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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2000
( ) For the transition period from __________ to __________
Commission file number: 000-29822
THEHEALTHCHANNEL.COM, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 33-0728140
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
5000 Birch Street, Suite 4000
Newport Beach, California 92660
(949) 631-8317 - telephone
(949) 631-2544 - facsimile
(Address of principal executive offices)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
The issuer had 71,335,051 shares of its $.001 par value Common Stock issued
and outstanding as of March 31, 2000.
Transitional Small Business Disclosure Format (check one)
Yes No X
--- ---
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THEHEALTHCHANNEL.COM, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
Item 1. Financial Statements
Unaudited Balance Sheet as of March 31, 2000
Comparative Unaudited Statements of Operations for
the Three Months Ended March 31, 2000, the Three
months Ended March 31, 1999 and for the Period from
September 6, 1996 (Inception) to March 31, 2000
Comparative Unaudited Statements of Cash Flows for
the Three Months Ended March 31, 2000, the Three
Months Ended March 31,1999, and for the Period from
September 6, 1996 (Inception) to March 31, 2000
Notes to the Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet as of March 31, 2000
Comparative Unaudited Statements of Operations for the Three Months
Ended March 31, 2000, the Three months Ended March 31, 1999 and for the
Period from September 6, 1996 (Inception) to March 31, 2000
Comparative Unaudited Statements of Cash Flows for the Three Months
Ended March 31, 2000, the Three Months Ended March 31,1999, and for the
Period from September 6, 1996 (Inception) to March 31, 2000
Notes to the Unaudited Financial Statements
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED BALANCE SHEET - MARCH 31, 2000
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS:
<S> <C> <C>
Cash $ 154,419
Software development costs 25,000
Loan receivable 49,000
Prepaid expenses 78,669
----------
TOTAL CURRENT ASSETS $ 307,088
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 785,549
-----------
$ 1,092,636
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES -
accounts payable and accrued expenses $ 733,716
STOCKHOLDERS' EQUITY:
Common stock; $.001 par value, 110,000,000 shares
authorized, 71,335,051 shares issued and outstanding 70,110
Additional paid in capital 6,660,818
Deficit accumulated during development stage (6,372,007)
----------
Total stockholders' equity 358,920
-----------
$ 1,092,636
===========
</TABLE>
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
From September 6,
3 months ended 3 months ended 1996 (Inception)
March 31, 2000 March 31, 1999 to March 31, 2000
-------------- -------------- -----------------
(unaudited) (unaudited)
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
COST OF SALES -- -- --
------------ ------------ ------------
GROSS PROFIT -- -- --
OPERATING EXPENSES:
General and administrative 697,631 -- 4,158,359
------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (697,631) -- (4,158,359)
Loss on discontinued operations -- (367,014) (2,114,398)
Loss on disposal of segment -- (99,250) (99,250)
------------ ------------ ------------
TOTAL DISCONTINUED OPERATIONS -- (466,264) (2,213,648)
------------ ------------ ------------
NET LOSS (697,631) (466,264) (6,372,007)
============ ============ ============
NET LOSS PER SHARE, BASIC AND DILUTED (0.01) (0.01)
============ ============
WEIGHTED AVERAGE COMMON EQUIVALENT
SHARES OUTSTANDING 69,591,604 69,591,604
============ ============
</TABLE>
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
For the three For the three From September 6,
months ended months ended 1996 (Inception)
March 31, 2000 March 31, 1999 to 3/31/2000
-------------- -------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
NET LOSS $ (697,631) $ (466,264) $(6,372,007)
ITEMS RECONCILING NET LOSS TO CASH USED BY OPERATING ACTIVITIES:
Depreciation 81,138 -- 216,368
Loss on disposal of segment -- 99,250 99,250
Loss on discontinued operations -- 367,014 2,114,398
Noncash expenses from stock issuances 83,231 -- 2,694,654
Changes in operating assets and liabilities:
Accounts receivable -- -- 189
Inventory -- -- (10,312)
Software development costs (25,000) -- (25,000)
Prepaid expenses 50,730 -- (57,717)
Other assets -- -- 2,597
Accounts payable and accrued expenses 222,749 -- 755,192
----------- ----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (284,783) -- (582,388)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
payments to acqure property and equipment (28,263) -- (54,081)
----------- ----------- -----------
NET CASH PROVIDED BY (USE FOR) INVESTING ACTIVITIES (28,263) -- (54,081)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for asset transfer -- -- (26,329)
Cash transferred out -- (22,551) (22,551)
Stock subscription receivable 25,000 -- --
Loans receivable (28,000) -- (49,000)
Proceeds from private placement offering 378,228 -- 888,768
-- -- --
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 375,228 (22,551) 790,888
----------- ----------- -----------
NET INCREASE IN CASH 62,182 (22,551) 154,419
CASH, beginning of period 92,237 22,551 --
----------- ----------- -----------
CASH, end of period $ 154,419 $ -- $ 154,419
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Noncash compensation from stock issuances $ 83,231 $ -- $ 2,777,885
=========== =========== ===========
</TABLE>
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL:
With headquarters in Newport Beach, California, thehealthchannel.com
(formerly Innovative Tracking Solutions Corporation or "IVTX") is a
comprehensive health information Internet portal that offers a
one-step access point for consumers and professionals who want to
explore a broad array of health topics. The portal currently indexes
other Internet health and health-related sites, has direct links with
online health-care information service centers and provides detailed
coverage of medical conditions. Consumers may access a global library
of health-care information while searching for products and services.
The site offers a complete Internet portal for state-of-the-art
continuing medical education for professionals.
The Company was incorporated under the laws of the state of Delaware
on September 4, 1996.
INTERIM FINANCIAL STATEMENTS
The accompanying financial statements include all adjustments
(consisting of only normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the
results of operations for the periods presented. Interim results
are not necessarily indicative of the results to be expected for a
full year. The financial statements should be read in conjunction
with the financial statements included in the annual report of
thehealthchannel.com, Inc. (the "Company") on Form 10-KSB for the
year ended December 31, 1999.
BUSINESS ACTIVITY:
In early 1999, IVTX management determined that the "public" status of
IVTX was detrimental to IVTX' operations due to the time and expense
burdens of being a public company. IVTX management then decided to
take the operations of IVTX "private" by transferring all IVTX assets
and liabilities to a newly formed private company and selling the
public shell to a suitable company, preferably in the healthcare
industry. On April 13, 1999, IVTX obtained written approval of 64.4%
of the total voting stock of IVTX, voting "for" taking the operations
of IVTX private and selling the public shell to a suitable company.
On April 14, 1999, IVTX transferred all of its assets and liabilities
based on majority stockholder approval to a newly formed private
company, Innovative Tracking Solutions Corporation, a private Nevada
corporation, incorporated on March 29, 1999. Innovative Tracking
Solutions Corporation was formed by IVTX management specifically for
the purpose of taking the operations of IVTX private. The former IVTX
officers and directors, Dianna Cleveland, Lee Namisniak and Lou Weiss
are the officers and directors of Innovative Tracking Solutions
Corporation, the private company. The consideration for the transfer
of assets was the assumption of all IVTX's liabilities by the newly
formed private company. As a result of this transfer of assets and
liabilities and the disposal of the segment of business on April 14,
1999 (which is unrelated to the present business of
thehealthchannel.com), the Company has recorded a loss on discontinued
operations of $367,014 and a loss on disposal of a segment of $99,250
for the year ended December 31, 1999.
In June 1999, IVTX was introduced to thehealthchannel.com, a
consumer-based health Internet web site
(http://www.thehealthchannel.com). On July 28, 1999, IVTX, pursuant to
its bylaws and general Delaware corporate law, acquired a certain
asset of Biologix International, Ltd., a Delaware corporation
("Biologix") consisting of thehealthchannel.com web site and its
related technology in exchange for the controlling interest in IVTX.
In connection with this change of control, IVTX's name was changed to
thethealthchannel.com, Inc. on July 28, 1999. The acquisition closed
on July 28, 1999.
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost. Expenditures for
maintenance and repairs are charged to earnings as incurred, whereas,
additions, renewals, and betterments are capitalized. When property
and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts,
and any gain or loss is included in operations. Depreciation is
computed using the straight-line method over the estimated useful
lives of the related assets.
DEVELOPMENT STAGE ENTERPRISE:
The Company is a development stage company as defined in Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting by
Development Stage Enterprises." The Company is devoting substantially
all of its present efforts to establish a new business, which is
unrelated to the business of Innovative Tracking Solutions Corporation
("IVTX"), and its planned principal operations have not yet commenced.
All losses accumulated since inception of thehealthchannel.com (Note
1) have been considered as part of the Company's development stage
activities. The operations of IVTX in 1999 are presented as
discontinued operations as a result of the transfer of its assets and
liabilities to a private company (Note 1).
NET LOSS PER SHARE:
The Company has adopted Statement of Financial Accounting Standard No.
128, Earnings per Share ("SFAS No. 128"), which is effective for
annual and interim financial statements issued for periods ending
after December 15, 1997. Net loss per share has been computed using
the weighted average number of shares outstanding. Common stock
equivalents have been excluded since their inclusion would reduce loss
per share.
7
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000
(2) STOCKHOLDERS' EQUITY:
In September 1999, the Company initiated a Rule 506, Regulation D private
placement of 2,191,528 restricted shares of the Company's common stock from
shares available from the forward stock split and 2,191,528 warrants to
purchase restricted shares of the Company's' common stock with an exercise
price of $0.75, for total net proceeds of $888,768, of which 378,228
relates to the first quarter of the year 2000. The shares issued and the
shares issuable upon exercise of the warrants have piggyback registration
rights in the event the Company files a Registration Statement with the
Securities and Exchange Commission. The warrants vest immediately and
expire two years from the date of issuance. This private placement offering
is still in process.
8
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PART I - FINANCIAL INFORMATION CONTINUED
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE COMPANY
thehealthchannel.com, Inc., formerly known as Innovative Tracking Solutions
Corporation (the "Company") was incorporated in Delaware on September 6, 1996.
It operates a consumer-based health supersite (http://www.thehealthchannel.com).
On April 16, 1999, the Company transferred all of its assets and
liabilities based on majority stockholder approval to a newly formed private
company. The Company's plan of operations following the transfer of assets and
liabilities was to seek and complete a merger or acquisition transaction with a
small or medium-sized enterprise which desired to become or remain a public
corporation.
On July 28, 1999, the Company was successful in finding an appropriate
acquisition candidate and, pursuant to its bylaws and general Delaware corporate
law, the Company acquired certain assets of Biologix International, Ltd.,
consisting primarily of thehealthchannel.com website and related technology in
exchange for the controlling interests of the Company. Restricted common shares,
representing the majority controlling interests held by the directors of the
Company, were transferred.
In connection with this change of control, the Company's name was changed
to thehealthchannel.com, Inc. on July 28, 1999. The Acquisition closed on July
28, 1999 (the "Acquisition").
With headquarters at 5000 Birch Street, Suite 4000, Newport Beach,
California, thehealthchannel.com is a comprehensive health information Internet
portal that offers a one-step access point for consumers and professions who
want to explore a broad array of health topics. Consumers may access a global
library of health-care information while searching for products and services.
The site offers a complete Internet portal for state-of-the-art continuing
medical education for professionals.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000.
REVENUE
The Company is a development stage company and had no revenues for
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the three months ended March 31, 2000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company expended approximately $300,000 in professional services
related to web site maintenance & development.
LOSS FROM OPERATIONS
The Company incurred a loss from operations of $697,631 for the three
months ended March 31, 2000. The operations of Innovative Tracking Solutions
Corporation, prior to the acquisition of thehealthchannel.com web site in 1999
(the "IVTX Operations") are presented as discontinued operations as a result of
the transfer of its assets and liabilities to a private company. The IVTX
Operations are not related to the operation of thehealthchannel.com business
going forward.
NET LOSS
The Company had a net loss of $697,631 or $(0.01) per share.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has primarily funded its capital
requirements through private equity infusions. The Company is currently
conducting a private offering to accredited investors only, of units, each unit
consisting of one share of the Company's Common Stock and one Warrant
exercisable for a term of two years (the "Units"). The company is offering the
Units at 30% discount on its stock at the closing price on the day of purchase
with the same exercise price on the Warrants. The Company is attempting to raise
a maximum of $5,000,000 under this private offering. This private offering is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act") pursuant to Section 4(2) of the Act.
At March 31, 2000, the Company had outstanding current liabilities of
$733,716 consisting mainly of accounts payable $148,750, accrued professional
fees of approximately $440,000, and accrued officers' salaries of $96,000. All
officers of the Company have agreed to defer their compensation until such time
as the Company has the financial ability to pay compensation. The Company
anticipates satisfying its current liabilities in the ordinary course of
business from revenues and accounts receivable.
The Company does not believe that inflation has had a significant impact on
its operations since inception of the Company.
FUTURE PLAN OF OPERATION
The Company's overall plan of operations for the next 12 months include
significant website development in three primary areas: a) Broaden overall
content offerings in the areas of general health content and delivery of
health goods and services, b) Deliver a number of "deep vertical" products in
specific health topics, c) Implement the business to business revenue
generating products covering a number of health areas including some unique
products not currently in the marketplace. The Company plans to implement
this plan over the next 12 months.
The Company believes it can satisfy its cash requirements for a period
of approximately 4-6 months. The Company will then need to raise additional
funds.
The Company is currently conducting product research and development in the
areas of general
10
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health content, broadening and strengthening its health information delivery, as
well as conducting research and development in the areas of premier health
product offerings (deep verticals). In addition the Company will continue to
develop its business to business goods and services products.
The Company recently purchased (through the inclusion of its new operations
center lease) additional infrastructure to grow the company and reduce its
operational costs by bringing a majority of its software development in house.
The Company expects to add approximately 5-10 new employees in the next
fiscal year.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
To the best knowledge of management, there are no litigation matters
pending or threatened against the Company which are not in the ordinary course
of business.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2000, the Company issued 973,726
shares sold in a private offering, raising $378,228. No underwriters were
utilized and no commissions were paid. This private offering is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "Act")
pursuant to Section 4(2) of the Act and Rule 506 of Regulation D.
Also during the three months ended March 31, 2000, shareholders
exchanged 1,226,125 shares of the Company pursuant to the Acquisition, Stock
Purchase and Exchange Agreement entered into between Biologix International,
Ltd. and the Company on July 28, 1999.
On January 4, 2000, the Company issued 82,899 shares as payment for legal
services rendered to the Company in 1999.
On January 21, 2000, the Company issued 160,000 shares in settlement of
debt incurred for web development and internet hosting services incurred in
1999.
On February 2, 2000, the Company issued 10,510 shares as compensation for
the preparation of a business plan.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
10.1 Healthcompass Services Agreement between thehealthchannel.com,
Inc. and HealthMagic, Inc., dated February 16, 2000
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10.2 Content License Agreement between Integrative Medicine
Communications, Inc. and thehealthchannel.com, dated March 24,
2000 [need electronic version]
10.3 LIVEware5, Inc. Agreement for Services between Liveware5, Inc.
and thehealthchannel.com, Inc., dated March 24, 2000 [need
electronic version]
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K:
On January 4, 2000, the Company filed a report on Form 8-K disclosing the
termination of the Roger G. Castro, C.P.A., Oxnard, California as its principal
accountant as of July 28, 1999, in connection with the change of control of the
Registrant reported on the Registrant's Form 8-K, dated August 12, 1999 and Form
8-K/A, dated October 12, 1999.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THEHEALTHCHANNEL.COM, INC.
