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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For fiscal year ended December 31, 1999
Commission file number 000-30100
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CORPAS INVESTMENTS, INC.
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(Exact Name of Small Business Issuer in Its Charter)
FLORIDA 59-2890565
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1640 5TH STREET, SUITE 218, SANTA MONICA, CALIFORNIA 90405 [310-392-5640]
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(Address, including zip code, and telephone number,
including area code, of issuer's executive offices)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Common Stock, par value $.001 per share
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: $-0-.
As of March 24, 2000, there were outstanding 14,078,579 shares of the issuer's
common stock, par value $.001 per share. The aggregate market value of common
stock held by nonaffiliates of the issuer (2,930,579 shares) based on the
closing price of the registrant's common stock as reported on the OTC Bulletin
Board on March 24, 2000, was $41,028,106. For purposes of this computation, all
executive officers, directors, and 10% beneficial owners of the registrant are
deemed to be affiliates. Such determination should not be deemed an admission
that such officers, directors, or 10% beneficial owners are, in fact, affiliates
of the registrant.
Documents incorporated by reference: NONE
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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CORPAS INVESTMENTS, INC.
ANNUAL REPORT ON FORM 10-KSB
FISCAL YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
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PART I
ITEM 1. DESCRIPTION OF BUSINESS...................................................................
ITEM 2. DESCRIPTION OF PROPERTY...................................................................
ITEM 3. LEGAL PROCEEDINGS.........................................................................
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................................
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..................................
ITEM 6. SELECTED FINANCIAL DATA; MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS................................
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............................................
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.......................................................
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT..........................................................
ITEM 10. EXECUTIVE COMPENSATION.....................................................................
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT............................................................................
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K..........................................................
SIGNATURES ..........................................................................................
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................................................................. F-1
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STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
THE STATEMENTS CONTAINED IN THIS REPORT ON FORM 10-KSB THAT ARE NOT
PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933, AS AMENDED AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED INCLUDING STATEMENTS REGARDING OUR
"EXPECTATIONS," "ANTICIPATION," "INTENTIONS," "BELIEFS," "PLANS," OR
"STRATEGIES" REGARDING THE FUTURE. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS
REGARDING OUR BUSINESS MODEL AND GROWTH STRATEGY, ACQUISITIONS OF MEDIA CONTENT;
DEVELOPMENT OF WEB SITES AND DISTRIBUTION CHANNELS, AS WELL AS LIQUIDITY AND
ANTICIPATED CASH NEEDS. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS REPORT
ARE BASED ON INFORMATION AVAILABLE TO US AS OF THE FILING DATE OF THIS REPORT,
AND WE ASSUME NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. IT IS
IMPORTANT TO NOTE THAT OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE IN
THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY ARE THE FACTORS DISCUSSED IN ITEM 1, "SPECIAL
CONSIDERATIONS."
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Corpas Investments, Inc.'s objective is to become a leading
entertainment and educational media content provider. We are positioning our
company to be an international distributor of entertainment and educational
programming. By acquiring entertainment and educational programming libraries
we intend to aggregate a broad media programming umbrella. Initially we are
focusing on two lifestyle categories around which we can build additional
content: health, and extreme sports. We plan to add many more diverse
categories as we seek out additional content. We intend to leverage our diverse
programming content across multiple distribution channels, including online
distribution, Webcast streaming of video and music over the Internet,
traditional retail distribution on DVD and video, and licensing our content to
network, cable, and satellite channel providers.
DEVELOPMENT OF OUR BUSINESS
We were incorporated under the name Synergy Investments, Inc. in May
1988 pursuant to the laws of the State of Florida. In September 1998, we paid
certain back fees owed to, and were reinstated to do business in, the State of
Florida, changing our name to Corpas Investments, Inc. In February 1999, our
application for unpriced quotations for our common stock on the OTC Bulletin
Board was accepted by the National Association of Securities Dealers. In
October 1999 our stock was authorized for trading under the symbol "CPIM".
ACQUISITION OF INTERACTIVE CONED.COM
In November 1999, we acquired by merger Interactive ConEd.com, Inc.,
which we commonly refer to as ICE. Prior to the merger, we had not conducted any
activities other than the issuance of shares to our shareholders. As a result of
the merger, we now own all of the assets of ICE, including a library of
continuing education and training content for doctors, nurses, allied health
professionals, and other healthcare workers.
ICE was formed in June 1999 to use the Internet as a tool for
satisfying the healthcare industry's need for online access to healthcare
education, training, and testing materials. In October 1999, ICE formed a
strategic alliance with Medical Management, Inc., or MMI. The MMI Group agreed
to provide ICE exclusive rights to the use of its entire proprietary video
library, comprised of at least 150 hours of healthcare training and education
programs conducted at medical conferences, as well as non-exclusive rights to
the use of its entire proprietary library of physician and other healthcare
professionals membership and mailing lists, medical publications, and audio
tapes of medical lectures. MMI's mailing lists include information with respect
to over 300,000 physicians, over 20,000 personal trainer professionals, over
20,000 chiropractors, all 7,000 members of MMI and other health related
companies, nurses, pharmacists, and healthcare professionals. ICE conducted no
significant operations and generated no revenues in 1999. We launched our online
continuing education and training services on November 15, 1999. We intend to
distribute this continuing education and training content to healthcare
professionals and other healthcare workers through a network of strategic
distribution partners, including the MMI Group. In connection with this
acquisition we launched anti-agingphysician.com on November 15, 1999. The
website anti-agingphysician.com is devoted to providing information on health,
vitality and longevity in a convenient and easily accessible manner.
Anti-agingphysician.com offers access to a world wide network of physicians
committed to improving the quality of life as well as extending the human
lifespan. Anti-agingphysician.com provides links to several universities as
well as medical schools. Anti-agingphysician.com provides access to articles
providing information regarding recent discoveries related to longevity and
improvement of the quality of life.
RECENT DEVELOPMENTS
ACQUISITION OF PLANET EXTREME
In March 2000, we acquired all of the assets of Planet Extreme Ltd.,
Inc. one of the leading online content distributors of extreme sports content
around the world. In connection with this acquisition, we acquired a 50%
ownership interest in PlanetExtreme.com, a joint venture with
Yahoo!Broadcast.com, which owns the remaining 50% ownership interest. This
website debuted March 8, 1999 and will be updated and fully redesigned on April
12, 2000. PlanetExtreme.com has created one of the largest streaming video media
sites for extreme sports, carrying over 400 extreme sports titles and continuing
to add new features. We also acquired 100% of the Planet Extreme Championships,
a 13 episode series, featuring 10 of the greatest extreme sport athletes in the
world competing against each other. The series will be broadcast on The Fox
Sports Network and is scheduled to air weekly starting in April through June
2000. The series is guaranteed to be re-aired at least once more this year by
Fox Sports Network. In addition, we acquired Extreme Distribution, the
distribution arm of Planet Extreme, which
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provides us access to traditional retail video distribution channels through
major video chains, including Tower Records and Blockbuster Video.
UFOTV.COM
In March of 2000 we acquired an exclusive use license of the largest
library of UFO, paranormal and unexplained phenomenon documentary programs
worldwide. In addition we acquired the rights to the URL UFOCENTRAL.com and
ownership of UFOTV.Com. We expect to debut our website UFOTV.Com by June of
2000.
For purposes of this discussion, the terms "we," "our," "us," or
Corpas refers to ICE, Planet Extreme, and Corpas.
INDUSTRY BACKGROUND
GROWTH OF THE INTERNET AND DIGITAL MEDIA
The Internet has emerged as a mass communication and commerce medium
that allows millions of people worldwide to share information, communicate, and
conduct business. According to International Data Corporation, there were 62.8
million Internet users in the United States and 142 million users worldwide in
1998. International Data Corporation estimates that by the end of 2003 there
will be 177 million Internet users in the United States and 502 million users
worldwide. Significant growth in the use of the Internet and other interactive
networks has created unprecedented opportunities for digital media. Increasing
use of the Internet to deliver interactive video, audio, and multimedia content
has enhanced users' online experiences. The Internet has evolved from a
compilation of static, text-oriented Web pages and e-mail services to a much
richer multimedia environment. For example, streaming media products enables the
simultaneous transmission and playback of continuous real-time "streams" of
video and audio content over the Internet. In addition, video can also be
downloaded and played back from a user's hard drive. These methods of
distribution, which are freely available to today's Internet users, deliver
digital video and audio over standard, widely-available modems. As higher-speed
Internet access becomes more widely available, more Internet users will be able
to access higher-quality digital video and audio products. Kinetic Strategies
reports that high-speed Internet access through cable modems is now available to
32 million North American households, or one-third of all cable subscribers, and
expects this figure to increase to half of all cable TV subscribers in the next
six to twelve months.
The Internet allows content delivery in a manner not possible through
traditional broadcast and print media. Although these traditional media can
reach large audiences, they generally are limited to a specific geographic area,
can deliver only limited content and are not effective for quickly distributing
customized content. The Internet, on the other hand, offers immediate access to
dynamic and interactive content, enables the content to be customized toward a
specific audience of users and provides instantaneous and targeted feedback. As
a result, the Internet has become an important alternative to traditional
broadcast and print media, enabling content providers to aggregate vast amounts
of information and to organize and deliver that information in a personalized,
easy-to-use, and cost-effective manner. As bandwidth availability continues to
increase, the delivery of full-motion video will become more widespread,
allowing for richer content. These characteristics, combined with the rapid
growth of the Internet, have created a new channel to distribute and access
timely and dynamic content.
CONTINUING EDUCATION IN THE HEALTHCARE INDUSTRY
The increase in the number of healthcare professionals, new
therapeutic treatments and procedures, and innovations in medical technology
have all led to increased demand for information exchange. To keep abreast of
the latest developments and to meet licensing and certification requirements,
healthcare professionals must obtain continuing education. In addition,
government regulations and accrediting bodies require employers to provide
healthcare professionals and other healthcare workers with training on an
increasing number and variety of topics. Simultaneously, the healthcare
industry has come under intense pressure to reduce costs as a result of
reductions in government reimbursement and increased participation of patients
in managed care programs. We believe these industry pressures have led to an
increased demand for high quality, low cost continuing education and training
solutions.
Regulations administered by various state and Federal agencies require
continuing education and training for healthcare professionals and other
healthcare workers. Continuing education and training typically consist of
educational programs that bring healthcare workers up to date in a particular
area of knowledge or skills. State licensing boards, professional
organizations, and employers require physicians and selected healthcare
professionals to fulfill continuing education and training requirements and to
certify annually that they have accumulated a minimum number of continuing
medical education, or CME, hours for physicians or continuing education units,
or CEU, for nurses in order to
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maintain their licenses. For physicians, these licensing boards require up to 50
CME hours per year. In addition, many specialty boards, including the American
Board of Family Practice and the American Board of Surgery, require doctors to
obtain CME hours that are accredited by these organizations to maintain their
specialty certification. Other agencies, including the Occupational Safety and
Health Administration, or OSHA, the Healthcare Financing Administration, or
HCFA, and the Joint Commission on Accreditation of Healthcare Organizations, or
JCAHO, require hospitals and other healthcare providers to provide employees
with various types of workplace safety training.
The continuing education and training market in the healthcare industry
is highly fragmented, with thousands of providers offering a limited selection
of programs on specific topics. There are over 600 providers of CME accredited
by the Accreditation Council for Continuing Medical Education, or ACCME. The
sheer volume of healthcare information available to satisfy continuing education
needs, rapid advances in medical developments, and the time constraints that
healthcare professionals face make it extremely difficult to stay current and to
quickly and efficiently access the continuing education content most relevant to
their practice or profession. Historically, healthcare professionals have
received continuing education and training through offline publications, such as
medical journals and CD-ROMs, and by attending conferences and seminars. In
addition, other healthcare workers and pharmaceutical and medical equipment
manufacturers' sales and internal regulatory personnel usually fulfill their
education and training needs through instructor-led programs from external
vendors or internal training departments. Although these existing approaches
satisfy continuing education and training requirements, they are limited in the
following ways:
o Seminars and instructor-led training may be inconvenient and costly
to attend and may result in lost productivity;
o Continuing education and training courses offered locally may be
limited in terms of breadth of offering and timeliness and may be
costly to produce on a per user basis; and
o Administrators find it difficult to review and assess results, track
employee compliance with certification requirements, and respond to
the effectiveness of education and training programs.
The inefficiencies inherent in traditional methods of providing continuing
education and training, combined with the time constraints and the increased
cost pressures in the healthcare industry, have prompted healthcare
professionals and organizations to improve information exchange and consider
alternative training methodologies.
CONVERGENCE OF THE INTERNET AND ONLINE HEALTHCARE EDUCATION SERVICES
We believe the healthcare continuing education and training market is
particularly well-suited for business-to-business e-commerce and online services
because of the high degree of fragmentation among the healthcare community, the
industry's dependence on a high volume of information exchange, and the
inefficiencies inherent in the existing methods of information exchange. The
emergence of the Internet enables the delivery of a greater breadth and depth of
continuing education and training for healthcare professionals and other
healthcare workers more cost effectively and conveniently than traditional
methods. The Internet allows for the aggregation and delivery of large amounts
of varied and highly specific content. Web-based delivery allows healthcare
professionals and other healthcare workers a significant degree of scheduling
and geographic flexibility in meeting their continuing education and training
requirements, saving them and their employers travel expenses and limiting
productivity losses.
GROWTH STRATEGY
Our objective is to become a leading entertainment and educational
media content provider. We plan to achieve this objective by pursuing the
following strategies:
o development of a diverse entertainment and educational library of
video through acquisitions, licensing arrangements;
o acquiring content providers and libraries that are lenders in their
niche;
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o distributing our content offerings across multiple distribution
channels, including online distribution, webcasting streaming video
and music over the Internet, traditional retail distribution; and
o licensing arrangements with network, cable, and satellite channel
providers.
OUR SERVICES
We intend to provide our complete Web-based continuing education and
training services to two types of end users in the healthcare community:
individual healthcare professionals and healthcare organizations.
SERVICES FOR HEALTHCARE PROFESSIONALS
Most healthcare professionals are responsible for meeting their own
continuing education requirements. We intend to enable these healthcare
professionals to meet their continuing education requirements by obtaining
credit through use of our online courseware by delivering online courseware to
healthcare professionals through multiple, co-marketed Web sites offered in
partnership with health Web sites, academic and medical institutions,
pharmaceutical and equipment manufacturers, and healthcare providers. Healthcare
professionals and other healthcare workers [can/will be able to] sign up to
become registered users of the Company's service after accessing the log-in
screen at our or any one of our distribution partners' Web sites. Each of these
Web sites will be based upon our standard template but [is/will be] customized
to match the look and feel of the Web site of the referring distribution
partner. Services for healthcare professionals will include:
o ONLINE COURSEWARE. The online courseware will be available through
our network of co-branded Web sites and our web site will be
targeted to healthcare professionals and include primarily CME and
CEU accredited content.
o WEBCAST EVENTS. We intend to offer both live and pre-recorded
Webcasts of medical procedures, the viewing of which may be credited
toward CME requirements.
o E-COMMERCE OFFERINGS. We intend to offer products and services that
complement our online continuing education and training courses and
link sales of our courseware to related books, videotapes, audio
tapes, and other educational and reference products produced by
content partners.
SERVICES FOR HEALTHCARE ORGANIZATIONS
Healthcare organizations are responsible for providing both government
mandated and internally required training to their employees. Our services for
healthcare organizations will include:
o ONLINE COURSEWARE. The courseware we intend to provide will
primarily focus on mandated training content. In addition, employers
may make some CME and CEU content from our library available to
their professional employees.
o ADMINISTRATIVE AND MANAGEMENT TOOLS. We also intend to offer
administrative and management tools to be used by human resources,
training, and management personnel to manage curriculum and employee
population training performance data.
o CONTENT CONVERSION AND DEVELOPMENT. Many healthcare organizations
provide their employees with organization-specific training. We
intend to offer full-service capabilities to convert existing course
materials to a Web-enabled format or develop custom courseware for
these healthcare organizations.
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SALES AND MARKETING
Our sales team will focus on selling our continuing education and
training service to hospitals and health networks. The sales team will also
target pharmaceutical and medical equipment vendors for sponsorship
opportunities and courseware development. We plan to increase our sales and
marketing team to focus on marketing our proprietary software to new and
existing customers.
Although we have had no marketing efforts to date because of our
development stage status, we plan in the future to launch a branding and
advertising campaign focused on building awareness of our products and services
to all of our market segments. The Company will focus on leveraging its
marketing efforts through co-branding arrangements with distribution partners.
COMPETITION
The market for online continuing education and training for the
healthcare industry is new and rapidly evolving. We face competitive pressures
from numerous actual and potential competitors, including:
o Web sites targeting medical professionals that currently offer or
may develop their own continuing education content in the future;
o traditional medical publishers and continuing education providers;
o academic medical centers;
o other Web-based continuing education and training providers;
o software developers that bundle their training systems with industry
training content;
o professional membership organizations;
o companies that market general-purpose computer-managed instruction
systems into the healthcare industry; and
o interactive media development companies focused on the healthcare
industry.
Many of these companies have greater financial, technical, product
development, marketing, and other resources than we do. These companies may be
better known and have longer operating histories. We believe that our ability to
compete depends on many factors both within and beyond our control, including
the following:
o the timing and market acceptance of new solutions and enhancements
to existing solutions developed by our company or our competitors;
o customer service and support efforts;
o sales and marketing efforts; and
o the ease of use, performance, price, and reliability of solutions
developed either by our company or our competitors.
PLANETEXTREME.COM AND UFOTV.COM
The market for online entertainment is growing and rapidly evolving.
We compete for users, advertisers and electronic commerce marketers with a wide
range of companies including the following:
o Internet "portal" companies, including Excite, Lycos and Yahoo!;
o Internet search engines and directories, including AskJeeves and
LookSmart;
o online content web sites, including C/net, ESPN.com and ZDNet.com;
o online personal homepage services, including Geocities and Tripod;
o publishers and distributors of television, radio and print,
including CBS, Disney, NBC and Time Warner;
o general purpose consumer online services, including America Online
and Microsoft Network; and
o web sites maintained by Internet service providers, including AT&T
WorldNet, EarthLink and MindSpring.
We believe that our ability to compete depends on many factors, many of
which are outside of our control. These factors include the quality of content
provided by us and our competitors, the ease of use of services developed either
by us or our competitors, the timing and market acceptance of new and enhanced
services developed either by us or our competitors, and sales and marketing
efforts of us and our competitors.
We also compete with television, radio, cable and print (traditional
advertising media) for a share of advertisers' total advertising budgets. If
advertisers perceive the Internet or ABOUT.COM to be a limited or ineffective
advertising medium, advertisers may be reluctant to devote a significant portion
of their advertising budget to Internet advertising or to advertise on Planet
Extreme.com.
GOVERNMENT REGULATION OF THE INTERNET AND THE HEALTHCARE INDUSTRY
THE INTERNET
The laws and regulations that govern our business change rapidly. The
United States government and the governments of some states and foreign
countries have attempted to regulate activities on the Internet. The following
are some of the evolving areas of law that are relevant to our business:
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o PRIVACY LAW. Current and proposed federal, state, and foreign
privacy regulations and other laws restricting the collection, use,
and disclosure of personal information could limit our ability to
use the information in our databases to generate revenues.
o ENCRYPTION LAWS. Many copyright owner associations have lobbied the
federal government for laws requiring copyrighted materials
transmitted over the Internet to be digitally encrypted in order to
track rights and prevent unauthorized use of copyrighted materials.
If these laws are adopted, we may need to incur substantial costs to
comply with these requirements or change the way we do business.
o CONTENT REGULATION. Both foreign and domestic governments have
adopted and proposed laws governing the content of material
transmitted over the Internet. These include laws relating to
obscenity, indecency, libel, and defamation. We could be liable if
content delivered by us violates these regulations.
o SALES AND USE TAX. We do not intend to collect sales, use, or other
taxes on the sale of CME courses on our Web sites other than on
sales in Tennessee and Massachusetts. However, states or foreign
jurisdictions may seek to impose tax collection obligations on
companies like us that engage in online commerce. If they do, these
obligations could limit the growth of electronic commerce in general
and limit our ability to profit from the sale of our services over
the Internet.
The enactment of any additional laws or regulations may impede the
growth of the Internet, which could decrease our potential revenues or otherwise
harm our business, financial condition, and operating results.
Laws and regulations directly applicable to e-commerce and Internet
communications are becoming more prevalent. The most recent session of Congress
enacted Internet laws regarding online copyright infringement. Although not yet
enacted, Congress is considering laws regarding Internet taxation. These are
recent enactments, and there is uncertainty regarding their marketplace impact.
Any new legislation or regulation regarding the Internet, or the
application of existing laws and regulations to the Internet, could negatively
affect our business. If we were alleged to violate federal, state, or foreign,
civil or criminal law, even if we could successfully defend such claims, it
could negatively affect our business.
REGULATION OF CONTINUING EDUCATION FOR HEALTHCARE PROFESSIONALS
CME. State licensing boards, professional organizations, and employers
require physicians to certify that they have accumulated a minimum number of CME
hours to maintain their licenses. Generally, each state's medical practice laws
authorize the state's board of medicine to establish and track CME requirements.
Medical licensing boards in 34 states currently have CME requirements. The
number of CME hours required by each state ranges up to 50 hours per year. Other
sources of CME requirements are state medical societies and practice specialty
boards. The failure to obtain the requisite amount and type of CME will result
in non-renewal of the physician's license to practice medicine and/or membership
in a medical or practice specialty society.
