Exhibit 10.56
STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT (this "Agreement") is made and entered
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into as of January 8, 2001 by and between ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.,
a Delaware corporation ("Allscripts") and IDX SYSTEMS CORPORATION, a Vermont
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corporation ("IDX").
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W I T N E S S E T H
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WHEREAS, Allscripts is in the business of developing and marketing
products and services (the "Allscripts Products") to automate the delivery of
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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
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marketing products and services (the "Physician Channel Products") to automate
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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");
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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
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Agreement"), and, concurrently herewith, the parties are entering into an
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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
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License Agreement, the License Agreement"); and
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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
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hereto.
2. TERM AND TERMINATION
2.1 Term. This Agreement shall be in effect for an initial term of ten
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(10) years from the date hereof (the "Initial Term") and shall
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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
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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.
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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
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the obligations of the parties set forth in Sections 11.7 and
11.8 hereof shall survive
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any such termination and shall be enforceable hereunder;
provided, further, however, that nothing in this Section 2.3
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shall relieve Allscripts or IDX of any liability for a breach
of this Agreement.
2.4 Change of Control.
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2.4.1 Allscripts Change of Control. If a Change of Control of
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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
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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
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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.
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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
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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.
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4.1.1 Development and Enhancement of Allscripts Products. Allscripts
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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
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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.
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4.1.2 Update of Development Plan. IDX and Allscripts shall update the
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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
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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
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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
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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.
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4.1.6 Demonstration Products. Each party shall develop demonstration
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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.
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4.2.1 Standards.
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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.
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4.2.2 Databases. Allscripts shall not create the capability in
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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.
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4.3.1 Interfaces. Each of IDX and Allscripts shall develop and
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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
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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
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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
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(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
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any so affected Interface necessary to maintain such
Interface, at its own expense.
4.4 Other Products. The parties shall make suggestions for developing
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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
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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
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Date, shall include the physician installation targets of new
physician users of Allscripts Products set forth in Schedule 5.1 and
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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.
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5.2.1 Restrictions on Allscripts. Except as provided in Section
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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
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Practice Management Products; provided, that except as
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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)
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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 similar
to the Allscripts Products.
5.2.3 Restrictions Not Applicable. Notwithstanding anything to the
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contrary contained in this Agreement or in any other agreement
between the parties:
5.2.3.1 Allscripts may cooperatively market Allscripts Products
with any vendor of Practice Management Products that is
not a Direct Competitor of IDX, to any Person other than
IDX Customers.
5.2.3.2 Allscripts may cooperate with a Person that Provides
products and services similar to the Practice Management
Products for the purpose of deploying such products and
services, on a case-by-case basis to any Allscripts
customer or prospect, including without limitation by
development of data exchange or interfaces, if such
Allscripts customer or prospect requests such similar
products or services; provided, that interface
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development and data exchange performed by Allscripts in
connection with such other products or services shall be
performed at a charge that is consistent with the
ordinary and customary practices of Allscripts, and
Allscripts will not cooperate with any Direct Competitor
of IDX to provide any financial benefits beyond payment
of such ordinary and customary charge.
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5.2.3.3 IDX may Provide any products or services similar to
Allscripts Products only as an offering integrated with
its LastWord and IDXrad and Imaging Suite product
lines, and any other non-Practice Management Product
products and services, such as image management. IDX
shall not Provide any products or services similar to
Allscripts Products as an offering integrated with any
Practice Management Products. IDX may Provide any hand-
held device for dictation only in connection with its
EDiX product line, but not any other products similar
to Allscripts Products in connection therewith.
5.2.3.4 IDX may establish direct connections for pharmacy
benefit management companies, drug manufacturers and
drug distributors involving a direct message to a
patient via the Patient Channel only (except with
respect to IDX Customers that utilize LastWord as their
inpatient EMR).
5.2.3.5 IDX may cooperate with a Person that Provides products
and services similar to the Allscripts Products for the
purpose of deploying such products and services, on a
case-by-case basis to any IDX Customer or prospect,
using any means, including without limitation,
development of interfaces or publication of
specifications, if such IDX Customer or prospect
requests such similar products or services; provided,
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that interface development and data exchange performed
by IDX in connection with such other products or
services shall be performed at a charge which is
consistent with the ordinary and customary practices of
IDX, and IDX will not cooperate with any Direct
Competitor of Allscripts to provide any financial
benefits beyond payment of such ordinary and customary
charge.
5.2.3.6 Allscripts may market Allscripts Products to any IDX
Customer; provided, that Allscripts shall notify IDX of
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any such marketing efforts within seven (7) days after
Allscripts' initial contact with such IDX Customer.
5.2.3.7 IDX may sell and market CMS subject to the compensation
provisions of Section 9.1.
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5.2.3.8 Clinical Trials. Nothing in this Agreement shall prevent
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either party from developing or marketing functionality
that that facilitates participation by customers and
prospects of such party in clinical trials. With respect
to and in connection with marketing such functionality
as
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may be contained in IDX's Practice Management
Products, however, IDX shall not resell or
distribute products of any Person that are similar
to the Allscripts Products.
5.2.4 Termination of Restrictions. Allscripts may elect to
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terminate Section 5.2.1 in the event of a Material
Adverse Change with respect to IDX, and IDX may elect
to terminate Section 5.2.2 in the event of a Material
Adverse Change with respect to Allscripts. In the event
of a notice given pursuant to this Section 5.2.4 by
either party, the notified party may, in its sole and
absolute discretion, refer to arbitration pursuant to
Section 11.20, the determination of whether the change
which is the subject of such notice is a Material
Adverse Change.
