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Internet Product Development and Marketing Agreement dated as of May 26, 2000 between Registrant and Quintiles Transnational Corp.



THIS INTERNET PRODUCT DEVELOPMENT AND MARKETING AGREEMENT (the "AGREEMENT") is made and entered into as of May 26, 2000 by and between HEALTHEON/WEBMD CORP., a Delaware corporation ("HWMD"), and QUINTILES TRANSNATIONAL CORP., a North Carolina corporation ("QUINTILES").

References in this Agreement to "schedules" refer to the documents attached as schedules to this Agreement, all of which form part of this Agreement; and unless otherwise indicated, references to "articles" or "sections" refer to the corresponding numbered articles and sections of this Agreement.


(a) Quintiles provides product development and commercialization solutions, healthcare informatics services, and healthcare policy consulting to the healthcare industry worldwide.

(b) HWMD is applying advanced Internet technology to enable healthcare providers and consumers to interact with each other and the institutions of healthcare online.

(c) HWMD and Quintiles are parties to an Agreement and Plan of Merger dated as of January 22, 2000 (the "MERGER AGREEMENT") pursuant to which they have agreed, among other things, for Quintiles' wholly owned subsidiary Pine to become a wholly owned subsidiary of HWMD by merger (the "PINE MERGER").

(d) As a principal component of the transactions surrounding the Merger Agreement, HWMD and Quintiles desire to engage in the collaborative development, marketing, and commercialization of a portfolio of Internet-based products and services for the pharmaceutical industry as provided herein.

NOW, THEREFORE, in consideration of their respective agreements set forth in this Agreement and of other good and valuable consideration, the receipt and legal sufficiency of which they acknowledge, and intending to be legally bound, HWMD and Quintiles agree as follows:

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As used in this Agreement, the following capitalized terms shall have the respective meanings set forth below:

(a) "AFFILIATE" of a Person means a Person controlling, controlled by or under common control with such Person.

(b) "ALLIANCE" means and refers to the relationship established between Quintiles and HWMD by this Agreement.

(c) "ALLIANCE GUIDELINES" means the alliance-wide guidelines referred to in Section 2.2, which the parties intend to serve as primary guidance for the Steering Committee in its administration of the transactions contemplated by this Agreement.

(d) "CO-BRANDED AREA" means that portion of HWMD's primary Internet presence which is devoted to the Alliance.

(e) "CONFIDENTIAL INFORMATION" means and includes all information disclosed under this Agreement by either party to the other, provided that the following shall not constitute Confidential Information: information which (1) is known by the receiving party prior to disclosure by the disclosing party; (2) is or becomes available publicly other than as a result of a breach of this Agreement; (3) is developed independently by the receiving party without the use of or reliance on the disclosing party's Confidential Information; or (4) is provided to the receiving party by a third party under no duty of confidentiality to the disclosing party.

(f) "DEVELOPMENT PERSONNEL" means HWMD personnel performing development services relating to a Tool under Section 4.2 of this Agreement.

(g) "EXECUTIVE SPONSOR" has the meaning set forth in Section 2.4.

(h) "INTELLECTUAL PROPERTY RIGHTS" means trade secret, confidentiality, patent, copyright, trademark, know-how, moral, and similar rights of any type under the applicable laws of any governmental authority, domestic or foreign, including without limitation all applications and registrations relating to any of the foregoing.

(i) "INVESTIGATION PERIOD" has the meaning set forth in Section 3.1(a).

(j) "MARKS" means a party's trademarks, trade names, service marks, service names, logos and trade dress.

(k) "PERSON" means any person or entity.

(l) "PLATFORM ENHANCEMENTS" has the meaning set forth in Section 7.1(c).

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(m) "HWMD PLATFORM" means that certain technology used by HWMD as of the Effective Date which serves as the basis for HWMD's Internet-based services provided to its customers.

(n) "SPECIFICATIONS" means, with respect to any Tool, the functional specifications determined by the Steering Committee for such Tool and reflected in the corresponding Work Plan.

(o) "STEERING COMMITTEE" means and refers to the six-member steering committee comprised of three designees from each party established pursuant to Section 2.4 to manage the conduct of the transactions contemplated by this Agreement.

(p) "TERM" means the term of this Agreement, as determined according to Section 9.1.

(q) "TOOL" means any product or service developed by the parties under this Agreement, each to operate in connection with the HWMD Platform.

(r) "TOOL GROUPS" means the three product/service groups referred to in Section 3.1(b) in which the parties intend to develop and commercialize Tools, namely drug development, physician detailing, and direct-to-consumer.

(s) "WORK PLAN" means, with respect to any Tool, the development and marketing plan, budget and schedule prepared pursuant to Section 3.1(c) in respect of such Tool.


2.1 PURPOSE. Through performance of their respective obligations under this Agreement, HWMD and Quintiles agree to conceive, design, implement, market, distribute, license, and sell services based on a portfolio of Tools to be made available through a prominent co-branded location hosted by HWMD in HWMD's healthcare Internet portal. The Tools the parties develop in the Alliance as a foundation for these service offerings will fall into three broad categories associated with the development, sales, and marketing process for pharmaceutical products, referred to in this Agreement as "drug development," "physician detailing," and "direct-to-consumer," respectively (the "TOOL GROUPS"). The parties intend to commercialize the Tool Groups on a package basis to enable corresponding efficiencies across the pharmaceutical product development and commercialization process.

2.2 ALLIANCE GUIDELINES. The parties intend to conduct the activities contemplated by this Agreement according to the alliance guidelines set forth in Schedule 2.2 concerning overall resource commitments, development and marketing schedules, and revenue sharing (the "ALLIANCE GUIDELINES"). The Steering Committee may depart from the Alliance Guidelines in the Work Plan for any Tool or otherwise in connection with its administration of the Alliance. Subject to any such departure, the Alliance Guidelines will control the parties' relationship with respect to the subject matter covered thereby.

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2.3 IMPLEMENTATION; RESOURCE ALLOCATIONS. The parties intend to implement development of an initial portfolio of Tools (referred to below as the "Initial Toolkit") by conducting the software development activities contemplated by Articles 3 and 4 and by allocating additional resources of the types and amounts determined from time to time by the Steering Committee with reference to the Alliance Guidelines. Quintiles agrees to purchase from HWMD, and HWMD agrees to provide to Quintiles, $100,000,000 of development services for the Initial Toolkit at cost, as set out in Section 6.1(a).


(a) The parties will organize the Steering Committee promptly after execution of this Agreement. The membership of the Steering Committee shall be composed of the same individuals comprising the Steering Committee under that certain Data Rights Agreement entered into of even date by and between the parties. The Steering Committee shall convene on such schedule (but not less frequently than monthly) and employ such procedures as it shall determine from time to time in good faith, and, except as otherwise specifically required by this Agreement, shall act by unanimous consent.

(b) The Steering Committee will provide general oversight and coordination of the parties' collaboration, and will be responsible for identifying Tools, overseeing creation of corresponding Work Plans, and monitoring the parties' conduct of the Work Plan for each Tool.

(c) The parties will resolve deadlock among the Steering Committee through the Executive Review procedure described in Section 10.1(a) below.

2.5 EXECUTIVE SPONSORS. Each party shall appoint a member of its senior management as an executive sponsor for the Alliance ("EXECUTIVE Sponsor"). Executive Sponsors will be responsible for monitoring the Alliance relationship, conducting periodic briefings for each other and their management teams, and providing a defined means of communication with other senior executives. Each party may change its Executive Sponsor at any time by written notice to the other party.



(a) SELECTION BY STEERING COMMITTEE. The Steering Committee will facilitate the initial review of potential Tools for the parties to develop under this Agreement, in accordance with the general timelines contemplated by the parties as described in the Alliance Guidelines. While the parties anticipate that Quintiles personnel will be primarily involved in the identification of Tools with appropriate support from HWMD personnel, either party may propose a Tool concept to the other, and any such proposal agreed upon by the Steering Committee will constitute and be deemed a Tool for purposes of this Agreement.

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(1) The parties will research, evaluate and agree on a base set of Tools (the "INITIAL TOOLKIT") during approximately the first six (6) months after the Execution Date of this Agreement, as contemplated in the Alliance Guidelines (the "INVESTIGATION PERIOD").

(2) The parties acknowledge that after determination of the Initial Toolkit, the parties may desire to develop and commercialize additional Tools under this Agreement, and/or to create enhancements of existing Tools. The Steering Committee will facilitate review of proposals for additional Tools and enhancements of existing Tools from time to time, and any agreed-to projects shall be developed as set forth in this Article III.

(3) HWMD will develop each Tool selected by the Steering Committee, as set forth in the corresponding Work Plan, and Quintiles will pay HWMD for development activities for the Initial Toolkit, as further specified in each corresponding Work Plan and at rates determined according to Section 6.1.

(b) CREATION OF WORK PLAN. Promptly after identification of any Tool under subsection (a) above, the parties shall collaborate in the preparation of a Work Plan for such Tool. Any Work Plan under this Agreement must be unanimously approved by the Steering Committee. As applicable, each Work Plan shall include, among other things:

(1) The Specifications for the Tool;

(2) Delivery and acceptance guidelines for the Tool prior to any commercial launch of the Tool;

(3) Allocation of responsibility for the actions required for development, implementation and marketing of the Tool;

(4) Uptime and related services and hosting requirements;

(5) Establishment of the parties' respective corresponding financial, personnel, and other resource commitments for the Tool;

(6) Establishment of a budget; and

(7) Establishment of a schedule for carrying out the development and marketing activities for such Joint Product.

3.2 RESTRICTIVE COVENANTS. Except with the other party's prior written consent or as otherwise provided in this Agreement, neither party will undertake directly or indirectly, or permit any of its Affiliates to undertake directly or indirectly, its respective conduct as follows:

(a) During the term of this Agreement, Quintiles will not promote, distribute or provide access to its products or services related to the CRO Business and CSO Business via the Internet through any Person other than HWMD; provided, however that Quintiles (1) may deploy its internal computer systems for internal purposes, (2) may continue to operate Quintiles.com and services offered through Quintiles.com, (3) may continue to provide services through existing

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contractual arrangements for so long as it is obligated to do so, and (4) may render client services through such client's systems as requested by such client without solicitation by Quintiles.

(b) During the term of this Agreement, HWMD will not promote any third party in the CRO Business or CSO Business or develop, distribute or provide access to any such company's services.

(c) During the term of this Agreement, HWMD will not participate in the CRO Business (other than pursuant to this Agreement) or develop or host for itself or any Person other than Quintiles any product designed to facilitate any CRO Business or the administration of clinical trials.

(d) During the term of this Agreement, Quintiles will not promote or advertise pharmaceutical products directly to consumers via the Internet through any Person other than HWMD.

(e) Quintiles will not contribute to the development with or procure development from any Person other than HWMD, of any Internet-based product or service to the extent such product or service is substantially functionally comparable to any Tool selected by the Steering Committee for development in the Alliance (all such products and services, "RESTRICTED PRODUCTS") (1) at any time during the three-year period commencing on the date of this Agreement (the "INITIAL ROLL-OUT PERIOD"); or (2) at any time after the Initial Roll-Out Period unless the Steering Committee has declined to pursue such product after the written suggestion to that effect from Quintiles, including a clear statement by Quintiles of its intent to undertake such activity.

(f) HWMD will not develop any Restricted Products for, or provide any Restricted Products to, any Person other than Quintiles (1) at any time during the Initial Roll-Out Period; or (2) at any time after the Initial Roll-Out Period unless the Steering Committee has declined to pursue such product after the written suggestion to that effect from HWMD, including a clear statement by HWMD of its intent to undertake such activity.

As used in this Section 3.2, "CRO Business" means generally the business of managing or conducting clinical trials on a contract basis as further defined by reference to Quintiles' contract research business as of the date of this Agreement, giving effect to future developments in the natural evolution of the contract research industry; "CSO Business" means generally the business of providing pharmaceutical sales services on a contract basis as further defined by reference to Quintiles' contract sales business as of the date of this Agreement, giving effect to future developments in the natural evolution of the contract sales industry.

The steering committee shall review these restrictive covenants six months after the effective date of this Agreement and annually thereafter at the request of either party.

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4.1 GENERAL. Upon execution of each Work Plan, the parties will develop, implement and operate the corresponding Tool through the procedures set forth in this Article 4.


(a) PERFORMANCE. The parties will perform the development work described in this Agreement to develop the Tool in accordance with the Specifications and the time frames set forth in the Work Plan (on a best efforts basis as to schedule and budget), as they may be modified from time to time in accordance with the terms of this Agreement.

(b) DEVELOPMENT RESOURCES. In performing development services under this Agreement, HWMD shall allocate Development Personnel of a quality and experience level at least equal to that allocated to any other HWMD customer. Quintiles shall have the right to request individual Development Personnel, and HWMD will consider and shall use its commercially reasonable efforts to use such individuals as Development Personnel. HWMD agrees to use its commercially reasonable efforts to maintain continuity of leadership among the Development Personnel in performing development services hereunder. In any allocation of resources regarding HWMD's development resources, HWMD agrees that the Alliance shall receive preferred treatment in obtaining and retaining Development Personnel, of at least a level of preference afforded to any other HWMD customer.

(c) MODIFICATIONS TO SPECIFICATIONS. Either party may request modifications to the Specifications at any time during the development of a Tool. Upon both parties' approval, HWMD will perform the requested modifications, and the Specifications and the Work Plan will be deemed amended accordingly.

(d) PROJECT MEETINGS AND REPORTS. During the performance of development services under this Section 4.2, the parties will conduct regular meetings, in accordance with a schedule mutually agreed by the parties, to review performance of the Alliance under this Agreement and to resolve any problems. During the term of this Agreement, HWMD will provide Quintiles with periodic reports describing the progress of the development in the preceding reporting period, in such a form as is agreed by the Steering Committee.

(e) REVIEW RIGHTS. Quintiles will have the right, in its reasonable discretion and at its cost, to review the progress of HWMD's performance of the development services at HWMD's facilities. HWMD will provide reasonable cooperation to Quintiles in performing such reviews, including without limitation providing Quintiles with access to all non-privileged work in progress, documents and other materials related thereto, as reasonably requested by Quintiles. Quintiles may perform such reviews during HWMD's normal business hours by providing HWMD with at least five business days advance written notice. In performing such reviews, Quintiles will not unduly interfere with the operation of HWMD's other business activities, and Quintiles will comply with HWMD's reasonable safety and security policies and procedures.

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(f) BETA AND PILOT PROGRAMS. The parties anticipate that during the development of any given Tool, the parties may desire to implement beta or pilot programs prior to commercial launch. To the extent that the parties desire to implement such programs, HWMD agrees to make available wherever practical prototype versions of the Tools for Quintiles' review during the performance of the development services, and Quintiles shall provide feedback regarding any nonconformities to Specifications or other suggestions regarding the prototype for HWMD to incorporate into the development services, all as further described in an applicable Work Plan.

(g) TECHNICAL CONTACTS. Quintiles and HWMD will each designate primary and alternate technical contacts (collectively, the "TECHNICAL CONTACTS") as the primary individuals responsible for facilitating communications between Quintiles and HWMD regarding all technical matters and for coordinating the design, development, and testing of the Tool. Each party may change its respective Technical Contacts at any time by providing the other party with no less than five (5) days' advance notice.

4.3 DELIVERY AND ACCEPTANCE. The parties shall determine in the Work Plan the procedures for final testing of each Tool to determine whether the Tool materially conforms to the applicable Specifications in the Work Plan. As set forth in further detail in the Work Plan, Quintiles will provide HWMD with a written acceptance of the Tool or one or more written statements of errors to be corrected (a "STATEMENT OF ERRORS"). If Quintiles fails to provide HWMD with written acceptance or Statement of Errors within the period of time set forth in the Work Plan, then the Tool will be deemed accepted. If Quintiles provides HWMD with a Statement of Errors, then HWMD shall promptly and correct such errors and make the Tool available for re-testing. The foregoing procedure will be repeated until Quintiles accepts or finally rejects each Tool. Upon acceptance of the Tool, HWMD will make the Tool available for use on the Internet as described in the Work Plan, or conduct such other activities to make the Tool available as described in the Work Plan.

4.4 IMPLEMENTATION/COMMERCIALIZATION OF TOOL. Upon launch of the Tool, HWMD shall host and operate the Tool as set forth in the Work Plan. Except as otherwise set forth in the Work Plan, HWMD shall, in accordance with any applicable costs and fees set forth in the Work Plan, comply with the following as to each Tool.

(a) HOSTING; CAPACITY. HWMD shall provide (within the context of HWMD's facilities and normal hosting operations) all computer servers, routers, switches and associated hardware in an amount reasonably necessary to meet anticipated traffic demands, adequate power supply (including generator back-up) and HVAC, adequate insurance, adequate service contracts and all necessary space, network cabling and power distribution to support the Tool. HWMD shall not be responsible for any such items beyond its own data center.

(b) SECURITY. HWMD shall implement security mechanisms for the Tool with a degree of protection at least as strong as any similar product made available by
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