The American Medical Association's, or AMA's, Physician Recognition
Award, or PRA, is the most widely recognized certificate for recognizing
physician completion of CME. The AMA classifies continuing education activities
as either category 1, which includes formal CME programs, or category 2, which
includes most informal activities. Sponsors want to designate CME activities for
AMA PRA category 1 because this has become the benchmark for quality in formally
organized educational programs. Almost all agencies nationwide that require CME
participation specify AMA PRA category 1 credit. Only institutions and
organizations accredited to provide CME can designate an activity for AMA PRA
category 1 credit or AMA PRA category 2 hours.
The American Counsil on Continuing Medical Education ("ACCME") is
responsible for the accreditation of medical schools, state medical societies,
and other institutions and organizations that provide CME activities for a
national or regional audience of physicians. Only institutions and organizations
are accredited. The ACCME and state medical societies do not accredit or approve
individual activities. State medical societies, operating under the aegis of
ACCME, accredit institutions and organizations that provide CME activities
primarily for physicians within the state or bordering states.
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CEU. As with CMEs, the state's nurse practice laws are usually the
source of authority for establishing the state board of nursing, which then
establishes the state's CEU requirements for professional nurses. The CEU
programs are accredited by the American Nurses Credentialing Center Commission
on Accreditation and/or the state board of nursing. CEU requirements vary widely
from state to state. Nurse licensing boards in 29 states require some form of
CEU in order to renew a nurse's license. In some states, the CEU requirement
only applies to re-licensure of advance practice nurses or additional CEU's
required of this category of nurses. On average, 12 to 15 CEU's are required
annually, with reporting generally on a bi-annual basis.
OTHER DISCIPLINES. Various allied health professionals are required to
obtain continuing education to maintain their licenses. Generally, these
professionals meet this requirement by obtaining continuing education. For
example, a physician assistant must acquire 100 continuing education hours every
two years in order to renew his or her license.
JOINT COMMISSION ON ACCREDITATION OF HEALTHCARE ORGANIZATIONS. The
JCAHO imposes CME requirements on physicians that relate to each physician's
specific staff appointments. In addition, the JCAHO mandates that employers in
the healthcare industry provide certain workplace safety and patient interaction
training to employees. JCAHO required training may include programs on infection
control, patient bill of rights, radiation safety, and incident reporting.
Healthcare organizations are required to provide and document training on these
topics to receive JCAHO accreditation.
OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION. OSHA regulations require
employers to provide training to employees to minimize the risk of injury from
various potential workplace hazards. Employers in the healthcare industry are
required to provide such training with respect to various topics, including
blood-borne pathogens exposure control, laboratory safety, and tuberculosis
infection control. OSHA regulations require employers to keep records of their
employees' completion of training with respect to these workplace hazards.
THE U.S. FOOD AND DRUG ADMINISTRATION AND THE FEDERAL TRADE COMMISSION
Current FDA and FTC rules and enforcement actions and regulatory
policies or those that the FDA or the FTC may develop in the future could have a
material adverse effect on our ability to provide existing or future
applications or services to our end users or obtain the necessary corporate
sponsorship to do so. The FDA and the FTC regulate the form, content, and
dissemination of labeling, advertising, and promotional materials, including
direct-to-consumer prescription drug and medical device advertising, prepared
by, or for, pharmaceutical, biotechnology, or medical device companies. The FTC
regulates over-the-counter drug advertising and, in some cases, medical device
advertising. Generally, regulated companies must limit their advertising and
promotional materials to discussions of the FDA-approved claims and, in limited
circumstances, to a limited number of claims not approved by the FDA. Therefore,
any information that promotes the use of pharmaceutical or medical device
products that is presented with our service is subject to the full array of the
FDA and FTC requirements and enforcement actions. We believe that banner
advertisements, sponsorship links, and any educational programs that lack
independent editorial control that we may present with our service could be
subject to FDA or FTC regulation. While the FDA and the FTC place the principal
burden of compliance with advertising and promotional regulations on the
advertiser, if the FDA or FTC finds that any regulated information presented
with our service violates FDA or FTC regulations, they may take regulatory
action against us or the advertiser or sponsor of that information.
In 1996, the FDA announced it would develop a guidance document
expressing a broad set of policies dealing with the promotion of pharmaceutical,
biotechnology, and medical device products on the Internet. Although the FDA has
yet to issue that guidance document, agency officials continue to predict its
eventual release. The FDA guidance document may reflect new regulatory policies
that more tightly regulate the format and content of promotional information on
the Internet.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
We intend to obtain the majority of our content license agreements by
acquiring content providers and video and music libraries, through, and from
internal staff development. Accordingly, we may be liable to third parties for
the content in our library and distributed through our distribution channels if
the video music, text, graphics, software, or other content in our library
violates their copyright, trademark, or other intellectual property rights or if
our content partners violate their contractual obligations to others by
providing content in our library.
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We may also be liable for anything that is accessible from our Web
sites through links to other Web sites. We will attempt to minimize these types
of liability by requiring representations and warranties relating to our content
partners' ownership of and rights to distribute and submit their content and by
taking related measures to review content in our library. For example, we intend
to require that our content partners represent and warrant that their content
does not infringe on any third-party copyrights and that they have the right to
provide their content and have obtained all third-party consents necessary to do
so.
Proprietary rights are important to our success and its competitive
position. To protect our proprietary rights, we rely generally on copyright,
trademark, and trade secret laws, confidentiality agreements with employees and
third parties, and license agreements with consultants, vendors, and customers.
Despite such protections, a third party could, without authorization, copy or
otherwise appropriate content or other information from our database. Our
agreements with employees, consultants, and others who participate in
development activities could be breached. We may not have adequate remedies for
any breach, and our trade secrets may otherwise become known or independently
developed by competitors. In addition, the laws of some foreign countries do not
protect proprietary rights to the same extent as do the laws of the United
States, and effective copyright, trademark, and trade secret protection may not
be available in those jurisdictions.
The legal status of intellectual property on the Internet is currently
subject to various uncertainties. The current system for registering,
allocating, and managing domain names has been the subject of litigation and
proposed regulatory reform. Additionally, legislative proposals have been made
by the federal government that would afford broad protection to owners of
databases of information, such as stock quotes. This protection of databases
already exists in the European Union.
There have been substantial amounts of litigation in the computer and
online industries regarding intellectual property assets. Third parties may
claim infringement by us with respect to current and future products,
trademarks, or other proprietary rights, and we may counterclaim against such
parties in such actions. Any such claims or counterclaims could be
time-consuming, result in costly litigation, diversion of management's
attention, cause product release delays, require us to redesign our products, or
require us to enter into royalty or licensing agreements, any of which could
have a material adverse effect upon our business, financial condition, and
operating results. Such royalty and licensing agreements, if required, may not
be available on terms acceptable to us, if at all.
EMPLOYEES
As of March 24, 2000, we have 15 full-time employees, consisting of
upper management, graphic designers, sales and marketing staff, producers,
editors, in-house legal and administrative support.
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RISK FACTORS WHICH COULD AFFECT FUTURE RESULTS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, IN ADDITION TO
OTHERS DISCUSSED IN THIS REPORT, IN ASSESSING OUR COMPANY AND OUR BUSINESS.
RISKS RELATED TO OUR BUSINESS
WE HAVE A LIMITED OPERATING HISTORY WHICH MAY NOT BE A RELIABLE BASIS FOR
EVALUATING OUR PROSPECTS.
We are a development stage company and have a limited operating history
upon which you can evaluate us and our potential. Our prospects must be
considered in light of the risks, expenses, and difficulties frequently
encountered by companies in an early stage of development, particularly
companies in new and rapidly evolving markets like ours. Our failure to
successfully address these risks and uncertainties could have a material adverse
effect on our financial condition. Some of these risks and uncertainties relate
to our ability to:
o establish and maintain relationships with sponsors and advertisers;
o respond effectively to competitive and technological developments;
and
o further develop our infrastructure, including additional hardware
and software, customer support, personnel and facilities, to support
our business.
WE EXPECT FUTURE LOSSES BECAUSE WE ANTICIPATE THAT OUR OPERATING EXPENSES WILL
INCREASE RAPIDLY.
To date, we have not generated any revenues from operations. We expect
to have increasing net losses and negative cash flows for the foreseeable
future. We intend to expend significant financial resources to acquire
additional content, develop and expand our operations. As a result, we expect
that our operating expenses will increase significantly for the foreseeable
future. Consequently, we may be unable to be profitable, and if we are, we may
not increase profitability in the future.
OUR REVENUES MAY NOT BE ABLE TO KEEP PACE WITH OUR EXPENSES IN THE FUTURE.
To attract and retain a larger audience for our online content, we may
need to significantly increase our expenditures for marketing our brand and for
content, technology and infrastructure development. Many of these expenditures
will be planned or committed in advance in anticipation of future revenues. If
our revenues are lower than expected, we may not be able to reduce spending
accordingly. We believe brand awareness will be critical to increasing our
audience. If we do not increase our revenues as a result of our branding and
other marketing efforts or if we otherwise fail to promote our brand
successfully, our business, financial condition, and results of operations could
be materially and adversely affected.
WE WILL REQUIRE ADDITIONAL CAPITAL IN THE FUTURE WHICH MAY NOT BE AVAILABLE TO
US.
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Our expansion and development plans are expected to consume substantial
amounts of capital. We expect to increase our capital and operating expenditures
significantly in the future, especially if we make additional acquisitions or
decide to focus on brand development and expand our online business into other
related web-based services. We will need to raise significant additional funds
in the future through public or private debt or equity financing. Adequate funds
may not be available when needed or may not be available on favorable terms. If
we raise additional funds by issuing equity securities, dilution to existing
shareholders may result. If funding is insufficient at any time in the future,
we may be unable to develop or enhance our libraries, or services, take
advantage of business opportunities or respond to competitive pressures, any of
which could harm our business. Our future capital requirements depend upon many
factors, including, but not limited to:
o the rate at which we expand our operations; and
o the extent to which we develop and brand our libraries, products,
and services.
WE ARE COMPETING IN A NEW MARKETS WHICH MAY NOT DEVELOP OR IN WHICH WE MAY FAIL
TO GAIN MARKET ACCEPTANCE.
The markets for online continuing education and training in the
healthcare industry and entertainment web programming are new and rapidly
evolving. As a result, uncertainty as to the level of demand and market
acceptance exposes us to a high degree of risk. We cannot assure you that the
healthcare community will accept online continuing education and training as a
replacement for, or alternative to, traditional sources of continuing education
and training. Market acceptance of online continuing education and training
depends upon continued growth in the use of the Internet generally and, in
particular, as a source of continuing education and training services. If the
market for online continuing education and training fails to develop, develops
more slowly than expected or becomes saturated with competitors, or our services
do not achieve or sustain market acceptance, our business will suffer. [Add
online entertainment discussion per PlanetExtreme]
FAILURE TO EFFECTIVELY MANAGE GROWTH OF OUR OPERATIONS AND INFRASTRUCTURE COULD
DISRUPT OUR OPERATIONS AND PREVENT US FROM GENERATING THE REVENUES WE EXPECT.
We anticipate a rapid expansion in end user traffic on the web sites we
intend to operate, and the co-branded web sites we intend to operate with
distribution partners. To manage our growth, we must successfully implement,
constantly improve and effectively utilize our operational and financial systems
while aggressively expanding our workforce. We must also maintain and strengthen
the breadth and depth of our strategic relationships while rapidly developing
new relationships. Our existing or planned operational and financial systems may
not be sufficient to support our growth, and our management may not be able to
effectively identify, manage and exploit existing and emerging market
opportunities. If our potential growth is not adequately managed, our business
will suffer.
WE MAY BE UNABLE TO BUILD RELATIONSHIPS WITH CONTENT PROVIDERS.
Our success depends significantly on our ability to maintain
relationships with the publishers and authors who will provide continuing
education and training content for our library and our ability to build new
relationships with other content partners, including with our primary content
provider, MMI. We expect that many of our agreements with publishers and authors
will be non-exclusive, and our competitors offer, or could offer, continuing
education and training content that is similar to or the same as ours. If
publishers and authors offer information to users or our competitors on more
favorable terms than those offered to us, our competitive position and our
profit margins and prospects could be harmed. In addition, the failure by our
content partners to deliver high-quality content and to continuously upgrade
their content in response to user demand and evolving healthcare advances and
trends could result in user dissatisfaction and inhibit our ability to attract
users.
WE MAY BE UNABLE TO BUILD RELATIONSHIPS WITH DISTRIBUTION PARTNERS.
If we are not successful in developing and enhancing relationships with
distribution partners, including our primary distribution partner, MMI, we could
become less competitive and our revenues could decline. Our distribution
partners may not view their relationships with us as significant to the success
of their business. As a result, they may reassess their commitment to us or
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decide to compete directly with us in the future. We do not intend to have
agreements that prohibit our distribution partners from competing against us
directly or from contracting with our competitors. Arrangements with our
distribution partners generally will not establish minimum performance
requirements, but instead will rely on the voluntary efforts of our distribution
partners. As a result, these relationships may not be successful.
OUR FUTURE SUCCESS DEPENDS IN PART ON REVENUES FROM SPONSORSHIPS AND, TO A
LESSER EXTENT, ADVERTISING, AND THE ACCEPTANCE AND EFFECTIVENESS OF INTERNET
SPONSORSHIP AND ADVERTISING IS UNCERTAIN.
We plan to derive significant revenues from sponsorships and, to a
lesser extent, the sale of advertisements, in conjunction with our online
continuing education and training services. The market for corporate sponsorship
and advertising on the Internet is new and rapidly evolving. Many sponsors and
advertisers have limited experience with Internet sponsorship and advertising,
and may ultimately conclude that Internet sponsorship and advertising are not
effective relative to traditional sponsorship and advertising opportunities. As
a result, the market for sponsorship or advertising on the Internet may not
continue to emerge or become sustainable. This makes it difficult to project our
future sponsorship and advertising revenues and rates. If the market for
Internet sponsorship or advertising fails to develop or develops more slowly
than we expect, our business will suffer.
WE EXPECT COMPETITION TO INCREASE SIGNIFICANTLY IN THE FUTURE WHICH COULD REDUCE
OUR REVENUES, POTENTIAL PROFITS AND OVERALL MARKET SHARE.
The market for traditional and online continuing education and training
services is competitive. Barriers to entry on the Internet are relatively low,
and we expect competition to increase significantly in the future. We face
competitive pressures from numerous actual and potential competitors, both
online and offline, many of which have longer operating histories, greater brand
name recognition, larger consumer bases and significantly greater financial,
technical and marketing resources than we do. We cannot assure you that online
continuing education and training services maintained by our existing and
potential competitors will not be perceived by the healthcare community as being
superior to ours.
THE CONTINUING EDUCATION AND TRAINING, ENTERTAINMENT, ADVERTISING, AND
ELECTRONIC COMMERCE MARKETS ARE FIERCELY COMPETITIVE, WHICH COULD LIMIT OUR
MARKET SHARE AND ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
VIDEO AND ONLINE ENTERTAINMENT
The video and online entertainment market is intensely competitive, and
we expect that competition will increase. Consumers in this market currently
spend time viewing broadcast television, cable television, satellite television,
and home videos and playing video games, where content is provided by numerous
well-established companies. In addition, numerous companies offer online
entertainment, with an increasing number offering video, graphic, or animation
content. These companies include:
- publishers and distributors of traditional video media, such as
television and film, including the broadcast networks, cable networks, film
studios and their Internet affiliates such as Disney's Go.com and Viacom's MTV
Online Networks;
- online services or Web sites that offer or intend to offer video
entertainment over the Internet or broadband, such as Broadcast.com, Pseudo.com,
AFI, Wirebreak Entertainment, Shockwave.com, CRAPtv, AtomFilms, Mediatainment,
Streamland, Tranz-send Broadcasting Network, Moviehead.com, Brilliant Digital
Entertainment, Honkworm.com, Sync.com, Intertainer and Warner Brothers'
Entertaindom;
- online services providing content or community activities such as
America Online, GeoCities, PeopleLink, Animalhouse.com, The Palace and TalkCity;
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- online video-gaming sites which allow for multiple users to play
video-games against each other over the Internet such as mplayer.com, Uproar,
Electronic Arts/Ultima Online, IGN.com, Blizzard Entertainment, Sony Online
Entertainment and Nintendo.com;
- Generation Y-targeted Internet sites such as Peelworld.com,
Sputnik7.com, SlackerTV, Slywire.com, Bolt, Alloy Online and iturf;
- Web retrieval and other Web "portal" companies, including Yahoo,
Lycos, Excite@Home, and Infoseek; and
- telecommunications companies with access to a large base of end
users, including regional "Bell" companies, long distance service providers such
as AT&T and Sprint and digital subscriber line providers such as Bell Atlantic
and US West.
Many of these companies have substantially greater financial,
technical, personnel and other resources than our company, and many have
established reputations for success in the creation of entertainment programs.
ADVERTISING
We compete with traditional media, such as television, radio and
print, for a share of advertisers' total advertising budgets. Many of our
competitors in the traditional media have larger and more established sales
organizations, greater name recognition and more established relationships with
advertisers and advertising agencies than we do. These competitors may be able
to undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and devote substantially more resources to attract users and
advertisers than we can. In addition, several of these traditional media
companies have formed alliances with other Internet companies, which may result
in them favoring these other Internet companies' Web sites.
There is intense competition for the sale of advertising on
high-traffic Web sites, which has resulted in a wide range of rates quoted by
different vendors for a variety of advertising services, making it difficult to
project the level of Internet advertising revenue that will be realized
generally or by any specific company. In addition, the available inventory of
advertising space on the Internet and elsewhere has recently increased
substantially. Accordingly, we may face increased pricing pressure for the sale
of advertisements. A reduction in our advertising revenues would have a material
adverse effect on our business, results of operations and financial condition.
ELECTRONIC COMMERCE
The electronic commerce market is new, rapidly evolving and very
competitive. We expect competition to intensify in the future, as we will be
competing with online retailers offering consumer goods to Generation Y, such as
iTurf and Alloy Online, as well as traditional retailers which have or plan to
have online electronic commerce stores, such as The Gap and Wal-Mart. Increased
competition is likely to result in price reductions and reduced gross margins,
either of which could seriously harm the prospects for our electronic commerce
operations. We expect to compete with other online retailers of youth-oriented
goods, as well as traditional retailers, many of which have longer operating
histories, larger customer bases and greater retail brand recognition than we
have.
WE DEPEND ON THE AVAILABILITY OF STREAMING-MEDIA TECHNOLOGY AT AFFORDABLE
PRICES.
We rely on online video player software products such as Microsoft's
Media Player, Apple Computer's Quicktime and RealNetworks' Real Player to
provide our users with the ability to view our programming. In order to receive
video content over the Internet adequately, users generally must have multimedia
personal computers with certain microprocessor requirements, Internet access of
at least 56.6 kbps and video player software. Users typically electronically
download such software and install it on their computers. Such installation may
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require technical expertise that some users do not possess. In addition, older
versions of certain Web browsers may need to be reconfigured in order to receive
streaming media from our network.
IF WE FAIL TO COLLECT ACCURATE AND USEFUL DATA ABOUT OUR END USERS, POTENTIAL
SPONSORS AND ADVERTISERS MAY NOT SUPPORT OUR SERVICES, WHICH MAY RESULT IN
REDUCED SPONSORSHIP AND ADVERTISING REVENUES.
We plan to use data about our end users to expand, refine and target
our marketing and sales efforts. We will collect most of our data from end users
who will report information to us as they register for courses on our, or our
distribution partners', Web sites. If a large proportion of users impedes our
ability to collect data or if they falsify data, our marketing and sales efforts
would be less effective since sponsors and advertisers generally require
detailed demographic data on their target audiences. In addition, laws relating
to privacy and the use of the Internet to collect personal information could
limit our ability to collect data and utilize our database. Failure to collect
accurate and useful data could result in a substantial reduction in sponsorship
and advertising revenues.
WE MAY BE UNABLE TO RECRUIT AND RETAIN THE PERSONNEL WE NEED TO SUCCEED.
We may be unable to retain our key employees and key sales affiliates
or attract, assimilate or retain other highly qualified employees and sales
affiliates in the future. Our future success depends on our ability to attract,
retain and motivate highly skilled employees and sales affiliates. Particularly,
if we do not succeed in attracting new personnel or retaining and motivating our
current personnel, it may be difficult for us to manage our business and meet
our objectives.
WE ARE DEPENDENT ON OUR KEY MANAGEMENT PERSONNEL FOR OUR FUTURE SUCCESS.
Our future success depends to a significant extent on the efforts and
ability of our management team, particularly Ross A. Love, our Chief Executive
Officer and Gene Fein, our President. The departure of any of our officers or
key employees could harm our ability to implement our business plan.
OUR OFFICERS AND DIRECTORS HAVE SIGNIFICANT INFLUENCE OVER US.
Our executive officers and directors, in the aggregate, beneficially
own approximately 38.69% of the common stock. These stockholders may be able
to exercise control over all matters requiring approval by our stockholders,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership may also have the effect of
delaying or preventing a change in control of us, which could have a material
adverse effect on our stock price.
A FAILURE IN THE PERFORMANCE OF OUR WEB HOSTING FACILITY SYSTEMS COULD HARM OUR
BUSINESS AND REPUTATION.
We depend upon a third party Internet service provider to host and
maintain our web sites. Any system failure, including network, software or
hardware failure, that causes an interruption in the delivery of our web site or
a decrease in responsiveness of our web site service could result in reduced
revenue, and could be harmful to our reputation and brand. Our Internet service
provider does not guarantee that our Internet access will be uninterrupted,
error free or secure. Any disruption in the Internet service provided by such
provider could significantly harm our business. In the future, we may experience
interruptions from time to time. Our insurance may not adequately compensate us
for any losses that may occur due to any failures in our system or interruptions
in our service. Our web servers must be able to accommodate a high volume of
traffic and we may in the future experience slower response times for a variety
of reasons. If we were unable to add additional software and hardware to
accommodate increased demand, this could cause unanticipated system disruptions
and result in slower response times. Customers may become dissatisfied by any
system failure that interrupts our ability to provide access or results in
slower response time.