Date: May 15, 2000 /s/ Donald Shea
------------------------------
Donald Shea, President
Date: May 15, 2000 /s/ Thomas Lonergan
------------------------------
Thomas Lonergan, Chief Operating Officer,
Vice President, Secretary, and Chief
Financial Officer
13
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EXHIBIT 10.1
HEALTHCOMPASS SERVICES AGREEMENT
DATED FEBRUARY 16, 2000
<PAGE>
HEALTHCOMPASS SERVICES AGREEMENT
THIS IS AN AGREEMENT ("Agreement") entered into on February 16, 2000 (the
"Effective Date") by and between [THEHEALTHCHANNEL], a Delaware corporation with
offices located at 3101 West Coast Hightway, Suite 175, newport Beach, CA 92663
(the "Licensee") and HealthMagic, Inc., a Delaware corporation with offices
located at 1901 Main Street, Columbia, South Carolina 29201 ("HealthMagic" or
"HMI"), by which HealthMagic agrees to license certain proprietary software and
other materials to Licensee on the terms and conditions of this Agreement.
In consideration of the obligations stated in this Agreement, and other good and
valuable consideration received by each of the parties, the parties hereto agree
as follows:
PART I. PURPOSE AND SCOPE OF AGREEMENT; DEFINITIONS
- --------------------------------------------------------------------------------
1. PURPOSE AND SCOPE OF AGREEMENT
HealthMagic is a corporation engaged in developing, marketing and providing
innovative Internet-enabled health information technology systems and
applications including, without limitation, HealthCompass (as further defined
below). Licensee is a corporation engaged in the provision of internet-based
healthcare information, products and services, including through its main
portal, THEHEALTHCHANNEL.COM. The parties have entered into this Agreement to
set forth the terms and conditions on which: (i) HMI will grant Licensee the
right to establish links to HealthCompass from Licensee Web Sites (as defined
below); (ii) HMI will host HealthCompass; and (iii) HMI will grant Licensee the
right to use certain software tools.
2. DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings given
below or in the context in which the term is used, as the case may be.
A. "Affiliate" shall mean, with respect to a party to this Agreement, any entity
that directly or indirectly controls, or is under common control with, or is
controlled by, such party. As used above, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") means
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
B. "Certifying Authority" shall mean HMI or such other trusted third-party
central administrator: (i) willing to verify the identities of those to whom it
issues certificates and their association with a given key; (ii) that have a
trustworthy public key (that is either publicized or provided with a certificate
from a higher level Certifying Authority attesting to the validity of its public
key); (iii) whose subject identification requirements engender a high level of
confidence to the certified name-key binding; and (iv) that are capable of
issuing Digital Certificates (including, without limitation, signing the Digital
Certificate) to authenticate the binding between the subject (end user's) name
and the subject's public key.
C. "Compass Man Design" shall have the meaning specified in Part II.2.A(1).
- --------------------------------------------------------------------------------
<PAGE>
Page 2
D. "Digital Certificate" shall mean a digital certificate as defined by the
International Telecommunications Union ("ITU-T") X.509 standard, version 3. As a
general matter, a Digital Certificate: (i) is a document attesting to the
binding of a public key to an individual or other entity; (ii) enables the
verification of a claim that a specific public key does in fact belong to a
specific individual; and (iii) contains information including version, serial
number, signature algorithm ID, issuer name (i.e., the Certifying Authority that
issued the Digital Certificate), validity period, subject (user) name, subject
public-key information, issuer unique identifier, subject unique identifier,
extensions and the signature of the Certifying Authority that issued the Digital
Certificate on the foregoing. Digital Certificates are stored on the subject's
(end user's) computer.
E. "End User" shall mean an individual who has a unique HealthCompass account
number/registration number combination and whose personal health information is
stored in, or capable of being stored in, HealthCompass. As applied: (i) the
same individual may be assigned multiple unique account number/registration
number combinations, and thus would be counted as a separate End User for each
such unique combination (i.e., a member with 5 records constitutes 5 End Users);
and (ii) in the case of a family, each family member may have the same account
number but the registration number for each such family member would be
different.
F. "End-User Data" shall mean the information provided by End Users or on behalf
of End Users, with their authorization, in the process of using HealthCompass.
Ownership of End-User Data shall, as between HMI and Licensee, be and remain
with the End User and shall in no way be altered by this Agreement.
G. "Engaging Applications" shall mean applications designed to engage an end
user in the management of his or her health and which are complimentary to,
utilize, or interact with HealthCompass (e.g., by providing data or other input
to HealthCompass, or using data or other output generated by HealthCompass).
EXHIBIT A to this Agreement lists the Engaging Applications being provided by
HMI to Licensee (the "HMI Engaging Applications"). As specified in EXHIBIT A,
HMI Engaging Applications either (i) reside on HMI servers and are accessible
from HealthCompass Enabled Sites (as defined in Part I.2.H) or (ii) are provided
to Licensee in run-time/executable form only for installation on Licensee
servers. HMI Engaging Applications are inclusive of any accompanying
documentation. HMI Engaging Applications include any and all Updates, Releases,
new Versions, modifications or derivative works of the HMI Engaging Applications
produced by HMI or on HMI's behalf and provided to Licensee.
H. "HealthCompass" shall mean HMI's proprietary Personal Medical Record
consisting of: (i) HMI proprietary interactive Internet-enabled pages which
reside on HMI servers, that are accessible from HMI licensed web sites
containing links to such pages through a digital certification process
("HealthCompass Enabled Sites") and containing functionality enabling end users
to retrieve, document, track and populate their own personal health information
in a secure fashion from any HealthCompass Enabled Site; and (ii) HMI's
proprietary database or "Repository", housed on HMI's servers, that stores each
End User's Health Vectors. HealthCompass includes any and all Updates, Releases,
new Versions, modifications or derivative works of HealthCompass produced by HMI
or on HMI's behalf and provided to Licensee. HealthCompass is inclusive of any
accompanying documentation.
I. "HealthMagic Content" shall mean content for Internet-enabled pages provided
to Licensee under license by HealthMagic including HealthCompass pages and any
HMI Engaging Application pages.
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Page 3
J. "HealthQuery" shall mean an HMI proprietary XML-based application programmer
interface or "API" to the Repository. HealthQuery includes any and all Updates,
Releases, new Versions, modifications or derivative works of HealthQuery
produced by HMI or on HMI's behalf and provided to Licensee. HealthQuery is
inclusive of any accompanying documentation.
K. "Health Vectors" shall mean, for any particular HealthCompass End User,
collections of health-related data that profiles such End User in his or her
role as a health care consumer which data is generated through the use of the
Health Vector software embedded in HealthCompass. Different kinds of Health
Vectors include, but are not limited to: (i) health and illness data (e.g.,
health status, symptoms, important diagnoses, most recent encounters,
medications, recent treatments); (ii) interests and needs data (i.e.,
information used and requested by the End User); (iii) demographic data (e.g.,
name, mailing address, gender, age, race); (iv) registration data (e.g., plan
identification, member identification and enrollment information); and (v)
transaction data (i.e., a summary of the transactions encountered within the
service by the End User).
L. "Health Vectors Tool" shall mean certain HMI proprietary technology which
enables the tailoring of user/computer interactions based on the End User's
profile. As of the Effective Date the profile includes age, gender and health
interests but the Health Vectors Tool is architected to profile many different
dimensions each called a vector. Based on the specific health profile that is
comprised of various health data, screens are assembled that contain articles,
weblinks and preventive guidelines tailored to the individual for various
sections of a web service. Software deliverables include: (i) Content Attribute
Studio; (ii) Active X DLL that represents the application; (iii) Health Vector
Publisher; and (iv) the associated data base schema. The Health Vectors Tool is
provided in run-time/executable form only and is inclusive of any accompanying
documentation. The Health Vectors Tool includes any Updates, Releases, new
Versions, modifications or derivative works of the Health Vectors Tool produced
by HMI or on HMI's behalf and provided to Licensee.
M. "HMI Materials" shall mean HealthCompass, HMI Engaging Applications,
HealthQuery, Health Vectors Tool and related materials.
N. "Licensee Application" shall mean any application created by Licensee using
HealthQuery or the Health Vectors Tool, as well as any Engaging Applications
created by Licensee.
O. "Licensee Components" shall mean components of Licensee Applications
exclusive of any HMI Materials.
P. "Licensee Web Sites" shall mean: (i) the _____________ web site (the "Primary
HealthCompass Web Site"); (ii) any web sites co-branded with the Primary
HealthCompass Web Site (each such web site a "Co-Branded HealthCompass Web
Site"); and (iii) any web sites of institutional clients of Licensee into which
Licensee has, in the capacity of a content supplier, licensed access to
HealthCompass and/or any HMI Engaging Applications under a private label
strategy (each such web site a "Privately Labeled HealthCompass Web Site").
Q. "Payment Period" shall have the meaning specified in Part IV.2.
R. "Personal Medical Record" shall mean an electronic repository or database
designed to store, on a long-term basis, an individual's personal health
information (including, without limitation, the health records maintained by
providers, health plans, laboratories, nursing homes, home care enterprises,
etc., as
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well as summaries of such information) and with or without a user interface that
enables the population, maintenance, display and reporting of such information.
S. "Public Sites" shall mean Licensee Web Sites which are not Sponsored Sites.
T. "Release Number" shall mean the second decimal place in the number assigned
to any software by the supplier of such software (e.g., the Release Number of
XYZ 6.1.23 would be 1). A new "Release" means a software upgrade that adds new
features, corrects bugs or defects and in which the Release Number is
incremented while the Version Number remains unchanged (e.g., XYZ 6.2.0 would be
a new Release as compared to XYZ 6.1.23).
U. "Sponsored Sites" shall mean Licensee Web Sites which are sponsored by a
health plan, integrated delivery system, health club or any other web site that
has a closed membership or a defined population.
V. "Update Number" shall mean the third decimal place in the number assigned to
any software by the supplier of such software (e.g., the Update Number of XYZ
6.2.23 would be 23). A new "Update" means a software upgrade that provides bug
fixes or other minor corrections in which the Version Number and Release Number
remain unchanged and, if the number assigned to the software by the supplier,
the Update Number is incremented (e.g., XYZ 6.1.24 would be a New Update as
compared to XYZ 6.2.23).
W. "Version Number" shall mean the first decimal place in the number assigned to
any software by the supplier of such software (e.g., the Version number of XYZ
6.2.23 would be 6). A new "Version" means a major software upgrade that adds
substantial new features or other significant changes in which the Version
Number is incremented (e.g., XYZ 7.0.0 would be a new Version as compared to XYZ
6.2.23).
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PART II. LICENSE AND PROPRIETARY RIGHTS
1. LICENSE
A. HMI hereby grants Licensee a five (5) year, nonexclusive, renewable,
nontransferable, world-wide right and license commencing on the Effective Date:
(1) to access from, and display on, Licensee Web Sites, the
Internet-enabled pages contained in HealthCompass (and HMI server based HMI
Engaging Applications) via links to such pages from such web sites through a
digital certification process for the purposes of allowing End Users to access
and use such Internet-enabled pages. Licensee shall license access to
HealthCompass (and HMI server based HMI Engaging Applications) by such web sites
on terms no less protective of HMI's intellectual property than are the terms
contained in this Agreement. Licensee is not granted the right to distribute
HealthCompass (or HMI server based HMI Engaging Applications) other than linked
through the Licensee Web Sites.
a) HMI shall be given the same access to the Licensee Web Sites as is
generally given to the End Users of such web sites.
b) HMI shall have the right to modify any aspect of HealthCompass (or
HMI server based HMI Engaging Applications) including, but not limited to,
structure, content or operation so long
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as substantially the same, or substantially similar, functionality is
maintained, provided however, that with respect to any such modification that
would reasonably be deemed to be significant, HMI shall provide prior notice of
same to Licensee, which such notice HMI shall endeavor to provide at least
ninety (90) days prior to distributing such modification, and Licensee shall
upon receipt of such notice have a bona fide opportunity to review and comment
on any such modification.
c) Except as otherwise provided in this Agreement, Licensee agrees not
to modify, amend, reduce the size of or in any way obliterate any warnings,
notices, liability limitations, or other license provisions which are contained
in HealthCompass or the HMI Engaging Applications. In addition, Licensee shall
not, without HMI's prior written consent, remove from any Licensee Web Site any
HMI Engaging Application; provided that Licensee shall be permitted to
substitute its own or other Engaging Applications of comparable or better
functionality and quality for HMI Engaging Applications ("Substitute Engaging
Applications")
d) Licensee acknowledges and agrees that End-User access to, and use
of, HealthCompass through links from the Licensee Web Sites to _______________
shall be subject to End-User's agreement with HealthMagic's standard terms and
conditions for use of HealthCompass and compliance with HMI promulgated privacy
statements/policies specific to HealthCompass.
e) Licensee acknowledges and agrees that each License Web Site shall
contain at least one direct link to HealthMagic's consumer market site,
_________________________, to provide End Users with the opportunity to learn
more about HealthMagic and its products and services.
(2) to use HealthQuery and the Health Vectors Tool internally in its own
business (to the extent related to HealthCompass) to develop Licensee
Applications; provided, however, Licensee may not develop or contract for the
creation of Licensee Applications (including, without limitation, Licensee
Engaging Applications) that, in the reasonable discretion of HMI, compete with
HealthCompass, HealthQuery or the Health Vectors Tool.
a) In consideration of the revenue sharing model set forth in Part
IV.3, Licensee shall grant to HMI a perpetual, nonexclusive, nontransferable,
world-wide right and license to copy, reproduce, modify, translate and
distribute (including sublicensing and marketing) copies of, and to prepare,
have prepared, derivative works of, and to perform, display and use Licensee
Applications for HMI's internal use and in conjunction with HealthCompass;
provided that HMI shall not be permitted to provide access to, or use of, any of
Licensee Applications licensed to HMI to HMI's other clients for a six (6) month
period beginning on the date such Licensee Applications were initially licensed
to HMI. Such licenses, if any, will include any and all Updates, Releases and
new Versions of such Licensee Applications that may be provided to HMI from time
to time. EXCEPT FOR THE WARRANTIES PROVIDED IN PART II.1.A(2)b) and Part V.2,
LICENSEE IS PROVIDING ANY SUCH LICENSEE APPLICATIONS SOLELY ON AN "AS-IS" BASIS.
b) Licensee warrants that the Licensee Components contained in the
Licensee Applications licensed to HMI shall not, at the time of licensing to
HMI, infringe any third party copyrights, patents or trademarks or
misappropriate any trade secrets rights of a third party. If a third party
brings an action against HMI making allegations which, if true, would constitute
a breach of this warranty, or if Licensee anticipates such an action, Licensee
shall have the option, at its expense, to: (i) modify the License Application to
be noninfringing; or (ii) obtain for HMI a license to continue using the
Licensee Application. This Part II.1.A(2)b) and Part VI.1.A state Licensee's
entire obligation to HMI and HMI's sole remedy with respect to any claim of
intellectual property infringement for Licensee Applications.
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(3) to implement HMI Engaging Applications (exclusive of HMI server based
HMI Engaging Applications) and Licensee Applications on Licensee servers and
permit the Internet-enabled pages contained in such applications to be accessed
from, and displayed on, Licensee Web Sites, solely as incorporated, integrated,
bundled, packaged into, or otherwise provided as a part of or for use in
conjunction with HealthCompass, via links to such pages from such web sites
through a digital certification process. Licensee shall license access to such
applications by such web sites on terms no less protective of HMI's intellectual
property than are the terms contained in this Agreement.
The licenses set forth in this Part II.1.A include any and all Updates, Releases
and new Versions of HealthCompass, HMI Engaging Applications, HealthQuery and
Health Vector Tool that may be provided to Licensee from time to time.
