As filed with the Securities and Exchange Commission on June 4, 1999
Registration No. 333-73459


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 3
to
FORM S-1

REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933


drkoop.com, Inc.
(Exact name of registrant as specified in its charter)

    Delaware                    7375                    95-4697615
(State or other          (Primary Standard           (I.R.S. Employer
jurisdiction of              Industrial           Identification Number)
incorporation or        Classification Code
 organization)                Number)

8920 Business Park Drive, Suite 200
Austin, Texas 78759
(512) 726-5110
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)


C. Everett Koop, M.D.
Chairman of the Board
drkoop.com, Inc.
8920 Business Park Drive, Suite 200
Austin, Texas 78759
(512) 726-5110
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies to:

  Anthony J. Richmond, Esq.               Jeffrey D. Saper, Esq.
   Harold R. DeGraff, Esq.                 Paul R. Tobias, Esq.
      Latham & Watkins                      Caine T. Moss, Esq.
   135 Commonwealth Drive         Wilson Sonsini Goodrich & Rosati, P.C.
Menlo Park, California 94025                650 Page Mill Road
       (650) 328-4600                   Palo Alto, California 94304
                                              (650) 493-9300

                          ----------------

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [_]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [_]

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.



++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JUNE 4, 1999

PROSPECTUS

9,375,000 Shares

[LOGO OF DRKOOP APPEARS HERE]

drkoop.com, Inc.

Common Stock


This is an initial public offering of 9,375,000 shares of common stock of drkoop.com, Inc. drkoop.com, Inc. is selling all of the shares of common stock offered under this prospectus.

There is currently no public market for the shares. Our common stock has been approved for listing on the Nasdaq National Market under the symbol "KOOP." We anticipate that the initial public offering price will be between $7.00 and $9.00 per share.

At our request, the underwriters will reserve at the initial public offering price up to $10 million of common stock for sale to each of Dell Computer Corporation, Quintiles Transnational Corp. and FHC Health Systems Investment Company, L.C., all of whom have expressed a non-binding interest in acquiring these shares. This would represent an aggregate of 3,750,000 shares of common stock at the midpoint of the estimated offering price range.

Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 8 to read about risks that you should consider carefully before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


                                                                      Per
                                                                     Share Total
                                                                     ----- -----
Public offering price...............................................
Underwriting discounts and commissions..............................
Proceeds, before expenses, to us....................................


drkoop.com, Inc. has granted the underwriters a 30-day option to purchase up to an additional 1,406,250 shares of common stock from us at the initial public offering price less the underwriting discount. The underwriters expect to deliver the shares on , 1999.


Bear, Stearns & Co. Inc.
Hambrecht & Quist Wit Capital Corporation as e-Manager(TM)

The date of this prospectus is , 1999


Description of Artwork

Inside Front Cover Overleaf

Photograph of C. Everett Koop, M.D., with the following caption: "During my tenure as U.S. Surgeon General, I saw first-hand the powerful impact a well- informed public made on the nation's health. Now, the World Wide Web presents exciting new opportunities to empower consumers to become active, informed participants in managing their own healthcare. I firmly believe that this is the path to significantly improving the quality of healthcare for years to come."

Inside Front Cover

Pictures of the drkoop.com logo and the logos of portals and other websites, traditional media and healthcare organization affiliates.

Underneath the drkoop.com logo in the middle of the inside front cover is a caption that reads as follows: "We are an Internet-based consumer healthcare network that includes the interactive website, www.drkoop.com. Our network provides individuals with trusted healthcare content, services and tools to empower them to better manage their health. Our network affiliates include other Internet portals, websites, healthcare organizations and traditional sources of health and medical news."

The following caption is under the logos of the new media affiliates: "We distribute drkoop.com content to affiliated portals and other websites that have established themselves as pathways for a broad variety of information. We intend to affiliate with selected websites that have the potential to drive traffic to our network and provide broad exposure to the drkoop.com brand."

The following caption is under the logos of the traditional media affiliates:
"Establishing affiliations with traditional media outlets allows us to deliver quality healthcare content to a targeted audience. Affiliates provide local, relevant information directly to a local audience. Through this unique means of distribution, drkoop.com is building a leading network of health content and editorial-based, breaking health news on the Internet."

The following caption is under the logos of the healthcare industry affiliates: "Through our Community Partner Program, we enroll hospitals and health systems as local affiliates. This enables healthcare organizations to integrate the drkoop.com brand and content into their on-line initiatives. Through this program, healthcare organizations can supply their patients with on-line health resources and interactive capabilities that allow patients to educate themselves and make informed decisions."

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PROSPECTUS SUMMARY

This summary highlights certain information found in greater detail elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors," before you decide to buy our common stock.

drkoop.com

Our Business

Our company operates drkoop.com, an Internet-based consumer healthcare network consisting of a consumer-focused interactive website and affiliate relationships with Internet portals, certain other websites, healthcare organizations and traditional media outlets. Our website, www.drkoop.com, is a healthcare portal with the following components:

. dynamic healthcare content on a wide variety of subjects, including information on acute ailments, chronic illnesses, nutrition, fitness and wellness, and access to medical databases, publications, and real-time medical news;

. interactive communities consisting of over 130 hosted chat support groups and tools that permit users to personalize their on-line experience; and

. opportunities to purchase healthcare-related products and services on- line.

We launched our website in July 1998 and, according to commercial software that we utilize, by June 1, 1999 www.drkoop.com had attracted over 6 million unique users and enrolled over 280,000 registered users.

Our network affiliates provide easy access to the information and services we offer on www.drkoop.com to their respective customers. We believe that we will benefit from these affiliate relationships through:

. broader exposure of our brand;

. higher volumes of traffic being driven to www.drkoop.com; and

. a cost-effective method of acquiring and distributing local healthcare content.

Our Market Opportunity

Healthcare is the largest segment of the U.S. economy, representing the annual expenditure of roughly $1 trillion, and health and medical information is one of the fastest growing areas of interest on the Internet. According to Cyber Dialogue, an industry research firm, during the 12-month period ended July 1998, approximately 17 million adults in the United States searched on- line for health and medical information, and approximately 50% of these individuals made off-line purchases after seeking information on the Internet. Cyber Dialogue estimates that approximately 70% of the persons searching for health and medical information on-line believe the Internet empowers them by providing them with information before and after they go to a doctor's office. Cyber Dialogue also estimates that the number of adults in the United States searching for on-line health and medical information will grow to approximately 30 million in the year 2000, and they will spend approximately $150 billion for all types of health-related products and services off-line.

Our Business Model

Our company's founders, including former U.S. Surgeon General Dr. C. Everett Koop, created drkoop.com to empower consumers to better manage their personal health with comprehensive, relevant and timely information. Our objective is to establish the drkoop.com network as the most trusted and comprehensive source of consumer healthcare information and services on the Internet. Our business model is

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to earn advertising and subscription revenues from advertisers, merchants, manufacturers and healthcare organizations who desire to reach a highly targeted community of healthcare consumers on the Internet. We also earn revenues by facilitating e-commerce transactions, such as sales of prescription refills, vitamins and nutritional supplements, and insurance services offered by outside parties.

Our Strategy

Our business strategy incorporates the following key elements:

. establish the drkoop.com brand so that consumers associate the trustworthiness and credibility of Dr. C. Everett Koop with our company;

. provide consumers with high quality healthcare content to attract users to www.drkoop.com and promote their loyalty to our website;

. syndicate content through affiliates to promote traffic growth;

. develop and expand on-line healthcare communities to allow users with similar health-related experiences to exchange information and gather news and knowledge in a secure, anonymous environment;

. provide consumers with unique features and tools, such as one that educates consumers on the interaction among various drugs and other substances;

. deploy a comprehensive personal medical record which will allow users to establish and maintain a lifelong record of their health and medical information in a secure portion of our database;

. provide an attractive website that can deliver advertising in a highly targeted manner, thereby commanding higher advertising rates; and

. facilitate e-commerce transactions offered by merchants, manufacturers and service providers to a highly targeted community of health-conscious consumers.

Recent Developments

On April 9, 1999 we entered into agreements with Infoseek Corporation and the Buena Vista Internet Group, a unit of The Walt Disney Company, under which we will be the exclusive provider of health and related content on three websites of the Go Network: Go.com Health Center, ESPN.com Training Room and the Family.com Health Channel. Under the Infoseek agreement, drkoop.com will also be the premier health content provider for ABCnews.com. In addition, drkoop.com will be the exclusive pharmacy and drugstore, health insurance and clinical trials partner in the Go.com Health Center. In the event drkoop.com elects not to provide specific content, it may be obtained from a third party. We believe that these agreements will contribute substantially to our brand awareness and increase traffic on our website. The term of these agreements is for three years, although either party may elect to terminate the relationship after two years. We will pay Infoseek and Buena Vista approximately $57.9 million in total consideration.


Our principal executive offices are located at 8920 Business Park Drive, Suite 200, Austin, Texas 78759, and our telephone number is (512) 726-5110.

4

The Offering

Common stock offered........   9,375,000 shares

Common stock outstanding
 after this offering .......  27,514,591 shares

Use of proceeds.............  We intend to use the net proceeds of this
                              offering to fund operating losses and for
                              general corporate purposes, including expansion
                              of our network, advertising, brand promotion,
                              content development and working capital. We may
                              also use a portion of the proceeds for strategic
                              alliances and acquisitions and to repay debt.
                              See "Use of Proceeds."

Nasdaq National
 Market symbol..............  KOOP


The number of shares of common stock outstanding after this offering is based on shares outstanding on March 31, 1999. This calculation excludes:

. 10,492,530 shares of common stock issuable upon exercise of options outstanding under our Amended and Restated 1997 Stock Option Plan with a weighted average exercise price of $0.53 per share (5,240,902 of these options were exercisable as of March 31, 1999; the balance are subject to future vesting requirements);

. 1,742,800 shares of common stock issuable upon exercise of options to be granted contemporaneously with this offering under our 1999 Equity Participation Plan with an exercise price equal to the public offering price listed on the cover of this prospectus;

. 33,482 shares of common stock issuable upon exercise of warrants with an exercise price of $4.78 per share;

. 775,000 shares of common stock issuable upon exercise of warrants with an exercise price of $8.60 per share; and

. 318,750 shares of common stock issuable upon exercise of options to be granted upon the closing of this offering with an exercise price equal to the public offering price listed on the cover of this prospectus.

This calculation includes:

. 7,249,667 shares of common stock to be issued upon the conversion of all outstanding shares of convertible preferred stock;

. 439,187 shares of common stock issuable assuming conversion of all convertible notes outstanding at March 31, 1999 ($2.8 million aggregate principal amount plus accrued interest); and

. 1,345,185 shares of common stock to be issued upon the closing of this offering to satisfy in full a purchase option and related anti-dilution adjustment rights.

Please see "Management--Stock Option Plans" and "Description of Securities."

5

Conventions Which Apply to this Prospectus

Unless we indicate otherwise, all information in this prospectus reflects the following:

. a three-for-one stock split effected in March 1999;

. a five-for-two stock split effected in June 1999;

. no exercise by the underwriters of their overallotment option to purchase up to 1,406,250 additional shares of common stock;

. the conversion of all outstanding shares of our convertible preferred stock into 7,249,667 shares of our common stock upon the closing of this offering;

. the conversion of all convertible notes outstanding as of March 31, 1999 ($2.8 million aggregate principal amount plus accrued interest) into 439,187 shares of common stock upon the closing of this offering; and

. the issuance of 1,345,185 shares of common stock to satisfy in full a purchase option and related anti-dilution adjustment rights.

References in this prospectus to "drkoop.com," "we," "our" and "us" refer to drkoop.com, Inc., a Delaware corporation. References to the offering refer to the initial public offering of our common stock being made by this prospectus. drkoop.com, Inc. was incorporated as a Texas corporation in July 1997 under the name Personal Medical Records, Inc., changed its name to Empower Health Corporation in April 1998 and reincorporated as drkoop.com, Inc., a Delaware corporation, in March 1999. "drkoop.com," "Dr. Koop's Community" and "Dr. Koop's Personal Medical Records" are trademarks of ours. Each trademark, trade name or service mark of any other company appearing in this prospectus belongs to its holder.

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SUMMARY FINANCIAL DATA

The following table sets forth summary financial data for our company. You should read this information together with the financial statements and the notes to those statements appearing elsewhere in this prospectus and the information under "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Please see the financial statements and the notes to such statements appearing elsewhere in this prospectus for the determination of shares used in computing basic and diluted and pro forma basic and diluted net loss per common share.

                            Period from
                             Inception                           Three Months Ended
                              through         Year Ended    -----------------------------
                         December 31, 1997 December 31,1998 March 31, 1998 March 31, 1999
                         ----------------- ---------------- -------------- --------------
                                      (in thousands, except per share data)
STATEMENT OF OPERATIONS
 DATA:
  Revenues..............      $  --            $     43         $  --         $    404
  Loss from operations..        (622)            (9,117)          (709)         (4,097)
  Net loss..............        (622)            (9,084)          (709)         (4,128)
  Net loss attributable
   to common
   stockholders.........        (622)           (23,903)          (709)        (24,632)
  Basic and diluted net
   loss per common
   share................      $ (.09)          $  (2.95)        $ (.10)       $  (2.63)
                              ======           ========         ======        ========
  Weighted average
   shares outstanding
   used in basic and
   diluted net loss per
   common share
   calculation..........       6,750              8,100          7,030           8,569
                              ======           ========         ======        ========
  Pro forma basic and
   diluted net loss per
   common share(1)......                       $   (.75)                      $   (.25)
                                               ========                       ========
  Weighted average
   shares outstanding
   used in pro forma
   basic and diluted net
   loss per common share
   calculated(1)........                         12,111                         16,347
                                               ========                       ========

                          December 31,               March 31, 1999
                         ---------------  -------------------------------------
                                                                   Pro Forma
                         1997     1998     Actual   Pro Forma(1) As Adjusted(2)
                         -----  --------  --------  ------------ --------------
                                           (in thousands)
BALANCE SHEET DATA:
  Cash and cash equiva-
   lents................ $   8  $    --   $  2,021    $ 2,021       $70,416
  Working capital (defi-
   cit).................  (649)   (2,905)   (3,038)      (286)       68,109
  Total assets..........    43       380    11,717     11,717        80,112
  Convertible note pay-
   able.................   --        451     2,741        --            --
  Mandatorily redeemable
   convertible
   (Series B) preferred
   stock................   --     18,940    30,296        --            --
  Total stockholders'
   equity (deficit).....  (614)  (21,527)  (24,155)     8,893        77,288


(1) Gives pro forma effect to the following:
. the conversion of all outstanding shares of our convertible preferred stock into 7,249,667 shares of our common stock upon the closing of this offering;
. the conversion of all convertible notes outstanding as of March 31, 1999 ($2.8 million aggregate principal amount plus accrued interest) into 439,187 shares of common stock upon the closing of this offering; and
. the issuance of 1,345,185 shares of common stock to satisfy in full a purchase option and related anti-dilution adjustment rights.
(2) As adjusted to give effect to the sale of shares of common stock offered by us in this offering at an assumed initial public offering price of $8.00 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

7

RISK FACTORS

Any investment in our common stock involves a high degree of risk. You should consider carefully the following information about these risks, together with the other information contained in this prospectus, before you decide whether to buy our common stock. If any of the following risks actually occur, our business, results of operations and financial condition would likely suffer. In any such case, the market price of our common stock could decline, and you may lose all or part of the money you paid to buy our common stock.

Risks Related to Our Business

Our business is difficult to evaluate because we have an extremely limited operating history.

We were incorporated in July 1997 and launched our Internet operations in July 1998. Accordingly, we have an extremely limited operating history. An investor in our common stock must consider the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in new and rapidly evolving markets, including the Internet market. These risks and difficulties include our ability to:

. attract a larger audience of users to our Internet-based consumer healthcare network;

. increase awareness of our brand;

. strengthen user loyalty and increase the number of registered users;

. offer compelling on-line content, services and e-commerce opportunities;

. maintain our current, and develop new, affiliate relationships;

. attract a large number of advertisers who desire to reach our users;

. respond effectively to the offerings of competitive providers of healthcare information on the Internet;

. continue to develop and upgrade our technology; and

. attract, retain and motivate qualified personnel.

We also depend on the growing use of the Internet for advertising, commerce and communication, and on general economic conditions. We cannot assure you that our business strategy will be successful or that we will successfully address these risks or difficulties. If we fail to address adequately any of these risks or difficulties our business would likely suffer. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements for detailed information on our extremely limited operating history.

Our business is changing rapidly, which could cause our quarterly operating results to vary and our stock price to fluctuate.

Our revenues and operating results may vary significantly from quarter to quarter due to a number of factors, not all of which are in our control. If we have a shortfall in revenue in relation to our expenses, or if our expenses precede increased revenues, then our business would be materially adversely affected. This would likely affect the market price of our common stock in a manner which may be unrelated to our long-term operating performance.

Important factors which could cause our results to fluctuate materially include:

. our ability to attract and retain users;

. our ability to attract and retain advertisers and sponsors and maintain advertiser and sponsor satisfaction;

. traffic levels on our Internet site;

. our ability to attract and retain customers and maintain customer satisfaction for our existing and future e-commerce offerings;

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. new Internet sites, services or products introduced by us or our competitors;

. the level of Internet and other on-line services usage;

. our ability to upgrade and develop our systems and infrastructure and attract new personnel in a timely and effective manner;

. our ability to successfully integrate operations and technologies from any acquisitions, joint ventures or other business combinations or investments; and

. technical difficulties or system downtime affecting the operation of our website.

Our revenues for the foreseeable future will remain dependent on user traffic levels, advertising and e-commerce activity on drkoop.com and the level of affiliate subscriptions. Such future revenues are difficult to forecast. In addition, we plan to increase our sales and marketing operations, expand and develop content and upgrade and enhance our technology and infrastructure development in order to support our growth. Many of the expenses associated with these activities--for example, personnel costs and technology and infrastructure costs--are relatively fixed in the short-term. We may be unable to adjust spending quickly enough to offset any unexpected revenue shortfall, in which case our results of operations would suffer.

We have a history of losses and negative cash flow and anticipate continued losses.

Since our inception, we have incurred significant losses and negative cash flow, and as of March 31, 1999, had an accumulated deficit of approximately $24.2 million, which included $10.4 million for accretion to fair value of the mandatory redeemable Series B convertible preferred stock. We have not achieved profitability and expect to continue to incur operating losses for the foreseeable future as we fund operating and capital expenditures in areas such as expansion of our network, advertising, brand promotion, content development, sales and marketing, and operating infrastructure. Our business model assumes that consumers will be attracted to and use healthcare information and related content available on our Internet-based consumer healthcare network which will, in turn, allow us the opportunity to sell advertising designed to reach those consumers. Our business model also assumes that those consumers will access important healthcare needs through electronic commerce using our website and that local healthcare organizations will affiliate with us. This business model is not yet proven, and we cannot assure you that we will ever achieve or sustain profitability or that our operating losses will not increase in the future. We have received a report from our independent auditors for our fiscal year ended December 31, 1998 containing an explanatory paragraph that describes the uncertainty as to our ability to continue as a going concern due to our historical negative cash flow and because, as of the date they rendered their opinion, we did not have access to sufficient committed capital to meet our projected operating needs for at least the next twelve months. Upon completion of this offering, we will have available that capital. However, we cannot assure you that we will achieve profitable operations. Please see "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

We must establish, maintain and strengthen our brand in order to attract users to our network and generate advertising, sponsorship and e-commerce revenue.

In order to expand our audience of users and increase our on-line traffic, we must establish, maintain and strengthen our brand. For us to be successful in establishing our brand, healthcare consumers must perceive us as a trusted source of healthcare information, and advertisers, merchants and manufacturers must perceive us as an effective marketing and sales channel for their products and services. We expect that we will need to increase substantially our marketing budget in our efforts to establish brand recognition and brand loyalty. Our business could be materially adversely affected if our marketing efforts are not productive or if we cannot strengthen our brand.

In addition, a key element of our strategy to establish, maintain and strengthen our brand is to encourage consumers to associate us with Dr. C. Everett Koop. We believe that consumers consider Dr. C. Everett Koop to be a trustworthy and credible leader in the healthcare field. We cannot assure you, however, that Dr. C. Everett

9

Koop will maintain this reputation, any damage to which could materially adversely impact our business. In addition, if our relationship with Dr. C. Everett Koop terminates for any reason, we would need to change the name of our website and devote substantial resources towards building a new marketing and brand strategy.

Key elements of our marketing and brand building strategies are dependent on our relationship with Dr. C. Everett Koop.

A key element of our strategy is to associate our company with former U.S. Surgeon General C. Everett Koop, Chairman of the Board of our company and a person who we believe is viewed by consumers as a trustworthy and credible leader in the healthcare field. We are a party to an agreement, dated January 5, 1999, as amended, with Dr. C. Everett Koop which permits us to use his image, name and likeness in connection with healthcare-related services and products. Under this agreement, our use of Dr. C. Everett Koop's name, image or likeness is subject to his prior written approval of the resulting products, which may not be unreasonably withheld. As consideration for the Koop agreement, we are obligated to pay Dr. C. Everett Koop a royalty equal to 2% of our revenues derived from sales of our current products and up to 4% of our revenues derived from sales of new products during the term of the agreement, including any rebranding period. The Koop agreement is exclusive and for a term of five years, subject to automatic renewal for additional three-year terms unless it is terminated by either party within 120 days of the end of each term. If a voluntary termination is requested by Dr. C. Everett Koop and is not the result of a breach or default by us, we will have the right on a non- exclusive basis for three years following the end of the term to rebrand and sell approved products bearing the name, image or likeness of Dr. C. Everett Koop. If we default in our obligations and do not promptly cure the default, Dr. C. Everett Koop may terminate the Koop agreement, no rebranding period will apply and we would immediately lose all rights to use Dr. C. Everett Koop's name and likeness. Dr. C. Everett Koop may also terminate the Koop agreement upon a change in control of our company.

If our agreement with Dr. C. Everett Koop were terminated prior to the end of its current term or not renewed at the end of its current term, we would need to change the name of our website and devote substantial resources towards building a new marketing and brand strategy. Without our ability to use Dr. C. Everett Koop's name and likeness or Dr. C. Everett Koop's participation in our business, we may not be able to continue to attract a significant amount of user traffic and advertisers to our website. The potential also exists that if Dr. C. Everett Koop ends his affiliation with our company, we could suffer a significant loss of credibility and trust with healthcare consumers as a result. Any development that would cause Dr. C. Everett Koop to exercise his right to terminate his relationship with our company or which otherwise would cause us to lose the benefits of our affiliation with him would have a material adverse effect on our business, results of operation and financial condition. We do not maintain "key person" life insurance for Dr. C. Everett Koop or any of our personnel. Please see "Management--Agreements with Dr. C. Everett Koop."

We have committed significant financial and marketing resources to expand our network; if we are unable to earn revenues in excess of these commitments, our business will suffer.

In order to expand our network, we have entered into a number of strategic partnerships which involve the payment of significant funds for prominent or exclusive carriage of our healthcare information and services. These transactions are premised on the assumption that the traffic we obtain from these arrangements will permit us to earn revenues in excess of the payments made to partners. This assumption is not yet proven, and if we are unsuccessful in generating sufficient resources to offset these expenditures, we will likely be unable to operate our business. On April 9, 1999 we entered into agreements with Infoseek Corporation and the Buena Vista Internet Group, a unit of The Walt Disney Company, under which we will be the exclusive provider of health and related content on three websites of the Go Network. Under the Infoseek agreement, drkoop.com will also be the premier health content provider for ABCnews.com. The term of these agreements is for three years for total consideration of approximately $57.9 million.

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In order to attract and retain our audience of users, we must provide healthcare content, tools and other features which meet the changing demands of those users.

One of our fundamental business objectives is for drkoop.com to be a trusted source for healthcare information and services. As with any form of consumer- oriented media, we have to provide editorial content, interactive tools and other features that consumers demand in order to continue to attract and retain our audience of users. We expect that competitive factors will create a continuing need for us to retain, improve and add to our editorial content, interactive tools and other features. We will not only have to expend significant funds and other resources to continue to improve our network, but we must also properly anticipate and respond to consumer preferences and demands. Competition for content will likely increase the fees charged by high quality content providers. The addition of new features will also require that we continue to improve the technology underlying our website. These requirements are significant, and we may fail to execute on them quickly and efficiently. If we fail to expand the breadth of our offerings quickly, or these offerings fail to achieve market acceptance, our business will suffer significantly.

Our business model relies on Internet advertising and sponsorship activities which may not be effective or profitable marketing media.

Our future is highly dependent on increased use of the Internet as an advertising medium. We expect to derive a substantial amount of our revenues from advertising and sponsorships. The Internet advertising market is new and rapidly evolving, and we cannot yet predict its effectiveness as compared to traditional media advertising. As a result, demand and market acceptance for Internet advertising solutions are uncertain. Most of our current or potential advertising customers have little or no experience advertising over the Internet and have allocated only a limited portion of their advertising budgets to Internet advertising. The adoption of Internet advertising, particularly by those entities that have historically relied upon traditional media for advertising, requires the acceptance of a new way of conducting business, exchanging information and advertising products and services. Such customers may find Internet advertising to be less effective for promoting their products and services relative to traditional advertising media. We cannot assure you that the market for Internet advertising will continue to emerge or become sustainable. If the market for Internet advertising fails to develop or develops more slowly than we expect, then our ability to generate advertising revenue would be materially adversely affected.

Various pricing models are used to sell advertising on the Internet. It is difficult to predict which, if any, will emerge as the industry standard, thereby making it difficult to project our future advertising rates and revenues. Our advertising revenues could be adversely affected if we are unable to adapt to new forms of Internet advertising. Moreover, "filter" software programs are available that limit or prevent advertising from being delivered to an Internet user's computer. Widespread adoption of this software could adversely affect the commercial viability of Internet advertising.

In order to execute our growth plan we must attract, retain and motivate highly skilled employees, and we face significant competition from other Internet and new media companies in doing so.

Our ability to execute our growth plan and be successful also depends on our continuing ability to attract, retain and motivate highly skilled employees. In addition to Dr. C. Everett Koop, Chairman of the Board, we depend on the continued services of key board members, our senior management and other personnel, particularly Donald W. Hackett, Chief Executive Officer. As we continue to grow, we will need to hire additional personnel in all operational areas. Competition for personnel throughout the Internet and related new-media industry is intense. We may be unable to retain our key employees or attract, assimilate or retain other highly qualified employees in the future. We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. If we do not succeed in attracting new personnel or retaining and motivating our current personnel, our business will be adversely affected. Please see "Management" for detailed information on our key personnel.

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In addition, as our market develops, seasonal and cyclical patterns may emerge. These patterns may affect our revenues. We cannot yet predict to what extent our operations will prove to be seasonal.

Due to the factors noted above and the other risks discussed in this section, you should not rely on quarter-to-quarter comparisons of our results of operations as indicators of future performance. It is possible that in some future periods our operating results may be below the expectations of public market analysts and investors. In this event, the price of our common stock may underperform or fall. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations."

We depend on third-party relationships, many of which are short-term or terminable, to generate advertising and provide us with content.

We depend, and will continue to depend, on a number of third-party relationships to increase traffic on drkoop.com and thereby generate advertising and other revenues. Outside parties on which we depend include unrelated website operators that provide links to drkoop.com, providers of healthcare content and the on-line property representation company which provides us with advertising sales services. Many of our arrangements with third-party Internet sites and other third-party service providers are not exclusive and are short-term or may be terminated at the convenience of either party. We cannot assure you that third parties regard our relationship with them as important to their own respective businesses and operations. They may reassess their commitment to us at any time in the future and may develop their own competitive services or products.

We intend to produce only a portion of the healthcare content that will be found on the drkoop.com network. We will rely on third-party organizations that have the appropriate expertise, technical capability, name recognition, reputation for integrity, and willingness to syndicate product content for branding and distribution by others. As health-related content grows on the Internet, we believe that there will be increasing competition for the best product suppliers, which may result in a competitor acquiring a key supplier on an exclusive basis, or in significantly higher content prices. Such an outcome could make the drkoop.com network less attractive or useful for an end user which could reduce our advertising and e-commerce revenues.

We cannot assure you that we will be able to maintain relationships with third parties that supply us with content, software or related products or services that are crucial to our success, or that such content, software, products or services will be able to sustain any third-party claims or rights against their use. Also, we cannot assure you that the content, software, products or services of those companies that provide access or links to our website will achieve market acceptance or commercial success. Accordingly, we cannot assure you that our existing relationships will result in sustained business partnerships, successful product or service offerings or the generation of significant revenues for us.

We have recently experienced and are currently experiencing rapid growth in our business, and our inability to manage this growth could harm our business.

We have experienced and are currently experiencing a period of significant growth. This growth has placed, and the future growth we anticipate in our operations will continue to place, a significant strain on our resources. As part of this growth, we will have to implement new operational and financial systems and procedures and controls, expand, train and manage our employee base, and maintain close coordination among our technical, accounting, finance, marketing, sales and editorial staffs. If we are unable to manage our growth effectively, our business, results of operations and financial condition could be adversely affected.

Several members of our senior management joined us in 1998 or early 1999, including Dennis J. Upah, Chief Operating Officer, and Susan M. Georgen-Saad, Chief Financial Officer. These individuals are currently becoming integrated with the other members of our management team. We cannot assure you that our management team will be able to work together effectively or successfully manage our growth. We believe that the successful integration of our management team is critical to our ability to effectively manage our operations and support our anticipated future growth.

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Any future acquisitions we make of companies or technologies may result in disruptions to our business and/or the distraction of our management, due to difficulties in assimilating acquired personnel and operations.

We may acquire or make investments in complementary businesses, technologies, services or products if appropriate opportunities arise. From time to time we engage in discussions and negotiations with companies regarding our acquiring or investing in such companies' businesses, products, services or technologies, and we regularly engage in such discussions and negotiations in the ordinary course of our business. Some of those discussions also contemplate the other party making an investment in our company. To date we have entered into such relationships with Superior Consultant Holdings Corporation and HealthMagic, Inc. We cannot assure you that we will be able to identify future suitable acquisition or investment candidates, or if we do identify suitable candidates, that we will be able to make such acquisitions or investments on commercially acceptable terms or at all. If we acquire or invest in another company, we could have difficulty in assimilating that company's personnel, operations, technology and software. In addition, the key personnel of the acquired company may decide not to work for us. If we make other types of acquisitions, we could have difficulty in integrating the acquired products, services or technologies into our operations. These difficulties could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations. Furthermore, we may incur indebtedness or issue equity securities to pay for any future acquisitions. The issuance of equity securities would be dilutive to our existing stockholders. As of the date of this prospectus, we have no agreement to enter into any material investment or acquisition transaction.

If our ability to expand our network infrastructure is constrained in any way we could lose customers and suffer damage to our operating results.

Presently, a relatively limited number of consumers use our website. We must continue to expand and adapt our network infrastructure to accommodate additional users, increase transaction volumes and changing consumer and customer requirements. We may not be able to accurately project the rate or timing of increases, if any, in the use of our website or to expand and upgrade our systems and infrastructure to accommodate such increases. Our systems may not accommodate increased use while maintaining acceptable overall performance. Service lapses could cause our users to instead use the on-line services of our competitors.

Many of our service agreements, such as those with our Community Partners, contain performance standards. If we fail to meet these standards, our customers could terminate their agreements with us or require that we refund part or all of the license fees. The loss of any of our service agreements and/or associated revenue would directly and significantly impact our business. We may be unable to expand or adapt our network infrastructure to meet additional demand or our customers' changing needs on a timely basis, at a commercially reasonable cost, or at all.

We may have liability for information we provide on our website or which is accessed from our website.

Because users of our website access health content and services relating to a condition they may have or may distribute our content to others, third parties may sue us for defamation, negligence, copyright or trademark infringement, personal injury or other matters. We could also become liable if confidential information is disclosed inappropriately. These types of claims have been brought, sometimes successfully, against on-line services in the past. Others could also sue us for the content and services that are accessible from our website through links to other websites or through content and materials that may be posted by our users in chat rooms or bulletin boards. While our agreements, including those with content providers, in some cases provide that we will be indemnified against such liabilities, such indemnification, if available, may not be adequate. Our insurance may not adequately protect us against these types of claims. Further, our business is based on establishing the drkoop.com network as a trustworthy and dependable provider of healthcare information and services. Allegations of impropriety, even if unfounded, could therefore have a material adverse effect on our reputation and our business.

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Any failure or inability to protect our intellectual property rights could adversely affect our ability to establish our brand.

Our intellectual property is important to our business. We rely on a combination of copyright, trademark and trade secret laws, confidentiality procedures and contractual provisions to protect our intellectual property. Federal registrations are pending for the trademark "drkoop.com," as well as other service and trademarks which incorporate the Dr. Koop name. Our right to use the Dr. Koop name is granted to us under an agreement with Dr. C. Everett Koop. If we lose our right to use the Dr. Koop name, we would be forced to change our corporate name and adopt a new domain name. These changes could confuse current and potential customers and would adversely impact our business. We also rely on a variety of technologies that are licensed from third parties, including our database and Internet server software, which is used in the drkoop.com website to perform key functions. These third-party licenses may not be available to us on commercially reasonable terms in the future. For a more complete description of the risks we face relating to our intellectual property, please see "Business--Intellectual Property."

Year 2000 problems may disrupt our operations which could result in lost revenues and increased operating costs.

Because our business depends on computer software, we have begun to assess the Year 2000 readiness of our systems. We are also in the process of contacting certain third-party vendors, licensors and providers of hardware, software and services regarding their Year 2000 readiness. Following our Year 2000 assessment and after contacting these third parties, we will be able to make a final evaluation of our state of readiness, potential risks and costs, and to determine to what extent a contingency plan is necessary. Third-party software, hardware or services incorporated into our systems may need to be revised or replaced, which could be time consuming and expensive, potentially resulting in lost revenues and increased costs for us. For a preliminary evaluation of the potential impact of these Year 2000-related issues on us, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Impact of the Year 2000."

We do not expect to pay dividends, and investors should not buy our common stock expecting to receive dividends.

We have never declared or paid any cash dividends on our capital stock. We presently intend to retain future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends in the foreseeable future. Investors should not purchase our common stock with the expectation of receiving cash dividends.

We are subject to anti-takeover provisions in our charter and in our contracts that could delay or prevent an acquisition of our company, even if such an acquisition would be beneficial to our stockholders.

Certain provisions of our certificate of incorporation, our bylaws, Delaware law and contracts to which we are party could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our stockholders. Please see "Management--Agreements with Dr. C. Everett Koop" and "Description of Securities."

Our business may face additional risks and uncertainties not presently known to us which could cause our business to suffer.

In addition to the risks specifically identified in this Risk Factors section or elsewhere in this prospectus, we may face additional risks and uncertainties not presently known to us or that we currently deem immaterial which ultimately impair our business, results of operations and financial condition.

Risks Related to Our Industry

Consumers and the healthcare industry must accept the Internet as a source of healthcare content and services for our business model to be successful.

To be successful, we must attract to our network a significant number of consumers as well as other participants in the healthcare industry. To date, consumers have generally looked to healthcare professionals as their principal source for health and wellness information. Our business model assumes that consumers will use

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healthcare information available on our network, that consumers will access important healthcare needs through electronic commerce using our website, and that local healthcare organizations will affiliate with us. This business model is not yet proven, and if we are unable to successfully implement our business model, our business will be materially adversely affected.

The Internet industry is highly competitive and changing rapidly, and we may not have the resources to compete adequately.

The number of Internet websites offering users healthcare content, products and services is vast and increasing at a rapid rate. These companies compete with us for users, advertisers, e-commerce transactions and other sources of on-line revenue. In addition, traditional media and healthcare providers compete for consumers' attention both through traditional means as well as through new Internet initiatives. We believe that competition for healthcare consumers will continue to increase as the Internet develops as a communication and commercial medium.

We compete directly for users, advertisers, e-commerce merchants, syndication partners and other affiliates with numerous Internet and non-Internet businesses, including:

. health-related on-line services or websites targeted at consumers, such as accesshealth.com, ahn.com, betterhealth.com, drweil.com, healthcentral.com, healthgate.com, intelihealth.com, mayohealth.org; mediconsult.com, onhealth.com, thriveonline.com and webmd.com;

. on-line and Internet portal companies, such as America Online, Inc.; Microsoft Network; Yahoo! Inc.; Excite, Inc.; Lycos Corporation and Infoseek Corporation;

. electronic merchants and conventional retailers that provide healthcare goods and services competitive to those available from links on our website;

. hospitals, HMOs, managed care organizations, insurance companies and other healthcare providers and payors which offer healthcare information through the Internet; and

. other consumer affinity groups, such as the American Association of Retired Persons, SeniorNet and ThirdAge Media, Inc. which offer healthcare-related content to specific demographic groups.

Many of these potential competitors are likely to enjoy substantial competitive advantages compared to our company, including:

. the ability to offer a wider array of on-line products and services;

. larger production and technical staffs;

. greater name recognition and larger marketing budgets and resources;

. larger customer and user bases; and

. substantially greater financial, technical and other resources.

To be competitive, we must respond promptly and effectively to the challenges of technological change, evolving standards and our competitors' innovations by continuing to enhance our products and services, as well as our sales and marketing channels. Increased competition could result in a loss of our market share or a reduction in our prices or margins. Competition is likely to increase significantly as new companies enter the market and current competitors expand their services. Please see "Business--Competition."

Since we operate an Internet-based network, our business is subject to government regulation relating to the Internet which could impair our operations.

Because of the increasing use of the Internet as a communication and commercial medium, the government has adopted and may adopt additional laws and regulations with respect to the Internet covering such areas as user privacy, pricing, content, taxation, copyright protection, distribution and characteristics and quality of production and services. For a description of risks associated with governmental regulation relating to the Internet, please see "Business--Governmental Regulation."

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Since we operate a healthcare network over the Internet, our business is subject to government regulation specifically relating to medical devices, the practice of medicine and pharmacology, healthcare regulation, insurance and other matters unique to the healthcare area.

Laws and regulations have been or may be adopted with respect to the provision of healthcare-related products and services on-line, covering areas such as:

. the regulation of medical devices;

. the practice of medicine and pharmacology and the sale of controlled products such as pharmaceuticals on-line;

. the regulation of government and third-party cost reimbursement; and

. the regulation of insurance sales.

FDA Regulation of Medical Devices. Some computer applications and software are considered medical devices and are subject to regulation by the United States Food and Drug Administration. We do not believe that our current applications or services will be regulated by the FDA; however, our applications and services may become subject to FDA regulation. Additionally, we may expand our application and service offerings into areas that subject us to FDA regulation. We have no experience in complying with FDA regulations. We believe that complying with FDA regulations would be time consuming, burdensome and expensive and could delay or prevent our introduction of new applications or services.

Regulation of the Practice of Medicine and Pharmacology. The practice of medicine and pharmacology requires licensing under applicable state law. We have endeavored to structure our website and affiliate relationships to avoid violation of state licensing requirements, but a state regulatory authority may at some point allege that some portion of our business violates these statutes. Any such allegation could result in a material adverse effect on our business. Further, any liability based on a determination that we engaged in the practice of medicine without a license may be excluded from coverage under the terms of our current general liability insurance policy.

Federal and State Healthcare Regulation. We earn a service fee when users on our website purchase prescription pharmacy products from certain of our e- commerce partners. The fee is not based on the value of the sales transaction. Federal and state "anti-kickback" laws prohibit granting or receiving referral fees in connection with sales of pharmacy products that are reimbursable under federal Medicare and Medicaid programs and other reimbursement programs. Although there is uncertainty regarding the applicability of these regulations to our e-commerce revenue strategy, we believe that the service fees we receive from our e-commerce partners are for the primary purpose of marketing and do not constitute payments that would violate federal or state "anti-kickback" laws. However, if our program were deemed to be inconsistent with federal or state law, we could face criminal or civil penalties. Further, we would be required either not to accept any transactions which are subject to reimbursement under federal or state healthcare programs or to restructure our compensation to comply with any applicable anti-kickback laws or regulations. In addition, similar laws in several states apply not only to government reimbursement but also to reimbursement by private insurers. If our activities were deemed to violate any of these laws or regulations, it could cause a material adverse affect on our business, results of operations and financial condition.

State Insurance Regulation. In addition, we market insurance on-line, offered by unrelated third parties, and receive referral fees from those providers in connection with this activity. The use of the Internet in the marketing of insurance products is a relatively new practice. It is not clear whether or to what extent state insurance licensing laws apply to our activities. If we were required to comply with such licensing laws, compliance could be costly or not possible. This could have a material adverse effect on our business. Please see "Business--Government Regulation."

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There is no established market for the consumer healthcare e-commerce transactions we facilitate.

We plan to develop relationships with retailers, manufacturers and other providers to offer healthcare products and services through direct links from our website to their website. Such a strategy involves numerous risks and uncertainties. There is no established business model for the sale of healthcare products or services over the Internet. Accordingly, we have limited experience in the sale of products and services on-line and the development of relationships with retailers, manufacturers or other providers of such products and services, and we cannot predict the rate at which consumers will elect to engage in this form of commerce or the compensation that we will receive for enabling these transactions.

Consumers may sue us if any of the products or services that are sold through our website are defective, fail to perform properly or injure the user, even if such goods and services are provided by unrelated third parties. Some of our agreements with manufacturers, retailers and other providers contain provisions intended to limit our exposure to liability claims. These limitations may not however prevent all potential claims, and our insurance may not adequately protect us from these types of claims. Liability claims could require us to spend significant time and money in litigation or to pay significant damages. As a result, any such claims, whether or not successful, could seriously damage our reputation and our business.

Internet capacity constraints may impair the ability of consumers to access our website, which could hinder our ability to generate advertising revenue.

Our success will depend, in large part, upon a robust communications industry and infrastructure for providing Internet access and carrying Internet traffic. The Internet may not prove to be a viable commercial medium because of:

. inadequate development of the necessary infrastructure such as a reliable network backbone;

. timely development of complementary products such as high speed modems;

. delays in the development or adoption of new standards and protocols required to handle increased levels of Internet activity; or

. increased government regulation.

If the Internet continues to experience significant growth in the number of users and the level of use, then the Internet infrastructure may not be able to continue to support the demands placed on it.

Our business is dependent on the continuous, reliable and secure operation of our website and related tools and functions we provide.

We rely on the Internet and, accordingly, depend upon the continuous, reliable and secure operation of Internet servers and related hardware and software. Recently, several large Internet commerce companies have suffered highly publicized system failures which resulted in adverse reactions to their stock prices, significant negative publicity and, in certain instances, litigation. We have also suffered service outages from time to time, although to date none of these interruptions has materially adversely effected our business operations or financial condition. To the extent that our service is interrupted, our users will be inconvenienced, our commercial customers will suffer from a loss in advertising or transaction delivery and our reputation may be diminished. Some of these outcomes could directly result in a reduction in our stock price, significant negative publicity and litigation. Our computer and communications hardware are protected through physical and software safeguards. However, they are still vulnerable to fire, storm, flood, power loss, telecommunications failures, physical or software break-ins and similar events. We do not have full redundancy for all of our computer and telecommunications facilities and do not maintain a back-up data facility. Our business interruption insurance may be inadequate to protect us in the event of a catastrophe. We also depend upon third parties to provide potential users with web browsers and Internet and on-line services necessary for access to our website. In the past, our users have occasionally experienced difficulties with Internet and other on-line services due to system failures, including failures unrelated to our systems. Any sustained disruption in Internet access provided by third parties could adversely impact our business.

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We retain confidential customer information in our database. Therefore, it is critical that our facilities and infrastructure remain secure and are perceived by consumers to be secure. Despite the implementation of security measures, our infrastructure may be vulnerable to physical break-ins, computer viruses, programming errors or similar disruptive problems. A material security breach could damage our reputation or result in liability to us.

Risks Related to This Offering

Investors will be relying on our management's judgment regarding the use of proceeds from this offering.

Our management will have broad discretion with respect to the use of the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of these proceeds. Presently, anticipated uses include the funding of operating losses and for general corporate purposes, including expansion of our network, advertising, brand promotion, content development and working capital. We may also use a portion of the proceeds for strategic alliances and acquisitions and to repay debt. We have not yet determined the amount of net proceeds to be used specifically for each of the foregoing purposes. Please see "Use of Proceeds."

The liquidity of our common stock is uncertain since it has not been publicly traded.

There has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. The initial public offering price for the shares will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the trading market. Please see "Underwriting."

Our need for additional financing is uncertain as is our ability to raise further financing if required.

We currently anticipate that our available cash resources combined with the net proceeds from this offering will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least 12 months after the date of this prospectus. We may need to raise additional funds, however, to respond to business contingencies which may include the need to:

. fund more rapid expansion;

. fund additional marketing expenditures;

. develop new or enhance existing editorial content, features or services;

. enhance our operating infrastructure;

. respond to competitive pressures; or

. acquire complementary businesses or necessary technologies.

If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders will be reduced, and these newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders, including those acquiring shares in this offering. We cannot assure you that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance editorial content, features or services, or otherwise respond to competitive pressures would be significantly limited. Please see "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Liquidity and Capital Resources."

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Market prices of emerging Internet companies have been highly volatile, and the market for our stock may exhibit volatility as well.

The stock market has experienced significant price and trading volume fluctuations, and the market prices of technology companies, particularly Internet-related companies, have been extremely volatile. Recent initial public offerings by Internet companies have been accompanied by exceptional share price and trading volume changes in the first days and weeks after the securities were released for public trading. Investors may not be able to resell their shares at or above the initial public offering price. Please see "Underwriting." In the past, following periods of volatility in the market price of a public company's securities, securities class action litigation has often been instituted against that company. Such litigation could result in substantial costs and a diversion of management's attention and resources.

We have negative net book value for accounting purposes, and new investors will suffer immediate and substantial dilution in the tangible net book value of their shares.

We expect the initial public offering price to be substantially higher than the net tangible book value per share of the common stock. The net tangible book value of a share of common stock purchased at an assumed initial public offering price of $8.00 per share will be only $2.67. You may incur additional dilution if holders of stock options, whether currently outstanding or subsequently granted, exercise their options or if warrantholders exercise their warrants to purchase common stock. Please see "Dilution" for a summary of this dilution.

The large number of shares eligible for public sale after this offering could cause our stock price to decline.

The market price of our common stock could decline as a result of sales by our existing stockholders of a large number of shares of our common stock in the market after this offering or the perception that such sales could occur. These sales also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. Please see "Shares Eligible for Future Sale" for a description of sales that may occur in the future.

Many corporate actions will be controlled by officers, directors and affiliated entities regardless of the opposition of other investors or the desire of other investors to pursue an alternative cause of action.

Our executive officers and directors and entities affiliated with them will, in the aggregate, beneficially own approximately 58% of our common stock following this offering. These stockholders will, if they act together, be able to exercise control over most matters requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control of our company, which could have a material adverse effect on our stock price. These actions may be taken even if they are opposed by the other investors, including those who purchase shares in this offering. Please see "Management" and "Principal Stockholders."

Forward-looking statements contained in this prospectus may not be realized.

This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of the risks faced by us described above and elsewhere in this prospectus. We undertake no obligation after the date of this prospectus to update publicly any forward- looking statements for any reason, even if new information becomes available or other events occur in the future.

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USE OF PROCEEDS

The net proceeds to our company from the sale of the shares offered hereby (after deducting underwriting discounts and estimated offering expenses) are estimated to be approximately $68,395,000 ($78,857,500 if the underwriters' over-allotment option is exercised in full), assuming an initial public offering price of $8.00 per share.

We intend to use the net proceeds of this offering to fund operating losses and for general corporate purposes, including expansion of our network, advertising, brand promotion, content development and working capital. We may also use a portion of the proceeds for strategic alliances and acquisitions and to repay debt.

As of March 31, 1999, we had outstanding $2.8 million in principal amount of convertible notes and held binding commitments which would permit us to issue up to $3.5 million in additional convertible notes. Upon the completion of this offering, $2.0 million principal amount of the notes that have been issued are, at the option of each holder, convertible into common stock at a conversion price of $7.43 per share or redeemable for the principal amount plus accrued and unpaid interest at the rate of 7.0% per annum. For purposes of this prospectus, we have assumed that all outstanding notes are converted into common stock and thus do not require repayment in cash. To the extent any holder elects to receive cash, this will represent a use of the proceeds of this offering.

We have not yet determined the amount of net proceeds to be used specifically for each of the foregoing purposes. Accordingly, management will have significant flexibility in applying the net proceeds of this offering. Pending any such use, as described above, we intend to invest the net proceeds in high quality, interest-bearing instruments. See "Risk Factors--Any future acquisitions we make of companies or technologies may result in disruption to our business and/or the distraction of our management, due to difficulties in assimilating acquired personnel and operations." and "--Investors will be relying on our management's judgment regarding the use of proceeds from this offering."

DIVIDEND POLICY

We have not declared or paid any cash dividends on our capital stock since inception and do not expect to pay any cash dividends for the foreseeable future. We currently intend to retain future earnings, if any, to finance the expansion of our business. Investors should not purchase our common stock with the expectation of receiving cash dividends.

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CAPITALIZATION

The following table sets forth, as of March 31, 1999, the capitalization of our company

. on an actual basis;

. on a pro forma basis to reflect automatic conversion of all outstanding convertible preferred stock into 7,249,667 shares of our common stock and convertible notes ($2.8 million aggregate principal amount plus accrued interest) into 439,187 shares of common stock upon the closing of this offering, and other issuances of 1,345,185 shares of common stock related to the termination of a purchase option and related anti-dilution adjustment rights; and

. on a pro forma as adjusted basis to give effect to the sale of the 9,375,000 shares offered hereby at an assumed initial public offering price of $8.00 per share, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

This information should be read in conjunction with our financial statements and the notes relating to such statements appearing elsewhere in this prospectus.

                                                         March 31, 1999
                                                 --------------------------------
                                                                       Pro Forma
                                                  Actual   Pro Forma  As Adjusted
                                                 --------  ---------  -----------
                                                     (dollars in thousands)
                                                 --------  --------    --------
Convertible notes payable......................  $  2,741  $    --     $    --
                                                 --------  --------    --------
Accrued interest, convertible notes............        11       --          --
                                                 --------  --------    --------
Mandatorily redeemable Series B convertible
 preferred stock...............................    30,296       --          --
                                                 --------  --------    --------
Series A convertible preferred stock, $.001 par
 value; 750,000 shares designated; 619,102
 shares issued and outstanding actual; no
 shares issued and outstanding pro forma or pro
 forma as adjusted.............................         1       --          --
Series C convertible preferred stock, $.001 par
 value; 3,000,000 shares designated; 2,615,677
 shares issued and outstanding actual; no
 shares issued and outstanding pro forma or pro
 forma as adjusted.............................         3       --          --
Common stock, $.001 par value, 100,000,000
 shares authorized; 9,105,552 shares issued and
 outstanding actual; 18,139,591 shares issued
 and outstanding pro forma; and 27,514,591
 shares issued and outstanding pro forma as
 adjusted......................................         9        18          28
Additional paid-in capital.....................     4,284    37,327     105,712
Obligation to issue common stock pursuant to
 option cancellation agreement (Note 7)........     9,147       --          --
Dividend payable to preferred stock holders
 (Note 7)......................................    (9,147)      --          --
Deferred stock compensation....................    (4,213)   (4,213)     (4,213)
Accumulated deficit............................   (24,239)  (24,239)    (24,239)
                                                 --------  --------    --------
  Total stockholders' (deficit) equity.........   (24,155)    8,893      77,288
                                                 --------  --------    --------
   Total capitalization........................  $  8,893  $  8,893    $ 77,288
                                                 ========  ========    ========

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DILUTION

The pro forma net tangible book value of our company as of March 31, 1999 was $5,115,580, or $0.28 per share of common stock. Pro forma net tangible book value per share is equal to the amount of our company's total tangible assets (total assets less intangible assets) less total liabilities, divided by the pro forma number of shares of common stock outstanding as of March 31, 1999. Assuming the sale by us of the shares offered by this prospectus at an assumed initial public offering price of $8.00 per share and after deducting underwriting discounts and the estimated offering expenses payable, the pro forma net tangible book value of our company as of March 31, 1999 would have been $73,510,580, or $2.67 per share of common stock. This represents an immediate increase in pro forma net tangible book value of $2.39 per share to existing stockholders and an immediate dilution in pro forma net tangible book value of $5.33 per share to new investors. That is, after this offering the excess of the tangible assets of drkoop.com over its liabilities calculated on a per share basis will be less than the purchase price paid for those shares by investors in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share....................       $8.00
  Pro forma net tangible book value per share as of March 31,
   1999............................................................ $0.28
  Pro forma increase in net tangible book value attributable to new
   investors.......................................................  2.39
                                                                    -----
  Pro forma net tangible book value per share after this offering..        2.67
                                                                          -----
  Pro forma dilution per share to new investors....................       $5.33
                                                                          =====

The following table summarizes, on a pro forma basis as of March 31, 1999, the total number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders and by new investors purchasing shares in this offering:

                            Shares Purchased  Total Consideration
                           ------------------ -------------------- Average Price
                             Number   Percent    Amount    Percent   Per Share
                           ---------- ------- ------------ ------- -------------
Existing stockholders..... 18,139,591    66%  $ 37,345,076    33%      $2.06
New investors.............  9,375,000    34     75,000,000    67        8.00
                           ----------   ---   ------------   ---       -----
  Total................... 27,514,591   100%  $112,345,076   100%      $4.08
                           ==========   ===   ============   ===       =====

The foregoing tables and calculations are based on shares outstanding on March 31, 1999 and exclude:

. 10,492,530 shares of common stock issuable upon exercise of options outstanding under our Amended and Restated 1997 Stock Option Plan with a weighted average exercise price of $0.53 per share (5,240,902 of these options were exercisable on March 31, 1999; the balance are subject to future vesting requirements);

. 33,482 shares of common stock issuable upon exercise of warrants with an exercise price of $4.78 per share;

. 775,000 shares of common stock issuable upon exercise of warrants with an exercise price of $8.60 per share; and

. 318,750 shares of common stock issuable upon exercise of options to be granted upon the closing of this offering with an exercise price equal to the public offering price listed on the cover of this prospectus.

The tables and calculations include:

. 7,249,667 shares of common stock to be issued upon the conversion of all outstanding shares of convertible preferred stock;

. 439,187 shares of common stock issuable upon conversion of all convertible notes outstanding at March 31, 1999 ($2.8 million aggregate principal amount plus accrued interest); and

. 1,345,185 shares of common stock to be issued upon the closing of this offering to satisfy in full a purchase option and related anti-dilution rights.

22

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the financial statements and the notes to such statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. The statement of operations data for the period from July 17, 1997 (inception) through December 31, 1997 and for the year ended December 31, 1998, and the balance sheet data at December 31, 1997 and 1998, are derived from our audited financial statements included elsewhere in this prospectus. Interim results for the periods ended March 31, 1998 and 1999 are derived from our unaudited financial statements which, in the opinion of management, reflect all adjustments necessary for a fair presentation of that data. Historical results are not indicative of the results to be expected in the future.

                                                            Three Months Ended
                                Period From     Year Ended  -------------------
                             Inception through December 31, March 31, March 31,
                             December 31, 1997     1998       1998      1999
                             ----------------- ------------ --------- ---------
                                   (in thousands, except per share data)
STATEMENT OF OPERATIONS
 DATA:
Revenues...................        $ --          $     43    $  --    $    404
                                   -----         --------    ------   --------
Operating expenses:
 Production, content and
  product development......          461            4,448       284      1,035
 Sales and marketing.......          --             2,008       166      2,048
 General and
  administrative...........          161            2,704       259      1,418
                                   -----         --------    ------   --------
Total operating expenses...          622            9,160       709      4,501
                                   -----         --------    ------   --------
Loss from operations.......         (622)          (9,117)     (709)    (4,097)
Other income (expense),
 net.......................          --                34       --         (31)
                                   -----         --------    ------   --------
Net loss...................         (622)          (9,083)     (709)    (4,128)
Accretion of redeemable
 securities to fair value..                       (14,820)      --     (11,357)
Dividend to preferred
 stockholders..............          --               --        --      (9,147)
                                   -----         --------    ------   --------
Loss attributable to common
 stockholders..............        $(622)        $(23,903)   $ (709)  $(24,632)
                                   =====         ========    ======   ========
Basic and diluted net loss
 per common share(1).......        $(.09)        $  (2.95)   $(0.10)  $  (2.87)
                                   =====         ========    ======   ========
Weighted average shares
 outstanding used in basic
 and diluted net loss per
 common share
 calculation(1)............        6,750            8,100     7,030      8,569
                                   =====         ========    ======   ========
Pro forma basic and diluted
 net loss per common
 shares(1)(2)..............                      $   (.75)            $   (.25)
                                                 ========             ========
Weighted average shares
 used in computing pro
 forma basic and diluted
 net loss per common share
 calculation(1)(2).........                        12,111               16,347
                                                 ========             ========

                                                            March 31, 1999
                                                   ----------------------------------
                                                                           Pro Forma
                         December 31, December 31,                            As
                             1997         1998      Actual   Pro Forma(2) Adjusted(2)
                         ------------ ------------ --------  ------------ -----------
                                    (in thousands, except per share data)
BALANCE SHEET DATA:
Cash and cash
 equivalents............    $   8       $    --    $  2,021     $2,021      $70,416
Working capital
 deficiency.............     (649)        (2,905)    (3,038)      (286)      68,109
Total assets............       43            380     11,717     11,717       80,112
Convertible notes
 payable to
 stockholder............      --             451      2,741        --           --
Mandatorily redeemable
 convertible (Series B)
 preferred stock........      --          18,940     30,296        --           --
Stockholders' equity
 (deficit)..............     (614)       (21,527)   (24,155)     8,893       77,288


(1) Please see the financial statements and the notes to such statements appearing elsewhere in this prospectus for the determination of shares used in computing basic and diluted and pro forma basic and diluted net loss per common share.
(2) Gives pro forma effect to all the following:
. the conversion of all outstanding shares of our convertible preferred stock into 7,249,667 shares of our common stock upon the closing of this offering;
. the conversion of all convertible notes outstanding as of March 31, 1999 ($2.8 million aggregate principal amount plus accrued interest) into 439,187 shares of common stock upon the closing of this offering; and
. the issuance of 1,345,185 shares of common stock to satisfy in full a purchase option and related anti-dilution adjustment rights.

23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of our company should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Please see "Risk Factors."

Overview

Our company operates drkoop.com, an Internet-based consumer healthcare network. Our network consists of a consumer-focused interactive website which provides users with comprehensive healthcare information and services, as well as affiliate relationships with portals, other websites, healthcare organizations and traditional media outlets. Our website, www.drkoop.com, is a healthcare portal which integrates dynamic healthcare content on a wide variety of subjects, interactive communities and tools as well as opportunities to purchase healthcare-related products and services on-line.

Our company was founded in July 1997 as Personal Medical Records, Inc. From July to December 1997 our primary operating activities related to the development of software for Dr. Koop's Personal Medical Record SystemTM. A personal medical record is a software application designed for consumers to establish and maintain lifelong control of personal health and medical information and related expense records. We originally contemplated the PMR as a free-standing product. As we developed it, however, we concluded that the PMR was best suited as one component of an Internet-based network including healthcare information, interactive tools and other useful features. Accordingly, in early 1998 we changed our primary emphasis to the development of the software and hardware infrastructure for the drkoop.com website, licensing and creating content, negotiating relationships with strategic partners, recruiting personnel and raising capital. We launched the drkoop.com website in late July 1998. After the launch of the website and for the remainder of 1998, we focused on broadening the functionality of the website and attracting an audience to the drkoop.com network. We presently expect to add a personal medical record feature to our website in the first half of 1999 as an element of our technology relationship with HealthMagic, Inc.

For 1998 and the quarter ended March 31, 1999, our revenues were derived primarily from recurring revenues from content subscriptions and software licensing through our Community Partner Program, and to a lesser extent from the sale of advertising. Content subscription and software licensing revenue accounted for $27,000 or 63% of revenues for the year ended December 31, 1998 and $216,000, or 53% of revenues for the quarter ended March 31, 1999.

In October 1998, we officially launched our first local affiliate subscription offering, the Dr. Koop Community Partner Program. Subscriptions to our Community Partner Program run from one to three years. Under this program, we develop co-branded Internet pages and software consisting of visual icons containing embedded links back to the drkoop.com website for local healthcare organizations, such as hospitals and payor organizations. Advance billings and collections relating to future services are recorded as deferred revenue and recognized when revenue is earned. Sales of software licensed to CPP affiliates is recognized as revenue upon shipment of the software, provided that the portion of the contract allocated to the software license is based upon vendor specific objective evidence of fair value, and collectibility is probable. Content subscription revenue is recognized ratably over the term of the CPP contract, generally ranging from twelve to thirty-six months.

In November 1998, we sold our first advertising contract and in December began running advertising banners on the website. Advertising revenues are derived principally from short-term advertising contracts in which we typically guarantee a minimum number of user "impressions" to be delivered over a specified period of time for a fixed fee. Impressions are the times that an advertisement is viewed by users of our website. We recognize advertising revenues at the lesser of the ratio of impressions delivered over the total guaranteed impressions or the straight-line rate over the term of the contract, provided that no significant obligations remain and collection of the resulting receivable is probable. Our obligations typically include the guarantee of

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a minimum number of impressions, or times that an advertisement appears in pages viewed by the users of the Company's website. Historically we have utilized third party firms to sell and insert advertisements on drkoop.com. Advertising rates, measured on a cost per thousand impressions basis, are dependent on whether the impressions are for general rotation throughout drkoop.com or for targeted audiences and properties within specific areas of the website. Advertising revenue is recognized in the period in which the advertisement is displayed. Advertising revenue accounted for $15,000, or 35%, of revenues for the year ended December 31, 1998 and $188,000, or 47%, of revenues for the quarter ended March 31, 1999.

Sponsorship revenues are derived principally from contracts ranging from one to twelve months in which we commit to provide sponsors enhanced promotional opportunities that go beyond traditional banner advertising. Sponsorships are designed to support broad marketing objectives, including branding, awareness, product introductions, research and transactions, frequently on an exclusive basis. Sponsorship agreements typically include the delivery of a guaranteed minimum number of impressions and the design and development of customized pages on the website that enhance the promotional objectives of the sponsor. Costs associated with the creation of the customized pages are minimal and expensed as incurred. Sponsorship revenues are recognized at the lesser of the ratio of impressions delivered over the total guaranteed impressions or the straight line rate over the term of the contract, provided that no significant obligations remain and collection of the resulting receivable is probable. Company obligations typically include the guarantee of a minimum number of impressions.

In December 1998, we began to generate electronic commerce revenues through alliances with certain retailers of pharmaceuticals and related products and to provide insurance companies with the opportunity to sell products and services to our audience. We do not provide any of the goods or services offered. We receive compensation in the form of transaction fees or anchor tenant rental fees from third parties who have entered into preferred provider arrangements with us. Revenues from our share of the proceeds from the commerce partner's transactions are recognized by us upon notification from the commerce partner of sales attributable to users from the drkoop.com website. E-commerce revenues were nominal for the year ended December 31, 1998 and the quarter ended March 31, 1999.

On January 29, 1999, we received $3.5 million in cash and acquired 10% of the outstanding stock of HealthMagic, Inc., a subsidiary of Adventist Health System Sunbelt Healthcare Corporation, in exchange for 2,615,677 shares of our Series C Convertible Preferred Stock, which will be converted into an equivalent number of shares of common stock upon the closing of this offering. We also established a technology relationship with HealthMagic, a supplier of applications to Internet companies, whereby we contributed to them our PMR product and received from them a license to use a broad range of Internet technologies, including a web-enabled personal medical record, personalization tools, and security and authentication features. HealthMagic will develop, implement and support these technologies for us. Currently, we expect to deploy these features in the first half of 1999. We have capitalized the fair value of the licenses acquired based upon an analysis of the cost required to build the technology versus purchasing it from HealthMagic. In addition, on January 29, 1999 we entered into a master content subscription and software licensing agreement with Adventist for $500,000.

Contract research organizations offer comprehensive clinical trial services which are the basis for obtaining regulatory approval for drugs and medical devices. The identification and enrollment of qualified individuals into these studies is usually a time-consuming and expensive process. In December 1998 we implemented the drkoop.com Clinical Research Center, a portion of our website designed to educate consumers about clinical trials, including how to find and enroll in an appropriate trial if the individual and their physician believe that it is a viable therapy option. We expect to receive transaction fee revenues for assisting contract research organizations in the identification and enrollment of qualified individuals into studies.

On March 10, 1999, we entered into a two year relationship with The @Home Network to be the anchor tenant partner within the Health Channel area of the @Home service. We will be the premier content provider appearing in the Health Channel. Under the terms of this agreement, we will have the ability to direct users to related commerce, community and interactive tool features appearing on the drkoop.com website from within

25

all health content appearing in the Health Channel. In addition, we will share in all advertising revenues generated by @Home in the Health Channel where our content dominates the related page. We will pay a carriage fee of $2.25 million to @Home in installments over the term of the agreement.

On April 9, 1999 we entered into agreements with Infoseek Corporation and the Buena Vista Internet Group, a unit of The Walt Disney Company, under which we will be the exclusive provider of health and related content on three websites of the Go Network: Go.com Health Center, ESPN.com Training Room and the Family.com Health Channel. Under the Infoseek agreement, drkoop.com will also be the premier health content provider for ABCnews.com. In addition, drkoop.com will be the exclusive pharmacy and drugstore, health insurance and clinical trials patron in the Go Health Center. In the event drkoop.com elects not to provide specific content, it may be obtained from a third party. We believe that these agreements will contribute substantially to our brand awareness and increase traffic on our website. The term of these agreements is for three years, although either party may elect to terminate the relationship after two years. We will pay Infoseek and Buena Vista approximately $57.9 million in total consideration consisting of cash and warrants to purchase up to 775,000 shares of common stock for $8.60 per share assuming the agreements run for the full three years. The cash portion of this obligation is payable as approximately $16.2 million in the first year of the agreements, $18.2 million in the second year of the agreements and $21.3 million in the third year.

We recorded deferred stock compensation of $1.5 million and $3.1 million during the year ended December 31, 1998 and the quarter ended March 31, 1999, respectively, for the difference between the exercise price and the deemed fair value of certain stock options granted by us to our employees, of which $107,000 and $314,000 was recorded as compensation expense in 1998 and the quarter ended March 31, 1999. This accounting treatment will generate non-cash amortization expense of $2.0 million in 1999, $1.4 million in 2000, $748,000 in 2001, $311,000 in 2002 and $31,000 in 2003.

Since inception, we have incurred significant losses and negative cash flow, and as of March 31, 1999 we had an accumulated deficit of $24.2 million including $10.4 million for accretion to fair value of the mandatorily redeemable (Series B) convertible preferred stock. We have not achieved profitability and expect to continue to incur operating losses for the foreseeable future as we fund operating and capital expenditures in the areas of expansion of our network, advertising, brand promotion, content development, sales and marketing, and operating infrastructure. Our business model assumes that consumers will be attracted to and use healthcare information and related content available on our on-line network which will, in turn, allow us the opportunity to sell advertising designed to reach those consumers. Our business model also assumes that those users will access important healthcare needs through electronic commerce and that local healthcare participants will affiliate with us. This business model is not yet proven and we cannot assure you that we will ever achieve or sustain profitability or that our operating losses will not increase in the future. Please see "Risk Factors--Our business is difficult to evaluate because we have an extremely limited operating history" and "--We have a history of losses and negative cash flow and anticipate continued losses."

We have a very limited operating history on which to base an evaluation of our business and prospects. Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in new and rapidly evolving markets such as the Internet market. In view of the rapidly evolving nature of our business and our limited operating history, we believe that period-to-period comparisons of revenues and operating results are not necessarily meaningful and should not be relied upon as indications of future performance.

Results of Operations

Comparison of the three months ended March 31, 1999 to the three months ended March 31, 1998

Revenues. Our website, www.drkoop.com, was launched in July 1998. Revenues increased to $404,000 for the three months ended March 31, 1999 as compared to no revenues recorded for the three months ended

26

March 31, 1998. Revenues for the quarter ended March 31, 1999 consisted of content subscription and software licenses of $216,000 or 53% of total revenues, including barter revenues of $32,000, and advertising and sponsorship revenue of $188,000 or 47% of total revenues including barter revenues of $20,000. The increase in content subscription and software license revenue was attributable to delivery of software licenses and content from six new contracts in the quarter ended March 31, 1999 under the Community Partner Program which ranged in value from $50,000 to $500,000 and had terms of one to three years. The increase in advertising and sponsorship revenues was attributable to an increase in the traffic to our website as well as an increase in the number of advertising arrangements entered into during late 1998 and the first quarter of 1999.

Production, content and product development. Production, content and product development expenses consist primarily of salaries and benefits, consulting fees and other costs related to content acquisition and licensing, software development, application development and website operations expense. Production, content and product development expenses increased by $751,000 or 265%, to $1.0 million for the quarter ended March 31, 1999, as compared to $284,000 for the quarter ended March 31, 1998. The primary reason for the increase was the addition of personnel which resulted in higher salaries, benefits, facilities and travel costs. We believe that additional significant investments in content development and operating infrastructure are required to remain competitive and therefore expect that production, content and product development expenses will continue to increase in absolute dollars for the foreseeable future.

Sales and marketing expenses. Sales and marketing expenses consist primarily of salaries and related costs, web-based advertising, commissions, general advertising and other related expenses. Sales and marketing expenses increased by $1.8 million to $2.0 million during the quarter ended March 31, 1999 as compared to $166,000 during the quarter ended March 31, 1998. The primary reasons for the increase were costs related to web-based advertising and promotion of the drkoop.com website and a significant increase in the number of sales and marketing personnel resulting in higher salaries, benefits, facilities and travel costs. We expect that sales and marketing expenses will continue to grow in absolute dollars for the foreseeable future as we hire additional sales and marketing personnel and increase expenditures for advertising, brand promotion, public relations and other marketing activities.

General and administrative expenses. General and administrative expenses consist primarily of salaries and related costs for general corporate functions, including executive, finance, accounting, human resources, facilities and fees for professional services. General and administrative expenses increased by $1.2 million, or 447%, to $1.4 million for the quarter ended March 31, 1999 as compared to $259,000 for the quarter ended March 31, 1999. The primary reasons for the increase were the addition of personnel and the resultant increase in salaries, benefits, non cash compensation facilities and travel costs. We expect that we will incur additional general and administrative expenses as we continue to hire personnel and incur incremental costs related to the growth of the business and compliance with public company obligations, including directors' and officers' liability insurance, investor relations programs and fees for professional services. Accordingly, we anticipate that general and administrative expenses will continue to increase in absolute dollars in future periods, although at a slower rate than other major expense categories such as sales and marketing expense.

Interest income (expense). Interest expense was $31,000 for the quarter ended March 31, 1999 as compared to no expense for the quarter ended March 31, 1998. Interest expense relates to outstanding convertible notes.

Income Taxes. We have incurred net losses to date. As of March 31, 1999 we had a net operating loss carryforward of $13.0 million for financial reporting purposes. We have recorded a valuation reserve equal to the amount of the carryforward due to the uncertain realization of these tax benefits.

Comparison of the year ended December 31, 1998 to the period from July 17, 1997 (inception) through December 31, 1997

Revenues. For the year ended December 31, 1998, we recorded revenues of $43,000, with $27,000, or 63% of revenues, attributable to content subscription and software licenses and $16,000, or 37% of revenues,

27

attributable to advertising; no revenues were recognized for the period from July 1997 (inception) to December 31, 1997.

Production, Content and Product Development Expense. Production, content and product development expenses consist primarily of salaries and benefits, consulting fees and other costs related to content acquisition and licensing, software development, application development and website operations expense. Production, content and product development expense increased by $4.0 million, or 866%, to $4.4 million for the year ended December 31, 1998 as compared to $461,000 for the period ended December 31, 1997. This increase was primarily attributable to increases in personnel and related costs to provide the infrastructure necessary to launch the drkoop.com website in July 1998, as well as costs for product development work on the PMR. We believe that additional significant investments in content development and operating infrastructure are required to remain competitive and therefore expect that production, content and product development expense will continue to increase in absolute dollars for the foreseeable future.

Sales and Marketing Expense. Sales and marketing expenses consist primarily of salaries and related costs, web-based advertising, commissions, general advertising and other related expenses. We did not have any sales and marketing expense during the period ended December 31, 1997. During the year ended December 31, 1998, we incurred costs of $2.0 million as we built a direct sales organization comprised of 11 sales professionals. During 1998 we also implemented a variety of approaches to promote the drkoop.com brand to attract new users, including advertising on the Internet, public relations campaigns and event marketing. We expect that sales and marketing expenses will continue to increase in absolute dollars for the foreseeable future as we hire additional sales and marketing personnel and increased expenditures for advertising, brand promotion, public relations and other marketing activities.

General and Administrative Expense. General and administrative expenses consist primarily of salaries and related costs for general corporate functions, including executive, finance, accounting, human resources, facilities and fees for professional services. General and administrative expenses increased by $2.5 million to $2.7 million for the year ended December 31, 1998 as compared to $161,000 for the period ended December 31, 1997. The increase in general and administrative expenses was primarily attributable to salaries and related expenses associated with hiring personnel and increased professional fees and facility-related expenses to support the growth of our operations. Administrative personnel headcount, including executive management, went from one person at December 31, 1997 to nine people at December 31, 1998. We expect that we will incur additional general and administrative expenses as we hire additional personnel and incur incremental costs related to the growth of the business and compliance with public company obligations, including directors and officers liability insurance, investor relations programs and fees for professional services. Accordingly, we anticipate that general and administrative expenses will continue to increase in absolute dollars in future periods, although at a slower rate than other major expense categories such as sales and marketing expense.

Interest and Other Income. Interest income includes interest income from the investment of cash and cash equivalents.

Income Taxes. We have incurred net losses to date. As of December 31, 1998, we had a net operating loss carryforward of $9.2 million for financial reporting purposes. We have recorded a valuation reserve equal to the amount of the carryforward due to the uncertain realization of these tax benefits.

28

Quarterly Results of Operations Data

The following table sets forth certain unaudited quarterly statement of operations data for the period from inception to December 31, 1997 and each of the five quarters ended March 31, 1999. In the opinion of management, this data has been prepared substantially on the same basis as the audited financial statements appearing elsewhere in this prospectus, including all necessary adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of such data. The quarterly data should be read in conjunction with the financial statements and the notes to such statements appearing elsewhere in this prospectus. In view of the rapidly evolving nature of our business and our limited operating history, we believe that period-to- period comparisons of revenues and operating results are not necessarily meaningful and should not be relied upon as indications of future performance.

                          Period From                                 Three Months Ended
                          Inception to  Year Ended  --------------------------------------------------------
                          December 31, December 31, March 31, June 30,  September 30, December 31, March 31,
                              1997         1998       1998      1998        1998          1998       1999
                          ------------ ------------ --------- --------  ------------- ------------ ---------
                                                           (in thousands)
Revenues.................    $ --        $    43      $ --    $   --       $   --       $    43     $   404
                             -----       -------      -----   -------      -------      -------     -------
Operating expenses
  Production, content and
   product development...      461         4,448        284       672        1,847        1,645       1,035
  Sales and marketing....      --          2,008        166       181          646        1,016       2,048
  General and
   administrative........      161         2,704        259       562          870        1,012       1,418
                             -----       -------      -----   -------      -------      -------     -------
   Total operating
    expenses.............      622         9,160        709     1,415        3,363        3,673       4,501
                             -----       -------      -----   -------      -------      -------     -------
Loss from operations.....     (622)       (9,117)      (709)   (1,415)      (3,363)      (3,630)     (4,097)
Interest income
 (expense)...............      --             33        --         14           13            6         (31)
                             -----       -------      -----   -------      -------      -------     -------
Net loss.................    $(622)      $(9,084)     $(709)  $(1,401)     $(3,350)     $(3,624)    $(4,128)
                             =====       =======      =====   =======      =======      =======     =======

Revenues. Our initial revenues were recorded in the quarter ended December 31, 1998. Revenues to date have consisted of revenue attributable to content subscription, software licenses and advertising arrangements.

Production, content and product. Production, content and product expenses have fluctuated in the brief operating history of drkoop.com. Production, content and product costs increased significantly in the third quarter of 1998 due primarily to development work on the personal medical record technology. Production, content and product expenses decreased in the quarters ended December 31, 1998 and March 31, 1999 as compared to the previous quarters due to the reduction in outsourced development on the personal medical record technology.

Sales and marketing. Sales and marketing expenses have increased every quarter. Sales and marketing expenses increased significantly in the third quarter of 1998 as compared to the prior quarter due to significant increases in advertising costs related to the launch of the drkoop.com website and the hiring of additional marketing personnel to market the website and the initial hiring of sales personnel. The following quarterly increases in sales and marketing expenses resulted primarily from building our sales and marketing organization. The addition of sales and marketing personnel resulted in higher salaries, benefits and travel costs. We have also increased the amount expended on advertising each quarter.

General and administrative. General and administrative costs have increased every quarter as we have hired our executive team and built our administrative infrastructure.

As a result of our extremely limited operating history, we do not have historical financial data for a significant number of periods on which to base planned operating expenses. Quarterly revenues and operating results depend substantially on the advertising, sponsorship, subscription and e-commerce revenues received

29

within the quarter, which are difficult to forecast accurately. Accordingly, the cancellation of a Community Partner Program subscription or the cancellation or deferral of a small number of advertising contracts or sponsorships could have a material adverse effect on our business, results of operations and financial condition. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall, and any significant shortfall in revenue in relation to our expectations would have an immediate adverse effect on our business, results of operation and financial condition. Due to the foregoing factors, it is possible that in some future periods our operating results may be below the expectations of public market analysts and investors. In this event, the price of our common stock may underperform or fall.

Seasonality

We believe that advertising sales in traditional media, such as television and radio, generally are lower in the first and third calendar quarters of each year. If our market makes the transition from an emerging to a more developed market, seasonal and cyclical patterns may develop in our industry and in the usage of our website. Seasonal and cyclical patterns in Internet advertising would affect our revenues. Those patterns may also develop on our website. Given the early stage of the development of the Internet and our company, however, we cannot predict to what extent, if at all, our operations will prove to be seasonal.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through private equity and debt financings. During the years ended December 31, 1997 and 1998, we received net proceeds from the sale of stock and issuance of convertible note payable to stockholder of $6,000 and $7.1 million, respectively. During the three months ended March 31, 1999 we received net proceeds of $5.8 million from the sale of stock and issuance of convertible notes payable.