WE MAY BE LIABLE FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
We may receive in the future, notice of claims of infringement of other
parties proprietary rights. Infringement or other claims could be asserted or
prosecuted against us in the future and it is possible that past or future
assertions or prosecutions could harm our business. Any such claims, with or
without merit, could be time consuming, resulting in costly litigation and
diversion of technical and management personnel, cause delays in the development
and release of new products or services, or require us to develop non-infringing
technology or enter into royalty or licensing arrangements. Such royalty or
licensing arrangements, if required, may not be available on terms acceptable to
us, or at all. For these reasons, infringement claims could harm our business.
OUR FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY COULD ADVERSELY AFFECT OUR
BRAND AND OUR BUSINESS.
We will need to rely on a combination of trademark and copyright law
and trademark protection. Despite our efforts, we cannot be sure that we will be
able to prevent misappropriation of our intellectual property. It is possible
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that litigation may be necessary in the future to enforce our intellectual
property rights, to protect our trade secrets or to determine the validity and
scope of the proprietary rights of others. Litigation could result in
substantial costs and diversion of our resources away from the operation of our
business.
ANY REDUCTION IN THE REGULATION OF CONTINUING EDUCATION AND TRAINING IN THE
HEALTHCARE INDUSTRY MAY ADVERSELY AFFECT OUR BUSINESS.
Our business is dependent in part on required continuing education and
training for healthcare professionals and other healthcare workers resulting
from regulations of state and Federal agencies, state licensing boards and
professional organizations. Any change in these regulations which reduce the
requirements for continuing education and training for the healthcare industry
could harm our business.
RISKS RELATED TO THE INTERNET INDUSTRY
OUR BUSINESS WILL SUFFER IF WE FAIL TO ADAPT TO EVOLVING STANDARDS AND
TECHNOLOGIES.
The standards and technologies that make up the Internet will evolve
and change over time. We must adapt our services to maintain compatibility in
the future to assure that we can continue to deliver high quality services on
the Web. Our inability to deliver high quality services would lead to a decline
in the demand for our services.
THIRD PARTY BREACHES OF DATABASE SECURITY COULD DISRUPT OUR OPERATIONS AND
INCREASE OUR CAPITAL EXPENDITURES.
A party who is able to circumvent our security measures could
misappropriate proprietary database information or cause interruptions in our
operations. As a result we may be required to expend significant capital and
other resources to protect against such security breaches or to alleviate
problems caused by such breaches, which could harm our business.
INTERNET RELATED REGULATORY AND LEGAL UNCERTAINTIES COULD HARM OUR BUSINESS.
There are an increasing number of laws and regulations pertaining to
the Internet. In addition, a number of legislative and regulatory proposals are
under consideration by federal, state, local and foreign governments and
agencies. Laws or regulations may be adopted with respect to the Internet
relating to liability for information retrieved from or transmitted over the
Internet, domain name registration, online content regulation, user privacy,
taxation and quality of products and services. Moreover, the applicability to
the Internet of existing laws governing issues including intellectual property
ownership and infringement, copyright, patent, trademark, trade secret,
obscenity, libel, employment and person privacy is uncertain and developing.
OUR ABILITY TO GENERATE BUSINESS DEPENDS ON CONTINUED GROWTH OF ONLINE COMMERCE.
Our ability to generate business through our Web site depends on
continued growth in the use of the Internet, on the acceptance of the Internet
as a vehicle for commerce and on volume of commerce transactions via the
Internet. We cannot assure you that the number of Internet users will continue
to grow or that commerce over the Internet will become more widespread or that
our sales will grow at a comparable rate. As is typical in the case of a new
and rapidly evolving industry, demand and market acceptance for recently
introduced services are subject to a high level of uncertainty. The Internet
may not prove to be a viable commercial marketplace for a number of reasons,
including:
o Lack of acceptable security technologies;
o Lack of access and ease of use;
o Congestion of traffic;
o Inconsistent quality of service and lack of availability of
cost-effective, high-speed service;
o Potentially inadequate development of the necessary infrastructure;
o Governmental regulation; and
o Uncertainty regarding intellectual property ownership.
We cannot assure you that the Internet will support increasing use or
will prove to be a viable commercial marketplace.
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INFORMATION DISPLAYED ON OUR WEB SITE MAY SUBJECT US TO LITIGATION AND THE
RELATED COSTS.
We may be subject to claims for defamation, libel, copyright or
trademark infringement or based on other theories relating to information
published on our Web site. We could also be subject to claims based upon the
content that is accessible from our Web site through links to other Web sites.
Defending against any such claims could be costly and divert the attention of
management from the operation of our business.
ITEM 2. PROPERTY
We have entered a lease for approximately 3,193 square feet at our new
principal executive offices located at 1640 5th Street, Suite 218, Santa Monica,
California. This facility will house all our executive, design and support
staff.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock has been approved for trading on the Over-the-Counter
Market Bulletin Board under the symbol "CPIM" since October 1999. We have no
shares of preferred stock outstanding. The following table sets forth the
quarterly high and low closing sale prices of our common stock for the calendar
periods indicated, as reported by Commodity Systems, Inc.. Quotations reflect
inter-dealer prices, without adjustments for retail mark-ups, mark-downs or
commissions and may not necessarily represent actual transactions.
COMMON STOCK
---------------
PERIOD HIGH LOW
------ ---- ---
Year Ended December 31,1999
1st Quarter................................ $N/A $N/A
2nd Quarter................................ $N/A $N/A
3rd Quarter................................. $N/A $N/A
4th Quarter................................ $5.4736 $5.1178
As of March 24, 2000, there were approximately 125 holders of record
of our common stock. On March 24, 2000, 2000, the closing sales price of our
common stock on the National Quotation Bureau's "Pink Sheets" was $14 per share.
We have not declared or paid any cash dividends on our common stock and
do not intend to declare or pay any cash dividends in the foreseeable future.
The payment of dividends, if any, is within the discretion of our board of
directors and will depend on our earnings, if any, our capital requirements and
financial condition, and such other factors as the board of directors may
consider.
RECENT SALES OF UNREGISTERED SECURITIES
In September of 1999, we commenced an offer to sell up to a maximum of
1,350,000 shares of our common stock to "accredited investors" as defined in
Rule 501(a) of Regulation D ("Reg D") promulgated under the Securities Act of
1933, as amended ("Securities Act"). The offering was made in reliance upon an
exemption pursuant to Rule 506 of Reg D, and closed on January 1, 2000 and
1,313,278 shares of common stock were issued of the 1,350,000 shares of common
stock offered. All shares were sold at a per share price of $11.50 for aggregate
gross proceeds of $1,969,917.
In November of 1999 we issued 5,600,000 shares of our common stock
pursuant to a merger with Interactive ConEd.com, Inc. ("ICE"). Each outstanding
share of ICE common stock was exchanged for one share of our common stock. These
shares were issued in reliance upon Section 4(2) of the Securities Act. The
investors were provided information about the Company or had access to such
information, and the investors were provided opportunity to ask questions of
management concerning information provided or made available. The investors
confirmed their investment intention in writing, and the certificates for the
securities bear a legend accordingly.
In November 1999 we approved the issuance of 224,000 shares of our
common stock to Medical Development Management, Inc. ("MDM") payment for
services provided under the Content Provider and Services Agreement effective
November 22, 1999 by and among American Academy of Anti-Aging Medicine, Inc.,
MDM and Interactive ConEd.com, Inc.
These shares were issued in reliance upon Section 4(2) of the
Securities Act. The investors were provided information about the Company or
had access to such information, and the investors were provided opportunity to
ask questions of management concerning information provided or made available.
The investors confirmed their investment intention in writing, and the
certificates for the securities bear a legend accordingly.
In March of 2000 we acquired all the assets of Plant Extreme, Ltd. in
exchange for 3,500,000 shares of our common stock.
These shares were issued in reliance upon Section 4(2) of the
Securities Act. The investors were provided information about the Company or
had access to such information, and the investors were provided opportunity to
ask questions of management concerning information provided or made available.
The investors confirmed their investment intention in writing, and the
certificates for the securities bear a legend accordingly.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
those discussed in these forward-looking statements as a result of various
factors, including those set forth in "risk factors" and elsewhere in this
annual report. The following discussion should be read in conjunction with the
financial statements and notes thereto included elsewhere in this annual
report. See "Forward-looking Statements" and "Business-Risk Factors."
Overview
The Company is an alternative health, entertainment, community and e-commerce
destination for the emerging Internet culture. We converge streaming video,
continuing medical education interactive content, e-commerce, communication and
music into a multi-media entertainment experience. We are a place for
advertisers, sponsors and e-commerce providers because we are developing deep
and relevant relationships with educated, successful Internet consumers.
Pursuant to a series of transactions on November 24, the Company acquired all
of the issued and outstanding share capital of Interactive Coned.com, Inc.
("ICE"), a Delaware company, incorporated on June 22, 1999 and under common
control. The Company exchanged 5,600,000 common shares for all of the
outstanding share capital of ICE. As a result of this acquisition, the previous
shareholders of ICE, as a group, own more than 50% of the issued and
outstanding voting shares of the Company. Consequently, this business
combination has been accounted for as a reverse acquisition whereby ICE is
deemed to have been combined in a manner similar to a pooling of interests, and
to have acquired the Company. Accordingly, these transactions reflect the
recapitalization of business of ICE on a combined basis. This acquisition will
allow the Company to meet its business objective of providing Web-based
continuing education and training for the healthcare community utilizing its
proprietary technology.
As at November 23, 1999, the Company had no monetary assets. For purposes of
the acquisition, the fair value of the net monetary assets of $0 has been
ascribed to the 4,000,000 previously outstanding common shares of the Company
deemed to be issued in the acquisition.
On February 29, 2000, the Company acquired all of the issued and outstanding
share capital of Planet Extreme Ltd., Inc. ("Planet") a California Limited
Liability Corporation. The Company exchanged 3,500,000 common shares and
$35,000 in cash for all of the outstanding share capital of Planet. This
acquisition will allow the Company to meet its business objective of providing
streaming video content for its sports entertainment.
<PAGE> 20
The Company has incurred losses since inception, and at December 31, 1999, had
an accumulated deficit of $808,000. The Company has recently increased its
sales and marketing and general and administrative expenses as it has focused
the entire efforts of its direct sales force to signing agreements with ISPs,
Web portals and foreign governmental and educational institutions. The Company
plans to continue increasing operating expenses to expand its sales operations,
fund greater levels of research and development for its Internet-based product
lines, improve its operational and financial systems and create its
international operations. As a result, the Company is likely to continue to
incur losses, and if the Company's revenues do not continue to materialize
significantly, the Company may never be profitable.
Results of Operations
Year Ended December 31, 1999
Revenues. The Company had no revenues for the year ended December 31, 1999.
Amortization. The amortization charge to operations represents the construction
of the Company's website. The total cost of the website amounted to $60,250 and
is being amortized over a five year period. Amortization expense for the year
ended December 31, 1999 amounted to $1,867.
Depreciation. Depreciation expenses consist of depreciation on the Company's
tape library, computer equipment, office equipment and furniture. Capital
assets such as computer equipment and office equipment are depreciated on a
straight-line basis over their estimated useful lives, computer equipment over
five years and office equipment over five years. During the year ended December
31, 1999, depreciation expenses increased to $2,791.
General and Administrative Expenses. General and administrative expenses
primarily consist of management, financial and administrative personnel
expenses and related costs and professional service fees. General and
administrative expenses were $810,235 for the year ended December 31, 1999,
consisting primarily of consulting expenses of $285,441, professional fees of
$119,149 resulting from auditing the Company's financial statements and legal
fees relating to the filing of the Company's 10-SB and 10-QSB for the fiscal
period ended December 31, 1999 and the merger of the Company with ICE and
payroll and related benefits of $106,389. The Company anticipates that general
and administrative expenses will increase significantly in the next year due to
the implementation of its Internet/Intranet enabled software initiatives.
<PAGE> 21
Research and Development Expenses. The Company has begun to develop its
research and development staff and anticipates that it will continue to grow
through 2000 as the Company focuses on improving and expanding the features and
availability of its Internet/Intranet network-enabled software products.
Research and development costs are expensed as incurred. However, computer
software development costs incurred after technological feasibility of a
product is established are capitalized. Technological feasibility is generally
not established until substantially all related product development is complete
and the product is released.
Income Taxes. No provision for federal income taxes has been recorded in 1999
as a result of losses. As at December 31,1999, the Company had a net operating
loss for United States income tax purposes of approximately $809,000 which will
begin to expire in 2019 if not utilized. The Company has recognized a valuation
allowance of $323,000 equal to the deferred tax assets due to the uncertainty
of realizing the benefits of the asset.
Other Income. Interest income during the year ended December 31, 1999 amount
to $1,317.
Liquidity and Capital Resources
Since inception, the Company has financed operations and met its capital
expenditure requirements primarily through private sales of equity securities,
which have resulted in net proceeds of $1,738,838 through December 31, 1999. At
December 31, 1999, the Company had $936,721 in cash and cash equivalents and a
working capital deficit of $966,913. In January 2000, the Company issued the
common stock certificates to the purchasers of the private placement offering
under Regulation D, Rule 506 of the Securities and Exchange Commission. The
allowed the Company to reclassify the deposits on unissued common stock to
stockholders' equity and eliminated the working capital deficit. Upon
reclassification of the common stock to stockholders' equity, the Company had
approximately $771,000 in working capital. The Company sold 1,313,278 shares of
common stock at $1.50 per share for aggregate gross proceeds of $1,969,917.
The Company has not yet generated positive cashflows from operating activities.
Cash used in operating activities was $639,464 for the year ended December 31,
1999. The Company does not expect to generate positive cash from operations for
the year ending December 31, 2000.
The Company's investing activities have consisted of capital expenditures
totaling $162,653 for the year ended December 31, 1999. The capital
expenditures of $102,406 related primarily to the acquisition of computer
software and equipment as well as furniture and fixtures used to support its
growing employee base. In addition, the Company hired outside consultants to
construct its website. The cost of the website amounted to $60,250.
Net cash provided by financing activities was $1,738,838 for the year ended
December 31, 1999. Net cash provided by financing activities resulted primarily
from issuance of common stock.
<PAGE> 22
The Company does foresee an increase in operating expenses in order to
implement its Internet/Intranet enabled applications as well as the continued
upgrade of its software application. The Company expects to fund these
increases with further issuance of common stock of the Company and from
advertising revenues that are expected to begin in the third quarter of 2000.
The Company believes that anticipated private placements of equity capital and
anticipated operating revenues will be adequate to fund the Company's
operations over the next twelve months. Thereafter, the Company expects it will
need to raise additional capital to meet its long-term operating requirements.
The Company may encounter business initiatives that require significant cash
commitments or unanticipated problems or expenses that could result in a
requirement for additional cash before that time. If the Company raises
additional funds through the issuance of equity or convertible debt securities,
the percentage ownership of its shareholders would be reduced, and such
securities might have rights, preferences or privileges senior to its common
stock. Additional financing may not be available upon acceptable terms, or at
all. If adequate funds are not available or are not available on acceptable
terms, the Company's ability to fund its expansion, take advantage of business
opportunities, develop or enhance its products or otherwise respond to
competitive pressures would be significantly limited, and it may significantly
restrict the Company's operations.
<PAGE> 23
ITEM 7. FINANCIAL STATEMENTS
Reference is made to the financial statements, the notes thereto, and
report thereon, commencing at page F-1 of this Report, which financial
statements, notes, and report are incorporated herein by reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
EXECUTIVE OFFICERS
The following table sets forth certain information regarding each of
our directors and executive officers as of March 24, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Ross A. Love....................... 38 Chief Executive Officer, and Chairman of
the Board
Lawrence R. Kuhnert................ 48 Chief Financial Officer and Director
Gene Fein.......................... 35 President and Director
Marvin Scaff....................... 34 Director
Dr. Lawrence Ribley................ 35 Director
</TABLE>
ROSS A. LOVE has served as our Chief Executive Officer and Chairman of
the Board since November 24, 1999. From December 1998 to the present, Mr. Love
has held the position of Entrepreneur in Residence with Strategic Acquisition
Ventures, or SAV, a technology incubator with offices in Palo Alto, California
and Tampa, Florida that specializes in technology and internet investments.
While with SAV, Mr. Love helped to conceive two internet-based companies,
BrainBuzz.com and NewHomes.com. In 1995, Mr. Love founded www.Mothernature.com,
a leading online brand for the vitamin and supplement market and served as
Mothernature.com's CEO, President, and Chairman from November 1995 to May 1998.
While at Mothernature.com, he was responsible for day to day operations, the
development of strategic relationships with major portals such as Yahoo!, AOL,
and Time Warner and successfully hired and transferred to a second stage
management team in 1998 that raised $62 million in private equity financing from
12 top tier venture groups, including Bessemer Venture Partners, Alex Brown and
CMGI@ventures. Prior to 1995, he served as CEO and Webmaster/Project Manager for
the Tampa-based Auto Help International. Mr. Love conceived, developed,
designed, and managed www.AutoHelp.com, a multifaceted automotive Website
offering, New and Used Car Finders, New and Used Parts Finders, International
Car Finder, and Specialty Car Finder.
LAWRENCE R. KUHNERT has served as our Chief Financial Officer since
November 24, 1999. From 1996 to 1999, Mr. Kuhnert served as Director of
Acquisitions for Rotech Medical Corp., a leading home healthcare company, where
he was directly involved in the management of over $200 million in acquisitions
for the company. Prior to 1996, he served for seven years as the Chief Financial
Officer of Con Pharma Home Health Care, which company was acquired by American
Home Patient in 1995, whereupon he served as Area Vice President. Mr. Kuhnert's
previous experience also includes extensive involvement in the founding of two
home medical equipment companies eventually sold to Fortune 500 companies.
GENE FEIN has served as President and Director since January 25, 2000.
Mr. Fein has produced, directed or been the executive in charge of over 250
episodes of network television. Mr. Fein oversaw the international
distributions of the television programs to over 40 countries. As co-owner of
Planetextreme.com with Yahoo! and Broadcast.com, Mr. Fein pioneered streaming
of Extreme Sport content on the web. Extreme Distribution, the distribution arm
of Planet Extreme, is the first company to rack extreme sport videos for sale
in Blockbuster Video. Planet Extreme now boasts a national film festival, as
well as The Planet Extreme Championships, a 13 episode series featuring 10 of
the greatest extreme sport athletes in the world competing against each other.
The series broadcasts on Fox Sports Net on April 12, 2000.
DR. LAWRENCE RIBLEY has served as a director since March 20, 2000.
Dr. Ribley has been a Doctor of Chiropractic Medicine for over 10 years and
operates his own successful chiropractic clinic in the Tampa, Florida area.
MARVIN SCAFF has served as a director of the Company since March 20,
2000. Mr. Scaff has served as chief technology officer of the Brainbuzz.com
since May 1999. Prior to joining Brainbuzz.com, from April 1996 to May 1999,
Mr. Scaff founded and served as chief executive officer of Kinetoscope, Inc.,
one of the nation's pioneers in Java-based intelligent agent development. Prior
to Kinetoscope, Inc., from March 1995 to March 1996, Mr. Scaff served as the
director of engineering for hands-on technology (HOT), a publisher of business
multimedia applications based in Burlingame, California and founded by Regis
McKenna. Prior to HOT, he was the director of development for Image
Technologies, a multimedia development company located in St. Petersburg,
Florida. As the director of engineering at Teknosys, Mr. Scaff designed the
rule-based expert systems used in solving system configuration problems for
Help! And Help! Network products. Mr. Scaff is a member of the Artificial
Knowledge Management Systems committee currently developing and ANSI standard
for Artificial Knowledge Management Systems.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act, requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's
outstanding common stock, to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
common stock. Such persons are required by SEC regulation to furnish the Company
with copies of all such reports they filed. Ross A. Love and Larry R. Kuhnert,
filed all initial reports required by Section 16(a) of the Exchange Act. The
Company has not received copies of any reports filed by Roy Meadows or
Interactive Medical Communications, Inc., therefore the Company cannot express
an opinion as to whether Roy Meadows or Interactive Medical Communications, Inc.
are in compliance with the reporting requirements of Section 16(a) of the
Exchange Act.
ITEM 10. EXECUTIVE COMPENSATION
No compensation was paid to the Company's Chief Executive Officer and
the other executive officers in 1999 (the "Named Executive Officers") for
services rendered to the Company for each of the three years in the period
ended December 31, 1999.
Name and
Principal Position
- ------------------
Roy Meadows .................................
Former Chairman of the Board,
President & Chief Executive Officer
Ross A. Love ................................
Chairman of the Board & Chief Executive
Officer
Larry R. Kuhnert ............................
Chief Financial Officer, Director &
Secretary
OPTION GRANTS IN 1999
No stock options were granted to the Named Executive Officers in 1999.
The Board of Directors has adopted an Equity Incentive Compensation Plan that
was submitted to stockholders for approval pursuant to proxy on March 30, 2000.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
There were no long-term incentive awards in the last fiscal year.
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS
The Company is in the processes of negotiating a definitive employment
agreement with Ross A. Love. The terms agreed to provide that Mr. Love will
serve as Chairman of the Board and Chief Executive Officer for an annual base
salary of $120,000 and that the agreement is to contain standard
confidentiality provisions. Mr. Love will also be eligible for annual bonuses
under the terms of the Employment Agreement. The Employment Agreement will
provide that Mr. Love may receive incentive compensation consisting of stock
options, restricted stock or any other type of compensation allowed under an
approved incentive compensation plan and approved by the Board of Directors or
appropriate committee thereof.
