Exhibit 10.6
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FORM OF
TRANSITION SERVICES AGREEMENT
BETWEEN
MERCK & CO., INC.
AND
MEDCOHEALTH SOLUTIONS, INC.
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agreement"), dated as of _______,
2002, between Merck & Co., Inc., a New Jersey corporation ("Merck"), and
MedcoHealth Solutions, Inc., a Delaware corporation ("Medco"; Merck and
Medco each being referenced herein individually as a "Party," and
collectively as the "Parties").
ARTICLE I
DEFINITIONS
For the purpose of this Agreement, the following capitalized terms shall have
the following meanings:
1.1 Ancillary Agreements. "Ancillary Agreements" shall have the
meaning set forth in the Master Separation and Distribution Agreement.
1.2 Confidential Disclosure Agreement. "Confidential Disclosure
Agreement" shall mean that certain Confidential Disclosure Agreement, dated
as of the date hereof, between the Parties.
1.3 Effective Date. "Effective Date" shall mean, with respect to each
Service, the Separation Date; provided, however, that if the Transition Service
Schedule with respect to a Service sets forth a commencement date other than the
date hereof, such commencement date shall be the "Effective Date" with respect
to such Service.
1.4 Expiration Date. "Expiration Date" shall have the meaning set
forth in Section 2.1.
1.5 Force Majeure. "Force Majeure" shall have the meaning set forth in
Section 10.1.
1.6 Impracticable. "Impracticable" (and words of similar import) shall
have the meaning set forth in Section 2.3.
1.7 Indemnification Agreement. "Indemnification Agreement" shall mean that
certain Indemnification and Insurance Matters Agreement, dated as of the date
hereof, between the Parties and Merck-Medco Managed Care, L.L.C.
1.8 Master Separation and Distribution Agreement. "Master Separation and
Distribution Agreement" shall mean that certain Master Separation and
Distribution Agreement, dated as of the date hereof, between the Parties.
1.9 Person. "Person" means any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company, or other legal entity or organization.
1.10 Service(s). "Service" shall mean the services described on a single
Transition Service Schedule and "Services" shall mean all services described on
all Transition Service Schedules.
1.11 Subsidiary. "Subsidiary" of either Party means a corporation or other
organization whether incorporated or unincorporated, of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Party or by
any one or more of its Subsidiaries, or by such Party and one or more of its
Subsidiaries. For purposes of this Agreement, neither Medco nor any of its
Subsidiaries shall be deemed to be a Subsidiary of Merck.
1.12 Transition Service Schedule. "Transition Service Schedule" shall
mean each transition service schedule attached hereto.
ARTICLE II
SERVICES
2.1 Term of Services. Except as otherwise provided herein, Merck shall
provide or cause to be provided to Medco or its Subsidiaries, as applicable,
each of the Services from the Effective Date through the Expiration Date with
respect to such Service. The "Expiration Date" with respect to each Service
shall be as set forth on the applicable Transition Service Schedule.
Notwithstanding the foregoing, in the event of an early termination of a Service
in accordance with Article V, the date of early termination of such Service
shall be the "Expiration Date" with respect thereto.
2.2 Service Parameters. Merck shall not be required to provide or cause to
be provided any Service for a purpose other than for the conduct of the
businesses of Medco and its Subsidiaries substantially in the manner in which
such businesses were conducted prior to the Separation Date. Medco shall not,
and shall not permit any of its Subsidiaries to, sell, transfer assign or
otherwise use the Services provided hereunder, in whole or in part, for the
benefit of any other Person or entity.
2.3 Impracticability. Merck shall not be required to provide or cause to be
provided any Service to the extent the performance of such Service, in the
reasonable judgment of Merck, becomes "Impracticable" as a result of a cause or
causes outside the reasonable control of Merck, or to the extent the performance
of such Services would violate any applicable laws, rules or regulations or
would result in the breach of any agreement, contract or commitment.
2.4 Services Performed by Others. At its option, Merck may cause any
Service it is required to provide hereunder to be provided by a Subsidiary of
Merck or by any other Person that is providing, or may from time to time
provide, the same or similar Service to Merck or any of its Subsidiaries.
2.5 Additional Resources. In providing the Services, neither Merck nor any
of its Subsidiaries shall be obligated to: (i) hire any additional employees;
(ii) maintain the employment of any specific employee; (iii) purchase, lease or
license any additional equipment or materials; or (iv) pay any costs related to
the transfer of any data to Medco, its Subsidiaries or any alternate supplier of
Services.
2.6 Service Representatives. The Parties shall each appoint a
representative with respect to each Service (each a "Service Representative").
