<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000.
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________.
------------------------
COMMISSION FILE NUMBER 0-21421
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VCAMPUS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 54-1290319
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
1850 CENTENNIAL PARK DRIVE 20191
SUITE 200, (Zip Code)
RESTON, VIRGINIA
(Address of principal executive offices)
</TABLE>
703-893-7800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ____ No____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<S> <C>
Common Stock, $0.01 par value 8,075,575 shares
(Class) (Outstanding at May 12, 2000)
</TABLE>
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VCAMPUS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 2000
----------- -----------
<S> <C> <C>
Revenues:
Online tuition revenues................................... $ 881,248 $ 1,275,515
Virtual campus software revenues.......................... 42,166 37,596
Development and other revenues............................ 235,874 196,692
Product sales revenues.................................... 399,635 129,560
Other service revenues.................................... 81,716 38,730
Instructor-led training revenues.......................... 1,394,444 780,685
----------- -----------
Net revenues................................................ 3,035,083 2,458,778
Costs and expenses:
Cost of revenues.......................................... 1,468,439 914,979
Sales and marketing....................................... 1,042,513 1,077,970
Product development and operations........................ 504,882 798,201
General and administrative................................ 688,130 822,382
Depreciation and amortization............................. 770,431 707,160
Compensation expense in connection with the acquisition of
HTR.................................................... -- 654,294
----------- -----------
Total costs and expenses.................................... 4,474,395 4,974,986
----------- -----------
Loss from operations........................................ (1,439,312) (2,516,208)
Interest income (expense)................................... (127,767) 17,287
----------- -----------
Net loss.................................................... $(1,567,079) $(2,498,921)
=========== ===========
Dividends to preferred stockholders......................... (73,411) (73,592)
----------- -----------
Net loss attributable to common stockholders................ $(1,640,490) $(2,572,513)
=========== ===========
Net loss per share.......................................... $ (0.39) $ (0.36)
=========== ===========
Net loss per share -- assuming dilution..................... $ (0.39) $ (0.36)
=========== ===========
</TABLE>
See accompanying notes.
2
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VCAMPUS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 204,455 $ 2,521,609
Accounts receivable, less allowance of $142,000 and
$140,000 at December 31, 1999 and March 31, 2000,
respectively........................................... 1,349,332 1,565,918
Loans receivable from related parties..................... 124,182 126,182
Loans receivable -- current............................... 1,213,717 1,123,794
Prepaid expenses and other current assets................. 599,645 473,633
------------ ------------
Total current assets.............................. 3,491,331 5,811,136
Property and equipment, net................................. 1,464,483 1,235,511
Capitalized software costs and courseware development costs,
net....................................................... 1,543,520 1,389,846
Acquired online publishing rights, net...................... 169,624 135,457
Loans receivable -- less current portion.................... 150,226 150,226
Other assets................................................ 180,988 278,363
Other intangible assets, net................................ 1,913,259 1,788,553
Goodwill, net............................................... 1,754,682 1,705,139
------------ ------------
Total assets...................................... $ 10,668,113 $ 12,494,231
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 2,819,956 $ 1,556,273
Accrued expenses.......................................... 2,672,160 2,470,325
Notes payable -- current portion.......................... 1,877,509 --
Deferred revenues......................................... 1,276,283 2,455,579
Accrued dividends payable................................. -- 73,592
------------ ------------
Total current liabilities......................... 8,645,908 6,555,769
Stockholders' equity:
Series C convertible Preferred Stock, $0.01 par value per
share; aggregate liquidation preference of $7,910,172;
1,000,000 shares authorized; 623,339 and 623,339 shares
issued and outstanding at December 31, 1999 and March
31, 2000, respectively................................. 6,233 6,233
Series D convertible Preferred Stock, $0.01 par value per
share; aggregate liquidation preference of $8,855,303;
1,200,000 shares authorized; 1,073,370 and 1,073,370
shares issued and outstanding at December 31, 1999 and
March 31, 2000, respectively........................... 10,734 10,734
Series E convertible Preferred Stock, $0.01 par value per
share; aggregate liquidation preference of $466,017;
3,000,000 shares authorized; 214,928 and 105,202 shares
issued and outstanding at December 31, 1999 and March
31, 2000, respectively................................. 2,149 1,052
Common Stock, $0.01 par value per share; 36,000,000 shares
authorized; 5,684,110 and 7,641,001 shares issued and
outstanding at December 31, 1999 and March 31, 2000,
respectively........................................... 56,840 76,410
Additional paid-in capital................................ 58,578,078 65,048,375
Accumulated deficit....................................... (56,631,829) (59,204,342)
------------ ------------
Total stockholders' equity........................ 2,022,205 5,938,462
------------ ------------
Total liabilities and stockholders' equity........ $ 10,668,113 $ 12,494,231
============ ============
</TABLE>
See accompanying notes.
3
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VCAMPUS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 2000
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $(1,567,079) $(2,498,921)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation.............................................. 257,775 257,080
Amortization.............................................. 512,654 450,080
Increase (decrease) in allowance for doubtful accounts.... (85,955) (1,138)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable............. 493,932 (215,448)
Increase in prepaid expenses and other current
assets................................................ (180,815) (106,539)
Increase (decrease) in other assets.................... 11,751 (97,388)
Increase (decrease) in accounts payable and accrued
expenses.............................................. (325,247) (1,376,010)
Increase in deferred revenues.......................... 283,662 1,179,296
----------- -----------
Net cash used in operating activities....................... (599,322) (2,408,988)
INVESTING ACTIVITIES
Purchases of property and equipment......................... (132) (28,095)
Capitalized software and courseware development costs....... (111,995) (87,990)
Proceeds from sale of property and equipment................ 3,066 --
Proceeds from loans receivable.............................. 42,320 117,205
Advances under loans (interest) receivable.................. -- (27,282)
Advances under loans receivable from related parties........ -- (2,000)
----------- -----------
Net cash used in investing activities....................... (66,741) (28,162)
FINANCING ACTIVITIES
Proceeds from issuance of common stock...................... 1,040,717 4,289,938
Proceeds from Series E redeemable convertible Preferred
Stock..................................................... -- 1,000,000
Repayments of notes payable and short-term debt............. (585,701) (535,634)
----------- -----------
Net cash provided by financing activities................... 455,016 4,754,304
----------- -----------
Net increase (decrease) in cash and cash equivalents........ (211,047) 2,317,154
Cash and cash equivalents at the beginning of the period.... 336,194 204,455
----------- -----------
Cash and cash equivalents at the end of the period.......... $ 125,147 $ 2,521,609
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid............................................... $ 80,000 $ 22,000
=========== ===========
</TABLE>
See accompanying notes.
4
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VCAMPUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the interim periods are not necessarily indicative of the
results that may be expected for any future period, including the year ending
December 31, 2000. For further information, refer to the audited financial
statements and footnotes thereto included in the VCampus Corporation ("VCampus"
or the "Company") Annual Report on Form 10-K for the year ended December 31,
1999.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassification
Certain 1999 amounts have been reclassified to conform to the 2000
presentation.
NOTE C -- EQUITY TRANSACTIONS
In January 2000, the Company completed a private placement of its Common
Stock to iGate Capital Corporation (formerly Mastech Corporation). The Company
issued 1,136,253 shares of Common Stock at $3.62 per share, a 20% premium over
the average closing price for a 15-day trailing period, resulting in gross
proceeds to VCampus of approximately $4,000,000. The Company also issued
warrants to purchase 450,000 shares of its Common Stock at exercise prices
between $4.34 and $6.125 per share. The warrants expire in January 2001.
During the three months ended March 31, 2000, the Company issued 482,574
shares of its common stock to its convertible debenture holders, at an average
price of $3.30 per share, in exchange for the conversion of the remaining
balance of approximately $1,590,000 in principal and accrued interest under the
convertible debentures.
Under the terms of the Company's equity line agreement with Hambrecht &
Quist Guaranty Finance, LLC ("H&QGF"), the Company drew down $500,000 in
February 2000 and issued to H&QGF 74,460 shares of Series E Preferred Stock at
$6.715 per share. In March 2000, the Company drew down an additional $500,000
and issued 44,332 shares of Series E Preferred Stock at $11.28 per share.
5
<PAGE> 6
VCAMPUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE D -- NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted net
loss per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 2000
----------- -----------
<S> <C> <C>
Numerator:
Net loss................................................. $(1,567,079) $(2,498,921)
Accrued dividends to preferred stockholders.............. (73,411) (73,592)
----------- -----------
Net loss available to common stockholders................ $(1,640,490) $(2,572,513)
=========== ===========
Denominator:
Denominator for basic earnings per share --
weighted-average shares............................... 4,169,225 7,104,901
=========== ===========
Denominator for diluted earnings per share --
adjusted weighted-average shares...................... 4,169,225 7,104,901
=========== ===========
Basic net loss per share................................... $ (0.39) $ (0.36)
=========== ===========
Diluted net loss per share................................. $ (0.39) $ (0.36)
=========== ===========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Statements in this Form 10-Q that are not descriptions of historical facts
are forward-looking statements that are subject to risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a
number of factors, including those set forth herein and in the Company's other
SEC filings, and including, in particular, the availability of sufficient
capital to finance the Company's business plan on terms satisfactory to the
Company, risks relating to uncertainties relating to dependence on strategic
partners and third party relationships, management of rapid growth, dependence
on online distribution, the risks and the Company's payment obligations relating
to acquisitions, security risks, government regulations and competition.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31,
1999
Summary
For the three months ended March 31, 2000, the Company incurred a net loss
of $2,572,513 (or $0.36 per share after accrual of dividends for preferred
stockholders) as compared to a net loss of $1,640,490 (or $0.39 per share) for
the three months ended March 31, 1999. The increase in the net loss in first
quarter results as compared to the three months ended March 31, 1999 was due
primarily to amounts paid to former HTR executives pursuant to their employment
agreements and the payment of incentive compensation amounts to employees for
achieving certain performance milestones in the first quarter of 2000.
