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Strategic Alliance Agreement

This is an actual contract between IDX Systems and Allscripts Healthcare Solutions.

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Sectors: Services, Biotechnology+%2f+Pharmaceuticals
Governing Law: Delaware, View Delaware State Laws
Effective Date: January 08, 2001
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Exhibit 10.56


STRATEGIC ALLIANCE AGREEMENT


THIS STRATEGIC ALLIANCE AGREEMENT (this "Agreement") is made and entered
--------- into as of January 8, 2001 by and between ALLSCRIPTS HEALTHCARE SOLUTIONS, INC., a Delaware corporation ("Allscripts") and IDX SYSTEMS CORPORATION, a Vermont
---------- corporation ("IDX").
---


W I T N E S S E T H
- - - - - - - - - -


WHEREAS, Allscripts is in the business of developing and marketing products and services (the "Allscripts Products") to automate the delivery of
------------------- physician or licensed clinical professional care and associated administrative tasks using technology at whatever location the physician or licensed clinical professional performs such activities;


WHEREAS, IDX has business units that develop and market computer technology to automate administrative and financial aspects of physician office medical practice. Through its subsidiary CHANNELHEALTH INCORPORATED, a Delaware corporation ("ChannelHealth"), IDX is in the business of developing and
------------- marketing products and services (the "Physician Channel Products") to automate
-------------------------- the delivery of physician or allied professional clinical care and associated administrative tasks carried out by physicians and licensed clinical professionals using technology at whatever location such physicians or clinical professionals perform such activities;


WHEREAS, IDX desires to divest its Physician Channel business and Allscripts desires to acquire such business;


WHEREAS, IDX and Allscripts have entered into an Agreement and Plan of Merger whereby Allscripts will acquire all of the issued and outstanding capital stock of ChannelHealth, and ChannelHealth will become a wholly-owned subsidiary of Allscripts (the "Acquisition");
-----------


WHEREAS, IDX and ChannelHealth entered into that certain Cross License and Software Maintenance Agreement, dated as of January 1, 2000, pertaining to the use and distribution of certain technology and products (the "Cross License
------------- Agreement"), and, concurrently herewith, the parties are entering into an --------- Amended and Restated Cross License and Software Maintenance Agreement to modify the terms and conditions thereof to provide for the transfer of certain technology to Allscripts (the "License Addendum" and, together with the Cross
---------------- License Agreement, the License Agreement"); and
-----------------


WHEREAS, IDX and Allscripts desire to enter into an exclusive strategic relationship whereby Allscripts and its Affiliates and successors, including without limitation, ChannelHealth, and IDX and its Affiliates and successors, will cooperate in marketing the Allscripts Products and the Physician Channel Products to IDX customers. Allscripts would agree to sell IDX products with agreeable revenue sharing or commission arrangement.


NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


1. DEFINITIONS


Capitalized terms used in this Agreement, unless otherwise defined in this Agreement, shall have the meanings ascribed to them on Schedule 1 attached
---------- hereto.


2. TERM AND TERMINATION


2.1 Term. This Agreement shall be in effect for an initial term of ten
----
(10) years from the date hereof (the "Initial Term") and shall
------------
automatically renew for additional, successive two (2) year terms
unless earlier terminated by either of IDX or Allscripts by giving
written notice of such party's election not to renew this Agreement
not later than one (1) year prior to the expiration of the Initial
Term or six (6) months prior to the expiration of any then current
successive term.


2.2 Termination. Notwithstanding the provisions of Section 2.1, this
-----------
Agreement may be terminated:


2.2.1 by Allscripts if IDX shall have defaulted under or breached any
material term of this Agreement and shall not have cured such
breach within one hundred twenty (120) days after receiving
written notice from Allscripts specifying the nature of such
default or breach; or


2.2.2 by IDX if Allscripts shall have defaulted under or breached any
material term of this Agreement and shall not have cured such
breach within one hundred twenty (120) days after receiving
written notice from IDX specifying the nature of such default
or breach; or


2.2.3 by either party upon receipt of a notice from the other party
that such other party requires a composition or other similar
arrangement with creditors, files for bankruptcy or is declared
bankrupt.


