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Transition Services Agreement

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Exhibit 10.2


TRANSITION SERVICES AGREEMENT

dated as of August 31, 2009

between

CARDINAL HEALTH, INC.

and

CAREFUSION CORPORATION


TABLE OF CONTENTS

Page ARTICLE I DEFINITIONS 1 Section 1.01. Certain Defined Terms 1 ARTICLE II SERVICES, DURATION AND SERVICES MANAGERS 3 Section 2.01. Services 3 Section 2.02. Duration of Services 4 Section 2.03. Additional Unspecified Services 4 Section 2.04. New Services 5 Section 2.05. Transition Services Managers 5 Section 2.06. Personnel 6 ARTICLE III CARDINAL HEALTH MATERIALS 7 Section 3.01. Corporate Policies 7 Section 3.02. Limitation on Rights and Obligations with Respect to the Cardinal Health Materials 7 ARTICLE IV OTHER ARRANGEMENTS 8 Section 4.01. Software and Software Licenses 8 ARTICLE V ADDITIONAL AGREEMENTS 9 Section 5.01. Cardinal Health Computer-Based and Other Resources 9 Section 5.02. Co-location and Facilities Matters 10 Section 5.03. Access 11 Section 5.04. Cooperation 12 ARTICLE VI COSTS AND DISBURSEMENTS 12 Section 6.01. Costs and Disbursements 12 Section 6.02. Taxes 13 Section 6.03. No Right to Set-Off 13 ARTICLE VII STANDARD FOR SERVICE 14 Section 7.01. Standard for Service 14 Section 7.02. Disclaimer of Warranties 14 Section 7.03. Compliance with Laws and Regulations 15 ARTICLE VIII LIMITED LIABILITY AND INDEMNIFICATION 15 Section 8.01. Consequential and Other Damages 15 Section 8.02. Limitation of Liability 15 Section 8.03. Obligation To Reperform; Liabilities 15


i Section 8.04. Release and Recipient Indemnity 15 Section 8.05. Provider Indemnity 16 Section 8.06. Indemnification Procedures 16 Section 8.07. Liability for Payment Obligations 16 Section 8.08. Exclusion of Other Remedies 16 ARTICLE IX DISPUTE RESOLUTION 16 Section 9.01. Dispute Resolution 16 ARTICLE X TERM AND TERMINATION 17 Section 10.01. Term and Termination 17 Section 10.02. Effect of Termination 19 Section 10.03. Force Majeure 19 ARTICLE XI GENERAL PROVISIONS 19 Section 11.01. No Agency 19 Section 11.02. Subcontractors 20 Section 11.03. Treatment of Confidential Information 20 Section 11.04. Further Assurances 21 Section 11.05. Notices 21 Section 11.06. Severability 22 Section 11.07. Entire Agreement 22 Section 11.08. No Third-Party Beneficiaries 22 Section 11.09. Governing Law 22 Section 11.10. Amendment 23 Section 11.11. Rules of Construction 23 Section 11.12. Counterparts 23 Section 11.13. Assignability 23 Section 11.14. Waiver of Jury Trial 24 Section 11.15. Non-Recourse 25 ANNEX A Cardinal Health Materials


ii ANNEX B Software Fee Arrangement ANNEX C Compliance Requirements for Services EXHIBIT I Services Managers SCHEDULE A Cardinal Health Services SCHEDULE B Cardinal Health Facilities SCHEDULE C CareFusion Services SCHEDULE D CareFusion Facilities


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This Transition Services Agreement, dated as of August 31, 2009 (this " Agreement" ), is made between Cardinal Health, Inc., an Ohio corporation (" Cardinal Health" ), and CareFusion Corporation, a Delaware corporation (" CareFusion" ).

