-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NLaaaeV/c/rusBeIFDZZbC2Cp00J2up4fQTmqIviY15blbfz5V+Cp2l0P88VD72R 4mxDmVr2IsbfBKvq7PtHdA== 0000950133-00-002054.txt : 20000516 0000950133-00-002054.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950133-00-002054 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VCAMPUS CORP CENTRAL INDEX KEY: 0000943742 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SERVICES, NEC [8900] IRS NUMBER: 541290319 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21421 FILM NUMBER: 631954 BUSINESS ADDRESS: STREET 1: 1850 CENTENNIAL PARK DR STREET 2: SIUTE 200 CITY: RESTON STATE: VA ZIP: 20191 BUSINESS PHONE: 7038937800 MAIL ADDRESS: STREET 1: 8251 GREENSBORO DRIVE STREET 2: SUITE 500 CITY: MCLEAN STATE: VA ZIP: 22102 FORMER COMPANY: FORMER CONFORMED NAME: UOL PUBLISHING INC DATE OF NAME CHANGE: 19960917 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSITY ONLINE INC DATE OF NAME CHANGE: 19960903 10-Q 1 FORM 10-Q FOR PERIOD ENDED 3/31/2000 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 ------------------------ VCAMPUS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) 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)
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. Common Stock, $0.01 par value 8,075,575 shares (Class) (Outstanding at May 12, 2000)
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VCAMPUS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ------------------------- 1999 2000 ----------- ----------- 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) =========== ===========
See accompanying notes. 2 3 VCAMPUS CORPORATION CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31, 1999 2000 ------------ ------------ (UNAUDITED) 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 ============ ============
See accompanying notes. 3 4 VCAMPUS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ------------------------- 1999 2000 ----------- ----------- 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 =========== ===========
See accompanying notes. 4 5 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 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:
THREE MONTHS ENDED MARCH 31, ------------------------- 1999 2000 ----------- ----------- 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) =========== ===========
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 7 VCAMPUS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Net Revenues
FOR THE THREE MONTHS ENDED MARCH 31, ---------------------------------------- 1999 2000 ------------------ ------------------ 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% ========== ===== ========== =====
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 8 VCAMPUS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table sets forth selected financial data:
FOR THE THREE MONTHS ENDED MARCH 31, ------------------------------------------- 1999 2000 ------------------- -------------------- 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)% =========== ===== =========== ======
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 9 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 10 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 11 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 12 EXHIBIT INDEX 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.
12 EX-10.54 2 APPLICATION HOSTING AGREEMENT DATED APRIL 20, 2000 1 Agreement No. 200052454 APPLICATION HOSTING AGREEMENT
TABLE OF CONTENTS 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
- 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. 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 -2- Confidential - Disclose only to those employees with a need to know. 3 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. -3- Confidential - Disclose only to those employees with a need to know. 4 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. -4- Confidential - Disclose only to those employees with a need to know. 5 Agreement No. 200052454 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 -5- Confidential - Disclose only to those employees with a need to know. 6 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. -6- Confidential - Disclose only to those employees with a need to know. 7 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. -7- Confidential - Disclose only to those employees with a need to know. 8 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. -8- Confidential - Disclose only to those employees with a need to know. 9 Agreement No. 200052454 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: 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
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 -9- Confidential - Disclose only to those employees with a need to know. 10 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.
For Supplier: For U S WEST: - ------------- ------------- 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: kannan@vcampus.com E-Mail: jajohn8@uswest.com ------------------ ------------------ 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
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. -10- Confidential - Disclose only to those employees with a need to know. 11 Agreement No. 200052454 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- Confidential - Disclose only to those employees with a need to know. 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.
U S WEST BUSINESS RESOURCES INC., as agent VCAMPUS CORPORATION for U S WEST INTERPRISE AMERICA, INC. - --------------------------------------------- ------------------------------------------------------------- (Authorized Signature) (Authorized Signature) - --------------------------------------------- ------------------------------------------------------------- (Print or Type Name of Signatory) (Print or Type Name of Signatory) - --------------------------------------------- ------------------------------------------------------------- (Title) (Title) - --------------------------------------------- ------------------------------------------------------------- (Execution Date) (Execution Date)
-12- Confidential - Disclose only to those employees with a need to know. 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. -13- Confidential - Disclose only to those employees with a need to know. 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.
DESCRIPTION QUANTITY 1 [*] [*] 2 [*] [*] 3 [*] [*]
-14- 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. 15 Agreement No. 200052454
DESCRIPTION QUANTITY 4 [*] [*] 5 [*] [*] 7 [*] [*] 8 [*] [*] 9 [*] [*]
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.
- ------------------------------------------------------------------------------------------------------------ PRODUCT OR SERVICE VCAMPUS LIST PRICE VCAMPUS FEES TO U S WEST AT [40]% DISCOUNT - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------
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 -15- 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. 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. -16- 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. 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 -17- Confidential - Disclose only to those employees with a need to know. 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 -18- Confidential - Disclose only to those employees with a need to know. 19 Agreement No. 200052454 SCHEDULE B TIER I PACKAGED COURSES - ----------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------
-19- Confidential - Disclose only to those employees with a need to know. 20 Agreement No. 200052454 - ----------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------
-20- Confidential - Disclose only to those employees with a need to know. 21 Agreement No. 200052454 - ----------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------
-21- Confidential - Disclose only to those employees with a need to know. 22 Agreement No. 200052454 - ----------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------
-22- Confidential - Disclose only to those employees with a need to know. EX-27.1 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 2,521,609 0 1,706,415 140,497 0 5,811,136 4,267,315 3,031,804 12,494,231 6,555,769 0 0 18,019 76,410 5,844,033 5,938,462 2,458,778 2,458,778 914,979 914,979 0 0 0 (2,572,513) 0 (2,572,513) 0 0 0 (2,572,513) (0.36) (0.36)
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