CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made this 1st day
of September, 1996, and is by and between Universal Document
Management Systems, Inc. ("UDMS"), an Ohio corporation, and
Madison Financial Group Ltd. /f/k/a/ DMG Equity Partners LLC
("Madison"), an Ohio limited liability company.
In consideration of the mutual promises hereinafter contained,
UDMS and Madison agree as follows.
1. Consulting Services. Madison agrees to provide the following
services to UDMS: (a) consulting services in connection with
potential acquisitions, corporate reorganizations and
restructurings, and private or public offerings, including
preparing reports, memoranda, analyses, and other documents for
management relating thereto; (b) preparing strategic plans in
connection with potential acquisitions, corporate reorganizations
and restructurings; (c) search and screening services in
connection with management personnel hirings; and (d) performing
such other activities which UDMS may reasonably request from time
to time.
2. Consulting Fees. In consideration of the services to be
provided by Madison to UDMS under this Agreement, UDMS agrees to
pay Madison the following compensation:
(a) As of September 1, 1996, UDMS grants Madison a warrant to
purchase 15% of the outstanding shares of UDMS stock as of the
date of this Agreement (the "Warrant"), at a price of $465,100 for
the Warrant (see Exhibit A). The Warrant shall be exercisable for
a period of three (3) years beginning on the date UDMS completes a
public or private offering of its stock. In the event that
MedPlus, Inc. (the parent company of UDMS) issues additional
consideration to any or all of the selling shareholders of UDMS in
connection with the terms and conditions of the Merger Agreement
between MedPlus, Inc. and UDMS dated December 29, 1995, then 15%
of such additional consideration shall be added to the price of
the Warrant. Notwithstanding the provisions of this Section 2(a),
however, if Madison terminates this Agreement prior to the
completion of a public or private offering of UDMS stock or if
UDMS terminates this Agreement more than ninety (90) days prior to
completion of a public or private offering of UDMS stock, the
Warrant shall cease to be effective and shall not be exercisable
by Madison.
(b) Provided this Agreement has been in full force and effect for
six (6) months, UDMS shall pay Madison a consulting fee of
$50,000. No consulting fee, nor any prorated consulting fee,
shall be paid to Madison if this Agreement is terminated by either
party for any reason before the expiration of said six months.
(c) In addition to the consideration described above, UDMS agrees
to reimburse Madison for all reasonable out-of-pocket expenses
incurred by Madison in connection with the performance of its
services under this Agreement. In the event the travel expenses
for any single trip are reasonably expected to exceed $2,500,
Madison shall be required to obtain prior written approval of UDMS
prior to incurring such expenses.
3. Term. The term of this Agreement shall commence as of the
date hereof and shall terminate upon the first to occur of (i)
written termination by either UDMS or Madison upon thirty (30)
days advance notice; (ii) the completion of a public or private
offering of UDMS stock; or (iii) two years from the date hereof.
4. Status of Madison. It is understood that Madison is an
independent contractor and is not an employee, agent, partner or
representative of UDMS, and shall not hold itself out to the
public as an employee, agent, partner or representative of UDMS.
5. Noncompetition and Confidentiality.
(a) Noncompetition. Madison agrees and covenants that during the
Noncompetition Period (as defined in Section 5(c)) and except for
any services performed for or on behalf of UDMS or any affiliates
thereof pursuant to the terms hereof, it will not, directly or
indirectly, engage in any business of the same nature as the
business in which UDMS or any of its affiliates now or hereafter
does business. Notwithstanding the foregoing, Madison may pursue
any business opportunity, whether or not of the same nature as the
business in which UDMS or any of its affiliates now or hereafter
engages, upon written notification from UDMS that UDMS does not
wish to engage in such business opportunity. Madison shall also
be permitted and entitled to beneficially own or acquire, for
investment purposes only, not more than five percent (5%) of the
outstanding capital stock of any publicly held enterprise engaged
in any business in which UDMS is engaged.
(b) Other Employees. Madison agrees that, during the
Noncompetition Period, it shall not, directly or indirectly, for
its own account or as agent of any business entity, employ,
engage, hire, offer to employ, engage, or hire or otherwise entice
or, in any other manner, persuade any employee, officer,
executive, or agent of UDMS or its affiliates to discontinue his
or her relationship with UDMS or its affiliates.
(c) Noncompetition Period. As used herein, the term
"Noncompetition Period" shall mean the period beginning on the
date hereof and ending six (6) months after the termination of
this Agreement pursuant to Section 3 hereof.
(d) Confidentiality. Madison acknowledges that it will come into
possession or knowledge of Confidential Information, as defined in
Section 5(e), relating to the business of UDMS. Except as
specifically provided otherwise in this Agreement, Madison shall:
(1) hold all Confidential Information in confidence; (2) not
disclose or disseminate any Confidential Information; (3) not copy
or reproduce any Confidential Information, in whole or in part;
and (4) make the Confidential Information available only to its
employees, representatives and agents who have a reasonable need
for such Confidential Information. UDMS acknowledges that it may
be necessary for Madison to disseminate certain confidential
information to third parties in the course of its duties
hereunder. Prior to disclosing any Confidential Information to
third parties, Madison shall give UDMS written notice of the
identity of the third party and the information to be disclosed,
shall require the third party to enter into a confidentiality
agreement in a form approved by UDMS, and shall deliver an
original signed copy of said confidentiality agreement to UDMS.