6
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VCAMPUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net Revenues
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
----------------------------------------
1999 2000
------------------ ------------------
<S> <C> <C> <C> <C>
Online tuition revenues...................... $ 881,248 29.0% $1,275,515 51.8%
Virtual campus software revenues............. 42,166 1.4 37,596 1.5
Online development and other revenues........ 235,874 7.8 196,692 8.0
Product sales revenues....................... 399,635 13.2 129,560 5.3
Other service revenues....................... 81,716 2.7 38,730 1.6
Instructor-led training revenues............. 1,394,444 45.9 780,685 31.8
---------- ----- ---------- -----
Total net revenues................. $3,035,083 100.0% $2,458,778 100.0%
========== ===== ========== =====
</TABLE>
Online tuition revenues increased 44.7% to $1,275,515 in the first quarter
of 2000, compared to $881,248 for the same period in 1999. The Company believes
that online tuition revenues will continue to increase in absolute dollars and
as a percentage of total revenue as the Company adds new customers and its
existing customer base matures.
Virtual campus software revenues remained relatively unchanged in the first
quarter of 2000, compared to the first quarter of 1999. The Company continues to
receive virtual campus licensing fees from existing customers who renew their
licenses.
Online development and other revenues decreased 16.6% to $196,692 in the
first quarter of 2000, compared to $235,874 for the first quarter of 1999. The
decrease was primarily due to certain contracting delays in the first quarter of
2000.
Product sales revenues decreased 67.6% to $129,560 in the first quarter of
2000, compared to $399,635 for the same period in 1999. The decrease was
primarily due to the sale of Knowledgeworks in the second quarter of 1999, and a
decrease in Teletutor product sales as a portion of the customer base migrates
to online delivery.
Other service revenues decreased 52.6% to $38,730 in the first quarter of
2000, compared to $81,716 for the same period in 1999. The decrease was
primarily due to the decline of CYBIS related revenues.
Instructor-led training revenues decreased 44.0% to $780,685 in the first
quarter of 2000, compared to $1,394,444 for the same period in 1999. The
decrease was due primarily to the closing of two instructor-led training
facilities located in Boston and Atlanta at the end of the third and fourth
quarter of 1999, respectively, as a result of management reorganization plans.
7
<PAGE> 8
VCAMPUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth selected financial data:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
-------------------------------------------
1999 2000
------------------- --------------------
<S> <C> <C> <C> <C>
Revenue................................... $ 3,035,083 100.0% $ 2,458,778 100.0%
Cost of revenues.......................... 1,468,439 48.4 914,979 37.2
Sales and marketing....................... 1,042,513 34.3 1,077,970 43.8
Product development and operations........ 504,882 16.6 798,201 32.5
General and administrative................ 688,130 22.7 822,382 33.4
Depreciation and amortization............. 770,431 25.4 707,160 28.8
Compensation expense in connection with
the acquisition of HTR............... -- -- 654,294 26.6
----------- ----- ----------- ------
Loss from operations.................... (1,439,312) (47.4) (2,516,208) (102.3)
Interest income (expense)............... (127,767) (4.2) 17,287 0.7
----------- ----- ----------- ------
Net loss................................ (1,567,079) (51.6) (2,498,921) (101.6)
Accrued dividends to preferred
stockholders............................ (73,411) (2.4) (73,592) (3.0)
----------- ----- ----------- ------
Net loss to common stockholders......... $(1,640,490) (54.1)% $(2,572,513) (104.6)%
=========== ===== =========== ======
</TABLE>
Cost of Revenues
Cost of revenues decreased 37.7% to $914,979 in the first quarter of 2000
as compared to $1,468,439 for the first quarter of 1999. The decrease was due
primarily to the closing of two low margin instructor-led training facilities at
the end of the second and fourth quarters of 1999, respectively, the sale of
Knowledgeworks in the second quarter of 1999, and the increase in higher margin
online revenues as a percentage of total revenues.
Operating Expenses
Sales and Marketing. Sales and marketing expenses increased 3.4% to
$1,077,970 in the first quarter of 2000 as compared to $1,042,513 for the first
quarter in 1999. The increase was due primarily to the payment of incentive
compensation amounts to employees for achieving performance milestones in the
first quarter of 2000.
Product Development. Product development expenses increased 58.1% to
$798,201 in the first quarter of 2000 as compared to $504,882 for the first
quarter of 1999. The increase was due primarily to the payment of incentive
compensation amounts to employees for achieving performance milestones in the
first quarter of 2000.
General and Administrative. General and administrative expenses increased
19.5% to $822,382 in the first quarter of 2000 as compared to $688,130 for the
first quarter of 1999. The increase was due primarily to the payment of
incentive compensation amounts to employees for achieving performance milestones
in the first quarter of 2000.
Compensation Expense in Connection with the Acquisition of
HTR. Compensation expense in connection with the acquisition of HTR consists of
$654,294 paid to former HTR executives in the first quarter of 2000 pursuant to
their employment agreements.
Depreciation and Amortization. Depreciation and amortization expense
decreased 8.2% to $707,160 in the first quarter of 2000 as compared to $770,431
for the first quarter of 1999. The decrease was due primarily to the sale of
Knowledgeworks in the second quarter of 1999.
Interest Income (Expense). Interest income in the first quarter of 2000 was
primarily derived from income earned on divestiture related notes receivable and
cash raised in the Company's January 2000 private
8
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VCAMPUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
placement, partially offset by interest expense on the Company's notes payable.
Interest expense for the three months ended March 31, 2000 was primarily
attributable to the Company's borrowings.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company had $2,521,609 in cash and cash
equivalents. Cash utilized in operating activities was $2,408,988 for the three
months ended March 31, 2000, funded by the $4,000,000 private placement of
common stock to iGate Capital, $1,000,000 raised through the H&QGF equity line
agreement, and customer prepayments. Net cash used in operating activities for
the same period in 1999 was $599,322. The increase in cash utilized in operating
activities is primarily due to amounts paid to former HTR executives in the
first quarter of 2000 pursuant to their employment agreements and the payment of
incentive compensation amounts to employees for achieving performance milestones
in the first quarter of 2000.
Net cash utilized in investing activities was $28,162 for the three months
ended March 31, 2000 and $66,741 for the three months ended March 31, 1999. The
use of cash for investing activities was primarily attributable to purchases of
equipment and software development costs that were capitalized.
Net cash provided by financing activities was $4,754,304 for the three
months ended March 31, 2000 and $455,016 for the three months ended March 31,
1999. During the three months ended March 31, 2000, the Company completed a
private placement of its Common Stock to iGate Capital Corporation. The Company
issued 1,136,253 shares of Common Stock at $3.62 per share, a 20% premium over
the average closing price for a 15-day trailing period, resulting in net
proceeds to the Company of approximately $4,000,000. The Company also issued
one-year warrants to purchase 450,000 shares of its Common Stock at exercise
prices between $4.34 and $6.125 per share. Under the terms of the H&QGF equity
line agreement, the Company drew down $500,000 in February 2000 and issued to
H&QGF 74,460 shares of Series E Preferred Stock at $6.715 per share. In March
2000, the Company drew down an additional $500,000 and issued to H&QGF 44,332
shares of Series E Preferred Stock at $11.28 per share. The Company also issued
482,574 shares of its common stock to its convertible debenture holders at an
average price of $3.30 per share, upon conversion of the remaining balance of
approximately $1,590,000 in principal and accrued interest. As of March 31, 2000
there was no principal balance remaining under the convertible debenture
agreement.
In March 2000, H&QGF agreed to increase the borrowing capacity under its
equity line to VCampus from $3 million to $5 million and to extend the term
through July 31, 2000 in exchange for warrants to purchase 43,632 shares of
Series E Preferred Stock. This increase is subject to NASD approval of the
additional warrants, if required.
The Company expects negative cash flow from operations to continue for at
least the next six months until the online revenue stream matures. The Company
recognizes that it will need to raise additional funding to meet its working
capital requirements and fund anticipated ongoing operating losses.
In April 2000, the Company raised $2,500,000 through a private placement of
its Common Stock. The Company issued 357,142 shares of Common Stock to US West
Internet Ventures, Inc. at $7.00 per share and five-year warrants to purchase
714,285 shares of the Company's Common Stock at $7.00 per share.
If the Company does not address its funding needs, it will be materially
adversely affected. The Company's future capital requirements will depend on
many factors, including, but not limited to, acceptance of and demand for its
products and services, the types of arrangements that the Company may enter into
with customers and resellers, and the extent to which the Company invests in new
technology and research and development projects.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable
9
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PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(a) No modifications.
(b) No limitations or qualifications.
(c) From January 1, 2000 to March 31, 2000, the Company has issued the
following unregistered securities:
1. 1,136,253 shares of Common Stock at $3.62 per share and one-year
warrants to purchase 450,000 shares of Common Stock at exercise prices
ranging from $4.34 to $6.125 per share to one accredited investor.
2. 24,648 shares of Common Stock upon the exercise of warrants.
3. Five-year warrants to purchase 113,625 shares of Common Stock at
$3.62 per share to a provider of investment banking services.
The sales of the above securities were deemed to be exempt from
registration under the Act in reliance upon section 4(2) of the Securities Act
of 1933, as amended (the "Act"), or Regulation D promulgated thereunder as
transactions by an issuer not involving a public offering. Recipients of the
securities in each such transaction represented their intentions to acquire such
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the
instruments issued in such transactions. All recipients had adequate access to
information about the Company.
ITEM 6. EXHIBITS
(a) Exhibits
10.54* Application Hosting Agreement dated April 20, 2000 between the
Company and U S West Interprise America, Inc.
27.1 Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only and not filed.