5.3 Joint Marketing Duties.
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5.3.1 Joint Marketing Materials. At their joint expense,
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shared equally, Allscripts and IDX shall develop and
produce product marketing documentation and materials
similar in kind and quality to that currently provided
by Allscripts and IDX to their respective sales
prospects for the purpose of promoting and marketing
the joint solution for physician office practice,
including without limitation, administrative, financial
and clinical information systems, through integration
of the IDX Practice Management Products and the
Allscripts Products.
5.3.2 User Groups and Trade Shows. Allscripts shall provide
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for featured participation by IDX at Allscripts' user
group meetings involving the Allscripts Products, and
IDX shall provide for featured participation by
Allscripts at IDX's user group meetings involving the
Practice Management Products. Each of Allscripts and
IDX shall provide space at their respective user group
meetings for the other party's products and shall show
such products together with their own respective
products. In accordance with the Marketing Plan,
Allscripts and IDX shall publicize the alliance created
hereby at appropriate trade shows.
5.3.3 Information Regarding IDX Customers and Competitors.
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Allscripts and IDX shall keep each other informed of
opportunities that may exist for marketing products to
their respective customers. Allscripts shall promptly
notify IDX of any sales contact with an IDX Customer.
IDX shall provide Allscripts with access to IDX sales
pipelines and IDX Customer and competitor databases to
the same extent and in the same manner as provided to
ChannelHealth prior to the date hereof.
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5.3.4 Joint Sales. Each of Allscripts and IDX shall bill and
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collect for its own respective products and services
provided to IDX Customers. Allscripts and IDX shall
each be responsible for the payment to members of their
own respective sales forces of any appropriate
commissions earned by such members on sales of
Allscripts Products pursuant to Sections 5.4 and 5.5.
Glen Tullman and Rich Tarrant shall be reasonably
available for initial marketing efforts undertaken by
Allscripts in connection with the Merger Agreement and
for subsequent meetings with customers of the Physician
Channel Products (which shall occur no less frequently
than once per month).
5.4 Marketing Duties of Allscripts--Allscripts Products. Allscripts
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shall market the Allscripts Products in accordance with the
Marketing Plan and in any event shall provide services necessary
to support IDX's marketing of Allscripts Products to IDX
Customers as set forth below, at its own expense:
5.4.1 Allscripts shall continue to develop and produce
product marketing documentation and collateral similar
in kind and quality to that currently provided by
Allscripts to its sales prospects. Allscripts shall
deliver such documentation and collateral in reasonable
quantities and at such times and places reasonably
requested by IDX.
5.4.2 Allscripts shall provide sales support services with
respect to the Allscripts Products as generally and
customarily employed by IDX in support of sales of its
products, including without limitation, assisting in
making sales calls, providing product demonstrations,
facilitating site visits and responding to inquiries
from prospects and customers, such as requests for
proposals, requests for information and requests for
quotations.
5.4.3 Allscripts shall maintain a qualified sales and
marketing support staff in numbers reasonably
sufficient to support IDX sales activities related to
Allscripts Products.
5.4.4 Allscripts shall provide training to the IDX sales
staff in the Allscripts Products and Allscripts'
business strategy.
5.4.5 Allscripts shall provide IDX with current sales
projections and regular updates thereto.
5.4.6 Allscripts shall develop and maintain a program for
incenting at least one IDX Customer in each IDX sales
region to be a reference site for every Allscripts
Product in general release.
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5.4.7 Allscripts shall appropriately compensate and incent
its sales personnel to sell Allscripts Products to IDX
Customers and prospects.
5.5 Marketing Duties of IDX--Allscripts Products. IDX shall market
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the Allscripts Products in accordance with the Marketing Plan and
in any event shall provide services necessary to support
Allscripts' marketing of Allscripts Products to IDX Customers as
set forth below, at its own expense:
5.5.1 IDX shall educate and train its sales and sales support
personnel so as to be able to present the Allscripts
Products to IDX Customers and prospects as necessary to
appropriately commercialize the Allscripts Products.
5.5.2 IDX shall appropriately compensate and incent its sales
personnel to sell Allscripts Products.
5.5.3 IDX shall provide Allscripts with current sales
projections and regular updates thereto.
5.5.4 IDX shall include appropriate descriptions of
Allscripts Products and Allscripts' business strategy
in sales proposals for new business as necessary to
appropriately commercialize the Allscripts Products.
5.5.5 IDX shall respond to requests for information,
quotations, proposals and the like for Allscripts
Products as necessary to appropriately commercialize
the Allscripts Products.
5.5.6 IDX shall pay reasonable compensation to its sales
force for sales of Allscripts Products to IDX
Customers; provided, that commission percentages paid
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on gross profit of Allscripts Products by any member of
IDX's sales force shall be not less than commission
percentages paid to such members on sales of any other
products.
5.5.7 Quotas for sales of Allscripts Products to IDX
Customers and prospects shall be placed on members of
IDX's ESD and Systems Division sales force. IDX account
executives shall be provided with a special bonus
opportunity of $5,000 per year in each of years 2001
and 2002 for the achievement of such quotas established
pursuant to this Section 5.5.7.
5.5.8 Each member of IDX's ESD and Systems Division sales
management shall be included in bonus plans and
commission plans whereby a meaningful portion of such
person's annual compensation is based upon overall
sales of Allscripts Products.
