Exhibit 10.2
SECOND AMENDMENT TO
PREFERRED PROVIDER AGREEMENT
This Second Amendment to Preferred Provider Agreement (the "Second
Amendment") is made as of the 11th day of September, 2000 by and between
National Century Financial Enterprises, Inc., an Ohio corporation (hereinafter
referred to as "NCFE") and X-Xxxxxxx.xxx, a Nevada corporation (hereinafter
referred to as "E-MED").
WITNESSETH
WHEREAS, NCFE and E-MED have heretofore entered into that certain
Preferred Provider Agreement dated as of February 2, 2000 (the "Original
Agreement") and that certain Letter Agreement clarifying and modifying the
Original Agreement dated as of February 2, 2000 (the "First Amendment" and
together with the Original Agreement the "Agreement").
WHEREAS, NCFE and E-MED desire to further amend and clarify certain
provisions of the Agreement by way of this Second Amendment.
NOW THEREFORE, in consideration of the premises and mutual obligations
set forth herein, and other good and valuable consideration, it is covenanted
and agreed for the proportionate benefit of all parties hereto as follows:
SECTION 1. AMENDMENT. The Agreement shall be amended as follows:
a. Section 1.1 shall be deleted in its entirety and
amended as follows:
SECTION 1.1 SERVICES. E-MED agrees to provide the
products and consulting services described in (a) the
"Statement of Work," attached hereto as Exhibit 1A, (b) the
"Business Plan" dated October 15, 1999 attached hereto as
Exhibit 1B, which may be mutually amended and supplemented by
the parties from time to time, and (c) each "Scope of Work" in
form and substance as agreed to by NCFE and E-MED in each
instance consistent with the "Statement of Work" and "Business
Plan," attached hereto as Exhibit 2. The parties hereto agree
that they may in the future mutually agree to modify or amend
the Statement of Work, any Scope of Work and/or the Business
Plan and any such modifications and amendments shall be in
writing, executed by NCFE and E-MED, and shall be attached to
this Agreement for future reference. The descriptions in the
Statement of Work and in the Business Plan are intended by the
parties to be read in the broadest possible sense such that --
except as otherwise limited by this Agreement -- E-MED shall
have the right and then the obligation to provide services and
software solutions with respect to all internet electronic
commerce software needs of NCFE and NCFE shall have the
ownership, licensure and other rights as more fully set forth
herein. The parties hereto agree that all projects hereunder
shall be set forth in writing between the parties in the form
of a Scope of Work to be mutually agreed upon in order to
permit the parties to have a standard by which to judge the
performance of E-MED hereunder (e.g., under subparagraph 1.3).
b. Section 1.2 shall be deleted in its entirety and
amended as follows:
SECTION 1.2 CONDUCT OF SERVICES. All work shall be
performed in a workmanlike and professional manner in
accordance with the terms and conditions of this Agreement.
NCFE agrees to provide E-MED access to all hardware and
facilities reasonably necessary to enable E-MED to provide its
products and services identified herein to NCFE in accordance
with general industry standards.
c. Section 1.4 shall be deleted in its entirety and
amended as follows:
SECTION 1.4 EXTRAORDINARY CASE WHERE NCFE MAY UTILIZE
ALTERNATIVE SERVICES. Notwithstanding any provision of this
Agreement to the contrary, NCFE may utilize the services of an
alternative vendor or supplier in each case (if any) wherein
all parties hereto mutually agree that a particular product,
project or Scope of Work is outside the Statement of Work. In
such instances, E-MED may make a proposal to do such product,
project or Scope of Work if E-MED, within ten (10) business
days of receipt of a written notice from NCFE, submits to NCFE
a pricing quote which is not greater than 110% of the average
quoted pricing of two (2) legitimate and capable third-party
vendors with respect to such product, project or Scope of
Work, provided that no vendor shall be deemed legitimate or
capable unless and until it is established that such vendor
has been in business for at least one (1) year and has annual
revenues at least as large as those of E-MED. Nothing in this
Section 1.4 shall permit NCFE to terminate this entire
Agreement. Neither E-MED nor NCFE may exercise any remedy
other than those set forth in Section 3 of this Agreement or
file any litigation in any court in the world against the
other for any alleged or anticipatory breach of this Agreement
unless such litigation is filed after July 25, 2002.
