<PAGE>
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended October 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________________ to ____________________
Commission file number 2-98314-W
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MEDICAL ADVISORY SYSTEMS, INC.
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(Name of small business issuer in its charter)
<TABLE>
<S> <C>
Delaware 52-1233960
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
8050 Southern Maryland Blvd., Owings, MD 20736
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(Address of principal executive offices) (Zip Code)
</TABLE>
(301) 855-8070
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Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 contained 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 of this Form 10-KSB [x]
Issuer's revenues for its most recent fiscal year: $7,108,496
The aggregate market value of the voting stock held by non-affiliates as of
February 4, 2000 $27,888,822
Common Stock, $.005 par value 4,411,060 Shares of Common Stock
Outstanding as of October 31, 1999
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Item 1. Description of Business.
Medical Advisory Systems, Inc. (the "Company" or "MAS"), NASDAQ/AMEX: "DOC",
is a Delaware corporation incorporated on December 1, 1981, with its principal
office located in Owings, Maryland. Its mailing address is: 8050 Southern
Maryland Blvd., Owings, Maryland 20736 (telephone: 301-855-8070).
The Company provides medical assistance products and services. The products
and services offered by the Company include:
o 24-hour-a-day medical information to the public via the Internet under an
exclusive contract with AmericasDoctor.com, Inc., which provides real-time
live online chats between physicians and Internet users.
o 24-hour-a-day medical information to individuals, groups, and associations
via the telephone with licensed medical physicians on a pay per call basis.
o 24-hour-a-day medical advice to ships at sea through a worldwide
telecommunications system, and ancillary services including training
programs, medical record maintenance, and medical cost containment services.
o 24-hour-a-day call center services and assistance to multi-national
corporations and the international travel industry and Health Maintenance
Organizations (HMO's),
o Customized pharmaceutical and medical supply kits, which are sold to the
maritime and aviation industries.
o Medical/Clinical services including treatments using laser technology.
The Company provides services from its 24 hour-a-day Call Center located in
Owings, Maryland. The Company utilizes an agent in Hong Kong to maintain
relations with maritime customers. The Company participates in a worldwide
network of 24-hour call centers in 36 countries and utilizes other centers in
the network to provide certain services outside the U.S.
a. History
The Company began operations at the beginning of 1982 to take advantage of
the privatization opportunity created by the US Government's decision to
dismantle the US Public Heath Hospital and Clinic Systems, thereby
disenfranchising US seafarers of free health care. Revenues grew slowly during
the initial years and only partially covered substantial losses incurred to
establish and enhance the Company's operational medical advice system.
The key to acceptance of the Company's maritime medical advice services was
the Company's ability to demonstrate the cost-effectiveness of those services.
Since modern vessels can be operated with relatively few people, physicians are
not required to be aboard. Consequently, in the event of a medical emergency, a
ship usually diverts from its charted course to facilitate an airlift evacuation
for a victim of an accident or illness. Unnecessary diversions are made when
trained medical personnel are not available to determine whether or not a
medical emergency really exists. The cost of a diversion to a shipping concern
can be very high. It has been the Company's experience that for maritime
companies utilizing the Company's medical advisory service, over 94% of all
illness or injury could be successfully treated at sea.
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The Company expanded its services to international travelers by forming an
alliance with SACNAS International (Mondial Assistance), in 1994, and
subsequently with other internationally recognized providers of travel
assistance.
The Company has, for the past seventeen years maintained a proven, well
established system for delivering quality medical assistance services to the
maritime and travel industries at a profit.
In the first quarter of 1998 the Board of Directors outlined a challenge for
MAS management to penetrate new medical assistance markets. The Company began
investigating other business opportunities compatible with its existing business
philosophy of providing actual " on duty" physicians specifically trained to
deliver medical assistance via telecommunications on a 24 hours a day 7 days a
week basis. Market research pointed the way towards the Internet as a new
frontier and future for consumer service.
During the fourth quarter of fiscal 1998 the Company entered into a "Call
Center Service Agreement" with AmericasDoctor.com, Inc. to provide real time
online chats between doctors at the Company Call Center in Owings, Maryland and
AmericasDoctor.com, Inc. users via the internet. The Company began providing
"chats" for AmericasDoctor.com, Inc. in September 1998. During fiscal 1998 and
the first half of fiscal 1999 the Company made equity investments in
AmericasDoctor.com, Inc., reaching an equity position in June 1999 of 13.5% of
AmericasDoctor.com outstanding shares. In October 1999, AmericasDoctor.com, Inc.
received funding from other sources, which diluted the MAS equity position to
5.3%. On January 6, 2000, the Call Center Service Agreement was again amended to
extend the contract through July 1, 2003. In addition, the Company agreed to
allow its interest to be further diluted to 2.3%.
In February 1999 the Company sold 500,000 shares of Series A Redeemable
Convertible Preferred Stock in a private placement. On May 1, 1999 the preferred
shareholders unanimously elected to convert these shares to MAS common stock.
In 1995 the Company entered into an agreement with SACNAS International of
Paris, France, (SACNAS) to create Assistance Services of America, Inc. (ASA).
The Company owned a 50% interest in ASA and ASA marketed assistance products to
the US markets under the name "Mondial Assistance". In March 1999 the Company
sold all of its interest in ASA to SACNAS International. In addition, the
Company repurchased 295,378 shares of its own common stock held by SACNAS
International and SACNAS forgave all of the outstanding indebtedness from the
Company. In conjunction with the final sale by the Company of all of its
interests in ASA to SACNAS, the Company entered into a lease and service
agreement with ASA and SACNAS. Under this agreement, ASA rented office space in
the Company's headquarters building in Owings, Maryland and continued to use the
Company to service its US medical and travel cases until January 31, 2000, at
which time, ASA vacated the premises and the contract ended. Effective, February
1, 2000, the Company entered into an agreement with CORIS Group of Paris,
France, an independent provider of travel assistance and international medical
network services. The Agreement gives MAS the right to access the international
correspondent network and the Company plans to continue offering international
travel assistance services under the trade name Medical Advisory Systems, Inc.
The DocTalk, Inc. Service was launched in October, 1999.The Company began the
development of this product in the early months of fiscal 1998 and continued
during fiscal 1999. The DocTalk, Inc. Service is a telephone based health and
medical information service offering individuals the opportunity to receive
answers to their medical questions directly and conveniently from a licensed
board certified physician 24 hours a day 7 days a week. The service is offered
on a confidential pay per call basis providing valuable relevant and helpful
information on general medical topics to consumers at a time most convenient to
them.
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b. Segments
Revenues from the Company's medical assistance services can be broken down in
the following segments:
Percent of Revenues
<TABLE>
<CAPTION>
October 31,
1998 1999
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<S> <C> <C>
Internet "Chat" Services 23 71
Maritime Response and Assistance Services 58 20
Pharmaceutical Kits and Equip. 16 7
The DocTalk, Inc. Service 0 0
Other 3 2
100% 100%
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Internet "Chat" Services
The Internet is considered the "super-highway" for information. Subscribers
gain access to the Internet through service providers. The largest provider in
the U.S. is America Online (AOL) which currently has over 20 million
subscribers. America's Doctor.com, Inc. ("Americas Doctor") has an exclusive
contract with AOL to be an anchor tenant on the AOL Health Page. Through a "Call
Center Service Agreement," the Company has an exclusive contract to provide
medical information for America's Doctor to AOL subscribers. Under the terms of
the agreement, the Company may not provide real-time Internet one-on-one chat
services by licensed health care providers to other Internet providers in the
United States.
The Company is not limited from any other types of electronic or "e" commerce
on the Internet and may use its exposure on the America's Doctor web site to
promote direct voice medical information services.
At the Company's call center, the physicians do not practice medicine or in
any way suggest specific treatment or consultation to the users, but seek to
provide reasonable answers to medically related questions. The Call Center is
staffed with over 150 physicians who have access to the latest medical
literature and can electronically send printed information to users upon
request. The service is provided 24 hours a day 7 days per week. The service
is provided on a cost plus contract to Americas Doctor.
Maritime Response and Assistance Services
A staff of communication specialists and physicians operating from the
Company's Call Center provide medical advice to people traveling anywhere in the
world, 24 hours a day, 7 days a week. Assistance is provided through
telecommunications systems utilizing telephones, satellite, high frequency
radio, fax and telex.
The Company charges for its maritime medical advice services according to one
of two methods. The subscriber can elect to have unlimited service for a flat
annual fee or to have the service available on a timed per minute basis.
Subscribers are responsible for all communication costs. Most US maritime
customers have flat fee contracts that have terms of one to three years.
A major market for the Company's services is the international travel
insurance and assistance industry. The Company provides medical consultation and
logistical support for travelers who become ill or injured while traveling
abroad. Services include coordination of medical care, physician consultation,
translation assistance, claims handling and cost containment on behalf of
assistance companies, insurance companies or managed care organizations. The
Company charges a fee for consultation and additional fees if the traveler
requires special arrangements or other logistical services.
Pharmaceutical Kits and Equipment
The Company sells a variety of kits containing pharmaceutical and medical
supplies. Included in the kits are both prescription and nonprescription
medications and controlled substances. The kits are designed following US
Government and International guidelines and include the Company's Pharmaceutical
Manual which provides information on proper storage, use and inventory control.
All medications are specially labeled for use in the Company's system. The
Company directly supplies pharmaceuticals to its maritime and airline customers
through the Company's warehouse facility. This facility stocks various commonly
needed pharmaceuticals and supplies. This internalization of the supply function
allows the Company to provide service for customers who often have time critical
supply needs.
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The DocTalk, Inc. Service
The DocTalk, Inc. Service is a telephone based health and medical information
service offering individuals the opportunity to receive answers to their medical
questions directly and conveniently from a licensed board certified physician 24
hours a day 7 days a week. The service is offered on a confidential pay per call
basis providing valuable relevant and helpful information on general medical
topics to consumers at a time most convenient to them. Although the service is
unique in many ways, the idea is a natural outgrowth of the core business
provided by Medical Advisory Systems, Inc. This service is provided from a
specially designed call center where the call is transferred to the physician
through an anonymous bridging device from our telephony interface. The physician
is provided with an up to date medical library and can access volumes of
research while the caller is on the line. The Service is being marketed through
a link with Americas Doctor and with several other websites. The Company has
signed contracts with National Internet Radio.com, Waypages-Pilgrim Media,
AcFit.com, RXData.net and Vitamins.com where the Company advertises on these
Internet sites and provides discounts to the Internet users who call the
DocTalk, Service. The strategic partner receives a referral fee up to 15% of the
income received. DocTalk, Inc. is operating in newly renovated office space
located at the parent company headquarters in Owings, Maryland. The DocTalk Inc.
Call Center accommodates sufficient workstations for the initial corps of
physicians, supervisors, and administrative support staff, as well as, capacity
for future expansion through the initial phase of business development.
DocTalk, Inc. has developed the first stage of an interactive web site and is
in the process of adding additional content to the site.
DocTalk, Inc. has developed key strategic relationships with select health
and wellness companies with an established Internet presence for the purpose of
directing consumers to the DocTalk pay-per-call service through an advertising
button on the "host" web site. These consumers receive a discount for the
DocTalk service and the "host" company will share in the revenues generated from
their site.
The Subsidiary's initial relationship was forged with Americas Doctor where a
free hyperlink from their web site was established, that directs the customer to
the DocTalk web site.
The Company has plans to implement comprehensive public relations and
advertising program in conjunction with the business plan. In support of this,
collateral materials have been created.
Domain names: DocTalk.com, DocTalk.net, and DocTalk.org have been secured to
brand the new company, its services and products.
The launch of the DocTalk Service occurred in October 1999. Since then,
DocTalk, Inc. has entered its initial prototype operational phase. The phasing
in of this service has permitted the Company to continuously fine tune its
operational procedures, more precisely identify the demographics of its customer
base and identify additional alliances and strategic programs to increase its
revenue sources.
In the initial phase of operations, a core of more than 24 full-time board-
certified or board-eligible physicians operate from the DocTalk, Inc. Call
Center in Owings, Maryland. This Call Center services the call traffic, which is
driven to the Call Center from all sources including advertising, media
promotions, direct mail and strategic partnering.
Other
In 1998 the Company began operating a clinic for out patient health services
at its headquarters building in Owings Maryland. This clinic provides primary
care and laser treatment for hair and tattoo removal. The clinic is operated
during normal business hours.
c. Markets
INTERNET "CHAT" SERVICES account for over 70% of the Company's revenue. The
growth of the telecommunications industry combined with advancements in Internet
technology is creating new marketing opportunities. MAS recognized this shift in
the telecommunications environment and developed the Internet chat service
through a strategic relationship with Americas Doctor. This relationship
provides our product as a private label service to consumers looking for medical
information on the Internet through Americas Doctor's website as an anchor
tenant on the AOL health page. The number of subscribers using AOL is currently
over 20 million individuals and is increasing daily.
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Under the Company's exclusive agreement with Americas Doctor, the Company may
not provide real time Internet one-on-one chat services by licensed health care
providers to other Internet providers in the United States. The Company is not
limited with respect to any other types of electronic or e-commerce on the
Internet and may use its exposure on the Americas Doctor website to promote
direct voice medical information services.
MARITIME RESPONSE AND ASSISTANCE SERVICES market consists of three primary
segments in maritime response and three market segments in assistance services.
MARITIME RESPONSE SERVICES
The first market segment consists of privately owned US flag ships which
transport US goods to and from ports within the United States. In this group,
there are approximately 350 deep draft vessels for which evacuations due to
medical emergencies are complicated and expensive. Over 90% of the companies
that operate these vessels utilize the services of the Company. Approximately
one-third of these customers have adopted the Company's pharmaceutical program
since it was introduced in 1983. The Company also has contracts with towing,
research, commercial fishing vessels and oil rigs.
The second market segment consists of ships owned by US and foreign companies
which carry US goods under flags of registry other than the US flag. Over 95% of
all goods are shipped on the approximately 10,000 vessels, which fall in this
category. The Company has contracts with over 300 of these ships having
domiciles in 15 countries. The Company also provides services to US flagships,
which are owned by or affiliated with the US Government.
The third market segment encompasses the balance of the world's ocean going
vessels and numbers around 75,000 vessels/units. The Company's ongoing effort to
sell to this market is enhanced by the effort made to sell to the second segment
as most of the companies operate vessels in both the US and worldwide. The
further development of less expensive satellite communication equipment also
makes this market more accessible. Although large in number, the ships
comprising the second and third market segments historically are infrequent
users of the service. This coupled with relatively high marketing costs led the
Company into other markets such as assistance.
ASSISTANCE SERVICES
The Assistance Services are primarily marketed to insurance companies, multi-
national corporations, and HMO's. The Insurance companies purchase assistance
services to gain access to the Company's specialized 24-hour claims handling
capabilities. The availability of such services allows the insurance company to
offer more attractive programs to policyholders while monitoring claims and
controlling costs. Multi-national corporations are faced with the challenge of
providing medical and operational services to their employees in foreign
countries. The Company's specialized services function as an additional employee
benefit and allow the client to control risk. HMO's provide managed health care
by designating preferred health care providers or by employing doctors directly.
However, enrollees who travel may not have direct access to these doctors. The
Company's services allow HMO's to monitor and control claims for enrollees who
travel outside the HMO catchment area.
THE DOCTALK, INC. SERVICE is marketed as a branded, co-branded or private
label product to consumers and to businesses. The Company markets this product
as a consumer-based service through its own website and through affiliation with
other websites. In addition, the product is advertised as a stand-alone product
and in conjunction with other offers. The Company also markets this product in a
business to business strategy where by the product is offered in value-added
packages to consumers through their affiliation with their employer, their
health insurance provider, or other affiliation. This market strategy provides
the consumer with a prepaid calling card where they will be able to call the
DocTalk, Service anytime from anywhere. This service will be offered on a
monthly subscription basis. The Company has entered into several agreements to
provide this service and plans to implement these agreements in the first half
of fiscal 2000.
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d. Competition
The Company competes in the Internet medical arena with potentially many
service providers including hospitals and other physician groups could launch a
competing web site to deliver medical information. The Company believes its
strategic affiliation with Americas Doctor will provide a competitive advantage,
however there is no assurance that other companies will not commence operations
on the Internet and generate greater competition than now exists.
The Company competes on the medical advice market with a few foreign
government-operated entities outside the United States. The company also knows
of a few US Companies as well as several hospitals in the US that provide radio
medical advice to ships at sea. While the Company believes it has a competitive
advantage, the barriers to entry into the Company's major market are relatively
low, and there can be no assurance that companies will not commence operations
similar to those of the company and generate competition that does not now
exist.
e. Regulation
The Company has been licensed by the Federal Communication Commission to
operate a limited coast, high frequency and single side bank ("SSB") radio
station.
The Company is also monitored for the distribution of "controlled substances"
by the US Department of Justice, Drug Enforcement Administration. The Company
holds licensure from the Drug Enforcement Administration and the Maryland Board
of Pharmacy for the distribution of pharmaceuticals. The Company does not hold
any direct medical licenses but utilizes the services of licensed physicians.
At this time, there is little government regulation regarding the medical
information content on the Internet. The Company, however, takes care to monitor
its Internet services to insure that only peer reviewed medical information is
provided to Internet users. Physicians providing Internet chats do not engage in
the practice of medicine and are trained and monitored to limit their chat
activity to general medical information.
f. Insurance
The Company maintains liability insurance for its operations. Physician
personnel are contracted through professional associations of physicians that
are covered by comprehensive professional liability insurance policies
g. Personnel
The Company employs 36 full time employees, 27 in management and 9 in
administration, clerical, and coordinator functions. The Company has three full
time physicians and over 160 physicians and medical professionals under contract
to provide services to the Company. The Company contracts with Hall &
Associates, Hall and AmDoc Associates, PA, and Hall and DocTalk Associates, PA
for 24 hour a day medical services. The Company also pays the premiums on
professional liability insurance covering personnel associated with Hall &
Associates, Hall and AmDoc Associates, PA, and Hall and DocTalk Associates, PA.
Item 2 Description of Properties
The headquarters of the Company consists of a newly constructed 12,000 square
foot custom designed Call Center and administrative office plus two original
buildings containing approximately 5,000 square feet, located on 1.44 acres of
commercial land in Owings, Maryland, approximately twenty miles from Washington,
D.C. The Company has approval to construct approximately 6,000 additional square
feet of office space at the headquarters site, when and if needed, without
additional site improvements. The Company's Call Center is staffed 24-hours-a-
day. The property is owned by the Company.
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The MAS Call Center is equipped with 90 telephone lines, 3 toll-free lines,
telex, fax, and the ability to receive AED (Automated External Defibrillator)
electrocardiograms. The center is also equipped with a high-frequency single
side band ("SSB") radio station, licensed by the Federal Communications
Commission (see Item 1, "Regulation"), and can operate on five specially
designed frequencies that are free of other traffic. Arrangements with various
relay stations around the globe give the company worldwide communications
capabilities. A Lucent DEFINITY G3SI switch is used to route inbound and
outbound calls. Emergency Transfer Panels are installed to transfer phone lines
to the response center in the event of a failure in the main switch. All core
telephone and server equipment is housed in a central computer room with an
independent climate control system. All computer room systems, as well as
mission critical response center equipment is on battery backup devices. A 60 kW
external generator powers all critical systems in the event of a power-failure.
The generator may be refueled while running, providing indefinite power to the
company's critical areas. All mission critical data is backed up to tape on a
daily basis, with one copy remaining off-site at all times. The Company
maintains a commercial insurance policy on all buildings and equipment, which in
the opinion of management, is adequate to cover the Company's exposure
Item 3. Legal Proceedings.
The Company is not a party to any pending legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the stockholders.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Company stock was traded on the OTC Bulletin Board from November 1, 1998
to July 29, 1999, at which time the stock began trading on NASDAQ/AMEX under the
symbol "DOC".
<TABLE>
<CAPTION>
Fiscal Year Ended October 31, 1999 High Low
<S> <C> <C>
First Quarter 14 1/2 1 1/4
Second Quarter 25 3/4 8 3/4
Third Quarter 29 7/8 15
Fourth Quarter 17 7/8 8 3/4
Fiscal Year Ended October 31, 1998
First Quarter 5/16 1/4
Second Quarter 7/16 3/8
Third Quarter 1 5/8 5/8
Fourth Quarter 1 1/8 1/2
</TABLE>
The closing price on February 4, 2000 was 10.75.
The Company has never paid a cash dividend on its common stock.
Item 6. Management's Discussion and Analysis
Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements made by the Company in its disclosures to
the public. There is certain information contained herein in the Company's press
releases and in oral statements made by authorized officers of the company which
are forward-looking statements as defined by such Act. When used herein in the
Company's press releases and in such oral statements, the words "estimate",
"project", "anticipate", "expect", "intend", "believe", "plan", and similar
expressions are intended to identify forward-looking statements.
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The following selected financial data and Management's Discussion and
Analysis of Financial Conditions and Results of Operations should be read in
conjunction with the Company's 1998 and 1999 financial statement and notes
thereto, included elsewhere in this Form 10KSB (See Item 7)
Selected Financial Data
<TABLE>
<CAPTION>
Years Ended October 31, 1998 1999
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<S> <C> <C> <C> <C>
REVENUE:
Internet chat services $ 721,463 22.7% $ 5,056,297 71.1%
Maritime response services 828,142 26.0% 881,626 12.4%
Travel assistance 1,019,150 32.0% 540,287 7.6%
Pharmaceutical sales 500,819 15.8% 497,125 7.0%
Training services 110,719 3.5% 70,559 1.0%
Clinic services 62,602 0.9%
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Total Revenue 3,180,293 100.0% 7,108,496 100.0%
- -----------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Internet chat services 323,204 10.2% 4,051,094 57.0%
Maritime response & travel assistance services 618,832 19.5% 538,888 7.6%
Pharmaceutical cost of sales 347,236 10.9% 340,759 4.8%
Cost of training services 24,945 0.8% 21,215 0.3%
Clinic services 69,773 1.0%
Start-up cost - DocTalk 351,076 4.9%
Salaries and wages 743,253 23.4% 760,552 10.7%
Other selling, general and administrative 894,769 28.1% 1,908,984 26.9%
Depreciation & amortization 86,624 2.7% 178,850 2.5%
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Total Operating Expenses 3,038,863 95.6% 8,221,191 115.7%
- -----------------------------------------------------------------------------------------------------------
Operating income/(loss) 141,430 4.4% (1,112,695) (15.7)%
OTHER INCOME\ (EXPENSE):
Other income 62,532 2.0% 38,771 0.5%
Gain on sale of investment in joint venture 62,287 0.9%
Interest income 56,467 1.8% 49,641 0.7%
Interest expense (34,848) (1.1)% (79,190) (1.1)%
- -----------------------------------------------------------------------------------------------------------
Total Other Income/Expense 84,151 2.7% 71,509 1.0%
- -----------------------------------------------------------------------------------------------------------
Income (loss) before earnings (loss) of affiliate
and joint venture and extraordinary item and
income tax benefit/(expense) 225,581 7.1% (1,041,186) (14.6)%
Equity in loss of affiliate (2,519,853) (35.4)%
Minority interest 53,181 1.7%
- -----------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary item and
income tax benefit/(expense) 278,762 8.8% (3,561,039) (50.0)%
Extraordinary gain 214,843 6.8% 330,822 4.7%
- -----------------------------------------------------------------------------------------------------------
Income (loss)before income tax benefit/expense 493,605 15.5% (3,230,217) (45.4)%
- -----------------------------------------------------------------------------------------------------------
Income tax benefit (expense) 36,058 1.1% (424,754) (6.0)%
- -----------------------------------------------------------------------------------------------------------
Net income (loss) 529,663 16.7% (3,654,971) (51.4)%
Preferred stock dividends (48,950) (0.7)%
- -----------------------------------------------------------------------------------------------------------
Net income (loss) attributable to common shareholders $ 529,663 16.7% $(3,703,921) (52.1)%
- -----------------------------------------------------------------------------------------------------------
Basic and diluted earnings/(loss) per share before
extraordinary gain $0.08 $(0.96)
Extraordinary gain 0.06 0.08
- -----------------------------------------------------------------------------------------------------------
Basic and diluted earnings/(loss) per share $0.14 $(0.88)
Weighted average shares outstanding 3,819,938 4,199,980
===========================================================================================================
</TABLE>
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The Company's net loss for fiscal 1999 was $3,654,971 compared to net income of
$529,663 in 1998. The net loss in the current year is due primarily to the
recognition of $2,519,853 in losses associated with the Company's equity
investment in Americas Doctor. In addition, the Company issued stock options and
warrants to outside consulting and investment firms. The fair value of these
options and warrants was expensed as non-cash compensation in the amount of
$755,746. Also, the Company recorded a 100% valuation allowance against its
deferred tax assets in the amount of $424,754. These non-cash expenses totaled
$3,700,353. Also, the Company launched the DocTalk, Inc. service in October
1999. These start up expenses generated losses of $351,076 in 1999.
INTERNET "CHAT" SERVICES
Revenues increased from $721,463 in 1998 to $5,056,297 in 1999. Operating
expenses increased from $323,204 in 1998 to $4,051,094 in 1999. Gross profits
increased 152.0% from $398,259 in 1998 to $1,005,203 in 1999. All of these
increases are due to a full year of operations in 1999 compared to three months
in 1998.
