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[OPTIMUM HEALTH SERVICES LETTERHEAD]
Mr. X. Xxxxxx XxXxxxxx
Chairman & Chief Executive Officer
Complete Wellness Centers, Inc.
000 00xx Xxxxxx X.X.
Suite 200
Washington, D.C. 20001
Dear Xxx,
This letter when executed by both parties will evidence the agreement ( the
"Agreement") Between Optimum Health Services, Inc. ("OHS") and Complete Wellness
Centers, Inc. ("CWC") with respect to the operational relationship between the
companies following the spin-off of OHS from CWC. The terms of our understanding
are as follows:
1) Term: The term (the "Term") of the Agreement shall be for ten (10) years.
The Agreement may be terminated by mutual written agreement at any
time. Either party may terminate this contract for cause with 30
days notice. Cause shall be defined as a material breach of any term
of this agreement.
2) Responsibilities:
A) CWC shall provide the following services to OHS:
1) Financing assistance- assisting in the raising of capital,
preparation of public filings, investor relations.
2) Legal Support- drafting and reviewing of employment
agreements, managed care contracts, and other agreements.
3) Strategy - assisting in the development of operational
strategies.
4) Mergers and acquisitions- assisting in the completion of
various merger and acquisition transactions.
5) Wellness products and services- CWC shall make available to
OHS, on a mutually agreed upon discount, the use of its
products and services for its networks, including
Nutri/Systems, SMOKENDERS, etc., subject to applicable legal
limitation(s). OHS has right of first refusal in selling these
products to managed
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care organizations (including HMO's) in their existing
geographic markets if CWC is not already selling in that
market to such customers.
6) Miscellaneous- CWC shall make available to OHS, on a cost
basis, other goods and services that it shall acquire or
develop during the term of the Agreement.
7) Communication- OHS management shall make every effort to
coordinate with CWC" management with respect to the execution
of the aforementioned items, including participation in weekly
telephone conferences, semiannual strategic conferences, and
other meetings as necessary.
B) OHS shall provide the following services to CWC:
1) Credentialing- OHS shall assist in credentialing the CWC
affiliated professionals.
2) Management Information Services ("MIS")- OHS shall assist in
the provision of the MIS division for CWC, including hosting
the Website, data transfer and storage, technical support,
etc. Neither OHS, its subsidiaries nor officers shall be held
liable for any losses, financial or other, due to any
corporate MIS issues including downtime, disasters, and
sabotage. It will be the responsibility of CWC to maintain
appropriate property and business loss insurance coverage for
the IS systems maintained at any optimum office location.
3) Corporate compliance- OHS shall assist in providing, through
Xxxxx Xxxxxxx, who shall remain the Chief Corporate Compliance
Officer of CWC, overall supervision of CWC's corporate
compliance program. Neither OHS its subsidiaries nor officers,
including Xxxxx Xxxxxxx, shall be held liable for any CWC, its
affiliates or clinics compliance issues or allegations.
4) Managed Care expertise- OHS shall assist CWC in the
procurement of managed care contracts for its affiliated
clinics. Including supervising Xxxx Xxxxxx in the
aforementioned task.
4A) Managed Care financial modeling.
5) Managed care contracts- OHS shall provide managed care
contracts for eligible CWC clinics (where eligible shall be
defined as "meeting the standards of the medical clinics on
OHS' network"). OHS shall give priority in a defined
geographic area
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and under contract under the same terms and conditions as
other clinics (including price) with the respect to the
managed care contracts with eligible CWC affiliated clinics.
7) Miscellaneous- OHS shall make available to CWC, on a cost
basis, other goods and services that it shall acquire or
develop during the term of the Agreement.
8) Communication- CWC's management shall make every effort to
coordinate with OHS's management with respect to the execution
of the aforementioned items, including participation in weekly
telephonic conferences, semiannual strategic conferences, and
other meetings as necessary.
3) Compensation
A) CWC shall compensate OHS for services as follows (to be
reviewed annually):
1) Credentialing- Ninety dollars ($90.00) per M.D.
professional credentialed and seventy-five dollars
($75.00) per non-M.D. professional credentialed.
Reimbursement is to be made to OHS no later than thirty
(30) days after the end of the month in which service is
rendered or an invoice is presented.
2) MIS- Time and cost of materials based upon the mutually
agreed upon budget. (Exhibit A)
3) All other items- Ten thousand dollars ($10,000.) per
month.
4) Expenses- CWC shall reimburse OHS for all mutually
agreed upon out of pocket expenses. In addition, CWC
shall reimburse OHS for all telephone, mailing, and
delivery charges, etc. All reimbursement shall be made
to OHS no later than thirty (30) days after the end of
the month that service is rendered.