- ---------------
* Confidential treatment requested
(b) The Company filed a current report on Form 8-K on January 13, 2000 to
report the $4 million strategic investment from iGate Capital
Corporation (then Mastech Corporation).
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by each of the
undersigned thereunto duly authorized.
VCAMPUS CORPORATION
By: /s/ NARASIMHAN P. KANNAN
------------------------------------
Narasimhan P. Kannan
Chief Executive Officer
By: /s/ MICHAEL A. SCHWIEN
------------------------------------
Michael A. Schwien
Vice President and Chief Financial
Officer
(Principal Financial and Accounting
Officer)
Date: May 15, 2000
11
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EXHIBIT INDEX
<TABLE>
<S> <C>
10.54 Application Hosting Agreement dated April 20, 2000 between
the Company and U S West Interprise America, Inc
27.1 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission for information
only and not filed.
</TABLE>
12
<PAGE> 1
Agreement No. 200052454
APPLICATION HOSTING AGREEMENT
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
1. Scope................................................................................................................. 2
2. Term.................................................................................................................. 2
3. Rights of U S WEST and License Grant.................................................................................. 2
4. Records and Audits:................................................................................................... 3
5. Upgrades.............................................................................................................. 4
6. Maintenance and Support Obligations................................................................................... 4
7. Marketing Rights and Obligations...................................................................................... 4
8. Work Product.......................................................................................................... 4
9. Confidential Information and Property................................................................................. 5
10. Warranty.............................................................................................................. 5
11. Indemnification....................................................................................................... 6
12. Limitation of Liability............................................................................................... 7
13. Escrow................................................................................................................ 7
14. Orders, Fulfillment and Delivery:..................................................................................... 7
15. Payments and Reports.................................................................................................. 8
16. Termination for Convenience; Cause.................................................................................... 8
17. Insurance............................................................................................................. 8
18. Independent Contractor................................................................................................ 9
19. Assignment............................................................................................................ 9
20. Notices............................................................................................................... 9
21. Entire Agreement...................................................................................................... 10
22. Waiver................................................................................................................ 10
23. Several Liability..................................................................................................... 10
24. Severability.......................................................................................................... 10
25. Dispute Resolution.................................................................................................... 11
26. Force Majeure......................................................................................................... 11
27. Compliance with Laws.................................................................................................. 11
28. Advertising; Publicity................................................................................................ 11
29. Nonexclusive Agreement................................................................................................ 11
30. M/WBE Subcontracting Plan............................................................................................. 12
SCHEDULE A
1. Product Description................................................................................................... 13
2. Access to Premises.................................................................................................... 14
3. Required Components................................................................................................... 14
4. Pricing............................................................................................................... 15
5. Upgrades and Servicing................................................................................................ 16
6. Supplier's Responsibilities........................................................................................... 16
7. U S WEST Responsibilities............................................................................................. 17
8. Territory............................................................................................................. 18
SCHEDULE B
Tier I Courses........................................................................................................ 28
</TABLE>
- 1 -
Confidential - Disclose only to those employees with a need to know.
Portions of this exhibit marked by [*] have been omitted pursuant to a request
for confidential treatment.
<PAGE> 2
Agreement No. 200052454
APPLICATION HOSTING AGREEMENT
This Application Hosting Agreement ("Agreement") is entered
into as of April 20, 2000, ("Effective Date"), by and between VCAMPUS
CORPORATION, a Delaware corporation, having its principal place of business at
1850 Centennial Park Drive, Suite 200, Reston, Virginia 20191 ("Supplier") and
U S WEST INTERPRISE AMERICA, INC. ("U S WEST"), a Colorado corporation, having
its principal place of business at 1801 California Street, Denver, Colorado
80202.
1. SCOPE
Supplier shall provide to U S WEST (a) the software described in the
Schedule(s) attached to and made a part of this Agreement, including
but not limited to any mainframe or hardware aspects of the software
and all other customization and enhancements to the software which
have been made by Supplier, and all systems, elements, materials, and
documentation in any form or medium (the "Software"), and (b) the
services described in the Schedules ("Services"), U S WEST may use
the Software and Services for its internal business purposes and/or
in conjunction with services offered by U S WEST to current and
potential third-party individual, business or government entity
customers of U S WEST ("End Users"), in accordance with the terms and
conditions of this Agreement ("Reseller Services"). U S WEST's
Affiliates may purchase under the terms and conditions of this
Agreement. "Affiliate" means any entity which directly or indirectly
controls, or is controlled by, or is under common control with, U S
WEST. "Control" means (i) for corporate entities, direct or indirect
ownership of twenty percent (20%) or more of the stock or shares
entitled to vote for the election of the board of directors or other
governing body of the entity; and (ii) for non-corporate entities
direct or indirect ownership of twenty percent (20%) or greater of
the equity interest.
2. TERM
Unless otherwise terminated or canceled as provided in this
Agreement, the term of this Agreement shall commence on the Effective
Date of this Agreement and shall continue until U S WEST discontinues
the use of the licensed Software, subject to the provisions of
Section 16.
3. RIGHTS OF U S WEST AND LICENSE GRANT
3.1 LICENSE GRANT. Supplier hereby grants to U S WEST:
3.1.1 a nonexclusive, royalty free, and nontransferable
(except as provided herein), license during the term
of this Agreement, subject to the provisions of
Section 16, to demonstrate software associated with
the Reseller Services to U S WEST internal users and
to End Users in order to market Reseller Services; and
3.1.2 a nonexclusive, royalty free and nontransferable
(except as provided herein), license during the term
of this Agreement, subject to the provisions of
Section 16, to use for U S WEST's internal business
purposes and in order to provide Reseller Services to
End Users, and to copy (for archival purposes), the
Software. Title to the Software shall remain with
Supplier. Supplier will provide source code to U S
WEST in the event Supplier ceases to do business, or
provides written notice to U S WEST that it has
discontinued or plans to discontinue all maintenance
and support of the Software, or Supplier is unable to
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Agreement No. 200052454
perform its obligations hereunder due to an assignment
for the benefit of creditors or appointment of a
receiver over Supplier's assets.
3.2 RESTRICTIONS ON USE. U S WEST agrees: (i) not to create or
attempt to create by reverse engineering, disassembly,
decompilation or otherwise, the source code, internal
structure, or organization of the Software, or any part
thereof, from any object code or information that may be made
available to it, or knowingly aid, abet or permit others to do
so; (ii) not to remove any Software identification or notices
of any proprietary or copyright restrictions from the Software
or any support material; (iii) not to develop methods to
enable unauthorized parties to use the Software; and (iv) not
to copy, distribute, license or otherwise transfer the
Software except as provided herein.
3.3 DOCUMENTATION. Supplier will provide to U S WEST a reasonable
quantity of Supplier standard user documentation and marketing
literature for the Software and/or Services and complete sets
of installation, operation and maintenance manuals for the
Software and/or Services ("Documentation"). Supplier hereby
grants to U S WEST a nonexclusive, nontransferable,
royalty-free right and license during the term of this
Agreement to use, reproduce in whole or in part and to
disseminate Documentation in conjunction with the sale, lease,
training, installation and maintenance of the Reseller
Services. Supplier will use commercially reasonable efforts to
provide camera-ready masters upon U S WEST's request. U S WEST
shall not remove Supplier's trademarks on the Software and/or
Services or Documentation. U S WEST may affix a label on the
Documentation and literature depicting U S WEST's logo, name
and address and identifying U S WEST as the service agent for
the Reseller Services, provided that U S WEST does not obscure
or obliterate Supplier's trademark.
3.4 So long as U S WEST abides by Supplier's quality control and
graphics standards, which Supplier may change from time to
time, Supplier hereby grants U S WEST the right and license to
use and display "VCampus" and other trademarks, service marks,
logos, and trade names adopted and used by Supplier, to
identify Software and other materials and Services belonging
to Supplier ("Supplier Marks"), for the purposes of
identifying the Reseller Services in connection with the
license granted under this Agreement. U S WEST has no right to
register and will not register any Supplier Marks belonging to
Supplier. U S WEST shall not in any way contest the right of
Supplier to register or to use Supplier Marks.
4. RECORDS AND AUDITS:
4.1 Supplier shall maintain complete and accurate records of all
charges incurred by U S WEST under this Agreement, in
accordance with generally accepted accounting principles, for
a period of twenty-four (24) months from the date of
termination, cancellation or expiration of this Agreement. U S
WEST may inspect (not more frequently than once every six
months) and keep copies of Supplier's records upon reasonable
prior written notice.
4.2 If U S WEST requests inspection and copies of Supplier's
records due to a billing dispute, and the records reveal a
discrepancy greater than 10%, the party that is in error will
pay for the costs incurred.
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Agreement No. 200052454
5. UPGRADES
This Agreement shall apply to and govern the use of any and all
upgrades, versions, or releases of the Software ("Upgrades") provided
under this Agreement. "Upgrade" means maintenance releases,
improvements and enhancements to the Software which are provided by
Supplier. Upgrades do not include additional software modules, which
may be developed subsequent to this Agreement, or new technologies
that may be identified as separate components or for which Supplier
charges separately. To the extent that Supplier is unable to remotely
upgrade the software as defined in Section 5 of Schedule A, U S WEST
agrees that upon U S WEST's installation and use of any such Upgrades
of the Software, it will voluntarily terminate its use of the earlier
release or version of the Software and will not transfer such earlier
release or version to any other person or entity.
6. MAINTENANCE AND SUPPORT OBLIGATIONS
During the term of this Agreement, Supplier shall provide U S WEST
with maintenance and support as set forth in Schedule A, section 6.
7. MARKETING RIGHTS AND OBLIGATIONS
7.1 U S WEST shall make no representations and warranties on
behalf of Supplier and shall not grant any rights to End Users
beyond those contemplated by this Agreement. Supplier shall
make no representations about or on behalf of U S WEST,
without U S WEST's prior written consent.