d. Section 1.5 shall be deleted in its entirety and
amended as follows:
SECTION 1.5 CUSTOM DELIVERABLES. E-MED and NCFE both
acknowledge and understand that by design this Agreement and
any Exhibits appended hereto have been drafted with the
anticipation and expectation that E-MED will be providing some
services and resultant work product to NCFE that shall be
considered Custom Deliverables. Such Custom Deliverables shall
be defined as follows: "Software and/or intellectual property
(including, but not limited to all codes, artwork, screens,
data and the like) developed by E-MED for NCFE specifically
pursuant to this Agreement that were neither developed nor
owned by E-MED prior to entering into this Agreement." Such
Custom Deliverables shall be considered a "work made for
hire." Provided that NCFE pays E-MED the required amounts for
such Custom Deliverables as set forth in the applicable Scope
of Work, NCFE shall have full and complete control and
authority over and with respect to the development of all
functional and/or artistic design matters related to such
Custom Deliverables and each Scope of Work on a
project-by-project basis. Such Custom Deliverables, and any
copyrights or intellectual property interest in such Custom
Deliverables, upon NCFE's payment of any and all amounts then
due and owing to E-MED in consideration of the
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development of a particular Custom Deliverable, shall be the
sole and exclusive property of NCFE. In consideration for
E-MED's services, NCFE shall be required to grant E-MED for
the duration of the term of this Agreement, a worldwide,
non-exclusive, royalty free, license to possess, copy, and
display any and all of the Custom Deliverables E-MED's
performance of services for third parties, provided that in
doing so E-MED does not disclose, utilize or include any of
NCFE's confidential information. E-MED shall not lease, sell,
transform, modify, disclose, transfer, distribute, assign or
sub-license any Custom Deliverable or any copyright or
intellectual property interest in the Custom Deliverables or
derivative thereof to any third party absent the prior express
written consent of NCFE.
Notwithstanding the aforementioned, E-MED shall not
under any circumstance, disclose or utilize all or a portion
of any Custom Deliverable or any copyright or intellectual
property interest in such Custom Deliverable in its
performance of services (including the sale or licensing of
software or software solution, consulting and the like) for
any third party which is or intends to be a competitor of
NCFE. Further, in the event of a "Change of Control" the
above-referenced license shall be terminated and any continued
use of such Custom Deliverables shall be subject to NCFE's
expressed written consent on a case-by-case basis. For the
purposes of this Agreement, a "Change of Control" shall be
defined as an event whereby a person who, as of the date of
this Agreement, owns 10% or less of the issued and outstanding
capital stock of E-MED through one or a series of
transactions, purchases, acquires, owns or otherwise controls,
directly or indirectly, greater than 10% of E-MED's issued and
outstanding capital stock and has or acquires the right to
appoint or control, directly or indirectly, one or more
members of E-MED's Board of Directors.
e. Section 1.6(a) shall be deleted in its entirety and
amended as follows:
(a) In consideration for NCFE entering into this
Agreement, E-MED shall issue to NCFE or its designee(s) or
nominee(s) Nine Million Five Hundred Thousand (9,500,000)
shares of the common stock of E-MED, and shall immediately
register such shares pursuant to a registration statement
filed with the Securities and Exchange Commission so that all
of the shares are unrestricted and free trading in accordance
with applicable law and all industry standards for the
securities industry in the United States and E-MED shall have
the same obligations to NCFE with respect to the registration
of such shares as E-MED currently has to Xxxxxx X. Xxxxx and
Xxxxxxx Investors, LLC pursuant to Sections 3, 5, 6, 7 and 8
of the Registration Rights Agreement by and among E-MED,
Xxxxxx X. Xxxxx and Xxxxxxx investors, LLC, dated its of March
18, 1999.