The Company is in the process of negotiating a definitive employment
agreement with Gene Fein. The terms agreed upon provide that Mr. Fein will
serve as President for an annual base salary of $120,000 the agreement will
contain standard confidentiality provisions. Mr. Fein will also be eligible for
annual bonuses under the terms of the Employment Agreement. The Employment
Agreement will provide that Mr. Fein may receive incentive compensation
consisting of stock options, restricted stock or any other type of compensation
allowed under an approved incentive compensation plan and approved by the Board
of Directors or appropriate committee thereof.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 24, 2000, information as
to the Company's common stock beneficially owned by (i) each executive officer
and director of the Company, (ii) all directors and executive officers of the
Company as a group, and (iii) any person who is known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of the Company's
common stock.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership (1) Percent
- ------------------------ ------------------------ -------
<S> <C> <C>
Roy Meadows .................................. 3,300,000 23.44%
Interactive Medical Communications, Inc. ..... 2,400,000 17.05%
Ross Love .................................... 1,000,000 7.10%
Gene Fein .................................... 3,500,000 24.86%
Larry Kuhnert ................................ 948,000 6.73%
Marvin Scaff ................................. -- *
Dr. Lawrence Ribley .......................... -- *
All directors and executive officer as a
group (5 persons) .......................... 38.69%
</TABLE>
- ---------------
* Less than 1%
(1) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission (the "Commission") rules,
includes shares as to which a person has or shares voting power and/or
investment power. The Company has been informed that all shares shown are
held of record with sole voting and investment power, except as otherwise
indicated.
COMPENSATION OF DIRECTORS
No Director receives compensation for attending Board meetings.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
PART IV
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit
NUMBER EXHIBIT
- ------ -------
2 Agreement and Plan of Merger effective as of November
22, 1999 -- incorporated by reference to Company's
current Report on Form 8-K for an event dated
November 22, 1999
3.1 Articles of Incorporation incorporated by reference to
Company's Registration Statement on Form 10SB filed
________________
3.2 By-laws incorporated by reference to the Company's
registration statement on Form 10-SB
4* *Registration Rights Agreement
10.1 Agreement of Purchase and Sale between the Company and
Planet Extreme Ltd -- incorporated by reference to the
Company's Current Report on Form 8-K for an event
dated March 6, 2000
10.2* *Content Provider and Services Agreement -MDM/A4M
10.3* *Web Site Development and Support Agreement
10.4** *Office Lease
27.1** *Financial Data Schedule (for SEC use only)
- ---------------
* Attached herewith.
** To be filed by amendment.
18
<PAGE> 24
(b) REPORTS OF FORM 8K
On December 9, 1999 the Company filed a Form 8-K announcing the
merger between the Company and Interactive ConEd.com, Inc.
On _____________, ____ the Company filed Amended Form 8-K for the
financial statements related to the merger of the Company and Interactive
ConEd.com, Inc.
On March 21, 2000 the Company filed a Form 8-K announcing the
acquisition of Planetextreme, Ltd.
19
<PAGE> 25
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CORPAS INVESTMENTS, INC.
Date: 4/13/00 /s/ Ross A. Love
----------------------------------------
Ross A. Love, Chairman of the Board,
and Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------- -------- ----
<S> <C> <C>
/s/ Ross A. Love
- --------------------------- Chairman of the Board,
Ross A. Love and Chief Executive Officer 4/13/00
/s/ Larry Kuhnert
- --------------------------- Director and Chief Financial
Larry Kuhnert Officer 4/13/00
/s/ Dr. Lawrence Ribley
- --------------------------- Director 4/13/00
Dr. Lawrence Ribley
</TABLE>
20
<PAGE> 26
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION
(JUNE 22, 1999) TO DECEMBER 31, 1999
<PAGE> 27
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
TABLE OF CONTENTS
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6 to F-13
</TABLE>
<PAGE> 28
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Corpas Investments, Inc.
We have audited the accompanying balance sheet of Corpas Investments, Inc., a
development stage entity, as of December 31, 1999 and the related statements of
operations, stockholder's equity and cash flows for the period from inception
(June 22, 1999) to December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Corpas Investments, Inc. as of
December 31, 1999 and the results of its operations and its cash flows for the
period then ended, in conformity with generally accepted accounting principles.
Meeks, Dorman & Company, P.A.
/s/ Meeks, Dorman & Company, P.A.
- ---------------------------------
Longwood, Florida
April 6, 2000
F-1
<PAGE> 29
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
- -------------------------------------------------------------------------------------
<S> <C>
ASSETS
Cash $ 936,721
Employee advances 15,500
- -------------------------------------------------------------------------------------
Total current assets 952,221
- -------------------------------------------------------------------------------------
Fixed assets, net 99,612
- -------------------------------------------------------------------------------------
Intangible assets, net 58,383
- -------------------------------------------------------------------------------------
TOTAL ASSETS $1,110,216
=====================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable 126,880
Accrued expenses 53,416
Deposits on unissued common stock 1,738,838
- -------------------------------------------------------------------------------------
Total liabilities 1,719,134
- -------------------------------------------------------------------------------------
Stockholders' deficit:
Common stock, par value $.001, 50,000,000 shares authorized,
9,600,000 shares issued and outstanding 9,600
Accumulated deficit (812,918)
Subscriptions receivable (5,600)
- -------------------------------------------------------------------------------------
Total stockholders' deficit (808,918)
- -------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $1,110,216
=====================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 30
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM INCEPTION
(JUNE 22, 1999) TO DECEMBER 31, 1999
<TABLE>
- -----------------------------------------------------------------------------
<S> <C>
Revenue $ --
Operating expenses 810,235
- -----------------------------------------------------------------------------
Other income:
Interest 1,317
- -----------------------------------------------------------------------------
Net loss (808,918)
- -----------------------------------------------------------------------------
Net loss per share $ (.09)
- -----------------------------------------------------------------------------
Weighted average common shares outstanding 9,600,000
- -----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 31
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM INCEPTION
(JUNE 22, 1999) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
DEFICIT
NUMBER ACCUMULATED
OF DURING THE TOTAL
COMMON SUBSCRIPTIONS DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT RECEIVABLE STAGE DEFICIT
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DATE OF INCEPTION,
JUNE 22, 1999 -- $ -- $ -- $ -- $ --
- -------------------------------------------------------------------------------------------------------------
Shares issued to Corpas
shareholders in reverse
merger 4,000,000 4,000 -- (4,000) --
Shares issued to ICE
shareholders in reverse merger 5,600,000 5,600 5,600) -- --
Net loss -- -- -- (808,918) (808,918)
- -------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1999 9,600,000 $ 9,600 $ (5,600) $ (812,918) $ (808,918)
=============================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 32
CORPAS INVESTMENTS, INC
(A DEVELOPMENT STAGE ENTITY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION
(JUNE 22, 1999) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (808,918)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization expense 4,658
Changes in assets and liabilities:
Employee advances (15,500)
Accounts payable 126,880
Accrued expenses 53,416
- ---------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES: (639,464)
- ---------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (102,406)
Purchase of intangible asset (60,250)
- ---------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES: (162,653)
- ---------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from deposits on unissued common stock 1,738,838
- ---------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 1,738,838
- ---------------------------------------------------------------------------
Net change in cash 936,721
Cash, beginning of period --
- ---------------------------------------------------------------------------
CASH, END OF PERIOD $ 936,721
===========================================================================
Supplemental disclosures of cash flow information:
- ---------------------------------------------------------------------------
Cash paid for interest $ --
Cash paid for income taxes $ --
===========================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 33
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations - Corpas Investments, Inc., a development stage entity (the
"Company" or "Corpas"), was incorporated on June 22, 1999 in the state of
Delaware as Interactive ConEd.com, Inc. ("ICE") for the purpose of utilizing the
Internet as a tool for satisfying the healthcare industry's need for online
access to healthcare education, training and testing materials. It is the
Company's mission to become a leading marketer of online continuing education
and training for the healthcare industry. On November 24, 1999, the Company
entered into a reverse merger agreement with Corpas Investments, Inc.,a publicly
traded Company, and changed its name to Corpas Investments, Inc. (See Note 2).
In January 2000, the Company expanded its business plan to become a media
programming umbrella. It is the Company's intent to create, acquire or merge
with other entertainment and education libraries.
Liquidity - The Company has no revenues from operations and is subject to the
risks, expenses, and uncertainties frequently encountered by companies in the
development stage. In the event the Company does not successfully implement its
business plan, certain assets may not be recoverable.
Fixed Assets - Fixed assets are stated at cost. Depreciation will be provided
for fixed assets over the estimated useful lives of the assets using a
straight-line method.
Income Taxes - The Company follows the provisions of Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for expected future tax
consequences of events that have been included in the Company's financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between financial statement
and tax basis of assets and liabilities using enacted tax rates in effect when
these differences are expected to reverse. Valuation allowances are
established, when appropriate, to reduce deferred tax assets to the amount
expected to be realized.
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
disclosures 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.
Earnings Per Share - The Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," which requires presentation of basic
earnings per share ("Basic EPS") and diluted earnings per share ("Diluted
EPS"). The computation of Basic EPS is computed by dividing income available to
common stockholders by the weighted average number of outstanding common shares
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period. The computation of Diluted EPS does not
assume conversion, exercise or contingent exercise of securities that would
have an anti-dilutive effect on earnings.
F-6
<PAGE> 34
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The shares used in the computation as of December 31, 1999 were as follows:
<TABLE>
----------------------------------------------
<S> <C>
Basic EPS 9,600,000
----------------------------------------------
Diluted EPS 9,600,000
----------------------------------------------
</TABLE>
Fair Value Of Financial Instruments - The carrying value of cash and cash
equivalents, accounts receivable, accounts payable, due to related parties, and
product rights payable, approximates fair value due to the relatively short
maturity of these instruments.
Disclosures About Segments of An Enterprise and Related Information - The
Company has adopted Statement of Financial Accounting Standards No. 131 ("SFAS
No. 131"), "Disclosure About Segments of an Enterprise and Related Information"
which changes the way public companies report information about segments. SFAS
No. 131 establishes standards for the way public companies report information
about operating segments in annual financial statements and requires reporting
of selected information about operating segments in interim financial
statements issued to the public. The Company does not have any disclosure
requirements under this standard.
Recent Accounting Pronouncements - In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," ("SFAS No.
133"). This statement establishes accounting and reporting guidelines for
derivatives and requires an establishment to record all derivatives as assets
or liabilities on the balance sheet at fair value. Additionally, this statement
establishes accounting treatment for four types of hedges: hedges of changes in
the fair value of assets or liabilities, firm commitments, forecasted
transactions and hedges of foreign currency exposures of net investments in
foreign operations. Any derivative that qualifies as a hedge, depending upon
the nature of that hedge, will either be offset against the change in fair
value of the hedged assets, liabilities or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. SFAS No. 133 is effective for years beginning after June 15, 2000.
The Company does not currently participate in these types of financing
activities and does not anticipate that the adoption of this statement will
have a material impact on its consolidated balance sheets, statements of
operations, or cash flows.
F-7
<PAGE> 35
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - ACQUISITION
On November 24, 1999, the Company entered into a reverse merger agreement with
Corpas Investments, Inc. to become a publicly traded company. In the
transaction, Corpas issued one share of stock for each one share of ICE common
stock outstanding as of the merger date. This resulted in 5,600,000 shares of
common stock being issued to the stockholders of ICE. Corpas was incorporated
on May 19, 1988 under the laws of the State of Florida. Corpas had been in the
development stage since inception, and its activities had been limited to
organization and capital formation. For accounting purposes, the merger has
been treated as a recapitalization of ICE. The Florida corporation is the
surviving legal entity, and the stock of ICE has been retroactively adjusted
for a common stock split reflecting the legal entity's stock balance as of
December 31, 1999. Losses from operations for ICE are included in the statement
of operations for the period from June 22, 1999 through December 31, 1999.
NOTE 3 - FIXED ASSETS
Fixed assets consisted of the following:
<TABLE>
<CAPTION>
---------------------------------------------------
December 31,
1999
---------------------------------------------------
<S> <C>
Tape library $ 65,000
Computer equipment 37,403
---------------------------------------------------
102,403
Less - Accumulated depreciation (2,791)
---------------------------------------------------
Net fixed assets $ 99,612
===================================================
</TABLE>
Depreciation expense for fixed assets was $2,791 for the period ended December
31, 1999.
NOTE 4 - INTANGIBLE ASSETS
Intangible assets consists of a website with a cost of $60,250 which is net of
accumulated amortization of $1,867. The website is being amortized on a
straight-line basis over a five year life. Amortization expense for the period
ended December 31, 1999 was $1,867.
F-8
<PAGE> 36
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - DEPOSITS ON UNISSUED COMMON STOCK
On September 28, 1999, the Company commenced its private offering to raise
$2,025,000 through the issuance of 1,350,000 shares of common stock at $1.50
per share. As of December 31, 1999, the Company had received $1,738,838 in
relation to this offering which was reflected in the financial statements as
deposits on unissued common stock. The stock related to this offering was then
issued in January 2000.
NOTE 6 - INCOME TAXES
At December 31, 1999, the Company had net operating loss carryforwards for
income tax purposes of approximately $808,000 available as offsets against
future taxable income. The net operating loss carryforwards expire during the
year 2019.
The tax effect of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities, consist of the
following at December 31:
<TABLE>
<CAPTION>
-------------------------------------------------
1999
-------------------------------------------------
<S> <C>
Deferred tax assets
Net operating loss $ 319,000
Less: Valuation allowance (319,000)
-------------------------------------------------
--
Deferred tax liabilities: --
-------------------------------------------------
-------------------------------------------------
Net deferred tax asset --
=================================================
</TABLE>
The net change in the valuation allowance was approximately $319,000 relating
to net operating losses from 1999.
F-9
<PAGE> 37
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - STOCKHOLDERS' EQUITY
As part of the Company's reverse merger (See Note 2), Corpas Investments, Inc.
had 4,000,000 shares of $.001 par value common stock outstanding. Interactive
Con-Ed.com, Inc. had 5,600,000 shares of $.001 par value common stock
outstanding which had not been paid for and were reflected as subscriptions
receivable of $5,600. Corpas Investments, Inc. issued one share of common stock
for each one share of ICE stock outstanding. For accounting purposes, the
merger has been treated as a recapitalization of ICE.
NOTE 8 - CONCENTRATION OF CREDIT RISK
The Company's cash is maintained in federally insured financial institutions.
These deposits are insured up to $100,000 per financial institution. At
December 31, 1999, the Company had $843,270 in excess of the insured
limitation.
NOTE 9 - COMMITMENTS
Leases - The following is a schedule by years of future minimum rental payments
required under operating leases for property on which the offices are located:
<TABLE>
<CAPTION>
-----------------------------------------------------
Minimum
Year ending December 31, Commitments
-----------------------------------------------------
<S> <C>
2000 $ 61,002
2001 103,745
2002 105,009
2003 44,992
---------------------------------------------------
Total minimum payments required $ 314,748
===================================================
</TABLE>
Lease expense amounted to $4,181 for the year ended December 31, 1999.
F-10
<PAGE> 38
CORPAS INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - SUBSEQUENT EVENTS
On March 6, 2000, the Company closed on the purchase of Planet Extreme Ltd.
Inc., a leading distributor of extreme sports content around the world. Planet
Extreme properties include PlanetExtreme.com, The Planet Extreme Film Festival,
Planet Extreme Championships and Extreme Distribution. As part of this
acquisition, the Company assumes a 50% share in PlanetExtreme.com with the
remaining 50% owned by Yahoo!Broadcast.com. The Company purchased PlanetExtreme
Ltd. Inc. for $35,000 and 3,500,000 shares of common stock.
On March 17, 2000, the Company announced its license purchase of the largest
library of UFO, paranormal and unexplained documentary programs in the world.
<PAGE> 1
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
<PAGE> 2
12
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of this
22nd day of November, 1999, and is effective on the Effective Date of the Merger
(as such terms are defined below), by and among the Shareholders set forth on
SCHEDULE A annexed hereto (sometimes referred to herein as "Shareholder" or,
collectively, as "Shareholders"), and Corpas Investments, Inc., a Florida
corporation (hereinafter referred as to as the "Company").
RECITALS:
WHEREAS, Interactive ConEd.com, Inc., a Delaware corporation ("ICE") ,
and the Company have executed simultaneously herewith that certain Agreement and
Plan of Merger (the "Plan"), whereby ICE will merge with and into the Company,
with the Company as the surviving entity (the "Merger"); and
WHEREAS, as a condition to the obligation of ICE Stockholders (defined
below) and ICE to consummate the transactions contemplated by the Plan, this
Agreement shall have been executed and effective simultaneous with the Effective
Date of such Merger as set forth in the Plan (the "Effective"); and
WHEREAS, upon the closing of the Merger, the stockholders of ICE set
forth on SCHEDULE A (the "ICE Stockholders") shall be the holders of record of
5,600,000 shares of issued and outstanding shares of the common stock, par value
$.001 per share (the "Common Stock") of the Company, in the respective amounts
and percentages set forth opposite their names on Schedule A (the "Percentage
Interests"); and
WHEREAS, as a condition to their willingness to consummate the Merger,
the Shareholders desire that the Company grant to them certain registration
rights with respect to the Common Stock owned by such Shareholders upon closing
of the Merger.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained, the Investors and the Company hereby agree as follows:
1. DEFINITIONS.
As used herein:
(a) The term "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(b) The term "Holder" means the holder or holders of Registrable
Securities.
(c) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such Registration Statement.
<PAGE> 3
(d) The term "Person" shall have the meaning set forth in Section 2(2)
of the Securities Act.
(e) The term "Prospectus" shall have the meaning set forth in Section
2(10) of the Securities Act.
(f) The term "Registrable Securities" means all of the Company's Common
Stock owned by the Shareholders.
(g) The term "Registration Expenses" shall mean any and all expenses
incident to the performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC or National Association of Securities
Dealers, Inc. (the "NASD") registration and filing fees, including, if
applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained by any Holder of Registrable
Securities in accordance with the rules and regulations of the NASD, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of one counsel for
any underwriters or Holder in connection with blue sky qualification of any of
the Registrable Securities) and compliance with the rules of the NASD, (iii) all
expenses of any Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus and any
amendments or supplements thereto, and in preparing or assisting in preparing,
printing and distributing any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, (v) the fees and disbursements
of counsel for the Company and of the independent certified public accountants
of the Company, including the expenses of any "cold comfort" letters required by
or incident to such performance and compliance, (vi) the fees and expenses of
any exchange agent or custodian, (vii) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities on any
securities exchange or exchanges, and (viii) the reasonable fees and expenses of
any special experts retained by the Company in connection with any Registration
Statement.
(h) The term "Registration Statement" shall mean any Registration
Statement of the Company that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, and all amendments and supplements to any
such Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
(i) The term "Securities Act" means the Securities Act of 1933, as
amended.
(j) The term "SEC" means the Securities and Exchange Commission.
2. REGISTRATION RIGHTS.
(a) If at any time or from time to time, the Company shall determine to
register for its own account in an underwritten public offering (other than on a
registration statement related to any employee benefit plan, acquisition or
corporate reorganization or registration for foreign issuance or distribution),
any of its Common Stock under the Securities Act, the Company will: (a) promptly
2
<PAGE> 4
give to the Holder written notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify its Common
Stock under the applicable blue sky or other state securities laws); and (b) use
all commercially reasonable efforts to cause to be included in such registration
under the Securities Act (and any related qualification under blue sky laws or
other compliance) and in any underwriting involved therein, all the Registrable
Securities specified in a written request made within 30 days after receipt of
such written notice from the Company by the Holders; except that, if, in
connection with any offering involving an underwriting of Common Stock to be
issued by the Company, the managing underwriter shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in its judgment, such limitation is necessary to effect an
orderly public distribution, then the Company shall be only obligated to include
in such Registration Statement that number of Registrable Securities that is in
excess of the number of shares of Common Stock the Company proposes to sell
under the Registration Statement, which Registrable Securities shall be
allocated on a pro rata basis among the Holders, who have requested that their
Registrable Securities be registered, based on their percentage of ownership of
such Registrable Securities. The Company shall not be required to reduce the
number of shares of Common Stock to be offered by the Company in such
Registration Statement for any reason.
(b) After the Company has qualified for the use of a Registration
Statement on Form S-3, in addition to the rights contained in Section 2(a)
above, any or all of the Holders shall have the right to request the Company use
its best efforts to effect a registration of the Registrable Securities on Form
S-3 (each such request to be in writing and to state the number of shares to be
disposed of and the intended methods of disposition); PROVIDED, HOWEVER, that
the Company shall not be required to bring effective more than two (2)
Registration Statements on Form S-3 pursuant to this Section 2(b).
3. EFFECTIVENESS.
A Registration Statement pursuant to which any Registrable Securities
are being offered will not be deemed to have become effective unless it has been
declared effective by the SEC; PROVIDED, HOWEVER, that if, after it has been
declared effective, the offering of the Registrable Securities pursuant to such
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. The Company will be
deemed not to have used best efforts to cause the Registration Statement to
become, or to remain, effective during the requisite period if it voluntarily
takes any action that would result in any such Registration Statement not being
declared effective or that would result in the Holder not being able to offer
and sell the Registrable Securities during that period unless such action is
required by applicable laws and regulations or currently prevailing
interpretations of the staff of the SEC. The Company shall use best efforts to
maintain the effectiveness for up to 120 days (or such shorter period of time as
the underwriters need to complete the distribution of the registered offering)
of any Registration Statement pursuant to which any of the Registrable
Securities are being offered, and from time to time will amend or supplement
such Registration Statement and the Prospectus contained therein to the extent
3
<PAGE> 5
necessary to comply with the Securities Act and any applicable state securities
laws or regulations. The Company shall also provide the Holder with as many
copies of the Prospectus contained in any such Registration Statement as the
Holder may reasonably request.
4. EXPENSES OF REGISTRATION.
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Agreement shall be borne by the
Company. Except as provided herein, the Holder shall pay all fees and expenses
of its legal counsel, underwriters' fees, discounts or commissions or transfer
taxes, if any, relating to the sale or disposition of the Holder's Registrable
Securities.
