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Development And Services Agreement

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EXHIBIT 10.51


CONFIDENTIAL
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DEVELOPMENT AND SERVICES AGREEMENT
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This Agreement (this "Agreement"), effective as of July 1, 1999 (the "Effective Date"), is made and entered into by and between America Online, Inc. ("AOL"), a Delaware corporation, with its principal offices at 22000 AOL Way, Dulles, Virginia 20166, and drkoop.com, Inc., ("Company"), a Delaware corporation, with its principal offices at 8920 Business Park Drive, Suite 200, Austin, Texas 78759 (each a "Party" and collectively the "Parties").


INTRODUCTION
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AOL provides online access and services through the AOL Network, including without limitation the AOL Service, Netscape Netcenter, the CompuServe brand service, Digital City and AOL.com (as such terms are defined herein).


Company is a provider of various health and medical care information, products and services, including products and services currently offered through the Internet at http://www.drkoop.com.


AOL and Company wish to enter into an agreement on the terms and conditions set forth herein whereby Company will have principal responsibility for developing, producing, managing and providing Content for an online personal medical records and health information service (as defined herein, "PMR Service") permitting individual consumers to maintain and access online personal medical records information and to access related value added services, products and content provided by or in conjunction with third parties such as medical insurance companies. The PMR Service will be managed by Company for AOL as provided herein (the "AOL PMR Service"). In addition, Company will have the right to operate the PMR Service on Company's own behalf on the Dr. Koop Site (the "Company PMR Service")


Concurrently herewith, the Parties are entering into an Interactive Services Agreement of even date pursuant to which AOL is providing access to an Internet Site of Company through the AOL Network (the "Interactive Services Agreement").


Defined terms used but not defined in the body of the Agreement or in the other Exhibits attached to this Agreement will have the respective meanings set forth on Exhibit A attached hereto.


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* * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


TERMS
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1. Development.
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1.1. Initial Specifications and Development. Company and AOL will, within
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forty-five (45) days following the Effective Date, jointly agree in
writing upon a development plan setting forth detailed specifications
for the PMR Service to be developed by Company. Such development
plan, as it may be amended from time to time by written agreement of
both Parties, is referred to in this Agreement as the "Development
Plan." The Development Plan will provide for the PMR Service to
utilize AOL namespace and applicable elements and characteristics of
that namespace (collectively the "AOL Namespace Technology"), so that
all users of the PMR Service will be able to utilize AOL products,
services, tools and utilities that utilize the AOL Namespace
Technology. The Development Plan will also include the requirement
that the PMR Service (a) conform with then-existing technologies
identified by AOL which are optimized for the AOL Service and are
compatible with AOL's then-available client and host software and the
AOL Network; and (b) meet AOL's then current reasonable volume and
performance requirements. The Development Plan will also include a
commitment by Company to develop and maintain as part of the PMR
Service an applications programming interface ("API") to facilitate
the transmission and passage of data between AOL and Third Party
Service Providers, which API shall be developed and maintained at a
quality level consistent with industry APIs intended to facilitate
electronic data interchange between commerce partners. Company's
commitment to development and maintenance of the API pursuant to this
Agreement does not extend to Backend servicing of Third Party Service
Provider interfaces and connections to the API, which services the
Parties understand Company may perform at a separate charge to such
Third Party Service Providers.


1.1 Timetable. The Parties will agree on a project timetable for
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development and launch of the PMR Service as part of the Development
Plan. Such project timetable, as it may be amended from time to time
by written agreement of both Parties, is referred to in this
Agreement as the "Project Timetable."


1.2 Company Development Responsibilities. Company will be principally
------------------------------------
responsible for the development of the PMR Service in accordance with
this Agreement, including all technology and aspects thereof, such as
user interface, database and database management technology and
interface technology to interface the PMR Service to third parties
and content and data from such third parties. Company agrees to
diligently perform the development services and to develop and
provide the PMR Service in accordance with the Development Plan, the
Project Timetable


and the operating standards set forth in Exhibit "C" (the "Operating
Standards"). Company will be responsible for devoting such personnel,
equipment and resources as are required to accomplish such
development.


