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Transition Services Agreement

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Exhibit 10.9


TRANSITION SERVICES AGREEMENT


TRANSITION SERVICES AGREEMENT, dated as of September 28, 2001 (this "Agreement"), between Carter-Wallace, Inc., a Delaware corporation (the --------- "Company"), and Armkel, LLC, a Delaware limited liability company ("Buyer") ------- ----- (each of the Company and Buyer, a "Party" and collectively, the "Parties").
----- -------


RECITALS:


WHEREAS, the Company and Buyer have executed and delivered an Asset Purchase Agreement, dated as of May 7, 2001 (including the exhibits, schedules and annexes thereto, the "Asset Purchase Agreement"), providing
------------------------ for, among other things, the sale, conveyance, transfer, assignment and delivery to Buyer of all of the Company's and its affiliates' rights, title and interest in and to the Purchased Assets (as defined in the Asset Purchase Agreement) and the assumption by Buyer of all of the Assumed Liabilities (as defined in the Asset Purchase Agreement), effective in each case immediately prior to the ABC Merger (as defined herein);


WHEREAS, the Company, CPI Development Corporation, a Delaware corporation ("ABC"), MedPointe Inc., a Delaware corporation ("Parent"), MCC
--- ------ Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Company Merger Sub"), and MCC Acquisition Sub
------------------ Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("ABC Merger Sub"), have executed and delivered an Agreement and Plan of -------------- Merger, dated as of May 7, 2001 (including the exhibits, schedules and annexes thereto, the "Merger Agreement"), providing for, among other
---------------- things, the merger of ABC Merger Sub with and into ABC (the "ABC Merger")
---------- and the merger of Company Merger Sub with and into the Company; and


WHEREAS, in connection with the transactions contemplated by the Asset Purchase Agreement and the Merger Agreement, Buyer is willing to provide to the Company the Buyer Services (as defined herein), and the Company is willing to provide to Buyer the Company Services (as defined herein).


NOW, THEREFORE, the Parties, in consideration of the premises and the mutual covenants contained herein, hereby agree as follows:


ARTICLE I


DEFINITIONS


1.1 General Terms. For purposes of this Agreement, the following terms
------------- have the meanings hereinafter indicated:


"Affiliate" means, with respect to any Person, any other Person
---------
directly or indirectly controlling, controlled by or under common control
with such Person as of the time of determination.


"Bankruptcy Event" with respect to a Party means the filing of an
----------------
involuntary petition in bankruptcy or similar proceeding against such Party
seeking its reorganization, liquidation or the appointment of a receiver,
trustee or liquidator for it or for all or substantially all of its assets,
whereupon such petition shall not be dismissed within 60 days after the
filing thereof, or if such Party shall (i) apply for or consent in writing
to the appointment of a receiver, trustee or liquidator of all or
substantially all of its assets, (ii) file a voluntary petition in
bankruptcy or similar


proceeding or admit in writing its inability to pay its debts as they
become due, (iii) make a general assignment for the benefit of
creditors, (iv) file a petition or an answer seeking reorganization or
an arrangement with its creditors or take advantage of any insolvency
law with respect to itself as debtor, or (v) file an answer admitting
the material allegations of a petition filed against it in any
bankruptcy, reorganization, insolvency proceedings or any similar
proceedings.


"Business Day" means any day other than a Saturday, a Sunday
------------
or a day on which banks in the City of New York are authorized or
obligated by law or executive order to close.


"Buyer Services" means those transitional services to be
--------------
provided by Buyer to the Company set forth on Schedule A hereto, in
each case at the locations specified on Schedule A hereto.


"Closing" means the Closing under the Merger Agreement.
-------


"Company Services" means those transitional services to be
----------------
provided by the Company to Buyer set forth on Schedule B hereto, in
each case at the locations specified on Schedule B hereto.


"Cranbury Lease" means that certain Cranbury Facilities
--------------
Sharing Agreement and Lease between the Company and Buyer, dated the
date of this Agreement.


"Facility" means any of the respective facilities listed on
--------
Schedule A or Schedule B, as the case may be.


"Person" means any individual, firm, partnership, association,
------
group (as such term is used in Rule 13d-5 under the Securities Exchange
Act of 1934, as amended, as such Rule is in effect on the date of this
Agreement), corporation or other entity.


"Provider" means, as the case may be, a Party, or an Affiliate
--------
of such Party, performing a Service for the other Party, or its
Affiliates, under the terms of this Agreement.


"Services" means, collectively, the Company Services and the
--------
Buyer Services.