7.2 U S WEST shall remain entirely free to determine its End User
prices and fees for the Reseller Services which it resells
under this Agreement.
7.3 U S WEST shall have the right to purchase and market
comparable Software and Services from other suppliers.
8. WORK PRODUCT
8.1 All materials (including but not limited to prototypes,
drawings and documentation) and any ideas, designs,
techniques, inventions, discoveries, improvements,
information, creations, software, and any other items
discovered, prepared or developed by or for Supplier in the
course of or resulting from performance under this Agreement
(the "Work Product") shall be promptly disclosed and furnished
to U S WEST. All right, title and interest in the Work Product
shall vest in U S WEST and shall be deemed to be a work made
for hire. To the extent it may not be considered a work made
for hire, Supplier assigns to U S WEST all right, title and
interest in the Work Product, including all copyrights,
patents and applications therefor.
8.2 Notwithstanding the foregoing, Supplier shall retain ownership
of its previously developed items (including but not limited
to the Software, and all enhancements and modifications
thereto). If the Work Product includes previously developed
items, Supplier hereby grants to U S WEST an unrestricted,
royalty-free, perpetual, irrevocable license to make, have
made, use, market, import, distribute, copy, modify, prepare
derivative works, perform, display, disclose and sublicense
such Work Product.
8.3 Supplier represents and warrants that it has all necessary
agreements with its employees, contractors and others in order
to convey the ownership and license rights stated herein. Upon
request, and without charge, Supplier agrees to reasonably
assist U S WEST (including executing assignments and other
papers) as may be required to protect, convey and enforce the
rights of U S WEST in the Work Product.
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9. CONFIDENTIAL INFORMATION AND PROPERTY
9.1 Confidential Information and Property ("Confidential
Information") shall mean any and all business, technical or
third party information (including but not limited to,
marketing plans, financial data, specifications, drawings,
sketches, models, samples, computer programs or documentation)
marked as confidential or proprietary and provided, disclosed
or made accessible to the other under this Agreement. The
parties shall restrict access to the Confidential Information
to employees or agents who have a "need to know." The parties,
employees or agents, shall not disclose the Confidential
Information to any third party and shall treat the information
in the same way it treats its own Confidential Information of
like kind. This provision will not apply to information which
is in the public domain, is previously known to the receiving
party without obligation of confidentiality, is independently
developed by the receiving party or is obtained by the
receiving party from a third party that does not have an
obligation to keep the information confidential. The parties
will not make any copies of the Confidential Information and
Supplier will not remove any property from U S WEST's premises
without prior approval.
9.2 Supplier agrees that U S WEST is the exclusive owner of all
information regarding or provided by its End Users and such
information shall be treated as Confidential Information.
Supplier warrants that it shall not disclose or use such End
User-specific information for any purpose other than for
performing its obligations under this agreement.
10. WARRANTY
10.1 Supplier warrants that it has all right, title and interest,
free of all liens and encumbrances, in the Software and has
the authority to grant the licenses granted hereunder.
Supplier warrants that the Software shall operate in
substantial conformance with the specifications and
requirements ("Specifications") and/or Documentation contained
in or attached to this Agreement and/or any Schedule(s) and
shall be free from material defects. Supplier shall use
commercially reasonable efforts to promptly correct any errors
and non-conformities in the Software.
10.2 Supplier represents and warrants that the Software provided
under this Agreement is Year 2000 Compliant and will lose no
functionality on or after January 1, 2000 or with respect to
the introduction of records containing dates falling on or
after January 1, 2000. "Year 2000 Compliant" means that the
Software will function or be usable properly in accordance
with the requirements of this Agreement and will record,
store, process, calculate and present calendar dates falling
on and after January 1, 2000, and will calculate any
information dependent on or relating to such dates in the same
manner and functionality as on or before December 31, 1999.
Upon reasonable request by U S WEST, Supplier shall provide a
test script to validate that the Software is Year 2000
Compliant. Supplier shall modify or replace any Software that
is not Year 2000 Compliant. If Supplier is unable to or fails
to modify or replace Software that is not Year 2000 Compliant,
U S WEST shall have the right to make such modification or
replacement and charge Supplier for any costs incurred, or at
U S WEST's option, Supplier shall refund to U S WEST all
amounts paid by U S WEST. Supplier's warranties and
representations contained in this paragraph are not subject to
or limited by any specific warranty period or limitation of
liability contained in this Agreement.
10.3 If Supplier is not the manufacturer or licensor of Software,
Supplier shall obtain the same warranty as specified herein
from the manufacturer or licensor and the complete
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Agreement No. 200052454
warranty shall pass to U S WEST. Supplier will assist U S WEST
in making claims under such warranty. If Supplier is a
distributor of Software, Supplier shall process such claims.
Warranties will not be affected by removal, relocation or
resale of Software and warranties shall survive inspection,
acceptance and payment. Warranties shall run to U S WEST, its
agents, successors in interest, and assigns.
10.4 Supplier also warrants that any Services provided under this
Agreement shall be performed in a professional manner,
consistent with industry standards.
10.5 Supplier acknowledges that U S WEST will extend to End Users
warranties similar to those contained herein and Supplier
agrees to cooperate with U S WEST to address any warranty
issues and claims raised by End Users.
11. INDEMNIFICATION
11.1 Supplier shall indemnify, hold harmless and defend, at
Supplier's expense, U S WEST (including its officers,
directors, employees and agents) and its Affiliates against
any loss, cost, expense or liability (including but not
limited to reasonable attorney fees and awarded damages)
arising out of a claim that the Software and Services, or
their use, infringe a patent, copyright, trademark, trade
secret or other intellectual property right. Supplier's
obligation hereunder shall not extend to any combination of
the Software and Services with any other product, software,
system or method, unless (1) the other software, system or
method is: (a) provided by Supplier or Supplier's subsidiaries
or Affiliates; (b) specified by Supplier to work with the
Software and Services; or (c) reasonably required, in order to
use the Software and Services in their intended manner, and
the infringement could not have been avoided by substituting
another reasonably available product, system or method capable
of performing the same function; or (2) it would be reasonably
expected to use the Software and Services in combination with
such product, system or method. U S WEST will notify Supplier
within a reasonable time after receiving notice of a claim.
Provided that Supplier promptly and reasonably investigates
and defends any such claim, Supplier shall have control over
the defense and settlement thereof. U S WEST shall furnish, at
Supplier's reasonable request and expense, information and
assistance necessary for such defense. In the event of such a
claim, and if (1) the Software and Services are held to be
infringing, (2) Supplier reasonably believes the Software and
Services will be held to infringe, or (3) where U S WEST's use
is restricted as a result of a claim of infringement, Supplier
shall, at its expense and sole discretion, either obtain the
right for U S WEST to continue using the Software and Services
or replace or modify it to be non-infringing and of equivalent
functionality. If neither of the alternatives is reasonably
possible, Supplier shall refund a pro-rata portion of the
amounts paid hereunder (based on the expected life of the
Software and Services) and reimburse U S WEST for all
reasonable expenses for removal and replacement of the
Software.
11.2 Each party shall indemnify and hold harmless the other,
(including its officers, directors, employees and agents), its
Affiliates and End Users, from and against all losses, costs,
expenses or liabilities (including reasonable costs and
attorneys fees) arising from the other's (including its
Affiliates, agents, employees and others under its direction
or control) negligent acts or omissions or willful misconduct.
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Agreement No. 200052454
12. LIMITATION OF LIABILITY
Except for breach of the Article entitled "Confidentiality" and the
obligations in the Article entitled "Indemnification," neither party
is liable to the other for consequential, incidental, indirect,
punitive or special damages, including commercial loss and lost
profits, however caused and regardless of legal theory or
foreseeability, directly or indirectly arising under this Agreement.
In no event shall Supplier be liable under this Agreement for an
amount in excess of the total fees it has received under this
Agreement for the 12-month period preceding any such liability or
$250,000.00 (whichever is greater), except for liabilities arising as
a result of a breach of the Article entitled "Confidentiality" and
the obligations in the Article entitled "Indemnification." In no
event shall U S WEST be liable under this Agreement for an amount in
excess of the total fees it has paid under this Agreement for the
12-month period preceding any such liability or $250,000.00
(whichever is greater), except for liabilities arising as a result of
a breach of the Article entitled "Confidentiality," the obligations
in the Article entitled "Indemnification," or amounts owed to
Supplier hereunder.
13. ESCROW
Supplier agrees that the entire source code for Software, together
with all related listings and Documentation, as now exists or
hereafter becomes available including, without limitation, the then
current version(s) of Software being used by U S WEST ("Escrow
Materials") will, at U S WEST's option, be deposited, maintained and
updated at U S WEST's expense in escrow pursuant to an Escrow
Agreement which may be executed between the parties. Unless otherwise
agreed, Supplier shall execute an Escrow Agreement, so long as the
terms thereof are commercially reasonable and reasonably satisfactory
to Supplier, and deposit the Escrow Materials within thirty (30) days
of U S WEST's exercise of its option.
14. ORDERS, FULFILLMENT AND DELIVERY:
1.1 U S WEST will issue a written purchase order ("Order") to
Supplier for delivery of VCampus(TM) Software for an End User.
Supplier will acknowledge receipt in writing, by facsimile
transmission or electronic media, and accept and provide a
promise completion date or reject the Order within one (1)
business day of receipt. If the Order is not rejected in
writing, it will be deemed accepted. Supplier will honor the
dates, amounts and other terms of an accepted Order. Supplier
will require thirty (30) days for fulfillment and delivery of
its VCampus(TM) product suite to an End User after Supplier's
receipt of an Order. When provisions of any Order conflict
with or supplement this Agreement, provisions of the Order
which are not pre-printed or otherwise in standard form shall
control; otherwise, this Agreement shall control. U S WEST may
modify or terminate Order(s) at any time prior to Supplier's
acceptance of or U S WEST's acceptance of a modified Order,
without liability. U S WEST may delay fulfillment of an Order
upon written notice at least ten (10) days prior to
commencement of fulfillment without liability, provided that
fulfillment is not delayed more than ninety (90) days. U S
WEST may rescind an Order upon written notice to Supplier at
least fifteen (15) days prior to the scheduled fulfillment
commencement date without liability.
