Data Rights Agreement - Healtheon/WebMD Corp. and Quintiles Transnational Corp.
DATA RIGHTS AGREEMENT
THIS DATA RIGHTS AGREEMENT (the "AGREEMENT") is made and entered into
as of May 26, 2000 by and between HEALTHEON/WEBMD CORPORATION, a Delaware
corporation ("HEALTHEON"), and QUINTILES TRANSNATIONAL CORP., a North Carolina
corporation ("QUINTILES").
References in this Agreement to "schedules" refer to the documents
attached as schedules to this Agreement, all of which form part of this
Agreement; and unless otherwise indicated, references to "articles" or
"sections" refer to the corresponding numbered articles and sections of this
Agreement. As used in the body of this Agreement, the term "Healtheon" shall be
deemed to include Healtheon and all of its Affiliates (as defined in Article I
below).
BACKGROUND
(a) Quintiles provides product development and
commercialization solutions, healthcare informatics services, and healthcare
policy consulting to the healthcare industry worldwide.
(b) Healtheon is applying advanced Internet technology to
enable healthcare providers and consumers to interact with each other and the
institutions of healthcare online.
(c) Healtheon and Quintiles are parties to an Agreement
and Plan of Merger dated as of January 22, 2000 (the "MERGER AGREEMENT")
pursuant to which they have agreed, among other things, for Quintiles' wholly
owned subsidiary Envoy Corporation ("Envoy") to become a wholly owned subsidiary
of Healtheon by merger (the "ENVOY MERGER").
(d) As a principal component of the transactions
surrounding the Merger Agreement, Quintiles desires to secure the right and
license from Healtheon, effective upon consummation of the Envoy Merger, to
develop and commercialize Data Products based on data available to Healtheon by
virtue of Healtheon's Transaction Business (including without limitation that
acquired through Envoy) and other healthcare businesses, all as provided below.
NOW, THEREFORE, in consideration of their respective
agreements set forth in this Agreement and of other good and valuable
consideration, the receipt and legal sufficiency of which they acknowledge, and
intending to be legally bound, Healtheon and Quintiles agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the respective meanings set forth below:
<PAGE> 3
(a) "ACCESS SPECIFICATIONS" means the schedule, method,
medium, format, structure, organization, archival, mapping, and other
logistical, technical, legal, and other parameters by which Healtheon will
provide Quintiles electronic access to and copies of the Licensed Data. The
Access Specifications will be determined by the parties and may be modified from
time to time pursuant to Section 2.2(a).
(b) "AFFILIATE" of a Person means a Person controlling,
controlled by or under common control with such Person at any time as of or
after the date of this Agreement and, with respect to Healtheon, shall include
WebMD International, LLC, Healtheon's international joint venture with an
affiliate of The News Corporation Limited.
(c) "CONFIDENTIAL INFORMATION" means and includes all
information disclosed under this Agreement by either party to the other (subject
to the exceptions defined below), including without limitation all business and
product plans, marketing information, and other business information so
disclosed; provided, however, that the Licensed Data shall constitute
Confidential Information of Healtheon except as and to the extent reflected in
Data Products commercialized by Quintiles under authority of this Agreement.
Notwithstanding the foregoing, the following shall not constitute Confidential
Information: information which (1) is known by the receiving party prior to
disclosure by the disclosing party; (2) is or becomes available publicly other
than as a result of a breach of this Agreement; (3) is developed independently
by the receiving party without the use of or reliance on the disclosing party's
Confidential Information; or (4) is provided to the receiving party by a third
party under no duty of confidentiality to the disclosing party.
(d) "DATA PRODUCT" means any product created for the
purpose of sale or licensing to one or more third Persons which is based on the
selective or strategic extraction, compilation, assimilation, manipulation,
analysis, and/or presentation of aggregate De-Identified Data of the type that
comprises the Licensed Data, with a view toward creation of a derivative
compilation of data (or analytical conclusions thereon) having commercial
utility. The term Data Product also shall include the sale or licensing of
Licensed Data in a raw format data feed or any other form.
(e) "DE-IDENTIFICATION" means the process of removing,
coding, encrypting or otherwise eliminating or concealing the data elements that
makes Licensed Data individually identifiable to a particular patient or
consumer, and includes the removal or concealing of any data elements
specifically required by Law or contractual obligation to be removed or
concealed to make Licensed Data not individually identifiable as to the patient
or consumer or other elements of the Licensed Data that are required by law to
be de-identified.
(f) "DE-IDENTIFIED DATA" means Licensed Data that has
been through the De-Identification process. For the avoidance of doubt,
De-Identified Data only de-identifies data elements that make the Licensed Data
individually identifiable to a particular patient or consumer (unless other
elements of the Licensed Data are required by Law to be de-identified), and
those data elements (other than patient or consumer identifying data) of the
Licensed Data that are not required to be de-identified constitute De-Identified
Data notwithstanding their identifiable format. By way of example, and without
limitation, specific identifiable data such as the names of specific pharmacies,
physicians, hospitals and payors constitute De-Identified Data once the
corresponding Licensed Data has been through the De-Identification process,
provided that such items are not
2
<PAGE> 4
required by Law to be de-identified. Licensed Data will also be considered
De-Identified Data for purposes of this Agreement if the particular data set
does not contain patient or consumer identifying data or any data elements that
require de-identification pursuant to applicable Law and, accordingly, such data
set does not go through the De-Identification process.
(g) "EFFECTIVE TIME" means the effective time of the
Envoy Merger, determined according to the Merger Agreement.
(h) "FIELD OF USE" means on a worldwide basis the
development of Data Products based on or including Licensed Data and
commercialization or delivery of such Data Products to (1) the pharmaceutical
industry, including without limitation pharmaceutical, biotechnology, genomics,
and other companies in the business of research, development, production,
manufacturing, marketing, sale, distribution, or other commercialization of
pharmaceutical products or medical devices, as well as to foundations,
government agencies, universities, private individuals, or others engaged in
research regarding drug efficacy, epidemiology, disease control, diagnostic
patterns, and similar areas of inquiry that in each case are related to
pharmaceutical use and medical outcomes, and (2) physicians, patients,
hospitals, health maintenance organizations, governmental entities, and other
healthcare consumers, providers, pharmacies, and payors.
(i) "LAW" means any United States federal, state, local
or foreign law, statute, regulation, ordinance, order, judgment, decree, rule or
other applicable governmental or judicial restriction or requirement, and any
judicial or administrative interpretation or determination with respect thereto.
(j) "LICENSED DATA" means all of the following
transmitted to, from, or through or otherwise received, possessed or controlled
from time to time by or for the benefit of Healtheon to the extent Healtheon is
not prohibited by applicable Law or contractual arrangement from providing such
data to Quintiles under this Agreement, regardless of the medium of or
circumstances giving rise to transmission: (1) Transaction Data and (2) other
data concerning (A) the health, medical condition, or treatment of actual,
specific people, (B) the behavior of actual, specific people intended to treat,
maintain, or otherwise influence their health or medical conditions, or (C) the
providing of health care or reimbursement or payment therefor with respect to
actual, specific physicians, hospitals, health maintenance organizations,
governmental entities, and other providers, pharmacies, and payors.
(k) "PERSON" means any person or entity.
(l) "STEERING COMMITTEE" means the oversight committee
formed pursuant to Section 7.1.