Cash used in operating activities for the quarter ended March 31, 1998 of $502,000 was due primarily to net operating losses of $709,000 offset by increases in accounts payable and accrued expenses of $75,000 and $158,000, respectively. Cash used in operating activities for the quarter ended March 31, 1999 of $3.7 million resulted primarily from net operating losses of $3.9 million, a decrease in related party payable of $1.1 million and an increase in accounts receivable of $365,000, partly offset by an increase in accrued expenses of $807,000 and deferred revenue of $544,000. The increase in accounts receivable and deferred-revenue amounts are attributable primarily to Community Partner Program contracts. Net cash used in operating activities was $6.8 million for the year ended December 31, 1998 primarily attributable to net operating losses of $9.0 million offset by increases in accounts payable, accrued expenses and related party payable of $747,000, $458,000 and $872,000, respectively. Net cash provided by operating activities for the period from inception to December 31, 1997 of $44,000 was provided primarily through increases in accounts payable, accrued expenses and related party payable of $58,000, $62,000 and $537,000, respectively, offset by a net operating loss of $622,000.

Cash used in investing activities was $29,000 and $120,000 for the three months ended March 31, 1998 and March 31, 1999, respectively, and was $42,000 and $335,000 for the period from inception through December 31, 1997 and the year ended December 31, 1998. Net cash used in investing activities for these periods consisted primarily of capital expenditures for computer equipment.

Cash provided by financing activities was $519,000 and $5.8 million for the three months ended March 31, 1998 and March 31, 1999, respectively, and $6,000 and $7.1 million for the period from inception through December 31, 1997 and the year ended December 31, 1998, respectively. Cash provided by financing activities has been provided primarily from the sale of convertible preferred stock and issuance of convertible notes payable. Our financing activities to date are described in detail below.

From March 1, 1998 through April 6, 1998, we issued 619,102 shares of Series A 8% Convertible Preferred Stock to accredited investors for an aggregate purchase price of $743,000. These shares will be converted into 671,727 shares of common stock upon the closing of this offering.

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On April 28, 1998, we issued 3,850,597 shares of Series B Non-voting Preferred Stock to Superior Consultant Holdings Corporation for a purchase price of $6.0 million. These shares will be converted into 3,962,265 shares of common stock upon the closing of this offering. In connection with this transaction we gave Superior the right to require us to repurchase their shares for the current fair market price during each of the 90-day periods following April 28, 2000 and April 28, 2001. Due to these terms, we are required under generally accepted accounting principles to accrete the Series B Non-voting Preferred Stock to its fair value for the periods reported. We incurred a charge for accretion to fair value for the redeemable stock of $8.7 million for the year ended December 31, 1998 which resulted in a fair value of $12.8 million as of December 31, 1998. We incurred a charge of $17.5 million for the quarter ended March 31, 1999 which resulted in a fair value of $30.3 million as of March 31, 1999. Upon the completion of an underwritten public offering of not less than $20.0 million, after which the common stock is listed on a national securities exchange or admitted for quotation on the Nasdaq National Market, the Series B Non-voting Preferred Stock is required to be converted into common stock. Upon conversion to common stock, the repurchase right held by Superior as holder of Series B Non-voting Preferred Stock terminates. In addition, Superior received the right to purchase an additional 3,850,597 shares of either Series B Non-voting Preferred Stock or common stock at a per share exercise price equal to 70% of the fair market value of the common stock on the date of exercise. The Superior purchase option will be terminated at the closing of this offering in consideration for the issuance of 1,210,665 shares of common stock, valued at $8.2 million, including shares to be issued as an anti-dilution adjustment. In addition, 134,520 shares, valued at $900,000, will be issued to satisfy an anti-dilution adjustment right held by the Series C preferred stockholder. These anti-dilution adjustments were specific to the Superior purchase option.

On December 24, 1998, we issued a convertible note payable to stockholder in the original principal amount of $800,000, $500,000 of which was received in 1998, bearing interest at 6% per annum due December 24, 1999, along with five year warrants to purchase 33,482 shares of Series C Preferred Stock for an exercise price of $4.78 per share, which will become the right to purchase 33,482 shares of common stock for $4.78 per share upon the closing of this offering. Interest on the note is payable at maturity. At any time prior to maturity any unpaid principal and interest may be converted into Series C Preferred Stock at a conversion price of $4.78 per share.

On January 29, 1999, we received $3.5 million in cash and acquired 10% of the outstanding stock of HealthMagic, Inc., a subsidiary of Adventist Health System Sunbelt Healthcare Corporation, in exchange for 2,615,677 shares of our Series C Convertible Preferred Stock, which will be converted into an equivalent number of shares of common stock upon the closing of this offering. We recorded our 10% ownership in Healthmagic at $5.0 million as investment in affiliate. We also established a technology relationship with HealthMagic, a supplier of applications to Internet companies, whereby we contributed to them our PMR product and received from them a license to use a broad range of Internet technologies, including a web-enabled personal medical record, personalization tools, and security and authentication features. HealthMagic will develop, implement and support these technologies for us. We did not attribute any value to the desktop-based PMR technology we contributed to HealthMagic as we believe the fair value was zero. We recorded the license received from HealthMagic as an intangible asset in the total amount of $4.5 million.

On or prior to March 5, 1999, we entered into loan agreements pursuant to which the investors are irrevocably obligated to loan to us the aggregate principal amount of up to $5.5 million at an interest rate of 7% per annum. Upon the closing of this offering, the principal amount borrowed under these agreements and all accrued interest will, solely at the option of each investor, either be due and payable or convert into common stock at a conversion price of $7.43 per share. We currently anticipate borrowing under these agreements prior to the closing of this offering. As of March 31, 1999, we had borrowed $2.0 million. We also have outstanding $800,000 in convertible notes issued in December 1998 and January 1999 and which may be converted into common stock at a conversion price of $4.78 per share.

We currently anticipate that our available cash resources combined with the net proceeds from this offering will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least 12 months after the date of this prospectus. These requirements are expected to include the funding of

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operating losses, working capital requirements and other general corporate purposes, including expansion of our network, advertising, brand promotion and content development. We may also elect to repay debt and pursue one or more strategic alliances or acquisition transactions, although, as of the date of this prospectus, we have no agreement to enter into any material investment or acquisition transaction. We may need to raise additional funds, however, to respond to business contingencies which may include the need to:

. fund more rapid expansion;

. fund additional marketing expenditures;

. develop new or enhance existing editorial content, features or services;

. enhance our operating infrastructure;

. respond to competitive pressures; or

. acquire complementary businesses or necessary technologies.

If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders will be reduced and these newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders, including those acquiring shares in this offering. We cannot assure you that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance editorial content, features or services, or otherwise respond to competitive pressures would be significantly limited. Our business, results of operations and financial condition could be materially adversely affected by any such limitation.

We have received a report from our independent auditors containing an explanatory paragraph that describes the uncertainty as to our ability to continue as a going concern due to our historical negative cash flow and because, as of the date they rendered their opinion, we did not have access to sufficient committed capital to meet our projected operating needs for at least the next twelve months. Upon completion of this offering, we will have available that capital. If capital requirements vary materially from those currently planned, we may require additional financing sooner than anticipated. If this offering is not successful and positive operating results are not achieved rapidly, we intend to reduce expenditures so as to minimize our requirements for additional financial resources, if such resources are not available on terms acceptable to us.

Impact of the Year 2000

Many currently installed computer systems and software products are coded to accept or recognize only two digit entries in the date code field. These systems may recognize a date using "00" as the year 1900 rather than the year 2000. As a result, computer systems and/or software used by many companies and governmental agencies may need to be upgraded to comply with such Year 2000 requirements or risk system failure or miscalculations causing disruptions of normal business activities.

State of Readiness

Costs. To date, we have not incurred any material costs in identifying or evaluating Year 2000 compliance issues. Most of our expenses have related to, and are expected to continue to relate to, the operating costs associated with time spent by employees in the evaluation process and Year 2000 compliance matters generally. We do not presently anticipate that such expenditures will be material.

Risks. We have made a preliminary assessment of the Year 2000 readiness of our operating and administrative systems and the third-party software, hardware and services used to host the drkoop.com website. Our assessment plan consists of:

. contacting third-party vendors of material software, hardware and services that are both directly and indirectly related to the delivery of drkoop.com services to our users;

. assessing and implementing repair or replacement of such components as required; and

. creating contingency plans in the event of Year 2000 failures.

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We plan to perform a Year 2000 simulation on our systems, including the drkoop.com website, during the second quarter of 1999 to test Year 2000 system readiness. Many of our vendors of material software, hardware and services have indicated that the products used by us are currently Year 2000 compliant. We are not currently aware of any internal Year 2000 compliance problems that could reasonably be expected to have a material adverse effect on our business, results of operations and financial condition, without taking into account the Company's efforts to avoid or fix such problems. However, there can be no assurance that we will not discover Year 2000 compliance problems in our computer infrastructure that will require substantial revisions or replacements. In addition, we cannot assure you that third-party software, hardware or services incorporated into our material systems or other systems upon which we are reliant will not need to be revised or replaced, which could be time consuming and expensive.

In addition, we cannot assure you that governmental agencies, utility companies, Internet access companies, third-party service providers and others outside of our control will be Year 2000 compliant. The failure by such entities to be Year 2000 compliant could result in a systemic failure beyond our control, such as a prolonged Internet, telecommunications or electrical failure, which could also prevent us from delivering drkoop.com, decrease the use of the Internet or prevent users from accessing drkoop.com, any of which would have a material adverse effect on our business, results of operations and financial condition.

Contingency Plan.

As discussed above, we are engaged in an ongoing Year 2000 assessment and have developed preliminary contingency plans. The results of our analyses and the responses received from third-party vendors and service providers will be taken into account to revise our contingency plans as necessary. It is our goal to finalize our contingency plans by the end of the third quarter of 1999.

New Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including derivative instruments embedded in other contracts, and for hedging activities. SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. We currently do not engage or plan to engage in derivative instruments or hedging activities.

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BUSINESS

Background

Our company operates drkoop.com, an Internet-based consumer healthcare network. Our network consists of a consumer-focused interactive website which provides users with comprehensive healthcare information and services, as well as affiliate relationships with Internet portals, other websites, healthcare organizations and traditional media outlets. Our website, www.drkoop.com, is a healthcare portal which integrates dynamic healthcare content on a wide variety of subjects, interactive communities and tools, as well as opportunities to purchase healthcare-related products and services on-line. Our company's founders, including former U.S. Surgeon General Dr. C. Everett Koop, created drkoop.com to empower consumers to better manage their personal health with comprehensive, relevant and timely information. Our objective is to establish the drkoop.com network as the most trusted and comprehensive source of consumer healthcare information and services on the Internet.

We launched our website in July 1998. By June 1, 1999, www.drkoop.com had attracted over 6 million unique users and enrolled over 280,000 registered users, according to commercial software that we utilize. Our network is designed to provide consumers with a variety of healthcare content, including information on acute ailments, chronic illnesses, nutrition, fitness and wellness, and access to medical databases, publications, and real-time medical news. In addition, we offer eight interactive communities consisting of over 130 hosted chat support groups. Our support groups allow users to share experiences with others who face, or have faced, similar health conditions, leveraging the aggregate community to benefit each member. We also provide interactive tools that permit users to personalize their drkoop.com experience and are developing additional features to expand the functionality of our website.

Currently, our affiliates consist of Internet portals and other websites, healthcare organizations and traditional media outlets. Each affiliate provides to its customers easy access to the information and services offered on drkoop.com. Through these relationships, we believe that we will gain broad exposure of our brand, drive high volumes of traffic to the drkoop.com website, and acquire and distribute relevant local content. We intend to expand our network by continuing to establish relationships with affiliates that have the ability to direct additional users to our website.

Our belief is that health-concerned consumers are highly motivated in their need to find accurate information and to act on it. Our strategy is to create a trusted brand that consumers will rely on for that information and for related e-commerce opportunities. Our business model is primarily to earn advertising, subscription and e-commerce transaction revenues from advertisers, merchants, manufacturers and healthcare organizations who desire to reach a highly targeted community of healthcare consumers on the Internet. For example, advertisers can target very specific audiences such as persons interested in a particular disease or individuals who desire to address a particular health condition. We also earn revenues by facilitating e-commerce transactions, such as sales of prescription refills, vitamins and nutritional supplements, and health insurance services, offered by outside parties.

Industry Overview

The Internet has become an important alternative to traditional media, enabling millions of consumers to seek information, communicate with one another and execute commercial transactions electronically. According to an industry research firm, the number of worldwide web users is expected to grow from approximately 100 million in 1998 to approximately 320 million by 2002. The Internet is distinct from traditional media in that it offers real-time access to dynamic and interactive content and instantaneous communication among users. These characteristics, combined with the fast growth of Internet users and usage, have created a powerful, rapidly expanding direct marketing and sales channel. Advertisers can target very specific demographic groups, measure the effectiveness of advertising campaigns and revise them in response to real- time feedback. Similarly, the Internet offers on-line merchants the ability to reach a vast audience and operate with lower costs and greater scale economies, while offering consumers greater selections, lower prices and heightened convenience, compared to conventional retailing. We believe that all participants in the healthcare industry will

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benefit from the Internet because of its unique attributes as an open, low-cost and flexible technology for the exchange of information and execution of electronic transactions.

Portals, such as AOL, Excite, the Go Network, Lycos, MSN and Yahoo!, have established themselves as leading pathways for a broad variety of information. Users are augmenting these portals with subject-specific vertical portals, which are becoming one of the fastest growing segments of the Internet. These vertical portals are using brand awareness driven by high quality topical content and significant market resources to establish themselves as destinations for highly concentrated groups of users.

In addition, on-line communities have emerged that allow users with similar interests to engage in interactive activities. Until recently, use of the Internet consisted mainly of users seeking one-way, static information on topics of interest to them. Technologies have recently been developed which allow users greater flexibility to create and personalize content, communicate with users having similar interests and engage in other interactive activities. We believe that on-line communities are particularly relevant to users interested in healthcare issues, since medical information is often complex and users value communication with peers who face, or have faced, the same health conditions, leveraging the aggregated community to benefit each member.

Healthcare is the largest segment of the U.S. economy, representing the annual expenditure of roughly $1 trillion, and health and medical information is one of the fastest growing areas of interest on the Internet. According to Cyber Dialogue, an industry research firm, during the 12-month period ended July 1998, approximately 17 million adults in the United States searched on- line for health and medical information, and approximately 50% of these individuals made off-line purchases after seeking information on the Internet. Cyber Dialogue estimates that approximately 70% of the persons searching for health and medical information on-line believe the Internet empowers them by providing them with information before and after they go to a doctor's office. Cyber Dialogue also estimates that the number of adults in the United States searching for on-line health and medical information will grow to approximately 30 million in the year 2000, and they will spend approximately $150 billion for all types of health-related products and services off-line. Accordingly, we believe that companies that establish a clear brand identity as a trusted source of on-line consumer healthcare information and services will have a significant opportunity to capitalize on multiple revenue sources, including direct-to-consumer advertising and e-commerce.

Business Strategy

Our objective is to establish the drkoop.com network as the most trusted and comprehensive source of consumer healthcare information and services on the Internet. Our business strategy incorporates the following key elements:

Establish the drkoop.com Brand. Our strategy is to create a strong brand with which consumers associate the trustworthiness and credibility of Dr. C. Everett Koop and which will enable us to implement his vision of empowering individuals to better manage their personal health. We also intend to enhance our brand through association with other notable leaders in the consumer healthcare field, such as ABC News Medical Correspondent Dr. Nancy Snyderman, a director of our company. Our company is currently engaged in a major campaign to increase awareness of the drkoop.com brand among consumers, healthcare organizations, Internet portals and other websites. We intend to allocate significant resources to further develop and build brand recognition through on-line advertising, general advertising, strategic alliances and other marketing initiatives.

Provide Consumers with Healthcare Content of High Quality. We currently provide our users with high quality healthcare content, including information on acute ailments, chronic illnesses, nutrition, fitness and wellness, and access to medical databases, publications, and real-time medical news. This information is provided by established sources such as Dartmouth Medical School, Reuters, the National Institute of Health, Multum Interactive Services, Inc., and the American Cancer Society. We also offer a directory which compares and rates over 1,100 other health-oriented websites. Our strategy is to integrate dynamic healthcare information on a wide variety of subjects with relevant interactive communities and tools, and opportunities to purchase

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healthcare-related products and services on-line. We believe that the quality of our health information is a competitive advantage that will enable us to attract users to our website, promote user loyalty and increase page views per visit.

Syndicate Content Through Affiliates to Promote Traffic Growth. We have entered into relationships with portals and other websites which position drkoop.com as their primary source for consumer healthcare content. In addition, we have entered into relationships with local hospitals, payor entities and local media outlets such as television stations. These relationships include the creation of co-branded websites and the distribution of branded healthcare information to affiliated entities. We intend to expand our network by continuing to establish relationships with affiliates that have the ability to direct additional users to our website.

Develop and Expand On-line Healthcare Communities. We currently offer our registered users free access to eight on-line communities consisting of over 130 hosted chat support groups. Our eight communities are organized by the following general health topics: Addiction & Recovery, Aging Healthy, General Health, Men's Health, Mental Health, Parenting & Children's Health, Physical Conditions and Women's Health. Our support groups cover topics including hepatitis C, child development, stress management and relaxation skills and anxiety disorders. Our communities and support groups allow users with similar health-related experiences to exchange information and gather news and knowledge in a secure, anonymous, on-line environment. Communities and support groups are hosted by selected moderators with experience both in the relevant topic and on-line forum moderating. We believe that our communities and support groups are an effective way to attract users to our website and strengthen their loyalty to the drkoop.com network. In addition, by aggregating users interested in a particular health topic, we believe we can sell advertising in a highly targeted manner, thereby commanding higher advertising rates. Similarly, we offer merchants and others who engage in e-commerce the ability to market products and services to our community members.

Provide Consumers with Unique Features and Tools. Our website is designed to provide easy access to innovative features and tools. Currently, our most popular tool educates consumers on the interaction among various drugs and other substances. In addition, we recently acquired the right to deploy a comprehensive personal medical record which will allow users to establish and maintain a lifelong record of their health and medical information in a secure portion of our database. We intend to continue to add useful tools to enable our users to personalize their on-line experience. We believe that our tools and features will continue to encourage users to visit our website frequently and increase the likelihood of users selecting drkoop.com as their preferred website for health-related issues.

Provide an Attractive Advertising Site. We believe our ability to target specific users, the interactive nature of our website and the demographic characteristics of our users will be attractive to pharmaceutical, healthcare and other companies that advertise on the Internet. By identifying users interested in a particular health-related topic or who desire to address a particular health condition, we believe we can deliver advertising in a highly targeted manner, thereby commanding higher advertising rates.

Enable High Value E-commerce Offerings. We enable e-commerce transactions offered by third parties. Our strategy involves permitting merchants, manufacturers and service providers access to a highly targeted community of health conscious consumers through our website and the health channels of our portal affiliates. We presently enable sales of prescription refills, vitamins and nutritional supplements and insurance services. Although we do not provide these products or services, we do provide links to the websites of third parties that provide these products or services. Some of these third parties have entered into preferred provider arrangements with us and pay us either a transaction fee for sales attributable to users from our website or an anchor tenant rental fee. Anchor tenant fees are annual fees paid by on-line merchants in exchange for a prominent link to their on-line stores. We believe that contextual merchandising of e-commerce transactions will attract users to our website and promote user loyalty.

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The drkoop.com Network

Our network consists of a consumer-focused interactive website which provides users with comprehensive healthcare information and services, as well as affiliate relationships with portals, other websites, local healthcare organizations and traditional media outlets. The website is a healthcare portal which integrates dynamic healthcare information on a wide variety of subjects, interactive communities and tools that enable our users to personalize their drkoop.com experience and opportunities to purchase healthcare-related products and services on-line. Our affiliate relationships, we believe, allow us to gain broad exposure of our brand, drive high volumes of traffic to the drkoop.com website, and acquire and distribute relevant content at the local level. Affiliates may use our content on television or radio, in print, radio or on- line, provided they credit drkoop.com as the provider of the content and, where appropriate, pay a license fee. We believe that displaying logos and credits on every web page, program and publication where drkoop.com content is displayed will help us build brand awareness and attract users to our website.

Website

Healthcare Information. Our goal is to provide consumer-focused information for the health-conscious public, individuals with a health condition, and individuals who have recovered from illness or injury, all at a level the average consumer can understand. We currently provide a variety of healthcare content, including information on acute ailments, chronic illnesses, mental health and behavioral issues, nutrition, fitness and wellness, and access to medical databases, other publications, and real-time medical news. To encourage interactivity, we provide links to relevant communities and other features from each content page. Examples of healthcare information that we currently provide include:

              Information                              Sources
              -----------                              -------
. Physician-authored articles on common   Dartmouth Medical School,
  medical conditions                      Nancy Snyderman, M.D.,
                                          drkoop.com

. Updated health-related news and         Reuters
  editorials on topics of current
  interest

. General medical information and         National Institute of Health,
  statistics                              American Cancer Society

. Information regarding the interaction   Multum Interactive Services, Inc.
  among various drugs and other
  substances

. Directory of over 1,100 health-related  drkoop.com
  websites including ratings and reviews

. Information on pharmaceuticals and      Graedon Enterprises, Inc.
  over-the-counter drugs

. Clinical trials study information       Quintiles, Inc.

We expect that competitive factors will create a continuing need for us to improve and add to our healthcare content. Accordingly, we intend to seek additional sources of healthcare information and expand the breadth of our content offerings.

Interactive Communities. We currently offer eight interactive communities consisting of over 130 hosted chat support groups. These communities were developed to provide users with a mechanism to interact with others experiencing, or who have experienced, similar health conditions. We believe the communities and their support groups enable users to gain valuable insight, practical knowledge and support with regard to their health concerns which supplement their interaction with their physicians. Our eight communities are organized by the following general health topics: Addiction & Recovery, Aging Healthy, General Health, Men's Health, Mental Health, Parenting & Children's Health, Physical Conditions and Women's Health.

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The drkoop.com support groups differ from other Internet chat rooms and forums in that drkoop.com selects hosts to be involved in each support group. Although most of our support groups are led by peer monitors, many of whom have faced similar health concerns, some are led by healthcare professionals with expertise in the specific area of health on which the support group is focused.

User demand has driven the expansion in the number of drkoop.com support groups. Our support topics are typically proposed by a user. Accordingly, our support groups are dynamic and evolve as user interests change. We believe our support groups are distinct from other support rooms because drkoop.com offers access to information and news relevant to the support topic on the corresponding web page. We believe that a user's participation in a focused chat will stimulate the user's interests in related support groups, contributing to more frequent usage and longer visits at our website. Examples of the interactive support groups that we currently offer include:

Addiction & Recovery                       Parenting & Children's Health
 Living with Sobriety                        Attachment Parenting

                                             Child Development
Aging Healthy                                Depression and Your Child
 Unique Exercise Ideas                       Parenting an Only Child


General Health                             Physical Conditions
 Angel Power                                 Beating the Pain
 Turning Back the Clock                      Crohn's Colitis Support

                                             Joint Replacement Chat
Men's Health                                 Hepatitis Central
 Beyond the Locker Room


                                           Women's Health
Mental Health                                Balancing Work & Family
 Anxiety Disorders                           Biological Clock Watchers
 Mood Disorders                              Menopause Management
 OCD Matters

Tools. We currently provide interactive tools and other features that allow registered users to personalize their drkoop.com experience and better manage the healthcare information available on our network. We believe our tools and features enable us to obtain and retain registered users. To enhance the experience of our current and future registered users, we intend to develop additional tools and features. Examples of tools that we have already developed or intend to develop include:

Existing Tools

Drug Checker. Our drug interaction tool, Drug Checker, allows users to quickly and easily search for information on a particular product and then check for interactions between it and other prescription and over-the- counter drugs. The tool enables the user to search for drugs by complete or partial name matching and returns a list of drugs for selection. Selection of more than one drug into the interaction list then permits the user to test for interaction among the selected drugs. The tool also provides drug- food interaction data when available. Drug Checker uses the Multum database which we have modified with an easy to use interface.

Health Search. This tool allows users to search the entire drkoop.com website and related healthcare websites for specific health and medical information. We also provide easy access to Medline, a large database of medical information provided by the National Library of Medicine and CancerLit, the National Cancer Institute's bibliographic database.

Health Site Reviews. We have created a directory of third party health- related websites using an industry standard rating scheme from the Healthcare Information Technology Institute. Our rating methodology produces an overall website score based on several criteria including credibility, accuracy, disclosure, links, design and interactivity. This tool enables a user to search for the highest rated healthcare websites categorized by various healthcare conditions.

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Health Risk Assessments. Our first health risk assessment tool, Tobacco Risk Profiler, enables users to understand their reliance on tobacco and assess a variety of treatment methods. This tool is integrated with content and interactive community features to provide an educational and supportive experience for users suffering from nicotine addiction. We expect to introduce a variety of health risk assessments allowing users a quick and easy way to assess their health and find corrective measures they can take to reduce any health-related risks.

Health Polls. Our health polls provide users with opportunities to answer a variety of health related questions on-line. We can obtain valuable information from our users as to their interests and demographics. The survey information is then used to make the related community more aware of current healthcare issues.

Preventionnaire. This interactive questionnaire, residing in our Prevention Center, is designed to help consumers identify their healthcare needs. After answering a series of questions tailored to the user's sex and age, the tool advises the user to consult with his or her physician on a variety of preventive tests or immunizations to maintain good health.

Future Tools

Listed below are some of the tools that we are presently developing. Deployment of these tools will involve our successful acquisition and integration of the required content and related technology. We cannot assure you that these tools will be successfully deployed on a timely basis, or at all, or that users will find these features attractive.

Dr. Koop's Personal Medical Record. We intend to offer a personal medical record which will allow users to establish and maintain a lifelong record of personal health and medical information in a secure portion of our database. We presently expect to add a personal medical record feature to our website in the first half of 1999 as an element of our technology relationship with HealthMagic.

My Health@drkoop.com. This product is intended to allow consumers to receive email newsletters with news and information tailored to their specific needs. We presently expect to add this tool to our website in the first half of 1999.

Recipe Database. This feature is intended to provide a customized, searchable database of recipes meeting specific dietary requirements of the user, such as low-fat, low-salt diets. We presently expect to add this tool to our website in the second half of 1999.

Personal Health Shopper. This tool is intended to enable consumers to enter their preferences for shopping and allow us to customize information and new product offerings for the users. We presently expect to add this tool to our website in the second half of 1999.

Physician Databases. We intend to provide to consumers access to physician databases permitting them to find doctors in their local area. In February 1999, we entered into a content agreement with Physicians' Online which will allow us to implement a physician database on our website. We are currently in the process of deploying this tool.

Insurance Assessment. This interactive questionnaire is designed to enable consumers to better understand their health insurance needs and assist them in making a purchase decision. We presently expect to add this tool to our website in the first half of 1999.

Affiliates

Portals and Other Websites. The distribution of drkoop.com content to affiliated portals and other websites is designed to rapidly increase brand awareness through co-promotion and direct links with the affiliate's server. We intend to affiliate with selected websites that have the potential to drive traffic to our website and provide broad exposure to the drkoop.com brand. Currently, portals are the leading aggregators of traffic on the Internet. Users are augmenting these portals with subject-specific vertical portals, which are becoming one of the fastest growing segments of the Internet. These vertical portals are using brand awareness

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driven by quality topical content and significant market resources to establish themselves as destinations for highly concentrated groups of users. Examples of relationships that we have already established include:

The Go Network. drkoop.com has entered into agreements with Infoseek Corporation and the Buena Vista Internet Group, a unit of The Walt Disney Company, under which drkoop.com will be the exclusive provider of health related content on three websites of the Go Network: Go.com Health Center on Infoseek, ESPN.com Training Room and the Family.com Health Channel. Under the Infoseek agreement, drkoop.com will also be the premier health content provider for ABCnews.com. In addition, drkoop.com will be the exclusive pharmacy and drugstore, health insurance and clinical trials partner in the Go.com Health Center. Under these agreements, users on the Go Network will be able to access various health information, services, interactive tools and commerce opportunities through a co-branded location (http://go.drkoop.com) served by drkoop.com. In the event drkoop.com elects not to provide specific content, it may be obtained from a third party. We believe that these agreements will contribute substantially to our brand awareness and increase traffic on our website.

The term of both agreements is for three years, except that each of the parties may elect to terminate the relationship after two years. We will pay Infoseek and the Buena Vista Internet Group approximately $57.9 million in total consideration consisting of cash and warrants to purchase 775,000 shares of common stock at an exercise price of $8.60 per share over the full three year term. None of the warrants are exercisable prior to one year after issuance.

Salon Internet, Inc. Salon Internet, Inc. and drkoop.com expect to launch a health and wellness site called Salon Health in the first half of 1999. Salon Health will create a unique blend of editorial content and integrated health information for its users. drkoop.com will be the exclusive provider of health information for Salon Health. This initiative is expected to introduce a complete storefront offering of drugstore related products. Our agreement with Salon has a three-year term. The parties will share in revenues generated through the storefront and in advertising revenue. We will pay Salon a fee for running a minimum number of drkoop.com banner advertisements on the Salon site.

WellSt.com. drkoop.com has been selected as the provider of traditional health and medical information for WellSt.com, a division of Element Media, Inc., an alternative health company. The WellSt.com agreement has a three- year term under which we will be the exclusive provider of traditional healthcare content to WellSt.com, except that WellSt.com may use other sources to the extent that we decline to develop any specific content. WellSt.com will be the preferred provider of alternative medicine and health information on drkoop.com. The parties have agreed to undertake joint marketing activities of mutual benefit and will share in revenues generated through the use of the other party's content. We believe this strategic partnership will allow drkoop.com to reach a unique audience that is interested in alternative medicine and health information.

Physicians' Online. drkoop.com will provide content and services to Physicians' Online, one of the largest Internet communities of doctors. drkoop.com and Physicians' Online will also undertake joint marketing and sales of the personal medical record software and services to hospitals and other managed health facilities and will share in the revenue generated from these activities. Physicians' Online provides doctors with access to medical databases, clinical symposia, medical news and other medical resources, and has a membership in excess of 170,000 doctors. Our agreement with Physicians' Online has a one-year term during which each party will promote the other party's website and share in various revenue sources.

iSyndicate. iSyndicate, a service that connects small sites in search of content with content providers, has selected drkoop.com as a provider of health information to its 13,000 affiliate sites. Under this agreement, iSyndicate affiliates can choose to provide headlines, teasers or full-text content to their users. The iSyndicate agreement has a one-year term under which iSyndicate will market the drkoop.com content under the several different marketing models. We pay a fee for each user who links to drkoop.com from a headline or teaser on an affiliate site, and we receive a fee when an affiliate elects to license the full-text drkoop.com content to be hosted and displayed on the affiliate's site.

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SeniorNet. SeniorNet.org, the world's largest trainer of older adults about computer technology and the Internet, has selected drkoop.com to be the exclusive provider of health information and services to users of the SeniorNet On-Line Community. Through this strategic partnership, drkoop.com will provide our healthcare content and our products and services that will empower SeniorNet users to better manage their health. SeniorNet operates over 140 SeniorNet Learning Centers across the United States, providing access to over 100,000 older adults, while educating them on how to use the SeniorNet website and the Internet. In addition to the content partnership, drkoop.com plans to release a co-branded version of the Dr. Koop's Personal Medical Record for members of the SeniorNet On-Line Community. The drkoop.com health content and PMR will become part of the Learning Center curriculum, which is used to educate more than 45,000 older adults each year. We will pay SeniorNet a fee for this exclusive relationship.

Yahoo! drkoop.com has entered into a relationship with Yahoo! to syndicate Dr. Nancy Snyderman's Daily Health offering for use in Yahoo! Health, with a launch expected in the second quarter of 1999. Under this agreement, Dr. Snyderman will appear daily on Yahoo! in a drkoop.com branded environment where users of Yahoo! Health are able to read Dr. Snyderman's responses to user-submitted questions. Users who wish to ask Dr. Snyderman a question through an email interface will be transferred to the "Ask Dr. Nancy Snyderman" area of the drkoop.com website. New answers and archives will be posted daily on Yahoo! Health. This is a non-paid relationship between the two companies.

@Home Network. drkoop.com entered into a two year relationship with The @Home Network to be the anchor tenant partner within the Health Channel area of the @Home service. drkoop.com will be the premier content provider appearing in the Health Channel. Under the terms of this agreement, drkoop.com will have the ability to direct users to related commerce, community and interactive tool features appearing on the drkoop.com website from within all health content appearing in the Health Channel. In addition, drkoop.com will share in all advertising revenues generated by @Home in the Health Channel where drkoop.com content dominates the related page. drkoop.com will pay a carriage fee of $2.25 million to @Home for the right to be the premier content provider in the @Home Health Channel.

Healthcare Organizations. drkoop.com enrolls healthcare organizations as local affiliates through our Community Partner Program. This program allows local organizations such as hospitals, health systems and other healthcare organizations to integrate the drkoop.com brand and content into their on-line initiatives. Under this program, we develop co-branded Internet pages linked to drkoop.com for local healthcare organizations. The Community Partner Program enables healthcare organizations to supply their patients with on-line health resources and interactive capabilities integrated with specific information about their facilities. This program provides consumers with the ability to educate themselves, make an informed decision, and take action through a healthcare organization's local website, strengthening the relationship between the consumer and the organization. Those consumers are introduced to the drkoop.com brand through our association with their local provider or payor. Examples of local healthcare organizations that have enrolled in our Community Partner Program include:

Adventist Health System. Adventist Health System currently operates 31 hospitals in nine states and has more than 4,900 licensed beds. Adventist Health System also operates 27 extended-care facilities with more than 3,000 long-term care beds. Florida Hospital, part of Adventist Health System, serves the 2.6 million residents of the Orlando area.

Highmark. Highmark, created in 1996 by the consolidation of Blue Cross of Western Pennsylvania and Pennsylvania Blue Shield, is one of the ten largest health insurers in the United States. Highmark offers managed care programs, health plans, traditional health insurance coverage, life and casualty insurance, and dental and vision programs to approximately 18 million people.

MemorialCare. MemorialCare is a comprehensive healthcare system servicing the over 14 million residents of Los Angeles and Orange Counties in California. MemorialCare offers Southern Californians four major medical centers and a children's hospital, as well as a number of subsidiary facilities.

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Tallahassee Memorial HealthCare. Tallahassee Memorial HealthCare provides Floridians with a comprehensive system of patient and healthcare services coordinated under certain specialty centers. These specialty centers include Tallahassee Memorial Hospital, the eighth largest hospital in Florida, and eleven satellite facilities in five counties. Founded more than fifty years ago, Tallahassee Memorial HealthCare currently services a population of over 500,000 individuals.

Scott and White Hospital and Clinic. Scott and White is one of the largest multi-specialty hospital and clinic groups in the United States. Their more than 515 physicians and scientists service the 1.8 million residents of Central Texas as well as patients from throughout the United States and many foreign countries.

Baptist Health Systems. Baptist Health Systems is South Florida's largest not-for-profit health care organization with 7,400 employees. The health system includes Baptist Hospital, Baptist Children's Hospital, Miami Cardiac & Vascular Institute, Homestead Hospital, Mariners Hospital in Tavernler and a full spectrum of outpatient diagnostic and treatment facilities. Baptist Health Systems serves the 3.5 million residents of the Miami area.

Promina Health Systems. Promina Health Systems is a local, not-for- profit organization created by local doctors and hospitals who have come together to protect and improve community-based health care for the 4.3 million residents of metro Atlanta.

Contracts we enter into under our Community Partner Program typically specify performance standards that require us to:

. provide up to 10 customized website pages;

. maintain operation of our website for at least 95% of the time; and/or

. provide monthly traffic reports to our community partners.

Traditional Media. We also intend to establish additional affiliate relationships with traditional media outlets. There are many areas of overlap with television and print that allow for collaboration in the delivery of quality healthcare content to an audience. Late breaking news, daily syndicated articles and other timely relevant content can be distributed as an information feed in multiple formats. For example, network television affiliates carry local, relevant information directly to local audiences. Similarly, by distributing content at the affiliate level, drkoop.com can be the leading syndicate of Internet-ready health content and editorial-based, breaking health news. The content that resides on our website can also be distributed through newspapers, trade journals, periodicals, and a variety of other print media. By aligning drkoop.com and our notable leaders in the healthcare field, Dr. C. Everett Koop and Dr. Nancy Snyderman, with high profile publications, we have the opportunity to build brand awareness of drkoop.com. Links from traditional media websites to our website create additional channels for generating traffic to the drkoop.com website. Examples of traditional media programs include:

Health Resource Marketing. drkoop.com has an agreement with Health Resource Publishing, a division of Catalina Marketing, Inc., to place advertisements for the drkoop.com site on up to 50% of the HRP newsletters distributed through chain drugstores. HRP estimates that it will distribute up to 20 million newsletters monthly during 1999. Additionally, personalized healthcare content from the drkoop. com site will be included in the HRP newsletters thus reaching a highly targeted health conscious population with branded content and promotion.

Granite Broadcasting. We have entered into an agreement with Granite Broadcasting Corporation, a publicly-traded owner of ten ABC, CBS, NBC and WB television stations in markets such as San Francisco, Detroit and Buffalo. A program was initiated in September 1998 with KEYE, Granite's CBS affiliate in Austin, Texas, in which drkoop.com provides the station with Internet health content, and the station provides both local promotion of drkoop.com and daily prompting of the station's viewers to drkoop.com following relevant health stories on the station's local newscasts.

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ABC Affiliates. drkoop.com's multi-year agreement with Infoseek for the Go Network Internet properties provides that the websites of all ABC affiliates who participate in the network's Local Net Internet service, currently 115 stations, will be linked to drkoop.com. ABC will also provide details to all of its affiliates regarding how they can participate as a full drkoop.com affiliate in their local news coverage and promotion. ABC affiliates receive first right of negotiation for participation in this program.

Revenue Opportunities

Our operating strategy is presently comprised of three primary means of generating revenue:

. advertising;

. content syndication; and

. electronic commerce.

Advertising. The healthcare industry spends billions of dollars every year to market products and services to consumers. Jupiter Communications projects that the on-line health advertising segment will grow from $12.3 million in 1998 to $265 million in 2002. We believe that health portals and other vertically focused websites are uniquely positioned to attract a significant share of these advertising expenditures. By identifying users interested in a particular health-related topic or who desire to address a particular health condition, we believe we can sell advertising in a highly targeted manner, thereby commanding higher advertising rates.

Merchants can purchase advertising on our website in two ways. Banner advertising is generally sold based on the number of impressions received by the advertisement and its position on the website. This type of advertising frequently encourages the user to move to other web pages which describe the advertiser's product and solicit a direct response from the user. Sponsorships are contracts that typically grant advertisers rights to promote their products on a specific portion of the website. Sponsorships are designed to support broad marketing objectives, including brand awareness, product introductions, research and transactions, generally on an exclusive basis. Accordingly, sponsorships are sold based on their duration, the portion of the website sponsored and the number of impressions delivered. Some of our advertisers and sponsors include:

. Pfizer, a pharmaceutical company, which advertises Zithromax, a children's antibiotic, in our Ear, Nose and Throat and Children's Health sections;

. Biogen, a pharmaceutical manufacturer, which advertises Avonex, a Multiple Sclerosis medication, in our Multiple Sclerosis disease section;

. Schering-Plough, a pharmaceutical company, which has sponsored our allergy health topic with Claritin. The integrated sponsorship includes logo links, keywords, and banner impressions; and

. SmithKline Beecham, a pharmaceutical company, which has sponsored the drkoop.com smoking cessation center with Nicorette/Nicoderm.

One form of direct response advertising involves pre-screening and identifying potential participants in clinical trials. In 1997, approximately $19 billion was spent by the private sector on human health research and development in the United States alone, according to the Pharmaceutical Manufacturers Association. A significant portion of these costs are incurred in the later stages of clinical development, where large numbers of subjects are enrolled into studies designed to provide the bulk of the safety and efficacy data needed to obtain a product license from the FDA. The identification and enrollment of qualified individuals into these studies is usually a time- consuming and expensive process.

In December 1998 we implemented the drkoop.com Clinical Research Center, a portion of our website designed to help educate consumers about clinical trials: what they are; what to expect; and how to find and enroll in an appropriate trial if the individual and their physician believe that this is a viable therapy option. When this feature is fully developed, consumers will be able to search a database of clinical trials by geography and by disease. We believe that on-line pre-screening will reduce the number of inappropriate contacts and result in only qualified people being referred to the clinical trial sponsors. drkoop.com will derive a per respondent advertising fee for this recruitment service.

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Content Syndication. We license our content and certain interactive tools through a broad variety of affiliated websites. The majority of the licensed content is provided by third-parties and is not produced by us. The primary source of content syndication revenue is our Community Partner Program. Under the Community Partner Program, we develop co-branded Internet pages and software consisting of visual icons containing links back to the drkoop.com website for local healthcare organizations, such as hospitals and payor organizations. Licensing fees are typically determined based on the channel for which the content will be used. Content syndication agreements generally stipulate that all content provided by drkoop.com must retain a legend indicating "Provided by drkoop.com" and is subject to an acceptable use policy that defines how and where the content may be used. Editorial content and/or content control generally remain the exclusive right of the drkoop.com network. We believe that by allowing other high-traffic websites and portals to offer our content we will gain broad exposure of our brand and drive high volumes of traffic to the drkoop.com website, thereby allowing us to generate more advertising and e-commerce revenues. While we expect to also generate significant revenues from certain of our syndication programs, this revenue source is expected to become a smaller proportion of our overall revenues as our audience continues to grow.

E-Commerce. We provide users with the ability to access e-commerce opportunities provided by outside parties in numerous locations throughout the drkoop.com website. For example, users can access prescription refill services through pages relevant to a particular condition. We also plan to offer the drkoop.com Health Store, a section of the website which aggregates all of the e-commerce opportunities found throughout the site into one comprehensive storefront that users can navigate to find the specific products or services offered by outside parties. E-commerce interfaces on drkoop.com, whether in the drkoop.com Health Store or in other locations within the website's general content, are being designed to be informative and easy to use.

We currently offer two primary categories of products and services which users can purchase from third parties through our website:

On-line Pharmacy Products. According to industry statistics, the retail prescription drug market in 1997 accounted for approximately $89.1 billion in sales generated by 2.6 billion prescriptions. Over-the-counter medications and the other health and beauty aids accounted for $26.8 billion and $26.9 billion in retail sales, respectively, in 1997. Due to the convenience, privacy, cost-savings and selection that can be offered to consumers via the Internet, we believe that the on-line pharmacy will become a major factor in retail pharmacy sales and will capture a significant portion of these sales in the near future. Moreover, direct deliveries of prescription drugs to the home via mail accounts for a significant proportion of all prescription drug sales. We expect that this distribution channel will expand to include other products traditionally associated with retail pharmacy stores.

Our personal drugstore provides links to 23 traditional and on-line pharmacies where users can order prescription refills and other pharmacy products over the Internet. We are also offering e-commerce anchor tenant positions to online and traditional pharmacies on a category-exclusive basis to allow consumers to link to their online stores. We receive an annual rental fee for these anchor tenant positions. Our first contract is with Vitamin Shoppe, an online vitamin and supplement company. We also intend to offer anchor tenant positions for the online pharmacy on the Go! Health Network.

Insurance. The individual health insurance market is estimated to be an $85 billion per year industry, according to AM Best. In the past decade, the AMA estimates that the number of Americans without health insurance increased from 32 million to 43.4 million. Our website provides access to an insurance center consisting of comparisons of different insurance plans designed to assist users in determining their individual health coverage needs and coverage options. This service is designed to provide useful, consumer-oriented information and to enable the purchase of insurance coverage through various links with qualified insurers.

Our current insurance partners include:

. Quotesmith.com, an on-line insurance website where users can obtain instant quotes from 375 leading insurance companies. We have implemented a co-branded version of their instant quote system.

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. American Health Value, a user-friendly Medical Savings Account (MSA) administrator offering consumers access to their MSA funds with a Visa card. We link to their website through our Personal Insurance Center.

. HealthCore Medical Solutions, a health and consumer benefits marketing company, which offers its members discounts on eye care, dental and pharmacy benefits. We link to their website through our Personal Insurance Center.

. eHealthInsurance.com, an online retail health insurance provider. We link to their website through our Personal Insurance Center.

Sales

As of March 31, 1999, we had a direct sales organization consisting of 11 sales professionals with an average of 14 years of sales experience, and had also contracted with WinStar Interactive, an on-line property representation company. We have seven geographically-based sales representatives with extensive healthcare backgrounds calling on large integrated health systems and payors in major metropolitan areas selling drkoop.com's Community Partner Program. We also have two sales representatives with pharmaceutical backgrounds who call directly on pharmaceutical companies. In addition, one of our sales representative with an insurance background calls on payors for enrollment in our insurance commerce initiative. Further, members of management and the sales force call on portals and other websites to establish affiliate relationships. We also use WinStar to call on the interactive agencies and media buyers for both sponsorship and banner advertising. As of March 31, 1999, approximately 60 percent of the advertising commitments received by us had been secured by our direct sales force, with the balance secured by WinStar.

For the year ending December 31, 1998, sales to individual customers constituting 10% or more of revenue included Memorial Care Hospital (63%), PCS Health Systems (23%), and Medtronic (12%).

Marketing and Public Relations

We employ a variety of methods to promote the drkoop.com brand to attract user traffic and affiliate relationships. Our public relations staff oversees a comprehensive pubic relations program targeting consumer, trade and healthcare media. In addition, we also conduct media outreach programs consisting of public service announcements and other promotional activities targeting radio, broadcast, and print media on a national and local basis.

Advertising. Media purchasing is a significant component to the brand awareness and customer acquisition strategy for drkoop.com. We believe that click-through banner advertising has been the accepted means to drive traffic across the Internet for several years. We believe that we must continue to promote drkoop.com to the mass Internet audience through banner advertising in order to attract first time users. Depending on the source, we can use a banner advertisement to direct a user to our homepage or to a place in the website that contains topical information of interest to them. We also intend to pursue general advertising through conventional media.

Public awareness campaigns are a significant part of the user generation plans for drkoop.com. By strategically aligning drkoop.com with health-related initiatives and charity organizations, we believe we will be able to reach a large audience to help raise awareness for specific causes or organizations. By creating opportunities for users to participate in awareness campaigns, we believe we can raise money for organizations and charities, and at the same time drive new registered users to drkoop.com.

Public Relations. As a well recognized, trusted spokesperson on America's health, we believe that Dr. C. Everett Koop is in a unique position to raise consumer awareness of health-related issues and our company. Since the launch of our website, Dr. C. Everett Koop has participated in several industry events that have dramatically raised our visibility in the Internet healthcare market. We expect Dr. C. Everett Koop to continue to raise awareness of our company's mission to empower consumers with information and services to

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better manage their personal healthcare and our initiatives to serve them, by participating in public relations and public service activities.

Technology

A component of our strategy is to apply existing technologies in novel ways to deliver content and provide services to our users. The various features of the drkoop.com network are implemented using a combination of commercially available and proprietary software components. We favor licensing and integrating "best of breed" commercially available technology from industry leaders. We reserve internal development of software for those components that are either unavailable on the market or that have major strategic advantages when developed internally. We believe that this component style approach is more manageable, reliable, and scaleable than single-source solutions. In addition, the emphasis on commercial components speeds development time, which is an advantage when competing in a rapidly evolving market. Consistent with our preference for off-the-shelf software components, we rely primarily on industry-standard Microsoft operating systems, development, and infrastructure components including NT, Internet Information Server, Microsoft Site Server, Visual Interdev, and others. We have also created a content management and development system and specialized applications, one example of which is the drug interaction application built upon the Multum commercial database.

In January 1999, we entered into a strategic technology relationship with HealthMagic, Inc. which includes a long-term fully paid license to use a broad range of Internet technologies, such as a web-based personal medical record, personalization tools, and security and authentication features. Under this arrangement, HealthMagic will develop, implement, and support these technologies for us, thereby permitting internal resources to address other needs. Our relationship with HealthMagic, we believe, will allow us to improve the functionality of our website with lower risk and at less cost than if we developed this technology ourselves. We expect that as we deploy the HealthMagic applications we will become dependent on that company for our personal medical record feature and for personalization tools currently in development.

Operating Infrastructure

The drkoop.com website is based on a technical operating infrastructure, the drkoop.com web platform, which is designed to be highly scaleable and reliable. The drkoop.com web platform consists of several subsystems, including a scaleable web cluster used to service user requests for web pages. The web cluster is controlled by a hardware cluster manager which continuously monitors the performance and availability of the individual servers within the web cluster. In the event of an individual server failure or when a server requires maintenance, the hardware cluster manager automatically distributes incoming requests to other available servers without disrupting the user's experience.

The drkoop.com web platform consists of readily available, off-the-shelf, computer systems, including dual Intel Pentium servers in a fully redundant configuration. The drkoop.com web platform was designed using a proprietary architecture deploying primarily Microsoft technology running the Windows/NT Operating System. Other Microsoft web enabling technologies used in the drkoop.com web platform include:

. Microsoft Membership and Personalization Server--software that captures user data and enables the drkoop.com experience to be customized for each user;

. Microsoft SQL Server--database software used to store user data and content; and

. Microsoft Internet Information Server--software which enables pages to be displayed to the user.

Our data center is maintained offsite by a third party and provides us with multiple backbone connections to the Internet and a fault-tolerant network design. In addition, electricity for running the drkoop.com web platform is protected by uninterruptible power systems including back-up diesel generators. We have an operations and disaster recovery plan, and drkoop.com is backed up nightly to an off-site storage facility. We do not maintain a back-up data center.

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Competition

A large number of Internet companies compete for users, advertisers, e- commerce transactions and other sources of on-line revenue. The number of Internet websites offering users healthcare content, products and services is vast and increasing at a rapid rate. In addition, traditional media and healthcare providers compete for consumers' attention both through traditional means as well as through new Internet initiatives. We believe that competition for healthcare consumers will continue to increase as the Internet grows as a communication and commercial medium.

We compete directly for users, advertisers, e-commerce merchants, syndication partners and other affiliates with numerous Internet and non-Internet businesses, including:

. health-related on-line services or websites targeted at consumers such as accesshealth.com, ahn.com, betterhealth.com, drweil.com, healthcentral.com, healthgate.com, intelihealth.com, mayohealth.org; mediconsult.com, onhealth.com, thriveonline.com and webmd.com;

. on-line and Internet portal companies, such as America Online, Inc.; Microsoft Network; Yahoo! Inc.; Excite, Inc.; Lycos Corporation and Infoseek Corporation;

. electronic merchants and conventional retailers such as CVS, Rite Aid Corporation, Walgreens, Advanced Paradigm, Express Scripts, Inc. and Merck-Medco, that provide healthcare goods and services competitive to those available from links on our website;

. hospitals, HMOs, managed care organizations, insurance companies and other healthcare providers and payors such as Columbia/HCA Healthcare Corporation, Kaiser Permanente and VHA Inc., which offer healthcare information through the Internet; and

. other consumer affinity groups, such as the American Association of Retired Persons, SeniorNet and ThirdAge Media, Inc., which offer healthcare-related content to special demographic groups.

We believe that competition in our industry is based primarily on:

. the quality and market acceptance of healthcare content;

. brand recognition; and

. the quality and market acceptance of new enhancements to current content, features and tools.

Although our competitive position in our market as compared to our competitors is difficult to characterize due principally to the variety of current and potential competitors and the emerging nature of the market, we believe that we presently compete favorably with respect to these factors. However, we believe that our markets are still evolving, and we cannot assure you that we will compete successfully in the future. Additionally, many of our competitors are likely to enjoy substantial competitive advantages compared to our company, including:

. the ability to offer a wider array of on-line products and services;

. larger production and technical staffs;

. greater name recognition and larger marketing budgets and resources;

. larger customer and user bases; and

. substantially greater financial, technical and other resources.

To be competitive, we must respond promptly and effectively to the challenges of technological change, evolving standards and our competitors' innovations by continuing to enhance our products and services, as well as our sales and marketing channels. Increased competition could result in a loss of our market share or a reduction in our prices or margins, any of which could adversely affect our business. Competition is likely to increase significantly as new companies enter the market and current competitors expand their services.

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Intellectual Property

Our intellectual property is important to our business. We rely on a combination of copyright, trademark and trade secret laws, confidentiality procedures and contractual provisions to protect our intellectual property. We intend to file for federal trademark registrations for the mark "drkoop.com," as well as other service and trademarks which incorporate the Dr. Koop name. Our right to use the Dr. Koop name is granted to us under an agreement with Dr. C. Everett Koop. If we lose our right to use the Dr. Koop name, we would be forced to change our corporate name and adopt a new domain name. These changes could confuse current and potential customers and would adversely impact our business. See "Management--Agreements with Dr. C. Everett Koop."

Our efforts to protect our intellectual property may not be adequate. Our competitors may independently develop similar technology or duplicate our products or services. Unauthorized parties may infringe upon or misappropriate our products, services or proprietary information. In addition, the laws of some foreign countries do not protect proprietary rights as well as the laws of the United States, and the global nature of the Internet makes it difficult to control the ultimate destination of our products and services. In the future, litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Any such litigation could be time-consuming and costly.

We could be subject to intellectual property infringement claims as the number of our competitors grows and the content and functionality of our website overlaps with competitive offerings. Defending against these claims, even if not meritorious, could be expensive and divert our attention from operating our company. If we become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial damage award and forced to develop noninfringing technology, obtain a license or cease using the applications that contain the infringing technology or content. We may be unable to develop noninfringing technology or content or obtain a license on commercially reasonable terms, or at all.

We also rely on a variety of technologies that are licensed from third parties, including our database and Internet server software, which are used in the drkoop.com website to perform key functions. These third-party licenses may not be available to us on commercially reasonable terms in the future. The loss of or inability to maintain any of these licenses could delay the introduction of software enhancements, interactive tools and other features until equivalent technology could be licensed or developed. Any such delay could materially adversely affect our ability to attract and retain users.

Government Regulation

General. There is an increasing number of laws and regulations pertaining to the Internet. In addition, a number of legislative and regulatory proposals are under consideration by federal, state, local and foreign governments and agencies. Laws or regulations may be adopted with respect to the Internet relating to liability for information retrieved from or transmitted over the Internet, on-line content regulation, user privacy, taxation and quality of products and services. Moreover, it may take years to determine whether and how existing laws such as those governing issues such as intellectual property ownership and infringement, privacy, libel, copyright, trade mark, trade secret, obscenity, personal privacy, taxation, regulation of professional services, regulation of medical devices and the regulation of the sale of other specified goods and services apply to the Internet and Internet advertising. The requirement that we comply with any new legislation or regulation, or any unanticipated application or interpretation of existing laws, may decrease the growth in the use of the Internet, which could in turn decrease the demand for our service, increase our cost of doing business or otherwise have a material adverse effect on our business, results of operations and financial condition.

On-line Content Regulations. Several federal and state statutes prohibit the transmission of indecent, obscene or offensive content over the Internet to certain persons. In addition, pending legislation seeks to ban Internet gambling and federal and state officials have taken action against businesses that operate Internet gambling activities. The enforcement of these statutes and initiatives, and any future enforcement activities, statutes and initiatives, may result in limitations on the type of content and advertisements available on

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drkoop.com. Legislation regulating on-line content could slow the growth in use of the Internet generally and decrease the acceptance of the Internet as an advertising and e-commerce medium, which could have a material adverse effect on our ability to generate revenues.

Privacy Concerns. The Federal Trade Commission is considering adopting regulations regarding the collection and use of personal identifying information obtained from individuals when accessing websites, with particular emphasis on access by minors. Such regulations may include requirements that companies establish certain procedures to, among other things:

. give adequate notice to consumers regarding information collection and disclosure practices;

. provide consumers with the ability to have personal identifying information deleted from a company's database;

. provide consumers with access to their personal information and with the ability to rectify inaccurate information;

. clearly identify affiliations or a lack thereof with third parties that may collect information or sponsor activities on a company's website; and

. obtain express parental consent prior to collecting and using personal identifying information obtained from children under 13 years of age.

Such regulation may also include enforcement and redress provisions. While we have implemented programs designed to enhance the protection of the privacy of our users, including children, there can be no assurance that such programs will conform with any regulations adopted by the FTC. Moreover, even in the absence of such regulations, the FTC has begun investigations into the privacy practices of companies that collect information on the Internet. One such investigation has resulted in a consent decree pursuant to which an Internet company agreed to establish programs to implement the principles noted above. We may become subject to such an investigation, or the FTC's regulatory and enforcement efforts may adversely affect the ability to collect demographic and personal information from users, which could have an adverse effect on the our ability to provide highly targeted opportunities for advertisers and e-commerce marketers. Any such developments could have a material adverse effect on the our business, results of operations and financial condition.

It is also possible that "cookies" may become subject to laws limiting or prohibiting their use. The term "cookies" refers to information keyed to a specific server, file pathway or directory location that is stored on a user's hard drive, possibly without the user's knowledge and which is used to track demographic information and to target advertising. Certain currently available Internet browsers allow users to modify their browser settings to remove cookies at any time or prevent cookies from being stored on their hard drives. In addition, a number of Internet commentators, advocates and governmental bodies in the United States and other countries have urged the passage of laws limiting or abolishing the use of cookies. Limitations on or elimination of the use of cookies could limit the effectiveness of the our targeting of advertisements, which could have a material adverse effect on our ability to generate advertising revenue.

The European Union has adopted a directive that imposes restrictions on the collection and use of personal data. Under this EU directive, EU citizens are guaranteed certain rights, including the right of access to their data, the right to know where the data originated, the right to have inaccurate data rectified, the right to recourse in the event of unlawful processing and the right to withhold permission to use their data for direct marketing. The EU directive could, among other things, affect U.S. companies that collect information over the Internet from individuals in EU member countries, and may impose restrictions that are more stringent than current Internet privacy standard in the United States. In particular, companies with offices located in EU countries will not be allowed to send personal information to countries that do not maintain adequate standards of privacy. The EU directive does not, however, define what standards of privacy are adequate. As a result, there can be no assurance that the EU directive will not adversely affect the activities of entities such as our company that engage in data collection from users in EU member countries.

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Planned features of our website include the retention of personal information about our users which we obtain with their consent. We have a stringent privacy policy covering this information. However, if third persons were able to penetrate our network security and gain access to, or otherwise misappropriate, our users' personal information, we could be subject to liability. Such liability could include claims for misuses of personal information, such as for unauthorized marketing purposes or unauthorized use of credit cards. These claims could result in litigation, our involvement in which, regardless of the outcome, could require us to expend significant financial resources. Moreover, to the extent any of the data constitute or are deemed to constitute patient health records, a breach of privacy could violate federal law.

Data Protection. Legislative proposals have been made by the federal government that would afford broader protection to owners of databases of information, such as stock quotes and sports scores. Such protection already exists in the EU. If enacted, this legislation could result in an increase in the price of services that provide data to websites. In addition, such legislation could create potential liability for unauthorized use of such data.

Internet Taxation. A number of legislative proposals have been made at the federal, state and local level, and by foreign governments, that would impose additional taxes on the sale of goods and services over the Internet and certain states have taken measures to tax Internet-related activities. Although Congress recently placed a three-year moratorium on state and local taxes on Internet access or on discriminatory taxes on electronic commerce, existing state or local laws were expressly excepted from this moratorium. Further, once this moratorium is lifted, some type of federal and/or state taxes may be imposed upon Internet commerce. Such legislation or other attempts at regulating commerce over the Internet may substantially impair the growth of commerce on the Internet and, as a result, adversely affect our opportunity to derive financial benefit from such activities.

Domain Names. Domain names are the user's Internet "address." Domain names have been the subject of significant trademark litigation in the United States. There can be no assurance that third parties will not bring claims for infringement against us or Dr. C. Everett Koop for the use of this trademark. Moreover, because domain names derive value from the individual's ability to remember such names, there can be no assurance that our domain names will not lose their value if, for example, users begin to rely on mechanisms other than domain names to access on-line resources.

The current system for registering, allocating and managing domain names has been the subject of litigation and of proposed regulatory reform. There can be no assurance that our domain names will not lose their value, or that we will not have to obtain entirely new domain names in addition to or in lieu of its current domain names, if such litigation or reform efforts result in a restructuring in the current system.

FDA Regulation of Medical Devices. Some computer applications and software are considered medical devices and are subject to regulation by the United States Food and Drug Administration. We do not believe that our current applications or services will be regulated by the FDA; however, our applications and services may become subject to FDA regulation. Additionally, we may expand our application and service offerings into areas that subject us to FDA regulation. We have no experience in complying with FDA regulations. We believe that complying with FDA regulations would be time consuming, burdensome and expensive and could delay or prevent our introduction of new applications or services.

Regulation of the Practice of Medicine and Pharmacology. The practice of medicine requires licensing under applicable state law. We have endeavored to structure our website and affiliate relationships to avoid violation of state licensing requirements. For example, we have included notices where we have deemed appropriate advising our users that the data provided on the drkoop.com network is not a substitute for consultation with their personal physician. Similar guidelines have been adopted governing the activities of moderators in our interactive communities, many of whom are not licensed physicians. However, the application of this area of the law to Internet services such as drkoop.com is novel and, accordingly, a state regulatory authority may at some point allege that some portion of our business violates these statutes.

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Similarly, we provide information about drugs and other prescription medications on our website and enable e-commerce transactions with third parties who sell these products. We have included within our website disclaimers and other notices that we have deemed appropriate to advise users that the information provided is not intended to be a substitute for consultation with a licensed pharmacist. For example, use of our drug interaction database requires that the user affirmatively click on a dialog box on the website page to indicate acceptance of the notices before being given access to the database. However, as with the practice of medicine, the application of this area to Internet services such as drkoop.com is novel and, accordingly, a state regulatory authority may at some point allege that some portion of our business violates state or federal law governing the dispensing of pharmacy products. Any application of the regulation of the practice of medicine or pharmacology to us could result in a material adverse affect on our business, results of operations and financial condition. Further, any liability based on a determination that we engaged in the practice of medicine without a license may be excluded from coverage under the terms of our current general liability insurance policy.

Federal and State Healthcare Regulation. We earn a service fee when users on our website purchase prescription pharmacy products from certain of our e- commerce partners. The fee is not based on the value of the sales transaction. Federal and state "anti-kickback" laws govern certain financial arrangements among healthcare service providers and others who may be in a position to refer or recommend patients to such providers. These laws prohibit, among other things, certain direct and indirect payments that are intended to induce the referral of patients to, the arranging for services by, or the recommending of, a particular provider of health care items or services. The federal healthcare program's anti-kickback law has been broadly interpreted to apply to contractual relationships between healthcare providers and sources of patient referrals. Such laws apply to the sales of pharmacy products that are reimburseable under federal Medicare and Medicaid programs and other reimbursement programs. Violation of these laws can result in civil and criminal penalties.

As the primary purpose of marketing is to generate business by referring or recommending, the Office of Inspector General of the United States Department of Health and Human Services has recognized that "many marketing and advertising activities may involve at least technical violations of the federal anti-kickback statute." Because of the breadth of the federal anti-kickback statute, Congress required DHHS to promulgate regulatory safe harbors to protect activities which do not harm federal healthcare programs. Some of our electronic commerce activities do not qualify for safe harbor protection under the federal anti-kickback statute because the aggregate compensation received by us for these services is not fixed in advance and takes into consideration the volume of business generated, because we receive a fixed service fee per completed prescription drug product transaction. Failure to meet a safe harbor, however, does not mean that the arrangement violates the statute. Instead, an analysis of the factual elements must be made. Alternatively, the OIG is authorized to issue advisory opinions regarding the interpretation and applicability of the federal anti-kickback statute, including whether an activity or proposed activity constitutes grounds for the imposition of civil or criminal sanctions. We have not sought such an opinion and are aware of no opinion that has been issued related to Internet sales activities. If our program was deemed to be inconsistent with the federal anti-kickback statute, we could face civil and criminal penalties. Further, we would be required either not to accept any transactions which are subject to reimbursement under federal or state healthcare programs or restructure our compensation structure to comply with the statute and any applicable regulations. Presently, federal and state programs provide only limited cost reimbursement for prescription drugs, although there have been proposals made from time to time to expand the benefits of these programs. In addition, similar laws in several states apply not only to government reimbursement but also to reimbursement by private insurers. Although there is uncertainty regarding the applicability of these "anti-kickback" laws, we believe that the service fees we receive from our e- commerce partners are for the primary purpose of marketing and do not constitute payments that would violate present federal or state law. If, however, our activities were deemed to violate any of these laws, it could cause a material adverse affect on our business, results of operations and financial condition.

State Insurance Regulation. We market insurance on-line and receive transaction fees in connection with this activity. All of the insurance products are offered by unrelated third-party providers who we believe to be appropriately licensed under applicable law. The use of the Internet in the marketing of insurance products is a

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relatively new practice. It is not clear whether or to what extent state insurance licensing laws apply to our activities. If we were required to comply with such licensing laws, compliance could be costly or not possible and could have a material adverse effect on our business.

Jurisdiction. Due to the global reach of the Internet, it is possible that, although our transmissions over the Internet originate primarily in the State of Texas, the governments of other states and foreign countries might attempt to regulate Internet activity and our transmissions or take action against us for violations of their laws. There can be no assurance that violations of such laws will not be alleged or charged by state or foreign governments and that such laws will not be modified, or new laws enacted, in the future. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Human Resources

As of March 31, 1999, we had 73 full-time employees. None of our employees are represented by a union. We believe that our relationship with our employees is good.

Facilities

We currently lease approximately 11,000 square feet of office space in Austin, Texas, under a lease expiring on October 31, 2000. We believe that our facilities are adequate for our current operations and that additional leased space can be obtained if needed.

Legal Proceedings

On April 12, 1999, a civil complaint was filed as Agrawal v. drkoop.com, Inc., Donald W. Hackett and John F. Zaccaro in the District Court of Travis County, Texas, 126 Judicial District, Case No. 99-04294. In the lawsuit, plaintiff attempts to allege causes of action including fraud, constructive fraud, promissory estoppel, negligent misrepresentation, breach of contract, conversion, stock fraud, defamation and misrepresentation. Plaintiff claims, among other things, that misrepresentations were made to him regarding his involvement in the early stages of development of drkoop.com and we breached a consulting agreement entered into between him and our company in September 1998. Plaintiff seeks recovery of actual damages which he alleges to be $4 million, punitive damages alleged to be in excess of $5 million, attorneys fees and costs and a temporary and permanent injunction prohibiting drkoop.com from offering stock for sale to the public unless and until we recognize plaintiff's alleged right to options to acquire 232,500 shares of our common stock which he claims are owed to him under the consulting agreement. In the event an injunction is granted, we will not complete this offering in a timely manner, if at all. We believe that the claims made by plaintiff are without merit and intend to defend this lawsuit vigorously. We filed a counterclaim against the plaintiff on April 27, 1999 in which we allege causes of action including breach of contract, fraudulent inducement, breach of fiduciary duty and professional malpractice.

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MANAGEMENT

The following table sets forth, as of March 31, 1999, the name, age and position of each director and executive officer of drkoop.com, Inc.

   Name                     Age                    Position
   ----                     ---                    --------
C. Everett Koop, M.D. ....   82 Chairman of the Board of Directors
John F. Zaccaro(2)........   64 Vice Chairman of the Board of Directors
Donald W. Hackett.........   42 President, Chief Executive Officer and Director
Dennis J. Upah............   37 Chief Operating Officer
Susan M. Georgen-Saad.....   41 Chief Financial Officer
Robert C. Hackett, Jr. ...   48 Executive Vice President, Business Development
Louis A. Scalpati.........   35 Senior Vice President, Chief Architect
Jeffrey C. Ballowe(1)(2)..   43 Director
Mardian J. Blair..........   67 Director
G. Carl Everett,
 Jr.(1)(2)................   48 Director
Richard D. Helppie, Jr....   43 Director
Nancy L. Snyderman,
 M.D.(1)..................   47 Director


(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

For purposes of the biographical data set forth below, service with drkoop.com, Inc. includes service with our predecessor.

C. Everett Koop, M.D., has served as our Chairman of the Board of Directors since he co-founded drkoop.com in July 1997. Since 1992, Dr. C. Everett Koop has served as the McInerney Professor of Surgery at the Dartmouth Medical School and as Senior Scholar at the C. Everett Koop Institute at Dartmouth. Dr. C. Everett Koop is also a frequent lecturer on healthcare topics. An internationally respected pediatric surgeon, Dr. C. Everett Koop was Surgeon- in-Chief of the Children's Hospital of Philadelphia from 1948 to 1981 and Editor-in-Chief of the Journal of Pediatric Surgery from 1964-1976. Dr. C. Everett Koop is a director of Superior Consultant Holdings Corporation, a publicly-traded healthcare consulting company, as well as several private healthcare companies. From 1994 to 1996, Dr. C. Everett Koop was a director and ex-officio Chairman of the Board of Patient Education Media, Inc., a producer of medical video tapes which filed for bankruptcy protection in 1996. Dr. C. Everett Koop was Surgeon General of the United States from 1981 to 1989. He was also appointed Director of the Office of International Health in May 1982. Dr. C. Everett Koop is also the recipient of numerous honors and awards, including 35 honorary doctorates. Dr. C. Everett Koop serves as our Chief Medical Officer. In this role, he oversees and sets policies and standards for all content on the website and keeps current with respect to medical issues in the political and national arenas. Dr. C. Everett Koop is our liaison to the medical community. He also is our primary spokesperson, making many appearances on our behalf.

John F. Zaccaro has served as our Vice Chairman of the Board of Directors since he co-founded drkoop.com in July 1997. From 1991 until November 1997, Mr. Zaccaro served as the President and Executive Producer of the International Health & Medical Film Festival. In addition, since 1995 Mr. Zaccaro has served as a Senior Advisor to the Russian Arts Foundation. Mr. Zaccaro is also a director of Kit Manufacturing Company, a publicly-traded constructor of manufactured housing. Mr. Zaccaro is a published author and a motivational speaker.

Donald W. Hackett has served as our President, Chief Executive Officer and a director since he co-founded drkoop.com in July 1997. From January 1996 until joining drkoop.com, Mr. Hackett served in various management positions, including President and Chief Executive Officer, of Tradewave Corporation, an Internet network security company. From September 1988 until December 1995, Mr. Hackett served as Senior Vice President of Physician Computer Network, Inc., a provider of practice management services. While employed

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at Physician Computer Network, Inc., Mr. Hackett successfully implemented the first provider-centric, computer-based pay-per-view-advertising network, and initiated direct data interchange transactions between laboratories, pharmacies and hospitals with practice management systems.

Dennis J. Upah has served as our Chief Operating Officer since January 1999. From February 1995 until joining drkoop.com, Mr. Upah served as President and General Manager of KEYE-TV (the CBS affiliate in Austin, Texas), a unit of Granite Broadcasting Corporation. From September 1988 until January 1995, Mr. Upah served as President and General Manager of WEEK-TV (the NBC affiliate in Peoria, Illinois), also a unit of Granite Broadcasting Corporation. Mr. Upah is the former Technology Chairman and an elected representative to the national CBS Affiliates Advisory Board of Directors. He was also elected to the board of directors for several groups, including the Illinois Broadcasters Association (where he served as President), Texas Association of Broadcasters, Austin Better Business Bureau and St. Jude Children's Hospital Midwest Affiliate.

Susan M. Georgen-Saad has served as our Chief Financial Officer since October 1998. From March 1997 until joining drkoop.com, Ms. Georgen-Saad served as Chief Financial Officer of IntelliQuest Information Group, a market research company. From July 1996 until February 1997, she served as Chief Financial Officer of Clinicor, Inc., a clinical research company. From April 1994 until June 1996, Ms. Georgen-Saad served as Senior Vice President, Finance, of the Texas Worker's Compensation Insurance Fund, an insurance company. Ms. Georgen- Saad has more than 19 years of experience in strategic operational and financial management in the high-technology services, pharmaceutical research, insurance, healthcare and financial services industries.

Robert C. Hackett, Jr. has served as our Executive Vice President, Business Development, since he co-founded drkoop.com in July 1997. From September 1996 until July 1997, Mr. Hackett served as Vice President of Business Development, Vaccine Division, of Merck & Co., a pharmaceutical company. From January 1995 until September 1996, Mr. Hackett served as Assistant Vice President of International Vaccines of American Home Products, a pharmaceutical company. From April 1990 until January 1995, Mr. Hackett served as Director of International Vaccines of American Cyanamid Company, a diversified pharmaceutical and chemicals company.

Louis A. Scalpati has served as our Senior Vice President, Chief Architect and Secretary since he co-founded drkoop.com in July 1997. From December 1995 until joining drkoop.com, Mr. Scalpati served as Director of the Healthcare Business Unit, Tradewave Corporation, an Internet network security company, and from July 1990 until November 1995, Mr. Scalpati served as Chief Network Architect of Physician Computer Network, Inc., a provider of practice management services.

Jeffrey C. Ballowe has served as a director of drkoop.com since March 1999. Since 1997, Mr. Ballowe has been self-employed. From 1986 until 1997, Mr. Ballowe held various management positions at Ziff-Davis, Inc., an international media company, including President of the Interactive Media and Development Group. Mr. Ballowe is Chairman of the Board of Deja News, Inc. and is a director of VerticalNet, Xoom.com and ZDTV, a unit of Ziff-Davis, Inc.

Mardian J. Blair has served as a director of drkoop.com since February 1999. For more than the past five years, Mr. Blair has served as the President of Adventist Health System Sunbelt Healthcare Corporation. Mr. Blair is also a director of multiple healthcare organizations in the Adventist system, including HealthMagic, Inc., as well as numerous not-for-profit charitable and educational institutions.

G. Carl Everett, Jr. has served as a director of drkoop.com since March 1999. Mr. Everett has been Senior Vice President, Personal Systems Group, of Dell Computer Corporation, responsible for worldwide development and marketing of all Dell desktop and notebook products since February 1998. For the prior twenty years, Mr. Everett was employed by Intel Corporation, most recently as General Manager of the Desktop Products Group.

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Richard D. Helppie, Jr. has served as a director of drkoop.com since May 1998. He has been the Chairman of the Board and Chief Executive Officer of Superior Consultant Holdings Corporation, a publicly-traded healthcare consulting company, since its inception in July 1996, and he founded Superior Consultant Company, Inc., its predecessor, in May 1984. Mr. Helppie has more than 22 years of experience in the healthcare and information systems industries. In 1998 Mr. Helppie was the recipient of the Michigan Entrepreneur of the Year Award (sponsored by Ernst & Young LLP) for healthcare.

Nancy L. Snyderman, M.D., has served as a director of drkoop.com since March 1998. Dr. Snyderman has been a practicing physician for more than fifteen years. Dr. Snyderman is a medical correspondent for ABC and can be seen on Good Morning America and Prime Time Live. Dr. Snyderman's Healthtalk segments can be heard daily on the CBS radio network, and she also writes a monthly column for Good Housekeeping. Dr. Snyderman is a published author and has received broadcasting awards from the California Medical Association, Radio and Television News Directors, the Associated Press, United Press International and the American Academy of Facial Plastic and Reconstructive Surgery. Dr. Snyderman continues to publish in peer-reviewed journals and has received grants from the Kellogg Foundation and the American Cancer Society.

Donald W. Hackett and Robert C. Hackett, Jr. are brothers.

Other Key Employees

Set forth below is the name, age, and recent business experience of the key members of our management team not described above.

Ian J. Bagnall, 27, serves as our Vice President of Business Development and has served as Director of our website since April 1998. From October 1996 until joining drkoop.com, Mr. Bagnall served as Marketing Relations Manager for ichat, Inc. (now Acuity, Inc.), a provider of web-integrated chat browser and server products. From October 1995 to October 1996, Mr. Bagnall worked as an Internet Consultant, and from July 1994 until October 1995 Mr. Bagnall served as Business Manager for Enter Television, Inc.

Peter Brumleve, 44, joined drkoop.com in May 1999 and serves as our Executive Vice President and General Manager, Health Division. From August 1994 until joining drkoop.com Mr. Brumleve was the Chief Marketing Officer and Chairman, Division of Marketing of the Cleveland Clinic Foundation and the Cleveland Clinic Health System. Prior to that Mr. Brumleve held the position of Group Vice President for Planning and Marketing with Group Health Corporation of Puget Sound.

Alex Cavalli, Ph.D., 49, has served as our Chief Development Officer since August 1998. From April 1995 until joining drkoop.com, Dr. Cavalli served as Chief Architect of Tradewave Corporation, an Internet network security company. From January 1992 until April 1995, Dr. Cavalli served as Chief Architect for the Enterprise Integration Project at Microelectronics and Computer Technology Corporation, a research consortium.

Neal K. Longwill, 44, has served as our Senior Vice President of Sales since May 1998. From May 1980 until joining drkoop.com, Mr. Longwill served in various sales and management positions with Intel Corporation.

Guy D. MacNeill, 38, has served as our Vice President of Marketing since February 1998. From January 1997 until joining drkoop.com, Mr. MacNeill served as Vice President of Marketing of ichat, Inc. (now Acuity, Inc.). From March 1996 until January 1997, he served as Director of Marketing, and from January 1995 until March 1996, he served as a Senior Product Manager, of Intuit, Inc. While at Intuit, Mr. MacNeill was active in all aspects of product management and marketing for the best selling TurboTax and MacInTax line of desktop and on-line consumer tax preparation products.

Keith Schaefer, 49, serves as our Executive Vice President and General Manager, New Media Division. From August 1997 until joining drkoop.com, Mr. Schaefer was Executive Partner for USWeb/CKS, a

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professional services firm, where he was responsible for worldwide business development. From 1994 to August 1997 he was co-founder of Cybernautics, an Internet communications company. Prior to Cybernautics, he was Vice President of Technology at Paramount Communications.

Roy A. Smith, 41, has served as our Chief Technology Officer since January 1998. In November 1996, Mr. Smith founded MarketPlace Consulting, a computer consulting company. From April 1995 until November 1996, Mr. Smith was the founder of Tradewave Corporation, an Internet network security company, and held the following positions: Chief Executive Officer, Vice Chairman and President. From April 1992 until April 1995, Mr. Smith served as Vice President of Microelectronics and Computer Technology Corporation, where he led the development of key information technologies for the National Information Infrastructure (NII) in conjunction with the Defense Advanced Research Projects Agency (DARPA) and the National Institute of Standards and Technology (NIST).