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Agreement No. 200052454
15. PAYMENTS AND REPORTS
15.1 Supplier shall issue an invoice to U S WEST upon fulfillment
of an Order.
15.2 U S WEST shall make payments on undisputed invoices to
Supplier 45 days after receipt of invoice.
15.3 All claims for money due, or to become due, from U S WEST
shall be subject to deduction or setoff by U S WEST by reason
of any counterclaim arising out of any transaction.
15.4 Should U S WEST overpay an invoice, Supplier will
automatically, return those overpayments to U S WEST within 15
days of receipt of such overpayment.
16. TERMINATION FOR CONVENIENCE; CAUSE
16.1 Either party may terminate this Agreement, in whole or in
part, for its convenience upon six (6) months' prior written
notice. Supplier shall be entitled to payment for amounts
accrued or which will accrue in accordance with Schedule A as
of the date of termination or cancellation of this Agreement.
U S WEST shall have no other liability arising out of
termination or cancellation of this Agreement under this
Section.
16.2 Either party may cancel this Agreement immediately, in whole
or in part, for default, breach, insolvency, bankruptcy,
inability to pay debts, or similar financial circumstances by
the other. If the default or breach is reasonably capable of
cure, the non-defaulting party shall give the other party
written notice and reasonable opportunity to cure. U S WEST
shall be entitled to receive all Work Product in progress or
completed as of the date of termination or cancellation. U S
WEST shall have no other liability because of its termination
or cancellation of this Agreement for cause.
16.3 The provisions of Articles on Confidential Information and
Property, Indemnification, Compliance with Laws, Dispute
Resolution, Escrow, Warranty and Year 2000 Compliance shall
survive the termination or cancellation of this Agreement or
any Schedules.
16.4 U S WEST, in its sole discretion may continue to provide
Reseller Services to End Users with which U S WEST has entered
into an agreement prior to termination of this Agreement and
Supplier shall continue its obligations regarding Services
provided to U S WEST for End Users, for up to twelve (12)
months after the termination of this Agreement. U S WEST may
retain and use copies of the Software, documentation and other
related materials necessary for any such support services
during such twelve- (12) month period. U S WEST shall be
responsible for advising its End Users of the upcoming
termination of Reseller Services.
17. INSURANCE
17.1 Supplier, its subcontractors and agents shall at all times
during the term of this Agreement, carry and maintain at a
minimum, the insurance coverage listed below with insurers
having a "Best's" rating of at least B+XIII. Supplier shall
not commence any work under this Agreement until all insurance
requirements are fulfilled.
17.2 Workers' Compensation insurance with statutory limits as
required in the state(s) of operation; and providing coverage
for any Supplier employee entering onto U S WEST premises,
even if not required by statute. Employers' Liability or "Stop
Gap" insurance with limits of not less than $100,000 each
accident.
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17.3 Commercial General Liability Insurance covering claims for
bodily injury, death, personal injury or property damage
occurring or arising out of the performance of this Agreement,
including coverage for independent contractor's protection
(required if any work will be subcontracted),
premises-operations, products/completed operations and
contractual liability with respect to the liability assumed by
Supplier hereunder. The limits of insurance shall not be less
than:
<TABLE>
<S> <C>
Each Occurrence $ 1,000,000.00
General Aggregate Limit $ 2,000,000.00
Products-Completed Operations Limit $ 1,000,000.00
Personal and Advertising Injury Limit $ 1,000,000.00
</TABLE>
17.4 Comprehensive Automobile Liability Insurance covering
ownership, operation and maintenance of all owned, non-owned
and hired motor vehicles used in connection with the
performance of this Agreement, with limits of at least
$1,000,000 per occurrence for bodily injury and property
damage.
17.5 The insurance limits required herein may be obtained through
any combination of primary and excess or umbrella liability
insurance. Supplier shall forward to U S WEST certificates of
such insurance promptly following execution of this Agreement
and promptly following any renewal of such insurance during
the term of this Agreement. The certificate(s) shall provide
that (1) U S WEST (including all participating Affiliates) be
named as an additional insured(s) as their interest may appear
with respect to this Agreement; (2) thirty (30) days prior
written notice of cancellation, material change or exclusions
in the policy shall be given to U S WEST; (3) coverage is
primary and not excess or contributory with any other valid
and collectible insurance purchased or maintained by U S WEST.
18. INDEPENDENT CONTRACTOR
The parties certify that each is engaged in an independent business
and will perform its obligations under this Agreement as an
independent contractor and not as the agent or employee of the other;
that it has no authority to act for or bind the other; that the
parties perform work for other customers; that any persons provided
by a party shall be solely the employees or agents of that party
under its sole and exclusive direction and control. Each party is
solely responsible for the hours of work, methods of performance and
payment of its employees and agents. Each party is solely responsible
for providing worker's compensation, unemployment, disability
insurance and social security withholding for its employees and
agents, and shall comply with all other federal, state and local
laws, rules and regulations. Each party is responsible for and shall
pay all assessable federal and state income tax on amounts paid under
this Agreement.
19. ASSIGNMENT
Supplier shall not assign this Agreement, in whole or in part,
without the prior written consent of U S WEST; and any attempted
assignment by Supplier shall be void.
20. NOTICES
Notices required under this Agreement shall be sent to the addresses
of the parties stated below. Notice will be deemed given (1) as of
the day they are deposited with an overnight courier, charges
prepaid, return receipt requested, with a confirming telefax; or (2)
as of the
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Agreement No. 200052454
day of receipt if they are deposited in first class U.S. Mail,
charges prepaid, return receipt requested; or (3) as of the day of
receipt if they are hand delivered.
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<CAPTION>
For Supplier: For U S WEST:
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<S> <C>
Vcampus Corporation U S WEST Interprise
Attention: Nat Kannan Attention: James Johnson, Prod. Manager
1850 Centennial Park Drive, #200 500 Stinson Boulevard, 3N
Reston, VA 20191 Minneapolis, MN 55413
Phone: 703-893-7800 Phone: 612-664-4199
Fax: 703-893-1905 Fax: 61-664-4772
E-Mail: [email protected] E-Mail: [email protected]
------------------ ------------------
With a copy to: With a copy to:
Wyrick Robbins Yates and Ponton, LLP U S WEST Law Department
4101 Lake Boone Trail, Suite 300 Commercial and IP Group
Raleigh, NC 27607 1801 California Street, #5100
Denver, CO 80202
Vcampus Corporation
Attention: Mike Chwien, CFO Business Resources, Inc.
1850 Centennial Park Drive, #200 Network Procurement-Reseller
Reston, VA 20191 Attn: Deb Egan, Grid AZN3.30
700 West Mineral Avenue
Littleton, CO 80127
</TABLE>
21. ENTIRE AGREEMENT
This Agreement, together with all incorporated Schedules, exhibits,
Order(s), any other attachments, and amendments, shall constitute the
entire Agreement between the parties. Any pre-printed terms and
conditions on Order(s), acknowledgment forms, or other forms or
documents shall not apply and are objected to. This Agreement
supersedes all prior oral and written communications, agreements and
understandings of the parties with respect to the subject of this
Agreement.
22. WAIVER
No waiver of any provision of this Agreement or any right or
obligation of a party will be effective unless in writing, signed by
the parties. The failure of either party to enforce a right shall not
constitute a waiver.
23. SEVERAL LIABILITY
If more than one (1) party is referred to as U S WEST herein, then
their obligations and liabilities shall be several, not joint.
24. SEVERABILITY
Any term of this Agreement, which is held to be invalid, illegal,
unenforceable or void, will in no way affect any other provision.
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25. DISPUTE RESOLUTION
25.1 Any claim, controversy or dispute between the parties, their
agents, employees, officers, directors, or affiliates
("Dispute") which cannot be settled through negotiation or
mediation, shall be resolved by arbitration conducted by a
single arbitrator engaged in the practice of law, under the
then current rules of the American Arbitration Association
("AAA"). The Federal Arbitration Act, 9 U.S.C. Secs. 1-16
shall govern the arbitrability of all Disputes. The arbitrator
shall not have the authority to award punitive damages. All
expedited procedures prescribed by the AAA rules shall apply.
The arbitrator's decision and award shall be final and binding
and judgment may be entered in any court having jurisdiction
thereof. Each party shall bear its own costs and attorney's
fees, and shall share equally in the fees and expenses of the
arbitrator. Either party may request, from the arbitrator,
injunctive relief to maintain the status quo until such time
as the arbitration award is rendered or the Dispute is
otherwise resolved. If any party files a judicial or
administrative action asserting claims subject to the
arbitration, as prescribed herein, and the other party
successfully stays such action and/or compels arbitration of
said claims, the party filing said action shall pay the other
party's costs and expenses incurred in seeking such stay
and/or compelling arbitration including reasonable attorney's
fees. Supplier agrees that in the event of any Dispute between
the parties, it will not terminate the License unless
termination is otherwise permitted under Section 16 of this
Agreement.
25.2 The laws of the State of Colorado shall govern the
construction and interpretation of this Agreement, without
regard to its conflict of laws provisions and the arbitration
shall occur in Virginia if the arbitration is initiated by U S
WEST or in Colorado if the arbitration is initiated by
Supplier.
26. FORCE MAJEURE
Neither party shall be liable to the other party for any delay,
error, failure in performance or interruption of performance
resulting from causes beyond their control. The injured party may
elect to terminate the Agreement and/or any Order upon written
notice.
27. COMPLIANCE WITH LAWS
Supplier shall, at its expense, obtain all permits and licenses, pay
all fees, and comply with all federal, state and local laws,
ordinances, rules, regulations and orders applicable to Supplier's
performance under this Agreement, including the Telecommunications
Act of 1996.
28. ADVERTISING; PUBLICITY
Neither party shall use the other party's names, trademarks, service
marks or logos in any advertising, promotional efforts or any
publicity of any kind without the prior written permission of such
other party.
29. NONEXCLUSIVE AGREEMENT
This Agreement does not grant to Supplier any exclusive privileges or
rights and U S WEST may contract with other suppliers for the
procurement of comparable Software and Services. U S WEST makes no
guarantee or commitment for any minimum or maximum amount of Software
and Services hereunder.
-11-
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<PAGE> 12
Agreement No. 200052454
30. M/WBE SUBCONTRACTING PLAN
Support of Minority and Women Owned Business Enterprises ("M/WBE") is
part of U S WEST's ongoing business strategy. If required by U S
WEST, Supplier agrees and commits to exercise its best efforts to
subcontract in accordance with its subcontracting plan as approved by
U S WEST, and such subcontracting plan shall be incorporated herein
as an attachment to the Agreement entitled "M/WBE Subcontracting
Plan."
The parties, intending to be legally bound, have caused this Agreement to be
executed by their authorized representatives on the dates set forth below.
<TABLE>
<CAPTION>
U S WEST BUSINESS RESOURCES INC., as agent VCAMPUS CORPORATION
for U S WEST INTERPRISE AMERICA, INC.
<S> <C>
- --------------------------------------------- -------------------------------------------------------------
(Authorized Signature) (Authorized Signature)
- --------------------------------------------- -------------------------------------------------------------
(Print or Type Name of Signatory) (Print or Type Name of Signatory)
- --------------------------------------------- -------------------------------------------------------------
(Title) (Title)
- --------------------------------------------- -------------------------------------------------------------
(Execution Date) (Execution Date)
</TABLE>
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<PAGE> 13
Agreement No. 200052454
SCHEUDLE A
SCOPE OF WORK
1. PRODUCT DESCRIPTION
Supplier provides a web-based delivery system for education and
training materials via its proprietary VCampus(TM) product suite.
VCampus(TM) is a web application utilizing a graphical user interface
and comprising three major components---the Supplier's proprietary
Student Management System, a Courseware Delivery Engine and a
Courseware Construction Set, as well as Site Management Tools, and
links to additional web sites.
The Student Management System is the system which tracks and records
enrollment, testing, grading, record keeping, maintenance,
registration, and reporting necessary to provide proper information
to End Users, U S WEST, and Supplier regarding the VCampus(TM).
The Courseware Delivery Engine is the component that actually
delivers the online courseware. The Courseware Delivery Engine has
the functionality to deliver content to students and to track and
assess the students' progress through the course.
The Courseware Construction Set is the component responsible for the
actual construction of online courseware. The tool allows the
courseware developer to create and edit courseware via a suite of
online tools.
Campus Courseware is the online content, including without limitation
online courses and software modules developed by the Supplier, End
User and third party content providers, with respect to which
Supplier has the rights to publish and distribute over the Internet.
Campus Courseware does not include those components of the Campus
Courseware for which Supplier has entered into other agreements
prohibiting Supplier from publishing such components on End User's
VCampus.
Site Management Tools are Supplier's proprietary software tools used
by U S WEST and Supplier to maintain and manage the VCampus(TM) and
the Campus Courseware. Supplier will build a replica of the VCampus
production environment comprised of all the above described
components and the applicable third-party software for installation
into U S WEST's facility at 600 Stinson Boulevard, Minneapolis,
Minnesota, or at such other facility designated by U S WEST. U S WEST
shall notify Supplier when installation of the replica can begin and
Supplier shall complete the Installation within 120 days of said
notice. The VCampus(TM) shall reside on U S WEST's web server and
shall be accessible using a unique address used to refer to a
particular web site. All software, third-party and proprietary, will
be loaded, configured and maintained by Supplier. The operational
environment will be monitored and maintained by Supplier's employees
located at Supplier's corporate facility. Supplier's employees will
accomplish this task via remote node network administration
utilities. At U S WEST's option, and upon mutual agreement between
the parties, Supplier may provide full-time on-site technology staff.
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<PAGE> 14
Agreement No. 200052454
2. ACCESS TO PREMISES
2.1 ACCESS: Should the onsite option be exercised, U S WEST shall
permit Supplier access to U S WEST's facilities in connection
with the performance of Services upon reasonable advance
notice. At U S WEST's request, Supplier shall furnish a
personnel sheet containing the employee name, address,
telephone number, job duties, key assignment and any other
information U S WEST deems necessary to safeguard its property
and operations.
2.2 PLANT AND WORK RULES: Supplier, while on U S WEST premises,
shall comply with all plant rules and regulations, including,
where required by governmental regulation, submission of
satisfactory clearance from the appropriate governmental
regulations.
2.3 OCCUPATIONAL SAFETY AND HEALTH ACT: Supplier shall comply with
the Occupational Safety and Health Act of 1970 (as amended)
and all other laws relating to safety and health, including
applicable motor carrier safety regulations. Supplier shall be
solely responsible for its safety, the safety of its
employees, its subcontractors and agents, and its general work
area. Supplier shall immediately remedy any non-compliance and
indemnify and hold U S WEST harmless from any penalty, fine or
liabilities in connection therewith.
2.4 DAMAGE TO PROPERTY: Supplier shall immediately notify U S WEST
and third party owners of real or personal property of any
loss of or damage to such property caused by Supplier.
Supplier shall take precautions and necessary measures to
prevent further damage and, at U S WEST's option and
direction, Supplier shall replace or temporarily repair such
property. At U S WEST's or third party owner's option and
direction, Supplier shall restore or replace U S WEST's or
others' property to its original condition, place such
property in operational condition or bear the cost of
restoration or replacement.
3. REQUIRED COMPONENTS
U S WEST will be solely responsible at its expense for providing a
minimum hardware configuration comparable to the following list.
Approximately [thirty] days prior to server capacity being exhausted,
U S WEST will increase the number of servers accordingly. Supplier
shall not modify this list during the term of this agreement without
prior written approval of U S WEST.
<TABLE>
<CAPTION>
DESCRIPTION QUANTITY
<S> <C>
1 [*] [*]
2 [*] [*]
3 [*] [*]
</TABLE>
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Portions of this exhibit marked by [*] have been omitted pursuant to a request
for confidential treatment.
<PAGE> 15
Agreement No. 200052454
<TABLE>
<CAPTION>
DESCRIPTION QUANTITY
<S> <C>
4 [*] [*]
5 [*] [*]
7 [*] [*]
8 [*] [*]
9 [*] [*]
</TABLE>
4. PRICING
4.1 USAGE PRICING. U S WEST will receive a [*]% discount on
tuition pricing. If, during a given contract year, U S WEST's
overall tuition fees to Supplier exceed $[*], U S WEST's
discount will increase non-retroactively to [*]% for the rest
of the contract year and the Monthly Maintenance and
Monitoring fee, if applicable, will no longer be charged for
the rest of that contract year. Once U S WEST's overall
tuition bookings to Supplier exceed $[*], U S WEST's discount
will increase, non-retroactively, to [*]% on all tuition usage
for the remaining contract year. For year two and subsequent
years, U S WEST's margins will be determined at the start of
the contract year based on overall tuition bookings in the
prior contract year.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
PRODUCT OR SERVICE VCAMPUS LIST PRICE VCAMPUS FEES TO U S WEST
AT [40]% DISCOUNT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
One time Set Up Fee $[*] per End User $[*] per End User
- ------------------------------------------------------------------------------------------------------------
Tier 1 Packaged courses $[*] per $[*] per course/student
([*] courses) course/student
- ------------------------------------------------------------------------------------------------------------
Tier 2 Packaged courses $[*] per $[*] per course/student
([*] courses) course/student
- ------------------------------------------------------------------------------------------------------------
Custom course $[* ] per $[*] per course/student
course/student
- ------------------------------------------------------------------------------------------------------------
Custom Course Average per course $[* ]
Development one-time charge
- ------------------------------------------------------------------------------------------------------------
Academic Courses $[*] per $[*] per course/student
course/student
- ------------------------------------------------------------------------------------------------------------
</TABLE>
4.2 PACKAGED COURSE LISTS ARE ATTACHED AS SCHEDULE B AND MAY BE
UPDATED BY THE SUPPLIER FROM TIME TO TIME.
Payment of the above fees entitles the End User to:
[*]
4.3 END USER SET-UP FEES. A $[*] one-time set-up fee is assessed
to each new End User for designing and implementing the
Customer's VCampus. Supplier will provide the
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Portions of this exhibit marked by [*] have been omitted pursuant to a request
for confidential treatment.
<PAGE> 16
Agreement No. 200052454
same margins to U S WEST shown in Section 4.1 above for the
$[*] set-up fee per End User VCampus.
4.4 MONTHLY MAINTENANCE AND MONITORING. Monthly Maintenance and
Monitoring as outlined in this Agreement shall be provided
from 7:00 a.m. to 12:00 midnight Eastern Time, Monday through
Friday ("5x12"), at no additional cost to U S WEST, except for
the following holidays: Christmas Day and Thanksgiving Day (if
they fall during the week). U S WEST may purchase 24x7 (24
hours a day, 7 days a week) coverage for an additional fee to
be negotiated at the time that election is made.
4.5 PROFESSIONAL SERVICES AND CUSTOM COURSE DEVELOPMENT. Supplier
will provide to U S WEST a firm price quote for any
Professional Services. (i.e., custom graphics creation, custom
web design and development, custom VCampus Reporting, and data
manipulation/integration) or custom course development at a
most favored customer rate. U S WEST may then mark up those
quotes for delivery to its End User.