(m) "TRANSACTION BUSINESS" refers to the business of
processing or facilitating the processing of transactions, of the following
type: reimbursement, indemnity, or payment or other related claims or encounters
by and among physicians, hospitals, health maintenance organizations,
governmental entities, and other providers, pharmacies, and payors, as well as
eligibility, adjudication, referrals, formulary checks, and similar
transactions, irrespective of the manner, mode, communications method or
platform through which such business is conducted from time to time, and giving
effect to evolutionary or other developments in the scope of and manner in which
such
3
<PAGE> 5
business generally is conducted going forward. Without limiting the foregoing,
the term "Transaction Business" includes the business conducted as of the date
of this Agreement (and evolutions thereof) by Envoy and by Healtheon's Affiliate
MedeAmerica, Inc.
(n) "TRANSACTION BUSINESS SERVICE AGREEMENT" means an
agreement to render Transaction Business services for a customer.
(o) "TRANSACTION DATA" means all data transmitted to,
from, or through or otherwise received or possessed by or for the benefit of
Healtheon from transactions processed or facilitated in the conduct of its
Transaction Business.
ARTICLE II
DATA PRODUCTS
2.1 LICENSE.
(a) Grant. Subject to the terms and conditions of this
Agreement, Healtheon hereby grants Quintiles, effective as of the Effective
Time, an irrevocable, perpetual, worldwide right and license to use the Licensed
Data (after its De-Identification according to Section 2.2(a)(2)) to develop,
license, sell, and otherwise commercialize Data Products, and in connection
therewith to receive, collect, possess, process, combine, analyze, and transfer
the Licensed Data to third parties. This license includes the right to
sublicense, subject to Section 7.9 below.
(b) Exclusivity. Subject to Section 2.1(d) below,
Healtheon shall not (i) grant any right or license, whether exclusive or
non-exclusive, to any Person to use the Licensed Data in the Field of Use, or
(ii) engage directly or indirectly in the development or commercialization of
Data Products in the Field of Use based on or including as a component thereof
the Licensed Data. Nothing in this Agreement shall preclude Healtheon from using
or analyzing Licensed Data solely for its internal purposes or for the
development or marketing of products or services that do not themselves
constitute Data Products. Nothing in this Agreement shall preclude Healtheon
from providing to those Persons from whom Healtheon has acquired Licensed Data
(or the Persons in the same transaction chain) the same Licensed Data that was
acquired from such Persons, which may be processed, compiled or analyzed, but
which shall not be aggregated with the Licensed Data acquired from any other
Person.
(c) Exclusivity and Royalty Dispute; Future Use of
Licensed Data. The parties acknowledge and agree that there will be ambiguities
concerning whether certain activities constitute Data Products or produce Gross
Product Revenue or Operating Income from the sale or licensing of Data Products.
Such ambiguities shall be resolved in good faith pursuant to the dispute
resolution process set forth in Article V. If trends in the data product
industry move toward a more significant use of patient or consumer identifiable
data in informatics and other data products, Quintiles may request the Steering
Committee to expand the definition of Data Products to include such patient or
consumer identifiable data products.
(d) Healtheon Affiliates. Healtheon and Quintiles
acknowledge that Healtheon's Affiliates have or will have access to Licensed
Data, and that Healtheon and Quintiles intend for all such Affiliates of
Healtheon to be subject to and bound by this Agreement. In that regard,
Healtheon
4
<PAGE> 6
agrees (1) that Healtheon's representations, warranties, and covenants made
under this Agreement shall be deemed also to include Healtheon Affiliates; and
(2) to cause each Affiliate to comply with Healtheon's obligations under this
Agreement as if parties hereto with obligations coextensive with Healtheon's.
(e) Limited Exceptions to Restrictive Covenant. At its
election, at any time three years after the Effective Date and from time to time
thereafter, Healtheon may propose Data Products for development by Quintiles
based on the Licensed Data for internal use or commercialization by Healtheon.
If Healtheon makes any such proposal in writing to Quintiles, including
certification by Healtheon that Healtheon intends to develop the proposed
product immediately if Quintiles elects not to do so, and Quintiles fails within
the Notice Period (defined below) to confirm for Healtheon in writing that
Quintiles has developed, is developing, or intends to develop a Data Product
substantially functionally comparable to that proposed by Healtheon, or if
Quintiles does not in fact so develop such a Data Product within one year from
the date of Quintiles' confirmation, then in either case Healtheon may develop
and commercialize such proposed Data Product (but no other) itself or with a
party other than Quintiles, and Quintiles' restrictive covenant in subsection
2.1(b) above shall be deemed thereafter to except such development and
commercialization for so long as (but no longer than) Healtheon's development,
internal use, or commercialization effort for such Data Product continues.
Healtheon agrees and acknowledges that its rights arising in this subsection are
not intended to enable broad commercial participation by Healtheon in the Data
Products market, but rather to enable Healtheon to pursue its discrete, isolated
Data Product needs. When used herein, the term Notice Period shall mean (i)
twenty (20) days after actual receipt of Healtheon's written proposal, followed
by (ii) to the extent Quintiles does not respond to such notice in writing
within the twenty-day period, ten (10) days after a follow-up written notice
indicating that Healtheon has not received a response to the initial written
proposal.
2.2 ACCESS TO LICENSED DATA.
(a) Determination of Access Specifications; Costs.
(1) Promptly after execution of this Agreement,
the parties will determine the Access Specifications. Each of the parties will
cooperate in good faith with the other to modify the Access Specifications
thereafter upon request. If the parties are unable to promptly agree on the
Access Specifications, or changes thereto from time to time, the matter shall be
promptly submitted to the Steering Committee and if it is unable to agree,
Quintiles shall have the right to establish or modify the Access Specifications
in Quintiles' reasonable discretion, provided that the Access Specifications or
changes thereto address Healtheon's reasonable business concerns and delivery of
Licensed Data in accordance therewith does not violate applicable Law or
contractual obligations, and Quintiles agrees to bear any incremental
out-of-pocket expenses related to such changes.
(2) The parties acknowledge and agree that the
Licensed Data provided to Quintiles will be delivered as De-Identified Data. In
this regard, Quintiles and its Affiliates have developed certain computer
software useful for De-Identification of data (such software, as it may be
modified or replaced through internal or third party development, the "Quintiles
De-Identification Software"). Quintiles may require Healtheon to use the
Quintiles De-Identification Software during the De-Identification process,
provided that the use of such software causes the data as delivered
5
<PAGE> 7
hereunder to comply with applicable Law and contractual obligations. Quintiles
will arrange for Healtheon to receive this software and a corresponding license
at no charge, along with reasonable related technical support, solely for the
purpose of fulfilling Healtheon's obligations under this Agreement. If the
Access Specifications require De-Identification through other means, Quintiles
shall pay Healtheon's related costs as provided in subsection (3) below.
(3) Quintiles and Healtheon acknowledge that
Healtheon is not primarily engaged in the business of collecting, preparing,
selling or delivering data as contemplated in this Agreement. Accordingly,
Quintiles shall pay to Healtheon all reasonable out-of-pocket expenses incurred
by Healtheon in conforming the Licensed Data to the Access Specifications and
delivering the Licensed Data under this Agreement to the extent such costs would
not have been incurred by Healtheon but for this Agreement, including all such
costs of satisfying the quality, accuracy and delivery criteria established in
this Agreement and the Access Specifications. All such amounts shall be paid
within thirty (30) days after invoicing by Healtheon, and all such amounts paid
by Quintiles shall be deemed data acquisition costs for purposes of determining
Quintiles' royalty obligations in Section 2.3.
(b) Access to Licensed Data.
(1) Healtheon will provide Quintiles access to
and copies of the Licensed Data in compliance and conformity with the Access
Specifications at all times as of and after the Effective Time; provided,
however, that Healtheon will not be required to provide Licensed Data solely to
the extent Healtheon is specifically prohibited from doing so by: (A) any
Transaction Business Service Agreement in effect as of the Effective Time
(including without limitation any acquired by Healtheon by virtue of the Envoy
Merger), provided Healtheon complies with the procedures required by Section 2.4
with respect to securing data use rights in current service agreements; (B) any
future Transaction Business Service Agreement (or any amendment to any existing
Transaction Business Service Agreement) or any future request by any existing or
future Transaction Business client to discontinue use of such client's data,
provided Healtheon has complied with the procedures required by Section 2.4 with
respect to securing data use rights in future service agreements; or (C) any
applicable Law, provided Healtheon has complied with the procedures required by
subsection (c) below concerning applicable Laws. For the avoidance of doubt,
Healtheon shall not be entitled to withhold Licensed Data except as and to the
extent specifically provided in subsections (1)(A) - (C) above or in subsection
(d) below concerning defaults in Quintiles' payment obligations.
(2) Quintiles and Healtheon agree to interpret
the data rights provisions in all Envoy Transaction Business Service Agreements
in effect as of the Effective Time in a manner consistent with Envoy's
historical interpretation practices absent a breach of the warranty by Quintiles
in Section 2.5(b)(2), developments in applicable Law or specific requests or
challenges by clients, in which cases Section 2.2(c) or (d) shall apply,
respectively.
(c) Interruptions to Data Stream Due to Applicable Law.
In the event Healtheon reasonably believes that developments to applicable Laws
after the date of this Agreement prohibit or limit Healtheon from providing a
material amount of data that would otherwise be Licensed Data but for the fact
that provision of such data under this Agreement is prohibited by applicable
Law, or that Quintiles breached its representation in Section 2.5(b)(2) below
with respect to current Law such
6
<PAGE> 8
that provision of data hereunder violates current Law, Healtheon will notify
Quintiles immediately in writing of the specific prohibition under applicable
Law and the nature of the corresponding prohibition or limitation and cooperate
in good faith with Quintiles to develop modifications to the Access
Specifications (if appropriate) or take other actions to fulfill the intent of
this Agreement without violating any such Law. Immediately upon such notice (or
on the date such Law takes effect, if later), Healtheon shall be entitled to
suspend providing the Licensed Data to Quintiles under this Agreement solely to
the extent that Healtheon believes in good faith that doing so would violate
such Law. Healtheon shall resume provision of the suspended Licensed Data within
five (5) business days after receiving a reasoned opinion of counsel reasonably
satisfactory to Healtheon, addressed to Quintiles and Healtheon, that providing
such Licensed Data (in the same or in a modified format) would not be prohibited
under applicable Law identified by Healtheon as the basis for suspension, along
with a specific undertaking by Quintiles to indemnify Healtheon from and against
any and all losses, claims, actions, damages, liabilities, costs, and expenses
(including attorneys' fees and expenses) arising from providing such data. In
the event the opinion of counsel provides that the Licensed Data must or should
be provided in modified form, Healtheon shall, at Quintiles' cost, use its
commercially reasonable efforts expeditiously to modify the data accordingly,
and the time period by which Healtheon shall resume providing the data shall be
extended until such modifications can be made.
(d) Limited Remedy for Payment Default. Healtheon shall
be excused from providing Licensed Data under this Agreement for any period
during which Quintiles is in material default of Quintiles' payment obligations
to Healtheon under this Agreement (including obligations to pay costs), provided
that Healtheon will not effect any such interruption (1) without giving
Quintiles at least thirty (30) days' prior written notice of Healtheon's intent
to do so, and (2) if and for so long as Quintiles disputes the alleged default
in good faith (as evidenced by written notice to that effect to Healtheon), pays
any undisputed amounts to Healtheon, and pays any disputed amounts into escrow.
Healtheon will resume providing Licensed Data immediately upon such cure of any
such default and the payment of any reasonable related out-of-pocket expenses
incurred by Healtheon in connection therewith. Healtheon agrees and acknowledges
that the suspension of provision of Covered Data described in this subsection
and recovery of amounts due and costs incurred in connection therewith is
Healtheon's sole and exclusive remedy for any such payment default by Quintiles,
and that no other type of default by Quintiles will entitle Healtheon to
withhold Licensed Data (except with respect to Section 2.2(c) as it relates to
Quintiles' breach of warranty under Section 2.5(b)(2)) or to terminate this
Agreement.
2.3 ROYALTIES.
(a) Definitions. As used in this Section 2.3, the
following capitalized terms shall have the respective meanings set forth below:
(1) "GROSS PRODUCT REVENUES" means Quintiles'
gross recognized revenues through Quintiles' sale and licensing of Data Products
that incorporate Licensed Data during the specified period, determined in
accordance with generally accepted accounting principles consistently applied
("GAAP"), and includes (without limitation) revenues received by Quintiles from
sublicenses. The use by Quintiles of Data Products solely for its internal
purposes or for the development or marketing of products or services that do not
themselves constitute Data Products shall not give rise to Gross Profit Revenue
or Operating Income.
7
<PAGE> 9
(2) "OPERATING INCOME" means the operating
income (before taxes and interest) generated through Quintiles' sale and
licensing of Data Products that incorporate Licensed Data, determined in
accordance with GAAP consistently applied. As soon as practicable after the
Effective Time, the Steering Committee will determine the specific manner in
which to calculate Operating Income.
(b) Payments.
(1) Quintiles will pay Healtheon a royalty in
the range of 20% - 33% of Operating Income. The specific royalty amount shall be
based upon Quintiles' Operating Income as a percentage of Gross Product Revenue,
as set forth on Schedule 2.3(b).
(2) Quintiles will make the payments required by
subsection (1) above on a quarterly (calendar year) basis and accompany each
payment with a statement of Quintiles' corresponding Gross Product Revenues and
Operating Income for the applicable quarter, together with an explanation of
Quintiles' calculation of the corresponding royalties due Healtheon. Quintiles
will make such payments within forty-five (45) days after the end of each
corresponding calendar quarter.
(c) Audits. Quintiles will maintain records reasonably
sufficient to document and record its Gross Product Revenues and Operating
Income; and Healtheon shall have the right to audit Quintiles' books and records
at Healtheon's expense on a confidential and otherwise commercially reasonable
basis to confirm the accuracy of all of the foregoing. Quintiles and Healtheon
will address any apparent payment discrepancy promptly and in good faith, and
the affected party promptly will correct any confirmed mispayment.
(d) Equitable Adjustments. In the event Quintiles pays
Healtheon any royalty in respect of Licensed Data the parties later determine to
have been provided by Healtheon to Quintiles improperly (such as in violation of
applicable Law or any applicable Healtheon service agreement) and as a result
Quintiles has not received or has refunded the related Gross Product Revenue,
Quintiles and Healtheon will determine in good faith an appropriate
corresponding royalty adjustment to be given effect as an offset against future
royalties to or a refund from Healtheon.
(e) Use of Licensed Data. Quintiles will use its
commercially reasonable efforts to incorporate the Licensed Data in all Data
Products that it develops that require the use of data of the type obtained from
the conduct of a Transaction Business, or other data of the type constituting
the Licensed Data.
2.4 DATA USE RIGHTS.
(a) General. Healtheon will undertake or permit Quintiles
to undertake, as the case may be, the procedures described in this Section
relative to avoiding prohibitions or limitations on the provision of Licensed
Data.
(b) Current Service Agreements. Promptly after execution
of this Agreement, Healtheon will identify for Quintiles in writing each of
Healtheon's Transaction Business Service
8
<PAGE> 10
Agreements (other than any obtained by Healtheon as a result of the Envoy
Merger) which prohibit or limit Healtheon's right to provide data of the type
which otherwise would be Licensed Data to Quintiles in the manner and for the
purposes contemplated by this Agreement. Healtheon further agrees to undertake
the access procedures described in subsection (d) below with respect to all such
Transaction Business Service Agreements requested by Quintiles (including any
originating from Envoy), to the end of eliminating or mitigating the
corresponding prohibitions or limitations. Healtheon also will undertake the
procedures described in this subsection with respect to Transaction Business
Service Agreements acquired by Healtheon by virtue of future transactions in
which Persons become Affiliates of Quintiles.
(c) Future Service Agreements. Going forward, Healtheon
will endeavor to avoid including in its Transaction Business Service Agreements
(including both new agreements and any renewals, extensions, or amendments of
any in effect as of the date of this Agreement) any provisions which prohibit or
limit Healtheon from providing data of the type which otherwise would be
Licensed Data to Quintiles in the manner and for the purposes contemplated by
this Agreement provided that doing so does not adversely affect Healtheon's
Transaction Business or other business. Without limiting the foregoing,
Healtheon will notify Quintiles of any Transaction Business Service Agreement
(or related amendment) with an anticipated annual transaction volume in excess
of 500,000 transactions entered into by Healtheon which includes any such
prohibition or limitation and consult with Quintiles (if requested by Quintiles)
to evaluate strategies for eliminating or minimizing the effect of any such
provision. Healtheon will undertake the access procedures described in
subsection (d) below with respect to any such agreement if so requested by
Quintiles. Healtheon will consult with Quintiles concerning the format of
Healtheon's customer proposals and proposed forms of agreement concerning data
use and other strategic matters designed to enable Healtheon to obtain data
suitable for use as Licensed Data without impairing Healtheon's Transaction
Business.
(d) Access Procedure. Whenever requested by Quintiles
under subsection (b) or (c) above after the Effective Time, Healtheon will
cooperate in good faith with Quintiles to enable Quintiles, at its cost and
expense, to negotiate financial or other terms upon which the corresponding
customer will agree not to include in its Transaction Business Service Agreement
provisions prohibiting or limiting Healtheon's right to provide data to
Quintiles in the manner or for the purposes contemplated by this Agreement;
provided, however, that Healtheon shall not be obligated to take any such action
prior to execution of any such agreement, nor to delay execution of any such
agreement to accommodate negotiations by Quintiles with Healtheon's
corresponding customer. Healtheon will provide Quintiles (in confidence) all
relevant information to the extent Healtheon is permitted to do so under
applicable Law and contractual obligations and permit Quintiles to correspond
with the customer party to any such restrictive Transaction Business Service
Agreement.
2.5 WARRANTIES.
(a) Healtheon warrants and covenants to Quintiles that:
(1) Healtheon is duly authorized to enter into
and perform its obligations under this Agreement, and, other than with respect
to any Law or contract which may prohibit or limit Healtheon's right to provide
Licensed Data to Quintiles as contemplated by this Agreement, is free of any
obligation or restriction that would prevent Healtheon from or impair or limit
its right or ability to do so.
9
<PAGE> 11
(2) The collection and accumulation of the
Licensed Data by Healtheon to the date of this Agreement has not violated
applicable Law or any agreement to which Healtheon is a party or by which it is
bound as of the date of this Agreement.
(3) Subject to the effects of being conformed to
the Access Specifications pursuant to Section 2.2(b)(1), the provision of the
Licensed Data by Healtheon to Quintiles pursuant to this Agreement will not
violate the corresponding agreement or arrangement pursuant to which Healtheon
rendered the services giving rise to such item of Licensed Data. All Licensed
Data shall be provided "as is" in the form resulting after Healtheon's
Transaction Business processing, De-Identification, and application of the
Access Specifications.
(4) To Healtheon's actual knowledge, after
general consultation with its legal advisors, but without conducting a
comprehensive investigation, Quintiles' current practices regarding the
collection and accumulation of data of the type comprising the Licensed Data and
its use of such data in Data Products would not violate applicable Law.
(b) Quintiles warrants and covenants to Healtheon that:
(1) Quintiles is duly authorized to enter into
and perform its obligations under this Agreement, and is free of any obligation
or restriction that would prevent Quintiles from or impair or limit its right or
ability to do so.
(2) There is no applicable Law as of the date of
this Agreement, or any material agreement to which Envoy or Quintiles is a party
or by which either is bound as of the date of this Agreement, that will prohibit
the collection and accumulation of data of the type that is Licensed Data under
this Agreement or its use by Quintiles in Data Products,.
(3) Provided that Healtheon's collection and
accumulation of the Licensed Data does not violate applicable Law, the use of
the Licensed Data by Quintiles after the date hereof will not violate applicable
Law as in effect from time to time; and the use of the Licensed Data by
Quintiles after the date hereof will not violate any agreement to which
Quintiles is a party or by which it is bound.
2.6 PRIVACY RELATED ACTIVITIES.
(a) Technical Consultation. Healtheon will cooperate in
good faith with Quintiles, through modifications to the Access Specifications or
otherwise (and subject to Quintiles' expense reimbursement obligations to
Healtheon described in Section 2.2(a)(3)), to develop "best practices" through
which to achieve availability of the Licensed Data to Quintiles, with a view
toward (1) achieving efficient technical processes for the parties and (2)
complying in all respects with applicable Laws concerning the privacy of
healthcare data. Such efforts may include periodic privacy compliance audits
upon the request of either party made no more frequently than once every
thirty-six (36) months.
(b) Public Policy and Public Relations Cooperation.
Healtheon and Quintiles also will cooperate in good faith to evaluate applicable
Laws concerning the privacy or collection of
10
<PAGE> 12
healthcare data or otherwise relevant to the transactions contemplated by this
Agreement and, where appropriate and mutually beneficial, to influence the
legislative process and public policy and perception on a coordinated basis
through lawful and appropriate means determined from time to time, including
without limitation public relations activities. Healtheon and Quintiles will
determine in good faith how to allocate their respective expenses for these
activities.
(c) Ongoing Adaptation. Healtheon and Quintiles agree to
cooperate in good faith on an ongoing basis to adapt the parties' arrangements
under this Agreement to accommodate future changes in applicable Laws, relevant
technology, or other changes in the Data Products industry or environment.
2.7 Distribution. Quintiles will not distribute Data Products on
the Internet other than through Healtheon without mutual agreement, not to be
unreasonably withheld.
ARTICLE III
INDEMNIFICATION
3.1 HEALTHEON. Healtheon shall defend, indemnify and hold
Quintiles harmless, to the full extent permitted in law or equity, from and
against any and all losses, claims, actions, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and expenses), net of any
corresponding insurance proceeds received by any indemnified party
(collectively, "LOSSES"), proximately caused by or resulting from (i) any
misrepresentation or non-fulfillment of any representation, warranty, covenant,
obligation or agreement by Healtheon contained in or made pursuant to this
Agreement, (ii) the negligence or willful misconduct of Healtheon or any of its
employees, agents, or representatives, and (iii) the enforcement by Quintiles of
its rights pursuant to this Section 3.1, and any litigation, proceeding or
investigation relating to any of the foregoing.
3.2 QUINTILES. Quintiles shall defend, indemnify and hold
Healtheon harmless, to the full extent permitted in law or equity, from and
against any and all Losses proximately caused by or resulting from (i)
Quintiles' use of the Licensed Data, (ii) any misrepresentation or
non-fulfillment of any representation, warranty, covenant, obligation or
agreement by Quintiles contained in or made pursuant to this Agreement, (iii)
the negligence or willful misconduct of Quintiles or any of its employees,
agents, or representatives, and (iv) the enforcement by Healtheon of its rights
pursuant to this Section 3.2, and any litigation, proceeding or investigation
relating to any of the foregoing.
3.3 PROCEDURES. Whenever either party shall become aware that a
claim by a third party has been asserted or threatened which, if valid, would
subject the other party to an indemnity obligation under this Agreement, the
indemnified party promptly shall notify the indemnifying party in writing of
such claim in sufficient detail to enable the indemnifying party to evaluate the
claim. The indemnifying party or its designee will have the right, but not the
obligation, to assume the defense of such claim. If an indemnifying party fails
to assume the defense of such claim within fifteen (15) days after receipt of
notice of the claim, the indemnified party will (upon delivering written notice
to such effect to the indemnifying party) have the right to undertake, at the
indemnifying party's cost and expense, the defense, compromise or settlement of
such claim, subject to the right of the indemnifying party to assume the defense
of such claim at any time prior to settlement, compromise, or final
determination thereof, and provided, however, that the indemnified
11
<PAGE> 13
party shall not enter into any such compromise or settlement without the written
consent of the indemnifying party. In the event the indemnified party assumes
the defense of the claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise, or
settlement. The indemnifying party shall not be liable for any settlement of any
claim effected without its consent.
ARTICLE IV
CONFIDENTIALITY
Each of Quintiles and Healtheon will hold the other party's
Confidential Information in confidence and refrain from using any such
Confidential Information other than for purposes of exercising its respective
rights and performing its respective obligations under this Agreement.
Notwithstanding the foregoing, each party will be permitted to disclose the
other party's Confidential Information as and to the extent required by
applicable law, provided the party required to make any such disclosure notifies
the party whose Confidential Information is required to be disclosed as far in
advance of the required disclosure as is reasonably practicable under the
circumstances and cooperates with such party (if reasonably requested to do so,
and at the requesting party's expense) to secure confidential treatment for the
required disclosure.
ARTICLE V
RELATIONSHIP MANAGEMENT
5.1 STEERING COMMITTEE. Promptly after execution of this
Agreement, the parties will organize a six-member Steering Committee comprised
of three designees from each party to provide open lines of communication and
facilitate, coordinate, and oversee the performance of the parties' respective
obligations under this Agreement. The initial Steering Committee designees shall
be Jim Bierman and John Russell and Connie Moreadith from Quintiles and Jack
Dennison, Pavin Nigram and Steve Simpson from Healtheon and shall be the same
Steering Committee under the Internet Product Development and Marketing
Agreement between the parties. Each party shall be entitled to replace its
designees to the Steering Committee by written notice to the other party. The
Steering Committee shall convene on such schedule (but not less frequently than
quarterly) and employ such procedures as it shall determine from time to time in
good faith, and, except as otherwise specifically required by this Agreement,
shall act by unanimous consent.
5.2 DISPUTE RESOLUTION.
(a) Executive Review. Each party shall have the right, at
any time after good faith efforts have failed to resolve any dispute, difference
or question concerning this Agreement at the Steering Committee level, to
request review of the matter by the chief executive officer of each party (an
"EXECUTIVE REVIEW"). Either party shall exercise its right to request an
Executive Review by delivering written notice to that effect to the other party.
The chief executive officers of each party shall meet in person or by telephone
within ten (10) days of the date such notice is given and shall engage in good
faith efforts to resolve the dispute within ten (10) days after such meeting.
12
<PAGE> 14
(b) Mediation. In the event of a dispute which cannot be
resolved by Executive Review, either party may commence a non-binding mediation
to resolve the dispute by providing written notice to the other party (a
"MEDIATION NOTICE") informing the other party of the dispute and the issues to
be resolved and containing a list of five (5) recommended individuals to serve
as the mediator. Within ten (10) business days after the receipt of a Mediation
Notice, the other party shall respond by written notice to the party initiating
mediation, providing a list of five (5) recommended individuals to serve as the
mediator and which adds additional issues to be resolved. The recommended
mediators shall be individuals with experience in the healthcare electronic data
interchange industry and shall not be any employee, director, shareholder or
agent of either party or an Affiliate of either party, or otherwise involved
(whether by contract or otherwise) in the affairs of either party. If, within
twenty (20) business days after receipt of the Mediation Notice, the parties
shall have been unable to agree upon an individual to serve as mediator, or to
the extent the mediator selected by the parties is unable to resolve the
dispute, the dispute will be settled by final and binding arbitration conducted
in the manner described in subsection (c) below. If, within twenty (20) business
days after receipt of the Mediation Notice, the parties shall have agreed upon
an individual to serve as mediator, the mediator shall conduct a mediation in an
effort to resolve the dispute, employing commercially reasonable procedures
selected by the mediator in consultation with the parties, completing such
mediation no later than sixty (60) days after engagement.
5.3 REMEDIES.
(a) Each of Healtheon and Quintiles acknowledges that its
failure to abide by the provisions of this Agreement (and in particular
Healtheon's obligations under Article II) would cause immediate and irreparable
harm to the other, for which legal remedies would be inadequate. Therefore, in
addition to any legal or other relief to which either party may be entitled by
virtue of the other party's failure to abide by these provisions, the injured
party shall be entitled to equitable relief, including but not limited to
preliminary and permanent injunctive relief and specific performance, for the
other party's actual or threatened failure to abide by these provisions.
(b) Notwithstanding the procedures described in Section
5.2, each party shall be entitled to seek and obtain preliminary injunctive
relief in any court of competent jurisdiction for the other party's actual or
threatened breach of this Agreement, pending execution thereafter of the dispute
resolution procedures described in Section 5.2.
ARTICLE VI
TERM AND TERMINATION
TERM. The term of this Agreement shall be perpetual. This Agreement may
not be terminated except by the mutual written agreement of Healtheon and
Quintiles.
13
<PAGE> 15
ARTICLE VII
MISCELLANEOUS
7.1 RELATIONSHIP OF PARTIES. Healtheon and Quintiles agree that
their legal relationship to one another under this Agreement is as independent
contractors. Nothing in this Agreement shall be deemed to create a joint
venture, agency, partnership, or other relationship between Healtheon and
Quintiles, and neither shall have any power by virtue of this Agreement to enter
into any contract or commitment on behalf of the other or to bind the other in
any respect whatsoever.
7.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement (referring specifically to
this Agreement) of Healtheon and Quintiles.
7.3 SEVERABILITY. In the event one or more of the provisions of
this Agreement or the application thereof to any circumstance are found to be
invalid or unenforceable to any extent by a court with jurisdiction, the
remaining provisions shall continue in full force and effect. If any provision
of this Agreement is found to be so broad as to be unenforceable, such provision
shall be interpreted to be only as broad as is enforceable.
7.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of a change of address shall be effective
only upon receipt thereof). Any such notice shall be effective upon receipt, if
personally delivered or telecopied, or one day after delivery to a courier for
next-day delivery.
If to Quintiles, to:
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 200
Durham, North Carolina 27703-8411
Telecopy Number: (919) 998-2177
Attention: John S. Russell, Senior Vice President,
General Counsel
with a copy to:
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan,
L.L.P.
Post Office Box 2611
Raleigh, North Carolina 27602-2611
Telecopy Number: (919) 821-6800
Attention: Gerald F. Roach
14
<PAGE> 16
If to HWMD, to:
Healtheon/WebMD Corporation
400 The Lenox Building
3399 Peachtree Road NE
Atlanta, Georgia 30326
Telecopy Number: (404) 479-7603
Attention: Jack Dennison, Executive Vice President,
General Counsel
with a copy to:
Alston & Bird, L.L.P.
1211 East Morehead Street
P.O. Drawer 34009
Charlotte, North Carolina 28234-4009
Telecopy Number: (704) 334-2014
Attention: H. Bryan Ives III
7.5 DESCRIPTIVE HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.6 ENTIRE AGREEMENT. This Agreement (including its various
Schedules) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties with
respect to its subject matter.
7.7 GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and construed in accordance with the laws of the State of North Carolina,
without giving effect to the provisions thereof relating to conflicts of law.
7.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
7.9 ASSIGNMENT. This Agreement and the rights, interests and
obligations hereunder shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns. Quintiles may not assign, sublicense, or otherwise transfer its rights,
interests or obligations under this Agreement without Healtheon's prior written
consent (not to be withheld or delayed unreasonably), except (a) as a part of
the sale or other disposition of all or a substantial portion of its Data
Products business; (b) to make Data Products available to customers in the
ordinary course of business; (c) in connection with any joint venture or
strategic relationship with one or more pharmaceutical companies for the
development or commercialization of Data Products; or (d) to any Affiliate of
Quintiles. Healtheon may not assign or otherwise transfer its rights, interests
or obligations under this Agreement without Quintiles' prior written consent
(not to be withheld or delayed unreasonably), except in connection with the
sale, transfer, or other disposition of all or any portion of its business or
assets (other than in the ordinary
15
<PAGE> 17
course of business) in a transaction in which the transferee or successor to
such business or assets assumes Healtheon's corresponding obligations under this
Agreement.
7.10 PUBLICITY. Except as otherwise required by applicable law,
neither party shall refer to the other party in advertising, promotional
activities, or other public disclosures or announcements without such other
party's prior written consent, which shall not be withheld unreasonably.
7.11 LIMITATION OF LIABILITY. EXCEPT IN THE CASE THAT REDWOOD
WILLFULLY REFUSES TO PROVIDE MAPLE ACCESS TO LICENSED DATA AS CONTEMPLATED
HEREIN (UNLESS REDWOOD'S REFUSAL IS BASED ON GOOD FAITH ASSERTION OF ITS RIGHTS
UNDER SECTIONS 2.2(C) OR (D)), NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES ARISING
OUT OF OR RELATED TO SUCH ACTION OR OMISSION, INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS
INFORMATION, AND THE LIKE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
7.12 FORCE MAJEURE. Neither party will be responsible for any
failure to perform its obligations under this Agreement due to causes beyond its
reasonable control, including without limitation acts of God, war, riot,
embargoes, acts of civil or military authorities, fire, floods, earthquakes,
accidents, strikes, or fuel crises, provided that such party gives prompt
written notice of such cause to the other party. The affected party's time for
performance will be extended for a period equal to the duration of the force
majeure.
7.13 TIME IS OF THE ESSENCE. Time is of the essence in the
performance of both parties obligations hereunder.
* * * * * * * * * *
16
<PAGE> 18
[signature page to Data Rights Agreement]
In witness whereof, each of Healtheon and Quintiles has caused this
Agreement to be executed on its behalf by its respective officer duly authorized
to do so, all as of the date specified above in the preamble.
HEALTHEON/WEBMD CORPORATION
By: /s/ Jeff Arnold
-----------------------------------------
Its: Chief Executive Officer
-----------------------------------------
QUINTILES TRANSNATIONAL CORP.
By: /s/ John S. Russell
-----------------------------------------
John S. Russell
Senior Vice President, General Counsel
and Corporate Secretary
17
<PAGE> 19
SCHEDULE 2.3(B)
<TABLE>
<CAPTION>
Ranges of Operating Income Healtheon
as a percentage of Royalty
Gross Product Revenue Percentage
--------------------------- ----------
<S> <C> <C>
0.00% 20.00% 20.00%
20.00% 21.00% 25.00%
21.00% 22.00% 25.80%
22.00% 23.00% 26.60%
23.00% 24.00% 27.40%
24.00% 25.00% 28.20%
25.00% 26.00% 29.00%
26.00% 27.00% 29.80%
27.00% 28.00% 30.60%
28.00% 29.00% 31.40%
29.00% 30.00% 32.20%
30.00% 100.00% 33.00%
</TABLE>
<PAGE> 20
TEMPORARY ADDENDUM TO DATA RIGHTS AGREEMENT
This Temporary Addendum to Data Rights Agreement (this "Addendum") is
an agreement between Quintiles Transnational Corp. ("Quintiles") and
Healtheon/WebMD Corporation ("Healtheon").
1. BACKGROUND
Quintiles and Healtheon are parties to an Agreement and Plan of Merger
dated January 22, 2000 (the Acquisition Agreement"). The Acquisition Agreement
calls for Quintiles' subsidiary known as Envoy Corporation ("Envoy") to be
acquired by Healtheon. Envoy's primary business is to act as a clearinghouse for
electronic data transmissions between health care providers and the institutions
that pay for or manage payment for health care services.
The Acquisition Agreement calls for Quintiles and Healtheon to be
parties to a Data Rights Agreement to be dated as of the date that Healtheon's
acquisition of Envoy is complete (the "Data Rights Agreement"). The Data Rights
Agreement calls for Healtheon to provide Quintiles certain De-Identified Data
(as defined in the Data Rights Agreement). Envoy's business is intended to be a
source of the De-Identified Data.
Envoy has, as part of its operations, been providing certain data that
has not yet been De-Identified (the "Identifiable Data") to Synergy Healthcare,
Inc. ("Synergy"), an affiliate of Envoy that will be retained by Quintiles after
Healtheon's acquisition of Envoy. The parties are agreeing to this Addendum for
the purpose of De-Identifying the Identifiable Data previously supplied to
Synergy.
The statements made in this Section 1 are only intended as background
for the reader of this Addendum and do not constitute representations of fact,
warranties, or contractual promises.
2. PROJECT DESCRIPTION
2.1. PURPOSE
The parties will cooperate to De-Identifying the Identifiable Data. The
parties will specify, develop, test, and implement software for De-Identifying
the data regularly provided by Healtheon and Envoy to Quintiles and Synergy and
will use the software to create a De-Identified version of the previously
delivered Identifiable Data.
2.2. HASHING PROGRAM
Envoy and Synergy have jointly created a computer program, (the
"Hashing Program") that creates a unique alphanumeric code to identify
individuals (the "Identifier"). The purpose of the Identifier is to enable
Quintiles to determine that two pieces of data relate to the same
1
<PAGE> 21
individual (for example, two prescriptions for the same patient). The Hashing
Program creates each Identifier by encrypting a concatenation of:
(a) information about the individual, determined by Synergy to be
sufficient to identify the individual uniquely (for example,
gender, last name, and date of birth), and
(b) a long number, determined by Envoy, that is constant across
individuals but is meaningless (the "Initialization Vector").
The Hashing Program encrypts information using a method that cannot be
readily decrypted called a one-way hashing algorithm. The Initialization Vector
shall be retained in confidence by Envoy until delivered to Quintiles as stated
in Section 2.8.
2.3. DATA FEEDS
Envoy and Synergy will jointly create a set of documents describing the
data elements to be included in separate sets of De-Identified Data from
pharmacy, hospital, medical, and dental data (the "Data Specifications").
Individuals will be identified in such De-Identified Data only by the
Identifier, and other personally identifiable information will be removed. Using
its existing systems, Envoy will produce the required data elements for
subsequent De-Identification using the Hashing Program and transmission to
Synergy using existing telecommunications processes. As of the Effective Date of
this Addendum, Envoy and Synergy have implemented the process described in this
Section 2.3 (the "De-Identified Feeds") for pharmacy data. Envoy and Synergy
plan to implement these processes for hospital, medical, and dental data no
later than May 31, 2000.
2.4. DATA CONVERSION
Envoy is developing a suite of programs (the "Bulk Conversion
Programs") capable of converting Identifiable Data to De-Identified Data using
the Hashing Program. The Bulk Conversion Programs address the conversion of each
type of data (such as pharmacy data, medical data, hospital data, and dental
data). As of the Effective Date of the Addendum, the parties have arranged for a
contractor to use the pharmacy Bulk Conversion Program to convert the pharmacy
data that had previously been delivered by Envoy to Synergy as Identifiable
Data. As of the Effective Date of this Addendum, Envoy is developing the Bulk
Conversion Programs to address hospital, medical, and dental data. When this
development is complete, expected to be no later than May 31, 2000, Envoy will
deliver the Bulk Conversion Programs to Synergy and Synergy will use the Bulk
Conversion Programs to convert the hospital, medical, and dental Identifiable
Data in its possession to De-Identified Data. As Synergy confirms that the Bulk
Conversion Programs correctly De-Identified Identifiable Data, Synergy shall (a)
at Synergy's option, deliver to Envoy the Identifiable Data in Envoy's
proprietary format, (b) erase the Identifiable Data from all of its computers in
an irretrievable manner, and (c) destroy all other
2
<PAGE> 22
copies of the Identifiable Data. The parties anticipate that this conversion
will be complete no later than July 17, 2000 (resulting in the purging of
Identifiable Data in Synergy's data warehouse), and the purging of all other
Identifiable Data will be complete no later than December 31, 2000. Upon
completion of the conversion, Synergy shall provide a sworn certificate of one
of its officers with personal knowledge that Synergy retains no further copies
or methods of re-creating the Identifiable Data.
2.5. INTERIM DATA MAP
(a) Between the time that the De-Identified Feeds are implemented
as set out in Section 2.3 and the time that the conversion is complete as set
out in Section 2.4 (the "Conversion Period"), Synergy will require a method of
relating De-Identified Data delivered through the De-Identified Feeds and
Identifiable Data to unique individuals. Envoy has delivered to Synergy a
program (the "Mapping Program") to create a table (the "Map") that cross-indexes
the identifiers with the data used to identify unique individuals (the "Keys")
in Synergy's own databases containing Identifiable Data (Synergy's "Data
Warehouse"). Synergy has created the Map and is using it to cross-index its
data.
(b) During the Conversion Period, Synergy shall undertake the
heightened precautions set out in this paragraph (b) with respect to the Map,
the Mapping Program, and the Bulk Conversion Programs. Synergy shall treat the
Map, the Mapping Program, and Bulk Conversion Programs with the highest level of
care and security given to any of Synergy's own trade secrets. In particular,
Synergy shall ensure that the only persons able to access the Map, the Mapping
Program and the Bulk Conversion Programs are its own employees who have a
documented need to know information contained in the Map, the Mapping Program,
or the Bulk Conversion Programs and who have signed written confidentiality
agreements prior to being given access to the Map, the Mapping Program or the
Bulk Conversion Programs. No copies of the Map, the Mapping Program or the Bulk
Conversion Programs shall be made, except for a single backup copy and except
for transitory copies made by the internal operations of databases. Except for
Healtheon, Quintiles and its Affiliates, no third parties whatsoever shall be
permitted to have access to the Map, the Mapping Program, or the Bulk Conversion
Programs in any manner whatsoever. Upon completion of the Conversion Period,
Synergy shall (i) erase the Map, the Mapping Program, and the Bulk Conversion
Programs from all of its computers in an irretrievable manner, shall destroy all
other copies of the Map, the Mapping Program, and the Bulk Conversion Programs
and shall provide a sworn certificate of one of its officers with personal
knowledge that Synergy retains no further copies or methods of re-creating the
Map, the Mapping Program, or the Bulk Conversion Programs, and (i) make no
further use of the Identifiable Data during the purging of such data as
contemplated in this Addendum.
(c) Without prejudice to any other remedies that may be available
at law or equity, Synergy agrees that its responsibilities under Section 2.5(b)
shall be enforceable by way of injunction and specific performance. In the event
that any party to this Addendum seeks an injunction or specific performance in
connection with Section 2.5(b), Synergy shall waive the
3
<PAGE> 23
requirement of any showing other than its breach or threatened of this section
and shall not oppose the entry of an injunction or specific performance if
breach or threatened breach is found.
2.6. TESTING
Envoy and Synergy will cooperate in testing the De-identified Feeds,
Hashing Software, Mapping Program, Bulk Conversion Programs, and all other
processes to be used by the parties hereunder. During the tests, Envoy or
Synergy may make temporary changes to the Data Specifications. The tests will be
handled outside of the normal production process, and all data used for the
tests will be destroyed at the end of the test process. Envoy will correct
problems discovered during the testing process. The parties will re-test any
corrections as they are completed. Because the parties desire to expedite the
completion of the implementation of the De-Identified Data Feeds, the parties
will not employ a formal acceptance process, but will cooperate to ensure that
the processes are adequately tested.
2.7. ACCESS SPECIFICATIONS
The Data Specifications and Hashing Program shall constitute a portion
of the Access Specifications (as such term is defined in the Data Rights
Agreement) until such time as the Access Specifications are formalized by
agreement of Quintiles and Healtheon.
2.8. DELIVERY OF SOFTWARE
Promptly after completion of the Conversion Period, Envoy shall deliver
to Quintiles a copy of the Hashing Program, and the Initialization Vector (the
"Software"). The Software shall be delivered in source code and with such
documentation as Envoy shall have prepared. Quintiles recognizes that Envoy will
not have developed the Software to the level of quality required for
commercialization. Quintiles shall accept delivery of the Software "AS IS" and
without warranty. Healtheon recognizes that during the term of the Conversion
Period, Quintiles may enter into data agreements with third parties pursuant to
which Quintiles would receive De-Identified Data, and performance of which would
benefit from the third party's use of the Hashing Program and the Initialization
Vector. Healtheon agrees to promptly make such items available to such third
parties upon Quintiles' request, provided that such third party agrees to keep
the Initialization Vector confidential during the term of the Conversion Period
to a degree commensurate with the restrictions set out above in Section 2.5.
Further, Healtheon agrees, upon Quintiles' request, to enter into a technology
escrow agreement (such escrow to be maintained at Quintiles' expense) with Data
Securities International, Fort Knox Escrow Services, or such other technology
escrow company mutually agreed by the parties which would make the
Initialization Vector and the Hashing Program available to such third parties
under the terms contemplated in this Section 2.8.
4
<PAGE> 24
2.9. EXCLUDED SOURCES
Portions of the data previously received by Synergy from Envoy may
include data that Envoy agreed to exclude from use in Data Products (as defined
in the Data Rights Agreement) ("Excluded Data"). The parties shall co-operate in
identifying such data for Synergy to purge, and in connection with such efforts
the parties plan to identify and compile a mutually agreed list of Excluded Data
sources which shall become the basis for Synergy's efforts to purge Excluded
Data hereunder. It is recognized that the Data Feed in Section 2.3, and the
De-Identified Data produced by the Bulk Conversion Programs, excludes the
Excluded Data to the best of the parties' knowledge. Therefore, at the end of
the Conversion Period, Synergy should not have Excluded Data in its primary data
warehouse. However, some of the data derivatives previously produced by Synergy
from the primary data warehouse may contain such Excluded Data. To the extent
possible, Synergy will identify the Excluded Data in all sources, including its
data warehouse and data derivatives, and purge it by December 31, 2000. In
addition, Envoy shall maintain complete copies of all such data, including such
Excluded Data, for a reasonable period of time not to exceed two years from
Envoy's receipt of the data, subject to any legal requirements to the contrary.
Envoy shall provide extracts from this data to Quintiles in order to provide
Excluded Data if Quintiles obtains the agreement of the parties with whom Envoy
agreed to exclude the data.
2.10. DATA TO BE PURGED IF PROHIBITED BY PRIVACY RULES
As of the date of this Addendum, the Department of Health and Human
Services is considering a proposed rule known as Standards for Privacy of
Individually Identifiable Health Information (the "HIPAA Rule"). Promptly after
the HIPAA Rule is promulgated and no later than the date it becomes effective
and requires compliance by Envoy, Quintiles and Synergy shall purge from its
computers data received from Envoy or Healtheon that is personally identifiable
as defined in the HIPAA Rule. Until such rule is promulgated, Envoy and
Healtheon may include in the De-Identified Data certain information, the
treatment of which under the final HIPAA Rule is not yet certain (for example,
zip code, city, and date of birth). The parties agree that, if this data is
delivered, it will be maintained in a manner determined by Synergy so that it
can be readily purged if required.
2.11. PURGING OF DATA
Where this Addendum requires the purging of data or destruction of
copies of data, it is the intent of the parties that such purging or destruction
be carried out without regard to where the data resides (such as in Synergy's
primary data warehouse, Data Products, data derivatives, data extracts, or
interim data).
5
<PAGE> 25
3. TERM
This Addendum shall become effective upon its signature by both parties
(the "Effective Date of this Addendum") and shall continue in force until the
obligations of each party under Section 2 have been completed, which in any
event shall not extend beyond the later of (a) two (2) years after the Effective
Date of this Addendum, or (b) the date at which the HIPAA Rule becomes effective
and requires compliance by Envoy. The provisions of Sections 3 through 7.4 shall
survive the expiration or termination of this Addendum.
4. AUDITS
In addition to the audits permitted by Section 2.6(a) of the Data
Rights Agreement, Healtheon may audit the performance of the obligations of
Quintiles and its subsidiaries under this Addendum no more than once per
calendar quarter (a) during the term of this Addendum, and (b) after the term of
this Addendum and for up to two (2) years thereafter, in all events with the
conduct and timing of such audit to be commercially reasonable.
5. OWNERSHIP OF WORK PRODUCT
Quintiles shall own the Software as described in the Assignment
Agreement dated as of the Effective Date of this Addendum. Healtheon shall have
a license to use the Software as described in the Software License Agreement
dated as of the Effective Date of this Addendum.
6. COSTS
For Envoy's efforts hereunder, Quintiles shall pay Envoy at Envoy's
"fully-loaded" cost for personnel assigned to the effort (determined as a
function of salary and an overhead allotment agreed to by the Steering Committee
as defined in the Data Rights Agreement) and actual, reasonable costs and
expenses otherwise incurred in supporting or carrying out the project described
above ("Costs"). Envoy shall provide to Quintiles monthly invoices for Costs
which shall provide all information reasonably necessary for the computation or
confirmation of the payments described in the invoices. Any payments for Costs
will be paid by Quintiles to Envoy within thirty (30) days after Quintiles'
receipt of such invoice. Quintiles will pay interest of 1% per month on amounts
not paid within such 30 day period, unless Quintiles delivers, in good faith,
notice to Envoy disputing such payment in reasonable detail. Quintiles will be
responsible for its own costs incurred hereunder.
7. WARRANTEES
7.1. NO ATTEMPTS TO REVERSE ENGINEER
Quintiles warrants that neither it nor its subsidiaries, agents or
subcontractors will attempt to (a) re-identify De-Identified Data (including
without limitation, the use of the Map to
6
<PAGE> 26
re-identify De-Identified Data after the Conversion Period), (b) reverse
engineer any process used to De-Identify Data, or (c) determine the value of the
Initialization Vector prior to the completion of the Conversion Period.
7.2. IDENTIFIABLE DATA
Quintiles warrants that its use of the Identifiable Data shall (a) be
treated the same as Licensed Data as set forth in the Data Rights Agreement, (b)
not include any dissemination of the Identifiable Data to third parties except
in aggregate or summary form, and (c) comply with all limitations on use of
which Quintiles or its subsidiary becomes aware and which arise from contracts
between Envoy and one of its customers.
7.3. PERFORMANCE BY SUBSIDIARIES
The parties warrant that they shall each cause their respective
subsidiaries to carry out the responsibilities assigned to them in this
Addendum.
7.4. CHAIN OF TRUST
Until the HIPAA Rule becomes effective and requires compliance by
Envoy, Quintiles warrants that whenever it makes Licensed Data received from
Healtheon or its subsidiaries (including the De-Identified Data, compilations of
data other than in aggregate or summary form, and data received through the Data
Feeds) available to third parties, it shall enter into agreements with such
parties that require that the third party (a) not attempt to re-identify such
Licensed Data (as applicable), and (b) appropriately safeguard the Licensed Data
through applicable use and confidentiality protections, at least to the degree
described in the most current draft of the HIPAA Rule published by way of Notice
of Rule Making by the Department of Health and Human Services.
8. INTERPRETATION
This Addendum shall incorporate and be subject to Articles I, III, IV,
V, and VII of the Data Rights Agreement as if such Articles were set out fully
herein. In any interpretation of this Addendum, in the event of any
inconsistency between the terms of this Addendum and the Data Rights Agreement,
the terms of this Addendum shall control. In all events, the parties expressly
agree that this Addendum shall not serve to amend or modify the terms of the
Data Rights Agreement in any manner.
7
<PAGE> 27
<TABLE>
<CAPTION>
Quintiles Transnational Corp. Healtheon/WebMD Corporation
<S> <C>
By: /s/ John Russell By: /s/ K. Robert Draughon
-------------------------------------------- -----------------------------------------
(authorized signature) (authorized signature)
Name: John Russell Name: K. Robert Draughon
------------------------------------------ ---------------------------------------
(printed) (printed)
Title: Senior Vice President, Corporate Counsel
----------------------------------------- Title: Executive Vice President
--------------------------------------
Date: 5/22/00 Date: 5/22/00
------------------------------------------ ---------------------------------------
</TABLE>
8