Sara B. Wells, 38, has served as our Senior Vice President Sales, Healthcare Division since May 1999. From January 1998 until joining drkoop.com, Ms. Wells was Senior Vice President of Sales at Abaton.com, a provider of web-based clinical solutions. From April 1997 until January 1998, she was Regional Vice President of Sales for Per-Se Technologies, a provider of healthcare business systems.

Board Composition

We currently have eight authorized directors. In accordance with the terms of our restated certificate of incorporation which will become effective upon the closing of this offering, the terms of office of the directors will be divided into three classes: Class I, whose term will expire at the annual meeting of stockholders to be held in 2000; Class II, whose term will expire at the annual meeting of stockholders to be held in 2001; and Class III, whose term will expire at the annual meeting of stockholders to be held in 2002. The Class I directors are Jeffrey C. Ballowe, Richard D. Helppie, Jr. and Mardian J. Blair, the Class II directors are G. Carl Everett, Jr., John F. Zaccaro and Nancy L. Snyderman, M.D., and the Class III directors are Donald W. Hackett and Dr. C. Everett Koop. At each annual meeting of stockholders after the initial classification or special meeting in lieu thereof, the successors to directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting following election or special meeting held in lieu thereof. In addition, our restated certificate of incorporation provides that the authorized number of directors may be changed only by resolution of the board of directors or a super-majority vote of the stockholders. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one third of the directors. This classification of the board of directors may have the effect of delaying or preventing changes in control or management of drkoop.com.

Board Committees

The audit committee of the board of directors reviews, acts on and reports to the board of directors with respect to various auditing and accounting matters, including the recommendation of our independent auditors, the scope of the annual audits, fees to be paid to the independent auditors, the performance of our independent auditors and our accounting practices. The members of the audit committee are Messrs. Ballowe, Everett and Zaccaro.

The compensation committee of the board of directors determines the salaries and benefits for our employees, consultants, directors and other individuals compensated by our company. The members of the compensation committee are presently Dr. Snyderman and Messrs. Ballowe and Everett.

The Company plans to establish a stock awards committee of the board of directors to administer the 1999 Equity Participation Plan and determine the stock option grants for our employees, consultants, directors and other individuals under this plan. A majority of the members of this committee will be non-employee directors.

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Director Compensation

From and after the completion of this offering, non-employee directors, other than Dr. Koop and Mr. Zaccaro, will receive $1,500 for attendance at each meeting of the board. In addition, those non-employee directors will receive formula stock option grants under our 1999 Equity Participation Plan. This formula feature will provide for the grant of options to purchase 37,500 shares of common stock upon initial appointment to the board of directors and an additional grant of options to purchase 12,500 shares immediately after each annual meeting of stockholders, provided that no such subsequent annual grant will be made if the director was initially appointed within 90-days of the annual meeting. Dr. C. Everett Koop and Mr. Zaccaro will not receive annual formula grants so long as they receive compensation under their respective consulting agreements. All of these options will vest in three equal annual instalments and will have an exercise price equal to fair market value on the date of grant. These options will vest immediately upon a change in control. The 1999 Plan permits additional discretionary option grants to non-employee directors if approved by the full board of directors with the interested director abstaining.

Each of Dr. C. Everett Koop and Mr. Zaccaro is party to a consulting agreement with us. The compensation payable to them under those agreements includes their service as a director. See "--Agreements with Dr. C. Everett Koop" and "--Other Consulting Agreements with Directors."

In addition, in 1998 we granted options to Dr. Snyderman and Mr. Helppie in consideration for their services as directors. Dr. Snyderman received an option to purchase 183,750 shares of common stock with an exercise price of $0.12 per share. Mr. Helppie received an option to purchase 112,500 shares of common stock with an exercise price of $0.16 per share. In 1999 we have granted to Messrs. Blair, Everett and Ballowe options to purchase 87,500, 87,500 and 87,500 shares, respectively. Each option has an exercise price of $4.78 per share. As noted above, additional grants may be made in the future. All directors are also reimbursed for their reasonable expenses incurred in connection with attendance at board and committee meetings and on related company business.

Compensation Committee Interlocks And Insider Participation

Our compensation committee consists of Dr. Snyderman and Messrs. Ballowe and Everett. Prior to the offering, all compensation decisions were made by the full board of directors.

No executive officer serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. However, Dr. C. Everett Koop is a director of Superior Consultant Holdings Corporation, and Mr. Helppie is the Chairman of the Board and Chief Executive Officer of Superior.

On April 28, 1998, we entered into a series of agreements with Superior. Pursuant to the terms of a stock purchase agreement, Superior purchased 3,850,592 shares of our Series B Non-Voting Preferred Stock for a purchase price of $6,000,000. These shares will convert into 3,962,265 shares of common stock upon the closing of this offering. We also entered into an option and put agreement with Superior. The option and put agreement will terminate upon the closing of this offering in exchange for the issuance of 1,210,665 shares of common stock, valued at $8.2 million, to Superior plus 134,520 shares, valued at $900,000, to be issued to Adventist Health System Sunbelt Healthcare Corporation to satisfy an anti-dilution right held by them.

On April 29, 1998, we entered into a service agreement with Superior that obligates us to provide $3.0 million in professional services revenue to Superior prior to September 1999. During the year ended December 31, 1998, we paid Superior approximately $1.5 million for services under this agreement. Please see "Certain Transactions."

Employment Agreements with Management

Donald W. Hackett. We are a party to an employment agreement with Donald W. Hackett, dated August 1, 1997. The term of the agreement is three years, although we may, by mutual agreement with

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Mr. Hackett, extend the agreement for successive one-year terms. Pursuant to the agreement, we are obligated to pay Mr. Hackett an initial annual salary of $195,000. This salary automatically increases by 20% at the end of each of the first three years of the agreement. In addition, Mr. Hackett receives a monthly car allowance of $700 and is eligible for annual discretionary bonuses. In the event Mr. Hackett's employment is terminated without cause or by reason of disability, he would receive a severance payment in an amount equal to his annual base salary. In the event Mr. Hackett resigns or his employment is terminated with cause, he has agreed not to compete with us for a period of 12 months following the cessation of his employment.

Dennis J. Upah. We are a party to an employment agreement with Dennis J. Upah, dated January 15, 1999. The term of the agreement is three years. Pursuant to the agreement, we are obligated to pay Mr. Upah an annual salary of $140,000 plus an annual bonus of at least $140,000 for the first year of the agreement and $105,000 for the second and third years. In addition, Mr. Upah receives a monthly car allowance of $600. Upon commencement of his employment, Mr. Upah was granted options to purchase 337,500 shares of common stock and, upon closing of this offering, will receive an option to purchase an additional 150,000 shares of our common stock with an exercise price equal to the public offering price set forth on the cover of this prospectus. In the event Mr. Upah's employment is terminated without cause or by reason of disability, each of the options granted under the agreement would vest immediately, and he would receive a severance payment in an amount equal to his annual base salary and annual bonus. Mr. Upah has agreed not to compete with us for a period of 12 months following the cessation of his employment.

Robert C. Hackett. We are a party to an employment agreement with Robert C. Hackett, dated August 1, 1997. The term of the agreement is three years, although we may, by mutual agreement with Mr. Robert Hackett, extend the agreement for successive one-year terms. Pursuant to the agreement, we are obligated to pay Mr. Robert Hackett an initial annual salary of $165,000. This salary automatically increases by 20% at the end of each of the first three years of the agreement. In addition, Mr. Robert Hackett receives a monthly car allowance of $600 and is eligible for annual discretionary bonuses. In the event Mr. Robert Hackett's employment is terminated without cause or by reason of disability, he would receive a severance payment in an amount equal to his annual base salary. In the event Mr. Robert Hackett resigns or his employment is terminated with cause, he has agreed not to compete with us for a period of 12 months following the cessation of his employment.

Susan M. Georgen-Saad. We are a party to an employment agreement with Susan M. Georgen-Saad, dated January 27, 1999. The term of the agreement is two years. Pursuant to the agreement, Ms. Georgen-Saad's initial annual salary of $124,000 was increased to $150,000 on January 1, 1999. In addition, Ms. Georgen-Saad receives a monthly car allowance of $600 and is eligible for annual discretionary bonuses. Upon commencement of her employment, Ms. Georgen- Saad was granted options to purchase 337,500 shares of common stock and, upon the closing of this offering, Ms. Georgen-Saad will receive an option to purchase an additional 150,000 shares of our common stock with an exercise price equal to the public offering price set forth on the cover of this prospectus. In the event Ms. Georgen-Saad's employment is terminated without cause or by reason of disability, each of the options granted under the agreement would vest immediately, and she would receive a severance payment in an amount equal to one-half her annual base salary. Ms. Georgen-Saad has agreed not to compete with us for a period of 12 months following the cessation of her employment.

Louis A. Scalpati. We are a party to an employment agreement with Louis A. Scalpati, dated August 1, 1997. The term of the agreement is three years, although we may, by mutual agreement with Mr. Scalpati, extend the agreement for successive one-year terms. Pursuant to the agreement, we are obligated to pay Mr. Scalpati an initial annual salary of $145,000. This salary automatically increases by 20% at the end of each of the first three years of the agreement. In addition, Mr. Scalpati receives a monthly car allowance of $600 and is eligible for annual discretionary bonuses. In the event Mr. Scalpati's employment is terminated without cause or by reason of disability, he would receive a severance payment in an amount equal to his annual base salary. In the event Mr. Scalpati resigns or his employment is terminated with cause, he has agreed not to compete with us for a period of 12 months following the cessation of his employment.

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Agreements with Dr. C. Everett Koop

Name and Likeness Agreement. We are a party to an agreement, dated January 5, 1999 and amended effective as of January 5, 1999, with Dr. C. Everett Koop. The Koop Agreement permits us to use the image, name and likeness of Dr. C. Everett Koop in connection with healthcare-related software services and products. Under the Koop Agreement, our use of Dr. Koop's name, image or likeness is subject to his prior written approval of the resulting products, which may not be unreasonably withheld and which must be rendered within ten working days of our request. Upon his death, these approvals will be made by Dr. Koop's estate. The agreement is exclusive except that it does not prohibit non-profit activities of the Koop Institute. The term of the Koop Agreement is for five years subject to automatic renewal for additional three year terms unless terminated by either party within 120 days of the end of each term. If a voluntary termination is requested by Dr. Koop and is not the result of a breach or default by us, we will have the right on a non-exclusive basis for three years following voluntary termination to rebrand and sell approved products bearing the name, image or likeness of Dr. Koop. If we default in our obligations and do not promptly cure the default, Dr. C. Everett Koop may terminate the Koop Agreement immediately, no rebranding period will apply and we would immediately lose all rights to use Dr. Koop's name and likeness. Dr. C. Everett Koop may also terminate the Koop Agreement upon a change in control of our company. Any development that would cause Dr. C. Everett Koop to exercise his right to terminate his relationship with us or which otherwise would cause us to lose the benefits of our affiliation with him would have a material adverse effect on our business, results of operation and financial condition.

As consideration for the Koop Agreement, we are obligated to pay Dr. C. Everett Koop a royalty equal to two percent (2%) of our revenues derived from sales of our current products during the term of the agreement including any rebranding period. In the event any new products are developed in the future, the royalty will be between two percent (2%) and four percent (4%) of revenues as determined by the board of directors. We have agreed with Dr. C. Everett Koop that, when we introduce a personal medical records feature to our users, we will obtain appropriate and fully informed consent from the user in compliance with all applicable laws and regulations and will take reasonable precautions to assure the security of that data. A personal medical records feature is a product which permits our users to store historical personal and healthcare information in a secure portion of our database. The Koop Agreement obligates us to convey to Dr. C. Everett Koop the trademarks "drkoop.com," "Dr. Koop's Community" and "Dr. Koop's Personal Medical Records" upon termination of the Koop Agreement including any rebranding period.

Consulting Agreement. We are party to a letter agreement with Dr. C. Everett Koop dated October 1, 1997. Under the agreement, which is for a three year term, we paid him $100,000 for the first year ended September 30, 1998, and are obligated to pay him $135,000 in the second year ending September 30, 1999 and $150,000 in the third year ending September 30, 2000. These amounts represent the cash compensation payable to Dr. Koop for services provided to us as a consultant and director. Dr. Koop has also provided lecture services from time to time for which he has been separately compensated, and he has also been granted stock options to purchase an aggregate of 713,437 shares of common stock with a weighted average exercise price of $0.11 per share. The options vested immediately on the date of grant.

Other Consulting Agreements with Directors

John F. Zaccaro. We are party to a letter agreement with John F. Zaccaro dated October 1, 1997. Under the agreement, which is for a three year term, we paid him $100,000 for the first year ended September 30, 1998 and are obligated to pay him $135,000 in the second year ending September 30, 1999 and $150,000 in the third year ending September 30, 1999. These amounts represent the cash compensation payable to Mr. Zaccaro for services provided to us as a consultant and director. He has also been granted stock options to purchase an aggregate of 938,437 shares of common stock with a weighted average exercise price of $0.08 per share. Options to purchase 225,000 shares will be fully vested on July 17, 1999. The other options to purchase 713,437 shares of common stock vested immediately on the date of grant.

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Dr. Nancy L. Snyderman. We are a party to an agreement, dated June 1, 1998, with Dr. Nancy Snyderman, a director of our company. The Snyderman Agreement permits us to use the image, name and likeness of Dr. Snyderman in connection with healthcare-related software services and programs. The agreement is exclusive in that Dr. Snyderman may not enter into agreements with companies that directly compete with us, except that Dr. Snyderman may continue to act under any agreements she entered into prior to entering into this agreement. The term of the Snyderman Agreement is for three years subject to automatic renewal for additional three year terms unless terminated by either party within 60 days of the end of a given term. If the voluntary termination is requested by Dr. Snyderman and is not the result of a breach or default by us, we will have the right on a non-exclusive basis for two years following voluntary termination to rebrand approved software services and programs bearing the name, image or likeness of Dr. Snyderman. As consideration for the Snyderman Agreement, we granted to Dr. Snyderman options to acquire 183,750 shares of our common stock with an exercise price of $0.16 per share. The options vested immediately on the date of grant. Our use of Dr. Snyderman's name, image or likeness is also subject to her prior written approval of the resulting programs, which may not be unreasonably withheld and which must be rendered within ten working days of our request.

Executive Compensation

The following table sets forth all compensation awarded to, earned by or paid to our Chief Executive Officer and the two other executive officers of the Company whose annual salary and bonus exceeded $100,000 in 1998 for services rendered in all capacities to us during 1998. We may refer to these officers as our named executive officers in other parts of this prospectus.

In accordance with the rules of the SEC, other compensation in the form of perquisites and other personal benefits has been omitted for the named executive officers because the aggregate amount of such perquisites and other personal benefits was less than the lesser of $50,000 or 10% of the total of annual salary and bonuses for each of the named executive officers in 1998. Dennis J. Upah, our Chief Operating Officer, joined drkoop.com in January 1999. His annual salary is $140,000, and he is guaranteed a bonus of at least $140,000 in 1999. Susan M. Georgen-Saad, our Chief Financial Officer, joined drkoop.com in October 1998. Her annual salary is $150,000. In addition, each of Mr. Upah and Ms. Georgen-Saad have been granted significant stock option awards in connection with their employment. See "--Employment Agreements with Management."

Our board of directors appointed two outside directors and an employee director to our compensation committee on February 24, 1999. Criteria previously established for determining executive bonus compensation, which is expected to be ratified by our compensation committee, includes measurement against predetermined management business objectives and our operating results for the period in review.

                                                                 Long-Term
                                                  Annual       Compensation
                                               Compensation       Awards
                                              -------------- Shares Underlying
         Name and Principal Position           Salary  Bonus      Options
         ---------------------------          -------- ----- -----------------
Donald W. Hackett, President and Chief
 Executive Officer........................... $146,250  --       2,061,975
Robert C. Hackett, Jr., Executive Vice
 President................................... $144,750  --         465,000
Louis A. Scalpati, Senior Vice President,
 Chief Architect............................. $129,750  --         367,500

Option Grants During the Year Ended December 31, 1998

The following table sets forth specified information regarding options granted to each of the named executive officers during the year ended December 31, 1998. We have not granted any stock appreciation rights. The options were granted under our Amended and Restated 1997 Stock Option Plan. In general, options granted under the plan vest over four years and expire on the tenth anniversary of the date of grant. The options granted to Donald W. Hackett expire five years after the date of grant. Potential realizable values are net of exercise price before taxes, and are based on the initial public offering price of $8.00 per share and the assumption that our common stock appreciates at he annual rate shown, compounded annually, from the date of

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grant until the expiration of the option term. These numbers are calculated based on Securities and Exchange Commission requirements and do not reflect our projection or estimate of future stock price growth.

                           Individual Grants
                         ---------------------
                                                                           Potential Realizable
                                                                          Value At Assumed Annual
                         Number of  % of Total                                Rates of Stock
                         Securities  Options                                Price Appreciation
                         Underlying Granted to                                for Option Term
                          Options   Employees  Exercise Market Expiration -----------------------
  Name                    Granted    in 1998    Price   Price     Date        5%          10%
  ----                   ---------- ---------- -------- ------ ---------- ----------- -----------
Donald W. Hackett.......   975,000      15%      $.13   $8.00   3/24/03   $ 9,828,246 $12,435,228
Donald W. Hackett....... 1,086,975      16%      $.13   $8.00   4/27/03   $10,956,982 $13,863,366
Robert C. Hackett,
 Jr. ...................   465,000       7%      $.12   $8.00   3/24/08   $ 6,003,688 $ 9,592,922
Louis A. Scalpati.......   367,500       5%      $.12   $8.00   3/24/08   $ 4,744,850 $ 7,581,503

The percentage of total options granted to employees in 1998 shown in the table above is based on options to purchase an aggregate of 6,709,512 shares of common stock granted during the year ended December 31, 1998.

1998 Year-End Option Values

The following table sets forth certain information concerning the number and value of unexercised options held by each of the named executive officers at December 31, 1998. None of the named executive officers exercised options to purchase common stock during the year ended December 31, 1998. The value of in- the-money options is based on the initial public offering price of $8.00 per share and is net of the option exercise price.

                              Number of Securities
                             Underlying Unexercised     Value of Unexercised
                             Options At December 31,   In-The-Money Options at
                                      1998                December 31, 1998
                            ------------------------- -------------------------
  Name                      Exercisable Unexercisable Exercisable Unexercisable
  ----                      ----------- ------------- ----------- -------------
Donald W. Hackett..........  1,127,682    1,546,480    8,874,865   12,170,798
Robert C. Hackett, Jr. ....  1,008,750      112,500    7,948,950      886,500
Louis A. Scalpati..........  1,000,312      187,500    7,882,463    1,477,500

Stock Option Plans

Amended and Restated 1997 Stock Option Plan. Our Amended and Restated 1997 Stock Option Plan authorizes the issuance of up to 11,250,000 shares of common stock. To date we have granted options to purchase an aggregate of 11,116,902 shares of common stock to employees, directors and consultants under the 1997 Plan with a weighted average exercise price of $0.53 per share. From and after the completion of this offering, no further options will be granted under the 1997 Plan.

The board of directors, or a committee thereof, has the power to determine the terms of the options, including the exercise price of the options, the number of shares subject to each option, the exercisability thereof, and the form of consideration payable on such exercise, provided that the exercise price must be at least 100% of fair market value for incentive stock options and not less than 85% of fair market value for nonqualified stock options. Any options must be granted within ten years from the date of the 1997 Plan. Incentive stock options granted to any holder of 10% or more of the combined voting power of all classes of stock must have an exercise price of not less than 110% of fair market value and be exercisable for a term of no more than five years.

1999 Equity Participation Plan. Our 1999 Equity Participation Plan was adopted by our board of directors in February 1999 as a successor equity plan to our 1997 Plan. The 1999 Plan will become effective contemporaneously with the completion of this offering and thereafter no further grants will be made under the 1997 Plan. Options to purchase an aggregate of 1,742,800 shares of common stock with an exercise price equal to the public offering price listed on the cover of this prospectus will be granted under the 1999 Plan contemporaneously with this offering. Up to 3,750,000 shares of common stock may be issued under the 1999 Plan.

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The 1999 Plan provides for the discretionary grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, to employees and for the grant of nonstatutory stock options, stock appreciation rights, performance awards, dividend equivalents, stock payments and deferred stock to employees and consultants. The 1999 Plan provides that we cannot issue incentive stock options after February 2009. The 1999 Plan also provides for grants to the non-employee directors of nonstatutory stock options to purchase 37,500 shares of common stock upon initial election to the board of directors and 12,500 shares of common stock annually thereafter (except that no annual grant will be made if the director was first appointed to the board within 90 days of the applicable annual meeting of stockholders). Dr. C. Everett Koop and Mr. Zaccaro will not receive annual formula grants so long as they receive compensation under their respective consulting agreements.

The 1999 Plan may be administered by the board or a board committee. The administrator has the power to determine the terms of the options or other awards granted, including the exercise price of the options or other awards, the number of shares subject to each option or other award (up to 1,250,000 per year per participant), the exercisability thereof, and the form of consideration payable upon such exercise. In addition, the administrator has the authority to amend, suspend or terminate the 1999 Plan, provided that no such action may affect any share of common stock previously issued and sold or any option previously granted under the 1999 Plan without the consent of the holder.

The exercise price of all incentive stock options granted under the 1999 Plan must be at least equal to the fair market value of the common stock on the date of grant. The exercise price of nonstatutory stock options and other awards granted under the 1999 Plan is determined by the administrator, but with respect to nonstatutory stock options intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the exercise price must be at least equal to the fair market value of the common stock on the date of grant. With respect to any participant who owns stock possessing more than 10% of the voting power of all classes of the Company's outstanding capital stock, the exercise price of any incentive stock option granted must be at least equal 110% of the fair market value on the grant date and the term of such incentive stock option must not exceed five years. The term of all other options granted under the 1999 Plan may not exceed ten years.

In the case of restricted stock, unless the administrator determines otherwise, the restricted stock purchase agreement will grant us a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's employment or consulting relationship with our company for any reason (including death or disability). The purchase price for shares repurchased pursuant to a restricted stock purchase agreement must be the original price paid by the purchaser. The repurchase option will lapse at a rate determined by the administrator.

Options and other awards granted under the 1999 Plan are generally not transferable by the optionee, and each option and other award is exercisable during the lifetime of the optionee only by such optionee. Options granted under the 1999 Plan must generally be exercised within 3 months after the end of optionee's status as an employee, director or consultant, or within one year after such optionee's termination by disability or death, respectively, but in no event later than the expiration of the option's term.

The 1999 Plan provides that, in the event of a merger of drkoop.com with or into another corporation, the administrator will have the authority, but not the obligation to accelerate the vesting of each outstanding option and other award, except that options issued to non-employee directors will vest in full upon the closing of such a transaction. Contemporaneously with the closing of this offering, we will grant options to purchase 318,750 shares of common stock to three of our employees in accordance with their employment agreements. The exercise price of these options will be the public offering price disclosed on the cover of this prospectus.

Employee Stock Purchase Plan. The drkoop.com 1999 Employee Stock Purchase Plan was adopted by the Board in June 1999 and approved by the stockholders in June 1999. A total of 750,000 shares of

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common stock has been reserved for issuance under the purchase plan. As of the date of this prospectus, no shares have been issued under the purchase plan.

The purchase plan, which is intended to qualify under Section 423 of the Code, contains consecutive offer periods that are generally six months in duration. The offer periods start and end on February 15 and August 15 of each year, except for the first two offer periods, which will commence on the date immediately preceding the first date on which a share of common stock is traded on an exchange or quoted on Nasdaq or a successor quotation system, and on August 15, 1999, respectively, and will end on February 15, 2000.

Employees are eligible to participate if they are customarily employed by us or any participating subsidiary for at least 20 hours per week. However, no employee may be granted a right to purchase stock under the purchase plan (1) to the extent that, immediately after the grant of the right to purchase stock, the employee would own (or be treated as owning) stock possessing 5% or more of the total combined voting power or value of all classes of the capital stock of the Company or (2) to the extent that his or her rights to purchase stock under all of our employee stock purchase plans accrues at a rate which exceed $25,000 worth of stock for each calendar year. The purchase plan permits participants to purchase common stock through payroll deductions of up to 15% of the participant's base compensation. Base compensation is defined as the participant's gross base compensation, excluding overtime payments, sales commissions, incentive compensation, bonuses, expense reimbursements, fringe benefits and other special payments. The maximum number of shares a participant may purchase with respect to a single offer period is 10,000 shares.

Amounts deducted and accumulated by the participant are used to purchase shares of common stock at the end of each offer period. The price of stock purchased under the purchase plan is 85% of the lesser of the fair market value of the common stock (1) the first day of the offer period or (2) the last day of the offer period. Participants may end their participation at any time other than the final fourteen days of an offer period, and they will be paid their payroll deductions to date. Participation ends automatically upon termination of employment with the Company.

Rights to purchase stock granted under the purchase plan are not transferable by a participant other than by will, the laws of descent and distribution, or as otherwise provided under the purchase plan. The purchase plan provides that, in the event of a merger of the Company with or into another corporation or a sale of substantially all of the Company's assets, each outstanding right to purchase stock may be assumed or substituted for by the successor corporation.

The Board has the authority to amend or terminate the purchase plan. However, no such action by the Board may adversely affect any outstanding rights to purchase stock under the purchase plan, except that the Board may terminate an offer period on any exercise date if the board of directors determines that the termination of the purchase plan is in the best interests of the Company and its stockholders.

Registration under the Securities Act. We intend promptly after the completion of this offering to register on Form S-8 all shares of common stock issuable under our compensatory stock plans other than shares which may be resold under Rule 701 without registration.

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PRINCIPAL STOCKHOLDERS

The following table sets forth specified information with respect to the beneficial ownership of the common stock as of March 31, 1999, and as adjusted to reflect the sale of the shares of common stock offered hereby, by:

(1) each person (or group of affiliated persons) who is known by us to beneficially own 5% or more of the common stock;
(2) each of our directors;
(3) each of our named executive officers; and
(4) all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and investment power with respect to shares. Unless otherwise indicated, the persons named in the table have sole voting and sole investment control with respect to all shares beneficially owned. The number and percentage of shares beneficially owned are based on 18,139,591 shares of common stock outstanding as of March 31, 1999, assuming conversion of all outstanding shares of preferred stock into common stock and assuming conversion of convertible notes and accrued interest. The number and percentage of shares beneficially owned also assumes that shares of common stock subject to options and other rights that are currently exercisable or exercisable within 60 days of March 31, 1999 are deemed to be outstanding and beneficially owned. The address for those individuals for which an address is not otherwise indicated is: c/o drkoop.com, Inc., 8920 Business Park Drive, Suite 200, Austin, Texas 78759.

                                 Shares Beneficially     Shares Beneficially
                                     Owned Prior             Owned After
                                   To This Offering         This Offering
                                 ------------------------------------------------
  Beneficial Owner                 Number      Percent     Number      Percent
  ----------------               ------------- ----------------------- ----------
C. Everett Koop, M.D. (1)......      2,543,505       11%     2,543,505        7%

John F. Zaccaro (2)............      1,643,505        7      1,643,505        4

Donald W. Hackett (3)..........      7,058,402       30      7,058,402       19

Jeffrey C. Ballowe ............            --         *            --         *

Mardian J. Blair (4)...........      2,750,195       12      2,750,195        7

Adventist Health System Sunbelt      2,750,195       12      2,750,195        7
 Healthcare Corporation........
 111 North Orlando Avenue
 Winter Park, Florida 32789

G. Carl Everett, Jr. ..........            --         *            --         *

Richard D. Helppie, Jr. (5)....      5,201,055       22      5,201,055       14

Superior Consultant Holdings         5,172,930       22      5,172,930       14
 Corporation...................
 4000 Town Center, Suite 1100
 Southfield, Michigan 48075

Nancy L. Snyderman, M.D. (6)...        367,500        2        367,500        1

Robert C. Hackett, Jr. (7).....      1,233,750        5      1,233,750        3

Louis A. Scalpati (8)..........      1,375,312        6      1,375,312        4

All directors and executive
 officers as a group (10
 persons)......................     22,173,224       94     22,173,224       58


(1) Includes 713,437 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 31, 1999.
(2) Includes 938,437 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 31, 1999. The business address of Mr. Zaccaro is 24050 Madison Street, Torrance, California 90505.
(3) Includes 1,643,177 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 31, 1999.

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(4) Consists of 2,615,677 shares of common stock held by Adventist Health Systems Sunbelt Healthcare Corporation and 134,520 shares of common stock that will be issued to Adventist upon the closing of this Offering. Please see "Certain Transactions." Mr. Blair, a director of drkoop.com, is also the president of Adventist and disclaims beneficial ownership of the shares held by Adventist. Mr. Blair's business address is the same as that of Adventist.
(5) Consists of 3,962,265 shares of common stock held by Superior Consultant Holdings Corporation, 1,210,665 shares of common stock that will be issued to Superior upon the closing of this offering and 28,125 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 31, 1999. Please see "Certain Transactions." Mr. Helppie, a director of drkoop.com, is the Chairman of the Board and Chief Executive Officer of Superior and disclaims beneficial ownership of the shares held by Superior. Mr. Helppie's business address is the same as that of Superior.
(6) Consists of 367,500 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 31, 1999.
(7) Includes 1,008,750 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 31, 1999.
(8) Includes 1,000,312 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 31, 1999.

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CERTAIN TRANSACTIONS

Series A Financing

From March 1, 1998 through April 6, 1998, we issued 619,102 shares of Series A 8% Convertible Preferred Stock to 17 accredited investors for an aggregate purchase price of $742,900. These shares will be converted into 671,727 shares of common stock upon the closing of this offering. Three members of Donald W. Hackett's immediate family purchased 104,505 shares of the stock for an aggregate purchase price of $125,400.

Series B Financing

On April 28, 1998, we entered into a series of agreements with Superior Consultant Holdings Corporation. Pursuant to the terms of a stock purchase agreement, Superior purchased 3,850,597 shares of our Series B Non-Voting Preferred Stock for a purchase price of $6,000,000. Superior has agreed that these shares will automatically be converted into 3,962,265 shares of common stock upon the closing of this offering. Pursuant to this agreement Superior also acquired the right to have one or more designees appointed to our board of directors. From and after the completion of this offering, we will be obligated to include on our slate for the election of directors one designee of Superior so long as they own not less than 10% of the outstanding common stock. Mr. Hackett, our Chief Executive Officer, has agreed to vote his shares in favor of Superior's designee. As part of this investment transaction, Richard D. Helppie, Jr., Chief Executive Officer of Superior, became a director of drkoop.com. If Superior's designee is other than Mr. Helppie, such person is subject to the approval of our board of directors, which may not be unreasonably withheld. In addition, Dr. C. Everett Koop was appointed a director of Superior.

In connection with the issuance of the Series B shares, we also entered into an option and put agreement and a registration rights agreement with Superior. Among other things, the option and put agreement gives Superior the right to require us to repurchase their shares at specified times prior to our initial public offering and gave Superior the right to acquire an additional 3,850,597 shares of Series B Preferred Stock (convertible into 3,962,265 shares of common stock) at an exercise price equal to seventy percent (70%) of the fair market value of the underlying shares of common stock on the date of exercise. All substantive provisions of the option and put agreement will be terminated at the closing of this offering in exchange for the issuance of 1,210,665 shares of common stock, valued at $8.2 million to Superior plus 134,520 shares valued at $900,000, to be issued to Adventist Health System Sunbelt Healthcare Corporation to satisfy an anti-dilution right held by them. The Adventist investment agreement includes a requirement that upon the issuance of any shares to Superior under their option and put agreement, additional shares will be issued to Adventist equal to approximately 9.9 percent of the total combined issuance. No further issuances are due to Adventist under this anti-dilution adjustment provision because it is specific to the Superior option and put agreement. Please see "Description of Securities--Registration Rights" for a summary of the registration rights granted to Superior.

Other Agreements with Superior

On April 29, 1998, we entered into a service agreement with Superior which contemplates our retention of them on an exclusive basis to provide professional services in connection with consulting and information technology matters, including the construction of our website. The term of the agreement is five years. The service agreement also includes an agreement calling for Superior to recognize at least $3.0 million in professional services revenue from its relationship with us (including specific work for other parties referred by us) during the first year of the relationship. This commitment has been modified to extend the period during which we may generate these revenues to September 1999. During the year ended December 31, 1998, we paid Superior an aggregate of approximately $1.5 million for services under the service agreement. We believe that these services have been provided on terms not less favorable than could have been obtained from an unaffiliated third party. This assessment reflects the determination of our management based on their business experience and other professional services firms engaged by them and is not based on a request for competitive proposals or similar agreements maintained with other parties.

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Series C Financing

On January 29, 1999, we received $3.5 million in cash and acquired 10% of the outstanding stock of HealthMagic, Inc., a subsidiary of Adventist Health System Sunbelt Healthcare Corporation, in exchange for 2,615,677 shares of our Series C convertible preferred stock, which will be converted into an equivalent number of shares of common stock upon the closing of this offering. The parties also entered into related agreements which provide for registration rights and specified transfer restrictions. These related agreements call for an Adventist representative, Mr. Mardian J. Blair, to become a director of our company and for us to designate a director of HealthMagic. The right of Adventist to designate a director of drkoop.com will terminate with this offering, although we expect Mr. Blair to continue to serve as a director.

HealthMagic Transaction

On January 29, 1999, we established a technology relationship with HealthMagic, a supplier of applications to Internet companies, whereby we contributed to them our PMR product and received from them a license to use a broad range of Internet technologies, including a web-enabled personal medical record, personalization tools, and security and authentication features. HealthMagic will develop, implement and support these technologies for us. Currently, we expect to deploy these features in the first half of 1999. Under the terms of the license, drkoop.com and HealthMagic will share in revenues generated from activities related to the licensed technology. However, in the event that HealthMagic grants more favorable revenue sharing terms to a third party, drkoop.com's revenue share will be adjusted to match the other terms. In addition, drkoop.com has agreed not to develop, support or distribute any product that significantly duplicates the functionality of the web-enabled personal medical record. The license is nonexclusive and has a term of 99 years. In general, neither party may assign, delegate or transfer any right or obligation under this license. HealthMagic may also develop similar technologies that it licenses to our competitors.

In addition, on January 29, 1999 we entered into a content subscription and software licensing agreement with Adventist for $500,000. The license fee was fully paid at the execution of the license, and no future payments by Adventist are required. Under the agreement, Adventist has the right, over a period of three years, to enroll affiliates in our Community Partner Program. Each Community Partner Program affiliate agreement has a term of one year. Mardian J. Blair, a director of our company, is president of Adventist. To the extent that our board of directors determines that a potential conflict of interest exists between our company and either Adventist or HealthMagic, Mr. Blair abstains from discussions and voting on matters concerning Adventist or HealthMagic.

Other Financing Agreement with Adventist

On March 3, 1999 we entered into a loan agreement with Adventist. Pursuant to this agreement, Adventist is irrevocably obligated to loan to us the aggregate principal amount of up to $2.0 million at an interest rate of 7% per annum. Upon the closing of this offering, the principal amount borrowed under this agreement and all accrued interest will, solely at Adventist's option, either be due and payable or convert into common stock at a per share price of $7.43. As of March 31, 1999, we had borrowed the full $2.0 million under this agreement.

Hackett Loan Agreement

From July 1997 through March 1998, Donald W. Hackett loaned the company an aggregate of $216,043. On March 16, 1998, we issued 1,800,360 shares of common stock to Mr. Hackett in exchange for cancellation of this indebtedness. The conversion price was established by the board of directors based on their assessment of the fair market value of the common stock on the date of conversion.

Agreements with Dr. C. Everett Koop

We are party to a name and likeness agreement and a consulting agreement with Dr. Koop. For the year ended December 31, 1998 we accrued royalty fees of $855, paid him lecture fees of $95,000 and director's fees of $83,333. Additionally, during such period we reimbursed him for his travel and other expenses incurred on

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company business in the amount of $9,200. For the year ended December 31, 1997, we paid Dr. Koop $2,200 in connection with certain services he rendered to our company. Please see "Management--Agreements with Dr. C. Everett Koop."

Consulting Agreement with Mr. Zaccaro

We are party to a consulting agreement with Mr. Zaccaro pursuant to which we paid him $83,333 for the year ended December 31, 1998. Please see "Management-- Other Consulting Agreements with Directors."

Name and Likeness Agreement with Dr. Snyderman

We are party to a name and likeness agreement with Dr. Snyderman. For the year ended December 31, 1998, she received no cash compensation but was granted options to purchase 183,750 shares of common stock for an exercise price of $0.12 per share, which we believe was not less than fair market value on the date of grant. In addition, Dr. Snyderman was granted options to purchase 183,750 shares of common stock for an exercise price of $0.16 per share as compensation for her services as a director. All of these options vested immediately on the date of grant. Please see "Other Consulting Agreements with Directors."

Promoters of drkoop.com, Inc.

Each of Dr. Koop, Chairman of the Board, Mr. Zaccaro, Vice Chairman, Mr. Donald Hackett, Chief Executive Officer and President, Mr. Robert Hackett, Executive Vice President, Business Development, and Mr. Scalpati, Senior Vice President, Chief Architect, is a co-founder of drkoop.com and may be deemed a promoter for purposes of the federal securities laws. All material transactions with such persons are described in this section or elsewhere in this prospectus. Please see "Management" and Note 11 to the financial statements.

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DESCRIPTION OF SECURITIES

The following description of our capital stock and certain provisions of our restated certificate of incorporation and bylaws are summaries thereof and are qualified by reference to the certificate and the bylaws. Copies of these documents have been filed with the SEC as exhibits to our registration statement, of which this prospectus forms a part. The descriptions of the common stock and preferred stock reflect changes to our capital structure that will occur upon the closing of this offering.

Upon completion of this offering, our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.001 per share, and 15,000,000 shares of preferred stock, par value $0.001 per share.

Common Stock

As of March 31, 1999, there were 18,139,591 shares of common stock outstanding and held of record by 25 stockholders, assuming conversion of all outstanding shares of preferred stock and the convertible note payable and accrued interest as set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources."

Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and they do not have cumulative voting rights. Accordingly, holders of a majority of the shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of common stock are entitled to receive ratably dividends, if any, as may be declared by the board of directors out of funds legally available therefor, subject to any preferential dividend rights of any outstanding preferred stock. Upon the liquidation, dissolution or winding up of drkoop.com the holders of common stock are entitled to receive ratably the net assets of drkoop.com available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of the common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we may designate and issue in the future. Upon the closing of this offering, there will be no shares of preferred stock outstanding.

Preferred Stock

Upon the closing of this offering, the board of directors will be authorized, without further stockholder approval, to issue from time to time up to an aggregate of 15,000,000 shares of preferred stock in one or more series and to fix or alter the designations, preferences, rights and any qualifications, limitations or restrictions of the shares of each such series thereof, including the dividend rights, dividend rates, conversion rights, voting rights, terms of redemption including sinking fund provisions, redemption price or prices, liquidation preferences and the number of shares constituting any series or designations of such series. We have no present plans to issue any shares of preferred stock. See "--Anti-Takeover Effects of Provisions of Delaware Law and our Certificate of Incorporation and Bylaws."

Convertible Notes and Restated Warrants

On December 24, 1998, we issued a convertible note payable to a stockholder in the original principal amount of $800,000--$500,000 of which was received in 1998--bearing simple interest at 6% per annum and due December 24, 1999, along with five-year warrants to purchase 33,482 shares of Series C Preferred Stock for an exercise price of $4.78 per share, which will become the right to purchase 33,482 shares of common stock for $4.78 per share upon the closing of this offering. Interest on the notes is payable at maturity. At any time prior to the closing of this offering any unpaid principal and interest may be converted at a conversion price of $4.78 per share.

On April 9, 1999, we entered into distribution agreements with Infoseek Corporation and the Buena Vista Internet Group, a unit of The Walt Disney Company. Under these agreements, we agreed to issue warrants to purchase an aggregate of 775,000 shares of common stock at an exercise price of $8.60 per share.

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None of these warrants are exercisable prior to one year after issuance.

Registration Rights

Pursuant to the terms of the amended and restated investors' rights agreement, after this offering, the holders of approximately 8,124,017 shares of common stock will be entitled to certain rights with respect to the registration of such shares under the Securities Act. Under the terms of the agreement between us and the holders of such registrable securities, if we propose to register any of our securities under the Securities Act, either for our own account or for the account of other security holders exercising registration rights, such holders are entitled to notice of such registration and are entitled to include shares of such common stock therein. Additionally, such holders are also entitled to certain demand registration rights pursuant to which they may require us to file a registration statement under the Securities Act at our expense with respect to their shares of common stock, and we are required to use our best efforts to effect such registration. All of these registration rights are subject to conditions and limitations, among them the right of the underwriters of an offering to limit the number of shares included in such registration and our right not to effect a requested registration within six months following an offering of our securities, including this offering. In addition, we have agreed to use our best efforts to provide similar registration rights to the holders of convertible promissory notes in the event holders convert the notes into shares of common stock. Please see "Shares Eligible for Future Sale."

Anti-Takeover Effects of Provisions Of Delaware Law and Our Certificate of Incorporation and Bylaws

We are subject to the provisions of Section 203 of the Delaware General Corporation Law. Subject to certain exceptions, Section 203 of Delaware law prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the interested stockholder attained such status with the approval of the board of directors or unless the business combination is approved in a prescribed manner. A "business combination" includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an "interested stockholder" is a person who, together with affiliates and associates, owns, or within three years did own, fifteen percent or more of a corporation's voting stock. This statute could prohibit or delay the accomplishment of mergers or other takeover or change in control attempts with respect to drkoop.com and, accordingly, may discourage attempts to acquire us.

In addition, some provisions of the certificate and bylaws may be deemed to have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. These provisions include:

Board of Directors. Our board of directors will be divided into three classes of directors serving staggered three year terms. The certificate of incorporation authorizes our board of directors to fill vacant directorships or increase the size of the board of directors. Accordingly, even if a stockholder brings a successful proxy fight, he would likely only be able to elect a minority of our board of directors at any one annual meeting.

Stockholder Action; Special Meeting of Stockholders. The certificate of incorporation provides that stockholders may not take action by written consent, but only at a duly called annual or special meeting of stockholders. The certificate of incorporation further provides that special meetings of our stockholders may be called only by the chairman of the board of directors, by a committee of the board of directors or a majority of the board of directors, and in no event may the stockholders call a special meeting. Thus, without approval by the board of directors or chairman, stockholders may take no action between annual meetings.

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Advance Notice Requirements for Stockholder Proposals and Director Nominations. The bylaws provide that stockholders seeking to bring business before an annual meeting of stockholders, or to nominate candidates for election as directors at an annual meeting of stockholders, must provide timely notice of this intention in writing. To be timely, a stockholder's notice must be delivered to or mailed and received at our principal executive offices not less than 120 days prior to the first anniversary of the date of our notice of annual meeting provided with respect to the previous year's annual meeting of stockholders. However, if no annual meeting of stockholders was held in the previous year or the date of the annual meeting of stockholders has been changed to be more than 30 calendar days from the time contemplated at the time of the previous year's proxy statement, then a proposal shall be received no later than the close of business on the 10th day following the date on which notice of the date of the meeting was mailed or a public announcement was made, whichever first occurs. The bylaws also include a similar requirement for making nominations at special meetings and specify requirements as to the form and content of a stockholder's notice. These provisions may preclude stockholders from bringing matters before an annual meeting of stockholders or from making nominations for directors at an annual or special meeting of stockholders.

Authorized But Unissued Shares. The authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval, subject to certain limitations imposed by the Nasdaq National Market. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of the drkoop.com by means of a proxy contest, tender offer, merger or otherwise.

Delaware law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or bylaws, unless a corporation's certificate of incorporation or bylaws, as the case may be, requires a greater percentage. drkoop.com has provisions in its certificate and bylaws which require a super- majority vote of the stockholders to amend, revise or repeal anti-takeover provisions.

Limitation of Liability and Indemnification Matters

The certificate of incorporation provides that, except to the extent permitted by Delaware law, our directors shall not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director. Under Delaware law, the directors have a fiduciary duty to us that is not eliminated by this provision of the certificate and, in appropriate circumstances, equitable remedies such as injunctive or other forms of nonmonetary relief will remain available. In addition, each director will continue to be subject to liability under Delaware law for breach of the director's duty of loyalty to us for acts or omissions which are found by a court of competent jurisdiction to be not in good faith or that involve intentional misconduct, or knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are prohibited by the Delaware law. This provision also does not affect the directors' responsibilities under any other laws, such as the federal securities laws.

Section 145 of the Delaware corporate law empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers, provided that this provision shall not eliminate or limit the liability of a director:

. for any breach of the director's duty of loyalty to the corporation or its stockholders;

. for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

. arising under Section 174 of the Delaware corporate law; or

. for any transaction from which the director derived an improper personal benefit.

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Delaware law provides further that the indemnification permitted by that law shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under a corporation's bylaws, any agreement, a vote of stockholders or otherwise. The certificate of incorporation eliminates the personal liability of directors to the fullest extent permitted by Section 102(b)(7) of the Delaware corporate law and provides that we may fully indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was an employee, director or officer of drkoop.com or is or was serving at our request as an employee, director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding.

We have entered into agreements to indemnify our directors and officers, in addition to the indemnification provided for in the bylaws. We believe that these provisions and agreements are necessary to attract and retain qualified directors and officers. Our bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions, regardless of whether Delaware law would permit indemnification.

Transfer Agent And Registrar

Upon the closing of this offering, the transfer agent and registrar for the common stock will be American Stock Transfer and Trust Company.

Listing

We have applied to have our common stock admitted for quotation on the Nasdaq National Market under the symbol "KOOP."

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has not been any public market for our common stock, and no prediction can be made as to the effect, if any, that market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of the common stock prevailing from time to time. Nevertheless, sales of substantial amounts of common stock in the public market, or the perception that such sales could occur, could adversely affect the market price of the common stock and could impair our future ability to raise capital through the sale of equity securities. See "Risk Factors--The sale of shares eligible for future sale and expectations of future sales of these shares could depress share prices.

Upon the closing of this offering, we will have an aggregate of 27,514,591 shares of common stock outstanding, assuming no exercise of the underwriters' over-allotment option and no exercise of outstanding options or warrants. Of the outstanding shares, 5,625,000 of the shares sold in this offering will be freely tradable, except that any shares held by "affiliates" (as that term is defined in Rule 144 promulgated under the Securities Act) may only be sold in compliance with the limitations described below. The other 3,750,000 shares sold in this offering will be available for sale in the public market after 180 days from the date of this prospectus. The remaining 18,139,591 shares of common stock will be deemed "restricted securities" as defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144, 144(k) or 701 promulgated under the Securities Act, which rules are summarized below. Subject to the lock-up agreements described below and the provisions of Rules 144, 144(k) and 701, shares will be available for sale in the public market as follows:

  Number
of Shares                                Date
---------                                ----
 5,625,000 After the date of this prospectus

 1,891,105 At various times after 90 days from the date of this prospectus
           (Rule 144)

19,998,486 At various times after 180 days from the date of this prospectus
           (subject, in some cases, to volume limitations)

In general, under Rule 144, as currently in effect, a person (or persons whose shares are required to be aggregated), including an affiliate, who has beneficially owned shares for at least one year is entitled to sell, within any three-month period commencing 90 days after the date of this prospectus, a number of shares that does not exceed the greater of 1% of the then outstanding shares of common stock (approximately 275,146 shares immediately after this offering) or the average weekly trading volume in the common stock during the four calendar weeks preceding the date on which notice of such sale is filed, subject to restrictions. In addition, a person who is not deemed to have been an affiliate at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years would be entitled to sell such shares under Rule 144(k) without regard to the requirements described above. To the extent that shares were acquired from an affiliate, such person's holding period for the purpose of effecting a sale under Rule 144 commences on the date of transfer from the affiliate.

Our directors and officers and certain stockholders who hold 16,248,486 shares in the aggregate have agreed that they will not offer, sell or agree to sell, directly or indirectly, or otherwise dispose of any shares of common stock without the prior written consent of Bear, Stearns & Co. Inc. for a period of 180 days from the date of this prospectus. Please see "Underwriting."

Any of our employees or consultants who purchased his or her shares pursuant to a written compensatory plan or contract is entitled to rely on the resale provisions of Rule 701, which permits nonaffiliates to sell their Rule 701 shares without having to comply with the public information, holding period, volume limitation or notice provisions of Rule 144 and permits affiliates to sell their Rule 701 shares without having to comply with the Rule 144 holding period restrictions, in each case commencing 90 days after the date of this prospectus. As of March 31, 1999, the holders of options exercisable into approximately 10,492,531 shares of common stock

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will be eligible to sell their shares on the expiration of the 180-day lockup period or subject in some cases to vesting of such options.

We intend to file one or more registration statements on Form S-8 under the Securities Act to register all shares of common stock subject to outstanding stock options and common stock issued or issuable under our stock plans. We expect to file the registration statement covering shares offered pursuant to the Amended and Restated 1997 Stock Option Plan, the 1999 Equity Participation Plan and the 1999 Employee Stock Purchase Plan within 180 days after the date of this prospectus, thus permitting the resale of such shares by nonaffiliates in the public market without restriction under the Securities Act.

We have agreed not to sell or otherwise dispose of any shares of common stock during the 180-day period following the date of the prospectus, except that we may issue, and grant options to purchase, shares of common stock under the 1999 Equity Participation Plan. In addition, we may issue shares of common stock in connection with any acquisition of another company if the terms of such issuance provide that such common stock shall not be resold prior to the expiration of the 180-day period referenced in the preceding sentence. See "Risk Factors--The sale of shares eligible for future sale and expectations of future sales of these shares could depress share prices."

Following this offering, holders of 8,090,534 shares of outstanding common stock will have demand registration rights with respect to their shares of common stock (subject to the 180-day lock-up arrangement described above) to require us to register their shares of common stock under the Securities Act, and they will have certain rights to participate in any future registration of our securities. We are not required to effect more than an aggregate of three demand registrations on behalf of such holders. These holders are subject to lock-up periods of not more than 180 days following the date of this prospectus or any subsequent prospectus. In addition, we have agreed to use our best efforts to provide similar registration rights to the holders of convertible promissory notes in the event the holders convert the notes into shares of common stock. The notes and accrued interest are convertible into an aggregate of up to 439,187 shares of common stock. See "Description of Securities-- Registration Rights." We also plan to register all shares issuable under our stock option plans on Form S-8 or to otherwise permit the resale of those shares in reliance on Rule 701 under the Securities Act.

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UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement among the underwriters and drkoop.com, each of the underwriters named below, through their representatives Bear, Stearns & Co. Inc., Hambrecht & Quist LLC and Wit Capital Corporation as e-Manager(TM), has severally agreed to purchase from drkoop.com the aggregate number of shares of common stock set forth opposite its name below:

                                                                     Number
   Underwriter                                                      of Shares
   -----------                                                      ---------
Bear, Stearns & Co. Inc. ..........................................
Hambrecht & Quist LLC .............................................
Wit Capital Corporation............................................
                                                                    ---------
  Total............................................................ 9,375,000
                                                                    =========

The underwriting agreement provides that the obligations of the several underwriters are subject to approval of certain legal matters by counsel and to various other conditions. The nature of the underwriters' obligations is such that they are committed to purchase and pay for all of the above shares of common stock if any are purchased.

The underwriters propose to offer the shares of common stock directly to the public at the "public offering price" set forth on the cover page of this prospectus and at such price less a concession not in excess of $ per share of common stock to other dealers who are members of the National Association of Securities Dealers, Inc. The underwriters may allow, and such dealers may reallow, concessions not in excess of $ per share of common stock to certain other dealers. After this offering, the offering price, concessions and other selling terms may be changed by the underwriters. The common stock is offered subject to receipt and acceptance by the underwriters and to certain other conditions, including the right to reject orders in whole or in part.

The underwriters, at the request of drkoop.com, have reserved for sale at the initial public offering price up to shares of common stock to registered users of drkoop.com's website who express an interest in purchasing such shares. The sale of such shares will be made by Wit Capital acting as e-Manager(TM) in the offering. Purchases of the reserved shares are to be made through an account at Wit Capital in accordance with Wit Capital's procedures for opening an account and transacting in securities. Any reserved shares not purchased by registered users of our website will be offered by the underwriters on the same basis as other shares offered hereby. The prospectus in electronic format is being made available on an Internet website maintained by Wit Capital Corporation.

We have granted a 30-day over-allotment option to the underwriters to purchase up to an aggregate of 1,406,250 additional shares of our common stock exercisable at the "public offering price" less the "underwriting discounts and commissions," each as set forth on the cover page of this prospectus. If the underwriters exercise such option in whole or in part, then each of the underwriters will be severally committed, subject to certain conditions, including the approval of certain matters by counsel, to purchase the additional shares of common stock in proportion to their respective purchase commitments as indicated in the preceding table.

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The following table summarizes the compensation to be paid to the underwriters by us and the expenses payable by us, assuming an initial public offering price of $8.00 per share.

                                                             Total
                                                 -----------------------------
                                            Per     Without          With
                                           Share Over-allotment Over-allotment
                                           ----- -------------- --------------
Underwriting discounts and commissions
 paid by us............................... $ .56   $5,250,000     $6,037,500
Expenses payable by us.................... $ .14   $1,355,000     $1,355,000

At the request of drkoop.com, the underwriters will reserve up to an aggregate of $30 million of common stock at the initial public offering price for sale to Dell Computer Corporation, Quintiles Transactional Corp. and FHC Health Systems Investment Company, L.C. This would represent 3,750,000 shares of common stock at the midpoint of the estimated offering price range. We cannot assure you that any of these reserved shares will be purchased. Dell Computer Corporation, Quintiles Transactional Corp. and FHC Internet Services, L.C. will each agree that, if it purchases any shares of common stock or other securities of drkoop.com, it will not sell or otherwise dispose of such shares or securities until six months after this offering. Any other strategic partners will also be required to agree to a similar lock-up.

The price of shares reserved for Dell Computer Corporation, Quintiles Transactional Corp. and FHC Health Systems Investment Company will be the initial public offering price on the cover page of this prospectus. The number of shares available to the general public will be reduced to the extent these entities purchase the reserved shares. Any reserved shares not purchased by them at the closing of the public offering will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus.

The underwriters, at the request of drkoop.com, have reserved for sale at the initial public offering price up to 500,000 shares of common stock to be sold in this offering for sale to our employees and to their associates and related persons. The number of shares available for sale to the general public will be reduced to the extent that any reserved shares are purchased. Any reserved shares not so purchased will be offered by the underwriters on the same basis as the other shares offered hereby.

The underwriters do not expect to confirm sales of common stock to any accounts over which they exercise discretionary authority.

The underwriting agreement provides that we will indemnify the underwriters against liabilities specified in the underwriting agreement under the Securities Act of 1933, as amended, or will contribute to payments that the underwriters may be required to make in respect thereof.

Our directors and officers and certain stockholders who hold 16,248,486 have agreed that they will not offer, sell or agree to sell, directly or indirectly, or otherwise dispose of any shares of common stock in the public market without the prior written consent of Bear, Stearns & Co. Inc. for a period of 180 days from the date of this prospectus.

In addition, we have agreed that for a period of 180 days after the date of this prospectus we will not, without the prior written consent of Bear, Stearns & Co. Inc., offer, sell or otherwise dispose of any shares of common stock except for the shares of common stock offered hereby and the shares of common stock issuable upon exercise of outstanding options and warrants.

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Prior to this offering, there has been no public market for our common stock. Consequently, the initial offering price for the common stock will be determined by negotiations between us and the underwriters. Among the factors to be considered in such negotiations will be our results of operations in recent periods, estimates of our prospects and the industry in which we compete, an assessment of our management, the general state of the securities markets at the time of this offering and the prices of similar securities of generally comparable companies. We have been approved for quotation of our common stock on the Nasdaq National Market, under the symbol "KOOP." There can be no assurance, however, that an active or orderly trading market will develop for the common stock or that the common stock will trade in the public markets subsequent to this offering at or above the initial offering price. Please see "Risk Factors--The liquidity of our common stock is uncertain since it has not been publicly traded."

In order to facilitate this offering, certain persons participating in this offering may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock during and after this offering. Specifically, the underwriters may over-allot or otherwise create a short position in the common stock for their own account by selling more shares of common stock than we have sold to them. The underwriters may elect to cover any such short position by purchasing shares of common stock in the open market or by exercising the over-allotment option granted to the underwriters. In addition, the underwriters may stabilize or maintain the price of the common stock by bidding for or purchasing shares of common stock in the open market and may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers participating in this offering are reclaimed if shares of common stock previously distributed in this offering are repurchased in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the common stock to the extent that it discourages resales thereof. No representation is made as to the magnitude or effect of any such stabilization or other transactions. Such transactions may be effected on the Nasdaq National Market or otherwise and, if commenced, may be discontinued at any time.

A relative of a person associated with one of the underwriters entered into a loan agreement in March 1999 to purchase promissory notes in the principal amount of $500,000. The loan agreement contains substantially the same terms and conditions as the loan agreements entered into by other investors.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon for drkoop.com, Inc. by Latham & Watkins, Menlo Park, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California.

EXPERTS

The financial statements for drkoop.com, Inc. as of December 31, 1997 and 1998 and for the period from July 17, 1997 (date of inception) to December 31, 1997, the year ended December 31, 1998, and the cumulative period from July 17, 1997 (date of inception) to December 31, 1998, included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph relating to the Company's ability to continue as a going concern as described in Note 1 to the financial statements) of PricewaterhouseCoopers LLP, independent certified public accountants, appearing elsewhere herein, upon the authority of that firm as experts in auditing and accounting.

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ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 (including the exhibits, schedules and amendments thereto) under the Securities Act with respect to the shares of common stock to be sold in this offering. As permitted by the SEC's rules and regulations, this prospectus does not contain all the information set forth in the registration statement. For further information regarding our company and the shares of common stock to be sold in this offering, please refer to the registration statement and the contracts, agreements and other documents filed as exhibits to the registration statement.

You may read and copy all or any portion of the registration statement or any other information that we file at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our SEC filings, including the registration statement, are also available to you on the SEC's website (http://www.sec.gov).

As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, will file periodic reports, proxy statements and other information with the Securities and Exchange Commission.

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drkoop.com, Inc.

Index to Financial Statements

                                                                            Page
                                                                            ----
Report of Independent Accountants.........................................  F-2

Balance Sheets as of December 31, 1997 and 1998 and March 31, 1999, actual
 (unaudited) and pro forma (unaudited)....................................  F-3

Statements of Operations for the period from July 17, 1997 (date of
 inception) to December 31, 1997, the year ended December 31, 1998, the
 cumulative period from July 17, 1997 (date of inception) to December 31,
 1998, and the three months ended March 31, 1998 (unaudited) and 1999
 (unaudited)..............................................................  F-4

Statements of Changes in Stockholders' Deficit for the period from July
 17, 1997 (date of inception) to December 31, 1997, the year ended
 December 31, 1998, and the three months ended March 31, 1999
 (unaudited)..............................................................  F-5

Statements of Cash Flows for the period from July 17, 1997 (date of
 inception) to December 31, 1997, the year ended December 31, 1998, the
 cumulative period from July 17, 1997 (date of inception) to December 31,
 1998, and the three months ended March 31, 1998 (unaudited) and 1999
 (unaudited)..............................................................  F-6

Notes to Financial Statements.............................................  F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders drkoop.com, Inc.

In our opinion, the accompanying balance sheets and the related statements of operations, changes in stockholders' deficit and cash flows listed in the index on page F-1 of this Form S-1 Registration Statement present fairly, in all material respects, the financial position of drkoop.com, Inc., a development stage enterprise ("the Company"), at December 31, 1997 and 1998, and the results of its operations and its cash flows for the period from July 17, 1997 (date of inception) to December 31, 1997, for the year ended December 31, 1998, and the cumulative period from July 17, 1997 (date of inception) to December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses and negative cash flows from operations since inception, which raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

PRICEWATERHOUSECOOPERS LLP

Austin, Texas
March 4, 1999, except for Note 14, for which the date is May 13, 1999

F-2

drkoop.com, Inc.

(A Development Stage Enterprise)

Balance Sheets

                                December 31,             March 31, 1999
                           -----------------------  --------------------------
                             1997         1998         Actual      Pro Forma
                           ---------  ------------  ------------  ------------
                                                           (unaudited)
Assets
Current assets:
  Cash and cash
   equivalents............ $   7,586  $        303  $  2,021,273  $  2,021,273
  Accounts receivable.....       --         40,531       405,725       405,725
  Employee receivables....       --          4,130         2,630         2,630
  Prepaids and other......       --         17,500       108,940       108,940
                           ---------  ------------  ------------  ------------
    Total current assets..     7,586        62,464     2,538,568     2,538,568
Equipment, furniture and
 fixtures, net............    35,204       306,539       389,745       389,745
Investment in affiliate...       --            --      5,000,000     5,000,000
Intangible assets, net....       --            --      3,777,778     3,777,778
Other assets..............       --         11,373        11,373        11,373
                           ---------  ------------  ------------  ------------
    Total assets.......... $  42,790  $    380,376  $ 11,717,464  $ 11,717,464
                           =========  ============  ============  ============
Liabilities and
 Stockholders' Equity
 (Deficit)
Current liabilities:
  Accounts payable........ $  57,747  $    804,459  $    860,437  $    860,437
  Accrued liabilities.....    61,993       519,800     1,327,090     1,315,248
  Related party payables..   537,308     1,193,125       104,049       104,049
  Deferred revenue........       --            --        544,372       544,372
  Convertible notes
   payable to
   stockholders, net of
   discount of $49,439 and
   $59,326 at December 31,
   1998 and March 31,
   1999...................       --        450,561     2,740,674           --
                           ---------  ------------  ------------  ------------
    Total current
     liabilities..........   657,048     2,967,945     5,576,622     2,824,106
Commitments and
 contingencies (Note 5)...       --            --            --            --
Mandatorily redeemable
 convertible (Series B)
 preferred stock;
 liquidation preference of
 $2,998,408 (Note 7)......       --     18,939,627    30,296,306           --
Stockholders' equity
 (deficit):
  Convertible preferred
   stock: $0.001 par
   value; 15,000,000
   shares authorized:
   Series A 750,000 shares
    designated; 619,102
    shares issued and
    outstanding;
    liquidation preference
    of $790,639 and
    $805,498 (unaudited)
    at December 31, 1998
    and March 31, 1999....       --            619           619           --
   Series C 3,000,000
    shares designated:
    2,615,677 shares
    issued and outstanding
    (unaudited);
    liquidation preference
    of $12,440,162........       --            --          2,616           --
  Common stock: $0.001 par
   value; 15,000,000
   shares authorized at
   December 31, 1998,
   25,000,000 shares
   authorized at March 31,
   1999, and 75,000,000
   shares authorized pro
   forma; 6,750,000 and
   8,550,360 shares issued
   and outstanding in 1997
   and 1998, 9,105,552
   (unaudited) and
   18,139,591 (unaudited)
   shares at March 31,
   1999, actual and pro
   forma..................     6,750         8,550         9,106        18,139
  Additional paid-in
   capital................     2,250           --      4,283,913    37,326,937
  Deferred stock
   compensation...........       --     (1,425,047)   (4,212,495)   (4,212,495)
  Amounts receivable from
   common stockholders....    (1,300)          --            --            --
  Accumulated deficit.....  (621,958)  (20,111,318)  (24,239,223)  (24,239,223)
                           ---------  ------------  ------------  ------------
    Total stockholders'
     equity (deficit).....  (614,258)  (21,527,196)  (24,155,464)    8,893,358
                           ---------  ------------  ------------  ------------
    Total liabilities and
     stockholders' equity
     (deficit)............ $  42,790  $    380,376  $ 11,717,464  $ 11,717,464
                           =========  ============  ============  ============

The accompanying notes are an integral part of these financial statements.

F-3

drkoop.com, Inc.

(A Development Stage Enterprise)

Statements of Operations

                                                      Cumulative
                          Period from      Year      Period from     Three Months Ended
                          Inception to    Ended      Inception to        March 31,
                          December 31, December 31,  December 31,  -----------------------
                              1997         1998          1998        1998         1999
                          ------------ ------------  ------------  ---------  ------------
                                                                        (unaudited)
Revenues:
  Content subscription
   and software
   license..............   $      --   $     27,000  $     27,000  $     --   $    216,216
  Advertising and
   sponsorship..........          --         15,470        15,470        --        187,526
  Other.................          --            264           264        --            473
                           ----------  ------------  ------------  ---------  ------------
                                  --         42,734        42,734        --        404,215
                           ----------  ------------  ------------  ---------  ------------
Operating expenses:
  Production, content
   and product
   development..........      460,629     4,448,125     4,908,754    283,716     1,034,654
  Sales and marketing...          --      2,008,372     2,008,372    165,927     2,048,090
  General and
   administrative.......      161,329     2,703,500     2,864,829    259,244     1,418,454
                           ----------  ------------  ------------  ---------  ------------
    Total operating
     expenses...........      621,958     9,159,997     9,781,955    708,887     4,501,198
                           ----------  ------------  ------------  ---------  ------------
Loss from operations....     (621,958)   (9,117,263)   (9,739,221)  (708,887)   (4,096,983)
Interest income
 (expense)..............          --         33,646        33,646        --        (30,922)
                           ----------  ------------  ------------  ---------  ------------
  Net loss..............     (621,958)   (9,083,617)   (9,705,575)  (708,887)   (4,127,905)
Accretion of redeemable
 securities to fair
 value..................          --    (14,819,627)  (14,819,627)       --    (11,356,679)
Dividend to preferred
 stockholders (Note 7)..          --            --             -         --     (9,147,258)
                           ----------  ------------  ------------  ---------  ------------
Loss attributable to
 common stockholders....   $ (621,958) $(23,903,244) $(24,525,202) $(708,887) $(24,631,842)
                           ==========  ============  ============  =========  ============
Net loss per share--
 basic and diluted......   $     (.09) $      (2.95) $      (3.21) $    (.10) $      (2.87)
                           ==========  ============  ============  =========  ============
Shares used in per share
 calculations--basic and
 diluted................    6,750,000     8,100,270     7,650,180  7,030,055     8,568,867
                           ==========  ============  ============  =========  ============
Pro forma net loss per
 share--basic and
 diluted (unaudited)....               $       (.75)                          $       (.25)
                                       ============                           ============
Shares used in pro forma
 calculations--basic and
 diluted (unaudited)....                 12,110,670                             16,347,347
                                       ============                           ============

The accompanying notes are an integral part of these financial statements.

F-4

drkoop.com, Inc.


(A Development Stage Enterprise)

Statements of Changes in Stockholders' Deficit For the Period from Inception to December 31, 1997, the Year Ended December 31, 1998, and the Three Months Ended March 31, 1999 (Unaudited)

                                                                                   Amounts
                    Preferred Stock    Common Stock   Additional     Deferred     Receivable
                    ---------------- ----------------   Paid-in       Stock      from Common  Accumulated
                     Shares   Amount  Shares   Amount   Capital    Compensation  Stockholders   Deficit        Total
                    --------- ------ --------- ------ -----------  ------------  ------------ ------------  ------------
Issuance of common
stock in July 1997
to founders for
cash and other
consideration.....        --  $  --  6,750,000 $6,750 $     2,250  $       --      $(1,300)   $        --   $      7,700
Net loss..........        --     --        --     --          --           --          --         (621,958)     (621,958)
                    --------- ------ --------- ------ -----------  -----------     -------    ------------  ------------
Balance at
December 31,
1997..............        --     --  6,750,000  6,750       2,250          --       (1,300)       (621,958)     (614,258)
Issuance of Series
A preferred stock
for cash,
net of issuance
costs of $6,232...    525,750    526       --     --      624,140          --          --              --        624,666
Issuance of Series
A preferred stock
for services......     93,352     93       --     --      111,932          --          --              --        112,025
Issuance of
options to Series
B stockholders....        --     --        --     --    1,880,000          --          --              --      1,880,000
Issuance of common
stock upon
conversion of
stockholder note
payable...........        --     --  1,800,360  1,800     214,243          --          --              --        216,043
Payment received
on amounts
receivable from
common
stockholders......        --     --        --     --          --           --        1,300             --          1,300
Deferred stock
compensation......        --     --        --     --    1,531,880   (1,531,880)        --              --            --
Amortization of
deferred stock
compensation......        --     --        --     --          --       106,833         --              --        106,833
Issuance of
warrant to
convertible note
holder............        --     --        --     --       49,439          --          --              --         49,439
Accretion of
redeemable
securities to fair
value.............        --     --        --     --   (4,413,884)         --          --      (10,405,743)  (14,819,627)
Net loss..........        --     --        --     --          --           --          --       (9,083,617)   (9,083,617)
                    --------- ------ --------- ------ -----------  -----------     -------    ------------  ------------
Balance at
December 31,
1998..............    619,102    619 8,550,360  8,550         --    (1,425,047)        --      (20,111,318)  (21,527,196)
Issuance of Series
C preferred stock
for cash and
investment
(unaudited).......  2,615,677  2,616       --     --   12,497,384          --          --              --     12,500,000
Issuance of
warrant to
convertible note
holder
(unaudited).......        --     --        --     --       29,663          --          --              --         29,663
Exercise of stock
options
(unaudited).......        --     --    555,192    556      12,018          --          --              --         12,574
Deferred stock
compensation
(unaudited).......        --     --        --     --    3,101,527   (3,101,527)        --              --            --
Amortization of
deferred stock
compensation
(unaudited).......        --     --        --     --          --       314,079         --              --        314,079
Obligation to
issue common stock
pursuant to option
cancellation
agreement (Note
7)................        --     --        --     --    9,147,258          --          --              --      9,147,258
Dividend payable
to preferred
stockholder (Note
7)................        --     --        --     --   (9,147,258)         --          --              --     (9,147,258)
Accretion of
redeemable
securities to fair
value
(unaudited).......        --     --        --     --  (11,356,679)         --          --                    (11,356,679)
Net loss
(unaudited).......        --     --        --     --          --           --          --       (4,127,905)   (4,127,905)
                    --------- ------ --------- ------ -----------  -----------     -------    ------------  ------------
Balance as of
March 31, 1999
(unaudited).......  3,234,779 $3,235 9,105,552 $9,106 $ 4,283,913  $(4,212,495)    $   --     $(24,239,223) $(24,155,464)
                    ========= ====== ========= ====== ===========  ===========     =======    ============  ============

The accompanying notes are an integral part of these financial statements.

F-5

drkoop.com, Inc.

(A Development Stage Enterprise)

Statements of Cash Flows

                                                    Cumulative
                        Period from      Year      Period from    Three Months Ended
                        Inception to    Ended      Inception to        March 31,
                        December 31, December 31,  December 31,  ----------------------
                            1997         1998          1998        1998        1999
                        ------------ ------------  ------------  ---------  -----------
                                                                      (unaudited)
Operating Activities:
  Net loss.............  $(621,958)  $(9,083,617)  $(9,705,575)  $(708,887) $(4,127,905)
  Depreciation and
   amortization........      6,941        64,090        71,031       5,036      258,631
  Amortization of
   deferred stock
   compensation........        --        106,833       106,833         --       314,079
  Interest accretion on
   convertible note
   payable to
   stockholders........        --            --            --          --        19,776
  Stock issued for
   services............      2,000       112,025       114,025         --           --
  Changes in assets and
   liabilities:
    Accounts
     receivable........        --        (40,531)      (40,531)        --      (365,194)
    Employee
     receivables.......        --         (4,130)       (4,130)       (500)       1,500
    Prepaids and other
     current assets....        --        (17,500)      (17,500)     (7,264)     (91,440)
    Other assets.......        --        (11,373)      (11,373)        --           --
    Accounts payable...     57,747       746,712       804,459      75,416       55,978
    Accrued expenses...     61,993       457,807       519,800     158,150      807,290
    Related party
     payable...........    537,308       871,860     1,409,168     (23,783)  (1,089,076)
    Deferred revenue...        --            --            --          --       544,372
                         ---------   -----------   -----------   ---------  -----------
      Cash provided by
       (used in)
       operating
       activities......     44,031    (6,797,824)   (6,753,793)   (501,832)  (3,671,989)
                         ---------   -----------   -----------   ---------  -----------
Investing Activities:
  Purchase of
   equipment, furniture
   and fixtures........    (42,145)     (335,425)     (377,570)    (29,030)    (119,615)
                         ---------   -----------   -----------   ---------  -----------
      Cash used in
       investing
       activities......    (42,145)     (335,425)     (377,570)    (29,030)    (119,615)
                         ---------   -----------   -----------   ---------  -----------
Financing Activities:
  Proceeds from
   issuance of
   convertible note
   payable to
   stockholder.........        --        500,000       500,000         --     2,300,000
  Proceeds from
   issuance of
   preferred stock,
   net.................        --      6,624,666     6,624,666     518,680    3,500,000
  Proceeds from
   issuance of common
   stock, net..........      5,700           --          5,700         --        12,574
  Repayment of
   stockholder
   payables............        --          1,300         1,300         --           --
                         ---------   -----------   -----------   ---------  -----------
  Cash provided by
   financing
   activities..........      5,700     7,125,966     7,131,666     518,680    5,812,574
                         ---------   -----------   -----------   ---------  -----------
Increase (decrease) in
 cash and cash
 equivalents...........      7,586        (7,283)          303     (12,182)   2,020,970
Cash and cash
 equivalents at
 beginning of period...        --          7,586           --        7,586          303
                         ---------   -----------   -----------   ---------  -----------
Cash and cash
 equivalents at end of
 period................  $   7,586   $       303   $       303   $  (4,596) $ 2,021,273
                         =========   ===========   ===========   =========  ===========

The accompanying notes are an integral part of these financial statements.

F-6

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

1. Organization and Basis of Presentation

drkoop.com, Inc. (formerly Empower Health Corporation and Personal Medical Records, Inc.) ("the Company"), a Delaware corporation, was incorporated on July 17, 1997 (date of inception). The Company's name as of March 4, 1999 was Empower Health Corporation, a Texas corporation. The Company reincorporated in the State of Delaware as drkoop.com, Inc. on March 24, 1999. This change has been reflected in the financial statements. The Company operates an Internet-based consumer healthcare network, consisting of an interactive website providing consumers with healthcare information and services, as well as affiliate relationships with portals, other websites, local healthcare organizations and traditional media outlets.

The Company has sustained losses and negative cash flows from operations since its inception. The Company's ability to meet its obligations in the ordinary course of business is dependent upon its ability to raise additional financing through public or private equity financings, establish profitable operations, enter into collaborative or other arrangements with corporate sources, or secure other sources of financing to fund operations. During 1998, the Company received cash and services of approximately $6.7 million through the issuance of preferred stock. In January 1999, the Company received approximately $4.3 million through transactions which included the issuance of preferred stock, convertible debt and warrants. Additionally, the Company has received loan commitments from a preferred stockholder and new investors to finance anticipated working capital requirements up to $5.5 million.

Management intends to raise working capital through additional equity and/or debt financings in the near future. If anticipated financing transactions and operating results are not achieved, management has the intent and believes it has the ability to delay or reduce expenditures so as not to require additional financial resources, if such resources were not available on terms acceptable to the Company. Nevertheless, these matters raise substantial doubt about the Company's ability to continue as a going concern. This uncertainty will be mitigated if the Company successfully completes the initial public offering of its common stock which it is pursuing. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company has a limited operating history and its prospects are subject to the risks, expenses and uncertainties frequently encountered by companies in the new and rapidly evolving markets for Internet products and services. These risks include the failure to develop and extend the Company's on-line service brands, the rejection of the Company's services by Internet consumers, vendors and/or advertisers, the inability of the Company to maintain and increase the levels of traffic on its on-line services, as well as other risks and uncertainties. In the event that the Company does not successfully implement its business plan, certain assets may not be recoverable.

2. Summary of Significant Accounting Policies

Development Stage Enterprise
For the period from inception through December 31, 1998, the Company was a development stage enterprise, as planned principal operations had not yet begun to generate significant revenue. In its development stage, all pre- operating costs have been expensed as incurred.

Interim Financial Statements (Unaudited) The financial statements as of March 31, 1999 and for the three months ended March 31, 1998 and 1999 are unaudited and should be read in conjunction with the Company's annual financial statements for the

F-7

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

year ended December 31, 1998. Such interim financial statements have been prepared in conformity with the rules and regulations of the Securities and Exchange Commission. Certain disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations pertaining to interim financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year.

Unaudited Pro Forma Information
In conjunction with the Company's anticipated initial public offering, all of the Company's outstanding convertible preferred stock and convertible notes payable to stockholders will be converted into shares of common stock. The pro forma effect of these conversions has been reflected in the accompanying unaudited pro forma balance sheet assuming the conversion had occurred on March 31, 1999. Original issue discount representing the unamortized portion of the value attributed to the warrants on such convertible notes amounting to approximately $59,000 has been charged to accumulated deficit (interest expense) as of the assumed date of conversion.

Cash Equivalents
Highly liquid investments with maturities of three months or less when purchased are considered to be cash equivalents.

Equipment, Furniture and Fixtures
Equipment, furniture and fixtures are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, generally three to seven years. Upon disposal, the Company removes the asset and the accumulated depreciation from its records and recognizes the related gain or loss in the results of operations.

Revenue Recognition

Advertising revenues are derived principally from short-term advertising contracts in which the Company typically guarantees a minimum number of impressions or pages to be delivered to users over a specified period of time for a fixed fee. Advertising revenues are recognized at the lesser of
(i) the ratio of impressions delivered over the total guaranteed impressions or (ii) the straight-line rate over the term of the contract, provided that no significant obligations remain and collection of the resulting receivable is probable. Company obligations typically include the guarantee of a minimum number of impressions or times that an advertisement appears in pages viewed by the users of the Company's website.

The Company has entered into revenue sharing arrangements whereby it is entitled to revenue sharing for advertising revenue derived from advertisements delivered on partner sites which display the Company's content. The Company recognizes advertising revenue under revenue sharing arrangements as the related impressions or pages are delivered, based on information obtained from our partner, provided that no significant obligations remain and collection of the resulting receivable is probable. Advertising revenues earned under these revenue sharing arrangements from partner websites are recorded net of commissions as the commissions are not contractual obligations of the Company. Revenues derived from advertising arrangements where the Company contracts directly with the advertiser are recorded at the gross contract amount and commissions paid to obtain these advertisements are recorded as selling expense.