5) Warrants - CWC shall grant to OHS 5,000 seven (7) year
warrants per year vested at 1,000 warrants per year for
five years at the closing bid price of the CWC common
stock as reported by the NASDAQ Exchange on the
anniversary date of this agreement
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B) OHS shall compensate CWC for services as follows ( to be
reviewed annually):
1) All items- Ten thousand dollars ($10,000.) per month.
2) Expenses- OHS shall reimburse CWC for all mutually
agreed upon out of pocket expenses. In addition, OHS
shall reimburse CWC for all telephone, mailing, and
delivery charges, etc.
3) Warrants - OHS shall grant to CWC 5,000 seven (7) year
warrants per year vested at 1,000 warrants per year for
five years at the closing bid price of the OHS Common
Stock as reported by the exchange on which the stock is
traded on the anniversary date of this agreement
4) Covenant Not to Compete; Not to Solicit
A) During the Agreement Term and for the period of six (6) months
thereafter, CWC and OHS will not without the prior written
permission of the other company in each instance directly or
indirectly carry on or participate in a business the same as
or similar to or in competition with that conducted or engaged
in by the other company or any of its subsidiaries or
affiliates. The same as or similar to or in competition with
shall be defined as any company engaged in the business of
medical integration of chiropractic practices, weight
management programs, smoking cessation programs, the provision
of practice management services to chiropractic-medically
integrated facilities and the provision of integrated delivery
system benefits and management services (alternative and
traditional providers networks) to payors.
B) The term "carry on or participate in a business the same as or
similar to that conducted or engaged in by either company or
any of its subsidiaries or affiliates" shall include directly
or indirectly, doing any of the following listed acts, other
than carrying on or engaging in activities expressly permitted
under this Agreement:
(i) carrying on or engaging in any such business as a
principal, or solely or jointly with others as a
director, officer, agent, employee, consultant, partner,
or stockholder or limited partner owning more than five
percent (5%) of the stock or equity interests in or
securities convertible into more than five (5%) of the
stock of or equity interests in any corporation,
association or limited partnership; or
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(ii) as agent or principal carrying on or engaging in any
activities or negotiations with respect to the
acquisition or disposition of any such business; or
(iii) lending credit or money for the purpose of establishing
or operating any such business; or
(iv) giving advice to any other person, firm, association,
corporation, or other entity engaging in any such
business, provided such other person, firm, association,
corporation or other entity is not a member of any
Employee's immediate family; or
(v) lending or allowing his name or reputation to be used in
any such business.
C) In the event of a breach or reasonably threatened breach by
CWC or OHS of the provisions of this section 4, CWC or OHS
shall be entitled to injunctive relief against the other
company. Nothing herein shall be constructed as prohibiting
the either company from pursuing any other remedies available
to CWC or OHS for such breach or threatened breach, including
without limitation the recovery of damages from the other
company.
D) During the Term and for a period of six (6) months thereafter,
CWC or OHS will not without the prior written permission of
the other company in each instance will not solicit, or
attempt to solicit and employ any employee of the other
company or any of its subsidiaries or affiliates, or commit an
act the primary purpose of which is to induce employee of the
CWC or OHS or any of its subsidiaries or affiliates to leave
such employment or significantly interfere with, disrupt or
attempt to disrupt any past, present or prospective
relationship, contractual or otherwise, relating to the
business activities between CWC or OHS or any of its
subsidiaries or affiliates and their respective prospects.
E) The parties hereto consider the restrictions contained in this
Section 4 to be reasonable. If, however, such restrictions are
found by any court having jurisdiction to be unreasonable
because they are (or any of them is) too broad, then such
restrictions shall nevertheless remain effective, but shall be
considered amended as to protection of business, time or
geographic area in whatever manner is considered reasonable by
that court and, as so amended, shall be enforced.
F) The provisions of this Section 4 shall survive the expiration
or termination, for any reason, of this Agreement and shall be
separately enforceable.
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5) Indemnification- Each party hereto hereby agrees to indemnify,
defend and hold the other harmless from and against any and all
costs, losses, claims, demands and liabilities, including reasonable
attorneys' fees which arise out of or relate to any breach by the
other of any of the terms and conditions in the Agreement; any
negligent or intentional wrongful act of the other ; any act or
omission of the other which constitutes negligence; or any other act
not authorized under the terms of the Agreement. If any party or any
of its shareholders or affiliates is made a party to litigation or
obligation or otherwise incurs any loss or expense as a result of
the other's activities unconnected with the other's business
hereunder, such parties shall forthwith upon demand, reimburse the
other party or such individuals for any all expenses incurred as a
result thereof. Each party shall name the other as "additional
insured" on their respective E & O policies and each shall provide
the other with a Certificate of Insurance evidencing such.