5. REGISTRATION PROCEDURES.
In the case of each registration, qualification, or compliance effected
by the Company pursuant to this Agreement, the Company will keep the Holder
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense, the Company will:
(a) Prepare and file with the SEC a Registration Statement with respect
to such Registrable Securities as described in Section 2 and use its best
efforts to cause such Registration Statement to become effective and to remain
effective in accordance with Section 3 (provided that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by the Holder copies of all
such documents proposed to be filed, which documents will be subject to the
review of such counsel);
(b) Prepare and file with the SEC such amendments and supplements to
such Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective and current for a
period of not less than 120 days and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof as set forth in such Registration
Statement;
(c) (i) Furnish to the Holder, and to each underwriter, if any, without
charge, such number of copies of such Registration Statement, each amendment and
supplement thereto, the Prospectus included in such Registration Statement
(including each preliminary Prospectus), and such other documents as the Holder
or underwriters may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by the Holder; and (ii) consent to the use of
the Prospectus or any amendment or supplement thereto by the Holder of
Registrable Securities included in the Registration Statement in connection with
the offering and sale of the Registrable Securities covered by the Prospectus or
any amendment or supplement thereto;
(d) Use its commercially reasonable best efforts to register or qualify
such Registrable Securities under all applicable securities or blue sky laws of
such jurisdictions of the United States by the time the applicable Registration
Statement is declared effective by the SEC as the Holder and any underwriters
reasonably request in writing and do any other related acts which may be
4
<PAGE> 6
reasonably necessary or advisable to enable the Holder and underwriters to
consummate the disposition in such jurisdictions of the Registrable Securities;
PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 5(d), (ii) file
any general consent to service of process in any jurisdiction where it would not
otherwise be subject to such service of process, or (iii) subject itself to
taxation in any such jurisdiction if it is not then so subject;
(e) Notify the Holder, its counsel, and the managing underwriters, if
any, promptly, and promptly confirm such notice in writing, (i) at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which, or the fact that, the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the reasonable request of a majority of the Holders, the
Company will prepare a supplement or amendment to such Prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading; (ii)
when a Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (iii) of any request by the
SEC or any state securities authority for amendments and supplements to a
Registration Statement or Prospectus or for additional information after the
Registration Statement has become effective, (iv) of the issuance by the SEC or
any state securities authority of any stop order suspending the effectiveness of
a Registration Statement or the qualification of the Registrable Securities or
the initiation of any proceedings for that purpose, (v) if, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties of
the Company contained in any purchase agreement, securities sales agreement or
other similar agreement, if any, cease to be true and correct in all material
respects, and (vi) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate;
(f) If applicable, use its best efforts to cause all such Registrable
Securities to be listed or quoted on each securities exchange or interdealer
quotation system on which similar securities issued by the Company are then
listed or quoted;
(g) Provide a transfer agent for all such Registrable Securities not
later than the effective date of such Registration Statement;
(h) Enter into such customary agreements (including underwriting
agreements on customary terms) and take all such other actions as the
underwriters, if any, reasonably requests in order to expedite or facilitate the
disposition of such Registrable Securities;
(i) Obtain for delivery to the Company and the managing underwriters,
if any, with copies to the Holders of the Registrable Securities being
registered, a comfort letter from the Company's independent public accountants
in customary form and covering such matters of the type customarily covered by
comfort letters as the Holders shall reasonably request, dated the effective
date of the Registration Statement and brought down to the closing;
5
<PAGE> 7
(j) If necessary, obtain a CUSIP number for the Registrable Securities
not later than the effective date of the Registration Statement; and
(k) Make available for inspection by the Holder, any underwriter
participating in any disposition pursuant to such Registration Statement and any
attorney, accountant or any other agent retained by the Holder or any such
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by the Holder, any such
underwriter, attorney, accountant or agent in connection with such Registration
Statement.
(l) Cooperate with the Holder to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and registered in such names as the Holder or
the underwriters may reasonably request at least two Business Days prior to the
closing of any sale of Registrable Securities pursuant to such Registration
Statement;
(m) Cooperate with the Holder to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and registered in such names as the Holder or
the underwriters may reasonably request at least two Business Days prior to the
closing of any sale of Registrable Securities pursuant to such Registration
Statement;
(n) Upon the occurrence of any circumstance contemplated by Section
5(e)(iii), 5(e)(iv), or 5(e)(v) hereof, use best efforts to prepare a supplement
or post-effective amendment to such Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and to notify the Holder to suspend use of the Prospectus
as promptly as practicable after the occurrence of such an event, and the Holder
hereby agrees to suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission;
(n) Cooperate with each seller of Registrable Securities covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD; and
(o) Use best efforts to take all other steps necessary to effect the
registration of the Registrable Securities covered by a Registration Statement
contemplated hereby.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) In connection with any Registration Statement, the Company shall
indemnify and hold harmless the Holder and each underwriter who participates in
an offering of the Registrable Securities, each Person, if any, who controls any
6
<PAGE> 8
of such parties within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each of their respective directors, officers,
employees and agents, as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, arising
out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto)
covering Registrable Securities, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the prior
written consent of the Company; and
(iii) from and against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursements of counsel chosen
by Holder or any underwriter (except to the extent otherwise expressly
provided in Section 6(c) hereof)), incurred in investigating, preparing
or defending against any litigation, or any investigation or proceeding
by any court or governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii)
of this Section 6(a);
PROVIDED, HOWEVER, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished in writing to the
Company by the Holder, or any underwriter with respect to the Holder, or any
underwriter, as the case may be, expressly for use in a Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or supplement
thereto) and (ii) the Company shall not be liable to the Holder, any underwriter
or controlling Person, with respect to any untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary Prospectus to the
extent that any such loss, liability, claim, damage or expense of the Holder,
any underwriter or controlling Person results from the fact that the Holder or
any underwriter, sold Registrable Securities to a Person to whom there was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the final Prospectus as then amended or supplemented if the Company had
previously furnished copies thereof to the Holder or any underwriter or
controlling Person and the loss, liability, claim, damage or expense of the
Holder or underwriter, or controlling Person results from an untrue statement or
omission of a material fact contained in the preliminary Prospectus which was
7
<PAGE> 9
corrected in the final Prospectus. Any amounts advanced by the Company to an
indemnified party pursuant to this Section 6 as a result of such losses shall be
returned to the Company if it shall be finally determined by such a court in a
judgment not subject to appeal or final review that such indemnified party was
not entitled to indemnification by the Company.
(b) A selling Holder agrees to indemnify and hold harmless the Company,
any underwriter and each of their respective directors, officers (including each
officer of the Company who signed the Registration Statement), employees and
agents, any underwriter or any other selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense whatsoever
described in the indemnity contained in Section 6(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in a Registration Statement or any Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such selling Holder with respect to such Holder expressly for use in
such Registration Statement, or any such Prospectus.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it may have
under this Section 6, except to the extent that it is materially prejudiced by
such failure. An indemnifying party may participate at its own expense in the
defense of such action, or, if it so elects within a reasonable time after
receipt of such notice, assume the defense of any suit brought to enforce any
such claim; but if it so elects to assume the defense, such defense shall be
conducted by counsel chosen by it and approved by the indemnified party or
parties, which approval shall not be unreasonably withheld. In the event that an
indemnifying party elects to assume the defense of any such suit and retain such
counsel, the indemnified party or parties shall bear the fees and expenses of
any additional counsel thereafter retained by such indemnified party or parties;
PROVIDED, HOWEVER, that the indemnified party or parties shall have the right to
employ counsel (in addition to local counsel) to represent the indemnified party
or parties who may be subject to liability arising out of any action in respect
of which indemnity may be sought against the indemnifying party if, in the
reasonable judgment of counsel for the indemnified party or parties, there may
be legal defenses available to such indemnified party or parties which are
different from or in addition to those available to the indemnifying party, in
which event the fees and expenses of appropriate separate counsel shall be borne
by the indemnifying party. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to local
counsel), separate from its own counsel, for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 (whether or not the indemnified parties are actual or
8
<PAGE> 10
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release in form and substance satisfactory to the
indemnified parties of each indemnified party from ail liability arising out of
such litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 6 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company and the Holder
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by the
Company and the Holder, as incurred; provided, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person that was not
guilty of such fraudulent misrepresentation. As between the Company and the
Holder, such parties shall contribute to such aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement in such proportion as shall be appropriate to reflect the relative
fault of the Company, on the one hand, and the Holder, on the other hand, with
respect to the statements or omissions which resulted in such loss, liability,
claim, damage or expense, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault of the Company, on the one
hand, and of the Holder, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by or on behalf of the
Holder, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holder agree that it would not be just and equitable if
contribution pursuant to this Section 6 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this Section 6, each
affiliate of the Holder, and each director, officer, employee, agent and Person,
if any, who controls a Holder or such affiliate within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Holder, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each Person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company.
(e) The obligations of the Company and the Holders under this Section 6
shall survive the completion of an offering of Registrable Securities pursuant
to a Registration Statement. Notwithstanding the foregoing, to the extent that
the indemnification and contribution provisions contained in the underwriting
agreement executed in connection with such Registration Statement conflict with
the foregoing provisions, the provisions in such underwriting agreement shall
control.
7. INFORMATION BY HOLDER.
The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such written information regarding
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification, or compliance referred to in
this paragraph.
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8. SUSPENSION RIGHTS.
The Company shall have the right, which right may be exercised by the
Company only twice during any 12-month period, to extend, suspend or delay the
effectiveness of any Registration Statement for a period of up to 90 days if,
upon advice of counsel to the Company, effectiveness of such Registration
Statement would interfere with any then currently active acquisition, financing
or similar transaction of the Company by requiring the premature disclosure of
any material corporate development or otherwise.
9. POSTPONEMENT RIGHTS.
The Company shall have the right to postpone the filing of any
Registration Statement if, upon advice of counsel to the Company, the filing of
such Registration Statement would interfere with any then current active
acquisition, financing or similar transaction of the Company or require the
premature disclosure of any material on-public information or because the
Company's Board of Directors determines in good faith that in the case of an
initial public offering the current market conditions are not conducive to a
successful offering or in the case of the Company already being public it would
be seriously detrimental to the company and its Shareholders for such
Registration Statement to be filed. In the event the filing does not occur, it
shall not count towards the two demand registrations granted pursuant to this
Agreement.
10. LOCK-UP ARRANGEMENTS.
Upon the consummation of the event set forth in subclause 1(a)(i), the
Holders (and any subsequent holder) agree that upon the reasonable request of
the managing underwriter selected for the IPO the Holders will allow for
restrictions on sales of their shares pursuant to the Registration Statement for
the period selected by the managing underwriter, including without limitation,
at a minimum, not to sell, make any short sale of, pledge, grant any option for
the purchase of or otherwise dispose of or reduce his or her risk of ownership
with respect to any Registrable Securities (other than those included in the
registration) or other securities of the Company without the prior written
consent of the Company or the managing underwriter, as the case may be, for up
to 180 days following the consummation of the event set forth in subclause
1(a)(i). Additionally, each Holder agrees to execute and deliver a lock-up
letter (setting forth the above restrictions in greater detail) if requested by
the managing underwriter or the Company in connection with any offering of
Registrable Securities; however the lock-up period in connection with any
offering after an IPO will not exceed 90 days without the Holder's consent.
11. TERMINATION OF REGISTRATION.
Notwithstanding any other provision in this Agreement, at any time
before or after the filing of a registration statement, the Company may, in its
sole discretion, abandon or terminate such registration without the consent of
the Holders with no liability to the Holders or any third party arising
therefrom.
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12. NO INCONSISTENT AGREEMENTS.
The Company has not entered into nor will the Company on or after the
date of this Agreement enter into any agreement which is inconsistent with the
rights granted to the Shareholders with respect to their Common Stock in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Shareholders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
13. TERMINATION OF OBLIGATIONS.
The right of any Holder to request registration or inclusion in any
registration pursuant to Section 2 hereof shall terminate on the date that all
shares of Registrable Securities held or entitled to be held on conversion by
such Holder may immediately be sold without restriction (including volume
limitations) under Rule 144 during any 90-day period.
14. ASSIGNABILITY.
This Agreement shall be binding upon and inure to the benefit of the
respective heirs, successors and assigns of the parties hereto.
15. CHANGES IN CAPITAL STOCK.
If, and as often as, there is any change in the Common Stock by way of
a stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the
Registrable Securities as so changed.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of Florida, without regard to the conflict of laws provisions thereof.
17. AMENDMENT.
Any modification, amendment or waiver of this Agreement or any
provision hereof shall be in writing and executed by Holders of not less than
66-2/3 percent of the Registrable Securities; PROVIDED, HOWEVER, that no such
modification, amendment or waiver shall reduce the aforesaid percentage of
Registrable Securities without the consent of the record or beneficial holders
of no less than 90 percent of the Registrable Securities.
18. SEVERABILITY.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
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in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
19. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors, assigns and transferees of the Holders, including, without
limitation and without the need for an express assignment, subsequent Holders.
If any transferee of the Shareholders shall acquire Registrable Securities, in
any manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities, such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
20. ENTIRE AGREEMENT.
This Agreement and the other writings referred to herein contain the
entire understandings among the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to its subject matter.
21. HEADINGS.
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
22. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned Holder and the Company have
executed this Agreement on the day and year first above written.
COMPANY: CORPAS INVESTMENTS, INC.
By:
----------------------
Name:
Title:
--------------------------
Address for Notices:
SHAREHOLDER By: Name:
--------------------------
--------------------------
--------------------------
Title (if applicable):
--------------------------
Address for Notices:
--------------------------
--------------------------
--------------------------
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SCHEDULE A
STOCKHOLDERS OF ICE
Interactive Medical
Communications, Inc.
Ross Love
Lawrence Kuhnert
David Oliver
Orlando Evora
Chalexis, Inc.
PACE Acquisitions, Inc.
E. Thom Rumberger, Jr.
Thomas Staub
Terry Oliver
Carolyn Evora
Robert Allen
Jacqueline Kuhnert
Ryan Kuhnert
Daniel Kuhnert
R&S Fields Limited Partnership
Patti Ciaramella
<PAGE> 1
EXHIBIT 10.2
CONTENT PROVIDER AND SERVICES AGREEMENT
This Content Provider and Services Agreement is made effective as of
the 22nd day of November, 1999 (the "Effective Date") by and among American
Academy of Anti-Aging Medicine, Inc., an Illinois not-for-profit corporation
("A4M"), Medical Development Management, Inc., an Illinois corporation ("MDM"),
and Interactive ConEd.com, Inc., a Delaware corporation, and any and all
successors in interest and assigns thereof ("ICE").
WHEREAS, A4M is an Illinois not-for-profit corporation organized to
support the study of and provide education on the human aging process and
treatment options which retard, stabilize, ameliorate or reverse said process
(the "A4M Mission"); and
WHEREAS, MDM is an Illinois corporation engaged in the business of
providing management and consulting services to the medical and health care
professions and is the owner of certain property including the URL known as
World Health CME; and
WHEREAS, MDM desires to transfer to ICE certain property and to provide
ICE with the right and license to use certain of its proprietary materials
(including, without limitation, the right and license to use the WorldHealth
Content), MDM also desires to provide ICE certain consulting services in
connection with its business, ICE desires to obtain such transfer, license and
utilize such consulting services; and
WHEREAS, A4M in furtherance of its mission wishes to cooperate with ICE
in providing educational materials to health care professionals, including
providing certain CME content for use in conjunction with ICE's (or its
successor in interests') website.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the meanings indicated below:
1.1 "A4M Content" means the text, information, data,
mailing lists and images identified in Schedule 1, annexed hereto and made a
part hereof, to which A4M has Intellectual Property Rights.
1.2 "A4M Marks" means the A4M trade names, trademarks
and service marks, all as may be amended by A4M from time to time.
1.3 "A4M Other Content" means the video and audio
recordings identified on Schedule 2 annexed hereto and made a part hereof
1.4 "Affiliate" means, with respect to any given Person,
any other Person directly or indirectly Controlling, Controlled by, or under
common Control with, such Person.
1.5 "Business Day" means a day that banks are open for
business in Tampa, Florida.
<PAGE> 2
1.6 "Control" over a Person means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or other equity interest, representation on its board of directors or
body performing similar functions, by contract or otherwise.
1.7 "Damages" means liabilities, damages, awards,
settlements, losses, claims and expenses, including reasonable attorney's fees
and expenses and costs of investigation.
1.8 ICE's Internet Site" means the Internet site owned
and operated by ICE and any Mirror site.
1.9 "Intellectual Property Rights" means any patent,
design right, copyright, trademark, service mark (and any application or
registration respecting the foregoing), database right, trade secret, know-how
and/or other present or future intellectual property right of any type, wherever
in the world enjoyable.
1.10 "Joint Content" means the A4M Content and the A4M
Other Content, collectively.
1.11 "Laws" means laws, regulations, rules or orders of
any government, administrative authority or court.
1.12 "MDM Content" means all right, title and interest MDM
has in the phrases, trademarks and/or tradenames "World Health", "WorldHealth
Net", "WorldHealth Network" and in the website at the URL "WorldHealth.net", as
such may be amended from time to time.
1.13 "Mirror Site" means an Internet site which contains
the exact form and content (including identical pages) of ICE's Internet Site
which (a) is located at a geographic location distinct from ICE's Internet Site
and (b) is created for the purpose of improving performance and accessibility to
ICE's Internet Site.
1.14 "Non-MDM Content" means all right, title and interest
that MDM, its shareholders, officers, directors, and employees has or may have
in (i) the trademarks and tradenames "WorldHealth CME", "WorldHealth Physician
Services", "WorldHealth PS" (and any derivations of any of the above) and (ii)
the website with the URL "WorldHealth.CME", as such may be amended from time to
time, and in which pursuant to the terms of Section 7.1 hereof MDM (and on
behalf of their shareholders, officers, directors, and employees) is
expressly disclaiming any right, title or interest.
1.15 "Person" means any individual, corporation,
limited-liability company, partnership, firm, joint venture, association,
joint-stock company, trust, or other entity or organization, including a
government or political subdivision or, an agency or instrumentality thereof.
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<PAGE> 3
1.16 "Third Party Providers" means Persons whose text,
information, data, mailing lists, images (still and moving), video, sound
recordings, equipment and/or software is included in the A4M Content.
2. TERM.
The initial term (the "Initial Term") of this Agreement shall
commence on the Effective Date and shall continue until the fifth anniversary
thereof, unless earlier terminated in accordance with the provisions of Section
12 hereof. ICE shall have the right in its sole discretion to extend the Initial
Term solely to continue to use the MDM Content and the A4M4 Other Content (both
subject to the limitations set forth herein) for successive one-year terms upon
at least 30 days prior written notice to A4M and MDM of its election to renew
for the succeeding one-year term (an "Additional Term" and collectively with
the Initial Term, the "Term"). The parties hereby agree that, with respect to
any such Additional Term, ICE shall pay, within the first 30 days of each such
Additional Term, a license fee equal to $50,000.
3. USE OF A4M CONTENT AND A4M OTHER CONTENT.
3.1 License Use of A4M Content. A4M hereby grants to ICE
during the Term (a) a non-exclusive right and license to use but not display the
A4M mailing list and to use and display on ICE's Internet Site or elsewhere, the
remaining A4M Content set forth on Schedule 1. Except for the mailing lists
which the Parties agree ICE may use to contact persons listed therein for
promotional or other commercial purposes (provided A4M and/or ICE obtains such
persons' permission), the A4M Content shall be used solely for purposes of
providing continuing medical education to healthcare professionals free of
charge. Except as set forth herein, no other copying, dissemination,
publication, display, distribution, use or sale in any form of the A4M Content,
in whole or in part, by ICE is permitted without the prior written consent of
A4M.
3.2 License and Use of A4M Other Content. A4M grants to
ICE during the term of this Agreement a license to display to health care
professionals on ICE's Internet Site via mutually agreed upon text links
("Links") off ICE's Internet Site the A4M Other Content. ICE hereby agrees that
it will not charge any healthcare professional with any fees or receive any
compensation to view display of the A4M Other Content on ICE's Internet Site.
The A4M Other Content will only be used for purposes of providing continuing
medical education to health care professionals. It will not be used for
advertising purposes or to promote any product or service; provided, however,
the Parties recognize that ICE may advertise or promote its products and
services generally, including the provision of continuing medical education by
ICE; provided further, however, such advertising will not include the A4M Joint
Content.
3.3 Editorial Control. A4M grants to ICE editorial
freedom in the form and content of the Joint Content and the right to alter the
same from time to time as ICE deems appropriate or necessary, provided such
editing does not render the materials or the use illegal, illicit, immoral or
cause the Joint Content to be displayed in any manner inconsistent with, or
damaging to the name and reputation of A4M or any author or speaker referenced
in the content. ICE may not edit any content to cause it to appear to be a
promotion for or an endorsement of a commercial product or service.
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<PAGE> 4
3.4 New Content. A4M hereby grants ICE a license to use
and display on ICE's Internet Site any and all additional materials of similar
type and nature to the Joint Content to which A4M obtains access or Intellectual
Property rights to in the future.
3.5 Compliance by ICE; Obligations of A4M. ICE will
ensure that ICE's Internet Site is designed and operates in a manner that allows
ICE to (a) comply with the provisions of this Section 3, and (b) read, and
comply with, codes inserted in the Joint Content.
3.6 Expenses Associated with the A4M Other Content. A4M
agrees to apply, at ICE's cost and expense, with the ACCME and with the American
Osteopathic Association for Continuing Medical Education, in order to become a
continuing medical education accrediting body. If A4M is successful in obtaining
such accreditation, A4M agrees (i) to grant accreditation for all Other Content
without charge or expense to ICE and (ii) to review and, if acceptable under the
accreditation standards, grant accreditation for other non-Other Content
materials, at A4M's Actual Cost. For purposes hereof, "Actual costs" shall mean
the actual costs and expenses incurred by A4M in reviewing and, if in acceptable
form, granting accreditation in respect of the other non-Other Content materials
submitted by ICE, including the actual man-hour labor costs to A4M for such
work.
