-----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, Piwbd6LPLMEa2giptIOWZEW/6L4VJtDZI32KgnOzgbAMVi7ghPKmpuBFEPt9ciM9 qW92CrTjAfJnqkKlYNS/xQ== 0000950109-00-002216.txt : 20000516 0000950109-00-002216.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950109-00-002216 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000401 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOORE MEDICAL CORP CENTRAL INDEX KEY: 0000074691 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 221897821 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08903 FILM NUMBER: 634848 BUSINESS ADDRESS: STREET 1: PO BOX 1500 STREET 2: 389 JOHN DOWNEY DR CITY: NEW BRITAIN STATE: CT ZIP: 06050 BUSINESS PHONE: 2038263600 MAIL ADDRESS: STREET 1: 389 JOHN DOWNEY DRIVE STREET 2: 389 JOHN DOWNEY DRIVE CITY: NEW BRITAIN STATE: CT ZIP: 06050 FORMER COMPANY: FORMER CONFORMED NAME: OPTEL CORP DATE OF NAME CHANGE: 19850611 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- 2000 FORM 10 - Q For the Fiscal FIRST QUARTER Ended April 1, 2000 Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 MOORE MEDICAL CORP. (Exact name of registrant as specified in its charter) - -------------------------------------------------------------------------------- Delaware 1-8903 (State of incorporation) (Commission File Number) P.O. Box 1500, New Britain, CT 06050 22-1897821 (Address of principal executive offices) (I.R.S. Employer Identification Number) 860-826-3600 (Registrant's telephone number) Securities registered pursuant to Section 12(b) of the Act: Common Stock ($.01 Par Value) American Stock Exchange Rights to Purchase Series I Junior American Stock Exchange Preferred Stock (Title of Each Class) (Name of each exchange on which registered) - -------------------------------------------------------------------------------- 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 twelve months, and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No ------- ------- Approximately 3,045,176 number of shares of Common Stock outstanding as of April 28, 2000 Total number of pages in the numbered original is 59 This is page 1 of 59 pages. ================================================================================ MOORE MEDICAL CORP. Index
Page No. -------- Part I. Financial Information Item 1. Financial Statements Balance Sheets at the end of the first quarter of 2000 and at the end of the year 1999...................... 3 Statements of Operations for the first quarters of 2000 and 1999.......................................... 4 Statements of Cash Flows for the first quarters of 2000 and 1999.......................................... 5 Notes to Financial Statements.................................. 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 8-11 Item 3. Quantitative and Qualitative Disclosures About Market Risk............................................... 11 Part II. Other Information Item 5. Other Matters................................................... 12 Item 6. Exhibits and Reports on Form 8-K............................... 12-59 Signatures................................................................ 13
2 MOORE MEDICAL CORP.
Balance Sheets - ------------------------------------------------------------------------------------------------------------------------------------ (Amounts in thousands, except par value) First Quarter 2000 Year 1999 (Unaudited) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Current Assets Cash $ 6,572 $ 744 Accounts receivable, less allowances of $200 and $200....................................... 12,255 11,488 Inventories................................................ 11,185 14,242 Prepaid expenses and other current assets.................. 3,050 1,852 Deferred income taxes...................................... 2,330 2,330 -------- -------- Total Current Assets.............................. 35,392 30,656 -------- -------- Noncurrent Assets Equipment and leasehold improvements, net. 10,327 10,641 Other assets............................................... 370 669 -------- -------- Total Noncurrent Assets........................... 10,697 11,310 -------- -------- $ 46,089 $ 41,966 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable........................................... $ 10,491 $ 7,483 Accrued expenses........................................... 5,035 4,665 -------- -------- Total Current Liabilities......................... 15,526 12,148 -------- -------- Deferred Income Taxes............................................. 2,368 2,368 Shareholders' Equity Preferred stock - no shares outstanding.................... -- -- Common stock - $.01 par value; 5,000 shares authorized; 3,246 shares issued.................................... 34 33 Capital in excess of par value............................. 21,784 21,675 Retained earnings.......................................... 8,194 8,449 -------- -------- 30,012 30,157 Less treasury shares, at cost, 205 and 305 shares................................................. (1,817) (2,707) -------- -------- Total Shareholders' Equity........................ 28,195 27,450 -------- -------- $ 46,089 $ 41,966 ======== ======== - ------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 3 MOORE MEDICAL CORP.
Statements of Operations - ------------------------------------------------------------------------------------------------------------------------------------ (Amounts in thousands, except per share data) First Quarter -------------------------------------- 2000 1999 (Unaudited) - ------------------------------------------------------------------------------------------------------------------------------------ Net sales......................................................... $29,517 $29,055 Cost of products sold............................................. 20,844 19,546 -------- ------- Gross profit...................................................... 8,673 9,509 Selling, general & administrative expenses........................ 9,105 8,803 -------- ------- Operating (loss) income........................................... (432) 706 Interest (income), net............................................ (27) (45) -------- ------- (Loss) income before income taxes................................. (405) 751 Income tax (benefit) provision.................................... (150) 274 -------- ------- Net (loss) income................................................. $ (255) $ 477 ======== ======= Basic and diluted net (loss) income per share..................................................... $ (.09) $ .16 ======== ======= - ------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 4 MOORE MEDICAL CORP.
Statements of Cash Flows - ------------------------------------------------------------------------------------------------------------------------------------ (Amounts in thousands) First Quarter -------------------------------------- 2000 1999 (Unaudited) - ------------------------------------------------------------------------------------------------------------------------------------ Cash Flows From Operating Activities Net (loss) income................................................. $ (255) $ 477 Adjustments to reconcile net (loss) income to net cash flows provided by operating activities: Depreciation and amortization................................. 676 337 Changes in operating assets and liabilities: Accounts receivable...................................... (767) (1,295) Inventories.............................................. 3,057 (1,961) Other current assets..................................... (1,198) (747) Accounts payable......................................... 3,008 2,665 Other current liabilities................................ 670 (945) --------- --------- Net cash flows provided by (used in) operating activities.......................................... 5,191 (1,469) -------- --------- Cash Flows From Investing Activities Equipment & leasehold improvements acquired....................... (363) (1,534) --------- --------- Net cash flows used in investing activities................... (363) (1,534) --------- --------- Cash Flows From Financing Activities Sale of treasury stock............................................ 890 -- Other, net........................................................ 110 13 --------- ---------- Net cash flows provided by financing activities.............................................. 1,000 13 --------- ---------- Increase (decrease) in cash.............................................. 5,828 (2,990) Cash at beginning of period.............................................. 744 3,520 --------- --------- Cash at end of period.................................................... $ 6,572 $ 530 ========= ========= - ------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 5 MOORE MEDICAL CORP. NOTES TO FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies The Company Moore Medical is a national marketer and distributor of healthcare products to approximately 92,000 healthcare practitioner customers in non-hospital settings. Primary customer groups are emergency medical services, medical departments at industrial sites, physicians and podiatrists, and university/school health services. It markets approximately 8,500 medical/surgical and pharmaceutical supply products (SKUs) through direct mail, telesales, a small field sales force and an early stage Internet company. The Company fulfills orders from its strategically located regional distribution centers in Connecticut, Florida, Illinois and California and ships orders nationwide by common carriers. The Company has more than 50 years experience, and has served healthcare practitioner customers for over 25 years. Basis of Presentation Moore Medical has prepared the accompanying unaudited financial statements in accordance with generally accepted accounting principles for interim financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the results for the interim period have been made. The results for the three months ended April 1, 2000 do not necessarily indicate the results to be expected for the fiscal year ended December 30, 2000 or any other future period. The fiscal quarters ended on April 1, 2000 and April 3, 1999. The accompanying unaudited financial statements should be read in conjunction with the Notes to Financial Statements and Management's Discussion and Analysis of Results of Operations and Financial Condition included in the Company's 1999 Annual Report filed on Form 10-K and in this Form 10-Q Report. Note 2 - Contingencies Beginning in 1991, the Company entered into various supply contracts with the U.S. Department of Veterans Affairs and the Defense Department. In April 1997, the Company completed a review of its compliance with various pricing provisions of these contracts and, with the assistance of special legal counsel, concluded that adjustments may be due to the federal agencies for potential unasserted claims against the Company relating to pricing deficiencies under product supply contracts subject to General Services Administration and Department of Defense regulations. In the fourth 6 quarter of 1996, the Company established a $3.8 million reserve for estimated pricing deficiency liabilities and associated legal costs. As of the end of 1999 and first quarter end of 2000, the reserve balance was $3.1 million. The final amount of the pricing deficiency adjustment is subject to the outcome of contract settlement discussions which the Company has requested with the governmental agencies or to an adjudicated disposition. In management's opinion, the ultimate resolution of this matter will not have a material adverse effect on the Company's financial position. Although management believes that the reserve is sufficient, it is possible the final resolution could exceed such reserve and could have a material impact on the statement of operations and cash flow in such period. 7 MOORE MEDICAL CORP. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS ------------- OVERVIEW - -------- Moore Medical's stated objective in our Form 10-K filed March 31, 2000 represents a strategic commitment to transforming the Company into a full business to business electronic commerce enterprise. To accomplish this objective we will continue to aggressively invest in technology, the acquisition of customer communities and content, our operating platforms and other e-business initiatives. We are presently using our database to distinguish customers' buying patterns and behaviors related to e-Commerce and our traditional business. Our investment in the Internet is fundamental to our strategy and future sustainable growth. We anticipate increased spending in an effort to acquire the talent and develop the infrastructure needed to exploit this business opportunity. The following table sets forth items included in the Statements of Operations as a percentage of sales for the first quarter of 2000 and 1999. The table also shows, for each line item, the percentage change of the amount in the 2000 period from the comparable 1999 period.
First Quarter ------------------------------------------------------- % of Sales % Change --------------------------------- ------------------ 2000 1999 ---- ---- Net Sales................................................. 100.0% 100.0% 2% Cost of products sold..................................... 70.6 67.3 7 ------- ------- Gross profit.............................................. 29.4 32.7 (9) Selling, general & administrative expenses................ 30.8 30.3 3 ------- ------- Operating (loss) income................................... (1.4) 2.4 (161) Interest (income), net.................................... -- (.1) (40) ------- ------- (Loss) /income before income taxes........................ (1.4) 2.5 (154) Income tax (benefit) provision........................... (0.5) .9 (155) ------- ------- Net (loss) income........................................ (0.9)% 1.6% (153)% ------- -------
8 RESULTS OF OPERATIONS - --------------------- Three Months Ended April 1, 2000 Compared to Three Months Ended April 3, 1999 - ----------------------------------------------------------------------------- Overall, net revenue of $29.5 million for the first quarter of 2000 increased 2% over the comparable period in 1999. Moore Medical experienced growth in its business communities and e-Commerce. The favorable increase was partially offset by the contraction of pharmaceutical product revenues. In the business communities, the increase in net sales was primarily due to increased account penetration with core dealer accounts. The remaining increase in the first quarter 2000 net sales was due to increased e-Commerce activity on our unpromoted transactional website, which increased $0.5 million or over 200%, to $0.7 million for the three months ended April 1, 2000, from $0.2 million for the three months ended April 3, 1999, while traffic has nearly doubled. Gross profit decreased by $0.8 million, or 9% to $8.7 million for the three months ended April 1, 2000, from $9.5 million for the three months ended April 3, 1999. The decrease is primarily attributable to the price erosion in pharmaceutical products resulting in lower margins. Also, the Company's average order size increased 13% over prior year, generating higher volume but at lower margins. Selling, general and administrative expenses increased by $0.3 million or 3%, to $9.1 million for the first quarter 2000 from $8.8 million. The increase is primarily due to higher depreciation charges associated with investments in technology. Other contributing factors to the increase were additional media and advertising costs associated with the acquisition of and intensive e-Commerce marketing research of customers. We anticipate increased selling and marketing expenses related to our Internet based business as a result of accelerated spending to fully web enable the Company. A net loss for the quarter of $(0.3) million or $(.09) earnings per share was reported compared with net income of $0.5 million or $0.16 earnings per share in the first quarter of 1999. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- On April 1, 2000, our unrestricted cash and cash equivalents totaled $6.6 million, a $5.9 million increase from a year ago. The increase was a result of net cash flow provided by operating activities. Our operations provided $5.2 million in cash during the three months ended April 1, 2000. Primary sources of cash were $3.1 million decrease in inventory levels, $3.7 million increase in accounts payable and accrued liabilities driven by successful supply 9 change management efforts. In addition, non-cash elements of $0.7 million related to depreciation and amortization primarily related to technology increased operating activities. Primary uses of cash included the net loss of $0.3 million, an increase in accounts receivable driven by the increase in net sales and $1.2 million in other assets. Investing actitives used $0.4 million in the first quarter, primarily in technology. Technology purchases were made to support our strategic commitment to fully web enable the Company. Financing activities provided $1.0 million in the first quarter, primarily attributable to proceeds from the sales of treasury stock. In our recent Annual Report on Form 10-K, we described our strategy to transform the Company to a full business-to-business electronic commerce enterprise by migrating existing customers and attracting additional customers to the new comprehensive Internet platform we plan to launch. The Report noted that our "Board recognizes the level of investment required to accomplish Moore's Internet strategy." Management seeks to raise funds to transform our business from institutional and other private equity sources. In addition, the Company's previous line of credit expired on March 31, 2000, and management is currently reviewing loan proposals. Management believes a definitive loan agreement, once consummated, will provide adequate funds for the Company's operations. In the interim, until a definitive loan agreement is negotiated and executed, the Company had, as of March 31, 2000, $6.6 million in cash and cash equivalents to fund its operations in the short term. FORWARD-LOOKING INFORMATION - --------------------------- From time to time, the Company or its representatives may have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but, not limited to, press releases, oral statements made by or with the approval of an authorized executive officer, or in this report or other filings made by the Company with the Securities and Exchange Commission. The words or phrases "trend," "expect," "grow," "will," "could," "likely result," "transform," "planned," "continued," "anticipated," "estimated," "believes," "continuing," "considers," "may be," "assessed," "contingency," "projected," "scheduled," "could have," "intended," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company wishes to ensure that such statements are accompanied by meaningful cautionary statements, so as to maximize to the fullest extent possible the protections of the safe harbor established in the said Act. Accordingly, such statements are qualified in their entirety by reference to 10 and are accompanied by the following discussion of certain important factors that could cause actual results to differ materially from such forward-looking statements. Investors should be aware of factors that could have an impact on the Company's business, financial position or performance. These include possible: pressures on the Company's revenues resulting, for example, from customer consolidations or changes in customer buying patterns; reductions in healthcare funding affecting its customers' services or revenues, resulting, for example, from changes in legislation or regulations or in HMO, managed care or other insurance programs; intensified competition resulting, for example, from distributor consolidations or pricing pressures from distributors able to benefit from economies of scale or other operating efficiencies; and new Internet unanticipated expenses, delays on technical problems associated with the Company's planned Internet site; disruptions in services or systems on which the Company is dependent, such as by truckers in deliveries from its suppliers, by UPS or other common carriers in deliveries to its customers, by its catalog printers or in telecommunication services, or relating to its computer systems or; pending adjustments of pricing under exited government contracts or unfavorable outcomes of litigation; and other factors detailed from time to time in the Company's Securities and Exchange Commission filings or other readily available or generally disseminated writings. The risks identified here are not all inclusive. Reference is also made to other parts of this on Form 10-Q, which include additional information concerning factors that could adversely impact the Company's business or financial position or performance. Moreover, the Company operates in a changing and very competitive business environment. New risks may emerge from time to time, and it is not possible for management to predict all risk factors, nor can it necessarily identify or assess the impact of all such factors on the Company or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. ITEM 3. Quantitative & Qualitative Disclosures About Market Risk -------------------------------------------------------- We have no material market risk exposure associated with activities in derivative financial statements, other financial instruments, or derivative commodity instruments. 11 PART II. OTHER INFORMATION ----------------- ITEM 5. OTHER MATTERS ------------- On March 1, 2000, Christopher W. Brody was elected to the Board of Directors of the Company. As of April 1, 2000, Moore Medical's Board of Directors is as follows: Name ---- Linda M. Autore Robert H. Steele Steven Kotler Christopher W. Brody Peter C. Sutro Wilmer J. Thomas, Jr. Daniel K. Wassong Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- Employment Agreement between the Company Exhibit 10.20 and Linda M. Autore, effective March 1, 2000. Subscription Agreement between the Company Exhibit 10.21 and Vantage Venture Partners, LP, dated February 28, 2000. Website Development and Hosting Agreement Exhibit 10.22 between the Company and e-Media, LLC, dated January 21, 2000. Financial Data Schedule. Exhibit 27 (b) Reports on Form 8-K ------------------- No report on Form 8-K was filed during the quarter. 12 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MOORE MEDICAL CORP. (REGISTRANT) By: /s/ Linda M. Autore By: /s/ Joseph P. Savidge --------------------------------- ----------------------------------- Linda M. Autore, President Joseph P. Savidge, Senior And Chief Executive Officer Vice President - Finance and May 15, 2000 Chief Financial Officer May 15, 2000 By: /s/ Susan G. D'Amato ----------------------------------- Susan G. D'Amato, Vice President - Finance and Controller May 15, 2000 13 EX-10.20 2 EMPLOYMENT AGREEMENT Exhibit 10.20 2/29/00 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, effective as of March 1, 2000, by and between MOORE MEDICAL CORP., a Delaware corporation (the "Employer"), and LINDA M. AUTORE of _______________________, Connecticut (the "Employee"). The Employer and Employee hereby agree as follows: 1. Term; Duties. For the period from March 1, 2000 through December 31, ------------ 2001 (or earlier, pursuant to paragraphs 6, 7 and 9) (the "Term"), the Employer will employ the Employee, and the Employee will serve the Employer, as its President and chief executive officer, subject at all times to the direction of its Board of Directors and Executive Committee. The Employee agrees that during the Term she will devote her entire working time and give her best efforts and attention to the business of the Employer. 2. Salary. As compensation for her services during the Term, the Employer ------ will pay the Employee, in installments on the Employer's regular payroll payment dates and subject to statutory withholding amounts, a salary : (a) for the period from March 1, 2000 through December 31, 2000, at the annual rate of $275,000 (i.e., of $229,166.66 for said ten month period); and (b) for 2001, at the annual rate of $275,000 plus an inflationary adjustment for any increase during 2000 in the Consumer Price Index. 3. Incentive Compensation. As additional compensation for her services ---------------------- during the Term, the Employer will pay the Employee incentive compensation pursuant to the Executive Officers' Bonus Plan of the Employer, as it may be adopted by its Board of Directors for each year during the Term. 4. Vacation. During each year of the Term, the Employee will be entitled to -------- four weeks vacation. 5. Non-Competition. The Employee covenants and agrees that during the Term --------------- she will not, directly or indirectly, engage or own any interest in any business competing with or planning to compete with any business or planned business of the Employer, whether as principal, agent, partner, director, officer, stockholder, investor, lender, consultant, employee, or in any other capacity. The Employee agrees that a remedy at law for any breach or threatened breach of the foregoing covenant will be inadequate, and that Employer will be entitled to temporary and permanent injunctive relief in respect thereof without the necessity of posting a bond or proving actual damage to Employer. 6. Death. The death of the Employee will terminate the Term. ----- 7. Incapacity. If during the Term the Employee is unable, on account of ---------- illness or other incapacity, to perform her duties for a total of more than 90 days during any twelve month period, the Employer has the right to terminate the Term on ten days' written notice to the Employee, and the Employee will thereafter be entitled to receive only one-half of her salary installments otherwise payable until the earlier of the last day of (i) the month-end twelve months after the delivery of said notice, or (ii) the Term (determined without giving effect to such termination) (the "Payment-End Date"). In the event of such termination, the covenant set forth in paragraph 5 will continue through the Payment-End Date. 8. Stock Option as an Inducement. As an inducement to the Employee to enter ----------------------------- into this Agreement, on February 23, 2000 the Employer's Board of Directors authorized the grant to the Employee of an incentive stock option, pursuant to the Employer's Incentive Stock Option Plan, to purchase 27,000 shares of the common stock of the Employer at $10.50 per share (the average market price on said date); the option becomes exercisable in four cumulative annual installments commencing on February 23, 2001, and it expires on February 22, 2005. 9. Effect of "Change of Control." The Employer or Employee may terminate ---------------------------- the Term, on written notice to the other within 30 days after a "change of control" (as defined in Section 3(a) of the Employer's Change of Control and Change of Position Payment Plan). The termination will be effective 30 days after the delivery of the notice. In the event of a termination (and if it was by the Employee's notice, also a "change of position" (as defined in Section 3(b) of the Plan)), the Employee will be entitled to the severance amount provided for in Section 4 of the Plan. 9. Governing Law; Etc. This Agreement is governed by the laws of ------------------ Connecticut. It cannot be changed except by a writing signed by the party to be charged therewith. IN WITNESS WHEREOF, the parties have signed and delivered this Employment Agreement, effective as of March 1, 2000. MOORE MEDICAL CORP. /s/ Linda M. Autore /s/ Robert H. Steele - -------------------------------- -------------------------- By: LINDA M. AUTORE Robert H. Steele, Chairman of the Board EX-10.21 3 SUBSCRIPTION AGREEMENT Exhibit 10.21 February 28, 2000 Moore Medical Corp. 389 John Downey Drive New Britain, CT 06050-1500 Attention: Joseph P. Savidge, Senior Vice President-Finance Re: Subscription Agreement -------------------------- Ladies and Gentlemen: 1. Agreement to Purchase --------------------- 1.1 Subscription. Vantage Venture Partners, LP, a Delaware limited ------------ partnership ("Holder"), hereby subscribes for and agrees to purchase 50,000 shares of the Common Stock ("Securities") of Moore Medical Corp., a Delaware corporation ("Company"), at a purchase price of $10.00 per share, on the terms and conditions described herein. Holder hereby tenders to the Company the amount of $500,000 by wire transfer to the account of the Company. 1.2 Acceptance of Subscription. The Company, by its execution and return to -------------------------- Holder of an executed copy of this Subscription Agreement, accepts the Holder's subscription. Such acceptance is subject to the execution and delivery by Asset Management Partners of the Subscription Agreement referred to in Section 2.1 below. 2. Registration Under the Securities Act of 1933. --------------------------------------------- 2.1 Registrable Securities. As used herein the term "Registrable ---------------------- Securities" means (x) the aggregate of 100,000 shares of Common Stock of the Company issuable under this Subscription Agreement and under a Subscription Agreement between the Company and Asset Management Partners being executed on the date hereof, together with (y) the 26,600 shares of Common Stock of the Company owned at the date hereof beneficially by Christopher W. Brody . In the event of any merger, reorganization, consolidation or recapitalization affecting the Common Stock, such adjustment will be made in the Registrable Securities as is appropriate in order to prevent any diminution or enlargement of the rights granted pursuant to this Section 2. 2.2 Registration. The Securities have not been registered for purposes of ------------ public distribution under the Securities Act of 1933 ("Act"). The Company will (a) file a Registration Statement on Form S-3 under the Act registering the Registrable Securities for a continuous or delayed offering pursuant to Rule 415 under the Act (the "S-3"), (b) keep the S-3 effective so long as such Securities may not be publicly distributed without registration under the Act, and (c), if so requested by Holder, amend the S-3 to cover the distribution of such Securities in an underwritten offering. 2.3 Miscellaneous Registration Provisions. The Company and the Holder agree ------------------------------------- as follows: (a) The Company will file the S-3 as expeditiously as reasonably practicable after the filing of its Form 10-K for its 1999 fiscal year, but in no event later than ninety days following the date thereof, and use its best efforts to have it become effective at the earliest practicable date thereafter, but no later than six months from the date hereof, and furnish the Holder with such number of prospectuses as it may reasonably be requested. (b) The Company will pay all costs, fees and expenses in connection with the S-3, including the Company's legal and accounting fees, printing expenses, and blue sky fees and expenses, but not underwriting commissions and discounts, if any, which will be payable by the Holder. (c) The Company will take all necessary action which may be required in qualifying or registering the Registrable Securities included in the S-3 for offering and sale under the securities or blue sky laws of such states as are requested by the Holder, except that the Company will not, for any such purpose, be required to quality to do business as a foreign corporation in any jurisdiction wherein it is not so qualified or to file therein any general consent to service of process. (d) The Company will indemnify and hold harmless the Holder and any underwriter (as defined in the Act) for the Holder and each person, if any, who controls the Holder or underwriter, within the meaning of the Act, against any losses, claims, damages or liabilities (or actions in respect thereof), joint or several, to which such indemnified party or parties may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) are caused by any untrue statement or alleged untrue statement of any material fact contained, on the effective date thereof, in the S-3, any prospectus contained therein, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse such indemnified party or parties for any legal (if the indemnifying party does not provide legal counsel reasonably satisfactory to the indemnifying party or parties) or other expenses reasonably incurred by it or them in connection with investigating or defending against any such loss, claim, damage, liability or action; provided, however, that the indemnifying party will not be ----------------- liable in any such case to the extent that any such loss, damage, expense or liability arises out of or is based upon an untrue statement, alleged untrue statement, omission or alleged omission so made in conformity with written information furnished by an indemnified party specifically for inclusion in the S-3. (e) The Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, and each person, if any, who controls the Company, within the meaning of the Act, against any losses, claims, damages or liabilities to which such indemnified party or parties may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) are caused by any untrue statement or alleged untrue statement of any material fact contained, on the effective date thereof, in the S-3, any prospectus contained therein, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse such indemnified party or parties for any legal (if the indemnifying party does not provide legal counsel reasonably satisfactory to the indemnifying party or parties) or other expenses reasonably incurred by it or them in connection with investigating or defending against any such loss, claim, damage, liability or action; provided, however, that the indemnifying party ----------------- will not be liable in any such case except to the extent that any such loss, damage, expense or liability arises out of or is based upon an untrue statement, alleged untrue statement, omission or alleged omission so made in conformity with written information furnished by the indemnifying party specifically for inclusion in the S-3, provided further, however, that ------------------------- Holder will not be liable hereunder for any amount in excess of the proceeds received by it on its sales of Registrable Securities under the S-3. (f) Promptly after receipt by an indemnified party pursuant hereto of notice of any claim or the commencement of any action to which indemnity would apply, such indemnified party will, if a claim thereof is made against the indemnifying party pursuant hereto, notify the indemnifying party of the claim or action, but the omission or delay so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party hereunder, except to the extent that the indemnifying party is prejudiced by such omission or delay. In case such action is brought against any indemnified party, and it notified the indemnifying party of the claim or action, the indemnifying party will be entitled to participate in, and to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party. (g) The Holder agrees to cooperate with the Company with the S-3 and any listing on a national securities exchange (including NASDAQ), including furnishing the Company with such information concerning the Holder and executing and delivering such documents as may be required by applicable securities laws or any such national securities exchange. 