The parties hereto stipulate that all of such shares
have been registered with the Securities and Exchange
Commission Pursuant to a registration statement declared
affective on or about August 1, 2000. E-MED agrees that the
only lawyer for E-MED authorized to interact with NCFE
regarding the shares is Xxx Xxxxxx of the Colorado Xxxx Xxxxx
law firm ("Krys Firm"), or any other agent of
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that firm, and E-MED agrees, warrants and represents that it
will not allow any other representatives to interact with NCFE
(or anybody else) appertaining or with respect to the NCFE
shares. Absent the express written consent of NCFE, no other
person besides a lawyer for the Krys firm is entitled to
handle issues appertaining or relating to the NCFE shares.
f. Section 1.6(c) shall be deleted in its entirety and
amended as follows:
(c) In consideration of E-MED adhering to Section
1.6(a), NCFE or one or more of it's affiliates shall
1. arrange for $1,000,000 of
additional equity financing (which
is part of the consideration given
by NCFE in exchange for the shares
referenced to Section 1.6(a)
above), to be accomplished by
September 1, 2000; meaning that
E-MED must actually and in fact
receive the $1,000,000 within
thirty (30) business days of the
execution of the Second Amendment
to Preferred Provider Agreement and
E-MED having executed all Mutually
agreed upon documentation and
agreements necessary to facilitate
NCFE's receipt of the shares set
forth in paragraph 1.6(a) as
amended above; and
2. arrange for $4,000,000 of debt
financing such that E-MED may draw
upon such financing commencing
within sixty (60) business days of
execution of the Second Amendment
to Preferred Provider Agreement and
E-MED having fully and completely
complied with paragraph 1.6(a)
above; but with the understanding
that such debt will be retired and
effectively converted into equity
without any additional shares being
issued to NCFE to the extent NCFE
is able to sell $4,000,000 worth of
its E-MED stock at a price per
share in excess of $9.50 per share
on or prior to September 1, 2003.
Until that time, the debt will not
accrue interest and will be carried
as long term debt on the books of
NCFE and E-MED.
g. Section 1.6(e) shall be deleted in its entirety and
amended as follows:
(e) Pursuant to the terms of this Agreement and for
the duration of this Agreement, NCFE and E-MED agree to
establish a proprietary "Master Portal" wherein all of NCFE's
and E-MED's electronic commerce based products and services
shall be able to be marketed and sold to all of NCFE's and
E-MED's participating customers in a manner mutually agreeable
and acceptable both to NCFE and E-MED. NCFE shall not be
entitled to charge development costs to the Master Portal
project and all development costs incurred by NCFE shall be
borne, exclusively, by NCFE on an internal basis. All
development costs directly related to the Master Portal
incurred by E-MED for soft costs/human resource cost shall be
charged to the project at 140% of actual out of pocket costs
and all
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hardware and hard costs shall be charged to the project at
110% of actual out-of-pocket costs. With respect to hardware
and software costs directly related to the development or
maintenance of the Master Portal, NCFE may purchase such items
from the lowest bidder only in accordance with Section 1.4.
Subsequent to the development phase which was concluded on
July 27, 2000, all costs related to the maintenance and
operation of the Master Portal shall be paid 50/50 by NCFE and
E-MED subject to the same markup limitation sat forth in this
Section 1.6(e). Both NCFE and E-MED understand and agree that
maintenance costs shall be nominal and any costs in excess of
nominal amounts will only be reimbursed or paid upon mutual
agreement of both NCFE and E-MED. All costs charged to the
project for either development or maintenance shall be
supported by an invoice and in the case of labor, costs shall
be supported by a detailed summary identifying the persons
involved, the time expended and actual costs. The Master
Portal shall function in such a way as to require it to be the
"ultimate destination" portal that a potential NCFE or E-MED
customer will enter into prior to doing business
electronically either with NCFE or E-MED as anticipated under
the terms of this Agreement.