1.3 AOL Development Responsibilities. The Parties recognize that the
--------------------------------
Development Plan may provide for certain development tasks to be
undertaken by AOL, where AOL has particular knowledge or expertise
that would advance or facilitate such development. To the extent that
the Development Plan provides that AOL is responsible for certain
development tasks, AOL will diligently perform the development
services for which it is responsible as set forth in the Development
Plan, and AOL will be responsible for devoting such personnel,
equipment and resources as are required to accomplish such
development tasks in accordance with the Development Plan and the
Project Timetable.


1.4 Testing and Acceptance. The PMR Service shall, upon completion, be
----------------------
subjected to such testing as each party may desire to conduct, and
the PMR Service will not be deployed until approved by both Company
and AOL. Upon completion of any such testing conducted by AOL, AOL
shall provide Company written notice of approval or disapproval of
the PMR Service. The Development Plan and/or Project Timetable shall
set forth more detailed procedures, responsibilities and timetables
for the acceptance testing process. Any disapproval by AOL shall be
based upon AOL's determination that the PMR Service fails to conform
to the Development Plan or is not suitable for commercial release and
deployment. In the event of disapproval by AOL, AOL shall give its
reasons for disapproval in reasonable detail, specifying the nature
of the deficiencies, and Company shall thereafter use reasonable
efforts to modify the PMR Service and resubmit it for further
acceptance testing by AOL. This process shall continue until the PMR
Service has been approved by AOL. The date on which AOL notifies
Company that AOL approves the PMR Service is referred to herein as
the "AOL Approval Date." Any subsequent enhancements, modifications
or revisions to the PMR Service will also be subject to AOL's and
Company's approval of the specifications therefor and AOL's and
Company's testing and approval thereof as set forth in this Section
1.5. No changes or additions will be made to the PMR Service until
such changes or additions (a) conform with specifications agreed to
by AOL, (b) conform with then-existing technologies identified by AOL
which are optimized for the AOL Service and are compatible with AOL's
then-available client and host software and the AOL Network; (c) meet
AOL's then current reasonable volume and performance requirements;
(d) meet such other requirements as AOL may reasonably require as a
condition to acceptance of such changes or additions; and (e) have
been accepted pursuant to this Section 1.5.


1.2. Additional Development Services.
-------------------------------


(a) Requirements. At all times during the Term, Company will
undertake such development and make such changes to the PMR
Service as may be required to ensure that the PMR substantially
complies with the Operating Standards.


(b) Changes. After the initial development of the PMR Service,
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Company may make such changes to the PMR Service as Company
deems appropriate to maintain the PMR Service as a market-
competitive service, provided that such changes will be subject
to AOL's written approval, not to be unreasonably withheld. In
addition, Company will make such changes to the PMR Service as
AOL may reasonably request from time to time. Without limiting
the foregoing, Company will make such changes to the PMR
Service as AOL may reasonably request in order to implement
technological innovations as well as to integrate with the PMR
Services complementary products, services and/or technologies
designated by AOL that are provided by AOL or third parties,
including without limitation Third Party Service Providers. In
the event AOL requests that Company implement technological
innovations or complementary products, services and/or
technologies offered by an AOL Strategic Partner, Company will
undertake such changes using the technological innovations,
products, services and/or technologies offered by such third
party. In the event AOL requests that Company implement
technological innovations or complementary products, services
and/or technologies offered by a third party other than an AOL
Strategic Partner, Company may elect either to undertake such
changes using the technological innovations, products, services
and/or technologies offered by such third party or to deliver
to AOL within thirty (30) days following AOL's initial request
for such implementation a written plan for implementation of
alternative third party or Company technological innovations,
products, services and/or technologies offering comparable or
better functionality and performance, which plan shall be
subject to AOL's approval, not to be unreasonably withheld.
Company will provide development services under this Section
1.6(a)(ii) on a high priority basis and on at least as high a
priority basis as provided to any third party. Upon any request
by AOL for changes or any approval by AOL of changes proposed
by Company, the parties will agree upon the specifications for
such changes and a development schedule for such changes.