3. Holder's Representations and Warranties. The Holder acknowledges, --------------------------------------- represents and warrants to, and agrees with the Company, as follows: (a) Holder is purchasing the Securities for its own account for investment and not with a view to or for sale in connection with the distribution of the Securities, nor with any present intention of selling or otherwise disposing of all or any part of the Securities. Holder agrees that (i) the purchase of the Securities is a long-term investment, (ii) it may have to bear the economic risk of investment for an indefinite period of time because the Securities have not been registered under the Act, and, notwithstanding the Company's commitment herein, such Securities may not be registered, and cannot be resold, pledged, assigned, or otherwise disposed of or transferred unless they are subsequently registered under the Act and applicable state securities laws or any exemption from such registration is available. Holder authorizes the Company to place a legend denoting the restrictions on the Securities to be issued. (b) Holder is an "accredited investor" as defined in Section 2(a)(15) of the Act and in Rule 501 thereunder. Holder understands that Securities are being sold without registration under the Act in reliance upon the exemption contained in Sections 3(b), 4(2) or 4(6) of the Act and under applicable state securities laws. (c) Holder believes that the investment in the Securities is suitable for it based upon its investment objectives and financial needs, and Holder and its members have adequate means for providing for their current financial needs and contingencies and have no need for liquidity with respect to Holder's investment in the Company. (d) Holder has been given access to full and complete information regarding the Company and has utilized such access to its satisfaction for the purpose of obtaining information, and Holder has either met with or been given reasonable opportunity to meet with officers of the Company for the purpose of asking questions of, and receiving answers from such officers concerning the terms and conditions of operations of the Company and to obtain any additional information to the extent reasonably available. Holder has received all information and materials regarding the Company that it has requested. (e) Except for the representations and warranties of the Company contained in Section 4 hereof, Holder has relied solely upon its own investigation in making a decision to invest in the Company and it has independently evaluated the risks of purchasing the Securities. Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities and have obtained, in its judgment, sufficient information from the Company to evaluate the merits and risks of an investment in the Company. Holder has not utilized any person as its "purchaser representative" as defined in Regulation D under the Act in connection with evaluating such merits and risks. (f) Holder has received no representation or warranty from the Company or any of its officers, directors, employees or agents in respect of its investment in the Company other than as set forth herein. (g) Holder understands that (i) none of the Securities have been registered under the Act, or the securities laws of certain states, in reliance on the specific exemptions from registration, (ii) no securities administrator of any state or the federal government has recommended or endorsed the offer of the Securities or made any finding or determination relating to the fairness of any investment in the Company, and (iii) the Company is relying on my representations and agreements for the purpose of determining whether this transaction meets the requirements of the exemptions afforded by the Securities Act and certain state securities laws. 4. Company's Representations and Warranties. The Company represents and ---------------------------------------- warrants to, and agrees with the Holder, as follows: (a) All corporate actions on the part of the Company necessary for the authorization, execution, delivery and performance by the Company of this Agreement have been taken. (b) The execution, delivery and performance of this Agreement by the Company do not conflict with any material provision by which the Company is bound. (c) The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware. (d) The Company has filed all reports required to be filed by it under the Securities Exchange Act of 1934, such reports comply with the requirements of said Exchange Act in all material respects, and, as of the date of filing thereof, no such report contained an untrue statement of material fact or omitted to state a fact necessary to make a statement of material fact contained therein not misleading. (e) There has been no material adverse change in the Company's performance and financial condition, taken as a whole, from its performance and condition as reported in its Form 10-Q for its third quarter of its 1999 fiscal year, except as referred to in its press release dated February 15, 2000 summarizing its fiscal year and fourth quarter results. (f) The Company's capitalization is substantially as set forth in its Form 10-Q for its third quarter of the 1999 fiscal year. (g) As of the date hereof, no legal proceedings would be required to be reported under Item 3 of a Form 10-K for the Company's 1999 fiscal year other than as reported under Item 3 of Form 10-K for its 1998 fiscal year. (h) The Company has engaged no broker or finder in connection with the transaction contemplated by this Agreement. 5. Miscellaneous. ------------- 5.1 Governing Law and Jurisdiction. This Subscription Agreement will be ------------------------------ deemed to have been made and delivered in New York City and will be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York without giving effect to its principles of conflicts of law. The Company and the Holder each hereby (a) agrees that any suit, action or proceeding arising out of or relating to this Subscription Agreement will be instituted exclusively in New York State Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (b) waives any objection to the venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum for such suit, action or proceeding, and (c) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding, and the Company and the Holder further agree to accept and acknowledge service or any and all process that may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York and agrees that service of process upon it mailed by certified mail to its address or given as provided for in Section 5.3 will be deemed in every respect effective service of process upon it in any such suit, action or proceeding. 5.2 Benefit. This Subscription Agreement will be binding upon and inure to ------- the benefit of the parties hereto and their respective heirs, executors, personal representatives and successors. The rights of the Holder under Section 2 may not be assigned or transferred by the Holder other than to a transferee of Registrable Securities on a transfer which, in the written opinion addressed to the Company and its transfer agent and reasonably acceptable to both, is exempt from the registration provisions of the Act pursuant to Section 4(2) thereof, provided, however, that such transferee agrees in a writing delivered to the - ----------------- Company prior to such transfer to be bound by and subject to all the obligations of a Holder under this Agreement. 5.3 Notices. All communications under this Subscription Agreement shall be ------- in writing and will be sufficiently given if delivered to the addresses in person by overnight courier service, by confirmed facsimile transmission or, if mailed, postage prepaid, by certified retail (return receipt requested), and will be effective three days after being placed in the mail if mailed, or upon receipt or refusal of receipt, if delivered personally or by courier or confirmed facsimile transmission, in each case addressed to a party. The addresses for such communications shall be, with respect to (a) the Company, its address set forth above, and (b) the Holder, to its address as set forth below. 5.4 Entire Agreement. This Subscription Agreement constitutes the entire ---------------- agreement between the parties with respect to the subject matter hereof and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. It may not be changed, waived, discharged or terminated orally but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Very truly yours, VANTAGE VENTURE PARTNERS, LP By its General Partner, Vantage Partners, LLC By: /s/ Christopher W. Brody Christopher W. Brody Vantage Partners, LLC c/o Vantage Partners, LLC 610 Fifth Avenue, 7th floor New York, NY 10020 The foregoing subscription is accepted, and the Company hereby agrees to be bound by its terms. MOORE MEDICAL CORP. By: /s/ Joseph P. Savidge Joseph P. Savidge Senior Vice President-Finance EX-10.22 4 WEBSITE DEVELOPMENT AND HOSTING AGREEMENT Exhibit 10.22 WEBSITE DEVELOPMENT AND HOSTING AGREEMENT This Website Development and Hosting Agreement (the "Agreement") is made as --------- of January 21, 2000 ("Execution Date"), by and between Moore Medical Corp., a -------------- Delaware corporation ("Moore"), and e-Media, L.L.C., a Connecticut limited ----- liability company ("e-Media"). ------- RECITALS A. e-Media, which is in the business of designing, developing, creating, programming, implementing and launching websites, desires to design, develop, create, program, implement and launch a Website (as hereinafter defined) for Moore. Exhibit A, attached hereto, describes (in some instances, where expressly so stated, by incorporation by reference from e-Media's Scope of Work) the design, technical and functional capabilities, look and feel and certain other attributes of the Website (collectively, the "Specifications"). -------------- B. The Website is to employ Work Product (defined hereinafter) and e-Media-Licensed Works (defined hereinafter, together with the Work Product, the "Enabling Works") to implement, launch, produce, edit, -------------- publish, update and manage the Moore Content (defined hereinafter) on the World Wide Web (defined hereinafter) in accordance with this Agreement and the Specifications. The Work Product, which e-Media is to develop for Moore under this Agreement, and the Moore Content, are to be proprietary to Moore. The e-Media-Licensed Works, which are proprietary to e-Media, are to be licensed to Moore, irrevocably, perpetually, without royalty, for use on the Website. C. e-Media provides a variety of technical services relating to the hosting of websites on the World Wide Web, including the installation and maintenance of hardware, software and communications facilities, and the hosting and servicing of websites. D. Moore wishes to retain the services of e-Media to: (i) locate, establish, install, and maintain certain computer hardware, software and telecommunications lines located in, or extending to, e-Media's or a third-party's facilities (the "e-Media Network," as further defined herein) --------------- sufficient to make the Website accessible to users of the World Wide Web and to allow such users to transact business on the Website with Moore; (ii) assist Moore with its development and operation of certain computer hardware, software, and telecommunications lines located in, or extending to, Moore's facilities (collectively, the "Moore Network," as hereinafter ------------- further defined); (iii) assist Moore in updating and revising the Website; and (iv) consult with Moore with respect to the transfer of the Website. E. Moore desires to engage e-Media to design, develop, create, program, document, implement, launch, and host its Website, and e-Media wishes to provide Moore with such services as set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual promises set forth herein, Moore and e-Media hereby agree as follows: 6. DEFINITIONS The following terms are used with the following meanings herein: 1.1 "Accepted" has the meaning set forth in Section 2.6(d). -------- 1.2 "Agreement" means this Website Development and Hosting Agreement, --------- including all provisions thereof and all Exhibits thereto. 1.3 "Beta Phase One" means the Website review and testing phase in which -------------- e-Media and Moore employ the Enabling Works to produce, edit, publish, update and manage the Moore Content on the Website on password-protected Web Servers, for review and testing by Moore. 1.4 "Beta Phase One Acceptance" has the meaning set forth in Section ------------------------- 2.6(c). 1.5 "Beta Phase One Acceptance Review" has the meaning set forth in -------------------------------- Section 2.6(b). 1.6 "Beta Phase One Acceptance Review Period" has the meaning set forth in --------------------------------------- Section 2.6(b). 1.7 "Beta Phase Two" means the Website review and testing phase in which -------------- e-Media and Moore employ the Enabling Works to (a) produce, edit, publish, update and manage the Moore Content on the Website on password-protected Web Servers and (b) cause Web Servers to process commercial transactions on the Website with customers selected by Moore, for review and testing by Moore. 1.8 "Beta Phase Two Acceptance" has the meaning set forth in Section ------------------------- 2.6(c). 1.9 "Beta Phase Two Acceptance Review" has the meaning set forth in -------------------------------- Section 2.6(c). 1.10 "Beta Phase Two Acceptance Review Period" has the meaning set forth in --------------------------------------- Section 2.6(c). 1.11 "CFML" means the series of commands, known as ColdFusion Markup ---- Language, for creating and formatting Webpages and includes only current and future official extensions thereto. 1.12 "Change Proposal," "Change Offer" and "Change Order" have the meanings set --------------- ------------ ------------ forth in Section 3.1. 1.13 "Combined Network" means, collectively, the Moore Network and the e-Media ---------------- Network. 1.14 "Combined Network Architecture" has the meaning set forth in Section 5.2. ----------------------------- 1.15 "Confidential Information" means information in the possession or under the ------------------------ control of a party relating to the technical, customer, marketing, product or business affairs or proprietary or Trade Secret information of that party in oral, graphic, written, electronic or machine readable form, other than information that: (a) is known by the recipient in an integrated form at the time of disclosure; (b) becomes, through no act or fault of the recipient, publicly known; (c) is received by the recipient from a third party without a restriction on disclosure or use; or (d) is independently developed by the recipient without reference to such information. 1.16 Intentionally omitted. 1.17 "Content Management Tools" means e-Media's proprietary software, customized ------------------------ electronic data interfaces, forms, wizards and templates designed by it for editing and producing content on a website, as referred to under the column captioned "e-Media" in the table under section 1.6.2 of the Specifications and described in section 1.6.4 thereof. 1.18 Intentionally omitted. 1.19 "Cure" has the meaning set forth in Section 2.6(e). ---- 1.20 "Damages" has the meaning set forth in Section 11.1. ------- 1.21 Intentionally omitted. 1.22 "Development Agreement" means this Agreement, excluding Section 5 and all --------------------- Exhibits referenced solely therein. 1.23 "Development Fees" has the meaning set forth in Section 6.1. ---------------- 1.24 "Documentation" means (i) written manuals, meeting the Documentation ------------- Standards, containing all information and instructions, and presented in a manner, sufficient for an experienced or competently trained person to efficiently (x) operate the Website in accordance with the Specifications by employing the Enabling Works and (y) produce, edit, publish, update and manage the Moore Content on the Website, in accordance with the Specifications, and (ii) all work books, diagrams, support manuals, configuration details and identification of components and technical and design documents prepared by or for e-Media in connection with the Work Product or the Website. 1.25 "Documentation Request" and "Documentation Charge Statement" have the --------------------- ------------------------------ meanings set forth in Section 3.2. 1.26 "Documentation Standards" means text, in print or electronic form ----------------------- (Microsoft Word format), containing all information and instructions, and organized and presented in a manner, adequate to enable an end-user of the Enabling Work covered by Documentation to effectively employ it and benefit from all its features. The documentation furnished by the licensors of Hosting Software shall serve as a reference for such Standards. 