RECITALS

WHEREAS, Cardinal Health and CareFusion entered into the Separation Agreement, dated as of July 22, 2009 (as amended, modified or supplemented from time to time in accordance with its terms, the " Separation Agreement" ). WHEREAS, pursuant to the Separation Agreement, the Parties (as defined below) agreed that (a) Cardinal Health shall provide or cause to be provided to CareFusion (and/or its Affiliates on the date of this Agreement immediately after giving effect to the Distribution (as defined in the Separation Agreement), collectively referred to as the " CareFusion Entities" ) certain services, use of facilities and other assistance on a transitional basis and in accordance with the terms and subject to the conditions set forth in this Agreement and (b) CareFusion shall provide or cause to be provided to Cardinal Health (and/or its Affiliates on the date of this Agreement immediately after giving effect to the Distribution, collectively referred to as the " Cardinal Health Entities" ) certain services, use of facilities and other assistance on a transitional basis and in accordance with the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, the Separation Agreement requires execution and delivery of this Agreement by Cardinal Health and CareFusion on or prior to the Distribution Date (as defined in the Separation Agreement). NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Certain Defined Terms . (a) Unless otherwise defined in this Agreement, all capitalized terms used in this Agreement shall have the same meaning as in the Separation Agreement.

(b) The following capitalized terms used in this Agreement shall have the meanings set forth below:

" Additional Services" shall have the meaning set forth in Section 2.03(a) .

" Agreement" shall have the meaning set forth in the Preamble. " Cardinal Health" shall have the meaning set forth in the Preamble. " Cardinal Health Entities" shall have the meaning set forth in the Recitals.

" Cardinal Health Facilities" shall have the meaning set forth in Section 5.02(a) .

" Cardinal Health Materials" shall have the meaning set forth in Section 3.01(a) .

" Cardinal Health Services" shall have the meaning set forth in Section 2.01 . " Cardinal Health Services Manager" shall have the meaning set forth in Section 2.05(a) . " CareFusion" shall have the meaning set forth in the Preamble. " CareFusion Entities" shall have the meaning set forth in the Recitals. " CareFusion Facilities" shall have the meaning set forth in Section 5.02(a) . " CareFusion Services" shall have the meaning set forth in Section 2.01 . " CareFusion Services Manager" shall have the meaning set forth in Section 2.05(b) . " Confidential Information" shall have the meaning set forth in Section 11.03(a) . " Dispute" shall have the meaning set forth in Section 9.01(a) . " Facilities" shall have the meaning set forth in Section 5.02(b) . " Force Majeure" means, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been reasonably foreseen by such Party (or such Person), or, if it could have been reasonably foreseen, was unavoidable, and includes acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources or distribution facilities. Notwithstanding the foregoing, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such Party' s response thereto shall not be deemed an event of Force Majeure.

" Interest Payment" shall have the meaning set forth in Section 6.01(b) . " New Services" shall have the meaning set forth in Section 2.04(a) . " Party" means Cardinal Health and CareFusion individually, and " Parties" means Cardinal Health and CareFusion collectively, and, in each case, their permitted successors and assigns.

" Provider" means the Party or its Subsidiary or Affiliate providing a Service under this Agreement.

" Provider Indemnified Party" shall have the meaning set forth in Section 8.04 .


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" Recipient" means the Party or its Subsidiary or Affiliate to whom a Service under this Agreement is being provided.

" Recipient Indemnified Party" shall have the meaning set forth in Section 8.05 .

" Representative" of a Person means any director, officer, employee, agent, consultant, accountant, auditor, attorney or other representative of such person.

" Schedule(s)" shall have the meaning set forth in Section 2.02 .

" Separation Agreement" shall have the meaning set forth in the Preamble. " Service Charges" shall have the meaning set forth in Section 6.01(a) . " Service Extension" shall have the meaning set forth in Section 10.01(d) . " Service Increases" shall have the meaning set forth in Section 2.03(b) . " Services" shall have the meaning set forth in Section 2.01 . " Termination Charges" shall mean, with respect to the early termination of any Service (i) prior to the expiration of the applicable minimum service period or (ii) without the requisite early termination notice, in each case, as set forth in the Schedule relating to such Service, a monthly amount equal to any and all Services Charges payable by the Recipient in connection with such Service (x) for the remainder of the applicable minimum service period, if any, or (y) if there is no minimum service period, for the remainder of the term of such Service, in each case, as set forth on the applicable Schedule and payable on a monthly basis in accordance with Section 6.01(a) ; provided , that the Provider shall use its commercially reasonable efforts to reduce any costs, fees or expenses incurred by the Provider or payable to any unaffiliated third-party provider in connection with the provision of such Service and credit any such reductions against the Termination Charges payable by the Recipient (for the avoidance of doubt, no Termination Charges shall be payable by a Recipient with respect to the early termination of a Service in accordance with Section 10.01(b) and after the minimum service period applicable to such Service set forth in the applicable Schedule). ARTICLE II

SERVICES, DURATION AND SERVICES MANAGERS

Section 2.01. Services . Subject to the terms and conditions of this Agreement, (a) Cardinal Health shall provide (or cause to be provided) to CareFusion Entities the services and access to facilities listed on Schedule A and Schedule B to this Agreement (the " Cardinal Health Services" ) and (b) CareFusion shall provide (or cause to be provided) to the Cardinal Health Entities the services and access to facilities listed on Schedule C and Schedule D to this Agreement (the " CareFusion Services ," and, collectively with the Cardinal Health Services, any Additional Services, any Service Increases and any New Services, the " Services" ). All of the Services shall be for the sole use and benefit of the respective Recipient and its respective Party. For the avoidance of doubt, none of the Services listed on any Schedule shall require the relevant Provider to provide the legal services of any attorney to the Recipient in connection with any such Service and the Recipient shall be responsible for obtaining legal services on its own.


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Section 2.02. Duration of Services . Subject to the terms of this Agreement, each of Cardinal Health and CareFusion shall provide or cause to be provided to the respective Recipients each Service until the earlier to occur of, with respect to each such Service, (i) the expiration of the period of the maximum duration for such Service as set forth on Schedule A , Schedule B , Schedule C or Schedule D (each a " Schedule" , and collectively, the " Schedules" ) or (ii) the date on which such Service is terminated under Section 10.01(b) ; provided , however , that each Recipient shall use its commercially reasonable efforts in good faith to transition itself to a stand-alone entity with respect to each Service during the period for such Service as set forth in the relevant Schedules; and provided , further , to the extent that a Provider' s ability to provide a Service is dependent on the continuation of either a Cardinal Health Service or a CareFusion Service (and such dependence has been made known to the other Party), as the case may be, the Provider' s obligation to provide such dependent Service shall terminate automatically with the termination of such supporting Cardinal Health Service or supporting CareFusion Service, as the case may be.

Section 2.03. Additional Unspecified Services . (a) After the date of this Agreement, if Cardinal Health or CareFusion (i) identifies a service that (x) the Cardinal Health Entities provided to the CareFusion Business prior to the Distribution Date that CareFusion reasonably needs in order for the CareFusion Business to continue to operate in substantially the same manner in which the CareFusion Business operated prior to the Distribution Date, and such service was not included on Schedule A or Schedule B (other than because the Parties agreed such service shall not be provided), or (y) the CareFusion Entities provided to Cardinal Health or its Affiliates prior to the Distribution Date that Cardinal Health reasonably needs in order for the Cardinal Health Business to continue to operate in substantially the same manner in which the Cardinal Health Business operated prior to the Distribution Date, and such service was not included on Schedule C or Schedule D (other than because the Parties agreed such service shall not be provided), and (ii) provides written notice to the other party within one hundred twenty (120) days following the Distribution Date requesting such additional services, then such other party shall provide such requested additional services (such additional services, the " Additional Services" ). In connection with any request for Additional Services in accordance with this Section 2.03(a) , the Cardinal Health Services Manager and the CareFusion Services Manager shall in good faith negotiate the terms of a supplemental Schedule, which terms shall be consistent with the terms of, and the pricing methodology used for, similar Services provided under this Agreement. The Parties shall agree to the applicable Service Charge and the supplemental Schedule shall describe in reasonable detail the nature, scope, service period(s), termination provisions and other terms applicable to such Additional Services. Each supplemental Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the Additional Services set forth therein shall be deemed " Services" provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