4. DELIVERY MECHANISM.
A4M shall work with ICE to make the Joint Content available to
ICE as ICE shall reasonably request, including on-line via an agreed upon File
Transfer Protocol (if requested by ICE, ICE will be provided with a password to
access and retrieve the Joint Content located on a directory on the A4M FTP
Server).
5. CREDIT AND BRANDING.
5.1 Notices. Without the prior written consent of A4M,
which consent shall not be unreasonably or untimely withheld by A4M, ICE will
not remove, conceal or obliterate any copyright or other proprietary notice or
any credit-line or date-line included in the Joint Content.
5.2 Branding. A4M will provide ICE with a "graphics" file
containing applicable A4M logos. When instructed in writing by A4M, such graphic
will be inserted in all materials that are contained in any A4M Joint Content in
the exact form, and in the exact size that it is provided by the A4M. A4M may,
in its sole discretion, replace this logo from time to time during the Term with
any other A4M-identifying logo. Upon request, ICE shall also insert a disclaimer
identifying the material as A4M educational material which cannot be reproduced
or used for any purpose.
5.3 Use of A4M Marks. A4M hereby grants ICE, and its
successors and assigns, a right and license to use the A4M Marks during the Term
in connection with ICE Internet Site only in a form and manner prescribed by
A4M. ICE shall not, without the prior written consent of A4M, display, perform,
distribute, transmit or otherwise make available in any media now known or
hereafter developed, other than through the ICE (or its successor's) Internet
Site, the Joint Content.
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<PAGE> 5
5.4 Promotion and Marketing. ICE may not make any
statement (whether oral or in writing) in any external advertising, marketing or
promotion materials regarding A4M or the Joint Content without the prior written
consent of A4M, which consent shall not be unreasonably or untimely withheld by
A4M, provided that materials that are substantially similar to those previously
approved need not be submitted for re-approval.
5.5 Framing. To the extent technologically feasible, ICE
shall not permit any third party Internet site or on-line service to frame ICE's
Internet Site such that any Joint Content appears on the same screen as such
third party's Internet site or on-line service. To the extent that it is not
technologically feasible to prevent such framing, upon A4M's request, ICE
shall cooperate with A4M in causing such third party to cease and desist from
such framing.
6. A4M MEMBERSHIP. During the term of this Agreement, ICE or its
successor shall be at all times a corporate member and pay to MDM A4M's yearly
membership fee of $25,000.00. The initial membership fee shall be paid within 30
days of execution of this Agreement. Additional fees shall be paid on each
anniversary date of this Agreement.
7. TRANSFER OF NON-MDM CONTENT; USE OF MDM CONTENT.
7.1 Provided ICE transfers the shares of stock of ICE as
referenced in Paragraph 10(a), MDM hereby transfers and assigns to ICE the World
Wide Web domain (i.e., URL) "WorldHealthCME.com" (and any derivations thereof
(other than "WorldHealth Net" or "WorldHealth Network"), the "Domain
Registration"), which Domain Registration MDM hereby represents and warrants has
been duly registered by MDM with Network Solutions, Inc. ("NSI") and currently
is active and available for use in accessing sites on that portion of the
Internet know as the World Wide Web. Upon payment of the consideration
referenced above and notwithstanding anything else to the contrary herein, each
of A4M and MDM (and each on behalf of their shareholders, officers, directors
and employees) hereby agrees that ICE, and its successors and assigns, is the
exclusive owner of the Domain Registration. Additionally, MDM (and on behalf of
its shareholders, officers, directors and employees) hereby acknowledge and
agree that all right (including all Intellectual Property Rights, if any), title
and interest in and to the Domain Registration "WorldHealth CME" and the
trademarks and tradenames, "WorldHealth CME", "WorldHealth Physician Services"
and "WorldHealth PS" (and any derivations thereof (other than "WorldHealth Net"
or "WorldHealth Network") and all other of the Non-MDM Content) hereby are and
shall remain the sole property of ICE and its successors and assigns. Each of
MDM and A4M (and each on behalf of their shareholders, officers, directors and
employees) hereby waives the right to acquire or claim any right, title or
interest to the Non-MDM Content.
7.2 MDM agrees that it will promptly execute and deliver
to ICE all documents required to cause ICE's ownership of the Domain
Registration to be duly reflected on the records of NSI and the administrative,
technical, and billing contacts being listed in a manner to be designated by
ICE. Without limiting the generality of the foregoing, MDM agrees that within
five (5) business days following the execution of this Agreement, it will
deliver to ICE an accurate, executed and notarized domain name change agreement.
MDM further agrees that he will execute and deliver to ICE any and all documents
or instruments requested by ICE to
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<PAGE> 6
evidence the sale, transfer and conveyance from MDM to ICE of the such Non-MDM
Content, or any portion thereof.
7.3 During the term hereof, MDM (and on behalf of its
shareholders, officers, directors and employees) hereby licenses to ICE whatever
right and interest MDM (or its shareholders, officers, directors and employees)
has to utilize the phrase "WorldHealth" in connection with ICE's website or
other business, provided, however, that MDM does not claim to have any ownership
interest, per se, in the phrase "WorldHealth". ICE agrees during the term of
this Agreement and thereafter that it will not use the phrase "WorldHealth Net"
or "WorldHealth Network."
7.4 ICE agrees that it will not utilize the phrase
"WorldHealth" in any manner which is associated with any illegal, elicit or
immoral activity, or in any manner that would be inconsistent with, or damaging
to, the name and reputation of MDM.
8. CONSULTING SERVICES OF MDM; LIMITED NON-COMPETE.
8.1 During the Initial Term, MDM (and its principals
including Dr. Robert Goldman) hereby agrees to provide ICE general advisory and
consulting services on the provision of CME services and on other health care
related matters relating to subject matter of this Agreement or as the Parties
may otherwise agree as may be reasonably requested by ICE's executive officers
from time to time. As payment for the performance of such services, MDM shall
receive the compensation set forth in Section 10 below.
8.2 MDM agrees on behalf of itself and its shareholders,
officers, directors and employees (collectively, the "MDM Parties") that during
the term of this Agreement, each will not, directly or indirectly, for
itself/himself or for another, engage in the business of providing continuing
medical education to health care professionals on the Internet; provided,
however, that ICE understands and agrees that the MDM Parties are also
extensively involved in the below-referenced not-for-profit corporations and
this provision shall in no way restrict their activities on behalf of the not-
for-profits, the American Board of Anti-Aging Medicine, Inc. or the American
Academy of Anti-Aging Medicine, Inc.
9. OWNERSHIP OF A4M JOINT CONTENT-AND THE MDM CONTENT.
9.1 Rights of A4M. ICE acknowledges that A4M exclusively
owns or has rights to Intellectual Property Rights in the Joint Content and the
A4M Marks. All rights with respect to the Joint Content and the A4M Marks,
whether now existing or which may hereafter come into existence, which are not
expressly granted to ICE herein, are reserved to A4M.
9.2 ICE's Obligations. To the extent that any A4M
Intellectual Property Rights may, by operation of law or otherwise, vest in
ICE, it will, at the request and expense of A4M, irrevocably assign to A4M any
such right, title or interest. ICE will promptly notify A4M of any infringement
or threatened infringement of any A4M Intellectual Property of which it has
knowledge, and will provide reasonable assistance to A4M in connection
therewith.
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<PAGE> 7
9.3 Rights of MDM. ICE acknowledges that MDM has
Intellectual Property Rights in the use of the phrase, trademarks or tradenames,
"WorldHealth Net" and "WorldHealth Network". All rights with respect to such
intellectual property and the MDM Content, whether now existing or which may
hereafter come into existence, which are not expressly granted or otherwise
licensed to ICE herein, are reserved to MDM and/or A4M.
9.4 MDM's Obligations. To the extent that any MDM
Intellectual Property Rights may, by operation of law or otherwise, vest in ICE,
it will, at the request and expense of MDM, irrevocably assign to MDM any such
right, title or interest. ICE will promptly notify MDM of any infringement or
threatened infringement of any MDM Intellectual Property of which it has
knowledge, and will provide reasonable assistance to MDM in connection
therewith.
10. PAYMENT. As compensation for the services to be performed by
the MDM pursuant to Section 6 above, MDM shall receive the following:
(a) On or prior to the date hereof, ICE shall
issue to MDM 224,000 shares of common stock, par value $.001 per share, of ICE
(the "ICE Common Stock"). ICE represents and warrants that the number of
outstanding shares of ICE at the time of the transfer to MDM is 5,600,000.
(b) Subject to the terms and provisions of a
Stock Option Agreement to be executed between ICE and MDM within 60 days of the
date hereof (the "Stock Option Agreement"), ICE shall grant MDM options to
purchase an additional 112,000 shares of ICE Common Stock, at a purchase price
per share and to vest at such times as are set forth in the Stock Option
Agreement. The restrictions placed on the stock and the option price will be no
less favorable than the most favorable restrictions and option price hereafter
granted to any officer, director or employee of, or consultant to, ICE (or its
successor in interest). Except as otherwise provided in the succeeding sentence,
such options shall vest in equal amounts as follows: (i) options to purchase
56,000 shares of ICE Common Stock shall vest immediately upon the first
anniversary of the date hereof, and (ii) options to purchase 56,000 shares of
ICE Common Stock shall vest immediately upon the second anniversary of the date
hereof. Notwithstanding the foregoing, any and all such options which have not
vested pursuant to clause (i) or (ii) above shall immediately vest upon
execution by A4M or MDM or ICE (or its successors or assigns), on the one hand,
and at least five (5) ICE-approved medical schools or institutions, on the other
hand, of a content provider or other licensing agreement reasonably acceptable
to ICE (or its successors or assigns) that ultimately provides ICE with rights
to use, among other things, such institution's CME content.
(c) Subject to the terms of the Stock Option
Agreement and only upon the procurement by MDM of at least 5,000 physicians as
registered members, MDM shall receive options to purchase an additional 112,000
shares of ICE Common Stock. The restrictions placed on the stock and the option
price will be no less favorable than the most favorable restrictions and option
price granted to officer, director or employee of, or consultant to, ICE (or its
successor in interest). Such options shall immediately vest upon such
procurement; and
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(d) ICE shall pay MDM an aggregate of $1 million
dollars, payable in equal monthly installments of $16,666.66 on the first day of
each month for 60 months (with the first payment due on or before December 1,
1999); provided, however, that in the event that ICE shall terminate this
agreement in accordance with Section 12.1 hereof, ICE shall pay MDM all unpaid
monthly payments due to MDM pursuant to this Subsection 10(d) pro rated through
the date of such termination, and shall have no further liability to MDM
pursuant to this Subsection 10(d); provided, however, that any fees or expenses
charged by, or otherwise associated with work performed by ICE, its employees
or agents (and its successors and assigns) in respect of the website located at
the URL "Worldhealth.net" and for which MDM has approved of in advance in
writing shall be deducted from such monthly installments due to MDM.
11. CONFIDENTIALITY.
11.1 Definition. "Confidential Information" means (a) any
information regarding the terms of this Agreement; (b) any information, in
whatever form, designated by the disclosing party (the "Disclosing Party") in
writing as confidential, proprietary or marked with words of like import when
provided to the receiving, party (the "Receiving Party"); and (c) information
orally conveyed if the Disclosing Parry states at the time of the oral
conveyance or promptly thereafter that such information is Confidential, and
provides specific written confirmation thereof within 10 days of the oral
conveyance.
11.2 Exclusions. Confidential Information will not include
information which: (a) at or prior to the time of disclosure by the Disclosing
Party was known to the Receiving Party through lawful means; (b) at or after the
time of disclosure by the Disclosing Party becomes generally available to the
public through no act or omission on the Receiving Party's part; (c) is
developed by the Receiving Parry independent of any Confidential Information it
receives from the Disclosing Party; or (d) the Receiving Party receives from a
third Person free to make such disclosure without breach of any legal
obligation.
11.3 Legal Obligations. The Receiving Party may disclose
Confidential Information pursuant to any statute, regulation, order, subpoena or
document discovery request, provided that prior written notice of such
disclosure is furnished to the Disclosing Party as soon as practicable in order
to afford the Disclosing Party an opportunity to seek a protective order (it
being agreed that if the Disclosing Party is unable to obtain or does not seek a
protective order and the Receiving Party is legally compelled to disclose such
information, disclosure of such information may be made without liability).
11.4 Requirements. The Receiving Party acknowledges the
confidential and proprietary nature of the Disclosing Party's Confidential
Information and agrees that it shall not discuss, reveal, or disclose the
Disclosing Party's Confidential Information to any other Person (other than
Affiliates), or use any Confidential Information for any purpose other than as
contemplated hereby, in each case, without the prior written consent of the
Disclosing Party. The Receiving Party agrees to take reasonable precautions (no
less rigorous than the Receiving Party takes with respect to its own comparable
Confidential Information) to prevent unauthorized or inadvertent disclosure of
the Confidential Information of the Disclosing Party. In the event that a
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Receiving Party wishes to disclose Confidential Information to one of its
professional advisors, it may do so only if that professional advisor agrees to
abide by the terms of this Section.
11.5 Return of Information. The Receiving Party will, at
the request of the Disclosing Party, during the Term or thereafter (a) promptly
return all Confidential Information held or used by the Receiving Party in
whatever form, or (b) at the discretion of the Disclosing Party, promptly
destroy all such Confidential Information, including all copies thereof, and
those portions of all documents that incorporate such Confidential Information.
11.6 Injunctions. In view of the difficulties of placing a
monetary value on the Confidential Information, the Disclosing Party may be
entitled to a preliminary and final injunction without the necessity of posting
any bond or undertaking in connection therewith to prevent any further breach
of this Section or further unauthorized use of its Confidential Information.
This remedy is separate from any other remedy the Disclosing Party may have.
11.7 Survival. The provisions of this Section 9 will
survive for 5 years after the end of the Term.
12. REPRESENTATIONS AND WARRANTIES.
12.1 As of the date hereof, ICE represents and warrants to
A4M and MDM, and each of A4M and MDM represents and warrants to ICE, that: (a)
it is a corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted; (b) the execution, delivery and
performance by it of this Agreement are within its corporate powers and have
been duly authorized by all necessary corporate action on its part; (c) this
Agreement constitutes a valid and binding agreement of it enforceable against it
in accordance with its terms, except as (i) the enforceability hereof and
thereof may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability; (d) the execution, delivery and performance of this
Agreement by it require no action by or in respect of, or filing with, any
governmental body, agency or official; (e) the execution, delivery and
performance of this Agreement by it do not and will not (i) violate its
organizational documents, (ii) violate any applicable law, judgment, injunction,
order or decree, or (iii) require any notice or consent or other action by any
person under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of it or to
a loss of any benefit to which it is entitled under, any agreement or other
instrument binding upon it or any license, franchise, permit or other similar
authorization held by it.
12.2 A4M hereby represents and warrants that (i) except
for certain text and publications which it shares an interest with third
parties, it owns or controls all right, title and interest in and to the A4M
Content and has rights to the A4M Other Content necessary to carry out its
obligations hereunder. ICE hereby represents and warrants that the ICE Internet
Site is, and will be, produced, displayed, advertised and transmitted in
accordance with all laws.
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12.3 MDM hereby represents and warrants that (i) except for
the phrase "WorldHealth" which it makes no representation or warranty of a
claim of ownership, it owns or controls all right, title and interest in and to
the MDM Content and has rights to the such MDM Content necessary to carry out
its obligations hereunder.
13. INDEMNIFICATION.
13.1 Indemnification by ICE. ICE will indemnify and hold A4M
and MDM and its officers, directors and employees harmless from and against any
and all Damages resulting from or arising out of (a) ICE's Internet Site or any
other activities of ICE, including infringement of any third Person Intellectual
Property Rights; (b) any material misrepresentation or a material breach of
representation or warranty of ICE contained herein; or (c) any material breach
of any covenant or agreement to be performed by ICE hereunder.
13.2 Indemnification by A4M and MDM.
(a) A4M shall indemnify and hold ICE, its Affiliates and any
and all successors in interest or assigns thereof, and their respective
officers, directors and employees, harmless from and against any and all Damages
resulting from or arising out of (a) claims that the A4M Content or the A4M
Marks infringe any third Person Intellectual Property Rights; provided, that if
the claim is based upon A4M Content obtained from a Third Party Provider, A4M's
only obligation to the ICE will be to assign to the ICE the indemnity, if any,
which A4M received from the Third Party Provider, if such indemnity is
assignable; (b) any material misrepresentation or a material breach of
representation or warranty of A4M contained herein; or (c) any material breach
of any covenant or agreement to be performed by A4M hereunder.
(b) MDM shall indemnify and hold ICE, its Affiliates and any
and all successors in interest or assigns thereof, and their respective
officers, directors and employees, harmless from and against any and all Damages
resulting from or arising out of (a) claims that the MDM Content infringes any
third Person Intellectual Property Rights; provided, that if the claim is based
upon MDM Content obtained from a Third Party Provider, MDM's only obligation to
the ICE will be to assign to the ICE the indemnity, if any, which MDM received
from the Third Party Provider, if such indemnity is assignable; (b) any material
misrepresentation or a material breach of representation or warranty of MDM
contained herein; or (c) any material breach of any covenant or agreement to be
performed by MDM hereunder.
13.3 Notice of Indemnification. A party seeking indemnification
pursuant to this Section II (an "Indemnified Party") from or against the
assertion of any claim by a third Person (a "Third Person Assertion") will give
prompt notice to the party from whom indemnification is sought (the
"Indemnifying Party"); provided, however, that failure to give prompt notice
will not relieve the Indemnifying Party of any liability hereunder (except to
the extent the Indemnifying Party has suffered actual material prejudice by such
failure).
13.4 Assumption of Defense. Within 5 Business Days of receipt
of notice from the Indemnified Party pursuant to Section 11.3, the Indemnifying
Party will have the right, exercisable by written notice to the Indemnified
Party, to assume the defense of a Third Person
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Assertion. If the Indemnifying Party assumes such defense, the Indemnifying
Party may select counsel, which counsel will be reasonably acceptable to the
Indemnified Party.
13.5 Failure to Defend. If the Indemnifying Party (a) does
not assume the defense of any Third Person Assertion in accordance with Section
11.4; (b) having so assumed such defense, unreasonably fails to defend against
such Third Person Assertion; or (c) has been advised by the written opinion of
counsel to the Indemnified Party that the use of the same counsel to represent
both the Indemnifying Party and the Indemnified Party would present a conflict
of interest, then, upon 5 days' written notice to the Indemnifying Party, the
Indemnified Party may assume the defense of such Third Person Assertion. In
such event, the Indemnified Party will be entitled under this Section 11 as
part of its Damages to indemnification for the costs of such defense.
13.6 Settlement. The party controlling the defense of a Third
Person Assertion, will have the right to consent to the entry of judgment with
respect to, or otherwise settle, such Third Person Assertion with the prior
written consent of the other party, which consent will not be unreasonably
withheld; provided, however, that such other party may withhold its consent if
any such judgment or settlement imposes a monetary obligation on such other
party that is not covered by the indemnification, imposes any material
non-monetary obligation, or does not include an unconditional release of such
other party and its Affiliates from all claims of the Third Person Assertion.
13.7 Participation. The Indemnifying Party and the
Indemnified Party will cooperate, and cause their respective Affiliates to
cooperate, in the defense or prosecution of any Third Person Assertion. The
Indemnifying Party or the Indemnified Party, as the case may be, will have the
right to participate, at its own expense, in the defense or settlement of any
Third Person Assertion.
13.8 Protection and Defense of Property. A4M shall promptly
notify ICE of any activity potentially infringing upon the A4M Content, A4M
Other Content or the A4M Marks (for purposes of this Section 11.8, the "Subject
Property") and shall further promptly provide notice to ICE of all claims and
potential claims of which it has notice or knowledge and all suits threatened
or brought against A4M involving the Subject Property. A4M agrees to protect
and defend the Subject Property against any such potentially infringing
activity and any such claims or potential claims, and ICE hereby agrees to
cooperate with all actions taken by A4M in defense and for the protection of the
Subject Property, and to share equally in any and all expenses incurred
therefor. In addition, MDM shall promptly notify ICE of any activity
potentially infringing upon any of the Non-MDM Content and shall further
promptly provide Notice to ICE of all claims and potential claims of which it
has notice or knowledge and all suits threatened or brought against MDM
involving the Non-MDM Content. MDM hereby agrees to cooperate with all actions
taken by ICE in defense and for the protection of the Non-MDM Content, at the
sole expense of ICE.
14. TERMINATION.
14.1 Grounds for Termination. In addition to any other remedy
available at law or in equity, either party may terminate this Agreement
immediately, without further obligation
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to the other party in the event of (i) any material breach of this Agreement by
the other party that is not remedied within 30 days' notice of such breach in
writing; provided that A4M or MDM may terminate this Agreement for any material
breach of Sections 3, 5, 6, 7.3 or 10 that is not remedied within 10 days'
notice of such breach in writing; and provided, further that ICE may terminate
this Agreement upon the willful misconduct or gross negligence of MDM in the
performance of the services to be rendered by same hereunder that is not cured
by MDM within 15 days' notice of such willful misconduct or gross negligence; or
(ii) the other party's making an assignment for the benefit of its creditors,
the filing of a voluntary or involuntary petition under any bankruptcy or
insolvency law, under the reorganization or arrangement provisions of the
United States Bankruptcy Code, or under the provisions of any law of like
import in connection with the other party, or the appointment of a trustee or
receiver for the other party or its property.
