MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU"), dated December 16, 1998,
entered into by and on behalf of WebMD, Inc., with its principal offices located
at 40180 The Lenox Building, 3399 Peachtree Road, N.E., Atlanta, Georgia 30326
("WebMD"), and CNN Interactive, a division of Cable News Network, Inc., with its
principal offices located at One CNN Center, Box 105366, Atlanta, Georgia 30348-
5366 ("CNN"), is intended to set forth the basic understanding of the parties
regarding each party's efforts to enhance and/or promote the other party's web
site in certain respects, and the further agreement of the parties to negotiate
in good faith the terms of a definitive agreement based on this understanding
(the "Agreement").
Accordingly, the parties hereby agree as follows:
1. WebMD Content. WebMD agrees to deliver and/or make accessible to CNN
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certain health and wellness related information ("WebMD Content") for use,
publication and distribution by CNN on its web site and related services,
CNN.com (the "CNN Site"). WebMD agrees that the WebMD Content provided or
made accessible to CNN hereunder will include, at a minimum: (i) *** (***)
new articles per week; (ii) *** (***) of the total content available to
consumers on WebMD's web site (the "WebMD Site") at any given time; and
(iii) specific types of content to be agreed upon by the parties and set
forth in an exhibit to the Agreement including without limitation the types
of content listed on Exhibit A to this MOU. Furthermore, WebMD agrees to
provide and/or make accessible all content owned or controlled by WebMD to
CNN for use on the CNN Site and further agrees to use commercially
reasonable efforts to secure sufficient rights in any third party content
to enable WebMD to provide said licensed content to CNN. The WebMD Content
will include editorial news stories that are timely, generally consistent
with the quality and editorial standards of CNN and of general interest to
health consumers.
2. Use of WebMD Content by CNN. Although CNN may use content from third party
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sources as it deems editorially appropriate, CNN hereby agrees to position
WebMD as its premier provider of content for the "Health" section of the
CNN Site ("Health Section"). As editorially appropriate, CNN will display
portions of the WebMD Content selected by CNN and related links and
branding throughout the Health Section and provide users with opportunities
to link to specific sections within the WebMD Site for greater depth,
related stories and other WebMD Site features. In connection with each
party's respective performance hereunder, each party agrees to specify and
designate an editorial contact for the other party. As more specifically
described in Paragraph 4 below, CNN will:
a. position WebMD branding prominently on every page of the Health
Section;
b. incorporate WebMD Content within the Health Section, introduce
WebMD editorially based services to CNN users through existing
CNN content areas within the Health Section and possibly create
new features for the Health
***Omitted pursuant to a request for confidential treatment and filed separately
with the Commission.
Section (by way of example only, a WebMD Health Almanac) (all of
which will provide further links and easy navigation to the WebMD
sites);
c. provide prominent links, as editorially appropriate, on the CNN
Site homepage to the WebMD Content in the Health Section;
d. promote the Health Section and the CNN/WebMD relationship via
CNN's various e-mail products, as appropriate;
e. promote the Health Section and the CNN/WebMD relationship via
promotional banners that will run throughout the CNN family of
web sites;
f. promote the Health Section and the CNN/WebMD relationship to
health-related chats and message boards within the CNN Site
discussion section; and
g. issue a joint press release with WebMD announcing the CNN/WebMD
relationship and follow-up press releases (as and when
appropriate as agreed by the parties) announcing further
developments (e.g., traffic milestones and new content
---
additions).
3. Licenses. The parties hereto agree to grant each other the appropriate
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licenses to use their respective content (as applicable), marks, logos and
brand identifiers for purposes consistent with the relationship established
by the Agreement.
4. Promotion of WebMD by CNN. During the Term, CNN agrees to provide the
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following promotion to WebMD:
a. WebMD Branding. WebMD branding will appear on each page of
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the Health Section (see IDG branding on
http://cnn.com/TECH/computing/ for an example of the integration
on the main page of the Health Section; the remaining Health
Section pages will include WebMD branding in a space above the
fold as mutually agreed by the parties). Additional WebMD
branding (and a link for "more" to the WebMD Site) will be
included on individual WebMD Content in a manner similar to the
current Salon Magazine branding and link on
http://cnn.com/books/rviews/9811/30/dismay.salon/index.html.
b. WebMD Promotional Banners. CNN will create promotional banners
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out of unsold advertising inventory promoting the Health Section
that will include the WebMD logo and affiliation that will rotate
through the CNN family of web sites and receive a minimum of ***
page impressions per month. In the event ad inventory is
unavailable, CNN will provide WebMD with promotional space in top
left corner of the CNN Site.
c. Message to E-Mail Subscribers. At least once a month, CNN will
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include in its "QuickNews" e-mail subscriber service a
promotional mention (and a link to the Health Section in the html
versions of such e-mails) with language similar to "visit
CNN.com/HEALTH with WebMD for the latest in health-related news."
d. CNN Link of the Day Mention. CNN will include a WebMD Content
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mention and/or WebMD branding as part of the CNN.com/Health
content
***Omitted pursuant to a request for confidential treatment and filed separately
with the Commission.
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offering in the Link of the Day space on the CNN Site homepage a
minimum of *** (***) times per month.
e. Homepage Editorial Promotion. CNN agrees that the Health
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Section will be eligible (in the same manner as other sections on
CNN.com) for promotion in the upper right hand box located on the
CNN.com homepage based on editorial decision. WebMD understands
that such promotion will be provided to the Health Section as CNN
deems editorially appropriate.
f. Promotion in Health-Related Specials. As health-related special
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sections are created by CNN for the general CNN Specials area
(see http://cnn.com/SPECIALS/) , and as editorially appropriate,
CNN will include WedMD Content and branding (and/or links to the
WebMD Site) within those specials. While CNN has no absolute
obligation to create such specials, CNN anticipates that a
minimum of *** health-related special (e.g., Breast Cancer
Awareness month) per----year will be created, subject to
editorial considerations.
g. Chat/Message Boards. CNN agrees to promote the Health Section
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and the WedMD relationship established hereunder in health-
related chats and message boards within the CNN discussion
section. Specifically, CNN agrees: (i) to provide WedMD with
branding "above the fold" on all pages containing medical- and
health-related message boards; (ii) that CNN will work with WedMD
to develop co-branded medical-and health-related chats on the CNN
Site; (iii) if WebMD provides webcasting capabilities, CNN will
work with WedMD to explore the possibility of promoting WedMD's
webcasting efforts as editorially appropriate; and (iv) CNN will
not develop co-branded medical- or health-related chats on the
CNN Site with Intellihealth, On Health, or Village's Better
Health ("WebMD Competitors"); additionally, CNN agrees not to
develop such chats with any other third party reasonably
considered to be a WedMD competitor without discussing the
opportunity with WedMD; provided, however, this latter commitment
specifically excludes arrangements with AccentHealth and Mayo
Clinic. Notwithstanding clause (iv), nothing herein will prevent
CNN from engaging individuals (e.g., medical experts) aligned
----
with any WedMD Competitor to participate in CNN Site health-
related chats; however, CNN will not, in such event, provide
branding to the WebMD Competitor.
It is understood that CNN may be temporarily excused from performance
of certain of the above-commitments during periods of high traffic if
it is reasonably necessary for CNN to temporarily remove certain items
from the CNN Site to enhance performance during such high-traffic
periods. Also, each party shall have the right to temporarily disable
links to the other party's site during any time such other Site is
experiencing technical difficulties.
5. Branding/Promotion Fee. During the Term, for WedMD promotion, linking and
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branding hereunder, WebMD hereby agrees to pay CNN an annual fee as
follows: (i) Year 1 - ***
***Omitted pursuant to a request for confidential treatment and filed separately
with the Commission.
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(ii) Year 2 - ***; and (iii) Year 3 - ***. The annual fee shall be payable
on a quarterly basis in advance, with the initial payment payable upon the
earlier of execution of the Agreement or any approved public uses of
references to this MOU by WebMD (including the filing of the WedMD S-1).
6. Delivery Benchmarks. CNN, with commercially reasonable cooperation from
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WebMD, will achieve minimum impressions for the Health Section over the
first two (2) years of the term as follows: (i) *** during Year 1; and
(ii) *** during Year 2 (each a "Delivery Benchmark"). Should it appear,
based on monthly impressions, that CNN is not on track to achieve the
applicable Delivery Benchmark, WebMD agrees to work with CNN and modify the
mix of WebMD Content as mutually agreed to improve traffic. It is
understood and agreed, however, that the foregoing Delivery Benchmarks are
established solely to measure performance of the branding and linking
relationship established hereunder. The parties agree to schedule
quarterly meetings by phone or in person to discuss traffic, the WebMD
Content and other matters related to the parties' mutual desire to increase
traffic to meet the Delivery Benchmarks. Any failure to achieve one or
more Delivery Benchmarks will not be deemed to be a breach of CNN's
obligations hereunder, but shall give rise to the following specific
remedies:
(i) if traffic in year 1 does not reach the applicable Delivery
Benchmark but is *** or more, WebMD's year 2 fee will be
reduced by the same percentage as such year 1 under-
delivery. For example, if traffic for year 1 equals ***
(i.e., *** of the *** target), then in year 2 WebMD will pay
only *** of the year 2 fee;
(ii) if traffic in year 1 does not reach *** page impressions,
then WebMD and CNN will each have the right to terminate the
Agreement by written notice to the other provided at any
time during the ten (10) day period following CNN's written
delivery of the final traffic numbers. Said termination
will take effect two (2) months after the end of year 1.
During that two (2) month period (if one of the parties has
elected to terminate), WebMD will pay a prorate portion of
the year 1 fee;
(iii) if traffic in year 2 does not reach the applicable Delivery
Benchmark but is *** or more, WebMD's year 3 fee will be
reduced by the same percentage as such year 2 under-
delivery; and
(iv) if traffic in year 2 does not reach *** page impressions,
then WebMD and CNN will each have the right to terminate the
Agreement by written notice to the other provided at any
time during the ten (10) day period following CNN's written
delivery of the final traffic numbers. Such termination
will take effect two (2) months after the end of year 2.
During that two (2) month period (if one of the parties has
elected to terminate), WebMD will pay a prorated portion of
the Year 2 fee.
7. Development and Posting of WebMD Sponsored Page by CNN. CNN will, in
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consultation with WebMD, design and create and publish on the CNN Site a
page containing the
***Omitted pursuant to a request for confidential treatment and filed separately
with the Commission.
4
WebMD logo along with the CNN logo and certain CNN content ("CNN Content"),
namely, the latest headlines, from national, international, sports, weather and
entertainment news stories selected and provided by CNN (the "WebMD Sponsored
Page"). It is understood and agreed that such CNN Content is made available for
the WebMD Sponsored page on a non-exclusive basis and CNN retains all rights to
use such content in any other manner it deems appropriate, including without
limitation, use in other areas of the CNN Site. The WebMD Sponsored Page will
serve as an access point to the CNN site for users of the "Physicians Lounge"
area of the professional/subscriber overall intent to present a look and fee
consistent with that of the WebMD Site; however, it is understood and agreed
that the WebMD Sponsored Page will have CNN's "QuickNews" branding and text
links to the CNN Site homepage and/or stories on the CNN Site. The WebMD
Sponsored Page will display both the CNN logo and the WebMD logo, each with an
active link to the CNN Site and the WebMD Site. CNN will retain sole and
exclusive editorial control of the regularly updated CNN Content for the WebMD
Sponsored Page. CNN agrees that it will use or post material in connection with
the WebMD Sponsored Page which is of the nature and quality that is consistent
with web site products and services provided by CNN generally. WebMD expressly
agrees that CNN will be the exclusive provider of general news (i.e., hard
----
general news as opposed to health-related news, financial news or sports news,
even though the CNN Content may include health, sports and financial news) on
the WebMD Site during the Term.
8. Ownership. Each party retains all rights, title and interest in and to any
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content, logos, marks and brand identifiers provided by it to the other
hereunder.
9. Exclusivity. Except as specifically provided herein to the contrary, this
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Agreement and all rights and licenses granted hereunder are non-exclusive
and, among other things, each party reserves the absolute right to enter
into agreements with third parties related to content for their respective
sites (except news content for the WebMD Site) or for the distribution of
their respective content through other sites even if competitive with this
Agreement. Specifically, the sole exceptions to such non-exclusivity
relate to WebMD's commitment not to include any other general news on the
WebMD Site directly or indirectly by branding and extensive linking, and
CNN's agreement not to develop a co-branded medical or health-related chat
on the CNN Site with any WebMD Competitor.
10. Term. The Agreement will commence as of the date of this MOU and will
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continue for period of three (3) years from the date the WedMD Content is
launched and publicly available on the CNN Site, unless earlier terminated
in accordance with this Agreement. It is the parties mutual desire to
launch such WebMD Content on the CNN site no later than February 1, 1999.
11. Termination. Either party may terminate the Agreement at any time during
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the Term in the event of a material breach by the other party that remained
uncured for a period of thirty (30) days after written notice of such
breach. Additionally, either party may terminate the Agreement based on
CNN's failure to deliver the specified minimum annual impressions for the
Health Section as specifically outlined in Paragraph 6(ii) and Paragraph
6(iv) of this MOU. Each party will have the right to terminate in the
event of the other party's bankruptcy or substantially similar adverse
financial position. CNN will have the right to terminate this MOU (or the
Agreement) if: (i) WebMD fails to consummate either of its planned
acquisitions of content providers, Direct Medical Knowledge or Sapient
Health
5
Network, within forty-five (45) days of this MOU; or (ii) the quality of
the WebMD Content fails, at any time, to meet CNN's editorial standards or
otherwise adversely affects CNN's reputation, journalistic integrity or
goodwill.
12. Good Faith Negotiations. WebMD and CNN will endeavor in good faith to
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negotiate and enter into definitive written Agreement relating to the
matters addressed hereunder within the next sixty (60) days from the date
hereof ("Negotiation Period"), setting forth the terms outlined in this MOU
as well as customary representations, warranties, covenants, indemnities,
limitations and other undertakings appropriate for a transaction of the
type contemplated hereunder.
13. Press Release. The parties shall cooperate with one another to develop a
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mutually agreeable press release related to this MOU and the Agreement
contemplated hereunder as soon as possible after the execution of the
Agreement. Any and all future releases and public announcements shall be
subject to the mutual written agreement of the parties as to timing,
content and the necessity therefor.
14. Confidentiality. Except as and to the extent required by law, neither
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party will disclose or use, and will direct it representatives not to
disclose or use to the detriment of the other party, any Confidential
Information (as defined below) with respect to the business of the other
party furnished, or to be furnished, by such party, or their respective
representatives to the other party or its representatives at any time or in
any manner other than disclosures to employees on a need-to-know basis.
For purposes of this Paragraph, "Confidential Information" means any
information about the ongoing negotiations related to this MOU or the
business or activities of either party stamped "confidential" or identified
in writing as such by a party to the other party promptly following its
disclosure. Disclosure of the Confidential Information to employees and
agents of the parties hereto will be limited to a need to know basis under
circumstances where the employee or agent is advised of the confidential
nature of the disclosure and is bound to keep said information
confidential. Notwithstanding the foregoing, the following information
shall not be deemed Confidential Information: (i) information that is
already known to the recipient party or its representatives or to others
not bound by a duty of confidentiality prior to disclosure; (ii)
information that becomes public available through no fault of the recipient
party or its representatives; (iii) information that is independently
developed by a party without the use of or reference to the Confidential
Information of the other party; or (iv) information that properly comes
into the recipient's possession from a third party who is not under an
obligation to maintain the confidentiality of such information.
Notwithstanding anything contained herein, it shall not be a breach of this
provision for either party to disclose Confidential Information pursuant to
any applicable subpoena or other legal or regulatory process or to its
shareholders pursuant to regulatory requirement so long as the recipient
notifies the disclosing party prior to making such disclosure. Upon the
written request of the disclosing party, the recipient party will promptly
return to the disclosing party or destroy any Confidential Information in
its possession and certify in writing to the disclosing party that it has
done so. Notwithstanding any other provision of this Paragraph, WebMD may,
for purposes of filing legally required documents in connection with any
public offerings of stock in WebMD, disclose the existence but not the
financial terms of the MOU or the Agreement.
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15. Standard Terms and Conditions. Each party will provide standard
-----------------------------
representations and warranties to the other party regarding its ability to
enter into the Agreement and carry out the transaction contemplated
hereunder. Additionally, each party will be solely responsible for the
content, logos, brand identifiers and other materials provided by it to the
other party hereunder for use in accordance with the terms of the Agreement
and will indemnify and hold the other party harmless from any claims
related to such materials. Finally, the Agreement will contain other
customary provisions appropriate for a transaction of this nature.
The signature of each party's duly authorized representative below shall
evidence the agreement of such party that this MOU accurately summarizes its
understanding with respect to the subject matter hereof.
CNN INTERACTIVE, A DIVISION OF CABLE NEWS
NETWORK, INC. WEBMD, INC.
/s/ Louis Lettes /s/ Jeff Arnold
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Signature Signature
Louis Lettes Jeffrey T. Arnold
---------------------------- ---------------------------
Print Name Print Name
VP Business Development Chairman/CEO
---------------------------- ---------------------------
Title Title
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TYPE: EX-10.43
SEQUENCE: 47
DESCRIPTION: STRATEGIC DISTRIBUTION ALLIANCE AGREE.
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 10.43
STRATEGIC DISTRIBUTION ALLIANCE AGREEMENT
-----------------------------------------
THIS STRATEGIC DISTRIBUTION ALLIANCE AGREEMENT (the "Agreement") is
entered into this 23/rd/ day of October, 1998, by and between WebMD, Inc., a
Georgia corporation ("WebMD"), and HBO & Company of Georgia, a Delaware
corporation ("HBOC").
BACKGROUND
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1. WebMD is engaged in, among other things, the business of promoting,
selling and providing under its "WebMD/SM/" brand name certain Internet-based
communications and information services (the "WebMD Services");
2. HBOC is engaged, directly and through its affiliates, in the business
of providing integrated patient care, clinical, financial, managed care and
strategic management software solutions and other healthcare-related products
and services (the "HBOC Services");
3. Section 10 of that certain Investment Agreement dated as of August 24,
1998 (the "Investment Agreement") by and between WebMD and HBOC contemplates
that if WebMD and HBOC enter into a strategic alliance agreement within ninety
(90) days of the closing of the investment by HBOC, WebMD will grant a
Performance-Based Warrant (as such capitalized term is defined in the Investment
Agreement) to HBOC based upon certain annual gross revenues of WebMD derived
from the strategic alliance; and
4. The parties agree that this Agreement constitutes the strategic
alliance as contemplated in the Investment Agreement and desire to enter into
such a strategic alliance pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
TERMS OF AGREEMENT
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1. DEFINITIONS. The following capitalized terms used in this Agreement
shall have the following meanings:
(a) "Affiliates" means any entity controlling, controlled by, or
under common control with, either party to this Agreement.
(b) "Correction(s)" means a modification, revision or supplement to
the WebMD Services which makes the WebMD Services perform functions it was
designed to perform or corrects defects or "bugs."
(c) "Distributor(s)" means HBOC, its Affiliates and those entities
which (at the time in question) are authorized by HBOC either as distributor or
agent to distribute HBOC Services. Additional Distributors may be added by HBOC
during the term of this Agreement so long as HBOC requires any such entity to
execute a written agreement with HBOC containing terms and conditions
substantially similar to those contained in this Agreement for the protection of
Proprietary Information.
(d) "Documentation" means the full and complete documentation in any
media and form (CD, hard copy, electronic, etc.) for WebMD Services, including
all programmer, user, training, operating, support and other manuals, technical
specifications and documents and manuals relating to the installation,
implementation, use, maintenance, testing and operation of WebMD Services,
together with all revisions, updates and other modifications thereto as WebMD
may make from time to time.
(e) "Enhancement(s)" means modifications, revisions, additions or
supplements to the WebMD Services which enables the WebMD Services to provide or
perform services or functions it could not previously perform or materially
improves the manner in which the WebMD Services performs existing functions.
(f) "HBOC Customer(s)" means the (i) current customers of HBOC which
have licensed HBOC software or purchased from HBOC services or hardware; and
(ii) prospective customers to whom HBOC or any of its Affiliates is marketing or
with whom HBOC or any of its Affiliates is negotiating for the license of HBOC
Software or the sale of hardware or HBOC Services. The term "HBOC Customer"
shall include Affiliates of any HBOC Customer.
(g) "New Release(s)" means all modifications, revisions, Enhancements,
Corrections or replacements for WebMD Services and related Documentation which
WebMD has agreed to provide pursuant to this Agreement or which WebMD makes
available to its customers in general from time to time at no additional license
fee.
(h) "Proprietary Information" means any data or information regarding
(i) the business operations of a party which is not generally known to the
public and affords such party a competitive advantage, including but not limited
to, information regarding its products and product development, suppliers,
marketing strategies, finance, operations, customers, sales, and internal
performance results; (ii) proprietary software, including but not limited to:
concepts, designs, documentation, reports, data, specifications, source code,
object code, flow charts, file record layouts, databases, inventions and trade
secrets, whether or not patentable or copyrightable; and (iii) the terms and
conditions of this Agreement.
(i) "Subscription Agreement" means the agreement which sets forth the
terms and conditions pursuant to which HBOC Customer will be licensed to use the
WebMD Services.
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(j) "Territory" means the geographical area and territories listed in
Exhibit A attached hereto. The Territory may be extended pursuant to the mutual
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written agreement of the parties.
2. LICENSE.
(a) License Grant. Subject to the terms and conditions set forth in
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this Agreement, WebMD grants HBOC, its Affiliates and Distributors a non-
exclusive, non-transferable license to market the WebMD Services to HBOC
Customers.
(b) Trademarks.
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(i) WebMD grants HBOC a non-exclusive, non-transferable license
to use WebMD's trademarks, service marks, logos, or slogans (the "WebMD Marks")
solely to advertise and promote the WebMD Services during the term of this
Agreement. HBOC shall submit all of such materials to WebMD for prior review and
approval. HBOC shall not receive any ownership in or to the WebMD Marks as a
result of such use. HBOC shall not use any of the WebMD Marks in any manner
likely to confuse, mislead or deceive the public, or to be adverse to the best
interests of WebMD.
(ii) HBOC grants to WebMD limited permission to use the HBOC's
trademarks, service marks, logos, or slogans (the "HBOC Marks") solely to
identify itself as a partner of HBOC during the term of this Agreement. WebMD
shall use the HBOC Marks in accordance with the guidelines established by HBOC
from time to time, a current copy of which is attached hereto as Exhibit B.
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WebMD shall submit all such materials to HBOC for prior review and approval.
WebMD shall not use any of the HBOC Marks in any manner likely to confuse,
mislead or deceive the public, or to be adverse to the best interests of HBOC.
(c) Fulfillment. WebMD agrees to allow HBOC Customers who wish to
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subscribe to the WebMD Services (the "Subscribers") through HBOC's marketing
efforts to subscribe to WebMD Services at the prices set forth on Exhibit C
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attached hereto, subject to adjustment as set forth in Section 13(o) of this
Agreement. Upon a potential Subscriber's execution of a Subscription Agreement,
HBOC shall forward the executed Subscription Agreement to WebMD for
consideration, acceptance and fulfillment. WebMD shall act on all such
Subscription Agreements it receives within a reasonable time after its receipt
thereof, not to exceed three (3) business days. WebMD shall maintain appropriate
bandwidth, storage space and access speed to permit timely access to the WebMD
Services by all Subscribers.
(d) HBOC Internet Commerce Content. HBOC may offer to WebMD from time
------------------------------
to time a non-exclusive, non-transferable, non-assignable license to incorporate
certain HBOC Services (the "HBOC Internet Commerce Content") into the WebMD
Services. HBOC represents and warrants to WebMD that such HBOC Internet
Commerce Content (A) will be licensed to or the property of HBOC or a third
party from whom HBOC has received the right to offer such HBOC Internet Commerce
Content to WebMD and that HBOC or such third party will have the full right to
allow WebMD to use such HBOC Internet Commerce Content,
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and to display and incorporate such HBOC Internet Commerce Content into WebMD
Services, without infringement upon the rights of any party; and (B) will have
been prepared and/or compiled with care. If such HBOC Internet Commerce Content
is incorporated into the WebMD Services: (x) WebMD shall have the right and
license to use such HBOC Internet Commerce Content in order to display and
incorporate such HBOC Internet Commerce Content into WebMD Services; and (y)
other than the right and license granted pursuant the foregoing clause (x),
WebMD shall obtain no rights in or to such HBOC Internet Commerce Content. The
parties will negotiate in good faith the terms and conditions under which the
HBOC Internet Commerce Content will be incorporated into the WebMD Services.
(e) Joint Services. The parties contemplate that they may, from time
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to time, develop new products and services for incorporation into the WebMD
Services. Concurrently with the development of such new products and services,
the parties agree to negotiate in good faith the terms and conditions under
which those products and services will be incorporated into the WebMD Services.
Such terms and conditions shall include, without limitation, the terms and
conditions set forth on Exhibit D attached hereto.
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(f) Goals; Performance-Based Warrant. The parties acknowledge that the
--------------------------------
Investment Agreement contemplates that if HBOC enters into this Agreement within
ninety (90) days of the closing of the investment in WebMD by HBOC and meets the
WebMD gross revenue targets generated by the joint marketing efforts of HBOC and
WebMD, including but not limited to HBOC's commercially reasonable efforts to
enroll Subscribers to the WebMD Services, as set forth on Exhibit E attached
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hereto, within the respective time periods set forth therein, WebMD shall issue
to HBOC, within five (5) days following the execution of this Agreement by the
parties, a Performance-Based Warrant to purchase an aggregate of *** (***)
shares of Preferred Stock or, in the event that the Initial Public Offering has
been closed by such date, Common Stock, (as such capitalized terms are defined
in the Investment Agreement). The Performance-Based Warrant would be granted
with respect to *** (***); *** (***); and *** (***) shares on March 31 of each
of the calendar years 1999, 2000 and 2001, respectively, with the exercise price
per share equal to the Fair Market Value (as defined below) of the underlying
capital stock on the respective dates of grant (as adjusted for stock splits,
stock dividends, combinations and the like occurring after the date thereof).
For purposes of this Section 2(f), "Fair Market Value" means: (i) prior to an
Initial Public Offering (as such capitalized term is defined in the Investment
Agreement), the fair market value of the underlying capital stock on the
respective dates of grant as determined by the Board of Directors of WebMD, in
its sole discretion; provided, however, that Fair Market Value shall not be
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greater than the price at which securities of WebMD were last sold in a
transaction between WebMD and parties who were not, at the time of such sale,
affiliated with WebMD; or (ii) subsequent to an Initial Public Offering, the
Market Price (as such capitalized term is defined in the Warrant to Purchase
Shares of Series A Preferred Stock or Common Stock of WebMD issued to HBOC and
dated August 24, 1998) on the respective dates of grant. The parties agree that
all fees received by WebMD from WebMD Subscribers enrolled through the marketing
efforts of HBOC Call Center Group or any other HBOC sales group in calendar year
1998 (either prior to or after the execution of this Agreement) shall be
included in the calculation of the gross revenues for the twelve (12)-month
period ended March 31,
*** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
4
1999 for purposes of the possible grant of the Performance-Based Warrant. The
parties further agree that such targets merely constitute a good faith estimate
by HBOC during the specified time periods and that the failure to meet such
targets shall not constitute a breach of this Agreement by HBOC.
3. MARKETING.
(a) Generally. HBOC will use commercially reasonable efforts to market
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the WebMD Services.
(b) Marketing Activities. HBOC and WebMD, as appropriate, may perform
--------------------
some or all of the following marketing activities:
(i) Press Releases. Subject to each party's prior written
--------------
approval, issue a press release announcing the creation of the strategic
alliance and additional press releases from time to time to publicize other
significant events regarding joint business developments and joint services.
(ii) Marketing Materials. Work together to develop articles or
-------------------
entries regarding WebMD Services for the HBOC marketing materials, including:
Fact Sheets, WebMD Solutions Directory, HBOC Sales Manual and For Your Arsenal
-------------------------- ----------------- ----------------
and other marketing materials released by HBOC from time to time during the term
of this Agreement. HBOC shall include references to the WebMD Services in
marketing presentations, as appropriate, and both parties, in consultation with
each other, shall be responsible for the design and development of marketing
materials for the WebMD Services.
(iii) RFP Responses. Recommend WebMD Services as a solution in
-------------
responses to requests for proposals ("RFP's") from HBOC Customers, provided
WebMD cooperates with HBOC in the preparation of such responses, such
cooperation to include, without limitation, ensuring the accuracy of HBOC's
responses to routine questions regarding WebMD Services contained in RFP's, the
development and update of standard information required to support HBOC
responses to routine questions in such RFP's, the formulation of responses to
non-routine questions in such RFP's, and other support to HBOC's RFP Specialists
as reasonably required in connection with clarifications to RFP responses.
(iv) Demonstrations. WebMD shall provide HBOC a reasonable amount
--------------
of sales support which may include demonstrations of the WebMD Services, either
at an HBOC or HBOC Cus tomer site, and attendance at sales presentations by
HBOC.
(v) Representatives. Each party shall assign a representative who
---------------
shall serve as that party's point-of-contact or facilitator between the parties
on all matters arising under this Agreement. The representatives shall meet on a
mutually agreed upon basis to review and coordinate all activities under this
Agreement, including development, support, marketing and sales, and to amicably
resolve any disputes which may arise under this Agreement.
5
(vi) Sales Training and Assistance. From time to time and at no
-----------------------------
charge to HBOC, upon mutually agreeable terms and conditions, HBOC and WebMD may
organize and hold sales training workshops for the WebMD Services. WebMD agrees
to respond timely and effectively to reasonable requests for assistance from
HBOC in order to promote the license of the WebMD Services by HBOC.
(c) Business Partner Database. HBOC will include information about
-------------------------
WebMD and WebMD Services in HBOC's Business Partner directory and other
materials, as appropriate, for use by HBOC sales representatives, Affiliates,
Distributors and others.
(i) Trade Show Attendance. Upon HBOC's reasonable request, WebMD
---------------------
shall participate with HBOC at vendor fairs and healthcare information industry
trade shows, seminars and selected user group events.
(ii) Web Page Links. As deemed appropriate, each party may
--------------
establish a link on its respective Web site to the Web site of the other party.
4. WebMD RESPONSIBILITIES.
(a) Technical Support for HBOC. WebMD shall provide to HBOC, at no
--------------------------
additional charge, reasonable technical support and consultation from WebMD's
designated offices by way of telephone, bulletin boards or other electronic
means, to assist HBOC in the resolution of problems encountered by HBOC in the
operation, configuration, implementation and support of WebMD Services. Such
support shall include commercially reasonable efforts by WebMD to verify,
diagnose and correct errors and defects in the WebMD Services. WebMD shall serve
as the sole contact point and provide all technical support for the WebMD
Services for HBOC Customers.
(b) Pre-releases. Upon HBOC's reasonable request, WebMD shall provide
------------
newly developed or beta versions ("Pre-releases") of WebMD Services for review,
evaluation, training and planning purposes. WebMD shall make Pre-releases
available to HBOC no later than when WebMD makes the same available to other
third party distributors of the WebMD Services. ANY PRE-RELEASE IS PROVIDED TO
HBOC "AS IS" AND WebMD MAKES NO WARRANTIES AND SPECIFICALLY DISCLAIMS ALL
IMPLIED WARRANTIES REGARDING THE PRE-RELEASE.
(c) Participation in Development. WebMD shall provide HBOC with
----------------------------
frequent communication regarding contemplated New Releases, Enhancements, and
other product directions, including providing HBOC with access to WebMD Services
under development in order that HBOC may fully utilize all the features of the
WebMD Services as early as is technically feasible, all of which shall be
provided to HBOC no later than provided to any other third party distributor of
the WebMD Services. WebMD agrees not to add incremental provider content
solutions without first previewing comparable HBOC solutions.
(d) HBOC Training. WebMD shall provide to HBOC, at no additional
-------------
charge, adequate initial training and re-training from time to time as
reasonably necessary and
6
reasonably requested by HBOC on the use, operation and installation of WebMD
Services. All training shall be conducted by qualified personnel at such
facilities and at such times mutually agreed to by the parties, it being
contemplated that initially WebMD's personnel shall provide such training in one
or more sessions at HBOC's offices. Unless otherwise expressly agreed, travel
and living expenses incurred by each party in connection with the training shall
be the responsibility of the party incurring the expenses.
(e) Professional Services. WebMD shall make certain other professional
---------------------
services available to HBOC beyond the scope of those provided in this Section 4
on mutually acceptable terms and conditions.
(f) Access to Technical Assistance. WebMD shall provide HBOC with any
------------------------------
technical assistance as may be reasonably necessary for any application or
database interfaces or integration between HBOC Services and WebMD Services on
mutually acceptable terms and conditions; however the rates payable by HBOC for
such services shall not exceed WebMD's actual costs incurred in any event.
(g) Continued Development of WebMD Services. Recognizing that a
---------------------------------------
significant portion of a customer's perceived value in Internet-based services
such as the WebMD Services is the developer's continued investment in improved
and enhanced versions thereof, WebMD shall devote appropriate resources to
developing improved and enhanced versions of the WebMD Services (including
versions designed to be compatible with new hardware, database,
presentation/windowing and operating system features and versions with improved
and additional features).
(h) Sale of Line of Business. In the event that HBOC should transfer
------------------------
any line of business whose products or services are dependent on the WebMD
Services, WebMD shall not unreasonably refuse to enter into a distribution
agreement with the buyer of such product or service line on terms comparable to
WebMD's then current terms for such a strategic relationship.
(i) Marketing Literature; Sales Support. WebMD shall provide and
-----------------------------------
distribute a reasonable number of copies of its WebMD Services marketing
materials to appropriate HBOC sales and marketing personnel. WebMD shall
respond timely and effectively to HBOC's reasonable requests for information and
sales assistance.
(j) Advertising and Sponsorship Placement. WebMD shall be responsible
-------------------------------------
for all advertising and sponsorship placements on its Web site.
(k) Customer Support. WebMD shall serve as the sole contact point and
----------------
provide all customer support for the WebMD Services for HBOC Customers.
5. PRICES AND PAYMENT.
(a) Customer Fees. WebMD shall determine the fees to be charged for
-------------
the WebMD Services (subject to adjustment as set forth in Section 13(o) of this
Agreement), and
7
HBOC shall determine the fees to be charged for the HBOC Internet Commerce
Content. The parties shall jointly determine the fees to be charged for services
which they jointly develop. WebMD shall be responsible for billing and
collection of the amounts owed for the WebMD Services. Concurrently with the
incorporation of any HBOC Internet Commerce Content as more fully described in
Section 2(d) of this Agreement, the parties agree to negotiate in good faith an
arrangement for WebMD to bill, collect and remit to HBOC fees, if any, relating
to any such HBOC Internet Commerce Content.
(b) Payment Terms. WebMD shall remit to HBOC incentive commissions per
-------------
paid Subscriber enrolled by HBOC or its Affiliates as set forth on Exhibit F
---------
within thirty (30) days of WebMD's receipt of the monthly fees from such
Subscriber. Subscriber fees pursuant to this Section 5(b) shall be payable by
the Subscriber within thirty (30) days following the end of each calendar month
in which such fees accrue.
(c) WebMD Commissions and Discounts. In the event WebMD provides
-------------------------------
commissions or discounts to any similarly situated third party distributor of
the WebMD Services, HBOC shall be entitled to receive the benefit of such
commission and/or discount offering for as long as that offering is in effect.
WebMD shall notify HBOC of all such transactions for which HBOC either qualifies
or for which it might qualify if it agrees to the conditions of such other
commission and/or discount offering.
(d) Expenses. Except as otherwise specified in this Agreement or
--------
mutually agreed to by the parties, each party shall be solely responsible for
its own travel and out-of-pocket expenses incurred in the performance of its
obligations under this Agreement.
6. PROPRIETARY RIGHTS AND CONFIDENTIALITY.
(a) Ownership and Protection. Each party agrees that it has no
------------------------
interest in or right to use the Proprietary Information of the other except in
accordance with the terms of this Agreement. Each party acknowledges that it may
disclose Proprietary Information to the other in the performance of this
Agreement. The party receiving the Proprietary Information shall (i) maintain it
in strict confidence and take all reasonable steps to prevent its disclosure to
third parties, except to the extent necessary to carry out the purposes of this
Agreement, in which case these confidentiality restrictions shall be imposed
upon the third parties to whom the disclosures are made; (ii) use at least the
same degree of care as it uses in maintaining the secrecy of its own Proprietary
Information (but no less than a reasonable degree of care); and (iii) prevent
the removal of any proprietary, confidential or copyright notices placed on the
Proprietary Information.
(b) Limitation. Neither party shall have any obligation concerning any
----------
portion of the Proprietary Information of the other which (i) is publicly known
prior to or after disclosure hereunder other than through acts or omissions
attributable to the recipient or its employees or representatives; (ii) as
demonstrated by prior written records, is already known to the recipient at the
time of disclosure hereunder, (iii) is disclosed in good faith to the recipient
by a third party having a lawful right to do so; or (iv) is the subject of
written consent
8
of the party which supplied such information authorizing disclosure; or (v) is
required to be disclosed by the receiving party by applicable law or legal
process, provided that the receiving party shall immediately notify the other
party so that it can take steps to prevent its disclosure.
(c) Remedies for Breach. In the event of a breach of this Section 6,
-------------------
the parties agree that the non-breaching party may suffer irreparable harm and
the total amount of monetary damages for any injury to the non-breaching party
may be impossible to calculate and would therefore be an inadequate remedy.
Accordingly, the parties agree that the non-breaching party may be entitled to
temporary, preliminary and permanent injunctive relief against the breaching
party, its officers or employees, in addition to such other rights and remedies
to which it may be entitled at law or in equity.
7. WebMD WARRANTIES.
(a) Warranties of Authority and Title. WebMD hereby warrants and
---------------------------------
represents that (i) it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia and has full power and
authority to enter into and consummate the transactions contemplated in this
Agreement; (ii) the execution, delivery and performance of this Agreement does
not violate the terms of any security agreement, license or any other contract
or written instrument to which WebMD is bound; (iii) the WebMD Services do not
infringe any patent, trademark, copyright or trade secret of a third party, and
(iv) it is not aware of any third party infringing on the rights of WebMD with
respect to the WebMD Services.
(b) Product Warranties. WebMD hereby warrants and represents that
------------------
WebMD Services, including all modifications, Corrections, Enhancements and New
Releases will have the functions and features and perform as described in the
Documentation provided to HBOC or to HBOC Customers by WebMD during the term of
this Agreement. WebMD further warrants that prior to delivery, the WebMD
Services have been audited and tested in accordance with WebMD's internal
quality control processes and that the WebMD Services contains no third party
software which would require HBOC, as a distributor of the WebMD Services, to
agree to any terms and conditions in addition to those set forth in this
Agreement. In the event that the WebMD Services fails to conform to such
warranties, WebMD shall promptly and continuously provide such support as
reasonably necessary to cause the WebMD Services to perform as warranted.
(c) WebMD Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 7
----------------
OR OTHERWISE UNDER THIS AGREEMENT (OR ANY OTHER AGREEMENT BETWEEN THE PARTIES)
OR IN ANY OTHER WebMD MATERIALS OR DOCUMENTATION PROVIDED TO SUBSCRIBERS, WebMD
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, ARISING BY LAW OR CUSTOM,
INCLUDING BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
9
(d) Year 2000 Warranty. WebMD warrants that the occurrence in or use
------------------
by the WebMD Services of dates on or after January 1, 2000 (the "Millennial
Dates") will not have a material adverse effect on the performance of the WebMD
Services with respect to date-dependent data, computations, output or other
functions (including, without limitation, calculating, computing or sequencing),
and the WebMD Services will create, store and generate output data related to or
including the Millennial Dates without errors or omissions.
8. HBOC WARRANTIES.
(a) Warranties of Authority. HBOC hereby warrants and represents that
-----------------------
(i) it is a corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware and has full power and authority to
enter into and consummate the transactions contemplated in this Agreement; and
(ii) the execution and performance of this Agreement does not violate the terms
of any security agreement, license or any other contract or written instrument.
(b) HBOC Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 8(b)
---------------
OR OTHERWISE UNDER THIS AGREEMENT (OR ANY OTHER AGREEMENT BETWEEN THE PARTIES)
HBOC DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, ARISING BY LAW OR
CUSTOM, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
9. INTELLECTUAL PROPERTY INDEMNIFICATION. WebMD shall indemnify, defend
and hold harmless HBOC, its Affiliates and Distributors and their officers,
directors, employees agents and affiliates (collectively, for purposes of this
Section 9, "HBOC Persons") from all damages, liabilities and expenses (and all
legal costs including reasonable attorneys fees, court costs, expenses and
settlements resulting from any action or claim) arising out of, connected with
or resulting in any way from (i) any allegation that the authorized possession,
distribution or use (by HBOC, its Affiliates or Distributors) in a manner that
is in compliance with this Agreement and the terms and conditions for the use of
the WebMD Services of WebMD Services infringes a patent, trademark, copyright,
trade secret or other intellectual property right of a third party; and (ii) the
use of WebMD Services (by HBOC, its Affiliates or Distributors) in a manner that
is in compliance with the terms and conditions for the use of the WebMD
Services. If any such claim or proceeding arises, HBOC Persons seeking
indemnification hereunder shall give timely notice of the claim to WebMD after
they it receive actual notice of the existence of the claim. WebMD shall have
the option, at its expense, to employ counsel reasonably acceptable to HBOC
Persons to defend again such claim and to compromise, settle or otherwise
dispose of the claim; provided, however, that no compromise or settlement of any
claim admitting liability of or imposing any obligations upon HBOC Persons may
be effected without the prior written consent of HBOC Persons. In addition, and
at the option and expense of WebMD, WebMD may, at any time after any such claim
has been asserted, and shall, in the event any WebMD Services are held to
constitute an infringement, either procure for HBOC Persons the right to
continue using the WebMD Services, or replace or modify the WebMD Services so
that they become non-infringing,
10
provided that such replacement or modified WebMD Services have the same
functional characteristics as the infringing WebMD Services, or, if the prior
two (2) remedies are commercially impractical, refund to HBOC all fees, costs
and charges paid by HBOC to WebMD for the WebMD Services and any other WebMD
Services reasonably rendered ineffective as the result of said infringement.
HBOC shall cooperate fully in such actions, making available books or records
reasonably necessary for the defense of such claim. If WebMD refuses to defend
or does not make known to HBOC Persons its willingness to defend against such
claim within ten (10) days after it receives notice thereof, then HBOC Persons
shall be free to investigate, defend, compromise, settle or otherwise dispose of
such claim in its best interest and incur other costs in connection therewith,
all at the expense of WebMD.
10. LIMITATION OF LIABILITY.
(a) Exclusion of Consequential Damages. NEITHER PARTY WILL BE LIABLE
----------------------------------
TO THE OTHER FOR ANY CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES, WHETHER
FORESEEABLE OR UNFORESEEABLE, BASED ON CLAIMS OF THE OTHER PARTY OR ITS CLIENTS,
CUSTOMERS OR SUBSCRIBERS (INCLUDING WITHOUT LIMITATION CLAIMS FOR GOODWILL, LOST
PROFITS OR USE OF MONEY) ARISING OUT OF BREACH OF EXPRESS OR IMPLIED WARRANTIES,
BREACH OF CONTRACT, MISREPRESENTATION, NEGLIGENCE, STRICT LIABILITY, IN TORT OR
OTHERWISE, IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, EXCEPT ONLY IN
THE CASE OF PERSONAL INJURY WHERE AND TO THE EXTENT THAT APPLICABLE LAW REQUIRES
SUCH LIABILITY; PROVIDED, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL IMPAIR OR
LIMIT WebMD'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 9 OF THIS AGREEMENT.
(b) Limitation of HBOC's Obligations. HBOC reserves the right to
--------------------------------
withhold service or otherwise cease performance of its obligations hereunder
with respect to any HBOC Customer which is found by HBOC to be in default or
breach of any agreement with HBOC. Upon such cessation of services, HBOC shall
be relieved of its performance obligations contained in this Agreement with
respect to such HBOC Customer, and shall not be found to be in breach of this
Agreement by WebMD. HBOC's aggregate liability to WebMD for damages concerning
performance or non-performance by HBOC or in any way related to the subject
matter of this Agreement, regardless of whether the claim for such damages is
based on contract or tort, shall not exceed the amount received by WebMD from
HBOC Customers during the previous twelve (12) months for the WebMD Services
giving rise to such claim.
11. TERMINATION; DISPUTE RESOLUTION.
(a) Term. This Agreement shall commence on the Effective Date and
----
shall continue in full force and effect for a period of three (3) years
("Initial Term"), unless earlier terminated as provided for below. Thereafter,
this Agreement will automatically renew for successive terms of one (1) year
each (each, a "Renewal Term"). Either party may terminate
11
this Agreement without cause at the end of the Initial Term or any Renewal Term
by providing at least nine (9) months prior written notice to the other party.
(b) Early Termination. Either party may terminate this Agreement
-----------------
immediately by notice to the other party upon the occurrence of any of the
following events of default by the other party:
(i) The other party fails to observe, perform or fulfill any of
its obligations or warranties (other than confidentiality obligations) under the
Agreement and fails to cure such default within thirty (30) days after the non-
defaulting party gives written notice of such failure;
(ii) The other party fails to observe, perform or fulfill any
confidentiality obligation imposed hereunder and fails to cure such default
within ten (10) days after the non-defaulting party gives notice of such
failure;
(iii) The other party's business is liquidated, dissolved or
suspended;
(iv) The other party is prevented from performing any of its
material obligations hereunder for more than ninety (90) days due to an event
beyond its reasonable control as described in Section 13(k); or
(v) Any representation or warranty made herein by the other party
is false or misleading in any material respect as of the date on which it was
made or becomes false or misleading in any material respect at any time
thereafter.
(c) Termination by HBOC. HBOC may, in its reasonable discretion,
-------------------
terminate this Agreement upon ninety (90) days written notice by providing
notice to WebMD upon the occurrence of a change in the direct or indirect
ownership or control of WebMD which in HBOC's reasonable opinion may adversely
affect HBOC's rights, goodwill, HBOC Customer relationships or competitive
position.
(d) Obligations After Expiration or Termination. Upon the expiration
-------------------------------------------
or termination of this Agreement for any reason:
(i) Except as otherwise specified below in clause (ii), each
party will promptly cease using and destroy or return to the other party all
advertisements and promotional materials that bear a trademark of the other
party and all Proprietary Information of such other party.
(ii) WebMD will continue to deliver the WebMD Services to HBOC
Customers, subject to their obligation to make timely payment therefor, until
the expirations or terminations of their respective Subscription Agreements, and
will continue to pay HBOC all incentive commissions set forth on Exhibit F
---------
attached hereto earned with respect to such HBOC Customers.
12
(iii) WebMD shall continue to perform all applicable warranty and
technical support and other obligations regarding the WebMD Services in
accordance with the provisions of this Agreement until such time as the last
HBOC Customer Subscription Agreement expires or terminates.
(e) Survival. The provisions of the Agreement which by their nature
--------
are intended to survive termination or expiration of this Agreement shall
survive expiration or termination of this Agreement.
(f) Dispute Resolution. In the event of a dispute between the parties
------------------
and for which dispute the parties are unable to reach a mutually agreeable
resolution, the dispute shall be submitted to arbitration under the commercial
arbitration rules of the American Arbitration Association then in effect. There
shall be one arbitrator mutually agreed to by both parties; such arbitrator
shall have experience in the area of controversy. After the hearing, the
arbitrator shall decide the controversy and render a written decision setting
forth the issues adjudicated, the resolution thereof and the reasons for the
award. The award of the arbitrator shall be conclusive. Payment of the expenses
of arbitration, including the fee of the arbitrator, shall be assessed by the
arbitrator based on the extent to which each party prevails.
12. EXCLUSIVITY.
(a) During the term of this Agreement, WebMD agrees that it shall not
grant a license to market the WebMD Services in the Territory to any of the
entities listed on Exhibit G attached hereto, or to any entity or person that
---------
controls or is controlled by, directly or indirectly, an entity listed on
Exhibit G, except upon HBOC's prior written approval. The exclusivity rights
---------
granted pursuant to this Section 12(a) shall be subject to attainment of the
WebMD gross revenue targets as set forth on Exhibit H attached hereto within the
---------
respective time periods set forth therein. If HBOC fails to meet either of such
targets, WebMD shall provide written notice to HBOC within thirty (30) days
after each such failure. HBOC shall then have a cure period of one hundred
eighty (180) days following (i) March 31, 2000 to meet the first target as set
forth in Section 1 of Exhibit H and to bring current the pro rata portion of the
---------
second target as set forth in Section 2 of Exhibit H; and (ii) March 31, 2001 to
---------
meet the second target as set forth in Section 2 of Exhibit H.
---------
(b) During the term of this Agreement, HBOC agrees that it shall not
enter into an agreement to market Internet-based communications and information
services in the Territory which are provided or distributed by any of the
entities listed on Exhibit I attached hereto, or to any entity or person that
---------
controls or is controlled by an entity listed on Exhibit I, except upon WebMD's
---------
prior written approval. The exclusivity rights granted pursuant to this Section
12(b) shall be subject to attainment of the WebMD gross revenue targets as set
forth on Exhibit J attached hereto within the respective time periods set forth
---------
therein. If WebMD fails to meet either of such targets, WebMD shall provide
written notice to HBOC within thirty (30) days after each such failure. WebMD
shall then have a cure period of one hundred eighty (180) days following (i)
March 31, 2000 to meet the first target as set forth in Section 1 of Exhibit J
---------
and to bring current the pro rata portion of the second target as set forth in
Section 2
13
of Exhibit J; and (ii) March 31, 2001 to meet the second target as set forth in
---------
Section 2 of Exhibit J.
---------
(c) If either party fails to meet its respective targets as set forth
on Exhibit H and Exhibit J attached hereto within the respective time periods
--------- ---------
set forth therein, including the cure periods specified in this Section 12,
neither party will be bound by the exclusivity provisions set forth in this
Section 12.
(d) For purposes of this Section 12, "Control" means the ownership of
at least a majority of the voting interests of an entity listed on Exhibit G and
---------
Exhibit I attached hereto.
---------
13. MISCELLANEOUS PROVISIONS.
(a) Independent Contractor. It is expressly agreed that WebMD and HBOC
----------------------
are acting under this Agreement as independent contractors, and the relationship
established under this Agreement shall not be construed as a partnership, joint
venture or other form of joint enterprise. Neither party is authorized to make
any representations or create any obligation or liability, expressed or implied,
on behalf of the other party, except as may be expressly provided for in this
Agreement.
(b) Comparable Terms. The fees charged HBOC Customers by WebMD for
----------------
WebMD Services and any non-price terms imposed shall not at any time be less
favorable than any price or non-price terms offered by WebMD to customers of any
third party which markets the WebMD Services in comparable volumes. In the event
that WebMD offers any third party distributor of the WebMD Services more
favorable price or non-price terms than those offered hereunder to HBOC, the
WebMD shall so notify HBOC, and the more favorable terms shall be immediately
extended to HBOC.
(c) Access to Books and Records. The parties shall keep complete,
---------------------------
accurate and up-to-date books and records in accordance with generally accepted
accounting principles and sound business practices covering all transactions
relating to this Agreement. Either party and/or its authorized representatives
shall upon reasonable notice have the right (not more than once annually) to
inspect, audit, and/or copy such records in order to determine whether all
provisions of this Agreement have been met. The parties agree that all
information and records obtained in such audit shall be considered Proprietary
Information. This right to audit shall be available to either party for up to
two (2) years following the termination of this Agreement.
(d) Omnibus Reconciliation Act of 1980. If the provisions of Section
----------------------------------
952 of the Omnibus Reconciliation Act of 1980, as amended (currently codified at
42 U.S.C. l395x(v)1(I)), are or become applicable to this Agreement, then, until
the expiration of four (4) years after the furnishing of services pursuant to
this Agreement, WebMD shall, upon written request, make available to the
Secretary of Health and Human Services, the U.S. Comptroller General, or any
other duly authorized representative of the federal government, the contracts
and books, documents and records of WebMD that are necessary to certify the
nature and extent of costs related to this Agreement.
14
(e) Compliance with Laws. WebMD, its employees and agents shall comply
--------------------
with applicable federal, state and local laws, ordinances, regulations and
codes, including the identification and procurement of required permits
certificates, approvals and inspections, in the performance of this Agreement.
(f) Export Assurance. HBOC hereby acknowledges and agrees that it will
----------------
first obtain any export license or approval required by the United States
Department of Commerce pursuant to Section 370 of the Export Administrative
Regulation prior to exporting the WebMD Services.
(g) Headings. The headings of the paragraphs of this Agreement are for
--------
convenience only and shall not be a part of or affect the meaning or
interpretation of this Agreement.
(h) Exhibits. This Agreement incorporates the attached Exhibits and
--------
any subsequent Exhibits or schedules referencing this Agreement.
(i) Non-Solicitation of Employees. During the term of this Agreement
-----------------------------
and for a period of one (1) year thereafter, each party agrees that without the
other party's prior written consent neither it nor its Affiliates shall solicit,
hire or otherwise retain as an employee or independent contractor any person who
during the previous twelve (12) months was an employee of the other party.
Notwithstanding the foregoing, nothing in this Section 13(i) shall be construed
to prohibit one party from hiring any employee of the other party who, without
solicitation or recruitment by the hiring party, responds to any general
advertisement for employment in a newspaper or otherwise.
(j) Assignment. This Agreement and any interest hereunder shall inure
----------
to the benefit of and be binding upon the parties and their respective
successors, legal representatives and permitted assigns. Upon prior notice to
the other party, either party may assign this Agreement (i) to any legal entity
in connection with the merger or consolidation of the assigning Party into such
entity or the sale of all or substantially all of the assets of the assigning
Party to such entity; or (ii) to any direct or indirect subsidiary of the
assigning party in connection with any corporate reorganization. Except as
stated in the previous sentence, neither party may assign or delegate this
Agreement without the other party's prior written consent, which consent shall
not be unreasonably withheld. Any attempt to assign, delegate or otherwise
transfer the Agreement in violation of this Section 13(j) is voidable by the
other party.
(k) Force Majeure. Neither party shall be responsible or considered in
-------------
breach of this Agreement for any delay or failure in the performance of any
obligation of this Agreement to the extent that such failure or delay is caused
by acts of God, fires, explosions, labor disputes, accidents, civil
disturbances, material shortages or other similar causes beyond its reasonable
control, even if such delay or failure is foreseeable; provided, however, that
the non-performing party provides notice of such cause preventing or delaying
performance and resumes its performance as soon as practicable and provided
further that the other party may
15
terminate this Agreement upon notice if such non-performance continues for a
period of ninety (90) days.
(l) Governing Law; Statute of Limitations. The validity and
-------------------------------------
construction of this Agreement shall be governed by, subject to and construed in
accordance with the laws of the State of Georgia, excluding its conflicts of law
rules. In the event either party employs attorneys to enforce any right arising
out of or relating to this Agreement, the prevailing party shall be entitled to
recover its reasonable attorneys fees and costs. Any claim arising out of or
relating to this Agreement shall be commenced within one (1) year of the date
upon which the cause of action accrued (or, i
Memorandum of Understanding - WebMD Inc. and Cable News Network Inc.
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