Sponsorship revenues are derived principally from contracts ranging from one to twelve months in which we commit to provide sponsors enhanced promotional opportunities that go beyond traditional banner

F-8

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

advertising. Sponsorships are designed to support broad marketing objectives, including branding, awareness, product introductions, research and transactions, frequently on an exclusive basis. Sponsorship agreements typically include the delivery of a guaranteed minimum number of impressions and the design and development of customized pages on the web- site that enhance the promotional objectives of the sponsor. Costs associated with the creation of the customized pages are minimal and expensed as incurred. Sponsorship revenues are recognized at the lesser of the ratio of impressions delivered over the total guaranteed impressions or the straight line rate over the term of the contract, provided that no significant obligations remain and collection of the resulting receivable is probable, Company obligations typically include the guarantee of a minimum number of impressions or times that an advertisement appears in pages viewed by the users of our web-site.

Content subscription and software license revenues are derived from contracts under the Dr. Koop Community Partner Program with local affiliates such as healthcare providers and third party payor organizations. Sales of software licenses to Community Partner Program affiliates are recognized as revenue upon shipment of the software, provided that the portion of the contract allocated to the software license is based upon vendor specific objective evidence of fair value, and collectibility is probable. Content subscription revenue is recognized ratably over the term of the Community Partner Program contract, generally ranging from twelve to thirty-six months.

Revenues from barter transactions are recorded at the estimated fair value of the advertisements, goods or services received or the estimated fair value of the advertisements given, whichever is a more clearly evident measure of fair value of the transaction. Revenue from barter transactions is recognized as income when advertisements are delivered on the Company's websites. Barter expense is recognized when the Company's advertisements are run on other companies' websites, which is typically in the same period when the related barter revenue is recognized. For the quarter ended March 31, 1999, barter transactions represented 13% of total revenues from continuing operations, respectively.

Transactional revenues are derived primarily from sales of pharmacy and insurance products. The Company earns transaction fees and recognizes revenue at the time the related referred sale occurs.

Production, Content and Product Development Expense Production, content and product development expenses consist primarily of salaries and benefits, consulting fees and other costs related to content acquisition and licensing, software development, application development and website operations. These costs are equivalent to cost of revenue and are expensed as incurred.

Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed" issued by the Financial Accounting Standards Board requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. To date, costs incurred following the establishment of technological feasibility, but prior to general release, have been insignificant.

Advertising
Advertising costs are expensed as incurred. Advertising expense for the period from inception to December 31, 1997 and for the year ended December 31, 1998 were $0 and $1,140,000, respectively.

F-9

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

Stock-Based Compensation
The Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation", which prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options. As allowed by SFAS No. 123, the Company accounts for its employee stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."

Income Taxes
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized and measured using enacted tax rates in effect for the year in which the differences are expected to be realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The primary sources of temporary differences are depreciation of equipment, furniture and fixtures.

Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the financial statements and accompanying notes. Actual results could differ from the estimates.

Net Loss Per Share
Basic net loss per common share and diluted net loss per common share are presented in conformity with SFAS No. 128, "Earnings Per Share," for all periods presented. Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin No. 98, common stock and convertible preferred stock issued or granted for nominal consideration prior to the anticipated effective date of the Company's initial public offering must be included in the calculation of basic and diluted net loss per common share as if they had been outstanding for all periods presented. To date, the Company has not had any issuances or grants for nominal consideration.

In accordance with SFAS No. 128, basic net loss per common share has been computed using the weighted-average number of shares of common stock outstanding during the period. Because the Company has incurred net losses since inception, the effect of all common stock equivalent shares (6,757,457 common equivalent shares as of December 31, 1998) is anti-dilutive; therefore basic and diluted loss per share are equivalent. Basic pro forma net loss per common share, as presented in the statement of operations, has been computed as described above and also gives effect, under Securities and Exchange Commission guidance, to the conversion of the convertible and convertible redeemable preferred stock and the convertible note payable to stockholder and to common stock issued subsequent to December 31, 1998 to satisfy in full a purchase option and anti-dilution right held by a stockholder (using the if-converted method) from the original date of issuance.

F-10

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

The numerator in the pro forma net loss per share calculation is equivalent to net loss. The denominator in the pro forma net loss per share calculation is comprised of the following weighted average shares:

                                                    December 31, March 31,
                                                        1998        1999
                                                    ------------ ----------
Weighted average number of common shares
 outstanding.......................................   8,100,270   8,568,867
Effect of convertible securities:
Convertible preferred stock........................   3,201,282   6,406,840
Common stock issued to satisfy purchase option and
 anti-dilution right held by a stockholder.........     807,110   1,210,665
Convertible notes payable and interest payable to
 stockholders......................................       2,008     160,975
                                                     ----------  ----------
  Shares used in pro forma calculation.............  12,110,670  16,347,347
                                                     ==========  ==========

New Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including derivative instruments embedded in other contracts, and for hedging activities. SFAS No. 33 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Company currently does not engage or plan to engage in derivative instruments or hedging activities.

3. Equipment, Furniture and Fixtures, Net

Equipment, furniture and fixtures are comprised of the following at December 31, 1997 and 1998, and March 31, 1999:

                                                 December 31,
                                               -----------------   March 31,
                                                1997      1998       1999
                                               -------  --------  -----------
                                                                  (unaudited)
Computer equipment............................ $42,145  $324,695   $ 403,221
Furniture and fixtures........................     --     40,144      81,869
Leasehold improvements........................     --     12,264      12,096
                                               -------  --------   ---------
                                                42,145   377,103     497,186
Accumulated depreciation......................  (6,941)  (70,564)   (107,441)
                                               -------  --------   ---------
                                               $35,204  $306,539   $ 389,745
                                               =======  ========   =========

Depreciation expense of $6,941 and $64,090 for the period from inception to December 31, 1997 and the year ended December 31, 1998, respectively, is included in the statements of operations.

4. Convertible Notes Payable to Stockholders

On December 24, 1998, the Company issued a convertible note payable to a stockholder in the amount of $800,000, of which $500,000 was received at closing and $300,000 was received on January 11, 1999. The note, which is payable December 24, 1999, bears interest at 6% and is subordinated to senior indebtedness of the Company, if any. The principal and accrued interest of the note is convertible, at the option of the holder and until such time as the Company closes a firm commitment for an underwritten public offering, into Series C preferred stock, at a conversion price of $4.78 per share equivalent to the share price for the sale of Series C preferred stock completed subsequent to December 31, 1998 and more fully described in footnote 13.

F-11

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

In connection with the convertible note payable, the Company issued stock purchase warrants to acquire the number of Series C preferred stock shares equating to twenty percent of the face amount of the note divided by the exercise price. At December 31, 1998, warrants to acquire 20,927 shares of a total of 33,482 shares were deemed outstanding based upon the cash received as of that date. Warrants for the remaining 12,555 shares were deemed outstanding upon funding of the remaining $300,000 in January 1999. The exercise price is $4.78 per share, subject to anti-dilution provisions, and is equivalent to the share price for the sale of Series C preferred stock completed subsequent to December 31, 1998 and more fully described in footnote 13. The warrants expire December 24, 2003.

The proceeds from the note payable have been allocated to the note and the warrants based upon the relative fair values of the instruments. The warrants are recorded at a fair value of $2.36 per warrant which is calculated at the time of issuance using the Black-Scholes option-pricing model with the following weighted average assumptions: zero dividend yield; 0.5 volatility; risk-free interest rate of 4.9%; and expected life of 5 years. The amount allocated to the warrants is recognized as original issue discount and amortized, using the interest method, over the term of the related indebtedness.

On March 3, 1999, the Company issued a convertible note payable to a stockholder in the amount of $2,000,000, the proceeds of which were received on March 30, 1999. The note, which is payable March 5, 2000, bears interest at 7%, and is subordinated to all senior indebtedness of the Company, if any. The principal and accrued interest of the note is convertible, at the option of the holder and until such time as the Company closes a firm commitment for an underwritten public offering, into common stock, at a conversion price of $7.43 per share.

5. Commitments and Contingencies

Leases
The Company is obligated through December 31, 2000 under operating lease agreements covering certain facilities and computer equipment.

Future minimum payments for all noncancelable operating leases with initial terms of one year or more consist of the following at December 31, 1998:

                                                                  Operating
                                                                   Leases
                                                                  ---------
Fiscal Year
1999............................................................. $252,236
2000.............................................................  206,630
                                                                  --------
 Total minimum lease payments.................................... $458,866
                                                                  ========

Rental expense for the period from inception to December 31, 1997 and for the year ended December 31, 1998 was $11,855 and $131,298, respectively.

Legal Matters
Subsequent to December 31, 1998, the Company paid $99,000 to settle a legal matter in which a former contractor of the Company claimed breach of contract. This amount was accrued by the Company as of December 31, 1998.

On April 12, 1999, a civil complaint was filed against the Company attempting to allege, among other things, fraud and breach of contract regarding a terminated consulting arrangement and seeking recovery

F-12

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

of damages of $4 million, punitive damages exceeding $5 million, attorney's fees and an injunction prohibiting the Company from offering stock for sale to the public unless and until it recognizes plaintiff's claim to options to acquire 232,500 shares of the Company's common stock alleged to be owed under the consulting agreement. The Company believes that the claims are without merit and intends to defend this lawsuit vigorously.

Other Matters
The Company has a contingent liability resulting from a preferred stockholder's right to require the Company to repurchase its shares. That stockholder also has an option to acquire shares at a 30% discount. The Company also has a consulting services purchase commitment with that stockholder. As disclosed in Note 7, the preferred stockholder has agreed to terminate the option and put agreements upon the completion of a specified offering, in exchange for 1,210,665 shares of common stock, valued at approximately $8.2 million, and 134,520 shares, valued at approximately $900,000, to be issued to satisfy an antidilution right held by the Series C stockholder. These amounts have been reflected as dividends to preferred stockholders.

6. Income Taxes

The Company did not incur any income taxes for the period from July 17, 1997 (inception) to December 31, 1997 and for the year ended December 31, 1998 as a result of operating losses.

As of December 31, 1998, the Company had federal net operating loss carryforwards of approximately $9,189,000. These net operating loss and tax credit carryforwards will expire from 2012 through 2019 if not utilized.

Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses and credits before utilization.

Significant components of the Company's deferred taxes as of December 31, 1997 and December 31, 1998 are as follows:

                                                December 31, December 31,
                                                    1997         1998
                                                ------------ ------------
Deferred tax assets (liabilities):
  Depreciable assets...........................  $     810   $    (7,585)
  Tax carryforwards............................    208,600     3,124,200
  Accrued liabilities..........................        --        142,800
                                                 ---------   -----------
Net deferred tax assets........................    209,410     3,259,415
                                                 ---------   -----------
Valuation allowance for net deferred tax
 asset.........................................   (209,410)   (3,259,415)
                                                 ---------   -----------
Net deferred taxes.............................  $     --    $       --
                                                 =========   ===========

The Company has established valuation allowances equal to the net deferred tax assets due to uncertainties regarding the realization of deferred tax assets based on the Company's lack of earnings history. The valuation allowance increased by approximately $3,050,000 during the year ended December 31, 1998.

The Company's provision for income taxes differs from the expected tax benefit amount computed by applying the statutory federal income tax rate of 34% to income before income taxes as a result of permanent differences and the increase in the valuation allowance.

F-13

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

7. Mandatorily Redeemable Convertible (Series B) Preferred Stock

The Company has authorized various classes of preferred stock, up to a maximum of 15,000,000 shares. As of December 31, 1998, the Company had designated 13,781,145 shares as $.001 par value Series B Convertible Non- Voting Preferred Stock. On April 28, 1998, the Company issued 3,850,597 shares of Series B to Superior Consultant Holdings Corporation for consideration of $6.0 million. Each share of Series B is convertible into 1.029 shares of common stock. In the event that the Company's board of directors elects to declare a dividend on the shares of common stock, Superior is entitled to received dividends as if the Series B shares had been converted to common stock. In the event of any liquidation, dissolution or winding up of the Company, the holders of each share of Series B then outstanding are entitled to receive a liquidation preference over common stockholders and preferred stockholders other than Series A holders. At December 31, 1998, this liquidation preference was $2,998,408, which is equivalent to $0.78 per share plus an amount in cash equal to all accumulated and unpaid dividends thereon.

At the date of closing, Superior was granted an option to purchase up to 3,962,265 shares of common stock, or the number of shares of preferred stock convertible into 3,962,265 shares of common stock. The exercise price per share shall be a price, subject to adjustment for dilution, equal to 70% of the fair market value per share of common stock into which each share of preferred stock is convertible. The option expires on April 28, 2000.

Superior was granted a right to require the Company to repurchase the Series B shares, or the shares of common stock into which the Series B shares may have been converted, for the current fair market price per share. The put option may only be exercised during each of the 90-day periods following April 28, 2000 and April 28, 2001. If the Company is unable to complete the purchase of the shares under the put option, Superior may elect nominees representing a majority of the Company's board of directors. Upon completion of an underwritten public offering by the Company of not less than $20.0 million after which the common stock is listed on a national securities exchange or admitted for quotation on the Nasdaq National Market, Superior has agreed to terminate the provisions of the aforementioned option agreement in exchange for 1,210,665 shares of common stock, valued at approximately $8.2 million (an additional 134,520 shares, valued at approximately $900,000 will be issued to the Series C holder pursuant to antidilution protection provisions). These amounts have been reflected as dividends to preferred stockholders.

The Company allocated the $6.0 million of proceeds as follows: $4.1 million to the Series B stock and $1.9 million to the options based on the fair values determined as of the closing date using the Black-Scholes valuation model with the following weighted average assumptions: zero dividend yield; 0.5 volatility; risk free interest rate of 5.9%; and expected life of 2 years. The Company is recognizing accretion of value on the mandatorily redeemable convertible preferred stock to redemption value (fair value) over the period between the closing date and the redemption dates as defined by the agreement. The per share redemption value is $4.78 as of December 31, 1998.

In conjunction with the January 1999 equity financing (Note 13), Superior received voting rights on an as-if converted to common stock basis and additional anti-dilution rights similar to those granted to preferred Series C stockholders.

The Company has a purchase commitment with Superior whereby the Company is obligated to purchase a minimum of $3.0 million in management consulting, information technology or outsourcing services from Superior by September 30, 1999, or pay the difference in cash. As of December 31, 1998, the Company had purchased approximately $1.5 million of such services from Superior.

F-14

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

8. Capital Stock

The authorized capital stock of the Company consists of 25,000,000 shares of common stock, par value $0.001 per share, and 15,000,000 shares of preferred stock, par value $0.001 per share.

Common Stock
Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and they do not have cumulative voting rights. Accordingly, holders of a majority of the shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the board of directors out of funds legally available therefor, subject to any preferential dividend rights of any outstanding preferred stock. Upon the liquidation, dissolution or winding up of the Company the holders of common stock are entitled to receive ratably the net assets of the Company available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of the common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which the Company may designate and issue in the future. Upon the closing of this offering, there will be no shares of preferred stock outstanding.

Series A Preferred Stock
The Company designated 750,000 shares of its authorized preferred stock as Series A 8% convertible preferred stock. From March 1, 1998 through April 6, 1998, the Company issued 619,102 Series A preferred shares for $742,923 including 104,505 shares issued to three members of an officer's immediate family for $125,400. Each share of Series A is senior to all other preferred stock and common stock and is convertible into 1.085 shares of common stock. Conversion is automatic in the event of an initial public offering. Holders of Series A shares have the right to vote on all matters, except the election of directors, with the number of votes equal to the number of shares into which the Series A is convertible. Series A shares have a cumulative dividend, which are payable when and if declared, prior to any class or series of the Company's equity, at the per annum rate of 8%, or $0.096 per share. Dividends are cumulative and accrue on each share from the date of issuance. In the event of any liquidation, dissolution or winding up of the Company, the holders of each share of Series A then outstanding have a liquidation preference over other preferred and common stockholders. The liquidation preference of $790,639 at December 31, 1998 is equivalent to $1.20 per share plus an amount equal to all accumulated and unpaid dividends thereon which totaled $47,716 at December 31, 1998.

9. Stock Option Plan

The Company has established the 1997 Stock Option Plan under which 3,750,000 shares of common stock were reserved for issuance. During 1998, the Company amended the 1997 Plan and increased the number of shares of common stock reserved under the 1997 Plan by 7,500,000 shares to 11,250,000 shares. Under the 1997 Plan, incentive options can be issued to employees, officers and directors of the Company at an exercise price not less than 100% of the fair market value of the Company's common stock at the date of grant as determined by the board of directors or by a committee of the board appointed to administer the 1997 Plan, except for incentive option grants to a stockholder that owns greater than 10% of the Company's outstanding stock in which case the exercise price per share is not less than 110% of the fair market value of the Company's common stock at the date of grant. Non-statutory stock options can be issued to employees, officers, directors or consultants of the Company at exercise prices determined by the

F-15

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

board of directors or by a committee of the board appointed to administer the 1997 Plan but not less than 85% of the fair market value of the Company's common stock at the date of grant. The 1997 Plan provides that options are exercisable no later than ten years from the date of grant. Generally 25% of the options granted are exercisable after one year, and then ratably over the remaining three years.

Option activity under the 1997 Plan for the period from inception to December 31, 1997 and for the year ended December 31, 1998:

                                                                     Weighted
                                                                     Average
                                               Options     Options   Exercise
                                              Authorized Outstanding  Price
                                              ---------- ----------- --------
Options authorized...........................  3,750,000        --    $ --
Options granted..............................        --   2,851,500    0.02
Options canceled.............................        --         --      --
Options exercised............................        --         --      --
                                              ----------  ---------   -----
Balances, December 31, 1997..................  3,750,000  2,851,500    0.02
Options authorized...........................  7,500,000        --      --
Options granted..............................        --   6,822,012    0.13
Options canceled.............................        --     (69,180)   0.10
Options exercised............................        --         --      --
                                              ----------  ---------   -----
Balances, December 31, 1998.................. 11,250,000  9,604,332   $0.10
                                              ==========  =========   =====

                     Options Outstanding                              Options Exercisable
               -------------------------------                  -------------------------------
                   Number                                           Number
               Outstanding at Weighted-Average                  Exercisable at
  Exercise      December 31,     Remaining     Weighted-Average  December 31,  Weighted-Average
    Price           1998      Contractual Life  Exercise Price       1998       Exercise Price
  --------     -------------- ---------------- ---------------- -------------- ----------------
$0.01              868,245          8.50            $0.01           433,787         $0.01
$0.03            1,970,325          9.00             0.03         1,842,827          0.03
$0.12 - $0.13    5,159,700          9.25             0.12         2,960,868          0.12
$0.16            1,606,062          9.75             0.16           183,750          0.16
                 ---------                                        ---------
$0.01 - $0.16    9,604,332          9.21            $0.10         5,421,232         $0.08
                 =========                                        =========

At December 31, 1997 and 1998, 1,970,250 and 5,421,232 options were vested, respectively.

During 1997 and 1998 the Company issued stock options under the 1997 Stock Option Plan, with the following weighted average fair values:

                                                Options  Weighted Average
                                                Granted     Fair Value
                                               --------- ----------------
At fair value................................. 5,178,038      $0.08
Below fair value.............................. 1,821,312      $0.99
Above fair value.............................. 2,674,162      $0.10

F-16

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

The Company applies APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock option plan, which are described below. Had compensation cost for the Company's stock option plans been determined based on the fair market value at the grant dates for awards under the Plan consistent with the method provided by SFAS No. 123, Accounting for Stock-Based Compensation, the Company's net loss would have been increased to the following pro forma amounts for the periods ended December 31, 1997 and 1998:

                                                    Period from  Year Ended
                                                    Inception to  December
                                                    December 31,     31,
                                                        1997        1998
                                                    ------------ -----------
Net loss: As reported..............................  $(621,958)  $(9,083,617)
    Pro forma......................................  $(629,445)  $(9,142,413)

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants during the periods ended December 31, 1997 and 1998:

                                                    Period from
                                                    Inception to  Year Ended
                                                    December 31, December 31,
                                                        1997         1998
                                                    ------------ ------------
Dividend yield.....................................        --           --
Expected volatility................................          0%           0%
Risk-free rate of return...........................        5.9%         5.9%
Weighted average expected life.....................  3.1 years    3.6 years

The Company granted 1,355,497 stock options under the 1997 plan and 87,893 additional stock options with weighted average exercise prices of $3.37 and $.01, respectively, during the three month period ending March 31, 1999. During this period, 555,192 options were exercised with a weighted average exercise price of $0.02 per share.

Contingent upon the successful completion of this offering, certain officers and employees will receive 318,750 options with an exercise price equivalent to the offering price.

10. Concentrations of Credit Risk

The Company maintains its cash and cash equivalent balances in high credit quality financial institutions and has not experienced any material losses relating to cash or cash equivalent balances.

At December 31, 1997 and December 31, 1998, the financial instruments which subject the Company to significant concentrations of credit risk consist principally of cash investments and trade receivables.

For the year ending December 31, 1998, sales to individual customers constituting 10% or more of revenue were as follows:

Customer A............................................................... 63%
Customer B............................................................... 23%
Customer C............................................................... 12%

F-17

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

11. Related Party Transactions

Related party payables are comprised of the following:

                                              December 31,
                                           -------------------  March 31,
                                             1997      1998       1999
                                           -------- ---------- -----------
                                                               (unaudited)
Accounts payable to stockholder for
 consulting services (Note 7)............. $    --  $1,032,219  $ 29,934
Stockholder note payable..................  216,043        --        --
Other payables to employees and
 stockholders.............................  321,265    160,906    74,115
                                           -------- ----------  --------
                                           $537,308 $1,193,125  $104,049
                                           ======== ==========  ========

On March 16, 1998, the Company issued 1,800,360 shares of common stock to its stockholder/CEO in exchange for cancellation of the $216,043 note payable. The conversion price was established by the board of directors based on their assessment of the fair market value of the common stock at the date of conversion.

The Company has entered into a name and likeness agreement with a stockholder, whereby the Company pays the stockholder 2% of revenues derived from sales of current products and up to 4% of revenues derived from sales of new products during the five-year term of the agreement. During 1998, the Company accrued royalty fees of $855 to this stockholder. Additionally, during this period, the Company reimbursed him for his travel and other expenses incurred on Company business in the amount of $9,200. The Company has entered into a consulting agreement with this stockholder whereby the Company pays the stockholder $11,250 per month relating to his services as Chief Medical Officer.

During 1998, the Company paid a stockholder professional fees of $95,000 related to speaking engagements, and director's fees of $83,333.

During 1998, the Company paid a board member $83,333 for corporate governance consulting services.

The Company has entered into a name and likeness agreement with a stockholder whereby the stockholder has received options to purchase 183,750 shares at an exercise price of $0.16 per share. The Company recorded deferred stock compensation in the amount of $28,664 related to the option grant.

F-18

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

12. Supplemental Cash Flows Information

                                                     Cumulative
                          Period from      Year     Period from   Three Months Ended
                          Inception to    Ended     Inception to       March 31,
                          December 31, December 31, December 31, ---------------------
                              1997         1998         1998       1998       1999
                          ------------ ------------ ------------ -------- ------------
                                                                      (unaudited)
Supplemental Disclosure
 of Noncash Financing
 Activities:
Conversion of related
 party payable to common
 stock..................     $  --      $  216,043   $  216,043  $216,043 $        --
                             ======     ==========   ==========  ======== ============
Issuance of notes
 receivable from common                                          $
 stockholders...........     $1,300     $      --    $    1,300       --  $        --
                             ======     ==========   ==========  ======== ============
Deferred stock
 compensation related to
 options granted........     $  --      $ (272,233)  $ (272,233) $    --  $ (1,853,726)
                             ======     ==========   ==========  ======== ============
Accretion of redeemable
 securities to fair
 value..................     $  --      $8,715,650   $8,715,650  $    --  $(17,460,656)
                             ======     ==========   ==========  ======== ============
Stock issued for
 services...............     $2,000     $  112,025   $  114,025  $    --  $        --
                             ======     ==========   ==========  ======== ============
Amortization of deferred
 stock compensation.....     $  --      $   20,216   $   20,216  $    --  $     98,198
                             ======     ==========   ==========  ======== ============
Issuance of preferred
 stock for investment in
 affiliate..............     $  --      $      --    $      --   $    --  $  5,000,000
                             ======     ==========   ==========  ======== ============
Issuance of preferred
 stock for intangible
 asset..................     $  --      $      --    $      --   $    --  $  4,000,000
                             ======     ==========   ==========  ======== ============
Obligation to issue
 common stock pursuant
 to option cancellation
 agreement..............     $  --      $      --    $      --   $    --  $  9,147,258
                             ======     ==========   ==========  ======== ============

13. Subsequent Events

On January 29, 1999, the Company received $3.5 million in cash and a license to certain Internet technology, and acquired 10% of the outstanding stock of HealthMagic, Inc. ("HealthMagic"), a subsidiary of Adventist Health System Sunbelt Healthcare Corporation ("Adventist"), in exchange for 2,615,677 shares of Series C convertible preferred stock (which will be converted into an equivalent number of shares of common stock upon the closing of this offering). HealthMagic is a supplier of applications to Internet companies. The Company has recorded its 10% investment in HealthMagic using the cost method of accounting valuing it at $5.0 million based on a discounted cash flow analysis. The Company also established a technology relationship with HealthMagic, a supplier of applications to Internet companies, whereby the Company contributed certain technology, which the Company had assigned a zero value, and received from HealthMagic a license to use a broad range of Internet technologies, including a web- enabled personal medical record, personalization tools, security and authentication features. HealthMagic will develop, implement and support these technologies for the Company. The Company has capitalized $4.0 million related to the HealthMagic technology license. The fair value of this license was determined using the cost method and is being amortized on a straight-line basis over a three-year period, based on the economic life of the technology.

The Series C is senior to common stock and upon the closing of this offering, each share of Series C will convert into one share of common stock. Holders of Series C are entitled to one vote for each share held.

Series B and Series C stockholders were given certain anti-dilution protections as a result of this transaction. In connection with these provisions, Series B stockholders received 21,982 shares of Series C preferred stock and Series C stockholders received 134,520 shares of Series C preferred stock.

F-19

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

We also entered into selected agreements with HealthMagic and Adventist which provide for registration rights and specified transfer restrictions. These agreements call for the appointment of an Adventist representative to the Company's board of directors, and for the Company to appoint a representative to HealthMagic's board of directors.

In addition, on January 29, 1999, the Company entered into a master content subscription and software licensing agreement with Adventist for $500,000. The master content subscription and software licensing agreement grants Adventist the right, over a period of three years, to enroll affiliates in our Community Partner Program. Each Community Partner Program affiliate agreement has a term of one year. The software licensing fee will be recognized upon shipment of the software, and the content subscription fees will be recognized ratably over the one year term of each individual affiliate's agreement.

On March 3, 1999, the Company entered into loan agreements with a preferred stockholder and a new investor whereby these investors are irrevocably obligated to loan the Company up to $2.5 million at an interest rate of 7% per annum. Upon the closing of this offering, borrowings under these agreements plus accrued interest will, solely at the option of each investor, either be due and payable or convert into common stock at a conversion price of $7.43 per share. As of March 31, 1999, the Company has borrowed $2.0 million under these loan agreements.

14. Events Subsequent to March 4, 1999

On March 5, 1999, the Company effected a three-for-one stock split of common and preferred stock. The effect of the stock split has been recorded retroactively to inception of the Company in the accompanying financial statements.

On March 5, 1999, the Company entered into loan agreements with new investors, whereby those investors are irrevocably obligated to loan the Company up to $3.0 million at an interest rate of 7% per annum. Upon the closing of this offering, borrowings under these agreements plus accrued interest will, solely at the the option of each investor, either be due and payable or convert into common stock at a conversion price of $7.43 per share.

On April 9, 1999, the Company entered into agreements with Infoseek Corporation and the Buena Vista Internet Group, a unit of The Walt Disney Company, under which the Company will be the exclusive provider of health and related content on three websites of the Go Network: Go.com Health Center on Infoseek, ESPN.com Training Room and the Family.com Health Channel. Under the Infoseek agreement, the Company will be also the premier health content provider for ABCnews.com. In addition, the Company will be the exclusive pharmacy and drugstore, health insurance and clinical trials partner in the Go.com Health Center. Under these agreements, users on the Go Network will be able to access various health information, services, interactive tools and commerce opportunities through a co-branded website served by the Company. In the event the Company elects not to provide specific content, content may be obtained from a third party.

The term of both agreements is for three years; except that, each of the parties may elect to terminate the relationship after two years. The Company will pay Infoseek and the Buena Vista Internet Group $57.9 million in total consideration consisting of cash and warrants to purchase 775,000 shares of common stock at an exercise price of $8.60 per share over the full three year term. The Company will recognize the costs associated with the agreements ratably over the term of agreements. The cash portion of this obligation is payable as approximately $16.2 million in the first year of the agreements, $18.2 million in the second year of the agreements and $21.3 million in the third year. None of the warrants are exercisable prior to one year after issuance.

F-20

drkoop.com, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements--(Continued)

The warrants have been recorded at a fair value of $2.89 per share which is calculated at the time of issuance using the Black-Scholes option-pricing model with the following weighted average assumptions: zero dividend yield; 0.5 volatility; risk-free interest rate of 5.0% and an expected life of 3 years.

The Company entered into a two year relationship with The @Home Network to be the anchor tenant partner within the Health Channel area of the @Home service. The Company will be the premier content provider appearing in the Health Channel. Under the terms of this agreement, the Company will have the ability to direct users to related commerce, community and interactive tool features appearing on the Company's website from within all health content appearing in the Health Channel. In addition, the Company will share in all advertising revenues generated by @Home in the Health Channel where the Company's content dominates the related page. The Company will pay a carriage fee of $2.25 million to @Home in installments over the term of the agreement. The Company will recognize the costs associated with the agreements ratably over the term of the agreement.

On March 24, 1999, the Company increased its authorized capital stock to 25,000,000 shares of common stock, par value $0.001 per share.

In May 1999, the Company effected a five-for-two stock split of common and preferred stock. The effect of this stock split has been recorded retroactively to inception of the Company in the accompanying financial statements.

In May 1999, the Company increased its authorized capital stock to 75,000,000 shares of common stock, par value $0.001 per share.

* * *

F-21

Inside Back Cover

Picture of the drkoop.com home page with call-outs describing the features of selected linked sites within our network.




Prospective investors may rely only on the information contained in this pro- spectus. Neither drkoop.com, Inc. nor any underwriter has authorized anyone to provide prospective investors with different or additional information. This prospectus is not an offer to sell nor is it seeking an offer to buy these se- curities in any jurisdiction where the offer or sale is not permitted. The in- formation contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or any sale of these securities.

No action is being taken in any jurisdiction outside the United States to per- mit a public offering of the common stock or possession or distribution of this prospectus in any such jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to in- form themselves about and to observe the restrictions of that jurisdiction re- lated to this offering and the distribution of this prospectus.


TABLE OF CONTENTS

                                                                          Page
                                                                          ----
Prospectus Summary.......................................................   3
Risk Factors.............................................................   8
Use of Proceeds..........................................................  20
Dividend Policy..........................................................  20
Capitalization...........................................................  21
Dilution.................................................................  22
Selected Financial Data..................................................  23
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  24
Business.................................................................  34
Management...............................................................  53
Principal Stockholders...................................................  64
Certain Transactions.....................................................  66
Description of Securities................................................  69
Shares Eligible for Future Sale..........................................  73
Underwriting.............................................................  75
Legal Matters............................................................  77
Experts..................................................................  77
Additional Information...................................................  78
Index to Financial Statements............................................ F-1





[LOGO OF DRKOOP APPEARS HERE]

drkoop.com, Inc.

9,375,000 Shares

Common Stock


PROSPECTUS


Bear, Stearns & Co. Inc.

Hambrecht & Quist

Wit Capital Corporation
as e-Manager(TM)

, 1999




PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than the underwriting discount, payable by the Registrant in connection with the sale of the common stock being registered. All amounts are estimates except the SEC registration fee, the NASD filing fees and the Nasdaq National Market listing fee.

                                                                  Amount to
                                                                   Be Paid
                                                                  ----------
SEC registration fee............................................. $   26,975
NASD filing fee..................................................     10,204
Nasdaq National Market listing fee...............................     94,000
Legal fees and expenses..........................................    600,000
Accounting fees and expenses.....................................    195,000
Printing and engraving...........................................    350,000
Blue sky fees and expenses (including legal fees)................     10,000
Transfer agent fees..............................................      7,500
Miscellaneous....................................................     61,321
                                                                  ----------
    Total........................................................  1,355,000
                                                                  ==========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our restated certificate of incorporation in effect as of the date hereof, and our restated certificate of incorporation to be in effect upon the closing of this offering provides that, except to the extent prohibited by the Delaware General Corporation Law, as amended, the Registrant's directors shall not be personally liable to the Registrant or its stockholders for monetary damages for any breach of fiduciary duty as directors of the Registrant. Under Delaware law, the directors have a fiduciary duty to the Registrant which is not eliminated by this provision of the Certificate and, in appropriate circumstances, equitable remedies such as injunctive or other forms of nonmonetary relief will remain available. In addition, each director will continue to be subject to liability under Delaware law for breach of the director's duty of loyalty to the Registrant, for acts or omissions which are found by a court of competent jurisdiction to be not in good faith or involving intentional misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are prohibited by Delaware law. This provision also does not affect the directors' responsibilities under any other laws, such as the Federal securities laws or state or Federal environmental laws. The Registrant has applied for liability insurance for its officers and directors.

Section 145 of Delaware law empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers, provided that this provision shall not eliminate or limit the liability of a director: (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) arising under
Section 174 of Delaware law, or (iv) for any transaction from which the director derived an improper personal benefit. Delaware law provides further that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation's bylaws, any agreement, a vote of stockholders or otherwise. The Certificate eliminates the personal liability of directors to the fullest extent permitted by Section 102(b)(7) of Delaware law and provides that the Registrant may fully indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was a director or officer of the Registrant, or is or was serving at the request of the

II-1


Registrant as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding.

On or prior to the effectiveness of this Registration Statement, we intend to enter into contractual indemnification agreements with each of our executive officers and directors. These agreements provide for contractual indemnification to the fullest extent permitted by applicable law and provide mechanical and administrative procedures to be followed in the event of any such claim.

At present, there is no pending litigation or proceeding involving any director, officer, employee or agent as to which indemnification will be required or permitted under the Certificate. The Registrant is not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The Registrant has sold and issued the following securities since July 17, 1997 (inception):

(1) Since July 17, 1997, we have granted options to purchase 11,116,902 shares of common stock to a total of 107 employees, consultants and non- employee directors at a weighted average exercise price of $0.53 per share pursuant to compensatory stock option plans.

(2) On July 17, 1997, we issued an aggregate of 6,750,000 shares of common stock to Dr. C. Everett Koop, Donald W. Hackett, John F. Zaccaro, Robert C. Hackett, Jr. and Louis A. Scalpati, the founders of our company, for an aggregate purchase price of $9,000.

(3) On March 16, 1998, we issued 1,800,360 shares of common stock to Donald W. Hackett in exchange for cancellation of indebtedness in the amount of $216,043.

(4) On April 28, 1998, we issued 3,850,597 shares of Series B Non-voting Preferred Stock to Superior Consultant Holdings Corporation for a purchase price of $6.0 million. These shares will be converted into 3,962,265 shares of common stock upon the closing of this offering. In connection with this transaction, we also gave Superior the right to require us to repurchase their shares prior to our initial public offering and the right to purchase an additional 3,850,597 shares of either Series B Non-voting Preferred Stock or common stock at a per share exercise price equal to 70% of the fair market value of the common stock on the date of exercise. All substantive provisions of these rights will terminate at the closing of this offering for the issuance of an additional 1,210,665 shares of common stock to Superior and 134,520 shares to Adventist Health System Sunbelt Healthcare Corporation.

(5) From March 1, 1998 through April 6, 1998, we issued 619,102 shares of Series A 8% Convertible Preferred Stock to 17 accredited investors, including one of our officers, for an aggregate purchase price of $742,923. These shares will be converted into 671,727 shares of common stock upon the closing of this offering.

(6) On December 24, 1998, we issued a convertible note payable in the original principal amount of $800,000, $500,000 of which was received in 1998, bearing interest at 6% per annum due December 24, 1999 along with five year warrants to purchase 33,482 shares of Series C Preferred Stock for an exercise price of $4.78 per share (which will become the right to purchase 33,482 shares of common stock for $4.78 per share upon the closing of this offering). Interest on the note is payable at the maturity. At any time prior to maturity any unpaid principal and interest may be converted into Series C Preferred Stock at a conversion price of $4.78 per share.

(7) On January 29, 1999, we received $3.5 million in cash and acquired 10% of the outstanding stock of HealthMagic, Inc., a subsidiary of Adventist Health System Sunbelt Healthcare Corporation, a supplier of applications to Internet companies, in exchange for 2,615,677 shares of Series C convertible preferred stock. These shares will be converted into an equivalent number of shares of common stock upon the closing of this offering.

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(8) On March 24, 1999, we reincorporated our predecessor corporation as a Delaware corporation and changed our name to drkoop.com, Inc.

(9) From March 3, 1999 through March 5, 1999, we entered into loan agreements with ten accredited investors. None of these investors is an executive officer, director or 5% stockholder of drkoop.com except that Adventist Health System Sunbelt Healthcare Corporation committed to provide convertible notes of up to $2.0 million aggregate principal amount. Pursuant to these agreements, the investors are irrevocably obligated to loan to us the aggregate principal amount of up to $5.5 million at an interest rate of 7% per annum. Upon the closing of this offering, the principal amount borrowed under these agreements and all accrued interest will, solely at the option of each investor, either be due and payable or convert into common stock at a conversion price of $7.43 per share. As of March 31, 1999, we had borrowed $2.0 million.

(10) On April 9, 1999, we entered into distribution agreements with Infoseek Corporation and the Buena Vista Internet Group, a unit of The Walt Disney Company, pursuant to which we will be the exclusive provider of health-related content on three websites of the Go Network, Go.com Health Center, ESPN.com Training Room and the Family.com Health Channel. drkoop.com will also be the premier health content provider for ABCnews.com. As an element of the consideration paid by us, we agreed to issue warrants to purchase an aggregate of 775,000 shares of common stock. These warrants are governed by substantially identical strategic warrant agreements, none of which may, under any circumstances, be exercised prior to one year of issuance. The exercise price of the warrants is $8.60 per share, subject to customary anti-dilution adjustments.

The sale of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, or, with respect to issuances to employees, directors and consultants, Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving a public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients of securities in each such transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the instruments representing such securities issued in such transactions. All recipients either received adequate information about drkoop.com or had adequate access, through their relationships with drkoop.com to such information.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

 Number                              Description
--------                             -----------
 1.1     Form of Underwriting Agreement
 3.1**   Restated Certificate of Incorporation of drkoop.com, Inc., a
         Delaware corporation, as currently in effect
 3.2**   Bylaws of drkoop.com, Inc., a Delaware corporation, as currently in
         effect
 3.3**   Form of Bylaws of drkoop.com, Inc., a Delaware corporation, as in
         effect after the closing of the offering made under this
         registration statement
 3.4**   Form of Restated Certificate of Incorporation of drkoop.com, Inc.,
         a Delaware corporation, to be filed after the closing of the
         offering made under this registration statement
 3.5     Certificate of Amendment of Restated Certificate of Incorporation
         of drkoop.com, Inc., a Delaware corporation
 4.1**   Specimen common stock certificate
 5.1     Opinion of Latham & Watkins
10.1**   Amended and Restated 1997 Stock Option Plan
10.2**   1999 Equity Participation Plan
10.3**   Amended and Restated Registration Rights Agreement, dated as of
         January 29, 1999

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 Number                              Description
--------                             -----------
10.4**   Employment Agreement dated January 27, 1999 by and between Company
         and Susan M. Georgen-Saad
10.5**   Employment Agreement dated August 1, 1997 by and between Company
         and Donald W. Hackett
10.6**   Employment Agreement dated August 1, 1997 by and between Company
         and Robert C. Hackett, Jr.
10.7**   Employment Agreement dated August 1, 1997 by and between Company
         and Louis A. Scalpati
10.8**   Employment Agreement dated January 15, 1999 by and between Company
         and Dennis J. Upah
10.9+    Distribution Agreement dated April 9, 1999 by and between Company
         and Infoseek Corporation
10.10+** Content Agreement dated March 30, 1999 by and between Company and
         the Trustees of Dartmouth College
10.11+** D.A.R.T. Service Agreement dated November 15, 1998 by and between
         Company and DoubleClick, Inc.
10.12+   Distribution Agreement dated April 9, 1999 by and between Company
         and Buena Vista Internet Group
10.13    Software Sale, License and Development Agreement dated January 29,
         1999 by and between Company and HealthMagic, Inc.
10.14+** Content License and Distribution Agreement dated March 10, 1999 by
         and between Company and @Home Network
10.15**  Tradename License Agreement dated January 5, 1999 by and between
         Company and C. Everett Koop, M.D.
10.16**  Consulting Letter Agreement dated October 1, 1997 by and between
         Company and C. Everett Koop, M.D.
10.17+** License Agreement dated July 13, 1998 by and between Company and
         Multum Information Services, Inc.
10.18+** Linking Agreement dated February 10, 1999 by and between Company
         and Physicians' Online
10.19+   Content License Agreement dated December 11, 1998 by and between
         Company and Excite, Inc. (terminated on March 1, 1999)
10.20+** Interim Linking Agreement dated January 28, 1999 by and between
         Company and Quotesmith.com
10.21+** First Amendment to License Agreement dated March 25, 1999 by and
         between Company and Multum Information Services, Inc.
10.22**  Tradename License Agreement dated June 1, 1998 by and between
         Company and Nancy Snyderman, M.D.
10.23    Reserved
10.24**  Agreement for Sub-Sublease dated May 20, 1998 by and between
         Company and The Software Atelier L.L.C.
10.25    Reserved
10.26+** Internet Advertising Sales Agreement dated October 16, 1998 by and
         between Company and WinStar Interactive Media Sales, Inc.
10.27**  Consulting Letter Agreement dated October 1, 1997 by and between
         Company and John Zaccaro
10.28+   Sponsorship Agreement dated March 11, 1999 by and between Company
         and Vitamin Shoppe Industries, Inc.
10.29+** Preferred Partner Agreement dated April 1999 by and between Company
         and Salon Internet, Inc.

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Number                               Description
-------                              -----------
10.30   Master Community Partner Program Agreement dated January 29, 1999 by
        and between Company and Adventist Health System Sunbelt Healthcare
        Corporation
10.31   Reserved
10.32** Form of Community Partner Program Agreement
10.33** Form of Indemnification Agreement
10.34   1999 Employee Stock Purchase Plan
10.35** Investment Agreement dated January 29, 1999 by and among Company,
        Adventist Health System Sunbelt Healthcare Corporation and
        HealthMagic, Inc.
10.36** Letter Agreement dated February 25, 1999 by and among Company,
        Superior Consultant Holdings Corporation and Donald W. Hackett
10.37** Letter Agreement dated January 29, 1999 by and among Company,
        Superior Consultant Holdings Corporation, Adventist Health System
        Sunbelt Healthcare Corporation, HealthMagic, Inc. and Donald W.
        Hackett
10.38** Stock Restriction Agreement dated January 29, 1999 by and among
        Company, HealthMagic, Inc. and Adventist Health System Sunbelt
        Healthcare Corporation
10.39** Loan Agreement dated December 24, 1998 between Company and Neal
        Longwill
10.40** Form of Loan Agreement between Company and accredited investors
10.41** Loan Agreement dated March 3, 1999 between Company and Adventist
        Health System Sunbelt Healthcare Corporation
10.42** Warrant to Purchase Shares of Common Stock Issued to Infoseek
        Corporation as of April 9, 1999
10.43** Agreement for Issuance and Sale of Stock between Company and
        Superior Consultant Holdings Corporation dated April 28, 1998
10.44** Letter of Donald W. Hackett dated April 28, 1998 constituting a
        Voting Agreement between Donald W. Hackett and Superior Consultant
        Holdings Corporation
10.45** Option and Put Agreement dated April 28, 1998 between Company and
        Superior Consultant Holdings Corporation
10.46** Service Agreement dated April 29, 1998 between Company and Superior
        Consultant, Inc., a wholly owned subsidiary of Superior Consultant
        Holdings Corporation
10.47** Warrant to Purchase Shares of Common Stock Issued to Buena Vista
        Interactive Group as of April 9, 1999
23.1    Consent of PricewaterhouseCoopers LLP
23.2    Consent of Latham & Watkins (included in Exhibit 5.1)
24.1**  Powers of Attorney
27.1**  Financial Data Schedule


** Previously filed.

+ Registrant has requested confidential treatment pursuant to Rule 406 for a portion of the referenced exhibit and has separately filed such exhibit with the Commission.

(b) Financial Statement Schedules.

None

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses

II-5


incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424 (b)(1) or
(4), or 497(h) under the Securities Act of 1933, shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment No. 3 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Austin, State of Texas, on this 4th day of June, 1999.

drkoop.com, Inc.

Donald W. Hackett* By:
Name: Donald W. Hackett Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 3 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

              SIGNATURE                          TITLE                   DATE
              ---------                          -----                   ----
         Donald W. Hackett*            President, Chief Executive    June 4, 1999
______________________________________  Officer and Director
          Donald W. Hackett             (Principal Executive
                                        Officer)

      /s/ Susan M. Georgen-Saad        Chief Financial Officer       June 4, 1999
______________________________________  (Principal Financial and
        Susan M. Georgen-Saad           Accounting Officer)

        C. Everett Koop, M.D.*         Chairman of the Board         June 4, 1999
______________________________________
        C. Everett Koop, M.D.

           John F. Zaccaro*            Vice Chairman of the Board    June 4, 1999
______________________________________
           John F. Zaccaro

           Mardian J. Blair*           Director                      June 4, 1999
______________________________________
           Mardian J. Blair

       Richard D. Helppie, Jr.*        Director                      June 4, 1999
______________________________________
       Richard D. Helppie, Jr.

       Nancy L. Snyderman, M.D.*       Director                      June 4, 1999
______________________________________
       Nancy L. Snyderman, M.D.

II-7


              SIGNATURE                          TITLE                   DATE
              ---------                          -----                   ----

      /s/ Jeffrey C. Ballowe           Director                      June 4, 1999
______________________________________
          Jeffrey C. Ballowe

     /s/ G. Carl Everett, Jr.          Director                      June 4, 1999
______________________________________
         G. Carl Everett, Jr.

*By: /s/ Susan M. Georgen-
            Saad
  ----------------------------
  Susan M. Georgen-Saad
  Attorney-in-Fact

II-8


Index of Exhibits

 Number                               Description
 ------                               -----------
 1.1     Form of Underwriting Agreement
 3.1**   Restated Certificate of Incorporation of drkoop.com, Inc., a Delaware
         corporation, as currently in effect
 3.2**   Bylaws of drkoop.com, Inc., a Delaware corporation, as currently in
         effect
 3.3**   Form of Bylaws of drkoop.com, Inc., a Delaware corporation, as in
         effect after the closing of the offering made under this registration
         statement
 3.4**   Form of Restated Certificate of Incorporation of drkoop.com, Inc., a
         Delaware corporation, to be filed after the closing of the offering
         made under this registration statement
 3.5     Certificate of Amendment of Restated Certificate of Incorporation of
         drkoop.com, Inc., a Delaware corporation
 4.1**   Specimen common stock certificate
 5.1     Opinion of Latham & Watkins
10.1**   Amended and Restated 1997 Stock Option Plan
10.2**   1999 Equity Participation Plan
10.3**   Amended and Restated Registration Rights Agreement, dated as of
         January 29, 1999
10.4**   Employment Agreement dated January 27, 1999 by and between Company
         and Susan M. Georgen-Saad
10.5**   Employment Agreement dated August 1, 1997 by and between Company and
         Donald W. Hackett
10.6**   Employment Agreement dated August 1, 1997 by and between Company and
         Robert C. Hackett, Jr.
10.7**   Employment Agreement dated August 1, 1997 by and between Company and
         Louis A. Scalpati
10.8**   Employment Agreement dated January 15, 1999 by and between Company
         and Dennis J. Upah
10.9+    Distribution Agreement dated April 9, 1999 by and between Company and
         Infoseek Corporation
10.10+** Content Agreement dated March 30, 1999 by and between Company and the
         Trustees of Dartmouth College
10.11+** D.A.R.T. Service Agreement dated November 15, 1998 by and between
         Company and DoubleClick, Inc.
10.12+   Distribution Agreement dated April 9, 1999 by and between Company and
         Buena Vista Internet Group
10.13    Software Sale, License and Development Agreement dated January 29,
         1999 by and between Company and HealthMagic, Inc.
10.14+** Content License and Distribution Agreement dated March 10, 1999 by
         and between Company and @Home Network
10.15**  Tradename License Agreement dated January 5, 1999 by and between
         Company and C. Everett Koop, M.D.
10.16**  Consulting Letter Agreement dated October 1, 1997 by and between
         Company and C. Everett Koop, M.D.
10.17+** License Agreement dated July 13, 1998 by and between Company and
         Multum Information Services, Inc.
10.18+** Linking Agreement dated February 10, 1999 by and between Company and
         Physicians' Online
10.19+   Content License Agreement dated December 11, 1998 by and between
         Company and Excite, Inc. (terminated on March 1, 1999)
10.20+** Interim Linking Agreement dated January 28, 1999 by and between
         Company and Quotesmith.com
10.21+** First Amendment to License Agreement dated March 25, 1999 by and
         between Company and Multum Information Services, Inc.
10.22**  Tradename License Agreement dated June 1, 1998 by and between Company
         and Nancy Snyderman, M.D.
10.23    Reserved
10.24**  Agreement for Sub-Sublease dated May 20, 1998 by and between Company
         and The Software Atelier L.L.C.


 Number                               Description
 ------                               -----------
10.25    Reserved
10.26+** Internet Advertising Sales Agreement dated October 16, 1998 by and
         between Company and WinStar Interactive Media Sales, Inc.
10.27**  Consulting Letter Agreement dated October 1, 1997 by and between
         Company and John Zaccaro
10.28+   Sponsorship Agreement dated March 11, 1999 by and between Company and
         Vitamin Shoppe Industries, Inc.
10.29+** Preferred Partner Agreement dated April 1999 by and between Company
         and Salon Internet, Inc.
10.30    Master Community Partner Program Agreement dated January 29, 1999 by
         and between Company and Adventist Health System Sunbelt Healthcare
         Corporation
10.31    Reserved
10.32**  Form of Community Partner Program Agreement
10.33**  Form of Indemnification Agreement
10.34    1999 Employee Stock Purchase Plan
10.35**  Investment Agreement dated January 29, 1999 by and among Company,
         Adventist Health System Sunbelt Healthcare Corporation and
         HealthMagic, Inc.
10.36**  Letter Agreement dated February 25, 1999 by and among Company,
         Superior Consultant Holdings Corporation and Donald W. Hackett
10.37**  Letter Agreement dated January 29, 1999 by and among Company,
         Superior Consultant Holdings Corporation, Adventist Health System
         Sunbelt Healthcare Corporation, HealthMagic, Inc. and Donald W.
         Hackett
10.38**  Stock Restriction Agreement dated January 29, 1999 by and among
         Company, HealthMagic, Inc. and Adventist Health System Sunbelt
         Healthcare Corporation
10.39**  Loan Agreement dated December 24, 1998 between Company and Neal
         Longwill
10.40**  Form of Loan Agreement between Company and accredited investors
10.41**  Loan Agreement dated March 3, 1999 between Company and Adventist
         Health System Sunbelt Healthcare Corporation
10.42**  Warrant to Purchase Shares of Common Stock Issued to Infoseek
         Corporation as of April 9, 1999
10.43**  Agreement for Issuance and Sale of Stock between Company and Superior
         Consultant Holdings Corporation dated April 28, 1998
10.44**  Letter of Donald W. Hackett dated April 28, 1998 constituting a
         Voting Agreement between Donald W. Hackett and Superior Consultant
         Holdings Corporation
10.45**  Option and Put Agreement dated April 28, 1998 between Company and
         Superior Consultant Holdings Corporation
10.46**  Service Agreement dated April 29, 1998 between Company and Superior
         Consultant, Inc., a wholly owned subsidiary of Superior Consultant
         Holdings Corporation
10.47**  Warrant to Purchase Shares of Common Stock Issued to Buena Vista
         Interactive Group as of April 9, 1999
23.1     Consent of PricewaterhouseCoopers LLP
23.2     Consent of Latham & Watkins (included in Exhibit 5.1)
24.1**   Powers of Attorney
27.1**   Financial Data Schedule


** Previously filed.

+ Registrant has requested confidential treatment pursuant to Rule 406 for a portion of the referenced exhibit and has separately filed such exhibit with

the Commission.


Exhibit 1.1

9,375,000 Shares of Common Stock

DRKOOP.COM, INC.

UNDERWRITING AGREEMENT

June __, 1999

BEAR, STEARNS & CO. INC.
HAMBRECHT & QUIST, L.L.C.
WIT CAPITAL CORPORATION
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, N.Y. 10167

Dear Sirs:

drkoop.com, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to the several underwriters named in Schedule I hereto (the "Underwriters") an aggregate of 9,375,000 shares (the "Firm Shares") of its common stock, par value $0.001 per share (the "Common Stock") and, for the sole purpose of covering over-allotments in connection with the sale of the Firm Shares, at the option of the Underwriters, up to an additional 1,406,250 shares (the "Additional Shares") of Common Stock. The Firm Shares and any Additional Shares purchased by the Underwriters are referred to herein as the "Shares". The Shares are more fully described in the Registration Statement referred to below.

1. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Underwriters that:

(a) The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement, and may have filed an amendment or amendments thereto, on Form S-1 (No. 333-73459), for the registration of the Shares under the Securities Act of 1933, as amended (the "Act"). Such registration statement, including the prospectus, financial statements and schedules, exhibits and all other documents filed as a part thereof, as amended at the time of effectiveness of the registration statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A or Rule 434 of the published Rules and Regulations of the Commission under the Act (the "Regulations"), is herein called the "Registration Statement" and the prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations or filed as part of the

Registration Statement at the time of effectiveness if no Rule 424(b) or Rule 434 filing is required, is herein called the "Prospectus". The term "preliminary prospectus" as used herein means a preliminary prospectus as described in Rule 430 of the Regulations.

(b) At the time of the effectiveness of the Registration Statement or the effectiveness of any post-effective amendment to the Registration Statement, when the Prospectus is first filed with the Commission pursuant to Rule 424(b) or Rule 434 of the Regulations, when any supplement to or amendment of the Prospectus is filed with the Commission and at the Closing Date and the Additional Closing Date, if any (as hereinafter respectively defined), the Registration Statement and the Prospectus and any amendments thereof and supplements thereto complied or will comply in all material respects with the applicable provisions of the Act and the Regulations and does not or will not contain an untrue statement of a material fact and does not or will not omit to state any material fact required to be stated therein or necessary in order to make the statements therein (i) in the case of the Registration Statement, not misleading and (ii) in the case of the Prospectus, in light of the circumstances under which they were made, not misleading. When the related preliminary prospectus as described in Rule 430 of the Regulations contained in Amendment No. 2 to the Registration Statement dated May 14, 1999 or thereafter filed with the Commission (whether filed as part of the registration statement for the registration of the Shares or any amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any amendment thereof or supplement thereto was first filed with the Commission, such preliminary prospectus and any amendments thereof and supplements thereto complied in all material respects with the applicable provisions of the Act and the Regulations and did not contain an untrue statement of a material fact and did not omit to state any material fact required to be stated therein or necessary in order to make the statements therein in light of the circumstances under which they were made not misleading. No representation and warranty is made in this subsection (b), however, with respect to any information contained in or omitted from the Registration Statement or the Prospectus or any related preliminary prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through you as herein stated expressly for use in connection with the preparation thereof. If Rule 434 is used, the Company will comply with the requirements of Rule 434.

(c) PricewaterhouseCoopers LLP, who have certified the financial statements and supporting schedules included in the Registration Statement, are independent public accountants as required by the Act and the Regulations.

(d) Except for changes in the economy or the securities markets generally, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, except as disclosed in or contemplated by the Registration Statement and the Prospectus, there has been no material adverse change or any development involving a prospective material adverse change in the business, prospects, properties, operations, condition (financial or other) or results of operations of

-2-

the Company, whether or not arising from transactions in the ordinary course of business (a "Material Adverse Effect"), and since the date of the latest balance sheet presented in the Registration Statement and the Prospectus, the Company has not incurred nor undertaken any liabilities or obligations, direct or contingent, which are material to the Company, except for liabilities or obligations which are disclosed in or contemplated by the Registration Statement and the Prospectus.

(e) This Agreement and the transactions contemplated herein have been duly and validly authorized by the Company and this Agreement has been duly and validly executed and delivered by the Company.

(f) The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) conflict with or result in a breach of any of the terms and provisions of, or constitute a default (or an event which with notice or lapse of time, or both, would constitute a default) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any agreement, instrument, franchise, license or permit to which the Company is a party or by which any of the Company's properties or assets may be bound or (ii) violate or conflict with any provision of the certificate of incorporation or by- laws of the Company or any judgment, decree, order, statute, rule or regulation of any court or any public, governmental or regulatory agency or body having jurisdiction over the Company or any of its properties or assets, except for any such conflict, breach, default, lien, change or encumbrance which would not reasonably be expected to result in a Material Adverse Effect. No consent, approval, authorization, order, registration, filing, qualification, license or permit of or with any court or any public, governmental or regulatory agency or body having jurisdiction over the Company or any of its properties or assets is required to be obtained by the Company for the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, including the issuance, sale and delivery of the Shares to be issued, sold and delivered by the Company hereunder, except the registration under the Act of the Shares and such consents, approvals, authorizations, orders, registrations, filings, qualifications, licenses and permits as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters or which have duly been obtained at or prior to closing.

(g) All of the outstanding shares of Common Stock are duly and validly authorized and issued, fully paid and nonassessable and were not issued and are not now in violation of or subject to any preemptive rights. The Shares, when issued, delivered and sold in accordance with this Agreement, will be duly and validly issued and outstanding, fully paid and nonassessable, and will not have been issued in violation of or be subject to any preemptive rights. The Company had, at March 31, 1999, an authorized and outstanding capitalization as set forth under the heading "Capitalization" in the Registration Statement and the Prospectus. The Common Stock, the Firm Shares and the Additional Shares conform in all material respects to the descriptions thereof contained in the Registration Statement and the Prospectus. Except as disclosed in or specifically

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contemplated by the Prospectus, the Company has no outstanding options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations, except for grants of options to purchase shares of the Company's Common Stock to employees made in the ordinary course of business since March 31, 1999 and not in excess of options to purchase 2,000,000 shares. The description of the Company's stock option and other stock plans or arrangements, and the options or other rights granted and exercised thereunder, set forth in the Prospectus accurately and fairly presents in all material respects the information required to be shown with respect to such plans, arrangements, options and rights. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company to the Underwriters as contemplated herein.

(h) The Company does not own or control, either directly or indirectly, any corporation, partnership, association or other entity. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation. The Company is duly qualified and in good standing as a foreign corporation in each jurisdiction in which the character or location of its properties (owned, leased or licensed) or the nature or conduct of its business makes such qualification necessary except as would not reasonably be expected to result in a Material Adverse Effect. The Company has all requisite corporate power and authority, and all necessary consents, approvals, authorizations, orders, registrations, qualifications, licenses and permits of and from all public, regulatory or governmental agencies and bodies, to own, lease and operate its properties and conduct its business as now being conducted and as described in the Registration Statement and the Prospectus except as would not reasonably be expected to have a Material Adverse Effect; no such consent, approval, authorization, order, registration, qualification, license or permit contains a materially burdensome restriction not adequately disclosed in the Registration Statement and the Prospectus; and, to the knowledge of the Company, no proceeding has been instituted in any jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification.

(i) Except as described in the Prospectus, there is no litigation or governmental proceeding to which the Company is a party or to which any property of the Company is subject or which is pending or, to the knowledge of the Company, contemplated against the Company which could reasonably be expected to result in any material adverse change or any development involving a material adverse change in the business, prospects, properties, operations, condition (financial or other) or, results of operations of the Company or which is required to be disclosed in the Registration Statement and the Prospectus.

(j) The Company has not taken and will not take, directly or indirectly, any action designed to cause or result in, or which constitutes or which might

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reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Shares.

(k) The financial statements, including the notes thereto, and supporting schedules included in the Registration Statement and the Prospectus present fairly in all material respects the financial position of the Company as of the dates indicated and the results of its operations for the periods specified; except as otherwise stated in the Registration Statement, said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis; the supporting schedules included in the Registration Statement, if any, present fairly the information required to be stated therein. Except as included in the Registration Statement, no other financial statements or schedules are required by Form S-1 to be included in the Registration Statement.

(l) Except as described in the Prospectus, no holder of securities of the Company has any rights to the registration of securities of the Company because of the filing of the Registration Statement or otherwise in connection with the sale of the Shares contemplated hereby.

(m) The Company is not, and upon consummation of the transactions contemplated hereby will not be, subject to registration as an "investment company" under the Investment Company Act of 1940.

(n) The Company maintains a system of internal accounting control sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(o) The Company is not in violation or default of any provision of its certificate of incorporation or by-laws, or other organizational documents, and is not in breach of or default with respect to any provision of any agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which it is a party or by which it or any of its properties are bound except as would not reasonably be expected to be material to the Company's business, results of operations or financial condition; and there does not exist any state of facts which constitutes an event of default on the part of the Company as defined in such documents or which, with notice or lapse of time or both, would constitute such an event of default except as would not reasonably be expected to be material to the Company's business, results of operations or financial condition.

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(p) There are no contracts or other documents required to be described in the Registration Statement or to be filed as exhibits to the Registration Statement which have not been described or filed as required. The contracts so described in the Prospectus are in full force and effect on the date hereof and neither the Company nor, to the Company's knowledge, any other party is in breach of or default under any of such contracts except as would not be material to the Company's business, results of operations or financial condition.

(q) The Company has good and marketable title to all the properties and assets reflected as owned in the financial statements hereinabove described (or elsewhere in the Prospectus), subject to no lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such financial statements, or (ii) those which are not material in amount and do not adversely affect in any material respect the use made and proposed to be made of such property by the Company. The Company holds its leased properties under valid and binding leases, with such exceptions as are not materially significant in relation to the business of the Company. Except as disclosed in the Prospectus, the Company owns or leases all such properties as are necessary to its operations as now conducted or as proposed to be conducted.

(r) Since the respective dates as of which information is given in the Registration Statement and Prospectus, except as disclosed or specifically contemplated therein: (i) the Company has not incurred any material liabilities or obligations, indirect, direct or contingent, or entered into any material agreement or other transaction which is not in the ordinary course of business; (ii) the Company has not sustained any material loss or interference with its business or properties from fire, flood, windstorm, accident or other calamity, whether or not covered by insurance; (iii) the Company has not paid or declared any dividends or other distributions with respect to its capital stock and the Company is not in default in the payment of principal or interest on any outstanding debt obligations; and (iv) there has not been any change in the capital stock (other than upon the sale of the Common Stock hereunder and upon the exercise of options or warrants described in the Registration Statement) or indebtedness material to the Company.

(s) Except as disclosed in or specifically contemplated by the Prospectus, the Company has or can acquire on commercially reasonable terms sufficient trademarks, trade names, patent rights, copyrights, licenses, approvals and governmental authorizations to conduct its business as now conducted and as proposed to be conducted; and the Company has no knowledge of any material infringement by it of trademark, trade name rights, patent rights, copyrights, licenses, trade secret or other similar rights of others and, to the Company's knowledge, there is no claim being made against the Company regarding trademark, trade name, patent, copyright, license, trade secret or other infringement which would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, results of operations or prospects of the Company, nor is the Company aware of any reasonable grounds for the same.

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(t) The Company has filed all necessary federal, state and foreign income and franchise tax returns, and all such tax returns are complete and correct in all material respects, and the Company has paid all taxes shown as due thereon. The Company has no knowledge of any tax deficiency which has been or might be asserted or threatened against the Company which would reasonably be expected to materially and adversely affect the business, operations or properties of the Company.

(u) The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Prospectus, the Registration Statement and the other materials permitted by the Act.

(v) The Company maintains insurance of the types and in the amounts generally deemed adequate for its business and all other risks customarily insured against, all of which insurance is in full force and effect. The Company has not been refused any insurance coverage sought or applied for; and the Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Company.

(w) Neither the Company nor, to the Company's knowledge, any of its employees or agents has at any time during the last five years (i) made any unlawful contribution to any candidate for foreign office, or failed to disclose fully any contribution in violation of law or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States of any jurisdiction thereof.

(x) To the Company's knowledge, no labor disturbance by the employees of the Company or any of its subsidiaries exists or is imminent; and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers, subcontractors, original equipment manufacturers, authorized dealers or international distributors that would reasonably be expected to result in a material adverse change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company. No collective bargaining agreement exists with any of the Company's employees and, to the Company's knowledge, no such agreement is imminent.

(y) The Common Stock has been approved for quotation on The Nasdaq National Market, subject to official notice of issuance.

(z) Except as set forth in the Registration Statement and Prospectus, (i) the Company is in compliance with all rules, laws and regulations relating to the use, treatment, storage and disposal of toxic substances and protection of health or

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the environment ("Environmental Laws") which are applicable to its business, (ii) the Company has received no notice from any governmental authority or third party of an asserted claim under Environmental Laws, which claim is required to be disclosed in the Registration Statement and the Prospectus, (iii) the Company will not be required to make future material capital expenditures to comply with Environmental Laws and (iv) no property which is owned, leased or occupied by the Company has been designated as a Superfund site pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. (S) 9601, et seq.), or otherwise designated as a

contaminated site under applicable state or local law except in each case as would not reasonably be expected have a Material Adverse Effect.

(aa) There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company to or for the benefit of any of the executive officers or directors of the Company or any of the members of the families of any of them of the sort required to be disclosed in the Registration Statement and Prospectus, except as disclosed therein.

2. Purchase, Sale and Delivery of the Shares.

(a) On the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriters and the Underwriters, severally and not jointly, agree to purchase from the Company, at a purchase price per share of $_______, the number of Firm Shares set forth opposite the respective names of the Underwriters in Schedule I hereto plus any additional number of Shares which such Underwriter may become obligated to purchase pursuant to the provisions of Section 9 hereof.

(b) Payment of the purchase price for, and delivery of certificates for, the Shares shall be made at the offices of Latham & Watkins, located at 135 Commonwealth Drive, Menlo Park, CA 94025 (the "L&W Offices"), or at such other place as shall be agreed upon by Bear, Stearns & Co., Inc. ("Bear Stearns") and the Company, at 10:00 A.M. on the third or fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
(unless postponed in accordance with the provisions of Section 9 hereof) following the date of the effectiveness of the Registration Statement (or, if the Company has elected to rely upon Rule 430A of the Regulations, the third or fourth business day (as permitted under Rule 15c6-1 under the Exchange Act) after the determination of the initial public offering price of the Shares), or such other time not later than ten business days after such date as shall be agreed upon by Bear Stearns and the Company (such time and date of payment and delivery being herein called the "Closing Date"). Payment shall be made to the Company by certified or official bank check or checks drawn in federal funds or similar same day funds payable to the order of the Company, or by wire transfer in same day funds, against delivery to you for the respective accounts of the Underwriters of certificates for the Shares to be purchased by them. Certificates for the Shares shall be registered in such name or names

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and in such authorized denominations as you may request in writing at least two full business days prior to the Closing Date. The Company will permit you to examine and package such certificates for delivery at least one full business day prior to the Closing Date.

(c) In addition, the Company hereby grants to the Underwriters the option to purchase up to 1,406,250 Additional Shares at the same purchase price per share to be paid by the Underwriters to the Company for the Firm Shares as set forth in this Section 2, for the sole purpose of covering over-allotments in the sale of Firm Shares by the Underwriters, if any. This option may be exercised from time to time and at any time, in whole or in part, on or before the thirtieth day following the date of the Prospectus, by written notice by you to the Company. Such notice shall set forth the aggregate number of Additional Shares as to which the option is being exercised and the date and time, as reasonably determined by you, when the Additional Shares are to be delivered (such date and time being herein sometimes referred to as the "Additional Closing Date"); provided, however, that unless otherwise agreed to by Bear Stearns and the Company, the Additional Closing Date shall not be earlier than the Closing Date or earlier than the second full business day after the date on which the option shall have been exercised nor later than the eighth full business day after the date on which the option shall have been exercised (unless such time and date are postponed in accordance with the provisions of Section 9 hereof). Certificates for the Additional Shares shall be registered in such name or names and in such authorized denominations as you may request in writing at least two full business days prior to the Additional Closing Date. The Company will permit you to examine and package such certificates for delivery at least one full business day prior to the Additional Closing Date.

The number of Additional Shares to be sold to each Underwriter shall be the number which bears the same ratio to the aggregate number of Additional Shares being purchased as the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto (or such number increased as set forth in Section 9 hereof) bears to 9,375,000, subject, however, to such adjustments to eliminate any fractional shares as you in your sole discretion shall make.

Payment for the Additional Shares shall be made by certified or official bank check or checks drawn in federal funds or similar same day funds, payable to the order of the Company, or by wire transfer in same day funds at the L&W Offices, or such other location as may be mutually acceptable, upon delivery of the certificates for the Additional Shares to you for the respective accounts of the Underwriters.

3. Offering.

(a) Upon your authorization of the release of the Firm Shares, the Underwriters propose to offer the Shares for sale to the public upon the terms set forth in the Prospectus.

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(b) At the request of the Company, the Underwriters will reserve up to an aggregate of _______________ Shares for sale to Dell Computer Corporation, Quintiles Transnational Corporation and FHC Internet Services, L.C. (collectively, the "Concurrent Purchasers") at the initial public offering price for such Shares. As a condition to the purchase of such Shares by the Concurrent Purchasers from the Underwriters, the Concurrent Purchasers shall enter into a lock-up agreement the same in duration and substantially identical in scope to that of the Company set out in Section 4(f) of this Agreement. The number of Shares available to the general public shall be reduced to the extent the Concurrent Purchasers elect to purchase such Shares. Any reserved Shares not purchased by the Concurrent Purchasers at the Closing shall be offered by the Underwriters to the general public in accordance with the terms of purchase, sale and delivery set out in the Prospectus.

4. Covenants of the Company. The Company covenants and agrees with the Underwriters that:

(a) If the Registration Statement has not yet been declared effective the Company will use its best efforts to cause the Registration Statement and any amendments thereto to become effective as promptly as possible, and if Rule 430A is used or the filing of the Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company will file the Prospectus (properly completed if Rule 430A has been used) pursuant to Rule 424(b) or Rule 434 within the prescribed time period and will provide evidence satisfactory to you of such timely filing. If the Company elects to rely on Rule 434, the Company will prepare and file a term sheet that complies with the requirements of Rule 434.

The Company will promptly notify you (and, if requested by you, will confirm such notice in writing) (i) when the Registration Statement and any amendments thereto become effective, (ii) of any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for any additional information, (iii) of the mailing or the delivery to the Commission for filing of any amendment of or supplement to the Registration Statement or the Prospectus, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of the initiation, or the threatening, of any proceedings therefor, (v) of the receipt of any comments from the Commission, and (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for that purpose. If the Commission shall propose or enter a stop order at any time, the Company will make every reasonable effort to prevent the issuance of any such stop order and, if issued, to obtain the lifting of such order as soon as practicable. The Company will not file any amendment to the Registration Statement or any amendment of or supplement to the Prospectus (including the prospectus required to be filed pursuant to Rule 424(b)or Rule 434) that differs from the prospectus on file at the time of the effectiveness of the Registration Statement before

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or after the effective date of the Registration Statement to which you shall reasonably object in writing after being timely furnished in advance a copy thereof.

(b) If at any time when a prospectus relating to the Shares is required to be delivered under the Act any event shall have occurred as a result of which the Prospectus as then amended or supplemented would, in the judgment of the Company include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary at any time to amend or supplement the Prospectus or Registration Statement to comply with the Act or the Regulations, the Company will notify you promptly and prepare and file with the Commission an appropriate amendment or supplement (in form and substance satisfactory to you) which will correct such statement or omission and will use its best efforts to have any amendment to the Registration Statement declared effective as soon as practicable.

(c) The Company will promptly deliver to you two signed copies of the Registration Statement, including exhibits and all amendments thereto, and the Company will promptly deliver to each of the Underwriters such number of copies of any preliminary prospectus, the Prospectus, the Registration Statement, and all amendments of and supplements to such documents, if any, as you may reasonably request.

(d) The Company will endeavor in good faith, in cooperation with you, at or prior to the time of effectiveness of the Registration Statement, to qualify the Shares for offering and sale under the securities laws relating to the offering or sale of the Shares of such jurisdictions within the United States or Canada as you may designate and to maintain such qualification in effect for so long as required for the distribution thereof; except that in no event shall the Company be obligated in connection therewith to qualify as a foreign corporation or to execute a general consent to service of process.

(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as practicable, but not later than 45 days after the end of its fiscal quarter in which the first anniversary date of the effective date of the Registration Statement occurs, an earnings statement (in form complying with the provisions of Rule 158 of the Regulations) covering a period of at least twelve consecutive months beginning after the effective date of the Registration Statement.

(f) During the period of 180 days from the date of the Prospectus, the Company will not, without your prior written consent, issue, sell, offer or agree to sell, grant any option for the sale of, or otherwise dispose of, directly or indirectly, any Common Stock (or any securities convertible into, exercisable for or exchangeable for Common Stock). The foregoing sentence shall not apply to (A) the Shares to be sold hereunder, (B) the issuance by the Company of shares of Common

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Stock upon the exercise of options or warrants or the conversion of a security outstanding on the date hereof of which the Underwriters have been advised in writing and which is described in the Prospectus, (C) the grant of options or share purchase rights by the Company pursuant to the option and employee stock purchase plans described in the Registration Statement and Prospectus, provided, such options are not exercisable for 180 days after the date of the Prospectus, or if such options are exercisable within such period, such options are subject to lockup provisions substantially the same as those set forth in this Section 4(f) or (D) the issuance of shares of Common Stock in acquisition or investment transactions approved by the Company's Board of Directors, provided, such shares are subject to lockup provisions substantially similar to those set forth in this Section 4(f) and so long as such shares are not transferrable until the expiration of such lockup, which expiration shall not occur until 180-days after the date of the Prospectus.

(g) During a period of three years from the effective date of the Registration Statement, the Company will upon request make generally available to its securityholders copies of (i) all reports to its shareholders; and (ii) all reports, financial statements and proxy or information statements filed by the Company with the Commission or any national securities exchange.

(h) The Company will apply the proceeds from the sale of the Shares as set forth under "Use of Proceeds" in the Prospectus.

(i) The Company will use all reasonable commercial efforts to cause the Shares to be listed for quotation on the Nasdaq National Market System.

(j) The Company will comply with Rule 463 of the Regulations.

5. Payment of Expenses. Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company hereby agrees to pay all costs and expenses incident to the performance of the obligations of the Company hereunder, including those in connection with (i) preparing, printing, duplicating, filing and distributing the Registration Statement, as originally filed and all amendments thereof (including all exhibits thereto), any preliminary prospectus, the Prospectus and any amendments or supplements thereto (including, without limitation, fees and expenses of the Company's accountants and counsel) but excluding the fees and expenses of counsel to the Underwriters, the underwriting documents including this Agreement and the Agreement Among Underwriters and all other documents related to the public offering of the Shares (including those supplied to the Underwriters in quantities as hereinabove stated), (ii) the issuance, transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) the qualification of the Shares under state or foreign securities or Blue Sky laws, including the reasonable costs of printing and mailing a preliminary and final "Blue Sky Survey" and the reasonable fees of counsel for the Underwriters and such counsel's disbursements in relation thereto, (iv) listing the Shares for quotation on the Nasdaq

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National Market, (v) filing fees of the Commission and the National Association of Securities Dealers, Inc.; (vi) the cost of printing certificates representing the Shares and (vii) the cost and charges of any transfer agent or registrar.

6. Conditions of Underwriters' Obligations. The obligations of the Underwriters to purchase and pay for the Firm Shares and the Additional Shares, as provided herein, shall be subject to the accuracy of the representations and warranties of the Company herein contained, as of the date hereof and as of the Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the Closing Date for the Firm Shares and any Additional Closing Date, if different, for the Additional Shares), to the absence from any certificates, opinions, written statements or letters furnished to you or to Wilson Sonsini Goodrich & Rosati, P.C. ("Underwriters' Counsel") pursuant to this Section 6 of any misstatement or omission, to the performance by the Company of its obligations hereunder, and to the following additional conditions:

(a) The Registration Statement shall have become effective not later than 5:30 P.M., New York time, on the date of this Agreement or at such later time and date as shall have been consented to in writing by you; if the Company shall have elected to rely upon Rule 430A or Rule 434 of the Regulations, the Prospectus shall have been filed with the Commission in a timely fashion in accordance with Section 4(a) hereof; and, at or prior to the Closing Date no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereof shall have been issued and no proceedings therefor shall have been initiated or threatened by the Commission.

(b) At the Closing Date you shall have received the opinion of Latham & Watkins, counsel for the Company, dated the Closing Date addressed to the Underwriters and in form and substance satisfactory to Underwriters' Counsel, to the effect that:

(i) The Company has been duly incorporated and is validly existing in good standing under the laws of the State of Delaware, with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus. Based solely on certificates from public officials, we confirm that the Company is qualified to do business in the State of Texas.

(ii) The authorized capital stock of the Company consists solely of 100,000,000 shares of Common Stock, $.001 par value per share, and 15,000,000 shares of Preferred Stock, $.001 par value per share.

(iii) The shares of Common Stock to be issued and sold by the Company pursuant to the Underwriting Agreement have been duly authorized and, when issued to and paid for by the Underwriters in accordance with the terms of the Underwriting Agreement, will be validly issued, fully paid and non-assessable.

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(iv) The Underwriting Agreement has been duly authorized, executed and delivered by the Company.

