THE CHARGE
1.4.1 To customers - based on package weight distributed
by this business.
1.4.2 Internal - based on the estimated number of staff
supporting this business.
1.5 GLD Packaging Design (pound sterling)40,000
NATURE
Design work associated with packaging (and chargeable to cost
of sales) which includes vials, CDS and lead pots.
BASIS OF CHARGE
Based on actual hours worked by project at a standard recovery
rate.
2 PURCHASING
2.1 Purchasing other than the costs of reprographics (pound sterling)418,000
NATURE
Management of suppliers, purchasing, orders and materials.
18
BASIS OF THE CHARGE
In proportion to the number of staff supporting
this business.
2.2 REPROGRAPHICS (pound sterling) 46,000
NATURE
Printing service for all departments of Amersham
International plc at sites at Amersham, Cardiff
and all subsidiaries. The service is provided by
either Amersham International plc, externally or a
combination of both.
BASIS OF CHARGE
Charge per copy equivalent to such costs of a
third party supplier.
3. SCIENCE ADVISER/IDEA LINK (pound sterling) 107,000
NATURE
Provision of general scientific advice and
management of the Company suggestion scheme.
Basis of Charge
Management of Amersham International plc
judgement.
4. TECHNICAL SERVICES ACCOUNTING (pound sterling) 49,000
NATURE
The unit undertakes accounting for the Technical
Services Group which includes Engineering, Group
Logistics, Safety, Patents and Quality Assurance.
Basis of the Charge
Management of Amersham International plc
judgement.
5. INSURANCE
19
NATURE
Annual premiums are placed for all insurances though a single broker
(▇▇▇▇▇▇ Coroon) and the process is managed by Secretariat. The premiums are
charged to Secretariat which recharge them on appropriate basis to the relevant
cost centres.
BASES OF CHARGE
Site Liability - Charge based on asset (pound sterling) 32,000
values within site
Material Damage - Charge based on asset (pound sterling) 143,000
values within site
Product Liability - Charge apportioned (pound sterling) 268,000
between businesses in
proportion to turnover
Business Interruption - Charge apportioned (pound sterling) 180,000
between businesses in
proportion to turnover
Motor - In proportion to the (pound sterling) 53,000
number of company car
drivers employed by
the business
6. HUMAN RESOURCES (pound sterling) 804,000
NATURE
The provision of personnel services including
training, recruitment, compensation and benefits
systems.
BASIS OF CHARGE
Charged according to estimates made by each
Human Resources manager of the amount of
their services provided to the business.
7. TELEPHONE CHARGES AT AMERSHAM PLACE (pound sterling) 58,000
20
NATURE
Telephone charges.
Basis of the Charge
In proportion to the estimated use by the business based
upon past usage as shown by call logging records.
8. IT LEASING EQUIPMENT (pound sterling) 129,000
NATURE
Some existing and all future computing equipment will be
the subject of leases managed by Group Information
Systems.
BASIS OF THE CHARGE
On the basis of the personal computer equipment expected
to be leased by the business in the year.
9. DESKTOP MAINTENANCE (pound sterling) 94,000
NATURE
All personal computer equipment is maintained by external
contractors under agreements established and managed by
Group Information Systems.
BASIS OF THE CHARGE
The costs of maintenance by external contractors is charged
according to the number of personal computers used by the
business.
10. CENTRAL FINANCIAL SERVICES (pound sterling) 393,000
NATURE
The unit provides payroll and Cash Office services and
maintains the Accounts Payable, Accounts Receivable and
General Ledgers.
BASIS OF THE CHARGE
Costs are apportioned to each business on the basis of
estimated use of each Service
21
11. HEAD OFFICE BUILDING (pound sterling) 609,000
NATURE
Costs of running the Head Office building.
BASIS OF THE CHARGE
Charged in proportion to the occupancy of
the building.
12. GROUP INFORMATION SERVICES
NATURE
The group provides services covering the operation
and development of computer systems including the
provision of network services.