1.27 "Domain Name" means Moore's World Wide Web URL: www.mooremedical.com and ----------- any alias or alternative URL so designated by Moore from time to time. "Primary ------- Domain Name" and "Secondary Domain Name" have the meanings set forth in Section - ----------- --------------------- 10.7. 1.28 "e-Media Confidential Information" includes all Confidential Information of -------------------------------- e-Media and the source code of the e-Media-Licensed Works. 1.29 "e-Media-Licensed Works" means the Content Management Tools and all ---------------------- Upgrades thereto made at any time during the Hosting Term. 1.30 "e-Media Network" means the computer hardware, network connections and --------------- telecommunications lines located in, or extending to, e-Media's or a third party service provider's facilities and designated in Exhibit L, to be operated and maintained by e-Media or a third party service provider as same relates to the Website. 1.31 "e-Media Server" means each individual server contained in the e-Media -------------- Network. 1.32 "e-Media Servers" means all servers contained in the e-Media Network. --------------- 1.33 "e-Media Server Specifications" has the meaning set forth in Section ----------------------------- 5.2. 1.34 "Enabling Works" has the meaning set forth in Recital B. -------------- 1.35 "Execution Date" has the meaning set forth in the introductory -------------- paragraph of this Agreement. 1.36 "For Cause Hosting Term Termination Event" has the meaning set forth ---------------------------------------- in Sections 5.9(b), 5.10(b) and 5.12. 1.37 "Hosting Agreement" means the Agreement, excluding Sections 2, 3, 4, ----------------- 6.2 and 6.3 and all Exhibits referenced solely therein. 1.38 "Hosting Fee" has the meaning set forth in Section 5.6. ----------- 1.39 "Hosting Service" has the meaning set forth in Section 5.1. --------------- 1.40 "Hosting Service Failure" or "Failure" means a failure, identified by ----------------------- ------- e-Media or Moore, of a Hosting Service to function in conformance with the Hosting Agreement. Hosting Service Failures shall be classified by level of severity as set forth in Exhibit N. 1.41 "Hosting Software" means all software, including server software, ---------------- telecommunications software, security software and other software that is necessary to operate and maintain the Website on the Combined Network in accordance with (i) the Hosting Agreement, and (ii) commonly accepted operating principles and industry standards. 1.42 "Hosting Term" has the meaning set forth in Section 5.7. ------------ 1.43 "HTML" means the series of commands, known as Hypertext Markup ---- Language, for formatting Webpages and includes all current and future extensions thereto, whether or not viewed as "official." 1.44 "including" means "including, but not limited to." --------- 1.45 "Indemnifying Party" has the meaning set forth in Section 11.1. ------------------ 1.46 "Indemnified Party" has the meaning set forth in Section 11.1. ----------------- 1.47 "Index Sites" has the meaning set forth in Section 2.9. ----------- 1.48 "Intellectual Property Rights" means all now known or hereafter known ---------------------------- tangible and intangible (a) rights associated with works of authorship throughout the universe, including but not limited to, copyrights, moral rights, and mask-works; (b) trademark and trade name rights and similar rights; (c) Trade Secret rights; (d) patents, designs, algorithms and other industrial property rights; (e) all other intellectual and industrial property rights (of every kind and nature throughout the universe and however designated, including logos, "rental" rights and rights to remuneration), whether arising by operation of law, contract, license, or otherwise; (f) all registrations, initial applications, renewals, extensions, continuations, divisions or reissues hereof now or hereafter in force; and (g) all rights in any of the foregoing. 1.49 "Internet" means the worldwide network of computers commonly -------- understood to provide some or all of the following features, among others: electronic mail, file transfers through File Transfer Protocol ("FTP"), Telnet access to local and remote computers, Usenet --- Newsgroups, Browser access to information on local and remote computers, Wide Area Information Servers ("WAIS") and World Wide Web access. ---- 1.50 "Launch" has the meaning set forth in Section 2.6(c). ------ 1.51 "Launch Acceptance Date" means the date immediately following the day ---------------------- as of which the Website has operated in accordance with the Specifications for an average of at least ninety-nine and one-half percent (99.5%) of the scheduled operating elapsed time (excluding from the numerator and denominator used in computation of said percent all time during which it did no so operate because of a breach by Moore of the Development Agreement) for any thirty (30) consecutive day period commencing after Launch. For purposes hereof, the Website shall not be deemed to have not operated in accordance with the Specifications to the extent that the downtime (i) does not arise from a breach by e-Media of the Development Agreement; or (ii) arises solely from one or a combination of the following: (a) downtime agreed to in writing by Moore and e-Media, (b) an act or omission of Moore constituting a breach by it of the Development Agreement, or (c) a modification to the Website mutually agreed to by Moore and e-Media. By way of example only, (i) if the Website does not so operate for an average of at least ninety-nine and one-half percent (99.5%) of the first thirty (30) days after Launch, Launch Acceptance Date will not have occurred on the thirty first (31st) day following Launch; and (ii) if at the end of the thirty second (32nd) day after Launch it did so operate for the immediately preceding thirty (30) days, the Launch Acceptance Date will have occurred as of the thirty third (33rd) day following Launch. 1.52 "meets the Specifications," "in accordance with the Specifications," ------------------------ ------------------------------------- "in conformance with the Specifications," "satisfies the -------------------------------------- ------------- Specifications," and similar phrases mean, with respect to the -------------- Enabling Works or the Website, that they or it perform and function in accordance with the Specifications. 1.53 "Megabits per second" or "Mbps" means 1,024,000 bits of data ------------------- ---- transmitted in one second. 1.54 "Moore Confidential Information" includes all: Confidential ------------------------------ Information of Moore; passwords used in connection with the Website (or a Beta Phase); server logs; the Work Product, its source code, and Documents related thereto; Moore Content which Moore designates as confidential; and other materials which Moore designates as confidential or which e-Media should reasonably believe to be confidential. Moore Confidential Information also includes the Website, other than to the extent made publically available by Moore on the World Wide Web and not subject to a copyright, patent, proprietary right held by Moore (except as surrendered by being so made available). 1.55 "Moore Content" or "Content" means all text, graphics, sound, ------------- ------- animation, video and other data supplied by Moore to e-Media, as such may be modified by Moore from time to time. 1.56 "Moore Marks" means the trademarks, trade names, service marks and ----------- logos owned, controlled or licensed by Moore. 1.57 "Moore Network" means the computer hardware, network connections and ------------- telecommunications lines located in, or extending to, Moore's facilities to be operated and maintained by Moore. 1.58 "Moore Representatives" has the meaning set forth in Section 5.5 (a). --------------------- 1.59 "Moore Specific Failure" has the meaning set forth in 5.10(a). ---------------------- 1.60 Intentionally omitted. 1.61 "Non-Renewal Payment" has the meaning set forth in Section 5.11. ------------------- 1.62 "Page View" means each access by an Internet user of a Webpage --------- contained within the Website. 1.63 "Personnel Agreements" means written agreements between e-Media and -------------------- each of its employees, consultants, sub-contractors and others who participate in, or who have access to, any of e-Media's work hereunder, in substantially the form of Exhibit ___ hereto. 1.64 "Pre-Execution Date Payments" has the meaning set forth in Section --------------------------- 6.1. 1.65 "Rejection" has the meaning set forth in Section 2.6(d). --------- 1.66 "Retainer Agreement" means an agreement between Moore and e-Media in ------------------ substantially the form of Exhibit D hereto. 1.67 "Secure Area" has the meaning set forth in Section 5.5. ----------- 1.68 "Staging Server" has the meaning set forth in Section 5.4. -------------- 1.69 "Source Code Escrow Agreement" means an agreement in the form of ----------------------------- Exhibit E hereto executed by e-Media, Moore and a mutually satisfactory person or entity, independent of Moore and e-Media, as escrow agent. 1.70 "Specifications" has the meaning set forth in the Recital A. -------------- 1.71 Intentionally omitted. 1.72 "Trade Secrets" means trade secrets as defined in the Connecticut ------------- Uniform Trade Secrets Act. 1.73 "Training Standards" means training, by skilled persons, each with ------------------ no less than twenty-four (24) months of experience training end- users of computers in a business setting. 1.74 "Transfer" means the transfer of the Website to Moore or a hosting -------- service provider of its choice. 1.75 "Transferable" means, with respect to the Website, that it functions ------------ and performs in accordance with the Specifications when operated (a) by Moore or by a hosting service provider selected by Moore on Web Servers technically equal to the equipment set forth in the Specifications meeting industry standards for performance and reliability (b) under the supervision of an experienced or competently trained person. 1.76 "Transfer Documentation" means written manuals and instructions, ---------------------- containing all information and instructions, and presented in a manner sufficient for an experienced or competently trained person selected by Moore to efficiently and effectively effect Transfer. 1.77 "Transfer Training" has the meaning set forth in Section 2.11. ----------------- 1.77A. "Updates" has the meaning set forth in Section 5.4. ------- 1.78 "Upgrades" means any change which (i) increases the speed, -------- efficiency or ease of operation of any software, script, technology or file, (ii) adds additional capabilities thereto, or (iii) otherwise improves the functionality, performance or appearance thereof. 1.79 "URL" ("Universal Resource Locator") means an address that --- identifies documents, such as Webpages and related resources, on the World Wide Web. 1.80 "Warranty Service Period" means the ninety (90) days, extended by ----------------------- all the time during which Warranty Service is required and during which it takes e-Media to implement any Warranty Service, immediately following Launch. 1.81 "Warranty Service" means all revisions, patches, fixes, work- ---------------- arounds, modifications and replacements necessary or appropriate for the Enabling Works to function and perform in accordance with the Specifications, consistently and without error. 1.82 Intentionally omitted. 1.83 "Web Browser" means the current version and the version immediately ----------- preceding the current version of software that is designed to allow interactive access to the World Wide Web (and in some cases to other Internet resources as well), including Netscape Navigator and Microsoft Internet Explorer. 1.84 "Webpage" means a document or file that is formatted using HTML, or -------- its equivalent, and that is intended to be accessible by Internet users with a Web Browser. 1.85 "Web Server" means computer equipment used to make the Website ---------- accessible to Internet users with a Web Browser. 1.86 "Website" means the presence, in accordance with the Specifications, ------- of the Moore Content on the World Wide Web (i) enabled by the integration of the Enabling Works and the Moore Content, and (ii) formed by the Combined Network. 1.87 "Website Updates" means revisions, updates, deletions, enhancements --------------- or modifications of the Website. 1.88 "World Wide Web" means all Webpages and resources related to -------------- Webpages accessible to Internet users with a Web Browser. 1.89 "Work Product" means all (a) HTML files, CFML files, Java files, ------------ graphics files, sound files, multimedia files, data files, technology, scripts and programs, both in object code and source code form, created by e-Media for Moore in connection with this Agreement, other than Content Management Tools, and (b) Documentation and any Transfer Documentation. 2. WEBSITE DEVELOPMENT, DELIVERY, TESTING AND LAUNCH 2.1 Development and Delivery of Website. e-Media agrees to (a) develop ----------------------------------- and deliver the Work Product to Moore, (b) license the e-Media- Licensed Works to Moore, (c) prepare and deliver the Documentation to Moore, (d) launch the Website for Moore, and (e) provide all design, development, creative, programming, installation, launching, training, technical support and other services in connection therewith, all as contemplated by the Development Agreement, in accordance with the Specifications. 2.2 Delivery of Moore Content. Moore agrees to deliver to e-Media all ------------------------- Moore Content that it desires e-Media to incorporate into the Website, in the formats set forth in the Specifications. e-Media shall, prior to incorporating Content delivered to it by Moore into the Website, remove any Trojan horses, worms, viruses or other disabling devices from it by scanning it with a virus detection program. In the event that Moore incorporates any Content directly into the Website, e-Media shall have no responsibility or liability to Moore or any third party arising out of any Trojan horses, worms, viruses or other disabling device ("Disabling Devices") that was in the Content or for the effect of such Disabling Devices on the Website. 2.3 Notice of Delay. e-Media agrees to notify Moore promptly of any --------------- factor, occurrence or event coming to its attention that may affect e-Media's ability to meet the requirements of the Development Agreement, or that may occasion any material delay in delivery of any Enabling Work or launch of the Website, including any loss or reassignment of key employees or equipment failure. Moore agrees to notify e-Media promptly of any factor, occurrence or event coming to its attention that may affect Moore's ability to meet the requirements of the Development Agreement, or that may occasion any material delay in delivery of Moore Content. 2.4 Project Leaders and Liaisons. Michael S. Terretta is the Project ---------------------------- Leader for e-Media, and Peter Hood is the Project Leader for Moore. They or their designees shall meet weekly, until Launch, and thereafter as reasonably requested by Moore until Launch Acceptance Date. Exhibit G, attached, sets forth the name, address, telephone number, fax number and e-mail address of each person designated by Moore or e-Media as responsible, for the respective party, for arranging meetings and consultations between the parties, and for the transmission and receipt of Content and Enabling Works, Documentation and technical information and assistance. ("Project Liaisons") The Project Liaisons shall attend or otherwise participate in project planning meetings as appropriate, and endeavor to respond within one business day of receipt of any requests for information or decisions that are communicated "live" by telephone between them (not over voice mail) or by e-mail. 2.5 Progress Reports. At least once every week until Launch, e-Media shall ---------------- offer to give, and if requested give, Moore a progress report advising Moore, in detail, of the status of e-Media's performance under the Development Agreement. Said report shall be in writing if so requested by Moore. 