14.2 Additional Grounds. A4M and MDM shall have the right to
terminate this Agreement immediately in the event that the merger of ICE with
and into Corpas Investments, Inc. ("Corpas") has not been consummated within 60
days of the date hereof and, in conjunction with such merger Corpas has not
provided to A4M and MDM a signed document agreeing to be bound by and assume
all of the obligations of ICE in the event the merger occurs. If this Agreement
is terminated prior to any such merger, ICE agrees to take such actions
necessary to return the URL WorldHealth CME to MDM.
14.3 Obligations upon Termination. Promptly upon termination
of this Agreement for any reason, ICE will delete or destroy any Joint Content
stored pursuant to Section 3.5 or otherwise in its possession, custody or
control.
15. RIGHT OF FIRST REFUSAL.
15.1 Right of First Refusal. For the duration of the Term,
upon MDM's receipt of an offer, whether oral or written in the form of a letter
of intent or instrument similar thereto pertaining to the acquisition of all or
a portion of the Assets or the Capital Stock (each as defined below) of MDM or
of the website or any of the assets relating to WorldHealth.net, containing
terms of an offer acceptable to MDM, as evidenced by MDM's execution thereof
("Offer"), MDM shall within five (5) days after receiving such Offer provide
ICE with a copy of or a detailed description of the terms of such Offer. For
purposes of this Section 13, the term "Assets" shall mean all material
properties or assets of any nature owned or leased by MDM, and the term
"Capital Stock" shall mean all shares of then outstanding capital stock of MDM.
15.2 Exercise. In the event that ICE desires to exercise its
right under this Section 13 to purchase the Assets or Capital Stock specified
in the Offer, ICE shall, within twenty (20) days of its receipt of the Offer
from MDM, assume the rights and obligations of the buyer designated in the
Offer and close on the acquisition of such Assets or Capital Stock upon the
terms and in the manner specified in the Offer. In the event that there are
certain terms not set forth in the Offer, such terms shall be set by the mutual
agreement of MDM and ICE.
15.3 No Waiver. The failure of ICE to exercise its right of
first refusal under this Section 13 with respect to a particular Offer or ICE's
failure to close on a sale after it has exercised its rights under this Section
13 to assume a particular Offer, shall not constitute a
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waiver of ICE's right to exercise its rights under this Section 13 with respect
any other proposed sale of all or a portion of the Assets or the Capital Stock
of MDM.
16. GENERAL.
16.1 Press Releases. Neither party will make or issue any
external press statement regarding the terms of this Agreement or the
availability of the Joint Content on ICE's Internet Site unless (a) it has
received the express written consent of the other party, which will not be
unreasonably withheld or (b) it is required to do so by Law or the rules of any
securities market.
16.2 Entire Agreement. This Agreement and any and all
addenda, schedules or exhibits attached hereto represent the entire agreement
of the parties regarding the subject matter hereof. There are no other oral or
written collateral representations, agreements, or understandings regarding the
subject matter hereof
16.3 Controlling Law. This Agreement will be deemed governed
by and construed in accordance with the laws of Florida, without application of
conflicts of laws principles. The parties hereby consent to the exclusive
jurisdiction and venue of the state and federal courts located in Cook County,
Illinois for the purpose of any action or proceeding brought by either of them
in connection with this Agreement.
16.4 Notices. All notices, requests and other communications
to any party hereunder will be in writing (including facsimile transmission or
similar writing) and will be given to such party at its address or telecopy
number set forth below or at such other address or telecopy number as such
party may hereafter specify for such purposes. Each such notice, request or
other communication will be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and
confirmation of receipt is obtained or (ii) if given by any other means, when
received, in the case of A4M or MDM, at American Academy of Anti-Aging Medicines
or Medical Development Management, Inc., as the case may be,
____________________, Attention: President and, in the case of ICE, at
Interactive ConEd.com, Inc., 7600 Southland Boulevard, Suite 100-320, Orlando,
Florida 32809, Attention: President.
16.5 Assignments. This Agreement will be binding upon and
inure to the benefit of the parties, their respective heirs, personal
representatives, successors and assigns. Neither party may assign any of its
rights or delegate any of its duties under this Agreement without the prior
written consent of the other, provided, however, that A4M and MDM hereby
consent in advance to any assignment by ICE to Corpas of this Agreement and the
rights granted hereunder.
16.6 Relationship Between the Parties. There is no joint
venture, partnership, agency or fiduciary relationship existing between the
parties and the parties do not intend to create any such relationship by this
Agreement.
16.7 Amendments; Waivers. This Agreement may not be amended,
modified or superseded, unless expressly agreed to in writing by both parties.
No provision of this
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Agreement may be waived except by an instrument in writing executed by the
party against whom the waiver is to be effective. The failure of either party
at any time or times to require full performance of any provision hereof will
in no manner affect the right of such party at a later time to enforce the
same.
16.8 Severability. If any provision or term of this
Agreement, not being of a fundamental nature, is held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of
this Agreement will not be affected.
16.9 Survival. The provisions of Sections 7, 8, 9, 10, 11, 12,
and 14.1 and any and all disclaimers and indemnities contained herein or in any
schedules to this Agreement will survive the termination of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf by duly authorized officers
thereof, all as of the date first above written.
AMERICAN ACADEMY OF ANTI-
AGING MEDICINES
By: /s/ Bob Goldman
--------------------------
Name: Bob Goldman MD, PhD
Title: Chairman
MEDICAL DEVELOPMENT
MANAGEMENT, INC.
By: /s/ Dr. Bob Goldman
--------------------------
Name: Dr. Bob Goldman
Title: President
INTERACTIVE CONED.COM, INC.
By: /s/ Lawrence Kuhnert
--------------------------
Name: Lawrence Kuhnert
Title: President
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SCHEDULE I
A4M CONTENT
(a) Physician and healthcare membership and mailing lists comprised of
approximately:
- 300,000 physicians;
- 20,000 personal trainer professionals;
- 20,000 chiropractors;
- 7,000 members of A4M; and
- Health-related companies, nurses, pharmacists and healthcare
professionals.
(b) Medical publications, including, without limitation, books and
articles.
<PAGE> 17
SCHEDULE 2
A4M OTHER CONTENT
(a) Approximately 150 hours of video of healthcare training and educational
programs conducted at medical conferences, pursuant to which A4M is authorized
to use the speakers' names, lecture notes, lecture abstracts, and video and
audio recordings in connection with A4M educational materials, publications or
advertising.
(b) Other audio or videotapes of medical related lectures to which A4M
obtains access to and rights to use for purposes of this Agreement.
<PAGE> 1
Exhibit 10.3
WEB SITE DEVELOPMENT AND SUPPORT AGREEMENT
THIS WEB SITE DEVELOPMENT AND SUPPORT AGREEMENT (the "Agreement")
is made and entered into as of the 27th day of October, 1999 (the "Effective
Date"), by and between INTERACTIVE CON-ED.COM, INC., with offices at 7600
Southland Boulevard, Suite 100-320, Orlando, Florida 32809 ("ICE"), and K.TEK
SYSTEMS, INC., with offices at 31640 U.S. Highway 19 N., Palm Harbor, Florida
34684 ("Developer").
1. WEB SITE DEVELOPMENT.
1.1 Pursuant to the terms and conditions of this Agreement,
Developer shall assist in developing a web-based, on-line continuing education
system for providing the delivery of online course content, testing, and
results for ICE (The "Web Site"). In particular, Developer shall furnish all
back-end functionality components for developing that Web Site (including only
the database design and structure, visual basic programmed components, and the
active service pages connectively to and from the database via a standard web
browser) that satisfy the specifications and requirements included on Schedule
A (the "Developer Components"). ICE acknowledges that ICE has hired another
contractor to develop the front-end functionality components for developing the
Web Site (including without limitation the site design and all user interface
components deemed separate from the Developer Components), and that Developer
is not responsible for developing or delivering those components.
1.1.1 Developer shall ensure that the Developer
Components of the Web Site will not inhibit the availability of the Web Site to
permitted individuals and/or access devices, as specified and designated by ICE,
to or from which information, graphic or other images, sounds, data and/or any
other digital or electronic content or materials may be perceived, accessed,
transmitted or utilized. Without limiting the generality of the foregoing, the
Web Site will be accessible through the World Wide Web which is a portion of the
interconnected computer, communications and information network commonly
referred to as the "Internet."
1.2 ICE acknowledges that the development of the Web Site will be
undertaken jointly by Developer and certain ICE representatives and other
independent contractors (collectively, "Non-Developer Personnel"). ICE shall
ensure that all Non-Developer Personnel involved in the development of the Web
Site perform their respective duties in a professional and timely manner and in
a manner that does not adversely affect or delay the performance by Developer
of its obligations under this Agreement. Additionally, ICE acknowledges that
Developer will develop the Web Site using pre-existing collateral and text to
be provided by ICE. ICE assumes full responsibility for the conceptual
organization of that content and the delivery of those materials on a timely
basis.
1.3 During the development process, Developer agrees to submit to
ICE, screen shots and other items which Developer has completed in accordance
with ICE's requirements during the development process (each, a "deliverable")
for review. This process is intended to facilitate ICE's ability to review the
items being developed in an efficient and timely manner and provide feedback to
enable Developer to refine and correct, if necessary, any portions of the Web
Site, prior to the date for satisfactory completion set forth in Section 1.2
above.
<PAGE> 2
1.4 The parties acknowledge that during development of each
deliverable and the Web Site, changes and/or refinements may be appropriate or
necessary to satisfy ICE's objectives, but which may deviate from the
descriptions, specifications and requirements specified in Schedule A. All
changes, including without limitation changes which may have an impact on the
schedule for completion, the development, implementation, any charges, fees or
prices (including maintenance and support), the functionality or other material
aspects of the Web Site or this Agreement, must be fully documented in writing
and signed by both parties in order to be effective ("Change Order"). Unless a
Change Order is mutually agreed upon and signed by both parties, the scope of
work and the obligations and requirements under this Agreement shall remain
unchanged.
2. WORKING RELATIONSHIP.
2.1 Each party shall designate a project manager to act as the
principal point of interface between Developer and ICE for the development,
delivery, installation and implementation of the Web Site. The project managers
will be responsible for coordinating the work effort, liaising with necessary
internal staff and resolving any issues that may arise. For purposes of this
Agreement, ICE designates Ross Love to serve as its project manager, and
Developer appoints Ron During to serve as its project manager. Either party may
change its project manager at any time by written notice to the other party.
Each party's project manager shall have express authority to act on behalf of
the party with respect to all aspects of this Agreement.
2.2 Every week during the Web Site development process, Developer
will submit to ICE brief status reports summarizing Developer's activities in
sufficient detail to allow the Developer and ICE project managers to effectively
and meaningfully monitor the progress of the work. If either party requests,
the other party shall participate in conference calls and status meetings to
review the status of project activities.
2.3 Developer is an independent contractor and its personnel are
not ICE employees or agents for federal tax purposes or any other purposes
whatsoever and are not entitled to any ICE employee benefits. Developer assumes
sole and full responsibility for the acts of its employees and representatives,
and Developer and its personnel have no authority to make commitments, enter
into contracts on behalf of, bind or otherwise obligate ICE in any manner
whatsoever. Likewise, ICE assumes sole and full responsibility for the acts of
its employees, representatives, and all Non-Developer Personnel, and ICE and
the Non-Developer Personnel shall have no authority to make commitments, enter
into contracts on behalf of, bind, or otherwise obligate Developer in any
manner whatsoever. Developer is solely responsible for the compensation of its
personnel assigned to perform services hereunder, as well as the payment of
worker's compensation, disability and any other benefits, unemployment and
other insurance and for withholding social security, income and other taxes for
its employees and independent contractors. ICE is solely responsible for the
compensation of all Non-Developer Personnel assigned to perform services or
provide goods in connection with the development of the Web Site, as well as
the payment of all workers' compensation, disability, and any other benefits,
unemployment and other insurance and for withholding social security, income,
and other taxes payable with respect to the Non-Developer Personnel.
2.4 Nothing in this Agreement shall be deemed to constitute,
create, or otherwise give effect to a joint venture, partnership or business
entity of any kind, nor shall anything in this
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Agreement be deemed to constitute either one party the agent of the other.
Neither Developer nor ICE shall be or become liable or bound by any
representation, act or omission whatsoever of the other and the rights and
obligations of the parties shall be limited to those set forth herein.
3. ACCEPTANCE TESTING.
3.1 When the Web Site has been fully developed and completed by
Developer in accordance with the specifications and requirements of ICE set
forth in Schedule A and is in good working order, ready for productive use and
availability to third party access, Developer will notify ICE in writing and
Developer shall begin acceptance testing as described in this Article 3. The
parties acknowledge that completion of the Web Site will also depend extensively
on the timely performance of services and full cooperation by other contractors
involved in the development of the Web Site and by ICE personnel involved in
the development of the Web Site.
3.2 The acceptance test will be designed and conducted by
Developer for the purpose of demonstrating that the Developer Components of the
Web Site conform to and perform in accordance with ICE's requirements as set
forth in Schedule A (as modified from time to time by written agreement of ICE
and Developer) and any other specifications and documentation prepared by
Developer hereunder. The acceptance test will be conducted by Developer and
sample input, transactions and/or information, representative of ICE's
requirements, transactions, operations, functions and activities, shall be
utilized for the acceptance test. ICE shall provide to Developer on demand all
sample input, transactions and/or information, representative of ICE's
requirements, transactions, operations, functions and activities, that are to
be utilized for the acceptance test.
3.3 Developer shall conduct an acceptance test promptly upon
completion of the Web Site and in any event not later than two days after the
completion of the Web Site (the "Initial Test"). If it determines that the Web
Site has successfully passed the Initial Test, Developer shall immediately
notify ICE in writing. If it determines that the Web Site has not successfully
passed the Initial Test, ICE shall notify Developer in writing within ten
calendar days after the conclusion of the Initial Test specifying in reasonable
detail in what respects the Web Site has failed to perform and/or conform to
Schedule A. ICE's failure to provide the foregoing notice during that ten-day
period shall constitute ICE's Acceptance (defined below) of the Web Site. If
the Web Site does not pass the Initial Test, Developer shall promptly correct
any deficiencies disclosed by the test. For purposes of this Agreement,
"Acceptance" shall mean ICE's actual or deemed acceptance of the Developer
Components of the Web Site.
3.4 In the event the Web Site fails the Initial Test, Developer
shall conduct succeeding acceptance tests. If the Web Site passes any
succeeding acceptance tests, Developer shall immediately notify ICE in writing.
If the Web Site fails three acceptance tests (including the Initial Test), ICE
shall have the option of either (a) terminating this Agreement (i) upon payment
to Developer of the Development Fee incurred through the date of the
termination in the event that such failure is not attributable to Developer, or
(ii) without further liability or obligation of any kind to and obtaining a
refund of all the fees previously paid to Developer by ICE hereunder, in the
event that such failure is attributable to Developer, or (b) of continuing the
acceptance testing until the Web Site has successfully passed, with ICE's
option to terminate pursuant to clause 3.4(a) remaining available during any
such continuation; provided however, if ICE elects to continue acceptance
testing the Web Site more than three times, ICE shall pay to
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<PAGE> 4
Developer all hourly fees of Developer through the date of that election for
which Developer has not already been paid (notwithstanding the provisions of
section 5.1(d)) before Developer will have any duty to continue modifying and
testing the Web Site.
4. OWNERSHIP RIGHTS.
4.1 The Developer Components and all related materials provided or
developed by Developer shall remain the sole and exclusive property of Developer
until the Development Fee and other amounts due and payable to Developer under
this Agreement as of Acceptance have been paid in full. Effective upon receipt
of all amounts due under this Agreement as of the effective date of Acceptance,
Developer assigns and transfers to ICE all of its right, title, and interest
in, to, and under the Web Site and the computer code, programs and documentation
developed or created hereunder (including source code and object code) and all
forms, images and text viewable on the Internet, any HTML or XTML elements
relating thereto, designs, products, drawings, documentation, information,
deliverables and other materials made and developed in connection with this
Agreement and the development and the ongoing maintenance and support of the
Web Site, whether as individual items or a combination of components (the
"Custom Materials"). Upon receipt of all amounts due to Developer under this
Agreement as of the Acceptance, the Custom Materials shall be deemed to be
"works made for hire" made in the course of services rendered under this
Agreement; provided, however, that if and to the extent title to any Custom
Materials does not vest in ICE as contemplated hereunder or is not covered by
any statute clearly vesting title in ICE, then the Developer hereby agrees to
irrevocably assign all right, title and interest therein to ICE once ICE has
met all of its obligations under this Agreement. Upon payment of all amounts
due to Developer under this Agreement as of Acceptance, ICE has the sole right
to obtain, hold and renew in its own name and for its own benefit, any and all
patents, copyrights, registrations and other similar protections in the Custom
Materials and Developer will cooperate with ICE and execute all documents
necessary to enable ICE to perfect, preserve, register and record its rights
therein. Upon payment of all amounts due to Developer under this Agreement as
of Acceptance, Developer irrevocably waives and relinquishes any so-called
"moral rights" in and to the Custom Materials, which shall not be construed to
prohibit the Customer Materials from being acknowledged as having been
developed by Developer for ICE.
4.1.1 Upon receipt of all amounts due to it under this
Agreement (regardless of whether ICE elects to complete the Web Site), Developer
shall, immediately upon request or upon the completion of the Web Site and/or
the termination or expiration of this Agreement, turn over to ICE any and all
such Custom Materials and any ICE documents, information and/or other materials
held by or on behalf of Developer in whatever form or media, together with all
copies thereof.
4.2 It is acknowledged that any and all ICE corporate identifiers,
brand names, marks, artwork, logos, graphics, video, text, data and other
materials supplied by or on behalf of ICE in connection with this Agreement, as
well as the domain name or names assigned to the Web Site (the "ICE Content")
and all rights with respect thereto, shall remain the sole and exclusive
property of ICE.
4.3 Nothing contained in this Agreement shall be deemed to
transfer, convey or assign to ICE any of Developer's rights in any processes,
procedures, software, information or other intellectual property which was
previously owned by Developer, prior to the provision of
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the Custom Materials and services furnished hereunder and/or created
independently and without reference to any materials or information of ICE
("Pre-Existing Works"); provided, however, that if and to the extent any
Pre-Existing Works are or have been provided to ICE as part of the development
of the Custom Materials and Web Site hosting project contemplated by this
Agreement, Developer hereby grants to ICE a royalty-free, irrevocable,
worldwide, perpetual license in and to such Pre-Existing Works owned by
Developer, to use same in conjunction with the Custom Materials. Each such
License includes the right to make and keep copies of each such Pre-Existing
Work for backup and archival purposes. Developer further agrees that ICE shall
have the right to enhance, modify and/or adapt any such Pre-Existing Works and
associated documentation and materials provided to ICE hereunder and may
create and use derivative works within the scope of the license granted
hereunder and may use and combine such Pre-Existing Works with other programs
and/or materials. In the event of any termination by ICE as a result of a
material breach of this Agreement by Developer and upon payment of all amounts
due to Developer under this Agreement, ICE shall, effective as of the date of
such termination, continue to have a license to use such Pre-Existing Works
and associated documentation and other items related thereto, without further
charge or fee, but otherwise subject to and in accordance with the provisions
of this Agreement.
5. COMPENSATION.
5.1 In consideration for the development, testing, implementation
and establishment of the Developer Components of the Web Site, ICE shall pay to
Developer a fee based on Developer's hourly rate (the "Hourly Rate") and the
number of hours of work provided by Developer for those activities (the
"Development Fee"). From the effective date of this Agreement through January
31, 2000, Developer's Hourly Rate will be $150 per man hour worked. Thereafter,
Developer's Hourly Rate will increase in accordance with its standard
practices. ICE shall pay the Development Fee as follows: (a) $12,187.50 on or
before the date of this Agreement: (b) $ 12,187.50 on or before November 3,
1999; (c) $12,187.50 on or before November 12, 1999; and (d) the balance of the
Development Fee upon Acceptance of the Web Site as described in Article 3
above. For any other work requested by ICE, ICE shall pay to Developer a fee
based on the number of hours of work provided at the Hourly Rate; provided,
however, that prior to the commencement by Developer of any such other work,
ICE shall approve orally or in writing Developer's written estimate of the
number of hours required to complete any such request.
5.2 Payment of the Development Fee is due on the dates specified
in sections 3.4 and 5.1, and a late charge of 1-1/2% per month is payable on
demand on any installment of the Development Fee that is not paid within 10
calendar days after it is due.
Payment of every invoice issued by Developer for non-development
services is due in full upon receipt, and a late charge of 1-1/2% per month is
payable on demand on any invoice balance that is not paid within 10 calendar
days after the date of the invoice. ICE shall pay all amounts due to Developer
under this Agreement in cash or by bank or corporate check and in United States
dollars. Developer reserves the right to suspend (without notice or penalty)
its services if any amount owed to it is not paid in full when due. If
collection action becomes necessary, ICE shall pay all costs and expenses
incurred by Developer in collecting any amount owed to Developer, including
legal fees incurred before and after demand or the commencement of a legal
proceeding, whether incurred pursuant to trial, appellate, mediation,
arbitration, bankruptcy, or judgment-execution proceedings.
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5.3 Notwithstanding anything in this Agreement to the contrary,
Developer is not obligated under this Agreement to purchase or provide any
hardware or software to ICE. If, during the term of this Agreement, the parties
determine that hardware or software is required to complete the Web Site or
the Custom Materials, ICE shall arrange for the purchase of those items
directly and shall pay all costs associated with the procurement and purchase
of those items. With respect to additional services and out of pocket expenses
approved in advance by ICE, unless otherwise mutually agreed upon, Developer
may invoice ICE monthly after such services are rendered or expenses incurred,
accompanying such invoices with documentation adequate for ICE to review and
reasonably approve.