"Subject Party" means, as the case may be, a Party, or an
-------------
Affiliate of such Party, receiving a Service hereunder from a Provider
or its Affiliate on such Provider's behalf.


ARTICLE II


SERVICES


2.1 Services. (a) Buyer shall provide or cause one of its
-------- Affiliates to provide to the Company or the relevant Affiliate of the Company each Buyer Service for the term set forth in the description of such Buyer Service in Schedule A.


(b) The Company shall provide or cause one of its Affiliates to provide to Buyer or the relevant Affiliates of Buyer, each Company Service for the term set forth in the description of such Company Service in Schedule B.


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(c) Notwithstanding Sections 2.1(a) and (b), a Party may elect to permanently cancel any Service as to which it or one of its Affiliates is the Subject Party, if such Service can be reasonably separated and terminated distinctly from any other Services which such Party has not elected to cancel, upon the delivery of 30 days' written notice, unless provided otherwise on Schedule A or Schedule B, to the Provider of such Service.


(d) Each Party shall create and maintain full and accurate books


in connection with the provision of the Services, and all other records relevant to this Agreement, and upon reasonable notice from the other Party shall make available for inspection and copy by such other Party's agents such records during reasonable business hours.


2.2 Parameters of Services; Standard of Service. (a) The Services
------------------------------------------- shall be in scope and nature substantially the same as such Services were provided within the Company for the four quarters prior to the date of the Asset Purchase Agreement and, subject to Section 10.7, such Services will be provided by and to the Persons and operations (or their equivalents) within each of Buyer and the Company, as the case may be, as was generally the case prior to the date of the Asset Purchase Agreement.


(b) In performing the Services, Buyer and the Company or any of their respective Affiliates providing the Services on their behalf shall provide substantially the same level of service and use substantially the same degree of care as their respective personnel provided and used in providing such Services with respect to the Company or similar services by Buyer with respect to Buyer prior to the date of this Agreement (it being understood that Buyer may over time reduce its own occupancy and usage of the Cranbury Facility (as defined in Section 3.1) and Buyer's ability to retain and/or attract employees may be affected as a result; accordingly, to the extent Buyer is so affected, Buyer shall not be in breach of its obligations hereunder so long as it uses its reasonable best efforts to hire or make available replacement personnel to perform Services required hereunder).


2.3 Authorized Statements of Provider in Respect of Products. A
-------------------------------------------------------- Provider performing any Services hereunder which involve the manufacturing, testing, marketing, sale, distribution or handling of products of a Subject Party shall not make any representations or warranties to any third parties, including but not limited to, any governmental inspection authority in respect of such products.


2.4 No Registration. It is the Parties' intention that nothing in
--------------- this Agreement shall be construed to require Buyer to apply for, obtain or maintain registration with the Drug Enforcement Agency ("DEA") pursuant to the
--- Comprehensive Drug Abuse Prevention and Control Act of 1970, as amended ("CSA").
---


2.5 Independent Contractor. It is the specific understanding of
--------------------- the Parties that this Agreement shall not constitute or give rise to a partnership between the Parties. All Services provided by either Buyer or the Company under the terms of this Agreement shall be carried on by either Buyer or the Company as an independent contractor and not as an agent for or employee of either the Company or Buyer, respectively, and this Agreement shall not constitute or give rise to an agency relationship between the Parties, except as otherwise expressly contemplated hereby.


ARTICLE III


CRANBURY FACILITY


3.1 Collective Bargaining Employees. (a) Upon the Closing, and to
------------------------------ the extent consistent with its obligations under the Collectively Bargained Agreements (as defined herein), Buyer


3


shall make available to the Company a sufficient number of (i) certain production employees ("Production Employees") who are covered under the
-------------------- collective bargaining agreement (the "Production CBA") between Buyer and the
-------------- Paper, Allied-Industrial, Chemical and Energy Workers International Union, AFL-CIO, CLC and its Local 2-5570 (the "Union") to operate its pharmaceutical
----- production and (ii) certain quality control employees ("QC Employees", and
------------ together with Production Employees, the "Collective Bargaining Employees") who
------------------------------- are covered under the collective bargaining agreement ("QC CBA," and
------- collectively, with the Production CBA, the "Collectively Bargained Agreements")
--------------------------------- between the Union and Buyer to perform, at the direction of the Company's employees, the Company's quality control functions consistent with past practice at Buyer's facility in Cranbury, New Jersey ("Cranbury Facility") and is fully
----------------- consistent in the future with CGMPs and applicable DEA regulations. As of the date of this Agreement, the Company estimates that it will require 25 Production Employees and 12 QC Employees. The Company will update such estimates monthly during the term of this Agreement.


(b) Subject to the Collectively Bargained Agreements, the Company shall have priority rights to choose which skilled or partially qualified Collective Bargaining Employees (including, but not limited to, chemical operators with pharmaceutical qualification, technician class 2 with pharmaceutical qualification and line mechanics with pharmaceutical qualification) are made available to it by Buyer.


(c) The Company will provide Buyer with 30 days' prior written notice, if it shall require that Buyer reduce or increase the number of Collective Bargaining Employees it is providing to the Company, but Buyer shall be required to provide additional Collective Bargaining Employees to the Company, only if Buyer has such Collective Bargaining Employees available to it and to the extent consistent with its obligations under the Collectively Bargained Agreements.


(d) The Company shall be responsible for directing and supervising the Collective Bargaining Employees and any employees of Buyer performing Services for the Company at Buyer's facility in Dayton, New Jersey (the "Dayton Facility") so as to achieve and maintain compliance with applicable
--------------- law and regulations, including, but not limited to, the U.S. Federal, Food, Drug, and Cosmetic Act, as amended ("FFDCA"), the CSA, federal laws governing
----- hazardous or toxic substances or wastes, and parallel state laws and regulations as to each.


(e) The Company shall ensure that each of the Collective Bargaining Employees and any employees of Buyer performing Services for the Company at the Dayton Facility are qualified to perform assigned tasks, are authorized to perform assigned tasks, and possess no disqualification from performing assigned tasks, including but not limited to, appropriate training, education, and background to perform assigned tasks within the jurisdiction of the FDA and the DEA under the FFDCA and the CSA. The Parties specifically acknowledge the need, subject to the terms of the Collectively Bargained Agreements, to provide each other with criminal background information regarding employees with potential access to controlled substances and agree to maintain such information as confidential in accordance with Article VI. The Parties specifically agree to use their commercially reasonable efforts to develop and maintain such information regarding designees' training, education, and background as will be necessary in order to fulfill the Parties' respective legal and regulatory obligations. The Company shall have the ability to take appropriate steps with personnel to assure compliance with the FDA's current Good Manufacturing Practices, DEA regulations, and conditions of approved New Drug Applications.


(f) No Collective Bargaining Employee and any employees of Buyer performing Services for the Company at the Dayton Facility shall be deemed to be an employee of the Company; provided, however, that no Collective
-------- Bargaining Employee and any employees of Buyer performing Services for the Company at the Dayton Facility shall be permitted by the Company to perform any task
4


for which that Collective Bargaining Employee or employees of Buyer performing Services for the Company at the Dayton Facility does not possess necessary training, education, and background, and for which that Collective Bargaining Employee or employee of Buyer performing Services for the Company at the Dayton Facility is otherwise not disqualified by applicable law or regulation.


3.2 Employee Costs. With respect to each Collective Bargaining
-------------- Employee, the Company shall pay to Buyer and be liable for (i) salary, wages, cash compensation and related payroll taxes, employee benefits during the period from the Closing Date to the date such Collective Bargaining Employee's employment is terminated (excluding severance, except as provided in (ii)), (ii) incremental liability, if any, for any post-employment benefit entitlement and severance incurred by reason of a Collective Bargaining Employee remaining employed by the Company after the first anniversary of the Closing Date and (iii) any employment-related liabilities to the extent related to acts or omissions by the Company that occur during the period from the Closing Date to the date such Collective Bargaining Employee's employment is terminated (including, without limitation, for employment discrimination or other torts or violations of law).


3.3 Incremental Costs. If Buyer is required to hire or re-assign
----------------- any additional personnel in order to allow the Company to have sufficient employees or incur incremental costs to comply with the rules and regulations promulgated under the FFDCA and CSA, then the Company shall reimburse Buyer for all such employee costs (including, but not limited to, salaries and employee benefits) and other costs; provided, however, that the Company consented (such consent not unreasonably withheld) prior to the hiring of such personnel or incurrence of such incremental cost.


3.4 Collective Bargaining Agreement. The Company will explore in
------------------------------- good faith with Buyer the feasibility of and the terms under which it will be able to transfer to the Company the Collective Bargaining Employees who are still being provided to the Company on the date which Buyer otherwise permanently ceases production on its own behalf at the Cranbury Facility.


3.5 Employee Qualifications. In accordance with the requirements
----------------------- of the FFDCA, Buyer certifies that it does not and will not be using the services of any person debarred under 21 U.S.C. section 335a in any capacity in connection with the performance of the Services. Buyer also certifies that it does not and will not be using the services of any person or Affiliate, Person or firm for whom convictions
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