2.6 Delivery of Enabling Works; Acceptance in Phases. ------------------------------------------------ (a) Intentionally omitted. (b) Prior to the commencement of Beta Phase One, e-Media shall have successfully completed alpha testing of the Enabling Works reasonably satisfactory to Moore. Unless the parties otherwise mutually agree in writing, subject to the installation by Moore of appropriate connectivity requirements, e-Media shall cause the Website development to enter Beta Phase One as soon as practicable. e-Media shall deliver all Enabling Works to Moore and install them, with the Moore Content delivered previously to e-Media, on the Web Servers, prior thereto. During Beta Phase One, Moore shall (i) review the Enabling Works and Website to determine whether they conform to the Specifications, and (ii) perform tests to determine whether the Enabling Works, when integrated with all previously-delivered Work Product and Moore Content and operated on the Web Servers set forth in the Specifications, function and perform (x) as set forth in the Specifications, and (y) repetitively on a variety of data, without failure or error, consistently and accurately ("Beta ---- Phase One Acceptance Review"). e-Media shall give Moore all --------------------------- reasonable assistance required to conduct the Beta Phase One Acceptance Review. Moore shall have a reasonable period of time, of approximately four (4) weeks, to conduct Beta Phase One Acceptance Review ("Beta Phase One Acceptance Review Period"). --------------------------------------- (c) Once Moore has communicated, in writing, to e-Media that it has satisfactorily completed the Beta Phase One Acceptance Review ("Beta Phase One Acceptance"), e-Media shall cause the Website ------------------------- development to enter Beta Phase Two. During Beta Phase Two, Moore shall review and perform tests on the Enabling Works by conducting commercial transactions with customers selected by it ("Beta Phase Two Acceptance Review"). e-Media shall give Moore -------------------------------- all reasonable assistance required to conduct the Beta Phase Two Acceptance Review. Moore shall have a reasonable period of time, of approximately four (4) weeks, to conduct Beta Phase Two Acceptance Review ("Beta Phase Two Acceptance Review Period"). --------------------------------------- Once Moore has communicated, in writing, to e-Media that Moore has satisfactorily completed Beta Phase Two Acceptance Review ("Beta Phase Two Acceptance"), the Website will begin full ------------------------- commercial-use operation ("Launch"). ------ (d) Moore shall notify e-Media if either the Beta Phase One or Beta Phase Two Acceptance Review does not establish that the Enabling Works conform to, function and perform, or the Website does not operate, in accordance with the Specifications (a "Rejection"). --------- During such Beta Phase One and Beta Phase Two Acceptance Review Periods, Moore may Reject all or any part of the Enabling Works or Website which does not satisfy, conform to, function, perform or operate in accordance with, the Specifications. A Rejection shall be in writing and shall state the grounds therefor. Subject to the provisions of Section 2.7, an Enabling Work or the Website shall be considered accepted ("Accepted," resulting in either -------- Beta Phase One Acceptance or Beta Phase Two Acceptance, as applicable) if Moore does not Reject it within the applicable Acceptance Review Period. (e) If Moore Rejects an Enabling Work or the Website, e-Media shall have up to the following ten (10) business days, but in no event more than the applicable Review Period, to implement any corrections, amendments or other changes necessary to establish that it functions, performs and operates in accordance with the Specifications ("Cure"). Upon implementation of such Cure, ---- e-Media shall redeliver such Enabling Work to Moore or reimplement the Website for a Beta Phase One or Beta Phase Two Acceptance Review, as applicable. (f) If Moore Rejects an Enabling Work or the Website, the procedures set forth herein shall be repeated until it is Accepted within 10 days of Rejection, unless it is not Accepted within said period or is Rejected 3 times. If it is not Accepted within said period or is Rejected 3 times, Moore may commence an arbitration against e-Media seeking remedies as a result of its damages relating to rejection pursuant to this Section 2.6(f). 2.7 Intentionally omitted. --------------------- 2.8 Back-up of Enabling Works and Moore Content. Prior to Acceptance of an ------------------------------------------- Enabling Work, e-Media shall back up said Work and the Moore Content at such times and shall store said back up materials at such locations as is consistent with e-Media's Gold Level hosting program. 2.9 Submission to Index Sites. At least 5 days prior to the delivery of ------------------------- the Enabling Works for Beta Phase One, e-Media shall supply Moore with a list of online directories and search engines ("Index Sites") (e.g., ----------- Alta Vista, Yahoo!, Infoseek, Lycos, and similar Internet resources that maintain lists of or information about resources available on the Internet) that may be appropriate to list the Website. At Moore's option and convenience, Moore shall then specify (in writing or by e-mail) up to six (6) Index Sites to which it would like its Website submitted, and e-Media shall then submit Website to the selected Index Sites within one week of Moore's selection of Index Sites. 2.10 Website Transfer. Website transfers by e-Media to Moore to a new ---------------- hosting service will be provided and effected and completed, at Moore's written request to e-Media, within thirty (30) days after said request, subject to payment, except as provided in Section 5.12, to e-Media of fees at the rate of eighty dollars ($80) per hour not in excess of one hundred fifty (150) hours in connection therewith. 2.11 Training. e-Media shall, prior to Launch, train the persons selected -------- by Moore to use and maintain the Enabling Works, and all Upgrades thereto. Such training shall consist of at least ten (10) consecutive business days of training by experienced personnel at a location in Connecticut designated by Moore. In addition, e-Media shall, at Moore's request, at charges of no more than its reasonable and customary hourly or daily charges, and at a cost of no more than $175 per hour or $1,200 per day, promptly train persons selected by Moore to implement, independently of e-Media, and Transfer the Website ("Transfer Training"). All such training shall conform to the Training ----------------- Standards. 2.12 Documentation. ------------- (a) Documentation for Work Product and e-Media-Licensed Works. --------------------------------------------------------- e-Media shall, on or prior to the date of Launch, deliver all Documentation to Moore for the Work-Product and e-Media-Licensed Works meeting the Documentation Standards. (b) Intentionally Omitted --------------------- (c) Transfer Documentation. e-Media shall promptly prepare and ---------------------- deliver such Transfer Documentation as Moore may request pursuant to Section 3.2 at charges of no more than its reasonable and customary hourly or daily charges. 2.13 Work Product Operating Response Time. e-Media shall design and program ------------------------------------ the Website utilizing generally accepted industry practices such that the Website, if hosted on the e-Media Servers with the e-Media Network Architecture identified in Exhibit L, will, during no sixty (60) consecutive minute period, process commercial transactions at a median rate of in excess of one-half (1/2) of one (1) second, measured at said e-Media Servers, from the receipt at said Servers of the commercial transaction requests until the completion of the processing by said Servers and Website. 3. ADDITIONAL WORK 3.1 Change Orders: Modification of Work Product and e-Media-Licensed ---------------------------------------------------------------- Works. If Moore desires e-Media to change a function or performance of ----- a Work Product or e-Media-Licensed Work from that set forth in the Specifications, Moore shall deliver to e-Media a statement of the changes desired (the "Change Proposal"). Within 5 days of a Change --------------- Proposal, e-Media shall submit a change order proposal (the "Change ------ Offer") which includes a statement of any additional charges and, if ----- the Change Offer is provided prior to Acceptance of the Work Product or e-Media-Licensed Work, any adjustments to the date of Launch that it proposes to effect the changes described in the Change Proposal. e-Media shall quote all Change Proposal charges at no more than its reasonable and customary hourly or daily charges, and at no more than $175 per hour or $1,200 per day. On Moore's written approval of the Change Offer (a "Change Order"), the Change Proposal and Change Order ------------ shall become a part of the Specifications. The Work Product and e-Media-Licensed Work on any Change Order shall be subject to Acceptance Reviewing, with the number of days for Acceptance Review and Acceptance Review Period set forth in the Change Proposal. 3.2 Preparation and Delivery of Transfer Documentation. If Moore desires -------------------------------------------------- e-Media to prepare Transfer Documentation, Moore shall deliver to e-Media a statement of the Transfer Documentation desired (the "Documentation Request"). Within 5 days of the Documentation Request, --------------------- e-Media shall submit a documentation charge proposal (the "Documentation Charge Statement") which includes a statement of the ------------------------------ charges and delivery dates it proposes for the requested Documentation. Such delivery dates shall be as early as reasonably practicable, and shall not entail a longer delay in starting and concluding the work than encountered by e-Media's other clients for work of similar size and scope. e-Media shall quote all charges at no more than its reasonable and customary hourly or daily charges, and at no more than $175 per hour or $1,200 per day. On Moore's written approval of the Documentation Charge Statement, e-Media shall prepare and deliver Transfer Documentation as requested by the Documentation Request and in accordance with the Documentation Charge Statement. 3.3 Sufficient Writings. A Change Proposal, Change Offer, Change Order, ------------------- Documentation Request and Documentation Charge Statement shall be written and signed by Moore's Senior Vice President of Information Systems (Peter Hood, on the Execution Date) or its Manager of Program Service (Lorraine Crawford, on the Execution Date) and by e-Media's chief financial officer (Raymond Tellini, on the Execution Date) or its account manager (Evan Barnet, on the Execution Date). An e-mail message shall constitute a writing, for purposes hereof, only if: (a) the e-mail message explicitly and prominently states that it is "Change [Proposal][Offer][Order], Documentation [Request] [Charge Statement] Number __ pursuant to the Moore Medical/e-Media Website Development and Hosting Agreement"; (b) the responding e-mail message clearly refers to the specific e-mail message to which it is responding; (c) the terms of the Change [Proposal][Offer][Order], Documentation [Request] or [Charge Statement], including the work to be done, the timing for that work, and the price for that work, are evident on the face of the three e-mail messages without reference to any other e-mail messages or Webpages; and (d) the three e-mail messages reflect a complete agreement among the parties on all material points mentioned in each e-mail message. 3.4 Retainer Agreement. On Moore's written request at any time prior to ------------------ March 1, 2000, e-Media shall execute the Retainer Agreement to Moore in the form of Exhibit D hereto, and Moore shall thereupon execute it and deliver it to e-Media. If Moore does not make such request, e-Media shall offer such Retainer Agreement after March 1, 2000, based upon e-Media's then current rates. 4. LICENSES 4.1 License by e-Media to Moore of e-Media-Licensed Works. e-Media hereby ----------------------------------------------------- grants to Moore, its successors and assigns a worldwide, non-exclusive, royalty-free, perpetual, irrevocable right to use, publicly perform, publicly display and digitally perform the e-Media-Licensed Works, in all media now known or hereafter known. e-Media shall, prior to the Beta Phase Two Review Period, provide to Moore the object code to the most current copies of all e-Media-Licensed Works to which Moore has rights pursuant to the foregoing, plus all related Documentation. Moore's exploitation of the e-Media-Licensed Works shall be limited to (i) the use of same in connection with the Website, and (ii) the use by alternative URL's pointed at the Website's URL (ie. such that when a user addresses the alternative URL it will gain access to the Website). Said license to: (1) reproduce and create derivative works shall be limited to reproduction and creation of derivative works made (a) in connection with the Website, or (ii) to edit and produce content thereon; and (2) reproduce and create derivative works shall be limited to reproductions and creation of derivative works for Moore's internal use only, provided that this limitation shall not restrict Moore from using, publicly performing, publicly displaying and digitally performing Content edited or produced with such reproduction or derivative work. 4.2 Intentionally Omitted. --------------------- 4.3 Licenses Irrevocable. All licenses granted under or pursuant to this -------------------- Agreement (including e-Media-Licensed Works and under Section 10.1 of this Agreement) are irrevocable, and any purported revocation shall be void and of no effect. 4.4 Post-Hosting Period Upgrades to e-Media-Licensed Works. Moore shall be ------------------------------------------------------ entitled to obtain licenses to Upgrades to the e-Media-Licensed Works made after the Hosting Period on no less favorable terms than offered by the e-Media to its licensee offered the most favorable terms. 5. Website Hosting Services 5.1 Hosting Services. e-Media shall, during the Hosting Term, provide to ---------------- Moore the specific technical services described in Exhibit K hereto, and all services set forth or described in this Section 5 and all subparts hereof (each a "Hosting Service," and collectively the --------------- "Hosting Services"). ---------------- 5.2 Delivery and Implementation of Hosting Services. e-Media shall, during ----------------------------------------------- the Hosting Term, deliver and implement the Hosting Services in accordance with the Specifications, the network architecture of the e-Media Network and the e-Media Server specifications set forth in Exhibit L ("e-Media Server Specifications"). ----------------------------- 5.3 Hosting Software. ---------------- (a) e-Media shall, for purposes of providing the Hosting Services provided herein during the Hosting Term, provide and maintain the Hosting Software. (b) e-Media represents and warrants that (a) Exhibit K, attached, sets forth: (i) all Hosting Software; (ii) the nature and use of such Software; (iii) its owner; and (iv) all licenses to e-Media of such Software, other than Hosting Software that e-Media has the right to use without license; and (b) e-Media will maintain all such licenses during the Hosting Term, without charge to Moore, sufficient for the operation of the Website and for it to discharge its obligations under the Hosting Agreement. (c) e-Media shall not add or remove any Hosting Software (or any part thereof) without Moore's prior written consent. 5.4 Website Updates. e-Media shall, during the Hosting Term, provide Moore --------------- with a system and necessary software to allow Moore to transmit changes to the Website Content ("Updates") to a staging server ------- designated by e-Media (the "Staging Server"). e-Media shall, within -------------- ten (10) business days of receipt by Moore, update the appropriate e-Media Server(s) with the Website Updates on the Staging Server, provided that such Updates are in a form which can be placed on the appropriate e-Media Server(s) and accessed over the Internet. e-Media shall, prior to said updating of the appropriate e-Media Servers with the Website Updates, scan the Updates with a current virus protection program in an effort to remove any interference from Disabling Devices from said Updates, 5.5 Access and Security. ------------------- (a) Physical Access and Security. e-Media shall maintain a secure ---------------------------- cage(s) in which all of the e-Media Network, Website and Confidential Information deployed in digital format and which comprises portions of the Website shall be located and stored (the "Secure Area"). Access to the Secure Area shall be limited ----------- by e-Media solely to (i) the individuals identified in Exhibit M, as amended by Moore from time to time, as authorized by Moore to have access to the Secure Area (the "Moore Representatives") with --------------------- e-Media representatives present, and (ii) e-Media's engineers, senior engineers, system administrators, equivalent systems personnel and senior management (and as necessary and with appropriate supervision, other service personnel) authorized by e-Media based on their need to have access to perform the Hosting Services hereunder. Moore Representatives shall have access to the Secure Area and any other location in which any e-Media Server, Content or Confidential Information is located twenty-four (24) hours a day, seven (7) days a week. To the extent that Moore desires access to the Secure Area pursuant hereto, e-Media will afford Moore reasonable access to e-Media representatives for such purpose. (b) Electronic Security. e-Media shall provide electronic security ------------------- (i.e., "firewalls"), including but not limited to operating systems and network interfaces, for the Combined Network so as to prevent unauthorized access by third parties to the Website and Confidential Information. Moore shall consult with e-Media to assist it with formulating and implementing a general security policy. 