(c) Agreements with Third Party Service Providers. The Parties
---------------------------------------------
recognize that a significant portion of the value of the PMR
Service is its ability to interface with products and services
offered by Third


Party Service Providers. The Parties recognize that the
Development Plan may provide for certain development tasks to
be undertaken by third parties, where one or more third parties
has particular knowledge or expertise that would advance or
facilitate such development. If AOL reasonably requests that
Company integrate with the PMR Service complementary products,
services or technologies provided by an AOL Strategic Partner,
Company will negotiate in good faith with such third party and
will enter into, on commercially reasonable terms, such
agreements with such third party as may be required to
accomplish such integration. In the event that AOL obtains a
commitment from a Third Party Service Provider to integrate
with the PMR Service complementary products or services of such
Third Party Service Provider that are anticipated to expand the
number of consumers with access to the PMR Service, AOL may
require that Company co-brand or ingredient brand the PMR
Service with the name or logo of such Third Party Service
Provider in accordance with branding commitments negotiated by
AOL and such Third Party Service Provider, subject to the
requirements set forth in Section 2.2(a) with respect to
ingredient branding to be accorded to Company. For other
complementary products, services or technologies integrated
with the PMR Service, AOL and Company will negotiate in good
faith with one another regarding any co-branding or ingredient
branding requested by the third party providing such
complementary products, services or technologies. All
agreements that Company enters into with any Third Party
Service Providers shall explicitly provide that upon expiration
or termination of the Term of this Agreement, the Third Party
Service Provider shall not be restricted or limited in any
manner from providing its products and services to AOL, either
directly or through one or more third party transaction
processors, it being the intention that AOL will have the
ability to continue to offer the PMR Service with any related
products or services of Third Party Service Providers that were
offered during the Term as part of the PMR Service. AOL shall
be a named third party beneficiary of any such agreements.


(d) Development Committee. AOL and Company shall each designate an
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individual to serve as development representatives (the
"Development Representatives") on a development committee (the
"Development Committee"). The initial Development
Representative appointed by each Party shall be subject to the
other Party's approval, not to be unreasonably withheld. Upon
AOL's request, the Development Committee shall also include a
development representative appointed by an AOL Strategic
Partner. If either Party replaces the initially designated
Development Representative, such Development Representative
must be replaced by a person of similar rank and stature unless
the


parties otherwise agree. The Development Committee shall meet
on a regularly scheduled basis to discuss development
activities and priorities relating to the PMR Service, new
technological innovations, complementary products, services
and/or technologies, and other matters relating to the ongoing
development and maintenance of the PMR Service, including
without limitation competitive and business justifications for
implementing particular changes. Through the Development
Committee, the Parties will approve an updated and revised
Development Plan for the PMR Service at least once every six
(6) months. In the event that AOL requests that Company
integrate with the PMR Service complementary products, services
or technologies provided by an AOL Strategic Partner that are
reasonably necessary in order to maintain the PMR Service as a
market-competitive service, and such integration or
implementation would require Company to incur extraordinary
unanticipated fees or expenses (such as, by way of example,
extraordinary license fees or extraordinary additional hardware
expenses), the Development Committee shall discuss the matter
and attempt to agree on an appropriate allocation of such
expenses between the Parties.


(e) Additions As Part of General Obligations. All additions and
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changes provided hereunder will be developed, constructed,
programmed, hosted and maintained by Company as required
hereunder.


(f) AOL Right To Opt Out of Features. The features and functions of
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the AOL PMR Service and the Company PMR Service shall be the
same (subject to such user interface modifications as may be
developed by AOL pursuant to Section 2.1(a) that may
differentiate the appearance of the AOL PMR Service as it
appears on various services on the AOL Network), provided that
AOL shall have the right to decline to include in the AOL PMR
Service any features or functions of the PMR Service
implemented by Company in the Company PMR that AOL finds
unsuitable or undesirable for any reason.


(g) Data Mining and Market Research. AOL and Company shall within
sixty (60) days following the Effective Date, jointly agree in
writing upon a plan setting forth goals and procedures and
allocating responsibilities for storing and manipulating
Customer Data and generating such summary and aggregate reports
and other compilations of Customer Data as the Parties may
desire for purposes permitted under this Agreement (the "Data
Mining Plan").