The Service Representatives with respect to each Service shall coordinate the
requesting, scheduling and delivery of such Service. The Transition Service
Schedule for a Service shall set forth each Party's initial Service
Representative for such Service. Either Party may nominate a substitute Service
Representative for itself with respect to a Service at any time upon reasonable
notice to the other Party.
ARTICLE III
COMPENSATION
3.1 Charges for Services. With respect to each Service, Medco shall pay
Merck the charges for such Service calculated by Merck in accordance with the
Transition Service Schedule for such Service, as may be adjusted, from time to
time, in accordance with the processes and procedures established under Section
3.3.
3.2 Payment Terms. Medco shall pay Merck for all Services provided
hereunder within thirty (30) days after receipt of an invoice therefor. Late
payments shall bear interest at the lesser of five percent (5%) per annum.
3.3 Pricing Adjustments. In the event of a tax or regulatory audit
adjustment relating to the pricing of any or all Services provided pursuant to
this Agreement in which it is determined by a taxing or regulatory authority
that any of the charges, individually or in combination, did not result in an
arm's-length payment, as determined under internationally accepted arm's-length
standards, then the Parties may agree to make adjustments to the charges in
question to the extent necessary to achieve arm's-length pricing. Any adjustment
made pursuant to this Section 3.3 at any time during the term of this Agreement
or after termination of this Agreement shall be reflected in the Parties' legal
books and records, and the resulting underpayment or overpayment shall create,
respectively, an obligation to be paid in the manner specified in Section 3.2,
or shall create a credit against amounts owed under this Agreement.
ARTICLE IV
GENERAL OBLIGATIONS; STANDARD OF CARE
4.1 Performance Parameters: Merck. Subject to Sections 2.2, 2.3, 2.4, 2.5,
4.4 and Article X and the other terms and conditions of this Agreement, Merck
shall perform its obligations hereunder in accordance with the Merck performance
parameters for each Service set forth on the applicable Transition Service
Schedule. Where no Merck performance parameters are set forth, Merck shall use
reasonable efforts to provide Services in accordance with its policies,
procedures and practices in effect with respect thereto and shall exercise the
same care and skill as it exercises in performing similar services for itself.
4.2 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
HEREIN, MERCK MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT
NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES OR OTHER DELIVERABLES PROVIDED
BY IT HEREUNDER.
4.3 Performance Parameters: Medco. Medco shall comply with the Medco
performance parameters for each Service as set in the applicable Transition
Service Schedule. Where no Medco performance parameters are set forth, Medco
shall, in connection with receiving Services, follow Merck policies,
procedures and practices, including providing information and documentation
reasonably requested by Merck for Merck or its designee to perform the Services
hereunder and making available, as reasonably requested by Merck, sufficient
resources and timely decisions, approvals and acceptances so that Merck may
accomplish its obligations hereunder in a timely manner.
4.4 Transitional Nature of Services; Changes. The Parties acknowledge the
transitional nature of the Services and agree that Merck may make changes from
time to time in the manner of performing the Services if Merck is making similar
changes in performing similar services for itself and its Subsidiaries and if
Merck furnishes to Medco at least ___ days written notice regarding such
changes.
4.5 Responsibility for Errors; Delays. Merck's sole responsibility to
Medco:
(a) for errors or omissions in Services shall be to furnish
correct information, payment and/or adjustment in such
Services; and
(b) for failure to deliver any Service because of
Impracticability, shall be to use reasonable efforts, subject to
Sections 2.2, 2.3, 2.4, 2.5, 4.4 and Article X, to make such
Services available and/or to resume performing such Services as
promptly as reasonably practicable.
4.6 Good Faith Cooperation; Consents. The Parties will use good faith
efforts to cooperate with each other in all matters relating to the provision
and receipt of Services. Such cooperation shall include exchanging information,
and obtaining all third party consents, licenses, sublicenses or approvals
necessary to permit each Party to perform its obligations hereunder (including
by way of example, not by way of limitation, rights to use third party software
needed for the performance of Services). The costs of obtaining such third party
consents, licenses, sublicenses or approvals shall be borne solely by Medco.
Each Party will maintain, in accordance with its standard document retention
procedures, documentation supporting the information relevant to cost
calculations and cooperate with each other in making such information available
as needed in the event of a tax or regulatory audit, whether in the United
States or any other country.