MARITIME AND TRAVEL ASSISTANCE SERVICES
Revenues decreased 23.0% from $1,847,292 in 1998 to $1,421,913 in 1999.
Operating expenses decreased 12.9% from $618,832 in 1998 to $538,888 in 1999.
Gross profits decreased 28.1% from $1,228,460 in 1998 to $883,025 in 1999. These
decreases are attributable to the sale of Assistance Services of America, Inc.
in March 1999. The 1998 consolidated financial statements included the accounts
of ASA whereas 1999 did not.
PHARMACEUTICAL KITS AND SERVICES
Revenues remained essentially unchanged at $500,819 in 1998 compared to $497,125
in 1999. Operating expenses remained essentially unchanged at $347,236 in 1998
compared to $340,759 in 1999. Gross profits also remained essentially unchanged
at $153,583 in 1998 compared to $156,366 in 1999.
THE DOCTALK, INC. SERVICE
The DocTalk, Inc. service was launched in October 1999 with no revenues
generated in 1999. In the months preceding its launch, the Company incurred
expenses of $351,076. The Company plans to fund the DocTalk, Inc. service solely
from outside equity financing, such as a private placement of stock or a
secondary public stock offering. The Company does not intend to incur any
additional debt to finance this new business. If the Company is unable to raise
the necessary financing the DocTalk, Inc. service will be scaled down
accordingly.
OTHER
Revenues increased 20.3% from $110,719 in 1998 to $133,161 in 1999. The
increase is due to the establishment of the primary care clinic in 1999.
Operating expenses increased 264.8% from $24,945 in 1998 to $90,988 in 1999.
Gross profits decreased 50.8% from $85,774 in 1998 to $42,173 in 1999 because of
start up costs associated with the new primary clinic.
SALARIES AND WAGES
Salaries and wages increased 2.3% from $743,253 in 1998 to $760,552 in 1999.
However, the 1998 amount included approximately $277,000 in salaries related to
the consolidation of ASA. On a comparative basis, excluding ASA in 1998,
salaries and wages increased 63.1% from $466,253 in 1998 to $760,552 in 1999.
The increase is due to salary and wage increases for existing employees as well
as hiring additional employees in managerial functions.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, General and Administrative increased 113.3% from $894,769 in 1998 to
$1,908,984 in 1999. However, the 1998 amount included approximately $284,000 in
S,G&A related to the consolidation of ASA. On a
11
<PAGE>
comparative basis, excluding ASA in 1998, S,G&A increased 212.6% from $610,769
in 1998 to $1,908,984 in 1999. This increase is due to non-cash compensation
expense related to options and warrants of $755,746, increase in legal fees of
approximately $339,999, increase in accounting fees of approximately $70,000 and
an increase in bad debt expense of approximately $36,000.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased 107.6% from $86,624 in 1998 to $178,850
in 1999. However, included in the 1998 amount is approximately $16,300 related
to the consolidation of ASA. On a comparative basis, excluding ASA in 1998,
depreciation and amortization increased 154.3% from $70,324 in 1998 to $178,850
in 1999. This change is primarily due to an increase in the depreciable asset
base.
OTHER INCOME AND EXPENSE
Other income decreased 38.0% from $62,532 in 1998 to $38,771 in 1999. In 1999
the Company recorded a gain on the sale of its investment in ASA of $62,287.
There was no comparable amount in 1998. Interest income decreased 12.1% from
$56,467 in 1998 to $49,641 in 1999. However, included in the 1998 amount is
approximately $11,100 related to the consolidation of ASA. On a comparative
basis, excluding ASA in 1998, interest income increased 9.4% from $45,367 in
1998 to $49,641 in 1999. The increase is due to additional funds available in
the Company's overnight investment account because of the issuance of preferred
stock. Interest expense increased 127.2% from $34,848 in 1998 to $79,190 in
1999. This increase is attributable to one time interest charge from SACNAS of
$57,000 and a new capital lease. In 1998 the Company recorded a minority
interest of $53,181 related to the other joint venture partners share in ASA,
which was sold in 1999. There is no comparable amount in 1999. Effective
November 1, 1998, the Company began to record its investment in Americas Doctor
using the equity method. Accordingly, the Company has recorded its pro rata
share of Americas Doctor's loss, which was $2,519,853 in 1999. There is no
comparable amount in 1998.
EXTRAORDINARY GAIN
In 1998 and 1999 the Company recorded an extraordinary gain of $214,843 and
$330,822 due to the forgiveness of debt from SACNAS International.
INCOME TAX BENEFIT/EXPENSE
In the fourth quarter of 1999 the Company recorded a 100% valuation allowance
against its deferred tax assets in the amount of $424,754. The Company recorded
this valuation allowance because the realization of those assets is dependent on
future earnings, which are uncertain.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $405,024 in 1999 due to a decrease
in accounts receivable and an increase in accounts payable and accrued expenses.
Significant expenses, which caused the net loss in 1999, were non-cash thus
creating cash from operating activities. Cash used in investing activities
totaled $2,807,321 and is comprised primarily of investments in
AmericasDoctor.com of $2,499,024, capital expenditures of $178,101 and a
transfer to the joint venture partner of $155,196. Capital expenditures were for
computers and equipment related to the new DocTalk, Inc. service and the
Internet chat services. Cash provided by financing activities totaled $2,754,915
and is comprised of net proceeds from the issuance of preferred stock of
$2,706,661 and the issuance of common stock of $238,153. All of the preferred
stock was converted into common stock in May 1999. These cash inflows were
offset with purchases of treasury stock totaling $116,263, principle repayments
of $24,686 and a dividend of $48,950 on the preferred stock.
The Company currently has a $500,000 credit agreement with a bank. At October
31, 1999 there is no outstanding balance. The agreement extends through October
2000. If business conditions warrant accelerated expansion of
12
<PAGE>
the DocTalk operations, the Company will explore financing alternatives to
provide the necessary funding. The Company believes that current levels of cash
($931,949 at October 31, 1999) together with cash from operations and its
existing credit facilities will be sufficient to meet its capital requirements
for the next twelve months.
Impact of Inflation and Changing Prices.
Although the Company has not attempted to calculate the effect of inflation,
management does not believe inflation has had a material effect on its results
of operations. Material increases in costs and expenses, particularly in the
labor costs, could have a significant impact on the Company's operating results
to the extent that the effect of such increases cannot be transferred to its
customers.
Impact of Year 2000 Issue
The Company assessed its computer applications to insure their functionality
with respect to the "Year 2000" millennium change. The Company upgraded the
accounting software to bring the accounting applications into compliance. The
cost of this upgrade was approximately $52,000. Presently, the Company has not
incurred any material Year 2000 effects nor does the Company anticipate that any
material incremental costs will be incurred in the foreseeable future.
Recent Accounting Pronouncements
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Standards No. 133, "Accounting for Derivative Instruments" (SFAS133").
SFAS 133 establishes accounting and reporting standards for derivative
instruments and for hedging activities. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities and measure those
instruments at fair market value. Under certain circumstances, a portion of the
derivative's gain or loss is initially reported as a component of other
comprehensive income and subsequently reclassified into income when the
transaction affects earnings. For a derivative not designated as a hedging
instrument, the gain or loss is recognized in income in the period of change.
SFAS 133 is effective for all fiscal quarters beginning after June 15, 2000 and
requires application prospectively. Presently, the Company does not use
derivative instruments either in hedging activities or as investments.
Accordingly, the Company believes that adoption of SFAS 133 will have no impact
on its financial position or results of operation.
Item 7 Financial Statements.
Financial statements and supplementary data required by this item are included
at Part IV, item 14.
Item 8 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
In September, 1999 the Company terminated its relationship with Stefanou &
Company Certified Public Accountants. The Company engaged BDO Seidman, LLP as
its independent auditors. In the last two years, there were no disagreements on
matters of accounting and auditing between the Company and Stefanou & Company.
PART III
Item 9 Directors, Executive Officers, Promoters, and Control Persons.
13
<PAGE>
Listed below are the directors and executive officers of the Company.
Directors are elected for one year terms or until their successors are elected
and qualified. Officers hold office until their successors are elected and
qualified or until their earlier resignation or removal.
<TABLE>
<CAPTION>
Age at
Name Positions with Company January 21,2000
- ----------------------------- ----------------------------------------- ---------------
<S> <C> <C>
Ronald W. Pickett Chairman of the Board of Directors & 52
President of DocTalk, L.L.C.
Thomas M. Hall, M.D., M.I.M. Chief Executive Officer, 47
President of Assistance Services of America, Inc.,
President of Hall & Associates, P.A.,
Chief Physician of the Company,
President Hall & Am Doc Associates, P.A., and
Hall and DocTalk, Associates, P.A.
Director
Robert P. Crabb Secretary
Director 52
Robert C. Goodwin, Jr. Director (1) 58
George E. Harris, IV Director (1) 57
Dale L. Hutchins, Ph.D. Executive Vice President, 38
Chief Operating Officer, DocTalk, L.L.C.
Robert C. Snyder Chief Financial Officer, 43
Treasurer
</TABLE>
(1) Appointed as Director October 29, 1999.
Ronald W. Pickett is the founder of the Company, Chairman of the Board of
Directors and President. He has been an officer and director of the Company
since its inception in 1981. A graduate of Gordon College, Mr. Pickett has
engaged in various entrepreneurial activities for 30 years.
Thomas M. Hall, M.D., M.I.M., a graduate of George Washington University
School of Medicine, "with distinction", has served as President of Hall &
Associates, P.A., Hall and DocTalk Associates, PA, and Hall and AmDoc
Associates, PA. as Chief Physician of the Company since 1982, and as Chief
Executive Officer of the Company since July 1992. Dr. Hall has been a director
of the Company since March, 1992. As Chief Executive Officer of the Company, Dr.
Hall supervises all day-to-day operations. As Chief Physician, Dr. Hall is in
charge of the medical personnel utilized in the Company's medical information,
advice and training operations. Dr. Hall is a diplomat of the National Board of
Medical Examiners, the American Board of Internal Medicine, and the American
Board of Preventive Medicine (Certified Occupational Medicine Specialist). He is
a member of Phi Beta Kappa and Alpha Omega Alpha honor societies. Dr. Hall also
holds a Masters degree in International Management from the University of
Maryland.
Robert P. Crabb, has over 30 years of sales, marketing and public and private
corporate management experience, including 15 years with the Metropolitan Life
Insurance Company where he assisted in the development of marketing and training
programs. His entrepreneurial expertise includes marketing and financial
consulting and commercial and residential real estate development. Mr. Crabb
serves the MAS as Corporate Secretary and Director of Corporate Development and
he is the Vice President of Marketing for Doc-Talk L.L.C. Mr. Crabb studied
Accounting and Finance at Benjamin Franklin University in Washington, D.C. and
Business Finance and Estate Planning at the University of North Carolina.
14
<PAGE>
Robert C. Goodwin, Jr. currently serves as Executive Vice President and
General Counsel of Chindex International, Inc. a publicly held US corporation
engaged in the provision of health products and services in China. Prior to
joining Chindex in 1992, Mr. Goodwin was engaged for a number of years in the
private practice of law in Washington, DC, where he concentrated on
international commercial law, representing numerous major US corporations.
George E. Harris, IV is co-founder and Chairman of VueCare, a home health
care company. In 1979, Mr. Harris developed and implemented an original business
plan for what became the basic model for the mail order pharmacy industry.
Dale L. Hutchins, Ph.D., Executive Vice President, joined the company in
1982. Dr. Hutchins functions as the Chief Operating Officer of the company. He
also serves as the Chief Operating Officer of DOC-TALK, L.L.C. He has 19 years
of experience in management, operations, technology and marketing. Dr. Hutchins
also has considerable specialized knowledge and experience related to the
Internet, call center technology and operations, and emergency management. He
also has import, export, and foreign product representation experience. He holds
a Ph.D. in business administration, as well as varied medical certifications. He
is active in a wide range of charitable, industry, technology, and civic
organizations.
Robert C. Snyder, Chief Financial Officer, Joined MAS in May of 1996. Mr.
Snyder has over 20 years of accounting experience working in the private sector
of Washington D.C. His experience includes senior financial and administrative
director for several rapid growth software R&D companies and director of three
Maryland based non-profit organizations. Mr. Snyder has degrees from the
University of Maryland in Accounting, Business Administration and Economics.
15
<PAGE>
Item 10 Executive Compensation.
The following is a table which summarizes the compensation awarded to,
earned by, or paid to executive officers of the Company for services to the
Company for the fiscal years ended October 31, 1997 and 1998:
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Name and Fiscal Other Annual
Principal Position Year Salary Bonus Compensation
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas M. Hall, M.D., M.I.M. 1999 $257,362 $ -0- $ -0-
CEO and 1998 $ 61,538 $110,231 (1) $83,260 (2)
Chief Physician 1997 $ 50,000 $ 95,105 (1) $85,694 (2)
Ronald W. Pickett 1999 $129,505 $ -0- 13,462 (3)
Chairman of the Board, 1998 $ 86,538 $ -0- 0
President and Treasurer 1997 $ 50,000 $ -0- 0
</TABLE>
(1) In previous years Dr. Hall also received income from the Company as an
independent contractor and independent commissioned sales agent, as
detailed in notes (1) and (2) above. Dr. Hall was required to pay
certain of his own business and travel expenses related to this
income. See Item 12. "Certain Relationships and Related Transactions."
(2) Received as an independent contractor through the Company's agreement
with Hall & Associates, P.A., under which Hall & Associates, P.A.
provides the Company with medical staff personnel. See Item 12.
"Certain Relationships and Related Transactions.
(3) Received as compensation through DocTalk. LLC, a wholly owned subsidiary
of Medical Advisory Systems.
The Chief Executive Officer and the President of the Company received
compensation in excess of $100,000 for the fiscal year ended October 31, 1999.
Only the Chief Executive Officer received total annual salary and bonus in
excess of $100,000 for the fiscal year ended October 31, 1998. (See Item 12.
"Certain Relationships and Related Transactions.")
Directors who are not officers of the Company receive $1,000 for each meeting
of the Board of Directors and $500 for committees of the Board of Directors that
they attend. Officers of the Company do not receive additional compensation for
attending board meetings.
The Company has entered into employment agreements with Officers Pickett,
Hall, and Snyder. The employment agreements are designed to assist the Company
in maintaining a stable and competent management team. The continued success of
the company depends to a significant degree on the skills and competence of its
officers. The employment agreements provide for an annual base salary in an
amount not less than the employees current salary and terms of three years for
officers Pickett and Hall, and one year for Snyder. The agreements provide for
terminations upon the employee's death, for cause or in certain events specified
by federal regulations. The employment agreements are also terminable by the
employee upon 30 to 90 days notice to the Company.
16
<PAGE>
Item 11 Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth the beneficial ownership of shares of Common
Stock of the Company as of February 4, 2000 for each director and executive
officer and for all directors and executive officers as a group:
<TABLE>
<CAPTION>
No. Shares
Name Owned Beneficially Percent of Class
- ---- ------------------ ----------------
<S> <C> <C>
Thomas M. Hall, M.D., M.I.M. 1,182,750* 26.81%
8050 Southern Maryland Blvd.
Owings, Maryland 20736
Ronald W. Pickett 535,890** 12.14%
8050 Southern Maryland Boulevard
Owings, MD 20736
Robert P. Crabb 95,180 2.10%
583 Lombard Road
Rising Sun, Maryland 21911
Dale L. Hutchins, Ph.D. 68,111*** 1.54%
8050 Southern Maryland Boulevard
Owings, MD 20736
Robert C. Snyder 30,000**** .68%
8050 Southern Maryland Boulevard
Owings, MD 20736
All directors and executive officers 1,911,931
as a group (5 individuals)
</TABLE>
- -------------------
* Includes immediately exercisable options to purchase 200,000 shares at
$.50 per share.
** Includes 203,000 shares owned by family members, associates, and
332,890 beneficially owned by Ronald W. Pickett and Cynthia P. Pickett
(his spouse).
*** Includes immediately exercisable options to purchase 50,000
shares of MAS common stock at $.50/ share
**** Consists of 30,000 options to purchase shares of MAS common stock at
$0.50/share. Per the terms of an employment agreement between the Company
and Mr. Snyder, 12,000 of the options vested on May 8, 1999 and 6,000 will
vest on each subsequent anniversary date through May 8, 2002 based on
continued satisfactory employment.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Options Value of Unexercised In-the-
At FY End (#) Money Options at FYEnd($)
Name Shares Acquired on Value Exercisable Unexercisable Exercisable Unexercisable
Exercise # Realized
<S> <C> <C> <C> <C> <C> <C>
Thomas M Hall, MD, MIM -0- -0- 200,000 -0- $2,000,000 -0-
</TABLE>
17
<PAGE>
Item 12 Certain Relationships and Related Transactions.
Medical Staffing
The Company has agreements with Hall & Associates, P.A., Hall and AmDoc
Associates, Pa, and Hall and DocTalk Associates, PA, which are owned by Thomas M
Hall, MD, MIM, the Company's Chief Executive Officer, to provide the Company
with medical personnel as needed to staff its maritime and international travel
operations. Amounts paid to these companies represent fees for professional
services rendered and premiums on professional liability insurance. During 1999
and 1998 the Company paid hall & Associates, PA, Hall and AmDoc, Associates, Pa
and Hall and DocTalk Associates, PA a combined total of $4,014,982 and
$1,254,465, respectively, in fees and professional liability insurance premiums.
There were no amounts payable to these affiliates at either October 31, 1998
or 1999.
18
<PAGE>
Item 13. Exhibits List and Reports on Form 8-K.
(a) A list of the exhibits filed as part of this report is found in the
Exhibits Index .
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MEDICAL ADVISORY SYSTEMS, INC.
Date: By:
___________ _______________________________________
Ronald W. Pickett
Chairman of the Board
President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date: By:
___________ _______________________________________
Ronald W. Pickett
Chairman of the Board
President
Date: By:
___________ _______________________________________
Thomas M. Hall, M.D., M.I.M.
Chief Executive Officer
Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Date: By:
___________ _______________________________________
Robert P. Crabb
Secretary
Director
Date: By:
___________ _______________________________________
Robert C. Goodwin, Jr.
Director
Date: By:
___________ _______________________________________
George E. Harris IV
Director
19
<PAGE>
EXHIBITS INDEX
Sequential
Exhibit No. Description of Exhibit Page Number
- ----------- ---------------------- -----------
3(a) Restated Certificate of Incorporation,
filed as Exhibit 3(a) to Registration N.A.
Statement on Form S-18 (No. 2-98314) on
June 7, 1985*
3(b) Certificate of Amendment of certificate
of incorporation dated Sept. 8, 1988, N.A.
filed as Exhibit 3(a)(2) to Annual
Report on Form 10-K on March 28, 1990*
3(c) Bylaws, as amended, filed as Exhibit
3(b) to Registration Statement on Form S-18 N.A.
(No. 2-98314) on June 7, 1985*
4 Form of Common Stock Certificate, filed
as Exhibit 4 to Amendment No. 1 to N.A.
registration Statement on Form S-18
(No.33-02991) on February 28, 1986*
10(a) Letter dated December 2, 1988 evidencing
agreement between Medical Advisory Systems,
Inc. and Hall and Associates, P.A. with respect
to provision of medical services to Customers N.A.
of Medical Advisory Systems, Inc., filed as
Exhibit 10(c) to Form 8 amending Annual
Report on Form 10-K on April 18, 1989*
10(b) Joint Venture Agreement dated June 21, 1993 N.A.
between SACNAS International and Medical
Advisory Systems, Inc., Agreement between
the Company and filed as Exhibit 10(b) to
Annual Report on Form 10-KSB on March 15, 1994*
23.1 Consent of Independent Certified Public Accountants
23.2 Consent of Certified Public Accountants -- Form S-8
23.3 Consent of Certified Public Accountants -- Form S-3
99.1 Web Site Agreement
99.2 RXData.net License Agreement
99.3 Addendum #3 dated January 5, 2000
99.4 Agreement dated January 28, 2000
99.5 Agreement dated November 10, 1999
99.6 Stock Purchase Agreement
99.7 Services Agreement
99.8 Agreement dated November 10, 1999
- -------------------
*Incorporated herein by reference.
20
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Reports of Independent Accountants F-2-3
Financial Statements
Balance Sheet F-4-5
Consolidated Statements of Operations F-6
Consolidated Statements of Changes in Stockholders' Equity F-7
Consolidated Statements of Cash Flows F-8
Notes to Consolidated Financial Statements F-14-25
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Medical Advisory Systems, Inc.
We have audited the accompanying consolidated balance sheet of Medical Advisory
Systems, Inc. and Subsidiaries as of October 31, 1999 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. 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 did not audit the financial
statements of AmericasDoctor.com, Inc., a 13.5% equity investee of the Company
which investment is $639,171 and the share of net losses is $2,519,853 as of and
for the year ended October 31, 1999. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to data included for AmericasDoctor.com, Inc., is based solely on the
report of the other auditors.
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
misstatements. 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 our audit and the report of other auditors provide a reasonable basis
for our opinion.
In our opinion, based on our audit and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Medical Advisory Systems, Inc. and Subsidiaries as of
October 31, 1999 and the results of their operation and their cash flows for the
year then ended in conformity with generally accepted accounting principles.
BDO Seidman, LLP
Washington, D.C.
January 7, 2000
F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors
Medical Advisory Systems, Inc.
We have audited the accompanying consolidated balance sheet of Medical
Advisory Systems, Inc. and subsidiaries as of October 31, 1998 and the related
consolidated statements of earnings, stockholders' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based upon 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
misstatements. 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 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 Medical Advisory Systems,
Inc. and subsidiaries as of October 31, 1998, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
/s/ STEFANOU & COMPANY, LLP
---------------------------
STEFANOU & COMPANY, LLP
Certified Public Accountants
McLean, Virginia
January 28, 1999
F-3
<PAGE>
Medical Advisory Systems, Inc.
Consolidated Balance Sheets
================================================================================
<TABLE>
<CAPTION>
October 31, October 31,
1998 1999
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash and cash equivalents $ 579,331 $ 931,949
Accounts receivable, less allowance for doubtful accounts
of $79,045 and $77,744 907,720 444,396
Inventories 26,745 25,108
Deferred income taxes (Note 8) 37,015 -
Prepaid expenses and other 31,508 11,651
- -------------------------------------------------------------------------------------------------------------
Total current assets 1,582,319 1,413,104
Property and equipment, at cost, less
accumulated depreciation and amortization (Notes 1 and 3) 1,015,055 1,042,653
Investment in AmericasDoctor.com (Note 2) 660,000 639,171
Deferred investment advisory costs (Note 6) - 757,607
Deferred income taxes (Note 8) 387,739 -
Intangible assets, net - 48,250
- -------------------------------------------------------------------------------------------------------------
$3,645,113 $3,900,785
=============================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-4
<PAGE>
Medical Advisory Systems, Inc.
Consolidated Balance Sheets
================================================================================
<TABLE>
<CAPTION>
October 31, October 31,
1998 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities and Stockholders' equity
Current
Current maturities of long-term debt (Note 3) $ 315,617 $ 3,395
Current maturities of capital lease obligations (Note 3) - 25,769
Accounts payable and accrued expenses 437,249 483,383
Deferred income 81,361 31,677
- ---------------------------------------------------------------------------------------------------------------
Total current liabilities 834,227 544,224
- ---------------------------------------------------------------------------------------------------------------
Long-term debt (Note 3) 134,069 131,230
Capital lease obligations (Note 3) - 98,793
Customer advances 246,204 57,944
- ---------------------------------------------------------------------------------------------------------------
Total liabilities 1,214,500 832,191
- ---------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 10)
Stockholders' equity (Notes 4, 5, 6 and 7)
Convertible preferred stock, par value, $1.75 par share;
1,000,000 shares authorized; none issued or outstanding - -
Common stock; $.005 par value; 10,000,000 shares
authorized; 3,819,938 and 4,411,060 shares issued
and outstanding 19,100 22,054
Additional paid-in capital 3,825,093 8,164,041
Accumulated deficit (1,369,997) (5,073,918)
Treasury stock, at cost (50,000 shares) (43,583) (43,583)
- ---------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,430,613 3,068,594
- ---------------------------------------------------------------------------------------------------------------
$ 3,645,113 $ 3,900,785
===============================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-5
<PAGE>
Medical Advisory Systems, Inc.
Consolidated Statements of Operations
================================================================================
<TABLE>
<CAPTION>
Years Ended October 31, 1998 1999
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue (Note 11):
Internet chat services $ 721,463 $ 5,056,297
Maritime response services 828,142 881,626
Travel assistance 1,019,150 540,287
Pharmaceutical sales 500,819 497,125
Training services 110,719 70,559
Clinic services - 62,602
- ---------------------------------------------------------------------------------------------------------------------------
Total Revenue 3,180,293 7,108,496
- ---------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Internet chat services (Note 4) 323,204 4,051,094
Maritime response & travel assistance services (Note 4) 618,832 538,888
Pharmaceutical cost of sales 347,236 340,759
Cost of training services 24,945 21,215
Clinic services - 69,773
Start-up cost-Doc-Talk - 351,076
Salaries and wages 743,253 760,552
Other selling, general and administrative (Note 6) 894,769 1,908,984
Depreciation & amortization 86,624 178,850
- ---------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 3,038,863 8,221,191
- ---------------------------------------------------------------------------------------------------------------------------
Operating income/(loss) 141,430 (1,112,695)
Other Income/(Expense):
Other income 62,532 38,771
Gain on sale of investment in joint venture - 62,287
Interest income 56,467 49,641
Interest expense (34,848) (79,190)
- ---------------------------------------------------------------------------------------------------------------------------
Total Other Income/(Expense) 84,151 71,509
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) before earnings (loss) of affiliate and joint
venture and extraordinary item and income tax
benefit/(expense) 225,581 (1,041,186)
Equity in loss of affiliate (Note 2) - (2,519,853)
Minority interest 53,181 -
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss)before extraordinary item and income tax
benefit/(expense) 278,762 (3,561,039)
Extraordinary gain (Note 4) 214,843 330,822
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) before income tax benefit/(expense) 493,605 (3,230,217)
- ---------------------------------------------------------------------------------------------------------------------------
Income tax benefit (expense) (Note 8) 36,058 (424,754)
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) 529,663 (3,654,971)
Preferred stock dividends - (48,950)
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) attributable to common shareholders $ 529,663 $(3,703,921)
===========================================================================================================================
Basic and diluted earnings/(loss) per share before
extraordinary gain $ 0.08 $ (0.96)
Extraordinary gain 0.06 0.08
- ---------------------------------------------------------------------------------------------------------------------------
Basic and diluted earnings/(loss) per share $ 0.14 $ (0.88)
Weighted average shares outstanding 3,819,938 4,199,980
===========================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-6
<PAGE>
Medical Advisory Systems, Inc.
Consolidated Statements of Stockholders' Equity
================================================================================
<TABLE>
<CAPTION>
Preferred Stock Common Stock
------------------------------------------------- Additional Accumulated
Shares Amount Shares Amount Paid-in-Capital Deficit
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1997 $ - $ - 3,819,938 $19,100 $3,825,093 $(1,899,660)
Net income - - - - - 529,663
- -------------------------------------------------------------------------------------------------------------------
Balance at October 31, 1998 - - 3,819,938 19,100 3,825,093 (1,369,997)
Issuance of preferred stock,
net of issuance costs 500,000 875,000 - - 1,831,661 -
Warrants issued as additional
issuance costs on preferred
stock - - 40,560 203 (124,808) -
Conversion of preferred
stock into common stock (500,000) (875,000) 500,000 2,500 872,500 -
Exercise of stock options and
warrants for cash - - 86,500 433 237,720 -
Purchase of treasury shares - - - - - -
Retirement of treasury shares - - (295,378) (1,477) (114,786) -
Payment of preferred
dividends - - - - - (48,950)
Warrants issued to outside
third parties - - 259,440 1,295 1,636,661 -
Net loss - - - - - (3,654,971)
- -------------------------------------------------------------------------------------------------------------------
Balance at October 31, 1999 $ - $ - 4,411,060 $22,054 $8,164,041 $(5,073,918)
===================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Treasury Stock
-----------------------------------------
Shares Amount Total
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Balance at October 31, 1997 50,000 $ (43,583) $ 1,900,950
Net income - - 529,663
- -----------------------------------------------------------------------
Balance at October 31, 1998 50,000 (43,583) 2,430,613
Issuance of preferred stock,
net of issuance costs - - 2,706,661
Warrants issued as additional
issuance costs on preferred
stock - - (124,605)
Conversion of preferred
stock into common stock - - -
Exercise of stock options and
warrants for cash - - 238,153
Purchase of treasury shares 295,378 (116,263) (116,263)
Retirement of treasury shares (295,378) 116,263 -
Payment of preferred
dividends - - (48,950)
Warrants issued to outside
third parties - - 1,637,956
Net loss - - (3,654,971)
- -----------------------------------------------------------------------
Balance at October 31, 1999 50,000 $ (43,583) $ 3,068,594
=======================================================================
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-7
<PAGE>
Medical Advisory Systems, Inc.
Consolidated Statements of Cash Flows
================================================================================
<TABLE>
<CAPTION>
Years ended October 31, 1998 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 529,663 $(3,654,971)
Adjustment to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 86,624 178,850
Bad debt expense - 59,780
Write-offs of accounts receivable - (37,779)
Extraordinary gain - (330,822)
Equity in loss of affiliate - 2,519,853
Minority interest (53,181) -
Gain on sale of investment in joint venture - (62,287)
Compensation expense for options and warrants - 755,746
Deferred income taxes (36,058) 424,754
Changes in assets and liabilities, net of divestitures:
Accounts receivable 136,892 212,050
Inventory (4,540) 1,637
Prepaid expenses and other 7,210 (6,307)
Accounts payable and accrued expenses (163,065) 337,368
Deferred income (39,607) (39,899)
Customer advances - 57,944
All other, net - (10,893)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 463,938 405,024
- ------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Investment in equity affiliate (295,031) (2,499,024)
Purchase of property and equipment, net (135,149) (178,101)
Transfer to joint venture partner - (155,196)
Proceeds from sale of joint venture - 25,000
- ------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (430,180) (2,807,321)
- ------------------------------------------------------------------------------------------------------------------------
Cash Flows from financing activities
Proceeds from sale of preferred stock, net of cost - 2,706,661
Proceeds from sale of common stock, net of cost - 238,153
Dividends on preferred stock - (48,950)
Purchase of treasury stock - (116,263)
Repayment of loans to banks and related parties (184,036) (24,686)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used In) financing activities (184,036) 2,754,915
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (150,278) 352,618
Cash at beginning of period 729,609 579,331
- ------------------------------------------------------------------------------------------------------------------------
Cash at end of the period $ 579,331 $ 931,949
========================================================================================================================
</TABLE>
See accompanying summary of accounting policieand notes to
consolidated financial statements.
F-8
<PAGE>
Medical Advisory Systems, Inc.
Summary of Accounting Policies
================================================================================
Basis of Presentation The consolidated financial statements include the
accounts of Medical Advisory Systems, Inc. (MAS or
the Company) and its wholly-owned subsidiaries, MAS
Laboratories, Inc., Doc-Talk, LLC, and TLC., Inc.
Significant intercompany transactions have been
eliminated in consolidation.
The consolidated financial statements as of and for
the year ended October 31, 1998 also include the
assets, liabilities and operating results of
Assistance Services of America, Inc. (ASA). In March,
1999, the Company sold its 50% ownership interest in
ASA to its co-venturer, SACNAS International. The
terms of the sale agreement included SACNAS
International assuming all responsibilities for
operations of ASA effective November 1, 1998.
Accordingly, the accompanying consolidated balance
sheet at October 31, 1999 and the statement of
operations for the year ended October 31, 1999 do not
include the assets, liabilities or operating results
of ASA.
Effective November 1, 1998, the Company began using
the equity method of accounting for its investment in
AmericasDoctor.com. The Company determined that the
equity method was appropriate based on a combination
of its strict ownership percentage, which increased
from 8% in October 1998 to 13.5% in April 1999,
coupled with the ability to have a representative on
the board of directors. Under the equity method,
original investments are recorded at cost, increased
for subsequent investments in and advances to the
investee, and adjusted for the Company's share of
undistributed earnings and losses of the investee.
The Company's prorata share of the net losses of
AmericasDoctor.com was $2,519,853 for fiscal 1999,
which served to increase the net loss per share by
$0.60 in 1999. (See Note 2). The Company did not
apply the equity method retroactively to fiscal 1998
because the effect on the financial statements was
insignificant.
F-9
<PAGE>
Medical Advisory Systems, Inc.
Summary of Accounting Policies
================================================================================
Business Operations MAS provides medical advice to personnel on ocean-
going vessels and other individuals or entities
located outside the continental United States,
operates an out-patient medical clinic and provides
medical information service via "chats" over the
internet and telephone. In 1998, ASA provided medical
assistance services to multi-national corporations,
health maintenance organizations, and insurance
companies in Canada and the United States. MAS
Laboratories is currently inactive. The Company
provides these various services through four
operating segments as described more fully in
Note 11.
Risks and Uncertainties The Company provides medical information and
assistance services and related products through
various methods of distribution. The majority of the
Company's revenues result from providing medical
information to the public via the internet under an
exclusive contract with AmericasDoctor.com.
AmericasDoctor.com has an exclusive contract with
America Online (AOL) to be an anchor tenant on the
AOL Health Page. AOL subscribers can "chat" with the
Company's doctors located in it's call center, which
is staffed 24-hours-a-day. Because of the exclusive
nature of its agreement with AmericasDoctor.com, the
Company's ability to continue to generate significant
internet chat revenue and cash flow is directly
related to the continued successful operation of the
AOL home page concept by AmericasDoctor.com.
Use of Estimates The preparation of financial statements in conformity
with generally accepted accounting principles
requires management to make estimates and assumptions
particularly regarding valuation of accounts
receivable, recognition of liabilities and disclosure
of contingent assets and liabilities at the date of
the financial statements. Actual results could differ
from those estimates.
Concentrations of Financial instruments and related items which
Credit Risk potentially subject the Company to concentrations of
credit risk consist primarily of cash and cash
equivalents and trade receivables. The Company places
its cash and temporary cash investments with high
credit quality institutions. At times, such
investments may be in excess of the FDIC insurance
limit. The Company's customers are not concentrated
geographically and it periodically reviews its trade
receivables in determining its allowance for doubtful
accounts. Revenue from AmericasDoctor.com, Inc. was
$5,056,297 or 71% of consolidated revenues for fiscal
1999. Revenue from two customers was $865,446 or 26%
of consolidated revenue for fiscal 1998.
F-10
<PAGE>
Medical Advisory Systems, Inc.
Summary of Accounting Policies
================================================================================
Cash Equivalents For purposes of the statements of cash flows, the
Company considers all highly liquid debt instruments
purchased with a maturity date of three months or
less to be cash equivalents.
Inventories Inventories are stated at the lower of cost or market
determined by the first-in, first-out (FIFO) method.
Inventories consist of pharmaceuticals available for
sale.
Property and Equipment Property and equipment are stated at cost.
Depreciation is computed over their estimated useful
lives by the straight line method.
Deferred Investment Deferred investment advisory and public relations
Advisory Costs costs consist of approximately $1,500,000,
representing the estimated fair value of 360,000
warrants issued to certain third parties for public
and investor relations services to be rendered over
one and three-year periods, respectively (see Note
6). These amounts are being amortized on a straight
line basis over the lives of the service agreements.
Amortization expense was approximately $756,000 in
fiscal 1999.
Impairment of Long-Lived Long-lived assets and certain identifiable
Assets intangibles held and used by the Company are reviewed
for impairment whenever events or changes in
circumstances indicate that the carrying amount of an
asset may not be recoverable. In addition, assets to
be disposed of are reported at the lower of the
carrying amount or the fair value less costs to sell.
Revenue Recognition Revenues from contracts that provide unlimited
services are recognized ratably over the term of the
contract. Revenues from contracts based on usage are
recognized when the services are rendered. Other
revenues are recognized at the time services or goods
are provided.
Income Taxes The Company accounts for income taxes in accordance
with Statement of Financial Accounting Standards No.
109. Accounting for Income Taxes ("SFAS 109"). Under
SFAS 109, deferred taxes are determined using the
liability method which requires the recognition of
deferred tax assets and liabilities based on
differences between financial statement and income
tax bases using presently enacted tax rates.
F-11
<PAGE>
Medical Advisory Systems, Inc.
Summary of Accounting Policies
================================================================================
Stock Based Compensation The Company accounts for stock based compensation
using the intrinsic value method prescribed in
Accounting Principle Board Opinion No. 25,
"Accounting for Stock Issued to Employees." The
Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" with
respect to options and warrants granted to employees.
Earnings Per Share The Company follows Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," specifying
the computation, presentation and disclosure
requirements of earnings per share information. Basic
earnings per share has been calculated based upon the
weighted average number of common shares outstanding.
Stock options and warrants have been excluded as
common stock equivalents in the diluted earnings per
share because they are antidilutive.
Comprehensive Statement of Financial Accounting Standards No.
Income 130, "Reporting Comprehensive Income" ("SFAS 130"),
establishes standards for reporting and display of
comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include
all changes in equity except those resulting from
investments by owners and distributions to owners.
Among other disclosures, SFAS 130 requires that all
items that are required to be recognized under
current accounting standards as components of
comprehensive income be reported in a financial
statement that is displayed with the same prominence
as other financial statements. The Company adopted
SFAS 130 during the first quarter of fiscal 1999 and
has no items of comprehensive income to report.
F-12
<PAGE>
Medical Advisory Systems, Inc.
Summary of Accounting Policies
================================================================================
Recent Accounting In June 1998, the Financial Accounting Standards
Pronouncements Board issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative
Instruments" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards for derivative
instruments and for hedging activities. SFAS 133
requires that an entity recognize all derivatives as
either assets or liabilities and measure those
instruments at fair market value. Under certain
circumstances, a portion of the derivative's gain or
loss is initially reported as a component of other
comprehensive income and subsequently reclassified
into income when the transaction affects earnings.
For a derivative not designated as a hedging
instrument, the gain or loss is recognized in income
in the period of change. SFAS 133 is effective for
all fiscal quarters beginning after June 15, 2000 and
requires application prospectively. Presently, the
Company does not use derivative instruments either in
hedging activities or as investments. Accordingly,
the Company believes that adoption of SFAS 133 will
have no impact on its financial position or results
of operations.
Reclassifications Certain prior year balances have been reclassified to
conform with the current year presentation.
F-13
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
1. Property and Property and equipment consists of the following:
Equipment
<TABLE>
<CAPTION>
October 31, October 31, Estimated
1998 1999 Useful lives
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land $ 65,078 $ 65,078
Buildings and improvement 918,699 955,802 10-20 years
Furniture, fixtures and equipment 675,537 814,476 3-5 years
- ------------------------------------------------------------------------------------
1,659,314 1,835,356
Less: Accumulated depreciation
and amortization 644,259 792,703
- ------------------------------------------------------------------------------------
$1,015,055 $1,042,653
- ------------------------------------------------------------------------------------
</TABLE>
2. Investment in In October 1998 the Company invested $660,000 which
AmericasDoctor.com represented an 8% interest in AmericasDoctor.com.
During 1999 the Company increased its investment to
$3,159,024 (13.5%), principally in February and June.
AmericasDoctor.com operates an interactive internet
healthcare information site for consumers which
offers free, real-time interaction with healthcare
professionals and easy access to relevant and
reliable healthcare information. The site features a
free 24-hour doctor chat service that enables
consumers to have live on-line, one-on-one chats with
doctors and other healthcare professionals, a variety
of interactive healthcare content including lectures
and live educational programs, a growing library of
information on ailments, illnesses, nutrition,
pharmacology and other topics, and health and medical
publications and news.
The Company's remaining investment represents
goodwill which has been assigned a five-year life.
The amortization expense was not material in fiscal
1999. On October 31, 1999, the Company's ownership
interest was reduced to 5.3% and further reduced to
2.3% on January 6, 2000. Effective November 1, 1999,
the Company began to account for its investment using
the cost method.
F-14
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
The following amounts have been derived from
AmericasDoctor.com's audited financial statements.
<TABLE>
<CAPTION>
Year Ended
September 30,
1999
---------------------------------------------------------------
<S> <C>
Revenue $ 1,245,244
Operating expenses 21,815,225
---------------------------------------------------------------
Loss from operations (20,569,981)
Interest expense, net 98,134
---------------------------------------------------------------
Net loss $(20,618,785)
===============================================================
Company's prorata share of
AmericasDoctor.com's net loss $ (2,519,853)
===============================================================
</TABLE>
The balance sheet of AmericasDoctor.com is
summarized as follows:
<TABLE>
<CAPTION>
September 30,
1999
---------------------------------------------------------------
<S> <C>
Current assets $ 1,556,424
Non-current assets 2,983,734
---------------------------------------------------------------
Total assets $ 4,540,158
===============================================================
Current liabilities $ 2,471,500
Other liabilities 17,176
Puttable common stock 15,257,376
Redeemable convertible preferred stock 5,808,451
Stockholders' deficit (19,014,345)
---------------------------------------------------------------
Total liabilities and stockholders' deficit $ 4,540,158
===============================================================
</TABLE>
F-15
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
3. Long-term Debt Long-term debt consists of the following:
<TABLE>
<CAPTION>
October 31, October 31,
1998 1999
- ------------------------------------------------------------------------------
<S> <C> <C>
Note payable to SACNAS
International including interest at
5% per annum; unsecured $132,500 $ -
Mortgage loan payable in monthly
installments of $1,222, including
interest at 8.5% per annum, and a
balloon payment of $123,441 on
January 3, 2003. The note is
collateralized by a first deed of
trust on the Company's building
and land 137,186 134,625
- ------------------------------------------------------------------------------
Total 449,686 134,625
- ------------------------------------------------------------------------------
Less current portion 315,617 3,395
- ------------------------------------------------------------------------------
$134,069 $131,230
==============================================================================
</TABLE>
Aggregate maturities of long-term debt as of October
31, 1999 are as follows:
<TABLE>
<CAPTION>
Year Amount
- ------------------------------------------------------------------------------
<S> <C>
2000 $ 3,395
2001 3,719
2002 4,048
2003 123,463
- ------------------------------------------------------------------------------
$134,625
==============================================================================
</TABLE>
F-16
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
As of October 31, 1999, future net minimum lease
payments under capital leases are as follows:
<TABLE>
<CAPTION>
Year Amount
- -----------------------------------------------------------------------------
<S> <C>
2000 $ 37,889
2001 37,889
2002 37,889
2003 37,889
Thereafter 3,157
- -----------------------------------------------------------------------------
Total minimum lease payments 154,713
Less: amount representing interest 30,152
- -----------------------------------------------------------------------------
Present value of net minimum lease payments 124,562
Less: Current portion 25,769
- -----------------------------------------------------------------------------
Long-term capital lease obligation $ 98,793
=============================================================================
</TABLE>
The net book value of assets under capital leases was
approximately $143,000 at October 31, 1999.
The Company has an unused $500,000 bank line of
credit that extends through October 2001. Borrowings
are unsecured and bear interest at the bank's prime
rate.
4. Related Party Hall & Associates, P.A., Hall & AmDoc, Associates, P.
Transactions A., and Hall & DocTalk, Associates, P.A., which are
owned by the Company's Chief Executive Officer,
Thomas M. Hall, M.D., provide medical professional
services to MAS. Amounts paid to these companies
represent fees for professional services rendered and
premiums on professional liability insurance. During
1999 and 1998, the Company paid Hall & Associates,
P.A., Hall & AmDoc, Associates, P.A. and Hall &
DocTalk, Associates, P.A., a combined total of
$4,014,982 and $1,254,465, respectively, in fees and
professional liability insurance premiums. There were
no amounts payable to these affiliates at either
October 31, 1998 or 1999.
During 1998, Thomas M. Hall, M.D., received $110,231
representing, a percentage of the Company's gross
sales of certain travel-related medical services.
F-17
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
The Company entered into a cooperative venture with
SACNAS International (trade name-Mondial Assistance)
through ASA, the Company's former 50% owned joint
venture. Additionally, as a result of its affiliation
with SACNAS, the Company derived net revenues of
approximately $245,000 and $189,000 during 1999 and
1998, respectively, exclusive of the joint venture
activities. At October 31, 1999, the net accounts
receivable from various Mondial centers were
approximately $99,873.
In March 1999, the Company sold its equity interest
in the joint venture to ASA's remaining shareholder,
SACNAS International. In consideration for the
Company's shares in ASA, SACNAS paid $25,000, which
resulted in a recorded gain on the sale of the joint
venture investment of $62,287. In addition, SACNAS
paid the Company a transition fee of $164,500,
forgave principle and accrued interest totaling
$330,822, which was recorded as an extraordinary gain
and sold back to the Company 295,378 shares of it's
common stock for $116,263. The Company then paid
SACNAS $57,000 representing accrued interest. As part
of a previous option agreement, SACNAS forgave
principal and accrued interest totaling $214,843 in
1998.
5. Stockholder's Equity In February 1999, the Company sold 500,000 shares of
Series A Convertible Preferred Stock for $6.00 per
share in a private placement. On May 1, 1999 all of
the preferred stockholders elected to convert these
shares into common stock based on the quoted fair
market value.
F-18
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
6. Stock Warrants In November 1998, the Company issued 300,000 warrants
to purchase the Company's common stock to a broker
dealer as consideration for certain investment
advisory services, including services related to the
issuance of 500,000 shares of Convertible Preferred
Stock in a private placement. The Company determined
the estimated aggregate fair value of these warrants
on the date of grant to be approximately $742,250
based on the Black-Scholes valuation model with the
following weighted average assumptions: dividend
yield of 0%, expected volatility of 40%, risk free
interest rate of approximately 5.01% and expected
life of approximately 5 years. The Company recorded
$124,605 as a reduction in paid-in-capital in order
to raise the effective commission paid to the broker
dealer to 15% to more accurately reflect the
commission rate for similar transactions being
completed. The remaining $620,645 was recorded as
deferred investment advisory fees and is being
amortized over 36 months, the term of the service
agreement. As of October 31, 1999, the amount
included in deferred investment advisory costs
related to these warrants is $465,485. In addition,
the Company issued warrants to purchase the Company's
common stock to various marketing and public
relations consultants. The terms of the consulting
agreements vary from one month to one year. All of
the warrants issued to third parties allowed them to
purchase common stock for $3.00 to $12.00 per share
for up to five years. There were no vesting
requirements associated with these warrants. The
Company determined the estimated aggregate fair value
of these various warrants on the date of grant to be
approximately $895,706 based on the Black-Scholes
valuation model described above. The majority of
these warrants have been amortized into expense as of
October 31, 1999. As of October 31, 1999, the amount
included in deferred investment advisory costs
related to these warrants is $292,122 and will be
fully amortized by March 2000.
7. Stock Options The Company has a nonqualified stock option plan to
provide key employees and non-employees the
opportunity to participate in equity ownership.
Options may be granted at or below the fair market
value of the stock and have a five-year life
(increased to ten years in December 1999). Options
granted to certain individuals vest ratably over
three to five years. The Company has reserved 650,000
common shares for exercise of these stock options.
F-19
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
The following table summarizes the changes in options
outstanding and the related prices for the shares of
the Company's common stock issued to key employees of
the Company:
<TABLE>
<CAPTION>
Exercise
Number Price Per
of Shares Share
- ------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding, October 31, 1997 305,000 $0.50
- ------------------------------------------------------------------------------
Options granted 100,000 0.50
- ------------------------------------------------------------------------------
Options outstanding, October 31, 1998 405,000 0.50
- ------------------------------------------------------------------------------
Options granted 16,500 1.25
- ------------------------------------------------------------------------------
Options exercised (16,500) 1.25
- ------------------------------------------------------------------------------
Options outstanding, October 31, 1999 405,000 $0.50
- ------------------------------------------------------------------------------
Weighted average price of options
outstanding $0.50
==============================================================================
</TABLE>
A summary of the stock options outstanding and
exercisable as of October 31, 1999 is as follows:
<TABLE>
<CAPTION>
Weighted Weighted Weighted
average average average
Exercise Number remaining exercise Number exercise
prices Outstanding life (years) price exercisable price
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0.50 405,000 2.04 $0.50 365,000 $0.50
==============================================================================================================
</TABLE>
For SFAS No. 123 purposes, the weighted average fair
value of each option granted has been estimated as of
the date of grant using the Black-Scholes option
pricing model with the following weighted average
assumptions: risk-free interest rate of 5.01% and
5.65% and expected volatility of 40% and 50% for the
years ended October 31, 1999 and 1998, respectively,
a dividend payout rate of zero for each year and an
expected option life of 5 years. Using these
assumptions, the weighted average fair value of the
stock options granted is $0.15 and $0.28 for 1999 and
1998, respectively. There were no adjustments made in
calculating the fair value to account for vesting
provisions or for non-transferability or risk of
forfeiture.
If the Company had elected to recognize compensation
expense based on the fair value at the grant dates
for options issued under the plan described above,
consistent with the method prescribed by SFAS No.
123, net income (loss) applicable to common
shareholders and earnings per (loss) share would have
been changed to the pro forma amounts indicated
below:
F-20
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
<TABLE>
<CAPTION>
Year ended October 31, 1998 1999
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net income (loss) applicable to common
shareholders:
as reported $529,663 $(3,703,921)
pro forma 494,663 (3,742,921)
Basic and diluted earnings (loss) per share:
as reported $ 0.14 $ (0.88)
pro forma $ 0.13 $ (0.89)
======================================================================================
</TABLE>
8. Income Taxes The Company files a consolidated U.S. federal income
tax return. The Company determines deferred tax
liabilities and assets based on the difference
between financial statements and tax bases of assets
and liabilities using presently enacted tax rates in
effect for the year in which the differences are
expected to reverse.
The tax effects of the temporary differences giving
rise to the Company's deferred tax asset (liability)
at October 31, 1998 and 1999 are summarized as
follows:
<TABLE>
<CAPTION>
1998 1999
- -------------------------------------------------------------------------------
<S> <C> <C>
Equity in loss of affiliate $ - $ 1,033,000
Net operating loss carry forwards 388,000 360,000
Non-deductible stock warrants - 257,000
Allowance for doubtful accounts 20,000 27,000
Deferred income 17,000 11,000
Accrued vacation - 10,000
Depreciation - 32,000
- -------------------------------------------------------------------------------
Subtotal 425,000 1,730,000
Valuation allowance - (1,730,000)
- -------------------------------------------------------------------------------
Net deferred taxes $425,000 $ -
===============================================================================
</TABLE>
Realization of the net deferred tax asset at the
balance sheet date is dependent on future earnings
which are uncertain. Accordingly, the Company wrote
off the prior year's deferred tax asset of $424,754
in the fourth quarter of fiscal 1999. The Company
continues to maintain a valuation allowance for the
entire deferred tax asset at October 31, 1999.
F-21
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
Due to utilization of net operating losses in fiscal
1998 and a net loss in fiscal 1999 there is no
current income tax provision. The income tax benefit
of $36,058 recognized in fiscal 1998 relates to an
increase in the related deferred tax asset. The
income tax provision of $424,754 relates to the
write-off of the deferred tax asset in the fourth
quarter of fiscal 1999.
As of October 31, 1999, the Company had net operating
loss carry forwards of approximately $1,058,000
expiring between 2002 and 2006 available to offset
future taxable income.
9. Retirement Plan In 1994, the Company adopted a Retirement Savings
Plan (Plan) in accordance with Section 401 (k) of the
Internal Revenue Code. The Plan is available to all
eligible employees, as defined in the Plan's
agreement. Participants are allowed to contribute up
to 15% of their annual compensation to the maximum
amounts prescribed by law. The Company provides for
discretionary matching contributions to the Plan
equal to a percentage of the participant's
contributions. The Company's contributions in 1999
and 1998 were $3,636 and $2,993, respectively.
F-22
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
10. Commitments and Presently, the Company leases two automobiles under
Contingencies non-cancelable operating leases. Minimum annual
rental commitments under these leases at October 31,
1999 are as follows:
<TABLE>
<S> <C>
2000 $19,914
2001 19,914
2002 9,004
---------------------------------------------------
$48,832
===================================================
</TABLE>
Rent expense was $19,914 in 1998 and 1999,
respectively.
11. Operating Segments The Company has four operating segments: Internet
chats, Maritime response and travel assistance,
Pharmaceutical sales and Doc-Talk. All of the
segments are engaged in the dispensing of medical
advice and information, but the method of
distribution and customer bases are different. The
Internet chats segment provides medical information
via the AmericasDoctor.com button on America Online.
The Maritime response segment provides medical advice
to personnel on ocean-going vessels. The Travel
assistance segment provides medical assistance to
travelers to the United States. The Pharmaceutical
sales segment provides pharmaceuticals to airlines
and companies using ocean-going vessels. The Doc-Talk
segment provides medical information via local and
long distance telephone lines. The Company evaluates
performance based on operating results of the
respective segments. The accounting policies of the
segments are the same as those described in the
summary of accounting policies.
F-23
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
<TABLE>
<CAPTION>
Years Ended October 31, 1998 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES:
Internet chat services $ 721,463 $ 5,056,297
Maritime response & travel assistance services 1,847,292 1,421,913
Pharmaceutical sales 500,819 497,125
Doc-Talk - -
Other 110,719 133,161
- ---------------------------------------------------------------------------------------------------------
Total Revenues 3,180,293 7,108,496
- ---------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Internet chat services 323,204 4,051,094
Maritime response & travel assistance services 618,832 538,888
Pharmaceutical sales 347,236 340,759
Doc-Talk - 351,076
Other 24,945 90,988
Unallocated corporate expenses 1,724,646 2,848,386
- ---------------------------------------------------------------------------------------------------------
Total operating expenses 3,038,863 8,221,191
- ---------------------------------------------------------------------------------------------------------
INCOME/(LOSS) FROM OPERATIONS:
Internet chat services 398,259 1,005,203
Maritime response & travel assistance services 1,228,460 883,025
Pharmaceutical sales 153,583 156,366
Doc-Talk - (351,076)
Other 85,774 42,173
Unallocated corporate expense (1,724,646) (2,848,386)
- ---------------------------------------------------------------------------------------------------------
Total income (loss) from operations 141,430 (1,112,695)
- ---------------------------------------------------------------------------------------------------------
EQUITY IN NET INCOME (LOSS) OF INVESTESS AND JOINT VENTURE:
Internet chat services - (2,519,853)
Joint venture minority interest 53,181 -
Gain on sale of joint venture investment - 62,287
- ---------------------------------------------------------------------------------------------------------
Total 194,611 (3,570,261)
- ---------------------------------------------------------------------------------------------------------
Corporate interest, net 21,619 (29,549)
Extraordinary gain 214,843 330,822
Income tax benefit (provision) 36,058 (424,754)
Other income 62,532 38,771
- ---------------------------------------------------------------------------------------------------------
Net income (loss) $ 529,663 $(3,654,971)
=========================================================================================================
</TABLE>
F-24
<PAGE>
Medical Advisory Systems, Inc.
Notes to Consolidated Financial Statements
================================================================================
<TABLE>
<CAPTION>
October 31,
-----------------------------------------
1998 1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Internet chat services $ 913,011 $ 1,100,168
Maritime response travel assistance services 975,524 553,835
Pharmaceutical sales 262,752 139,325
Doc-Talk - 98,884
- -----------------------------------------------------------------------------------------------------
Total segment assets 2,151,287 1,892,212
Unallocated assets
Cash 579,331 931,949
Deferred investment advisory costs - 757,607
Deferred income taxes 424,754 -
Prepaid expenses 31,508 11,651
Property and equipment 458,233 307,366
- -----------------------------------------------------------------------------------------------------
Consolidated total assets $ 3,645,113 $ 3,900,785
=====================================================================================================
</TABLE>
12. Supplemental
Disclosure of Cash
Flows Information
<TABLE>
<CAPTION>
Years ended October 31, 1998 1999
- ------------------------------------------------------------------------------
<S> <C> <C>
Cash paid for interest $12,567 $ 80,029
Disclosure of non-cash investing
and financing activities:
Fair value of warrants issued to
non-employees - 1,637,956
Capital lease obligations - 146,689
Conversion of preferred stock -
to common stock - 2,706,661
</TABLE>
F-25
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Medical Advisory Systems, Inc.
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-92471) of our report dated January 7, 2000,
relating to the consolidated financial statements of Medical Advisory Systems,
Inc. appearing in the Company's Annual Report on Form 10-KSB for the year ended
October 31, 1999.
BDO Seidman, LLP
Washington, D.C.
February 14, 2000
<PAGE>
Exhibit 23.2
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
TO: Medical Advisory Systems, Inc.
As independent certified public accountants, we hereby consent to the
incorporation by reference in the Annual Report on Form 10-KSB under the
Securities Exchange Act of 1934 of Medical Advisory Systems, Inc. for the year
ended October 31, 1998 of our report dated January 28, 1999 and contained in the
Registration Statement No. 333-92471 of Medical Advisory Systems, Inc. Form S-8
under the Securities Act of 1933 insofar as such report relates to the
financial statements of Medical Advisory Systems, Inc. for the year ended
October 31, 1998.
/s/ Stefanou & Company, LLP
---------------------------
Stefanou & Company, LLP
McLean, Virginia
February 14, 2000
<PAGE>
Exhibit 23.3
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
TO: Medical Advisory Systems, Inc.
As independent certified public accountants, we hereby consent to the
incorporation by reference in the Annual Report on Form 10-KSB under the
Securities Exchange Act of 1934 of Medical Advisory Systems, Inc. for the year
ended October 31, 1998 of our report dated January 28, 1999 and contained in the
Registration Statement No. 333-85369 of Medical Advisory Systems, Inc. Form S-3
under the Securities Act of 1933 insofar as such report relates to the
financial statements of Medical Advisory Systems, Inc. for the year ended
October 31, 1998.
/s/ Stefanou & Company, LLP
---------------------------
Stefanou & Company, LLP
McLean, Virginia
February 14, 2000
<PAGE>
Exhibit 99.1
Web Site Agreement November 19, 1999
THIS AGREEMENT made this 23rd. day of November 1999;
BETWEEN:
ACTFIT.com Inc. Telephone: (416) 977-2001
11 Charlotte Street Fax: (416) 977-7353
Toronto, Ontario
Canada
M5H 2145
(hereinafter referred to as "ACTFIT")
OF THE FIRST PART;
- and -
Doc-Talk, L.L.C. Telephone: (301) 855-8070
8050 Southern Maryland Blvd. Fax: (410) 257-6381
Owings,MD
U.S.A.
20736
(hereinafter referred to as "DocTalk")
OF THE SECOND PART.
WHEREAS the parties wish to make mutual use of their web sites during the
term of this Agreement;
AND WHEREAS DocTalk wishes to utilize ACTFIT's web site whereby Internet
customers will gain access to DocTalk's Web Site;
NOW THEREFORE in consideration or these presents, the mutual covenants
herein contained and other good and valuable consideration, the parties agree as
follows:
1. Web cite Linkage
----------------
(1) DocTalk agrees to permit ACTFIT at ACTFIT's sole expense to link the
ACTFIT Web Site to the DocTalk Web Site. Such link will be implemented
through a web page on the ACTFIT web site which consists of a frame
designed by ACTFIT (the "Frame") in which is displayed the content of
the DocTalk Web Site (the "DocTalk Content"), referred to collectively
in this agreement as the "Web Site Linkage";
<PAGE>
-2-
(2) ACTFIT will set up a graphical button (the "Button") on ACTFIT's web
page that directs visitors to the ACTFIT Web Site to the Web Site
Linkage. The design and content of the Button shall be mutually agreed
to by the Parties hereto;
(3) The Content shall contain a discount number whereby third party
Internet customers will receive a Customer discount of not less than
Five Percent (5%) on DocTalk services purchased through use of the
discount number. DocTalk agrees that the discount number and DocTalk's
telephone number will be visible to third party Internet customers
while in the home page of the Framed Content;
(4) ACTFIT will also include textual hyperlinks to the Web Site Linkages in
any channel of the ACTFIT Web Site relating to medicine, health,
fitness, wellness or other related topics;
(5) The Frame will include banner advertisements. ACTFIT will be
responsible for obtaining and serving banner advertisements in the
Frame. Such banner advertisements shall not contain any content which
is lewd, pornographic, sexually suggestive or promotes any activity
illegal if performed within the borders of the United States of
America;
2. Maintenance. Updates and Amendments
-----------------------------------
(1) In co-operation with ACTFIT, DocTalk shall be responsible at its
expense for maintaining the Content
(2) ACTFIT in its sole discretion, may change or modify Frame at any time;
3. DocTalk's Web Site
------------------
(1) DocTalk and not ACTFIT is solely responsible for the merchantability of
all goods and services and the accuracy of all .information that it
provides on DocTalk's Web Site and DocTalk and not ACTFIT is solely
responsible for the accuracy, completeness, usefulness, quality or
availability of any goods, services, or information on DocTalk's Web
Site. DocTalk is also responsible for handling any complaints that may
arise in relation to such goods, services, or information. If ACTFIT
receives any complaints, it shall forward them to DocTalk for
processing and reply;
(2) ACTFIT reserves the right to put a disclaimer on ACTFIT's Web Site to
the effect that ACTFIT does not warrant or endorse the accuracy or
merchantability of information, goods or services on the DocTalk Web
Site;
<PAGE>
-3-
(3) DocTalk agrees that its use of ACTFIT's Web Site is solely at its own
risk, and acknowledges that ACTFIT operates and provides the ACTFIT Web
Site on a "as is", "as available" basis without warranties of any
kind, either express or implied, unless such warranties are legally
incapable of exclusion in which case ACTFIT's liability shall be
limited to the sum of $1,00.00;
(4) It is DocTalk's responsibility that all photographs, video, sound
bites. graphics and printed information on the DocTalk Web Site do not
violate any copyright, trademark, patent, privacy laws, or other laws;
(5) DocTalk and not ACTFIT is responsible for all claims, including
negligence, actions, causes of action, damages, costs, that may
directly or indirectly arise in relation to any information, goods or
services on DocTalk's Web Site;
4. ACTFIT's WebSite
----------------
(1) Excluding the goods and services of DocTalk offered through the Web
Site Linkage, (i) ACTFIT and not DocTalk is solely responsible for the
merchantability of all goods and services and the accuracy of all
information that it provides on ACTFIT's Web Site and (ii) ACTFIT and
not DocTalk is solely responsible for the accuracy, completeness,
usefulness, quality or . availability of any goods, services, or
information on ACTFIT's Web Site. ACTFIT is also responsible for
handling any complaints that may arise in relation. to such goods,
services, or information. If DocTalk receives any complaints, it shall
forward them to ACTFIT for processing and reply;
(2) ACTFIT agrees that its use of DocTalk's Web Site is solely at its own
risk, and acknowledges that DocTalk operates and provides the DocTalk
Web Site and Content on an "as is", "as available" basis without
warranties of any kind, either express or implied, unless such
warranties are legally incapable of exclusion in which case DocTalk's
liability shall be limited to the sum of $1,000.00;
(3) It is ACTFIT's responsibility that all photographs, video, sound bites,
graphics and printed information on its WO Site do not violate any
copyright, trademark. patent privacy laws, or other laws;
(4) ACTFIT and not DocTalk is responsible for all claims, including
negligence, actions, causes of action, damages, costs, that may
directly or indirectly arise in relation to any information, goods or
services on ACTFIT's Web Site;
<PAGE>
-4-
5. Non-Solicitation
----------------
(1) DocTalk agrees not to solicit, contact, e-mail or send flyers,
catalogues or any other form of material, mail or communication to any
of the Internet Customers of ACTFIT directly or indirectly or in any
manner whatsoever save and except contact necessitated by customer
complaints, enquiries regarding information supplied, warranties,
product or service use or application. This clause shall survive the
termination of this Agreement for a period of 1 year. "Internet
Customers of ACTFIT" means those Internet customers who access
DocTalk's Web Site via ACTFIT's Web Site, excluding those Internet
customers who purchase or have purchased the DocTalk service;
6. Confidentiality
---------------
(1) DocTalk agrees to treat all information, pricing, commissions,
accounting methods, ACTFIT's Web Page; Web Site Linkage and Web Site
set up and ACTFIT's Internet Customer particulars as confidential and
agrees that ACTFIT's Internet Customer particulars are proprietary to
ACTFIT and DocTalk agrees not to divulge any of the foregoing to any
third party except as required by law;
7. Liability
---------
(1) Under no circumstances, including negligence, shall ACTFIT, its
offices, agents or anyone else involved in creating, producing or
distributing the Web Site Linkage be liable to DocTalk for any direct,
indirect, incidental, special or consequential damages that result from
the use of or inability to use the Web Site Linkage or any information,
products or services provided therein, or that results from mistakes,
omissions, interruptions, disruptions, malfunctions, deletion of files,
errors. defects, delays in operation, or transmission or any failure of
performance, whether or not limited to acts of God, communication
failure, theft, destruction or unauthorized access to ACTFIT's records,
programs or services.
(2) Under no circumstances, including negligence, shall DocTalk, its
offices, agents or anyone else involved in creating, producing or
distributing the DocTalk Web Site be liable to ACTFIT for any direct,
indirect, incidental, special or consequential damages that result from
the use of or inability to use the DocTalk Web Site or any information,
products or services provided therein, or that results from mistakes,
omissions, interruptions, disruptions, malfunctions, deletion of files,
errors. defects, delays in operation, or transmission or any failure of
performance, whether or not limited to acts of God, communication
failure, theft, destruction or unauthorized access to DocTalk's
records, programs or services.
<PAGE>
-5-
8. Lawful Purpose
--------------
(1) DocTalk may only use ACTFIT's Web Site Linkage and Home Web Page for
lawful purposes. Use of any information in violation of any law is
prohibited. This includes, but is not limited to copyrighted material,
trademarks, patents, material legally judged to be threatening or
obscene, or material protected by trade secrets.
9. Indemnification
---------------
(1) Both Parties herein agrees that it shall defend, indemnify, save and
hold the other Party; its agents, officers, directors, shareholders and
employees or assigns, harmless from any and all demands, liabilities,
losses, costs and claims, including solicitor's fees and disbursements
(upon a solicitor and own client basis) asserted against such Party,
its agents, its customers, servants, officers and employees, that may
arise or result from any service provided or performed or agreed to be
performed, information. provided or any product sold by a Party, its
agents, employees or assigns. Without limiting the generality of the
foregoing, each Party agrees to defend, indemnify and hold harmless the
other Party against liabilities arising out of any of the following:
(1) any injury to person or property caused by any information
provided, products or services, sold or otherwise distributed in
connection with this Agreement;
(2) any material or information supplied by a Party to the other
infringing on the proprietary rights of a third party;
(3) copyright and patent infringement; and
(4) any defective product or service or misinformation which a Party
provided to the other in connection with this Agreement;
(5) breach of any law.
10. Assignment
----------
This Agreement may not be assigned without the consent in writing of the
parties hereto.
11. Term and Termination
--------------------
(1) The term of this Agreement is 1 year and shall automatically be renewed
from year to year unless terminated as herein provided;
(2) Upon termination, as aforesaid, ACTFIT shall remove DocTalk from the
Web Site Linkage.
(3) Either Party may terminate this Agreement for any reason upon not less
than ten (10) calendar days written notice to the other Party.
<PAGE>
-6-
12. General Provision
-----------------
(1) The Agreement may not be modified unless agreed to in writing by both
parties. No waiver of any of the provisions of this Agreement shall be
deemed to constitute a waiver of any other provisions (whether or not
similar) nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided for in writing duly executed by the
parties;
(2) Headings are inserted for convenience purposes only and do not
constitute a part of this Agreement;
(3) Each Party shall be responsible for fully indemnifying the other Party
from and against all costs and expenses, including legal fees and
disbursements (upon a solicitor and own client basis), incurred by the
other Party in connection with any legal or other proceedings brought
by the other Party in enforcing the terms of this Agreement;
(4) This Agreement shall be governed by the laws of the Province of Ontario
and federal Canadian laws where applicable;
(5) Both parties agree that this Agreement may be validly executed by means
of transmission of signed facsimile;
(6) This Agreement constitutes the entire agreement between the parties and
supersedes all prior written or oral agreement, representations and
other communications between the parties relating to the subject matter
of this Agreement;
(7) The parties agree that, if any portion of this Agreement is held
invalid or unenforceable, that portion will be construed consistent
with applicable law as nearly as possible to reflect the original
intentions of the patties, and the remaining portions will remain in
full force and effect;
(8) Time shall be of the essence.
13. Currency
--------
(1) All references in this Agreement to monetary amounts, unless indicated
to the contrary, are in United States dollars.
14. Notices
-------
(1) Any notice, demand, or other communication required or permitted to be
given to any party hereunder shall be given in writing and addressed as
noted above;
<PAGE>
-7-
(2) Any such notice shall be deemed to be sufficiently given if personally
delivered or sent by facsimile transmission, and in each case shall be
deemed to have been received by the other party on the same day on
which it was delivered or sent by facsimile transmission.
(3) Any such notice that is mailed by prepaid registered post addressed to
the party at the address above noted or at such other then current
address as is specified by notice shall be deemed to have been received
on the 3rd day following the day of mailing.
15. Successors
----------
(1) This Agreement is binding on the parties hereto and their successors
and permitted assigns.
16. Survival
--------
(1) Any terms which by their nature are intended to survive the termination
of this agreement shall continue in full force and effect after
termination, which terms shall include, but not be limited to, any
terms dealing with confidentiality, limitation of liability,
indemnification or proprietary rights;
17. English Language
----------------
(1) It is the express wish of the parties that this Agreement and any
related documents be draw up and executed in English. Les parties
conviennent que la presente convention et tous les documents s'y
rattachant soient rediges et signes en anglais.
18. Revenue Share
-------------
(1) DocTalk agrees to pay ACTFIT a referral fee in the amount of fifteen
percent (15%) of the Adjusted Gross Revenue, which revenue shall be
paid to ACTFIT monthly;
(2) "Adjusted Gross Revenue" means revenue after the calculation of the
said Customer discount referred to in clause 1(2) collected by DocTalk
from customers who purchase the DocTalk service in conjunction with the
use of the discount number less applicable sales taxes, refunds, credit
card charge backs and bad debt;
(3) DocTalk shall include with each monthly payment a signed certificate by
its financial officer confirming the accurate calculation of the
payment to ACTFIT;
<PAGE>
-8-
19. Termination
-----------
(1) In the event that this Agreement is terminated, the said referral fee
payments shall be payable up to and including the date of termination.
(2) ACTFIT will pay DocTalk fifty percent (50%) of the revenues collected
by ACTFIT from the sale of banner advertisements displayed in the
Frame.
20. Default
-------
(1) DocTalk shall be in default of this Agreement if DocTalk breaches any
covenant herein including the covenant to pay the referral fees on a
timely basis and if there is any material discrepancy in the
determination of the said gross revenue payments.
21. Records
-------
(1) DocTalk agrees to keep full. accurate and complete records and books of
account relating to its operation under this Agreement for the accurate
determination of gross revenues be made under this Agreement. Upon not
less than ten (10) days calendar notice by ACTFIT all of the records
and books of account of DocTalk necessary for the determination of the
gross revenue payments to be made shall be open during business hours
during the term of this Agreement for inspection and audit by an
independent third party authorized by ACTFIT to ascertain the accuracy
of the gross revenue payments made by DocTalk. ACTFIT's authorized
agents shall be entitled to make notes and copies of any information
contained in the records and accounts applicable to the gross revenue
payment obligation, provided that such information is not disclosed to
any party other than ACTFIT.
In witness whereof the parties have signed this Agreement effective the date
above written.
Authorized Signature of DocTalk Authorized Signature of ACTFIT
/s/ Dale L. Hutchins /s/ Rodger Campbell
- ------------------------------- ------------------------------
Dale L. Hutchins Rodger Campbell
Vice President and C.O.O.
<PAGE>
Exhibit 99.2
RXData.net License Agreement
RXData.net Integrated Health Records IS WILLING TO LICENSE THE DATABASE ONLY
UPON THE CONDITION THAT YOU ACCEPT ALL OF THE TERMS CONTAINED IN THIS LICENSE
AGREEMENT. PLEASE READ THE TERMS CAREFULLY BEFORE ACCEPTING, AS ACCEPTANCE OF
THE DATABASE WILL INDICATE YOUR AGREEMENT WITH THEM. IF YOU DO NOT AGREE WITH
THESE TERMS, THEN RXData.net Integrated Health Records IS UNWILLING TO LICENSE
THE DATABASE TO YOU.
1. The Database. The Database licensed under this Agreement consists of computer
health records database, data compilation(s) of health clauses and algorithms,
and on-line documentation referred to as RXData.net, (the "Database").
2. Distribution. You are authorized to use the Database on a license agreement
which is renewed annually. The licensee purchases from RXData.net client
product(s) which become part of said license upon acceptance of proposal. You
are hereby licensed to (i) use the Database for a period of one(1) year on as
many computers and networks as you wish; and (ii) distribute the Database packs
to purchasers of the medical insurance/records option or individual product(s).
The attached vendor information data record is hereby incorporated by reference.
Any distribution satisfying all of the distribution requirements expressed in
that record is hereby authorized.
3. Restrictions. You may not: (i) modify or translate the Database; (ii) reverse
engineer, decompile, or disassemble the Database, except to the extent this
restriction is expressly prohibited by applicable law; (iii) create derivative
works based on the Database; (iv) merge the Database with another product;
(v) export or use the Database data compilations, structures, or algorithms with
another product; (vi) remove or obscure any proprietary rights notices or labels
on the Database, or (vii) charge a fee or royalty, or request donations, for any
distribution or transmission of the Database other than to member purchasers of
medical insurance/records option.
4. Ownership. Roadpoet Ventures Ltd. own the Database and all intellectual
property rights embodied therein, including copyrights and valuable trade
secrets embodied in the Database's design and coding methodology. The Database
is protected by United States copyright laws and international treaty
provisions. This Agreement provides You only a limited use license, and no
ownership of any intellectual property.
WARRANTY STATEMENT; LIMITATION OF LIABILITY. RXData.net PROVIDES THE DATABASE
"AS-IS." NEITHER RXData.net NOR ANY OF ITS SUPPLIERS MAKES ANY WARRANTY OF ANY
KIND, EXPRESS OR IMPLIED. RXData.net AND ITS SUPPLIERS SPECIFICALLY DISCLAIM THE
IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR
A PARTICULAR PURPOSE. THERE IS NO WARRANTY OR GUARANTEE THAT THE OPERATION OF
THE DATABASE WILL BE UNINTERRUPTED, ERROR-FREE, OR THAT THE DATABASE WILL MEET
ANY PARTICULAR CRITERIA OF PERFORMANCE OR QUALITY.
To the extent that this Warranty Statement is inconsistent with the locality
where you use the Database, the Warranty Statement shall be deemed to be
modified consistent with such local law. Under such local law, certain
limitations may not apply. For example, some states in the United States and
some jurisdictions outside the United States may: (i) preclude the disclaimers
and limitations of this Warranty Statement from limiting the rights of a
consumer; (ii) otherwise restrict the ability of a manufacturer to make such
disclaimers or to impose such limitations; or (iii) grant the consumer
additional legal rights, specify the duration of implied warranties which
RXData.net cannot disclaim, or prohibit limitations on how long an implied
warranty lasts.
IN NO EVENT AND UNDER NO LEGAL THEORY, INCLUDING WITHOUT LIMITATION, TORT,
CONTRACT, OR STRICT PRODUCTS LIABILITY, SHALL RXData.net OR ANY OF ITS SUPPLIERS
BE LIABLE TO YOU OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING WITHOUT LIMITATION, DAMAGES FOR
LOSS OF GOODWILL, WORK STOPPAGE, COMPUTER MALFUNCTION, OR ANY OTHER KIND OF
COMMERCIAL DAMAGE, EVEN IF RXData.net HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. IN NO EVENT SHALL RXData.net BE LIABLE FOR DAMAGES IN EXCESS OF
RXData.net LIST PRICE FOR THIS DATABASE LICENSE. THIS LIMITATION SHALL NOT APPLY
TO LIABILITY FOR DEATH OR PERSONAL INJURY TO THE EXTENT PROHIBITED BY APPLICABLE
LAW.
EXPORT CONTROLS. The Database or underlying information or technology may not be
exported or re-exported (i) into (or to a national or resident of) Cuba, Iraq,
Libya, Yugoslavia, North Korea, Iran, Syria or any other country to which the
United States has embargoed goods; or (ii) to anyone on the US Treasury
Department's list of Specially Designated Nationals or the US Commerce
Department's Table of Denial Orders. By your acceptance of the Database as
indicated above, You agree to the foregoing and that You are not located in,
under the control of, or a national or resident of any such country or on any
such list.
MISCELLANEOUS. This Agreement constitutes the entire understanding of the
parties with respect to the subject matter of this Agreement and merges all
prior communications, representations, and agreements. This Agreement may be
modified only by a written agreement signed by the parties. If any provision of
this Agreement is held to be unenforceable for any reason, such provision shall
be reformed only to the extent necessary to make it enforceable. This Agreement
shall be construed under the laws of the State of Florida, USA, excluding rules
regarding conflicts of law. The application the United Nations Convention of
Contracts for the International Sale of Goods is expressly
<PAGE>
AGREEMENT
This Agreement (the "Agreement") is made and entered into this 16 day of
December, 1999 (the "Effective Date"), by and between Doc-Talk, L.L.C.
(hereinafter "Doc-Talk"), a Delaware limited liability company with offices
located at 8050 Southern Maryland Boulevard, Owings, MD 20736 and Roadpoet
--------
Ventures Ltd., Inc. dba RXData.net Intearated Health Records (hereinafter
- -------------------------------------------------------------------------
"Company"). Doc-Talk and Company may also be referred to as a "Party" or
- ----------
collectively as the "Parties" throughout this Agreement.
WHEREAS, Doc-Talk provides the Doc-Talk Service described below through its toll
free telephone number; To be determined
----------------
WHEREAS, RXData.net operates a Web Site offering a Health Record's Repository;
and
WHEREAS, the Doc-Talk and Company desire to place a Hyper Link to the Doc-Talk
Web Site on the home page of the Company Web Site.
NOW, therefore, in consideration of the premises and the mutual covenants and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties agree as
follows:
Definitions. For the purposes of this Agreement, the following terms shall have
the following meanings:
"Discount Number" means the unique number which may be used in conjunction with
the Doc-Talk service to grant the user of such service a specified discount from
the fees charged for the service.
"Doc-Talk Service" means the fee-based, medical information service offered by
Doc-Talk through telephone access.
"Hyper Link" means the icon, logo, highlighted or colored text, figure, or image
representing a URL which allows an Internet user to move from one web site to
another web site.
"Proprietary Information" means and shall include, but not be limited to, either
Party's software, data, databases, product plans, designs, protocols, products,
costs, prices, names, finances, marketing plans, business opportunities,
personnel, and research and development originated by the disclosing Party, not
previously published or otherwise disclosed to the general public, not
previously available without restriction to the receiving Party, nor normally
furnished to others without restriction, and which the disclosing Party desires
to protect against unrestricted disclosure or competitive use. "Proprietary
Information" shall not include information that (i) is or enters the public
domain through no fault of the receiving Party; (ii) is known and has been
reduced to tangible form by the receiving Party prior to the time of disclosure
and is not subject to restriction; (iii) is independently developed by the
receiving Party without access to or use of the Proprietary Information; (iv) is
made generally available by the disclosing Party without restriction on
disclosure; or (v) is disclosed by the receiving Party with the disclosing
Party's prior written consent.
"Web Site" means the entry page on the WWW located at a given domain.
Hyper Link.
Company. Company shall display on the home page of the Company Web Site a brief
textual description of the Doc-Talk service and a Hyper Link to the Doc-Talk Web
Site. The text and Hyper Link shall appear above the fold, and the form and
content of the text and Hyper Link shall be mutually agreed to by the Parties.
The Hyper Link shall be no smaller than 200 by 90 pixels in size, and shall be
established using the graphics, images, HTML code or other data and information
provided by Doc-Talk. The text shall include a Discount Number. Use of a Hyper
Link to the Doc-Talk Web Site shall in no way alter the look, feel or
functionality of the Doc-Talk Web Site, nor will the Doc-Talk Web Site be framed
by any web page content of Company or any third party.
<PAGE>
Doc-Talk. Doc-Talk shall display on a web page(s) of the Doc-Talk Web Site
selected by Doc-Talk in its sole discretion a brief textual description of the
Company's products and services and a Hyper Link to the Company Web Site. The
form and content of the text and Hyper Link shall be mutually agreed to by the
Parties and shall be established using the graphics, images, HTML code or other
data and information provided by Company. Use of a Hyper Link to the Company Web
Site shall in no way alter the look, feel or functionality of the Company Web
Site, nor will the Company Web Site be framed by any web page content of Doc-
Talk or any third party.
Referral Fees.
Amounts. Doc-Talk will pay Company referral fees on certain sales of the Doc-
Talk Service to third parties who utilize the Discount Number in purchasing the
Doc-Talk Service. Referral Fees shall be in the amount of Five Percent (5%) of
Adjusted Gross Revenue of the Service. For the purposes of this Agreement,
Adjusted Gross Revenue shall mean the amounts collected by Doc-Talk from sales
of the Doc-Talk Service to customers using the Discount Number, less taxes,
refunds, credit card charge backs and bad debt.
Payments. Doc-Talk will pay to Company referral fees on a calendar quarter basis
within forty-five (45) days following the end of the respective calendar
quarter. The amount of the referral fee payment shall be based upon Net Sales
for the respective calendar quarter only. If the referral fees payable for any
calendar quarter are less than $100.00, Doc-Talk or Company will hold those
referral fees until the total amount due hereunder is at least $100.00 or this
Agreement is terminated.
The referral fee payment shall made payable to Company, and sent to the
attention of:
Joseph R. Wigley, 635 Foxwood Blvd., Englewood, Florida 34223
Policies and Pricing. Customers who buy the Doc-Talk Service using the Discount
Number shall be deemed customers of Doc-Talk. Accordingly, all Doc-Talk rules,
policies, and operating procedures concerning customer orders, customer service,
and sales of the Doc-Talk service will apply to those customers. Doc-Talk shall
be solely responsible for all aspects of processing and fulfilling orders for
the Doc-Talk Service. Doc-Talk, in its sole discretion, shall determine the
prices to be charged for Doc-Talk Service sold under the Discount Number. Doc-
Talk may change its policies and operating procedures at any time.
Limited License.
Doc-Talk. Doc-Talk hereby grants to Company, and Company hereby accepts, a non-
exclusive, non-transferable, worldwide, revocable right to use and display
solely in connection with establishing the Hyper Link on the Company Web Site
and promoting the Doc-Talk Service during the term of this Agreement the graphic
image and text described in Section 2.1, the Doc-Talk Web Site URL, and any
other trademarks or logos of Doc-Talk provided to Company. All representations
of the Doc-Talk logos and trademarks that Company uses will be exact copies of
those provided by Doc-Talk.
Company. Company hereby grants to Doc-Talk, and Doc-Talk hereby accepts, a non-
exclusive, non-transferable, worldwide, revocable right to use and display
solely in connection with establishing the Hyper Link on the Doc-Talk Web Site
during the term of this Agreement the graphic image and text described in
Section 2.2, the Company Web Site URL, and any other trademarks or logos of
Company provided to Doc-Talk. All representations of the Company logos and
trademarks that Doc-Talk uses will be exact copies of those provided by Company.
Company Web Site. Company is solely responsible for the development, operation,
and maintenance of Company Web Site and for all materials that appear on such
site, including without limitation the technical operation of its site and all
related equipment, creating and posting the text and Hyper Link in accordance
with Section 2.1 and linking those descriptions to the Doc-Talk Web Site,
ensuring that materials posted on the Company Web Site do not violate or
infringe upon the rights of any third party (including, for example, copyrights,
trademarks, privacy, or other personal or proprietary rights) and ensuring that
materials posted on the Company Web site are not libelous or otherwise illegal.
<PAGE>
Press Release. Doc-Talk and Company agree to cooperate with each other in a
joint press release following execution of this Agreement. Doc-Talk and Company
shall jointly determine the content, timing and necessity of all press releases
regarding this Agreement.
Term. The term of this Agreement shall commence on the Effective Date and
continue for a period of one (1) year unless sooner terminated as provided
herein. Either Party may terminate this Agreement at any time upon not less than
thirty (30) days prior written notice to the other Party. Upon the termination
of this Agreement for any reason, each Party will immediately cease use of, and
remove from its site, all links to the other Party's Web Site and all
trademarks, trade dress and logos, and all other materials provided to the Party
by or on behalf of the other Party in connection with this Agreement. Company
shall only be eligible to earn referral fees on Net Sales occurring during the
term of the Agreement. Upon termination of the this Agreement for any reason,
Sections 8, 9, 10, 11, 12, 13, 15, 17 and 18 shall survive.
Relationship of Parties. Doc-Talk and Company are independent contractors, and
nothing in this Agreement will create any partnership, joint venture, agency,
franchise, sales representative, or employment relationship between the Parties.
Company shall have no authority to make or accept any offers or representations
on behalf of Doc-Talk, and Company warrants that it will not make any statement,
whether on Company's Web Site or otherwise, that reasonably would contradict
anything in this Section.
Confidentiality.
Non-disclosure. Each Party shall protect the other Party's Proprietary
Information from unauthorized dissemination and use with the same degree of care
that such Party uses to protect its own like information, but in no event less
than reasonable care, for a period of three years from receipt of the disclosing
Party's Proprietary Information. Neither Party will use the other Party's
Proprietary Information for purposes other than those necessary to directly
further the purposes of this Agreement. Neither Party will disclose to third
parties the other Party's Proprietary Information without the prior written
consent of the other Party. Except as expressly provided in this Agreement, no
ownership or license rights are granted in any Proprietary Information. Both
parties acknowledge that the restrictions contained in this Paragraph 10.1 are
reasonable and necessary to protect their legitimate interests and that
violation of these restrictions will cause irreparable damage to the other Party
and each Party agrees that the other Party shall be entitled to injunctive
relief against each violation.
Development Rights. The Parties' obligations of confidentiality under this
Agreement shall not be construed to limit either Party's right to independently
develop or acquire products without the use of the other Party's Proprietary
Information.
This Agreement. Neither Party shall disclose the terms and conditions of this
Agreement to any third party without the other Party's express written
permission, provided that a Party may disclose the terms and conditions of this
Agreement to its financial and legal advisors who are bound by obligations of
confidentiality substantially similar to those contained in this Agreement.
Indemnity.
Company. Company shall indemnify and hold harmless Doc-Talk and its successors
and assigns from all third party claims, damages, liabilities, costs and
expenses (including, without limitation, reasonable legal fees and expenses)
relating to the development, operation, maintenance, and content of the Company
Web Site.
Doc-Talk. Doc-Talk shall indemnify and hold harmless Company and its successors
and assigns from all third party claims, damages, liabilities, costs and
expenses (including, without limitation, reasonable legal fees and expenses)
relating to the development, operation, maintenance, and content of the Doc-Talk
Web Site.
<PAGE>
Any indemnity under this Section 11 is conditioned upon prompt written notice by
the non-indemnifying Party to the indemnifying Party of any claim, action or
demand for which indemnity is claimed and such reasonable cooperation by the
non-indemnifying Party in the defense as the indemnifying Party may request. The
non-indemnifying Party shall have the right, but not the obligation to control
the defense and/or settlement of any third party claim in which it is named as a
party. The non-indemnifying Party shall have the right to participate in any
defense of a third party claim against the indemnifying Party with counsel of
the non-indemnifying Party's choice at its own expense.
Disclaimer. Doc-Talk provides the Doc-Talk Service on an "as-is" and "as-
available" basis. Accordingly, Doc-Talk makes no express or implied warranties
or representations with respect to the Doc-Talk Service (including, without
limitation, warranties of fitness, merchantability, non-infringement, or any
implied warranties arising out of a course of performance, dealing, or trade
usage). In addition, we make no representation that the operation of our site
will be uninterrupted or error-free, and we will not be liable for the
consequences of any interruptions or errors.
LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR
ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (OR ANY
LOSS OF REVENUE, PROFITS, OR DATA) ARISING IN CONNECTION WITH THIS AGREEMENT,
EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NEITHER
PARTY'S AGGREGATE LIABILITY ARISING WITH RESPECT TO THIS AGREEMENT SHALL EXCEED
THE TOTAL REFERRAL FEES PAID OR PAYABLE TO COMPANY UNDER THIS AGREEMENT.
Notification. All notices and requests in connection with this Agreement shall
be deemed given as of the day they are received either by messenger, delivery
service, or in the United States of America mails, postage prepaid, certified or
registered, return receipt requested, and addressed as follows:
To Doc-Talk: To Company:
Doc-Talk, L.L.C. RXData.net Integrated Health Records
8050 Southern Maryland Blvd. 1891 Englewood Road, #208
Owings, MD 20736 Englewood, FL 34223
Attention: Todd M. Lamka Attention: Joseph Wigley/W. A. Cabana
Phone: (410) 286-2736 Phone: 941.473.5421 or 941.473.3436
Fax:
Governing Law. This Agreement shall be governed by the laws of the State of
Maryland, excluding its conflicts of laws rules.
Assignment. Neither Party may assign this Agreement or any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other; provided that either Party shall have the right to assign
its rights and obligations hereunder to its parent or to any subsidiary or
affiliate upon notice to the other Party, and Doc-Talk, L. L. C. may assign its
rights and obligations herein as part of a sale of assets to DocTalk, Inc., a
Delaware corporation. Any purported assignment or delegation without such
required consent shall be null and void.
Construction. If for any reason a court of competent jurisdiction finds any
provision of this Agreement, or portion thereof, to be unenforceable, that
provision of the Agreement will be enforced to the maximum extent permissible so
as to effect the intent of the Parties, and the remainder of this Agreement will
continue in full force and effect. Failure by either Party to enforce any
provision of this Agreement will not be deemed a waiver of future enforcement of
that or any other provision. This Agreement has been negotiated by the Parties
and their respective counsel and will be interpreted fairly in accordance with
its terms and without any strict construction in favor of or against either
Party.
Entirety. This Agreement shall not be effective until signed by both Parties.
This Agreement constitutes the entire agreement between the Parties with respect
to the Doc-Talk Service and all other subject matter hereof and supersedes all
prior and contemporaneous communications. This Agreement shall not be modified
except by written agreement dated subsequent to the date of this Agreement and
signed on behalf of Doc-Talk and Company by their respective duly authorized
representatives.
<PAGE>
IN WITNESS WHEREOF, each of the Parties has duly executed and delivered this
Agreement as of the dates signed below.
Doc-Talk, L.L.C. Roadpoet Ventures Ltd., Inc.
RXDat net Integrated Health Records
By: /s/ Dale L. Hutchins By: /s/ Joseph R. Wigley
-------------------------- --------------------
Name: Dale L. Hutchins, Ph.D. Name: Joseph R. Wigley
Title: COO Title: President
Date: 12/22/99 Date: 16, December 1999
<PAGE>
Exhibit 99.3
Addendum #3, dated January 5, 2000, between AmericasDoctor.com, Inc., a
Delaware corporation ("AD"), and Medical Advisory Systems, Inc., a Delaware
corporation ("MAS"), to the Call Center Service Agreement, dated July 2, 1998,
between AD and MAS.
Preliminary statement
The parties hereto are parties to a Call Center Service Agreement, dated July 2,
1998, as amended by Addendum #1 and Addendum #2 thereto (the "Agreement") and
wish to clarify certain matters set forth in the Agreement. Accordingly, the
parties hereto agree as follows.
1. Term of the Agreement
a. The term of the Agreement will end on July 1, 2003. Neither MAS nor AD
will have the right unilaterally to terminate the Agreement at the end
of the Initial Term or the Renewal Term.
b. Sections 18(b) and 18(c) of the Agreement are hereby amended by deleting
the following language from both sections: "...and for a period of one
(1) year after the termination of this Service Agreement ..."
2. Exclusivity
a. The Agreement applies to the provision of medical chat services to
residents of the U.S. Neither MAS nor AD shall be restricted under the
Agreement from providing medical chat services to residents of countries
other than the U.S.
b. The exclusivity provisions of the Agreement relate only to real-time
Internet one-on-one chat services provided by licensed health care
providers.
3. Quality control. AD retains the right to monitor the quality of service
provided by MAS.
4. Other matters.
a. Provided that AD pays MAS all amounts owned to MAS under section 16 of
the Agreement on or prior to the date 10 business days following the
effective date of the merger (the "Merger") between AD and a wholly
owned subsidiary of Affiliated Research Centers, Inc. ("ARC"), all AD
defaults under the Agreement through the date of such payment shall be
deemed to have been waived.
b. MAS agrees that MAS will consult with AD and ARC, a reasonable time
prior to the issuance of any press release referring to AD, ARC, the
Merger, the Agreement or this addendum, concerning the content of such
release.
c. This addendum will become effective concurrently with the effective date
of the Merger, of which AD will promptly advise MAS.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
date first above set forth.
AmericasDoctor.com, Inc.
/s/ Scott Rifkin
------------------------
Scott Rifkin
Medical Advisory Systems, Inc.
By: /s/ Ronald W. Pickett
--------------------------
Ronald W. Pickett
Acknowledged:
Affiliated Research Centers, Inc.
Signed: Affiliated Research Centers, Inc.
<PAGE>
Exhibit 99.4
AGREEMENT
January 28, 2000
Between
Customized Services Administrators, Inc.
6440 Lusk Boulevard, Suite D-205
San Diego, GA 92121
(hereinafter called CSA)
Represented by: Mr. Les Maine, President
and
Medical Advisory Systems, Inc.
8050 Southern Maryland Boulevard
Owings, MD 20736
(hereinafter called MAS)
Represented by Thomas M. Hall, M.D., M.I.M., Chief Executive Officer
Whereas MAS has the ability to provide travel assistance services worldwide; and
Whereas CSA wishes to offer its clients a Travel Assistance Program provided by
MAS,
Now the parties agree as follows:
1-The following DEFINITIONS apply
1-1 Beneficiary: a client of CSA identified by CSA as eligible to receive
Services provided by MAS, and who is able to provide identification or an
appropriate reference number.
1-2 Services: [as listed in Schedule 1].
1-3 Geographical Coverage: Worldwide, US included.
<PAGE>
2
2-CSA's RESPONSIBILITIES
2-1 By this contract CSA delegates to MAS the necessary authority to provide the
Services detailed in Schedule 1.
2-2 CSA agrees to provide each Beneficiary with emergency contact information
detailing the Travel Assistance Services available from MAS.
2-3 CSA agrees to give MAS read only access to its database of covered
Beneficiaries, in order to enable MAS to check coverage.
2-4 CSA agrees to inform MAS before communicating to Beneficiaries any changes
in Services available through MAS.
2-5 CSA agrees to pay MAS the Service fees as defined in Article 5.
Additionally, in emergency medical situations in which MAS cannot obtain prior
approval from CSA to provide what MAS considers to be necessary Services to a
Beneficiary, then MAS is authorized to incur reasonable costs for those Services
on behalf of CSA.
2-6 CSA agrees to provide MAS with mutually-agreed upon after-hours contacts
where emergency information may be obtained if required.
3-MAS's OBLIGATIONS
3-1 MAS agrees to use every reasonable business effort to provide the Services
listed in SCHEDULE 9 to the Beneficiaries 24-hours-a-day, 365 days-a-year.
Services are provided following the guidelines and limits of a Policies and
Procedures Manual mutually agreed upon between the parties.
MAS will seek authorization from CSA at the time Service is requested, where MAS
cannot verify coverage for the Beneficiary from the CSA data base.
MAS will also seek written authorization from CSA before providing Service for
Guarantee of Medical Expenses, or Medical Repatriation or Remains Repatriation
in excess of $90,000, or Emergency Evacuation in excess of $20,000, or Cash
Advance in excess of $250, or any Service in which the cost will exceed the
coverage available.
3-2 MAS agrees to pay all costs incurred in providing listed Services on behalf
of CSA and agrees to re invoice those costs to CSA.
<PAGE>
3
3-3 MAS agrees to pay only those costs for Services organized by the MAS
Response Center, and will not bear those incurred by a Beneficiary who has not
informed MAS in advance. CSA will be notified of any case in which a Beneficiary
requests reimbursement for expenses not previously authorized by MAS.
3-4 On a monthly basis MAS agrees to provide CSA with statistics concerning the
number of cases, including Customer Service calls, handled. For each case MAS
will report the case type, MAS case number, Beneficiary's first and last names,
certificate or policy identification number, travel dates and a one-line case
summary.
Upon request of CSA, MAS will provide case summary or in-depth information on
particular cases.
3-5 Should it be requested or become necessary for MAS to provide consultation
or services to CSA not listed in Schedule 1, the parties agree to negotiate in
advance a fee to be paid to MAS based on prevailing market rates.
4-CALL RESPONSE
4-1 TOLL LINE CALLS
CSA toll lines will be directed to MAS and MAS will answer these lines according
to a schedule mutually agreed upon between CSA and MAS.
4-2 800 LINE CALLS DURING CSA OFFICE HOURS
Between 6:00 am and 5:30 PM (Pacific time) from Monday through Friday (except
holidays), 800 line calls will be answered by CSA employees.
As soon as a call is identified as an assistance call, the CSA employee will
transfer the call to MAS and provide coverage information whenever possible.
CSA reserves the right to transfer its phone lines to MAS for coverage in the
event of an emergency such as equipment failure or disaster.
Additionally, MAS shall provide backup call center support to CSA at such other
times as directed by CSA.
4-3 800 LINE OUTSIDE CSA OFFICE HOURS
Between 5:30 PM and 6*00 am (Pacific time) from Monday through Friday and all
day on Saturday, Sunday and holidays, 800 line calls will be answered by MAS.
<PAGE>
4
MAS will check coverage and provide immediate assistance for assistance calls.
For Customer Service calls that are non-assistance related, the MAS coordinator
will record the call and forward the information to CSA or ask the caller to
call CSA the next working day.
5-FEES and PAYMENT
In consideration of the Services specified in Schedule 1, CSA agrees to pay fees
to MAS as follows:
5-1 SERVICE FEES
MAS will charge CSA on a fee for Service basis by classifying each case received
into one of the following Service categories:
TYPE of CASE/CALL FEE per CASE/CALL
Transportation $900
Medical $486
Travel $270
Fraud Analysis $250
Permatel $27
Customer service The greater of $3.50 per call or $1 per
minute
A transportation case is the organization of medical evacuation or repatriation,
or repatriation of remains;
A medical case is defined as one or more services organized with respect to one
incident or medical problem for one Beneficiary where MAS physicians are
involved;
A travel case is defined as one or more services organized with respect to one
incident or medical problem for one Beneficiary where MAS physicians are not
involved;
A fraud analysis case is defined as one or more services organized to assist in
the investigation of suspected fraud occurring on a particular claim;
A permatel case is defined as a case where the Services provided do not fall
into a category listed above and the Services are provided to the Beneficiary
within 30 minutes of MAS receiving the call;
<PAGE>
5
A customer service call is defined as one telephone call where the Service
provided is the referral to the CSA customer service line.
5-2 INVOICING of the SERVICE FEES
At the end of each month that Services are provided under this Agreement, MAS
will invoice CSA for the Service fees outlined in Section 5-1. The invoice will
be calculated based on the number of cases opened during the month in each
Service category, multiplied by the fee per case in that category. Payment is
due as of the date of the invoice, as outlined in Section 5-4.
5-3 BILLING at COST
MAS will use reasonable efforts to ensure that external costs incurred on behalf
of CSA are within customary ranges for the travel assistance industry. The
following external costs will be charged to CSA at cost:
. Long distance telecommunications (telephone, telex or fax) and 800 line
costs,
. Correspondent fees,
. Computer connections for data base access,
. Funds advanced to a Beneficiary,
. Payment of medical or hospital bills, fees of local physicians or suppliers,
fees of escorts or transportation providers, or fees for wire transfers,
. Document translation/translation fees,
5-4 IMPREST ACCOUNT
To pay for MAS Service fees as defined in section 5-1, and to pay for external
fees as defined in section 5-3, an imprest account initially set at $50,000 will
be established by CSA.
MAS will be authorized and have the right to withdraw funds from this account
based on the following provisions:
Upon preparing a monthly invoice for Services rendered and sending it to CSA,
MAS will have the right to withdraw from this account the amount of the monthly
Service fee as defined in section 5-2.
When external expenses are incurred as defined in section 5-3 MAS will withdraw
funds to cover these expenses as soon as original invoices are received from the
supplier.
MAS will send a receipt or a copy of the original invoice to CSA within 24 hours
of withdrawing funds for payment of Service fees or external expenses.
<PAGE>
6
The parties agree that CSA must provide sufficient funding of the imprest
account to cover external expenses and to keep MAS from having to pay external
expenses from its own accounts. Therefore, CSA will reimburse the imprest
account with a sufficient amount each business day to maintain an account
balance of $50,000.
CSA agrees that should case volume increase, the balance in the imprest account
will be adjusted upwards if necessary to maintain sufficient funds for MAS to
collect its fees and pay external expenses.
Any amount remaining in the imprest account after payment of all fees and
expenses will be returned to CSA within 30 days after the termination of this
agreement.
5-5 PAYMENT TERMS:
CSA agrees to pay MAS in a timely manner by maintaining sufficient funds in the
imprest account as detailed in section 5-4.
Should CSA fail to maintain adequate funds in the imprest account or to make
payment to MAS for Services and expenses when due, MAS will give CSA written
notice of said breach and CSA will have 10 days to cure. If CSA fails to cure
within 10 days, MAS reserves the right to stop providing services at the end of
the 10-day cure period.
Before stopping services MAS will make a reasonable attempt to determine why
payment was not made.
6-DISCLAIMERS
6-1 Neither CSA nor MAS (including its affiliates) shall act as an agent for
the other.
6-2 MAS undertakes to provide a system to facilitate the provision of travel
assistance and medical consultation services to the Beneficiaries.
Decisions made and/or actions taken by a Beneficiary after receiving any medical
consultation or advice remain within the and authority of the Benefciary.
6-3 MAS will make all reasonable efforts to provide assistance services, but
there may be circumstances or situations beyond the control of MAS that hinder
its efforts to provide services. For example, the parties hereto agree that MAS
is
<PAGE>
7
not obligated to provide communications beyond the capacity of the
communications equipment in its response center.
6-4 The parties understand that the medical personnel and international
correspondents who shall provide medical services as referred to herein, are not
agents, servants or employees of MAS, but are independently licensed contractors
whom MAS represents to be duly licensed and insured. Notwithstanding the
foregoing, MAS agrees to indemnify and hold CSA harmless for any loss, including
attorney's fees, suffered by CSA arising solely out of the negligent or willful
misconduct of the medical personnel who provide services to the Beneficiaries.
7-CONFIDENTIALITY
CSA and MAS each acknowledge to the other that they will keep confidential the
names, addresses, statistics, and claims pertaining to Beneficiaries which arise
out of this Agreement and that such information will only be used for the
purpose of providing services hereunder or for statutory reporting.
8-COMMENCEMENT and DURATION
This Agreement shall commence on February 1, 2000 and shall continue for a
period of 1 (one) year until January 31, 2001. Following the initial one year
term, the Agreement will renew for successive one year periods until either
party gives to the other party written notice of termination in accordance with
the provisions of Article 9.
9-TERMINATION
9-1 Following the initial term, this Agreement may be terminated by either party
upon written notice 90 days in advance.
At the request of either party this Agreement can be renewed for a maximum of 60
days to allow the requesting party to make necessary arrangements prior to
termination.
9-2 This Agreement may be terminated at any time upon written notice:
. by either party in case of insolvency, bankruptcy, reorganization,
receivership, or similar action by the other party.
<PAGE>
8
. by MAS in case of failure of CSA to maintain adequate funds in the imprest
account.
. by CSA if MAS fails to perform services such that there is a material breach
of its obligations under this Agreement.
10- FORCE MAJEURE
10-1 Neither party shall be liable to the other party in any manner whatsoever
for any failure or delay in performing its obligations due to force majeure
Force majeure means any cause beyond the reasonable control of the party in
question such as governmental action, war, rioting, !civil commotion, fire,
flood, epidemic, labor dispute, including labor dispute involving the workforce
or any part thereof of the party in question or an Act of God.
10-2 The date for performance of the contractual obligation which has been
delayed by the force majeure event shall be deemed suspended only for a period
equal to the delay caused by the event.
11-ARBITRATION and GOVERNING LAW
11-1 In the event of any dispute arising out of or under this Agreement between
CSA and MAS, both parties agree to submit to binding arbitration following the
American Arbitration Association rules in the state of Maryland (USA).
11-2 This Agreement, including the Schedules hereto, shall be governed by and
shall be construed in accordance with the laws of the state of Maryland (USA).
12-ASSIGNMENT and AMENDMENT
12-1 Neither party hereto shall directly or indirectly, in part or in whole,
assign, transfer, give, sell or otherwise dispose of its rights, privileges,
duties, obligations, or interest acquired under this Agreement without prior
written approval of the other party.
12-2 No amendment to this Agreement shall be valid or binding unless set forth
in writing and duly executed by all of the parties hereto.
<PAGE>
9
13-NOTICES
Any notice with respect to this Agreement shall be given in writing.
Such notice shall be considered duly given if delivered by hand, or sent by
prepaid first class mail return receipt requested.
Notices shall be sent to the parties at their respective addresses, and to the
attention of the appropriate representatives, as set out on the preamble hereto.
14-ENFORCEABILITY
Should any of the provisions of this agreement for any reason be declared or be
considered void or unenforceable such decision shall not affect the validity of
the other provisions of this Agreement.
Such remaining portions shall remain in force and effect as if this agreement
had been executed with the invalid provision eliminated.
15-INDEMNIFICATION
CSA shall indemnify, defend and hold harmless MAS, its directors, officers,
employees, and affiliated companies from and against any and all claims, suits
or proceedings, demands, liabilities, costs, damages, fines and expenses
whatsoever, including reasonable attorney's fees, arising solely from:
. any breach by CSA of its agreements, obligations or representations,
. any violation of applicable law and regulation in connection with the
performance of CSAs obligations,
. actions and decisions concerning assistance services which are the
responsibility of CSA,
. negligent or willful misconduct by CSA.
MAS shall indemnify, defend and hold harmless CSA, its directors, officers,
employees, and affiliated companies from and against any and all claims, suits
or proceedings, demands, liabilities, costs, damages, fines and expenses
whatsoever, including reasonable attorney's fees, solely arising from:
<PAGE>
10
. any breach by MAS of its agreements, obligations or representations,
. any violation of applicable law and regulation in connection with the
performance of MASS obligations,
. actions and decisions concerning assistance services which are the
responsibility of MAS,
. negligent or willful misconduct by MAS.
The parties hereto shall promptly notify each other of any suit or threat of
suit (except with respect to those which either party might institute against
the other) related in any way to the benefits or Services provided which may
give rise to a claim for indemnification against the other party.
The parties shall cooperate with and assist one another in connection with any
required response to or involvement in any legal proceeding, action or inquiry.
The indemnifying party may control any suit or proceeding; provided, however, in
instances where the indemnifying party elects to control, the indemnified party
may, at its own cost, engage its own attorney(s).
In witness whereof, the patties hereto have caused this Agreement to be executed
effective as of the date first written above.
For and on behalf of:
Customized Services Medical Advisory Systems, Inc.
Administrators, Inc.
By: Les MAINE By: Thomas M. HALL, M.D., M.I.M.
Title: President Title: CEO
Date: January 28,2000 Date: January 28, 2000
Signature Signature
/s/ Leslie Maine /s/ Thomas M. Hall MD, MIM
- ---------------- --------------------------
<PAGE>
11
SCHEDULE 1: SERVICES
MEDICAL REFERRALS
Should the Beneficiary need help locating a doctor or hospital, MAS will provide
referrals to a local doctor or hospital in the MAS network in the US or abroad,
At the request of the Beneficiary MAS will organize a hotel call by a local
doctor, if possible.
MEDICAL EVACUATION
Should the medical condition of the ill or injured Beneficiary require special
transportation for either treatment or for specific examination which can't be
done locally, MAS will organize either:
. medical transportation to the nearest appropriate medical center,
. or medical repatriation to the US if there is no appropriate medical facility
nearer, and if the Beneficiary's condition allows it.
The medical transportation will be done with the most appropriate medical
escorts, equipment, and means of transportation.
The decision maker for this benefit will be the MAS monitoring doctor.
GUARANTEE of MEDICAL EXPENSES
Should the Beneficiary not be in a position to pay the medical expenses, MAS
will, with written authorization from CSA, guarantee the expenses on behalf of
CSA.
ADVANCE of CASH
Should the Beneficiary need cash as a result of loss or theft of personal
belongings abroad, MAS will arrange for an advance of cash.
<PAGE>
12
REPATRIATION of MORTAL REMAINS
In the event of death of a Beneficiary, MAS will organize and coordinate payment
for the transportation of mortal remains back to the departure point or
Beneficiary's home in the US, as directed by CSA.
LANGUAGE ASSISTANCE
Should the Beneficiary need help to communicate in a foreign country, MAS will
provide telephone translation.
Should there be a request for an interpreter to be sent in person, MAS will help
to locate one.
LOSS of DOCUMENTS
Should the Beneficiary need help to replace lost or stolen travel documents
(i.e. passport, ticket, credit card,..), MAS will advise and assist where
possible regarding their replacement.
EMERGENCY RETURN
Should the Beneficiary need to fly back home earlier than initially planned, MAS
will organize and coordinate the travel arrangements.
PRE-TRAVEL ADVICE
Should the Beneficiary need specific information on recommended or required
immunizations, visa requirements, weather conditions, time zones, currency
exchange rates, national holidays, banking or shopping hours, MAS will provide
appropriate information from the most authoritative sources.
LEGAL REFERRALS
Should the Beneficiary need help to locate an attorney or to secure bail bond,
MAS will provide referral to a local lawyer for assistance.
<PAGE>
13
EMERGENCY DELIVERY of PRESCRIPTION ITEMS
Should the Beneficiary need prescription medication or lenses not available
locally, MAS will organize for the delivery of the prescribed item, when
possible and legally permissible, to the Beneficiary upon the written
authorization of the prescribing physician.
EMERGENCY FAMILY TRAVEL ARRANGEMENTS
Should the BENEFICIARY be hospitalized for 10 or more days and there is a need
for family members to travel to the place of hospitalization, MAS will organize
and coordinate payment for the travel arrangements.
RETURN of MINOR CHILDREN
If dependent children are left unattended as the result of the Beneficiary's
accident or illness, MAS will provide one-way economy fare for them to their
place of residence.
Qualified attendants will also be provided without charge, when required.
FRAUD ANALYSIS
When requested by CSA, MAS will open a case to investigate a particular claim
where CSA suspects potential fraud. Upon receipt of relevant information from
CSA, MAS will open the investigation with an appropriate local correspondent.
<PAGE>
Exhibit 99.5
AGREEMENT
This Agreement is made and entered into this 10 day of November, 1999, by and
between National Internet Radio, Inc. ("NIR"), a CA corporation with offices at
900 Wilshire Blvd., Suite 400, Los Angeles, CA 90017, and Doc-Talk, L.L.C.
("Doc-Talk") a Delaware limited liability company with offices at 8050 Southern
Maryland Boulevard, Owings, MD 20736.
In consideration of the mutual promises and covenants set forth below, the
parties hereto agree as follows:
1) NIR shall air over the internet up to sixteen (16) audio broadcast programs
("Programs") created and produced by Doc-Talk, as follows:
a) Doc-Talk may in its sole discretion provide to NIR one (1) Program each week
for sixteen (16) consecutive weeks, starting the week of November 7th 1999
and ending the week of February 20th, 2000. Doc-Talk, at its sole cost,
shall provide the Program to NIR in the form of standard, two-channel audio
on a compact cassette audiotape. The Program shall be no shorter than 2
minutes and no longer than 10 minutes and shall include a telephone number
and discount number (the "PIN") which may be used to contact Doc-Talk,
L.L.C. to purchase the Doc-Talk health and medical information service. The
PIN shall permit users to access the Doc-Talk service at a discounted fee as
determined by Doc-Talk in its sole discretion.
b) Programs initially will all be scheduled to be available for broadcast from
the NIR web site on the same day of the week, which day shall be chosen at
the discretion of NIR. Access to the Program will be provided through a
hyper link (or other link) on the home web page of the NIR web site
appearing above the fold of such web page.
c) NIR will archive each Program on the NIR website for a period of eight
weeks after the date of initial availability. Archived Programs will be
provided through a hyper link (or other link) appearing on the home web page
of the NIR web site appearing above the fold of such web page.
d) NIR, at its sole cost, will display a banner advertisement ("Banner")
provided by Doc-Talk on the NIR web site during any broadcast of a Program.
The Banner will include a hyper link to the Doc-Talk web site. The content
of the Banner shall be determined by Doc-Talk in its sole discretion subject
to the reasonable requirements of NIR, and Doc-Talk will have the
opportunity to place different banner ads for different audio broadcasts.
2) In consideration of Doc-Talk paying to NIR Seven Hundred Dollars ($700.00),
NIR shall make available for broadcast one (1) audio interview
("Interview"). Access to the Interview will be provided through a hyper link
(or other link) appearing above
<PAGE>
the fold on the home web page of the NIR web site. The Interview hyper link
shall remain in such position on the NIR website until December 31, 1999.
Doc-Talk, at its sole cost, shall provide the Interview to NIR in the form
of standard, two-channel audio on a compact cassette audiotape. The
Interview shall be no shorter than 2 minutes and no longer than 10 minutes,
and shall include a telephone number and discount number (the "PIN") for
contacting Doc-Talk, L.L.C. to purchase the Doc-Talk service.
3) In consideration of NIR making the Programs available from the NIR web site,
Doc-Talk will pay to NIR a referral fee ("Referral Fee") for completed calls
made to the Doc-Talk service using the PIN stated in the Program or made
known through the Banner in an amount that is the greater of One Dollar and
twenty-five cents per completed and paid call ($1.25) or five percent (5%)
of the Adjusted Gross Revenue collected by Doc-Talk for such calls. Referral
Fees shall be sent addressed to NIR at the address appearing above. For the
purposes of this Agreement, "Adjusted Gross Revenue" means the amounts
collected by Doc-Talk from sales of the Doc-Talk service to its customers
using the PIN, less any applicable sales taxes, refunds, credit card charge
backs and bad debt.
4) Payment of Referral Fees shall be made to NIR on a calendar month basis
within thirty (30) days of the end of the respective calendar month. Due to
each Program being displayed on the website for eight weeks, such Referral
Fee payments will continue until the final Program is removed from the NIR
web site.
5) NIR shall timely publish press releases announcing each week's Program, and
each press release shall be designed to draw traffic to the audio program
and ultimately, to the Doc-Talk web site. Notwithstanding the foregoing, NIR
shall publish no press release relating to Doc-Talk or the Doc-Talk service
without the prior written consent Doc-Talk.
6) The Parties acknowledge and agree that the Programs and Interview are not
works for hire and that all right, title and interest in and to the
copyright and all other intellectual property rights relating to the
Programs and Interview shall be owned by Doc-Talk. Doc-Talk hereby grants,
and NIR hereby accepts, a limited right and license to copy, display and
perform the Programs and Interview solely in the furtherance of this
Agreement and for no other purpose.
7) In the event of a dispute between the parties, Both NIR and Doc-Talk agree
to settle the dispute through the American Arbitration Association in
accordance with the then-current rules of the Association; the award given
by the arbitrators shall be binding and a judgement can be obtained on any
such award in any court of competent jurisdiction. It is expressly agreed
that arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
<PAGE>
8) This agreement shall be governed by, and construed in accordance with, the
laws of the State of California. Both parties to this contract agree to
accept executed faxed copies of this agreement as legally binding.
The parties hereto have entered into this Agreement on the date first written
above.
National Internet Radio, Inc. Doc-Talk, L.L.C.
By: By: /s/ Dale L. Hutchins
----------------------- --------------------------
Name: Raymond L. Bary Name: Dale L. Hutchins, Ph.D.
-------------------- -----------------------
Title: President Title: COO
-------------------- -----------------------
<PAGE>
Exhibit 99.6
STOCK PURCHASE AGREEMENT
AGREEMENT (this "Agreement'), dated as of July 29, 1999, by and
between MEDICAL ADVISORY SYSTEMS, INC. (the "Seller") and SACNAS INTERNATIONAL
(the "Purchaser").
WHEREAS, the Seller and the Purchaser entered into a binding letter
agreement (the "Letter Agreement") dated March 8, 1999, pursuant to which (i)
the Seller agreed to sell to the Purchaser 250 shares (the "Shares") of the
issued and outstanding common stock, $100 par value, of ASSISTANCE SERVICES OF
AMERICA, INC. (the "Company"), which shares constitute 50% of the total issued
and outstanding common stock of the Company; (ii) the Purchaser forgave as of
the date of the Letter Agreement the remaining balance, in the approximate
amount of $250,000 (two hundred fifty thousand U.S. dollars), of a loan (the
"Loan") made by the Purchaser to the Seller in the original principal amount of
$500,000 (five hundred thousand U.S. dollars); (iii) the Seller paid to the
Purchaser accrued interest on the Loan to the date of forgiveness of the Loan in
the amount of $57,000 (fifty seven thousand U.S. dollars) and Seller has no
further obligations for repayment of the Loan or under the Loan Agreement dated
September 10, 1996; (iv) the Seller redeemed 295,378 (two hundred ninety-five
thousand three hundred seventy-eight) shares of the common stock of the Seller
owned by the Purchaser for the consideration of a payment by the Seller to the
Purchaser of FrF 700,755 (seven hundred thousand seven hundred fifty-five French
francs) being approximately equivalent to $164,000 (one hundred sixty-four
thousand U.S. dollars); (v) each of Thomas M. Hall and Ronald W. Pickett
resigned as an officer and as a director of the Company and Jean-Paul Babey
resigned as a director of the Seller, effective March 8, 1999; (vi) the joint
venture between the Seller and the Purchaser terminated, effective March 8,
1999, and neither the Seller nor the
<PAGE>
Purchaser has any obligation to the other respecting such joint venture,
including without limitation obligations under that certain joint venture
contract between the Purchaser and the Seller dated June 1993 and any amendments
thereto (collectively, the "Joint Venture Agreement"); (vii) the Purchaser has
paid to the Seller a $164,000 Transition fee to compensate the Seller for
unaccountable expenses and costs associated with the transition of business
contemplated by the parties; and (viii) the Seller and the Purchaser agreed to
certain transitional relationships prior to and subsequent from July 30, 1999,
which relationships shall be the subject of a separate services agreement (the
"Services Agreement") to be negotiated in good faith by the Seller and the
Purchaser between the Closing Date (as defined below) and July 30, 1999;
WHEREAS, the Seller and the Purchaser timely completed on or about
March 8, 1999 all actions, requirements and obligations to effectuate and
complete the transactions described in subparagraphs (ii), (iii), (iv), (v),
(vi) and (vii) above, all in accordance with the terms of the Letter Agreement;
WHEREAS, by entering into this Agreement, the Seller and the Purchaser
shall complete all actions, requirements and obligations to effectuate the
transaction described in subparagraph (i);
NOW, THEREFORE, in consideration of the covenants and mutual
agreements herein set forth and in reliance upon the representations and
warranties contained herein, the parties do hereby agree as follows:
Section 1. Sale and Purchase of the Shares.
Subject to all of the terms and conditions hereof, the Seller hereby
agrees to deliver to the Purchaser on the date of the Closing (as hereinafter
defined) the Shares, free and
-2-
<PAGE>
clear of all liens, and the Purchaser hereby agrees to pay to the Seller the
purchase price in accordance with Section 2 hereof.
Section 2. Purchase Price.
The purchase price for the Shares shall be $25,000 (twenty-five
thousand U.S. dollars) (the "Purchase Price"), payable by delivery to the Seller
at the Closing of certified or bank cashier's checks made payable to the order
of the Seller (the "Closing Payment").
Section 3. The Closing.
The delivery of and payment for the Shares will be effected at a
closing (the "Closing") to be held at the Company's offices in Owings, Maryland
on July 30, 1999, or at such other place and date as shall be agreed upon by the
parties hereto (the "Closing Date"). At the Closing:
(a) the Seller shall deliver to the Purchaser a stock certificate or
certificates for the Shares, duly endorsed in blank or with blank stock powers
attached and with the requisite stock transfer stamps, if any, attached; and
(b) the Purchaser shall deliver to the Seller the Closing Payment.
Section 4. Representations and Warranties.
The Seller hereby makes the following representations and warranties
to the Purchaser:
(a) Ownership of Shares. The Seller is the sole and exclusive
registered and beneficial owner of the Shares free and clear of all liens. The
Shares are fully paid and nonassessable. No other person, firm or corporation
has any interest whatsoever in any of the
-3-
<PAGE>
Shares. The sale of the Shares vests absolute title to the Shares in the
Purchaser directly, free of any liens, options, agreements or conditions.
(b) Authority and Enforceability. The Seller has the full right,
corporate power and authority to enter into and perform its obligations under
this Agreement, and to transfer the Shares to the Purchaser, free and clear of
any statutory, contractual or other limitations. This Agreement constitutes a
valid and legally binding obligation of the Seller, enforceable against Seller
in accordance with is terms.
(c) Absence of Litigation. No action, suit or proceeding before any
court or governmental body or authority, pertaining to the transactions
contemplated by this Agreement or to its consummation has been instituted or
threatened.
(d) Capital of Company. The Company has an authorized capital of
1,500,000 shares of common stock, par value $100 per share, of which 500 shares
are issued and outstanding. The Shares represent the Seller's entire interest in
the Company.
The Purchaser hereby represents and warrants to the Seller:
(aa) Authority and Enforceability. The Purchaser has all requisite
power and the full right and authority to enter into and perform its obligations
under this Agreement. The Purchaser has taken all necessary action on its part
as may be required under applicable laws, under its constituent documents, or
otherwise to authorize the execution, delivery and carrying out of the Agreement
on its behalf. This Agreement constitutes a valid and legally binding obligation
of the Purchaser enforceable against it in accordance with its terms.
-4-
<PAGE>
Section 5. Conditions to Purchaser's Obligations.
The obligations of the Purchaser to proceed with the Closing and to
consummate the transactions contemplated hereby shall be subject to the
fulfillment at or before the Closing of the following conditions precedent:
(a) The Purchaser shall have completed to its sole satisfaction its
due diligence investigation in connection with the transactions contemplated by
this Agreement.
(b) All representations and warranties by the Seller contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing as though such representations and warranties were made at and as of
that time.
(c) As of Closing, there shall not be pending or threatened before any
court or governmental body or authority any action, suit, proceeding, injunction
or other order challenging, restraining or prohibiting the transactions
contemplated by this Agreement.
Section 6. Conditions to Seller's Obligations.
The obligations of the Seller to proceed with the Closing and to
consummate the transactions contemplated hereby shall be subject to the
fulfillment at or before the Closing of the following conditions precedent:
(a) All representations and warranties by the Purchaser contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing as though such representations and warranties were made at and as of
that time.
-5-
<PAGE>
(b) As of Closing, there shall not be pending or threatened before any
court or governmental body or authority any action, suit, proceeding, injunction
or other order challenging, restraining or prohibiting the transactions
contemplated by this Agreement.
Section 7. Additional Obligations.
(a) As promptly as practicable, but in all events within fifteen (15)
days after the execution of this Agreement, the Seller will return to the
Company all documents, files or copies related to the Mondial Assistance
International Network (the "Network"), it being understood that with the
Purchaser's express prior written consent, the Seller may retain documents
reasonably necessary for the future provision of services by the Seller to the
Company. Except as expressly provided in this Agreement or in any Services
Agreement that the parties may hereafter execute or deliver, the Seller hereby
agrees not to use or participate in such Network from and after the date hereof
without the express prior written consent of the Purchaser.
(b) As promptly as practicable after the execution of this Agreement,
each of the Purchaser and the Seller shall, in cooperation with the other, file
any reports or notifications that may be required to be filed or supplied by
them pursuant to applicable law in connection with the transactions contemplated
hereby.
(c) From and after the date hereof, each party shall execute and
deliver such documents and take such actions as may reasonably be requested by
the other party in order to consummate or effect the transactions contemplated
hereby.
(d) From and after the date hereof through and including July 30,
1999, the Seller shall provide to the Company, upon the Purchaser's request,
such case-management
-6-
<PAGE>
services as the Company may require at fees equal to those fees currently
charged by the Seller to the Company for such services (as detailed in Exhibit
A), it being understood that neither the Purchaser nor the Company is or shall
be under any obligation whatsoever to request such services, and that the
Company shall not be prohibited from obtaining similar services from a service
provider other than the Seller. However, should the Purchaser request such
casemanagement services from the Seller, Purchaser will allow Seller to continue
to use and have access to the Mondial Assistance International Network, Section
7(a) of this Agreement notwithstanding. In addition, should such case-management
services be requested by Purchaser, Purchaser (or the Company) will provide a
sufficient advance of funds to Seller to cover all external fees and payment
guarantees (so-called CADE expenses) incurred by Seller in providing the
requested case-management services. On or before the Closing Date, Purchaser
agrees to pay (or cause to be paid) all outstanding invoices issued by Seller to
Company, and to pay (or cause to be paid) all subsequent invoices within 30 days
of issuance by Seller. Seller has no obligation under this Agreement to provide
case-management services above current levels of support to the Company, or
beyond the capacity of Seller's current personnel.
(e) The Seller agrees that, from and after the date hereof through and
including July 30, 1999, the Company may continue to use the four existing
offices it currently occupies and shall continue to have reasonable access to
the conference room, computer network cables and common areas of the Seller's
building in which it currently operates. In addition, through and including July
31, 1999, the Company may continue to use the dedicated telephones lines listed
on Exhibit A hereto, and related services. It is understood and agreed by the
parties that such lines, while registered in the name of the Seller with
relevant telephone companies, are to be transferred to the Company in connection
with the sale of stock that is the subject of this
-7-
<PAGE>
Agreement, and the Seller hereby agrees to promptly take any and all actions
reasonably necessary to effect such transfer of lines to the Company as soon as
practicable. Any internal transfers of telephone lines shall be by mutual
agreement of the Seller, the Purchaser and the Company and shall be made by the
Seller at no cost to either the Purchaser or the Company. Transfers of telephone
lines by the Company to a new office location shall be at the Company's expense.
After July 30, 1999, the Company may, but need not, request the Seller to
negotiate in good faith a new service agreement respecting the matter set forth
in this Section 7 (d), but the Seller shall have no obligation to provide any
services absent a mutually satisfactory agreement.
(f) As promptly as practicable, but in no event later than July 30,
1999, the Seller shall return to the Company all Company files in the Seller's
possession, including without limitation correspondence, e-mail, accounting
books and records, legal records, invoices, insurance policies and electronic
databases, and the Purchaser shall cause the Company to return to the Seller all
files of the Seller in the Company's possession, it being understood that no
party shall be required to return to any other party any medical records that
must as a matter of law and in accordance with an opinion of legal counsel
(which opinion shall be delivered in writing to any party hereto upon any other
party's reasonable request) be retained by such party. Except as provided in the
foregoing sentence, no party shall retain any copies of any such records without
the express written consent of the other.
(g) The Seller agrees that the Company may hire any member of the
operational staff of the Seller who is currently devoted to the "Maison de la
France" contract, as well as Ian Pratt, Sandy Eichorn and Lynn Phillips, it
being understood that the Company shall not be entitled hereby to offer
employment to any other employee of the Seller.
-8-
<PAGE>
(h) In accordance with Paragraph 9 of the Letter Agreement, and in
lieu of any obligation under Section 12.2 of the Joint Venture Agreement which
the parties agree shall be amended hereby and of no further force and effect,
Seller and Purchaser hereby agree that the phrase "not interfere with the
business of the other for a period not less than 2 years after the date of this
letter" shall mean and shall be interpreted as follows:
(i) During the Restricted Period (as hereinafter defined),
Seller shall not engage in any business wherein Seller (A) actively markets for
Seller's own account and as Seller's business enterprise (and not as the
operator of an internet or telephone call center) travel medical assistance
insurance policies in the United States of America ("USA"), and (B) provides
roadside travel and emergency services through insurance policies or otherwise
in the USA.
(ii) During the Restricted Period, Purchaser shall not engage in
any business activity in the USA wherein Purchaser (A) provides medical
assistance services and other assistance services to the maritime industry, and
(B) provides 900-number telephone medical information or internet real-time
medical chat services.
(iii) For purposes of this Agreement, the Restricted Period shall
commence on March 8, 1999 and shall end on March 8, 2001.
(i) Each of the Purchaser and the Seller hereby agrees to indemnify
the other and to hold the other harmless against any and all demands, claims,
losses, liabilities, damages, costs end expenses (including without limitation
attorneys' fees) which it may incur, directly or indirectly, relating to,
resulting from or arising out of a breach of any obligation of the other under
this Agreement, or because any representation or warranty by the other contained
herein is false in any material respect as of the Closing Date.
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<PAGE>
(j) The Seller and the Purchaser hereby acknowledge and agree that the
parties have fully performed, on or about the date of the Letter Agreement, all
actions, requirements, duties and obligations with respect to the transactions
described in (ii), (iii), (iv), (v), (vi) and (vii) of the Recitals of this
Agreement and all such transactions have been fully completed and consummated.
The Seller and the Purchaser further acknowledge that the provisions of this
Agreement are intended solely by them to fully and properly effectuate the
transactions described in (i) of the Recitals above. In the event of any
inconsistency or conflict between this Agreement and the Letter Agreement, the
provisions of this Agreement shall control and govern.
Section 8. Releases.
Excepting any rights of contribution with respect to third party
claims of third parties who are not affiliates of either party and any
obligations to be performed or completed by the parties under the provisions of
this Agreement subsequent to the date hereof (the "Excluded Obligations"), each
of the Seller and the Purchaser, on behalf of itself and its parents,
subsidiaries, affiliates, successors and assigns, does hereby release and
discharge the other party, and each of its directors, officers, employees,
agents, successors and assigns, from and against any and all claims, demands,
actions, causes of action, liabilities, obligations, damages, costs or expenses,
including reasonable attorneys' fees, known to the parties on the closing date
arising from the relationship of the Seller and the Purchaser in any and all
transactions whatsoever, including, without limitation, the formation and
operation of the Company and the Joint Venture, which occurred, was taken,
existed or began prior to the date of this Agreement. The foregoing release
excludes and excepts only the Excluded Obligations. Each of the Seller and the
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<PAGE>
Purchaser hereby covenant and agree not to sue the other party with regard to
any matter which has been released as described in this Section 8. The parties
agree to execute such other documents and to take such further actions as
reasonably required to confirm the releases set forth herein. The provisions of
this Section 8 shall be effective upon the execution of this Agreement and shall
survive the Closing and shall continue in full and effect from and after the
date of this Agreement.
Section 9 Miscellaneous.
(a) The representations and warranties contained in Section 4 hereof
shall survive the delivery of the Shares referred to in Section 3 hereof.
(b) This Agreement shall be binding on, and shall inure to the benefit
of and be enforceable by, the respective successors and assigns of the parties
hereto.
(c) This Agreement shall constitute the entire agreement of the
parties with respect to the subject matter hereof and may not be modified or
amended or any term or provision thereof waived or discharged except in a
writing signed by the party against whom such amendment, modification, waiver or
discharge is sought to be enforced.
(d) This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of France.
(e) Each of the parties shall bear is own costs and expenses in
connection with the negotiation, preparation, execution and delivery of this
Agreement.
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<PAGE>
(f) The subject headings of the sections, paragraphs and subparagraphs
of this Agreement are included for the purposes of convenience only, and shall
not affect the construction or interpretation of any of its provisions.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on and as of the date first above written.
MEDICAL ADVISORY SYSTEMS, INC.
------------------------------------
By:
Title:
SACNAS INTERNATIONAL
------------------------------------
By:
Title:
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<PAGE>
SI - MAS Stock Purchase Agreement
Exhibit - A
<TABLE>
<CAPTION>
Case Fee
(In U.S. Dollars)
<S> <C>
Medical Case US 257.16
Medical case Mondial Group country 107.12
Medical case Mondial Correspondant country 138.54
Technical Case US 190.81
Technical case Mondial Group country 96.82
Technical case Mondial Correspondant country 115.66
Question Only 4.10
Administrative 190.81
Permatel medical US 35.25
Permatel non medical US 18.09
</TABLE>
<PAGE>
Exhibit 99.7
SERVICES AGREEMENT
Services Agreement ("Services Agreement") dated as of July 30, 1999, by and
between Assistance Services of America, Inc. ("ASA") and Medical Advisory
Systems, Inc. ("MAS").
WITNESSETH
WHEREAS, ASA desires to hire the services of a service provider capable of
performing certain services in support of the businesses and services that ASA
provides, and
WHEREAS, MAS has the experience to perform the services required to be
performed by it under this Agreement, and has the organization, means, and
technical ability to fulfill all of its obligations under this Agreement.
NOW, THEREFORE, the parties hereto in consideration of the premises and the
mutual covenants and conditions hereinafter set forth do hereby agree as
follows:
ARTICLE 1
ENGAGEMENT AND SCOPE OF WORK
1.1 Subject to the terms and conditions of this Services Agreement,
ASA hereby engages MAS, and MAS hereby accepts such engagement, to provide those
services (the "Services") described in Appendix A. MAS hereby agrees to provide
Services in accordance with its current practices, which it hereby represents
are in accord with industry standards and practices. When requesting Services,
ASA shall provide MAS with written instructions on the Services to be provided
and access to updated Mondial Assistance networks information. Notwithstanding
the foregoing, ASA is not under any obligation whatsoever to request any
Services from MAS, and ASA shall not be prohibited from obtaining similar
services for ASA from a service provider other than MAS. In the event that ASA
decides to engage another service provider to handle the cases currently treated
by MAS, ASA will give MAS a 90 days' written notice prior to the transfer. It is
further understood that MAS is under no obligation to provide Service above
reasonable levels of support or beyond the reasonable capacity of its personnel
as existed as of March 8, 1999.
1.2 In addition to the Services, MAS will provide administrative
offices and support to ASA as specified in Appendix C.
<PAGE>
ARTICLE 2
COMPENSATION
The fees, commissions and other compensation to be paid by ASA to MAS for
Services performed by MAS hereunder shall be as set forth in Appendix B.
ARTICLE 3
TERM OF PAYMENT
3.1 Within thirty (30) days of the performance of any Services by MAS
hereunder, MAS shall submit to ASA an original statement therefor, supported by
one copy each of all expense reports and any other documentation necessary to
substantiate the statement. Within thirty (30) days after receipt of such
statements, ASA shall pay MAS all amounts that may be due.
3.2 Assistance Services of America Inc. is responsible for all
external supplier expenses incurred by Medical Advisory Systems, Inc. in
providing Services on behalf of Assistance Services of America, Inc in
accordance with the mutually agreed upon book of procedure. When provided by
ASA, MAS shall when reasonably possible use any supplier directed by ASA.
Failure to use ASA's supplier (except if not reasonably possible) shall result
in charge back of any overcharges to MAS. The parties acknowledge that ASA has
paid to MAS, as an advance against external supplier expenses --so called CADE
expenses-- the sum of $35,384. Every three months both parties agree to adjust
this advance to cover adequate CADE expenses of this period.. At the termination
of this contract MAS shall repay to ASA any remaining credit balance within 3
months of the termination. If MAS receives any CADE invoices after having
reimbursed ASA, MAS shall invoice ASA for the remaining balance, providing ASA
with the necessary documentation to substantiate the statement. Upon receipt of
such statement, ASA will have 30 days to pay MAS all amounts due.
3.3 Payment of rent for administrative offices in the MAS building is
due on the 1st day of the month for each month of occupancy.
<PAGE>
ARTICLE 4
INDEMNIFICATION
MAS shall indemnify, defend and hold harmless ASA, its directors, officers,
employees, and affiliated companies from and against any and all claims, suits
or proceedings, demands, liabilities, costs, damages, fines, and expenses
whatsoever, including reasonable attorney's fees, arising from or related in any
way to:
o Any breach by MAS of its agreements, obligations or representations
under this Service Agreement;
o Any violation by MAS of applicable law and regulation in connection with
the performance of the Company's obligations;
ASA shall indemnify, defend and hold harmless MAS, its directors, officers,
employees, and affiliated companies from and against any and all claims, suits
or proceedings, demands, liabilities, costs, damages, fines and expenses
whatsoever, including reasonable attorney's fees, arising from or related in any
way to:
o Any breach by ASA of its agreements, obligations or representations;
o Any violation of applicable law and regulation in connection with the
performance of ASA's obligations;
The parties hereto shall promptly notify each other of any suit or threat
of suit (except with respect to those which either party might institute against
the other) related in any way to the benefits provided which may give rise to
claim or indemnification against the other party.
The parties shall cooperate with and assist one another in connection with
any required response to or involvement in any legal proceeding, action, or
inquiry.
The indemnifying party may control any suit or proceeding; provided,
however, in instances where the indemnifying party elects to control, the
indemnified party may, at its own cost, engage its own attorney(s).
<PAGE>
ARTICLE 5
INSURANCE
5.1 MAS, (including staff physicians contracted to work in the MAS
response center) shall, at its own expense, maintain in force, during the term
of this Services Agreement, workers compensation and employer's liability
insurance (limit of One Million Dollars ($1,000,000) per occurrence) in
accordance with the laws having jurisdiction over MAS's employees (or, as the
case may be MAS contracted physicians) who are performing the Services. MAS
shall also maintain during such period commercial general bodily injury and
property damage liability, including automobile (owned, non-owned, or hired),
covering bodily injury to or death of any person, including without limitation
any employee of MAS, and/or loss of or damage to property in a combined single
amount of One Million Dollars ($1,000,000) for any one occurrence.
5.2 MAS shall make best effort to maintain ASA as an additional
insured on MAS professional liability insurance polices provided there is no
increase in premium. MAS will provide written notice to ASA within 5 days of a
receipt of a notice from its insurance carrier related to any amendment or
cancellation of each professional liability policy.
ARTICLE 6
COMPLIANCE WITH LAWS
In providing Services hereunder, MAS shall comply with all applicable
federal, state and local laws, it being understood that MAS physicians should
not be requested by ASA to practice medicine across states borders.
ARTICLE 7
ACCESS TO NETWORK
MAS shall have access to the Mondial Assistance networks, which include but
are not limited to the Mondial Assistance International network and the US PPO
network, for the term of this Agreement. MAS is obliged to utilize these
networks exclusively when handling an ASA case.
<PAGE>
ARTICLE 8
CONFIDENTIALITY
8.1 MAS shall be responsible for ensuring that all information, oral
or written obtained from ASA by MAS or by any MAS Agent, officer, director,
employee, agent or other representative thereof, and all of the conclusions and
recommendations reached or made by MAS, or any MAS Agent shall be kept
confidential and shall not be disclosed. This obligation of MAS shall be of a
continuing nature and shall not be canceled by the expiration, suspension, or
termination of the Services Agreement. MAS agrees that, upon the completion or
other termination of the Services, all network information, printed or
electronic, received by MAS shall promptly be delivered to ASA.
8.2 MAS shall also be responsible for ensuring that any MAS contracted
physician performing Services under this Agreement will comply with these
requirements. This obligation of confidentiality shall not apply to information:
(i) that is previously known, or available, to MAS on an unrestricted and non-
confidential basis; (ii) that is, or becomes a part of the public domain through
a third party; (iii) that is learned by MAS from a third party who has obtained
such information free of any obligation or confidentiality; or (iv) that must be
disclosed pursuant to legal requirements to which MAS is subject if such
disclosure is mandatory and failure to so disclose would subject MAS to civil or
criminal penalties. Notwithstanding the generality of the foregoing, MAS agrees
that within 15 days of the termination of this Agreement for any reason
whatsoever, MAS shall return to ASA all documents and things, files, or copies
of documents related to the Mondial Assistance International Network and will
undertake not to use this network except with the prior written consent of ASA.
ARTICLE 9
AUDIT
ASA may audit and inspect MAS's records and accounts with respect to the
Services performed at any time during MAS's performance of any Services and for
a period of two (2) years following the completion or termination of the
Services for the purpose of verifying any statement and underlying documentation
presented by MAS in accordance with the provisions of Article 3 hereof, it being
understood that MAS agrees to preserve all such documents respecting all
Services for a two (2) year period following the termination of this Agreement
or such longer period as may be required by applicable law or regulation.
<PAGE>
ARTICLE 10
PROPRIETARY INFORMATION
Upon the termination of this agreement, MAS shall promptly return to ASA
all ASA proprietary information, including but not limited to, ASA Books of
Procedures, ASA client databases, any equipment loaned to MAS by ASA or ASA
clients and ASA files on electronic media, it being understood that no party
shall be required to return to any other party any medical records that must as
a matter of law and in accordance with an opinion of legal counsel (which
opinion shall be delivered in writing to any party hereto upon any other party's
reasonable request) be retained by such party. Except as provided in the
foregoing sentence, no party shall retain any copies of any such records without
the express written consent of the other. Upon termination of this agreement ASA
shall return promptly to MAS all proprietary information files and equipment
belonging to MAS.
ARTICLE 11
FORCE MAJEURE
Any delay in or failure of performance of ASA or MAS shall not constitute
default hereunder if and to the extent such delay or failure of performance is
caused by occurrences beyond the reasonable control of ASA or MAS, as the case
may be, including but not limited to: Acts of God or the public enemy;
compliance with any order or request of any governmental authority; act of war;
rebellion or sabotage or damage resulting therefrom; fires; floods; release of
hazardous or toxic substances; explosions; accidents; riots or strikes or other
concerted acts of workmen, whether direct or indirect; or any other causes
whether or not of the same class or kind as those specifically above named,
which are not within the reasonable control of ASA or MAS, as the case may be.
ARTICLE 12
TERM AND TERMINATION
This Services Agreement shall terminate on July 31, 2000 unless extended by
mutual agreement of the parties or terminated sooner, at the sole discretion by
either party, upon 90 day's written notice to the other party. Should the
parties agree to extend the Agreement beyond July 31, 2000, they agree to
negotiate new case fees and office lease rates at least 90 days prior to
termination.
<PAGE>
ARTICLE 13
DISCLAIMERS
13.1 MAS shall be an independent contractor and neither MAS nor ASA
shall act as the agent for the other, except as set forth in this Services
Agreement. MAS undertakes to provide medical and travel assistance, insurance
claims handling and cost containment services, including medical monitoring and
advice by staff physicians.
13.2 The parties understand that the medical personnel who shall
provide medical consultation as referenced herein, are not agents or employees
of MAS, but are independently licensed and insured medical contractors. Subject
to the provisions of Article 14, it is understood that MAS does not have any
control over the medical judgement exercised by any of these independent medical
contractors and shares no liability for same.
13.3 The communications equipment used by MAS (as with any
communications equipment) has limitations to its capacity. The parties hereto
recognize that these limitations may restrict the capability of MAS to
communicate beyond certain distances or in certain areas of the world.
Additionally, the parties hereto recognize that effective communications may be
dependent upon third party interfacing systems. The parties hereto agree MAS is
not obligated to provide communications beyond the capacity of its equipment.
ARTICLE 14
SUBCONTRACTORS
MAS may subcontract the performance of Services under this Service
Agreement with any agent. For services outside the US and for PPO repricing
services MAS shall use when reasonably possible representatives of the SACNAS
International network or the ASA PPO network, such networks being maintened by
SI and ASA respectively. Notwithstanding any subcontracting by MAS outside the
network provided by ASA or Sacnas International, MAS shall remain liable and
responsible to ASA, and ASA to MAS, for all of the parties' respective
obligations under this Service Agreement. MAS shall, for the protection of ASA,
demand from all MAS agents from which MAS procures services, reasonable
guarantees which shall be made available to ASA to the full extent of the terms
thereof.
