EXHIBIT 10.3
5Net5 Corp.
000 Xxxxxx Xx., Xxxxx 0
Xxx Xxxx, Xxx Xxxx 00000
Horizon Pharmacies, Inc.
000 X. Xxxx Xx. Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx XxXxxx
President and CEO
Re: Software Development Agreement
Dear Xx. XxXxxx:
This will confirm the arrangements, terms and conditions pursuant to
which 5Net5 Corp. ("Consultant") has been retained as a Consultant to provide
services (as described below) to Horizon Pharmacies, Inc. (the "Company").
The undersigned hereby agrees to the following terms and conditions:
1. DUTIES OF CONSULTANT. During the term of this Agreement, Consultant
will provide consulting services to the Company as requested. These services
will be performed on a best efforts basis and will include, without
limitation, designing of plans for, and implementation oversight of,
technology and Internet strategies, all with the objective of accomplishing
the business and financial goals of the Company. The Company understands that
it is engaging Consultant principally to design plans for technology,
e-commerce, marketing, and information gathering systems. As such, Consultant
shall be responsible for the creation of detailed plans and e-commerce
platform with written specifications (within 100 days) for the construction
and creation of detailed plans in writing, the systems and processes
described below in subpoints A through C. Consultant will not be responsible
for the purchase of, or payment for, any equipment, hardware or software,
additional consulting or installation services, or any other expenditure
necessary for the completion and implementation of the systems, strategies,
and overall platform designed by Consultant. In each case, Consultant will
exercises its best efforts to accomplish the goals established by the Company
and shall comply with all applicable laws in connection with the performance
of this Agreement. All deliverables and other work product created by
Consultant under this Agreement will be considered "work made for hire" under
applicable law, Consultant hereby irrevocably assigns to the Company without
further consideration, all of Consultant's right, title and interest in and
to that those deliverables and work product, including all intellectual
property rights therein. Consultant agrees to execute any documents and take
any other actions reasonably requested by the Company to document and
evidence the Company's ownership thereof. Consultant will indemnify, defend
and hold harmless the Company from and against any and all claims that any
such deliverable or work product infringes the intellectual property rights
of any third party.
A. WEBSITE DESIGN: Consultant shall design viable plans in writing that
are acceptable to the company for the infrastructure of a website for
the Company with four main functionalities: (1) e-commerce, (2) health
information and content provision, (3) customer/visitor information
gathering systems, and (4) advertising and Internet traffic direction.
i. E-COMMERCE FUNCTIONALITY: Consultant will design plans for
systems which enhance current e-commerce capabilities on the Company's
website and incorporate affinity marketing programs described below.
ii. HEALTH INFORMATION AND CONTENT: Plans for the website will be
designed to maximize customer interest through the provision of
targeted health information and content offerings tailored to the
Company's customer base.
iii. CUSTOMER/VISITOR INFORMATION GATHERING SYSTEMS: Plans will be
designed for systems to monitor all aspects of traffic and viewing
patterns. Comprehensive information on what visitors see, how long they
visit each page, how they interact with the site, and what they
purchase will become the basis for targeted, and individual, marketing
programs.
iv. ADVERTISING AND INTERNET TRAFFIC DIRECTION STRATEGIES: Plans
will operate on two levels: (1) on the Company's website and (2) on
other websites. On the Company's website, Consultant will design an
advertising program to allow other companies to purchase media. In
addition, programs will be designed to increase traffic to the
Company's website. On other websites, Consultant will design plans for
an advertising program to increase brand recognition and exposure for
the Company's e-commerce initiatives.
B. BRANCH-TO-HOME OFFICE INFORMATION DISTRIBUTION SYSTEM: Consultant
will design plans for a system, to work in conjunction with the
Affinity Marketing Programs described in subpoint C below, to
distribute customer purchase information for the branch locations to a
home office central database. This system will have three parts: (1)
hardware and system architecture, (2) software, (3) procedures.
i. HARDWARE AND SYSTEM ARCHITECTURE: The basic architecture will
encompass smartcards, card readers, servers in branches to collect
data, frame relay communications from branch offices to the home
office, and a central home office server to house information
databases. Consultant must evaluate current technology systems and give
report on current compatibility with the architecture being designed
ii. SOFTWARE: Systems will be designed to transmit and database
customers purchase information at the branch locations and in the home
office central database.
iii. PROCEDURES: Consultant will design plans for operating
procedures to accompany the hardware and software portions of the
communications system.
C. AFFINITY MARKETING PROGRAMS: Consultant's affinity marketing program
will have four main objectives: (1) communicating with customers, (2)
tracking customer demands and buying patterns, (3) driving customers to
demand and purchase higher-margin products and to visit, and purchase
items at, the Company's e-commerce website, (4) increasing
customer/Company bonds and loyalty. Consultant shall design technology
and marketing systems, to include smart card programs, customer
purchase information distribution systems between the branches and the
home office, and online marketing program.
i. COMMUNICATING WITH CUSTOMERS: Programs will focus on obtaining
demographic and contact information from customers. Systems will be
designed to reach customers via email, via direct mail, and via the
Company's e-commerce website.
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ii. TRACKING CUSTOMERS: Plans will be designed to identify
individual customers at the point-of-sale through smartcards and on the
Company's website to allow more effective marketing of products (i.e.,
by learning what type of customer buys what products, which customers
visit which locations, how often customers purchase, etc.) By
identifying purchases on an individual basis, the Company will have the
ability to clearly see the correlation between customer purchases and
can more accurately design marketing and inventory programs to maximize
purchases of higher-margin items and items available for purchase on
the Company's website.
iii. DRIVING CUSTOMERS: Plans will be developed to encourage
purchases of higher-margin merchandise and items available for purchase
on the Company's e-commerce website.
iv. INCREASING CUSTOMER LOYALTY: Thorough knowledge of the
customer base will allow the Company to more specifically design its
product offerings to the demands of its customers, and more
specifically tailor customer service, resulting in more satisfied and
loyal customers.
2. COMPENSATION:
A. As compensation for the services to be performed by Consultant
described in paragraph 1 above, Consultant shall be compensated with a
grant of 300,000 warrants by the Company at market price of the
business day previous to closing with performance vesting as follows:
i. 150,000 warrants, each to purchase one share of the common
stock of the Company at market price of the business day previous to
closing, vested upon signing of the 5x5net corporation agreement.
ii. Within two (2) business days after the 45th day the publicly
traded common stock of the Company closes at a market price greater
than, or equal to, a 45 calendar day trailing average of $4.00 per
share the Company shall vest to the Consultant 50,000 warrants, each
to purchase one share of the common stock of the Company as granted
above.
iii. Within two (2) business days after the 45th day the publicly
traded common stock of the Company closes at a market price greater
than, or equal to, a 45 calendar day trailing average of $5.00 per
share the Company shall vest to the Consultant 50,000 warrants, each
to purchase one share of the common stock of the Company as granted
above.
iv. Within two (2) business days after the 45th day the publicly
traded common stock of the Company closes at a market price greater
than, or equal to, a 45 calendar day trailing average of $6.00 per
share the Company shall vest to the Consultant 50,000 warrants, each
to purchase one share of the common stock of the Company as granted
above.
v. The following are the terms and conditions of all warrants on
the Company's common stock to be delivered to the Consultant by the
Company:
i. These warrants shall contain a cashless exercise
provision satisfactory to Consultant.
ii. The shares underlying all warrants shall be voting
common stock of the Company after vesting
iii. Upon written notice to the Company by the Consultant
(or its permitted designee), the Company shall deliver
within twenty (20) business days certificates
representing all of the shares underlying the warrants
then being exercised. Such certificates shall be duly
endorsed for transfer to the Consultant (or its
permitted designee(s)) or accompanied by properly
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executed stock powers. The Company shall at that time
deliver good and valid title to said shares, free and
clear of any and all liens, claims, charges, and
encumbrances of any nature whatsoever.
iv. The company shall grant piggyback registration rights in
accordance to the SEC rules and regulations.
Once effective, the Company covenants and agrees to use
its best efforts to maintain the effectiveness of the
Registration Statement until the earlier of (i) the date
that all of the Registrable Securities have been sold
pursuant to a Registration Statement or Rule 144 of the
General Rules and Regulations promulgated under the Act
("Rule 144"), or (ii) the date that the Holders of the
Registrable Securities receive an opinion of counsel to
the Company that all of the Registrable Securities may
be freely traded (without limitation or restriction as
to quantity or timing and without registration under the
Act) pursuant to Rule 144 or otherwise.
v. the Warrants shall be immediately forfeited upon any
transfer or assignment by the Consultant, or any
transferee or assignee of the Consultant, to any person
or entity not qualifying as an "accredited investor"
(non-employees) under Rule 501.
vi. A consulting fee of $10,000 per month for one (1) year,
payable no later than the 10th calendar day of each month; provided,
however, that the first month's fee shall be payable to Consultant on
February 1st, 2000. If the publicly traded common stock of the Company
closes at a market price greater than, or equal to, $5.00 for ten (10)
trading days, this consulting fee shall become $20,000 per month for
the remainder of the period of this agreement. In addition, the Company
shall pay the Consultant retroactively an additional $10,000 for each
month of this agreement prior to the month when payment of the $20,000
consulting fee is begun under the above provision.
vii. The Consultant shall be responsible for placing or brokering
all advertising on the Company's website with approval in writing by
the company, for a period of three (3) years from the date of this
agreement and shall receive 15% of gross revenue from such advertising
fees that and will be paid within 30 days upon receipt of said revenues
by the Company. Consultant shall receive an additional 15% on
e-commerce advertising fees that the consultant directly contracts.
B. The Company shall reimburse non-ordinary expenses, with advanced
company approval in writing, consultant immediately upon request for all
reasonable and necessary out-of-pocket expenses incurred by Consultant in
connection with the rendering by Consultant of the services provided in this
Agreement upon presentation of vouchers and proof of expenses incurred.
3. TERM. Unless otherwise extended by the Board of Directors of the
Company, this Agreement shall terminate upon one year from the date the
Company executes this Agreement; provided no substantial breach of contract.
4. CAPITAL EXPENDITURES. The consultant is not responsible for any
capital or other expenditures necessary for the completion of the plans for
technology, e-commerce, marketing, and information gathering systems to be
designed by the Consultant as described in paragraph 1 above. The Company
recognizes that such expenditures are likely to include, without limitation,
website programming, website hosting, information/data feeds, communications
lines and equipment, and
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installation service. Company is responsible for implementation,
installation, ongoing maintenance and support of all hardware, software, and
systems. Company is responsible for programming, construction, support,
hosting, connectivity, content fees, data fees, and all other expenses
relating to the construction and ongoing maintenance of its website solely at
the companies discretion.
5. AVAILABLE TIME. Consultant shall make available such time as
reasonable to both parties to perform its obligations under this Agreement.
6. RELATIONSHIP. Nothing herein shall constitute Consultant as an
employee or agent of the Company, except to such extent as might hereinafter
be agreed in writing upon for a particular purpose. Except as might
hereinafter be expressly agreed, Consultant shall not have the authority to
obligate or commit the Company in any manner whatsoever.
7. CONFIDENTIALITY. Without the prior written consent of the Company,
Consultant will not at any time, directly or indirectly, use, reproduce or
disclose any trade secrets, know-how or other information provided to
Consultant by or on behalf of the Company in connection with this Agreement
unless and until such information becomes publicly known through no fault of
Consultant. All information regarding the Company's customers, suppliers,
strategies, technology and plans will remain the sole property of the Company
and Consultant will maintain the confidentiality thereof in accordance with
this Section.
8. ASSIGNMENT. This Agreement shall not be assignable by any party for
any reason whatsoever without the prior written consent of the other party,
which consent may be arbitrarily withheld by the party whose consent is
required; provided, however, Consultant may assign its rights under this
Agreement to any funds payable to it, to common stock of the Company issuable
to it or to warrants of the Company issuable to it.
9. GOVERNING LAW. This Agreement shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said State without reference to
principles of conflicts of law.
10. SEVERABILITY. In the event any provision of this Agreement shall be
deemed invalid by a court of competent jurisdiction, such invalidity shall be
limited solely to the specific term or provision invalidated by such court
and, nevertheless, the balance of this Agreement shall remain in full force
and effect according to its terms.
11. WAIVER. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate as a waiver of any such breach of any
provision of this Agreement by any party.
12. ENTIRE AGREEMENT, AMENDMENT. The terms and provisions of this
Agreement shall constitute the entire Agreement between the Company and
Consultant with respect to the subject matter hereof and shall supersede any
and all prior agreements or understandings between the parties whether
written or oral. This Agreement may be amended or modified only by a written
instrument executed by the parties.
13. DISPUTE PROCEDURE. Any dispute, claim or controversy arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in New York, New York
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administered by the American Arbitration Association under its Commercial
Arbitration Rules. The parties further agree that they will abide by and
perform any award rendered by the Arbitrator(s). Judgment upon any such award
rendered may be entered in any court having jurisdiction thereof.
14. TERMINATION. A one-year (12 month) contract from the software
agreement date. Either party can terminate after one year by providing 30 day
written notice. After six months (180 days) contract will become null and
void if funding for capital requirements of this project are not received
from a reputable broker/dealer with terms and conditions acceptable to the
company. The company may also terminate this agreement upon ten days prior
written notice to Consultant if Consultant materially breaches this Agreement
and fails to cure such breach within thirty days after the Company gives
Consultant written notice of such breach. Upon such termination for cause,
the Company will pay the cash consulting fee at the applicable rate set forth
above for services rendered through the termination date. The company may
also terminate this agreement if the following criteria are not met: 1)
consultant collects $25,000 gross revenue for the company 2) consultant
provides company research reports and distribution to institutional investors
and the e-commerce market and 3) the capital required for the plan accepted
by the company from 5net5 presented and accepted by Horizon must be raised
within 6 months.
15. ADDITIONAL ELEMENTS. The Consultant shall cause an equity research
report on the Company to be written during the term of this agreement, and
will cause that equity research report to be distributed to institutional and
Internet clients. The Consultant shall post this equity research report to
its own website during the term of this agreement. The Company will provide
the Consultant free advertising space on the Company's website during the
term of this agreement.
If the foregoing is acceptable, please date, execute and return the enclosed
copy of this letter.
Very truly yours,
5NET5 CORP.
AGREED AND ACCEPTED:
HORIZON PHARMACIES, INC
By: /s/ Xxxxx Xxxxxxx
--------------------
Name: Xxxxx Xxxxxxx
Title: President
By: /s/ Xxxxx X. XxXxxx
------------------------
Name: Xxxxx X. XxXxxx
Title: President & CEO
Date of Execution: 2/1/2000
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