ARTICLE V
EARLY TERMINATION
5.1 Early Termination. Medco may terminate all or any one or more of the
Services provided to it hereunder at any time upon thirty (30) days] prior
written notice to Merck. Merck may terminate its obligation to provide all or
any one or more of the Services it is required to provide hereunder if (a) Medco
fails to pay any amount which is due and payable in respect of any Service in
accordance with the provisions of Section 3.2 hereof or (b) Medco materially
breaches any other provision hereunder and does not cure such breach hereunder
within ten (10) days after being notified of such breach.
5.2 Survival. Those Sections of this Agreement that, by their nature, are
intended to survive termination will survive in accordance with their terms.
Notwithstanding the foregoing, in the event of any termination with respect to
one or more, but less than all Services, this Agreement shall continue in full
force and effect with respect to any Services not terminated hereby.
ARTICLE VI
CONFIDENTIALITY
The terms of the Confidential Disclosure Agreement shall apply to any
Confidential Information (as defined therein) of Medco provided to Merck for the
purpose of providing Services under this Agreement.
ARTICLE VII
RELATIONSHIP BETWEEN THE PARTIES
The relationship between the Parties established under this Agreement is that of
independent contractors and neither Party is an employee, agent, partner, or
joint venturer of or with the other. Medco agrees to grant Merck personnel
access to sites, systems and information (subject to the provisions of
confidentiality in Article VI) as is necessary for Merck to perform its
obligations hereunder.
ARTICLE VIII
INTELLECTUAL PROPERTY
Except as otherwise set forth herein, the terms of the Technology and
Intellectual Property Ownership and License Agreement, dated as of the
Separation Date, between the Parties, shall govern the use and ownership of any
Technology (as defined therein) and any patents, trademarks, or other
intellectual property transferred, licensed used or created in connection with
the provision of Services under this Agreement.
ARTICLE IX
LIMITATION OF LIABILITY; INDEMNIFICATION
9.1 LIMITATION OF LIABILITY. IN NO EVENT SHALL MERCK OR ANY OF ITS
SUBSIDIARIES, AFFILIATEDS OR ITS OR THEIR DIRECTORS, OFFICERS OR EMPLOYEES BE
LIABLE TO MEDCO OR ITS SUBSIDIARIES OR AFFILIATES FOR ANY LOST PROFITS, LOSS OF
DATA, LOSS OF USE, COST OF COVER, BUSINESS INTERRUPTION OR OTHER SPECIAL,
INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED, UNDER
ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), ARISING FROM THE PERFORMANCE OF,
OR RELATING TO, THIS AGREEMENT, WHETHER OR NOT ANY OF MERCK OR ITS SUBSIDIARIES,
AFFILIATES OR ITS OR THEIR DIRECTORS, OFFICERS OR EMPLOYEES HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
9.2 Indemnification. Medco shall indemnify and hold harmless the Merck
Indemnitees (as defined in the Indemnification Agreement) in respect of all
Liabilities (as defined in the Indemnification Agreement) related to, arising
from, asserted against or associated with Merck's providing Services hereunder.
Such indemnification obligation shall be a Medco Liability for purposes of the
Indemnification Agreement, and the provisions of Article I thereof with respect
to indemnification shall govern with respect thereto.
ARTICLE X
FORCE MAJEURE
Merck will be excused for any failure or delay in performing any of its
obligations under this Agreement if such failure or delay is caused solely by
Force Majeure. "Force Majeure" includes, without limitation, any act of God; any
accident, explosion, fire, ice, earthquake, lightning, tornado, hurricane, or
other severe weather condition or calamity; any civil disturbance, labor
dispute, or material labor shortage; any sabotage or acts of terrorism; any acts
of a public enemy, uprising, insurrection,
civil unrest, war or rebellion; any action or restraint by court order or public
or governmental authority or lawfully established civilian authorities, or any
other circumstance or event beyond Merck's reasonable control.
ARTICLE XI
DISPUTE RESOLUTION
ANY DISPUTE, CONTROVERSY OR CLAIM BETWEEN THE PARTIES HERETO ARISING OUT OF OR
RELATING TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, DISPUTES CONCERNING
THE VALIDITY, INTERPRETATION OR PERFORMANCE OF OR UNDER THIS AGREEMENT OR ANY
TERM OR PROVISION HEREOF, SHALL BE EXCLUSIVELY GOVERNED BY AND SETTLED IN
ACCORDANCE WITH THE PROVISIONS OF ARTICLE III OF THE INDEMNIFICATION AGREEMENT.
ARTICLE XII
MISCELLANEOUS
12.1 Entire Agreement. This Agreement, the Master Separation and
Distribution Agreement, the other Ancillary Agreements and any Annexes, Exhibits
and Schedules attached hereto and thereto, constitutes the entire agreement
among the parties with respect to the subject matter hereof and thereof and
shall supersede all prior written and oral and all contemporaneous oral
agreements and understandings with respect to the subject matter hereof and
thereof.