4.6 [*].
5. UPGRADES AND SERVICING
5.1 To the extent possible, Supplier, in its sole discretion, will
remotely update VCampus code on an as needed basis. This code
is "pushed," meaning copied to and installed as necessary, to
all VCampus servers and is used to update, repair, and improve
VCampus performance and reliability. Additionally, Supplier
will make code changes to basic system functionality and
system operations. This includes the look and feel of the
VCampus, screen workflow and processes, and general user
system functions. This code will be tested and approved by
Suppliers Quality Assurance Team assigned to the U S WEST
account prior to being deployed to a U S WEST production
facility.
5.2 Supplier requires four (4) hours per month downtime for
routine scheduled maintenance. The exact time for this
scheduled down time will be agreed upon between U S WEST and
Supplier. Additional scheduled down time will be coordinated
with U S WEST as needed by Supplier. A thirty-day, rolling
time window will be kept to allow ample notification of any
scheduled maintenance to be Agreement No. 200052454 performed
outside of the standard four-(4) hours-per-month scheduled
maintenance.
6. SUPPLIER'S RESPONSIBILITIES
6.1 Obtain, install, configure and maintain all third party
software and proprietary VCampus applications at no additional
cost to U S WEST.
6.2 Support all activities included in the service description
above.
6.3 Keep U S WEST informed of operational problems promptly after
their detection.
6.4 Work with U S WEST to resolve operational problems to the
extent of the service level contract.
6.5 Repair/fix all application software failures within the
VCampus based on existing policies and procedures for bug
fixes at Supplier.
6.6 Remote monitoring of all systems. Trouble tickets reported to
the Supplier Network Operations Center (NOC) with the status
of the failure.
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Portions of this exhibit marked by [*] have been omitted pursuant to a request
for confidential treatment.
<PAGE> 17
Agreement No. 200052454
6.7 Optional onsite monitoring of all systems. Trouble tickets
reported to the Supplier Network Operations Center (NOC) with
the status of the failure.
6.8 Provide written or real-time instructions for shutdown and
rebooting the system/hardware for offsite Supplier staff to
remotely administer the distributed VCampus.
6.9 Supplier will provide remote monitoring of the environment on
a 5x12 schedule.
6.10 Supplier will provide optional onsite system administration
through a VCampus Application Service Engineer. This person's
responsibilities will include but are not limited to:
6.10.1 VCampus System Support ("Remote hands" for Supplier
should hands-on access be required for maintenance or
support).
6.10.2 System performance tuning and monitoring.
6.10.3 System anomaly resolution.
6.11 All optional onsite Supplier employees will meet the
minimum-security requirements necessary to access U S WEST
computer/network centers.
6.12 Supplier will provide remote system administration through the
Supplier NOC located in Reston, Virginia. Examples of work
done are:
6.12.1 Managing VCampus code releases
6.12.2 Managing the course deployment process
6.12.3 VCampus database administration.
6.12.4 System monitoring
6.12.5 System performance tuning and monitoring.
6.12.6 System anomaly resolution.
6.12.7 Tier 3 technical support.
6.13 Supplier will provide its own primary and secondary
connections from the VCampus environment to the Supplier NOC
in Reston, Virginia.
7. U S WEST RESPONSIBILITIES
7.1 Provide floor space in a server room within designated U S
WEST facilities. Such floor space shall:
7.1.1 meet all federal regulations for minimum power
requirements, fire suppression, and access/egress
points.
7.1.2 be independently temperature controlled and have a
backup power solution in place.
7.1.3 at U S WEST's option, be available to Supplier's
onsite staff 24 hours a day, 7 days a week ("24x7"),
365 days per year should the onsite option be
exercised.
7.1.4 be available for Supplier's offsite staff to access
via remote network administration utilities 24x7, 365
days per year.
7.2 Provide tier 1 and tier 2 support to its VCampus End Users.
U S WEST may, at its option, train End User for tier 1 support
or otherwise outsource tier 1 support. For
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<PAGE> 18
Agreement No. 200052454
purposes of this Agreement, tier 1 support shall be from U S
WEST's end user to End User's technical support personnel or
U S WEST's technical support personnel; tier 2 support is from
End User's technical support personnel to U S WEST's technical
support personnel, and tier 3 support shall be from U S WEST's
technical support personnel to Supplier's IT technical support
personnel. U S WEST tier 2 support will report cases directly
to Supplier tier 3 support.
7.3 Provide all hardware for the VCampus that will reside on U S
WEST's web server pursuant to this Agreement, based on
Supplier's specifications set forth in Section 3, Required
Components above, subject to mutual agreement of the parties.
7.4 U S WEST will provide all operating systems and associated
patches/service packs for the VCampus(TM) based on Supplier's
specifications, which shall be provided at the time such
patch/service pack is needed. This is includes operating
system patches, security patches, etc.
7.5 U S WEST will provide all hardware maintenance.
8. TERRITORY
8.1 Geographical: United States
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<PAGE> 19
Agreement No. 200052454
SCHEDULE B
TIER I PACKAGED COURSES
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------
Access 7.0 for Windows 95 Fundamentals version 2
- -----------------------------------------------------------------------------------------------------
Access 97 Intermediate version 2
- -----------------------------------------------------------------------------------------------------
Access 97 Introduction version 2
- -----------------------------------------------------------------------------------------------------
Adobe Acrobat 3.01
- -----------------------------------------------------------------------------------------------------
Adobe PageMill 3.0
- -----------------------------------------------------------------------------------------------------
Advanced Business Writing version 2
- -----------------------------------------------------------------------------------------------------
Advanced Grammar version 3
- -----------------------------------------------------------------------------------------------------
Advanced JavaScript
- -----------------------------------------------------------------------------------------------------
Advanced Punctuation version 2
- -----------------------------------------------------------------------------------------------------
Advanced Spelling version 2
- -----------------------------------------------------------------------------------------------------
Advanced Vocabulary version 2
- -----------------------------------------------------------------------------------------------------
Applications of Financial Management
- -----------------------------------------------------------------------------------------------------
Asynchronous Transfer Mode - 2
- -----------------------------------------------------------------------------------------------------
Back Safety
- -----------------------------------------------------------------------------------------------------
Basic Business Math
- -----------------------------------------------------------------------------------------------------
Basic Business Writing version 2
- -----------------------------------------------------------------------------------------------------
Basic Clerical Skills version 2
- -----------------------------------------------------------------------------------------------------
Basic Grammar version 2
- -----------------------------------------------------------------------------------------------------
Basic JavaScript
- -----------------------------------------------------------------------------------------------------
Basic Punctuation version 2
- -----------------------------------------------------------------------------------------------------
Basic Spelling version 2
- -----------------------------------------------------------------------------------------------------
Basic Vocabulary version 2
- -----------------------------------------------------------------------------------------------------
Business Communications - Systems and Services
- -----------------------------------------------------------------------------------------------------
Calming Upset Customers
- -----------------------------------------------------------------------------------------------------
Case Management: An Overview
- -----------------------------------------------------------------------------------------------------
Communications Electronics
- -----------------------------------------------------------------------------------------------------
Creativity and Innovation
- -----------------------------------------------------------------------------------------------------
Crystal Reports 6.0 Advanced
- -----------------------------------------------------------------------------------------------------
Crystal Reports 6.0 Introduction
- -----------------------------------------------------------------------------------------------------
Datacomm Fundamentals
- -----------------------------------------------------------------------------------------------------
Delegating for Results
- -----------------------------------------------------------------------------------------------------
Developing Self Esteem
- -----------------------------------------------------------------------------------------------------
Diversity Issues in the Workplace 3rd. Ed.
- -----------------------------------------------------------------------------------------------------
Driving Safety
- -----------------------------------------------------------------------------------------------------
DS3 Fundamentals
- -----------------------------------------------------------------------------------------------------
E1/2M Transmission Fundamentals
- -----------------------------------------------------------------------------------------------------
Effective Leadership in the New Workplace
- -----------------------------------------------------------------------------------------------------
Effective Meeting Skills
- -----------------------------------------------------------------------------------------------------
Effective Presentation Skills
- -----------------------------------------------------------------------------------------------------
Effective Problem Solving version 2
- -----------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 20
Agreement No. 200052454
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------
Emerging Network Technologies
- -----------------------------------------------------------------------------------------------------
Empowerment
- -----------------------------------------------------------------------------------------------------
Ethics in Business
- -----------------------------------------------------------------------------------------------------
Excel 7.0 for Windows 95 Fundamentals version 2
- -----------------------------------------------------------------------------------------------------
Excel 97 Intermediate version 2
- -----------------------------------------------------------------------------------------------------
Excel 97 Introduction version 2
- -----------------------------------------------------------------------------------------------------
Exploring the Web with Microsoft Internet Explorer 5
- -----------------------------------------------------------------------------------------------------
Fiber Optic Communication
- -----------------------------------------------------------------------------------------------------
Fiber Optic System Design and Specification (V 2)
- -----------------------------------------------------------------------------------------------------
Fire Prevention and Safety
- -----------------------------------------------------------------------------------------------------
Forklift Safety
- -----------------------------------------------------------------------------------------------------
Formatting version 2
- -----------------------------------------------------------------------------------------------------
Frame Relay - Applications and Technology
- -----------------------------------------------------------------------------------------------------
Getting Plugged In - Internet Explorer Version
- -----------------------------------------------------------------------------------------------------
Getting Plugged In - Netscape Version
- -----------------------------------------------------------------------------------------------------
Getting Plugged In With Netscape Navigator 4.0
- -----------------------------------------------------------------------------------------------------
Handling Diversity in the Workplace version 2
- -----------------------------------------------------------------------------------------------------
Healthcare Manager/Supervisor Core Skills and Concepts
- -----------------------------------------------------------------------------------------------------
How To Get Everything Done (And Still Have A Life) version 2
- -----------------------------------------------------------------------------------------------------
HTML 4.0 Fundamentals version 2
- -----------------------------------------------------------------------------------------------------
HTML 4.0 Intermediate
- -----------------------------------------------------------------------------------------------------
I Have to Fire Someone! version 2
- -----------------------------------------------------------------------------------------------------
Interconnecting Ethernet & Token Ring LANs
- -----------------------------------------------------------------------------------------------------
Intermediate Spelling version 2
- -----------------------------------------------------------------------------------------------------
Intermediate Vocabulary version 2
- -----------------------------------------------------------------------------------------------------
Interviewing - More Than A Gut Feeling version 2
- -----------------------------------------------------------------------------------------------------
Introduction to Internet/Intranet Technology
- -----------------------------------------------------------------------------------------------------
Introduction to xDSL Technology
- -----------------------------------------------------------------------------------------------------
ISDN Technology
- -----------------------------------------------------------------------------------------------------
ISO 9000
- -----------------------------------------------------------------------------------------------------
Job Strategies for New Employees version 2
- -----------------------------------------------------------------------------------------------------
Leadership Skills for Women
- -----------------------------------------------------------------------------------------------------
Leading Teams for Success- 2nd Ed.