BASIS OF THE CHARGE
In proportion to the amount of sales of the
business compared to sales of the Amersham
International Group:
GIS Management IT Director costs (pound sterling) 151,000
GIS Operations Applications development (pound sterling) 520,000
GIS Projects Major development projects (pound sterling) 890,000
in proportion to the number of staff employed (pound sterling) 638,000
in the business; and
Network Services IT network costs, staff costs
plus external services
In proportion to the estimated use of each system
by the business:
Computer Services Operation of mainframe (pound sterling) 1,092,000
computers and provision of
personal computer services
and user support
In proportion to the amount of sales of the
business compared to sales of the Amersham
International Group:
Commercial GRS Operation of Group Regional (pound sterling) 437,000
System and provision of business systems support.
13. TREASURY ARRANGEMENTS
22
Nature
International will provide currency management services, including foreign
exchange, in accordance with existing International policies.
BASIS OF THE CHARGE
Cover will be provided on an arms length Reuters rate.
NATURE
International will lend to and borrow for Biotech in accordance with existing
practice.
BASIS OF THE CHARGE
Borrowings will be on an arms-length basis.
NATURE
International will settle intra-group trading and other debts in accordance
with existing practice.
23
PART B: SERVICES TO BE PROVIDED BY AMERSHAM
HOLDINGS, INC.
ESTIMATED ANNUAL COST
($000 omitted)
1. REGULATORY AND ENVIRONMENTAL REGULATORY US$506
AFFAIRS
NATURE: Management of Regulatory Affairs and
health, safety, environmental regulatory
monitoring and compliance, and company library.
BASIS OF CHARGE:
TOTAL % ALLOCATED TO ALLOCATED
DEPARTMENT BUDGET LIFE SCIENCE AMOUNT BASIS OF ALLOCATION
Regulatory Affairs 431 18.0 78 Estimated efforts
Environ Reg Affairs 948 42.0 398 Estimated efforts
Library 60 50.0 30 Estimated efforts
Total: 506
2. FACILITIES AND CORPORATE PURCHASING US$672
NATURE: Management and expenses to run and
maintain the South Arlington Heights facility
including corporate purchasing.
BASIS OF CHARGE:
TOTAL % ALLOCATED TO ALLOCATED
DEPARTMENT BUDGET LIFE SCIENCE AMOUNT BASIS OF ALLOCATION
Corporate Purchasing 216 36.1 8 Estimated efforts
Engineering/ 1,220 48.7 594 Building
Maintenance
Total: 672 Occupancy
3. FINANCE AND ACCOUNTING US$1,127
NATURE: Corporate functions that provide
financial and accounting services for
all through business and Shared Services.
BASIS OF CHARGE:
TOTAL % ALLOCATED TO ALLOCATED
DEPARTMENT BUDGET LIFE SCIENCE AMOUNT BASIS OF ALLOCATION
24
Controller 334 30.0 100 Estimated efforts
General Accounting 387 41.0 159 Estimated efforts
Accounts Payable 229 41.0 94 Invoices processed
Payroll 199 32.0 64 Headcount
Credit Management 434 45.0 195 Estimated efforts
Tax 229 48.0 110 Estimated efforts
Cost Accounting 171 6.0 10 Salary percentages
Financial Management 266 45.0 120 Estimated efforts
Fleet Administration 244 24.0 59 Vehicles/Est efforts
LS Customer Collections 217 100.0 217 LS Specific
Total: 1,127
4. HOLDINGS ADMINISTRATION US$220
NATURE: Expenses of the Holdings
function including Board of
Directors expenses and Shared
Services expenses and Senior
Management incentive bonus plan.
BASIS OF CHARGE:
TOTAL % ALLOCATED TO ALLOCATED
DEPARTMENT BUDGET LIFE SCIENCE AMOUNT BASIS OF ALLOCATION
Holdings 550 40.0 220 Estimated efforts
Administration
5. INFORMATION SERVICES US$1,884
NATURE: Management and expenses
of the hardware, software and personnel
of the various information functions
for all business, mainframe computer
systems, pc network, and
telecommunications.