6) Arbitration- except for any claim based on fraud or seeking
injunctive relief, any controversy, dispute or disagreement arising
out of or relating to the Agreement or the breach thereof, including
without limitation any dispute concerning the scope of this
arbitration clause, shall be settled by binding arbitration, which
shall be, conducted in the venue which shall be that of the party
instituting the arbitration, in accordance with the American Health
Lawyer's Association ("AHLA") Alternative Resolution Service Rules
of Procedure of Arbitration. The courts, in the venue, shall have
exclusive jurisdiction for the entry of judgement upon any award
rendered by such arbitration panel. The parties hereto consent to
such exclusive jurisdiction and venue.
If this letter meets with your understanding, please execute below.
Sincerely,
/s/ XXXXX XXXXXXX
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Xxxxx Xxxxxxx
Chief Executive Officer
Optimum Health Services, Inc.
Agreed to and Accepted by:
/s/ X. XXXXXX XXXXXXXX
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X. Xxxxxx XxXxxxxx
Chairman and Chief Executive Officer
Complete Wellness Centers, Inc.
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EXHIBIT A
CWC MIS DEPARTMENT
1998 BUDGET
====================================================================================================================================
MONTH
CATEGORY OF EXPENSE February March April May June July
====================================================================================================================================
------------------------------------------------------------------------------------------------------------------------------------
1 HARDWARE & SOFTWARE $5,455 $5,455 $5,455 $5,455 $5,455 $5,455
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
2 CONSULTING SERVICES $3,182 $3,182 $3,182 $3,182 $3,182 $3,182
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
3 MISC (Travel, Training, Seminars & Publications) $2,727 $2,727 $2,727 $2,727 $2,727 $2,727
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
4 OPERATING EXPENSES (RECURRING)
------------------------------------------------------------------------------------------------------------------------------------
A COMPENSATION $2,917 $5,833 $5,833 $5,833 $5,833 $5,833
------------------------------------------------------------------------------------------------------------------------------------
B PAYROLL TAXES AND BENEFITS $642 $1,283 $1,283 $1,283 $1,283 $1,283
------------------------------------------------------------------------------------------------------------------------------------
C MIS ALLOCATION $900 $900 $900 $900 $900 $900
------------------------------------------------------------------------------------------------------------------------------------
D BONUS $0 $0 $0 $0 $0 $0
====================================================================================================================================
E TOTAL OPERATING EXPENSES $4,458 $8,017 $8,017 $8,017 $8,017 $8,017
====================================================================================================================================
====================================================================================================================================
5 TOTAL EXPENSES $15,822 $19,380 $19,380 $19,380 $19,380 $19,380
====================================================================================================================================
====================================================================================================================================
6 TOTAL EXPENSES - CUMMULATIVE $15,822 $35,202 $54,583 $73,963 $93,343 $112,723
====================================================================================================================================
====================================================================================================================================
7 FTE'S 1.0 2.0 2.0 2.0 2.0 2.0
====================================================================================================================================
====================================================================================================================================
MONTH TWELVE
MONTH
CATEGORY OF EXPENSE August September October November December TOTAL
====================================================================================================================================
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
1 HARDWARE & SOFTWARE $5,455 $5,455 $5,455 $5,455 $5,455 $60,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
2 CONSULTING SERVICES $3,182 $3,182 $3,182 $3,182 $3,182 $35,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
3 MISC (Travel, Training, Seminars & Publications) $2,727 $2,727 $2,727 $2,727 $2,727 $30,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
4 OPERATING EXPENSES (RECURRING)
------------------------------------------------------------------------------------------------------------------------------------
A COMPENSATION $5,833 $5,833 $5,833 $5,833 $5,833 $61,250
------------------------------------------------------------------------------------------------------------------------------------
B PAYROLL TAXES AND BENEFITS $1,283 $1,283 $1,283 $1,283 $1,283 $13,475
------------------------------------------------------------------------------------------------------------------------------------
C MIS ALLOCATION $900 $900 $900 $900 $900 $9,900
------------------------------------------------------------------------------------------------------------------------------------
D BONUS $0 $0 $0 $0 $6,000 $6,000
====================================================================================================================================
E TOTAL OPERATING EXPENSES $8,017 $8,017 $8,017 $8,017 $14,017 $90,625
====================================================================================================================================
5 TOTAL EXPENSES $19,380 $19,380 $19,380 $19,380 $25,380 $215,625
====================================================================================================================================
====================================================================================================================================
6 TOTAL EXPENSES - CUMMULATIVE $132,104 $151,484 $170,864 $190,245 $215,625
====================================================================================================================================
====================================================================================================================================
7 FTE'S 2.0 2.0 2.0 2.0
====================================================================================================================================
MIS Budget Allocation - Payments are due monthly
Total $215,625.00