2.3 Effect of Termination; Survival.
-------------------------------


2.3.1 In the event that this Agreement is validly terminated as
provided herein, then each of the parties shall be relieved of
their duties and obligations arising under this Agreement after
the date of such termination and such termination shall be
without liability to Allscripts or IDX; provided, however, that
-------- -------
the obligations of the parties set forth in Sections 11.7 and
11.8 hereof shall survive


2


any such termination and shall be enforceable hereunder;
provided, further, however, that nothing in this Section 2.3
-------- ------- -------
shall relieve Allscripts or IDX of any liability for a breach
of this Agreement.


2.4 Change of Control.
-----------------


2.4.1 Allscripts Change of Control. If a Change of Control of
----------------------------
Allscripts or the Physician Channel Products business shall
occur at any time during the term of this Agreement whereby a
Direct Competitor of IDX shall Control Allscripts or the
Physician Channel Products business, (i) IDX shall thereafter,
for the term of this Agreement, be entitled to payment of
compensation on the sale or license of all Allscripts Products
(other than pharmaceutical products) in a percentage amount
equivalent to that provided to IDX at the time of such Change
of Control pursuant to the Compensation Table set forth in the
Development Plan and (ii) immediately at the end of the term of
this Agreement, Allscripts shall deliver the source code for
all Allscripts Products to IDX.


2.4.2 IDX or Patient Channel Change of Control. If a Change of
----------------------------------------
Control of IDX or the Patient Channel business of IDX shall
occur at any time during the term of this Agreement whereby a
Direct Competitor of Allscripts shall Control IDX or the
Patient Channel business of IDX (i) Allscripts shall
thereafter, for the term of this Agreement, be entitled to
payment of compensation on the sale or license of all Patient
Channel Products in a percentage amount equivalent to that
provided to Allscripts at the time of such Change of Control
pursuant to the Compensation Table set forth in the Development
Plan and (ii) immediately at the end of the term of this
Agreement, IDX shall deliver the source code for all Patient
Channel Products to Allscripts.


2.4.3 "Intellectual Property". All rights and licenses granted under
---------------------
or pursuant to this Agreement are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the United
States Bankruptcy Code (the "Code"), licenses to rights to
"intellectual property" as defined in the Code. A party
receiving such rights under this Agreement shall retain and may
fully exercise all of its rights and elections under the Code.
The parties further agree that, in the event of the
commencement of bankruptcy proceeding by or against a party
under the Code, the other party shall be entitled to retain all
of its rights under this Agreement.


3


3. OPERATIONAL MANAGEMENT


The following obligations shall be in effect during the Initial Term of this Agreement only:


3.1 Executive Management. Allscripts and IDX shall each appoint an
--------------------
executive with the title of vice president or higher to oversee
performance under this Agreement. These two executives shall meet not
less frequently than once each calendar quarter during the Initial
Term (and more frequently as needed) and shall produce not later than
five (5) business days after the end of each such calendar quarter a
written report to the boards of directors of IDX and Allscripts
setting forth in detail:


3.1.1 the accomplishments of Allscripts and IDX during the preceding
month in performing this Agreement;


3.1.2 plans for managing the relationship between IDX and Allscripts
during the next calendar month;


3.1.3 any items of dispute or disagreement between IDX and
Allscripts;


3.1.4 plans for resolving any dispute or disagreement between IDX and
Allscripts;


3.1.5 any changes proposed to be made to the Marketing Plan or
Development Plan; and


3.1.6 such other items as may be deemed appropriate by such
executives.


4. PRODUCT DEVELOPMENT


The following obligations shall be in effect during the Initial Term of this Agreement only:


4.1 Product Development.
-------------------


4.1.1 Development and Enhancement of Allscripts Products. Allscripts
--------------------------------------------------
shall be responsible for development of the Physician Channel
Products as described in the Development Plan attached hereto
as Exhibit A, as such Development Plan is updated from time to
---------
time pursuant to Section 4.1.2. IDX shall perform all of its
duties under the Development Plan. The parties shall cooperate
to jointly test any software used in connection with the
Allscripts Products to ensure the functionality of such
software prior to distribution thereof to any IDX Customer.


4


4.1.2 Update of Development Plan. IDX and Allscripts shall update the
--------------------------
Development Plan every calendar quarter during the term of this
Agreement unless earlier updated as necessary to maintain the
commercial reasonableness thereof. The Development Plan, as
updated from time to time, shall describe detailed activities
and responsibilities for two-year periods initially commencing
on the date hereof. Not later than three (3) months prior to
the expiration of the initial two-year term of the Development
Plan, and thereafter not later than three (3) months prior to
the expiration of each successive two-year period, the parties
shall commence work on a revised Development Plan for the
following two-year period. The Development Plan, as updated
from time to time, shall be executed by the parties and shall
become subject to this Agreement. Should the parties have
failed to agree upon and execute a revised an updated
Development Plan at the time of the expiration of the then
current Development Plan, the parties shall continue to perform
under the terms of the then current Development Plan until such
time as the parties shall agree upon a revised Development
Plan. Notwithstanding anything contained herein or in any
Development Plan to the contrary, at all times during the
Initial Term, Allscripts shall continue to fund the development
of the Physician Channel Products as provided in the
Development Plan as adopted on the date hereof.


4.1.3 Participation in Development. Upon reasonable request by the
----------------------------
other party, each party agrees to cooperate during the term of
this Agreement in the provision of suggestions and
specifications for enhancement and improvement of their
respective products and services based upon the needs and
requirements of their respective customers. If either party
agrees to develop additional products, features, functionality,
or interfaces, the material terms with respect to such
additional development shall be memorialized in a written
addendum to this Agreement specifying such terms.


4.1.4 User Groups. Allscripts shall be given an opportunity to
-----------
present and participate at IDX's annual ESD and Systems
Division national sales and user group conferences.


4.1.5 Early Releases and Testing. IDX and Allscripts shall deliver to
--------------------------
each other for testing purposes only, copies of the earliest
test releases of all development deliverables provided for in
the Development Plan prior to delivery thereof to any other
customers or Distribution Partners.


5


4.1.6 Demonstration Products. Each party shall develop demonstration
----------------------
versions of its products for use in selling its products to the
other party's customers and prospects and shall have access to
the demonstration systems of the other party, in accordance
with the Demonstration Product Specification.


4.2 Technologies and Architectures.
------------------------------


4.2.1 Standards.
---------


4.2.1.1 To facilitate data exchange and ease of use of the
parties' respective products, Allscripts Products shall
connect with the appropriate technical, architectural,
communication, functional design and programming
standards embodied in IDX Practice Management Products,
as well as the Patient Channel and EDiX products, from
time to time, including without limitation the technical
standards, protocols, conventions and platforms
incorporated in the IDX Web FrameWork. IDX shall provide
Allscripts with no less than ninety (90) days' prior
written notice before implementing any change with
respect to such standards, protocols, conventions or
platforms.


4.2.1.2 IDX represents and warrants, as of the Closing Date,
that Physician Channel Products connect with the
appropriate technical, architectural, communication,
functional design and programming standards embodied in
IDX Practice Management Products, as well as the Patient
Channel and EDiX products, including without limitation
the technical standards, protocols, conventions and
platforms incorporated in the IDX Web FrameWork.


4.2.1.3 To facilitate data exchange between the Patient Channel
and the portions of the Allscripts Products related to
the Patient Channel, all IDX products shall connect with
the appropriate technical, architectural, communication,
functional design and programming standards embodied in
such Allscripts Products, such compliance to allow for
connection with such products. Allscripts shall provide
IDX with no less than ninety (90) days' prior written
notice before implementing any change with respect to
such technical, architectural, communication, design and
programming standards embodied in such Allscripts
Products from time to time.


6


4.2.2 Databases. Allscripts shall not create the capability in
---------
its products and services, or permit the use of its
products and services, to write to Practice Management
Product database except in conformance with written
standards and procedures approved by IDX in advance. IDX
shall not create the capability in its products and
services, or permit the use of its products and services,
to write to any Allscripts Product database except in
conformance with written standards and procedures approved
by Allscripts in advance. The parties shall regularly keep
each other informed of their respective standards and
procedures.


4.3 Data Exchange.
-------------


4.3.1 Interfaces. Each of IDX and Allscripts shall develop and
----------
maintain Interfaces with respect to each of the products
of the other party identified in the Development Plan. The
Interfaces, and any updates thereof required to be made to
maintain the Interfaces, shall be developed at the
complete and sole expense of the developing party with
respect to any particular Interface and shall be provided
to the other party at no charge. Allscripts shall migrate
toward a service oriented architecture in 2002 provided
that such architecture is stable, deployable, has
comparable performance to currently utilized technologies
and has a similar cost structure to currently utilized
technologies. Allscripts shall be responsible for
integration and support costs related to the guaranteed
methods developed by Allscripts in connection with such
architecture.


4.3.2 Synchronization. Each of IDX and Allscripts shall be
---------------
required to reasonably maintain the compatibility of their
respective products with any updates or new version
releases of the products of the other party identified in
the Development Plan.


4.3.3 Additional Interfaces. If the parties agree to develop
---------------------
interfaces between their respective products in addition
to the Interfaces, the material terms with respect to such
additional interfaces shall be memorialized in a written
addendum to this Agreement specifying such terms. Upon the
execution of such an addendum by each party, such
additional interfaces shall be deemed to be Interfaces
hereunder.


4.3.4 Effects on Integration. Each party shall provide ninety
----------------------
(90) days' prior notice to the other of any new versions
or other material changes in any of its respective
products that might affect any Interface. Within a
reasonable time following receipt of such notice, the
notified party shall make any alterations or updates to


7


any so affected Interface necessary to maintain such
Interface, at its own expense.


4.4 Other Products. The parties shall make suggestions for developing
--------------
functional integration and data exchange among other IDX Practice
Management Products, EDiX products, Patient Channel Products and
Allscripts Products for the purpose of creating work flows and
processes that benefit physicians.


5. MARKETING OF ALLSCRIPTS PRODUCTS


The following obligations shall be in effect during the Initial Term of this Agreement only:


5.1 Marketing Plan. During the Initial Term, IDX and Allscripts shall
--------------
regularly update a marketing plan for marketing Allscripts Products to
IDX Customers and prospects, such marketing plan to initially to be
developed by Allscripts and IDX during the first ninety (90) days
following the Closing Date (as updated from time to time, the
"Marketing Plan"). The Marketing Plan shall commence on the Closing
--------------
Date, shall include the physician installation targets of new
physician users of Allscripts Products set forth in Schedule 5.1 and
------------
shall describe detailed activities and responsibilities (including
without limitation, with respect to implementation) and sales
forecasts over the initial two-year period of this Agreement, but
shall be updated not less frequently than every three (3) months. The
Marketing Plan for the initial two-year period shall be completed and
executed by the parties no later than ninety (90) days following the
Closing Date and shall be subject to the terms of this Agreement. Not
less than three (3) months prior to the expiration of the initial two-
year period, and thereafter three (3) months prior to the expiration
of each successive two-year period of the Initial Term, the parties
shall commence work on a revised Marketing Plan for the following two-
year sales forecast period. The initial and each revised two-year
Marketing Plan shall be executed by the parties and shall be subject
to the terms of this Agreement. Should the parties have failed to
agree upon and execute a revised Marketing Plan at the time of the
expiration of the then current Marketing Plan, the parties shall
continue to perform under the terms of the then current Marketing Plan
until such time as the parties shall agree upon a revised Marketing
Plan.


5.2 Certain Restrictions on Marketing Rights.
----------------------------------------


5.2.1 Restrictions on Allscripts. Except as provided in Section
--------------------------
5.2.3:


5.2.1.1 Allscripts shall not develop any Practice Management
Products and shall not enter into any relationship or
arrangement with any Direct Competitor of IDX whereby
Allscripts or such Direct Competitor of IDX Provides


8


Practice Management Products; provided, that except as
--------
expressly set forth in this Agreement, nothing shall
preclude Allscripts from developing or marketing any
product, service, or functionality that it currently
markets.


5.2.1.2 Allscripts shall not Provide any products to IDX
Customers that are similar to the Virtual Office
Products unless IDX has abandoned the marketing of such
products.


5.2.2 Restrictions on IDX. Except as provided in Section 5.2.3, (i)
-------------------
IDX shall not develop or Provide any products similar to the
Allscripts Products and (ii) shall not enter into any
relationship or arrangement with any Direct Competitor of
Allscripts whereby IDX Provides products similar to or in
competition with the Allscripts Products, including without
limitation, the IDX products referred to as "OCM" or "Order
Communication" or "ESD's Mobile Schedule" (except to continue
to market the "ESD Mobile Schedule" as a stand alone
application on the Palm Pilot). The Practice Management System
of IDX as of the date hereof shall not be deemed to be simi
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