Madison shall not use any Confidential Information for any purpose
not related to its services under this Agreement. This Section
5(d) shall survive the termination of this Agreement.
(e) Confidential Information. "Confidential Information" shall
include, but is not limited to, the following types of information
regarding UDMS or its affiliates: corporate information,
including, without limitation, contractual arrangements, plans,
strategies, tactics, terms, conditions, policies, (written or
otherwise), resolutions, and any litigation or negotiations;
marketing information, including, without limitation, sales or
product plans, strategies, tactics, methods, customers (and any
information concerning customers), prospects, or market research
data; financial information, including, without limitation, cost
and performance data, debt arrangement, equity structure,
investors, and holdings; personnel information, including, without
limitation, personnel lists, resumes, personnel data,
organizational structure and performance evaluations; and
technical information, including, without limitation, patents,
copyrights, source codes, proprietary information, trade secrets,
methods, systems, and product specifications. Confidential
Information does not include information that:
(i) is in the public domain or becomes known in the industry other
than as a result of disclosure by Madison or its affiliates or
representatives;
(ii) was rightfully available to Madison on a non-confidential
basis prior to its disclosure to Madison by UDMS or its
affiliates, agents or representatives;
(iii) becomes rightfully available to Madison on a
non-confidential basis from a source other than UDMS or its
affiliates, agents, or representatives, provided that such source
is not bound by a confidentiality agreement with UDMS or its
affiliates, or otherwise prohibited from transmitting the
information to Madison by contractual, legal, or fiduciary
obligation.
(f) Corporate Documents. Madison agrees that all documents that
now or hereafter come into its possession relating to UDMS or its
affiliates in any manner, or to any of the foregoing matter
including, without limitation, memoranda, notebooks, data sheets,
records, financial statements, and documents, are and shall remain
the property of UDMS and that they and all copies thereof shall be
surrendered to UDMS upon termination of this Agreement.
(g) Equitable Remedies. In the event of a breach by Madison of
any of the provisions of this Section 5, UDMS, in addition to any
other remedies it may have at law or in equity, shall be entitled
to a permanent injunction in order to prevent or restrain any such
breach by the Madison and/or by Madison affiliates, employees,
partners, agents, representatives, or any and all persons directly
acting for or with Madison.
6. Indemnification. UDMS agrees to indemnify and hold harmless
Madison for any liabilities, claims, demands, or obligations
asserted against Madison or UDMS by any third party in connection
with the performance by UDMS, or any of its employees or
representatives, of consulting services pursuant to this
Agreement.
7. Entire Agreement. This Agreement contains the parties' entire
agreement regarding the consulting services to be performed by
Madison to or for the benefit of UDMS and supersedes any prior or
oral or written understandings and agreements. The parties can
modify this Agreement only by a writing signed by Madison and
UDMS.
8. Survival. The obligations contained in Sections 2 and 5 of
this Agreement shall survive termination of this Agreement.
9. Assignment. Neither party shall have the right to assign any
rights or obligations under this Agreement without the prior
written consent of the other party.
10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
UNIVERSAL DOCUMENT MANAGEMENT SYSTEMS, INC.
By: /s/ Xxxxxx X. Present II Date: September 1, 1996
Name: Xxxxxx X. Present II
MADISON FINANCIAL GROUP LTD.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx Date: September 1, 1996
Name: Xxxxxxxxxxx X. Xxxxxxxx
Exhibit A
UDMS
Calculation of Value
As of September 1, 1996
Universal Document Management Systems, Inc.
Calculation of Value of Warrant
September 1, 1996
Value of Universal Document Management Systems, Inc.
Purchase Price:
Original cash & stock consideration $1,700,000
Contingent cash & stock consideration 280,000
Net liabilities assumed by MedPlus, Inc. 357,283
_________
2,337,283
Professional fees paid by MedPlus, Inc.
related to acquisition 112,569
Contribution Margin:
Stub period, 12/13/95-12/31/95 206,179
Eight months ended 8/30/96 183,897
Goodwill amortization, 12/13/95-8/30/96 (72,616)
_________
317,460
_________
Total $2,767,312
_________
Value of Warrant
Value of UDMS as calculated above $2,767,312
15%
_________
15% of Calculated Value 415,100
MFG Consulting Fee reimbursement 50,000
_________
Value of Warrant $465,100
_________
EXHIBIT 21
Subsidiaries of MedPlus, Inc.
1. FutureCORE, Inc., an Ohio corporation, doing business as such
2. Universal Document Management Systems, Inc., an Ohio
corporation, doing business as such