(v) The issuance and sale of the shares of Common Stock to be sold to you by the Company pursuant to the Underwriting Agreement on the date hereof will not result in the violation by the Company of its Certificate of Incorporation or Bylaws or the violation by the Company of any federal, California or Delaware statute, rule or regulation known by us to be applicable to the Company (other than federal or state securities laws as to which no opinion is expressed in this paragraph) or in the breach of or a default under any agreement or instrument listed on Annex A hereto or under any license or permit known to us, which breach or default which in any such case would reasonably be expected to result in a Material Adverse Effect. No consent, approval, authorization or order of, or filing with, any federal, California or Delaware court or governmental agency or body known by us to be applicable to the Company is required for the consummation of the issuance and sale of the shares of Common Stock to be sold to you by the Company pursuant to the Underwriting Agreement on the date hereof, except such as have been obtained under the Act, such as may be required under applicable state securities laws in connection with the purchase and distribution of such shares of Common Stock by the Underwriters and the filing of the Company's Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.

(vi) The Registration Statement has become effective under the Act, and, to the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the Act and no proceedings therefor have been initiated by the Commission.

(vii) The Registration Statement and the Prospectus comply as to form in all material respects with the requirements for registration statements on Form S-1 under the Act and the rules and regulations of the Commission thereunder; it being understood, however, that we express no opinion with respect to the financial statements, schedules and other financial data included in the Registration Statement or the Prospectus. In passing upon the compliance as to the form of Registration Statement and the Prospectus, we assume that the statements made therein are correct and complete.

(viii) The statements set forth in the Prospectus under the headings "Description of Securities," "Management--Stock Option Plans," "Shares Eligible for Future Sale" and "Item 14 of Part II of the Registration Statement" insofar as such statements constitute a summary of the legal matters or documents referred to therein, are accurate in all material respects.

(ix) To the best of our knowledge, there are no legal or governmental proceedings required to be described in the Prospectus that are not described as required, or contracts or documents of a character required to be described in

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the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement that are not described and filed as required.

(x) The Shares to be issued and sold by the Company pursuant to the Underwriting Agreement are duly authorized for quotation on the Nasdaq National Market.

(xi) The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

In addition, such opinion shall also contain a statement that such counsel has participated in conferences with officers and representatives of the Company, representatives of the independent public accountants for the Company and the Underwriters at which the contents and the Prospectus and related matters were discussed and, no facts have come to the attention of such counsel which would lead such counsel to believe that either the Registration Statement at the time it became effective (including the information deemed to be part of the Registration Statement at the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable), or any amendment thereof made prior to the Closing Date as of the date of such amendment, contained an untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as of its date (or any amendment thereof or supplement thereto made prior to the Closing Date as of the date of such amendment or supplement) and as of the Closing Date contained or contains an untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no belief or opinion with respect to the financial statements and schedules and other financial data included or incorporated by reference therein).

In rendering such opinion, such counsel may rely as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and certificates or other written statements of officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company and its subsidiaries, provided that copies of any such statements or certificates shall upon request be delivered to Underwriters' Counsel.

(c) All proceedings taken in connection with the sale of the Firm Shares and the Additional Shares as herein contemplated shall be reasonably satisfactory in form and substance to you and to Underwriters' Counsel, and the Underwriters shall have received from said Underwriters' Counsel a favorable opinion, dated as of the Closing Date with respect to the issuance and sale of the Shares, the Registration Statement and the Prospectus and such other related matters as you may reasonably require, and the Company shall have furnished to Underwriters' Counsel such

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documents as they reasonably request for the purpose of enabling them to pass upon such matters.

(d) At the Closing Date you shall have received a certificate of the Company executed on its behalf by its Chief Executive Officer and Chief Financial Officer, dated the Closing Date to the effect that (i) the condition set forth in subsection (a) of this Section 6 has been satisfied, (ii) as of the date hereof and as of the Closing Date the representations and warranties of the Company set forth in Section 1 hereof are accurate, (iii) as of the Closing Date the obligations of the Company to be performed hereunder on or prior thereto have been duly performed and (iv) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company has not sustained any material loss or interference with its businesses or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labor dispute or any legal or governmental proceeding, and there has not been any material adverse change, or any development involving a material adverse change, in the prospects, properties, operations, condition (financial or otherwise), results of operations or business of the Company as presently conducted or as proposed to be conducted, except in each case as described in or contemplated by the Prospectus.

(e) At the time this Agreement is executed and at the Closing Date, you shall have received a letter, from PricewaterhouseCoopers LLP, independent public accountants for the Company, dated, respectively, as of the date of this Agreement and as of the Closing Date addressed to the Underwriters and in form and substance satisfactory to you, to the effect that: (i) they are independent certified public accountants with respect to the Company within the meaning of the Act and the Regulations and stating that the answer to Item 10 of the Registration Statement is correct insofar as it relates to them; (ii) stating that, in their opinion, the financial statements and schedules of the Company included in the Registration Statement and the Prospectus and covered by their opinion therein comply as to form in all material respects with the applicable accounting requirements of the Act and the applicable published rules and regulations of the Commission thereunder; (iii) on the basis of procedures consisting of a reading of the latest available unaudited interim financial statements of the Company, a reading of the minutes of meetings and consents of the shareholders and board of directors of the Company and the committees of such boards subsequent to December 31, 1998, inquiries of officers and other employees of the Company who have responsibility for financial and accounting matters of the Company with respect to transactions and events subsequent to December 31, 1998 and other specified procedures and inquiries to a date not more than five days prior to the date of such letter, nothing has come to their attention that would cause them to believe that: (A) the unaudited financial statements and schedules of the Company presented in the Registration Statement and the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the applicable published rules and regulations of the Commission thereunder or that such unaudited financial statements are not fairly presented in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the

-16-

audited financial statements included in the Registration Statement and the Prospectus; (B) with respect to the period subsequent to March 31, 1999 there were, as of the date of the most recent available monthly financial statements of the Company and as of a specified date not more than five days prior to the date of such letter, any changes in the capital stock or long-term indebtedness of the Company or any decrease in the net current assets or stockholders' equity of the Company, in each case as compared with the amounts shown in the most recent balance sheet presented in the Registration Statement and the Prospectus, except for changes or decreases which the Registration Statement and the Prospectus disclose have occurred or may occur or which are set forth in such letter or (C) that during the period from March 31, 1999 to the date of the most recent available monthly financial statements of the Company and to a specified date not more than five days prior to the date of such letter, there was any decrease, as compared with the corresponding period in the prior fiscal year, in total revenues, or total or per share net income, except for decreases which the Registration Statement and the Prospectus disclose have occurred or may occur or which are set forth in such letter; and (iv) stating that they have compared specific dollar amounts, numbers of shares, percentages of revenues and earnings, and other financial information pertaining to the Company set forth in the Registration Statement and the Prospectus, which have been specified by you prior to the date of this Agreement, to the extent that such amounts, numbers, percentages, and information may be derived from the general accounting and financial records of the Company or from schedules furnished by the Company, and excluding any questions requiring an interpretation by legal counsel, with the results obtained from the application of specified readings, inquiries, and other appropriate procedures specified by you set forth in such letter, and found them to be in agreement.

(f) Prior to the Closing Date the Company shall have furnished to you such further information, certificates and documents as you may reasonably request.

(g) You shall have received from each person who is a director or officer of the Company or such shareholder as have been heretofore designated by you and listed on Schedule II hereto a Lock-Up Agreement to the effect that such person will not, directly or indirectly, without your prior written consent, offer, sell, offer or agree to sell, grant any option to purchase or otherwise dispose (or announce any offer, sale, grant of an option to purchase or other disposition) of any shares of Common Stock (or any securities convertible into, exercisable for or exchangeable or exercisable for shares of Common Stock) for a period of 180 days after the date of the Prospectus.

(h) At the Closing Date, the Shares shall have been approved for quotation on the Nasdaq National Market.

If any of the conditions specified in this Section 6 shall not have been fulfilled when and as required by this Agreement, or if any of the certificates, opinions, written statements or letters furnished to you or to Underwriters' Counsel pursuant to this Section 6 shall not be in all material respects reasonably satisfactory in

-17-

form and substance to you and to Underwriters' Counsel, all obligations of the Underwriters hereunder may be cancelled by you at, or at any time prior to, the Closing Date and the obligations of the Underwriters to purchase the Additional Shares may be cancelled by you at, or at any time prior to, the Additional Closing Date. Notice of such cancellation shall be given to the Company in writing, or by telephone, telex or telegraph, confirmed in writing.

7. Indemnification.

(a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), against any and all losses, liabilities, claims, damages and expenses whatsoever as incurred (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement for the registration of the Shares, as originally filed or any amendment thereof, or any related preliminary prospectus or the Prospectus, or in any supplement thereto or amendment thereof, 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; provided, however, that the Company will not be liable in any such case to the extent but only to the extent that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company in writing by or on behalf of any Underwriter through you expressly for use therein. This indemnity agreement will be in addition to any liability which the Company may otherwise have including under this Agreement.

(b) Each Underwriter severally, and not jointly, agrees to indemnify and hold harmless the Company, each of the directors of the Company, each of the officers of the Company who shall have signed the Registration Statement, and each other person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses, liabilities, claims, damages and expenses whatsoever as incurred (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), jointly or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue

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statement of a material fact contained in the registration statement for the registration of the Shares, as originally filed or any amendment thereof, or any related preliminary prospectus or the Prospectus, or in any amendment thereof 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, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through you expressly for use therein; provided, however, that in no case shall any individual Underwriter be liable or responsible for any amount in excess of the underwriting discount applicable to the Shares purchased by such Underwriter hereunder. This indemnity will be in addition to any liability which any Underwriter may otherwise have including under this Agreement. The Company acknowledges that the statements set forth in the last paragraph of the cover page and under the caption "Underwriting" in the Prospectus constitute the only information furnished in writing by or on behalf of any Underwriter expressly for use in the registration statement relating to the Shares as originally filed or in any amendment thereof, any related preliminary prospectus or the Prospectus or in any amendment thereof or supplement thereto, as the case may be.

(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this
Section 7 except to the extent the indemnifying party is substantially prejudiced, and then only to the extent thereof). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by one of the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to have charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses shall be borne by the indemnifying parties. In no event shall the indemnifying

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parties be liable for the fees and expenses of more than one counsel (in addition to any required local counsel) for all indemnified parties, which counsel shall be selected by Bear Stearns. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent; provided, however, that such consent was not unreasonably withheld.

8. Contribution. In order to provide for contribution in circumstances in which the indemnification provided for in Section 7 hereof is for any reason held to be unavailable from any indemnifying party or is insufficient to hold harmless a party indemnified thereunder, the Company and the Underwriters shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Company any contribution received by the Company from persons, other than the Underwriters, who may also be liable for contribution, including persons who control the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the Company who signed the Registration Statement and directors of the Company) as incurred to which the Company and one or more of the Underwriters may be subject, in such proportions as is appropriate to reflect the relative benefits received by the Company and the Underwriters from the offering of the Shares or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in Section 7 hereof, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Underwriters in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Underwriters shall be deemed to be in the same proportion as (x) the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and (y) the underwriting discounts and commissions received by the Underwriters, respectively, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company and of the Underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this
Section 8, (i) in no case shall any Underwriter be liable or responsible for any amount in excess of the underwriting discount applicable to the Shares purchased by such Underwriter hereunder,

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and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Notwithstanding the provisions of this Section 8 and the preceding sentence, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as such Underwriter, and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this Section 8. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties, notify each party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 8 or otherwise, except to the extent the indemnifying party is substantially prejudiced, and then only to the extent thereof. No party shall be liable for contribution with respect to any action or claim settled without its consent; provided, however, that such consent was not unreasonably withheld.

9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their obligation to purchase Firm Shares or Additional Shares hereunder, and if the Firm Shares or Additional Shares with respect to which such default relates do not (after giving effect to arrangements, if any, made by you pursuant to subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares or Additional Shares, to which the default relates shall be purchased by the non-defaulting Underwriters in proportion to the respective proportions which the numbers of Firm Shares set forth opposite their respective names in Schedule I hereto bear to the aggregate number of Firm Shares set forth opposite the names of the non- defaulting Underwriters.

(b) In the event that such default relates to more than 10% of the Firm Shares or Additional Shares, as the case may be, you may in your discretion arrange for yourself or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm Shares or Additional Shares, as the case may be, to which such default relates on the terms contained herein. In the event that within 5 calendar days after such a default you do not arrange for the purchase of the Firm Shares or Additional Shares, as the case may be, to which such default relates as provided in this Section 9, this Agreement or, in the case of a default

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with respect to the Additional Shares, the obligations of the Underwriters to purchase and of the Company to sell the Additional Shares shall thereupon terminate, without liability on the part of the Company with respect thereto (except in each case as provided in Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in this Agreement shall relieve a defaulting Underwriter or Underwriters of its or their liability, if any, to the other Underwriters and the Company for damages occasioned by its or their default hereunder.

(c) In the event that the Firm Shares or Additional Shares to which the default relates are to be purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid, you or the Company shall have the right to postpone the Closing Date or Additional Closing Date, as the case may be for a period, not exceeding five business days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus or in any other documents and arrangements, and the Company agrees to file promptly any amendment or supplement to the Registration Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may thereby be made necessary or advisable. The term "Underwriter" as used in this Agreement shall include any party substituted under this Section 9 with like effect as if it had originally been a party to this Agreement with respect to such Firm Shares and Additional Shares.

10. Survival of Representations and Agreements. All representations and warranties, covenants and agreements of the Underwriters and the Company contained in this Agreement, including the agreements contained in Section 5, the indemnity agreements contained in Section 7 and the contribution agreements contained in Section 8, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any controlling person thereof or by or on behalf of the Company, any of its officers and directors or any controlling person thereof, and shall survive delivery of and payment for the Shares to and by the Underwriters. The representations contained in Section 1 and the agreements contained in Sections 5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement, including termination pursuant to Section 9 or 11 hereof.

11. Effective Date of Agreement; Termination.

(a) This Agreement shall become effective, upon the later of when
(i) you and the Company shall have received notification of the effectiveness of the Registration Statement or (ii) the execution of this Agreement. If either the initial public offering price or the purchase price per Share has not been agreed upon prior to 5:00 P.M., New York time, on the fifth full business day after the Registration Statement shall have become effective, this Agreement shall thereupon terminate without liability to the Company or the Underwriters except as herein expressly provided. Until this Agreement becomes effective as aforesaid, it may be terminated by the Company by notifying you or by you notifying the Company. Notwithstanding the foregoing, the provisions of this

-22-

Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in full force and effect.

(b) You shall have the right to terminate this Agreement at any time prior to the Closing Date or the obligations of the Underwriters to purchase the Additional Shares at any time prior to the Additional Closing Date, as the case may be, if (A) any domestic or international event or act or occurrence has materially disrupted, or in your opinion will in the immediate future materially disrupt, the market for the Company's securities or securities in general; or (B) if trading on either of the Nasdaq National Market or the New York Stock Exchange (the
"NYSE") shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, on the Nasdaq or the NYSE or by order of the Commission or any other governmental authority having jurisdiction; or (C) if a banking moratorium has been declared by a New York or federal authority or if any new restriction materially adversely affecting the distribution of the Firm Shares or the Additional Shares, as the case may be, or (i) if the United States becomes engaged in hostilities or there is an escalation of hostilities involving the United States or there is a declaration of a national emergency or war by the United States or (ii) if there shall have been such change in political, financial or economic conditions if the effect of any such event set forth in clauses (i) or (ii) as in your judgment makes it impracticable or inadvisable to proceed with the offering, sale and delivery of the Firm Shares or the Additional Shares, as the case may be, on the terms contemplated by the Prospectus.

(c) Any notice of termination pursuant to this Section 11 shall be by telephone, telex, or telegraph, confirmed in writing by letter.

(d) If this Agreement shall be terminated pursuant to any of the provisions hereof (otherwise than pursuant to (i) notification by you as provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if the sale of the Shares provided for herein is not consummated because any condition to the obligations of the Underwriters set forth herein is not satisfied or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof, the Company will, subject to demand by you, reimburse the Underwriters for all out-of-pocket expenses (including the reasonable fees and expenses of their counsel), no incurred by the Underwriters in connection herewith.

12. Notices. All communications hereunder, except as may be otherwise specifically provided herein, shall be in writing and, if sent to any Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed in writing, to such Underwriter c/o Bear, Stearns & Co. Inc., 245 Park Avenue, New York, N.Y. 10167, Attention: Syndicate Department, with a copy to Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill Road, Palo Alto, CA 94304, Attn:
Paul R. Tobias, Esq.; if sent to the Company, shall be mailed, delivered, or telegraphed and confirmed in writing to the Company, drkoop.com, Inc., 8920 Business Park Drive, Austin, TX 78759, Attn: Chief

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Executive Officer, with a copy to Latham & Watkins, 135 Commonwealth Drive, Menlo Park, CA 94025, Attn: Anthony J. Richmond, Esq.

13. Parties. This Agreement shall insure solely to the benefit of, and shall be binding upon, the Underwriters and the Company and the controlling persons, directors, officers, employees and agents referred to in Section 7 and 8, and their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained. The term "successors and assigns" shall not include a purchaser, in its capacity as such, of Shares from any of the Underwriters.

14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, but without regard to principles of conflicts of law.

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If the foregoing correctly sets forth the understanding between you and the Company, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among us.

Very truly yours,

DRKOOP.COM, INC.


By: Donald Hackett Its: President and Chief Executive Officer

Accepted as of the date first above written

BEAR, STEARNS & CO. INC.
HAMBRECHT & QUIST L.L.C.
WIT CAPITAL CORPORATION

By____________________________________

On behalf of themselves and the other
Underwriters named in Schedule I hereto.

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its pro rata share of
SCHEDULE I

Number of Firm Name of Underwriter Shares to be Purchased

Bear, Stearns & Co. Inc
Hambrecht & Quist L.L.C.
Wit Capital Corporation

Total...........__________

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SCHEDULE II

Names of stockholders subject to the lock-up provision:

Received

X C. Everett Koop
X John F. Zaccaro
X Donald W. Hackett
X Louis A. Scalpati
X Dennis J. Upah
X Susan M. Georgen-Saad
X Robert C. Hackett, Jr.
X Richard D. Helppie, Jr.
X Superior Consultant Holdings Corporation X Nancy L. Snyderman
X Adventist Health Systems Sunbelt Healthcare Corporation X Jeffrey McClorey
X Neil K. Longwill
X Thomas Main
X John C. Williams
X Joseph Zaccaro
X The Software Atelier
X James W. Graham
X Harry Hackett
X Jean Hackett
X Eric Friar
X Judy Behm
X Hal Hunter
X Calvert W. Huffines
X Bruce Hackett

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EXHIBIT 3.5

CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION
OF
DRKOOP.COM, INC.

DRKOOP.COM, INC., a corporation organized under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify that:

1. The name of the corporation is drkoop.com, Inc.

2. The Certificate of Incorporation of this corporation was originally filed with the Secretary of State of Delaware on February 26, 1999.

3. This Certificate of Amendment has been duly adopted by this corporation's Board of Directors and stockholders in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware, and the corporation's stockholders have given their written consent in accordance with Section 228 of the General Corporation Law of the State of Delaware.

4. The first paragraph of Article IV of the Restated Certificate of Incorporation of this corporation shall be amended to read in its entirety as follows:

ARTICLE IV

The aggregate number of shares that the Company shall have authority to issue is 75,000,000 divided into 50,000,000 shares of Common Stock (the "Common Stock") each with the par value of $0.001 per share, and 25,000,000 shares of Preferred Stock (the "Preferred Stock") each with the par value of $0.001 per share. The Preferred Stock may be issued from time in one or more series. The first series shall be denominated the "Series A 8% Convertible Preferred Stock" and shall consist of 750,000 shares. The second series shall be denominated the "Series B Preferred Stock" and shall consist of 13,781,145 shares. The third series shall be denominated the "Series C Preferred Stock" and shall consist of 3,000,000 shares.

As of the date of the filing of this Certificate of Amendment of Restated Certificate of Incorporation, each currently outstanding share of Common Stock shall be subdivided and converted into 2.5 outstanding shares of Common Stock and each currently outstanding share of Preferred Stock shall be subdivided and converted into 2.5 outstanding shares of Preferred Stock.


The foregoing amendment has been duly adopted by this corporation's Board of Directors and stockholders in accordance with the applicable provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

Executed at Austin, Texas, this ____ day of June, 1999.

DRKOOP.COM, INC.

By: ______________________________
Donald W. Hackett, President

ATTEST:

By: ______________________________

Louis A. Scalpati, Secretary


Exhibit 5.1

[LETTERHEAD OF LATHAM & WATKINS]

June 4, 1999

drkoop.com, Inc.
8920 Business Park Drive
Suite 200
Austin, Texas 78759

Ladies and Gentlemen:

This opinion is rendered in connection with the filing by drkoop.com, Inc., a Delaware corporation (the "Company"), of its Registration Statement on Form S-1 (the "Registration Statement") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), with respect to the offer and sale by the Company (the "Offering") of up to 10,781,250 shares of the Company's common stock, par value $.001 per share (the "Registered Common Stock"), and any subsequent registration statement the Company may hereafter file with the Commission pursuant to Rule 462(b) under the Act to register additional shares of the Company's common stock, par value $.001 per share, in connection with the Offering (such additional shares, together with the Registered Common Stock, the "Shares"). We have acted as special counsel to the Company in connection with the preparation of the Registration Statement.

In our capacity as such counsel, we are familiar with the proceedings taken and to be taken by the Company in connection with the authorization, issuance and sale of the Shares. In addition, we have made such legal and factual examinations and inquiries, including and examination of originals (or copies certified or otherwise identified to our satisfaction as being true reproductions of originals) or such documents, corporate records and other instruments, and have obtained from officers of the Company and agents thereof such certificates and other representations and assurances, as we have deemed necessary or appropriate for the purposes of this opinion.


June 4, 1999

Page 2

In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the legal capacity of natural persons executing such documents and the authenticity and conformity to original documents of documents submitted to us as certified or photostatic copies.

We are opining herein as to the effect on the subject transaction only of the General Corporation Law of the State of Delaware, including statutory and reported decisional law thereunder, and we express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction or, in the case of Delaware, any other laws, or as to any matters of municipal law of the laws of any local agencies within any state.

Subject to the foregoing and the other qualifications set forth herein, it is our opinion that, as of the date hereof, based on the foregoing and the proceedings to be taken by the Company as referred to above, we are the opinion that the Shares have been duly authorized, and upon issuance, delivery and payment therefor in the manner described in the Registration Statement, such Shares will be validly issued, fully paid and nonassessable.

We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm contained under the heading "Legal Matters" of the prospectus included therein, and to the incorporation by reference of this opinion and consent into a registration statement filed with the Commission pursuant to Rule 462(b) under the Act relating to the Offering.

Very truly yours,

/s/ LATHAM & WATKINS


EXHIBIT 10.9
DISTRIBUTION AGREEMENT

This Distribution Agreement ("Agreement") is entered into by and between Infoseek Corporation, a corporation duly organized under the laws of California, with its principal place of business at 1399 Moffett Park Drive, Sunnyvale, California 94089-1134, hereinafter referred to as "Infoseek", and drkoop.com, Inc., a corporation organized under the laws of the State of Delaware with its principal place of business at 8920 Business Park Drive, Longhorn Suite, Austin, Texas 78759, hereinafter referred to as "Content Partner" or "DrKoop.com". ABC News/Starwave Partners (which operates the ABCNews.com U.S. Internet site referred to herein a "ABCNews.com") and ESPN/Starwave Partners (also referred to as "EIV") (which operates the ESPN.com U.S. Internet site referred to herein as "ESPN.com") are parties to this Agreement only with respect to those provisions herein that specifically reference and apply to "ABCNews.com", "ESPN.com" and/or GO Partners. ABC News/Starwave Partners and ESPN/Starwave Partners are collectively referred to herein as the "GO Partners."

WITNESSETH:

WHEREAS, Infoseek hosts and maintains a U.S. version of the Internet service known as GO Network (the "Service" or "GO Network") located at, www.infoseek.go.com, www.go.com and/or such successor site(s) as may be designated by Infoseek through which information organized in applicable subject-related centers ("the Centers") is provided to its users ("Users"); the GO Network currently includes the following Infoseek Affiliate Internet sites:
www.abcnews.com and www.espn.com; and

WHEREAS, Content Partner operates an Internet site located at www.drkoop.com (the "DrKoop.com Site") and is the provider of information described in Appendix A hereto ("DKC Health Content"), and e-commerce related content described in Appendix G (the "Commerce Content") which Content Partner and Infoseek desire to make available to Users. Content Partner and Infoseek have been in discussions concerning this Agreement since February, 1999. DKC Health Content and Commerce Content provided by Content Partner may be collectively referred to herein as "Content Partner Content".

NOW, THEREFORE, for good and valuable consideration, and in consideration of the mutual covenants and conditions herein set forth, and with the intent to be legally bound thereby, Infoseek and Content Partner hereby agree as follows:

1. LICENSE; OBLIGATIONS OF CONTENT PARTNER; OBLIGATIONS OF INFOSEEK

1.1 Grant. Subject to the terms and conditions of this Agreement, Content Partner hereby grants to Infoseek and the GO Partners, a fully-paid, worldwide, non-exclusive right and license to use, reproduce, adapt, incorporate, integrate, distribute and otherwise exploit the Content Partner Content solely on the Service and to use Content Partner's trade names, trade dress, and trademarks as expressly permitted herein and as reasonably necessary with respect to the display and use of the Content Partner Content on the Service. Infoseek and its subsidiaries and Affiliates may use Content Partner Content other than on the Service, provided that Infoseek obtains Content Partner's prior consent for such use on a case-by-case basis. As used herein, "Affiliate" means with respect to a party to this Agreement, any entity that directly or indirectly controls, or is under common control with, or is controlled by, such party; "control" (including, with its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). The terms set forth in the Appendices attached hereto shall also

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated ***. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


apply to this Agreement. The Content Partner Content shall be hosted by the parties as described herein and in the Appendices.

1.2 Page Views. Infoseek shall guarantee, over the three year term of this Agreement, *** Page Views on GO Network in accordance with the following:

***

If, on the second anniversary of the Effective Date, Infoseek has not satisfied the minimum annual Page View requirements set forth above for Years 1 and 2 of this Agreement, and this Agreement has not been terminated as of the second anniversary of the Effective Date, Infoseek shall have ninety (90) days to correct the shortfall by delivering additional Page Views to Content Partner (a "make good" period). If such shortfall has not been corrected at the expiration of such ninety (90) day make good period, Infoseek shall refund to Content Partner the fees paid by Content Partner for Page Views not delivered. Notwithstanding the foregoing, if Infoseek subsequently delivers Page Views in excess of those guaranteed above ("Excess Page Views"), Infoseek shall be entitled to a refund, equivalent to the value of the Excess Page Views, of any fees previously refunded to Content Partner. ***

Notwithstanding the foregoing, if Infoseek delivers ***.

As used herein, a "Page View" refers to each instance in which an HTML page is displayed to a User, which page contains any DKC Health Content or DrKoop.com branding (including, without limitation, banners, buttons or links), which shall, at minimum, contain one direct link to the GO Network-Wrapped Pages.

***

As used herein "Impression" means an advertisement image that is viewable by a person accessing a web page on the Service. Impressions may include banners, buttons, interstitials, and any other web-based advertising that becomes generally available to advertisers on GO Network.

1.3 Hosting by Infoseek. DKC Health Content to be hosted on Infoseek's servers will be available to Users through certain web pages located at www.drkoop.go.com. Infoseek shall host all DKC Health Content that appears at Levels 1-3 within the Health Center on the Service. As used herein, "Level" means a page location within the Service as further described in Appendix B. Level 1 is the home page of the Health Center; Level 2 is a navigation page, and Level 3 is the first page where full text DKC Health Content appears. GO Partners will host any DKC Health Content on their sites.

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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1.4 Hosting by Dr.Koop. The portion of the DKC Health Content not hosted on Infoseek's servers (Level 4 content) will be hosted on Content Partner's servers and accessed by Users from Content Partner/Infoseek co-branded Web pages located at http://go.drkoop.com ("GO Network- Wrapped Pages") pursuant to the specifications in Appendix B hereto. Content Partner shall cooperate and assist Infoseek by promptly answering questions and complaints regarding any Content Partner Content. Each party shall promptly inform the other party of any event or circumstance, and provide all information pertaining to such event or circumstance, related or arising from this Agreement which could lead to a claim or demand against the other party by any third party. All DKC Health Content shall be provided to Users free of charge; provided, however, that GO Partners may charge Users for ISP services.

1.5 Delivery of Content. Content Partner will deliver to Infoseek the Infoseek-hosted Content Partner Content in a mutually agreeable format, electronically via modem or Internet access (e.g. Internet ftp or Internet e-mail). Content Partner agrees to certify that all deliveries hereunder were made electronically. Content Partner will make updates to the Content Partner Content available to Infoseek and Infoseek shall update the Infoseek-hosted Content Partner Content on a regular mutually agreed upon basis. Infoseek shall have the right, but not the obligation, to remove, or direct Content Partner to remove any Content Partner Content, which Infoseek, in its reasonable discretion, determines to be offensive, in poor taste, or otherwise objectionable.

1.6 Exclusivity. Subject to the exceptions set forth below, during the term of this Agreement, Content Provider shall be the exclusive provider of Health Content on the Center of GO Network devoted primarily to health related topics and named the Health Center ("Health Center"). The Health Center shall be the only Center within the Service devoted primarily to comprehensive health and medical information. In addition, during the term of this Agreement, Infoseek shall not enter into any agreements with any third party, other than Content Partner, to sell or offer within the Health Center (i) Health Insurance or (ii) clinical trial or clinical research opportunities of any kind. As used herein, Health Insurance is limited to insurance policies written to cover medical, dental and vision bills and expenses exclusively. ***:

1. ***.

2. Infoseek's preexisting contracts with third parties for health related content; provided, however, Infoseek hereby agrees it shall not renew any such existing third party contracts and represents that such contracts shall expire on or before September 15, 1999. The foregoing representation concerning renewals and expirations shall not apply to third party agreements relating to GO Shop, as referenced in Appendix G, Section 2.1

3. Health Content provided to Infoseek by news or data feeds or Freelancers;

4. Any content created internally by Infoseek or a GO Partner or any of their Affiliates;

5. ***

6. ***

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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7. Infoseek standard advertising banner business and Spotlight business ***.

8. News and Editorial Content of any kind. As used herein "Editorial Content" means opinion pieces related to current events and magazine articles that may relate to health; ***.

As used herein, "Freelancers" shall mean independent parties who receive a fee for their services and who are not (to Infoseek's or a GO Partner's knowledge) employed by any ***

DrKoop.com acknowledges that the following shall not constitute a breach of this Section 1.6: (a) the Infoseek search technology may search the sites ***; (b) Infoseek may provide search-related products that may include results from such ***, health insurance information or products, or clinical trial information; and (c) such *** may be in the Service Directory. As used herein, Service Directory means the general directory on GO Network which is currently accessed through the tab "Web Directory."

The placement and positioning of DKC Health Content within the Health Center shall be consistent with the mock up pages attached hereto as Appendix B. Each page of the Health Center will include separate links to DKC Health Content relating to pharmacy products and health insurance. Although Infoseek reserves the right to revise the look and feel of the Health Center and the display of DKC Health Content within the Health Center (except as expressly set forth herein), the relative prominence of such DKC Health Content within the Health Center shall be consistent with the mock up pages attached hereto as Appendix B.

In the event of a breach of this Section 1.6 by Infoseek (an "Exclusivity Breach"), Content Partner's sole and exclusive remedy shall be to request removal of the content that violates this Section 1.6, and Infoseek shall comply with such request within five (5) business days. ***

1.7 Access. The Health Center shall be accessible by Users through no more than one hyperlink from the GO home page. Further, Infoseek shall maintain the Health Center, in a manner consistent with its development and operation of the other Centers within GO Network.

1.8 Commerce Content. Content Partner will provide Commerce Content to the Service as further described in Appendix G.

1.9 ***


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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1.10 Response Times. The response times which DrKoop.com shall use to remedy and/or correct any material limitations or errors in any Content Partner Content made available by or through DrKoop.com that Infoseek brings to DrKoop.com's attention or about which DrKoop.com otherwise becomes aware are specified in Appendix E; ***. DrKoop.com agrees not to override browser back button functionality to prevent Users who link to the GO Network-Wrapped Pages from the Service from returning to the Service. As used herein "Link" means a so-called "hot link" in graphical and/or textual format located on the applicable areas of the Service which takes the User directly to another web site or area within the site.

1.11 Maintenance of Service. Each party will be responsible for its respective telecommunications charges with respect to the provision of respective portions of the Content Partner Content to Infoseek and to Users. Except as expressly provided herein, Infoseek retains the right to adapt or otherwise alter the design, look, and any other attributes of the Service and Service pages. Infoseek will use reasonable efforts to promptly incorporate into the Content Partner Content error corrections within a reasonable period of time after Content Partner makes such corrections available to Infoseek; provided, however that if Content Partner advises Infoseek in writing during normal business hours that failure to promptly correct an error could result in serious physical injury to a User, Infoseek shall exercise prompt and commercially reasonable efforts to expedite the correction of such error.

1.12 User Registration

a. DrKoop.com shall ensure that its privacy policy applicable to the DrKoop.com Site and the GO Network-Wrapped Pages, to the extent applicable to its performance under this Agreement, is consistent with Infoseek's privacy policy, as may be changed from time to time, including, without limitation, a mechanism that allows Users to opt in to sharing of User data (not including personal medical information) with Infoseek.

b. The following illustrates the User registration experience which shall be implemented pursuant to this Agreement:

i. An unregistered User in the Health Center encounters DrKoop.com functionality or DKC Health Content that provides the User with an opportunity to register. The standard series of GO Network user registration screens appear, the first of which explains that this is a simultaneous registration for DrKoop.com and GO Network. The User then has the option to continue to register or to click back to the User's original starting point. If the User responds "yes", then the User's data will go simultaneously to DrKoop.com and Infoseek. If the User responds "no", then the User cannot proceed to use DrKoop.com functionality.

ii. If the User who responds "yes" when initially registering as specified in Section 1.12 b.i. above, returns to GO Network or to the DrKoop.com site (not the GO Network-Wrapped Pages) and logs in, the User will be recognized as a registered User of both services (provided that the User is known to the Content Partner as a GO Network registered User).


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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iii. The Infoseek privacy policy shall be available to Users (via a link) at the time of registration as set forth in Section 1.12(b)(i).

iv If a User that has already registered on GO Network elects to opt-in to Content Partner registration, the User shall only be required to execute "one click" to transfer his or her registration data to DrKoop.com.

1.13 DrKoop.com User Data

a. ***. DrKoop.com shall make available to Infoseek, via a method and timing to be mutually agreed upon, all names and email addresses from each Dr.Koop.com User accessing DKC Health Content from the Service provided that such User has opted in to the sharing of his/her data with third parties and provided such disclosure is not prohibited by law or regulation. Notwithstanding the foregoing, DrKoop.com shall not provide personal medical information to Infoseek, including, without limitation, personal medical records. In addition, except as prohibited by law, Dr.Koop.com shall provide to Infoseek all available data (in aggregate, anonymous form only) concerning Users who access the GO Network Wrapped Pages from GO Network, concerning products and/or services purchased by such Users, survey and promotion responses, and other demographic information concerning such Users. Infoseek may use such information for its internal business purposes and may provide such aggregate, anonymous information to third parties as it deems appropriate in connection with its operations; provided, however that such aggregate, anonymous data may not be identified to third parties as DrKoop.com User data. Such User data must be aggregated with other Infoseek User data before being provided to a third party.

1.14 Infoseek User Data

Infoseek shall own all right, title and interest in and to and the exclusive right to use all User data generated on all pages of the Service hosted by Infoseek.

1.15 Go Wrapper

Both parties hereby acknowledge that the GO Network-Wrapped Pages wrapper (the "GO Wrapper") will evolve over the term of the Agreement. To this end, Infoseek shall ensure that the GO Wrapper will include the following elements, consistent with the mock up pages attached hereto as Appendix B

Header
Tabs
Breadcrumbs
Footer

In the event that Infoseek elects to substantially modify the GO Wrapper that is displayed in connection with DKC Health Content, Infoseek shall seek DrKoop.com's approval of such modifications, which approval shall not be unreasonably withheld or delayed.


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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2. FEES AND PAYMENTS

2.1 Content Partner will make payments to Infoseek in the amounts and at the times specified in Appendix F and Appendix G. Content Partner will be responsible for the proper payment of all taxes, including sales, excise and value added taxes, which may be levied in connection therewith, exclusive of taxes based upon Infoseek's net income.

2.2 All payments made to Infoseek hereunder shall be made via wire transfer in accordance with the following instructions, or such other instructions as may be provided to Content Partner in writing by an authorized representative of Infoseek:

Wire transfer, EFT/ACH Payment remittance instructions:


Bank of America
San Francisco, California

                    ABA Number:    121000358
                    Account Name:  Infoseek Corporation
                    Account Number:  12335-30390
                    Swift ID:   BOFAUS6S

3.   CONFIDENTIAL INFORMATION

3.1 Either Infoseek (which, for purposes of this Article 3 only, shall include the GO Partners) or Content Partner may disclose to the other (the "Receiving Party") certain information that the disclosing party deems to be confidential and proprietary ("Proprietary Information"), and technical and other business information of the disclosing party that is not generally available to the public.

3.2 The Receiving Party agrees to use Proprietary Information solely in conjunction with its performance under this Agreement and not to disclose or otherwise use such information in any fashion. The Receiving Party, however, will not be required to keep confidential such Proprietary Information that becomes generally available without fault on its part; is already rightfully in the Receiving Party's possession without restriction prior to its receipt from the disclosing party; is independently developed by the Receiving Party; is disclosed by third parties without similar restrictions; is rightfully obtained by the Receiving Party from third parties without restriction; or is otherwise required by law or judicial process.

3.3 Unless required by law or to assert its rights under this Agreement, and except for disclosure on a "need to know basis" to its own employees, and its legal, investment, financial and other professional advisers on a confidential basis, each party agrees not to disclose the terms of this Agreement or matters related thereto without the prior written consent of the other party.

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4. REPRESENTATIONS AND WARRANTIES

4.1 Content Partner represents and warrants that it is the owner of the Content Partner Content and/or has the right to grant the rights hereunder. Content Partner represents and warrants to Infoseek and the GO Partners that it holds the necessary rights to permit the use of Content Partner Content by Infoseek and the GO Partners for the purpose of this Agreement; that its entry into this Agreement does not violate any agreement with any other party; that its performance under this Agreement will conform to applicable U.S. laws and government rules and regulations; that to the best of its knowledge, after reasonable inquiry, the Content Partner Content is true, accurate and does not contain material omissions; Content Partner further represents and warrants to Infoseek and the GO Partners that the use, reproduction, distribution, transmission, or display of Content Partner Content, Content Partner's collection and use of DrKoop.com User Data and the sale of products and services by Content Partner as contemplated in this Agreement will not (a) violate any laws or any rights of any third parties, including, but not limited to, such violations as infringement or misappropriation of any U.S. copyright, patent, trademark, trade dress, trade secret, music, image, or other proprietary or property right, false advertising, unfair competition, defamation, invasion of privacy or publicity rights, moral or otherwise, or rights of celebrity, violation of any antidiscrimination law or regulation, or any other right of any person or entity; or (b) contain any material that is: unlawful, harmful, fraudulent, threatening, abusive, harassing, defamatory, vulgar, obscene, profane, hateful, racially, ethnically, or otherwise objectionable, including, without limitation, any material that supports, promotes or otherwise encourages wrongful conduct that would constitute a criminal offense, give rise to civil liability, or otherwise violate any applicable local, state or national laws.

4.2 Content Partner represents and warrants that, *** the systems and technology utilized to operate the DrKoop.com Site and the GO Network Wrapped Pages (including, without limitation, order fulfillment systems relating to products sold by Content Partner) are compliant with the following Year 2000 requirements: (a) the occurrence in or use by such systems of dates before, on or after January 1, 2000 will not adversely affect the performance of such systems with respect to date-dependent data, computations, output, or other functions (including, without limitations, calculating, comparing and sequencing); and (b) such systems will not abnormally end or provide invalid or incorrect results as a result of date dependent data.

4.3 Infoseek represents and warrants, *** that the systems and technology utilized by Infoseek to operate the GO Network (including, without limitation, order fulfillment systems relating to products sold by Infoseek) are compliant with the following Year 2000 requirements: (a) the occurrence in or use by such systems of dates before, on or after January 1, 2000 will not adversely affect the performance of such systems with respect to date-dependent data, computations, output, or other functions (including, without limitations, calculating, comparing and sequencing); and (b) such systems will not abnormally end or provide invalid or incorrect results as a result of date dependent data.


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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4.4 Infoseek represents and warrants to Content Partner that *** this Agreement does not violate any agreement with any other party; that its performance under this Agreement will conform to applicable U.S. laws and government rules and regulations; that the Infoseek proprietary technology as utilized by the Service does not infringe any U.S. copyright, patent, trademark, trade dress or trade secret of any person or entity, and that Infoseek Content (as defined in this
Section 4.4) will not (a) violate any U.S. laws or any rights of any third parties, including, but not limited to, such violations as infringement or misappropriation of any copyright, patent, trademark, trade dress, trade secret, music, image, or other proprietary or property right, false advertising, unfair competition, defamation, invasion of privacy or publicity rights, moral or otherwise, or rights of celebrity, violation of any antidiscrimination law or regulation, or any other right of any person or entity; or (b) contain any material that is: unlawful, harmful, fraudulent, threatening, abusive, harassing, defamatory, vulgar, obscene, profane, hateful, racially, ethnically, or otherwise objectionable, including, without limitation, any material that supports, promotes or otherwise encourages wrongful conduct that would constitute a criminal offense, give rise to civil liability, or otherwise violate any applicable local, state, or national laws. As used herein, "Infoseek Content" means any content on the Health Center that has been authored and created solely by Infoseek.

5. LIMITATION OF LIABILITY; DISCLAIMER

5.1 EXCEPT FOR EITHER PARTY'S LIABILITY FOR THIRD PARTY CLAIMS AS SPECIFIED IN ARTICLE 9 BELOW OR IN APPENDIX A, SECTION C(7), OR ANY PARTY'S BREACH OF ARTICLE 3, OR DAMAGES ARISING FROM PERSONAL INJURY, IN NO EVENT SHALL CONTENT PROVIDER, INFOSEEK, GO PARTNERS OR ANY OF THEIR AFFILIATES BE LIABLE TO ANY OTHER PARTY OR ITS AFFILIATES FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES OF ANY NATURE, EVEN IF SUCH PARTY SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING SHALL APPLY REGARDLESS OF THE NEGLIGENCE OR OTHER FAULT OF ANY PARTY AND REGARDLESS OF WHETHER SUCH LIABILITY SOUNDS IN CONTRACT, NEGLIGENCE, TORT, STRICT LIABILITY OR ANY OTHER THEORY OF LIABILITY.

5.2 EXCEPT AS SET FORTH IN ARTICLE 4, CONTENT PARTNER, INFOSEEK AND THE GO PARTNERS MAKE NO, AND EACH PARTY ACKNOWLEDGES THAT EACH PARTY HAS NOT MADE ANY, AND HEREBY SPECIFICALLY DISCLAIMS ANY, REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SERVICE, THE CONTENT PARTNER CONTENT, GO PARTNERS, THE DRKOOP.COM SITE, OR THE OPERATION OF THE CONTENT PARTNER CONTENT ON THE SERVICE, INCLUDING, BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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6. TERM AND TERMINATION

6.1 This Agreement shall be effective on the date executed by both parties ("Effective Date") and shall continue in force for an initial term ending thirty-six (36) months from the Effective Date. Upon prior mutual written agreement, the then current term of this Agreement may be renewed at the end of such initial term and each anniversary date thereafter for one (1) year renewal terms. Notwithstanding the foregoing, either party may terminate this Agreement without cause effective as of the second anniversary of the Effective Date by providing at least 120 days prior written notice to the other party. If this Agreement is not terminated as of the second anniversary of the Effective Date, the Agreement shall continue in full force and effect for another twelve (12) months (unless terminated for cause during said 12 month period).

6.2 Either party will have the right to immediately terminate this Agreement if the other party is in default of any obligation herein, including failure of DrKoop.com to provide DKC Health Content, or Commerce Content, and such breach is incapable of being cured, or if such breach is capable of cure, such breach is not cured within thirty
(30) days (or fourteen (14) days with respect to any default in any payment obligation) after receipt of written notice of such default from the non-defaulting party or within such additional cure period as the non-defaulting party may authorize.

6.3 If the GO Network-Wrapped Pages do not meet the following performance standards (which shall be measured by Infoseek or an independent third party mutually agreed to between the parties and paid for solely by DrKoop.com), and such failure is not due to force majeure events or the failure of any third party services, hardware, software or telecommunications systems not controlled by Content Partner, Infoseek shall notify the Content Partner in writing and Content Partner shall exercise commercially reasonable efforts to promptly correct the failure. ***

***

If Infoseek elects to terminate the Agreement pursuant to this Section 6.3, such termination shall relieve both parties of any further liability (except as provided in Section 6.5 below), including but not limited to, the payment of fees as set forth in Section 2.

6.4 If that portion of the Health Center hosted by Infoseek ("Health Center" as used in this Section 6.4) does not meet the following external performance standards, as measured by Keynote or another independent service provider, mutually agreed to between the parties, and such failure is not due to force majeure events or the failure of any third party services, hardware, software or telecommunications systems not controlled by Infoseek, DrKoop.com shall notify the Infoseek in writing and upon such notice Infoseek shall use commercially reasonable efforts to promptly correct the problem. ***. Such performance standards are as follows:

***

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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6.5 The following provisions of this Agreement shall survive the termination or expiration of this Agreement: 1.13 (first sentence only), 1.14, 2.1, Article 3, Article 5, 8.1 (first two sentences only), 8.2, Article 4 (as to claims arising prior to termination or expiration or claims based on events arising prior to termination or expiration), Article 9, and Article 10.

6.6 Upon the termination or expiration of this Agreement, each party shall
(a) promptly return all Proprietary Information, and other information, documents, manuals and other materials belonging to the other party (or any GO Partner), except as may be otherwise provided in this Agreement; and (b) promptly remove the other party's content, branding, links, and any other material provided under this Agreement.

6.7 During the term of this Agreement, Infoseek shall not enter into any agreements to permit the sale or distribution of tobacco or tobacco products on the Health Center. Notwithstanding the foregoing, Content Partner acknowledges and agrees that information concerning tobacco and tobacco products may be displayed in standard search and directory result format on the Health Center in response to the search queries of Users.

7. FORCE MAJEURE

Neither party will be liable for delay or default in the performance of its obligations under this Agreement (other than for non-payment) if such delay or default is caused by conditions beyond its reasonable control, including, but not limited to, fire, flood, accident, earthquakes, telecommunications line failures, storm, acts of war, riot, government interference, strikes and/or walk-outs. In the event of a force majeure event which lasts longer than twenty (20) days, the party not experiencing the force majeure event may terminate this Agreement upon prior written notice to the other party.

8. ADVERTISING AND PROMOTION; PUBLICITY

8.1 Content Partner shall not issue or permit the issuance of any press releases or publicity regarding, or grant any interview, or make any public statements whatsoever concerning, this Agreement, GO Network or Infoseek (or its Affiliates, including, without limitation, ESPN.com, ABCNews.com, The Walt Disney Company, or any of their Affiliates) without prior coordination with and written approval from Infoseek, which approval may be granted or withheld in Infoseek's sole discretion. Infoseek shall not issue or permit the issuance of any press releases or publicity regarding, or grant any interview, or make any public statements whatsoever concerning this Agreement or Content Partner without prior coordination with and written approval from Content Partner, which approval may be granted or withheld in Content Partner's sole discretion. Notwithstanding the foregoing, promptly after execution of this Agreement and during the term of the Agreement, DrKoop.com ***


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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shall reasonably cooperate with Infoseek in the issuance of a press release, mutually agreed to between the parties, announcing this Agreement and endorsing the distribution of DKC Health Content on the Health Center of GO Network. All Content Partner endorsements and public statements concerning this Agreement must receive Infoseek's prior review and approval. Notwithstanding the foregoing, DrKoop.com shall not state or imply, in advertisements, writings, or otherwise, that Infoseek or its Affiliates endorse DrKoop.com's products or services or any other product or service. Content Partner shall not use, verbally or in writing, the names ABC, ABCNews or The Walt Disney Company in connection with the sale of advertising by Content Partner (except that Content Partner may describe the sites included within the GO Network).

8.2 Neither Infoseek or the GO Partners shall have any right to use the name and/or likeness of Dr. C Everett Koop or to make any statements, whether written or oral, which state or otherwise imply, directly or indirectly, any endorsement from or affiliation with Dr. Koop in any manner whatsoever without the prior written consent of DrKoop.com, which consent may be withheld in DrKoop.com's sole discretion.

8.3 Content Partner and Infoseek may undertake such joint marketing efforts as may be mutually agreed upon from time to time. Each party shall cooperate and assist the other party by supplying, without charge, reasonable quantities of materials for the other party's marketing and promotional activities. Neither party shall be obligated to participate in any joint marketing efforts, except as expressly provided in Section 8.1 above.

9. INDEMNIFICATION

9.1 Content Partner agrees to defend, indemnify and hold Infoseek and the GO Partners and their officers, directors, agents and employees harmless from and against any and all claims, demands, liabilities, actions, judgments, and expenses, including reasonable fees and expenses of attorneys, paralegals and other professionals, arising out of or related to (i) any breach or alleged breach of any of Content Partner's representations and warranties set forth in Section 4.1;
(ii) any breach by Content Partner of an international law, rule or regulation or international third party proprietary right (as if Content Partner had made the representations and warranties equivalent to those set forth in Section 4.1 regarding US laws, regulations and proprietary rights) (ii) any injury to person or property caused by any products or services sold by Content Partner, or any User's use of or reliance on the DKC Health Content; (iii) any injury to person or property caused by any products or services sold through Content Partner Content (including, without limitation, the sale of products by Affiliate Partners); (iv) any other claim with respect to Content Partner, Content Partner Content, or products or services sold by or through Content Partner or its Affiliate Partners, or (v) Content Partner's sales or marketing practices. Content Partner shall bear full responsibility for the defense (including any settlements) of any such claim; provided however, that (a) Content Partner shall keep Infoseek (and GO Partners, as applicable) informed of, and consult with Infoseek in connection with the progress of such litigation or settlement; and (b) Content Partner shall not have any right, without Infoseek's written consent, to settle any such claim if such settlement arises from or is part of any criminal action, suit or proceeding or contains a stipulation to or admission or acknowledgment of, any liability or wrongdoing (whether in contract, tort or otherwise) on the part of Infoseek or its Affiliates or otherwise requires Infoseek or its Affiliates to take or refrain from taking any material action (such as the payment of fees).

9.2 Infoseek agrees to defend, indemnify and hold Content Partner and its officers, directors, agents and employees harmless from and against any and all claims, demands, liabilities, actions, judgments, and expenses, including reasonable fees and expenses of attorneys, paralegals and other professionals, arising out of or related to (i) any breach or alleged

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breach of any of Infoseek's representations and warranties set forth in Section 4.4; (ii) any injury to person or property caused by any Infoseek products or Infoseek services sold by Infoseek on the Health Center, or any User's use of or reliance on the Infoseek Content displayed on the Health Center; or (iii) any breach by Infoseek of an international law, rule or regulation or international third party proprietary right (as if Infoseek had made the representations and warranties equivalent to those set forth in Section 4.4 regarding US laws, regulations and proprietary rights). Infoseek shall bear full responsibility for the defense (including any settlements) of any such claim; provided, however, that (a) Infoseek shall keep Content Partner informed of, and consult with Content Partner in connection with the progress of such litigation or settlement; and (b) Infoseek shall not have any right, without Content Partner's written consent, to settle any such claim if such settlement arises from or is part of any criminal action, suit or proceeding or contains a stipulation to or admission or acknowledgment of, any liability or wrongdoing (whether in contract, tort or otherwise) on the part of Content Provider or its Affiliates or otherwise requires Content Partner or its Affiliates to take or refrain from taking any material action (such as the payment of fees).

9.3 Each GO Partner agrees to defend, indemnify and hold Content Partner and its officers, directors, agents and employees harmless from and against any and all claims, demands, liabilities, actions, judgments, and expenses, including reasonable fees and expenses of attorneys, paralegals and other professionals, arising out of or related to any content authored by such GO Partner which is displayed in connection with the DKC Health Content on a GO Partner's Internet site. The indemnifying party shall bear full responsibility for the defense (including any settlements) of any such claim; provided however, that
(a) such party shall keep Content Partner informed of, and consult with Content Partner in connection with the progress of such litigation or settlement; and (b) such party shall not have any right, without Content Partner's written consent, to settle any such claim if such settlement arises from or is part of any criminal action, suit or proceeding or contains a stipulation to or admission or acknowledgment of, any liability or wrongdoing (whether in contract, tort or otherwise) on the part of Content Partner or otherwise requires Content Partner to take or refrain from taking any material action (such as the payment of fees).

10. GENERAL TERMS AND CONDITIONS

10.1 The parties to this Agreement are independent contractors. Neither party is an agent, representative or partner of the other party. Neither party shall have any right, power or authority to enter into any agreement for or on behalf of, or to incur any obligation or liability for, or to otherwise bind, the other party. This Agreement shall not be interpreted or construed to create an association, joint venture, co-ownership, co-authorship, or partnership between the parties or to impose any partnership obligation or liability upon either party.

10.2 Neither party shall assign, sublicense or otherwise transfer (voluntarily, by operation of law or otherwise) this Agreement or any right, interest or benefit under this Agreement, without the prior written consent of the other party; provided, however, that either party may assign this Agreement to any entity that acquires all or substantially all of the assets or shares (or controlling shares) of such party; provided that the acquiring entity is not a direct competitor of the other party. Any attempted assignment, sublicense or transfer by a party in derogation hereof shall be null and void. Subject to the foregoing, this Agreement shall be fully binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. Any change of control of either party shall be deemed an "assignment" for purposes of this
Section 10.2; provided, however, that as long as control is not transferred to a direct competitor of the

13

nonassigning party, it shall be an approved assignment. As used herein, "change of control" shall include any event (including, without limitation, a merger, sale, liquidation, transfer, encumbrance or other disposition) which results in a change of the control of a party. As used in this Section 10.2 "change of control" shall mean a change in the legal, beneficial or equitable ownership, directly or indirectly, of more than fifty (50%) of a class of capital stock having voting rights of either party.

10.3 No change, amendment or modification of any provision of this Agreement or waiver of any of its terms will be valid unless set forth in writing and signed by the party to be bound thereby.

10.4 This Agreement shall be interpreted, construed and enforced in all respects in accordance with the laws of the State of California. Each party irrevocably consents to the exclusive jurisdiction of any state or federal court for or within Santa Clara County, California over any action or proceeding arising out of or related to this Agreement, and waives any objection to venue or inconvenience of the forum in any such court.

10.5 The failure of either party to insist upon or enforce strict performance by the other party of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such party's right to assert or rely upon any such provision or right in that or any other instance; rather the same shall be and remain in full force and effect.

10.6 Any notice, approval, request, authorization, direction or other communication under this Agreement shall be given in writing, will reference this Agreement, and shall be deemed to have been delivered and given (a) when delivered personally; (b) three (3) business days after having been sent by registered or certified U.S. mail, return receipt requested, postage and charges prepaid; or (c) one (1) business day after deposit with a commercial overnight courier, with written verification of receipt. All communications will be sent to the addresses set forth below or to such other address as may be designated by a party by giving written notice to the other party pursuant to this Section 10.6.

If to Infoseek:                    If to Content Partner:
Infoseek Corporation               drkoop.com, Inc.
1399 Moffett Park Drive            8920 Business Park Drive, Longhorn Suite
Sunnyvale, CA 94089-1134           Austin, Texas 78759
Attention: Legal Department        Attention: CFO
Tel: (408) 543-6000                Tel: (512) 726-5110

With a copy to:                    With a copy to:
ABCNews.com                        Latham & Watkins
77 W. 66th Street                  135 Commonwealth Drive
New York, NY 10023                 Menlo Park, CA  94025
Attention: Cherie Carr, Esq.       Attention:  Anthony Richmond, Esq.
Tel: (212) 456-7310                Tel:  (650) 463-4600

10.7 This Agreement and the Appendices attached hereto and incorporated herein by reference constitute the entire agreement between the parties and supersede any and all prior agreements or understandings between the parties with respect to the subject matter hereof. Neither party shall be bound by, and each party specifically objects to, any term, condition other provision or other condition which is different from or in addition to the provisions of this Agreement (whether or not it would materially alter this Agreement) and which is proffered by the other party in any purchase order, correspondence or other

14

document, unless the party to be bound thereby specifically agrees to such provision in writing.

10.8 The headings used in this Agreement are for convenience only and are not to be construed to have legal significance. In the event that any provision of this Agreement conflicts with the law under which this Agreement is to be construed or if any such provision is held invalid by a court with jurisdiction over the parties to this Agreement, such provision shall be deemed to be restated to reflect as nearly as possible the original intentions of the parties in accordance with applicable law, and the remainder of this Agreement shall remain in full force and effect. This Agreement may be executed in counterparts.

INFOSEEK CORPORATION                         DRKOOP.COM, INC.

By: /s/ Harry Motro                          By: /s/ Donald W. Hackett
   --------------------------                   ----------------------------
     Authorized Signature                         Authorized Signature

Print Name: Harry Motro                      Print Name: Donald W. Hackett
           ------------------                           --------------------

Title: CEO                                   Title: CEO
      -----------------------                      -------------------------

Date: 4/9/99                                 Date: 4/9/99
     ------------------------                     --------------------------

Accepted will respect to all matters affecting ABCNews.com and ABC News/Starwave Partners d/b/a ABC News Internet Ventures:

ABC NEWS/STARWAVE PARTNERS D/B/A ABC NEWS INTERNET VENTURES

By: /s/ Patricia E. Vance
   --------------------------
Print Name: Patricia E. Vance
           ------------------
Title: Senior Vice President
      -----------------------
Date: 4/9/99
     ------------------------

Accepted with respect to all matters affecting ESPN.com and ESPN/Starwave Partners d/b/a ESPN Internet Ventures:

ESPN/STARWAVE PARTNERS D/B/A ESPN INTERNET VENTURES

By: /s/ Steve Tanes
   --------------------------
Print Name: Steve Tanes
           ------------------
Title: SVP-General Manager
      -----------------------
Date: 4/9/99
     ------------------------

15

APPENDIX A

A. HEALTH CONTENT

"Health Content" means content that relates to human health conditions, medicine, and the treatment of disease.

"DKC Health Content" means content that relates to human health conditions, medicine, and the treatment of disease as further defined on Appendix A-1, which content includes DrKoop.com branding. Dr.Koop.com may, subject to Infoseek's approval, which shall not be unreasonably withheld or delayed, revise Appendix A-1 to include new content and functionality added to the DrKoop.com Site after the date of this Agreement. As part of DKC Health Content, DrKoop.com will provide Infoseek and the GO Partners with unique Health Content that is not available from DrKoop.com on any other Internet portal with which DrKoop.com has an agreement.

B. GO NETWORK PROGRAM DESCRIPTION

1. A sample schematic illustrating the layout of the Infoseek hosted Health Center is set forth in Appendix B. Any material change to such layout shall be mutually agreed to by Infoseek and Content Partner.

2. a. DrKoop.com shall provide DKC Health Content and related tools to the Health Center in areas and subjects as specified by Infoseek. ***

b. ***

***

3. All links pointing to GO Network-Wrapped Pages from the Service shall provide links back to the Service.

4. Infoseek will have editorial control over all content appearing on the Service and branded in any way to Infoseek and GO Network. Notwithstanding the foregoing, Infoseek shall not modify, edit, abbreviate or censor DKC Health Content, but Infoseek shall have the right to not include such content on any pages of GO Network.

5. All DKC Health Content shall carry Content Partner's standard legal disclaimer, which is set forth in Appendix A-1, and may be subject to reasonable changes from time to time. This disclaimer shall be presented in its entirety any time DKC Health Content is displayed. In addition, certain third party content which is provided by Content Partner may have additional requirements for displaying, such as including the logo of the original content provider (for example, Dartmouth Medical content must carry the branding and logo of the Dartmouth Medical School), which requirements are described on Appendix A-1. Content Partner will provide further details concerning such requirements at the time DKC Health Content is submitted for inclusion in the Service.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

16

6. At Infoseek's request, DrKoop.com shall temporarily send to Infoseek's facilities a minimum of three (3) on-site designers/producers/engineers during the term of this Agreement for a mutually agreed upon duration for purposes of assisting Infoseek in building the Health Center, and Infoseek Commerce Area as it relates to Commerce Content.

7. ***

8. If Infoseek elects to provide Health Content for other potential GO Network health areas during the term of this Agreement, Infoseek shall have the option, but not the obligation, subject to Content Provider's approval, which shall not be unreasonably withheld or delayed, to use any such DrKoop.com Health Content pursuant to GO Network producers and editors decisions.

9. ***

10. Any promotions and/or links to GO Network provided by DrKoop.com shall be approved in advance by Infoseek, which approval shall not be unreasonably withheld or delayed.

11. Both parties will discuss how Infoseek may integrate Dr. Koop community functions (Chat and Message Boards) into Go Network Communities Center and Go Network Health Center ***. Go Network Community Center is defined as Chat and Message Boards only. Such functions are scheduled to be launched in ***. Fees for custom Go Community services will be assessed on a case by case basis. Infoseek shall provide Content Partner with a right of first negotiation (for a period not to exceed ten (10) business days) to become a content provider with respect to health related matters in the GO Network Community Center.

C. PROGRAM DESCRIPTION - ABCNEWS.COM

1. Subject to the following exceptions, ABCNews.com shall not ***

2. DrKoop.com shall provide DKC Health Content to ABCNews.com in content areas and subjects as specified by ABCNews.com. *** All Health Content appearing on ABCNews.com shall be hosted by ABCNews.com or Infoseek, or an Infoseek Affiliate, unless otherwise mutually agreed. Any links from ABCNews.com to DKC Health Content will be links directed to GO-Network Wrapped Pages or to pages with an ABCNews.com wrapper or to pages with no wrapper, at ABC's sole discretion. Nothing in this Agreement shall give Content Partner the right to sell or provide advertising of any kind on ABCNews.com.

3. ABCNews.com shall determine which of the following content shall be included as part of the DKC Health Content displayed on ABCNews.com and the parties shall mutually agree upon a schedule and method for such implementation within 90 days of the Effective Date.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

17

OVERALL HEALTH AND INDIVIDUAL ILLNESS RISK ASSESSMENT TOOLS

a. Risk calculators for specific diseases/conditions
b. Personal health diary
c. Clinical pathways/symptom checklists "trees"
d. Health IQ quizzes

REFERENCE MATERIALS

a. Virtual Anatomy applications
b. Virtual tour of body
c. Link to Physician Finder Service
d. Link to Hospital Rankings
e. Link to Encyclopedic health manual

MEDICAL RECORDS

a. The ability of ABCNEWS.com users to download Personal Medical Record(TM)
b. Personal Medical Record(TM)

VIDEO AND LIVE EVENTS

Other
Alternative Medicine resources

4. All links pointing to the GO Network-Wrapped Pages (or pages with an ABCNews.com wrapper, if applicable) from ABCNews.com shall provide links back to ABCNews.com.

5. ABCNews.com and DrKoop.com shall negotiate in good faith *** to finalize a mutually acceptable agreement pursuant to which ABCNews.com would be the *** provider of news and headlines to DrKoop.com (the "News Agreement"). Any such headlines or news stories would be provided *** for use on the GO Network-Wrapped Pages and/or the DrKoop.com Site. Provided a mutually acceptable News Agreement is finalized within such *** period, DrKoop.com shall follow the process in item C (6) below if it seeks to obtain news stories not provided by ABCNews.com. If a News Agreement is not finalized within such time period, the provisions of Section C(6) below shall be inapplicable.

6. ***

7. ABCNews.com will have editorial control over all content appearing on its site and shall control the look and feel of its site. Notwithstanding the foregoing, ABCNews.com shall not modify, edit, abbreviate or censor DKC Health Content, but ABCNews.com shall have the right not to include such content on any pages of ABCNews.com. ***

8. Any promotions and/or links to ABCNews.com provided by DrKoop.com shall be approved in advance by ABCNews.com

9. Nothing in this Agreement shall restrict or limit the right of ABCNews.com to sell and display on the ABCNews.com site advertising, promotions and sponsorships from DrKoop.com Direct Competitors listed on Appendix C. The advertising restrictions set forth in Section B (7) of this Appendix A do not apply to ABCNews.com.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

18

10. ABC AFFILIATE PROVISIONS

In consideration of this Agreement, ABCNews.com and DrKoop.com agree as follows:

(a) Dr. Koop.com *** a "link" on the ABC Local Net for ***, pursuant to a Distribution Agreement to be mutually agreed to between the parties. The ABC Local Net makes available Internet content to 115 affiliate ABC television stations throughout the country.

(b) Provided that DrKoop.com has purchased the link referenced in section 10(a) above, ABCNews.com will use reasonable efforts to facilitate introductory communications and meetings between DrKoop.com management and executives at all ABC owned stations concerning DrKoop.com services and strategic initiatives.

(c ) ABC owned and affiliate stations in all United States markets will be *** participate in DrKoop.com's station affiliate program (the "DrKoop Affiliate Program"), in designated market areas ("DMAs") where this program is offered at the sole discretion of DrKoop.com . Provided that DrKoop.com has purchased the link referenced in Section 10(a) above, Information concerning the details of the DrKoop Affiliate Program, which details shall be mutually agreed to between the parties, will be distributed to such affiliates by ABC, at DrKoop.com's sole expense, within 30 days of the Execution Date of this agreement.

(d) Should an ABC affiliated station express interest in the DrKoop Affiliate Program, DrKoop.com will arrange for a presentation of the DrKoop Affiliate Program terms to the station at the mutual convenience of DrKoop.com and the station, and such station will have 10 business days following this presentation to either accept or reject the terms of the DrKoop Affiliate Program. If DrKoop.com and such station are unable to agree on terms ***

11. ABCNews.com and Infoseek shall each appoint a project liaison to coordinate the provision of DKC Health Content to ABCNews.com.

D. PROGRAM DESCRIPTION - ESPN.COM

1. Subject to the exceptions set forth below in Section this Section D (1), during the term of this Agreement, Content Provider shall be the exclusive provider of Health Content to the section of the ESPN.com site devoted primarily to health and medical related topics, which section is currently named the Training Room (the "Training Room"). ***

2. ESPN.com and DrKoop.com shall mutually agree upon a schedule for the display of DKC Health Content on the Training Room of ESPN.com, which may include implementation of the following features:


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

19

(i) weekly articles for both the fitness and conditioning and the sports nutrition subsections of Training Room, either re-purposed directly from existing DKC Health Content or written specifically by DrKoop.com staff for ESPN.com's audience of recreational athletes and sports fans.

(ii) weekly replies from experts affiliated with DrKoop.com to ESPN.com user questions in each of the two subsections specified in
Section D. 2(i) above.

(iii) online assessments (quizzes, rate-yourself surveys, body-fat calculators, etc.) for both subsections.

(iv) at least one photo for each article and illustrations, graphs, statistical tables and charts wherever appropriate in subsections specified in Section D. 2(i) and D.2(ii) above.

(v) periodic online chats with experts provided by DrKoop.com.

3. DrKoop.com may provide additional health related content in areas within the League sites (NFL, NBA, and NASCAR); subject to Infoseek, in its role as a general partner of EIV, using commercially reasonable efforts to receive applicable approvals from the owners of such sites; no assurance can be provided that such approvals will be obtained.

4. DrKoop.com shall provide DKC Health Content to the Training Room in areas and subjects as specified by ESPN.com., which shall be mutually agreed to by the parties within 90 days of the Effective Date. ***

5. All links pointing to the GO Network-Wrapped Pages from ESPN.com shall provide links back to ESPN.com. All Health Content appearing on ESPN.com shall be hosted by ESPN.com or Infoseek, or an Infoseek Affiliate, unless otherwise mutually agreed. Any links from ESPN.com.com to DKC Health Content will be links directed to GO- Network Wrapped Pages or to pages with an ESPN.com wrapper or to pages with no wrapper, at ESPN.com's sole discretion. Nothing in this Agreement shall give Content Partner the right to sell or provide advertising of any kind on ESPN.com.

6. ***

7. ESPN.com will have editorial control over all content appearing on its site and the look and feel of its site. Notwithstanding the foregoing, ESPN.com shall not modify, edit, abbreviate or censor DKC Health Content, but ESPN.com shall have the right to not include such content on pages of ESPN.com.

8. Any promotions and/or links to ESPN.com provided by DrKoop.com shall be approved in advance by ESPN.com

9. Nothing in this Agreement shall restrict or limit the right of ESPN.com to sell or provide advertising, promotions and sponsorships for display on ESPN.com (including the Training Center) ***. The advertising restrictions set forth in
Section B (7) of this Appendix A do not apply to ESPN.com.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

20

APPENDIX A-1

This Appendix A-1 sets forth existing DKC Health Content as of the Effective Date. Content Partner may revise this Appendix from time to time, to reflect new content added to the DrKoop.com Site, and to reflect the termination or expiration of third party agreements, which revisions shall be subject to Infoseek's reasonable approval; notwithstanding the foregoing, Content Partner shall maintain the quality and quantity of DKC Health Content available to Infoseek and the GO Partners throughout the term of the Agreement.

Category       Source                Copyright          Distribution              Disclaimer         Logo
                                                        Rights                     Required         Needed
==========================================================================================================
Disease

               Dartmouth             Drkoop.com         any use                    Standard          Yes



               N. Snyderman          Drkoop.com         any use                    Standard          Yes

               Public Domain - NIH   Drkoop.com         any use                    Standard          Yes

               Patient Associations                     Individual deals -         Standard          No
                                                        please inquire about
                                                        specifics with
                                                        bhansen@drkoop.com
==================================================================================================
Expert         Sharon Howard -       Drkoop.com         any use                    Standard          No
Content        Nutrition

               Armond Tecco -        Drkoop.com         any use                    Standard          No
               Fitness

               Debora Orrick -       Drkoop.com         any use                    Standard          No
               Smoking

               Elizabeth Farrugia    Drkoop.com         any use                    Standard          No
               - Insurance
==================================================================================================
Pharmacy       Joe Graedon           JG                 Limited offline use        Standard          No

21

               Multum                Multum                                        Standard +       Yes
                                                                                    Multum
==================================================================================================
Insurance      J. Hallam / T.        Drkoop.com         any use                    Standard         No
               Rowen
==================================================================================================


==================================================================================================
Clinical       Public domain                            any use                    Standard         No
Trials
==================================================================================================
Community      Day in my life        Drkoop.com         any use                    Standard         No

               In the Spotlight                         Individual deals -         Standard         No
                                                        please inquire
==================================================================================================
                                                                                                    No
Health Site                          Drkoop.com         any use                    Standard
Reviews

Standard Disclaimer

This information is not intended to be a substitute for professional medical advice. You should not use this information to diagnose or treat a health problem or disease without consulting with a qualified healthcare provider. Please consult your healthcare provider with any questions or concerns you may have regarding your condition.

Multum Disclaimer

Every effort has been made to ensure that the information provided by Multum is accurate, up-to-date, and complete, but no guarantee is made to that effect. In addition, the drug information contained herein may be time sensitive and should not be utilized as a reference resource beyond the date hereof. Also requires user to accept Terms of Use when such content is first displayed.

22

APPENDIX B

GO NETWORK-WRAPPED PAGES SPECIFICATIONS
AND
INFOSEEK-HOSTED HEALTH CENTER SCHEMATIC

See attached

23

GO health Center Level One


header

Navigation     Family Health    Conditions

               *etc.            *etc

               *etc.            *etc                   -Community

                                                       -Health

               Health/Wellness  Health Resources        Record

               *etc             *etc                   -Feature TBD

               *etc             *etc                   -Snyderman

               Health News

               -etcetcetc    Red=Fourth level

               -etcetcetc    Black=second level

               -etcetcetc    Green=third level

                                            =advertisement



GO health Center Level Two (except news)


header

Navigation                  Family Health

                               . Topic                 -Community
                               . Topic                 -Health
                               . Topic                   Record
Related GO                     . Topic
Links                          . Topic                 -Link TBD
Links                          . etc
Links



GO Health Center Level Three


header

       Navigation                 Heart Disease


                                   Links to                       Links to
                                    Dr Koop                        Dr Koopv
                                                    Links to
                                                    Dr Koopv

       Related GO
       Links
       Links
       Links
                                      Links to
                                       Dr Koop

-------------------------------------------------------------------------------


APPENDIX C
(Long List)

***

***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


APPENDIX D

***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


APPENDIX E

ERROR CORRECTION SCHEDULE

The response times within which DrKoop.com shall remedy and/or correct any material limitations or errors in any Content Partner Content made available by or through DrKoop.com that Infoseek brings to DrKoop.com's attention or about which DrKoop.com otherwise becomes aware are specified below. DrKoop.com shall acknowledge receipt of the problem description, and, in the time frames specified below, remedy and/or correct the problem.

Program/Error Severity Levels Problem/Error Correction Time

***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


AMENDED AND RESTATED APPENDIX F TO THE DISTRIBUTION AGREEMENT
FEES AND PAYMENTS

THIS AMENDED AND RESTATED APPENDIX F TO THE DISTRIBUTION AGREEMENT is made as of the 9th day of April, 1999 by and between Infoseek Corporation, a corporation duly organized under the laws of California, with its principal place of business at 1399 Moffett Park Drive, Sunnyvale, California 94089-1134, hereinafter referred to as "Infoseek", and drkoop.com, Inc., a corporation organized under the laws of the State of Delaware with its principal place of business at 8920 Business Park Drive, Longhorn Suite, Austin, Texas 78759, hereinafter referred to as "Content Partner" or "DrKoop.com". This Addendum is effective as of April 9, 1999 (the "Effective Date")

BACKGROUND

Whereas, Infoseek and drkoop.com are parties to that certain Distribution Agreement, dated April 9, 1999 (the "Agreement"). Infoseek and drkoop.com have agreed to revise and restate Appendix F to the Agreement in its entirety to reflect pricing which was agreed to by the parties.

Appendix F is hereby revised and restated as follows:

A. Fees and Payments

1. This Agreement is contingent upon the closing of a financing transaction (including, without limitation, the proposed initial public offering of common stock) resulting in aggregate net cash proceeds to Content Partner of not less than Thirty Million Dollars ($30,000,000) (herein the "Financing"). In the event the Financing is not completed on or before June 30, 1999, either party may terminate this Agreement on 30 days prior written notice, provided such notice is provided prior to August 1, 1999. In the event DrKoop.com is not successful in completing the Financing and this Agreement is terminated by either party, DrKoop.com shall pay to Infoseek a nonrefundable payment of One Million Three Hundred Seventy Thousand Eight Hundred Thirty-Four dollars ($1,370,834) by no later than August 1, 1999 (which shall be in addition to the One Million Dollars up front payment to be paid upon the Execution Date).

2. DrKoop.com shall pay to Infoseek an up-front nonrefundable payment of One Million Dollars ($1,000,000) for engineering services due and payable upon the Execution Date (as defined in Section 9 below) by DrKoop.com. Within 30 days after the close of the Financing, but in no event later than June 30, 1999, DrKoop.com shall pay Infoseek an additional up-front payment of Two Million Seven Hundred Fifty-Four Thousand Eight Hundred and Fifteen Dollars ($2,754,815). Such prepayment is attributable to the following components of this Agreement:

Ecommerce Premier Merchant listing ($1,414,891)

Exclusivity in the Health Center and related content distribution ($2,339,924).


3. In addition, DrKoop.com shall issue 250,000 warrants to Infoseek pursuant to the form of warrant agreement attached hereto as Appendix I, which agreement shall be executed concurrently with this Agreement.

4. ***

6. Infoseek (or its agents or Affiliates) shall receive all monies derived from advertising, product sales, and all other activities and transactions on all pages of GO Network hosted by Infoseek or its Affiliates. DrKoop.com shall receive all monies derived from advertising, product sales and all other activities and transactions on GO Network-Wrapped Pages, except as otherwise expressly provided herein.

7. During the term of this Agreement, DrKoop.com shall pay to Infoseek *** of all Net Revenues in excess of *** received by DrKoop.com attributable to all Commerce Content transactions conducted by Users within the Health Center or attributable to links on Levels 1, 2 or 3 within the Health Center. As used herein, Net Revenues means gross revenues received by DrKoop.com for such transactions reduced by (1) any amounts paid directly for the acquisition of goods or services intended for resale; (2) any amounts for refunds or other credits including amounts credited for product returns, bad debt or fraud; and
(3) any applicable sales, use, value added or withholding taxes (other than income taxes) associated with such sales. As used in this Section 7, Commerce Content means any products and/or services relating to DrKoop.com Premier Products (as defined in Appendix G, Section 6), health insurance sales, or clinical trials made available by DrKoop.com or by an Affiliate Partner on the GO Network-Wrapped Pages.

8. Infoseek shall have the right to retain a U.S. nationally prominent or other mutually agreeable independent auditor to whom DrKoop.com shall allow reasonable access to DrKoop.com's applicable books of account and other for the purpose of verifying the amounts due and payable to Infoseek under this Agreement. Access to DrKoop.com's documentation shall be during DrKoop.com's regular business hours upon at least fifteen (15) business days prior written notice. In the event that an audit discloses an underpayment of more than five percent (5%) of the amount due to Infoseek, DrKoop.com shall immediately pay to Infoseek the amount of such underpayment and shall pay the reasonable costs of such audit.

9. Fees and Payment Schedules for the Infoseek Commerce Area are specified in Appendix G hereto.

10. All Infoseek invoices are to be mailed to:

drkoop.com, Inc.
8920 Business Park Drive
Longhorn Suite
Austin, Texas 78759


*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


Attention: Accounts Payable

11. Content Partner Content shall be accessible by Users on the Service within 90 days from the Effective Date (the "Execution Date"). At such time, the Advertising Agreement by and between Infoseek and drkoop.com dated February 26, 1999, shall terminate and such termination shall relieve both parties of any further liability, including but not limited to, the payment of fees thereunder. Notwithstanding the foregoing, future payments under such Advertising Agreement shall terminate upon the Effective Date of this Agreement.