<PAGE>
ARTICLE 15
ASSIGNMENT
This Services Agreement may not be assigned by any party without the
express written consent of the other party.
ARTICLE 16
NOTICES
Unless otherwise expressly provided in this Agreement all notices and other
communications given under this Agreement shall be in writing and shall be
deemed effective upon receipt of the addressee at its address listed below or at
such other address as such party shall have notified the other in writing.
If to ASA:
Attention: Carol AVENEL
8050 Southern Maryland Blvd.
Owings, Maryland 20736 USA
Phone: (410) 257-9542
Fax: (410) 257-5285
<TABLE>
<CAPTION>
<S> <C>
with copy to:
Yves Lepage, Esq. And Herve Deboutidre, Chairman,
Curtis, Mallet-Prevost, Colt & Mosle Helene Meyniac, President
101 Park Avenue c/o Sacnas International
New York, New York 10178 2, rue Fragonard 75017 PARIS - FRANCE
Phone: (212) 696-6000 phone: (33) 1 53 06 15 32
Fax: (212) 697-1559 fax (33) 1 53 06 15 32
</TABLE>
If to MAS:
Attention: Thomas M. Hall. M.D., M.I.M.
8050 Southern Maryland Blvd.
Owings, Maryland 20736 USA
Phone: (301) 855-8070
Fax: (301) 855-4958
<PAGE>
With copy to:
Ronald W. Pickett
2321 Ocean Point Drive
Wilmnigton, NC 28405
Phone: (910) 509-1433
Fax: (910) 509-1702
ARTICLE 17
ARBITRATION
Any controversy or claim arising out of or relating to this Services
Agreement or any breach thereof, shall be settled by arbitration in Maryland in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgement upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
ARTICLE 18
GOVERNING LAWS
This Agreement shall be governed by and construed in accordance with the
laws of the state of Maryland.
ARTICLE 19
MISCELLANEOUS
19.1 HEADINGS AND TITLES OF ARTICLES. Headings and titles of
paragraphs and other subparts of this Agreement are for convenience of reference
only and shall not be considered in interpreting the text of this Services
Agreement. Modifications or amendments to this Services Agreement must be in
writing and executed by duly authorized representatives of each part.
19.2 COUNTERPARTS. This Services Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this Services
Agreement by signing any such counterpart.
<PAGE>
19.3 ENTIRE AGREEMENT. This Services Agreement and the attached
Appendices noted above constitute the entire agreement of the parties with
respect to the subject matter hereof.
19.4 CONFLICTS WITH THE STOCK PURCHASE AGREEMENT. In the event that
any term, condition or other aspect of this Services Agreement conflicts with
any portion of the Stock Purchase Agreement dated July 30, 1999 between SACNAS
International and MAS, the Stock Purchase Agreement shall be the controlling
document and govern the resolution of the conflict.
19.5 CONFLICTS WITH THE LETTER OF AGREEMENT. In the event that any
term, condition or other aspect of the this Services Agreement conflicts with
any portion of the Letter of Agreement dated March 8, 1999 between SACNAS
International and MAS, this Services Agreement shall be the controlling document
and govern the resolution of the conflict.
19.6 CONFLICTS WITH THE ADMINISTRATIVE AND MEDICAL CORRESPONDENT
AGREEMENT. In the event that any term, condition or other aspect of the this
Services Agreement conflicts with any portion of the Administrative and Medical
Correspondent Agreement dated August 2, 1990 between SACNAS International and
MAS, this Services Agreement shall be the controlling document and govern the
resolution of the conflict.
IN WITNESS WHEREOF, the parties hereto have executed this Service Agreement
as of the date first above written:
ACCEPTED AND AGREED:
ASSISTANCE SERVICES OF AMERICA, INC.
By: /s/ Helene Meyniac
-----------------------------------
Name: Helene Meyniac
Title: President
MEDICAL ADVISORY SYSTEMS, INC.
By: /s/ Thomas M. Hall
-----------------------------------
Name: Thomas M. Hall, M.D., M.I.M.
Title: Chief Executive Officer
<PAGE>
APPENDIX A
MAS will provide the following Services linked to the call center Services
rendered to ASA clients:
1. Provision of 24-hour telephone handling and assistance including timely
provision of ASA case summaries and case logs;
2. Provision of 24-hour medical consultation by telephone;
3. Coordination of transportation services including medical escorts;
4. Medical cost containment services;
5. Advance of funds to subscribers
6. Coordination of examination by an independent physician;
7. Dossier administration ("gestion") and PPO repricing. The MAS accounting
department will assist with financial case file reconciliation, data needed
for billing of cases, and signature on impressed accounts for cases handled
by MAS;
8. Timely support in handling ASA customer complaints as they relate to cases
handled by MAS as per the urgency of ASA's clients request;
9. Maintenance of ASA client databases that are required for the verification
of subscriber eligibility when MAS handles cases. Databases are to be
provided to MAS in electronic format compatible with existing MAS databases.
Maintenance of the Sacnas International network database (period Master
updates from Sacnas International).
10. Production of standard monthly ASA reports for cases handled by MAS, as
defined between MAS and ASA;
11. Tape back up of and access to ASA databases used by MAS to handle cases.
<PAGE>
Appendix B
Medical Advisory Systems, Inc. Fees For Case Handling
Case Handling Fees
<TABLE>
<S> <C>
1. TRANSPORTATION / EVACUATION $485.00
1.1 Evacuation / Air Ambulance
1.2 Escorted transport
1.3 Pre-payment of transportation expenses
1.4 Repatriation of remains
2. MEDICAL $257.00
2.1 Medical contact
2.2 Medical Advisory Systems, Inc.Doctor involved
3. TRAVEL / TECHNICAL $170.00
3.1. Plane ticket assistance with travel agency
3.2. Lost luggage
3.3. Car / driver arrangements
3.4 Doctor referral with no medical report
3.5. Immunisation information
3.6. Travel / hotel arrangements
4. PERMATEL - MEDICAL
4.1. One time medical contact with no follow-up $ 47.00
5. PERMATEL - NON MEDICAL $ 18.00
5.1. Flight information
5.2. Claims assistance
5.3. Conference call
5.4. Travel information
5.5. Lost Passport
5.6. Report of theft
6. CUSTOMER SERVICE I QUESTION ONLY $ 2.45
6.1. Maximum 5 minute call
6.2. Request claims forms
6.3. Advise correct telephone number to call
7. ADMINISTRATIVE $ 75.00
7.1. Guarantee of expenses
7.2. Billing service with no referral
7.3. Billing service with no medical report
</TABLE>
Medical Advisory Systems, Inc fees for case handling services not covered by one
of the above categories shall be negotiated between the parties at the time
service is requested.
<PAGE>
APPENDIX C: PROVISION OF ADMINISTRATIVE SERVICES
In addition to the services provided in Appendix A, MAS will provide ASA with
the following administrative services:
A. ADMINISTRATIVE OFFICES
The use of the office building includes access to the common parking lot to the
conference room and common areas of the building. It also includes unlimited
access to any available copier, postage meter, and door lock key codes.
<TABLE>
<CAPTION>
Monthly Fee
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<S> <C>
o 4 currently occupied offices and the office currently
occupied by MAS's Chief Accountant $1,600
o electricity & grounds maintenance 500
o office cleaning services 545
o phone system lease 850
o use of computer network, Solomon's accounting
license & maintenance 375
o build out 130
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$4,000
</TABLE>
MAS will give ASA a 10% rebate on the total monthly office rental provided a.)
payment is made no later than the first of the month, b.) float account is in
order, c.) no outstanding invoices owed to MAS exceed 30 days and d.) previous
monthly billing from MAS to ASA for medical cases exceeded $15,000.
B. ADMINISTRATIVE SUPPORT
1. Use of the computer network includes routine maintenance of the existing ASA
IT network cables and server(s) used for Internet access and e-mail. It
includes routine tape back up of server files and network anti-virus and
security upgrades. It does not include installation of new software or
workstations required by ASA, extensive shutdowns or work required for
eradication of viruses imported by ASA employees, nor extensive or unusual
repairs or upgrades of equipment.
2. Use of the telephone system includes existing use of phone lines and
equipment. It does not include upgrades required to handle a high influx of
calls from new services or contracts. Upon termination of this Agreement, MAS
shall cooperate with ASA to ensure that all ASA telephone lines are properly
transferred.
3. Rental of administrative offices includes reasonable use of the postage meter
at cost plus reasonable access to MAS shipping and receiving areas.
4. Additional Information Technology services are available as time permits from
the Medical Advisory Systems, Inc. Information Technology department at
current billing
<PAGE>
rates. The current billing rate for Mr. Lawrence Horsemen is $160.00 per hour
and $85.00 per hour for Mr. Thomas Moran. Rates are subject to periodic
change as for other clients.
5. Printing services are available from MAS at the following rates
Color Printer $1.95 per page
Document Scan $9.00 per page
6. Copier Services
For copier services the fee is $100.00 per month lease fee plus $0.03 per
page copied. A log sheet will be maintained next to the copier so that the
number of copies made can be documented using an honor system. Periodically the
log sheet totals will be compared to the master counter inside the copier
machine. MAS reserves the right upon 30 days notice to request that ASA obtain
its own copier should this log sheet documentation system prove inaccurate or
unmanageable.
<PAGE>
Exhibit 99.8
AGREEMENT
This Agreement (the "Agreement") Is made and entered into this 10 day of
November, 1999 (the "Effective Date"), by and between DocTalk, L.L.C.
(hereinafter "Doc-Talk"), a Delaware limited liability company with offices
located at 8050 Southern Maryland Boulevard, Owings, MD 20736 and William S.
(Chip) Canty III, d/b/a Waypages Productions ("Waypages"): Doc-Talk and Waypages
may also be referred to as a "Party" or collectively as the "Parties" throughout
this Agreement.
WHEREAS, Doc-Talk provides the Doc-Talk Service described below through Its toil
free telephone number;
WHEREAS, Waypages operates a Web Site designed to help visitors find information
more easily across the Internet; and
WHEREAS, Doc-Talk and Waypages desire to attract visitors to the Doc-Talk Web
Site by means of Hyper Links from the Waypages Web Site.
NOW, therefore, in consideration of the premises and the mutual covenants and
conditions contained herein, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. Definitions. For the purposes of this Agreement , the following terms shall
-----------
have the following meanings:
1.1 "Discount Number" means the unique number which maybe used in
conjunction with the Doc-Talk service to grant the user of such service
a specified discount from the fees charged for the service.
1.2 "Doc-Talk Service" means the fee-based, medical information. service
offered by Doc-Talk through telephone access.
1.3 "Hyper Link" means the icon, logo, highlighted or colored text, figure,
or image representing a URL which allows an Internet user to move from
one web site to another web site.
1.4 "Proprietary information" means and shall include, but not be limited
to, either Party's software, data, databases, product plans, designs,
protocols, products, costs, prices, names, finances, marketing plans,
business opportunities, personnel, and research and development
originated by the disclosing Party, not previously published or
otherwise disclosed to the general public, not previously available
without restriction to the receiving Party, nor normally furnished to
others without restriction, and which the disclosing Party desires to
protect against unrestricted disclosure or competitive use.
Page 1 of 7
<PAGE>
"Proprietary Information" shall not include information that (i) is or
enters the public domain through no fault of the receiving Party; (ii)
is known and has been reduced to tangible form by the receiving Party
prior to the time of disclosure and is not subject to restriction;
(III) is independently developed by the receiving Party without access
to or use of the Proprietary Information; (iv) is made generally
available by the disclosing Party without restriction on disclosure; or
(v) is disclosed by the receiving Party with the disclosing Party's
prior written consent.
1.5 "Web Site" means a series of pages on the World Wide Web ("Web'") that
are (1) created, controlled or maintained for a common purpose by
either Party, and (2) organized via a hierarchical set of Hyper Links
that originate from the home page of that Party's Web domain.
2. Hyper Link.
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2.1 Customer. Waypages shall create and maintain on the Waypages Web Site a
--------
one or more pages devoted to a brief textual description of the Doc-
Talk service. Each of these so-called gateway pages shall contain one
or more Hyper Links to the Doc-Talk Web Site. Waypages shall also
develop and maintain a series of Hyper Links to the gateway pages, and
shall cause such Hyper Links to be displayed to certain visitors,
particularly those performing health related queries on the Waypages
Web Site. The form and placement of such Hyper Links, as well as the
design of the gateway pages shall be as mutually agreed to by the
Parties, and shall be established using the graphics, images, HTML code
or other data and information provided by Doc-Talk. The text of each
gateway page shall include a Discount Number. Use of a Hyper Link to
the Doc-Talk Web Site shall in no way after the look, feel or
functionality of the Doc-Talk Web Site, nor will the Doc-Talk Web Site
be framed by any web page content of Waypages or arty third party.
2.2 Doc-Talk. Doc-Talk shall display on a web page of the Doc-Talk Web Site
--------
selected by Doc-Talk in its sole discretion a brief textual description
of Waypages's products and services and a Hyper Link to the Waypages
Web Site. The form and content of the text and Hyper Link shall be
mutually agreed to by the Parties and shall be established using the
graphics, images, HTML code or other data and information provided by
Waypages. Use of a Hyper Link to the Waypages Web Site shall in no way
alter the look, feel or functionality of the Waypages Web Site, nor
will the Waypages Web Site be framed by any web page content of Doc-
Talk or any third party.
3. Referral Fees.
-------------
3.1 Amounts. Doc-Talk will pay Waypages referral fees on certain sales of
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Page 2 of 7
<PAGE>
the Doc-Talk Service to third parties who utilize the Discount Number
in purchasing the Doc-Talk Service. Referral Fees shall be in the
amount of five percent (5%) of Net Sales of the Service. For the
purposes of this Agreement; Net Sales shall mean the the gross receipts
collected by Doc-Talk from sales of the Doc-Talk Service to customers
using the Discount Number, less any discounts, refunds, sales taxes if
applicable, and charge backs due to customer credit-card payments that
prove to be uncollectible.
3.2 Payments. Doc-Talk will pay to Waypages referral fees on a calendar
quarter basis within thirty (30) days following the end of the
respective calendar quarter. The amount of the referral fee payment
shall be based upon Net Sales for the respective calendar quarter only.
If the referral fees payable for any calendar quarter are less than
$100.00, Doc-Talk will hold those referral fees until the total amount
due hereunder at least $100.00 or this Agreement Is terminated. The
referral fee payment shall be made payable to Waypages Productions, and
sent to the address in Section 14 below.
4. Policies and Pricing. Customers who buy the Doc-Talk Service using the
--------------------
Discount Number shall be deemed customers of Doc-Talk. Accordingly, all Doc-
Talk rules, policies, and operating procedures concerning customer orders,
customer service, and sales of the Doc-Talk service will apply to those
customers. Doc-Talk shall be solely responsible for all aspects of
processing and fulfilling orders for the Doc-Talk Service. Doc-Talk, in its
sole discretion, shall determine the prices to be charged for Doc-Talk
Service sold under the Discount Number. Doc-Talk may change its policies and
operating procedures at any time.
5. Limited License.
---------------
5.1 Doc-Talk. Doc-Talk hereby grants to Waypages, and Waypages hereby
--------
accepts, a non-exclusive, non-transferable, worldwide, revocable right
to use and display solely in connection with establishing the Hyper
Link on the Waypages Web Site and promoting the Doc-Talk Service during
the term of this Agreement the graphic image and text described in
Section 2.1, the Doc-Talk Web Site URL, and any other trademarks or
logos of Doc-Talk provided to Waypages. All representations of the Doc-
Talk logos and trademarks that Waypages uses will be exact copies of
those provided by Doc-Talk.
5.2 Customer. Waypages hereby grants to Doc-Talk, and Doc-Talk hereby
--------
accepts, a non-exclusive, non-transferable, worldwide, revocable right
to use and display solely in connection with establishing the Hyper
Link on the Doc-Talk Web Site during the term of this Agreement the
graphic image and text described in Section 2.2,
Page 3 of 7
<PAGE>
the Waypages Web Site URL, and any other trademarks or logos of
Waypages provided to Doc-Talk, All representations of the Waypages
logos and trademarks that Doc-Talk uses will be exact copies of those
provided by Waypages.
6. Customer Web Site. Waypages is solely responsible for the development,
-----------------
operation, and maintenance of Waypages Web Site and for all materials that
appear on such site, including without limitation the technical operation of
its site and all related equipment, creating and posting the text arid Hyper
Link in accordance with Section 2.1 and linking those descriptions to the
Doc-Talk Web Site, ensuring that materials posted on the Waypages Web Site
do not violate or infringe upon the rights of any third party (including,
for example, copyrights, trademarks, privacy, or other personal or
proprietary rights) and ensuring that materials posted on the Waypages Web
site are not libelous or otherwise illegal.
7. Press Release. Doc-Talk and Waypages agree to cooperate with each other in a
-------------
joint press release following execution of this Agreement. Doc-Talk and
Waypages shall jointly determine the content, timing and necessity of all
press releases regarding this Agreement.
8. Term. The term of this Agreement shall commence on the Effective Date and
----
continue for a period of one (1) year unless sooner terminated as provided
herein. Either Party may terminate this Agreement at any time upon not less
than thirty (30) days prior written notice to the other Party. Upon the
termination of this Agreement for any reason, each Party will immediately
cease use of, and remove from its site, all links to the other Party's Web
Site and all trademarks, trade dress and logos, and all other materials
provided to the Party by or on behalf of the other Party in connection with
this Agreement. Waypages shall only be eligible to earn referral fees on Net
Sales occurring during the term of the Agreement. Upon termination of the
this Agreement for any reason, Sections 8, 9, 10, 11, 12, 13, 15, 17 and 18
shall survive.
9. Relationship of Parties. Doc-Talk and Waypages are independent contractors,
-----------------------
and nothing in this Agreement will create any partnership, joint venture,
agency, franchise, sales representative, or employment relationship between
the Parties. Waypages shall have no authority to make or accept any offers
or representations on behalf of Doc-Talk, and Waypages warrants that it will
not make any statement, whether on Waypages's Web Site or otherwise, that
reasonably would contradict anything in this Section.
10. Confidentiality.
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10.1 Non-disclosure. Each Party shall protect the other Party's
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Proprietary Information from unauthorized dissemination and use with
the same
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<PAGE>
degree of care that such Party uses to protect its own like
information, but in no event less than reasonable care, for a period of
three years from receipt of the disclosing Party's Proprietary
Information. Neither Party will use the other Party's Proprietary
Information for purposes other than those necessary to directly further
the purposes of this Agreement. Neither Party will disclose to third
parties the other Party's Proprietary Information without the prior
written consent of the other Party. Except as expressly provided in
this Agreement, no ownership or license rights are granted in any
Proprietary Information. Both parties acknowledge that the restrictions
contained in this Paragraph 14.1 are reasonable and necessary to
protect their legitimate interests and that violation of these
restrictions will cause irreparable damage to the other Party and each
Party agrees that the other Party shall be entitled to injunctive
relief against each violation.
10.2 Development Rights. The Parties' obligations of confidentiality under
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this Agreement shall not be construed to limit either Party's .right to
independently develop or acquire products without the use of the other
Party's Proprietary Information.
10.3 This Agreement. Neither Party shall disclose the terms and conditions
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of this Agreement to any third party without the other Party's express
written permission, provided that a Party may disclose the terms and
conditions of this Agreement to its financial and legal advisors who
are bound by obligations of confidentiality substantially similar to
those contained in this Agreement.
11. Indemnity.
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11.1 Customer. Waypages shall indemnify and hold harmless Doc-Talk and its
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successors and assigns from all third party claims, damages,
liabilities, costs and expenses (including, without limitation,
reasonable legal fees and expenses) relating to the development,
operation, maintenance, and content of the Waypages Web Site.
11.2 Doc-Talk. Doc-Talk shall indemnify and hold harmless Waypages and its
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successors and assigns from all third party claims, damages,
liabilities, costs and expenses (including, without limitation,
reasonable legal fees and expenses) relating to the development,
operation, maintenance, and content of the Doc-Talk Web Site.
11.3 Any indemnity under this Section 11 is conditioned upon prompt written
notice by the non-indemnifying Party to the indemnifying Party of any
claim, action or demand for which indemnity is claimed and such
reasonable cooperation by the non-indemnifying Party in the
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<PAGE>
defense as the indemnifying Party may request. The nonindemnifying
Party shall have the right, but not the obligation to control the
defense and/or settlement of any third party claim in which it is named
as a party. The non-indemnifying Party shall have the right to
participate in any defense of a third party claim against the
indemnifying Party with counsel of the non-indemnifying Party's choice
at its own expense.
12. Disclaimer. Doc-Talk provides the Doc-Talk Service on an "as-is" and
----------
"as-available" basis. Accordingly, Doc-Talk makes no express or implied
warranties or representations with respect to the Doc-Talk Service
(including, without limitation, warranties of fitness, merchantability,
non-infringement, or any implied warranties arising out of a course of
performance, dealing, or trade usage). In addition, we make no
representation that the operation of our site will be uninterrupted or error
free, and we will not be liable for the consequences of any interruptions or
errors.
13. LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY
-----------------------
FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES
(OR ANY LOSS OF REVENUE, PROFITS, OR DATA) ARISING IN CONNECTION WITH THIS
AGREEMENT, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
AND NEITHER PARTY'S AGGREGATE LIABILITY ARISING WITH RESPECT TO THIS
AGREEMENT SHALL EXCEED THE TOTAL REFERRAL FEES PAID OR PAYABLE TO WAYPAGES.
UNDER THIS AGREEMENT.
14. Notification. All notices and requests in connection with this Agreement
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shall be deemed given as of the day they are received either by messenger,
delivery service, or in the United States of America mails, postage prepaid,
certified or registered, return receipt requested, and addressed as follows:
To Doc-Talk: To Waypages:
Doc-Talk, L.L.C. L.L.C. Waypages Productions
8050 Southern Maryland Blvd. 132 Adams St. #10
Owings, MD 20736 Newton, MA 02458
Attention: Todd M. Lamka Attn: Chip Canty
Phone: (410) 286-2736 Phone: 617-964-9866
Fax:(410) 257-6381 FAX: 617-964-9989
15. Governing Law. This Agreement shall be governed by the laws of the State of
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Maryland, excluding its conflicts of laws rules.
16. Assignment. Neither Party may assign this Agreement or any of its rights or
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delegate any of its duties under this Agreement without the prior written
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<PAGE>
consent of the other; provided that either Party shall have the right to
assign its rights and obligations hereunder to its parent or to any
subsidiary or affiliate upon notice to the other Party, and Doc-Talk, L.L.C.
may assign its rights and obligations herein as part of a sale of assets to
DocTalk, Inc., a Delaware corporation. Any purported assignment or
delegation without such required consent shall be null an void.
17. Construction. If for any reason a court of competent jurisdiction finds any
------------
provision of this Agreement, or portion thereof, to be unenforceable, that
provision of the Agreement will be enforced to the maximum extent
permissible so as to effect the intent of the Parties, and the remainder of
this Agreement will continue in full force and effect. Failure by either
Party to enforce any provision of this Agreement will not be deemed a waiver
of future enforcement of that or any other provision. This Agreement has
been negotiated by the Parties and their respective counsel and will be
interpreted fairly in accordance with its terms and without any strict
construction in favor of or against either Party.
18. Entirety. This Agreement shall not be effective until signed by both
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Parties. This Agreement constitutes the entire agreement between the Parties
with respect to the Doc-Talk Service and all other subject matter hereof and
supersedes all prior and contemporaneous communications. This Agreement
shall not be modified except by written agreement dated subsequent to the
date of this Agreement and signed on behalf of Doc-Talk and Waypages by
their respective duly authorized representatives.
IN WITNESS WHEREOF, each of the Parties has duly executed and delivered this
Agreement as of the dates signed below.
Doc-Talk, L.L.C. Waypages Productions
By: /s/ Dale L. Hutchins By: /s/ William S. Canty III
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Name: Dale L. Hutchins Ph.D. Name: William S. (Chip) Canty III
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Title: COO Title: Principal
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Date: 11/10/99 Date: 11/03/99
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