12.2 Governing Law; Forum. This Agreement shall be construed in accordance
with, and all Disputes (as defined in the Indemnification Agreement) hereunder
shall be governed by, the procedural (except to the extent inconsistent with the
procedures set forth in Article III of the Indemnification Agreement) and
substantive laws of the State of New York as to all matters regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto. Under no circumstances may any party seek or be awarded
punitive damages under this Agreement. Any state court sitting in New York
county, New York and/or the United States District Court for the Southern
District of New York shall have exclusive jurisdiction and venue, and each party
hereto hereby submits to such jurisdiction and venue and irrevocably waives, to
the fullest extent permitted by applicable law, any objection it may now or
hereafter have to such jurisdiction or the laying of such venue over any
Disputes between the parties that are permitted to be brought in a court, or the
enforcement of any decision of an arbitrator, pursuant to Article III of the
Indemnification Agreement. Each of the parties hereby irrevocably waives any
right to a jury trial with respect to a Dispute.
12.3 Notices. All notices and other communications required or permitted to
be given by any party pursuant to the terms of this Agreement shall be in
writing to and shall be deemed to have been duly given when delivered in person,
by express or overnight mail delivery by a nationally recognized courier
(delivery charges prepaid), or by registered or certified mail (postage prepaid,
return receipt requested), as follows:
if to Merck:
Merck & Co., Inc.
Xxx Xxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
if to Medco:
MedcoHealth Solutions, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
furnished to the other in writing in the manner set forth above. All notices and
other communication shall be deemed to have been given and received on the date
of actual delivery.
12.4 Binding Effect; Assignment; Third-Party Beneficiaries. Medco may not,
directly or indirectly, in whole or in part, whether by operation of law or
otherwise, assign or transfer this Agreement or its rights or obligations
hereunder, without Merck's prior written consent and, except as otherwise
permitted hereby, any attempted assignment, transfer or delegation without such
prior written consent shall be voidable at the sole option of Merck. Nothing in
this Agreement shall restrict any transfer of this Agreement by Merck, whether
by operation of law or otherwise. Without limiting the foregoing, this Agreement
shall be binding upon Merck and the other members of the Merck Group and Medco
and the other members of the Medco Group and their respective legal
representatives, successors andpermitted assigns, and nothing in this Agreement,
express or implied, is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.5 Offset. In addition to, and not in limitation of, any other remedies
any member of the Merck Group or any Merck Indemnitee (as defined in the
Indemnification Agreement) may be entitled to under the Master Separation and
Distribution Agreement, any Ancillary Agreement (including this Agreement) or
any Intercompany Agreement (as defined in the Indemnification Agreement) , any
member of the Merck Group or any Merck Indemnitee may satisfy any amounts owed
to such member of the Merck Group or Merck Indemnitee by any member of the Medco
Group by means of an offset against any amounts any member of the Merck Group
may from time to time owe to any member of the Medco Group or an Medco
Indemnitee, whether under the Master Separation and Distribution Agreement, any
Ancillary Agreement (including this Agreement), any Intercompany Agreement, any
other agreement or arrangement existing between any member of the Merck Group
and any member of the Medco Group, or otherwise.
12.6 Counterparts. This Agreement, including any Annexes, Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
12.7 Severability. If any term or other provision of this Agreement or any
Annexes, Schedules or Exhibits attached hereto is determined by a court,
administrative agency or arbitrator to be invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party hereto.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties hereto
as closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the fullest extent possible. If the parties
are unable to reach an agreement on any such modification, the arbitrator
selected in accordance with Article III of the Indemnification Agreement shall
have the authority to determine such modification.
12.8 Failure or Indulgence Not Waiver. No failure or delay on the part
of any party hereto in the exercise of any right hereunder shall impair such
right or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right.
12.9 Amendment. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
this Agreement.
12.10 Interpretation. The headings contained in this Agreement, in any
Annex, Exhibit or Schedule hereto and in the table or contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Annex,
Schedule or Exhibit but not otherwise defined therein, shall have the meaning
assigned to such term in this Agreement. When a reference is made in this
Agreement to an Article or Section, or an Annex, Exhibit or Schedule, such
reference shall be to an Article or Section of, or an Annex, Exhibit or Schedule
to, this Agreement unless otherwise indicated.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives.
MERCK & CO., INC. MEDCOHEALTH SOLUTIONS, INC.
By: By:
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Name: Name:
Title: Title:
