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EXHIBIT 10.31
HEALTHCARE ALLIANCE, INC.
CONSULTING AND SERVICES AGREEMENT
THIS AGREEMENT, made and entered into this lst day of January, 1999, by
and between Healthcare Alliance, Inc. (the "Alliance"), and Horizon Medical
Products, Inc. ("Client").
WHEREAS, the Alliance is engaged in the business of providing
consulting and related services to healthcare suppliers in order to ▇▇▇▇▇▇ and
expedite the sales of their products to hospital purchasing groups, physician
organizations, medical services providers and other healthcare suppliers
("Customer"); and
WHEREAS, Client desires to engage the services of the Alliance upon the
terms and conditions hereinafter set forth,
NOW, THEREFORE in consideration of the premises, covenants, and
agreements herein contained, the parties agree as follows:
1.0 ENGAGEMENT. Client hereby engages the Alliance and the Alliance
agrees to extend its reasonable best efforts to assist Client in marketing its
products/services by representing Client to customers with the expressed purpose
of negotiating and executing a purchasing agreement on behalf of Client. It is
the intention of the Alliance not to enter into agreements with clients where
significant competitive overlaps exist.
2.0 COMPENSATION. In consideration of performance of the Services,
Client shall make payment to the Alliance for marketing fees in the amount of
thirty-six thousand dollars ($36,000), annually; three thousand dollars ($3,000)
payable January 1, 1999 and three thousand dollars ($3,000) every month
thereafter, payable through Client's automated payroll system.
In consideration for services hereunder during the term hereof, and upon
approval of such options by the Board of Directors of the Client or by the
Compensation Committee of the Board of Directors, the Client grants an option to
the Alliance for the purchase of Forty-Five Thousand (45,000) shares of common
stock of the Client. Such options will become vested and exercisable by the
Alliance, only if the Client achieves certain amounts of incremental sales
revenues over sales base under the Client's Purchasing Agreement with Premier
Purchasing Partners, L.P. dated March 9, 1998, as amended, ("Purchasing
Agreement"), as follows:
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A. 15,000 shares which will vest and become exercisable on the
date on which the Client's initial $2,000,000.00 in
incremental sales revenues from product sales by the Client
under the Purchasing Agreement exceed the Client's sales base.
B. 15,000 shares which will vest and become exercisable on the
date on which the Client's next additional incremental sales
revenues of $3,000,000.00 (above the $2,000,000.00 in
incremental sales described in paragraph A. above) from
product sales by the Client under the Purchasing Agreement
exceed the Client's sales base.
C. 15,000 shares which will vest and become exercisable on the
date on which the Client's next additional incremental sales
revenues of $4,000,000.00 (above the $2,000,000.00 and the
$3,000,000.00 described in paragraphs A and B above) from
product sales by the Client under the Purchasing Agreement
exceed the Client's sales base.
The sales base for purposes of this provision will be the total sales recorded
by the Client during the twelve months from January 1, 1998 through December 31,
1998 to Horizon customers who are today members of the Premier Purchasing
Partners purchasing group.
All of such unvested options shall become vested and exercisable at an exercise
price of $7.00 per share, at such time as the Client is acquired in a merger
transaction, an asset acquisition (all or substantially all of its assets are
acquired), or a stock acquisition (in excess of 50% of the Client's outstanding
common stock is acquired).
Such options shall continue to be vested and exercisable for five (5) years
after the date on which such options become vested. The exercise price for each
15,000 share option shall be the closing stock price of the Client's common
stock on the date on which such 15,000 share option vests as provided above or
on the next business day thereafter if there is no closing stock price on such
date of vesting. Shares issued to the Alliance upon exercise of such options
will be subject to SEC Rule 144. Such option price and number of shares subject
to such options will be adjusted appropriately by the parties in the event of a
recapitalization or a stock split relating to the Client's common shares. Such
options cannot be assigned or transferred by the Alliance without the Client's
prior written approval.
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2.1 PERFORMANCE INCENTIVE. A performance incentive of five (5) percent
of the annual sales increase over the sales base that results from the
Alliance's efforts will be paid 60 days following the close of the quarter
throughout the terms of any purchasing and/or distribution
agreement/arrangement. The sales base against which this performance incentive
will be measured will be the total sales recorded for the customer (including
members of any purchasing group) for the preceding twelve months prior to any
purchasing agreement. Client agrees to provide Alliance with customer sales
reports on a quarterly basis.
2.2 EQUITY INCENTIVE. An equity incentive in the form of an option to
purchase the Client's common shares will be granted the Alliance according to
the terms contained in Exhibit A. The calculation of shares will be determined
in the manner specified in Exhibit A. Any shares of Client received by Alliance
hereunder will be restricted stock subject to SEC Rule 144.
2.3 PAYMENT OF EXPENSES. Reasonable expenses related to the performance
of services by the Alliance on behalf of the Client will be reimbursed to the
Alliance.
2.4 PERSONNEL. The Services will be provided in accordance with all
applicable laws, rules, regulations, statutes, and ordinances of any
governmental authority applicable thereto. In connection with performing the
Services, the Alliance accepts responsibility for and will furnish all
coordinating management and special projects personnel required to efficiently
perform the Services. These personnel shall be direct agents and employees of
the Alliance. The Alliance will pay all salaries, taxes, insurance, and other
fringe benefits of its personnel performing Services hereunder.
3.0 TERM. This Agreement shall commence on or about January 1, 1999,
and terminate on December 31, 2001. Termination of this agreement shall not
effect payments due Alliance under Section 2.1 for contracts that extend beyond
December 31, 2001.
3.1 RENEWAL. This Agreement will be renewed only upon the written
approval of the parties hereto.
3.2 NON-CANCELABLE. This Agreement is non-cancelable by Client, during
its term except for breach of a material provision of this Agreement by the
Alliance, or the death/departure or disability of either of the Alliance's
principals, ▇.▇. ▇▇▇▇▇▇▇ or ▇.▇. ▇▇▇▇▇▇▇▇▇. In the event of breach, Client
shall, by written notice, give the Alliance sixty (60) days commencing with
receipt of such notice, to correct the alleged breach. In the event the alleged
breach is not so corrected within the sixty (60) day period, Client may
thereafter deem this Agreement immediately terminated.
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4.0 EXCLUSIVITY AND RESTRICTIVE COVENANTS. Client acknowledges that the
Alliance has devoted considerable time and expense in developing the business
that provides services within the scope of the Agreement. The fees to be paid to
the Alliance for services provided is based in part on the assumption that
Client will not employ or engage others, with the exception of HMP employees, to
provide services similar to the services provided by the Alliance during the
term of the engagement.
5.0 RELATIONSHIP OF PARTIES. The parties acknowledge and agree that in
all respects in providing Services hereunder, the Alliance shall be an
independent contractor and shall act as an extension of Client.
6.0 REPRESENTATIONS AND WARRANTIES OF THE ALLIANCE. The Alliance
represents and warrants that it is an Equal Opportunity employer and does not
and shall not discriminate against any of its employees or applicants for
employment on the basis of race, color, creed, sex, national origin, physical
condition or age. The Alliance will furnish Client with all information, data
and certificates which may be required by Client in order for it to comply with
governmental non-discrimination requirements.
6.1 Neither the Alliance nor any shareholder, director, officer or
employee of is now or ever has been the subject of any governmental
investigation into the legality or propriety of actions, practices, or
procedures of the Alliance.
6.2 Neither the Alliance nor the Client nor any shareholder, director,
officer or employee of the Alliance or Client, has paid or promised to pay any
remuneration to any employee of Alliance or the Client in consideration of
obtaining this Agreement.
7.0 CONFIDENTIALITY. The Alliance and Client acknowledge that billing
information, written procedures, manuals and methods are confidential and are
the property of the respective party. All files, records and documents relating
to the Alliance and the Client's business, to which the other has access, shall
remain the exclusive property of the respective party and shall not be used
without the written consent of that respective party.
8.0 GENERAL. This Agreement supersedes all prior agreements and
understandings between the Alliance and Client and its directors, officers,
shareholders, employees, attorneys, agents or representatives and constitutes
the entire Agreement between the parties. There are no representations,
warranties, or commitments other than those expressed herein.
8.1 No modification or amendment of, or waiver under, this Agreement
shall be valid unless in writing and signed by both parties.
8.2 The validity, construction, interpretation and enforceability of
this Agreement and the capacity of the parties shall be determined and governed
by the laws of the State of Illinois.
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8.3 This Agreement shall be assigned in the event of a change of
ownership.
8.4 If any provision of this Agreement shall be held invalid under
applicable laws, such invalidity shall not affect any other provision of this
Agreement that can be given effect without the invalid provisions, and, to this
end, the provisions hereof are severable.
8.5 Any notice required or permitted to be given to either party in
writing under this Agreement may either be personally delivered or sent by
registered or certified mail, return receipt requested, postage paid, addressed
to each party as follows:
TO ALLIANCE: Healthcare Alliance, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
TO CLIENT: Horizon Medical Products, Inc.
Seven North Parkway Square
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
8.6 The Alliance and Client each agree to indemnify and hold the other
harmless from any court costs and reasonable attorney's fees which each may
sustain as a result of, or in connection with, either directly or indirectly,
the other's breach or violation of this Agreement.
8.7 Client represents and warrants to the Alliance that it is not a
party to or bound by, and its Agreement with the Alliance or its disclosure of
any information to the Alliance, will not violate or breach any employment,
retainer, consulting, license, non-competition, non-disclosure, or other
agreement or understanding between Client and any other person, partnership,
corporation, joint venture, association or entity.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HORIZON MEDICAL PRODUCTS, INC. HEALTHCARE ALLIANCE, INC.
By: By:
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Title: Title:
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Date: Date:
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EXHIBIT A
CONSULTING AND SERVICES AGREEMENT
BETWEEN HEALTHCARE ALLIANCE, INC. AND
HORIZON MEDICAL PRODUCTS, INC.
EQUITY INCENTIVE SCHEDULE
Having been approved by the Client's Board of Directors or the Compensation
Committee of the Board of Directors, the Client hereby grants options to
Healthcare Alliance to acquire from the Client shares of the common stock of the
Client, as provided below. Such options will vest and become exercisable for
each of the following purchasing agreements: (i) After Healthcare Alliance's
procurement of such purchasing agreement for the client and both parties have
executed such purchasing agreement and (ii) on the date on which the Client's
cumulative incremental sales revenues from product sales by the Client under
such purchasing agreeement exceed by the amount of $1,000,000 the Client's sales
base. The sales base for purposes of this provision will be the total sales
recorded by the Client for the customer who has entered into the group
purchasing agreement (including without limitation sales to members of any
purchasing group described in the purchasing agreement) for the twelve months
immediately preceding the effective date of such purchasing agreement. The
number of shares of the Client's common stock subject to such options for each
such purchasing agreement will be the percentage set forth below for such
purchasing agreement times the number of outstanding common shares of the Client
on the effective date of such purchasing agreement. The option price for the
options for each such purchasing agreement shall be the closing stock price of
the common shares of the Client on the effective date of such purchasing
agreement or on the next business day thereafter if there is no closing stock
price on the effective date. Such options cannot be assigned or transferred by
Healthcare Alliance without the Client's prior written approval. If any such
options become vested and exercisable, such options shall continue to be vested
and exercisable for five (5) years after the date on which such options vested.
Such option price and number of shares subject to such options will be adjusted
appropriately by the parties upon a recapitalization or stock split with respect
to the common shares of the Client.
HMP, INC.
STOCK OPTION GROUP AGREEMENT GOAL
0.50% Outstanding Common Stock* Novation - Includes UHC
0.25% Outstanding Common Stock* ▇▇▇▇▇
0.25% Outstanding Common Stock* Consorta
To be determined Various other group purchasing
agreements, as individual
agreements or in combination
as defined and agreed to by
the parties.
*Calculated as described above
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Total Shares Available: One Percent (1.00%) Outstanding Common Stock (calculated
as described above); not withstanding any additional groups defined and agreed
to by the parties.
The Alliance shall be granted their shares in a manner as agreed upon by both
parties. The provisions of this Exhibit A will not be applicable to a group
purchasing agreement that was entered into by a company prior to its acquisition
by the Client.
HORIZON MEDICAL PRODUCTS, INC. HEALTHCARE ALLIANCE, INC.
BY: BY:
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DATE: DATE:
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