(Signature Page Follows)


Except as amended and restated by this Amended and Restated Appendix F to the Distribution Agreement, the Agreement remains in effect pursuant to its terms, and is hereby ratified and confirmed.

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Appendix F to the Distribution Agreement as of the date first written above.

INFOSEEK CORPORATION                         DRKOOP.COM, INC.

By:  /s/ Andrew Newton                       By:  /s/ Ian Bagnall
   --------------------------------             --------------------------------
     Authorized Signature                       Authorized Signature

Print Name:  Andrew Newton                   Print Name:  Ian Bagnall
           ------------------------                     ------------------------

Title:  General Counsel                      Title:  Vice President, Business
      -----------------------------                -----------------------------
                                                      Development
                                                      -----------

Date:  May 12, 1999                          Date:  May 11, 1999
     ------------------------------               ------------------------------


APPENDIX G

COMMERCE TERMS

1. Definitions

1.1 "Department" means a commerce category designated on and linked from the home page of the Infoseek Commerce Area, such as Books, Music, Toys & Games, as further specified in this Appendix G.

1.2 "Infoseek Commerce Area" means the electronic commerce/shopping area located on the Service also known as "GO SHOP".

1.3 "Commerce Content" means the content provided to Infoseek by DrKoop.com for placement on the Infoseek Commerce Area relating to DrKoop.com Premier Products (as defined in Section 6 below) made available by DrKoop.com or by an Affiliate Partner on the GO Network Wrapped Pages. Commerce Content may include DrKoop.com's or Affiliate Partner's trademarks, service marks, logos and related proprietary materials. As used herein, "Affiliate Partner" means any third party web site to which DrKoop.com provides a link which allows Users who follow such link to purchase a product or service.

1.4 "Sub-Department" means a specific topic within a Department, such as Action Figures under the Toys & Games Department, or Jazz under the Music Department.

2. Commerce Content and DrKoop.com Site

2.1 DrKoop.com shall provide Infoseek with Commerce Content, to be displayed on GO Shop in electronic form. Infoseek retains the right to request removal of any Commerce Content from GO Shop based on the reasonable determination by Infoseek that the Commerce Content does not comply with Infoseek's then current advertising or content guidelines or would cause Infoseek to be in violation of any existing agreements with third parties (for example, exclusivity agreements prohibiting the sale of books or music by third party merchants), and DrKoop.com shall immediately comply with such request. During the term of this Agreement, Infoseek shall not enter into any agreements with third parties that would prohibit the sale of prescription drugs, OTC drugs, or vitamins and nutritional supplements by Content Partner on GO Shop. Currently, certain areas of GO Shop are operated by Infoseek utilizing third party technology. In the event Infoseek elects to make such third party technology available to DrKoop.com directly, DrKoop.com may be required to agree to additional terms and conditions regarding use of such third party technology as a condition of utilizing such technology.

2.2 DrKoop.com will provide Infoseek with all necessary technology and information required to establish and maintain such Commerce Content in the Infoseek Commerce Area, at DrKoop.com's sole expense, which in no event shall exceed commercially reasonable costs.

2.3 DrKoop.com will reasonably cooperate with Infoseek, and any other third party designated by Infoseek, and provide necessary information and make commercially reasonable technical changes to its Commerce Content systems and data feeds to allow the Commerce Content to be effectively retrieved, searched, and displayed on the Service.

3. Infoseek Commerce Area

Except as expressly set forth in this Agreement, Infoseek retains the right to adapt or otherwise alter the design, look, and any other attributes of the Service and Service pages, including the Infoseek


Commerce Area. Infoseek shall have the right, but not the obligation, to remove, or direct DrKoop.com to remove, from the Commerce Content information or other material which Infoseek, in its reasonable discretion, determines to be offensive, in poor taste, or otherwise objectionable. Notwithstanding the foregoing, DrKoop.com or its Affiliate Partner shall have the right to control the design, look and any other attributes of pages served off DrKoop.com or Affiliate Partner servers.

4. Order Fulfillment; Customer Service

4.1 DrKoop.com (or its Affiliate Partner to whom Dr.Koop.com may delegate order processing functions) shall be solely responsible for (a) processing and fulfilling all product and service orders relating to the Commerce Content, whether the orders are made through the GO Network-Wrapped Pages or on GO Shop; (b) all accounting with respect to such orders, and (c) all customer service and support with respect to such orders, purchases and returns. DrKoop.com or its Affiliate Partner shall provide all of the foregoing services in the same manner as it provides such services with respect to orders received by DrKoop.com in any other manner and with the high quality consistent with DrKoop.com's name and reputation, and industry standards. DrKoop.com acknowledges and agrees that it is solely responsible for the security of any transactions initiated within or relating to the Commerce Content and for all legal and financial liability relating to the Commerce Content, including, without limitation the acts or omissions of Affiliate Partners (except to the extent that such liability arises from Infoseek's modification of such content or Infoseek's unauthorized representations to Users concerning such content).

4.2 a. DrKoop.com shall cooperate and assist Infoseek by answering questions and complaints regarding the Commerce Content. Each party shall promptly inform the other party of any event or circumstance, and provide all information pertaining to such event or circumstance, related to or arising out of this Agreement which could lead to a claim or demand against either party by any third party.

b. In the event Infoseek receives *** complaint for every *** transactions completed (whether such complaints are in writing, via telephone or email) concerning DrKoop.com's order fulfillment or customer service practices, Infoseek shall be entitled, at its discretion, to permanently remove all Commerce Content relating to such complaints from the Service (or, pursuant to mutual agreement of the parties, the Affiliate Partner responsible for such complaints, if reasonably necessary to terminate future complaints). Ongoing fees payable by DrKoop.com for inclusion of the Commerce Content in GO Shop, as specified in Appendix F, shall remain unchanged unless all Commerce Content is removed from GO Shop, in which case future fees payable by DrKoop.com for participation in GO Shop would terminate.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


5. Fees/Revenue Sharing

5.1 During the term of this Agreement, DrKoop.com shall pay to Infoseek *** Net Revenues received by DrKoop.com attributable to Commerce Content transactions conducted by Users (I) within GO Shop or (ii) directed to the GO Network-Wrapped Pages from GO Shop. As used herein, Net Revenues means gross revenues received by DrKoop.com for such transactions reduced by (1) any amounts paid directly for the acquisition of goods or services intended for resale; (2) any amounts for refunds or other credits including amounts credited for product returns, bad debt or fraud; and (3) any applicable sales, use, value added or withholding taxes (other than income taxes) associated with such sales.

5.2 DrKoop.com shall pay such applicable transaction revenues to Infoseek within thirty (30) days from the end of calendar quarter in which the revenue accrues. Each payment will be accompanied by a report which details the payment due for the preceding quarter and the methodology used to calculate the payment due.

6. Premier Merchant; Department; Sub-Department; Commerce Content; and Additional Commerce Area Features

6.1 DrKoop.com shall be the Premier Merchant of the following Commerce Content on GO Shop:

Prescription drugs;
Vitamins and nutritional supplements; and Over the counter ("OTC") pharmacy products

(herein the "DrKoop.com Premier Products")

As used herein, "Premier Merchant" means that DrKoop.com Premier Products shall be the only Prescription drugs, Vitamins and OTC pharmacy products promoted by Infoseek on GO Shop As used herein a product is "promoted" by Infoseek if it prominently advertised or marketed by Infoseek on GO Shop. Notwithstanding the foregoing, prescription drugs, vitamins, and OTC pharmacy products, and information and content related thereto, may be provided to Users on GO Shop in response to or pursuant to:

Search queries
Directory Listings
General Merchandise listings Ad banner displays

6.2 DrKoop.com shall use commercially reasonable efforts to integrate its Commerce Content, and its order processing and fulfillment functionality in support of any future Infoseek Commerce Area features, which may include, without limitation, "wallet" and affinity and rewards programs.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


APPENDIX H
***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


APPENDIX I - WARRANT AGREEMENT


THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.

THIS WARRANT MAY NOT BE EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS TO THE REASONABLE SATISFACTION OF THE COMPANY AND LEGAL COUNSEL FOR THE COMPANY.

STRATEGIC PARTNER WARRANTS

WARRANT TO PURCHASE
250,000 SHARES OF COMMON STOCK
OF
Drkoop.com, Inc.
A Delaware Corporation

Issued
April 9, 1999

THIS CERTIFIES THAT, for value received, Infoseek Corporation (the "Warrantholder") is entitled to purchase, on the terms hereof, two hundred fifty thousand (250,000) shares of common stock (subject to adjustment), par value $.001 per share (the "Common Stock"), of drkoop.com, Inc., a Delaware corporation (the "Company"), at a purchase price and upon the terms and conditions as set forth herein.

1. EXERCISE OF WARRANT.

The terms and conditions upon which this Warrant may be exercised and the shares of Common Stock covered hereby (the "Warrant Stock") may be purchased, are as follows:

1.1. Exercise. This warrant may be exercised in whole or in part as follows:

(a) this Warrant may be exercised with respect to 150,000 shares of Common Stock at any time on or after April 9, 2000; and

(b) this Warrant may be exercised with respect to the remaining 100,000 shares of Common Stock at any time on or after April 10, 2001 if (but only if) neither party has exercised its right to terminate the Distribution Agreement between the Company and the Warrantholder dated even herewith (the "Distribution Agreement") pursuant to Section 6.1 thereof on the second anniversary of the Effective Date of such agreement, and the Distribution Agreement remains effective and in full force and effect as of such second anniversary.


Notwithstanding the foregoing, this Warrant may not be exercised under any circumstances after the first to occur of (1) the termination of the Distribution Agreement for failure to complete the "Financing" under paragraph A(1) of Appendix F to the Distribution Agreement, or (2) after 5:00 p.m., San Francisco, California time on April 9, 2003 (the "Termination Date"), after which time this Warrant shall terminate and shall be void and of no further force of effect.

1.2. Exercise Price. The purchase price for the shares of Common Stock to be issued upon exercise of this Warrant shall be $21.50 per share, subject to adjustment as set forth herein (the "Exercise Price").

1.3. Method of Exercise. The exercise of the purchase rights evidenced by this Warrant shall be effected by (a) the surrender of this Warrant, together with a duly executed copy of the form of Election to Purchase attached hereto, to the Company at its principal office and (b) the delivery of the Exercise Price multiplied by the number of shares for which the purchase rights hereunder are being exercised, payable (x) by certified check, corporate check of Infoseek Corporation, or wire transfer of immediately available funds payable to the Company's order or (y) on a net basis, such that, without the exchange of any funds, the Warrantholder receives that number of shares otherwise issuable (or other consideration payable) upon exercise of this Warrant less that number of shares of Warrant Stock having an aggregate fair market value (as defined below) at the time of exercise (i.e., the date a duly executed Election to Purchase is delivered to the Company) equal to the aggregate Exercise Price that would otherwise have been paid by the Warrantholder for the shares of the Warrant Stock issuable. In connection with such exercise the holder shall, if requested by the Company, include confirmation of the accuracy of the representations set forth in Section 12 and otherwise as reasonably requested by the Company to evidence compliance with any applicable securities laws as of the date of exercise. For purposes of the foregoing, "FAIR MARKET VALUE" of the Warrant Stock on any date shall be the average of the Quoted Prices of the Common Stock of the Company for 20 consecutive trading days ending the trading day prior to such date (if, during such 30-day period, there is a day in which no trades are reported, such date shall be discarded and the 20-day period extended). The "Quoted Price" of the Common Stock as reported by Nasdaq or, if the principal trading market for the Common Stock is then a securities exchange, the last reported sales price of the Common Stock on such exchange which shall be consolidated trading if applicable to such exchange, or if neither so reported or listed, the last reported bid price of the Common Stock. In the absence of quotation or listing, such determination as to "Quoted Price" shall be made in good faith by the Board of Directors of the Company.

1.4. Issuance of Shares. In the event that the purchase rights evidenced by this Warrant are exercised in whole or in part in accordance with the terms of this Warrant, a certificate or certificates for the purchased shares shall be issued to the Warrantholder as soon as practicable. The Warrant Stock shall be stamped or imprinted with a legend in substantially the following form:

"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NO SALE OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE

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COMPANY AND WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT."

In the event the purchase rights evidenced by this Warrant are exercised in part, the Company will also issue to the Warrantholder a new warrant representing the unexercised purchase rights.

1.5 Exercise of Warrants on Termination Date. If as of the Termination Date the Warrants are in the money based on the cash or other property to be received, such exercise shall take place automatically with respect to all then outstanding and exercisable (but not exercised) Warrants (the "Termination Date Exercise"), on a net exercise basis, immediately prior to the Termination Date; provided, however, that the Company may condition such exercise on the delivery by the Warrantholder of a duly completed Election to Purchase and the reasonable satisfaction of the Company that all applicable securities laws have been complied with, which the Company shall give notice to the Warrantholder of within ten (10) days prior to the Termination Date. No such Termination Date Exercise shall take place if such issuance would not comply with applicable securities laws, whereupon the Termination Date shall occur as scheduled.

2. CERTAIN ADJUSTMENTS.

2.1. Stock Dividends. If at any time while this Warrant remains outstanding and unexpired, the Company pays a dividend or makes a distribution with respect to the Common Stock payable in shares of Common Stock, then the Exercise Price shall be adjusted, as of the record date of stockholders established for such purpose (or if no such record is taken, as at the date of such payment or distribution), to that price determined by multiplying the Exercise Price in effect immediately prior to such payment or distribution by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution. The Warrantholder shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares of Common Stock (calculated to the nearest whole share) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon the exercise hereof immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. The provisions of this Section 2.1 shall not apply under any of the circumstances for which an adjustment is provided under Sections 2.2, 2.3 or 2.4.

2.2. Mergers, Consolidations or Sale of Assets. If at any time while this Warrant remains outstanding and unexpired, there shall be a capital reorganization of the shares of the Company's capital stock (other than a combination, reclassification, exchange or subdivision otherwise provided for herein), or a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving corporation (collectively, a "Corporate

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Transaction"), then lawful provision shall be made so that the Warrantholder shall thereafter be entitled to receive, upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the successor corporation resulting from such Corporate Transaction to which a holder of the securities deliverable upon exercise of this Warrant would have been entitled under the provisions of the agreement in such Corporate Transaction if this Warrant had been exercised immediately prior to such Corporate Transaction. Appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Warrantholder after the Corporate Transaction to the end that the provisions of this Warrant (including adjustment of the purchase price then in effect and the number of shares of securities issuable under this Warrant) shall be applicable after the Corporate Transaction, as near as reasonably may be, in relation to any shares or other property deliverable after the Corporate Transaction upon exercise of this Warrant.

2.3. Reclassification. If the Company at any time shall, by subdivision, combination or reclassification or securities or otherwise, change any of the securities issuable under this Warrant into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as a result of such change with respect to the securities issuable under this Warrant immediately prior to such subdivision, combination, reclassification or other change.

2.4. Subdivision or Combination of Shares. If at any time while this Warrant remains outstanding and unexpired, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock, then the Exercise Price shall be proportionately increased in the case of a combination of such shares, or shall be proportionately decreased in the case of a subdivision of such shares, and the number of shares of Common Stock issuable upon exercise of the Warrant shall thereafter be adjusted to equal the product obtained by multiplying the number of shares of Common Stock purchasable under this Warrant immediately prior to such Exercise Price adjustment by a fraction (A) the numerator of which shall be the Exercise Price immediately prior to such adjustment, and (B) the denominator of which shall be the Exercise Price immediately after such adjustment.

2.5. Liquidating Dividends, Etc. If the Company at any time while the Warrant remains outstanding and unexpired makes a distribution of its assets to the holders of its Common Stock as a dividend in liquidation or by way of return of capital or other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law or any distribution to such holders made in respect of the sale of all or substantially all of the Company's assets (other than under the circumstances provided for in the foregoing Sections 2.1 through 2.4), the holder of this Warrant shall be entitled to receive upon the exercise hereof, in addition to the shares of Common Stock receivable upon such exercise, and without payment of any consideration other than the Exercise Price, an amount in cash equal to the value of such distribution per share of Common Stock multiplied by the number of shares of Common Stock which, on the record date for such distribution, are issuable upon exercise of this Warrant (with

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no further adjustment being made following any event which causes a subsequent adjustment in the number of shares of Common Stock issuable upon the exercise hereof), and an appropriate provision therefor should be made a part of any such distribution. The value of a distribution which is paid in other than cash shall be determined in good faith by the Board of Directors.

2.6. Notice of Adjustments. Whenever any of the Exercise Price or the number of securities purchasable under the terms of this Warrant at that Exercise Price shall be adjusted pursuant to Section 2 hereof, the Company shall promptly notify the Warrantholder in writing of such adjustment, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and number of shares of Common Stock or other securities purchasable at that Exercise Price after giving effect to such adjustment. Such notice shall be mailed (by first class and postage prepaid) to the registered Warrantholder.

In the event of:

(a) The taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right for which no adjustment is required by the operation of this Section 2,

(b) Any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets of the Company to any other person or any consolidation or merger involving the Company for which no adjustment is required by the operation of this Section 2, or

(c) Any voluntary or involuntary dissolution, liquidation, or winding-up of the Company,

the Company will mail to the Warrantholder, at its last address at least ten
(10) days prior to the earliest date specified therein as described below, a notice specifying:

(i) The date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right; and

(ii) The date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected to become effective and the record date for determining shareholders entitled to vote thereon.

Failure to give any notice required under this Section 2.6, or any defect in such notice, shall not affect the legality or validity of the underlying corporate action taken or transaction entered into by the Company.

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3. FRACTIONAL SHARES.

No fractional shares shall be issued in connection with any exercise of this Warrant. In lieu of the issuance of such fractional share, the Company shall make a cash payment equal to the then fair market value of such fractional share as determined under Section 1.3.

4. RESERVATION OF COMMON STOCK.

The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, a sufficient number of shares of Common Stock to effect the exercise of the entire Warrant and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of the entire Warrant, in addition to such other remedies as shall be available to the holder of this Warrant, the Company will use its reasonable efforts to take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

5. PRIVILEGE OF STOCK OWNERSHIP.

Prior to the exercise of this Warrant and the issuance to the Warrant Holder of certificates representing the resulting shares of Common Stock, and except as otherwise provided herein, the Warrantholder shall not be entitled, by virtue of holding this Warrant, to any rights of a Stockholder of the Company, including (without limitation) the right to vote, receive dividends or other distributions or be notified of Stockholder meetings, and such holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company, except as required by law.

6. LIMITATION OF LIABILITY.

No provision hereof, in the absence of affirmative action by the holder hereof to purchase the securities issuable under this Warrant, and no mere enumeration herein of the rights of privileges of the holder hereof, shall give rise to any liability of such holder for the purchase price or as a Stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

7. TRANSFERS AND EXCHANGES.

This Warrant may be transferred or assigned in whole or in part provided such transfer complies with applicable federal and state securities laws and the requirements of any legend on this Warrant.

8. PAYMENT OF TAXES.

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The Company shall pay all stamp or similar issue or transfer taxes payable in respect of the issue or delivery of the securities issuable under this Warrant. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of the securities issuable under this Warrant in any name other than that of the Warrantholder, and in such case, the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the Company's satisfaction that no such tax or other charge is due.

9. NO IMPAIRMENT OF RIGHTS.

The Company hereby agrees that it will not, through the amendment of its Certificate of Incorporation or otherwise, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against impairment.

10. SUCCESSORS AND ASSIGNS.

The terms and provisions of this Warrant shall be binding upon the Company and the Warrantholder and their respective successors and assigns.

11. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, upon receipt of an indemnity or security reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.

12. SECURITIES LAW MATTERS.

Warrantholder represents to the Company as follows:

(a) the Warrants and Common Stock to be acquired by Warrantholder pursuant hereto will be acquired for its own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act of 1933 (the "SECURITIES ACT") or any applicable state securities laws, and such securities will not be disposed of in contravention of the Securities Act of any applicable state securities laws;

(b) the Warrantholder understands that (a) the Warrants and Common Stock issuable on exercise have not been registered under the Securities Act, nor qualified under the securities laws of any other jurisdiction, (b) such securities cannot be resold unless they subsequently are registered under the Securities Act and qualified under applicable state securities laws, unless the Company determines that exemptions from such registration and

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qualification requirements are available, and (c) the Warrantholder has no right to require such registration or qualification;

(c) Warrantholder is familiar with the term "accredited investor" as defined in Rule 501 under the Securities Act and investor is an "accredited investor" within the meaning of such term in Rule 501 under the Securities Act;

(d) Warrantholder is sophisticated in financial matters and the market for Internet companies and is able to evaluate the risks and benefits of the investment in the Warrants and Common Stock issuable on exercise;

(e) Warrantholder is able to bear the economic risk of its investment in the Warrants and the Common Stock issuable on exercise for an indefinite period of time; and

(f) Warrantholder has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of securities and has had full access to such other information concerning the Company as investor has requested.

13. SATURDAYS, SUNDAYS, HOLIDAYS.

If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

14. GOVERNING LAW.

This Warrant shall be construed, interpreted, and the rights of the Company and the Warrantholder determined in accordance with the internal laws of the State of Delaware, without regard to the conflict of laws provision thereof.

15. BENEFITS OF THIS WARRANT.

Nothing in this Warrant shall be construed to give any person other than the Company and the registered Warrantholder any legal or equitable right, remedy or claim.

16. COUNTERPARTS.

This Warrant may be exercised in counterpart with each constitution; an original and together constituting but one and the same Warrant.

(signature page follows)

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IT WITNESS WHEREOF, drkoop.com, Inc. has caused this Warrant to be duly executed and delivered to the Warrantholder identified below on the date first set forth above.

drkoop.com, Inc.

                                             By: /s/ Donald W. Hackett
                                                --------------------------------
                                                Donald W. Hackett
                                                Chief Executive Officer


Dated: April 9, 1999

Acknowledged and Accepted:

Infoseek Corporation

By: /s/ Harry Motro
    ---------------------------------
    Name:  Harry Motro
    Title: CEO

Address for Notice:
1399 Moffett Park Drive
Sunnyvale, CA 94089

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APPENDIX J

Guidelines for Advertising on GO Network

The advertising environment must be appropriate in the context of the GO Network. This "advertising environment" includes the ad unit itself, the advertiser's web site and direct links off of it, the specific destination URL, interstitial or buffer pages, and all other elements that define the guest's online experience.

An advertising environment or advertising materials of the types enumerated in the first grouping below will not be accepted and materials may also be rejected, at the discretion of Infoseek

What is clearly not appropriate?

. Hard liquor-related (brown goods, white goods, etc)
. Tobacco-related (cigarettes, cigars, pipes, chewing tobacco, etc)
. Guns/weapons-related (firearms, bullets, etc)
. Drugs-related (marijuana, etc)
. Gambling-related (casinos, lotteries, etc)
. Pornographic-related (sex sites)
. Crime-related (dealing with the notorious)
. Death-related (funeral homes, mortuaries)
. Graphic violence (including certain types of game sites)

What may also be considered by Infoseek as inappropriate?

. Involves what Infoseek considers to be a direct business competitor of GO Network.
. Involves unauthorized or unapproved use of GO Network creative assets (including ESPN talent, ABC logos, Disney characters, movie logos, theme park imagery, names and marks used in GO Network).
. Involves an advertiser in a category where the privilege of exclusivity has previously been sold to another advertiser.
. Involves a copy or parody of current or past GO Network product.
. Politics-related (lobbyists, PAC sites, political campaigns)
. Non-hard liquor related (beer, non-alcoholic beer, wine, champagne, etc.)
. Other "controversial topics" (politics, social issues, etc.) as determined by Infoseek in its discretion
. Involves an implied affiliation or favored status with GO Network.
. Involves unreasonable or highly unlikely product or service claims.

Solicitation of Personal Information: The advertiser's web site should not require guest registration prior to site access when linking to such site through the banner. The destination URL should not be a registration screen, sweepstakes entry screen or other screen that immediately solicits personal information from a site guest.

Where information is requested:

. Any solicitation of personal information must include a clear request that children below the age of 13 years seek parental permission before providing any such information.

. The advertiser must clearly explain to the guest how the advertiser will utilize the personal information collected.


. Only certain functionality or premium content areas will require the user to submit personal information.

Infoseek welcomes the opportunity to work closely with advertisers and agencies, to insure that ad content and web sites meet standards for advertising applicable to GO Network.

Immediately upon determining that an advertisement does not meet these ad guidelines, that ad will be removed from GO Network.

All advertisers, agents or representatives placing ads on behalf of or with GO Networks must adhere to these advertising guidelines. Infoseek reserves the right of refusal for any advertising placement for any reason, whether due to content, technological, legal, privacy or other considerations.

OTHER GUIDELINES:

NO "POP UP" ADS


EXHIBIT 10.12

DISTRIBUTION AGREEMENT

This Distribution Agreement ("Agreement") is entered into by and between Buena Vista Internet Group, a corporation duly organized under the laws of California, with its principal place of business at 5161 Lankershim Blvd., North Hollywood California 91601, hereinafter referred to as "BVIG", and drkoop.com, Inc., a corporation organized under the laws of the State of Delaware with its principal place of business at 8920 Business Park Drive, Longhorn Suite, Austin, Texas 78759, hereinafter referred to as "Content Partner" or "DrKoop.com".

WITNESSETH:

WHEREAS, BVIG hosts and maintains a web site known as "Disney's family.com" (the "Service" or "Family.com") located at www.family.com through which information targeted towards parents and families is provided to its users ("Users"); and

WHEREAS, Content Partner operates an Internet site located at www.drkoop.com (the "DrKoop.com Site" or the "Content Partner Service") and is the provider of information described in Appendix A hereto ("Health Content").

WHEREAS, BVIG desires to create a clearly designated area on Family.com devoted to Health Content (the "Health Channel") and BVIG and Content Partner desire Content Partner to provide such content for such channel. Health Content provided by Content Partner hereunder, as set forth on Appendix A-1 hereto, shall be referred to herein as "Content Partner Content".

NOW, THEREFORE, for good and valuable consideration, and in consideration of the mutual covenants and conditions herein set forth, and with the intent to be legally bound thereby, BVIG and Content Partner hereby agree as follows:

1 LICENSE; OBLIGATIONS OF CONTENT PARTNER; OBLIGATIONS OF BVIG

1.1 Subject to the terms and conditions of this Agreement, Content Partner hereby grants to BVIG and its subsidiaries and Affiliates, a fully- paid, worldwide, irrevocable (during the term), non-exclusive right and license to use, reproduce, adapt, incorporate, integrate, distribute and otherwise exploit the Content Partner Content on the Service and other BVIG sites as specified in Section 1.9 below, and, in conjunction with BVIG's activities pursuant to this Agreement, to exploit the applicable copyrights, trade names, trade dress, trademarks and other intellectual property rights of Content Partner on the Service. The terms set forth in the Appendices attached hereto shall also apply to this Agreement.

As used herein, "Affiliate" means with respect to a party to this Agreement, any entity that directly or indirectly controls, or is under common control with, or is controlled by, such party; "control" (including, with its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

1.2 BVIG shall create the Health Channel which shall contain Content Partner Content and/or Links (defined in Section 1.7) to Content Partner Content. The Health Channel is further described on Appendix
A.


Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated ***. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

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1.3 Content Partner shall host most of the Content Partner Content on Content Partner's servers. Certain Content Partner Content hosted by Content Partner and accessed by Users shall, at BVIG's option, appear within a BVIG-designed branded frame ("Family.com-Wrapped Pages"),, or within pages on the DrKoop Site with no wrapper (collectively "Pages"). The Family.com-Wrapped Pages shall, at BVIG's option, consist of either (a) a custom configuration of portions of the Content Provider Content selected by BVIG which shall appear within a Family.com branded frame which includes the Family.com navigation bar; or (b) Go-Wrapped Pages created under the Distribution Agreement between Content Partner and Infoseek Corporation of even date herewith (the "Distribution Agreement"). The advertising and sponsorships on the Family.com-Wrapped Pages shall be determined by Content Partner, subject to Appendix A, Section 7. The Family.com-Wrapped Pages shall appear to the viewer to be located at www.family.drkoop.com. The parties will mutually agree on the format for the Family.com-Wrapped Pages wrapper. Content Partner shall cooperate and assist BVIG by promptly answering questions and complaints regarding any Content Partner Content. Each party shall promptly inform the other party of any event or circumstance, and provide all information pertaining to such event or circumstance, related or arising from this Agreement which could lead to a claim or demand against the other party by any third party. The parties acknowledge that, unless otherwise agreed, Users will not be required to pay a fee to view any Family.com-Wrapped Pages or to view a page on the DrKoop.com Site which Users accessed through a link from Family.com.

1.4 Content Partner will deliver to BVIG all Content Partner Content to be hosted by BVIG in a mutually agreeable format, electronically via modem or Internet access (e.g. Internet ftp or Internet e-mail). Content Partner agrees to certify that all deliveries hereunder were made electronically. Content Partner will make updates to the Content Partner Content available to BVIG on a regular mutually agreed upon basis. BVIG shall have the right, but not the obligation, to remove from Family.com, or direct Content Partner to remove from the Family.com-Wrapped Pages, any Content Partner Content which BVIG, in its reasonable discretion, determines to be offensive, in poor taste, or otherwise objectionable.

1.5 Subject to the exceptions set forth below, during the term of this Agreement, Content Partner shall be the exclusive provider of Health Content for the Health Channel. ***

1. ***
2. Health Content provided to BVIG by news or data feeds or Freelancers;
3. Any Health Content created internally by BVIG or its Affiliates;
4. ***
5. BVIG's standard advertising banner business conducted outside the Health Channel;
6. News and Editorial Content of any kind (As used herein, "Editorial Content" means opinion pieces related to current events and magazine articles that may relate to health; ***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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7. New Content or products that are not available from DrKoop.com as further described in Appendix A, Section B 2; and
8. Any Health Content obtained from a third party which is marketed under the "Disney" brand (such as, "Disney's Health Encyclopedia").

As used herein, "Freelancers" shall mean independent parties who receive a fee for their services and who are not (to BVIG's knowledge) full time employees of any DrKoop.com Direct Competitor as set forth on Appendix E.

DrKoop.com acknowledges that the following shall not constitute a breach of this Section 1.5: (a) the BVIG search technology may search the sites *** (b) BVIG may provide search-related products that may include results from any third parties; and (c) any third party may be included in service/product provider directories on Family.com.

1.6 ***

1.7 The response times which DrKoop.com shall use to remedy and/or correct any material limitations or errors in any Content Partner Content made available by or through DrKoop.com that BVIG brings to DrKoop.com's attention or about which DrKoop.com otherwise becomes aware are specified in Appendix C; *** DrKoop.com agrees not to override browser back button functionality to prevent Users who link to the DrKoop.com Site from the Service from returning to the Service. As used herein "Link" means a so-called "hot link" in graphical and/or textual format located on a web site which takes the User directly to another web site.

1.8 Each party will be responsible for its respective telecommunications charges with respect to the provision of respective portions of the Content Partner Content to BVIG and to Users. Except as expressly provided herein, BVIG retains the right to adapt or otherwise alter the design, look, and any other attributes of the Service and Service pages, and the placement of the Content Partner Content on the Service. BVIG will use commercially reasonable efforts to incorporate into the Content Partner Content error corrections, as provided and identified as such by Content Partner; provided, however that if Content Partner advises BVIG in writing during normal business hours that failure to promptly correct an error could result in serious physical injury to a User, BVIG shall exercise best commercially reasonable efforts to expedite the correction of such error.

1.9 Family.com may place up to ten articles of Content Partner Content per month as part of the archival database for the Service during the term of the Agreement. The archival database may be searched from Family.com as well as other BVIG sites that include the Family.com database in their search.

1.10 User Registration. DrKoop.com shall ensure that its privacy policy applicable to the DrKoop.com Site and the Family.com-Wrapped Pages, to the extent applicable to its performance under this Agreement, is consistent with the BVIG's privacy policy for Family.com, as such may be changed from time to time, including but not limited to including a mechanism that allows Users to opt in to DrKoop.com's sharing of User data (not including personal medical information) with BVIG. The parties will work together to implement a shared registration solution for Users accessing DrKoop functionality.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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1.11 DrKoop.com User Data. *** DrKoop.com shall make available to BVIG, via a method and timing to be mutually agreed upon, all names and email addresses of all new Dr.Koop.com Users who register on the Family.com-Wrapped Pages or who have accessed the DrKoop.com Site from a Link on Family.com, provided that such User has opted in for sharing his/her data with BVIG and provided such disclosure is not prohibited by law or regulation. In addition, except as prohibited by law, Dr.Koop.com shall provide to BVIG all available data (in aggregate, anonymous form only) concerning Users who access the Pages from Links on Family.com, concerning products and/or services purchased by such Users, survey and promotion responses, and other demographic information concerning such Users. Notwithstanding the foregoing, DrKoop.com shall not provide personal medical information to BVIG, including, without limitation, personal medical records. BVIG may use such information for its internal business purposes and may provide such aggregate, anonymous information to third parties as it deems appropriate in connection with its operations; provided, however that such aggregate, anonymous data may not be identified to third parties as DrKoop.com User data. Drkoop.com User data must be aggregated with other BVIG User data before being provided to a third party.

1.12 BVIG User Data. BVIG shall own all right, title and interest in and to and the exclusive right to use all BVIG User Data generated on all pages of the Service hosted by BVIG.

1.13 Access. The Health Channel shall be accessible by Users through no more than one hyperlink from the Family.com home page. Further, BVIG shall maintain the Health Channel, in a manner consistent with its development and operation of the other Channels within the Service.

1.14 Warrants. At BVIG's option, upon execution of this Agreement, Content Partner will provide BVIG with warrants for the right to purchase sixty thousand (60,000) shares of Content Partner's common stock pursuant to a Warrant Agreement between Content Partner and BVIG containing terms no less favorable to BVIG than the terms of the Warrant Agreement between Content Partner and Infoseek Corporation attached to the Distribution Agreement.

2 FEES AND PAYMENTS

Each party will make payments to the other party in the amounts and at the times specified in Appendix D. Each party will be responsible for the proper payment of all taxes, including sales, excise and value added taxes, which may be levied in connection with its payments to the other party, exclusive of taxes based upon the other party's net income.

3 CONFIDENTIAL INFORMATION

3.1 Either BVIG or Content Partner may disclose to the other (the "Receiving Party") certain information that the disclosing party deems to be confidential and proprietary ("Proprietary Information"), and technical and other business information of the disclosing party that is not generally available to the public.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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3.2 The Receiving Party agrees to use Proprietary Information solely in conjunction with its performance under this Agreement and not to disclose or otherwise use such information in any fashion. The Receiving Party, however, will not be required to keep confidential such Proprietary Information that becomes generally available without fault on its part; is already rightfully in the Receiving Party's possession without restriction prior to its receipt from the disclosing party; is independently developed by the Receiving Party; is disclosed by third parties without similar restrictions; is rightfully obtained by the Receiving Party from third parties without restriction; or is otherwise required by law or judicial process.

3.3 Unless required by law or to assert its rights under this Agreement, and except for disclosure on a "need to know basis" to its own employees, and its legal, investment, financial and other professional advisers on a confidential basis, each party agrees not to disclose the terms of this Agreement or matters related thereto without the prior written consent of the other party.

4 REPRESENTATIONS AND WARRANTIES

4.1 Content Partner represents and warrants that it is the owner of the Content Partner Content and/or has the right to grant the rights hereunder. Content Partner represents and warrants to BVIG that it holds the necessary rights to permit the use of Content Partner Content by BVIG for the purpose of this Agreement; that its entry into this Agreement does not violate any agreement with any other party; that its performance under this Agreement will conform to applicable U.S. laws and government rules and regulations; that to the best of its knowledge, after reasonable inquiry, the Content Partner Content is true, accurate and does not contain material omissions; Content Partner further represents and warrants to BVIG that the use, reproduction, distribution, transmission, or display of Content Partner Content will not (a) violate any laws or any rights of any third parties, including, but not limited to, such violations as infringement or misappropriation of any U.S. copyright, patent, trademark, trade dress, trade secret, music, image, or other proprietary or property right, false advertising, unfair competition, defamation, invasion of privacy or publicity rights, moral or otherwise, or rights of celebrity, violation of any antidiscrimination law or regulation, or any other right of any person or entity; or (b) contain any material that is: unlawful, harmful, fraudulent, threatening, abusive, harassing, defamatory, vulgar, obscene, profane, hateful, racially, ethnically, or otherwise objectionable, including, without limitation, any material that supports, promotes or otherwise encourages wrongful conduct that would constitute a criminal offense, give rise to civil liability, or otherwise violate any applicable local, state or national laws.

4.2 Content Partner represents and warrants that, *** the systems and technology utilized to operate the DrKoop.com Site and the GO Network Wrapped Pages are compliant with the following Year 2000 requirements:
(a) the occurrence in or use by such systems of dates before, on or after January 1, 2000 will not adversely affect the performance of such systems with respect to date-dependent data, computations, output, or other functions (including, without limitations, calculating, comparing and sequencing); and (b) such systems will not abnormally end or provide invalid or incorrect results as a result of date dependent data.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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4.3 BVIG represents and warrants, *** that the systems and technology utilized by BVIG to operate the Service are compliant with the following Year 2000 requirements: (a) the occurrence in or use by such systems of dates before, on or after January 1, 2000 will not adversely affect the performance of such systems with respect to date- dependent data, computations, output, or other functions (including, without limitations, calculating, comparing and sequencing); and (b) such systems will not abnormally end or provide invalid or incorrect results as a result of date dependent data.

4.4 BVIG represents and warrants to Content Partner that *** this Agreement does not violate any agreement with any other party; that its performance under this Agreement will conform to applicable U.S. laws and government rules and regulations; that the BVIG proprietary technology as utilized by the Service does not infringe any U.S. copyright, patent, trademark, trade dress or trade secret of any person or entity, and that BVIG Content (as defined in this Section 4.4) will not (a) violate any U.S. laws or any rights of any third parties, including, but not limited to, such violations as infringement or misappropriation of any copyright, patent, trademark, trade dress, trade secret, music, image, or other proprietary or property right, false advertising, unfair competition, defamation, invasion of privacy or publicity rights, moral or otherwise, or rights of celebrity, violation of any antidiscrimination law or regulation, or any other right of any person or entity; or (b) contain any material that is: unlawful, harmful, fraudulent, threatening, abusive, harassing, defamatory, vulgar, obscene, profane, hateful, racially, ethnically, or otherwise objectionable, including, without limitation, any material that supports, promotes or otherwise encourages wrongful conduct that would constitute a criminal offense, give rise to civil liability, or otherwise violate any applicable local, state, or national laws. As used herein, "BVIG Content" means any content on the Health Channel that has been authored and created solely by BVIG.

5 LIMITATION OF LIABILITY; DISCLAIMER

5.1 EXCEPT FOR EITHER PARTY'S LIABILITY FOR THIRD PARTY CLAIMS AS SPECIFIED IN SECTION 9 BELOW OR IN APPENDIX A, SECTION B(4), DAMAGES ARISING FROM PERSONAL INJURY, OR EITHER PARTY'S BREACH OF SECTION 3, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES OF ANY NATURE, EVEN IF SUCH PARTY SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

5.2 EXCEPT AS SET FORTH IN SECTION 4, NEITHER PARTY MAKES ANY, AND EACH PARTY ACKNOWLEDGES THAT THE OTHER HAS NOT MADE ANY, AND HEREBY SPECIFICALLY DISCLAIMS ANY, REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SERVICE, THE DRKOOP.COM SITE, THE CONTENT PARTNER CONTENT, OR THE OPERATION OF THE CONTENT PARTNER CONTENT ON THE SERVICE, INCLUDING, BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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6 TERM AND TERMINATION

6.1 This Agreement shall be effective on the date executed by both parties ("Effective Date") and shall continue in force for an initial term ending thirty-six (36) months from the Execution Date (as defined in Appendix A, Section B.1.a). Upon prior mutual written agreement, the then current term of this Agreement may be renewed at the end of such initial term and each anniversary date thereafter for one (1) year renewal terms. Notwithstanding the foregoing, either party may terminate this Agreement effective as of the second anniversary of the Execution Date by providing at least 120 days prior written notice to the other party. If this Agreement is not terminated as of the second anniversary of the Execution Date, the Agreement shall continue in full force and effect for another twelve (12) months (unless terminated for cause during said 12 month period).

6.2 DrKoop.com will make best commercially reasonable efforts for the Pages to meet the following performance standards The applicable performance standards are as follows:

***

6.3 BVIG shall make best commercially reasonable efforts for that portion of the Health Channel hosted by BVIG ("Health Channel" as used in this Section 6.3) to meet the following external performance standards. Such performance standards are as follows:

***

6.4 ***

6.5 The following sections shall survive the termination or expiration of this Agreement: 1.11 (first sentence only), 1.12, 2, 3, Article 4 (as to claims arising prior to termination or expiration or claims based on events arising prior to termination or expiration) 5, 8.1 (first and second sentences only), 8.2, 9, and 10.

6.6 Upon the termination or expiration of this Agreement, each party shall
(a) promptly return all Proprietary Information, and other information, documents, manuals and other materials belonging to the other party, except as may be otherwise provided in this Agreement;
(b) promptly pay all amounts due and payable as of the date of such expiration or termination; and (c) promptly remove the other party's content, branding, links, and any other material provided under this Agreement from its respective sites and services.

6.7 During the term of this Agreement, BVIG shall not enter into any agreements to permit the sale or distribution of tobacco or tobacco products on the Health Channel. Notwithstanding the foregoing, Content Partner acknowledges and agrees that information concerning tobacco and tobacco products may be displayed in standard search and directory result format on the Health Channel in response to the search queries of Users.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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7 FORCE MAJEURE

Neither party will be liable for delay or default in the performance of its obligations under this Agreement (other than for non-payment) if such delay or default is caused by conditions beyond its reasonable control, including, but not limited to, fire, flood, accident, earthquakes, telecommunications line failures, storm, acts of war, riot, government interference, strikes and/or walk-outs. The party experiencing the force majeure event shall provide the other party with notice as soon as reasonably possible under the circumstances. In the event of a force majeure event which lasts longer than fifteen (15) days, the party not experiencing the force majeure event may terminate this Agreement upon prior written notice to the other party.

8 ADVERTISING AND PROMOTION; PUBLICITY

8.1 Content Partner shall not issue or permit the issuance of any press releases or publicity regarding, or grant any interview, or make any public statements whatsoever concerning, this Agreement, Family.com BVIG or its Affiliates, without prior coordination with and written approval from BVIG, which approval may be granted or withheld in BVIG's sole discretion. BVIG shall not issue or permit the issuance of any press releases or publicity regarding, or grant any interview, or make any public statements whatsoever concerning this Agreement or Content Partner without prior coordination with and written approval from Content Partner, which approval may be granted or withheld in Content Partner's sole discretion. Notwithstanding the foregoing, after execution of this Agreement, and during the term of the Agreement, DrKoop.com *** shall reasonably cooperate with BVIG in the issuance of a press release, mutually agreed to between the parties, announcing this Agreement. All such endorsements must receive BVIG's prior review and approval. Except and only to the extent specifically set forth in this Agreement, DrKoop.com shall not acquire any right under this Agreement to use any BVIG trademarks or logos or the names "Disney" or "Family.com" (either alone or in conjunction with or as a part of any other word or name) or any fanciful characters or designs of any BVIG affiliate, (a) in any advertising, publicity, or promotion; (b) to express or to imply any endorsement of its own products or services; or (c) in any other way.

8.2 BVIG shall not have any right to use the name and/or likeness of Dr. C Everett Koop or to make any statements, whether written or oral, which state or otherwise imply, directly or indirectly, any endorsement from or affiliation with Dr. Koop in any manner whatsoever without the prior written consent of DrKoop.com, which consent may be withheld in DrKoop.com's sole discretion.

8.3 Content Partner and BVIG may undertake such joint marketing efforts as may be mutually agreed upon from time to time, but neither party is obligated to undertake any such efforts.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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9 INDEMNIFICATION

9.1 Content Partner agrees to defend, indemnify and hold BVIG and their officers, directors, agents and employees harmless from and against any and all claims, demands, liabilities, actions, judgments, and expenses, including reasonable fees and expenses of attorneys, paralegals and other professionals, arising out of or related to (i) any breach or alleged breach of any of Content Partner's representations and warranties set forth in Section 4.1; (ii) any breach of an international law, rule or regulation or international third party proprietary right (as if Content Partner had made the representations and warranties equivalent to those set forth in
Section 4.1 regarding US laws, regulations and proprietary rights);
(ii) any injury to person or property caused by any products or services sold by Content Partner, or any User's use of or reliance on the Content Partner Content; (iii) any other claim with respect to Content Partner, Content Partner Content, or products or services sold by or through Content Partner, or (iv) Content Partner's sales or marketing practices. Content Partner shall bear full responsibility for the defense (including any settlements) of any such claim; provided however, that (a) Content Partner shall keep BVIG informed of, and consult with BVIG in connection with the progress of such litigation or settlement; and (b) Content Partner shall not have any right, without BVIG's written consent, to settle any such claim if such settlement arises from or is part of any criminal action, suit or proceeding or contains a stipulation to or admission or acknowledgment of, any liability or wrongdoing (whether in contract, tort or otherwise) on the part of BVIG or otherwise requires BVIG to take or refrain from taking any material action (such as the payment of fees).

9.2 BVIG agrees to defend, indemnify and hold Content Partner and its officers, directors, agents and employees harmless from and against any and all claims, demands, liabilities, actions, judgments, and expenses, including reasonable fees and expenses of attorneys, paralegals and other professionals, arising out of or related to (i) any breach or alleged breach of any of BVIG's representations and warranties set forth in Section 4.4; (ii) any injury to person or property caused by any BVIG products or BVIG services sold by BVIG on the Health Channel, or any User's use of or reliance on the BVIG Content displayed on the Health Channel; or (iii) any breach of an international law, rule or regulation or international third party proprietary right (as if BVIG had made the representations and warranties equivalent to those set forth in Section 4.4 regarding US laws, regulations and proprietary rights). BVIG shall bear full responsibility for the defense (including any settlements) of any such claim; provided, however, that (a) BVIG shall keep Content Partner informed of, and consult with Content Partner in connection with the progress of such litigation or settlement; and (b) BVIG shall not have any right, without Content Partner's written consent, to settle any such claim if such settlement arises from or is part of any criminal action, suite or proceeding or contains a stipulation to or admission or acknowledgment of, any liability or wrongdoing (whether in contract, tort or otherwise) on the part of Content Provider or otherwise requires Content Partner to take or refrain from taking any material action (such as the payment of fees).

10 GENERAL TERMS AND CONDITIONS

10.1 The parties to this Agreement are independent contractors. Neither party is an agent, representative or partner of the other party. Neither party shall have any right, power or authority to enter into any agreement for or on behalf of, or to incur any obligation or liability for, or to otherwise bind, the other party. This Agreement shall not be interpreted or construed to create an association, joint venture, co-ownership, co-authorship, or partnership between the parties or to impose any partnership obligation or liability upon either party.

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10.2 Neither party shall assign, sublicense or otherwise transfer (voluntarily, by operation of law or otherwise) this Agreement or any right, interest or benefit under this Agreement, without the prior written consent of the other party; provided, however, that either party may assign this Agreement to any entity that acquires all or substantially all of the assets or shares (or controlling shares) of such party; provided that the acquiring entity is not a direct competitor of the other party. Any attempted assignment, sublicense or transfer by a party in derogation hereof shall be null and void. Subject to the foregoing, this Agreement shall be fully binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. Any change of control of either party shall be deemed an "assignment" for purposes of this
Section 10.2; provided, however, that as long as control is not transferred to a competitor of the nonassigning party, it shall be an approved assignment.As used herein, "change of control" shall include any event (including, without limitation, a merger, sale, liquidation, transfer, encumbrance or other disposition) which results in a change of the control of a party. As used in this Section 10.2 "change of control" shall mean a change in the legal, beneficial or equitable ownership, directly or indirectly, of more than fifty (50%) of a class of capital stock having voting rights of either party.

10.3 No change, amendment or modification of any provision of this Agreement or waiver of any of its terms will be valid unless set forth in writing and signed by the party to be bound thereby.

10.4 This Agreement shall be interpreted, construed and enforced in all respects in accordance with the laws of the State of California. Each party irrevocably consents to the exclusive jurisdiction of any state or federal court for or within Los Angeles County, California over any action or proceeding arising out of or related to this Agreement, and waives any objection to venue or inconvenience of the forum in any such court.

10.5 The failure of either party to insist upon or enforce strict performance by the other party of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such party's right to assert or rely upon any such provision or right in that or any other instance; rather the same shall be and remain in full force and effect.

10.6 Any notice, approval, request, authorization, direction or other communication under this Agreement shall be given in writing, will reference this Agreement, and shall be deemed to have been delivered and given (a) when delivered personally; (b) three (3) business days after having been sent by registered or certified U.S. mail, return receipt requested, postage and charges prepaid; or (c) one (1) business day after deposit with a commercial overnight courier, with written verification of receipt. All communications will be sent to the addresses set forth below or to such other address as may be designated by a party by giving written notice to the other party pursuant to this Section 10.6.

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If to BVIG:                   If to Content Partner:
Buena Vista Internet Group    drkoop.com, Inc.
5161 Lankershim Blvd.         8920 Business Park Drive, Longhorn Suite
North Hollywood, CA 91601     Austin, Texas 78759
Attention: Dan Rosen          Attention: __________________
Tel: (212) 456-6469           Tel: ______________________
Fax:(212) 456-7635            Fax:________________

With a copy to:
Legal Department
Fax: (818) 623-3637

10.7 This Agreement and the Appendices attached hereto and incorporated herein by reference constitutes the entire agreement between the parties and supersede any and all prior agreements or understandings between the parties with respect to the subject matter hereof. Neither party shall be bound by, and each party specifically objects to, any term, condition or other provision or other condition which is different from or in addition to the provisions of this Agreement (whether or not it would materially alter this Agreement) and which is proffered by the other party in any purchase order, correspondence or other document, unless the party to be bound thereby specifically agrees to such provision in writing.

10.8 The headings used in this document are for convenience only and are not to be construed to have legal significance. In the event that any provision of this Agreement conflicts with the law under which this Agreement is to be construed or if any such provision is held invalid by a court with jurisdiction over the parties to this Agreement, such provision shall be deemed to be restated to reflect as nearly as possible the original intentions of the parties in accordance with applicable law, and the remainder of this Agreement shall remain in full force and effect.

BUENA VISTA INTERNET GROUP                    DRKOOP.COM, INC.


By: /s/ Larry Shapiro                         By: /s/ Donald Hackett
   ---------------------------                   ------------------------------
      Authorized Signature                            Authorized Signature

Print Name: Larry Shapiro                     Print Name: Donald Hackett
           -------------------                           ----------------------

Title: Sr. V.P. Business and Legal Affairs    Title: CEO
      ------------------------                      ---------------------------

Date: 4/9/99                                  Date: 4/9/99
     -------------------------                     ----------------------------

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APPENDIX A

A. HEALTH CONTENT

1. "Health Content" means content that relates to human health conditions, medicine, and the treatment of disease ***

B. HEALTH CHANNEL DESCRIPTION

1. a. The Health Channel shall comprise one or more pages and shall include a DrKoop.com branded area featuring relevant Headlines from the DrKoop.com Site selected by Family.com. "Headline" means a title of an article, application, graphic or other Content Provider Content. The Headlines shall be Links to the applicable Health Content within the Pages either hosted by BVIG or Dr.Koop.com. The Headlines may be pulldown menus or other kinds of Links and may also include a brief description of the content (subject to the obligations set forth in Section B 4 below). Each page of the Health Channel shall include a Drkoop.com button which will be Linked to the DrKoop.com site or the Family.com Wrapped Pages, as determined by BVIG. The Health Channel shall be available to Users within 60 days of the Effective Date. The date on which the Health Channel is made available to Users is referred to herein as the "Execution Date."

b. At least *** of the content on the Health Channel's home page shall be Content Provider Content or Headlines, provided Family.com's editorial team, in its reasonable discretion, identifies relevant Content Provider Content/Headlines to reach this *** threshold. At least *** of the Links on the Health Channel shall go directly to the Family.com-Wrapped Pages or the DrKoop.com Site, provided Family.com's editorial team identifies, in its reasonable discretion, relevant Content Provider Content/Headlines to reach this *** threshold. The other *** may link to Family.com pages that contain other Health Content (subject to Section B 2b) and other content.

c. Family.com may also choose in its sole discretion to host and display in full on Family.com up to 10 articles per month from the Content Provider Content. Each such article will include a mutually agreed Link to the DrKoop.com Site.

d. BVIG shall promote the Health Channel in a manner commensurate with BVIG's promotion of the other Family.com Channels.

2. a. DrKoop.com shall provide Health Content and tools to Family.com in areas and subjects as specified by BVIG. BVIG and DrKoop.com shall mutually upon a schedule for the display of Content Provider Content which may include implementation of the following features within 90 days of the Effective Date:

. Weekly articles
. Periodic online chats with experts provided by DrKoop.com
. At least one photo for each article and illustrations, graphs, statistical tables and charts wherever appropriate
. Weekly replies from experts affiliated with DrKoop.com to Family.com user questions
. Search


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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b. In the event that BVIG desires Health Content and/or tools, medium and/or functionality not available from Content Partner at the time of BVIG's request ("New Content"), it shall provide DrKoop.com with written notice of its desire to obtain such New Content, which notice shall include a specification therefor, and a delivery schedule in reasonable detail to allow DrKoop.com to evaluate the scope of the development project (the "Request").

c. ***

3. All Links pointing to the DrKoop.com Site from the Service shall provide Links back to the same area of the Service.

4. Notwithstanding the foregoing, BVIG shall not modify, edit, abbreviate or censor Content Partner Content, but BVIG shall have the right not to include such content on any pages of Family.com. In the event that BVIG modifies; including without limitation, creating summaries, any portion of the Content Partner Content without the prior written approval of Content Provider, BVIG shall be solely responsible for any liability arising from such unauthorized modifications and shall indemnify and hold Content Partner harmless from such liability.

5. ***

6. At BVIG's request, DrKoop.com shall send to BVIG's facilities a minimum of one (1) on-site designer/producer/engineer during the term of this Agreement for a mutually agreed upon duration for purposes of assisting BVIG in building the Health Channel and integrating the Content Partner Content therein.

7. ***

a. DrKoop.com shall place on the Family.com Wrapped-Pages and on any portion of the DrKoop.com Site which includes only promotions for or links to the Family.com Wrapped-Pages only "run of site" advertising and shall not include in such locations any advertising from any *** without BVIG's prior written consent, which may be granted or withheld in BVIG's sole discretion.

b. DrKoop.com may sell sponsorships which appear on the Family.com- Wrapped Pages, provided that (i) such sponsorships comply with BVIG's current Advertising Guidelines and (ii) DrKoop does not sell Family.com-Wrapped Pages sponsorships as a stand alone opportunity and without BVIG's prior approval do not reference Family.com when discussing sponsorship opportunities.

c. Content Provider shall comply with BVIG's then current standard advertising policy.

d. DrKoop.com shall not transmit any so-called "interstitials" or "pop-up ads" to users of Family.com or the Family.com Wrapped- Pages.

8. At present, BVIG intends that all Health Content provided to users of BVIG's site "Disney.com" shall be provided via Links to Family.com. ***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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9. Any promotions and/or links to Family.com provided by DrKoop.com shall be approved in advance by BVIG.

10. All Content Partner Content shall carry Content Partner's legal disclaimer, a copy of which is included on Appendix A-1, which may be revised from time to time by Content Provider. Other than Headlines, this disclaimer shall be presented in its entirety any time Content Partner Content is displayed. In addition, certain third party content which is provided by Content Partner may have additional requirements for displaying, such as including the logo of the original content provider (for example, Dartmouth Medical content must carry the branding and logo of the Dartmouth Medical School), which requirements are described on Appendix A-1. Content Partner will provide further details concerning such requirements at the time Content Partner Content is submitted for inclusion in the Service.

11. Advertising

a. Commencing on Execution Date, BVIG shall deliver *** of DrKoop.com Ad Banners at a cpm of *** on a "run of site" basis across Family.com. *** of such impressions shall be delivered by September 15, 1999 and the remainder shall be delivered within the first year of this Agreement. The terms and conditions of the BVIG's then- current "Advertising Sales Terms and Conditions" shall apply to such advertising. Copies of such terms and conditions are available from BVIG on request.

b. Provided DrKoop.com is current on all payments described above, BVIG agrees to purchase *** Ad Banner impressions on the DrKoop.com Site at a cpm of *** of the impressions shall be delivered during the first year of this Agreement and the remaining *** shall be delivered as determined by BVIG over the first two (2) years of this Agreement.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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APPENDIX A-1

This Appendix A-1 sets forth existing Content Provider Content as of the Effective Date. All Content Provider Content includes, in addition to the requirements listed below, drkoop.com branding. Content Partner may revise this Appendix from time to time, to reflect new content added to the DrKoop.com Site, and to reflect the termination or expiration of third party agreements, which revisions shall be subject to BVIG's reasonable approval; notwithstanding the foregoing, Content Partner shall maintain the quality and quantity of Content Provider Content available to BVIG throughout the term of the Agreement.

Category       Source                Copyright          Distribution            Disclaimer      Logo
                                                        Rights                  Required        Needed
========================================================================================================
Disease

               Dartmouth             Drkoop.com         any use                 Standard        Yes



               N. Snyderman          Drkoop.com         any use                 Standard        Yes

               Public Domain -       Drkoop.com         any use                 Standard        Yes
               NIH

               Patient                                  Individual deals -      Standard        No
               Associations                             please inquire about
                                                        specifics with
                                                        bhansen@drkoop.com
=============================================================================================
Expert         Sharon Howard -       Drkoop.com         any use                    Standard     No
Content        Nutrition

               Armond Tecco -        Drkoop.com         any use                    Standard     No
               Fitness

               Debora Orrick -       Drkoop.com         any use                    Standard     No
               Smoking

               Elizabeth Farrugia    Drkoop.com         any use                    Standard     No
               - Insurance
=============================================================================================
Pharmacy       Joe Graedon           JG                 Limited offline use        Standard     No

               Multum                Multum                                        Standard +   Yes
                                                                                     Multum

15 of 21

==============================================================================================
Insurance      J. Hallam / T.        Drkoop.com         any use                    Standard       No
               Rowen
==============================================================================================

==============================================================================================
Clinical       public domain                            any use                    Standard       No
Trials

==============================================================================================
Community      Day in my life        Drkoop.com         any use                    Standard       No

               In the Spotlight                         Individual deals -         Standard       No
                                                        please inquire
==============================================================================================
                                                                                                  No
Health Site                          Drkoop.com         any use                    Standard
Reviews

Standard Disclaimer
This information is not intended to be a substitute for professional medical advice. You should not use this information to diagnose or treat a health problem or disease without consulting with a qualified healthcare provider. Please consult your healthcare provider with any questions or concerns you may have regarding your condition.

Multum Disclaimer
Every effort has been made to ensure that the information provided by Multum is accurate, up-to-date, and complete, but no guarantee is made to that effect. In addition, the drug information contained herein may be time sensitive and should not be utilized as a reference resource beyond the date hereof. Also requires user to accept Terms of Use when such content is first displayed.

16 of 21

APPENDIX B

***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

17 of 21

APPENDIX C

ERROR CORRECTION SCHEDULE

The response times within which DrKoop.com shall remedy and/or correct any material limitations or errors in any Content Partner Content made available by or through DrKoop.com that Users of Family.com bring to DrKoop.com's attention or about which DrKoop.com otherwise becomes aware are specified below. DrKoop.com shall acknowledge receipt of the problem description, and, in the time frames specified below, remedy and/or correct the problem.

Program/Error Severity Levels Problem/Error Correction Time

***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

18 of 21

APPENDIX D

FEES AND PAYMENTS

A. Fees and Payments

1. DrKoop.com shall pay to BVIG a content/program placement fee of six million dollars ($6,000,000) (five hundred thousand dollars of which is attributable as a production fee as described below) and, in consideration for the ad impressions to the delivered under Appendix A, Section 12a., an advertising fee of one million five hundred thousand dollars ($1,500,000) payable to BVIG on the schedule specified below.

2. BVIG shall pay to DrKoop.com an advertising fee of two million dollars ($2,000,000) for the ad impressions to be provided under Appendix A,
Section 12b over the first two year period of the term of this Agreement, provided this Agreement is not terminated.

B. Payment Schedule

1. Content/Placement Fee to BVIG:DrKoop.com shall pay to BVIG a non- refundable, up-front production fee payment ***

2. ***

C. Other

1. BVIG (or its agents) shall receive all monies derived from advertising, product sales, and all other activities and transactions on all pages of Family.com. DrKoop.com shall receive all monies derived from advertising, product sales and all other activities and transactions on the Family.com-Wrapped Pages and the DrKoop.com Site.

2. All BVIG invoices are to be mailed to:

drkoop.com, Inc.
8920 Business Park Drive
Longhorn Suite
Austin, Texas 78759
Attention: _______________________

All payments are to be mailed to:
Buena Vista Internet Group
5161 Lankershim Blvd.
North Hollywood, CA 91601
Attention: Accounts Payable


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

19 of 21

APPENDIX E
***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

20 of 21

APPENDIX F
***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

21 of 21

EXHIBIT 10.13

SOFTWARE SALE, LICENSE AND DEVELOPMENT AGREEMENT

This is a Software Sale, License and Development Agreement ("Agreement") dated as of January 20, 1999, (the "Effective Date") by and between Empower Health Corporation ("EHC"), a Texas corporation having a place of business at 8920 Business Pass Drive, Austin, Texas 78759 and HealthMagic, Inc. ("HMI"), a Delaware corporation having a principal place of business at 1444 Wazee Street, Suite 210, Denver, Colorado 80202 (individually a "party" and collectively, the "parties").

In consideration of the obligations stated in this Agreement, and other good and valuable consideration received by each of the parties, the parties agree as follows:

PART I. PURPOSE AND SCOPE OF AGREEMENT; DEFINITIONS

1. Purpose and Scope of Agreement

A. HMI is a corporation engaged in developing, marketing and providing innovative Internet-enabled health information technology systems and applications including, without limitation, the Lifelong Health Record or "LHR" (as further defined below). EHC is a corporation engaged in the business of developing, marketing and maintaining an integrated suite of Internet enabled consumer oriented software applications and services including, but not limited to, Dr. Koop's Personal Medical Record System or "PMR" (as further defined below), Dr. Koop's Community and advertising and promotional services on the Internet at the web site http://www.drkoop.com (the "EHC Web Site"). The parties have entered into this Agreement under which: (i) EHC will sell Dr. Koop's Personal Medical Record System to HMI; (ii) HMI will further develop its existing Web-Based LHR and develop a Client-Based LHR using PMR as a starting point; (iii) HMI will grant EHC the right to "frame" or "embed" the Web-Based LHR into the EHC Web Site; (iv) HMI will grant EHC the right to use certain software tools; and (v) HMI will grant EHC the right to use and distribute LHR in association with EHC Web Site.

The execution, delivery and effectiveness of this Agreement are contingent upon the simultaneous execution and delivery of: (i) that certain Investment Agreement by and among Adventist Health System Sunbelt Healthcare Corporation ("Adventist"), EHC and HMI dated January 20, 1999; and (ii) that certain Master Community Partner Program Agreement by and between Adventist and EHC dated January 20, 1999.

2. Definitions

Capitalized terms used in this Agreement shall have the meanings given below or in the context in which the term is used, as the case may be.

A. "Affiliate" shall mean, with respect to a party to this Agreement, any entity that directly or indirectly controls, or is under common control with, or is controlled by, such party. As used above, "control" (including, with its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

B. "Acquired Assets" shall mean the Acquired Product, the Acquired Documentation and the Acquired Intellectual Property Rights in such Acquired Assets.

________________________________________________________________________________
HealthMagic, Inc                     1              Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


C. "Acquired Documentation" shall mean any and all documentation relating to or associated with the Acquired Product that EHC owns, to the best of EHC's knowledge, on the Effective Date.

D. "Acquired Intellectual Property Rights" shall mean all of the following as they relate to the Acquired Assets:

(1) All right, title and interest, under the laws of any country, in patents and applications for patents and any other government-issued indicia of invention ownership;

(2) All right, title and interest in all trade secret rights arising under the laws of any country;

(3) All rights of copyright and all other literary property and author rights (including moral rights) whether or not copyrightable, under the laws of any country, and all right, title and interest in all copyright registrations or applications for copyright registration;

(4) All right, title and interest in all technical data (excluding data of EHC end users), whether or not protectable by patent, copyright or trade secret laws; and

(5) All right, title and interest in all causes of action arising under the patent, copyright, trade secret or other laws of any jurisdiction, which causes of action have not been asserted as of the Effective Date.

E. "Acquired Product" shall mean Dr Koop's Personal Medical Record System ("PMR") (including all present and predecessor versions thereof and all works in progress relating to its correction, enhancement or modification), including both source code and object code versions and all supplements, enhancements and modifications thereto created by EHC or otherwise, and all audio and/or visual elements. In addition, Acquired Product includes the framework used for the development of PMR, whether stand-alone or web based. HMI hereby acknowledges that the PMR has not been completed and is not a fully functional software program.

F. "Certifying Authority" shall mean HMI or such other trusted third-party central administrator: (i) willing to verify the identities of those to whom it issues certificates and their association with a given key; (ii) that have a trustworthy public key (that is either publicized or provided with a certificate from a higher level Certifying Authority attesting to the validity of its public key); (iii) whose subject identification requirements (e.g., driver's license, notarized form, fingerprints) engender a high level of confidence to the certified name-key binding; and (iv) that are capable of issuing Digital Certificates (including, without limitation, signing the Digital Certificate) to authenticate the binding between the subject (end user's) name and the subject's public key.

G. "Client-Based Lifelong Health Record" or "Client-Based LHR" shall mean HMI's proprietary client-based version of LHR made up of: (i) proprietary interactive web-browser compatible pages, or other programs, which are installed and executed locally on an end user's computer and contain functionality enabling end users to retrieve, document, track and populate their own personal health information; and (ii) a local "Repository" that is installed and executed locally on the end user's computer and stores that end user's health data and such other information as mutually agreed upon by the parties within ninety (90) days of the Effective Date (or failing mutual agreement through the binding arbitration procedure described in Part VII.11.D). The Client-Based LHR includes any Updates, Releases, new Versions, modifications or derivative works of the Client-Based LHR produced by HMI or on HMI's behalf.

________________________________________________________________________________
HealthMagic, Inc                     2              Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


H. "Digital Certificate" shall mean a digital certificate as defined by the International Telecommunications Union ("ITU-T") X.509 standard, version 3. As a general matter, a Digital Certificate: (i) is a document attesting to the binding of a public key to an individual or other entity; (ii) enables the verification of a claim that a specific public key does in fact belong to a specific individual; and (iii) contains information including version, serial number, signature algorithm ID, issuer name (i.e., the Certifying Authority that issued the Digital Certificate), validity period, subject (user) name, subject public-key information, issuer unique identifier, subject unique identifier, extensions and the signature of the Certifying Authority that issued the Digital Certificate on the foregoing. Digital Certificates are stored on the subject's (end user's) computer.

I. "Dr. Koop's Personal Medical Record" or "PMR" shall mean EHC's proprietary desktop application which includes, but is not limited to the Electronic Medical Record module.

J. "End Users" shall mean any hospitals, insurance companies or other entities (including their consumers) and individuals visiting the EHC Web Site.

K. "End-User Data" shall mean the information provided by end users or on behalf of end users, with their authorization, in the process of using LHR. Ownership of End-User Data shall in no way be altered by this Agreement.

L. "Health Talk Tool" shall mean HMI's proprietary underlying infrastructure that supports the construction of secure health applications that enable the sharing of sensitive information on the public Internet and World Wide Web. Key features enable a trusted identity for every person accessing sensitive information, the specification of security policies independent of the application, the optional generation of the applications that enforce the security policies, and the decentralized assignment of roles to employees of providers and health plans. Software deliverables include: (i) the Visual HealthTalk Studio that enables the entry of meta-data; (ii) the generator itself; (iii) a tool for building implementations; (iv) Test Suite 98; (v) an Administration Console; (vi) Charter Editor; and (vii) a Batch Enroller. The Health Talk Tool includes any and all Updates, Releases, new Versions, modifications or derivative works of the Health Talk Tool produced by HMI or on HMI's behalf.

M. "Health Vectors" shall mean, for any particular LHR end user, collections of health-related data that profiles such end user in his or her role as a health care consumer which data is generated through the use of the Health Vector software embedded in the LHR. Different kinds of Health Vectors include, but are not limited to: (i) health and illness data (e.g., health status, symptoms, important diagnoses, most recent encounters, medications, recent treatments); (ii) interests and needs data (i.e., information used and requested by the consumer); (iii) demographic data (e.g., name, mailing address, gender, age, race); (iv) registration data (e.g., plan identification, member identification and enrollment information); and (v) transaction data (i.e., a summary of the transactions encountered within the service by the end user).

N. "Health Vectors Tool" shall mean HMI's proprietary software development tool which enables the tailoring of user/computer interactions based on the user's profile. As of the Effective Date the profile includes age, gender and health interests but the Health Vectors Tool is architected to profile many different dimensions each called a vector. Based on the specific health profile that is comprised of various health data, screens are assembled that contain articles, Weblinks and Preventive Guidelines tailored to the individual for various sections of a Web service. Software deliverables include: (i) Content Attribute Studio; (ii) Active X DLL that represents the application; (iii) Health Vector Publisher; and (iv) the associated data base schema. The Health Vectors Tool includes any and all Updates,

________________________________________________________________________________
HealthMagic, Inc                     3              Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


Releases, new Versions, modifications or derivative works of the Health Vectors Tool produced by HMI or on HMI's behalf.

O. "Health Tool Application" shall mean any application created using the Health Talk Tool or the Health Vectors Tool.

P. "Lifelong Health Record" or "LHR" shall mean the Web-Based LHR, EHC LHR (as defined in Part IV.3.B) and the Client-Based LHR.

Q. "Personal Medical Record" shall have the meaning provided in Exhibit D to this Agreement.

R. "Release Number" shall mean the second decimal place in the number assigned to any software by the supplier of such software (e.g., the Release Number of XYZ 6.1.23 would be 1). A new "Release" means a software upgrade that adds new features, corrects bugs or defects and in which the Release Number is incremented while the Version Number remains unchanged (e.g., XYZ 6.2.0 would be a new Release as compared to XYZ 6.1.23).

S. "Update Number" shall mean the third decimal place in the number assigned to any software by the supplier of such software (e.g. the Update Number of XYZ 6.2.23 would be 23). A new "Update" means a software upgrade that provides bug fixes or other minor corrections in which the Version Number and Release Number remain unchanged and, if the number assigned to the software by the supplier, the Update Number is incremented (e.g. XYZ 6.1.24 would be a New Update as compared to XYZ 6.2.23).

T. "Version Number" shall mean the first decimal place in the number assigned to any software by the supplier of such software (e.g., the Version number of XYZ 6.2.23 would be 6). A new "Version" means a major software upgrade that adds substantial new features or other significant changes in which the Version Number is incremented (e.g., XYZ 7.0.0 would be a new Version as compared to XYZ 6.2.23).

U. "Web-Based Lifelong Health Record" or "Web-Based LHR" shall mean: (i) HMI proprietary interactive Internet-enabled pages which reside on HMI servers, that are accessible from HMI licensed web sites containing links to such pages through a digital certification process ("LHR Enabled Sites") (the EHC Web Site will be an example of such a web site), and contain functionality enabling end users to retrieve, document, track and populate their own personal health information in a secure fashion from any LHR Enabled Site; and (ii) HMI's proprietary database or "Repository", housed on HMI's servers, that stores each end user's Health Vectors. The Web-Based LHR includes any and all Updates, Releases, new Versions, modifications or derivative works of the Web-Based LHR produced by HMI or on HMI's behalf. Supported Versions (as defined in Part
IV.3.C(3)) of Web-Based LHR shall reside on servers specifically designated to HMI at a Third-Party Secured Site (as defined in Part IV.2.B).


PART II. SALE OF ACQUIRED ASSETS

1. Sale, Assignment and Transfer of Acquired Assets to HMI

A. EHC hereby irrevocably sells, assigns and transfers to HMI all of EHC's right, title and interest in and to the Acquired Assets. This exclusive grant of rights shall include, but is not limited to, the rights to (i) offer, market, publish, reproduce, distribute, transmit, adapt, maintain, prepare derivative works, sell, license or otherwise make use of the Acquired Assets (including, without limitation, all subsequent

________________________________________________________________________________
HealthMagic, Inc                     4              Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


editions, revisions, supplements to, and versions of the Acquired Assets, regardless of length, nature or state of development) throughout the world in any form or medium and in any language, and (ii) to license or otherwise transfer to others the rights commensurate herewith in connection with the Acquired Assets.

B. As of the Effective Date, HMI shall have the right to obtain and hold in its own name any intellectual property rights in and to the Acquired Assets and all copies and derivative works made therefrom (which shall include, but not be limited to, the right to file patent, copyright and trademark applications in the U.S. and throughout the world for the Acquired Assets in the name of HMI). EHC hereby agrees that HMI may act as attorney-in-fact to execute any documents that HMI deems necessary to record this grant with the U.S. Patent and Trademark Office, the U.S. Copyright Office or elsewhere. EHC agrees that it will execute any documents or take any other actions as may reasonably be necessary, or as HMI may reasonably request, to establish, confirm and defend HMI's ownership of, and intellectual property rights in and to, the Acquired Assets and all copies and derivative works made therefrom. The cost of recording and registering ownership rights in the Acquired Assets shall be borne solely by HMI.

C. As of the Effective Date, EHC shall deliver to HMI a complete set of all complete and partial copies of the Acquired Assets in all forms (including, without limitation, source code and object code for software components). The source code for the Acquired Product delivered shall contain such code, libraries and other source components so that, when compiled, linked and otherwise manipulated to create the runtime/executable image for the Acquired Product, creates a complete and fully operational run-time/executable version of the Acquired Product. Notwithstanding the foregoing, EHC shall not be required to deliver any third party software development tools and third party components used in the creation of the Acquired Assets.

D. EHC reserves the right to request HMI to complete development of PMR in a commercially reasonable manner, pursuant to a client opportunity. In the event HMI elects to complete development of PMR pursuant to EHC's request, upon completion of development of PMR, HMI shall license use of PMR to EHC under the same terms as LHR under this Agreement (including, without limitation, the revenue sharing provisions set forth in Part VI which shall apply to PMR in the same manner as they apply to LHR). In the event HMI elects not to accept EHC's request, then HMI shall grant a license in and to PMR to EHC under commercially reasonable terms to complete PMR and use PMR, provided that such license shall be subject to revocation in the event EHC does not proceed in a commercially reasonable manner to meet the client opportunity.

2. Representations and Warranties by EHC

Except as otherwise disclosed in Exhibit C. EHC represents and warrants to HMI, as of the Effective Date, as follows:

A. EHC is the sole and exclusive legal and equitable owner of and holds good, clear and marketable right and title to the Acquired Product and Acquired Documentation including, without limitation, all Acquired Intellectual Property Rights in the Acquired Product and Acquired Documentation. The Acquired Assets are not subject to a license (other than the licenses contained in this Agreement) and are not subject to any lien, security interest, royalty obligation or other interest or claim of any kind. EHC has the sole right to bring actions for infringement of any Acquired Intellectual Property Rights in the Acquired Product and Acquired Documentation. Except for this Agreement, neither the Acquired Product, nor any Acquired Documentation are subject to any escrow.

________________________________________________________________________________
HealthMagic, Inc                     5              Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


B. EHC is a corporation duly organized and validly existing under the laws of Texas and the execution of this Agreement by EHC and the transactions contemplated by this Agreement have been authorized by all necessary corporate action on the part of EHC and neither the execution of this Agreement by EHC, nor the transactions contemplated by this Agreement, nor compliance by EHC with any of its provisions, violates any judgment or order of any court, arbitrator, or administrative agency applicable to EHC or any of its properties or assets.

C. To the best of EHC's knowledge, there are no pending or threatened disputes or controversies with EHC's suppliers, customers, consultants, distributors and others having business relations with EHC relating to the Acquired Assets, nor any valid basis for a dispute.

D. To the best of EHC's knowledge, there are no suits, proceedings, or investigations pending or threatened against EHC before any court, arbitrator or agency based upon or challenging the ownership or use of the Acquired Assets, including claims for breach of warranty or products liability. There is no judgment or order entered against EHC which might have a material adverse effect on the value of the Acquired Assets to HMI. No third party is asserting the invalidity of this Agreement or seeking to prevent any of the transactions contemplated by this Agreement.

E. Neither the execution by EHC of this Agreement, nor compliance by EHC with its terms and conditions will (a) conflict with, or result in a breach or violation of any provision in the documents under which EHC is incorporated, any award of any arbitrator in a matter as to which EHC is a party, or any other agreement or U.S. Government regulations relating to prohibitions on transfer or export of technology to which EHC is subject, or (b) result in the creation of any lien upon the Acquired Assets. EHC is not a party to, or otherwise subject to any provision contained in any agreement which restricts or otherwise limits the transfer of the Acquired Assets (including, but not limited to, any loan agreement). EHC is not a party to any license (other than the licenses contained in this Agreement), joint venture or similar affiliation involving the Acquired Assets.

F. To the best of EHC's knowledge: (a) The Acquired Assets (including all Acquired Intellectual Property Rights) and the marketing, reproduction or use of the Acquired Assets do not infringe upon any patent, copyright, trademark, trade secret or other proprietary right of any third party; (b) no proceedings have been instituted, are pending or are threatened which challenge the rights of EHC under or the validity of the Acquired Intellectual Property Rights; (c) none of the Acquired Intellectual Property Rights is being infringed upon by others; and
(d) without regard to EHC's knowledge, none of the Acquired Intellectual Property Rights is subject to any outstanding order or judgment. EHC has taken all steps reasonably necessary to protect the Acquired Intellectual Property Rights in the Acquired Assets, including, but not limited to, utilization of the proper statutory form of copyright notice on all copies of the Acquired Product and Acquired Documentation commercially distributed prior to the Effective Date. The representations and warranties set forth in this Part II.2.F (a) shall survive termination or expiration of this Agreement for injuries which arose prior to termination or expiration.