BASIS OF CHARGE:
TOTAL % ALLOCATED TO ALLOCATED
DEPARTMENT BUDGET LIFE SCIENCE AMOUNT BASIS OF ALLOCATION
Management 281 48.0 135 Estimated efforts
Bus System Develop 805 50.0 403 Estimated efforts
25
Info Tech Group 2,561 48.7 1,247 Estimated efforts
LS Support 99 100.0 99 Life Science Specific
Total: 1,884
6. HUMAN RESOURCES US$395
NATURE: Management of Human Resources
functions and employee benefits and training.
BASIS OF CHARGE:
DEPARTMENT TOTAL % ALLOCATED TO ALLOCATED BASIS OF ALLOCATION
BUDGET LIFE SCIENCE AMOUNT
Administration 253 26.0 66 Headcount
Operations 567 26.0 147 Headcount
Benefits & Comp 554 26.0 144 Headcount
Admin
Training and 461 26.0 120 Headcount
Develop
Employee Relations 132 26.0 40 Headcount
Benefits (Net of -468 26.0 -122 Headcount
charges to dept)
Total: 395
26
7. HOLDINGS SERVICES US$417
NATURE: Management of facility
services for South Arlington
Heights including security and
housekeeping.
BASIS OF CHARGE:
TOTAL % ALLOCATED TO ALLOCATED
DEPARTMENT BUDGET LIFE SCIENCE AMOUNT BASIS OF ALLOCATION
Security & Housekeeping 617 48.7 300 Building occupancy
Facility Services Management 361 26.0 94 Headcount
Training 43 54.0 23 Headcount
Total: 417
8. DISTRIBUTION US$1,179
NATURE: Picking, packing and
transportation of all goods from
South Arlington Heights. Receiving
for all goods into South Arlington
Heights.
BASIS OF CHARGE:
TOTAL % ALLOCATED TO ALLOCATED
DEPARTMENT BUDGET LIFE SCIENCE AMOUNT BASIS OF ALLOCATION
Traffic 1,453 77.0 1,119 Estimated efforts
Receiving 224 27.0 60 Estimated efforts
Total: 1,179
27
9. MISCELLANEOUS US$96
NATURE: Non specific miscellaneous expenses
including bank fees, credit card fees, other income
and expense items.
BASIS OF CHARGE:
DEPARTMENT TOTAL % ALLOCATED TO ALLOCATED BASIS OF ALLOCATION
BUDGET LIFE SCIENCE AMOUNT
Miscellaneous 300 31.9 % Estimate
Expenses
ESTIMATED TOTAL SHARED SERVICES 97/98 US$6,496
(1 APRIL 97 - 31 MARCH 98)
28
SCHEDULE 2
SHARED SERVICE TERMINATION
1. The charges to be paid by Biotech in respect of the costs of any Services
following termination of the provision of such Services shall be calculated
by reference to the actual charges made in respect of the relevant Services
that have been terminated in the twelve months prior to such termination and
using the rates and bases set out in Schedule 1 (as revised from time to
time) and in accordance with the principles referred to in clause 5.1. The
provisions of the remainder of clause 5 shall to the extent applicable
continue to apply to the manner and timing of any payment. The proportion of
the charges payable by Biotech in the period following such termination
shall be reduced in accordance with paragraph 2 below. If, as a result of
any action taken by the Amersham Parties as referred to in clause 9.3, the
costs of the Amersham Parties referred to above are reduced beneath the
actual charges made in the twelve month period referred to then the amounts
payable by Biotech shall be reduced accordingly (without prejudice to any
payment obligation arising under clause 9.3)
2. NUMBER OF MONTHS AFTER TERMINATION EFFECTIVE
0-6 MTHS 7-12 MTHS 13-18 MTHS EACH MONTH
FROM AND
INCLUDING
19 MONTHS
Proportion of ongoing service 100% 80% 50% 0%
charge to be paid
29
SIGNED by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ )
for and on behalf of )
AMERSHAM INTERNATIONAL ) /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PLC in the presence of: ▇▇▇▇▇ ▇▇▇▇, )
Freshfields, ▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ )
SIGNED by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ )
for and on behalf of )
AMERSHAM PHARMACIA ) /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
BIOTECH LIMITED )
in the presence of: ▇▇▇▇▇ ▇▇▇▇, )
Freshfields, ▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ )
