Channel Management Agreement

EXHIBIT 10.42


CHANNEL MANAGEMENT AGREEMENT


This Channel Management Agreement (the "Agreement") is made effective as of March 7, 2000 (the "Effective Date") by and between McKesson HBOC, Inc., a ------------- Delaware corporation, with offices at One Post Street, San Francisco, CA 94104 ("McKesson"), and AvantGo, Inc., a Delaware corporation with its principal place of business at 1700 S. Amphlett Blvd., Suite 300, San Mateo, CA 94402 ("AvantGo").


RECITALS


AvantGo operates an Internet service (the "AG Service") that facilitates delivery of information obtained over the Internet through handheld devices.


The AG Service delivers information in several general interest categories and specific subcategories each of which provides content supplied by individual content providers.


AvantGo and McKesson have entered into an Amendment to License Agreement of even date herewith under which McKesson has acquired a license to utilize certain AvantGo software (the "Licensed Software") in the conduct of its business, including offering information services to its customers.


The parties want McKesson to develop and manage a Health Category available through the AG Service.


The parties intend to share revenues generated by the Health Category, as well as revenues generated by similar activities conducted by McKesson using the AvantGo software on behalf of McKesson's customers, but do not intend to share revenues arising from the operations of their respective core businesses.


The parties wish to set forth their understanding with regard to the foregoing matters in this Agreement.


NOW, THEREFORE, the parties agree as follows:


AGREEMENT


1. Certain Definitions


"AG Site" means the AvantGo Channels page located at http://avantgo.com/channels or any successor site(s), including any page appearing on Handhelds serving similar functions.


"Category" is a general interest subject matter category, containing multiple Channels, that appears on the first user search level of the AG Site at which Subscribers select Content.


"Channel" is a specific information stream within the Health Category delivered via the AG Service to a Subscriber's Handheld. Currently, Content for a particular Channel is typically web pages supplied by a single Content Provider, such as but not limited to an online publication or reference source, although advertising Content included in a particular Channel may be supplied by one or more additional Content Providers.


****** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


"Confidential Information" means (i) information about a party's (or its suppliers') business or activities that is proprietary and confidential, including all business, financial, technical and other information of a party marked or designated by the party as "confidential" or "proprietary"; (ii) information which, by its nature or the circumstances surrounding disclosure, ought in good faith to be treated as confidential; and (iii) the terms and conditions of this Agreement. Confidential Information does not include information that (a) is in or enters the public domain without breach of this Agreement; (b) the receiving party lawfully receives from a third party without restriction on disclosure and without breach of a nondisclosure obligation; (c) the receiving party knew prior to receiving such information from the disclosing party; or (d) the receiving party develops independently without use of the disclosing party's Confidential Information.


"Content" is material supplied for delivery through the AG Service in the Health Category which conforms to the Style Guide. It may include news stories, feature articles, reference material, interactive services, advertising and other information.


"Content Provider" is an entity that enters into an agreement to furnish Content for distribution in the Health Category as described in this Agreement.


"Handheld" is any existing or future mobile computing or communication device, including but not limited to a cell phone, pager, handheld computer, or other portable device to which Content is or may in the future be delivered.


"Health Category" is the Category that includes Content in the Health Subject Areas.


"Health Subject Areas" are health, health care, disease, drugs and pharmaceuticals, and medical matters.


"Style Guide" is the AvantGo guide which specifies guidelines and procedures for developing material for the AG Service which is optimized for the small graphics display of Handhelds, a copy of which is located at http://corp.avantgo,com/DevCorner/StyleGuide/.


"Subscriber" is any person that registers to receive Content through the AG Service.


"Technical Contact" is a person appointed by AvantGo as the principal contact for technical matters related to the AG Service and the Health Category.


2. McKesson Responsibilities


2.1 Category Management. McKesson will have sole authority to manage the
------------------- Health Category, as follows.


2.1.1 Channels. McKesson's responsibilities will include exclusive
-------- management of Content within the Health Subject Areas, except as provided in section 3.5. McKesson will assume management of Channels within the Health Subject Areas promptly after the Effective Date and following orientation by AvantGo concerning the AG Service. Content Partner Agreements in existence prior to the Effective Date of this Agreement for Channels in Health Subject Areas may continue in effect only until they first expire or otherwise terminate, after which time any continuation will be within McKesson's sole discretion. McKesson will determine appropriate Channels within the Health Subject Areas to add to or delete from the Health Category. AvantGo may request that particular Content Providers or Channels be included in the Health Category, and McKesson will consider in good faith accommodating such requests.


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AvantGo will cooperate as reasonably requested by McKesson in connection with McKesson's Health Category management and the allocation of Content to Subscribers.


2.1.2 Content Providers. McKesson will be responsible for all
----------------- interaction with Content Providers relating to the scope and nature of the Content (as distinct from technical delivery of the Content). McKesson will include and exclude Content and Content Providers for the Channels in McKesson's sole reasonable discretion, and will communicate its determinations to AvantGo in a manner reasonably requested by AvantGo. Revenue will be collected and allocated in accordance with section 6 below.


2.1.3 Agreements. McKesson will negotiate all agreements with
---------- Content Providers for the supply of Content in the Health Category. McKesson will include in such agreements technical requirements reasonably requested by AvantGo. McKesson will obtain from Content Providers terms no less protective of AvantGo than those at Exhibit 2.1.3, and the agreement will state that AvantGo is a third party beneficiary of such terms. McKesson may extend to Content Providers promises and benefits on behalf of AvantGo no more burdensome to AvantGo than those specified in Exhibit 2.1.3. To the extent of the provisions in Exhibit 2.1.3 only, Content Providers shall be third party beneficiaries of this Agreement. In McKesson's reasonable discretion, such agreements will provide for compensation which may include, without limitation, any or all of [******].


2.1.4 McKesson Content. McKesson may itself supply Content for one
---------------- or more Channels under the terms of this section 2.1.4 ("McKesson Content"). Subject to its obligation to share revenue set forth in Section 6.2, McKesson will not be obliged to pay fees for placement of McKesson Content on the AG Site. Notwithstanding the foregoing, if McKesson Content receives preferred placement or is otherwise specially featured such that McKesson would charge another Content Provider additionally for preferred treatment, then McKesson will pay AvantGo [******].


2.2 Advertising. Except as provided in section 2.2.1, McKesson will have
----------- the sole right and responsibility to enter into agreements for advertising and other promotions in the Health Category, provided that such capabilities are available and offered through the AG Service and within the technical capabilities of the AG Service. McKesson will confer with AvantGo on technical matters relating to Health Category advertising, including but not limited to targeting, the use of cookies and other visitor promotional and solicitation tools and techniques, and the requirements of third party advertising brokers and other vendors.


2.2.1 AvantGo Network. Subject to this section 2.2.1, AvantGo may
--------------- invite Content Providers in the Health Category to participate in an "AvantGo Network" under which


****** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


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advertisements are placed on various channels in the AG Service. To the extent reasonably practical from a technical perspective, McKesson may decline to allow the placement of some or all such advertising on such basis as it reasonably considers appropriate, including but not limited to alternative advertising sales opportunities or avoiding excessive advertising clutter. Revenue derived from the portion of such advertising placed in the Health Category, allocated to the Health Category on the basis of impressions or such other criteria as the parties agree, will be included as revenue shared under this Agreement.


2.2.2 Subcontracts. McKesson may subcontract the sale, serving and
------------ other aspects of advertising in its reasonable judgment.


2.3 Technical Contacts. McKesson and AvantGo will cooperate to allow
------------------ Content Providers to communicate directly with AvantGo concerning technical matters related to the supply and distribution of Content.


2.4 Non-Circumvention. Neither party will enter into deals with
----------------- prospective Content Providers which are intended to circumvent, in whole or in part, the revenue sharing arrangements hereunder. The occurrence of any such arrangement shall constitute a breach of this Agreement.


3. AvantGo Responsibilities


3.1 Hosting.
--------


3.1.1 Category Hosting. AvantGo will operate the AG Service and host
---------------- the Health Category as part of the AG Site and in accordance with this Agreement. Except to the extent inconsistent with this Agreement, AvantGo will maintain performance of the AG Site to be equal to or better than the performance of other reasonably high-quality consumer oriented sites generally with respect to uptime, responsiveness, and other common factors affecting site performance.


3.1.2 Technical Support. All Content must conform to the Style
----------------- Guide. AvantGo will use its commercially reasonable efforts to respond to all electronic mail requests received during normal business hours within twenty- four (24) hours, and will furnish such technical support to Health Category Content Providers as it furnishes to other Content Providers generally. AvantGo will provide additional support to Content Partners, in AvantGo's sole discretion, subject to AvantGo's then-current time and materials rates. AvantGo will continue to provide the "Developer Corner" area that is available to Content Providers and McKesson technical personnel on the site currently located at http://corp.avantgo.com/DevCorner/.


3.1.3 Site Operation and Navigation. AvantGo will undertake
----------------------------- commercially reasonable efforts to make the AvantGo Site continuously available on the Internet, excluding reasonable scheduled maintenance periods. AvantGo will not prevent or impede back channel and other Interact site and content navigation generally available through Web browsers.


3.1.4 Subscriber Support. AvantGo will provide all technical support
------------------ to Subscribers to the Health Category as part of its Subscriber support for the AG Service generally. Subscriber support will be equal to or better than that provided to users of non-Health Category channels.


3.2 Content Review. McKesson and AvantGo will cooperate to remove any
-------------- Content that is defamatory, obscene, infringing, deemed hate speech, unlawfully invasive or in any other


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way unlawful, or that encourages violence, or otherwise is in violation of the Content Partner Agreements.


3.3 Promotion. AvantGo and McKesson will advertise and promote the Health
--------- Category Channels and their Content, including but not limited to their launch. AvantGo promotion will be no less prominent than that typical of its advertisement and promotion of other Categories, Channels and Content available through the AG Service in general.