For the duration of this Agreement and any extension
hereof, E-MED shall be entitled to receive a "per click"
payment for each entry to the NCFE website through the Master
Portal by a potential customer. No "per click" payment shall
apply to any customer activity within NCFE's website or with
respect to any then current NCFE customer who utilize the
Master Portal for the exchange of proprietary data as between
NCFE and its customer. Such click fee will be monitored by an
internet activities monitoring service acceptable to NCFE and
E-MED and payable each month in the arrears. During the first
year of the contract, such minimum payments will be $15,000
per month (prorated for any period less than one year) or 5
cents per click whichever is greater so long as E-MED
continues to maintain the Master Portal and all functional
aspects thereof in an appropriate manner. During the second
year of this contract, so long as the Master Portal and all
functional aspects thereof is provided and maintained by E-MED
in an appropriate manner, the minimum charge will be $20,000
per month or 5 cents per click whichever is greater, so long
as E-MED continues to maintain the Master Portal and all
functional aspects thereof in an appropriate manner. In the
third year and every successive year of this Agreement, the
charge will be $25,000 per month minimum or 5 cents per click
whichever is greater, so long as E-MED continues to maintain
the Master Portal and all functional aspects thereof in an
appropriate manner. In addition to the above consideration, to
the extent that NCFE obtains new clients as a result of the
Master Portal application process, whether that new client
comes from the E-MED client base or a new client base that
comes to NCFE as a result of the Master Portal, E-MED will be
entitled to a fee commencing when such client commits to a
funding apparatus offered NCFE. Such funding apparatus
includes, medical accounts receivable funding, self-pay
receivable fundings, leases, loans, and bridge financing as
well as advisory services in mergers and acquisitions.
In relation to the ownership of the Master Portal,
E-MED and NCFE shall be joint owners of the Master Portal and
all related capabilities and technology,
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jointly and equally responsible for the development and
maintenance of the Master Portal during the term of this
Agreement. Subsequent to the Termination of this Agreement,
each of NCFE and E-MED shall cooperate to the extent necessary
to maintain and administer the operation, accessibility and
functionality of the Master Portal in relation to access and
usage by their respective current and future customers. In the
event either NCFE or E-MED abandons their interest in the
Master Portal affirmatively or by failure to cooperate and
maintain the Master Portal as described above, the abandoning
party's interest in the Master Portal and all related
capabilities and technology shall automatically transfer to
the non-abandoning party, provided, however, that all
notification provisions hereof shall be strictly complied with
meaning that the party claiming an abandonment by the other
shall have provided written notification and a thirty (30) day
opportunity to cure shall have been and shall have lapsed.
h. Section 1.6 shall be amended by adding subsection (h)
thereto as follows:
(h) In each instance wherein (i) E-MED expends human
resources in the performance of its obligations hereunder and
(ii) E-MED is entitled to reimbursement hereunder from NCFE,
the cost of such resources shall be billed to NCFE at a rate
equal to not more than actual out-of-pocket costs plus 40%. In
no event shall E-MED be entitled to reimbursements from NCFE
for any costs or expenses incurred by E-MED for projects or
work other than those incurred or undertaken at the direction
of NCFE or directly in furtherance of the Statement of Work
and Scope of Work.
i. Section 2.1 shall be deleted in its entirety and
amended as follows:
SECTION 2.1 TERM. The term of this Agreement shall
commence on the date set forth above and shall (absent earlier
termination as provided hereunder) be for an Initial Term of
twenty-one (21) years ("Initial Term"). Following the
expiration of the Initial Term, this Agreement may be extended
by mutual agreement of the parties for one (1) successive
Extended Term. The Extended Term shall be for a period of Five
(5) years. Therefore, including the Initial Term, upon
exercise of the Extended Term, this Agreement could remain
effective for a cumulative term of twenty-six (26) years.
j. Section 2.2 shall be deleted in its entirety and
amended as follows:
SECTION 2.2 EVENTS OF DEFAULT. The following events
shall constitute a "Default":
(a) NCFE fails to pay any amounts when
due and does not pay such amounts
within forty-five (45) days of
receipt of written notice of such
payment failure;
(b) Either NCFE or E-MED has failed to
comply with any obligation set forth
herein (other than a payment default
under subsection (a)), the
non-defaulting party has exhausted
any specific contractual rights and
remedies set forth herein, and the
lack of compliance of the defaulting
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party remains uncured for a period
of thirty (30) days after notice of
such breach is sent by the
non-defaulting party to the party
alleged to be in Default, in
accordance with Section 2.3. The
cure period may be extended, if both
parties agree to such extension in
writing.