G. (a) No source code included in the Acquired Product or Acquired Documentation has been disclosed to any third party by EHC or any EHC representative, agent or partner; and (b) any EHC employee, who has been directly involved in the development of the Acquired Product and Acquired Documentation has executed a confidentiality and nondisclosure agreement covering the source code and other non-public information contained in the Acquired Product and Acquired Documentation.

H. The set of materials provided to HMI by EHC pursuant to Part II.1.C constitutes a complete set of all full and partial copies of the Acquired Assets in all forms (including, without limitation, source

________________________________________________________________________________
HealthMagic, Inc                     6              Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


code and object code for software components) that EHC owns, to the best of EHC's knowledge, as of the Effective Date.


PART III. LICENSE TO HMI PRODUCTS

1. License

A. Except as set forth in Part VI.1, HMI hereby grants EHC a ninety-nine (99) year, nonexclusive, nontransferable, world-wide and fully paid-up right and license commencing on the Effective Date: (i) to use, copy, as well as offer and distribute to End Users under HMI's standard license, solely in conjunction and integrated with EHC's software medical applications and services, the Client-Based LHR (including the Client-Based EHC LHR and upon their initial release); (ii) to use, copy and display in a manner "framed" by or "embedded" within the EHC Web Site content, as well as offer and distribute to End Users under HMI's standard license terms, solely in conjunction and integrated with EHC's Web Site, the Web-Based LHR (including the Web-Based EHC LHR and upon their initial release); and (iii) to use internally in its own business, copy, (as well as use to develop, offer and distribute, under EHC's standard license, Health Tool Applications), the Health Talk Tool and the Health Vectors Tool; provided, however, EHC may not develop or contract for the creation of Health Tool Applications that, in the reasonable discretion of HMI, compete with the Health Talk Tool or the Health Vectors Tool. HMI hereby grants to EHC the same licenses to the manuals related to LHR, solely for use with the LHR (the "LHR Documentation"). This license includes any and all Updates, Releases and new Versions of LHR, Health Talk Tool and Health Vector Tool that may be provided to EHC from time to time.

B. HMI shall submit the standard licenses for EHC End Users referenced in Part
III.1.A (i) and (ii) to EHC for review and approval, which approval shall be not unreasonably withheld or delayed. EHC shall submit its standard license referenced in Part III.1.A (iii) to HMI for review and approval, which approval shall be not unreasonably withheld or delayed.

C. EHC acknowledges and agrees that HMI represents that the LHR, Health Talk Tool, Health Vectors Tool, and related materials ("HMI Materials") are owned by and shall remain the sole property of, HMI, that the HMI Materials contain, embody and are based on patented or patentable inventions, trade secrets, copyrights and other intellectual property rights (collectively, "IP Rights") owned or controlled by HMI and that HMI shall continue to be the sole owner of all IP Rights in and to the HMI Materials, including, without limitation, any derivative works of the HMI Materials produced by HMI or on HMI's behalf. EHC agrees that it will provide all reasonable cooperation and assistance to HMI, at HMI's expense, in taking any action necessary or appropriate to establish, confirm and defend HMI's IP Rights, including, without limitation, the preparation, filing and prosecution of patent, copyright and trademark applications and the offering of testimony and other support in connection with any legal proceedings brought by or against HMI relating to HMI's IP Rights.

D. EHC agrees not to modify, translate, reverse engineer, decompile, disassemble or extract, as applicable, any ideas, algorithms or procedures from the whole or any part of the HMI Materials for any reason and shall include this restriction in all relevant agreements with third parties, (including but not limited to license agreements and consulting agreements) relating to the HMI Materials.

E. EHC agrees to reproduce and include HMI's copyright, trademark, and other proprietary rights notices on any copies of the HMI Materials and the LHR Documentation, including partial copies and copied materials in derivative works.

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HealthMagic, Inc                     7              Confidential and Proprietary
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Development Agreement                                    Final, January 20, 1999


2. HMI Warranties and Remedies for Breach of Warranty

A. HMI represents and warrants to EHC, as of the Effective Date, as follows:

(1) HMI is a corporation duly organized and validly existing under the laws of Delaware; and the execution of this Agreement by HMI, and the transactions contemplated by this Agreement have been authorized by all necessary corporate action on the part of HMI and neither the execution of this Agreement by HMI, nor the transactions contemplated by this Agreement, nor compliance by HMI with any of its provisions violates any judgment or order of any court, arbitrator, or administrative agency applicable to HMI or any of its properties or assets.

(2) To the best of HMI's knowledge, there are no pending or threatened disputes or controversies with HMI's suppliers, customers, consultants, distributors and others having business relations with HMI relating to the LHR, Health Talk Tool and Health Vectors Tool, nor any valid basis for a dispute.

(3) To the best of HMI's knowledge, there are no suits, proceedings, or investigations pending or threatened against HMI before any court, arbitrator or agency based upon or challenging the ownership or use of the LHR, Health Talk Tool and Health Vectors Tool, including claims for breach of warranty or products liability. There is no judgment or order entered against HMI which might have a material adverse effect on the value of the license rights granted to EHC pursuant to this Agreement. No third party is asserting the invalidity of this Agreement or seeking to prevent any of the transactions contemplated by this Agreement.

(4) Neither the execution by HMI of this Agreement, nor compliance by HMI with its terms and conditions will (a) conflict with, or result in a breach or violation of any provision in the documents under which HMI is incorporated, any award of any arbitrator in a matter as to which HMI is a party, or U.S. Government regulations relating to prohibitions on transfer or export of technology to which HMI is subject.

B. Subject to Part III.2.E below, HMI warrants that, during the thirty
(30) days immediately following the delivery of LHR (the "Warranty Period"):
(i) performance of LHR as delivered will not deviate materially from its specifications as set forth in the LHR Documentation (the "LHR Specifications"); and (ii) any date sensitive software components (i.e., software components the functionality of which includes processing, providing and/or receiving date data) of LHR will be year 2000 compliant (i.e., will, when used in accordance with associated documentation be capable of correctly processing, providing and/or receiving date data from, into, within or between the twentieth and twenty-first centuries). For purposes of Part III.2.A (ii) the Warranty Period shall be from the initial delivery of LHR until December 31, 2000. If EHC believes there has been a breach of this warranty and so notifies HMI in writing within the Warranty Period, then HMI will promptly investigate the matter to determine the nature of the suspected breach. If it is determined that there has been a breach of this warranty, then HMI's sole obligation, and EHC's exclusive remedy, will be for HMI to correct or modify LHR to make it perform as warranted. With respect to the year 2000 warranty, HMI will additionally use commercially reasonable efforts to reconstitute and/or repair any LHR-stored data files damaged as a result a year 2000 compliance failure caused by LHR.

C. Subject to Part III.2.E below, HMI warrants that LHR shall not: (a) constitute, or contain material that would constitute, libel, defamation or slander; or (b) constitute, or contain material that would constitute, an invasion of the rights to publicity of any third party or other similar right.

Except as

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HealthMagic, Inc                     8              Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


set forth in Part VII.2.C, to the extent the breach of this Part III.2.C is due to content not developed or owned by HMI, HMI's exclusive liability and EHC's sole remedy for breach of this Part III.2.C shall be for HMI to remove any content which is the subject of the warranty claim in a commercially reasonable timely fashion.

D. Subject to Part III.2.E below, HMI warrants that the LHR, Health Talk Tool and the Health Vectors Tool do not infringe any third party copyrights, patents or trademark or misappropriate any trade secrets rights of a third party. If a third party brings an action against EHC making allegations which, if true, would constitute a breach of this warranty for which HMI is responsible, or if HMI anticipates such an action, HMI shall have the option, at its expense, to:
(i) modify the infringing item(s) to be noninfringing without materially changing the functionality of such item(s); or (ii) obtain for EHC a license to continue using such item(s). This Part III.2.D and Part VII.2.C state HMI's entire obligation to EHC and EHC's sole remedy with respect to any claim of intellectual property infringement with respect to LHR, the Health Talk Tool and the Health Vectors Tool.

E. HMI is not responsible for any claimed breaches of the foregoing warranties set forth in Part III.2 caused by: (i) Acquired Assets furnished to HMI by EHC pursuant to Part II.1.C of this Agreement, (ii) modifications made to the HMI Materials by anyone other than HMI and its authorized personnel working at HMI's direction; (iii) the combination, operation or use of the HMI Materials with any third-party equipment or software or other items that HMI did not supply to EHC (including, without limitation, any EHC provided or developed equipment or software); or (iv) failure to use any new or corrected versions of HMI Materials made available by HMI.

F. HMI does not warrant that the HMI Materials will be error-free or that its operation will be uninterrupted. The obligations set forth in this Part III.2.C and Part III.2.D (and related other sections) shall survive termination or expiration of this Agreement for injuries which arose prior to termination or expiration.

3. Engaging Applications

A. EHC Engaging Applications.

(1) EHC may create applications that are designed to engage the consumer in the management of their health that utilize LHR, and that are separate from LHR, but which interact with LHR, provide data or other input to LHR, or use data or other output generated by LHR ("Engaging Applications"). HMI acknowledges that the Engaging Applications created by EHC are owned by and shall remain the sole property of EHC. If any material functionality or end-user value of any particular EHC Engaging Application is derived from, related to or enabled by LHR, EHC shall, subject to Part III.3.A (2) below, and in consideration of the revenue sharing scheme set forth in Part VI.1.F, offer to HMI a ninety-nine (99) year, nonexclusive, nontransferable, world-wide right and license to copy, reproduce, modify, translate and distribute (including sublicensing and marketing) copies of, and to prepare, have prepared, derivative works of, and to perform, display and use such EHC Engaging Applications (including source code, the "EHC Engaging Applications Source Code") for HMI's internal use and in conjunction with LHR. This license includes any and all Updates, Releases and new Versions of the Engaging Applications that may be provided to LHR from time to time. EXCEPT FOR THE WARRANTY PROVIDED IN PART
III.3.C, EHC PROVIDES THE EHC ENGAGING APPLICATIONS SOLELY ON AN "AS-IS" BASIS.

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Software Sale, License and
Development Agreement                                    Final, January 20, 1999


(2) During each twelve (12) month period following the Effective Date, EHC shall, with respect to any EHC Engaging Application the development of which is completed during such twelve (12) month period, and at the time of such completion, be entitled to designate to HMI (via a written notice) such EHC Engaging Application as a "Protected Engaging Application" that EHC need not offer to license to HMI as provided for in Part III.3.A (1) above; provided that EHC has not already, during such twelve (12) month period, designated more than one (1) other EHC Engaging Application as a Protected Engaging Application. EHC shall deliver any such EHC Engaging Applications which are not Protected Engaging Applications to HMI within six (6) months from its general release to EHC customers.

(3) Should HMI create any Engaging Applications for general release to HMI's customers ("HMI Engaging Applications"), (i) EHC acknowledges that the Engaging Applications created by HMI are owned by and shall remain the sole property of HMI; and (ii) if any material functionality or end-user value of any particular HMI Engaging Application is derived from, related to or enabled by LHR or if HMI creates a derivative work based an EHC Engaging Application licensed to HMI under Part III.3.A, HMI shall, in consideration of the revenue sharing scheme set forth in Part VI.1.F, offer to EHC a ninety-nine (99) year, nonexclusive, nontransferable, world-wide right and license to use and copy, as well as offer and distribute to End Users under HMI's standard license terms (pursuant to Part III.1.B), such HMI Engaging Applications solely for EHC's internal use and in conjunction with EHC's Web Site. In addition, EHC may sublicense HMI Engaging Applications to third parties under commercially reasonable terms; provided that such terms will be at least as protective of HMI's intellectual property (and intellectual property and other proprietary rights therein) as is the license to LHR granted to EHC in Part III.1 above. Should HMI be permitted to sublicense any third-party Engaging Applications to EHC, HMI may offer EHC the opportunity to purchase a sublicense to such third- party Engaging Applications. HMI shall deliver any such HMI Engaging Applications to EHC upon such HMI Engaging Applications general release to other HMI customers.

B. The license grant set forth in Part III.3.A(3) includes any and all Updates, Releases and new Versions of the HMI Engaging Applications that may be provided to EHC from time to time. EXCEPT FOR THE WARRANTY PROVIDED IN PART
III.3.C, HMI PROVIDES THE HMI ENGAGING APPLICATIONS SOLELY ON AN "AS-IS" BASIS.

C. Each party warrants that its Engaging Applications licensed to the other party do not infringe any third party copyrights, patents or trademarks or misappropriate any trade secrets rights of a third party. If a third party brings an action against the licensee party making allegations which, if true, would constitute a breach of this warranty, or if the licensor party anticipates such an action, the licensor party shall have the option, at its expense, to:
(i) modify the Engaging Application to be noninfringing; or (ii) obtain for the licensee party a license to continue using the Engaging Application. This Part
III.3.C and Part VII.2.C (in the case of HMI) and Part VII.2.B (in the case of EHC) state the licensor party's entire obligation to the licensee party and the licensee party's sole remedy with respect to any claim of intellectual property infringement for Engaging Applications. The obligation of each party set forth in this Part III.3.C (and related other sections) shall survive termination or expiration of this Agreement for injuries arising prior to termination or expiration.

4. Source Code Escrow

A. HMI agrees that it will deliver (subject to the terms and conditions of this Part III.4) within thirty (30) days after (i) the delivery of PMR to HMI, one (1) copy of the source code, (if any) for PMR (the "PMR Source Code"); (ii) the Effective Date, one (1) copy of the source code for each of such Tools (the

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HealthMagic, Inc                     10             Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


"Health Tools Source Code"); (iii) the initial release of the Web-Based LHR or (with respect to Web-Based LHR) within 180 days of the Effective Date (whichever is shorter), one (1) copy of the source code for the Web-Based LHR, including the EHC version thereof; and (iv) the initial release of the Client-Based LHR, one (1) copy of the source code for the Client-Based LHR, including the EHC version thereof (the source code for Web-Based LHR and Client-Based LHR are collectively referred to as the "LHR Source Code") to Data Securities International, Inc. ("DSI"), 9555 Chesapeake Drive, Suite 200, San Diego, CA 92123. HMI and the EHC shall, promptly following the Effective Date, negotiate and execute a three party Technology Escrow Agreement with DSI governing the terms of the escrow arrangement and such Technology Escrow Agreement shall be attached and incorporated as Exhibit F to this Agreement. The source code delivered into escrow under this Part III.4.A means a copy of the code, libraries and other source components so that, when compiled, linked and otherwise manipulated to create the runtime/executable image for the delivered software, creates a complete and fully operational run-time/executable version of the delivered software.

B. The Technology Escrow Agreement shall provide the events under which EHC may exercise its rights to obtain access to all or any part of the Health Tools Source Code, the PMR Source Code and/or the LHR Source Code, however such conditions shall be limited as follows:

(1) EHC may exercise its rights under the Technology Escrow Agreement and obtain access to Web-Based LHR Source Code, including the EHC version thereof, upon, subject to Part III.4.B(5) below: (i) failure on the part of HMI to resolve material errors in Web-Based LHR in a commercially reasonable manner (as determined by prevailing industry standards); (ii) material failure by HMI to meet the Service Levels (exclusive of failures caused by the Third-Party Secured Site over which HMI has no control,) on a continuing basis; (iii) a material failure by HMI to comply with the End-User Data Standards; (iv) upon termination of this Agreement for cause by EHC pursuant to Part VII.10.A based upon a breach of Part III.2.B, Part III.4.A, Part III.4.C, Part IV.3.C(1) or (3), or Part
VII.6; (v) breach by HMI of the document which shall be developed pursuant to Part VII.7.A; (vi) termination of this Agreement by EHC pursuant to Part
VII.10.B; or (vii) termination of this Agreement by HMI pursuant to Part VII.5.

(2) EHC may exercise its rights under the Technology Escrow Agreement and obtain access to Client-Based LHR Source Code, including the EHC version thereof, upon, subject to Part III.4.B(5) below: (i) failure on the part of HMI to resolve material errors in Client-Based LHR in a commercially reasonable manner (as determined by prevailing industry standards); (ii) upon termination of this Agreement for cause by EHC pursuant to Part VII.10.A based upon a breach of Part III.2.B, Part III.4.A, Part III.4.C, , or Part IV.3.C(1) or (3); (iii) termination of this Agreement by EHC pursuant to Part VII.10.B; or (iv) termination of this Agreement by HMI pursuant to Part VII.5.

(3) EHC may exercise its rights under the Technology Escrow Agreement and obtain access to the PMR Source Code upon termination of this Agreement for cause by EHC, subject to Part III.4.B(5) below, pursuant to Part VII.10.A, pursuant to Part VII.10.B or termination of this Agreement by HMI pursuant to

Part VII.5.

(4) EHC may exercise its rights under the Technology Escrow Agreement and obtain access to the Health Tools Source Code upon, subject to Part III.4.B(5) below: (i) termination of this Agreement for cause by EHC pursuant to Part
VII.10.A based upon a breach of Part III.2.B, Part III.4.A, Part III.4.C, Part
IV.4.B, Part IV.4.C, Part IV.3.C(1) or (3), or Part VII.6; (iii) breach by HMI of the document which shall be developed pursuant to Part VII.7.A; (iv) termination of this Agreement by EHC pursuant to Part VII.10.B; or (v) termination of this Agreement by HMI pursuant to Part VII.5.

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Software Sale, License
and Development Agreement                                Final, January 20, 1999


(5) EHC may not exercise its rights, for any reason, under this Part
III.4.B, except under Part III.4.B(3), with respect to a specific Source Code, for a period of eighteen (18) months after the initial deposit of such Source Code into escrow. After such eighteen (18) month period, EHC's exercise of its rights under pursuant to items (1) through (4) of this Part III.4.B, and access to the applicable Source Code, shall be subject to HMI first being provided commercially reasonable time to resolve support issues, as defined by the parties under Part IV.3.C(1), plus an additional thirty (30) day cure period in which to resolve the condition triggering EHC's exercise of rights under this Part III.4.B, during which the applicable Source Code will not be released from escrow and at the end of which the applicable source code shall remain in escrow if the condition has been resolved.

C. If and to the extent HMI makes available Updates, Releases or new Versions of LHR, the Health Talk Tool or the Health Vectors Tool, HMI shall: (i) deposit with DSI source code of such Updates or Releases on a semi-annual basis; and
(ii) deposit with DSI source code of such new Versions within ten (10) days of the release of such new Versions, so the escrow account remains current. All account renewal costs shall be borne by HMI, except that EHC will be responsible for paying the annual beneficiary fee.

D. License to Source Code Upon Release.

(1) Upon EHC obtaining access to the Web-Based LHR Source Code pursuant to Part III.4.B, HMI grants EHC a non-terminable, worldwide, non-exclusive, fully paid-up right and license to use such LHR Source Code for any purposes relating to maintaining, enhancing, preparing derivative works of and supporting Web- Based LHR and finishing development of Web-Based LHR if initial release has not yet been achieved. All right, title and interest in and to derivative works made by EHC pursuant to this Part III.4 shall vest in EHC.

(2) Upon EHC obtaining access to the Client-Based LHR Source Code pursuant to Part III.4.B, HMI grants EHC a non-terminable, worldwide, non-exclusive, full paid up right and license to use such LHR Source Code for any purposes relating to maintaining, enhancing, preparing derivative works of and supporting Client- Based LHR and finishing development of Client-Based LHR if initial release has not yet been achieved. All right, title and interest in and to derivative works made by EHC pursuant to this Part III.4 shall vest in EHC.

(3) Upon EHC obtaining access to the PMR Source Code pursuant to Part
III.4.B, HMI grants EHC a non-terminable, worldwide, non-exclusive right, fully paid up and license to use such PMR Source Code for any purposes relating to maintaining, enhancing, preparing derivative works of and supporting PMR, and finishing development of an initial release of PMR if not yet achieved. All right, title and interest in and to derivative works made by EHC pursuant to this Part III.4 shall vest in EHC.

(4) Upon EHC obtaining access to the Health Tools Source Code pursuant to Part III.4.B, HMI grants EHC a non-terminable, worldwide, non-exclusive, fully paid up right and license to use such PMR Source Code for the any purposes relating to maintaining, enhancing, preparing derivative works of and supporting the Health Talk Tool and the Health Vectors Tool. All right, title and interest in and to derivative works made by EHC pursuant to this Part III.4 shall vest in EHC.

E. EHC acknowledges that the LHR Source Code, the PMR Source Code and the Health Tools Source Code constitute highly sensitive HMI Confidential Information. If EHC obtains access to the LHR Source Code, the PMR Source Code or the Health Tools Source Code as provided herein, it agrees to treat such Source Code as HMI Confidential Information pursuant to Part VII.6 and otherwise

with at

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HealthMagic, Inc                    12              Confidential and Proprietary
Software Sale, License
and Development Agreement                                Final, January 20, 1999


least the same degree of care as it treats the source code to its own proprietary programs, and further agrees that:

(1) Such Source Code will be used solely for EHC's internal purposes as expressly permitted in Part III.4.D(1), and will not be made available to third parties for any reason;

(2) Access to the such Source Code shall be strictly limited to employees of EHC who have a need to access such Source Code and who have been advised of the confidential proprietary nature of the such Source Code;

(3) In the event EHC's access to such Source Code occurs outside of a termination of this Agreement by EHC pursuant to Part VII.10.A (for cause) or pursuant to Part VII.10.B or by HMI pursuant to Part VII.5, HMI's ongoing obligations under this Agreement with respect to such Source Code and the products such Source Code underlies (i.e., LHR, PMR or Health Talk Tool and the Health Vectors Tool, as applicable) shall cease. Without limiting the generality of the foregoing, such obligations include: (i) in the case of LHR, those contained in Part III.4, Part IV.1, Part IV.2.A, Part IV.2.B (if breach of Part
IV.2.B was the event upon which EHC exercised its right to obtain access to the Web-Based LHR Source Code) and Part IV.3; and (ii) in the case of the Health Talk Tool and the Health Vectors Tool, those contained in Part IV.4.

(4) In the event EHC's access to such Source Code occurs in the context of a termination of this Agreement by EHC pursuant to Part VII.10.A (for cause) or pursuant to Part VII.10.B or by HMI pursuant to Part VII.5, EHC shall continue to be bound by the terms of Part III.1 of this Agreement with respect to any copies of LHR, PMR and the Health Talk Tool and the Health Vectors Tool in EHC's possession for as long as such products are in EHC's possession.

(5) The revenue sharing provisions set forth in Part VI.1 shall cease to apply with respect to the products such Source Code underlies.

(6) The non-competition provisions set forth in Part V.2 shall cease to apply with respect to the products such Source Code underlies.


PART IV. DEVELOPMENT AND MAINTENANCE OF LHR

1. EHC Services

A. In conjunction with this Agreement, EHC shall provide to HMI a project manager on a full time basis and an architect, Mr. Lou Scalpati, on a half-time basis (the "EHC Employees"). Such EHC Employees shall provide consulting, software development and other professional services to HMI for the purposes of assisting in developing, maintaining and enhancing the Acquired Product, the Client-Based LHR and the Web-Based LHR consistent with the EHC Employees roles as an architect and project manager (collectively, "Services").

B. The EHC Employees shall execute HMI standard consulting agreement, a copy of which is attached hereto as Exhibit A (except that no payment shall be due to EHC or the EHC Employees under such agreement) and the HMI standard confidentiality agreement, a copy of which is attached hereto as Exhibit B.

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HealthMagic, Inc                    13              Confidential and Proprietary
Software Sale, License
and Development Agreement                                Final, January 20, 1999


2. Completion of Web-Based LHR

A. Process. The currently existing Web-Based LHR will be further developed by HMI with the assistance of the EHC Employees. HMI shall assign the equivalent of two full time employees (the "HMI EHC Resources") to assist in the development of the EHC LHR, including EHC Features (as defined below); provided that during the period before the initial release of the Web-Based LHR, the HMI EHC Resources shall assist in the development of such initial release of the Web-Based LHR. Furthermore, as agreed by the parties, during the period before the initial release of the Web-Based LHR, EHC and HMI shall meet to review the direction (technical and otherwise) of the Web-Based LHR. During the Term of this Agreement, EHC shall have a reasonable opportunity to provide comment on and approve, (such approval shall not be unreasonably withheld), the direction of the Web-Based LHR, in a timely manner, during the course of such meetings and during the development of the Web-Based LHR; however, HMI will retain final control over all aspects of the Web-Based LHR.

B. Third Party Secured Site.

(1) Before the release of the initial Web-Based LHR to EHC, HMI and EHC will mutually select a commercially reasonable third-party secured site provider (the "Third-Party Secured Site"), and HMI shall enter into a commercially reasonable agreement with such Third-Party Secured Site, at which to host LHR on HMI servers (i.e., servers specifically designated for HMI). Within sixty (60) days of LHR first being hosted at such Third-Party Secured Site, the parties shall negotiate in good faith a set of commercially reasonable service levels (e.g., availability of LHR on the host server) ("Service Levels") which shall be incorporated into this Agreement in the form of Exhibit E attached to this Agreement. HMI shall be responsible for all costs associated with the Third Party Secured Site.

(2) Should a breach of this Agreement by HMI (including, without limitation, a material failure to meet the Service Levels) occur that would not have occurred but for: (i) the hosting of LHR at the Third-Party Secured Site; or (ii) the associated services ancillary to the hosting of LHR at the Third- Party Site (e.g., telecommunications to and from the Third-Party Secured Site), then HMI shall have a reasonable period of time (not to exceed thirty (30) days) in which to work with the Third-Party Secured Site to identify and resolve the factors contributing to such breach. If such breach persists (or in HMI's opinion is likely to persist) following such period, HMI's sole obligation to EHC and EHC's exclusive remedy under this Agreement shall be for the parties to promptly select another commercially reasonable Third-Party Secured Site, and following HMI entering into a commercially reasonable agreement with such alternative Third-Party Secure Site, relocate LHR to such alternate Site.

3. Future Developments and Maintenance of LHR

A. Future Development of LHR. HMI, at its sole discretion may provide Updates, Releases or new Versions of LHR. As agreed by the parties, EHC and HMI shall meet to review the direction (technical and otherwise) of LHR. After the initial release of LHR, EHC shall have a reasonable opportunity to provide comment on and approve, (such approval shall not be unreasonably withheld), the direction of such Updates, Releases or new Versions of EHC's version of LHR, in a timely manner, when HMI seeks input during the development process; however, HMI will retain final control over all aspects of LHR.

B. EHC LHR. After the initial release of Web-Based LHR EHC may request that certain EHC Features (as defined herein) be added to LHR to create a "Web-Based EHC LHR" (the EHC versions of the Web-Based LHR and the Client-Based LHR are collectively referred to as the "EHC LHR"). Upon the initial release of Web- Based LHR, and at EHC's request, the EHC Employees and the HMR

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and Development Agreement                                Final, January 20, 1999


Resources shall be used to assist in the creation of the EHC LHR as well as future Updates, Releases or new Versions of the EHC LHR. The EHC LHR and all EHC Features shall be and remain the property of HMI. "EHC Features" means a feature, data element or function not part of the then-current Version of LHR (or the EHC LHR, as applicable): (i) which is an original concept suggested by EHC; or (ii) which is a feature or function which HMI does not agree to incorporate as a Suitable Priority as part of LHR pursuant to this Part IV.3.B.

EHC shall provide its requested features and functions for LHR during the normal course of project planning for LHR. HMI shall in a reasonably timely manner decide to reject or incorporate such suggested features and functions into the next Version of LHR, or assign such features and functions a priority level for incorporation into the a future Version of LHR. If a feature or function is of a priority level which, in EHC's reasonable judgment, is too low for incorporation into LHR, the feature and function will be not of "Suitable Priority", for purposes of Part IV.3.B (ii). Notwithstanding the foregoing, HMI shall not have the right to reject an EHC Feature which will be incorporated into the EHC LHR, unless the EHC Feature, in HMI's reasonable discretion would result in a breach of any of the warranties contained in Part III.2, and HMI may also limit the programming resources used to develop an EHC Feature to the HMI EHC Resources. If the parties cannot agree that an EHC Feature is an "original concept" under of Part IV.3.B (i), then the parties shall resolve this issue through the binding arbitration procedures described in Part VII.11.D.

(1) The parties shall use commercially reasonable efforts to maintain as much compatibility as is practicable between LHR and the EHC LHR.

(2) For a period of six (6) months following such time as any EHC Feature has been incorporated, but in no event longer than nine (9) months after the EHC Feature has been made available for incorporation, into any new Update, Release or Version of the EHC LHR ("EHC Exclusivity Period"), HMI shall not make available to any of its other customers any new Update, Release or Version of Client-Based LHR or Web Based LHR that contains such EHC Feature. By way of clarification, this provision in no way restricts HMI from offering, licensing/distributing or otherwise providing a Client-Based LHR or Web Based LHR (or any new Updates, Releases or Versions thereof) to the extent that the Client-Based LHR or Web Based LHR does not include any EHC Features that are still within their EHC Exclusivity Period.

C. Support.

(1) The parties shall mutually agree to support provisions, subject to Part IV.3.C(3), relating to LHR that HMI will provide to EHC during the term of this Agreement and commencing upon the initial release of the LHR, or failing mutual agreement, the parties shall define such support provisions through the binding arbitration procedure described in Part VII.11.D.

(2) HMI agrees that it will offer to EHC's end users, commercially reasonable end user support for the EHC LHR, subject to Part IV.3.C(3), at a commercially reasonable price. HMI shall offer the terms of such end user support for EHC's approval, which approval shall not be unreasonably withheld or delayed.

(3) At any given time during the term of this Agreement, HMI shall, with respect to any particular Version of EHC LHR, provide support to EHC for such Version if and to the extent less than nine (9) months have elapsed since the time such Version was the current (i.e., most recent)Version of

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and Development Agreement                                Final, January 20, 1999


the EHC LHR (each such Version for which HMI will provide support to EHC are hereinafter referred to as a "Supported Version").

4. Future Developments, Training and Technical Support for The Health Talk and Health Vector Tools

A. HMI, at its sole discretion may provide Updates, Releases or new Versions of the HealthTalk Tool and/or the Health Vector Tool.

B. HMI shall provide to EHC, at no cost to EHC, a total of three (3) days of training on the HealthTalk Tool and the Health Vector Tool at HMI's facilities, which may be used by EHC up to one (1) year after the Effective Date. HMI shall provide additional training as reasonably requested by EHC; provided that EHC will reimburse HMI for the direct costs incurred by HMI in providing such training to EHC (along with any reasonable out-of-pocket expenses incurred by HMI in providing such training to EHC).

C. HMI shall provide technical support to EHC for the current Versions of the Health Talk Tool and the Health Vectors Tool (and for the prior Version of such Tools for a commercially reasonable period of time following the release of the current Version of such Tools). EHC will reimburse HMI for the direct costs incurred by HMI in providing such technical support to EHC (along with any reasonable out-of-pocket expenses incurred by HMI in providing such technical support to EHC).


PART V. MARKETING AND QUALITY CONTROL; NONCOMPETITION; TRADEMARKS

1. Marketing and General Quality Control

A. Marketing of LHR. EHC shall use commercially reasonable efforts to advertise, promote and market the LHR to its end users and potential customers.

B. General Quality Control.

(1) It is anticipated that EHC will "frame" or "embed" LHR in the EHC Web Site as a mechanism for accessing LHR. EHC warrants that any non-HMI content displayed or appearing to the end user in a "frame" or other similar mechanism including, without limitation, advertisements and the content accessed by selecting such advertisements, in conjunction with EHC's use of LHR shall not:
(a) constitute, or contain material that would constitute, libel, defamation or slander; (b) constitute, or contain material that would constitute, an invasion of the rights to publicity of any third party; or (c) infringe upon the IP Rights of any third party. Except as set forth in Part VII.2.B, EHC's exclusive liability and HMI's sole remedy for breach of this Part V.1.B(1) shall be for EHC to remove any content which is the subject of the warranty claim in a commercially reasonable timely fashion.

(2) EHC shall not modify, edit, abbreviate, censor or limit LHR's content transmitted to EHC for display on the EHC Web Site through the LHR user interface, including HMR Marks in LHR, except for the specific "framing" contemplated in this Agreement.

(3) Each party shall conduct its business in a fair and ethical manner, reflecting favorably upon the other party's software and the reputation, goodwill, image and the credibility of the other party.

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and Development Agreement                                Final, January 20, 1999


2. Non-Competition

A. HMI agrees not to use EHC Sourced End-User Data (as defined in Part
VII.7.A) to directly or indirectly solicit or assist in the solicitation of EHC's End Users to leave EHC.

B. Within the United States and within any other country in which HMI does business and/or in which LHR (or any portion thereof) is marketed and/or licensed, EHC shall not, outside of this Agreement or any other agreement with HMI: (i) develop itself, contract for the creation of on its behalf, or represent that it has any product(s) or service(s) that duplicate to any significant degree the functionality of a Personal Medical Record; (ii) support or distribute any such product(s) or service(s); or (iii) enter into or maintain contractual relationships with third parties under which a material portion of the revenue EHC receives pursuant to such relationships derives from the sale or license by such third parties of any such product(s) or service(s).

C. Within the United States and any within any other country in which EHC does business and/or in which the EHC Web Site is marketed and/or licensed, HMI shall not, outside of this Agreement or any other agreement with EHC: (i) develop itself, contract for the development of on its behalf, or represent that it has a Portal Web Site that substantially duplicates the functionality and content of the EHC Web Site (a "Competitive Portal Web Site"); or (ii) develop and distribute to third parties an LHR-variant enhanced with content to the extent that, standing alone, such LHR-variant, when put up on a Web site, is a Competitive Portal Web Site. A "Portal Web Site" means a machine on the Internet that is running a Web server to respond to requests from remote Web browsers which contains both content owned or licensed by the web site owner and acts as a significant gateway to other web sites. For the avoidance of doubt, HMI may create, contract for the development of on its behalf, and represent that it has a web site, so long as that web site does not exceed the limitations of this

Part V.2.C.

D. If the EHC Web Site ceases to be a Market Competitive Product, HMI may terminate this Agreement, in which case the provisions of this Part V.2 shall not survive termination of this Agreement. If LHR ceases to be a Market Competitive Product, EHC may terminate this Agreement, in which case the provisions of this Part V.2 shall not survive termination of this Agreement. "Market Competitive Product" shall, in each of the foregoing instances, be defined by mutual agreement of the parties, or failing mutual agreement through the binding arbitration procedure described in Part VII.11.D. In the event that the LHR becomes a noncompetitive product pursuant to this Part V.2.D, material breach of Part IV.3.B(2) by HMI, or material breach of Part V.2.A or Part V.2.C by HMI, EHC may provide prompt written notice to HMI. Upon written notice, and subject to the cure period provided in Part VII.10.A, the non-compete provisions in this Part V.2 shall terminate and EHC shall have a twelve (12) month transition period commencing immediately on receipt of such notice by HMI. At the end of such twelve month transition period, this Agreement shall terminate in its entirety.

E. For a period of nine (9) months after EHC introduces HMI to any EHC customer or EHC notifies HMI that a customer is a potential EHC customer, HMI shall not directly or indirectly solicit or attempt to solicit such EHC customer. What constitutes a "customer (or potential customer) of EHC" shall be defined by mutual agreement of the parties, or failing mutual agreement through the binding arbitration procedure described in Part VII.11.D.

F. Each party acknowledges and agrees that the restrictive covenants placed on such party in this Part V.2 are reasonable and necessary to protect the legitimate interests of the other party and that any violation of such restrictive covenants will result in irreparable injury to the other party. Each party hereby irrevocably waives any right to challenge or otherwise attempt to invalidate any of the restrictive

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and Development Agreement                                Final, January 20, 1999


covenants that such party is subject to, or any part(s) thereof. Each party agrees that, in the event it violates any of the restrictive covenants to which it is subject, the other party shall be entitled to preliminary and permanent injunctive relief as well as an equitable accounting of all earnings, profits and other benefits arising from such violation, which rights shall be cumulative and in addition to any other rights or remedies to which such other party may be entitled at law or in equity. If it is determined that any of the restrictive covenants set forth in this Part V.2, or any part(s) thereof, are illegal or unenforceable, it is the parties' intent that the scope of the covenant be reduced to conform to the requirements of law.

For so long as EHC remains a licensee of LHR and/or PMR in any form, and except as expressly set forth in this Agreement, both parties' obligation under this Part V.2 shall survive the termination of this Agreement for any reason.

3. HMI Trademarks

A. Trademark License Grant.

(1) HMI is the owner of the "Health Magic" trade name, "Health Talk" mark, U.S. Trademark Application Number 75/323223, the "Compass Man Design", U.S. Trademark Application Number 75/459701, as well as the rights to marks associated with the LHR developed by HMI specifically for use with LHR as LHR is presented on a customer's web site, whether a word, graphic, animated or sound mark (the "HMI Marks"). During the Term of this Agreement, HMI grants to EHC a non-exclusive license to use the HMI Marks in conjunction and integrated with EHC's software medical applications and services (the "Licensed Activities"). EHC will use the HMI Marks solely in connection with the Licensed Activities. HMI does not grant EHC the right to use the HMI Marks in connection with any products, services and/or business other than the Licensed Activities.

(2) EHC will always use the HMI Marks on and in connection with the Licensed Activities in a style or size of print distinguishing it from accompanying wording or text. EHC will display the symbol "TM" to the right and slightly above the last letter of the HMI Marks identified by HMI as requiring a "TM" when displayed on promotional and other materials used in advertising and rendering the Licensed Activities.

(3) Except as contemplated by this Agreement, the license to use the HMI Marks granted by Part V.3.A(1) of this Agreement may not be assigned or otherwise transferred by EHC. HMI does not grant, and nothing in this Agreement will be construed as granting, EHC the right to license, sublicense or authorize others to use the HMI Marks.

B. Quality Control.

(1) EHC's use of the HMI Marks and the nature and quality of the Licensed Activities promoted and marketed by EHC under the HMI Marks will at all times comply with HMI's written standards and specifications as provided to EHC. EHC will permit HMI to reasonably inspect any materials used by EHC in the promotion and marketing of the Licensed Activities under the HMI Marks and all other records relating to the quality of such activities.

(2) EHC will provide HMI with "proofs" or draft "web pages" of all materials used in the identification and or promotion of the Licensed Activities under the HMI Marks for approval by HMI prior to their use which approval shall not be unreasonably withheld or delayed. Materials used in the

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and Development Agreement                                Final, January 20, 1999


identification and/or promotion of the Licensed Activities will include, but are not limited to, business cards, stationery, letterhead, web pages and promotional materials.

(3) If HMI notifies EHC in writing that the Licensed Activities and/or any materials used by EHC in the promotion and marketing of the Licensed Activities do not meet the quality standards of HMI as reasonably determined by HMI, EHC will cease use the HMI Marks in any manner or in connection the Licensed Activities and materials in question. If, within sixty (60) days after receiving the above written notification from HMI, EHC cures or otherwise corrects to HMI's reasonable satisfaction the failure to meet the quality standards of HMI, EHC will be entitled to resume its use of the HMI Marks in connection with the promotion and marketing of the Licensed Activities.

C. Trademark Ownership.

(1) EHC acknowledges that, as between HMI and EHC, that HMI's rights in the HMI Marks are valid, that each is the exclusive property of HMI, and can lawfully be used only with the express license or consent of HMI. Specifically, as between HMI and EHC, EHC acknowledges HMI's common law rights in the HMI Marks. EHC will not at anytime do, or cause to be done any act or thing contesting or in any way impairing or intending to impair the validity of and/or HMI's rights, title and interest in and to the HMI Marks.

(2) EHC will not in any manner represent that it owns the HMI Marks. EHC will not register or apply to register the HMI Marks either alone or in combination with any other word(s) and/or design(s), in any country, state or jurisdiction.

(3) EHC acknowledges that its use of the HMI Marks will not create any rights, title, or interest in or to said mark in EHC's favor, but that all use of the HMI Marks by EHC will inure to the benefit of HMI.


PART VI. FINANCIAL STRUCTURE

1. Revenue Sharing

Revenues shall be shared in accordance with the allocations described below, or as mutually agreed to by the parties from time to time. As used herein, "Revenue" shall mean gross revenue less reasonable amounts paid for commissions reasonable in light of industry standards and consistent with industry standards for third-party commissions (EHC's current internal sales commission is ten percent (10%)), and other reasonable direct costs.

A. Advertising. Any advertising Revenue generated by the EHC Web Site's use of the LHR pages, including without limitation, advertisements framing LHR, or "pop-up" advertising, shall be shared between EHC and HMI with 30% of such Revenues allocated to EHC and 70% of such Revenues to HMI. Such advertising can be sold either by HMI and shared with EHC or it can be part of EHC's advertising inventory and shared with HMI.

B. Sponsorship. Any Revenues generated through sponsorship related to LHR or LHR pages shall be shared between EHC and HMI with 30% of such Revenues allocated to EHC and 70% of such Revenues to HMI.

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and Development Agreement                                Final, January 20, 1999


C. Electronic Data Interchange (EDI). Any Revenues generated through EDI agreements reasonably related to LHR shall be shared between EHC and HMI with 30% of such Revenues allocated to EHC and 70% of such revenues to HMI. The Revenue split for EDI shall be equitably adjusted to the extent that HMI maintains and administers less than all of the additional programs, services and support required to connect to the EDI exchange partner. As used herein, "EDI" shall mean any arrangements which causes data to be transmitted in or out of LHR repository to a third party (other than a consumer) without the use of the consumer-oriented LHR front-end application.

D. Clinical Research Organizations (CRO). Any Revenues generated through CRO Transaction reasonably related to LHR shall be shared between EHC and HMI with 30% of such Revenues allocated to EHC and 70% of such Revenues to HMI. As used herein, a "CRO Transaction" shall occur where any individual selects a study (research) offer on the EHC Web Site where the study offer was directed to the individual based on information found in the individual's LHR record.

E. Electronic Commerce (EC). The parties agree to negotiate in good faith the sharing of revenues generated through EC opportunities reasonably related to LHR as such opportunities arise.

F. Engaging Applications. Any revenues generated by either party through an HMI or EHC Engaging Application shall be shared between EHC and HMI with 70% of such revenues allocated to the party who developed the Engaging Application and 30% of such revenues to the other party; provided, however, that HMI shall not be required to share revenue pursuant to this Part VI.1.F for HMI Engaging Applications if HMI was responsible for generating such revenue; provided that the HMI Engaging Application is not a derivative work of an EHC Engaging Application. If and to the extent revenues generated by an EHC Engaging Application are subject to sharing pursuant to this Part VI.1.F and any other revenue sharing provisions in this Part VI.1, such revenues shall be shared pursuant to such other revenue sharing provisions, with the sharing of any revenues generated by such EHC Engaging Application which are not subject to such other revenue sharing provisions being determined by this Part VI.1.F.

G. Health Tool Applications. EHC shall, with respect to any Health Tool Application created by EHC which is not reasonably related to LHR and which is not "framed" by or "embedded" within any EHC web site content, pay to HMI a portion of the revenue received by EHC pursuant to any transaction of which the licensing of such Health Tool Application to a third party is a part, in a manner and to an extent that equitably reflects the relative value of each party's contribution to the transaction (with HMI's contribution being the extent to which the Health Vectors Tool and/or the Health Talk Tool enabled the development of such Health Tool Application). In light of the foregoing, such portion shall be as mutually agreed upon by the parties.

H. LHR Data "Pool" Sharing. HMI may respond to requests from an advertiser or a supplier of health related goods and services for information to provide market research or data analysis of a statistical or demographic nature (specifically to spot trends and make observations about end users whose data is contained in LHR) to the extent HMI receives compensation for such services. Provisions regarding the sharing between the parties of revenues generated by such activities shall be as mutually agreed upon by the parties; provided that any revenue sharing scheme shall take into account the quantity and quality of the End-User Data originating from the EHC Web Site used in responding to the request.

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and Development Agreement                                Final, January 20, 1999


2. Audits

Each party shall maintain sufficient records to track the revenues generated under Part VI.1. Either party shall have the right to audit, on a reasonable basis, the other party's records and agreements to confirm the accuracy of the revenues reported by such party and compliance with the other terms and conditions of this Agreement. Such audits shall be at the requesting party's expense, unless the audit reflects a discrepancy of 8% percent or more in favor of the other party , in which case, the audited party shall reimburse the other party for the costs of the audit. In the event of a underpayment, the audited party, within a reasonable period of time, shall pay the discrepancy together with interest at a rate of the lesser of (i) one-and-one-half percent (1 1/2%) per month from the date the discrepancy occurred; or (ii) the maximum amount allowed by applicable law. In the event of an overpayment, the auditing party shall, within a reasonable period of time, refund the amount over paid.

3. Opportunities for Revenue Sharing

In instances where EHC derives revenue from any product or services it markets, offers or provides in which there is a component made up entirely or in part of products or services (or a group of products or services) for which revenue sharing applies under this Part VI.1, if a group of such products and services are priced together, or if one or more of the products and services are given to an End User free of charge (or at a significant discount) as part of a deal where the End User buys some products or services and gets some products or services for free (or at a significant discount), then the portion of the revenue received by EHC that is allocated to the revenue sharing product or service will be determined by looking at EHC's separate suggested retail prices of all products and services that are "bundled" together, and determining what proportion the suggested retail price of each revenue sharing product or service bear to the total suggested retail prices of all the products or services bundled together; and then that proportion of the total amount received would be allocated to such revenue sharing product or service.

4. Revenue Sharing Procedures

The procedures for the reporting, invoicing and payment of revenues shall be mutually agreed to by the parties under commercially reasonable terms and conditions.

5. Most Favored Nation Status

If and to the extent HMI enters into a revenue sharing scheme with a third party that is better than any of the revenue sharing schemes set forth in Part
VI.1, HMI agrees to adjust the revenue splits in this Agreement to match the other agreement. By way of clarification, if HMI enters into a revenue sharing scheme analogous to a scheme in this Agreement, whereby the other customer receives forty percent (40%) of such revenues, and the other conditions of this provision are met, EHC's share of advertising revenues for the analogous scheme would be adjusted to forty percent (40%). However, if the revenue sharing scheme with such third party is structured in conjunction with up-front cash or cash equivalent consideration, then the adjustment to the revenue scheme in this Agreement will be equitably scaled back to take into account the value of such consideration. Without limiting the generality of the foregoing, the benefit of the most favored nations status accounted to EHC in this Part VI.5 shall be shifted by an additional ten percent (10%) to the advantage of EHC (thus, in the example above, the forty percent (40%) would become forty four percent (44%).

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Development Agreement                                    Final, January 20, 1999


6. All Initial Revenues to HMI

Until HMI has received a cumulative amount of One Million Two Hundred and Fifty Thousand Dollars ($1,250,000) (the "Initial Revenue Amount") in Revenues from the revenue sharing opportunities under Part VI.1, HMI shall receive all Revenues from such opportunities, rather than the sharing formulas provided in Part VI.1. For the avoidance of doubt, each of the formulas provided in Part
VI.1 are deemed to provide that HMI receives one hundred percent (100%) of the Revenues and EHC receives zero percent (0%) of the Revenues until HMI has received the Initial Revenue Amount. Once the Initial Revenue Amount has been achieved, the revenue sharing provisions will apply as stated in Part VI.1.

7. Binding Arbitration for Resolution of Revenue Sharing Disputes

Should the informal dispute resolution procedure fail to resolve a dispute between the parties with regard to the provisions of this Part VI, including without limitation the amount and character of such revenue sharing, such dispute shall be resolved by binding arbitration as described in Part VII.11.D.

8. Cost of Performance

Except as otherwise set forth herein, neither party shall be obligated to pay any taxes of the other or any other expenses which the other party may be liable for based upon or in connection with the transactions contemplated by this Agreement.

9. Survival of Revenue Sharing

A. For so long as EHC remains a licensee of LHR and/or PMR in any form, and except as expressly set forth in this Agreement, both parties' obligations under this Part VI shall survive the termination of this Agreement for any reason.


PART VII. COMMON TERMS AND CONDITIONS

1. Warranty Disclaimer

A. THE WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT BY EACH PARTY ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY IMPLIED WARRANTIES ARISING FROM STATUTE, COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE.

2. General Indemnification

A. If, as a result of HMI's negligence or intentional tortious conduct, EHC or EHC's employees suffer personal injury or damage to tangible property, HMI will reimburse EHC for that portion of any claims EHC actually pays for which HMI is legally liable. If, as a result of EHC's negligence or intentional tortious conduct, HMI or HMI's employees suffer personal injury or damage to tangible property, EHC will reimburse HMI for that portion of any claims HMI actually pays for which EHC is legally liable.

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B. EHC agrees that, in the event a third party brings an action against HMI based upon a: (i) claimed breach of any of the representations and warranties being provided by EHC in Part II.2 of this Agreement; (ii) breach of its obligations pursuant to Part V.1.B of this Agreement; (iii) breach of its security and other obligations with respect to End User Data pursuant to Part
VII.7; (iv) breach of its confidentiality obligations pursuant to Part VII.6 of this Agreement or (v) breach of the warranties being provided by EHC in Part
III.3.C or Part V.1.B (to the extent that content developed and owned by EHC is responsible for the breach of Part V.1.B) of this Agreement, EHC will indemnify, hold harmless, and defend HMI from and against any and all damages, costs, losses, claims, causes of action and lawsuits and expenses, including reasonable attorneys' fees. Notwithstanding the foregoing, EHC's obligation under item
(iii) and (iv) of this Part VII.2.B shall be limited proceeds from the insurance required to be carried by EHC pursuant to Part VII.9.C and up to One Million Dollars ($1,000,000) for such item(s) if the insurance does not cover the claim.

C. HMI agrees that, in the event a third party brings an action against EHC based upon a: (i) claimed breach of any of the representations and warranties being provided by HMI in Part III.2.A of this Agreement; (ii) claim that the execution by HMI of this Agreement or compliance by HMI with its terms and conditions conflicts with or causes a breach or violation of any other agreement; (iii) an error or omission in LHR; (iv) breach of its security and other obligations with respect to End User Data pursuant to Part VII.7; (v) breach of its confidentiality obligations pursuant to Part VII.6 of this Agreement; or (vi) breach of the warranties being provided by HMI in Part
III.2.C, (to the extent that content developed and owned by HMI is responsible for the breach of Part III.2.C), Part III.2.D or Part III.3.C of this Agreement, HMI will indemnify, hold harmless, and defend EHC from and against any and all damages, costs, losses, claims, causes of action and lawsuits and expenses, including reasonable attorneys' fees. Notwithstanding the foregoing, HMI's obligation under items (iii), (iv) and (v) of this Part VII.2.C shall be limited proceeds from the insurance required to be carried by HMI pursuant to Part
VII.9.C and up to One Million Dollars ($1,000,000) for such item(s) if the insurance does not cover the claim.

3. Indemnification Procedures

A. Notice. Promptly after receipt by any entity entitled to indemnification under this Agreement of notice of the commencement or threatened commencement of any civil, criminal, administrative, or investigative action or proceeding involving a claim in respect of which the indemnitee will seek indemnification pursuant to the appropriate provision of this Agreement, the indemnitee shall promptly notify the indemnitor of such claim in writing. No failure to so notify an indemnitor shall relieve it of its obligations under this Agreement except to the extent that it can demonstrate damages attributable to such failure. Within fifteen (15) days following receipt of written notice from the indemnitee relating to any claim, but no later than ten (10) days before the date on which any response to a complaint or summons is due, the indemnitor shall notify the indemnitee in writing if the indemnitor elects to assume control of the defense and settlement of that claim (a "Notice of Election"). The indemnitor shall reimburse the indemnitee for all costs and expenses incurred by the indemnitee in responding to such action or proceeding during the period between when the indemnitee has notified the indemnitor of the claim in writing and when the indemnitor delivers a Notice of Election in response or the expiration of the required notice period for the Notice of Election to be delivered, whichever comes first.

B. Procedure Following Notice of Election. If the indemnitor delivers a Notice of Election relating to any claim within the required notice period, the indemnitor shall be entitled to have sole control over the defense and settlement of such claim; provided that (i) the indemnitee shall be entitled to participate in the defense of such claim and to employ counsel at its own expense to assist in the handling of such claim, and (ii) the indemnitor shall obtain the prior written approval of the indemnitee before entering

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into any settlement of such claim or ceasing to defend against such claim. After the indemnitor has delivered a Notice of Election and has assumed its obligations under this Part VII.3 relating to any claim in accordance with the preceding paragraph, the indemnitor shall not be liable to the indemnitee for any legal expenses incurred by the indemnitee in connection with the defense of that claim. In addition, the indemnitor shall not be required to indemnify the indemnitee for any amount paid or payable by the indemnitee in the settlement of any claim for which the indemnitor has delivered a timely Notice of Election if such amount was agreed to without the written consent of the indemnitor.

C. Procedure Where No Notice of Election Is Delivered. If the indemnitor does not deliver a Notice of Election relating to any claim within the required notice period, the indemnitee shall have the right to defend the claim in such manner as it may deem appropriate, at the cost and expense of the indemnitor. The indemnitor shall promptly reimburse the indemnitee for all such costs and expenses.

4. Limitation of Liability

To the maximum extent permitted by applicable law, each party's entire liability and the other party's exclusive remedy for damages from any event or claim arising under or relating to this Agreement, for any cause whatsoever, and regardless of the form of action, whether in contract or in tort or any other theory of liability (including, without limitation, breach of warranty and negligence), will be limited as follows:

A. Each party will be liable for direct damages only, in an amount not to exceed, in the aggregate for all claims, the greater of: (a) cumulative revenue share paid to HMI under Part VI.1 in the three (3) month period immediately proceeding the event giving rise to such liability, or (b) One Million Dollars ($1,000,000.00).

B. In no event will either party be liable for any lost profits, loss of business, loss of use, lost savings or other consequential, special, incidental, indirect, exemplary or punitive damages, even if advised of the possibility of such damages.

C. The foregoing limitations shall not apply to: (i) claims that are the subject of indemnification pursuant to Part VII.2; or (ii) claims arising out of the breach of Part V.2, Part VI.1 (but only to the extent of unpaid revenues plus accrued interest), or Part VII.6.

D. Each party shall have a duty to mitigate damages for which the other party is responsible.

E. The remedies expressly stated in this Agreement are the sole and exclusive remedies of either party. The limitations of liability set forth in this Part
VII.4 will survive the failure of any limited or exclusive remedy set forth in this Agreement and the expiration or termination of this Agreement.

5. Force Majeure

Neither party will be deemed in default of this Agreement to the extent that performance of its obligations, or attempts to cure any breach, are delayed or prevented by reason of any act of God, cause outside of the party's reasonable control or other force majeure; provided that, such party promptly gives to the other party written notice of the condition and undertakes commercially reasonable efforts to circumvent the cause of the delay or minimize the extent of the delay. In any such event, the time for performance or cure will be extended for a period equal to the duration of the delay, not to exceed four (4) weeks. If the notifying party does not resume performance of such

obligations or cure such breach

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Development Agreement                                    Final, January 20, 1999


before the end of such four (4) week period, the other party will be entitled to terminate the Agreement immediately without any obligation or liability to the delayed party for doing so.

6. Nondisclosure

A. Each party acknowledges that it may be furnished with or may otherwise receive or have access to non-public information which relates to past, present or future research, development, improvements, inventions, processes, software, techniques, designs or other technical data, contact lists or other compilations for marketing or development, or regarding administrative, management, financial or marketing activities of HMI, EHC or other third parties which have provided information to HMI or EHC. "Confidential Information" is all information (i) identified in written, graphic electronic or oral format by the Disclosing Party as confidential, trade secret or proprietary information, or (ii) or by its nature or the circumstances surrounding its disclosure should reasonably be regarded as Confidential Information. "Disclosing Party" is the party disclosing Confidential Information. "Receiving Party" is the party receiving Confidential Information. Without limiting the generality of the foregoing, Confidential Information shall be deemed to include End-User Data and data about end users contained in Health Vectors, and the terms and conditions of this Agreement.

B. All Confidential Information furnished or otherwise disclosed to either party in the course of performing this Agreement shall remain the property of and be deemed proprietary and confidential to the Disclosing Party (with the exception of End-User Data which shall be deemed, for the purposes of protecting the confidentiality of such End-User Data under this Agreement, to be confidential to the Disclosing Party). Without limiting the foregoing, the Receiving Party agrees: (a) to the extent permitted by applicable law, to hold such Confidential Information in strict confidence and in trust for the Disclosing Party; (b) to use the same degree of care in protecting the Confidential Information for which it protects its own such confidential information of like nature, but in no instance with less than reasonable care to protect such Confidential Information against unauthorized use or disclosure; and (c) to restrict disclosure of such Confidential Information to its employees who (i) are directly participating in the performance of this Agreement; (ii) have a need to know such Confidential Information; and (iii) have, upon the request of the Disclosing Party as a prerequisite to the release of Confidential Information, executed an employee nondisclosure agreement in a form mutually acceptable to the Disclosing Party and the Receiving Party.

C. The Receiving Party further agrees that, with regard to Confidential Information which it has received or itself generated, it will not disclose or allow to be disclosed any such Confidential Information to any third party, including, without limitation, any subsidiary, Affiliate, joint venture, any other contractual, cooperative, or affiliated entity of the such third party, or any independent entity without the express prior written consent of the Disclosing Party, which consent the Disclosing Party may give or withhold in its sole discretion unless disclosure of such Confidential Information is required by applicable law. If a Disclosing Party consents to the disclosure of such Confidential Information to any such third party, such disclosure shall not be made until Receiving Party, the Disclosing Party and the third party have entered into a non-disclosure agreement in a form acceptable to the Disclosing Party.

D. The Receiving Party shall not reproduce, disclose or use Confidential Information, except for the sole purpose of performing its obligations under this Agreement or in accordance with applicable law. Without limiting the generality of the preceding sentence, the Receiving Party may not use Confidential Information which it has received, collected or itself generated for purposes other than performing its obligations under this Agreement without the prior written consent of the Disclosing Party.

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Development Agreement                                    Final, January 20, 1999


E. The limitations on reproduction, disclosure, or use of Confidential Information shall not apply to, and neither party shall be liable for, reproduction, disclosure, or use of any particular Confidential Information of the other that:

(1) was developed independently by the Receiving Party prior to the receipt of any Confidential Information under this Agreement, as evidenced by written documents prepared or received by such party prior to the receipt of any Confidential Information under this Agreement;

(2) was received without any obligation of confidentiality from a third party that was rightfully in possession of such information and had the right to disclose it to the Receiving Party without an obligation of confidentiality;

(3) has been published or otherwise disclosed to others by the Disclosing Party without restrictions, or has come within the public knowledge or become generally known to the public without breach of this Agreement;

(4) is a derivative of End-User Data (or data about end users contained in Health Vectors) that is of a statistical/demographic nature and provided in an anonymous form, as an aggregate of the similar information of multiple end users that does not individually identify specific end users (e.g., the number of LHR end users who are males between the ages of 25 and 40 reporting a particular condition); or

(5) is legally required to be disclosed pursuant to a judicial order (provided that, prior to such disclosure, the party ordered to make such a disclosure promptly informs the other of the order).

The party seeking the protection of any of items (1) through (5) above shall bear the burden of proof with respect to any such exception. Immediately upon receipt by the Receiving Party of any request to release, disclose or use Confidential Information, where such release, disclosure or use is required by applicable law and is otherwise in contravention to the terms and conditions of this Agreement, Receiving Party shall provide Disclosing Party written notice of such request. Such notice shall be calculated to be sufficiently descriptive and in advance of any such release, disclosure or use so as to allow Disclosing Party the opportunity to raise any appropriate objections. Disclosing Party shall be solely responsible for raising such objections and shall bear all costs, including legal costs, associated with such objections. Confidential Information may be disclosed on a need to know basis to the accountants and attorneys of the Receiving Party without the consent of the Disclosing Party.

F. Should the Receiving Party receive information with uncertain status, the Receiving Party agrees to treat such information as Confidential Information until it receives written verification from the Disclosing Party that such information is not Confidential Information.

G. Neither the execution of this Agreement, nor the furnishing of any Confidential Information by the Disclosing Party or the Receiving Party shall be construed as granting to either party expressly, by implication, by estoppel or otherwise, any license under any trademark, copyright, invention or other proprietary right now or hereafter owned or controlled by the party furnishing such information.

H. Except as otherwise set forth in this Agreement, upon termination or expiration of this Agreement for any reason, the Receiving Party shall, at the Disclosing Party's option, either return or destroy all Confidential Information, and shall destroy all analyses, compilations, forecasts, studies and other documents based upon or derived from such Confidential Information,

and in each case shall retain

________________________________________________________________________________
HealthMagic, Inc.                     26            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


no copies and shall cause an officer of the Receiving Party to certify in writing that it has complied fully with its obligations under this Part VII.6.H.

I. With regard to Confidential Information which either party has received or itself generated, in the event either party becomes aware of any release, disclosure or use of such Confidential Information which has not been authorized by this Agreement, it will promptly, at its sole expense, (i) notify the Disclosing Party in writing; (ii) take such actions as may be necessary or reasonably requested by the Disclosing Party to minimize such unauthorized release, distribution or use and any damage to the Disclosing Party resulting therefrom; and (iii) to the extent permitted by applicable law, cooperate in all reasonable respects with the Disclosing Party to minimize any such release, distribution, use and damage. The Receiving Party shall be considered to have cured its breach of this Part VII.6 provided that: (i) the Receiving Party has taken commercially reasonable efforts to modify its nondisclosure procedures and educate its personnel to reduce the likelihood of similar breaches of this Part
VII.6; and (ii) the Receiving Party has made commercially reasonable efforts to limit further disclosures by the person(s) or entity(ies) to whom unauthorized disclosure was made.

J. The provisions of this Part VII.6 shall survive the termination or expiration of this Agreement for any reason for a period of five (5) years; provided, however, that such provision shall continue to apply: (i) to End-User Data; (ii) to the LHR Source Code, PMR Source Code, EHC Engaging Applications Source Code and Health Tools Source Code; and (iii) as necessary to comply with any applicable laws, regulations, ordinances and codes.

7. Rights in Data; Security

A. Within ninety (90) days of the Effective Date, the parties shall in good faith commence negotiations to mutually agree upon a set of standards to govern:
(i) the location of particular elements or types of End-User Data, as between LHR and the EHC Web Site; (ii) the presentation of derivatives of End-User Data to third parties; (iii) physical and logical security measures to safeguard against the unauthorized alteration of access to, or destruction or loss of, End User Data; (iv) use of End-User Data that is specific to a particular end user but provided in a "blinded" fashion that does not reveal identifying data about such end user) and (v) other security policies related to HMI's and EHC's uses of End User Data (items (i) through (iv) collectively, the "End-User Data Standards"). Such Standards will be based on, or take into account standards or guidelines promulgated by: (i) federal or applicable state or local governmental organizations; and (ii) industry recognized groups/organizations. If the parties are unable to agree upon the End-User Data Standards within a reasonable time frame, the parties shall mutually agree on one expert to resolve (in a binding manner) the differences between the parties preventing such agreement. If the parties cannot agree on an expert, the expert shall be nominated by the arbitration panel identified in Part VII.11.D.

B. Once established and agreed upon, each party shall be bound by and comply with such End-User Data Standards.

C. Notwithstanding Part VII.7.A and Part VII.7.B above, HMI shall have: (i) the right to provide market research or data analysis on the whole of LHR (i.e., on all End User Data contained in LHR including, without limitation, the EHC Sourced End-User Data aggregated with end user data from other LHR customers) to third parties as specified in Part VI.1.H; and (ii) ongoing access to EHC Sourced End-User Data as necessary to perform its obligations under this Agreement including, without limitation, the ongoing maintenance, support and enhancement of LHR (or the EHC LHR as the case may be).

________________________________________________________________________________
HealthMagic, Inc.                     27            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


8. Digital Security

To restrict access to LHR to authorized end users whose identity has been verified, and to secure transmission of information over the Internet between such end users and HMI, when using LHR, access to, and use of, LHR is protected by a Digital Certificate based public-key encryption process. Accordingly, prior to using LHR, end users shall be required to present a Digital Certificate to HMI from an HMI approved Certifying Authority. Upon end user request, HMI will serve as the Certifying Authority and issue an HMI Digital Certificate to the end user. If the end user elects to obtain the Digital Certificate from an HMI approved Certifying Authority (as opposed to HMI), the end user will be responsible for any costs associated with acquiring such Digital Certificate.

9. Insurance

Each party will have and maintain in force the following insurance coverages:

A. Comprehensive or Commercial General Liability Insurance, including Products, Completed Operations Liability and Personal Injury, Blanket Contractual Liability and Broad Form Property Damage Liability coverage for damages to any property with a minimum limit of $1,000,000 per occurrence and $5,000,000 in the aggregate.

B. Employee Dishonesty and Computer Fraud coverage for loss arising out of or in connection with any fraudulent or dishonest acts committed by the employees or agents of the insured party, acting alone or in collusion with others, including the property and funds of others in their care, custody or control, in a minimum amount of $5,000,000.

C. Errors and Omissions Liability Insurance covering the liability for financial loss due to error, omission, negligence of employees and machine malfunction in an amount of at least $5,000,000.

D. Software Errors and Omissions Liability Insurance covering the liability for financial loss due to software errors and omissions in an amount of at least $5,000,000.

Each party shall cause its insurers to issue certificates of insurance evidencing that the coverages and policy endorsements required under this Agreement are maintained in force and that not less than thirty (30) days written notice shall be given to the other party prior to any modification, cancellation or non-renewal of the policies.

10. Termination

A. If either party believes that the other party has failed in any material respect to perform its obligations under this Agreement, then that party may provide written notice to the breaching party describing the alleged failure in reasonable detail. If the breaching party does not, within thirty (30) calendar days after receiving such written notice, either (i) cure the material failure or (ii) if the breach is not one that can reasonably be cured within thirty (30) calendar days, develop a plan to cure the failure and diligently proceed according to the plan until the material failure has been cured, then the non- breaching party may terminate this Agreement for cause by providing written notice to the non-breaching party. Termination of this Agreement will be in addition to, and not in lieu of, other remedies available to the terminating party under this Agreement.

B. Either party may terminate this Agreement by giving the other party prior written notice and designating a date upon which such termination shall be effective if the notifying party makes a general

________________________________________________________________________________
HealthMagic, Inc.                     28            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


assignment for the benefit of creditors, files a voluntary petition of bankruptcy, suffers or permits the appointment of a receiver for its business or assets, becomes subject to any proceeding under any bankruptcy or insolvency law, whether domestic or foreign, that is not dismissed within one hundred and twenty (120) days, or has wound up or liquidated, voluntarily or otherwise.

C. Within thirty (30) days after the expiration or termination of this Agreement for any reason: (i) EHC shall cease all use of and, at HMI's election, return to HMI or destroy the original and all copies (including partial copies) of all software, documentation, all HMI Confidential Information, and any other products or materials licensed or otherwise provided to EHC under this Agreement (including, without limitation, LHR, the Acquired Assets, PMR, the Health Talk Tool and the Health Vectors Tool and HMI or third- party Engaging Applications) for which EHC does not possess a valid license that expressly by its terms survives the expiration or termination of this Agreement ("HMI Items"); (ii) all rights granted to EHC in and to such HMI items shall terminate; (iii) HMI shall cease all use of and, at EHC's election, return to EHC or destroy all EHC Engaging Applications licensed or otherwise provided to HMI pursuant to this Agreement, as well as return to EHC or destroy the original and all copies (including partial copies) of all EHC Confidential Information and any other products or materials licensed or otherwise provided to HMI under this Agreement; and (iv) all rights granted to HMI in and to such products shall terminate. Each party shall certify in writing to the other party that it has fully performed its obligations under this paragraph.

11. Law and Disputes

A. This Agreement will be governed by the laws of the State of Delaware, without regard to any provision of Delaware law that would require or permit the application of the substantive law of any other jurisdiction.

B. Informal Dispute Resolution.

(1) Prior to the initiation of formal dispute resolution procedures, the parties shall first attempt to resolve their dispute informally, as follows:

a) Upon the written request of a party, each party shall appoint a designated representative whose task it will be to meet for the purpose of endeavoring to resolve such dispute.

b) The designated representatives shall meet as often as the parties reasonably deem necessary in order to gather and furnish to the other all information with respect to the matter in issue which the parties believe to be appropriate and germane in connection with its resolution. The representatives shall discuss the problem and attempt to resolve the dispute without the necessity of any formal proceeding.

c) During the course of discussion, all reasonable requests made by one party to another for nonprivileged information, reasonably related to this Agreement, shall be honored in order that each of the parties may be fully advised of the other's position.

d) The specific format for the discussions shall be left to the discretion of the designated representatives.

(2) Formal proceedings for the resolution of a dispute may not be commenced until the earlier of:

________________________________________________________________________________
HealthMagic, Inc.                     29            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


a) the designated representatives concluding in good faith that amicable resolution through continued negotiation of the matter does not appear likely; or

b) thirty (30) days after the initial written request to appoint a designated representative pursuant to Paragraph (a) above (this period shall be deemed to run notwithstanding any claim that the process described in this Part
VII.11.B was not followed or completed).

(3) Part VII.11.B shall not be construed to prevent a party from instituting, and a party is authorized to institute, formal proceedings earlier to avoid the expiration of any applicable limitations period, or to preserve a superior position with respect to other creditors.

C. Immediate Injunctive Relief.

The parties agree that the only circumstance in which disputes between them shall not be subject to the provisions of Part VII.11.B is where a party makes a good faith determination that a breach of the terms of this Agreement by the other party is such that a temporary restraining order or other injunctive relief is the only appropriate and adequate remedy. If a party files a pleading with a court seeking immediate injunctive relief and this pleading is challenged by the other party and the injunctive relief sought is not awarded in substantial part, the party filing the pleading seeking immediate injunctive relieve shall pay all of the costs and attorneys' fees of the party successfully challenging the pleading.

D. Binding Arbitration.

(1) Subject to Part VII.11.B above, and only where a particular part of this Agreement calls for arbitration between the parties, such question or dispute arising out of or relating to this Agreement will be determined by binding arbitration in the location of the principal place of a business of the party who does not make the initial claim for arbitration, under the American Arbitration Association ("AAA") Commercial Arbitration Rules with Expedited Procedures in effect on the date hereof, as modified by this Agreement.

(2) There will be one arbitrator selected by the parties within ten (10) days of the arbitration demand or if not, by the AAA from its Large, Complex Case Panel (or have similar professional credentials), who shall be an attorney with at least fifteen (15) years commercial law experience. Any issues about whether a claim is covered by this Agreement will be determined by the arbitrator.

(3) As may be shown to be necessary to ensure a fair hearing: the arbitrator may authorize limited discovery; and may enter pre-hearing orders regarding, without limitation, scheduling, document exchange, witness disclosure and issues to be heard. The arbitrator will not be bound by the rules of evidence or of civil procedure, but may consider such writings and oral presentations as reasonable people would use in the conduct of their day-to-day affairs, and may require the parties to submit some or all of their case by written declaration or such other manner of presentation as the arbitrator may determine to be appropriate. The parties intend to limit live testimony and cross-examination to the extent necessary to ensure a fair hearing on material issues.

(4) The parties agree that the arbitrator will be directed to use best efforts to: (i) hold a private hearing within sixty (60) days after the initial demand for arbitration; (ii) conclude the hearing within three (3) days; and
(iii) provide his or her written decision not later than fourteen (14) days after the hearing. In making the decision and award, the arbitrator shall apply the applicable substantive law. Absent fraud, collusion or willful misconduct by the arbitrator, the arbitrator's award will be final, and judgment may be entered in any court having jurisdiction thereof. The arbitrator will award attorneys' fees and costs to the prevailing party but will have no authority to award any damages that are excluded

________________________________________________________________________________
HealthMagic, Inc.                     30            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


by the terms and conditions of this Agreement. Either party will have the right to apply at any time to a judicial authority for appropriate injunctive or other interim or provisional relief, and will not by doing so be deemed to have breached its agreement to arbitrate or to have affected the powers reserved to the arbitrator.

(5) Neither party nor the arbitrator may disclose the existence, content or results of an arbitration without the prior written consent of both parties.

E. Both HMI and EHC agree to comply fully with all relevant export laws and regulations of the United States to ensure that no information or technical data provided pursuant to this Agreement is exported or re-exported directly or indirectly in violation of law.

F. No proceeding, regardless of form, arising out of or related to this Agreement may be brought by either party more than two (2) years after the accrual of the cause of action, except that (i) proceedings related to violation of a party's proprietary rights or any duty to protect Confidential Information may be brought at any time within the applicable statute of limitations, and
(ii) proceedings for non-payment may be brought up to two (2) years after the date the last payment was due.

12. General

A. Any notice or other communication required or permitted to be made or given by either party pursuant to this Agreement will be in writing, and will be deemed to have been duly given: (i) five (5) business days after the date of mailing if sent by registered or certified U.S. mail, postage prepaid, with return receipt requested; (ii) when transmitted if sent by facsimile, provided a confirmation of transmission is produced by the sending machine and a copy of such facsimile is promptly sent by another means specified in this section; or
(iii) when delivered if delivered personally or sent by express courier service. All notices will be sent to the other party at its address as set forth below or at such other address as such party will have specified in a notice given in accordance with this section:

-------------------------------------------------------------------------------------
 In the case of EHC:                         With a copy to:
-------------------------------------------------------------------------------------
    Empower Health Corporation, Inc.         Latham & Watkins
    8920 Business Park Drive                 135 Commonwealth Ave.
    Austin, TX  78759                        Menlo Park, Ca 94025

    Attn: Chief Financial                    Attn: Anthony Richmond
    Fax:                                     Fax:  650 463-2600
-------------------------------------------------------------------------------------
 In the case of HMI:                         With a copy to:
-------------------------------------------------------------------------------------
 HealthMagic, Inc.                           Shaw, Pittman, Potts & Trowbridge
 1444 Wazee Street, Suite 210                1501 Farm Credit Drive
 Denver, Colorado 80202                      McLean, Virginia 22102-0500

 Attn:  Calvin Wiese                         Attn:  Steven Meltzer, Esq.
 Fax:   407 975 1548                         Fax:  703-821-2397
-------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------

B. Each party will act in good faith in its performance of this Agreement and will not unreasonably delay or withhold the giving of any consent, decision or approval that is either requested by the other party or is reasonably required by the other party in order to perform its responsibilities in accordance with this Agreement.

________________________________________________________________________________
HealthMagic, Inc.                     31            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


C. Assignment/Change in Control.

(1) Neither party may assign, delegate or otherwise transfer any right or obligation set forth in this Agreement without the other party's prior written consent, except (subject to Part VII.12.C(2)) that a party may assign any right or obligation set forth in this Agreement to an Affiliate or to a successor entity in the event of a merger, consolidation or sale of such party's business or all or substantially all of such party's stock or assets, provided the assignee agrees in writing to assume all of the assignor's obligations and liabilities under this Agreement, and provided further that the substitution of the rights of the assignee for the rights of the assignor does not materially increase the scope of, in the case of EHC, EHC's use of HMI Materials and HMI or third party Engaging Applications, or in the case of HMI, HMI's use of EHC Engaging Applications, or materially increase the burden or risk imposed on the other party by this Agreement. Any purported assignment in violation of the preceding sentence will be void and of no effect. This Agreement will be binding upon the parties' respective successors and permitted assigns.

(2) Immediately upon Control of HMI passing to an individual entity (or a group of entities in the aggregate each of) whose main business is the manufacture and/or sale of pharmaceuticals, tobacco products or insurance or to a Direct Competitor of EHC, or Control of EHC passing to an entity who is a Direct Competitor of HMI: (i) the non-compete provisions set forth in Part V.2 of this Agreement shall no longer be binding on either party and shall for all purposes be deemed to be null and void; and (ii) the party who has not had a change in control may at any time thereafter terminate this Agreement for convenience subject to a three (3) month transition period commencing immediately upon receipt by the non-terminating party of notice of termination. At the end of such transition period: (i) EHC shall cease all use of and, at HMI's election, return to HMI or destroy all HMI products licensed or otherwise provided to EHC pursuant to this Agreement (including, without limitation, LHR, the Acquired Assets, PMR, the Health Talk Tool and the Health Vectors Tool and HMI or third party Engaging Applications, including source code); (ii) all rights granted to EHC in and to such products shall terminate; (iii) HMI shall cease all use of and, at EHC's election, return to EHC or destroy all EHC Engaging Applications, including source code, licensed or otherwise provided to HMI pursuant to this Agreement; and (iv) all rights granted to HMI in and to such products shall terminate. For the purposes of this Agreement, "Control" shall mean the legal, beneficial, or equitable ownership, directly or indirectly, of more than fifty percent (50%) of a class of the capital stock of HMI ordinarily having voting rights. "Direct Competitor of EHC" and "Direct Competitor of HMI" shall be defined by mutual agreement of the parties, or failing mutual agreement through the binding arbitration procedure described in

Part VII.11.D.

D. Except as otherwise permitted by the terms of this Agreement, all media releases, public announcements, and public disclosures by either party relating to this Agreement or the subject matter of this Agreement, including promotional or marketing material, but not including announcements intended solely for internal distribution or disclosures to the extent required to meet legal or regulatory requirements beyond the reasonable control of the disclosing party, shall be coordinated with and approved by other party prior to release. Notwithstanding the preceding sentence, HMI may identify Empower as a client and generally state the nature of HMI's relationship with EHC provided that HMI shall first obtain the written consent of EHC, which consent shall not be unreasonably withheld or delayed.

E. There are no intended third party beneficiaries of any provision of this Agreement.

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HealthMagic, Inc.                     32            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


F. EHC and HMI are and will remain independent contractors with respect to all performance rendered pursuant to this Agreement. Neither EHC nor any employee or agent of EHC will be considered an employee or agent of HMI for any purpose. Neither HMI nor any employee or agent of HMI will be considered an employee or agent of EHC for any purpose. Neither party, nor its employees, will have any authority to bind or make commitments on behalf of the other party for any purpose, nor will it or they hold itself or themselves out as having such authority. Each party will be solely responsible for supervising, providing daily direction and control, paying the salaries (including withholding of income taxes and social security), worker's compensation, disability benefits and the like of its personnel.

G. The provisions of this Agreement will be deemed severable, and the unenforceability of any one or more provisions will not affect the enforceability of any other provisions. In addition, if any provision of this Agreement, for any reason, is declared to be unenforceable, the parties will substitute an enforceable provision that, to the maximum extent possible in accordance with applicable law, preserves the original intentions and economic positions of the parties.