2. Ownership.
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2.1. Joint Ownership of PMR Service and Underlying Rights.
----------------------------------------------------


(a) Ownership and Assignments. Except as otherwise provided in this
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Section 2 and subject to the limitations set forth in Section
2.1(b) and (c) of this Agreement, the PMR Service and all
proprietary rights in the PMR Service created, developed, owned
or other acquired or used during the Term, including all PMR
Rights, shall be jointly owned by Company and AOL in equal,
undivided shares, and Company and AOL shall each have all the
rights of a joint owner of such rights, subject to the
limitations and restrictions set forth in this Agreement. To
the extent such rights would, in the absence of any assignment
of rights, be owned by one Party, such Party hereby transfers
and assigns such co-ownership rights to the other Party.
Notwithstanding the foregoing, neither Company nor AOL shall
have any duty to account to one another or to pay to one
another any revenues derived from their respective exploitation
of the PMR Service or PMR Rights, except as specifically
provided in this Agreement. Any technology or other proprietary
rights or other rights created or acquired by or on behalf of a
Party after the Term (including any rights that would be
considered PMR Rights if created or acquired during the Term)
shall belong exclusively to the party creating such rights.
Without limiting the foregoing, each Party shall own exclusive
rights in any derivative works, modifications, enhancements,
adaptations or improvements it creates after the Term based on
or derived from any of the PMR Rights, subject to the joint
ownership of the underlying PMR Rights. Despite the foregoing,
at any time, including during the Initial Term, AOL will have
the right to modify, adapt, enhance and customize the user
interface of the PMR Service as it appears on the AOL Network
(or cause Company to do so on behalf of AOL), and any such
modifications, adaptations, enhancements and customizations,
and all proprietary rights therein, shall belong exclusively to
AOL. It is understood that the PMR Service that is jointly
owned by the Parties will itself have a full featured user
interface. Customization of such user interface undertaken by
AOL for which AOL would own all proprietary rights might
include, by way of example, customization to make the user
interface of the AOL PMR Service conform to the AOL Look and
Feel of one or more of the services comprising the AOL Service,
such as the aol.com, CompuServe or America Online brand
services. In addition, Company shall not acquire any ownership
rights in or to the AOL Namespace Technology; provided that
Company shall have the right to utilize such technology solely
for the PMR Service after the Term. It is understood that,
except as expressly set forth herein, the foregoing is intended
to provide each Party with joint


rights in and to all aspects of the PMR Service. Each Party
will have the right to possession of all aspects of the jointly
owned technology, including source code and all documentation
of any nature whatsoever. Company shall promptly deliver to AOL
copies of all jointly owned technology, including source code
and documentation, as it is developed.


(b) License. Recognizing that the PMR Service will be developed, in
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part, by modifying, enhancing and creating derivative works
based upon the Dr. Koop Personal Medical Records System,
Company hereby grants to AOL a perpetual, non-terminable non-
exclusive license to any and all portions and elements of the
Dr. Koop Personal Medical Records System that are incorporated
in or become a part of the PMR Service. Such license includes
all rights that a joint owner of all proprietary rights would
have in the portions and elements of the Dr. Koop Personal
Medical Records System so incorporated into the PMR Service,
and Company acknowledges and agrees that, as set forth in
Section 2.1(a), Company and AOL will be joint owners of all
rights in the PMR Service.


(c) Third Party Agreements. All agreements that are entered into
----------------------
with any third party with respect to the PMR Service shall
explicitly provide that upon expiration or termination of the
Term of this Agreement, such third party shall not be
restricted or limited in any manner from entering into a
similar agreement directly with AOL or a third party, it being
the Parties' intention that AOL will have the ability to
continue to offer the PMR Service with any and all features,
functions and capabilities that were offered during the Term as
part of the PMR Service. AOL shall be a named third party
beneficiary of any such agreements.


(d) Limits on Use by Company. Despite its joint ownership of the
------------------------
PMR Service and PMR Rights, during the Initial Term, Company
will have the right to use the PMR Service and PMR Rights only
as follows: (i) to perform its duties under this Agreement,
(ii) to implement the Company PMR Service on the Dr. Koop Site,
and (iii) to authorize third parties to deploy, display or
offer the Company PMR Service, provided that any such third
party deploying, displaying or offering the Company PMR Service
during the Initial Term offers is in the business of offering
medical or health related products and services and is not in
the business of offering Interactive Services or Interactive
Sites targeted to consumers, and provided that Company shall
use commercially reasonable efforts to obtain from any such
third party a written agreement in a form approved by AOL
containing (a) commitments to provide AOL with a reasonably
prominent AOL-branded button


on the first screen of such service, above-the-fold, promoting
the availability of the AOL PMR Service; and (b) commitments to
promote the availability of the AOL PMR Service in all offline
advertising, marketing and promotional materi
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