B. Licensee shall not modify, make derivative works of, translate, reverse
engineer, decompile, dissemble, reengineer, extract, as applicable, any ideas,
algorithms or procedures from the whole or any part of the HMI Materials or
otherwise create or attempt to create or permit, allow, or assist others to
create the source code for the HMI Materials or any portion thereof. Without
limiting the generality of the foregoing, Licensee shall not modify, edit,
abbreviate censor or limit HealthCompass content or contained in HMI Engaging
Applications.
C. Licensee agrees to reproduce and include HMI's copyright, trademark, and
other proprietary rights notices on any copies of the HMI Materials, including
partial copies and copied materials in derivative works.
D. HMI reserves all rights not expressly granted under this Agreement.
2. HMI TRADEMARKS
A. TRADEMARK LICENSE GRANT.
(1) HMI is the owner of the "Health Magic" trade name, "Health Talk" mark,
U.S. Trademark Application Number 75/323223, the "Compass Man Design", U.S.
Trademark Application Number 75/459701, as well as the rights to marks
associated with HealthCompass developed by HMI specifically for use with
HealthCompass as HealthCompass is presented on a customer's web site, whether a
word, graphic, animated or sound mark (the "HMI Marks"). During the Term, HMI
grants to Licensee a non-exclusive license to use the HMI Marks in conjunction
and integrated with HealthCompass (the "Licensed Activities"). Licensee will use
the HMI Marks solely in connection with the Licensed Activities. HMI does not
grant Licensee the right to use the HMI Marks in connection with any products,
services and/or business other than the Licensed Activities.
(2) Licensee will always use the HMI Marks on and in connection with the
Licensed Activities in a style or size of print distinguishing it from
accompanying wording or text. Licensee will display the symbol "TM" to the right
and slightly above the last letter of the HMI Marks identified by HMI as
requiring a "TM" when displayed on promotional and other materials used in
advertising and rendering the Licensed Activities.
(3) Except as contemplated by this Agreement, the license to use the HMI
Marks granted by Part II.2.A(1) of this Agreement may not be assigned or
otherwise transferred by Licensee. HMI does not grant, and nothing in this
Agreement will be construed as granting, Licensee the right to license,
sublicense or authorize others to use the HMI Marks.
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B. QUALITY CONTROL.
(1) Licensee's use of the HMI Marks and the nature and quality of the
Licensed Activities promoted and marketed by Licensee under the HMI Marks will
at all times comply with HMI's written standards and specifications attached
hereto as EXHIBIT D (and including as such standards and specifications are
revised by HMI from time-to-time upon written notice to Licensee). Licensee
shall be permitted a reasonable period of time to bring its use of the HMI Marks
into conformance with any changes in such standards and specifications. Licensee
will permit HMI to reasonably inspect any materials used by Licensee in the
promotion and marketing of the Licensed Activities under the HMI Marks and all
other records relating to the quality of such activities.
(2) Licensee will provide HMI with "proofs" or draft "web pages" of all
materials used in the identification and or promotion of the Licensed Activities
under the HMI Marks for approval by HMI prior to their use which approval shall
not be unreasonably withheld or delayed. Materials used in the identification
and/or promotion of the Licensed Activities will include, but are not limited
to, business cards, stationery, letterhead, web pages and promotional materials.
(3) If HMI notifies Licensee in writing that the Licensed Activities and/or
any materials used by Licensee in the promotion and marketing of the Licensed
Activities do not meet the quality standards of HMI as reasonably determined by
HMI, Licensee will cease use the HMI Marks in any manner or in connection with
the Licensed Activities and materials in question. If, within sixty (60) days
after receiving the above written notification from HMI, Licensee cures or
otherwise corrects to HMI's reasonable satisfaction the failure to meet the
quality standards of HMI, Licensee will be entitled to resume its use of the HMI
Marks in connection with the promotion and marketing of the Licensed Activities.
C. TRADEMARK OWNERSHIP.
(1) Licensee acknowledges that, as between HMI and Licensee, HMI's rights
in the HMI Marks are valid, that each is the exclusive property of HMI, and can
lawfully be used only with the express license or consent of HMI. Specifically,
as between HMI and Licensee, Licensee acknowledges HMI's common law rights in
the HMI Marks. Licensee will not at anytime do, or cause to be done any act or
thing contesting or in any way impairing or intending to impair the validity of
and/or HMI's rights, title and interest in and to the HMI Marks.
(2) Licensee will not in any manner represent that it owns the HMI Marks.
Licensee will not register or apply to register the HMI Marks either alone or in
combination with any other word(s) and/or design(s), in any country, state or
jurisdiction.
(3) Licensee acknowledges that its use of the HMI Marks will not create any
rights, title, or interest in or to said mark in Licensee's favor, but that all
use of the HMI Marks by Licensee will inure to the benefit of HMI.
D. HMI MARKS IN LICENSEE WEB SITES. Subject to the other provisions of this Part
II.2, Licensee agrees to place a HealthMagic logo (in the form of the Compass
Man Design at least 100x70 pixels in size) on all pages on the Licensee Web
Sites containing HealthMagic Content.
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3. PROPRIETARY RIGHTS
As between HMI and Licensee, the HMI Materials are owned by and shall
remain the sole property of, HMI, contain, embody and are based on patented or
patentable inventions, trade secrets, copyrights and other intellectual property
rights (collectively, "IP Rights") owned or controlled by HMI and HMI shall
continue to be the sole owner of all IP Rights in and to the HMI Materials,
including, without limitation, any derivative works of the HMI Materials
produced by HMI or on HMI's behalf. Licensee agrees that it will provide all
reasonable cooperation and assistance to HMI, at HMI's expense, in taking any
action necessary or appropriate to establish, confirm and defend HMI's IP
Rights, including, without limitation, (i) transferring and assigning to HMI any
rights, title and interest that Licensee may have in and to the HMI Materials
(to the extent, if any, that ownership of the HMI Materials does not
automatically vest in HMI by virtue of this Agreement or otherwise) and (ii) the
preparation, filing and prosecution of patent, copyright and trademark
applications and the offering of testimony and other support in connection with
any legal proceedings brought by or against HMI relating to HMI's IP Rights.
A. As between HMI and Licensee, the Licensee Components are owned by and shall
remain the sole property of, Licensee, contain, embody and are based on IP
Rights owned or controlled by Licensee and Licensee shall continue to be the
sole owner of all IP Rights in and to the Licensee Components, including,
without limitation, any derivative works of Licensee Components produced by
Licensee. HMI agrees that it will provide all reasonable cooperation and
assistance to Licensee, at Licensee's expense, in taking any action necessary or
appropriate to establish, confirm and defend Licensee's IP Rights, including,
without limitation, (i) transferring and assigning to Licensee any rights, title
and interest that HMI may have in and to the Licensee Components (to the extent,
if any, that ownership of the Licensee Components does not automatically vest in
Licensee by virtue of this Agreement or otherwise) and (ii) the preparation,
filing and prosecution of patent, copyright and trademark applications and the
offering of testimony and other support in connection with any legal proceedings
brought by or against Licensee relating to Licensee's IP Rights.
4. NONCOMPETITION
A. Within the United States and within any other country in which HMI does
business and/or in which HealthCompass (or any portion thereof) is marketed
and/or licensed, Licensee shall not, outside of this Agreement or any other
agreement with HMI: (i) develop itself, contract for the creation of on its
behalf, or represent that it has any product(s) or service(s) that duplicate to
any significant degree the functionality of HealthCompass; (ii) support or
distribute any such products(s) or service(s); or (iii) enter into or maintain
contractual relationships with third parties under which a material portion of
the revenue Licensee receives pursuant to such relationships derives from the
sale or license by such third parties of any such product(s) or service(s).
B. Each party acknowledges and agrees that the restrictive covenants placed on
such party in this Part II.4 are reasonable and necessary to protect the
legitimate interests of the other party and that any violation of such
restrictive covenants will result in irreparable injury to the other party. Each
party hereby irrevocably waives any right to challenge or otherwise attempt to
invalidate any of the restrictive covenants that such party is subject to, or
any part(s) thereof. Each party agrees that, in the event it violates any of the
restrictive covenants to which it is subject, the other party shall be entitled
to preliminary and permanent injunctive relief as well as an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which such other party may be entitled at law or in equity. If it
is determined that
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any of the restrictive covenants set forth in this Part II.4, or any part(s)
thereof, are illegal or unenforceable, it is the parties' intent that the scope
of the covenant be reduced to conform to the requirements of law.
C. For so long as Licensee continues to use any of the HMI Materials, Licensee's
obligation under this Part II.4 shall survive the termination of this Agreement
for any reason.
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PART III. SET-UP, MAINTENANCE AND SUPPORT SERVICES; HOSTING SERVICES
1. SET-UP SERVICES
Upon the Effective Date of this Agreement, HMI and Licensee shall commence
(or continue as the case may be) good faith discussions and cooperate towards
producing a mutually agreed upon document specifying the requirements for
setting up HealthCompass for Licensee (the "Release Definition"). HMI and
Licensee shall each perform the tasks required of it by the Release Definition
(with HMI's tasks referred to herein as the "Set-Up Services"). HMI shall be
responsible for overall management of setting HealthCompass up for Licensee and
shall use commercially reasonable efforts to maintain the agreed upon schedule
for final completion, and to identify and resolve, or assist Licensee in the
resolution of, any problems encountered in the timely completion of each task. A
work-in-progress draft of the Release Definition is attached to this Agreement
as EXHIBIT F in the form of the HealthCompass Onsite for TheHealthChannel
Requirements, dated July 26, 1999.
2. MAINTENANCE AND SUPPORT SERVICES
EXHIBIT B to this Agreement describes the maintenance and support services
for the HMI Materials ("Maintenance and Support Services"). Maintenance and
Support Services will be provided by HMI on the terms set forth in EXHIBIT B.
3. HEALTHCOMPASS HOSTING.
HealthMagic will provide Licensee with services for hosting of
HealthCompass on the World Wide Web portion of the Internet (the "Hosting
Services"). HealthCompass will provide the Hosting Services so that
HealthCompass is accessible from the Licensee Web Sites via the World Wide Web
portion of the Internet twenty-four (24) hours a day, seven (7) days a week,
except for scheduled maintenance and required repairs, and except for any loss
or interruption due to causes beyond HMI's control or which are not reasonably
foreseeable by HMI, including, but not limited to, interruption or failure of
telecommunication or digital transmission links and Internet slow-downs or
failures. HealthCompass will be hosted by HMI on HMI's own servers located
within a secure location at HMI's facilities or on servers specifically
designated for HMI at a third-party secured site provider selected by HMI. PART
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IV. FINANCIAL STRUCTURE
1. SET-UP AND MAINTENANCE FEES
A. As compensation for the Set-Up Services, Licensee shall pay HMI, via wire
transfer to an account designated by HMI, and within fifteen (15) days after the
Effective Date, a one-time fee of Ten Thousand Dollars ($10,000).
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2. LICENSE FEES
A. There will be no additional license fees for the terms of this contract.
B. With respect to each Payment Period during the Term, HMI shall be entitled to
additional fees ("Additional Fees") for such Payment Period pursuant to the
revenue sharing provisions set forth in EXHIBIT E.
C. Licensee shall use commercially reasonable efforts to advertise, promote and
market HealthCompass to its End-Users and potential customers.
3. LICENSEE APPLICATIONS
The gross revenues, if any, generated by either party through any Licensee
Application created by Licensee using HealthQuery or the Health Vectors Tool
shall be shared equally between Licensee and HMI. If and to the extent revenues
generated by such a Licensee Application are subject to sharing pursuant to this
Part IV.3 and also subject to any of the revenue sharing provisions in Part
IV.2, such revenues shall be shared pursuant to the applicable revenue sharing
provisions in Part IV.2, with the sharing of any revenues generated by such
Licensee Applications which are not subject to any of the revenue sharing
provisions in Part IV.2 being determined by this Part IV.3.
4. AUDITS
For three (3) years after the close of each Payment Period, Licensee shall
keep full and accurate books of accounts and copies of all documents and other
material necessary to calculate amounts due HMI pursuant to Part IV.2 and shall
make such books of accounts, documents and other materials available for
inspection by HMI upon HMI's reasonable notice and during normal business hours.
In the event such inspection reveals any underpayments in Licensee's payment
obligations and, taking into account any overpayments uncovered by the
inspection, the aggregate amount actually paid to HMI is less than the aggregate
amount due to HMI (the difference between such amounts hereinafter referred to
as the "Underpayment Amount"), Licensee will promptly pay to HMI the
Underpayment Amount plus interest calculated at the lower of one and one-half
percent (1.5%) per month or the highest interest rate permitted by law on the
Underpayment Amount, from the date of underpayment by Licensee until the date
HMI is paid the Underpayment Amount. In addition, if the Underpayment Amount
exceeds five percent (5%) of the amount due to HMI, Licensee will reimburse HMI
for its reasonable audit and inspection costs.
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5. COST OF PERFORMANCE; TAXES
A. Except as otherwise set forth herein, neither party shall be obligated to pay
any other expenses which the other party may be liable for based upon or in
connection with the transactions contemplated by this Agreement.
B. Licensee shall pay all taxes arising out of this Agreement except taxes based
upon the net income of HMI.
6. PAYMENT DUE
All amounts payable to HMI under this Agreement are to be paid in US
Dollars by wire transfer to an account designated by HMI. Such amounts shall be
due and payable in full in accordance with the time periods specified in this
Agreement for such amounts or, if no time period is specified, within fifteen
(15) days of the date Licensee receives an invoice from HMI for such amounts.
Any payment not made by Licensee when due under this Agreement will be subject
to interest from the date such payment was due through the date paid, at an
annual rate of two percent (2%) over the prevailing prime interest rate as fixed
and published in the Wall Street Journal in effect as of the date on which such
payment should have been paid to HMI. If any payment (and/or applicable
interest) remains unpaid for more than forty-five (45) days after the date due,
HMI may terminate this Agreement by providing written notice to Licensee.
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PART V. WARRANTIES
1. HMI WARRANTIES
A. HMI warrants to Licensee, as of the Effective Date, as follows:
(1) Subject to Part V.1.B below, HMI warrants that, during the thirty (30)
days immediately following the delivery of HealthCompass (the "Warranty
Period"): (i) performance of HealthCompass as delivered will not deviate
materially from the documentation accompanying HealthCompass; and (ii) any date
sensitive software components (i.e., software components the functionality of
which includes processing, providing and/or receiving date data) of
HealthCompass will be year 2000 compliant (i.e., will, when used in accordance
with associated documentation be capable of correctly processing, providing
and/or receiving date data from, into, within or between the twentieth and
twenty-first centuries). For purposes of Part V.1.A(ii) the Warranty Period
shall be from the initial delivery of HealthCompass until December 31, 2000. If
Licensee believes there has been a breach of this warranty and so notifies HMI
in writing within the Warranty Period, then HMI will promptly investigate the
matter to determine the nature of the suspected breach. If it is determined that
there has been a breach of this warranty, then HMI's sole obligation, and
Licensee's exclusive remedy, will be for HMI to correct or modify HealthCompass
to make it perform as warranted.
(2) Subject to Part V.1.B below, HMI warrants that the HMI Materials shall
not: (a) constitute, or contain material that would constitute, libel,
defamation or slander; or (b) constitute, or contain material that would
constitute, an invasion of the rights to publicity of any third party or other
similar right. Except as set forth in Part VI.1.B, to the extent the breach of
this Part V.1.A(2) is due to content not developed or owned by HMI, HMI's
exclusive liability and Licensee's sole remedy for breach of this Part V.1.A(2)
shall be for HMI to remove any content which is the subject of the warranty
claim in a commercially reasonable timely fashion.
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(3) Subject to Part V.1.B below, HMI warrants that the HMI Materials do not
infringe any third party copyrights, issued U.S. patents or trademarks or
misappropriate any trade secrets rights of a third party. If a third party
brings an action against Licensee making allegations which, if true, would
constitute a breach of this warranty for which HMI is responsible, or if HMI
anticipates such an action, HMI shall have the option, at its expense, to: (i)
modify the infringing item(s) to be noninfringing without materially changing
the functionality of such item(s); or (ii) obtain for Licensee a license to
continue using such item(s). This Part V.1.A(3) and Part VI.1.B state HMI's
entire obligation to Licensee and Licensee's sole remedy with respect to any
claim of intellectual property infringement with respect to the HMI Materials.
B. HMI is not responsible for any claimed breaches of the foregoing warranties
set forth in Part V.1 caused by: (i) software or other materials furnished to
HMI by Licensee pursuant to this Agreement, (ii) modifications made to the HMI
Materials by anyone other than HMI and its authorized personnel working at HMI's
direction; (ii) the combination, operation or use of the HMI Materials with any
third-party equipment or software or other items that HMI did not supply to
Licensee (including, without limitation, any Licensee provided or developed
equipment or software); or (iii) failure to use any new or corrected versions of
HMI Materials made available by HMI.
C. HMI does not warrant that the HMI Materials will be error-free or that their
operation will be uninterrupted. Licensee acknowledges that it is solely
responsible for the results obtained from use of the HMI Materials.
2. LICENSEE WARRANTIES
Licensee warrants that the Licensee Components and non-HMI Content
displayed or appearing on, or otherwise a part of, the pages of the Licensee Web
Sites including, without limitation, advertisements and the content accessed by
selecting such advertisements, in conjunction with Licensee's use of
HealthCompass shall not: (a) constitute, or contain material that would
constitute, libel, defamation or slander; (b) constitute, or contain material
that would constitute, an invasion of the rights to publicity of any third
party; or (c) infringe upon the IP Rights of any third party.
3. WARRANTY DISCLAIMER
THE WARRANTIES EXPRESSLY SET FORTH IN THIS Part V BY EACH PARTY ARE IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND
ANY IMPLIED WARRANTIES ARISING FROM STATUTE, COURSE OF DEALING, COURSE OF
PERFORMANCE OR USAGE OF TRADE.
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PART VI. OTHER TERMS AND CONDITIONS
1. GENERAL INDEMNIFICATION
A. Licensee shall defend at its expense, indemnify and hold HMI and its
respective officers, directors, shareholders, employees and agents harmless
from, and pay all settlements, costs and expenses (including, without
limitation, costs of investigation and reasonable legal fees and expenses),
damages, liabilities and awards, arising out of or relating to third party
claims based on: (i) claimed breach by Licensee of any of the warranties being
provided by Licensee in Part V.2 of this Agreement; (ii) breach by Licensee of
its security and other obligations with respect to End User Data pursuant to
Part VI.6; (iii)
<PAGE>
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breach by Licensee of its confidentiality obligations pursuant to Part VI.5 of
this Agreement; (iv) Licensee's negligence or intentional tortious conduct; or
(v) use of or inability to use the HMI Materials or the Licensee Web Sites.
B. HMI shall defend at its expense, indemnify and hold Licensee and its
respective officers, directors, shareholders, employees and agents harmless
from, and pay all settlements, costs and expenses (including, without
limitation, costs of investigation and reasonable legal fees and expenses),
damages, liabilities and awards, arising out of or relating to third party
claims based on: (i) claimed breach of any of the warranties being provided by
HMI in Part V.1 of this Agreement for which HMI is responsible; (ii) claim that
the execution by HMI of this Agreement or compliance by HMI with its terms and
conditions conflicts with or causes a breach or violation of any other
agreement; (iii) breach of its confidentiality obligations pursuant to Part VI.5
of this Agreement; or (iv) HMI's negligence or intentional tortious conduct.
2. INDEMNIFICATION PROCEDURES
A. NOTICE. Promptly after receipt by any entity entitled to indemnification
under this Agreement of notice of the commencement or threatened commencement of
any civil, criminal, administrative, or investigative action or proceeding
involving a claim in respect of which the indemnitee will seek indemnification
pursuant to the appropriate provision of this Agreement, the indemnitee shall
promptly notify the indemnitor of such claim in writing. No failure to so notify
an indemnitor shall relieve it of its obligations under this Agreement except to
the extent that it can demonstrate damages attributable to such failure. Within
fifteen (15) days following receipt of written notice from the indemnitee
relating to any claim, but no later than ten (10) days before the date on which
any response to a complaint or summons is due, the indemnitor shall notify the
indemnitee in writing if the indemnitor elects to assume control of the defense
and settlement of that claim (a "Notice of Election"). The indemnitor shall
reimburse the indemnitee for all costs and expenses incurred by the indemnitee
in responding to such action or proceeding during the period between when the
indemnitee has notified the indemnitor of the claim in writing and when the
indemnitor delivers a Notice of Election in response or the expiration of the
required notice period for the Notice of Election to be delivered, whichever
comes first.
B. PROCEDURE FOLLOWING NOTICE OF ELECTION. If the indemnitor delivers a Notice
of Election relating to any claim within the required notice period, the
indemnitor shall be entitled to have sole control over the defense and
settlement of such claim; provided that (i) the indemnitee shall be entitled to
participate in the defense of such claim and to employ counsel at its own
expense to assist in the handling of such claim, and (ii) the indemnitor shall
obtain the prior written approval of the indemnitee before entering into any
settlement of such claim or ceasing to defend against such claim. After the
indemnitor has delivered a Notice of Election and has assumed its obligations
under this Part VI.2 relating to any claim in accordance with the preceding
paragraph, the indemnitor shall not be liable to the indemnitee for any legal
expenses incurred by the indemnitee in connection with the defense of that
claim. In addition, the indemnitor shall not be required to indemnify the
indemnitee for any amount paid or payable by the indemnitee in the settlement of
any claim for which the indemnitor has delivered a timely Notice of Election if
such amount was agreed to without the written consent of the indemnitor.
C. PROCEDURE WHERE NO NOTICE OF ELECTION IS DELIVERED. If the indemnitor does
not deliver a Notice of Election relating to any claim within the required
notice period, the indemnitee shall have the right to defend the claim in such
manner as it may deem appropriate, at the cost and expense of the indemnitor.
The indemnitor shall promptly reimburse the indemnitee for all such costs and
expenses.
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3. LIMITATION OF LIABILITY
To the maximum extent permitted by applicable law, each party's entire
liability and the other party's exclusive remedy for damages from any event or
claim arising under or relating to this Agreement, for any cause whatsoever, and
regardless of the form of action, whether in contract or in tort or any other
theory of liability (including, without limitation, breach of warranty and
negligence), will be limited as follows:
A. Subject to Part VI.3.C, each party will be liable for direct damages only, in
an amount not to exceed, in the aggregate for all claims, the greater of: (a)
the cumulative amount paid or payable to HMI under this Agreement in the three
(3) month period immediately proceeding the event giving rise to such liability,
or (b) [TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000)].
B. Subject to Part VI.3.C, in no event will either party be liable for any lost
profits, loss of business, loss of use, lost savings or other consequential,
special, incidental, indirect, exemplary or punitive damages, even if advised of
the possibility of such damages.
C. The limitations set forth in Part VI.3.A and Part VI.3.B shall not apply to:
(i) claims that are the subject of indemnification pursuant to Part VI.1; or
(ii) claims arising out of the breach of, Part II.4, Part IV or Part VI.5.
D. Each party shall have a duty to mitigate damages for which the other party is
responsible.
E. The remedies expressly stated in this Agreement are the sole and exclusive
remedies of either party. The limitations of liability set forth in this Part
VI.3 will survive the failure of any limited or exclusive remedy set forth in
this Agreement and the expiration or termination of this Agreement.
4. FORCE MAJEURE
Neither party will be deemed in default of this Agreement to the extent
that performance of its obligations, or attempts to cure any breach, are delayed
or prevented by reason of any act of God, cause outside of the party's
reasonable control or other force majeure; provided that, such party promptly
gives to the other party written notice of the condition and undertakes
commercially reasonable efforts to circumvent the cause of the delay or minimize
the extent of the delay. In any such event, the time for performance or cure
will be extended for a period equal to the duration of the delay, not to exceed
four (4) weeks. If the notifying party does not resume performance of such
obligations or cure such breach before the end of such four (4) week period, the
other party will be entitled to terminate the Agreement immediately without any
obligation or liability to the delayed party for doing so.
5. NONDISCLOSURE
A. Each party acknowledges that it may be furnished with or may otherwise
receive or have access to non-public information which relates to past, present
or future research, development, improvements, inventions, processes, software,
techniques, designs or other technical data, contact lists or other compilations
for marketing or development, or regarding administrative, management, financial
or marketing activities of HMI, Licensee or other third parties which have
provided information to HMI or Licensee. "Confidential Information" is all
information (i) identified in written, graphic electronic or oral format by the
Disclosing Party as confidential, trade secret or proprietary information, or
(ii) by its nature or the circumstances surrounding its disclosure should
reasonably be regarded as Confidential Information. "Disclosing Party" is the
party disclosing Confidential Information. "Receiving Party" is
<PAGE>
Page 15
the party receiving Confidential Information. Without limiting the generality of
the foregoing, Confidential Information shall be deemed to include End-User Data
and data about End Users contained in Health Vectors and the terms and
conditions of this Agreement.
B. All Confidential Information furnished or otherwise disclosed to either party
in the course of performing this Agreement shall remain the property of and be
deemed proprietary and confidential to the Disclosing Party (with the exception
of End-User Data which shall, as between HMI and Licensee, be deemed to be
confidential to, and remain the property of, the disclosing End User). Without
limiting the foregoing, the Receiving Party agrees: (a) to the extent permitted
by applicable law, to hold such Confidential Information in strict confidence
and in trust for the Disclosing Party; (b) to use the same degree of care in
protecting the Confidential Information for which it protects its own such
confidential information of like nature, but in no instance with less than
reasonable care to protect such Confidential Information against unauthorized
use or disclosure; and (c) to restrict disclosure of such Confidential
Information to its employees who (i) are directly participating in the
performance of this Agreement; (ii) have a need to know such Confidential
Information; and (iii) have, upon the request of the Disclosing Party as a
prerequisite to the release of Confidential Information, executed an employee
nondisclosure agreement in a form mutually acceptable to the Disclosing Party
and the Receiving Party.
C. The Receiving Party further agrees that, with regard to Confidential
Information of the Disclosing Party which the Receiving Party has received or
itself generated, it will not disclose or allow to be disclosed any such
Confidential Information to any third party, including, without limitation, any
subsidiary, Affiliate, joint venture, any other contractual, cooperative, or
affiliated entity of the such third party, or any independent entity without the
express prior written consent of the Disclosing Party, which consent the
Disclosing Party may give or withhold in its sole discretion unless disclosure
of such Confidential Information is required by applicable law. If a Disclosing
Party consents to the disclosure of such Confidential Information to any such
third party, such disclosure shall not be made until Receiving Party, the
Disclosing Party and the third party have entered into a non-disclosure
agreement in a form acceptable to the Disclosing Party.
D. The Receiving Party shall not reproduce, disclose or use the Confidential
Information of the Disclosing Party, except for the sole purpose of performing
its obligations under this Agreement or in accordance with applicable law.
Without limiting the generality of the preceding sentence, the Receiving Party
may not use Confidential Information of the Disclosing Party which it has
received, collected or itself generated for purposes other than performing its
obligations under this Agreement without the prior written consent of the
Disclosing Party.
E. The limitations on reproduction, disclosure, or use of Confidential
Information shall not apply to, and neither party shall be liable for,
reproduction, disclosure, or use of any particular Confidential Information of
the other that:
(1) was developed independently by the Receiving Party prior to the receipt
of any Confidential Information under this Agreement, as evidenced by written
documents prepared or received by such party prior to the receipt of any
Confidential Information under this Agreement;
(2) was received without any obligation of confidentiality from a third
party that was rightfully in possession of such information and had the right to
disclose it to the Receiving Party without an obligation of confidentiality;
<PAGE>
Page 16
(3) has been published or otherwise disclosed to others by the Disclosing
Party without restrictions, or has come within the public knowledge or become
generally known to the public without breach of this Agreement;
(4) is a derivative of End-User Data (or data about end users contained in
Health Vectors) that: (i) is of a statistical/demographic nature and provided in
an anonymous form, as an aggregate of the similar information of multiple end
users that does not individually identify specific end users (e.g., the number
of HealthCompass end users who are males between the ages of 25 and 40 reporting
a particular condition); or (ii) specific to a particular end user but provided
in a "blinded" fashion that does not reveal identifying data about such end user
(e.g., the age of the youngest HealthCompass end user in a geographic area
reporting a particular condition);
(5) is legally required to be disclosed pursuant to a judicial order
(provided that, prior to such disclosure, the party ordered to make such a
disclosure promptly informs the other of the order).
The party seeking the protection of any of items (1) through (5) above shall
bear the burden of proof with respect to any such exception. Immediately upon
receipt by the Receiving Party of any request to release, disclose or use
Confidential Information, where such release, disclosure or use is required by
applicable law and is otherwise in contravention to the terms and conditions of
this Agreement, Receiving Party shall provide Disclosing Party written notice of
such request. Such notice shall be calculated to be sufficiently descriptive and
in advance of any such release, disclosure or use so as to allow Disclosing
Party the opportunity to raise any appropriate objections. Disclosing Party
shall be solely responsible for raising such objections and shall bear all
costs, including legal costs, associated with such objections. Confidential
Information may be disclosed on a need to know basis to the accountants and
attorney of the Receiving Party without the consent of the Disclosing Party.
F. Should the Receiving Party receive information with uncertain status, the
Receiving Party agrees to treat such information as Confidential Information
until it receives written verification from the Disclosing Party that such
information is not Confidential Information.
G. Neither the execution of this Agreement, nor the furnishing of any
Confidential Information by the Disclosing Party or the Receiving Party shall be
construed as granting to either party expressly, by implication, by estoppel or
otherwise, any license under any trademark, copyright, invention or other
proprietary right now or hereafter owned or controlled by the party furnishing
such information.
H. Upon termination or expiration of this Agreement for any reason, the
Receiving Party shall, at the Disclosing Party's option, either return or
destroy all Confidential Information, and shall destroy all analyses,
compilations, forecasts, studies and other documents based upon or derived from
such Confidential Information, and in each case shall retain no copies and shall
cause an officer of the Receiving Party to certify in writing that it has
complied fully with its obligations under this Part VI.5.H.
I. With regard to Confidential Information which either party has received or
itself generated, in the event either party becomes aware of any release,
disclosure or use of such Confidential Information which has not been authorized
by this Agreement, it will promptly, at its sole expense, (i) notify the
Disclosing Party in writing; (ii) take such actions as may be necessary or
reasonably requested by the Disclosing Party to minimize such unauthorized
release, distribution or use and any damage to the Disclosing Party resulting
therefrom; and (iii) to the extent permitted by applicable law, cooperate in all
reasonable respects with the Disclosing Party to minimize any such release,
distribution, use and damage.
<PAGE>
Page 17
J. The provisions of this Part VI.5 shall survive the termination or expiration
of this Agreement for any reason for a period of five (5) years; provided,
however, that such provision shall continue to apply: (i) to End-User Data; and
(ii) as necessary to comply with any applicable laws, regulations, ordinances
and codes.
6. RIGHTS IN DATA
A. Within ninety (90) days of the Effective Date, the parties shall in good
faith commence negotiations to mutually agree upon a set of standards to govern:
(i) the location of particular elements or types of End-User Data, as between
HealthCompass and the Licensee Web Sites; (ii) the presentation of derivatives
of End-User Data to third parties; (iii) physical and logical security measures
to safeguard against the unauthorized alteration of access to, or destruction or
loss of, End User Data; and (iv) other security policies related to HMI's and
Licensee's uses of End User Data (items (i) through (iv) collectively, the
"End-User Data Standards"). Such Standards will be based on, or take into
account standards or guidelines promulgated by: (i) federal or applicable state
or local governmental organizations; and (ii) industry recognized
groups/organizations. Once established and agreed upon, each party shall be
bound by and comply with such End-User Data Standards.
B. Notwithstanding Part VI.6.A above:
(1) HMI shall have: (i) the right to provide market research or data
analysis on the whole of HealthCompass (i.e., on all End User Data contained in
HealthCompass including, without limitation, the Licensee Sourced End User Data)
to third parties; and (ii) ongoing access to Licensee Sourced End User Data as
necessary to perform its obligations under this Agreement including, without
limitation, the ongoing maintenance, support and enhancement of HealthCompass.
(2) Licensee's access to the End-User Data contained in HealthCompass of
End-Users whose data was entered into HealthCompass through a Licensee Web Site
(and which has not been removed by such End-User) (hereinafter referred to as
"Licensee Sourced End-User Data") shall generally be for the purpose of
performing market research of a statistical or demographic nature (specifically,
trend spotting and making observations about such end users).
(3) Licensee shall establish physical and logical data security and
protection measures no less stringent than those maintained by HMI (or on HMI's
behalf) to protect/secure/safeguard End-User Data prior to viewing, displaying
or maintaining copies of Licensee Sourced End-User Data outside of
HealthCompass.
7. SECURITY
A. DIGITAL SECURITY. To restrict access to HealthCompass to authorized end users
whose identity has been verified, and to secure transmission of information over
the Internet between such end users and Licensee, when using HealthCompass,
access to, and use of, HealthCompass shall be protected by a Digital Certificate
based public-key encryption process. Accordingly, prior to using HealthCompass,
End Users shall be required to present a Digital Certificate to Licensee from an
HMI approved Certifying Authority. Upon End-User request, HMI will serve as the
Certifying Authority and issue an HMI Digital Certificate to the End-User. If
the End-User elects to obtain the Digital Certificate from an HMI approved
Certifying Authority (as opposed to HMI), the End-User will be responsible for
any costs associated with acquiring such Digital Certificate.
<PAGE>
Page 18
B. SECURITY AND PROTECTION OF END-USER DATA.
(1) HMI shall use commercially reasonable efforts to institute and maintain
industry recognized "best practices" (limited to the commercial sector) for
physical and logical security measures to safeguard against the unauthorized
alteration or access to, or destruction or loss of, End User Data. As of the
Effective Date, HMI is a participant in several privacy programs that govern the
privacy and security of information over the Internet, including TRUSTe, HON
code and the Better Business Bureau (BBB Online). Without limiting the
generality of the foregoing, HMI shall comply with applicable mandatory
standards promulgated by federal or applicable state or local jurisdictions and
relating to the safeguarding of data that is of a same or similar nature to
medical data in the context of the Internet or World Wide Web; provided that
failure by HMI to comply with such applicable mandatory standards shall not be
deemed to be a breach of this Agreement where HMI provides Licensee with
commercially adequate assurances that such non-compliance does not place on
Licensee any liability that would not have existed in the absence of such
non-compliance.
(2) Licensee agrees that the Licensee Web Sites, as well as Licensee's use
of the Licensee Web Sites and HealthCompass, and Licensee's use of Licensee
Sourced End-User Data, shall be subject to the HMI promulgated security policies
set forth in EXHIBIT C and the relevant security requirements established in the
Health Insurance Portability and Accountability Act.
8. INSURANCE
Each party will have and maintain in force the following insurance
coverages:
A. Comprehensive or Commercial General Liability Insurance, including Products,
Completed Operations Liability and Personal Injury, Blanket Contractual
Liability and Broad Form Property Damage Liability coverage for damages to any
property with a minimum limit of $1,000,000 per occurrence and $5,000,000 in the
aggregate.
B. Employee Dishonesty and Computer Fraud coverage for loss arising out of or in
connection with any fraudulent or dishonest acts committed by the employees or
agents of the insured party, acting alone or in collusion with others, including
the property and funds of others in their care, custody or control, in a minimum
amount of $5,000,000.
C. Errors and Omissions Liability Insurance covering the liability for financial
loss due to error, omission, negligence of employees and machine malfunction in
an amount of at least $5,000,000.
D. Software Errors and Omissions Liability Insurance covering the liability for
financial loss due to software errors and omissions in an amount of at least
$5,000,000.
Each party shall cause its insurers to issue certificates of insurance
evidencing that the coverages and policy endorsements required under this
Agreement are maintained in force and that not less than thirty (30) days
written notice shall be given to the other party prior to any modification,
cancellation or non-renewal of the policies.
9. TERM AND TERMINATION
A. The term of this Agreement shall commence upon the Effective Date and expire
on the fifth (5th) anniversary of the Effective Date (the "Initial Term"),
unless terminated earlier or extended in accordance with this Agreement. This
Agreement (including, without limitation, the license granted in Part II.1) will
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Page 19
automatically renew for successive twelve (12) month periods unless either party
notifies the other in writing at least sixty (60) days prior to the end of the
Initial Term or any then-applicable renewal period that it desires this
Agreement to expire at the end of the Initial Term or renewal period. The
Initial Term and any renewal period(s) are collectively referred to herein as
the "Term".
B. If either party believes that the other party has failed in any material
respect to perform its obligations under this Agreement, then that party may
provide written notice to the breaching party describing the alleged failure in
reasonable detail. If the breaching party does not, within one hundred and
eighty (180) calendar days after receiving such written notice, either (i) cure
the material failure or (ii) if the breach is not one that can reasonably be
cured within one hundred and eighty (180) calendar days, develop a plan to cure
the failure and diligently proceed according to the plan until the material
failure has been cured, then the non-breaching party may terminate this
Agreement for cause by providing written notice to the non-breaching party.
Termination of this Agreement will be in addition to, and not in lieu of, other
remedies available to the terminating party under this Agreement.
C. HMI may terminate this Agreement by giving Licensee prior written notice and
designating a date upon which such termination shall be effective if Licensee
makes a general assignment for the benefit of creditors, files a voluntary
petition of bankruptcy, suffers or permits the appointment of a receiver for its
business or assets, becomes subject to any proceeding under any bankruptcy or
insolvency law, whether domestic or foreign, that is not dismissed within one
hundred and twenty (120) days, or has wound up or liquidated, voluntarily or
otherwise.
D. Within thirty (30) days after the expiration or termination of this Agreement
for any reason: (i) Licensee shall cease all use of and, at HMI's election,
return to HMI or destroy the original and all copies (including partial copies)
of all software, documentation, all HMI Confidential Information, and any other
products or materials licensed or otherwise provided to Licensee under this
Agreement (including, without limitation, the HMI Materials) ("HMI Items"); (ii)
all rights granted to Licensee in and to such HMI Items shall terminate.
Licensee shall certify in writing to HMI that it has fully performed its
obligations under this paragraph.
10. LAW AND DISPUTES
A. This Agreement will be governed by the laws of the State of [SOUTH CAROLINA],
without regard to any provision of [SOUTH CAROLINA] law that would require or
permit the application of the substantive law of any other jurisdiction.
B. INFORMAL DISPUTE RESOLUTION.
(1) Prior to the initiation of formal dispute resolution procedures, the
parties shall first attempt to resolve their dispute informally, as follows:
a) Upon the written request of a party, each party shall appoint a
designated representative whose task it will be to meet for the purpose of
endeavoring to resolve such dispute.
b) The designated representatives shall meet as often as the parties
reasonably deem necessary in order to gather and furnish to the other all
information with respect to the matter in issue which the parties believe to be
appropriate and germane in connection with its resolution. The representatives
shall discuss the problem and attempt to resolve the dispute without the
necessity of any formal proceeding.
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c) During the course of discussion, all reasonable requests made by
one party to another for nonprivileged information, reasonably related to this
Agreement, shall be honored in order that each of the parties may be fully
advised of the other's position.
d) The specific format for the discussions shall be left to the
discretion of the designated representatives.
(2) Formal proceedings for the resolution of a dispute may not be commenced
until the earlier of:
a) the designated representatives concluding in good faith that
amicable resolution through continued negotiation of the matter does not appear
likely; or
b) thirty (30) days after the initial written request to appoint a
designated representative pursuant to Paragraph (a) above (this period shall be
deemed to run notwithstanding any claim that the process described in this Part
VI.10.B was not followed or completed).
(3) Part VI.10.B shall not be construed to prevent a party from
instituting, and a party is authorized to institute, formal proceedings earlier
to avoid the expiration of any applicable limitations period, or to preserve a
superior position with respect to other creditors.
C. IMMEDIATE INJUNCTIVE RELIEF.
The parties agree that the only circumstance in which disputes between them
shall not be subject to the provisions of Part VI.10.B is where a party makes a
good faith determination that a breach of the terms of this Agreement by the
other party is such that a temporary restraining order or other injunctive
relief is the only appropriate and adequate remedy. If a party files a pleading
with a court seeking immediate injunctive relief and this pleading is challenged
by the other party and the injunctive relief sought is not awarded in
substantial part, the party filing the pleading seeking immediate injunctive
relieve shall pay all of the costs and attorney's fees of the party successfully
challenging the pleading.
D. BINDING ARBITRATION.
(1) Subject to Part VI.10.B above, questions or disputes arising out of or
relating to this Agreement will be determined by binding arbitration in
Columbia, South Carolina, under the American Arbitration Association ("AAA")
Commercial Arbitration Rules with Expedited Procedures in effect on the date
hereof, as modified by this Agreement.
(2) There will be one arbitrator selected by the parties within ten (10)
days of the arbitration demand or if not, by the AAA from its Large, Complex
Case Panel (or have similar professional credentials), who shall be an attorney
with at least fifteen (15) years commercial law experience. Any issues about
whether a claim is covered by this Agreement will be determined by the
arbitrator.
(3) As may be shown to be necessary to ensure a fair hearing: the
arbitrator may authorize limited discovery; and may enter pre-hearing orders
regarding, without limitation, scheduling, document exchange, witness disclosure
and issues to be heard. The arbitrator will not be bound by the rules of
evidence or of civil procedure, but may consider such writings and oral
presentations as reasonable people would use in the conduct of their day-to-day
affairs, and may require the parties to submit some or all of their case by
written declaration or such other manner of presentation as the arbitrator may
determine to be appropriate. The parties intend to limit live testimony and
cross-examination to the extent necessary to ensure a fair hearing on material
issues.
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(4) The parties agree that the arbitrator will be directed to use best
efforts to: (i) hold a private hearing within sixty (60) days after the initial
demand for arbitration; (ii) conclude the hearing within three (3) days; and
(iii) provide his or her written decision not later than fourteen (14) days
after the hearing. In making the decision and award, the arbitrator shall apply
the applicable substantive law. Absent fraud, collusion or willful misconduct by
the arbitrator, the arbitrator's award will be final, and judgment may be
entered in any court having jurisdiction thereof. The arbitrator will award
attorney's fees and costs to the prevailing party but will have no authority to
award any damages that are excluded by the terms and conditions of this
Agreement. Either party will have the right to apply at any time to a judicial
authority for appropriate injunctive or other interim or provisional relief, and
will not by doing so be deemed to have breached its agreement to arbitrate or to
have affected the powers reserved to the arbitrator.
(5) Neither party nor the arbitrator may disclose the existence, content or
results of an arbitration without the prior written consent of both parties.
E. Both HMI and Licensee agree to comply fully with all relevant export laws and
regulations of the United States to ensure that no information or technical data
provided pursuant to this Agreement is exported or re-exported directly or
indirectly in violation of law.
F. No proceeding, regardless of form, arising out of or related to this
Agreement may be brought by either party more than two (2) years after the
accrual of the cause of action, except that (i) proceedings related to violation
of a party's proprietary rights or any duty to protect Confidential Information
may be brought at any time within the applicable statute of limitations, and
(ii) proceedings for non-payment may be brought up to two (2) years after the
date the last payment was due.
11. GENERAL
A. Any notice or other communication required or permitted to be made or given
by either party pursuant to this Agreement will be in writing, and will be
deemed to have been duly given: (i) five (5) business days after the date of
mailing if sent by registered or certified U.S. mail, postage prepaid, with
return receipt requested; (ii) when transmitted if sent by facsimile, provided a
confirmation of transmission is produced by the sending machine and a copy of
such facsimile is promptly sent by another means specified in this section; or
(iii) when delivered if delivered personally or sent by express courier service.
All notices will be sent to the other party at its address as set forth below or
at such other address as such party will have specified in a notice given in
accordance with this section:
- ----------------------------------- -----------------------------------
In the case of Licensee: With a copy to:
- ----------------------------------- -----------------------------------
Thehealthchannel.com, Inc. Horowitz & Beam
3101 West Coast Highway 2 Venture Plaza
Suite 175 Suite 350
Newport Beach, CA 92663 Irvine, CA 92714
Attn: Richard Wolpow Attn: Lyn Buldac
Fax: 949-645-9728
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----------------------------------- -----------------------------------
In the case of HMI: With a copy to:
----------------------------------- -----------------------------------
HealthMagic, Inc. Shaw, Pittman, Potts & Trowbridge
1901 Main Street 1676 International Drive
Columbia, South Carolina 29201 McLean, Virginia 22102
Attn: Linda C. Klute Attn: Steven Meltzer, Esq.
Fax: 803-748-9989 Fax: 703-790-7901
----------------------------------- -----------------------------------
B. Each party will act in good faith in its performance of this Agreement and
will not unreasonably delay or withhold the giving of any consent, decision or
approval that is either requested by the other party or is reasonably required
by the other party in order to perform its responsibilities in accordance with
this Agreement.
C. Neither party may assign, delegate or otherwise transfer any right or
obligation set forth in this Agreement without the other party's prior written
consent, except that a party may assign any right or obligation set forth in
this Agreement to an Affiliate or to a successor entity in the event of a
merger, consolidation or sale of such party's business or all or substantially
all of such party's stock or assets, provided the assignee agrees in writing to
assume all of the assignor's obligations and liabilities under this Agreement,
and provided further that the substitution of the rights of the assignee for the
rights of the assignor does not materially increase the scope of Licensee's use
of HealthCompass or materially increase the burden or risk imposed on the other
party by this Agreement. Any purported assignment in violation of the preceding
sentence will be void and of no effect. This Agreement will be binding upon the
parties' respective successors and permitted assigns.
D. Except as otherwise permitted by the terms of this Agreement, all media
releases, public announcements, and public disclosures by either party relating
to this Agreement or the subject matter of this Agreement, including promotional
or marketing material, but not including announcements intended solely for
internal distribution or disclosures to the extent required to meet legal or
regulatory requirements beyond the reasonable control of the disclosing party,
shall be coordinated with and approved by other party prior to release.
Notwithstanding the preceding sentence, HMI may identify the Licensee as a
client and generally state the nature of HMI's relationship with the Licensee.
E. There are no intended third party beneficiaries of any provision of this
Agreement.
F. Licensee and HMI are and will remain independent contractors with respect to
all performance rendered pursuant to this Agreement. Neither Licensee nor any
employee or agent of Licensee will be considered an employee or agent of HMI for
any purpose. Neither HMI nor any employee or agent of HMI will be considered an
employee or agent of Licensee for any purpose. Neither party, nor its employees,
will have any authority to bind or make commitments on behalf of the other party
for any purpose, nor will it or they hold itself or themselves out as having
such authority. Each party will be solely responsible for supervising, providing
daily direction and control, paying the salaries (including withholding of
income taxes and social security), worker's compensation, disability benefits
and the like of its personnel.
G. The provisions of this Agreement will be deemed severable, and the
unenforceability of any one or more provisions will not affect the
enforceability of any other provisions. In addition, if any provision of this
Agreement, for any reason, is declared to be unenforceable, the parties will
substitute an
<PAGE>
Page 23
enforceable provision that, to the maximum extent possible in accordance with
applicable law, preserves the original intentions and economic positions of the
parties.
H. No failure or delay by either party in exercising any right, power or remedy
will operate as a waiver of such right, power or remedy, and no waiver will be
effective unless it is in writing and signed by the waiving party. If either
party waives any right, power or remedy, such waiver will not waive any
successive or other right, power or remedy the party may have under this
Agreement.
I. Any provisions of this Agreement that by their sense and context contemplate
continued performance or observance by one or both parties following the
expiration or termination for any reason of this Agreement will survive any such
expiration or termination.
J. Headings used in this Agreement are for convenience of reference only, and
will not be used to interpret or construe this Agreement.
K. The Exhibits referred to in and attached to this Agreement are made a part of
it as if fully included in the text.
L. This Agreement constitutes the entire agreement between the parties, and
supersedes all other prior or contemporaneous communications between the parties
(whether written or oral) relating to the subject matter of this Agreement. This
Agreement may be modified or amended solely in a writing signed by both parties.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same
instrument.
- --------------------------------------------------------------------------------
By signing below, each party acknowledges that it has read this Agreement,
understands it and, intending to be legally bound by this Agreement, has caused
its authorized representative to execute this Agreement as of the date first
written above.
HealthMagic, Inc. (HMI) TheHealthChannel (Licensee)
By: /s/ Gail M. Anderman By: /s/ Richard A. Wolpow
--------------------------- ------------------------------
Name: Gail M. Anderman Name: Richard A. Wolpow
------------------------- ----------------------------
Title: CBDO Title: Vice President Development
------------------------ ---------------------------
<PAGE>
Page A-1
EXHIBIT A
HMI ENGAGING APPLICATIONS
Instant Medical History-TM- Pre-Visit Symptom Interview and Histories*
Health at Home-Registered Trademark- Self-Care Guide*
MedAppraise-Registered Trademark- Adult Health Survey (release date not
established) *
Medical Data Source-Registered Trademark- Medical Topics*
The HMI Engaging Applications listed above with an asterisk are being licensed
to HMI by third parties and licensed by HMI to Licensee under agreements between
HMI and such third parties (the "Third Party Content Agreements"). HMI does not
warrant, guarantee or covenant that any such HMI Engaging Application will
remain available for use by Licensee beyond the expiration or termination of the
Third Party Content Agreement under which HMI has been granted the right to
license such HMI Engaging Application to Licensee and Licensee acknowledges and
agrees that following the expiration or termination of such Third Party Content
Agreement Licensee may be required by HMI to cease use of such HMI Engaging
Application and return and/or destroy any components of such HMI Engaging
Application then in Licensee's possession. In the event Licensee is required to
cease use of any such HMI Engaging Application, HMI reserves the right to
provide Licensee with a functionally and qualitatively equivalent replacement
application.
HealthMagic may, from time-to-time, offer Licensee the opportunity to license
HMI Engaging Applications in addition to those listed above ("Additional HMI
Engaging Applications"); provided that any such offer for any particular
Additional HMI Engaging Application may be contingent upon payment of additional
fees to HealthMagic and/or agreement with additional or different terms and
conditions, which shall apply only with respect to the Additional HMI Engaging
Application being offered to Licensee.
<PAGE>
Page B-1
EXHIBIT B
MAINTENANCE AND SUPPORT SERVICES
[NOTE: TO BE COMPLETED]
<PAGE>
Page C-1
EXHIBIT C
HMI SECURITY POLICIES
[NOTE: TO BE COMPLETED]
<PAGE>
Page D-1
EXHIBIT D
HMI CORPORATE IDENTITY STANDARDS
[NOTE: TO BE PROVIDED]
<PAGE>
Page E-1
EXHIBIT E
REVENUE SHARING
The Parties shall negotiate in good faith to reach a mutual agreement regarding
a revenue sharing structure on or before December 31, 1999. In the event the
Parties are unable to reach such an agreement by such time, HMI shall have the
right to add, insert and/or otherwise include advertising and other revenue
share opportunities as part of the HealthMagic Content linked to or otherwise on
the Licensee Web Sites with the net revenues generated by such opportunities
shared between HMI and Licensee with thirty percent (30%) of such revenues
allocated to Licensee and seventy percent (70%) of such revenues allocated to
HMI.
<PAGE>
Page F-1
EXHIBIT F
RELEASE DEFINITION
[NOTE: SEE THE HEALTHCOMPASS ONSITE FOR THEHEALTHCHANNEL REQUIREMENTS, DATED
JULY 26, 1999]
<PAGE>
EXHIBIT 10.2
CONTENT LICENSE AGREEMENT BETWEEN
INTEGRATIVE MEDICINE COMMUNICATIONS, INC. AND THEHEALTHCHANNEL.COM
DATED MARCH 24, 2000
<PAGE>
CONTENT LICENSE AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of this 24th
day of March, 2000 (the "Effective Date") by and between Integrative Medicine
Communications, Inc., a Massachusetts corporation with its principal place of
business at 1029 Chestnut Street, Newton, Massachusetts, 02464 ("IMC"), and
thehealthchannel.com, a Delaware Corporation with its principal place of
business at 3101 West Coast Highway, Suite 175, Newport Beach, CA 92663
("Host"). (IMC and Host are hereinafter sometimes referred to individually as a
"Party" and collectively as the "Parties.")
WHEREAS, Host [is building and will maintain] [maintains] a website on the
World Wide Web with an address of http://www.thehealthchannel.com (the
"Website"), on which it posts third-party content; and
WHEREAS, Host wishes from time to time to post on the Website certain
proprietary content owned or licensed by IMC, as more particularly described on
Exhibit A hereto (the "Content").
NOW, THEREFORE, in consideration of the mutual promises and in accordance
with the terms and conditions hereinafter set forth, the Parties agree as
follows:
1. GRANT OF LICENSE
1.1 Upon the terms and subject to the conditions and restrictions set forth
herein, IMC hereby grants to Host the non-exclusive, non-assignable,
non-transferable right and license to reproduce and display ("Post") Content as
follows: (i) Host may Post Consumer Content (as defined in Exhibit A) on the
Website beginning the effective date of this agreement; and (ii) Host may Post
Professional Content (as defined in Exhibit A) beginning ninety days after the
effective date of this agreement.
1.2 Visitors to or users of the Website ("Users") must be required to
register and obtain an access code to utilize the Professional Content as
defined in Exhibit A.
1.3 The grant of these licenses shall not be construed to grant any greater
proprietary or other right in the Content than expressly set forth in Section
1.1.
2. PAYMENTS
2.1 As consideration for the rights and license granted to Host hereunder
for the Consumer Content, Host shall pay IMC an annual license fee equal to
$80,000 payable in monthly increments of $6,667. The first payment is due upon
execution of this agreement. Subsequent payments shall be due on the first day
of each subsequent month.
2.2 In addition, as consideration for the rights and license granted to
Host hereunder for the Professional Content, the annualized license fee shall be
increased to $120,000 with monthly payments increasing to $10,000. This increase
will begin six months after the execution of this agreement until the end of the
Initial Term or Renewal Term as defined in Section 7.1.
2.3 Payments not paid to IMC by Host when due shall bear interest following
the date due at an annual rate of ten percent (10%) until paid.
3. PROVISION OF CONTENT
IMC shall provide the Content to Host in HyperText Markup Language (HTML)
format (or another mutually agreed upon format) within 30 days following the
execution by the Parties of this Agreement and Host's payment of the initial fee
due hereunder. Delivery of Content by IMC hereunder may be made by e-mail, or by
any other method mutually agreed upon by the Parties. "Renewal Term" (as defined
in Section 7.1) payments will remain at $10,000 per month.
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<PAGE>
4. MODIFICATION AND POSTING OF CONTENT
The Host shall not, without the prior written approval of IMC in each
instance: (a) modify or alter the Content in any respect, except as to software
coding format to the extent reasonably necessary to post the Content on the
Website and to match the Website's stylistic features; or (b) display portions,
excerpts or subsets of any monograph within the Content. If Host desires to
modify or alter the Content in any manner requiring IMC's written approval or to
display an excerpt from a monograph independently of the entire monograph, Host
shall first submit the proposed modification, alteration or excerpt (as the case
may be) to IMC for review and approval prior to any display or use thereof. IMC
will notify Host of its approval or disapproval of such modification, alteration
or excerpt within ten (10) business days after its receipt of such notice and,
in the event of disapproval, of its reason therefor. Any excerpt from a
monograph permitted hereunder shall be accompanied by a hyperlink to another
page on the Website on which the subject monograph is displayed in its entirety.
Host assumes full responsibility for any modifications, alterations or excerpts
to or from the Content made or used pursuant to this Section notwithstanding
IMC's approval of same, and agrees to indemnify, defend and hold harmless IMC,
its officers, directors, employers, agents, successors and assigns, authors,
editors and licensors from and against any and all losses, liabilities, damages,
costs and expenses directly or indirectly arising out of or resulting from same.
5. NOTICES, CREDIT AND DISCLAIMERS
5.1 On each screen of text within the Website containing any material
from the Content, Host shall include: (a) notices, in form and substance
satisfactory to IMC, of IMC's or its licensors' (as the case may be) ownership
of the copyright in the Content and ownership of any trademarks associated
therewith, and the date of release or publication of the Content or portions
thereof and any updates or supplements thereto, (b) an acknowledgment, in form
and substance satisfactory to IMC, of the source of the Content and of IMC as
the copyright owner and/or publisher thereof (including any logo provided from
time to time by IMC and a notation of the book or other publication from which
such Content was excerpted or derived and any trademarks associated therewith);
and (c) a link in a prominent place (to a URL to be provided by IMC) to allow
Users the option to purchase the book or other publication from which such
Content was derived.
5.2 Host shall include at the bottom of each monograph from the
Content to be displayed on the Website the following disclaimer and/or such
additional or other appropriate disclaimers and warnings as IMC may reasonably
request from time to time:
"The information contained above is general in nature, and is not intended
as a guide to self-medication by consumers or meant to substitute for
advice provided by your own physician or other medical professional. The
reader is advised to consult with a physician or other medical professional
and to check product information (including package inserts) for changes
and new information regarding dosage, precautions and contra indication
before administering any drug, herb or supplement discussed herein. No
claims or endorsements are made for any drug, herb, supplement, compound,
therapy or treatment discussed herein. Neither the editors nor the
publisher accepts any responsibility for the accuracy of the information or
the consequences from use or misuse of the information contained herein."
6. ADDITIONAL AGREEMENTS BY HOST
6.1 IMC shall have the right, at any time and from time to time at no
cost to IMC, to access the
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<PAGE>
Website and view the Content as displayed thereon for purposes of verifying
Host's compliance with the provisions of this Agreement. As "Users" are required
to obtain access codes to utilize the portion of the Website where the
Professional Content is posted, Host shall assign to IMC three no-charge user
access codes to the Website.
6.2 Host shall correct any errors or inaccuracies in the Content
introduced or caused by Host or its agents or contractors promptly after
learning of the existence of such errors or inaccuracies. Host shall promptly
make corrections and changes to the editorial content requested by IMC for the
purpose of (i) correcting material errors, omissions or inaccuracies or (ii)
complying with any judicial, governmental or administrative decision, rule or
order or settlement agreement by which IMC is bound or (iii) avoiding potential
liability from continued publication of such materials.
6.3 The right of Host to use any trade names or trademarks of IMC or
its licensors (collectively, "Trademarks") is limited to the display of such
Trademarks in conjunction with the Content as displayed in the Website and in
promotional materials for the Website, such use to be in such form and in such
manner as has been specifically approved in writing in each instance by IMC. All
such use of the Trademarks shall accrue to the benefit of IMC and its licensors,
as the case may be. Host will not use any Trademarks in any other manner without
the prior written consent of IMC.
6.4 Host shall be responsible for compliance, at its own expense, with
all federal, state, local and foreign laws, rules, regulations, ordinances and
orders of any governmental body, department or agency or judicial authority,
applicable to its display, publication, distribution, dissemination or other use
of the Content and the Trademarks pursuant to this Agreement.
6.5 Host hereby agrees to indemnify, defend and hold harmless IMC, its
officers, directors, employees, agents, successors and assigns, authors, editors
and licensors from and against any and all loss, liability, damage, cost and
expense arising directly or indirectly out of (i) any breach by Host of its
obligations under this Agreement; (ii) Host's transcription, digitization, or
other processing or transmission of the Content or portions thereof; (iii) the
operation of the Website or the manner in which the Content is displayed, posted
or utilized on the Website; or (iv) the content of the Website other than the
editorial content of any Content licensed hereunder or portions thereof.
7. TERMINATION
7.1 This Agreement shall commence upon the Effective Date and shall
continue in force for a term (the "Term") which shall consist of an initial Term
(the "Initial Term") of one year. It shall be automatically renewed for
additional successive one year Terms ("Renewal Term(s)") unless one Party shall
give written notice of termination to the other Party no later than 60 days
prior to the expiration of the Initial Term or the then current Renewal Term, as
applicable, or unless otherwise terminated as hereinafter provided.
7.2 In the event that either Party commits a breach of this Agreement,
upon written notice ("Breach Notice") from the non-defaulting Party, the
defaulting Party shall use its best efforts to cure such breach within 30 days
after the receipt of the Breach Notice. If such breach is not cured within 30
days of receipt of the Breach Notice, the non-defaulting Party may give written
notice ("Termination Notice") to the defaulting Party of the non-defaulting
Party's election to terminate this Agreement on a date specified in the
Termination Notice. Such right of termination shall not be exclusive of any
other remedies or means of redress to which the non-defaulting Party may be
lawfully entitled.
7.3 If either Party: (i) makes an assignment for the benefit of
creditors; (ii) becomes insolvent;
3
<PAGE>
(iii) files a voluntary petition for bankruptcy; (iv) acquiesces to an
involuntary bankruptcy petition; (iv) is adjudicated as bankrupt; or (v) ceases
to do business, the other Party, at its option, may immediately terminate this
Agreement upon giving written notice thereof.
7.4 The provisions of Sections 6.5, 7.4, 7.5, 8, 9 and 10
shall survive the expiration or early termination of this Agreement for any
reason. In addition, the following rights and obligations of the Parties shall
survive any expiration or termination of this Agreement to the degree necessary
to permit their complete fulfillment or discharge: (i) the obligation of Host to
pay the applicable payments accrued under Section 2; and (ii) any cause of
action or claim of either Party, accrued or to accrue, because of any breach or
default by other Party.
7.5 In the event of termination or expiration of this
Agreement for any reason, Host shall immediately cease posting the Content on
the Website and cease all use of the Content and any Trademarks for any purpose.
In addition, Host shall destroy all versions and copies of the Content in
whatever form or medium in Host's custody or under Host's control. An officer of
Host shall certify such action in writing to IMC.
8. OWNERSHIP OF THE CONTENT
8.1 Host agrees and acknowledges that, as between the Parties, IMC or
its licensors own all right, title and interest in and to the Content and the
Trademarks, including, without limitation, all patent rights, copyrights,
trademark rights, trade secret rights and other intellectual property rights
therein. Host shall take no action inconsistent with such ownership, and shall
not at any time do or cause to be done any act or thing contesting or in any way
impairing or tending to impair any part of such right, title and interest. Host
acknowledges that its use of the Content and the Trademarks as herein provided
shall not create any right, title and interest therein in Host's favor. Host
further agrees not to copy, reproduce, sell, license, subscribe, lease,
distribute, disseminate, broadcast, webcast or otherwise use the Content or
portions thereof other than as expressly permitted herein.
8.2 Host shall post notices and disclaimers in form and substance
satisfactory to IMC to inform Users who have access to Content or portions
thereof by or through the Website (i) that they may only use the Content or
portions thereof exclusively as a reference or informational tool for their
personal use; and (ii) that they may not reproduce or distribute the Content or
portions thereof for any commercial or other purpose.
8.3 Host shall promptly notify IMC of any unauthorized use or
infringement of the Content (or portions thereof) or the Trademarks by Users or
others of which Host becomes aware. IMC shall have the right, at its expense, to
bring an action on account of such unauthorized uses or infringements. Host
shall cooperate with IMC in such action in such manner as the IMC may reasonably
request at IMC's cost and expense.
8.4 IMC shall indemnify, defend, and hold Host harmless from and
against any and all losses, expenses, damages, liabilities, taxes, penalties,
assessments, judgments, and costs (including reasonable attorneys' fees)
(collectively, "Liabilities") arising out of any third party claims, actions or
proceedings brought against Host so far as same are based upon a claim that the
Content, in the form provided by IMC to Host hereunder, infringes any U.S.
patent, copyright, trade secret, trademark or other intellectual property right;
PROVIDED THAT Host provides IMC with prompt written notice of any claims and
reasonable assistance and sole authority to defend or settle such claims. IMC
shall have no obligation pursuant to this Section to the extent that such
Liabilities arise out of the breach of this Agreement or any other action or
failure to act by the Host. If any portion of the Content is, or in IMC's
reasonable opinion is likely to become, the subject of a claim of infringement,
IMC may, at its option, (i) procure for Host the right to continue using such
Content; (ii) replace or modify such Content so that it becomes non-infringing;
or (iii) if the remedies in (i) or (ii) are not reasonably available to IMC
despite IMC's commercially reasonable efforts, terminate Host's right to use
such
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<PAGE>
Content without liability to Host hereunder. This Section sets forth IMC's sole
liability and Host's sole remedy with respect to any claims of intellectual
property infringement relating to this Agreement.
9. CONFIDENTIALITY
The terms and provisions of this Agreement, any amounts paid to IMC
hereunder, and any and all other confidential business information disclosed by
either Party to the other, including, without limitation, information concerning
their respective businesses and plans, products, and customers shall be
considered to be and treated by the Parties as "Confidential Information" for
purposes of this Agreement. Each Party agrees to maintain the other Party's
Confidential Information in confidence and not to use such other Party's
Confidential Information for any purpose other than as set forth in this
Agreement. All such information disclosed shall remain the sole property of the
Party disclosing it, and the receiving Party shall have no interest in or rights
to that information except as expressly set forth in this Agreement. In the
event of a breach of this Section 9, the non-defaulting Party shall be entitled
to equitable and injunctive relief in addition to any other available remedies.
10. LIMITATION OF LIABILITY
10.1 IMC MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT
TO THE CONTENT OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT, INCLUDING
BUT NOT LIMITED TO, ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. Without limiting the generality of the
preceding sentence, HOST understands, acknowledges and agrees that: (a) due to
constant changes in information resulting from ongoing research and clinical
experience, differences in opinion among authorities, unique individual
circumstances and the possibility of human error in compiling the Content, it is
possible that information in the Content may be or become inaccurate or
incorrect, either generally or in specific applications; and (b) IMC makes no
representations or warranties with respect to, and assumes no responsibility or
liability for, the accuracy or correctness of the Content or the consequences of
any use or misuse of the Content by HOST or any healthcare practitioner, patient
or other person accessing the Content, whether on or through the Website or
otherwise.
10.2 UNDER NO CIRCUMSTANCES, SHALL IMC BE LIABLE FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF IMC HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES) ARISING FROM THE USE, PUBLICATION,
OR TRANSMISSION OF THE CONTENT OR THE BREACH OF ANY PROVISION OF THIS AGREEMENT,
SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST
BUSINESS. IMC'S TOTAL LIABILITY (WHETHER IN CONTRACT, TORT OR OTHERWISE) ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL NOT, UNDER ANY CIRCUMSTANCES,
EXCEED THE AGGREGATE AMOUNT PAID TO IMC HEREUNDER.
11. MISCELLANEOUS
11.1 RECITALS. The recitals herein constitute an integral part of the
agreement reached by the Parties and are to be considered as such.
11.2 BREACH OR DEFAULT. The waiver by either Party of a breach or
default of any provision of this Agreement by the other Party shall not
constitute a waiver by such Party of any succeeding breach of the same or other
provision; nor shall any delay or omission on the part of either Party to
exercise or avail itself of any right, power or privilege that it has or may
have hereunder operate as a waiver of any such right, power or privilege by such
Party.
5
<PAGE>
11.3 FORCE MAJEURE. Neither Host nor IMC shall be liable for any
breach of this Agreement occasioned by any cause beyond the reasonable control
of such party, which for purposes of this Agreement shall mean governmental
action, war, riot, or civil commotion, fire, floods, labor disputes, restraints
affecting shipping or credit, delay of carrier, black-outs, brown-outs, computer
generated worms, viruses, and other self-destructing code, a substantial change
to the commercial structure of the Internet or any other causes which could not
with reasonable diligence be controlled or prevented by the parties.
11.4 HEADINGS. The headings of the Sections of this Agreement are for
convenience only and will not be of any effect in construing the meanings of the
Sections and subsections.
11.5 COUNTERPARTS; FACSIMILE. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Any signed copy of this
Agreement delivered by facsimile transmission shall for all purposes be treated
as if it were delivered containing an original signature of the party whose
signature appears in the facsimile.
11.6 NO ASSIGNMENT. Host may not assign this Agreement or any of its
rights hereunder or delegate any of its obligations hereunder without the prior
written consent in each instance of IMC.
11.7 INVALIDITY. If any covenant or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by reason of any rule of
law, administrative order, judicial decision or public policy, all other
conditions and provisions of this Agreement shall, nevertheless, remain in full
force and effect.
11.8 NO JOINT VENTURE. Nothing in this Agreement nor the relations
between the Parties of this Agreement shall be construed to constitute a
partnership or joint venture between the Parties of this Agreement. Neither
Party shall have the right or authority to bind or obligate the other Party in
any manner whatsoever and shall not expressly or impliedly incur any liability
or obligation on behalf of the other Party.
11.9 NOTICES. All notices or other communications that shall or may be
given pursuant to this Agreement, shall be in writing, in English, and shall be
sent by certified or registered mail, return receipt requested with postage
prepaid, by facsimile, telex or cable communication, or by hand delivery. Such
communications shall be deemed given and received upon dispatch, if sent by
facsimile, telex, or cable communication; or upon delivery if hand delivered; or
within five (5) days of mailing, if sent by certified or registered mail, and
shall be addressed to the parties as set forth below or to such other addresses
as the parties may designate in writing from time to time.
IF TO IMC: Integrative Medicine Communications, Inc.
1029 Chestnut Street
Newton, Massachusetts 02464
Attn: Bernie Brieter, Controller
Fax: (617) 641-2301
IF TO HOST: thehealthchannel.com
3101 West Coast Highway, Suite 175
Newport Beach, CA 92663
Attn: Richard Wolpow, VP, Business Development
Fax: (949) 645-9728
COPY TO: Horwitz & Beam
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<PAGE>
The Venture Plaza
Suite 350
Irvine, CA 92618
Attn: Lynn Bolduc
Fax: (949) 453 9416
11.11 GOVERNING LAW. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts, without regard to conflicts of law
principles. Any action, suit or other proceeding arising out of or based upon
this Agreement shall be brought in the courts of the Commonwealth of
Massachusetts or any federal court located in such state, and the Host
irrevocably consents and submits to the exclusive jurisdiction of such courts
for the purpose of any such action, suit or proceeding.
11.12 ENTIRE AGREEMENT. This Agreement, including the exhibits
attached hereto, state the entire agreement between the Parties relating to the
subject matter hereof and supersedes any and all prior Agreements and
communications, written or oral, with respect thereto. No waiver, amendment or
modification of this Agreement may be made except by an instrument in writing
signed by both Parties or, in the case of a waiver, by the Party waiving
compliance.
IN WITNESS WHEREOF, each of the Parties has caused a duly authorized
officer or agent to execute the Agreement to be effective as of the Effective
Date set forth in the opening paragraph of this Agreement.
INTEGRATIVE MEDICINE
COMMUNICATIONS, INC. THEHEALTHCHANNEL.COM, INC.
By: /s/ Ronald J. Turcotte By: /s/ Richard A. Wolpow
------------------------ --------------------------
Signature Signature of Authorized Officer
Richard A. Wolpow
Ronald J. Turcotte Vice President, Business Development
Director, Electronic Products
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<PAGE>
EXHIBIT A
CONTENT
CONSUMER CONTENT
- - Patient Education Condition, Herb and Supplement Monographs from
INTEGRATIVE MEDICINE ACCESS: PROFESSIONAL GUIDE TO CONDITIONS, HERBS &
SUPPLEMENTS (including updates and photographic images for the herb
monographs)
Copyright: 2000 Integrative Medicine Communications
- Drug/Herb Interaction Database (when available)
Copyright: To be provided upon availability
- Drug/Supplement Interaction Database (when available)
Copyright: To be provided upon availability
- Drug/Nutrient Depletion Database (when available)
Copyright: To be provided upon availability
- - HERBAL MEDICINE: EXPANDED COMMISSION E MONOGRAPHS (including photographic
images)
Copyright: 2000 American Botanical Council
Published by: Integrative Medicine Communications
- - INTEGRATIVE MEDICINE COMMUNICATIONS HERB & DIETARY SUPPLEMENT REPORT
electronic monthly newsletter
Copyright: 2000 Integrative Medicine Communications
- - AN INTEGRATIVE MEDICINE PRIMER
Copyright: Integrative Medicine Communications
PROFESSIONAL CONTENT
- - Professional Condition, Herb and Supplement Monographs from INTEGRATIVE
MEDICINE ACCESS: PROFESSIONAL GUIDE TO CONDITIONS, HERBS & SUPPLEMENTS
(including updates and photographic images for the herb monographs)
Copyright: 2000 Integrative Medicine Communications
- Drug/Herb Interaction Database (when available)
Copyright: To be provided upon availability
- Drug/Supplement Interaction Database (when available)
Copyright: To be provided upon availability
- Drug/Nutrient Depletion Database (when available)
Copyright: To be provided upon availability
8
<PAGE>
EXHIBIT 10.3
LIVEWARE5, INC. AGREEMENT FOR SERVICES BETWEEN
LIVEWARE5, INC. AND THEHEALTHCHANNEL.COM, INC.
DATED MARCH 24, 2000
<PAGE>
LIVEware5, Inc. Agreement for Services
This service agreement entered this 24th day of March 2000 by and between
LIVEware5 Inc., an Iowa corporation with principle offices at 425 Second Ave.
SE, Suite 600 Cedar Rapids, IA 52401, hereafter referred to as LW5 and
thehealthchannel.com, Inc., a corporation with principle offices at 3101 West
Coast Highway, Suite 175 Newport Beach, CA 92663, hereafter referred to as
Reseller.
Whereas LW5 is a provider of online communication and learning technologies &
services including but not limited to online application for rich media
distribution and user collaboration, content development and production, and
hosting and network services; and
Whereas Reseller is a corporation that provides communication and distribution
channels to its' customers; and
Whereas RESELLER desires to use LW5's products & services for the development,
management and delivery of streaming media-based programming;
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1) SCOPE OF WORK
The scope of work for deliverables is contained in its' entirety in this
"Agreement" (Agreement, Addendum A, and signed Customer Requirements Documents).
This is the complete understanding between the parties of deliverables being
contracted for under the terms of this Agreement. LW5 is committed to providing
these products and services, as described in this Agreement, within the
specified timeframe to RESELLER. RESELLER is committed to providing the
necessary internal support to LW5 to allow for the timely completion. Changes to
the scope of work are only binding when in writing and accepted by signature of
both parties.
2) LICENSE AND RIGHTS
LW5 retains all licenses, title and rights to the services, service marks,
trademarks, and other materials that are provided to enable the delivery of
programs to RESELLER customers. This includes Intelligent Learning Network-TM-,
Question Retrieval System-TM-, KnowledgePortal-TM- and other marks and products
owned by LW5.
RESELLER retains all licenses, titles, and rights to the materials, service
marks and trademarks developed by or exclusively for the RESELLER that are
included on the RESELLER KnowledgePortal-TM-. RESELLER hereby acknowledges that
they have rights and ownership of the materials provided to LW5 for distribution
on the KnowledgePortal-TM-. If these materials are owned or delivered by a third
party, RESELLER assumes all responsibility for obtaining written authorization
as required from third parties, including speakers, affiliate corporations or
other parties to transmit these materials electronically via videoconferencing,
Internet delivery or other delivery technologies.
3) MARKETING & PROMOTION
RESELLER is responsible for promoting the use of KnowledgePortal-TM- and LW5
services within their customer base and creating demand for streaming media
programming. RESELLER will use its' best efforts to build awareness and interest
for the services. LW5 will provide RESELLER with start up materials for customer
advertising of the products and services. RESELLER will then make copies and
provide their own materials to customers for the services. LW5 will provide
RESELLER with logos and other electronic artwork.
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LW5 is allowed to name RESELLER as a customer in LW5 marketing and presentation
materials, but not RESELLER's customer's unless specifically stated in writing
by RESELLER.
4) NONEXCLUSIVE ARRANGEMENT
Nothing in this Agreement shall be construed to prevent either party from
entering into arrangements similar to this Agreement with any other entities.
Nothing in this Agreement shall be construed to prevent LW5 from providing
Services to any other entities.
5) FEE SCHEDULE
The fees to be paid for products delivered and services performed under this
agreement are detailed in Addendum A- Scope of Work and/or any Custom Exhibit
created and agreed to by both parties for unique customer requirements.
6) PAYMENT TERMS
RESELLER agrees to pay LW5 as follows:
Creation of RESELLER Knowledge Portal: Upon signing contract
Creation of RESELLER Customer Knowledge Portal: Upon signing contract
Hosting Charges: Net 30 days; invoiced monthly.
Streaming Participation (video streaming) Charges: Net 30 days; invoiced
monthly.
Application Development Services: 50% upfront; 50% at billed completion, net 30
days.
Consulting Fees: Net 30 days; invoiced monthly.
The streaming service charges will be based on actual hours of usage and will be
accompanied by a detailed report of users, the programs they accessed and
participation for each KnowledgePortal.
LW5 will invoice RESELLER for Services and other expenses to be paid by RESELLER
within ten (10) business days after the end of each month. It is understood that
RESELLER will be a direct customer of LIVEware5 and will be responsible for
payment of services that LW5 provides to RESELLER for RESELLER and RESELLER
customers.
7) REIMBURSEMENT FOR EXPENSES
If RESELLER requests LW5 to undertake activities in the marketing and
performance of services which are not typically provided to other RESELLERS or
customers of LW5 without charge, RESELLER shall reimburse LW5 for all reasonable
expenses incurred by LW5 in the performance of such activities. RESELLER will be
notified by LW5 of activities that would be considered not typical and would
result in incremental expense recovery. LW5 will provide RESELLER an estimate of
those expenses in writing prior to the commencement of the activity.
8) TERMS AND CONDITIONS
The term of this agreement is one (1) years from acceptance date and will
continue in effect until the earlier of:
a) Expiration or
b) mutual agreement of parties to termination, expressed in writing or
c) a material breach by either party, which the breaching party fails to cure
within thirty (30) days after receipt of written notice.
This agreement shall be automatically renewed for successive one (1) year terms
unless written notice is given by
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<PAGE>
either party within sixty (60) days prior to the anniversary date.
9) TERMINATION
The Agreement shall terminate upon the first to occur of (a) the expiration of
this agreement as outlined herein or (b) the other party's breach of material
provision of this Agreement, which breach has not been cured to the reasonable
satisfaction of the non-breaching party within thirty (30) days after the
non-breaching party notifies the breaching party, in writing, of such breach, or
(c) as otherwise provided in this Agreement. This agreement can be terminated
with ninety (90) days written notice by either party. All fees due shall be paid
immediately upon termination and any costs incurred to transfer materials to
RESELLER will be invoiced within sixty (60) days thereafter.
10) INDEMNIFICATION
RESELLER and LW5 each shall indemnify, defend and hold harmless the other from
and against any and all claims for physical property damage, physical personal
injury or wrongful death to the extent that such claims arise out of the
negligence or willful misconduct of the respective indemnifying party, its
employees, agents, affiliates or contractors in connection with the provision of
Services or other performance pursuant to this Agreement. The indemnified party
shall promptly notify the indemnifying party in writing of any such claims.
11) REPRESENTATIONS AND WARRANTIES
RESELLER hereby warrants, represents and agrees that:
a) RESELLER has complete power and authority to enter into this agreement.
b) RESELLER is under no restrictions or prohibition with respect to its rights
to execute this contract and with its rights to perform the terms and
provisions hereof.
c) RESELLER will pay all sums due third parties that provide materials or
deliver programs materials or other products and services provided to LW5.
RESELLER shall not make nor permit its employees, agents or affiliates to make,
any misrepresentations as to the capabilities, specifications or functionality
of the Services, or any warranties with respect to the products and services
other than those that are authorized by LW5 in writing.
LW5 and RESELLER desire to enter into an arrangement whereby RESELLER will
engage its sales force to promote to its customers and prospective customers
(collectively termed "Customers") the streaming media services of LW5, in
exchange for the consideration and subject to the terms and conditions set forth
herein. It is expressly understood and agreed that the agency created herein is
a limited agency and RESELLER shall have only those rights and responsibilities
specifically described in this Agreement. No agency rights or responsibilities
shall arise by operation of law. RESELLER is not a legal representative of LW5
and LW5 is not a legal representative of RESELLER. Neither party is granted by
the terms or execution of this Agreement, or otherwise, any right or authority
to assume or create any responsibility on behalf of, or in the name of, the
other, or to bind in any manner what-so-ever.
LIVEware5 hereby warrants, represents and agrees that:
a) LW5 has the complete power and authority to enter into this agreement.
b) LW5 is under no restrictions or prohibition with respect to its rights to
execute this contract and with its rights to perform the terms and
provisions hereof.
LW5 represents and warrants that the provision of services hereunder will not
infringe upon any United States
3
<PAGE>
patents, copyrights, trademarks or other proprietary rights of third parties.
LW5 shall indemnify, defend and hold harmless RESELLER from and against any
claims for
infringement upon any United States patents, copyrights, trademarks or other
proprietary rights brought by third parties with respect to Services; provided,
however, that RESELLER promptly notifies LW5 of any such claim.
THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDLING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR ANY PARTICULAR PURPOSE.
12. CONFIDENTIALITY
The terms of this agreement are "Confidential" and, except as required by law,
shall not be disclosed to any other party without the written consent of the
non-disclosing party. Each party shall preserve in strict confidence information
such as trade secrets, strategic plans, proprietary information and other
sensitive information obtained in the course of execution of this agreement. For
a period of one (1) years after the termination or expiration of this Agreement
LW5 and RESELLER will not directly approach the other parties customers nor will
either party share confidential information that is not available publicly
during that time. In handling the other party's customer, LW5 will ensure all
information shared during the execution of Services that all information made
available is considered confidential.
13. FORCE MAJEURE
Neither LW5 or RESELLER shall be held liable for any delay or failure to perform
any part of this Agreement (other than payment of amounts due hereunder) for any
cause beyond its control and without its fault or negligence, including but not
limited to acts of civil or military authority, government regulations,
embargoes, epidemics, wars, terrorist acts, riots, insurrections, fires,
explosions, nuclear accidents, strikes, extended power blackouts, natural
disasters or any law, regulation or of any government agency or court of
competent jurisdiction affecting either of the parties hereto in the performance
of their obligations hereunder. The parties' obligations, which cannot be
performed because of the force majeure event, will be suspended until the force
majeure is resolved. If such contingency occurs and continues for more than five
(5) business days, the non-delaying party may, without any liability or
associated costs to the other party, terminate the Services requested or any
portions thereof relating to the affected Services.
14. LIMITATION OF LIABILITY
NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR THROUGH THE OTHER FOR ANY
INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL, PUNITIVE OR SIMILAR DAMAGES, OR
FOR ANY LOST PROFITS OR BUSINESS OF ANY KIND OR NATURE WHATSOVERVER, REGARDLESS
OF THE FORM OF ACTION AND WHETHER EITHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. WITH RESPECT TO THIRD PARTIES THAT USE SERVICES
THROUGH RESELLER, RESELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LW5 FROM
AND AGAINST ANY CLAIMS FOR SUCH DAMAGES BROUGHT BY SUCH THIRD PARTIES. IN NO
EVENT WILL LW5'S LIABILITY UNDER THIS AGREEMENT EXCEED THE AMOUNTS PAID BY
RESELLER PURSUANT TO THIS AGREEMENT.
15. MISCELLANEOUS
a. NOTICES
All notices, reports, records or other communications which are required or
permitted to be given to the parties
4
<PAGE>
under this Agreement shall be sufficient in all respects if given in writing and
delivered in person, by facsimile, email, by overnight courier or by registered
or certified mail, postage prepaid, return receipt requested, to the receiving
party at the address set forth below.
Notice shall be deemed given on the date of delivery, in the case of personal
delivery or telecopy, or on the delivery or refusal date, as specified on the
return receipt, in the case of overnight courier or registered mail.
If to LW5: LIVEware 5, Inc.
Ms. Kimberley Lehrman
PO Box 75002
Cedar Rapids, IA 52401
319/298-3455
319/298-3457 (fax)
With copy to: Shuttlesworth & Ingersoll
Mr. Dean Einck
500 Firstar Bank Building
Cedar Rapids, IA 52401
319/365-9461
If to RESELLER: Thehealthchannel.com, Inc.
3101 W. Coast Highway, Suite 75
Newport Beach, CA 92663
949/645-9970
949/645-9728 (fax)
With Copy to: Horwitz & Beam
Attn: Lynne Bolduc
Two Venture Plaza, Suite 350
Irvine, CA 92618
949/453-0300
949/9614 (fax)
b. APPLICABLE LAW
This agreement and its validity, construction and performance shall be governed
in all respects by the internal laws of the State of Iowa. All controversies
arising under this agreement shall be litigated in a court of competent
jurisdiction within the County of Linn, State of Iowa, and in no other venue.
c. SEVERABILITY
If any term or provision of this Agreement shall, to any extent, be determined
to be invalid or unenforceable by court or body of competent jurisdiction, then
(i) both parties shall be relieved of all obligations arising under such
provision and this Agreement shall be deemed amended by modifying such provision
to the extent necessary to make it valid and enforceable while preserving its
intent, and (ii) the remainder of this Agreement shall be valid and enforceable.
d. ASSIGNMENT
Neither party may assign this Agreement without the other party's prior written
consent not to be unreasonably withheld: provided, however, that any transfer or
issuance of capital stock shall not be deemed an assignment for
5
<PAGE>
purposes herein, and further provided that LW5 may assign this Agreement to an
affiliate, without prior consent.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be signed
as of the date first set forth above.
Thehealthchannel.com LIVEWARE5, INC.
BY: /s/ Richard Wolpow BY: /s/ Bruce Lehrman
----------------------------------- ---------------------
Date: 2/24/00 Date: 3/24/00
----------------------------------- ---------------------
Name: Richard Wolpow Name: Bruce Lehrman
----------------------------------- ---------------------
Title: Vice President Business Development Title: President
----------------------------------- ---------------------
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<PAGE>
ADDENDUM A
SCOPE OF WORK
CREATION OF "KNOWLEDGEPORTAL" AND THREADED DISCUSSION
LW5 will provide a URL address to Reseller to create a link from the Reseller or
Reseller's Customer site to LIVEware5's KnowledgePortal site. This site will be
customized with Reseller logo or customer logo, and Internet links, program
listings and descriptions. The initial set-up will be done by LW5. The link
establishes the interface through which customers will participate in streaming
media based programs.
<TABLE>
<CAPTION>
- ------------------------------------------- ----------------------------- -----------------------------------
KNOWLEDGEPORTAL-TM- MSRP Reseller Cost
- ------------------------------------------- ----------------------------- -----------------------------------
<S> <C> <C>
Purchase $15,000 $10,000
- ------------------------------------------- ----------------------------- -----------------------------------
12 Month Lease* $1,500/ month $1,000/ month
- ------------------------------------------- ----------------------------- -----------------------------------
Reseller KnowledgePortal $10,000
- ------------------------------------------- ----------------------------- -----------------------------------
Optional: Private Chat and Threaded $500 $400
Discussion Setup
- ------------------------------------------- ----------------------------- -----------------------------------
</TABLE>
* Minimum lease commitment is 12 months. First 3 payments can be applied to
purchase price.
HOSTING AND DISTRIBUTION SERVICES
LW5 will maintain a network of videoservers, WWW servers and necessary bandwidth
to support KnowledgePortal usage for Reseller customers worldwide. LW5 will
manage hardware, software and upgrades. Services will be available 24 hours per
day, 7 days per week under normal operating conditions. Catastrophic server or
bandwidth loss, which is out of LW5 control, will be reported within 24 hours to
Reseller.
The system has been designed using easy-to-follow database entries. LW5 will
set-up the KnowledgePortal with guidance from Reseller on content. A site
administrator can modify these templates at their discretion. LW5 will provide 4
hours of technical training at no charge to Reseller and Reseller Customers as
they learn to use and administer the KnowledgePortal. This training will be
accomplished using phone, videoconference and Internet communications or in LW5
offices.
<TABLE>
<CAPTION>
- ------------------------------------------- ----------------------------- -----------------------------------
NETWORK COSTS- HOSTING MSRP Reseller Cost
- ------------------------------------------- ----------------------------- -----------------------------------
<S> <C> <C>
Hosting Service (Up to 50MB) $50 $50
- ------------------------------------------- ----------------------------- -----------------------------------
Hosting Service (Additional increments of $25 $25
50MB)
- ------------------------------------------- ----------------------------- -----------------------------------
Hosting Threaded Discussion $25 $25
- ------------------------------------------- ----------------------------- -----------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------- ----------------------------- -----------------------------------
NETWORK COSTS- STREAMING MSRP Reseller Cost
- ------------------------------------------- ----------------------------- -----------------------------------
<C> <S> <S>
110K Audio/Video Stream $17 $9
- ------------------------------------------- ----------------------------- -----------------------------------
48K Audio/Video Stream $14 $7
- ------------------------------------------- ----------------------------- -----------------------------------
22K Audio/Video Stream $10 $5
- ------------------------------------------- ----------------------------- -----------------------------------
12K Audio Stream $8 $4
- ------------------------------------------- ----------------------------- -----------------------------------
Multibit rate Audio/Video Stream $10 $5
- ------------------------------------------- ----------------------------- -----------------------------------
</TABLE>
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<PAGE>
APPLICATION DEVELOPMENT SERVICES
LW5 provides varying levels of support for program development, production and
streaming program implementation. The following matrix describes these levels
and associated costs.
<TABLE>
<CAPTION>
LIVEWARE5 INC. LEVELS OF SERVICE
LEVEL I LEVEL II LEVEL III
FEATURE/ FUNCTION SELF-MANAGED KP CUSTOM KP CUSTOM EVENT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STREAMING FUNCTIONALITY
Audio Only X X Will customize
Audio/Video X X any feature
WMT X X on a per event
Real X X basis.
Multibit Rate Only
Customer Defined Streams X X Client pays
QCIF X X
Bigger than QCIF X
for each
SIGNAL ACQUISITION custom feature.
Automated Bridge Call
Analog Port X X
Point to Point Videoconference X X
Multipoint Videoconference X X
Satellite X X
Video/ Audio Tape X X
Onsite/ Studio Production X
KNOWLEDGEPORTAL
3rd Party KP
Custom KP X X
KP Integrated into customer website X
APPLICATION DEVELOPMENT SERVICES
Content Development X
Content Repurposing X
Network Support X
Production Support X
TOOLS Templates modified
Graphics/ PPT X X
Slide Pushing X X
Slide Caching X
Threaded Discussion X
Download Materials X X
Chat X
Online Q&A X X
Polling X
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Testing Database X
Testing- Formatted X
Evaluation Forms X
Whiteboard X
Memory Devices X
Hyperlinks X
Case Studies X
Role Plays X
Simulations X
Embedded Video X
Workbook X
Indexing X
Glossary X
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
LEVEL I: Program Set-Up: $750/ finished hr. MSRP
Reseller Cost: $500/ finished hr.
LEVEL II: Program Set-Up: $2500/ finished hr. MSRP
Reseller Cost: $2000/ finished hr.
Production Support: Onsite support min. charge $2000
+ travel
LEVEL III: Complete, custom development
Costs TBD
Reseller Customers can contract for additional support at a rate of $250/ hour.
CANCELLATION POLICY
Application Development Service fees will be paid in full if work has been
completed but the program is not delivered. If work has not been completed, a
minimum of 25% of fees will be billed to the customer.
KnowledgePortal set-up fees will be paid in full if the site has been customized
and implemented for the Reseller or Reseller Customer.
THEHEALTHCHANNEL.COM LIVEWARE5, INC.
BY: /s/ Richard Wolpow BY: /s/ Bruce Lehrman
-------------------- ---------------------
Date: March 24, 2000 Date: March 24, 2000
-------------------- ---------------------
Name: Richard Wolpow Name: Bruce Lehrman
-------------------- ---------------------
Title: Vice President
Business Development
---------------------
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS OTHER
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999 DEC-31-2000
<PERIOD-START> JAN-01-2000 JAN-01-1999 SEP-06-1996
<PERIOD-END> MAR-31-2000 MAR-31-1999 MAR-31-2000
<CASH> 154,419 0 0
<SECURITIES> 0 0 0
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 307,088 0 0
<PP&E> 1,001,916 0 0
<DEPRECIATION> (216,367) 0 0
<TOTAL-ASSETS> 1,092,636 0 0
<CURRENT-LIABILITIES> 733,716 0 0
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 70,110 0 0
<OTHER-SE> 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 1,092,636 0 0
<SALES> 0 0 0
<TOTAL-REVENUES> 0 0 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> (697,631) 0 (4,158,359)
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> (697,631) 0 (4,158,359)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (697,631) 0 (4,158,359)
<DISCONTINUED> 0 (466,264) (2,213,648)
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (697,631) (466,264) (6,372,007)
<EPS-BASIC> (0.01) (0.01) 0
<EPS-DILUTED> (0.01) (0.01) 0
</TABLE>