k. Section 6.2 shall be deleted in its entirety and
amended as follows:
SECTION 6.2 PROHIBITION AGAINST COMPETITIVE SERVICES
AND PRODUCTS. Subject to any express limitations set out in
this Section, NCFE and E-MED agree that during the term of
this Agreement neither party shall, without the prior written
consent of the other, compete, provide services to third
parties which enable such third parties to compete, or
participate in competition, either directly, indirectly, with,
or against the other party in relation to either party's
current business operations, whether alone, as a partner, or
as an officer, director, employee, consultant, or holder of
more than five percent (5%) of the capital stock of any other
corporation. In regards to NCFE competing with E-MED, such
prohibition against participation in competition shall be
limited to all of the services and products to be provided
under the terms of this Agreement by E-MED. Subject to the
conditions set forth in Section 1.4 hereof and this Section
6.2, nothing herein shall permit NCFE to compete against E-MED
during the term hereof in a manner in which NCFE uses -- in
any way shape or form -- the services or products of any
company other than E-MED with respect to the projects and work
set out in the Statement of Work and the Business Plan.
While NCFE has no obligation to continue to use the
services of E-MED after the termination of this Agreement.
NCFE agrees that, subsequent to the termination of this
Agreement, it will give E-MED the first opportunity to
continue to provide services set forth in the Statement of
Work. NCFE also agrees that it shall not utilize the services
or products (excluding hardware) of any provider engaged in
the business of providing technological solutions of the kind
set out in the Statement of Work or of any technological or
service solutions similar or related thereto, other than and
with the sole exception of NCFE's utilization hereunder of
E-MED's services and products; provided, however, that NCFE
may at all times use such competitive products in accordance
with Section 1.4 of this Agreement or if E-MED has shown
inability to provide the solutions set out in the Statement of
Work and the Business Plan and if NCFE has exhausted all
dispute escalation remedies expressly set forth in Section 3,
with the exception that if those escalation procedures do not
yield a resolution within the provided timeframe, NCFE shall
not be compelled to obtain judicial approval before using
alternative services.
l. Section 6.3 shall be amended to cross-reference
Section 1.6(c) as opposed to Section 1.5(c).
m. Section 7.1 shall be deleted in its entirety and
amended as follows:
SECTION 7.1 GRANT OF LICENSE. Subject to the payment
of all compensation due under this Agreement and all other
terms and conditions herein,
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E-MED grants to NCFE, a perpetual, personal, non-transferable,
non-exclusive license to Software, other than the Custom
Deliverables which are owned by NCFE and defined in Section
1.5 above, in object code form solely for the purpose of
serving the normal business operations of NCFE. This license
grant is subject to NCFE's continued use of the Master Portal
and payment of the fees referenced in Section 1.6(e).
n. Section 7,2 shall be amended to cross-reference
Section 1.5 as opposed to Section 1.4:
o. Section 10.1 shall be supplemented by adding the
following:
For the purposes of this Section 10.1 "Software
Requirements" shall have the meaning ascribed in the Statement
of Work and/or the related Scope of Work.
SECTION 2. GOVERNING LAW. Section 11.3 of the Agreement shall apply to
this Second Amendment.
SECTION 3. SEVERAL COUNTERPARTS. This Second Amendment may be executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts shall constitute one and the same instrument.
SECTION 4. CAPTIONS. The captions or headings in this Second Amendment
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Second Amendment.
SECTION 5. AFFIRMATION OF TERMS. Except as expressly provided herein to
the contrary, the terms, covenants, and conditions of the Agreement shall remain
in full force and effect without modification or amendment, and the parties
hereto ratify and reaffirm the same in their entirety.