H. No failure or delay by either party in exercising any right, power or remedy will operate as a waiver of such right, power or remedy, and no waiver will be effective unless it is in writing and signed by the waiving party. If either party waives any right, power or remedy, such waiver will not waive any successive or other right, power or remedy the party may have under this Agreement.

I. Any provisions of this Agreement that by their sense and context contemplate continued performance or observance by one or both parties following the expiration or termination for any reason of this Agreement will survive any such expiration or termination.

J. Headings used in this Agreement are for convenience of reference only, and will not be used to interpret or construe this Agreement.

K. The Exhibits referred to in and attached to this Agreement are made a part of it as if fully included in the text.

L. This Agreement constitutes the entire agreement between the parties, and supersedes all other prior or contemporaneous communications between the parties (whether written or oral) relating to the subject matter of this Agreement. This Agreement may be modified or amended solely in a writing signed by both parties.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

________________________________________________________________________________
HealthMagic, Inc.                     33            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999



By signing below, each party acknowledges that it has read this Software Sale, License and Development Agreement, understands it and, intending to be legally bound by this Agreement, has caused its authorized representative to execute this Agreement as of the date first written above.

HealthMagic, Inc. (HMI)                 Empower Health Corporation (EHC)


By: /s/ Calvin Wiese                    By: /s/ Donald Hackett
   -----------------------------           ------------------------------


Name: Calvin Wiese                      Name: Donald Hackett
     ---------------------------             ----------------------------


Title: Chairman & President             Title: CEO
      --------------------------              ---------------------------

________________________________________________________________________________
HealthMagic, Inc.                     34            Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


Exhibit A

Terms and Conditions for EHC Services

Please see the attached HMI consulting services agreement.

________________________________________________________________________________
HealthMagic, Inc.                     A-1           Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


Exhibit B

Confidentiality Agreement

Please see the attached HMI Confidentiality Agreement

________________________________________________________________________________
HealthMagic, Inc.                     B-1           Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


Exhibit C

Warranty Disclosures by EHC

2.A The following licenses can not be verified:
Pull-down calendar control
All Icons and graphic backgrounds

The following third party software toolkits are included in the PMR:
Stingray Software
Objective Grid
Objective Toolkit
Objective Chart

2.G Third parties involved in the development:

          Superior Consultant
          Microsoft Corporation

________________________________________________________________________________
HealthMagic, Inc.                     C-1           Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


Exhibit D

Definition of "Personal Medical Record"

"Personal Medical Record" means a repository of health information throughout the life of the consumer or individual which includes all of the following:

(1) The medical records maintained by providers, health plans, laboratories, nursing homes, home care enterprises, etc, as well as summaries of such information;

(2) A place for the consumer to deposit health status information (so that the information can be compared over time);

(3) A mechanism whereby providers, health plans and employers can monitor compliance; and

(4) A Universal Patient Index Service containing demographic and transactional information, as well as various identifiers about the individual.

________________________________________________________________________________
HealthMagic, Inc.                     D-1           Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


Exhibit E

Service Level Agreement

This Exhibit E to be completed by the parties within sixty (60) days of LHR first being hosted at the Third-Party Secured Site.

________________________________________________________________________________
HealthMagic, Inc.                     E-1           Confidential and Proprietary
Software Sale, License and
Development Agreement                                    Final, January 20, 1999


Exhibit F

Technology Escrow Agreement


Exhibit 10.19

CONTENT LICENSE AGREEMENT

This agreement ("Agreement") is entered into as of the 11th day of December, 1998 ("Effective Date"), by and between Excite, Inc., a Delaware corporation, located at 555 Broadway, Redwood City, California 94063 ("Excite"), and Empower Health Corporation, a Texas corporation, located at 8920 Business Park Drive, Longhorn Suite, Austin, TX 78759 ("Content Provider").

RECITALS

A. Excite maintains sites on the Internet at http://www. excite.com (the "Excite Site") and at http://www.webcrawler.com (the "Webcrawler Site"), and owns and/or manages related Web sites worldwide (collectively, the "Excite Network") which, among other things, allow its users to search for and access content and other sites on the Internet.

B. Excite also maintains and/or manages certain Web pages which may be delivered to users worldwide via email, desktop "channels" or Internet "push" technologies (collectively, "Broadcast Pages") which may incorporate content supplied to Excite by third parties for the purpose of providing value to Excite users and providing access to the content, products and/or services of such third parties.

C. Content Provider owns or has the right to distribute certain health content and maintains a related site on the Internet at http://www.drkoop.com (the "Content Provider Site").

D. Excite and Content Provider wish to distribute Content Provider's content through the Excite Network and/or Broadcast Pages.

Therefore, the parties agree as follows:

1. CONTENT PROVIDED TO EXCITE

a) Content Provider will provide to Excite the content described in Exhibit A (the "Content"). The Content will comply with the description a technical specifications attached hereto as Exhibit A; provided, however, that Content Provider does not warrant that the Content is error free. Content Provider warrants that Content will comply with the description and technical specifications contemplated by this Agreement.


Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

b) Excite may incorporate the Content into certain pages in the Excite Network (the "Content Pages) and reasonable excerpts or portions of the Content may be incorporated into Broadcast Pages, at Excite's discretion.

c) Content Provider will have sole control and responsibility over the data and information contained in the Content. Content Provider and Excite will mutually agree on reasonable legal and medical disclaimers for the Content Pages and the Broadcast Pages.

d) Content Provider will get prominent branding on the Content Pages. The exact type and placement of the branding will be mutually determined by Content Provider and Excite.

e) Content Provider and Excite will determine mutually agreeable methods for the transmission and incorporation of updates to the Content. Other than updates to the Content, Content Provider will not alter the Content without Excite's prior consent; provided, however, that Content Provider may promptly and without prior consent of Excite make any changes in the Content to correct errors and the like, or to remove any defamatory materials or any other materials that Content Provider can demonstrate via user feedback are offensive to a reasonable number of users of Content Provider Site.

f) Excite will have sole control over the "look and feel" of the Excite Network. Excite will have sole control over the content, composition, "look and feel" and distribution of the Broadcast Pages. Excite will have sole responsibility for providing, hosting and maintaining, at its expense, the Excite Network and for providing and delivering the Broadcast Pages.

g) Content Provider will have sole responsibility for providing, at its expense, the Content to Excite.

h) Content Provider will be able to provide the Content to other partners at its discretion.

2. ADVERTISING; USAGE REPORTS; PUBLICITY

a) Excite will be solely responsible for selling any advertising on the Excite Network.


b) Excite will pay Content Provider on a quarterly basis * * * of the "Net Advertising Revenue" that accrues to Excite during the term of this Agreement from banner advertising that appears on "Advertising Pages." "Net Advertising Revenue" means all banner advertising revenue that accrues to Excite during the applicable payment period * * ** * * . "Advertising Pages" mean Content Pages that display the Content or any portion thereof and with respect to which at least a majority of the content (excluding advertisements) on such pages is composed of the Content. "Advertising Pages" specifically exclude Excite and Webcrawler search results pages.

c) Payments by Excite to Content Provider will be due within thirty (30) days of the end of each calendar quarter.

d) With each payment, Excite will provide to Content Provider documentation reasonably detailing the calculation of the payment.

e) Excite will maintain accurate records with respect to the calculation of all payments due under this Agreement. Content Provider may, upon no less than thirty (30) days' prior written notice to Excite and no more than once per year, cause an independent Certified Public Accountant to inspect the records of Excite reasonably related to the calculation of such payments during Excite's normal business hours. The fees charged by such Certified Public Accountant in connection with the inspection will be paid by Content Provider, unless any such inspection reveals any underpayment of fees by Excite of greater than ten percent (10%) in which event Excite shall reimburse Content Provider for any reasonable fees charged by such Certified Public Accountant in connection with such inspection.

f) Excite will provide Content Provider via email usage reports containing the total number of page views generated by links from the Excite Network to the Advertising Pages. Each Usage Report will cover a calendar month and will be delivered within fifteen (15) days following the end of the applicable month.

g) Except as otherwise set forth in this Agreement, neither party will make any public statement, press release or other announcement relating to the terms of or existence of this Agreement without the prior written approval of the other.

3. CONTENT OWNERSHIP AND LICENSE


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


a) Content Provider will retain all right, title and interest in and to the Content worldwide (including, but not limited to, ownership of all copyrights and other intellectual property rights therein). Subject to the terms and conditions of this Agreement, Content Provider hereby grants to Excite a non-exclusive, worldwide license to use, reproduce, distribute, transmit and publicly display the Content in accordance with this Agreement and to sub-license the Content to Excite's wholly-owned subsidiaries or to joint ventures in which Excite participates for the sole purpose of using, reproducing, distributing, transmitting and publicly displaying the Content in accordance with this Agreement. Excite's only payment obligation to Content Provider in consideration for such license is set forth in Section 2.

b) Excite will retain all right, title, and interest in and to the Excite Network and the Broadcast Pages worldwide (including, but not limited to, ownership of all copyrights, look and feel and other intellectual property rights therein).

4. TRADEMARK OWNERSHIP AND LICENSE

a) Content Provider will retain all right, title and interest in and to its trademarks, service marks and trade names worldwide, including any goodwill associated therewith, subject to the limited license granted to Excite hereunder. Any use of any such trademarks by Excite shall inure to the benefit of Content Provider and Excite shall take no action that is inconsistent with Content Provider's ownership thereof.

b) Excite will retain all right, title and interest in and to its trademarks, service marks and trade names worldwide, including any goodwill associated therewith, subject to the limited license granted to Content Provider hereunder. Any use of any such trademarks by Content Provider shall inure to the benefit of Excite and Content Provider shall take no action that is inconsistent with Excite's ownership thereof.

c) Each party hereby grants to the other a non-exclusive, limited license to use its trademarks, service marks or trade names only as specifically described in this Agreement. All such use shall be in accordance with each party's reasonable policies regarding advertising and trademark usage as established from time to time.

d) Upon the expiration or termination of this Agreement, each party will cease using the trademarks, service marks and/or trade names of the other except:

(i) As the parties may agree in writing; or

(ii) To the extent permitted by applicable law.


5. TERM The term of this Agreement will begin on the Effective Date and will end one year thereafter. This Agreement will automatically renew for additional terms of one year each, unless either party notifies the other in writing at least thirty (30) days prior to automatic renewal that it does not wish to renew this Agreement.

6. TERMINATION

a) Either party may terminate this Agreement if the other party materially breaches its obligations hereunder and such breach remains uncured for thirty (30) days following the notice to the breaching party of the breach, with the following exceptions:

(i) In the event of three or more material errors, failures or outages of the Content in any thirty (30) day period, Excite may elect to immediately terminate this Agreement upon the third such event by written notice to Content Provider and enter into other arrangements for the acquisition of similar content:

(ii) Content Provider will ensure that the Content will at all times be at least comparable to or better any other source of similar topical content available on the Internet in terms of the following factors, taken as a whole: (i) breadth and depth of coverage, (ii) timeliness of content updates and (iii) reputation and ranking based on a cross-section of third party reviewers in terms of topics covered, accuracy of included information and other qualitative factors. In the event that Content Provider fails to meet these quality criteria, Excite may terminate this Agreement on thirty (30) days' written notice and enter into other arrangements for the acquisition of similar content.

b) All payments that have accrued prior to the termination or expiration of this Agreement will be payable in full within thirty (30) days thereof.

c) The provisions of this Section 6 (Termination), Section 7 (Confidentiality), Section 8 (Warranty and Indemnity), Section 9 (Limitation of Liability) and Section 10 (Dispute Resolution) will survive any termination or expiration of this Agreement.

7. CONFIDENTIALITY

a) For the purposes of this Agreement, "Confidential Information" means information about the disclosing party's (or its suppliers') business activities that is proprietary and confidential, which shall include all business, financial, technical and other information of a party marked or designated by such party as "confidential" or "proprietary," or information which, by the nature of the


circumstances surrounding the disclosure, ought in good faith to be treated as confidential.

b) Confidential Information will not include information that (i) is in or enters the public domain without breach of this Agreement, (ii) the receiving party lawfully receives from a third party without restriction on disclosure and without breach of a nondisclosure obligation or (iii) the receiving party knew prior to receiving such information from the disclosing party or develops independently without reference to the Confidential Information of the disclosing party.

c) Each party agrees (i) that it will not disclose to any third party or use any Confidential Information disclosed to it by the other except as expressly permitted in this Agreement and (ii) that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other party in its possession or control, which will in no event be less than the measures it uses to maintain the confidentiality of its own information of similar importance.

d) Notwithstanding the foregoing, each party may disclose Confidential Information (i) to the extent required by a court of competent jurisdiction or other governmental authority or otherwise as required by law or (ii) on a "need-to-know" basis under an obligation of confidentiality to its legal counsel, accountants, banks and other financing sources and their advisors.

e) The information contained in the Usage Reports provided by each party hereunder will be deemed to be the Confidential Information of the disclosing party.

f) The terms and conditions of this Agreement will be deemed to be the Confidential Information of each party and will not be disclosed without the written consent of the other party.

8. WARRANTY AND INDEMNITY

a) Content Provider warrants that it owns, or has obtained the right to distribute and make available as specified in this Agreement, any and all Content provided to Excite hereunder.

b) Except for the Content, Excite warrants that it owns, or has obtained the right to distribute and make available as specified in this Agreement the Content Pages and Broadcast Pages.

c) Content Provider will indemnify, defend and hold harmless Excite, its affiliates, officers, directors, employees, consultants and agents from any and all third party claims, liability, damages and/or costs (including, but not limited to, attorneys fees) arising from:

(i) Its breach of any warranty, representation or covenant in this
Section 8; or


(ii) Any claim that the Content infringes or violates any third party's copyright, patent, trade secret, trademark, right of publicity or right of privacy or contains any defamatory content; or

(iii) Any claim that the Content and/or its display on the Excite Network violate any state, federal or local laws, regulations or statues, including but not limited to, restrictions on the practice of medicine; or

(iv) Any claim of personal injury or product liability with respect to the Content displayed to consumers on the Excite Network.

Excite will promptly notify Content Provider of any and all such claims and will reasonably cooperate with Content Provider with the defense and/or settlement thereof, which defense and/or settlement shall be controlled by Content Provider, provided that, if any settlement requires an affirmative obligation of, results in any ongoing liability to or prejudices or detrimentally impacts Excite in any way and such obligation, liability, prejudice or impact can reasonably be expected to be material, then such settlement shall require Excite's written consent (not to be unreasonably withheld or delayed) and Excite may have its own counsel in attendance at all proceedings and substantive negotiations relating to such claim.

d) Excite will indemnify, defend and hold harmless Content Provider, its affiliates, officers, directors, employees, consultants and agents from any and all third, party claims, liability, damages and/or costs (including but not limited to, attorneys fees) arising from:

(i) Its breach of any warranty, representation or covenant in this
Section 8; or

(ii) Any claim arising from content displayed on the Excite Network other than the Content, and any claim arising from any modification made to the Content by Excite or by Content Provider at the direction of Excite.

Content Provider will promptly notify Excite of any and all such claims and will reasonably cooperate with Excite with the defense and/or settlement thereof, which defense and/or settlement shall be controlled by Excite, provided that, if any settlement requires an affirmative obligation of, results in any ongoing liability to or prejudices or detrimentally impacts Content Provider in any way and such obligation, liability, prejudice or impact can reasonably be expected to be material, then such settlement shall require Content Provider's written consent (not to be unreasonably withheld or delayed) and Content Provider may have its own counsel in attendance at all proceedings and substantive negotiations relating to such claim.

e) EXCEPT AS SPECIFIED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING ALL IMPLIED


WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
REGARDING SUCH SUBJECT MATTER.

9. LIMITATION OF LIABILITY

a) EXCEPT UNDER SECTION 10(c) and 10(d), IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

b) EXCEPT UNDER SECTION 10(c), THE LIABILITY OF CONTENT PROVIDER FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER, WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED, THE AMOUNTS PAYABLE TO EXCITE UNDER THIS AGREEMENT.

c) EXCEPT UNDER SECTION 10(d), THE LIABILITY OF EXCITE FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER, WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED, THE AMOUNTS ACTUALLY PAID TO CONTENT PROVIDER.

10. DISPUTE RESOLUTION

a) The parties agree that any breach of either of the parties' obligations regarding trademarks, service marks or trade names and/or confidentiality would result in irreparable injury for which there is no adequate remedy at law. Therefore, in the event of any breach or threatened breach of a party's obligations regarding trademarks, service marks or trade names or confidentiality, the aggrieved party will be entitled to seek equitable relief in addition to its other available legal remedies in a court of competent jurisdiction. For the purposes of this section only, the parties consent to venue in either the state courts of the county in which Excite has its principal place of business or the United States District Court for the Northern District of California.

b) In the event that disputes between the parties arising from or concerning in any manner the subject matter of this Agreement, other than disputes arising from or concerning trademarks, service marks or trade names and/or confidentiality, cannot be resolved through good faith negotiation within 30 days after notice of dispute is provided to the other party, the parties will refer the dispute(s) to the American Arbitration Association for resolution through binding arbitration by a single arbitrator pursuant to the American Arbitration Association's

rules


applicable to commercial disputes. The arbitration will be held in the county in which Excite has its principal place of business.

11. GENERAL

a) Assignment. Neither party may assign this Agreement, in whole or in part, without the other party's written consent (which will not be unreasonably withheld), except that no such consent will be required in connection with a merger, reorganization or sale of all, or substantially all, of such party's assets. Any attempt to assign this Agreement other than as permitted above will be null and void.

b) Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of California, notwithstanding the actual state or country of residence or incorporation of Content Provider.

c) Notice. Any notice under this Agreement will be in writing and delivered by personal delivery, express courier, confirmed facsimile, confirmed email or certified or registered mail, return receipt requested, and will be deemed given upon personal delivery, one (1) day after deposit with express courier, upon confirmation of receipt of facsimile or email or five (5) days after deposit in the mail. Notices will be sent to a party at its address set forth below or such other address as that party may specify in writing pursuant to this section.

d) No Agency. The parties are independent contractors and will have no power or authority to assume or create any obligation or responsibility on behalf of each other. This Agreement will not be construed to create or imply any partnership, agency or joint venture.

e) Force Majeure. Any delay in or failure of performance by either party under this Agreement will not be considered a breach of this Agreement and will be excused to the extent caused by any occurrence beyond the reasonable control of such party including, but not limited to, acts of God, power outages and governmental restrictions.

f) Severability. In the event that any of the provisions of this Agreement are held to be unenforceable by a court or arbitrator, the remaining portions of the Agreement will remain in full force and effect.

g) Entire Agreement. This Agreement is the complete and exclusive agreement between the parties with respect to the subject matter hereof, superseding any prior agreements and communications (both written and oral) regarding such subject matter. This Agreement may only be modified, or any rights under it waived, by a written document executed by both parties.

Empower Health Corporation                      Excite, Inc.

By: \s\ Donald W. Hackett                       By: \s\ Robert C. Hood
   ------------------------------                  -----------------------------

Name: Donald W. Hackett                         Name: Robert C. Hood
     ----------------------------                    ---------------------------

Title: Chief Executive Officer                  Title: Executive Vice President/
      ---------------------------                     --------------------------
                                                       Chief Financial Officer
                                                      --------------------------

Date: 12/22/98                                  Date: 12/16/98
     ----------------------------                    ---------------------------

8920 Business Park Drive                        555 Broadway
Longhorn Suite                                  Redwood City, CA 94063
Austin, TX 78759                                415-568-6000 (voice)
512-726-5116 (voice)                            415-568-6030 (fax)


EXHIBIT A

CONTENT DESCRIPTION AND TECHNICAL SPECIFICATIONS

The content will include content, currently presented on http://www.drkoop.com or any other Health related presentations directly produced or authored by Content Provider:

1) A.D.A.M. Database

2) University of Pennsylvania editorial content

3) Reuters news and articles

4) Dr. Nancy Snyderman's column and editorial content

5) Multum Database, pharmaceutical/drug information

6) Government Documents and databases as they become available

7) Other content to be mutually agreed upon

Updates to the Content may include new and additional information and corrections for errors or other misinformation.

Content Provider will meet Excite's technical specifications for the delivery and maintenance of the Content by January 2, 1999. An FTP site, the databases and an agreed to retrieval and update methodology will be in place by January 2, 1999.

Changes to the contents format, delivery and timeliness will be mutually agreed

to between Excite and Dr. Koop.


EXHIBIT 10.28

SPONSORSHIP AGREEMENT

This Sponsorship Agreement (the "Agreement") is entered into as of the 11th day of March, 1999 by and between drkoop.com, inc., a Delaware corporation, located at 8920 Business Park Drive, Longhorn Suite, Austin, Texas 78759 ("drkoop.com"), and Vitamin Shoppe Industries, Inc., a New Jersey corporation, located at 4700 Westside Avenue, North Bergen, New Jersey 07047 ("Sponsor").

WHEREAS, drkoop.com develops, markets and maintains an integrated suite of Internet enabled, consumer oriented software applications and services, including but not limited to, drkoop.com. electronic data interchange services, and advertising and promotional services on the Internet at the website http://www.drkoop.com (together with any successor or replacement websites, the "drkoop.com Website");

WHEREAS, Sponsor markets and sells vitamins and nutritional supplements on the Internet at the website http://www.vitaminshoppe.com (together with any successor or replacement websites, the "Sponsor Website"; and together with the drkoop.com Website, the "Sites"); and

WHEREAS, Sponsor desires to have certain exclusive rights with respect to vitamins and nutritional supplements on the drkoop.com Website and to be the exclusive vitamin and nutritional supplement tenant in the E-Commerce area of the drkoop.com Website and drkoop.com desires to promote Sponsor for vitamin and nutritional supplements and to make Sponsor its' exclusive vitamin and nutritional supplement tenant pursuant to the terms and conditions contained in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1.
EXCLUSIVE VITAMIN SPONSOR

1.1. Exclusive Vitamin Sponsor. Throughout the Term (as defined below), Sponsor shall be the sole and exclusive vitamin and supplement sponsor of, and the sole and exclusive vitamin and supplement advertiser on, the drkoop.com Website, and in furtherance thereof, drkoop.com shall not (i) place any names, trademarks, links, buttons, advertisements or content (other than editorial content which does not contain links) of any Sponsor Competitor (as defined below) (collectively, "Competitor Content"), or any links which link directly to any Competitor Content, on any area of the drkoop.com Website; or (ii) other than Sponsor banner advertisements, allow any banner advertisements for or promoting the sale of vitamins or nutritional supplements to appear on the drkoop.com site; provided, however, that the Greentree


Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the infomation subject to the confidential request. Omissions are designated ***. A complete version of this exhibit has been filed seperately with the Securities and Exchange Commission.


link which is currently on the drkoop.com Website may continue in its current form until April 18, 1999. For purposes of this Agreement the term "Sponsor Competitor" means: (i) any entity set forth on Exhibit A attached hereto, which Exhibit A may be updated from time to time by Sponsor, subject to the reasonable approval of drkoop.com; or (ii) any entity which derives more than 67% of its revenues from the sale of vitamins and/or nutritional supplements.

1.2. Sponsor Placements. During the Term, in no way limiting the foregoing in Section 1.1, Sponsor will receive the following sponsorship and promotional placements on the drkoop.com Website:

(i) Sponsor shall be the exclusive sponsor of the Nutrition Center on the drkoop.com Website and each area (other than the "Daily Special" area, the "Healthy Recipes" area and any other area which may be created in the future which specifically relates to cooking or food recipes (collectively, the "Excluded Areas")) within the Nutrition Center, including, the "Vitamins & Supplements" area, the "Vitamins and Minerals" area, the "Nutrition News" area, the "Nutrition for Healthy Living" area and the "Nutrition for your Condition" area (collectively, the "Sponsor Areas"). In furtherance of the foregoing, drkoop.com agrees that: (A) it shall place a permanent Sponsor logo containing a Sponsor link on each page of the Sponsor Areas; (B) Sponsor banner advertising (which advertising shall be served by Sponsor) on the top of at least 70% of all page views of pages within the Sponsor Areas; and (C) it shall allow Sponsor, in Sponsor's sole discretion, to place Sponsor impressions in up to all four of the e-commerce tiles appearing on pages within the Sponsor Areas; (D) only Sponsor e-commerce tiles shall appear within the Sponsor Areas; and (E) Sponsor links may link, in Sponsor's sole discretion, to either the Sponsor Website or to Sponsor's Vitamin Buzz website ("Vitamin Buzz"). Sponsor shall be treated no less favorably in Sponsor Areas than any other similarly situated sponsor of the drkoop.com Website is treated within its sponsored areas of the drkoop.com Website. The Excluded Areas may be sponsored by entities other than Sponsor, provided, that no Sponsor Competitor, or any drugstore*** may sponsor any of the Excluded Areas. Schedule 1.2(i) is a page shot mock-up of the Nutrition Center home page and the home page of each major area within the Nutrition Center, substantially as they will appear on their respective launch dates.

(ii) drkoop.com shall place a permanent Sponsor logo on the home page of the drkoop.com Website so that it appears prominently. Such logo shall contain a link to, in Sponsor's sole discretion, either Sponsor's Website or the Vitamin Buzz. No logo of any other similarly situated sponsor of the drkoop.com Website shall be more prominently displayed on the home page of the drkoop.com Website, whether in terms of size, placement or frequency.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

2

(iii) From time to time, drkoop.com shall create content which features vitamins and nutritional supplements. Sponsor's Advertising Content shall be displayed on such pages which host vitamins and nutritional supplement content to the same extent and subject to the same restrictions as such Sponsor Advertising Content is displayed in the Sponsor Areas.

(iv) As used in this Section 1.2, the term exclusive with respect to any area means that: (A) Sponsor shall be the sole and exclusive vitamin and nutrition supplement provider in such area, and that no Competitor Content, or links which link directly to any Competitor Content, shall appear in such area where Sponsor has such exclusivity; and (B) other than Sponsor banner advertisements, no banner advertisements for or promoting the sale of vitamins or nutritional supplements shall appear in such area. Drkoop.com's obligations with respect to each area of the drkoop.com Website set forth in this Section 1.2 shall also apply to all areas which are successors or replacements to such areas and to all new vitamin and nutrition areas on the drkoop.com Website launched on the drkoop.com Website after the date of this Agreement. Only Sponsor may promote the sale of vitamins and supplements in the Sponsor Areas.

1.3. Impressions. Not including any permanent Sponsor links, banners or buttons pursuant to Section 1.2, drkoop.com shall, during the Initial Term (as defined below) provide *** advertising banner and e-commerce tile impressions consisting of Sponsor Advertising Content, *** shall be delivered during each month of the Initial Term. If by the end of the Initial Term drkoop.com has not delivered the foregoing number of impressions, then, as Sponsor's sole remedy for such breach, the Term of this Agreement shall be extended until drkoop.com has satisfied its obligations under this Section.

1.4. Dr. Koop Health Links. In addition to the fees specified in Section 2.5.1, Sponsor shall pay *** to drkoop.com and in exchange therefore shall have the right to use as many Dr. Koop Health Links as Sponsor, in its sole discretion, wishes to use, all in accordance with the terms of the drkoop.com Healthlinks Agreement, the form of which is attached hereto as Exhibit B.

1.5. Content License to Third Parties. If drkoop.com wishes to allow any area on the drkoop.com Website set forth in this Section 1 in which Sponsor is the exclusive sponsor of vitamins and supplements to be displayed on any website other than the drkoop.com Website (regardless of whether such other website is owned by drkoop.com or not and regardless of whether such content is served up by drkoop.com or by a third party) and if drkoop.com is able to control the advertising placements within or sponsorship of such area on such third party website, then drkoop.com shall, prior to contacting any other party with respect to such advertisements or sponsorship, notify Sponsor in writing prior to the launch of such area and


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

3

shall negotiate in good faith with Sponsor in order to allow Sponsor to be the exclusive advertiser on and sponsor of such area on such third party website. If Sponsor and drkoop.com have not reached an agreement on the principal terms of such agreement within 15 business days after Sponsor is notified of such opportunity, drkoop.com shall be free to commence negotiations with other parties with respect to such opportunities.

1.6. Modifications. Each party reserves the right to modify the design, organization, structure, look and feel, navigation and other elements of its Site, provided, that drkoop.com may not, without the prior written consent of Sponsor, substantially alter, change or modify the look, feel or functionality of the Sponsor Areas of the drkoop.com Website, so as to materially change the Sponsor's prominence or placements within such areas.

ARTICLE II.
SPONSORSHIP POLICY

2.1. Content. For each of the placements described in Section 1, including all banner advertisements and e-commerce tiles, Sponsor shall provide drkoop.com with all content including all trademarks, logos or banners (the "Sponsor Advertising Content"), in accordance with the specifications set forth on Exhibit C attached hereto, which will be displayed on the drkoop.com Website and which will link, in Sponsor's discretion, to either the Sponsor Site or Vitamin Buzz. The parties hereto agree to cooperate and work together in the establishment of all links, buttons and banners placed pursuant to this Agreement. Links from one party's Site to the other party's Site shall in no way alter the look, feel or functionality of the linked Site.

2.2. Changes and Cancellations. Any cancellations or change orders must be made in writing and acknowledged by drkoop.com. Sponsor shall not be required to change Sponsor Advertising Content more often than once per month. Sponsor shall provide drkoop.com with Sponsor Advertising Content artwork at least five business days in advance of the publication date.

2.3. Statistics. Drkoop.com shall provide Sponsor with Sponsor usage reports on a monthly basis. Sponsor shall have the right to use such data for its internal business purposes, but may not provide such data for use by third parties. Such reports shall contain substantially the same types of information delivered to other of drkoop.com's similarly situated partners, which reports will include information regarding impressions, clickthroughs and any information known about the users of such areas in aggregate form.

2.4. Publication Error. In the event of a publication error in the Sponsor Advertising Content arising exclusively from the fault of drkoop.com, Sponsor shall notify drkoop.com of such error and drkoop.com will use reasonable efforts to promptly correct the error.

4

2.5. Payment.

2.5.1. Fees. The fee for the placements and other rights provided under this Agreement for the Initial Term (as defined below) is *** is payable within *** of the date of this Agreement, with the balance of such fee payable by Sponsor in *** consecutive equal installments of *** payable by the *** of the Initial Term commencing *** following *** the Launch Date (as defined below).

2.5.2. Taxes. Sponsor shall be responsible for the collection of any and all value added, consumption, sales, use or similar taxes and fees payable with respect to all sales made on the Sponsor Website.

ARTICLE III.
OWNERSHIP OF DATA

3.1. User Data. Drkoop.com requests its users ("Individual Users"), to provide personal information when they sign up for certain services including requesting information on a specific disease, chat rooms and forums ("User Data"). Such User Data is owned by each Individual User and drkoop.com does not use or disclose any such User Data without the consent of the Individual User.

3.2. Data Release to Sponsor. Drkoop.com shall provide to Sponsor any and all User Data for which the Individual User has specifically authorized release to Sponsor. In the event that an Individual User grants rights to Sponsor for use of his User Data, Sponsor shall use its best efforts to keep User Data confidential and shall only use such data in an ethical manner. Sponsor may use User Data for its owns purposes, but User Data may not be disclosed, sold, assigned, leased or otherwise disposed of to third parties by Sponsor.

3.3. Data Confidentiality. The User Data shall be drkoop.com Confidential Information under Article 5 and shall in addition be subject to the terms of this Article 3. Sponsor shall be liable for the conduct of its employees, agents and representatives who in any way breach this Amendment. Sponsor's obligations to treat the User Data as Confidential Information under Article 5 and this Article 3 shall continue in perpetuity following termination of this Amendment.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

5

3.4. Sponsor User Data. All users on the Sponsor Website, including, users linked to the Sponsor Website from the drkoop.com Website, will be deemed to be customers of Sponsor. Accordingly, all rules, policies and operating procedures of Sponsor concerning customer orders, customer service and sales will apply to those customers. Sponsor may change its policies and operating procedures at any time. Sponsor will determine the prices to be charged for products and other merchandise sold on the Sponsor Website in accordance with its own pricing policies. Prices and availability on the Sponsor Website may vary from time to time. Notwithstanding Section 3.3, the parties hereto hereby agree that title to any user information of any users on the Sponsor Website, including but not limited to the name, address and e-mail address of users, obtained by Sponsor from such users shall be owned by the Sponsor. The parties hereto agree that pursuant to this Section 3 they may each collect and own similar information from and with respect to individuals who visit each of their Sites.

ARTICLE IV.
LICENSES

4.1. Licenses.

4.1.1. Subject to the terms and conditions hereof, Sponsor hereby represents and warrants that it has the power and authority to grant, and does hereby grant to drkoop.com a non-exclusive, non-transferable, royalty-free, worldwide license to reproduce and display all logos, trademarks, trade names and similar identifying material relating to Sponsor (the "Sponsor Marks") solely in connection with the promotion, marketing and distribution of the parties and the Sites in accordance with the terms hereof, provided, however, that drkoop.com shall, other than as specifically provided for in this Agreement, not make any specific use of any Sponsor Mark without first submitting a sample of such use to Sponsor and obtaining its prior consent, which consent shall not be unreasonably withheld. The foregoing license shall terminate upon the effective date of the expiration or termination of this Agreement.

4.1.2. Subject to the terms and conditions hereof, drkoop.com hereby represents that it has the power and authority to grant, and does hereby grant to Sponsor a non-exclusive, non-transferable, royalty-free, worldwide license to reproduce and display all logos, trademarks, trade names and similar identifying material relating to drkoop.com and, solely as allowed pursuant to this Agreement, to the Dr. C. Everett Koop name (collectively, the "drkoop.com Marks") solely in connection with the promotion, marketing and distribution of the parties and the Sites in accordance with the terms hereof, provided, however, that Sponsor shall, other than as specifically provided for in Section 4.4 of this Agreement, not make any specific use of any drkoop.com Marks without first submitting a sample of such use to drkoop.com and obtaining its prior consent, which consent shall not be unreasonably withheld. The foregoing license shall terminate upon the effective date of the expiration or termination of this Agreement.

4.2. Intellectual Property Ownership. Each party shall retain all right, title, and interest (including all copyrights, patents, service marks, trademarks and other intellectual property rights) in its Site. Except for the license granted pursuant to this Agreement, neither

6

party shall acquire any interest in the other party's Site or any other services or materials, or any copies or portions thereof, provided by such party pursuant to this Agreement.

4.3. Removal of Materials. Each party reserves the right to reject or remove any content, information, data, logos, trademarks and other materials (collectively, "Materials") provided by the other from its servers at any time if, in its reasonable opinion, it believes that any such Materials infringe any third-party intellectual property right, are libelous or invade the privacy or violate other rights of any person, violate applicable laws or regulations, or jeopardize the health or safety of any person. Each party will use reasonable efforts to contact the other prior to removing any of its Materials from its servers and will work with the other to resolve the issue as quickly as possible.

4.4. Use of Name and Likeness. Sponsor shall not have any right to use the name and/or likeness of Dr. C. Everett Koop or to make any statements, whether written or oral, which state or otherwise imply, directly or indirectly, any endorsement from or affiliation with Dr. C. Everett Koop in any manner whatsoever without the prior written consent of drkoop.com, which consent may be withheld in drkoop.com's sole discretion. Notwithstanding the foregoing, Sponsor is hereby authorized during the Term to use the logo and tag lines set forth on Exhibit D, on its Site, in its catalogs and in its stores in connection with its marketing and promotion efforts, in each case in accordance with the terms of this Agreement and subject to the reasonable approval of drkoop.com. Sponsor is hereby authorized to place such logo and any one of such tag lines on its Site, in its stores and in its catalogs in accordance with the terms of this Agreement..

ARTICLE V.
CONFIDENTIALITY

5.1. Confidentiality. For the purposes of this Agreement, "Confidential Information" means non-public information about the disclosing party's business or activities that is proprietary and confidential, which shall include, without limitation, all business, financial, technical and other information of a party marked or designated "confidential" or by its nature or the circumstances surrounding its disclosure should reasonably be regarded as confidential. Confidential Information includes not only written or other tangible information, but also information transferred orally, visually, electronically or by any other means. Confidential Information will not include information that (i) is in or enters the public domain without breach of this Agreement,
(ii) the receiving party lawfully receives from a third party without restriction on disclosure and without breach of a nondisclosure obligation or
(iii) the receiving party knew prior to receiving such information from the disclosing party or develops independently.

5.2. Exclusions. Each party agrees (i) that it will not disclose to any third party or use any Confidential Information disclosed to it by the other except as expressly permitted in this Agreement and (ii) that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other party in its possession or control, which will in no event be less than the measures it uses to maintain the confidentiality of its own information of similar importance.

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5.3. Exceptions. Notwithstanding the foregoing, each party may disclose Confidential Information (i) to the extent required by a court of competent jurisdiction or other governmental authority or otherwise as required by law, provided, however, that with respect to filing obligations under the securities laws, each party will, to the extent that it is required to file this Agreement, file this Agreement in redacted form reasonably approved by the other party prior to such filing or (ii) on a "need-to-know" basis under an obligation of confidentiality to its legal counsel, accountants, banks and other financing sources and their advisors. Except as set forth in this Section 5.3, the terms and conditions of the Agreement will be deemed to be the Confidential Information of each party and will not be disclosed without the prior written consent of the other party.

5.4. Sponsor Advertising Content. drkoop.com hereby confirms and agrees that during the Term Sponsor shall be able to serve up its own advertising using NetGravity software and tags, and that drkoop.com shall not do anything which would interfere or hamper such serving. Notwithstanding anything in this Agreement, all information regarding Sponsor Advertising Content (including Sponsor banner advertisements and e-commerce tiles), including all users viewing and clicking information with respect thereto, shall be deemed to be Confidential Information of Sponsor (collectively, "Sponsor Confidential Advertising Information"). To the extent that in connection with drkoop.com's advertising efforts, or otherwise, any third party may or will receive any Sponsor Confidential Advertising Information from or through drkoop.com, drkoop.com agrees that prior to such third party receiving any such information drkoop.com will enter into an agreement with such third party pursuant to which such third party will agree to keep any such Sponsor Confidential Advertising Information received by such third party confidential to the same extent as drkoop.com is required to keep such information confidential under the Agreement. To the extent that any third party breaches any such agreement of confidentiality with drkoop.com, drkoop.com hereby agrees to enforce its rights and pursue its remedies under such agreement to the fullest extent permitted by law, including seeking equitable relief, ***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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ARTICLE VI.

REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

6.1. Sponsor Warranty. Sponsor represents and warrants for the benefit of drkoop.com that the Sponsor Advertising Content and Sponsor Marks are true and correct and do not and will not for the Term infringe upon or violate: (i) any intellectual property rights, including any copyright or trademark rights, of any third party and do not and will not constitute a defamation or invasion of the rights of privacy or publicity of any kind of any third party, (ii) any applicable law, regulation or non-proprietary third-party right. Sponsor further represents and warrants for the benefit of drkoop.com that the Sponsor Advertising Content does not contain any material which is unlawful, harmful, abusive, hateful, obscene, threatening or defamatory and Sponsor is not an entity or an affiliate of any entity which engages in the manufacture or wholesale distribution of tobacco or tobacco products (such activities are collectively referred to herein as "Tobacco Industry Affiliation").

6.2. Drkoop.com Warranty. Drkoop.com represents and warrants for the benefit of Sponsor that the drkoop.com Marks are true and correct and do not and will not for the Term infringe upon or violate: (i) any intellectual property rights, including any copyright or trademark rights, of any third party and do not and will not constitute a defamation or invasion of the rights of privacy or publicity of any kind of any third party, (ii) any applicable law, regulation or non-proprietary third-party right. Drkoop.com further represents and warrants for the benefit of Sponsor that the drkoop.com Marks do not contain any material which is unlawful, harmful, abusive, hateful, obscene, threatening or defamatory, and drkoop.com has the right to license the drkoop.com Marks, including the Dr. C. Everett Koop name (to the extent licensed under this Agreement), in accordance with the terms of this Agreement.

6.3. Indemnification. Each party hereby agrees to indemnify and hold harmless the other party and its subsidiaries and affiliates, and their respective directors, officers, employees, agents, shareholders, partners, members and other owners, against any and all claims, actions, demands, liabilities, losses, damages, judgments, settlements, costs and expenses (including reasonable attorneys' fees) (any or all of the foregoing hereinafter referred to as "Losses") insofar as such Losses (or actions in respect thereof) arise out of or are based on (i) the breach of any representation or warranty set forth in Articles 4, 5 or 6, (ii) any breach by it of the licenses granted by it hereunder; (iii) the use by it of any trademarks or Content other than in accordance with the terms hereof; (iv) any and all product liability claims arising from this Agreement; and (v) the development, operation, maintenance and Content (as defined below) of its Site. For purposes herein, "Content" shall mean, with respect to each party, the proprietary content delivered by such party to the other party pursuant to this Agreement, including, Sponsor Advertising Content, but only to the extent that such content is not altered by the receiving party, and the proprietary content contained on such party's Site, and shall include only that content created by such party, its employees or other persons contractually bound to such party to create such content. The foregoing obligations are contingent upon the indemnified party: (i) promptly notifying the indemnifying party of any claim, suit, or proceeding for which indemnity is claimed; (ii) cooperating reasonably with the indemnifying party at the latter's expense; and (iii) allowing the indemnifying party to control the defense or settlement thereof. The indemnified

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party will have the right to participate in any defense of a claim and/or to be represented by counsel of its own choosing at its own expense.

ARTICLE VII.

LIMITATION OF LIABILITY

7.1. Warranty. Drkoop.com will use commercially reasonable efforts to maintain the drkoop.com Website available and display the Sponsor Advertising Content twenty four hours per day each day during the term of the Agreement. Drkoop.com shall install and maintain a commercially acceptable system of collecting information about impressions and other data relating to the use of the Sponsor Advertising Content. Drkoop.com warrants to Sponsor that it will make reasonable effort to perform under this agreement in a competent manner. ***

7.2. Disclaimer. Each party will be solely responsible for the development, operation and maintenance of its Site and for all materials that appear on its Site. Such responsibilities include, but are not limited to: (i) the technical operation of its Site and all related equipment; (ii) the accuracy and appropriateness of materials posted on its Site; (iii) for ensuring that materials posted on its Site do not violate any law, rule or regulation, including all FDA requirements, or infringe upon the rights of any third party (including, for example, copyright, trademarks, privacy or other personal or proprietary rights); and (iv) for ensuring that materials posted on its Site are not libelous or otherwise illegal. Each party disclaims all liability for all such matters with respect to the other party's Site. Except for the foregoing, or as otherwise specifically set forth in this Agreement, neither party makes any representations, warranties or guarantees of any kind, either express or implied (including, without limitation, any warranties of merchantability or fitness for a particular purpose), with respect to their respective Sites, or the functionality, performance or results of use thereof, or otherwise in connection with this Agreement.

7.3. Exclusion Of Warranty. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY TO THE OTHER PARTY IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT AND EACH PARTY HEREBY DISCLAIMS ANY AND ALL WARRANTIES WITH REGARD TO ITS SITE AND SERVICES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF NONINFRINGEMENT AND THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN PARTICULAR, AND NOT BY WAY OF LIMITATION, NEITHER PARTY WARRANTS THAT ITS SITE WILL OPERATE ERROR-FREE OR WITHOUT INTERRUPTION.


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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7.4. Damages. EXCEPT AS SET FORTH IN SECTION 6.3, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR ITS TERMINATION, WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) STRICT LIABILITY OR OTHERWISE AND IRRESPECTIVE OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE.***

ARTICLE VIII.

TERM AND TERMINATION

8.1. Term; Termination.

8.1.1. The initial term (the "Initial Term"; and together with all extensions and renewals, the "Term") will begin on the date set forth above and expire on the one year anniversary of the date (the "Launch Date") on which: (i) each of the Sponsor Areas of the drkoop.com Website are operational in accordance with the terms of this Agreement (other than the e-commerce tile placements); and (ii) the links to the Sponsor Website or Vitamin Buzz contained in the Sponsor logos or the Sponsor banner advertisements are established in accordance with the terms of this Agreement, subject to earlier termination as set forth in this Agreement. If the Launch Date has not occurred by August 31, 1999, Sponsor shall, in its sole discretion, be entitled to terminate this Agreement without any liability and receive a full refund of all amounts paid by Sponsor to drkoop.com pursuant to this Agreement prior to the date of such termination.

8.1.2. On the 95/th/ day prior to the expiration of the initial Term, drkoop.com shall deliver a written notice to Sponsor to notify Sponsor of the commencement of the extension negotiation period. Between the 90/th/ and 60/th/ day prior to the expiration of the initial Term, drkoop.com and Sponsor shall in good faith negotiate to extend the term of this Agreement. If by the 30th day prior to the expiration of the initial Term, drkoop.com and Sponsor shall have not agreed on mutually agreeable terms for an extension of the Term of this Agreement, drkoop.com may commence negotiations with third parties with respect to the sponsorship of the Sponsor Areas, provided, that prior to entering into any agreement with any third party regarding the sponsorship of the Sponsor Areas, drkoop.com must notify Sponsor in writing of the material terms of such third party agreement ("Third Party Terms"), and Sponsor shall have two business days from the receipt of such notice to notify drkoop.com that Sponsor will accept such Third Party Terms, in which case drkoop.com and Sponsor shall enter into an agreement for the extension of the Term on substantially the terms set forth in the Third Party Terms. If Sponsor


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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does not respond to drkoop.com within such two business day period, then on or after the next succeeding business day, drkoop.com may enter into an agreement with such third party substantially upon the terms of the Third Party Terms.

8.2. Termination For Tobacco Industry Affiliation. Upon commencing any activities relating to Tobacco Industry Affiliation (as defined in Section 6.1), Sponsor shall promptly notify drkoop.com of its intent to undertake Tobacco Industry Affiliation. Upon receipt of such notice or upon learning of any such Tobacco Industry Affiliation from a third party, drkoop.com shall have the right to terminate this Agreement immediately on written notice to Sponsor without liability of any kind.

8.3. Termination For Garnishment. ***. Additionally, in the event that either party undertakes any action or fails to undertake any action, which the other party reasonably believes tarnishes the high quality of its name or trademarks, including, with respect to drkoop.com, the "Dr. Koop" name, the other party shall have the right to terminate this agreement upon ten (10) days' written notice to the other party, provided that such action or inaction is not cured to the reasonable satisfaction of the terminating party within such ten day period.

8.4. Termination For Cause. Either party may terminate this Agreement upon thirty (30) days' written notice of a breach by the other party, provided such breach is not cured within such thirty-day period.

8.5. Termination By Insolvency. Either party may terminate this Agreement by providing written notice to the other party if the other party ceases to function as a going concern, becomes insolvent, makes an assignment for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in writing its inability to pay its debts as they mature, or if a receiver is appointed for a substantial part of its assets.

8.6. Survival. The following Sections shall survive termination of this Agreement: Article 5 (Confidentiality), Article 6 (Representations, Warranties and Indemnification), Article 7 (Limitation of Liability), and Article 9 (General).


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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ARTICLE IX

GENERAL

9.1. Publicity. Except as may be required by applicable laws and regulations or a court of competent jurisdiction, or as required to meet credit and financing arrangements, or as required or appropriate in the reasonable judgment of either party to satisfy the disclosure requirements of an applicable securities law or regulation or any applicable accounting standard, neither party shall make any public release respecting this Agreement and the terms hereof without the prior consent of the other party.

9.2. Arbitration. Any and all disputes, controversies and claims arising out of or relating to this Agreement or concerning the respective rights or obligations of the parties hereto shall be settled and determined by arbitration in the defending parties home forum before one (1) arbitrator pursuant to the Commercial Rules then in effect of the American Arbitration Association. Each party shall have no longer than three (3) days to present its position. Judgment upon the award rendered may be entered in any court having jurisdiction or application may be made to such court for a judicial acceptance of the award and an order of enforcement. The parties agree that the arbitrators shall have the power to award damages, injunctive relief and reasonable attorneys' fees and expenses to any party in such arbitration.

9.3. Assignment. Neither party may assign this Agreement, in whole or in part, without the other party's written consent, which consent will not be unreasonably withheld, except that: (a) a party's rights and obligation hereunder may be transferred to a successor of all or substantially all of the business and assets of the party regardless of how the transaction or series of related transactions is structured, provided, that the successor party agrees to be bound by all of the terms and conditions of this Agreement; and (b) Sponsor may assign its rights and obligations under this Agreement to any entity (i) which operates the Sponsor Website and (ii) which agrees to bound by all of the terms and conditions of this Agreement.

9.4. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, but without giving effect to its laws or rules relating to conflicts of laws.

9.5. Notice. All notices, statements and reports required or permitted by this Agreement shall be in writing and deemed to have been effectively given and received: (i) five (5) business days after the date of mailing if sent by registered or certified U.S. mail, postage prepaid, with return receipt requested; (ii) when transmitted if sent by facsimile, provided a confirmation of transmission is produced by the sending machine and a copy of such facsimile is promptly sent by another means specified in this section; or (iii) when delivered if delivered personally or sent by express courier service. Notices shall be addressed as follows:

For drkoop.com:                         For Sponsor:

drkoop.com.                             Vitamin Shoppe Industries, Inc.
Personal Medical Records, Inc.          4700 Westside Avenue
8920 Business Park Drive                North Bergen, New Jersey 07047

                                  13

Austin, TX 78759                        Attn: Ms. Miriam Nesheiwat
Attn: Chief Financial Officer           Fax: 201-583-1834
Fax:  512-726-5130                      Email: mnesh@vitaminshoppe.com
Email: gsears@drkoop.com

                                   With a copy to:
                                        H. Leigh Feldman
                                        Robinson Silverman Pearce
                                        Aronsohn & Berman LLP
                                        1290 Avenue of the Americas
                                        32/nd/ Floor
                                        New York, NY 10104
                                        Fax: 212-541-1492
                                        Email: feldman@rspab.com

Either party may change its address for the purpose of this paragraph by notice given pursuant to this paragraph

9.6. No Agency. The parties are independent contractors and will have no power or authority to assume or create any obligation or responsibility on behalf of each other. This Agreement will not be construed to create or imply any partnership, agency or joint venture.

9.7. Severability. In the event that any of the provisions of this Agreement are held to be unenforceable by a court or arbitrator, the remaining portions of the Agreement will remain in full force and effect.

9.8. Entire Agreement. This Agreement is the complete and exclusive agreement between the parties with respect to the subject matter hereof, superseding any prior agreements and communications (both written and oral) regarding such subject matter. This Agreement may only be modified, or any rights under it waived, by a written document executed by both parties.

9.9. Counterparts. This Agreement may be signed in counterparts which, when signed, shall constitute one document.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written.

drkoop.com, inc.

By:___________________________________ Name:

Title:

VITAMIN SHOPPE INDUSTRIES, INC.

By:___________________________________
Name:
Title:

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SCHEDULE 1.2(I)
Screen Shot Mock-Ups

[ATTACHED]


EXHIBIT A
***


* * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


EXHIBIT B
Form of Healthlinks Agreement

[ATTACHED]


EXHIBIT C
Advertising Specifications

File Formats

Naming Convention: (lowercase only, 8.3)

Alternate Text: Use ALT tag; ten words or less

Image Dimensions :

Sponsor Banner: 468 pixels by 60 pixels, 234 pixels by 60 pixels, 120 pixels by 60 pixels

Image File Format: [GIF/JPEG]

Image File Size: 12 k maximum file size

File Names:Use Sponsor name.: [Sponsor].gif]

Delivery of GIFs

Email - mbaehr@drkoop.com.com, cc: gsears@drkoop.com.com

We accept [,CompactPro, zip, gzip, and UNIX tar or compress] format tiles. All formats must be mailed in [ASCII encoding(uuencode, mmencode)].


EXHIBIT D
drkoop.com corporate logo

[LOGO ATTACHED]

"The Vitamin Shoppe is the proud exclusive vitamin sponsor of drkoop.com."

"The Vitamin Shoppe is a proud sponsor of drkoop.com, the Trusted health Network, led by Dr. C. Everett Koop."

The Vitamin Shoppe is a proud sponsor of drkoop.com, the Trusted Health Network, led by Dr. Ce. Everett Koop


EXHIBIT 10.30

MASTER COMMUNITY PARTNER PROGRAM AGREEMENT

This is a Master Community Partner Program Agreement ("Agreement"), effective as of the 29th of January, 1999 (the "Effective Date"), by and between Adventist Health System Sunbelt Healthcare Corporation ("Adventist"), a Florida not-for-profit corporation, and Empower Health Corporation ("EHC"), a Texas corporation (individually a "party" and collectively, the "parties").

RECITALS

WHEREAS, EHC develops, markets and maintains an integrated suite of Internet enabled, consumer oriented software applications and services, including but not limited to, Dr. Koop's Personal Medical Record System, Dr. Koop's Community, electronic commerce and electronic data interchange services, and advertising and promotional services on the Internet at the wet site http://www.drkoop.com (collectively, the "EHC Web Site");

WHEREAS, EHC offers a service to healthcare providers, under Community Partner Program Agreements, which enables such healthcare providers to associate themselves with the EHC Web Site through: (a) a series of co-branded pages located at a URL unique to the healthcare provider, which web pages are customized for the healthcare provider, and (b) the right to link from such co- branded pages to the EHC Web Site. Such co-branded healthcare provider sites are referred to as Partner Communities (individually, a "Partner Community"); and

WHEREAS, Adventist desires to allow Adventist itself, its present and future subsidiaries and health care organizations who are present customers on HealthMagic, Inc.'s HealthCompass product (collectively the "Subscribing Organizations") to execute Subscribing Organizations Community Partner Program Agreements with EHC on a discounted basis, as well as allow other health care organizations ("Other Organizations") to execute Standard Community Partner Program Agreements with EHC.

NOW, THEREFORE, in consideration for the obligations stated in this Agreement, and for other good and valuable consideration received by each of the parties, the parties hereto agree as follows:

1. OFFER OF COMMUNITY PARTNER PROGRAM AGREEMENTS

During the Term of this Agreement, and as further described in Section 3 below, EHC agrees to execute the Subscribing Organizations Community Partner Program Agreements (the "Subscriber CCP Agreements"), a form of which is attached to this Agreement as Exhibit A, with the Subscribing Organizations and the Standard Community Partner Program Agreements (the "Standard CCP Agreements"), as adjusted pursuant to Section 4(b) of this Agreement, with Other Organizations, a form of which is attached to this Agreement as Exhibit B. Subscriber CCP Agreements and Standard CCP Agreements shall collectively be referred to as "Community Partner Agreements."


2. PAYMENT BY ADVENTIST

(a) In accordance with the terms and conditions of this Agreement, Adventist shall pay to EHC the sum of Five Hundred Thousand Dollars ($500,000) upon execution of this Agreement in consideration for thirty-one (31) one year licenses for Community Partner Agreements, which licenses shall be divided, at Adventist's option, between Subscriber CPP Agreements and Standard CCP Agreements. In addition, Adventist shall have the right to offer the opportunity to enter into, and EHC agrees to execute, Subscriber CPP Agreements with additional (beyond 31) Subscribing Organizations (as "not Initial Subscribing Organizations") under the Subscriber CPP Agreement.

(b) Once the total number of Subscriber CCP Agreements and Standard CCP Agreements entered into has collectively reached thirty-one (31) in number, Adventist may not offer additional Standard CCP Agreements to Other Organizations under the terms of this Agreement. Provided, however, that any Subscriber CCP Agreement terminated under Section 1.2 of the Subscriber CCP Agreement shall not count as one of the thirty-one Community Partner Agreements.

(c) In the event that EHC offers to a third party a license fee less than the rate set forth in the Subscriber CCP Agreement, EHC shall offer to any Subscribing Organization renewing a Subscriber CCP Agreement most favorite nation pricing; provided that such most favored nation pricing shall be shifted by an additional ten percent (10%) to the advantage of the Subscribing Organization. This Section 3(c) shall survive termination of this Agreement. The Subscribing Organizations are intended third party beneficiaries of this Section 3(c).

3. OTHER ORGANIZATIONS

(a) When Adventist provides an Other Organization to enter into a Standard CCP Agreement, at rates to be determined by Adventist ("Other Organization Subscriber Rates"), upon execution of the Standard CCP Agreement and payment of the Other Organization Subscriber Rate to Adventist, if the Other Organization Subscriber Rate charged to the Other Organization is less than Forty-Five Thousand Dollars ($45,000), Adventist shall remit to EHC the difference between Forty-Five Thousand Dollars ($45,000) and the Other Organization Subscriber Rate paid by the Other Organization. Notwithstanding the foregoing, Adventist shall obtain EHC's prior written consent before providing an Other Organization to enter into a Standard CCP Agreement, which consent shall not be unreasonably withheld or delayed and the sole justification for withholding such consent shall be on the basis of reasonably protecting the high quality of EHC's trademarks including the "Dr. Koop" name.

(b) The Standard CCP Agreement, a form of which is attached to this Agreement as Exhibit B, shall be modified by the parties to create a Standard CPP Agreement to effectuate the provisions of this Agreement, specifically
Section 4(a).

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4. CONFIDENTIALITY

(a) Either party (the "Disclosing Party") may from time to time disclose Confidential Information to the other party (the "Recipient"). "Confidential Information" means non-public information belonging to or in the possession or control of a party which is of a confidential, proprietary or trade secret nature that is furnished or disclosed to the other party under the Agreement:
(i) in tangible form and marked or designated in writing in a manner to indicate its confidential, proprietary or trade secret nature, or (ii) in intangible form and subsequently identified as confidential, proprietary or trade secret in a writing provided to the receiving party within thirty (30) business days after disclosure. During the term of this Agreement and for a period of two (2) years thereafter, Recipient will keep in confidence and trust and will not disclose or disseminate, or permit any employee, agent or other person working under Recipient's direction to disclose or disseminate, the existence, source, content or substance of any Confidential Information to any other person. Recipient will employ at least the same methods and degree of care, but no less than a reasonable degree of care, to prevent disclosure of the Confidential Information as Recipient employs with respect to its own confidential patent data, trade secrets and proprietary information. Recipient's employees and independent contractors will be given to the Confidential Information only on a need-to-know basis, and only if they have executed a form of non-disclosure agreement with Recipient which imposes a duty to maintain the confidentiality of information identified or described as confidential by Recipient and after Recipient has expressly informed them of the confidential nature of the Confidential Information. Recipient will not copy or load any of the Confidential Information onto any computing device or store the Confidential Information electronically except in circumstances in which Recipient has taken reasonable precautions to prevent access to the information stored on such device or electronic storage facility by anyone other than the persons entitled to receive the Confidential Information hereunder. Notwithstanding the foregoing, confidential information does not include information that the receiving party can establish (i) was, at the time of disclosure to it, in the public domain, (ii) after disclosure to it, is published or otherwise becomes part of the public domain through no fault of the receiving party, (iii) was in possession of the receiving party at the time of disclosure to it, as established by documentary evidence, (iv) was received after disclosure to it from a third party who had a lawful right to disclose such information, or (v) is legally required to be disclosed pursuant to a judicial order.

(b) The obligation of confidentiality set forth in this Section 5 will survive the termination or expiration of this Agreement.

5. LIMITATION OF LIABILITY

IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, LOSS OF DATA, LOSS OF BUSINESS OR OTHER LOSS ARISING OUT OR RESULTING FROM THIS AGREEMENT EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. Each party will be liable for direct damages only, in an

3

amount not to exceed, in the aggregate for all claims, Five Hundred Thousand Dollars ($500,000.00).

6. TERM AND TERMINATION

This Agreement will commence on the Effective Date and continue for three
(3) years (the "Term").

7. NOTICES

Any notice, request, instruction or other document or communication required or permitted to be given under this Agreement shall be in writing and shall be deemed to be given upon (i) delivery in person, (ii) five (5) days after being deposited in the mail, postage prepaid, for mailing by certified or registered mail, (iii) one (1) day after being deposited with an overnight courier, charges prepaid, or (iv) when transmitted by facsimile, with a copy simultaneously sent as provided in clause (iii), in every case as follows:

For EHC:                                For Adventist:

  Empower Health Corporation              111 North Orlando Avenue
  8920 Business Park Drive                Winter Park, Florida 32789-3675
  Austin, Texas 78759
                                          Attn:  Calvin Wiese
  Attn:  Chief Financial Officer          407.975.1458 (facsimile)

or to such other address or addresses as may be specified in writing at any time or from time to time by any party to the other parties hereto.

8. GENERAL

(a) This Agreement constitutes the entire understanding and agreement between the parties, and supersedes all previous agreements (whether written or oral) concerning the subject matter hereof. This Agreement may not be amended or supplemented except by a written document executed by the parties to this Agreement.

(b) Neither party may assign this Agreement nor any interest in this Agreement without the prior written consent of the other party except that either party may assign or transfer this Agreement without the consent of the other party to an entity which acquires all or substantially all of the assets of the assigning party or to any subsidiary or affiliate or successor in a merger or acquisition of the assigning party.

(c) Any and all disputes, controversies and claims arising out of or relating to this Agreement or concerning the respective rights or obligations of the parties hereto shall be settled and determined by arbitration in Austin, Texas before a panel of one (1) arbitrator pursuant to the Commercial Rules then in effect of the American Arbitration Association. Each party shall have no longer than three (3) days to present its position. Judgment upon the award rendered may be

4

entered in any court having jurisdiction or application may be made to such court for a judicial acceptance of the award and an order of enforcement. The parties agree that the arbitrators shall have the powers to award damages, injunctive relief and reasonable attorneys' fees and expenses to any party in such arbitration.

(d) This Agreement shall be construed and enforced in accordance with the laws of the State of Texas, but without giving effect to its laws or rules relating to conflicts of laws.

(e) Except as may be required by applicable laws and regulations or a court of competent jurisdiction, or as required to meet credit and financing arrangements, or as required or appropriate in the reasonable judgment of either party to satisfy the disclosure requirements of an applicable securities law or regulation or any applicable accounting standard, neither party shall make any public release respecting this Agreement and the terms hereof without the prior consent of the other party.

(f) Neither party hereto shall be in default hereunder by reason of its delay in the performance or failure to perform any of its obligations hereunder for any event, circumstances, or cause beyond its control such as, but not limited to, acts of God, strikes, lock-outs, general governmental orders or restrictions, war, threat of war, hostilities, revolution, riots, epidemics, power shortages, fire, earthquake, or flood. The party affected by any such event shall notify the other party within a maximum period of fifteen (15) days from its occurrence. The performance of this Agreement shall then be suspended for as long as any such event shall prevent the affected party from performing its obligations under this Agreement. If such suspension continues for more than 30 days, the other party may immediately terminate this Agreement and EHC will remit a pro-rata refund of the fees paid by Customer.

(g) The provisions of this Agreement are severable, and in the event any provision hereof is determined to be invalid or unenforceable, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof.

(h) The headings of the articles and several paragraphs of this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

(i) The waiver of a default hereunder by one party may be effected only by a written acknowledgment signed by the other party and shall not constitute a waiver of any other default. The failure of either party to enforce any right or remedy for any one default shall not be deemed a waiver of said right or remedy if the other party persists in such default or commits any other default, nor shall such failure in any way affect the validity of this Agreement or any part hereof.

(j) Nothing in this Agreement shall be deemed to constitute, create, give effect to or otherwise recognize a partnership, joint venture or formal business entity of any kind; and the rights and obligations of the parties shall be limited to those expressly set forth herein. With the exception of Section 3(c) above, there are no intended third party beneficiaries of any provision of this Agreement.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives, effective as of the date set forth in the introductory paragraph of this Agreement.

Adventist Health System Sunbelt            Empower Health Corporation ("EHC")
HealthCare Corporation ("Adventist")

/s/ Calvin W. Wiese                        /s/ D. Hackett
______________________________________     _____________________________________
(Signature)                                (Signature)

Calvin W. Wiese                            Donald Hackett
______________________________________     _____________________________________
(Name Printed)                             (Name Printed)

Senior Vice President                      CEO
______________________________________     _____________________________________
(Title)                                    (Title)

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Exhibit 10.34
DRKOOP.COM, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

drkoop.com, Inc., a Delaware corporation (the "Company"), hereby adopts the drkoop.com, Inc. 1999 Employee Stock Purchase Plan (the "Plan"), effective as of the Effective Date (as defined herein).

1. Purpose. The purpose of the Plan is to assist employees of the Company and its Subsidiary Corporations in acquiring stock ownership interests in the Company, pursuant to a plan which is intended to qualify as an "employee stock purchase plan" within the meaning of Code Section 423. The Plan is intended to help employees provide for their future security and to encourage them to remain in the employ of the Company and its Subsidiary Corporations.

2. Definitions. Whenever one of the following terms is used in the Plan with the first letter or letters capitalized, it shall have the following meaning, unless the context clearly indicates to the contrary (such definitions to be equally applicable to the singular and plural forms of the terms defined):

(a) "Administrator" shall mean the Company, acting through its Chief Executive Officer or his or her delegate.

(b) "Authorization Card" shall mean the form prescribed by the Administrator, which shall include a form of stock purchase agreement pursuant to which an Eligible Employee shall purchase shares of Stock under the Plan and a form of payroll deduction authorization pursuant to which such Eligible Employee shall authorize the Company or a Subsidiary Corporation to deduct such Eligible Employee's contributions under the Plan.

(c) "Base Pay" shall mean gross pay received by an Employee on each Payday as cash compensation for services to the Company or any Subsidiary Corporation, excluding overtime payments, incentive compensation, bonuses, fringe benefits, expense reimbursements, and other special payments, except to the extent that the inclusion of any such item is specifically designated by the Administrator.

(d) "Board of Directors" shall mean the Board of Directors of the Company.

(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(f) "Company" shall mean drkoop.com, Inc., a Delaware corporation.

(g) "Effective Date" shall mean the first day of the first Offer Period, which shall be the date immediately preceding the first date on which a share of Stock is traded on an exchange or quoted on Nasdaq or a successor quotation system.


(h) "Eligible Employee" shall mean any Employee who satisfies the requirements of Section 4.

(i) "Employee" shall mean any person who renders services to the Company or any Subsidiary Corporation in the status of an employee within the meaning of Code Section 3121(d). "Employee" shall not include any director of the Company or any Subsidiary Corporation who does not render services to the Company or any Subsidiary Corporation in the status of an employee within the meaning of Code Section 3121(d).

(j) "Enrollment Period" shall mean, for each Offer Period, the two or three week period (as applicable) determined in accordance with Section 6(b) or such other period as determined by the Administrator in its discretion.

(k) "Entry Date" shall mean the date an Eligible Employee is granted an Option during the Offer Period. The first Entry Date under the Plan shall be the Effective Date. The second Entry Date under the Plan shall be August 15, 1999. Subsequent Entry Dates under the Plan shall be each February 15 and August 15 during the period that the Plan is in effect.

(l) "Offer Period" shall mean the period beginning on each Entry Date and ending on the date which is the six-month anniversary of such date; provided, however, that the Offer Period for an Eligible Employee whose Entry Date is the Effective Date shall be the period commencing on the Effective Date and ending February 15, 2000.

(m) "Option" shall mean a right granted to an Eligible Employee to purchase shares of Stock under Section 8(a) of the Plan.

(n) "Option Price" shall mean the per share exercise price of shares of Stock to be purchased pursuant to an Option, as provided in Section 9.

(o) "Parent Corporation" shall mean any corporation, other than the Company, in an unbroken chain of corporations ending with the Company if, at the time of the granting of the Option, each of the corporations other than the Company own stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(p) "Participant" shall mean an Eligible Employee who elects to participate in the Plan and complies with the provisions of Section 6.

(q) "Payday" of an Employee shall mean the regular and recurring established day for payment of cash compensation to Employees in the same classification or position.

(r) "Plan" shall mean this drkoop.com, Inc. 1999 Employee Stock Purchase Plan.

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(s) "Purchase Date" shall mean the last day of each Offer Period on which shares of Stock are automatically purchased for Participants under the Plan.

(t) "Subsidiary Corporation" shall mean any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(u) "Stock" shall mean the shares of the Company's Common Stock, $.001 par value.

3. Stock Subject to the Plan.

(a) Subject to Section 14, the shares of Stock that may be sold pursuant to Options granted under the Plan shall not exceed 750,000 shares.

(b) The maximum aggregate number of shares of Common Stock subject to any Option shall not exceed 10,000 shares.

(c) The Company shall reserve for issuance under the Plan 750,000 shares of the Company's authorized but unissued Stock.

(d) If any Option expires or is canceled without having been fully exercised, the number of shares subject to such Option but as to which such Option was not exercised before its expiration or cancellation may again be optioned hereunder, subject to the limitations of subsection (a).

(e) Any adjustment to the number of shares of Stock reserved for issuance under the Plan shall be made only in accordance with Sections 14 (relating to recapitalization) and 17 (relating to amendments of the Plan).

4. Eligibility. Each Employee of the Company or any Subsidiary Corporation who on the first day of any Enrollment Period is customarily employed by the Company or any Subsidiary Corporation for more than twenty (20) hours per week, shall become an Eligible Employee on such day.

5. Purchase Rights.

(a) Options shall be granted under the Plan until the earlier of the maximum number of shares of Stock subject to sale pursuant to Options have been sold, or the Plan is terminated.

(b) The Plan shall be implemented under successive Offer Periods. Subject to subsection (c), the first Offer Period will begin on the Effective Date and will end on February 15, 2000.

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(c) Under no circumstances shall any shares of Stock be issued hereunder until such time as (i) the Plan shall have been approved by the Company's stockholders and (ii) the Company shall have complied with all applicable requirements of the Securities Act of 1933 (as amended), all applicable listing requirements of any securities exchange on which shares of the Stock are listed and all other applicable statutory and regulatory requirements.

(d) Each Eligible Employee shall be granted a separate Option for each Offer Period. The Option shall be granted on the Entry Date for the relevant Offer Period and shall be automatically exercised on the last day of such Offer Period.

6. Participation in the Plan.

(a) Each Eligible Employee may elect to participate in the Plan by submitting to the Administrator a completed and executed Authorization Card in accordance with subsection (b). An Eligible Employee who elects to participate in the Plan shall elect on such Authorization Card any whole percentage of Base Pay (such percentage not to exceed fifteen percent (15%)) to be withheld by payroll deduction, which upon an exercise of the Option granted to such Eligible Employee with respect to the Offer Period, shall be contributed to the Company as payment for shares of Stock purchased pursuant to such Option. The deduction rate authorized by any Eligible Employee shall continue in effect for the remainder of the Offer Period and for successive Offer Periods, except to the extent such rate is changed in accordance with the following:

(i) Each Eligible Employee may, at any one time during the period commencing two weeks prior to a Purchase Date, increase (not to exceed fifteen percent (15%)) or reduce his or her percentage of payroll deduction to any whole percentage by filing a new completed and executed Authorization Card with the Administrator (or his or her designate); provided, however, that any such increase or reduction shall only be effective beginning on the first day of the subsequent Offer Period.

(ii) Notwithstanding subsection (i), any Eligible Employee may cease payroll deductions and/or withdraw from participation under the Plan at any time by reducing his or her percentage of payroll deduction to zero percent (0%), except that no Eligible Employee may cease payroll deductions and/or withdraw during the period commencing two weeks prior to a Purchase Date. An Eligible Employee electing to cease payroll deductions and/or withdraw from the Plan must deliver to the Administrator a notice of withdrawal approved by the Administrator (the "Cessation/Withdrawal Election") not later than the date which is two weeks prior to a Purchase Date. Upon receipt of an Eligible Employee's Cessation/Withdrawal Election pursuant to which the Eligible Employee provides notice of his or her intent to withdraw from the Plan, the Company or Subsidiary Corporation will as soon as practicable thereafter pay to such Eligible Employee in cash in one lump sum the balance of payroll deductions credited to such Eligible Employee's account under the Plan, without the payment of any interest thereon, and the Eligible Employee will at that time be deemed to have ceased to participate in the Plan and may only recommence active participation in the Plan by submitting to the Administrator a

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new completed and executed Authorization Card in accordance with subsection (b). Upon receipt of an Eligible Employee's Cessation/Withdrawal Election pursuant to which the Eligible Employee indicates his or her intention to cease participation but does not provide notice of his or her intent to withdraw from the Plan, such Eligible Employee's payroll deductions shall cease as soon as administratively practicable following the Administrator's receipt of his or her Cessation/Withdrawal Election, and his or her Option shall be exercised on the Purchase Date in accordance with Section 8(b).

(b) Except as permitted otherwise by the Administrator in its discretion, an Employee who is an Eligible Employee on the Effective Date must submit his or her Authorization Card to the Administrator during the three week period immediately prior to the Effective Date in order to participate in the first Offer Period under the Plan. Except as permitted otherwise by the Administrator in its discretion, an Employee who is an Eligible Employee on the Effective Date but who does not submit his or her Authorization Card to the Administrator during such three week period or an Employee who becomes an Eligible Employee subsequent to the Effective Date must submit his or her Authorization Card to the Administrator during the two week period commencing one month prior to such Eligible Employee's Entry Date, or during such other period designated by the Administrator in its sole discretion.

(c) An Eligible Employee's Authorization Card shall include express written authorization by the Eligible Employee to the Company to issue shares of Stock purchased under the Plan to an account in the name of such Eligible Employee with a brokerage firm to be designated by the Administrator.

7. Payroll Deductions.

(a) Cash compensation payable to an Eligible Employee who elects to participate in the Plan for an Offer Period shall be reduced each Payday during such Offer Period through payroll deductions by an amount equal to the whole percentage of Base Pay payable on such Payday elected by the Eligible Employee under Section 6.

(b) The amount of each Eligible Employee's payroll deduction shall be held by the Company or Subsidiary Corporation and credited to an account established for such Eligible Employee. Neither the Company nor any Subsidiary Corporation shall pay any interest on the funds credited to an Eligible Employee's account under the Plan.

(c) During a leave of absence from the Company or any Subsidiary Corporation which is approved by the Company or Subsidiary Corporation and which meets the requirements of Treasury Regulation Section 1.421-7(h)(2), an Eligible Employee may continue to participate in the Plan by making cash payments to the Company or Subsidiary Corporation on each Payday equal to the dollar amount of the payroll deduction made for such Eligible Employee for the Payday next preceding the first day of such Eligible Employee's leave of absence.

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8. Grant of Options; Exercise of Options.

(a) Each Eligible Employee shall be granted an Option on his or her Entry Date for the Offer Period. Each Eligible Employee's Option shall be automatically exercised on the Purchase Date for the Offer Period to which such Option relates. The number of shares of Stock subject to an Option shall be the quotient of the total payroll deductions made for the Eligible Employee during the Offer Period divided by the Option Price with respect to such Offer Period, excluding fractional shares of Stock; provided, however, that the number of shares of Stock subject to each Option shall not exceed 10,000 shares.

(b) Except as otherwise provided in subsection (e) and Sections 6(a)(i) and (ii), each Eligible Employee participating in the Plan shall be deemed to have exercised his or her Option on the Purchase Date for each Offer Period in which the Eligible Employee is participating in the Plan, to the extent that the balance of payroll deductions credited to such Eligible Employee's account under the Plan is sufficient to purchase, at the Option Price, whole shares of Stock. No fractional shares of Stock shall be purchased upon the exercise of an Option and any funds credited to such Eligible Employee's account remaining after the purchase of whole shares of Stock upon exercise of an Option shall remain credited to such Eligible Employee's account and carried forward for purchase of shares of Stock pursuant to the exercise of the Option on the Purchase Date relating to the next following Offer Period.

(c) Upon exercise of an Option, the Company shall as soon as practicable thereafter issue to the Eligible Employee such shares of Stock purchased pursuant to subsection (b). Such Stock is initially to be held in the brokerage account established by the Eligible Employee at such brokerage firm as designated by the Administrator and as authorized by the Eligible Employee upon enrollment in the Plan.

(d) If the total number of shares of Stock for which Options are to be exercised on any date exceeds the number of shares remaining unsold under the Plan (after deduction of all shares for which Options have theretofore been exercised), the Administrator shall make a pro rata allocation of the available remaining shares in as nearly a uniform manner as shall be practicable and any balance of payroll deductions credited to the accounts of Eligible Employees which have not been applied to the purchase of shares of Stock shall be paid to such Eligible Employees by the Company or Subsidiary Corporation in cash in one lump sum as soon as practicable, without payment of any interest thereon.

(e) Notwithstanding any provision in the Plan to the contrary, an Eligible Employee shall not be granted an Option:

(i) if, immediately after the Option is granted, such Employee would own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company, any Parent Corporation or any Subsidiary Corporations. For purposes of determining stock ownership under this paragraph, the rules of Code Section 424(d) shall apply and Stock which an Eligible Employee may purchase under outstanding options held by such Eligible Employee shall be treated as stock owned by such Eligible Employee; or

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(ii) which permits such Eligible Employee's rights to purchase stock under the Plan and all other employee stock purchase plans of the Company, any Parent Corporation, or any Subsidiary Corporations subject to Code
Section 423, to accrue at a rate which exceeds $25,000 of the fair market value of such Stock or other stock (determined at the time such Option is granted) for each calendar year in which such option is outstanding at any time. For purpose of the limitations imposed by this subsection, the right to purchase Stock or other stock under an Option or other option accrues when the Option or other option (or any portion thereof) first becomes exercisable during the calendar year, the right to purchase Stock or other stock under an Option or other option accrues at the rate provided in the Option or other option (but in no case may such rate exceed $25,000 of fair market value of such Stock or other stock determined at the time such Option or other option is granted) for any one calendar year, and a right to purchase Stock or other stock which has accrued under the Option or other option may not be carried over to any other Option or other option.

(f) Any Employee who is an officer subject to Section 16(b) under the Securities Exchange Act of 1934, as amended, shall not sell, transfer, or otherwise dispose of any shares of Stock received upon the exercise of the Option granted hereunder for a period of six months after the purchase of such shares.

9. Option Price.

(a) The per share exercise price of each Option (the "Option Price") shall be an amount equal to the lesser of:

(i) 85% of the "Fair Market Value" (as defined below) of a share of Stock on the Participant's Entry Date into the Plan for the relevant Offer Period; or

(ii) 85% of the Fair Market Value of a share of Stock on the Purchase Date corresponding to the Offer Period for which a Participant exercises his or her Option.

(b) For purposes of subsection (a), the Fair Market Value of a share of Stock as of a given date shall be: (A) the closing price of a share of Stock on the principal exchange on which the Stock is then trading, if any, on such date, or, if shares of Stock were not traded on such date, then on the next preceding trading day during which a sale occurred; (B) if the Stock is not traded on an exchange, but is quoted on Nasdaq or a successor quotation system, (X) the last sales price (if the Stock is then listed as a National Market Issue under the NASD National Market System) or (Y) the mean be