5.6 Monthly Hosting Fees and Hosting Payment Terms. In consideration of ---------------------------------------------- the Hosting Services and other services provided by e-Media under Article 5 of this Hosting Agreement, Moore agrees to pay e-Media a fee of $22,883.00 per month for each month during the Hosting Term ("Hosting Fee"), payable on the first day of each month in advance. ----------- 5.7 Hosting Term. e-Media shall provide the Hosting Services for a period ------------ of twelve (12) months from Launch, unless earlier terminated as otherwise provided in Sections 5.9(b), 5.10(b) and 5.12 (the "Initial ------- Term"). e-Media shall continue to provide the Hosting Services on the ---- terms and conditions of this Hosting Agreement beyond the Initial Term for additional twelve (12) month terms (each, subject to Sections 5.9(b), 5.10(b) and 5.12, a "Renewal Term") unless Moore gives e-Media ------------ a written notice of termination at least three (3) months prior to the expiration of the Initial Term or the then-current Renewal Term. The Initial Term and any Renewal Term(s) are herein collectively referred to as the "Hosting Term." ------------ 5.8 Hosting Services Termination and Payment. Upon the effective date of ---------------------------------------- any termination or expiration of the Hosting Term, Moore shall pay (i) all unpaid and outstanding fees through the effective date of termination or expiration of the Hosting Term and (ii)if it fails to renew the Initial Term for a Renewal Term pursuant to Section 5.7 and except as provided for in Sections 5.11 and 5.12, the Non-Renewal Payment. 5.9 Performance Representations and Warranties. e-Media represents and ------------------------------------------ warrants the following: (a) Dedicated Equipment and Bandwidth. The e-Media Network, and each --------------------------------- component thereof, is and will be dedicated solely to Moore. e-Media acknowledges that it established the e-Media Network Configuration and Moore Network Configuration with knowledge of the particular purpose for which such Networks are required by Moore and with knowledge that Moore is relying on e-Media's skill and judgment to select or furnish suitable hardware, software, network connections and telecommunications lines. e-Media hereby warrants that the e-Media Network, and each component thereof, provided to Moore from e-Media and all spare components shall be current technology, new and merchantable and shall be fit for their intended purpose in accordance with the Hosting Agreement. (b) Uptime. Except as otherwise agreed in writing by the parties, the ------ Website shall be accessible to Internet users twenty-four (24) hours per day, seven (7) days per week, with the sole exception of scheduled maintenance during such times as Moore and e-Media mutually agree in advance in writing which shall be not less than an average of ten (10) minutes per day during each prior consecutive thirty (30) day period ("Scheduled Hosting ----------------- Maintenance Time"). E-Media shall furnish to Moore Hosting ---------------- Services, including response in the event of a Failure, consistent with e-Media's Gold Level Hosting Service described on Exhibit N hereto. Notwithstanding the foregoing, in the event of any loss or interruption of Hosting Services for more than an average of twenty (20) minutes per day during each consecutive thirty (30) day period, Moore shall (as its sole remedy under this Agreement, including without limitation the Hosting Agreement, receive a credit against future Hosting Services equal to one (1) day for each day or portion thereof during which there is any loss or interruption of Hosting Services for more than an average of twenty (20) minutes per day during each consecutive thirty (30) day period. Any loss or interruption of the Hosting Services, for causes other than scheduled maintenance in excess of a cumulative period of 1350 minutes in any consecutive thirty (30) day period shall be considered a For Cause Hosting Term Termination Event. The parties acknowledge that the Website may be accessible to Internet users but Internet users may, for reasons unrelated to e-Media or its obligations hereunder, be unable to access the Website (ie. storm damage, cable cuts, or the like). In any such event(s), the downtime shall not be counted against e-Media for the purposes hereof. (c) Backup; Redundancy. e-Media will provide Moore at all times with ------------------ the equipment, communications capacity and carriers, power backup and redundancy set forth in the e-Media Network Architecture, provided that in any event e-Media will always provide Moore with sufficient local generator backup power capacity to fully operate the e-Media Network for at least two (2) consecutive hours. In the absence of extraordinary circumstances, e-Media has access to spare web servers and shall put available servers into use on six (6) hours notice in the event that the e-Media Network ceases to make the Website available to Internet users. (d) Response Time. E-Media warrants that the Website will process ------------- commercial transactions during no sixty (60) consecutive minute period at a median rate of in excess of one-half (1/2) of one (1) second, measured at the e-Media Servers, from receipt of commercial transaction requests until completion of the processing by said servers and the Website. (e) Processor Capacity. The e-Media Servers shall each, on the ------------------ average, operate at less than fifty percent (50%) processor capacity between 8:00 a.m. and 8:00 p.m. EST. 5.10 Procedure for Determining and Remedying Hosting Service Failure. --------------------------------------------------------------- (a) Time to Discover; Notification of Moore. As soon as practicable, --------------------------------------- but in any event within one (1) hour following identification by e-Media or Moore of any Hosting Service Failure, e-Media will determine and report to Moore's chief information systems' officer by telephone and/or e-mail (address: phood@mooremedical.com) whether, in its view, the source of such ---------------------- Failure is in the e-Media Network. Unless such Failure is limited to the Moore Network ("Moore Specific Failure"), e-Media will ---------------------- determine its source as soon as practicable after determining that it is not a Moore Specific Failure. In any event, e-Media will notify Moore of the source of such defect or problem as soon as practicable after identifying the source. (b) Remedy of Defect or Problem. After identification, except in the --------------------------- case of Moore Specific Failures, e-Media shall, at no additional cost to Moore, respond to and remedy, to the reasonable satisfaction of Moore, any Failure other than a Moore Specific Failure in accordance with Exhibit N. In the event that e-Media is unable or fails to remedy, to the reasonable satisfaction of Moore, e-Media shall notify Moore of such, and shall provide Moore with an alternate means of obtaining the Hosting Services to Moore within 24 hours at no extra cost to Moore. If e-Media fails to remedy such Failure after 24 hours, such shall be a For Cause Hosting Term Termination Event. In the case of Moore Specific Failures, e-Media will cooperate with Moore to resolve the problem as soon as possible. 5.11 Non-Renewal Payment. If Moore fails to renew the Initial Term for a ------------------- Renewal Term pursuant to Section 5.7, it shall pay e-Media a termination payment of $68,649 ("Non-Renewal Payment"). No such ------------------- payment shall be payable in the event of a For Cause Hosting Term Termination Event. 5.12 For Cause Hosting Term Termination. In the event that either (i) ---------------------------------- Launch Acceptance Date does not occur as specified in Section 14.7, or (ii) e-Media is in material breach of a provision of the Hosting Agreement and it fails to remedy such breach within five (5) business days of Moore's written notice thereof to e-Media, such shall be a For Cause Hosting Term Termination Event. In the event of a For Cause Hosting Term Termination Event, Moore may on written termination notice to e-Media terminate the Hosting Term for cause (a "For Cause --------- Hosting Term Termination Event"). No Non-Renewal Payment shall be ------------------------------ payable in the event of Moore's termination of the Hosting Term by reason of a For Cause Hosting Term Termination Event. In the event of a termination of the Hosting Term by reason of a For Cause Hosting Term Termination Event, e-Media shall transfer the Website to a new hosting services provider selected by Moore, within 150 person hours in no event to exceed thirty(30) days of such request, using 2-3 people assuming the transferee hosting service provider employs comparable bandwidth as that employed by e-Media, without charge. 6. COMPENSATION, ETC. 6.1 Development Fees. e-Media and Moore agree that e-Media's compensation ---------------- for designing, developing, creating, programming, documenting, implementing and launching the Website in accordance with the Development Agreement and the Specifications shall be one million three hundred seventy-five thousand six hundred fifteen dollars and no cents ($1,375,615.00) ("Development Fees") Moore has paid e-Media six ---------------- hundred eighty-seven thousand eight hundred seven dollars and fifty cents ($687,807.50) of the Fees on or prior to the Execution Date ("Pre-Execution Date Payments"). The balance of the Development Fees --------------------------- shall be paid as follows: (a) two-hundred and twenty-nine thousand two hundred sixty nine dollars and sixteen cents ($229,269.16) on the Execution Date, being paid on execution of this Agreement by application of the credit in the amount of two-hundred and twenty-nine thousand dollars ($229,000.00), (b) two hundred twenty-nine thousand four hundred three dollars and seventy five cents ($229,403.75) within simultaneous with Beta Phase Two commencement, and (c) two hundred twenty-nine thousand four hundred three dollars and seventy five cents ($229,403.75) simultaneous with Launch. One Hundred Thousand Dollars ($100,000.00) of the payment to be received simultaneous with Launch shall be held in escrow pursuant to the terms of the Escrow Agreement attached hereto as Exhibit O. 6.2 Repurchase of Certain Equipment. On October 8, 1999, Moore purchased ------------------------------- certain equipment from e-Media. e-Media is, simultaneous with the execution of this Agreement, repurchasing said equipment from Moore and is paying Moore two hundred thirty-four thousand one hundred fifty two dollars and fifty cents ($234,150.50) therefor (of which $229,000.00 is being applied as credit against the portion of the Development Fees payable under Section 6.1(a) of this Agreement, and the balance, $5,152.50, is being paid by e-Media's check to Moore in that amount) and, in consideration thereof, Moore is herewith transferring to e-Media all its right, title and interest in said equipment. 6.3 Expenses. Moore shall reimburse e-Media for all reasonable -------- out-of-pocket expenses which have been approved in advance in writing by Moore incurred by e-Media in the performance of services hereunder (except that no such advance approval shall be needed for long distance telephone calls, messenger, overnight delivery, automobile mileage and tolls, after- hour reasonable meal charges and outsourced photocopying expenses), within thirty (30) days after Moore's receipt of expense statements, with supporting documentation. 6.4 Most Favored Client. e-Media represents and warrants that the Fees do ------------------- not, and that the charges referred to in Sections 2.10, 2.11(c), 2.11(d), 3.1, 3.2, 3.4 and 5.6 will not, reflect hourly or daily charges in excess of those charged by e-Media on projects of similar size and scope for any other client of e-Media. 7. DEVELOPER REPRESENTATIONS AND WARRANTIES 7.1 No Conflict. e-Media represents and warrants that it is under no ----------- obligation or restriction, nor will it assume any such obligation or restriction that does or would in any way interfere or conflict with, or that does or would present a conflict of interest concerning, the work to be performed by e-Media under this Agreement. 7.2 Ownership and Licensed Rights. e-Media represents and warrants that: ----------------------------- (i) e-Media has the authority to enter into this Agreement and to perform all its obligations hereunder; (ii) e-Media has and will have full and sufficient right to transfer and assign all ownership rights in the Work Product to Moore and to grant all license rights to Moore in the e-Media-Licensed Works pursuant to this Agreement; (iii) e-Media is and will be the sole author of all Enabling Works; (iv) the Work Product is and will be created solely by e-Media; (v) e-Media has not granted any rights or licenses to any third party under or to Work Product or any portion thereof; (vi) the Website and Work Product are "works made for hire," e-Media's work on the Website and Work Product have been specially ordered by Moore as an audiovisual work, or such other category of work as may be eligible, to the greatest extent available under law, for treatment under 17 U.S.C ss. 101, et seq., as a "work made for hire;" and (vii) on delivery of Work Product and Website to Moore as required by this Agreement, Moore will have all right, title and interest therein, free of all claims (other than any claim by e-Media for unpaid Fees or reimbursable unreimbursed expenses), liens and encumbrances. 7.3 Non-infringement. e-Media represents and warrants that (i) the e-Media ---------------- Network, e-Media Licensed Works and Work Product do not and will not infringe, in whole or in part, any patent, copyright, trademark or other Intellectual Property Right of any third party, (ii) e-Media has received no claim or charge of such infringement by the e-Media Network, e-Media-Licensed Works or Work Product or any portion thereof, (iii) e-Media has no reason to believe that the e-Media Network, e-Media-Licensed Works or Work Product may infringe, in whole or in part, a patent, copyright, Trade Secret or other Intellectual Property Right of any third party, and (iv) the e-Media Network, e-Media- Licensed Works and Work Product do not invade or violate any right of privacy, personal or proprietary right, or other common law statutory right. 7.4 Originality. e-Media represents and warrants that the Work Product is ----------- and will be original work developed by it exclusively for Moore pursuant to this Agreement. 7.5 Copyright and Patent. e-Media represents and warrants that: (a) -------------------- assuming that Moore does not publish Work Product in a manner which causes loss of copyright therein, the Work Product is and will be entitled to copyright protection under United States copyright laws, and (b) no Work Product has or will be published by e-Media, or by any of its employees, consultants, sub-contractors or other person who has or obtains access to Work Product through e-Media, under circumstances which have caused, or may cause, a loss of copyright or patent therein. 7.6 Conformity, Performance, and Compliance. e-Media represents and --------------------------------------- warrants that: (a) all services performed and to be performed under this Agreement by e-Media will be rendered using sound, professional practices and in a competent and professional manner by knowledgeable, trained and qualified personnel; (b) the Enabling Works and Website will appear and operate in conformance with the Specifications; (c) the Website, if hosted in accordance with the Specifications, will be accessible by users of the Internet twenty-four (24) hours per day, seven (7) days per week; (d) all obligations owed to third parties with respect to obligations of e-Media pursuant to this Agreement or with respect to Enabling Works or the Website are or will be, prior to the beginning of Beta Phase Two, fully satisfied by e-Media, so that Moore does not and will not have any obligations with respect thereto to any third party; (e) e-Media has complied and will comply with all applicable federal, state and local laws in the performance of its obligations hereunder; (f) subject to Paragraphs 2.2 and 5.4 herein, the entire Website and the e-Media Network does not and will not contain any Trojan horses, worms, viruses or other disabling devices; (g) e-Media, in implementing the Website, will not alter the Moore Content in any manner without Moore's prior written consent; and (h) the Enabling Works and Website are and will be free from programming errors which would materially impair conformance with the Specifications. 7.7 Personnel Agreements. e-Media represents and warrants that it has and -------------------- will have Personnel Agreements. On Moore's request, which shall be made only upon Moore's reasonable and good-faith belief that a Personnel Agreement(s) has been breached to the detriment of Moore, e-Media shall furnish Moore with copies of the applicable executed Personnel Agreement(s). 7.8 Year 2000. e-Media represents and warrants that the Hosting Services, --------- e-Media Network, Website, Work Product and e-Media-Licensed Works shall provide, among other things, the following functionality: (a) accurate processing of date-related information before, during and after January 1, 2000, including, without limitation, accepting date input, providing date output, and performing calculations on dates or portions of dates; (b) function accurately in accordance with the Specifications and without interruption before, during and after January 1, 2000, without any change in operations associated with the advent of the new century; (c) respond to two-digit date input in a way that resolves any ambiguity as to century in a disclosed, defined and predetermined manner; and (d) store and provide output of date information in ways that are unambiguous as to century. 