3.4 Reports. AvantGo will provide monthly reporting to McKesson at the end
------- of the month of the total number of Subscribers to each Health Category Channel, and such other information reasonably available to AvantGo as McKesson reasonably requests. If AvantGo will incur more than minimal costs or charges to generate information that is not otherwise available, it will so advise McKesson in advance and McKesson will reimburse AvantGo or withdraw the request.


3.5 Non-Revenue Content. AvantGo may with McKesson's consent add Content
------------------- in a Health Subject Area that does not generate revenue. Such added Content may be placed within or outside the Health Category as the parties agree, and may be added in order to increase usage of the Health Category or the AG Service, or for other purposes which benefit the Health Category or the AG Service generally. McKesson may decline some or all such added Content on such basis as it reasonably considers appropriate, taking into consideration the success and popularity of the Health Category as a whole, including but not limited to the basis that it conflicts with agreements with Content Providers or with actual or proposed negotiations with potential Content Providers, but McKesson will not unreasonably reject such added Content.


3.6 Exclusivity. Except as expressly provided in sections 2.2.1 and 3.5,
----------- McKesson has the exclusive right to obtain or provide, as the case may be, the supply of Content for the Health Category. AvantGo will not designate any channel or obtain, provide or distribute content that, in the aggregate over time, is primarily within one or more of the Health Subject Areas. AvantGo will not solicit or distribute through the AG Service advertising for information, products or services in the Health Subject Areas, other than that supplied through McKesson. No Category other than the Health Category will contain in its title the terms "health", "wellness", "health care", "medical", or "medicine" or any combination or synonyms of such terms.


4. Mutual Responsibilities


4.1 Principal Contacts; Meetings. Each party will appoint a person to be
---------------------------- the principal contact with the other for matters relating to this Agreement (each, a "Manager"). At least monthly, or at such other times as the parties agree, the Managers will meet to review the status of the activities relating to this Agreement and to resolve any outstanding issues. Should the Managers be unable to resolve any issue, promptly upon the written request of either Manager specifying the issue of concern, both Managers will arrange to have more senior officers of each party meet to resolve the issue.


4.1.1 Technical Contact. AvantGo will appoint a Technical Contact as
----------------- the principal contact for technical matters related to operation of Channels and the AG Service, who will be available during business hours to assist or meet with McKesson. The Technical Contact will also assist Content Providers to the same extent as typically provided to other Content Providers. The Technical Contact may be, but need not be the same person as the Manager appointed by AvantGo as its principal contact.


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4.1.2 Alternative Contacts. Each party will identify alternative
-------------------- contacts in case the principal contacts designated in accordance with this section 4.1 are unavailable. Each party will give the other party the name, telephone and other contact information for their respective principal contacts and alternative contacts, and will notify the other party reasonably promptly of any changes to its designated contracts or their contact information.


4.2 Branding and Licenses.
---------------------


4.2.1 Category Branding. The Health Category will include in its
----------------- name "Health" or "Health Information" or similar terms and the phrase "by McKesson HBOC" (or another phrase requested by McKesson such as "presented by McKesson HBOC"). It will include the phrase and term in its listing with other Categories and in any and all other places on the AG Site in which it appears. The Health Category will be listed no less prominently than is typical of any other AG Service Category, excluding special short-term promotions. Without limiting the foregoing, the Health Category will typically be listed "above the fold" if any Category is typically listed "above the fold". To the extent that AvantGo is reasonably able to do so, it will feature the McKesson logo (or such other logo as McKesson substitutes) in the Health Category listing of the Health Category pages.


4.2.2 Logo and License. McKesson will furnish AvantGo its logo in
---------------- the form of digitized art suitable for display on the AG Site as described in this section 4.2. McKesson may from time to time furnish AvantGo other forms or formats of its name and logo for use in specific agreed promotional activities related to the Health Category.


4.2.3 McKesson Trademark License. Subject to the terms and
----------------- conditions of this Agreement, McKesson hereby grants AvantGo a limited, worldwide, royalty-free, non-exclusive license to display its name and logo (the "McKesson Marks") as described in this section 4.2 during the term of this Agreement. Any such use of the McKesson Marks will be consistent in all respects with then current trademark usage guidelines that McKesson may communicate to AvantGo from time to time. The parties agree that all rights and interests, including any and all goodwill therein and thereto, in and to the McKesson Marks shall inure to McKesson. AvantGo hereby assigns and agrees to assign and affirm, as requested by McKesson from time to time, all such rights and interests to McKesson.


4.2.4 AvantGo Trademark License. Subject to the terms and conditions
----------------- of this Agreement, AvantGo hereby grants McKesson a limited, worldwide, royalty- free, non-exclusive license to display its name and logo (the "AvantGo Marks") as described in this section 4.2 during the term of this Agreement. Any such use of the AvantGo Marks will be consistent in all respects with then current trademark usage guidelines that AvantGo may communicate to McKesson from time to time. The parties agree that all rights and interests, including any and all goodwill therein and thereto, in and to the AvantGo Marks shall inure to AvantGo. McKesson hereby assigns and agree ...