(b) After the date of this Agreement, if (i) (x) a Recipient requests or (y) a Provider reasonably determines that the Recipient' s business requires, the Provider to increase, relative to historical levels prior to the Distribution Date, the volume, amount, level or frequency, as applicable, of any Service provided by such Provider and (ii) such increase is reasonably determined by the


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Recipient as necessary for the Recipient to operate its businesses (such increases, the " Service Increases" ), then such Provider shall provide the Service Increases in accordance with such request; provided , that no Party shall be obligated to provide any Service Increase if it does not, in its reasonable judgment, have adequate resources to provide such Service Increase or if the provision of such Service Increase would significantly disrupt the operation of its businesses. In connection with any request for Service Increases in accordance with this Section 2.03(b) , the Cardinal Health Services Manager and the CareFusion Services Manager shall in good faith negotiate the terms of an amendment to the applicable Schedule, which amendment shall be consistent with the terms of, and the pricing methodology used for, the applicable Service. Each amended Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the Service Increases set forth therein shall be deemed a part of the " Services" provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

Section 2.04. New Services . (a) From time to time during the term of this Agreement, either Party may request the other Party to provide additional or different services which such other Party is not expressly obligated to provide under this Agreement (the " New Services" ). The Party receiving such request shall consider such request in good faith and shall use commercially reasonable efforts to provide any such New Services; provided , that no Party shall be obligated to provide any New Services if it does not, in its reasonable judgment, have adequate resources to provide such New Services or if the provision of such New Services would significantly disrupt the operation of its businesses; and, for the avoidance of doubt, neither Party shall have any obligation to provide New Services if, after negotiations between the Parties pursuant to Section 2.04(b) , the Parties fail to reach an agreement with respect to the terms (including the Service Charges) applicable to the provision of such New Services.

(b) In connection with any request for New Services in accordance with Section 2.04(a) , the Cardinal Health Services Manager and the CareFusion Services Manager shall in good faith (i) negotiate the applicable Service Charge and the terms of a supplemental Schedule, which supplemental Schedule shall describe in reasonable detail the nature, scope, service period(s), termination provisions and other terms applicable to such New Services, and (ii) determine any costs and expenses, including any start-up costs and expenses, that would be incurred by the Provider in connection with the provision of such New Services, which costs and expenses shall be borne solely by the Recipient. Each supplemental Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the New Services set forth therein shall be deemed " Services" provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

Section 2.05. Transition Services Managers . (a) Cardinal Health hereby appoints and designates the individual holding the Cardinal Health position set forth on Exhibit I to act as its initial services manager (the " Cardinal Health Services Manager" ), who will be directly responsible for coordinating and managing the delivery of the Cardinal Health Services and have authority to act on Cardinal Health' s behalf with respect to matters relating to this Agreement. The Cardinal Health Services Manager will work with the personnel of the Cardinal Health Entities to periodically address issues and matters raised by CareFusion relating to this Agreement. Notwithstanding the requirements of Section 11.05 , all communications from CareFusion to Cardinal Health pursuant to this


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Agreement regarding routine matters involving the Services set forth on the Schedules shall be made through the Cardinal Health Services Manager, or such other individual as specified by the Cardinal Health Services Manager in writing and delivered to CareFusion by email or facsimile transmission with receipt confirmed. Cardinal Health shall notify CareFusion of the appointment of a different Cardinal Health Services Manager, if necessary, in accordance with Section 11.05 .

(b) CareFusion hereby appoints and designates the individual holding the CareFusion position set forth on Exhibit I to act as its initial services manager (the " CareFusion Services Manager" ), who will be directly responsible for coordinating and managing the delivery of CareFusion Services and have authority to act on CareFusion' s behalf with respect to matters relating to this Agreement. The CareFusion Services Manager will work with the personnel of CareFusion Entities to periodically address issues and matters raised by Cardinal Health relating to this Agreement. Notwithstanding the requirements of Section 11.05 , all communications from Cardinal Health to CareFusion pursuant to this Agreement regarding routine matters involving the Services set forth on the Schedules shall be made through the CareFusion Services Manager or such other individual as specified by the CareFusion Services Manager in writing and delivered to Cardinal Health by email or facsimile transmission with receipt confirmed. CareFusion shall notify Cardinal Health of the appointment of a different CareFusion Services Manager, if necessary, in accordance with Section 11.05 . Section 2.06. Personnel . (a) The Provider of any Service will make available to the Recipient of such Service such personnel as may be necessary to provide such Service. The Provider will have the right, in its reasonable discretion, to (i) designate which personnel it will assign to perform such Service, and (ii) remove and replace such personnel at any time, so long as there is no resulting increase in costs or decrease in the level of service for the Recipient; provided , however , that the Provider will use its commercially reasonable efforts to limit the disruption to the Recipient in the transition of the Services to different personnel.

(b) In the event that the provision of any Service by the Provider requires, as set forth in the Schedules, the cooperation and services of the applicable personnel of the Recipient, the Recipient will make available to the Provider such personnel (who shall be appropriately qualified for purposes of the provision of such Service by the Provider) as may be necessary for the Provider to provide such Service. The Recipient will have the right, in its reasonable discretion, to (i) designate which personnel it will make available to the Provider in connection with the provision of such Service, and (ii) remove and replace such personnel at any time, so long as there is no resulting increase in costs to, or any adverse effect to the provision of such Service by, the Provider; provided , however , that the Recipient will use its commercially reasonable efforts to limit the disruption to the Provider in the transition of such personnel. The Provider may, in its reasonable discretion and following discussions with the Recipient, request the Recipient to remove and/or replace any such personnel from their roles in respect of the Services being provided by the Provider. All personnel of the Recipient made available to the Provider pursuant to this Section 2.06(b) shall be dedicated full-time to the provision of the applicable Services in accordance with the direction of the Provider and shall be instructed to comply with the applicable policies and guidelines of the Provider, including any policies and guidelines relating to enterprise information technology (EIT).


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(c) No Provider shall be liable under this Agreement for any Liabilities incurred by the Recipient Indemnified Parties that are primarily attributable to, or that are a consequence of, any actions or inactions of the personnel of the Recipient, except for any such actions or inactions undertaken pursuant to the direction of the Provider.

ARTICLE III

CARDINAL HEALTH MATERIALS

Section 3.01. Corporate Policies . (a) Cardinal Health shall provide CareFusion access and rights to those policies and manuals published on the Cardinal Health Intranet and listed in Annex A (the " Cardinal Health Materials" ). Subject to the terms and conditions of this Agreement, Cardinal Health grants to CareFusion a non-exclusive, royalty-free, fully paid-up, worldwide license to create or have created materials based on the Cardinal Health Materials for distribution to employees and suppliers of CareFusion and use such materials in the operation of the CareFusion Business in substantially the same manner as the Cardinal Health Materials were used by Cardinal Health prior to the Distribution. It is understood and agreed that Cardinal Health makes no representation or warranty, express or implied, as to the accuracy or completeness of any of the Cardinal Health Materials, as to the noninfringement of any of the Cardinal Health Materials or as to the suitability of any of the Cardinal Health Materials for use by CareFusion in respect of its business or otherwise.

(b) Notwithstanding the foregoing and except as may be permitted under the Transitional Trademark License Agreement, dated as of the date hereof, by and between Cardinal Health and CareFusion, the text of any materials related to or based upon any of the Cardinal Health Materials created by or for CareFusion may not contain any references to Cardinal Health (or any use of Cardinal Health' s marks, names, trade dress, logos or other source or business identifiers, including the Cardinal Health Name and Cardinal Health Marks), Cardinal Health' s publications, Cardinal Health' s personnel (including senior management), Cardinal Health' s management structures or any other indication that such materials are based upon any of the Cardinal Materials. Section 3.02. Limitation on Rights and Obligations with Respect to the Cardinal Health Materials . (a) Cardinal Health shall have no obligation to (i) notify CareFusion of any changes or proposed changes to any of the Cardinal Health Materials, (ii) include CareFusion in any consideration of proposed changes to any of the Cardinal Health Materials, (iii) provide draft changes of any of the Cardinal Health Materials to CareFusion for review and/or comment or (iv) provide CareFusion with any updated materials relating to any of the Cardinal Health Materials. CareFusion acknowledges and agrees that, except as expressly set forth above, Cardinal Health reserves all rights (including all Intellectual Property rights) in, to and under the Cardinal Health Materials and no rights with respect to ownership or use, except as otherwise expressly provided in this Agreement, shall vest in CareFusion. The Parties acknowledge and agree that the Cardinal Health Materials are the Confidential Information of Cardinal Health. CareFusion shall use at least the same degree of care to prevent and restrain the unauthorized use or disclosure of any materials created by or for CareFusion that are based upon any of the Cardinal Health Materials as it uses for its other confidential information of a like nature, but in no event less than a reasonable degree of care. CareFusion will allow Cardinal Health reasonable access to personnel and information as reasonably


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necessary to determine CareFusion' s compliance with the provisions set forth above; provided , however , such access shall not unreasonably interfere with any of the business or operations of CareFusion. Subject to Section 9.01 , in the event that Cardinal Health determines that CareFusion has not materially complied with some or all of its obligations with respect to any or all of the Cardinal Health Materials, Cardinal Health may terminate CareFusion' s rights with respect to such Cardinal Health Materials upon written notice to CareFusion and, in such case, Cardinal Health shall be entitled to require such Cardinal Health Materials to be returned to Cardinal Health or destroyed and any materials created by or for CareFusion that are based upon such Cardinal Health Materials to be destroyed (with such destruction certified by CareFusion in writing to Cardinal Health promptly after such termination).

(b) If CareFusion determines to cease to avail itself of any of the Cardinal Health Materials or upon expiration or termination of any period during which CareFusion is permitted to use any of the Cardinal Health Materials, Cardinal Health and CareFusion shall cooperate in good faith to take reasonable and appropriate actions to effectuate such determination, expiration or termination, to arrange for the return to Cardinal Health or destruction of such Cardinal Health Materials and to protect Cardinal Health' s rights and interests in such Cardinal Health Materials.

ARTICLE IV

OTHER ARRANGEMENTS

Section 4.01. Software and Software Licenses . (a) If and to the extent requested by CareFusion, Cardinal Health shall use commercially reasonable efforts to assist CareFusion in its efforts to obtain licenses (or other appropriate rights) to use, duplicate and distribute, as necessary and applicable, certain computer software necessary for Cardinal Health to provide, or CareFusion to receive, Cardinal Health Services (which assistance shall include providing CareFusion the opportunity to receive a copy of, or participate in, any communication between Cardinal Health and the applicable third party licensor in connection therewith); provided , however , that Cardinal Health and CareFusion shall identify the specific types and quantities of any such software licenses; provided , further , that, subject to the terms set forth in Annex B , Cardinal Health shall not be required to pay any fees or other payments or incur any obligations or liabilities to enable CareFusion to obtain any such license or rights; provided , further , that Cardinal Health shall not be required to seek broader rig
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