- -----------------------------------------------------------------------------------------------------
Leading Teams for Success version 3
- -----------------------------------------------------------------------------------------------------
Legal Issues for Managers version 2
- -----------------------------------------------------------------------------------------------------
Local Area Networking
- -----------------------------------------------------------------------------------------------------
Lock-Out/Tag-Out
- -----------------------------------------------------------------------------------------------------
Making Effective Decisions- 2nd Ed.
- -----------------------------------------------------------------------------------------------------
Managed Care
- -----------------------------------------------------------------------------------------------------
Managing People Through Change- 2nd Ed.
- -----------------------------------------------------------------------------------------------------
Mastering Java
- -----------------------------------------------------------------------------------------------------
Microsoft Access 2000: End User Fundamentals
- -----------------------------------------------------------------------------------------------------
Microsoft Excel 2000: Fundamentals
- -----------------------------------------------------------------------------------------------------
Microsoft Internet Explorer 5.0: Fundamentals
- -----------------------------------------------------------------------------------------------------
Microsoft Outlook 2000: Fundamentals
- -----------------------------------------------------------------------------------------------------
Microsoft PowerPoint 2000: Fundamentals
- -----------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 21
Agreement No. 200052454
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------
Microsoft Windows 98: End User Fundamentals
- -----------------------------------------------------------------------------------------------------
Microsoft Word 2000: Fundamentals
- -----------------------------------------------------------------------------------------------------
Motivation in the Workplace version 2
- -----------------------------------------------------------------------------------------------------
MS Access 2000: Fundamentals
- -----------------------------------------------------------------------------------------------------
MS Excel 2000: Fundamentals
- -----------------------------------------------------------------------------------------------------
MS FrontPage 98: Intermediate
- -----------------------------------------------------------------------------------------------------
MS FrontPage 98: Introduction
- -----------------------------------------------------------------------------------------------------
MS Outlook 98
- -----------------------------------------------------------------------------------------------------
MS Word 2000: Fundamentals
- -----------------------------------------------------------------------------------------------------
Netscape Communicator 4.5: Fundamentals
- -----------------------------------------------------------------------------------------------------
Orientation to Lab Safety
- -----------------------------------------------------------------------------------------------------
OSHA - Ergonomics II - Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Confined Space Entry - Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Ergonomics I - Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Fire Prevention - Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Flammable and Combustible Liquids- Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Hazard Communication - Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Hearing Protection- Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Lockout Tagout - Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Personal Protective Equipment - Release 2
- -----------------------------------------------------------------------------------------------------
OSHA- Respiratory Protection - Release 2
- -----------------------------------------------------------------------------------------------------
Patient Care Assistant
- -----------------------------------------------------------------------------------------------------
Personal Protective Equipment.
- -----------------------------------------------------------------------------------------------------
Personal Time Management
- -----------------------------------------------------------------------------------------------------
PhotoImpact 4
- -----------------------------------------------------------------------------------------------------
Population Focused Nursing Part 1
- -----------------------------------------------------------------------------------------------------
Population Focused Nursing Part 2
- -----------------------------------------------------------------------------------------------------
PowerPoint 97 Intermediate version 2
- -----------------------------------------------------------------------------------------------------
PowerPoint 97 Introduction version 2
- -----------------------------------------------------------------------------------------------------
Preventing Job Burnout
- -----------------------------------------------------------------------------------------------------
Professional Excellence for Secretaries
- -----------------------------------------------------------------------------------------------------
Professional Selling
- -----------------------------------------------------------------------------------------------------
Proofreading version 2
- -----------------------------------------------------------------------------------------------------
Quality At Work
- -----------------------------------------------------------------------------------------------------
Right-To-Know for Industrial Facilities
- -----------------------------------------------------------------------------------------------------
Risk Taking
- -----------------------------------------------------------------------------------------------------
Safety Attitudes
- -----------------------------------------------------------------------------------------------------
Self-Managing Teams
- -----------------------------------------------------------------------------------------------------
Sexual Harassment - Crisp
- -----------------------------------------------------------------------------------------------------
Sexual Harassment in the Workplace 3rd ed.
- -----------------------------------------------------------------------------------------------------
Simply 3D
- -----------------------------------------------------------------------------------------------------
SONET
- -----------------------------------------------------------------------------------------------------
Stopping Sexual Harassment Before It Starts version 2
- -----------------------------------------------------------------------------------------------------
Stress Management for Health Care Professionals
- -----------------------------------------------------------------------------------------------------
Successful Continuous Quality Improvement for Healthcare Teams
- -----------------------------------------------------------------------------------------------------
Successful Negotiations
- -----------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 22
Agreement No. 200052454
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------
T1 Testing
- -----------------------------------------------------------------------------------------------------
T1 Transmission Basics
- -----------------------------------------------------------------------------------------------------
Tactical Marketing for the HealthCare Professional
- -----------------------------------------------------------------------------------------------------
TCP/IP: Concepts and Applications
- -----------------------------------------------------------------------------------------------------
Team Building
- -----------------------------------------------------------------------------------------------------
Technical Presentation Skills
- -----------------------------------------------------------------------------------------------------
Telecommunications Technologies
- -----------------------------------------------------------------------------------------------------
The 5 Second Stress Solution
- -----------------------------------------------------------------------------------------------------
The Art of Giving and Receiving Feedback version 2
- -----------------------------------------------------------------------------------------------------
The Basics of Budgeting
- -----------------------------------------------------------------------------------------------------
The Business of Listening
- -----------------------------------------------------------------------------------------------------
The Delegation Advantage version 3
- -----------------------------------------------------------------------------------------------------
The Human Touch Performance Appraisal version 2
- -----------------------------------------------------------------------------------------------------
The Memory Works(R) for Names and Faces
- -----------------------------------------------------------------------------------------------------
The Motivating Leader
- -----------------------------------------------------------------------------------------------------
The New Supervisor
- -----------------------------------------------------------------------------------------------------
The VCampus Experience
- -----------------------------------------------------------------------------------------------------
The VCampus Experience (no plug-in)
- -----------------------------------------------------------------------------------------------------
Understanding Financial Statements
- -----------------------------------------------------------------------------------------------------
Understanding the Public Telephone Network
- -----------------------------------------------------------------------------------------------------
VBA Foundations for AutoCAD
- -----------------------------------------------------------------------------------------------------
VBA Solutions for AutoCAD
- -----------------------------------------------------------------------------------------------------
Visual Basic 5.0, Level 1: Programming
Fundamentals of Visual Basic 5.0
- -----------------------------------------------------------------------------------------------------
Visual Basic 5.0, Level 2: Programming Visual
Basic 5.0 Applications
- -----------------------------------------------------------------------------------------------------
Visual Basic 5.0, Level 3: Advanced Visual Basic 5.0 Programming Concepts
- -----------------------------------------------------------------------------------------------------
Visual Basic for Applications
- -----------------------------------------------------------------------------------------------------
Windows NT 4.0 Fundamentals version 3
- -----------------------------------------------------------------------------------------------------
Windows on the Web - Internet Explorer Edition
- -----------------------------------------------------------------------------------------------------
Windows on the Web - Navigator Edition
- -----------------------------------------------------------------------------------------------------
Windows on the Web- Netscape Navigator 4.0
- -----------------------------------------------------------------------------------------------------
Word 7.0 for Windows 95 Fundamentals version 2
- -----------------------------------------------------------------------------------------------------
Word 97 Intermediate version 2
- -----------------------------------------------------------------------------------------------------
Word 97 Introduction version 2
- -----------------------------------------------------------------------------------------------------
Workplace Violence
- -----------------------------------------------------------------------------------------------------
X.25 Fundamentals - Revised
- -----------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,521,609
<SECURITIES> 0
<RECEIVABLES> 1,706,415
<ALLOWANCES> 140,497
<INVENTORY> 0
<CURRENT-ASSETS> 5,811,136
<PP&E> 4,267,315
<DEPRECIATION> 3,031,804
<TOTAL-ASSETS> 12,494,231
<CURRENT-LIABILITIES> 6,555,769
<BONDS> 0
0
18,019
<COMMON> 76,410
<OTHER-SE> 5,844,033
<TOTAL-LIABILITY-AND-EQUITY> 5,938,462
<SALES> 2,458,778
<TOTAL-REVENUES> 2,458,778
<CGS> 914,979
<TOTAL-COSTS> 914,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,572,513)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,572,513)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,572,513)
<EPS-BASIC> (0.36)
<EPS-DILUTED> (0.36)
</TABLE>