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IN WITNESS WHEREOF this Agreement has been signed by the Parties hereto
on the date first written above.
NATIONAL CENTURY FINANCIAL
ENTERPRISE, INC.
By:
--------------------------------------
Title
-----------------------------------
Address: 0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
X-XXXXXXX.XXX
By:
--------------------------------------
Title
-----------------------------------
Address: 0000 Xxxxx Xxxxxxx Xxxx. #000
Xxxxxxxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000 0000
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EXHIBIT 1A
STATEMENT OF WORK
Development of full, web-based, subscription based network pursuant to policies
and pricing as may be promulgated from time to time by E-MED, within E-MED's
sole discretion, but provided that such pricing shall be at levels such that
NCFE receives discounts of at least eight percent (8%) from the standard pricing
of E-MED competitive with the industry.
In exchange for this preferred pricing being provided to NCFE, E-MED shall
develop and implement and provide for all of NCFE's internet electronic commerce
needs -- including all software, portal, web (and any other network) and
hardware products and services -- in the following areas:
1. Consumer web portals;
2. E-MED web portals;
3. Broker web portals;
4. Employer web portals;
5. Claims and encounters;
6. Eligibility and benefits verification;
7. Claim status inquiry;
8. Referrals and authorizations for newly acquired clients;
9. Coordination of benefits;
10. First report of injury;
11. Credentialing;
12. Drug history;
13. Prescription communication services;
14. Lab order and results;
15. Other connectivity and connectivity
16. Other e-commerce applications;
17. Internet/extranet products
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EXHIBIT 1B
BUSINESS PLAN
DATED OCTOBER 15, 1999
1. The main focus of E-MED and NCFE, following the development of the
"master portal", is to sign up new business clients for NCFE with the
specific target market being Group Medical Practices added to the
NCFE's funding programs. By 12/31/2000, the goal is 1950 practices.
Target Chartwell operations and HMO's.
2. Provide detailed cash flow and marketing objectives to both E-MED and
NCFE for balance of fiscal 2000 (July-December). See attached.
3. Provide a proposal for $15,000,000 revolver to E-MED using bank
participations. If acceptable to NCFE, NCFE to syndicate the vehicle
and provide $15,000,000 participation.
4. Refine Preferred Provider Agreement to make the arrangement more
workable long term and defendable in either public market or merger
joint venture market. This means a longer term, i.e., 15-25 years.
5. Reach an understanding as to some form of compensation to NCFE (cash or
additional stock) in consideration of referrals of new business not
related to Group Medical Practices.
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EXHIBIT 2
SCOPE OF WORK
(TO BE PROVIDED)
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EXHIBIT 3
PARTICIPATION FEE
In addition to a one-time payment of $1,000 by NCFE to E-MED with respect to
each new seller of receivable originated through the Master Portal, E-MED will
participate in the program revenues based on the outstanding balance of seller
receivables purchased by NCFE that result from a financing relationship
originated and funded using the Master Portal internet connection. The maximum
participation fee is an annual fee of .5% computed on a monthly basis. The final
determination of this fee is contingent upon NCFE earning a minimum gross margin
of 6%. Gross margin is determined by subtracting the average cost of funds
related to the purchased receivables from the program fees earned and collected
on funds advanced to purchase receivables. If the gross margin does not exceed
6%, no participation fee is due to E-MED. If the gross margin exceeds 6%, E-MED
will earn a participation fee equal to such excess but in no event in excess of
..5% annually.
EXAMPLE
Cost of funds: 7.0%
Program Charges: 13.5%
Gross Margin: 6.5%
PARTICIPATION FEE DUE TO E-MED: .5% of outstanding balance of
purchased receivables computed
monthly.
Cost of funds: 7.5%
Program Charges: 13.5%
Gross Margin: 6.0%
PARTICIPATION FEE DUE TO E-MED: none
Cost of funds: 7.4%
Program Charges: 13.5%
Gross Margin: 6.1%
PARTICIPATION FEE DUE TO E-MED: .1% of outstanding balance of
purchased receivables computed
monthly.
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