5.4 Pursuant to ICE's request, Developer previously estimated that
the Development Fee for the Developer Components of the Web Site as described
in Schedule A will be $48,750.00. Nevertheless, ICE acknowledges that the total
Development Fee for the Developer Components of the Web Site is difficult to
estimate with any reasonable degree of accuracy because so much of the required
work is affected by events and actions beyond Developer's control; provided,
however, that any fees in excess of $48,750 shall require the prior written
approval of ICE which approval shall not be unreasonably withheld. The
Development Fee ultimately could exceed $48,750.00. Accordingly, that estimate
does not constitute a fixed, maximum, or guaranteed Development Fee. The actual
fee could be more depending on the amount of work needed or requested by ICE.
Moreover, unless Developer agrees in writing to perform a particular service
for a fixed fee payable in advance, all budgets and estimates provided by
Developer pursuant to this Agreement are subject to unforeseeable events and
circumstances and do not constitute fixed, maximum, or guaranteed fees for the
work to be provided.
5.5 Regardless of whether this Agreement is terminated, ICE shall
remain liable to Developer for all services provided by Developer through the
effective date of the termination. The provisions of sections 5.1 through 5.5
of this Agreement will survive the expiration or termination of this Agreement.
6. WARRANTIES.
6.1 Developer represents and warrants that: (a) Developer is a
corporation organized, existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) the execution, delivery, and performance
of this Agreement have been duly authorized by all requisite action of
Developer will not conflict with its bylaws or articles of incorporation, will
not constitute a breach or violation of, or a default under, or require any
consent under, any contract, agreement, indenture, instrument, mortgage, lease,
promissory note, or other commitment, or any decree, judgment, order, or other
edict to which Developer is a party or any of its property is subject, or
violate any local, state, federal, or foreign law, rule, policy, statute, or
regulation; (c) this Agreement is a valid, binding, and effective and
enforceable obligation of Developer; (d) the Developer Components of the Web
Site, including, without limitation, the Custom Materials, will be designed,
developed, and will operate at the time delivered to ICE (but before publicly
displayed or launched) in conformance with the terms and conditions of this
Agreement, including, but not limited to Schedule A; (e) all services to be
provided by Developer under this Agreement will be performed and rendered by
qualified personnel in a professional manner; (f) Developer has full authority
to provide the services and deliver the Custom Materials and that Developer
will comply with any and all federal, state and local laws
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and regulations applicable to or associated with the performance of its
obligations under this Agreement; (g) at the time delivered to ICE (but before
publicly displayed or launched) neither the Developer Components of the Web
Site, nor Custom Materials, nor any component thereof shall contain any
malicious or unauthorized instructions (including, without limitation, so
called "computer viruses", "worms", "trap" or "back doors" or "Trojan horses")
or any other instructions, codes, programs or materials which could improperly,
wrongfully and/or without authorization, interfere with the operation or the
use of same; and (h) at the time delivered to ICE (but before publicly
displayed or launched) neither the Developer Components of the Web Site, nor
Custom Materials, nor any component thereof, shall be incorrect, invalid or
materially adversely affected in any manner based on a change in date, year,
century or otherwise and that, if applicable, shall include date data century
recognition, calculations which accommodate same century and multi-century date
values and formulae, as well as date data interfaces (to application and
operating system software, as applicable) that reflect the correct century.
6.2 ICE warrants, covenants, and represents to Developer; (a) ICE
is a corporation organized, existing, and in good standing under the laws of
the State of Delaware; (b) the execution, delivery, and performance of this
Agreement have been duly authorized by all requisite action of ICE, will not
conflict with its bylaws or articles of incorporation, will not constitute a
breach or violation of, or a default under, or require any consent under, any
contract, agreement, indenture, instrument, mortgage, lease, promissory note,
or other commitment, or any decree, judgment, order, or other edict to which
ICE is a party or any of its property is subject, or violate any local, state,
federal, or foreign law, rule, policy, statute, or regulation; (c) this
Agreement is a valid, binding, and effective and enforceable obligation of ICE;
(d) ICE has trained personnel who are capable of assisting with the development
of the Web Site and with launching, operating, and maintaining the Web Site;
(e) ICE will provide in a timely manner, all software, hardware, materials,
personnel, contractors, and other materials and personnel requested by
Developer to assist with the development of the Web Site and Custom Materials,
including without limitation all materials to be included on the Web Site; (f)
ICE will provide in a timely manner all input requested by Developer with
respect to the Web Site and Custom Materials; (g) ICE shall provide timely
feedback on all work in progress on an ongoing basis, including scheduled
review dates; and (h) upon completion of the Web Site, ICE shall complete,
execute, and return to Developer the Web Site Approval Form attached to this
Agreement as Schedule B.
6.2 EXCEPT AS SPECIFICALLY SET FORTH ABOVE, NONE OF THE PARTIES HERETO
MAKE ANY OTHER OR DIFFERENT REPRESENTATIONS OR WARRANTIES TO THE OTHER, WHETHER
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7. INDEMNITY.
7.1 Developer, at its sole cost and expense, will defend and/or
handle any claim or action against ICE for: (i) actual or alleged infringement
of any patent, copyright, intellectual or industrial property right or any
other similar right (including, but not limited to, misappropriation of trade
secrets) based on the Developer Components of the Web Site, Custom Materials,
any deliverables, information, materials and/or any items furnished by
Developer or the use and operation thereof (but excluding any data,
information, and images provided by ICE or any Non-Developer Personnel to
Developer for use on the Web Site, for which Developer assumes no
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responsibility or liability); and (ii) Developer's violation of or
non-compliance with any law or regulation governing the performance of its
obligations hereunder. Developer shall indemnify, defend, and hold harmless
ICE, its officers, directors, shareholders, agents, employees, contractors, and
their respective successors, assigns and heirs, against and from any and all
liability, loss, cost, injury, damage, and expense (including but not limited
to reasonable attorney's fees and expenses) of any kind whatsoever arising out
of, on account of, or related to a material breach of any representation or
warranty of Developer, the material breach by Developer of any provision of
this Agreement, all actual or alleged infringement of any patent, copyright,
intellectual or industrial property right or any other similar right
(including, but not limited to, misappropriation of trade secrets) based on
Custom Materials provided by Developer, Developer's violation of or
non-compliance with any law or regulation governing the performance of its
obligations hereunder, or any loss, theft, or misappropriation of property
arising from an act or omission of Developer or its agents, officers,
directors, employees, shareholders, or representatives. ICE will give Developer
prompt notice of any such claim or action and copies of all papers served upon
or received by ICE relating to same. The Developer shall have the right to
conduct the defense of any such claim or action, consistent with ICE's rights
hereunder, and all negotiations for its settlement or compromise; provided,
however, that ICE may, at its own expense, participate in such defense or
negotiations to protect its own interests.
7.2 ICE shall indemnify, defend, and hold harmless Developer, its
officers, directors, shareholders, agents, employees, contractors, and their
respective successors, assigns and heirs, against and from any and all
liability, loss, cost, injury, damage, and expense (including but not limited
to reasonable attorney's fees and expenses) of any kind whatsoever arising out
of, on account of, or related to ICE's use or operation of the Web Site, a
breach of any representation or warranty of ICE, the breach by ICE of any
provision of this Agreement, all actual or alleged infringement of any patent,
copyright, intellectual or industrial property right or any other similar right
(including, but not limited to, misappropriation of trade secrets) based on
materials provided by ICE for use in the Web Site, Custom Materials, or any
deliverables, ICE's violation of or non-compliance with any law or regulation
governing the performance of its obligations hereunder, or any loss, theft, or
misappropriation of property arising from an act or omission of ICE or its
agents, officers, directors, employees, shareholders, or representatives.
Developer will give ICE prompt notice of any such claim or action and copies of
all papers served upon or received by Developer relating to same. ICE shall
have the right to conduct the defense of any such claim or action, consistent
with Developer's rights hereunder, and all negotiations for its settlement or
compromise; provided, however, that Developer may, at its own expense,
participate in such defense or negotiations to protect its own interests.
The indemnities provided by this Section 7 shall survive the
expiration or termination of this Agreement.
8. Non-Solicitation.
8.1 During the term of this Agreement and for a period of five
years after the expiration or termination of this Agreement, neither party
shall, directly or indirectly, in any capacity, either for itself or on behalf
of any other person, do any of the following: (a) hire, recruit, or offer to
hire any person who either is or was an agent, officer, director, employee,
shareholder, or independent contractor of the other party (the "Non-Soliciting
Party"), at any time during the term of this Agreement or offer, induce,
recruit, solicit, influence, or attempt to influence any agent,
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<PAGE> 9
officer, director, employee, shareholder, or independent contractor of the
Non-Soliciting Party to terminate her or his service with the non-soliciting
party for the purpose of working for the Soliciting party or any other person,
whether or not a competitor of the Non-Soliciting Party; or (b) persuade or
attempt to persuade any agent, vendor, supplier, customer, insurance company,
independent contractor, or other person who has a business or professional
relationship with Non-Soliciting Party to cease to do business with the
Non-Soliciting Party, reduce the amount of business that it historically has
done with the Non-Soliciting Party, or otherwise adversely alter its business
or professional relationship with the Non-Soliciting Party.
The parties stipulate that a breach by either party (the "Breaching
Party") of any of the covenants in this Section and Section 9 will diminish the
value of the other party (the "Non-Breaching Party") and will cause irreparable
and continuing injury to the Non-Breaching Party for which an adequate legal
remedy will not exist. Accordingly, the parties stipulate that, if either party
breaches any of the covenants in this Section or Section 9 and fails to cure
the breach to the reasonable satisfaction of the Non-Breaching Parry within ten
days after the Non-Breaching Party gives it notice of the breach, the
Non-Breaching Party will be entitled to the following remedies, without
excluding any other available remedy; (i) entry by a court having jurisdiction
of an order granting specific performance or temporary injunctive relief, upon
the posting of any requisite bond and the filing with the court of an
appropriate pleading and affidavit specifying each obligation breached by the
Breaching Party, but without proof of actual monetary damage or an inadequate
remedy at law; (ii) if a court having jurisdiction determines for any reason
that the Non-Breaching Party is not entitled to injunctive relief, the recovery
from the Breaching Party of all profit, remuneration, or other consideration
that the Breaching Party gains from breaching the covenant; and (iii)
reimbursement from the Breaching Parry of all costs incurred by the
Non-Breaching Party in enforcing the covenant or otherwise defending or
prosecuting any mediation, arbitration, or litigation arising out of the
covenant. The Non-Breaching Party may exercise any of the foregoing remedies
concurrently, independently, or successively.
The covenants on the part of ICE and Developer in this Section and
Section 9 shall survive the expiration or termination of this Agreement and the
termination of any other agreements between ICE and Developer.
9. CONFIDENTIAL INFORMATION.
9.1 ICE Confidential Information. In the course of performing
services pursuant to this Agreement, Developer may obtain or be given access to
certain confidential and/or proprietary data, records, materials, information
and trade secrets relating to publications, financial reports, business
operations, strategic plans and other confidential, proprietary, sensitive
and/or trade secret information of ICE, its employees, clients, suppliers,
customers and/or other entities (the "ICE Confidential Information"). The ICE
Confidential Information is of a highly sensitive nature, representing special,
valuable and unique commercial assets, and its disclosure and/or unauthorized
or improper use would be materially damaging to said entities. Developer and
its employees and agents will hold in strict confidence and trust all ICE
Confidential Information. Developer will not, directly or indirectly, disclose
any of the ICE Confidential Information or make it available to any third parry
or use it for its benefit or the benefit of any third party unless specific
written authorization is received from ICE, Developer agrees not to make copies
of any ICE Confidential Information except as required in the course of
performing services hereunder. Developer will not disclose the ICE Confidential
Information to any of its employees or agents, except those with a "need to
know" for the sole purpose of
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performing services hereunder and then, only to the extent required. Developers
agrees to apply at least the same degree of care in safeguarding the ICE
Confidential Information that it uses to protect its own most valuable
proprietary information and material against any unauthorized or unlawful use,
disclosure, dissemination or copying.
9.2 Developer Confidential Information. During the term of this
Agreement, ICE may obtain or be given access to certain confidential and/or
proprietary data, records, materials, information and trade secrets relating to
publications, financial reports, business operations, strategic plans,
intellectual property (including without limitation all patents, trademarks,
trade names, service marks, and copyrighted materials, all ideas, methods,
concepts, inventions, and advertising and promotional materials of Developer),
and other confidential, proprietary, sensitive and/or trade secret information
of Developer, its employees, clients, suppliers, customers and/or other
entities (the "Developer Confidential Information." The Developer Confidential
Information is of a highly sensitive nature, representing special, valuable and
unique commercial assets, and it disclosure and/or unauthorized or improper use
would be materially damaging to said entities. ICE and its employees and agents
will hold in strict confidence and trust all Developer Confidential
Information. ICE will not, directly or indirectly, disclose any of the
Developer Confidential Information or make it available to any third party or
use it for its benefit or the benefit of any third party unless specific
written authorization is received from Developer. ICE agrees not to make copies
of any Developer Confidential Information except as required in the course of
assisting Developer in providing services hereunder, ICE will not disclose the
Developer Confidential Information to any of its employees or Agents, except
those with a "need to know" for the sole purpose of assisting Developer in
providing the services hereunder and then, only to the extent required. ICE
agrees to apply at least the same degree of care in safeguarding the Developer
Confidential Information that it uses to protect its own most valuable
proprietary information and material against any unauthorized or unlawful use,
disclosure, dissemination or copying.
10. TERMINATION OF PROJECT PROPOSAL AGREEMENT.
10.1 THE parties hereby agree that certain Project Proposal
Agreement, dated as of October 26, 1999, entered into between World Health CME,
on behalf of ICE, and Developer shall be terminated in its entirety and shall
be of no further force and effect.
11. GENERAL
11.1 Term & Termination: This Agreement shall commence as of the
date first written above and shall continue in full force and effect thereafter
unless and until terminated as permitted hereunder. Either party may terminate
this Agreement upon at least thirty (30) calendar days' advance written notice
to the other party. If one party materially breaches any provision of this
Agreement, the other party may (reserving cumulatively all other remedies and
rights under this Agreement and in law and in equity) terminate this Agreement
by giving the other party at least twenty (20) calendar days' written notice;
provided, however, that such termination shall not be effective if the party in
breach has cured the breach of which it has been notified prior to the
expiration of said twenty (20) days. This Agreement may be terminated by either
party immediately by providing written notice to the other party upon the
occurrence of any of the following events: (i) if the other parry ceases to do
business, or otherwise terminates its business operations or if there is a
material change in control of the other party (other than a merger of ICE with
Corpas Investments, Inc.; or (ii) if the other party becomes insolvent or seeks
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protection under any bankruptcy, receivership, trust deed, creditors
arrangement, composition or comparable proceeding, or if any such proceeding is
instituted against the other party (and not dismissed within 30 calendar days).
11.2 Limitation of Liability: EXCEPT AS OTHERWISE PROVIDED HEREIN,
IN NO EVENT WILL EITHER PARTY BE LIABLE, TO THE OTHER OR TO ANY THIRD PARTY,
FOR ANY SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES IN ANY MANNER IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR
THE DEVELOPMENT OR USE OF THE WEB SITE OR CUSTOM MATERIALS, REGARDLESS OF THE
FORM OF ACTION OR THE BASIS OF THE CLAIM (WHETHER FOR BREACH OF CONTRACT,
BREACH OF WARRANTY, STRICT TORT, NEGLIGENCE, OR OTHERWISE) OR WHETHER OR NOT
THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES (INCLUDING
WITHOUT LIMITATION LOSS OF PROFITS OR DATA, LOSS OF SAVINGS OR REVENUE, LOSS OF
USE OF THE WEB SITE, COST OF ANY SUBSTITUTE PROPERTY, DOWNTIME, THE CLAIMS OF
THIRD PARTY CUSTOMERS OF ICE, AND DAMAGE TO PROPERTY). DEVELOPER IS NOT LIABLE
FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES. THE LIABILITY OF
EITHER PARTY (IF ANY) ARISING OUT OF THIS AGREEMENT OR RELATING TO THE WEB SITE
OR CUSTOM MATERIALS (INCLUDING WITHOUT LIMITATION SECTION 7 OF THIS AGREEMENT)
SHALL NOT EXCEED THE AGGREGATE AMOUNT PAID BY ICE TO DEVELOPER PURSUANT TO
THIS AGREEMENT. THE LIMITATIONS PROVIDED BY THIS SECTION 11.2 SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OR ANY LIMITED OR EXCLUSIVE
REMEDY.
11.3 Excusable Delay: Except with respect to payment obligations,
neither party will be liable to the other for any delay or failure to perform
its obligations under this Agreement due to causes beyond its control and
without its fault or negligence.
11.4 Assignment: Except in connection with a merger, sale,
transfer, conveyance, acquisition or other corporate reorganization or change in
control or ownership relating to all or any material portion of its stock,
assets, operations or business, neither parry may assign, transfer or
subcontract this Agreement and/or any rights and/or obligations hereunder,
without the advance written consent of the other and any attempt to do so shall
be void.
11.5 Notices: Notices shall be in writing and delivered personally,
mailed, first class mail, postage prepaid, or sent by electronic or other means
that provides for confirmation of receipt, to the addresses of the parties
indicated in the first paragraph of this Agreement, or to any other address or
addressee requested by written notice. All notices shall be deemed given on the
date delivered or when placed in the mail or when confirmation is received, as
specified herein.
11.6 Advertising: Neither party will disclose the specific terms of
this Agreement, or use the other party's and/or any of its customers' names or
marks, or refer to the other party or any of its customers in any advertising,
publicity releases or marketing or similar written communication, without the
other party's prior written approval, which it shall not unreasonably withhold.
Notwithstanding the foregoing, Developer may indicate to third parties that it
jointly developed the Web Site without obtaining ICE's prior written approval.
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11.7 Governing Law & Interpretation: This Agreement shall be
construed and enforced under the substantive laws of the State of Florida,
without regard to its conflict of laws provisions. Headings are solely for
reference and shall not affect the meaning of any terms. If any part of this
Agreement is held invalid, illegal or unenforceable, the remaining provisions
will be unimpaired. In addition, if any one or more of the provisions contained
in this Agreement shall for any reason in any jurisdiction be held excessively
broad as to time, duration, geographical scope, activity or subject, it shall
be construed, by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law of such jurisdiction as it shall then
appear. No modification, course of conduct, amendment, supplement to or waiver
of this Agreement or any provisions hereof shall be binding upon the parties
unless made in writing and duly signed by both parties. At no time shall a
failure or delay in enforcing any provisions, exercising any option or
requiring performance, be construed to be a waiver.
The parties (a) consent to the personal jurisdiction of the state and
federal courts having jurisdiction over Hillsborough County, Florida, (b)
stipulate that the proper, exclusive, and convenient venues for all legal
proceedings arising out of this Agreement are Hillsborough County, Florida, for
state court proceedings, and the Middle District of Florida for federal court
proceedings, and (c) waive any defense, whether asserted by motion or pleading,
that Hillsborough County, Florida, or the Middle District of Florida are
improper or inconvenient venues, The provisions of this section shall survive
the expiration or termination of this Agreement.
11.8 Entirety: All schedules referred to in this Agreement are
incorporated into and constitute a part of this Agreement as if fully set forth
herein. This Agreement and the Schedules attached to it constitute the entire
agreement between the parties and supersede all previous agreements, promises,
proposals, representations, understandings and negotiations, whether written or
oral, between the parties respecting the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Web Site
Development and Support Agreement as of the day and year first above written.
INTERACTIVE CON-ED.COM, INC.
By: /s/ Lawrence R. Kuhnert
-------------------------------------
Name: Lawrence R. Kuhnert
-----------------------------------
[Print]
Title: President
----------------------------------
K.TEK SYSTEMS, INC.
By: /s/ Ronald A. Ducing
-------------------------------------
Name: Ronald A. Ducing
-----------------------------------
[Print]
Title: Vice President
----------------------------------
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Schedule A
SPECIFICATIONS AND REQUIREMENTS FOR WEB SITE
- Membership Interface:
The primary entry point for the site, this will control new member
registrations, existing membership authentications, and notices to membership
and entry/exit to the email list serves. Functionality includes new membership
profiles (a primary table source), main site entry via .asp authentication
methods and the ability to sign up for one or more list serves. The design of
this site includes a basic membership registration form, authentication login
via .asp and SQL and a list serve signup form with high code commenting.
- Data Collection:
This section includes an information request form and the access point for
various online surveys that can either be calculated for raw outcome or stored
and referenced via a weighted schema output. One generic information request
form and one survey of the client's choice (10 questions) is included with the
ability to generate survey reports via Crystal Reports Web Server. The
information request form will be archived in a client table with the request
sent to an email address.
- Resource Query:
This area includes a FAQ database, product review section and a news articles
section with most data accessed via dynamic query to the database. This site
includes one 10-question FAQ database (indexed and searchable), one product
review section with one product and one news article in the articles section.
- Classroom:
Section that includes area for download of curriculum which
can be in text, MS Word, PDF, audio, or video format. Interfacing Microsoft
"Active Streaming" capabilities within the site to allow for a conversion of
digital voice and video content to enable "streaming" over the Internet. This
includes the conversion of one audio and one video track for proof of concept.
Also, a testing center with one multiple choice test that is graded with a
place where members can view there testing history such as test results and
listing of all tests that were taken.
- Personal Web:
Web template design to allow site creation and design (within template
guidelines) by members. It will allow for the inclusion of basic graphics
(supplied by members.) It includes the basic web creation template.
- Commerce:
This area offers an online catalog with the ability to purchase via "shopping
cart" technology and use credit card authorization. It includes an catalog with
3 initial items and the implementation of the purchasing interface for
promotional purposes.
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- Administrative Interface:
The second "heart" of this site, it includes templates to update various
portions of SQL data and site design.
- SQL Database Modeling & Design
A-2