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5.5.9 IDX shall provide Allscripts employees involved in the
sale and development of Physician Channel Products with
reasonable access to IDX facilities for the same or
similar purposes related to the development, marketing
and sale of Physician Channel Products as provided to
ChannelHealth prior to the Closing Date.
5.6 Use of Allscripts Names and Marks. IDX may use the name
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"Allscripts" and the other Allscripts names and marks in
connection with customer communications pertaining to the co-
marketing relationship between IDX and Allscripts provided for
under this Agreement and in accordance with Allscripts'
reasonable branding standards in effect from time to time.
5.7 Use of IDX Names and Marks. Allscripts may use the name "IDX" and
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the other IDX names and marks in connection with customer
communications pertaining to the co-marketing relationship
between IDX and Allscripts as provided for under this Agreement
and in accordance with IDX's reasonable branding standards in
effect from time to time.
5.8 Marketing and Administrative Duties of IDX. IDX shall have the
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authority to market, sell, resell and distribute Allscripts
Products pursuant to IDX's own terms and conditions as previously
agreed upon in writing by Allscripts. At IDX's request, IDX and
Allscripts shall enter into a distribution agreement for the term
of this Agreement that shall set forth customary terms and
conditions upon which IDX may purchase, license, sell and
sublicense the Allscripts Products. To the extent permitted by
law, IDX shall have authority as Allscripts' agent to bind
Allscripts to perform for IDX Customers all of Allscripts'
standard sales terms and conditions as previously agreed upon in
writing by Allscripts; provided, however, that in the event of a
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failure by an IDX Customer to pay for an Allscripts Product, and
such failure is not based upon a dispute with respect to such
Allscripts Product, IDX shall be responsible to Allscripts for
the sale price of such Allscripts Product. Allscripts shall
confirm IDX's authority as provided in this Section 5.8 to any
IDX Customer or prospective customer on request of IDX.
6. OTHER MARKETING RIGHTS
6.1 Right to Provide on Non-exclusive Basis. Notwithstanding any
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termination or non-renewal of this Agreement, other than a
termination pursuant to Section 2.2.1 and including otherwise
without limitation any termination under Section 2.2 of this
Agreement, for so long as Allscripts or any Affiliate of
Allscripts shall offer, license, support, or maintain any
Allscripts Products, or any derivatives, enhancements, or
improvements thereof, IDX shall be entitled to and Allscripts
shall offer to permit IDX to, Provide such Allscripts Products,
derivatives, enhancements, and improvements, and support or
maintenance services with respect thereto, upon the best terms
and conditions offered by Allscripts or such Affiliate
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of Allscripts to any distributor of Allscripts; provided, that if
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Allscripts or such Affiliate has no distributor, IDX's provision
of Allscripts Products shall be upon customary terms and at a
price equal to Allscripts' direct sale price less a commercially
reasonable discount.
6.2 Best Prices. Allscripts or any Affiliate of Allscripts shall at
-----------
all times during the term of this Agreement offer IDX Customers
such prices and terms for Allscripts Products equally favorable
to the prices (plus any subsidy earned by Allscripts on such
Allscripts Products) and terms offered to any customer of
Allscripts similarly situated to such IDX Customer.
7. TERMINATION OF PRIOR MARKETING OBLIGATIONS
Upon the Closing, that certain Marketing, Development and Service
Agreement, made and entered into as of January 1, 2000, by and between
ChannelHealth and IDX shall, except for the obligations of the parties set forth
in Section 5.1 thereof, terminate and cease to be of any further effect.
8. OWNERSHIP
8.1 In General. Ownership of software developments shall be governed
----------
by the License Agreement, except with respect to Interfaces,
which shall be governed by Section 8.2 of this Agreement.
8.2 Interfaces Developed Pursuant to This Agreement. The parties
-----------------------------------------------
contemplate that they may individually or jointly develop certain
new Interfaces. In each instance in which a new Interface is
created, the parties will agree to a specification for the
Interface. Where the specification is in the public domain, this
Agreement does not purport to create any rights for either party
in such specification. If the specification is owned by one of
the parties, the other party receives a perpetual, non-exclusive,
non-transferable license to use the Intellectual Property
embodied in the Interface specification for the purpose of
creating the Interfaces contemplated in this Agreement. If a
specification is jointly authored by the parties, the parties
shall jointly own such specification and shall be free to use
such specification without interference from the other party and
without any obligation to pay any royalties or account for any
profits. The parties contemplate that Intellectual Property in
and to the new Interfaces may be created as a result of the
creation of the new Interfaces. As between the parties, such
Intellectual Property related to portions of the Interfaces
intended to (a) organize data from IDX's systems in the manner
stated in the specification or (b) organize data received in the
manner stated in the specifications for use by IDX's systems,
shall be IDX's Intellectual Property. As between the parties, the
Intellectual Property related to Interfaces intended to (x)
organize data from Allscripts systems in the manner stated in the
specification, (y) organize data received in the
15
manner stated in the specifications for use by Allscripts'
systems, or (z) organize data between Allscripts' systems and
third party systems, shall be Allscripts' Intellectual Property.
IDX hereby assigns to Allscripts all right, title, and interest
in and to all Intellectual Property in the new Interfaces that is
described above as belonging to Allscripts. Allscripts hereby
assigns to IDX all right, title, and interest in and to all
Intellectual Property in the new Interfaces that is described
above as belonging to IDX. The parties agree from time to time to
exchange and agree upon a written schedule setting forth the
allocation of the ownership and rights in and to the
specifications and Intellectual Property used or developed in
connection with the development of the new Interfaces.
9. COMPENSATION
9.1 Compensation; Payment. IDX and Allscripts shall be entitled to
---------------------
compensation for the sale or license of Allscripts Products and
IDX products as set forth in the Compensation Table set forth in
the Development Plan; provided, however, that IDX shall not be
-------- -------
entitled to any compensation for the sale or license of any
Allscripts Products or IDX Products installed prior to the
Closing Date.
9.2 Minimum Compensation. Provided Allscripts shall not 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:
9.2.1 If the gross revenues to Allscripts for Allscripts
Products (less any commissions paid to IDX by
Allscripts and less payments to third parties for
equipment sold) for fiscal year 2001 (the "2001
----
Revenue") are less than $4.5 million, IDX will pay to
-------
Allscripts an amount equal to the difference between
$4.5 million minus 2001 Revenue.
9.3 Payments. Any payment to be made by a party pursuant to this
--------
Agreement shall be made no later than the twentieth-fifth (25th)
day of the calendar month next following the calendar month to
which such payment applies and shall be made by delivery of a
check, payable to the order of the party entitled to payment or
by wire transfer of immediately available funds to an account
designated by such party. Any payment to be made by IDX to
Allscripts pursuant to Section 9.2 shall be made no later than
March 31st of the year next following the fiscal year to which
such payment applies and shall be made by delivery to Allscripts
of a check, payable to the order of Allscripts or by wire
transfer of immediately available funds to an account designated
by Allscripts.
16
9.4 Late Fees. Each party agrees to pay late fees equal to one and
---------
one-half percent (1 1/2%) per month on all amounts due but not
paid within the time provided in Section 9.3.
10. SERVICES
10.1 Customer Support Services. Allscripts shall provide customer
-------------------------
support services for Allscripts Products, as follows:
10.1.1 CMS. Allscripts shall provide support for all existing
---
CMS customers of IDX in a manner consistent with
support provided by IDX to its customers generally and
to the level necessary to fulfill all contractual
commitments of IDX to its customers for CMS. As the
sole compensation to Allscripts for such services, IDX
hereby assigns to Allscripts all support fees for CMS
it receives from such customers.
10.1.2 Other Products. At its own expense and cost, Allscripts
--------------
shall provide Allscripts Maintenance for all IDX
Customers of Allscripts Products, including bugs, fixes
and drivers, consistent with Allscripts' ordinary and
customary business practices. Upgrades to Allscripts
Products sold to IDX Customers will be provided in the
manner and price as is consistent with Allscripts'
ordinary and customary business practices.
10.1.3 Other Services. Notwithstanding the fact that each
--------------
party shall be responsible for servicing and supporting
its own products, the parties hereby agree to cooperate
with respect to installation and implementation of each
others' products and in the provision of customer
support services. The parties further agree to
cooperate to create a seamless help desk, operations
support and problem triage model for customers to which
products of both parties are marketed and sold. If
requested by an IDX Customer, IDX shall be entitled to
oversee and coordinate the implementation of such
model.
10.2 Service Quality. All installation services provided by Allscripts
---------------
with respect to sales by IDX of Allscripts Products pursuant to
Section 5.8 shall be performed in a good and workmanlike manner
and consistent with standards generally applicable in the
healthcare clinical information systems industry and consistent
with the reasonable and customary support standards maintained in
the healthcare clinical information systems industry or, if
higher, by the IDX business unit most closely associated with the
IDX Customer using the Allscripts Products as previously
communicated to Allscripts in writing. Allscripts employees shall
be permitted to directly support IDX Customers.
17
11. MISCELLANEOUS
11.1 Confidentiality. Each of IDX and Allscripts will receive or learn
---------------
from, information, both orally and in writing, concerning the
business of Allscripts or IDX, respectively, including, without
limitation, financial, technical and marketing information, data,
and information related to the development of technology and
services relating to business plans, customers, and markets,
which information is deemed, in the case of Allscripts,
proprietary to Allscripts and, in the case of IDX, proprietary to
IDX. Both parties hereby agree, as set forth below, to protect
such information, whether furnished before, on or after the date
of this Agreement, as it protects its own similar confidential
information, but never less than by commercially reasonable
efforts, and not to disclose such information to anyone except as
otherwise provided for in this Agreement. Such information, in
whole or in part, together with analyses, compilations, programs,
reports, proposals, studies or any other documentation prepared
by the parties, as the case may be, which contain or otherwise
reflect or make reference to such information, is hereinafter
referred to as "Confidential Information." Each party hereby
agrees that the Confidential Information will be used solely for
the purpose of this Agreement and not for any other purpose. Each
party further agrees that any Confidential Information pertaining
to the other party is the sole and exclusive property of such
other party, and that the receiving party shall not have any
right, title, or interest in or to such Confidential Information
except as expressly provided in this Agreement. Each party
further agrees to protect and not to disclose to anyone (except
as provided in this Agreement) for any reason Confidential
Information pertaining to the other party; provided, however,
-------- -------
that: (a) such Confidential Information may be disclosed to the
receiving party's respective officers, directors, employees,
agents, or representatives (collectively, "Representatives") on a
"need to know" basis for the purpose of this Agreement on the
condition that (i) each of such Representatives will be informed
by the receiving party of the confidential nature of such
Confidential Information and will agree to be bound by the terms
of this Agreement and not to disclose the Confidential
Information to any other person and (ii) each party agrees to
accept full responsibility for any breach of this Section 11.1 by
its respective Representatives; and (b) Confidential Information
pertaining to the other party may be disclosed upon the prior
written consent of the other party. Each party hereby agrees,
upon the request of the other party, to promptly deliver to the
other party at the other party's cost the Confidential
Information pertaining to such other party, without retaining any
copies thereof. Specifically and without limitation, each party
agrees to notify the other party promptly in writing upon any
officer or director learning of any unauthorized disclosure or
use of the Confidential Information.
18
11.2 Non-Confidential Information. The term "Confidential Information"
----------------------------
shall not include any information: (i) which at the time of
disclosure or thereafter is generally available to or known by
the public (other than as a result of a disclosure directly or
indirectly by the receiving party); (ii) is independently
developed by the receiving party, without reference to or use of,
the Confidential Information of the other party; (iii) was known
by the receiving party as of the time of disclosure without a
breach of confidentiality; (iv) is lawfully learned from a third
party not under obligation to the disclosing party; or (v) is
required to be disclosed pursuant to a subpoena, court order or
other legal process, whereupon the receiving party shall provide
prompt written notice to the other party prior to such
disclosure.
11.3 No-Solicitation. During the first year of the term of this
---------------
Agreement, neither party, nor any Affiliate within its Control,
shall hire any individual who had been in the employ of the other
party or any of the other party's Affiliates. After the first
year of the term of this Agreement, neither party, nor any
Affiliate within its Control, shall hire any individual who had
been in the employ of the other party or any of the other party's
Affiliates until such time as one (1) year has passed since such
individual was in the employ of the other party.
11.4 Regulatory Matters. Each party shall adopt, implement, and
------------------
maintain appropriate and compliant policies, procedures, and
practices necessary to comply with laws and regulations
(including without limitation the Health Insurance Portability
and Accountability Act of 1996 ("HIPAA")) applicable to it in its
business and applicable to it as a business partner of a customer
of the other to whom products or services are provided under this
Agreement. The parties agree to amend this Agreement to contain
any provisions necessary to be included as a result of such
business partner status. Each party agrees to timely develop and
include in its respective products covered by this Agreement the
functionality required to support the minimum necessary standards
applicable to users of its products as required by HIPAA.
11.5 No Consequential Damages. In no event shall either party or any
------------------------
Affiliate of either party be liable hereunder for any
consequential, special, incidental, punitive or indirect damages
(including without limitation loss of profit, revenue, business
opportunity or business advantage), whether based upon a claim or
action of tort, contract, warranty, negligence, strict liability,
breach of statutory duty, or any other legal theory or cause of
action, even if advised of the possibility of such damages.
11.6 Agreements with Healtheon/WebMD. Each of IDX and Allscripts agree
-------------------------------
not to cause any default under or termination of (other than a
termination as a result of a default by Healtheon/WebMD) of the
contracts between IDX and Healtheon/WebMD and ChannelHealth and
Healtheon/WebMD.
19
In the event IDX shall cause such a default or termination, IDX
agrees to pay Allscripts such amount of revenues as would have
been paid to Allscripts under the terms of the defaulted or
terminated contract if such default or termination by IDX had not
occurred.
11.7 Indemnification. Each party (an "Indemnifying Party") will
--------------- ------------------
indemnify the other party, its officers, employees, and agents
(each an "Indemnified Party" and, collectively, the "Indemnified
----------------- -----------
Parties") against, and hold each Indemnified Party harmless from,
-------
all claims, suits, judgments, losses, damages, fines or costs
(including reasonable legal fees and expenses) ("Losses")
------
resulting from any claim, suit, or demand by any third party
("Third Party Claim") for injuries to or deaths of persons or
-----------------
loss of or damage to property arising out of: (i) the
Indemnifying Party's products or services as marketed by the
Indemnified Parties, unless the Indemnified Parties shall have
acted outside the scope of their rights under this Agreement; and
(ii) the Indemnifying Party's performance or willful misconduct
of the Indemnifying Party, its employees, officers, or agents in
connection with the Indemnifying Party's performance of this
Agreement, except to the extent caused by the negligence of any
Indemnified Party.
11.7.1 The Indemnifying Party's obligations under this Section
12 will survive the termination of this Agreement.
11.7.2 Each Indemnified Party shall give an Indemnifying Party
prompt written notice of any Third Party Claim of which
such Indemnified Party has knowledge concerning any
Losses as to which such Indemnified Party may request
indemnification hereunder. If the Indemnifying Party
acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Losses that may
result from such Third Party Claim, then the
Indemnifying Party shall be entitled to assume and
control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives
notice of its intention to do so to the Indemnified
Party within five (5) days of the receipt of such
notice from the Indemnified Party; provided, however,
-------- -------
that if there exists or is reasonably likely to exist a
conflict of interest that would make it inappropriate
in the judgment of the Indemnified Party, in its sole
and absolute discretion, for the same counsel to
represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be
entitled to retain its own counsel, at the expense of
the Indemnifying Party. In the event the Indemnifying
Party exercises the right to undertake any such defense
against any such Third Party Claim as provided above,
the Indemnified Party shall cooperate with the
Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Party's
expense, all witnesses, pertinent records, materials
and information in the
20
Indemnified Party's possession or under the Indemnified
Party's control relating thereto as is reasonably required
by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the Indemnifying
Party shall cooperate with the Indemnified Party in such
defense and make available to the Indemnified Party, at the
Indemnified Party's expense, all such witnesses, records,
materials and information in the Indemnifying Party's
possession or under the Indemnifying Party's control
relating thereto as is reasonably required by the
Indemnified Party. No such Third Party Claim may be settled
by the Indemnifying Party without the prior written consent
of the Indemnified Party.
11.7.3 In no event shall the Indemnifying Party be liable to an
Indemnified Party for any indirect, incidental, special,
punitive, exemplary or consequential damages arising out of
or otherwise relating to this Agreement, even if the
Indemnifying Party has been advised of the possibility or
likelihood of such damages.
11.7.4 Notwithstanding the foregoing, with respect to any claim
that would otherwise be subject to indemnification by a
party pursuant to this Agreement, if indemnification with
respect to such claim is governed by the License Agreement,
then no indemnification shall be available under this
Agreement.
11.8 Expenses. Except as otherwise specified in this Agreement, all costs
--------
and expenses, including, without limitation, fees and disbursements
of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses,
whether or not the Closing shall have occurred.
11.9 Further Assurances and Documents. IDX and Allscripts shall take all
--------------------------------
actions and do all things, including without limitation the execution
and delivery of instruments and documents, necessary to effectuate
the purposes and intent of this Agreement.
11.10 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by courier service, by telecopy or by
registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or
at such other address for a party as shall be specified in a notice
given in accordance with this Section 11.10):
21
(a) if to Allscripts:
Allscripts Healthcare Solutions, Inc.
2401 Commerce Drive
Libertyville, Illinois 60048
Attention: President
Facsimile: (847) 680-3573
With a copy to:
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Attention: Steven D. Rubin III
Facsimile: (713) 224-9511
(b) if to IDX:
IDX Systems Corporation
1400 Shelbourne Road
South Burlington, VT 05043
Attention: President
Facsimile: (802) 865-3681
With a copy to: General Counsel at the same
address
11.11 Public Announcements. Except as required by law,
--------------------
governmental regulation or by the requirements of any
securities exchange on which the securities of a party
hereto are listed, no party to this Agreement shall make,
or cause to be made, any press release or public
announcement in respect of this Agreement or the
transactions contemplated hereby or otherwise communicate
with any news media without the prior written consent of
the other party, and the parties shall cooperate as to the
timing and contents of any such press release or public
announcement.
11.12 Headings. The descriptive headings contained in this
--------
Agreement are for convenience of reference only and shall
not affect in any way the meaning or interpretation of
this Agreement.
11.13 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being
enforced by any law, governmental regulation or public
policy, all other terms and provisions of this Agreement
shall 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. 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
22
Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest
extent possible.
11.14 Entire Agreement. This Agreement, together with the
----------------
License Agreement, constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both
written and oral, with respect to the subject matter
hereof.
11.15 Assignment. This Agreement shall be binding upon the
----------
parties and their respective successors, representatives
and permitted assigns and their Affiliates Controlled by
them, respectively. Neither party may assign this
Agreement without the prior written consent of the other
party, except that either party hereto may assign its
rights hereunder to an Affiliate of such party and either
party may, without the consent of the other party, assign
and delegate this Agreement and its rights and obligations
hereunder in connection with a merger, consolidation or
sale of substantially all of its assets (which sale shall
include the assignment and assumption of all rights and
obligations under the License Agreement); provided,
--------
however, that such assignee or transferee shall assume all
-------
obligations of the assigning or transferring party and any
such assignment shall not relieve the assigning or
transferring party of its obligations hereunder.
11.16 No Third Party Beneficiaries. This Agreement shall be
----------------------------
binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns and successors
and nothing herein, express or implied, is intended to or
shall confer upon any other person or entity, any legal or
equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
11.17 Amendment. This Agreement may not be amended or modified
---------
except by an instrument in writing signed by, or on behalf
of, each of the parties.
11.18 Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Delaware without regard to its
conflict of laws provisions.
11.19 Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall
be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
11.20 Arbitration. The parties shall attempt in good faith to
-----------
resolve by agreement any claim or controversy arising out
of or relating to this Agreement or the breach hereof.
23
11.20.1 Subject to the first sentence of this Section 11.20, any
and all claims, counterclaims, demands, causes of
action, disputes, controversies, and other matters in
question arising out of or relating to this Agreement,
any provision hereof, the alleged breach of any such
provision, or in any way relating to the subject matter
of this Agreement or the relationship between the
parties created by this Agreement, involving the
parties, their Affiliates and/or their respective
representatives (all of which are referred to herein as
"Arbitrable Claims"), even though some or all of such
-----------------
Arbitrable Claims allegedly are extra-contractual in
nature, whether such Arbitrable Claims sound in
contract, tort, or otherwise, at law or in equity, under
state or federal law, whether provided by statute or the
common law, for damages or any other relief, will be
resolved by binding arbitration. Any arbitration will be
administered by the arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association (the "AAA") in effect at the time the
---
arbitration is initiated (collectively, the "Rules").
-----
11.20.2 The validity, construction, and interpretation of this
agreement to arbitrate, and all procedural aspects of
the arbitration conducted pursuant to this agreement to
arbitrate, including without limitation, the
determination of the issues that are subject to
arbitration (i.e., arbitrability), the scope of the
arbitrable issues, allegations of "fraud in the
inducement" to enter into this Agreement or this
arbitration provision, allegations of waiver, laches,
delay or other defenses to arbitrability, and the rules
governing the conduct of the arbitration (including
without limitation, the time for filing an answer, the
time for the filing of counterclaims, the times for
amending the pleadings, the specificity of the
pleadings, the extent and scope of discovery, the
issuance of subpoenas, the times for the designation of
experts, whether the arbitration is to be stayed pending
resolution of related litigation involving third parties
not bound by this Agreement, the receipt of evidence,
and the like), will be decided by the arbitrators in
accordance with the Rules. In deciding the substance of
the parties' Arbitrable Claims, the arbitrators shall
refer to the substantive laws of the State of Delaware
for guidance (excluding Delaware choice-of-law
principles that might call for the application of some
other state's law). Each party shall be entitled to
discovery rights equivalent to those provided under the
Federal Rules of Civil Procedure. NOTWITHSTANDING ANY
OTHER PROVISION IN THIS AGREEMENT TO THE CONTRARY, THE
PARTIES EXPRESSLY AGREE THAT THE ARBITRATORS WILL HAVE
ABSOLUTELY NO AUTHORITY TO AWARD CONSEQUENTIAL, TREBLE,
24
EXEMPLARY OR PUNITIVE DAMAGES OF ANY TYPE UNDER ANY
CIRCUMSTANCES REGARDLESS OF WHETHER SUCH DAMAGES MAY BE
AVAILABLE UNDER DELAWARE LAW, THE LAW OF ANY OTHER
STATE, OR FEDERAL LAW, OR UNDER THE FEDERAL ARBITRATION
ACT, OR UNDER THE RULES, THE PARTIES HEREBY WAIVING
THEIR RIGHT, IF ANY, TO RECOVER CONSEQUENTIAL, TREBLE,
EXEMPLARY OR PUNITIVE DAMAGES IN CONNECTION WITH ANY
ARBITRABLE CLAIMS.
11.20.3 The arbitration proceeding will be conducted in New
York, New York. Within thirty days of the notice of
initiation of the arbitration procedure, the parties
shall obtain from the AAA a list of arbitrators from its
Commercial Panel from which the parties shall select a
panel of three neutral arbitrators in accordance with
the Rules and normal procedures of the New York office
of the AAA. If necessary, the AAA shall select some or
all of the arbitrators when it is authorized to do so
under the Rules.
11.20.4 In the event of an arbitration proceeding between
Allscripts and IDX or any of their Affiliates, one half
of all fees of the arbitrators will be borne by
Allscripts and the other half will be borne by IDX.
11.20.5 To the fullest extent permitted by law, the arbitration
proceeding and the arbitrators' award will be maintained
in confidence by the parties.
11.20.6 The award of the arbitrators will be final and binding
on the parties, and judgement thereon may be entered in
a court of competent jurisdiction.
11.21 Waiver of Jury Trial. Each of the parties hereto irrevocably and
--------------------
unconditionally waives trial by jury in any legal action or
proceeding relating to this Agreement or the transactions
contemplated hereby and for any counterclaim therein.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized signatories thereunto duly
authorized as of the day and year first above written.
IDX SYSTEMS CORPORATION ALLSCRIPTS HEALTHCARE
SOLUTIONS, INC.
By: /s/ ROBERT W. BAKER, JR. By: /s/ Glen E. Tullman
---------------------
- -----------------------------------
[Signature of Authorized Agent] Glen E. Tullman
Chief Executive Officer
Print Name and Title:
26
Schedule 1
----------
DEFINITIONS
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such specified
Person.
"Allscripts" means Allscripts Healthcare Solutions, Inc. a Delaware
corporation.
"Allscripts Products" means the products and services (i) offered by
Allscripts as more fully described in the Development Plan, (ii) the Physician
Channel Products as of the Closing Date and (iii) all of the products and
services to be developed as set forth under the Development Plan.
"Change of Control" means any event, transaction or occurrence as a
result of which either of IDX or Allscripts (i) shall cease to own or control,
directly or indirectly through any of its respective Affiliates, a majority of
the voting rights associated with ownership of its respective voting stock or
(ii) shall cease to have the ability, directly or indirectly, through one or
more of its Affiliates, to elect a majority of its respective board of
directors.
"ChannelHealth" means ChannelHealth Incorporated, a Delaware
corporation, its successors and assigns, and any other entity which, as of the
Closing, Controls, is Controlled by, or is under common Control with
ChannelHealth.
"ChannelHealth Customers" means customers that have contracted or are
in the process of contracting for some or all of the products and services
offered by ChannelHealth.
"Clinical Management Suite" or "CMS" means the product currently
marketed by IDX under the trademark of "CMS" or "Clinical Management Suite,"
including its predecessor product known as "CRS."
"Closing" means the closing of the acquisition by Allscripts of all of
the issued and outstanding capital stock of ChannelHealth pursuant to the Merger
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Compensation Table" means the revenue sharing model as provided in
the Development Plan.
"ConnectR" means the product currently marketed by IDX under the
trademark "ConnectR."
27
"Control" including the terms "Controlling," "Controlled by," and
"under common Control with," means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Cross License Agreement" has the meaning set forth in the recitals to
the Strategic Alliance Agreement.
"Demonstration Product Specification" means the hardware and software
required to demonstrate the Allscripts Products as mutually agreed to in the
Marketing Plan.
"Development Plan" means the Development Plan as described in Section
4 to the Strategic Alliance Agreement, and as initially set forth on Exhibit A
attached to the Strategic Alliance Agreement.
"Direct Competitor of Allscripts" means any Person that Provides any
products similar to the Allscripts Products and any successor, assignee,
Affiliate or partner of such Person.
"Direct Competitor of IDX" means any Person that Provides any Practice
Management Products and is named on Annex A to this Schedule 1 and any
-------
successor, assignee, Affiliate or partner of such Person and any Person that IDX
notifies Allscripts shall be additionally included on Annex A to this Schedule 1
-------
from time to time.
"Distribution Partner" means any Person that has the right to market,
cooperatively market, distribute, resell, sublicense, license, sell or otherwise
provide a party's products or services, including by way of example and not in
limitation, any reseller, distributor, licensee, customer, contractor, service
provider, co-marketer, outsourcing vendor, or other information technology
company.
"EDI" means effecting the exchange of information and transactions
between trading partners over a network using electronic means.
"IDX" means IDX Information Systems Corporation, a Vermont
corporation.
"IDX Customer" means any Person that has entered into a written
agreement with IDX pursuant to which IDX provides any of its core products,
including without limitation Practice Management Systems, IDXrad(TM), and
LastWord(R) (the "Core Products"), all Affiliates of such Person, and all
Persons receiving the benefit of any of the Core Products by or through such
Person or Affiliates of such Person including without limitation those IDX
Customers as set forth in the Development Plan.
"IDX Licensed Technology" means the technology licensed to Allscripts
and ChannelHealth pursuant to the License Addendum.
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"Initial Term" means a period of ten (10) years commencing on the
Closing Date.
"Intellectual Property" means, without limitation, know-how, trade
secrets, inventions (whether or not patentable), ideas, materials, discoveries,
techniques, plans, designs, formulas, processes, invention disclosures,
technology, data or information, software and documentation therefor, hardware,
source code (including all programmers' notes), procedures, methods, works and
other documentation and information and the right to sue and recover damages for
past, present and future infringement of such intellectual property.
"Interfaces" means the interfaces between the Allscripts Products and
the IDX Practice Management Products, Patient Channel, and EDiX as described on
Schedule 4.3.1 attached to the Strategic Alliance Agreement.
"LastWord" means the product marketed by IDX under the trademark
LastWord.
"License Addendum" has the meaning set forth in recitals to the
Strategic Alliance Agreement.
"License Agreement" has the meaning set forth in recitals to the
Strategic Alliance Agreement.
"Maintenance" means the upkeep of software products by a Person
including the provision of bugs, fixes and drivers, consistent with such
Person's ordinary and customary business practices
"Marketing Plan" has the meaning set forth in Section 5.1 of the
Strategic Alliance Agreement.
"Material Adverse Change" means any material adverse change in the
business, properties, results of operations, condition (financial or otherwise)
of an applicable Person (other than changes that are the result of economic
factors affecting the economy as a whole or changes that are the result of
factors generally affecting the specific industry or markets in which a party
competes).
"Merger Agreement" means that certain Agreement and Plan of Merger by
and among Allscripts (formerly named Allscripts Holding, Inc.), Allscripts,
Inc., Bursar Acquisition, Inc., Bursar Acquisition No. 2, Inc., IDX and
Channelhealth, dated as of July 13, 2000, whereby Allscripts agreed to acquire
all of the issued and outstanding capital stock of ChannelHealth.
"OutReach" means the product currently marketed by IDX under the
trademark "OutReach."
"Patient Channel" means the product marketed by ChannelHealth and IDX
under the name Patient Channel.
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"Patient Channel Products" means the computer software and
computerized or automated products and services marketed under the name "Patient
Channel" as more fully described in the Development Plan.
"Person" means any individual, partnership, firm, corporation,
association, trust, limited liability company, limited liability partnership,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
"Physician Channel Products" means the computer software and
computerized or automated products and services marketed under the name
"Physician Channel" as more fully described in the Development Plan.
"Practice Management Products" means any software application
expressly designed to automate the business processes of physician billing,
physician scheduling and managed care contract administration.
"Provide" means to market, sell, license, cooperatively market, or
otherwise distribute, including through one or more Distribution Partners.
"Regulatory Requirements" means all federal and state laws and
regulatory requirements applicable to the use by IDX, IDX Customers,
ChannelHealth, and ChannelHealth Customers of the ChannelHealth products from
time to time during the term of the Strategic Alliance Agreement, including
without limitation those applicable to billing and claims submittal, managed
care, prescriptions, EDI transactions, data transmission, security and privacy,
and program requirements generally applicable to healthcare organizations, such
as those involving accreditation.
"Strategic Alliance Agreement" means that certain agreement to which
these definitions are a Schedule entitled "Strategic Alliance Agreement" by and
between Allscripts and IDX executed or intended to be executed on the Closing
Date.
"Virtual Office Products" means the product currently marketed by IDX
under the name "Virtual Office" which allows for secure messaging, managing
appointments, viewing of personal information, monitoring patient account status
and tasking management.
"Web FrameWork" means the product currently marketed by IDX under the
trademark "IDX Web FrameWork" and as more fully described in the Development
Plan.
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Annex A to Schedule 1
---------------------
Direct Competitors of IDX
Cerner Corporation
Eclipsys Corporation
Epic Systems Corporation
Healtheon/WebMD (except as pursuant to the agreement with ChannelHealth dated
June 6, 2000)
Infocure
McKesson/HBOC
Medic Corporation
Medical Manager Corporation
Quality Systems
Shared Medical Systems Corporation
Trizetto Corporation
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Schedule 5.1
------------
Physician Installation Targets
New Physician Allscripts
------------------------
Year Product Users
---- -------------
2001 5000
2002 7500
2003 7500
2004 7500
2005 7500
2006 7500
2007 7500
2008 7500
2009 4000
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