7.9 Transferability. e-Media represents and warrants that the Website, --------------- Work Product and e-Media-Licensed Works are and will be Transferable and warrants that all Transfer Documentation will meet the Documentation Standards. 7.10 Warranty Service. e-Media warrants that it will provide the Warranty ---------------- Service during the Warranty Service Period, except that e-Media will not be obliged to provide Warranty Service if Moore modifies an Enabling Work and/or the Moore Network unless it reasonably demonstrates that its modification did not cause the need for Warranty Service. 7.11 Source Code Escrow Agreement Deposit. e-Media and Moore agree to ------------------------------------ execute the Source Code Escrow Agreement prior to Launch, and to name AboveNet as escrow agent. e-Media represents and warrants that, upon Launch, it shall deposit the source code to the e-Media-Licensed Works in escrow, for release to Moore only upon the occurrence of certain events as forth therein. 7.12 No Certain Third Party Materials. e-Media warrants and represents that -------------------------------- no HTML file, CFML file, graphic file, sound file, data file, technology, script or program not proprietary to e-Media in incorporated in or used in connection with the Work Product other than Moore Content. 8. CLIENT REPRESENTATIONS AND WARRANTIES Moore represents and warrants that: (a) it has the power and authority to enter into this Agreement; (b) it is the owner or licensee of all rights necessary and appropriate to use the Moore Content on the Website; (c) the Moore Content is original, except for material in the public domain and such excerpts from the other works as may be included therein or pursuant to the written license of the copyright owners; (d) the Moore Content does not contain libelous material; (e) the Moore Content does not and will not infringe, in whole or in part, any patent, copyright, trademark or other Intellectual Property Right of any third party; (f) Moore has received no claim or charge of such infringement by the Moore Content or any portion thereof; (g) Moore has no reason to believe that the Moore Content may infringe, in whole or in part, a patent, copyright, Trade Secret or other Intellectual Property Right of any third party; and (h) the Moore Content does not invade or violate any right of privacy, personal or proprietary right, or other common law statutory right. 9. DISCLAIMERS OF OTHER WARRANTIES THE WARRANTIES SET FORTH IN THIS AGREEMENT ARE LIMITED WARRANTIES AND ARE THE ONLY WARRANTIES MADE BY THE RESPECTIVE PARTIES. THE PARTIES EXPRESSLY DISCLAIM, AND HEREBY EXPRESSLY WAIVE, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED. MOORE MAKES NO WARRANTIES OR GUARANTEES OTHER THAN TO e-MEDIA AS SET FORTH HEREIN AS TO THE ACCURACY OR COMPLETENESS OF ANY CONTENT PUBLISHED OR MADE ACCESSIBLE TO WEBSITE. 10. OWNERSHIP AND RIGHTS 10.1 Grant of License by Moore: Content. As between Moore and e-Media, ---------------------------------- Moore shall own all right, title and interest in and to the Content. Moore hereby grants to e-Media a non-exclusive, non-transferable, limited license, to use the Content under the terms and conditions of this Agreement solely in connection with the establishment of the Website. e-Media may only make such copies of the Content as may be necessary to perform its obligations under this Agreement. Except for the limited license set forth in this Section, Moore expressly reserves all other rights in and to the Content. 10.2 Copyright Notice. e-Media shall cause the following copyright notice ---------------- (or any other notices as instructed in writing by Moore) to be displayed on each page of Website on which Moore Content is viewed: "Copyright (or(C)) ____ [relevant year] Moore Medical Corp. All Rights Reserved." 10.3 Trademark Usage. e-Media shall not use any Moore Content or Moore --------------- Marks, in any manner other than as is expressly provided for in this Agreement, without Moore's prior written approval. e-Media shall submit to Moore for prior written approval any proposed use of the Moore Marks, and shall not use the Moore Marks without such approval. Moore reserves the right to review any approved use of the Moore Marks and to require changes in such further use, and e-Media agrees to comply with such requirements. e-Media acknowledges and agrees that: (a) it shall not use the Moore Marks in a manner likely to diminish the Moore Marks' commercial value; (b) it shall not knowingly permit any third-party to use the Moore Marks unless authorized to do so in writing by Moore; (c) it shall not knowingly use or permit the use of any mark, name, or image likely to cause confusion with the Moore Marks; (d) all goodwill associated with e-Media's use of the Moore Marks shall inure to Moore; (e) the Moore Marks are and shall remain the sole property of Moore; (f) nothing in this Agreement shall confer in e-Media any right of ownership in the Moore Marks, and e-Media shall not make any representation to the effect, or use the Moore Marks in a manner that suggests that such rights are conferred; and (g) e-Media shall not now or in the future contest the validity of the Moore Marks. 10.4 Publicity. Without limiting Section 10.3, e-Media and its employees, --------- agents and representatives will not, without prior written consent in each instance, use in any advertising, public announcement, press release or any other promotional endeavor any Moore mark, the name of Moore or any Moore affiliate, or any officer or employee of Moore, or any trade name, trademark, trade device, service mark, symbol or any abbreviation, contraction or simulation thereof used by Moore or its affiliates, or represent, directly or indirectly, that any product or service provided by e-Media has been approved or endorsed by Moore, or refer to the existence of this Agreement in a press release, advertising or materials distributed to e-Media's prospective customers. Notwithstanding the foregoing, after the Launch Acceptance Date, e-Media shall have the right to use the name of Moore on its standard client list which lists all or substantially all of the e-Media's other clients (provided, however, that Moore's name is not used or presented in a manner which is distinct from the way any of the other clients' names are presented). 10.5 Intellectual Property Rights in and Ownership of Work Product. ------------------------------------------------------------- (a) The Work Product and all Upgrades thereto are the property of Moore and all right, title and interest thereto, and the copyright embodied therein, shall vest in Moore and shall be deemed to be a "work made for hire" under the United States copyright law (17 U.S.C.ss.101 et seq.) and made in the course of the Development Agreement. To the extent that title to any such works may not, by operation of law, vest in Moore or such works may not be considered to be work made for hire, all right, title and interest therein are hereby irrevocably assigned to Moore. e-Media herewith irrevocably assigns to Moore all Intellectual Property Rights in the Work Product and the Upgrades thereto. All Work Product and Upgrades thereto shall belong exclusively to Moore with Moore having the right to obtain and to hold in its own name, copyrights, patents, registrations or such protection as may be appropriate to the subject matter, and any extensions and renewals thereof. e-Media agrees to give, without charge (except for copying or similar administrative costs), Moore and any person designated by Moore all information available to e-Media and to assist (at its regular charges, for consultations) Moore in determining patentability and perfecting and enforcing the rights defined in this Section; provided, however, that to the extent ----------------- that any information is e-Media Confidential Information, e-Media shall promptly notify Moore thereof and shall furnish such Information to Moore upon receipt from Moore in form and substance reasonably satisfactory to e-Media and Moore of a non-disclosure agreement covering such Information. (b) e-Media agrees never to contest or dispute or assist others in contesting or disputing Moore's exclusive ownership of all right, title and interest in and related to the Work Product or Upgrades thereto, and the Intellectual Property Rights in or related to the Work Product or Upgrades thereto. (c) The Intellectual Property Rights or other property rights granted or assigned Moore hereunder shall become and remain the exclusive property of Moore even if Moore does not file applications for patent, copyright, trademark, service mark, trade secret, mask work or other similar protection, as applicable, for any such rights. (d) e-Media hereby waives any moral rights in and to the Work Product which e-Media may acquire pursuant to the Development Agreement or by operation of law and expressly agrees not to undertake any steps to acquire any such rights, and expressly grants Moore the right to make Upgrades in and to the same. 10.6 Rights Clearance. Moore shall be responsible for obtaining any ---------------- permissions necessary: (a) to place the Moore Content and any other editorial materials (i.e., photographs or other content which appears as part of the substantive content) on the Website; and (b) for the use of any Moore Content for navigational or site design purposes which is specifically requested for inclusion by Moore. Except with respect to the foregoing, e-Media shall have the full and complete responsibility to obtain any rights, licenses, clearances, releases or other permissions necessary for e-Media and Moore to develop and test any software to be incorporated as part of the Website pursuant to this Agreement or Content used for navigational or site design purposes, and e-Media shall pay all fees or costs associated therewith. With respect to any rights clearances, which are Moore's responsibility, e-Media will facilitate and clear such rights, subject to Moore's payments of any fees to third parties for such clearances (such fees to be approved in advance by Moore in writing). 10.7 Domain Names. Subject to availability, the Website shall have its URL ------------ under Domain Name, www.mooremedical.com, which Domain Name is and shall remain the sole property of Moore (the "Primary Domain Name"). ------------------- e-Media shall register any other available Domain Names which are necessary for the efficient and proper development and operation of the Website, which Domain Names will ultimately resolve to any Webpage within the Website of the Primary Domain Name (the "Secondary Domain ---------------- Names"). All Secondary Domain Names shall remain the sole property of ----- Moore. To the extent that title to the Primary Domain Name and the Secondary Domain Names does not vest in Moore by operation of law, e-Media hereby assigns all rights, title, and interests to Moore which e-Media has, may have, or may hereafter have, if any, in and to the Primary Domain Name and Secondary Domain Names. e-Media shall promptly, upon Moore's request, execute any documents and submit any documents to Network Solutions, Inc. and/or other agency which are necessary to give full force and effect to the foregoing assignment. 10.8 No Infringement. In performing services under this Agreement, each --------------- party agrees not to design, develop, or provide any items that infringes one or more patents, copyrights, trademarks, or other Intellectual Property Rights, privacy or other rights of any person or entity. If a party becomes aware of any such possible infringement in the course of performing any work hereunder, that party shall immediately so notify the other party in writing. 10.9 Additional Insured. Moore shall, at Moore's cost, cause e-Media to be ------------------ named as an additional insured under Moore's product liability insurance policy. 11. INDEMNIFICATION 11.1 Indemnification. Each party hereto (an "Indemnifying Party") shall --------------- ------------------ indemnify and hold harmless the other party hereto, and its employees, officers, directors, controlling persons and affiliates (each an "Indemnified Party") for, and shall pay to Indemnified Parties the ----------------- amount of any loss, liability, damage, diminution of value (but, not in the aggregate, in excess of the sum of the Fees paid by Moore to e-Media under this Agreement) and expenses (including costs of investigation and defense and reasonable attorneys' fees), whether or not involving a third-party claim (collectively, "Damages"), arising, ------- directly or indirectly, from or in connection with: (a) any breach by the Indemnifying Party of any representation or warranty made by said Party in this Agreement, and (b) any breach by the Indemnifying Party of any covenant or obligation of said Party in this Agreement. The remedies provided in this Section will not be exclusive of or limit any other remedies that may be available to an Indemnified Party. 11.2 Procedure for Indemnification - Third Party Claims. Promptly after -------------------------------------------------- receipt of notice by an Indemnified Party of any claim against it which, if valid, would entitle it to indemnification under Section 11.1, said Party, if it desires such indemnification, shall give prompt notice to the Indemnifying Party of such claim, but the failure to notify the Indemnifying Party will not relieve the Indemnifying Party of any liability that it may have to the Indemnified Party, except to the extent that the defense of such claim is prejudiced by the Indemnified Party's failure to give such prompt notice. Unless the Indemnifying Party (a) is also a party to such claim and the Indemnified Party determines in good faith that joint representation would be inappropriate or (b) fails to provide reasonable assurance to the Indemnified Party of its financial capacity to defend such claim and provide indemnification with respect to such claim, it will be entitled to participate in the defense of such claim and to the extent that it wishes to assume the defense of such claim with counsel reasonably satisfactory to the Indemnified Party and, after notice from the Indemnifying Party to the Indemnified Party, will not, as long as it diligently conducts such defense, be liable to the Indemnified Party under Section 11.1 for any fees of other counsel or any other expenses with respect to the defense of such claim, in each case subsequently incurred by the Indemnified Party in connection with the defense of such claim, other than reasonable costs of investigation. If the Indemnifying Party assumes the defense of a claim, (x) it will be conclusively established for purposes of this Agreement that the claim is within the scope of and subject to indemnification; (y) no compromise or settlement of such claims may be effected by the Indemnifying Party without the Indemnified party's consent unless (i) there is no finding or admission of any violation of law or any violation of the rights of any person and no effect on any other claims that may be made against the Indemnified Party, (ii) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party and (iii) the Indemnified Party will have no liability with respect to any compromise or settlement of such claims effected without its consent. If notice is given to an Indemnifying Party of a claim and the Indemnifying Party does not, within ten (10) days after the Indemnified Party's notice is given, give notice to the Indemnified Party of its election to assume the defense of such claim, the Indemnifying Party will be bound by any determination of such claim, or any compromise or settlement effected by the Indemnified Party. Notwithstanding the foregoing, if an Indemnified Party determines in good faith that there is a reasonable probability that a claim for which it would be entitled to indemnification under this Agreement may adversely affect it or its affiliates other than as a result of monetary damages, the Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise, or settle such claim, but the Indemnifying Party will not be bound by any determination of so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld). Each Indemnifying Party hereby consents to the non-exclusive jurisdiction of any court in which a claim is brought against any Indemnified Party for purposes of any claim that an Indemnified Party may have under this Agreement with respect to such claim or other matters alleged therein. 11.3 Procedure for Indemnification - Other Claims. A claim for -------------------------------------------- indemnification for any matter not involving a third-party claim may be asserted by notice to the Indemnifying Party. 12. CONFIDENTIALITY; NON-COMPETITION; ETC. 12.1 Confidentiality. e-Media shall treat this project as confidential in --------------- accordance with Section 12.3 below. e-Media may not issue any advertising, marketing material, or press release that refers to e-Media's work for Moore unless Moore has previously approved the material in writing, which approval shall not be unreasonably withheld. If e-Media receives inquiries regarding e-Media's work for Moore after Launch, e-Media may, without disclosing any Moore Confidential Information, respond to such inquiries with respect to the work that e-Media conducted for Moore and any technical questions relating to Website, but shall also use commercially reasonable efforts to refer all such inquiries to Moore. In no event shall e-Media comment on Moore's philosophies, motivations, goals, or the like in constructing a Website, on items or ideas that Moore may have decided not to include in its Website, or on disagreements or difficulties (if any should arise) between e-Media and Moore or between Moore and others in connection with this Agreement or the construction of Website. 12.2 Non-Competition. e-Media shall not, for a period equal to the greater --------------- of (i) one (1) year after the Launch Acceptance Date, and (ii) the term of the Hosting Agreement and any renewals or extensions thereof, but in no event more than three (3) years, develop or host an e-commerce Website (i) for any entity or person specified in Exhibit J, or (ii) for any business or unit of a business which (except for an incidental portion of its business competitive with a business of Moore) is a distributor of medical or surgical supplies. 12.3 "Look and Feel". e-Media shall not design or host a Website for one of ------------- its other clients that "looks and feels" materially like Website. Such "look and feel" shall be measured by reference to points (referred to below) the following elements as same exist on the Website as of the date of Launch: (a) the use of similar logos or graphics or similar sizing and placement of logos or graphics (5 points); (b) the use of a similar organization scheme for the entire Website or for any particular page or section thereof (30 points); (c) the use of the same type face for the customer's logo (5 points); (d) the organization of the site into sections similar to those on Website (30 points); (e) the use of a "button bar" that is substantially similar to Moore's "button bar" (15 points); (f) the use of descriptive text similar to or organized similar to that of Moore (10 points); and (g) the use of the same or substantially similar links or graphics to convey information (5 points). A website designed or hosted by e-Media shall be deemed to "look and feel" materially like the Website if 50 or more of such points are present. Notwithstanding anything to the contrary contained herein, nothing herein shall constitute a transfer or license by Moore to e-Media of any proprietary right that it may have. 12.4 Confidential Information. Each party shall hold the other party's ------------------------ Confidential Information in confidence and shall not disclose or use it for any purpose other than as necessary to perform it obligations under this Agreement. 12.5 Joinder, at e-Media's Option, Against e-Media's Employee's for Breach --------------------------------------------------------------------- of Personnel Agreement. If Moore seeks to enforce a Personnel ---------------------- Agreement against an employee of e-Media, it shall (i) where reasonable and practicable, provide e-Media an opportunity to join in the action, at its expense, and (ii) at e-Media's written request, forego the recovery of monetary damages from the employee if e-Media indemnifies Moore for the amount thereof on terms reasonably satisfactory to Moore and establishes to Moore's reasonable satisfaction the adequacy of its financial resources for such indemnification. 12.6 Non-Solicitation of Employees. Each party acknowledges that the other ----------------------------- party's employees are uniquely qualified for their jobs, and that the identity of the other party's employees is Confidential Information. Therefore, each party represents and warrants that it has not and agrees that it will not for a period until the earlier of (i) February 28, 2001, or (ii) one (1) year after the Launch Acceptance Date, solicit the employment of any of the other party's employees. 13. TERMINATION 13.1 Termination for Breach. Either party may terminate its obligations ---------------------- under the Development Agreement upon thirty (30) days written notice if the other party materially breaches any of the terms of the Development Agreement, provided, however, that its obligations will not terminate if the non-terminating party cures the breach (including by compensating the terminating party for its Damages, if any, resulting from the breach) within the thirty (30) day notice period. 13.2 Treatment of License of e-Media-Licensed Works in Bankruptcy. All ------------------------------------------------------------ rights and licenses granted under or pursuant to this Agreement by e-Media to Moore are, and shall be deemed to be, for the purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to "intellectual property" as defined under Section 101(56) of the Bankruptcy Code. The parties agree that Moore, as licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code. The parties further agree that in the event of the commencement of a bankruptcy proceeding by or against e-Media under the Bankruptcy Code, other than by Moore individually or with the cooperation of third parties and which is not dismissed within sixty (60) days following the date of commencement and for which a trustee is appointed (except as otherwise provided in the Source Code Escrow Agreement), Moore shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and embodiments of such intellectual property, and such, if not already in its possession, shall be promptly delivered to Moore (i) upon the expiration of the sixty (60) day period described above upon written request therefor by Moore, unless e-Media (as debtor-in-possession) or its trustee-in-bankruptcy elects to continue to perform all of its obligations under this Agreement, or (ii) upon the rejection of this Agreement by or on behalf of e-Media upon written request therefor by Moore, provided that in any such event Moore's exploitation of the intellectual property shall be limited to the use of same in connection with the Website and for its internal use, including the creation of derivative works solely for internal purposes, and to edit and produce Content for use on the Website only and not for any other use or purpose, including without limitation commercial or public use, and, other than as specifically provided herein, shall not encompass the production of derivative works, the sale, resale, license or sublicensing of any or all of such intellectual property. 13.3 Return of Confidential Information Upon Termination. Upon termination --------------------------------------------------- by a party of its obligations under this Agreement, the other party shall promptly return to the terminating party all copies of the other party's Confidential Information other than Confidential Information included in the Work Product theretofore delivered to Moore and paid for. 14. GENERAL PROVISIONS 14.1 Independent Contractors. The parties to this Agreement are independent ----------------------- contractors, and no agency, partnership, joint venture or employee-employer relationship is intended or created by this Agreement. Neither party shall have the power to obligate or bind the other party. Personnel supplied by e-Media shall work exclusively for e-Media and shall not, for any purpose, be considered employees or agents of Moore. e-Media shall be solely responsible for their supervision, direction and control, compensation, benefits and taxes. 14.2 Force Majeure. Neither party shall be deemed in default of the ------------- Development Agreement to the extent that performance of its obligations or attempts to cure any breach are delayed, restricted or prevented by reason of any act of God, fire, natural disaster, act of government, strikes or labor disputes, inability to provide raw materials, power or supplies, or any other similar act or condition beyond the reasonable control of the parties, provided that the party so affected uses its best efforts to avoid and remove the causes of nonperformance and continues performance hereunder immediately after those causes are removed. Upon such circumstances arising, the date of Launch shall be extended for a period equal to the duration of such circumstances (in no event to exceed a cumulative period of 30 days), and the parties shall meet forthwith to discuss what, if any, other modification may be required to the terms of the Development Agreement, in order to reach a resolution. In the event that any act or acts of force majeure prevent either party from carrying out its obligations under the Development Agreement for a cumulative period of more than 30 days, the other party may terminate its obligations under the Development Agreement upon 10 days written notice. Such termination shall not discharge any liability or obligation incurred hereunder prior to termination. 14.3 Governing Law. This Agreement shall be governed and construed in all ------------- respects with the state laws of the State of Connecticut as they apply to a contract entered into and performed within the State, without giving effect to principles of conflicts of laws. 14.4 Compliance With Laws. e-Media shall ensure that its Website design -------------------- services will comply with all applicable international, national and local laws and regulations. 14.5 Partial Invalidity. Should any provision of this Agreement be held to ------------------ be void, invalid or inoperative, the remaining provisions of this Agreement shall not be affected and shall continue in effect and the invalid provision shall be deemed modified to the least degree necessary to remedy such invalidity. 14.6 Headings. Headings used in this Agreement are for reference purposes -------- only and in no way define, limit, construe or describe the scope or extent of such section or in any way affect this Agreement. 14.7 Time of the Essence for Launch. e-Media shall perform the services, ------------------------------ and shall otherwise design, develop, test, deliver, implement, operate, maintain and update the Website and any Work Product, in compliance with the Specifications. Time is of the essence with respect to the Launch occurring by no later than March 15, 2000, provided, however, that if e-Media is prevented in effecting the Launch by said date by reason of Moore's failure to make any delivery required to be made by it to e-Media hereunder or to reasonably cooperate with e-Media and e-Media promptly advises Moore in writing that such failure will delay the Launch, said date shall be extended by the number of days of such failure and such additional time as may be reasonably required to reschedule in light of all of e-Media's commitments and obligations, but not more, in the aggregate, than two extension days for each day of Moore delay. 14.8 Notice. Any notice provided pursuant to this Agreement, if specified ------ to be in writing, shall be in writing and shall be deemed given (i) if by hand delivery, upon receipt thereof, (ii) if by mail, three (3) business days after deposit in the United States mails, postage prepaid, certified mail, return receipt requested, (ii) if by facsimile transmission, upon electronic confirmation thereof, or (iv) if by next day delivery service, upon such delivery. All notices shall be addressed as follows (or such other address as either party may in the future specify in writing to the other): In the case of e-Media: ---------------------- e-Media, L.L.C. 199 Elm St. New Canaan, CT 06840 Attention: Albert F. Barber, Chief Operating Officer Fax: 203-966-6042 e-mail: abarber@e-media.com ------------------- with a copy to: e-Media, L.L.C. 199 Elm St. New Canaan, CT 06840 Attention: Eric J. Dale, General Counsel Fax: 203-966-6042 e-mail: edale@e-media.com In the case of Moore: -------------------- Moore Medical Corp. 389 John Downey Drive New Britain, CT 06050 Attention: Peter Hood, Senior Vice President - Information Systems Fax: 860-826-3601 e-mail: phood@mooremedical.com ---------------------- with a copy to: Joseph Greenberger, Esq. 1370 Avenue of the Americas New York, NY 10019 Fax: 212-757-4053 and 212-496-8324 e-mail: grnbrgr@flash.net ----------------- 14.9 Neutral Construction. The parties to this Agreement agree that this -------------------- Agreement was negotiated fairly between them at arm's length and that the final terms of this Agreement are the product of the parties' negotiations. Each party warrants and represents that it has sought and received legal counsel of its own choosing with regard to the contents of this Agreement and the rights and obligations affected hereby. The parties agree that this Agreement shall be deemed to have been jointly and equally drafted by them, and that the provisions of this Agreement therefore should not be construed against a party on the grounds it drafted, or was more responsible for drafting, it. 14.10 No Waiver. The failure of either party to partially or fully exercise --------- any right or the waiver by either party of any breach, shall not prevent a subsequent exercise of such right or be deemed a waiver of any subsequent breach of the same or any other term of this Agreement. 14.11 Arbitration. Any dispute arising under or relating to this Agreement ----------- shall, at the request of either party, be submitted to binding arbitration administered by, and pursuant to the rules of, the American Arbitration Association held in Hartford, Connecticut, with all costs of the arbitration to be paid by the non-predominately prevailing party, and shared equally until such party is determined. The arbitrator may award injunctive relief or any substantive or procedural relief or direction available from a judge in an action, in law or equity. Prior to the appointment of an arbitrator, either party shall be entitled, in circumstances considered appropriate by a court of competent jurisdiction, to court-ordered injunctive relief; however, once an arbitrator is appointed, he/she shall have the power to modify or terminate any such court-ordered injunctive relief. Each party waives the posting of bond or security by the other party in connection with its seeking or obtaining injunctive relief. Judgment upon any arbitration award may be entered in any court having jurisdiction. All expenses (including reasonable attorneys', investigatory and experts' fees and disbursements) incurred by the predominately prevailing party in connection with the arbitration and the enforcement of the arbitration award shall be paid by the non-predominately prevailing party. 14.12 Entire Agreement. Each party to this Agreement acknowledges that this ---------------- Agreement constitutes the entire Agreement of the parties with regard to the subject matters addressed in this Agreement, that this Agreement supersedes all prior or contemporaneous agreements, discussions, or representations, whether oral or written, with respect to the subject matter of this Agreement, and that this Agreement cannot be varied, amended, changed, waived, or discharged except by a writing signed by all parties hereto. Each party to this Agreement further acknowledges that no promises, representations, inducements, agreements, or warranties, other than those set forth herein, have been made to induce the execution of this Agreement by said party, and each party acknowledges that it has not executed this Agreement in reliance on any promise, representation, inducement, or warranty not contained herein. 14.13 Insurance. e-Media shall, throughout the performance of its services --------- pursuant to this Agreement, maintain at its sole cost and expense: Comprehensive general liability insurance and broad form contractual insurance (including automobile liability insurance and broad form contractual coverage) with minimum limits of $1,000,000 combined single limit per occurrence, protecting e-Media and Moore from claims for loss or damage to property or loss, damage or liability for injury or death to persons occurring from any cause whatsoever that may arise from or in connection with the performance of e-Media's services under this Agreement or from or out of any negligent act of omission of e-Media, its officers, directors and employees; and worker`s compensation insurance as required by applicable law. IN WITNESS WHEREOF, each of the parties hereto have executed this Agreement as of the date first written above. e-Media, L.L.C. Moore Medical Corp. By: /s/ John Engel By: /s/ Linda M. Autore Title: President Title: President and CEO * 1/21/2000 - Each party's execution and delivery of this may be withdrawn by it if in its judgment exhibits wholly satisfactory to it are not exchanged and attached by 1/28/2000. Changes marked to pages 1,3,5,7,11,12,15,18,20,23,29 and per note on page 30 are incorporated. Exhibit A - Specifications Exhibit B - [omitted] Exhibit C - [omitted] Exhibit D - Form of Retainer Agreement Exhibit E - Form of Source Code Escrow Agreement Exhibit F - [omitted] Exhibit G - Project Liaisons Exhibit H - [omitted] Exhibit I - [omitted] Exhibit J - Entities and Persons for Whom e-Media May Not Develop a Website Exhibit K - Hosting Services: Technical Services Exhibit L - Combined Network Architecture and e-Media Server Specifications Exhibit M - Moore Representatives Exhibit N - Service Response Times Exhibit O - Escrow Agreement EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-30-2000 JAN-02-2000 APR-01-2000 6,572 0 12,455 200 11,185 35,392 23,583 (13,256) 46,089 15,526 0 0 0 34 28,161 46,089 29,517 29,517 20,844 20,844 9,105 0 (27) (405) (150) (255) 0 0 0 (255) (0.09) (0.09)
-----END PRIVACY-ENHANCED MESSAGE-----